AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as
of the 15th day of November, 2000, by and among Pine View Technologies, Inc., a
Nevada corporation ("Pine View"); Pine View Merger, Co., a Nevada corporation
("Merger Co"); and Videolocity, Inc., a Nevada corporation ("Video"); based on
the following:
Recitals
The parties desire to enter into this agreement to set forth the terms
and conditions of the corporate reorganization pursuant to which Merger Co. will
be merged with and into Video, with Video being the surviving entity, and the
issued and outstanding shares of capital stock of Video will be converted into
shares of Pine View common stock. The merger of Merger Co. with and into Video
and the issuance of Pine View common stock are for the purpose of effecting a
tax-free reorganization pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Internal Revenue Code of 1986, as amended (the "Code").
Agreement
Based on the stated premises, which are incorporated herein by
reference, and for and in consideration of the mutual covenants and agreements
hereinafter set forth, the mutual benefits to the parties to be derived
here from, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, it is hereby agreed as follows:
ARTICLE I
MERGER
1.01 The Merger. Merger Co. will be merged with and into Video, which
shall survive the merger as the Surviving Corporation. The issued and
outstanding shares of Video (the "Video Shares") shall be converted into
post-split shares of Pine View common stock, par value $0.001 per share, after
giving effect to the reverse split described in Section 4.02 (the "Pine View
Shares"), as follows:
(a) Each Video Share outstanding on the Effective Date of the
merger and all rights in respect thereof shall be converted into
twenty-five (25) Pine View Shares (the "Exchange Ratio") for an
aggregate of thirty million two hundred eighty-one thousand two hundred
fifty (30,281,250) post-split Pine View Shares being issued to the
Video shareholders on the effective date of the merger; except that,
any "Dissenting Shares" of Video shall receive payment from Video, upon
the completion of the merger, in accordance with the provisions of the
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Nevada Revised Statutes. Dissenting Shares means any shares of Video
for which the holder thereof has exercised his or her appraisal rights
under the Nevada Revised Statutes.
(b) Pine View shall not issue any fractional shares or
interest in connection with the foregoing conversion. If any holder of
Video Shares would otherwise be entitled to a fractional share upon
exchange thereof, Pine View shall round up the number of Pine View
Shares to be issued to such holder to the nearest whole share.
(c) After the Effective Date of the merger, each holder of
Video Shares shall, upon the surrender of the certificates representing
such Shares to the registrar and transfer agent of Pine View, be
entitled to receive a certificate or certificates evidencing the
post-split Pine View Shares as provided herein. On the Effective Date
of the merger, all Video Shares shall be canceled and all rights in
respect thereof shall cease.
(d) Each share of common stock of Merger Co. issued and
outstanding on the Effective Date, and all rights in respect thereof,
shall, without any action on the part of Pine View or Merger Co.,
forthwith cease to exist and be converted into one validly issued,
fully paid and nonassessable share of common stock of the Surviving
Corporation.
1.02 Adjustments to Exchange Ratio. For all relevant purposes of the
merger of Video into Merger Co., the number of Pine View Shares to be issued and
delivered pursuant to this Agreement shall be appropriately adjusted to take
into account any stock split, stock dividend, reverse stock split (except for
the proposed reverse split set forth in Section 4.02), recapitalization, or
similar change in the Pine View Common Stock which may occur (with the prior
written consent of Video) between the date of the execution of this Agreement
and the date of delivery of such shares to provide the holders of Video Shares
the same economic effect as contemplated by this Agreement prior to such event.
1.03 Manner and Basis of Converting Stock. The manner and basis of
converting the shares of common stock of Video and Merger Sub, by virtue of the
Merger and without any action on the part of any holder thereof, shall be as set
forth in this Section 1.03.
(a) Subject to the terms and conditions of this Agreement,
each Video Share issued and outstanding immediately prior to the
Effective Date, and all rights in respect thereof, shall at the
Effective Date, without any action on the part of any holder thereof,
forthwith cease to exist and be converted into the right to receive
twenty-five (25) post-split Pine View Shares. In other words, Pine View
shall issue twenty-five post-split Pine View Shares for each one share
of Video for an exchange ration of 25-to-1 (the "Exchange Ratio").
(b) Except as otherwise provided herein, commencing
immediately after the Effective Date, each certificate which,
immediately prior to the Effective Date, represented issued and
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outstanding Video Shares shall evidence the right to receive
twenty-five (25) whole post-split Pine View Shares on the basis set
forth in paragraph (a) above. Upon the surrender by the holders of
Video Shares to the transfer agent and registrar of Pine View of the
stock certificate or certificates of Video endorsed in blank or
accompanied by stock powers executed in blank, with all signatures
medallion guaranteed and with all necessary transfer taxes and other
revenue stamps affixed and acquired, together with the investment
representation letter and all other documents and materials reasonably
required by such transfer agent to be delivered in connection
therewith, the holders of the Video Shares shall be entitled to receive
a certificate or certificates representing the number of whole Pine
View Shares to which they are entitled.
(c) On the Closing Date, Pine View shall adopt and assume the
Videolocity, Inc. 2000 Stock Incentive Plan (the "Video Incentive
Plan") and all awards made under the Video Incentive Plan shall be
adjusted so that each award under the Video Incentive Plan shall be
converted into an award pertaining to such number of post-split Pine
View Shares as is equal to the product of (x) the number of shares of
Video Common Stock subject to such award immediately prior to the
Closing Date and (y) the Exchange Ratio. Except for adjustments
required in connection with the conversion of Video Common Stock to
post-split Pine View Shares, the Video Incentive Plan shall be
unchanged and shall continue in full force and effect. Nothing
contained in this Agreement shall be interpreted as causing any awards
under the Video Incentive Plan to become vested or exercisable other
than in accordance with the terms of such award.
1.04. Articles of Incorporation; Bylaws; Directors and Officers of the
Surviving Corporation. Unless otherwise agreed by Pine View and Video prior to
the Closing, at the Effective Date:
(a) The Articles of Incorporation of Video (the "Articles of
Incorporation") as in effect immediately prior to the Effective Date
shall be at and after the Effective Date (until amended as provided by
law and by such Articles of Incorporation) the articles of
incorporation of the Surviving Corporation.
(b) The Bylaws of Video as in effect immediately prior to the
Effective Date shall be at and after the Effective Date (until amended
as provided by law, its Articles of Incorporation and its Bylaws, as
applicable) the Bylaws of the Surviving Corporation;
(c) The officers of Video immediately prior to the Effective
Date shall continue to serve in their respective offices of the
Surviving Corporation from and after the Effective Date, until their
successors are elected or appointed and qualified or until their
resignation or removal; and
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(d) The directors of Video immediately prior to the Effective
Date shall be the directors of the Surviving Corporation from and after
the Effective Date, until their successors are elected or appointed and
qualified or until their resignation or removal.
1.05 Subsequent Actions. If, at any time after the Effective Date, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to continue in, vest, perfect or confirm of record or otherwise the
Surviving Corporation's right, title or interest in, to or under any of the
rights, properties, privileges, franchises or assets of either of its
constituent corporations acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger, or otherwise to carry out the
intent of this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of either of the constituent corporations of the Merger, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties, privileges,
franchises or assets in the Surviving Corporation or otherwise to carry out the
intent of this Agreement.
1.06 Closing and Parties. The Closing contemplated hereby shall be held
at a mutually agreed upon time and place on such date as may be agreed to in
writing by the parties (the "Closing Date"). The Closing Date shall occur not
more than five days following the approval by a majority of the shareholders of
Pine View Common Stock as set forth in Section 4.03 hereof and the Video
Shareholders as set forth in Section 5.01 hereof. The Closing may be
accomplished by wire, express mail, overnight courier, conference telephone call
or as otherwise agreed to by the respective parties or their duly authorized
representatives.
