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AGREEMENT AND PLAN OF MERGER
by and among
SANTA MARIA RESOURCES, INC ,
FANTASTICON.COM, INC. (Nevada),
and
FANTASTICON.COM, INC. (Delaware)
MADMAN BACKSTAGE PRODUCTIONS, INC.
and
IMPACT INTERACTIVE, INC.
As of September 1, 2000
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TABLE OF CONTENTS
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AGREEMENT AND PLAN OF MERGER........................................................................... 1
WITNESSETH:............................................................................................ 1
I. THE MERGER.................................................................................. 2
1.01 The Merger.................................................................................. 2
1.02 Effective Time.............................................................................. 2
1.03 Closing..................................................................................... 3
1.04 Certificate of Incorporation and By-Laws of the Surviving Corporation....................... 3
1.05 Certificate of Incorporation and By-Laws of the Parent...................................... 4
II. STATUS AND CONVERSION OF SECURITIES; OTHER AGREEMENTS....................................... 4
2.01 Common Stock of Fantasticon.com and the Merger-Sub.......................................... 4
2.02 Fantasticon.com Private Placement, Options and Warrants..................................... 4
2.03 Exchange of FM&I Capital Stock.............................................................. 5
2.04 Board of Directors of the Parent............................................................ 6
III. REPRESENTATIONS AND WARRANTIES.............................................................. 7
3.01 Representations and Warranties of FM&I...................................................... 7
3.02 Representations and Warranties of the Parent and the Merger-Sub............................. 22
IV. COVENANTS................................................................................... 39
4.01 Covenants of the Parent and the Merger-Sub.................................................. 39
4.02 Covenants of Fantasticon.com., Madman and Impact............................................ 45
4.03 Amendment to SEC Filings.................................................................... 49
V. CONDITIONS.................................................................................. 50
5.01 Conditions to Each Party's Obligation to Effect the Merger.................................. 50
5.02 Conditions to Obligations of the Parent and the Merger-Sub.................................. 51
5.03 Conditions to Obligation of Fantasticon.com to Effect the Merger............................ 54
VI. TERMINATION................................................................................. 59
6.01 Termination................................................................................. 59
6.02 Effect of Termination....................................................................... 60
VII. MISCELLANEOUS............................................................................... 61
7.01 Fees and Expenses........................................................................... 61
7.02 Further Actions............................................................................. 61
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TABLE OF CONTENTS
(Continued)
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7.03 Availability of Equitable Remedies....................................................... 61
7.04 Survival................................................................................. 62
7.05 Modification............................................................................. 62
7.06 Notices.................................................................................. 62
7.07 Waiver................................................................................... 63
7.08 Binding Effect........................................................................... 64
7.09 No Third-Party Beneficiaries............................................................. 64
7.10 Severability............................................................................. 64
7.11 Merger; Assignability.................................................................... 64
7.12 Schedules and Exhibits................................................................... 65
7.13 Headings................................................................................. 65
7.14 Counterparts; Governing Law; Jurisdiction................................................ 65
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is dated as of
September 1, 2000, by and among SANTA MARIA RESOURCES, INC, a Nevada
corporation, whose address is 5015 Sahara Avenue, Suite 125-209, Las Vegas,
Nevada 76022 (the "Parent"), FANTASTICON.COM, INC., a corporation formed under
the laws of the state of Nevada and a wholly-owned subsidiary of Parent, whose
address is also 5015 Sahara Avenue, Suite 125-209, Las Vegas, Nevada 76022 (the
"Merger-Sub") and FANTASTICON.COM, INC., a Delaware corporation,
("Fantasticon.com"), MADMAN BACKSTAGE PRODUCTIONS, INC., a Michigan corporation
("Madman"), and IMPACT INTERACTIVE, INC., a Michigan corporation ("Impact"),
each of whose address is 17117 W. Nine Mile, Suite 1515, MI 48075 (unless
otherwise indicated, Fantasticon.com, Madman and Impact shall be referred to
collectively as "FM&I"). Merger-Sub shall be the surviving corporation of the
proposed merger between the Merger-Sub and FM&I and, in such capacity, Merger-
Sub shall sometimes be referred to herein as the "Surviving Corporation."
W I T N E S S E T H:
WHEREAS, Merger-Sub was recently formed and constituted as a wholly-owned
subsidiary of Parent for the purpose of merging with FM&I as provided for in
this Agreement, and
WHEREAS, the respective Boards of Directors of the Parent, the Merger-Sub
and FM&I have determined that it is advisable and in the best interests of their
respective equity owners to consummate the business combination transaction
provided for herein in which the FM&I would merge (the "Merger") with and into
Merger-Sub; and
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WHEREAS, Parent, the Merger-Sub and FM&I desire to make certain agreements
in connection with the Merger.
NOW, THEREFORE, in consideration of the mutual premises, covenants, and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
I. THE MERGER.
1.01 The Merger.
At the Effective Time (as defined in Section 1.02), upon the terms and
subject to the conditions of this Agreement, FM&I shall be merged with and
into Merger-Sub in accordance with the Delaware General Corporation Law
(the "DGCL"), the Nevada General Corporation Law (the "NGCL") and the
Michigan Business Corporation Act ("MBCA"). Merger-Sub shall be the
surviving corporation in the Merger, and the name of the Surviving
Corporation shall be "FANTASTICON.COM, INC." As a result of the Merger, all
outstanding shares of capital stock of each of Fantasticon.com, Madman and
Impact (the "FM&I Capital Stock"), and any options, warrants or other
securities convertible into FM&I Capital Stock shall be converted in the
manner provided in Article II.
1.02 Effective Time.
At the Closing (as defined in Section 1.03), a certificate of merger (the
"Certificate of Merger") shall be duly prepared by the Surviving
Corporation and delivered to the Secretary of State of Delaware, Nevada and
Michigan for filing as provided in the DGCL, NGCL, and MBCA on, or as soon
as practicable after, the Closing Date (as defined in Section 1.03). The
Merger shall become effective as soon as the Certificate of Merger has been
filed with the Secretary of State of Delaware, Nevada and Michigan (the
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date and time when such condition has been satisfied being referred to
herein as the "Effective Time").
1.03 Closing.
The closing of the Merger (the "Closing") will take place at the offices of
Simone V. Palazzolo, Esq., counsel for the Parent, 7 Penn Plaza, Suite 422,
New York, New York 10001 on or before October 15, 2000, or at such other
place and time as shall be mutually agreed upon by the parties hereto (the
"Closing Date"). At the Closing, there shall be delivered to FM&I and the
Parent the certificates and other documents and instruments required to be
delivered under Article V. The Closing will be effective as of the
Effective Time.
1.04 Certificate of Incorporation and By-Laws of the Surviving Corporation.
At the Effective Time, (i) the Certificate of Incorporation of Merger-Sub
in effect immediately prior to the Effective Time shall be the Certificate
of Incorporation of the Surviving Corporation and (ii) the By-Laws of
Merger-Sub as in effect immediately prior to the Effective Time shall be
the By-Laws of the Surviving Corporation. The Certificate of Incorporation
and By-Laws of Merger-Sub as in effect as of the date hereof and to be in
effect as of the Effective Time are attached hereto as Schedules 1.04-1 and
----------------
1.04-2, respectively.
------
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1.05 Certificate of Incorporation and By-Laws of the Parent
The Certificate of Incorporation and the By-Laws of the Parent as in effect
on the date hereof and to be in effect as of the Effective Time are
attached hereto as Schedules 1.05-1 and 1.05-2, respectively.
---------------- ------
II. STATUS AND CONVERSION OF SECURITIES; OTHER AGREEMENTS.
2.01 Common Stock of Fantasticon.com and the Merger-Sub.
(a) Each share of common stock, no par value per share, of Merger-Sub
outstanding immediately prior to the Closing shall remain outstanding
(the "Surviving Corporation Common Stock"), so that at the Effective
Time, the Parent shall be the holder of all of the issued and
outstanding shares of the Surviving Corporation Common Stock.
(b) The outstanding shares of capital stock of Fantasticon.com, Madman and
Impact (the "FM&I Common Stock") issued and outstanding prior to the
Closing shall be converted into an aggregate of 6.5 million shares of
Parent Common Stock, which shares shall be issued to the persons and
in the amounts indicated on Schedule 2.01(b) hereto upon consummation
----------------
of the Merger, the FM&I Common Stock shall be cancelled.
2.02 Fantasticon.com Private Placement, Options and Warrants.
(a) Pursuant to a Confidential Private Placement Memorandum dated July 24,
2000, Fantasticon.com presently is offering, subject to completion of
the Merger, units in Fantasticon.com ("Fantasticon.com Units") which,
upon consummation of the Merger will represent up to 500,000 units of
Parent ("Parent Units"), each Parent Unit consisting of the equivalent
of three (3) shares of the common stock of
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Parent (the "Private Placement Shares") plus one (1) warrant to
purchase one (1) additional Private Placement Share (the "Warrants").
(b) Schedule 2.02(b), as supplemented to the date of Closing, sets forth a
-----------------
true, correct and complete list of all purchasers of Fantasticon.com
Units with the total equivalent number of Private Placement Shares and
Warrants to be issued to such parties upon consummation of the Merger.
Such Private Placement Shares and Warrants shall be in addition to the
Parent Common Stock issuable pursuant to Section 2.01(b) hereof. A
---------------
copy of the Private Placement Memorandum, together with any
Supplements or Addendums thereto, is attached hereto as Schedule
--------
2.02(b)-1.
---------
(c) At the Effective Time, the Parent shall assume the Warrants, issue new
warrants in equivalent amount and having the same terms and conditions
as the Warrants (the "Parent Warrants") and shall reserve from
Parents' authorized but unissued shares, a sufficient number of shares
of its common stock for issuance upon the exercise of all the Parent
Warrants. At the Effective Time, each Warrant shall be cancelled and
Parent shall issue the Parent Warrants to the former holders of the
Warrants as set forth on Schedule 2.02(b).
----------------
2.03 Exchange of FM&I Capital Stock.
(a) The Parent shall appoint an exchange agent hereunder (the "Exchange
Agent") pursuant to an agreement (the "Exchange Agent Agreement") in a
form to be agreed upon by the parties hereto. Promptly after the
Closing, the Parent shall deposit or cause to be deposited with the
Exchange Agent the certificates representing the shares of Parent
Common Stock issuable to the holders of FM&I
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Capital Stock and the Private Placement Shares. Parent shall also
deliver to the Exchange Agent the Parent Warrants to be exchanged for
the Warrants.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding shares of FM&I Capital Stock (the "FM&I Certificates"),
including the Private Placement Shares and Warrants (collectively the
"FM&I Securities), a form letter of transmittal (which shall specify
that delivery shall be effective, and risk of loss and title to the
FM&I Certificates shall pass, only upon delivery of the FM&I
Certificates to the Exchange Agent) and instructions for such holder's
use in effecting surrender of the FM&I Certificates in exchange for
certificates representing shares of Parent Common Stock. The Exchange
Agent shall collect the FM&I Securities in exchange for the Parent
Shares and Parent Warrants and deliver the FM&I Securities to Parent.
