AGREEMENT AND PLAN OF MERGER
by and among
NEW VISUAL ENTERTAINMENT, INC.,
INTELECON ACQUISITION, INC.,
INTELECON SERVICES, INC.,
and certain
SHAREHOLDERS OF
INTELECON SERVICES, INC.
Dated as of March 30, 2000
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER
1.1 The Merger.............................................................................. 1
1.2 The Closing............................................................................. 2
1.3 Effective Time.......................................................................... 2
ARTICLE II THE SURVIVING CORPORATION
2.1 Certificate of Incorporation............................................................ 2
2.2 Bylaws.................................................................................. 2
2.3 Directors............................................................................... 2
2.4 Officers................................................................................ 2
ARTICLE III CONVERSION OF INTELECON STOCK
3.1 Conversion of Intelecon Stock........................................................... 3
3.2 Exchange of Certificates................................................................ 4
3.3 Escrow Shares........................................................................... 5
3.4 Restrictions Against Transfer........................................................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Intelecon and the Shareholders........................ 6
4.1.1 Authorization.................................................................. 6
4.1.2 Corporate Status............................................................... 6
4.1.3 Capitalization................................................................. 7
4.1.4 No Conflicts................................................................... 7
4.1.5 Financial Statements........................................................... 8
4.1.6 Absence of Undisclosed Liabilities............................................. 8
4.1.7 Taxes.......................................................................... 9
4.1.8 Absence of Changes............................................................. 10
4.1.9 Litigation..................................................................... 12
4.1.10 Compliance with Laws; Governmental Approvals................................... 12
4.1.11 Title to Assets................................................................ 12
4.1.12 Contracts...................................................................... 13
4.1.13 Territorial Restrictions....................................................... 15
4.1.14 Inventories.................................................................... 15
4.1.15 Bank Accounts.................................................................. 15
4.1.16 Licenses....................................................................... 15
4.1.17 Intellectual Property.......................................................... 16
4.1.18 Insurance...................................................................... 17
4.1.19 Environmental Matters.......................................................... 17
4.1.20 Employees and Labor Matters.................................................... 18
4.1.21 Employee Benefit Plans and Related Matters..................................... 19
4.1.22 Brokers; Finders, etc.......................................................... 21
AGREEMENT AND PLAN OF MERGER - PAGE i
4.1.23 Disclosure..................................................................... 21
4.1.24 Investment Intent.............................................................. 21
4.1.25 Accounts Receivable............................................................ 22
4.2. Representations and Warranties of New Visual and Acquisition............................ 22
4.2.1 Authorization.................................................................. 22
4.2.2 Corporate Status............................................................... 23
4.2.3 Capitalization................................................................. 23
4.2.4 No Conflicts................................................................... 24
4.2.5 Brokers; Finders, etc.......................................................... 24
4.2.6 Validity of Merger Shares...................................................... 24
4.2.7 SEC Reports and Financial Statements........................................... 25
4.2.8 Absence of Certain Changes..................................................... 25
4.2.9 Litigation..................................................................... 25
4.2.10 Disclosure..................................................................... 25
4.2.11 Absence of Undisclosed Liabilities............................................. 25
ARTICLE V COVENANTS
5.1. Conduct of Business..................................................................... 26
5.2 No Solicitation......................................................................... 28
5.3 Access and Information; Cooperation for SEC Filings by New Visual;
Schedules............................................................................. 29
5.4 Public Announcements.................................................................... 30
5.5 Vote or Consent on Merger; Other Actions................................................ 30
5.6 Financial Statements.................................................................... 31
5.7 Further Actions......................................................................... 31
5.8 Further Assurances...................................................................... 32
5.9 Election of Officers and Directors...................................................... 32
5.10 Employee Benefits....................................................................... 32
ARTICLE VI CONDITIONS PRECEDENT
6.1 Conditions to Obligations of Each Party................................................. 33
6.1.1 No Injunction, etc............................................................. 33
6.2 Conditions to Obligations of New Visual and Acquisition................................. 33
6.2.1 Representations; Performance................................................... 33
6.2.2 Consents ...................................................................... 33
6.2.3 No Material Adverse Effect..................................................... 34
6.2.4 Transaction Agreements ........................................................ 34
6.2.5 Estoppel Letters............................................................... 34
6.2.6 1999 Financial Statements...................................................... 34
6.2.7 Intelecon Liabilities.......................................................... 34
6.2.8 Greenbriar Transactions........................................................ 34
6.2.9 No Liens on Intelecon Shares................................................... 35
6.2.10 Debt Exchange Agreement........................................................ 35
AGREEMENT AND PLAN OF MERGER - PAGE ii
6.2.11 Loan Agreement................................................................. 35
6.3 Conditions to Obligations of Intelecon and the Shareholders............................. 35
6.3.1 Representations; Performance, etc.............................................. 35
6.3.2 Transaction Agreements......................................................... 36
6.3.3 Consents ...................................................................... 36
6.3.4 Funding Commitment............................................................. 36
6.3.5 NASDAQ Application............................................................. 36
ARTICLE VII TERMINATION
7.1 Termination............................................................................. 36
7.2 Effect of Termination................................................................... 38
ARTICLE VIII INDEMNIFICATION; MISCELLANEOUS
8.1 Indemnification ...................................................................... 39
8.2 Survival of Representations and Warranties; etc......................................... 41
8.3 Expenses ............................................................................... 41
8.4 Severability............................................................................ 41
8.5. Notices ............................................................................... 42
8.6. Miscellaneous........................................................................... 43
8.6.1 Headings ...................................................................... 43
8.6.2 Entire Agreement............................................................... 43
8.6.3 Counterparts................................................................... 43
8.6.4 Governing Law.................................................................. 43
8.6.5 Arbitration.................................................................... 43
8.6.6 Binding Effect................................................................. 43
8.6.7 Assignment..................................................................... 44
8.6.8 No Third Party Beneficiaries .................................................. 44
8.6.9 Amendment; Waiver, etc......................................................... 44
8.6.10 Confidentiality................................................................ 44
LIST OF EXHIBITS
Exhibit A - List of Shareholders
Exhibit B - Letter of Transmittal
Exhibit C - Form of Employment Agreement of Xxxxx Xxxxxx
Exhibit D - Form of Employment Agreement of Xxxxxxxx Xxxxxx
Exhibit E - Form of Shareholders' Release
Exhibit F - Form of Escrow Agreement
AGREEMENT AND PLAN OF MERGER - PAGE iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 30, 2000, by and
among New Visual Entertainment, Inc., a Utah corporation ("New Visual"),
Intelecon Acquisition, Inc., a Delaware corporation ("Acquisition"), Intelecon
Services, Inc., a Texas corporation ("Intelecon"), and the shareholders of
Intelecon listed on Exhibit A hereto as parties to this Agreement (collectively,
the "Shareholders" and severally, a "Shareholder").
WHEREAS, each of New Visual, Acquisition and Intelecon desire to effect
a business combination pursuant to which Intelecon will be merged with and into
Acquisition and the holders of common stock, $0.01 par value, of Intelecon
("Intelecon Common Stock") will receive shares of common stock, par value $0.001
per share, of New Visual ("New Visual Common Stock") in exchange for their
shares of Intelecon Common Stock (the "Merger");
WHEREAS, the Boards of Directors of New Visual, Acquisition and
Intelecon each have approved the Merger provided for herein upon the terms and
subject to the conditions set forth herein;
WHEREAS, the Shareholders, the beneficial owners and holders of record
of at least 97% of the issued and outstanding common stock of Intelecon, desire
to join in and be a party to this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements made herein and of the mutual benefits to
be derived hereby, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.3), Intelecon shall be merged
with and into Acquisition (the "Merger") and the separate corporate existence of
Intelecon shall thereupon cease. Acquisition shall be the surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"). The Merger shall have the effects specified in Section 259 of the
Delaware General Corporation Law (the "DGCL") and Section 5.06 of the Texas
AGREEMENT AND PLAN OF MERGER - PAGE 1
Business Corporation Act (the "TBCA"). Notwithstanding anything to the contrary
herein, upon the mutual agreement of New Visual and Intelecon, the Merger shall
be restructured in the form of a reverse triangular merger of Acquisition into
Intelecon, with Intelecon being the surviving corporation. In such event, this
Agreement shall be deemed appropriately modified to reflect such form of merger.
1.2 THE CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place (a) at the office of
Xxxxx & Xxxxxx LLP, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, at 9:00
a.m., Central time, on the fifth business day following the day on which the
last to be fulfilled or waived of the conditions set forth in Article 6 shall be
fulfilled or waived in accordance herewith or (b) at such other time, date or
place as New Visual and Intelecon may agree. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date".
1.3 EFFECTIVE TIME. If the conditions to the Merger set forth in
Article 6 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 7, the parties
hereto shall cause a Certificate of Merger meeting the requirements of Section
252 of the DGCL and Articles of Merger meeting the requirements of Section 5.04
of the TBCA to be properly executed and filed in accordance with such sections
as soon as practicable after the Closing. The Merger shall become effective at
the time of filing of the Certificate of Merger with the Secretary of State of
the State of Delaware in accordance with the DGCL, or at such later time which
the parties hereto shall have agreed upon and designated in such filing as the
effective time of the Merger (the "Effective Time").
ARTICLE II
THE SURVIVING CORPORATION
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Acquisition in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law, except that the name of the Surviving
Corporation shall be "Intelecon Services, Inc."
2.2 BYLAWS. The Bylaws of Acquisition in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
2.3 DIRECTORS. The directors of Acquisition immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time.
2.4 OFFICERS. The officers of Acquisition immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time.
AGREEMENT AND PLAN OF MERGER - PAGE 2
ARTICLE III
CONVERSION OF INTELECON STOCK
3.1 CONVERSION OF INTELECON STOCK.
(a) At the Effective Time, each share of common stock, par value $.01
per share, of Acquisition outstanding immediately prior to the Effective Time
shall remain outstanding and shall represent one share of common stock, par
value $.01 per share, of the Surviving Corporation.
(b) Subject to the provisions of Sections 3.1(d) and 3.2(d) hereof, at
the Effective Time, the shares of Intelecon Common Stock issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holders thereof, be converted into the
right to receive an aggregate of 5,500,000 shares of New Visual Common Stock
(the "Merger Shares"). Two million (2,000,000) shares of the Merger Shares shall
be referred to herein as the "Initial Shares" and the remaining 3,500,000 shares
shall be referred to as the "Escrow Shares."
(c) As a result of the Merger and without any action on the part of the
holder thereof, all shares of Intelecon Common Stock shall cease to be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a certificate (a "Certificate") representing any shares of Intelecon
Common Stock shall thereafter cease to have any rights with respect to such
shares, except the right to receive upon the surrender of such Certificate,
without interest, the New Visual Common Stock and cash (in lieu of fractional
shares) into which the shares represented by such Certificate have been
converted in accordance with Sections 3.1(b), 3.2(d) and 3.3 of this Agreement.
(d) Each share of Intelecon Common Stock issued and held in Intelecon's
treasury at the Effective Time shall, by virtue of the Merger, cease to be
outstanding and shall be canceled and retired without payment of any
consideration therefor.
(e) All options (individually, an "Intelecon Option" and collectively,
the "Intelecon Options") outstanding immediately prior to the Effective Time
under Intelecon's 1997 Stock Option Plan, as amended (the "Intelecon Stock
Option Plan"), shall remain outstanding following the Effective Time. At the
Effective Time, such Intelecon Options shall, by virtue of the Merger and
without any further action on the part of Intelecon or the holder of any such
Intelecon Options, be assumed by New Visual in such manner that New Visual (i)
is a corporation "assuming a stock option in a transaction to which Section
424(a) applied" within the meaning of Section 424 of the Code, or (ii) to the
extent that Section 424 of the Code does not apply to any such Intelecon
Options, would be such a corporation if Section 424 was applicable to such
option. Each Intelecon Option assumed by New Visual shall be exercisable upon
the same terms and conditions as under the applicable Intelecon Stock Option
Plan and the applicable option agreement issued thereunder, except that (i) each
such Intelecon Option shall (for every share of Intelecon Common Stock covered
thereby) be exercisable for 4.873 shares of New Visual Common Stock (to the
nearest whole share), and (ii) the option price per share of New Visual Common
AGREEMENT AND PLAN OF MERGER - PAGE 3
Stock shall be an amount equal to the option price per share of Intelecon Common
Stock subject to such Intelecon Option in effect immediately prior to the
Effective Time divided by 4.873 (the price per share, as so determined, being
rounded down to the nearest full cent). Within ten days after the Closing Date,
New Visual shall notify each holder of an option under the Intelecon Stock
Option Plan of the assumption of such options by New Visual and the revisions to
the options effected thereby. No payment shall be made for fractional interests.
>From and after the date of this Agreement, no additional options shall be
granted by Intelecon under the Intelecon Stock Option Plan or otherwise.
3.2 EXCHANGE OF CERTIFICATES.
(a) At or after the Effective Time, each holder of Certificates
theretofore representing shares of Intelecon Common Stock, upon the surrender
thereof to New Visual together with a duly executed and completed Letter of
Transmittal, in the form attached hereto as Exhibit B ("Letter of Transmittal"),
shall be entitled to receive in exchange therefor the shares of New Visual
Common Stock and cash (in lieu of fractional shares) into which such shares of
Intelecon Common Stock have been converted as provided in Sections 3.1 and
3.2(d) hereof (other than the portion of such shares of New Visual Common Stock
that comprise Escrow Shares), and the Certificate so surrendered shall be
canceled. No interest will be paid or accrued on the value of any New Visual
Common Stock payable to holders of Certificates. Until so surrendered, each
Certificate shall be deemed for all purposes, other than as provided below with
respect to the payment of dividends or other distributions, if any, in respect
of New Visual Common Stock, to represent the number of whole shares of New
Visual Common Stock and cash (in lieu of fractional shares) into which the
shares of Intelecon Common Stock theretofore represented thereby shall have been
converted.
(b) Notwithstanding any other provisions of this Agreement, no
dividends on New Visual Common Stock shall be paid with respect to any shares of
Intelecon Common Stock represented by a Certificate until such Certificate is
surrendered for exchange as provided herein. Subject to the effect of applicable
laws, following surrender of any such Certificate, there shall be paid to the
holders of the Certificates representing whole shares of New Visual Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore payable with respect to such whole shares
of New Visual Common Stock and not paid, less the amount of any withholding
taxes which may be required thereon, and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of New Visual Common Stock, less the
amount of any withholding taxes which may be required thereon.
