MERGER AGREEMENT AND PLAN
OF REORGANIZATION
This Agreement, is entered into as of January 28, 2004 (the "Agreement")
by and among MEMS USA, Inc. (Nevada), a corporation organized under the laws of
the State of Nevada (hereinafter "MEMS"), the shareholder guaranteeing MEMS's
obligations set forth on the signature page hereto (the "Guarantor"), MEMS USA,
Inc., a California corporation (hereinafter the "Company") and certain of the
shareholders of the Company as set forth on the signature page hereto (the
"Selling Shareholders").
WITNESSETH:
WHEREAS, the Selling Shareholders cumulatively own 80.18754% of the
outstanding capital stock of the Company; and
WHEREAS, the Guarantor cumulatively owns approximately 75% of the
outstanding capital stock of MEMS; and
WHEREAS, the parties intend that this Agreement shall constitute a plan of
reorganization (the "Plan") of a type described in Section 368(a) of the
Internal Revenue Code of 1986, as amended. However, no party is representing to
any other party that the transaction will so qualify. The Plan comprises the
merger (the "Merger") of a to-be-formed subsidiary of MEMS into the Company with
such newly formed subsidiary disappearing and the Company surviving, and the
conversion of all the Company's securities into newly issued shares of the
common stock of MEMS; and
WHEREAS, MEMS, the Company, the Guarantor and the Selling Shareholders
believe it is in their best interests to adopt and consummate the Plan,
NOW, THEREFORE, in consideration of the mutual terms and covenants set
forth herein, MEMS, the Company, the Guarantor and the Selling Shareholders
approve and adopt this Agreement and mutually covenant and agree with each other
as follows:
ARTICLE I
PLAN OF REORGANIZATION
1.01 The Merger.
(a) MEMS shall form a wholly owned corporation under the laws of the State
of California ("Msub"). MEMS will cause Msub to execute and deliver, and MEMS
agrees to execute and deliver, an Agreement of Merger substantially in the form
of Exhibit "1" hereto (the "Merger Agreement"), providing for the merger of Msub
with and into the Company (the "Merger"). The Company shall be the surviving
corporation in the Merger (the "Surviving Corporation") and as a result thereof
shall become a wholly owned subsidiary of MEMS.
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(b) Pursuant to the Merger, each share of common stock, no par value per
share, of the Company issued and outstanding immediately prior to the Effective
Time (as defined below) shall thereupon be converted into and become 1.7125634
of one validly issued, fully paid and nonassessable share of common stock, no
part value per share, of MEMS ("MEMS Common Stock"), subject to adjustment for
the elimination of fractional shares. No fractional shares shall be issued.
Instead, cash equal to $2.50 per share of eliminated fractional shares will be
paid in lieu thereof. MEMS has authorized the issuance, and shall issue, up to
10,000,000 shares of MEMS Common Stock to each holder of the Company's common
stock who is not a dissenter under Section 1.09 herein. The Company and the
Selling Shareholders will cause all stock certificates representing issued and
outstanding shares of the Company's Common Stock to be delivered, free and clear
of all encumbrances, to MEMS at or prior to delivery of certificates evidencing
ownership of the MEMS Common Stock into which the Company's Common Stock is to
be converted. Certificates representing MEMS Common Stock and the payment for
eliminated fractional shares will be delivered to the holders of the Company's
common stock at the later of the Effective Time or upon surrender to the Company
of valid stock certificates representing their shares of the Company's common
stock. Certificates representing MEMS Common Stock issued pursuant to the Merger
will bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER SAID ACT OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE IN THE OPINION OF
COUNSEL FOR THE ISSUE."
(c) At the Effective Time, each share of Common Stock of Msub that is
issued and outstanding will be converted into one newly issued share of the
Company common Stock. From and after the Effective Time, MEMS, as the sole
shareholder of the Company, shall be entitled to receive, upon surrender to the
Company of the certificate or certificates representing such shares, one or more
certificates representing the Company Common Stock, into which such shares have
been converted.
1.02 Filing of Merger Agreement, Effective Time. On the business day on
which (a) this Agreement and the Merger Agreement have been duly adopted and
approved by the requisite vote of the shareholders of the Company and (b) all
conditions to the closing of the transactions contemplated by this Agreement
shall have occurred, or such later date as shall be agreed upon by MEMS and the
Company, the Merger Agreement and any other documents necessary to effect the
Merger shall be filed in accordance with the California General Corporation Law
(the "California Law") and the Merger shall become effective (such time and date
are referred to herein as the "Effective Time"). The parties hereto will cause
such filings to occur as soon as practicable after the satisfaction or waiver of
the conditions to the Merger set forth in this Agreement.
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1.03 Effects of the Merger. As of the Effective Time, the Surviving
Corporation shall be a wholly owned subsidiary of MEMS. From and after the
Effective Time, the name of the Surviving Corporation shall be name of the
Company until changed or amended in accordance with applicable law.
