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Title: |
Agreement and Plan of Merger |
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Date: |
2000 |
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Preview shows 29KB of 142KB total |
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$53 |
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ID: |
#1357973 |
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<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>AGREEMENT AND PLAN OF MERGER
<TEXT>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated August 1, 2000, by and among
PRE-CELL SOLUTIONS, INC., a Colorado corporation (hereinafter "Pre-Cell"),
TELECONEX, INC., a Florida corporation (hereinafter the "Company"), STEVEN T.
WATSON, CHRIS S. WATSON AND PAUL T. WATSON (collectively, the "Shareholders"),
and PRE-CELL SOLUTIONS, INC., a Florida corporation ("PCF"), a wholly-owned
subsidiary of Pre-Cell.
WITNESSETH:
WHEREAS, PCF is a wholly-owned subsidiary of Pre-Cell; and
WHEREAS, the Boards of Directors of Pre-Cell, PCF and the Company have
each determined that it is advisable and in the interests of their respective
shareholders to consummate, and have approved, the business combination
transaction provided for herein in which PCF will merge with and into the
Company so that the separate corporate existence of PCF shall cease and the
Company will be the Surviving Corporation (as defined below) (the "Merger"), all
upon the terms and subject to the conditions of this Agreement and in accordance
with the laws of the State of Florida; and
WHEREAS, the transaction provided for herein is intended to be
consummated in accordance with Section 607.1106 of the Florida Business
Corporation Act (the "Florida Business Corporation Act"); and
WHEREAS, in connection with said merger, each shareholder of the
Company is willing to surrender all of the issued and outstanding common shares
of the Company owned by such shareholder in exchange for the right to receive
certain common shares of Pre-Cell, as detailed herein, and further subject to
the covenants and undertakings of the parties hereto; and
WHEREAS, the terms and conditions of the Merger, the mode of carrying
the same into effect, the manner of converting the capital stock of the Company
into the right to receive common shares of Pre-Cell and such other terms and
conditions as may be required or permitted to be stated in this Agreement are
set forth below; and
WHEREAS, for Federal income tax purposes, it is intended by the parties
hereto that the Merger shall qualify as a tax-free reorganization within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code"), and that this Agreement shall constitute a
"Plan of Reorganization" for purposes of Section 368 of the Code.
WHEREAS, PCF and the Company and their respective shareholders desire
to make certain representations, warranties and agreements in connection with
the Merger and also to prescribe various conditions to the Merger;
<PAGE>
NOW, THEREFORE, in consideration of the mutual 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:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2), upon
the terms and subject to the conditions of this Agreement, PCF shall be merged
with and into the Company in accordance with the Florida Business Corporation
Act. The Company shall be the surviving corporation in the Merger (the
"Surviving Corporation") and the separate corporate existence of PCF shall
cease. PCF and the Company are sometimes referred to herein as the "Constituent
Corporations." As a result of the Merger, the outstanding shares of capital
stock of the Company shall be converted or cancelled in the manner provided in
Article II.
1.2 Effective Time. At the Closing (as defined in Section 1.3),
Articles of Merger shall be duly prepared and executed by the Company and PCF
and thereafter delivered to the Secretary of State of the State of Florida (the
"Secretary of State") for filing, as provided in Section 607.1105 of the Florida
Business Corporation Act, on, or as soon as practicable after, the Closing Date
(as defined in Section 1.3). The Merger shall become effective at the time
Articles of Merger are filed with the Florida Secretary of State (the "Effective
Time").
1.3 Closing. The closing of the Merger (the "Closing") will take place
at the offices of Tobin & Reyes, P.A., 7251 West Palmetto Park Avenue, Suite
205, Boca Raton, Florida 33433, or at such other place as the parties hereto
mutually agree, on the date that is five (5) days after the last of the closing
conditions set forth in Article VII and VIII have been satisfied or, if
permissible, waived in accordance with this Agreement, or on such other date as
the parties hereto mutually agree (the "Closing Date"). At the Closing there
shall be delivered to the Company and Pre-Cell the certificates and other
documents and instruments required to be delivered under Articles VII and VIII.
1.4 Articles of Incorporation and Bylaws of the Surviving Corporation.
At the Effective Time, (i) the Certificate of Incorporation of the Company as in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation, and (ii) the Bylaws of the Company
as in effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such Bylaws.
1.5 Directors and Officers of the Surviving Corporation. The directors
of the Surviving Corporation shall be Steve Watson, Paul Watson, Thomas Biddix,
and Tom Fricks, and the officers of the Surviving Corporation shall be Thomas E.
Biddix, Chief Executive Officer, Chris Watson, President, Tom Fricks,
Secretary-Treasurer, and Steve Watson and Paul Watson, Vice Presidents, in each
instance until their respective successors shall have been duly elected or
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<PAGE>
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and
Bylaws.
