Attached files
| file | filename |
|---|---|
| EX-99.1 - FINANCIAL STATEMENTS - IN Media Corp | ex99-1.htm |
| EX-99.2 - PRO FORMA FINANCIAL STATEMENTS - IN Media Corp | ex99-2.htm |
| 8-K - CURRENT REPORT DATED 10-30-09 - IN Media Corp | g3591.htm |
Exhibit
2.1
AGREEMENT
AND PLAN OF MERGER AND REORGANIZATION
among:
TRES ESTRELLAS ENTERPRISES, INC.,
a Nevada
corporation;
and
In Media Corporation,
a
California corporation
Dated as
of October 30, 2009
AGREEMENT
AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (“Agreement”) is made and
entered into as of October 30, 2009 (the “Execution Date”), by and
among: Tres Estrellas Enterprises, Inc., a Nevada corporation (“Parent”) and In Media
Corporation, a California corporation (the “Company”). Certain capitalized
terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent and the Company
intend to effect a merger the Company into the Parent in accordance with this
Agreement, the Nevada Revised Statutes, and the California Corporations Code
(the “Merger”). Upon
consummation of the Merger, the Parent will be the Surviving Corporation.
B. It is intended that, for
United States federal income tax purposes, the Merger shall qualify as a
reorganization within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (“Code”).
C. The respective boards of
directors of Parent and the Company have approved this Agreement and the
Merger.
D. After the execution of this
Agreement certain majority stockholders of the Company will execute written
consents pursuant to which such stockholders will agree to vote in favor of the
Merger (the “Company Written
Consent”) and the Board of Directors of Parent will execute a written
consent pursuant to which such Board of Directors will agree to vote in favor of
the issuance of Parent Common Stock in the Merger (the “Parent Written Consent”).
AGREEMENT
The
parties to this Agreement, intending to be legally bound, agree as follows:
SECTION
1. DESCRIPTION OF TRANSACTION
1.1 The Merger. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.3), Company shall be merged with and into the Parent.
By virtue of the Merger, at the Effective Time, the separate existence of the
Company shall cease and the Parent shall continue as the surviving corporation
in the Merger (the “Surviving
Corporation”).
1.2 Effects of the Merger..
The Merger shall have the effects set forth in this Agreement and in the
applicable provisions of the Nevada Revised Statutes (“NRS”) and the California
Corporations Code (“CCC”).
1.3 Closing; Effective Time of the
Merger..
(a) The consummation of the
Contemplated Transactions (the “Closing”) shall take place at
the offices of Joseph I. Emas, P.A., 1224 Washington Avenue, Miami Beach,
Florida 33139, unless another place, time location is agreed to by the parties
hereto. And on a date to be designated by Parent, which shall be no later than
the fifth business day after the satisfaction or waiver of the last to be
satisfied or waived of the conditions set forth in Sections 6 and 7 (other than
conditions which by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of each of such conditions). The date on which the
Closing actually takes place is referred to as the “Closing Date.”
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(b) Subject to the provisions
of this Agreement, in order to effect the Merger, a certificate of merger
satisfying the applicable requirements of the NRS and CCC shall be
duly executed by the Company and concurrently with or as soon as practicable
following the Closing shall be filed with the Secretary of State of the State
of California and the Secretary of State of the State of Nevada. The
Merger shall become effective at the time of the filing of such certificate of
merger with the Secretary of State of the State of and the Secretary of State of
the State of Nevada or at such later time as may be designated by Parent and
specified in such certificate of merger (the time as of which the Merger becomes
effective being referred to as the “Effective Time”).
1.4 Certificate of Incorporation and
Bylaws; Directors and Officers. Unless otherwise determined by Parent
prior to the Effective Time:
(a) the Certificate of
Incorporation of the Surviving Subsidiary Corporation shall be amended and
restated immediately after the Effective Time to conform to the Company
Certificate of Incorporation; and
(b) the Bylaws of the
Surviving Subsidiary Corporation shall be amended and restated as of the
Effective Time to conform to the Bylaws of Company as in effect immediately
prior to the Effective Time.
1.5 Conversion of
Shares
(a) A as of the date of the
Agreement, Parent has 11,500,000 shares of Parent Common Stock issued and
outstanding.
(b) At the Effective Time, by
virtue of the Merger and without any further action on the part of
Parent, the Company or any stockholder of the Company, each share of
Company Common Stock outstanding immediately prior to the Effective Time shall
be converted such that the holders of the aggregate 51,231,250 of Company common
stock issued and outstanding will receive, pro rata, thirty-three million, five
hundred thousand (33,500,000) shares of Parent Common Stock and the current
holders of Parent Common Stock shall retain eleven million, five hundred
thousand (11,500,000) shares of Parent Common Stock (“Merger
Consideration”),.
(c) If, during the
period from the date of this Agreement through the Effective Time, the
outstanding shares of Parent Common Stock are changed into a different number or
class of shares by reason of any stock split, division or subdivision of shares,
stock dividend, reverse stock split, consolidation of shares, reclassification,
recapitalization or other similar transaction, or if a stock dividend is
declared by Parent during such period, or a record date with respect to any such
event shall occur during such period, then appropriate adjustments shall be made
to Section 1.5(a).
(c) No fractional shares of
Parent Common Stock shall be issued in connection with the Merger, and no
certificates or scrip for any such fractional shares shall be issued.
1.6 Closing of the Company’s Transfer
Books. At the Effective Time: (a) all shares of Company Common Stock
outstanding immediately prior to the Effective Time shall automatically be
canceled and retired and shall cease to exist, and all holders of certificates
representing shares of Company Common Stock that were outstanding immediately
prior to the Effective Time shall cease to have any rights as stockholders of
the Company; and (b) the stock transfer books of the Company shall be
closed with respect to all shares of Company Common Stock outstanding
immediately prior to the Effective Time. No further transfer of any such shares
of Company Common Stock shall be made on such stock transfer books after the
Effective Time. If, after the Effective Time, a valid certificate previously
representing any shares of Company Common Stock outstanding immediately prior to
the Effective Time (a “Company
Stock Certificate”) is presented to the Exchange Agent (as defined in
Section 1.7) or to the Surviving Subsidiary Corporation or Parent, such
Company Stock Certificate shall be canceled and shall be exchanged as provided
in Section 1.7.
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1.7 Exchange of Certificates.
(a) Prior to the Closing Date,
Parent shall select a reputable attorney, transfer agent, bank or trust company
reasonably acceptable to the Company to act as payment and exchange agent in the
Merger (the “Exchange
Agent”). Parent shall deposit with the Exchange Agent certificates
representing the shares of Parent Common Stock issuable pursuant to
Section 1.5(a). The shares of Parent Common Stock and cash amounts so
deposited with the Exchange Agent, together with any dividends or distributions
received by the Exchange Agent with respect to such shares of Parent Common
Stock, are referred to collectively as the “Exchange Fund.”
(b) As promptly as
practicable, the Exchange Agent will mail to the Persons who were record holders
of Company Stock Certificates immediately prior to the Effective Time:
(i) a letter of transmittal in customary form and containing such
provisions as Parent may reasonably specify (including a provision confirming
that delivery of Company Stock Certificates shall be effected, and risk of loss
and title to Company Stock Certificates shall pass, only upon delivery of such
Company Stock Certificates to the Exchange Agent); and (ii) instructions
for use in effecting the surrender of Company Stock Certificates in exchange for
cash and certificates representing Parent Common Stock. Upon surrender of a
Company Stock Certificate to the Exchange Agent for exchange, together with a
duly executed letter of transmittal and such other documents as may be
reasonably required by the Exchange Agent or Parent: (A) the holder of such
Company Stock Certificate shall be entitled to receive in exchange therefor, a
certificate representing the number of whole shares of Parent Common Stock that
such holder has the right to receive pursuant to the provisions of
Section 1.5(a); and (B) the Company Stock Certificate so surrendered
shall be canceled. Until surrendered as contemplated by this
Section 1.7(b), each Company Stock Certificate shall be deemed, from and
after the Effective Time, to represent only the right to receive cash and shares
of Parent Common Stock pursuant to the provisions of Section 1.5(a). If any
Company Stock Certificate shall have been lost, stolen or destroyed, Parent may,
in its discretion and as a condition to the payment of any cash or the issuance
of any certificate representing Parent Common Stock, require the owner of such
lost, stolen or destroyed Company Stock Certificate to provide an appropriate
affidavit and to deliver a bond (in such sum as Parent may reasonably direct) as
indemnity against any claim that may be made against the Exchange Agent, Parent
or the Surviving Subsidiary Corporation with respect to such Company Stock
Certificate.