(c) As of the Effective Time, each holder of FM&I Securities shall
surrender the same at the principal offices of the Exchange Agent, and
shall be entitled to receive in exchange therefor a certificate or
certificates of the Parent reflecting the amount of Parent Common
Stock and Parent Warrants to be received by such holder.
2.04 Board of Directors of the Parent.
At the Effective Time, the existing directors of Parent shall elect to the
Board of Directors of the Parent three (3) nominees of the Former FM&I
Stockholders, as designated by such Former FM&I Stockholders, and
immediately thereafter tender their own resignations from the Board of
Directors of Parent.
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III. REPRESENTATIONS AND WARRANTIES.
3.01 Representations and Warranties of FM&I.
Each of Fantasticon.com, Madman, and Impact represents and warrants to the
Parent and the Merger-Sub as follows:
(a) Organization and Qualification. Each of Fantasticon.com, Madman and
Impact is a corporation duly organized, validly existing and in good
standing under the laws of their respective states, which has full
power and authority to conduct its business as and to the extent now
conducted, and currently proposed to be conducted, and to own, use and
lease its assets and properties, except for such failures to have such
power and authority which, individually or in the aggregate, do not
and are not reasonably expected to have a Material Adverse Effect (as
defined in this Section 3.01(a)) on FM&I. Fantasticon.com, Madman and
Impact are duly qualified, licensed or admitted to do business and are
in good standing in the state of Michigan and in all jurisdictions
where their operations or ownership of property require it to be so
qualified. As used in this Agreement, a "Material Adverse Effect"
shall mean a material adverse effect on the businesses, properties,
assets, liabilities, condition (financial or otherwise) or results of
operations of an entity (or group of entities taken as a whole).
Notwithstanding the foregoing, a Material Adverse Effect shall not
include any change in political or economic matters of general
applicability. Except for Madman and Impact's ownership of shares of
Fantastiscon.com each of Fantasticon.com, Madman and Impact does not
directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any
equity or similar
7
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interest in, any corporation, partnership, joint venture or other
business association or entity.
(b) Organizational Documents; Capital Stock; Capitalization.
(i) True and complete copies of the Certificates of Incorporation
and By-laws of each of Fantasticon.com, Madman and Impact as in
effect on the date hereof are attached hereto as Schedules
---------
3.01(b)(i)-1 and 3.01(b)(i)-2.
------------ -------------
(ii) The authorized capital stock of Fantasticon.com consists of
3,000 shares of Fantasticon.com common stock. As of the date
hereof, without considering the Fantasticon.com Securities sold
in the Private Placement, 265.39 shares of Fantasticon.com
Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable. The authorized
capital stock of Madman consists of 60,000 shares of Madman
common stock, of which 1,000 shares are issued and outstanding,
all of which are validly issued, fully paid and non-assessable.
The authorized capital stock of Impact consists of 60,000 shares
of Impact common stock of which 100 shares are issued and
outstanding, all of which are validly issued, full paid and non-
assessable. Attached hereto as Schedule 3.01(b)(ii) is a true
and complete schedule of all stockholders of each
Fantasticon.com, Madman and Impact.
(iii) Schedule 3.01(b)(iii) attached hereto sets forth the number of
---------------------
shares of Fantasticon.com Common Stock reserved for future
issuance upon exercise of Fantasticon.com Warrants granted and
outstanding as of the date hereof. Except as set forth on
Schedule 2.02(a) and Schedule 2.02(b),
---------------- ----------------
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there are no outstanding options, warrants, calls,
subscriptions, rights, agreements or other commitments of any
character (contingent or otherwise) of Fantasticon.com, Madman
or Impact to issue, sell, repurchase, redeem, or otherwise
acquire any shares of FM&I Capital Stock.
(iv) The financial statements of each of FM&I, fairly reflect the
material liabilities of each of Fantasticon.com, Madman and
Impact.
(c) Authority Relative to this Agreement Each of Fantasticon.com, Madman
and Impact has full power and authority to enter into this Agreement
and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery, and
performance of this Agreement by FM&I and the consummation by FM&I of
the Merger and the transactions contemplated hereby have been duly and
validly approved by the Boards of Directors of FM&I, and upon the
approval of the stockholders of FM&I, no other proceedings on the part
of FM&I will be necessary to authorize the execution, delivery, and
performance of this Agreement by FM&I and the consummation by FM&I of
the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by FM&I and constitutes the legal,
valid, and binding obligation is of FM&I enforceable against FM&I in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer or similar laws affecting the enforcement of
creditors' rights generally
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and general principles of equity (whether considered in a proceeding
at law or in equity).
(d) Non-Contravention; Approvals and Consents.
(i) The execution and delivery of this Agreement by FM&I does not,
and the performance by FM&I of their obligations hereunder and
the consummation of the transactions contemplated hereby will
not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a
default under, result in or give to any person any right of
payment or reimbursement, termination, cancellation, modification
or acceleration of, or result in the creation or imposition of
any lien, claim, mortgage, encumbrance, pledge, security
interest, equity, or charge of any kind (any of the foregoing, a
"Lien") upon any of the assets or properties of FM&I under any of
the terms, conditions, or provisions of (x) the respective
Certificates of Incorporation of FM&I, (y) any statute, law,
rule, regulation, or ordinance (collectively, "Laws"), or any
judgment, decree, order, writ, permit, or license (collectively,
"Orders"), of any court, tribunal, arbitrator, authority, agency,
commission, official, or other instrumentality of the United
States, any foreign country, or any domestic or foreign state,
county, city, or other political subdivision (a "Governmental or
Regulatory Authority"), applicable to FM&I or any of their assets
or properties, or (z) any note, bond, mortgage, security
agreement, indenture, license, franchise, permit, concession,
contract, lease (capital or operating) or other instrument,
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obligation, or agreement of any kind (collectively, "Contracts")
to which any of Fantasticon.com, Madman or Impact is a party or
by which FM&I or any of their assets or properties is bound,
excluding from the foregoing clauses (y) and (z) conflicts,
violations, breaches, defaults, terminations, modifications,
accelerations and creations, and impositions of Liens which,
individually or in the aggregate, could not be reasonably
expected to have a Material Adverse Effect on FM&I or on its
ability to consummate the transactions contemplated by this
Agreement.
(ii) Except (x) for the filing of the Certificate of Merger and other
appropriate merger documents required by the DGCL and MBCA with
the Secretary of States of Delaware and Michigan, (y) as
otherwise disclosed in Schedule 3.01(d)(ii) hereto, and (z) for
--------------------
the approval of stockholders of FM&I, no consent, approval, or
action of, filing with, or notice to any Governmental or
Regulatory Authority or other public or private third party is
necessary or required under any of the terms, conditions or
provisions of any Law or Order of any Governmental or Regulatory
Authority or any Contract to which any of Fantasticon.com, Madman
or Impact is a party or by which FM&I or any of their assets or
properties arebound for the execution and delivery of this
Agreement by FM&I, the performance by FM&I of their obligations
hereunder or the consummation of the transactions contemplated
hereby, except for such consents, approvals, or actions of,
filings with or notices to any Governmental or Regulatory
Authority or other public or private third party the failure of
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which to make or obtain could not reasonably be expected to have
a Material Adverse Effect on FM&I, the Surviving Corporation, or
on FM&I's ability to consummate the transactions contemplated by
this Agreement.
(e) Legal Proceedings. Except as set forth in Schedule 3.01(e), there are
----------------
no actions, suits, arbitrations, or proceedings pending, nor to the
knowledge of FM&I, threatened against, relating to or affecting, FM&I
or any of their assets and properties which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect on FM&I or on the ability of FM&I to consummate the
transactions contemplated by this Agreement. None of Fantasticon.com,
Madman or Impact is subject to any judgment, decree, court order, or
writ of any Governmental or Regulatory Authority.
(f) Patents, Trademarks, Intangibles. To the best of FM&I's knowledge and
belief, each of Fantasticon.com, Madman and Impact has all right,
title and interest in, or a valid and binding license to use all
patents, patent applications, trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications,
franchises, trade secrets, computer programs (in object or source code
form), or other intangible property or asset (collectively,
"Intangibles") which individually or in the aggregate are material to
the conduct of its business. Attached as Schedule 3.01(f) is a true
and complete list of all material intangibles of FM&I. None of
Fantasticon.com, Madman or Impact is in default (or with the giving of
notice or lapse of time or both, would be in default) in any material
respect under any license to use such Intangibles. To FM&I's
knowledge, no
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such Intangibles are being infringed by any third party and, to FM&I's
knowledge, it is not infringing any Intangible of any third party,
except for such defaults and infringements which, individually or in
the aggregate, do not and are not reasonably expected to have a
Material Adverse Effect on FM&I or the Surviving Corporation.
(g) Financial Statements. Fantasticon.com has delivered, or on or before
the Closing Date will deliver, to the Parent copies of its balance
sheet, operating statements and schedule of shareholder's equity
(collectively the "Fantasticon.com Financial Statements") as at the
end of its most recent two fiscal years, such Fantasticon.com
Financial Statements having been, or prior to the Closing will be,
certified by any independent certified public accountant. Said
Fantasticon.com Financial Statements are complete, accurate and fairly
present the financial condition of Fantasticon.com as of the date
thereof, all in conformity with generally accepted accounting
principles applied on a consistent basis. Fantasticon.com has no
material liabilities, either fixed or contingent, not reflected in
such financial statements, other than for contracts or obligations
incurred in the ordinary and usual course of business or as set forth
in Schedule 3.01(g), and no such contracts or obligations constitute
liens or other liabilities which, if disclosed, would alter
substantially the financial condition of Fantasticon.com as reflected
in the Fantasticon.com Financial Statements. All liabilities for the
current and for all prior years, including any income and sales taxes
or other taxes for which Fantasticon.com has any liability, have been
paid in
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full or have been adequately provided for in the Fantasticon.com
Financial Statements in accordance with generally accepted accounting
principles;
(h) Absence of Certain Changes or Events. Except as set forth in Schedule
3.01(h) hereto or as contemplated hereby, since the date of the
Fantasticon.com Financial Statements, no change, event, or development
or combination of changes or developments (including any worsening of
any condition currently existing) has occurred or is reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect on FM&I (without regard, however, to changes in conditions
generally applicable to the industry in which Fantasticon.com is
involved or general economic conditions).
(i) Absence of Undisclosed Liabilities. Except for matters reflected or
reserved against in the Fantasticon.com Financial Statements,
Fantasticon.com did not have at such date and has not incurred since
that date, any liabilities or obligations (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due) of
any nature, except liabilities or obligations which were incurred in
connection with this Agreement and the transactions contemplated
hereby, which were incurred in the ordinary course of business
consistent with past practice.
(j) Information Supplied. Nothing in this Agreement or any schedule,
exhibit, certificate, document, or statement in writing which has been
supplied by or on behalf of FM&I, in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact,
or omits any statement of a material fact required to be stated or
necessary in order to make the statements
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contained herein or therein not misleading. There is no fact known to
FM&I which materially and adversely affects FM&I or the Surviving
Corporation, which has not been set forth in this Agreement or in the
schedules, exhibits, certificates, documents, or statements in writing
furnished by FM&I in connection with the transactions contemplated by
this Agreement.
