Exhibit 10.1
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AGREEMENT OF MERGER AND
PLAN OF REORGANIZATION
by and among
WILDON PRODUCTIONS INC.,
VMS ACQUISITION CORP. and
VISUAL MANAGEMENT SYSTEMS HOLDING, INC.
JUNE 15, 2007
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TABLE OF CONTENTS
Page
1. The Merger..........................................................1
1.1 Merger..........................................................1
1.2 Effective Time..................................................2
1.3 Certificate of Incorporation, By-laws, Directors and Officers...2
1.4 Assets and Liabilities..........................................2
1.5 Manner and Basis of Converting Shares...........................3
1.6 Surrender and Exchange of Certificates..........................3
1.7 Parent Common Stock.............................................3
1.8 Exchange of Options.............................................4
1.9 Operation of Surviving Corporation..............................4
1.10 Further Assurances.............................................4
2. Representations and Warranties of the Company.......................4
2.1 Organization, Standing, Subsidiaries, Etc.......................4
2.2 Qualification...................................................5
2.3 Capitalization of the Company...................................5
2.4 Indebtedness....................................................5
2.5 Company Shareholders............................................5
2.6 Corporate Acts and Proceedings..................................5
2.7 Compliance with Laws and Instruments............................5
2.8 Binding Obligations.............................................6
2.9 Broker's and Finder's Fees......................................6
2.10 Financial Statements...........................................6
2.11 Absence of Undisclosed Liabilities.............................7
2.12 Changes........................................................7
2.13 Employees......................................................7
2.14 Tax Returns and Audits.........................................7
2.15 Patents and Other Intangible Assets............................8
2.16 Employee Benefit Plans; ERISA..................................8
2.17 Title to Property and Encumbrances.............................8
2.18 Condition of Properties........................................9
2.19 Insurance Coverage.............................................9
2.20 Litigation.....................................................9
2.21 Licenses.......................................................9
2.22 Interested Party Transactions..................................9
2.23 Environmental Matters..........................................9
2.24 Receivables...................................................10
2.25 Inventories...................................................10
2.26 Customers, Suppliers and Independent Contractors..............10
2.27 Questionable Payments.........................................10
2.28 Obligations to or by Shareholders.............................11
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3. Representations and Warranties of Parent and Acquisition Corp......11
3.1 Organization and Standing......................................11
3.2 Corporate Authority............................................11
3.3 Broker's and Finder's Fees.....................................11
3.4 Capitalization of Parent.......................................12
3.5 Acquisition Corp...............................................12
3.6 Validity of Shares.............................................12
3.7 SEC Reporting and Compliance...................................12
3.8 Financial Statements...........................................13
3.9 Governmental Consents..........................................14
3.10 Compliance with Laws and Other Instruments....................14
3.11 No General Solicitation.......................................14
3.12 Binding Obligations...........................................14
3.13 Absence of Undisclosed Liabilities............................14
3.14 Changes.......................................................14
3.15 Tax Returns and Audits........................................15
3.16 Employee Benefit Plans; ERISA.................................16
3.17 Litigation....................................................16
3.18 Interested Party Transactions.................................16
3.19 Questionable Payments.........................................16
3.20 Obligations to or by Shareholders.............................16
3.21 Schedule of Assets and Contracts..............................16
3.22 Employees.....................................................17
3.23 Disclosure....................................................17
4. Conduct of Businesses Pending the Merger...........................17
4.1 Conduct of Business by the Company Pending the Merger..........17
4.2 Conduct of Business by Parent and Acquisition Corp.
Pending the Merger............................................18
5. Additional Agreements..............................................19
5.1 Access and Information.........................................19
5.2 Additional Agreements..........................................20
5.3 Publicity......................................................20
5.4 Appointment of Directors.......................................20
5.5 Parent Name Change and Exchange Listing........................21
5.6 Parent Reverse Stock Split.....................................21
5.7 Preferred Stock................................................21
5.8 Stock Incentive Plan...........................................21
6. Conditions of Parties' Obligations.................................21
6.1 Parent and Acquisition Corp. Obligations.......................21
6.2 Company Obligations............................................23
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7. Non-Survival of Representations and Warranties.....................25
8. Amendment of Agreement.............................................25
9. Definitions........................................................26
10. Closing............................................................29
11. Termination Prior to Closing.......................................30
11.1 Termination of Agreement......................................30
11.2 Termination of Obligations....................................30
12. Miscellaneous......................................................30
12.1 Notices.......................................................30
12.2 Entire Agreement..............................................31
12.3 Expenses......................................................31
12.4 Time..........................................................31
12.5 Severability..................................................31
12.6 Successors and Assigns........................................32
12.7 No Third Parties Benefited....................................32
12.8 Counterparts..................................................32
12.9 Recitals, Schedules and Exhibits..............................32
12.10 Section Headings and Gender..................................32
12.11 Governing Law................................................32
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LIST OF EXHIBITS AND SCHEDULES
Exhibits
A Certificate of Merger
B Certificate of Incorporation of the Company
C By-laws of the Company
D Directors and Officers of the Surviving Corporation and Parent
E Amended and Restated Certificate of Incorporation of Parent
F Form of Lock-Up Agreement
G Form of Opinion of Parent's Counsel
H Form of Representation Warranty and Indemnification Agreement
Company Disclosure Schedules
2.3 Options, Rights and Commitments
2.5 Company Shareholders
2.9 Company Broker's and Finder's Fees
2.10 Financial Statements
2.11 Undisclosed Liabilities
2.12 Changes/Indebtedness
2.15 Patents and Intangible Assets
2.17 Liens
2.20 Litigation
2.22 Interested Party Transactions
2.28 Obligations to or by Shareholders
Parent Disclosure Schedules
3.3 Parent Broker's and Finder's Fees
3.7 SEC Reporting
3.21 Schedule of Parent Bank Accounts
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AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION is made and entered
into on June 15, 2007, by and among WILDON PRODUCTIONS INC., a Nevada
corporation ("Parent"), VMS ACQUISITION CORP., a New Jersey corporation
("Acquisition Corp."), which is a wholly-owned subsidiary of Parent, and
Visual Management Systems Holding, Inc., a New Jersey corporation
(the "Company").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Board of Directors of Acquisition Corp., Parent and the
Company, respectively, have determined that it is fair to and in the best
interests of their respective corporations and shareholders for Acquisition
Corp. to be merged with and into the Company (the "Merger") upon the terms and
subject to the conditions set forth herein;
WHEREAS, the Board of Directors of Acquisition Corp. and the Board of
Directors of the Company have approved the Merger in accordance with the New
Jersey Business Corporation Act (the "NJBCA"), and upon the terms and subject to
the conditions set forth herein and in the Certificate of Merger (the
"Certificate of Merger") attached hereto as Exhibit A; and the Board of
Directors of Parent also has approved this Agreement and the Certificate of
Merger;
WHEREAS, the requisite Shareholders (as such term is defined in Section
10 hereof) have approved by written consent pursuant to Section 14A:5-6 of the
NJBCA this Agreement and the Certificate of Merger and the transactions
contemplated and described hereby and thereby, including without limitation the
Merger, and Parent, as the sole shareholder of Acquisition Corp., has approved
this Agreement, the Certificate of Merger and the transactions contemplated and
described hereby and thereby, including without limitation the Merger; and
WHEREAS, simultaneously with the Closing (as such term is defined
herein), Parent (as it will exist as of the closing of the Merger) is selling
Units consisting of shares of its Series A Convertible Preferred Stock and
detachable warrants to purchase shares of its common stock par value $.001 per
share, in a private placement (the "Private Placement") to accredited investors,
pursuant to the terms of a Confidential Private Placement Memorandum, dated
March 30, 2007 (as supplemented and amended from time to time, the
"Memorandum"), for the purpose of causing the business of the Surviving
Corporation (as defined below) to include the business of the Company following
the Merger.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. The Merger.
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1.1 Merger. Subject to the terms and conditions of this Agreement and the
Certificate of Merger, Acquisition Corp. shall be merged with and into the
Company in accordance with Section 14A:10-1, et. seq. of the NJBCA. At the
Effective Time (as hereinafter defined), the separate legal existence of
Acquisition Corp. shall cease, and the Company shal be the surviving
corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue its corporate existence under
the laws of the State of New Jersey under the name "Visual Management
Systems Holding, Inc."
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1.2 Effective Time. The Merger shall become effective on the date and at the
time the Certificate of Merger is filed with the Secretary of State of the
State of New Jersey in accordance with Section 14A:10-6 of the NJBCA but no
later than June 30, 2007. The time at which the Merger shall become
effective as aforesaid is referred to hereinafter as the "Effective Time."
1.3 Certificate of Incorporation, By-laws, Directors and Officers.
(a) The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, attached as Exhibit B hereto,
shall be the Certificate of Incorporation of the Surviving Corporation
from and after the Effective Time until further amended in accordance
with applicable law.
(b) The By-laws of the Company, as in effect immediately prior to the
Effective Time, attached as Exhibit C hereto, shall be the By-laws of
the Surviving Corporation from and after the Effective Time until
amended in accordance with applicable law, the Certificate of
Incorporation and such By-laws.
(c) The directors, officers and key employees listed in Exhibit D hereto
shall be the directors, officers and key employees of the Surviving
Corporation, and each shall hold his or her respective office or
offices from and after the Effective Time until his or her successor
shall have been elected and shall have qualified in accordance with
applicable law, or as otherwise provided in the Certificate of
Incorporation or By-laws of the Surviving Corporation.
1.4 Assets and Liabilities. At the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises of a public
as well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of Acquisition Corp and the Company
(collectively, the "Constituent Corporations"); and all the rights,
privileges, powers and franchises of each of the Constituent Corporations,
and all property, real, personal and mixed, and all debts due to any of the
constituent corporations on whatever account, as well for stock
subscriptions as all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation; and
all property, rights, privileges, powers and franchises, and all and every
other interest shall be thereafter as effectively the property of the
Surviving Corporation as they were of the respective Constituent
Corporations, and the title to any real estate vested by deed or otherwise
in either of the such Constituent Corporations shall not revert or be in
any way impaired by the Merger; but all rights of creditors and all liens
upon any property of either of the Constituent Corporations shall be
preserved unimpaired, and all debts, liabilities and duties of the
Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if said
debts, liabilities and duties had been incurred or contracted by it.
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1.5 Manner and Basis of Converting Shares
(a) At the Effective Time:
(i) each share of common stock, par value $.01 per share, of
Acquisition Corp. that shall be outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the
right to one share of common stock, par value $.01 per share, of
the Surviving Corporation, so that at the Effective Time, Parent
shall be the holder of all of the issued and outstanding shares
of the Surviving Corporation;
(ii) the shares of common stock, par value $.01 per share, of the
Company (the "Company Common Stock"), which shares at the Closing
will constitute all of the issued and outstanding shares of
capital stock of the Company, beneficially owned by the
Shareholders listed in Schedule 2.5 (other than shares of Company
Common Stock as to which appraisal rights are perfected pursuant
to the applicable provisions of the NJBCA and not withdrawn or
otherwise forfeited), shall, by virtue of the Merger and without
any action on the part of the holders thereof, be converted into
the right to receive 0.50 shares of Parent Common Stock for each
share of Company Common Stock; and
(iii) each share of Company Common Stock held in the treasury of the
Company immediately prior to the Effective Time shall be
cancelled in the Merger and cease to exist.
