EXHIBIT 2
AGREEMENT AND PLAN OF EXCHANGE
This Agreement and Plan of Exchange ("Agreement") between
Traffic Technology, Inc., an Arizona corporation ("Traffic Tech" or
"TTI"), and CalbaTech, Inc., a Nevada corporation ("CalbaTech" or
"Acquired Corporation"), the two corporations acting by their
respective boards of directors and sometimes collectively referred to
as the "Constituent Corporations," is entered into this 12th day of
December, 2002, and the Effective Date shall be the latter date
written in conjunction with the signatures affixed hereto.
WHEREAS, Traffic Tech is a corporation organized and existing
under the laws of the State of Arizona, having been originally
incorporated in May 1998 with its principal business office located
at 0000 X. Xxxxx Xxxx, #X0, Xxxxxxxxxx, XX 00000;
WHEREAS, the authorized capital stock of Traffic Tech consists
of Ninety Nine Million (99,000,000) shares of common stock, par value
of one cent ($0.01) per share, of which Fourteen Million, Two Hundred
Fifty-Six Thousand, Nine Hundred and Seventy (14,256,970) shares are
presently issued and outstanding.
WHEREAS, CalbaTech is a corporation organized and existing under
the laws of the State of Nevada, having been originally incorporated
on April 29, 2002, with its principal business office located at
00000 Xxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000;
WHEREAS, the authorized capital stock of CalbaTech consists of
Twenty-Five Million (25,000,000) shares of common stock, par value of
$0.001) per share, of which Ten Million (10,000,000) shares are
presently issued and outstanding.
WHEREAS, the respective Boards of Directors of Traffic Tech and
CalbaTech, as well as their respective shareholders, deem it
desirable and in the best interests of the corporations and their
stockholders that the corporations enter into this Agreement pursuant
to the terms and conditions contained herein; and
WHEREAS, in order to consummate this exchange and in
consideration of the mutual benefits to be derived and the mutual
agreements contained herein, Traffic Tech and CalbaTech approve and
adopt this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual
agreements, provisions and covenants herein contained, it is agreed
by and between the parties that, in accordance with the provisions of
the laws of the State of Nevada, there shall be an exchange of
interest between Traffic Tech and CalbaTech as of the Closing,
planned for December 20, 2002, with CalbaTech becoming a subsidiary
of Traffic Tech, all on the terms and conditions set forth as follows:
1. CalbaTech shareholders will transfer all CalbaTech stock to
Traffic Tech, and pay Traffic Tech $200,000;
2. In consideration of the above, Traffic Tech will issue new
shares to equal an 89% interest to CalbaTech shareholders,
pro-rata, under the provisions of Article IV;
3. TTI will transfer title to all its assets to Patent Technology
LLC and make certain payments as agreed to fully satisfy any
claims by Paten Technology LLC against TTI; and
4. TTI will make payments as agreed to any remaining creditors of
TTI to fully satisfy their claims against TTI.
ARTICLE I
EXCHANGE OF INTEREST
1. Shareholder Approval.
Both CalbaTech and Traffic Tech have received approval by the
majority of the shares entitled to vote of each of the Constituent
Corporations to approve and adopt this Agreement whereby Traffic Tech
would acquire CalbaTech as a wholly-owned subsidiary and the
Constituent Corporations have received the authority to immediately
proceed to effectuate the exchange of interest between CalbaTech and
Traffic Tech.
2. Filings After Shareholder Approval.
As soon as practicable after all conditions to the obligations
of the parties to this agreement to the effect the exchange of
interest shall have been satisfied or waived, Traffic Tech shall file
with the Arizona Secretary of State the documents necessary and
required by Arizona Law and take such other and future actions as may
be required by Arizona law to make the exchange of interest
effective. Notwithstanding the duty imposed by Arizona law to notify
the Arizona Secretary of State, the exchange of interest between
CalbaTech and Traffic Tech shall become effective upon Closing.