(c) At or after the Effective Time, there shall be no transfers on the
stock transfer books of Intelecon of the shares of Intelecon Common Stock which
were outstanding immediately prior to the Effective Time.
AGREEMENT AND PLAN OF MERGER - PAGE 4
(d) No fractional shares of New Visual Common Stock shall be issued
pursuant hereto. In lieu of the issuance of any fractional shares of New Visual
Common Stock pursuant to Section 3.1 hereof, cash adjustments will be paid to
holders in respect of any fractional shares of New Visual Common Stock that
would otherwise be issuable, and the amount of such cash adjustment shall be
equal to such fractional proportion of the "Average Price" of a share of New
Visual Common Stock, as defined in this section 3.2(d). As used herein, the
"Average Price" of a share of New Visual Common Stock shall be the average of
the closing bid prices thereof on the OTC Bulletin Board of the National
Association of Securities Dealers or, if not quoted at such time on the OTC
Bulletin Board, in the NQB Pink Sheets published by the National Quotation
Bureau Incorporated, in each case over the five trading days immediately
preceding the Closing Date.
3.3 ESCROW SHARES. As soon as practicable after the Effective Time, New
Visual shall deposit the Escrow Shares with the escrow agent under an escrow
agreement substantially in the form of Exhibit F attached hereto (the "Escrow
Agreement"). The Escrow Shares shall be held by the escrow agent during the
period specified in the Escrow Agreement, and shall be released to the former
holders of Intelecon Common Stock or New Visual, or both, as the case may be,
only in accordance with the terms thereof.
3.4 RESTRICTIONS AGAINST TRANSFER. In addition to any restrictions on
transfer prescribed by state or federal law, the Merger Shares shall be subject
to the following restrictions on transfer:
(a) Neither the Merger Shares, nor any right or interest therein, shall
be sold, transferred, assigned, or otherwise disposed of, whether voluntarily or
by operation of law, by the holder thereof before the expiration of eighteen
(18) months from the Effective Time of the Merger (in the case of the Initial
Shares) or the release of such shares from escrow pursuant to the Escrow
Agreement (in the case of the Escrow Shares)(the "Lock-Up Period").
(b) Following the expiration of the Lock-Up Period, no holder of Merger
Shares shall, during any thirty (30) day period, sell, transfer, assign or
otherwise dispose of more than ten percent (10%) of the sum of the total number
of Initial Shares issued to such holder and the total number of Escrow Shares
that have been released to such holder from escrow pursuant to this Agreement
and the Escrow Agreement. The sale of Merger Shares by one holder of Merger
Shares shall not prohibit the sale of Merger Shares by another holder of Merger
Shares during the same thirty (30) day period.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF INTELECON AND THE SHAREHOLDERS.
Intelecon and each Shareholder represents and warrants to New Visual and
Acquisition as follows:
4.1.1 AUTHORIZATION. Intelecon has the requisite corporate power and
authority to execute and deliver this Agreement and all agreements contemplated
AGREEMENT AND PLAN OF MERGER - PAGE 5
hereby (collectively, the "Transaction Agreements"), and, subject only to the
approval of this Agreement and the transactions contemplated hereby by the
holders of two-thirds of the outstanding shares of Intelecon Common Stock (the
"Requisite Shareholder Approval"), to perform fully its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by Intelecon of this Agreement and the other
Transaction Agreements and, subject to obtaining the Requisite Shareholder
Approval, the consummation of the transactions contemplated hereby and thereby,
have been duly authorized by all requisite corporate action of Intelecon.
Intelecon and the Shareholders have duly executed and delivered this Agreement
and on the Closing Date Intelecon and the Shareholders will have duly executed
and delivered the Transaction Agreements to which they are parties. Subject to
obtaining the Requisite Shareholder Approval, this Agreement is, and on the
Closing Date each of the Transaction Agreements will be, legal, valid and
binding obligations of Intelecon and/or the Shareholders, as the case may be,
enforceable against each of them in accordance with their respective terms,
except as may be limited by applicable bankruptcy and other laws regarding
creditors' rights generally, and general principles of equity.
4.1.2 CORPORATE STATUS.
(a) Intelecon is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, with full
corporate power and authority to carry on its business and to own or lease and
to operate its properties as and in the places where such business is conducted
and such properties are owned, leased or operated.
(b) Intelecon is duly qualified or licensed to do business in
the jurisdictions specified in Schedule 4.1.2, which are the only jurisdictions
in which the operation of its business or the character of the properties owned,
leased or operated by it makes such qualification or licensing necessary.
(c) Within ten days after the date hereof, Intelecon will
deliver to New Visual complete and correct copies of its articles of
incorporation and bylaws, each as amended and in effect on the date so
delivered. Intelecon is not in violation of any of the provisions of its
articles of incorporation or bylaws. The minute books and other corporate
records of Intelecon contain a true and complete record of all action taken at
all meetings and by all written consents in lieu of meetings of the
shareholders, the Board of Directors and committees of the Board of Directors of
Intelecon. The stock transfer ledgers and other similar records of Intelecon
currently reflect all record transfers prior to the execution of this Agreement
in the capital stock of Intelecon.
4.1.3 CAPITALIZATION.
(a) The authorized capital stock of Intelecon consists solely
of (i) 25,000,000 shares of Intelecon Common Stock, of which 410,421 shares are
issued and outstanding and no shares are held in its treasury, and (ii) 500
shares of preferred stock, $1.00 par value ("Intelecon Preferred Stock"), of
which 100 shares of 1998 Cumulative Redeemable Preferred Stock are issued and
outstanding and no shares are held in its treasury. All issued and outstanding
AGREEMENT AND PLAN OF MERGER - PAGE 6
shares of Intelecon Common Stock and Intelecon Preferred Stock are duly
authorized, validly issued, fully paid, non-assessable and free of preemptive
rights. Except as set forth in Schedule 4.1.3, all shares of Intelecon Common
Stock are owned by the Shareholders and Ikso Vakser, free and clear of all
liens, pledges, assessments, charges, security interests, claims or other
encumbrances of any kind (each, a "Lien"). All shares of Intelecon Preferred
Stock are owned by Greenbriar, Ltd., an Isle of Man company ("Greenbriar").
(b) Except for (i) options to purchase an aggregate of 14,300
shares of Intelecon Common Stock granted under the Intelecon Stock Option Plan,
and (ii) that certain Warrant issued to Greenbriar by Intelecon, dated November
1, 1998 (the "Greenbriar Warrant"), no subscriptions, options, warrants,
conversion or other rights, agreements, commitments, arrangements or
understandings of any kind obligating Intelecon, contingently or otherwise, to
issue or sell, or cause to be issued or sold, any shares of Intelecon Common
Stock, or any securities convertible into or exchangeable for any such shares,
are outstanding, and no authorization therefor has been given. There are no
outstanding contractual or other rights or obligations to or of Intelecon to
repurchase, redeem or otherwise acquire any outstanding shares of Intelecon
Common Stock.
(c) Intelecon does not own directly or indirectly any interest
or investment (whether equity or debt) in any corporation, partnership, joint
venture, business, trust or entity (other than investments in short-term
investment securities).
4.1.4 NO CONFLICTS. The execution, delivery and performance by
Intelecon and the Shareholders of this Agreement and of the other Transaction
Agreements to which they are parties, and the consummation of the transactions
contemplated hereby and thereby, do not and will not conflict with or result in
a violation of or a default under (with or without the giving of notice or the
lapse of time or both), create in any other person a right or claim of
termination, amendment, modification, acceleration or cancellation of, or result
in the creation of any Lien (or any obligation to create any Lien) upon any of
the properties or assets of Intelecon under, (i) any law, statute, ordinance,
governmental rule or regulation (each, a "Law") applicable to Intelecon or any
of its properties or assets, or to any Shareholder, (ii) the articles of
incorporation or bylaws of Intelecon or (iii) except as set forth in Schedule
4.1.4., any contract (whether written or oral), agreement, arrangement or other
instrument (each, a "Contract") to which Intelecon or any Shareholder is a party
or by which Intelecon, any Shareholder or any of the properties or assets of
Intelecon may be bound or affected, except, in the case of clause (iii), for
violations or defaults that, individually and in the aggregate, would not have a
material adverse effect on the business, results of operations, condition
(financial or otherwise) or prospects of Intelecon (a "Material Adverse Effect")
and would not materially impair the ability of Intelecon or any Shareholder to
perform its obligations hereunder or under the other Transaction Agreements to
which they are parties. Except as specified in Schedule 4.1.4, no governmental
approval or other approval or other consent of any party is required to be
obtained or made by Intelecon or any Shareholder in connection with the
execution and delivery of this Agreement or the other Transaction Agreements or
the consummation of the transactions contemplated hereby or thereby.
AGREEMENT AND PLAN OF MERGER - PAGE 7
4.1.5 FINANCIAL STATEMENTS.
(a) Intelecon has delivered to New Visual complete and correct copies
of (a) the balance sheets as of December 31, 1997 and December 31, 1996 of
Intelecon and the related statements of income, changes in shareholders' equity
and changes in cash flows for the respective years then ended, the related notes
and schedules thereto, and the report of its independent public accountants with
respect thereto (collectively, the "Audited Financial Statements"), and (b) the
unaudited balance sheet (the "Latest Balance Sheet") as of December 31, 1999
(the "Balance Sheet Date") and December 31, 1998 of Intelecon and the related
unaudited statements of income for the periods then ended and the related notes
and schedules, if any, thereto (collectively, the "Unaudited Financial
Statements").
(b) The Audited Financial Statements are, and the 1999 Financial
Statements (as defined in Section 5.6) will be when delivered, complete and
correct in all material respects, have been derived from the accounting books
and records of Intelecon and have been and will be, as applicable, prepared in
accordance with generally accepted accounting principles ("GAAP") throughout the
periods indicated. The Unaudited Financial Statements have been prepared in all
material respects on a basis consistent with the Audited Financial Statements.
(c) The balance sheets included in the Audited Financial Statements and
the Unaudited Financial Statements (collectively, the "Financial Statements")
present fairly the financial position of Intelecon as of the respective dates
thereof, and the related statements of income, changes in shareholders' equity
and changes in cash flows included in such Financial Statements present fairly
the result of operations, changes in shareholders' equity and changes in cash
flows of Intelecon for the respective periods indicated.
(d) The 1999 Financial Statements (as defined in Section 5.6) will,
when delivered, present fairly the financial position of Intelecon at December
31, 1999 and December 31, 1998 and the result of operations, changes in
shareholders' equity and changes in cash flows of Intelecon for the years then
ended.
4.1.6. ABSENCE OF UNDISCLOSED LIABILITIES. Intelecon has no liabilities
or obligations of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, except (a) as set
forth in Schedule 4.1.6, (b) as and to the extent disclosed and adequately
reserved against in the Latest Balance Sheet (excluding the notes thereto) and
(c) for liabilities and obligations that (i) were incurred after the Balance
Sheet Date, in the ordinary course of business consistent with prior practice
and (ii) individually and in the aggregate are not material to Intelecon and
have not had or resulted in, and will not have or result in, a Material Adverse
Effect.
4.1.7 TAXES.
(a) All federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, stamp, occupation, customer
AGREEMENT AND PLAN OF MERGER - PAGE 8
duties, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative, add-on minimum taxes, or other
tax of any kind whatsoever, including any interest, penalty, or addition thereto
(each, a "Tax" and collectively, "Taxes") that are or may be required to be
paid, collected or withheld by or with respect to Intelecon or any of its assets
or properties on or before the Closing Date or that are chargeable as a Lien on
any assets or properties of Intelecon have been timely paid or collected or
withheld and remitted to the appropriate taxing or other governmental
authorities, except (i) as set forth on Schedule 4.1.7, (ii) for any Taxes which
are being contested in good faith by appropriate proceedings and for which
adequate reserves with respect thereto have been established and are being
maintained in accordance with GAAP and (iii) for any Taxes that are not yet due
and payable and are adequately reserved in the Latest Balance Sheet or have
arisen in the ordinary course of business since the Balance Sheet Date and
before the Closing Date.
(b) Except as set forth on Schedule 4.1.7 and without limiting
the representation made in Section 4.1.7(a), all federal, state, local and
foreign tax returns that are or may be required to be filed by or with respect
to Intelecon, or any of its assets or properties, on or before the Closing Date
have been timely filed with the appropriate taxing or other governmental
authorities and have reflected only such positions on such tax returns as were
believed in good faith by the person preparing each such tax return and the
person on whose behalf each such tax return was filed to be supported under then
prevailing Law. All Taxes shown to be due on each such tax return have been
paid.
(c) Except as set forth on Schedule 4.1.7, Intelecon (i) has
not received any written notice of deficiency or assessment from any taxing or
other governmental authority with respect to Taxes, (ii) is not currently under,
and has not received notice of commencement of, any audit by any taxing or other
governmental authority concerning any Taxes and (iii) has not executed any
waiver of the statute of limitations with respect to any taxable period.
(d) Except as set forth on Schedule 4.1.7, (i) no written
ruling (as such term is used in the Code) has been received from, and no closing
or other similar agreement has been executed with, any taxing or other
governmental authority that will be binding upon Intelecon or any of its assets
or properties after the Closing and (ii) no power of attorney has been given by
or with respect to Intelecon to any person with respect to Taxes that will be
binding upon Intelecon.
