AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
PACIFIC INTERMEDIA, INC.
AND
RAPTOR NETWORKS TECHNOLOGY, INC.
--------------------------------
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is dated as of August 23, 2003,
by and between Pacific Intermedia, Inc. ("PFII"), a Colorado corporation whose
principal place of business is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, such corporation being herein sometimes called the
"Surviving Corporation", and Raptor Networks Technology, Inc. ("Raptor"), a
California corporation whose principal place of business is located at ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, such corporation being herein
sometimes called the "Disappearing Corporation," with PFII and Raptor being
herein sometimes collectively called the "Constituent Corporations". This
agreement replaces all preceding agreements.
SECTION 1. NAME OF SURVIVING CORPORATION; ARTICLES OF INCORPORATION AND
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BY-LAWS; BOARD OF DIRECTORS; OFFICERS
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1.1 Name of Surviving Corporation. The corporation which shall survive the
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merger ("Merger") contemplated hereby is Pacific Intermedia, Inc., a
Colorado corporation. However, immediately following the Effective Time
(as defined in Section 3.2 hereof), the name of the Surviving Corporation
shall be changed to "Raptor Networks Technology, Inc."
1.2 Articles of Incorporation and By-laws: The articles of incorporation and
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the by-laws of Pacific Intermedia, Inc. as in effect at the Effective Time
(as defined in Section 3.2 hereof) shall from and after the Effective Time
be the articles of incorporation and the by-laws of the Surviving
Corporation until they are amended. Immediately following commencement of
the Effective Time the articles of incorporation and the by-laws shall be
amended such that the then-current articles of incorporation and by-laws
of Raptor shall be adopted by the Surviving Corporation.
1.3 Board of Directors and Officers: The directors and officers of Raptor as
---------------------------------
of the Effective Time shall be the directors and the officers of the
Surviving Corporation, each to serve in each case until his respective
successor shall have been elected and qualified. The directors and
officers of PFII as of the Effective Time shall resign effective
immediately following commencement of the Effective Time.
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1.4 Employees and Consultants: All employees of Raptor shall remain employees
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of the Surviving Corporation following the Effective Time, at the sole
discretion of the directors and officers of the Surviving Corporation. All
employees of PFII as of the Effective Time shall be terminated effective
immediately following commencement of the Effective Time.
SECTION 2. STATUS AND CONVERSION OF SECURITIES
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2.1 Stock of Disappearing Corporation:
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(a) Raptor Common and Preferred Stock. Each share of common stock, par
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value $0.001 per share, of Raptor ("Raptor Common Stock")
outstanding at the Effective Time shall, subject to compliance with
Section 2.1(d), be converted into and exchanged for one (1) share of
common stock, par value $0.001 per share, of PFII ("PFII Common
Stock"), except that shares of Raptor Common Stock held in Raptor's
treasury at the Effective Time, if any, shall be cancelled. Each
share of Raptor Series C Convertible Preferred Stock ("Raptor Series
C Stock"), par value $.50 per share, outstanding at the Effective
Time shall, subject to compliance with Section 2.1(d), be converted
into and exchanged for one (1) share of PFII Series C Convertible
Preferred Stock, par value $.50 per share, except that shares of
Raptor Series C Stock held in Raptor's treasury at the Effective
Time, if any, shall be cancelled.
(b) Dissenter's Rights. Notwithstanding Section 2.1(a), no share of PFII
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Common Stock and/or PFII Series C Stock shall be issued in respect
of any shares of Raptor Common Stock and/or Raptor Series C Stock,
the holders of which shall object to the Merger in writing and
demand payment of the value of their shares pursuant to the General
Corporation Law of the State of California and as a result payment
therefore is made, such holders to have only the rights provided by
such law.
(c) Surrender and Exchange of Raptor Common Stock and/or Raptor Series C
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Stock. Subject to the provisions of Section 2.1(a) and 2.1(d), after
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the Effective Time each holder of an outstanding certificate or
certificates ("Old Certificates") theretofore representing shares of
Raptor Common Stock and/or Raptor Series C Stock, upon surrender
thereof to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. ("Exchange Agent"), at ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, shall be
entitled to receive in exchange therefore a certificate or
certificates ("New Certificates"), which PFII agrees to make
available to the Exchange Agent as soon as practicable after the
Effective Time, representing the number of whole shares of PFII
Common Stock and/or, where applicable, Raptor Series C Stock rounded
up to the nearest whole share into and for which the shares of
Raptor Common Stock and/or Raptor Series C Stock theretofore
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represented by such surrendered Old Certificates have been
converted. No certificates or scrip for fractional shares of PFII
Common Stock and/or Series C Stock will be issued, no PFII stock
split or dividend shall relate to any fractional share interest, and
no such fractional share interest shall entitle the owner thereof to
vote or to any rights of a shareholder of PFII.