1.04 Articles of Incorporation and Bylaws. From and after the Effective
Time, the Articles of Incorporation and the Bylaws of the Surviving Corporation
will be the Articles of Incorporation and the Bylaws of the Company until
changed or amended as provided therein or under the California law.
1.05 Directors and Officers. From and after the Effective Time, the
officers and directors of Mems shall be the officers and directors of the
Company immediately prior to the Effective Time.
1.06 Certificates for the Company Common Stock. Each certificate which
immediately prior to the Effective Time represented outstanding shares of the
Company Common Stock shall at and after the Effective Time be deemed to
represent the number of shares of MEMS Common stock into which shares of the
Company Common Stock represented by such certificates shall have been converted
pursuant to Section 1.1(b) herein. From and after the Effective Time, MEMS shall
be entitled to treat certificates for shares of the Company Common Stock as
evidencing the ownership of the whole number of shares of MEMS Common Stock into
which the shares of the Company Common Stock represented by such certificates
shall have been converted.
1.07 The Closing. The closing of the transactions contemplated by this
Agreement (the "closing") shall be held at 10:00 a.m. local time on the date of
the Effective Time at the offices of Xxxxxxxx & Kilkowski, 1900 Avenue of the
Stars, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at such other date, place and time as
the parties may agree (the "closing date").
1.08 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, shares of
the Company Common Stock which are dissenting shares (as defined in Section
1300(b) of the California Law) shall not be converted into or represent a right
to receive any shares of MEMS Common Stock, but the holders thereof shall be
entitled only to such rights as are granted by the California Law. Each holder
of dissenting shares who becomes entitled to payment therefore pursuant to the
California Law shall receive payment from the Surviving Corporation in
accordance with the California Law; provided, however, that (i) if any such
holder of dissenting shares shall have failed to establish his entitlement to
appraisal rights as provided in the California law, (ii) if any such holder of
dissenting shares shall have effectively withdrawn his demand for appraisal and
payment therefore under the California Law or (iii) if neither any holder of
dissenting shares nor the Surviving Corporation shall have filed a petition
demanding a determination of the value of all dissenting shares within the time
provided in the California Law, such holder or holders (as the case may be)
shall forfeit the right to appraisal of such shares
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of the Company Common Stock and such shares of the Company Common Stock shall
thereupon be deemed to have been converted, as of the Effective Time, into and
represent shares of MEMS Common Stock, without interest thereon, as provided in
Section 1.06 hereof.
(b) The Company shall give MEMS (i) prompt notice of any written demands
for appraisal and any other instruments served pursuant to the California Law
received by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the California Law. The
Company shall promptly make payment with respect to any demands for appraisal or
offer to settle or settle any such demands.
1.09 Election of Officers. The officers of MEMS shall resign their posts
effective upon the date this Agreement is signed by all the parties hereto (the
"signature date"), and Xxxxxxxx Weisdorn ("Weisdorn") shall be elected,
effective as of the signature date, to the offices of President, Secretary and
Treasurer of MEMS, to serve in those posts as set forth herein. Weisdorn shall
be responsible for running the daily operations of MEMS, and shall be authorized
to negotiate and enter into one or more agreements on behalf of MEMS for the
purposes of raising money therefor, so long as these agreements are no less
favorable to MEMS than the agreements which MEMS will be permitted to enter into
after the closing under Section 2.09 hereof, and such agreements are contingent
upon the consummation of the Merger. The Board of Directors of MEMS may, at its
discretion, dismiss Weisdorn from these positions, or any of them, if the Merger
is not consummated within 30 days of the signature date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING SHAREHOLDERS
Except as set forth in the Company's Disclosure Statement submitted
herewith as Schedule "B" (the "Disclosure Statement"), the Company and the
Selling Shareholders represent and warrant:
2.01 Ownership of Stock.
The record owners of the number of the Company's common stock are listed
in Schedule "A" hereto as of the date hereof and such owners will continue to
own such shares of the stock of the Company until the delivery thereof to MEMS
or the Company and all such shares of stock are or will be on the closing date
owned free and clear of all liens, encumbrances, charges and assessments of
every nature and subject to no restrictions with respect to transferability.
2.02 Capitalization
Except for this Agreement, there are no outstanding options, contracts,
calls, commitments, agreements or demands of any character relating to the stock
of the Company.
2.03 Organization and Authority.
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(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, with all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as now being conducted, is duly qualified and in good
standing in every jurisdiction in which the property owned, leased or operated
by it, or the nature of the business conducted by it, makes such qualification
necessary to avoid material liability or material interference in its business
operations, and is not subject to any agreement, commitment or understanding
which restricts or may restrict the conduct of its business in any jurisdiction
or location. The Company is presently qualified to do business in the State of
California.