(b) After the Effective Time, there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of
the shares of Company Common Stock that were outstanding immediately
prior to the Effective Time.
1.6 Surrender and Exchange of Certificates. Promptly after the Effective Time
and upon (i) surrender of a certificate or certificates representing shares
of Company Common Stock that were outstanding immediately prior to the
Effective Time or an affidavit and indemnification in form reasonably
acceptable to counsel for the Parent stating that such Shareholder has lost
their certificate or certificates or that such have been destroyed and (ii)
delivery of a Letter of Transmittal in a form satisfactory to Parent,
Parent shall issue to each record holder of Company Common Stock
surrendering such certificate or certificates and Letter of Transmittal, a
certificate or certificates registered in the name of such Shareholder
representing the number of shares of Parent Common Stock that such
Shareholder shall be entitled to receive as set forth in Section 1.5(a)(ii)
hereof. Until the certificate, certificates or affidavit is or are
surrendered together with the Letter of Transmittal as contemplated by this
Section 1.6, each certificate or affidavit that immediately prior to the
Effective Time represented any outstanding shares of Company Common Stock
shall be deemed at and after the Effective Time to represent only the right
to receive upon surrender as aforesaid the Parent Common Stock specified in
Schedule 1.5 hereof for the holder thereof or to perfect any rights of
appraisal which such holder may have pursuant to the applicable provisions
of the NJBCA.
1.7 Parent Common Stock. Parent agrees that it will cause the Parent Common
Stock into which the Company Common Stock is converted at the Effective
Time pursuant to Section 1.5(a)(ii) to be available for such purpose.
Parent further covenants that immediately prior to the Effective Time there
will be no more than 1,559,286 shares of Parent Common Stock issued and
outstanding (after giving effect to the Reverse Split) and that no other
common or preferred stock or equity securities or any options, warrants,
rights or other agreements or instruments convertible, exchangeable or
exercisable into common or preferred stock, excluding the shares of
preferred stock and warrants to be issued in connection with the Private
Placement, or other equity securities shall be issued or outstanding,
except as described herein.
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1.8 Exchange of Options. At the Effective Time, Parent shall issue to each
holder of an option to purchase shares of Company Common Stock (a "Company
Option") an option to purchase a number of shares of Parent Common Stock
that is equal to fifty percent (50%) of the number of shares subject to the
Company Option at an exercise price that is two hundred percent (200%) of
the exercise price of the Company Option but otherwise having terms
substantially similar to that of the Company Option for which it is
exchanged.
1.9 Operation of Surviving Corporation. The Company acknowledges that upon the
effectiveness of the Merger, and the compliance by the Parent and
Acquisition Corp. of its duties and obligations hereunder, Parent shall
have the absolute and unqualified right to deal with the assets and
business of the Surviving Corporation as its own property without
limitation on the disposition or use of such assets or the conduct of such
business.
1.10 Further Assurances. From time to time, from and after the Effective Time,
as and when reasonably requested by Parent, the proper officers and
directors of the Company as of the Effective Time shall, for and on behalf
and in the name of the Company or otherwise, execute and deliver all such
deeds, bills of sale, assignments and other instruments and shall take or
cause to be taken such further actions as Parent, Acquisition Corp. or
their respective successors or assigns reasonably may deem necessary or
desirable in order to confirm or record or otherwise transfer to the
Surviving Corporation title to and possession of all of the properties,
rights, privileges, powers, franchises and immunities of the Company or
otherwise to carry out fully the provisions and purposes of this Agreement
and the Certificate of Merger.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Acquisition Corp. as follows:
2.1 Organization, Standing, Subsidiaries, Etc.
(a) The Company is a corporation duly organized and existing in good
standing under the laws of the State of New Jersey, and has all
requisite power and authority (corporate and other) to carry on its
business, to own or lease its properties and assets, to enter into
this Agreement and the Certificate of Merger and to carry out the
terms hereof and thereof. Copies of the Certificate of Incorporation
and By-laws of the Company that have been delivered to Parent and
Acquisition Corp. prior to the execution of this Agreement are true
and complete and have not since been amended or repealed.
(b) Other than Visual Management Systems, LLC, a New Jersey limited
liability company, and Visual Management Systems PDG, LLC, a New
Jersey limited liability company (each a "Subsidiary" and
collectively, the "Subsidiaries"), the Company has no subsidiaries or
direct or indirect interest (by way of stock ownership or otherwise)
in any firm, corporation, limited liability company, partnership,
association or business. The Company owns all of the issued and
outstanding membership interests of each of the Subsidiaries free and
clear of all Liens (as hereinafter defined), and each Subsidiary has
no outstanding options, warrants or rights to purchase membership
interests or other equity securities of such Subsidiary, other than
the membership interests owned by the Company. Unless the context
otherwise requires, all references in this Section 2 to the "Company"
shall be treated as being a reference to the Company and the
Subsidiaries taken together as one enterprise.
2.2 Qualification. The Company is duly qualified to conduct business as a
foreign corporation and is in good standing in each jurisdiction wherein
the nature of its activities or its properties owned or leased makes such
qualification necessary, except where the failure to be so qualified would
not hav e a material adverse effect on the condition (financial or
otherwise), properties, assets, liabilities, business operations or results
of operations of the Company taken as a whole (the "Condition of the
Company").
2.3 Capitalization of the Company. The authorized capital stock of the Company
consists of 50,000,000 shares of Company Common Stock and 10,000,000 shares
of preferred stock, and the Company has no authority to issue any other
capital stock. There are 10,436,000 shares of Company Common Stock issued
and outstanding and no shares of preferred stock issued and outstanding,
and such issued shares are duly authorized, validly issued, fully paid and
nonassessable, and none of such shares have been issued in violation of the
preemptive rights of any person. Except as disclosed in Schedule 2.3 or the
Memorandum, the Company has no outstanding options, rights or commitments
to issue Company Common Stock or other Equity Securities of the Company,
and there are no outstanding securities convertible or exercisable into or
exchangeable for Company Common Stock or other Equity Securities of the
Company.
2.4 Indebtedness. The Company has no Indebtedness for Borrowed Money, except as
disclosed on the Balance Sheet and Schedule 2.12 or the Memorandum.
2.5 Company Shareholders. Schedule 2.5 hereto contains a true and complete list
of the record owner of all of the outstanding shares of Company Common
Stock together with the number of securities held. To the knowledge of the
Company, except as disclosed in the Memorandum, there is no voting trust,
agreement or arrangement among any of the beneficial holders of Common
Stock affecting the nomination or election of directors or the exercise of
the voting rights of Company Stock.
2.6 Corporate Acts and Proceedings. The execution, delivery and performance of
this Agreement and the Certificate of Merger (together, the "Merger
Documents") have been duly authorized by the Board of Directors of the
Company and have been approved by the requisite vote of the Shareholders,
and all of the corporate acts and other proceedings required for the due
and valid authorization, execution, delivery and performance of the Merger
Documents and the consummation of the Merger have been validly and
appropriately taken, except for the filing referred to in Section 1.2.
2.7 Compliance with Laws and Instruments. The business, products and operations
of the Company have been and are being conducted in compliance in all
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material respects with all applicable laws, rules and regulations, except
for such violations thereof for which the penalties, in the aggregate,
would not have a material adverse effect on the Condition of the Company.
The execution, delivery and performance by the Company of the Merger
Documents and the consummation by the Company of the transactions
contemplated by this Agreement: (a) will not require any authorization,
consent or approval of, or filing or registration with, any court or
governmental agency or instrumentality, except such as shall have been
obtained prior to the Closing, (b) will not cause the Company to violate or
contravene (i) any provision of law, (ii) any rule or regulation of any
agency or government, (iii) any order, judgment or decree of any court, or
(iv) any provision of the Certificate of Incorporation or By-laws of the
Company, (c) will not violate or be in conflict with, result in a breach of
or constitute (with or without notice or lapse of time, or both) a default
under, any indenture, loan or credit agreement, deed of trust, mortgage,
security agreement or other contract, agreement or instrument to which the
Company is a party or by which the Company or any of its properties is
bound or affected, except as would not have a material adverse effect on
the Condition of the Company and (d) will not result in the creation or
imposition of any Lien upon any property or asset of the Company. The
Company is not in violation of, or (with or without notice or lapse of
time, or both) in default under, any term or provision of its Certificate
of Incorporation or By-laws or of any indenture, loan or credit agreement,
deed of trust, mortgage, security agreement or, except as would not
materially and adversely affect the Condition of the Company, or any other
material agreement or instrument to which the Company is a party or by
which the Company or any of its properties is bound or affected.
2.8 Binding Obligations. The Merger Documents constitute the legal, valid and
binding obligations of the Company and are enforceable against the Company
in accordance with their respective terms, except as such enforcement is
limited by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity.
2.9 Broker's and Finder's Fees. No Person has, or as a result of the
transactions contemplated or described herein will have, any right or valid
claim against the Company, Parent, Acquisition Corp. or any Shareholder for
any commission, fee or other compensation as a f inder or broker, or in any
similar capacity, except as disclosed in Schedule 2.9 hereto. Parent and
Acquisition Corp. on the one hand and the Company on the other, hereby
indemnify and hold each other harmless from and against any and all claims,
losses or liabilities for any such commission, fee or other compensation as
a result of the claim by any other Person that the indemnifying party or
parties introduced or assisted them in connection with the transactions
contemplated or described here.
2.10 Financial Statements. Attached hereto as Schedule 2.10 is the Company's
audited statement of operations for the year ended December 31, 2006 and
balance sheet (the "Balance Sheet") as of December 31, 2006 (the "Balance
Sheet Date"). Such financial statements (i) are in accordance with the
books and records of the Company, (ii) present fairly in all material
respects the financial condition of the Company at the dates therein
specified and the results of its operations and changes in financial
position for the periods therein specified, and (iii) have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied
on a basis consistent with prior accounting periods.
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2.11 Absence of Undisclosed Liabilities. The Company has no material obligation
or liability (whether accrued, absolute, contingent, liquidated or
otherwise, whether due or to become due), arising out of any transaction
entered into at or prior to the Closing, except (a) as disclosed in
Schedule 2.11 and/or Schedule 2.12 hereto or in the Memorandum, (b) to the
extent set forth on or reserved against in the Balance Sheet or the Notes
to the Financial Statements, (c) current liabilities incurred and
obligations under agreements entered into in the usual and ordinary course
of business since the Balance Sheet Date, none of which (individually or in
the aggregate) has had or will have a material adverse effect on the
Condition of the Company, and (d) by the specific terms of any written
agreement, document or arrangement identified in the Schedules.
