AGREEMENT AND PLAN OF
MERGER
a Utah corporation,
CASTILLO, INC.,
a Delaware corporation,
TECHNISCAN ACQUISITION,
INC.,
a Utah corporation,
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2.4 Legal Effects of the Merger
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2.5 Articles of Incorporation and Bylaws of the
Surviving Entity
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2.6 Directors and Officers of the Surviving
Entity
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Article III MANNER OF CONVERTING
SECURITIES
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3.1 Conversion of Shares in the
Merger
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3.2 Surrender and Exchange of TechniScan
Securities
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3.3 Transfer Books; No Further Ownership Rights
in TechniScan Common Stock
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3.4 No Fractional Shares for Parent Common
Stock
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Article IV REPRESENTATIONS AND WARRANTIES
OF TECHNISCAN
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4.1 Organization and Standing
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4.8 Absence of Certain Changes or
Events
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4.10 Intellectual Property
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4.11 Title to Properties and Assets;
Liens
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4.12 Compliance with Laws
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4.14 Governmental Consents
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4.17 Tax Returns and Payments
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4.19 Employee Benefit Plans
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4.20 Obligations of Management
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4.21 Obligations to Related Parties
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4.24 Customers and Suppliers
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4.25 Products; Product Warranties; Product
Liability
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4.26 Absence of Certain Commercial
Practices
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Article V REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
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5.1 Organization and Standing
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5.4 Authorized Securities
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Page No.
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5.7 SEC Reports; Financial Statements
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5.10 Governmental Consents
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5.13 Tax Returns and Payments
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5.14 Employee Benefit Plans
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5.15 Obligations to Related Parties
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5.17 No Assets; No Liabilities
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5.18 Operations of Merger Sub
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Article VI ADDITIONAL
AGREEMENTS
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6.1 Tax-Free Reorganization
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6.2 Transaction Form 8-K; Other
Filings
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6.7 Intentionally Left Blank
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6.8 Post-Closing Restructuring
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6.9 TechniScan Shareholder Approval
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6.10 Notice of Developments
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Article VII INDEMNIFICATION
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7.1 Survival; Timing of Claims
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7.6 Right to Indemnification Not Affected by
Knowledge or Waiver
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Article VIII MISCELLANEOUS
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8.1 Successors and Assigns
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8.5 Enforceability; Severability
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8.8 No Third Party Beneficiaries
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8.11 No Strict Construction
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8.14 Arm’s Length Negotiations
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ii
AGREEMENT AND PLAN OF
MERGER
THIS AGREEMENT
AND PLAN OF MERGER (this “ Agreement ”),
dated as of October 9, 2009 (the “ Execution Date
”), is entered into by and among TECHNISCAN, INC., a Utah
corporation (“ TechniScan ”), CASTILLO, INC., a
Delaware corporation (“ Parent ”), TECHNISCAN
ACQUISITION, INC., a Utah corporation, which is a wholly owned
Subsidiary of Parent (“ Merger Sub ”) and EMILIA
OCHOA, an individual (“ Parent Shareholder
”).
WHEREAS ,
Parent is the sole shareholder of Merger Sub;
WHEREAS ,
the Parent, as the sole shareholder of Merger Sub, and the boards
of directors of each of Merger Sub and TechniScan (each a “
Board ”) have, pursuant to the Laws of their
respective states of organization, declared that this Agreement is
advisable, fair and in the best interests of their respective
shareholders, and have approved this Agreement and the consummation
of the transactions contemplated hereby, including the merger of
Merger Sub with and into TechniScan in exchange for shares of
Parent Common Stock (the “ Merger ”);
and
WHEREAS ,
the parties to this Agreement intend that the Merger will qualify
as a transaction described in Section 368 of the Internal
Revenue Code of 1986, as amended (the “ Code ”),
and the parties have agreed not to take actions that would cause
the Merger not to so qualify.
NOW,
THEREFORE , in consideration of the covenants, promises and
representations set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
expressly and mutually acknowledged, and intending to be legally
bound hereby, the parties hereto agree as follows:
Unless the context
otherwise requires, the terms defined in this Article I shall
have the meanings herein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any
of the terms herein defined.
1.1
Definitions . As used herein, the following terms shall have
the following meanings:
“
Acquired Entity ” means any of TechniScan or its
Subsidiaries and “ Acquired Entities ” means
TechniScan and its Subsidiaries, collectively.
“ Current
SEC Reports ” means the following SEC Reports of Parent:
Annual Report on Form 10-K for the fiscal year ended
December 31, 2008; Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 2009; and Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 2009.
