EXHIBIT 2.0
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DIRECTVIEW, INC., A NEVADA CORPORATION
AND
XXXXXXX COMMUNICATIONS, INC., A FLORIDA CORPORATION
MAY 16, 2003
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of May 16, 2003,
by and among DIRECTVIEW, INC., a Nevada corporation ("BPMI") and XXXXXXX
COMMUNICATIONS, INC. d/b/a Directview, a Florida corporation ("RCI"). The
corporate parties hereto are sometimes hereinafter referred to collectively as
the "Companies," or individually as a "Company."
WHEREAS, the respective Boards of Directors of the Companies deem it
advisable and in the best interests of their respective stockholders that RCI be
acquired by and become a wholly owned subsidiary of BPMI and, in furtherance
thereof, the Boards of Directors of the Companies have approved, as applicable,
the merger of a Florida corporation to be formed and to be a wholly owned
subsidiary of BPMI ("Acquisition Sub") with and into RCI, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, for federal income tax purposes, it is intended that the
merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.2 hereof), Acquisition
Sub shall be merged (the "Merger") with and into RCI, with RCI being the
surviving corporation in the Merger (the "Surviving Corporation") and the
separate existence of Acquisition Sub shall thereupon cease. The Merger shall
have the effects set forth in the Florida Business Corporation Law (the "FBCA").
1.2 Effective Time of the Merger. The Merger shall become
effective (the "Effective Time") upon the completion of the filing of properly
executed Articles of Merger with the Secretary of State of the State of Florida,
which filing shall be made on the Closing Date after satisfaction of the
conditions set forth in Article VII hereof.
ARTICLE II
BPMI AND THE SURVIVING CORPORATION
2.1 Certificate of Incorporation of the Surviving Corporation. The
Certificate of Incorporation of RCI shall be the Certificate of Incorporation of
the Surviving Corporation.
2.2 Bylaws of the Surviving Corporation. The Bylaws of RCI as in
effect at the Effective Time shall be the Bylaws of the Surviving Corporation
until thereafter amended in accordance with applicable law.
2.3 Directors and Officers of the Surviving Corporation.
(a) The directors of RCI at the Effective Time shall be
the initial directors of the Surviving Corporation of the Merger and shall hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided
by law.
(b) The officers of RCI at the Effective Time shall be
the initial officers of the Surviving Corporation of the Merger and shall hold
office from the Effective Time until removed or until
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their respective successors are duly elected or appointed and qualified in the
manner provided in the Certificate of Incorporation and Bylaws of the Surviving
Corporation, or as otherwise provided by law.
ARTICLE III
CONVERSION OF SHARES
3.1 Exchange Ratio. At the Effective Time and subject to Section
VII, by virtue of the Merger and without any action on the part of the holder
thereof:
(a) Each share of common stock of RCI ("RCI Common
Share") issued and outstanding immediately prior to the Effective Time shall be
converted at the Effective Time into the right to receive shares of restricted
common stock, par value $.0001 share, of BPMI ("BPMI Shares"). The aggregate
number of BPMI Shares to be received by the RCI shareholders shall be
107,776,566.
(b) Notwithstanding anything to the contrary in this
Agreement, any holder of RCI Shares who shall exercise the rights of a
dissenting shareholder pursuant to and strictly in accordance with the
provisions of the FBCA shall be entitled to receive only the payment therein
provided for and shall not be entitled to receive BPMI Shares. Such payment
shall be made directly by the Surviving Corporation.
(c) At the Effective Time, all RCI Shares shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and each certificate previously representing any such RCI Shares shall
thereafter represent the BPMI Shares, into which such RCI Shares have been
converted. Certificates representing RCI Shares shall be exchanged for
certificates representing whole BPMI Shares.
(d) Each RCI Share held in treasury shall be canceled and
retired and cease to exist, and no BPMI Shares shall be issued in exchange
therefor.
3.2 Intentionally Left Blank.
3.3 Dividends; Transfer Taxes. No dividends shall be declared or
paid on BPMI Shares prior to the Effective Time.
3.4 No Fractional Securities. No certificates or scrip
representing fractional BPMI Shares shall be issued pursuant to this Article III
and no dividend, stock split-up, or other change in the capital structure of
BPMI shall relate to any fractional security, and such fractional interests
shall not entitle the owner thereof to vote or to any rights of a security
holder. In lieu of any such fractional securities, each holder of Shares who
would otherwise have been entitled to a fraction of a BPMI Share upon surrender
of stock certificates for exchange pursuant to this Article III shall receive a
BPMI Share rounded to the next highest number.