4.1.8 ABSENCE OF CHANGES. Except as set forth in Schedule 4.1.8, since
the Balance Sheet Date, Intelecon has conducted its business only in the
ordinary course consistent with prior practice and has not:
(a) suffered any Material Adverse Effect;
(b) declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock or otherwise purchased or redeemed,
directly or indirectly, any shares of its capital stock;
AGREEMENT AND PLAN OF MERGER - PAGE 9
(c) issued or sold any shares of its capital stock, or any
securities convertible into or exchangeable for any such shares, or issued,
sold, granted or entered into any subscriptions, options, warrants, conversion
or other rights, agreements, commitments, arrangements or understandings of any
kind, contingent or otherwise, to purchase or otherwise acquire any such shares
or any securities convertible into or exchangeable for any such shares;
(d) incurred any indebtedness for borrowed money, issued or
sold any debt securities or prepaid any debt (including, without limitation, any
borrowings from or prepayments to any Shareholder), except for borrowings and
prepayments in the ordinary course of business;
(e) mortgaged, pledged or otherwise subjected to any Lien, any
of its properties or assets, tangible or intangible, except for (i) mortgages
and encumbrances which secure indebtedness which is properly reflected in the
Latest Balance Sheet; (ii) Liens filed of record; (iii) Liens for taxes accrued
but not yet payable; (iv) Liens arising as a matter of law in the ordinary
course of business with respect to obligations incurred after the Balance Sheet
Date; PROVIDED that the obligations secured by such Liens are not delinquent or
are being contested in good faith; (v) such imperfections of title and
encumbrances, if any, as do not materially detract from the value of or
materially interfere with the present use of any of such properties or assets or
the pending sale of any of such owned properties or assets; and (vi) capital
leases, if any, with third parties for fair and adequate consideration
(collectively, "Permitted Liens");
(f) forgiven, cancelled, compromised, waived or released any
debts, claims or rights, except for debts of, or claims and rights against,
persons other than any Shareholder that have been forgiven, cancelled,
compromised, waived or released in the ordinary course of business;
(g) paid or committed to pay any bonus, other incentive
compensation, change in control or similar compensation to any officer,
director, employee, Shareholder or affiliate, or granted or committed to grant
to any officer, director, employee, Shareholder or affiliate any other increase
in, or additional, compensation in any form;
(h) entered into, instituted, adopted or amended or committed
to enter into, institute, adopt or amend any employment, consulting, retention,
change-in-control, collective bargaining, bonus or other incentive compensation,
profit-sharing, health or other welfare, stock option or other equity, pension,
retirement, vacation, severance, deferred compensation or other employment,
compensation or benefit plan, policy, agreement, trust, fund or arrangement in
respect of or for the benefit of any officer, director, employee, Shareholder or
affiliate;
(i) encountered any labor union organizing activity or had any
actual or threatened employee strikes, work stoppages, slowdowns or lockouts, or
had any material adverse change in its relations with its employees, agents,
customers or suppliers;
(j) amended either of its articles of incorporation or bylaws;
AGREEMENT AND PLAN OF MERGER - PAGE 10
(k) changed in any respect its accounting practices, policies or
principles;
(l) incurred, assumed, guaranteed or otherwise become directly
or indirectly liable with respect to any liability or obligation in excess of
$500,000 in each case or $750,000 in the aggregate at any one time outstanding
(whether absolute, accrued, contingent or otherwise and whether direct or
indirect, or as guarantor or otherwise with respect to any liability or
obligation of any other person) other than agreements for purchases of goods or
services in the ordinary course of business;
(m) sold any assets with a value in excess of $100,000 in each
case or $250,000 in the aggregate, other than inventory in the ordinary course
of business;
(n) received any notice of termination of any Contract which, in
any case or in the aggregate, would have or result in a Material Adverse Effect;
(o) transferred or granted any rights under, or entered into
any settlement regarding the breach or infringement of, any United States or
foreign patents, copyrights, trademarks, service marks, trade names, trade
dress, logos, business and product names, slogans, inventions, trade secrets,
industrial models, formulas, processes, designs, confidential and technical
information, manufacturing, engineering and technical drawings, product
specifications, know-how, and intellectual property rights to or similar to and
registrations and applications for registration relating to any of the foregoing
("Intellectual Property"), or modified any existing rights with respect thereto;
(p) suffered any damage, destruction or loss (whether or not
covered by insurance), or any employment-related problem, that, individually or
in the aggregate, would have or result in a Material Adverse Effect;
(q) made any capital expenditures or capital additions or
improvements in excess of an aggregate of $250,000;
(r) instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body involving amounts in
excess of $50,000;
(s) entered into any transaction, Contract or commitment other
than in the ordinary course of business, or paid or agreed to pay any legal,
accounting, brokerage or finder's fees, taxes or other expenses in connection
with, or incurred any severance pay obligations by reason of, this Agreement,
the other Transaction Agreements or the transactions contemplated hereby or
thereby; or
(t) taken any action or omitted to take any action that would
result in the occurrence of any of the foregoing.
4.1.9 LITIGATION. Except as set forth in Schedule 4.1.9, there is no
action, claim, demand, suit, proceeding, arbitration, grievance, citation,
AGREEMENT AND PLAN OF MERGER - PAGE 11
summons, subpoena, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, pending or, to the knowledge of
Intelecon or any Shareholder, threatened against or relating to Intelecon or
against or relating to the transactions contemplated by this Agreement or the
other Transaction Agreements, and neither Intelecon nor any Shareholder knows or
has reason to be aware of any basis for the same.
4.1.10 COMPLIANCE WITH LAWS; GOVERNMENTAL APPROVALS.
(a) Except as disclosed in Schedule 4.1.10(a), Intelecon is not,
and since January 1, 1997, Intelecon has not been, in violation of or default
under any Law applicable to it or any of its properties or business, except for
any such violations or defaults that, individually and in the aggregate, have
not had and will not have a Material Adverse Effect. Neither Intelecon nor any
Shareholder has received any notice alleging any such violation or default.
(b) Except as disclosed in Schedule 4.1.10(b), all material
governmental approvals necessary for the conduct of the business and operations
of Intelecon have been duly obtained and are in full force and effect. As of the
date hereof, there are no proceedings pending or, to the knowledge of Intelecon
or any Shareholder, threatened that could result in the revocation, cancellation
or suspension, or any materially adverse modification, of any such governmental
approval, and the execution and delivery of this Agreement and the other
Transaction Agreements, and the consummation of the transactions contemplated
hereby and thereby will not result in any such revocation, cancellation,
suspension or modification.
4.1.11 TITLE TO ASSETS.
(a) On the Balance Sheet Date, Intelecon had and, except with
respect to assets disposed of for adequate consideration in the ordinary course
of business since such date, as of the date of this Agreement, has good and
merchantable title to all real property and all other material properties and
assets reflected on the Latest Balance Sheet, and has good and merchantable
title to all real property and all other material properties and assets acquired
since such date, in each case free and clear of all Liens except for Permitted
Liens. Intelecon owns, or has valid leasehold interests in or license to, all
material properties and assets used in the conduct of the business of Intelecon
as now conducted. Intelecon has adequate rights of ingress and egress with
respect to its real property and all buildings, structures, facilities, fixtures
and other improvements thereon. Within ten days after the date hereof, Intelecon
will deliver or make available to New Visual copies of the deeds and other
instruments (as recorded) by which Intelecon acquired such real property, and
copies of all title insurance policies, opinions, abstracts, and surveys in the
possession of Intelecon or any Shareholder and relating to such real property.
(b) With respect to each lease of any real property or a
material amount of personal property to which Intelecon is a party, (i) such
lease is a legal, valid and binding agreement, is in full force and effect and
is enforceable in accordance with its terms; (ii) all rents and other monetary
amounts that have become due and payable thereunder have been paid; (iii) there
exists no default, or event, occurrence, condition or act, which with the giving
AGREEMENT AND PLAN OF MERGER - PAGE 12
of notice, the lapse of time or the happening of any further event, occurrence,
condition or act would become a default under such lease; and (iv) the execution
and delivery of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby will not
constitute a breach under, or cause a termination of, such lease.
(c) Intelecon does not have any legal obligation, absolute or
contingent, to any other person to sell or otherwise dispose of any substantial
part of its assets; or to sell or dispose of any of its assets except in the
ordinary course of business consistent with past practices.
(d) None of Intelecon's real property, buildings, structures,
facilities, fixtures or other improvements, or the use thereof, contravenes or
violates any building, zoning, administrative, occupational safety and health or
other applicable Law in any material respect.
(e) The improvements on Intelecon's real property are in good
operating condition and in a state of good maintenance and repair, ordinary wear
and tear excepted, are adequate and suitable for the purposes for which they are
presently being used and there are no condemnation or appropriation proceedings
pending or, to the knowledge of Intelecon or any Shareholder, threatened against
any of such real property or the improvements thereon. There is no writ,
injunction, decree, order or judgment outstanding, nor any action, claim, suit
or proceeding, pending or, to the knowledge of Intelecon or any Shareholder,
threatened, relating to the ownership, lease, use, occupancy or operation of any
such real property or the improvements thereon.
4.1.12 CONTRACTS.
(a) Schedule 4.1.12(a) contains a complete and correct list of
all Contracts of the types described below (true and complete copies or, if
none, reasonably complete and accurate written descriptions of which, together
with all amendments and supplements thereto and all waivers of any terms
thereof, have been made available to New Visual prior to the date of this
Agreement), to which Intelecon is a party or by which any of its assets or
properties is bound:
(i) leases, licenses, and other material Contracts
concerning or relating to real property;
(ii) written or oral employment Contracts for officers,
directors, management or key personnel, consulting, agency, collective
bargaining or other similar Contracts and agreements under which current or
future obligations exist relating to or for the benefit of current, future or
former employees, officers, directors, sales representatives, distributors,
dealers, agents, independent contractors or consultants, in each case that are
not cancelable on notice of 30 days or less and do not require payments in the
event of termination;
(iii) loan agreements, indentures, letters of credit,
mortgages, security agreements, pledge agreements, deeds of trust, bonds, notes,
guarantees, and other agreements and instruments effecting, evidencing or
securing the borrowing of money or obtaining of or extension of credit (other
than ordinary trade credit);
AGREEMENT AND PLAN OF MERGER - PAGE 13
(iv) brokerage or finder's agreements;
(v) joint venture, partnership and similar Contracts
involving a sharing of profits or expenses;
(vi) asset purchase agreements and other acquisition or
divestiture agreements (other than agreements for sales of inventory in the
ordinary course of business) and any agreements relating to the sale, lease or
disposal of any capital assets in the amount of $100,000 or more;
(vii) other Contracts with respect to which the aggregate
amount that could reasonably be expected to be paid or received thereunder in
the future exceeds $250,000 per annum or $500,000 in the aggregate;
(viii) Contracts between or among Intelecon, on the one
hand, and any officer, director or affiliate of Intelecon, or any Shareholder,
on the other hand; and
(ix) any other Contracts, agreements or commitments that are
material to Intelecon or its business.
(b) All Contracts are in full force and effect and enforceable
against Intelecon and each Shareholder who is a party thereto, and, to the
knowledge of Intelecon and each Shareholder, against each other party thereto.
There does not exist under any Contract any event of default or event or
condition that, after notice or lapse of time or both, would constitute a
violation, breach or event of default thereunder on the part of Intelecon, each
Shareholder who is a party thereto or, to the knowledge of Intelecon and each
Shareholder, any other party thereto except as set forth in Schedule 4.1.12(b)
and except for such events or conditions that, individually and in the
aggregate, (i) have not had or resulted in, and will not have or result in, a
Material Adverse Effect and (ii) have not and will not materially impair the
ability of Intelecon to perform its obligations hereunder or under the other
Transaction Agreements to which it is a party. Except as set forth in Schedule
4.1.12(b), no consent of any third party is required under any Contract as a
result of or in connection with, and the enforceability of any Contract will not
be affected in any manner by, the execution, delivery and performance of this
Agreement or any of the other Transaction Agreements or the consummation of the
transactions contemplated hereby or thereby.
4.1.13 TERRITORIAL RESTRICTIONS. Except as otherwise described on
Schedule 4.1.13, Intelecon is not restricted by any Contract, agreement or
understanding with any other person from carrying on its business anywhere in
the world.
4.1.14 INVENTORIES. Except for excess and obsolete inventory for which
reserves have been established on the Latest Balance Sheet: (a) all of the
inventories of Intelecon of raw materials, supplies, work in process, finished
products, spare parts, and replacement and component parts are of good, usable
and merchantable quality in all material respects and, except as set forth on
AGREEMENT AND PLAN OF MERGER - PAGE 14
Schedule 4.1.14, do not include excess, obsolete or discontinued items; (b) all
such inventories are of such quality as to meet the quality control standards of
Intelecon, and any applicable governmental quality control standards; (c) all
such inventories that are finished goods are saleable as current inventories at
the current prices thereof in the ordinary course of business and (d) all such
inventories are recorded on the books of Intelecon at the lower of cost or
market value determined in accordance with GAAP.
4.1.15 BANK ACCOUNTS. Schedule 4.1.15 sets forth a complete and correct
list containing the names of each bank or other financial institution in which
Intelecon has an account or safe deposit or lock box, the account or box number,
as the case may be, and the name of every person authorized to draw thereon or
having access thereto.
4.1.16. LICENSES. Intelecon has all necessary licenses, permits,
approvals, registrations and similar consents and authorizations (collectively,
the "Licenses") required to lawfully conduct its business as presently
conducted, including but not limited to all material Licenses required for
Intelecon to operate as it currently operates and in accordance with all
applicable Laws or orders or permits of any governmental authority, and (a) each
such License is valid, binding and in full force and effect, (b) no such License
is subject to revocation or forfeiture by virtue of any existing circumstance,
(c) there is no pending or, to the knowledge of Intelecon or any Shareholder,
threatened proceeding to modify in any material respect or revoke any License,
(d) no such License is subject to any outstanding order, decree, judgment,
stipulation, or investigation known to Intelecon or any Shareholder that would
materially affect such License, and (e) Intelecon is not, and neither Intelecon
nor any Shareholder has received any notice that Intelecon is, in default (or
with the giving of notice or lapse of time or both, would be in default) under
any such License.
4.1.17 INTELLECTUAL PROPERTY.
(a) TITLE. Schedule 4.1.17(a)(i) contains a complete and correct
list of all Intellectual Property that is owned by Intelecon other than
Intellectual Property that is both not registered or subject to application for
registration and not material to the business of Intelecon. All Intellectual
Property related to, used in, held for use in connection with, or necessary for
the conduct of, or otherwise material to, the business of Intelecon (the
"Intellectual Property Assets") are owned by Intelecon, except as disclosed on
Schedule 4.1.17(a)(ii).
(b) NO INFRINGEMENT. To the knowledge of Intelecon and each
Shareholder, the conduct of its business by Intelecon does not infringe or
otherwise conflict with any rights of any person in respect of any Intellectual
Property. To the knowledge of Intelecon and each Shareholder, none of the
Intellectual Property Assets is being infringed.
