Exhibit 2.1
ACQUISITION AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 16, 2001 BETWEEN
VITAL LIVING, INC.
AND
VCM TECHNOLOGY LIMITED
TABLE OF CONTENTS
ARTICLE 1. The Merger 4
Section 1.1. The Merger 4
Section 1.2 Effective Time 4
Section 1.3 Closing of the Merger 4
Section 1.4 Effects of the Merger 4
Section 1.5. Board of Directors and Officers of VITAL 4
Section 1.6. Conversion of Shares 5
Section 1.7. Exchange of Certificates 5
Section 1.8. Taking of Necessary Action; Further Action 6
ARTICLE 2. Representations and Warranties of VITAL 6
Section 2.1. Organization and Qualification 6
Section 2.2. Capitalization of VITAL 6
Section 2.3. Authority Relative to this Agreement; Recommendation. 7
Section 2.4. SEC Reports; Financial Statements 7
Section 2.5. Information Supplied 7
Section 2.6. Consents and Approvals; No Violations 7
Section 2.7. No Default 7
Section 2.8. No Undisclosed Liabilities; Absence of Changes 8
Section 2.9. Litigation 8
Section 2.10. Compliance with Applicable Law 8
Section 2.11. Employee Benefit Plans; Labor Matters 8
Section 2.12. Environmental Laws and Regulations 9
Section 2.13. Tax Matters 10
Section 2.14. Title To Property 10
Section 2.15. Intellectual Property 10
Section 2.16. Insurance 10
Section 2.17. Vote Required 11
Section 2.18. Tax Treatment 11
Section 2.19. Affiliates 11
Section 2.20. Certain Business Practices 11
Section 2.21. Insider Interests 11
Section 2.22. Opinion of Financial Adviser 11
Section 2.23. Brokers 11
Section 2.24. Disclosure 11
Section 2.25. No Existing Discussion 11
Section 2.26. Material Contracts 11
ARTICLE 3. Representations and Warranties of VCM. 12
Section 3.1. Organization and Qualification 12
Section 3.2. Capitalization of VCM 12
Section 3.3. Authority Relative to this Agreement; Recommendation 13
Section 3.4. SEC Reports; Financial Statements 13
Section 3.5. Information Supplied 14
Section 3.6 Consents and Approvals; No Violations 14
Section 3.7. No Default 14
Section 3.8 No Undisclosed Liabilities; Absence of Changes 14
Section 3.9. Litigation 15
Section 3.10. Compliance with Applicable Law 15
Section 3.11. Employee Benefit Plans; Labor Matters 15
Section 3.12. Environmental Laws and Regulations 16
Section 3.13. Tax Matters 16
Section 3.14. Title to Property 16
Section 3.15. Intellectual Property 17
Section 3.16. Insurance 17
Section 3.17. Vote Required 17
Section 3.18. Tax Treatment 17
Section 3.19. Affiliates 17
Section 3.20. Certain Business Practices 17
Section 3.21. Insider Interests 17
Section 3.22. Opinion of Financial Adviser 17
Section 3.23. Brokers 17
Section 3.24. Disclosure 18
Section 3.25. No Existing Discussions 18
Section 3.26. Material Contracts 18
ARTICLE 4. Covenants 18
Section 4.1. Conduct of Business of VITAL 18
Section 4.2. Conduct of Business of VCM 20
Section 4.3. Preparation of 8-K 21
Section 4.4. Other Potential Acquirers 21
Section 4.5. Meetings of Stockholders 21
Section 4.6. NASD OTC:BB Listing 21
Section 4.7. Access to Information 21
Section 4.8. Additional Agreements; Reasonable Efforts. 22
Section 4.9. Indemnification 22
Section 4.10. Notification of Certain Matters 23
ARTICLE 5. Conditions to Consummation of the Merger
Section 5.1. Conditions to each Party's Obligation
to Effect the Merger 23
Section 5.2. Conditions to the Obligations of VITAL 23
Section 5.3. Conditions to the Obligations of VCM 24
ARTICLE 6. Termination; Amendment; Waiver 24
Section 6.1. Termination 24
Section 6.2. Effect of Termination 25
Section 6.3. Fees and Expenses 25
Section 6.4. Amendment 25
Section 6.5. Extension; Waiver 25
ARTICLE 7. Miscellaneous 25
Section 7.1. Nonsurvival of Representations and Warranties 25
Section 7.2. Entire Agreement; Assignment 25
Section 7.3. Validity 25
Section 7.4. Notices 25
Section 7.5. Governing Law 26
Section 7.6. Descriptive Headings 26
Section 7.7. Parties in Interest 26
Section 7.8. Certain Definitions 26
Section 7.9. Personal Liability 27
Section 7.10.Specific Performance 27
Section 7.11.Counterparts 27
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of August
16, 2001, is between VITAL LIVING, INC., a Nevada corporation ("VITAL"), and
VCM TECHNOLOGY LIMITED, a Nevada corporation ("VCM").
Whereas, the Board of Directors of VITAL and VCM each have, in light of
and subject to the terms and conditions set forth herein, (i) determined that
the Merger (as defined below) is fair to their respective stockholders and in
the best interests of such stockholders and (ii) approved the Merger in
accordance with this Agreement;
Whereas, for Federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");and
Whereas, VITAL and VCM desire to make certain representations,
warranties,covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
Now, therefore,in consideration of the promises the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, VITAL and VCM hereby agree as follows:
ARTICLE I
The Merger
Section 1.1. The Merger. At the Effective Time (as defined below) and
upon the terms and subject to the conditions of this Agreement and in
accordance with the General Corporation Law of the State of Nevada (the
"NGCL"), VCM shall be merged with and into VITAL (as defined below) (the
``Merger`). Following the Merger, VITAL shall continue as the surviving
corporation (the "Successor Corporation"), shall continue to be governed by
the laws of the jurisdiction of its incorporation or organization and the
separate corporate existence of VCM shall cease. Prior to the Effective Time,
the parties hereto shall mutually agree as to the name of the Successor
Corporation; however, initially the Successor Corporation shall be named
VITAL LIVING, INC., a Nevada corporation. The Merger is intended to qualify
as a tax-free reorganization under Section 368 of the Code as relates to the
non-cash exchange of stock referenced herein.
Section 1.2. Effective Time. Subject to the terms and conditions set
forth in this Agreement, a Certificate of Merger (the "Merger Certificate")
shall be duly executed and acknowledged by each of VCM and VITAL, and
thereafter the Merger Certificate reflecting the Merger shall be delivered to
the Secretary of State of the State of Nevada for filing pursuant to the NGCL
on the Closing Date (as defined in Section 1.3). The Merger shall become
effective at such time as a properly executed and certified copy of the
Merger Certificate is duly filed by the Secretary of State of the State of
Nevada in accordance with the NGCL or such later time as the parties may
agree upon and set forth in the Merger Certificate (the time at which the
Merger becomes effective shall be referred to herein as the "Effective
Time").
Section 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Article 5
(the "Closing Date"), at the offices of Sperry Young & Xxxxxxxxxx, 0000 X.
Xxxxxxxx Xx., Xxxxx 000, Xxx Xxxxx, Xxxxxx, unless another time, date or
place is agreed to in writing by the parties hereto.
Section 1.4. Effects of the Merger. The Merger shall have the effects
set forth in the NGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties,rights,
privileges, powers of VCM shall vest in the Successor Corporation, and all
debts, liabilities and duties of VCM shall become the debts, liabilities and
duties of the Successor Corporation.
Section 1.5. Board of Directors and Officers of VITAL. At or prior to
the Effective Time, each of VCM and VITAL agrees to take such action as is
necessary (i) to cause the number of directors comprising the full Board of
Directors of VITAL to remain the same.
Section 1.6. Conversion of Shares. At the Effective Time, each share of
common stock, par value $.001 per share of VCM (individually a "VCM Share"
and collectively, the "VCM Shares") issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any action
on the part of VCM, VITAL, or the holder thereof, be converted into and shall
become fully paid and nonassessable VITAL common shares determined by issuing
one(1)share of VITAL common share for every 1275 shares of VCM. Shares issued
to VCM stockholders shall be issued pursuant to Rule 144 and shall be
considered restricted shares and will not be available for resale for twelve
(12) months from the closing date. The certificates evidencing the shares
shall bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A
CURRENT AND EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT WITH
RESPECT TO SUCH SHARES, OR AN OPINION SATISFACTORY TO THE ISSUER
AND ITS COUNSEL TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED
UNDER THE ACT.
Section 1.7. Exchange of Certificates.
