AGREEMENT AND PLAN OF MERGER
Among
CEMENTITIOUS MATERIALS, INC.,
CEMENTITIOUS ACQUISITIONS, INC.
And
NATURALNANO, INC.
-1-
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of this 26th day of September 2005 by and among CEMENTITIOUS MATERIALS,
INC., a Nevada Corporation ("CMI"), CEMENTITIOUS ACQUISITIONS, INC., a Nevada
corporation ("Merger Sub"), and NaturalNano, Inc., a Delaware corporation (the
"Company").
WHEREAS, CMI desires to acquire the Company as a wholly owned subsidiary
and to issue shares of CMI common stock to the security holders of the Company
upon the terms and conditions set forth herein. Merger Sub is a newly-created,
wholly-owned subsidiary corporation of CMI that will be merged with and into the
Company, whereupon the Company will be the surviving corporation and will become
the wholly owned subsidiary of CMI. Merger Sub and the Company are sometimes
collectively hereinafter referred to herein as the "Constituent Corporations");
WHEREAS, the boards of directors of CMI, Merger Sub and the Company,
respectively, deem it advisable and in the best interests of such corporations
and their respective stockholders that Merger Sub merge with and into the
Company pursuant to this Agreement and the Certificate of Merger (in the form
attached hereto as Exhibit "A") and pursuant to applicable provisions of law
(such transaction is hereafter referred to as the "Merger"); and
WHEREAS, each of the parties to this Agreement desires to make certain
representations, warranties and agreements in connection with the transactions
contemplated herein and also to prescribe various conditions thereto.
NOW THEREFORE, in consideration of the premises, mutual covenants set out
herein and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties agree as follows:
SECTION 1 Acquisition of NaturalNano, Inc. The parties to this Agreement
do hereby agree that Merger Sub will be merged with and into the Company upon
the terms and conditions set forth herein and in accordance with the provisions
of the Nevada Revised Statutes ("NRS"). It is the intention of the parties
hereto that this transaction qualify as a tax-free reorganization under Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended, and related
sections thereunder.
SECTION 2 Terms of Merger. In accordance with the provisions of this
Agreement and the requirements of applicable law, Merger Sub will be merged with
and into the Company as of the Effective Time of the Merger (the terms "Closing"
and "Effective Time of the Merger" are defined in Section 6 hereof). The Company
will be the surviving corporation (hereinafter sometimes referred to as the
"Surviving Corporation") and the separate existence of Merger Sub will cease at
the Effective Time of the Merger. The Company, as the Surviving Corporation,
will succeed to and assume all the rights and obligations of Merger Sub in
accordance with the NRS, as described below. Consummation of the Merger will be
upon the following terms and subject to the conditions set forth herein:
(a) Corporate Existence. Commencing at the Effective Time of the Merger,
the separate corporate existence of Merger Sub will cease and the
Surviving Corporation will continue its corporate existence as a Delaware
corporation; and
-2-
(i) the Surviving Corporation will thereupon and thereafter
possess all rights, privileges, powers, franchises and
property (real, personal and mixed) of each of the
Constituent Corporations;
(ii) all debts due to either of the Constituent Corporations, on
whatever account, all causes in action and all other things
belonging to either of the Constituent Corporations will,
except as otherwise set forth herein, be taken and deemed to
be transferred to and will be vested in the Surviving
Corporation by virtue of the Merger without further act or
deed; and
(iii) all rights of creditors and all liens, if any, upon any
property of any of the Constituent Corporations will be
preserved unimpaired, limited in lien to the property affected
by such liens immediately prior to the Effective Time of the
Merger, and all debts, liabilities and duties of the
Constituent Corporations will thenceforth attach to the
Surviving Corporation.
(b) Effective Time of the Merger. At the Effective Time of the Merger,
(i) the Certificate of Incorporation and the Bylaws of the Company, as
existing and in effect immediately prior to the Effective Time of the
Merger, will be and remain the Certificate of Incorporation and Bylaws of
the Surviving Corporation; (ii) the members of the Board of Directors of
the Company holding office immediately prior to the Effective Time of the
Merger will remain as the members of the Board of Directors of the
Surviving Corporation until their respective successors are elected or
appointed and qualified (if on or after the Effective Time of the Merger
a vacancy exists on the Board of Directors of the Surviving Corporation,
such vacancy may thereafter be filled in a manner provided by applicable
law and the Bylaws of the Surviving Corporation); and (iii) until the
Board of Directors of the Surviving Corporation otherwise determines, all
persons who hold offices of the Company at the Effective Time of the
Merger will continue to hold the same offices of the Surviving
Corporation.
(c) Conversion of Securities. At the Effective Time of the Merger and
without any action on the part of CMI, Merger Sub, the Company or the
holders of any of the securities of any of these corporations, each of
the following will occur:
(i) The outstanding shares of capital stock of the Company will
be converted into the right to receive shares of common
stock, par value $0.001 per share, of CMI ("CMI Common
Stock"). Each one (1) share of Company Common Stock issued
and outstanding immediately prior to the Effective Time of
the Merger will be converted into the right to receive
4.4919378 shares of CMI Common Stock. No fraction of any
share of CMI Common Stock will be issued to any former holder
of capital stock of the Company; rather, the number of shares
of CMI Common Stock otherwise issuable, if other than a whole
number, will be rounded to the nearest whole number. The
holders of such certificates previously evidencing shares of
Company Common Stock outstanding immediately prior to the
Effective Time of the Merger will cease to have any rights
with respect to such shares of the Company's common stock
except as otherwise provided herein or by law.
(ii) Any shares of the Company capital stock held in the treasury
of the Company immediately prior to the Effective Time of the
Merger will automatically be canceled and extinguished
without any conversion thereof and no payment will be made
with respect thereto. At the Effective Time of the Merger,
the stock transfer books of the Company will be closed and
thereafter, there will be no further registration of
transfers on the stock transfer books of the Surviving
Corporation of any shares of capital stock of the Company
which were outstanding immediately prior to the Effective
Time.
-3-
(iii) Each holder of an option (a "Company Option") to purchase
Company Common Stock granted prior to the Effective Time of
the Merger pursuant to the Company's Stock Option Plan (the
"Company Option Plan") or otherwise will receive from CMI at
the Closing, in exchange for a written instrument executed by
him canceling by its terms all of the Company Options held by
him at the Closing, a duly executed Option Agreement (a "CMI
Option Agreement") evidencing the grant to said holder,
pursuant to the CMI Stock Incentive Plan (as defined herein),
of an option (each, a "CMI Option") to acquire one (1) share
of CMI Common Stock for every one (1) share of Company Common
Stock for which the Company Option is exercisable, on
economic and contractual terms substantially and materially
similar to the terms and conditions of said Company Option
prior to such conversion, and substantially in the form of
Exhibit "C" attached hereto.
(iv) Each share of capital stock of Merger Sub issued and
outstanding immediately prior to the Effective Time of the
Merger will remain in existence as one share of common stock
of the Surviving Corporation, which will be owned by CMI.
(v) The 4,991,042 shares of CMI Common Stock issued and
outstanding immediately prior to the Merger will remain
issued and outstanding after the Effective Time of the
Merger.
(d) Restricted Securities.
