EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER entered into as of August 30, 1996 by and among
View Tech, Inc., a California corporation (the "Surviving Corporation"),
GroupNet, Inc., a Massachusetts corporation (the "Merging Corporation"), and
Andrew W. Jamison, the sole shareholder of Merging Corporation (the "Merging
Corporation Sole Shareholder"). The Surviving Corporation, the Merging
Corporation Sole Shareholder and the Merging Corporation are referred to
collectively herein as the "Parties."
WHEREAS, upon the terms and subject to the conditions of this Agreement, in
accordance with the corporation laws of the Parties' states of incorporation,
the Surviving Corporation and the Merging Corporation will carry out a business
combination pursuant to which the Merging Corporation will merge with and into
the Surviving Corporation, and in consideration thereof, the Merging Corporation
Sole Shareholder will be issued 150,000 shares of the common stock of the
Surviving Corporation and will receive an additional $330,000, all in accordance
with Code (S)368(a)(1)(A).
WHEREAS, the Board of Directors of the Surviving Corporation and the Merging
Corporation unanimously have determined that the Merger is fair to, and in the
best interests of, their respective companies and shareholders, and have
approved and adopted this Agreement and the Merger, and have recommended
approval and adoption of this Agreement and the Merger by their respective
shareholders.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
SECTION 1. MERGER
On the Effective Date, the Merging Corporation shall be merged with and into
the Surviving Corporation. The separate existence of the Merging Corporation
shall cease, and both the Merging and Surviving Corporation shall be a single
corporation which shall be the Surviving Corporation. The title to all real
estate and other property owned by the Merging Corporation and the Surviving
Corporation shall be vested in the Surviving Corporation without reversion or
impairment, and without further act or deed. The Surviving Corporation shall
assume all liabilities and obligations of the Merging Corporation and the
Surviving Corporation as of the Effective Date. Any proceeding pending against
the Merging Corporation or the Surviving Corporation may be continued as if the
merger did not occur, or the Surviving Corporation may be substituted in the
proceeding for the Merging Corporation.
SECTION 2. SHAREHOLDER APPROVAL
Forthwith upon the full execution of this agreement, the Merging Corporation
shall submit this agreement to its shareholder for approval in accordance with
Business Corporation Act of the Commonwealth of Massachusetts.
SECTION 3. EFFECTIVE DATE AND CLOSING
3.1 Effective Date. The merger of the Merging Corporation and the Surviving
Corporation shall be effective (Effective Date) upon the filing of the Articles
of Merger in accordance with the Business Corporation Act of the Commonwealth of
Massachusetts and the Certificate of Merger and this Agreement with the
Secretary of State of California in accordance with the Corporations Code of the
State of California.
3.2 Closing. Subject to the satisfaction of the conditions set forth in
Sections 10 and 11 of this agreement, the closing of this merger shall take
place at the office of the Surviving Corporation on August 27, 1996, or at such
other place or at such other time as may be agreed upon by the Surviving
Corporation and the Merging Corporation. At the time of the closing:
3.2.1 Filing of Articles of Merger and Certificate of Merger. The
Surviving Corporation and the Merging Corporation shall cause the Articles
of Merger and Certificate of Merger, respectively, to be filed.
3.2.2 Certificates. The Merging Corporation and the Surviving
Corporation shall each deliver to the other certified copies of the
resolutions of the Board of Directors and Shareholder (of the Merging
Corporation) of the delivering corporation approving the merger.
3.2.3 Registration Rights Agreement. The Surviving Corporation shall
deliver to the Merging Corporation Sole Shareholder an executed
Registration Rights Agreement.
3.3 Further Assurances. From time to time after the closing, the parties
shall execute and deliver such other documents and take such other actions as
may reasonably be required to accomplish the merger.
SECTION 4. SHARES OF STOCK AND PAYMENT OF MONEY
4.1 Exchange of Shares and Payment of Money. On or after the Effective Date,
the Surviving Corporation, upon the receipt of properly endorsed stock
certificates representing the outstanding shares of common stock of the Merging
Corporation, shall (i) direct its transfer agent, U.S. Stock Transfer
Corporation, to issue to the shareholders of the Merging Corporation stock
certificates representing 150,000 shares of the fully paid and nonassessable
common stock of the Surviving Corporation for all of the outstanding shares of
the Merging Corporation held by the Merging Corporation Sole Shareholder, and
(ii) pay the Merging Corporation Sole Shareholder upon receipt of his stock
certificate $110,000, and (iii) give the Merging Corporation Sole Shareholder a
promissory note for $220,000, such note to be in the form of Exhibit C attached
hereto.
