Exhibit 2.1
CALDERA CORPORATION
3156 East Old Mill Circle
Suite 100
Salt Lake City, Utah 84121
March 15, 1999
Ragula Bhaskar, President
Ragula Systems, Inc.
404 East 4500 South
Suite A-22
Salt Lake City, UT 84107
Re: Proposed Exchange of capital shares of Caldera Corporation, a Florida
corporation, ("Acquiror") for all of the outstanding shares of Ragula
Systems, Inc., a Utah corporation, ("Acquiree").
Dear Mr. Bhaskar:
This letter will confirm the recent discussions we have had with you
relative to the proposed exchange of shares of the voting capital stock of
Acquiror for all of the issued and outstanding voting capital stock of
Acquiree which, among other things, would provide for the various matters set
forth below:
1. Acquiror would acquire all of the issued and outstanding voting
capital stock of Acquiree from the shareholders of Acquiree in exchange for
approximately 6,000,000 of restricted shares of the $.0025 par value common
stock of Acquiror ("Acquiror Common Stock"), all of which would be delivered
upon the closing of this transaction (the "Closing" or "Closing Date"), with
the condition that the exchange would be made with no more than 35
non-accredited Acquiree shareholders and the transaction would not otherwise
violate the provisions of the Securities Act of 1933, as amended, (the
"Securities Act") or any applicable state securities laws. You would need to
provide us with the names and addresses of the shareholders of Acquiree as
soon as possible. It is anticipated that the Closing Date would be on or
before July 1, 1999. This exchange is intended to qualify as a tax-free
transaction under Section 351 and/or 368 of the Internal Revenue Code, and
the shares of Acquiror received by the Acquiree shareholders are expected to
be received on a tax-free basis. The shares to be issued by Acquiror would
be "restricted securities" as defined in Rule 144 under the Securities Act.
An appropriate legend would be placed on the certificates representing such
shares, and stop transfer orders placed
against them. The specific form of the reorganization under Section 351 is
expected to be a "stock-for-stock" reorganization; however, said form of
reorganization shall be mutually determined by council for the parties hereto.
2. It is contemplated that up to 2,000,000 shares of the Acquiror
Common Stock would be offered and sold in a private offering pursuant to Rule
506 of Regulation D promulgated by the Securities and Exchange Commission
(the "SEC") to "accredited investors" only to raise a minimum of $5,000,000
for working capital for the business of Acquiree. It may be a condition of
such funding that the parties providing the funding may require
representation on the Board of Directors of the Acquiror. Of the funds
raised, $1,000,000 would be raised prior to, and loaned by the Acquiror to
the Acquiree simultaneous with, the signing of the Definitive Agreement (as
defined below) on or before April 1, 1999. The loan would not be due or
payable unless and until the Definitive Agreement were abandoned or
terminated without Closing, or if rescinded after Closing. If the Definitive
Agreement were abandoned or terminated without Closing, the $1,000,000
previously loaned to Acquiree by Acquiror would be repayable in monthly
installment payments over a period of 3 years commencing July 1, 1999, with
interest at 2% above the prime rate from the date of abandonment or
termination of the Definitive Agreement, or converted into common stock of
the Acquiree at $2.50 per share, at the option of Acquiree. Of the remaining
balance, $4,000,000 would be raised on or before Closing by July 1, 1999.
The furnishing of the $2,000,000 at Closing would be a condition of Closing.
If for any reason the final $2,000,000 is not raised by July 1, 1999,
Acquiree would have the option prior to July 10, 1999, to rescind the
Definitive Agreement. If the Definitive Agreement were rescinded after
Closing, the $2,000,000 previously furnished to Acquiree by Acquiror on or
before July 1, 1999, would be repayable in monthly installment payments over
a period of 3 years commencing January 1, 2000, with interest at 2% above the
prime rate from July 1, 1999. Any such loans shall be secured by all of the
assets of the Acquiree.
3. There are currently 4,176,250 shares of Acquiror Common Stock
outstanding. Prior to or at Closing the Acquiror intends to cancel outstanding
shares so that there would be no more than approximately 2,000,000 shares of
Acquiror Common Stock outstanding at Closing (excluding shares to be issued
pursuant to Paragraph 2 above), of which current management would own
approximately 1,000,000 and the public would own 1,000,000. Upon Closing,
Acquiror would issue up to 6,000,000 restricted shares to the shareholders of
Acquiree, and Acquiree would become a wholly-owned subsidiary of Acquiror.
After Closing (taking into account the maximum number of shares set aside for
the issuance of the shares referred to in Paragraph 2 above and the cancellation
of existing outstanding shares) the share ownership of Acquiror would be
approximately as follows:
Existing Shareholders of Acquiror 2,000,000 20%
Existing Shareholders of Acquiree 6,000,000 60%
Private Offering Shareholders 2,000,000 20%
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TOTAL 10,000,000 100%
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4. The current officers and directors of Acquiror would submit their
resignations as officers and directors effective on the Closing Date and the
new officers and directors would be designated by the Acquiree. The
appointment or election of such nominees would be subject to Rule 14f-1, or
Regulation 14A or 14C, as applicable, promulgated by the SEC under the
Securities Exchange Act of 1934 (the "Exchange Act").
5. Prior to Closing the Acquiror would seek shareholder approval to
change the name of the Acquiror to "Fat Pipe Inc.com," or such other name
reasonably proposed by the Acquiree.
6. Prior to Closing the Acquiror would authorize the granting of
options to acquire up to 2,000,000 shares of the Acquiror by persons
designated by the Acquiree to be granted only after July 11, 1999, or
following the completion of the private offering set forth in Paragraph 2
above, whichever shall first occur.
