AMENDMENT NO. 2 TO
AGREEMENT AND PLAN OF MERGER
This AMENDMENT NO. 2, dated as of January 10, 2001 (the "Amendment"), to
the Agreement and Plan of Merger, dated February 28, 2000 (the "Agreement"),
among Vizacom Inc., a Delaware corporation ("Buyer"), PWR Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Buyer ("Merger Sub"), PC
Workstation Rentals, Inc. d/b/a PWR Systems, a New York corporation ("Seller"),
and the stockholders set forth in Schedule A to the Agreement (the "Seller
Stockholders").
WHEREAS, on March 27, 2000, Seller merged with and into Merger Sub, which
simultaneously changed its name to PWR Systems, Inc. (the "Surviving
Corporation"), pursuant to the terms of the Agreement;
WHEREAS, the Agreement provides for the issuance of additional shares of
common stock, par value $.001 per share of the Buyer (the "Common Stock") to the
Seller Stockholders in certain instances;
WHEREAS, on December 6, 2001, the Board of Directors of the Surviving
Corporation determined that the Surviving Corporation would not have sufficient
working capital to allow the Operating Profit of the Base Business to increase
by 50% during its fiscal year ended December 31, 2000;
WHEREAS, on December 6, 2000, the Board of Directors of Buyer (the "Board")
authorized the issuance of 280,000 shares of Common Stock to each of the Seller
Stockholders pursuant to Section 5.14(b) of the Agreement;
WHEREAS, on December 6, 2000, the Board authorized the issuance of 539,324
shares of Common Stock to each of the Seller Stockholders pursuant to Section
1.12 of the Agreement, 534,236 of such shares to be issued to each of the Seller
Stockholders subject to stockholder approval thereof;
WHEREAS, the Seller Stockholders have agreed to waive the obligation of the
Buyer to obtain such stockholder approval within the six-month period set forth
in Section 1.12 of the Agreement, provided that such stockholder approval is
solicited at the annual meeting of stockholders to be held in 2001;
WHEREAS, the parties to this Amendment have agreed that the accounts
payable of the Seller, as set forth in Section 2.5 of the Agreement, may have
been understated by approximately $171,346; and
WHEREAS, in consideration of a mutual waiver of all claims for
indemnification and breaches of representations and warranties under this
Agreement, other than the representations and warranties set forth in Section
2.24 of the Agreement, under which
the 120-day accounts receivables deadline has been agreed to be extended to
March 31, 2001, the Buyer and the Seller Stockholders have agreed to reduce the
number of shares of Common Stock to be issued in the future subject to
stockholder approval to each of the Seller Stockholders by 77,786, so that
following the requisite stockholder approval, each of the Seller Stockholders
shall receive 456,450 shares of Common Stock.
NOW, THEREFORE, in consideration of the premises, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Each of the Seller Stockholders has received 280,000 shares
of the Common Stock in satisfaction of the APEO Payment for the
Buyer's fiscal year ended December 31, 2000.
2. Each of the Seller Stockholders shall receive 5,088 shares
of Common Stock pursuant to Section 1.12 of the Agreement and an
additional 456,450 shares of Common Stock pursuant to such section
(the "Additional Shares"), following approval of the Buyer's
stockholders. This number of Additional Shares has been reduced by
77,786 for each of the Seller Stockholders, in consideration for
Paragraphs 4 and 5 below.
3. The Seller Stockholders hereby waive the obligation of the
Buyer to obtain stockholder approval of the issuance of the
Additional Shares within the six-month period set forth in to the
second proviso in the third sentence of Section 1.12 of the
Agreement, provided that the Company solicit stockholder approval
for such issuance at the annual meeting of stockholders to be held
in 2001. The Board of Directors of the Company will recommend the
approval of such issuance by the stockholders of the Company.
4. Except as set forth in Paragraph 5 of this Amendment, each
party hereto hereby waives any and all claims and/or indemnity
rights it has against each other party for the breach of any and all
representations or warranties set forth in the Agreement, including
without limitation, Sections 2.5, 2.6 and 2.22.
