AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is dated
November 13, 1999, and is by and between St. Xxxxx Group, Inc., a Delaware
corporation (the "Company"), ClearLogic Acquisition Corp, a New Jersey
corporation ("CA"), and ClearLogic, Inc., a New Jersey corporation
("ClearLogic").
R E C I T A L S
WHEREAS, the shareholders of ClearLogic ("Shareholders") will own,
prior to Closing, the shares of capital stock of ClearLogic as set forth in
Schedule 1 attached hereto, which will constitute all of the issued and
outstanding stock of ClearLogic (the "ClearLogic Shares");
WHEREAS, the Company hereby represents and warrants that it is in full
compliance with the Securities Exchange Act of 1934;
WHEREAS, the Company is the owner of all of the outstanding shares of
CA; and
WHEREAS, the Board of Directors of the Company, CA and ClearLogic deem
it advisable that the acquisition by the Company of ClearLogic be effected
through the merger (the "Merger") of ClearLogic and CA pursuant to this
Agreement and Articles of Merger; and
WHEREAS, the Company desires to acquire all of the outstanding
ClearLogic shares for shares of Common Stock of the Company, in a transaction
that qualifies under Section 368(a)(2)(E) of the Internal Revenue Code of 1986,
as amended (the "Code"); and
WHEREAS, the Boards of Directors of the Company, CA and ClearLogic
intend that the Merger constitute a "reorganization" under Section 368(a)(2)(E)
of the Code, and the infusion of assets to be a tax-free transfer under Section
351 of the Code and the rules and regulations of the Internal Revenue Service
(the "IRS") promulgated thereunder, have approved and adopted this Agreement as
a "plan of reorganization" within the meaning of Section 368 of the Code, and
the rules and regulations of the IRS promulgated thereunder, and intend that the
Merger be treated as a tax-free merger under the Code and the rules and
regulations of the IRS promulgated thereunder.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in reliance upon the representations and warranties
hereinafter set forth, the parties agree as follows:
I. MERGER
1.01 Merger. CA shall merge with and into ClearLogic pursuant to the
Delaware Revised Business Corporation Act (the "Merger") and in accordance with
the Certificate of Merger among the Company, CA and ClearLogic (the "Certificate
of Merger"), a copy of which is attached hereto as Exhibit 2. The Merger shall
be effective on the date on which the Certificate of Merger, or a conformed copy
thereof, in substantially the form annexed hereto as Exhibit 2,
has been filed with the Secretary of State of Delaware, which filing shall take
place upon Closing hereinafter defined.
1.02. Closing. The Closing of the transaction contemplated by this
Agreement (the "Closing") shall take place on the first closing of the offering
described in Section 6.01. At Closing, and pursuant to the Articles of Merger,
all outstanding ClearLogic Shares and employee stock options shall be cancelled
and in lieu thereof the Shareholders shall receive an aggregate of 11,114,458
shares of Company Common Stock (the "Company Shares") and holders of employee
stock options shall receive options to purchase 1,635,542 employee stock options
of the Company. The Merger shall be a "Reverse Triangular Merger" pursuant to
Section 368 (a)(2)(E) of the Internal Revenue Code.
1.03. Deliveries. Upon Closing, the parties are delivering the
following documents:
1.03(a). The items and documents set forth in Sections 1.01
and 1.02.
1.03(b). The Company Shares described in Section 1.02
1.03(c). The Company shall deliver the resignations of all of
its current officers and directors, and a board and or shareholder
resolution electing Sina Khelil, Ronaldo Nascimiento, Xxxxxx Xxxxxxx
and Xxxxxxx Xxxxxxxxxxxxxx to the Board of Directors of the Company.
1.04. Filings. Following with the Closing, the Company shall file a
Certificate of Amendment to the Certificate of Incorporation of the
Company with the Delaware Secretary of State changing the name of the
Company to "ClearLogic, Inc." or a similar name as may be determined by
the Board of Directors and shall file a Current Report on Form 8-K
reporting the transactions effected by this Agreement.