3.5 Closing of Transfer Books. At the Effective Time, the stock
transfer books of RCI shall be closed and no transfer of RCI Shares shall
thereafter be made. If, after the Effective Time, certificates representing RCI
Shares are presented to the Surviving Corporation, they shall be canceled and
exchanged for certificates representing BPMI Shares in accordance with the terms
hereof. At and after the Effective Time, the holders of RCI Shares to be
exchanged for BPMI Shares pursuant to this Agreement shall cease to have any
rights as shareholders of RCI except for the right to surrender such stock
certificates in exchange for BPMI Shares as provided hereunder.
3.6 Dissenting Shares. If holders of RCI Shares are entitled to
dissent from the Merger and demand appraisal of any such RCI Shares in
accordance with the provisions of the FBCA concerning the right of such holders
to dissent from the Merger and demand appraisal of their shares ("Dissenting
Holders"), any RCI Shares held by a Dissenting Holder as to which appraisal has
been so demanded ("Excluded RCI Shares") shall not be converted as described in
Section 3.1, but shall from and after the
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Effective Time represent only the right to receive such consideration as may be
determined to be due to such Dissenting Holder pursuant to the FBCA; provided,
however, that each RCI Share held by a Dissenting Holder who shall, after the
Effective Time, withdraw his demand for appraisal or lose his right of appraisal
with respect to such RCI Shares, in either case pursuant to the DGCL, shall not
be deemed Excluded RCI Shares but shall be deemed to be converted, as of the
Effective Time, into the right to receive BPMI Shares in accordance with the RCI
Exchange Ratio, as applicable.
3.7 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxx & Xxxx,
P.A., 000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000,
at 11 a.m., local time, on the first business day (the "Closing Date") after the
later of (a) the day on which the meeting of the stockholders of RCI approving
the Merger is held or the Required Stockholders' Consent is executed and
delivered to RCI in compliance with applicable law, or (b) the day on which all
of the conditions set forth in Article VII hereof are satisfied or waived (other
than those conditions which are to be satisfied at Closing), or at such other
date, time and place as the Companies shall agree.
3.8 Supplementary Action. If at any time after the Effective Time,
any further assignments or assurances in law or any other things are necessary
or desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either BPMI or RCI, or
otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered on
behalf of each, in the name of and on behalf of them as appropriate, to execute
and deliver any and all things necessary or proper to vest or to perfect or
confirm title to such property or rights in the Surviving Corporation, and
otherwise to carry out the purposes and provisions of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RCI
As used in this Agreement, (i) the term "Material Adverse Effect"
means, with respect to BPMI or RCI, as the case may be, a material adverse
effect on the business, assets, results of operations, or financial condition of
such party and its subsidiaries taken as a whole or in the ability of such party
to perform its obligations hereunder, and (ii) the word "subsidiary" when used
with respect to any party means any corporation or other organization, whether
incorporated or unincorporated, of which such party or any other subsidiary of
such party is a general partner (excluding partnerships the general partnership
interests of which held by such party or any subsidiary of such party do not
have a majority of the voting interests in such partnership) or of which at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporations or other
organizations is directly or indirectly owned or controlled by such party and/or
by any one or more of the subsidiaries.
RCI represents and warrants, with respect to RCI, except as disclosed
to BPMI in the RCI Schedule of Exceptions (the "RCI Schedule"), attached hereto
and incorporated herein by this reference, as follows:
4.1 Organization. RCI is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation and has the corporate or other power to carry on its business as
it is now being conducted or presently proposed to be conducted. RCI is duly
qualified as a foreign corporation or entity to do business, and is in good
standing (to the extent the concept of good standing exists), in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified shall not have a Material Adverse Effect.
4.2 Capitalization. The authorized capital stock of RCI is as set
forth in Section 4.2 of the RCI Schedule. As of the date hereof and as of the
Effective Time, the number of Shares of RCI which are issued and outstanding is
as set forth in Section 4.2 of the RCI Schedule. All of the issued and
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outstanding Shares of RCI are validly issued, fully paid, and non-assessable and
free of preemptive rights or similar rights created by statute, the Certificate
of Incorporation or Bylaws of RCI or any agreement by which RCI is a party or by
which it is bound.
