EXHIBIT A
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this
"Agreement"), dated as of April 24, 2002, is among Parentech, Inc., a Delaware
corporation (the "Company") and Premier Classic Art, Inc., a Delaware
corporation ("PCA"). Certain capitalized and non-capitalized terms used herein
are defined in Section 8.13.
RECITALS
WHEREAS, the Boards of Directors of the Company and PCA each have, in
light of and subject to the terms and conditions set forth herein, approved this
Agreement and the transactions contemplated hereby, including the Merger, and
declared the Merger advisable and fair to, and in the best interests of, their
respective stockholders;
WHEREAS, pursuant to the Merger, among other things, and subject to the
terms and conditions of this Agreement, all of the issued and outstanding shares
of capital stock of the Company shall be converted into the right to receive
shares of Common Stock and Series B Preferred Stock of PCA, par value $0.001 per
share, (the "PCA Series B Preferred Stock");
WHEREAS, as an inducement to the Company to enter this Agreement,
certain stockholders of PCA have entered into lock-up agreements, attached
hereto as Exhibit A ("Lock-up Agreement") pursuant to which, among other things,
such stockholders have agreed to refrain from selling shares of Common Stock of
PCA (the "PCA Common Stock") prior to November 15, 2002 (the "Lock-up Date") and
during a specified period following the Lock-up Date;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Company and PCA desire to make certain representations,
warranties, covenants and agreements in connection with the Merger as set forth
in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company and PCA hereby agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and in accordance with the
applicable provisions of the Delaware General Corporation Law ("Delaware Law"),
the Company shall be merged with and into PCA (the "Merger"). Following the
Merger, PCA shall continue as the surviving corporation (the "Surviving
Corporation"), and the separate corporate existence of the Company shall cease.
Section 1.2 Effective Time. Subject to the provisions of this
Agreement, the Company and PCA shall cause the Merger to be consummated by
filing an appropriate certificate of merger in the form attached hereto as
Exhibit B and other appropriate documents (the "Certificate of Merger") with the
Secretary of State of the State of Delaware in such form as required by, and
executed in accordance with, the relevant provisions of Delaware Law, on the
Closing Date or as soon thereafter as practicable. The Merger shall become
effective upon the filing of the Certificate of Merger (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 (the "Closing Date"), which shall be no later than the third business
day after satisfaction or waiver of the conditions set forth in ARTICLE VI
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions), at the
offices of Xxxx Xxxx Xxxx & Freidenrich LLP, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000,
Xxx Xxxxx, XX 00000-0000 or at such other time, date or place as agreed to in
writing by the parties hereto.
Section 1.4 Effects of the Merger. The Merger shall have the effects
set forth in this Agreement, the Certificate of Merger and the applicable
provisions of Delaware Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all of the properties, rights,
privileges, powers and franchises of the Company shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company shall become
the debts, liabilities and duties of the Surviving Corporation.
Section 1.5 Directors and Officers. The directors of the Surviving
Corporation shall be comprised in accordance with Schedule 1.5 of the Company
Disclosure Schedule (as defined in Article III) and shall hold office in
accordance with the certificate of incorporation and bylaws of the Surviving
Corporation until their successors are duly elected or appointed and qualified
or until their earlier death, resignation or removal. The officers of the
Company at the Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation until their successors are
duly elected or appointed and qualified or until their earlier death,
resignation or removal.
Section 1.6 Certificate of Incorporation and Bylaws. As of the
Effective Time, the certificate of incorporation of PCA, as in effect
immediately prior to the Effective Time, shall be amended in its entirety to
read as set forth in the Certificate of Merger; provided, however, that Article
FIRST of the certificate of incorporation of PCA shall be amended to read in its
entirety as follows: " The name of the corporation is Parentech, Inc." until
thereafter amended as provided by law. Effective immediately following the
Merger, the bylaws of the Company, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation until amended
in accordance with applicable Law.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Shares.
(a) At the Effective Time, each share of the Company's Series A
Preferred Stock and Series B Preferred Stock (collectively, "Company Preferred
Stock"), issued and outstanding immediately prior to the Effective Time
(individually, a "Preferred Share" and collectively, the "Preferred Shares") ")
(other than Dissenting Shares (as hereinafter defined) shall, by virtue of the
Merger and without any action on the part of PCA or the Company or any holder
thereof, be converted into and be exchangeable for the right to receive one
fully paid and non-assessable share of PCA Series B Preferred Stock.
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(b) At the Effective Time, each share of Company's common stock, par
value $0.000001 (the "Company Common Stock"), issued and outstanding immediately
prior to the Effective Time (individually, a "Common Share" and collectively,
the "Common Shares" and together with the Preferred Shares, the "Shares") (other
than Dissenting Shares (as hereinafter defined) shall, by virtue of the Merger
and without any action on the part of PCA or the Company or any holder thereof,
be converted into and be exchangeable for the right to receive one fully paid
and non-assessable share of PCA Common Stock. All such shares of PCA Common
Stock issued pursuant to this Section 2.1(b) and PCA Series B Preferred Stock
issued pursuant to Section 2.1(a) above, are referred to herein as the "Merger
Consideration."
(c) If, between the date of this Agreement and the Effective Time, the
outstanding shares of PCA Common Stock or PCA Series B Preferred Stock shall
have been changed into a different number of shares or a different class by
reason of any stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, or any similar event, the calculation
of the number of shares of PCA Common Stock or PCA Series B Preferred Stock for
which the Company Common Stock shall be exchanged shall be correspondingly
adjusted to the extent necessary to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares, or
such similar event.
Section 2.2 Issuance of Adjustment Shares. If, at the Effective Time,
PCA has liabilities that exceed $100,000 (the "Excess Liabilities"), the Merger
Consideration shall be increased as follows: for every dollar of Excess
Liabilities, an additional five (5) shares of PCA Common Stock shall be issued
to the Company's stockholders (the "Adjustment Shares"). Each holder of Shares
at the Effective Time shall receive that number of Adjustment Shares determined
by multiplying (i) the aggregate number of Adjustment Shares and (ii) a
fraction, the numerator of which is the number of Shares owned by such holder
just prior to the Effective Time (determined on as-converted to common stock
basis) and the denominator of which is the total number of Shares just prior to
the Effective Time (determined on as-converted to common stock basis), excluding
any Dissenting Shares (as such term is defined in Section 2.13). Such Excess
Liabilities shall be determined by the Company within sixty (60) calendar days
after the Closing Date in accordance with generally accepted accounting
principles in the United States ("GAAP").
Section 2.3 Stock Options. At the Effective Time, the Company Stock
Options, whether vested or unvested, will be assumed by PCA ("Assumed Stock
Options"). Section 2.3 of the Company Disclosure Schedule (as defined in Article
III) sets forth a true and complete list as of the date hereof of all holders of
outstanding options to purchase shares of Company Common Stock ("Company Stock
Options"), including the number of shares of Company Common Stock subject to
each such option, the exercise or vesting schedule, the exercise price per share
and the term of each such option. On the Closing Date, the Company shall deliver
to PCA an updated Section 2.3 of the Company Disclosure Schedule (as defined in
Article III) current as of such date. Each such option so assumed by PCA under
this Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the Company Stock Option Plan ("Company Option Plan")
and any other document governing such option immediately prior to the Effective
Time, except that (a) such option will be exercisable for that number of whole
shares of PCA Common Stock equal to that number of shares of Company Common
Stock that were issuable upon exercise of such option immediately prior to the
Effective Time, (b) the per share exercise price for the shares of PCA Common
Stock issuable upon exercise of such assumed option will be equal to the
exercise price per share of Company Common Stock at which such option was
exercisable immediately prior to the Effective Time and (c) any restriction on
the exercisability of such Company Stock Option shall continue in full force and
effect, and the term, exercisability, vesting schedule and other provisions of
such Company Stock Option shall remain unchanged. Consistent with the terms of
the Company Option Plan and the documents governing the outstanding options, the
Merger will not terminate any of the outstanding options under the Company
Option Plan or accelerate the exercisability or vesting of such options or the
shares of PCA Common Stock which will be subject to those options upon PCA's
assumption of the options in the Merger. It is the intention of the parties that
the options so assumed by PCA following the Effective Time will remain incentive
stock options as defined in Section 422 of the Code to the extent such options
qualified as incentive stock options prior to the Effective Time, and the
parties hereto shall use their commercially reasonable efforts to carry out such
intention. Within ten (10) business days after the Effective Time, PCA will
issue to each person who, immediately prior to the Effective Time was a holder
of an outstanding option under the Company Option Plan a document in form and
substance reasonably satisfactory to the Company evidencing the foregoing
assumption of such option by PCA. PCA agrees to provide any assistance
reasonably requested by the Surviving Corporation in order to enable the
Surviving Corporation to file with the Securities and Exchange Commission
("SEC") after the Closing a registration statement on Form S-8 covering the
shares of PCA Common Stock issuable pursuant to Assumed Stock Options. The
Company shall cooperate with and assist PCA in the preparation of such
registration statement.
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Section 2.4 Exchange Agent. Prior to the Effective Time, PCA shall
appoint an exchange agent hereunder for the purpose of exchanging Shares for the
Merger Consideration (the "Exchange Agent"). At or prior to the Effective Time,
PCA shall deposit with the Exchange Agent, in trust for the benefit of holders
of Shares, certificates representing the PCA Common Stock and PCA Series B
Preferred Stock issuable pursuant to Section 2.1. in exchange for outstanding
Shares.
Section 2.5 Exchange Procedures. As soon as reasonably practicable
after the Effective Time (and in any event within three business days after the
Effective Time), the Surviving Corporation shall use its commercially reasonable
efforts, and PCA shall provide any assistance reasonably requested by the
Surviving Corporation, to cause the Exchange Agent to mail to each holder of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") (a) a letter of transmittal
which shall specify that delivery shall be effective, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent, and which letter shall be in customary form and have such other
provisions as PCA may reasonably specify; and (b) instructions for effecting the
surrender of such Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate to the Exchange Agent together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, and such other documents as may reasonably be required by the Exchange
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor shares of PCA Common Stock or PCA Series B Preferred Stock
representing, in the aggregate, the whole number of shares that such holder has
the right to receive pursuant to Section 2.1. (after taking into account all
Shares then held by such holder), and the Shares formerly represented by such
Certificate and the Certificate so surrendered shall forthwith be canceled.
Until surrendered as contemplated by this Article II, each Certificate shall be
deemed at any time after the Effective Date to represent only the right to
receive the Merger Consideration payable upon surrender of the Certificates. In
the event of a transfer of ownership of Shares which is not registered in the
transfer records of the Company, shares of PCA Common Stock or PCA Series B
Preferred Stock evidencing, in the aggregate, the proper number of shares of PCA
Common Stock or PCA Series B Preferred Stock may be issued with respect to such
Shares to such a transferee if the Certificate representing such Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable Transfer
Taxes have been paid.
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Section 2.6 Distributions with Respect to Unsurrendered Certificates.
No dividends or other distributions declared or made with respect to shares of
PCA Common Stock or PCA Series B Preferred Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of PCA Common Stock or PCA Series B Preferred Stock that
such holder would be entitled to receive upon surrender of such Certificate
until such holder shall surrender such Certificate in accordance with Section
2.5. Subject to the effect of applicable Laws (as hereinafter defined),
following surrender of any such Certificate, there shall be paid to such holder
of shares of PCA Common Stock or PCA Series B Preferred Stock issuable in
exchange therefor, without interest, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such shares of PCA Common Stock or PCA Series B Preferred Stock.
Section 2.7 No Further Ownership Rights in Company Common Stock. All
shares of PCA Common Stock and PCA Series B Preferred Stock issued upon
conversion of the Shares in accordance with the terms of ARTICLE I and this
ARTICLE II shall be deemed to have been issued or paid in full satisfaction of
all rights pertaining to the Shares.
Section 2.8 No Fractional Shares of PCA Common Stock or Series B
Preferred Stock. No certificates or scrip of shares of PCA Common Stock or PCA
Series B Preferred Stock representing fractional shares of PCA Common Stock or
PCA Series B Preferred Stock or book-entry credit of the same shall be issued
upon the surrender for exchange of Certificates and such fractional share
interests will not entitle the owner thereof to vote or to have any rights of a
stockholder of PCA or a holder of shares of PCA Common Stock or PCA Series B
Preferred Stock.
Section 2.9 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity by such
person against any claim that may be made against the Surviving Corporation with
respect to such Certificate, the Exchange Agent will deliver in exchange for
such lost, stolen or destroyed Certificate the applicable Merger Consideration
with respect to the Shares formerly represented thereby, pursuant to this
Agreement.
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Section 2.10 Tax Consequences. It is intended by the parties hereto
that the Merger shall constitute a reorganization within the meaning of Section
368(a) of the Code. Each party hereto shall use its commercially reasonable
efforts to cause the Merger to be so qualified, shall report the transactions
contemplated by this Agreement in a manner consistent with such reorganization
treatment and will not take any position inconsistent therewith in any Tax
Return (as hereinafter defined), refund claim, litigation or otherwise unless
required to do so by law. The Merger shall be treated as a purchase for
accounting purposes.