2.12 Changes. Since the Balance Sheet Date, except as disclosed in Schedule 2.12
hereto or in the Memorandum, the Company has not (a) incurred any debts,
obligations or liabilities, absolute, accrued, contingent or otherwise,
whether due or to become due, except for fees, expenses and liabilities
incurred in connection with the Private Placement, the Merger and related
transactions and current liabilities incurred in the usual and ordinary
course of business, (b) discharged or satisfied any Liens other than those
securing, or paid any obligation or liability other than, current
liabilities shown on the Balance Sheet and current liabilities incurred
since the Balance Sheet Date, in each case in the usual and ordinary course
of business, (c) mortgaged, pledged or subjected to Lien any of its assets,
tangible or intangible other than in the usual and ordinary course of
business, (d) sold, transferred or leased any of its assets, except in the
usual and ordinary course of business, (e) cancelled or compromised any
debt or claim, or waived or released any right, of material value, (f)
suffered any physical damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting the Condition of the
Company, (g) entered into any transaction other than in the usual and
ordinary course of business, (h) encountered any labor union difficulties,
(i) declared or paid any dividends on or made any other distributions with
respect to, or purchased or redeemed, any of its outstanding capital stock,
(j) suffered or experienced any change in, or condition affecting, the
Condition of the Company other than changes, events or conditions in the
usual and ordinary course of its business, none of which (either by itself
or in conjunction with all such other changes, events and conditions) has
been materially adverse, (k) made any change in the accounting principles,
methods or practices followed by it or depreciation or amortization
policies or rates theretofore adopted, (l) made or permitted any amendment
or termination of any material contract, agreement or license to which it
is a party, (m) suffered any material loss not reflected in the Balance
Sheet or its statement of income for the year ended on the Balance Sheet
Date, or (n) entered into any agreement, or otherwise obligated itself, to
do any of the foregoing.
2.13 Employees. The Company has complied in all material respects with all laws
relating to the employment of labor, and the Company has encountered no
material labor union difficulties. Other than pursuant to ordinary
arrangements of employment compensation, the Company is not under any
obligation or liability to any officer, director or employee of the
Company.
2.14 Tax Returns and Audits. All required federal, state and local Tax Returns
of the Company have been accurately prepared and duly and timely filed or
extensions with respect thereto have been granted, and all federal, state
and local Taxes required to be paid with respect to the periods covered by
such returns have been paid. The Company is not and has not been delinquent
in the payment of any Tax. The Company has not had a Tax deficiency
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proposed or assessed against it and has not executed a waiver of any
statute of limitations on the assessment or collection of any Tax. None of
the Company's federal income tax returns nor any state or local income or
franchise tax returns has been audited by governmental authorities. The
reserves for Taxes reflected on the Balance Sheet are and will be
sufficient for the payment of all unpaid Taxes payable by the Company as of
the Balance Sheet Date. Since the Balance Sheet Date, the Company has made
adequate provisions on its books of account for all Taxes with respect to
its business, properties and operations for such period. The Company has
withheld or collected from each payment made to each of its employees the
amount of all taxes required to be withheld or collected therefrom, and has
paid the same to the proper Tax receiving officers or authorized
depositaries. There are no federal, state, local or foreign audits,
actions, suits, proceedings, investigations, claims or administrative
proceedings relating to Taxes or any Tax Returns of the Company now
pending, and the Company has not received any notice of any proposed
audits, investigations, claims or administrative proceedings relating to
Taxes or any Tax Returns. The Company has not agreed nor is required to
make any adjustments under Section 481(a) of the Code (or any similar
provision of state, local and foreign law) by reason of a change in
accounting method or otherwise for any Tax period for which the applicable
statute of limitations has not yet expired. The Company (i) is not a party
to, is bound by or has any obligation under, any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement, whether
written or unwritten (collectively, "Tax Sharing Agreements"), or (ii) does
not have any potential liability or obligation to any person as a result
of, or pursuant to, any such Tax Sharing Agreements.
2.15 Patents and Other Intangible Assets. Except as set forth in Schedule 2.15
or as disclosed in the Memorandum, the Company (i) owns or has the right to
use, free and clear of all Liens, claims and restrictions, all patents,
trademarks, service marks, trade names, copyrights, licenses and rights
with respect to the foregoing used in or necessary for the conduct of its
business as now conducted or proposed to be conducted without infringing
upon or otherwise acting adversely to the right or claimed right of any
Person under or with respect to any of the foregoing and (ii) is not
obligated or under any liability to make any payments by way of royalties,
fees or otherwise to any owner or licensor of, or other claimant to, any
patent, trademark, service ▇▇▇▇, trade name, copyright or other intangible
asset, with respect to the use thereof or in connection with the conduct of
its business or otherwise.
2.16 Employee Benefit Plans; ERISA. The Company has no "employee benefit plans"
(within the meaning of Section 3(3) of the ERISA) nor any other employee
benefit or fringe benefit arrangements, practices, contracts, policies or
programs of any type other than programs merely involving the regular
payment of wages, commissions, or bonuses established, maintained or
contributed to by the Company, whether written or unwritten and whether or
not funded.
2.17 Title to Property and Encumbrances. The Company has good, valid and
indefeasible marketable title to all properties and assets used in the
conduct of its business (except for property held under valid and
subsisting leases which are in full force and effect and which are not in
default) free of all Liens (except as set forth in Schedule 2.17) and other
encumbrances, except Permitted Liens and such ordinary and customary
imperfections of title, restrictions and encumbrances as do not,
individually or in the aggregate, materially detract from the value of the
property or assets or materially impair the use made thereof by the Company
in its business. Without limiting the generality of the foregoing, the
Company has good and indefeasible title to all of its properties and assets
8
reflected in the Balance Sheet, except for property disposed of in the
usual and ordinary course of business since the Balance Sheet Date and for
property held under valid and subsisting leases which are in full force and
effect and which are not in default.
2.18 Condition of Properties. All facilities, machinery, equipment, fixtures and
other properties owned, leased or used by the Company are in operating
condition and repair, subject to ordinary wear and tear, and are adequate
and sufficient for the Company's business.
2.19 Insurance Coverage. There is in full force and effect one or more policies
of insurance issued by insurers of recognized responsibility, insuring the
Company and its properties, products and business against such losses and
risks, and in such amounts, as are customary for corporations engaged in
the same or similar business and similarly situated.
2.20 Litigation. Except as disclosed in Schedule 2.20 hereto or in the
Memorandum, there is no legal action, suit, arbitration or other legal,
administrative or other governmental proceeding pending or, to the best
knowledge of the Company, threatened against or affecting the Company or
its properties, assets or business, and after reasonable investigation, the
Company is not aware of any incident, transaction, occurrence or
circumstance that might reasonably be expected to result in or form the
basis for any such action, suit, arbitration or other proceeding. The
Company is not in default with respect to any order, writ, judgment,
injunction, decree, determination or award of any court or any governmental
agency or instrumentality or arbitration authority.
2.21 Licenses. The Company possesses from all appropriate governmental
authorities all licenses, permits, authorizations, approvals, franchises
and rights (collectively "Permits") necessary for the Company to engage in
the business currently conducted by it, all of which are in full force and
effect, except for such Permits the absence of which would not have a
material adverse effect on the condition of the Company.
2.22 Interested Party Transactions. Except as disclosed in Schedule 2.22 hereto
or in the Memorandum, no officer, director or shareholder of the Company or
any Affiliate or "associate" (as such term is defined in Rule 405 under the
Securities Act) of any such Person or the Company has or has had, either
directly or indirectly, (a) an interest in any Person that (i) furnishes or
sells services or products that are furnished or sold or are proposed to be
furnished or sold by the Company or (ii) purchases from or sells or
furnishes to the Company any goods or services, or (b) a beneficial
interest in any contract or agreement to which the Company is a party or by
which it may be bound or affected.
2.23 Environmental Matters.
(a) To the knowledge of the Company, the Company has never generated,
used, handled, treated, released, stored or disposed of any Hazardous
Materials on any real property on which it now has or previously had
any leasehold or ownership interest, except in compliance with all
applicable Environmental Laws.
(b) To the knowledge of the Company, the historical and present operations
of the business of the Company are in compliance with all applicable
Environmental Laws, except where any non-compliance has not had and
would not reasonably be expected to have a material adverse effect on
the Condition of the Company.
9
(c) There are no material pending or, to the knowledge of the Company,
threatened, demands, claims, information requests or notices of
noncompliance or violation against or to the Company relating to any
Environmental Law; and, to the knowledge of the Company, there are no
conditions or occurrences on any of the real property used by the
Company in connection with its business that would reasonably be
expected to lead to any such demands, claims or notices against or to
the Company, except such as have not had, and would not reasonably be
expected to have, a material adverse effect on the Condition of the
Company.
2.24 Receivables. The accounts receivable shown on the Balance Sheet (net of the
allowance for doubtful accounts in the amount appearing thereon) have been
collected or are, to the knowledge of the Company, collectible in the usual
and ordinary course of the Company's business in the amounts thereof shown
on the Balance Sheet. The accounts receivable of the Company acquired after
the Balance Sheet Date and prior to the Closing Date will be reflected on
the books of account of the Company at 100% of the amount thereof and have
been collected, or are, to the knowledge of the Company, collectible in the
usual and ordinary course of the Company's business, in the full amounts
thereof (less normal allowances for doubtful accounts). All of the accounts
receivable reflected on the Balance Sheet and all accounts receivable which
have arisen since the Balance Sheet Date are valid and enforceable claims,
and the goods and services sold and delivered which gave rise to such
accounts receivable were sold and delivered in conformity with all
applicable express and implied warranties, purchase orders, agreements and
specifications, and, to knowledge of the Company, are not subject to any
valid defense or offset.
2.25 Inventories. The inventories of the Company which are reflected in the
Balance Sheet and all inventory items which have been acquired since the
Balance Sheet Date consist of raw materials, supplies, work-in-process and
finished goods of such quality and in such quantities as are being used and
will be usable or are being sold and will be saleable in the ordinary
course of its business with full ▇▇▇▇-up at prevailing market prices,
except to the extent of reserves for obsolete and slow-moving inventories
reflected in the Balance Sheet. Such inventories are valued at the lower of
cost or fair market value and were determined in accordance with generally
accepted accounting principles consistently applied. The Company has not
experienced, nor has any reason to believe that it will experience in the
foreseeable future, any material difficulty in obtaining, in the desired
quantity and quality and upon reasonable terms and conditions, the raw
materials, supplies or component products required for the manufacture,
assembly or production of its products.
2.26 Customers, Suppliers and Independent Contractors. Since the Balance Sheet
Date, the Company has not been advised that any customer, supplier or
independent contractor of the Company intends to terminate or materially
curtail its business relationship with the Company.
2.27 Questionable Payments. Neither the Company nor any director, officer or, to
the best knowledge of the Company, agent, employee or other Person
associated with or acting on behalf of the Company, has used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; made any direct or indirect
10
unlawful payments to government officials or employees from corporate
funds; established or maintained any unlawful or unrecorded fund of
corporate monies or other assets; made any false or fictitious entries on
the books of record of any such corporations; or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
2.28 Obligations to or by Shareholders. Except as disclosed in Schedule 2.28 or
in the Memorandum, other than for accrued salary of employees of the
Company who are also Shareholders, the Company has no liability or
obligation or commitment to any Shareholder or any Affiliate or "associate"
(as such term is defined in Rule 405 under the Securities Act) of any
Shareholder, nor does any Shareholder or any such Affiliate or associate
have any liability, obligation or commitment to the Company.