(c) LICENSING ARRANGEMENTS. Schedule 4.1.17(c)(i) sets forth all
Contracts, agreements or arrangements pursuant to which Intelecon has licensed
any Intellectual Property Assets to, or the use of such Intellectual Property
Assets is otherwise permitted (through non-assertion, settlement or similar
agreements or otherwise) by, any other person. Schedule 4.1.17(c)(ii) sets forth
AGREEMENT AND PLAN OF MERGER - PAGE 15
all Contracts, agreements or arrangements pursuant to which Intelecon has had
Intellectual Property primarily related to, used in, held for use primarily in
connection with, or necessary for the conduct of or otherwise material to its
business licensed to it, or has otherwise been permitted to use such
Intellectual Property (through non-assertion, settlement or similar agreements
or otherwise) (other than off-the-shelf commercially available software). All of
the Contracts, agreements or arrangements that are or should be set forth on
Schedules 4.1.17(c)(i) and (ii) (the "Intellectual Property Licenses") (x) are
in full force and effect in accordance with their terms and no default exists
thereunder by Intelecon or, to the knowledge of Intelecon or any Shareholder, by
any other party thereto, (y) are free and clear of all Liens, and (z) do not
contain any change in control or other terms or conditions that will become
applicable or inapplicable as a result of the consummation of the transactions
contemplated by this Agreement and the other Transaction Agreements. Intelecon
has made available to New Visual true and complete copies of all Intellectual
Property Licenses (including amendments, supplements, renewals, waivers and
other modifications) set forth on Schedule 4.1.17(c)(i) and (ii). All royalties,
license fees, charges and other amounts payable by, on behalf of, to, or for the
account of Intelecon in respect of any Intellectual Property Assets are set
forth on Schedules 4.1.17(c)(i) and (ii) and are reflected in the Financial
Statements.
(d) NO INTELLECTUAL PROPERTY LITIGATION. Except as set forth in
Schedule 4.1.17(d), no claim or demand of any person has been made nor is there
any proceeding that is pending, or to the knowledge of Intelecon or any
Shareholder, threatened, which (i) challenges the rights of Intelecon in respect
of any Intellectual Property Assets, (ii) asserts that Intelecon is infringing
or otherwise in conflict with, or is, except as set forth in Schedule
4.1.17(c)(ii), required to pay any royalty, license fee, charge or other amount
with regard to, any Intellectual Property, or (iii) claims that any default
exists under any Contract, agreement or arrangement listed on Schedule
4.1.17(c)(i) or (ii). Except as set forth in Schedule 4.1.17(d), none of the
Intellectual Property Assets is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court, arbitrator, or
administrative agency, or has been the subject of any litigation within the last
five years, whether or not resolved in favor of Intelecon.
4.1.18 INSURANCE. Schedule 4.1.18 contains a complete and correct list
of all insurance policies maintained by Intelecon. Within ten days after the
date hereof, Intelecon will make available to New Visual complete and correct
copies of all such policies, together with all riders and amendments thereto.
Such policies are in full force and effect, all premiums due thereon have been
paid and Intelecon has not received notice of a material premium increase or
cancellation with respect to such policies or of any default thereunder.
Intelecon has complied in all material respects with the terms and provisions of
such policies. Within the past two years, Intelecon has not been refused any
basic insurance coverage applied for, and Intelecon has no reason to believe
that its existing insurance coverage cannot be renewed as and when the same
shall expire, upon terms and conditions standard in the market at the time
renewal is sought.
4.1.19 ENVIRONMENTAL MATTERS.
(a) (i) Intelecon has obtained all Licenses that are required to
be obtained by it in connection with the operation of its business and ownership
AGREEMENT AND PLAN OF MERGER - PAGE 16
of its properties (collectively, the "Subject Properties") under any applicable
Environmental Law Requirements (as hereinafter defined), except where failure to
obtain such Licenses would not have a Material Adverse Effect;
(ii) Intelecon is in compliance in all respects with all
terms and conditions of such Licenses and with all applicable Environmental Law
Requirements, except where the failure to so comply would not have a Material
Adverse Effect;
(iii) there are no past or present events, conditions,
circumstances, activities or plans, in each case by or relating in any manner to
Intelecon or its use of the Subject Properties, that did or would violate or
prevent compliance or continued compliance with any Environmental Law
Requirements or give rise to any Environmental Liability (as hereinafter
defined), except for such matters as would not have a Material Adverse Effect;
(iv) there is no civil, criminal or administrative action,
suit, demand, claim, order, judgment, hearing, notice or demand letter, notice
of violation, investigation or proceeding pending or, to the knowledge of
Intelecon or any Shareholder, threatened by any person against Intelecon or any
prior owner of any of the Subject Properties, and relating in any way to any
Environmental Law Requirement or seeking to impose any Environmental Liability,
except for such matters as would not have a Material Adverse Effect;
(v) no hazardous material generated by Intelecon has been
recycled, treated, stored, disposed of or released by Intelecon at any location;
(vi) no oral or written notification of a release of a
hazardous material has been filed by or on behalf of Intelecon and no site or
facility now or previously owned, operated or leased by Intelecon is listed or
proposed for listing on any federal, state or local list of sites requiring
investigation or clean-up; and
(vii) there have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by, or that are in
the possession of, Intelecon in relation to any site or facility now or
previously owned, operated or leased by Intelecon which have not been delivered
to New Visual prior to the execution of this Agreement.
(b) "Environmental Law Requirement" shall mean any Law,
ordinance, rule, regulation, notice, plan or demand letter relating to pollution
or protection of human health, safety or the environment, including those
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes into the environment (including without limitation, ambient air,
surface water, groundwater, soil, wetlands, subsurface strata or land) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes.
(c) "Environmental Liability" shall mean (i) any liability or
obligation arising under any Environmental Law Requirement that has resulted in
AGREEMENT AND PLAN OF MERGER - PAGE 17
or is reasonably likely to result in a Material Adverse Effect, or (ii) any
liability or obligation under any other current theory of law or equity
(including without limitation, any liability for personal injury, property
damage or remediation) that results from, or is based upon or related to, the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical, or industrial,
toxic or hazardous substance or waste, which liability or obligation has
resulted in or is reasonably likely to result in a Material Adverse Effect.
4.1.20 EMPLOYEES AND LABOR MATTERS. Except as set forth in Schedule
4.1.20, Intelecon is not a party to or bound by any collective bargaining
agreement and there are no labor unions or other organizations representing,
purporting to represent or attempting to represent any employees of Intelecon.
Since January 1, 1997, there has not occurred or been threatened any material
strike, slowdown, picketing, work stoppage, concerted refusal to work overtime
or other similar labor activity with respect to any employees of Intelecon, and
since such date, Intelecon has complied in all material respects with all
applicable Laws relating to the employment of labor, including without
limitation those relating to wages, hours, occupational safety and health and
collective bargaining. There are no material labor disputes currently subject to
any grievance procedure, arbitration or litigation and there is no
representation petition pending or threatened with respect to any employee of
Intelecon. Intelecon has not received any written notice of, and is not
otherwise aware of, any federal, foreign, state or local administrative
proceeding (excluding workers compensation proceedings or except as set forth in
Schedule 4.1.20) pending or, to the knowledge of Intelecon or any Shareholder,
threatened with respect to any employee of Intelecon. There is no unfair labor
practice, sex, age, race or other discrimination or labor arbitration proceeding
pending or, to the knowledge of Intelecon or any Shareholder, threatened against
Intelecon.
4.1.21 EMPLOYEE BENEFIT PLANS AND RELATED MATTERS.
(a) EMPLOYEE BENEFIT PLANS.
(i) Schedule 4.1.21(a) sets forth a true and complete list
of each plan, fund or program that provides for its participants or their
beneficiaries, through the purchase of insurance or otherwise, medical,
surgical, or hospital care or benefits, or benefits in the event of sickness,
accident, disability, death or unemployment, or vacation benefits,
apprenticeship or other training programs, or day care centers, scholarship
funds, prepaid legal services, or supplemental income benefits for transferred
employees, or retirement income, or results in a deferral of income by employees
for periods extending to the termination of covered employment or beyond,
regardless of the method of calculating the contributions made to any such plan,
fund or program, or the method of calculating the benefits under any such plan,
fund or program or the method of distributing benefits from any such plan, fund
or program, and each bonus, incentive or deferred compensation, severance,
termination, retention, change in control, stock option or other equity-based,
performance or other employee or retiree benefit or compensation plan, program,
arrangement, agreement or policy, in any such case, whether written or unwritten
(in each case that applies to more than one person), that (x) provides or may
provide benefits or compensation in respect of any employee or former employee
AGREEMENT AND PLAN OF MERGER - PAGE 18
employed or formerly employed by Intelecon or the beneficiary or dependent of
any such employee or former employee (such employees, former employees,
beneficiaries and dependents collectively, the "Employees") or under which any
Employee is or may become eligible to participate or derive a benefit and (y) is
or has been entered into, maintained or established by Intelecon, or to which
Intelecon contributes or is or has been obligated or required to contribute or
otherwise with respect to which Intelecon may have any liability (collectively,
the "Plans").
(ii) With respect to each such Plan, Intelecon will make
available to New Visual within ten days after the date hereof complete and
correct copies of: all written Plans; descriptions of all unwritten Plans; all
trust agreements, insurance contracts or other funding arrangements; the two
most recent actuarial reports prepared for any Plan that is a defined benefit
plan and for which actuarial reports are prepared; the two most recent annual
and similar reports filed with any governmental authority, including all
schedules thereto and all reports attached thereto; the most recent Internal
Revenue Service ("IRS") determination letter issued in respect of any Plan;
current summary plan descriptions and other explanatory literature or
announcements provided to Employees; all material communications received from
or sent to the IRS, the Pension Benefit Guaranty Corporation or the Department
of Labor in respect of any Plan during the preceding two years; statements or
other communications regarding withdrawal or other multi-employer plan
liabilities in respect of any Plan which is a multi-employer Plan, if any; and
all amendments and modifications to any such document. Except as disclosed in
Schedule 4.1.21(a), Intelecon has not communicated to any Employee any intention
or commitment to modify any Plan or to establish or implement any other employee
or retiree benefit or compensation arrangement.
(b) QUALIFICATION. Each Plan intended to be qualified under
Section 401(a) of the Code, and the trust (if any) forming a part thereof, has
received a favorable determination letter from the IRS as to its qualification
under the Code and to the effect that each such trust is exempt from taxation
under Section 501(a) of the Code, and, to the knowledge of Intelecon and each
Shareholder, nothing has occurred since the date of such determination letter
that could adversely affect such qualification or tax-exempt status.
(c) COMPLIANCE; LIABILITY.
(i) No Plan covered by Title IV of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or Section 412 of the Code is
now, or ever was, to the knowledge of Intelecon or any Shareholder, maintained
by Intelecon or any predecessor of either of them. Neither any Plan nor
Intelecon has incurred any liability or penalty under Section 4975 of the Code
or Sections 409, 502(i) or 502(l) of ERISA.
(ii) Each of the Plans has been operated and administered in
all respects in substantial compliance with all applicable Laws, including
without limitation all applicable provisions of ERISA and the Code. There are no
pending or, to the knowledge of Intelecon or any Shareholder, threatened or
anticipated claims, in excess of $50,000 individually or $100,000 in the
AGREEMENT AND PLAN OF MERGER - PAGE 19
aggregate, against or involving any of the Plans and no suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of
Plan activities) has been brought against or with respect to any such Plan.
(iii) All contributions required to be made as of the date
of this Agreement to the Plans have been made or provided for. Neither Intelecon
nor any entity under "common control" with Intelecon within the meaning of
Section 4001 of ERISA has contributed to, or been required to contribute to, any
"multi-employer plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA).
(iv) No Employee is or may become entitled to
post-employment benefits of any kind by reason of employment by Intelecon,
including, without limitation, death or medical benefits (whether or nor
insured), other than (a) coverage provided pursuant to the terms of any Plan
specifically identified as providing such coverage in Schedule 4.1.21(a) or
mandated by Section 4980B of the Code, (b) retirement benefits payable under any
Plan qualified under Section 401(a) of the Code or (c) deferred compensation
fully and adequately accrued as a liability on the Latest Balance Sheet or
incurred with respect to services rendered after the Balance Sheet Date in the
ordinary course of business consistent with prior practice, pursuant to the
terms of a Plan. The consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits or the acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of any Employee.
4.1.22 BROKERS; FINDERS, ETC. Neither Intelecon nor any Shareholder has
engaged any broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement who would be entitled to a brokerage
or finder's commission, fee or similar compensation in connection therewith or
upon the consummation thereof. All negotiations relating to this Agreement and
the transactions contemplated hereby have been carried on without the
participation of any person acting on behalf of Intelecon or any Shareholder in
such manner as to give rise to any valid claim against New Visual or any of its
subsidiaries or affiliates for any brokerage or finder's commission, fee or
similar compensation, or for any bonus payable to any officer, director,
employee, agent or sales representative of or consultant to Intelecon or any
Shareholder upon consummation of the transactions contemplated hereby.
4.1.23 DISCLOSURE. To the knowledge of Intelecon and each Shareholder,
no representation or warranty by Intelecon and the Shareholders contained in
this Agreement nor any statement or certificate furnished or to be furnished by
or on behalf of Intelecon or any Shareholder to New Visual or its
representatives in connection herewith or pursuant hereto contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to make the statements contained herein or therein
not misleading. To the knowledge of Intelecon and each Shareholder, there is no
fact (other than matters of a general economic or political nature which do not
affect the Intelecon business uniquely) that has not been disclosed by Intelecon
or the Shareholders to New Visual and/or its representatives that might
reasonably be expected to have or result in a Material Adverse Effect.
AGREEMENT AND PLAN OF MERGER - PAGE 20
4.1.24 INVESTMENT INTENT.
(a) Each Shareholder is acquiring the Merger Shares solely for
the purpose of investment for his own account and not with a view to or for sale
in connection with any distribution thereof within the meaning of Section 2(11)
of the Securities Act of 1933 (the "Securities Act"). Each Shareholder
acknowledges that the Merger Shares are being issued to each Shareholder in
reliance upon one or more exemptions from registration contained in the
Securities Act and applicable state securities laws. The reliance by New Visual
upon such exemptions is based in part upon the representations set forth in this
Section 4.1.24.
