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AGREEMENT AND PLAN OF REORGANIZATION BY AND AMONG
VERTICAL COMPUTER SYSTEMS, INC., AND XXXXXXX XXXXXX
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered into
this 6th of April, 2000, by and among VERTICAL COMPUTER SYSTEMS, INC. , a
Delaware corporation (hereinafter referred to as "Buyer"); and XXXXXXX XXXXXX or
his assigns (hereinafter collectively referred to as "Seller"), being sole
shareholder of SCIENTIFIC FUEL TECHNOLOGY, INC., a Nevada corporation (hereafter
referred to as "Company").
WHEREAS, Seller is the owner of record and beneficially owns Ten Million
(10,000,000) shares of the issued and outstanding shares of Common Stock of the
Company (the "Shares"); and
WHEREAS, the Shares represent 100% of all the issued and outstanding
shares of the Company; and
WHEREAS, Seller desires to sell all of the Shares to Buyer, and Buyer
desires to purchase the Shares, upon the terms and conditions set forth herein;
WHEREAS, the parties intend that the exchange of Shares for shares of
Buyer's common stock, as contemplated herein, qualify as a tax free transaction
under Section 368 of the Internal Revenue Code;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, and subject to the
accuracy of the representations and warranties of the parties, the parties
hereto agree as follows:
I.
SALE AND PURCHASE OF THE SHARES
1.1 SALE AND PURCHASE. Subject to the terms and conditions hereof, at the
Closing (as defined in paragraph 1.2 below), Seller agrees to sell, assign,
transfer, convey and deliver to Buyer, and Buyer agrees to purchase from Seller,
the Shares, which constitute 100% of the issued and outstanding Shares of Common
Stock of the Company.
1.2 CLOSING. The purchase shall be consummated at a closing ("Closing") to
take place at 10:00 o'clock a.m., at the offices of Buyer's counsel on April 6,
2000 ("Closing Date").
1.3 PURCHASE PRICE. The aggregate purchase price ("Purchase Price") for
the Shares shall be Two Million (2,000,000) shares of common stock of the Buyer
("Buyer Shares"). The purchase price shall be paid at Closing by issuance and
delivery of Buyer's Shares to Seller against receipt of certificates
representing the Shares, duly endorsed for transfer to Buyer.
II.
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Each Seller represents and
warrants to Buyer as follows:
(a) TITLE TO THE SHARES. At Closing, Seller shall own of record and
beneficially the number of the Shares listed in Exhibit "A", of the
Company, free and clear of all liens, encumbrances, pledges,
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claims, options, charges and assessments of any nature whatsoever, with
full right and lawful authority to transfer the Shares to Buyer. No person
has any preemptive rights or rights of first refusal with respect to any
of the Shares. There exists no voting agreement, voting trust, or
outstanding proxy with respect to any of the Shares. There are no
outstanding rights, options, warrants, calls, commitments, or any other
agreements of any character, whether oral or written, with respect to the
Shares.
(b) AUTHORITY. Seller has full power and lawful authority to execute
and deliver the Basic Agreements and to consummate and perform the
Transactions contemplated thereby. The Basic Agreements constitute (or
shall, upon execution, constitute) valid and legally binding obligations
upon Seller, enforceable in accordance with their terms. Neither the
execution and delivery of the Basic Agreements by Seller, nor the
consummation and performance of the Transactions contemplated thereby,
conflicts with, requires the consent, waiver or approval of, results in a
breach of or default under, or gives to others any interest or right of
termination, cancellation or acceleration in or with respect to, any
agreement by which Seller is a party or by which Seller or the Company or
any of his respective properties or assets are bound or affected.
2.2. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller and Company as follows:
(a) ORGANIZATION. The Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of
Delaware. The Buyer has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business. The
Buyer is duly qualified and in good standing as a foreign corporation in
each jurisdiction where its ownership of property or operation of its
business requires qualification.
(b) AUTHORIZED CAPITALIZATION. The authorized common stock
capitalization of the Buyer at Closing will consist of One Billion
(1,000,000,000) shares of Common Stock, $.0001 par value, of which Seven
Hundred Thirty-Three Million Four Hundred Forty-Two Thousand, Five Hundred
Twenty (733,442,520) shares will be issued and outstanding. All shares
have been duly authorized, validly issued, are fully paid and
nonassessable with no personal liability attaching to the ownership
thereof and were offered, issued, sold and delivered by the Buyer in
compliance with all applicable state and federal laws. Buyer is not a
party to and is not bound by any agreement, contract, arrangement or
understanding, whether oral or written, giving any person or entity any
interest in, or any right to share, participate in or receive any portion
of, the Buyer's income, profits or assets, or obligating the Buyer to
distribute any portion of its income, profits or assets.