(k) Compliance with Laws and Orders. Each of Fantasticon.com, Madman and
Impact holds all permits, licenses, variances, exemptions, orders, and
approvals of all Governmental and Regulatory Authorities necessary for
the lawful conduct of its business (the "FM&I Permits"), except for
failures to hold such permits, licenses, variances, exemptions,
orders, and approvals which, individually or in the aggregate, do not
and are not reasonably expected to have a Material Adverse Effect on
FM&I. Each of Fantasticon.com, Madman and Impact is in compliance with
the terms of the FM&I Permits, except failures so to comply which,
individually or in the aggregate, do not have and are not reasonably
expected to have a Material Adverse Effect on FM&I. None of
Fantasticon.com, Madman or Impact is in violation of, or in default
under, any Law or Order of any Governmental or Regulatory Authority,
except for violations which, individually or in the aggregate, do not
and are not reasonably expected to have a Material Adverse Effect on
FM&I.
(l) Compliance with Agreements; Certain Agreements. Neither
Fantasticon.com, Madman or Impact nor to the knowledge of any of
Fantasticon.com, Madman or Impact any other party thereto, is in
breach or violation of, or in default in the performance or observance
of any term or provision of, and no event has occurred
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which, with notice or lapse of time or both, is reasonably expected to
result in a default under, (x) the Certificates of Incorporation of
FM&I or (y) any material Contract to which FM&I is a party or by which
FM&I or any of their assets or properties is bound, except in the case
of clause (y) for breaches, violations, and defaults which,
individually or in the aggregate, do not and are not reasonably
expected to have a Material Adverse Effect on FM&I.
(m) Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by FM&I and
their affiliates directly with the Parent and the Merger-Sub without
the intervention of any person on behalf of FM&I and its affiliates in
such manner as to give rise to any valid claim by any person against
FM&I, the Parent, or the Surviving Corporation for a finder's fee,
brokerage commission, or similar payment.
(n) Consents Without Any Condition. None of Fantasticon.com, Madman, or
Impact has made any agreement or reached any understanding not
approved by the Parent and the Merger-Sub as a condition for obtaining
any consent, authorization, approval, order, license, certificate, or
permit required for the consummation of the transactions contemplated
by this Agreement.
(o) Tax Matters. Except as set forth in Schedule 3.01(o):
(i) Each of Fantasticon.com, Madman and Impact will file all tax
returns required to be filed by applicable law, and will file any
deliquent tax returns covering periods prior to Closing within 90
days after Closing.
(ii) There are no tax liens upon the assets of FM&I.
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(iii) None of Fantasticon.com, Madman or Impact has requested (and no
request has been made on its behalf) any extension of time
within which to file any material tax return.
(iv) (A) No income tax returns have been examined by any taxing
authorities for any periods; and (B) no deficiency for any
material taxes has been suggested, proposed, asserted, or
assessed against FM&I that has not been resolved and paid in
full.
(v) No audits or other administrative proceedings or court
proceedings are presently pending with regard to any taxes or
tax returns of FM&I. No written claim has been made by a taxing
authority in a jurisdiction where FM&I does not file tax
returns such that it is or may be subject to taxation by that
jurisdiction.
(vi) No agreements relating to allocating or sharing of any taxes
have been entered into by FM&I.
(vii) FM&I has not entered into any transactions that could give rise
to an understatement of Federal Income Tax.
(viii) Neither FM&I, nor any other person on behalf of FM&I, has
agreed to or is required to make any adjustments pursuant to
Section 481(a) of the Code or any similar provisions of state,
local or foreign law by reason of a change in accounting method
initiated by FM&I or has any application pending with any
taxing authority requesting permission for any change in
accounting methods that relate to the business or operations of
FM&I, and
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FM&I has no knowledge that the IRS has proposed any such
adjustment or change in accounting method.
(ix) FM&I has not been, and is not now, a member of any
consolidated, combined, unitary or affiliated group of
corporations for any tax purposes.
(x) FM&I has not waived any statute of limitations in respect of
taxes or agreed to any extension of time with respect to a tax
assessment or deficiency.
(xi) There is no contract, plan or arrangement (written or
otherwise) covering any current or former employee or
independent contractor of FM&I that, individually or in the
aggregate, could give rise to the payment of any amount that
will not be deductible by FM&I under Section 280G of the Code.
(xii) No power of attorney that is currently in force has been
granted by any of Fantasticon.com, Madman or Impact with
respect to any matters relating to taxes.
(xiii) There are no tax sharing agreements or other similar
arrangements with respect to or involving any of
Fantasticon.com, Madman or Impact.
(xiv) None of Fantasticon.com, Madman or Impact is or during the five
year period ending on the Closing Date has been, a "United
States Real Property Holding Corporation," as such term is
defined in Section 897(c) of the Code or the Treasury
Regulations promulgated thereunder.
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(p) Investment Company. None of Fantasticon.com, Madman or Impact is
an "Investment Company" as that term is defined under the
Investment Company Act of 1940, as amended.
(q) Bank Accounts. Schedule 3.01(q) sets forth the names and
locations of all banks, trust companies, savings and loan
associations and other financial institutions at which any of
Fantasticon.com, Madman or Impact maintain safe deposit boxes or
accounts of any nature and the names of all persons authorized to
draw thereon, make withdrawals therefrom or have access thereto.
(r) Insurance Policies. Schedule 3.01(r) contains an accurate and
complete description of all material policies of fire, liability,
workmen's compensation and other forms of insurance proposed to
be purchased by FM&I. Such policies will be sufficient for
compliance with all requirements of law and of all agreements to
which FM&I is party; will provide adequate insurance coverage for
the assets and operations of FM&I; and will remain in full force
and effect through the respective dates set forth in Schedule
3.01(r).
(s) Employment Laws. To the best knowledge of FM&I, FM&I is in
compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor
practices; there is no unfair labor practice complaint against
any of Fantasticon.com, Madman or Impact pending before the
National Labor Relations Board; there is no labor strike,
dispute, slowdown or stoppage actually pending or, to the best of
FM&I's knowledge, threatened against or affecting any of
Fantasticon.com, Madman, or Impact; to the best knowledge of FM&I
no
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representation question exists respecting the employees of any of
Fantasticon.com, Madman or Impact; to the best knowledge of FM&I,
no grievance which might have a material adverse effect on FM&I
or the conduct of their businesses nor any arbitration proceeding
arising out of or under collective bargaining agreements is
pending and no claim therefor exists; no collective bargaining
agreement which is binding on any of Fantasticon.com, Madman or
Impact restricts them from relocating or closing its operations;
FM&I has not experienced any work stoppage or other labor
difficulty in the past; and FM&I is not a party to any collective
bargaining labor representative agreement.
(t) Employee Plans. Except as disclosed in Schedule 3.01(t), none of
Fantasticon.com, Madman, or Impact has any bonus, deferred
compensation, pension, profit-sharing, retirement, stock
purchase, stock option or any other fringe benefit plan,
arrangement or practice, whether formal or informal. None of
Fantasticon.com, Madman or Impact has or ever maintained any
employee benefit plan within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(u) Leaseholds. Neither the whole nor any portion of the leaseholds
or any other assets of FM&I is subject to any governmental decree
or order to be sold or is being condemned, expropriated or
otherwise taken by any public authority with or without payment
of compensation therefor, nor to the best knowledge of FM&I has
any such condemnation, expropriation or taking been proposed.
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(v) Environmental Matters.
(i) To the best knowledge of FM&I, each of Fantasticon.com, Madman
and Impact is in compliance in all material respects with all
applicable federal, state and local laws and regulations relating
to pollution control and environmental contamination, including,
without limitation, all discharge or disposal of Hazardous
Materials (as defined below). Except as set forth in Schedule
--------
3.01(v) annexed hereto, to the best knowledge of FM&I, none of
-------
Fantasticon.com, Madman or Impact has been alleged to be in
violation of, or been subject to any administrative or judicial
proceeding pursuant to, such laws or regulations either now or at
any time during the past. Except as set forth in Schedule
--------
3.01(v), there are no facts or circumstances that FM&I reasonably
-------
expects could form the basis for the assertion of any Claim (as
defined below) against Fantasticon.com, Madman or Impact relating
to environmental matters including, but not limited to, any Claim
arising from past or present environmental practices asserted
under CERCLA or RCRA (each as defined below), or any other
federal, state or local environmental statute or regulation.
(ii) For purposes of this Agreement, the following terms shall have
the following meanings: (x) "Hazardous Materials" shall mean
materials defined as "hazardous substances," "hazardous wastes"
or "solid wastes" in (A) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601-9657, and any amendment thereto ("CERCLA"), (B) the
Resource Conservation and Recovery Act,
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42 U.S.C. Section 6901-6987, and any amendments thereto ("RCRA"),
and (C) any similar state or local environmental statute or
regulation; and (y) "Claim" shall mean any and all claims,
demands, causes of action, suits, proceedings and decrees.
3.02 Representations and Warranties of the Parent and the Merger-Sub.
The Parent and the Merger-Sub represent and warrant to FM&I as follows:
(a) Organization and Qualification. The Parent and the Merger-Sub are, and
at the Closing Date will be, corporations duly organized, validly
existing, and in good standing under the laws of Nevada, respectively,
and have full corporate power and authority to conduct their business
as and to the extent now conducted, and currently proposed to be
conducted, and to own, use and lease their assets and properties.
Except for the Parent's ownership of the Merger-Sub, neither the
Parent nor the Merger-Sub directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable
or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture, or other business association
or entity.
(b) Organizational Documents; Capital Stock; Capitalization.
(i) Attached hereto as Schedules 1.04-1 and 1.04-2, respectively, are
---------------- ------
true and complete copies of the Certificate of Incorporation and
By-Laws of the Merger-Sub as in effect on the date hereof.
Attached hereto as Schedules 1.05-1 and 1.05-2, respectively, are
---------------- ------
true and complete copies of the Certificate of Incorporation and
By-Laws of the Parent as in effect on the date hereof.
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(ii) As of the Closing Date, the authorized capital stock of the
Parent will consist solely of one hundred million (100,000,000)
shares of the Parent Common Stock, $0.01 par value. As of the
Closing Date, the authorized capital stock of the Merger-Sub
will consist solely of Twenty-five thousand (25,000) shares of
the common stock, no par value per share, of the Merger-Sub
(the "Merger-Sub Common Stock"). The shares of the Parent Common
Stock issuable to the FM&I Stockholders pursuant to Article II
hereof, will be, when issued in accordance with this Agreement,
duly authorized, validly issued, fully paid, and nonassessable.
(iii) As of the date hereof, approximately 6,000,583 shares of Parent
Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable. Schedule
--------
3.02(b)(iii) attached hereto sets forth the number of shares of
------------
Parent Common Stock reserved for future issuance upon exercise
of Parent options granted and outstanding as of the date hereof,
if any. Except as set forth on Schedule 3.02(b)(iii), there are
---------------------
no outstanding options, warrants, calls, subscriptions, rights,
agreements or other commitments of any character (contingent or
otherwise) of the Parent or the Merger-Sub to issue, sell,
repurchase, redeem, or otherwise acquire any shares of the
Parent Common Stock or the Merger-Sub Common Stock,
respectively. True and complete copies of all such options,
warrants, calls, subscriptions, rights, agreements and other
commitments as in effect on the date hereof have been delivered
to Fantasticon.com.