(i) None of (i) the shares of CMI Common Stock into which the
shares of capital stock of the Company are to be converted,
or (ii) the CMI Options will, at the Effective Time of the
Merger, be registered under the Securities Act of 1933, as
amended (the "Securities Act") but, rather, will be deemed to
have been issued pursuant to an exemption therefrom (subject
to the satisfaction of certain other terms and conditions
hereof) and will be considered "restricted securities" within
the meaning of Rule 144 promulgated under the Securities Act.
All shares of CMI Common Stock will bear a legend worded
substantially as follows:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 (the
"Act") and are "restricted securities" as that term is
defined in Rule 144 under the Act. The shares may not
be offered for sale, sold or otherwise transferred
except pursuant to an exemption from registration under
the Act, the availability of which is to be established
to the satisfaction of the Company."
(ii) At the Closing, CMI will direct its transfer agent to record,
as soon as practicable after the Closing, the issuance of CMI
Common Stock to the holders of the Company's capital stock
pursuant to the provisions set forth above. The transfer
agent will annotate its records to reflect the restrictions
on transfer embodied in the legend set forth above. There
will be no requirement of CMI to register under the
Securities Act the CMI Common Stock in connection with the
Merger.
(e) Other Matters.
(i) Immediately prior to the Effective Time of the Merger, the
Company will have no more than 10,000,000 shares of Company
Common Stock issued and outstanding. Immediately prior to the
Effective Time of the Merger, CMI will have no more than
-4-
4,991,042 shares of CMI Common Stock and no other series of
capital stock issued and outstanding.
(ii) From and after the Closing and with a view to making
available to holders of CMI Common Stock the benefits of Rule
144 of the Securities Act or any other similar rule or
regulation of the Securities and Exchange Commission ("SEC"),
CMI will take all action as may be required as a condition to
the availability of Rule 144 under the Securities Act (or any
successor exemptive rule hereafter in effect) with respect to
CMI Common Stock and furnish to any holder of CMI Common
Stock forthwith, upon request, a written statement by CMI as
to its compliance with the reporting requirements of Rule
144, a copy of the most recent annual or quarterly report of
CMI as filed with the SEC and such other reports and
documents as a holder may reasonably request in availing
itself of any rule or regulation of the SEC allowing a holder
to sell any such CMI Common Stock without registration, upon
satisfaction of all applicable provisions of Rule 144. CMI
agrees to facilitate and expedite transfers of the shares of
CMI Common Stock pursuant to Rule 144 under the Securities
Act, which efforts will include timely notice to its transfer
agent to expedite such transfers of such shares.
(iii) At the Closing, the then existing directors of CMI will
nominate and elect to the CMI Board of Directors those
persons designated by the Company, and CMI will cause all of
the persons then serving as directors and officers of CMI
immediately prior to the Closing to resign from all of their
respective positions with CMI, effective immediately upon the
Closing.
(iv) If, at any time after the Closing, any further action is
necessary or desirable to carry out the purposes of this
Agreement, the officers and directors of CMI are hereby fully
authorized to take, and will use their reasonable efforts to
take, all such lawful and necessary action.
(v) The Company has entered into that certain Registration Rights
Agreement with one or more of its shareholders that provides
certain limited "piggy back" registration rights relating to
10,000,000 shares of the Company's common stock, which number
does not take into consideration the conversion into CMI
Common Stock under the terms Section 2(c) of this Agreement.
Contemporaneous with the Closing of this Agreement, the
Company agrees to assign all of its rights, duties and
obligations under the Registration Rights Agreement to CMI
and CMI agrees to accept such assignment and to assume and
fulfill all of the terms, conditions and obligations of the
Company set forth in the Registration Rights Agreement as
they may apply to CMI Common Stock following the Closing of
this Agreement.
(vi) CMI acknowledges the existence of certain convertible debt of
the Company, which debt is to be convertible into 10,469,600
shares of CMI Common Stock following the Closing of this
Agreement. CMI agrees to facilitate the conversion of the debt
into the 10,469,600 shares of CMI Common Stock and to provide
to the holder of such shares certain limited "piggy back"
registration rights relating to no more than 20% of those
shares and which registration rights will be identical to
those set forth in the Registration Rights Agreement between
the Company and TI.
-5-
(vii) CMI acknowledges the existence of certain common stock
warrants held by SBI USA, LLC providing for the right to
purchase shares of the Company's common stock. CMI agrees to
assume the obligations of the warrants and will facilitate
the conversion of the warrants into a maximum of 2,250,000
shares of CMI Common Stock following the Closing of this
Agreement and pursuant to the terms and conditions of the
warrant agreement between SBI USA, LLC and the Company.
SECTION 3 Delivery of Shares. On or as soon as practicable after the
Effective Time of the Merger, the Company will use reasonable efforts to cause
all holders of the Company's capital stock (the "Company Stockholders") to
surrender to CMI's transfer agent for cancellation certificates representing
their shares of the Company's capital stock, against delivery of certificates
representing the shares of CMI Common Stock for which the Company's capital
stock is to be converted in the Merger pursuant to Section 2 hereof. Until
surrendered and exchanged as herein provided, each outstanding certificate
which, prior to the Effective Time of the Merger, represented Company capital
stock, will be deemed for all corporate purposes to evidence ownership of the
same number of shares of CMI Common Stock into which the shares of the Company
capital stock represented by such Company certificate will have been so
converted.
SECTION 4 Representations of the Company. The Company hereby represents
and warrants as follows, which warranties and representations will also be true
as of the Effective Time of the Merger:
(a) As of the date hereof, excluding the Company Options, the total
number of shares of Company Common Stock issued and outstanding is
10,000,000. As of the date hereof, the total number of Company Options
issued and outstanding is no more than 4,950,000.
(b) The Company Common Stock constitutes duly authorized and validly
issued shares of capital stock of the Company. All shares are fully paid
and nonassessable.
(c) The audited financial statements of the Company as of and for the
year ended December 31, 2004 and unaudited interim financial statements
of the Company for the period ended June 30, 2005, which have been
delivered to CMI, or will be delivered prior to the Closing (hereinafter
referred to as the "Company Financial Statements"), fairly present the
financial condition of the Company as of the dates thereof and the
results of its operations for the periods covered thereby. Other than as
set forth in any schedule or exhibit attached hereto, and except as may
otherwise be set forth or referenced herein, there are no material
liabilities or obligations, either fixed or contingent, not disclosed or
referenced in the Company Financial Statements or in any exhibit or notes
thereto other than contracts or obligations occurring in the ordinary
course of business since June 30, 2005; and no such contracts or
obligations occurring in the ordinary course of business constitute liens
or other liabilities which materially alter the financial condition of
the Company as reflected in the Company Financial Statements. The Company
has, or will have at the Closing, good title to all assets, properties or
contracts shown on the Company Financial Statements subject only to
dispositions and other transactions in the ordinary course of business,
the disclosures set forth therein and liens and encumbrances of record.
(d) Except as disclosed in writing to CMI, since June 30, 2005, there
have not been any material adverse changes in the financial position of
the Company except changes arising in the ordinary course of business,
which changes will not materially and adversely affect the financial
position of the Company.