4.2 Cancellation of Shares. On the Effective Date, each share of stock of
the Merging Corporation that is then issued and outstanding shall, by virtue of
the merger and without any action on the part of the Merging Corporation or the
Surviving Corporation, be immediately canceled.
4.3 Continuation of Shares. Each share of stock of the Surviving Corporation
that is issued and outstanding as of the Effective Date shall continue to be an
issued and outstanding share of the Surviving Corporation notwithstanding the
merger.
SECTION 5. CORPORATE INCIDENTS
5.1 Articles of Incorporation. The Articles of Incorporation of the
Surviving Corporation, as in effect immediately prior to the Effective Date,
shall be the Articles of Incorporation of the Surviving Corporation following
this merger.
5.2 Bylaws. The Bylaws of the Surviving Corporation, as in effect
immediately prior to the Effective Date, shall be the Bylaws of the Surviving
Corporation following this merger.
5.3 Board of Directors and Officers. The Board of Directors of the Surviving
Corporation following this merger shall consist of the persons who are members
of the Board of Directors of the Surviving Corporation immediately prior to the
Effective Date, and they shall hold office until their successors have been
elected and qualified. The officers of the Surviving Corporation following this
merger shall be the persons who are the officers of the Surviving Corporation
immediately prior to the Effective Date, and they shall hold office at the
pleasure of the Board of Directors of the Surviving Corporation.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF MERGING CORPORATION AND THE
MERGING CORPORATION MAJORITY SHAREHOLDER
6.1 Organization. The Merging Corporation is a corporation duly organized
and existing in good standing under the laws of the Commonwealth of
Massachusetts and has the corporate power to own its properties and to carry on
its business as now conducted, and is qualified to do business in no other
jurisdiction. No proceeding is pending or threatened involving the Merging
Corporation in which it is alleged that the nature of its business makes
qualification necessary in any additional jurisdiction.
6.2 Capitalization. The issued and outstanding stock of the Merging
Corporation consists solely of 10,000 shares of common stock without par value.
All of the issued and outstanding shares of the Merging Corporation are validly
issued and outstanding, fully paid and nonassessable. There are no existing
options, warrants, calls, preemptive rights (except certain statutory rights not
affecting the transactions hereunder), or commitments of any kind relating to
the Merging Corporation's authorized and unissued capital stock.
6.3 Subsidiaries. The Merging Corporation has no subsidiaries.
6.4 Valid and Binding Agreement. The execution and delivery of this
agreement has been approved by the Board of Directors of the Merging
Corporation, and this agreement constitutes a valid and binding obligation of
the Merging Corporation in accordance with its terms. The execution and
delivery of this agreement and the consummation thereof do not and will not
violate any provision of any judicial or governmental decree, order, or judgment
or conflict with, or result in a breach of, or constitute a default under, the
Articles of Organization or bylaws of the Merging Corporation, or any material
agreement or instrument to which the Merging Corporation is a party or by which
it is bound.
6.5 Financial Statements. The Merging Corporation has furnished Surviving
Corporation with the Merging Corporation's unaudited balance sheet as of
December 31, 1995 and its unaudited income statement for the year ended on such
date. The Merging Corporation has also furnished the Merging Corporation's
unaudited balance sheet as of July 31, 1996 (Latest Balance Sheet) and its
unaudited income statement for the seven (7) months ended on such date, a copy
of which is attached hereto as Exhibit B. The Merging Corporation will also
provide the Surviving Corporation at the Closing with a preliminary balance
sheet and income statement as of the date of Closing and with its final balance
sheet and income statement as of the Closing Date or as soon as reasonably
possible thereafter. All such financial statements (including the notes
thereto) are correct and complete, and the audited financial statements have
been prepared in accordance with generally accepted accounting principles
consistently applied and fairly present in the financial position of the Merging
Corporation on the dates thereof and the results of its operations for the
periods then ended.
6.6 Undisclosed Liabilities. Except as disclosed in Exhibit A or on the
notes to the Merging Corporation's financial statements, the Merging Corporation
has no liability or obligation, absolute or contingent, including without
limitation, liabilities for federal, state, local or foreign taxes, that is not
reflected on the Latest Balance Sheet, except for changes in the amounts of the
liabilities shown on the Latest Balance Sheet that have arisen since the date of
the Latest Balance Sheet in the ordinary course of business and that are not
materially adverse to the business, assets, or operations of the Merging
Corporation.
6.7 Title to Properties. Except as disclosed on the Merging Corporation's
financial statements, the Merging Corporation has good and marketable title to
all of its properties and assets, real and personal reflected in the Latest
Balance Sheet except as since sold or otherwise disposed of in the ordinary
course of business, free and clear of all liens and encumbrances except as set
forth on Exhibit A. The Merging Corporation has received no notice of violation
of any law, regulation, ordinance, or other requirement relating to its business
or operations or its owned or leased real or personal properties. Physical
assets owned or leased by the Merging Corporation are listed on Exhibit A
hereto.
