AGREEMENT AND PLAN OF MERGER by and among Xedar Corporation, a Colorado corporation and PDS Acquisition Corp., a Colorado corporation and Premier Data Services, Inc., a Delaware corporation December 31, 2006
by
and
among
Xedar
Corporation, a Colorado corporation
and
PDS
Acquisition Corp., a Colorado corporation
and
Premier
Data Services, Inc., a Delaware corporation
December
31, 2006
TABLE
OF CONTENTS
|
1.
The Merger
|
1
|
|
1.1
Merger
|
1
|
|
1.2
Effective Time
|
1
|
|
1.3
Certificate of Incorporation, By-laws, Directors and
Officers
|
2
|
|
1.4
Assets and Liabilities
|
2
|
|
1.5
Manner and Basis of Converting Shares
|
2
|
|
1.6
Surrender and Exchange of Certificates
|
3
|
|
1.7
Warrants
|
3
|
|
1.8
Parent Common Stock
|
3
|
|
2.
Representations and Warranties of the Company
|
3
|
|
2.1
Organization, Standing, Subsidiaries, Etc
|
3
|
|
2.2
Qualification
|
4
|
|
2.3
Capitalization of the Company
|
4
|
|
2.4
Company Stockholders
|
4
|
|
2.5
Corporate Acts and Proceedings
|
4
|
|
2.6
Compliance with Laws and Instruments
|
4
|
|
2.7
Binding Obligations
|
4
|
|
2.8
Broker's and Finder's Fees
|
5
|
|
2.9
Financial Statements
|
5
|
|
2.10
Absence of Undisclosed Liabilities
|
5
|
|
2.11
Changes
|
5
|
|
2.13
Title to Property and Encumbrances
|
5
|
|
2.14
Litigation
|
5
|
|
2.15
Patents, Trademarks, Etc
|
6
|
|
3.
Representations and Warranties of Parent and Acquisition
Corp
|
6
|
|
3.1
Organization and Standing
|
6
|
|
3.2
Corporate Authority
|
6
|
|
3.3
Broker's and Finder's Fees
|
6
|
|
3.4
Capitalization of Parent
|
6
|
|
3.5
Acquisition Corp
|
7
|
|
3.6
Validity of Shares
|
7
|
|
3.7
SEC Reporting and Compliance
|
7
|
|
3.8
Financial Statements
|
7
|
|
3.9
Governmental Consents
|
8
|
|
3.10
Compliance with Laws and Instruments
|
8
|
|
3.11
No General Solicitation
|
8
|
|
3.12
Binding Obligations
|
8
|
|
3.13
Absence of Undisclosed Liabilities
|
8
|
|
3.14
Changes
|
8
|
|
3.15
Tax Returns and Audits
|
9
|
|
3.16
Employee Benefit Plans; ERISA
|
9
|
|
3.17
Litigation
|
10
|
|
3.18
Interested Party Transactions
|
10
|
|
3.19
Questionable Payments
|
10
|
|
3.20
Obligations to or by Stockholders
|
10
|
|
3.21
Assets and Contracts
|
10
|
|
3.22
Employees
|
11
|
|
3.23
Disclosure
|
11
|
|
4.
Additional Representations, Warranties and Covenants of the
Stockholders
|
11
|
|
5.
Conduct of Businesses Pending the Merger
|
11
|
|
5.1
Conduct of Business by the Company Pending the Merger
|
11
|
|
5.2
Conduct of Business by Parent and Acquisition Corp
|
12
|
|
6.
Additional Agreements
|
13
|
i
|
6.1
Access and Information
|
13
|
|
6.2
Additional Agreements
|
13
|
|
6.3
Publicity
|
14
|
|
6.4
Appointment of Directors
|
14
|
|
6.6
Registration Rights Agreement
|
14
|
|
7.
Conditions of Parties' Obligations
|
14
|
|
7.1
Company Obligations
|
14
|
|
7.2
Parent and Acquisition Corp
|
15
|
|
8.
Non-Survival of Representations and Warranties
|
17
|
|
9.
Amendment of Agreement
|
17
|
|
10.
Definitions
|
17
|
|
11.
Closing
|
20
|
|
12.
Termination Prior to Closing
|
20
|
|
12.1
Termination of Agreement
|
20
|
|
12.2
Termination of Obligations
|
21
|
|
13.
Miscellaneous
|
21
|
|
13.1
Notices
|
21
|
|
13.2
Entire Agreement
|
22
|
|
13.3
Expenses
|
22
|
|
13.4
Time
|
22
|
|
13.5
Severability
|
22
|
|
13.6
Successors and Assigns
|
22
|
|
13.7
No Third Parties Benefited
|
22
|
|
13.8
Counterparts
|
22
|
|
13.9
Governing Law
|
22
|
|
LIST
OF EXHIBITS AND SCHEDULES
|
|
|
Exhibits
|
|
|
Exhibit
A - Certificate of Merger
|
|
|
Exhibit
B - Statement of Merger
|
|
|
Exhibit
C - Certificate of Incorporation of Premier Data Services,
Inc.
|
|
|
Exhibit
D - Bylaws of Premier Data Services, Inc.
|
|
|
Exhibit
E - Directors and Officers of Premier Data Services, Inc.
|
|
|
Exhibit
F - Letter of Transmittal
|
|
|
Exhibit
G - Directors and Officers of Xedar Corporation (Post
Merger)
|
|
|
Exhibit
H - Registration Rights and Lock-Up Agreement
|
|
|
Company
Disclosure Schedules
|
|
|
Schedule
1.5 - Parent Shares to be Issued to Stockholders in Merger
|
|
|
Schedule
1.7 - Options, Warrants, and Other Rights to Company Stock
|
|
|
Schedule
2.4 - Stockholders of Company (Immediately Prior to
Merger)
|
|
|
Schedule
2.8 - Brokers, Advisors, Finders' Fees
|
|
|
Schedule
2.9 - Company Financial Statements
|
|
|
Schedule
2.10 - Company Liabilities (Unreserved Against Balance
Sheet)
|
|
|
Schedule
2.11 - Changes in Company Liabilities Since Balance Sheet
Date
|
|
|
Schedule
2.12 - Company Properties - Encumbrances; Title Exceptions
|
|
|
Schedule
2.13 - Litigation
|
|
|
Schedule
2.14 - Patents; Trademarks
|
|
|
Parent
Disclosure Schedules
|
|
|
Schedule
3.1 - Subsidiaries of Parent and/or Acquisition Corp.
|
|
|
Schedule
3.21 - Material Contracts of Parent
|
ii
THIS
AGREEMENT AND PLAN OF MERGER is made and entered into effective as of December
31, 2006, by and among Xedar Corporation, a Colorado corporation ("Parent"),
PDS
Acquisition Corp., a Colorado corporation ("Acquisition Corp."), which is a
wholly-owned subsidiary of Parent, and Premier Data Services, Inc., a Delaware
corporation (the "Company").
RECITALS
WHEREAS,
the Board of Directors of each of Acquisition Corp., Parent and the Company
have
each determined that it is fair and in the best interests of their respective
corporations and shareholders for Acquisition Corp. to be merged with and into
the Company (the "Merger"), with the Company being the Surviving Corporation
(as
defined below in Section 1.1), upon the terms and subject to the conditions
set
forth herein;
WHEREAS,
the Board of Directors of Acquisition Corp. and the Board of Directors of the
Company have approved the Merger in accordance with the General Corporation
Law
of the State of Delaware (the "DGCL"), the Colorado Business Corporation Act
("CBCA"), and upon the terms and subject to the conditions set forth herein,
in
the Certificate of Merger (the "Certificate of Merger"), attached as
Exhibit
A
hereto,
and in the Statement of Merger ("Statement of Merger"), attached as Exhibit
B
hereto,
and the Board of Directors of Parent has also approved the Merger, this
Agreement, the Certificate of Merger, and the Statement of Merger.
WHEREAS,
the requisite shareholders of Acquisition Corp. and the Company have approved,
by written consent and to the extent required by the DGCL and the CBCA, this
Agreement, the Certificate of Merger, the Statement of Merger, and the
transactions contemplated hereby and thereby, including without limitation,
the
Merger;
WHEREAS,
immediately prior to the Closing (as such term is defined herein), the Company
will sell $1,330,000 worth of shares of its common stock, $0.001 par value
per
share, in a private offering (the "Private Offering") to accredited investors,
pursuant to the terms of a Share Purchase Agreement, dated December 29, 2006,
as
it may be further supplemented (the "Purchase Agreement"), for the purpose
of
financing the ongoing business and operations of the Surviving Corporation
following the Merger; and
WHEREAS,
pursuant to agreements with Xxxx Xxxx and Sagebrook Technologies (the
"Conversion Agreements"), immediately following the Merger, the Company will
convert one half of the outstanding balance of those certain promissory notes,
in the original principal amount of $321,839, payable to Xxxx Xxxx, and in
the
original principal amount of $378,161, payable to Sagebrook Technology Partners,
L.P., an entity controlled by Xxxx Xxxx (collectively the "Notes"), into 409,090
shares of Parent Common Stock (as defined below), with the remaining unpaid
balance of such notes convertible into 409,089 shares of Parent Common Stock
pursuant to the terms of the Conversion Agreements and as more fully described
in Schedule
1.7
hereof.
NOW,
THEREFORE, in consideration of the mutual agreements and covenants hereinafter
set forth, the parties hereto agree as follows:
1.
The Merger.
1.1
Merger.
Subject
to the terms and conditions of this Agreement, the Certificate of Merger, and
the Statement of Merger, Acquisition Corp. shall be merged with and into the
Company in accordance with Section 252 of the DGCL and Section 0-000-000 of
the
CBCA. At the Effective Time (as hereinafter defined), the separate legal
existence of Acquisition Corp. shall cease, and the Company shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue its corporate existence under the
laws of the State of Delaware under the name: Premier Data Services,
Inc.
1.2
Effective Time.
The
Merger shall become effective on December 31, 2006, and upon the filing of
the
Certificate of Merger with the Secretary of State of the State of Delaware,
in
accordance with Section 252 of the DGCL, and the Statement of Merger with the
Secretary of State of the State of Colorado, in accordance with
Section
-
1 -
7-111-104.5.
The time at which the Merger shall become effective as aforesaid is referred
to
hereinafter as the "Effective Time."
1.3
Certificate of Incorporation, Bylaws, Directors and Officers.
(a)
The
Certificate of Incorporation of the Company, as in effect immediately prior
to
the Effective Time, attached as Exhibit
C
hereto,
shall be the Certificate of Incorporation of the Surviving Corporation from
and
after the Effective Time until further amended in accordance with applicable
law.
