Exhibit 10.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (herein, together with all
Exhibits, "Agreement") is entered in to as of June 5, 2003 by and between 20/20
Networks, Inc., a Nevada corporation ("20/20") and E-Z Arch, LLC, a Nevada
limited liability company ("EZA").
This Agreement sets forth the terms and conditions upon which EZA will
merge with and into 20/20 (the "Merger"), pursuant to an Agreement and Plan of
Merger (the "Merger Agreement") in substantially the form attached hereto as
Exhibit A, which provides, among other things, for the conversion and exchange
of all outstanding membership interests of EZA ("EZA Interests") into 5,325,000
shares of voting $.001 par value common stock of 20/20 ("20/20 Common Stock").
In consideration of the mutual promises and covenants contained herein,
EZA and 20/20 agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms (whether used in
singular or plural forms) shall have the following meanings:
"EZA Members" shall mean all members of EZA as of the date of closing.
"EZA Interests" shall mean the EZA membership interests to be exchanged
for shares of 20/20 common stock to the EZA Members.
"Closing Date" shall mean the date upon which the reorganization shall
have occurred in accordance with the terms and conditions set forth herein.
"Contract" means any written contract, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant, right,
or other instrument, document or agreement, and any oral obligation, right or
agreement.
"Controlled Group" means all trades or businesses (whether or not
incorporated) under common control that, together with EZA, are treated as a
single employer under Section 414(b) or 414(c) of the Code or Section 4001 of
ERISA.
"GAAP" means generally accepted accounting principles, as the term is
defined by the American Institute of Certified Public Accountants under the
first standard of reporting under its generally accepted accounting standards.
"Knowledge" of EZA of or with respect to any matter means that any of
the managers of EZA has, or after due inquiry and investigation would have,
actual awareness or knowledge of such matter, and "Knowledge" of 20/20 of or
with respect to any matter means that any of the executive officers, directors,
or senior managers of 20/20 has, or after due inquiry and investigation would
have, actual awareness or knowledge of such matter.
"Legal Requirements" means applicable common law and any statute,
ordinance, code or other law, rule regulation, order, technical or other
standard requirement, judgment or procedure enacted, adopted, promulgated,
applied or followed by any governmental authority, including judgments.
"Lien" means any security agreement, financing statement filed with any
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governmental authority, conditional sale statement filed with any governmental
authority, conditional sale or other title retention agreement, any lease
consignment or bailment given for purposes of security, any lien, mortgage,
indenture, pledge, option, encumbrance, adverse interest, constructive trust or
other trust, claim, attachment, exception to or defect in title or other
ownership interest (including but not limited to reservations, rights of entry,
possibilities of reverter, encroachments, casement, rights of way, restrictive
covenants leases and licenses) of any kind, which otherwise constitutes an
interest in or claim against property, whether arising pursuant to any Legal
Requirement, Contract or otherwise.
"Reorganization" shall mean the acquisition by 20/20 of the EZA
Interests in exchange for the 20/20 Shares as further defined herein.
"20/20 Shares" shall mean the Shares of the Common Stock of 20/20 to be
issued to the EZA Members.
ARTICLE 2
MERGER
Section 2.1 PLAN AND AGREEMENT OF REORGANIZATION. A plan of reorganization
is hereby adopted to as follows:
A. Subject to the terms and conditions hereinafter set forth,
on the Closing Date, and in the manner hereinafter proved, (i) the EZA Members
shall exchange the EZA Interests for the 20/20 Shares in the amounts set forth
herein; EZA shall cease to exist and 20/20 shall be the surviving corporation.
B. 20/20 and EZA, respectively, shall take, or cause to be
taken, such action as may be necessary or appropriate in order to effectuate the
transactions contemplated hereby. Such action shall include, but not be limited
to, the filing of Articles of Merger with the Nevada Secretary of State. In the
event that after the Closing Date, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest 20/20 or the EZA Members
with full title to the securities to be exchanged hereby, the officers and
directors of 20/20 or the EZA Members, as the case may be, shall take all such
necessary action.
Section 2.2 EFFECTIVE DATE OF THE REORGANIZATION FOR ACCOUNTING PURPOSES.
The transactions contemplated by this Agreement shall be effective for
accounting purposes and for all other purposes as mutually agreed by the parties
hereto and to the extent permissible by law.
Section 2.3 CONSIDERATION AND BASIS OF EXCHANGE OF SHARES. The manner and
basis of exchanging the EZA Interests for the Common Shares of 20/20 shall be as
follows:
A. On the Closing Date, the EZA Members shall deliver to 20/20
certificates aggregating all EZA Interests, or 100% of the issued and
outstanding EZA Interests, duly endorsed in favor of 20/20 with signatures
guaranteed; the EZA Members, in exchange for the EZA Interests held of record on
the Closing Date, an aggregate of 5,325,000 20/20 Shares. The EZA Members and
20/20 agree that the EZA Interests and the 20/20 Shares exchanged hereby shall
be "restricted securities" as that term is defined in Rule 144 under the
Securities Act of 1933, as amended (the "1933 Act") and all certificates issued
under this Agreement shall bear an appropriate legend to such effect. EZA will
have received the
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necessary approval of its members to this transaction.
B. A total of no more than 1,000,000 shares of 20/20 Common
Stock will be issued to certain officers, directors, consultants and advisors of
20/20 with said stock to be registered on an S-8 Registration Statement to be
filed with the SEC at Closing.
C. The EZA Members and EZA shall pay the sum of $250,000 to
Crown Partners, Inc. ("Crown"), majority shareholder of 20/20, as a finder's fee
in arranging for this transaction. In addition, Crown will be issued 5,000,000
shares of 20/20 Common Stock, in restricted form, in cancellation of the debt
owed by 20/20 to Crown.