(a) Prior to the Effective Time, VITAL shall enter into an agreement
with, and shall deposit with, Sperry Young & Xxxxxxxxxx, or such other agent
or agents as may be satisfactory to VITAL and VCM (the"Exchange Agent'), for
the benefit of the holders of VCM Shares, for exchange through the Exchange
Agent in accordance with this Article I: (i) certificates representing the
appropriate number of VITAL Shares to be issued to holders of VCM Shares
issuable pursuant to Section 1.6 in exchange for outstanding VCM Shares.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding VCM Shares (the "Certificates") whose shares were converted into
the right to receive VITAL Shares pursuant to Section 1.6: (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as VCM and VITAL may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing VITAL Shares. Upon surrender of a
Certificate to the Exchange Agent, together with such letter of transmittal,
duly executed, and any other required documents, the holder of such
Certificate shall be entitled to receive in exchange therefore a certificate
representing that number of whole VITAL Shares, which such holder has the
right to receive pursuant to the provisions of this Article I, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of VCM Shares which are not registered in the transfer
records of VCM, a certificate representing the proper number of VITAL Shares
may be issued to a transferee if the Certificate representing such VCM Shares
is presented to the Exchange Agent accompanied by all documents required by
the Exchange Agent or VITAL to evidence and effect such transfer and by
evidence that any applicable stock transfer or other taxes have been paid.
Until surrendered as contemplated by this Section 1.7, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing VITAL Shares as
contemplated by this Section 1.7.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to VITAL Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the VITAL Shares represented thereby until the holder of
record of such Certificate shall surrender such Certificate.
(d) In the event that any Certificate for VCM Shares or VITAL Shares
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange therefore, upon the making of an affidavit of that fact by the
holder thereof such VITAL Shares and cash in lieu of fractional VITAL Shares,
if any, as may be required pursuant to this Agreement; provided, however,
that VITAL or the Exchange Agent, may, in its respective discretion, require
the delivery of a suitable bond, opinion or indemnity.
(e) All VITAL Shares issued upon the surrender for exchange of VCM
Shares in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such VCM
Shares. There shall be no further registration of transfers on the stock
transfer books of VCM of the VCM Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time,Certificates of
VCM are presented to VITAL for any reason, they shall be canceled and
exchanged as provided in this Article I.
(f) No fractional VITAL Shares shall be issued in the Merger, but I
lieu thereof each holder of VCM Shares otherwise entitled to a fractional
VITAL Share shall, upon surrender of its, his or her Certificate or
Certificates, be entitled to receive an additional share to round up to the
nearest round number of shares.
Section 1.8. Taking of Necessary Action;Further Action.If,at any time
after the Effective Time, VCM or VITAL reasonably determines that any deeds,
assignments, or instruments or confirmations of transfer are necessary or
desirable to carry out the purposes of this Agreement and to vest VITAL with
full right, title and possession to all assets,property, rights, privileges,
powers and franchises of VCM, the officers and directors of VITAL and VCM are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary or desirable action.
ARTICLE 2
Representations and Warranties of VITAL
Except as set forth on the Disclosure Schedule delivered by VITAL to VCM
(the "VITAL Disclosure Schedule"), VITAL hereby represents and warrants to
VCM as follows:
Section 2.1. Organization and Qualification.
(a) VITAL is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization,has 300 or
more round lot (100 or more shares) stockholders and has all requisite power
and authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority
would not have a Material Adverse Effect (as defined below) on VITAL. When
used in connection with VITAL, the term "Material Adverse Effect" means any
change or effect (i) that is or is reasonably likely to be materially adverse
to the business, results of operations, condition (financial or otherwise) or
prospects of VITAL, other than any change or effect arising out of general
economic conditions unrelated to any business in which VITAL is engaged, or
(ii) that may impair the ability of VITAL to perform its obligations
hereunder or to consummate the transactions contemplated hereby.
(b) VITAL has heretofore delivered to VCM accurate and complete copies
of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of VITAL. Except as set forth on Schedule
2.1 of the VITAL Disclosure Schedule,VITAL is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing
would not have a Material Adverse Effect on VITAL.
Section 2.2. Capitalization of VITAL.
(a) The authorized capital stock of VITAL consists of; (i) One Hundred
Million (100,000,000) Authorized Shares of Common Stock, $0.001 par value,
13,626,554 Common shares are issued and outstanding as of July 31, 2001, and
held by 300 or more round lot (100 or more shares) stockholders and (ii)
Fifty Million (50,000,000) VITAL preferred shares, $.001 par value, and no
preferred shares are issued and outstanding. Pursuant to the Merger
Agreement VITAL will issue 5,062 shares of 144 restricted common stock to the
stockholder of VCM, which shall not be available for resale for at least
twelve (12) months from the closing date. All of the outstanding VITAL
Shares have been duly authorized and validly issued, and are fully paid,
nonassessable and free of preemptive rights. Except as set forth herein, as
of the date hereof, there are no outstanding (i) shares of capital stock or
other voting securities of VITAL, (ii) securities of VITAL convertible into
or exchangeable for shares of capital stock or voting securities of VITAL,
(iii) options or other rights to acquire from VITAL, except as set forth in
2.2(a) of the Disclosure Schedule, and, no obligations of VITAL to issue, any
capital stock, voting securities or securities
convertible into or
exchangeable for capital stock or voting securities of VITAL,and(iv)equity
equivalents, interests in the ownership or earnings of VITAL or other similar
rights (collectively, "VITAL Securities"). As of the date hereof, except as
set forth on Schedule 2.2(a) of the VITAL Disclosure Schedule there are no
outstanding obligations of VITAL or its subsidiaries to repurchase, redeem or
otherwise acquire any VITAL Securities or stockholder agreements, voting
trusts or other agreements or understandings to which VITAL is a party or by
which it is bound relating to the voting or registration of any shares of
capital stock of VITAL. For purposes of this Agreement, ``Lien" means, with
respect to any asset (including, without limitation,any security)any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset.
(b) VITAL does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity, other than as specifically disclosed in the
disclosure documents.
Section 2.3. Authority Relative to this Agreement; Recommendation.
VITAL has all necessary corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of VITAL (the "VITAL Board") and no other corporate
proceedings on the part of VITAL are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by VITAL and constitutes a valid,
legal and binding agreement of VITAL, enforceable against VITAL in accordance
with its terms.
Section 2.4. SEC Reports; Financial Statements. VITAL is not required
to file forms, reports and documents with the SEC.
Section 2.5. Information Supplied. None of the information supplied or
to be supplied by VITAL for inclusion or incorporation by reference in
connection with the Merger will at the date presented to stockholder of VCM
and at the times of the meeting or meetings of stockholders of VITAL to be
held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 2.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1916, as amended (the ``HSR Act''), the rules of the National Association
of Securities Dealers,Inc. ("NASD"), the filing and recordation of the Merger
Certificate as required by the NGCL, and as set forth on Schedule 2.6
of the VITAL Disclosure Schedule no filing with or notice to, and no permit,
authorization,consent or approval of,any court or tribunal or
administrative,governmental or regulatory body,agency or authority(a
"Governmental Entity") is necessary for the execution and delivery by VITAL
of this Agreement or the consummation by VITAL of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on VITAL.
Except as set forth in Section 2.6 of the VITAL Disclosure Schedule,
neither the execution, delivery and performance of this Agreement by VITAL
nor the consummation by VITAL of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of
VITAL, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration or Lien) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which VITAL is a party or by which any of its properties or
assets may be bound, or (iii) violate any order, writ, injunction,decree,
law, statute,rule or regulation applicable to VITAL or any of its properties
or assets,except in the case of (ii) or (iii) for violations, breaches or
defaults which would not have a Material Adverse Effect on VITAL.
Section 2.7. No Default. Except as set forth in Section 2.7 of the VITAL
Disclosure Schedule, VITAL is not in breach, default or violation(and no
event has occurred which with notice or the lapse of time or both would
constitute a breach default or violation) of any term, condition or provision
of (i) its Certificate of Incorporation or Bylaws (or similar governing
documents), (ii) any note, bond, mortgage, indenture, lease, license,
contract,
agreement or other instrument or obligation to which VITAL is now a
party or by which any of its respective properties or assets may be bound or
(iii) any order, writ injunction, decree, law, statute, rule or regulation
applicable to VITAL or any of its respective properties or assets, except in
the case of (ii) or (iii) for violations, breaches or defaults that would not
have a Material Adverse Effect on VITAL. Except as set forth in Section 2.7
of the VITAL Disclosure Schedule, each note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which VITAL is now a party or by which its respective properties or assets
may be bound that is material to VITAL and that has not expired is in full
force and effect and is not subject to any material default thereunder of
which VITAL is aware by any party obligated to VITAL thereunder.