(b)
The
Bylaws of the Company, as in effect immediately prior to the Effective Time,
attached as Exhibit
D
hereto,
shall be the Bylaws of the Surviving Corporation from and after the Effective
Time until amended in accordance with applicable law, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws.
(c)
The
directors and officers listed in Exhibit
E
hereto
are the directors and officers of the Surviving Corporation, and each shall
hold
his respective office or offices from and after the Effective Time, until his
successor shall have been elected and shall have qualified in accordance with
applicable law, or as otherwise provided in the Certificate of Incorporation
or
Bylaws of the Surviving Corporation.
1.4
Assets and Liabilities.
At the
Effective Time, the Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public as well as of a private nature,
and be subject to all the restrictions, disabilities and duties of each of
Acquisition Corp. and the Company (collectively, the "Constituent
Corporations"); and all the rights, privileges, powers and franchises of each
of
the Constituent Corporations, and all property, real, personal and mixed, and
all debts due to any of the constituent corporations on whatever account, as
well for stock subscriptions as all other things in action or belonging to
each
of the Constituent Corporations, shall be vested in the Surviving Corporation;
and all property, rights, privileges, powers and franchises, and all and every
other interest shall be thereafter as effectively the property of the Surviving
Corporation as they were of the several and respective Constituent Corporations,
and the title to any real estate vested by deed or otherwise in either of the
such Constituent Corporations shall not revert or be in any way impaired by
the
Merger; but all rights of creditors and all liens upon any property of any
of
the Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the Constituent Corporations shall thenceforth attach
to the Surviving Corporation, and may be enforced against it to the same extent
as if said debts, liabilities and duties had been incurred or contracted by
it.
1.5
Manner and Basis of Converting Shares.
(a)
At
the Effective Time:
(i)
each
share of common stock, no par value per share, of Acquisition Corp. that shall
be outstanding immediately prior to the Effective Time shall, by virtue of
the
Merger and without any action on the part of the holder thereof, be converted
into one (1) share of common stock, no par value per share, of the Surviving
Corporation, so that at the Effective Time, Parent shall be the holder of all
of
the issued and outstanding shares of the Surviving Corporation;
(ii)
the
shares of common stock, $0.001 par value per share, of the Company (the "Company
Common Stock"), which shares at the Closing will constitute all of the issued
and outstanding shares of common stock of the Company, beneficially owned by
the
Stockholders listed in Schedule
2.4,
shall,
by virtue of the Merger and without any action on the part of the holders
thereof, be converted into the number of shares of Parent Common Stock specified
in Schedule
1.5
for each
of the Stockholders, which shall be equal to 0.78199 shares of Parent Common
Stock for each (1) share of Company Common Stock;
(iii)
the
shares of preferred stock, designated Series A, $0.001 par
value
per share,
of the
Company (the "Company Preferred Stock"), which shares at the Closing will
constitute all of the issued and outstanding shares of preferred stock of the
Company, beneficially owned by the Stockholders listed in Schedule
2.4,
shall,
by virtue of the Merger and without any action on the part of the holders
thereof, be converted into the number of shares of Parent Common
Stock
-
2 -
specified
in Schedule
1.5
for each
of the Stockholders, which shall be equal to 1.25922 shares of Parent Common
Stock for each (1) share of Company Preferred Stock;
(iv)
each
share of Company Common Stock held in the treasury of the Company immediately
prior to the Effective Time shall be cancelled in the Merger and cease to
exist.
(b)
After
the Effective Time, there shall be no further registration of transfers on
the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock or Company Preferred Stock (referred to collectively herein as
"Company Stock") that were outstanding immediately prior to the Effective
Time.
1.6
Surrender and Exchange of Certificates.
Promptly after the Effective Time and upon (i) surrender of a certificate or
certificates representing shares of Company Stock that were outstanding
immediately prior to the Effective Time or an affidavit and indemnification
in
form reasonably acceptable to counsel for the Parent stating that such
Stockholder has lost its certificate or certificates or that such have been
destroyed and (ii) delivery of a Letter of Transmittal (as described in Section
4 hereof), Parent shall issue to each record holder of the Company Stock
surrendering such certificate or certificates and Letter of Transmittal, a
certificate or certificates registered in the name of such Stockholder
representing the number of shares of Parent Common Stock that such Stockholder
shall be entitled to receive as set forth in Sections 1.5(a)(ii) and 1.5(a)(iii)
hereof. Until the certificate, certificates or affidavit is or are surrendered
together with the Letter of Transmittal as contemplated by this Section 1.6
and
Section 4 hereof, each certificate or affidavit that immediately prior to the
Effective Time represented any outstanding shares of Company Stock shall be
deemed at and after the Effective Time to represent only the right to receive
upon surrender as aforesaid the Parent Common Stock specified in Schedule
1.5
hereof
for the holder thereof or to perfect any rights of appraisal which such holder
may have pursuant to the applicable provisions of the DGCL.
1.7
Options; Warrants; Other Rights.
Except
as set forth in Schedule
1.7,
all
options, warrants, and other rights of any kind to purchase Company Stock
outstanding as of the Effective Date will be exercised or terminated prior
to or
effective upon the Effective Time, and neither Parent nor Acquisition Corp.,
except as set forth in Schedule
1.7,
shall
assume or have any obligation with respect to such options or
rights.
1.8
Parent Common Stock.
Parent
agrees that it will cause the Parent Common Stock into which the Company Common
Stock is converted at the Effective Time pursuant to Section 1.5(a)(ii) and
1.5(a)(iii) to be available for such purpose. Parent further covenants that
immediately prior to the Effective Time there will be no more than 2,500,000
shares of Parent Common Stock (plus that number of shares necessary to adjust
for any averaging up resulting from the reverse split of Parent described in
the
Definitive Proxy of Parent, filed December 4, 2006) issued and outstanding,
and
that no other common or preferred stock or equity securities or any options,
warrants, rights or other agreements or instruments convertible, exchangeable
or
exercisable into common or preferred stock or other equity securities shall
be
issued or outstanding.
2.
Representations and Warranties of the Company.
The
Company hereby represents and warrants to Parent and Acquisition Corp. as
follows:
2.1
Organization, Standing, Subsidiaries, Etc.
(a)
The
Company is a corporation duly organized and existing in good standing under
the
laws of the State of Delaware, and has all requisite power and authority
(corporate and other) to carry on its business, to own or lease its properties
and assets, to enter into this Agreement, the Certificate of Merger, the
Statement of Merger and to carry out the terms hereof and thereof. Copies of
the
Certificate of Incorporation and Bylaws of the Company that have been delivered
to Parent and Acquisition Corp. prior to the execution of this Agreement are
true and complete and have not since been amended or repealed.
(b)
Other
than FuGEN, Inc., a Delaware corporation and PDS/GIS, Inc., a Delaware
corporation (collectively, the "Subsidiaries"), the Company has no subsidiaries
or direct or indirect interest (by way of stock ownership or otherwise) in
any
firm, corporation, limited liability company, partnership, association or
business. The Company owns all of the issued and outstanding capital stock
of
the Subsidiaries free and clear of all Liens, and the Subsidiaries have no
outstanding options, warrants or rights to purchase capital
-
3 -
stock
or
other equity securities of such Subsidiaries, other than the capital stock
owned
by the Company. Unless the context otherwise requires, all references in this
Section 2 to the "Company" shall be treated as being a reference to the Company
and the Subsidiaries taken together as one enterprise.
2.2
Qualification.
The
Company is duly qualified to conduct business as a foreign corporation and
is in
good standing in each jurisdiction wherein the nature of its activities or
its
properties owned or leased makes such qualification necessary, except where
the
failure to be so qualified would not have a material adverse effect on the
condition (financial or otherwise), properties, assets, liabilities, business
operations, results of operations or prospects of the Company taken as a whole
(the "Condition of the Company").
2.3
Capitalization of the Company.
The
authorized capital stock of the Company consists of 30,000,000 shares of Company
Common Stock, 10,000,000 shares of preferred stock, 5,000,000 of which have
been
designated Company Preferred Stock. The Company has no authority to issue any
other capital stock. There are 13,776,262 shares of Company Common Stock issued
and outstanding, and such shares are duly authorized, validly issued, fully
paid
and nonassessable. There are 3,162,941 shares of Company Preferred Stock issued
and outstanding, and such shares are duly authorized, validly issued, fully
paid
and nonassessable. Except as disclosed in Schedule
1.7,
the
Company has no outstanding warrants, stock options, rights or commitments to
issue Company Common Stock, Company Preferred Stock or other Equity Securities
of the Company, and there are no outstanding securities convertible or
exercisable into or exchangeable for Company Common Stock, Company Preferred
Stock or other Equity Securities of the Company.
2.4
Company Stockholders.
Schedule
2.4
hereto
contains a true and complete list of the names of the record owners of all
of
the outstanding shares of Company Stock and other Equity Securities of the
Company, together with the number of securities held. To the knowledge of the
Company, except as described in Schedule
2.4,
there
is no voting trust, agreement or arrangement among any of the beneficial holders
of Company Common Stock affecting the exercise of the voting rights of Company
Stock.
2.5
Corporate Acts and Proceedings.
The
execution, delivery and performance of this Agreement, the Certificate of Merger
and the Statement of Merger (together, the "Merger Documents") have been duly
authorized by the Board of Directors of the Company and, to the extent required
by the DGCL, have been approved by the requisite vote of the Stockholders,
and
all of the corporate acts and other proceedings required for the due and valid
authorization, execution, delivery and performance of the Merger Documents
and
the consummation of the Merger have been validly and appropriately taken, except
for the filing of the Certificate of Merger and the Statement of Merger, which
shall be filed upon or promptly after the Closing.
2.6
Compliance with Laws and Instruments.
To the
knowledge of the Company, the business, products and operations of the Company
have been and are being conducted in compliance in all material respects with
all applicable laws, rules and regulations, except for such violations thereof
for which the penalties, in the aggregate, would not have a material adverse
effect on the Condition of the Company. The execution, delivery and performance
by the Company of the Merger Documents and the consummation by the Company
of
the transactions contemplated by this Agreement: (a) will not require any
authorization, consent or approval of, or filing or registration with, any
court
or governmental agency or instrumentality, except such as shall have been
obtained prior to the Closing, (b) will not cause the Company to violate or
contravene in any material respect (i) any provision of law, (ii) any rule
or
regulation of any agency or government, (iii) any order, judgment or decree
of
any court, or (iv) any provision of the Certificate of Incorporation or Bylaws
of the Company, (c) will not violate or be in conflict with, result in a breach
of or constitute (with or without notice or lapse of time, or both) a default
under, any indenture, loan or credit agreement, deed of trust, mortgage,
security agreement or other contract, agreement or instrument to which the
Company is a party or by which the Company or any of its properties is bound
or
affected, except as would not have a material adverse effect on the Condition
of
the Company, and (d) will not result in the creation or imposition of any
material Lien upon any property or asset of the Company.