(d) Endorsement of Shares of Raptor Common Stock and/or Raptor Series C
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Stock. The Old Certificates to be surrendered by the holders of
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Raptor Common Stock and/or Raptor Series C Stock shall be properly
endorsed and otherwise in proper form for transfer in accordance
with the share exchange instructions provided to the holders of such
securities.
(e) Stock Transfers. As of the Effective Time, no transfer of the shares
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of Raptor Common Stock and/or Raptor Series C Stock outstanding
prior to the Effective Time shall be made on the stock transfer book
of the Surviving Corporation. If, after the Effective Time, Old
Certificates are presented to the Surviving Corporation, they shall
be exchanged pursuant to Section 2.1 (c).
2.2 Assumption and Recognition of Raptor Options: On and after the Effective
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Time, PFII shall assume and recognize any vested or unvested stock options
outstanding with respect to Raptor Common Stock and/or Raptor Series C
Stock.
2.3 Nonassumption or Nonrecognition of PFII Options: On and after the
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Effective Time, Raptor shall neither assume nor recognize any stock
options outstanding with respect to PFII Common Stock. It is the intention
of PFII to cause all outstanding stock options to be cancelled or
exercised prior to the Effective Time.
2.4 Capital Stock of PFII. All issued shares of PFII Common Stock outstanding
----------------------
immediately prior to the Effective Time shall continue unchanged as
securities of the Surviving Corporation.
SECTION 3. STOCKHOLDER APPROVALS; BOARDS OF DIRECTORS' RECOMMENDATIONS;
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FILING; EFFECTIVE TIME
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3.1 Stockholder Approvals; Boards of Directors' Recommendations: Meetings of
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the stockholders of Raptor and PFII shall be held in accordance with their
respective articles and bylaws and general corporate law, in accordance
with any and all applicable federal laws or regulations or SEC provisions,
respectively, as promptly as possible, after at least 20 days' prior
written notice thereof to the stockholders of the respective Constituent
Corporations, in each case, among other things, to consider and vote upon
the adoption and approval of this Agreement, the Merger and the other
transactions, if any, contemplated hereby. In the event that either party
hereto is able to obtain the written consent of the owners of a majority
of its outstanding shares of capital stock in favor of the Merger, then no
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notice of a stockholders' meeting need be given to such party's
stockholders and no proxies need to be solicited from such stockholders to
accomplish the Merger. Subject to its fiduciary duty to its stockholders,
the Board of Directors of PFII shall recommend to its stockholders that
this Agreement, the Merger and the other transactions contemplated hereby,
if any, be adopted and approved. Subject to its fiduciary duties to its
stockholders, the Board of Directors of Raptor shall recommend to its
stockholders that this Agreement, the Merger and the other transactions
contemplated hereby, if any, be adopted and approved.
3.2 Filing; Effective Time: As soon as practicable after the adoption and
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approval of this Agreement, the Merger and the other transactions
contemplated hereby, if any, by the respective stockholders of each of the
Constituent Corporations (unless one or more of the conditions contained
in Sections 7 and 8 have not then been fulfilled or waived, then as soon
as practicable after the fulfillment or waiver of all such conditions), an
appropriate certificate of merger in the form required by law shall be
executed and filed in the office of the Secretary of State of the
respective states, at which time the Merger shall become effective (the
"Closing" or the "Effective Time"). The parties intend the Closing to take
place no later than 5:00 p.m., Pacific Standard Time, on September 30,
2003.
SECTION 4. CERTAIN EFFECTS OF THE MERGER
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4.1 Effects of Merger: When the Merger becomes effective, the separate
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existence of Raptor shall cease, Raptor shall be merged into PFII, and the
Surviving Corporation shall possess all the rights, privileges, powers and
franchises of a public or private nature, and shall be subject to all the
restrictions, disabilities and duties of each of the Constituent
Corporations; and all and singular, the rights, privileges, powers and
franchises of each of the Constituent Corporations, and all property,
real, personal and mixed, and all debts due to either of the Constituent
Corporations on whatever account, as well for stock subscriptions as all
other things in action or belonging to each of the Constituent
Corporations shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every
other interest shall be thereafter as effectively as possible the property
of the Surviving Corporation as they were of the several and respective
Constituent Corporations; and the title to any real estate vested by deed
or otherwise, under the laws of any jurisdiction, in either of the
Constituent Corporations, shall not revert or be in any way impaired by
reason of the Merger; but all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the respective
Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if such
debts, liabilities and duties had been incurred or contracted by it.
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SECTION 5. COVENANTS
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5.1 Covenants of Raptor: Raptor agrees that, unless PFII otherwise agrees in
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writing:
(a) Certificate of Incorporation and Bylaws. Until the earlier of the
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Effective Time or the rightful abandonment or termination of the
Merger pursuant to Sections 7 or 8 or otherwise ("Release Time"), no
amendment will be made in the certificate of incorporation or bylaws
of Raptor.
