The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 1B to the financial statements,
the Company has not yet generated material revenues from its operations to fund its activities and is therefore dependent upon
external sources for financing its operations. As of December 31, 2018, the Company has incurred accumulated deficit of $2,094,812
and negative operating cash flows. These factor among others, as discussed in Note 1B to the financial statements raise substantial
doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are
also described in Note 1B to the financial statements. The financial statements do not include any adjustments that might result
from the outcome of’ these uncertainties.
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based
on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides
a reasonable basis for our opinion.
30 A’arba’a
st. A’arba’a towers, Tel Aviv 6473926 | tel. +972-3-9335474 | fax. +972-3-9335466 | www.halperin-cpa.co.il
SAMSARA LUGGAGE,
INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’
DEFICIT
(U.S. dollars, except share and per share
data)
|
|
Number
of Shares
|
|
|
Amount
|
|
|
Additional
paid-in capital
|
|
|
Proceeds
on account of shares
|
|
|
Services
receivable
|
|
|
Accumulated
deficit
|
|
|
Total
stockholders’ deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHANGES
DURING THE PERIOD FROM OCTOBER 23, 2017 TO DECEMBER 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares for cash
|
|
|
4,000,000
|
|
|
|
400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
400
|
|
Issuance of shares for
services (Note 6B1)
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
1,999,900
|
|
|
|
-
|
|
|
|
(2,000,000
|
)
|
|
|
-
|
|
|
|
-
|
|
Amortization of services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
216,438
|
|
|
|
-
|
|
|
|
216,438
|
|
Proceeds on account of
shares not yet issued
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,115
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,115
|
|
Loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(490,351
|
)
|
|
|
(490,351
|
)
|
BALANCE
AT DECEMBER 31, 2017
|
|
|
5,000,000
|
|
|
|
500
|
|
|
|
1,999,900
|
|
|
|
32,115
|
|
|
|
(1,783,562
|
)
|
|
|
(490,351
|
)
|
|
|
(241,398
|
)
|
CHANGES
DURING THE YEAR ENDED DECEMBER 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for
cash net of issuance expenses
|
|
|
156,913
|
|
|
|
16
|
|
|
|
179,417
|
|
|
|
(32,115
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
147,318
|
|
Issuance of shares and
warrants for services (Note 4B and 6B3)
|
|
|
495,500
|
|
|
|
50
|
|
|
|
534,150
|
|
|
|
-
|
|
|
|
(200,000
|
)
|
|
|
-
|
|
|
|
334,200
|
|
Amortization of services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,075,000
|
|
|
|
-
|
|
|
|
1,075,000
|
|
Comprehensive loss for
the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,604,461
|
)
|
|
|
(1,604,461
|
)
|
BALANCE
AT DECEMBER 31, 2018
|
|
|
5,652,413
|
|
|
|
566
|
|
|
|
2,713,467
|
|
|
|
-
|
|
|
|
(908,562
|
)
|
|
|
(2,094,812
|
)
|
|
|
(289,341
|
)
|
The accompanying notes are an integral
part of the financial statements.
SAMSARA LUGGAGE,
INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S.
dollars)
|
|
Year ended
|
|
|
Period from October 23 (*) till
|
|
|
|
December 31
|
|
|
December 31
|
|
|
|
2018
|
|
|
2017
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Loss for the period
|
|
|
(1,604,461
|
)
|
|
|
(490,351
|
)
|
Adjustments required to reconcile net loss for the
period to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Amortization of services receivable
|
|
|
1,075,000
|
|
|
|
216,438
|
|
Interest on convertible note and short-term loan
|
|
|
128,773
|
|
|
|
-
|
|
Decrease (increase) in other current assets
|
|
|
19,200
|
|
|
|
(69,200
|
)
|
Increase in inventory
|
|
|
(182,730
|
)
|
|
|
-
|
|
Increase in deferred revenues
|
|
|
92,242
|
|
|
|
368,126
|
|
Increase in other accounts liabilities
|
|
|
101,700
|
|
|
|
-
|
|
Net cash provided by (used in)
operating activities
|
|
|
(370,276
|
)
|
|
|
25,013
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Long-term loan received
|
|
|
-
|
|
|
|
40,000
|
|
Convertible note from related parties
|
|
|
54,000
|
|
|
|
-
|
|
Short-term loan received
|
|
|
200,000
|
|
|
|
-
|
|
Proceeds from stock issued for cash, net
|
|
|
147,318
|
|
|
|
400
|
|
Proceeds on account of shares
|
|
|
-
|
|
|
|
32,115
|
|
Net cash provided by financing
activities
|
|
|
401,318
|
|
|
|
72,515
|
|
|
|
|
|
|
|
|
|
|
INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
31,042
|
|
|
|
97,528
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR
|
|
|
97,528
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS
AT END OF YEAR
|
|
|
128,570
|
|
|
|
97,528
|
|
|
|
|
|
|
|
|
|
|
Non cash transactions:
|
|
|
|
|
|
|
|
|
Issued shares and warrants against services
(Note 4B)
|
|
|
334,200
|
|
|
|
-
|
|
(*) See Note 1 below.
The accompanying notes are an integral
part of the financial statements.
SAMSARA LUGGAGE,
INC.
NOTES TO FINANCIAL STATEMENTS
NOTE
1 – GENERAL
Samsara Luggage Inc. (“Company”)
was incorporated on October 23, 2017 in Delaware. The Company designs, manufacturers, and sells high quality luggage products
to meet the evolving needs of frequent travelers. The Company also seeks to present new technologies within the aluminum luggage
industry, including an aluminum “smart” suitcase.
|
B.
|
Going concern uncertainty
|
The Company has incurred significant
operating losses since its inception. The Company’s net losses were $1,604,461 and $490,351 for the years ended December 31,
2018, and for the period from from October 23, 2017 till December 31, 2017, respectively. As of December 31, 2018, the
Company had an accumulated deficit of $2,094,812. The Company expects to continue to incur losses for the foreseeable future and
anticipates these losses will increase substantially as the Company continues to develop and commercialize its products.
The Company is addressing its liquidity
needs by seeking additional funding from public and/or private sources. There are no assurances, however, that the Company will
be able to obtain an adequate level of financial resources that are required for the Company’s short and long-term requirements,
or at all these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustments to reflect the possible future effects on recoverability and classification of assets
or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
The Company face a number of risks,
including uncertainties regarding finalization of the development process, demand and market acceptance of the Company’s
products, the effects of technological changes, competition and the development of products by competitors. Additionally, other
risk factors also exist, such as the ability to manage growth and the effect of planned expansion of operations on the Company’s
future results. In addition, the Company expects to continue incurring significant operating costs and losses in connection
with the development of its products and increased marketing efforts. As mentioned above, the Company has not yet generated
significant revenues from its operations to fund its activities, and therefore the continuance of its activities as a going concern
depends on the receipt of additional funding from its current stockholders and investors or from third parties.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES
The financial statements were prepared
in accordance with accounting principles generally accepted in the United States of America (US GAAP).
|
A.
|
Use of estimates in the preparation
of financial statements
|
The preparation of financial statements
in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported
amounts of expenses during the reporting periods. Actual results could differ from those estimates. As applicable to these financial
statements, the most significant estimates and assumptions relate to the going concern assumptions.
The functional currency of the
Company is the US dollar (“US$”), which is the currency of the primary economic environment in which the operations
of the Company are conducted.
|
C.
|
Cash and cash equivalents
|
Cash equivalents are short-term
highly liquid investments which include short term bank deposits (up to three months from date of deposit), that are not restricted
as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired.
The Group accounts for income taxes
in accordance with ASC Topic 740, “Income Taxes”. Accordingly, deferred income taxes are determined utilizing the
asset and liability method based on the estimated future tax effects of differences between the financial accounting and the tax
bases of assets and liabilities under the applicable tax law. Deferred tax balances are computed using the enacted tax rates expected
to be in effect when these differences reverse. Valuation allowances in respect of deferred tax assets are provided for, if necessary,
to reduce deferred tax assets to amounts more likely than not to be realized.
The Group accounts for uncertain
tax positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial statement recognition,
measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements. According to ASC
Topic 740-10, tax positions must meet a more-likely-than-not recognition threshold. The Company’s accounting policy is to
classify interest and penalties relating to uncertain tax positions under income taxes, however the Company did not recognize
such items in its fiscal 2018 and 2017 financial statements and did not recognize any liability with respect to an unrecognized
tax position in its balance sheets.
SAMSARA LUGGAGE,
INC.
NOTES TO FINANCIAL
STATEMENTS
NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES (continue)
Revenues are recognized when delivery
has occurred and there is persuasive evidence of an agreement, the fee is fixed or determinable and collection of the related
receivables is reasonably assured and no further obligations exist.
Revenues from sales of products
are recognized when title and risk and rewards for the products are transferred to the customer.
|
F.
|
Research and development expenses
|
Research and development expenses
are charged to operations as incurred.
Inventories are valued at the lower
of cost or net realizable value. Cost of raw and packaging materials, purchased products, manufactured finished products and products
in process are determined on the average costs basis.
The Company regularly reviews its
inventories for impairment and reserves are established when necessary.
|
H.
|
Basic and diluted loss per
ordinary share
|
Basic loss per ordinary share is
computed by dividing the loss for the period applicable to ordinary shareholders, by the weighted average number of shares of
common stock outstanding during the period. Securities that may participate in dividends with the shares of common stock (such
as the convertible preferred) are considered in the computation of basic loss per share under the two class method. However, in
periods of net loss, only the convertible preferred shares are considered, since such shares have a contractual obligation to
share in the losses of the Company.
In computing diluted loss per share,
basic loss per share is adjusted to reflect the potential dilution that could occur upon the exercise of potential shares. Accordingly,
in periods of net loss, no potential shares are considered.
|
I.
|
Share-based compensation
|
Share-based payments awarded to
consultants (non-employees) are accounted for in accordance with ASC Topic 505-50, “Equity-Based Payments to Non-Employees”.
However, when the Company grants to non-employees a fully vested, nonforfeitable equity instrument, such grants are measured based
on the fair value of the award at the date of grant. When the fully vested, nonforfeitable equity instruments are granted for
services to be received in future periods, the measured cost is recognized as an increase to stockholders’ equity at the
measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable”.
Such amount is subsequently amortized to the statement of operations over the term of the services as an operating expense, as
if the Company has paid periodic payments of cash for the services received from such service provider.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES (continue)
|
J.
|
Fair Value Measurements
|
The Company measures and discloses
fair value in accordance with the Financial Accounting Standards Board (“FASB”), Accounting Standards Codification
820, Fair Value Measurements and Disclosures (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework
and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements.
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement
that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis
for considering such assumptions there exists a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring
fair value as follows:
Level 1 –
unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability
to access as of the measurement date
Level 2 –
pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly
observable through corroboration with observable market data.
Level 3 –
pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity
for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant
management judgment or estimation. Level 3 inputs are considered as the lowest priority within the fair value hierarchy.
This hierarchy requires the Company
to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.
