Exhibit 10.6
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
RECONSTRUCTION DATA GROUP, INC.
AND
VERDISYS, INC.
THIS AGREEMENT AND PLAN OF MERGER ("Agreement"), is dated as of April 24, 2003,
by and between Reconstruction Data Group, Inc. ("RDGI") a California corporation
whose principal place of business is located at 00000 Xxxxxx Xxxxx, Xxxxx 000,
Xxx Xxxxx, Xxxxxxxxxx 00000, such corporation being herein sometimes called the
"Surviving Corporation," and Verdisys, Inc. ("Verdisys"), a California
corporation whose principal place of business is located at 00000 X. Xx Xxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, such corporation being herein
sometimes called the "Disappearing Corporation," with RDGI and Verdisys being
herein sometimes collectively called the "Constituent Corporations." This
agreement replaces all preceding agreements.
SECTION 1. NAME OF SURVIVING CORPORATION; ARTICLES OF INCORPORATION AND BY-LAWS;
BOARD OF DIRECTORS; OFFICERS
1.1 Name of Surviving Corporation. The corporation which shall survive the
merger ("Merger") contemplated hereby is RDGI, Inc., a California
corporation. However, immediately following the Effective Time (as
defined in Section 3.2 hereof), the name of the Surviving Corporation
shall be changed to "Verdisys, Inc."
1.2 Articles of Incorporation and By-laws: The articles of incorporation
(as defined in California Corporate Statutes) and the by-laws of RDGI,
Inc. as in effect at the Effective Time (as defined in Section 3.2
hereof) shall from and after the Effective Time be the articles of
incorporation and the by-laws of the Surviving Corporation until they
are amended.
1.3.1 Board of Directors and Officers: The directors and officers of
Verdisys, as of the Effective Time shall be the directors and the
officers of the Surviving Corporation, each to serve, in each
case until his respective successor shall have been elected and
qualified
1.4 Employees and Consultants: All employees of Verdisys shall remain
employees of the Surviving Corporation following the Effective Time,
at the sole discretion of the directors and officers of the Surviving
Corporation.
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RDGI Initial_____ Verdisys Initial______
SECTION 2. STATUS AND CONVERSION OF SECURITIES
2.1 Stock of Disappearing Corporation:
(a) Verdisys Common Stock. Each share of common stock, par value
$0.001 per share, of Verdisys ("Verdisys Common Stock")
outstanding at the Effective Time shall, subject to compliance
with Section 2.1(d), be converted into and exchanged for one (1)
share of common stock, par value $ 0.001 per share, of RDGI
("RDGI Common Stock"), except that shares of Verdisys Common
Stock held in Verdisys' treasury at the Effective Time, if any,
shall be cancelled.
(b) Dissenter's Rights. Notwithstanding Section 2.1(a), no share of
RDGI Common Stock shall be issued in respect of any shares of
Verdisys Common Stock, the holders of which shall object to the
Merger in writing and demand payment of the value of their shares
pursuant to the General Corporation Law of the State of
California and as a result payment therefore is made, such
holders to have only the rights provided by such law.
(c) Surrender and Exchange of Verdisys Common Stock. Subject to the
provisions of Section 2.1(a) and 2.1(d), after the Effective
Time, each holder of an outstanding certificate or certificates
("Old Certificates") theretofore representing shares of Verdisys
Common Stock, upon surrender thereof to Xxxxxxx X. Xxxxxx, Esq.
("Exchange Agent"), at 00000 Xxx Xxxxxxx, Xxxx X, Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000, shall be entitled to receive in
exchange therefore a certificate or certificates ("New
Certificates"), which RDGI agrees to make available to the
Exchange Agent as soon as practicable after the Effective Time,
representing the number of whole shares of RDGI Common Stock
rounded up to the nearest whole share into and for which the
shares of Verdisys Common Stock theretofore represented by such
surrendered Old Certificates have been converted. No certificates
or scrip for fractional shares of RDGI Common Stock will be
issued, no RDGI stock split or dividend shall relate to any
fractional share interest, and no such fractional share interest
shall entitle the owner thereof to vote or to any rights of a
shareholder of RDGI.
(d) Endorsement of Shares of Verdisys Common Stock. The Old
Certificates to be surrendered by the holders of Verdisys Common
Stock shall be properly endorsed and otherwise in proper form for
transfer in accordance with the share exchange instructions
provided to the holders of such securities.