(c) AUTHORITY. Buyer has full power and lawful authority to execute
and deliver this Agreement and to consummate and perform the Transaction
contemplated thereby. This Agreement constitutes (or shall, upon
execution, constitute) valid and legally binding obligations upon Buyer,
enforceable in accordance with their terms. Neither the execution and
delivery of this Agreement by Buyer, nor the consummation and performance
of the Transactions contemplated thereby, conflicts with, requires the
consent, waiver or approval of, results in a breach of or default under,
or gives to others any interest or right of termination, cancellation or
acceleration in or with respect to, any agreement by which Buyer is a
party or by which Buyer or any of its respective properties or assets are
bound or affected.
(d) BUYER'S FINANCIAL STATEMENTS. The Buyer's unaudited Financial
Statements are complete, were prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior
periods and fairly present the financial position of the Buyer as of
December 31, 1999.
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(e) NO UNDISCLOSED LIABILITIES. Buyer is not aware of any material
liabilities for which the Buyer is liable or will become liable in the
future which are not reflected in the Buyer's financial statements.
(f) TAXES. Buyer has filed all federal, state, local tax and other
returns and reports which were required to be filed with respect to all
taxes, levies, imposts, duties, licenses and registration fees, charges or
withholdings of every nature whatsoever ("Taxes"), and their exists a
substantial basis in law and fact for all positions taken in such reports.
No waivers of periods of limitation are in effect with respect to any
taxes arising from and attributable to the ownership of properties or
operations of the business of the Company.
(g) PROPERTIES. The Buyer has good and marketable title to all its
personal property, equipment, processes, patents, copyrights, trademarks,
franchises, licenses and other properties and assets (except for items
leased or licensed to the Buyer), including all property reflected in the
Buyer's Financial Statements (except for assets reflected therein which
have been sold in the normal course of its business where the proceeds
from such sale or other disposition have been properly accounted for in
the financial statements of the Buyer), in each case free and clear of all
liens, claims and encumbrances of every kind and character. The Buyer has
no ownership interest in any real property. The assets and properties
owned, operated or leased by the Buyer and used in its business are in
good operating condition, reasonable wear and tear excepted, and suitable
for the uses for which intended.
(h) BOOKS AND RECORDS. The books and records of the Buyer are
complete and correct in all material respects, have been maintained in
accordance with good business practices and accurately reflect in all
material respects the business, financial condition and results of
operations of the Buyer as set forth in the Buyer's Financial Statements.
(i) MATERIAL CONTRACTS. The Buyer has no purchase, sale, commitment,
or other contract, the breach or termination of which would have a
materially adverse effect on the business, financial condition, results of
operations, assets, liabilities, or prospects of the Buyer.
(j) COMPLIANCE WITH LAWS. The Buyer is not, and as a result of the
transactions contemplated hereby, will not be, in violation of any
federal, state, local or other law, ordinance, rule or regulation
applicable to its business, and has not received any actual or threatened
complaint, citation or notice of violation or investigation from any
governmental authority, including the Securities and Exchange Commission.
(k) LITIGATION. There are no material actions, suits, claims,
complaints or proceedings pending or threatened against the Buyer, at law
or in equity, or before or by any governmental department, commission,
court, board, bureau, agency or instrumentality; and there are no facts
which would provide a valid basis for any such action, suit or proceeding.
There are no orders, judgments or decrees of any governmental authority
outstanding which specifically apply to the Company or any of its assets.
III.
COVENANTS
3.1 COVENANTS OF SELLER. Seller covenants and agrees that from the date
hereof to the Closing without the prior written consent of Buyer:
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(a) ORDINARY COURSE OF BUSINESS. Company will operate the business
of the Company only in the ordinary course and will use their best efforts
to preserve the Company's business, organization, goodwill and
relationships with persons having business dealings with them.
(b) COMPENSATION. Company will not (1) enter into or alter any
employment agreements; (2) grant any increase in compensation other than
normal merit increases consistent with the Company's general prevailing
practices to any officer or employee; or (3) enter into or alter any labor
or collective bargaining agreement or any bonus or other employee fringe
benefit.
(c) NO INDEBTEDNESS. Company will not create, incur, assume,
guarantee or otherwise become liable with respect to any obligation for
borrowed money, indebtedness, capitalized lease or similar obligation,
except in the ordinary course of business consistent with past practices
where the entire net proceeds thereof are deposited with and used by and
in connection with the business of the Company.
(d) NO AMENDMENTS. Company will not amend its corporate charter or
bylaws (or similar documents) without prior consent of Buyer and Company
will maintain their corporate existence, licenses, permits, powers and
rights in full force and effect.