The fair value of cash and cash
equivalents is based on its demand value, which is equal to its carrying value. Additionally, the carrying value of all other
short term monetary assets and liabilities are estimated to be equal to their fair value due to the short-term nature of these
instruments.
|
K.
|
Other comprehensive income
(loss)
|
Other comprehensive income (loss),
presented in stockholders’ equity (deficit), includes, in addition to loss, gains and losses from the translation of the
results of foreign subsidiary to the reporting currency.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES (continue)
|
L.
|
Recently
issued accounting standards
|
In June 2016, the FASB issued a
new standard, ASU 2016-13 – “Financial Instruments—Credit Losses”, requiring measurement and recognition
of expected credit losses on certain types of financial instruments. The standard also modifies the impairment model for available-for-sale
debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since
their origination. This standard is effective for the Company after December 15, 2019. The standard does not have a material impact
on the Company’s financial statements.
In February 2016, the FASB issued
a new lease accounting standard, ASU 2016-02 - “Leases”, requiring the recognition of lease assets and liabilities
on the balance sheet. This standard is effective starting January 1, 2019. The adoption of ASU 2016-02 is not expected to have
a material impact on the Company’s financial statements.
In May 2014, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts
with Customers,” and modified the standard thereafter. The objective of the ASU is to establish a single comprehensive model
for entities to use in accounting for revenue arising from contracts with customers that will supersede most current revenue recognition
guidance. The basis of the guidance is that an entity should recognize revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods and services. The Company adopted this standard as of January 1, 2018 using the modified retrospective method. See
Note 2.H. to the consolidated financial statements for additional details.
On January 5, 2016, the FASB issued
ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requiring changes
to recognition and measurement of certain financial assets and liabilities. The standard primarily affects equity investments,
financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments.
The Company adopted ASU 2016-01 in the first quarter of 2018 and the impact on its consolidated financial statements was not material.
In November 2016, the FASB issued
ASU 2016-18 “Restricted Cash” to provide guidance on the presentation of restricted cash in the statement of cash
flows. Currently, the statement of cash flows explained the change in cash and cash equivalents for the period. The ASU requires
that the statement of cash flows explain the change in cash, cash equivalents and restricted cash for the period. The ASU is effective
for the Company in the first quarter of 2018, with early adoption permitted. The Company did not have a material effect on the
statements of cash flows as the Company’s restricted cash is not material.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars)
NOTE 2 – SIGNIFICANT ACCOUNTING
POLICIES (continue)
|
L.
|
Recently
issued accounting standards (continue)
|
In June 2018, the FASB issued ASU
No. 2018-07 “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.”
These amendments expand the scope of Topic 718, Compensation – Stock Compensation (which currently only includes share-based
payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting
for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity
– Equity-Based Payments to Non-Employees. The Company plans to adopt this standard in the first quarter of 2019. ASU 2018-07
is not expected to have an impact on Company’s consolidated financial statements.
In August 2018, the FASB issued
ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements,” which will improve the effectiveness
of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain
disclosure requirements and is effective for the Company beginning on January 1, 2020. The Company does not expect that this standard
will have a material effect on the Company’s consolidated financial statements.
NOTE
3 – OTHER CURRENT ASSTES
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
-
|
|
|
|
15,000
|
|
Other (Note 4B)
|
|
|
7,790
|
|
|
|
-
|
|
Advances to accounts payable
|
|
|
50,000
|
|
|
|
54,200
|
|
|
|
|
57,790
|
|
|
|
69,200
|
|
NOTE
4 – CONVERTIBLE NOTE AND SHORT TERM-LOAN
|
A.
|
On August 20, 2018 the Company entered into a Convertible Promissory
Note (hereunder the “Note”) with a related party for the finance of the ongoing
working capital of the Company in the amount of $54,000. The Company promised to pay
to related party in lawful money of the United States of America the principal sum of
Fifty Four Thousand Dollars ($54,000), or such lesser amount as shall equal the outstanding
principal amount hereof, together with interest from the date of this Note on the unpaid
principal balance at a rate equal to 12% per annum, with such interest payable in the
form of Shares of Common Stock of the Company, par value $0.001 (the “Shares”),
at a price of Seventy Cents ($0.70) per Share, computed on the basis of the actual number
of days elapsed and a year of 365 days.
|
The note was payable by August
20, 2019. In September 2019, the maturity of the loan was extended till December 31, 2019.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE
4 – CONVERTIBLE NOTE AND SHORT TERM-LOAN (continue)
|
B.
|
On August 22, 2018 the Company
(through a related company) entered into a Secured Loan and Service Agreement with a
an affiliated entity of Moshe Zuk (hereunder “Zuk”) for the finance of the
ongoing working capital of the Company, according to which Zuk granted the Company a
loan in the amount of $200,000. The loan bears a monthly interest at a rate of 2% paid
quarterly and calculated daily. The loan was guaranteed by the Company and by one of
its shareholders.
|
In addition
Zuk granted the Company a credit line of up to $300,000 per year. The credit line shall bear a monthly interest of 1.5% of the
utilized credit line. As of the date of this financial statements, the Company has not utilized such line of credit.
In addition,
the Company issued Zuk 395,500 shares of common stock of the Company representing 7% of the issued and outstanding shares of the
Company on a fully diluted basis and warrants to purchase 169,500 shares of common stock of the Company representing 3% of the
issued and outstanding shares of the Company on a fully diluted basis for an excersie price of $50,000. The Company estimated
the value of the fair value of such shares and warrants at a total of $334,200 of which $119,030 were recorded for interest expenses.
The balance
of Zuk loan, net of unamortized portion of the Zuk shares and options amounted to $7,790 and was presented in Other Current Assets.
NOTE
5 – LONG TERM LOAN
On August 13,
2017 the Company entered into an agreement (hereunder the “Note”) with YARN Investments Ltd (hereunder “YARN”)
according to which YARN provided the Company with a loan investment of $40,000. The loan does not bear interest and its repayment
is conditional upon raising at least $200,000. In addition, YARN had agreed to provide additional $60,000 to the Company in a
way of payments to promotional consultants. As of the date of this financial statement, the additional loan was not utilized.
NOTE
6 – STOCKHOLDERS’ EQUITY
|
A.
|
Description of
the rights attached to the Shares in the Company:
|
Each share of common
stock entitles the holder to one vote, either in person or by proxy, at meetings of stockholders. The holders are not permitted
to vote their shares cumulatively. Accordingly, the stockholders of the Company’s common stock who hold, in the aggregate,
more than fifty percent of the total voting rights can elect all of the directors and, in such event, the holders of the remaining
minority shares will not be able to elect any of such directors. The vote of the holders of a majority of the issued and outstanding
shares of common stock entitled to vote thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except
as otherwise provided by law.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE
6 – STOCHOLDERS’ EQUITY
|
1.
|
On October 23, 2017,
the Company issued 1,000,000 shares of common stock of the Company to YARN Investments
Ltd (hereunder “YARN”) under its August 13, 2017 two year consulting agreement
with YARN. Per the agreement, YARN will assist the Company with raising capital via equity
crowdfunding campaign that started in 2017 and continued in 2018, in addition to other
funding sources by YARN. The Company has estimated the fair value of such shares at a
total of $2,000,000 and recorded an expense of $1,000,000 and $216,438, in the year ended
December 31, 2018 and in the period from October 23, 2017 till December 31, 2017, respectively.
As the equity instruments issued are fully vested and nonforfeitable, the fair value
of the grant was recognized as an increase to stockholders’ equity at the measurement
date with an offsetting amount as a deduction from stockholders’ equity within
the caption “Services receivable” (see Note 2I). Such amount is subsequently
amortized to the statement of operations over the term of the services as an operating
expense.
|
|
2.
|
During the years
2017-2018, the Company issued 77,501 shares of common stock of the Company to 122 crowdfunding
participants for total consideration of $140,433.
|
|
3.
|
On August 23, 2018,
the Company issued 100,000 shares of common stock of the Company to DeMarcus Cousins
(hereunder “DeMarcus”) under its march 15, 2018 agreement with Demarcus.
Per the agreement, Demarcus will assist the Company with advertising, promotion, and
sale of Samsara Products. The total consideration for the above services is 100,000 shares
and $ 40,000. The Company has estimated the fair value of such shares at a total of $200,000
and recorded an expense of $75,000 in the year ended December 31, 2018. As the equity
instruments issued are fully vested and nonforfeitable, the fair value of the grant was
recognized as an increase to stockholders’ equity at the measurement date with
an offsetting amount as a deduction from stockholders’ equity within the caption
“Services receivable” (see Note 2I) Such amount is subsequently amortized
to the statement of operations over the term of the services as an operating expense.
|
|
4.
|
On
August 23, 2018, the Company issued 79,412 shares of common stock of the Company to Gil
Melikovsky for total consideration of $54,000.
|
|
5.
|
See also Note 4B
above.
|
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars)
NOTE
7 – GENERAL AND ADMINISTRATIVE EXPENSES
|
|
Year ended
December 31
|
|
|
Period from October 23 (*)
till
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Accounting and legal
|
|
|
27,469
|
|
|
|
21,534
|
|
Share based compensation (Note 6B1)
|
|
|
1,000,000
|
|
|
|
216,438
|
|
Management fees (See Note 10)
|
|
|
100,000
|
|
|
|
-
|
|
Other expenses
|
|
|
34,278
|
|
|
|
18,200
|
|
|
|
|
1,161,747
|
|
|
|
256,172
|
|
(*) See
note 1 above.
NOTE
8 – INCOME TAX
US resident companies are taxed on their
worldwide income for corporate income tax purposes at a statutory rate of 21%. No further taxes are payable on this profit unless
that profit is distributed. If certain conditions are met, income derived from foreign subsidiaries is tax exempt in the US under
applicable tax treaties to avoid double taxation.
The following is reconciliation between the
theoretical tax on pre-tax income, at the tax rate applicable to the Company (federal tax rate) and the tax expense reported in
the financial statements:
|
|
Year ended
December 31
|
|
|
Period from October 23 (*)
till
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Pretax loss
|
|
|
1,604,461
|
|
|
|
490,351
|
|
Federal tax rate
|
|
|
21
|
%
|
|
|
21
|
%
|
Income tax computed at the ordinary tax rate
|
|
|
336,934
|
|
|
|
102,974
|
|
Share-based compensation
|
|
|
(250,746
|
)
|
|
|
(45,452
|
)
|
Losses and timing differences in respect of which no deferred taxes were
generated
|
|
|
(86,188
|
)
|
|
|
(57,522
|
)
|
|
|
|
-
|
|
|
|
-
|
|
(*) See note 1 above.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(U.S. dollars, except share and per share
data)
NOTE
8 – INCOME TAX (continue)
|
A.
|
Deferred taxes result primarily from
temporary differences in the recognition of certain revenue and expense items for financial
and income tax reporting purposes. Significant components of the Company’s future
tax assets are as follows:
|
|
|
Year ended
December 31
|
|
|
Period from October 23 (*)
till
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
Composition of deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non capital loss carry forwards
|
|
|
86,181
|
|
|
|
57,522
|
|
Valuation allowance
|
|
|
(86,181
|
)
|
|
|
(57,522
|
)
|
|
|
|
-
|
|
|
|
-
|
|
(*) See note 1 above.