Section 2.8. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent disclosed in the May 7, 2001 audited financial statements,
none of VITAL or its subsidiaries had any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be
required by generally accepted accounting principles to be reflected on a
consolidated balance sheet of VITAL and its consolidated subsidiaries
(including the notes thereto) or which would have a Material Adverse Effect
on VITAL. Except as disclosed by VITAL, none of VITAL or its subsidiaries has
incurred any liabilities of any nature, whether or not accrued, contingent or
otherwise, which could reasonably be expected to have, and there have been no
events, changes or effects with respect to VITAL or its subsidiaries having
or which could reasonably be expected to have, a Material Adverse Effect on
VITAL. Except as and to the extent disclosed by VITAL there has not been (i)
any material change by VITAL in its accounting methods, principles or
practices (other than as required after the date hereof by concurrent changes
in generally accepted accounting principles), (ii) any revaluation by VITAL
of any of its assets having a Material Adverse Effect on VITAL, including,
without limitation, any write-down of the value of any assets other than in
the ordinary course of business or (iii) any other action or event that would
have required the consent of any other party hereto pursuant to Section 4.2
of this Agreement had such action or event occurred after the date of this
Agreement.
Section 2.9. Litigation. Except as set forth in Schedule 2.9 of the
VITAL Disclosure Schedule there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of VITAL, threatened against VITAL
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on VITAL or could
reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as disclosed by VITAL,
none of VITAL or its subsidiaries is subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect on
VITAL or could reasonably be expected to prevent or delay the consummation of
the transactions contemplated hereby.
Section 2.10. Compliance with Applicable Law. Except as disclosed by
VITAL, VITAL and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for
the lawful conduct of their respective businesses (the "VITAL Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders and approvals which would not have a Material Adverse Effect on VITAL.
Except as disclosed by VITAL, VITAL and its subsidiaries are in compliance
with the terms of the VITAL Permits, except where the failure so to comply
would not have a Material Adverse Effect on VITAL. Except as disclosed by
VITAL, the businesses of VITAL and its subsidiaries are not being conducted
in violation of any law, ordinance or regulation of any Governmental Entity
except that no representation or warranty is made in this Section 2.10 with
respect to Environmental Laws and except for violations or possible
violations which do not, and, insofar as reasonably can be foreseen, in the
future will not, have a Material Adverse Effect on VITAL. Except as disclosed
by VITAL no investigation or review by any Governmental Entity with respect
to VITAL or its subsidiaries is pending or, to the knowledge of VITAL,
threatened, nor, to the knowledge of VITAL, has any Governmental Entity
indicated an intention to conduct the same, other than, in each case, those
which VITAL reasonably believes will not have a Material Adverse Effect on
VITAL.
Section 2.11. Employee Benefit Plans; Labor Matters.
(a) Except as set forth in Section 2.11(a) of the VITAL Disclosure
Schedule with respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974,as amended("ERISA")),
maintained or contributed to at any time by VITAL or any entity required to
be aggregated with VITAL pursuant to Section 414 of the Code (each,a "VITAL
Employee Plan"), no event has occurred and to the knowledge of VITAL,
no
condition or set of circumstances exists in connection with which VITAL
could reasonably be expected to be subject to any liability which would
have a Material Adverse Effect on VITAL.
(b) (i) No VITAL Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each VITAL Employee Plan intended
to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
Internal Revenue Service determination letter, and nothing has occurred which
could reasonably be expected to adversely affect such determination.
(c) Section 2.11(c) of the VITAL Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement,of each person who holds
any VITAL Stock Options, together with the number of VITAL Shares which are
subject to such option, the date of grant of such option, the extent to which
such option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 2.11(c) of the VITAL
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. VITAL has furnished VCM with complete
copies of the plans pursuant to which the VITAL Stock Options were issued.
Other than the automatic vesting of VITAL Stock Options that may occur
without any action on the part of VITAL or its officers or directors, VITAL
has not taken any action that would result in any VITAL Stock Options that
are unvested becoming vested in connection with or as a result of the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(d) VITAL has made available to VCM (i) a description of the terms of
employment and compensation arrangements of all officers of VITAL and a copy
of each such agreement currently in effect; (ii) copies of all agreements
with consultants who are individuals obligating VITAL to make annual cash
payments in an amount exceeding $60,000; (iii) a schedule listing all
officers of VITAL who have executed a non-competition agreement with VITAL
and a copy of each such agreement currently in effect; (iv) copies (or
descriptions) of all severance agreements, programs and policies of VITAL
with or relating to its employees, except programs and policies required to
be maintained by law; and (v) copies of all plans, programs, agreements and
other arrangements of VITAL with or relating to its employees which contain
change in control provisions all of which are set forth in Section 2.11(d) of
the VITAL Disclosure Schedule.
(e) There shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any VITAL Employee
Plan or any agreement or arrangement disclosed under this Section 2.11 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of VITAL,
threatened, between VITAL and any of their employees, which controversies
have or could reasonably be expected to have a Material Adverse Effect on
VITAL. Neither VITAL nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by VITAL or any of its subsidiaries (and neither VITAL nor any of
its subsidiaries has any outstanding material liability with respect to any
terminated collective bargaining agreement or labor union contract), nor does
VITAL know of any activities or proceedings of any labor union to organize
any of its or employees. VITAL has no knowledge of any strike, slowdown, work
stoppage, lockout or threat thereof, by or with respect to any of its
employees.
Section 2.12. Environmental Laws and Regulations.
(a) Except as disclosed by VITAL, (i) VITAL is in material compliance
with all applicable federal, state, local and foreign laws and regulations
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata) (collectively, "Environmental Laws"),
except for non-compliance that would not have a Material Adverse Effect on
VITAL, which compliance includes, but is not limited to, the possession by
VITAL of all material permits and other governmental authorizations required
under applicable Environmental Laws, and compliance with the terms and
conditions thereof; (ii) VITAL has not received written notice of, or, to the
knowledge of VITAL, is the subject of, any action, cause of action, claim,
investigation, demand or notice by any person or entity alleging liability
under or non-compliance with any Environmental Law (an ``Environmental
Claim") that could reasonably be expected to have a Material Adverse Effect
on VITAL; and (iii) to the knowledge of VITAL, there are no circumstances
that are reasonably likely to prevent or interfere with such material
compliance in the future.
(b) Except as disclosed by VITAL, there are no Environmental Claims
which could reasonably be expected to have a Material Adverse Effect on VITAL
that are pending or, to the knowledge of VITAL, threatened against VITAL or,
to the knowledge of VITAL, against any person or entity whose liability for
any Environmental Claim VITAL has or may have retained or assumed either
contractually or by operation of law.
Section 2.13. Tax Matters.
(a) Except as set forth in Section 2.13 of the VITAL Disclosure
Schedule: (i) VITAL has filed or has had filed on its behalf in a timely
manner (within any applicable extension periods) with the appropriate
Governmental Entity all income and other material Tax Returns (as defined
herein) with respect to Taxes (as defined herein) of VITAL and all Tax
Returns were in all material respects true, complete and correct; (ii) all
material Taxes with respect to VITAL have been paid in full or have been
provided for in accordance with GAAP on VITAL's most recent balance sheet
which is part of the VITAL SEC Documents. (iii) there are no outstanding
agreements or waivers extending the statutory period of limitations
applicable to any federal, state, local or foreign income or other material
Tax Returns required to be filed by or with respect to VITAL; (iv) to the
knowledge of VITAL none of the Tax Returns of or with respect to VITAL is
currently being audited or examined by any Governmental Entity; and (v) no
deficiency for any income or other material Taxes has been assessed with
respect to VITAL which has not been abated or paid in full.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority and (ii) "Tax Return"
shall mean any report, return, documents declaration or other information or
filing required to be supplied to any taxing authority or jurisdiction with
respect to Taxes.
Section 2.14. Title to Property. VITAL has good and defensible title to
all of its properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby
or which, individually or in the aggregate, would not have a Material Adverse
Effect on VITAL; and, to VITAL's knowledge, all leases pursuant to which
VITAL leases from others real or personal property are in good standing,
valid and effective in accordance with their respective terms, and there is
not, to the knowledge of VITAL, under any of such leases,any existing
material default or event of default(or event which with notice of lapse of
time, or both, would constitute a default and in respect of which VITAL has
not taken adequate steps to prevent such a default from occurring) except
where the lack of such good standing, validity and effectiveness, or the
existence of such default or event, would not have a Material Adverse Effect
on VITAL.
Section 2.15. Intellectual Property.
(a) VITAL owns, or possesses adequate licenses or other valid rights to
use, all existing United States and foreign patents, trademarks, trade names,
service marks, copyrights, trade secrets and applications therefore that are
material to its business as currently conducted (the "VITAL Intellectual
Property Rights").
(b) The validity of the VITAL Intellectual Property Rights and the title
thereto of VITAL is not being questioned in any litigation to which VITAL is
a party.
(c) Except as set forth in Section 2.15(c) of the VITAL Disclosure
Schedule, the conduct of the business of VITAL as now conducted does not, to
VITAL's knowledge, infringe any valid patents, trademarks, trade names,
service marks or copyrights of others. The consummation of the transactions
completed hereby will not result in the loss or impairment of any VITAL
Intellectual Property Rights.
(d) VITAL has taken steps it believes appropriate to protect and
maintain its trade secrets as such, except in cases where VITAL has elected
to rely on patent or copyright protection in lieu of trade secret protection.