5. Section 2.24 of the Agreement is hereby replaced in its entirety with
a new Section 2.24, as follows:
"2.24 Accounts Receivable. Schedule 2.24 sets forth all
of Seller's accounts receivables. All accounts receivable
of Seller (i) arose from bona fide sales of goods or services
in the ordinary course of business and consistent with past
practice; (ii) are owned by Seller and as of the Closing
Date shall be free and clear of any Encumbrances, except for
the Encumbrances listed in the Schedule 2.24 which are
outstanding as of the date hereof, all of which shall be
released on the Closing Date; (iii) are accurately and
fairly reflected on the Seller Financials or, with respect
to accounts receivable of Seller created after the date
thereof and through the Closing Date, are and will be
accurately and fairly reflected in the books and records of
Seller; and (iv) are collectable, subject to any allowance
for doubtful accounts shown in the Seller Financials or
the books and records of Seller, in full no later than
March 31, 2001."
Notwithstanding Paragraph 4 of this Amendment, Section
2.24, as revised hereby, is otherwise in full force and effect.
6. The RE Notes in favor of each of the Seller Stockholders,
which had the initial aggregate principal amount of $762,745,
$369,250.37 of which has been repaid, shall be exchanged for new RE
Notes, each in the principal amount of 196,747.31, or in the
aggregate, $393,494.63, in the forms attached hereto as Exhibits A
and B, respectively.
7. All capitalized terms used herein without definition shall
have the meaning ascribed to them in the Agreement.
8. Except for the foregoing amendments and waivers, the remaining terms
and provisions of the Agreement are in full force and effect.
9. The Amendment may be executed by the parties hereto in one or more
counterparts, all of which shall be considered one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
signed by themselves or their duly authorized respective officer, all as of
the date first written above.
VIZACOM INC.
By: /s/ Xxxx Xxxxxxxxxx
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Name: Xxxx Xxxxxxxxxx
Title: VP of Finance and CFO
PWR SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
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Name: Xxxx X. Xxxxxxxxxx
Title: Treasurer
SELLER STOCKHOLDERS
/s/ Xxxxxxx XxXxxxxx
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Xxxxxxx XxXxxxxx
/s/ Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
Exhibit A
PROMISSORY NOTE
$196,747.31 Teaneck, New Jersey
January __, 2001
FOR VALUE RECEIVED, the undersigned, PWR Systems, Inc., a Delaware
corporation ("Maker"), does hereby promise to pay to the order of Xxxxxxx
XxXxxxxx ("Payee"), with an address at 00 Xxxxx Xxxx, or at such other place as
the Payee or any holder hereof may from time to time designate, the principal
sum of One Hundred Ninety-six Thousand Seven Hundred Forty-seven Dollars and
Thirty-one Cents ($196,747.31) in lawful money of the United States and
immediately available funds, together with interest accruing from the date
hereof on the unpaid balance of said principal amount from time to time
outstanding at the rate of 6.30%, in twelve equal installments of principal plus
interest of $16,950.53 on the 27th day of the twelve consecutive months
beginning January 27, 2001 with the final installment on December 27, 2001.
Interest shall be calculated on the basis of the actual number of days elapsed
in a 360 day year of twelve 30-day months. This Note is made pursuant to Section
4.1.2 of a certain Agreement and Plan of Merger (the "Merger Agreement") dated
as of February 28, 2000, as amended as of the date hereof, among Maker, Payee
and others.