(b) Dividends and Purchases of Stock. Until the Release Time, no
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dividend or liquidating or other distribution or stock split shall
be authorized, declared, paid or affected by Raptor in respect of
the outstanding shares of Raptor Common Stock.
(c) Access. Until the Release Time, Raptor will afford the officers,
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directors, employees, counsel, agents, investment bankers
accountants and other representatives of PFII free and full access
to the plants, premises, properties, books and records of Raptor,
will permit them to make extracts from and copies of such books and
records, and will from time to time furnish PFII with such
additional financial and operating data and other information as to
the financial condition, results of operations, business,
properties, assets, liabilities or future prospects of Raptor as
PFII from time to time may request.
(d) Conduct of Business. Until the Release Time, Raptor shall conduct
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its affairs so that at the Effective Time no representation or
warranty of Raptor will be inaccurate, no covenant or agreement of
Raptor will be breached, and no condition of this Agreement will
remain unfulfilled by reason of the actions or omissions of Raptor.
Except as otherwise requested by PFII in writing, until the Release
Time, Raptor will use its best efforts to preserve the business
operations of Raptor intact, to keep available the services of its
present personnel, to preserve in full force and effect the
contracts, agreements, instruments, leases, licenses, arrangements
and understandings of Raptor, and to preserve the good will of its
suppliers, customers and others having business relations with any
of them. Until the Release Time, Raptor will conduct its business
and operations in all respects only in the ordinary course.
(e) Advice of Changes. Until the Release Time, Raptor will immediately
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advise PFII in a detailed written notice of any fact or occurrence
or any pending or threatened occurrence of which it obtains
knowledge and which (if existing and known at the date of the
execution of this Agreement) would have been required to be set
forth or disclosed in or pursuant to this Agreement or the Raptor
Disclosure Letter (as defined in Section 6.1 (a)), which (if
existing and known at any time prior to or at the Effective Time)
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would make the performance by any party of a covenant contained in
this Agreement impossible or make such performance materially more
difficult than in the absence of such fact or occurrence, or which
(if existing and known at the time of the Effective Time) would
cause a condition to any party's obligations under this Agreement
not to be fully satisfied.
(f) Confidentiality. Raptor shall ensure that all confidential
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information which Raptor or any of its respective officers,
directors, employees, counsel, agents, investment bankers, or
accountants may now possess or may hereafter create or obtain
relating to the financial condition, results of operation, business,
properties, assets, liabilities or future prospects of PFII, any of
PFII affiliate, or any customer or supplier of PFII or any such
affiliate shall not be published, disclosed, or made accessible by
any of them to any other person or entity at any time or used by any
of them except pending the Effective Time in the business and for
the benefit of Raptor, in each case without the prior written
consent of PFII; provided, however, that the restrictions of this
sentence shall not apply (i) after the Merger is rightfully
abandoned or terminated pursuant to Section 7 or 8 or otherwise, but
only to the extent such confidential information relates to the
financial condition, results of operations, business, properties,
assets, liabilities or future prospects of Raptor, of any affiliate
of any of them, or (insofar as such confidential information was
obtained directly by Raptor or any such affiliate from any customer
or supplier of any of them) of any such customer or supplier, (ii)
as may otherwise be required by law, (iii) as may be necessary or
appropriate in connection with the enforcement of this Agreement, or
(iv) to the extent the information shall have otherwise become
publicly available. Raptor shall, and shall cause all other such
persons and entities to, deliver to PFII all tangible evidence of
the confidential information to which the restrictions of the
foregoing sentence apply immediately after the rightful abandonment
or termination of the Merger pursuant to Section 7 or 8 or
otherwise.
(g) Public Statements. Before Raptor releases any information concerning
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this Agreement, the Merger, or any of the other transaction
contemplated by this Agreement which is intended for or may result
in public dissemination thereof, Raptor shall cooperate with PFII,
shall furnish drafts of all documents or proposed oral statements to
PFII for comments, and shall not release any such information
without the written consent of PFII. Nothing contained herein shall
prevent Raptor from releasing any information if required to do so
by law.
(h) Indemnification. Raptor agrees to indemnify and hold harmless PFII
----------------
and its officers, directors, managers, employees, agents and
counsel, against any and all losses, liabilities (including personal
liabilities of certain executives and directors), claims, damages,
and expenses whatsoever (which shall include, for all purposes of
this Section 5.1(j), but not be limited to, counsel fees and any and
6
all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any
claim or litigation) as and when incurred and whether or not
involving a third party arising out of, based upon, or in connection
with (i) an untrue statement or alleged untrue statement of a
material fact contained in this Agreement or any other document
relating to this Agreement and the Merger contemplated thereby, and
(ii) any liability under state or Federal securities laws resulting
from any omission or alleged omission to state a material fact
required to be stated in this Agreement or any other document
required hereunder, provided in each case that such untrue
statement, alleged untrue statement, omission, or alleged omission
relates to information furnished by or on behalf of, or pertaining
to, Raptor or any Raptor security holder or (ii) any breach of any
representation, warranty, covenant or agreement of Raptor contained
in this Agreement. The foregoing agreement to indemnify shall be in
addition to any liability Raptor may otherwise have, including
liabilities arising under this Agreement.