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(e) Stock Transfers. As of the Effective Time, no transfer of the
shares of Verdisys Common Stock outstanding prior to the
Effective Time shall be made on the stock transfer book of the
Surviving Corporation. If, after the Effective Time, Old
Certificates are presented to the Surviving Corporation, they
shall be exchanged pursuant to Section 2.1 (c).
2.2 Assumption and Recognition of Verdisys Options: On and after the
Effective Time, RDGI shall assume and recognize any vested or unvested
stock options outstanding with respect to Verdisys Common Stock.
2.3 Nonassumption or Nonrecognition of RDGI Options: On and after the
Effective Time, Verdisys shall neither assume nor recognize any stock
options outstanding with respect to RDGI Common Stock. It is the
intention of RDGI to cause all outstanding stock options to be
cancelled or exercised prior to the Effective Time.
2.4 Capital Stock of RDGI. All issued shares of RDGI Common Stock
outstanding prior to the Effective Time shall continue unchanged as
securities of the Surviving Corporation.
SECTION 3. STOCKHOLDER APPROVALS; BOARDS OF DIRECTORS' RECOMMENDATIONS; FILING;
EFFECTIVE TIME
3.1 Stockholder Approvals; Boards of Directors' Recommendations: Meetings
of the stockholders of Verdisys and RDGI shall be held in accordance
with the General Corporation Law of the State of California, in
accordance with any and all applicable federal laws or regulations or
SEC provisions, respectively, as promptly as possible, after at least
20 days' prior written notice thereof to the stockholders of the
respective Constituent Corporations, in each case, among other things,
to consider and vote upon the adoption and approval of this Agreement,
the Merger and the other transactions, if any, contemplated hereby. In
the event that either party hereto is able to obtain the written
consent of the owners of a majority of its outstanding shares of
capital stock in favor of the Merger, then no notice of a
stockholders' meeting need be given to such party's stockholders and
no proxies need to be solicited from such stockholders to accomplish
the Merger. Subject to its fiduciary duty to its stockholders, the
Board of Directors of RDGI shall recommend to its stockholders that
this Agreement, the Merger and the other transactions contemplated
hereby, if any, be adopted and approved. Subject to its fiduciary
duties to its stockholders, the Board of Directors of Verdisys shall
recommend to its stockholders that this Agreement, the Merger and the
other transactions contemplated hereby, if any, be adopted and
approved.
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3.2 Filing; Effective Time: As soon as practicable after the adoption and
approval of this Agreement, the Merger and the other transactions
contemplated hereby, if any, by the respective stockholders of each of
the Constituent Corporations (unless one or more of the conditions
contained in Sections 7 and 8 have not then been fulfilled or waived,
then as soon as practicable after the fulfillment or waiver of all
such conditions), an appropriate certificate of merger in the form
required by California law shall be executed and filed in the office
of the Secretary of State of the State of California, at which time
the Merger shall become effective (the "Closing" or the "Effective
Time"). The parties intend the Closing to take place no later than
5:00 p.m., Pacific Standard Time, on May 30, 2003.
SECTION 4. CERTAIN EFFECTS OF THE MERGER
4.1 Effects of Merger: When the Merger becomes effective, the separate
existence of Verdisys shall cease, Verdisys shall be merged into RDGI,
and the Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public or private nature, and
shall be subject to all the restrictions, disabilities and duties of
each of the Constituent Corporations; and all and singular, the
rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all
debts due to either 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 as possible 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, under the laws of any jurisdiction, in either of the
Constituent Corporations, shall not revert or be in any way impaired
by reason of the Merger; but all rights of creditors and all liens
upon any property of either of the Constituent Corporations shall be
preserved unimpaired, and all debts, liabilities and duties of the
respective Constituent Corporations shall thenceforth attach to the
Surviving Corporation, and may be enforced against it to the same
extent as if such debts, liabilities and duties had been incurred or
contracted by it.
SECTION 5. COVENANTS
5.1 Covenants of Verdisys: Verdisys agrees that, unless RDGI otherwise
agrees in writing:
(a) Certificate of Incorporation and Bylaws. Until the earlier of the
Effective Time or the rightful abandonment or termination of the
Merger pursuant to Sections 7 or 8 or otherwise ("Release Time"),
no amendment will be made in the certificate of incorporation or
bylaws of Verdisys;
(b) Dividends and Purchases of Stock. Until the Release Time, no
dividend or liquidating or other distribution or stock split
shall be authorized, declared, paid or affected by Verdisys in
respect of the outstanding shares of Verdisys Common Stock.