“
Dissenter’s Act ” means
Sections 16-10a-1301 - 1331 of the Utah Revised Business
Corporation Act.
“
Employee Benefit Plans ” means all “employee
benefit plans” (as defined in Section 3(3) of ERISA) and all
other employee benefit plans, policies, agreements or arrangements,
including any bonus or other incentive compensation, stock
purchase, equity or equity-based compensation, deferred
compensation, change in control, termination, severance, sick
leave, vacation, loans, perquisites, salary continuation, health,
disability, life insurance and educational assistance plans,
policies, agreements or arrangements for the benefit of any current
or former employees, officers, directors or managers of a Person.
For the avoidance of doubt, “Employee Benefit Plans” do
not include employee agreements.
1
“
Environmental Law ” means any Law of any Governmental
Authority in effect as of the Execution Date relating to pollution
or protection of the environment, including Laws related to
emissions, discharges, releases, or threatened releases of
Hazardous Substances.
“
ERISA ” means the Employee Retirement Income Security
Act of 1974, as amended.
“
Exchange Act ” means the Securities Exchange Act of
1934, as amended.
“
GAAP ” means accounting principles generally accepted
in the United States of America, as in effect from time to
time.
“
Governmental Authority ” means any foreign, federal,
national, state or local judicial, legislative, executive or
regulatory body, authority or instrumentality.
“
Hazardous Substances ” means any substance, waste,
contaminant, pollutant or material defined or regulated as toxic or
as a pollutant, contaminant or waste, or words of similar meaning
including petroleum or petroleum products, under any Environmental
Law.
“
Immediate Family ” with respect to a specified natural
Person, means such Person’s spouse, parents and children,
including adoptive relationships and relationships through
marriage.
“
Indebtedness ” of any Person means, without
duplication (a) all indebtedness for borrowed money;
(b) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business consistent
with past practices); (c) all reimbursement or payment
obligations with respect to letters of credit, surety bonds and
other similar instruments; (d) all obligations evidenced by
notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case
with respect to any property or assets acquired with the proceeds
of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are
limited to repossession or sale of such property); (f) all
monetary obligations under any leasing or similar arrangement
which, in connection with GAAP, consistently applied for the
periods covered thereby, is classified as a capital lease;
(g) all indebtedness referred to in clauses (a) through
(f) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness; and (h) all
guaranties in respect of indebtedness or obligations of others of
the kinds referred to in clauses (a) through
(g) above.
“
Insolvent ” means, with respect to any Person:
(a) the present fair saleable value of such Person’s
assets is less than the amount required to pay such Person’s
total liabilities as they come due; (b) such Person is unable
to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and
matured; (c) such Person intends to incur or believes that it
will incur debts that would be beyond its ability to pay as such
debts mature; or (d) such Person has unreasonably small
capital with which to conduct its business as such business is now
conducted and is proposed to be conducted.
“
Intellectual Property ” means all trademarks and
trademark rights, trade names and trade name rights, service marks
and service mark rights, service names and service name rights,
patents and patent rights, patent term extensions, supplementary
protection certificates, market or data exclusivities, brand names,
trade dress, product designs, product packaging, business and
product names, logos, slogans, rights of publicity, trade secrets,
inventions, formulae, industrial models, processes, designs,
specifications, data, technology,
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methodologies,
computer programs (including all source codes), any other
confidential and proprietary right or information, whether or not
subject to statutory registration, and all related technical
information, manufacturing, engineering and technical drawings,
know-how and all pending applications for and registrations of
patents, trademarks, service marks and copyrights, and the right to
sue for past infringement, if any, in connection with any of the
foregoing, and all documents, disks and other media on which any of
the foregoing is stored.
“
Knowledge, ” with respect to: (a) TechniScan
and/or the Acquired Entities, means the actual and imputed
knowledge of David Robinson; and (b) Parent, means the actual
and imputed knowledge of Emilia Ochoa; provided , that for
purposes hereof, “imputed knowledge” means, with
respect to any individual, the knowledge that an individual holding
a similar office or position as such individual would reasonably be
expected to have after a reasonable inquiry.
“ Law
” means any federal, state or local law, statute, rule,
regulation, judgment, decree, injunction, order, ordinance, code,
regulation, arbitration award or other legally enforceable
requirement of or by any Governmental Authority.
“
Lien ” means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including, without
limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof and including any lien
or charge arising by Law.