(b) The outstanding shares of the Company are legally and validly issued,
fully paid and non-assessable.
(c) The Company does not own five percent (5%) or more of the outstanding
stock of any corporation.
(d) The minute book of the Company made available to MEMS contains
complete and accurate records of all meetings and other corporate actions of the
shareholders and the Board of Directors (and any committee thereof) of the
Company.
(e) The list of the officers, directors and shareholders of the Company
and copies of the articles of incorporation and by-laws currently in effect of
the Company made available to MEMS is complete and accurate.
(f) The execution and delivery of this Agreement does not, and the
consummation of the transaction contemplated hereby will not, subject to the
approval and adoption by the Shareholders of the Company, violate any provision
of the certificate/articles of incorporation or bylaws of the Company, or any
provisions thereof, or result in the acceleration of any obligation under, any
mortgage, lien, lease, agreement, instrument, court order, arbitration award,
judgment or decree to which the Company is a party, or by which it is bound, and
will not violate any other restriction of any kind or character to which it is
subject.
(g) The authorized capital stock of the Company is twenty-five million
(25,000,000) shares of common stock, no par value, of which approximately Five
Million Eight Hundred Thirty Nine Thousand Two Hundred (5,839,200) shares of
such stock will be issued and outstanding at the time of closing.
2.04 Financials.
(a) Audited financial statements (hereafter "financial statements")
of the Company through September, 2003, (the "statement date") have been
delivered by the Company to MEMS. Said financial statements are true and correct
in all material respects and present an
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accurate and complete disclosure of the financial condition of the Company as of
its date and for the periods covered.
(b) All accounts receivable, if any, (net of reserves for doubtful
accounts) of the Company shown on the books of account on the statement date and
as incurred in the normal course of business since that date, are collectible in
the normal course of business.
(c) The Company has good and marketable title to all of its assets,
business and properties including, without limitation, all such properties
reflected in the balance sheet as of the statement date except as disposed of in
the normal course of business, free and clear of any mortgage, lien, pledge,
charge, claim or encumbrance, except as shown on said balance sheet as of the
statement date and, in the case of real properties except for rights-of-way and
easements which do not adversely affect the use of such property.
(d) All currently used property and assets of the Company, or in
which it has an interest, or which it has in possession, are in good operating
condition and repair subject only to ordinary wear and tear.
2.05 Changes Since the Statement Date. Since the statement date, there
will not have been any material negative change in the financial position or
assets of the Company.
2.06 Liabilities. To the best of the knowledge of management, there are no
material liabilities of the Company, whether accrued, absolute, contingent or
otherwise, which arose or relate to any transaction of the Company, its agents
or servants occurring prior to the statement date, which are not disclosed by or
reflected in said financial statements. There are no such liabilities of the
Company which have arisen or relate to any transaction of the Company, its
agents or servants, occurring since the statement date, other than normal
liabilities incurred in the normal conduct of the business of the Company, and
none of which have a material adverse effect on the business or financial
condition of the Company, except as disclosed in the Disclosure Statement. As of
the date hereof, there are no known circumstances, conditions, happenings,
events or arrangements, contractual or otherwise, which may hereafter give rise
to liabilities, except in the normal course of business of the Company.
2.07 Taxes. All federal, foreign, county and local income, ad valorem,
excise, profits, franchise, occupation, property, sales, use gross receipts and
other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by the Company, and there are no unpaid taxes which are,
or could become a lien on the properties and assets of the Company, except as
provided for in the financial statements of their date, or have been incurred in
the normal course of business of the Company since that date. All tax returns of
any kind required to be filed have been filed and the taxes paid or accrued.
2.08 Accuracy of All Statements Made by the Company. No representation or
warranty by the Company in this Agreement, nor any statement, certificate,
schedule or exhibit
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hereto furnished or to be furnished by or on behalf of the Shareholders pursuant
to this Agreement, nor any document or certificate delivered to MEMS pursuant to
this Agreement or in connection with actions contemplated hereby, contains or
shall contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statement contained therein not misleading.