ARTICLE II
NAME AND CONTINUED CORPORATE EXISTENCE
OF ACQUIRED CORPORATION
The corporate name of CalbaTech, the acquired corporation, whose
corporate existence is to survive this exchange of interest and
continue thereafter, and its identity, existence, purposes, powers,
objects, franchises, rights and immunities shall continue unaffected
and unimpaired by the exchange of interest.
ARTICLE III
DIRECTORS AND OFFICERS
OF ACQUIRED CORPORATION
1. Directors.
Upon Closing, Traffic Tech directors will nominate Xxxxx XxXxxxx
to the Directors seat recently vacated. Immediately thereafter, two
Traffic Tech directors will resign, and the remaining three directors
(Xxxxxxx, Bourke and DeOlden) will nominate Xxxxxx Xxxxx and Xxxx
Xxxxxx to the two vacated seats. If desired, and at the sole
discretion of the majority of the directors, Xxxxxxx and Bourke will
then resign their seats. The respective names of the Directors of
the Acquired Corporation are as follows:
Xxxxxx Xxxxx
Xxxxx XxXxxxx
Xxxx Xxxxxx
2. Officers.
The current officers of Traffic Tech shall resign upon Closing.
The officers of the Acquired Corporation, who shall hold office until
their successors have been elected or appointed and shall have
qualified, or as otherwise provided in its bylaws, are as follows:
Xxxxx XxXxxxx, President/Secretary
Xxxxxx Xxxxx, Chief Operating Officer/Treasurer
Xxxx Xxxxxx, Vice President
ARTICLE IV
TERMS OF THE EXCHANGE OF SHARES
At Closing, Traffic Tech, pursuant to its receipt of shareholder
approval and Board of Director approval, shall effect a Fourteen for
One (14 for 1) reverse split of its outstanding shares such that,
after the reverse split, there shall be One Million, Two Hundred
Thousand (1,200,000) shares of common stock outstanding. Traffic Tech
thereafter agrees to issue to CalbaTech Nine Million Seven Hundred
Thousand (9,700,000) shares, par value of One Cent ($0.01) per share,
of Traffic Tech for all of the current outstanding shares of
CalbaTech. It is understood and agreed to by the Constituent
Corporations that, post issuance of shares to CalbaTech, CalbaTech
will own Eighty-Nine Percent (89%) of the outstanding shares of
Traffic Tech. It is further understood that in the event that there
are not enough shares available to issue the entire Eighty-Nine
Percent (89%) controlling interest to CalbaTech prior to its
acquisition, Traffic Tech will issue all of the shares that it has
authorized and understands and agrees that CalbaTech will take such
steps, post acquisition, to increase the number of authorized shares
and thereafter issue that amount of shares to equal the agreed upon
Eighty-Nine Percent (89%) interest.
ARTICLE V
OTHER TERMS OF PAYMENT
CalbaTech agreed to pay to Traffic Tech a total of Two Hundred
Thousand Dollars ($200,000) under the following: CalbaTech agrees to
make a non-refundable payment to Traffic Tech of Twenty Thousand
Dollars ($20,000) upon the execution of this Agreement and will pay
to Traffic Tech Eighty Thousand Dollars ($80,000) at Closing,
scheduled for December 20, 2002,for a total initial payment of One
Hundred Thousand Dollars. These proceeds will be used to settle
negotiated debts of Traffic Tech. CalbaTech agrees to make another
payment of Fifty Thousand Dollars ($50,000) three (3) months after
the Closing, and a final payment of Fifty Thousand Dollars ($50,000)
six (6) months after closing (the "Remainder Payments") with the
understanding that those monies will be used for the settlement of
all remaining outstanding creditor liabilities. The Remainder
Payments will be made pursuant to a Promissory Note between CalbaTech
and a liquidating trust designee of Traffic Tech. The Promissory
Note will be signed by CalbaTech, and its founders as individuals,
specifically Xxxxxx Xxxxx, Xxxxx XxXxxxx, Esq., and Xxxx X. Xxxxxx, Ph.D.