Section 2.11 Stock Transfer Books. The stock transfer books of the
Company shall be closed immediately upon the Effective Time and there shall be
no further registration of transfers of Shares thereafter on the records of the
Company. On or after the Effective Time, any Certificates presented to the
Exchange Agent or PCA for any reason shall be converted into the Merger
Consideration with respect to the Shares formerly represented thereby.
Section 2.12 Affiliates. Notwithstanding anything to the contrary
herein, no shares of PCA Common Stock or PCA Series B Preferred Stock shall be
delivered to a person who may be deemed an "affiliate" of the Company for
purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), until such person has executed and delivered to PCA the
written agreement contemplated by Section 5.7.
Section 2.13 Appraisal Rights. Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by stockholders who did not vote
in favor of the Merger (the "Dissenting Shares"), which stockholders comply with
all of the relevant provisions of Delaware Law (the "Dissenting Stockholders"),
shall not be converted into or be exchangeable for the right to receive the
Merger Consideration, unless and until such holders shall have failed to perfect
or shall have effectively withdrawn or lost their rights to appraisal under
Delaware Law. If any Dissenting Shareholder shall have failed to perfect or
shall have effectively withdrawn or lost such right, such holder's Shares shall
thereupon be converted into and become exchangeable for the right to receive, as
of the Effective Time, the Merger Consideration without any interest thereon.
The Company shall give PCA (a) prompt notice of any written demands for
appraisal of any Shares, attempted withdrawals of such demands and any other
instruments served pursuant to Delaware Law and received by the Company relating
to stockholders' rights of appraisal, and (b) the opportunity to direct, in its
reasonable business judgment, all negotiations and proceedings with respect to
demands for appraisal under Delaware Law. Neither the Company nor the Surviving
Corporation shall, except with the prior written consent of PCA, voluntarily
make any payment with respect to, or settle or offer to settle, any such demand
for payment. If any Dissenting Shareholder shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Shares held by such
Dissenting Shareholder shall thereupon be treated as though such Shares had been
converted into the right to receive the Merger Consideration pursuant to Section
2.1.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Except as set forth on the schedule delivered by the Company to PCA in
connection with the execution and delivery of this Agreement (the "Company
Disclosure Schedule") the Company hereby represents and warrants to PCA, and
except as set forth in the disclosure schedule delivered by PCA to the Company
in connection with the execution and delivery of this Agreement (the "PCA
Disclosure Schedule"), PCA hereby represents and warrants to the Company, in
each case as set forth in this ARTICLE III, with the party making such
representations and warranties being referred to as the "Representing Party" and
such Representing Party's Disclosure Schedule as the "Representing Party's
Disclosure Schedule." Notwithstanding the foregoing, any representation or
warranty which expressly refers to PCA or its Subsidiaries is being made solely
by PCA and any representation or warranty which expressly refers to the Company
or its Subsidiaries is being made solely by the Company. As used in this
Agreement, "Material Adverse Effect" means any change, effect, event,
occurrence, state of facts or developments that (i) materially adversely affects
the assets, liabilities, business, results of operations, condition (financial
or otherwise) or prospects of the Representing Party and its Subsidiaries, taken
as a whole or (ii) adversely affects or delays the ability of the Representing
Party to consummate the transactions contemplated by this Agreement.
Section 3.1 Organization, Qualification.
(a) The Representing Party is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority required for it to own
its properties and assets and to carry on its business as it is now being
conducted. The Representing Party is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of its properties or
the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or in good standing would
not, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the Representing Party or substantially delay consummation of
the transactions contemplated by this Agreement or otherwise prevent the
Representing Party from performing its obligations hereunder.
(b) Each of the Representing Party's Subsidiaries is listed in Section
3.1 of the Representing Party's Disclosure Schedule and is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the Representing Party's
Subsidiaries has the corporate power and authority required for it to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on the
Representing Party, taken as a whole. All the outstanding shares of capital
stock of, or other ownership interests in, the Representing Party's Subsidiaries
are duly authorized, validly issued, fully paid and non-assessable and, with
respect to such shares or ownership interests that are owned by the Representing
Party and its Subsidiaries, are owned free and clear of all liens, claims,
mortgages, encumbrances, pledges and security interests of any kind. All the
outstanding shares of capital stock of, or other ownership interests in, the
Representing Party's Subsidiaries are wholly owned by the Representing Party,
directly or indirectly.
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Section 3.2 Capital Stock.
(a) Section 3.2(a) of the Representing Party's Disclosure Schedule sets
forth, as of February 28, 2002 with respect to PCA and as of April 24, 2002 with
respect to the Company: (i) the number of authorized shares of each class or
series of capital stock of the Representing Party; (ii) the number of shares of
each class or series of capital stock of the Representing Party which are issued
and outstanding; (iii) the number of shares of each class or series of capital
stock which are held in the treasury of such Representing Party; (iv) the number
of shares of each class or series of capital stock of the Representing Party
which are reserved for issuance, indicating each specific reservation; and (v)
the number of shares of each class or series of capital stock of such
Representing Party which are subject to employee stock options or other rights
to purchase or receive capital stock granted under such Person's stock option or
other stock based employee or non-employee director benefit plans, indicating
the name of the plan, the date of grant, the number of shares and the exercise
price thereof. Since February 28, 2002, PCA has not issued any additional shares
of its capital stock.
(b) All the outstanding shares of capital stock of the Representing
Party are, and all shares of PCA Common Stock and PCA Series B Preferred Stock
to be issued in the Merger will be, when issued in accordance with the terms of
this Agreement, duly authorized, validly issued, fully paid and non-assessable
and issued in compliance with all applicable U.S. state and federal securities
laws. Except for the transactions contemplated by this Agreement, (i) there are
no shares of capital stock of the Representing Party authorized, or as of the
date of this Agreement, issued or outstanding, (ii) as of the date of this
Agreement there are no authorized or outstanding options, warrants, calls,
preemptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the Representing Party or any of its Subsidiaries, obligating the Representing
Party or any of its Subsidiaries to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock or other equity interest
in the Representing Party or any of its Subsidiaries or securities convertible
into or exchangeable for such shares or equity interests, or obligating the
Representing Party or any of its Subsidiaries to grant, extend or enter into any
such option, warrant, call, subscription or other right, agreement, arrangement
or commitment, (iii) there are no outstanding contractual obligations of the
Representing Party or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Representing Party or any Subsidiary
of the Representing Party or to provide funds to make any investment (in the
form of a loan, capital contribution or otherwise) in any Subsidiary of the
Representing Party or other entity, and (iv) there are no shareholder
agreements, voting trusts or other agreements to which the Representing Party is
a party or to which it is bound relating to the voting of any shares of the
capital stock of the Representing Party.
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Section 3.3 Corporate Authority Relative to this Agreement; No
Violation.
(a) The Company has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. 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 the
Company and, except for obtaining the requisite approval of the stockholders of
the Company (the "Company Stockholder Approval"), as contemplated in Section 5.1
and the filing of the Certificate of Merger, no other corporate proceedings on
the part of the Company are necessary to authorize the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement constitutes a
valid and binding agreement of PCA, constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as may be limited by (i) bankruptcy laws and other similar laws affecting
creditor's rights generally and (ii) general principles of equity.
(b) PCA has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. 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 PCA, and
other than the obtaining the requisite approval of the stockholders of PCA
through action by written consent (the "PCA Stockholder Approval"), the filing
of an information statement with the SEC, the resolution of any comments from
the SEC with respect to the information statement, and the filing of the
Certificate of Merger, no other corporate proceedings on the part of PCA are
necessary to authorize the consummation of the transactions contemplated hereby.
The Board of Directors of PCA has taken all appropriate action so that Section
203 of Delaware Law will not be applicable to the Company or to PCA for any
purpose. This Agreement has been duly and validly executed and delivered by PCA
and, assuming this Agreement constitutes a valid and binding agreement of the
Company, constitutes a valid and binding agreement of PCA, enforceable against
PCA in accordance with its terms, except as may be limited by (i) bankruptcy
laws and other similar laws affecting creditor's rights generally and (ii)
general principles of equity.
(c) Except as may be required under, and other applicable requirements
of, the Securities Act, the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "Exchange Act"), state
securities or blue sky laws, and the rules and regulations of Nasdaq, and the
filing of the Certificate of Merger under Delaware Law, none of the execution,
delivery or performance of this Agreement by the Representing Party, the
consummation by the Representing Party of the transactions contemplated hereby
or compliance by the Representing Party with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the certificate of
incorporation, bylaws or similar organizational documents of the Representing
Party or any of its Subsidiaries, (ii) require any filing with, or permit,
authorization, consent or approval of, any federal, regional, state or local
court, arbitrator, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, whether U.S. or foreign (a
"Governmental Entity"), (iii) 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) 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
the Representing Party or any of its Subsidiaries is a party or by which any of
them or any of their properties or assets may be bound, or (iv) violate any
order, writ, injunction, decree, judgment, permit, license, ordinance, law,
statute, rule or regulation ("Law") applicable to the Representing Party, any of
its Subsidiaries or any of their properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) such filings, permits, authorizations,
consents, approvals, violations, breaches or defaults which are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on the Representing Party or prevent or substantially delay the
consummation of the transactions contemplated hereby.
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Section 3.4 Reports and Financial Statements.
(a) PCA has previously furnished or otherwise made available (by
electronic filing or otherwise) to the Company true and complete copies of: (i)
Annual Reports on Form 10-K filed with the SEC for each of the fiscal years
ended May 31, 2000 and 2001; and (ii) each Quarterly Report on Form 10-Q filed
with the SEC for the three fiscal quarters occurring since the Annual Report on
Form 10-K for the fiscal year ended May 31, 2001.
As of their respective dates, such reports, proxy statements and prospectuses
filed with the SEC by PCA (collectively with, and giving effect to, all
amendments, supplements and exhibits thereto, the "SEC Reports") (i) complied as
to form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of PCA's
Subsidiaries is required to file any forms, reports or other documents with the
SEC. The audited consolidated financial statements and unaudited consolidated
interim financial statements included in the SEC Reports (including any related
notes and schedules) fairly present in all material respects the financial
position of PCA and its consolidated Subsidiaries as of the dates thereof and
the results of operations and cash flows for the periods or as of the dates then
ended (subject, in the case of the unaudited interim financial statements, to
normal recurring adjustments), in each case in accordance with past practice and
GAAP consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto). Since it first became required to file reports
under the Exchange Act, PCA has timely filed all reports, registration
statements and other filings required to be filed by it with the SEC under the
rules and regulations of the SEC, and the PCA Common Stock is registered under
the Exchange Act.
(b) The Company has delivered to PCA copies of the audited balance
sheets of the Company as of December 31, 2001, together with the related audited
statements of income, stockholders' equity and changes in cash flow for the
calendar year ended December 31, 2001, and the notes thereto (such audited
financial statements being hereinafter referred to as the "Financial
Statements"). The Financial Statements, including the notes thereto, (i) were
prepared in accordance with GAAP throughout the periods covered thereby, and
(ii) present fairly in all material respects the financial position, results of
operations and changes in cash flow of the Company and its consolidated
Subsidiaries as of such dates and for the periods then ended.
Section 3.5 No Undisclosed Liabilities. Neither the Representing Party
nor any of its Subsidiaries has any liabilities or obligations of any nature
required to be set forth on a balance sheet of the Representing Party under
GAAP, whether or not accrued, contingent or otherwise, and there is no existing
condition, situation or set of circumstances which would be expected to result
in such a liability or obligation, except (a) liabilities or obligations with
respect to PCA reflected in the SEC Reports and with respect to the Company
reflected in the Financial Statements or (b) liabilities and obligations which
are not, individually or in the aggregate, reasonably expected to have a
Material Adverse Effect on the Representing Party.
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Section 3.6 No Default; Compliance with Applicable Laws. The businesses
of the Representing Party and each of its Subsidiaries is not in conflict with,
or in default or violation of, any term, condition or provision of (i) its
respective certificate of incorporation or bylaws or similar organizational
documents, (ii) any Company Material Contracts or PCA Material Contracts, as
applicable, or (iii) any federal, state, local or foreign statute, Law,
concession, grant, franchise, Permit or other governmental authorization or
approval applicable to the Representing Party or any of its Subsidiaries,
excluding from the foregoing clauses (ii) and (iii), defaults or violations
which would not, either individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the Representing Party.
Section 3.7 Environmental Matters.
(a) Each of the Representing Party and its Subsidiaries has obtained
all licenses, permits, authorizations, approvals and consents from Governmental
Entities which are required under any applicable Environmental Law and necessary
for it to carry on its business or operations as now conducted ("Environmental
Permits"), except for such failures to have Environmental Permits which,
individually or in the aggregate, are not reasonably expected to have a Material
Adverse Effect on the Representing Party. Each of such Environmental Permits is
in full force and effect, and each of the Representing Party and its
Subsidiaries is in compliance with the terms and conditions of all such
Environmental Permits and with all applicable Environmental Laws, except for
such failures to be in full force and effect or to be in compliance which,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on the Representing Party.