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<PAGE>
(iv) The financial statements of Parent and Merger-Sub fairly reflect
the material liabilities of each of Parent and Merger-Sub.
(c) Authority Relative to this Agreement. The Parent and the Merger-Sub
have full corporate power and authority to enter into this Agreement
and to perform their respective obligations hereunder and to
consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement by the Parent and the
Merger-Sub and the consummation by the Parent and the Merger-Sub of
the Merger and the transactions contemplated hereby have been duly and
validly approved by the respective Boards of Directors of the Parent
and the Merger-Sub and Parent as the sole stockholder of the Merger-
Sub, and no other corporate proceedings on the part of the Parent or
the Merger-Sub are necessary to authorize the execution, delivery, and
performance of this Agreement by the Parent and the Merger-Sub and the
consummation by the Parent and the Merger-Sub of the transactions
contemplated hereby. This Agreement has been duly and validly executed
and delivered by the Parent and the Merger-Sub, and constitutes a
legal, valid, and binding obligation of the Parent and the Merger-Sub
enforceable against the Parent and the Merger-Sub in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer or
similar laws affecting the enforcement of creditors' rights generally
and general principles of equity (whether considered in a proceeding
at law or in equity).
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<PAGE>
(d) Non-Contravention; Approvals and Consents.
(i) Except as set forth in Schedule 3.02(d)(i) hereto, the execution
-------------------
and delivery of this Agreement by the Parent and the Merger-Sub
does not, and the performance by the Parent and the Merger-Sub of
their obligations hereunder and the consummation of the
transactions contemplated hereby will not, conflict with, result
in a violation or breach of, constitute (with or without notice
or lapse of time or both) a default under, result in, or give to
any person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in the
creation or imposition of any Lien on any of the respective
assets or properties of the Parent or the Merger-Sub under any of
the terms, conditions or provisions of (x) the Certificate of
Incorporation or By-Laws of the Parent or the Merger-Sub, (y) any
Laws or Orders of any Governmental or Regulatory Authority
applicable to the Parent or the Merger-Sub or any of their
respective assets or properties, or (z) any Contracts to which
either the Parent or the Merger-Sub is a party or by which either
the Parent or the Merger-Sub or any of their respective assets or
properties are bound, excluding from the foregoing clauses (y)
and (z) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations, and creations and impositions of
Liens, which individually or in the aggregate, could not be
reasonably expected to have a Material Adverse Effect on the
Parent or the Merger-Sub or on their ability to consummate the
transactions contemplated by this Agreement.
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<PAGE>
(ii) Except (x) for the filing of the Certificate of Merger and other
appropriate merger documents required by the DGCL with the
Secretary of State of Delaware and appropriate documents with the
relevant authorities of other states in which Fantasticon or
Merger-Sub are qualified to do business, and (y) as disclosed in
Schedule 3.02(d)(ii) hereto, no consent, approval, or action of,
--------------------
filing with or notice to any Governmental or Regulatory Authority
or other public or private third party is necessary or required
under any of the terms, conditions or provisions of any Law or
Order of any Governmental or Regulatory Authority or any Contract
to which the Parent or the Merger-Sub is a party or by which the
Parent or the Merger-Sub or any of their respective assets or
properties is bound for the execution and delivery of this
Agreement by the Parent and the Merger-Sub, the performance by
the Parent and the Merger-Sub of their respective obligations
hereunder or the consummation of the transactions contemplated
hereby, except for such consents, approvals or actions of, filing
with or notices to any Governmental or Regulatory Authority or
other public or private third party the failure of which to make
or obtain could not reasonably be expected to have a Material
Adverse Effect on the Parent, the Merger-Sub or the Surviving
Corporation or on the Parent's and the Merger-Sub's ability to
consummate the transactions contemplated by this Agreement.
(e) Financial Statements. The Parent has delivered to FM&I true, correct,
and complete copies of the following: the audited balance sheets of
the Parent (the
26
<PAGE>
"Parent Balance Sheets") as of September 30, 1997, 1998 and 1999; the
audited statement of operations of the Parent (the "Parent Operations
Statement") for the years ending September 30, 1997, 1998 and 1999;
the audited statement of changes in stockholders' deficit of the
Parent (the "Parent Stockholders' Equity Statement") for the years
ending September 30, 1997, 1998 and 1999; and the audited statement of
cash flows of the Parent (the "Parent Cash Flow Statement") for the
years ending September 30 1997, 1998 and 1999, and interim unaudited
financial statements of Parent for the quarters ended December 31,
1999, March 30, 2000 and June 30, 2000 (the "Parent Interim Financial
Statements") (together, the "Parent Financial Statements"). The Parent
Financial Statements fairly present the financial condition, assets,
liabilities, stockholders equity and results of operations of the
Parent for the periods indicated. The Merger-Sub is only recently
formed , as of the Closing Date will have no assets or liabilities,
other than a stated capital account; was formed solely for the
purposes of the Merger, and has not and will not have conducted any
business except in connection with the Merger.
(f) Patents, Trademarks, Intangibles. To the best of Parent's knowledge
and belief, it has all right, title and interest in, or a valid and
binding license to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights,
copyright applications, franchises, trade secrets, computer programs
(in object or source code form), or other intangible property or asset
(collectively, "Intangibles") which individually or in the aggregate
are material to the conduct of its business. Attached as Schedule
3.02(f) is a true and complete
27
<PAGE>
list of all material Intangibles of Parent, if any. Parent is not in
default (or with the giving of notice or lapse of time or both, would
be in default) in any material respect under any license to use such
Intangibles. To Parent's knowledge, no such Intangibles are being
infringed by any third party and, to Parent's knowledge, it is not
infringing any Intangible of any third party, except for such defaults
and infringements which, individually or in the aggregate, do not and
are not reasonably expected to have a Material Adverse Effect on
Parent or the Surviving Corporation.
(g) Absence of Certain Changes or Events. Except as set forth in Schedule
3.02(g) hereto, in the Parent Interim Financial Statements or as
contemplated hereby, since June 30, 2000, no change, event, or
development or combination of changes or developments (including any
worsening of any condition currently existing) has occurred or is
reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on the Parent or the Merger-Sub (without
regard, however, to changes in conditions generally applicable to the
industries in which the Parent and the Merger-Sub are involved or
general economic conditions).
(h) Absence of Undisclosed Liabilities. Except as set forth in Schedule
3.02(h) hereto, and for matters reflected or reserved against in the
Parent Balance Sheets included in the Parent Financial Statements,
neither Parent nor the Merger-Sub had at such date and has not
incurred since that date, any liabilities or obligations (whether
absolute, accrued, contingent, fixed or otherwise, or whether due or
to become due) of any nature, except liabilities or obligations which
were incurred
28
<PAGE>
in connection with this Agreement and the transactions contemplated
hereby or in the ordinary course of business consistent with past
practice.
(i) Legal Proceedings. Except as set forth in Schedule 3.02(i), there are
no actions, suits, arbitrations, or proceedings pending or to the
knowledge of the Parent, threatened against, relating to or affecting,
nor to the knowledge of the Parent or the Merger-Sub, are there any
Governmental or Regulatory Authority investigations or audits pending
or threatened against, relating to or affecting, the Parent or the
Merger-Sub or any of their assets and properties which, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect on the Parent or the Merger-Sub or on the ability of
the Parent or the Merger-Sub to consummate the transactions
contemplated by this Agreement. Neither the Parent nor the Merger-Sub
is subject to any judgment, decree, court order, or writ of any
Governmental or Regulatory Authority.
(j) Information Supplied. Nothing in this Agreement or any schedule,
exhibit, certificate, document, or statement in writing which has been
supplied by or on behalf of the Parent or the Merger-Sub, in
connection with the transactions contemplated hereby, contains any
untrue statement of a material fact, or omits any statement of a
material fact required to be stated or necessary in order to make the
statements contained herein or therein not misleading. There is no
fact known to the Parent which materially and adversely affects the
Parent or the Merger-Sub, which has not been set forth in this
Agreement or in the schedules, exhibits, certificates, documents, or
statements in writing furnished by the Parent
29
<PAGE>
or the Merger-Sub in connection with the transactions contemplated by
this Agreement.
(k) Compliance with Laws and Orders. Except as set forth in Schedule
3.02(k) hereto, the Parent and the Merger-Sub hold all permits,
licenses, variances, exemptions, orders, and approvals of all
Governmental and Regulatory Authorities necessary for the lawful
conduct of its business (the "Permits"), except for failures to hold
such permits, licenses, variances, exemptions, orders, and approvals
which, individually or in the aggregate, do not and are not reasonably
expected to have a Material Adverse Effect on the Parent or the
Merger-Sub. The Parent and the Merger-Sub are in compliance with the
terms of the Permits, except failures so to comply which, individually
or in the aggregate, do not have and are not reasonably expected to
have a Material Adverse Effect on the Parent or the Merger-Sub. The
Parent and the Merger-Sub are not in violation of, or in default
under, any Law or Order of any Governmental or Regulatory Authority
except for violations which, individually or in the aggregate, do not
and are not reasonably expected to have a Material Adverse Effect on
the Parent or the Merger-Sub.
(l) Compliance with Agreements; Certain Agreements. Neither the Parent nor
the Merger-Sub, nor to the knowledge of the Parent, any other party
thereto, is in breach or violation of, or in default in the
performance or observance of any term or provision of and no event has
occurred which, with notice or lapse of time or both, is reasonably
expected to result in a default under, (x) the respective Certificates
of Incorporation and By-Laws of the Parent and the Merger-Sub or
30
<PAGE>
(y) any material Contract to which the Parent or the Merger-Sub is a
party or by which the Parent or the Merger-Sub or any of their assets
or properties is bound, except in the case of clause (y) for breaches,
violations, and defaults which, individually or in the aggregate, do
not and are not reasonably expected to have a Material Adverse Effect
on the Parent or the Merger-Sub.
(m) Employee Benefit Plans. Neither the Parent nor the Merger-Sub has or
contributes to any pension, profit-sharing, option, other incentive
plan, or any other type of employee benefit plan, or has any
obligation to or customary arrangement with employees for bonuses,
incentive compensation, vacations, severance pay, sick pay, sick
leave, insurance, service award, relocation, disability, tuition
refund, or other benefits, whether oral or written, other than the
existing Parent stock option plan, which plan shall be cancelled on or
prior to the Effective Date.
(n) Insurance Policies. Schedule 3.02(n) contains an accurate and complete
description of all material policies of fire, liability, workmen's
compensation and other forms of insurance owned or held by Parent or
Merger-Sub. All such policies, if any, are in full force and effect,
all premiums with respect thereto covering all periods up to and
including the Effective Time have or will be paid, and no notice of
cancellation or termination has been received with respect to any such
policy. Such policies are sufficient for compliance with all
requirements of law and of all agreements to which Fantasticon.com is
party; are valid, outstanding and enforceable policies; provide
adequate insurance coverage for the assets and operations of Parent
and merger-Sub; will remain in full force and
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effect through the respective dates set forth in Schedule 3.02(n)
without the payment of additional premiums; and will not in any way be
affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement.