ARTICLE VI
ASSETS AND LIABILITIES
Pursuant to, and in connection with the Other Terms of Payment
as contemplated by Article V, above, it is understood and agreed that
Traffic Tech is currently, and will continue to negotiate and settle
any and all outstanding liabilities of Traffic Tech such that, upon
Closing, Traffic Tech will have settled all outstanding liabilities
or will have negotiated to an agreement with each creditor a payment
plan to settle each and every liability of Traffic Tech. On the
Effective Date, 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 choses in action, and all
and every other interest of or belonging to either of Constituent
Corporations shall remain with each of the Constituent Corporations,
and the title to any real estate or any interest, whether vested by
deed or otherwise, in either of the Constituent Corporations shall
not revert or be in any way impaired by reason of the exchange. It
is understood and agreed to by Traffic Tech that CalbaTech is not,
under any circumstances, assuming the debts, liabilities and
obligations of Traffic Tech.. The parties respectively agree that
from time to time, when requested by either party or by its
successors or assigns, they will execute and deliver or cause to be
executed and delivered all deeds and instruments, and will take or
cause to be taken all further or other action, as either party may
deem necessary or desirable in order to vest in and confirm to each
of the respective parties or its successors or assigns title to and
possession of all the property and rights and otherwise carry out the
intent and purposes of this Agreement.
ARTICLE VII
CONDUCT OF BUSINESS BY CONSTITUENT CORPORATIONS
Prior to Closing, CalbaTech shall conduct its business in its
usual and ordinary manner, and shall not enter into any transaction
other than in the usual and ordinary course of such business. It is
understood and agreed to that CalbaTech shall continue to seek
acquisitions, both tangible and intangible, as well as seek other
sources of debt or equity funding that are in the best interest of
CalbaTech, and as such, these activities are considered within its
usual and ordinary course of business. Without limiting the
generality of the above, CalbaTech shall not, except as otherwise
consented to in writing by Traffic Tech or as otherwise provided in
this Agreement:
1. Amend its certificate of incorporation or its bylaws;
2. Declare or pay any dividend or make any other distribution upon
or with respect to its capital stock.;
3. Repurchase any of its outstanding stock or by any other means
transfer any of its funds to its shareholders either selectively or
rateably, in return for value or otherwise, except as salary or other
compensation in the ordinary or normal course of business;
4. Undertake or incur any obligations or liabilities except current
obligations or liabilities in the ordinary course of business and
except for liabilities for fees and expenses in connection with the
negotiation and consummation of the merger in amounts to be
determined after the Effective Date;
5. Mortgage, pledge, subject to lien or otherwise encumber any
realty or any tangible or intangible personal property;
6. Sell, assign or otherwise transfer any tangible assets of
whatever kind, or cancel any claims, except in the ordinary course of
business;
7. Sell, assign, or otherwise transfer any trademark, trade name,
patent or other intangible asset;
8. Default in performance of any material provision of any material
contract or other obligation; or
9. Waive any right of any substantial value.
Prior to Closing, Traffic Tech shall conduct its business in its
usual and ordinary manner, and shall not enter into any transaction
other than in the usual and ordinary course of such business except
as provided. Without limiting the generality of the above, Traffic
Tech shall not, except as otherwise consented to in writing by
CalbaTech or as otherwise provided in this Agreement:
1. Issue or sell any shares of its capital stock in addition to
those outstanding on this date;
2. Issue rights to subscribe to or options to purchase any shares
of its stock;
3. Amend its certificate of incorporation or its bylaws other than
agreed to and provided for in this Agreement;
4. Issue or contract to issue funded debt;
5. Declare or pay any dividend or make any other distribution upon
or with respect to its capital stock.
