EXHIBIT 2.1
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
by and among
THANE INTERNATIONAL, INC.,
RELIANT ACQUISITION CORPORATION,
RELIANT INTERACTIVE MEDIA CORP.
and
XXXXX XXXXXXXXXX, XXXXXXX XXXXXXXXXX AND XXX XXXXXX, as
Stockholders of Reliant Interactive Media Corp.
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Dated
December 6, 2001
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................................................
ARTICLE II THE MERGER.................................................................................
SECTION 2.1 The Merger............................................................................
SECTION 2.2 Filing................................................................................
SECTION 2.3 Effective Time of the Merger..........................................................
SECTION 2.4 Effect of the Merger..................................................................
SECTION 2.5 Charter...............................................................................
SECTION 2.6 Bylaws................................................................................
SECTION 2.7 Directors and Officers................................................................
SECTION 2.8 Conversion............................................................................
SECTION 2.9 Closing..............................................................................
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE CORPORATION AND THE CONTROLLING STOCKHOLDERS........
SECTION 3.1 Organization and Standing.............................................................
SECTION 3.2 Authorization.........................................................................
SECTION 3.3 Due Execution and Delivery; Binding Obligations.......................................
SECTION 3.4 No Violation..........................................................................
SECTION 3.5 Consents and Approvals................................................................
SECTION 3.6 Subsidiaries..........................................................................
SECTION 3.7 Permits...............................................................................
SECTION 3.8 Capital Stock.........................................................................
SECTION 3.9 Litigation............................................................................
SECTION 3.10 Financial Statements; No Undisclosed Liabilities; Commission Documents................
SECTION 3.11 Change in Condition...................................................................
SECTION 3.12 Employee Benefit Plans and Labor Matters..............................................
SECTION 3.13 Interests in Real Property............................................................
SECTION 3.14 Leases................................................................................
SECTION 3.15 Compliance with Law...................................................................
SECTION 3.16 Related Party Transactions............................................................
SECTION 3.17 Tax Matters...........................................................................
SECTION 3.18 Environmental Matters.................................................................
SECTION 3.19 Intellectual Property.................................................................
SECTION 3.20 Registration Rights...................................................................
SECTION 3.21 Insurance.............................................................................
SECTION 3.22 Material Contracts....................................................................
SECTION 3.23 Questionable Payments.................................................................
SECTION 3.24 Brokers...............................................................................
SECTION 3.25 Books and Records.....................................................................
(i)
SECTION 3.26 Personal Property.....................................................................
SECTION 3.27 Advertising...........................................................................
SECTION 3.28 Customer Warranties...................................................................
SECTION 3.29 Products Liability....................................................................
SECTION 3.30 Capital Expenditures and Investments..................................................
SECTION 3.31 Accounts Receivable; Inventories......................................................
SECTION 3.32 Disclosure............................................................................
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THANE....................................................
SECTION 4.1 Organization and Standing.............................................................
SECTION 4.2 Authorization.........................................................................
SECTION 4.3 Due Execution and Delivery; Binding Obligations.......................................
SECTION 4.4 Capital Stock.........................................................................
SECTION 4.5 No Violation..........................................................................
SECTION 4.6 Consents and Approvals................................................................
SECTION 4.7 Subsidiaries..........................................................................
SECTION 4.8 Permits...............................................................................
SECTION 4.9 Litigation............................................................................
SECTION 4.10 Financial Statements; No Undisclosed Liabilities......................................
SECTION 4.11 Change in Condition...................................................................
SECTION 4.12 Employee Benefit Plans and Labor Matters..............................................
SECTION 4.13 Interests in Real Property............................................................
SECTION 4.14 Leases................................................................................
SECTION 4.15 Compliance with Law...................................................................
SECTION 4.16 Related Party Transactions............................................................
SECTION 4.17 Tax Matters...........................................................................
SECTION 4.18 Environmental Matters.................................................................
SECTION 4.19 Intellectual Property.................................................................
SECTION 4.20 Insurance.............................................................................
SECTION 4.21 Material Contracts....................................................................
SECTION 4.22 Questionable Payments.................................................................
SECTION 4.23 Brokers...............................................................................
SECTION 4.24 Books and Records.....................................................................
SECTION 4.25 Personal Property.....................................................................
SECTION 4.26 Advertising...........................................................................
SECTION 4.27 Customer Warranties...................................................................
SECTION 4.28 Products Liability....................................................................
SECTION 4.29 Capital Expenditures and Investments..................................................
SECTION 4.30 Accounts Receivable; Inventories......................................................
SECTION 4.31 Disclosure............................................................................
SECTION 4.32 Xxxxx Holdings, Inc...................................................................
ARTICLE V COVENANTS OF THE CORPORATION...............................................................
SECTION 5.1 Operation of Business.................................................................
SECTION 5.2 Access to Books and Records...........................................................
(ii)
SECTION 5.3 Compliance with Conditions; Commercially Reasonably Efforts...........................
SECTION 5.4 Consents and Approvals................................................................