2.7
Binding Obligations.
The
Merger Documents constitute the legal, valid and binding obligations of the
Company and are enforceable against the Company in accordance with their
respective terms, except as such
enforcement
is limited by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity.
-
4 -
2.8 Broker's and Finder's Fees.
No
Person has, or as a result of the transactions contemplated herein will have,
any right or valid claim against the Company, Parent, Acquisition Corp. or
any
Stockholder for any commission, fee or other compensation as a finder or broker,
or in any similar capacity, except as set forth in Schedule
2.8
hereof.
2.9
Financial Statements.
Attached hereto as Schedule
2.9
are the
Company's audited Consolidated Balance Sheet, Consolidated Statement of
operations, Consolidated Statement of Changes in Shareholders' Equity and
Consolidated Statement of Cash Flows as of and for the year ended December 31,
2005, and the Company's unaudited Consolidated Balance Sheet (the "Balance
Sheet") as of September 30, 2006 (the "Balance Sheet Date") and related
Statement of Operations, Consolidated Statement of Changes in Shareholders'
Equity and Consolidated Statement of Cash Flows as of and for the nine months
ended September 30, 2006. Such financial statements (i) are in accordance with
the books and records of the Company, (ii) present fairly in all material
respects the financial condition of the Company at the dates therein specified
and the results of its operations and changes in financial position for the
periods therein specified and (iii) have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a basis consistent
with prior accounting periods.
2.10
Absence of Undisclosed Liabilities.
The
Company has no material obligation or liability (whether accrued, absolute,
contingent, liquidated or otherwise, whether due or to become due), arising
out
of any transaction entered into at or prior to the Closing, except (a) as
disclosed in Schedule
2.10
and/or
Schedule
2.11
hereto,
(b) to the extent set forth on or reserved against in the Balance Sheet, (c)
current liabilities incurred and obligations under agreements entered into
in
the usual and ordinary course of business since the Balance Sheet Date, none
of
which (individually or in the aggregate) has had or will have a material adverse
effect on the Condition of the Company and (d) by the specific terms of any
written agreement, document or arrangement identified in the
Schedules.
2.11
Changes.
Since
the Balance Sheet Date, except as disclosed in Schedule
2.11
hereto,
the Company has not (a) incurred any debts, obligations or liabilities,
absolute, accrued, contingent or otherwise, whether due or to become due, except
for fees, expenses and liabilities incurred in connection with the Merger and
related transactions and current liabilities incurred in the usual and ordinary
course of business, (b) discharged or satisfied any Liens other than those
securing, or paid any obligation or liability other than, current liabilities
shown on the Balance Sheet and current liabilities incurred since the Balance
Sheet Date, in each case in the usual and ordinary course of business, (c)
mortgaged, pledged or subjected to Lien any of its assets, tangible or
intangible, other than in the usual and ordinary course of business, (d) sold,
transferred or leased any of its assets, except in the usual and ordinary course
of business, (e) cancelled or compromised any debt or claim, or waived or
released any right, of material value, (f) suffered any physical damage,
destruction or loss (whether or not covered by insurance) materially
and
adversely
affecting the Condition of the Company, or (g) entered into any transaction
other than in the usual and ordinary course of business.
2.12
Title to Property and Encumbrances.
Except
as disclosed in Schedule
2.12
hereto,
the Company has good, valid and indefeasible marketable title to all properties
and assets used in the conduct of its business (except for property held under
valid and subsisting leases which are in full force and effect and which are
not
in default) free of all Liens and other encumbrances, except Permitted Liens
and
such ordinary and customary imperfections of title, restrictions and
encumbrances as do not, individually or in the aggregate, materially detract
from the value of the property or assets or materially impair the use made
thereof by the Company in its business. Without limiting the generality of
the
foregoing, the Company has good and indefeasible title to all of its properties
and assets reflected in the Balance Sheet, except for property disposed of
in
the usual and ordinary course of business since the Balance Sheet Date and
for
property held under valid and subsisting leases which are in full force and
effect and which are not in default.
2.13
Litigation.
Except
as set forth on Schedule
2.13,
there
is no legal action, suit, arbitration or other legal, administrative or other
governmental proceeding pending or, to the best knowledge of the Company,
threatened against or affecting the Company or its properties, assets or
business, and after reasonable investigation, the Company is not aware of any
incident, transaction, occurrence or circumstance that might reasonably be
expected to result in or form the basis for any such action, suit, arbitration
or other proceeding. The Company is not in default with respect to any order,
writ, judgment, injunction, decree, determination or award of any court or
any
governmental agency or instrumentality or arbitration
authority.
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5 -
2.14 Patents, Trademarks, Etc.
Schedule
2.14
sets
forth a list of all United States and foreign patents, trademarks, trade names,
copyrights, and applications therefor used by the Company exclusively in and
material to the conduct of its business (the "Patent and Trademark Rights").
Except as disclosed in Schedule
2.14,
(a) the
Company owns or possesses adequate licenses or other valid rights to use all
Patent and Trademark Rights; and (b) to the Company's knowledge, the conduct
of
its business as now being conducted does not conflict with any valid patents,
trademarks, trade names or copyrights of others in any way which has a material
adverse effect on the business or financial condition of the Company or its
business.
3.
Representations and Warranties of Parent and Acquisition
Corp.
Parent
and Acquisition Corp. jointly and severally represent and warrant to the
Company, as follows:
3.1
Organization and Standing.
Parent
is a corporation duly organized and existing in good standing under the laws
of
the State of Colorado. Acquisition Corp. is a corporation duly organized and
existing in good standing under the laws of the State of Colorado. Parent and
Acquisition Corp. have heretofore delivered to the Company complete and correct
copies of their respective Articles of Incorporation and Bylaws as now in
effect. Parent and Acquisition Corp. have full corporate power and authority
to
carry on their respective businesses as they are now being conducted and as
now
proposed to be conducted and to own or lease their respective properties and
assets. Except as disclosed in Schedule
3.1
hereto,
neither Parent nor Acquisition Corp. has any subsidiaries (except Parent as
the
sole stockholder of Acquisition Corp.) or direct or indirect interest (by way
of
stock ownership or otherwise) in any firm, corporation, limited liability
company, partnership, association or business. Parent owns all of the issued
and
outstanding capital stock of Acquisition Corp. free and clear of all Liens,
and
Acquisition Corp. has no outstanding options, warrants or rights to purchase
capital stock or other equity securities of Acquisition Corp., other than the
capital stock owned by Parent. Unless the context otherwise requires, all
references in this Section 3 to the "Parent" shall be treated as being a
reference to the Parent and Acquisition Corp. taken together as one
enterprise.
3.2
Corporate Authority.
Each of
Parent and/or Acquisition Corp. (as the case may be) has full corporate power
and authority to enter into the Merger Documents and the other agreements to
be
made pursuant to the Merger Documents, and to carry out the transactions
contemplated hereby and thereby. All corporate acts and proceedings required
for
the authorization, execution, delivery and performance of the Merger Documents
and such other agreements and documents by Parent and/or Acquisition Corp.
(as
the case may be) have been duly and validly taken or will have been so taken
prior to the Closing. Each of the Merger Documents constitutes a legal, valid
and binding obligation of Parent and/or Acquisition Corp. (as the case may
be),
each enforceable against them in accordance with their respective terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization
or
other similar laws affecting creditors' rights generally and by general
principles of equity.
3.3
Broker's and Finder's Fees.
Except
for the firms engaged by the Company described in Section 2.8, no person, firm,
corporation or other entity is entitled by reason of any act or omission of
Parent or Acquisition Corp. to any broker's or finder's fees, commission or
other similar compensation with respect to the execution and delivery of this
Agreement or the Certificate of Merger, or with respect to the consummation
of
the transactions contemplated
hereby
or
thereby. Parent and Acquisition Corp. jointly and severally indemnify and hold
Company harmless from and against any and all loss, claim or liability arising
out of any such claim from any other Person who claims he, she or it introduced
Parent or Acquisition Corp. to, or assisted them with, the transactions
contemplated by or described herein.
3.4
Capitalization of Parent.
The
authorized capital stock of Parent consists of (a) 50,000,000 shares of common
stock, no par value per share (the "Parent Common Stock"), of which not more
than 2,500,000 shares (plus that number of shares necessary to adjust for any
averaging up resulting from the reverse split of Parent described in the
Definitive Proxy of Parent, filed December 4, 2006) will be, prior to the
Effective Time, issued and outstanding. Parent has no outstanding options,
rights or commitments to issue shares of Parent Common Stock or any other Equity
Security of Parent or Acquisition Corp., and there are no outstanding securities
convertible or exercisable into or exchangeable for shares of Parent Common
Stock or any other Equity Security of Parent or Acquisition Corp. There is
no
voting trust, agreement or arrangement among any of the beneficial holders
of
Parent Common Stock affecting the nomination or election of directors or the
exercise of the voting rights of Parent Common Stock. All outstanding shares
of
the capital stock of Parent are validly issued and outstanding, fully paid
and
nonassessable, and none of such shares have been issued in violation of the
preemptive rights of any person.
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6 -
3.5 Acquisition Corp.
Acquisition Corp. is a wholly-owned subsidiary of Parent that was formed
specifically for the purpose of the Merger and that has not conducted any
business or acquired any property, and will not conduct any business or acquire
any property prior to the Closing Date, except in preparation for and otherwise
in connection with the transactions contemplated by this Agreement, the
Certificate of Merger and the other agreements to be made pursuant to or in
connection with this Agreement and the Certificate of Merger.
3.6
Validity of Shares.
The
15,530,911 shares of Parent Common Stock to be issued at the Closing pursuant
to
this Agreement, when issued and delivered in accordance with the terms hereof,
the Certificate of Merger, and the Statement of Merger shall be duly and validly
issued, fully paid and nonassessable. Based in part on the representations
and
warranties of the Stockholders as contemplated by Section 4 hereof and assuming
the accuracy thereof, the issuance of the Parent Common Stock upon the Merger
pursuant to this Agreement will be exempt from the registration and prospectus
delivery requirements of the Securities Act and from the qualification or
registration requirements of any applicable state blue sky or securities
laws.
3.7
SEC Reporting and Compliance.
(a)
Parent filed a registration statement on Form 10-SB under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), on April 17, 2006, which
became effective sixty (60) days thereafter in accordance with Section 12(g)
of
the Exchange Act and the rule promulgated thereunder. Since that date, Parent
has filed with the Commission all reports required to be filed by companies
registered pursuant to Section 12(g) of the Exchange Act.