D. Payment of the $250,000 shall be made as follows: Crown has
already received the sum of $10,000 toward the payment price. The balance of the
$240,000 shall be due and payable to Crown no later than July 7, 2003. Failure
to pay the $240,000 by July 7, 2003 shall result in Crown, at its option,
rescinding this Agreement, and retaining all funds paid to it to compensate it
for its costs in negotiating and entering into this Agreement as well as lost
opportunity costs. Until the entire $240,000 has been paid, all shares issued
under this Agreement, with the exception of those shares described in
subparagraph B of this Section, shall be held in escrow pending receipt of the
$240,000. No additional shares shall be issued unless and until the $240,000 has
been paid. At Closing, the number of shares issued and outstanding shall be no
more than 11,755,991.
E. At Closing, The 20/20 Board of Directors will appoint the
following to serve as additional directors of 20/20: Xxxxxx Xxxxxxxxx and Xxxxxx
Xxxxxxx. The current Board will not resign until receipt of the full purchase
price.
Section 2.4 CLOSING. Closing of this Agreement shall be held
on or before June 16, 2003 (the "Closing Date") at the offices of 20/20, or such
other place as the parties may mutually agree. The parties shall exchange such
other documents and take such other actions as may be necessary or appropriate
for completing the transactions contemplated by the Agreement.
Section 2.5 MECHANICS FOR CLOSING MERGER. Upon the approval of
the EZA Members, the executed Articles of Merger shall be filed with the Nevada
Secretary of State.
Section 2.6 FURTHER ASSURANCES. At or after Closing, EZA, at
the request of 20/20, shall promptly execute and deliver, or cause to be
delivered, to 20/20 all such documents and instruments, in form and substance
satisfactory to 20/20, as 20/20 reasonably may request in order to carry out or
evidence the terms of this Agreement.
ARTICLE 3
Representations and Warranties of EZA
EZA represents and warrants to 20/20, as of the date of this Agreement
and as of the Closing, as follows:
Section 3.1 ORGANIZATION AND QUALIFICATION OF EZA. EZA is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Nevada. EZA has full corporate power and authority to
conduct its business as now conducted and to own or lease and operate the assets
and property now owned or leased or operated by it. EZA is qualified to transact
business in those jurisdictions wherein its business requires such action.
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Section 3.2 AUTHORITY. EZA has all requisite corporate power and
authority to execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement by EZA has been duly and validly
executed and delivered by EZA, and is a valid and binding obligation of EZA,
enforceable against EZA in accordance with its terms.
Section 3.3 Ownership and Shareholders of EZA. The members set forth on
Exhibit 3.3 own the EZA Interests shown thereon, beneficially and of record,
free and clear of all liens. The EZA Interests are not subject to, or bound or
affected by, any proxies, voting agreements, or other restrictions on the
incidents or ownership hereof. There are not, and will not at Closing, be more
than 5 members of EZA.
Section 3.4 SUBSIDIARIES. EZA has no subsidiaries.
Section 3.5 NO CONFLICTS; REQUIRED CONSENT. The execution, delivery,
and performance by EZA of this Agreement will not: (i) conflict with or violate
any provision of the articles or certificate of incorporation of EZA; (ii)
violate any Legal Requirements; (iii) result in the creation or imposition of
any Lien against or upon the EZA Interests or any of the assets or properties
owned or leased by EZA; or (iv) require any consent, approval, or authorization
of, or filing of any certificate, notice, application, report or other document
with, any governmental authority or other person.
Section 3.6 LITIGATION. There is no litigation pending or, to EZA's
knowledge, threatened, by or before any governmental authority or private
arbitration tribunal, against EZA or its operations, except as described in
Exhibit 3.6 attached hereto and incorporated herein by this reference, nor, to
EZA's knowledge, is there any basis for any such litigation.
Section 3.7 COMPLIANCE WITH APPLICABLE LEGAL REQUIREMENTS. Conduct by
EZA of its activities as currently conducted does not violate or infringe any
Legal Requirements currently in effect, or, to the knowledge of EZA, proposed to
become effective; and EZA has received no notice of any violation by EZA,
proposed to become effective; and EZA has received no notice of any violation by
EZA of any Legal Requirements applicable to EZA or its activities as currently
conducted; and EZA knows of no basis for the allegation of any such violation.
Section 3.8 FINANCIAL STATEMENTS. EZA will deliver to 20/20 the audited
balance sheet and statements of operations of EZA as of December 31, 2001 and
2002 as well as any other interim periods as determined by 20/20's auditors. The
financial statements will be prepared in accordance with United States GAAP and
present fairly the financial position of EZA as of the dates indicated and the
results of operations of EZA for the periods ended December 31, 2001 and 2002.
The cost of said audits and interim reviewed statements shall be borne by EZA.
The parties hereto agree that as part of this transaction, 20/20 must file a
Form 8-K with the Securities and Exchange Commission that contains audited and
pro forma financial statements of EZA and that failure to file this report on a
timely basis could result in the de-listing of 20/20's stock as well as the
Securities and Exchange Commission taking action against 20/20 for its failure.
Therefore, in the preparation of the audits and any interim financial
statements, time is of the essence. Failure to have these reports ready for
timely filing is ground for rescission of this Agreement.
Section 3.9 Liabilities. EZA has no liabilities or obligations, whether
absolute, accrued, contingent, or otherwise, that are not reflected in the
Balance Sheet or non-delinquent obligations for ordinary and recurring expenses,
including expenses occurring in the ordinary course of business of EZA since the
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date of the Balance Sheet. Attached as Exhibit 3.9 is a list of all accounts
payable of EZA.
Section 3.10 TAX RETURNS AND PAYMENTS. EZA has timely paid all taxes,
including all federal and state payroll taxes that have become due and payable,
whether or not shown on such tax returns. EZA has filed all federal, state and
local tax returns as the same became due. EZA has not received any notice of,
nor does EZA have any knowledge of, any deficiency or assessment of proposed
knowledge of, any deficiency or assessment of proposed deficiency or assessment
from any taxing governmental authority. There are no tax audits pending with
respect to EZA, and there are no outstanding agreements or waivers by or with
respect to EZA, that extend the statutory period of limitations applicable to
any federal, state, local or foreign tax returns for any period.