(c) No dividends or other
distributions declared or made with respect to Parent Common Stock with a record
date after the Effective Time shall be paid or otherwise delivered to the holder
of any unsurrendered Company Stock Certificate with respect to the shares of
Parent Common Stock that such holder has the right to receive in the Merger
until such holder surrenders such Company Stock Certificate in accordance with
this Section 1.7 (at which time such holder shall be entitled, subject to
the effect of applicable abandoned property, escheat or similar laws, to receive
all such dividends and distributions, without interest).
(d) Any portion of the
Exchange Fund that remains undistributed to holders of Company Stock
Certificates as of the date 180 days after the date on which the Merger becomes
effective shall be delivered to Parent upon demand, and any holders of Company
Stock Certificates who have not theretofore surrendered their Company Stock
Certificates in accordance with this Section 1.7 shall thereafter look only
to Parent for satisfaction of their claims for shares of Parent Common Stock
pursuant to the provisions of Section 1.5(a) and any dividends or
distributions with respect to shares of Parent Common Stock.
(e) Each of the Exchange
Agent, Parent and the Surviving Subsidiary Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable
pursuant to this Agreement to any holder or former holder of Company Common
Stock such amounts as may be required to be deducted or withheld from such
consideration under the Code or any provision of state, local or foreign tax law
or under any other applicable Legal Requirement. To the extent such amounts are
so deducted or withheld, such amounts shall be treated for all purposes under
this Agreement as having been paid to the Person to whom such amounts would
otherwise have been paid.
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(f) Neither Parent nor the
Surviving Subsidiary Corporation shall be liable to any holder or former holder
of Company Common Stock or to any other Person with respect to any shares of
Parent Common Stock (or dividends or distributions with respect thereto), or for
any cash amounts, delivered to any public official pursuant to any applicable
abandoned property law, escheat law or other similar Legal Requirement.
1.8 Tax Consequences.. For
federal income tax purposes, the Merger is intended to constitute a
“reorganization” within the meaning of Section 368 of the Code, and the
parties will report the Merger as such for federal, state and local income tax
purposes. None of the parties will knowingly take any action, or fail to take
any action, which action or failure to act would cause the Merger to fail to
qualify as a reorganization within the meaning of Section 368 of the Code
or the Treasury Regulations promulgated thereunder. The parties to this
Agreement adopt this Agreement as a “plan of reorganization” within the meaning
of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
1.9 Appraisal Rights.
(a) Notwithstanding anything
to the contrary contained in this Agreement, any shares of Company Common Stock
that, as of immediately prior to the Effective Time, are held by holders who
have as of such time preserved appraisal rights under the NRS with respect to
such shares shall not be converted into or represent the right to receive shares
of Parent Common Stock in accordance with Section 1.5(a) and the holder or
holders of such shares shall be entitled only to such rights as may be granted
to such holder or holders pursuant to the NRS; provided, however, that if
such appraisal rights shall not be perfected or the holders of such shares shall
otherwise lose their appraisal rights with respect to such shares, then, as of
the later of the Effective Time or the time of the failure to perfect such
status or the loss of such rights, such shares shall automatically be converted
into and shall represent only the right to receive (upon the surrender of such
holder’s Company Stock Certificate(s) in accordance with Section 1.7)
shares of Parent Common Stock in accordance with Section 1.5(a).
(b) The Company shall give
Parent: (i) prompt notice of any written demand received by the Company
prior to the Effective Time to require the Company to purchase shares of Company
Common Stock pursuant to the NRS and of any other demand, notice or instrument
delivered to the Company prior to the Effective Time pursuant to the NRS; and
(ii) the opportunity to participate in all negotiations and proceedings
with respect to any such demand, notice or instrument. The Company shall not
make any payment or settlement offer prior to the Effective Time with respect to
any such demand unless Parent shall have consented in writing to such payment or
settlement offer.
1.10 Further Action.. If, at any
time after the Effective Time, any further action is determined by Parent or the
Surviving Subsidiary Corporation to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Subsidiary Corporation with
full right, title and possession of and to all rights and property
of the Company, the officers and directors of the Surviving
Subsidiary Corporation and Parent shall be fully authorized (in the name of the
Company and otherwise) to take such action.
SECTION
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Parent as follows:
2.1 Subsidiaries; Due Organization;
Etc.
(a) The Company has no
subsidiaries and does not own any capital stock of, or any equity interest of
any nature in, any other Entity. The Company has not agreed to or is obligated
to make, or is bound by any contract under which it may become obligated to
make, any future investment in or capital contribution to any other Entity.
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(b) The Company is a
corporation duly organized, validly existing and, in jurisdictions that
recognize the concept, is in good standing under the laws of the jurisdiction of
its incorporation and has all necessary power and authority: (i) to conduct
its business in the manner in which its business is currently being conducted;
(ii) to own and use its assets in the manner in which its assets are
currently owned and used; and (iii) to perform its obligations under all
contracts by which it is bound.
2.2 Certificate of Incorporation and
Bylaws. The Company has delivered to Parent accurate and complete copies
of: (a) its certificate of incorporation, bylaws and other charter and
organizational documents, including all amendments thereto; (b) its stock
records; and (c) its minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of its stockholders, the board of directors and all committees of the
board of directors. The books of account, stock records, minute books and other
records of the Company are accurate, up-to-date and complete in all material
respects, and have been maintained in accordance with prudent business
practices.
2.3 Capitalization, Etc.
(a) The authorized capital
stock of the Company consists of 100,000,000 shares of Company Common Stock, of
which 51,231,250 shares have been issued and are outstanding as of the date of
this Agreement. The Company does not hold any shares of its capital stock in its
treasury. All of the outstanding shares of Company Common Stock have been duly
authorized and validly issued, and are fully paid and non-assessable. None of
the outstanding shares of Company Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right; (ii) none of the outstanding shares of Company Common Stock is
subject to any right of first refusal or similar right in favor of the Company
or any other Person; and (iii) there is no Company contract relating to the
voting or registration of, or restricting any Person from purchasing, selling,
pledging or otherwise disposing of (or granting any option or similar right with
respect to), any shares of Company Common Stock. The Company is not under any
obligation, or is bound by any contract pursuant to which it may become
obligated, to repurchase, redeem or otherwise acquire any outstanding shares of
Company Common Stock or any other securities.
(b) As of the date of this
Agreement, there are no options to purchase Company Common Stock.
(c) As of the date of this
Agreement, there is no: (i) outstanding subscription, option, call, warrant
or right (whether or not currently exercisable) to acquire any shares of the
capital stock or other securities of the Company;
(ii) outstanding security, instrument or obligation that is or may become
convertible into or exchangeable for any shares of the capital stock or other
securities of the Company; (iii) contract under which the
Company is or may become obligated to sell or otherwise issue any shares of its
capital stock or any other securities; or (iv) condition or circumstance
that may give rise to or provide a basis for the assertion of a claim by any
Person to the effect that such Person is entitled to acquire or receive
(A) any shares of capital stock or other securities of the
Company, or (B) any portion of any Merger Consideration or other
consideration payable in connection with the Merger (other than in respect of
outstanding shares of Company Common Stock as set forth in Section 2.3(a)).
(d) All outstanding shares of
capital stock, and all options, warrants and other securities of the Company
have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in applicable contracts.
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2.4 Authority; Binding Nature of
Agreement. The Company has the corporate right, power and authority to
enter into and to perform its obligations under this Agreement. The board of
directors of the Company (at a meeting duly called and held) has:
(a) unanimously determined that the Merger is advisable and fair to, and in
the best interests of, the Company and its stockholders; (b) unanimously
authorized and approved the execution, delivery and performance of this
Agreement by the Company and unanimously approved the Merger; and
(c) unanimously recommended the adoption of this Agreement by the holders
of Company Common Stock. This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to: (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors; and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
2.5 Vote Required. The only vote
of Company stockholders required to approve the Merger is the affirmative vote
of a majority of the outstanding shares of Common Stock of Company.
