Exhibit 99.1
MERGER AGREEMENT
This Merger Agreement dated as of August 1, 1998, is by and between R.M.&
M. Acquisition, Inc., a Delaware corporation (and a wholly-owned subsidiary of
Palm Desert Art, Inc., a Delaware corporation) ("RAI") and R M & M Framemakers,
Inc. a New York corporation, such corporations being collectively referred to
below as the "Constituent Corporations", Xxxxxx X. Xxxx ("Xxxx") and Xxxxx Xxxx
residing at 000 Xxxxxx Xxxx Xxxx, Xxxxx, Xxx Xxxx 00000 (collectively
"Shareholders").
Recitals
R M & M Framemakers, Inc. (hereinafter "RM&M") is a corporation organized
and existing under the laws of the State of New York, having an authorized
capital of 100 shares of common stock, no par value (the "Common Stock of R M &
M"), of which 100 shares are issued and outstanding as of the date of this
contract;
R. M. & M. Acquisition, Inc. (hereinafter "RAI") is a corporation organized
and existing under the laws of the State of Delaware, having an authorized
capital of 100 shares of common stock, no par value (the "Common Stock of RAI"),
of which 100 shares are issued and outstanding as of the date of this contract;
Palm Desert Art, Inc. (hereinafter "Palm") is a corporation duly organized
and existing under the laws of the State of Delaware having, as of the Merger
Date (as that term is defined herein) an authorized capitalization which
consists of 25,000,000 shares of voting common stock, par value $.001 of which
3,917,974 shares are issued and outstanding (the "Common Stock of Palm");
The respective boards of directors of RM&M, Palm and RAI have each approved
this Merger Agreement providing for the merger of RM&M with and into RAI with
RAI as the surviving corporation as authorized by the statutes of the state of
Delaware.
Palm, RAI, RM&M and Shareholders have entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement") dated as of August 1, 1998,
setting forth certain representations, warranties, covenants, agreements, and
conditions in connection with the merger;
Shareholders own all the issued and outstanding voting shares of RM&M.
Agreement
In consideration of the premises and mutual agreements, provisions and
covenants contained herein, and for the purpose of setting forth the terms and
conditions of the merger and the manner and basis of causing the shares of RM&M
to be converted into shares
of common stock of Palm, par value $.001 per share (the "Exchanged Palm Stock")
and such other provisions as are deemed necessary or desirable, it is agreed by
and between the parties that, in accordance with the provisions of the laws of
Delaware and New York, respectively, that RAI and RM&M shall be, and they are,
as of the Merger Date (as defined in paragraph 3 of Article I) merged into a
single surviving corporation (sometimes called the "surviving corporation"),
which shall be and is RAI, one of the constituent corporations, which shall
continue its corporate existence and remain a Delaware corporation governed by
the laws of that state, all on the terms and conditions set forth as follows:
Article I
Merger
1. This Agreement of merger (sometimes called the "Merger Agreement"),
shall be submitted for adoption and approval of the board of directors of Palm
and RAI and of the shareholders of RM&M as provided by their respective state
general corporation law.
2. Upon the adoption and approval of this Agreement by the board and
shareholders of the respective constituent corporations, the facts shall be
certified on this Agreement or in a Certificate of Merger and this Agreement or
a Certificate of Merger shall be signed, acknowledged, filed and recorded in the
manner required by Delaware and New York general corporation law.
3. The merger of RM&M into RAI shall become effective as of August 1, 1998
(the "Merger Date").
Article II
Name and Continued Corporate Existence of
Surviving Corporation
The corporate name of RAI, the constituent corporation whose corporate
existence is to survive this merger and continue thereafter as the surviving
corporation, and its identity, existence, purposes, powers, objects, franchises,
rights and immunities shall continue unaffected and unimpaired by the merger,
and the corporate identity, existence, purposes, powers, objects, franchises,
rights and immunities of RM&M shall be wholly merged into RAI. Accordingly, on
the Merger Date the separate existence of RM&M, except insofar as continued by
statute, shall cease.
Article III
Governing Law
Certificate of Incorporation
As stated, the laws of Delaware shall govern the surviving corporation.
From and after the Merger Date, the amended certificate of incorporation of RAI
attached as Appendix A and incorporated with the same force and effect as if
here set out in
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full (which Appendix A represents the composite certificate of incorporation of
RAI filed in the office of the Secretary of State of the State of Delaware on
July 27, 1998 and all amendments now in force, together with further amendments
of articles Third, Fourth and Ninth, to read as set forth, which further
amendments shall become effective upon the Merger Date) shall be and become the
certificate of incorporation of the surviving corporation. In addition to the
powers conferred upon it by law, the surviving corporation shall have the powers
set forth in Appendix A and be governed by those provisions. From and after the
Merger Date, and until further amended as provided by law, Appendix A may be
certified, separate and apart from this Agreement, as the certificate of
incorporation of the surviving corporation.
