Exhibit 2
AGREEMENT AND PLAN OF MERGER
OF
HSEMergerCo, Inc.
(a Delaware corporation)
WITH AND INTO
HoustonStreet Exchange, Inc.
(a Delaware corporation)
AGREEMENT AND PLAN OF MERGER (hereinafter the "Agreement"),
entered into as of this 22nd day of April, 2004, by and between
HSEMergerCo, Inc., a Delaware corporation (hereinafter
"MergerCo"), and HoustonStreet Exchange, Inc., a Delaware
corporation, (hereinafter "HSE") (MergerCo and HSE are
hereinafter sometimes collectively referred to as the
"Corporations").
W I T N E S S E T H:
WHEREAS, MergerCo is a corporation duly organized and
existing under the laws of the State of Delaware, having been
duly incorporated on April 19, 2004, and having a principal place
of business located in Portsmouth, New Hampshire, with authorized
capital stock consisting of ten thousand (10,000) shares of
Common Stock having a par value of $.01 per share; and
WHEREAS, HSE is a corporation duly organized and existing
under the laws of the State of Delaware, having been duly
incorporated on April 27, 1999, and having a principal place of
business located in Portsmouth, New Hampshire, with authorized
capital stock of Two Hundred Fifty-Eight Million Three Hundred
Sixty-Three Thousand Seven Hundred Fifty-One (258,363,751),
consisting of One Hundred Seventy Million (170,000,000) shares of
Common Stock having a par value of $.01 per share, and Eighty-
Eight Million Three Hundred Sixty-Three Thousand Seven Hundred
Fifty-One (88,363,751) shares of Preferred Stock having a par
value of $.01 per share, of which Three Million Seven Hundred
Sixty Thousand Three (3,760,003) shares are designated as Series
A Convertible Preferred Stock ("Series A Preferred Stock"), Two
Million Three Hundred Thirty-Three Thousand Three Hundred Thirty-
Four (2,333,334) shares are designated as Series B Convertible
Preferred Stock ("Series B Preferred Stock"), and Eighty-Two
Million Two Hundred Seventy Thousand Four Hundred Fourteen
(82,270,414) shares are designated as Series C Convertible
Preferred Stock ("Series C Preferred Stock"); and
WHEREAS, the Board of Directors of HSE believes it is
advisable and in the best interest of the Corporation and their
Shareholders that the Corporations be merged to form a single
Delaware corporation; and
WHEREAS, the Boards of Directors of the Corporations believe
it is advisable and to the advantage of the Corporations and
their Shareholders that the Corporations be merged to form a
single Delaware corporation; and
WHEREAS, the Boards of Directors of the Corporations have
authorized and approved such merger and the execution of this
Agreement in connection therewith, pursuant to the authority
granted by, and in accordance with, the provisions of Sections
251 and 253 of the Delaware General Corporation Law ("GCL"); and
WHEREAS, the laws of the State of Delaware, under which the
Corporations are organized, permit such a merger; and
WHEREAS, for United States Federal income tax purposes, it
is intended that the Merger (as defined in Section 1) shall
qualify as a reorganization under the provisions of Section 368
of the Internal Revenue Code of 1986, as amended (the "Code") and
this Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368 of the Code.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained in this Agreement, and for the purpose
of stating the method and terms and conditions of the merger of
the Corporations, and such other details and provisions as the
parties deem desirable, the parties hereto agree as follows:
1. Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 8 hereof)
MergerCo shall be merged with and into HSE (hereinafter the
"Merger"), the separate existence of MergerCo shall cease, and
HSE (hereinafter sometimes referred to as the "Surviving
Corporation") shall continue to exist by virtue of and be
governed by the laws of the State of Delaware. In all respects,
the Merger shall have the effect provided for in Section 259 of
the Delaware GCL.
It is the intention of the parties to this Agreement that
the Merger be accomplished pursuant to and in accordance with the
requirements of Section 368(a)(1)(A) of the Code.
2. Name of Surviving Corporation. The name of the
Surviving Corporation shall be HoustonStreet Exchange, Inc.