(o) Employment Laws. To the best knowledge of Parent, Parent is in
compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, and is not engaged in any unfair labor practices; there is no
unfair labor practice complaint against Parent pending before the
National Labor Relations Board; there is no labor strike, dispute,
slowdown or stoppage actually pending or, to the best of Parent's
knowledge, threatened against or affecting Parent; to the best
knowledge of Parent, no representation question exists respecting the
employees of Parent; to the best knowledge of Parent, no grievance
which might have a material adverse effect on Parent or the conduct of
its businesses nor any arbitration proceeding arising out of or under
collective bargaining agreements is pending and no claim therefor
exists; no collective bargaining agreement which is binding on Parent
restricts it from relocating or closing its operations; Parent has not
experienced any work stoppage or other labor difficulty in the past;
and Parent is not a party to any collective bargaining labor
representative agreement.
(p) Facilities, Tangible Property and Assets. Except as set forth on
Schedule 3.02(p), the Parent and the Merger-Sub have no facilities,
tangible property or assets.
(q) Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Parent
and the Merger-Sub and
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their affiliates directly with FM&I, without the intervention of any
person on behalf of the Parent or the Merger-Sub and their affiliates
in such manner as to give rise to any valid claim by any person
against the Parent, the Merger-Sub, FM&I or the Surviving Corporation
for a finder's fee, brokerage commission or similar payment.
(r) Transactions with Affiliates. Except as set forth on Schedule 3.02(r),
neither the Parent nor the Merger-Sub is a party to any material
Contract with any of their affiliates or any director or officer for
the purchase, sale, lease or other disposition of property or
services.
(s) Tax Matters.
(i) Except as set forth in Schedule 3.02(s), the Parent and the
----------------
Merger-Sub have filed all tax returns required to be filed by
applicable law prior to the Closing. All tax returns were (and,
as to tax returns not filed as of the date hereof, will be) true,
complete, and correct and filed on a timely basis. The Parent and
the Merger-Sub (x) have paid all taxes due, or claimed or
asserted in writing by any taxing authority to be due, for the
periods covered by such tax returns or (y) have duly and fully
provided reserves (in accordance with GAAP) adequate to reflect
all such taxes.
(ii) The Parent and the Merger-Sub have established (and until the
Closing will maintain) on their respective books and records
reserves adequate to reflect all material taxes not yet due and
payable. The Parent and the Merger-Sub have made available to
FM&I complete and accurate copies
33
<PAGE>
of all work papers associated with the calculation of the
Parent's and the Merger-Sub's respective tax reserve.
(iii) There are no tax liens upon the assets of the Parent or the
Merger-Sub.
(iv) The Parent and the Merger-Sub have not requested (and no
request has been made on their behalf) any extension of time
within which to file any material tax return.
(v) No income tax returns have been examined by any taxing
authorities for any periods; and no deficiency for any material
taxes has been suggested, proposed, asserted, or assessed
against the Parent or the Merger-Sub that has not been resolved
and paid in full.
(vi) No audits or other administrative proceedings or court
proceedings are presently pending with regard to any taxes or
tax returns of the Parent or the Merger-Sub. No written claim
has been made by a taxing authority in a jurisdiction where the
Parent or the Merger-Sub does not file tax returns such that it
is or may be subject to taxation by that jurisdiction.
(vii) To the extent requested by FM&I, the Parent and the Merger-Sub
have made available to FM&I (or, in the case of tax returns to
be filed on or before the Closing, will make available)
complete and accurate copies of all tax returns and associated
work papers filed by or on behalf of the Parent or the Merger-
Sub for all taxable years ending on or prior to the Closing.
(viii) No agreements relating to allocating or sharing of any taxes
have been entered into by the Parent or the Merger-Sub.
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(ix) Neither the Parent nor the Merger-Sub has entered into any
transactions that could give rise to an understatement of
Federal Income Tax.
(x) Neither the Parent, the Merger-Sub nor any other person on
behalf of the Parent or the Merger-Sub has agreed to or is
required to make any adjustments pursuant to Section 481(a) of
the Code or any similar provision of state, local or foreign
law by reason of a change in accounting method initiated by the
Parent or the Merger-Sub or has any application pending with
any taxing authority requesting permission for any change in
accounting methods that relate to the business or operations of
the Parent or the Merger-Sub, and neither the Parent nor the
Merger-Sub has knowledge that the IRS has proposed any such
adjustment or change in accounting method.
(xi) Except as set forth on Schedule 3.02(s), neither the Parent nor
----------------
the Merger-Sub has been, or is now, a member of any
consolidated, combined, unitary or affiliated group of
corporations for any tax purposes.
(t) Accuracy of Information. The Parent has made with the Securities and
Exchange Commission ("SEC") all filings of Annual Reports on Form 10-
KSB and, of all Quarterly Reports on Form 10-QSB since the end of its
latest fiscal year end, as required by the Securities Exchange Act of
1934, as amended (all such filings and any future filings made
thereunder are collectively, the "Exchange Act Filings"). None of the
Exchange Act Filings contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were
35
<PAGE>
made, not misleading. Neither the SEC nor any state regulatory
authority has issued any order preventing or suspending the use of any
preliminary prospectus or registration statement or any part thereof,
and no proceedings for a stop order suspending the effectiveness of
any of the Company's securities have been instituted or are pending or
threatened.
(u) NASD Report.
(i) To the knowledge of the Parent, the Parent has made all
requisite filings with the National Association of Securities
Dealers (the "NASD") and the Over-the-Counter Bulletin Board
(the "OTCBB") pursuant to Rule 6740 (the "Rule"). As of the date
of filing thereof, such filings (i) complied as to form in all
material respects with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules promulgated by
the NASD, and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(ii) As of the date hereof, the Parent's Common Stock is quoted on
the OTCBB and, since the declaration or ordering of
effectiveness of the registration statement on Form 10 of the
Parent (filed under the March 12, 1991, as amended or
supplemented from time to time (as so amended and supplemented,
the "Form 10"), the Parent, to the best knowledge and
information of Parent and its officers and directors, has been
and shall continue to be in compliance with the NASD Eligibility
36
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Rule for the trading of its securities on the OTC
Bulletin Board, as effective on the date hereof.
(iii) No quotation is being submitted or published, directly or
indirectly, on behalf of the Parent or any director or
officer, or any person, directly or indirectly, who is
the beneficial owner of more than ten percent (10%) of
the outstanding shares of any equity security of the
Parent.
(v) Investment Company. Neither Parent nor Merger-Sub is an
"Investment Company" as that term is defined under the
Investment Company Act of 1940, as amended.
(w) Bank Accounts. Schedule 3.02(w) sets forth the names and
locations of all banks, trust companies, savings and loan
associations and other financial institutions at which Parent
maintain safe deposit boxes or accounts of any nature and the
names of all persons authorized to draw thereon, make
withdrawals therefrom or have access thereto.
(x) Employee Plans. Except as disclosed in Schedule 3.02(x), Parent
does not have any bonus, deferred compensation, pension,
profit-sharing, retirement, stock purchase, stock option or any
other fringe benefit plan, arrangement or practice, whether
formal or informal. Parent does not have and has never
maintained any employee benefit plan within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
(y) Leaseholds. Neither the whole nor any portion of the leaseholds
or any other assets of Parent is subject to any governmental
decree or order to be sold or is being condemned, expropriated
or otherwise taken by any public authority with or
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without payment of compensation therefor, nor to the best
knowledge of Parent has any such condemnation, expropriation or
taking been proposed.
(z) Environmental Matters.
(i) To the best knowledge of Parent, Parent is in compliance
in all material respects with all applicable federal,
state and local laws and regulations relating to
pollution control and environmental contamination,
including, without limitation, all discharge or disposal
of Hazardous Materials (as defined below). Except as set
forth in Schedule 3.02(z)-1 annexed hereto, to the best
knowledge of Parent, Parent has not been alleged to be
in violation of, or been subject to any administrative
or judicial proceeding pursuant to, such laws or
regulations either now or at any time during the past.
Except as set forth in Schedule 3.02(z)-2, there are no
facts or circumstances that Parent reasonably expects
could form the basis for the assertion of any Claim (as
defined below) against Parent relating to environmental
matters including, but not limited to, any Claim arising
from past or present environmental practices asserted
under CERCLA or RCRA (each as defined below), or any
other federal, state or local environmental statute or
regulation.
(ii) For purposes of this Agreement, the following terms
shall have the following meanings: (x) "Hazardous
Materials" shall mean materials defined as "hazardous
substances," "hazardous wastes" or "solid wastes" in (A)
the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Section 9601-9657,
and any amendment
38
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thereto ("CERCLA"), (B) the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901-6987, and any amendments thereto
("RCRA"), and (C) any similar state or local environmental
statute or regulation; and (y) "Claim" shall mean any and all
claims, demands, causes of action, suits, proceedings, and
decrees.
IV. COVENANTS.
4.01 Covenants of the Parent and the Merger-Sub.
The Parent and the Merger-Sub covenant and agree as follows:
(a) Certificate of Incorporation and By-Laws. As of the Closing Date, the
Certificate of Incorporation and By-Laws of the Merger-Sub shall be
substantially in the form of Schedules 3.02(b)-1 and 3.02(b)-2,
------------------- ---------
respectively, and the Certificate of Incorporation and By-Laws of the
Parent shall be substantially in the form of Schedules 1.05-1 and
----------------
1.05-2, respectively.
------
(b) Shares and Options. Except as contemplated hereby, until the earlier
of the Effective Time or the Termination of this Agreement pursuant to
Article VI (the "Release Time") without the prior written consent of
FM&I, no share of capital stock of the Parent or the Merger-Sub or any
option or warrant for any such share, right to subscribe to or
purchase any such share, or security convertible into or exchangeable
for any such share, shall be issued or sold by the Parent or the
Merger-Sub, nor shall the Parent or the Merger-Sub enter into any
agreement or commitment to effect any such issuance or sale.
(c) Dividends and Purchases of Stock. Until the Release Time, without the
prior written consent of FM&I, no cash or non-cash dividend, or
liquidating or other distribution or stock split shall be authorized,
declared, paid, or effected by the
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Parent or the Merger-Sub in connection with their respective
outstanding capital stock except as set forth in Schedule 4.01(c)
----------------
hereto.
(d) Borrowing of Money; Working Capital. Until the Release Time, neither
the Parent nor the Merger-Sub shall incur indebtedness for borrowed
money except as set forth on Schedule 3.02(b)(iv). Until the Release
--------------------
Time, neither the Parent nor the Merger-Sub shall guarantee the
borrowing of money by any third party, enter into or modify any
capital or operating lease or enter into any agreement.
(e) Access. Until the Release Time, the Parent and the Merger-Sub will
afford the directors, counsel, agents, investment bankers,
accountants, and other representatives of FM&I reasonable access to
the plants, properties, books, and records of the Parent and the
Merger-Sub, will permit them to make extracts from and copies of such
books and records, and will from time to time furnish FM&I with such
additional financial and operating data and other information as to
the financial condition, results of operations, businesses,
properties, assets, liabilities, or future prospects of the Parent and
the Merger-Sub as FM&I from time to time may reasonably request.