(e) The Company is not a party to any material pending litigation or, to
the knowledge of its executive officers (herein, the "Company's
Knowledge"), any governmental investigation or proceeding, not reflected
-6-
in the Company Financial Statements, and, to the Company's Knowledge, no
material litigation, claims, assessments or any governmental proceedings
are threatened in writing against the Company.
(f) Neither the Company nor any of its officers, employees or agents, nor
any other person acting on behalf of the Company has, to the Company's
knowledge, directly or indirectly, within the past five years, given or
agreed to give any gift or similar benefit to any person who is or may be
in a position to help or hinder the Company's business, or assist it in
connection with any actual or proposed transaction, which (i) might
subject it to any material damage or penalty in any action or which might
have a material effect on the Company or its assets and properties, (ii)
if not given in the past, might have had a material effect on the
Company's business or its assets and properties, or (iii) if not
continued in the future, might have a material effect on the Company's
business or its assets and properties or subject it to suit or penalty in
any action.
(g) The Company is in good standing in its state of incorporation, and is
in good standing and duly qualified to do business in each state where
required to be so qualified, except where the failure to so qualify would
have no material adverse effect on the business, financial condition or
results of operations of the Company.
(h) The Company has, or by the Effective Time of the Merger will have,
filed all material tax, governmental and/or related forms and reports (or
extensions thereof) due or required to be filed in the ordinary course of
business and has (or will have) paid or made adequate provisions for all
taxes or assessments which have become due as of the Effective Time of
the Merger.
(i) The Company has not, to the Company's knowledge, materially breached
any material agreement to which it is a party. The Company has previously
given CMI copies of or access to all material contracts, commitments
and/or agreements to which the Company is a party.
(j) The Company has the requisite corporate power and authority to enter
into this Agreement together with such other agreements and documents
requisite to this Agreement (the "Transaction Documents") to which it is
a party and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and other Transaction Documents
to which it is a party and the consummation of the transactions
contemplated hereby and thereby have been, or will prior to the Closing
and the Effective Time of the Merger be, duly authorized by the Company's
Board of Directors and by the Company's stockholders (if necessary). The
execution of this Agreement and other Transaction Documents does not
materially violate or breach any material agreement or contract to which
the Company is a party, and the Company, to the extent required, has, or
will have by Closing, obtained all necessary approvals or consents
required by any agreement to which the Company is a party. The execution
and performance of this Agreement and other Transaction Documents will
not violate or conflict with any provision of the Company's Certificate
of Incorporation in effect as of the date hereof, or Bylaws of the
Company.
(k) Information regarding the Company, which has been delivered by the
Company to CMI for use in connection with the Merger is, to the Company's
Knowledge, true and accurate in all material respects.
(l) To the Company's Knowledge, the Company has and at the Closing will
have, disclosed in writing to CMI all events, conditions and facts
materially affecting the business, financial conditions (including any
liabilities, contingent or otherwise) or results of operations of the
Company.
-7-
(m) All information regarding the Company which has been provided to CMI
by the Company or set forth in any document or other communication,
disseminated to any former, existing or potential Company Stockholders,
or to the public or filed with any state or federal securities regulators
or authorities is, to the Company's Knowledge, true, complete, accurate
in all material respects.
(n) To the Company's Knowledge the Company is and has been in compliance
with, and the Company has conducted any business previously owned or
operated by it in compliance with, all applicable laws, orders, rules and
regulations of all governmental bodies and agencies, including applicable
securities laws and regulations and environmental laws and regulations,
except where such noncompliance has and will have, in the aggregate, no
material adverse effect. The Company has not received notice of any
noncompliance with the foregoing, nor is it aware of any claims or
threatened claims in connection therewith.
(o) To the Company's Knowledge without limiting the foregoing, (i) the
Company and any other person or entity for whose conduct the Company is
legally held responsible are and have been in material compliance with
all applicable federal, state, regional, local laws, statutes,
ordinances, judgments, rulings and regulations relating to any matters of
pollution, protection of the environment, health or safety, or
environmental regulation or control, and (ii) neither the Company nor any
other person for whose conduct the Company is legally held responsible
has manufactured, generated, treated, stored, handled, processed,
released, transported or disposed of any hazardous substance on, under,
from or at any of the Company's properties or in connection with the
Company's operations.
(p) Except as and to the extent specifically disclosed in this Agreement
and as may be specifically disclosed or reserved against it as to amount
in the latest balance sheet contained in the Company Financial
Statements, there is no basis for any assertion against the Company of
any material liabilities or obligations of any nature, whether absolute,
accrued, contingent or otherwise and whether due or to become due,
including, without limitation, any liability for taxes (including
e-commerce sales or other taxes), interest, penalties and other charges
payable with respect thereto. Neither the execution and delivery of this
Agreement or other Transaction Documents to which it is a party, nor the
consummation of the transactions contemplated hereby or thereby will
(i) result in any payment (whether severance pay, unemployment
compensation or otherwise) becoming due from the Company to
any person or entity, including without limitation any
employee, director, officer or affiliate or former employee,
director, officer or affiliate of the Company;
(ii) increase any benefits otherwise payable to any person or
entity, including without limitation any employee, director,
officer or affiliate or former employee, director, officer or
affiliate of the Company; or
(iii) result in the acceleration of the time of payment or vesting
of any such benefits.
(q) To the Company's Knowledge, no aspect of the Company's past or
present business, operations or assets is of such a character as would
restrict or otherwise hinder or impair the Company from carrying on the
business of the Company as it is presently being conducted by the
Company.
-8-
(r) Except as disclosed to CMI in writing, to the Company's Knowledge the
Company has no Material Contracts, commitments, arrangements, or
understandings relating to its business, operations, financial condition,
prospects, or otherwise. For purposes of this Section 4, "Material
Contract" means payment or performance of a contract, commitment,
arrangement or understanding in the ordinary course of business, which is
expected to involve payments from the Company to any third party in
excess of $100,000.
(s) To the Company's Knowledge, no representation or warranty by the
Company contained in this Agreement and no statement contained in any
certificate, schedule or other communication furnished pursuant to, or in
connection with, the provisions hereof contains or will contain any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein not misleading. To the
Company's Knowledge, there is no current or prior event or condition of
any kind or character pertaining to the Company that may reasonably be
expected to have a material adverse effect on the business, financial
condition or results of operations of the Company. Except as specifically
indicated elsewhere in this Agreement, all documents delivered by the
Company in connection herewith have been and will be complete originals,
or exact copies thereof.
(t) To the Company's Knowledge, all information to be supplied by it in
writing, specifically for inclusion or incorporation by reference in the
definitive Information Statement to be filed with the SEC by CMI and
disseminated by CMI to its stockholders (the "Information Statement"),
will not, at the time the Information Statement is so disseminated, or at
any time it is amended or supplemented thereafter, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
SECTION 5 Representations of CMI and Merger Sub. CMI and Merger Sub
hereby jointly and severally represent and warrant as follows, each of which
representations and warranties will also be true as of the Effective Time of the
Merger:
(a) As of the date hereof and the Effective Time of the Merger, the
shares of CMI Common Stock to be issued and delivered to the security
holders of the Company hereunder and in connection herewith will, when so
issued and delivered, constitute duly authorized, validly and legally
issued, fully-paid, nonassessable shares of CMI capital stock, free of
all liens and encumbrances.
