AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
PACIFIC VISION GROUP, INC.
AND
WINNERNET INDUSTRIES, INC.
DATED JUNE 13, 2000
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TABLE OF CONTENTS
ARTICLE I MERGER
1.01 THE MERGER...............................................................1
1.02 EFFECT OF THE MERGER.....................................................1
1.03 EFFECTIVE TIME...........................................................2
1.04 CLOSING..................................................................2
1.05 CONSTITUTIONAL DOCUMENTS, DIRECTORS AND OFFICERS.........................2
1.06 PRINCIPAL OFFICE.........................................................3
1.07 CONVERSION OF SECURITIES.................................................3
1.08 TAX CONSEQUENCES; ACCOUNTING TREATMENT...................................4
1.09 TAKING OF NECESSARY ACTION; FURTHER ACTION...............................4
ARTICLE II REPRESENTATIONS AND WARRANTIES OF WNNI
2.01 ORGANIZATION; QUALIFICATION; SUBSIDIARIES................................4
2.02 AUTHORITY................................................................5
2.03 CAPITALIZATION...........................................................5
2.04 WNNI COMMON STOCK........................................................6
2.05 ABSENCE OF LITIGATION....................................................6
2.06 NO OTHER DEFAULT.........................................................6
2.07 CORPORATE DOCUMENTS......................................................6
2.08 TAX AND OTHER LIABILITIES................................................7
2.09 PROPERTIES...............................................................7
2.10 CONTRACTS AND OTHER INSTRUMENTS..........................................7
2.11 EMPLOYEES................................................................7
2.12 PRE CLOSING ACTIVITY.....................................................7
2.13 CERTIFICATE..............................................................8
2.14 FINANCIAL STATEMENTS AND CONDITION.......................................8
2.15 BOARD ACTION.............................................................8
2.16 STOCKHOLDER VOTE REQUIRED................................................8
2.17 BOARD APPROVAL...........................................................8
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PVG
3.01 ORGANIZATION; QUALIFICATION; SUBSIDIARIES................................9
3.02 AUTHORITY................................................................9
3.03 CAPITALIZATION...........................................................9
3.04 ABSENCE OF LITIGATION...................................................10
3.05 NO OTHER DEFAULT........................................................10
3.06 CORPORATE DOCUMENTS.....................................................11
3.07 TAX AND OTHER LIABILITIES...............................................11
3.08 PROPERTIES..............................................................11
3.09 CONTRACTS AND OTHER INSTRUMENTS.........................................11
3.10 PRE CLOSING ACTIVITY....................................................11
3.11 CERTIFICATE.............................................................12
3.12 FINANCIAL STATEMENTS AND CONDITION......................................12
3.13 BOARD ACTION............................................................12
3.14 STOCKHOLDER VOTE REQUIRED...............................................12
3.15 BOARD APPROVAL..........................................................12
3.16 ACQUISITION FOR INVESTMENT PURPOSES ONLY................................12
ARTICLE IV COVENANTS AND OTHER AGREEMENTS
4.01 CONDUCT OF BUSINESS OF WNNI.............................................13
4.02 TRANSACTION COSTS AND EXPENSES..........................................14
4.03 SUBSEQUENT EVENTS.......................................................14
4.04 INDEMNITY...............................................................14
4.05 RELATED AGREEMENTS......................................................15
4.06 ACCESS TO INFORMATION; CONFIDENTIALITY..................................15
4.07 CONSENTS................................................................16
4.08 FORM 10-SB REGISTRATION STATEMENT.......................................16
4.09 STATE SECURITIES LAW COMPLIANCE.........................................16
4.10 BOARD OF DIRECTORS......................................................16
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ARTICLE V CONDITIONS
5.01 CONDITIONS TO THE OBLIGATION TO EFFECT THE MERGER.......................17
5.02 WNNI'S OBLIGATIONS AT CLOSING...........................................17
5.03 PVG'S OBLIGATIONS AT CLOSING............................................19
ARTICLE VI TERMINATION, AMENDMENT AND WAIVER
6.01 TERMINATION.............................................................20
6.02 TERMINATION PROCEDURES..................................................21
6.03 EFFECT OF TERMINATION...................................................21
ARTICLE VII MISCELLANEOUS
7.01 BROKERAGE FEES..........................................................21
7.02 FURTHER ACTIONS.........................................................21
7.03 SURVIVAL................................................................21
7.04 MODIFICATION............................................................22
7.05 NOTICES.................................................................22
7.06 WAIVER..................................................................22
7.07 BINDING EFFECT..........................................................22
7.08 NO THIRD-PARTY BENEFICIARIES............................................23
7.09 SEVERABILITY AND REFORMATION............................................23
7.10 HEADINGS................................................................23
7.11 GOVERNING LAW...........................................................23
7.12 SEPARATE COUNTERPARTS...................................................23
7.13 INCORPORATION OF RECITALS, EXHIBITS AND SCHEDULES.......................23
7.14 ARBITRATION.............................................................23
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is entered into as of
the 13 day of June, 2000, by and between Pacific Vision Group, Inc., a Delaware
corporation ("PVG"), and Winnernet Industries, Inc., a Nevada corporation
("WNNI").
WHEREAS, PVG is authorized to issue up to 30,000,000 shares of common
stock, $.002 par value ("PVG Common Stock"), of which 10,000,000 shares are
issued and outstanding; and
WHEREAS, WNNI is authorized to issue up to 100,000,000 shares of common
stock, $.001 par value ("WNNI Common Stock"), of which 4,500,000 shares are
issued and outstanding; and
WHEREAS, PVG AND WNNI have agreed to the merger described in Article I
hereof (the "Merger"); and
WHEREAS, the respective boards of directors of PVG and WNNI have determined
that it is advisable to consummate the Merger, as a result of which all of the
outstanding PVG Common Stock will be converted into WNNI Common Stock and PVG
will be merged with and into WNNI, on the terms and subject to the conditions
set forth in this Agreement; and
WHEREAS, the Boards of Directors of WNNI and PVG have submitted this
Agreement to their respective stockholders for approval as required by the
corporate law of their respective states of incorporation.
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto do hereby agree as follows:
ARTICLE I
MERGER
1.01 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Revised Statutes of the state of
Nevada, PVG shall be merged with and into WNNI at the Effective Time (as defined
in Section 1.03). As of the Effective Time, the separate corporate existence of
PVG shall cease and WNNI shall continue as the surviving corporation (the
"Surviving Corporation"), under the new name of "Pacific Vision Group, Inc." and
shall succeed to and assume all the rights and obligations of PVG in accordance
with the Nevada Revised Statutes.
1.02 EFFECT OF THE MERGER. The Surviving Corporation shall possess all the
rights, privileges, immunities and franchises, of a public as well as of a
private nature, of each of PVG and WNNI (collectively, the "Constituent
Corporations"), and all property, real, personal and mixed, and all debts due on
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whatever account, including subscriptions to shares, and all other choses in
action, and all and every other interest of or belonging to or due to each of
the Constituent Corporations, shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed and the
Surviving Corporation shall be responsible and liable for all liabilities and
obligations of each of the Constituent Corporations.
1.03 EFFECTIVE TIME. The Merger contemplated by this Agreement shall be
effective on the date and time that the Articles of Merger is filed with and
accepted by the Secretary of State of Nevada in accordance with applicable law,
unless a later time is expressly provided for in such articles (the "Effective
Time").