NOTE
9 – LOSS PER SHARE
Basic loss per share is computed
by dividing net loss by the weighted average number of shares outstanding during the year. The weighted average number of shares
of common stock used in computing basic and diluted loss per share of common stock for the years ended December 31, 2018 and for
the period from October 23, 2017 till December 31, 2017, are as follows:
|
|
Year ended
December 31
|
|
|
Period from October 23 (**)
till
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
Number of shares
|
|
|
|
|
|
|
|
|
Weighted average number
of shares of common stock outstanding attributable to ordinary shareholders
|
|
|
5,244,563
|
|
|
|
5,000,000
|
|
Total weighted average number of
shares of common stock related to outstanding options, excluded from the calculations of diluted loss per share
(*)
|
|
|
169,500
|
|
|
|
-
|
|
(*) The effect of the inclusion of option
and convertible loans in 2018 and 2017 is anti-dilutive.
(**) See note 1 above.
SAMSARA LUGGAGE,
INC.
NOTES TO FINANCIAL
STATEMENTS
(U.S. dollars)
NOTE
10 – RELATED PARTIES
|
A.
|
Transactions and balances with
related parties
|
|
|
Year ended December 31
|
|
|
|
2018
|
|
|
2017
|
|
General and administrative expenses:
|
|
|
|
|
|
|
|
|
Management fees
|
|
|
100,000
|
|
|
|
-
|
|
|
|
|
100,000
|
|
|
|
-
|
|
B. Balances with related parties and officers:
|
|
|
|
|
|
|
|
|
Other accounts liabilities
|
|
|
88,500
|
|
|
|
-
|
|
Convertible note
|
|
|
54,000
|
|
|
|
-
|
|
NOTE
11 – SUBSEQUENT EVENTS
|
A.
|
Convertible Loan Agreement
|
On March 24, 2019, the Company
entered into a Convertible Loan Agreement (the “Agreement”) with Moshe Zuk. (the “Lender”), pursuant to
which the Lender agreed to provide the Company with a loan in the amount of fifty thousand dollars ($50,000). The Company undertook
to repay the loan principal plus annual interest of 12% within one year. The Lender may convert the loan plus interest into shares
of the Company’s common stock at a price per share based on (a) a discount of twenty percent (20%) to the valuation of the
Company at the Company’s first financing round, or (b) a one million dollar ($1,000,000) valuation of the Company, the lower
valuation of the two. The Agreement is conditioned on the Company consummating a merger with a public company, and the funds are
expected to be used to finance the Company’s working capital needs until the merger. The loan will become immediately repayable
in the event the Lender reasonably determines that the Company is unable to consummate a merger with a public company.
On May 10, 2019, Darkstar Ventures,
Inc. (“Darkstar”) and the Company have entered into an Agreement and Plan of Merger (the “Merger Agreement”)
pursuant to which the Company will merge with and into Darkstar, and the current shareholders of the Company will be issued new
shares of the Darkstar representing approximately 80% of the issued and outstanding shares of the Darkstar’s common stock
following the completion of the merger with Darkstar, and the name of Darkstar will be changed to Samsara Luggage, Inc. (the “Merger”).
The closing of the merger transaction
is subject, among other standard closing conditions, to the following conditions:
|
(1)
|
The completion of all missing information,
exhibits, and schedules to the merger agreement to the satisfaction of Samsara.
|
|
(2)
|
An increase in the authorized share capital
of the Company.
|
|
(3)
|
The spin-off and sale of the Company’s
wholly owned Israeli subsidiary, Bengio Urban Renewals Ltd., to Avraham Bengio, the current
CEO of the Company.
|
|
(4)
|
The Company having raised at least $500,000
in financing.
|
|
(5)
|
A Registration Statement on Form S-4 for the
Company shares to be issued to the shareholders of Samsara having been declared effective
by the Securities and Exchange Commission.
|
|
(6)
|
All required consents and approvals for the
merger transaction having been obtained.
|
ANNEX A
MERGER AGREEMENT AND PLAN OF MERGER
THIS MERGER AGREEMENT AND PLAN OF MERGER
(the “Agreement”) is made and entered into this 10th day of May 2019, by and among:
(A) Darkstar Ventures,
Inc., a publicly-traded Nevada corporation with an address at 7 Eliezri
Street, Jerusalem, Israel (“DarkStar”);
(B) Avraham Bengio,
an individual with an address at 7 Eliezri Street, Jerusalem, Israel
(“Bengio”); and
(C) Samsara Luggage, Inc., a Delaware
corporation with an address at One University Plaza, Suite 505, Hackensack,
NewJersey 07601 (“Samsara”);
Darkstar, Bengio, and Samsara are hereinafter
collectively referred to as the “Parties.”
INTRODUCTION
A.
Darkstar is a Nevada corporation of which at least 27,200,000 shares of its common stock, $0.0001 par value per share (the “DarkStar
Common Stock”) are publicly-traded and listed on the OTC Markets OTC Pink quotation service (“OTCPink”)
under the symbol “DAVC”.
B.
Samsara is private Delaware corporation.
C.
Each of the board of directors of Darkstar and Samsara deems it advisable, fair, and in the best interest of such corporation
and its respective stockholders that Samsara merge with and into Darkstar, with Samsara becoming extinct and Darkstar the surviving
entity, upon the terms and subject to the conditions hereinafter set forth (the “Merger”).
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto intending to be bound
hereby, it is agreed as follows:
1.
The Merger
1.1
Upon the terms and subject to the conditions set forth in this Agreement, on the Effective Time (as defined in Section 3.1) below,
Samsara shall be merged with and into Darkstar, and the separate existence of Samsara shall cease. Darkstar shall be the surviving
corporation in the Merger (the “Surviving Corporation”) and shall continue to be a corporation formed under the laws
of the State of Nevada.
1.2
The Merger shall have the effects specified in the General Corporation Law of the State of Delaware, as amended (the “DGGL”),
and in the Nevada Revised Statutes, as amended (the “NRS”), and the Surviving Corporation shall succeed, without other
transfer, to all of the assets and property (whether real, personal or mixed), rights, privileges, franchises, immunities and
powers of Samsara, and shall assume and be subject to all of the liabilities, obligations and restrictions of every kind and description
of Samsara, including, without limitation, all outstanding indebtedness of Samsara.
1.3
If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise
in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of Samsara or
to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement,
the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf
of Samsara or otherwise, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf
of each of Samsara or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise
to carry out this Agreement.
1.4 The Articles of Incorporation of the
Surviving Corporation shall be the Articles of Incorporation of Darkstar as in effect immediately before the Effective Time, without
change unless and until amended in accordance with applicable law.
1.5 The Bylaws of the Surviving Corporation
shall be the Bylaws of Darkstar as in effect immediately before the Effective Time, without change unless and until amended in
accordance with applicable law.
1.6 At the Effective Time, the directors
and officers of Samsara in office immediately before the Effective Time shall become the directors and officers of the Surviving
Corporation, with each of such directors and officers to hold office subject to the applicable provisions of the Articles of Incorporation
and Bylaws of the Surviving Corporation and the NRS until his or her successor is duly elected or appointed and qualified.
2. Effect of Merger on Capital Stock;
Conversion of Shares
2.1 At the Effective Time, as a result
of the Merger, each share of Samsara’s common stock, $0.001 per value per share (“Samsara Stock”), issued and
outstanding immediately before the Effective Time (but excluding Dissenting Shares, as defined in Section 2.4 below), shall ,
by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become 2,589,400,000 validly
issued, fully paid, and non-assessable shares of the Surviving Corporation’s common stock, $0.0001 par value per share (“Surviving
Corporation Stock”), with all fractional shares to be rounded up, and all shares of Samsara Stock shall be cancelled and
retired and shall cease to exist.
2.2 The total number of shares of Surviving
Corporation Stock to be issued to each holder of shares of Samsara Stock (each a “Samsara Stockholder”) shall be as
set forth opposite such Samsara Stockholder’s name in Exhibit A attached hereto.
2.3 Following the Effective Time, the Samsara
Stockholders immediately prior to the Effective Time will hold approximately eighty percent (80%) of the issued and outstanding
shares of the Surviving Corporation Stock.
2.4 Notwithstanding anything in this Agreement
to the contrary, any shares of Samsara Stock that are issued and outstanding as of the Effective Time and that are held by a Samsara
Stockholder who has properly exercised his, her, or its appraisal rights under the DGCL (the “Dissenting Shares”)
shall not be converted into shares of the Surviving Corporation Stock unless and until the holder shall have failed to perfect,
or shall have effectively withdrawn or lost, his, her or its right to dissent from the Merger under the DGCL and to receive such
consideration as may be determined to be due with respect to such Dissenting Shares pursuant to and subject to the requirements
of the DGCL.
3. Effective Time.
3.1 As soon as practicable following the
satisfaction of the conditions set forth in Section 7 and Section 8 of this Agreement, Darkstar and Samsara shall cause Articles
of Merger to be executed and filed with the Office of the Secretary of State of Nevada (the “Nevada Articles of Merger”)
and a Certificate of Merger to be executed and filed with the Office of the Secretary of State of Delaware (the “Delaware
Certificate of Merger”). The Merger shall become effective upon the date and time specified in the Nevada Articles
of Merger and the Delaware Certificate of Merger (the “Effective Time”).
4. Representations and Warranties of
DarkStar and Bengio
DarkStar and Bengio hereby represent and
warrant to Samsara and the Samsara Stockholders as follows:
4.1 Corporate Organization. DarkStar
is a corporation duly organized, validly existing, and within seven (7) days of the signing of this Agreement will be in good
standing, under the laws of the State of Nevada, with the requisite corporate power and authority to carry on its business as
it is now being conducted, and to own, operate and lease its properties and assets. With respect to the filing of annual returns
and the payment of fees required under the laws of the jurisdiction of its incorporation, DarkStar is in compliance with all such
laws. DarkStar is not and has not been the subject of any voluntary or involuntary bankruptcy
proceeding. DarkStar is currently not in good standing and its status has been “revoked” due to Darkstar’s
failure to pay the required annual fees to, and file the required annual reports with, the Office of the Secretary of State of
Nevada.
4.2 Authorization. DarkStar has
all requisite power and authority to enter into, execute, deliver, and perform its obligations under this Agreement. This Agreement
has been duly and validly executed and delivered by DarkStar and is the valid and binding legal obligation of DarkStar enforceable
against DarkStar in accordance with its terms, subject to bankruptcy, moratorium, principles of equity and other limitations limiting
the rights of creditors generally. The execution and performance of this Agreement will not constitute a material breach or default
of any agreement, contract, charter, indenture, mortgage, license or other instrument or document to which DarkStar or Bengio
is party and will not violate any judgment, decree, order, writ, rule, statute, or regulation applicable to DarkStar or Bengio
or their respective properties.
4.3 Consents and Approvals. DarkStar
has received the requisite majority approval of DarkStar’s board of directors (the “Board”) to enter into this
Agreement, and shall prior to the Effective Time obtain the requisite majority approval of DarkStar’s shareholders (the
“Shareholders”) to enter into this Agreement. No other consent, approval, order or authorization of or from, or registration,
notification, declaration or filing with any individual or entity is required in connection with the execution, delivery or performance
of this Agreement by DarkStar or the consummation by DarkStar of the transactions contemplated herein.