3. Principal Place of Business. The principal place of
business of the Surviving Corporation shall be ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
4. Certificate of Incorporation. The Certificate of
Incorporation of HSE in effect immediately prior to the
Effective Date of the Merger, amended as follows, shall be the
Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by
applicable law:
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ARTICLE FIRST will be amended at the Effective Time to
change the name of the corporation to HoustonStreet, Inc.
ARTICLE FOURTH will be amended at the Effective Time to
reduce the authorized capital to One Million (1,000,000) shares,
consisting entirely of Common Stock, $0.01 par value per share,
and to delete Part B, Part C, and Part D in their entirety.
5. Bylaws. The Bylaws of HSE in effect immediately prior
to the Effective Date of the Merger shall be the Bylaws of the
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
6. Directors and Officers of the Surviving Corporation.
The Directors and officers of HSE at the Effective Time shall be
the Directors and officers of the Surviving Corporation until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
7. Conversion of Shares. The basis and manner of
converting shares of MergerCo and HSE at the time of the Merger
shall be as follows:
A. At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares
of common stock of MergerCo, each share of issued and
outstanding stock of MergerCo, shall be converted into one
hundred (100) shares of common stock of the Surviving
Company (the aggregate number of shares to be issued to each
holder will be rounded to the nearest share). The remaining
shares of authorized but unissued shares of stock of
MergerCo shall, at the Effective Time, be cancelled and
shall cease to exist.
B. At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any Series C
Incentive Plan Rights granted by HSE pursuant to the 2002
Employee and Director Retention and Incentive Plan, each
Series C Incentive Plan Right granted and outstanding,
whether or not vested, shall be converted into 0.001888612
shares of common stock of the Surviving Company (the
aggregate number of shares to be issued to each holder will
be rounded to the nearest share). The 2002 Employee and
Director Retention and Incentive Plan shall, at the
Effective Time, be terminated and shall cease to exist.
C. At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares
of Series A Preferred Stock of HSE except as expressly
provided herein, each share of issued and outstanding Series
A Preferred Stock of HSE, shall be converted into a right to
receive, at the election of each holder of Series A
Preferred Stock, in accordance with the terms and conditions
hereof, either (i) 0.000637168 share of common stock of the
Surviving Company ("Series A Stock Consideration") (the
aggregate number of shares to be issued to each holder will
be rounded to the nearest share) or (ii) cash in an amount
equal to one dollar ($1.00) divided by the number of shares
of
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Series A Preferred Stock held by such shareholder ("Series A
Cash Consideration"), such that if such shareholder elects
to receive Series A Cash Consideration the total amount
payable to such shareholder shall be $1.00 in exchange for
all shares of Series A Preferred Stock held by such
shareholder. The remaining shares of authorized but
unissued shares of Series A Preferred Stock of HSE shall
cease to exist at the Effective Time.
D. At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares
of Series B Preferred Stock of HSE except as expressly
provided herein, each share of issued and outstanding Series
B Preferred Stock of HSE, shall be converted into a right to
receive, at the elections of the holders of Series B
Preferred Stock, in accordance with the terms and conditions
hereof, either (i) 0.000637168 share of common stock of the
Surviving Company ("Series B Stock Consideration") (the
aggregate number of shares to be issued to each holder will
be rounded to the nearest share) or (ii) cash in an amount
equal to one dollar ($1.00) divided by the number of shares
of Series B Preferred Stock held by such shareholder
("Series B Cash Consideration"), such that if such
shareholder elects to receive Series B Cash Consideration
the total amount payable to such shareholder shall be $1.00
in exchange for all shares of Series B Preferred Stock held
by such shareholder. The remaining shares of authorized but
unissued shares of Series B Preferred Stock of HSE shall
cease to exist at the Effective Time.
E. At the Effective Time, by virtue of the Merger and
without any action on the part of the Surviving Corporation
or the holder of any shares of common stock of HSE, each
share of common stock of HSE issued and outstanding
immediately prior to the Effective Time, shall be cancelled.