(b) There are no Environmental Claims pending, or to the knowledge of
the Representing Party, threatened, against the Representing Party or any of its
Subsidiaries, or, to the knowledge of the Representing Party, any Person whose
liability for any such Environmental Claim the Representing Party or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law for which reserves have not been established in accordance with
GAAP, that, individually or in the aggregate, would have a Material Adverse
Effect on the Representing Party.
(c) There are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
threatened release or presence of any Hazardous Material, that would form the
basis of any Environmental Claim against the Representing Party or any of its
Subsidiaries, or for which the Representing Party or any of its Subsidiaries is
liable, except for such liabilities which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on the Representing
Party.
(d) As used in this Agreement: (i) "Environmental Claim" means any
claim, action, lawsuit or proceeding by any Person which seeks to impose
liability (including, without limitation, liability for investigatory costs,
cleanup costs, governmental response costs, natural resources, damages, property
damages, personal injuries or penalties) arising out of, based on or resulting
from (A) the presence, or release or threatened release, of any Hazardous
Materials at any location, whether or not owned or operated by the Representing
Party or any of its Subsidiaries, or (B) circumstances which would give rise to
any violation, or alleged violation, of any Environmental Law; (ii)
"Environmental Law" means any law or order of any Governmental Entity relating
to (A) the generation, treatment, storage, disposal, use, handling,
manufacturing, transportation or shipment of, or (B) the environment or to
emissions, discharges, releases or threatened releases of, Hazardous Materials,
into the environment; (iii) "Hazardous Materials" means (A) any petroleum or
petroleum products, radioactive materials or friable asbestos; (B) any chemicals
or other materials or substances which are now defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
or "toxic pollutants" under any Environmental Law; and (C) pesticides.
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Section 3.8 Litigation. Except as set forth at ss.3.8 of the Company's
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the Representing Party's knowledge, threatened
against the Representing Party, its Subsidiaries or any of its assets or
properties which (a) has had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Representing
Party or its Subsidiaries, or (b) questions the validity of this Agreement or
any action to be taken by the Representing Party in connection with the
consummation of the transactions contemplated hereby or could otherwise prevent
or materially delay the consummation of the transactions contemplated by this
Agreement. The Representing Party and its Subsidiaries are not subject to any
outstanding order, writ, injunction or decree which has had or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Representing Party and its Subsidiaries. There is no action, suit,
proceeding or investigation pending or, to the Representing Party's knowledge,
threatened against any current or former officer, director, employee,
consultant, contractor or agent of the Representing Party (in his or her
capacity as such) which gives rise or could reasonably be expected to give rise
to a claim for contribution or indemnification against the Representing Party.
Section 3.9 Permits. The Representing Party holds, and has at all times
held, all permits, licenses, variances, exemptions, orders, and approvals of all
Governmental Entities necessary for the lawful conduct of its business (the
"Permits"), except for such Permits the absence of which would not reasonably be
expected to have a Material Adverse Effect on the Representing Party. The
Representing Party is in material compliance with the terms of the Representing
Party Permits. No investigation or review by any Governmental Entity in respect
of the Representing Party is pending or, to the Representing Party's knowledge,
threatened, nor has the Representing Party received notice from any Governmental
Entity of its intention to conduct the same.
Section 3.10 Employee Plans.
(a) Section 3.10(a) of the Representing Party's Disclosure Schedule
sets forth a true, correct and complete list of:
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(i) all "employee benefit plans," as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which
the Representing Party has any obligation or liability, contingent or otherwise
(the "Benefit Plans");
(ii) all employees, consultants and independent contractors of the
Representing Party; and
(iii) all employment, consulting, termination, profit sharing,
severance, change of control, individual compensation or indemnification
agreements, and all bonus or other incentive compensation, deferred
compensation, salary continuation, disability, stock award, stock option, stock
purchase, educational assistance, legal assistance, club membership, employee
discount, employee loan, credit union or vacation agreements, policies or
arrangements under which the Representing Party has any obligation or liability
(contingent or otherwise) in respect of any current or former officer, director,
employee, consultant or contractor of the Representing Party (the "Employee
Arrangements").
Benefit Plans and Employee Arrangements which cover current or former employees,
consultants, contractors, officers, or directors (or their equivalent) of the
Representing Party are separately identified, by the applicable country, on
Section 3.10(a) of the Representing Party's Disclosure Schedule.
(b) None of the Benefit Plans or Employee Arrangements is subject to
Title IV of ERISA, constitutes a defined benefit retirement plan or is a
multi-employer plan described in Section 3(37) of ERISA, and the Representing
Party does not have any obligation or liability (contingent or otherwise) in
respect of any such plans. The Company is not a member of a group of trades or
businesses under common control or treated as a single employer pursuant to
Section 414 of the Code.
(c) The Benefit Plans and Employee Arrangements have been maintained
and administered in all material respects in accordance with their terms and
applicable Laws. In particular, no individual who has performed services for the
Representing Party has been improperly excluded from participation in any
Benefit Plan or Employee Arrangement.
(d) There are no pending or, to the Representing Party's knowledge,
threatened actions, claims, or proceedings against or relating to any Benefit
Plan or Employee Arrangement (other than routine benefit claims by persons
entitled to benefits thereunder), and, to the knowledge of the Representing
Party, there are no facts or circumstances which could form the basis for any of
the foregoing.
(e) The Representing Party does not have any obligation or liability
(contingent or otherwise) to provide post-retirement life insurance or health
benefits coverage for current or former officers, directors, employees,
consultants or contractors of the Representing Party except (i) as may be
required under Part 6 of Title I of ERISA at the sole expense of the participant
or the participant's beneficiary, (ii) a medical expense reimbursement account
plan pursuant to Section 125 of the Code, or (iii) through the last day of the
calendar month in which the participant terminates employment with the
Representing Party.
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(f) None of the assets of any Benefit Plan is stock of the Representing
Party or any of its affiliates, or property leased to or jointly owned by the
Representing Party or any of its affiliates.
(g) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any employee, consultant or contractor (current, former,
or retired) of the Representing Party, (ii) increase any benefits under any
Benefit Plan or Employee Arrangement or (iii) result in the acceleration of the
time of payment of, vesting of, or other rights in respect of any such benefits
(except as which may be required by the partial or full termination of any
Benefit Plan intended to be qualified under Section 401 of the Code).
Section 3.11 Labor Matters.
(a) The Representing Party is not a party to any labor or collective
bargaining agreement, and no employees of the Representing Party are represented
by any labor organization. Within the preceding three years, there have been no
representation or certification proceedings, or petitions seeking a
representation proceeding, pending or, to the Representing Party's knowledge,
threatened in writing to be brought or filed with the National Labor Relations
Board or any other labor relations tribunal or authority. Within the preceding
three years, to the Representing Party's knowledge, there have been no
organizing activities involving the Representing Party in respect of any group
of employees of the Representing Party.
(b) There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances or other material labor disputes pending or,
to the knowledge of the Representing Party, threatened against or involving the
Representing Party. There are no unfair labor practice charges, grievances or
complaints pending or, to the Representing Party's knowledge, threatened by or
on behalf of any employee or group of employees of the Representing Party and,
to the knowledge of the Representing Party, there are no facts or circumstances
which could form the basis for any of the foregoing.
(c) There are no complaints, charges or claims against the Representing
Party pending or, to the Representing Party's knowledge, threatened to be
brought or filed with any Governmental Entity or arbitrator based on, arising
out of, in connection with, or otherwise relating to the employment or
termination of employment of any individual by the Representing Party, and, to
the knowledge of the Representing Party, there are no facts or circumstances
which could form the basis for any of the foregoing.
(d) The Representing Party is in material compliance with all Laws
relating to the employment of labor, including all such Laws relating to wages,
hours, the Worker Adjustment and Retraining Notification Act, as amended
("WARN"), collective bargaining, discrimination, civil rights, safety and
health, workers' compensation and the collection and payment of withholding
and/or Social Security Taxes and any similar Tax.
(e) There has been no "mass layoff" or "plant closing" as defined by
WARN in respect of the Representing Party within the six months prior to the
date hereof.
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Section 3.12 Absence of Certain Changes or Events.
Since the end of the period covered by each Party's audited financial
statements provided under this Agreement, (i) the businesses of the Representing
Party and its Subsidiaries have been conducted in all material respects in the
ordinary course and (ii) there has not been:
(a) a material adverse change in the assets, liabilities, business,
results of operations, condition (financial or otherwise) or prospects of the
Representing Party and its Subsidiaries, taken as a whole, or any event,
occurrence or development which has had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Representing
Party and its Subsidiaries, taken as a whole;
(b) any declaration, setting aside or payment of any dividend or other
distribution in respect of any shares of capital stock of the Representing
Party, or any repurchase, redemption or other acquisition by the Representing
Party of any Representing Party securities; (c) any incurrence or assumption by
the Representing Party of any indebtedness for borrowed money (or any renewals,
replacements, or extensions that do not increase the aggregate commitments
thereunder) except (i) in the ordinary and usual course of business consistent
with past practice or (ii) in connection with any capital expenditure permitted
by Section 4.1 or Section 4.2, as applicable, or (iii) any guarantee,
endorsement, or other incurrence or assumption of liability (whether directly,
contingently or otherwise) by the Representing Party for the obligations of any
other person;
(d) any creation or assumption by the Representing Party of any
material Lien on any material asset of the Representing Party other than
Permitted Liens;
(e) any making of any loan, advance or capital contribution to or
investment in any person by the Representing Party other than loans or advances
to employees, contractors or consultants of the Representing Party made in the
ordinary and usual course of business consistent with past practice;
(f) (i) any contract or agreement entered into by the Representing
Party on or prior to the date hereof relating to any material acquisition or
disposition of any assets or business or (ii) any modification, amendment,
assignment, termination or relinquishment by the Representing Party of any
contract, license or other right (including, any insurance policy naming it as a
beneficiary or a loss payable payee) that does or would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Representing Party, other than those contemplated by this Agreement;
(g) any (i) grant of any severance or termination pay to any director,
officer, employee, consultant or contractor of the Representing Party; (ii)
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer, employee, consultant or contractor of the Representing Party; (iii)
increase in benefits payable under any existing severance or termination pay
policies or employment agreements; or (iv) increase in compensation, bonus or
other benefits payable to directors, officers, employees, consultants or
contractors of the Representing Party other than, in the case of clause (iv)
only, increases prior to the date hereof in compensation, bonus or other
benefits payable to employees, consultants or contractors of the Representing
Party in the ordinary and usual course of business consistent with past practice
or merit increases in salaries of employees, consultants or contractors at
regularly scheduled times in customary amounts consistent with past practices;
- 15 -
(h) any adoption, entering into, amendment, alteration or termination
of (partially or completely) any Benefit Plan or Employee Arrangement except as
contemplated by this Agreement or to the extent required by applicable Law;
(i) any (i) making or revoking of any material election relating to
Taxes (as hereinafter defined), (ii) settlement or compromise of any material
claim, action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to Taxes, or (iii) change to any material methods of
reporting income or deductions for federal income tax purposes;
(j) any capital expenditures in excess of $25,000 individually and in
excess of $100,000 in the aggregate;
(k) any lease, license or grant to any Person of any rights in any of
the Representing Party's assets or properties;
(l) any amendment of the certificate of incorporation or bylaws of the
Representing Party;
(m) any sufferance of any material damage, destruction or loss (whether
or not covered by insurance) to any material assets of the Representing Party;
or
(n) any strike, slowdown or demand for recognition by a labor
organization by or with respect to any of the employees of the Representing
Party.
Section 3.13 Tax Matters.
(a) For purposes of this Agreement: (i) "Taxes" means any and all
federal, state, local, foreign or other taxes of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation or
net worth, and taxes or other charges in the nature of excise, withholding, ad
valorem or value added, and (ii) "Tax Return" means any return, report or
similar statement (including the attached schedules) required to be filed with
respect to any Tax, including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
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(b) All federal, state, local and foreign Tax Returns required to be
filed by or on behalf of the Representing Party, each affiliated, combined,
consolidated or unitary group of which the Representing Party is a member (an
"Affiliated Group") have been timely filed or requests for extensions have been
timely filed and any such extension has been granted and has not expired, and
all such filed Tax Returns are complete and accurate except to the extent any
failure to file or any inaccuracies in filed Tax Returns would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect on
the Representing Party. All Taxes due and owing by the Representing Party or any
Representing Party's Affiliated Group, including estimates and withheld Taxes,
have been paid, or adequately reserved in accordance with GAAP, except to the
extent any failure to pay or reserve for would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on the
Representing Party. There is no audit or examination in process or pending and
there has been no notification of any request for such audit or other
examination and there is no deficiency, refund litigation, proposed adjustment
or matter in controversy with respect to any Taxes due and owing by the
Representing Party or any Representing Party's Affiliated Group which if
determined adversely would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Representing Party. All
assessments for Taxes due and owing by the Representing Party or any
Representing Party's Affiliated Group with respect to completed and settled
examinations or concluded litigation have been paid, except to the extent that
any failures to pay would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Representing Party.