1.6 Effects of the Merger. Pursuant to Section 607.1106 of the Florida
Business Corporation Act, on the Effective Date, the corporate identity,
property, purposes, powers, franchises, rights and obligations of PCF shall be
transferred to, vest in, and be merged with the Company, without further act or
deed. The Company hereby appoints and designates the President and the Secretary
of the Surviving Corporation as its attorneys-in-fact to execute, acknowledge
and deliver on behalf of the Company any assignments, deeds, statements,
verifications or other instruments that are necessary or appropriate to
effectuate or evidence the transfer or vesting of any property, right, privilege
or franchise of the Company in the Surviving Corporation as a result of the
Merger.
1.7 Further Assurances. Each party hereto will execute such further
documents and instruments and take such further actions as may reasonably be
requested by one or more of the others to consummate the Merger, to vest the
Surviving Corporation with full title to all assets, properties, rights,
approvals, immunities and franchises of the Company or to effect the other
purposes of this Agreement.
ARTICLE II
CONVERSION OF SHARES
2.1 Conversion of Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(a) Capital Stock of the Company. Each issued and outstanding
share of the common stock, par value $10.00 per share, of the Company ("Company
Common Stock") shall be converted into and become 22.7778 (683,334/30,000) fully
paid and non-assessable shares of common stock, par value $.01 per share, of
Pre-Cell ("Pre-Cell Common Stock"). Each certificate representing outstanding
shares of Company Common Stock shall at the Effective Time represent shares of
Pre-Cell Common Stock determined by multiplying the number of shares of Company
Common Stock represented by such certificate immediately prior to the Effective
Time by 22.7778 (the "Merger Consideration").
(b) Cancellation of Treasury Stock and Stock Owned by the
Company. All shares of common stock, par value $0.01 per share, of the Company
that are owned by the Company as treasury stock shall be cancelled and retired
and shall cease to exist and no Pre-Cell Common Stock or other consideration
shall be delivered in exchange therefor. As used in this Agreement, "Subsidiary"
means, with respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which more than fifty percent (50%) of either
the equity interests in, or the voting control of, such corporation or other
organization is, directly or indirectly through Subsidiaries or otherwise,
beneficially owned by such party.
(c) Exchange Ratio for Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares to be canceled in
accordance with Section 2.1(b) and other than Dissenting Shares (as defined in
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<PAGE>
Section 2.1(e)), shall be converted into the right to receive Twenty Two and
fractional (22.7778) (the "Conversion Number") fully paid and non-assessable
shares of Pre-Cell Common Stock, subject to adjustment as follows: (i) if, prior
to the Effective Time, Pre-Cell shall pay a dividend in, subdivide, combine into
a smaller number of shares or issue by reclassification of its shares, any
shares of Pre-Cell Common Stock, the Conversion Number shall be multiplied by a
fraction, the numerator of which shall be the number of shares of Pre-Cell
Common Stock outstanding immediately after, and the denominator of which shall
be the number of such shares outstanding immediately before, the occurrence of
such event, and the resulting product shall from and after the date of such
event be the Conversion Number, subject to further adjustment in accordance with
this sentence; and (ii) if the average closing price of one share of Pre-Cell's
Common Stock is less than $2.00 per share during the five days immediately
preceding the Closing, then the number of shares of Pre-Cell Common Stock to be
delivered to the Shareholders or their designees shall be equal to the quotient
of (a) $1,025,000, divided by (b) seventy five percent (75%) of the closing
price of one share of Pre-Cell Common Stock on the day immediately preceding the
Closing.. All such shares of Company Common Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the shares of
Pre-Cell Common Stock and any cash in lieu of fractional shares of Pre-Cell
Common Stock to be issued or paid in consideration thereof (determined in
accordance with Section 2.2(e)), upon the surrender of such certificate in
accordance with Section 2.2, without interest.
(d) Newly Issued Shares of the Company. At the conclusion of
the aforesaid conversions and cancellations, one (1) share of Company Common
Stock shall be issued to Pre-Cell for par value consideration and the Company
shall become a wholly-oned subsidiary of Pre-Cell.
(e) Dissenting Shares.
(i) Notwithstanding any provision of this Agreement
to the contrary, the holder of each outstanding share of Company Common Stock
which has not voted in favor of the Merger, has perfected such holder's right to
an appraisal of such holder's shares in accordance with the applicable
provisions of the Florida Business Corporation Act and has not effectively
withdrawn or lost such right to appraisal (as "Dissenting Share"), shall not be
converted into or represent a right to receive the Merger Consideration pursuant
to Section 2.1(a), but the holder thereof shall be entitled only to such rights
as are granted by the applicable provisions of the Florida Business Corporation
Act; provided, however, that any Dissenting Share held by a person at the
Effective Time who shall, after the Effective Time, withdraw the demand for
appraisal or lose the right of appraisal, in either case pursuant to the Florida
Business Corporation Act, shall be deemed to be converted into, as of the
Effective Time, the right to receive the Merger Consideration pursuant to
Section 2.1(a).