Article IV
Bylaws of Surviving Corporation
From and after the Merger Date, the present bylaws of RAI shall be and
become the bylaws of the surviving corporation until they shall be altered,
amended or repealed, or until new bylaws shall be adopted, in accordance with
the provisions of law, the bylaws and the certificate of incorporation of the
surviving corporation.
Article V
Directors and Officers
1. The number of directors of the surviving corporation, who shall hold
office until their successors have been duly elected and shall have qualified,
or as otherwise provided in the certificate of incorporation of the surviving
corporation or its bylaws, shall be one (1) until changed by action of the board
of directors of the surviving corporation pursuant to its bylaws; and the name
of the first director of the surviving corporation is as follows:
Xxxx X. Xxxx
2. The first annual meeting of the shareholders of the surviving
corporation after the Merger Date shall be the annual meeting provided by the
bylaws of the surviving corporation for the year 1999.
3. The first officers of the surviving corporation, who shall hold office
until their successors have been elected or appointed and shall have qualified,
or as otherwise provided in its bylaws, are the officers of RAI immediately
prior to the Merger Date.
4. If, on or after the Merger Date, a vacancy shall for any reason exist in
the board of directors of the surviving corporation, or in any of the offices,
the vacancy shall be filled in the manner provided in the certificate of
incorporation of the
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surviving corporation or in its bylaws.
Article VI
Capital Stock of Surviving Corporation
The capitalization of the surviving corporation upon the Merger Date shall
be as set forth in the certificate of incorporation of the surviving
corporation.
Article VII
Manner and Basis of Converting Shares
Each issued share of common stock, of the $.01 par value of RAI, including
shares held in the treasury of RAI, shall, on the Merger Date continue to be
issued shares of common stock, $.01 par value per share, of the surviving
corporation. All of the shares of common stock, no par value, of RM&M
outstanding on the Merger Date (called "RM&M Stock"), and all rights attendant
thereto shall upon the Merger Date be exchanged for 645,000 shares of common
stock, par value $.001 per share of Palm.
Article VIII
Assets and Liabilities
On the Merger Date, all property, real, personal and mixed, and all debts
due to either of the constituent corporations on whatever account, as well for
stock subscriptions as all other choses in action, and all and every other
interest of or belonging to either of constituent corporations shall be taken by
and deemed to be transferred to and vested in the surviving corporation without
further act or deed; and all property and every other interest shall be as
effectively the property of the surviving corporation as it was of the
respective constituent corporations, and the title to any real estate or any
interest, whether vested by deed or otherwise, in either of the constituent
corporations shall not revert or be in any way impaired by reason of the merger;
provided, however, that all rights of creditors and all liens upon the property
of either of the constituent corporations shall be preserved unimpaired, and all
debts, liabilities, obligations and duties of the respective constituent
corporations shall attach to the surviving corporation, and may be enforced
against it to the same extent as if the debts, liabilities, obligations and
duties had been incurred or contracted by it. Any action or proceeding pending
by or against either of the constituent corporations may be prosecuted to
judgment as if the merger had not taken place, or the surviving corporation may
be submitted in place of either of the constituent corporations. The parties
respectively agree that from time to time, when requested by the surviving
corporation or by its successors or assigns, they will execute and deliver or
cause to be executed and delivered all deeds and instruments, and will take or
cause to be taken all further or other action, as the surviving corporation may
deem necessary or desirable in order to vest in and
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confirm to the surviving corporation or its successors or assigns title to and
possession of all the property and rights and otherwise carry out the intent and
purposes of this Agreement.
Article IX
Conduct of Business by Constituent Corporations
Prior to the Merger Date, RM&M shall conduct its business in its usual and
ordinary manner, and shall not enter into any transaction other than in the
usual and ordinary course of such business except as provided. Without limiting
the generality of the above RM&M shall not, except as otherwise consented to in
writing by Palm or RAI or as otherwise provided in this Agreement:
(1) Issue or sell any shares of its capital stock in addition to those
outstanding on this date;
(2) Amend its certificate of incorporation or its bylaws;
(3) Issue or contract to issue funded debt;
(4) Declare or pay any dividend or make any other distribution upon or with
respect to its capital stock;
(5) Repurchase any of its outstanding stock or by any other means transfer
any of its funds to its shareholders either selectively or rateably, in return
for value or otherwise, except as salary or other compensation in the ordinary
or normal course of business;
(6) Undertake or incur any obligations or liabilities except current
obligations or liabilities in the ordinary course of business and except for
liabilities for fees and expenses in connection with the negotiation and
consummation of the merger in amounts to be determined after the Merger Date;
(7) Mortgage, pledge, subject to lien or otherwise encumber any realty or
any tangible or intangible personal property;
(8) Sell, assign or otherwise transfer any tangible assets of whatever
kind, or cancel any claims, except in the ordinary course of business;
(9) Sell, assign, or otherwise transfer any trademark, trade name, patent
or other intangible asset;
(10) Default in performance of any material provision of any material
contract or other obligation;
(11) Waive any right of any substantial value; or
(12) Purchase or otherwise acquire any equity or debt security of another
corporation except to realize on an otherwise worthless
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debt.