4.4 Non-Contravention. Neither the
execution, delivery nor performance of this Agreement and each other transaction document, nor the consummation of the transactions
contemplated hereby or thereby will (a) violate, contravene or be in conflict with any provision of the certificate of incorporation,
articles of incorporation, charter, or by-laws of DarkStar, or (b) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein.
4.5 Capitalization. The authorized
share capital of DarkStar currently consists of 2,000,000,000 shares of Common Stock, par value $0.0001, of which 647,345,000
shares of Common Stock are outstanding as of the date of this Agreement, and 5,000,000 shares of Preferred Stock, par value $0.0001,
none of which are outstanding as of the date of this Agreement. No shares of DarkStar Common Stock are reserved for issuance pursuant
to any convertible securities, options or warrants. All issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and nonassessable and are without, and were not issued in violation of, preemptive rights, and have been issued
in accordance with all applicable laws, including, but not limited to, the Securities Act. There are 44 stockholders of record
of DarkStar.
4.6 Ownership of the Shares of the Surviving
Corporation Stock. Upon issuance of shares of the Surviving Corporation Stock to the Samsara Stockholders, the Samsara Stockholders
will own the shares of the Surviving Corporation Stock beneficially and of record, free and clear of any liens, claims, security
interests, or encumbrances (collectively, “Encumbrances”). There are no agreements (i) granting any pre-emptive right
with respect to the Surviving Corporation Stock to any person, (ii) restricting the right of DarkStar to issue the Surviving Corporation
Stock to the Samsara Stockholders, or (iii) restricting any other right of the Samsara Stockholders with respect to the Surviving
Corporation Stock. Upon issuance to the Samsara Stockholders of the shares of the Surviving Corporation Stock, the Samsara Stockholders
will acquire good, valid and marketable title to the shares of the Surviving Corporation Stock, free and clear of any Encumbrances.
4.7 Commission Filings; Financial Statements.
(a) Reports. DarkStar
is current in the filing of all forms or reports with the SEC, and has been a reporting company under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). All such reports and statements filed by DarkStar with the SEC
(collectively, “SEC Reports”) did not and do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstance
under which they were made, not misleading.
(b) Registration Statements. No
order suspending the effectiveness of any registration statement of the Company under the Securities Act or the Exchange Act of
1934, as amended, has been issued by the SEC and, to the Company’s knowledge, no proceedings for that purpose have been
initiated or threatened by the SEC;
(c) Bad Actors. DarkStar is
not and has not, and the past and present officers, directors and affiliates of DarkStar are not and have not, been the subject
of, nor does any officer or director of DarkStar have any reason to believe that DarkStar or any of its officers, directors or
affiliates will be the subject of, any civil or criminal proceeding or investigation by any federal or state agency alleging a
violation of securities laws and do not qualify as “Bad Actors”.
(d) Financial Statements. The
financial statements contained in the Company’s SEC Reports: (i) comply as to form in all material respects with the published
rules and regulations of the Commission applicable thereto; (ii) were prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered (except as may be indicated in the notes to such financial statements and, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC); and (iii) fairly present, in all material respects, the consolidated
financial position of Company and its consolidated subsidiaries as of the respective dates thereof and the consolidated results
of operations of Company and its consolidated subsidiaries for the periods covered thereby. All adjustments considered necessary
for a fair presentation of the financial statements have been included. The books of account and other financial records of DarkStar
are in all respects complete and correct in all material respects and are maintained in accordance with good business and accounting
practices.
4.8 FINRA Approval.
FINRA has approved DarkStar’s sponsoring broker-dealer/market maker’s Form 211 application to initiate quotation of
DarkStar’s securities pursuant to Rule 15c-211.
4.9 Absence of Undisclosed Liabilities.
DarkStar does not have any liabilities, indebtedness, obligations, or claims of any kind whatsoever (“Liabilities”),
other than the Liabilities detailed in Schedule 4.9 attached hereto, all of which Liabilities are fully reflected in the
balance sheet (the “Balance Sheet”) as at July 31, 2018 and as at January 31, 2019, and are included in DarkStar’s
Form 10-K for the year ended July 31, 2018 and its Form 10-Q for the quarter ended January 31, 2019, respectively, as filed with
the SEC. The Company has not incurred any liabilities, debts, or other obligations, whether fixed, contingent or otherwise, subsequent
to January 31, 2019 and up to the date of this Agreement other than in the ordinary course of business. The details of the Geveva
Roth Remark Holding issue are set forth in Schedule 4.9.
4.10 Discharge of Liabilities. Except
for the Liabilities set forth in Schedule 4.10 attached hereto, which liabilities shall be settled by Samsara as required
for purposes of Closing, as of immediately prior to the Effective Time DarkStar will have paid or discharged all of the Liabilities
of DarkStar such that DarkStar shall not have any outstanding Liabilities.
4.11 Assets. The assets of
Darkstar are detailed in Schedule 4.11 attached hereto, all of which assets are owned by DarkStar free and clear of any
liens, claims, security interests, or encumbrances.
4.12 Interested Party Transactions. No
officer, director, or shareholder of DarkStar, or any affiliate of any such person or entity, (an “Interested Party”)
has a beneficial interest in any contract or agreement to which DarkStar is a party. As of the Effective Time, DarkStar will not
have any contract or agreement with any Interested Party.
4.13 No Material Adverse Changes. Since
January 31, 2019, there have not been any material adverse changes in the financial, business, or regulatory position of DarkStar.
4.14 Taxes. Except as detailed in
Schedule 4.14 attached hereto, DarkStar has timely filed all material tax, governmental and/or related forms and reports
(or extensions thereof) due or required to be filed and has paid or made adequate provisions for all taxes or assessments which
have become due as of the Effective Time, and there are no deficiencies outstanding.
4.15 Litigation. There is no legal,
administrative, regulatory, arbitration, or other proceeding, suit, claim or action of any nature, or investigation, review, or
audit of any kind, or any judgment, decree, decision, injunction, writ, or order pending, noticed, scheduled, or, to the knowledge
of DarkStar and Bengio, threatened or contemplated by or against or involving DarkStar, including but not limited to any letter
asserting a claim of any nature whatsoever against DarkStar.
4.16 Compliance. DarkStar is and
has been in compliance in all respects with all laws and regulations applicable to DarkStar’s business and operations. DarkStar
is not in default (a) under its certificate of incorporation or by-laws, or (b) under any note, indenture, mortgage, lease,
agreement, contract, purchase order or other instrument, document or agreement to which DarkStar is a party or by which any of
its properties is bound or affected, or (c) with respect to any law, statute, ordinance, regulation, order, writ, injunction,
decree, or judgment of any court or any governmental department, commission, board, bureau, agency or instrumentality.
4.17 Books and Records. The books
of account, minute books, stock record books, and other material records of DarkStar are correct in all material respects and
have been maintained in accordance with reasonable business practices. The minute books of DarkStar contain accurate and complete
records of all formal meetings of, and corporate action taken by, the directors and officers of DarkStar. At the Effective Time,
all of those books and records will be in the possession of DarkStar and delivered to or upon the direction of the Samsara Stockholders.
4.18 Quotation. At least 27,200,000
shares of DarkStar’s Common Stock are quoted on the OTC Pink Marketplace, and except as detailed in Schedule 4.18
attached hereto, neither DarkStar nor Bengio has received any notice from FINRA, OTC Markets Group, or any other regulatory authority
that would lead them to believe that such quotation has been suspended or delisted or is subject to potential suspension or delisting.
4.19 Disclosure. DarkStar
has (and at the Effective Time will have) provided Samsara with all publicly available information regarding events, conditions
and facts materially affecting the business, financial conditions or results of operation of DarkStar. DarkStar has not now and
will not have, at the Effective Time, withheld disclosure of publicly available information regarding any such events, conditions,
and facts which it has knowledge of or has reasonable grounds to know may exist.
4.20 Full Disclosure. No representation
or warranty by DarkStar in this Agreement or in any document or schedule to be delivered by them pursuant hereto, and no written
statement, certificate or instrument furnished or to be furnished by DarkStar pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement contains or will contain any untrue statement of a material fact or omits or will omit
to state any fact necessary to make any statement herein or therein not materially misleading or necessary to complete and correct
presentation of all material aspects of the business of DarkStar.
5. Representations and Warranties of
Samsara.
Samsara hereby represent and warrant to
DarkStar, as follows:
5.1 Organization and Good Standing.
Samsara is a corporation duly organized, validly existing and in good standing under the laws of Delaware and has the requisite
corporate power and authority and all governmental licenses, authorizations, consents and approvals required to own, operate and
lease its properties and assets and to conduct its business as it is now being owned, operated, leased and conducted. Samsara
is duly qualified or licensed to do business as a corporation, and is in good standing as a corporation, in every jurisdiction
in which its ownership of property or the character of its business requires such qualification.
5.2 Authorization and Power. Samsara
has all power and authority to enter into this Agreement and to carry out the transactions contemplated herein. This Agreement
is the valid and binding legal obligation of Samsara enforceable against it in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization or similar laws that affect creditors’ rights generally.
5.3 Consents and Approvals. No consent
is required by any person or entity in connection with the execution, delivery and performance by Samsara, or the consummation
of the transactions contemplated herein, that will not have been obtained by the Effective Time.
5.4 Non-Contravention. Neither the
execution, delivery nor performance of this Agreement and each other transaction document nor the consummation of the transactions
contemplated hereby or thereby will (a) be in conflict with, or constitute a default, however defined (or an event which, with
the giving of due notice or lapse of time, or both, would constitute such a default), under any agreement to which Samsara is
a party; or (b) violate any law.
5.5 Samsara Capitalization. As of
the date of this Agreement, Samsara is authorized to issue Ten Million shares of Samsara Common Stock, $0.0001 par value per share,
of which 5,653,536 shares of Samsara Common Stock are issued and outstanding, and One Million shares of Samsara Preferred Stock,
$0.0001 par value per share, none of which are outstanding as of the date of this Agreement. One hundred percent (100%) of the
issued and outstanding shares of Samsara Stock are held as of the date of this Agreement by the Samsara Stockholders in the amount
of shares as set forth in Exhibit A attached hereto. All outstanding shares of Samsara stock are duly authorized, validly issued,
fully paid and non-assessable and have been issued in compliance with applicable laws. There are no declared or accrued but unpaid
dividends or distributions with respect to any shares of Company Stock. No shares of Samsara Common Stock are reserved for issuance
pursuant to any convertible securities, options or warrants. There are no first preemptive rights or agreements, arrangements
or understandings to issue preemptive rights with respect to the issuance or sale of capital stock or any other equity interest
of Samsara to which Samsara is a party or to which it is bound. There are no first refusal or shareholder rights of whatsoever
nature that conflict with, contradict or otherwise undermine the obligations, commitments and covenants of Samsara under this
Agreement and the transactions contemplated herein.
5.6 Subsidiaries. Samsara does not
have any subsidiaries. Samsara does not hold or own, directly or indirectly, any securities, equity interests, or rights in any
other corporation, partnership, joint venture or other person.