6. Repurchase any of its outstanding stock or by any other means
transfer any of its funds to its shareholders either selectively or
rateably, in return for value or otherwise, except as salary or other
compensation in the ordinary or normal course of business;
7. Undertake or incur any obligations or liabilities except current
obligations or liabilities in the ordinary course of business and
except for liabilities for fees and expenses in connection with the
negotiation and consummation of the merger in amounts to be
determined after the Effective Date;
8. Mortgage, pledge, subject to lien or otherwise encumber any
realty or any tangible or intangible personal property, with the
exception that upon Closing, Traffic tech will transfer all its non-
cash assets to its secured lender in return for cancellation of the
Note between the two parties;
9. Sell, assign or otherwise transfer any tangible assets of
whatever kind, or cancel any claims, except in the ordinary course of
business and except as provided for in this Agreement;
10. Sell, assign, or otherwise transfer any trademark, trade name,
patent or other intangible asset except as provided for in this
Agreement;
11. Default in performance of any material provision of any material
contract or other obligation;
12. Waive any right of any substantial value; or
13. Purchase or otherwise acquire any equity or debt security of
another corporation except to realize on an otherwise worthless debt.
ARTICLE VIII
WARRANTIES OF THE CONSTITUENT CORPORATIONS
1. Representations and Warranties of CalbaTech.
CalbaTech covenants, represents and warrants to Traffic Tech
that:
a. It is on the date of this Agreement, and will be on Closing, (a)
a corporation duly organized and existing and in good standing under
the laws of the jurisdiction of the State of Nevada and (b) duly
authorized under its articles, and under applicable laws, to engage
in the business carried on by it;
b. Its Board of Directors has and its shareholders have authorized
and approved the execution and delivery of this Agreement, and the
performance of the transactions contemplated by this Agreement;
c. It has complied with, and is not in violation of any applicable
Federal, State, or local statutes, laws, and regulations affecting
its properties or the operation of its business;
d. It is not involved as a defendant or plaintiff in any suit,
action, arbitration, or legal, administrative or other proceeding,
which to its best knowledge, would affect the company or its
business, assets, or financial condition in a negative manner; or,
governmental investigation which is pending; to the best of its
knowledge, threatened against or affecting the company or its
business assets or financial condition; and is not in default with
respect to any order, writ, injunction or decree of any Federal,
State, local/foreign court, department, agency, or instrumentality
applicable to it;
e. The execution and delivery of this Agreement and its performance
in the time and manner contemplated will not cause, constitute, or
conflict with, or result in any of the following: (1) a breach or
violation of any provisions of or constitute a default under any
license, indenture, mortgage instrument, article of incorporation,
bylaw, other agreement or instrument to which the company is a party,
or by which it may be bound, nor will any consents or authorizations
of any party other than those required, (2) any event that would
permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of
the company, or, (3) an event that would result in the creation or
imposition of any lien, charge, encumbrance on any asset;
f. All federal, state and local tax returns required to be filed by
it on or before the Closing will have been filed, and all taxes shown
to be required to be paid on or before the Closing will have been paid;
g. All leases now held by it are now and will be on the Closing in
good standing and not voidable or void by reason of any default
whatsoever;
h. It has not been represented by any broker in connection with the
transaction contemplated, except as it has advised Traffic Tech
in writing;
i. CalbaTech has reviewed all Traffic Tech SEC filings;
j. CalbaTech undertakes to make all necessary SEC filings required
by law, and will indemnify Traffic tech officers and directors
against failure on its part to make the necessary filings;
k. CalbaTech warrants that its Balance Sheet dated December 9, 2002
is accurate in all material respects; and
l. CalbaTech undertakes to maintain until December 31, 2003, the
current Traffic Tech Director's and Officer's liability
insurance policy.
