EXHIBIT 10.27
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, made on the 15th day of March, 2002,
by and among XXXXX HOLDINGS, INC., a Delaware corporation ("Xxxxx"), THANE
INTERNATIONAL, INC., a Delaware corporation ("Thane"), XXXXX ACQUISITION
CORPORATION, Delaware corporation and a wholly-owned subsidiary of Thane (the
"Intermediate Entity"), XXXXX HOLDINGS ACQUISITION CORPORATION, a Delaware
corporation and a wholly-owned subsidiary of the Intermediate Entity
("Acquisition"), and each of the stockholders of Xxxxx listed on the signature
pages hereto (collectively, the "Stockholders").
WHEREAS, Acquisition desires to merge with and into Xxxxx and Xxxxx
desires that Acquisition be merged with and into Xxxxx, so that Xxxxx will be
the surviving corporation, all upon the terms and subject to the conditions set
forth herein and in accordance with the laws of the State of Delaware;
WHEREAS, the terms and conditions of such merger, the mode of carrying
the same into effect, the manner of converting the capital stock of Xxxxx into
the right to receive cash or shares of capital stock of Thane and such other
terms and conditions as may be required or permitted to be stated in this
Agreement are set forth below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements, and subject to the conditions herein contained, Thane, Xxxxx,
the Intermediate Entity, Acquisition and each of the Stockholders hereby agree
as follows:
SECTION 1
THE MERGER
1.1 The Merger. Subject to the terms and conditions contained
herein, at the Effective Time, Acquisition shall be merged with and into Xxxxx
in accordance with the requirements of the laws of the State of Delaware (the
"Merger"). Thereupon, (a) the corporate existence of Xxxxx, with all its rights,
privileges, immunities, powers and purposes, shall continue unaffected and
unimpaired by the Merger, and Xxxxx, as the corporation surviving the Merger,
shall be fully vested therewith, the separate existence of Acquisition shall
cease upon the Merger becoming effective as herein provided and thereupon Xxxxx
and Acquisition shall be a single corporation (sometimes referred to herein as
the "Surviving Corporation") and (b) all of the assets and properties of
Acquisition, whether real, personal, or mixed, and whether tangible or
intangible, and all of the liabilities and obligations of Acquisition whether
fixed or contingent, shall vest in the Surviving Corporation, without any
further action of either Acquisition or Xxxxx.
1.2 Filing. On the date hereof, Xxxxx and Acquisition will
cause an executed counterpart of a Certificate of Merger in substantially the
form of Exhibit A hereto (the "Certificate of Merger") to be filed with the
office of the Secretary of State of the State of Delaware in accordance with the
provisions of Sections 251 and 103 of the Delaware General Corporation Law (the
"DGCL").
1.3 Effective Time of the Merger. The Merger shall be effective
at the time that the filing of the counterpart of the Certificate of Merger with
the Secretary of State of the State of Delaware referred to in Section 1.2 is
completed, which time is sometimes referred to herein as the "Effective Time."
1.4 Effect of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
SECTION 2
CONVERSION OF SHARES AND WARRANTS; ASSUMPTION OF OPTIONS
2.1 At the Effective Time, all of the issued and outstanding
shares of capital stock of Acquisition and Xxxxx shall, by virtue of the Merger
and without any action on the part of the respective holders thereof, become and
be converted into shares of capital stock of the Surviving Corporation or into
the right to receive shares of capital stock of Thane or be canceled, as the
case may be, as follows:
(a) Each issued and outstanding share of common stock, par value
$.001 per share, of Acquisition shall be converted into one share of common
stock, par value $.001 per share, of the Surviving Corporation.
(b) Each issued and outstanding share of common stock, par value
$.001 per share, of Xxxxx ("Xxxxx Common Stock") (excluding any treasury shares
of Xxxxx), shall be converted into and become the right to receive
2.42432187628972 shares of common stock, par value $.001, of Thane ("Thane
Common Stock"). Subject to the provisions set forth in Section 2.1(d) hereto,
Thane will promptly issue to each of the Stockholders a stock certificate
evidencing the ownership of such number of shares of Thane Common Stock as set
forth opposite such Stockholder's name on Schedule 2.1(b) hereto upon surrender
by such Stockholder of stock certificates evidencing ownership of shares of
Xxxxx Common Stock.
(c) Each share of Xxxxx Common Stock issuable to Prairie Capital
Mezzanine Fund, L.P. ("Prairie") upon the exercise of the warrants issued to
Prairie (the "Prairie Warrants") pursuant to that certain Initial Stock Purchase
Warrant and Repurchase Agreement, dated as of May 17, 2000, by and between Xxxxx
and Prairie, shall be converted into and become the right to receive
2.42432187628972 shares of Thane Common Stock. Thane will promptly issue to
Prairie a stock certificate evidencing the ownership of such number of shares of
Thane Common Stock as set forth on Schedule 2.1(c) hereto upon surrender by
Prairie of the Prairie Warrants.
(d) At the Effective Time, Thane shall deposit an aggregate of
263,477 shares of Thane Common Stock (the "Escrow Shares") issuable to the
Persons listed on Schedule 2.1(d) hereto (the "Controlling Stockholders") into
an escrow account subject to the escrow agreement (the "Escrow Agreement")
substantially in the form of Exhibit B hereto.