“
Material Adverse Effect ” means a material adverse
effect on the operations, condition (financial or other), assets,
liabilities, earnings, prospects or business of the Person affected
or the ability of any Person to timely consummate the transactions
contemplated hereby; provided , however , that none
of the following shall be deemed to constitute, and none of the
following shall be taken into account in determining whether there
has been or would be, a “Material Adverse Effect” on or
with respect to the Person affected: (a) any adverse change or
effect that is demonstrated to be primarily caused by conditions
affecting the United States economy generally; (b) any adverse
change, event or effect that is demonstrated to be primarily caused
by the announcement or pendency of the Merger or of the
transactions contemplated hereby; or (c) the taking of any
action contemplated by this Agreement and other agreements
contemplated hereby. All references in this Agreement to a
“Material Adverse Effect on TechniScan” shall mean a
Material Adverse Effect on TechniScan and its Subsidiaries, taken
as a whole and a “Material Adverse Effect on Parent”
shall mean a Material Adverse Effect on Parent and Merger Sub,
taken as a whole.
“
Organizational Documents ” means the certificate of
incorporation or articles of incorporation, as amended and/or
restated, bylaws, as amended and/or restated and/or other
organizational or governing documents of a Person, as the case may
be, as each may be amended from time to time.
“
OTCBB ” means the over-the-counter bulletin board
market maintained by The Nasdaq Stock Market, Inc.
“ Parent
Common Stock ” means the common stock of Parent, par
value $.001 per share.
“
Person ” means all natural persons, corporations,
business trusts, associations, unincorporated organizations,
limited liability companies, partnerships and other entities and
Governmental Authorities or any department or agency
thereof.
“
Proceeding ” means an action, claim, suit,
investigation or proceeding (including, without limitation, a
partial proceeding, such as a deposition) by or before any
Governmental Authority or arbitrator.
“ SEC
” means the U.S. Securities and Exchange
Commission.
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“
Securities Act ” means the Securities Act of 1933, as
amended.
“
Subsidiary ” means any corporation, association,
business entity, partnership, limited liability company or other
entity of which a Person, either alone or together with one or more
other Subsidiaries: (a) directly or indirectly owns or
controls securities or other interests representing more than fifty
(50%) of the voting power of such entity; or (b) is entitled,
by contract or otherwise, to elect, appoint or designate managers
or directors constituting a majority of the managers or members of
such entity’s board of directors or other governing
body.
“ Tax
” or “ Taxes ” means all taxes of any
kind, and fees or other assessments in the nature of taxes, imposed
by any Governmental Authority, and any and all interest, penalties
and additions relating thereto. “Tax” or
“Taxes” includes, without limitation, all add-on
minimum, alternative minimum, capital stock, currency, customs,
documentary, disability, employee, employer, environmental,
estimated, excise, export, FICA, franchise, FUTA, gross receipts,
income, import, natural resources, license, occupation, payroll,
personal property, premium, real property, registration, sales,
severance, social security, stamp, transfer, unemployment, use,
value added, windfall profit and withholding taxes and duties.
“Tax” or “Taxes” also includes any
transferee or secondary liability for Taxes and any liability
pursuant to an agreement or otherwise, including liability arising
as a result of being or ceasing to be a member of any affiliated
group, or being included or required to be included in any Tax
Return relating thereto.
“ Tax
Return ” means any tax return, filing or information
statement required to be filed in connection with or with respect
to any Taxes.
“
TechniScan Common Stock ” means the Common Stock of
TechniScan, par value $.001 per share.
“
Transaction Expenses ” means all out-of-pocket fees
and expenses (including legal and accounting fees and expenses)
with respect to this Agreement and the transactions contemplated
hereby, including without limitation all fees and expenses relating
to the preparation and filing of the Transaction Form
8-K.
“ Utah
Act ” means the Utah Revised Business Corporation
Act.
1.2 Additional
Terms . Each of the following additional terms is defined in
the Section set forth opposite such term:
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Term
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Section
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Preamble
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Section 2.3
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Section 4.7(b)
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Section 4.7(b)
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Section 2.2
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Section 2.2
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Recitals
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Section 7.2(a)
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Section 6.3
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Section 2.3
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Section 2.3
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Section 3.1(a)
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Preamble
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Recitals
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Section 5.4
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Preamble
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Preamble
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4
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Term
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Section
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Section 7.2(b)
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Section 5.15
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Preamble
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Section 4.11
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Section 4.25
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Section 4.21
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Preamble
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TechniScan
Dissenting Shares
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Section 3.5
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TechniScan
Financial Statements
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Section 4.7
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TechniScan
Indemnified Party
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Section 7.2(a)
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TechniScan
Intellectual Property
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Section 4.10(a)
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TechniScan
Material Agreement
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Section 4.9(a)
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Section 5.6
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Section 2.1
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Section 6.2
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2.1 Merger
. On the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, in accordance with the provisions
of the Utah Act, Merger Sub shall be merged with and into
TechniScan. TechniScan shall continue as the surviving entity (the
“ Surviving Entity ”) and the separate existence
of Merger Sub shall cease.