3. Representations and Warranties of Parent and Acquisition Corp. Parent and
Acquisition Corp., jointly and severally, represent and warrant to the
Company as follows:
3.1 Organization and Standing. Parent is a corporation duly organized and
existing in good standing under the laws of the State of Nevada.
Acquisition Corp. is a corporation duly organized and existing in good
standing under the laws of the State of New Jersey. Parent and Acquisition
Corp. have heretofore delivered to the Company complete and correct copies
of their respective Certificates of Incorporation and By-laws as now in
effect. Parent and Acquisition Corp. have full corporate power and
authority to carry on their respective businesses as they are now being
conducted and as now proposed to be conducted and to own or lease their
respective properties and assets. Neither Parent nor Acquisition Corp. has
any subsidiaries (except Parent's ownership of Acquisition Corp.) or direct
or indirect interest (by way of stock ownership or otherwise) in any firm,
corporation, limited liability company, partnership, association or
business. Parent owns all of the issued and outstanding capital stock of
Acquisition Corp. free and clear of all Liens, and Acquisition Corp. has no
outstanding options, warrants or rights to purchase capital stock or other
equity securities of Acquisition Corp., other than the capital stock owned
by Parent. Unless the content otherwise requires, all references in this
Section 3 to the "Parent" shall be treated as being a reference to the
Parent and Acquisition Corp. taken together as one enterprise.
3.2 Corporate Authority. Each of Parent and/or Acquisition Corp. (as the case
may be) has full corporate power and authority to enter into the Merger
Documents and the other agreements to be made pursuant to the Merger
Documents, and to carry out the transactions contemplated hereby and
thereby. All corporate acts and proceedings required for the authorization,
execution, delivery and performance of the Merger Documents and such other
agreements and documents by Parent and/or Acquisition Corp. (as the case
may be) have been duly and validly taken or will have been so taken prior
to the Closing. Each of the Merger Documents constitutes a legal, valid and
binding obligation of Parent and/or Acquisition Corp. (as the case may be),
each enforceable against them in accordance with their respective terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally
and by general principles of equity.
3.3 Broker's and Finder's Fees. No person, firm, corporation or other entity is
entitled by reason of any act or omission of Parent or Acquisition Corp. to
any broker's or finder's fees, commission or other similar compensation
with respect to the execution and delivery of this Agreement or the
11
Certificate of Merger, or with respect to the consummation of the
transactions contemplated hereby or thereby, except as disclosed in
Schedule 3.3 hereto. Parent and Acquisition Corp. jointly and severally
indemnify and hold Company harmless from and against any and all loss,
claim or liability arising out of any such claim from any other Person who
claim they introduced Parent or Acquisition Corp. to, or assisted them with
the transactions contemplated by or described herein.
3.4 Capitalization of Parent. The authorized capital stock of Parent consists
of 75,000,000 shares of common stock , par value $0.001 per share (the
"Parent Common Stock"), of which not more than 1,559,286 shares will be,
prior to the Effective Time, issued and outstanding after taking into
consideration the cancellation of Parent Common Stock as indicated in
Section 7.2(f)(7)(iii) hereof., Parent has no outstanding options, rights
or commitments to issue shares of Parent Common Stock or any other Equity
Security of Parent or Acquisition Corp., and there are no outstanding
securities convertible or exercisable into or exchangeable for shares of
Parent Common Stock or any other Equity Security of Parent or Acquisition
Corp, excluding the warrants to be issued in connection with the Private
Placement. There is no voting trust, agreement or arrangement among any of
the beneficial holders of Parent Common Stock affecting the nomination or
election of directors or the exercise of the voting rights of Parent Common
Stock. All outstanding shares of the capital stock of Parent are validly
issued and outstanding, fully paid and nonassessable, and none of such
shares have been issued in violation of the preemptive rights of any
person.
3.5 Acquisition Corp. Acquisition Corp. is a wholly-owned subsidiary of Parent
that was formed specifically for the purpose of the Merger and that has not
conducted any business or acquired any property, and will not conduct any
business or acquire any property prior to the Closing Date, except in
preparation for and otherwise in connection with the transactions
contemplated by this Agreement, the Certificate of Merger and the other
agreements to be made pursuant to or in connection with this Agreement and
the Certificate of Merger.
3.6 Validity of Shares. The shares of Parent Common Stock to be issued at the
Closing pursuant to Section 1.5(a)(ii) hereof, when issued and delivered in
accordance with the terms hereof and of the Certificate of Merger, shall be
duly and validly issued, fully paid and nonassessable. Based in part on the
representations and warranties of the Shareholders as contemplated by
Section 4 hereof and assuming the accuracy thereof, the issuance of the
Parent Common Stock upon the Merger pursuant to Section 1.5(a)(ii) will be
exempt from the registration and prospectus delivery requirements of the
Securities Act and from the qualification or registration requirements of
any applicable state blue sky or securities laws.
3.7 SEC Reporting and Compliance.
(a) Parent has filed two registration statements on Form SB-2 under the
Securities Act, one filed May 9, 2006 which became effective July 17,
2006 and the second filed October 26, 2006 which became effective
November 29, 2006. Since July 17, 2006, Parent has filed, on a timely
basis, with the Commission all registration statements, proxy
statements, information statements and reports required to be filed
pursuant to the Exchange Act. Parent has not filed with the Commission
a certificate on Form 15 pursuant to Rule 12h-3 of the Exchange Act.
12
(b) None of the registration statements, information statements and other
reports (collectively, the "Parent SEC Documents") filed by the Parent
with the Commission, as of their respective dates, contained any
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements contained therein not
misleading.
(c) Except as set forth on Schedule 3.7, Parent has not filed, and nothing
has occurred with respect to which Parent would be required to file,
any report on Form 8-K since October 10, 2006. Prior to and until the
Closing, Parent will provide to the Company copies of any and all
amendments or supplements to the Parent SEC Documents filed with the
Commission since October 10, 2006 and all subsequent registration
statements and reports filed by Parent subsequent to the filing of the
Parent SEC Documents with the Commission and any and all subsequent
information statements, proxy statements, reports or notices filed by
the Parent with the Commission or delivered to the shareholders of
Parent.
(d) Parent is not an investment company within the meaning of Section 3 of
the Investment Company Act.
(e) The shares of Parent Common Stock are quoted on the Over-the-Counter
(OTC) Bulletin Board under the symbol "WDNP.OB," and Parent is in
compliance in all material respects with all rules and regulations of
the OTC Bulletin Board applicable to it and the Parent Common Stock.
(f) Between the date hereof and the Closing Date, Parent shall continue to
timely satisfy the filing requirements of the Exchange Act and all
other requirements of applicable securities laws, the OTC Bulletin
Board and the National Association of Securities Dealers, including,
but not limited to the timely filing of notices required by Rule
10b-17 under the Securities Act.
(g) Parent has otherwise complied with the Securities Act, Exchange Act
and all other applicable federal and state securities laws, including,
but not limited to, Regulation S promulgated under the Securities Act.
(h) Parent is not a "blank check company" subject to the requirements of
Rule 419 of the Securities Act.
3.8 Financial Statements. The balance sheets, and statements of income, changes
in financial position and shareholders' equity contained in the Parent SEC
Documents (the "Parent Financial Statements") (i) have been prepared in
accordance with GAAP applied on a basis consistent with prior periods (and,
in the case of unaudited financial information, on a basis consistent with
year-end audits), (ii) are in accordance with the books and records of the
Parent, and (iii) present fairly in all material respects the financial
condition of the Parent at the dates therein specified and the results of
its operations and changes in financial position for the periods therein
specified. The financial statements included in the Annual Report on Form
10-KSB for the fiscal year ended February 28, 2007, are as audited by, and
include the related opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, Parent's independent
certified public accountants that are registered with the Public Company
Accounting Oversight Board.
13
3.9 Governmental Consents. All material consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations,
declarations, or filings with any federal or state governmental authority
on the part of Parent or Acquisition Corp. required in connection with the
consummation of the Merger shall have been obtained prior to, and be
effective as of, the Closing.
3.10 Compliance with Laws and Other Instruments. The execution, delivery and
performance by Parent and/or Acquisition Corp. of this Agreement, the
Certificate of Merger and the other agreements to be made by Parent or
Acquisition Corp. pursuant to or in connection with this Agreement or the
Certificate of Merger and the consummation by Parent and/or Acquisition
Corp. of the transactions contemplated by the Merger Documents will not
cause Parent and/or Acquisition Corp. to violate or contravene (i) any
provision of law, (ii) any rule or regulation of any agency or government,
(iii) any order, judgment or decree of any court, or (iv) any provision of
their respective certificates of incorporation or by-laws as amended and in
effect on and as of the Closing Date and will not violate or be in conflict
with, result in a breach of or constitute (with or without notice or lapse
of time, or both) a default under any indenture, loan or credit agreement,
deed of trust, mortgage, security agreement or other agreement or contract
to which Parent or Acquisition Corp. is a party or by which Parent and/or
Acquisition Corp. or any of their respective properties is bound.
3.11 No General Solicitation. In issuing Parent Common Stock in the Merger
hereunder, neither Parent nor anyone acting on its behalf has offered to
sell the Parent Common Stock by any form of general solicitation or
advertising.
3.12 Binding Obligations. The Merger Documents constitute the legal, valid and
binding obligations of the Parent and Acquisition Corp., and are
enforceable against the Parent and Acquisition Corp., in accordance with
their respective terms, except as such enforcement is limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
3.13 Absence of Undisclosed Liabilities. Neither Parent nor Acquisition Corp.
has any material obligation or liability (whether accrued, absolute,
contingent, liquidated or otherwise, whether due or to become due), arising
out of any transaction entered into at or prior to the Closing, except (a)
as disclosed in the Parent SEC Documents, (b) to the extent set forth on or
reserved against in the balance sheet of Parent as of February 28, 2007
(the "Parent Balance Sheet") or the Notes to the Parent Financial
Statements, (c) current liabilities incurred and obligations under
agreements entered into in the usual and ordinary course of business since
February 28, 2007 (the "Parent Balance Sheet Date"), none of which
(individually or in the aggregate) materially and adversely affects the
condition (financial or otherwise), properties, assets, liabilities,
business operations, results of operations or prospects of the Parent or
Acquisition Corp., taken as a whole (the "Condition of the Parent"), and
(d) by the specific terms of any written agreement, document or arrangement
attached as an exhibit to the Parent SEC Documents.