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(c) Access. Until the Release Time, Verdisys will afford the
officers, directors, employees, counsel, agents, investment
bankers accountants and other representatives of RDGI free and
full access to the plants, premises, properties, books and
records of Verdisys, will permit them to make extracts from and
copies of such books and records, and will from time to time
furnish RDGI with such additional financial and operating data
and other information as to the financial condition, results of
operations, business, properties, assets, liabilities or future
prospects of Verdisys as RDGI from time to time may request.
(d) Conduct of Business. Until the Release Time, Verdisys shall
conduct its affairs so that at the Effective Time no
representation or warranty of Verdisys will be inaccurate, no
covenant or agreement of Verdisys will be breached, and no
condition of this Agreement will remain unfulfilled by reason of
the actions or omissions of Verdisys. Except as otherwise
requested by RDGI in writing, until the Release Time, Verdisys
will use its best efforts to preserve the business operations of
Verdisys intact, to keep available the services of its present
personnel, to preserve in full force and effect the contracts,
agreements, instruments, leases, licenses, arrangements and
understandings of Verdisys, and to preserve the good will of its
suppliers, customers and others having business relations with
any of them. Until the Release Time, Verdisys will conduct its
business and operations in all respects only in the ordinary
course.
(e) Advice of Changes. Until the Release Time, Verdisys will
immediately advise RDGI in a detailed written notice of any fact
or occurrence or any pending or threatened occurrence of which it
obtains knowledge and which (if existing and known at the date of
the execution of this Agreement) would have been required to be
set forth or disclosed in or pursuant to this Agreement or the
Verdisys Disclosure Letter (as defined in Section 6.1 (a)), which
(if existing and known at any time prior to or at the Effective
Time) would make the performance by any party of a covenant
contained in this Agreement impossible or make such performance
materially more difficult than in the absence of such fact or
occurrence, or which (if existing and known at the time of the
Effective Time) would cause a condition to any party's
obligations under this Agreement not to be fully satisfied.
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(f) Confidentiality. Verdisys shall ensure that all confidential
information which Verdisys or any of its respective officers,
directors, employees, counsel, agents, investment bankers, or
accountants may now possess or may hereafter create or obtain
relating to the financial condition, results of operation,
business, properties, assets, liabilities or future prospects of
RDGI, any of RDGI affiliate, or any customer or supplier of RDGI
or any such affiliate shall not be published, disclosed, or made
accessible by any of them to any other person or entity at any
time or used by any of them except pending the Effective Time in
the business and for the benefit of Verdisys, in each case
without the prior written consent of RDGI; provided, however,
that the restrictions of this sentence shall not apply (i) after
the Merger is rightfully abandoned or terminated pursuant to
Section 7 or 8 or otherwise, but only to the extent such
confidential information relates to the financial condition,
results of operations, business, properties, assets, liabilities
or future prospects of Verdisys, of any affiliate of any of them,
or (insofar as such confidential information was obtained
directly by Verdisys or any such affiliate from any customer or
supplier of any of them) of any such customer or supplier, (ii)
as may otherwise be required by law, (iii) as may be necessary or
appropriate in connection with the enforcement of this Agreement,
or (iv) to the extent the information shall have otherwise become
publicly available. Verdisys shall, and shall cause all other
such persons and entities to, deliver to RDGI all tangible
evidence of the confidential information to which the
restrictions of the foregoing sentence apply immediately after
the rightful abandonment or termination of the Merger pursuant to
Section 7 or 8 or otherwise.
(g) Public Statements. Before Verdisys releases any information
concerning this Agreement, the Merger, or any of the other
transaction contemplated by this Agreement which is intended for
or may result in public dissemination thereof, Verdisys shall
cooperate with RDGI, shall furnish drafts of all documents or
proposed oral statements to RDGI for comments, and shall not
release any such information without the written consent of RDGI.
Nothing contained herein shall prevent Verdisys from releasing
any information if required to do so by law.
(h) Indemnification. Verdisys agrees to indemnify and hold harmless
RDGI and its officers, directors, managers, employees, agents and
counsel, against any and all losses, liabilities (including
personal liabilities of certain executives and directors),
claims, damages, and expenses whatsoever (which shall include,
for all purposes of this Section 5.1(j), but not be limited to,
counsel fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation) as and
when incurred and whether or not involving a third party arising
out of, based upon, or in connection with (i) an untrue statement
or alleged untrue statement of a material fact contained in this
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Agreement or any other document relating to this Agreement and
the Merger contemplated thereby, and (ii) any liability under
state or Federal securities laws resulting from any omission or
alleged omission to state a material fact required to be stated
in this Agreement or any other document required hereunder,
provided in each case that such untrue statement, alleged untrue
statement, omission, or alleged omission relates to information
furnished by or on behalf of, or pertaining to, Verdisys or any
Verdisys security holder or (ii) any breach of any
representation, warranty, covenant or agreement of Verdisys
contained in this Agreement. The foregoing agreement to indemnify
shall be in addition to any liability Verdisys may otherwise
have, including liabilities arising under this Agreement.