4.3 Authority Relative to this Agreement. RCI has the corporate
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement by RCI and the consummation by RCI
of the transactions contemplated hereby have been duly authorized by its Board
of Directors, and, except for approval by the requisite votes cast by RCI's
shareholders at the meeting provided for herein or the Required Stockholders'
Consent, no other corporate proceedings on the part of RCI are necessary to
approve this Agreement or the transactions contemplated hereby.
4.4 Consents and Approvals; No Violations. Except filing and
recordation of Articles of Merger under the FBCA, no filing with, and no permit,
authorization, consent, or approval of, any public body or authority is
necessary for the consummation by RCI of the transactions contemplated by this
Agreement. Except as set forth in Section 4.4 of the RCI Schedule, neither the
execution and delivery of this Agreement by RCI, nor the consummation by it of
the transactions contemplated hereby, nor compliance by RCI with any of the
provisions hereof, shall (a) result in any breach of the Certificate of
Incorporation or Bylaws of RCI, (b) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, or acceleration) under, any
of the terms, conditions, or provisions of any note, bond, mortgage, indenture,
license, contract, agreement, or other instrument or obligation to which RCI is
a party or by which it or any of its properties or assets may be bound or (c)
violate any order, writ, injunction, decree, statute, rule, or regulation
applicable to RCI, or any of its properties or assets, except in the case of
clauses (b) and (c) for violations, breaches, or defaults that would not have a
Material Adverse Effect on RCI.
4.5 Financial Statements. The unaudited balance sheet dated
December 31, 2002 fairly presents in all material respects the consolidated
financial position of RCI as of the respective dates thereof, and the other
related statements (including in the case of the audited balance sheet, the
related notes) included therein fairly present in all material respects the
results of operations, changes in stockholders' equity and cash flows of RCI for
the respective periods or as of the respective dates set forth therein, all in
conformity with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted therein and subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments and any other adjustments described therein and the absence of any
notes thereto.
4.6 Absence of Certain Changes or Events; Undisclosed Liabilities.
(a) Since December 31, 2002, except as set forth in
Section 4.6 of the RCI Schedule, RCI has not: (i) incurred any liability
material to RCI on a consolidated basis, except in the ordinary course of its
business, consistent with past practices; (ii) suffered a change, or any event
involving a prospective change, in the business, assets, financial condition, or
results of operations of RCI which has had, or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on RCI, (other than
as a result of changes or proposed changes in federal or state regulations of
general applicability or interpretations thereof, changes in generally accepted
accounting principles, and changes that could, under the circumstances,
reasonably have been anticipated); or (iii) subsequent to the date hereof,
conducted its business and operations other than in the ordinary course of
business and consistent with past practices.
(b) RCI has any liability (and there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rising to any liability)
except for (i) liabilities set forth on the face of the December 31 balance
sheet and (ii) liabilities which have risen after the December 31, 2002 balance
sheet in the ordinary course of business (none of which is material or results
from, arises out of, relates to, is in the nature of, or was caused by any
breach of contract, tort, infringement, or violation of law).
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4.7 Litigation. As of the date of this Agreement, (i) there is no
action, suit, judicial, or administrative proceeding, arbitration or
investigation pending or, to the best knowledge of RCI, threatened against or
involving RCI or any of its properties or rights, before any court, arbitrator,
or administrative or governmental body; (ii) to the best knowledge of RCI there
is no judgment, decree, injunction, rule, or order of any court, governmental
department, commission, agency, instrumentality, or arbitrator outstanding
against RCI; and (iii) to the best knowledge of RCI ,RCI is not in violation of
any term of any judgments, decrees, injunctions, or orders outstanding against
them. RCI has furnished to BPMI in writing, a copy of which is set forth in
Section 4.7 of the RCI Schedule, a description of all litigation, actions,
suits, proceedings, arbitrations, investigations known to it, judgments,
decrees, injunctions or orders pending; or to its best knowledge, threatened
against or involving RCI, or any of their properties or rights as of the date
hereof.
4.8 Contracts.
(a) Each of the material contracts, instruments,
mortgages, notes, security agreements, leases, agreements, or understandings,
whether written or oral, to which RCI is a party that relates to or affects the
assets or operations of RCI or to which RCI or its assets or operations may be
bound or subject is a valid and binding obligation of RCI and in full force and
effect (with respect to RCI or such subsidiary), except for where the failure to
be in full force and effect would not, individually or in the aggregate, have a
Material Adverse Effect on RCI. Section 4.8(a) of the RCI Schedule sets forth a
complete list of all material contracts. For purposes of this Agreement a
material contract shall be any contract or agreement, which involves
consideration in excess of $25,000. Except to the extent that the consummation
of the transactions contemplated by this Agreement may require the consent of
third parties, as disclosed in the RCI Schedule, there are no existing defaults
by RCI thereunder or, to the knowledge of RCI, by any other party thereto, which
defaults, individually or in the aggregate, would have a Material Adverse Effect
on RCI; and no event of default has occurred, and no event, condition, or
occurrence exists, that (whether with or without notice, lapse of time, or the
happening or occurrence of any other event) would constitute a default by RCI
thereunder which default would, individually or in the aggregate, have a
Material Adverse Effect on RCI.