3.14 Changes. Since the Parent Balance Sheet Date, except as disclosed in the
Parent SEC Documents, the Parent has not (a) incurred any debts,
obligations or liabilities, absolute, accrued or, to the Parent's
knowledge, contingent, whether due or to become due, except for current
14
liabilities incurred in the usual and ordinary course of business, (b)
discharged or satisfied any Liens other than those securing, or paid any
obligation or liability other than, current liabilities shown on the Parent
Balance Sheet and current liabilities incurred since the Parent Balance
Sheet Date, in each case in the usual and ordinary course of business, (c)
mortgaged, pledged or subjected to Lien any of its assets, tangible or
intangible, other than in the usual and ordinary course of business, (d)
sold, transferred or leased any of its assets, except in the usual and
ordinary course of business, (e) cancelled or compromised any debt or
claim, or waived or released any right of material value, (f) suffered any
physical damage, destruction or loss (whether or not covered by insurance)
which could reasonably be expected to have a material adverse effect on the
Condition of the Parent, (g) entered into any transaction other than in the
usual and ordinary course of business, (h) encountered any labor union
difficulties, (i) made or granted any wage or salary increase or made any
increase in the amounts payable under any profit sharing, bonus, deferred
compensation, severance pay, insurance, pension, retirement or other
employee benefit plan, agreement or arrangement, or entered into any
employment agreement, (j) issued or sold any shares of capital stock,
bonds, notes, debentures or other securities or granted any options
(including employee stock options), warrants or other rights with respect
thereto, excluding the shares of preferred stock and warrants to be issued
in connection with the Private Placement, (k) declared or paid any
dividends on or made any other distributions with respect to, or purchased
or redeemed, any of its outstanding capital stock, (l) suffered or
experienced any change in, or condition affecting, the financial condition
of the Parent other than changes, events or conditions in the usual and
ordinary course of its business, none of which (either by itself or in
conjunction with all such other changes, events and conditions) could
reasonably be expected to have a material adverse effect on the Condition
of the Parent, (m) made any change in the accounting principles, methods or
practices followed by it or depreciation or amortization policies or rates
theretofore adopted, (n) made or permitted any amendment or termination of
any material contract, agreement or license to which it is a party, (o)
suffered any material loss not reflected in the Parent Balance Sheet or its
statement of income for the year ended on the Parent Balance Sheet Date,
(p) paid, or made any accrual or arrangement for payment of, bonuses or
special compensation of any kind or any severance or termination pay to any
present or former officer, director, employee, shareholder or consultant,
(q) made or agreed to make any charitable contributions or incurred any
non-business expenses, or (r) entered into any agreement, or otherwise
obligated itself, to do any of the foregoing.
3.15 Tax Returns and Audits. All required federal, state and local Tax Returns
of the Parent have been accurately prepared in all material respects and
duly and timely filed, and all federal, state and local Taxes required to
be paid with respect to the periods covered by such returns have been paid
to the extent that the same are material and have become due, except where
the failure so to file or pay could not reasonably be expected to have a
material adverse effect upon the Condition of the Parent. The Parent is not
and has not been delinquent in the payment of any Tax. The Parent has not
had a Tax deficiency assessed against it. None of the Parent's federal
income tax returns nor any state or local income or franchise tax returns
has been audited by governmental authorities. The reserves for Taxes
reflected on the Parent Balance Sheet are sufficient for the payment of all
unpaid Taxes payable by the Parent with respect to the period ended on the
Parent Balance Sheet Date. There are no federal, state, local or foreign
audits, actions, suits, proceedings, investigations, claims or
administrative proceedings relating to Taxes or any Tax Returns of the
Parent now pending, and the Parent has not received any notice of any
proposed audits, investigations, claims or administrative proceedings
relating to Taxes or any Tax Returns.
15
3.16 Employee Benefit Plans; ERISA. There are no "employee benefit plans"
(within the meaning of Section 3(3) of ERISA) nor any other employee
benefit or fringe benefit arrangements, practices, contracts, policies or
programs established, maintained or contributed to by the Parent.
3.17 Litigation. There is no legal action, suit, arbitration or other legal,
administrative or other governmental proceeding pending or, to the
knowledge of the Parent, threatened against or affecting the Parent or
Acquisition Corp. or their properties, assets or business. To the knowledge
of the Parent, neither Parent nor Acquisition Corp. is in default with
respect to any order, writ, judgment, injunction, decree, determination or
award of any court or any governmental agency or instrumentality or
arbitration authority.
3.18 Interested Party Transactions. No officer, director or shareholder of the
Parent or any Affiliate or "associate" (as such term is defined in Rule 405
under the Securities Act) of any such Person or the Parent has or has had,
either directly or indirectly, (a) an interest in any Person that (i)
furnishes or sells services or products that are furnished or sold or are
proposed to be furnished or sold by the Parent or (ii) purchases from or
sells or furnishes to the Parent any goods or services, or (b) a beneficial
interest in any contract or agreement to which the Parent is a party or by
which it may be bound or affected.
3.19 Questionable Payments. Neither the Parent, Acquisition Corp. nor to the
knowledge of the Parent, any director, officer, agent, employee or other
Person associated with or acting on behalf of the Parent or Acquisition
Corp., has used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity;
made any direct or indirect unlawful payments to government officials or
employees from corporate funds; established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; made any false or
fictitious entries on the books of record of any such corporations; or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
3.20 Obligations to or by Shareholders. The Parent has no liability or
obligation or commitment to any shareholder of Parent or any Affiliate or
"associate" (as such term is defined in Rule 405 under the Securities Act)
of any shareholder of Parent, nor does any shareholder of Parent or any
such Affiliate or associate have any liability, obligation or commitment to
the Parent.
3.21 Schedule of Assets and Contracts. Except as expressly set forth in this
Agreement, the Parent Balance Sheet or the notes thereto, the Parent is not
a party to any written or oral agreement not made in the ordinary course of
business that is material to the Parent. Parent does not own any real
property. Parent is not a party to or otherwise barred by any written or
oral (a) agreement with any labor union, (b) agreement for the purchase of
fixed assets or for the purchase of materials, supplies or equipment in
excess of normal operating requirements, (c) agreement for the employment
of any officer, individual employee or other Person on a full-time basis or
any agreement with any Person for consulting services, (d) bonus, pension,
profit sharing, retirement, stock purchase, stock option, deferred
compensation, medical, hospitalization or life insurance or similar plan,
contract or understanding with respect to any or all of the employees of
Parent or any other Person, (e) indenture, loan or credit agreement, note
agreement, deed of trust, mortgage, security agreement, promissory note or
other agreement or instrument relating to or evidencing Indebtedness for
16
Borrowed Money or subjecting any asset or property of Parent to any Lien or
evidencing any Indebtedness, (f) guaranty of any Indebtedness, (g) lease or
agreement under which Parent is lessee of or holds or operates any
property, real or personal, owned by any other Person, (h) lease or
agreement under which Parent is lessor or permits any Person to hold or
operate any property, real or personal, owned or controlled by Parent, (i)
agreement granting any preemptive right, right of first refusal or similar
right to any Person, (j) agreement or arrangement with any Affiliate or any
"associate" (as such term is defined in Rule 405 under the Securities Act)
of Parent or any present or former officer, director or shareholder of
Parent, (k) agreement obligating Parent to pay any royalty or similar
charge for the use or exploitation of any tangible or intangible property,
(1) covenant not to compete or other restriction on its ability to conduct
a business or engage in any other activity, (m) distributor, dealer,
manufacturer's representative, sales agency, franchise or advertising
contract or commitment, (n) agreement to register securities under the
Securities Act, (o) collective bargaining agreement, or (p) agreement or
other commitment or arrangement with any Person continuing for a period of
more than three months from the Closing Date that involves an expenditure
or receipt by Parent in excess of $1,000. The Parent maintains no insurance
policies and insurance coverage of any kind with respect to Parent, its
business, premises, properties, assets, employees and agents. Schedule 3.21
contains a true and complete list and description of each bank account,
savings account, other deposit relationship and safety deposit box of
Parent, including the name of the bank or other depository, the account
number and the names of the individuals having signature or other
withdrawal authority with respect thereto. Except as disclosed on Schedule
3.21, no consent of any bank or other depository is required to maintain
any bank account, other deposit relationship or safety deposit box of
Parent in effect following the consummation of the Merger and the
transactions contemplated hereby. Parent has furnished to the Company true
and complete copies of all agreements and other documents disclosed or
referred to in Schedule 3.21, as well as any additional agreements or
documents, requested by the Company.
3.22 Employees. Parent is not under any obligation or liability to any officer,
director, employee or Affiliate of Parent.
3.23 Disclosure. There is no fact relating to Parent that Parent has not
disclosed to the Company in writing that materially and adversely affects
nor, insofar as Parent can now foresee, will materially and adversely
affect, the condition (financial or otherwise), properties, assets,
liabilities, business operations, results of operations or prospects of
Parent. No representation or warranty by Parent herein and no information
disclosed in the schedules or exhibits hereto by Parent contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements contained herein or therein misleading.
4. Conduct of Businesses Pending the Merger.
4.1 Conduct of Business by the Company Pending the Merger. Prior to the
Effective Time, unless Parent or Acquisition Corp. shall otherwise agree in
writing or as otherwise contemplated by this Agreement:
(i) the business of the Company shall be conducted only in the ordinary
course;
17
(ii) the Company shall not (A) directly or indirectly redeem, purchase or
otherwise acquire or agree to redeem, purchase or otherwise acquire
any shares of its capital stock; (B) amend its Certificate of
Incorporation or By-laws; or (C) split, combine or reclassify the
outstanding Company Stock or declare, set aside or pay any dividend
payable in cash, stock or property or make any distribution with
respect to any such stock, other than the 4.15-for-1 forward stock
split of shares of Parent Common Stock (the "Parent Stock Split").
(iii) the Company shall not (A) issue or agree to issue any additional
shares of, or options, warrants or rights of any kind to acquire any
shares of, Company Stock, except to issue shares of Company Common
Stock in connection with the exercise of stock options outstanding on
the date hereof; (B) acquire or dispose of any fixed assets or acquire
or dispose of any other substantial assets other than in the ordinary
course of business; (C) incur additional Indebtedness or any other
liabilities or enter into any other transaction other than in the
ordinary course of business; (D) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing; or (E)
except as contemplated by this Agreement, enter into any contract,
agreement, commitment or arrangement to dissolve, merge, consolidate
or enter into any other material business combination;
(iv) the Company shall use its best efforts to preserve intact the business
organization of the Company, to keep available the service of its
present officers and key employees, and to preserve the good will of
those having business relationships with it; and
(v) the Company will not, nor will it authorize any director or authorize
or permit any officer or employee or any attorney, accountant or other
representative retained by it to, make, solicit, encourage any
inquiries with respect to, or engage in any negotiations concerning,
any Acquisition Proposal (as defined below). The Company will promptly
advise Parent orally and in writing of any such inquiries or proposals
(or requests for information) and the substance thereof. As used in
this paragraph, "Acquisition Proposal" shall mean any proposal for a
merger or other business combination involving the Company or for the
acquisition of a substantial equity interest in it or any material
assets of it other than as contemplated by this Agreement. The Company
will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any person conducted
heretofore with respect to any of the foregoing.