(b) Each Shareholder understands that the Merger Shares have not
been registered under the Securities Act, and that he has no right to demand the
registration of the Merger Shares under the Securities Act. Each Shareholder
understands and agrees that the Merger Shares must be held subject to Section
3.4 hereof and cannot be transferred for a period of at least eighteen months,
and unless they are subsequently registered under the Securities Act or any
exemption from such registration is available with respect to such transfer.
(c) Each Shareholder understands that the Merger Shares
represent a speculative investment which involves a high degree of risk of loss
to each Shareholder.
(d) Each Shareholder has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of an investment in the Merger Shares and of making an informed investment
decision.
(e) Each Shareholder acknowledges and agrees that the Merger
Shares issued to each Shareholder or any subsequent holder thereof who acquires
the Merger Shares in a transaction exempt from registration under the Securities
Act may be imprinted with a restrictive legend concerning registration and the
provisions of Section 3.4 hereof deemed appropriate by New Visual.
(f) Each Shareholder acknowledges and agrees that New Visual's
stock records may be marked to indicate the provisions of this Section 4.1.24
and Section 3.4 hereof, and that New Visual may direct any transfer agent to
enter a stop transfer order in its records with respect to the Merger Shares in
accordance with this Section 4.1.24 and Section 3.4 hereof.
4.1.25 ACCOUNTS RECEIVABLE. All accounts receivable of Intelecon that
are reflected on the Latest Balance Sheet or on the accounting records of
Intelecon as of the Closing Date (collectively, the "Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the ordinary course of business. Unless paid
prior to the Closing Date, the Accounts Receivable are or will be as of the
Closing Date current and collectible net of the respective reserves shown on the
Latest Balance Sheet or on the accounting records of Intelecon as of the Closing
Date (which reserves are adequate and calculated consistent with past practices
and, in the case of the reserve as of the Closing Date, will not represent a
greater percentage of the Accounts Receivable as of the Closing Date than the
AGREEMENT AND PLAN OF MERGER - PAGE 21
reserve reflected in the Latest Balance Sheet represented of the Accounts
Receivable reflected therein and will not represent a material adverse change in
the composition of such Accounts Receivable in terms of aging). Subject to such
reserves, each of the Accounts Receivable either has been or will be collected
in full, without any set-off, within ninety days after the day on which it first
becomes due and payable. There is no contest, claim, or right of set-off, other
than returns in the ordinary course of business, under any Contract with any
obligor of an Accounts Receivable relating to the amount or validity of such
Accounts Receivable. Schedule 4.1.25 contains a complete and accurate list of
all Accounts Receivable as of the date of the Latest Balance Sheet, which list
sets forth the aging of such Accounts Receivable.
4.2. REPRESENTATIONS AND WARRANTIES OF NEW VISUAL AND ACQUISITION. New
Visual and Acquisition represent and warrant to Intelecon and each Shareholder
as follows:
4.2.1 AUTHORIZATION. Each of New Visual and Acquisition has the
requisite corporate power and authority to execute and deliver this Agreement
and the other Transaction Agreements to which it is a party, to perform fully
its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by New Visual and
Acquisition of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action of New Visual and Acquisition. Each
of New Visual and Acquisition has duly executed and delivered this Agreement and
on the Closing Date will have duly executed and delivered the other Transaction
Agreements to which it is a party. This Agreement is, and on the Closing Date
each of the other Transaction Agreements to which New Visual or Acquisition is a
party will be, legal, valid and binding obligations of New Visual and/or
Acquisition, as the case may be, enforceable against each such party in
accordance with their respective terms, except as may be limited by applicable
bankruptcy and other laws regarding creditors' rights generally, and general
principles of equity.
4.2.2 CORPORATE STATUS.
(a) Each of New Visual and Acquisition is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with full corporate power and authority to
carry on its respective business and to own or lease and to operate its
respective properties as and in the places where such business is conducted and
such properties are owned, leased or operated.
(b) Each of New Visual and Acquisition is duly qualified and
licensed to do business in the jurisdictions specified in Schedule 4.2.2, which
are the only jurisdictions in which the operation of its respective business or
the character of the properties owned, leased, or operated by it makes such
qualification or licensing necessary.
(c) Each of New Visual and Acquisition will deliver to Intelecon,
within ten (10) days after the date hereof, complete and correct copies of their
respective articles of incorporation and bylaws. The minute books and other
AGREEMENT AND PLAN OF MERGER - PAGE 22
corporate records of New Visual and Acquisition contain a true and complete
record of all action taken at all meetings and by all written consents in lieu
of meetings of the shareholders, the Board of Directors and committees of the
Board of Directors of New Visual and Acquisition.
4.2.3 CAPITALIZATION.
(a) The authorized capital stock of New Visual consists solely of
(i) 100,000,000 shares of New Visual Common Stock, of which 82,028,831 shares
were issued and outstanding as of March 23, 2000, and (ii) 200,000,000 shares of
New Visual preferred stock, $30 par value, no shares of which are outstanding.
All issued and outstanding shares of New Visual Common Stock are duly
authorized, validly issued, fully paid, non-assessable and free of preemptive
rights.
(b) The authorized capital stock of Acquisition consists solely
of 10,000 shares of Acquisition Common Stock, 1,000 shares of which are issued
and outstanding. All issued and outstanding shares of Acquisition Common Stock
are duly authorized, validly issued, fully paid, non-assessable, free of
preemptive rights, and owned by New Visual.
(c) Except as set forth on Schedule 4.2.3, no subscriptions,
options, warrants, conversion or other rights, agreements, commitments,
arrangements or understandings of any kind obligating New Visual or Acquisition,
contingently or otherwise, to issue or sell, or cause to be issued or sold, any
shares of New Visual Common Stock or Acquisition Common Stock or any securities
convertible into or exchangeable for any such shares, are outstanding; and no
authorization therefor has been given. There are no outstanding contractual or
other rights or obligations to or of New Visual or Acquisition to repurchase,
redeem or otherwise acquire any outstanding shares of New Visual Common Stock or
Acquisition Common Stock.
4.2.4 NO CONFLICTS. The execution, delivery and performance by New
Visual and Acquisition of this Agreement and of the other Transaction Agreements
to which they are parties, and the consummation of the transactions contemplated
hereby and thereby, do not and will not conflict with or result in a violation
of or a default under (with or without the giving of notice or the lapse of time
or both), create in any other person a right or claim of termination, amendment,
modification, acceleration or cancellation of, or result in the creation of any
Lien (or any obligation to create any Lien) upon any of the properties or assets
of New Visual or Acquisition under (i) any Law applicable to New Visual or
Acquisition or any of the properties or assets of New Visual or Acquisition,
(ii) the certificate or articles of incorporation or bylaws of New Visual or
Acquisition or (iii) except as set forth in Schedule 4.2.4, any Contract to
which New Visual or Acquisition is a party or by which New Visual or Acquisition
or any of their properties or assets may be bound or affected, except, in the
case of clause (iii), for violations or defaults that, individually and in the
aggregate, would not have a material adverse effect on the business, results of
operations, condition (financial or otherwise) or prospects of New Visual and
Acquisition, taken as a whole (a "New Visual Material Adverse Effect"), and
would not materially impair the ability of New Visual or Acquisition to perform
its respective obligations hereunder or under the other Transaction Agreements
to which they are parties. Except as specified in Schedule 4.2.4, no
AGREEMENT AND PLAN OF MERGER - PAGE 23
governmental approval or other consent of any party is required to be obtained
or made by New Visual or Acquisition in connection with the execution and
delivery of this Agreement or the other Transaction Agreements or the
consummation of the transactions contemplated hereby or thereby.
4.2.5 BROKERS; FINDERS, ETC. New Visual has not engaged any broker,
finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement who would be entitled to a brokerage or finder's
commission, fee or similar compensation in connection therewith or upon the
consummation thereof. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on without the participation
of any person acting on behalf of New Visual in such manner as to give rise to
any valid claim against Intelecon or any Shareholder for any brokerage or
finder's commission, fee or similar compensation.
4.2.6 VALIDITY OF MERGER SHARES. The Merger Shares, when issued and
delivered in accordance with the terms of this Agreement, will have been duly
authorized and validly issued and will be fully paid and non-assessable.
4.2.7 SEC REPORTS AND FINANCIAL STATEMENTS. New Visual has filed with
the United States Securities and Exchange Commission (the "Commission"), its
Annual Report on Form 10-KSB for the fiscal year ended October 31, 1999 and its
Quarterly Report on Form 10-QSB for the period ended January 31, 2000 (as such
documents have been amended through the date hereof, the "New Visual Reports").
The consolidated financial statements of New Visual included in the New Visual
Reports comply in all material respects with applicable accounting requirements
and with the published rules and regulations of the Commission with respect
thereto, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto), and fairly present the consolidated
financial position of New Visual and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended.
4.2.8 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the New Visual
Reports or as set forth in Schedule 4.2.8, since January 31, 2000, (i) New
Visual and Acquisition have conducted their respective businesses only in the
ordinary course and consistent with prior practice and (ii) there has not been
(A) any event or occurrence which will have a New Visual Material Adverse Effect
or (B) any material change by New Visual in its accounting principles, practices
or methods (except to the extent required by GAAP).
4.2.9 LITIGATION. Except as set forth in Schedule 4.2.9, there is no
action, claim, demand, suit, proceeding, arbitration, grievance, citation,
summons, subpoena, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, pending or, to the knowledge of
New Visual or Acquisition, threatened against or relating to New Visual or
Acquisition or against or relating to the transactions contemplated by this
Agreement or the other Transaction Agreements, and neither New Visual nor
Acquisition knows or has reason to be aware of any basis for the same.
AGREEMENT AND PLAN OF MERGER - PAGE 24
4.2.10 DISCLOSURE. To the knowledge of New Visual and Acquisition, no
representation or warranty by New Visual and Acquisition contained in this
Agreement nor any statement or certificate furnished or to be furnished by or on
behalf of New Visual or Acquisition to Intelecon or its representatives in
connection herewith or pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to make the statements contained herein or therein not misleading. To
the knowledge of New Visual and Acquisition, there is no fact (other than
matters of a general economic or political nature which do not affect New
Visual's business uniquely) known to New Visual or Acquisition that has not been
disclosed by New Visual or Acquisition to Intelecon and/or its representatives
that might reasonably be expected to have or result in a New Visual Material
Adverse Effect.
4.2.11. ABSENCE OF UNDISCLOSED LIABILITIES. New Visual has no
liabilities or obligations of any nature, whether known or unknown, absolute,
accrued, contingent or otherwise and whether due or to become due, except (a) as
set forth in Schedule 4.2.11, (b) as and to the extent disclosed and adequately
reserved against in the latest balance sheet included in the New Visual Reports
(excluding the notes thereto) and (c) for liabilities and obligations that (i)
were incurred after January 31, 2000, in the ordinary course of business
consistent with prior practice and (ii) individually and in the aggregate are
not material to New Visual and have not had or resulted in, and will not have or
result in, a New Visual Material Adverse Effect.
ARTICLE V
COVENANTS
5.1 CONDUCT OF BUSINESS. On and after the date hereof and until the
Effective Time, except as expressly permitted or required by this Agreement or
as otherwise expressly consented to by New Visual in writing, Intelecon will,
and the Shareholders will cause Intelecon to:
(a) carry on its business in, and only in, the ordinary course,
in substantially the same manner as heretofore conducted, and use all
commercially reasonable efforts to preserve intact its present business
organization, maintain its properties in good operating condition and repair,
keep available the services of its present officers and significant employees,
and preserve its relationship with customers, suppliers and others having
business dealings with it, to the end that its goodwill and going business shall
be in all material respects unimpaired following the Closing;
(b) not prepay any accounts payable, delay payment of any trade
payables or other obligations, or make any other cash payments other than in the
ordinary course of business;
(c) maintain all of its tangible assets in good repair, working
order and operating condition subject only to ordinary wear and tear;
(d) use all reasonable efforts to keep in full force and effect
insurance comparable in amount and scope of coverage to insurance now carried by
it;
AGREEMENT AND PLAN OF MERGER - PAGE 25
(e) maintain its books of account and records in the usual, regular
and ordinary manner consistent with past policies and practices and not change
such policies and practices;
(f) comply in all material respects with all Laws applicable to
Intelecon and its business;
(g) use all reasonable efforts to maintain its good standing in its
jurisdiction of incorporation and in the jurisdictions in which it is qualified
to do business as a foreign corporation and to maintain all governmental
approvals and consents necessary for, or otherwise material to, Intelecon and
its business;
(h) not merge or consolidate with, or agree to merge or consolidate
with, or purchase substantially all of the assets of, or otherwise acquire, any
business, business organization or division thereof, of any other person;
(i) promptly advise New Visual in writing of any event, occurrence,
fact, condition, change, development or effect that, individually or in the
aggregate, could, to the knowledge of Intelecon or any Shareholder, reasonably
be expected to have or result in a Material Adverse Effect or could cause a
breach of this Section 5.1;
(j) perform in all material respects all of its obligations under
all Contracts relating to or affecting Intelecon and its business;
(k) not declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock or otherwise purchase or redeem,
directly or indirectly, any shares of its capital stock;
(l) not issue or sell any shares of any class of its capital stock,
or any securities convertible into or exchangeable for any such shares, or
issue, sell, grant or enter into any subscriptions, options, warrants,
conversion or other rights, agreements, commitments, arrangements or
understandings of any kind, contingently or otherwise, to purchase or otherwise
acquire any such shares or any securities convertible into or exchangeable for
any such shares;
(m) not incur any indebtedness for borrowed money, issue or sell
any debt securities or prepay any debt (including, without limitation, any
borrowings from or prepayments to any Shareholder or other affiliate) except for
borrowings and prepayments (other than to or from any Shareholder or other
affiliate) in the ordinary course of business;
(n) not mortgage, pledge or otherwise subject to any Lien, any of
its real property or other properties or assets, tangible or intangible, except
in the ordinary course of business;
(o) not forgive, cancel, compromise, waive or release any debts,
claims or rights, except for debts of, or claims and rights against, persons
AGREEMENT AND PLAN OF MERGER - PAGE 26
other than any Shareholder or other affiliate that are forgiven, cancelled,
compromised, waived or released in the ordinary course of business;
(p) not pay or commit to pay any bonus, other incentive
compensation, change in control or similar compensation to any officer,
director, employee, Shareholder or affiliate or grant or commit to grant to any
officer, director, employee, Shareholder or affiliate any other increase in, or
additional, compensation in any form;
(q) not enter into, institute, adopt or amend or commit to enter
into, institute, adopt or amend any employment, consulting, retention,
change-in-control, collective bargaining, bonus or other incentive compensation,
profit-sharing, health or other welfare, stock option or other equity, pension,
retirement, vacation, severance, deferred compensation or other employment,
compensation or benefit plan, policy, agreement, trust, fund or arrangement in
respect of or for the benefit of any officer, director, employee, Shareholder or
affiliate;
(r) not amend either its articles of incorporation or bylaws;
(s) not incur, assume, guarantee or otherwise become directly or
indirectly liable with respect to any liability or obligation in excess of
$500,000 in each case or $750,000 in the aggregate at any one time outstanding
(whether absolute, accrued, contingent or otherwise and whether direct or
indirect, or as guarantor or otherwise with respect to any liability or
obligation of any other person) other than agreements for purchases of goods or
services in the ordinary course of business;
(t) not sell any assets with a value in excess of $100,000 in each
case or $250,000 in the aggregate, other than inventory in the ordinary course
of business;
(u) not transfer or grant any rights under, or enter into any
settlement regarding the breach or infringement of any Intellectual Property, or
modify any existing rights with respect thereto;
(v) not make any capital expenditures or capital additions or
improvements in excess of an aggregate of $250,000;
(w) not institute, settle or agree to settle any litigation, action
or proceeding before any court or governmental body involving amounts in excess
of $50,000;
(x) not liquidate, dissolve or wind-up its affairs; or
(y) not enter into any transaction, Contract or commitment other
than in the ordinary course of business, or pay or agree to pay any legal,
accounting, brokerage or finder's fee, Taxes or other expenses in connection
with, or incur any severance pay obligations by reason of, this Agreement, the
other Transaction Agreements or the transactions contemplated hereby or thereby.