5.2 Covenants of RDGI: RDGI agrees that, unless Verdisys otherwise agrees
in writing:
(a) Articles of Incorporation and Bylaws. Until the earlier of the
Effective Time or the rightful abandonment or termination of the
Merger pursuant to Section 7 or 8 or otherwise ("Release Time"),
no amendment will be made in the articles of incorporation or
bylaws of RDGI.
(b) Shares and Options. Until the Release Time, no shares of capital
stock of RDGI, options or warrants for such shares, rights to
subscribe to or purchase such shares, or securities convertible
into or exchangeable for such shares, shall be issued, granted or
sold by RDGI, otherwise than as may be required upon the exercise
of RDGI stock options.
(c) Dividends and Purchases of Stock. Until the Release Time, no
dividend or stock split shall be authorized, declared, paid or
affected by RDGI in respect of the outstanding shares of RDGI
Common Stock.
(d) Assets/Liabilities/Borrowing of Money. Until the Release Time,
RDGI shall not borrow money, guarantee the borrowing of money,
engage in any transaction or enter into any material agreement,
except in the ordinary course of business. At the Closing, RDGI
shall have no assets, no liabilities and no contracts in force or
effect.
(e) Access. Until the Release Time, RDGI will afford the officers,
directors, employees, counsel, agents, investment bankers
accountants and other representatives of Verdisys free and full
access to the plants, premises, properties, books and records of
RDGI and the RDGI Subsidiaries, will permit them to make extracts
from and copies of such books and records, and will from time to
time furnish Verdisys with such additional financial and
operating data and other information as to the financial
condition, results of operations, business, properties, assets,
liabilities or future prospects of RDGI and the RDGI Subsidiaries
as Verdisys from time to time may request.
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(f) Conduct of Business. Until the Release Time, RDGI shall conduct
its affairs so that at the Effective Time no representation or
warranty of RDGI will be inaccurate, no covenant or agreement of
RDGI will be breached, and no condition of this Agreement will
remain unfulfilled by reason of the actions or omissions of RDGI.
Except as otherwise requested by Verdisys in writing, until the
Release Time, RDGI will use its best efforts to preserve the
business operations of RDGI intact, to keep available the
services of its present personnel, to preserve in full force and
effect the contracts, agreements, instruments, leases, licenses,
arrangements and understandings of RDGI, and to preserve the good
will of its suppliers, customers and others having business
relations with any of them. Until the Release Time, RDGI will
conduct its business and operations in all respects only in the
ordinary course.
(g) Advice of Changes. Until the Release Time, RDGI will immediately
advise Verdisys in a detailed written notice of any fact or
occurrence or any pending or threatened occurrence of which it
obtains knowledge and which (if existing and known at the date of
the execution of this Agreement) would have been required to be
set forth or disclosed in or pursuant to this Agreement or the
RDGI Disclosure Letter [as defined in Section 6.02 (a)], which
(if existing and known at any time prior to or at the Effective
Time) would make the performance by any party of a covenant
contained in this Agreement impossible or make such performance
materially more difficult than in the absence of such fact or
occurrence, or which (if existing and known at the time of the
Effective Time) would cause a condition to any party's
obligations under this Agreement not to be fully satisfied.
(h) Confidentiality. RDGI shall ensure that all confidential
information which RDGI or any of its officers, directors,
employees, counsel, agents, investment bankers, or accountants
may now possess or may hereafter create or obtain relating to the
financial condition, results of operation, business, properties,
assets, liabilities or future prospects of Verdisys, any Verdisys
affiliate, or any customer or supplier of Verdisys or any such
affiliate shall not be published, disclosed, or made accessible
by any of them to any other person or entity at any time or used
by any of them except pending the Effective Time in the business
and for the benefit of RDGI, in each case without the prior
written consent of Verdisys; provided, however, that the
restrictions of this sentence shall not apply (i) after the
Merger is rightfully abandoned or terminated pursuant to Section
7 or 8 or otherwise, but only to the extent such confidential
information relates to the financial condition, results of
operations, business, properties, assets, liabilities or future
prospects of RDGI or of any of its affiliates, or (insofar as
such confidential information was obtained directly by RDGI, any
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RDGI Subsidiary, or any such affiliate from any customer or
supplier of any of them) of any such customer or supplier, (ii)
as may otherwise be required by law, (iii) as may be necessary or
appropriate in connection with the enforcement of this Agreement,
or (iv) to the extent the information shall have otherwise become
publicly available. RDGI shall, and shall cause all other such
persons and entities to, deliver to Verdisys all tangible
evidence of the confidential information to which the
restrictions of the foregoing sentence apply immediately after
the rightful abandonment or termination of the Merger pursuant to
Section 7 or 8 or otherwise.