2.6 Non-Contravention; Consents.
Neither (1) the execution, delivery or performance of this Agreement or any
of the other contracts referred to in this Agreement, nor (2) the
consummation of the Merger will directly or indirectly (with or without notice
or lapse of time):
(a) contravene, conflict with
or result in a violation of (i) any of the provisions of the certificate of
incorporation, bylaws or other charter or organizational documents of any of the
Company, or (ii) any resolution adopted by the stockholders, the board of
directors or any committee of the board of directors of any of the Company;
(b) contravene, conflict with
or result in a violation of, or give any Governmental Body or other Person the
right to challenge the Merger or any of the other Contemplated Transactions or
to exercise any remedy or obtain any relief under, any Legal Requirement or any
Order to which any of the Company, or any of the assets owned or used by any of
the Company, is subject;
(c) contravene, conflict with
or result in a violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or
modify, any Governmental Authorization that is held by any of the Company or
that otherwise relates to the business of any of the Company or to any of the
assets owned or used by any of the Company;
(d) contravene, conflict with
or result in a violation or breach of, or result in a default under, any
provision of any Company contract that constitutes a Company Material contract,
or give any Person the right to (i) declare a default or exercise any
remedy under any such Company contract, (ii) a rebate, chargeback, penalty
or change in delivery schedule under any such Company contract,
(iii) accelerate the maturity or performance of any obligation under any
such Company contract, or (iv) cancel, terminate or modify any term of any
such Company contract; or
(e) result in the imposition
or creation of any Encumbrance upon or with respect to any asset owned or used
by any of the Company (except for minor liens that will not, in any case or in
the aggregate, materially detract from the value of the assets subject thereto
or materially impair the operations of any of the Company).
Except as
may be required by the CCC, the Company is not required to make any filing with
or give any notice to, or to obtain any Consent from, any Person in connection
with (x) the execution, delivery or performance of this Agreement or any of
the other Contemplated Transactions, or (y) the consummation of the Merger
or any of the other Contemplated Transactions. For purposes of this Agreement,
an Acquired Corporation will be deemed to be or to have been “required” to
obtain a Consent if the failure to obtain such Consent (1) could result in
the imposition of any liability or obligation on, or the expansion of any
liability or obligation of, any of the Company, (2) could result in the
termination, modification or limitation of any contractual or other right of any
of the Company, or (3) could otherwise have an adverse effect on the
business, condition, capitalization, assets, Intellectual Property, liabilities,
results of operations, financial performance or prospects of any of the Company.
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2.7 Full Disclosure. To the
Company’s Knowledge, this Agreement does not, and the certificate referred to in
Section 6.7 will not: (i) contain any representation, warranty or
information that is false, misleading or incomplete with respect to any material
fact; or (ii) omit to state any material fact necessary in order to make
the representations, warranties and information contained and to be contained
herein and therein (in the light of the circumstances under which such
representations, warranties and information were or will be made or provided)
not false or misleading.
Section
3. REPRESENTATIONS AND WARRANTIES OF PARENT
Parent
represents and warrants to the Company as follows:
3.1 Due Organization.
(a) Parent has no
subsidiaries nor owns any capital stock of, or any equity interest of any nature
in, any other Entity, nor is not obligated to make, or is bound by any contract
under which it may become obligated to make, any future investment in or capital
contribution to any other Entity.
(b) Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada, and Parent has all necessary power and authority:
(i) to conduct their businesses in the manner in which their businesses are
currently being conducted; (ii) to own and use their assets in the manner
in which their assets are currently owned and used; and (iii) to perform
their obligations under all contracts by which they are bound.
(c) Parent (in
jurisdictions that recognize the following concepts) is qualified to do business
as a foreign corporation, and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such qualification,
except as would not have and would not reasonably be expected to have or result
in a Parent Material Adverse Effect.
3.2 Certificate of Incorporation and
Bylaws. The copies of the certificate of incorporation and bylaws of
Parent which are incorporated by reference as exhibits to the Parent’s
registration statement on Form SB-2 filed on July 24, 2007 with the SEC are
complete and correct copies of such documents and contain all amendments thereto
as in effect on the date of this Agreement. Parent has delivered to the Company
accurate and complete copies of: (a) the certificate of incorporation,
bylaws and other charter and organizational documents, including all amendments
thereto; and (b) the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the stockholders , the board of directors and all committees of
the Corporation.
3.3 Capitalization, Etc.
(a) The authorized capital
stock of Parent consists of 75,000,000 shares of Parent Common Stock
(ii) 11,500,000 shares of Parent Common Stock were issued and outstanding;
(iii) no shares of Parent Common Stock were held by Parent in its treasury;
(iv) there were no outstanding options to purchase shares of Parent Common
Stock; and (v) there were no outstanding warrants exercisable for shares of
Parent Common Stock. Such issued and outstanding shares of Parent
Common Stock have been duly authorized and validly issued, are fully paid and
non-assessable, and are free of preemptive rights. Other than the
Parent Common Stock, there are no outstanding bonds, debentures, notes or other
indebtedness or securities of Parent having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters
on which stockholders of Parent may vote.
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(b) There are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Parent is a party or by which
it is bound obligating Parent to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of Parent or obligating Parent to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking.
(c) All outstanding shares of
Parent Common Stock have been issued and granted in compliance with:
(i) all applicable securities laws and other applicable Legal Requirement
applicable to Parent; and (ii) all material requirements set forth in
applicable contracts.
3.4 SEC Filings; Financial
Statements.
(a) Parent has delivered (or
made available on the SEC website) to the Company accurate and complete copies
of all registration statements, proxy statements and other statements, reports,
schedules, forms and other documents filed by Parent with, and all Parent
Certifications (as defined below) filed or furnished by Parent with or to, the
SEC since December 13, 2008, including all amendments thereto (collectively, the
“Parent SEC
Reports”). All statements, reports, schedules, forms and other
documents required to have been filed or furnished by Parent with or to the SEC
since December 13, 2008 have been so filed or furnished on a timely basis. None
of Parent’s Subsidiaries is required to file or furnish any documents with or to
the SEC. As of the time it was filed with or furnished to the SEC, none of the
Parent SEC Reports contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except to the extent corrected by the filing or
furnishing of the applicable amending or superseding Parent SEC Document.
(b) The financial statements
(including any related notes) contained or incorporated by reference in the
Parent SEC Reports: (i) complied as to form in all material respects with
the published rules and regulations of the SEC applicable thereto;
(ii) were prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered (except as may be indicated in the notes to such
financial statements or, in the case of unaudited financial statements, as
permitted by Form 10-Q, Form 8-K or any successor form under the Exchange Act,
and except that the unaudited financial statements may not contain footnotes and
are subject to normal and recurring year-end adjustments that will not,
individually or in the aggregate, be material in amount), and (iii) fairly
present in all material respects the consolidated financial position of Parent
and its Subsidiaries as of the respective dates thereof and the consolidated
results of operations and cash flows of Parent and its Subsidiaries for the
periods covered thereby.
(c) To the Knowledge of
Parent, Parent’s auditor has at all times since the date of enactment of the
Sarbanes-Oxley Act been: (i) a registered public accounting firm (as
defined in Section 2(a)(12) of the Sarbanes-Oxley Act);
(ii) “independent” with respect to Parent within the meaning of Regulation
S-X under the Exchange Act; and (iii) in compliance with subsections
(g) through (l) of Section 10A of the Exchange Act and the rules
and regulations promulgated by the SEC and the Public Company Accounting
Oversight Board thereunder. All non-audit services (as defined in
Section 2(a)(8) of the Sarbanes-Oxley Act) performed by Parent’s auditors
for Parent or any of its Subsidiaries were approved as required by
Section 202 of the Sarbanes-Oxley Act.
3.5 Absence of Changes. Between
December 31, 2008 and the date of this Agreement, no event has occurred
that would reasonably be expected to have or result in a Parent Material Adverse
Effect.
3.6 Title to Assets. Parent owns,
and has good, valid and marketable title to, all assets purported to be owned by
them, including: (a) all assets reflected on the audited consolidated
balance sheet included in Parent’s annual report on Form 10-K for the year
ending on December 31, 2008 as filed with the SEC (the “Parent December 2008 Balance
Sheet”) All of said assets are owned by the Parent free and clear of any
Encumbrances.
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3.7 Equipment; Leasehold. All
material items of equipment and other tangible assets owned by or leased to the
Parent are adequate for the uses to which they are being put, are in good
condition and repair (ordinary wear and tear excepted) and are adequate for the
conduct of the business of the Parent in the manner in which such businesses are
currently being conducted. The Parent do not own any real property or any
interest in real property.
3.8 Intellectual Property
(a) The Parent SEC
Reports discloses: (i) all Registered Intellectual Property in which the
Parent has an ownership interest; and (ii) all IP contracts relating to
Parent Intellectual Property. For purposes of this Agreement the term “Parent Intellectual Property”
shall mean all Registered Intellectual Property in which any Parent has an
ownership interest and all other Intellectual Property that is used by or
licensed to the Parent.