Section 2.16. Insurance. VITAL currently maintains general liability and
other business insurance.
Section 2.17. Vote Required. Approval of this Agreement and Plan of
Merger by the Stockholders of VITAL is not required pursuant to current
Nevada law.
Section 2.18. Tax Treatment. Neither VITAL nor, to the knowledge of
VITAL, any of its affiliates has taken or agreed to take action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 2.19. Affiliates. Except for the directors and executive
officers of VITAL, each of whom is listed in Section 2.19 of the VITAL
Disclosure Schedule, there are no persons who, to the knowledge of VITAL, may
be deemed to be affiliates of VITAL under Rule 1-02(b) of Regulation S-X of
the SEC (the "VITAL Affiliates").
Section 2.20. Certain Business Practices. None of VITAL or any
directors, officers, agents or employees of VITAL has (i) used and funds for
unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended (the "FCPA"), or (iii) made any
other unlawful payment.
Section 2.21. Insider Interests. Except as set forth in Section 2.21 of
the VITAL Disclosure Schedule, neither any officer or director of VITAL has
any interest in any material property, real or personal, including without
limitation, any computer software or VITAL Intellectual Property Rights, used
in or pertaining to the business of VITAL, except for the ordinary rights of
a stockholder or employee stock optionholder.
Section 2.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the VITAL Board a written opinion to the effect
that, as of such date, the exchange ratio contemplated by the Merger is fair
to the holders of VITAL Shares.
Section 2.23. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of VITAL.
Section 2.24. Disclosure. No representation or warranty of VITAL in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to VCM pursuant hereto or in connection herewith
contains, as of the date of such representation, warranty or instrument, or
will contain any untrue statement of a material fact or, at the date thereof,
omits or will omit to state a material fact necessary to make any statement
herein or therein, in light of the circumstances under which such statement
is or will be made, not misleading.
Section 2.25. No Existing Discussions. As of the date hereof, VITALis
not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to any Third Party Acquisition (as defined in
Section 4.4).
Section 2.26. Material Contracts.
(a) VITAL has delivered or otherwise made available to VCM true, correct
and complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which VITAL is
a party affecting the obligations of any party thereunder) to which VITAL is
a party or by which any of its properties or assets are bound that are,
material to the business, properties or assets of VITAL taken as a whole,
including, without limitation, to the extent any of the following are,
individually or in the aggregate, material to the business, properties or
assets of VITAL taken as a whole, all: (i) employment, product design or
development, personal services, consulting, non-competition, severance,
golden parachute or indemnification contracts (including, without limitation,
any contract to which VITAL is a party involving employees of VITAL);(ii)
licensing, publishing, merchandising or distribution agreements; (iii)
contracts granting rights of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the acquisition,
sale or lease of material properties or assets or stock or otherwise entered
into since December 31, 2000; (vi) contracts or agreements with any
Governmental Entity. and (vii) all commitments and agreements to enter into
any of the foregoing (collectively, together with any such contracts entered
into in accordance with Section 4.1 hereof, the "VITAL Contracts"). VITAL is
not a party to or bound by any severance, golden parachute or other agreement
with any employee or
consultant pursuant to which such person would be
entitled to receive any additional compensation or an accelerated payment of
compensation as a result of the consummation of the transactions contemplated
hereby.
(b) Each of the VITAL Contracts is valid and enforceable in accordance
with its terms, and there is no default under any VITAL Contract so listed
either by VITAL or, to the knowledge of VITAL, by any other party thereto,
and no event has occurred that with the lapse of time or the giving of notice
or both would constitute a default thereunder by VITAL or, to the knowledge
of VITAL, any other party, in any such case in which such default or event
could reasonably be expected to have a Material Adverse Effect on VITAL.
(c) No party to any such VITAL Contract has given notice to VITAL of or
made a claim against VITAL with respect to any breach or default thereunder,
in any such case in which such breach or default could reasonably be expected
to have a Material Adverse Effect on VITAL.
ARTICLE 3
Representations and Warranties of VCM
Except as set forth on the Disclosure Schedule delivered by VCM to VITAL
(the "VCM Disclosure Schedule"), VCM hereby represents and warrants to VITAL
as follows:
Section 3.1. Organization and Qualification.
(a) Each of VCM and its subsidiaries is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
or organization and has all requisite power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted,
except where the failure to be so organized, existing and in good standing or
to have such power and authority would not have a Material Adverse Effect (as
defined below) on VCM. When used in connection with VCM, the term "Material
Adverse Effect'' means any change or effect (i) that is or is reasonably
likely to be materially adverse to the business, results of operations,
condition (financial or otherwise) or prospects of VCM and its subsidiaries,
taken as a whole, other than any change or effect arising out of general
economic conditions unrelated to any businesses in which VCM and its
subsidiaries are engaged, or (ii) that may impair the ability of VCM to
consummate the transactions contemplated hereby.
(b) VCM has heretofore delivered to VITAL accurate and complete copies
of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of VCM. Each of VCM and its subsidiaries
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect on VCM.
Section 3.2. Capitalization of VCM.
(a) The authorized capital stock of VCM consists of; (i) Twenty Million
(20,000,000) Authorized Shares of Common Stock, $0.001 par value, 6,454,060
Common shares are issued and outstanding as of June 30, 2001, and (ii) Five
Million (5,000,000) VCM preferred shares, $.001 par value, and no preferred
shares are issued and outstanding. All of the outstanding VCM Shares have
been duly authorized and validly issued, and are fully paid, nonassessable
and free of preemptive rights.
(b) Except as set forth in Section 3.2(b) of the VCM Disclosure
Schedule, VCM is the record and beneficial owner of all of the issued and
outstanding shares of capital stock of its subsidiaries.
(c) Except as set forth in Section 3.2(c) of the VCM Disclosure
Schedule, between June 30, 2001 and the date hereof, no shares of VCM's
capital stock have been issued and no VCM Stock options have been granted.
Except as set forth in Section 3.2(a) above, as of the date hereof, there are
no outstanding (i) shares of capital stock or other voting securities of VCM,
(ii) securities of VCM or its subsidiaries convertible into or exchangeable
for shares of capital stock or voting securities of VCM, (iii) options or
other rights to acquire from VCM or its subsidiaries, or obligations of VCM
or its subsidiaries to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of VCM, or (iv) equity equivalents, interests in
the ownership or
earnings of VCM or its subsidiaries or other similar rights (collectively,
"VCM Securities"). As of the date hereof, there are no outstanding
obligations of VCM or any of its subsidiaries to repurchase, redeem or
otherwise acquire any VCM Securities. There are no stockholder agreements,
voting trusts or other agreements or understandings to which VCM is a party
or by which it is bound relating to the voting or registration of any shares
of capital stock of VCM.
(d) Except as set forth in Section 3.2(d) of the VCM Disclosure
Schedule, there are no securities of VCM convertible into or exchangeable
for, no options or other rights to acquire from VCM, and no other contract,
understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital
stock or other ownership interests in, or any other securities of, any
subsidiary of VCM.
(e) The VCM Shares constitute the only class of equity securities of VCM
or its subsidiaries.
(f) Except as set forth in Section 3.2(f) of the VCM Disclosure
Schedule, VCM does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity.
Section 3.3. Authority Relative to this Agreement; Recommendation.
(a) VCM has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of VCM (the "VCM Board"), and no other corporate
proceedings on the part of VCM are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby, except,as referred to in
Section 3.17, the approval and adoption of this Agreement by the holders of
at least a majority of the then outstanding VCM Shares. This Agreement has
been duly and validly executed and delivered by VCM and constitutes a valid,
legal and binding agreement of VCM, enforceable against VCM in accordance
with its terms.
(b) The VCM Board has resolved to recommend that the stockholders of VCM
approve and adopt this Agreement.
Section 3.4. SEC Reports; Financial Statements.
(a) VCM has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since December 31, 2000,each
of which has complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and the Exchange Act (and the rules and regulations promulgated
thereunder, respectively), each as in effect on the dates such forms, reports
and documents were filed. VCM has heretofore delivered or promptly will
deliver prior to the Effective Date to VCM, in the form filed with the SEC
(including any amendments thereto but excluding any exhibits), (i) its Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2000, (ii) all
definitive proxy statements relating to VCM's meetings of stockholders
(whether annual or special) held since December 31, 2000, if any, and (iii)
all other reports or registration statements filed by VCM with the SEC since
December 31, 2000 (all of the foregoing, collectively, the "VCM SEC
Reports"). None of such VCM SEC Reports, including, without limitation, any
financial statements or schedules included or incorporated by reference
therein, contained, when filed, any untrue statement of a material fact or
omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements of VCM included in the VCM SEC Reports fairly
present, in conformity with generally accepted accounting principles applied
on a consistent basis (except as may be indicated in the notes thereto), the
financial position of VCM as of the dates thereof and its results of
operations and changes in financial position for the periods then ended. All
material agreements, contracts and other documents required to be filed as
exhibits to any of the VCM SEC Reports have been so filed.