5.7 Intellectual Property. Samsara
has sufficient title and ownership, or has obtained the unrestricted right to use, free and clear of all liens, claims, restrictions,
third-party rights or royalties known to Samsara, in and to patents, trademarks, service marks, trade names, copyrights, moral
rights and other proprietary rights and processes, and applications, licenses and rights with respect to the foregoing, and trade
secrets, including know-how, inventions, designs, processes, works of authorship, computer programs and technical data and information
(collectively herein “Intellectual Property”) used in the conduct of its business as now conducted, without,
to the knowledge of Samsara, infringing upon or violating any rights of others.
5.8 Litigation. There is no legal,
administrative, arbitration, or other proceeding, suit, claim or action of any nature or investigation, review or audit of any
kind, or any judgment, decree, decision, injunction, writ or order pending, noticed, scheduled, or, to the knowledge of Samsara,
threatened or contemplated by or against or involving Samsara, its assets, properties or business, or which questions or challenges
the validity of this Agreement or any action taken or to be taken by the Parties hereto pursuant to the transactions contemplated
herein.
5.9 Liabilities. Samsara’s
liabilities as of March 31, 2019 are detailed in Schedule 5.9 attached hereto. Samsara has no other liabilities other than
liabilities incurred in the ordinary course of business subsequent to March 31, 2019 and expenses related to the Exchange Transaction.
6. Covenants of the Parties
6.1 Covenants of Darkstar
6.1.1 Conduct of Business. Except
as contemplated by this Agreement, during the period, if any, from the date of this Agreement to the Effective Time, DarkStar
will conduct its business and operations according to its ordinary and usual course of business consistent with past practices.
Without limiting the generality of the foregoing, prior to the Effective Time, without the prior written consent of Samsara, not
to be unreasonably delayed, DarkStar will not:
(a) amend its articles of incorporation
or bylaws;
(b) issue, sell, deliver or pledge or authorize
or propose the issuance, sale, delivery or pledge of shares of Common Stock or Preferred Stock of the Company;
(c) incur, assume, suffer or become subject
to, whether directly or by way of guarantee or otherwise, any additional liabilities other than in the ordinary and usual course
of business consistent with past practices (this section shall not apply to Bengio Urban Renewal);
(d) enter into other material agreements,
commitments or contracts (this section shall not apply to Bengio Urban Renewal); or
(e) agree in writing or otherwise to take
any of the foregoing actions or any action which would make any representation or warranty in this Agreement untrue or incorrect
in any material respect.
6.1.2 Good Standing. Within
seven (7) days of the signing of this Agreement, Darkstar will pay all of its outstanding fees and penalties to, and file all
required annual reports with, the Secretary of State of Nevada so as to reinstate Darkstar and restore Darkstar as a company in
good standing.
6.1.3 No Liabilities. Darkstar shall
ensure that except for the Liabilities set forth on Schedule 4.10, as of immediately prior to the Effective Time, DarkStar
will have paid or discharged all of the Liabilities of DarkStar such that DarkStar shall not have any outstanding Liabilities.
6.1.4 Full Access. Throughout the
period prior to the Effective Time, DarkStar will afford to Samsara reasonable access to the books and records of DarkStar in
order that Samsara may have full opportunity to make such investigations as they will desire to make of the affairs of DarkStar.
6.2 Covenants of Darkstar and Samsara
6.2.1 Completion of Information and
Documents. The parties will complete all missing information, exhibits, and schedules to this Agreement as soon as practicable
following signing.
6.2.2 Registration Statement on Form
S-4. The parties will file a registration statement on Form S-4 with regard to the Merger and the shares of the Surviving
Corporation to be issued to the Samsara Stockholders at the Effective Time.
6.2.3 Confidentiality. Each of the
Parties hereto agrees that it will not use, or permit the use of, any of the information relating to any other party hereto furnished
to him in connection with the transactions contemplated herein (“Information”) in a manner or for a purpose detrimental
to such other Party or otherwise than in connection with the transaction, and that they will not disclose, divulge, provide or
make accessible (collectively, “Disclose”), or permit the disclosure of, any of the Information to any person or entity,
other than their respective directors, officers, employees, investment advisors, accountants, counsel and other authorized representatives
and agents, except: (i) that DarkStar may file a Current Report on Form 8-K and other required filings with the Securities and
Exchange Commission; and (ii) as may be required by judicial or administrative process or, in the opinion of such Party’s
counsel, by other requirements of Law; provided, however, that prior to any Disclosure of any Information permitted hereunder,
such Party will first obtain the recipients’ undertaking to comply with the provisions of this Section with respect to such
information.
6.2.4 Concurrently with obtaining its approval
from its respective majority shareholders for this Agreement and the Merger, (a) Samsara shall notify each Samsara Stockholder
who is entitled to appraisal rights that the Merger has been approved by the Samsara Stockholders and that appraisal rights are
available, and Samsara shall include in such notice a copy of the relevant section of the DGCL; and (b) Darkstar shall notify
each holder of shares of Darkstar who is entitled to a right of dissent with respect to the Merger that the Merger has been approved
by the stockholders of Darkstar and that such stockholder is entitled to dissent and obtain payment of the fair value of his shares,
and Darkstar shall include in such notice a copy of the relevant sections of the NRS .
6.2.5 Filings; Consents; Removal of
Objections. Subject to the terms of this Agreement, each of the Parties shall take or cause to be taken all actions and do
or cause to be done all things necessary, proper or advisable under applicable laws to consummate and make effective, as soon
as reasonably practicable, the transactions contemplated hereby, including without limitation obtaining all consents of any person
or entity, whether private or governmental, required in connection with the consummation of the transactions contemplated herein.
In furtherance, and not in limitation of the foregoing, it is the intent of the Parties to consummate the transaction at the earliest
practicable time, and they respectively agree to exert commercially reasonable efforts to that end, including without limitation:
(i) the removal or satisfaction, if possible, of any objections to the validity or legality of the transactions contemplated herein;
and (ii) the satisfaction of the conditions to consummation of the transactions contemplated hereby. For purposes of clarity,
Samsara shall finance the requisite securities law and corporate filings during the period between execution of this Agreement
and the Effective Time.
6.2.6 Further Assurances; Cooperation;
Notification.
(a) Each of the Parties will, before, at
and after Effective Time, execute and deliver such instruments and take such other actions as the other Party may reasonably require
in order to carry out the intent of this Agreement.
(b) Bengio agrees to provide assistance
in delivering to Samsara any additional corporate records, financial information, information regarding corporate acquisitions
and divestitures, rescission agreements and other information related to DarkStar that is in the possession of, or available to
Bengio.
(c) At all times from the date hereof until
the Effective Time, each of the Parties will promptly notify the other in writing of the occurrence of any event which he reasonably
believes will or may result in a failure by such Party to satisfy the conditions specified in this Article 6.
6.2.7 Public Announcements. None
of the Parties hereto will make any public announcement with respect to the transactions contemplated herein without the prior
written consent of the other Party, which consent will not be unreasonably withheld or delayed; provided, however, that
either of the Parties hereto may at any time make any announcements that are required by applicable law so long as the Party so
required to make an announcement promptly upon learning of such requirement notifies the other Party of such requirement and discusses
with the other Party in good faith the exact proposed wording of any such announcement.
6.2.8 Satisfaction of Conditions Precedent.
Each Party will use commercially reasonable efforts to satisfy or cause to be satisfied all the conditions precedent that are
applicable to it, and to cause the transactions contemplated by this Agreement to be consummated, and, without limiting the generality
of the foregoing, to obtain all material consents and authorizations of third parties and to make filings with, and give all notices
to, third parties that may be necessary or reasonably required on his part in order to effect the transactions contemplated hereby.
7. Conditions to Obligations of Samsara
Notwithstanding any other
provision of this Agreement to the contrary, the obligation of Samsara to effect the transactions contemplated herein will be
subject to the satisfaction at or prior to the Effective Time, or waiver by Samsara, of each of the following conditions:
7.1 Completion
of Information and Documents. The completion of all missing information, exhibits, and schedules to this Agreement to the
satisfaction of Samsara.
7.2 Increase in Authorized
Share Capital. Prior to the Effective Time, Darkstar will have amended its Articles of Incorporation to increase the number
of authorized shares of common stock of Darkstar from 2,000,000,000 shares to 5,000,000,000 shares.
7.3 Spin-Off Transaction. Immediately
prior to the Effective Time, DarkStar will complete the sale of DarkStar’s
wholly-owned Israeli subsidiary, Bengio Urban Renewals Ltd (“Bengio Urban”) to Bengio, through the sale of 100% of
the issued and outstanding shares of Bengio Urban and all of DarkStar’s interest in Bengio Urban (including all debts and
liabilities owed by DarkStar to Bengio Urban and the debts of Bengio Urban to DarkStar)
to Bengio, (the “Spin-Off”). DarkStar will sell 100% of its interests of Bengio Urban to Bengio in exchange for all
debts, liabilities and obligations of Bengio Urban being assigned to and assumed by Bengio and with no other consideration.
7.4 Private Placement. Prior
to the Effective Time, DarkStar will have entered into subscription agreements
with investors, pursuant to Regulation D and/or Regulation S under the Securities Act of 1933, as amended, and any and all applicable
state securities laws, to raise $500,000 at a pre-money company valuation of $5,000,000 through the sale of shares of Darkstar’s
Common Stock and warrants (the “PP”). The subscription agreements shall be in a form acceptable to Samsara. The closing
of the PP shall take place at the Effective Time immediately following the Effective Time.
7.5 Form S-4 Registration
Statement. The Registration Statement on Form S-4 shall have been declared effective by the Securities and Exchange Commission.
7.6 Representations
and Warranties of DarkStar and Bengio. The representations and warranties of DarkStar and Bengio contained in this Agreement
will be true, complete and accurate in all material respects as of the date when made and at and as of the Effective Time as though
such representations and warranties were made at and as of such time, except for changes specifically permitted or contemplated
by this Agreement, and except insofar as the representations and warranties relate expressly and solely to a particular date or
period, in which case they will be true and correct at the Effective Time with respect to such date or period.
7.7 Performance.
Darkstar and Bengio will have performed and complied in all material respects with all agreements, covenants, obligations and
conditions required by this Agreement to be performed or complied with by DarkStar and Bengio on or prior to the Effective Time.
7.8 Required Approvals
and Consents.
(a) All action required by law to authorize
the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will have
been duly and validly taken.
(b) All consents of or from all authorities
required hereunder to consummate the transactions contemplated herein, will have been delivered, made or obtained, and Samsara
will have received copies thereof.
7.9 Discharge of Liabilities. DarkStar
will have paid or discharged DarkStar’s Liabilities and will have provided Samsara with satisfactory proof of such payments
or discharges, such that DarkStar shall not have any outstanding Liabilities as of the Effective Time, except for those Liabilities
set forth on Schedule 4.10.
7.10 Current with all Filings. DarkStar
shall be current with all of its filings of all forms and reports with the SEC.
7.11 Adverse Changes. No material
adverse change will have occurred in the business, financial condition, prospects, assets or operations of DarkStar since January
31, 2018, the quarter-end date of the Company’s quarterly report on Form 10-Q, as filed with the Commission on March 19,
2019.