(i) Public Statements. Before RDGI releases any information
concerning this Agreement, the Merger, or any of the other
transactions contemplated by this Agreement which is intended for
or may result in public dissemination thereof, RDGI shall
cooperate with Verdisys, shall furnish drafts of all documents or
proposed oral statements to Verdisys for comments, and shall not
release any such information without the written consent of
Verdisys Nothing contained herein shall prevent RDGI from
releasing any information if required to do so by law.
(j) Indemnification. RDGI agrees to indemnify and hold harmless
Verdisys and its officers, directors, managers, employees, agents
and counsel, against any and all losses, liabilities, claims,
damages, and expenses whatsoever (which shall include, for all
purposes of this Section 5.3(j), but not be limited to, counsel
fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation) as and
when incurred and whether or not involving a third party arising
out of, based upon, or in connection with (i) untrue statement or
alleged untrue statement of a material fact contained in this
Agreement or in any other document relating to this Agreement and
the Merger contemplated thereby, and (ii) any liability under
state or Federal securities laws resulting from any omission or
alleged omission to state a material fact required to be stated
this Agreement or any other document required hereunder, provided
in each case that such untrue statement, alleged untrue
statement, omission, or alleged omission relates to information
furnished by or on behalf of, or pertaining to, RDGI, any RDGI
Subsidiary, or any RDGI security holder or (ii) any breach of any
representation, warranty, covenant or agreement of RDGI contained
in this Agreement. The foregoing agreement to indemnify shall be
in addition to any liability RDGI may otherwise have, including
liabilities arising under this Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 Certain Representations and Warranties of Verdisys: Verdisys
represents and warrants to RDGI as follows:
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(a) Disclosures. Verdisys is incorporated in the State of California;
its principal place of business is in Texas; the jurisdictions in
which it is qualified to do business are California and Texas;
and the business which it presently conducts and which it
contemplates conducting is oil and gas services, including
lateral drilling and satellite services. Verdisys is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, with all
requisite power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates and
permits of and from, and declarations and filings with, all
federal, state, local and other governmental authorities and all
courts and other tribunals, to own, lease, license and use its
properties and assets and to carry on the business in which it is
now engaged and the business in which it contemplates engaging.
Verdisys is duly qualified to transact the business in which it
is engaged and is in good standing as a foreign corporation in
every jurisdiction in which its ownership, leasing, licensing, or
use of property or assets or the conduct of its business makes
such qualification necessary.
(b) Capitalization. The authorized capital stock of Verdisys consists
of 60,000,000 shares of Verdisys Common Stock, and 40,000,000
shares of Preferred Stock, zero par values, of which 17,935,137
Common shares. Verdisys is conducting a private placement of its
common shares and prior to Closing may issue up to five million
additional common shares pursuant to such placement. In addition,
prior to Closing Verdisys anticipates conversion of 3,650,909
currently outstanding warrants into common stock. Prior to
Closing, Verdisys anticipates conversion of currently outstanding
Series B Preferred Stock into 1,410,000 common shares of
Verdisys, and conversion of Series C Preferred Stock into 2
million common shares of Verdisys. Verdisys also has convertible
notes outstanding that are convertible into 2,971,988 shares of
common stock. Each of such outstanding shares of Verdisys Common
and Preferred Stock is validly authorized, validly issued, fully
paid and nonassessable, has not been issued and is not owned or
held in violation of any preemptive right of stockholders, and is
owned of record and beneficially by the following persons in the
case of Verdisys in accordance with the following table:
SEE Exhibit "A"
in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements and
voting trusts. Other than the shares and convertible securities
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disclosed herein, There is no commitment, plan or arrangement to
issue, and no outstanding option, warrant, or other right calling
for the issuance of, any share of capital stock of Verdisys or
any security or other instrument convertible into, exercisable
for, or exchangeable for capital stock of Verdisys, and there is
outstanding no security or other instrument convertible into or
exchangeable for capital stock of Verdisys.