2. Representations and Warranties of Traffic Tech.
Traffic Tech covenants, represents and warrants to CalbaTech
that:
a. It is on the date of this Agreement, and will be on Closing
Date, (a) a corporation duly organized and existing and in good
standing under the laws of the jurisdiction of the State of Arizona
and (b) duly authorized under its articles, and under applicable
laws, to engage in the business carried on by it;
b. Its Board of Directors has and its shareholders have authorized
and approved the execution and delivery of this Agreement, and the
performance of the transactions contemplated by this Agreement;
c. It has complied with, and is not in violation of any applicable
Federal, State, or local statutes, laws, and regulations affecting
its properties or the operation of its business.
d. It is not involved as a defendant or plaintiff in any suit,
action, arbitration, or legal, administrative or other proceeding,
which to its best knowledge, would affect the company or its
business, assets, or financial condition in a negative manner; or,
governmental investigation which is pending; to the best of its
knowledge, threatened against or affecting the company or its
business assets or financial condition; and is not in default with
respect to any order, writ, injunction or decree of any Federal,
State, local/foreign court, department, agency, or instrumentality
applicable to it;
e. The execution and delivery of this Agreement and its performance
in the time and manner contemplated will not cause, constitute, or
conflict with, or result in any of the following: (1) a breach or
violation of any provisions of or constitute a default under any
license, indenture, mortgage instrument, article of incorporation,
bylaw, other agreement or instrument to which the company is a party,
or by which it may be bound, nor will any consents or authorizations
of any party other than those required, (2) any event that would
permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of
the company, or, (3) an event that would result in the creation or
imposition of any lien, charge, encumbrance on any asset;
f. It is a fully reporting company under the Securities Exchange
Act of 1934, and is current in all its reporting requirements;
g. Traffic Tech's common stock is listed and trading on the Over
the Counter Bulletin Board (under the trading symbol "TRFT") and no
restrictions have been imposed on the trading of these shares by the
National Association of Securities Dealers, Inc. or any other
regulatory body; and
h. Traffic Tech represents that there are no outstanding options,
warrants or other instruments currently in existence that would
entitle anyone to acquire new shares, post acquisition of
CalbaTech, of Traffic Tech, other than those fully disclosed to
CalbaTech. In the event any non-disclosed instruments are found
post acquisition of CalbaTech, Traffic Tech understands and
agrees that CalbaTech shall cancel and rescind such options,
warrants or other instruments.
i. Traffic Tech represents that it has made all timely SEC filings.
ARTICLE IX
CONSUMMATION OF EXCHANGE
If the exchange contemplated is completed, all expenses incurred
in consummating the plan of exchange shall, except as otherwise
agreed in writing between the Constituent Corporations, be borne by
the Corporation incurring the expense.
If the Closing shall not have occurred by December 20, 2002,
then the Constituent Corporations agree that such non-occurrence
shall not act to terminate the Agreement, but rather the Constituent
Corporations agree to extend the termination of this Agreement until
December 31, 2002. At such time, and at the option of the Board of
Directors of the Constituent Corporations, the time for performance
may be mutually agreed to and extended in writing, with an
accompanying non-refundable payment of $20,000 to Traffic Tech, which
shall be applied against the Closing payment. In the event of the
abandonment of the merger pursuant to the foregoing provisions, the
party abandoning the merger shall pay the other party a break-up fee
of $50,000 as damages for the irreparable harm visited upon that
party, with the understanding that the non-refundable $20,000 payment
shall be considered offsetting or be credited against the $50,000. In
the event the abandonment is mutually agreed upon, there shall be no
break-up fee. .
ARTICLE X
MISCELLANEOUS
1. Access to Books and Records.
CalbaTech shall, before Closing, afford to the officers and
authorized representatives of Traffic Tech free and full access to
its books and records, and the officers of CalbaTech will furnish
Traffic Tech with financial and operating data and other information
as to the business and properties of CalbaTech as Traffic Tech shall
from time to time reasonably request. Traffic Tech shall, before
Closing, afford to the officers and authorized representatives of
CalbaTech free and full access to its books and records, and the
officers of Traffic Tech will furnish CalbaTech with financial and
operating data and other information as to the business and
properties of Traffic Tech as CalbaTech shall from time to time
reasonably request. Traffic Tech and CalbaTech agree that, unless
and until the merger contemplated by this Agreement has been
consummated, Traffic Tech and CalbaTech and their officers and
representatives will hold in strict confidence all data and
information obtained from one another as long as it is not in the
public domain, and if the merger provided for is not consummated as
contemplated, Traffic Tech and CalbaTech will each return to the
other party all data as the other party may reasonably request.