4.2 Conduct of Business by Parent and Acquisition Corp. Pending the Merger.
Prior to the Effective Time, unless the Company shall otherwise agree in
writing or as otherwise contemplated by this Agreement:
(i) the business of Parent and Acquisition Corp. shall be conducted only
in the ordinary course; provided, however, that Parent shall take the
steps necessary to have discontinued its existing business without
liability to Parent or Acquisition Corp. as of the Closing Date;
(ii) neither Parent nor Acquisition Corp. shall (A) directly or indirectly
redeem, purchase or otherwise acquire or agree to redeem, purchase or
otherwise acquire any shares of its capital stock; (B) amend its
certificate of incorporation or by-laws other than to effectuate the
Reverse Split, and as reasonably request by the Company; or (C) split,
combine or reclassify its capital stock or declare, set aside or pay
any dividend payable in cash, stock or property or make any
distribution with respect to such stock other than the Reverse Split;
18
(iii) neither Parent nor Acquisition Corp. shall (A) issue or agree to
issue any additional shares of, or options, warrants or rights of any
kind to acquire shares of, its capital stock, excluding the shares of
preferred stock and warrants to be issued in connection with the
Private Placement; (B) acquire or dispose of any assets other than in
the ordinary course of business (except for dispositions in connection
with Section 5.2(i) hereof); (C) incur additional Indebtedness or any
other liabilities or enter into any other transaction except in the
ordinary course of business; (D) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing, or (E)
except as contemplated by this Agreement, enter into any contract,
agreement, commitment or arrangement to dissolve, merge; consolidate
or enter into any other material business contract or enter into any
negotiations in connection therewith;
(iv) neither the Parent nor Acquisition will, nor will they authorize any
director or authorize or permit any officer or employee or any
attorney, accountant or other representative retained by them to,
make, solicit, encourage any inquiries with respect to, or engage in
any negotiations concerning, any Acquisition Proposal (as defined
below for purposes of this paragraph). Parent will promptly advise the
Company orally and in writing of any such inquiries or proposals (or
requests for information) and the substance thereof. As used in this
paragraph, "Acquisition Proposal" shall mean any proposal for a merger
or other business combination involving the Parent or Acquisition Corp
or for the acquisition of a substantial equity interest in either of
them or any material assets of either of them other than as
contemplated by this Agreement. The Parent will immediately cease and
cause to be terminated any existing activities, discussions or
negotiations with any person conducted heretofore with respect to any
of the foregoing; and
(v) neither the Parent nor Acquisition will enter into any new employment
agreements with any of their officers or employees or grant any
increases in the compensation or benefits of their officers and
employees.
5. Additional Agreements.
5.1 Access and Information. The Company, Parent and Acquisition Corp. shall
each afford to the other and to the other's accountants, counsel and other
representatives full access during normal business hours throughout the
period prior to the Effective Time of all of its properties, books,
contracts, commitments and records (including but not limited to tax
returns) and during such period, each shall furnish promptly to the other
all information concerning its business, properties and personnel as such
other party may reasonably request, provided that no investigation pursuant
to this Section 6.1 shall affect any representations or warranties made
herein. Each party shall hold, and shall cause its employees and agents to
hold, in confidence all such information (other than such information which
(i) is already in such party's possession or (ii) becomes generally
available to the public other than as a result of a disclosure by such
party or its directors, officers, managers, employees, agents or advisors,
or (iii) becomes available to such party on a non-confidential basis from a
source other than a party hereto or its advisors, provided that such source
19
is not known by such party to be bound by a confidentiality agreement with
or other obligation of secrecy to a party hereto or another party until
such time as such information is otherwise publicly available; provided,
however, that (A) any such information may be disclosed to such party's
directors, officers, employees and representatives of such party's advisors
who need to know such information for the purpose of evaluating the
transactions contemplated hereby (it being understood that such directors,
officers, employees and representatives shall be informed by such party of
the confidential nature of such information), (B) any disclosure of such
information may be made as to which the party hereto furnishing such
information has consented in writing, and (C) any such information may be
disclosed pursuant to a judicial, administrative or governmental order or
request; provided, however, that the requested party will promptly so
notify the other party so that the other party may seek a protective order
or appropriate remedy and/or waive compliance with this Agreement and if
such protective order or other remedy is not obtained or the other party
waives compliance with this provision, the requested party will furnish
only that portion of such information which is legally required and will
exercise its best efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded the information
furnished). If this Agreement is terminated, each party will deliver to the
other all documents and other materials (including copies) obtained by such
party or on its behalf from the other party as a result of this Agreement
or in connection herewith, whether so obtained before or after the
execution hereof.
5.2 Additional Agreements. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use its commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
by this Agreement, including using its commercially reasonable efforts to
satisfy the conditions precedent to the obligations of any of the parties
hereto to obtain all necessary waivers, and to lift any injunction or other
legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible). In order to obtain any necessary governmental
or regulatory action or non-action, waiver, consent, extension or approval,
each of Parent, Acquisition Corp. and the Company agrees to take all
reasonable actions and to enter into all reasonable agreements as may be
necessary to obtain timely governmental or regulatory approvals and to take
such further action in connection therewith as may be necessary. In case at
any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers
and/or directors of Parent, Acquisition Corp. and the Company shall take
all such necessary action.
5.3 Publicity. No party shall issue any press release or public announcement
pertaining to the Merger that has not been agreed upon in advance by Parent
and the Company, except as Parent reasonably determines to be necessary in
order to comply with the rules of the Commission or of the principal
trading exchange or market for Parent Common Stock, provided that in such
case Parent will use its best efforts to allow Company to review and
reasonably approve any same prior to its release.
5.4 Appointment of Directors. Immediately upon the Effective Time, Parent shall
accept the resignations of the current officers and directors of Parent as
provided by Section 7.2(f)(7) hereof, and shall cause the persons listed as
directors in Exhibit D hereto to be elected to the Board of Directors of
Parent. At the first annual meeting of Parent shareholders and thereafter,
the election of members of Parent's Board of Directors shall be
accomplished in accordance with the by-laws of Parent.
20
5.5 Parent Name Change and Exchange Listing. At the Effective Time, Parent
shall take all required legal actions to change its corporate name to
"Visual Management Systems, Inc.," including, but not limited to, filing an
Amended and Restated Certificate of Incorporation in the form annexed as
Exhibit E hereto (the Amended and Restated COI") with the Secretary of
State, State of Nevada. Promptly following the Effective Time, Parent shall
take all required actions to, upon satisfaction of the original listing
requirements, list the Parent Common Stock for trading on the American
Stock Exchange or the NASDAQ Capital Market.
5.6 Parent Reverse Stock Split. Parent shall, promptly after execution of this
Agreement, take all steps necessary to effectuate a 1-for-7 reverse split
of the Parent Common Stock (the "Reverse Split"), including, but not
limited to, the sending of all notices required by Rule 10b-17 under the
Securities Act and the obtaining of shareholder approval of the Reverse
Split.
5.7 Preferred Stock. Parent shall, promptly after execution of this Agreement,
take all steps necessary to amend its certificate of incorporation to
create a class of "blank check" preferred stock, consisting of 20,000,000
shares, $.001 par value per share, having rights, designations, and
preferences as shall be established by the Board of Directors, of which
2,300 shares shall be designated as Series A Convertible Preferred Stock
and have the rights and preferences set forth in the Amended and Restated
COI.
5.8 Stock Incentive Plan. At the Effective Time, Parent shall adopt a new
equity incentive plan, or amend Parent's existing equity incentive plan in
a form acceptable to the Company and reserve thereunder a number of shares
of Parent Common Stock as is equal to twenty percent (20%) of the number of
shares of Parent Common Stock to be issued and outstanding following the
Merger, on a fully diluted as converted basis.
6. Conditions of Parties' Obligations.
6.1 Parent and Acquisition Corp. Obligations. The obligations of Parent and
Acquisition Corp. under this Agreement and the Certificate of Merger are
subject to the fulfillment at or prior to the Closing of the following
conditions, any of which may be waived in whole or in part by Parent.
(a) No Errors, etc. The representations and warranties of the Company
under this Agreement shall be deemed to have been made again on the
Closing Date and shall then be true and correct in all material
respects.
(b) Compliance with Agreement. The Company shall have performed and
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on
or before the Closing Date.
(c) No Default or Adverse Change. There shall not exist on the Closing
Date any Default or any event or condition that, with the giving of
notice or lapse of time, or both, would constitute a Default, and
since the Balance Sheet Date, there shall have been no material
adverse change in the Condition of the Company.
21
(d) Certificate of Officers. The Company shall have delivered to Parent
and Acquisition Corp. a certificate dated the Closing Date, executed
on its behalf by the Chief Executive Officer and Chief Financial
Officer of the Company, certifying the satisfaction of the conditions
specified in paragraphs (a), (b) and (c) of this Section 6.1.
(e) Consummation of Private Placement. Consummation of the Merger shall
occur simultaneously with the initial closing of the Private
Placement.
(f) No Restraining Action. No action or proceeding before any court,
governmental body or agency shall have been threatened, asserted or
instituted to restrain or prohibit, or to obtain substantial damages
in respect of, this Agreement or the Certificate of Merger or the
carrying out of the transactions contemplated by the Merger Documents.
(g) Supporting Documents. Parent and Acquisition Corp. shall have received
the following:
(1) Copies of resolutions of the Board of Directors and the
shareholders of the Company, certified by the Secretary of the
Company, authorizing and approving the execution, delivery and
performance of the Merger Documents and all other documents and
instruments to be delivered pursuant hereto and thereto.
(2) A certificate of incumbency executed by the Secretary of the
Company certifying the names, titles and signatures of the
officers authorized to execute any documents referred to in this
Agreement and further certifying that the Certificate of
Incorporation and By-laws of the Company delivered to Parent and
Acquisition Corp. at the time of the execution of this Agreement
have been validly adopted and have not been amended or modified.
(3) A certificate, dated the Closing Date, executed by the Company's
Secretary, certifying that, except for the filing of the
Certificate of Merger: (i) all consents, authorizations, orders
and approvals of, and filings and registrations with, any court,
governmental body or instrumentality that are required for the
execution and delivery of this Agreement and the Certificate of
Merger and the consummation of the Merger shall have been duly
made or obtained, and all material consents by third parties that
are required for the Merger have been obtained; and (ii) no
action or proceeding before any court, governmental body or
agency has been threatened, asserted or instituted to restrain or
prohibit, or to obtain substantial damages in respect of, this
Agreement or the Certificate of Merger or the carrying out of the
transactions contemplated by the Merger Documents.
(4) Evidence as of a recent date of the good standing and corporate
existence of the Company issued by the Secretary of State of the
State of New Jersey and evidence that the Company is qualified to
transact business as a foreign corporation and is in good
standing in each state of the United States and in each other
jurisdiction where the character of the property owned or leased
by it or the nature of its activities makes such qualification
necessary.
(5) Lock-Up agreements, in the form attached hereto as Exhibit F, for
all shares of Parent Common Stock issued to the former holders of
Company Common Stock, except for such shares held by certain
shareholders whose names are set forth on Schedule 7.1, which
provide that the shares will not be, directly or indirectly,
publicly sold, subject to a contract for sale or otherwise
transferred except with the consent of the Parent.
22
(6) Such additional supporting documentation and other information
with respect to the transactions contemplated hereby as Parent
and Acquisition Corp. may reasonably request.
(h) Consents. The Company shall have obtained and delivered to Acquisition
Corp. written consents, reasonably satisfactory in form and substance
to Parent, from each party listed in Schedule 6.1(h) consenting to the
Merger.