Section 3.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of
Balance Sheet there has not occurred:
(a) any material and adverse change in the financial condition or
operations of EZA;
(b) any damage, destruction or loss to or of any of the material assets
of properties owned or leased by EZA;
(c) the creation or attachment of any Lien against the EZA Interests;
(d) any waiver, release, discharge, transfer, or cancellation by EZA of
any rights or claims of material value;
(e) any issuance by EZA of any securities, or any merger or
consolidation of EZA with any other Person, or any acquisition by EZA of the
business of any other Person;
(f) any incurrence, assumption or guarantee by EZA of any indebtedness
or liability;
(g) any declaration, setting aside or payment by EZA of any dividends
on, or any other distribution with respect to, any capital stock of EZA or any
repurchase, redemption, or other acquisition of any capital stock of EZA;
(h) (A) any payment of any bonus, profit sharing, pension or similar
payment or arrangement or special compensation to any employee of EZA, except in
the ordinary course of the administration of EZA, or (B) any increase in the
compensation payable to any employee of EZA; or
(i) the entry by EZA into any Contract to do any of the foregoing.
Section 3.12 MATERIAL EZA CONTRACTS. As of the date of this Plan of
Reorganization, EZA does not have except as discussed in Exhibit 3.12, (i)
contracts evidence or evidencing or relating to any liabilities or obligations
of EZA, whether absolute, accrued, contingent or otherwise, or granting any
Person a Lien or against any properties or assets owned or leased by EZA; (ii)
joint venture or partnership Contracts between EZA and any other person; (iii)
Contracts limiting the freedom of EZA to engage in or to complete in any
activity, or to use or disclose any information in its possession; (iv) any
guarantees of indebtedness for any other entity; and (v) any other Contracts to
which EZA is a party or by which it or the assets or properties owned or leased
by it are bound or affected that are not set forth on other Exhibits hereto,
which in aggregate contemplate payments to or by EZA exceeding $5,000 in any
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twelve-month period (collectively herein as the "Material EZA Contract"). EZA
has delivered to 20/20 true and complete copies of each of the Material EZA
Contracts, including any amendments thereto (or, in the case or oral Material
EZA Contracts, a memorandum of such contract) and all Material EZA Contracts are
valid, in full force and effect and enforceable in accordance with its terms
against the parties thereto other than EZA, and EZA has fulfilled when due, or
has taken all action necessary to enable it to fulfill when due all of its
obligations thereunder; (ii) there has not occurred any default (without regard
to lapse of time, the giving notice, or the election of any person other then
EZA, or any combination thereof) by EZA, nor, to the knowledge of EZA, has there
occurred any default (without regard to lapse of time, the giving of notice, or
the election of EZA, or any combination thereof) by any other person, under any
of the Material EZA Contracts; and (iii) neither EZA nor, to the knowledge of
EZA, any other person is in arrears in the performance or satisfaction of its
obligation under any of the Material EZA Contracts, and no waiver has been
granted by any of the parties thereto.
Section 3.13 REAL PROPERTY. As of the date of this Plan of
Reorganization, EZA does not own any real property.
Section 3.14 EMPLOYEES. As of the date of this Plan of Reorganization,
EZA has no employees.
Section 3.15 BOOKS AND RECORDS. All of the books, records and accounts
of EZA are in all material respects true and complete, are maintained in
accordance with good business practice and all applicable Legal Requirements,
accurately present and reflect in all material respects all of the transactions
therein described, and are reflected accurately in the Financial Statements. EZA
has previously delivered to 20/20 true and complete copies of all the minutes
and meetings and all other corporate actions of the officers, directors and
shareholders of EZA since the date of its incorporation.
Section 3.16 CERTAIN INTERESTS. None of EZA or its officers or
directors, directly or indirectly is, or owns any interest in, or controls, or
is an employee, officer or director or partner of or participant in, or
consultant to, any person which is a competitor, supplier or customer of EZA.
Section 3.17 BANK ACCOUNTS. Exhibit 3.17 sets forth all bank accounts,
brokerage accounts, and safe deposit boxes of any kind maintained by EZA and, in
each case, identifies the persons that are authorized signatories for, or which
are authorized to have access to, each of them.
Section 3.18 CHANGES IN CIRCUMSTANCES. EZA has no knowledge of (i) any
current or future condition or state of facts of circumstances which could
reasonably be expected to result in a material and adverse change in the
financial condition of operations of EZA, or (ii) any Legal Requirements
currently in effect from which EZA currently is, or any currently proposed Legal
Requirements from which EZA would be, except by reason of any "grandfather"
clauses of provisions contained therein, but which would be applicable to 20/20
following closing.
Section 3.19 Accuracy of Information. None of the written information
and documents which have been or will be furnished by EZA or any representatives
of EZA to 20/20 or any of the representatives of 20/20 in connection with the
transactions contemplated by this Agreement contains or will contain, as the
case may be, any untrue statement of a material fact, or omits or will omit to
state a material fact necessary in order to make the statements therein not
misleading in light of the circumstances in which made. To the knowledge of EZA,
EZA has
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disclosed to 20/20 as the purchaser of EZA Interests all material information
relating to EZA and its activities as currently conducted.
Section 3.20 INVESTMENT. EZA is acquiring 20/20 Common Stock for
investment purposes, and not with a view to distribution or resale thereof in
violation of applicable securities Legal Requirements.
Section 3.21 COMPLIANCE WITH ERISA. EZA does not maintain or contribute
to any Plan other than as set forth in Schedule 3.21. EZA and each member of the
Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the applicable provisions of ERISA and the Code,
and have not incurred any liability to the PBGC or a Plan under Title IV of
ERISA; and no "prohibited transaction" or "reportable event" (as such terms are
defined in ERISA) has occurred with respect to any Plan.
Section 3.22 ENVIRONMENTAL MATTERS.