AGREEMENT AND PLAN OF MERGER - PAGE 27
5.2 NO SOLICITATION. From the date hereof until the earlier of the
Effective Time or the termination of this Agreement in accordance with the terms
hereof, Intelecon agrees (a) that it shall not, and Intelecon shall direct and
use its best efforts to cause its officers, directors, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it) not to, initiate, solicit or encourage, directly
or indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its shareholders)
with respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
equity securities of, Intelecon (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal") or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal;
(b) that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing and Intelecon will take the necessary steps
to inform the individuals or entities referred to above of the obligations
undertaken in this Section 5.2; and (c) that it will notify New Visual
immediately of the identity of the potential acquiror and the terms of such
person's or entity's proposal if any such inquiries or proposals are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, it; provided, however,
that nothing contained in this Section 5.2 shall prohibit the Board of Directors
of Intelecon from (i) furnishing information to or entering into discussions or
negotiations with any person or entity that makes an unsolicited written
proposal to acquire Intelecon pursuant to a merger, consolidation, share
exchange, purchase of a substantial portion of the assets, business combination
or other similar transaction, if, and only to the extent that, (A) the Board of
Directors of Intelecon determines in good faith that such action is required for
the Board of Directors to comply with its fiduciary duties to shareholders, (B)
prior to furnishing such information to, or entering into discussions or
negotiations with, such person or entity, Intelecon provides written notice to
New Visual to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person or entity, and (C) subject to any
confidentiality agreement with such person or entity (which Intelecon determined
in good faith was required to be executed in order for the Board of Directors to
comply with its fiduciary duties to shareholders), Intelecon keeps New Visual
informed of the status of any such discussions or negotiations and (ii) to the
extent applicable, complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Acquisition Proposal. Nothing in this Section 5.2 shall (x)
permit Intelecon to terminate this Agreement (except as specifically provided in
Article VII during the term of this Agreement (it being agreed that during the
term of this Agreement, Intelecon shall not enter into any agreement with any
person that provides for, or in any way facilitates, an Acquisition Proposal
(other than a confidentiality agreement in customary form)), or (z) affect any
other obligation of any party under this Agreement.
AGREEMENT AND PLAN OF MERGER - PAGE 28
5.3 ACCESS AND INFORMATION; COOPERATION FOR SEC FILINGS BY NEW VISUAL;
SCHEDULES.
(a) From the date hereof until the earlier of the Effective Time or
the termination of this Agreement in accordance with the terms hereof, each of
the parties hereto will give the other parties hereto and such other parties'
accountants, counsel, consultants, employees and agents, access at all
reasonable times to, and furnish them with all documents, records, work papers
and information with respect to, all of the assets, properties, books,
contracts, commitments, reports and records of such party, as any of the other
parties hereto shall from time to time reasonably request. In addition, each of
the parties hereto will permit the other parties hereto and their respective
accountants, counsel, consultants, employees and agents, reasonable access to
personnel of such party and persons acting on such parties' behalf as may be
necessary or useful to each of the other parties hereto in its review of the
properties, assets and business of such party and the above-mentioned documents,
records and information. Without limiting the foregoing, each of New Visual and
Intelecon agrees that the other shall be permitted during the thirty (30) day
period commencing on the date of this Agreement (hereinafter called the "Due
Diligence Period") to conduct such diligence and investigation concerning the
other party and its properties, assets and business and the above-mentioned
documents, records and information, as the investigating party, in its
discretion, reasonably deems appropriate. Intelecon and the Shareholders will
keep New Visual reasonably informed as to the affairs of Intelecon and its
business, and New Visual will keep Intelecon reasonably informed as to the
affairs of New Visual and its business.
(b) Intelecon and the Shareholders will use reasonable good faith
efforts to cause the accountants of Intelecon to cooperate with New Visual, and
deliver to New Visual such written consents as it shall reasonably request, in
connection with any required filings with the Commission under the Securities
Act and the Exchange Act.
(c) On or before April 7, 2000, each of the parties hereto will
deliver to the other parties hereto all Schedules referred to herein that are
required to be delivered by such party.
5.4 PUBLIC ANNOUNCEMENTS. Except as required by applicable Law, none of
the parties hereto shall, nor shall any person acting on behalf of any of them,
make any public announcement in respect of this Agreement or the transactions
contemplated hereby without the prior written consent of New Visual and
Intelecon.
5.5 VOTE OR CONSENT ON MERGER; OTHER ACTIONS.
(a) Intelecon and each Shareholder agree to take all action
necessary in accordance with applicable Law and Intelecon's articles of
incorporation and bylaws to convene or cause to be convened a meeting of the
shareholders of Intelecon to consider and vote upon, or to otherwise take action
by shareholder consent to approve, this Agreement and the Merger and the other
Transactions contemplated hereby, as promptly as practicable. Intelecon, through
its Board of Directors, agrees to recommend to the shareholders of Intelecon
approval of this Agreement and the Merger and the other Transactions
contemplated hereby.
AGREEMENT AND PLAN OF MERGER - PAGE 29
(b) Each Shareholder agrees to vote, or cause to be voted, all of
his shares of Intelecon Common Stock in favor of, or to otherwise take action by
shareholder consent to approve, any proposal submitted by the Board of Directors
of Intelecon for shareholder approval of this Agreement and the Merger and the
other Transactions contemplated hereby.
(c) Each Shareholder agrees that he will not, prior to the
Effective Time or the earlier termination of this Agreement pursuant to Section
7 of this Agreement, without the prior written consent of New Visual, (i) sell,
transfer, pledge, assign or otherwise dispose of, or enter into any Contract,
option or other arrangement or understanding with respect to the sale, transfer,
pledge, assignment or other disposition of any of his shares of Intelecon Common
Stock, (ii) grant any proxy with respect to any of his shares of Intelecon
Common Stock or enter into any voting trust or similar agreement or arrangement
in respect of the voting of any of his shares of Intelecon Common Stock or (iii)
vote any of the shares of Intelecon Common Stock to amend the articles of
incorporation or bylaws of Intelecon, to authorize any merger or consolidation
of Intelecon, or sale of all or substantially all of the assets of Intelecon, or
the dissolution, liquidation or winding-up of the affairs of Intelecon, or
authorize the issuance of any shares of capital stock of Intelecon, or approve
any new employee benefit, pension, stock option or other similar plan or
arrangement of Intelecon or any amendment to any existing plan or arrangement to
increase the size of any such plan or arrangement or materially increase the
benefits payable thereunder.
5.6 FINANCIAL STATEMENTS. As soon as practicable after the execution of
this Agreement, Intelecon agrees to engage Xxxx, Xxxxxxxxxx & XxXxxx, P.C.
("TCM") as its accountants to audit Intelecon's balance sheets as of December
31, 1999 and 1998 and the related statements of income, changes in shareholders'
equity and changes in cash flows for the respective years then ended, and the
related notes and schedules thereto, and to prepare its report of independent
public accountants with respect thereto (the "1999 Financial Statements"). Up to
$30,000 of the cost of the preparation of the 1999 Financial Statements shall be
paid by Intelecon upon its receipt of TCM's xxxx for such services. Intelecon
shall deliver the 1999 Financial Statements to New Visual as soon as practicable
after the date hereof. New Visual agrees to pay any fees of TCM relating to the
preparation of the 1999 Financial Statements in excess of $30,000, regardless of
whether the Closing occurs.
5.7 FURTHER ACTIONS.
(a) Each of the parties hereto agrees to use and to cause all
persons acting on its behalf to use all reasonable good faith efforts to take
all actions and to do all things necessary, proper or advisable to consummate
the transactions contemplated hereby by the Closing Date.
(b) Each of New Visual and Intelecon, as promptly as practicable,
will file or supply, or cause to be filed or supplied, all applications,
notifications and information required to be filed or supplied by it pursuant to
applicable Law in connection with this Agreement and the other Transaction
Agreements and the consummation of the transactions contemplated hereby and
thereby.
AGREEMENT AND PLAN OF MERGER - PAGE 30
(c) Each of New Visual and Intelecon, as promptly as practicable,
will use all reasonable efforts to obtain, or cause to be obtained, all consents
(including, without limitation, all governmental approvals and any consent
required under any Contract) necessary to be obtained by it in order to
consummate the transactions contemplated by this Agreement.
(d) Each of the parties hereto will, and will cause all persons
acting on its or their behalf to, coordinate and cooperate with the other
parties hereto in exchanging such information and supplying such assistance as
may be reasonably requested by the other parties hereto in connection with the
filings and other actions contemplated hereby.
(e) At all times prior to the Effective Time, Intelecon and the
Shareholders shall promptly notify New Visual in writing of any fact, condition,
event or occurrence (including any fact that would cause the representations and
warranties of Intelecon and the Shareholders set forth in this Agreement to be
incorrect in any material respect) that will or may result in the failure of any
of the conditions contained in Sections 6.1 and 6.2 to be satisfied, promptly
upon becoming aware of the same. At all times prior to the Effective Time, New
Visual shall promptly notify Intelecon in writing of any fact, condition, event
or occurrence (including any fact that would cause any of the representations
and warranties of New Visual set forth in this Agreement to be incorrect in any
material respect) that will or may result in the failure of any of the
conditions contained in Sections 6.1. and 6.3 to be satisfied, promptly upon
becoming aware of the same. Additionally, in the event any party, whether during
the course of its due diligence review or otherwise, discovers prior to the
Closing that any representation and warranty made by any other party is
incorrect in any material respect, the discovering party shall give such other
party prompt written notice of the inaccuracy, which notice shall describe the
inaccuracy in reasonable detail.
5.8 FURTHER ASSURANCES. Following the Closing, each of the parties
hereto shall, and shall cause all persons acting on its or their behalf to, from
time to time, execute and deliver such additional instruments, documents,
conveyances or assurances and take such other actions as shall be necessary, or
otherwise reasonably requested by any of the other parties hereto, to confirm
and assure the rights and obligations provided for in this Agreement and in the
other Transaction Agreements and render effective the consummation of the
transactions contemplated hereby and thereby.
5.9 ELECTION OF DIRECTORS AND OFFICERS. Immediately following the
Effective Time, the Board of Directors of New Visual shall cause Xxxxx Xxxxxx
and Xxxxxxxx Xxxxxx to be appointed to the Board of Directors of New Visual, and
shall cause Xxxxx Xxxxxx to be elected President of New Visual, and Xxxxxxxx
Xxxxxx to be elected Chief Operating Officer and Chief Financial Officer of New
Visual. Immediately following the Effective Time, the Board of Directors of
Acquisition shall cause Xxxxx Xxxxxx and Xxxxxxxx Xxxxxx to be elected officers
and members of the Board of Directors of Acquisition.
5.10 EMPLOYEE BENEFITS. From and after the Effective Time, subject to
applicable law, Acquisition will honor in accordance with their terms, all
AGREEMENT AND PLAN OF MERGER - PAGE 31
Plans; provided, however, that nothing herein shall preclude any change effected
on a prospective basis in any Plan that is permitted pursuant to the following
sentence of this Section 5.10. For a period of not less than six months
following the Effective Time, subject to applicable law, Acquisition will
provide benefits to Intelecon employees who become employees of Acquisition
which will, in the aggregate, be no less favorable than those provided by
Intelecon to its employees immediately prior to the Effective Time. New Visual
agrees that, if its shareholders approve a stock option plan of New Visual, its
Board of Directors will cause stock options with respect to an aggregate of
1,000,000 shares of New Visual Common Stock to be granted to certain Intelecon
employees (other than the Shareholders) who become employees of Acquisition.
Xxxxx Xxxxxx and Xxxxxxxx Xxxxxx will submit their recommendations concerning
the employees to whom stock options will be granted and the number of shares to
be covered by each such stock option; provided, however, that the employees to
whom stock options will be granted and all terms of such options shall be
approved by the New Visual Board of Directors or committee administering such
stock option plan. Nothing herein shall preclude additional stock option grants
to Intelecon employees who become employees of Acquisition.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of the parties to consummate the transactions contemplated hereby shall be
subject to the fulfillment on or prior to the Closing Date of the following
condition:
6.1.1 NO INJUNCTION, ETC. Consummation of the transactions contemplated
hereby shall not have been restrained, enjoined or otherwise prohibited by any
applicable Law, including any order, injunction, decree or judgment of any court
or governmental authority. No court or governmental authority shall have
determined any applicable Law to make illegal the consummation of the
transactions contemplated hereby or by the other Transaction Agreements, and no
proceedings with respect to the application of any such Law to such effect shall
be pending or threatened.