2.09 Limitation of Subsequent Corporate Actions. It is expressly
understood and agreed that MEMS, and its affiliates and shareholders, will take
all steps necessary to insure that with respect to the operations of MEMS for a
period of twelve months following the Effective Time, 1) there shall be no
reverse split, 2) except for stock issued pursuant to the exercise of employee
stock options, no freely trading stock shall be issued for less than $1.00 per
share except to fund the operations of MEMS or the Company, and no restricted
stock shall be issued for less than seventy per cent of the market value of
MEMS' freely trading stock (as determined in good faith by MEMS' Board of
Directors, and 3) the assets existing in the new subsidiary, or to be
transferred to the new subsidiary, shall remain in place as part of its business
operations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MEMS AND GUARANTOR
Except as set forth in MEMS' Disclosure Statement submitted herewith as
Schedule "C" (the "MEMS Disclosure Statement"), MEMS and the Guarantor represent
and warrant:
3.01 Organization and Authority.
(a) MEMS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, with full power and authority to
enter into and perform the transactions contemplated by this Agreement, and with
all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as now being conducted, is duly
qualified and in good standing in every jurisdiction in which the property
owned, leased or operated by it, or the nature of the business conducted by it,
makes such qualification necessary to avoid material liability or material
interference in its business operations, and is not subject to any agreement,
commitment or understanding which restricts or may restrict the conduct of its
business in any jurisdiction or location. MEMS is presently qualified to do
business in the State of Nevada.
(b) The outstanding shares of MEMS are legally and validly issued, fully
paid and non-assessable.
(c) MEMS does not own five percent (5%) or more of the outstanding stock
of any corporation except for Msub.
(d) The minute books of MEMS and Msub made available to the Company
contains complete and accurate records of all meetings and other corporate
actions of the shareholders and the Board of Directors (and any committee
thereof) of MEMS .
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(e) The MEMS Disclosure Statement contains a list of the officers,
directors and shareholders of MEMS and copies of the articles of incorporation
and by-laws currently in effect of MEMS.
(f) The execution and delivery of this Agreement does not, and the
consummation of the transaction contemplated hereby will not violate any
provision of the certificate/articles of incorporation or bylaws of MEMS, or any
provisions thereof, or result in the acceleration of any obligation under, any
mortgage, lien, lease, agreement, instrument, court order, arbitration award,
judgment or decree to which MEMS is a party, or by which it is bound, and will
not violate any other restriction of any kind or character to which it is
subject.
(g) The authorized capital stock of MEMS is one hundred million
(100,000,000) shares of common stock, $.001 par value, of which thirteen million
three hundred thousand shares (13,300,000) shares of such stock will be issued
and outstanding at the time of closing.
(h) At the time of closing, MEMS will have no assets or liabilities other
than that which is reflected in its audited financial statements.
(i) At the time of closing, MEMS will have taken all necessary steps to
comply with all applicable state and federal securities laws and regulations and
that, to the knowledge of MEMS, at the time of closing, there will be no
litigation, arbitration, governmental or other proceeding (formal or informal),
claim or investigation pending or threatened, with respect to the MEMS's
compliance with any and all applicable securities laws and regulations.
3.02 Performance of This Agreement. The execution and performance of this
Agreement and the issuance of stock contemplated hereby, has been authorized by
the board of directors of MEMS .
3.03 Financials.
(a) True copies of the audited financial statements of MEMS as of
December 31, 2003 have been delivered to the Company by MEMS. These statements
have been examined and certified by certified public accountants. Said financial
statements are true and correct in all material respects and present an accurate
and complete disclosure of the financial condition and earnings of MEMS for the
periods covered, in accordance with generally accepted accounting principles
applied on a consistent basis.
(b) All accounts receivable, if any, (net of reserves for doubtful
accounts) of MEMS shown on financial statement, and as incurred in the normal
course of business since that date, are collectible in the normal course of
business.
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(c) MEMS has good and marketable title to all of its assets,
business and properties including, without limitation, all such properties
reflected in the aforementioned balance sheet, except as disposed of in the
normal course of business, free and clear of any mortgage, lien, pledge, charge,
claim or encumbrance, except as shown on said balance sheet, and, in the case of
real properties, except for rights-of-way and easements which do not adversely
affect the use of such property.
3.04 Changes Since Date of Financial Statements. Since the date of the
financial statements, except as disclosed in writing, there has not been any
material change in the business, financial position or assets of MEMS. At the
time of the Closing, MEMS shall have no debt.
3.05 Accuracy of All Statements Made by MEMS. No representation or
warranty by MEMS in this Agreement, nor any statement, certificate, schedule or
exhibit hereto furnished or to be furnished by MEMS pursuant to this Agreement,
nor any document or certificate delivered to the Company or the Shareholders
pursuant to this Agreement or in connection with actions contemplated hereby,
contains or shall contain any untrue statement of material fact or omits or
shall omit a material fact necessary to make the statement contained therein not
misleading.
3.06 Legality of Shares to be Issued. The shares of common stock of MEMS
to be delivered pursuant to this Agreement, when so delivered, will have been
duly and validly authorized and issued by MEMS and will be fully paid and
non-assessable.
3.07 No Covenant as to Tax Consequences. It is expressly understood and
agreed that neither MEMS nor its officers or agents has made any warranty or
agreement, expressed or implied, as to the tax consequences of the transactions
contemplated by this Agreement or the tax consequences of any action pursuant to
or growing out of this Agreement.