(b) VCM has heretofore made available or promptly will make available to
VITAL a complete and correct copy of any amendments or modifications which
are required to be filed with the SEC but have not yet been filed with the
SEC, to agreements, documents or other instruments which previously had been
filed by VCM with the SEC pursuant to the Exchange Act.
Section 3.5. Information Supplied. None of the information supplied or
to be supplied by VCM for inclusion or incorporation by reference to the 8-K
will, at the time the 8-K is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
Section 3.6. Consents and Approvals; No Violations. Except as set forth
in Section 3.6 of the VCM Disclosure Schedule, and for filings,permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the rules of the NASD, and the
filing and recordation of the Merger Certificate as required by the NGCL, no
filing with or notice to, and no permit, authorization, consent or approval
of, any Governmental Entity is necessary for the execution and delivery by
VCM of this Agreement or the consummation by VCM of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on VCM.
Neither the execution, delivery and performance of this Agreement by VCM
nor the consummation by VCM of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents)of
VCM or any of VCM's subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which VCM or any of VCM's subsidiaries is a
party or by which any of them or any of their respective properties or assets
may be bound or (iii) violate any order, writ, injunction, decree, law,
statute, rule or regulation applicable to VCM or any of VCM's subsidiaries or
any of their respective properties or assets, except in the case of (ii) or
(iii) for violations, breaches or defaults which would not have a Material
Adverse Effect on VCM.
Section 3.7. No Default. None of VCM or any of its subsidiaries is in
breach, default or violation (and no event has occurred which with notice or
the lapse of time or both would constitute a breach, default or violation) of
any term, condition or provision of (i) its Certificate of Incorporation or
Bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which VCM or any of its subsidiaries is now a party or by which
any of them or any of their respective properties or assets may be bound or
(iii) any order, writ, injunction, decree, law, statute, rule or regulation
applicable to VCM, its subsidiaries or any of their respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or
defaults that would not have a Material Adverse Effect on VCM. Each note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which VCM or any of its subsidiaries is now a
party or by which any of them or any of their respective properties or assets
may be bound that is material to VCM and its subsidiaries taken as a whole
and that has not expired is in full force and effect and is not subject to
any material default thereunder of which VCM is aware by any party obligated
to VCM or any subsidiary thereunder.
Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as
set forth in Section 2.8 of the VCM Disclosure Schedule and except as and to
the extent publicly disclosed by VCM in the VCM SEC Reports, as of December
31, 2000, VCM does not have any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would be required by
generally accepted accounting principles to be reflected on a balance sheet
of VCM (including the notes thereto) or which would have a Material Adverse
Effect on VCM. Except as publicly disclosed by VCM, since December 31, 2000,
VCM has not incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, which could reasonably be expected to have, and
there have been no events,changes or effects with respect to VCM having or
which reasonably could be expected to have, a Material Adverse Effect on VCM.
Except as and to the extent publicly disclosed by VCM in the VCM SEC Reports
and except as set forth in Section 2.8 of the VCM Disclosure Schedule, since
December 31, 2000, there has not been (i) any material change by VCM in its
accounting methods, principles or practices (other than as required after the
date hereof by concurrent changes in generally accepted accounting
principles),(ii) any revaluation by VCM of any of its assets having a
Material Adverse Effect on VCM, including, without limitation, any write-down
of the value of any assets other than in the ordinary course of business or
(iii) any other action or event that would have required the consent of any
other party hereto pursuant to Section 4.1 of this Agreement had such action
or event occurred after the date of this Agreement.
Section 3.9. Litigation.Except as publicly disclosed by VCM in the VCM
SEC Reports, there is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of VCM, threatened against VCM or any of its
subsidiaries or any of their respective properties or assets before any
Governmental Entity which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect on VCM or could reasonably be
expected to prevent or delay the consummation of the transactions
contemplated by this Agreement. Except as publicly disclosed by VCM in the
VCM SEC Reports, VCM is not subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect on VCM
or could reasonably be expected to prevent or delay the consummation of the
transactions contemplated hereby.
Section 3.10. Compliance with Applicable Law. Except as publicly
disclosed by VCM in the VCM SEC Reports, VCM holds all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the `'VCM
Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals which would not have a Material Adverse
Effect on VCM. Except as publicly disclosed by VCM in the VCM SEC Reports,
VCM is in compliance with the terms of the VCM Permits, except where the
failure so to comply would not have a Material Adverse Effect on VCM. Except
as publicly disclosed by VCM in the VCM SEC Reports, the business of VCM is
not being conducted in violation of any law, ordinance or regulation of any
Governmental Entity except that no representation or warranty is made in this
Section 2.10 with respect to Environmental Laws (as defined in Section 2.12
below) and except for violations or possible violations which do not, and,
insofar as reasonably can be foreseen, in the future will not, have a
Material Adverse Effect on VCM. Except as publicly disclosed by VCM in the
VCM SEC Reports, no investigation or review by any Governmental Entity with
respect to VCM is pending or, to the knowledge of VCM, threatened, nor, to
the knowledge of VCM, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those which VCM reasonably
believes will not have a Material Adverse Effect on VCM.
Section 3.11. Employee Benefit Plans; Labor Matters.
(a) With respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of ERISA), maintained or
contributed to at any time by VCM, any of its subsidiaries or any entity
required to be aggregated with VCM or any of its subsidiaries pursuant to
Section 414 of the Code (each,a"VCM Employee Plan"),no event has occurred
and, to the knowledge of VCM, no condition or set of circumstances exists in
connection with which VCM or any of its subsidiaries could reasonably be
expected to be subject to any liability which would have a Material Adverse
Effect on VCM.
(b) (i) No VCM Employee Plan is or has been subject to Title IV of ERISA
or Section 412 of the Code; and (ii) each VCM Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code is the subject of a favorable Internal
Revenue Service determination letter, and nothing has occurred which could
reasonably be expected to adversely affect such determination.
(c) Section 3.11(c) of the VCM Disclosure Schedule sets forth a true and
complete list, as of the date of this Agreement, of each person who holds any
VCM Stock Options, together with the number of VCM Shares which are subject
to such option, the date of grant of such option, the extent to which such
option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 3.11(c) of the VCM
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. VCM has furnished VITAL with complete
copies of the plans pursuant to which the VCM Stock Options were issued.
Other than the automatic vesting of VCM Stock Options that may occur without
any action on the part of VCM or its officers or directors, VCM has not taken
any action that would result in any VCM Stock Options that are unvested
becoming vested in connection with or as a result of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(d) VCM has made available to VITAL (i) a description of the terms of
employment and compensation arrangements of all officers of VCM and a copy of
each such agreement currently in effect; (ii) copies of all agreements with
consultants who are individuals obligating VCM to make annual cash payments
in an amount exceeding $60,000; (iii) a schedule listing all officers of VCM
who have executed a non-competition agreement
with VCM and a copy of each
such agreement currently in effect; (iv) copies (or descriptions) of all
severance agreements, programs and policies of VCM with or relating to its
employees, except programs and policies required to be maintained by law; and
(v) copies of all plans, programs, agreements and other arrangements of the
VCM with or relating to its employees which contain change in control
provisions.
(e) Except as disclosed in Section 3.11(e) of the VCM Disclosure
Schedule there shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any VCM Employee
Plan or any agreement or arrangement disclosed under this Section 3.11
solely by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of VCM
threatened, between VCM or any of its subsidiaries and any of their
respective employees, which controversies have or could reasonably be
expected to have a Material Adverse Effect on VCM. Neither VCM nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by VCM or any of its
subsidiaries (and neither VCM nor any of its subsidiaries has any outstanding
material liability with respect to any terminated collective bargaining
agreement or labor union contract),nor does VCM know of any activities or
proceedings of any labor union to organize any of its or any of its
subsidiaries' employees. VCM has no knowledge of any strike, slowdown,work
stoppage,lockout or threat thereof by or with respect to any of its or any
of its subsidiaries' employees.
Section 3.12. Environmental Laws and Regulations.
(a) Except as disclosed by VCM,(i) each of VCM and its subsidiaries is
in material compliance with all Environmental Laws, except for non-compliance
that would not have a Material Adverse Effect on VCM, which compliance
includes, but is not limited to, the possession by VCM and its subsidiaries
of all material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof; (ii) none of VCM or its subsidiaries has received written notice
of,or, to the knowledge of VCM, is the subject of, any Environmental Claim
that could reasonably be expected to have a Material Adverse Effect on VCM;
and (iii) to the knowledge of VCM, there are no circumstances that are
reasonably likely to prevent or interfere with such material compliance in
the future.