(b)
Parent has provided to the Company true and complete copies of all annual
reports on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on
Form 8-K and other statements reports and filings (collectively, the "Parent
SEC
Documents") filed by the Parent with the Commission. None of the Parent SEC
Documents, as of their respective dates, contained any untrue statement of
a
material fact or omitted to state a material fact necessary in order to make
the
statements contained therein not misleading.
(c)
Parent has not filed, and nothing has occurred with respect to which Parent
would be required to file, any report on Form 8-K since December 4, 2006. Prior
to and until the Closing, Parent will provide to the Company copies of any
and
all amendments or supplements to the Parent SEC Documents filed with the
Commission since December 4, 2006 and any and all subsequent statements, reports
and filings filed by the Parent with the Commission or delivered to the
stockholders of Parent.
(d)
Parent is not an investment company within the meaning of Section 3 of the
Investment Company Act.
(e)
The
shares of Parent Common Stock are quoted on the Over-the-Counter (OTC) Bulletin
Board under the symbol "XDER" and Parent is in compliance in all material
respects with all rules and regulations of the OTC Bulletin Board applicable
to
it and the Parent Stock. The OTC Bulletin Board has cleared the Form 211 filed
by Parent pursuant to Rule 15c2-11(a)(5) of the Exchange Act.
(f)
Between the date hereof and the Closing Date, Parent shall continue to satisfy
the filing requirements of the Exchange Act and all other requirements of
applicable securities laws and the OTC Bulletin Board.
(g)
To
the best knowledge of Parent, Parent has otherwise complied with the Securities
Act of 1933, as amended (the "Securities Act"), Exchange Act and all other
applicable federal and state securities laws.
3.8
Financial Statements.
The
balance sheets, and statements of operations, statements of changes in
shareholders' equity and statements of cash flows contained in the Parent SEC
Documents (the "Parent Financial Statements") (i) have been prepared in
accordance with GAAP applied on a basis consistent with prior periods (and,
in
the case of unaudited financial information, on a basis consistent with year-end
audits), (ii) are in accordance with the books and records of the Parent, and
(iii) present fairly in all material respects the financial condition of the
Parent at the dates therein specified and the results of its operations and
changes in financial position for the periods
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7 -
therein
specified. The financial statements included in the Annual Report on Form 10-KSB
for the fiscal years ended December 31, 2004 and December 31, 2005, are audited
by, and include the related report of Xxxxxxxxxx & Associates, Parent's
independent certified public accountants. The financial information included
in
the Quarterly Report on Form 10-QSB for the quarter ended September, 30, 2006,
is unaudited, but reflects all adjustments (including normally recurring
accounts) that Parent considers necessary for a fair presentation of such
information and have been prepared in accordance with generally accepted
accounting principles, consistently applied.
3.9
Governmental Consents.
All
consents, approvals, orders, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with any federal or
state
governmental authority on the part of Parent or Acquisition Corp. required
in
connection with the consummation of the Merger shall have been obtained prior
to, and be effective as of, the Closing.
3.10
Compliance with Laws and Instruments.
The
execution, delivery and performance by Parent and/or Acquisition Corp. of this
Agreement, the Certificate of Merger and the other agreements to be made by
Parent or Acquisition Corp. pursuant to or in connection with this Agreement
or
the Certificate of Merger and the consummation by Parent and/or Acquisition
Corp. of the transactions contemplated by the Merger Documents will not cause
Parent and/or Acquisition Corp. to violate or contravene (i) any provision
of
law, (ii) any rule or regulation of any agency or government, (iii) any order,
judgment or decree of any court, or (v) any provision of their respective
articles or certificate of incorporation or Bylaws as amended and in effect
on
and as of the Closing Date and will not violate or be in conflict with, result
in a breach of or constitute (with or without notice or lapse of time, or both)
a default under any indenture, loan or credit agreement, deed of trust,
mortgage, security agreement or other agreement or contract to which Parent
or
Acquisition Corp. is a party or by which Parent and/or Acquisition Corp. or
any
of their respective properties is bound.
3.11
No General Solicitation.
In
issuing Parent Common Stock in the Merger hereunder, neither Parent nor anyone
acting on its behalf has offered to sell the Parent Common Stock by any form
of
general solicitation or advertising.
3.12
Binding Obligations.
The
Merger Documents constitute the legal, valid and binding obligations of the
Parent and Acquisition Corp., and are enforceable against the Parent and
Acquisition Corp., in accordance with their respective terms, except as such
enforcement is limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.
3.13
Absence of Undisclosed Liabilities.
Neither
Parent nor Acquisition Corp. has any obligation or liability (whether accrued,
absolute, contingent, liquidated or otherwise, whether due or to become due),
arising out of any transaction entered into at or prior to the Closing, except
(a) as disclosed in the Parent SEC Documents, (b) to the extent set forth on
or
reserved against in the audited balance sheet of Parent as of December 31,
2005
(the "Parent Balance Sheet") or the Notes to the Parent Financial Statements,
(c) current liabilities incurred and obligations under agreements entered into
in the usual and ordinary course of business since September 30, 2006 (the
"Parent Balance Sheet Date"), none of which (individually or in the aggregate)
materially and adversely affects the condition (financial or otherwise),
properties, assets, liabilities, business operations, results of operations
or
prospects of the Parent or Acquisition Corp., taken as a whole (the "Condition
of the Parent"), and (d) by the specific terms of any written agreement,
document or arrangement attached as an exhibit to the Parent SEC
Documents.
3.14
Changes.
Since
the Parent Balance Sheet Date, except as disclosed in the Parent SEC Documents,
the Parent has not (a) incurred any debts, obligations or liabilities, absolute,
accrued or, to the Parent's knowledge, contingent, whether due or to become
due,
except for current liabilities incurred in the usual and ordinary course of
business, (b) discharged or satisfied any Liens other than those securing,
or
paid any obligation or liability other than, current liabilities shown on the
Parent Balance Sheet and current liabilities incurred since the Parent Balance
Sheet Date, in each case in the usual and ordinary course of business, (c)
mortgaged, pledged or subjected to Lien any of its assets, tangible or
intangible, other than in the usual and ordinary course of business, (d) sold,
transferred or leased any of its assets, except in the usual and ordinary course
of business, (e) cancelled or compromised any debt or claim, or waived or
released any right of material value, (f) suffered any physical damage,
destruction or loss (whether or not covered by insurance) which could reasonably
be expected to have a material adverse effect on the Condition of the Parent,
(g) entered into any transaction other than in the usual and ordinary course
of
business, (h)
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8 -
encountered
any labor union difficulties, (i) made or granted any wage or salary increase
or
made any increase in the amounts payable under any profit sharing, bonus,
deferred compensation, severance pay, insurance, pension, retirement or other
employee benefit plan, agreement or arrangement, other than in the ordinary
course of business consistent with past practice, or entered into any employment
agreement, (j) issued or sold any shares of capital stock, bonds, notes,
debentures or other securities or granted any options (including employee stock
options), warrants or other rights with respect thereto, (k) declared or paid
any dividends on or made any other distributions with respect to, or purchased
or redeemed, any of its outstanding capital stock, (l) suffered or experienced
any change in, or condition affecting, the financial condition of the Parent
other than changes, events or conditions in the usual and ordinary course of
its
business, none of which (either by itself or in conjunction with all such other
changes, events and conditions) could reasonably be expected to have a material
adverse effect on the Condition of the Parent, (m) made any change in the
accounting principles, methods or practices followed by it or depreciation
or
amortization policies or rates theretofore adopted, (n) made or permitted any
amendment or termination of any material contract, agreement or license to
which
it is a party, (o) suffered any material loss not reflected in the Parent
Balance Sheet or its statement of income for the year ended on the Parent
Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment
of,
bonuses or special compensation of any kind or any severance or termination
pay
to any present or former officer, director, employee, stockholder or consultant,
(q) made or agreed to make any charitable contributions or incurred any
non-business expenses in excess of $500 in the aggregate, or (r) entered into
any agreement, or otherwise obligated itself, to do any of the
foregoing.
3.15
Tax Returns and Audits.
All
required federal, state and local Tax Returns of the Parent have been accurately
prepared in all material respects and duly and timely filed, and all federal,
state and local Taxes required to be paid with respect to the periods covered
by
such returns have been paid to the extent that the same are material and have
become due, except where the failure so to file or pay could not reasonably
be
expected to have a material adverse effect upon the Condition of the Parent.
The
Parent is not and has not been delinquent in the payment of any Tax. The Parent
has not had a Tax deficiency assessed against it. None of the Parent's federal
income tax returns nor any state or local income or franchise tax returns has
been audited by governmental authorities. The reserves for Taxes reflected
on
the Parent Balance Sheet are sufficient for the payment of all unpaid Taxes
payable by the Parent with respect to the period ended on the Parent Balance
Sheet Date. There are no federal, state, local or foreign audits, actions,
suits, proceedings, investigations, claims or administrative proceedings
relating to Taxes or any Tax Returns of the Parent now pending, and the Parent
has not received any notice of any proposed audits, investigations, claims
or
administrative proceedings relating to Taxes or any Tax Returns.
3.16
Employee Benefit Plans; ERISA.
(a)
Except as disclosed in the Parent SEC Documents, there are no "employee benefit
plans" (within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") nor any other employee benefit or
fringe benefit arrangements, practices, contracts, policies or programs other
than programs merely involving the regular payment of wages, commissions, or
bonuses established, maintained or contributed to by the Parent. Any plans
listed in the Parent SEC Documents are hereinafter referred to as the "Parent
Employee Benefit Plans."
(b)
Any
current and prior material documents, including all amendments thereto, with
respect to each Parent Employee Benefit Plan have been given to the Company
or
its advisors.
(c)
All
Parent Employee Benefit Plans are in material compliance with the applicable
requirements of ERISA, the Code and any other applicable state, federal or
foreign law.
(d)
There
are no pending, or to the knowledge of the Parent, threatened, claims or
lawsuits which have been asserted or instituted against any Parent Employee
Benefit Plan, the assets of any of the trusts or funds under the Parent Employee
Benefit Plans, the plan sponsor or the plan administrator of any of the Parent
Employee Benefit Plans or against any fiduciary of a Parent Employee Benefit
Plan with respect to the operation of such plan.
(e)
There
is no pending, or to the knowledge of the Parent, threatened, investigation
or
pending or possible enforcement action by the Pension Benefit Guaranty
Corporation, the Department of Labor, the
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9 -
Internal
Revenue Service or any other government agency with respect to any Parent
Employee Benefit Plan.