1.07 Closing Events.
(a) Pine View Deliveries. Subject to fulfillment or waiver of
the conditions set forth in Article V, Pine View shall deliver to Video
at Closing all the following:
(i) A certificate of good standing from the secretary
of state of Nevada, issued as of a date within five days prior
to the Closing Date, certifying that Pine View is in good
standing as a corporation in the State of Nevada;
(ii) Incumbency and specimen signature certificates
dated the Closing Date with respect to the officers of Pine
View executing this Agreement and any other document delivered
pursuant hereto on behalf of Pine View;
(iii) Copies of the resolutions of Pine View's board
of directors and shareholder minutes or consents authorizing
the execution and performance of this Agreement and the
contemplated transactions, certified by the secretary or an
assistant secretary of Pine View as of the Closing Date;
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(iv) The certificate contemplated by Section 4.04,
duly executed by the president of Pine View;
(v) The certificate contemplated by Section 4.05,
dated the Closing Date, signed by the president of Pine View;
and
(vi) Certificates for the Pine View Shares registered
in the names of the Video Shareholders.
In addition to the above deliveries, Pine View shall take all steps and
actions as Video and the Video Shareholders may reasonably request or as
may otherwise be reasonably necessary to consummate the transactions
contemplated hereby.
(b) Video's Deliveries. Subject to fulfillment or waiver of
the conditions set forth in Article IV, Video and/or Video's
Stockholder's shall deliver to Pine View at Closing all the following:
(i) A certificate of good standing from the secretary
of state of Nevada, issued as of a date within five days prior
to the Closing Date certifying that Video is in good standing
as a corporation in the State of Nevada;
(ii) Incumbency and specimen signature certificates
dated the Closing Date with respect to the officers of Video
executing this Agreement and any other document delivered
pursuant hereto on behalf of Video;
(iii) Copies of the resolutions of Video's board of
directors and shareholder minutes or consents authorizing the
execution and performance of this Agreement and the
contemplated transactions, certified by the secretary or an
assistant secretary of Video as of the Closing Date;
(iv) The certificate contemplated by Section 5.02,
executed by the chief executive officer of Video; and
(v) The certificate contemplated by Section 5.03,
dated the Closing Date, and signed by the chief executive
officer of Video.
In addition to the above deliveries, Video shall take all steps and actions as
Pine View may reasonably request or as may otherwise be reasonably necessary to
consummate the transactions contemplated hereby.
1.08 Effective Date. As soon as practicable following consummation of
the transactions contemplated hereby on the Closing Date, Articles of Merger
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setting forth such matters as required by the provisions of the corporate
statute of the State of Nevada to complete the merger of Video and Merger Co.
shall be filed with the Secretary of State of Nevada. The "Effective Date" of
the merger shall be the date the filing of such Articles of Merger shall become
effective.
1.09 Effect of Merger. On the Effective Date of the merger, Video and
Merger Co. shall cease to exist separately, and Merger Co. shall be merged with
and into Video, the Surviving Corporation, in accordance with the provisions of
this Agreement and the Articles of Merger, and in accordance with the provisions
of and with the effect provided in the corporation laws of the State of Nevada.
Video, as the Surviving Corporation, shall posses all the rights, privileges,
franchises, and trust and fiduciary duties, powers, and obligations, of a
private as well as of a public nature, and be subject to all the restrictions,
obligations, and duties of each of Video and Merger Co.; all property, real,
personal, and mixed, and all debts due to either Video or Merger Co. on whatever
account, and all other things belonging to each of Video and Merger Co. shall be
vested in Video, all property, rights, privileges, powers, and franchises, and
all and every other interest shall be thereafter the property of Video as they
were of Video and Merger Co.; the title to any real estate, whether vested by
deed or otherwise, in either Video or Merger Co. shall not revert or be in any
way impaired by reason of the merger; provided, however, that all rights of
creditors and all liens on any property of either Video or Merger Co. shall be
preserved unimpaired, and all debts, liabilities, and duties of Video and Merger
Co. shall thenceforth attach to Video and may be enforced against it to the same
extent as if such debts, liabilities, and duties had been incurred or contracted
by Video.
1.10 Termination
(a) This Agreement may be terminated by the board of directors
of either Pine View or Video at any time prior to the Closing Date if:
(i) There shall be any actual or threatened action or
proceeding before any court or any governmental body which
shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which, in the
reasonable judgment of such board of directors, made in good
faith and based upon the advice of its legal counsel, makes it
inadvisable to proceed with the transactions contemplated by
this Agreement; or
(ii) Any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions or in the reasonable
judgment of such board of directors, made in good faith and
based on the advice of counsel, there is substantial
likelihood that any such approval will not be obtained or will
be obtained only on a condition or conditions which would be
unduly burdensome, making it inadvisable to proceed with the
exchange.
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In the event of termination pursuant to this paragraph (a) of Section
1.11, no obligation, right, or liability shall arise hereunder, and each
party shall bear all of the expenses incurred by it in connection with
the negotiation, preparation, and execution of this Agreement and the
transactions contemplated hereby.
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Pine View if (i)
shareholders of Video owning more than five percent (5%) of the issued
and outstanding shares of Video capital stock perfect their dissenter's
rights with respect to the approval of this Agreement and the
transactions contemplated hereby, (ii) Video shall fail to comply in
any material respect with any of its covenants or agreements contained
in this Agreement or if any of the representations or warranties of
Video contained herein shall be inaccurate in any material respect or
(iii) there has been any material adverse change in the business or
financial condition of Video. In the event of termination pursuant to
this paragraph (b) of this section 1.11, no obligation, right, remedy,
or liability shall arise hereunder. All parties shall bear their own
costs incurred in connection with the negotiation, preparation, and
execution of this Agreement and the transactions contemplated hereby.
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Video if (i) The
shareholders of Video fail to approve this Agreement and the
transactions contemplated hereby in the manner specified herein, (ii)
Pine View shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of Pine View contained herein shall be
inaccurate in any material respect, or (iii) there has been any adverse
change in the business or financial condition of Pine View. In the
event of termination pursuant to this paragraph (c) of this section
1.11, no obligation, right, remedy, or liability shall arise hereunder.
All parties shall bear their own costs incurred in connection with the
negotiation, preparation, and execution of this Agreement and the
transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF PINE VIEW
As an inducement to, and to obtain the reliance of Video, Pine View and
Merger Co. represent and warrant as follows:
2.01 Organization.
(a) Pine View is, and will be on the Closing Date, a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Nevada and has the corporate power and
is and will be duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of
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public authorities to own all of its properties and assets and to carry
on its business in all material respects as it is now being conducted,
and there are no other jurisdictions in which it is not so qualified in
which the character and location of the assets owned by it or the
nature of the material business transacted by it requires
qualification, except where failure to do so would not have a material
adverse effect on its business, operations, properties, assets or
condition. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of
Pine View's articles of incorporation or bylaws, or other agreement to
which it is a party or by which it is bound.
(b) Merger Co. is, and will be on the Closing, a corporation
duly organized, validly existing, and in good standing under the laws
of the State of Nevada and has the corporate power and is and will be
duly authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, and
there are no other jurisdictions in which it is not so qualified in
which the character and location of the assets owned by it or the
nature of the material business transacted by it requires
qualification, except where failure to do so would not have a material
adverse effect on its business, operations, properties, assets or
condition. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of
Merger Co.'s articles of incorporation or bylaws, or other agreement to
which it is a party or by which it is bound.
2.02 Approval of Agreement. Pine View and Merger Co. have full power,
authority, and legal right and have taken, or will take, all action required by
law, their articles of incorporation, bylaws, and otherwise to execute and
deliver this Agreement and to consummate the transactions herein contemplated.