7.12 No Proceeding or Litigation.
No suit, action, investigation, inquiry or other proceeding by any authority or other person or entity will have been instituted
or threatened which delays or questions the validity or legality of the transactions contemplated hereby or which, if successfully
asserted, would, in the reasonable judgment of the Purchasing Parties, individually or in the aggregate, otherwise have a material
adverse effect on Darkstar’s business, financial condition, prospects, assets or operations or prevent or delay the consummation
of the transactions contemplated by this Agreement.
8. Conditions to Obligations of DarkStar and Bengio
Notwithstanding anything
in this Agreement to the contrary, the obligation of DarkStar and Bengio to effect the transactions contemplated herein will be
subject to the satisfaction at or prior to the Effective Time the following conditions:
8.1 Form S-4 Registration
Statement. The Registration Statement on Form S-4 shall have been declared effective by the Securities and Exchange Commission.
8.2 Representations
and Warranties True. The representations and warranties of Samsara contained in this Agreement will be true, complete and
accurate in all material respects as of the date when made and at and as of the Effective Time, as though such representations
and warranties were made at and as of such time, except for changes permitted or contemplated in this Agreement, and except insofar
as the representations and warranties relate expressly and solely to a particular date or period, in which case they will be true
and correct at the Effective Time with respect to such date or period.
8.3 Performance.
Samsara will have performed and complied in all material respects with all agreements, covenants, obligations and conditions required
by this Agreement to be performed or complied with by Samsara at or prior to the Effective Time.
8.4 Required Approvals
and Consents. All action required by law to authorize the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will have been duly and validly taken.
8.5 Adverse Changes.
No material adverse change will have occurred in the ability of Samsara to perform their obligations under this Agreement.
9. Intentionally Left Blank
10. Indemnification.
10.1 Indemnification.
From and after the Effective Time, Bengio agrees to indemnify, defend and hold Samsara and the Samsara Stockholders, their affiliates
(including, after the Effective Time, the Surviving Corporation) and their respective officers, directors, stockholders, employees,
agents and representatives (the “Indemnified Parties”) harmless from and in respect of any and all losses,
damages, costs and reasonable expenses (including reasonable fees and expenses of counsel including both those incurred in connection
with the defense or prosecution of the indemnifiable claim and those incurred in connection with the enforcement of this provision,
whether or not related to a third-party claim) (collectively, “Losses”), that they may incur arising out of
or due to any (a) breach of any representation or warranty of DarkStar or Bengio contained in this Agreement or (b) breach of
any covenant of DarkStar or Bengio contained in this Agreement or (c) agreements between Bengio and Raanan Bar Zohar and/or between
Bengio and TCSM Inc.
10.2 Procedure.
If there occurs an event which a party asserts is an indemnifiable event pursuant to Section 10.1, the party or parties seeking
indemnification shall notify the other party or parties obligated to provide indemnification (the “Indemnifying Party”)
promptly, but no later than forty-five (45) days, after such Indemnified Party receives written notice of any claim, event or
matter as to which indemnity may be sought; provided that the failure of the Indemnified Party to give notice as provided shall
not relieve any Indemnifying Party of its obligations under Section 10.1, except to the extent that such failure materially prejudices
the rights of any such Indemnifying Party. In the event of any claim, action, suit, proceeding or demand asserted by any Person
who is not a party (or a successor to a party) to this Agreement (a “Third-Party Claim”) which is or gives
rise to an indemnification claim, the Indemnifying Party may elect within fifteen (15) business days to acknowledge its obligations
to indemnify the Indemnified Party therefor and to assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom,
shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at the Indemnified Party’s expense, which shall include counsel of its choice; provided
that the Indemnified Party shall have the right to employ, at the Indemnifying Party’s expense, one counsel of its choice
in each applicable jurisdiction (if more than one jurisdiction is involved) to represent the Indemnified Party if, in the Indemnified
Party’s reasonable judgment, there exists an actual conflict of interest between the Indemnified Party and the Indemnifying
Party or if the Indemnifying Party (i) elects not to defend, compromise or settle a Third-Party Claim, (ii) fails to notify the
Indemnified Party within the required time period of its election as provided in this section, or (iii) having timely elected
to defend a Third-Party Claim, fails, in the reasonable judgment of the Indemnified Party, after at least fifteen (15) days’
notice to the Indemnifying Party, to adequately prosecute or pursue such defense, and in each such case the Indemnified Party
may defend such Third-Party Claim on behalf of and for the account and risk of the Indemnifying Party. The Indemnifying Party,
in the defense of any such claim or litigation, shall not, except with the consent of the Indemnified Party, consent to entry
of any judgment or entry into any settlement which does not include as an unconditional term thereof the giving by the claimant
or plaintiff to the Indemnified Party of a release from all liability in respect of such claim or litigation. The Indemnified
Party shall not settle or compromise any such claim without prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld. The Indemnified Party shall furnish such information regarding itself or the claim in question and
render assistance as the Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.
10.3 Without derogating
from Section 10.1 above, in the event of a breach of Section 6.1.3, and in the event Bengio fails to make payment in cash to the
Surviving Corporation in the amount of Bengio’s liability within seven (7) days of written notice, then the Surviving Corporation
may demand and implement the discharge of Bengio’s liability by having Bengio forfeit and transfer to the Surviving Corporation
such number of shares of the Surviving Corporation Stock held by Bengio that is equal in value to Bengio’s liability for
breach of Section 6.1.3. The value of each share shall be determined according to the average closing price of the Surviving Corporation’s
common stock during the seven (7) day period preceding Bengio’s failure to make payment.
11. Miscellaneous
11.1 Entire Agreement.
This Agreement constitutes the entire agreement between the Parties in respect of the matters referred to herein and supersedes
all prior agreements, written or oral, with respect hereof.
11.2 Amendments.
No alteration, amendment, modification or interpretation of this Agreement or any provision of this Agreement shall be valid and
binding upon the Parties unless such alteration, amendment, modification or interpretation is in written form executed by both
of the Parties hereto.
11.3 Execution.
The Parties shall execute and deliver all such further documents and instruments and do all such acts and things as any Party
may reasonably require in order to carry out the full intent and meaning of this Agreement.
11.4 Invalidity.
If any term or provision of this Agreement is determined to be illegal, unenforceable or invalid, in whole or in part for
any reason, such term or provision shall be deemed limited in scope and effect to the minimum extent necessary to make such term
or provision legal, enforceable and valid, and in the event no such limiting construction may be made, the term or provision shall
be stricken from this Agreement and such term or provision shall not affect the legality, enforceability or validity of the remainder
of this Agreement.
11.5 Headings.
The headings in this Agreement are solely for convenience of reference and shall be given no effect in the meaning or interpretation
of this Agreement.
11.6 Notice.
Any notice, request, demand and other communication to be given under this Agreement shall be in writing and shall be delivered
to the Parties at their respective e-mail addresses below or to such other addresses as may be given in writing by the Parties
in the manner provided for in this paragraph and shall be deemed to be delivered on the date of actual delivery.
Notice to DarkStar
and Bengio:
Avraham Bengio
bengio2010@gmail.com
Notice to Samsara:
Atara Dzikowski
atara@samsaraluggage.com
11.7 Successors and
Assigns. This Agreement shall enure to the benefit of and be binding upon the Parties and their respective heirs, executors,
administrators, successors and assigns.
11.8 Governing Jurisdiction.
This Agreement and all related agreements, exhibits and attachments shall be subject to, governed by and construed in accordance
with the laws of the State of New York. Jurisdiction and venue shall reside in the State of New York for any action or proceeding
instituted by Bengio against Samsara or Darkstar. Jurisdiction and venue shall reside in the State of Israel for any action or
proceeding instituted by Samsara or Darkstar against Bengio.
11.9 Counterparts.
This Agreement may be executed and sent by fax and in counterparts, as is deemed necessary to carry out the execution of this
Agreement, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of May 10, 2019.
DarkStar Ventures, Inc.
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/s/
Avraham Bengio
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Name:
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Avraham Bengio
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Title:
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CEO
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Date:
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Avraham Bengio
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/s/
Avraham Bengio
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Avraham Bengio
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Date:
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Samsara Luggage, Inc.
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/s/
Atara Dzikowski
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Name:
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Atara Dzikowski
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Title:
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CEO
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Date:
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ANNEX B
DISSENTERS’ RIGHTS (NRS 92A.300
THROUGH NRS 92A.500)
NRS 92A.300 Definitions. As
used in NRS 92A.300 to 92A.500, inclusive, unless the context otherwise requires, the words and terms defined in NRS 92A.305 to
92A.335, inclusive, have the meanings ascribed to them in those sections.
NRS 92A.305 “Beneficial stockholder”
defined. “Beneficial stockholder” means a person who is a beneficial owner of shares held in a voting
trust or by a nominee as the stockholder of record.
NRS 92A.310 “Corporate action”
defined. “Corporate action” means the action of a domestic corporation.
NRS 92A.315 “Dissenter” defined. “Dissenter”
means a stockholder who is entitled to dissent from a domestic corporation’s action under NRS 92A.380 and who exercises
that right when and in the manner required by NRS 92A.400 to 92A.480, inclusive.
NRS 92A.320 “Fair value” defined. “Fair
value,” with respect to a dissenter’s shares, means the value of the shares determined:
1. Immediately before the effectuation
of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable;
2. Using customary and current
valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal;
and
3. Without discounting for
lack of marketability or minority status.
NRS 92A.325 “Stockholder” defined. “Stockholder”
means a stockholder of record or a beneficial stockholder of a domestic corporation.
NRS 92A.330 “Stockholder of record”
defined. “Stockholder of record” means the person in whose name shares are registered in the records
of a domestic corporation or the beneficial owner of shares to the extent of the rights granted by a nominee’s certificate
on file with the domestic corporation.
NRS 92A.335 “Subject corporation”
defined. “Subject corporation” means the domestic corporation which is the issuer of the shares held
by a dissenter before the corporate action creating the dissenter’s rights becomes effective or the surviving or acquiring
entity of that issuer after the corporate action becomes effective.
NRS 92A.340 Computation of interest. Interest
payable pursuant to NRS 92A.300 to 92A.500, inclusive, must be computed from the effective date of the action until the date of
payment, at the rate of interest most recently established pursuant to NRS 99.040.
NRS 92A.350 Rights of
dissenting partner of domestic limited partnership. A partnership agreement of a domestic limited partnership or,
unless otherwise provided in the partnership agreement, an agreement of merger or exchange, may provide that contractual rights
with respect to the partnership interest of a dissenting general or limited partner of a domestic limited partnership are available
for any class or group of partnership interests in connection with any merger or exchange in which the domestic limited partnership
is a constituent entity.
NRS 92A.360 Rights of
dissenting member of domestic limited-liability company. The articles of organization or operating agreement of
a domestic limited-liability company or, unless otherwise provided in the articles of organization or operating agreement, an
agreement of merger or exchange, may provide that contractual rights with respect to the interest of a dissenting member are available
in connection with any merger or exchange in which the domestic limited-liability company is a constituent entity.
NRS 92A.370 Rights of dissenting member
of domestic nonprofit corporation.