(e) Each treasury share of capital stock of Xxxxx, if any, shall
be canceled, and no payment shall be made in respect thereof.
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2.2 At the Effective Time, each issued and outstanding option to
purchase or otherwise acquire shares of Xxxxx Common Stock (whether or not
vested) (the "Assumed Options") shall be assumed by Thane in connection with the
Merger. Each Assumed Option so assumed by Thane under this Agreement shall
continue to have, and be subject to, the same terms and conditions as in place
immediately prior to the Effective Time (including, without limitation, any
vesting schedule or repurchase rights, but not taking into account any
acceleration thereof provided for in the underlying option agreements that may
otherwise result from the Merger or other transactions contemplated by this
Agreement), except that (i) each Assumed Option to purchase one share of Xxxxx
Common Stock will be exercisable for 2.42432187628972 shares of Thane Common
Stock and (ii) the per share exercise price for the shares of Thane Common Stock
issuable upon exercise of such Assumed Option will be equal to the quotient
determined by dividing: (A) the exercise price per share of Xxxxx Common Stock
at which such Assumed Option was exercisable immediately prior to the Effective
Time by (B) 2.42432187628972. No Assumed Option as so converted shall be
exercisable for a fractional share of Thane Common Stock and the number of
shares of Thane Common Stock for which all Assumed Options to be delivered to
the optionees thereof shall be rounded up to the nearest whole number of shares
of Thane Common Stock.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF XXXXX AND THE STOCKHOLDERS
Xxxxx hereby represents and warrants to Thane with regard to Xxxxx and
Xxxxx Products, Inc., a Delaware corporation and a wholly-owned subsidiary of
Xxxxx (each a "Corporation" and together, the "Corporations"), and each
Stockholder, severally but not jointly, hereby represents and warrants to Thane
in Section 3.5(b) only with regard to itself, each as of the date hereof and as
of the Effective Time, as follows:
3.1 Compliance with Law and Applicable Government Regulations.
Except as set forth in Schedule 3.1 hereto, each of the Corporations has been
operated for the last five years in compliance in all material respects with
regard to its operations, practices, real property, plants, structures,
machinery, equipment and other property, and all other aspects of its business,
with all applicable Regulations and Orders, including, but not limited to, all
Regulations relating to the safe conduct of business, environmental protection,
quality and labeling, antitrust, consumer protection, equal opportunity,
discrimination, health, sanitation, fire, zoning, building and occupational
safety. There are no Claims pending, or, to the knowledge of the Corporations
and each of their respective officers, threatened, nor has the Corporation
received any written notice, regarding any violations of any Regulations and
Orders enforced by any Authority claiming jurisdiction over the Corporations
including any requirement of the Occupational Safety and Health Act of 1970, as
amended ("OSHA"), or the Federal Trade Commission or Better Business Bureau.
3.2 Employees/Labor Employment Matters. Except as set forth in
Schedule 3.2 hereto, (i) there is no labor strike, dispute, slowdown, stoppage
or lockout pending or, to the knowledge of the Corporations and each of their
respective officers, threatened against or affecting either Corporation and
during the past five years there has not been any such action; (ii) no union
Claims to represent the employees of either Corporation; (iii) none of the
employees of
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either Corporation represented by any labor organization and neither
Corporations nor any of their respective officers have any knowledge of any
current union organizing activities among its employees, nor, to the knowledge
of the Corporations and each of their respective officers, does any question
concerning representation exist concerning such employees; (iv) the Corporations
have been in material compliance with all obligations under the National Labor
Relations Act, as amended, Title VII of the Civil Rights Act of 1964, as
amended, the Age Discrimination in Employment Act, as amended, OSHA, and all
other federal, state and local labor or labor related Regulations applicable to
Persons employed in connection with the Corporations, including, without
limitation, those Regulations relating to wages, hours, health and safety,
payment of social security withholding and other taxes, maintenance of workers'
compensation insurance, labor and employment relations and employment
discrimination, and have not engaged in any unfair labor practices as defined in
the National Labor Relations Act or other applicable Regulation; (v) there is no
unfair labor practice charge or complaint against either Corporation pending or,
to the knowledge of the Corporations and each of their respective officers,
threatened before the National Labor Relations Board or any similar state or
foreign Authority; (vi) there is no grievance arising out of any collective
bargaining agreement or other grievance procedure; (vii) there is no charge with
respect to or relating to either Corporation pending before the Equal Employment
Opportunity Commission or any other agency responsible for the prevention of
unlawful employment practices; (viii) neither Corporation has received notice of
the intent of any Authority responsible for the enforcement of labor or
employment Regulations, including, but not limited to, health and safety
Regulations, to conduct an investigation with respect to or relating to either
Corporation and, to the knowledge of the Corporations and such of their
respective officers, no such investigation is in progress nor has any such
investigation been conducted during the last five years; (ix) there are no
Claims pending or, to the knowledge of the Corporations and each of their
respective officers, threatened in any forum by or on behalf of any present or
former employee of either Corporation, any applicant for employment or classes
of the foregoing alleging breach of any express or implied Contract of
employment, any Regulation governing employment or the termination thereof or
other discriminatory, wrongful or tortious conduct in connection with the
employment relationship; (x) since the enactment of the WARN Act, neither
Corporation has effectuated (A) a plant closing (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of either Corporation; or (B) a mass
layoff (as defined in the WARN Act) affecting, any site of employment or
facility of either Corporation, nor has either Corporation been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state, local or foreign law or
Regulation; (xi) to the knowledge of the Corporations and each of their
respective officers, none of the employees of either Corporation has suffered an
employment loss (as defined in the WARN Act) during the 180 day period prior to
the date of this Agreement; and (xii) each facility or location of each
Corporation has been operated as a single site of employment (as defined in the
WARN Act) at all times since the enactment of the WARN Act.