II. REPRESENTATIONS AND WARRANTIES OF CLEARLOGIC
ClearLogic represents and warrants to the Company as follows, as of the
date of this Agreement and as of the Closing:
2.01. Organization.
2.01(a). ClearLogic is a corporation duly organized, validly
existing and in good standing under the laws of the State of New
Jersey; ClearLogic has the corporate power and authority to carry on
its business as presently conducted; and ClearLogic is qualified to do
business in all jurisdictions where the failure to be so qualified
would have a material adverse effect on its business.
2.02. Capitalization.
2.02(a). As of the Closing, the authorized capital stock and
the issued and outstanding shares of ClearLogic will be as set forth on Exhibit
2.02(a). All of the issued
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and outstanding shares of ClearLogic will be duly authorized, validly
issued, fully paid and nonassessable.
2.02(b). Except as set forth in Exhibit 2.02(b) there are no
outstanding options, warrants, or rights to purchase any securities of
ClearLogic.
2.03. Subsidiaries and Investments. ClearLogic does not own any
capital stock or have any interest in any corporation, partnership or other
form of business organization, except as described in Exhibit 2.03 hereto.
2.04. Financial Statements. The audited financial statements of
ClearLogic as of and for the period since its inception to December 31, 1998,
including the audited balance sheet as of June 30, 1999 and the related audited
statement of operations for the period then ended (the "Financial Statements")
present fairly the financial position and results of operations of ClearLogic,
on a consistent basis.
2.05. No Undisclosed Liabilities. To the best knowledge of ClearLogic,
other than as described in Exhibit 2.05 attached hereto and the audited
financial statements, ClearLogic is not subject to any material liability or
obligation of any nature, whether absolute, accrued, contingent, or otherwise
and whether due or to become due, which is not reflected or reserved against in
the Financial Statements, except those incurred in the normal course of
business.
2.06. Absence of Material Changes. Since June 30, 1999, except as
described in any Exhibit attached hereto or as required or permitted under this
Agreement, there has not been:
2.06(a). any material adverse change in the condition
(financial or otherwise) of the properties, assets, liabilities or
business of ClearLogic, except changes in the ordinary course of
business which, individually and in the aggregate, have not been
materially adverse;
2.06(b). any redemption, purchase or other acquisition of
any shares of the capital stock of ClearLogic, or the granting of any rights,
warrants, options or commitments by ClearLogic relating to their authorized or
issued capital stock; or
2.06(c). any change or amendment to the Articles of
Incorporation of ClearLogic.
2.07. Litigation. Except as set forth in Exhibit 2.07 attached hereto,
to the best knowledge of ClearLogic there is no litigation, proceeding or
investigation pending or threatened against ClearLogic affecting any of its
properties or assets that might result, either in any case or in the aggregate,
in any material adverse change in the business, operations, affairs or condition
of ClearLogic or its properties or assets, or that might call into question the
validity of this Agreement, or any action taken or to be taken pursuant hereto.
2.08. Title To Assets. ClearLogic has good and marketable title to all
of its assets and properties now carried on its books including those reflected
in the balance sheets contained in the Financial Statements, free and clear of
all liens, claims, charges, security interests or other encumbrances, except as
described in Exhibit 2.08 attached hereto or any other Exhibit.
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2.09. Transactions with Affiliates, Directors and Shareholders. Except
as set forth in Exhibit 2.09 attached hereto, there are and have been no
contracts, agreements, arrangements or other transactions between ClearLogic,
and any officer, director, or stockholder of ClearLogic, or any corporation or
other entity controlled by the Shareholders, a member of the Shareholders'
families, or any affiliate of the Shareholders.
2.10. No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with or
result in a breach of any term or provision of, or constitute a default under,
the Articles of Incorporation or Bylaws of ClearLogic, or any agreement,
contract or instrument to which ClearLogic is a party or by which it or any of
its assets are bound.
2.11. Disclosure. To the actual knowledge of ClearLogic, neither this
Agreement, the Financial Statements nor any other agreement, document,
certificate or written or oral statement furnished to the Company by or on
behalf of ClearLogic in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact or when taken as a whole omits
to state a material fact necessary in order to make the statements contained
herein or therein not misleading.