3.08 Taxes. All federal, foreign, county and local income, ad valorem,
excise, profits, franchise, occupation, property, sales, use gross receipts and
other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by MEMS, and there are no unpaid taxes which are, or
could become a lien on the properties and assets of MEMS, except as provided for
in the financial statements of their date, or have been incurred in the normal
course of business of MEMS since that date. All tax returns that are required to
be filed have been filed and the taxes paid or accrued.
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ARTICLE IV
COVENANTS OF THE COMPANY
4.01 Access to Information. MEMS and its authorized representatives shall
have full access during normal business hours to all properties, books, records,
contracts and documents of the Company, and the Company shall furnish or cause
to be furnished to MEMS and its authorized representatives all information with
respect to its affairs and business of the Company as MEMS may reasonably
request.
4.02 Actions Prior to Closing. From and after the date of this Agreement
and until the closing date, the Company shall not materially alter its business.
ARTICLE V
CONDITIONS PRECEDENT TO MEMS'S OBLIGATIONS
Each and every obligation of MEMS to be performed on the closing date
shall be subject to the satisfaction of MEMS of the following conditions:
5.01 Truth of Representations and Warranties. The representations and
warranties made by the Company and Selling Shareholders in this Agreement or
given on its behalf hereunder shall be substantially accurate in all material
respects on and as of the closing date with the same effect as though such
representations and warranties had been made or given on and as of the closing
date.
5.02 Compliance with Covenants. The Company shall have performed and
complied with all obligations under this Agreement which are to be performed or
complied with by it prior to or on the closing date, including the delivery of
the closing documents specified hereafter.
5.03 Absence of Suit. No action, suit or proceedings before any court or
any governmental or regulatory authority shall have been commenced or threatened
and, no investigation by any governmental or regulatory authority shall have
been commenced, against the Selling Shareholders, the Company or any of its
affiliates, associates, officers or directors of any of them, seeking to
restrain, prevent or change the transactions contemplated hereby, or questioning
the validity or legality of any such transactions, or seeking damages in
connection with any of such transactions.
5.04 Receipt of Approvals. All approvals, consents and/or waivers that are
necessary to effect the transactions contemplated hereby shall have been
received.
5.05 No Material Adverse Change. As of the closing date there shall not
have occurred any material adverse change that materially impairs the ability of
the Company to conduct its business or the earning power thereof on the same
basis as in the past.
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5.06 Accuracy of Financial Statements. MEMS and its representatives shall
be satisfied as to the accuracy of all balance sheets, statements of income and
other financial statements of the Company furnished to MEMS herewith.
5.07 Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as MEMS may request shall have been
delivered to MEMS. The Company shall have delivered certificates in such detail
as MEMS may request as to compliance with the conditions set forth in this
Article V.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY AND THE SELLING SHAREHOLDERS
Each and every obligation of the Company and the Selling Shareholders to
be performed on the closing date shall be subject to the satisfaction prior
thereto of the following conditions:
6.01 Truth of Representations and Warranties. The representations and
warranties of MEMS contained in this Agreement shall be true at and as of the
closing date as though such representations and warranties were made at and as
of the transfer date.
6.02 MEMS 's Compliance with Covenants. MEMS shall have performed and
complied with its obligations under this Agreement which are to be performed or
complied with by it prior to or on the closing date.
6.03 Absence of Suit. No action, suit or proceedings before any court or
any governmental or regulatory authority shall have been commenced or threatened
and, no investigation by any governmental or regulatory authority shall have
been commenced against MEMS, or any of the affiliates, associates, officers or
directors of MEMS seeking to restrain, prevent or change the transactions
contemplated hereby, or questioning the validity or legality of any such
transactions, or seeking damages in connection with any of such transactions.
6.04 Receipt of Approvals, Etc. All approvals, consents and/or waivers
that are necessary to effect the transactions contemplated hereby shall have
been received.
6.05 No Material Adverse Change. As of the closing date there shall not
have occurred any material adverse change which materially impairs the ability
of MEMS to conduct its business or the earning power thereof on the same basis
as in the past.
6.06 Accuracy of Financial Statements. The Company and the Selling
Shareholders shall be satisfied as to the accuracy of all balance sheets,
statements of income and other financial statements of MEMS furnished to the
Company herewith.
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6.07 Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as the Company may request shall have
been delivered to the Company. MEMS shall have delivered certificates in such
detail as the Shareholders may request as to compliance with the conditions set
forth in this Article VI.
6.08 Opinion of Company's Counsel. MEMS shall have delivered to the
Company an opinion of Xxxxxx Xxxxx, counsel for MEMS, addressed to the Company,
dated as of the closing date and substantially in the form of the Exhibit "2"
attached hereto.