3.3 Corporate Organization, Etc. Each Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation with full corporate power and authority to
carry on its business as it is now being conducted and to own, operate and lease
its properties and assets. Each Corporation is duly qualified or licensed to do
business and is in good standing in every jurisdiction in which the conduct of
its business, the ownership or lease of its properties, require it to be so
qualified or licensed.
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3.4 Title to Stock. All of the outstanding shares of the capital
stock of Xxxxx are owned by the Stockholders, have been duly authorized, validly
issued, fully paid and nonassessable, are free of all Liens and Contracts, and
have been issued in compliance with all applicable securities laws. All of the
shares of Xxxxx Common Stock were acquired from third parties or Xxxxx in
compliance with all applicable securities laws, free and clear of any rescission
rights. Except as set forth on Schedule 3.4 hereto, there is no outstanding
Contract with either Corporation or any other Person to purchase, redeem or
otherwise acquire any outstanding shares of the capital stock of the
Corporation, or securities or obligations of any kind convertible into any
shares of the capital stock of the Corporation. Neither Corporation has redeemed
any securities in violation of any Contract or Regulation.
3.5 Authorization, Etc.
(a) Xxxxx has full power and authority to enter into this
Agreement and the agreements contemplated hereby and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and all other agreements and transactions
contemplated hereby have been duly authorized by the Board of Directors of Xxxxx
and no other corporate proceedings on its part are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement and all other
agreements contemplated hereby to be entered into by each Corporation each
constitutes a legal, valid and binding obligation of each Corporation
enforceable against each Corporation in accordance with its terms, subject to
applicable bankruptcy laws and general principles of equity.
(b) Each Stockholder is the sole owner of and has full right,
power and authority to sell and vote the shares of Xxxxx Common Stock set forth
opposite such Stockholder's name on Schedule 2.1(b) hereto. Each Stockholder has
full power and authority to enter into this Agreement and the agreements
contemplated hereby and to deliver the shares of Xxxxx Common Stock and the
certificates evidencing such shares of Xxxxx Common Stock to Thane as provided
for herein, free and clear of all Liens. This Agreement and all other agreements
contemplated hereby to be entered into by the Stockholders each constitute, or
will constitute when fully executed and delivered, a legal, valid and binding
obligation of each Stockholder who is a party thereto enforceable against such
Stockholder in accordance with its terms.
3.6 Capitalization of Xxxxx. The authorized capital stock of
Xxxxx consists solely of 3,000,000 shares of common stock. The issued and
outstanding shares of capital stock of Xxxxx consist solely of 1,045,139 shares
of common stock, all of which are validly issued and outstanding, fully paid and
non-assessable. Except as set forth on Schedule 3.6 hereto, Xxxxx has no
outstanding options or other commitments of any kind which obligate Xxxxx to
issue or sell shares of its capital stock.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THANE
Thane represents and warrants to Xxxxx and each Stockholder with regard
to Thane, the Intermediate Entity and Acquisition (the "Thane Entities"), as of
the date hereof and as of the Effective Time, as follows:
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4.1 Corporate Organization, Etc. Each Thane Entity is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware with full corporate power and authority to carry on its
business as it is now being conducted and to own, operate and lease its
properties and assets. Each Thane Entity is duly qualified or licensed to do
business and is in good standing in every jurisdiction in which the conduct of
its business or the ownership or lease of its properties require it to be so
qualified or licensed.
4.2 Authorization, Etc. Each Thane Entity has full power and
authority to enter into this Agreement and the agreements contemplated hereby
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and all other agreements
and transactions contemplated hereby have been duly authorized by the Board of
Directors of each Thane Entity and no other corporate proceedings on their part
are necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement and all other agreements contemplated hereby to be
entered into by each Thane Entity each constitutes a legal, valid and binding
obligation of such Thane Entity enforceable against such Thane Entity in
accordance with its terms, subject to applicable bankruptcy laws and general
principles of equity.
4.3 Capitalization of Thane. The authorized capital stock of
Thane consists solely of 200,000,000 shares of common stock and 100,000 shares
of preferred stock. The issued and outstanding shares of capital stock of Thane
consist solely of 29,405,536 shares of Thane Common Stock, all of which are
validly issued and outstanding, fully paid and non-assessable. The shares of
Thane Common Stock to be issued pursuant to this Agreement will, when issued, be
duly authorized, validly issued, fully paid and non-assessable, free and clear
of all Liens, and have been issued in compliance with all applicable securities
laws. The issuance of the shares of Thane Common Stock to the Stockholders will
not trigger any pre-emptive rights of any stockholder of Thane. Except as set
forth on Schedule 4.3 hereto, Thane has no outstanding options or other
commitments of any kind which obligate Thane to issue or sell shares of its
capital stock.