(c) The Representing Party has not (i) entered into a closing agreement
or other similar agreement with a taxing authority relating to Taxes of the
Representing Party or any Representing Party's Affiliated Group with respect to
a taxable period for which the statute of limitations is still open, or (ii)
with respect to U.S. federal income Taxes, granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any income Tax, in either case, that is still outstanding. There are no Liens
relating to material Taxes upon the assets of the Representing Party or any
Representing Party's Affiliated Group other than Liens relating to Taxes not yet
due and Liens that would not, individually or in the aggregate, have a Material
Adverse Effect on the Representing Party. Neither the Representing Party nor any
Representing Party's Affiliated Group is a party to or is bound by any Tax
sharing agreement, Tax indemnity obligation or similar agreement in respect of
Taxes (other than with respect to agreements solely between or among members of
the consolidated group of which the Representing Party is the common parent and
agreements and obligations that would not, individually or in the aggregate,
have a Material Adverse Effect on the Representing Party).
(d) Neither the Representing Party nor any Representing Party's
Affiliated Group has taken any action or knows of any fact, agreement, plan or
other circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(e) Neither the Representing Party nor any Affiliated Group has
requested or received any private letter ruling from the Internal Revenue
Service or comparable rulings from other taxing authorities.
(f) Neither the Representing Party nor any member of any Affiliated
Group has any employment, severance or termination agreements, other
compensation arrangements, or Benefit Plans currently in effect which provide
for the payment of any amount (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by this Agreement
that individually or collectively (either alone or upon the occurrence of any
additional or subsequent event), could give rise to a payment which is
nondeductible by reason of Section 280G of the Code.
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(g) Neither the Representing Party nor any member of any Affiliated
Group has filed any consent agreement under Section 341(f) of the Code or agreed
to have Section 341(f)(4) applied to any disposition of assets owned by the
Representing Party or any Affiliated Group.
(h) Neither the Representing Party nor any member of any Affiliated
Group has been at any time a United States Real Property Holding Corporation
within the meaning of Section 897(c)(2) of the Code.
Section 3.14 Absence of Questionable Payments. Neither the Representing
Party nor, to the Representing Party's knowledge, any director, officer, agent,
employee, consultant, contractor or other person acting on behalf of the
Representing Party, has used any corporate or other funds for unlawful
contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others or
established or maintained any unlawful or unrecorded funds in violation of the
Foreign Corrupt Practices Act of 1977, as amended, or any other domestic or
foreign Law. Neither the Representing Party nor, to the Representing Party's
knowledge, any director, officer, agent, employee, consultant, contractor or
other person acting on behalf of the Representing Party, has accepted or
received any unlawful contributions, payments, gifts or expenditures.
Section 3.15 Title and Related Matters. The Representing Party or one
of its Subsidiaries has good and valid title to, or a valid leasehold or
contractual interest in, all of the properties and assets reflected in the
latest balance sheet included, in the case of the Company in the Financial
Statements and, in the case of PCA, in the SEC Reports, or acquired after the
date thereof (except for properties or assets sold or otherwise disposed of
since the date thereof), free and clear of all Liens, statutory Liens securing
payments not yet due or delinquent or the validity of which is being contested
in good faith by appropriate proceedings, and such imperfections or
irregularities in title that do not materially and adversely affect the current
use of the properties or assets subject thereto or affected thereby, affect the
ability to convey title thereto or otherwise materially impair the business
operations currently conducted at such properties. As of the date hereof,
Section 3.15 of the Representing Party's Disclosure Schedule contains a complete
and correct list of all real property owned or leased by the Representing Party
or any of its Subsidiaries, and a complete and correct list of each title
insurance policy insuring title to any of such real properties.
Section 3.16 Material Contracts.
(a) Company Contracts.
(i) Section 3.16 of the Company Disclosure sets forth a list of
all agreements the Company would be required to file as material contracts under
Item 601 of Regulation S-K were the Company subject to the Exchange Act and the
disclosure requirements of Regulation S-K (the "Company Material Contracts").
The Company has heretofore made available to PCA true, correct and complete
copies of all Company Material Contracts. The Company is not a party to nor
bound by any severance or other agreement with any employee, consultant or
contractor 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.
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(ii) Each of the Company Material Contracts constitutes the valid
and legally binding obligation of the Company, enforceable in accordance with
its terms, and is in full force and effect, except as may be limited by (A)
bankruptcy laws and other similar laws affecting creditors' rights generally and
(B) general principles of equity. The Company is not in breach or default in any
material respects of any provisions of any Company Material Contract and, to the
Company's knowledge, no event has occurred which with notice or lapse of time
would constitute a material breach or default by the Company or permit
termination, modification or acceleration thereunder, and which with respect to
each of the foregoing, could not be timely cured by the Company. The Company
does not have any knowledge of any termination or material breach of anticipated
termination or material breach by the other parties to any Company Material
Contract or commitment to which it is a party or to which any of its assets are
subject.
(iii) No party to any such Company Material Contract has given
notice to the Company of or made a claim against the Company in respect of any
breach or default thereunder.
(iv) No terms and conditions of any Company Material Contract or
other arrangement or understanding between the Company and any other Person in
effect on the date of this Agreement prevent, delay or materially restrict the
Company's ability to deploy any material portion of its assets or resources as
it deems appropriate, and after the Closing shall prevent, delay or materially
restrict the Company's ability to deploy any material portion of its assets or
resources as it deems appropriate.
(b) PCA Contracts
(i) The SEC Reports contain true and accurate copies of all of the
agreements required to be filed as material contracts under Item 601 of
Regulation S-K under the Securities Act (the "PCA Material Contracts"). PCA is
not a party to nor bound by any severance or other agreement with any employee,
consultant or contractor 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.
(ii) Each of the PCA Material Contracts constitutes the valid and
legally binding obligation of PCA, enforceable in accordance with its terms, and
is in full force and effect, except as may be limited by (A) bankruptcy laws and
other similar laws affecting creditors' rights generally and (B) general
principles of equity. PCA is not in breach or default in any material respects
of any provisions of any PCA Material Contract and, to PCA's knowledge, no event
has occurred which with notice or lapse of time would constitute a material
breach or default by PCA or permit termination, modification or acceleration
thereunder, and which with respect to each of the foregoing, could not be timely
cured by PCA. PCA does not have any knowledge of any termination or material
breach or anticipated termination or material breach by the other parties to any
PCA Material Contract or commitment to which it is a party or to which any of
its assets are subject.
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(iii) No party to any such PCA Material Contract has given notice
to PCA of or made a claim against PCA in respect of any breach or default
thereunder.
(iv) No terms and conditions of any PCA Material Contract or other
arrangement or understanding between PCA and any other Person in effect on the
date of this Agreement prevent, delay or materially restrict PCA's ability to
deploy any material portion of its assets or resources as it deems appropriate,
and after the Closing shall prevent, delay or materially restrict PCA's ability
to deploy any material portion of its assets or resources as it deems
appropriate. Section 3.17 Insurance. Section 3.17 of the Representing Party's
Disclosure Schedule sets forth a true and complete list and brief summary
description (including information on the premiums payable in connection
therewith and the scope and amount of the coverage provided thereunder) of
directors and officers liability and general liability insurance policies
maintained by the Representing Party. Such policies have been issued by insurers
which, to the Representing Party's knowledge, are reputable and financially
sound and provide coverage for the operations conducted by the Representing
Party of a scope and coverage consistent with customary industry practice. All
such policies are in full force and effect and no notice of cancellation has
been given with respect to any such policy. All premiums due thereon have been
paid in a timely manner. There are no pending claims or, to the knowledge of the
Representing Party, threatened claims, under any of the Representing Party's
insurance policies.
Section 3.18 Subsidies. No grants, subsidies or similar arrangements
exist directly or indirectly between or among the Representing Party, on the one
hand, and any domestic or foreign Governmental Entity or any other person, on
the other hand. The Representing Party has not requested, sought, applied for or
entered into any grant, subsidy or similar arrangement directly or indirectly
from or with any domestic or foreign Governmental Entity or any other person.
Section 3.19 Intellectual Property.
(a) For purposes of this Agreement, "Intellectual Property" means:
(i) all issued patents, reissued or reexamined patents, revivals
of patents, utility models, certificates of invention, registrations of patents
and extensions thereof, regardless of country or formal name (collectively,
"Issued Patents");
(ii) all published or unpublished nonprovisional and provisional
patent applications, reexamination proceedings, invention disclosures and
records of invention (collectively "Patent Applications" and, with the Issued
Patents, the "Patents");
(iii) all copyrights, copyrightable works, semiconductor
topography and mask work rights, including all rights of authorship, use,
publication, reproduction, distribution, performance transformation, moral
rights and rights of ownership of copyrightable works, semiconductor topography
works and mask works, and all rights to register and obtain renewals and
extensions of registrations, together with all other interests accruing by
reason of international copyright, semiconductor topography and mask work
conventions (collectively, "Copyrights");
- 20 -
(iv) common law trademarks, registered trademarks, applications
for registration of trademarks, common law service marks, registered service
marks, applications for registration of service marks, trade names, registered
trade names and applications for registrations of trade names and trade dress
(collectively, "Trademarks");
(v) all technology, ideas, inventions, designs, proprietary
information, manufacturing and operating specifications, know-how, formulae,
trade secrets, technical data, computer programs, hardware, software and
processes related to the business of the Representing Party as such business is
currently conducted and as its business is proposed to be conducted;
(vi) all domain names registered by the Representing Party; and
(vii) all other intangible intellectual property assets,
properties and rights (whether or not appropriate steps have been taken to
protect, under applicable law, such other intangible assets, properties or
rights).
(b) The Representing Party owns and has good and marketable title to,
or possesses legally enforceable rights to use, all Intellectual Property used
or currently proposed to be used in the business of the Representing Party as
currently conducted or as proposed to be conducted by the Representing Party
(the "Representing Party's Intellectual Property"), free and clear of all liens,
claims or encumbrances. The Representing Party's Intellectual Property
constitutes all of the Intellectual Property necessary to enable the
Representing Party to conduct its business as such business is currently being
conducted and as its business is proposed to be conducted. No current or former
officer, director, stockholder, employee, consultant or independent contractor
has asserted any right, claim or interest in or with respect to any Representing
Party Intellectual Property and the Representing Party is not aware of a basis
for any such claim. There is no unauthorized use, disclosure or misappropriation
of any Representing Party Intellectual Property by any employee or, to the
Representing Party's knowledge, former employee of the Representing Party or, to
the Representing Party's knowledge, by any other third party. There are no
royalties, fees or other payments payable by the Representing Party to any third
person under any written or oral contract or understanding by reason of the
ownership, use, sale or disposition of Representing Party Intellectual Property.
(c) To the knowledge of the Representing Party, there is no
unauthorized use, disclosure, infringement or misappropriation of any
Representing Party Intellectual Property, including any license, sublicense and
other agreements to which the Representing Party is a party and pursuant to
which the Representing Party is authorized to use any Intellectual Property
owned by any third party, excluding "off the shelf" or other software at a cost
not exceeding $10,000 and widely available through regular commercial
distribution channels on standard terms and conditions ("Third Party
Intellectual Property") by any third party, including any employee or former
employee of the Representing Party. Other than in respect of agreements with the
Representing Party's officers and directors, the Representing Party has not
entered into any agreement to indemnify any other person against any charge of
infringement of any Intellectual Property, other than indemnification provisions
contained in standard sales or agreements to end users arising in the ordinary
course of business. There are no royalties, fees or other payments payable by
the Representing Party to any Person by reason of the ownership, use, sale or
disposition of Intellectual Property.
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(d) The Representing Party is not in breach of any license, sublicense
or other agreement relating to the Representing Party Intellectual Property or
Third Party Intellectual Property Rights. Neither the execution, delivery or
performance of this Agreement or any ancillary agreement contemplated hereby nor
the consummation of the Merger or any of the transactions contemplated by this
Agreement will contravene, conflict with or result in an infringement on the
Representing Party Intellectual Property, including any Third Party Intellectual
Property.
(e) All Patents, registered Trademarks, registered service marks and
registered Copyrights held by the Representing Party are valid and subsisting.
All maintenance and annual fees have been fully paid and all fees paid during
prosecution and after issuance of any patent comprising or relating to such item
have been paid in the correct entity status amounts. The Representing Party is
not infringing, misappropriating or making unlawful use of, or received any
notice or other communication (in writing or otherwise) of any actual, alleged,
possible or potential infringement, misappropriation or unlawful use of any
proprietary asset owned or used by any third party. There is no proceeding
pending or, to the Representing Party's knowledge, threatened nor has any claim
or demand been made, which challenges the legality, validity, enforceability or
ownership of any item of the Representing Party Intellectual Property or Third
Party Intellectual Property or alleges a claim of infringement of any Patents,
Trademarks, service marks, Copyrights or violation of any trade secret or other
proprietary right of any third party. The Representing Party has not brought a
proceeding alleging infringement of the Representing Party Intellectual Property
or breach of any license or agreement involving Intellectual Property against
any third party.