The board of directors of Pine View and Merger Co. have authorized and approved
the execution, delivery, and performance of this Agreement and the transactions
contemplated hereby; subject to the approval of the Pine View shareholders and
compliance with state and federal corporate and securities laws.
2.03 Capitalization. The authorized capitalization of Pine View
consists of 50,000,000 shares of common stock, $0.001 par value, of which
10,501,000 shares are issued and outstanding. As a condition to the Closing,
Pine View shall raise an additional $500,000 through the sale of not more than
10,000,000 additional shares of its pre-split common stock to be issued
immediately following the Closing. The authorized capitalization of Merger Co.
consists of 50,000 shares, $0.001 par value, of which 100 shares are issued and
outstanding. All issued and outstanding shares of Pine View and Merger Co. are
legally issued, fully paid, and nonassessable and not issued in violation of the
preemptive or other right of any person. There are no dividends or other amounts
due or payable with respect to any of the shares of capital stock of Pine View
or Merger Co.
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2.04. SEC Reports; Financial Statements.
(a) Pine View has filed all forms, reports and documents
(including all Exhibits, Schedules and Annexes thereto) required to be
filed by it with the SEC since it became subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act, including any
amendments or supplements thereto (collectively, including any such
forms, reports and documents filed after the date hereof, the "Pine
View SEC Reports "), and, with respect to the Pine View SEC Reports
filed by Pine View after the date hereof and prior to the Closing Date,
will deliver or make available, to Video all of its Pine View SEC
Reports in the form filed with the SEC. The Pine View SEC Reports (i)
were (and any Pine View SEC Reports filed after the date hereof will
be) in all material respects prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations promulgated thereunder, and (ii) as
of their respective filing dates, did not (and any Pine View SEC
Reports filed after the date hereof will not) contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. On the Closing Date, Pine View shall be current in the
filing of the Pine View SEC Reports.
(b) Included in Schedule 2.04 are (i) the audited balance
sheets of Pine View as of October 31, 1999 and 1998, and the related
statements of operations, stockholders' equity (deficit), and cash
flows for the fiscal year ended October 31, 1999, and 1998, and from
inception through October 31, 1999, including the notes thereto, and
the accompanying report of Dave Thomson, independent certified public
accountant, and (ii) the unaudited balance sheet of Pine View as of
July 31, 2000, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the nine months ended July 31,
2000 and from inception through July 31, 2000, together with the notes
thereto and representations by the principal accounting and financial
officer of Pine View to the effect that such financial statements
contain all adjustments (all of which are normal recurring adjustments)
necessary to present fairly the results of operations and financial
position for the periods and as of the dates indicated and such
financial statements shall not reflect any material changes since the
October 31, 1999.
(c) The financial statements of Pine View delivered pursuant
to Section 2.04(b) have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved as explained in the notes to such financial
statements. The Pine View financial statements present fairly, in all
material respects, as of their respective dates, the financial
condition of Pine View. Pine View did not have, as of the date of any
such financial statements, except as and to the extent reflected or
reserved against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in any financial statement or the
notes thereto prepared in accordance with generally accepted accounting
principles, and all assets reflected therein present fairly the assets
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of Pine View in accordance with generally accepted accounting
principles. The statements of operations and cash flows present fairly
the financial position and result of operations of Pine View as of
their respective dates and for the respective periods covered thereby.
(d) Pine View has filed or will file as the Closing Date all
tax returns required to be filed by it from inception to the Closing
Date. All such returns and reports are accurate and correct in all
material respects. Pine View has no material liabilities with respect
to the payment of any federal, state, county, local, or other taxes
(including any deficiencies, interest, or penalties) accrued for or
applicable to the period ended on the date of the most recent balance
sheet of Pine View, except to the extent reflected on such balance
sheet, or for such other dates and years and periods prior thereto for
which Pine View may at said date have been liable in its own right or
as transferee of the assets of, or as successor to, any other
corporation or entity, except for taxes accrued but not yet due and
payable, and no deficiency assessment or proposed adjustment of any
such tax return is pending, proposed or contemplated. None of such
income tax returns has been examined or is currently being examined by
the Internal Revenue Service and no deficiency assessment or proposed
adjustment of any such return is pending, proposed or contemplated.
Pine View has not made any election pursuant to the provisions of any
applicable tax laws (other than elections that relate solely to methods
of accounting, depreciation, or amortization) that would have an
adverse affect on Pine View, its financial condition, its business as
presently conducted or proposed to be conducted, or any of its
respective properties or assets. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any
tax return of Pine View.
(e) The books and records, financial and otherwise, of Pine
View and Merger Co. are in all material respects complete and correct
and have been maintained in accordance with sound business and
bookkeeping practices so as to accurately and fairly reflect, in
reasonable detail, the transactions and dispositions of the assets of
Pine View and Merger Co., and Pine View and Merger Co. have maintained a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions have been and are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit the preparation of
financial statements in conformity with generally accepted accounting
principles or any other criteria applicable to such statements and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals, and appropriate action is taken
with respect to any differences.
2.05 Outstanding Warrants and Options. Pine View and Merger Co. have no
existing warrants, options, calls, or commitments of any nature relating to the
authorized and unissued shares of Pine View or Merger Co. Common Stock.
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2.06 Information. The information concerning Pine View and Merger Co.
set forth in this Agreement and the schedules delivered by Pine View pursuant
hereto is complete and accurate in all material respects and does not contain
any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading. Pine View and Merger Co. shall cause the
schedules delivered by them pursuant hereto and the instruments delivered to
Video hereunder to be updated after the date hereof up to and including the
Closing Date.
2.07 Absence of Certain Changes or Events. Except as set forth in this
Agreement or the schedules hereto, since the date of the most recent Pine View
balance sheet described in Section 2.04:
(a) There has not been (i) any adverse change in the business,
operations, properties, level of inventory, assets, or condition of
Pine View or (ii) any damage, destruction, or loss to Pine View
(whether or not covered by insurance) adversely affecting the business,
operations, properties, assets, or condition of Pine View;
(b) Pine View has not (i) amended its articles of
incorporation or bylaws; (ii) declared or made, or agreed to declare or
make, any payment of dividends or distributions of any assets of any
kind whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material
considering the business of Pine View; (iv) made any change in its
method of management, operation, or accounting; (v) entered into any
other transactions; (vi) made any accrual or arrangement for or payment
of bonuses or special compensation of any kind or any severance or
termination payment to any present or former officer or employee; (vii)
increased the rate of compensation payable or to become payable by it
to any of its officers or directors or any of its employees; or (viii)
established any profit-sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan,
payment, or arrangement made to, for, or with its officers, directors,
or employees;
(c) Pine View has not (i) granted or agreed to grant any
options, warrants, or other rights for its stocks, bonds, or other
corporate securities calling for the issuance thereof; (ii) borrowed or
agreed to borrow any funds or incurred, or become subject to, any
material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii) paid any
material obligation or liability (absolute or contingent) other than
current liabilities reflected in or shown on the most recent Pine View
balance sheet and current liabilities incurred since that date in the
ordinary course of business; (iv) sold or transferred, or agreed to
sell or transfer, any of its assets, properties, or (v) rights,
canceled, or agreed to cancel, any debts or claims; (vi) made or
permitted any amendment or termination of any contract, agreement, or
license to which it is a party if such amendment or termination is
material, considering the business of Pine View; or (vii) issued,
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delivered, or agreed to issue or deliver any stock, bonds, or other
corporate securities including debentures (whether authorized and
unissued or held as treasury stock); and
(d) Pine View has not become subject to any law or regulation
which materially and adversely affects, or in the future would be
reasonably expected to adversely affect, the business, operations,
properties, assets, or condition of Pine View.
2.08 Litigation and Proceedings. There are no actions, suits, or
administrative or other proceedings pending or, threatened by or against Pine
View or adversely affecting Pine View or its properties, at law or in equity,
before any court or other governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind. There is no default on its part
with respect to any judgment, order, writ, injunction, decree, award, rule, or
regulation of any court, arbitrator, or governmental agency or instrumentality.