6.8 Condition of Personal Property. Except as disclosed in the Latest
Balance Sheet or on Exhibit A: (1) the machinery and equipment of the Merging
Corporation is in good and useable condition, reasonable wear and tear excepted;
(2) substantially all its inventories, as valued in the Latest Balance Sheet,
are good and saleable, and not obsolete, and will be sold, used, or consumed in
the usual and ordinary course of business of the Merging Corporation as now
conducted; and (3) the accounts receivable of the Merging Corporation as shown
on the Latest Balance Sheet are good and collectible at the aggregate recorded
amount after reserves thereof, subject to no counterclaims or setoffs.
6.9 Condition of Real Property. The real property of the Merging
Corporation, and to the best of the Merging Corporation's knowledge, the
surrounding areas, are not currently and have not ever been subject to hazardous
or toxic substances or wastes or to their effects, and there are no claims,
litigation, administrative or other proceedings, whether actual or threatened,
or judgment or orders, relating to any hazardous or toxic substances or wastes,
discharges, emissions, or other forms of pollution relating in any way to the
real property or improvements of the Merging Corporation.
6.10 Adequacy of Rights; Patents and Trademarks. The Merging Corporation
does not own or possess any patents, franchises, licenses or other rights to use
all trade names, trademarks, patents, copyrights, trade secrets, formulae,
design rights, or other intangible assets for the conduct of its business, or to
purchase and sell the products now being purchased and sold, or to perform the
services now being performed by it, except as listed on Exhibit A hereto.
6.11 Obligations; Litigation. Except as disclosed on Exhibit A, the Merging
Corporation has performed all material obligations required to be performed by
it to date, and is not in default under any agreement, lease or other document
to which it is a party, or under any law or order of any court or other
governmental agency, which has or may have a material effect on the business,
operations, or financial conditions of the Merging Corporation. There are no
claims, actions, suits, or proceedings pending or threatened at law or in equity
or before or by any federal, state, or other governmental agency, which if
adversely determined would have a material adverse effect on the business,
operations, or financial condition of the Merging Corporation or would prevent
or hinder the consummation of the merger. No party with whom the Merging
Corporation has an agreement, lease or other arrangement which is of material
importance to the Merging Corporation is in default thereunder, except as noted
on Exhibit A hereto.
6.12 Compliance With Laws. The business of the Merging Corporation has been
conducted consistent with the material provisions of all applicable laws and
regulations of federal, state, and local governments (including, without
limitation, any applicable building, zoning, health, safety, or environmental
ordinance or regulation). No improper gifts or illegal payments have been made
or received on behalf of the Merging Corporation by any of its officers,
directors, employees, or agents.
6.13 Contracts. The Merging Corporation has disclosed to the Surviving
Corporation all major contracts relating to the Merging Corporation's business
including (1) all contracts with sales representatives which are not terminable
on 30 days' notice or less; (2) any other contract or commitment, not in the
ordinary course of business, involving a liability by or to the Merging
Corporation to pay in the aggregate more than $25,000; and (3) any other
contract, agreement, or arrangement, not in the ordinary course of business,
which is or may be material to the business, operations, or financial condition
of the Merging Corporation. The Merging Corporation has not entered into any
employment contract or any other contract, agreement, or commitment which will
require the Merging Corporation to provide goods or services more than 90 days
from the date hereof, whether in the ordinary course of business or otherwise.
6.14 Long-Term Debt. Except as disclosed in its Financial Statements, the
Merging Corporation has no obligations for the repayment of borrowed money which
has a maturity date of more than one year from the date such obligation was
incurred.
6.15 Tax Matters. Copies of the state and federal tax returns of the Merging
Corporation for its fiscal year ended December 31, 1995 have been furnished to
the Surviving Corporation. The Merging Corporation has filed all federal,
state, local, and foreign tax returns required to be filed by it and has paid
all federal, state, local, and foreign tax required to be paid. All taxes and
governmental charges levied or assessed against the property or the business of
the Merging Corporation have been paid, other than taxes or charges the payment
of which is not yet due or which, if due, are not yet delinquent or which have
not been finally determined or which are being contested in good faith. Except
as disclosed on Exhibit A, the amounts set up as provisions for taxes on the
Latest Balance Sheet are sufficient for the payment of all unpaid taxes and
other governmental charges applicable to the property or the business of the
Merging Corporation for the period ended on the date of the Latest Balance Sheet
and all periods prior thereto. All federal, state, local or foreign taxes for
periods prior to the Closing Date will be paid by the Merging Corporation Sole
Shareholder.