(i) Proceedings and Documents. All corporate and other proceedings and
actions taken by the Company in connection with the transactions
contemplated hereby and all certificates, opinions, agreements,
instruments and documents mentioned herein or incident to any such
transactions shall be reasonably satisfactory in form and substance to
Parent and Acquisition Corp. The Company shall furnish to Parent and
Acquisition Corp. such supporting documentation and evidence of the
satisfaction of any or all of the conditions precedent specified in
this Section 7.1 as Parent or its counsel may reasonably request.
6.2 Company Obligations. The obligations of the Company under this Agreement
and the Certificate of Merger are subject to the fulfillment at or prior to
the Closing of the following conditions:
(a) No Errors, etc. The representations and warranties of Parent and
Acquisition Corp. under this Agreement shall be deemed to have been
made again on the Closing Date and shall then be true and correct in
all material respects.
(b) Compliance with Agreement. Parent and Acquisition Corp. shall have
performed and complied in all material respects with all agreements
and covenants required by this Agreement and the Certificate of Merger
to be performed or complied with by them on or before the Closing
Date.
(c) No Default or Adverse Change. There shall not exist on the Closing
Date any Default or Event of Default or any event or condition, that
with the giving of notice or lapse of time, or both, would constitute
a Default of Event of Default, and since the Parent Balance Sheet
Date, there shall have been no material adverse change in the
Condition of the Parent.
(d) Certificate of Officers. Parent and Acquisition Corp. shall have
delivered to the Company a certificate dated the Closing Date,
executed on their behalf by their respective Presidents or other duly
authorized officers, certifying the satisfaction of the conditions
specified in paragraphs (a), (b), and (c) of this Section 7.2.
(e) Consummation of Private Placement. Consummation of the Merger shall
occur simultaneously with the initial closing of the Private
Placement.
(f) Opinion of Parent's Counsel. The Company shall have received from
counsel for Parent, a favorable opinion dated the Closing Date to the
effect set forth in Exhibit G hereto.
23
(g) Supporting Documents. The Company shall have received the following:
(1) Copies of resolutions of Parent's and Acquisition Corp.'s
respective board of directors and the sole shareholder of
Acquisition Corp., certified by their respective Secretaries,
authorizing and approving, to the extent applicable, the
execution, delivery and performance of this Agreement, the
Certificate of Merger and all other documents and instruments to
be delivered by them pursuant hereto and thereto.
(2) A certificate of incumbency executed by the respective
Secretaries of Parent and Acquisition Corp. certifying the names,
titles and signatures of the officers authorized to execute the
documents referred to in paragraph (i) above and further
certifying that the certificates of incorporation and by-laws of
Parent and Acquisition Corp. appended thereto have not been
amended or modified.
(3) A certificate, dated the Closing Date, executed by the Secretary
of each of the Parent and Acquisition Corp., certifying that,
except for the filing of the Certificate of Merger: (i) all
consents, authorizations, orders and approvals of, and filings
and registrations with, any court, governmental body or
instrumentality that are required for the execution and delivery
of this Agreement and the Certificate of Merger and the
consummation of the Merger shall have been duly made or obtained,
and all material consents by third parties required for the
Merger have been obtained; and (ii) no action or proceeding
before any court, governmental body or agency has been
threatened, asserted or instituted to restrain or prohibit, or to
obtain substantial damages in respect of, this Agreement or the
Certificate of Merger or the carrying out of the transactions
contemplated by any of the Merger Documents.
(4) A certificate of Island Stock Transfer, Parent's transfer agent
and registrar, certifying as of the business day prior to the
date any shares of Parent Common Stock are first issued in the
Private Placement, and before taking into consideration the
cancellation of Parent Common Stock as indicated in Section
7.2(f)(7)(iii) hereof, a true and complete list of the names and
addresses of the record owners of all of the outstanding shares
of Parent Common Stock, together with the number of shares of
Parent Common Stock held by each record owner.
(5) An opinion letter from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Parent's counsel
setting forth that the number of shares of Parent Common Stock
that would be issued and outstanding as of the Closing Date after
taking into consideration the Reverse Stock Split and
cancellation of Parent Common Stock as indicated in Section
7.2(f)(7)(iii) hereof, but prior to the closing of the Merger, is
no more than 1,559,286 shares of Parent Common Stock.
(6) An agreement in writing from ▇▇▇▇▇▇▇▇▇▇▇ & Co., in form and
substance reasonably satisfactory to the Company, to deliver
copies of the audit opinions with respect to any and all
financial statements of Parent that had been audited by such
firm.
(7) The executed resignation of each of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ of their positions as officers of Parent, which
resignations are to take effect at the Effective Time, (ii) an
executed representation, warranty and indemnification agreement,
in the form attached hereto as Exhibit H, from each of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and (iii) stock powers executed in
blank, with signatures medallion guaranteed, evidencing the
cancellation of an aggregate of 3,335,000 shares (before giving
effect to the Reverse Split) of Parent Common Stock owned by
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in consideration for $200,000.
24
(8) Evidence as of a recent date of the good standing and corporate
existence of each of the Parent and Acquisition Corp. issued by
the Secretary of State of their respective states of
incorporation and evidence that the Parent and Acquisition Corp.
are qualified to transact business as foreign corporations and
are in good standing in each state of the United States and in
each other jurisdiction where the character of the property owned
or leased by them or the nature of their activities makes such
qualification necessary.
(9) Evidence that Parent has filed all tax returns required to be
filed with the United States Internal Revenue Service, the State
of Nevada and Canada and that Parent has no liabilities for taxes
or penalties for failure to timely file tax returns.
(10) Such additional supporting documentation and other information
with respect to the transactions contemplated hereby as the
Company may reasonably request.
(h) Consents. The Company shall have obtained and delivered to Acquisition
Corp. written consents, reasonably satisfactory in form and substance
to Parent, from each party listed in Schedule 6.1(k) consenting to the
Merger.
(i) Proceedings and Documents. All corporate and other proceedings and
actions taken by the Company and Acquisition Corp. in connection with
the transactions contemplated hereby and all certificates, opinions,
agreements, instruments and documents mentioned herein or incident to
any such transactions shall be mutually satisfactory in form and
substance to the Company, Parent and Acquisition Corp. Parent and
Acquisition Corp. shall furnish to the Company such supporting
documentation and evidence of satisfaction of any or all of the
conditions specified in this Section 7.2 as the Company may reasonably
request.
(j) OTC Bulletin Board Listing. The Parent Common Stock shall not have
been removed from the OTC Bulletin Board quotation system.
7. Non-Survival of Representations and Warranties. The representations and
warranties of the parties made in Sections 2 and 3 of this Agreement
(including the Schedules to the Agreement which are hereby incorporated by
reference) shall not survive beyond the Effective Time. This Section 8
shall not limit any claim for fraud or any covenant or agreement of the
parties which by its terms contemplates performance after the Effective
Time.
8. Amendment of Agreement. This Agreement and the Certificate of Merger may be
amended or modified at any time in all respects by an instrument in writing
executed (i) in the case of this Agreement by the parties hereto and (ii)
in the case of the Certificate of Merger by the parties thereto.
25
9. Definitions. Unless the context otherwise requires, the terms defined in
this Section 10 shall have the meanings herein specified for all purposes
of this Agreement, applicable to both the singular and plural forms of any
of the terms herein defined.
"Acquisition Corp." means VMS Acquisition Corp., a New Jersey corporation.
"Affiliate" shall mean any Person that directly or indirectly controls, is
controlled by, or is under common control with, the indicated Person.
"Agreement" shall mean this Agreement.
"Certificate of Merger" shall have the meaning assigned to it in the second
recital of this Agreement.
"Balance Sheet" and "Balance Sheet Date" shall have the meanings assigned
to such terms in Section 2.10 hereof.
"Closing" and "Closing Date" shall have the meanings assigned to such terms
in Section 11 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Company" shall mean Visual Management Systems Holding, Inc., a New Jersey
corporation.
"Company Common Stock" shall mean the common stock, par value $.01 per
share, of the Company.
"Condition of the Company" shall have the meaning assigned to it in Section
2.2 hereof.
"Condition of the Parent" shall have the meaning assigned to it in Section
3.13 hereof.
"Default" shall mean a default or failure in the due observance or
performance of any covenant, condition or agreement on the part of the
Company to be observed or performed under the terms of this Agreement or
the Certificate of Merger, if such default or failure in performance shall
remain unremedied for five (5) days.
"Effective Time" shall have the meaning assigned to it in Section 1.2
hereof.
"Employee Benefit Plans" shall have the meaning assigned to it in Section
2.17 hereof.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ▇▇.▇▇. 9601, et seq.; the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
▇▇.▇▇. 11001, et seq.; the Resource Conservation and Recovery Act, 42
U.S.C. ▇▇.▇▇. 6901, et seq.; the Toxic Substances Control Act, 15 U.S.C.
▇▇.▇▇. 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide
Act, 7 U.S.C. ▇▇.▇▇. 136, et seq. and comparable state statutes dealing
with the registration, labeling and use of pesticides and herbicides; the
Clean Air Act, 42 U.S.C. ▇▇.▇▇. 7401 et seq.; the Clean Water Act (Federal
Water Pollution Control Act), 33 U.S.C. ▇▇.▇▇. 1251 et seq.; the Safe
Drinking Water Act, 42 U.S.C. ▇▇.▇▇. 300f, et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. ▇▇.▇▇. 1801, et seq.; as any of the above
statutes have been amended as of the date hereof, all rules, regulations
and policies promulgated pursuant to any of the above statutes, and any
other foreign, federal, state or local law, statute, ordinance, rule,
regulation or policy governing environmental matters, as the same have been
amended as of the date hereof.
26
"Equity Security" shall mean any stock or similar security of an issuer or
any security (whether stock or Indebtedness for Borrowed Money)
convertible, with or without consideration, into any stock or similar
equity security, or any security (whether stock or Indebtedness for
Borrowed Money) carrying any warrant or right to subscribe to or purchase
any stock or similar security, or any such warrant or right.
"ERISA" shall mean the Employee Retirement Income Securities Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"NJBCA" means the New Jersey Business Corporation Act, as amended.
"GAAP" shall mean generally accepted accounting principles in the United
States, as in effect from time to time.
"Hazardous Material" means any substance or material meeting any one or
more of the following criteria: (a) it is or contains a substance
designated as or meeting the characteristics of a hazardous waste,
hazardous substance, hazardous material, pollutant, contaminant or toxic
substance under any Environmental Law; (b) its presence at some quantity
requires investigation, notification or remediation under any Environmental
Law; or (c) it contains, without limiting the foregoing, asbestos,
polychlorinated biphenyls, petroleum hydrocarbons, petroleum derived
substances or waste, pesticides, herbicides, crude oil or any fraction
thereof, nuclear fuel, natural gas or synthetic gas.
"Indebtedness" shall mean any obligation of the Company which under
generally accepted accounting principles is required to be shown on the
balance sheet of the Company as a liability. Any obligation secured by a
Lien on, or payable out of the proceeds of production from, property of the
Company shall be deemed to be Indebtedness even though such obligation is
not assumed by the Company.
"Indebtedness for Borrowed Money" shall mean (a) all Indebtedness in
respect of money borrowed including, without limitation, Indebtedness which
represents the unpaid amount of the purchase price of any property and is
incurred in lieu of borrowing money or using available funds to pay such
amounts and not constituting an account payable or expense accrual incurred
or assumed in the ordinary course of business of the Company, (b) all
Indebtedness evidenced by a promissory note, bond or similar written
obligation to pay money, or (c) all such Indebtedness guaranteed by the
Company or for which the Company is otherwise contingently liable.