6.2 CONDITIONS TO OBLIGATIONS OF NEW VISUAL AND ACQUISITION. The
obligations of New Visual and Acquisition to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver in writing by
New Visual) on or prior to the Closing Date of the following additional
conditions, which Intelecon and the Shareholders agree to use their good faith
efforts to cause to be fulfilled:
6.2.1 REPRESENTATIONS; PERFORMANCE. The representations and warranties
of Intelecon and the Shareholders contained in this Agreement and the Exhibits
and Schedules hereto (i) shall be true and correct in all material respects at
and as of the date hereof, and (ii) shall be repeated and shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though made on and as of the Closing Date. Intelecon and the
Shareholders shall have duly performed and complied in all material respects
with all agreements and conditions required by this Agreement to be performed or
complied with by each of them prior to or on the Closing Date. Intelecon and the
AGREEMENT AND PLAN OF MERGER - PAGE 32
Shareholders shall have delivered to New Visual a certificate, dated the Closing
Date and signed by Intelecon's duly authorized officer and by each Shareholder,
to the foregoing effect.
6.2.2 CONSENTS. Intelecon shall have obtained and shall have delivered
to New Visual copies of (i) all governmental approvals required to be obtained
by Intelecon in connection with the execution and delivery of this Agreement and
the other Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby and (ii) all consents (including, without
limitation, all consents required under any Contract) necessary to be obtained
by Intelecon or the Shareholders in order to consummate the Merger pursuant to
this Agreement.
6.2.3 NO MATERIAL ADVERSE EFFECT. No event, occurrence, fact,
condition, change, development or effect shall have occurred, exist or come to
exist since the Balance Sheet Date that, individually or in the aggregate, has
constituted or resulted in, or could reasonably be expected to constitute or
result in, a Material Adverse Effect.
6.2.4 TRANSACTION AGREEMENTS. The Shareholders shall have entered into
the following agreements with New Visual and/or Acquisition:
(a) Employment Agreements, in the forms attached hereto as
Exhibits C and D, shall be entered into by Xxxxx Xxxxxx and Xxxxxxxx Xxxxxx,
respectively;
(b) the Shareholders' Release, in the form attached hereto as
Exhibit E, shall be entered into by the Shareholders and Ikso Vakser; and
(c) the Escrow Agreement shall be entered into by the
Shareholders and Ikso Vakser.
6.2.5 ESTOPPEL LETTERS. Intelecon shall have delivered to New Visual
estoppel letters, reasonably satisfactory to New Visual, from the lessors of the
leases listed in Schedule 6.2.5 to the effect that Intelecon has paid all rent
and other amounts due under such lease, is not otherwise in default in any
material respect thereunder and, if required under such lease, consenting to the
assumption of such lease by Acquisition as the Surviving Corporation in the
Merger.
6.2.6 1999 FINANCIAL STATEMENTS. Intelecon shall have provided New
Visual with the completed 1999 Financial Statements, and such 1999 Financial
Statements shall be satisfactory to New Visual, in its sole discretion.
6.2.7 INTELECON LIABILITIES. Intelecon's liabilities on the Closing
Date shall not exceed $1.5 million, excluding (i) liabilities relating to
capital leases, and (ii) indebtedness of up to $6 million relating to the
repayment of the Greenbriar Note (as defined below), the cancellation of the
Greenbriar Warrant (as defined in Section 4.1.3) and the redemption of the
Intelecon Preferred Stock. Intelecon shall have delivered to New Visual the
certificate of its President and Chief Financial Officer, dated the Closing
Date, listing the liabilities of Intelecon, by balance sheet category and
amount, and confirming Intelecon's compliance with this Section 6.2.7. As used
AGREEMENT AND PLAN OF MERGER - PAGE 33
herein, "Greenbriar Note" refers to that certain promissory note of Intelecon to
Greenbriar, dated November 1, 1998, in the original principal amount of
$2,688,000.
6.2.8 GREENBRIAR TRANSACTIONS. Intelecon shall have fully repaid the
Greenbriar Note, and all indebtedness due to Greenbriar, the Greenbriar Warrant
and any other agreement with Greenbriar shall have been canceled, and all
outstanding Intelecon Preferred Stock shall have been redeemed and retired, and
Greenbriar shall have released Intelecon from any and all liability or
obligation relating to any of the foregoing matters. Intelecon shall have
received, and delivered to New Visual, the certificate of a duly authorized
representative of Greenbriar to the foregoing effect.
6.2.9 NO LIENS ON INTELECON SHARES OR ASSETS. All Liens on the
Intelecon Common Stock, including without limitation the pledge of the
Shareholders' shares to Greenbriar, and all Liens on any of Intelecon's assets,
shall have been released, and Intelecon and the Shareholders shall provide to
New Visual reasonably satisfactory documentation confirming such releases of
Liens. All issued and outstanding shares of Intelecon Common Stock shall be
owned by the Shareholders and Ikso Vakser at the Effective Time, free and clear
of all Liens.
6.2.10 DEBT EXCHANGE AGREEMENT. New Visual and Intelecon shall have
entered into a Debt Exchange Agreement with Xxxxxx Xxxxxxxxxx or his affiliates
("Xxxxxxxxxx"), which agreement shall be in a form acceptable to New Visual and
provide for the issuance to Xxxxxxxxxx of up to 2 million restricted shares of
New Visual Common Stock immediately after the Effective Time in full and
complete repayment of any and all indebtedness of Intelecon (which shall not
exceed $6 million) incurred for the purpose of repaying the Greenbriar Note,
canceling the Greenbriar Warrant, redeeming all outstanding Intelecon Preferred
Stock and effecting any other transactions contemplated by Section 6.2.8. The
shares to be issued pursuant to the Debt Exchange Agreement shall be subject to
the same restrictions on transferability to which the Merger Shares to be issued
in the Merger shall be subject, except that the Lock-Up Period shall be twelve
(12) months.
6.2.11 LOAN AGREEMENT. Intelecon shall have entered into a loan
agreement with Xxxxxxxxxx, the form of which shall be satisfactory to New
Visual, pursuant to which Intelecon shall have borrowed up to $6 million for the
purpose of effecting the transactions described in Section 6.2.8 hereof.
6.3 CONDITIONS TO OBLIGATIONS OF INTELECON AND THE SHAREHOLDERS. The
obligations of Intelecon and the Shareholders to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver in writing by
Intelecon or the Shareholders, as the case may be), on or prior to the Closing
Date, of the following additional conditions, which New Visual and Acquisition
agree to use their good faith efforts to cause to be fulfilled.
6.3.1 REPRESENTATIONS; PERFORMANCE, ETC. The representations and
warranties of New Visual and Acquisition contained in this Agreement and the
Exhibits and Schedules hereto (i) shall be true and correct in all material
respects at and as of the date hereof and (ii) shall be repeated and shall be
AGREEMENT AND PLAN OF MERGER - PAGE 34
true and correct in all material respects on and as of the Closing Date with the
same effect as though made at and as of the Closing Date. Each of New Visual and
Acquisition shall have duly performed and complied in all material respects with
all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or on the Closing Date. Each of New Visual and
Acquisition shall have delivered to Intelecon a certificate, dated the Closing
Date and signed by its duly authorized officer, to the foregoing effect.
6.3.2 TRANSACTION AGREEMENTS. New Visual and/or Acquisition shall have
executed and delivered each of the Transaction Agreements to which it will be a
party.
6.3.3 CONSENTS. New Visual or Acquisition shall have obtained and shall
have delivered to Intelecon copies of (i) all governmental approvals required to
be obtained by New Visual or Acquisition in connection with the execution and
delivery of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby and (ii) all
consents necessary to be obtained by either of them in order to consummate the
Merger pursuant to this Agreement.
6.3.4 FUNDING COMMITMENT. New Visual shall have received, and delivered
to Intelecon a copy of, a letter of intent or commitment letter from Lilly Beter
Capital Group, Ltd. ("LBCG") with respect to the placement of at least
$18,000,000 of New Visual's debt and/or equity securities within twelve (12)
months after the Effective Time. Such letter of intent or commitment letter
shall be subject to conditions to which New Visual and LBCG may agree, including
without limitation, market conditions, LBCG's satisfaction with its due
diligence and the financial statements of New Visual and Intelecon, and other
conditions customary in such letters.
6.3.5 NASDAQ APPLICATION. New Visual shall have filed an application
for the listing of its outstanding common stock and the Merger Shares on the
NASDAQ Stock Market.
ARTICLE VII
TERMINATION
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by the written agreement of New Visual and Intelecon;
(b) by either Intelecon or New Visual, by written notice delivered
to the other party hereto before the expiration of the Due Diligence Period if
either Intelecon or New Visual determines in good faith that the results of its
due diligence investigation are unsatisfactory or disclose matters which lead
such party's board of directors to determine that the consummation of the Merger
would not be in its best interests or the best interests of its shareholders;
(c) by either Intelecon or New Visual, by written notice to the
other party hereto by 5:00 p.m., Central time, on or after June 30, 2000 if the
Closing shall not have occurred by such date (unless the failure of the Closing
AGREEMENT AND PLAN OF MERGER - PAGE 35
to occur shall be due to any breach of this Agreement by the party seeking to
terminate), unless such date shall be extended by the mutual written consent of
Intelecon and New Visual;
(d) by Intelecon, if there has been a breach on the part of New
Visual or Acquisition in the representations, warranties or covenants of New
Visual and Acquisition set forth herein, or a failure on the part of New Visual
or Acquisition to perform their respective obligations hereunder; PROVIDED that
Intelecon shall have performed and complied with, in all material respects, all
agreements and covenants required by this Agreement to have been performed and
complied with by Intelecon prior to such time, or any other events or
circumstances shall have occurred such that, in any such case, any of the
conditions to the Closing set forth in Sections 6.1 or 6.3 could not be
satisfied on or prior to the termination date contemplated by Section 7.1(b)
hereof;
(e) by New Visual, if there has been a breach on the part of
Intelecon or the Shareholders in the representations, warranties or covenants of
Intelecon or the Shareholders set forth herein or any failure on the part of
Intelecon or the Shareholders to perform their respective obligations hereunder;
PROVIDED that New Visual shall have performed and complied with, in all material
respects, all agreements and covenants required by this Agreement to have been
performed or complied with by New Visual prior to such time, or any other events
or circumstances shall have occurred such that, in any case, any of the
conditions to the Closing set forth in Sections 6.1 or 6.2 could not be
satisfied on or prior to the termination date contemplated by Section 7.1(b)
hereof;
(f) by New Visual if there has been a material breach by Intelecon
or the Shareholders of any of the covenants contained in Sections 5.2, 5.5(a) or
5.5(b) hereof, or a breach of such Sections resulting in an Acquisition
Proposal; or
(g) by Intelecon if the Average Price (as defined in Section 3.2(d)
hereof) of a share of New Visual Common Stock over the five trading day period
ending three business days prior to the Closing Date (the "Determination
Period") shall be less than $4.00; PROVIDED, HOWEVER, that:
(i) If Intelecon elects to terminate this Agreement pursuant
to this Section 7.1(g), it shall provide written notice to New Visual
within one business day after the Determination Period;
(ii) During the two business day period commencing with its
receipt of such termination notice, New Visual shall have the option to
elect to increase the number of Merger Shares to be issued hereunder to
equal a number determined as follows: (1) the revised number of Initial
Shares shall equal $8 million divided by the Average Price over the
Determination Period; and (2) the revised number of Escrow Shares shall
equal $14 million divided by the Average Price over the Determination
Period, in each case rounded to the nearest whole share.
AGREEMENT AND PLAN OF MERGER - PAGE 36
(iii) If New Visual makes an election contemplated by
subsection (ii) within such two business day period, it will give
prompt written notice to Intelecon of such election and all references
to the number of Merger Shares in this Agreement and in any agreement
contemplated hereby shall be appropriately adjusted to reflect the
revised number of Merger Shares, no termination shall have occurred
pursuant to this Section 7.1(g), and this Agreement shall continue in
effect in accordance with its terms (except with respect to the
modifications in the number of Merger Shares required by this Section
7.1(g)).
7.2 EFFECT OF TERMINATION.
(a) If New Visual terminates this Agreement pursuant to Section
7.1(f) and as of the date of such termination, (x) there has been no breach by
New Visual of a representation or warranty which would have or would be
reasonably likely to have a New Visual Material Adverse Effect, or (y) there has
been no material breach of any of the covenants or agreements set forth in this
Agreement on the part of New Visual, then immediately, but in any event no later
than five business days after such termination, Intelecon shall pay to New
Visual an amount in cash equal to $1,500,000, plus actual out of pocket expenses
incurred by New Visual and Acquisition in connection with the transactions
contemplated hereby (including but not limited to fees and disbursements of
counsel, fees and expenses of investment bankers, accountants and lenders, and
printing costs) (collectively, the "Termination Fee"). If New Visual has
received the Termination Fee, it shall not (i) assert or pursue in any manner,
directly or indirectly, any claim or cause of action based in whole or in part
upon alleged tortious or other interference with rights under this Agreement
against any entity or person submitting an Acquisition Proposal or (ii) assert
or pursue in any manner, directly or indirectly, any claim or cause of action
against Intelecon or any of its officers or directors based in whole or in part
upon its or their receipt, consideration, recommendation, or approval of an
Acquisition Proposal.
(b) In the event of the termination of this Agreement pursuant to
the provisions of Section 7.1, this Agreement shall become void and have no
effect and all obligations of the parties hereto shall terminate, except the
obligations of the parties pursuant to this Section 7.2 and except for the
provisions of Sections 8.3 and 8.6.
(c) In the event of termination of this Agreement pursuant to
Sections 7.1(d) or 7.1(e), nothing herein shall prejudice the ability of the
non-breaching party from seeking damages from any other party for any breach of
this Agreement, including, without limitation, attorneys' fees and the right to
pursue any remedy at law or in equity.