(a) EZA has obtained all permits, licenses and other
authorizations which are required under all Environmental Laws, except to the
extent failure to have any such permit, license or authorization would not have
a material adverse effect on the business, financial condition or operations of
EZA. EZA is in compliance with the terms and conditions of all such permits,
licenses and authorizations, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply would not have a material adverse effect
on the business, financial condition or operations of EZA.
(b) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by EZA or any of its Subsidiaries to have any permit, license or
authorization required in connection with the conduct of its business or with
respect to any Environmental Laws, including, without limitation, Environmental
Laws relating to the generation, treatment storage, recycling, transportation,
disposal or release of any Hazardous Materials.
(c) To the best of EZA's knowledge, no material oral or
written notification of a release of a Hazardous Material has been filed by or
on behalf of EZA and no property now or previously owned, leased or used by EZA
is listed or proposed for listing on the National Priorities List under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or on any similar state list of sites requiring investigation or
clean-up.
(d) There are no liens or encumbrances arising under or
pursuant to any Environmental Laws on any of the real property or properties
owned, leased or used by EZA and no governmental actions have been taken or are
in process which could subject any of such properties to such liens or
encumbrances or, as a result of which EZA would be required to place any notice
or restriction relating to the presence of Hazardous Materials at any property
owned by it in any deed to such property.
(e) Neither EZA nor, to the best knowledge of EZA, any
previous owner, tenant, occupant or user of any property owned, leased or used
by EZA has
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(i) engaged in or permitted any operations or activities upon or any use or
occupancy of such property, or any portion thereof, for the purpose of or in any
way involving the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal (whether legal or illegal,
accidental or intentional) of any Hazardous Materials on, under, in or about
such property, except in compliance with all Environmental Laws, or (ii)
transported any Hazardous Materials to, from or across such property except in
compliance with all Environmental Laws; nor to the best knowledge of EZA have
any Hazardous Materials migrated from other properties upon, about or beneath
such property, nor, to the best knowledge of EZA, are any Hazardous Materials
presently constructed, deposited, stored or otherwise located on, under, in or
about such property except in compliance with all Environmental Laws.
Section 3.24 FRANCHISES, PATENTS, COPYRIGHTS, ETC. Schedule 3.24 sets
forth an accurate and complete list of all franchises, patents, copyrights,
trademarks, trade names, trademark registrations, service names, service marks,
licenses, formulas and applications therefor owned by EZA or used or required by
EZA in the operation of its business, title to each of which is, except as set
forth in Schedule 3.24 hereto, held by EZA free and clear of all adverse claims,
liens, security agreements, restrictions or other encumbrances. Except as set
forth in Schedule 3.24, EZA owns or possesses adequate (and will use its best
efforts to obtain as expediently as possible any additional) licenses or other
rights to use all patents, trademarks, trade names, service marks, trade secrets
or other intangible property rights and know-how necessary to entitle EZA to
conduct its business as presently being conducted. There is no infringement
action, lawsuit, claim or complaint which asserts that EZA's operations violate
or infringe the rights or the trade names, trademarks, trademark registrations,
service names, service marks or copyrights of others with respect to any
apparatus or method of EZA or any adversely held trademarks, trade names,
trademark registrations, service names, service marks or copyrights, and EZA is
not in any way making use of any confidential information or trade secrets of
any person, except with the consent of such person. Except as set forth in
Schedule 3.24, EZA has taken reasonable steps to protect its proprietary
information (except disclosure of source codes pursuant to licensing agreements)
and is the lawful owner of the proprietary information free and clear of any
claim of any third party. EZA's proprietary rights are adequate for the conduct
of its business substantially as now conducted without known conflict with any
rights of others.
Section 3.25 NO MATERIALLY ADVERSE CONTRACTS, ETC. EZA is not subject
to any charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation that has or is expected in the future to have a
materially adverse effect on the business, assets or financial condition of EZA.
EZA is not a party to any contract or agreement that has or is expected, in the
judgment of EZA's officers, to have any materially adverse effect on the
business of EZA.
Section 3.26 COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. EZA is not
in violation of any provision of its certificate of incorporation, by-laws, or
any agreement or instrument to which it may be subject or by which it or any of
its properties may be bound, or any decree, order, judgment, statute, license,
rule or regulation, in any of the foregoing cases in a manner that could result
in the imposition of substantial penalties or materially and adversely affect
the financial condition, properties or business of EZA.
Section 3.27 Absence of UCC Financing Statements, Etc. There is no
financing statement, security agreement, chattel mortgage, real estate mortgage
or other document filed or recorded with any filing records, registry, or other
public office, that purports to cover, affect or give notice of any present or
possible future lien on, or security interest in, any Collateral or rights
thereunder.
Section 3.28 Certain Transactions. Except as set forth in Schedule
3.28, none of the officers, trustees, directors, or employees of EZA is
presently a party to any transaction with EZA, including any contract, agreement
or other
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arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, trustee, director or such employee or, to the knowledge
of EZA, any corporation, partnership, trust or other entity in which any
officer, trustee, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
Section 3.29 FEES/COMMISSIONS. Except as set forth in Schedule 3.30
hereto, EZA has not agreed to pay any finder's fee, commission, origination fee
or other fee or charge to any Person with respect to the transactions
contemplated hereunder.
Section 3.30 EMPLOYEES. EZA has no current labor problems or disputes
which have resulted in, or are reasonably believed by EZA could have, a material
adverse effect on the operations, properties or financial condition of EZA.
Section 3.31 OTHER REPRESENTATIONS AND WARRANTIES. All representations,
warranties, and covenants made by EZA in connection with this transaction are
true and correct in all material respects, and do not omit to state a material
fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF 20/20
20/20 represents and warrants to EZA, as of the date of this Agreement
and as of Closing, as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION OF 20/20. 20/20 is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Nevada, and has all requisite corporate power and authority
to own and lease the properties and assets it currently owns and leases and to
conduct its activities as currently conducted. 20/20 is duly qualified to do
business as a foreign corporation in all jurisdictions in which the ownership or
leasing of the properties and assets owned or leased by it or the nature of its
activities makes such qualification necessary.