(b) To the Parent’s Knowledge,
the Parent Intellectual Property, is and are valid and enforceable. To the
Parent’s Knowledge, there are no facts, proceedings, claims or challenges that
cause or would cause any Parent Intellectual Property to be invalid or
unenforceable, or challenging the Parent’ rights in any Parent Intellectual
Property.
(c) To the Parent’s Knowledge,
none of the Parent or any of their respective current or contemplated
activities, or products misappropriates, violates or otherwise conflicts with,
or has infringed, misappropriated, violated or otherwise conflicted with, or
will infringe, misappropriate, violate or otherwise conflict with, any
Intellectual Property of any Person.
3.9 Material contracts. Except
for this Agreement, as of the date of this Agreement, Parent is not a party to
or bound by any “material contract” (as such term is defined in
Item 601(b)(10) of Regulation S-K promulgated by the SEC) (each a “Parent Material contract”)
that is not filed as an exhibit to a Parent SEC Document.
3.10 Liabilities. None
of the Parent has any accrued, contingent or other liabilities required by GAAP
to be set forth on a consolidated balance sheet of Parent or in the notes
thereto, except for liabilities identified as such, or specifically reserved
against, in the Parent December 2008 Balance Sheet.
3.11 Compliance with Legal
Requirements.
(a) The Parent and Persons
acting in concert with or on behalf of the Parent are not, nor has any of them
since December 13, 2008 been, in violation of any Legal Requirement applicable
to the Parent or by which any of their respective properties are bound or any
regulation issued under any of the foregoing or has been notified in writing by
any Governmental Body of any violation, or any investigation with respect to any
such Legal Requirement.
(b) The Parent has all
material Authorizations from Governmental Authorities required to conduct their
business as now being conducted. Such Authorizations are valid and in full force
and effect, and the Parent and Persons acting in concert with and on their
behalf are in compliance in all material respects with all such Authorizations.
(c) T Parent has, and (to the
Knowledge of Parent) no Representative of the Parent with respect to
any matter relating to the Parent, has: (a) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (b) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or (c) made any other unlawful payment.
3.12 Tax Matters.
(a) Each of the Tax Returns
required to be filed by or on behalf of the Parent with any Governmental Body
with respect to any taxable period ending on or before the Closing Date (the
“Parent Returns”):
(i) has been or will be filed on or before the applicable due date
(including any extensions of such due date); and (ii) has been, or will be
when filed, prepared in all material respects in compliance with all applicable
Legal Requirements. All Taxes of Parent, whether or not shown on the Parent
Returns, due on or before the Closing Date, have been or will be paid on or
before the Closing Date.
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(b) The Parent December 2008
Balance Sheet fully accrues all actual and contingent liabilities for Taxes with
respect to all periods through the date of this Agreement in accordance with
GAAP, except for liabilities for Taxes incurred since the date of the Parent
December 2008 Balance Sheet in the operation of the business of the Parent.
Parent will establish, prior to the Closing Date, in the ordinary course of
business and consistent with its past practices, reserves adequate for the
payment of all Taxes for the period from the date of the Parent December 2008
Balance Sheet through the Closing Date.
(c) Parent and no Parent
Return is currently being audited by any Governmental Body. No extension or
waiver of the limitation period applicable to any of the Parent Returns has been
granted (by Parent or any other Person), and no such extension or waiver has
been requested from any Acquiring Corporation.
(d) No claim or Legal
Proceeding is pending or, to the Knowledge of Parent, has been threatened
against it in respect of any material Tax. There are no unsatisfied liabilities
for material Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of deficiency
or similar document received by Parent with respect to any Tax. There are no
liens for material Taxes upon any of the assets of Parent.
(e) Parent has delivered to
the Company accurate and complete copies of all Tax Returns of the Parent for
all Tax years from and including the tax year ended December 31, 2007.
3.13 Employee and Labor Matters; Benefit
Plans.
(a) The Parent SEC Reports
discloses each Parent Employee Agreement.
(b) Parent has made available
to the Company accurate and complete copies of all documents embodying or
setting forth the terms of each Parent Employee Agreement.
3.14 Environmental
Matters.. Since December 31, 2008, Parent has received no
notice or other communication, whether from a Governmental Body, citizens group
or otherwise, that alleges that Parent is not or might not be in compliance with
any Environmental Law, and, to the Knowledge of Parent, there are no
circumstances that may prevent or interfere with the compliance by the Parent
with any Environmental Law in the future.
3.15 Insurance. All fire and
casualty, general liability, business interruption, product liability, sprinkler
and water damage insurance policies and other forms of insurance maintained by
the Parent have been provided or made available to the Company. To the Knowledge
of Parent, each such policy is in full force and effect. All premiums due
thereon have been paid in full.
3.16 Legal Proceedings; Orders.
(a) Except as set forth in the
Parent SEC Reports, there is no pending Legal Proceeding, and (to the Knowledge
of Parent) no Person has threatened to commence any Legal Proceeding:
(i) that involves Parent, any business of Parent or any of the assets
owned, leased or used by Parent; or (ii) that challenges, or that may have
the effect of preventing, delaying, making illegal or otherwise interfering
with, the Merger or any of the other Contemplated Transactions. To the Knowledge
of Parent, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that would reasonably be expected to give rise to or serve
as a basis for the commencement of any Legal Proceeding of the type described in
clause “(i)” or clause “(ii)” of the first sentence of this
Section 3.16(a).
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(b) There is no Order to which
Parent, or any of the assets owned or used by Parent, is subject. To the
Knowledge of Parent, no officer or other key employee of Parent is subject to
any Order that prohibits such officer or other employee from engaging in or
continuing any conduct, activity or practice relating to the business of the
Parent.
3.17 Authority; Binding Nature of
Agreement.. Parent has the corporate right, power and authority to enter
into and to perform its obligations under this Agreement.. The board of
directors of Parent (at a meeting duly called and held or acting by written
consent) as of the date of this Agreement has: (a) unanimously determined
that the issuance of Parent Common Stock in the Merger is advisable and fair to,
and in the best interests of, Parent and its stockholders; (b) unanimously
authorized and approved the execution, delivery and performance of this
Agreement by Parent and unanimously approved the Merger; and
(c) unanimously recommended the approval of the issuance of Parent Common
Stock in the Merger by the holders of Parent Common Stock. This Agreement
constitutes the legal, valid and binding obligation of
Parent, enforceable against them in accordance with its terms,
subject to: (A) laws of general application relating to bankruptcy,
insolvency and the relief of debtors; and (B) rules of law governing
specific performance, injunctive relief and other equitable remedies.
3.18 Vote Required. The only
vote required to approve the issuance of Parent Common Stock in the Merger is
the affirmative vote of the Board of Directors of Parent.
3.19 Non-Contravention;
Consents. Neither (1) the execution, delivery or performance of this
Agreement or any of the other contracts referred to in this Agreement, nor
(2) the consummation of the Merger will directly or indirectly (with or
without notice or lapse of time):
(a) contravene, conflict with
or result in a violation of: (i) any of the provisions of the certificate
of incorporation or bylaws of Parent; or (ii) any resolution adopted by the
stockholders, the board of directors or any committee of the board of directors
of Parent;
(b) contravene, conflict with
or result in a violation of, or give any Governmental Body or other Person the
right to challenge the Merger or any of the other Contemplated Transactions or
to exercise any remedy or obtain any relief under, any Legal Requirement or any
Order to which the Parent, or any of the assets owned or used by the Parent, is
subject;
(c) contravene, conflict with
or result in a violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or
modify, any Governmental Authorization that is held by any of the Parent or that
otherwise relates to the business of any of the Parent or to any of the assets
owned or used by any of the Parent;
(d) contravene, conflict with
or result in a violation or breach of, or result in a default under, any
provision of any Parent Material contract, or give any Person the right to:
(i) declare a default or exercise any remedy under any such contract;
(ii) a rebate, chargeback, penalty or change in delivery schedule under any
such contract; (iii) accelerate the maturity or performance of any such
Parent Material contract; or (iv) cancel, terminate or modify any right,
benefit, obligation or other term of such Parent Material contract; or
(e) result in the imposition
or creation of any Encumbrance upon or with respect to any asset owned or used
by any of the Parent (except for minor liens that will not, in any case or in
the aggregate, materially detract from the value of the assets subject thereto
or materially impair the operations of any of the Parent).