5.2 Covenants of PFII: PFII agrees that, unless Raptor otherwise agrees in
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writing:
(a) Articles of Incorporation and Bylaws. Until the earlier of the
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Effective Time or the rightful abandonment or termination of the
Merger pursuant to Section 7 or 8 or otherwise ("Release Time"), no
amendment will be made in the articles of incorporation or bylaws of
PFII.
(b) Shares and Options. Until the Release Time, no shares of capital
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stock of PFII, options or warrants for such shares, rights to
subscribe to or purchase such shares, or securities convertible into
or exchangeable for such shares, shall be issued, granted or sold by
PFII without the prior written consent of an authorized officer of
Raptor.
(c) Dividends and Purchases of Stock. Until the Release Time, no
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dividend or stock split shall be authorized, declared, paid or
affected by PFII in respect of the outstanding shares of PFII Common
Stock.
(d) Assets/Liabilities/Borrowing of Money. Until the Release Time, PFII
---------------------------------------
shall not borrow money, guarantee the borrowing of money, engage in
any transaction or enter into any material agreement, except in the
ordinary course of business. At the Closing, PFII shall have no
assets, no liabilities and no contracts in force or effect.
(e) Access. Until the Release Time, PFII will afford the officers,
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directors, employees, counsel, agents, investment bankers
accountants and other representatives of Raptor free and full access
to the plants, premises, properties, books and records of PFII and
the PFII Subsidiaries, will permit them to make extracts from and
copies of such books and records, and will from time to time furnish
7
Raptor with such additional financial and operating data and other
information as to the financial condition, results of operations,
business, properties, assets, liabilities or future prospects of
PFII and the PFII Subsidiaries as Raptor from time to time may
request.
(f) Conduct of Business. Until the Release Time, PFII shall conduct its
--------------------
affairs so that at the Effective Time no representation or warranty
of PFII will be inaccurate, no covenant or agreement of PFII will be
breached, and no condition of this Agreement will remain unfulfilled
by reason of the actions or omissions of PFII. Except as otherwise
requested by Raptor in writing, until the Release Time, PFII will
use its best efforts to preserve the business operations of PFII
intact, to keep available the services of its present personnel, to
preserve in full force and effect the contracts, agreements,
instruments, leases, licenses, arrangements and understandings of
PFII, and to preserve the good will of its suppliers, customers and
others having business relations with any of them. Until the Release
Time, PFII will conduct its business and operations in all respects
only in the ordinary course.
(g) Advice of Changes. Until the Release Time, PFII will immediately
------------------
advise Raptor in a detailed written notice of any fact or occurrence
or any pending or threatened occurrence of which it obtains
knowledge and which (if existing and known at the date of the
execution of this Agreement) would have been required to be set
forth or disclosed in or pursuant to this Agreement or the PFII
Disclosure Letter [as defined in Section 6.02 (a)], which (if
existing and known at any time prior to or at the Effective Time)
would make the performance by any party of a covenant contained in
this Agreement impossible or make such performance materially more
difficult than in the absence of such fact or occurrence, or which
(if existing and known at the time of the Effective Time) would
cause a condition to any party's obligations under this Agreement
not to be fully satisfied.
(h) Confidentiality. PFII shall ensure that all confidential information
----------------
which PFII or any of its officers, directors, employees, counsel,
agents, investment bankers, or accountants may now possess or may
hereafter create or obtain relating to the financial condition,
results of operation, business, properties, assets, liabilities or
future prospects of Raptor, any Raptor affiliate, or any customer or
supplier of Raptor or any such affiliate shall not be published,
disclosed, or made accessible by any of them to any other person or
entity at any time or used by any of them except pending the
Effective Time in the business and for the benefit of PFII, in each
case without the prior written consent of Raptor; provided, however,
that the restrictions of this sentence shall not apply (i) after the
Merger is rightfully abandoned or terminated pursuant to Section 7
or 8 or otherwise, but only to the extent such confidential
information relates to the financial condition, results of
operations, business, properties, assets, liabilities or future
8
prospects of PFII or of any of its affiliates, or (insofar as such
confidential information was obtained directly by PFII, any PFII
Subsidiary, or any such affiliate from any customer or supplier of
any of them) of any such customer or supplier, (ii) as may otherwise
be required by law, (iii) as may be necessary or appropriate in
connection with the enforcement of this Agreement, or (iv) to the
extent the information shall have otherwise become publicly
available. PFII shall, and shall cause all other such persons and
entities to, deliver to Raptor all tangible evidence of the
confidential information to which the restrictions of the foregoing
sentence apply immediately after the rightful abandonment or
termination of the Merger pursuant to Section 7 or 8 or otherwise.