6.16 Labor Matters. The Merging Corporation is not a party to any collective
bargaining agreement, and there is no pension or profit-sharing plan for the
Merging Corporation's employees, except as described in Exhibit A. The Merging
Corporation has complied with all laws and regulations which relate to employee
civil rights and equal employment opportunities and there are no presently
pending or threatened labor
problems which do or may in the future adversely affect the business,
operations, or financial condition of the Merging Corporation.
6.17 Insurance. Immediately prior to the Closing Date, the Merging
Corporation was insured under those insurance policies listed on Exhibit A
hereto.
6.18 Suppliers and Customers. Except as disclosed on Exhibit A, the Merging
Corporation is not aware that any major customer or supplier of the Merging
Corporation intends to discontinue or diminish its business relationship with
the Merging Corporation on account of the transactions contemplated hereunder or
otherwise.
6.19 Completeness of Disclosure. Neither this agreement nor any certificate,
exhibit, schedule, or other instrument furnished or to be furnished by the
Merging Corporation to the Surviving Corporation pursuant to this agreement, or
in connection with the merger, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained not misleading. There is no fact known
to the Merging Corporation or the Merging Corporation Sole Shareholder (other
than generally available public information) which materially adversely affects
or may, in the future, materially adversely affect the business, operations, or
condition (financial or otherwise) of the Merging Corporation which has not been
set forth in this agreement or in any Exhibit, certificate, or schedule
furnished under this agreement.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF SURVIVING CORPORATION
7.1 Organization. The Surviving Corporation is a corporation duly organized
and existing in good standing under the laws of the state of California and has
the corporate power to own its properties and to carry on its business as now
conducted.
7.2 Capitalization. The issued and outstanding stock of the Surviving
Corporation consists solely of 10 million shares of common stock, $0.01 par
value, of which 2,943,057 shares are issued and outstanding and 5,000,000 shares
of preferred stock, of which no shares are issued and outstanding. All of the
issued and outstanding shares of the Surviving Corporation are validly issued
and outstanding, fully paid and nonassessable. Except as listed in Exhibit F,
there are no existing options, warrants, calls, preemptive rights (except
certain statutory rights not affecting the transactions hereunder), or
commitments of any kind relating to the Surviving Corporation's authorized and
unissued capital stock.
7.3 Shares Issued in Merger. The shares of stock of the Surviving
Corporation to be issued to the shareholders of the Merging Corporation in the
merger shall be fully paid and nonassessable. However, the issuance of shares by
the Surviving Corporation will not be registered under the Securities Act of
1933, as amended (Act), nor the securities law of any state, and the Certificate
for the Shares shall bear a legend stating that the shares shall not be offered,
sold, pledged, hypothecated, or otherwise transferred or disposed of without
registration under the Act and any applicable state securities law or an opinion
of counsel or other evidence satisfactory to counsel for the Corporation that an
exemption from such registrations is available. The Surviving Corporation will
enter into a Registration Rights Agreement in the form of Exhibit D whereby it
will agree to register the shares under certain circumstances.
7.4 Valid and Binding Agreement. The execution and delivery of this
agreement has been approved by the Board of Directors of the Surviving
Corporation, and this agreement constitutes a valid and binding obligation of
the Surviving Corporation in accordance with its terms. The execution and
delivery of this agreement and the consummation thereof do not and will not
violate any provision of any judicial or governmental decree, order, or judgment
or conflict with, or result in a breach of, or constitute a default under, the
Articles of Incorporation or bylaws of the Surviving Corporation, or any
material agreement or instrument to which the Surviving Corporation is a party
or by which it is bound.
7.5 Financial Statements. The Surviving Corporation has furnished the Merging
Corporation with the Surviving Corporation's balance sheet as of June 30, 1995
and 1994 and its income statement for the years ended on such dates, together
with the report of Carpenter, Kuhen & Sprayberry, independent certified public
accountants. The Surviving Corporation has also furnished the Merging
Corporation's unaudited balance sheet as of March 31, 1996 (Latest Balance
Sheet) and its income statement for the nine months ended on such date. All
such financial statements (including the notes thereto) are correct and
complete, and the audited financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present in the financial position of the Surviving Corporation on the dates
thereof and the results of its operations for the periods then ended.
7.6 Litigation. There are no claims, actions, suits, or proceedings pending
or threatened at law or in equity or before or by any federal, state, or other
governmental agency, which if adversely determined would have an adverse effect
on the business, operations, or financial condition of the Surviving Corporation
or would prevent or hinder the consummation of the merger.