Section 4.2 AUTHORITY. 20/20 has all requisite corporation and
authority to execute, deliver and perform this Agreement. The execution,
delivery, and performance of this Agreement by 20/20 have been duly and validly
authorized by all necessary action on the part of 20/20. This Agreement has been
duly and validly executed and delivered by 20/20 and is the valid and binding
obligation of 20/20, enforceable against 20/20 in accordance with its terms.
Section 4.3 NO CONFLICTS; REQUIRED CONSENTS. The execution, delivery
and performance by 20/20 of this Agreement does not and will not: (i) conflict
with or violate any provisions of the articles of certificate of incorporation
or bylaws of 20/20; (ii) violate any provisions of any Legal Requirements; or
(iii) conflict with, violate result in a breach of, constitute a default under
(without regard to requirements of notice, lapse of time, or elections of other
persons, or any combination thereof) or accelerate or permit the acceleration of
the
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performance required by, and Contract or Lien to which 20/20 is a party or by
which 20/20 or the assets or properties owned or leased by it are bound or
affected; or (iv) require any consent, approval or authorization, report or
other document with, any Governmental Authority or other person.
Section 4.4 VALIDITY AND OWNERSHIP OF 20/20 COMMON STOCK. The 20/20
Common Stock received by the EZA Members at Closing will be validly issued and
outstanding, duly paid and nonassessable. The 20/20 Common Stock will not be
subject to, nor bound or affected by, any proxies, voting agreements, or other
restrictions on the ownership thereof.
Section 4.5 OWNERSHIP AND NUMBER OF SHARES OF 20/20 COMMON STOCK. The
shareholders' list attached hereto as Exhibit 4.5 accurately reflects the
currently issued and outstanding shares of 20/20 Common Stock currently
outstanding. There are not, and will not at Closing, be more than 11,755,991
outstanding shares of 20/20 Common Stock.
Section 4.6 SUBSIDIARIES. 20/20 does not control or hold direct or
indirect equity interest in, or hold rights to control or acquire direct or
indirect equity interests in, any corporation.
Section 4.7 CAPITALIZATION OF 20/20. The authorized capital stock of
20/20 consists of 100,000,000 duly authorized shares of common stock $.001 per
share par value, of which 430,991 are validly issued and outstanding, fully paid
and nonassessable. There are no other authorized or outstanding subscriptions,
options, convertible securities, warrants, calls or other rights or any kind
issued or granted by, or binding upon, 20/20 to purchase or otherwise acquire
any securities of or equity interest in 20/20.
Section 4.8 LITIGATION. There is no litigation pending or, to 20/20's
knowledge, threatened, by or before any governmental authority or private
arbitration tribunal, against 20/20 or its operations, nor, to 20/20"s
knowledge, is there any basis for any such litigation.
Section 4.9 LIABILITIES. Except as disclosed in Exhibit 4.10, 20/20 has
no liabilities or obligations, whether absolute, accrued, contingent, or
otherwise that have not been disclosed to EZA.
Section 4.10 TAX RETURNS AND PAYMENTS. Except as disclosed in Schedule
4.11, 20/20 has filed all federal, state, local and foreign tax returns required
to be filed, and has timely paid all taxes that have become due and payable,
whether or not so shown on any such tax returns. 20/20 has not received any
notice of, nor does 20/20 have any knowledge of, any deficiency or assessment of
proposed knowledge of, any deficiency or assessment of proposed deficiency or
assessment from any taxing governmental authority. There are no tax audits
pending with respect to 20/20, and there are no outstanding agreements or
waivers by or with respect to 20/20, that extend the statutory period of
limitations applicable to any federal, state, local or foreign tax returns for
any period. 20/20 makes no representation or warranty concerning whether or not
its net operating loss carryforwards will be available for use by EZA following
this transaction.
Section 4.11 BOOKS AND RECORDS. All of the books, records and accounts
of 20/20 are in all material respects true and complete, are maintained in
accordance with good business practice and all applicable Legal Requirements,
accurately present and reflect in all material respects all of the transactions
therein described, and are reflected accurately in the Financial Statements.
20/20 has previously delivered to EZA the complete stock record book of 20/20
and
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true and complete copies of all the minutes and meetings and all other corporate
actions of the stockholders, Board of Directors and committees of the Board of
Directors of 20/20 since the date of its incorporation.
Section 4.12 Accuracy of Information. None of the written information
and documents which have been or will be furnished by 20/20 or any
representatives of 20/20 to EZA or any of the representatives of EZA in
connection with the transactions contemplated by this Agreement contains or will
contain, as the case may be, any untrue statement of a material fact, or omits
or will omit to state a material fact necessary in order to make the statements
therein not misleading in light of the circumstances in which made. To the
knowledge of 20/20, 20/20 has disclosed to EZA as the purchaser of 20/20 common
stock all material information relating to 20/20 and its activities.
ARTICLE 5
COVENANTS OF EZA AND 20/20
Section 5.1 AFFIRMATIVE COVENANTS OF EZA. Except as 20/20 may otherwise
consent in writing, between the date of this Agreement and Closing, EZA shall:
(a) conduct its business only in the usual, regular and ordinary course
and in accordance with past practices;
(b) (1) duly comply with all applicable Legal Requirements; (2) perform
all of its obligations under all EZA Contacts without default; and (3) maintain
its books, records, and accounts on a basis consistent with past practices;
(c) (1) give to 20/20 its counsel, accountants and other
representatives reasonable access during normal business hours to the premises
of EZA, all of the assets and properties owned or leased by EZA, EZA's books and
records, and EZA's personnel; (2) furnish to 20/20 and such representatives all
such additional documents (certified by an officer of EZA, if requested),
financial information and other information as EZA may from time to time
reasonably request and (3) cause EZA's accountants to permit 20/20 and its
accountants to examine the records and working papers pertaining to EZA's
financial statements' provided that no investigation by 20/20 of its
representatives will affect or limit the scope of any of the representations and
warranties of EZA herein or in any other related document;
(d) use of best efforts to obtain in writing as promptly as possible
all approvals and consents required to be obtained by EZA in order to consummate
the transactions contemplated hereby and deliver to 20/20 copies, satisfactory
in form and substance to 20/20, of such approvals and consents;
(e) promptly deliver to 20/20 true and complete copies of all monthly
and quarterly financial statements of EZA and any reports with respect to the
activities of EZA which are prepared by or for EZA at any time from the date
hereof until Closing; and
(f) promptly notify 20/20 of any circumstances, event or action, by EZA
or otherwise, (A) which, if known at the date of this Agreement, would have been
required to be disclosed in or pursuant to this Agreement, or (B) the existence,
occurrence or taking of which would result in any of the representations and
warranties of EZA in this Agreement or in any Transaction Documents not being
true and correct in all material respects.