(b) Except for this Agreement and those set forth on
Section 4.8(b) of the RCI Schedule, RCI is not a party to any oral or written
(i) consulting agreement not terminable on 60 days' or less notice requiring the
payment of more than $25,000 per annum, in the case of any such agreement with
an individual; (ii) joint venture agreement; (iii) noncompetition or similar
agreements that restricts RCI from engaging in a line of business; (iv)
agreement with any executive officer or other employee of RCI or any subsidiary
the benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving RCI of the nature
contemplated by this Agreement and which provides for the payment of in excess
of $100,000; (v) agreement with respect to any executive officer of RCI or any
subsidiary providing any term of employment or compensation guaranty in excess
of $25,000 per annum; or (vi) agreement or plan, including any stock option
plan, stock appreciation rights plan, restricted stock plan, or stock purchase
plan, any of the benefits of which shall be increased, or the vesting of the
benefits of which shall be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which shall be calculated on the basis of any of the transactions
contemplated by this Agreement.
4.9 Taxes. For the purposes of this section, the term "tax" shall
include all taxes, charges, withholdings, fees, levies, penalties, additions,
interest, or other assessments imposed by any United States federal, state, or
local authority or any other taxing authority on RCI or any of its Tax
Affiliates (as hereinafter defined) as to their respective income, profit,
franchise, gross receipts, payroll, sales, employment, worker's compensation,
use, property, withholding, excise, occupancy, environmental, and other taxes,
duties, or assessments of any nature, whatsoever. Except as set forth in Section
4.9 of the RCI Schedule, RCI has filed or caused to be filed timely all material
federal, state, local, and foreign tax returns required to be filed by each of
its and any member of its consolidated, combined, unitary, or similar group
(each such member a "Tax Affiliate"). Such returns, reports, and other
information are accurate and complete in all material respects. RCI has paid or
caused to be paid or has made adequate provision or set up an adequate accrual
or reserve for the payment of, all taxes shown to be due in respect of the
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periods for which returns are due, and has established (or shall establish at
least quarterly) an adequate accrual or reserve for the payment of all taxes
payable in respect of the period subsequent to the last of said periods required
to be so accrued or reserved. Neither RCI nor any of its Tax Affiliates has any
material liability for taxes in excess of the amount so paid or accruals or
reserves so established. Except as set forth in Section 4.9 of the RCI Schedule,
neither RCI nor any of its Tax Affiliates is delinquent in the payment of any
tax in excess of the amount reserved or provided therefor, and no deficiencies
for any tax, assessment, or governmental charge in excess of the amount reserved
or provided therefor have been threatened, claimed, proposed, or assessed. No
waiver or extension of time to assess any taxes has been given or requested. The
Internal Revenue Service or comparable state agencies have never audited RCI's
federal and state income tax returns.
4.10 Compliance With Applicable Law. RCI holds all material
licenses, franchises, permits, variances, exemptions, orders, approvals, and
authorizations necessary for the lawful conduct of its business and the business
of RCI is not being conducted in violation of, any provision of any material
federal, state, local, or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license, or
other governmental authorization or approval applicable to RCI.
4.11 Subsidiaries. RCI has no subsidiaries.
4.12 Intellectual Property. Except to the extent that the
inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy) does not have or could not reasonably be expected to have a Material
Adverse Effect:
(i) RCI owns, or is licensed or otherwise has the legally
enforceable right to use (in each case, clear of any liens or encumbrances of
any kind), all Intellectual Property (as hereinafter defined) used in or
necessary for the conduct of its business as currently conducted;
(ii) no claims are pending or, to the best knowledge of
RCI, threatened that RCI is infringing on or otherwise violating the rights of
any person with regard to any Intellectual Property used by, owned by, and/or
licensed to RCI and, to the best knowledge of RCI, there are no valid grounds
for any such claims;
(iii) to the best knowledge of RCI, no person is infringing
on or otherwise violating any right of RCI with respect to any Intellectual
Property owned by and/or licensed to RCI;
(iv) to the best knowledge of RCI, there are no valid
grounds for any claim challenging the ownership or validity of any Intellectual
Property owned by RCI or challenging RCI's license or legally enforceable right
to use any Intellectual Property licensed by it; and
(v) to the best knowledge of RCI, all patents, registered
trademarks, service marks, and copyrights held by RCI are valid and subsisting.