2.2 The
Closing . The closing of the Merger and the other transactions
contemplated by this Agreement (the “ Closing ”)
shall take place at the offices of Greenberg Traurig, P.A., in Boca
Raton, Florida on October 9, 2009, subject to the satisfaction
or waiver of all conditions to the obligations of the parties to
consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective parties will take
at the Closing itself, but subject to the fulfillment or waiver of
those conditions) or such other date as the parties may mutually
determine (the “ Closing Date ”).
2.3 Effective
Time . Prior to the Closing, Parent, Merger Sub and TechniScan
shall prepare, and, on the Closing Date, TechniScan shall file with
the Department of Commerce, Division of Corporations and Commercial
Code of the State of Utah (the “ Division ”),
Articles of Merger (the “ Articles of Merger ”),
and/or such other appropriate documents executed in accordance with
the applicable provisions of the Utah Act and shall make all other
filings or recordings required under the Utah Act to effect the
Merger. The Merger shall become effective at such time as the
Articles of Merger are filed with the Division on the Closing Date,
or such other time and/or date specified in the Articles of Merger
(the “ Effective Time. ”)
2.4 Legal
Effects of the Merger . At the Effective Time, the effect of
the Merger shall be as provided in this Agreement and the
applicable provisions of the Utah Act. Without limiting the
generality of the foregoing, and subject thereto, at the Effective
Time, all of the assets, properties, rights, privileges, powers and
franchises of TechniScan and Merger Sub shall vest in the Surviving
Entity.
2.5 Articles of
Incorporation and Bylaws of the Surviving Entity .
(a)
Articles of Incorporation . As of the Effective Time, by
virtue of the Merger and without any action on the part of Parent,
Merger Sub or TechniScan, the Articles of Incorporation of Merger
Sub as in effect immediately prior to the Effective Time shall be
the Articles of Incorporation of the Surviving Entity until
thereafter amended in accordance with the Utah Act.
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(b)
Bylaws . As of the Effective Time, by virtue of the Merger
and without any action on the part of Parent, Merger Sub or
TechniScan, the Bylaws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving
Entity until thereafter amended in accordance with the Utah Act and
the Articles of Incorporation of the Surviving Entity.
2.6 Directors
and Officers of the Surviving Entity . The initial director and
officer of the Surviving Entity shall be David Robinson, until his
successor is duly elected or appointed and qualified.
ARTICLE III
MANNER OF CONVERTING SECURITIES
3.1 Conversion
of Shares in the Merger . Subject to the provisions of this
Article III , at and as of the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub
or TechniScan, or any of the shareholders of any of the foregoing,
the outstanding securities of TechniScan and Merger Sub shall be
converted as follows:
(a)
TechniScan Common Stock . Each share of TechniScan Common
Stock issued and outstanding immediately prior to the Effective
Time (other than TechniScan Dissenting Shares) shall, at the
Effective Time, by virtue of the Merger and without any action on
the part of Parent, TechniScan or Merger Sub, cease to be
outstanding and shall be converted into and exchanged for the right
to receive one (1) validly issued, fully paid and
nonassessable share of Parent Common Stock (the “ Exchange
Ratio ”).
(b)
TechniScan Options . Each option to purchase shares of
TechniScan Common Stock that is outstanding immediately prior to
the Effective Time shall, at the Effective Time, by virtue of the
Merger and without any action on the part of Parent, TechniScan or
Merger Sub, cease to be outstanding and shall be converted into and
exchanged for an option to purchase an equivalent number of shares
of Parent Common Stock pursuant to the terms of a stock option plan
which shall be adopted by the Board of Parent to be effective as of
the Effective Time.
(c)
Merger Sub Shares . Each share of common stock, par value
$.001 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall, at the Effective Time, by virtue
of the Merger and without any action on the part of Parent,
TechniScan or Merger Sub, be converted into and represent the right
to receive one (1) validly issued, fully paid and
nonassessable share of the common stock, par value $.001 per share,
of the Surviving Entity.
(d)
Parent Common Stock . Each share of Parent Common Stock
owned by TechniScan shall, at the Effective Time, be canceled and
retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
3.2 Surrender
and Exchange of TechniScan Securities . As soon as
practicable

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