(b) Except as disclosed by VCM, there are no Environmental Claims which
could reasonably be expected to have a Material Adverse Effect on VCM that
are pending or,to the knowledge of VCM, threatened against VCM or any of its
subsidiaries or, to the knowledge of VCM, against any person or entity whose
liability for any Environmental Claim VCM or its subsidiaries has or may have
retained or assumed either contractually or by operation of law.
Section 3.13. Tax Matters. Except as set forth in Section 3.13 of the
VCM Disclosure Schedule: (i) VCM and each of its subsidiaries has filed or
has had filed on its behalf in a timely manner (within any applicable
extension periods) with the appropriate Governmental Entity all income and
other material Tax Returns with respect to Taxes of VCM and each of its
subsidiaries and all Tax Returns were in all material respects true, complete
and correct; (ii) all material Taxes with respect to VCM and each of its
subsidiaries have been paid in full or have been provided for in accordance
with GAAP on VCM's most recent balance sheet which is part of the VCM SEC
Documents; (iii) there are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Tax Returns required to be filed by or with
respect to VCM or its subsidiaries; (iv) to the knowledge of VCM none of the
Tax Returns of or with respect to VCM or any of its subsidiaries is currently
being audited or examined by any Governmental Entity; and (v) no deficiency
for any income or other material Taxes has been assessed with respect to VCM
or any of its subsidiaries which has not been abated or paid in full.
Section 3.14. Title to Property. VCM and each of its subsidiaries have
good and defensible title to all of their properties and assets, free and
clear of all liens, charges and encumbrances except liens for taxes not yet
due and payable and such liens or other imperfections of title, if any, as do
not materially detract from the value of or interfere with the present use of
the property affected thereby or which, individually or in the aggregate,
would not have a Material Adverse Effect on VCM; and, to VCM's knowledge, all
leases pursuant to which VCM or any of its subsidiaries lease from others
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
VCM, under any of such leases, any existing material
default or event of
default (or event which with notice or lapse of time, or both, would
constitute a material default and in respect of which VCM or such subsidiary
has not taken adequate steps to prevent such a default from occurring) except
where the lack of such good standing, validity and effectiveness, or the
existence of such default or event of default would not have a Material
Adverse Effect on VCM.
Section 3.15. Intellectual Property.
(a) Each of VCM and its subsidiaries owns, or possesses adequate
licenses or other valid rights to use, all existing United States and foreign
patents, trademarks, trade names, services marks, copyrights, trade secrets,
and applications therefore that are material to its business as currently
conducted (the "VCM Intellectual Property Rights").
(b) Except as set forth in Section 3.15(b) of the VCM Disclosure
Schedule the validity of the VCM Intellectual Property Rights and the title
thereto of VCM or any subsidiary, as the case may be, is not being questioned
in any litigation to which VCM or any subsidiary is a party.
(c) The conduct of the business of VCM and its subsidiaries as now
conducted does not, to VCM's knowledge, infringe any valid patents,
trademarks, tradenames, service marks or copyrights of others. The
consummation of the transactions contemplated hereby will not result in the
loss or impairment of any VCM Intellectual Property Rights.
(d) Each of VCM and its subsidiaries has taken steps it believes
appropriate to protect and maintain its trade secrets as such, except in
cases where VCM has elected to rely on patent or copyright protection in lieu
of trade secret protection.
Section 3.16. Insurance. VCM currently does not maintain general
liability and other business insurance.
Section 3.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding VCM Shares is the only vote of the
holders of any class or series of VCM's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 3.18. Tax Treatment. Neither VCM nor, to the knowledge of VCM,
any of its affiliates has taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 3.19. Affiliates. Except for the directors and executive
officers of VCM each of whom is listed in Section 3.19 of the VCM Disclosure
Schedule, there are no persons who, to the knowledge of VCM, may be deemed to
be affiliates of VCM under Rule 1-02(b)of Regulation S-X of the SEC(the
"VCM Affiliates").
Section 3.20. Certain Business Practices. None of VCM, any of its
subsidiaries or any directors, officers, agents or employees of VCM or any of
its subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or
violated any provision of the FCPA, or (iii) made any other unlawful payment.
Section 3.21. Insider Interests. Except as set forth in Section 3.21 of
the VCM Disclosure Schedule,no officer or director of VCM has any interest in
any material property, real or personal, including without limitation, any
computer software or VCM Intellectual Property Rights, used in or pertaining
to the business of VCM or any subsidiary, except for the ordinary rights of a
stockholder or employee stock optionholder.
Section 3.22. Opinion of Financial Adviser. No advisers,as of the date
hereof, have delivered to the VCM Board a written opinion to the effect that,
as of such date,the exchange ratio contemplated by the Merger is fair to the
holders of VCM Shares.
Section 3.23. Brokers. No broker, finder or investment banker is
entitled to any brokerage,finders or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of VCM.
Section 3.24. Disclosure. No representation or warranty of VCM in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to VITAL pursuant hereto or in connection
herewith contains, as of the date of such representation, warranty or
instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 3.25. No Existing Discussions. As of the date hereof, VCM is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to any Third Party Acquisition (as defined in
Section 5.4).
Section 3.26. Material Contracts.
(a) VCM has delivered or otherwise made available to VITAL true, correct
and complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which VCM is a
party affecting the obligations of any party thereunder)to which VCM or any
of its subsidiaries is a party or by which any of their properties or assets
are bound that are, material to the business, properties or assets of VCM and
its subsidiaries taken as a whole, including, without limitation, to the
extent any of the following are, individually or in the aggregate, material
to the business, properties or assets of VCM and its subsidiaries taken as a
whole, all: (i) employment, product design or development, personal services,
consulting, non-competition, severance, golden parachute or indemnification
contracts (including, without limitation, any contract to which VCM is a
party involving employees of VCM); (ii) licensing, publishing, merchandising
or distribution agreements; (iii) contracts granting rights of first refusal
or first negotiation; (iv) partnership or joint venture agreements;(v)
agreements for the acquisition, sale or lease of material properties or
assets or stock or otherwise. (vi) contracts or agreements with any
Governmental Entity; and (vii) all commitments and agreements to enter into
any of the foregoing (collectively, together with any such contracts entered
into in accordance with Section 5.2 hereof, the`VCM Contracts"). Neither VCM
nor any of its subsidiaries is a party to or bound by any severance,golden
parachute or other agreement with any employee or consultant pursuant to
which such person would be entitled to receive any additional compensation or
an accelerated payment of compensation as a result of the consummation of the
transactions contemplated hereby.
(b) Each of the VCM Contracts is valid and enforceable in accordance
with its terms, and there is no default under any VCM Contract so listed
either by VCM or, to the knowledge of VCM, by any other party thereto, and no
event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder by VCM or, to the knowledge of
VCM, any other party, in any such case in which such default or event could
reasonably be expected to have a Material Adverse Effect on VCM.
(c) No party to any such VCM Contract has given notice to VCM of or made
a claim against VCM with respect to any breach or default thereunder, in any
such case in which such breach or default could reasonably be expected to
have a Material Adverse Effect on VCM.
ARTICLE 4
Covenants
Section 4.1. Conduct of Business of VITAL. Except as contemplated by
this Agreement or as described in Section 4.1 of the VITAL Disclosure
Schedule, during the period from the date hereof to the Effective Time, VITAL
will conduct its operations in the ordinary course of business consistent
with past practice and, to the extent consistent therewith, with no less
diligence and effort than would be applied in the absence of this Agreement,
seek to preserve intact its current business organization, keep available the
service of its current officers and employees and preserve its relationships
with customers, suppliers and others having business dealings with it to the
end that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 4.1 of the
VITAL Disclosure Schedule, prior to the Effective Time, VITAL will not,
without the prior written consent of VCM:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) amend the terms of any stock of any class or any other securities
(except bank loans) or equity equivalents.
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of VITAL (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person.
(iii) make any loans, advances or capital contributions to, or investments
in, any other person; (iv) pledge or otherwise encumber shares of capital
stock of VITAL; or (v) mortgage or pledge any of its material assets, or
create or suffer to exist any material Lien thereupon (other than tax Liens
for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner,or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including,without limitation,the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent VITAL from (i) entering into employment
agreements or severance agreements with employees in the ordinary course of
business and consistent with past practice or (ii) increasing annual
compensation and/or providing for or amending bonus arrangements for
employees for fiscal 2000 in the ordinary course of year-end compensation
reviews consistent with past practice and paying bonuses to employees for
fiscal 2000 in amounts previously disclosed to VCM (to the extent that such
compensation increases and new or amended bonus arrangements do not result in
a material increase in benefits or compensation expense to VITAL);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions (other than in the ordinary
course of business);
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets including, without
limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation,or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to VITAL;(iii) authorize any new
capital expenditure or expenditures which, individually is in excess
$1,000 or, in the aggregate,are in excess of $5,000; provided, however that
none of the foregoing shall limit any capital expenditure required pursuant
to existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to VITAL;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
VITAL;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing,in
either case, except pursuant to the terms of existing contracts or in the
ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through 4.1(m) or any action which would make
any of the representations or warranties of contained in this Agreement
untrue or incorrect.