(i) Public Statements. Before PFII releases any information concerning
------------------
this Agreement, the Merger, or any of the other transactions
contemplated by this Agreement which is intended for or may result
in public dissemination thereof, PFII shall cooperate with Raptor,
shall furnish drafts of all documents or proposed oral statements to
Raptor for comments, and shall not release any such information
without the written consent of Raptor Nothing contained herein shall
prevent PFII from releasing any information if required to do so by
law.
(j) Indemnification. PFII agrees to indemnify and hold harmless Raptor
----------------
and its officers, directors, managers, employees, agents and
counsel, against any and all losses, liabilities, claims, damages,
and expenses whatsoever (which shall include, for all purposes of
this Section 5.3(j), but not be limited to, counsel fees and any and
all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any
claim or litigation) as and when incurred and whether or not
involving a third party arising out of, based upon, or in connection
with (i) untrue statement or alleged untrue statement of a material
fact contained in this Agreement or in any other document relating
to this Agreement and the Merger contemplated thereby, and (ii) any
liability under state or Federal securities laws resulting from any
omission or alleged omission to state a material fact required to be
stated this Agreement or any other document required hereunder,
provided in each case that such untrue statement, alleged untrue
statement, omission, or alleged omission relates to information
furnished by or on behalf of, or pertaining to, PFII, any PFII
Subsidiary, or any PFII security holder or (ii) any breach of any
representation, warranty, covenant or agreement of PFII contained in
this Agreement. The foregoing agreement to indemnify shall be in
addition to any liability PFII may otherwise have, including
liabilities arising under this Agreement.
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SECTION 6. REPRESENTATIONS AND WARRANTIES
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6.1 Certain Representations and Warranties of Raptor: Raptor represents and
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warrants to PFII as follows:
(a) Disclosures. Raptor Network Technologies, Inc. is incorporated in
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the State of California; its principal place of business is in
California; the jurisdiction in which it is qualified to do business
is California; and the business which it presently conducts and
which it contemplates conducting is a combined network, storage,
video and voice over IP technologies (VOIP) enfrastructure of
software, hardware, design and manufacturing company. Raptor is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, with all
requisite power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates and
permits of and from, and declarations and filings with, all federal,
state, local and other governmental authorities and all courts and
other tribunals, to own, lease, license and use its properties and
assets and to carry on the business in which it is now engaged and
the business in which it contemplates engaging. Raptor is duly
qualified to transact the business in which it is engaged and is in
good standing as a foreign corporation in every jurisdiction in
which its ownership, leasing, licensing, or use of property or
assets or the conduct of its business makes such qualification
necessary.
(b) Capitalization. The authorized capital stock of Raptor consists of
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40,000,000 shares of Raptor Common Stock, $0.001 par value, of which
15,485,000 common shares shall be outstanding as of Closing, and
5,000,000 shares of Series C Preferred Stock, $.50 par value, of
which (fill in amount) shall be outstanding as of Closing, including
the conversion of bridge funding, warrants and other amounts. Raptor
is conducting a private placement of its common shares and prior to
Closing may issue up to an additional two million common shares
and/or two million additional shares of Series C Preferred Stock
pursuant to such placement. Each of such outstanding shares of
Raptor Common and/or Preferred Stock is validly authorized, validly
issued, fully paid and nonassessable, has not been issued and is not
owned or held in violation of any preemptive right of stockholders,
and is owned of record and beneficially by the following persons in
the case of Raptor in accordance with the following capitalization
table:
SEE Exhibit "A"
in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements and voting
trusts. Other than the shares and convertible securities disclosed
herein, there is no commitment, plan or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance
of, any share of capital stock of Raptor or any security or other
10
instrument convertible into, exercisable for, or exchangeable for
capital stock of Raptor, and there is outstanding no security or
other instrument convertible into or exchangeable for capital stock
of Raptor, other than as set forth herein.
(c) Financial Condition. Raptor has delivered to PFII true and correct
---------------------
copies of its unaudited financial statements (profit and loss
statement and a balance sheet). Such financial statements are true
and correct. Since the preparation of such statements:
(i) There has at no time been a material adverse change in the
financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of
Raptor.
(ii) Raptor has not authorized, declared, paid or affected any
dividend or liquidating or other distribution in respect of
its capital stock or any direct or indirect redemption,
purchase or other acquisition of any stock of Raptor.
(d) Tax and Other Liabilities. To its knowledge, Raptor has no material
--------------------------
liability of any nature, accrued or contingent, including without
limitation liabilities for federal, state, local or foreign taxes
("Taxes") and liabilities to customers or suppliers, except those
reflected in the financial statements provided by Raptor to PFII.
Raptor has filed all federal, state and local tax returns required
to be filed by it, and all such tax returns are true and correct and
all taxes due by Raptor have been paid.