(b) Each of CMI and Merger Sub has the requisite corporate power to enter
into this Agreement and to perform its respective obligations hereunder.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby (i) have been or prior to the Closing
and the Effective Time of the Merger will be duly authorized by the
respective Boards of Directors of CMI and Merger Sub and by CMI as the
sole stockholder of Merger Sub; and (ii) except as set forth in Section
7(e) hereof, do not have to be approved or authorized by the stockholders
of CMI. The execution and performance of this Agreement will not
constitute a material breach of any agreement, indenture, mortgage,
license or other instrument or document to which CMI or Merger Sub is a
party or to which it is otherwise subject and will not violate any
judgment, decree, order, writ, law, rule, statute, or regulation
applicable to CMI, Merger Sub or their properties. The execution and
performance of this Agreement will not violate or conflict with any
provision of the respective Certificates of Incorporation or Bylaws of
either CMI or Merger Sub.
-9-
(c) CMI has delivered to the Company a true and complete copy of its
audited financial statements for the fiscal years ended December 31,
2004, and 2003, and unaudited financial statements for the six-month
period ended June 30, 2005 (the "CMI Financial Statements"). The CMI
Financial Statements are complete, accurate and fairly present the
financial condition of CMI as of the dates thereof and the results of its
operations for the periods then ended. There are no material liabilities
or obligations either fixed or contingent not reflected therein. The CMI
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis
(except as may be indicated therein or in the notes thereto) and fairly
present the financial position of CMI as of the dates thereof and the
results of its operations and changes in financial position for the
periods then ended. CMI agrees to provide updated quarterly financial
statements as required by the SEC. Merger Sub has no financial statements
because it was recently formed solely for the purpose of effectuating the
Merger and it has been, is and will remain inactive except for purposes
of the Merger and it has no assets, liabilities, contracts or obligations
of any kind other than as incurred in the ordinary course in connection
with its incorporation in Nevada. CMI has no subsidiaries or affiliates
except for Merger Sub and Merger Sub has no subsidiaries or affiliates.
(d) Since June 30, 2005, there have not been any material adverse changes
in the business, financial condition or results of operation of CMI. At
the Closing, neither CMI nor Merger Sub will have any material assets and
neither such corporation now has, nor will it have, any liabilities of
any kind other than those reflected in the most recent balance sheet set
forth in the CMI Financial Statements and any costs or liabilities
incurred in connection with the Merger (which costs and liabilities,
including those liabilities reflected in the most recent balance sheet
set forth in the CMI Financial Statements, collectively will be paid in
full by CMI prior to or at the Closing so that at Closing, CMI has no
outstanding liabilities).
(e) Neither CMI nor Merger Sub is a party to, or the subject of, any
material pending litigation, claims, or governmental investigation or
proceeding not reflected in the CMI Financial Statements, and to the
knowledge of the executive officers of CMI (herein "CMI's Knowledge"),
there are no lawsuits, claims, assessments, investigations, or similar
matters, threatened in writing against Merger Sub, CMI, or the management
or properties of CMI or Merger Sub.
(f) CMI and Merger Sub are each duly organized, validly existing and in
good standing under the laws of the jurisdiction of their respective
incorporation; each has the corporate power to own its property and to
carry on its business as now being conducted and is duly qualified to do
business in any jurisdiction where so required except where the failure
to so qualify would have no material negative impact. Neither corporation
is required to be qualified to do business in any state other than the
State of Nevada.
(g) CMI and Merger Sub have filed all federal, state, county and local
income, excise, property and other tax, governmental and/or other
returns, forms, filings, or reports, which are due or required to be
filed by it prior to the date hereof and have paid or made adequate
provision in the CMI Financial Statements for the payment of all taxes,
fees, or assessments which have or may become due pursuant to such
returns, filings or reports or pursuant to any assessments received.
Neither CMI nor Merger Sub is delinquent or obligated for any tax,
penalty, interest, delinquency or charge and there are no tax liens or
encumbrances applicable to either corporation.
-10-
(h) As of the date of this Agreement, CMI's authorized capital stock
consists solely of 12,500,000 shares of CMI Common Stock, $0.001 par
value, of which 4,991,042 shares are presently issued and outstanding.
Prior to the Closing, CMI will have outstanding 4,991,042 shares of
common stock and no shares of preferred stock. Prior to the Closing, CMI
will amend its Certificate of Incorporation to increase its authorized
capitalization to 100 million shares of common stock, par value $0.001
per share, and 10 million shares of "blank check" preferred stock. Merger
Sub's capitalization consists solely of 1,000 authorized shares of $0.001
par value common stock ("Merger Sub's Common Stock"), of which 1,000
shares are outstanding, all of which are owned by CMI, free and clear of
all liens, claims and encumbrances. All outstanding shares of capital
stock of CMI and Merger Sub are, and will be at the Closing, duly
authorized, validly issued, fully paid and nonassessable. There are no
existing options, calls, claims, warrants, preemptive rights,
registration rights or commitments of any character relating to the
issued or unissued capital stock or other securities of either CMI or
Merger Sub.
(i) The financial records, minute books, and other documents and records
of CMI and Merger Sub have been made available to the Company prior to
the Closing. The records and documents of CMI and Merger Sub that have
been delivered to the Company constitute all of the material records and
documents of CMI and Merger Sub that they are aware of or that are in
their possession or in the possession of CMI or Merger Sub.
(j) Neither CMI nor Merger Sub has breached any material agreement to
which it is a party. Prior to the Closing, CMI will have given to the
Company copies or access to all material contracts, commitments and/or
agreements to which CMI is a party. There are no currently existing
agreements with any affiliates, related or controlling persons or
entities.
(k) CMI has complied with all provisions relating to the issuance of
shares and for the registration thereof under the Securities Act, or
appropriate exemption from registration therefrom. There are no
outstanding, pending or threatened stop orders or other actions or
investigations relating thereto involving federal and state securities
laws.
(l) CMI currently has no employees, consultants or independent
contractors other than its attorneys, accountants and transfer agent.
Edward F. Cowle, Geoff Williams and Jim Ruzicka are, and will be, the
sole directors and sole executive officers of CMI, and Geoff Williams and
Jim Ruzicka are the sole directors and sole executive officers of Merger
Sub.
(m) CMI and Merger Sub have, and at the Closing will have, disclosed in
writing to the Company all events, conditions and facts materially
affecting the business, financial conditions, including any liabilities,
contingent or otherwise, or results of operations of either CMI or Merger
Sub, since January 1, 2005.
(n) CMI was originally organized for the purposes of, and with a specific
plan for the ownership and operations of mining claims. Subsequently, CMI
revised its business to seeking potential operating businesses and
business opportunities with the intent to acquire or merge with such
businesses. (o) All information regarding CMI which has been provided to
the Company by CMI, or set forth in any document or other communication,
disseminated to any former, existing or potential stockholders of CMI, to
the public or filed with the SEC or any state securities regulators or
authorities, is true, complete, accurate in all material respects, not
-11-
misleading, and was and is in full compliance with all securities laws
and regulations. Without limiting the generality of the foregoing, CMI
has filed all required reports, schedules, forms, statements and other
documents with the SEC since the filing of its registration statement on
Form 10-SB on July 3, 2003, including all filed reports, schedules,
forms, statements and other documents whether or not required (the "SEC
Documents"). As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the
case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents. Except to the extent that
information contained in any SEC Document has been revised or superseded
by a later filed SEC Document, none of the SEC Documents contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in
the SEC Documents are true and complete and comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.