2.09 Compliance With Laws and Regulations. Pine View has complied with
all applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
(i) could not adversely affect the business, operations, properties, assets, or
condition of Pine View or (ii) could not result in the occurrence of any
liability for Pine View. To the best knowledge of Pine View, the consummation of
this transaction will comply with all applicable statutes and regulations,
subject to the preparation and filing of any forms required by state and federal
securities laws.
2.10 Contracts. Except as included or described in Schedule 2.10:
(a) There are no material contracts, agreements, franchises,
license agreements, or other commitments to which Pine View is a party
by which it or any of the properties of Pine View are bound;
(b) All contracts, agreements, franchises, license agreements,
and other commitments to which Pine View is a party or by which its
properties are bound and which are material to the operations or
financial condition of Pine View are valid and enforceable by Pine View
in all material respects;
(c) Pine View is not a party to or bound by, and its
properties are not subject to, any material contract, agreement, other
commitment or instrument; any charter or other corporate restriction; or
any judgment, order, writ, injunction, decree, or award which materially
and adversely affects, or in the future may (as far as Pine View can now
foresee) materially and adversely affect, the business, operations,
properties, assets, or condition of Pine View; and
(d) Pine View is not a party to any oral or written (i)
contract for the employment of any officer, director, or employee which
is not terminable on 30 days (or less) notice; (ii) profit-sharing,
bonus, deferred compensation, stock option, severance pay, pension
<PAGE>
benefit or retirement plan, agreement, or arrangement covered by Title
IV of the Employee Retirement Income Security Act, as amended; (iii)
agreement, contract, or indenture relating to the borrowing of money;
(iv) guarantee of any obligation, other than one on which Pine View is a
primary obligor, for the borrowing of money or otherwise, excluding
endorsements made for collection and other guarantees of obligations,
which, in the aggregate do not exceed $500; (v) consulting or other
similar contract with an unexpired term of more than one year; (vi)
collective bargaining agreement; (vii) agreement with any present or
former officer or director of Pine View or any subsidiary; or (viii)
contract, agreement, or other commitment involving payments by it of
more than $500 in the aggregate.
2.11 Material Contract Defaults. Pine View is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets, or condition of Pine View, and there is no event of default or other
event which, with notice or lapse of time or both, would constitute a default in
any material respect under any such contract, agreement, lease, or other
commitment in respect of which Pine View has not taken adequate steps to prevent
such a default from occurring.
2.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any indenture, mortgage, deed of trust, or
other contract, agreement, or instrument to which Pine View is a party or to
which any of its properties or operations are subject.
2.13 Compliance With Laws and Regulations. Pine View has complied with
all applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets, or condition of Pine View or except to the extent that noncompliance
would not result in the occurrence of any material liability for Pine View. To
the best knowledge of Pine View, the consummation of the transactions
contemplated by this Agreement will comply with all applicable statutes and
regulations, subject to the preparation and filing of any forms required by
state and federal security laws.
2.14 Subsidiaries and Predecessors. Pine View does not own,
beneficially or of record, any equity securities in any other entity except for
Merger Co. which is a wholly owned subsidiary formed for the sole purpose of
completing the transactions set forth herein. Pine View does not have a
predecessor as that term is defined under generally accepted accounting
principles or Regulation S-X promulgated by the Securities and Exchange
Commission.
2.15 Employee Relations. Pine View has complied in respect of its
business in all material respects with all applicable laws, rules, and
regulations, specifically title VII of the Civil Rights Act of 1963 and the Fair
Labor Standard Act of 1938, that relate to prices, wages, hours, harassment,
<PAGE>
disabled access, and discrimination in employment and collective bargaining and
to the operation of its business and is not liable for any arrears of wages or
any taxes or penalties for failure to comply with any of the foregoing. Pine
View believes that its relationship with its employees is satisfactory.
2.16 Pine View Schedules. Pine View has delivered to Video the
following schedules, which are collectively referred to as the "Pine View
Schedules" and which consist of the following separate schedules dated as of the
date of execution of this Agreement, all certified by a duly authorized officer
of Pine View as complete, true, and accurate:
(a) A schedule including copies of the articles of
incorporation and bylaws of Pine View in effect as of the date of this
Agreement;
(b) A schedule containing copies of resolutions adopted by the
board of directors of Pine View approving this Agreement and the
transactions herein contemplated;
(c) A schedule setting forth a description of any material
adverse change in the business, operations, property, inventory,
assets, or condition of Pine View since the most recent Pine View
balance sheet, required to be provided pursuant to Section 2.07 hereof;
(d) A schedule setting forth Pine View's annual report on Form
10-KSB for the year ended October 31, 1999, and its quarterly reports
on Form 10-QSB for each fiscal quarter in 2000, which include the
financial statements required pursuant to Section 2.04(b) hereof; and
(e) A schedule setting forth any other information, together
with any required copies of documents, required to be disclosed in the
Pine View Schedules by Sections 2.01 through 2.15.
Pine View shall cause the Pine View Schedules and the instruments delivered to
Video hereunder to be updated after the date hereof up to and including the
Closing Date. Such updated Pine View Schedules, certified in the same manner as
the original Pine View Schedules, shall be delivered prior to and as a condition
precedent to the obligation of Video to close.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF VIDEO
As an inducement to, and to obtain the reliance of, Pine View and
Merger Co., Video represents and warrants as follows:
3.01 Organization. Video is, and will be on the Closing Date, a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Nevada and has the corporate power and is and will be duly
authorized, qualified, franchised, and licensed under all applicable laws,
<PAGE>
regulations, ordinances, and orders of public authorities to own all of its
properties and assets and to carry on its business in all material respects as
it is now being conducted, and there are no other jurisdictions in which it is
not so qualified in which the character and location of the assets owned by it
or the nature of the material business transacted by it requires qualification,
except where failure to do so would not have a material adverse effect on its
business, operations, properties, assets or condition of Video. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement in accordance with the terms hereof
will not, violate any provision of Video's articles of organization or operating
agreement, or other material agreement to which it is a party or by which it is
bound.
3.02 Approval of Agreement. Video has full power, authority, and legal
right and has taken, or will take, all action required by law, its articles of
incorporation, bylaw, and otherwise to execute and deliver this Agreement and to
consummate the transactions herein contemplated. The board of directors of Video
has authorized and approved the execution, delivery, and performance of this
Agreement and the transactions contemplated hereby; subject to the approval of
the Video Shareholders and compliance with state and federal corporate and
securities laws.
3.03 Capitalization. The authorized capitalization of Video consists of
2,000,000 shares of common stock, par value $0.001, of which 1,211,250 shares
are issued and outstanding. Video also has 400,000 shares of its common stock
reserved for issuance under the Videolocity, Inc. 2000 Stock Incentive Plan (the
"Video Incentive Plan") and, as of the date hereof, awards with respect to
363,750 shares of common stock have been made under the Video Incentive Plan.
All issued and outstanding shares of Video are legally issued, fully paid, and
nonassessable and not issued in violation of the preemptive or other right of
any person. There are no distributions, return of capital or other amounts due
or payable with respect to any of the shares of Video.
3.04 Financial Statements.
(a) Included in Schedule 3.04 are the audited balance sheet of
Video as of October 31, 2000, and the related audited statements of
operations, cash flows, and stockholders' equity for the period from
inception on May 26, 2000 to October 31, 2000, including the notes
thereto.