Section 4.2. Conduct of Business of VCM. Except as contemplated by this
Agreement or as described in Section 4.2 of the VCM Disclosure Schedule
during the period from the date hereof to the Effective Time, VCM will
conduct its operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith,with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 4.2 of the
VCM Disclosure Schedule, prior to the Effective Time, VCM will not, without
the prior written consent of VITAL:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities (except bank loans) or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution, merger
consolidation, restructuring, recapitalization or other reorganization of VCM
(other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business. (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person;
(iii) make any loans, advances or capital contributions to or investments in,
any other person; (iv) pledge or otherwise encumber shares of capital stock
of VCM or its subsidiaries; or (v) mortgage or pledge any of its material
assets, or create or suffer to exist any material Lien thereupon (other than
tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent VCM or its subsidiaries from (i) entering
into employment agreements or severance agreements with employees in the
ordinary course of business and consistent with past practice or (ii)
increasing annual compensation and/or providing for or amending bonus
arrangements for employees for fiscal 2000 in the ordinary course of yearend
compensation reviews consistent with past practice and paying bonuses to
employees for fiscal 2000 in amounts previously disclosed to (to the extent
that such compensation increases and new or amended bonus arrangements do not
result in a material increase in benefits or compensation expense to VCM);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions other than in the ordinary
course of business;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets,including,
without limitation, writing down the value of inventory of writing-off notes
or accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to VCM; (iii) authorize any new capital
expenditure or expenditures which,individually,is in excess of $1,000 or, in
the aggregate, are in excess of $5,000:provided, however that none of the
foregoing shall limit any capital expenditure required pursuant to existing
contracts;
(k) make any tax election or settle or compromise any income tax
liability material to VCM and its subsidiaries taken as a whole;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
VCM;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or except in
the ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.2(a) through 4.2(m) or any action which would make
any of the representations or warranties of the VCM contained in this
Agreement untrue or incorrect.
Section 4.3. Preparation of 8-K. VCM and VITAL shall promptly prepare
and file with the SEC an 8-K disclosing this merger.
Section 4.4. Other Potential Acquirers.
(a) VCM, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore
with respect to any Third Party Acquisition.
Section 4.5. Meetings of Stockholders. VCM shall take all action
necessary, in accordance with the respective General Corporation Law of its
respective state, and its respective certificate of incorporation and bylaws,
to duly call, give notice of, convene and hold a meeting of its stockholders
as promptly as practicable, to consider and vote upon the adoption and
approval of this Agreement and the transactions contemplated hereby. The
stockholder votes required for the adoption and approval of the transactions
contemplated by this Agreement. VCM will, through its Boards of Directors,
recommend to their respective stockholders approval of such matters
Section 4.6. NASD OTC:BB Listing. The parties shall use all reasonable
efforts to cause the VITAL Shares, subject to Rule 144, to be traded on the
Over-The-Counter Bulletin Board (OTC:BB).
Section 4.7. Access to Information.
(a) Between the date hereof and the Effective Time, VITAL will give VCM
and its authorized representatives, and VCM will give VITAL and its
authorized representatives, reasonable access to all employees, plants,
offices, warehouses and other facilities and to all books and records of
itself and its subsidiaries, will permit the other party to make such
inspections as such party may reasonably require and will cause its officers
and those of its subsidiaries to furnish the other party with such financial
and operating data and other information with respect to the business and
properties of itself and its subsidiaries as the other party may from time to
time reasonably request.
(b) Between the date hereof and the Effective Time, VITAL shall furnish
to VCM, and VCM will furnish to VITAL, within 25 business days after the end
of each quarter, quarterly statements prepared by such party in conformity
with its past practices) as of the last day of the period then ended.
(c) Each of the parties hereto will hold and will cause its consultants
and advisers to hold in confidence all documents and information furnished to
it in connection with the transactions contemplated by this Agreement.
Section 4.8. Additional Agreements, Reasonable Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action,and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
(i) cooperating in the preparation and filing of the 8-K, any filings that
may be required under the HSR Act, and any amendments to any thereof; (ii)
obtaining consents of all third parties and Governmental Entities necessary,
proper or advisable for the consummation of the transactions contemplated by
this Agreement; (iii) contesting any legal proceeding relating to the Merger
and (iv) the execution of any additional instruments necessary to consummate
the transactions contemplated hereby. Subject to the terms and conditions of
this Agreement, VCM and VITAL agree to use all reasonable efforts to cause
the Effective Time to occur as soon as practicable after the stockholder
votes with respect to the Merger. In case at any time after the Effective
Time any further action is necessary to carry out the purposes of this
Agreement, the proper officers and directors of each party hereto shall take
all such necessary action.
Section 4.9. Indemnification.
(a) To the extent, if any, not provided by an existing right under one
of the parties' directors and officers liability insurance policies, from and
after the Effective Time, VITAL shall, to the fullest extent permitted by
applicable law, indemnify,defend and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director, officer or employee of the parties hereto or any
subsidiary thereof (each an "Indemnified Party" and, collectively, the
``Indemnified Parties") against all losses, expenses (including reasonable
attorneys' fees and expenses), claims, damages or liabilities or, subject to
the proviso of the next succeeding sentence, amounts paid in settlement
arising out of actions or omissions occurring at or prior to the Effective
Time and whether asserted or claimed prior to, at or after the Effective
Time) that are in whole or in part (i) based on, or arising out of the fact
that such person is or was a director, officer or employee of such party or a
subsidiary of such party or (ii) based on, arising out of or pertaining to
the transactions contemplated by this Agreement. In the event of any such
loss expense, claim, damage or liability (whether or not arising before the
Effective Time),(i) VITAL shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to VITAL, promptly after statements therefore are
received and otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred, in either case to
the extent not prohibited by the NGCL or its certificate of incorporation or
bylaws, (ii) VITAL will cooperate in the defense of any such matter and (iii)
any determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under the NGCL and
VITAL's certificate of incorporation or bylaws shall be made by independent
counsel mutually acceptable to VITAL and the Indemnified Party; provided,
however, that VITAL shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld). The
Indemnified Parties as a group may retain only one law firm with respect to
each related matter except to the extent there is, in the opinion of counsel
to an Indemnified Party, under applicable standards of professional conduct,
c conflict on any significant issue between positions of any two or more
Indemnified Parties.
(b) In the event VITAL or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to
any person,then and in either such case, proper provision shall be made so
that the successors and assigns of VITAL shall assume the obligations set
forth in this Section 4.9.
(c) To the fullest extent permitted by law, from and after the Effective
Time, all rights to indemnification now existing in favor of the employees,
agents, directors or officers of VITAL and VCM and their subsidiaries with
respect to their activities as such prior to the Effective Time, as provided
in VITAL's and VCM's certificate of
incorporation or bylaws, in effect on the
date thereof or otherwise in effect on the date hereof, shall survive the
Merger and shall continue in full force and effect for a period of not less
than six years from the Effective Time.
(d) The provisions of this Section 4.9 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 4.10. Notification of Certain Matters. The parties hereto shall
give prompt notice to the other parties, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time, (ii) any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice of, or other communication relating to, a default
or event which, with notice or lapse of time or both, would become a default,
received by such party or any of its subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract or
agreement material to the financial condition, properties, businesses or
results of operations of such party and its subsidiaries taken as a whole to
which such party or any of its subsidiaries is a party or is subject, (iv)
any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement, or (v) any material adverse
change in their respective financial condition, properties, businesses,
results of operations or prospects taken as a whole, other than changes
resulting from general economic conditions; provided, however, that the
delivery of any notice pursuant to this Section 4.10 shall not cure such
breach or non-compliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
ARTICLE 5
Conditions to Consummation of the Merger
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the stockholders of VCM;
(b) this Agreement shall have been approved and adopted by the Board of
Directors of VITAL and VCM;
(c) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which prohibits,
restrains, enjoins or restricts the consummation of the Merger;
(d) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices
or approvals required with respect to the transactions contemplated hereby
shall have been either filed or received; and
Section 5.2. Conditions to the Obligations of VITAL. The obligation of
VITAL to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) the representations of VCM contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on VCM) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing VCM
shall have delivered to VITAL a certificate to that effect;
(b) each of the covenants and obligations of VCM to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time
and at the Closing VCM shall have delivered to VITAL a certificate to that
effect;
(d) VCM shall have obtained the consent or approval of each person whose
consent or approval shall be required in order to permit the Merger as
relates to any obligation, right or interest of VCM under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or instrument,
except those for which failure to obtain such consents and approvals would
not, in the reasonable opinion of VITAL, individually or in the aggregate,
have a Material Adverse Effect on VCM;
(e) there shall have been no events, changes or effects with respect to
VCM or its subsidiaries having or which could reasonably be expected to have
a Material Adverse Effect on VCM; and
Section 5.3. Conditions to the Obligations of VCM. The respective
obligations of VCM to effect the Merger are subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) the representations of VITAL contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on VITAL) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing VITAL
shall have delivered to VCM a certificate to that effect;
(b) each of the covenants and obligations of VITAL to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time
and at the Closing VITAL shall have delivered to VCM a certificate to that
effect;
(c) there shall have been no events, changes or effects with respect to
VITAL having or which could reasonably be expected to have a Material Adverse
Effect on VITAL.