(e) Litigation and Claims. Except as previously disclosed to PFII, there
----------------------
is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending,
threatened or in prospect known to Raptor, with respect to Raptor or
any of its businesses, properties or assets.
(f) Properties. Raptor has good and marketable title to all properties
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and assets used in its business or owned by it, free and clear of
all liens, security interests, mortgages, pledges, charges and
encumbrances (except as set forth in the financial statements and
other disclosures by Raptor to PFII, including the use of inventory,
equipment, furniture and intellectual property.
(g) Retirement Plans. Raptor has no pension, profit sharing or other
------------------
incentive plans or any outstanding bonuses, incentive compensation,
vacations, severance pay, insurance or other benefits, except as
previously disclosed to PFII.
(h) Authority to Merge. Raptor has all requisite power and authority to
-------------------
execute, deliver and perform this Agreement. All necessary corporate
proceedings of Raptor have been taken to authorize the execution,
11
delivery and performance of this Agreement by Raptor, other than
approval of the holders of Raptor Common Stock. This Agreement has
been duly authorized, executed and delivered by Raptor, constitutes
the legal, valid and binding obligation of Raptor, and is
enforceable as to it in accordance with its terms. Except as set
forth elsewhere herein, no consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing
with, any federal, state, local or other governmental authority or
any court or other tribunal is required by Raptor for the execution,
delivery or performance of this Agreement by Raptor. No consent of
any party to any contract, agreement, instrument, lease, arrangement
or understanding to which Raptor is a party, or to which any of its
properties or assets are subject, is required for the execution,
delivery or performance of this Agreement. At the Effective Time,
the Surviving Corporation will acquire all right, title and interest
of Raptor in and to all of its properties and assets, free and clear
of all liens, mortgages, security interests, pledges, charges and
encumbrances, except these specifically assumed as set forth a
disclosure letter to be delivered by Raptor to PFII at Closing (the
"Raptor Disclosure Letter").
6.2 Certain Representations and Warranties of PFII: PFII represents and
---------------------------------------------------
warrants to Raptor as follows:
(a) Disclosure. PFII is incorporated in Colorado; its principal place of
-----------
business is in Colorado; the jurisdiction in which it is qualified
to do business is Colorado; and the business which it presently
conducts and which it contemplates conducting will be sold to a
private party prior to the Closing. PFII is a corporation duly
organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation, with all requisite power and
authority, and all necessary consents, authorizations, approvals,
orders, licenses, certificates and permits of and from, and
declarations and filings with, all federal, state, local and other
governmental authorities and all courts and other tribunals, to own,
lease, license and use its properties and assets and to carry on the
business in which it is now engaged and the business in which it
contemplates engaging. PFII is duly qualified to transact the
business in which it is engaged and is in good standing as a foreign
corporation in every jurisdiction in which its ownership, leasing,
licensing, or use of property or assets or the conduct of its
business makes such qualification necessary.
(b) Capitalization. The authorized capital stock of PFII consists of
---------------
50,000,000 shares of PFII Common Stock, and 5,000,000 shares of
Preferred Stock, $0.001 par value, of which 4,034,000 shares of
registered Common Stock and zero shares of Preferred Stock shall be
outstanding at Closing. Immediately prior to Closing, PFII shall
cause to be cancelled all the shares of its outstanding restricted
common stock, and shall have only 1,034,000 shares of registered
common stock outstanding. Each of such outstanding shares of PFII
Common Stock is validly authorized, validly issued, fully paid and
12
nonassessable, has not been issued and is not owned or held in
violation of any preemptive right of stockholders. There is no
commitment, plan or arrangement to issue, and no outstanding option,
warrant, or other right calling for the issuance of, any share of
capital stock of PFII or any security or other instrument
convertible into, exercisable for, or exchangeable for capital stock
of PFII. There is outstanding no security or other instrument
convertible into or exchangeable for capital stock of PFII.
(c) Financial Condition. PFII has delivered to Raptor true and correct
---------------------
copies of its audited and unaudited financial statements (profit and
loss statement and a balance sheet). Such financial statements are
true and correct. Since the preparation of the aforementioned
financial statements: (i) There has at no time been a material
adverse change in the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of
PFII; (ii) PFII has not authorized, declared, paid or effected any
dividend or liquidating or other distribution in respect of its
capital stock or any direct or indirect redemption, purchase or
other acquisition of any stock of PFII.
(d) Tax and Other Liabilities. PFII has no liability of any nature,
---------------------------
accrued or contingent, including without limitation liabilities for
federal, state, local or foreign taxes ("Taxes") and liabilities to
customers or suppliers, except those reflected in the financial
statements provided by PFII to Raptor.
(e) Litigation and Claims. There is no litigation, arbitration, claim,
----------------------
governmental or other proceeding (formal or informal), or
investigation pending, threatened or in prospect known to PFII, with
respect to PFII or any of its businesses, properties or assets,
other than those proceedings previously disclosed to Raptor.