1.04 CLOSING. Subject to the satisfaction or waiver of the last of the
conditions set forth in Article V hereof, the consummation of the transactions
contemplated by this Agreement (the "Closing"), will take place at 10:00 a.m. on
June 13, 2000, at the law offices of Squire, Sanders & Dempsey L.L.P., 40 North
Central Avenue, Phoenix, Arizona, 85004, or at such other time and place as the
parties to this Agreement shall agree (the "Closing Date"). Subject to the terms
and conditions of this Agreement, on the Closing Date: (a) the parties hereto
shall each deliver to the other the documents, agreements, payments and
consideration required to be delivered to the other party hereto as herein
expressly provided; and (b) the Constituent Corporations shall execute two
originals of Articles of Merger in the forms required for filing with the
Secretary of State of Nevada and the Secretary of State of Delaware
(collectively, the "Articles of Merger"), which Articles of Merger shall be
filed by the parties with the Secretary of State of Nevada and the Secretary of
State of Delaware immediately after execution on the Closing Date. Subsequent to
the Closing, the parties hereto shall thereafter execute, acknowledge, deliver
and/or record such other and further instruments, documents or certificates
and/or take and perform such other and further actions as may be required to
effect and implement the Merger.
1.05 CONSTITUTIONAL DOCUMENTS, DIRECTORS AND OFFICERS. On and as of the
Effective Time:
(a) The articles of incorporation of WNNI, as in effect immediately
prior to the Effective Time, shall be the articles of incorporation of the
Surviving Corporation immediately after the Effective Time and shall thereafter
continue to be its articles of incorporation until amended as provided therein
and under the applicable law;
(b) The bylaws of WNNI, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation immediately
after the Effective Time and shall thereafter continue to be its bylaws until
amended as provided therein and under the applicable law;
(c) The officers of the Surviving Corporation from and after the
Effective Time until their successors are duly elected and qualified shall be as
follows:
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Barry Chen Chairman and President
William T. Selby Executive Vice President
Joe Collins Chief Operating Officer and Vice President
Philip Liu Chief Financial Officer and Vice President
Ali Dahi Chief Technical Officer and Vice President
(d) At or prior to the Effective Time, the number of directors to
serve on the Board of Directors of the Surviving Corporation initially shall be
five (as such number may be modified in accordance with the Surviving
Corporation's articles of incorporation and bylaws) initially consisting of
Barry Chen, Joe Collins, Philip Liu, Zhou Keqing and Susan Chan.
1.06 PRINCIPAL OFFICE. The principal office of the Surviving Corporation
the as of the Effective Time shall be 9540 Waples Street, Suite E, San Diego,
California 92121.
1.07 CONVERSION OF SECURITIES. As of the Effective Time, the shares of PVG
Common Stock shall be converted and exchanged into shares of WNNI Common Stock
and cash consideration in the following manner:
(a) Each issued and outstanding share of PVG Common Stock shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted and exchanged into 1.05 fully paid and non-assessable shares of
WNNI Common Stock (such exchange and issuance being equal to 10,500,000 WNNI
restricted shares to represent control of the then total of 15,000,000
outstanding shares of WNNI);
(b) After the Effective Time, each holder, other than a Dissenting
Stockholder (as defined below), of an outstanding certificate, which prior to
the Effective Time represented shares of PVG Common Stock, shall surrender such
certificate (a "PVG Certificate"), to WNNI, and such holder shall be entitled
upon such surrender to receive in exchange therefore a certificate for that
number of shares of WNNI Common Stock which such holder is entitled to receive
under Section 1.07(a) of this Agreement. Until surrendered as contemplated by
this Section 1.07(b), each PVG Certificate representing shares of PVG Common
Stock shall be deemed at all times after the Effective Time to represent and
evidence (for all corporate purposes) that number of shares of WNNI Common Stock
into which the shares of PVG Common Stock theretofore represented by such PVG
Certificate shall have been converted pursuant to Section 1.07(a) of this
Agreement. From and after the Effective Time, the sole rights of the holders of
PVG Certificates representing shares of PVG Common Stock shall be those to which
they are entitled as owners of WNNI Common Stock into which the shares of PVG
Common Stock evidenced by such PVG Certificates have been converted as herein
provided;
(c) Upon the issuance of the WNNI Common Stock to the stockholders of
PVG as herein provided in exchange for their shares of PVG Common Stock, there
shall be credited to the capital accounts of WNNI an amount equal to the fair
market value of the shares of WNNI Common Stock so issued, and of the amount so
credited, the portion thereof in excess of the aggregate par value thereof shall
be credited to the capital surplus account; and
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(d) Notwithstanding anything in this Agreement to the contrary, any
issued and outstanding shares of PVG Common Stock held by a person who complies
with all of the provisions of Delaware law concerning the rights of holders of
PVG Common Stock to object to the Merger and require appraisal of their shares
("Dissenting Shares" and "Dissenting Stockholders," as the case may be) shall
not be converted as described in Section 1.07(a) of this Agreement but shall
instead entitle the holder thereof to receive such consideration as may be
determined to be due to such Dissenting Stockholder pursuant to Delaware law.
If, after the Effective Time, such Dissenting Stockholder withdraws his demand
for appraisal or fails to perfect or otherwise loses his right of appraisal
pursuant to Delaware law, each of such Dissenting Stockholder's shares of PVG
Common Stock shall be deemed to be converted as of the Effective Time into the
WNNI Common Stock specified in Section 1.07(a) of this Agreement.
1.08 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"). The parties to this
Agreement hereby adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations.
1.09 TAKING OF NECESSARY ACTION; FURTHER ACTION. PVG, on the one hand, and
WNNI, on the other hand, shall use all reasonable efforts to take all such
action (including specifically, but without limitation, action to cause the
satisfaction of the conditions of the other to effect the Merger) as may be
necessary or appropriate in order to effectuate the Merger as promptly as
possible. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full possession of all the rights, privileges,
immunities and franchises of the Constituent Corporations, the officers and
directors of the Surviving Corporation are fully authorized in the name of the
Constituent Corporations or otherwise to take, and shall take, all such actions.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF WNNI
In order to induce PVG to execute and perform this Agreement, WNNI does
hereby represent, warrant, covenant and agree (which representations,
warranties, covenants and agreements shall be and are hereby deemed to be
continuing and survive the execution and delivery of this Agreement, the Closing
and the Effective Time) as follows:
2.01 ORGANIZATION; QUALIFICATION; SUBSIDIARIES.
(a) WNNI is a corporation duly organized, validly existing, and in
good standing under the laws of Nevada, with all requisite power and authority
to own, lease, license, and operate its properties and assets and to carry on
its business as now conducted and presently proposed to be conducted and to
perform its obligations under all contracts, instruments, notes or other binding
commitments to which it is or may become a party or by which it is or its assets
are or may become bound. WNNI is duly qualified to transact the business in
which it is engaged and is in good standing as a foreign corporation in every
jurisdiction in which its ownership, leasing, licensing, or use of property or
assets or the conduct of its business makes such qualification necessary.
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(b) WNNI has furnished to PVG its articles of incorporation and
bylaws, as presently in effect, certified by the Secretary of WNNI. WNNI is not
in material violation or breach of, or in default with respect to, any term of
its articles of incorporation or bylaws.
(c) WNNI does not own, beneficially or otherwise, any stock or other
equity interest, partnership interest, joint venture interest or any other
security issued by any other corporation, organization or entity, and WNNI has
not agreed and is not obligated to make any future investment in or capital
contribution to any such corporation, organization or entity.
2.02 AUTHORITY. WNNI has all requisite power and authority to execute,
deliver, and perform this Agreement and to carry out its obligations hereunder.