Article X
Consummation of Merger
All expenses incurred in consummating the plan of merger shall, except as
otherwise agreed in writing between the constituent corporations, be borne by
the constituent corporations. If the merger is not completed, each of the
constituent corporations shall be liable for, and shall pay, the expenses
incurred by it.
The filing and recording of this Agreement may be deferred from time to
time by mutual consent of the respective boards of directors of each of the
constituent corporations, and, to the extent provided in (1), (2), (3) and (4)
below, the merger may be abandoned:
(1) By the mutual consent of the respective boards of directors of each of
the constituent corporations;
(2) At the election of the board of directors of RAI, if, in the judgment
of board any judgment is rendered relating to any legal proceeding not commenced
and the existence of the judgment will or may materially affect the rights of
either constituent corporation to sell, convey, transfer or assign any of its
assets or materially interfere with the operation of its business, renders the
merger impracticable, undesirable or not in the best interests of its
shareholders; or
(3) At the election of the board of directors of either constituent
corporation if-
(a) The warranties and representations of the other constituent
corporation contained in this Agreement shall not be substantially accurate
in all material respects on and as of the date of merger; or the covenants
of the other constituent corporation shall not have been performed or
satisfied in all material respects; or
(b) It shall not have received an opinion of counsel for the other
constituent corporation to the effect that: (i) any other constituent
corporation is a corporation duly organized, validly existing and in good
standing under the laws of their respective states of incorporation; (ii)
all outstanding shares of stock of the constituent corporation have been
duly and validly authorized, are validly issued and outstanding, and are
fully paid and nonassessable; and (iii) all corporate action (other than
the filing and recording of this Agreement)
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required for the consummation of the merger contemplated hereby has been
taken by the constituent corporation; or
(c) The taking of any steps necessary to effect the merger by either
of the constituent corporations shall be permanently or temporarily
enjoined by a court having jurisdiction; or
(d) It shall not have received an opinion of counsel selected by Palm
and RAI to the effect that the shares of stock of the surviving corporation
to be issued, as provided, upon conversion of shares of stock of RM&M will
be legally and validly authorized and, when issued, will be validly issued,
fully paid and nonassessable shares of stock of the surviving corporation.
(4) If the Merger Date shall not have occurred by 5:00 p.m. August 22, 1998
then, at the option of the board of directors of either constituent corporation
the merger may be abandoned.
In the event of the abandonment of the merger pursuant to the foregoing
provisions, this Agreement shall become void and have no effect, without any
liability on the part of either of the constituent corporations or its
shareholders or directors or officers in respect of this merger except the
obligation of each constituent corporation to pay its own expenses as provided
in this Article X.
Article XI
Resident Agent
The respective names of the county and the city within the county in which
the principal office of the surviving corporation is to be located in the State
of California, the street and number of the principal office, the name of the
registered agent will, as of the Merger Date, be as set forth in article second
of the certificate of incorporation of the surviving corporation.
Article XII
Right to Amend Certificate of Incorporation
The surviving corporation reserves the right to amend, alter, change or
repeal its certificate of incorporation in the manner now or later prescribed by
statute or otherwise authorized by law; and all rights and powers conferred in
the certificate of incorporation on shareholders, directors or officers of the
surviving corporation, or any other person, are subject to this reserved power.
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Article XIII
Miscellaneous
1. The representations and warranties contained in the Agreement and Plan
of Reorganization and any liability of one constituent corporation to the other
for any default under the provisions of Article IX of this Agreement, shall
expire with, and be terminated and extinguished by, the merger under this
Agreement on the Merger Date.
2. To enable RAI to coordinate the activities of RM&M into those of RAI on
and after the Merger Date, RM&M shall, before the Merger Date, afford to the
officers and authorized representatives of RAI free and full access to the
plants, properties, books and records of RM&M, and the officers of RM&M will
furnish RAI with financial and operating data and other information as to the
business and properties of RM&M as RAI shall from time to time reasonably
request. Palm, RAI and RM&M agree that, unless and until the merger contemplated
by this Agreement has been consummated, Palm, RAI and RM&M and their officers
and representatives will hold in strict confidence all data and information
obtained from one another as long as it is not in the public domain, and if the
merger provided for is not consummated as contemplated, Palm, RAI and RM&M will
each return to the other party all data as the other party may reasonably
request.
3. For the convenience of the parties and to facilitate the filing or
recording of this Agreement, any number of counterparts may be executed and each
executed counterpart shall be deemed to be an original instrument.
In witness, the directors, or a majority of them, of each of the
constituent corporations have duly subscribed their names to this Agreement
under the corporate seal of their respective corporation, all as of the day and
year first written above.
WITNESS: PALM DESERT ART, INC.
By: /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx, President
WITNESS: R. M. & M. ACQUISITION, INC.
By: /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx, President
WITNESS: R. M. & M. FRAMEMAKERS, INC.
By: /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx, President
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WITNESS:
/s/ Xxxxxx Xxxx
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Xxxxxx Xxxx, Shareholder
WITNESS:
/s/ Xxxxx Xxxx
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Xxxxx Xxxx, Shareholder
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