Except as
may be required by the Securities Act, Exchange Act, the NRS and the rules and
regulations of OTCBB, Parent will not be required to make any filing
with or give any notice to, or to obtain any Consent from, any Person in
connection with: (x) the execution, delivery or performance of this
Agreement; or (y) the consummation of the Merger or any of the other
Contemplated Transactions.
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3.20 Valid Issuance.. The
Parent Common Stock to be issued in the Merger has been duly authorized and
will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and non-assessable, however it will be subject to
restriction on resale under the Securities Act.
3.21 Brokerage. There are no claims
for brokerage commissions, finders fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement or
agreement made or alleged to have been made by or on behalf of Parent.
3.22 Over-the-Counter Bulletin Board
Quotation. Parent Common Stock is quoted on the Over-the-Counter Bulletin
Board (“TLLA”). There is
no action or Proceeding pending or, to Parent’s Knowledge, threatened against
Parent by NASDAQ or FINRA with respect to any intention by such entities to
prohibit or terminate the quotation of Parent Common Stock on the OTC BB.
3.23 Listing and Maintenance
Requirements. Parent’s Common Stock is registered pursuant to the
Exchange Act, and Parent has taken no action designed to, or which is likely to
have the effect of, terminating the registration of the Parent Common Stock
under the Exchange Act nor has Parent received any notification that the SEC is
contemplating terminating such registration. Parent has not, in the 12 months
preceding the date hereof, received notice from the OTC BB to the effect that
Parent is not in compliance with the listing or maintenance requirements of the
OTC BB. Parent is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements.
3.24 Application of Takeover
Protections.. Parent and its Board of Directors have taken all necessary
action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Parent charter (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable as a result of the Merger, including without limitation
as a result of the Parent’s issuance of the Parent Common Stock and the Company
shareholders’ ownership of Parent Common Stock.
3.25 Interested Party
Transactions. Except as set forth in the Parent SEC Reports filed prior
to the date of this Agreement, no employee, officer, director or stockholder of
Parent or a member of his or her immediate family is indebted to Parent nor is
Parent indebted (or committed to make loans or extend or guarantee credit) to
any of them, other than reimbursement for reasonable expenses incurred on behalf
of Parent. To Parent’s Knowledge, none of such individuals has any direct or
indirect ownership interest in any Person with whom Parent is affiliated or with
whom Parent has a material contractual relationship, or any Person that competes
with Parent, except that each employee, stockholder, officer or director of
Parent and their respective immediate families may own less than 5% of the
outstanding stock in publicly traded companies that may compete with Parent. To
Parent’s Knowledge, no officer, director or stockholder or any member of their
immediate families is, directly or indirectly, interested in any material
contract with Parent (other than such contracts as relate to any such individual
ownership of capital stock or other securities of
Parent).
3.26 Indebtedness. Parent has
no indebtedness for borrowed money.
3.27 Full Disclosure. To
Parent’s Knowledge, this Agreement does not, and the certificate referred to in
Section 7.6 will not: (i) contain any representation, warranty or
information that is false, misleading or incomplete with respect to any material
fact; or (ii) omit to state any material fact necessary in order to make
the representations, warranties and information contained and to be contained
herein and therein (in the light of the circumstances under which such
representations, warranties and information were or will be made or provided)
not false or misleading.
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SECTION 4.
CERTAIN COVENANTS OF THE PARTIES
4.1 Access and Investigation..
During the period commencing on the date of this Agreement and ending as of the
earlier of the Effective Time or the termination of this Agreement (the “Pre-Closing Period”), each of
the Company and Parent shall, and shall cause the respective Representatives of
the other party to: (a) provide the other party’s Representatives with
reasonable access during normal business hours to the Representatives, and to
all existing books, records, Tax Returns, work papers and other documents and
information relating to such party; and (b) provide the other party’s
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to such party as the
other party may reasonably request.
4.2 Operations Prior to
Closing.
(a) Except (i) as
expressly contemplated or permitted by this Agreement, (ii) as required by
applicable Legal Requirement; or (iii) as approved in advance by the other
party hereto in writing, at all times during the period commencing with the
execution and delivery of this Agreement and continuing until the earlier to
occur of the termination of this Agreement pursuant to Section 8 and the
Effective Time, each of the Company and Parent shall, (w) carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and in compliance with all applicable Legal
Requirements, (x) pay its debts and Taxes when due, in each case subject to
good faith disputes over such debts or Taxes, (y) pay or perform all
material obligations when due, and (z) use reasonable best efforts,
consistent with past practices and policies, to (A) preserve intact its
present business organization, (B) keep available the services of its
present officers and employees and (C) preserve its relationships with
customers, suppliers, distributors, licensors, licensees and others with which
it has significant business dealings.
(b) Except (A) as
expressly contemplated or permitted by this Agreement, or (B) with the
prior written consent by the other party hereto, which shall not be unreasonably
withheld, delayed or conditioned, at all times during the period commencing with
the execution and delivery of this Agreement and continuing until the earlier to
occur of the termination of this Agreement pursuant to Section 8 and the
Effective Time, neither the Company nor Parent shall, nor shall either of them
cause or permit any of their respective Subsidiaries to, do any of the
following:
(i) propose to adopt any
amendments to or amend its certificate of incorporation or bylaws or comparable
organizational documents;
(ii) authorize for issuance,
issue, sell, deliver or agree or commit to issue, sell or deliver (whether
through the issuance or granting of options, warrants, other equity-based
(whether payable in cash, securities or other property or any combination of the
foregoing) commitments, subscriptions, rights to purchase or otherwise) any of
its securities;
(iii) amend any of its
securities;
(iv) incur any indebtedness or
guarantee any indebtedness for borrowed money or issue or sell any debt
securities or guarantee any debt securities or other obligations of others or
create a Encumbrance over any of its assets;
(v) declare, set aside or pay
any dividend or other distribution of property in respect of any shares of
capital stock, make any other actual, constructive or deemed distribution of
property in respect of the shares of capital stock or effect or commit to any
stock repurchase or redemption of its capital stock;
(vi) propose or adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of it;
(vii) forgive any loans of any
party, including its employees, officers or directors or any employees, officers
or directors;
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(viii) increase the
compensation payable or to become payable to its officers, employees or
consultants, or grant any severance or termination pay to, or enter into any
severance agreement with any director, officer, consultant or other employee, or
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any such
director, officer, consultant or employee, except the parties may make any
amendments to existing employee benefit plans to the extent necessary to
maintain their compliance with applicable Legal Requirements (including any
amendments necessary or desirable to comply with Section 409A of the Code
so as to avoid the imposition of additional Tax with respect thereto) and the
parties may make grants of equity awards as provided in Section 4.2(b)(ii)
above;
(ix) acquire, sell, lease,
license or dispose of any material property or assets in any single transaction
or series of related transactions;
(x) except as may be required
by applicable Legal Requirements or GAAP, make any change in any of the
accounting principles or practices used by it;
(xi) make or change any
material Tax election, adopt or change any Tax accounting method, settle or
compromise any material Tax liability, or consent to the extension or waiver of
the limitations period applicable to a material Tax claim or assessment;
(xii) enter into any Parent
Material contract, as the case may be;
(xiii) amend in any material
respect any Parent Material contract, as the case may be, or grant any release
or relinquishment of any material rights under any Parent Material contract;
(xiv) sell, assign, transfer,
license or sublicense, pledge or otherwise encumber any Parent Intellectual
Property, as applicable (other than non-exclusive licenses in the ordinary
course of business consistent with past practice);
(xv) acquire (by merger,
consolidation or acquisition of stock or assets) any other Person or any equity
interest therein;
(xvi) mortgage, pledge or
subject to Encumbrance, any of its assets or properties;
(xvii) authorize, incur or
commit to incur any new material capital expenditure(s);
(xviii) settle or compromise
any pending or threatened Legal Proceeding or pay, discharge or satisfy or agree
to pay, discharge or satisfy any Liability;
(xix) initiation of any
material Legal Proceeding;
(xx) except as required by
applicable Legal Requirements or GAAP, revalue in any material respect any of
its properties or assets, including writing-off notes or accounts receivable
other than in the ordinary course of business consistent with past practice;
(xxi) enter into a contract to
do any of the foregoing or knowingly take any action which is reasonably
expected to result in any of the conditions to the consummation of the
transactions contemplated hereby not being satisfied, or knowingly take any
action which would make any of its representations or warranties set forth in
this Agreement untrue or incorrect in any material respect, or that would
materially impair its ability to consummate the transactions contemplated by
this Agreement in accordance with the terms hereof or materially delay such
consummation.