1. Except as otherwise provided
in subsection 2, and unless otherwise provided in the articles or bylaws, any member of any constituent domestic nonprofit corporation
who voted against the merger may, without prior notice, but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the constituent or surviving corporations which did not
occur before the member’s resignation and is thereby entitled to those rights, if any, which would have existed if there
had been no merger and the membership had been terminated or the member had been expelled.
2. Unless otherwise provided
in its articles of incorporation or bylaws, no member of a domestic nonprofit corporation, including, but not limited to, a cooperative
corporation, which supplies services described in chapter 704 of NRS to its members only, and no person who is a member of a domestic
nonprofit corporation as a condition of or by reason of the ownership of an interest in real property, may resign and dissent
pursuant to subsection 1.
NRS 92A.380 Right of stockholder to dissent
from certain corporate actions and to obtain payment for shares.
1. Except as otherwise provided
in NRS 92A.370 and 92A.390 and subject to the limitation in paragraph (f), any stockholder is entitled to dissent from, and obtain
payment of the fair value of the stockholder’s shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger
to which the domestic corporation is a constituent entity:
(1) If approval by the stockholders
is required for the merger by NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation, regardless of whether the stockholder
is entitled to vote on the plan of merger; or
(2) If the domestic corporation is a
subsidiary and is merged with its parent pursuant to NRS 92A.180.
(b) Consummation of a plan of conversion
to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be converted.
(c) Consummation of a plan of exchange
to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be acquired,
if the stockholder’s shares are to be acquired in the plan of exchange.
(d) Any corporate action taken pursuant
to a vote of the stockholders to the extent that the articles of incorporation, bylaws or a resolution of the board of directors
provides that voting or nonvoting stockholders are entitled to dissent and obtain payment for their shares.
(e) Accordance of full voting rights
to control shares, as defined in NRS 78.3784, only to the extent provided for pursuant to NRS 78.3793.
(f) Any corporate action not described
in this subsection that will result in the stockholder receiving money or scrip instead of a fraction of a share except where
the stockholder would not be entitled to receive such payment pursuant to NRS 78.205, 78.2055 or 78.207. A dissent pursuant to
this paragraph applies only to the fraction of a share, and the stockholder is entitled only to obtain payment of the fair value
of the fraction of a share.
2. A stockholder who is entitled
to dissent and obtain payment pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action creating the
entitlement unless the action is unlawful or fraudulent with respect to the stockholder or the domestic corporation.
3. Subject to the limitations
in this subsection, from and after the effective date of any corporate action described in subsection 1, no stockholder who has
exercised the right to dissent pursuant to NRS 92A.300 to 92A.500, inclusive, is entitled to vote his or her shares for any purpose
or to receive payment of dividends or any other distributions on shares. This subsection does not apply to dividends or other
distributions payable to stockholders on a date before the effective date of any corporate action from which the stockholder has
dissented. If a stockholder exercises the right to dissent with respect to a corporate action described in paragraph (f) of subsection
1, the restrictions of this subsection apply only to the shares to be converted into a fraction of a share and the dividends and
distributions to those shares.
NRS 92A.390 Limitations on right of dissent:
Stockholders of certain classes or series; action of stockholders not required for plan of merger.
1. There is no right of dissent
with respect to a plan of merger, conversion or exchange in favor of stockholders of any class or series which is:
(a) A covered security under section
18(b)(1)(A) or (B) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(1)(A) or (B), as amended;
(b) Traded in an organized market
and has at least 2,000 stockholders and a market value of at least $20,000,000, exclusive of the value of such shares held by
the corporation’s subsidiaries, senior executives, directors and beneficial stockholders owning more than 10 percent of
such shares; or
(c) Issued
by an open end management investment company registered with the Securities and Exchange Commission under the Investment Company
Act of 1940, 15 U.S.C. §§ 80a-1 et seq., as amended, and which may be redeemed at the option of the holder at net asset
value, unless the articles of incorporation of the corporation issuing the class or series or the resolution of the board of directors
approving the plan of merger, conversion or exchange expressly provide otherwise.
2. The applicability of subsection
1 must be determined as of:
(a) The record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the corporate action requiring
dissenter’s rights; or
(b) The day before the effective date
of such corporate action if there is no meeting of stockholders.
3. Subsection 1 is not applicable
and dissenter’s rights are available pursuant to NRS 92A.380 for the holders of any class or series of shares who are required
by the terms of the corporate action requiring dissenter’s rights to accept for such shares anything other than cash or
shares of any class or any series of shares of any corporation, or any other proprietary interest of any other entity, that satisfies
the standards set forth in subsection 1 at the time the corporate action becomes effective.
4. There is no right of dissent
for any holders of stock of the surviving domestic corporation if the plan of merger does not require action of the stockholders
of the surviving domestic corporation under NRS 92A.130.
5. There is no right of dissent
for any holders of stock of the parent domestic corporation if the plan of merger does not require action of the stockholders
of the parent domestic corporation under NRS 92A.180.
NRS 92A.400 Limitations on right of dissent:
Assertion as to portions only to shares registered to stockholder; assertion by beneficial stockholder.
1. A stockholder of record
may assert dissenter’s rights as to fewer than all of the shares registered in his or her name only if the stockholder of
record dissents with respect to all shares of the class or series beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on whose behalf the stockholder of record asserts dissenter’s
rights. The rights of a partial dissenter under this subsection are determined as if the shares as to which the partial dissenter
dissents and his or her other shares were registered in the names of different stockholders.
2. A beneficial stockholder
may assert dissenter’s rights as to shares held on his or her behalf only if the beneficial stockholder:
(a) Submits to the subject corporation
the written consent of the stockholder of record to the dissent not later than the time the beneficial stockholder asserts dissenter’s
rights; and
(b) Does so with respect to all shares
of which he or she is the beneficial stockholder or over which he or she has power to direct the vote.
NRS 92A.410 Notification of stockholders
regarding right of dissent.
1. If a proposed corporate
action creating dissenter’s rights is submitted to a vote at a stockholders’ meeting, the notice of the meeting must
state that stockholders are, are not or may be entitled to assert dissenter’s rights under NRS 92A.300 to 92A.500, inclusive.
If the domestic corporation concludes that dissenter’s rights are or may be available, a copy of NRS 92A.300 to 92A.500,
inclusive, must accompany the meeting notice sent to those record stockholders entitled to exercise dissenter’s rights.
2. If the corporate action
creating dissenter’s rights is taken by written consent of the stockholders or without a vote of the stockholders, the domestic
corporation shall notify in writing all stockholders entitled to assert dissenter’s rights that the action was taken and
send them the dissenter’s notice described in NRS 92A.430.
NRS 92A.420 Prerequisites to demand for
payment for shares.
1. If a proposed corporate
action creating dissenter’s rights is submitted to a vote at a stockholders’ meeting, a stockholder who wishes to
assert dissenter’s rights with respect to any class or series of shares:
(a) Must deliver to the subject corporation,
before the vote is taken, written notice of the stockholder’s intent to demand payment for his or her shares if the proposed
action is effectuated; and
(b) Must not vote, or cause or permit
to be voted, any of his or her shares of such class or series in favor of the proposed action.
2. If a proposed corporate
action creating dissenter’s rights is taken by written consent of the stockholders, a stockholder who wishes to assert dissenter’s
rights with respect to any class or series of shares must not consent to or approve the proposed corporate action with respect
to such class or series.
3. A stockholder who does not
satisfy the requirements of subsection 1 or 2 and NRS 92A.400 is not entitled to payment for his or her shares under this chapter.
NRS 92A.430 Dissenter’s notice: Delivery
to stockholders entitled to assert rights; contents.
1. The subject corporation
shall deliver a written dissenter’s notice to all stockholders of record entitled to assert dissenter’s rights in
whole or in part, and any beneficial stockholder who has previously asserted dissenter’s rights pursuant to NRS 92A.400.
2. The dissenter’s notice
must be sent no later than 10 days after the effective date of the corporate action specified in NRS 92A.380, and must:
(a) State where the demand for payment
must be sent and where and when certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not
represented by certificates to what extent the transfer of the shares will be restricted after the demand for payment is received;
(c) Supply a form for demanding payment
that includes the date of the first announcement to the news media or to the stockholders of the terms of the proposed action
and requires that the person asserting dissenter’s rights certify whether or not the person acquired beneficial ownership
of the shares before that date;
(d) Set a date by which the subject
corporation must receive the demand for payment, which may not be less than 30 nor more than 60 days after the date the notice
is delivered and state that the stockholder shall be deemed to have waived the right to demand payment with respect to the shares
unless the form is received by the subject corporation by such specified date; and
(e) Be accompanied by a copy of NRS
92A.300 to 92A.500, inclusive.
NRS 92A.440 Demand for payment and deposit
of certificates; loss of rights of stockholder; withdrawal from appraisal process.
1. A stockholder who receives
a dissenter’s notice pursuant to NRS 92A.430 and who wishes to exercise dissenter’s rights must:
(a) Demand payment;
(b) Certify whether the stockholder
or the beneficial owner on whose behalf he or she is dissenting, as the case may be, acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter’s notice for this certification; and
(c) Deposit the stockholder’s
certificates, if any, in accordance with the terms of the notice.
2. If a stockholder fails to
make the certification required by paragraph (b) of subsection 1, the subject corporation may elect to treat the stockholder’s
shares as after-acquired shares under NRS 92A.470.
3. Once a stockholder deposits
that stockholder’s certificates or, in the case of uncertified shares makes demand for payment, that stockholder loses all
rights as a stockholder, unless the stockholder withdraws pursuant to subsection 4.
4. A stockholder who has complied
with subsection 1 may nevertheless decline to exercise dissenter’s rights and withdraw from the appraisal process by so
notifying the subject corporation in writing by the date set forth in the dissenter’s notice pursuant to NRS 92A.430. A
stockholder who fails to so withdraw from the appraisal process may not thereafter withdraw without the subject corporation’s
written consent.
5. The stockholder who does
not demand payment or deposit his or her certificates where required, each by the date set forth in the dissenter’s notice,
is not entitled to payment for his or her shares under this chapter.
NRS 92A.450 Uncertificated shares: Authority
to restrict transfer after demand for payment. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is received.
NRS 92A.460 Payment for shares: General
requirements.
1. Except as otherwise provided
in NRS 92A.470, within 30 days after receipt of a demand for payment pursuant to NRS 92A.440, the subject corporation shall pay
in cash to each dissenter who complied with NRS 92A.440 the amount the subject corporation estimates to be the fair value of the
dissenter’s shares, plus accrued interest. The obligation of the subject corporation under this subsection may be enforced
by the district court:
(a) Of the county where the subject
corporation’s principal office is located;
(b) If the subject corporation’s
principal office is not located in this State, in the county in which the corporation’s registered office is located; or
(c) At the election of any dissenter
residing or having its principal or registered office in this State, of the county where the dissenter resides or has its principal
or registered office.
The court shall dispose of the complaint promptly.
2. The payment must be accompanied
by:
(a) The subject corporation’s
balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, a statement of income
for that year, a statement of changes in the stockholders’ equity for that year or, where such financial statements are
not reasonably available, then such reasonably equivalent financial information and the latest available quarterly financial statements,
if any;
(b) A statement of the subject corporation’s
estimate of the fair value of the shares; and
(c) A statement of the dissenter’s
rights to demand payment under NRS 92A.480 and that if any such stockholder does not do so within the period specified, such stockholder
shall be deemed to have accepted such payment in full satisfaction of the corporation’s obligations under this chapter.