1. Events of Default
-----------------
Upon the occurrence of any of the following events (each, an "Event of
Default" and collectively, the "Events of Default"):
(a) failure by Maker to pay the principal or interest of the Note or
any installment thereof within ten business days after such payment is due,
whether on the date fixed for payment or by acceleration or otherwise; or
(b) a final judgment for the payment of money in excess of $75,000
shall be rendered against Maker, and such judgment shall remain undischarged for
a period of sixty days from the date of entry thereof unless within such sixty
day period such judgment shall be stayed, and appeal taken therefrom and the
execution thereon stayed during such appeal; or
(c) if Maker shall default in respect of any evidence of indebtedness
or under any agreement under which any notes or other evidence of indebtedness
of Maker are issued, if the effect thereof is to cause, or permit the holder or
holders thereof to cause, such obligation or obligations in an amount in excess
of $75,000 in the aggregate to become due prior to its or their stated maturity
or to permit the acceleration thereof; or
(d) if Maker or any other authorized person or entity shall take any
action to effect a dissolution, liquidation or winding up of Maker; or
(e) if Maker shall make a general assignment for the benefit of
creditors or consent to the appointment of a receiver, liquidator,
custodian, or similar official of all or
substantially all of its properties, or any such official is placed in
control of such properties, or Maker admits in writing its inability to pay its
debts as they mature, or Maker shall commence any action or proceeding or take
advantage of or file under any federal or state insolvency statute, including,
without limitation, the United States Bankruptcy Code or any political
subdivision thereof, seeking to have an order for relief entered with respect to
it or seeking adjudication as a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution,
administration, a voluntary arrangement, or other relief with respect to it or
its debts; or
(f) there shall be commenced against Maker any action or proceeding of
the nature referred to in paragraph (e) above or seeking issuance of a warrant
of attachment, execution, distraint, or similar process against all or any
substantial part of the property of Maker, which results in the entry of an
order for relief which remains undismissed, undischarged or unbonded for a
period of sixty (60) days;
(g) any default under any of (i) the Guaranty of this Note of even
date between Vizacom Inc., a Delaware corporation ("VIZ"), and Payee; (ii) the
Promissory Note (the "PN2") of even date by Maker made to the other Seller
Stockholder ("SS");(iii) the Guaranty of the PN2 of even date between VIZ and
SS; (iv) the Convertible Promissory Note (the "CPN") of even date made by VIZ to
Payee; (v) the Guaranty of the CPN of even date between Maker and Payee; (vi)
the Convertible Promissory Note (the "CPN2") of even date made by VIZ to SS; and
(vii) the Guaranty of the CPN2 of even date between Maker and SS; or
(h) any material default by VIZ of the first or second sentence of
Section 3(a) or any material default of the provisions set forth in of Section
3(b) of the Executive Employment Agreement of even date between VIZ and Payee.
then, in addition to all rights and remedies of Payee under applicable law or
otherwise, all such rights and remedies being cumulative, not exclusive and
enforceable alternatively, successively and concurrently, at his option, Payee
may declare all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof together with all interest accrued thereon, shall
forthwith become due and payable, together with default interest accruing
thereafter at 6.30% plus three percent (3%) until the indebtedness evidenced by
this Note is paid in full, plus all costs and expenses of collection or
enforcement hereof, including, but not limited to, attorneys' fees and expenses.
2. Prepayment.
----------
(a) Maker may prepay, at any time, the unpaid principal balance of
this Note or any portion thereof, together with all accrued and unpaid
interest on the amount so prepaid. Amounts so prepaid shall be applied
first to Maker's obligations under this Note in respect of interest, and second,
to principal.
(b) Maker shall prepay the entire principal balance of this Note,
together with
all accrued and unpaid interest on the amount so prepaid, upon receiving
gross proceeds of $15,000,000 or more in the aggregate commencing on
November 12, 1999.
3. Offset. The obligation of Maker to make payments pursuant to this Note
is subject to Vizacom's right of offset set forth in Section 9.3 of the Merger
Agreement.
4. Miscellaneous.
-------------
(a) Maker (i) waives diligence, notice of dishonor, demand,
presentment, protest, notice of protest and notice of any kind, (ii) agrees that
it will not be necessary for any holder hereof to first institute suit in order
to enforce payment of this Note and (iii) consents to any one or more extensions
or postponements of time of payment, release, surrender or substitution of
collateral security or forbearance or other indulgence, without notice or
consent.
(b) All payments to be made to Payee under this Note shall be made
into such account or accounts as the Payee may from time to time specify for
that purpose.
(c) The provisions of this Note may not be changed, modified or
terminated orally, but only by an agreement in writing signed by the party to be
charged, nor shall any waiver be applicable except in the specific instance for
which it is given.
(d) This Note may not be assigned without the prior written consent
of the Maker.
(e) The execution and delivery of this Note has been authorized by the
Board of Directors of Maker.
(f) This Note shall be governed by and construed, and all rights and
obligations hereunder and thereunder determined, in accordance with the laws of
the State of New York without regard to the conflicts of laws principles thereof
and shall be binding upon the successors and assigns of Maker and inure to the
benefit of the Payee, its successors, endorsees and assigns.
(g) If any term or provision of this Note shall be held invalid,
illegal or unenforceable, the validity of all other terms and provisions shall
in no way be affected thereby.