SECTION 5
SURVIVAL OF TERMS; INDEMNIFICATION
5.1 Survival. All of the terms and conditions of this Agreement,
together with the representations, warranties and covenants contained herein or
in any instrument or document delivered or to be delivered pursuant to this
Agreement, shall survive the execution of this Agreement and the Effective Time
until all obligations set forth therein shall have been performed and satisfied,
notwithstanding any investigation heretofore or hereafter made by or on behalf
of any party hereto; provided, however, that all representations and warranties,
and the agreements contained herein by any party hereto to indemnify another
party hereto as set forth in this Section 5, shall survive and continue for, and
all Claims with respect thereto shall be made prior to the end of, twelve months
from the Effective Time.
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5.2 Limitations
(a) No party hereto shall be required to indemnify another party
hereto pursuant to this Section 5 until the indemnifiable damages, individually
or in the aggregate, exceed $200,000 (the "Hurdle Rate"). Once such
indemnifiable damages have, individually or in the aggregate, exceeded the
Hurdle Rate, the indemnifying party shall be responsible for all indemnifiable
damages that may arise, irrespective of the Hurdle Rate and provided that
indemnifiable damages shall accumulate until such time as the Hurdle Rate is
met, whereupon the party to be indemnified shall be entitled to seek
indemnification for the full amount of such damages.
(b) In the absence of fraud, Thane's and the Controlling
Stockholders' respective aggregate liability under Section 5.3 or 5.4 shall not
exceed the Fair Market Value of the Escrow Shares as of the date of
determination.
(c) In the absence of fraud, the sole recourse of Thane pursuant
to this Section 5 shall be against the Escrow Shares.
(d) Notwithstanding any provisions contained herein to the
contrary, the respective aggregate liability under this Agreement of (i) Prairie
and Lease Plan - Xxxxx Products Investors, L.P. ("Lease Plan") to Thane and (ii)
Thane to Prairie and Lease Plan shall be governed by that certain Redemption
Agreement, dated as of the date hereof (the "Redemption Agreement"), by and
among Thane, Prairie and Lease Plan.
5.3 Indemnification by the Controlling Stockholders. Subject to
Sections 5.1 and 5.2, the Controlling Stockholders agree to indemnify Thane and
its subsidiaries and their respective officers, directors, employees,
shareholders, representatives and agents and hold each of them harmless at all
times after the date of this Agreement, against and in respect of any and all
damage, loss, deficiency, liability, obligation, commitment, cost or expense
(including the fees and expenses of counsel) resulting from, or in respect of,
any misrepresentation, breach of warranty, or non-fulfillment of any obligation
on the part of Xxxxx or any Stockholder under this Agreement, any document
relating hereto or thereto or contained in any exhibit to this Agreement or from
any misrepresentation in or omission from any certificate, schedule, other
agreement or instrument by Xxxxx or any Stockholder hereunder.
5.4 Indemnification by Thane. Subject to Sections 5.1 and 5.2,
Thane agrees to indemnify the Stockholders and their respective officers,
directors, employees, shareholders, representatives and agents and hold each of
them harmless at all times after the date of this Agreement, against and in
respect of any and all damage, loss, deficiency, liability, obligation,
commitment, cost or expense (including the fees and expenses of counsel)
resulting from, or in respect of, any misrepresentation, breach of warranty, or
non-fulfillment of any obligation on the part of Thane under this Agreement, any
document relating hereto or thereto or contained in any exhibit to this
Agreement or from any misrepresentation in or omission from any certificate,
schedule, other agreement or instrument by Thane hereunder.
5.5 Third-Party Claims.
(a) Except as otherwise provided in this Agreement, the following
procedures shall be applicable with respect to indemnification for third-party
Claims. Promptly after receipt by
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the party seeking indemnification hereunder (hereinafter referred to as the
"Indemnitee") of notice of the commencement of any action or the assertion of
any Claim, liability or obligation by a third party (whether by legal process or
otherwise), against which Claim, liability or obligation the other party to this
Agreement (hereinafter the "Indemnitor") is, or may be, required under this
Agreement to indemnify such Indemnitee, the Indemnitee will, if a Claim thereon
is to be, or may be, made against the Indemnitor, notify the Indemnitor in
writing of the commencement or assertion thereof and give the Indemnitor a copy
of such Claim, process and all legal pleadings. The Indemnitor shall have the
right to participate in the defense of such action with counsel of reputable
standing. The Indemnitor shall have the right to assume the defense of such
action unless such action (i) may result in injunctions or other equitable
remedies in respect of the Indemnitee or its business; (ii) may result in
liabilities which, taken with other then existing Claims under this Section 5,
would not be fully indemnified hereunder; (iii) may have an adverse effect on
the business or financial condition of the Indemnitee after the Effective Time
(including an effect on the earnings or ongoing business relationships of the
Indemnitee); or (vi) is for an alleged amount of less than $25,000. The
Indemnitor and the Indemnitee shall cooperate in the defense of such Claims. In
the case that the Indemnitor shall assume or participate in the defense of such
proceeding as provided herein, the Indemnitee shall make available to the
Indemnitor all relevant records and take such other action and sign such
documents as are reasonable necessary to defend such proceeding in a timely
manner. If the Indemnitee shall be required by judgment or a settlement
agreement to pay any amount in respect of any obligation or liability against
which the Indemnitor has agreed to indemnify the Indemnitee under this
Agreement, the Indemnitor shall promptly reimburse the Indemnitee in an amount
equal to the amount of such payment plus all reasonable expenses (including
legal fees and expenses) incurred by such Indemnitee in connection with such
obligation or liability subject to this Section 5. No Indemnitor, in the defense
of any such Claim, shall, except with the consent of the Indemnitee, consent to
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability with respect to such Claim. In the
event that the Indemnitor does not accept the defense of any matter for which it
is entitled to assume such defense as provided above, the Indemnitee shall have
the full right to defend against any such Claim, and shall be entitled to settle
or agree to pay in full such claim or demand, in its sole discretion. With
respect to any matter as to which the Indemnitor is not entitled to assume the
defense pursuant to the terms of this paragraph, the Indemnitee shall not enter
into any settlement for which an indemnification claim will be made hereunder
without the approval of the Indemnitor, which will not be unreasonably withheld.