Section 5.2 Negative Covenants of EZA. Except as 20/20 may otherwise
consent in writing, between the date of this Agreement and Closing, EZA shall
not:
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(a) change the character of its business;
(b) incur any liability or obligation or enter into any Contract
except, in each case, in the ordinary course of business consistent with prior
practices and not prohibited by any other provision hereof;
(c) incur, assume or guarantee any indebtedness or liability in respect
of borrowed money;
(d) make any capital expenditure or commitment for capital expenditure
exceeding $5,000 for a single project or $10,000 for all projects, whether or
not in the ordinary course of business, or waive, lease, discharge, transfer or
cancel any rights or claims of material value;
(e) modify, terminate, or abrogate any Material EZA Contact other than
in the ordinary course of business, or waive, lease, discharge, transfer or
cancel any rights or claims of material value;
(f) create or permit the creation or attachment of any Lien against any
of the assets or properties owned or leased by it;
(g) except as otherwise required by this Agreement, prepay any material
liabilities or obligations;
(h) issue any securities, or merge or consolidate with any other person
or acquire any of the securities, partnership or joint venture interests, or
business of any other person;
(i) declare, set aside or pay any dividends on, or make any other
distribution with respect to, any of its capital stock, or repurchase, redeem,
or otherwise acquire any of its capital stock; and
(j) enter into any transaction or permit the taking of any action that
would result in any of the representations and warranties in this Agreement not
being true and correct in all material respects at Closing.
Section 5.3 COVENANTS OF 20/20. Except as EZA may otherwise agree in
writing, between the date of this Agreement and Closing, 20/20 shall:
(a) use it best efforts to obtain in writing as promptly as possible
all approvals and consents required to be obtained by 20/20 in order to
consummate the transaction contemplated hereby and deliver to EZA copies,
satisfactory in form and substance to EZA, of such approvals and consents;
(b) promptly notify EZA of any circumstance, event or action, by 20/20
or otherwise, (i) which, if known at the date of this Agreement, would have been
required to be disclosed in or pursuant to this Agreement, or (ii) the
existence, occurrence or taking of which would result in any of the
representations and warranties of EZA in this Agreement or in any Transaction
Document not being true and correct in all material respects;
(c) undertake all other actions necessary to put into force and effect
this Agreement.
Section 5.4 JOINT UNDERTAKINGS. Each of 20/20 and EZA shall cooperate
and exercise commercially reasonable efforts to facilitate the consummation of
the
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transactions contemplated by this Agreement so as to permit Closing to take
place on the date provided herein and to raise the satisfaction of conditions to
Closing set forth in Article 6. Both parties hereto agree that they will use
their best efforts to cause a Form 8-K to be filed with the Securities and
Exchange Commission concerning this transaction which Form 8-K will require
audited financial statements for EZA and pro forma financial information for the
companies as merger.
Section 5.5 CONFIDENTIALITY.
(a) Any non-public information that 20/20 may obtain from EZA in
connection with this Agreement, including but not limited to information
concerning trade secrets, licenses, research projects, costs, profits, markets,
sales, customer lists, strategies, plans for future development and any other
information of a similar nature, shall be deemed confidential and, unless and
until Closing shall occur, 20/20 shall not disclose any such information to any
third party (other than its directors, officers and employees and persons whose
knowledge thereof is necessary to facilitate the consummation of the
transactions contemplated hereby) or use such information to the detriment of
EZA; provided that (i) 20/20 may use and disclose any such information once it
has been publicly disclosed (other than by 20/20 in breach of its obligations
under this Section) or which rightfully has come into the possession of 20/20
(other than from EZA) and (ii) to the extent that 20/20 may become complied by
Legal Requirements to disclose any of such information, 20/20 may disclose such
information if it shall have used all reasonable efforts, and shall have
afforded EZA the opportunity to obtain an appropriate protective order, or other
satisfactory assurance of confidential treatment for the protective order, or
other satisfactory assurance of confidential treatment, for the information
compelling to be disclosed. In the event of termination of this Agreement, 20/20
shall use all reasonable efforts to cause to be delivered to EZA, and retain no
copies of, any documents, work papers and other materials obtained by 20/20 or
on its behalf from EZA, whether so obtained before or after the execution
hereof.
(b) Any non-public information that EZA may obtain from 20/20 in
connection with this Agreement, including but not limited to information
concerning trade secrets, licenses, research projects, costs, profits, markets,
sales, customer lists, strategies, plans for future development and any other
information of a similar nature, shall be deemed confidential and, unless and
until Closing shall occur, EZA shall not disclose any such information to any
third party (other than its directors, officers and employees, and persons whose
knowledge thereof is necessary to facilitate the consummation of the
transactions contemplated hereby) or use such information to the detriment of
20/20; provided that (i) EZA may use and disclose any such information once it
has been publicly disclosed (other than by EZA in breach of obligations under
this Section) or which rightfully has come into the possession of EZA (other
than from 20/20) and (ii) to the extent that EZA may become complied by Legal
Requirements to disclose any of such information, EZA may disclose such
information if it shall have used all reasonable efforts, and shall have
afforded 20/20 the opportunity, to obtain an appropriate protective order, or
other satisfactory assurance of confidential treatment, for the information
compelled to be disclosed. In the event of termination of this Agreement, EZA
shall use all reasonable efforts to cause to be delivered to 20/20, and retain
no copies of, any documents, work papers and other materials obtained by EZA or
on its behalf from 20/20, whether so obtained before or after the execution
hereof.