All necessary corporate proceedings of WNNI have been or as of the Effective
Time will have been duly taken to authorize the execution, delivery, and
performance of this Agreement by WNNI. This Agreement has been duly authorized,
executed, and delivered by WNNI, constitutes the legal, valid, and binding
obligation of WNNI, and is enforceable as to WNNI in accordance with its terms
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of creditors
generally and the discretion of courts in granting equitable remedies. Except
for the provisions of the Nevada Revised Statutes governing the filing of the
Articles of Merger, no consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal is
required by WNNI for the execution, delivery, or performance of this Agreement
by WNNI.
2.03 CAPITALIZATION
(a) The authorized capital stock of WNNI consists of 100,000,000
shares of Common Stock of which 4,500,000 shares were issued and outstanding as
of the date hereof. All of the issued and outstanding shares of WNNI Common
Stock are duly authorized, validly issued, fully paid, and non-assessable.
(b) There is no: (i) outstanding subscription, option, call, warrant
or right (whether or not currently exercisable) to acquire any shares of the
capital stock or other securities of WNNI; (ii) outstanding security, instrument
or obligation that is or may become convertible into or exchangeable for any
shares of the capital stock or other securities of WNNI; (iii) contract or
agreement under which WNNI is or may become obligated to sell or otherwise issue
any shares or its capital stock or any other securities; or (iv) condition or
circumstance that may give rise to or provide a basis for the assertion of a
claim by any person or entity to the effect that such person or entity is
entitled to acquire or receive any shares of capital stock or other securities
of WNNI.
(c) All outstanding shares of WNNI Common Stock have been issued and
granted in compliance with all applicable securities laws and other applicable
laws and regulations.
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(d) WNNI is not under any obligation to register under the U.S.
Securities Act of 1933, as amended (the "Act"), any of its presently outstanding
securities or any securities that may be subsequently issued, and no person or
entity holds any right to participate in new issuances of securities by WNNI.
2.04 WNNI COMMON STOCK. All of the shares of WNNI Common Stock to be issued
by WNNI pursuant to this Agreement shall be, and are hereby deemed to be duly
and validly authorized and, when issued to the stockholders of PVG in exchange
for their PVG Common Stock, duly and validly issued, fully paid and
non-assessable.
2.05 ABSENCE OF LITIGATION. There is no action, lawsuit, claim, proceeding,
order or investigation of any kind or nature pending or threatened against WNNI
or otherwise effecting any of its properties or assets, or that challenges or
may have the effect of preventing, delaying, making illegal or otherwise
interfering with the Merger or any other transactions contemplated by this
Agreement, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or that could reasonably be expected to have a material adverse
effect on the business, properties, assets or condition (financial or otherwise)
of WNNI and there is no basis known to WNNI for any of the foregoing. There is
no order, writ, injunction, judgment or decree to which WNNI or any of the
assets owned or used by WNNI is subject.
2.06 NO OTHER DEFAULT. The execution and delivery of this Agreement and the
other agreements referred to herein, and the consummation of the transactions
contemplated hereunder will not conflict with or violate or require any consent
under and will not result in any breach or termination of (i) articles of
incorporation or bylaws of WNNI, (ii) any resolution adopted by WNNI's
stockholders, board of directors, or any committee of such board of directors,
or (iii) any other agreement to which WNNI is a party or by which its properties
are subject or by which it is bound. WNNI is not in violation of, or in default
under, (a) any term or provision of its constitutional documents; (b) any
material term or provision or any financial covenant of any indenture, mortgage,
contract, commitment or other agreement or instrument to which it is a party or
by which it or any or its properties or business is or may be bound or affected;
or (c) any existing applicable law, rule, regulation, judgment, order or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over it or any of its properties or business. WNNI owns, possesses or has
obtained all governmental and other licenses, permits, certifications,
registrations, approvals or consents and other authorizations necessary to own
or lease, as the case may be, and to operate its properties and to conduct its
business or operations as presently conducted and all such governmental and
other licenses, permits, certifications, registrations, approvals, consents, and
other authorizations are outstanding and in good standing, and there are no
proceedings pending or threatened, or any basis therefore existing, seeking to
cancel, terminate, or limit such licenses, permits, certifications,
registrations, approvals, or consents or authorizations, or related to the
breach or failure to comply of WNNI with any law, rule, regulation, judgment,
order, or decree.
2.07 CORPORATE DOCUMENTS. WNNI has furnished to PVG true, correct and
complete copies of its articles of incorporation, bylaws, and minute book, and
will furnish a certificate of good standing from the State of Nevada dated
within ten (10) days of the Closing Date. The minute book contains a record,
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which is complete and accurate in all material respects, of all meetings and all
corporate actions of the stockholders and board of directors of WNNI. WNNI is
not in material violation or breach of, or in default with respect to, (a) any
term of its constitutional documents or any agreement to which it is a party or
by which its assets are bound, or (b) any law, rule, regulation, judgment,
order, or decree of any governmental agency or court having jurisdiction over it
or its assets.
2.08 TAX AND OTHER LIABILITIES. WNNI has no liability of any nature,
accrued, absolute or contingent, secured or unsecured, including, without
limitation, liabilities to customers or suppliers, other than liabilities (if
any) which are reflected on the WNNI Financial Statements (as defined in Section
2.14). Except for the liabilities included on the WNNI Financial Statements, as
of the date of such WNNI Financial Statements, WNNI had no liabilities, either
fixed or contingent, which would have been required to be recorded under GAAP as
of such date, and no such liabilities, other than liabilities arising in the
ordinary course of business and/or pursuant to this Agreement have accrued
and/or will accrue between such date and the Effective Time. To the best of the
knowledge of WNNI, after due investigation, each tax return heretofore filed by
WNNI correctly and accurately reflects the amount of its tax liability
thereunder.
2.09 PROPERTIES. As of the Effective Time, WNNI will have good title to all
properties and assets used in its business or owned by it free and clear of all
liens, claims, mortgages, security interests, pledges, charges, and
encumbrances.
2.10 CONTRACTS AND OTHER INSTRUMENTS. WNNI is not a party to nor it or its
assets bound by any agreement of any kind, nature, or description except as set
forth in the WNNI Financial Statements. WNNI is not in breach or violation of or
default under any contract or instrument to which WNNI is a party and/or by
which its assets are bound; and no event has occurred which with the lapse of
time or action by a third party could result in a breach or violation of or
default by WNNI under any contract or other instrument to which PVG is a party
or by which it or any of its assets are bound or affected, nor is there any
court or regulatory order pending against or affecting WNNI and/or any of its
assets. WNNI is not a party to any agreement performable in the future.
2.11 EMPLOYEES. WNNI has no employees and no welfare benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA")) or otherwise of any kind, nature or description.
2.12 PRE CLOSING ACTIVITY. WNNI shall not enter into or consummate any
transactions prior to the Closing other than in the ordinary course of business
and will pay no dividend, or increase the compensation of any officer, director,
or employee and will not enter into any transaction or agreement which would
adversely affect its financial condition. WNNI shall deliver to PVG at or prior
to the Closing copies of any and all reports relating to the financial and/or
business condition of WNNI that are created or published subsequent to the date
hereof together with any reports or communications sent to the stockholders of
WNNI subsequent to the date hereof.
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2.13 CERTIFICATE. The representations, warranties, covenants and agreements
of WNNI contained in this Agreement, including, without limitation, those
contained in this Article II, are true, accurate and correct in all respects as
of the date hereof and shall be true, accurate and correct and complete, in all
respects, as of the Closing.
2.14 FINANCIAL STATEMENTS AND CONDITION.
(a) WNNI has delivered to PVG a true, correct and complete copy of its
audited financial statements for the period ended March 31, 2000 which includes
a balance sheet, statement of income, statement of retained earnings, and
statement of cash flows of WNNI (the "WNNI Financial Statements").