2.12. Authority. ClearLogic has full power and authority to enter into
this Agreement and to carry out the transactions contemplated herein. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, have been duly authorized and approved by the
Board of Directors of ClearLogic and, other than the approval by the
Shareholders of ClearLogic described in Section 6.04, no other corporate
proceedings on the part of ClearLogic are necessary to authorize this Agreement
and the transactions contemplated hereby.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to ClearLogic as follows, as
of the date of this Agreement and as of the Closing:
3.01. Organization.
3.01(a). The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware;
has the corporate power and authority to carry on its business as
presently conducted; and is qualified to do business in all
jurisdictions where the failure to be so qualified would have a
material adverse effect on the business of the Company.
3.01(b). The copies of the Certificate of Incorporation, of
the Company, as certified by the Secretary of State of Delaware, and
the Bylaws of the Company are complete and correct copies of the
Certificate of Incorporation and the Bylaws of the Company as amended
and in effect on the date hereof. All minutes of meetings and actions
in writing without a meeting of the Board of Directors and shareholders
of the Company are contained in the minute book of the Company and no
minutes or actions in writing
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without a meeting have been included in such minute book since such
delivery to ClearLogic that have not also been delivered to ClearLogic.
3.02. Capitalization of the Company. The authorized capital stock of
the Company consists of 20,000,000 shares of Common Stock, par value $.001 per
share, of which 2,250,000 shares shall be outstanding immediately prior to the
close of the Merger, and 1,000,000 shares of preferred stock, none of which is
outstanding or will be outstanding at the close of the Merger. All outstanding
shares are duly authorized, validly issued, fully paid and non-assessable.
Following the merger issuance of Company Shares, the capitalization of the
Company shall be 15,000,000 shares of common stock.
3.03. Subsidiaries and Investments. Other than CA, the Company
does not own any capital stock or have any interest in any corporation,
partnership, or other form of business organization. CA is newly organized and
has no liabilities or assets.
3.04. Authority. The Company has full power and authority to enter into
this Agreement and to carry out the transactions contemplated herein. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, and the issuance of the Company Shares in accordance with
the terms hereof, have been duly authorized and approved by the Board of
Directors of the Company and no other corporate proceedings on the part of
Company are necessary to authorize this Agreement, the transactions contemplated
hereby and the issuance of the Company Shares in accordance with the terms
hereof.
3.05. No Undisclosed Liabilities. Other than as described in
Exhibit 3.05 attached hereto, the Company is not subject to any material
liability or obligation of any nature, whether absolute, accrued, contingent,
or otherwise and whether due or to become due.
3.06. Litigation. There is no litigation, proceeding or investigation
pending or to the knowledge of the Company, threatened against the Company
affecting any of its properties or assets, or, to the knowledge of the Company,
against any officer, director, or stockholder of the Company that might result,
either in any case or in the aggregate, in any material adverse change in the
business, operations, affairs or condition of the Company or any of its
properties or assets, or that might call into question the validity of this
Agreement, or any action taken or to be taken pursuant hereto.
3.07. Title To Assets. The Company has good and marketable title to all
of its assets and properties now carried on its books including those reflected
in the balance sheet contained in the Company's financial statements, free and
clear of all liens, claims, charges, security interests or other encumbrances,
except as described in the balance sheet included in the Com- pany's financial
statements or on any Exhibits attached hereto.
3.08. Contracts and Undertakings. Exhibit 3.08 attached hereto contains
a list of all contracts, agreements, leases, licenses, arrangements, commitments
and other undertakings to which the Company is a party or by which it or its
property is bound. Each of said contracts, agreements, leases, licenses,
arrangements, commitments and undertakings is valid, binding and in full force
and effect. The Company is not in material default, or alleged to be in material
default, under any contract, agreement, lease, license, commitment, instrument
or obligation and,
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to the knowledge of the Company, no other party to any contract, agreement,
lease, license, commitment, instrument or obligation to which the Company is a
party is in default thereunder nor, to the knowledge of the Company, does there
exist any condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any such contract, agreement, lease,
license, commitment, instrument or obligation.