(h) No delay or failure on the part of Payee to exercise any power or
right shall operate as a waiver thereof, and such rights and powers shall be
deemed continuous, nor shall a partial exercise preclude full exercise thereof,
and no right or remedy of Payee shall be deemed abridged or modified by any
course of conduct, and no waiver thereof shall be predicated thereon, nor shall
failure to exercise any such power or right subject Payee to any liability.
(i) Upon receipt by Maker of evidence and adequate indemnification by
Payee reasonably satisfactory to it of the loss, theft, destruction, or
mutilation of this Note, and upon
surrender and cancellation of this Note, if mutilated, Maker will make and
deliver a new Note of like tenor, in lieu thereof.
(j) Whenever used herein, the terms "Maker" and "Payee" shall be
deemed to include their respective successors and assigns.
(k) This Note supercedes any prior note issued to Payee pursuant to
Section 4.1.2 of the Merger Agreement.
PWR SYSTEMS, INC.
By:
-------------------------------
Name:
Title
Exhibit B
PROMISSORY NOTE
$196,747.31 Teaneck, New Jersey
January ___, 2001
FOR VALUE RECEIVED, the undersigned, PWR Systems, Inc., a Delaware
corporation ("Maker"), does hereby promise to pay to the order of Xxxxx X. Xxxxx
("Payee"), with an address at 00 Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxx Xxxx 00000, or
at such other place as the Payee or any holder hereof may from time to time
designate, the principal sum of One Hundred Ninety-six Thousand Seven Hundred
Forty-seven Dollars and Thirty-one Cents ($196,747.31) in lawful money of the
United States and immediately available funds, together with interest accruing
from the date hereof on the unpaid balance of said principal amount from time to
time outstanding at the rate of 6.30%, in twelve equal installments of principal
plus interest of $16,950.53 on the 27th day of the twelve consecutive months
beginning January 27, 2001 with the final installment on December 27, 2001.
Interest shall be calculated on the basis of the actual number of days elapsed
in a 360 day year of twelve 30-day months. This Note is made pursuant to Section
4.1.2 of a certain Agreement and Plan of Merger (the "Merger Agreement") dated
as of February 28, 2000, as amended as of the date hereof, among Maker, Payee
and others.
1. Events of Default
-----------------
Upon the occurrence of any of the following events (each, an "Event of
Default" and collectively, the "Events of Default"):
(a) failure by Maker to pay the principal or interest of the Note or
any installment thereof within ten business days after such payment is due,
whether on the date fixed for payment or by acceleration or otherwise; or
(b) a final judgment for the payment of money in excess of $75,000
shall be rendered against Maker, and such judgment shall remain undischarged for
a period of sixty days from the date of entry thereof unless within such sixty
day period such judgment shall be stayed, and appeal taken therefrom and the
execution thereon stayed during such appeal; or
(c) if Maker shall default in respect of any evidence of indebtedness
or under any agreement under which any notes or other evidence of indebtedness
of Maker are issued, if the effect thereof is to cause, or permit the holder or
holders thereof to cause, such obligation or obligations in an amount in excess
of $75,000 in the aggregate to become due prior to its or their stated maturity
or to permit the acceleration thereof; or
(d) if Maker or any other authorized person or entity shall take
any action to effect a dissolution, liquidation or winding up of Maker; or
(e) if Maker shall make a general assignment for the benefit of
creditors or consent to the appointment of a receiver, liquidator,
custodian, or similar official of all or
substantially all of its properties, or any such official is placed in
control of such properties, or Maker admits in writing its inability to pay its
debts as they mature, or Maker shall commence any action or proceeding or take
advantage of or file under any federal or state insolvency statute, including,
without limitation, the United States Bankruptcy Code or any political
subdivision thereof, seeking to have an order for relief entered with respect to
it or seeking adjudication as a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution,
administration, a voluntary arrangement, or other relief with respect to it or
its debts; or
(f) there shall be commenced against Maker any action or proceeding of
the nature referred to in paragraph (e) above or seeking issuance of a warrant
of attachment, execution, distraint, or similar process against all or any
substantial part of the property of Maker, which results in the entry of an
order for relief which remains undismissed, undischarged or unbonded for a
period of sixty (60) days;
(g) any default under any of (i) the Guaranty of this Note of even
date between Vizacom Inc., a Delaware corporation ("VIZ"), and Payee; (ii) the
Promissory Note (the "PN2") of even date by Maker made to the other Seller
Stockholder ("SS");(iii) the Guaranty of the PN2 of even date between VIZ and
SS; (iv) the Convertible Promissory Note (the "CPN") of even date made by VIZ to
Payee; (v) the Guaranty of the CPN of even date between Maker and Payee; (vi)
the Convertible Promissory Note (the "CPN2") of even date made by VIZ to SS; and
(vii) the Guaranty of the CPN2 of even date between Maker and SS; or
(h) any material default by VIZ of the first or second sentence of
Section 3(a) or any material default of the provisions set forth in of Section
3(b) of the Executive Employment Agreement of even date between VIZ and Payee.