(d) At any time prior to the Effective Time, any party hereto, by
action taken by its Board of Directors, may, to the extent legally allowed, (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
AGREEMENT AND PLAN OF MERGER - PAGE 37
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.
ARTICLE VIII
INDEMNIFICATION; MISCELLANEOUS
8.1 INDEMNIFICATION.
(a) BY THE SHAREHOLDERS. Each Shareholder severally covenants and
agrees to defend, indemnify and hold harmless New Visual, its officers,
directors, employees, agents, advisers, representatives and affiliates
(collectively, the "Buyer Indemnitees") from and against any and all claims,
suits, demands, proceedings and actions (collectively, "Claims"), and pay or
reimburse the Buyer Indemnitees for any and all damage, loss, liability, or
expense (including reasonable attorney's fees and expenses of investigating,
defending or prosecuting any Claim, but excluding any Claim for lost profits
(collectively, "Damages") resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by
Intelecon or any Shareholder herein or under any other Transaction Agreement or
in connection herewith or therewith; and
(ii) any failure of Intelecon or any Shareholder to perform
any covenant or agreement hereunder or under any other Transaction Agreement or
to fulfill any other obligation in respect hereof or thereof.
(b) BY NEW VISUAL. New Visual covenants and agrees to defend,
indemnify and hold harmless each Shareholder and his respective agents,
advisers, representatives and affiliates (collectively, the "Seller
Indemnitees") from and against any and all Claims and Damages (but excluding any
Claim for lost profits) resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by
New Visual or Acquisition herein or under any other Transaction Agreement or in
connection herewith or therewith; and
(ii) any failure of New Visual or Acquisition to perform any
covenant or agreement hereunder or under any other Transaction Agreement or to
fulfill any other obligation in respect hereof or thereof.
(c) LIMITATIONS ON INDEMNIFICATION. Notwithstanding the provisions
of Sections 8.1(a) and 8.1(b) hereof, a party otherwise required to provide
indemnification under this Section 8.1 shall not be liable for indemnification
pursuant hereto to the extent that any Claim or Damage is found by a court or
arbitration panel of competent jurisdiction, after full hearing on the merits,
to have resulted from the fraudulent, grossly negligent, bad faith or criminal
act or omission of a party otherwise entitled to indemnification hereunder or of
such party's officers, directors, employees, agents, advisers, representatives
or affiliates. The aggregate maximum liability of an Indemnifying Party (as
defined below) pursuant to this Section 8.1 shall be limited to $25 million.
AGREEMENT AND PLAN OF MERGER - PAGE 38
Except with respect to third-party claims as described in Section 8.1(e) below,
no party shall make an indemnification claim hereunder until the dollar amount
of Damages to such party for all Claims exceeds, in the aggregate, $50,000;
provided, however, that no Shareholder shall be liable for a breach of the
representation contained in Section 4.1.25 unless the dollar amount of Damages
resulting from or arising out of such breach exceeds $200,000.
(d) ADJUSTMENTS TO INDEMNIFICATION PAYMENTS. Without limiting the
obligations of the Indemnifying Party (as hereinafter defined) under this
Agreement, (including the timely indemnification of the Indemnified Party), any
amount payable by any Shareholder to any Buyer Indemnitee, on the one hand, or
by New Visual to any Seller Indemnitee, on the other hand, pursuant to this
Section 8.1 in respect of any Claim shall be net of any insurance proceeds
realized by and paid to the Indemnified Party in respect of such Claim. The
Indemnified Party shall use its reasonable efforts to make insurance claims
relating to any Claim for which it is seeking indemnification pursuant to this
Section 8.1; PROVIDED that the Indemnified Party shall not be obligated to make
such an insurance claim if the Indemnified Party in its reasonable judgment
believes that the cost of pursuing such an insurance claim together with any
corresponding increase in insurance premiums or other chargebacks to the
Indemnified Party, would exceed the value of the Claim for which the Indemnified
Party is seeking indemnification. In the event the Indemnified Party receives
such insurance proceeds after being indemnified by the Indemnifying Party with
respect to any Damage, the Indemnified Party shall pay to the Indemnifying Party
the net amount of such insurance proceeds (less attorney's fees and other
expenses incurred in connection with such recovery) paid to the Indemnified
Party.
(e) INDEMNIFICATION PROCEDURES. In the case of any Claim asserted
by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), notice shall be given by the Indemnified
Party to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any Claim
as to which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom; PROVIDED that (i)
the counsel for the Indemnifying Party who shall conduct the defense of such
Claim or litigation shall be reasonably satisfactory to the Indemnified Party,
(ii) the Indemnified Party may participate in such defense at such Indemnified
Party's expense and (iii) the omission by any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement except to the extent that such
omission results in a failure of actual notice to the Indemnifying Party and
such Indemnifying Party is materially damaged as a result of such failure to
give notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such Claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such Claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party
AGREEMENT AND PLAN OF MERGER - PAGE 39
or that the Indemnified Party may have available to it one or more defenses or
counterclaims that are inconsistent with one or more of those that may be
available to the Indemnifying Party in respect of such Claim or any litigation
relating thereto, the Indemnified Party shall have the right at all times to
take over and assume control over the defense, settlement, negotiations or
litigation relating to any such Claim at the sole cost of the Indemnifying
Party; PROVIDED that if the Indemnified Party does so take over and assume
control, the Indemnified Party shall not settle such Claim or litigation without
the prior written consent of the Indemnifying Party. In the event that the
Indemnifying Party does not accept the defense of any matter as above provided,
the Indemnified Party shall have the full right to defend against any such Claim
or demand and shall be entitled to settle or agree to pay in full such Claim or
demand. In any event, the Indemnifying Party and the Indemnified Party shall
cooperate in the defense of any Claim or litigation subject to this Section 8.1
and the records of each shall be available to the other with respect to such
defense.
(f) Except as provided in Section 8.1(c), the indemnification
provided in this Section 8.1 shall be applicable regardless of whether or not
negligence of the Indemnified Party is alleged or proven.
8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ETC. The provisions of
this Agreement shall survive the consummation of the Merger contemplated hereby.
No investigation by the parties hereto made heretofore or hereafter shall affect
the representations and warranties of the parties that are contained herein, and
each such representation and warranty shall survive such investigation and the
consummation of the transactions contemplated hereby for a period of twenty-four
(24) months, other than representations and warranties set forth in Sections
4.1.19 and 4.1.21 hereof, which shall survive indefinitely, and the
representations and warranties set forth in Section 4.1.7, which shall survive
for six (6) years after the Closing. The foregoing limits on survival will not
estop any party from obtaining indemnification from another party after such
survival date if the claim relating thereto has been timely made prior to
expiration of the relevant time period.
8.3 EXPENSES. Except as otherwise provided herein, Intelecon and the
Shareholders, on the one hand, and New Visual and Acquisition, on the other
hand, shall bear their respective expenses, costs and fees (including attorneys'
and auditors' fees) in connection with the transactions contemplated hereby,
including the preparation, execution and delivery of this Agreement and
compliance herewith, whether or not the transactions contemplated hereby shall
be consummated.
8.4 SEVERABILITY. If any provision of this Agreement, including any
phrase, sentence, clause, section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
8.5 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
AGREEMENT AND PLAN OF MERGER - PAGE 40
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by telecopy or telegram:
(i) if to Intelecon or the Shareholders, at:
Intelecon Services, Inc.
0000 Xxxx Xxxxxxxxx Xxxx.
Xxxxxx, Xxxxx 00000
Telecopy: 214.571.0670
Attention: Xxxxx Xxxxxx
with copies to:
Xxxxxxx Xxxxxx LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy: 214.953.5822
Attention: Xxxx Xxxxxxxx
(ii) if to New Visual or Acquisition, at:
New Visual Entertainment, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopy: 619.718.7446
Attention: Xxx Xxxxxxxxxx, Xx.
with copies to:
Xxxxx & Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy: 214.741.7139
Attn: Xxxxxxxx X. Xxxxxxx
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications
shall be deemed to have been received (w) if by personal delivery, on the day
after such delivery, (x) if by certified or registered mail, on the fifth
business day after the mailing thereof, (y) if by next-day or overnight mail or
delivery, on the day delivered, (z) if by telecopy or telegram, on the next day
following the day on which such telecopy or telegram was sent, provided that a
copy is also sent by certified or registered mail.
AGREEMENT AND PLAN OF MERGER - PAGE 41
8.6 MISCELLANEOUS.
8.6.1 HEADINGS. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
8.6.2 ENTIRE AGREEMENT. This Agreement (including the Schedules
hereto), the other Transaction Agreements (when executed and delivered) and the
representations, warranties, agreements and covenants contained herein and
therein constitute the entire agreement and supersede all prior agreements,
understandings, representations, warranties, covenants and discussions, both
written and oral, between the parties with respect to the subject matter hereof,
including without limitation that certain letter of understanding dated January
21, 2000, between the parties hereto.
8.6.3 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
8.6.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas (regardless of the laws that
might otherwise govern under applicable principles of conflicts of law).
8.6.5 ARBITRATION. Except to the extent provided elsewhere in this
Agreement, any controversy of any nature whatsoever, including but not limited
to tort claims, statutory claims or contract disputes, between the parties to
this Agreement (including their directors, officers, executives, agents,
successors, assigns, heirs, executors and beneficiaries) relating to the
formation, execution, interpretation, breach or enforcement of this Agreement,
or relating to any other matter arising from the transactions contemplated
herein, shall be submitted to arbitration before the American Arbitration
Association ("AAA"), in accordance with their rules then in effect and the
substantive law of the State of Texas and the United States. The arbitration
shall be held in Dallas County, Texas. Each of the parties to this Agreement
shall appoint one person as an arbitrator to hear and determine such disputes,
and if they should be unable to agree, then the two arbitrators shall choose a
third arbitrator from a panel made up of experienced arbitrators selected
pursuant to the procedures of the AAA and, once chosen, the third arbitrator's
decision shall be final, binding and conclusive upon the parties to this
Agreement. The arbitrators may not award punitive or exemplary damages for tort,
contract or other common law claims, but will have the power to award such
damages to the extent permitted by an applicable statute and to award
prejudgment interest and attorneys' fees to the prevailing party. The award of
the arbitration panel may be confirmed by any state or federal court of
competent jurisdiction located in Dallas County, Texas, and may be challenged
only upon the grounds provided in Section 10 of the Federal Arbitration Act,
Title 9, United States Code. This agreement to arbitrate shall survive the
execution of this Agreement. THE RIGHT TO ARBITRATE IS INTEGRAL TO AND NOT
SEVERABLE FROM THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS
ARBITRATION AGREEMENT AND KNOWINGLY CONSENT TO ITS CONSEQUENCES, INCLUDING THE
AGREEMENT AND PLAN OF MERGER - PAGE 42
WAIVER OF THE RIGHT TO LITIGATE CERTAIN DISPUTES. The expenses of such
arbitration will be borne by the losing party or in such proportion as the
arbitrators decide. A material or anticipatory breach of any section of this
Agreement will not release either party from the obligations of this Section
8.6.5.
8.6.6 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
8.6.7 ASSIGNMENT. This Agreement shall not be assignable or otherwise
transferable by any party hereto without the prior written consent of the other
parties hereto; PROVIDED that New Visual may assign this Agreement to any
subsidiary of New Visual.
8.6.8 NO THIRD PARTY BENEFICIARIES. Except as provided in Section 8.1
with respect to indemnification hereunder, nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto and
their respective heirs, successors and permitted assigns
8.6.9 AMENDMENT; WAIVER, ETC. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies of any party based upon, arising
out of or otherwise in respect of any inaccuracy or breach of any
representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement as to which there is no inaccuracy or breach.
The representations and warranties of Intelecon and the Shareholders shall not
be affected or deemed waived by reason of any investigation made by or on behalf
of New Visual (including but not limited to by any of its advisors, consultants
or representatives) or by reason of the fact that New Visual or any of such
advisors, consultants or representatives knew or should have known that any such
representation or warranty is or might be inaccurate.
8.6.10 CONFIDENTIALITY. Except as otherwise provided in this Agreement,
each party to this Agreement will, and will cause its affiliates (and their
respective accountants, counsel, consultants, employees and agents to whom they
disclose such information) to, keep confidential and not disclose all
information obtained by and in the possession of such party and its affiliates
or to which such party and its affiliates are given access that in any way
relates to the business or operations of the other party hereto. The provisions
of this Section 8.6.10 shall not apply to the disclosure by any party hereto or
their respective affiliates of any information, documents or materials (i) which
AGREEMENT AND PLAN OF MERGER - PAGE 43
are, or become, publicly available, other than by reason of a breach of this
Section 8.6.10 by the disclosing party or any affiliate of the disclosing party,
(ii) received from a third party not bound by any confidentiality agreement with
the other party hereto, (iii) required by applicable Law to be disclosed by such
party, or (iv) necessary to establish such party's rights under either this
Agreement or any other Transaction Agreement; PROVIDED that, in the case of
clauses (iii) and (iv), the person intending to make disclosure of confidential
information will promptly notify the party to whom it is obligated to keep such
information confidential and, to the extent practicable, provide such party a
reasonable opportunity to prevent public disclosure of such information. If the
transactions contemplated by this Agreement are not consummated, such
information will be immediately returned to the applicable party (to the extent
such information consists of originals or copies of records, documents, reports
or other written materials).
[SIGNATURE PAGE FOLLOWS]
AGREEMENT AND PLAN OF MERGER - PAGE 44
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SHAREHOLDERS: NEW VISUAL ENTERTAINMENT, INC.
/s/ Xxxxx Xxxxxx By: /s/ Xxx Xxxxxxxxxx, Xx.
------------------------------ ------------------------------
XXXXX XXXXXX Name: Xxx Xxxxxxxxxx, Xx.
Title: President
INTELECON ACQUISITION, INC.
/s/ Xxxxxxxx Xxxxxx By: /s/ Xxx Xxxxxxxxxx, Xx.
------------------------------ ------------------------------
XXXXXXXX XXXXXX Name: Xxx Xxxxxxxxxx, Xx.
Title: President
INTELECON SERVICES, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: President
AGREEMENT AND PLAN OF MERGER - PAGE 45