(b) The audited financial statements delivered pursuant to
Section 3.04(a) have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved. The financial statements of Video present fairly in
all material aspects, as of their respective dates, the financial
condition of Video. Video did not have, as of the date of any such
balance sheets, except as and to the extent reflected or reserved
against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in any financial statements or
the notes thereto prepared in accordance with generally accepted
accounting principles, and all assets reflected therein present fairly
the assets of Video, in accordance with generally accepted accounting
principles. The statements of revenue and expenses and cash flows
<PAGE>
present fairly the financial position and result of operations of Video
as of their respective dates and for the respective periods covered
thereby.
(c) Video completed its first fiscal year on October 31, 2000
and has or will prior to the Closing Date file all required federal and
state income tax returns. Video has no material liabilities with
respect to the payment of any federal, state, county, local, or other
taxes (including any deficiencies, interest, or penalties) accrued for
or applicable to the period ended on the date of the audited balance
sheet of Video, except to the extent reflected on such balance sheet
and adequately provided for therein, which are not yet due and payable.
Proper and accurate amounts of taxes have been withheld by or on behalf
of Video with respect to all material compensation paid to employees of
Video for all periods ending on or before the date hereof, and all
deposits required with respect to compensation paid to such employees
have been made, in compliance with the provisions of all applicable
federal, state, and local tax and other laws. Video has not made any
election pursuant to the provisions of any applicable tax laws (other
than elections that relate solely to methods of accounting,
depreciation, or amortization) that would have a material adverse
affect on Video, its financial condition, its business as presently
conducted or proposed to be conducted, or any of its properties or
material assets. There are no tax liens upon any of the assets of
Video. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any tax return of Video.
(d) The books and records, financial and otherwise, of Video
are in all material respects complete and correct and have been
maintained in accordance with sound business and bookkeeping practices
so as to accurately and fairly reflect, in reasonable detail, the
transactions and dispositions of the assets of Video. Video has
maintained a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions have been and are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit the
preparation of financial statements in conformity with generally
accepted accounting principles or any other criteria applicable to such
statements and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals, and
appropriate action is taken with respect to any differences.
3.05 Outstanding Warrants and Options. Except for awards made under the
Video Incentive Plan, Video has no outstanding options, warrants, calls or
awards of any nature relating to the authorized and unissued Video Shares.
3.06 Information. The information concerning Video set forth in this
Agreement and in the schedules delivered by Video pursuant hereto is complete
and accurate in all material respects and does not contain any untrue statement
of a material fact or omit to state a material fact required to make the
statements made, in light of the circumstances under which they were made, not
<PAGE>
misleading. Video shall cause the schedules delivered by Video pursuant hereto
to Pine View hereunder to be updated after the date hereof up to and including
the Closing Date.
3.07 Absence of Certain Changes or Events. Except as set forth in this
Agreement since October 31, 2000:
(a) There has not been (i) any material adverse change in the
business, operations, properties, level of inventory, assets, or
condition of Video or (ii) any damage, destruction, or loss to Video
materially and adversely affecting the business, operations,
properties, assets, or conditions of Video.
(b) Video has not (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to its stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary and material
considering the business of Video; (iv) made any material change in its
method of accounting; (v) entered into any other material transactions
other than those contemplated by this Agreement; (vi) made any material
accrual or material arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any
present or former officer or employee; or (vii) made any material
increase in any profit-sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan,
payment, or arrangement made to, for, or with their officers,
directors, or employees;
(c) Video has not (i) granted or agreed to grant any options,
warrants, or other rights for its Shares, bonds, or other securities
calling for the issuance thereof except awards granted under the Video
Incentive Plan; (ii) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability
(absolute or contingent) except liabilities incurred in the ordinary
course of business; (iii) paid any material obligation or liability
(absolute or contingent) other than current liabilities reflected in or
shown on the most recent Video balance sheet and current liabilities
incurred since that date in the ordinary course of business; (iv) sold
or transferred, or agreed to sell or transfer, any of its material
assets, properties, or rights, or agreed to cancel, any material debts
or claims; (v) made or permitted any amendment or termination of any
contract, agreement, or license to which it is a party if such
amendment or termination is material, considering the business of
Video; or (vi) issued, delivered, or agreed to issue or deliver any
stock, bonds, or other company securities including debentures (whether
authorized and unissued or held as treasury shares) except awards
granted under the Video Incentive Plan; and
(d) To the best knowledge of Video, it has not become subject
to any law or regulation which materially and adversely affects, or in
<PAGE>
the future would be reasonably expected to adversely affect, the
business, operations, properties, assets, or condition of Video.
3.08 Title and Related Matters. Except as provided herein or disclosed
in the Video balance sheet and the notes thereto, Video has good and marketable
title to all of its properties, inventory, interests in properties, and assets,
which are reflected in the most recent Video balance sheet or acquired after
that date (except properties, interests in properties, and assets sold or
otherwise disposed of since such date in the ordinary course of business), free
and clear of all mortgages, liens, pledges, charges, or encumbrances, except (i)
statutory liens or claims not yet delinquent; and (ii) such imperfections of
title and easements as do not, and will not, materially detract from, or
interfere with, the present or proposed use of the properties subject thereto or
affected thereby or otherwise materially impair present business operations on
such properties. To the best knowledge of Video, the technology licensed to it
does not infringe on the copyright, patent, trade secret, know-how, or other
proprietary right of any other person or entity and comprises all such rights
necessary to permit the operation of the business of Video as now being
conducted or as contemplated.
3.09 Litigation and Proceedings. Except as otherwise disclosed in
Schedule 3.09, there are no material actions, suits, or proceedings pending or,
to the knowledge of Video, threatened by or against Video or adversely affecting
Video, at law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind.
Video does not have any knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, award, rule, or regulation of any
court, arbitrator, or governmental agency or instrumentality.
3.10 Contracts. Except as otherwise disclosed in Schedule 3.10:
(a) There are no material contracts, agreements, franchises,
license agreements, or other commitments to which Video is a party by
which it or any of the properties of Video are bound;
(b) All contracts, agreements, franchises, license agreements,
and other commitments to which Video is a party or by which its
properties are bound and which are material to the operations or
financial condition of Video are valid and enforceable by Video in all
material respects;
(c) Video is not a party to or bound by, and its properties
are not subject to, any material contract, agreement, other commitment
or instrument; any charter or other corporate restriction; or any
judgment, order, writ, injunction, decree, or award which materially and
adversely affects, or in the future may (as far as Video can now
foresee) materially and adversely affect, the business, operations,
properties, assets, or condition of Video; and
<PAGE>
(d) Video is not a party to any oral or written (i) contract
for the employment of any officer, director, or employee which is not
terminable on 30 days (or less) notice; (ii) profit-sharing, bonus,
deferred compensation, stock option, severance pay, pension benefit or
retirement plan, agreement, or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii) agreement,
contract, or indenture relating to the borrowing of money; (iv)
guarantee of any obligation, other than one on which Video is a primary
obligor, for the borrowing of money or otherwise, excluding endorsements
made for collection and other guarantees of obligations, which, in the
aggregate do not exceed $5,000; (v) consulting or other similar contract
with an unexpired term of more than one year or providing for payments
in excess of $5,000 in the aggregate; (vi) collective bargaining
agreement; (vii) agreement with any present or former officer or
director of Video or any subsidiary; or (viii) contract, agreement, or
other commitment involving payments by it of more than $5,000 in the
aggregate.
3.11 Material Contract Defaults. Video is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets, or condition of Video, and there is no event of default or other event
which, with notice or lapse of time or both, would constitute a default in any
material respect under any such contract, agreement, lease, or other commitment
in respect of which Video has not taken adequate steps to prevent such a default
from occurring.
3.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust, or other material contract, agreement, or instrument to which Video is a
party or to which any of its properties or operations are subject.