SECTION 5.5 Corporation Stockholder Approval......................................................
SECTION 5.6 No Solicitation.......................................................................
SECTION 5.7 Notification of Certain Matters.......................................................
SECTION 5.8 Certain Tax Covenants.................................................................
SECTION 5.9 Confidentiality.......................................................................
SECTION 5.10 Certain Tax Covenants.................................................................
SECTION 5.11 Options Cancellation..................................................................
ARTICLE VI COVENANTS OF THANE.........................................................................
SECTION 6.1 Operation of Business.................................................................
SECTION 6.2 Access to Books and Records...........................................................
SECTION 6.3 Compliance with Conditions; Commercially Reasonable Efforts...........................
SECTION 6.4 Consents and Approvals................................................................
SECTION 6.5 Registration Statement; Listing.......................................................
SECTION 6.6 Confidential Information..............................................................
SECTION 6.7 Notification of Certain Matters.......................................................
SECTION 6.8 Working Capital.......................................................................
ARTICLE VII CONDITIONS PRECEDENT TO CLOSING............................................................
SECTION 7.1 Conditions to the Corporation's Obligations...........................................
SECTION 7.2 Conditions to Thane's Obligations.....................................................
ARTICLE VIII TERMINATION................................................................................
SECTION 8.1 Termination of Agreement..............................................................
SECTION 8.2 Effect of Termination.................................................................
ARTICLE IX INDEMNIFICATION............................................................................
SECTION 9.1 Survival; Indemnification.............................................................
SECTION 9.2 Limitations...........................................................................
SECTION 9.3 Third Party Claims....................................................................
SECTION 9.4 Security for the Indemnification Obligation...........................................
ARTICLE X MISCELLANEOUS..............................................................................
SECTION 10.1 Amendment and Modification............................................................
SECTION 10.2 Notices...............................................................................
SECTION 10.3 Governing Law.........................................................................
SECTION 10.4 Entire Agreement......................................................................
SECTION 10.5 Waivers and Extensions................................................................
SECTION 10.6 Titles and Headings; Interpretation...................................................
SECTION 10.7 Exhibits and Schedules................................................................
SECTION 10.8 Expenses; Brokers.....................................................................
(iii)
SECTION 10.9 Press Releases and Public Announcements...............................................
SECTION 10.10 Assignment; No Third Party Beneficiaries..............................................
SECTION 10.11 Severability..........................................................................
SECTION 10.12 Counterparts; Facsimile...............................................................
SECTION 10.13 Further Assurances....................................................................
SECTION 10.14 Remedies Cumulative...................................................................
(iv)
AMENDED AND RESTATED AGREEMENT AND
PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated
as of the 6th day of December, 2001 (the "Agreement"), by and among THANE
INTERNATIONAL, INC., a Delaware corporation ("Thane"), RELIANT ACQUISITION
CORPORATION, a Nevada corporation wholly owned by Thane ("Acquisition"), RELIANT
INTERACTIVE MEDIA CORP., a Nevada corporation (the "Corporation"), and XXXXX
XXXXXXXXXX, XXXXXXX XXXXXXXXXX and XXX XXXXXX, stockholders of the Corporation
(individually, a "Controlling Stockholder," and collectively, the "Controlling
Stockholders"). The Corporation, Acquisition, Thane and the Controlling
Stockholders are sometimes referred to herein individually as a "Party" and
collectively as the "Parties."
W I T N E S S E T H:
WHEREAS, the Corporation, Thane and the Controlling
Stockholders entered into that certain Agreement and Plan of Merger and Plan of
Reorganization, dated as of November 21, 2001 (the "Original Agreement"); and
WHEREAS, it is the intent of the Parties that the structure of
the transactions contemplated by the Original Agreement be amended and the
Parties desire to amend and restate the Original Agreement to more clearly
delineate such intent; and
WHEREAS, the Corporation is a publicly traded company whose
shares of common stock, par value $.001 per share (the "Corporation Common
Stock"), are currently traded on the National Association of Securities Dealer's
Over-the-Counter Electronic Bulletin Board ("OTC-BB"); and
WHEREAS, Acquisition desires to merge with and into the
Corporation, and Thane and Acquisition desire that Acquisition be merged with
and into the Corporation, so that the Corporation will be the surviving
corporation (the "Merger"), all upon the terms and subject to the conditions set
forth herein and in accordance with the laws of State of Nevada; and
WHEREAS, the parties hereto intend that such transaction be
treated for federal income tax purposes as a "reorganization" within the meaning
of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"),
and in furtherance thereof, intend that this Agreement shall be a "plan of
reorganization" within the meaning of Sections 354(a) and 361(a) of the Code;
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
Corporation into shares of the Class A common stock, par value $.001 per share
(the "Thane Common 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;
and
WHEREAS, the Board of Directors of each of the Corporation and
Thane have unanimously (i) determined that the Merger is advisable and is fair
to, and in the best interests of, each of the Corporation and Thane,
respectively, and (ii) resolved to recommend that the stockholders of each of
such companies adopt and approve the Merger and this Agreement; and
WHEREAS, as a material inducement to Thane to enter into this
Agreement and to consummate the transactions contemplated hereby, the
Controlling Stockholders concurrently with the execution of this Agreement are
executing and delivering the Amended and Restated Affiliate Voting Agreement in
the form of Exhibit A hereto; and
WHEREAS, effective immediately prior to the Effective Time (as
defined herein), Thane will effect a stock split with respect to its
then-outstanding shares of Thane Common Stock, as determined by Thane's Board of
Directors (the "Stock Split"); and
NOW, THEREFORE, in consideration of the mutual premises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"Acquisition" shall have the meaning set forth in the
Preamble.