F. At the Effective Time, by virtue of the Merger and
without any action on the part of the Surviving Corporation
or the holder of any warrant, option or other right to
purchase any class of capital stock of HSE, each such
warrant, option and right granted and unexercised
immediately prior to the Effective Time, shall be cancelled.
8. Elections of Merger Consideration. Subject to Section
7, each person who is a record holder of either Series A
Preferred Stock or Series B Preferred Stock as of the Effective
Time will be entitled, with respect to all of his or its shares
of such class of stock, to make an unconditional election (a
Series A Cash Consideration or Series A Stock Consideration
election or a Series B Cash Consideration or Series B Stock
Consideration election, as the case may be, collectively "Merger
Consideration") on or prior to the Election Date (as defined in
Section 8.D below).
A. The Form of Election shall be used by each record
holder of Series A Preferred Stock who wishes to elect to
receive the Series A Cash Consideration or the Series A
Stock Consideration. An election, if properly and timely
made, shall be effective with respect to all such
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shareholder's shares of Series A Preferred Stock. If a
holder of Series A Preferred Stock fails to make a proper
election on or prior to the Election Date, then such
shareholder shall be deemed to have elected to receive
Series A Stock Consideration in exchange for such
shareholder's Series A Preferred Stock.
B. The Form of Election shall be used by each record
holder of Series B Preferred Stock who wishes to elect to
receive the Series B Cash Consideration or the Series B
Stock Consideration. An election, if properly and timely
made, shall be effective with respect to all such
shareholder's shares of Series B Preferred Stock. If a
holder of Series B Preferred Stock fails to make a proper
election on or prior to the Election Date, then such
shareholder shall be deemed to have elected to receive
Series B Stock Consideration in exchange for such
shareholder's Series B Preferred Stock.
C. The Surviving Corporation shall prepare and mail a
form of election (the "Form of Election") to each holder of
Series A Preferred Stock and/or Series B Preferred Stock as
of the Effective Date.
D. The Surviving Corporation will use reasonable
efforts to make the Form of Election available to each
holder of Series A Preferred Stock and/or Series B Preferred
Stock as of the Effective Date within ten (10) days of the
Effective Date. Any such holder's election to receive
Series A Cash Consideration, Series A Stock Consideration,
Series B Cash Consideration or Series B Stock Consideration,
as the case may be, shall have been properly made only if
the President of the Surviving Corporation shall have
received at the Surviving Corporation's principal place of
business, by 5:00 p.m. EDT, on the thirtieth (30th) day
following the Effective Date (or if the thirtieth (30th) day
following the Effective Date is not a Business Day, then the
next succeeding Business Day) (the "Election Date") a Form
of Election properly completed and signed and accompanied by
certificates for the shares of the Series A Preferred Stock
and/or Series B Preferred Stock, as applicable. "Business
Day" shall mean any day other than a Saturday, Sunday or
other day on which banks in Portsmouth, New Hampshire are
required by law to close.
E. The determination of the President of the
Surviving Corporation shall be binding as to whether or not
elections to receive a type of Merger Consideration have
been property made pursuant to this Agreement, and as to the
time when elections were received by him. The President of
the Surviving Corporation shall also make all computations
contemplated by Section 7 and any such computation shall be
conclusive and binding on the holders of shares of Series A
Preferred Stock and/or Series B Preferred Stock.