7.7 Completeness of Disclosure. Neither this agreement nor any certificate,
exhibit, schedule, or other instrument furnished or to be furnished by the
Surviving Corporation to the Merging Corporation pursuant to this agreement, or
in connection with the merger contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements contained not misleading. There is no fact known to the
Surviving Corporation which materially adversely affects or may, in the future,
materially adversely affect the business, operations, or condition (financial or
otherwise) of the Surviving Corporation which has not been set forth in this
agreement or in any exhibit, certificate, or schedule furnished under this
agreement.
SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties of the Merging Corporation and the Merging
Corporation Sole Shareholder and the Surviving Corporation shall be true and
complete as of the closing and shall survive the closing.
SECTION 9. CONDUCT OF BUSINESS PENDING CLOSING
Pending the closing of the merger, the Merging Corporation shall, without the
prior written consent of the Surviving Corporation, refrain from engaging in
transactions other than in the ordinary course of business; entering into any
transactions involving a capital expenditure (including any borrowings in
connection with such transaction) of more than $10,000 or the disposal of any
property or asset (other than inventory) with a value of more than $5,000;
making any changes in their articles of incorporation or bylaws; issuing,
reclassifying, or altering any shares of their outstanding or unissued capital
stock; granting options, warrants, or other rights of any kind to purchase, or
issuing any shares of their capital stock; purchasing, redeeming, or otherwise
acquiring for a consideration any shares of their capital stock; declaring,
paying, setting aside, or making any dividends or other distributions or payment
in respect to their capital stock.
SECTION 10. CONDITIONS PRECEDENT TO OBLIGATIONS OF MERGING CORPORATION
The obligation of the Merging Corporation to consummate the merger is, at the
option of the Merging Corporation, subject to the fulfillment, prior to or at
the closing, of each of the following conditions:
10.1 Representations and Performance. The representations and warranties
made under this agreement by the Surviving Corporation shall be true and correct
in all material respects at the time of the closing, and the Surviving
Corporation shall have performed and complied with all agreements, covenants,
and conditions required of the Surviving Corporation by the closing under the
terms of this agreement.
10.2 Adverse Changes. There shall not have been any material adverse changes
in the conditions, financial or otherwise, or business of the Surviving
Corporation since the date of the Latest Balance Sheet of the Surviving
Corporation.
10.3 Due Diligence. The Merging Corporation shall have completed its due
diligence and all outstanding issues relating thereto shall have been
satisfactorily resolved by the Parties.
10.4 Employment Agreement. The Surviving Corporation and the Merging
Corporation Sole Shareholder shall have entered into an employment agreement in
the form of Exhibit E hereto effective as of the Closing Date.
10.5 Opinion of Counsel for Surviving Corporation. The Merging Corporation
shall receive an opinion, addressed to the Merging Corporation and the
shareholders of the Merging Corporation, dated as of the date of the closing, of
Howard J. Kern, Esq. or such other attorney as may be reasonably satisfactory to
the Merging Corporation, in form satisfactory to the Merging Corporation to the
effect that:
10.5.1 The Surviving Corporation is a corporation duly organized, validly
existing, and in good standing under the laws of the states of California.
10.5.2 The execution, delivery and performance of this agreement by the
Surviving Corporation have been duly authorized by all requisite corporate
action, and this agreement has been duly executed and delivered and
constitutes a valid and binding obligation of the Surviving Corporation in
accordance with its terms.
10.5.3 To the best knowledge of such counsel, the authorized, issued and
outstanding capital stock of the Surviving Corporation is correctly set
forth and described in Section 7.2 of this agreement.
10.5.4 The shares of stock of the Surviving Corporation to be received by
the shareholders of the Merging Corporation pursuant to this agreement have
been validly authorized and issued and upon delivery will be fully paid and
nonassessable.
10.5.5 The execution and delivery of this agreement and the consummation
of the merger do not conflict with, or result in a breach of, or constitute
a default under, the Articles of Incorporation or bylaws of the Merging
Corporation, or any agreement or instrument, of which such counsel has
knowledge and to which the Merging Corporation is a party or by which it is
bound.
10.5.6 Except as may be specified in writing by such counsel, counsel does
not know of any material default or any meritorious basis for any claim of
such default of any litigation, proceeding, or governmental investigation
which is pending or threatened against or relates to the Merging
Corporation, its property or business, or which seeks to restrain or obtain
damages or other relief in connection with this agreement or the
consummation of the merger.
10.6 Registration Rights Agreement. The Merging Corporation and the Merging
Corporation Sole Shareholder shall have entered into a Registration Rights
Agreement, effective as of the Closing Date, in the form of Exhibit D attached
hereto.
SECTION 11. CONDITIONS TO OBLIGATIONS OF SURVIVING CORPORATION
The obligation of the Surviving Corporation to consummate the merger is, at
the option of the Surviving Corporation, subject to the fulfillment, prior to or
at the closing, of each of the following conditions:
11.1 Representations and Performance. The representations and warranties
made under this agreement by the Merging Corporation shall be true and correct
in all material respects at the time of the closing, and the Merging Corporation
shall have performed and complied with all agreements, covenants, and conditions
required of the Merging Corporation by the closing under the terms of this
agreement.