Section 5.6 PUBLICITY. 20/20 and EZA shall each consult with and obtain
the consent of the other before issuing any press release or making any other
public disclosure concerning this Agreement or the transactions contemplated
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hereby unless, in the reasonable judgment of the disclosing party, a release or
disclosure is required to discharge its disclosure obligations under applicable
legal requirements, in which case it shall in good faith consult with the other
party about the form, content and timing of such release or disclosure prior to
its release of disclosure.
ARTICLE 6
CONDITIONS PRECEDENT
Section 6.1 Conditions to EZA's Obligations. The obligations of EZA to
consummate the transactions contemplated by this Agreement are subject to the
following conditions:
(a) Accuracy of Representations. The representations of 20/20 in this
Agreement or in any Transaction Document shall be true and accurate in all
material respects at and as of Closing with the same effect as if made at and as
of Closing, except as affected by the transactions contemplated hereby.
(b) Performance of Agreements. 20/20 shall have performed all
obligations and agreements and complied with all covenants in this Agreement to
be performed and complied with by it at or before Closing.
(c) Officers's Certificate. EZA shall have received a certificate
executed by an executive officer of 20/20, dated as of Closing, reasonably
satisfactory in form and substance to EZA certifying that the conditions stated
in subparagraphs (a) and (b) of this Section have been satisfied.
(d) Legal Proceedings. There shall be no Legal Requirement, and no
judgment shall have been entered and not vacated by any governmental authority
of competent jurisdiction and no litigation shall be pending which restrains,
makes illegal or prohibits consummation of the transactions contemplated hereby.
(e) Consents. EZA shall have obtained evidence, in form and substance
satisfactory to it, that there have been obtained all consents, approvals and
authorizations required by this Agreement.
(f) Legal Matters Satisfactory to EZA's Counsel. All actions,
proceedings, instruments and documents required to carry out the transactions
contemplated by this Agreement or incidental thereto and all related matters
shall be reasonably satisfactory to and approved by EZA's counsel, and such
counsel shall have been furnished with such certified copies of actions and
proceedings and such other instruments and documents as it shall have reasonably
requested.
Section 6.2 CONDITIONS TO 20/20'S OBLIGATIONS. The obligations of 20/20
to consummate the transactions contemplated by this Agreement are subject to the
following conditions:
(a) Accuracy of Representations. The representations of EZA in this
Agreement or in any Transaction Document shall be true and accurate (in all
material respects) at and as of Closing with the same effect as if they were
made at and as of Closing, except as afforded by the transactions contemplated
hereby.
(b) Performance of Agreements. EZA shall have performed all obligations
and agreements and complied with all covenants in this Agreement or in any
Transaction Document to which it is a party to be performed and complied with by
it at or before closing.
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(c) Officers's Certificate. 20/20 shall have received a certificate
executed by an executive officer of EZA, dated as of Closing, reasonably
satisfactory in form and substance to 20/20, certifying that the conditions
stated in subparagraphs (a) and (b) of this Section have been satisfied.
(d) Legal Proceedings. There shall be no Legal Requirement, and no
judgment shall have been entered and not created by any governmental authority
of competent jurisdiction and no litigation shall be pending which restrains,
makes illegal or prohibits consummation of the transactions contemplated hereby.
(e) Consents. 20/20 shall have obtained evidence, in form and substance
satisfactory to it, that there have been obtained all consents, approvals and
authorizations required by this Agreement.
(f) Legal Matters Satisfactory to 20/20's Counsel. All actions,
proceedings, instruments and documents required to carry out the transactions
contemplated by this Agreement or incidental thereto and all related legal
matters shall be reasonably satisfactory to and approved by 20/20's counsel, and
such counsel shall have been furnished with such copies of actions and
proceedings and such other instruments and documents as it shall have reasonably
requested.
ARTICLE 7
INDEMNIFICATION
Section 7.1 INDEMNIFICATION BY EZA SHAREHOLDERS. From and after
Closing, the EZA Members set forth in Exhibit 7, who together with their
subsidiaries, other corporate affiliates, and immediate families, are all the
holders of EZA Interests ("EZA Members") all jointly and severally indemnify and
hold harmless 20/20, its officers, directors, employees, agents and
representatives and any person claiming by or through any of them, from and
against any and all losses and related expenses arising out of or resulting
from:
(a) any representations and warranties of EZA in this Agreement not
being true and accurate when made or when required by this Agreement to be true
and accurate; or
(b) any failure by EZA to perform any of its covenants, agreements or
obligations in this Agreement.
Section 7.2 INDEMNIFICATION BY 20/20. From and after the Closing, 20/20
shall indemnify and hold harmless EZA, its officers, directors, agents and
representatives, and any person claiming by or through any of them as the case
my be, from and against any and all losses and related expenses arising out of
or resulting from:
(a) any representations and warranties of 20/20 in this Agreement not
being true and accurate when made or when required by this Agreement to be true
and accurate; or
(b) any failure by 20/20 to perform any of its covenants, agreements or
obligations in this Agreement.
(c) all undisclosed abilities and obligations relating to, or arising
out of activities of 20/20 during periods prior to Closing.