(c) Financial Condition. Verdisys has delivered to RDGI true and
correct copies of its unaudited financial statements (profit and
loss statement and a balance sheet). Such financial statements
are true and correct. Since the preparation of such statements:
(i) There has at no time been a material adverse change in the
financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of
Verdisys.
(ii) Verdisys has not authorized, declared, paid or affected any
dividend or liquidating or other distribution in respect of
its capital stock or any direct or indirect redemption,
purchase or other acquisition of any stock of Verdisys.
(d) Tax and Other Liabilities. To its knowledge, Verdisys has no
material liability of any nature, accrued or contingent,
including without limitation liabilities for federal, state,
local or foreign taxes ("Taxes") and liabilities to customers or
suppliers, except those reflected in the financial statements
provided by Verdisys to RDGI. Verdisys has filed all federal,
state and local tax returns required to be filed by it, and all
such tax returns are true and correct and all taxes due by
Verdisys have been paid.
(e) Litigation and Claims. Except as previously disclosed to RDGI,
there is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending,
threatened or in prospect known to Verdisys, with respect to
Verdisys or any of its businesses, properties or assets.
(f) Properties. Verdisys has good and marketable title to all
properties and assets used in its business or owned by it, free
and clear of all liens, security interests, mortgages, pledges,
charges and encumbrances (except as set forth in the financial
statements and other disclosures by Verdisys to RDGI).
(g) Retirement Plans. Verdisys has no pension, profit sharing or
other incentive plans or any outstanding bonuses, incentive
compensation, vacations, severance pay, insurance or other
benefits, except as previously disclosed to RDGI.
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(h) Authority to Merge. Verdisys has all requisite power and
authority to execute, deliver and perform this Agreement. All
necessary corporate proceedings of Verdisys have been taken to
authorize the execution, delivery and performance of this
Agreement by Verdisys, other than approval of the holders of
Verdisys Common Stock. This Agreement has been duly authorized,
executed and delivered by Verdisys, constitutes the legal, valid
and binding obligation of Verdisys, and is enforceable as to it
in accordance with its terms. Except as set forth elsewhere
herein, no consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with,
any federal, state, local or other governmental authority or any
court or other tribunal is required by Verdisys for the
execution, delivery or performance of this Agreement by Verdisys.
No consent of any party to any contract, agreement, instrument,
lease, arrangement or understanding to which Verdisys is a party,
or to which any of its properties or assets are subject, is
required for the execution, delivery or performance of this
Agreement (except for the consents referred to in Section D of
the Verdisys Disclosure Letter). At the Effective Time, the
Surviving Corporation will acquire all right, title and interest
of Verdisys in and to all of its properties and assets, free and
clear of all liens, mortgages, security interests, pledges,
charges and encumbrances (except those listed in Section D of the
Verdisys Disclosure Letter).
6.2 Certain Representations and Warranties of RDGI: RDGI represents and
warrants to Verdisys as follows:
(a) Disclosure Letter. RDGI is incorporated in California; its
principal place of business is in California; the jurisdiction in
which it is qualified to do business is California; and the
business which it presently conducts and which it contemplates
conducting will be sold to a private party prior to the Closing..
RDGI is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of
incorporation, with all requisite power and authority, and all
necessary consents, authorizations, approvals, orders, licenses,
certificates and permits of and from, and declarations and
filings with, all federal, state, local and other governmental
authorities and all courts and other tribunals, to own, lease,
license and use its properties and assets and to carry on the
business in which it is now engaged and the business in which it
contemplates engaging. RDGI is duly qualified to transact the
business in which it is engaged and is in good standing as a
foreign corporation in every jurisdiction in which its ownership,
leasing, licensing, or use of property or assets or the conduct
of its business makes such qualification necessary.
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(b) Capitalization. The authorized capital stock of RDGI consists of
50,000,000 shares of RDGI Common Stock, and zero shares of
Preferred Stock, $0.001 par value, of which approximately
3,651,500 shares of Common Stock and zero shares of Preferred
Stock are outstanding. Immediately prior to Closing, RDGI shall
cause to be cancelled 2,500,000 shares of common stock. Each of
such outstanding shares of RDGI Common Stock is validly
authorized, validly issued, fully paid and nonassessable, has not
been issued and is not owned or held in violation of any
preemptive right of stockholders. There is no commitment, plan or
arrangement to issue, and no outstanding option, warrant, or
other right calling for the issuance of, any share of capital
stock of RDGI or any security or other instrument convertible
into, exercisable for, or exchangeable for capital stock of RDGI.