(b) Prior to paying or settling any Claim against which an
Indemnitor is, or may be, obligated under this Agreement to indemnify an
Indemnitee, the Indemnitee must first supply the Indemnitor with a copy of a
final court judgment or decree holding the Indemnitee liable on such Claim or
failing such judgment or decree, must first receive the written approval of the
terms and conditions of such settlement from the Indemnitor. An Indemnitor or
Indemnitee shall have the right to settle any Claim against it, subject to the
prior written approval of the other, which approval shall not be unreasonably
withheld.
(c) An Indemnitee shall have the right to employ its own counsel
in any case, but the fees and expenses of such counsel shall be at the expense
of the Indemnitee unless (i) the employment of such counsel shall have been
authorized in writing by the Indemnitor in
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connection with the defense of such action or claim, (ii) the Indemnitor shall
not have employed counsel in the defense of such action or claim, or (iii) such
Indemnitee shall have reasonably concluded that there may be defenses available
to it which are contrary to, or inconsistent with, those available to the
Indemnitor, in any of which events such fees and expenses of not more than one
additional counsel for the indemnified parties shall be borne by the Indemnitor.
SECTION 6
CERTAIN DEFINITIONS
"Acquisition" shall have the meaning set forth in the Preamble.
"Assumed Options" shall have the meaning set forth in Section 2.2.
"Authority" means any governmental, regulatory or administrative body,
agency, commission, board, arbitrator or authority, any court or judicial
authority, any public, private or industry regulatory authority, whether
international, national, federal, state or local.
"Business Day" means any day except Saturday, Sunday and any day which
in the City of New York shall be a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close.
"Certificate of Merger" shall have the meaning as set forth in
Section 1.2.
"Claim" means any action, suit, claim, lawsuit, demand, suit, inquiry,
hearing, investigation, notice of a violation or noncompliance, litigation,
proceeding, arbitration, appeals or other dispute, whether civil, criminal,
administrative or otherwise.
"Contract" means any agreement, contract, commitment, instrument,
document, certificate or other binding arrangement or understanding, whether
written or oral.
"Controlling Stockholders" shall have the meaning set forth in
Section 2.1(d).
"Corporation" and "Corporations" shall each have the meaning set forth
in Section 3.
"DGCL" shall have the meaning as set forth in Section 1.2.
"Effective Time" shall have the meaning as set forth in Section 1.3.
"Escrow Agreement" shall have the meaning set forth in Section 2.1(d).
"Escrow Shares" shall have the meaning set forth in Section 2.1(d).
"Fair Market Value" means, with respect to each share of Thane Common
Stock that is deemed to be Escrow Shares pursuant to Section 2.1(d):
(a) if the Thane Common Stock is Publicly Traded at the time of
determination, the average of the closing prices on such day of the Thane Common
Stock on all domestic securities exchanges on which the Thane Common Stock is
then listed, or, if there have been no sales on any
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such exchange on such day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of such day or, if on any such day the
Thane Common Stock is not so listed, the average of the representative bid and
asked prices quoted on NASDAQ as of 4:00 P.M., New York time, on such day, or if
on any day such security is not quoted on NASDAQ, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 20 days
consisting of the day as of which "Fair Market Value" is being determined and
the nineteen consecutive Business Days prior to such day; or
(b) if the Thane Common Stock is not Publicly Traded at the time
of determination, the fair market value of the Thane Common Stock, as determined
by an unaffiliated investment banker selected by Thane without calculating any
discounts based on the marketability of such shares or the percentage of the
total shares issued the Escrow Shares represent.
"Hurdle Rate" shall have the meaning set forth in Section 5.2(a).
"Indemnitee" shall have the meaning set forth in Section 5.3.
"Intermediate Entity" shall have the meaning set forth in the Preamble.
"Xxxxx" shall have the meaning set forth in the Preamble.
"Xxxxx Common Stock" shall have the meaning set forth in
Section 2.1(b).
"Lease Plan" shall have the meaning set forth in Section 5.2(d).