3.09. Underlying Documents. Copies of all documents described in
any Exhibit attached hereto (or a summary of any such contract, agreement or
commitment, if oral) have been made available to ClearLogic and are complete
and correct and include all amendments, supplements or modifications thereto.
3.10. Transactions with Affiliates, Directors and Shareholders. Except
as set forth in Exhibit 3.10 hereto, there are and have been no contracts,
agreements, arrangements or other transactions between the Company, and any
officer, director, or 5% stockholder of the Company, or any corporation or other
entity controlled by any such officer, director or 5% stockholder, a member of
any such officer, director or 5% stockholder's family, or any affiliate of any
such officer, director or 5% stockholder.
3.11. No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with or
result in a breach of any term or provision of, or constitute a default under,
the Certificate of Incorporation or Bylaws of the Company, or any agreement,
contract or instrument to which the Company is a party or by which it or any of
its assets are bound.
3.12. Disclosure. To the actual knowledge of the Company, neither this
Agreement nor any other agreement, document, certificate or written or oral
statement furnished to ClearLogic and the Shareholders by or on behalf of the
Company in connection with the transactions contemplated hereby, contains any
untrue statement of a material fact or when taken as a whole omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading.
3.13. Financial Statements. The financial statements of the
Company as of and for the year ended June 30, 1999 present fairly the financial
position and results of operations of the Company, on a consistent basis.
3.14. Absence of Material Changes. Since June 30, 1999, except as
described in any Exhibit hereto or as required or permitted under this
Agreement, there has not been:
3.14(a). any material change in the condition (financial or
otherwise) of the properties, assets, liabilities or business of
Company, except changes in the ordinary course of business which,
individually and in the aggregate, have not been materially adverse.
3.14(b). any redemption, purchase or other acquisition of any
shares of the capital stock of the Company, or any issuance of any
shares of capital stock or the granting, issuance or exercise of any
rights, warrants, options or commitments by the Company relating to
their authorized or issued capital stock.
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3.14(c). any amendment to the Certificate of Incorporation
of the Company.
IV. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants of the Company and
ClearLogic contained herein shall survive the consummation of the transactions
contemplated herein and remain in full force and effect.
V. CONDITIONS TO CLOSING
5.01. Conditions to Obligation of ClearLogic. The obligations of
ClearLogic under this Agreement shall be subject to each of the following
conditions:
5.01(a). The representations and warranties of the Company
herein contained shall be true in all material respects at the Closing
with the same effect as though made at such time. The Company shall
have performed in all material respects all obligations and complied in
all material respects, to its actual knowledge, with all covenants and
conditions required by this Agreement to be performed or complied with
by it at or prior to the Closing.
5.01(b). No injunction or restraining order shall be in
effect, and no action or proceeding shall have been instituted and, at
what would otherwise have been the Closing, remain pending before a
court to restrain or prohibit the transactions contemplated by this
Agreement.
5.01(c). All statutory requirements for the valid consummation
by the Company of the transactions contemplated by this Agreement shall
have been fulfilled. All authorizations, consents and approvals of all
governments and other persons required to be obtained in order to
permit consummation by the Company of the transactions contemplated by
this Agreement shall have been obtained.
5.01(d). The fulfillment by the Company of all of its
obligations under this agreement and any and all related documents
(including the sale of the offering set forth in Section 6.01.)
5.02. Conditions to Obligations of the Company. The obligation of
the Company under this Agreement shall be subject to the following conditions:
5.02(a). The representations and warranties of ClearLogic
herein contained shall be true in all material respects as of the
Closing, and shall have the same effect as though made at the Closing;
ClearLogic shall have performed in all material respects all
obligations and complied in all material respects, to its actual
knowledge, with all covenants and conditions required by this Agreement
to be performed or complied with by it prior to the Closing.
5.02(b). No injunction or restraining order shall be in
effect prohibiting this Agreement, and no action or proceeding shall have been
instituted and, at what would
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otherwise have been the Closing, remain pending before the court to
restrain or prohibit the transactions contemplated by this Agreement.
5.02(c). All statutory requirements for the valid consummation
by ClearLogic of the transactions contemplated by this Agreement shall
have been fulfilled. All authorizations, consents and approvals of all
governments and other persons required to be obtained in order to
permit consummation by ClearLogic of the transactions contemplated by
this Agreement shall have been obtained.