There is outstanding no security or other instrument convertible
into or exchangeable for capital stock of RDGI.
(c) Financial Condition. RDGI has delivered to Verdisys true and
correct copies of its audited and unaudited financial statements
(profit and loss statement and a balance sheet). Such financial
statements are true and correct. Since the preparation of the
aforementioned financial statements: (i) There has at no time
been a material adverse change in the financial condition,
results of operations, business, properties, assets, liabilities,
or future prospects of RDGI; (ii) RDGI has not authorized,
declared, paid or effected any dividend or liquidating or other
distribution in respect of its capital stock or any direct or
indirect redemption, purchase or other acquisition of any stock
of RDGI.
(d) Tax and Other Liabilities. RDGI has no liability of any nature,
accrued or contingent, including without limitation liabilities
for federal, state, local or foreign taxes ("Taxes") and
liabilities to customers or suppliers, except those reflected in
the financial statements provided by RDGI to Verdisys.
(e) Litigation and Claims. There is no litigation, arbitration,
claim, governmental or other proceeding (formal or informal), or
investigation pending, threatened or in prospect known to RDGI,
with respect to RDGI or any of its businesses, properties or
assets, other than those proceedings previously disclosed to
Verdisys.
(f) Properties. RDGI has good and marketable title to all properties
and assets used in its business or owned by it, free and clear of
all liens, security interests, mortgages, pledges, charges and
encumbrances (except as set forth in Section D of the RDGI
Disclosure Letter).
(g) Authority to Merge. RDGI has all requisite power and authority to
execute, deliver and perform this Agreement. All necessary
corporate proceedings of RDGI have been taken to authorize the
execution, delivery and performance of this Agreement by RDGI,
other than approval of the holders of RDGI Common Stock. This
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Agreement has been duly authorized, executed and delivered by
RDGI, constitutes the legal, valid and binding obligation of
RDGI, and is enforceable as to it in accordance with its terms.
Except as set forth elsewhere herein, no consent, authorization,
approval, order, license, certificate, or permit of or from, or
declaration or filing with, any federal, state, local or other
governmental authority or any court or other tribunal is required
by RDGI for the execution, delivery or performance of this
Agreement by RDGI. No consent of any party to any contract,
agreement, instrument, lease, arrangement or understanding to
which RDGI is a party, or to which any of its properties or
assets are subject, is required for the execution, delivery or
performance of this Agreement (except for the consents referred
to in Section D of the RDGI Disclosure Letter).
SECTION 7. ABANDONMENT AND TERMINATION
7.1 Right of RDGI to Abandon: RDGI's Board of Directors shall have the
right to abandon or terminate the Merger if any of the following shall
not be true or shall not have occurred, as the case may be, prior to
the Effective Time:
(a) Accuracy of Representations and Compliance with Conditions: All
representations and warranties of Verdisys contained in this
Agreement shall be accurate when made and, in addition, shall be
accurate as of the Effective Time as though such representations
and warranties were then made in exactly the same language by
Verdisys and regardless of knowledge or lack thereof on the part
of Verdisys or changes beyond their control; as of the Effective
Time, Verdisys shall have performed and complied with all
covenants and agreements and satisfied all conditions required to
be performed and complied with by them at or before the Effective
Time of this Agreement; and RDGI shall have received a
certificate executed by the chief executive officer and the chief
financial officer of Verdisys dated the Effective Time to that
effect.
(b) Other Closing Documents: Verdisys shall have delivered to RDGI at
or prior to the Effective Time such other documents as RDGI may
reasonably request in order to enable RDGI to determine whether
the conditions to its obligations under this Agreement have been
met and otherwise to carry out the provisions of this Agreement.
(c) Legal Action: There shall not have been instituted or threatened
any legal proceeding relating to, or seeking to prohibit or
otherwise challenge the consummation of, the transactions
contemplated by this Agreement, or to obtain substantial damages
with respect thereto.
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7.2 Right of Verdisys to Abandon: The Board of Directors of Verdisys shall
have the right to abandon or terminate the Merger if any of the
following shall not be true or shall not have occurred, as the case
may be, prior to the Effective Time:
(a) Accuracy of Representations and Compliance with Conditions. All
representations and warranties of RDGI contained in this
Agreement shall be accurate when made and, in addition, shall be
accurate as of the Effective Time as though such representations
and warranties were then made in exactly the same language by
RDGI and regardless of knowledge or lack thereof on the part of
RDGI or changes beyond their control; as of the Effective Time,
RDGI shall have performed and complied with all covenants and
agreements and satisfied all conditions required to be performed
and complied with by them at or before the Effective Time of this
Agreement; and Verdisys shall have received a certificate
executed by the chief executive officer and the chief financial
officer of the RDGI dated the Effective Time to that effect.