7. Each of the parties shall pay its own legal, accounting, and any
other out-of-pocket expenses reasonably incurred in connection with this
transaction. No party shall have any financial responsibility to the other
party for any failure to complete this proposed transaction.
8. Upon the signing of this Letter of Intent, Acquiror and Acquiree
will provide to each other full access to their books and records (excluding
proprietary information) and will furnish financial and operating data and
such other information with respect to their business and assets as may
reasonably be requested from time to time. If the proposed transaction is
not consummated, all parties shall keep confidential any information (unless
ascertainable from public filings or other public sources) obtained
concerning the other's operations, assets, and business.
9. Upon the execution by you and return to us of this Letter of
Intent, our counsel will prepare an Agreement and Plan of Reorganization (the
"Definitive Agreement") which would contain provisions in accord with this
Letter of Intent together with such further appropriate terms and conditions
as legal counsel and the parties may mutually determine. The Definitive
Agreement would be subject, in all respects, to the approval of the
respective Boards of Directors and Shareholders of Acquiror and Acquiree. It
is anticipated that the Definitive Agreement would be executed on or before
April 1, 1999.
10. Upon execution of the Definitive Agreement by all of the parties
thereto, current management of the Acquiror would place in escrow 1,000,000
shares owned by such persons, which shares would be held in escrow until July
11, 1999, or the abandonment of the Definitive Agreement, whichever would
first occur. Upon the Closing all shares of the Acquiree to be transferred
to the Acquiror, duly endorsed for transfer, and the shares of the Acquiror
to be issued to such shareholders would be held in escrow until July 11,
1999, or the rescission of the Definitive Agreement, whichever would first
occur. Notwithstanding the foregoing, if the funding set forth in Paragraph 2
above shall be completed in full prior to July 1, 1999, all shares held in
escrow shall be immediately released.
11. It is anticipated that this Letter of Intent, if executed by you,
would expire and be superceded by the Definitive Agreement. It is also
anticipated that if the Closing of this transaction is not completed on or
before July 1, 1999, the Definitive Agreement, if executed, would terminate
and the contemplated transactions would be deemed abandoned.
12. Upon the execution by you and return to us of this Letter of
Intent, Acquiror and Acquiree would take all necessary steps to call meetings
of their respective shareholders, or otherwise obtain shareholder approval,
on or before July 1, 1999.
13. The Acquiree would be required to provide financial statements in
accordance with the requirements of Form 8-K promulgated by the SEC on or
before May 1,1999. The Acquiree would be required to provide additional
financial statements prior to Closing to meet the requirements of Regulation
14A or 14C, as applicable.
14. The Acquiror would be required prior to Closing to continue to file
on a timely basis all periodic reports with the SEC under the Exchange Act.
15. In connection with the dissemination of a proxy or information
statement by Acquiror, Acquiree would be required to cooperate in providing
and explaining certain corporate information with respect to the transaction
contemplated herein, including: (a) a complete description of its business;
(b) background information for the proposed new directors and officers; (c)
a list of names, addresses, and number of shares, warrants, and/or stock
options owned as to each shareholder of Acquiree; and (d) such other
information as shall be reasonably requested by counsel for Acquiror.
16. At Closing, Acquiror would be required to be in good standing as a
corporation under the laws of State of Florida, have filed all appropriate
state and federal tax returns, and paid the taxes appropriate thereto, and
not have total liabilities in excess of $3,000. Similarly, Acquiree would be
required to be in good standing as a corporation under the laws of the State
of Utah, and have filed all appropriate state and federal tax returns, and
paid the taxes appropriate thereto.
17. After Closing, Acquiror and Acquiree would reasonably assist the
SEC counsel who is responsible for the preparation of any required SEC
filings.
18. No party hereto shall release any information regarding the
transaction to the public or the media without prior review and consent of
the other party hereto, except that the Acquiror is permitted to make such
filings with the SEC as counsel for the Acquiror shall deem necessary to meet
the filing requirements of the Exchange Act. Immediately upon execution of
this Letter of Intent, the Acquiree and the Acquiror, together with
respective counsel, shall draft a press release describing this Letter of
Intent.
19. The parties hereto hereby agree to conduct their business in
accordance with the ordinary, usual and normal course of business heretofore
conducted by the companies. Thus, there may be no material adverse changes
in the business of any of the companies from the date hereof through the
Closing of this transaction.
20. This Letter of Intent may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21. By execution of this Letter of Intent, both of the parties
represent and warrant that the parties whose signatures appear below were
duly authorized by the respective Boards of Directors for each company to
execute and deliver this Letter of Intent.
22. The parties agree that from the date of this Letter of Intent until
the termination of this Letter of Intent or the termination of the Definitive
Agreement, if executed, neither party shall negotiate or enter into a letter
of intent or agreement with another person to consummate a transaction
similar to the one set forth in this Letter of Intent.
23. It is understood that the terms set forth in this Letter of Intent
may not constitute all of the major terms which would be included in the
Definitive Agreement, that the terms set forth herein are subject to further
discussion and negotiation, and that while this Letter of Intent summarizes
the various understandings
which were reached between the parties, this letter is not intended to create
or constitute a legally binding obligation between parties, except for the
provisions of Paragraphs 7, 8, 18, and 22.
If the foregoing accurately reflects our discussions, please execute and
return to the undersigned at least one fully executed copy of this Letter of
Intent. This Letter of Intent shall remain open for a period of five
business days from the date hereof. If this letter is not executed and
returned to Acquiror within such period, this Letter of Intent shall
automatically expire.
ACQUIROR: Caldera Corporation
By: /s/ Radd C. Berrett
Radd C. Berrett, President
ACCEPTED AND AGREED TO THIS 16th DAY OF MARCH 1999.
ACQUIREE: Ragula Systems, Inc.
By: /s/ Ragula Bhaskar
Ragula Bhaskar, President