3.13 Governmental Authorizations. Video has all licenses, franchises,
permits, and other governmental authorizations that are legally required to
enable it to conduct its business in all material respects as conducted on the
date of this Agreement. Except for compliance with federal and state securities
and corporation laws, as hereinafter provided, no authorization, approval,
consent, or order of, or registration, declaration, or filing with, any court or
other governmental body is required in connection with the execution and
delivery by Video of this Agreement and the consummation by Video of the
transactions contemplated hereby.
3.14 Compliance With Laws and Regulations. Video has complied with all
applicable statutes and regulations of any federal, state, or other governmental
entity or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties, assets, or
condition of Video or except to the extent that noncompliance would not result
in the occurrence of any material liability for Video. To the best knowledge of
Video, the consummation of this transaction will comply with all applicable
statutes and regulations, subject to the preparation and filing of any forms
required by state and federal security laws.
<PAGE>
3.15 Subsidiaries and Predecessors. Except as set forth in Schedule
3.15, Video does not own, beneficially or of record, any equity securities in
any other entity.
3.16 Insurance. Video currently has no significant insurable properties
and does not carry insurance on such properties.
3.17 Employee Relations. Video has complied in respect of its business
in all material respects with all applicable laws, rules, and regulations that
relate to prices, wages, hours, harassment, disabled access, and discrimination
in employment and collective bargaining and to the operation of its business and
is not liable for any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing. Video believes that its relationship with its
employees is satisfactory.
3.18 Video Schedules. Video has delivered to Pine View the following
schedules, which are collectively referred to as the "Video Schedules" and which
consist of the following separate schedules dated as of the date of execution of
this Agreement, and instruments and Pine View as of such date, all certified by
the chief executive officer of Video as complete, true, and accurate:
(a) A schedule including copies of its articles of
incorporation and bylaws and all amendments thereto in effect as of the
date of this Agreement;
(b) A schedule containing copies of resolutions adopted by the
directors of Video approving this Agreement and the transactions herein
contemplated as referred to in Section 3.02;
(c) A schedule setting forth the financial statements required
pursuant to Section 3.04 (a) hereof;
(d) A schedule setting forth a description of any material
adverse change in the business, operations, property, inventory,
assets, or condition of Video since the most recent Video balance
sheet, required to be provided pursuant to Section 3.07 hereof;
(e) A schedule setting forth any material contracts required
to be provided or matters to be disclosed pursuant to Section 3.10
hereof;
(f) A schedule setting forth a description of the third party
securities owned by Video required pursuant to Section 3.15 hereof; and
(g) A schedule setting forth any other information, together
with any required copies of documents, required to be disclosed in the
Video Schedules by Sections 3.01 through 3.18.
<PAGE>
Video shall cause the Video Schedules and the instruments delivered to Pine View
hereunder to be updated after the date hereof up to and including the Closing
Date. Such updated Video Schedules, certified in the same manner as the original
Video Schedules, shall be delivered prior to and as a condition precedent to the
obligation of Pine View to close.
ARTICLE IV
CONDITIONS PRECEDENT TO OBLIGATIONS OF VIDEO
Video shall be bound by the terms and conditions of this Agreement
provided the following conditions are complied with and satisfied by Pine View
at or before the Closing Date:
4.01. Additional Financing. At Closing, Pine View will have raised five
hundred thousand dollars ($500,000) in additional equity financing. The
additional financing shall be through the sale of not more than the equivalent
of 10,000,000 pre-split shares of Pine View common stock. The sale of the shares
of Pine View common stock shall be subject to the closing of the Merger, shall
be an investment in the combined companies, and accordingly, will be treated as
having been issued immediately following the Merger. All funds raised shall be
held in an escrow account with Victor D. Schwarz, LLC pending closing of the
Merger. Upon completion of the Merger, the funds shall be placed in the
operating account of Pine View. For purposes of issuing share certificates, all
shares of Common Stock issued to the subscribers shall be after completion of
the merger and taking into account the reverse split set forth in section 4.02
hereof. If the transactions contemplated by this Agreement are not closed, all
funds raised shall be returned to the subscribers.
4.02. Reverse Split. Pine View shall effect a .61-for-1 reverse split
of its issued and outstanding Common Stock, which reverse split shall be
implemented prior to the Closing of the transactions contemplated in this
Agreement, subject to shareholder approval.
4.03 Shareholder Approval. Pine View shall call and hold a meeting of
its shareholders, to (i) approve the transactions contemplated by this
Agreement, (ii) change of name of Pine View to "Videolocity TV, Inc." or such
name as may be selected by Video, (iii) amend Pine View's articles of
incorporation to provide for those changes that are believed to be in the best
interest of the Pine View shareholders and that are mutually agreed to by the
board of directors of Pine View and Video, including but not limited to the
change in the capitalization of Pine View to increase the authorized shares of
common stock to 125,000,000 and add a class of preferred stock, (iv) elect the
nominees of Video as Pine View's board of directors, subject to the closing of
the transactions contemplated by this Agreement, and (v) approve the reverse
split contemplated in Section 4.02 hereof. In addition, this Agreement and the
transactions contemplated hereby shall have been approved by the shareholders of
Video in the manner required by the applicable laws of the state of Nevada.
<PAGE>
4.04 Accuracy of Representations. The representations and warranties
made by Pine View in this Agreement were true when made and shall be true at the
Closing Date with the same force and affect as if such representations and
warranties were made at and as of the Closing Date (except for changes therein
permitted by this Agreement), and Pine View shall have performed or complied
with all covenants and conditions required by this Agreement to be performed or
complied with by Pine View prior to or at the Closing. Video shall be furnished
with certificates, signed by duly authorized officers of Pine View and dated the
Closing Date, to the foregoing effect.
4.05 Officer's Certificates. Video shall have been furnished with
certificates dated the Closing Date and signed by the duly authorized chief
executive officer of Pine View to the effect that to such officer's best
knowledge no litigation, proceeding, investigation, or inquiry is pending or, to
the best knowledge of Pine View threatened, which might result in an action to
enjoin or prevent the consummation of the transactions contemplated by this
Agreement. Furthermore, based on certificates of good standing, representations
of government agencies, and Pine View's own documents and information, the
certificate shall represent, to the best knowledge of the officer, that:
(a) This Agreement has been duly approved by Pine View's board
of directors and shareholders and has been duly executed and delivered
in the name and on behalf of Pine View by its duly authorized officers
pursuant to, and in compliance with, authority granted by the board of
directors of Pine View pursuant to a unanimous consent;
(b) There have been no material adverse changes in Pine View
up to and including the date of the certificate;
(c) All conditions required by this Agreement have been met,
satisfied, or performed by Pine View;
(d) All authorizations, consents, approvals, registrations,
and/or filings with any governmental body, agency, or court required in
connection with the execution and delivery of the documents by Pine
View have been obtained and are in full force and effect or, if not
required to have been obtained, will be in full force and effect by
such time as may be required; and
(e) There is no material action, suit, proceeding, inquiry, or
investigation at law or in equity by any public board or body pending
or threatened against Pine View, wherein an unfavorable decision,
ruling, or finding could have an adverse effect on the financial
condition of Pine View, the operation of Pine View, or the acquisition
and reorganization contemplated herein, or any agreement or instrument
by which Pine View is bound or in any way contests the existence of
Pine View.
4.06 No Material Adverse Change. Prior to the Closing Date, there shall
not have occurred any material adverse change in the financial condition,
business, or operations of Pine View, nor shall any event have occurred which,
<PAGE>
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business, or operations of Pine View.
4.07 Good Standing. Video shall have received a certificate of good
standing from the secretary of state of Nevada, dated as of the date within five
days prior to the Closing Date, certifying that Pine View is in good standing as
a corporation in the State of Nevada.
4.08 Other Items. Video shall have received such further documents,
certificates, or instruments relating to the transactions contemplated hereby as
Video may reasonably request.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF PINE VIEW
The obligations of Pine View under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
5.01. Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the shareholders of Video and
Pine View in the manner required by the applicable laws of the state of Nevada.