(b) Other Closing Documents. RDGI shall have delivered to Verdisys at
or prior to the Effective Time such other documents as Verdisys
may reasonably request in order to enable Verdisys to determine
whether the conditions to its obligations under this Agreement
have been met and otherwise to carry out the provisions of this
Agreement.
(c) Legal Action. There shall not have been instituted or threatened
any legal proceeding relating to, or seeking to prohibit or
otherwise challenge the consummation of, the transactions
contemplated by this Agreement, or to obtain substantial damages
with respect thereto.
SECTION 8. ADDITIONAL TERMS OF ABANDONMENT
8.1 Mandatory Abandonment: The Merger shall be abandoned or terminated if
the holders of at least the requisite majority of the shares of any of
the Constituent Corporations, as required by applicable state laws,
shall not have voted in favor of the adoption and approval of this
Agreement, the Merger and the other transactions contemplated hereby.
8.2 Optional Abandonment: In addition to the provisions of Section 7, the
Merger may be abandoned or terminated at or before the Effective Time,
notwithstanding the adoption and approval of this Agreement, the
Merger and the other transactions contemplated hereby by the
stockholders of the parties hereto:
(a) by mutual agreement of the Boards of Directors of the Constituent
Corporations; or
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(b) At the option of any of the respective Boards of Directors of the
Constituent Corporations, if the Effective Time shall not have
occurred on or before May 30, 2003;
8.3 Effect of Abandonment: If the Merger is rightfully abandoned or
terminated as provided in Section 7 or this Section 8:
(a) this Agreement shall forthwith become wholly void and of no
effect without liability on the part of either party to this
Agreement or on the part of any officer, director, controlling
person, employee, counsel, agent or shareholder thereof; and
(b) the Constituent Corporations shall each pay and bear its own fees
and expenses incident to the negotiation, preparation and
execution of this Agreement and its respective meetings of
stockholders, including fees and expenses of its counsel,
accountants, investment banking firm and other experts.
SECTION 9. GENERAL PROVISIONS
9.1 Further Actions: At any time and from time to time, each party agrees,
at its expense, to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes of
this Agreement.
9.2 Amendments: This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof and supersedes all
existing agreements among them concerning such subject matter. This
Agreement may be amended prior to the Effective Time (notwithstanding
stockholder adoption and approval) by a written instrument executed by
the Constituent Corporations with the approval of their respective
Boards of Directors.
9.3 Notices: Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified
mail, return receipt requested, or by Federal Express or similar
overnight delivery or courier service or delivered in person against
receipt to the party to whom it is to be given at the address of such
party set forth in the preamble to this Agreement. Notices hereunder
shall be deemed delivered only upon actual delivery against a signed
receipt.
9.4 Waiver: Any waiver by any party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any
other breach of that provision or of any breach of any other provision
of this Agreement. Any waiver must be in writing and be authorized by
a resolution of the Board of Directors of the waiving party.
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9.5 Binding Effect: The provisions of this Agreement shall be binding upon
and inure to the benefit of the Constituent Corporations and their
respective successors and assigns and shall inure to the benefit of
each indemnity.
9.6 Separability: If any provision of this Agreement is invalid, illegal
or unenforceable, the balance of this Agreement shall remain in
effect, and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other
persons and circumstances.
9.7 Headings: The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or
interpretation of this Agreement.
9.8 Counterparts; Governing Law: This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. It
shall be governed by and construed in accordance with the laws of the
State of California.
IN WITNESS WHEREOF, this Agreement has been approved by resolutions duly adopted
by the Board of Directors of each of the Constituent Corporations and has been
signed by duly authorized officers of each of the Constituent Corporations, and
each of the Constituent Corporations has caused its corporate seal to be
hereunto affixed and attested by the signature of its Secretary or Assistant
Secretary, all as of the date first above written.
RECONSTRUCTION DATA GROUP, INC.
/s/ Xxxxx Xxxxx
-------------------------------------
Xxxxx Xxxxx
President and Chief Executive Officer
VERDISYS, INC.
/s/ Xxx Xxxxxxxx
-------------------------------------
Xxx Xxxxxxxx
President and Chief Executive Officer
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