(b) The WNNI Financial Statements were prepared in accordance with
generally accepted accounting principles ("GAAP"), consistently applied
throughout the period involved, are true, correct and complete in all material
respects, are in accordance with the books and records of WNNI, and fairly
present (and will fairly present) together with the notes thereto, the financial
position and results of operations of WNNI for the periods therein indicated.
(c) Since the dates of the WNNI Financial Statements, there have not
been, nor prior to the Closing will there be, any material adverse changes in
the business or condition, financial or otherwise, of WNNI.
2.15 BOARD ACTION. During the period from the date hereof until the Closing
there shall not be taken an action by the Board of Directors of WNNI without the
prior written consent of PVG in each instance.
2.16 STOCKHOLDER VOTE REQUIRED. The affirmative vote of a majority of the
votes entitled to be cast by holders of the outstanding shares of WNNI Common
Stock (voting as a class) are the only votes of the holders of any class or
series of WNNI's capital stock necessary to approve this Agreement and the
Merger under applicable law.
2.17 BOARD APPROVAL. The board of directors of WNNI has (i) approved the
Merger and the execution of this Agreement, (ii) determined that the Merger is
in the best interests of the stockholders of WNNI and is on terms that are fair
to such stockholders, and (iii) recommended that holders of WNNI Common Stock
vote in favor of this Agreement and the Merger, to the extent such Stockholder
approval is required under applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PVG
In order to induce WNNI to execute and perform this Agreement, PVG does
hereby represent, warrant, covenant, and agree (which representations,
warranties, covenants, and agreements shall be and are hereby deemed to be
continuing and survive the execution and delivery of this Agreement, the
Closing, and the Effective Time) as follows:
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3.01 ORGANIZATION; QUALIFICATION; SUBSIDIARIES.
(a) PVG is a corporation duly organized, validly existing, and in good
standing under the laws of Delaware, with all requisite power and authority to
own, lease, license, and operate its properties and assets and to carry on its
business as now conducted and presently proposed to be conducted and to perform
its obligations under all contracts, instruments, notes or other binding
commitments to which it is or may become a party or by which it is or its assets
are or may become bound. PVG is duly qualified to transact the business in which
it is engaged and is in good standing as a foreign corporation in every
jurisdiction in which its ownership, leasing, licensing, or use of property or
assets or the conduct of its business makes such qualification necessary.
(b) PVG has furnished to WNNI a copy of its articles of incorporation
and bylaws, as presently in effect, certified by the Secretary of PVG. PVG is
not in material violation or breach of, or in default with respect to, any term
of its articles of incorporation or bylaws.
(c) Except as set forth on Schedule 3.01(c), PVG does not own,
beneficially or otherwise, any stock or other equity interest, partnership
interest, joint venture interest or any other security issued by any other
corporation, organization or entity, and PVG has not agreed and is not obligated
to make any future investment in or capital contribution to any such
corporation, organization or entity.
3.02 AUTHORITY. PVG has all requisite power and authority to execute,
deliver, and perform this Agreement and to carry out its obligations hereunder.
All necessary corporate proceedings of PVG have been or as of the Effective Time
will have been duly taken to authorize the execution, delivery, and performance
of this Agreement by PVG. This Agreement has been duly authorized, executed, and
delivered by PVG, constitutes the legal, valid, and binding obligation of PVG,
and is enforceable as to PVG in accordance with its terms subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws affecting the rights of creditors generally and the
discretion of courts in granting equitable remedies. Except for the provisions
of the General Corporation Law of the state of Delaware governing the filing of
the Certificate of Merger, no consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal is
required by PVG for the execution, delivery, or performance of this Agreement by
PVG.
3.03 CAPITALIZATION
(a) The authorized capital stock of PVG consists of 30,000,000 shares
of Common Stock of which 10,000,000 shares were issued and outstanding as of the
date hereof. All of the issued and outstanding shares of PVG Common Stock are
duly authorized, validly issued, fully paid, and non-assessable.
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(b) There is no: (i) outstanding subscription, option, call, warrant
or right (whether or not currently exercisable) to acquire any shares of the
capital stock or other securities of PVG; (ii) outstanding security, instrument
or obligation that is or may become convertible into or exchangeable for any
shares of the capital stock or other securities of PVG; (iii) contract or
agreement under which PVG is or may become obligated to sell or otherwise issue
any shares of its capital stock or any other securities; or (iv) condition or
circumstance that may give rise to or provide a basis for the assertion of a
claim by any person or entity to the effect that such person or entity is
entitled to acquire or receive any shares of capital stock or other securities
of PVG.
(c) All outstanding shares of PVG Common Stock have been issued and
granted in compliance with all applicable securities laws and other applicable
laws and regulations.
(d) PVG is not under any obligation to register under the Act any of
its presently outstanding securities or any securities that may be subsequently
issued, and no person or entity holds any right to participate in new issuances
of securities by PVG.
3.04 ABSENCE OF LITIGATION. There is no action, lawsuit, claim proceeding,
order, or investigation of any kind or nature pending or threatened against PVG
or otherwise effecting any of its properties or assets, or that challenges or
may have the effect of preventing, delaying, making illegal or otherwise
interfering with the Merger or any other transactions contemplated by this
Agreement, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or that could reasonably be expected to have a material adverse
effect on the business, properties, assets, or condition (financial or
otherwise) of PVG and there is no basis known to PVG for any of the foregoing.
There is no order, writ, injunction, judgment, or decree to which PVG or any of
the assets owned or used by PVG is subject.
3.05 NO OTHER DEFAULT. The execution and delivery of this Agreement and the
other agreements referred to herein, and the consummation of the transactions
contemplated hereunder will not conflict with or violate or require any consent
under and will not result in any breach or termination of (i) the articles of
incorporation or bylaws of PVG, (ii) any resolution adopted by PVG's
stockholders, board of directors, or any committee of such board of directors,
or (iii) any other agreement to which PVG is a party or by which its properties
are subject or by which it is bound. PVG is not in violation of, or in default
under, (a) any term or provision of its constitutional documents; (b) any
material term or provision or any financial covenant of any indenture, mortgage,
contract, commitment, or other agreement or instrument to which it is a party or
by which it or any or its properties or business is or may be bound or affected;
or (c) any existing applicable law, rule, regulation, judgment, order, or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over it or any of its properties or business. PVG owns, possesses, or has
obtained all governmental and other licenses, permits, certifications,
registrations, approvals, or consents and other authorizations necessary to own
or lease, as the case may be, and to operate its properties and to conduct its
business or operations as presently conducted and all such governmental and
other licenses, permits, certifications, registrations, approvals, consents, and
other authorizations are outstanding and in good standing, and there are no
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proceedings pending or threatened, or any basis therefore existing, seeking to
cancel, terminate, or limit such licenses, permits, certifications,
registrations, approvals, or consents or authorizations, or related to the
breach or failure to comply of PVG with any law, rule, regulation, judgment,
order, or decree.
3.06 CORPORATE DOCUMENTS. PVG has furnished to WNNI true, correct and
complete copies of its articles of incorporation, bylaws, and minute book, and
will furnish a certificate of good standing from the state of Delaware dated
within ten (10) days of the Closing Date. The minute book contains a record,
which is complete and accurate in all material respects, of all meetings and all
corporate actions of the stockholders and board of directors of PVG. PVG is not
in material violation or breach of, or in default with respect to, (a) any term
of its constitutional documents or any agreement to which it is a party or by
which its assets are bound, or (b) any law, rule, regulation, judgment, order,
or decree of any governmental agency or court having jurisdiction over it or its
assets.