5.02 Accuracy of Representations. The representations and warranties
made by Video in this Agreement were true when made and shall be true at the
Closing Date with the same force and effect as if such representations and
warranties were made at and as of the Closing Date (except for changes therein
permitted by this Agreement), and Video shall have performed or complied with
all covenants and conditions required by this Agreement to be performed or
complied with by Video prior to or at the Closing. Pine View shall be furnished
with a certificate, signed by a duly authorized officer of Video and dated the
Closing Date, to the foregoing effect.
5.03 Officer's Certificates. Pine View shall have been furnished with
certificates dated the Closing Date and signed by the duly authorized chief
executive officer of Video to the effect that no litigation, proceeding,
investigation, or inquiry is pending or, to the best knowledge of Video,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement. Furthermore,
based on certificates of good standing, representations of government agencies,
and Video's own documents, the certificate shall represent, to the best
knowledge of the officer, that:
(a) This agreement has been duly approved by Video's board of
directors and shareholders and has been duly executed and delivered in
the name and on behalf of Video by its duly authorized officers
pursuant to, and in compliance with, authority granted by the board of
directors of Video pursuant to a unanimous consent and the shareholders
of Video;
<PAGE>
(b) Except as provided or permitted herein, there have been no
material adverse changes in Video up to and including the date of the
certificate;
(c) All authorizations, consents, approvals, registrations,
and/or filing with any governmental body, agency, or court required in
connection with the execution and delivery of the documents by Video
have been obtained and are in full force and effect or, if not required
to have been obtained will be in full force and effect by such time as
may be required; and
(d) Except as otherwise disclosed in Schedule 3.09, there is
no material action, suit, proceeding, inquiry, or investigation at law
or in equity by any public board or body pending or threatened against
Video, wherein an unfavorable decision, ruling, or finding would have a
material adverse affect on the financial condition of Video, the
operation of Video, or the acquisition and reorganization contemplated
herein, or any material agreement or instrument by which Video is bound
or would in any way contest the existence of Video.
5.04 No Material Adverse Change. Prior to the Closing Date, there shall
not have occurred any material adverse change in the financial condition,
business or operations of Video, nor shall any event have occurred which, with
the lapse of time or the giving of notice, may cause of create any material
adverse change in the financial condition, business, or operations of Video.
5.05 Good Standing. Pine View shall have received a certificate of good
standing from the appropriate authority, dated as of a date with five days prior
to the Closing Date, certifying that Video is in good standing as a corporation
in the State of Nevada.
5.06 Other Items. Pine View shall have received such further documents,
certificates, or instruments relating to the transactions contemplated hereby as
Pine View may reasonably request.
ARTICLE VI
SPECIAL COVENANTS
6.01 Activities of Pine View and Video
(a) From and after the date of this Agreement until the
Closing Date and except as set forth in the respective schedules to be
delivered by Pine View and Video pursuant hereto or as permitted or
contemplated by this Agreement, Pine View and Video will each:
(i) Carry on its business in substantially the same
manner as it has heretofore;
(ii) Maintain in full force and effect insurance
comparable in amount and in scope of coverage to that now
maintained by it;
<PAGE>
(iii) Perform in all material respects all of its
obligations under material contracts, leases, and instruments
relating to or affecting its assets, properties, and business;
(iv) Use its best efforts to maintain and preserve
its business organization intact, to retain its key employees,
and to maintain its relationships with its material suppliers
and customers;
(v) Duly and timely file for all taxable periods
ending on or prior to the Closing Date all federal, state,
county, and local tax returns required to be filed by or on
behalf of such entity or for which such entity may be held
responsible and shall pay, or cause to pay, all taxes required
to be shown as due and payable on such returns, as well as all
installments of tax due and payable during the period
commencing on the date of this Agreement and ending on the
Closing Date.; and
(vi) Fully comply with and perform in all material
respects all obligations and duties imposed on it by all
federal and state laws and all rules, regulations, and orders
imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement and except as
provided herein until the Closing Date, Pine View and Video will not:
(i) Make any change in its articles of incorporation
or bylaws or effect any recapitalization;
(ii) Enter into or amend any material contract,
agreement, or other instrument of any of the types described
in such party's schedules, except that a party may enter into
or amend any contract, agreement, or other instrument in the
ordinary course of business; and
(iii) Enter into any agreement for the sale of Video
or Pine View securities without the prior approval of the
other party.
6.02 Access to Properties and Records. Until the Closing Date, Video
and Pine View will afford to the other party's officers and authorized
representatives full access to the properties, books, and records of the other
party in order that each party may have full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of Video or Pine View
and will furnish the other party with such additional financial and other
information as to the business and properties of Video or Pine View as each
party shall from time to time reasonably request.
6.03 Indemnification by Video. Video will indemnify and hold harmless
Pine View and its directors and officers, and each person, if any, who controls
Pine View within the meaning of the Securities Act, from and against any and all
losses, claims, damages, expenses, liabilities, or actions to which any of them
may become subject under applicable law (including the Securities Act and the
<PAGE>
Securities Exchange Act) and will reimburse them for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
claims or actions, whether or not resulting in liability, insofar as such
losses, claims, damages, expenses, liabilities, or actions arise out of or are
based upon any untrue statement or alleged untrue statement of material fact
contained in any application or statement filed with a governmental body or
arising out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary in order to
make the statements therein not misleading, but only insofar as any such
statement or omission was made in reliance upon and in conformity with
information furnished in writing by Video expressly for use therein. The
indemnity agreement contained in this Section 6.03 shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
Pine View and shall survive the consummation of the transactions contemplated by
this Agreement for a period of three months.
6.04. Indemnification by Pine View. Pine View will indemnify and hold
harmless Video, and its directors and officers, and each person, if any, who
controls Video within the meaning of the Securities Act, from and against any
and all losses, claims, damages, expenses, liabilities, or actions to which any
of them may become subject under applicable law (including the Securities Act
and the Securities Exchange Act) and will reimburse them for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any claims or actions, whether or not resulting in liability, insofar
as such losses, claims, damages, expenses, liabilities, or actions arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact contained in any application or statement filed with a governmental body or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary in order to make the
statements therein not misleading, but only insofar as any such statement or
omission was made in reliance upon and in conformity with information furnished
in writing by Pine View expressly for use therein. The indemnity agreement
contained in this Section 6.04 shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of Video and shall
survive the consummation of the transactions contemplated by this Agreement for
a period of three months.
6.05 The Acquisition of Pine View Common Stock. Pine View and Video
understand and agree that the consummation of this Agreement including the
issuance of the Pine View Common Stock to Video in exchange for the Video Shares
as contemplated hereby, constitutes the offer and sale of securities under the
Securities Act and applicable state statutes. Pine View and Video agree that
such transactions shall be consummated in reliance on exemptions from the
registration and prospectus delivery requirements of such statutes which depend,
among other items, on the circumstances under which such securities are
acquired.
(a) In order to provide documentation for reliance upon the
exemptions from the registration and prospectus delivery requirements
for such transactions, each shareholder of Video shall execute and
deliver to Pine View an investment representation letter in
substantially the same form as that attached hereto as Exhibit "A."
<PAGE>
(b) In connection with the transaction contemplated by this
Agreement, Video and Pine View shall each file, with the assistance of
the other and their respective legal counsel, such notices,
applications, reports, or other instruments as may be deemed by them to
be necessary or appropriate in an effort to document reliance on such
exemptions, and the appropriate regulatory authority in the states
where the shareholders of Video reside unless an exemption requiring no
filing is available in such jurisdictions, all to the extent and in the
manner as may be deemed by such parties to be appropriate.
(c) In order to more fully document reliance on the exemptions
as provided herein, Video, the shareholders of Video, and Pine View
shall execute and deliver to the other, at or prior to the Closing,
such further letters of representation, acknowledgment, suitability, or
the like as Pine View or Video and their respective counsel may
reasonably request in connection with reliance on exemptions from
registration under such securities laws.