NRS 92A.470 Withholding payment for shares
acquired on or after date of dissenter’s notice: General requirements.
1. A subject corporation may
elect to withhold payment from a dissenter unless the dissenter was the beneficial owner of the shares before the date set forth
in the dissenter’s notice as the first date of any announcement to the news media or to the stockholders of the terms of
the proposed action.
2. To the extent the subject
corporation elects to withhold payment, within 30 days after receipt of a demand for payment pursuant to NRS 92A.440, the subject
corporation shall notify the dissenters described in subsection 1:
(a) Of the information required by
paragraph (a) of subsection 2 of NRS 92A.460;
(b) Of the subject corporation’s
estimate of fair value pursuant to paragraph (b) of subsection 2 of NRS 92A.460;
(c) That they may accept the subject
corporation’s estimate of fair value, plus interest, in full satisfaction of their demands or demand appraisal under NRS
92A.480;
(d) That those stockholders who wish
to accept such an offer must so notify the subject corporation of their acceptance of the offer within 30 days after receipt of
such offer; and
(e) That those stockholders who do
not satisfy the requirements for demanding appraisal under NRS 92A.480 shall be deemed to have accepted the subject corporation’s
offer.
3. Within 10 days after receiving
the stockholder’s acceptance pursuant to subsection 2, the subject corporation shall pay in cash the amount offered under
paragraph (b) of subsection 2 to each stockholder who agreed to accept the subject corporation’s offer in full satisfaction
of the stockholder’s demand.
4. Within 40 days after sending
the notice described in subsection 2, the subject corporation shall pay in cash the amount offered under paragraph (b) of subsection
2 to each stockholder described in paragraph (e) of subsection 2.
NRS 92A.480 Dissenter’s estimate of
fair value: Notification of subject corporation; demand for payment of estimate.
1. A dissenter paid pursuant
to NRS 92A.460 who is dissatisfied with the amount of the payment may notify the subject corporation in writing of the dissenter’s
own estimate of the fair value of his or her shares and the amount of interest due, and demand payment of such estimate, less
any payment pursuant to NRS 92A.460. A dissenter offered payment pursuant to NRS 92A.470 who is dissatisfied with the offer may
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of his or her shares and interest due.
2. A dissenter waives the right
to demand payment pursuant to this section unless the dissenter notifies the subject corporation of his or her demand to be paid
the dissenter’s stated estimate of fair value plus interest under subsection 1 in writing within 30 days after receiving
the subject corporation’s payment or offer of payment under NRS 92A.460 or 92A.470 and is entitled only to the payment made
or offered.
NRS 92A.490 Legal proceeding to determine
fair value: Duties of subject corporation; powers of court; rights of dissenter.
1. If a demand for payment
pursuant to NRS 92A.480 remains unsettled, the subject corporation shall commence a proceeding within 60 days after receiving
the demand and petition the court to determine the fair value of the shares and accrued interest. If the subject corporation does
not commence the proceeding within the 60-day period, it shall pay each dissenter whose demand remains unsettled the amount demanded
by each dissenter pursuant to NRS 92A.480 plus interest.
2. A subject corporation shall
commence the proceeding in the district court of the county where its principal office is located in this State. If the principal
office of the subject corporation is not located in this State, the right to dissent arose from a merger, conversion or exchange
and the principal office of the surviving entity, resulting entity or the entity whose shares were acquired, whichever is applicable,
is located in this State, it shall commence the proceeding in the county where the principal office of the surviving entity, resulting
entity or the entity whose shares were acquired is located. In all other cases, if the principal office of the subject corporation
is not located in this State, the subject corporation shall commence the proceeding in the district court in the county in which
the corporation’s registered office is located.
3. The subject corporation
shall make all dissenters, whether or not residents of Nevada, whose demands remain unsettled, parties to the proceeding as in
an action against their shares. All parties must be served with a copy of the petition. Nonresidents may be served by registered
or certified mail or by publication as provided by law.
4. The jurisdiction of the
court in which the proceeding is commenced under subsection 2 is plenary and exclusive. The court may appoint one or more persons
as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or any amendment thereto. The dissenters are entitled to the same discovery rights as parties in
other civil proceedings.
5. Each dissenter who is made
a party to the proceeding is entitled to a judgment:
(a) For the amount, if any, by which
the court finds the fair value of the dissenter’s shares, plus interest, exceeds the amount paid by the subject corporation;
or
(b) For the fair value, plus accrued
interest, of the dissenter’s after-acquired shares for which the subject corporation elected to withhold payment pursuant
to NRS 92A.470.
NRS 92A.500 Assessment of costs and fees
in certain legal proceedings.
1. The court in a proceeding
to determine fair value shall determine all of the costs of the proceeding, including the reasonable compensation and expenses
of any appraisers appointed by the court. The court shall assess the costs against the subject corporation, except that the court
may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the
dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment.
2. The court may also assess
the fees and expenses of the counsel and experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation
and in favor of all dissenters if the court finds the subject corporation did not substantially comply with the requirements of
NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation
or a dissenter in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed
acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.
3. If the court finds that
the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the subject corporation, the court may award to those counsel reasonable fees
to be paid out of the amounts awarded to the dissenters who were benefited.
4. In a proceeding commenced
pursuant to NRS 92A.460, the court may assess the costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters who are parties to the proceeding, in amounts the court finds equitable, to the extent the
court finds that such parties did not act in good faith in instituting the proceeding.
5. To the extent the subject
corporation fails to make a required payment pursuant to NRS 92A.460, 92A.470 or 92A.480, the dissenter may bring a cause of action
directly for the amount owed and, to the extent the dissenter prevails, is entitled to recover all expenses of the suit.
6. This section does not preclude
any party in a proceeding commenced pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68.
ANNEX C
APPRAISAL RIGHTS (SECTION 262 OF THE
DELAWARE GENERAL CORPORATION LAW)
§ 262 Appraisal rights [For application of this
section, see 79 Del. Laws, c. 72, § 22; 79 Del. Laws, c. 122, § 12; 80 Del. Laws, c. 265, §
18; 81 Del. Laws, c. 354, § 17; and 82 Del. Laws, c. 45, § 23]
(a) Any stockholder of a corporation of this State who holds
shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares,
who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the
stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this
section, the word “stockholder” means a holder of record of stock in a corporation; the words “stock”
and “share” mean and include what is ordinarily meant by those words; and the words “depository receipt”
mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any
class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other
than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255, § 256, § 257, §
258, § 263 or § 264 of this title:
(1) Provided, however, that, except as
expressly provided in § 363(b) of this title, no appraisal rights under this section shall be available for the shares of
any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the
stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation (or,
in the case of a merger pursuant to § 251(h), as of immediately prior to the execution of the agreement of merger), were
either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that
no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger
did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this
title.
(2) Notwithstanding paragraph (b)(1) of
this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251,
252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving
or resulting from such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation,
or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
d. Any combination of the shares of stock,
depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs
(b)(2)a., b. and c. of this section.
(3) In the event all of the stock of a
subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this title is not owned by the parent
immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
(4) In the event of an amendment to a corporation’s
certificate of incorporation contemplated by § 363(a) of this title, appraisal rights shall be available as contemplated
by § 363(b) of this title, and the procedures of this section, including those set forth in subsections (d) and (e)
of this section, shall apply as nearly as practicable, with the word “amendment” substituted for the words “merger
or consolidation,” and the word “corporation” substituted for the words “constituent corporation”
and/or “surviving or resulting corporation.”
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of
an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation
or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a
provision, the provisions of this section, including those set forth in subsections (d),(e), and (g) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation
for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation,
not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of
such meeting (or such members who received notice in accordance with § 255(c) of this title) with respect to shares
for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if
1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing
to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on
the merger or consolidation, a written demand for appraisal of such stockholder’s shares; provided that a demand may be
delivered to the corporation by electronic transmission if directed to an information processing system (if any) expressly designated
for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote
against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so
by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection
and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was
approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a constituent corporation
before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall
notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or
series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent
corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation.
Any stockholder entitled to appraisal rights may, within 20 days after the date of giving such notice or, in the case of a merger
approved pursuant to § 251(h) of this title, within the later of the consummation of the offer contemplated by § 251(h)
of this title and 20 days after the date of giving such notice, demand in writing from the surviving or resulting corporation
the appraisal of such holder’s shares; provided that a demand may be delivered to the corporation by electronic transmission
if directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will
be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby
to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the
merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of
the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that
are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation
shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if
such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant
to § 251(h) of this title, later than the later of the consummation of the offer contemplated by § 251(h) of this title
and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled
to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit
of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the
effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the
notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day
on which the notice is given.
(e) Within 120 days after the effective date of the merger
or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) of this
section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in
the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing,
at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal
proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder’s demand for appraisal
and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation,
any stockholder who has complied with the requirements of subsections (a) and (d) of this section hereof, upon request given in
writing (or by electronic transmission directed to an information processing system (if any) expressly designated for that purpose
in the notice of appraisal), shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation
a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation (or, in the case of
a merger approved pursuant to § 251(h) of this title, the aggregate number of shares (other than any excluded stock (as defined
in § 251(h)(6)d. of this title)) that were the subject of, and were not tendered into, and accepted for purchase or exchange
in, the offer referred to in § 251(h)(2)), and, in either case, with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such statement shall be given to the stockholder within 10 days after such
stockholder’s request for such a statement is received by the surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later.
Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a
voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition or request from the
corporation the statement described in this subsection.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service
file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses
of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not
been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation,
the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give
notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or
more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall
be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine
the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the
stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates
of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. If immediately before the merger
or consolidation the shares of the class or series of stock of the constituent corporation as to which appraisal rights are available
were listed on a national securities exchange, the Court shall dismiss the proceedings as to all holders of such shares who are
otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds 1% of the outstanding
shares of the class or series eligible for appraisal, (2) the value of the consideration provided in the merger or consolidation
for such total number of shares exceeds $1 million, or (3) the merger was approved pursuant to § 253 or § 267 of this
title.
(h) After the Court determines the stockholders entitled to
an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any
rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares
exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with
interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall
take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, and except
as provided in this subsection, interest from the effective date of the merger through the date of payment of the judgment shall
be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established
from time to time during the period between the effective date of the merger and the date of payment of the judgment. At any time
before the entry of judgment in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an
amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if
any, between the amount so paid and the fair value of the shares as determined by the Court, and (2) interest theretofore accrued,
unless paid at that time. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination
of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted such stockholder’s certificates of stock to
the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment
shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court’s
decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation
be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court
and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may
order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorney’s fees and the fees and expenses of experts, to be charged pro rata against the value of
all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such
stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions
payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however,
that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder’s demand for an appraisal
and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall
be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as
the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced
an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and
to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation,
as set forth in subsection (e) of this section.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the surviving or resulting corporation.
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