(f) All current and former officers and employees of the Representing
Party have executed and delivered to the Representing Party an agreement
(containing no exceptions or exclusions from the scope of its coverage)
regarding the protection of proprietary information and the assignment to the
Representing Party of any Intellectual Property arising from services performed
for the Representing Party by such persons. All current and former consultants
and independent contractors to the Representing Party involved in the
development, modification, marketing and servicing of the Representing Party's
products, and/or the Representing Party Intellectual Property have executed and
delivered to the Representing Party an agreement (containing no exceptions or
exclusions from the scope of its coverage) regarding the protection of
proprietary information and the assignment to the Representing Party of any
Intellectual Property arising from services performed for the Representing Party
by such persons. To the Representing Party's knowledge, no employee or
independent contractor of the Representing Party is in violation of any term of
any patent disclosure agreement or employment contract or any other contract or
agreement relating to the relationship of any such employee or independent
contractor with the Representing Party.
(g) The Representing Party has taken all commercially reasonable and
customary measures and precautions necessary to protect and maintain the
confidentiality of all the Representing Party Intellectual Property (except such
Representing Party Intellectual Property whose value would be unimpaired by
public disclosure) and otherwise to maintain and protect the full value of all
Intellectual Property it owns or uses. All Intellectual Property not otherwise
protected by Patents or Copyrights ("Confidential Information") owned by the
Representing Party used by or disclosed to a third party has been pursuant to
the terms of a written agreement between the Representing Party and such third
party.
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(h) No product liability claims have been communicated in writing to
or, to the Representing Party's knowledge, threatened against the Representing
Party.
(i) The Representing Party is not subject to any proceeding or
outstanding decree, order, judgment, or stipulation restricting in any manner
the use, transfer, or licensing thereof by the Representing Party, or which may
affect the validity, use or enforceability of such Representing Party
Intellectual Property. The Representing Party is not subject to any agreement
which restricts in any material respect the use, transfer, or licensing by the
Representing Party of the Representing Party Intellectual Property or
Representing Party Products.
Section 3.20 Minute Books; Stock Record Books. True and correct copies
of the Representing Party's minute books and, in the case of the Company, stock
record books have been made available to the other. The minute books of the
Representing Party contain true and complete originals or copies of all minutes
of meetings of and actions by the stockholders, Board of Directors and all
committees of the Board of Directors of the Representing Party, and accurately
reflect in all material respects all corporate actions of the Representing Party
which are required by law to be passed upon by the Board of Directors or
stockholders of the Representing Party. The stock record books accurately
reflect all transactions in shares of the Company's capital stock.
Section 3.21 Contribution of Assets, Assumption of Liabilities and
Distribution of Cool Classics, Inc. Common Stock. The contribution of all of the
tangible assets and intellectual property rights of PCA to Cool Classics, Inc.,
a Nevada corporation ("New PCA"), New PCA's assumption of substantially all the
liabilities of PCA except for up to $100,000 of liabilities of any kind
whatsoever (the "PCA Liabilities") and the distribution of the Common Stock of
Cool Classics, Inc. to certain PCA creditors in lieu of foreclosure (the
"Distribution") will be completed on or before the Effective Time (the
"Distribution Effective Time"). Such contribution shall not include, among other
items, all claims for refund of Taxes and other governmental charges of whatever
nature relating to the business of for periods prior to the Closing Date. The
amount of liabilities of any kind whatsoever remaining in PCA after the
Distribution Effective Time will not exceed the PCA Liabilities. The
Distribution will be effected in compliance with all applicable laws, including
without limitation the applicable provisions of the Delaware General Corporation
Law and any other applicable state laws. The consummation of the Distribution
will not require any consent, release, waiver or approval that would adversely
affect PCA. The consummation of the Distribution will not give rise to or
trigger the application of any right of any third party that has not been waived
by such party in a writing signed by it. The consummation of the Distribution
will not conflict with, or (with or without notice or lapse of time, or both)
result in a termination, breach, impairment or violation of, (a) any provision
of the Certificate of Incorporation or Bylaws of the PCA, (b) any note, bond,
lease, mortgage, indenture, license, franchise, permit, agreement, "PCA Material
Contract" (as defined in Section 3.16) or other instrument or obligation
(whether oral or in writing) to which PCA is or was a party or by which the PCA
is or was bound, or (c) any federal, state, local or foreign statute, Law,
concession, grant, franchise, Permit or other governmental authorization or
approval applicable to PCA or any of its Subsidiaries.
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Section 3.22 Bank Accounts; Powers of Attorney. Section 3.22 of the
Representing Party's Disclosure Schedule hereto sets forth a complete and
correct list showing: (a) all banks in which the Representing Party maintains a
bank account or safe deposit box (collectively, "Bank Accounts"), together with,
as to each such Bank Account, the account number, the names of all signatories
thereof and the authorized powers of each such signatory and, with respect to
each such safe deposit box, the number thereof and the names of all persons
having access thereto; and (b) the names of all persons holding powers of
attorney from the Representing Party, true and correct copies thereof which have
been delivered to the other.
Section 3.23 Disclosure. The representations and warranties by the
Representing Party in this Agreement and the statements contained in the
schedules, certificates and other writings furnished and to be furnished by the
Representing Party to the other party pursuant to this Agreement, when
considered as a whole and giving effect to any supplements or amendments thereof
prior to the time of signing on the date hereof, do not and will not contain any
untrue statement of a material fact and do not and will not omit to state any
material fact necessary to make the statements herein, in light of the
circumstances under which they were or shall be made, not misleading, it being
understood that as used in this Section 3.23 "material" means material to the
Representing Party and its Subsidiaries, taken as a whole. The Representing
Party has provided to the other copies of all contracts and agreements that can
be reasonably construed as material to the business of the Representing Party.
Section 3.24 Brokers or Finders.
(a) The Company represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor or other
firm or person is or will be entitled to any brokers' or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement; and the Company agrees to indemnify and hold PCA
harmless from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses asserted by any person on the
basis of any act or statement alleged to have made by such party or its
affiliates.
(b) PCA represents, as to itself, its Subsidiaries and its affiliates,
that no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any brokers' or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement; and PCA agrees to indemnify and hold the Company
harmless from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses asserted by any person on the
basis of any act or statement alleged to have been made by such party or its
affiliates.
ARTICLE IV
COVENANTS RELATED TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business of the Company. Except as contemplated
by this Agreement, during the period from the date hereof to the Effective Time,
the Company will conduct its operations in the ordinary and usual 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, use commercially reasonable efforts to preserve intact its current
business organizations, keep available the service of its current officers and
employees, preserve its relationships with customers, suppliers and others
having business dealings with it and preserve the goodwill of the Company
through the Effective Time. Without limiting the generality of the foregoing,
and except as otherwise expressly provided in this Agreement or in Schedule 4.1,
prior to the Effective Time, the Company will not, without the prior written
consent of PCA:
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(a) amend its certificate of incorporation or bylaws (or other similar
organizational or governing instruments), as each such document is in effect on
the date hereof;
(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 convertible into or exchangeable for any
stock or any equity equivalents (including, any stock options or stock
appreciation rights), except for: (i) the issuance or sale of Shares pursuant to
outstanding Company Stock Options; (ii) the issuance of Company Stock Options to
purchase up to an aggregate of 150,000 shares of Company Common Stock to
employees, consultants or directors pursuant to the Company's Stock Option Plans
and consistent with past practices; and (iii) the authorization for issuance(s)
after the Closing of the Merger of (x) up to 5,000,000 shares of PCA Common
Stock and (y) a warrant exercisable for up to an additional 1,000,000 shares of
PCA Common Stock to certain prospective financial investors (the "Investors")
(c) (i) split, combine or reclassify any shares of its capital stock;
(ii) 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; (iii) make any other actual, constructive or deemed distribution in
respect of any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as such; or (iv) redeem, repurchase or otherwise
acquire, directly or indirectly, any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities; (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 (other than customary loans or advances to
employees, consultants or contractors in the ordinary and usual course of
business consistent with past practice and in amounts not material to the maker
of such loan or advance); (iv) pledge or otherwise encumber shares of capital
stock of the Company; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any Lien thereupon, other
than as disclosed in the schedules hereto and Permitted Liens;
(f) (i) except as may be required by Law or as contemplated by this
Agreement, enter into, adopt or amend or terminate (partially or completely) any
Benefit Plan, Employee Arrangement (including, the repricing of any stock
options or the acceleration or vesting of any stock options), stock appreciation
right, restricted stock, performance unit, stock equivalent or stock purchase
agreement for the benefit or welfare of any director, officer, employee,
consultant or contractor in any manner, (ii) except as required under existing
agreements, increase in any manner the compensation or fringe benefits of any
director, officer, employee, consultant or contractor or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, the granting of stock appreciation rights or performance units) or
grant any completion bonuses or change of control payments in respect of the
Merger or that will be affected thereby; or (iii) hire, promote or change the
classification or status in respect of any employee or individual; provided,
however, that PCA shall not unreasonably withhold or delay any consent sought to
hire, promote or change the classification or status of any employee or
individual.
- 25 -
(g) acquire, sell, lease or dispose of any assets outside the ordinary
and usual course of business consistent with past practice or any assets which
in the aggregate are material to the Company, enter into any commitment or
transaction outside the ordinary and usual course of business consistent with
past practice or grant any exclusive distribution rights, except for any rights
that may be sold or granted in connection with the proposed transactions with
the Investors;
(h) 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;
(i) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(j) take any action (including, any action otherwise permitted by this
Section 4.2) that would prevent or impede the Merger from qualifying as a
"reorganization" under Section 368(a) of the Code;
(k) fail to comply in any material respect with any Law applicable to
the Company or its assets which would reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect on the Company;
(l) dispose of or permit to lapse any rights to the use of any patent,
trademark, trade name, copyright or other intangible asset that is material to
the Company, or dispose of or disclose to any Person any trade secret, formula,
process or know-how not theretofore a matter of public knowledge unless, in
respect of disclosure, such Person has executed a confidentiality agreement in
form acceptable to the Company;
(m) sell or dispose of any Company Intellectual Property;
(n) change any of the banking or safe deposit arrangements described in
Section 3.23 hereto, except in the ordinary course of business;
(o) fail to maintain its books, accounts and records in the usual,
regular and ordinary manner on a basis consistent with prior years; or
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(p) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Section 4.1(a) through Section 4.1(o) or any
action which would make any of the representations or warranties of the Company
contained in this Agreement untrue, incomplete or incorrect.
Section 4.2 Conduct of Business of PCA. Except as contemplated by this
Agreement, during the period from the date hereof to the Effective Time, PCA
will conduct its operations in the ordinary and usual 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, use commercially reasonable efforts to preserve intact its current
business organizations, keep available the service of its current officers and
employees, preserve its relationships with customers, suppliers and others
having business dealings with it and preserve the goodwill of PCA through the
Effective Time. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement or in Schedule 4.2, prior to the
Effective Time, PCA will not, without the prior written consent of Company:
(a) amend its certificate of incorporation or bylaws (or other similar
organizational or governing instruments), as each such document is in effect on
the date hereof;
(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 convertible into or exchangeable for any
stock or any equity equivalents (including, any stock options or stock
appreciation rights), except for the issuance or sale of PCA Common Stock
pursuant to outstanding PCA Stock Options, and except for the issuance of PCA
Stock Options to purchase up to an aggregate of no shares of PCA Common Stock to
employees, consultants and directors pursuant to PCA's Stock Option Plans and
consistent with past practices;
(c) (i) split, combine or reclassify any shares of its capital stock;
(ii) 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; (iii) make any other actual, constructive or deemed distribution in
respect of any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as such; or (iv) redeem, repurchase or otherwise
acquire, directly or indirectly, any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of PCA (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities; (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 (other than customary loans or advances to
employees, consultants or contractors in the ordinary and usual course of
business consistent with past practice and in amounts not material to the maker
of such loan or advance); (iv) pledge or otherwise encumber shares of capital
stock of PCA; or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any Lien thereupon, other than as
disclosed in the schedules hereto and Permitted Liens;
- 27 -
(f) (i) except as may be required by Law or as contemplated by this
Agreement, enter into, adopt or amend or terminate (partially or completely) any
Benefit Plan, Employee Arrangement (including, the repricing of any stock
options or the acceleration or vesting of any stock options), stock appreciation
right, restricted stock, performance unit, stock equivalent or stock purchase
agreement for the benefit or welfare of any director, officer, employee,
consultant or contractor in any manner, (ii) except as required under existing
agreements, increase in any manner the compensation or fringe benefits of any
director, officer, employee, consultant or contractor or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, the granting of stock appreciation rights or performance units) or
grant any completion bonuses or change of control payments in respect of the
Merger or that will be affected thereby; or (iii) hire, promote or change the
classification or status in respect of any employee or individual; provided,
however, that the Company shall not unreasonably withhold or delay any consent
sought to hire, promote or change the classification or status of any employee
or individual.