(f)
No
actual or, to the knowledge of Parent, contingent liability exists with respect
to the funding of any Parent Employee Benefit Plan or for any other expense
or
obligation of any Parent Employee Benefit Plan, except as disclosed on the
financial statements of the Parent or the Parent SEC Documents, and to the
knowledge of the Parent, no contingent liability exists under ERISA with respect
to any "multi-employer plan," as defined in Section 3(37) or Section 4001(a)(3)
of ERISA.
3.17
Litigation.
There
is no legal action, suit, arbitration or other legal, administrative or other
governmental proceeding pending or, to the knowledge of the Parent, threatened
against or affecting the Parent or Acquisition Corp. or their properties, assets
or business. To the knowledge of the Parent, neither Parent nor Acquisition
Corp. is in default with respect to any order, writ, judgment, injunction,
decree, determination or award of any court or any governmental agency or
instrumentality or arbitration authority.
3.18
Interested Party Transactions.
Except
as disclosed in the Parent SEC Documents, no officer, director or stockholder
of
the Parent or any Affiliate or "associate" (as such term is defined in Rule
405
under the Securities Act) of any such Person or the Parent has or has had,
either directly or indirectly, (a) an interest in any Person that (i) furnishes
or sells services or products that are furnished or sold or are proposed to
be
furnished or sold by the Parent or (ii) purchases from or sells or furnishes
to
the Parent any goods or services, or (b) a beneficial interest in any contract
or agreement to which the Parent is a party or by which it may be bound or
affected.
3.19
Questionable Payments.
Neither
the Parent, Acquisition Corp. nor to the knowledge of the Parent, any director,
officer, agent, employee or other Person associated with or acting on behalf
of
the Parent or Acquisition Corp., has used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payments to government
officials or employees from corporate funds; established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; made any false
or fictitious entries on the books of record of any such corporations; or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
3.20
Obligations to or by Stockholders.
Except
as disclosed in the Parent SEC Documents, the Parent has no liability or
obligation or commitment to any stockholder of Parent or any Affiliate or
"associate" (as such term is defined in Rule 405 under the Securities Act)
of
any stockholder of Parent, nor does any stockholder of Parent or any such
Affiliate or associate have any liability, obligation or commitment to the
Parent.
3.21
Assets and Contracts.
Except
as expressly set forth in a schedule to this Agreement, the Parent Balance
Sheet
or the notes thereto, the Parent is not a party to any written or oral agreement
not made in the ordinary course of business that is material to the Parent.
Parent does not own any real property. Parent is not a party to or otherwise
barred by any written or oral (a) agreement with any labor union, (b) agreement
for the purchase of fixed assets or for the purchase of materials, supplies
or
equipment in excess of normal operating requirements, (c) agreement for the
employment of any officer, individual employee or other Person on a full-time
basis or any agreement with any Person for consulting services, (d) bonus,
pension, profit sharing, retirement, stock purchase, stock option, deferred
compensation, medical, hospitalization or life insurance or similar plan,
contract or understanding with respect to any or all of the employees of Parent
or any other Person, (e) indenture, loan or credit agreement, note agreement,
deed of trust, mortgage, security agreement, promissory note or other agreement
or instrument relating to or evidencing Indebtedness for Borrowed Money or
subjecting any asset or property of Parent to any Lien or evidencing any
Indebtedness, (f) guaranty of any Indebtedness, (g) lease or agreement under
which Parent is lessee of or holds or operates any property, real or personal,
owned by any other Person, (h) lease or agreement under which Parent is lessor
or permits any Person to hold or operate any property, real or personal, owned
or controlled by Parent, (i) agreement granting any preemptive right, right
of
first refusal or similar rightto any Person, (j) agreement or arrangement with
any Affiliate or any "associate" (as such term is defined in Rule 405 under
the
Securities Act) of Parent or any present or former officer, director or
stockholder of Parent, (k) agreement obligating Parent to pay any royalty or
similar charge for the use or exploitation of any tangible or intangible
property, (1) covenant not to compete or other restriction on its ability to
conduct a business or engage in any other activity, (m) distributor, dealer,
manufacturer's representative, sales agency, franchise or advertising contract
or commitment, (n) agreement to register securities under the Securities Act,
(o) collective bargaining agreement, or
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10 -
(p)
agreement or other commitment or arrangement with any Person continuing for
a
period of more than two months from the Closing Date that involves an
expenditure or receipt by Parent in excess of $1,000. The Parent maintains
no
insurance policies and insurance coverage of any kind with respect to Parent,
its business, premises, properties, assets, employees and agents. Schedule
3.21
contains
a true and complete list and description of each bank account, savings account,
other deposit relationship and safety deposit box of Parent, including the
name
of the bank or other depository, the account number and the names of the
individuals having signature or other withdrawal authority with respect thereto.
Except as disclosed on Schedule
3.21,
no
consent of any bank or other depository is required to maintain any bank
account, other deposit relationship or safety deposit box of Parent in effect
following the consummation of the Merger and the transactions contemplated
hereby. Parent has furnished to the Company true and complete copies of all
agreements and other documents disclosed or referred to in Schedule
3.21
or the
Parent Balance Sheet or the notes thereto, as well as any additional agreements
or documents, requested by the Company.
3.22
Employees.
Other
than pursuant to ordinary arrangements of employment compensation, Parent is
not
under any obligation or liability to any officer, director, employee or
Affiliate of Parent.
3.23
Disclosure.
There
is no fact relating to Parent that Parent has not disclosed to the Company
in
writing that materially and adversely affects nor, insofar as Parent can now
foresee, will materially and adversely affect, the condition (financial or
otherwise), properties, assets, liabilities, business operations, results of
operations or prospects of Parent. No representation or warranty by Parent
herein and no information disclosed in the schedules or exhibits hereto by
Parent contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein
not
misleading.
4.
Additional Representations, Warranties and Covenants of the Stockholders.
Promptly
after the Effective Time, Parent shall cause to be mailed to each holder of
record of Company Common Stock that was converted pursuant to Section 1.5 hereof
into the right to receive Parent Common Stock a letter of transmittal ("Letter
of Transmittal"), in substantially the form attached hereto as Exhibit
F,
which
shall contain additional representations, warranties and covenants of such
Stockholder, including, without limitation, that (i) such Stockholder has full
right, power and authority to deliver such Company Common Stock and Letter
of
Transmittal, (ii) the delivery of such Company Common Stock will not violate
or
be in conflict with, result in a breach of or constitute a default under, any
indenture, loan or credit agreement, deed of trust, mortgage, security agreement
or other agreement or instrument to which such Stockholder is bound or affected,
(iii) such Stockholder has good, valid and marketable title to all shares of
Company Common Stock indicated in such Letter of Transmittal and that such
Stockholder is not affected by any voting trust, agreement or arrangement
affecting the voting rights of such Company Common Stock, (iv) such Stockholder
is acquiring Parent Common Stock for investment purposes, and not with a view
to
selling or otherwise distributing such Parent Common Stock in violation of
the
Securities Act or the securities laws of any state, and (v) such Stockholder
has
had an opportunity to ask and receive answers to any questions such Stockholder
may have had concerning the terms and conditions of the Merger and the Parent
Common Stock and has obtained any additional information that such Stockholder
has requested. Delivery shall be effected, and risk of loss and title to the
Parent Common Stock shall pass, only upon delivery to the Parent (or an agent
of
the Parent) of (x) certificates evidencing ownership thereof as contemplated
by
Section 1.6 hereof (or affidavit of lost certificate), and (y) the Letter of
Transmittal containing the representations, warranties and covenants
contemplated by this Section 4.
5.
Conduct of Businesses Pending the Merger.
5.1
Conduct of Business by the Company Pending the Merger.
Prior
to the Effective Time, unless Parent or Acquisition Corp. shall otherwise agree
in writing or as otherwise contemplated by this Agreement:
(a)
the
business of the Company shall be conducted only in the ordinary
course;
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11 -
(b) the Company shall not (i) directly or indirectly redeem, purchase or
otherwise acquire or agree to redeem, purchase or otherwise acquire any shares
of its capital stock; (ii) amend its Certificate of Incorporation or Bylaws;
or
(iii) split, combine or reclassify the outstanding Company Common Stock or
declare, set aside or pay any dividend payable in cash, stock or property or
make any distribution with respect to any such stock;
(c)
the
Company shall not (i) issue or agree to issue any additional shares of, or
options, warrants or rights of any kind to acquire any shares of, Company Common
Stock; (ii) acquire or dispose of any fixed assets or acquire or dispose of
any
other substantial assets other than in the ordinary course of business; (iii)
incur additional Indebtedness or any other liabilities or enter into any other
transaction other than in the ordinary course of business; (iv) enter into
any
contract, agreement, commitment or arrangement with respect to any of the
foregoing; or (v) except as contemplated by this Agreement, enter into any
contract, agreement, commitment or arrangement to dissolve, merge, consolidate
or enter into any other material business combination;
(d)
the
Company shall use its best efforts to preserve intact the business organization
of the Company, to keep available the service of its present officers and key
employees, and to preserve the good will of those having business relationships
with it;
(e)
the
Company will not, nor will it authorize any director or authorize or permit
any
officer or employee or any attorney, accountant or other representative retained
by it to, make, solicit, encourage any inquiries with respect to, or engage
in
any negotiations concerning, any Acquisition Proposal (as defined below). The
Company will promptly advise Parent orally and in writing of any such inquiries
or proposals (or requests for information) and the substance thereof. As used
in
this paragraph, "Acquisition Proposal" shall mean any proposal for a merger
or
other business combination involving the Company or for the acquisition of
a
substantial equity interest in it or any material assets of it other than as
contemplated by this Agreement. The Company will immediately cease and cause
to
be terminated any existing activities, discussions or negotiations with any
person conducted heretofore with respect to any of the foregoing;
and
(f)
the
Company will not enter into any new employment agreements with any of its
officers or employees or grant any increases in the compensation or benefits
of
its officers and employees other than increases in the ordinary course of
business and consistent with past practice or amend any employee benefit plan
or
arrangement.
5.2
Conduct of Business by Parent and Acquisition Corp.