"Lien" means any (a) security interest, Lien, mortgage, pledge,
hypothecation, encumbrance, Claim, easement, charge, restriction on transfer or
otherwise, or interest of another Person of any kind or nature, including any
conditional sale or other title retention Contract or lease in the nature
thereof; (b) any filing or agreement to file a financing statement as debtor
under the Uniform Commercial Code or any similar statute; and (c) any
subordination arrangement in favor of another Person.
"Merger" shall have the meaning as set forth in Section 1.1.
"Order" means any writ, decree, order, judgment, injunction, rule,
ruling, Lien, voting right, consent of or by an Authority.
"OSHA" shall have the meaning as set forth in Section 3.1.
"Person" means any corporation, partnership, joint venture, limited
liability company, organization, entity, Authority or natural person.
"Prairie" shall have the meaning set forth in Section 2.1(c).
"Prairie Warrants" shall have the meaning set forth in Section 2.1(c).
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"Publicly Traded" means, with respect to any security, that such
security is (a) listed on a domestic securities exchange, (b) quoted on NASDAQ
or (c) traded in the domestic over-the-counter market, which trades are reported
by the National Quotation Bureau, Incorporated.
"Redemption Agreement" shall have the meaning set forth in
Section 5.2(d).
"Regulation" means any rule, law, code, statute, regulation, ordinance,
requirement, announcement, policy, guideline, rule of common law or other
binding action of or by an Authority and any judicial interpretation thereof.
"Surviving Corporation" shall have the meaning as set forth in
Section 1.1.
"Thane" shall have the meaning set forth in the Preamble.
"Thane Common Stock" shall have the meaning set forth in
Section 2.1(b).
"WARN Act" shall mean the Workers Adjustment and Retraining
Notification Act of 1988, as amended.
SECTION 7
CERTIFICATE OF INCORPORATION AND BYLAWS
7.1 At the Effective Time, the certificate of incorporation of
Xxxxx shall be the certificate of incorporation of the Surviving Corporation,
which may be amended from time to time after the Effective Time as provided by
law.
7.2 At the Effective Time, the bylaws of Xxxxx shall be the bylaws
of the Surviving Corporation, which may be amended from time to time after the
Effective Time as provided by the certificate of incorporation or said bylaws.
SECTION 8
OFFICERS AND DIRECTORS
8.1 The officers and directors of Xxxxx at the Effective Time of
the Merger shall be the officers and directors of the surviving corporation for
the full unexpired terms of their offices and until their successors have been
elected or appointed.
SECTION 9
AMENDMENT AND TERMINATION
9.1 This Agreement may be terminated and the transactions herein
contemplated may be abandoned at any time by the mutual consent of Xxxxx, Xxxxx
and Acquisition.
-11-
SECTION 10
MISCELLANEOUS
10.1 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, understandings, negotiations and
discussions, both written and oral, between the parties hereto with respect to
such subject matter.
10.2 Benefits, Binding Effect. This Agreement shall be for the
benefit of, and shall be binding upon, the parties hereto and their respective
successors and assigns.
10.3 Severability. The invalidity of any one of the words,
phrases, sentences, clauses, sections or subsections contained in this Agreement
shall not affect the enforceability of the remaining portions of this Agreement,
all of which are inserted conditionally on their being valid in law; if any one
of the words, phrases, sentences, clauses, sections or subsections contained in
this Agreement shall be declared invalid by a court of competent jurisdiction,
this Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, section or sections, or
subsection or subsections had not been inserted.
10.4 Section Headings. This section and the other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of any of the provisions of this Agreement.
10.5 Counterparts. This Agreement may be executed in any number
of counterparts and by the separate parties hereto in separate counterparts,
each of which shall be deemed to be an original and the one and the same
instrument.
* * *
-12-
IN WITNESS WHEREOF, the undersigned have executed this Agreement and
Plan of Merger as of the date first above written.
XXXXX HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
THANE INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxx
--------------------------------------
Name: Xxxxxxx X. Xxx
Title: Chief Executive Officer
XXXXX ACQUISITION CORPORATION
By: /s/ Xxxxx X. XxXxxx
--------------------------------------
Name: Xxxxx X. XxXxxx
Title: Vice President,
Chief Financial Officer
XXXXX HOLDINGS ACQUISITION CORPORATION
By: /s/ Xxxxx X. XxXxxx
--------------------------------------
Name: Xxxxx X. XxXxxx
Title: Vice President,
Chief Financial Officer
STOCKHOLDERS:
H.I.G. KPI, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Secretary
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
PRAIRIE CAPITAL MEZZANINE FUND, L.P.
By: Xxxxxxx & King Capital, L.L.C.,
its General Partner
By: /s/ Xxxxxxx X. Xxxx
----------------------------------
Name: Xxxxxxx X. Xxxx
Title: Managing Member
LEASE PLAN - XXXXX PRODUCTS
INVESTORS, L.P.