5.02(d) The fulfillment of the obligations of ClearLogic set
forth in Section 6.04.
VI. CERTAIN AGREEMENTS
6.01. Placement. The Company shall immediately commence the preparation
of a private placement information to issue or sell $1,000,000 in 8% Debentures
at a price of 100% per share. The infusion of cash in this placement is intended
to qualify as a tax-free transaction under Section 351 of the Code. The Company
shall rely on information provided by ClearLogic in the preparation of such
private placement information. ClearLogic agrees to indemnify the Company and
persons who control the Company for any false statement of a material fact or
the omission of any material fact required to be included to make the statements
made in the memorandum not misleading, related to ClearLogic; provided that such
statement or omission was made in reliance on information provided in writing by
ClearLogic. The Company agrees to indemnify ClearLogic and persons who control
ClearLogic for any false statement of a material fact or the omission of any
material fact required to be included to make the statements made in the
memorandum not misleading, related to the Company; provided that such statement
or omission was made in reliance on information provided in writing. The parties
acknowledge, however, that it is the position of the Securities and Exchange
Commission that indemnification for liabilities under the federal securities
laws is against public policy and is unenforceable.
6.02. Reporting Requirements. The Company shall file all reports
required by Section 13 of the Securities Exchange Act of 1934 and shall maintain
its books and records in accordance with Sections 12 and 13 thereof. The parties
agree that the breach of this Section 6.02 shall constitute a material breach of
this Agreement.
6.03. Shareholder Approval. ClearLogic shall submit the Merger to its
Shareholders for approval, and the Company shall approve the Merger as the sole
shareholder of CA. The Closing is subject to not more than 5% of the ClearLogic
shareholders electing dissentor's rights under the Delaware General Corporation
law. The Board of Directors of the Company, prior to the Closing, will reserve
sufficient shares of Company Common Stock for issuance pursuant to the terms of
the Articles of Merger and take such other action as is necessary in connection
therewith.
VII. MISCELLANEOUS
7.01. Finder's Fees, Investment Banking Fees. Neither ClearLogic
nor the Company have retained or used the services of any person, firm or
corporation in such manner as to require
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the payment of any compensation as a finder or a broker in connection with the
transactions contemplated herein.
7.02. Tax Treatment. The transactions contemplated hereby are intended
to qualify as a so-called "tax-free" reorganization under the provisions of
Section 368 of the Code and as a tax free transfer under Section 351 of the
Code. The Company and ClearLogic acknowledge, however, that they each have been
represented by their own tax advisors in connection with this transaction; that
neither has made any representation or warranty to the other with respect to the
treatment of such transaction or the effect thereof under applicable tax laws,
regulations, or interpretations; and that no attorney's opinion or private
revenue ruling has been obtained with respect to the effects thereof under the
Internal Revenue Code of 1986, as amended.
7.03. Further Assurances. From time to time, at the other party's
request and without further consideration, each of the parties will execute and
deliver to the others such documents and take such action as the other party may
reasonably request in order to consummate more effectively the transactions
contemplated hereby.
7.04. Parties in Interest. Except as otherwise expressly provided
herein, all the terms and provisions of this Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the respective heirs,
beneficiaries, personal and legal representatives, successors and assigns of the
parties hereto.
7.05. Entire Agreement; Amendments. This Agreement, including the
Schedules, Exhibits and other documents and writings referred to herein or
delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein or therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to its
subject matter. This Agreement may be amended only by a written instrument duly
executed by the parties or their respective successors or assigns.
7.06. Headings, Etc. The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretations of this Agreement.
7.07. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the person, persons, entity or entities may require.
7.08. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
7.09. Governing Law. This Agreement shall be governed by the laws
of the State of Delaware (excluding conflicts of laws principles) applicable to
contracts to be performed in the State of Delaware.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto as the date first above written.
ST. XXXXX CLEARLOGIC, INC.
GROUP, INC.
By: By:
Name: Name:
Title: Title:
CLEARLOGIC ACQUISITION CORP.
By:
Name:
Title:
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