MERGER AGREEMENT AND PLAN OF REORGANIZATION
This MERGER AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and entered into as of ______________, 20 (the "Effective Date"), by and among:
THE GALACTIC SWARM CORPORATION, a Delaware corporation ("TGSC" or the "Acquiring Company"),
[TARGET COMPANY NAME], a [state/country] [entity type] (the "Target Company"), and
The shareholders of the Target Company, as listed in Exhibit A attached hereto (collectively, the "Shareholders").
RECITALS
WHEREAS, the Acquiring Company desires to acquire all of the issued and outstanding shares of the Target Company through a merger transaction;
WHEREAS, the Target Company desires to merge with and into the Acquiring Company;
WHEREAS, the Boards of Directors of the Acquiring Company and the Target Company have determined that it is in the best interests of their respective companies and shareholders to consummate the merger contemplated by this Agreement;
WHEREAS, for U.S. federal income tax purposes, the parties intend that the merger contemplated by this Agreement shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the parties agree as follows:
- DEFINITIONS
1.1 "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person.
1.2 "Intellectual Property" means all intellectual property rights, including but not limited to patents, trademarks, copyrights, trade secrets, domain names, and all other proprietary rights.
1.3 "Material Adverse Effect" means any event, occurrence, fact, condition, or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise), or assets of the Target Company, or (b) the ability of the Target Company to consummate the transactions contemplated hereby on a timely basis.
1.4 "Person" means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association, or other entity.
- THE MERGER
2.1 The Merger. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the Delaware General Corporation Law (the "DGCL"), at the Effective Time (as defined below), the Target Company shall merge with and into the Acquiring Company (the "Merger"), the separate corporate existence of the Target Company shall cease, and the Acquiring Company shall continue as the surviving corporation of the Merger (the "Surviving Corporation").
2.2 Effective Time. Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall file a certificate of merger (the "Certificate of Merger") in such form as is required by, and executed in accordance with, the relevant provisions of the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such later time as may be specified in the Certificate of Merger (the time the Merger becomes effective being the "Effective Time").
2.3 Effects of the Merger. The Merger shall have the effects set forth herein and in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, all property, rights, privileges, immunities, powers, franchises, licenses, and authority of the Target Company shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, and duties of the Target Company shall become the debts, liabilities, obligations, restrictions, and duties of the Surviving Corporation.
- MERGER CONSIDERATION
3.1 Merger Consideration. The aggregate consideration for the Merger (the "Merger Consideration") shall be $________________, payable as follows:
(a) Cash Consideration: $________________ in cash, payable at Closing (the "Cash Consideration"); and
(b) Stock Consideration: ________________ shares of TGSC common stock (the "Stock Consideration"), to be issued to the Shareholders in proportion to their ownership interests in the Target Company as set forth in Exhibit A.
3.2 Adjustment of Merger Consideration. The Merger Consideration shall be subject to adjustment as follows:
(a) Working Capital Adjustment. The Cash Consideration shall be increased or decreased on a dollar-for-dollar basis by the amount by which the Target Company's working capital at Closing exceeds or falls short of $________________, respectively.
(b) Indebtedness Adjustment. The Cash Consideration shall be decreased on a dollar-for-dollar basis by the amount of any outstanding indebtedness of the Target Company at Closing.
3.3 Payment of Merger Consideration. At the Closing, the Acquiring Company shall:
(a) pay the Cash Consideration (as adjusted pursuant to Section 3.2) to the Shareholders in proportion to their ownership interests in the Target Company; and
(b) issue the Stock Consideration to the Shareholders in proportion to their ownership interests in the Target Company.
- CONVERSION OF SHARES
4.1 Conversion of Target Company Shares. At the Effective Time, by virtue of the Merger and without any action on the part of the Acquiring Company, the Target Company, or the Shareholders:
(a) each share of common stock of the Target Company issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive the applicable portion of the Merger Consideration as set forth in Exhibit A; and
(b) each share of common stock of the Target Company held in the treasury of the Target Company shall automatically be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.
4.2 Acquiring Company Shares. Each share of common stock of the Acquiring Company issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding as one share of common stock of the Surviving Corporation.
- CLOSING
5.1 Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing") shall take place at [LOCATION] at [TIME] on [DATE], or at such other time, date, or place as the Acquiring Company and the Target Company may mutually agree upon in writing (the day on which the Closing takes place being the "Closing Date").
5.2 Closing Deliverables.
(a) At or prior to the Closing, the Target Company shall deliver to the Acquiring Company the following:
(i) certificates representing all of the issued and outstanding shares of the Target Company, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank;
(ii) the certificate of the Secretary of the Target Company certifying as to (A) the resolutions of the board of directors and the shareholders of the Target Company, authorizing the execution, delivery, and performance of this Agreement and the transactions contemplated hereby, and (B) the names and signatures of the officers of the Target Company authorized to sign this Agreement and the other documents to be delivered hereunder;
(iii) a good standing certificate for the Target Company from the Secretary of State of [STATE/COUNTRY], dated within ten (10) days of the Closing Date;
(iv) all other agreements, documents, instruments, or certificates required to be delivered by the Target Company at or prior to the Closing pursuant to this Agreement.