Pending
the Merger, prior to the Effective Time, unless the Company shall otherwise
agree in writing or as otherwise contemplated by this Agreement:
(a)
the
business of Parent and Acquisition Corp. shall be conducted only in the ordinary
course; provided, however, that Parent shall take the steps necessary to have
discontinued its existing business without liability to Parent or Acquisition
Corp. as of the Closing Date;
(b)
neither Parent nor Acquisition Corp. shall (A) directly or indirectly redeem,
purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire
any shares of its capital stock; (B) amend its articles or certificate of
incorporation or Bylaws; or (C) split, combine or reclassify its capital stock
or declare, set aside or pay any dividend payable in cash, stock or property
or
make any distribution with respect to such stock; and
(c)
neither Parent nor Acquisition Corp. shall (A) issue or agree to issue any
additional shares of, or options, warrants or rights of any kind to acquire
shares of, its capital stock; (B) acquire or dispose of any assets other than
in
the ordinary course of business (except for dispositions in connection with
Section 5.2(a) hereof); (C) incur additional Indebtedness or any other
liabilities or enter into any other transaction except in the ordinary course
of
business; (D) enter into any contract, agreement, commitment or arrangement
with
respect to any of the foregoing, or (E) except as contemplated by this
Agreement, enter into any contract, agreement, commitment or arrangement to
dissolve, merge; consolidate or enter into any other material business contract
or enter into any negotiations in connection therewith.
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(d) neither Parent nor Acquisition Corp. will, nor will they authorize any
director or authorize or permit any officer or employee or any attorney,
accountant or other representative retained by them to, make, solicit, encourage
any inquiries with respect to, or engage in any negotiations concerning, any
Acquisition Proposal (as defined below for purposes of this paragraph). Parent
will promptly advise the Company orally and in writing of any such inquiries
or
proposals (or requests for information) and the substance thereof. As used
in
this paragraph, "Acquisition Proposal" shall mean any proposal for a merger
or
other business combination involving the Parent or Acquisition Corp. or for
the
acquisition of a substantial equity interest in either of them or any material
assets of either of them other than as contemplated by this Agreement. Parent
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any person conducted heretofore with respect
to
any of the foregoing; and
(e)
neither the Parent nor Acquisition Corp. will enter into any new employment
agreements with any of their officers or employees or grant any increases in
the
compensation or benefits of their officers or employees.
6.
Additional Agreements.
6.1
Access and Information.
The
Company, Parent and Acquisition Corp. shall each afford to the other and to
the
other's accountants, counsel and other representatives full access during normal
business hours throughout the period prior to the Effective Time of all of
its
properties, books, contracts, commitments and records (including but not limited
to tax returns) and during such period, each shall furnish promptly to the
other
all information concerning its business, properties and personnel as such other
party may reasonably request; provided, that no investigation pursuant to this
Section 6.1 shall affect any representations or warranties made herein. Each
party shall hold, and shall cause its employees and agents to hold, in
confidence all such information (other than such information which (i) is
already in such party's possession or (ii) becomes generally available to the
public other than as a result of a disclosure by such party or its directors,
officers, managers, employees, agents or advisors, or (iii) becomes available
to
such party on a non-confidential basis from a source other than a party hereto
or its advisors, provided that such source is not known by such party to be
bound by a confidentiality agreement with or other obligation of secrecy to
a
party hereto or another party until such time as such information is otherwise
publicly available; provided, however, that (A) any such information may be
disclosed to such party's directors, officers, employees and representatives
of
such party's advisors who need to know such information for the purpose of
evaluating the transactions contemplated hereby (it being understood that such
directors, officers, employees and representatives shall be informed by such
party of the confidential nature of such information), (B) any disclosure of
such information may be made as to which the party hereto furnishing such
information has consented in writing, and (C) any such information may be
disclosed pursuant to a judicial, administrative or governmental order or
request; provided, however, that the requested party will promptly so notify
the
other party so that the other party may seek a protective order or appropriate
remedy and/or waive compliance with this Agreement and if such protective order
or other remedy is not obtained or the other party waives compliance with this
provision, the requested party will furnish only that portion of such
information which is legally required and will exercise its best efforts to
obtain a protective order or other reliable assurance that confidential
treatment will be accorded the information furnished). If this Agreement is
terminated, each party will deliver to the other all documents and other
materials (including copies) obtained by such party or on its behalf from the
other party as a result of this Agreement or in connection herewith, whether
so
obtained before or after the execution hereof.
6.2
Additional Agreements.
Subject
to the terms and conditions herein provided, each of the parties hereto agrees
to use its commercially reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its commercially
reasonable efforts to satisfy the conditions precedent to the obligations of
any
of the parties hereto to obtain all necessary waivers, and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed
with
the Merger as expeditiously as possible). In order to obtain any necessary
governmental or regulatory action or non-action, waiver, consent, extension
or
approval, each of Parent, Acquisition Corp. and the Company agrees to take
all
reasonable actions and to enter into all reasonable agreements as may be
necessary to obtain timely governmental or regulatory approvals and to take
such
further action in connection therewith as may be necessary. In case at any
time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and/or directors of
Parent, Acquisition Corp. and the Company shall take all such necessary
action.
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6.3 Publicity.
No
party shall issue any press release or public announcement pertaining to the
Merger that has not been agreed upon in advance by Parent and the Company,
except as Parent reasonably determines to be necessary in order to comply with
the rules of the Commission or of the principal trading exchange or market
for
Parent Common Stock; provided, that in such case Parent will use its best
efforts to allow the Company to review and reasonably approve any press release
or public announcement prior to its release.
6.4
Appointment of Directors.
Parent
shall accept the resignation of the current officers and directors of Parent
as
provided by Section 7.2(f)(5) hereof, and shall cause the persons listed as
directors in Exhibit
G
hereto
to be elected and appointed to the Board of Directors of Parent, in each case
immediately upon the Effective Time, except that the resignation and appointment
of certain directors shall be delayed until compliance with Section 14(f) of
the
Exchange Act, and the rules promulgated thereunder, is obtained, as more
particularly set forth in Section 7.2(f)(5) hereof. At the first annual meeting
of Parent stockholders and thereafter, the election of members of Parent's
Board
of Directors shall be accomplished in accordance with the Bylaws of
Parent.
6.5
INTENTIONALLY OMITTED.
6.6
Registration Rights and Lock-Up Agreement.
As of
the Effective Time, Parent shall enter into a Registration Rights and Lock-Up
Agreement with the Stockholders on substantially the terms set forth in the
form
of agreement attached as Exhibit
H.
6.7
INTENTIONALLY OMITTED.
7.
Conditions of Parties' Obligations.
7.1
Company Obligations.
The
obligations of Parent and Acquisition Corp. under this Agreement, the
Certificate of Merger and the Statement of Merger are subject to the fulfillment
at or prior to the Closing of the following conditions, any of which may be
waived, in whole or in part, by Parent.
(a)
No
Errors, etc. The representations and warranties of the Company under this
Agreement shall be deemed to have been made again on the Closing Date and shall
then be true and correct in all material respects.
(b)
Compliance with Agreement. The Company shall have performed and complied in
all
material respects with all agreements and conditions required by this Agreement
to be performed or complied with by it on or before the Closing
Date.
(c)
No
Default or Adverse Change. There shall not exist on the Closing Date any Default
or Event of Default or any event or condition that, with the giving of notice
or
lapse of time, or both, would constitute a Default or Event of Default, and
since the Balance Sheet Date, there shall have been no material adverse change
in the Condition of the Company.
(d)
The
Company shall have delivered to Parent a certificate dated the Closing Date,
executed on its behalf by Xxxxxxx X. Xxxxxxx, the President and Chief Executive
Officer of the Company, or Xxxx X. Xxxxxxxxxx, III, the Chairman of the Company,
certifying the satisfaction of the conditions specified in paragraphs (a),
(b)
and (c) of this Section 7.1.
(e)
No
Restraining Action. No action or proceeding before any court, governmental
body
or agency shall have been threatened, asserted or instituted to restrain or
prohibit, or to obtain substantial damages in respect of, this Agreement or
the
Certificate of Merger or the carrying out of the transactions contemplated
by
the Merger Documents.
(f)
Supporting Documents. Parent and Acquisition Corp. shall have received the
following:
(1)
Copies of resolutions of the Board of Directors and the Stockholders of the
Company, certified by the Secretary of the Company, authorizing and approving
the execution,
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14 -
delivery
and performance of the Merger Documents and all other documents and instruments
to be delivered pursuant hereto and thereto.
(2)
A
certificate of incumbency executed by the Secretary of the Company certifying
the names, titles and signatures of the officers authorized to execute any
documents referred to in this Agreement and further certifying that the
Certificate of Incorporation and Bylaws of the Company delivered to Parent
and
Acquisition Corp. at the time of the execution of this Agreement have been
validly adopted and have not been amended or modified.
(3)
A
certificate, dated the Closing Date, executed by the Company's Secretary,
certifying that, except for the filing of the Statement of Merger and
Certificate of Merger: (i) all consents, authorizations, orders and approvals
of, and filings and registrations with, any court, governmental body or
instrumentality that are required for the execution and delivery of this
Agreement , the Statement of Merger, the Certificate of Merger and the
consummation of the Merger shall have been duly made or obtained, and all
material consents by third parties that are required for the Merger have been
obtained; and (ii) no action or proceeding before any court, governmental body
or agency has been threatened, asserted or instituted to restrain or prohibit,
or to obtain substantial damages in respect of, this Agreement, the Statement
of
Merger, the Certificate of Merger or the carrying out of the transactions
contemplated by the Merger Documents.
(4)
Evidence as of a recent date of the good standing and corporate existence of
the
Company issued by the Secretary of State of the State of Delaware and evidence
that the Company is qualified to transact business as a foreign corporation
and
is in good standing in each other state of the United States and in each other
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary.
(5)
Such
additional supporting documentation and other information with respect to the
transactions contemplated hereby as Parent and Acquisition Corp. may reasonably
request.
(g)
The
Private Offering shall have closed immediately prior to the Effective
Time.
(h)
Proceedings and Documents. All corporate and other proceedings and actions
taken
in connection with the transactions contemplated hereby and all certificates,
opinions, agreements, instruments and documents mentioned herein or incident
to
any such transactions shall be reasonably satisfactory in form and substance
to
Parent and Acquisition Corp. The Company shall furnish to Parent and Acquisition
Corp. such supporting documentation and evidence of the satisfaction of any
or
all of the conditions precedent specified in this Section 7.1 as Parent or
its
counsel may reasonably request.
7.2
Parent and Acquisition Corp. Obligations.
The
obligations of the Company under this Agreement, the Certificate of Merger
and
the Statement of Merger are subject to the fulfillment at or prior to the
Closing of the following conditions, and of which may be waived, in whole or
in
part, by the Company:
(a)
No
Errors, etc. The representations and warranties of Parent and Acquisition Corp.
under this Agreement shall be deemed to have been made again on the Closing
Date
and shall then be true and correct in all material respects.
(b)
Compliance with Agreement. Parent and Acquisition Corp. shall have performed
and
complied in all material respects with all agreements and conditions required
by
this Agreement and the Certificate of Merger to be performed or complied with
by
them on or before the Closing Date.