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SECTION 5.
ADDITIONAL COVENANTS OF THE PARTIES
5.1 Regulatory Approvals and Related
Matters.
(a) Except as otherwise
provided in this Agreement, each party shall use commercially reasonable efforts
to file, as soon as practicable after the date of this Agreement, all notices,
reports and other documents required to be filed by such party with any
Governmental Body with respect to the Merger and the other Contemplated
Transactions.
(b) Subject to compliance with
applicable Legal Requirements, Parent shall use commercially reasonable efforts
to provide to the Company, and the Company shall use commercially reasonable
efforts to provide to Parent, as promptly as practicable any information that is
required in order to effectuate any filings or applications by Parent or the
Company, as the case may be, pursuant to Section 5.5(a).
5.2 Officers.. Parent and the
Company agree that promptly after the Effective Time the officers of Parent
shall be those persons designated by the Company.
SECTION 6.
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT
The
obligations of Parent to cause the Merger to be effected and otherwise cause the
Contemplated Transactions to be consummated are subject to the waiver (except
for Section 6.10) or satisfaction, at or prior to the Closing, of each of the
following conditions:
6.1 Accuracy of Company
Representations. Each of the representations and warranties of the
Company contained in this Agreement shall have been accurate in all respects as
of the date of this Agreement and shall be accurate in all respects as of the
Closing Date as if made on and as of the Closing Date (except for any
representation or warranty made as of a specific date, which shall have been
accurate in all respects as of such date).
6.2 Performance of Covenants..
All of the covenants and obligations in this Agreement that the Company is
required to comply with or to perform at or prior to the Closing shall have been
complied with and performed in all material respects.
6.3 Company Stockholder
Approval. This Agreement shall have been duly adopted and the Merger
shall have been duly approved by the required Company stockholder vote by
Company Written Consent.
6.4 Parent Board of Director
Approval. The issuance of Parent Common Stock in the Merger shall have
been duly approved by the Board of Directors of the Parent.
6.5 Consents. The Consents
identified in Section 6.3, 6.4, 7.3 and 7.4 shall have been obtained and shall
be in full force and effect; and all other Consents required to be obtained in
connection with the Merger and the other Contemplated Transactions shall have
been obtained and shall be in full force and effect, except where the failure to
obtain such Consents would not reasonably be expected to have or result in a
Company Material Adverse Effect.
6.6 Documents. Parent shall
have received the following documents, each of which shall be in full force and
effect: a certificate executed by the Chief Executive Officer and
Chief Financial Officer of the Company, in their capacities as such (which
certificate shall be in full force and effect), confirming that the conditions
set forth in Sections 7 have been duly satisfied and certifying, as of
immediately prior to the Effective Time, and the number of shares of
Company Common Stock issued and outstanding immediately prior to the Effective
Time.
6.7 No Company Material Adverse
Effect.. Since the date of this Agreement, there shall not have occurred
and be continuing any Company Material Adverse Effect, and no event shall have
occurred or circumstance shall exist that, in combination with any other events
or circumstances, would reasonably be expected to have or result in a Company
Material Adverse Effect.
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6.8 Other Governmental
Approvals. Any Governmental Authorization or other Consent required to be
obtained with respect to the Merger under any applicable Antitrust Law shall
have been obtained and shall remain in full force and effect, and no such
Governmental Authorization or other Consent so obtained shall require or contain
any term, limitation, condition or restriction that would reasonably be expected
to result in material harm to: (a) Parent or the Company or any Subsidiary
of Parent or the Company; (b) any business or material asset of Parent or
the Company or any Subsidiary of Parent or the Company; or (c) the future
ability or authority of Parent or the Company or any Subsidiary of Parent or the
Company to conduct business or to own, operate or retain exclusive rights to any
material asset.
6.9 No Restraints.. No
temporary restraining order, preliminary or permanent injunction or other Order
preventing the consummation of the Merger shall have been issued by any court of
competent jurisdiction or other Governmental Body and remain in effect, and
there shall not be any Legal Requirement enacted or deemed applicable to the
Merger that makes consummation of the Merger illegal.
6.10 Form 8-K
Filing.. The Company shall provide Audited Financial
Statements, Unaudited Financial Statements, pro formas, and such
information as required to file a Recent Report on Form 8-K (and including “Form
10 level disclosure) within four (4) business days of the Effective
Date. “Audited Financial
Statements” shall include a balance sheet and the related statements of
operation, changes in Stockholders’ equity and cash flows and any required
footnotes and such other disclosure materials, in each case, to the extent
required to be included in the Form 8-K, prepared in accordance with GAAP, and
in compliance with Regulation S‑X, Regulation
S‑B and the
General Rules and Regulations of the Securities Exchange Act of 1934, as
amended. “Unaudited
Financial Statements” means the quarterly period then completed following
the fiscal year end of the Company including the balance sheet and the related
statements of operation, changes in Stockholders’ equity and cash flows and any
required footnotes and such other disclosure materials, in each case, to the
extent required to be included in the Form 8-K, prepared in
accordance with GAAP, and in compliance with Regulation S‑X, Regulation
S‑B and the
General Rules and Regulations of the Securities Exchange Act of 1934, as
amended.
SECTION 7.
CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY
The
obligation of the Company to cause the Merger to be effected and otherwise cause
the Contemplated Transactions to be consummated is subject to the waiver or
satisfaction, at or prior to the Closing, of the following conditions:
7.1 Accuracy of Parent
Representations. Each of the representations and warranties of Parent
contained in this Agreement shall have been accurate in all respects as of the
date of this Agreement and shall be accurate in all respects as of the Closing
Date as if made on and as of the Closing Date.
7.2 Performance of Covenants..
All of the covenants and obligations in this Agreement that Parent are required
to comply with or to perform at or prior to the Closing shall have been complied
with and performed in all material respects.
7.3 Company Stockholder
Approval.. This Agreement shall have been duly adopted and the Merger
shall have been duly approved by the required Company stockholder vote by
Company Written Consent.
7.4 Parent Approval.. The
issuance of Parent Common Stock in the Merger shall have been duly approved by
the Board of Directors of the Parent.
7.5 Documents.. The Company
shall have received the following documents: a certificate executed
by the Chief Executive Officer and Chief Financial Officer of the Parent, in
their capacities as such (which certificate shall be in full force and effect),
confirming that the conditions set forth in Sections 6 have been duly satisfied
and certifying, as of immediately prior to the Effective Time, and the
number of shares of Parent Common Stock issued and outstanding immediately prior
to the Effective Time.
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7.6 No Parent Material Adverse
Effect. Since the date of this Agreement, there shall not have occurred
and be continuing any Parent Material Adverse Effect, and no event shall have
occurred or circumstance shall exist that, in combination with any other events
or circumstances, would reasonably be expected to have or result in a Parent
Material Adverse Effect.
7.7 Other Governmental
Approvals.. Any Governmental Authorization or other Consent required to
be obtained with respect to the Merger under any applicable Antitrust Law shall
have been obtained and shall remain in full force and effect, and no such
Governmental Authorization or other Consent so obtained shall require or contain
any term, limitation, condition or restriction that would reasonably be expected
to result in material harm to: (a) Parent or the Company or any Subsidiary
of Parent or the Company; (b) any business or material asset of an
Acquiring Corporation or an Acquired Corporation ; or (c) the future
ability or authority of an Acquiring Corporation or an Acquired Corporation to
conduct business or to own, operate or retain exclusive rights to any material
asset.
7.8 No Restraints.. No
temporary restraining order, preliminary or permanent injunction or other Order
preventing the consummation of the Merger shall have been issued by any court of
competent jurisdiction or other Governmental Body and remain in effect, and
there shall not be any Legal Requirement enacted or deemed applicable to the
Merger that makes consummation of the Merger illegal.
SECTION 8.
TERMINATION
8.1 Termination.. This
Agreement may be terminated prior to the Effective Time (whether before or after
adoption of this Agreement by the Company’s stockholders and whether before or
after approval of the issuance of Parent Common Stock in the Merger):
(a) by mutual written consent
of Parent and the Company, duly authorized by their respective boards of
directors;
(b) by either Parent or the
Company if a court of competent jurisdiction or other Governmental Body shall
have issued a final and nonappealable Order, or shall have taken any other final
and nonappealable action, having the effect of permanently restraining,
enjoining or otherwise prohibiting the consummation of the Merger;
or
(c) the conditions to Closing of
Section 6 and Section 7 have not been met or waived on or before November 30,
2009.