(b) At the Closing, the Acquiring Company shall deliver to the Target Company or the Shareholders, as applicable, the following:
(i) the Cash Consideration, by wire transfer of immediately available funds to an account designated in writing by the Target Company to the Acquiring Company no later than two (2) business days prior to the Closing Date;
(ii) stock certificates evidencing the Stock Consideration;
(iii) the certificate of the Secretary of the Acquiring Company certifying as to (A) the resolutions of the board of directors of the Acquiring Company, authorizing the execution, delivery, and performance of this Agreement and the transactions contemplated hereby, and (B) the names and signatures of the officers of the Acquiring Company authorized to sign this Agreement and the other documents to be delivered hereunder;
(iv) a good standing certificate for the Acquiring Company from the Secretary of State of Delaware, dated within ten (10) days of the Closing Date;
(v) all other agreements, documents, instruments, or certificates required to be delivered by the Acquiring Company at or prior to the Closing pursuant to this Agreement.
- REPRESENTATIONS AND WARRANTIES OF THE TARGET COMPANY
The Target Company represents and warrants to the Acquiring Company that the statements contained in this Section 6 are true and correct as of the date hereof and will be true and correct as of the Closing Date.
6.1 Organization and Authority. The Target Company is duly organized, validly existing, and in good standing under the laws of [STATE/COUNTRY]. The Target Company has full corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement by the Target Company, the performance by the Target Company of its obligations hereunder, and the consummation by the Target Company of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Target Company.
6.2 Capitalization. The authorized capital stock of the Target Company consists of ________________ shares of common stock, of which ________________ shares are issued and outstanding. All of the issued and outstanding shares of the Target Company have been duly authorized, are validly issued, fully paid, and non-assessable, and are owned of record and beneficially by the Shareholders, free and clear of all encumbrances.
6.3 No Conflicts; Consents. The execution, delivery, and performance by the Target Company of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, bylaws, or other organizational documents of the Target Company; (b) conflict with or result in a violation or breach of any provision of any law or governmental order applicable to the Target Company; or (c) require the consent, notice, or other action by any Person under any contract to which the Target Company is a party. No consent, approval, permit, governmental order, declaration, or filing with, or notice to, any governmental authority is required by or with respect to the Target Company in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.
6.4 Financial Statements. Complete copies of the Target Company's unaudited financial statements consisting of the balance sheet of the Target Company as of [DATE] and the related statements of income and retained earnings, shareholders' equity, and cash flow for the year then ended (the "Financial Statements") have been delivered to the Acquiring Company. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved. The Financial Statements are based on the books and records of the Target Company, and fairly present in all material respects the financial condition of the Target Company as of the respective dates they were prepared and the results of the operations of the Target Company for the periods indicated.
6.5 Undisclosed Liabilities. The Target Company has no liabilities, obligations, or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured, or otherwise ("Liabilities"), except (a) those which are adequately reflected or reserved against in the Financial Statements, and (b) those which have been incurred in the ordinary course of business consistent with past practice since the date of the Financial Statements and which are not, individually or in the aggregate, material in amount.
6.6 Absence of Certain Changes, Events, and Conditions. Since the date of the Financial Statements, and other than in the ordinary course of business consistent with past practice, there has not been, with respect to the Target Company, any:
(a) event, occurrence, or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;
(b) amendment of the charter, bylaws, or other organizational documents of the Target Company;
(c) split, combination, or reclassification of any shares of its capital stock;
(d) issuance, sale, or other disposition of any of its capital stock, or grant of any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock;
(e) declaration or payment of any dividends or distributions on or in respect of any of its capital stock or redemption, purchase, or acquisition of its capital stock;
(f) material change in any method of accounting or accounting practice of the Target Company, except as required by GAAP or as disclosed in the notes to the Financial Statements;
(g) incurrence, assumption, or guarantee of any indebtedness for borrowed money except unsecured current obligations and liabilities incurred in the ordinary course of business consistent with past practice;
(h) transfer, assignment, sale, or other disposition of any of the assets shown or reflected in the Financial Statements or cancellation of any debts or entitlements;
(i) transfer or assignment of or grant of any license or sublicense under or with respect to any Intellectual Property;
(j) material damage, destruction, or loss (whether or not covered by insurance) to its property;
(k) any capital investment in, or any loan to, any other Person;
(l) acceleration, termination, material modification to, or cancellation of any material contract to which the Target Company is a party or by which it is bound;
(m) any material capital expenditures;
(n) imposition of any encumbrance upon any of the Target Company's properties, capital stock, or assets, tangible or intangible;
(o) adoption of any plan of merger, consolidation, reorganization, liquidation, or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy law or consent to the filing of any bankruptcy petition against it under any similar law;
(p) purchase, lease, or other acquisition of the right to own, use, or lease any property or assets for an amount in excess of $, individually (in the case of a lease, per annum) or $ in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of inventory or supplies in the ordinary course of business consistent with past practice;
(q) acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets or stock of, or by any other manner, any business or any Person or any division thereof;
(r) action by the Target Company to make, change, or rescind any tax election, amend any tax return, or take any position on any tax return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the tax liability or reducing any tax asset of the Acquiring Company in respect of any post-Closing tax period; or
(s) any contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.