11.2 Adverse Changes. There shall not have been any material adverse changes
in the conditions, financial or otherwise, or business of the Merging
Corporation since the date of the Latest Balance Sheet of the Merging
Corporation.
11.3 Due Diligence. The Surviving Corporation shall have completed its due
diligence and all outstanding issues relating thereto shall have been
satisfactorily resolved by the Parties.
11.4 Employment Agreement. The Surviving Corporation and the Merging
Corporation Sole Shareholder shall have entered into an employment in the form
of Exhibit E hereto effective as of the Closing Date.
11.5 Investment Representations. The shareholders of the Merging Corporation
receiving stock of the Surviving Corporation in the merger shall execute and
deliver to Surviving Corporation an investment representation certificate
warranting and representing that the shareholder:
11.5.1 Has sufficient knowledge and experience to evaluate the merits and
risks of his investment in the shares of the Surviving Corporation.
11.5.2 Has been provided with, or given reasonable access to, full and
fair disclosure of all information material to his or her investment in the
shares of the Surviving Corporation.
11.5.3 Has not received any advertisement or general solicitation with
respect to the sale of the shares of the Surviving Corporation.
11.5.4 Is acquiring the shares of the Surviving Corporation for the
shareholder's own account for investment purposes only and not with a view
to their distribution.
11.5.5 Understands that the shares will not be registered under the
Securities Act of 1933, as amended (Act), nor the securities law of any
state, and accordingly these securities may not be offered, sold, pledged,
hypothecated, or otherwise transferred or disposed of in the absence of
registration or the availability of an exemption from registration under
the Act and any applicable state securities law. The shareholder further
understands that except as provided in the Registration Rights Agreement of
even date herewith, the Surviving Corporation is under no obligation to
register the shares on behalf of the shareholder or to assist the
shareholder in complying with an exemption from registration.
11.5.6 Understands that the certificate for the shares of the Surviving
Corporation will bear a legend that the shares shall not be offered, sold,
pledged, hypothecated, or otherwise transferred or disposed of without
registration under the Act and any applicable state securities law or an
opinion of counsel or other evidence satisfactory to counsel for the
Corporation that an exemption from such registrations is available.
11.5.7 Understands that the certificate for 75,000 of the shares of the
Surviving Corporation will bear a legend and will have a stop order with
the transfer agent that will prevent the shares from being transferred for
twelve months following the Closing Date. At the expiration of said twelve
month period, the Surviving Corporation will take all necessary actions to
remove such restrictions.
11.5.8 Is a resident of the Commonwealth of Massachusetts.
11.6 Opinion of Counsel for Merging Corporation. The Surviving Corporation
shall receive an opinion, addressed to the Surviving Corporation and dated as of
the date of the closing, of Van Wert & Zimmer, P.C., in form satisfactory to
the Surviving Corporation to the effect that:
11.6.1 The Merging Corporation is a corporation duly organized, validly
existing, and in good standing under the laws of the states of
Massachusetts and has the corporate power to own its property and to
conduct its business as then being conducted.
11.6.2 The execution, delivery, and performance of this agreement by
Merging Corporation have been duly authorized by all requisite corporate
action, and this agreement has been duly executed and delivered and
constitutes a valid and binding obligation of the Merging Corporation in
accordance with its terms.
11.6.3 To the best knowledge of such counsel, the authorized, issued, and
outstanding capital stock of the Merging Corporation is correctly set forth
and described in Section 6.2 of this agreement, and all of the issued and
outstanding shares of the Merging Corporation are duly authorized, validly
issued and outstanding, fully paid, and nonassessable.
11.6.4 The execution and delivery of this agreement and the consummation
of the merger do not conflict with, or result in a breach of, or constitute
a default under, the Articles of Incorporation or bylaws of the Merging
Corporation, or any agreement or instrument, of which such counsel has
knowledge and to which the Merging Corporation is a party or by which it is
bound.
11.6.5 Except as may be specified in writing by such counsel, counsel does
not know of any material default or any meritorious basis for any claim of
such default of any litigation, proceeding, or governmental investigation
which is pending or threatened against or relates to the Merging
Corporation, its property or business, or which seeks to restrain or obtain
damages or other relief in connection with this agreement or the
consummation of the merger.
11.7 Condition to Obligations of Both Corporations. The obligations of the
Merging Corporation and the Surviving Corporation to consummate the merger are,
at the option of either party, subject to the condition that, at the time of the
closing, no suit, action, or other proceeding is pending or threatened before
any court or other governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this agreement
or the consummation of the merger.