(f) Conduct of Business. Except as otherwise contemplated or permitted
hereby, until the Release Time, neither the Parent nor the Merger-Sub
shall take any action that would or is reasonably likely to result in
any of the representations or warranties of the Parent or the Merger-
Sub set forth in this Agreement being untrue at the Closing Date, or
in any of the conditions to the Merger set forth in Article V not
being satisfied. Except as otherwise contemplated or permitted
40
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hereby, until the Release Time, the Parent or the Merger-Sub will
conduct their affairs in all respects only in the ordinary course.
(g) Advice of Changes. Until the Release Time, the Parent and the Merger-
Sub will promptly advise FM&I in a reasonably detailed written notice
of any fact or occurrence or any pending threatened occurrence of
which it obtains knowledge and which (if existing and known at the
date of the execution of this Agreement) would have been required to
be set forth or disclosed in or pursuant to this Agreement, which (if
existing or known at any time prior to or at the Effective Time) would
make the performance by any party of a covenant contained in this
Agreement impossible or make such performance materially more
difficult in the absence of such fact or occurrence, or which (if
existing or known at the time of the Effective Time) would cause a
condition to any party's obligations under this Agreement not to be
fully satisfied.
(h) Public Statements. Before either the Parent or the Merger-Sub releases
any information concerning this Agreement, the Merger, or any other
transactions contemplated by this Agreement which is intended for or
is reasonably expected to result in public dissemination thereof, the
Parent and the Merger-Sub shall cooperate with FM&I, shall furnish
drafts of all documents or proposed oral statements to FM&I for
comments, and shall not release any such information without the prior
consent of FM&I; provided, however, that the foregoing shall not be
deemed to prevent the Parent or the Merger-Sub from releasing any
information or making any disclosure to the extent that the Parent or
the Merger-Sub reasonably determines that it is required to do so by
law. Specifically, the
41
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parties agree that within 15 days of the execution of this Agreement,
Parent shall file a Current Report on Form 8-K, to report the
transactions which are the subject of this Agreement; FM&I shall
cooperate with Parent in the preparation of said Report on Form 8-K,
which Report shall be approved by Counsel for FM&I in an expeditious
manner.
(i) Other Proposals. Until the Release Time the Parent shall not authorize
or permit any officer, director, employee, counsel, agent, investment
banker, accountant, or other representative of the Parent, directly or
indirectly, to: (x) initiate contact with any person or entity in an
effort to solicit any Takeover Proposal (as such term is defined in
this Section 4.01(i)); (y) cooperate with, or furnish or cause to be
furnished any non-public information concerning the financial
condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of the Parent to, any person or
entity in connection with any Takeover Proposal; (z) negotiate with
any person or entity with respect to any Takeover Proposal; or (xx)
enter into any agreement or understanding with the intent to effect a
Takeover Proposal; provided, however, that the Parent shall be
entitled to take any action described in the foregoing clauses (x)-
(xx) if and to the extent that the Board of Directors of the Parent
determines in good faith, based on the advice of their respective
counsel, that the failure to take any such action would violate their
fiduciary duties to the stockholders of the Parent. The Parent will
immediately give written notice to FM&I of the details of any Takeover
Proposal of which the Parent becomes aware. As used in Section
4.01(i), "Takeover Proposal" shall mean any proposal, other than as
contemplated by this Agreement, for a merger,
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consolidation, reorganization, other business combination, or
recapitalization involving the Parent, for the acquisition of a ten
percent (10%) or greater interest in the equity or in any class or
series of capital stock of the Parent, for the acquisition of the
right to cast ten percent (10%) or more of the votes on any matter
with respect to the Parent, or for the acquisition of one of their
divisions or of a substantial portion of any of their respective
assets, the effect of which may be to prohibit, restrict, or delay the
consummation of the Merger or any of the other transactions
contemplated by this Agreement, or impair the contemplated benefits to
FM&I of the Merger or any of the other transactions contemplated by
this Agreement.
(j) Consents Without Any Condition. Neither the Parent nor the Merger-Sub
shall make any agreement or reach any understanding, not approved in
writing by FM&I, as a condition for obtaining any consent,
authorization, approval, order, license, certificate, or permit
required for the consummation of the transactions contemplated by this
Agreement.
(k) Transfer Taxes. The Parent and the Merger-Sub shall timely prepare and
file any declaration or filing necessary to comply with any transfer
tax statutes that require any such filing before the Effective Time.
(l) Exchange Act Filings. The Parent shall prepare and file in a timely
manner any Exchange Act Filings to be made prior to the Closing Date
and present management of Parent shall reasonably cooperate with
respective managements of FM&I with respect to any such filings to be
made after the Closing Date. If at any time prior to the Closing Date
the Parent finds that any Exchange Act Filings
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contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading, the Parent shall, upon becoming aware of
any such untrue statement or omission, promptly notify FM&I.
(m) Compliance With Listing Requirements. To the best knowledge and belief
of Parent, Parent is in substantial compliance with all reporting
requirements under the Exchange Act and believes that it has complied
with all present requirements for the listing and trading of its
securities on the OTC Bulletin Board. In the event that any deficiency
therein is discovered prior to the Closing Date, Parent shall
immediately notify FM&I thereof and shall use its reasonable best
efforts to correct such deficiency prior to the Closing Date.
(n) CUSIP; Symbol. The Parent shall use its best efforts to obtain a CUSIP
number from the CUSIP Service Bureau for the Parent Common Stock to be
issued pursuant to the Merger and to cause the Parent's trading symbol
to be changed on the OTCBB as instructed by FM&I as soon as
practicable.
(o) Other Covenants. Parent agrees that, as a condition precedent to the
Closing Date, it shall take all action reasonable and necessary to (i)
cause the name of Parent to be changed to "FANTASTICON, INC." or such
other name as shall be requested by the Fantasticon.com shareholders
if that name is unavailable in Nevada; (ii) repay the outstanding loan
to Robert Sturges, a shareholder of Parent; (iii) cause all mining
claims presently held by Parent to be transferred to Rapid River, Inc.
in consideration of the assumption of all obligations in connection
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<PAGE>
therewith; (iv) prior to the Closing Date, cause a reverse split of
its shares of common stock on the basis of one new share for every two
shares presently issued and outstanding; and (v) request and deliver
at the Closing, effective on the Closing Date, the resignation of all
of its officers and directors.
4.02 Covenants of Fantasticon.com., Madman and Impact
Fantasticon.com covenants and agrees as follows:
(a) Certificate of Incorporation and By-Laws. As of the Closing Date, the
Certificates of Incorporation and By-Laws of FM&I shall be
substantially in forms set forth on Exhibits 1.04-1 and 1.04-2,
--------------- ------
respectively.
(b) Shares and Options. Except as contemplated hereby, until the earlier
of the Effective Time or the Termination of this Agreement pursuant to
Article VI (the "Release Time") without the prior written consent of
Parent and Merger-Sub, no share of capital stock of any of
Fantasticon.com, Madman or Impact or any option or warrant for any
such share, right to subscribe to or purchase any such share, or
security convertible into or exchangeable for any such share, shall be
issued or sold by any of Fantasticon.com, Madman or Impact, nor shall
any of Fantasticon.com, Madman or Impact enter into any agreement or
commitment to effect any such issuance or sale.
(c) Dividends and Purchases of Stock. Until the Release Time, without the
prior written consent of the Parent and Merger-Sub, no cash or non-
cash dividend, or liquidating or other distribution or stock split
shall be authorized, declared, paid, or effected by any of
Fantasticon.com, Madman or Impact in connection with its outstanding
capital stock.
45
<PAGE>
(d) Borrowing of Money; Working Capital. Until the Release Time, FM*T
shall not incur indebtedness for borrowed money or guarantee the
borrowing of money by any third party, or enter into or modify any
capital or operating lease.
(e) Access. Until the Release Time, FM&I will afford the directors,
counsel, agents, investment bankers, accountants, and other
representatives of the Parent and the Merger-Sub reasonable access to
the plants, properties, books, and records of FM&I, will permit them
to make extracts from and copies of such books and records, and will
from time to time furnish the Parent and the Merger-Sub with such
additional financial and operating data and other information as to
the financial condition, results of operations, businesses,
properties, assets, liabilities, or future prospects of FM&I as the
Parent and the Merger-Sub from time to time may reasonably request.
(f) Conduct of Business. Until the Release Time, FM&I shall not take any
action that would or is reasonably likely to result in any of the
representations or warranties of FM&I set forth in this Agreement
being untrue at the Closing Date or to any of the conditions to the
Merger set forth in Article V not being satisfied. Until the Release
Time, FM&I will use all reasonable efforts to preserve the business
operations of FM&I intact, to keep available the services of its
present personnel, and to preserve the good will of its suppliers,
customers, and others having business relations with any of them.
(g) Advice of Changes. Until the Release Time, FM&I will promptly advise
the Parent and the Merger-Sub in a reasonably detailed written notice
of any fact or occurrence or any pending threatened occurrence of
which it obtains knowledge
46
<PAGE>
and which (if existing or known at the date of the execution of this
Agreement) would have been required to be set forth or disclosed in or
pursuant to this Agreement, which (if existing and known at any time
prior to or at the Effective Time) would make the performance by any
party of a covenant contained in this Agreement impossible or make
such performance materially more difficult than in the absence of such
fact or occurrence, or which (if existing and known at the time of the
Effective Time) would cause a condition to any party's obligations
under this Agreement not to be fully satisfied.
(h) Public Statements. Before FM&I release any information concerning this
Agreement, the Merger, or any of the other transactions contemplated
by this Agreement which is intended for, or is reasonably expected to,
result in public dissemination thereof, FM&I shall cooperate with the
Parent and the Merger-Sub, shall furnish drafts of all documents or
proposed oral statements to the Parent and the Merger-Sub for
comments, and shall not release any such information without the prior
consent of the Parent and the Merger-Sub; provided, however, that the
foregoing shall not be deemed to prevent FM&I from releasing any
information or making any disclosure to the extent FM&I reasonably
determines that it is required to do so by law. Further, the parties
agree that within 15 days of the execution of this Agreement, Parent
shall file a Current Report on Form 8-K, to report the transactions
which are the subject of this Agreement; FM&I shall cooperate with
Parent in the preparation of said Report on Form 8-K, which Report
shall be approved by Counsel for FM&I in an expeditious manner.
47
<PAGE>
(i) Other Proposals. Until the Release Time, FM&I shall not authorize or
permit any officer, director, employee, counsel, agent, investment
banker, accountant, or other representative of FM&I, directly or
indirectly, to (x) initiate contact with any person or entity in an
effort to solicit any Takeover Proposal (as such term is defined in
this Section 4.02(i)); (y) cooperate with, or furnish or cause to be
furnished any non-public information concerning the financial
condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of Fantasticon.com to, any person or
entity in connection with any Takeover Proposal; (z) negotiate with
any person or entity with respect to any Takeover Proposal; or (xx)
enter into any agreement or understanding with the intent to effect a
Takeover Proposal; provided, however, that each of Fantasticon.com,
Madman and Impact shall be entitled to take any action described in
the foregoing clauses (x)-(xx) if and to the extent that their
respective Boards of Directors of Fantasticon.com determine in good
faith, based on the advice of their counsel, that the failure to take
any such action would violate their fiduciary duties to their
stockholders will immediately give written notice to the Parent of the
details of any Takeover Proposal of which FM&I become aware. As used
in Section 4.02(i), "Takeover Proposal" shall mean any proposal, other
than as contemplated by this Agreement, for a merger, consolidation,
reorganization, other business combination, or recapitalization
involving any of Fantasticon.com, Madman or Impact for the acquisition
of a ten percent (10%) or greater interest in the equity or in any
class or series of capital stock of any Fantasticon.com, Madman or
Impact for the acquisition of the right to cast ten percent (10%) or
48
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more of the votes on any matter with respect to any of
Fantasticon.com, Madman or Impact or for the acquisition of one of
their divisions or of a substantial portion of any of their respective
assets, the effect of which may be to prohibit, restrict, or delay the
consummation of the Merger or any of the other transactions
contemplated by this Agreement, or impair the contemplated benefits to
the Parent of the Merger or any of the other transactions contemplated
by this Agreement.