(c)
No
Default or Adverse Change. There shall not exist on the Closing Date any Default
or Event of Default or any event or condition, that with the giving of notice
or
lapse of time, or both, would constitute a Default of Event of Default, and
since the Parent Balance Sheet Date, there shall have been no material adverse
change in the Condition of the Parent.
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15 -
(d) Certificate of Officer. Parent and Acquisition Corp. shall have delivered
to
the Company a certificate dated the Closing Date, executed on their behalf
by
their respective President and CEO, certifying the satisfaction of the
conditions specified in paragraphs (a), (b), and (c) of this Section
7.2.
(e)
Supporting Documents. The Company shall have received the
following:
(1)
Copies of resolutions of Parent's and Acquisition Corp.'s respective boards
of
directors and the sole shareholder of Acquisition Corp., certified by their
respective Secretaries, authorizing and approving, to the extent applicable,
the
execution, delivery and performance of this Agreement, the Statement of Merger,
the Certificate of Merger, the Certificate of Amendment and all other documents
and instruments to be delivered by them pursuant hereto and
thereto.
(2)
A
certificate of incumbency executed by the respective Secretaries of Parent
and
Acquisition Corp. certifying the names, titles and signatures of the officers
authorized to execute the documents referred to in paragraph (1) above and
further certifying that the articles or certificates of incorporation and Bylaws
of Parent and Acquisition Corp. appended thereto have not been amended or
modified.
(3)
A
certificate, dated the Closing Date, executed by the Secretary of each of the
Parent and Acquisition Corp., certifying that, except for the filing of the
Certificate of Merger: (i) all consents, authorizations, orders and approvals
of, and filings and registrations with, any court, governmental body or
instrumentality that are required for the execution and delivery of this
Agreement, the Certificate of Merger, the Certificate of Merger, the Certificate
of Amendment and the consummation of the Merger shall have been duly made or
obtained, and all material consents by third parties required for the Merger
have been obtained; and (ii) no action or proceeding before any court,
governmental body or agency has been threatened, asserted or instituted to
restrain or prohibit, or to obtain substantial damages in respect of, this
Agreement or the Certificate of Merger or the carrying out of the transactions
contemplated by any of the Merger Documents.
(4)
A
certificate of Computershare Trust Company, Inc., Parent's transfer agent and
registrar, certifying as of the business day prior to the Closing Date, a true
and complete list of the names and addresses of the record owners of all of
the
outstanding shares of Parent Common Stock, together with the number of shares
of
Parent Common Stock held by each record owner.
(5)
The
executed resignations of Xxxxxx Xxxxxx, Xx. as a director and officer of Parent,
with the officer resignation to take effect at the Effective Time, with the
appointment of Xxxx X. Xxxxxxxxxx, III, as President and CEO of Parent and
Xxxxxx Xxxxx as CFO, Treasurer, and Secretary of Parent, to take effect at
the
Effective Time, and with the resignation of Xxxxxx Xxxxxx, Xx. as director
to
take effect upon compliance with Section 14(f) of the Exchange Act and rules
promulgated thereunder.
(6)
A
resolution of the Board of Parent, effective as of the Effective Time,
appointing Xxxx X. Xxxxxxxxxx, III as a director of Pubco.
(7)
Evidence as of a recent date of the good standing and corporate existence of
the
Parent made available to the Company by the Secretary of State of Delaware
and
evidence that the Parent is qualified to transact business as a foreign
corporation and is in good standing in each state of the United States and
in
each other jurisdiction where the character of the property owned or leased
by
it or the nature of its activities makes such qualification
necessary.
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16 -
(8)
Evidence as of a
recent date of the good standing and corporate existence of Acquisition Corp.
issued by the Secretary of State of Delaware.
(9)
No
more than 19% of the Stockholders of the Company shall have voted against the
Merger or shall have demanded or exercised their appraisal rights pursuant
Section 262 of the DGCL.
(10)
Such
additional supporting documentation and other information with respect to the
transactions contemplated hereby as the Company may reasonably
request.
(f)
Parent shall have caused the Private Offering to be consummated immediately
prior to the Effective Time.
(g)
The
Private Offering shall have closed immediately prior to the Effective
Time.
(h)
Proceedings and Documents. All corporate and other proceedings and actions
taken
in connection with the transactions contemplated hereby and all certificates,
opinions, agreements, instruments and documents mentioned herein or incident
to
any such transactions shall be satisfactory in form and substance to the
Company. Parent and Acquisition Corp. shall furnish to the Company such
supporting documentation and evidence of satisfaction of any or all of the
conditions specified in this Section 7.2 as the Company may reasonably
request.
8.
Non-Survival of Representations and Warranties.
The
representations and warranties of the parties made in Sections 2 and 3 of this
Agreement (including the Schedules to the Agreement which are hereby
incorporated by reference) shall survive for one (1) year beyond the Effective
Time. This Section 8 shall not limit any claim for fraud or any covenant or
agreement of the parties which by its terms contemplates performance after
the
Effective Time.
9.
Amendment of Agreement.
This
Agreement, the Certificate of Merger, the Statement of Merger and the
Certificate of Amendment may be amended or modified at any time in all respects
by an instrument in writing executed (i) in the case of this Agreement by the
parties hereto; (ii) in the case of the Certificate of Merger and Statement
of
Merger by the parties thereto; and (iii) in the case of the Certificate of
Amendment by the Parent.
10.
Definitions.
Unless
the context otherwise requires, the terms defined in this Section 10 shall
have
the meanings herein specified for all purposes of this Agreement, applicable
to
both the singular and plural forms of
any
of
the terms herein defined.
"Acquisition
Corp." means PDS Acquisition Corp., a Colorado corporation.
"Acquisition
Proposal" shall have the meaning assigned to such term in each of Section 5.1(e)
and Section 5.2(d) hereof, as applicable.
"Affiliate"
shall mean any Person that directly or indirectly controls, is controlled by,
or
is under common control with, the indicated Person.
"Agreement"
shall mean this Agreement.
"Balance
Sheet" and "Balance Sheet Date" shall have the meanings assigned to such terms
in Section 2.9 hereof.
"Benefit
Arrangements" shall have the meaning assigned to it in Section 2.12
hereof.
"CBCA"
shall have the meaning assigned to it in the second recital hereof.
"Certificate
of Amendment" have the meaning assigned to it in the second recital
hereof.
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17 -
"Certificate
of Merger" shall have the meaning assigned to it in the second recital
hereof.
"Closing"
and "Closing Date" shall have the meanings assigned to such terms in Section
11
hereof.
"Code"
shall mean the Internal Revenue Code of 1986, as amended.
"Commission"
shall mean the U.S. Securities and Exchange Commission.
"Company"
shall mean Premier Data Services, Inc., a Delaware corporation.
"Company
Common Stock" shall have the meaning assigned to it in Section
1.5(a)(ii).
"Company
Stock" shall have the meaning assigned to it in Section 1.5(b).
"Company
Benefit Plans" shall have the meaning assigned to it in Section 2.12
hereof.
"Company
Preferred Stock" shall have the meaning assigned to it in Section
1.5(a)(iii).
"Condition
of the Company" shall have the meaning assigned to it in Section 2.2
hereof.
"Condition
of the Parent" shall have the meaning assigned to it in Section 3.13
hereof.
"Constituent
Corporations" shall have the meaning assigned to it in Section 1.4
hereof.
"Conversion
Agreements" shall have the meaning assigned to it in the Fifth recital
hereof.
"Default"
shall mean a default or failure in the due observance or performance of any
covenant, condition or agreement on the part of the Company, Parent, or
Acquisition Corp. to be observed or performed under the terms of this Agreement,
or any Merger Document, if such default or failure in performance shall remain
unremedied for five (5) days.
"DGCL"
shall have the meaning assigned to it in the second recital hereof.
"Effective
Time" shall have the meaning assigned to it in Section 1.2 hereof.
"Equity
Security" shall mean any stock or similar security of an issuer or any security
(whether stock or Indebtedness for Borrowed Money) convertible, with or without
consideration, into any stock or similar equity
security,
or any security (whether stock or Indebtedness for Borrowed Money) carrying
any
warrant or right to subscribe to or purchase any stock or similar security,
or
any such warrant or right.
"ERISA"
shall have the meaning assigned to it in Section 2.12 hereof.
"Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended.
"Event
of
Default" shall mean (a) the failure of the Company, Parent, or Acquisition
Corp.
to pay any Indebtedness for Borrowed Money, or any interest or premium thereon,
within five (5) days after the same shall become due, whether such Indebtedness
shall become due by scheduled maturity, by required prepayment, by acceleration,
by demand or otherwise, (b) an event of default under any agreement or
instrument evidencing or securing or relating to any such Indebtedness, or
(c)
the failure of the Company, Parent, or Acquisition Corp. to perform or observe
any material term, covenant, agreement or condition on its part to be performed
or observed under any agreement or instrument evidencing or securing or relating
to any such Indebtedness when such term, covenant or agreement is required
to be
performed or observed.
"GAAP"
shall have the meaning assigned to it in Section 2.9 hereof.
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18 -
"Indebtedness" shall mean any obligation of the Company, Parent, or Acquisition
Corp. which under generally accepted accounting principles is required to be
shown on the balance sheet of the Company, Parent, or Acquisition Corp.,
respectively, as a liability. Any obligation secured by a Lien on, or payable
out of the proceeds of production from, property of the Company, Parent, or
Acquisition Corp., shall be deemed to be Indebtedness of the respective entity
even though such obligation is not assumed by the such entity.
"Indebtedness
for Borrowed Money" shall mean (a) all Indebtedness in respect of money borrowed
including, without limitation, Indebtedness which represents the unpaid amount
of the purchase price of any property and is incurred in lieu of borrowing
money
or using available funds to pay such amounts and not constituting an account
payable or expense accrual incurred or assumed in the ordinary course of
business of the Company, Parent, or Acquisition Corp., respectively, (b) all
Indebtedness evidenced by a promissory note, bond or similar written obligation
to pay money of the Company, Parent, or Acquisition Corp., respectively ,or
(c)
all such Indebtedness guaranteed by the of the Company, Parent, or Acquisition
Corp., respectively, or for which the of the Company, Parent, or Acquisition
Corp., respectively, is otherwise contingently liable.
"Investment
Company Act" shall mean the Investment Company Act of 1940, as
amended.
"knowledge"
and "know" means, when referring to any person or entity, the actual knowledge
of such person or entity of a particular matter or fact, and what that person
or
entity would have reasonably known after due inquiry. An entity will be deemed
to have "knowledge" of a particular fact or other matter if any individual
who
is serving, or who has served, as an executive officer of such entity has actual
"knowledge" of such fact or other matter, or had actual "knowledge" during
the
time of such service of such fact or other matter, or would have had "knowledge"
of such particular fact or matter after due inquiry.