(p) CMI is and has been in compliance with, and CMI has conducted any
business owned or operated by it in compliance with, all applicable laws,
orders, rules and regulations of all governmental bodies and agencies,
including applicable securities laws and regulations, including, but not
limited to, the Sarbanes-Oxley Act of 2002, and environmental laws and
regulations, except where such noncompliance has and will have, in the
aggregate, no material adverse effect. CMI has not received notice of any
noncompliance with the foregoing, nor is it aware of any claims or
threatened claims in connection therewith. CMI has never conducted any
operations or engaged in any business transactions of a material nature
other than as set forth in the reports CMI has previously filed with the
SEC.
(q) The certificates of the Chief Executive Officer and Chief Financial
Officer of CMI required by Rules 13a-14 and 15d-14 of the Exchange Act or
Section 906 of the Sarbanes-Oxley Act of 2002 with respect to the SEC
Documents, as applicable, are true and correct as of the date of this
Agreement as they relate to a particular SEC Document, as though made as
of the date of this Agreement. The Company has established and maintains
disclosure controls and procedures, has conducted the procedures in
accordance with their terms and has otherwise operated in compliance with
the requirements under Rules 13a-15 and 15d-15 of the Exchange Act.
(r) Except as and to the extent specifically disclosed in this Agreement
and as may be specifically disclosed or reserved against as to amount in
the latest balance sheet contained in the CMI Financial Statements, there
is no basis for any assertion against CMI of any material liabilities or
obligations of any nature, whether absolute, accrued, contingent or
otherwise and whether due or to become due, including, without
limitation, any liability for taxes, including e-commerce sales or other
taxes, interest, penalties and other charges payable with respect
thereto. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
(i) result in any payment, whether severance pay, unemployment
compensation or otherwise, becoming due from CMI to any person
or entity, including without limitation any employee,
director, officer;
(ii) increase any benefits otherwise payable to any person or
entity, including without limitation any employee, director,
officer or affiliate; or
-12-
(iii) result in the acceleration of the time of payment or vesting
of any such benefits.
(s) No aspect of CMI's business, operations or assets is of such a
character as would restrict or otherwise hinder or impair CMI from
carrying on the business of CMI as it is presently being conducted by
CMI.
(t) Other than retention of accountants, attorney, and transfer agent,
CMI has no other contracts, commitments, arrangements, or understandings
relating to its business, operations, financial condition, prospects or
otherwise.
(u) None of CMI, Merger Sub or any other affiliate thereof has or
maintains any employee benefit, bonus, incentive compensation,
profit-sharing, equity, stock bonus, stock option, stock appreciation
rights, restricted stock, other stock-based incentive, executive
compensation agreement, employment agreement, deferred compensation,
pension, stock purchase, employee stock ownership, savings, pension,
retirement, supplemental retirement, employment related
change-in-control, severance, salary continuation, layoff, welfare
(including, without limitation, health, medical, prescription, dental,
disability, salary continuation, life, accidental death, travel accident,
and other insurance), vacation, holiday, sick leave, fringe benefit, or
other benefit plan, program, or policy, whether qualified or nonqualified
and any trust, escrow, or other agreement related thereto, covering any
present or former employees, directors, or their respective dependents.
(v) No representation or warranty by CMI or Merger Sub contained in this
Agreement and no statement contained in any certificate, schedule or
other communication furnished pursuant to or in connection with the
provisions hereof, contains or will contain any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements therein not misleading. There is no event or
condition of any kind or character pertaining to CMI that may reasonably
be expected to have a material adverse effect on CMI or its subsidiaries.
Except as specifically indicated elsewhere in this Agreement, all
documents delivered by CMI in connection herewith have been and will be
complete originals, or exact copies thereof.
SECTION 6 Closing. The Closing of the transactions contemplated herein
will take place on such date (the "Closing") as mutually determined by the
parties hereto, but no later than five (5) days after all conditions precedent
have been satisfied or waived and all required documents have been delivered.
The parties will use their reasonable commercial efforts to cause the Closing to
occur on or before November 15, 2005. The "Effective Time of the Merger" will be
that date and time specified in the Certificate of Merger as the date on which
the Merger will become effective.
SECTION 7 Actions Prior to Closing.
(a) Prior to the Closing, the Company on the one hand, and CMI and
Merger Sub on the other hand, will be entitled to make such
investigations of the assets, properties, business and operations
of the other party and to examine the books, records, tax returns,
financial statements and other materials of the other party as
such investigating party deems necessary in connection with this
Agreement and the transactions contemplated hereby. Any such
investigation and examination will be conducted at reasonable
times and under reasonable circumstances, and the parties hereto
will cooperate fully therein. The representations and warranties
contained in this Agreement will not be affected or deemed waived
-13-
by reason of the fact that either party hereto discovered or
should have discovered any representation or warranty is or might
be inaccurate in any respect. Until the Closing, the parties
hereto and their respective affiliates will keep confidential and
will not use in any manner inconsistent with the transactions
contemplated by this Agreement any information or documents
obtained from the other concerning its assets, properties,
business or operations (the "Confidential Information"). For the
purpose of this Agreement, the party disclosing such Confidential
Information is referred to as the "Discloser," and the party
receiving such Confidential Information is referred to as the
"Recipient." If the Closing will not occur for any reason
(including, without limitation, pursuant to a termination of this
Agreement), the parties hereto and their respective affiliates
will not disclose, nor use for their own benefit, any such
Confidential Information obtained from the other, in either case.
(i) Confidential Information shall not include any information of that:
A. is already known to Recipient at time of its disclosure as
proven by documentary evidence;
B. is or becomes publicly known through no wrongful act of
Recipient;
C. is independently developed by or on behalf of Recipient; or
D. is received from a third party whose disclosure does not
violate a confidentiality obligation.
(ii) Required Disclosure. In the event Recipient is required by law,
regulation or legal or administrative process to disclose any
Discloser Confidential Information, Recipient shall promptly
notify Discloser in writing so that a protective order or other
appropriate remedy may be sought by Discloser. Recipient agrees to
furnish only that portion of Confidential Information that is
legally required and to cooperate with Discloser, at Discloser's
expenses and request, in seeking such a protective order;
(iii) Return of Confidential Information. If the Closing will not occur
for any reason (including, without limitation, pursuant to a
termination of this Agreement), Confidential Information is and
shall remain the Discloser's sole and exclusive property and no
license or right to Confidential Information is granted hereby
except as specifically provided herein. Any and all Confidential
Information disclosed in tangible form, including information
incorporated into computer software or held in electronic storage
media, shall upon termination of this Agreement be returned to
Discloser or destroyed promptly and shall not be thereafter
retained in any form by Recipient or its Representatives.
Notwithstanding termination or expiration of this Agreement or any
return of Confidential Information, all rights and obligations of
the parties under this Agreement as to any particular Confidential
Information shall survive until the fourth anniversary of the
disclosure of that Confidential Information.
(iv) Specific Performance. The parties acknowledge Confidential
Information is valuable and unique and that disclosure in breach
of this Agreement will result in irreparable harm to Discloser.