6.06 Pine View Liabilities. Immediately prior to the Closing Date, Pine
View shall have cash and cash equivalents in an amount not less than $39,000 and
no material liabilities, except for the costs and expenses related to this
Agreement which shall not exceed $15,000.
6.07 Securities Filings. Pine View shall be responsible for the
preparation of a Form D and its filing with the Securities and Exchange
Commission and Video will be responsible for any and all filings in any
jurisdiction where its shareholders reside which would require a filing with a
governmental agency as a result of the transactions contemplated in this
Agreement.
6.08 Sales of Securities Under Rule 144, If Applicable.
(a) Pine View will use its best efforts to at all times
satisfy the current public information requirements of rule 144
promulgated under the Securities Act so that its shareholders can sell
restricted securities that have been held for one year or more or such
other restricted period as required by rule 144 as it is from time to
time amended.
(b) Upon being informed in writing by any person holding
restricted stock of Pine View as of the date of this Agreement that
such person intends to sell any shares under rule 144 promulgated under
the Securities Act (including any rule adopted in substitution or
replacement thereof), Pine View will certify in writing to such person
that it is compliance with rule 144 current public information
requirement to enable such person to sell such person's restricted
stock under rule 144, as may be applicable under the circumstances.
(c) If any certificate representing any such restricted stock
is presented to Pine View's transfer agent for registration or transfer
in connection with any sales theretofore made under rule 144, provided
such certificate is duly endorsed for transfer by the appropriate
person(s) or accompanied by a separate stock power duly executed by the
appropriate person(s) in each case with reasonable assurances that such
<PAGE>
endorsements are genuine and effective, and is accompanied by an
opinion of counsel satisfactory to Pine View and its counsel that such
transfer has complied with the requirements of rule 144, as the case
may be, Pine View will promptly instruct its transfer agent to register
such transfer and to issue one or more new certificates representing
such shares to the transferee and, if appropriate under the provisions
of rule 144, as the case may be, free of any related stop transfer
order or restrictive legend. The provisions of this Section 6.08 shall
survive the Closing and the consummation of the transactions
contemplated by this Agreement for a period of two years.
6.09 New Board of Directors and Officers. Upon closing of the
transactions contemplated by this Agreement, the current directors and officers
of Pine View shall resign, seriatim, and the persons designated by Video shall
be appointed to fill the vacancies created thereby, subject to the approval of
the suitability and qualifications of such nominees by Pine View's board of
directors.
ARTICLE VII
MISCELLANEOUS
7.01 Brokers. Pine View and Video agree that there were no finders or
brokers involved in bringing the parties together or who were instrumental in
the negotiation, execution, or consummation of this Agreement. Further, Pine
View and Video each agree to indemnify the other against any claim by any third
person for any commission, brokerage, or finder's fee or other payment with
respect to this Agreement or the transactions contemplated hereby based on any
alleged agreement or understanding between such party and such third person,
whether express or implied, from the actions of such party.
The covenants set forth in this section shall survive the Closing Date
and the consummation of the transactions herein contemplated.
7.02 No Representation Regarding Tax Treatment. No representation or
warranty is being made by any party to any other regarding the treatment of this
transaction for federal or state income taxation. Each party has relied
exclusively on its own legal, accounting, and other tax adviser regarding the
treatment of this transaction for federal and state income tax purposes.
7.03 Governing Law. This Agreement shall be governed by, enforced and
construed under and in accordance with the laws of the State of Nevada.
7.04 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered, if sent by
facsimile or telecopy transmission or other electronic communication confirmed
by registered or certified mail, postage prepaid, or if sent by prepaid
overnight courier addressed as follows:
<PAGE>
If to Pine View, to: If to Video, to:
Stephen B. Cluff, President Jerry E. Romney, Jr., President
Pine View Technologies, Inc. Videolocity, Inc.
1242 Roosevelt Avenue P.O. Box 4108
Salt Lake City, Utah 84105 136 Heber Avenue, #209
Park City, Utah 84060
With a copy to: With a copy to:
Victor D. Schwarz, Esq. D.T. Norman, Secretary
Victor D. Schwarz, LLC Videolocity, Inc.
2681 Parley's Way 358 S. 700 E., #B-604
Salt Lake City, UT 84109 Salt Lake City, UT 84102
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices, hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered or sent by facsimile or
telecopy transmission or other electronic communication, or one day after the
date so sent by overnight courier.
7.05 Attorney's Fees. In the event that any party institutes any action
or suit to enforce this Agreement or to secure relief from any default hereunder
or breach hereof, the breaching party or parties shall reimburse the
nonbreaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
7.06 Schedules; Knowledge. Whenever in any section of this Agreement
reference is made to information set forth in the schedules provided by Pine
View or Video such reference is to information specifically set forth in such
schedules and clearly marked to identify the section of this Agreement to which
the information relates. Whenever any representation is made to the "knowledge"
of any party, it shall be deemed to be a representation that no officer or
director of such party, after reasonable investigation, has any knowledge of
such matters.
7.07 Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof. All previous
agreements between the parties, whether written or oral, have been merged into
this Agreement. This Agreement alone fully and completely expresses the
agreement of the parties relating to the subject matter hereof. There are no
other courses of dealing, understandings, agreements, representations, or
warranties, written or oral, except as set forth herein.
<PAGE>
7.08 Survival; Termination. The representations, warranties, and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of six months
from the Closing Date, unless otherwise provided herein.
7.09 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
7.10 Amendment or Waiver. Every right and remedy provided herein shall
be cumulative with every other right and remedy, whether conferred herein, at
law, or in equity, and such remedies may be enforced concurrently, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance thereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
7.11 Public Statements. Subject to their respective legal obligations
(including requirements of stock exchanges and other similar regulatory bodies),
the Parties shall consult with one another, and use reasonable best efforts to
agree upon the text of any press release, before issuing any such press release
or otherwise making public statements with respect to the Merger and in making
any filings with any federal or state governmental or regulatory agency or with
any national securities exchange with respect thereto.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first above written.
PINE VIEW TECHNOLOGIES, INC., VIDEOLOCITY, INC.,
a Nevada corporation a Nevada corporation
By: /s/ Stephen B. Cluff By: /s/ Jerry E. Romney, Jr.
-------------------------- ----------------------------
Stephen B. Cluff, President Jerry E. Romney, Jr., President
and Secretary
PINE VIEW MERGER CO.,
a Nevada corporation
By: /s/ Stephen B. Cluff By: /s/ D. T. Norman
--------------------------- -----------------
Stephen B. Cluff, President D.T. Norman, Secretary
and Secretary
<PAGE>
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE )
On this 16th day of November, 2000, personally appeared before me
Stephen B. Cluff, whose identity is personally known to me and who being by me
duly sworn, did say that he is the President and Secretary of Pine View
Technologies, Inc. and Pine View Merger Co., respectively, and that the
foregoing agreement was signed by him on behalf of said corporations by
authority of resolutions adopted by their respective boards of directors, and
said Stephen B. Cluff acknowledged to me that said corporations executed the
same.
/s/ Victor D. Schwarz
---------------------
NOTARY PUBLIC
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE )
On this 15th day of November, 2000, personally appeared before me Jerry
E. Romney, Jr. and D.T. Norman, whose identities are personally known to me and
who, each being by me duly sworn, did say that he is the President and she is
the Secretary of Videolocity, Inc. and that the foregoing agreement was signed
by them on behalf of said corporation by authority of resolutions adopted by its
board of directors, and said Jerry E. Romney, Jr. and Donna T. Norman
acknowledged to me that said corporation executed the same.
/s/ Mark N. Schneider
------------------------
NOTARY PUBLIC