27
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended.
"knowledge" and "know" means, when referring to any person or entity, the
actual knowledge of such person or entity of a particular matter or fact,
and what that person or entity would have reasonably known after due
inquiry. An entity will be deemed to have "knowledge" of a particular fact
or other matter if any individual who is serving, or who has served, as an
executive officer of such entity has actual "knowledge" of such fact or
other matter, or had actual "knowledge" during the time of such service of
such fact or other matter, or would have had "knowledge" of such particular
fact or matter after due inquiry.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including, without limitation, any conditional
sale or other title retention agreement, any lease in the nature thereof
and the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction and including any lien or
charge arising by statute or other law.
"Memorandum" shall have the meaning assigned to it in the fourth recital
hereof.
"Merger" shall have the meaning assigned to it in Section 1.1 hereof.
"Merger Documents" shall have the meaning assigned to it in Section 2.6
hereof.
"Parent" shall mean Wildon Productions Inc., a Nevada corporation.
"Parent Balance Sheet Date" shall have the meaning assigned to it in
Section 3.14 hereof.
"Parent Common Stock" shall mean the common stock, par value $.0001 per
share, of Parent.
"Parent Employee Benefit Plans" shall have the meaning assigned to it in
Section 3.16 hereof.
"Parent Financial Statements" shall have the meaning assigned to it in
Section 3.8 hereof.
"Parent SEC Documents" shall have the meaning assigned to it in Section 3.7
hereof.
"Permitted Liens" shall mean (a) Liens for taxes and assessments or
governmental charges or levies not at the time due or in respect of which
the validity thereof shall currently be contested in good faith by
appropriate proceedings; (b) Liens in respect of pledges or deposits under
workmen's compensation laws or similar legislation, carriers',
warehousemen's, mechanics', laborers' and materialmens' and similar Liens,
if the obligations secured by such Liens are not then delinquent or are
being contested in good faith by appropriate proceedings; and (c) Liens
incidental to the conduct of the business of the Company that were not
incurred in connection with the borrowing of money or the obtaining of
advances or credits and which do not in the aggregate materially detract
from the value of its property or materially impair the use made thereof by
the Company in its business.
28
"Person" shall include all natural persons, corporations, business trusts,
associations, limited liability companies, partnerships, joint ventures and
other entities and governments and agencies and political subdivisions.
"Private Placement" shall mean the private offering of shares of Parent
Stock pursuant to the terms of the Memorandum.
"Reverse Split" shall have the meaning assigned to it in Section 6.6
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shareholders" shall mean all of the shareholders of the Company.
"Surviving Corporation" shall have the meaning assigned to it in Section
1.1 hereof.
"Tax" or "Taxes" shall mean (a) any and all taxes, assessments, customs,
duties, levies, fees, tariffs, imposts, deficiencies and other governmental
charges of any kind whatsoever (including, but not limited to, taxes on or
with respect to net or gross income, franchise, profits, gross receipts,
capital, sales, use, ad valorem, value added, transfer, real property
transfer, transfer gains, transfer taxes, inventory, capital stock,
license, payroll, employment, social security, unemployment, severance,
occupation, real or personal property, estimated taxes, rent, excise,
occupancy, recordation, bulk transfer, intangibles, alternative minimum,
doing business, withholding and stamp), together with any interest thereon,
penalties, fines, damages costs, fees, additions to tax or additional
amounts with respect thereto, imposed by the United States (federal, state
or local) or other applicable jurisdiction; (b) any liability for the
payment of any amounts described in clause (a) as a result of being a
member of an affiliated, consolidated, combined, unitary or similar group
or as a result of transferor or successor liability, including, without
limitation, by reason of Regulation section 1.1502-6; and (c) any liability
for the payments of any amounts as a result of being a party to any Tax
Sharing Agreement or as a result of any express or implied obligation to
indemnify any other Person with respect to the payment of any amounts of
the type described in clause (a) or (b).
"Tax Return" shall include all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns
(including Form 1099 and partnership returns filed on Form 1065) required
to be supplied to a Tax authority relating to Taxes.
10. Closing. The closing of the Merger (the "Closing") shall occur concurrently
with the Effective Time (the "Closing Date") but in no event later than
June 30, 2007. The Closing shall occur at the offices of Peckar & ▇▇▇▇▇▇▇▇,
P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇. At the Closing, Parent
shall present for delivery to each Shareholder the certificate representing
the Parent Common Stock to be issued pursuant to Section 1.5(a)(ii) hereof
to them pursuant to Sections 1.6 and 4 hereof. Such presentment for
delivery shall be against delivery to Parent and Acquisition Corp. of the
certificates, opinions, agreements and other instruments referred to in
Section 7.1 hereof, and the certificates representing all of the Common
Stock issued and outstanding immediately prior to the Effective Time.
Parent will deliver at such Closing to the Company the officers'
certificate and opinion referred to in Section 6.2 hereof. All of the other
documents and certificates and agreements referenced in Section 6 will also
be executed as described therein. At the Effective Time, all actions to be
taken at the Closing shall be deemed to be taken simultaneously.
29
11. Termination Prior to Closing.
11.1 Termination of Agreement. This Agreement may be terminated at any time
prior to the Closing:
(a) By the mutual written consent of the Company, Acquisition Corp.
and Parent;
(b) By the Company, if Parent or Acquisition Corp. (i) fails to
perform in any material respect any of its agreements contained
herein required to be performed by it on or prior to the Closing
Date, (ii) materially breaches any of its representations,
warranties or covenants contained herein, which failure or breach
is not cured within thirty (30) days after the Company has
notified Parent and Acquisition Corp. of its intent to terminate
this Agreement pursuant to this paragraph (b);
(c) By Parent and Acquisition Corp., if the Company (i) fails to
perform in any material respect any of its agreements contained
herein required to be performed by it on or prior to the Closing
Date, (ii) materially breach any of its representations,
warranties or covenants contained herein, which failure or breach
is not cured within thirty (30) days after Parent or Acquisition
Corp. has notified the Company of its intent to terminate this
Agreement pursuant to this paragraph (c);
(d) By either the Company, on the one hand, or Parent and Acquisition
Corp., on the other hand, if there shall be any order, writ,
injunction or decree of any court or governmental or regulatory
agency binding on Parent, Acquisition Corp. or the Company, which
prohibits or materially restrains any of them from consummating
the transactions contemplated hereby, provided that the parties
hereto shall have used their best efforts to have any such order,
writ, injunction or decree lifted and the same shall not have
been lifted within ninety (90) days after entry, by any such
court or governmental or regulatory agency; or
11.2 Termination of Obligations. Termination of this Agreement pursuant to
this Section 12 shall terminate all obligations of the parties
hereunder, except for the obligations under Sections 5.1, 12.3 and
12.11; provided, however, that termination pursuant to paragraphs (b)
or (c) of Section 11.1 shall not relieve the defaulting or breaching
party or parties from any liability to the other parties hereto.
12. Miscellaneous.
12.1 Notices. Any notice, request or other communication hereunder shall be
given in writing and shall be served either personally by overnight
delivery or delivered by mail, certified return receipt and addressed
to the following addresses:
30
If to Parent
or Acquisition Corp.: Wildon Productions Inc.
▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
If to the Company: Visual Management Systems Holding, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President and CEO
With a copy to: ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
Middletown, New Jersey 07748
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Notices shall be deemed received at the earlier of actual
receipt or three (3) business days following mailing. Counsel for a party (or
any authorized representative) shall have authority to accept delivery of any
notice on behalf of such party.
12.2 Entire Agreement. This Agreement, including the schedules and exhibits
attached hereto and other documents referred to herein, contains the entire
understanding of the parties hereto with respect to the subject matter
hereof. This Agreement supersedes all prior agreements and undertakings
between the parties with respect to such subject matter.
12.3 Expenses. In addition to the provisions in Section 11.3 hereof, each party
shall bear and pay all of the legal, accounting and other expenses incurred
by it in connection with the transactions contemplated by this Agreement.
Expenses of Parent prior to the effective time shall be satisfied by Parent
immediately prior to the Effective Time and Parent shall not be liable for
such expenses after the Effective Time.
12.4 Time. Time is of the essence in the performance of the parties' respective
obligations herein contained.
12.5 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
31
12.6 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns
and heirs; provided, however, that neither party shall directly or
indirectly transfer or assign any of its rights hereunder in whole or in
part without the written consent of the others, which may be withheld in
its sole discretion , and any such transfer or assignment without said
consent shall be void.
12.7 No Third Parties Benefited. This Agreement is made and entered into for the
sole protection and benefit of the parties hereto, their successors,
assigns and heirs, and no other Person shall have any right or action under
this Agreement, except that ▇▇▇▇▇▇▇▇▇▇ Securities Corporation shall have
the right to rely on the representations and warranties of Parent,
Acquisition Corp. and the Company as if it were a party to this Agreement
and such representations and warranties are made to it herein.
12.8 Counterparts. This Agreement may be executed in one or more counterparts,
with the same effect as if all parties had signed the same document. Each
such counterpart shall be an original, but all such counterparts together
shall constitute a single agreement.
12.9 Recitals, Schedules and Exhibits. The Recitals, Schedules and Exhibits to
this Agreement are incorporated herein and, by this reference, made a part
hereof as if fully set forth herein.
12.10 Section Headings and Gender. The Section headings used herein are inserted
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. All personal pronouns used in this
Agreement shall include the other genders, whether used in the masculine,
feminine or neuter gender, and the singular shall include the plural, and
vice versa, whenever and as often as may be appropriate.
12.11 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New Jersey, without
giving affect to the conflict of laws provisions thereof. This Agreement
and the transactions contemplated hereby shall be subject to the exclusive
jurisdiction of the courts of the State of New Jersey. The parties to this
Agreement agree that any breach of any term or condition of this Agreement
or the transactions contemplated hereby shall be deemed to be a breach
occurring in the State of New Jersey by virtue of a failure to perform an
act required to be performed in the State of New Jersey. The parties to
this Agreement irrevocably and expressly agree to submit to the
jurisdiction of the courts of the State of New Jersey for the purpose of
resolving any disputes among the parties relating to this Agreement or the
transactions contemplated hereby. The parties irrevocably waive, to the
fullest extent permitted by law, any objection which they may now or
hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement and the transactions
contemplated hereby, or any judgment entered by any court in prospect
hereof brought in the State of New Jersey, and further irrevocably waive
any claim that any suit, action or proceeding brought in the State of New
Jersey has been brought in an inconvenient forum. With respect to any
action before the above courts, the parties hereto agree to service of
process by certified or registered United States mail, postage prepaid,
addressed to the party in question.
32
[Signature Page Follows.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
Merger and Plan of Reorganization to be binding and effective as of the day and
year first above written.
PARENT:
WILDON PRODUCTIONS INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive Officer
ACQUISITION CORP.:
VMS ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive Officer
THE COMPANY:
Visual Management Systems Holding, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Treasurer and Chief Financial Officer
33