(j) Approval of Stockholders. FM&I shall, through their respective Boards
of Directors, duly call, give notice of, convene, and hold meetings of
its stockholders for the purpose of voting on the ratification and
approval of this Merger Agreement as soon as reasonably practicable
following the date hereof, or shall take such other action as will
satisfy the requirement of stockholder approval under Delaware law.
(k) Indentification. Henry Mayers shall identify Fantasticon.com against
any liability for payroll taxes of FM&I for periods prior to Closing.
4.03 Amendment to SEC Filings.
The Parent shall prepare and file with the SEC such amendment, if any, as
counsel for the parties reasonably believes to be required under the 34 Act
as soon as reasonably practicable after the date hereof if required to
effect the transactions contemplated hereby. The Parent shall also take any
action (other than qualifying as a foreign corporation or taking any action
which would subject it to service of process in any jurisdiction where the
Parent is not now so qualified or subject) required to be taken under
applicable state "Blue Sky" or securities laws in connection with the
issuance of
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the Parent Common Stock in connection with the Merger. Parent, Merger-Sub
and FM&I shall cooperate with each other in the preparation of any filings
required to be made with the SEC, and each shall notify the other of the
receipt of any communication of the SEC with respect to any such filings
and of any requests by the SEC for any amendment or supplement thereto or
for additional information.
V. CONDITIONS.
5.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger are subject
to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
adopted by the requisite vote of the stockholders of each of
Fantasticon.com, Madman and Impact.
(b) State Securities Laws. The Parent shall have received all state
securities or "Blue Sky" permits and other authorizations necessary to
issue the Parent Common Stock pursuant to the Merger.
(c) No Injunctions or Restraints. No court of competent jurisdiction or
other competent Governmental or Regulatory Authority shall have
enacted, issued, promulgated, enforced, or entered any Law or Order
(whether temporary, preliminary or permanent) which is then in effect
and has the effect of making illegal or otherwise restricting,
preventing, or prohibiting consummation of the Merger or the other
transactions contemplated by this Agreement.
(d) Consents and Approvals. Other than the filings provided for by Section
1.02, all consents, approvals and actions of, filings with and notices
to any Governmental or Regulatory Authority or any other public or
private third parties required of the
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Parent, the Merger-Sub or FM&I to consummate the Merger shall have
been obtained, all in form and substance reasonably satisfactory to
the Parent, the Merger-Sub and FM&I, and no such consent, approval, or
action shall contain any term or condition which could be reasonably
expected to result in a material diminution of the benefits of the
Merger to the stockholders of the Parent, the Merger-Sub and FM&I.
5.02 Conditions to Obligations of the Parent and the Merger-Sub.
The obligations of the Parent and the Merger-Sub to effect the Merger is
further subject to the fulfillment, at or prior to the Closing, of each of
the following additional conditions (all or any of which may be waived in
whole or in part by the Parent and the Merger-Sub and in their sole
discretion):
(a) Representations and Warranties. The representations and warranties
made by FM&I in this Agreement shall be true and correct in all
material respects as of the Closing Date as though made on and as of
the Closing Date or, in the case of representations and warranties
made as of a specified date earlier than the Closing Date, on and as
of such earlier date, and FM&I. shall have delivered to the Parent and
Merger-Sub a certificate, dated the Closing Date and executed on
behalf of FM&I by duly authorized officers, to such effect.
(b) Performance of Obligations. FM&I shall have performed and complied
with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied
with by FM&I at or prior to the Closing, and FM&I shall have delivered
to the Parent and Merger-Sub a certificate dated the Closing Date and
executed on behalf of FM&I by duly authorized officers, to such
effect.
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(c) Other Closing Documents. FM&I shall have delivered to the Parent and
the Merger-Sub at or prior to the Closing Date such other documents as
the Parent and the Merger-Sub may reasonably request in order to
enable the Parent and the Merger-Sub to determine whether the
conditions to their obligations under this Agreement have been met and
otherwise to carry out the provisions of this Agreement.
(d) Review of Proceedings. All actions, proceedings, instruments, and
documents required by the Parent and the Merger-Sub to carry out this
Agreement or incidental thereto and all other related legal matters
shall be subject to the reasonable approval of Simone V. Palazzolo,
Esq, counsel to the Parent and the Merger-Sub, and FM&I shall have
furnished such documents as such counsel may have reasonably requested
for the purpose of enabling it to pass upon such matters.
(e) Legal Opinion. The Parent and the Merger-Sub shall receive at the
Closing Date an opinion of D'Ancona & Pflaum LLC, counsel for FM&I,
addressed to the Parent and the Merger-Sub, in a form reasonably
acceptable to the Parent and the Merger-Sub, a draft of which shall be
delivered to Parent not less than ten (10) days prior to the Closing
Date, as to the following matters:
(i) Each of Fantasticon.com, Madman and Impact is a corporation duly
organized, validly existing and in good standing under the laws
of the state of Delaware, with all requisite corporate power and
authority to carry on the business now conducted and to own and
operate its respective properties;
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(ii) The capital stock of each of Fantasticon.com, Madman and Impact
and the number of shares issued and outstanding immediately
prior to the acquisition, all of which are duly authorized,
issued and outstanding, and are non-assessable shares of
Fantasticon.com, are as indicated in Schedule 3.01(b)(ii)
--------------------
hereof;
(iii) All necessary corporate proceedings, including appropriate
action by the shareholders and directors of each of
Fantasticon.com, Madman and Impact to approve this Agreement and
the execution, delivery and performance thereof and all other
proceedings required by law or by the provisions of this
Agreement have been taken, and each of Fantasticon.com, Madman
and Impact has the full right, power and authority to enter into
this Agreement and to carry out the terms thereof without
further action; and
(iv) To the best knowledge of such counsel, except as herein
indicated, there are no suits, action, claims or proceedings
pending or threatened against any of Fantasticon.com, Madman and
Impact nor to the knowledge of such counsel is any of
Fantasticon.com, Madman or Impact a party to or subject to any
order, judgement, decree, agreement, stipulation or consent of
or with any court or administrative agency, nor, to the best
knowledge of such counsel, is any investigation pending or
threatened against any of Fantasticon.com, Madman or Impact.
(f) Legal Action. There shall not have been instituted or threatened any
legal proceeding relating to, or seeking to prohibit, or otherwise
challenge the
53
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consummation of, the transactions contemplated by this Agreement, or
to obtain substantial damages with respect thereto.
5.03 Conditions to Obligation of Fantasticon.com to Effect the Merger.
The obligation of FM&I to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following
additional conditions (all or any of which may be waived in whole or in
part by FM&I in their sole discretion):
(a) Representations and Warranties. The representations and warranties
made by the Parent and the Merger-Sub in this Agreement shall be true
and correct in all material respects as of the Closing Date as though
made on and as of the Closing Date or, in the case of representations
and warranties made as of a specified date earlier than the Closing
Date, on and as of such earlier date, and the Parent and the Merger-
Sub shall have delivered to FM&I a certificate, dated the Closing Date
and executed on behalf of the Parent and the Merger-Sub by a duly
authorized officer, to such effect.
(b) Performance of Obligations. The Parent and the Merger-Sub shall have
performed and complied with in all material respects, each agreement,
covenant, and obligation required by this Agreement to be so performed
or complied with by the Parent and the Merger-Sub at or prior to the
Closing, and the Parent and the Merger-Sub shall have delivered to
FM&I a certificate, dated the Closing Date and executed on behalf of
the Parent and the Merger-Sub by a duly authorized officer, to such
effect.
(c) Other Closing Documents. The Parent and the Merger-Sub shall have
delivered to FM&I at or prior to the Effective Time such other
documents as FM&I may reasonably request in order to enable FM&I to
determine whether the conditions
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to its obligations under this Agreement have been met and otherwise to
carry out the provisions of this Agreement.
(d) Review of Proceedings. All actions, proceedings, instruments, and
documents required by FM&I to carry out this Agreement or incidental
thereto and all other related legal matters shall be subject to the
reasonable approval of D'Ancona & Pflaum LLC, counsel to FM&I, and the
Parent and the Merger-Sub shall have furnished such documents as such
counsel may have reasonably requested for the purpose of enabling it
to pass upon such matters.
(e) Legal Opinion. The Boards of Directors of Fantasticon.com, Madman and
Impact shall receive at the Closing Date an opinion of Simone V.
Palazzolo, Esq., counsel for the Parent and the Merger-Sub, addressed
to Fantasticon.com, in a form reasonably acceptable to
Fantasticon.com., a draft of which shall be delivered to Parent not
less than ten (10) days prior to the Closing Date, as to the following
matters:
(i) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the state of Nevada and it has
all requisite corporate power and authority to carry on the
business now conducted and to own and operate its respective
properties;
(ii) Merger-Sub is a corporation duly organized, validly existing and
in good standing under the laws of the state of Nevada and it has
all requisite corporate power and authority to carry on the
business now conducted and to own and operate its respective
properties;
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(iii) The capital stock of Parent and the number of shares issued and
outstanding immediately prior to the acquisition, all of which
are duly authorized, issued and outstanding, and are non-
assessable shares of Parent, are as indicated herein;
(iv) All necessary corporate proceedings, including appropriate
action by the shareholders and directors of Parent and Merger-
Sub, to approve this Agreement and the execution, delivery and
performance thereof and all other proceedings required by law
or by the provisions of this Agreement have been taken, and
Parent and Merger-Sub have the full right, power and authority
to enter into this Agreement and to carry out the terms thereof
without further action;
(v) To the best knowledge of such counsel, except as herein
indicated, there are no suits, action, claims or proceedings
pending or threatened against Parent or Merger-Sub, nor to the
knowledge of such counsel is Parent or Merger-Sub a party to or
subject to any order, judgement, decree, agreement, stipulation
or consent of or with any court or administrative agency, nor,
to the best knowledge of such counsel, is any investigation
pending or threatened against Parent or Merger-Sub.
(f) Legal Action. There shall not have been instituted or threatened any
legal proceeding relating to, or seeking to prohibit or otherwise
challenge the consummation of, the transactions contemplated by this
Agreement, or to obtain substantial damages with respect thereto.
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(g) Reverse Split. Parent shall approve, subject to the Closing, a reverse
split of its issued and outstanding capital stock immediately prior to
the Closing Date on the basis of one new share for every two then
issued and outstanding shares.