8.2 Effect of Termination.. In
the event of the termination of this Agreement as provided in Section 8.1,
this Agreement shall be of no further force or effect; provided, however, that:
(i) this Section 8.2, Section 8.3 and Section 9 shall
survive the termination of this Agreement and shall remain in full force and
effect; and (ii) the termination of this Agreement shall not relieve any
party from any liability for any material breach of any covenant or obligation
contained in this Agreement or for any intentional and material breach of any
representation or warranty contained in this Agreement.
8.3 Expenses. All
fees and expenses incurred in connection with this Agreement and the
Contemplated Transactions shall be paid by the party incurring such expenses,
whether or not the Merger is consummated.
SECTION 9.
MISCELLANEOUS PROVISIONS
9.1 Amendment. This Agreement
may be amended with the approval of the respective boards of directors of the
Company and Parent at any time (whether before or after the adoption of this
Agreement by the Company’s stockholders and whether before or after approval of
the issuance of Parent Common Stock in the Merger by Parent’s stockholders);
provided, however,
that after any such adoption of this Agreement by the Company’s
stockholders, no amendment shall be made which by law requires further approval
of the stockholders of the Company without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
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9.2 Waiver.
(a) Subject to Sections 9.2(b)
and 9.2(c), at any time prior to the Effective Time, any party hereto may:
(i) extend the time for the performance of any of the obligations or other
acts of the other parties to this Agreement; (ii) waive any inaccuracy in
or breach of any representation, warranty, covenant or obligation of the other
party in this Agreement or in any document delivered pursuant to this Agreement;
and (iii) waive compliance with any covenant, obligation or condition for
the benefit of such party contained in this Agreement.
(b) No failure on the part of
any party to exercise any power, right, privilege or remedy under this
Agreement, and no delay on the part of any party in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial exercise of any such
power, right, privilege or remedy shall preclude any other or further exercise
thereof or of any other power, right, privilege or remedy.
(c) No party shall be deemed
to have waived any claim arising out of this Agreement, or any power, right,
privilege or remedy under this Agreement, unless the waiver of such claim,
power, right, privilege or remedy is expressly set forth in a written instrument
duly executed and delivered on behalf of such party; and any such waiver shall
not be applicable or have any effect except in the specific instance in which it
is given.
9.3 No Survival of Representations
and Warranties. None of the representations and warranties contained in
this Agreement or in any certificate delivered pursuant to this Agreement shall
survive the Merger.
9.4 Entire Agreement; Counterparts;
Exchanges by Facsimile or Electronic Delivery. This Agreement and the
other agreements, exhibits and disclosure schedules referred to herein
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among or between any of the parties with
respect to the subject matter hereof and thereof . This Agreement may be
executed in several counterparts, each of which shall be deemed an original and
all of which shall constitute one and the same instrument. The exchange of a
fully executed Agreement (in counterparts or otherwise) by facsimile or by
electronic delivery shall be sufficient to bind the parties to the terms and
conditions of this Agreement.
9.5 Applicable Law;
Jurisdiction. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Nevada, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
In any action between any of the parties arising out of or relating to this
Agreement or any of the Contemplated Transactions, each of the parties
irrevocably and unconditionally consents and submits to the exclusive
jurisdiction and venue of the Courts of the State of Nevada.
9.6 Attorneys’
Fees.. In any action at law or suit in equity to enforce this Agreement
or the rights of any of the parties hereunder, the prevailing party in such
action or suit shall be entitled to receive a reasonable sum for its attorneys’
fees and all other reasonable costs and expenses incurred in such action or
suit.
9.7 Assignability; No Third Party
Rights. This Agreement shall be binding upon, and shall be enforceable by
and inure solely to the benefit of, the parties hereto and their respective
successors and assigns; provided, however, that
neither this Agreement nor any
19
party’s
rights or obligations hereunder may be assigned or delegated by such party
without the prior written consent of the other parties, and any attempted
assignment or delegation of this Agreement or any of such rights or obligations
by any party without the prior written consent of the other parties shall be
void and of no effect. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any Person (other than the parties hereto) any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
9.8 Notices. All notices,
requests, demands and other communications under this Agreement shall be in
writing and shall be deemed to have been duly given or made as follows:
(a) if sent by registered or certified mail in the United States return
receipt requested, upon receipt; (b) if sent by nationally recognized
overnight air courier (such as DHL or Federal Express), two business days after
sending; (c) if sent by facsimile transmission before 5:00 p.m., when
transmitted and receipt is confirmed; (d) if sent by facsimile transmission
after 5:00 p.m. and receipt is confirmed, on the following business day; and
(e) if otherwise actually personally delivered, when delivered, provided
that such notices, requests, demands and other communications are delivered to
the address set forth below, or to such other address as any party shall provide
by like notice to the other parties to this Agreement:
if to
Parent:
Tres
Estrellas Enterprises, Inc.
3401
Adams Avenue, Suite 302
San
Diego, CA 92116-2490
Attention:
Nitin Karnik
with a
copy (which shall not constitute notice) to:
Joseph I.
Emas
1224
Washington Avenue
Miami
Beach, Florida 33139
Facsimile:
305-531-1274
if to the
Company:
In Media
Corporation
2920 El
Camino Real
Suite
100
Los
Altos, CA 94022
Attention:
Nitin Karnik
Facsimile:
4150647-3461
with a
copy (which shall not constitute notice) to:
Bernstein
Shur
Jefferson
Mill Building
670 North
Commercial Street
Suite
108
Manchester,
NH 03105
Attn: Sean
B. Leonard
20
9.9 Cooperation. Each Party
agrees to cooperate fully with the other parties and to execute and deliver such
further documents, certificates, agreements and instruments and to take such
other actions as may be reasonably requested by the other party to evidence or
reflect the Contemplated Transactions and to carry out the intent and purposes
of this Agreement.
9.10 Severability. Any term or
provision of this Agreement that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions of this Agreement or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction. If a final judgment of a court of competent jurisdiction
declares that any term or provision of this Agreement is invalid or
unenforceable, the parties hereto agree that the court making such determination
shall have the power to limit such term or provision, to delete specific words
or phrases or to replace such term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be valid
and enforceable as so modified. In the event such court does not exercise the
power granted to it in the prior sentence, the parties hereto agree to replace
such invalid or unenforceable term or provision with a valid and enforceable
term or provision that will achieve, to the extent possible, the economic,
business and other purposes of such invalid or unenforceable term or provision.
9.11 Construction.
(a) For purposes of this
Agreement, whenever the context requires: the singular number shall include the
plural, and vice versa; the masculine gender shall include the feminine and
neuter genders; the feminine gender shall include the masculine and neuter
genders; and the neuter gender shall include masculine and feminine genders.
(b) The parties hereto agree
that any rule of construction to the effect that ambiguities are to be resolved
against the drafting party shall not be applied in the construction or
interpretation of this Agreement.
(c) As used in this Agreement,
the words “include” and “including,” and variations thereof, shall not be deemed
to be terms of limitation, but rather shall be deemed to be followed by the
words “without limitation.”
(d) Except as otherwise
indicated, all references in this Agreement to “Sections,” are intended to refer
to Sections of this Agreement.
(e) The bold-faced
headings contained in this Agreement are for convenience of reference only,
shall not be deemed to be a part of this Agreement and shall not be referred to
in connection with the construction or interpretation of this Agreement.
[Remainder
of page intentionally left blank]
21
IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed as of the date first above
written.
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TRES
ESTRELLAS ENTERPRISES, INC.
|
|||
|
By:
|
|||
|
Name:
|
/s/
Jose Chavez
|
Jose
Chavez
|
|
|
Title:
|
President
|
||
|
/s/
Natkin Karnick
|
Natkin
Karnick
|
||
|
Director
|
|||
|
IN
MEDIA CORPORATION
|
|||
|
By:
|
|||
|
Name:
|
/s/
Natkin Karnick
|
Nitin
Karnik
|
|
|
Title:
|
President
and Chief Executive Officer
|
Merger
Agreement Signature Page
22
EXHIBIT
A
CERTAIN
DEFINITIONS
For
purposes of the Agreement (including this Exhibit A):
Agreement. “Agreement” shall
mean the Agreement and Plan of Merger and Reorganization to which this Exhibit A
is attached, as it may be amended from time to time.
Code. “Code” shall mean the
United States Internal Revenue Code of 1986, as amended.