"Letter
of Transmittal" shall have the meaning assigned to it in Section 4
hereof.
"Lien"
shall mean any mortgage, pledge, security interest, encumbrance, lien or charge
of any kind, including, without limitation, any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code
of
any jurisdiction and including any lien or charge arising by statute or other
law.
"Merger"
shall have the meaning assigned to it in the first recital hereof.
"Merger
Documents" shall have the meaning assigned to it in Section 2.5
hereof.
"Notes"
shall have the meaning assigned to it in the fifth recital hereof.
"Parent"
shall mean Xedar Corporation, a Colorado corporation.
"Parent
Balance Sheet" and "Parent Balance Sheet Date" shall have the meanings assigned
to them in Section 3.13 hereof.
"Parent
Common Stock" shall have the meaning assigned to it in Section 3.4
hereof.
"Parent
Employee Benefit Plans" shall have the meaning assigned to it in Section 3.16
hereof.
"Parent
Financial Statements" shall have the meaning assigned to it in Section 3.8
hereof.
"Parent
Incentive Plan" shall have the meaning assigned to it in Section 6.7
hereof.
"Parent
SEC Documents" shall have the meaning assigned to it in Section 3.7(b)
hereof.
"Parent
Warrants" shall have the meaning assigned to it in Section 1.7(a)
hereof.
"Patent
and Trademark Rights" shall have the meaning assigned to it in Section 2.15
hereof.
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19 -
"Permitted Liens" shall mean (a) Liens for taxes and assessments or governmental
charges or levies not at the time due or in respect of which the validity
thereof shall currently be contested in good faith by appropriate
proceedings;
(b) Liens in respect of pledges or deposits under workmen's compensation laws
or
similar legislation, carriers', warehousemen's, mechanics', laborers' and
materialmens' and similar Liens, if the obligations secured by
such
Liens are not then delinquent or are being contested in good faith by
appropriate proceedings; and (c) Liens incidental to the conduct of the business
of the Company that were not incurred in connection with the borrowing of money
or the obtaining of advances or credits and which do not in the aggregate
materially detract from the value of its property or materially impair the
use
made thereof by the Company in its business.
"Person"
shall include all natural persons, corporations, business trusts, associations,
limited liability companies, partnerships, joint ventures and other entities
and
governments and agencies and political subdivisions.
"Private
Offering" shall have the meaning assigned to it in the fourth recital
hereof.
"Purchase
Agreement" shall have the meaning assigned to it in the fourth recital
hereof.
"Securities
Act" shall mean the Securities Act of 1933, as amended.
"Statement
of Merger" shall have the meaning assigned to it in the second recital
hereof.
"Stockholders"
shall mean all of the stockholders of the Company.
"Subsidiaries"
shall have the meaning assigned to it in Section 2.1(b) hereof.
"Surviving
Corporation" shall have the meaning assigned to it in Section 1.1
hereof.
"Tax"
or
"Taxes" shall mean (a) any and all taxes, assessments, customs, duties, levies,
fees, tariffs, imposts, deficiencies and other governmental charges of any
kind
whatsoever (including, but not limited to, taxes on or with respect to net
or
gross income, franchise, profits, gross receipts, capital, sales, use, ad
valorem, value added, transfer, real property transfer, transfer gains, transfer
taxes, inventory, capital stock, license, payroll, employment, social security,
unemployment, severance, occupation, real or personal property, estimated taxes,
rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative
minimum, doing business, withholding and stamp),
together
with any interest thereon, penalties, fines, damages costs, fees, additions
to
tax or additional amounts with respect thereto, imposed by the United States
(federal, state or local) or other applicable jurisdiction; (b) any liability
for the payment of any amounts described in clause (a) as a result of being
a
member of an affiliated, consolidated, combined, unitary or similar group or
as
a result of transferor or successor liability, including, without limitation,
by
reason of Regulation section 1.1502-6; and (c) any liability for the payments
of
any amounts as a result of being a party to any Tax Sharing Agreement or as
a
result of any express or implied obligation to indemnify any other Person with
respect to the payment of any amounts of the type described in clause (a) or
(b).
"Tax
Return" shall include all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns
(including Form 1099 and partnership returns filed on Form 1065) required to
be
supplied to a Tax authority relating to Taxes.
11.
Closing.
The
closing of the Merger (the "Closing") shall occur on December 31, 2006,
concurrently with the Effective Time (the "Closing Date"). The Closing shall
occur at the offices of Castle Xxxxxxxx & Stawiarski LLC, referred to in
Section 13.1 hereof. Parent will deliver at such Closing to the Company the
officers' certificate referred to in Section 7.2 hereof and the Company will
deliver to Parent the officers' certificate referred to in Section 7.1 hereof.
All of the other documents, certificates and agreements referenced in Section
7
will also be executed and delivered as described therein. At the Effective
Time,
all actions to be taken at the Closing shall be deemed to be taken
simultaneously.
12.
Termination Prior to Closing.
12.1
Termination of Agreement.
This
Agreement may be terminated at any time prior to the Closing:
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(a) By the mutual written consent of the Company, Acquisition Corp. and
Parent;
(b)
By
the Company, if Parent or Acquisition Corp. (i) fails to perform in any material
respect any of its agreements contained herein required to be performed by
it on
or prior to the Closing Date, (ii) materially breaches any of its
representations, warranties or covenants contained herein, which failure or
breach is not cured within thirty (30) days after the Company has notified
Parent and Acquisition Corp. of its intent to terminate this Agreement pursuant
to this paragraph (b);
(c)
By
Parent and Acquisition Corp., if the Company (i) fails to perform in any
material respect any of its agreements contained herein required to be performed
by it on or prior to the Closing Date, (ii) materially breach any of its
representations, warranties or covenants contained herein, which failure or
breach is not cured within thirty (30) days after Parent or Acquisition Corp.
has notified the Company of its intent to terminate this Agreement pursuant
to
this paragraph (c);
(d)
By
either the Company, on the one hand, or Parent and Acquisition Corp., on the
other hand, if there shall be any order, writ, injunction or decree of any
court
or governmental or regulatory agency binding on Parent, Acquisition Corp. or
the
Company, which prohibits or materially restrains any of them from consummating
the transactions contemplated hereby; provided, that the parties hereto shall
have used their best efforts to have any such order, writ, injunction or decree
lifted and the same shall not have been lifted within ninety (90) days after
entry, by any such court or governmental or regulatory agency; or
(e)
By
either the Company, on the one hand, or Parent and Acquisition Corp., on the
other hand, if the Closing has not occurred on or prior to December 31, 2006,
for any reason other than delay or nonperformance of the party seeking such
termination.
12.2
Termination of Obligations.
Termination of this Agreement pursuant to this Section 12 shall terminate all
obligations of the parties hereunder, except for the obligations under Sections
6.1, 13.3 and 13.9; provided, however, that termination pursuant to paragraphs
(b) or (c) of Section 12.1 shall not relieve the defaulting or breaching party
or parties from any liability to the other parties hereto.
13.
Miscellaneous.
13.1
Notices.
Any
notice, request or other communication hereunder shall be given in writing
and
shall be served either personally by overnight delivery or delivered by mail,
certified return receipt and addressed to the following addresses:
If
to
Parent or Acquisition Corp.: Xedar
Corporation
0000
X.
Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxx Xxxxxx, Xx.
With
a
copy to Xxxx
Xxxxx, Esq.
0000
XXX
Xxxx, Xxxxx 000
Xxxxxxxxx
Xxxxxxx, XX 00000
Attention:
Xxxx Xxxxx
If
to the
Company:
Premier
Data Services, Inc.
0000
Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxxx
President
and CEO
With
a
copy to: Castle
Xxxxxxxx & Stawiarski, LLC
000
00xx
Xxxxxx,
Xxxxx 0000
Xxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxx, Esq.
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Notices shall be deemed received at the earlier of actual receipt or three
(3)
business days following mailing. Counsel for a party (or any authorized
representative) shall have authority to accept delivery of any
notice
on
behalf
of such party.
13.2
Entire Agreement.
This
Agreement, including the schedules and exhibits attached hereto and other
documents referred to herein, contains the entire understanding of the parties
hereto with respect to the subject matter hereof. This Agreement supersedes
all
prior agreements and undertakings between the parties with respect to such
subject matter.
13.3
Expenses.
Each
party shall bear and pay all of the legal, accounting and other expenses
incurred by it in connection with the transactions contemplated by this
Agreement.
13.4
Time.
Time is
of the essence in the performance of the parties' respective obligations herein
contained.
13.5
Severability.
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any
other jurisdiction.
13.6
Successors and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns and heirs.
13.7
No Third Parties Benefited.
This
Agreement is made and entered into for the sole protection and benefit of the
parties hereto, their successors, assigns and heirs, and no other Person shall
have any right or
action
under this Agreement.
13.8
Counterparts.
This
Agreement may be executed in one or more counterparts, with the same effect
as
if all parties had signed the same document. Each such counterpart shall be
an
original, but all such counterparts
together
shall constitute a single agreement.
13.9
Governing Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of Colorado. The parties to this Agreement agree that any
breach of any term or condition of this Agreement or the transactions
contemplated hereby shall be deemed to be a breach occurring in the State of
Colorado by virtue of a failure to perform an act required to be performed
in
the State of Colorado. The parties to this Agreement irrevocably and expressly
agree to submit to the jurisdiction of the courts of the State of Colorado
for
the purpose of resolving any disputes among the parties relating to this
Agreement or the transactions contemplated hereby. The parties irrevocably
waive, to the fullest extent permitted by law, any objection which they may
now
or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this
Agreement
and the transactions contemplated hereby, or any judgment entered by any court
in respect hereof brought in Denver, Colorado, and further irrevocably waive
any
claim that any suit, action or proceeding brought in Denver, Colorado has been
brought in an inconvenient forum. With respect to any action before the above
courts, the parties hereto agree to service of process by certified or
registered United States mail, postage prepaid, addressed to the party in
question.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement to be binding
and effective as of the day and year first above written.
PARENT
Xedar
Corporation, a
Colorado
corporation
By: /s/
Xxxxxx Xxxxxx, Xx.
Xxxxxx
Xxxxxx, Xx., President and CEO
ACQUISITION
CORP.
PDS
Acquisition Corp., a
Colorado
corporation
By: /s/
Xxxxxx Xxxxxx, Xx.
Xxxxxx
Xxxxxx, Xx., President and CEO
COMPANY
Premier
Data Services, Inc., a
Delaware
corporation
By: /s/
Xxxxxxx X. Xxxxxxx
Xxxxxxx
X. Xxxxxxx, President and CEO
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