(g) acquire, sell, lease or dispose of any assets outside the ordinary
and usual course of business consistent with past practice or any assets which
in the aggregate are material to PCA, enter into any commitment or transaction
outside the ordinary and usual course of business consistent with past practice
or grant any exclusive distribution rights;
(h) 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;
(i) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(j) take any action (including, any action otherwise permitted by this
Section 4.2) that would prevent or impede the Merger from qualifying as a
"reorganization" under Section 368(a) of the Code;
(k) fail to comply in any material respect with any Law applicable to
PCA or its assets which would reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect on PCA;
(l) dispose of or permit to lapse any rights to the use of any patent,
trademark, trade name, copyright or other intangible asset that is material to
PCA, or dispose of or disclose to any Person any trade secret, formula, process
or know-how not theretofore a matter of public knowledge unless, in respect of
such disclosure, such Person has executed a confidentiality agreement in form
acceptable to PCA;
(m) sell or dispose of any PCA Intellectual Property;
(n) change any of the banking or safe deposit arrangements described in
Section 3.23 hereto, except in the ordinary course of business;
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(o) fail to maintain its books, accounts and records in the usual,
regular and ordinary manner on a basis consistent with prior years; or
(p) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Section 4.2(a) through Section 4.2(o) or any
action which would make any of the representations or warranties of PCA
contained in this Agreement untrue, incomplete or incorrect.
Section 4.3 Access to Information.
(a) Between the date hereof and the Effective Time, the Company and PCA
will each give the authorized representatives (including, counsel, financial
advisors and auditors) of the other reasonable access to all its employees,
consultants, contractors, plants, offices, warehouses and other facilities and
to all its books and records, will permit the other to make such inspections and
investigations as each may require. Each of the Company and PCA will cause its
officers to furnish the other with such financial and operating data and other
information in respect of its business, properties and personnel as each may
from time to time reasonably request, provided that no investigation pursuant to
this Section 4.3(a) shall affect or be deemed to modify any of the
representations or warranties made by each of the Company and PCA.
(b) Each of PCA and the Company will hold and will cause its authorized
representatives to hold in confidence all documents and information concerning
the other furnished in connection with the transactions contemplated by this
Agreement.
Section 4.4 Continuation of Insurance Coverage. From the date hereof to
the Closing, each of the Company and PCA shall keep in full force and effect
insurance coverage for its assets and operations comparable in amount and scope
to the coverage now maintained covering its assets and operations.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 PCA Written Consent. PCA shall take all action necessary
under all applicable Laws to obtain approval for the actions contemplated by
this agreement through action by written consent of its stockholders.
Section 5.2 Company Written Consent. The Company shall take all action
necessary under all applicable Laws to obtain approval for the actions
contemplated by this agreement through action by written consent of its
stockholders.
Section 5.3 Commercially Reasonable Efforts.
(a) Subject to the terms and conditions of this Agreement, each party
will use commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to consummate the Merger and the other
transactions contemplated by this Agreement. Neither the Company nor PCA will
take, agree to take or knowingly permit to be taken any action or do or
knowingly permit to be done anything in the conduct of the business of the
companies, or otherwise, which would be contrary to or in breach of any of the
terms or provisions of this Agreement.
- 29 -
(b) In furtherance and not in limitation of the covenants of the
parties contained in Section 5.1, each of PCA and the Company shall use
commercially reasonable efforts to resolve such objections, if any, as may be
asserted by a Governmental Entity or other person in respect of the transactions
contemplated hereby, including, without limitation, under any antitrust or other
Law, or by any Dissenting Stockholder in respect of Dissenting Shares. In
connection with the foregoing, if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement, each of PCA and the Company shall cooperate in all respects with each
other and use its respective commercially reasonable efforts to contest and
resist any such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction, or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 5.3(b) shall (i) limit a party's right to terminate this
Agreement pursuant to Section 7.2 so long as such party has up to then complied
in all material respects with its obligations under this Section 5.3(b), or (ii)
require PCA to dispose or hold separate any part of its or the Company's
business or operations (or a combination of PCA's and the Company's business or
operations), or comply with any other material restriction affecting its
business or operations.
(c) The Company and PCA agree that in connection with any litigation
which may be brought against the Company or its directors or PCA or its
directors relating to the transactions contemplated hereby, the party subject to
such litigation will keep the other, and any counsel which the other may retain
at its own expense, informed of the course of such litigation, to the extent the
other is not also a party thereto. The parties agree that they will consult with
each other prior to entering into any settlement or compromise of any such
litigation, and that no such settlement or compromise will be entered into by
either party without the prior written consent of the other party, which consent
shall not be unreasonably withheld.
Section 5.4 Public Announcements. Each of PCA and the Company will
consult with one another before issuing any press release or otherwise making
any public statements in respect of the transactions contemplated by this
Agreement, including, the Merger, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable Law, as determined by PCA or the Company, as the case may
be, a copy of which shall be sent simultaneously to the other party upon such
release.
Section 5.5 Employee Matters.
(a) PCA will cause the Surviving Corporation to honor the obligations
of the Company under the provisions of all Benefit Plans and Employee
Arrangements set forth in the Company's Disclosure Schedule, subject to PCA's
right to amend or terminate any such Benefit Plan or Employee Arrangement in
accordance with its terms. After the Effective Time, the employees of the
Company will be eligible to participate in the Company's Benefit Plans or, if so
determined by PCA, PCA's applicable Benefit Plans, as such plans may be in
effect from time to time, and, at PCA's sole discretion, will become employees
of PCA. With respect to each such employee of the Company, service with the
Company may be counted for purposes of determining periods of eligibility to
participate or to vest in benefits under any applicable Benefit Plan of PCA. At
PCA's sole discretion, administrative functions, including but not limited to
payroll processing, may be transferred to processors of PCA's choosing.
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(b) At the Closing, PCA may cause the Surviving Corporation to deposit
with an escrow agent reasonably acceptable to all parties hereto and pursuant to
the terms of a mutually acceptable escrow agreement, an amount sufficient to pay
any amount due pursuant to retention agreements disclosed in the PCA Disclosure
Schedule.
Section 5.6 Affiliate Agreements. Section 5.6 of the Company Disclosure
Schedule sets forth a list of all persons who are, and all persons who to the
Company's knowledge will be at the Closing Date, "affiliates" of the Company for
purposes of Rule 145 under the Securities Act. The Company will cause such list
to be updated promptly through the Closing Date. No later than 15 days after the
date of this Agreement (but in any event prior to the Effective Time), the
Company shall cause its "affiliates" to deliver to PCA an Affiliate Agreement in
substantially the form attached hereto as Exhibit C.
Section 5.7 Lock-up Agreements. Section 5.7 of the PCA Disclosure
Schedule sets forth a list of certain of PCA's officers, directors and
stockholders who hold a substantial number of shares of PCA Common Stock. Prior
to the Effective Time, PCA shall cause all such individuals or entities to
deliver to PCA a Lock-up Agreement.
Section 5.8 Antitakeover Statutes. If any antitakeover statute is or
may become applicable to the Merger, each of PCA and the Company shall take such
actions as are necessary so that the transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to eliminate or minimize the effects of any antitakeover
statute on the Merger.
Section 5.9 Third Party Consents.
(a) Each of PCA and the Company shall use its commercially reasonable
efforts to obtain at the earliest practicable date all consents of third parties
(including, but not limited to, such as are listed on Section 3.3 of the Company
Disclosure Schedule or PCA Disclosure Schedule, as applicable) and Governmental
Entities necessary to the consummation of the transactions contemplated hereby
(the "Third Party Consents") and will provide to the other parties hereto copies
of each such Third Party Consent promptly after it is obtained. Each of PCA and
the Company agrees to cooperate fully with the other parties hereto in
connection with the obtaining of the Third Party Consents; provided, however,
that no party shall be required to pay any additional sums to secure such Third
Party Consents of the other parties hereto.
(b) In furtherance and not in limitation of the covenants of the
parties contained in Section 5.10(a), if any administrative or judicial action
or proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement, each of PCA and the Company shall cooperate in all respects with each
other and use its respective commercially reasonable efforts to contest and
resist any such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgement, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this Agreement.
- 31 -
(c) If any objections are asserted with respect to the transactions
contemplated hereby or if any suit is instituted by any Governmental Entity or
any private party challenging any of the transactions contemplated hereby as
violative of any regulatory Law, each of PCA and the Company shall use its
commercially reasonable efforts to resolve any such objections or challenge as
such Governmental Entity or private party may have to such transactions under
such regulatory Law so as to permit consummation of the transactions
contemplated by this Agreement.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the party being benefited thereby, to the extent
permitted by applicable Law:
(a) This Agreement shall have been approved and adopted by the
Company's stockholders and by PCA's stockholders.
(b) The Company and PCA shall have timely obtained from each
Governmental Entity all approvals, waivers and consents, if any, necessary for
consummation of or in connection with the transactions contemplated hereby,
including such approvals, waivers and consents as may be required under the
Securities Act and under blue sky laws, if any, except for such authorizations,
consents or approvals, the failure of which to have been made or obtained does
not and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(c) There shall not be in effect any Law of any Governmental Entity of
competent jurisdiction restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement and no
Governmental Entity shall have instituted any proceeding which continues to be
pending seeking any such Law.
Section 6.2 Conditions to the Obligations of PCA. The obligations of
PCA to consummate the transactions contemplated by this Agreement are subject to
the fulfillment at or prior to the Effective Time of each of the following
additional conditions, any or all of which may be waived in whole or part by PCA
to the extent permitted by applicable Law:
(a) The representations and warranties of the Company contained herein
shall be true (for the purposes of this Section 6.2(a), without regard to any
materiality or Material Adverse Effect qualifier contained therein), except
where the failure to be true, individually or in the aggregate, has not had or
is not reasonably expected to have a Material Adverse Effect on the Company, in
each case on and as of the Closing (except for representations and warranties
made as of a specified date, which shall speak only as of the specified date);
- 32 -
(b) The Company shall have performed or complied in all material
respects with all agreements and conditions contained herein required to be
performed or complied with by it prior to or at the time of the Closing; or
(c) The Company shall have delivered to PCA a certificate, dated the
date of the Closing, signed by the President of the Company (but without
personal liability thereto), certifying as to the fulfillment of the conditions
specified in Section 6.2(a) and Section 6.2(b).
(d) The Company shall wire Two Hundred Forty Thousand Dollars
($240,000) to an account designated by Xxxxxx X. Xxxxx, Esq. of Xxxxx & Schloss
LLP to discharge agreed-upon liabilities at a time no later than forty-eight
(48) hours subsequent to full and complete compliance by the respective parties
with all conditions listed in this Article VI, including compliance with those
conditions listed in Section 3.3(b).
Section 6.3 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Effective Time of
each of the following conditions, any or all of which may be waived in whole or
in part by the Company to the extent permitted by applicable Law:
(a) The representations and warranties of PCA contained herein shall be
true (for the purposes of this Section 6.3(a), without regard to any materiality
or Material Adverse Effect qualifier contained therein), except where the
failure to be true, individually or in the aggregate, has not had or is not
reasonably expected to have a Material Adverse Effect on PCA, in each case on
and as of the Closing Date (except for representations and warranties made as of
a specified date, which shall speak only as of the specified date).
(b) PCA shall have performed or complied in all material respects with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
(c) PCA shall have delivered to the Company a certificate, dated the
date of the Closing, signed by an executive officer of PCA (but without personal
liability thereto), certifying as to the fulfillment of the conditions specified
in Section 6.3(a) and Section 6.3(b).
(d) The Company shall have completed to its satisfaction, as determined
by the Company in its sole discretion, a due diligence examination of PCA and
its assets and business.
(e) Prior to the Closing, there shall not have occurred any Material
Adverse Effect on PCA.
- 33 -
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
Section 7.1 Termination by Mutual Agreement. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the Company
Stockholder Approval and PCA Stockholder Approval referred to in Section 6.1(a),
by mutual written consent of the Company and PCA by action of their respective
boards of directors.
Section 7.2 Termination by either PCA or the Company. This Agreement
may be terminated and the Merger may be abandoned at any time prior to the
Effective Time by action of the board of directors of either PCA or the Company
if:
(a) the Merger shall not have been consummated by June 30, 2002,
whether such date is before or after the date of approval of the Merger by the
Company Stockholder Approval and PCA Stockholder Approval (the "Termination
Date"); provided, however, that if any condition of Closing set forth in Section
6.1 that remains reasonably capable of satisfaction has not been fulfilled or
waived prior to June 30, 2002, the Termination Date shall be automatically
extended to July 31, 2002;
(b) after the Company convenes and holds the Company Stockholders'
Meeting and certifies the vote with respect to the Merger, the Company
Stockholder Approval shall not have been obtained;
(c) the PCA Stockholder Approval shall not have been obtained;
(d) Xxx Cool Collectibles, Inc. has not entered into a Lock-up
Agreement;
(e) Stockholders of the Company possessing the authority to vote, in
the aggregate, greater than 10% of each class of the Company's capital stock,
determined on an as-converted to Common Stock basis, elect to become Dissenting
Stockholders; or
(f) any Law permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable (whether before
or after the approval of the Merger by the Company Stockholder Approval and PCA
Stockholder Approval); provided, however, that the right to terminate this
Agreement pursuant to this Section 7.2 shall not be available to any party that
has breached in any material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the occurrence of the failure
of the Merger to be consummated.