SECTION 12. EXPENSES
Subject to the following sentences, the Surviving Corporation and the Merging
Corporation shall each bear their own expenses, including legal and accounting
fees, incurred in connection with this transaction. Prior to the execution of
this Agreement, the Merging Corporation has paid its counsel and accountant a
retainer for services in connection with the Merger.
SECTION 13. INDEMNIFICATION
13.1 Obligation to Indemnify. The Merging Corporation Sole Shareholder shall
indemnify the Surviving Corporation and shall hold the Surviving Corporation
harmless from all loss, cost, damage, or expense, including attorneys' fees
arising from:
13.1.1 Taxes. Any federal, state, or local tax liabilities, including
penalties and assessments, of the Merging Corporation accrued in respect of
and measured by the income of the Merging Corporation prior to August 30,
1996, arising out of transactions entered into or a state of facts arising
prior to August 30, 1996, or accrued in respect to property of the Merging
Corporation for periods prior to August 30, 1996.
13.1.2 Representations and Warranties. Any breach of any of the
representations or warranties, whether made by the Merging Corporation Sole
Shareholder or the Merging Corporation, contained in Section 6 of this
Agreement.
13.2 Settlement. The Merging Corporation Sole Shareholder shall have full
power and authority to take any and all action with respect to proceedings
relating to any liability, claim, or tax of the Merging Corporation that are
subject to this indemnification obligation, including the right to appeal,
settle, compromise, or dispose of any such proceedings in the name of the
Surviving Corporation. The Merging Corporation Sole Shareholder's obligation to
indemnify the Surviving Corporation shall be subject to the condition that the
Surviving Corporation give written notice to the Merging Corporation Sole
Shareholder promptly upon being informed of or becoming aware of any such
liability, claim, or tax covered by this indemnity. The Merging Corporation
Sole Shareholder shall allow the Surviving Corporation or its designated
representatives, to fully participate in (but not control) the determination,
settlement, or defense of any such liability, claim, or tax.
13.3 $50,000 Minimum Indemnification Required to Activate Merging Corporation
Sole Shareholder's Obligation. The obligation of the Merging Corporation Sole
Shareholder to indemnify and hold harmless the Surviving Corporation from the
types of items set forth in Section 13.1 does not inure to the benefit of the
Surviving Corporation until the amount of indemnification provided under Section
13.1 exceeds $50,000. However, once the claim for indemnification is activated,
the Merging Corporation Sole Shareholder is retroactively liable for all
indemnification provided for under Section 13.2.
13.4 Termination of Indemnification Rights. The Surviving Corporation's right
to seek indemnification terminates 18 months following the Effective Date.
However, the Merging Corporation Sole Shareholder shall be obligated to provide
indemnification under this Section 13 for all claims made by the Surviving
Corporation prior to the expiration of such 18 month period and that are covered
by this indemnity.
13.5 Limitation on Indemnification. The Merging Corporation Sole Shareholder's
liability for indemnification under this Section 13 shall not exceed $1,380,000,
i.e., the value of the shares of the Surviving Corporation common stock and the
cash consideration paid in exchange for the shares of the Merging Corporation
common stock.
SECTION 14. INTENT
It is the intent of the parties that the transaction contemplated by this
agreement shall constitute a merger under the Business Corporation Act of the
Commonwealth of Massachusetts and the Corporations Code of the State of
California and qualify as a tax-free corporate reorganization within the meaning
of IRC Sec. 368(a)(1)(A).
SECTION 15. MISCELLANEOUS PROVISIONS
15.1 Time of Essence. Time is of the essence of this agreement.
15.2 Commissions. Each of the parties represents to the other that, to the
best of the party's knowledge, no person has right to a fee, commission, or
other payment for services in connection with the merger. Each of the parties
shall indemnify the other and hold the other harmless from any claim for any
such fee, commission, or other payment arising out of the actual or purported
act or agreement of the party.
15.3 Binding Effect. The provisions of this agreement shall be binding upon
and inure to the benefit of the successors and assigns of the parties.
15.4 Notice. Any notice or other communication required or permitted to be
given under this agreement shall be in writing and shall be mailed by certified
mail, return receipt requested, postage prepaid, addressed to the parties as
follows:
If to Merging Corporation:
Andrew W. Jamison
18 Winding Way
Plymouth, MA 02360
With a copy to:
Thomas M. Zimmer, Esq.
Van Wert & Zimmer, P.C.
One Militia Drive
Lexington, MA 02173
If to Surviving Corporation:
Robert G. Hatfield
Chief Executive Officer
View Tech, Inc.