9. Exchange Procedure.
A. As soon as reasonably practicable following the
Effective Time, and subject to proper elections having been
made, the President of the Surviving Company shall mail to
each holder of an outstanding certificate or certificates
which prior thereto represented shares of
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Series A Preferred Stock or Series B Preferred Stock that
did not submit such certificate or certificates to the
President of the Surviving Corporation with such holder's
Form of Election (i) a letter of transmittal (which shall
specify, as shall the Form of Election, that delivery shall
be effected, and risk of loss and title to such certificate
shall pass, only upon delivery of such certificates to the
President of the Surviving Corporation), and (ii)
instructions for use in effecting the surrender of the
certificates for the Merger Consideration. The holder of
such certificates shall after the Effective Time, subject to
proper surrender to the President of the Surviving
Corporation of such certificates for cancellation, be
entitled only to a certificate or certificates representing
the number of shares of common stock of the Surviving
Corporation, if any, and/or the amount of cash, if any, into
which the aggregate number of shares of Series A Preferred
Stock or Series B Preferred Stock, as applicable, previously
represented by such certificate or certificates surrendered
shall have been converted pursuant to this Agreement. The
Exchange Agent shall accept such certificates upon
compliance with such reasonable terms and conditions as the
President of the Surviving Corporation may impose to effect
an orderly exchange thereof. After the Effective Date,
there shall be no further transfer on the records of HSE or
its transfer agent of certificates representing shares of
HSE Series A Preferred Stock or Series B Preferred Stock and
if such certificates are presented to the Surviving
Corporation for transfer, they shall be cancelled against
delivery of certificates for Surviving Corporation common
stock or cash as hereinabove provided. If any certificate
for such Surviving Corporation common stock is to be issued
in, or if cash is to be remitted to, a name other than that
in which the certificate for Series A Preferred Stock or
Series B Preferred Stock surrendered for exchange is
registered, it shall be a condition of such exchange that
the certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer. Until surrendered as
contemplated by this Section 9, each certificate for shares
of Series A Preferred Stock or Series B Preferred Stock
shall be deemed at any time after the Effective Time of the
Merger to represent only the right to receive upon such
surrender the Merger Consideration. No interest will be
paid or will accrue on any cash payable as Merger
Consideration.
B. No dividends or other distributions with respect
to Surviving Corporation common stock with a record date
after the Effective Time shall be paid to the holder of any
unsurrendered certificate for shares of Series A Preferred
Stock or Series B Preferred Stock with respect to the shares
of Surviving Corporation common stock represented thereby
until the surrender of such certificate in accordance with
this Agreement. Subject to the effect of applicable laws,
following surrender of any such certificate, there shall be
paid to the holder of the certificate representing shares of
Surviving Corporation common stock issued in exchange
therefor, without interest, (i) at the time of such
surrender the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid
with respect to such shares of Surviving Corporation common
stock, and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after
the Effective Time but prior to such surrender and a payment
date subsequent to such surrender payable with respect to
such shares of Surviving Corporation common stock.
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C. All shares of Surviving Corporation common stock
issued and cash paid upon the surrender for exchange of
certificates representing shares of Series A Preferred Stock
or Series B Preferred Stock in accordance with the terms of
this Agreement shall be deemed to have been issued (and
paid) in full satisfaction of all rights pertaining to the
shares of Series A Preferred Stock or Series B Preferred
Stock theretofore represented by such certificates.
10. Effective Date and Time of Merger. The Merger shall
become effective on such date ("Effective Date") and at such time
as the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware, or at such other time as is
permissible in accordance with the Delaware GCL and as MergerCo
and HSE shall agree should be specified in the Certificate of
Merger (the time the Merger becomes effective being the
"Effective Time").
11. Abandonment; Amendment. This Agreement may be
abandoned or amended (subject to certain limitations under law)
by appropriate mutual action of the Boards of Directors of the
Companies at any time prior to the Effective Date.
[signature page to follow]
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IN WITNESS WHEREOF, MergerCo and HSE have caused this
Agreement to be signed by their duly authorized officers, and
their seals to be affixed, as of the day and year first above
written.
Witness: HSEMergerCo, Inc.
(a Delaware corporation)
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., President
Witness: HoustonStreet Exchange, Inc.
(a Delaware corporation)
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., President
STATE OF NEW HAMPSHIRE
COUNTY OF ROCKINGHAM
The foregoing instrument was acknowledged before me this
22nd day of April, 2004, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., President of
HSEMergerCo, Inc., a Delaware corporation, on behalf of the
corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Notary Public/Justice of the Peace
My commission expires: June 6, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
The foregoing instrument was acknowledged before me this
22nd day of April, 2004, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., President of
HoustonStreet Exchange, Inc., a Delaware corporation, on behalf
of the corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Notary Public/Justice of the Peace
My commission expires: June 6, 2006
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