2. Rights Cumulative; Waivers.
The rights of each of the parties under this Agreement are
cumulative. The rights of each of the parties hereunder shall not be
capable of being waived or varied other than by an express waiver or
variation in writing. Any failure to exercise or any delay in
exercising any of such rights shall not operate as a waiver or
variation of that or any other such right. Any defective or partial
exercise of any of such rights shall not preclude any other or
further exercise of that or any other such right. No act or course
of conduct or negotiation on the part of any party shall in any way
preclude such party from exercising any such right or constitute a
suspension or any variation of any such right.
3. Benefit; Successors Bound.
This Agreement and the terms, covenants, conditions, provisions,
obligations, undertakings, rights, and benefits hereof, shall be
binding upon, and shall inure to the benefit of, the undersigned
parties and their heirs, executors, administrators, representatives,
successors, and permitted assigns.
4. Entire Agreement.
This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof. There are no promises,
agreements, conditions, undertakings, understandings, warranties,
covenants or representations, oral or written, express or implied,
between them with respect to this Agreement or the matters described
in this Agreement, except as set forth in this Agreement. Any such
negotiations, promises, or understandings shall not be used to
interpret or constitute this Agreement.
5. Assignment.
Neither this Agreement nor any other benefit to accrue hereunder
shall be assigned or transferred by either party, either in whole or
in part, without the written consent of the other party, and any
purported assignment in violation hereof shall be void.
6. Amendment.
This Agreement may be amended only by an instrument in writing
executed by all the parties hereto.
7. Severability.
Each part of this Agreement is intended to be severable. In the
event that any provision of this Agreement is found by any court or
other authority of competent jurisdiction to be illegal or
unenforceable, such provision shall be severed or modified to the
extent necessary to render it enforceable and as so severed or
modified, this Agreement shall continue in full force and effect.
8. Section Headings.
The Section headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9. Construction.
Unless the context otherwise requires, when used herein, the
singular shall be deemed to include the plural, the plural shall be
deemed to include each of the singular, and pronouns of one or no
gender shall be deemed to include the equivalent pronoun of the other
or no gender.
10. Further Assurances.
In addition to the instruments and documents to be made,
executed and delivered pursuant to this Agreement, the parties hereto
agree to make, execute and deliver or cause to be made, executed and
delivered, to the requesting party such other instruments and to take
such other actions as the requesting party may reasonably require to
carry out the terms of this Agreement and the transactions
contemplated hereby.
11. Notices.
Any notice which is required or desired under this Agreement
shall be given in writing and may be sent by personal delivery or by
mail by either the United States mail, postage prepaid, or by Federal
Express or similar generally recognized overnight carrier.
12. Arbitration, Venue, Governing Law.
This agreement shall be deemed to be made, governed by,
interpreted under and construed in all respects in accordance with
the commercial rules of Judicial Arbitration and Mediation Service
("JAMS"). This chosen jurisdiction is irrespective of the country or
place of domicile or residence of either party. In the event of
controversy arising out of the interpretation, construction,
performance or breach of this agreement, the parties hereby consent
to adjudication under the commercial rules of JAMS. Said venue of
the arbitration shall be in Orange County, California. Judgment on
the award rendered by the arbitrator may be entered in any federal or
state court in Orange County, California. The Laws of the State of
California shall govern all disputes regarding this matter. Any
provision herein which is later determined to be in violation of any
such laws shall be eliminated from the terms of this LOI, and the
remainder of this LOI shall continue in full force and effect.
13. Consents.
The person signing this Agreement on behalf of each party hereby
represents and warrants that he has the necessary power, consent and
authority to execute and deliver this Agreement on behalf of such party.
14. Execution in Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
TRAFFIC TECH: CALBATECH:
Dated:________________________ Dated:_______________________
By:________________________________ By:_________________________
Xxxxx Xxxxxxx, Chief Executive Officer Xxxxx XxXxxxx, Chief
Executive Officer