(e) NO SECURITIES ISSUANCES. Company will not issue any shares of
any class of capital stock, or enter into any contract, option, warrant or
right calling for the issuance of any such shares of capital stock, or
create or issue any securities convertible into any securities of the
Company except for the transactions contemplated herein.
(f) CONTRACTS. Company will not enter into or assume any contract,
agreement, obligation, lease, license, or commitment except in the
ordinary course of business consistent with past practice or as
contemplated by this Agreement.
(g) CONSENTS. Company will use its, best good faith efforts to
obtain the consent or approval of each person or entity whose consent or
approval is required for the consummation of the Transactions contemplated
hereby and to do all things necessary to consummate the Transactions
contemplated by the Basic Agreements.
3.2 COVENANTS OF BUYER. Buyer covenants and agrees that from the date
hereof to the Closing without the prior written consent of Seller:
(a) ORDINARY COURSE OF BUSINESS. Buyer will operate the business in
the ordinary course and will use their best efforts to preserve the
Company's business, organization, goodwill and relationships with persons
having business dealings with them.
(b) MAINTAIN BOOKS. Buyer will maintain its books, accounts and
records in the usual, regular ordinary and sound business manner and in
accordance with generally accepted accounting principles applied on a
basis consistent with past practices.
(c) NO AMENDMENTS. Buyer will not amend its corporate charter or
bylaws (or similar documents) without prior consent of Seller and will
cause the Company to maintain its corporate existence, licenses, permits,
powers and rights in full force and effect.
(d) DUE COMPLIANCE. Buyer will comply with all laws, regulations,
rules and ordinances applicable to it and to the conduct of its business.
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(e) NOTICE OF CHANGE. Buyer will promptly advise Seller in writing
of any material adverse change, or the occurrence of any event which
involves any substantial possibility of a material adverse change, in the
business, financial condition, results of operations, assets, liabilities
or prospects of the Buyer.
(f) CONSENTS. Buyer will use its best good faith efforts to obtain
the consent or approval of each person or entity whose consent or approval
is required for the consummation of the Transactions contemplated hereby
and to do all things necessary to consummate the Transactions contemplated
by the Basic Agreements.
IV.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
The obligation of Buyer to close the Transaction contemplated hereby is
subject to the fulfillment by Seller prior to Closing of each of the following
conditions, which may be waived in whole or in part by Buyer:
4.1 COMPLIANCE WITH REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Seller contained in this Agreement shall have
been true and correct when made and shall be true and correct as of the Closing
with the same force and effect as if made at the Closing. Seller shall have
performed all agreements, covenants and conditions required to be performed by
Seller prior to the Closing.
4.2 NO ADVERSE CHANGE. There shall have been no event which has had or may
have a material adverse effect upon the business, financial condition, results
of operation, assets, liabilities or prospects of the Company.
4.3 NO LEGAL PROCEEDINGS. No suit, action or other legal or administrative
proceeding before any court or other governmental agency shall be pending or
threatened seeking to enjoin the consummation of the Transaction contemplated
hereby.
4.4 DOCUMENTS TO BE DELIVERED BY SELLER. Seller shall have delivered the
following documents:
(a) Stock certificates representing all of the Shares, duly endorsed
to Buyer and in blank or accompanied by duly executed stock powers, copies
of which are attached as Exhibit "A".
(b) All corporate and other records of or applicable to the Company
included but not limited to, current and up-to-date minute books, stock
transfer books and registers, books of accounts, leases and material
contracts.
(c) Such other documents or certificates as shall be reasonably
required by Buyer or its counsel in order to close and consummate this
Agreement.
V.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLER TO CLOSE
The obligation of Seller to close the Transaction is subject to the
fulfillment prior to Closing of each of the following conditions, any of which
may be waived in whole or in part by Seller:
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5.1 COMPLIANCE WITH REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties made by Buyer in this Agreement shall have been
true and correct when made and shall be true and correct in all material
respects at the Closing with the same force and effect as if made at the
Closing, and Buyer shall have performed all agreements, covenants and conditions
required to be performed by Buyer prior to the Closing.
5.2 NO LEGAL PROCEEDINGS. No suit, action or other legal or administrative
proceedings before any court or other governmental agency shall be pending or
threatened seeking to enjoin the consummation of the Transaction contemplated
hereby.
5.3. DOCUMENTS TO BE DELIVERED BY BUYER.
(a) A copy of (i) the Articles of Incorporation of the Buyer,
certified as correct by the Buyer; and
(ii) the Bylaws of the Buyer certified as correct by the Buyer.