(ii) The Company shall give Pre-Cell (x) prompt
notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other instruments served pursuant to the applicable provisions
of the Florida Business Corporation Act relating to the appraisal process
received by the Company and (y) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the Delaware law. The
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<PAGE>
Company will not voluntarily make any payments with respect to any demands for
appraisal and will not, except with the prior written consent of Pre-Cell,
settle or offer to settle any such demands.
2.2 Exchange of Certificates.
(a) As soon as practicable after the Effective Date, each
holder of a certificate or certificates which prior thereto represented validly
issued and outstanding shares of Company Common Stock shall surrender such
certificate or certificates to Pre-Cell or to its designated transfer agent, and
shall receive in exchange therefore a certificate representing the number of
shares of Pre-Cell Common Stock into which the shares of the Company's Common
Stock theretofore represented by the surrendered certificate or certificates
shall have been converted pursuant to Section 2.1(a) hereof. Until so
surrendered, each certificate that on the Effective Date represents issued and
outstanding shares of the Company's Common Stock shall be deemed for all
corporate purposes to evidence ownership of the number of shares of Pre-Cell
Common Stock into which the shares of Company Common Stock shall have been
converted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
The Company and the Shareholders, jointly and severally, to the best of
the Shareholders knowledge and belief after diligent inquiry (but without
consulting professionals such as outside counsel or accountants), represent and
warrant to PCF and Pre-Cell that the statements contained in this Article III
are true, correct and complete as of the date of this Agreement and will be
true, correct and complete as of the Effective Time (as though made then and as
though the Effective Time were substituted for the date of this Agreement
throughout this Article III), except as set forth in the schedules hereto.
3.1 Organization and Good Standing.
(a) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Florida with full power and authority (corporate and other) to own and lease its
properties and to conduct its business as currently conducted. The Company has
been duly qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each jurisdiction set forth on Schedule
3.1(a), such jurisdictions comprising all jurisdictions in which the Company
owns or leases any property, or conducts any business, so as to require such
qualification.
(b) The Company has no subsidiary nor owns or controls, or has
any other equity investment or other interest in, directly or indirectly, any
corporation, limited liability company, joint venture, partnership, association
or other entity.
3.2 No Conflicts. Except as set forth on Schedule 3.2, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not (a) conflict with or result in a
breach or violation of any material term or provision of, or constitute a
material default under (with or without notice or passage of time, or both), or
otherwise give any person a basis for accelerated or increased rights or
termination or nonperformance under, any indenture, mortgage, deed of trust,
5
<PAGE>
loan or credit agreement, lease, license or other agreement or instrument to
which the Company is a party or by which the Company is bound or affected or to
which any of the property or assets of the Company is bound or affected
including, without limitation, all arrangements in Section 3.19 hereof, (b)
result in the violation of the provisions of the Articles of Incorporation or
Bylaws of the Company or any legal requirement applicable to or binding upon it,
(c) result in the creation or imposition of any lien upon any property or asset
of the Company or (d) otherwise adversely affect the contractual or other legal
rights or privileges of the Company.
3.3 Capitalization. The authorized capital stock of the Company
consists solely of one thousand (1,000) shares of the Company Common Stock, of
which only thirty (30) shares are, and as the Effective Time will be, issued and
outstanding. All of the shares of the Company Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and outstanding.
Other than as set forth on Schedule 3.3, (i) there are no existing options,
warrants, right, calls or commitments of any character relating to the shares of
the Company Common Stock or any other capital stock or securities of the
Company, (ii) there are no outstanding securities or other instruments
convertible into or exchangeable for shares of the Company Common Stock or any
other capital stock or securities of the Company and no commitments to issue
such securities or instruments and no person has any right of first refusal,
preemptive right, subscription right or similar right with respect to any shares
of the Company Common Stock or any other capital stock or securities of the
Company.
3.4 Financial Statements.
(a) Schedule 3.4 hereto contains true and complete copies of
(i) the unaudited balance sheet of the Company at June 30, 2000 (the "Company
Balance Sheet Date"), and the related unaudited statement of income for the four
months then ended, and (ii) the unaudited balance sheet of the Company at
December 31, 1999, and the related unaudited statement of income for the fiscal
year then ended (the financial statements described in clause (i) and (ii) above
are collectively referred to as the "Company Financial Statements").
(b) The Company Financial Statements present fairly the
financial condition of the Company as of the dates indicated therein and the
results of operations of the Company for the periods specified therein, have
been prepared with principles applied on a consistent basis, have been derived
from the accounting records of the Company, and do not contain any untrue
statement of material fact or omit to state a material fact.