Section 4.12 of the RCI Schedule sets forth a list of all
domain names, trade names, copyrights and trademarks owned by RCI. RCI has full
and complete ownership of all domain names.
4.13 Disclosure of the Representations and Warranties. The
representations and warranties in this Section 4 do not knowingly contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements and information contained in this Section 4 in
light of the circumstances when made not misleading.
4.14 RCI Shareholders. The Shareholder of RCI is an accredited
investor as such term is defined in the Securities Act of 1933 as amended.
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4.15 Shareholder Approval. RCI has obtained the consent to this
Agreement and the transactions reflected hereby of the RCI Shareholder, who is
an "accredited investors." Each of the RCI shareholders listed on Schedule 4.15
has agreed to vote their Shares in favor of the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BPMI
BPMI represents and warrants, with respect to BPMI, which as of the
Effective Time shall include Acquisition Sub, except as disclosed to RCI in the
BPMI Schedule of Exceptions (the "BPMI Schedule"), attached hereto and
incorporated herein by this reference, as follows:
5.1 Organization. Each of BPMI and its subsidiaries is a
corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation and has the corporate power to carry
on its business as it is now being conducted or presently proposed to be
conducted. Each of BPMI and its subsidiaries is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified shall not have a Material Adverse Effect.
5.2 Capitalization.
(a) The authorized capital stock of BPMI consists of
shares of common stock and shares of 8% Convertible Preferred Stock and Series B
preferred stock. As of the date hereof, the number of shares of BPMI common
stock and the shares of 8% Convertible Preferred Stock and Series B preferred
stock authorized and outstanding are as set forth in Section 5.2 of the BPMI
disclosure schedule. All of the issued and outstanding shares of the capital
stock of BPMI are validly issued, fully paid, and non-assessable and free of
preemptive rights or similar rights created by statute, the Certificate of
Incorporation or Bylaws of BPMI or any agreement by which BPMI or any of its
subsidiaries is a party or by which it is bound. There are no outstanding
options, warrants or other securities convertible into stock of BPMI.
(b) As of the date hereof, BPMI has neither assets nor
liabilities except as set forth on Schedule 5.2.
5.3 Authority Relative to this Agreement. BPMI has the corporate
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement by BPMI and the consummation by
BPMI of the transactions contemplated hereby have been duly authorized by its
Board of Directors, no other corporate proceedings on the part of BPMI are
necessary to approve this Agreement or the transactions contemplated hereby.
5.4 Consents and Approvals; No Violations. Except for applicable
requirements under the Securities Act of 1933 and the Securities Exchange Act of
1934, state law relating to takeovers, if applicable, state securities or blue
sky laws, and, as applicable, filing and recordation of Articles of Merger under
the FBCA, no filing with, and no permit, authorization, consent, or approval of,
any public body or authority is necessary for the consummation by BPMI of the
transactions contemplated by this Agreement. Neither the execution and delivery
of this Agreement by BPMI, nor the consummation by it of the transactions
contemplated hereby, nor compliance by BPMI with any of the provisions hereof,
shall (a) result in any breach of the Articles of Organization or Bylaws of
BPMI, (b) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, or acceleration) under, any of the terms, conditions,
or provisions of any note, bond, mortgage, indenture, license, contract,
agreement, or other instrument or obligation to which BPMI or any of its
subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (c) violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to BPMI, any of its subsidiaries or any of their
properties or assets, except in the case of clauses (b) and (c) for violations,
breaches, or defaults that would not have a Material Adverse Effect.
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5.5 Financial Statements. The audited balance sheet as of December
31, 2002 and unaudited balance as of March 31, 2003 fairly presents in all
material respects the consolidated financial position of BPMI and its
subsidiaries as of the respective dates thereof, and the other related
statements (including in the case of the audited balance sheet, the related
notes) included therein fairly present in all material respects the results of
operations, changes in stockholders' equity and cash flows of BPMI and its
subsidiaries for the respective periods or as of the respective dates set forth
therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein and subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments and any other adjustments described therein and
the absence of any notes thereto.