Section 7.3 Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the Company
Stockholder Approval and PCA Stockholder Approval referred to in Section 6.1(a),
by action of the Company board of directors, if:
(a) (i) any of PCA's representations and warranties shall have been
inaccurate as of the date of this Agreement, such that the condition set forth
in Section 6.3 would not be satisfied, or (ii) if (A) any of PCA's
representations and warranties become inaccurate as of a date subsequent to the
date of this Agreement (as if made on such subsequent date), such that the
condition set forth in Section 6.3 would not be satisfied and (B) such
inaccuracy has not been cured by PCA within ten business days after its receipt
of written notice thereof and remains uncured at the time notice of termination
is given, or (iii) PCA's representation and warranties with respect to its
capitalization are inaccurate such that there are shares or rights to obtain
shares outstanding in addition to those initially disclosed, or (iv) any of
PCA's covenants contained in this Agreement shall have been breached, such that
the condition set forth in Section 6.3 would not be satisfied;
- 34 -
(b) the board of directors of PCA shall have withdrawn its
recommendation of this Agreement or modified the recommendation in a manner
adverse to the Company or shall have resolved to do the foregoing;
(c) the Company's due diligence examination of PCA and its assets and
business reveals information that varies materially or adversely from the
understandings upon which the Company agreed to proceed with the transactions
contemplated by this Agreement, as determined by the Company in its reasonable
discretion;
(d) since the date of this Agreement, PCA shall have suffered any
Material Adverse Effect.
Section 7.4 Termination by PCA. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval of the Merger by the Company Stockholder Approval
and PCA Stockholder Approval referred to in Section 6.1(a), by action of the
Board of Directors of PCA, if:
(a) (i) any of the Company's representations and warranties shall have
been inaccurate as of the date of this Agreement, such that the condition set
forth in Section 6.2 would not be satisfied, or (ii) if (A) any of the Company's
representations and warranties become inaccurate as of a date subsequent to the
date of this Agreement (as if made on such subsequent date), such that the
condition set forth in Section 6.2 would not be satisfied and (B) such
inaccuracy has not been cured by the Company within ten business days after its
receipt of written notice thereof and remains uncured at the time notice of
termination is given, or (iii) any of the Company's covenants contained in this
Agreement shall have been breached, such that the condition set forth in Section
6.2 would not be satisfied;
(b) the board of directors of the Company shall have withdrawn its
recommendation of this Agreement or modified the recommendation in a manner
adverse to PCA or shall have resolved to do the foregoing; or
(c) if, since the date of this Agreement, there shall have occurred any
Material Adverse Effect on the Company.
Section 7.5 Effect of Termination and Abandonment. Subject to the terms
of Section 7.6, in the event of termination of this Agreement and the
abandonment of the Merger pursuant to this ARTICLE VII, this Agreement (other
than this Section 7.5, Section 4.3(b) and Section8.2(a)) shall become void and
of no effect with no liability on the part of any party hereto (or of any of its
directors, officers, employees, consultants, contractors, agents, legal and
financial advisors, or other representatives); provided, however, that except as
otherwise provided herein, no such termination shall relieve any party hereto of
any liability or damages resulting from any willful breach of this Agreement.
- 35 -
Section 7.6 Termination Fee. If this Agreement is terminated by the
Company for the reasons described in Sections 7.3(b) and (c), PCA shall pay to
the Company upon such termination a termination fee of Seventy-Five Thousand
Dollars ($75,000) in cash in immediately available funds (the "PCA Termination
Fee").
Section 7.7 Amendment. This Agreement may be amended by action taken by
the Company and PCA at any time before or after approval of the Merger by the
Company Stockholder Approval but, after any such approvals, no amendment shall
be made which changes the amount or form of the Merger Consideration. This
Agreement may not be amended except by an instrument in writing signed on behalf
of the parties hereto.
Section 7.8 Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto, or (c) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of either 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 VIII
MISCELLANEOUS
Section 8.1 No Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
Section 8.2 Entire Agreement; Assignment.
(a) This Agreement constitutes the entire agreement between the parties
hereto in respect of the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties in
respect of the subject matter hereof, other than the binding provisions of the
Memorandum of Understanding between the parties dated as of December 21, 2001,
and any amendments thereto (which shall remain in effect).
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by operation of Law (including, by
merger or consolidation) or otherwise. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and permitted assigns.
- 36 -
Section 8.3 Notices. All notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given, (a) five business days following sending by registered or
certified mail, postage prepaid, (b) when sent if sent by facsimile; provided,
however, that the facsimile is promptly confirmed by telephone confirmation
thereof by the intended recipient, (c) when delivered, if delivered personally
to the intended recipient, and (d) one business day following sending by
overnight delivery via a national courier service, and in each case, addressed
to a party at the following address for such party:
if to PCA, to: Premier Classic Art, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Executive Officer
Fax:
with copies to: Xxxxx & Xxxxxxx LLP
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to the Company, to: Parentech, Inc.
000 Xxxxx Xxxxxxx 000, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxx, Esq.
Facsimile: (000) 000-0000
or to such other address or facsimile number as the person to whom notice is
given may have previously furnished to the other in writing in the manner set
forth above.
Section 8.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without giving
effect to the choice of Law principles thereof.
Section 8.5 Expenses. The Company shall be solely responsible for the
legal, accounting and other fees and expenses incurred by the Company in
connection with the execution of this Agreement and the consummation of the
transactions contemplated hereby. PCA shall be solely responsible for the legal,
accounting and other fees and expenses incurred by PCA in connection with
execution of this Agreement and the consummation of the transactions
contemplated hereby. Any and all Transfer Taxes shall be timely paid by the
Company.
- 37 -
Section 8.6 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 8.7 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, 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 8.8 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
Section 8.9 Specific Performance. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which they are entitled at Law or in equity.
Section 8.10 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.11 Further Assurances. Each party to this Agreement agrees
(a) to furnish upon request to the other party such further information, (b) to
execute and deliver to the other party such other documents and (c) to do such
other acts and things as the other party reasonably requests for the purpose of
carrying out the intent of this Agreement and the documents and instruments
referred to herein.
Section 8.12 Interpretation.
(a) The words "hereof," "herein," "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit, and schedule references are to the articles,
sections, paragraphs, exhibits, and schedules of this Agreement unless otherwise
specified. Whenever the words "include," "includes," or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." All terms defined in this Agreement shall have the defined meanings
contained herein when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. Any agreement, instrument, or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument, or statute as from time to time, amended, qualified
or supplemented, including (in the case of agreements and instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
- 38 -
(b) The phrases "the date of this Agreement," "the date hereof," and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to April 24, 2002.
(c) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
Section 8.13 Definitions. As used herein,
(a) "Affiliate" has the meaning given to it in Rule 12b-2 of Regulation
12B under the Exchange Act.
(b) "Beneficial ownership" or "beneficially own" has the meaning
provided in Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(c) "Know" or "knowledge" means, (i) in respect of PCA, the knowledge
of PCA's executive officers and (ii) in respect of the Company, the knowledge of
the Company's executive officers.
(d) "Lien" means, in respect of any asset (including, any security) any
mortgage, lien, pledge, charge, security interest, or encumbrance of any kind in
respect of such asset.
(e) "Permitted Lien" means a statutory Lien not yet delinquent; a
purchase money Lien arising in the ordinary course of business consistent with
past practices; a Lien reflected in the financial statements of the applicable
party; or a Lien which does not materially detract from the value or impair the
use of the asset or property in question.
(f) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
- 39 -
(g) "Subsidiary" means, in respect of any party, any corporation,
partnership or other entity or organization, whether incorporated or
unincorporated, of which (i) such other party or any other subsidiary of such
party is a general partner (excluding such partnerships where such party or any
subsidiary of such party does not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions in respect of such corporation
or other organization is directly or indirectly owned or controlled by such
party or by any one or more of its subsidiaries, or by such party and one or
more of its subsidiaries.
(h) "Transfer Taxes" means any and all state, local, foreign or
provincial sales, use, real property, stock transfer or similar taxes (including
any interest or penalties with respect thereto, but not including any
shareholder level taxes based upon net income) attributable to the transactions
contemplated herein.
- 40 -
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the date first above written.
PARENTECH, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
PREMIER CLASSIC ART, INC.
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
EXHIBIT A
LOCK-UP AGREEMENT
Agreement made this ____ day of April 2002 by and between the undersigned
shareholder (the "Shareholder") and Premier Classic Art, Inc. (the "Company")
with reference to the number of shares of common stock of the Company set forth
below (the "Stock").
The Shareholder hereby agrees, for the benefit of the Company and in furtherance
of the planned merger between the Company and Parentech, Inc. (the "Merger"),
and in exchange for one dollar ($1.00) and other good and valuable
consideration, receipt of which Shareholder hereby acknowledges, that for a
period commencing April 24, 2002 and continuing for a period of six months
following the effective date of the Merger, but in no case to continue past
November 15, 2002, the Shareholder will not directly or indirectly sell, assign,
convey or otherwise transfer any of the Stock. Thereafter, Shareholder may
transfer not more than 20.00% of the Stock in any calendar month (such limit to
be pro-rated for the partial initial month and partial ending month, if
applicable). The Shareholder may transfer any portion of their Stock to a trust
owned and controlled by the same party (the "Shareholder Trust") at any time,
with the lock-up agreement staying in full force and effect. Under no
circumstances may the Shareholder or Shareholder Trust sell more than 20.00% of
the aggregate Stock held by both of them in any month. All restrictions on
transfer of the Stock hereunder shall terminate upon the 12th month anniversary
of the effective date of the Merger or May 15, 2003, whichever should occur
earlier.
The Shareholder acknowledges that the Company shall, and agrees that the Company
may, cause Colonial Stock Transfer, Inc., its transfer agent, (or a replacement
to be named by the Company after the completion of the Merger), to place
appropriate stock transfer restrictions on the Shareholder's shares reflecting
the terms of this Agreement.
This Agreement shall terminate immediately in the event that (a) the Company
publicly announces that it has broken off negotiations with Parentech, Inc. and
will not pursue the proposed Merger; or (b) the Merger does not occur on or
before May 15, 2002, provided, however, that if Premier and Parentech are
continuing to work diligently toward the completion of the Merger, this
agreement may be extended for a reasonable period at the request of Parentech.
Parentech is expressly acknowledged to be a third party beneficiary of this
agreement with rights to enforce all of its provisions against either party or
both parties.
IN WITNESS WHEREOF, the undersigned have set their hand on the day and year
first above written.
Shares of the Company's Common
Stock subject to this agreement:
shares, certificate no(s).:
----------------
PREMIER CLASSIC ART, INC. SHAREHOLDER
By:
------------------------------- ------------------------------------
Name: Name:
Its:
EXHIBIT B
CERTIFICATE OF MERGER
MERGING
PARENTECH, INC.
INTO
PREMIER CLASSIC ART, INC.
-----------------------------------------
Pursuant to Section 251 of the
General Corporation Law of Delaware
-----------------------------------------
The undersigned corporation, organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, does hereby certify:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
Name State of Incorporation
---- ----------------------
Parentech, Inc. Delaware
Premier Classic Art, Inc. Delaware
SECOND: That an Agreement and Plan of Merger and Reorganization between
the parties to the merger has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance with the
requirements of Section 251 of the General Corporation Law of the State of
Delaware.
THIRD: That Premier Classic Art, Inc., a Delaware corporation, shall be
the surviving corporation of the merger which will continue its existence as
said surviving corporation under the name "Parentech, Inc." upon the effective
date of said merger pursuant to the provisions of the General Corporation Law of
the State of Delaware.
FOURTH: Pursuant to the Agreement and Plan of Merger and
Reorganization, the Certificate of Incorporation of the surviving corporation is
amended to read as set forth in its entirety in Exhibit A hereto.
FIFTH: That the executed agreement and plan of merger is on file at the
principal place of business of the surviving corporation. The address of the
principal place of business of the surviving corporation is 000 Xxxxxxxx Xxxx,
Xxxxx 000, Xxx Xxxxx, XX 00000.
SIXTH: That a copy of the agreement and plan of merger will be
furnished by the surviving corporation, on request and without cost to any
stockholder of any constituent corporation.
SEVENTH: That this Certificate of Merger shall be effective upon
filing.
Dated as of: May __, 2002
Premier Classic Art, Inc.
a Delaware corporation
By:
-------------------------------------
President
EXHIBIT A
Certificate of Incorporation
To be prepared by Parentech, Inc. and mutually approved by Parentech, Inc. and
Premier Classic Art, Inc., and reflecting the rights and preferences of
Parentech's Common Stock and Series B Preferred Stock and Premier Classic Art's
Series A Preferred Stock, with the following modifications:
1. a capital structure of 50,000,000 shares of common stock (par
$0.000001) and 15,300,000 shares of preferred stock (300,000 of which
shares to be designated Series A Preferred Stock (par value of $0.001
per share) and 9,000,000 of which shares to be designated Series B
Preferred Stock (par value of $0.001 per share));
2. the elimination of cumulative dividends on the Series A Preferred
Stock;
3. addition of staggered Board of Directors (3 year terms - 2 elected 1st
year after closing, 2 elected 2nd year after closing, and 3 elected 3rd
year after closing);
4. all outstanding shares of Series A Preferred Stock and Series B
Preferred Stock automatically convert into Common Stock one year after
Effective Time of the Merger;
5. addition that a majority vote of the Series A Preferred Stock shall
authorize the automatic conversion of all outstanding shares of Series
A Preferred Stock into Common Stock, and if the total number of issued
and outstanding shares of Series A Preferred Stock is less than 150,000
at any time, all such issued and outstanding shares of Series A
Preferred Stock shall be automatically converted into Common Stock;
6. addition that a majority vote of the Series B Preferred Stock shall
authorize the automatic conversion of all outstanding shares of Series
B Preferred Stock into Common Stock, and if the total number of issued
and outstanding shares of Series B Preferred Stock is less than
2,000,000 at any time, all such issued and outstanding shares of Series
B Preferred Stock shall be automatically converted into Common Stock.;
and
7. other minor changes.