The parties agree that, in the event of a breach or threatened
breach of the terms of this Agreement, Discloser shall be entitled
to specific performance and/or an injunction prohibiting any such
breach. Any such relief shall be in addition to and not in lieu of
any monetary damages or other remedies that may be available.
-14-
(b) Prior to the Closing, any written news releases or public disclosure
by either party pertaining to this Agreement will be submitted to the
other party for its review and approval prior to such release or
disclosure, provided, however, that
(i) such approval will not be unreasonably withheld, and
(ii) such review and approval will not be required of disclosures
required to comply, in the judgment of counsel, with federal
or state securities or corporate laws or policies.
(c) Prior to the Effective Time of the Merger, CMI will amend its
Certificate of Incorporation (i) to increase its authorized
capitalization to 100 million shares of common stock, par value $0.001
per share, and 10 million shares of "blank check" preferred stock, and
(ii) to change CMI's corporate name to NaturalNano, Inc.
(d) Except as contemplated by this Agreement, there will be no stock
dividend, stock split, recapitalization, or exchange of shares with
respect to or rights issued in respect of CMI Common Stock after the date
hereof and there will be no dividends or other distributions paid on
CMI's Common Stock after the date hereof, in each case through and
including the Effective Time of the Merger. CMI and Merger Sub will
conduct no business activities prior to the Closing other than in the
ordinary course of business or as may be necessary in order to consummate
the transactions contemplated hereby.
(e) CMI, acting through its Board of Directors, will, in accordance with
applicable law give notice of and submit for action by written consent of
its stockholders;
(i) an amendment to its Certificate of Incorporation to increase
the authorized capitalization of CMI to 100 million shares of
common stock and 10 million shares of "blank check" preferred
stock;
(ii) a proposal to adopt a stock option plan and allocate
7,000,000 shares of CMI common stock to the plan (the "CMI
Stock Incentive Plan"); and
(iii) an amendment to its Certificate of Incorporation to change
CMI's corporate name to NaturalNano, Inc.
(f) CMI will use its reasonable best efforts to obtain the written
consent discussed in Section 7(e) above as soon as practicable after the
execution of this Agreement and, as promptly as practicable thereafter;
(i) prepare and file with the SEC a preliminary Information
Statement relating to the matters stated above;
(ii) use its reasonable best efforts to obtain and furnish the
information required by the SEC to be included in the
definitive Information Statement; and,
(iii) after consultation with counsel to the Company, respond
promptly to any comments made by the SEC with respect to the
preliminary Information Statement and cause the Information
Statement to be mailed to its stockholders as promptly as
practicable following clearance from the SEC and at least 20
days prior to effecting the actions to be taken by written
consent set forth in Section (7)(e) above.
-15-
(g) The Company will provide to CMI any information for inclusion in the
Information Statement which may be required under applicable law and
which is reasonably requested by CMI. Each of the Company, CMI and Merger
Sub, respectively, agree promptly to correct any information provided by
any of them for use in the Information Statement if, and to the extent
that, such information will have become false or misleading in any
material respect and CMI further agrees to take all necessary steps to
cause the Information Statement as so corrected to be filed with the SEC
and to be disseminated to its stockholders to the extent required by
applicable federal securities laws.
(h) CMI hereby represents and warrants that the information supplied or
to be supplied by CMI for inclusion or incorporation by reference in (i)
the Information Statement and (ii) the Other Filings (as defined below)
will, at the respective times filed with the SEC and, in the case of the
Information Statement as of the date it or any amendment or supplement
thereto is mailed to stockholders, not contain any untrue statement of a
fact or omit to state any fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Information Statement will
comply as to form in all respects with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder. The Company
hereby represents and warrants that the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in
the Information Statement or Other Filings will, at the respective times
filed with the SEC and, in addition, in the case of the Information
Statement, as of the date it or any amendment or supplement thereto is
mailed to stockholders, not contain any untrue statement of a fact or
omit to state any fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading.
(i) As soon as practicable following the date hereof and following the
Effective Time of the Merger, each of CMI and the Company will properly
prepare and file any other filings required under the Exchange Act or any
other federal, state or foreign law relating to the Merger (collectively,
the "Other Filings").
(j) Except as required by law, CMI and Merger Sub will not voluntarily
take any action that would, or that is reasonably likely to, result in
any of the conditions to the Merger not being satisfied. Without limiting
the generality of the foregoing CMI and Merger Sub will not take any
action that would result in (i) any of its representations and warranties
set forth in this Agreement that are qualified as to materiality becoming
untrue or (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect.
(k) The CMI Common Stock will continue to be approved for quotation on
the OTC Bulletin Board and CMI will have continued to satisfy throughout
the period from the date hereof through the Closing Date (i) its filing
requirements under Section 13 of the Exchange Act and (ii) the
requirements of Rule 15c2-11 as promulgated by the SEC under the Exchange
Act.
SECTION 8 Conditions Precedent to the Obligations of the Company. All
obligations of the Company under this Agreement to effect the Merger and the
other transactions contemplated hereby are subject to the fulfillment, prior to
or as of the Closing and/or the Effective Time of the Merger, as indicated
below, of each of the following conditions:
-16-
(a) The representations and warranties by or on behalf of CMI and Merger
Sub contained in this Agreement, or in any certificate or document
delivered pursuant to the provisions hereof or in connection herewith,
will be true at and as of the Closing and Effective Time of the Merger as
though such representations and warranties were made at and as of such
time.
(b) CMI and Merger Sub will have performed and complied with, in all
material respects, all covenants, agreements, and conditions required by
this Agreement to be performed or complied with by them prior to or at
the Closing. No preliminary or permanent injunction or other order,
decree or ruling issued by a court or other governmental authority of
competent jurisdiction nor any statute, rule, regulation or executive
order promulgated or enacted by any governmental authority of competent
jurisdiction will be in effect which would have the effect of (i) making
the consummation of the Merger illegal, or (ii) otherwise prohibiting the
consummation of the Merger.
(c) On or before the Closing, the directors of CMI and Merger Sub, and
CMI as sole stockholder of Merger Sub, will have approved in accordance
with applicable provisions of the NRS the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein,
and will have approved the Restated Certificate and the CMI Stock
Incentive Plan and submitted the same for approval by the stockholders of
CMI as required.
(d) On or before the Closing, CMI and Merger Sub will have delivered
certified copies of resolutions of the sole stockholder and directors of
Merger Sub and of the directors of CMI approving and authorizing: (i) the
execution, delivery and performance of this Agreement and all necessary
and proper actions to enable CMI and Merger Sub to comply with the terms
of this Agreement; (ii) the election of the Company's nominees to the
Board of Directors of CMI and all matters outlined or contemplated
herein; (iii) the submission of the amendment to the Certificate of
Incorporation and the CMI Stock Incentive Plan to the stockholders of
CMI; and (iv) the filing of the amendment to the Certificate of
Incorporation upon approval thereof.
(e) Each of the Company Stockholders will have delivered to CMI a letter
commonly known as an "investment letter" agreeing that the shares of CMI
Common Stock to be issued in the Merger are, among other things, (i)
being acquired for investment purposes and not with a view to public
resale, (ii) are being acquired for the investor's own account, (iii)
that the investor is an "accredited investor" as defined under Regulation
D of the Securities Act, and (iv) that the shares of CMI Common Stock are
restricted and may not be resold, except in reliance of an exemption
under the Act.