5.6 Absence of Certain Changes or Events; Undisclosed Liabilities.
(a) Since December 31, 2002, except as set forth in
Section 5.6 of the BPMI disclosure schedule, neither BPMI nor any of its
subsidiaries has (i) incurred any liability material to BPMI and its
subsidiaries on a consolidated basis except in the ordinary course of business,
consistent with past practices; (ii) suffered a change or any event involving a
prospective change in the business assets, financial condition or results of
operations of BPMI or any of its subsidiaries which has had, or is likely to
have, individually or in the aggregate, a Material Adverse Effect on BPMI; (iii)
subsequent to the date hereof conducted its business and operations other than
in the ordinary course of business consistent with past practices.
(b) Neither BPMI nor any of its subsidiaries has any
liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rising to any liability) except for (i) liability set forth
on the face of the December 31, 2002 balance sheet and (ii) liabilities which
have risen after the December 31 2002 balance sheet in the ordinary course of
business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, tort, infringement, or
violation of law).
5.7 Litigation. As of the date of this Agreement, (i) there is no
action, suit, judicial, or administrative proceeding, arbitration or
investigation pending or, to the best knowledge of BPMI, threatened against or
involving BPMI or any of its subsidiaries, or any of their properties or rights,
before any court, arbitrator, or administrative or governmental body; (ii) to
the best knowledge of BPMI, there is no judgment, decree, injunction, rule, or
order of any court, governmental department, commission, agency,
instrumentality, or arbitrator outstanding against BPMI or any of its
subsidiaries; and (iii) BPMI and its subsidiaries are not in violation of any
term of any judgments, decrees, injunctions, or orders outstanding against them.
5.8 Taxes. For the purposes of this section, the term "tax" shall
include all taxes, charges, withholdings, fees, levies, penalties, additions,
interest, or other assessments imposed by any United States federal, state, or
local authority or any other taxing authority on BPMI or any of its Tax
Affiliates (as hereinafter defined) as to their respective income, profit,
franchise, gross receipts, payroll, sales, employment, worker's compensation,
use, property, withholding, excise, occupancy, environmental, and other taxes,
duties, or assessments of any nature, whatsoever. BPMI has filed or caused to be
filed timely all material federal, state, local, and foreign tax returns
required to be filed by each of its and any member of its consolidated,
combined, unitary, or similar group (each such member a "Tax Affiliate"). Such
returns, reports, and other information are accurate and complete in all
material respects. BPMI has paid or caused to be paid or has made adequate
provision or set up an adequate accrual or reserve for the payment of, all taxes
shown to be due in respect of the periods for which returns are due, and has
established (or shall establish at least quarterly) an adequate accrual or
reserve for the payment of all taxes payable in respect of the period subsequent
to the last of said periods required to be so accrued or reserved. Neither BPMI
nor any of its Tax Affiliates has any material liability for taxes in excess of
the amount so paid or accruals or reserves so established. Neither BPMI nor any
of its Tax Affiliates is delinquent in the payment of any tax in excess of the
amount reserved or provided therefor, and no deficiencies for any tax,
assessment, or governmental charge in excess of the amount reserved or provided
therefor have been threatened, claimed, proposed, or assessed. No waiver or
extension of time
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to assess any taxes has been given or requested. The Internal Revenue Service or
comparable state agencies have never audited BPMI's federal and state income tax
returns.
5.9 Compliance With Applicable Law. BPMI and each of its
subsidiaries hold all material licenses, franchises, permits, variances,
exemptions, orders, approvals, and authorizations necessary for the lawful
conduct of its business and the business of each of BPMI and its subsidiaries is
not being conducted in violation of, any provision of any material federal,
state, local, or foreign statute, law, ordinance, rule, regulation, judgment,
decree, order, concession, grant, franchise, permit or license, or other
governmental authorization or approval applicable to BPMI or any of its
subsidiaries.
5.10 Disclosure of Representations and Warranties. The
representations and warranties in this Section 5 do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements and information contained in this Section 5 in
light of the circumstances when made not misleading.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Additional Agreements.
(a) Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper, or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable efforts to obtain all necessary waivers,
consents, and approvals, and to effect all necessary registrations and filings.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers
and/or directors of the Companies shall take all such necessary action.
(b) Each Company shall cooperate with the others and use
all reasonable efforts to prepare all necessary documentation to effect promptly
all necessary filings and to obtain all necessary permits, consents, approvals,
orders, and authorizations of or any exemptions by, all third parties and
governmental bodies necessary to consummate the transactions contemplated by
this Agreement.