(b) Such other documents or certificates as shall be reasonably
required by Buyer or its counsel in order to close and consummate this
Agreement.
5.4 PAYMENTS. Seller shall have received from Buyer all Common Stock to be
issued at the Closing by Buyer.
VI.
MODIFICATION, WAIVERS, TERMINATION
AND EXPENSES
6.1 MODIFICATION. Buyer and Seller may amend, modify or supplement this
Agreement in any manner as they may mutually agree in writing.
6.2 WAIVERS. Buyer and Seller may in writing extend the time for or waive
compliance by the other with any of the covenants or conditions of the other
contained herein.
6.3 TERMINATION AND ABANDONMENT. This Agreement may be terminated and the
purchase of the Shares may be abandoned before the Closing:
(a) By the mutual consent of Seller and Buyer;
(b) By Buyer, if the representations and warranties of Seller set
forth herein shall not be accurate, or the conditions precedent set forth
in Article IV shall have not have been satisfied, in all material
respects; or
(c) By Seller, if the representations and warranties of Buyer set
forth herein shall not be accurate, or the conditions precedent set forth
in Article V shall not have been satisfied in all material respects.
Termination shall be effective on the date of receipt of written notice
specifying the reasons therefor.
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VII.
MISCELLANEOUS
7.1 REPRESENTATIONS AND WARRANTIES TO SURVIVE. Unless otherwise provided,
all of the representations and warranties contained in this Agreement and in any
certificate, exhibit or other document delivered pursuant to this Agreement
shall survive the Closing for a period of two (2) years. No investigation made
by any party hereto or their representatives shall constitute a waiver of any
representation or warranty, and no such representation or warranty shall be
merged into the Closing.
7.2 BINDING EFFECT OF THE BASIC AGREEMENTS. The Basic Agreements and the
certificates and other instruments delivered by or on behalf of the parties
pursuant thereto, constitute the entire agreement between the parties. The terms
and conditions of the Basic Agreements shall inure to the benefit of and be
binding upon the respective heirs, legal representatives, successor and assigns
of the parties hereto. Nothing in the Basic Agreements, expressed or implied,
confers any rights or remedies upon any party other than the parties hereto and
their respective heirs, legal representatives and assigns.
7.3 APPLICABLE LAW. The Basic Agreements are made pursuant to, and will be
construed under, the laws of the State of Delaware.
7.4 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and will be deemed to have been duly given when
delivered or mailed, first class postage prepaid:
(a) If to Seller, to:
Xxxxxxx XxXxxx
0000 Xxxx Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
(b) If to Buyer, to:
Mr. Xxxxxxx Xxxx
Vertical Computer Systems, Inc.
0000 Xxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Mr. G. Xxxxx Xxxxxx
G. Xxxxx Xxxxxx & Associates, P.C.
One Memorial Place
0000 Xxxx 00xx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
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These addresses may be changed from time to time by written notice to the
other parties.
7.5 HEADINGS. The headings contained in this Agreement are for reference
only and will not affect in any way the meaning or interpretation of this
Agreement.
7.6 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which will be deemed an original and all of which together will constitute one
instrument.
7.7 SEVERABILITY. If any one or more of the provisions of this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable under
applicable law this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. The remaining
provisions of this Agreement shall be given effect to the maximum extent then
permitted by law.
7.8 FORBEARANCE; WAIVER. Failure to pursue any legal or equitable remedy
or right available to a party shall not constitute a waiver of such right, nor
shall any such forbearance, failure or actual waiver imply or constitute waiver
of subsequent default or breach.
7.9 ATTORNEYS' FEES AND EXPENSES. The prevailing party in any legal
proceeding based upon this Agreement shall be entitled to reasonable attorneys'
fees and expenses and court costs.
7.10 EXPENSES. Each party shall pay all fees and expenses incurred by it
incident to this Agreement and in connection with the consummation of all
transactions contemplated by this Agreement.
7.11 INTEGRATION. This Agreement and all documents and instruments
executed pursuant hereto merge and integrate all prior agreements and
representations respecting the Transactions, whether written or oral, and
constitute the sole agreement of the parties in connection therewith. This
Agreement has been negotiated by and submitted to the scrutiny of both Seller
and Buyer and their counsel and shall be given a fair and reasonable
interpretation in accordance with the words hereof, without consideration or
weight being given to its having been drafted by either party hereto or its
counsel.
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this
Agreement on the date first written above.
"BUYER"
VERTICAL COMPUTER SYSTEMS, INC.
BY: /s/ XXXXXXX XXXX
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XXXXXXX XXXX, PRESIDENT
"SELLER"
/s/ XXXXXXX XXXXXX
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XXXXXXX XXXXXX
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