ARTICLE 6
Termination; Amendment; Waiver
Section 6.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval and adoption of this Agreement by VITAL's or VCM's
stockholders:
(a) by mutual written consent of VITAL and VCM;
(b) by VCM or VITAL if (i) any court of competent jurisdiction in the
United States or other United States Governmental Entity shall have issued a
final order, decree or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action is or shall have become nonappealable or (ii) the Merger has
not been consummated by August 31, 2001; provided, however, that no party may
terminate this Agreement pursuant to this clause (ii) if such party's failure
to fulfill any of its obligations under this Agreement shall have been the
reason that the Effective Time shall not have occurred on or before said
date;
(c) by VITAL if (i) there shall have been a breach of any representation
or warranty on the part of VCM set forth in this Agreement, or if any
representation or warranty of VCM shall have become untrue, in either case
such that the conditions set forth in Section 5.2(a) would be incapable of
being satisfied by August 31, 2001 (or as otherwise extended), (ii) there
shall have been a breach by VCM of any of their respective covenants or
agreements hereunder having a Material Adverse Effect on VCM or materially
adversely affecting (or materially delaying) the consummation of the Merger,
and VCM, as the case may be, has not cured such breach within 20 business
days after notice by VITAL thereof, provided that VITAL has not breached any
of its obligations hereunder, (iii) VITAL shall have convened a meeting of
its stockholders to vote upon the Merger and shall have failed to obtain the
requisite vote of its stockholders; or (iv) VITAL shall have convened a
meeting of its Board of Directors to vote upon the Merger and shall have
failed to obtain the requisite vote;
(d) by VCM if (i) there shall have been a breach of any representation
or warranty on the part of VITAL set forth in this Agreement, or if any
representation or warranty of VITAL shall have become untrue, in either case
such that the conditions set forth in Section 5.3(a) would be incapable of
being satisfied by August 31, 2001 (or as
otherwise extended), (ii) there
shall have been a breach by VITAL of its covenants or agreements hereunder
having a Material Adverse Effect on VITAL or materially adversely affecting
(or materially delaying) the consummation of the Merger, and VITAL, as the
case may be, has not cured such breach within twenty business days after
notice by VCM thereof, provided that VCM has not breached any of its
obligations hereunder, (iii) the VITAL Board shall have recommended to
VITAL's stockholders a Superior Proposal, (iv) the VITAL Board shall have
withdrawn, modified or changed its approval or recommendation of this
Agreement or the Merger, or hold a stockholders' meeting to vote upon the
Merger, or shall have adopted any resolution to effect any of the foregoing,
(v) VCM shall have convened a meeting of its stockholders to vote upon the
Merger and shall have failed to obtain the requisite vote of its
stockholders.
Section 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part
of any party hereto or its affiliates, directors, officers or stockholders,
other than the provisions of this Section 6.2 and Sections 4.7(c) and 6.3
hereof. Nothing contained in this Section 6.2 shall relieve any party from
liability for any breach of this Agreement.
Section 6.3. Fees and Expenses. Except as specifically provided in this
Section 6.3, each party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
Section 6.4. Amendment. This Agreement may be amended by action taken by
VITAL and VCM at any time before or after approval of the Merger by the
stockholders of VITAL and VCM (if required by applicable law) but,after any
such approval,no amendment shall be made which requires the approval of such
stockholders under applicable law without such approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of the
parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party, (ii) waive any inaccuracies in
the representations and warranties of any other party contained herein or in
any document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by any other party with any of the agreements or conditions
contained herein. Any agreement on the part of any 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. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE 7
Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties.
The representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto which by its terms
requires performance after the Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement(a)
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings both written and oral, between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise.
Section 7.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby,
and to such end, the provisions of this Agreement are agreed to be severable.
Section 7.4. Notices. All notices, requests,claims,demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail(postage prepaid,return receipt
requested), to each other party as follows:
If to VCM:
VCM TECHNOLOGY LIMITED
0000 Xxxx Xxxxxxxx Xx. Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
with a copy to:
Xxxxxxxxxx Law Group
000 Xxxx Xxxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000 (619) 595-4882
(000) 000-0000
if to VITAL:
VITAL LIVING, INC.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxx 00000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard
to the principles of conflicts of law thereof.
Section 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
Section 7.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 4.9 and 4.11, nothing
in this Agreement, express or implied, is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 7.8. Certain Definitions. For the purposes of this agreement,
the term:
(a) "affiliate" means (except as otherwise provided in Sections 2.19 and
3.19 a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
the first mentioned person;
(b) "business day" means any day other than a day on which Nasdaq is
closed;
(c) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(d) "knowledge'' or "known'' means, with respect to any matter in
question, if an executive officer of VITAL or VCM or its subsidiaries, as the
case may be, has actual knowledge of such matter;
(e) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
(f) "subsidiary" or "subsidiaries" of VITAL, VCM or any other person,
means any corporation, partnership, limited liability company, association,
trust, unincorporated association or other legal entity of which VITAL, VCM
or any such other person, as the case may be (either alone or through or
together with any other subsidiary), owns,
directly or indirectly, 50% or
more of the capital stock, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
Section 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part
of any direct or indirect stockholder of VITAL, VCM or any officer, director,
employee, agent, representative or investor of any party hereto.
Section 7.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; provided, however, that,
if a party hereto is entitled to receive any payment or reimbursement of
expenses pursuant to Sections 6.3(a), (b) or (c), it shall not be entitled to
specific performance to compel the consummation of the Merger.
Section 7.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
In Witness Whereof, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
VITAL LIVING, INC.
By:/s/
Name: Xxxx Xxxxx
Title: President
VCM TECHNOLOGY LIMITED
By:/s/
Name: Xxxxx Xxxxxxx
Title: President
VITAL DISCLOSURE SCHEDULE
Schedule 2.1 Organization See Amended Articles/Bylaws
Schedule 2.2(a) Options, Stock Preference Rights See Provided List
Schedule 2.6 Consents & Approvals None Provided
Schedule 2.7 No Default Not Applicable
Schedule 2.8 No Undisclosed Liability None Exist
Schedule 2.9 Litigation None Exist
Schedule 2.10 Compliance with Applicable Law None
Schedule 2.11 Employee Benefit Plans None Provided
Schedule 2.12 Environmental Laws and Regs Not Applicable
Schedule 2.13 Tax Matters None Exist
Schedule 2.14 Title to Property None Exist
Schedule 2.15 Intellectual Property None Exist
Schedule 2.16 Insurance None Exist
Schedule 2.17 Vote Required None Required
Schedule 2.18 Tax Treatment Not Applicable
Schedule 2.19 Affiliates Xxxx Xxxxx
Xxxxxx Xxxxx
Schedule 2.20 Certain Business Practices None Exist
Schedule 2.21 Insider Interest See 2.19
Schedule 2.22 Opinion of Financial Adviser Waived - None Exist
Schedule 2.23 Broker None Exist
Schedule 4.1 Conduct of Business None Provided
VCM DISCLOSURE SCHEDULE
Schedule 3.2(b) Subsidiary Stock None Exist
Schedule 3.2(c) Capital Stock Rights None Exist other than as in
Articles
Schedule 3.2(d) Securities conversions None Exist
Schedule 3.2 (f) Subsidiaries None Exist
Schedule 3.6 Consents & Approvals Provided
Schedule 3.7 No Default Not Applicable
Schedule 3.8 No Undisclosed Liability None Exist
Schedule 3.9 Litigation None Exist
Schedule 3.10 Compliance with Not Applicable-full disclosed
Applicable Law in 10KSB
Schedule 3.11 Employee Benefit Plans Section3.11(c)No Options Exist
Section3.11(e) No Agreements Exist
Schedule 3.12 Environmental Laws and Regs Not Applicable
Schedule 3.13 Tax Matters None Exist
Schedule 3.14 Title to Property None Exist
Schedule 3.15(b) Intellectual Property None Exist
Schedule 3.16 Insurance None Exist
Schedule 3.17 Vote Required See Shareholder Meeting Certificate
Schedule 3.18 Tax Treatment Not Applicable
Schedule 3.19 Affiliates Xxxxx Xxxxxxx
Schedule 3.20 Certain Business Practices None Exist
Schedule 3.21 Insider Interest None Exist
Schedule 3.22 Opinion of Financial Adviser Waived - None Exist
Schedule 3.23 Broker None Exist
Schedule 4.2 Conduct of Business See Amended & Restated Articles