6.2 Survival of Representations and Warranties. The respective
representations and warranties of BPMI and RCI contained in this Agreement shall
survive the Closing Date for a period of two years (the "Survival Period"), at
the end of which Survival Period no claim may be made with respect to any such
representation or warranty unless such claim shall have been asserted in writing
to the Indemnifying Party during such period.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to the Companies' Obligation to Effect the Merger.
The respective obligations of the other Company to effect the transactions
contemplated herein shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any one of which may be waived by a
writing signed by BPMI and RCI:
(a) This Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote of the
shareholders of RCI in accordance with applicable law or by a written consent of
stockholders of RCI holding majority of the shares of capital stock of RCI
entitled to vote on the Merger (the "Required Stockholders' Consent").
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(b) No preliminary or permanent injunction or other order
by any federal, state, or foreign court of competent jurisdiction which
prohibits the consummation of any Merger shall have been issued and remain in
effect. No statute, rule, regulation, executive order, stay, decree, or judgment
shall have been enacted, entered, issued, promulgated, or enforced by any court
or governmental authority which prohibits or restricts the consummation of the
Merger. Other than the filing of Articles of Merger with the Secretary of State
for the State of Florida, all authorizations, consents, orders or approvals of,
or declarations or filings with, and all expirations of waiting periods imposed
by, any governmental entity (all of the foregoing, "Consents") which are
necessary for the consummation of the Merger, other than Consents the failure to
obtain which would have no material adverse effect on the consummation of the
Merger or on the Surviving Corporation and its subsidiaries, taken as a whole,
shall have been filed, occurred, or been obtained.
(c) There shall not be any action taken, or any statute,
rule, regulation, or order enacted, entered, enforced, or deemed applicable to
any Merger, by any federal or state governmental entity which imposes any
condition or restriction upon any Surviving Corporation or its subsidiaries
including, without limitation, requirements relating to the disposition of
assets, which in any such case would so materially adversely impact the economic
or business benefits of the transactions contemplated by this Agreement as to
render inadvisable the consummation of the Merger.
(d) Each Company shall have obtained the consent or
approval of each person whose consent or approval shall be required in
connection with the transactions contemplated hereby, under any loan or credit
agreement, note, mortgage, indenture, lease, license, or other agreement or
instrument, except those for which failure to obtain such consents and approvals
would not, individually or in the aggregate, have a material adverse effect on
the Surviving Corporation and its subsidiaries taken as a whole or upon the
consummation of the transactions contemplated hereby.
7.2 Conditions to Obligations of BPMI. The obligations of BPMI to
carry out the transactions contemplated by this Agreement are subject, at the
option of BPMI, to the satisfaction, or waiver by BPMI, of the following
conditions:
(a) No proceeding which RCI shall be a debtor, defendant,
or party seeking an order for its own relief or reorganization shall have been
brought or be pending by or against RCI under any United States or state
bankruptcy or insolvency law.
(b) RCI shall have delivered a certificate of an officer
of RCI that (i) it shall have performed in all material respects its obligations
under this Agreement required to be performed by it at or prior to the Effective
Time and (ii) the representations and warranties of RCI contained in this
Agreement shall be true and correct in all material respects at and as of the
Effective Time as if made at and as of such time, except as contemplated by this
Agreement. (c) RCI shall deliver (i) a certificate of good standing issued by
the Secretary of the State of Florida and (ii) a corporate resolution executed
by the RCI Board of Directors approving this Agreement and the transactions
herein.
7.3 Conditions to Obligations of RCI. The obligations of RCI to
carry out the transactions contemplated by this Agreement are subject, at the
option of RCI, to the satisfaction, or waiver by RCI, of the following
conditions:
(a) No proceeding which BPMI shall be a debtor,
defendant, or party seeking an order for its own relief or reorganization shall
have been brought or be pending by or against BPMI under any United States or
state bankruptcy or insolvency law.
(b) BPMI shall deliver (i) a certificate of good standing
issued by the Secretary of the State of Nevada and (ii) a corporate resolution
executed by the BPMI Board of Directors approving this Agreement and the
transactions herein.
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(c) BPMI shall have delivered a certificate of an officer
of BPMI that (i) it shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time and (ii) the representations and warranties of BPMI contained
in this Agreement shall be true and correct in all material respects at and as
of the Effective Time as if made at and as of such time, except as contemplated
by this Agreement.
(d) BPMI shall have completed the following corporate
action prior to the Effective Time.