ARTICLE VII
INDEMNIFICATION
(a) The Selling Shareholders and the Company shall indemnify MEMS from and
against any loss, cost, expense or other damage suffered by MEMS resulting from,
arising out of, or incurred with respect to the falsity or the breach of any
representation, warranty or covenant made by the Company herein.
Specifically, the Selling Shareholders and the Company shall be
responsible for any and all "finders" fees associated with the transaction and
shall indemnify MEMS and the Guarantor of from such fees or from any persons
claiming to be entitled to such,. Persons who may make such a claim are listed
in Schedule D. All parties acknowledge that Xxxx Xxxxxxxxxx, individully or
through his company New Century Management, Inc. introduced the parties to each
other, and that neither Xxxx Pittsburgh, Four Pitt, Inc., nor Xxxxxx Xxxxx had
anything to so with such introduction.
(b) MEMS and the Guarantor shall indemnify the Company and the Selling
Shareholders from and against any loss, cost, expense or other damage suffered
by the Company or the Selling Shareholders resulting from, arising out of, or
incurred with respect to the falsity or the breach of any representation,
warranty or covenant made by MEMS herein.
ARTICLE VIII
CLOSING
8.01 Documents To Be Delivered by the Company. At the closing the Company
shall deliver to MEMS the following documents:
(a) Certificates or assignments for all shares of stock of the
Company in the manner and form required by sub-section 1.01 hereof. The Company
must deliver certificates evidencing ownership of at least 80% of all issued and
outstanding shares of the Company's common stock before MEMS will be required to
consummate the Merger.
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(b) A certificate signed by the President of the Company that the
representations and warranties made by the Company in this Agreement are true
and correct on and as of the closing date with the same effect as though such
representations and warranties had been made on or given on and as of the
closing date and that Shareholders have performed and complied with all of their
obligations under this Agreement which are to be performed or complied with by
or prior to or on the closing date.
(c) A copy of the by-laws of the Company certified by its secretary
and a copy of the certificate of incorporation of the Company.
(d) Such other documents of transfer, certificates of authority and
other documents as MEMS may reasonably request.
(e) A certified copy of the duly adopted resolutions of the board of
directors of the Company authorizing or ratifying the execution and performance
of this Agreement and authorizing or ratifying the acts of its officers and
employees in carrying out the terms and provisions thereof.
8.02 Documents To Be Delivered by MEMS . At the closing MEMS shall deliver
to Shareholders the following documents:
(a) Certificates for the number of shares of common stock of MEMS as
determined in Article I hereof.
(b) A certified copy of the duly adopted resolutions of the board of
directors of MEMS authorizing or ratifying the execution and performance of this
Agreement and authorizing or ratifying the acts of its officers and employees in
carrying out the terms and provisions thereof.
(c) A certificate signed by the President of MEMS that the
representations and warranties made by MEMS in this Agreement are true and
correct on and as of the closing date with the same effect as though such
representations and warranties had been made on or given on and as of the
closing date and that MEMS has performed and complied with all of their
obligations under this Agreement which are to be performed or complied with by
or prior to or on the closing date.
(d) Documents for the appointment of new management and the
resignation of current management.
(e) An opinion of counsel as set forth in section 6.08 above.
13
ARTICLE IX
TERMINATION AND ABANDONMENT
This Agreement may be terminated and the transaction provided for by this
Agreement may be abandoned without liability on the part of any part to any
other, at any time before the closing date, or on a post closing basis as
provided previously herein:
(a) By mutual consent of MEMS and the Company;
(b) By MEMS if any of the conditions provided for in Article V of
this Agreement have not been met and have not been waived in writing by MEMS.
(c) By the Company if any of the conditions provided for in Article
VI of this Agreement have not been met and have not been waived in writing by
the Company.
In the event of termination and abandonment by any party as above provided
in this Article, written notice shall forthwith be given to the other party, and
each party shall pay its own expenses incident to preparation for the
consummation of this Agreement and the transactions contemplated hereunder.
ARTICLE X
MISCELLANEOUS
10.01 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given, if delivered by hand or
mailed, certified or registered mail with postage prepaid:
(a) If to the Company or the Selling Shareholders, to Xxxxxxxx Weisdorn at
0000 Xxxxxxx Xxxxxx Xx. #0-000, Xxxxxxxx Xxxxxxx, XX 00000, with copy to Xxx
Xxxxxxxx, Esq., of Xxxxxxxx & Kilkowski, at 0000 Xxxxxx xx xxx Xxxxx, 00xx
Xxxxx, Xxx Xxxxxxx, XX 00000, or to such other person and place as the Company
shall furnish to MEMS in writing; or
(b) If to MEMS or the Gurantor, to Xxxxxx X. Xxxxx, P.C., 0000 Xxxxxxxx,
Xxxx., Xxxxxxxx, Xxxx 00000, or to such other person and place as MEMS shall
furnish to Company in writing.