then, in addition to all rights and remedies of Payee under applicable law or
otherwise, all such rights and remedies being cumulative, not exclusive and
enforceable alternatively, successively and concurrently, at his option, Payee
may declare all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof together with all interest accrued thereon, shall
forthwith become due and payable, together with default interest accruing
thereafter at 6.30% plus three percent (3%) until the indebtedness evidenced by
this Note is paid in full, plus all costs and expenses of collection or
enforcement hereof, including, but not limited to, attorneys' fees and expenses.
2. Prepayment.
----------
(a) Maker may prepay, at any time, the unpaid principal balance of
this Note or any portion thereof, together with all accrued and unpaid interest
on the amount so prepaid. Amounts so prepaid shall be applied first to Maker's
obligations under this Note in respect of interest, and second, to principal.
(b) Maker shall prepay the entire principal balance of this Note,
together with
all accrued and unpaid interest on the amount so prepaid, upon receiving
gross proceeds of $15,000,000 or more in the aggregate commencing on November
12, 1999.
3. Offset. The obligation of Maker to make payments pursuant to this Note is
subject to Vizacom's right of offset set forth in Section 9.3 of the Merger
Agreement.
4. Miscellaneous.
-------------
(a) Maker (i) waives diligence, notice of dishonor, demand,
presentment, protest, notice of protest and notice of any kind, (ii) agrees that
it will not be necessary for any holder hereof to first institute suit in order
to enforce payment of this Note and (iii) consents to any one or more extensions
or postponements of time of payment, release, surrender or substitution of
collateral security or forbearance or other indulgence, without notice or
consent.
(b) All payments to be made to Payee under this Note shall be made
into such account or accounts as the Payee may from time to time specify for
that purpose.
(c) The provisions of this Note may not be changed, modified or
terminated orally, but only by an agreement in writing signed by the party to be
charged, nor shall any waiver be applicable except in the specific instance for
which it is given.
(d) This Note may not be assigned without the prior written consent
of the Maker.
(e) The execution and delivery of this Note has been authorized by the
Board of Directors of Maker.
(f) This Note shall be governed by and construed, and all rights and
obligations hereunder and thereunder determined, in accordance with the laws of
the State of New York without regard to the conflicts of laws principles thereof
and shall be binding upon the successors and assigns of Maker and inure to the
benefit of the Payee, its successors, endorsees and assigns.
(g) If any term or provision of this Note shall be held invalid,
illegal or unenforceable, the validity of all other terms and provisions shall
in no way be affected thereby.
(h) No delay or failure on the part of Payee to exercise any power or
right shall operate as a waiver thereof, and such rights and powers shall be
deemed continuous, nor shall a partial exercise preclude full exercise thereof,
and no right or remedy of Payee shall be deemed abridged or modified by any
course of conduct, and no waiver thereof shall be predicated thereon, nor shall
failure to exercise any such power or right subject Payee to any liability.
(i) Upon receipt by Maker of evidence and adequate indemnification by
Payee reasonably satisfactory to it of the loss, theft, destruction, or
mutilation of this Note, and upon
surrender and cancellation of this Note, if mutilated, Maker will make and
deliver a new Note of like tenor, in lieu thereof.
(j) Whenever used herein, the terms "Maker" and "Payee" shall be
deemed to include their respective successors and assigns.
(k) This Note supercedes any prior note issued to Payee pursuant to
Section 4.1.2 of the Merger Agreement.
PWR SYSTEMS, INC.
By:
----------------------------------
Name:
Title