(f) The Merger will be permitted by applicable state law and otherwise
and CMI will have sufficient shares of its capital stock authorized to
complete the Merger at the Effective Time and the transactions
contemplated hereby.
(g) The amendment to the Certificate of Incorporation and CMI Stock
Option Incentive Plan will have been approved by the requisite vote of
the stockholders of CMI, acting by written consent in lieu of a special
meeting thereof, and the amendment to the Certificate of Incorporation
will have been filed in accordance with the applicable requirements of
the NRS.
-17-
(h) At Closing, all of the directors and officers of CMI and Merger Sub
will have resigned in writing from their positions as directors and
officers of CMI and Merger Sub, respectively, effective upon the election
and appointment of the Company nominees, and the directors of CMI will
have taken such action as may be deemed necessary or desirable by the
Company regarding such election and appointment of the Company nominees.
(i) At the Closing, all instruments and documents delivered by CMI or
Merger Sub, including to the Company Stockholders pursuant to the
provisions hereof, will be reasonably satisfactory to legal counsel for
the Company.
(j) The capitalization of CMI and Merger Sub will be the same as
described in Section 5(h) above and will reflect the effectiveness of the
amendment to the Certificate of Incorporation increasing CMI's authorized
capitalization.
(k) The shares of CMI Common Stock to be issued to the Company
Stockholders at Closing will be validly issued, nonassessable and fully
paid under the applicable provisions of the NRS and will be issued in a
nonpublic offering in compliance with all federal, state and applicable
securities laws. (l) The Company will have received all necessary and
required approvals and consents from required parties and from its
stockholders.
(m) At the Closing, CMI and Merger Sub will have delivered to the Company
an opinion of CMI's legal counsel dated as of the Closing to the effect
that:
(i) Each of CMI and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation;
(ii) This Agreement has been duly authorized, executed and
delivered by CMI and Merger Sub and is a valid and binding
obligation of CMI and Merger Sub enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors'
rights and general principles of equity;
(iii) CMI and Merger Sub each through its Board of Directors and/or
stockholders, as required, have taken all corporate action
necessary for performance under this Agreement;
(iv) The documents executed and delivered to the Company and the
Company Stockholders hereunder are valid and binding in
accordance with their terms and vest in the Company
Stockholders all right, title and interest in and to the
shares of CMI's Common Stock to be issued pursuant to Section
2 hereof, and the shares of CMI Common Stock when issued will
be duly and validly issued, fully paid and nonassessable; and
(i) CMI and Merger Sub each has the corporate power to execute,
deliver and perform its respective obligations under this
Agreement;
(n) The Company will have completed its financial and legal due diligence
investigation of CMI with results thereof satisfactory to the Company in
its sole discretion.
-18-
Section 9 Conditions Precedent to the Obligations of CMI and Merger Sub.
All obligations of CMI and Merger Sub under this Agreement are subject to the
fulfillment, prior to or at the Closing and/or the Effective Time of the Merger,
of each of the following conditions:
(a) The representations and warranties by the Company contained in this
Agreement or in any certificate or document delivered pursuant to the
provisions hereof or in connection herewith, will be true at and as of
the Closing and the Effective Time of the Merger as though such
representations and warranties were made at and as of such times.
(b) The Company will have performed and complied with, in all material
respects, all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it prior to or at the
Closing.
(c) On or before the Closing, the directors of the Company will have
approved in accordance with applicable state corporation law the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein and will have submitted the same to the
stockholders of the Company.
(d) On or before the Closing Date, the Company will have delivered
certified copies of resolutions of the stockholders and directors of the
Company approving and authorizing the execution, delivery and performance
of this Agreement and the other Transaction Documents and authorizing all
of the necessary and proper action to enable the Company to comply with
the terms of this Agreement.
(e) The Merger will be permitted by applicable state law and otherwise.
(f) At the Closing, all instruments and documents delivered by the
Company pursuant to the provisions hereof will be reasonably satisfactory
to legal counsel for CMI.
(g) The capitalization of the Company will be the same as described in
Section 4(a) hereof.
(h) CMI will have received all necessary and requisite approvals and
consents from required parties and from its stockholders, and this
Agreement and the Merger will have been adopted and approved by the
requisite vote of the Company Stockholders.
(i) At the Closing, the Company will have delivered to CMI an opinion of
the Company's legal counsel dated as of the Closing to the effect that:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of
its incorporation;
(ii) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding
obligation of the Company enforceable in accordance with its
terms;
(iii) The Company, through its Board of Directors and stockholders
has taken all corporate action necessary for performance
under this Agreement; and
(iv) The Company has the corporate power to execute, deliver and
perform under this Agreement.
-19-
(j) CMI will have an exemption from registration under the Securities Act
and the securities laws of the state of Delaware and the various states
of residence of the Company Stockholders for issuance of the shares of
CMI Common Stock to be issued to the Company Stockholders in the Merger.
(k) CMI will have received from the Company Stockholders the investment
letters described in Section 8(e) hereof.
SECTION 10 Survival. The representations and warranties contained in this
Agreement and any other document or certificate relating hereto will survive and
continue in full force and effect for a period of six months after the Effective
Time of the Merger.
SECTION 11 Nature of Representations. All of the parties hereto are
executing and carrying out the provisions of this Agreement in reliance solely
on the representations, warranties, covenants and agreements contained in this
Agreement and the other documents delivered at the Closing and not upon any
representation, warranty, agreement, promise or information, written or oral,
made by the other party or any other person other than as specifically set forth
herein.
SECTION 12 Documents at Closing. At the Closing, the following documents
will be delivered:
(a) The Company will deliver, or will cause to be delivered, to CMI the
following:
(i) a certificate executed by the President of the Company to the
effect that all representations and warranties made by the
Company under this Agreement are true and correct as of the
Closing and as of the Effective Time of the Merger, the same
as though originally given to CMI or Merger Sub on said date
and that the Company has performed or complied in all
material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on
or prior to the Effective Time of the Merger;
(ii) a certificate from the state of the Company's incorporation
dated within five business days of the Closing to the effect
that the Company is in good standing under the laws of said
state;
(iii) such other instruments, documents and certificates, if any,
as are required to be delivered pursuant to the provisions of
this Agreement and the other Transaction Documents;
(iv) executed copy of the Certificate of Merger for filing in
Delaware;
(v) certified copies of resolutions adopted by the Company
Stockholders and the directors of the Company approving the
Merger Agreement and other Transaction Documents and
authorizing the Merger;
(vi) the opinion of the Company's counsel as described in Section
9(i) above; and
(vii) all other items, the delivery of which is a condition
precedent to the obligations of CMI and Merger Sub, as set
forth herein.
(b) CMI and Merger Sub will deliver or cause to be delivered to the
Company:
-20-
(i) stock certificates representing those securities of CMI to be
issued as a part of the Merger as described in Section 2
hereof;
(ii) a certificate of the President of CMI and Merger Sub,
respectively, to the effect that all representations and
warranties of CMI and Merger Sub made under this Agreement
are true and correct as of the Closing, the same as though
originally given to the Company on said date; and that each
of CMI and Merger Sub has performed or complied in all
material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on
or prior to the Effective Time of the Merger;
(iii) certified copies of resolutions adopted by CMI's and Merger
Sub's Board of Directors and Merger Sub's sole stockholder
approving the Merger Agreement and authorizing the Merger and
all related matters; and certified copies of resolutions
adopted by the stockholders of CMI approving the matters
described in Section 7(e) above.