10.02 Announcements. Until the Effective Time, announcements concerning
the transactions provided for in this Agreement by either the Company or MEMS
shall be subject to the approval of the other in all essential respects, except
that the approval of the Company shall not be required as to any statements and
other information that MEMS may submit to its shareholders.
10.03 Default. Should any party to this Agreement default in any of the
covenants, conditions, or promises contained herein, the defaulting party shall
pay all costs and expenses, including a reasonable attorney's fee, which may
arise or accrue from enforcing this Agreement, or in pursuing any remedy
provided hereunder or by the statutes of the State of Nevada or the laws of the
United States of America.
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10.04 Assignment. This Agreement may not be assigned in whole or in part
by the parties hereto without the prior written consent of the other party or
parties.
10.05 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, and their successors and
assigns.
10.06 Holidays. If any obligation or act required to be performed
hereunder shall fall due on a Saturday, Sunday or other day which is a legal
holiday established by the State of Nevada, such obligation or act may be
performed on the next succeeding business day with the same effect as if it had
been performed upon the day appointed.
10.07 Computation of Time. The time in which any obligation or act
provided by this Agreement is to be performed is computed by excluding the first
day and including the last, unless the last day is a holiday, in which event
such day shall also be excluded.
10.08 Governing Law and Venue. This Agreement shall be governed by and
interpreted pursuant to the laws of the State of Nevada and the United States of
America. Any action to enforce the provisions of this Agreement shall be brought
in a court of competent jurisdiction within the State of Nevada, and in no other
place. Each party concedes that the State of Nevada is proper venue, and that
such state will have jurisdiction to hear any such action.
10.09 No Other Agreements. This Agreement constitutes the entire Agreement
between the parties and there are and will be no oral representations which will
be binding upon any of the parties hereto.
10.10 Rights are Cumulative. The rights and remedies granted hereunder
shall be in addition to and cumulative of any other rights or remedies provided
under the laws of the State of Nevada or the United States of America.
10.11 Waiver. No delay or failure in the exercise of any power or right
shall operate as a waiver thereof or as an acquiescence in default. No single or
partial exercise of any power or right hereunder shall preclude any other or
further exercise thereof or the exercise of any other power or right.
10.12 Survival of Covenants, Etc. All covenants, representations, and
warranties made herein to any parties or in any statement or document delivered
to any party hereto, shall survive the making of this Agreement and shall remain
in full force and effect until the obligations of such party hereunder have been
fully satisfied.
10.13 Further Action. The parties hereto agree to execute and deliver such
additional documents and to take such other and further action as may be
required to carry out fully the transaction(s) contemplated herein.
15
10.14 Amendment. This Agreement or any provision hereof may not be
changed, waived, terminated or discharged except by means of a written
supplemental instrument signed by the party or parties against whom enforcement
of the change, waiver, termination, or discharge is sought.
10.15 Headings. The descriptive headings of the various Sections or parts
of this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
10.16 Counterparts. This agreement may be executed in two or more
partially or fully executed counterparts, each of which shall be deemed an
original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument. A facsimile signature of a party may
be used as though it is an original.
[REMAINDER OF PAGE BLANK; SIGNATURE PAGES TO FOLLOW]
16
IN WITNESS WHEREOF, the parties hereto executed the foregoing Acquisition
Agreement effective the 28th day January, 2004.
"MEMS" MEMS USA, Inc. (Nevada)
By
--------------------------
-------------------------, President
"THE COMPANY" MEMS USA, INC.(California)
By
--------------------------
Xxxxxxxx Weisdorn, President
"SELLING SHAREHOLDERS" By
--------------------------
By
--------------------------
By
--------------------------
"GUARANTOR"
BSI, Inc.
By
--------------------------
17
SCHEDULE "A"
LIST OF THE SELLING SHAREHOLDERS OF MEMS USA, INC. (CALIFORNIA)
SHAREHOLDERS:
Xxxxxxxx Weisdorn 1,651,000
Xxx & Xxxxx Xxxxx 1,511,800
Xxxxxx X. Xxxxxxxxxxx 1,519,800
18
SCHEDULE "B"
DISCLOSURE STATEMENT OF THE COMPANY AND SELLING SHAREHOLDERS
Employee Stock Options granted are: 2,637,000
Employee Stock Options vested are: 16,000
19
SCHEDULE "C"
DISCLOSURE STATEMENT OF MEMS AND GUARANTORS
20
SCHEDULE D
FINDERS OR PERSONS CLAIMING TO BE SUCH
Xxxx Xxxxxxxxxx, or New Century Management, Inc.
Xxxxxx Xxxxx
Xxxx Pittsburg, or Four Pitt, Inc.
21
EXHIBIT A
MERGER AGREEMENT
22
EXHIBIT "B"
Opinion of Counsel
------, 2004
MEMS USA, Inc.