3.07 TAX AND OTHER LIABILITIES. PVG has no liability of any nature,
accrued, absolute or contingent, secured or unsecured, including, without
limitation, liabilities to customers or suppliers, other than liabilities (if
any) which are reflected on the PVG Financial Statements (as defined in Section
3.12). Except for the liabilities included on the PVG Financial Statements, as
of the date of such PVG Financial Statements, PVG had no liabilities, either
fixed or contingent, which would have been required to be recorded under GAAP as
of such date, and no such liabilities, other than liabilities arising in the
ordinary course of business and/or pursuant to this Agreement have accrued
and/or will accrue between such date and the Effective Time. To the best of the
knowledge of PVG, after due investigation, each tax return heretofore filed by
PVG correctly and accurately reflects the amount of its tax liability
thereunder.
3.08 PROPERTIES. As of the Effective Time, PVG will have good title to all
properties and assets used in its business or owned by it free and clear of all
liens, claims, mortgages, security interests, pledges, charges, and
encumbrances.
3.09 CONTRACTS AND OTHER INSTRUMENTS. PVG is not a party to nor it or its
assets bound by any agreement of any kind, nature, or description except as set
forth in the PVG Financial Statements. PVG is not in breach or violation of or
default under any contract or instrument to which PVG is a party and/or by which
its assets are bound; and no event has occurred which with the lapse of time or
action by a third party could result in a breach or violation of or default by
PVG under any contract or other instrument to which WNNI is a party or by which
it or any of its assets are bound or affected, nor is there any court or
regulatory order pending against or affecting PVG and/or any of its assets. PVG
is not a party to any agreement performable in the future.
3.10 PRE CLOSING ACTIVITY. PVG shall not enter into or consummate any
transactions prior to the Closing other than in the ordinary course of business
and will pay no dividend, or increase the compensation of any officer, director,
or employee and will not enter into any transaction or agreement which would
adversely affect its financial condition. PVG shall deliver to WNNI at or prior
to the Closing copies of any and all reports relating to the financial and/or
business condition of PVG that are created or published subsequent to the date
hereof together with any reports or communications sent to the stockholders of
PVG subsequent to the date hereof.
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3.11 CERTIFICATE. The representations, warranties, covenants, and
agreements of PVG contained in this Agreement, including, without limitation,
those contained in this Article III, are true, accurate and correct in all
respects as of the date hereof and shall be true, accurate and correct and
complete, in all respects, as of the Closing.
3.12 FINANCIAL STATEMENTS AND CONDITION.
(a) PVG has delivered to WNNI a true, correct and complete copy of its
audited financial statements for the period ended December 31, 1999 which
includes a balance sheet, statement of income, statement of retained earnings,
and statement of cash flows of PVG (the "PVG Financial Statements").
(b) The PVG Financial Statements were prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout the period involved, are true, correct and complete in all material
respects, are in accordance with the books and records of PVG and fairly present
(and will fairly present) together with the notes thereto, the financial
position and results of operations of PVG for the periods therein indicated.
(c) Since the dates of the PVG Financial Statements, there have not
been, nor prior to the Closing will there be, any material adverse changes in
the business or condition, financial or otherwise, of PVG.
3.13 BOARD ACTION. During the period from the date hereof until the Closing
there shall not be taken an action by the Board of Directors of PVG without the
prior written consent of WNNI in each instance.
3.14 STOCKHOLDER VOTE REQUIRED. The affirmative vote of a majority of the
votes entitled to be cast by holders of the outstanding shares of PVG Common
Stock (voting as a class) are the only votes of the holders of any class or
series of PVG's capital stock necessary to approve this Agreement and the Merger
under applicable law.
3.15 BOARD APPROVAL. The board of directors of PVG has (i) approved the
Merger and the execution of this Agreement, (ii) determined that the Merger is
in the best interests of the stockholders of PVG and is on terms that are fair
to such stockholders, and (iii) recommended that holders of PVG Common Stock
vote in favor of this Agreement and the Merger, to the extent such Stockholder
approval is required under applicable law.
3.16 ACQUISITION FOR INVESTMENT PURPOSES ONLY. The stockholders of PVG are
acquiring the WNNI Common Stock as a result of the Merger for investment
purposes only and not with the view to the resale or distribution thereof. Each
of the stockholders of PVG is an "accredited investor" under the regulations
promulgated under the Act or otherwise meets one of the definitions for persons
entitled to acquire unregistered securities pursuant to an exemption from
registration under the Act. Neither PVG nor its stockholders have received
and/or relied upon any representations or warranties from WNNI other than those
contained in this Agreement and the attached schedules or exhibits hereto. PVG
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represents and warrants that it and its stockholders have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment in WNNI Common Stock. PVG and its
stockholders understand and acknowledge that the WNNI Common Stock has not been
registered under the Act or under any state securities act and are being issued
to the stockholders of PVG pursuant to an exemption from registration under the
Act. The reliance by WNNI upon such exemption is predicated upon the
representations and warranties of PVG contained herein. In this regard, PVG and
its stockholders understand and agrees that there may be affixed to the
certificates representing the shares of WNNI Common Stock acquired by the
stockholders of PVG hereunder a legend advising of the unregistered, restricted
nature of the shares.
ARTICLE IV
COVENANTS AND OTHER AGREEMENTS
4.01 CONDUCT OF BUSINESS OF WNNI. Except as herein expressly provided to
the contrary or as otherwise agreed to in writing by PVG, during the period from
the execution of this Agreement until the earlier to occur of the Effective Time
or the termination of this Agreement as herein provided, WNNI will conduct its
operations according to its ordinary and usual course of business and consistent
with past practice. In this regard, except as expressly provided in this
Agreement to the contrary or otherwise agreed to by PVG in writing or as
required by law or agreement, WNNI will not, between the date of this Agreement
and the earlier to occur of the Effective Time or the termination of this
Agreement as herein provided:
(a) Make or become obligated to make, any payment to any director,
officer, employee, or agent;
(b) Declare any dividend or make any other distribution to
stockholders;
(c) Incur any indebtedness for borrowed money except in the ordinary
course of business;
(d) Sell, lease, license, encumber or dispose of any material portion
of its properties or assets except in the ordinary course of business;
(e) Expend funds for any individual capital expenditure in excess of
$1,000 or aggregate capital expenditures in excess of $5,000;
(f) Issue any shares of capital stock, modify or reorganize its equity
capitalization or grant any option or other right to acquire any shares of its
capital stock;
(g) Amend its articles of incorporation or bylaws;
(h) Change its business, operations or financial condition, or the
manner of managing or conducting its business and operations if such changes, if
any, have a material adverse effect on such business, operations or financial
condition, taken as a whole;
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(i) Change its accounting methods or practices (including, without
limitation, any change in depreciation, amortization and/or good will policies
or rates;
(j) Incur any damage, destruction or loss (whether or not covered by
insurance) which materially and adversely affects its assets, business,
operations or financial condition;
(k) Make any loan to any person or entity and/or issue any guaranty
for or with respect to its own or another's obligations; or
(l) Waive or release any right or claim.
4.02 TRANSACTION COSTS AND EXPENSES. Each of the parties hereto shall pay
its own respective costs incurred in connection with this transaction including,
without limitation, all legal, accounting, auditing, and appraisal fees in
negotiating and preparing this Agreement and in consummating, closing, and
implementing the transactions contemplated hereby.
4.03 SUBSEQUENT EVENTS. Each of the parties hereto shall promptly advise
the other parties hereto, in writing of (a) the occurrence or failure of any
event, condition, fact or circumstance which occurrence or failure would be
likely to cause any representation or warranty of such party set forth herein to
be untrue or inaccurate in any material respect at, or any time prior to, the
Effective Time, and (b) the failure of such party to comply with or accomplish,
in any material respect, any of the covenants, conditions, or agreements of such
party set forth herein.