950 Flynn Road
Camarillo, CA 93012
With a copy to:
Howard J. Kern
Law Offices of Howard J. Kern
4057 Rhodes Avenue
Studio City, CA 91604
All notices and other communications shall be deemed to be given at the
expiration of three days after the date of mailing. The address of a party to
which notices or other communications shall be mailed may be changed from time
to time by giving written notice to the other party.
15.5 Termination; Effect of Termination.
15.5.1 Termination of Agreement. Either the Surviving Corporation or the
Merging Corporation may terminate this Agreement with the prior authorization of
its board of directors (whether before or after stockholder approval) as
provided below:
(i) the Surviving Corporation and the Merging Corporation may terminate
this Agreement by mutual written consent at any time prior to the Effective
Time;
(ii) the Surviving Corporation may terminate this Agreement by giving
written notice to the Merging Corporation at any time prior to the
Effective Time (A) in the event the Merging Corporation has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, the Surviving Corporation has notified the Merging
Corporation of this breach, and the breach has continued without cure for a
period of five (5) days after the notice of breach or (B) if the Closing
shall not have occurred on or before August 31, 1996, by reason of the
failure of any condition precedent under Section 11 hereof (unless the
failure results primarily from the Surviving Corporation breaching any
representation, warranty, or covenant contained in this Agreement);
(iii) the Merging Corporation may terminate this Agreement by giving
written notice to the Surviving Corporation at any time prior to the
Effective Time (A) in the event the Surviving Corporation has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, the Merging Corporation has notified the Surviving
Corporation of the breach, and the breach has continued without cure for a
period of five (5) days after the notice of breach or (B) if the Closing
shall not have occurred on or before August 31, 1996, by reason of the
failure of any condition precedent under Section 10 hereof (unless the
failure results primarily from the Merging Corporation breaching any
representation, warranty, or covenant contained in this Agreement) so long
as the Merging Corporation has repaid all amounts that are owed by the
Merging Corporation to the Surviving Corporation; or
(iv) the Surviving Corporation may terminate this Agreement by giving
written notice to the Merging Corporation at any time prior to the
Effective Time in the event the Surviving Corporation's board of directors
concludes that termination would be in the best interests of the Surviving
Corporation and its stockholders.
15.5.2 Effect of Termination. If any Party terminates this Agreement pursuant
to (S)15.5.1 above, all rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party then in breach).
15.6 Litigation Expense. In the event of a default under this agreement, the
defaulting party shall reimburse the nondefaulting party or parties for all
costs and expenses reasonably incurred by the nondefaulting party or parties in
connection with the default, including without limitation attorney's fees.
Additionally, in the event a suit or action is filed to enforce this agreement
or with respect to this agreement, the prevailing party or parties shall be
reimbursed by the other party for all costs and expenses incurred in connection
with the suit or action, including without limitation reasonable attorney's fees
at the trial level and on appeal.
15.7 Waiver. No waiver of any provision of this agreement shall be deemed,
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
15.8 Applicable Law. This agreement shall be governed by and shall be
construed in accordance with the laws of the State of California.
15.9 Venue; Jurisdiction. All actions with respect to this Agreement will be
instituted in a state court sitting in Ventura County, California or Suffolk
County, Massachusetts or in a federal court for the Central District of
California, or the Eastern District of Massachusetts, subject to the provisions
on arbitration in (S)15.10 below. By the execution of this Agreement, each
Party irrevocably and unconditionally submits to the jurisdiction (both subject
matter and personal) of each such court and irrevocably and unconditionally
waives: (a) any objection such Party might now or hereafter have to the venue
in any such court; and (b) any claim that any action or proceeding brought in
any such court has been brought in an inconvenient forum.
15.10 Arbitration. Any disputes arising out of this Agreement and the
transactions among the Parties contemplated by this Agreement shall be settled
by binding arbitration to be held in (i) Ventura County, California if such
arbitration proceeding is initiated by the Merging Corporation or the Merging
Corporation Sole Shareholder and (ii) in Suffolk County, Massachusetts if such
arbitration proceeding is initiated by the Surviving Corporation, in each case
in accordance with the rules of the American Arbitration Association. Judgment
upon any award rendered by any arbitrator may be entered in any court having
jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar
doctrines which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an action for these
purposes.
15.11 Entire Agreement. This agreement constitutes the entire agreement
between the parties pertaining to its subject matter, and it supersedes all
prior contemporaneous agreements, representations, and understandings of the
parties. No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by all parties.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
View Tech, Inc.
By: \s\ Robert G. Hatfield
---------------------------------
Title: Chief Executive Officer
------------------------------
GroupNet, Inc.
By: \s\ Andrew W. Jamison
-------------------------------
Title: President
----------------------------
\s\ Andrew W. Jamison
- ---------------------
Andrew W. Jamison