Re: MEMS USA, Inc., (NEVADA)
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 6.08 of the Merger
Agreement and Plan of Reorganization entered into as of January __, 2004 (the
"Agreement"), by and among MEMS USA, Inc. (California) and certain shareholders
thereof, and MEMS USA, Inc. (Nevada), and certain shareholders thereof.
Capitalized terms used herein without definition shall have the meanings
specified in the Agreement.
We are counsel to MEMS and the Guarantors and are delivering this opinion
in connection with the preparation, execution and delivery of the Agreement. In
our capacity as legal counsel to MEMS, we have responsibility for the legal
affairs relating to the matters covered herein. For purposes of this opinion, we
have examined the following:
(1) The Agreement;
(2) MEMS's Articles of Incorporation (the "Articles");
(3) Resolutions of MEMS's Board of Directors and holders of the
requisite numbers of MEMS's common stock; and
(4) A Certificate(s) from the Chairman, Chief Executive Officer,
Secretary and member of the Board of Directors of MEMS.
23
In addition, we have examined the originals, or copies certified to our
satisfaction, of such other company records of MEMS, certificates of public
officials and of officers of MEMS, and agreements, instruments and other
documents, as we have deemed necessary as a basis for the opinions expressed
below. We have assumed that all documents submitted to us as originals are
authentic and that all documents submitted to us as faxed copies or photocopies
conform to original documents. As to questions of fact material to such
opinions, we have, when relevant facts were not independently established by us,
relied upon certificates of MEMS or its officers or of public officials. We have
assumed the due execution and delivery, pursuant to due authorization, of the
Agreement, and each agreement ancillary thereto, by all parties thereto other
than the Company.
The opinions expressed below are limited to the laws of the States of
Nevada, California and the Federal law of the United States.
Based upon and subject to the foregoing and except as set forth in the
Stock Purchase Agreement or the Schedule of Exceptions thereto, we are of the
opinion that:
(a) MEMS is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Nevada, and
has all corporate power and authority necessary to own its
properties and to conduct its business as, to our knowledge,
it is presently conducted.
(b) MEMS has the requisite corporate power and authority to
execute, deliver and perform its obligations under the
Agreement.
(c) All corporate action on the part of MEMS, its directors and
stockholders necessary for the authorization, execution,
delivery and performance of the obligations under the
Agreement by MEMS has been taken.
(d) The authorized capital stock of MEMS consists of ________
shares of common stock, fully paid and non a nonassessable. To
our knowledge, except as described above, there are no other
presently outstanding preemptive rights, options, warrants,
other conversion privileges, or rights to purchase or acquire
any of the authorized but unissued stock or other securities
of MEMS.
(e) The Agreement constitutes legal, valid and binding obligations
of MEMS enforceable against MEMS in accordance with their
terms. The Agreement has been duly executed by MEMS.
24
(f) The common stock to be issued to Shareholders, when issued in
compliance with the provisions of the Agreement and the
Articles and upon receipt by MEMS of the consideration set
forth in the Agreement, will be duly authorized, validly
issued, fully paid and nonassessable.
(g) The execution, delivery and performance of the Agreement have
not resulted and will not result in (i) a violation of the
Articles or MEMS's Bylaws, (ii) a material violation of any
statute, rule or regulation of federal or Nevada law
applicable to MEMS, (iii) to our knowledge, a violation of any
judgment or order, or (iv) a default by MEMS under any
Contractual Obligation.
(h) To our knowledge, there is no action, suit, proceeding or
investigation pending or threatened against MEMS that (i)
questions the validity of the Agreement or the right of MEMS
to enter into the Agreement or (ii) if determined adversely,
would be likely to result in a material adverse change in the
financial condition or business of MEMS.
(i) No consent, approval or authorization of or designation,
declaration or filing with, any federal or Nevada state
governmental authority on the part of MEMS is required in
connection with the valid execution, delivery and performance
of the Agreement, or the offer, sale or issuance of the Shares
(and the Common Stock issuable upon conversion thereof).
(j) Based in part upon the representations made by you in the
Agreement, the offer, sale and issuance of the Shares to be
issued in conformity with the terms of the Agreement,
constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act and the
qualification requirements of the California Corporate
Securities Law of 1968, as amended.
The opinions set forth above are subject to the following qualifications:
This opinion is limited to the matters stated herein and no opinions are
to be inferred or may be implied beyond the matters expressly so stated. This
opinion speaks as of the date first written above. We assume no obligation to
supplement this opinion if any applicable laws change after the date of this
opinion, or if we become aware of any facts that might change the opinions
expressed above after the date of this opinion.
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This opinion is being furnished only to the addressee, is solely for its
benefit, and may not be relied upon for any other purpose, or relied upon by any
other person, firm or corporation for any purpose, without our prior written
consent.
Yours very truly,
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