Section 7.3 INDEMNIFICATION AGAINST THIRD PARTY CLAIMS. Promptly after
receipt entitled to indemnification hereunder (the "Indemnitee") of written
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notice of the assertion of any claim or the commencement of any Litigation with
respect to any matter referred to Sections 7.1 or 7.2, the Indemnitee shall give
written notice thereof to the party from whom indemnification is sought pursuant
hereto (the "Indemnitor") and thereafter shall keep the Indemnitor reasonably
informed with respect thereto, may provided that failure of the Indemnitee to
give the Indemnitor notice as provided herein shall not relieve the Indemnitor
of its obligations hereunder. In case any litigation is brought against any
Indemnitee, the Indemnitor shall be entitled to participate in (and at the
request of the Indemnitee shall assume) the defense thereof with counsel
satisfactory to Indemnitee at the Indemnitor's expense. If the Indemnitor, at
the Indemnitee's request, shall assume the defense of any settlement shall
include as an unconditional term thereof the giving by the claimant or the
plaintiff of a release of the Indemnitee, satisfactory to the Indemnitee, from
all liability with respect to such litigation.
Section 7.4 TIME AND MANNER OF CERTAIN CLAIMS. The representations and
warranties of 20/20 and the EZA Members in this Agreement shall survive Closing;
provided, however, that neither 20/20 nor the Members shall have any liability
under Section 7.1 or 7.2, respectively, unless a claim is asserted by the party
seeking indemnification thereunder by written notice to the party from whom
indemnification is sought within three years after Closing, and such party
commences litigation seeking such indemnification within 180 days following the
date of such notice.
Section 7.5 EFFECT OF DE MINIMUS DAMAGE ON INDEMNITY BY PRINCIPAL
SHAREHOLDERS. The Members shall have no indemnity obligations under this Article
7 unless aggregate amount payable by them under this Article 7 is in excess of
$10,000.
Section 7.6 TAX EFFECT. In calculating amount payable to an Indemnitee
hereunder (i) the amount of the indemnified losses shall be reduced by the
amount of any reduction in the Indemnitee's liability for taxes resulting from
the facts or occurrence giving rise to the indemnified losses; and (ii) the
amount of the indemnified losses shall be grossed up by the amount of any
increase in liability for taxes resulting from indemnification with respect
thereto.
ARTICLE 8
TERMINATION
Section 8.1 TERMINATION EVENTS. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned:
(a) at any time, by the mutual agreement of 20/20 and EZA.
(b) by either 20/20 and EZA, if the other is in material breach or
default of its respective covenants, agreements or other obligations hereunder
or if any of its representations and warranties herein are not true and accurate
in all material respects when made or when otherwise required by this Agreement
to be true and accurate.
(c) by either 20/20 or EZA upon written notice to the other, if the
transactions contemplated by this Agreement are not consummated on or prior to
June 16, 2003, for any reason other than material breach or default by such
party of its respective representations, warranties, covenants, agreements or
other obligations hereunder.
(d) by 20/20 if the sum of $240,000 is not received by Crown on or
before July 7, 2003.
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Section 8.2 EFFECT OF TERMINATION. If this Agreement shall be
terminated, all obligations of the parties hereunder shall terminate, except for
the obligations set forth in section 5.5, 5.6 and 9.3.
ARTICLE 9
MISCELLANEOUS
Section 9.1 EXPENSES. Each party shall pay its own expenses incurred as
a result of this transaction.
Section 9.2 WAIVER AND MODIFICATIONS. Any of the provisions of this
Agreement may be waived at any time by the party entitled to the benefit
thereof, upon the authority of the Board of Directors of such party. Any of the
provisions of this Agreement (including the exhibits and the Agreement of
Merger) may be modified at any time prior to and after the vote of the EZA
Shareholders by agreement in writing approved by the Board of Directors of each
party and executed in the same manner (but necessarily by the same persons) as
this Agreement, provided that such modification, after the last vote of the EZA
Shareholders shall not be allowed, if in the judgment of the Board of Directors
of EZA, it affects materially and adversely the benefits of EZA's Shareholders
under this Agreement of Merger. To the extent permitted by law, the powers of
the Board of Directors may be delegated by the Board of the Executive Committee
of such Board or by such Board (or by the Executive Committee to the extent any
matter has been delegated to such Committee by the Board) to any officer or
officers of such party, and any notices, consents or other action referred to in
this Agreement may be given or taken by any officer so authorized.
Section 9.3 FINDER COMMISSIONS. 20/20 and EZA each represents and
warrants that no broker or finder is entitled to any brokerage or finder's fee
or other commission based on agreements, arrangements or understandings made by
it with respect to the transactions contemplated by this Agreement or by the
Agreement of Merger, other than set forth in Exhibit 9.3.
Section 9.4 NOTICES. Any notice request, instruction or other documents
to be given hereunder or under the Agreement of Merger by any part to another
shall be in writing and delivered personally or sent by registered or certified
mail, postage prepaid,
if to 20/20, addressed to:
20/20 Networks, Inc.
00000 Xxxxxxx Xxxx. Xxxxx 000
Xxxxxxxx Xxxxx XX 00000
if to EZA, addressed to:
E-Z Arch, LLC
Attn: Xxxxxx Xxxxxxxxx, Manager
000-000 Xxxx Xxxxxxxx Xx.
Xxxxxxxxx XX X0X 0X0
Section 9.5 ABANDONMENT. At any time before the effective Date, this
Merger Agreement may be terminated and the merger may be abandoned by the Board
of Directors of 20/20 or the managers of EZA or both, notwithstanding approval
of this Agreement by the EZA Members or the 20/20 Shareholders or both.
Section 9.6 ENTIRE AGREEMENT. This Agreement and Plan of Merger
represents the entire agreement between the parties. Any and all oral or written
agreements
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concerning this merger shall be deemed null and void.
Section 9.6 GOVERNING LAW. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Nevada.
Section 9.7 COUNTERPARTS. In order to facilitate the filing and
recording of this Merger Agreement, the same may be executed in any number of
counterparts, each of which shall be deemed to be an original.
IN WITNESS WHEREOF, 20/20 and EZA, by their duly authorized officers,
have executed and delivered this Agreement effective as of the date first above
written.
20/20 Networks, Inc.
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx, CEO
E-Z Arch, LLC
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------
Xxxxxx Xxxxxxxxx, Manager
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