Company Common Stock. “Company
Common Stock” shall mean the Common Stock, $0.001 par value per share, of the
Company.
Company Material Adverse
Effect. “Company Material Adverse Effect” shall mean any effect, change,
event or circumstance (each, an “Effect”) that, considered
together with all other Effects, has a material adverse effect on: (a) the
business, financial condition, operations or results of operations of the
Company; provided,
however, that, in no event shall any of the following, alone or in
combination, be deemed to constitute, nor shall any of the following be taken
into account in determining whether there has occurred, a Company Material
Adverse Effect: Effects resulting from (i) conditions generally affecting
the industries in which the Company participate or the U.S. or global economy or
capital markets as a whole, to the extent that such conditions do not have a
disproportionate impact on the Company taken as a whole; (ii) any failure
by the Company to meet internal projections or forecasts or third party revenue
or earnings predictions for any period ending (or for which revenues or earnings
are released) on or after the date of the Agreement (it being understood,
however, that any Effect causing or contributing to such failures to meet
projections or predictions may constitute a Company Material Adverse Effect and
may be taken into account in determining whether a Company Material Adverse
Effect has occurred); (iii) the execution, delivery, announcement or
performance of the obligations under this Agreement or the announcement,
pendency or anticipated consummation of the Merger; (iv) any natural
disaster or any acts of terrorism, sabotage, military action or war or any
escalation or worsening thereof; (v) any changes (after the date of this
Agreement) in GAAP or applicable Legal Requirements; (vi) the taking of any
action required by this Agreement; (vii) the ability of the Company to
consummate the Merger or to perform any of its covenants or obligations under
the Agreement; or (viii) Parent’s ability to vote, transfer, receive
dividends with respect to or otherwise exercise ownership rights with respect to
the stock of the Surviving Subsidiary Corporation.
Consent. “Consent” shall mean
any approval, consent, ratification, permission, waiver or authorization
(including any Governmental Authorization).
Contemplated Transactions.
“Contemplated Transactions” shall mean the Merger and the other transactions
contemplated by the Agreement.
Encumbrance. “Encumbrance”
shall mean any lien, pledge, hypothecation, charge, mortgage, easement,
encroachment, imperfection of title, title exception, title defect, right of
possession, lease, tenancy license, security interest, encumbrance, claim,
infringement, interference, option, right of first refusal, preemptive right,
community property interest or restriction of any nature (including any
restriction on the voting of any security, any restriction on the transfer of
any security or other asset, any restriction on the receipt of any income
derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset).
Entity. “Entity” shall mean
any corporation (including any non-profit corporation), general partnership,
limited partnership, limited liability partnership, joint venture, estate,
trust, company (including any company limited by shares, limited liability
company or joint stock company), firm, society or other enterprise, association,
organization or Entity.
Exchange Act. “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.
GAAP. “GAAP” shall mean
generally accepted accounting principles in the United States.
23
Governmental Authorization.
“Governmental Authorization” shall mean any: (a) permit, license,
certificate, franchise, permission, variance, clearance, registration,
qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement; or (b) right under any contract with any Governmental
Body.
Governmental Body.
“Governmental Body” shall mean any: (a) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental division, department, agency, commission, instrumentality,
official, ministry, fund, foundation, center, organization, unit, body or Entity
and any court or other tribunal); or (d) self-regulatory organization
(including Nasdaq).
IRS. “IRS” shall mean the
United States Internal Revenue Service.
Knowledge. “Knowledge” shall
mean, with respect to any particular matter: (a) with respect to the
Company, the actual knowledge of the Company’s Chief Executive Officer regarding
such matter; and (b) with respect to Parent, the actual knowledge of
Parent’s Chief Executive Officer, Chief Financial Officer, and the Chairman of
the board of directors of the Parent regarding such matter.
Legal Proceeding. “Legal
Proceeding” shall mean any action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry, audit, examination or investigation commenced,
brought, conducted or heard by or before, or otherwise involving, any court or
other Governmental Body or any arbitrator or arbitration panel.
Legal Requirement. “Legal
Requirement” shall mean any federal, state, local, municipal, foreign or other
law, statute, constitution, principle of common law, resolution, ordinance,
code, edict, decree, rule, regulation, order, award, ruling or requirement
issued, enacted, adopted, promulgated, implemented or otherwise put into effect
by or under the authority of any Governmental Body (or under the authority of
Nasdaq).
Order. “Order” shall mean any
order, writ, injunction, judgment or decree.
Parent Affiliate. “Parent
Affiliate” shall mean any Person under common control with any of the Parent or
required to be aggregated with any of the Parent within the meaning of
Section 414(b), Section 414(c), Section 414(m) or
Section 414(o) of the Code, and the regulations issued thereunder.
Parent Associate. “Parent
Associate” shall mean any current or former officer or other employee, or
current or former independent contractor, consultant or director, of or to any
of the Parent or any Parent Affiliate.
Parent Common Stock. “Parent
Common Stock” shall mean the Common Stock, $0.001 par value per share, of
Parent.
Parent Employee. “Parent
Employee” shall mean any director or any officer or other employee of any of the
Parent.
Parent Employee Agreement.
“Parent Employee Agreement” shall mean any management, employment, severance,
retention, transaction bonus, change in control, consulting, relocation,
repatriation or expatriation agreement or other similar contract between:
(a) any of the Parent or any Parent Affiliate; and (b) any Parent
Associate, other than any such contract that is terminable “at will” (or
following a notice period imposed by applicable law) without any obligation on
the part of any Acquiring Corporation or any Parent Affiliate to make any
severance, termination, change in control or similar payment or to provide any
benefit, other than severance payments required to be made by any Acquiring
Corporation under applicable foreign law.
Parent Material Adverse
Effect. “Parent Material Adverse Effect” shall mean any Effect that,
considered together with all other Effects, has a material adverse effect on:
(a) the business, financial condition, operations or results of operations
of Parent; provided,
however, that, in no event shall any of the following, alone or in
combination, be deemed to constitute, nor shall any of the following be taken
into account in determining whether there has occurred, a Parent Material
Adverse Effect: Effects resulting (i) from conditions generally affecting
the industries in which Parent participates or the U.S. or global economy or
capital markets as a whole, to the extent that such conditions do not
24
have a
disproportionate impact on Parent and its Subsidiaries taken as a whole;
(ii) changes in the trading price or trading volume of Parent Common Stock
(it being understood, however, that any Effect causing or contributing to such
changes in the trading price or trading volume of Parent Common Stock may
constitute a Parent Material Adverse Effect and may be taken into account in
determining whether a Parent Material Adverse Effect has occurred);
(iii) the execution, delivery, announcement or performance of the
obligations under this Agreement or the announcement, pendency or anticipated
consummation of the Merger; (iv) any natural disaster or any acts of
terrorism, sabotage, military action or war or any escalation or worsening
thereof; (v) any changes (after the date of this Agreement) in GAAP or
applicable Legal Requirements; (vi) the taking of any action required by
this Agreement; and (vii) the ability of Parent to consummate the Merger or
to perform any of its covenants or obligations under the Agreement.
Person. “Person” shall mean
any individual, Entity or Governmental Body.
Representatives.
“Representatives” shall mean directors, officers, other employees, agents,
attorneys, accountants, advisors and representatives.
Sarbanes-Oxley Act.
“Sarbanes-Oxley Act” shall mean the Sarbanes-Oxley Act of 2002, as it may be
amended from time to time.
SEC. “SEC” shall mean the
United States Securities and Exchange Commission.
Securities Act. “Securities
Act” shall mean the Securities Act of 1933, as amended.
Subsidiary. An Entity shall be
deemed to be a “Subsidiary” of another Person if such Person directly or
indirectly owns or purports to own, beneficially or of record: (a) an
amount of voting securities of or other interests in such Entity that is
sufficient to enable such Person to elect at least a majority of the members of
such Entity’s board of directors or other governing body; or (b) at least
50% of the outstanding equity, voting or financial interests in such Entity.
Tax. “Tax” shall mean any
federal, state, local, foreign or other tax (including any income tax, franchise
tax, capital gains tax, gross receipts tax, value-added tax, surtax, estimated
tax, unemployment tax, national health insurance tax, excise tax, ad valorem
tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax,
withholding tax or payroll tax), levy, assessment, tariff, duty (including any
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
Tax Return. “Tax Return” shall
mean any return (including any information return), report, statement,
declaration, estimate, schedule, notice, notification, form, election,
certificate or other document or information, and any amendment or supplement to
any of the foregoing, filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
25