4.04 INDEMNITY.
(a) PVG does hereby agree to indemnify and hold harmless WNNI and its
employees, officers, directors and successors against and in respect of any and
all claims, suits, actions, proceedings (formal or informal), governmental
investigations, judgments, deficiencies, set-offs, damages, settlements,
liabilities, and reasonable legal and other expenses (including reasonable
attorneys fees and defense costs) as and when incurred arising out of or based
upon any breach by PVG of any representation, warranty, covenant, or agreement
of PVG contained in this Agreement;
(b) WNNI does hereby agree to indemnify and hold harmless PVG and its
employees, officers, directors and successors against and in respect of any and
all claims, suits, actions, proceedings (formal or informal), governmental
investigations, judgments, deficiencies, set-offs, damages, settlements,
liabilities, and reasonable legal and other expenses (including reasonable
attorneys' fees and costs of defense) as and when incurred arising out of or
based upon any breach by WNNI of any representation, warranty, covenant, or
agreement of WNNI contained in this Agreement.
(c) The parties' respective indemnity obligations hereunder shall be
subject to the following terms, limitations and conditions:
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(i) A person claiming the right to indemnity coverage under this
Section 4.04 ("Indemnitee"), shall give the party from whom he or it seeks
indemnity coverage ("Indemnitor"), prompt notice of the assertion of any
indemnified claim on the basis of which an Indemnitee intends to seek
indemnification from an Indemnitor as provided herein; provided, however,
that the obligation of an Indemnitor shall be reduced for the failure to
give timely notice at any particular time only to the extent that the
Indemnitor has been actually prejudiced thereby;
(ii) The Indemnitor shall have the duty to zealously and
competently defend, with counsel selected by Indemnitor after consultation
with the Indemnitee, any matter subject to indemnity coverage under
subparagraphs (a) or (b) of this section and to pay all costs of such
defense. In any case where Indemnitor's obligation to provide a zealous
defense is compromised by conflict of interest between itself and an
Indemnitee or between Indemnitees, the Indemnitor shall, upon the request
of an Indemnitee, provide separate legal representation to obviate the
conflict of interest. When Indemnitor has assumed the defense obligations
of this section, Indemnitor shall have the right to settle the matter
without the Indemnitees' consent, provided Indemnitor in fact commits
sufficient funds to satisfy the settlement in full. In the event that an
Indemnitor fails to defend as provided in this section, any Indemnitee
shall have the right (but not the obligation) to select and be represented
by counsel of its choice, to manage its own legal representation or defense
and to settle any claim, debt or other indemnified matter hereunder, and
the Indemnitor shall be liable to such Indemnitee for all costs, expenses,
damages and settlements incurred by such Indemnitee;
(iii) With respect to any claim for which an Indemnitor shall
indemnify any Indemnitee, the Indemnitor shall be subrogated to all rights
of any Indemnitee against any and all third parties up to the amount paid
by Indemnitor to Indemnitees or set off by such indemnity against an
Indemnitor; and
(iv) No Indemnitor shall be liable for that portion of any claim
for which an Indemnitee actually receives from any insurance, the defense,
cost of defense or insurance proceeds covering such claim (the deductible
pertaining to any such insurance shall not be considered to be insurance
proceeds or cost of defense).
4.05 RELATED AGREEMENTS. Each of the parties shall execute and deliver at
Closing the related agreements, instruments and documents specified for delivery
at Closing or the Effective Time in Sections 5.02 and 5.03 and elsewhere in this
Agreement or in a related agreement to which each, respectively, is a party.
4.06 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) WNNI and its attorneys, accountants, consultants and
representatives shall continue to have access to the books and records of PVG
and such other information pertaining to the business and assets of PVG as WNNI
shall reasonably request, and PVG and its attorneys, accountants, consultants
and representatives shall continue to have access to the books and records of
WNNI and such other information pertaining to the business and assets of WNNI as
PVG shall reasonably request, and each of WNNI and PVG shall provide the other
with reasonable access to its officers and other personnel.
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(b) Each party shall treat in confidence all documents, materials, and
other information which it has and shall have obtained regarding the other party
during the course of the negotiations leading to the consummation of the
transactions contemplated by this Agreement (whether obtained before or after
the date of this Agreement) and the preparation of this Agreement and other
related documents. The obligation of each party to treat such documents,
materials and other information in confidence shall not apply to any information
which (i) such party can demonstrate was already lawfully in its possession
prior to the disclosure thereof by the other party, (ii) is known to the public
and did not become so known through any violation of a legal obligation, (iii)
became known to the public through no fault of such party, (iv) is later
lawfully acquired by such party from other sources, (v) is required to be
disclosed under the provisions of any federal, state or local statute or
regulation issued by a duly authorized agency, board or commission thereof, or
(vi) is required to be disclosed by a rule or order of any court of competent
jurisdiction. Each party agrees, if it breaches any of the terms of this Section
4.06(b), it will consent to the issuance of a temporary and/or permanent
injunction by any court of competent jurisdiction enjoining such party from
continuing to breach the terms of this Section 4.06(b). In the event that this
Agreement shall be terminated for any reason, the parties hereto shall, and
shall cause their respective officers, directors, employees and agents to,
promptly return any and all copies of all documents, materials and other
information which are confidential, proprietary or otherwise relate to a trade
secret of the other party which was received in connection with the negotiation
of the transactions contemplated by this Agreement.
4.07 CONSENTS. As promptly as practicable after the execution of this
Agreement, each party to this Agreement (a) shall make all filings (if any) and
give all notices (if any) required to be made and given by such party in
connection with the Merger and the other transactions contemplated by this
Agreement, and (b) shall use all commercially reasonable efforts to obtain all
consents (if any) required to be obtained (pursuant to any applicable law,
regulation, contract or agreement, or otherwise) by such party in connection
with the Merger and the other transactions contemplated by this Agreement. WNNI
shall (upon request) promptly deliver to PVG a copy of each such filing made,
each such notice given and each such consent obtained by WNNI during the period
subsequent to the date hereof and prior to the Effective Time; and the Company
shall (upon request) promptly deliver to WNNI a copy of each such filing made,
each such notice given and each such consent obtained by the Company during the
period subsequent to the date hereof and prior to the Effective Time.
4.08 FORM 10-SB REGISTRATION STATEMENT. The Surviving Corporation shall, at
its sole expense, prepare and file with the Securities and Exchange Commission
(the "SEC"), within ninety (90) days after the Effective Time, a registration
statement on Form 10-SB under the Securities Exchange Act of 1934, as amended.
4.09 STATE SECURITIES LAW COMPLIANCE. WNNI shall use commercially
reasonable efforts to qualify, prior to the Effective Time, the WNNI Common
Stock to be issued pursuant to the Merger under state "blue sky" laws of every
jurisdiction of the United States in which (i) any registered Stockholder of PVG
has an address on the records of PVG as of the date of this Agreement, and (ii)
an exemption from the qualification requirements under such laws is unavailable
with respect to the issuance of WNNI Common Stock in the Merger.
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4.10 BOARD OF DIRECTORS. Contemporaneously with the consummation of the
Merger, persons designated by PVG pursuant to Section 1.05(d) shall be appointed
to the Surviving Corporation's board of directors to serve until the first
annual meeting of stockholders of the Surviving Corporation to occur following
consummation of the Merger.