By: H.I.G. Capital, LLC, its General
Partner
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Partner
/s/ Xxxx Xxxxx
-----------------------------------------
Xxxx Xxxxx
/s/ Xxxxxx Xxxxx
-----------------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxx Xxxxxx
-----------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxx
-----------------------------------------
Xxxxxx Xxxxx
/s/ Xxxx Xxxx
-----------------------------------------
Xxxx Xxxx
/s/ Xxxxx Xxxxx
-----------------------------------------
Xxxxx Xxxxx
/s/ Xxxxxx Xxxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxxx
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
/s/ Xxxxxxxxx Xxxxx
-----------------------------------------
Xxxxxxxxx Xxxxx
/s/ Xxxxx Xxxx
-----------------------------------------
Xxxxx Xxxx
/s/ Xxxxxx Genio
-----------------------------------------
Xxxxxx Genio
/s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxx Xxxxxxxx
-----------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxx Xxxxxxx
-----------------------------------------
Xxx Xxxxxxx
/s/ Xxx Xxxx
-----------------------------------------
Xxx Xxxx
/s/ Xxxxxxx Xxxxxx
-----------------------------------------
Xxxxxxx Xxxxxx
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
SCHEDULE 2.1(b)
-------------------------------------------------------------------------------------------------------------------------------
NAME OF HOLDER OF XXXXX NUMBER OF SHARES OF XXXXX COMMON NUMBER OF SHARES OF THANE COMMON
COMMON STOCK STOCK HELD STOCK TO BE ISSUED
-------------------------------------------------------------------------------------------------------------------------------
H.I.G. KPI, Inc. 549,000 1,330,953
-------------------------------------------------------------------------------------------------------------------------------
Prairie Capital Mezzanine Fund, L.P. 40,667 98,590
-------------------------------------------------------------------------------------------------------------------------------
Lease Plan - Xxxxx Products Investors, L.P. 20,333 49,294
-------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxx 194,517 471,572
-------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx 194,517 471,572
-------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx 4,105 9,952
-------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx 5,000 12,122
-------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxx 10,000 24,243
-------------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxx 10,000 24,243
-------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx 2,000 4,849
-------------------------------------------------------------------------------------------------------------------------------
Xxxxxxxxx Xxxxx 3,000 7,273
-------------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxx 6,000 14,546
-------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Genio 2,000 4,849
-------------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx 1,000 2,424
-------------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx 1,000 2,424
-------------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxx 500 1,212
-------------------------------------------------------------------------------------------------------------------------------
Xxx Xxxxxxx 500 1,212
-------------------------------------------------------------------------------------------------------------------------------
Xxx Xxxx 500 1,212
-------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxx 500 1,212
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
TOTAL: 1,045,139 2,533,754
-------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 2.1(c)
-----------------------------------------------------------------------------------------------------------------------
NAME OF HOLDER OF XXXXX NUMBER OF XXXXX COMMON STOCK NUMBER OF SHARES OF THANE
COMMON STOCK WARRANTS WARRANTS HELD MMON STOCK TO BE ISSUED
-----------------------------------------------------------------------------------------------------------------------
Prairie Capital Mezzanine Fund, L.P. 41,667 101,014
-----------------------------------------------------------------------------------------------------------------------
SCHEDULE 2.1(d)
-------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES OF THANE
NAME OF HOLDER OF XXXXX NUMBER OF SHARES OF XXXXX COMMON STOCK TO BE HELD
COMMON STOCK COMMON STOCK HELD IN ESCROW
-------------------------------------------------------------------------------------------------------------------------
H.I.G. KPI, Inc. 549,000 154,205
-------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxx 194,517 54,636
-------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx 194,517 54,636
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
TOTAL: 938,034 263,477
-------------------------------------------------------------------------------------------------------------------------
SCHEDULE 3.1
Compliance with Law and Applicable Government Regulations
Xxxxx is currently in discussions with the Attorney General of the state of
Indiana for certain "Do Not Call" violations. The Indiana Attorney General is
asking for $17,500 to settle the violation, but Xxxxx is disputing the
violations since they resulted from Xxxxx'x DNC provider not having updated
files. The outcome is uncertain at the time.
SCHEDULE 3.2
Employees/Labor Employment Matters
In January 2002, Xxxxx settled a lawsuit with a former employee for
approximately $2,300, including attorney's fees and expenses. In the lawsuit,
it was alleged that Xxxxx was calculating overtime pay for their salespeople
incorrectly. The overtime calculations were based on hourly salary, but it was
determined that any commissions earned for that time should have been figured in
to calculate a new hourly rate for overtime purposes. While there are currently
no other similar lawsuits pending, the statute of limitations for such claims
runs for two years.
SCHEDULE 3.4
Title to Stock
None.
SCHEDULE 3.6
Capitalization of Xxxxx
Prairie Capital Mezzanine Fund, L.P. currently holds a warrant to purchase
41,667 shares of Xxxxx Common Stock at an exercise price per share of $0.001.
Pursuant to Section 2.1(c) of the Agreement, this warrant will be converted into
the right to receive shares of Thane Common Stock upon the consummation of the
Merger.
Xxxxxx Xxxxxxxxxx currently holds options to purchase 10,000 shares of Xxxxx
Common Stock at an exercise price per share of $15.00. Pursuant to Section 2.2
of the Agreement, these options will be assumed by Thane upon the consummation
of the Merger.