3.5 Title to Property; Encumbrances.
(a) Title to and Condition of Properties. Except as set forth
in Schedule 3.5, the Company has good, valid and marketable title to all of its
assets and properties of every kind, nature and description, tangible or
intangible, wherever located, which constitute all of the property (including
without limitation property and assets shown or reflected on the Company's
Financial Statements now used in and necessary for the conduct of its business
as presently conducted and all such properties are either owned free and clear
of all mortgages, pledges, liens, security interests, encumbrances, options,
5
<PAGE>
rights of first refusal and restrictions of any nature whatsoever (collectively
a "Lien") or listed as a lease on Schedule 3.5(d)). All such properties are
useable for their current uses without violating any applicable federal, state
or local laws, or any applicable private restriction, and such uses are legal
conforming uses. Except as set forth in Schedule 3.5, no financing statement
under the Uniform Commercial Code or similar law naming the Company or any of
its predecessors has been filed authorizing any party to file any such financing
statement. All tangible personal property owned, leased or used by the Company
is suitable for the purpose or purposes for which it is being used and has been
maintained in accordance with the terms of the lease applicable thereto.
Schedule 3.5 lists the names of all secured parties holding any mortgage, lien,
security interest or other encumbrances on any property of the Company and
describes the property that is encumbered, the amount of any loan relating to
such encumbrance and the file number of any file relating to such encumbrance.
(b) The Company does not own or have the right to acquire any
real property.
(c) Schedule 3.5(c) contains a list of all tangible personal
property having a cost or fair market value in excess of $20,000 owned by the
Company (other than personal property held by the Company as lessee under a
personal property lease).
(d) Schedule 3.5(d) contains a list of all real property
leases, licenses and personal property leases under which the Company is the
lessee or licensee, together with (i) the location and nature of each of the
leased or licensed properties (including a legal description of all leased real
property), (ii) the termination date of each such lease or license, (iii) the
name of the lessor or licenser and (iv) all rental and other payments made or
required to be made for the fiscal years ending December 31, 1999 and December
31, 2000. All leases and licenses pursuant to which the Company leases or
licenses from others real or personal property are valid, subsisting in full
force and effect in accordance with their respective terms, and there is not,
under any real property lease, personal property lease or license, any existing
default or event of default (or event that, with notice or passage of time, or
both, would constitute a default, or would constitute a basis of force majeure
or other claim of excusable delay or nonperformance). True and complete copies
of all real property leases, licenses and personal property leases listed on
Schedule 3.5(d) have been delivered to Pre-Cell heretofore, as well as copies of
any title reports, surveys or environmental reports or audits relating to any
leased real property. Except as set forth in Schedule 3.5(d), no such lease or
license will require the consent of the lessor or licenser to or as a result of
the consummation of the transactions contemplated by this Agreement. For the
purposes of this Section 3.5(d), a "lease" shall include a sublease.
(e) All personal property owned by the Company and all
personal property held by the Company pursuant to personal property leases is in
good operating condition and repair, subject only to ordinary wear and tear, has
been operated, serviced and maintained properly within the recommendations and
requirements of the manufacturers thereof (if any) and is suitable and
appropriate for the use thereof made and proposed to be made by the Company in
its business and operations. The real property and personal property described
in Sections 3.5(a), 3.5(b) and 3.5(c) and the real property and personal
property held by the Company pursuant to the leases and licenses described in
Schedule 3.5(d) comprise all of the real property and personal property used in
the conduct of business of the Company.
(f) Except as set forth in Schedule 3.5(f), the Company is not
in violation of, or default under, any legal requirement pertaining to any of
its owned or leased real or personal property. No notice of violation of any
legal requirement, or of any covenant, condition, restriction or easement
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<PAGE>
affecting any real or personal property or with respect to the use or occupancy
thereof, has been received by the Company or any of its officers, directors or
shareholders .
3.6 Accounts Receivable. All accounts receivable of the Company
reflected in the Company Balance Sheet (except such accounts receivable as have
been collected since such dates) arose in the ordinary course, and are valid and
enforceable claims. Such accounts receivable of the Company are subject to no
valid defense, offset or counterclaim and are fully collectible, except to the
extent of the allowance for doubtful accounts reflected in the Company Balance
Sheet. Schedule 3.6 contains a true complete aging of the Company's accounts
receivable as of the Balance Sheet Date.
3.7 Stock Ownership. All of the shares of the Company Common Stock are
owned free and clear of all liens, security interests, encumbrances, pledges,
charges, claims, voting trusts, and restrictions on transfer of any nature
whatsoever, except restrictions on transfer imposed by or pursuant to federal or
state securities laws. Each Shareholder of the Company has the full and
unrestricted right, power and capacity to transfer and deliver the Company the
Company Common Stock owned by him as provided herein and to execute this
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