ARTICLE V
CONDITIONS
5.01 CONDITIONS TO THE OBLIGATION TO EFFECT THE MERGER. The respective
obligations of each party to consummate the Merger shall be subject to and
conditioned upon the satisfaction at or prior to the Closing Date of the
following conditions:
(a) To the extent required by Nevada law and/or Delaware law or the
party's articles of incorporation or bylaws, stockholder approval shall have
been obtained;
(b) No statute, rule, regulation executive order, decree, temporary
restraining order, preliminary or permanent injunction, or other order issued by
any court or competent jurisdiction or other governmental entity preventing the
consummation of the Merger shall be in effect; provided that each of the parties
shall have used reasonable efforts to prevent the entry of any such injunction
or other order and to appeal as promptly as possible any injunction or other
order that may be entered;
(c) There shall not have occurred or been discovered any material
breach or inaccuracy of any representation or warranty made by any other party
in this Agreement, and there shall not have occurred any material breach of any
covenant or obligation required by this Agreement or by law to have been
performed by any other party prior to the Effective Time; and
(d) Each party shall have received all documents and agreements
required to be delivered to it at or before the Closing.
5.02 WNNI'S OBLIGATIONS AT CLOSING. At the Closing, WNNI shall deliver or
cause to be delivered to PVG, in form satisfactory to PVG, the following:
(a) A true copy of the minutes of the meeting of the Board of
Directors of WNNI approving this Agreement and Plan of Merger and the Merger,
recommending the Agreement and Plan of Merger and Merger to the stockholders of
WNNI and authorizing WNNI's execution, delivery and performance of this
Agreement;
(b) A true copy of the notice of stockholders meeting and proof of
service thereof upon all WNNI stockholders of record in accordance with Nevada
law together with the minutes of the stockholder's meeting evidencing
stockholder approval of the Plan of Merger and the execution, delivery and
performance of this Agreement; or, alternatively, a written consent executed by
the stockholders of WNNI as required by Nevada law containing the foregoing
approvals;
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(c) A certificate in which WNNI shall certify that the representations
and warranties of WNNI set forth in Article II shall be true and correct in all
material respects as of the Effective Time as and if made at and as of the
Effective Time, and WNNI has performed each obligation and agreement and
complied with each covenant to be performed and complied with by it hereunder at
or prior to the Effective Time;
(d) A legal opinion addressed to PVG from The Law Offices of Kevin
Sherlock, based on customary reliance and subject to customary qualifications,
to the effect that:
(i) WNNI is a corporation validly existing and in good standing
under the laws of the State of Nevada and is not required by the laws of
any other jurisdiction to be qualified to do business as a foreign
corporation in such jurisdiction.
(ii) The authorized capital of WNNI consists of shares of capital
stock, designated "common stock," having a par value of $0.001 per share,
of which the number of shares indicated in such opinion are outstanding,
all of which were duly and validly issued and are fully paid and
non-assessable.
(iii) WNNI has the corporate power to consummate the transactions
on its part contemplated by this Agreement; WNNI has duly taken all
requisite corporate action to authorize this Agreement and the Articles of
Merger contemplated by Section 1.04; and this Agreement and such Articles
of Merger have been duly executed and delivered by WNNI and constitute
valid and binding obligations of WNNI enforceable against WNNI in
accordance with their respective terms, subject to (a) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or other laws from time to time in effect, and (b) general principles of
equity and rights of specific performance.
(iv) The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, and the fulfillment
of the terms hereof, will not violate any provision of WNNI's Articles of
Incorporation or Bylaws nor will they result in the breach of any term or
provision of, or constitute a default under, or conflict with, or cause the
acceleration of any obligation under any loan agreement, note, debenture,
indenture, mortgage, deed of trust, lease, contract, agreement or other
obligation of any description of which such counsel has knowledge to which
WNNI is a party or by which it is bound, or any judgment, decree, order, or
award of any court, governmental body, or arbitrator of which such counsel
has knowledge, or any applicable law, rule, or regulation.
(v) No actions are required to be taken in order to make the
Merger effective which have not been taken on or prior to the delivery of
such legal opinion except the delivery of the forms required for filing of
the Articles of Merger contemplated in Section 1.04 to the Secretary of
State of the State of Nevada and the Secretary of the State of Delaware.
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(vi) Such counsel has no knowledge of any suits, actions, claims,
arbitrations, administrative or other proceedings or governmental
investigations pending or threatened against or affecting WNNI, its
business, or its assets or any litigation affecting the right of WNNI to
enter into or perform under this Agreement or the Articles of Merger
contemplated in Section 1.04 in any court or before or by any federal,
state, or other governmental department or agency or of the existence of
any order, judgment, decree, or ruling of any court or governmental
department or agency affecting its business or assets.
(e) A certificate of good standing for WNNI issued within ten (10)
days prior to the Closing Date by the Secretary of State of Nevada;
(f) All other schedules, certificates, and other documents required by
this Agreement or by law to be delivered by WNNI on or before Closing or the
Effective Time; and
(g) All of the books and records of WNNI.
5.03 PVG'S OBLIGATIONS AT CLOSING. At or prior to the Closing, PVG shall
deliver or cause to be delivered to WNNI, in form satisfactory to WNNI, the
following:
(a) A true copy of the minutes of the meeting of the Board of
Directors of PVG approving this Agreement and Plan of Merger and the Merger,
recommending the Agreement and Plan of Merger and Merger to the stockholders of
PVG and authorizing PVG's execution, delivery and performance of this Agreement;
(b) A true copy of the notice of stockholders meeting and proof of
service thereof upon all PVG stockholders of record in accordance with Delaware
law together with the minutes of the stockholder's meeting evidencing
stockholder approval of the Plan of Merger and the execution, delivery and
performance of this Agreement; or, alternatively, a unanimous written consent
executed by all of the stockholders of PVG containing the foregoing approvals;
(c) A certificate in which PVG shall certify that the representations
and warranties of PVG set forth in Article III shall be true and correct in all
material respects as of the Effective Time as and if made at and as of the
Effective Time, and PVG has performed each obligation and agreement and complied
with each covenant to be performed and complied with by it hereunder at or prior
to the Effective Time;
(d) A legal opinion addressed to WNNI from Squire, Sanders & Dempsey
L.L.P., based on customary reliance and subject to customary qualifications, to
the effect that:
(i) PVG is a corporation validly existing and in good standing
under the laws of the State of Delaware.
(ii) PVG has the corporate power to consummate the transactions
on its part contemplated by this Agreement; PVG has duly taken all
requisite corporate action to authorize this Agreement and the Articles of
Merger contemplated by Section 1.04; and this Agreement and such Articles
of Merger have been duly executed and delivered by PVG and constitute valid
and binding obligations of PVG.
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(iii) No actions are required to be taken in order to make the
Merger effective which have not been taken on or prior to the delivery of
such legal opinion except the delivery of the forms required for filing of
the Articles of Merger contemplated in Section 1.04 to the Secretary of
State of the State of Delaware and the Secretary of State of the State of
Nevada.
(e) A certificate of good standing for PVG issued within ten (10) days
of the Closing Date by the Secretary of State of Delaware; and
(f) All other schedules, certificates and other documents required by
this Agreement or by law to be delivered by PVG on or before Closing or the
Effective Time.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.01 TERMINATION. This Agreement may be terminated prior to the Effective
Time:
(a) by WNNI if there has been a material breach by PVG of any covenant
or agreement of PVG set forth in this Agreement or in any other agreement or
instrument delivered to WNNI, which breach has not been cured within thirty (30)
days of the date on which written notice of such breach was first given to PVG
or which is not reasonably anticipated to be cured by Closing;
(b) by PVG if there has been a material breach by WNNI of any covenant
or agreement of WNNI set forth in this Agreement or in any other agreement or
instrument delivered to PVG, which breach has not been cured within thirty (30)
days of the date on which written notice of such breach was first given to WNNI
or which is not reasonably anticipated to be cured by Closing;
(c) by WNNI if WNNI reasonably determines that the timely satisfaction
of any condition set forth in Section 5.01 or 5.03 by the Closing has become
impossible (other than as a result of any failure on the part of WNNI to comply
with or perform any covenant or obligation of WNNI set forth in this Agreement);
(d) by PVG if PVG reasonably determines that the timely satisfaction
of any condition set forth in Section 5.01 or 5.02 by the Closing has become
impossible (other than as a result of any failure of PVG to comply with or
perform any covenant or obligation of PVG set forth in this Agreement);
(e) by WNNI at or by the Closing if any condition set forth in Section
5.01 or 5.03 has not been satisfied (other than as a result of any failure on
the part of WNNI to comply with or perform any covenant or obligation of WNNI
set forth in this Agreement);
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(f) by PVG at or by the Closing if any condition set forth in Section
5.01 or 5.02 has not been satisfied (other than as a result of any failure on
the part of PVG to comply with or perform any covenant or obligation of PVG set
forth in this Agreement); or
(g) by the mutual consent of WNNI and PVG.