(f) Properties. PFII has good and marketable title to all properties and
-----------
assets used in its business or owned by it, free and clear of all
liens, security interests, mortgages, pledges, charges and
encumbrances except these specifically assumed as set forth a
disclosure letter to be delivered by PFII to Raptor at Closing (the
"PFII Disclosure Letter").
(g) Authority to Merge. PFII has all requisite power and authority to
-------------------
execute, deliver and perform this Agreement. All necessary corporate
proceedings of PFII have been taken to authorize the execution,
delivery and performance of this Agreement by PFII, other than
approval of the holders of PFII Common Stock. This Agreement has
been duly authorized, executed and delivered by PFII, constitutes
the legal, valid and binding obligation of PFII, and is enforceable
as to it in accordance with its terms. Except as set forth elsewhere
herein, no consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with,
any federal, state, local or other governmental authority or any
court or other tribunal is required by PFII for the execution,
delivery or performance of this Agreement by PFII. No consent of any
13
party to any contract, agreement, instrument, lease, arrangement or
understanding to which PFII is a party, or to which any of its
properties or assets are subject, is required for the execution,
delivery or performance of this Agreement.
SECTION 7. ABANDONMENT AND TERMINATION
---------------------------
7.1 Right of PFII to Abandon: PFII's Board of Directors shall have the right
-------------------------
to abandon or terminate the Merger if any of the following shall not be
true or shall not have occurred, as the case may be, prior to the
Effective Time:
(a) Accuracy of Representations and Compliance with Conditions: All
---------------------------------------------------------------
representations and warranties of Raptor contained in this Agreement
shall be accurate when made and, in addition, shall be accurate as
of the Effective Time as though such representations and warranties
were then made in exactly the same language by Raptor and regardless
of knowledge or lack thereof on the part of Raptor or changes beyond
their control; as of the Effective Time, Raptor shall have performed
and complied with all covenants and agreements and satisfied all
conditions required to be performed and complied with by them at or
before the Effective Time of this Agreement; and PFII shall have
received a certificate executed by the chief executive officer and
the chief financial officer of Raptor dated the Effective Time to
that effect.
(b) Other Closing Documents: Raptor shall have delivered to PFII at or
-------------------------
prior to the Effective Time such other documents as PFII may
reasonably request in order to enable PFII to determine whether the
conditions to its obligations under this Agreement have been met and
otherwise to carry out the provisions of this Agreement.
(c) Legal Action: There shall not have been instituted or threatened any
-------------
legal proceeding relating to, or seeking to prohibit or otherwise
challenge the consummation of, the transactions contemplated by this
Agreement, or to obtain substantial damages with respect thereto.
7.2 Right of Raptor to Abandon: The Board of Directors of Raptor shall have
---------------------------
the right to abandon or terminate the Merger if any of the following shall
not be true or shall not have occurred, as the case may be, prior to the
Effective Time:
(a) Accuracy of Representations and Compliance with Conditions. All
---------------------------------------------------------------
representations and warranties of PFII contained in this Agreement
shall be accurate when made and, in addition, shall be accurate as
of the Effective Time as though such representations and warranties
were then made in exactly the same language by PFII and regardless
of knowledge or lack thereof on the part of PFII or changes beyond
their control; as of the Effective Time, PFII shall have performed
and complied with all covenants and agreements and satisfied all
conditions required to be performed and complied with by them at or
14
before the Effective Time of this Agreement; and Raptor shall have
received a certificate executed by the chief executive officer and
the chief financial officer of the PFII dated the Effective Time to
that effect.
(b) Other Closing Documents. PFII shall have delivered to Raptor at or
-------------------------
prior to the Effective Time such other documents as Raptor may
reasonably request in order to enable Raptor to determine whether
the conditions to its obligations under this Agreement have been met
and otherwise to carry out the provisions of this Agreement.
(c) Legal Action. There shall not have been instituted or threatened any
-------------
legal proceeding relating to, or seeking to prohibit or otherwise
challenge the consummation of, the transactions contemplated by this
Agreement, or to obtain substantial damages with respect thereto.
SECTION 8. ADDITIONAL TERMS OF ABANDONMENT
-------------------------------
8.1 Mandatory Abandonment: The Merger shall be abandoned or terminated if the
----------------------
holders of at least the requisite majority of the shares of any of the
Constituent Corporations, as required by applicable state laws, shall not
have voted in favor of the adoption and approval of this Agreement, the
Merger and the other transactions contemplated hereby.
8.2 Optional Abandonment: In addition to the provisions of Section 7, the
----------------------
Merger may be abandoned or terminated at or before the Effective Time,
notwithstanding the adoption and approval of this Agreement, the Merger
and the other transactions contemplated hereby by the stockholders of the
parties hereto:
(a) By mutual agreement of the Boards of Directors of the Constituent
Corporations; or
(b) At the option of any of the respective Boards of Directors of the
Constituent Corporations, if the Effective Time shall not have
occurred on or before September 30, 2003.