SCHEDULE 4.3
Capitalization of Thane
OPTIONS TO PURCHASE THANE'S COMMON STOCK, PAR VALUE $.001 PER SHARE
("THANE COMMON STOCK")
----------------------------------------------------------------------------------------------------------------------
OPTION NUMBER OF EXERCISE
NUMBER OPTIONEE DATE OF ISSUANCE OPTIONS PRICE
----------------------------------------------------------------------------------------------------------------------
1 Xxxx Xxxxxx June 10, 1999 320,000 $0.26875
----------------------------------------------------------------------------------------------------------------------
2 Xxxxxx Xxxxx June 10, 1999 240,000 $0.26875
----------------------------------------------------------------------------------------------------------------------
3 Xxxxxx Xxxxxx October 1, 1999 160,000 $0.26875
----------------------------------------------------------------------------------------------------------------------
4 Xxxx Xxxxxx June 1, 2000 320,000 $ 0.9375
----------------------------------------------------------------------------------------------------------------------
5 Xxxxx Xxxxxxx July 1, 2000 160,000 $ 1.875
----------------------------------------------------------------------------------------------------------------------
6 Xxxxxx Xxxxxxx August 1, 2000 80,000 $ 1.25
----------------------------------------------------------------------------------------------------------------------
7 Xxxxxx Xxxxx September 1, 2000 80,000 $ 1.25
----------------------------------------------------------------------------------------------------------------------
8 Xxxxx Xxxxx October 1, 1999 80,000 $0.26875
----------------------------------------------------------------------------------------------------------------------
9 Xxxx See August 5, 2001 80,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
10 Xxxxxxxx Xxxxxxxx August 5, 2001 80,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
11 Xxxxx Xxxxxxxx August 5, 2001 32,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
12 Xxxxxxxx Xxxxxxxxx August 5, 2001 64,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
13 Xxxxx Xxxxx August 5, 2001 64,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
14 Xxxxx X. Xxxxxx August 6, 2001 83,232 $ 6.25
----------------------------------------------------------------------------------------------------------------------
15 Xxxxx X. Xxxxxx August 6, 2001 9,248 $ 6.25
----------------------------------------------------------------------------------------------------------------------
16 Xxxx Xxxxxx August 6, 2001 29,376 $ 6.25
----------------------------------------------------------------------------------------------------------------------
17 Xxxx Xxxxxx August 6, 2001 3,264 $ 6.25
----------------------------------------------------------------------------------------------------------------------
18 Xxxxxxx X. Xxxxxx August 6, 2001 83,232 $ 6.25
----------------------------------------------------------------------------------------------------------------------
19 Xxxxxxx X. Xxxxxx August 6, 2001 9,248 $ 6.25
----------------------------------------------------------------------------------------------------------------------
20 Xxxxxx Xxxxx August 6, 2001 48,960 $ 6.25
----------------------------------------------------------------------------------------------------------------------
21 Xxxxxx Xxxxx August 6, 2001 5,440 $ 6.25
----------------------------------------------------------------------------------------------------------------------
22 Xxxxxx Xxxxxx August 5, 2001 32,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
23 Xxxxxx Xxxxxxx August 5, 2001 160,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
24 Xxxxxxx Xxxxx August 5, 2001 80,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
25 Xxxxxx Xxxxx August 5, 2001 16,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
26 Xxxxxx Xxxxx August 5, 2001 16,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
27 Xxxxx Xxxxxxxx August 5, 2001 16,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
28 Xxxx Xxxxxxxxx August 5, 2001 16,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
29 Xxxx Xxx August 5, 2001 16,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
30 Xxxxx Xxxxxx August 5, 2001 16,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
31 Xxx Xxxxxx August 5, 2001 16,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
32 Xxxxxxx Xxxxxxx August 5, 2001 16,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
33 Xxxxx Xxxxx August 5, 2001 80,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
34 Xxxxxx Xxxxxx August 5, 2001 128,000 $5.46875
----------------------------------------------------------------------------------------------------------------------
35 Xxxxx X. XxXxxx December 19, 2001 240,000 $ 6.25
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
TOTAL 2,880,000
----------------------------------------------------------------------------------------------------------------------
SCHEDULE 4.3
Page 2
WARRANTS TO PURCHASE THANE COMMON STOCK
------------------------------------------------------------------------------------------------------------------------
WARRANT NUMBER OF EXERCISE
NUMBER WARRANT HOLDER DATE OF ISSUANCE WARRANTS PRICE
------------------------------------------------------------------------------------------------------------------------
:
WB-1 Paribas North America, Inc. March 13, 2002 572,192 $0.001
------------------------------------------------------------------------------------------------------------------------
WB-2 Paribas Capital Funding LLC March 13, 2002 220,704 $0.001
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
TOTAL 792,896
------------------------------------------------------------------------------------------------------------------------
OTHER AGREEMENTS TO ISSUE THANE COMMON STOCK
Thane has agreed, pursuant to that certain Amended and Restated
Agreement and Plan of Merger, dated as of December 6, 2001 (the "Reliant Merger
Agreement"), by and among Thane, Reliant Acquisition Corporation, Reliant
Interactive Media Corp. ("Reliant") and Messrs. Xxxxx Xxxxxxxxxx, Xxxxxxx
Xxxxxxxxxx and Xxx Xxxxxx, as stockholders of Reliant, to issue 3,532,375 shares
of Thane Common Stock upon the consummation of the transactions contemplated by
the Reliant Merger Agreement.