6.02 TERMINATION PROCEDURES. If WNNI wishes to terminate this Agreement
pursuant to Section 6.01(a), Section 6.01(c), Section 6.01(e), WNNI shall
deliver to PVG a written notice stating that WNNI is terminating this Agreement
and setting forth a brief description of the basis on which WNNI is terminating
this Agreement. If PVG wishes to terminate this Agreement pursuant to Section
6.01(b), Section 6.01(d) or Section 6.01(f), PVG shall deliver to WNNI a written
notice stating that PVG is terminating this Agreement and setting forth a brief
description of the basis on which PVG is terminating this Agreement.
6.03 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 6.01, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) neither PVG nor WNNI shall be relieved
of any obligation or liability arising from any prior breach by such party of
any provision of this Agreement. If this Agreement is terminated pursuant to
Section 6.01 as a result of the inaccuracy of any representation or warranty of
WNNI set forth in Article II or the inaccuracy of any representation or warranty
of PVG set forth in Article III, the party making such inaccurate representation
or warranty shall be subject to liability for the termination of this Agreement
as a result thereof only if and to the extent that any Responsible Officer (as
defined below) of such party had actual knowledge of such inaccuracy. For
purposes hereof, "Responsible Officer" of any party shall mean the chairman of
the board of directors, the chief executive officer, the chief operating
officer, the chief financial officer, any executive vice president, the
treasurer or the secretary of such party.
ARTICLE VII
MISCELLANEOUS
7.01 BROKERAGE FEES. No party to this Agreement has consented to or
authorized any broker or agent to act on its behalf, directly or indirectly, as
a broker or finder in connection with the transaction contemplated by this
Agreement. In the event any claim is made for a broker's or finder's fee in
connection with the transactions contemplated hereunder, the party responsible
for retaining or securing said broker or finder shall be solely responsible for
the payment of any broker's or finder's fees incurred as a result thereof.
Further, the responsible party or parties shall indemnify the other parties
against any loss or liabilities by reason of such broker's or finder's fees.
7.02 FURTHER ACTIONS. At any time and from time to time, each party agrees,
at its expense, to take such actions and to execute and deliver such documents
as may be reasonably necessary to effectuate the purposes of this Agreement.
7.03 SURVIVAL. Except as otherwise provided herein, the covenants,
agreements, representations, and warranties contained in or made pursuant to
this Agreement shall survive the Effective Time and any delivery of
consideration at Closing or the Effective Time irrespective of any investigation
made by or on behalf of any party.
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7.04 MODIFICATION. This Agreement and the related instruments and
agreements hereto set forth the entire understanding of the parties with respect
to the subject matter hereof, supersede all existing agreements among them
concerning such subject matter, and may be modified only by a written instrument
duly executed by all of the parties hereto.
7.05 NOTICES. All notices, elections, reports or other correspondence
required or permitted hereunder shall be in writing and deemed to have been
properly given or delivered when mailed by certified mail, return receipt
requested, postage prepaid, delivered by overnight express courier, delivery
fees prepaid, or transmitted by fax with receipt confirmed, to the party to whom
directed at the below specified addresses:
If to WNNI: Mark Collantes, President
Winnernet Industries, Inc.
3510 N. Pine Grove, Suite 521
Chicago, Illinois 60657
With a copy to: Kevin Sherlock, Esq.
4042 N. Pontatoc Rd.
Tucson, Arizona 85718
If to PVG: Barry Chen, Chief Executive Officer
Pacific Vision Group
9540 Waples Street, Suite E
San Diego, California 92121
With a copy to: James L. Adler, Jr., Esq.
Squire, Sanders & Dempsey L.L.P.
40 N. Central Ave, Suite 2700
Phoenix, Arizona 85004
Any such notice shall be deemed given three days after deposit with the mail,
one day following delivery thereof to an overnight express courier or upon
confirmation of receipt when sent by fax. The address of a party may be changed
in accordance with the notice provisions of this section.
7.06 WAIVER. Any waiver by any party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions will not be considered a waiver, or
deprive that party, of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
7.07 BINDING EFFECT. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, and in addition shall inure to the benefit of the Indemnitees and
their respective successors, assigns, heirs, and personal representatives.
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7.08 NO THIRD-PARTY BENEFICIARIES. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement (except as provided in Section 7.07).
7.09 SEVERABILITY AND REFORMATION. If any provision of this Agreement is
invalid, illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances,
in either case unless the result thereof would preclude the consummation in all
material respects of the Merger contemplated by this Agreement and the
associated transactions or result in an unjust modification of the balance of
rights and obligations hereunder. To the extent provided in this section, a
court having jurisdiction of a matter involving the interpretation of this
Agreement shall be authorized to reform this Agreement to the minimum extent
necessary to accomplish the objectives of this section.
7.10 HEADINGS. The headings of this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
7.11 GOVERNING LAW. To the extent permitted by law, this Agreement shall be
governed by and construed in accordance with the laws of the state of Nevada,
without giving effect to conflict of laws. To the maximum extent permitted by
law and subject to the provisions of Section 7.14 hereof, any action or
proceeding initiated by any party to this Agreement, any Indemnitee or any other
person claiming rights under this Agreement shall be brought in an appropriate
state or federal court in Las Vegas, Nevada, and any person claiming rights
under this agreement consents to the jurisdiction and proper venue of such
forum.
7.12 SEPARATE COUNTERPARTS. This Agreement may be executed in several
identical counterparts, each one of which shall be considered an original and
all of which when taken together shall constitute but one instrument.
7.13 INCORPORATION OF RECITALS, EXHIBITS AND SCHEDULES. All related
instruments and agreements executed in connection herewith are incorporated
herein by this reference and expressly made a part of this Agreement.
7.14 ARBITRATION. Except in cases where the remedy of preliminary
injunction is reasonably sought by a party because of the irreparability and
immediacy of the harm alleged to be caused or threatened, in the event there
shall arise any dispute or claim in law or equity arising out of this Agreement
or any breach thereof or any resulting transaction between the parties under
this Agreement and if such dispute cannot be resolved through negotiation, the
parties agree that such dispute shall be submitted to arbitration under the
rules and regulations of the American Arbitration Association then obtaining.
The arbitration shall be held in Las Vegas, Nevada, before a single arbitrator.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date of the day and year first above written.
PACIFIC VISION GROUP, INC.,
a Delaware corporation
June 13, 2000 By: /s/ Barry Chen
------------------------------------
Barry Chen, Chief Executive Officer
WINNERNET INDUSTRIES, INC.,
a Nevada corporation
June 13, 2000 By: /s/ Mark Collantes
------------------------------------
Mark Collantes, President
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SCHEDULE 3.01(C)
China Eastern Pacific Vision Co., Ltd.
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