8.3 Effect of Abandonment: If the Merger is rightfully abandoned or terminated
----------------------
as provided in Section 7 or this Section 8:
(a) This Agreement shall forthwith become wholly void and of no effect
without liability on the part of either party to this Agreement or
on the part of any officer, director, controlling person, employee,
counsel, agent or shareholder thereof; and
(b) The Constituent Corporations shall each pay and bear its own fees
and expenses incident to the negotiation, preparation and execution
of this Agreement and its respective meetings of stockholders,
15
including fees and expenses of its counsel, accountants, investment
banking firm and other experts.
SECTION 9. GENERAL PROVISIONS
------------------
9.1 Further Actions: At any time and from time to time, each party agrees, at
----------------
its expense, to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes of
this Agreement.
9.2 Amendments: This Agreement sets forth the entire understanding of the
-----------
parties with respect to the subject matter hereof and supersedes all
existing agreements among them concerning such subject matter. This
Agreement may be amended prior to the Effective Time (notwithstanding
stockholder adoption and approval) by a written instrument executed by the
Constituent Corporations with the approval of their respective Boards of
Directors.
9.3 Notices: Any notice or other communication required or permitted to be
--------
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express or similar overnight
delivery or courier service or delivered in person against receipt to the
party to whom it is to be given at the address of such party set forth in
the preamble to this Agreement. Notices hereunder shall be deemed
delivered only upon actual delivery against a signed receipt.
9.4 Waiver: Any waiver by any party of a breach of any provision of this
-------
Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. Any waiver must be in writing and be authorized by a resolution
of the Board of Directors of the waiving party.
9.5 Binding Effect: The provisions of this Agreement shall be binding upon and
---------------
inure to the benefit of the Constituent Corporations and their respective
successors and assigns and shall inure to the benefit of each indemnity.
9.6 Separability: If any provision of this Agreement is invalid, illegal or
-------------
unenforceable, the balance of this Agreement shall remain in effect, and
if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
9.7 Headings: The headings in this Agreement are solely for convenience of
---------
reference and shall be given no effect in the construction or
interpretation of this Agreement.
9.8 Counterparts; Governing Law: This Agreement may be executed in any number
-----------------------------
of counterparts, each of which shall be deemed an original, but all of
16
which together shall constitute one and the same instrument. It shall be
governed by and construed in accordance with the laws of the State of
California.
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IN WITNESS WHEREOF, this Agreement has been approved by resolutions duly
adopted by the Board of Directors of each of the Constituent Corporations and
has been signed by duly authorized officers of each of the Constituent
Corporations, and each of the Constituent Corporations has caused its corporate
seal to be hereunto affixed and attested by the signature of its Secretary or
Assistant Secretary, all as of the date first above written.
PACIFIC INTERMEDIA, INC. September 9, 2003
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
RAPTOR NETWORKS TECHNOLOGY, INC. September 9, 2003
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
President and Chief Executive Officer
18
EXHIBIT "A" TO MERGER AGREEMENT
-------------------------------
RAPTOR SHAREHOLDERS
-------------------
Name Number of Shares
---- ----------------
▇▇▇▇ ▇▇▇▇▇▇▇ - Chairman/CEO 4,000,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ - CTO 3,000,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ - VP Engineering 3,000,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 150,000
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 100,000
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 30,000
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ 20,000
▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇ 100,000
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 30,000
▇▇▇▇ ▇▇▇▇▇▇▇ 200,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 20,000
▇▇▇▇▇ ▇▇▇▇▇ 30,000
Almamlaka LTD, BVI 672,000
The Leopard-Alliance Company Ltd, BVI 672,000
▇▇▇▇▇ ▇▇▇▇▇ 672,000
Turki bin Abdullah 1,072,456
Dr ▇▇▇▇▇▇ ▇▇▇▇▇▇ 100,000
Boston Life & Annuity, Co. (▇▇▇▇ ▇▇▇▇) 25,000
Dr ▇▇▇▇▇▇ ▇▇▇▇▇▇ 50,000
▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇ 30,000
▇▇▇ ▇▇▇▇▇▇▇▇ 40,000
▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇ 100,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ 200,000
Steel Tech Inc. 40,000
▇▇▇▇▇▇ ▇▇▇▇▇ 500,000
▇▇▇▇▇▇▇ San Flipppo 300,000
▇▇▇▇▇ ▇▇▇▇ 125,000
▇▇▇▇▇ ▇▇▇▇ 125,000
Malina Kavaldjieva 100,000
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 150,000
Atlantic Commucations 150,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 50,000
Focus Partners 9,000
▇▇▇▇ ▇▇▇▇▇ 50,000
Alchemy Advisors LLC 1,690,000
Atlantic Communications 1,558,800
----------
Total 19,161,256
19