(iv) certificates from the jurisdiction of incorporation of CMI
and Merger Sub dated within five business days of the Closing
Date that each of said corporations is in good standing under
the laws of said state;
(v) executed copy of the Certificate of Merger for filing in
Nevada;
(vi) opinion of CMI's counsel as described in Section 8(m) above;
(vii) such other instruments and documents as are required to be
delivered pursuant to the provisions of this Agreement;
(viii) written resignation of all of the officers and directors of
CMI and Merger Sub; and
(ix) all other items, the delivery of which is a condition
precedent to the obligations of the Company, as set forth in
Section 8 hereof.
SECTION 13 Finder's Fees. CMI and Merger Sub, jointly and severally,
represent and warrant to the Company, and the Company represents and warrants to
CMI and Merger Sub, that none of them, or any party acting on their behalf, has
incurred any liabilities, either express or implied, to any "broker" or "finder"
or similar person in connection with this Agreement or any of the transactions
contemplated hereby.
SECTION 14 Additional Covenants. Between the date hereof and the Closing,
except with prior written consent of the other party:
(a) CMI, Merger Sub and the Company will conduct their business only in
the usual and ordinary course and the character of such business will not
be changed nor will any different business be undertaken;
(b) No change will be made in the Certificate of Incorporation or Bylaws
of CMI, Merger Sub or the Company except as described herein;
(c) No change will be made in the authorized or issued shares of CMI
except as set forth herein;
-21-
(d) Neither CMI nor the Company will discharge or satisfy any lien or
encumbrance or obligation or liability, other than current liabilities
shown on the financial statements heretofore delivered and current
liabilities incurred since that date in the ordinary course of business;
and
(e) CMI will not make any payment or distribution to its stockholders or
purchase or redeem any shares or capital stock except as set forth
herein.
SECTION 15 Post-Closing Covenants. After the Closing, the Company will
cause CMI to timely file with the SEC a current report on Form 8-K to report the
Merger. In addition, for a period of 12 months following the Closing, the
Company will cause CMI to use its commercially reasonable efforts to timely file
all reports and other documents required to be filed by CMI under the Exchange
Act.
SECTION 16 Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, by action taken or authorized by the
Board of Directors of the terminating party or parties and, except as provided
below, whether before or after approval of the matters presented in connection
with the Mergers by the stockholders of CMI or the Company:
(a) By mutual written consent of CMI and the Company;
(b) By either CMI or the Company, if the Effective Time of the Merger
will not have occurred on or before November 30, 2005 (the "Termination
Date"); provided, however, that the right to terminate this Agreement
under this Section 16(b) will not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause of or
resulted in, the failure of the Effective Time of the Merger to occur on
or before the Termination Date;
(c) By either CMI or the Company if any governmental entity (i) will have
issued an order, decree or ruling or taken any other action (which the
parties will use their reasonable best efforts to resist, resolve or
lift, as applicable), permanently restraining, enjoining or otherwise
prohibiting the transaction contemplated by this Agreement and such
order, decree, ruling or other action will have become final and
nonappealable, or (ii) will have failed to issue an order, decree or
ruling or to take any other action and such denial of a request to issue
such order, decree, ruling or take such other action will have become
final and nonappealable (which order, decree, ruling or other action the
parties will have used their reasonable best efforts to obtain), in the
case of each of (i) and (ii) which is necessary to fulfill the conditions
set forth in Sections 8 and 9, as applicable;
(d) By either CMI or the Company, if the approvals of the respective
stockholders of either CMI or the Company contemplated by this Agreement
will not have been obtained by reason of the failure to obtain the
required vote of stockholders or consent to the respective matters as to
which such approval was sought;
(e) By CMI, if the Company will have breached or failed to perform any of
its representations, warranties, covenants or other agreements contained
in this Agreement, such that the conditions set forth in Section 9 are
not capable of being satisfied on or before the Termination Date; or
(f) By the Company, if CMI will have breached or failed to perform any of
its representations, warranties, covenants or other agreements contained
in this Agreement, such that the conditions set forth in Section 8 are
not capable of being satisfied on or before the Termination Date.
-22-
SECTION 17 Effect of Termination. In the event of termination of this
Agreement by either CMI or the Company as provided in Section 16 (other than
Sections 16(e) or (f)), this Agreement will forthwith become void and there will
be no liability or obligation on the part of any of the parties or their
respective officers or directors.
SECTION 18 Miscellaneous.
(a) Further Assurances. At any time and from time to time after the
Effective Time of the Merger, each party will execute such additional
instruments and take such action as may be reasonably requested by the
other party to confirm or perfect title to any property transferred
hereunder or otherwise to carry out the intent and purposes of this
Agreement.
(b) Waiver. Any failure on the part of any party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived
in writing by the party (in its sole discretion) to whom such compliance
is owed.
(c) Amendment. This Agreement may be amended only in writing as agreed to
by all parties hereto.
(d) Notices. All notices and other communications hereunder will be in
writing and will be deemed to have been given if delivered in person or
sent by prepaid first class registered or certified mail, return receipt
requested to the last known address of the noticed party.
(e) Headings. The section and subsection headings in this Agreement are
inserted for convenience only and will not affect in any way the meaning
or interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
(g) Binding Effect. This Agreement will be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
(h) Entire Agreement. This Agreement and the attached Exhibits, including
the Certificate of Merger, is the entire agreement of the parties
covering everything agreed upon or understood in the transaction. There
are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof.
(i) Severability. If any part of this Agreement is deemed to be
unenforceable, the balance of the Agreement will remain in full force and
effect.
(j) Responsibility and Costs. Whether the Merger is consummated or not
and except as otherwise set forth below, all fees, expenses and
out-of-pocket costs including, without limitation, fees and disbursements
of counsel, financial advisors and accountants, incurred by the parties
hereto will be borne solely and entirely by the party that has incurred
such costs and expenses, unless the failure to consummate the Merger
constitutes a breach of the terms hereof, in which event the breaching
party will be responsible for all costs of all parties hereto.
Notwithstanding the above, the Company agrees that it will pay to Leonard
E. Neilson, Attorney at Law, all legal expenses and costs associated with
the preparation and execution of this Agreement and all transactions,
agreements and documents contemplated hereby.
-23-
(k) Governing Law. This Agreement will be governed and construed in
accordance with the laws of the State of Utah without regard to
principles of conflicts of law.
[Signatures on the Following Page]
IN WITNESS WHEREOF, the parties have executed this Agreement the
day and year first above written.
NATURALNANO, INC.
By: /s/ Michael D. Riedlinger
------------------------------------
Michael D. Riedlinger
Its: President
CEMENTITIOUS MATERIALS, INC.
By: /s/ Edward F. Cowle
------------------------------------
Edward F. Cowle
Its: President
CEMENTITIOUS ACQUISITIONS, INC.
By: /s/ Geoff Williams
------------------------------------
Geoff Williams
Its: President
-24-