(i) Xxxx Xxxxxxx will be appointed as a director
of BPMI and all directors and officers will resign.
(e) Enter into an agreement to convert the Series B
Preferred Stock.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby abandoned at any time prior to the Effective Time, whether
before or after approval by the shareholders of RCI:
(a) By mutual written consent of all of the Companies.
(b) By either BPMI or RCI if the Merger shall not have
been consummated on or before June 6, 2003, through no fault of the terminating
party.
(c) By BPMI or RCI if there shall have been any material
breach of a material obligation of the other hereunder and, if such breach is
curable, such default shall have not been remedied within 10 days after receipt
by the other Company, as the case may be, of notice in writing from such Company
specifying such breach and requesting that it be remedied; provided, that such
10-day period shall be extended for so long as the other Company shall be making
diligent attempts to cure such default.
(d) By either BPMI or RCI if any court of competent
jurisdiction in the United States or other United States governmental body shall
have issued an order, decree, or ruling or taken any other action restraining,
enjoining, or otherwise prohibiting the Merger and such order, decree, ruling,
or any other action shall have become final and non-appealable.
8.2 Effect of Termination. In the event of termination of this
Agreement as provided above, this Agreement shall forthwith become of no further
effect and, except for a termination resulting from a breach by a party to this
Agreement, there shall be no liability or obligation on the part of any Company
or their respective officers or directors. Nothing contained in this Section 8.2
shall relieve any party from liability for willful breach of this Agreement that
results in termination of this Agreement. Upon request therefor, each party
shall redeliver all documents, work papers, and other material of any other
party relating to the transactions contemplated hereby, whether obtained before
or after the execution hereof, to the party furnishing same.
8.3 Amendment. This Agreement may be amended by action taken at
any time before or after approval hereof by the shareholders of RCI, but, after
any such approval, no amendment shall be made which alters the Exchange Ratio or
which in any way materially adversely affects the rights of such shareholders,
without the further approval of such shareholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.4 Waiver. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any
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inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. Such extensions or waivers
shall be in writing, executed by each of BPMI and RCI. Such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Brokers. Each Company represents and warrants to the others
that no broker, finder, or financial advisor is entitled to any brokerage,
finder's, or other fee or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any party hereto, except as reflected in the RCI Schedule or the
BPMI Schedule.
9.2 Notices. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by telex or telecopy or mailed by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to BPMI, to:
DIRECTVIEW, INC.
000 Xxxx 000 xxxxx
Xxxxxxxx Xxxxx, Xxxx 00000
Attention: President
With a copy to:
Xxxxxx X. Xxxxx, Esq.
00 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
(b) If to RCI, to:
XXXXXXX COMMUNICATIONS, INC.
d/b/a DirectView, Inc.
Suite 323
00000 Xx. Xxxxxxx Xxxxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
9.3 Descriptive Headings. The headings contained in this Agreement
are for reference Purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.4 Entire Agreement: Assignment. This Agreement (including the
Exhibits, Schedules, and other documents and instruments referred to herein) (a)
constitute the entire agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them, with
respect to the subject matter hereof; and (b) shall not be assigned by operation
of law or otherwise.
9.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida without giving
effect to the provisions thereof relating to conflicts of law.
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9.6 Parties in Interest. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefit, or remedies of any nature whatsoever or by reason of this Agreement.
9.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.[include a facsimiles provision]
9.8 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
9.9 Jurisdiction and Venue. Each Party hereto hereby agrees that
any proceeding relating to this Agreement and the Merger shall be brought in the
United States District Court for the Southern District of Florida. Each party
hereto hereby consents to personal jurisdiction in any such action brought in
such court, consents to service of process by registered mail made upon such
party and such party's agent and waives any objection to venue in any such court
or to any claim that such court is an inconvenient form.
9.10 Investigation. The respective representations and warranties
of each Company contained herein or in the certificates or other documents
delivered prior to the Closing shall not be deemed waived or otherwise affected
by any investigation made by any party hereto.
9.11 Consents. For purposes of any provision of this Agreement
requiring, permitting, or providing for the consent of any or Company, the
written consent of the Chief Executive Officer or President of a Company shall
be sufficient to constitute such consent.
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IN WITNESS WHEREOF, each Company has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
DIRECTVIEW, INC. XXXXXXX COMMUNICATIONS, INC.
By: /s/ Xxxxx Xxxx By: /s/ Xxxx Xxxxxxx
--------------------------- --------------------------
Title: President Title: President