- i -
EXHIBIT C
Form of Affiliate Agreement
April __, 2002
Premier Classic Art, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attn: Secretary
Ladies and Gentlemen:
1. I have been advised that I might be considered to be an "affiliate,"
as that term is defined for purposes of paragraphs (c) and (d) of Rule 145
("Rule 145") promulgated by the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), of Parentech, Inc., a Delaware corporation ("Parentech").
2. Pursuant to an Agreement and Plan of Merger and Reorganization dated
April __, 2002, as amended (the "Agreement"), by and between Premier Classic
Art, Inc., a Delaware corporation ("PCA"), and Parentech, it is contemplated
that Parentech will merge with and into PCA and that all of Parentech's
outstanding common and preferred stock, each with a par value $0.000001 per
share ("Parentech Stock"), will, respectively, be converted into common stock
(the "Common Stock") and Series B Preferred Stock, par value $0.002 per share,
of PCA (the "Series B Preferred Stock," and together with the Common Stock, the
"PCA Stock"), as set forth in the Agreement (the "Merger"). In connection with
the Merger, I will receive my pro rata portion of the shares of PCA Stock upon
distribution of the PCA Stock to the holders of Parentech Stock.
3. I hereby agree as follows:
I will not offer to sell, transfer or otherwise dispose of any
of the shares of PCA Stock distributed to me pursuant to the Merger
(the "Stock"), except (i) in compliance with the applicable provisions
of Rule 145, (ii) in a transaction that is otherwise exempt from the
registration requirements of the Securities Act, (iii) in an offering
registered under the Securities Act or (iv) if an authorized
representative of the Commission shall have rendered written advice to
me (sought by my counsel or me, with a copy thereof and all other
related communications delivered to PCA) to the effect that the
Commission would take no action, or that the staff of the Commission
would not recommend that the Commission take any action, with respect
to the proposed disposition if consummated.
- ii -
4. I consent to the endorsement of the PCA Stock issued to me pursuant
to the Merger with a restrictive legend which will read substantially as
follows:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933, as amended (the "Act"), applies, and may be sold or otherwise
transferred only in compliance with the limitations of such Rule 145,
or upon receipt by Premier Classic Art, Inc. of an opinion of counsel
reasonably satisfactory to it that some other exemption from
registration under the Act is available, or pursuant to a registration
statement under the Act."
PCA's transfer agent shall be given an appropriate stop transfer order
and shall not be required to register any attempted transfer of the shares of
the PCA Stock, unless the transfer has been effected in compliance with the
terms of this letter agreement, it being understood that PCA will promptly
process all transfer requests effected in compliance with the terms of this
letter agreement.
5. It is understood and agreed that this letter agreement shall
terminate and be of no further force and effect and the legend set forth in
paragraph 4 above shall be removed by delivery of substitute certificates
without such legend, and the related stop transfer restrictions shall be lifted
forthwith, if (i) any such shares of PCA Stock shall have been registered under
the Securities Act for sale, transfer or other disposition by me or on my behalf
and are sold, transferred or otherwise disposed of, or (ii) any such shares of
PCA Stock are sold in accordance with the provisions of paragraphs (c), (e), (f)
and (g) of Rule 144 promulgated under the Securities Act, or (iii) I am not at
the time an affiliate of PCA and have been the beneficial owner of the PCA Stock
for at least one year (or such other period as may be prescribed by the
Securities Act and the rules and regulations promulgated thereunder) and PCA has
filed with the Commission all of the reports it is required to file under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), during the
preceding 12 months, or (iv) I am not and have not been for at least three
months an affiliate of PCA and have been the beneficial owner of the PCA Stock
for at least two years (or such other period as may be prescribed by the
Securities Act and the rules and regulations promulgated thereunder), or (v) PCA
shall have received a letter from the staff of the Commission, or an opinion of
counsel reasonably acceptable to PCA, to the effect that the stock transfer
restrictions and the legend are not required.
6. By its acceptance hereof, PCA agrees, for a period of two years
after the Effective Time (as defined in the Agreement) of the Merger, to file on
a timely basis all reports required to be filed by it pursuant to Sections 13
and 15(d) of the Exchange Act so that the public information provisions of Rule
144(c) promulgated by the Commission under the Securities Act are satisfied and
the resale provisions of Rule 145(d)(1) and (2) are therefore available to me in
the event I am considered an affiliate of Parentech and I desire to transfer any
PCA Stock issued to me pursuant to the Merger.
7. Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of Parentech as described in the first paragraph
of this letter or as a waiver of any rights I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
- iii -
8. I have carefully read this letter agreement and the Agreement and
have discussed their requirements and other applicable limitations upon my
ability to offer to sell, transfer or otherwise dispose of shares of the PCA
Stock, to the extent I felt necessary, with my counsel or counsel for Parentech.
Sincerely,
----------------------------------------
Agreed and accepted this ______
day of ________, 2002, by
Premier Classic Art, Inc.
By ___________________________
Its _________________________
- iv -
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This First Amendment (this "Amendment") to that certain Agreement and
Plan of Merger and Reorganization among Parentech, Inc., a Delaware corporation
(the "Company") and Premier Classic Art, Inc., a Delaware corporation ("PCA"),
dated April 24, 2002 (the "Merger Agreement"), is made and entered into this
10th day of May, 2002.
RECITALS
A. The Company and PCA previously entered into the Merger Agreement.
B. All capitalized terms used herein and not defined herein shall have
the same meanings ascribed to them in the Merger Agreement.
C. The Boards of Directors of the Company and PCA have determined that
in order to effect or facilitate the purposes and intent of the Merger
Agreement, and to clarify the intentions of parties thereto, certain provisions
of the Merger Agreement shall be amended and restated as set forth herein.
D. Pursuant to Section 7.7 of the Merger Agreement, the Merger
Agreement may be amended by action taken by the Company and PCA at any time
before or after approval of the Merger by the Company Stockholder Approval, in a
writing signed on behalf of the parties to thereto.
AGREEMENT
Now, Therefore, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Amendment to Section 2.2. Section 2.2 shall be amended and restated
in its entirety as follows:
"Issuance of Adjustment Shares. If, at the Effective Time, PCA has
liabilities that exceed $1.00 (the "Excess Liabilities"), the Merger
Consideration shall be increased as follows: for every dollar of Excess
Liabilities, an additional five (5) shares of PCA Common Stock shall be issued
to the Company's stockholders (the "Adjustment Shares"). Each holder of Shares
at the Effective Time shall receive that number of Adjustment Shares determined
by multiplying (i) the aggregate number of Adjustment Shares and (ii) a
fraction, the numerator of which is the number of Shares owned by such holder
just prior to the Effective Time (determined on as-converted to common stock
basis) and the denominator of which is the total number of Shares just prior to
the Effective Time (determined on as-converted to common stock basis), excluding
any Dissenting Shares (as such term is defined in Section 2.13). Such Excess
Liabilities shall be determined by the Company within sixty (60) calendar days
after the Closing Date in accordance with generally accepted accounting
principles in the United States ("GAAP")."
2. Amendment to Section 2.3. Section 2.3 shall be amended and restated
in its entirety as follows:
"Stock Options. At the Effective Time, the Company Stock Options,
whether vested or unvested, will be assumed by PCA ("Assumed Stock Options").
Section 2.3 of the Company Disclosure Schedule (as defined in Article III) sets
forth a true and complete list as of the date hereof of all holders of
outstanding options to purchase shares of Company Common Stock ("Company Stock
Options"), including the number of shares of Company Common Stock subject to
each such option, the exercise or vesting schedule, the exercise price per share
and the term of each such option. On the Closing Date, the Company shall deliver
to PCA an updated Section 2.3 of the Company Disclosure Schedule (as defined in
Article III) current as of such date. Each such option so assumed by PCA under
this Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the Company Stock Option Plan ("Company Option Plan")
and any other document governing such option immediately prior to the Effective
Time, except that (a) such option will be exercisable for that number of whole
shares of PCA Common Stock equal to that number of shares of Company Common
Stock that were issuable upon exercise of such option immediately prior to the
Effective Time, (b) the per share exercise price for the shares of PCA Common
Stock issuable upon exercise of such assumed option will be equal to the
exercise price per share of Company Common Stock at which such option was
exercisable immediately prior to the Effective Time and (c) any restriction on
the exercisability of such Company Stock Option shall continue in full force and
effect, and the term, exercisability, vesting schedule and other provisions of
such Company Stock Option shall remain unchanged. Consistent with the terms of
the Company Option Plan and the documents governing the outstanding options, the
Merger will not terminate any of the outstanding options under the Company
Option Plan or accelerate the exercisability or vesting of such options or the
shares of PCA Common Stock which will be subject to those options upon PCA's
assumption of the options in the Merger. It is the intention of the parties that
the options so assumed by PCA following the Effective Time will remain incentive
stock options as defined in Section 422 of the Code to the extent such options
qualified as incentive stock options prior to the Effective Time, and the
parties hereto shall use their commercially reasonable efforts to carry out such
intention. Within ten (10) business days after the Effective Time, PCA will
issue to each person who, immediately prior to the Effective Time was a holder
of an outstanding option under the Company Option Plan a document in form and
substance reasonably satisfactory to the Company evidencing the foregoing
assumption of such option by PCA."
3. AMENDMENT TO SECTION 2.14. Section 2.14 shall be amended and
restated in its entirety as follows:
"Legends. The shares represented by the Merger Consideration
issued pursuant to this Section 2 have not been registered under the Securities
Act and shall be characterized as "restricted securities" under the federal
securities laws. Under such laws, the shares represented by the Merger
Consideration may not be resold without registration under the Securities Act or
in reliance on an exemption therefrom.
2
Each certificate evidencing shares represented by the Merger
Consideration issued pursuant to this Section 2 shall bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE
CORPORATION RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THESE SECURITIES REASONABLY SATISFACTORY TO THE CORPORATION
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
IS EXEMPT FROM REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT."
4. Amendment to Section 3.21. Section 3.21 shall be amended and
restated in its entirety as follows:
"Contribution of Assets, Assumption of Liabilities and Distribution of
Cool Classics, Inc. Common Stock. The contribution of all of the tangible assets
and intellectual property rights of PCA to Cool Classics, Inc., a Nevada
corporation ("New PCA"), New PCA's assumption of substantially all the
liabilities of any kind whatsoever of PCA so that $1.00 in liabilities of any
kind whatsoever remain in PCA at the Effective Time (the "PCA Liabilities") and
the distribution of the Common Stock of Cool Classics, Inc. to certain PCA
creditors in lieu of foreclosure (the "Distribution") will be completed on or
before the Effective Time (the "Distribution Effective Time"). Such contribution
shall not include, among other items, all claims for refund of Taxes and other
governmental charges of whatever nature relating to the business of for periods
prior to the Closing Date. The amount of liabilities of any kind whatsoever
remaining in PCA after the Distribution Effective Time will not exceed the PCA
Liabilities. The Distribution will be effected in compliance with all applicable
laws, including without limitation the applicable provisions of the Delaware
General Corporation Law and any other applicable state laws. The consummation of
the Distribution will not require any consent, release, waiver or approval that
would adversely affect PCA. The consummation of the Distribution will not give
rise to or trigger the application of any right of any third party that has not
been waived by such party in a writing signed by it. The consummation of the
Distribution will not conflict with, or (with or without notice or lapse of
time, or both) result in a termination, breach, impairment or violation of, (a)
any provision of the Certificate of Incorporation or Bylaws of the PCA, (b) any
note, bond, lease, mortgage, indenture, license, franchise, permit, agreement,
"PCA Material Contract" (as defined in Section 3.16) or other instrument or
obligation (whether oral or in writing) to which PCA is or was a party or by
which the PCA is or was bound, or (c) any federal, state, local or foreign
statute, Law, concession, grant, franchise, Permit or other governmental
authorization or approval applicable to PCA or any of its Subsidiaries."
3
5. Amendment to Section 7.2(b). Section 7.2(b) shall be amended and
restated in its entirety as follows:
"after the Company solicits approval for the actions contemplated by
this agreement through action by written consent of its stockholders, the
Company Stockholder Approval shall not have been obtained;"
6. MISCELLANEOUS. This Amendment shall be limited solely to the matters
expressly set forth herein and all terms and conditions of the Merger Agreement
shall remain in full force and effect, except as modified by this Amendment.
This Amendment may be executed in any number of counterparts, each of which when
so executed and delivered will be deemed an original, and all of which together
shall constitute one and the same agreement.
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4
In Witness Whereof, the parties hereto have executed this First
Amendment to Agreement and Plan of Merger and Reorganization as of the date set
forth in the first paragraph hereof.
PARENTECH, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
PREMIER CLASSIC ART, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