6.7 Material Contracts. Each material contract of the Target Company is valid and binding on the Target Company in accordance with its terms and is in full force and effect. Neither the Target Company nor, to the Target Company's knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under) in any material respect, or has provided or received any notice of any intention to terminate, any material contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any material contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder.
6.8 Title to Assets; Real Property. The Target Company has good and valid title to, or a valid leasehold interest in, all real property and personal property and other assets reflected in the Financial Statements or acquired after the date of the Financial Statements, other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice since the date of the Financial Statements. All such properties and assets (including leasehold interests) are free and clear of encumbrances.
6.9 Intellectual Property.
(a) "Intellectual Property" means all of the following and similar intangible property and related proprietary rights, interests and protections, however arising, pursuant to the laws of any jurisdiction throughout the world: (i) trademarks, service marks, trade names, brand names, logos, trade dress, and other proprietary indicia of goods and services, whether registered or unregistered, and all registrations and applications for registration of such trademarks, including intent-to-use applications, all issuances, extensions and renewals of such registrations and applications, and the goodwill connected with the use of and symbolized by any of the foregoing; (ii) internet domain names, whether or not trademarks, registered in any top-level domain by any authorized private registrar or governmental authority; (iii) original works of authorship in any medium of expression, whether or not published, all copyrights (whether registered or unregistered), all registrations and applications for registration of such copyrights, and all issuances, extensions, and renewals of such registrations and applications; (iv) confidential information, formulas, designs, devices, processes, methods, techniques, know-how, and trade secrets; (v) all rights to sue for past, present, and future infringement, misappropriation, or other violation of any of the foregoing; and (vi) all rights to obtain and enforce any of the foregoing.
(b) The Target Company owns or has the right to use all Intellectual Property necessary for the conduct of its business as currently conducted. To the knowledge of the Target Company, the conduct of its business does not infringe, misappropriate, or otherwise violate any intellectual property rights of any third party.
(c) The Target Company has taken reasonable steps to protect its Intellectual Property, including entering into confidentiality agreements with employees and third parties.
- COVENANTS
7.1 Conduct of Business. From the date of this Agreement until the Closing, the Target Company shall conduct its business in the ordinary course and in a manner consistent with past practice and shall use commercially reasonable efforts to preserve intact its business organization, assets, and relationships with customers, suppliers, and employees.
7.2 No Solicitation. The Target Company shall not, and shall cause its officers, directors, employees, agents, and representatives not to, directly or indirectly, solicit, initiate, or encourage any inquiries or proposals regarding any merger, sale of assets, or similar transaction involving the Target Company or any of its subsidiaries (a "Competing Transaction").
7.3 Shareholder Approval. The Target Company shall take all necessary actions to obtain the approval of its shareholders for the transactions contemplated by this Agreement, including the Merger.
- INDEMNIFICATION
8.1 Indemnification by the Target Company. The Target Company shall indemnify and hold harmless the Acquiring Company and its affiliates, and their respective officers, directors, employees, and agents (the "Indemnified Parties") from and against any and all losses, liabilities, damages, costs, and expenses (including reasonable attorneys' fees) incurred by any Indemnified Party arising out of or resulting from:
(a) any breach of any representation, warranty, or covenant made by the Target Company in this Agreement;
(b) any claim or action brought by a third party against any Indemnified Party arising out of the business of the Target Company prior to the Effective Time.
- TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior to the Effective Time:
(a) by mutual written consent of the parties;
(b) by either party if the Closing has not occurred on or before ______________, 20;
(c) by either party if a governmental authority shall have issued a final order, decree, or ruling or taken any other action permanently restraining, enjoining, or otherwise prohibiting the Merger.
- MISCELLANEOUS
10.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws principles.
10.2 Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.
10.3 Amendments. This Agreement may be amended or modified only by a written instrument executed by all parties hereto.
10.4 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
THE GALACTIC SWARM CORPORATION
By: ___________________________
Name: _________________________
Title: _________________________
[TARGET COMPANY NAME]
By: ___________________________
Name: _________________________
Title: _________________________
SHAREHOLDERS
By: ___________________________
Name: _________________________
Title: _________________________