(h) Change of Name. Immediately prior to the Closing of this transaction,
Parent shall take all action necessary to change the name of the
Parent to "FANTASTICON, INC." or such other name selected by the FM&I
shareholders in the event such name is not available in Nevada;
(i) Assignment of Name. Simultaneous with the change of name of Parent,
Parent shall execute an assignment of the right to use the name "SANTA
MARIA RESOURCES, INC." to Rapid River, Inc.
(j) Board of Directors. At the Closing Date, Parent's Board of Directors
shall resign and be replaced by the persons designated in Schedule
5.03(j) to serve as directors of the Company until the next annual
meeting of shareholders.
(k) Resignation of Existing Officers and Directors. At the Closing, Parent
shall deliver the resignation, effective as of the Closing, of its
present officers and directors;
(l) Repayment of Loans. Prior to the Closing, Parent shall repay an
outstanding loan in the amount of $41,237 presently due and owing to
Robert Sturges, a shareholder of Parent, and at the Closing shall
deliver to FM&I confirmation of the extinguishment of such
indebtedness;
(m) Transfer of Mining Claims. Prior to the Closing, Parent shall effect
the transfer of all mining claims and water rights presently owned by
Parent to Rapid River, Inc. in consideration of the agreement of Rapid
River, Inc. to assume all of the
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indebtedness and obligations of Parent in connection therewith, so as
to leave the Parent with no assets and no liabilities at the time of
the Closing.
(n) Indemnification. As of the Closing Date, FM&I shall have received from
Robert Sturges an agreement to indemnify FM&I for up to $41,237, for
all liabilities of the Parent with respect to the existing loan due to
him from the Parent, in form and substance satisfactory to FM&I.
(o) Capital. The Parent and the Merger-Sub shall be in strict compliance
with Section 3.02(b)(iii).
(p) Minimum Financing. Fantasticon.com shall have successfully completed
its pending private placement offering and have raised, either
directly or through the conversion of existing debt, a minimum of
$750,000. In the event that such minimum financing has not been
achieved on or before October 15, 2000 then, unless waived by FM&I in
its discretion, FM&I may terminate this Agreement. The right to
terminate this Agreement shall be in addition to, and not in
limitation of, any other right granted to Fantasticon.com to terminate
this Agreement pursuant to any other provision of this Agreement.
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VI. TERMINATION.
6.01 Termination.
This Agreement may be terminated, and the transactions contemplated hereby
may be abandoned at any time prior to the Effective Time, whether prior to
or after the Fantasticon.com stockholders' approval:
(a) By mutual written agreement of the parties hereto duly authorized by
action taken by or on behalf of their respective Boards of Directors.
(b) By either FM&I, the Parent or the Merger-Sub upon written notification
to the other party, if:
(i) the FM&I stockholders' approval shall not be obtained by reason
of the failure to obtain the requisite vote upon a vote held at a
meeting of such stockholders or pursuant to a written consent; or
(ii) facts exist which render impossible the satisfaction of one or
more of the conditions set forth in Section 5.01 and such are not
waived by the Parent, the Merger-Sub and FM&I.
(c) By the Parent and the Merger-Sub upon written notification to FM&I,
if:
(i) there has been a material breach of any representation, warranty,
covenant, or agreement on the part of FM&I set forth in this
Agreement which breach has not been cured within ten (10)
business days following receipt by FM&I of notice of such breach
from the Parent or the Merger-Sub or assurance of such cure
reasonably satisfactory to the Parent or the Merger-Sub have not
been given by or on behalf of FM&I within such ten (10) business
day period; or
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(ii) facts exist which render impossible the satisfaction of one or
more of the conditions set forth in Section 5.02 and such are
not waived by the Parent or the Merger-Sub; or
(iii) the Parent or its stockholders receive a proposal or offer for
any Takeover Proposal, other than pursuant to the transactions
contemplated by this Agreement, in connection with which the
Board of Directors of the Parent exercises any of its rights
specified in Section 4.01(i).
(d) By FM&I upon written notification to the Parent or the Merger-Sub, if:
(iv) at any time after October 15, 2000 if the Merger shall not have
been consummated on or prior to such date and such failure to
consummate the Merger is not caused by a breach of this Agreement by
FM&I; or (ii) there has been a material breach of any representation,
warranty, covenant, or agreement on the part of the Parent or the
Merger-Sub set forth in this Agreement which breach has not been cured
with ten (10) business days following receipt by the Parent or the
Merger-Sub of notice of such breach from FM&I or assurance of such
cure reasonably satisfactory to FM&I shall not have been given by or
on behalf of the Parent or the Merger-Sub within such ten (10)
business day period; or (iii) facts exist which render impossible the
satisfaction of one or more of the conditions set forth in Section
5.03 and such are not waived by FM&I.
6.02 Effect of Termination.
If this Agreement is validly terminated by the Parent, the Merger-Sub or
FM&I pursuant to Section 6.01, this Agreement shall forthwith become null
and void and there shall be no liability or obligation on the part of
either the Parent, the Merger-Sub or FM&I (or any
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of their respective officers, directors, representatives, or affiliates),
except that (i) the provisions of this Section 6.02 will continue to apply
following any such termination, and (ii) nothing contained herein shall
relieve the Parent, the Merger-Sub or FM&I from liability for willful or
intentional breach of their respective obligations contained in this
Agreement or for fraud.
VII. MISCELLANEOUS.
7.01 Fees and Expenses.
Except as otherwise provided in this Agreement, all fees and expenses
incurred in connection with this Agreement, the documents appurtenant
hereto and the transactions contemplated hereby and thereby shall be paid
by the party incurring such fees or expenses, whether or not the Closing
occurs.
7.02 Further Actions.
Each party hereto will execute such further documents and instruments and
take such further actions as may reasonably be requested by the other party
to consummate the Merger, to vest the Surviving Corporation with full title
to all assets, properties, rights, approvals, immunities, and franchises of
either of the Constituent Entities or to effect the other purposes of this
Agreement.
7.03 Availability of Equitable Remedies.
Since a breach of the provisions of this Agreement could not adequately be
compensated by money damages, any party shall be entitled, either before or
after the Effective Time, in addition to any other right or remedy
available to it, to an injunction restraining such breach or threatened
breach and to specific performance of any such provision of this Agreement,
and, in either case, no bond or other security shall be required in
connection
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therewith, and the parties hereby consent to the issuance of such an
injunction and to the ordering of specific performance.
7.04 Survival.
The representations, warranties, covenants, and agreements contained in
this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Merger for a period of one (1) year after the Effective
Time.
7.05 Modification.
This Agreement may be amended, supplemented, or modified by action taken by
or on behalf of the respective Boards of Directors of the parties hereto at
any time prior to the Effective Time. No such amendment, supplement, or
modification shall be effective unless set forth in a written instrument
duly executed by or on behalf of each party hereto.
7.06 Notices.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested or by Federal Express, express mail or similar overnight
delivery or courier service or delivered (in person or by telecopy, telex
or similar telecommunications equipment) against receipt to the party to
which it is to be given at the address of such party set forth in the
preamble to this Agreement (or to such other address as the party shall
have furnished in writing in accordance with the provisions of this Section
7.06) with copies (which copies shall not constitute notice) as follows:
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If to the Parent or the Merger-Sub 5015 Sahara Avenue, Suite 125-209, Las
Vegas, Nevada 76022
Attn: Robert Sturges
With a copy to: Simone V. Palazzolo, Esq.
7 Penn Plaza, Suite 422
New York, NY 10001
If to FM&I: 17117 W. Nine Mile Road,
Suite 1515,
Southfield, Michigan 48075
Attn: Henry Mayers
With a copy to: D'Ancona & Pflaum LLC
111 East Wacker Drive, Suite 2800
Chicago, Illinois 60601
Attn: Steve Curtis
Any notice shall be addressed to the attention of the President. Any notice
or other communication given by certified mail shall be deemed given three
business days after certification thereof, except for a notice changing a
party's address which will be deemed given at the time of receipt thereof.
Any notice given by other means permitted by this Section 7.06 shall be
deemed given at the time of receipt hereof.
7.07 Waiver.
Any waiver by any party of a breach of any term of this Agreement shall not
operate as or be construed to be a waiver of any other breach of that term
or of any breach of any other term 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 and be
authorized by a resolution of the Board of Directors or by an officer of
the waiving party.
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7.08 Binding Effect.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the Parent, the Merger-Sub and FM&I, and their respective
successors and assigns.
7.09 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.
7.10 Severability.
If any provision of this Agreement is hereafter held to be invalid, illegal
or unenforceable for any reason, such provision shall be reformed to the
maximum extent permitted so as to preserve the parties' original intent,
failing which, it shall be severed .If any provision of this Agreement is
hereafter held to be invalid, illegal, or unenforceable for any reason,
such provision shall be reformed to the maximum extent permitted so as to
preserve the parties' original intent, failing which, it shall be severed
from this Agreement, with the balance of this Agreement continuing in full
force and effect. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable. If any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons
and circumstances.
7.11 Merger; Assignability.
This Agreement and the other agreements to be delivered pursuant to this
Agreement, and the Exhibits and Schedules attached, or to be attached,
hereto and thereto, set forth the entire understanding of the parties with
respect to the subject matter hereof and supersede all existing agreements
concerning such subject matter. This Agreement may not be
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assigned by any party without the prior written consent of each other party
to this Agreement.
7.12 Schedules and Exhibits.
Any and all Schedules and/or Exhibits required to be annexed hereto that
are not available on the date on which this Agreement shall be executed
shall be provided by party required to do so not less than ten (10) days
prior to the Closing Date and all shall be in form and substance reasonably
acceptable to counsel for the other party.
7.13 Headings.
The headings in this Agreement are solely for convenience of reference and
shall be given no effect in the construction or interpretation of this
Agreement.
7.14 Counterparts; Governing Law; Jurisdiction.
This Agreement may be executed in any number of counterparts (and by
facsimile), each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
without giving effect to the rules governing the conflict of laws. Any
action, suit, or proceeding arising out of, based on, or in connection with
this Agreement, the Merger, or the other transactions contemplated hereby,
or any document relating hereto or delivered in connection with the
transactions contemplated hereby, may be brought only and exclusively in
the Federal or State Courts located in the State of New York; and each
party covenants and agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of such court if it has been duly
served with process, that its property is exempt or immune from attachment
or execution, that the action, suit, or
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proceeding is brought in an inconvenient forum, that the venue of the
action, suit, or proceeding is improper, or that this Agreement has been
executed by duly authorized subject matter hereof may not be enforced in or
by such court.
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IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
officers of each of the parties hereto as of the date first above written.
SANTA MARIA RESOURCES, INC., Parent
By:_____________________________________
Name: Hubert Stroud
Title: President
FANTASTICON.COM, INC. (Nevada) - Merger-Sub
By:_____________________________________
Name: Hubert Stroud
Title: President
FANTASTICON.COM, INC.
By:_____________________________________
Name: Henry T. Mayers
Title: President
MADMAN BACKSTAGE PRODUCTIONS, INC.
By:_____________________________________
Name: Jill Mayers
Title: President
IMPACT INTERACTIVE, INC.
By:_____________________________________
Name: Henry T. Mayers
Title: President
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