"Action" means any Claim, suit, litigation, proceeding,
arbitration or mediation.
"Affiliate" means, with regard to any Person, (a) any Person,
directly or indirectly, controlled by, under common control of, or controlling
such Person; (b) any Person, directly or indirectly, in which such Person holds,
of record or beneficially, five percent (5%) or more of the equity or voting
securities; (c) any Person that holds, of record or beneficially, five percent
(5%) or more of the equity or voting securities of such Person; (d) any Person
that, through Contract, relationship or otherwise, exerts a substantial
influence on the management of such Person's affairs; (e) any Person that,
through Contract, relationship or otherwise, is influenced substantially in the
management of its affairs by such Person; (f) any director, officer, partner or
individual holding a similar position in respect of such Person; or (g) as to
any natural Person, any Person related by blood, marriage or adoption and any
Person owned by such Persons, including without limitation, any spouse, parent,
grandparent, aunt, uncle, child, grandchild, sibling, cousin or in-law of such
Person.
"Affiliate Voting Agreement" means that certain Amended and
Restated Affiliate Voting and Lock-Up Agreement, executed by the Corporation,
Thane and each of the Controlling Stockholders, on the date hereof, as the same
may be amended from time to time.
"Alternative Transaction" shall have the meaning set forth in
Section 5.6(a).
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"Agreement" shall have the meaning set forth in the Preamble.
"Applicable Law" means, with respect to any Person, any law,
statute, rule, regulation, ordinance, order, writ, injunction, judgment or
decree of any Governmental Authority to which such Person or any of its
Subsidiaries is bound or to which any of their respective assets or properties
is subject.
"Articles of Merger" shall have the meaning set forth in
Section 2.2.
"Business Combination" means, with respect to any person, (a)
any merger, consolidation, share exchange, reorganization or other business
combination transaction to which such Person is a party, (b) any sale, or other
disposition of any capital stock or other equity interests of such Person
(except for issuances of common stock upon conversion of preferred stock
outstanding on the date hereof or the exercise of Options or warrants
outstanding on the date hereof or issued in accordance with this Agreement), (c)
any tender offer (including a self tender), exchange offer, recapitalization,
restructuring, liquidation, dissolution or similar or extraordinary transaction,
(d) any sale, dividend or other disposition of all or a substantial portion of
the assets and properties of such Person (including by way of exclusive license
or joint venture formation) other than sales of inventory and license in the
ordinary course of such Person's business and consistent with past practice, or
(e) the entering into of any Contract or understanding, the granting of any
rights or Options, or the acquiescence of such Person, to do any of the
foregoing.
"Business Day" means any day except a Saturday, a Sunday or
any other day on which commercial banks are required or authorized to close in
New York, New York.
"Bylaws" with respect to any corporation means the bylaws of
such corporation.
"CERCLA" means Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, and the Regulations
thereunder.
"CERCLIS" means Comprehensive Environmental Response,
Compensation, and Liability Information System.
"Certificates" shall have the meaning set forth in Section
2.8(b)(ii).
"Charter" with respect to any corporation means the
certificate of incorporation or articles of incorporation of such corporation.
"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.
"Closing" shall have the meaning set forth in Section 2.9.
"Closing Date" shall have the meaning set forth in Section
2.9.
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"COBRA" shall have the meaning set forth in Section 3.12(d).
"Code" shall have the meaning set forth in the Recitals.
"Commission" means the United States Securities and Exchange
Commission.
"Commission Documents" shall have the meaning set forth in
Section 3.10(d).
"Contract" means any agreement, contract, commitment,
instrument, document, certificate or other binding arrangement or understanding,
whether written or oral.
"Controlling Stockholder" and "Controlling Stockholders" shall
have the meaning set forth in the Preamble.
"Corporation" shall have the meaning set forth in the
Preamble.
"Corporation Commitments" shall have the meaning set forth in
Section 3.22(a).
"Corporation Common Stock" shall have the meaning set forth in
the Recitals.
"Corporation Employee Benefit Plans" shall have the meaning
set forth in Section 3.12(a)(iii).
"Corporation Entities" means collectively, the Corporation and
each of its direct and indirect Subsidiaries identified on Exhibit B hereto.
"Corporation Financial Statements" shall have the meaning set
forth in Section 3.10(a).
"Corporation Leases" shall have the meaning set forth in
Section 3.14(a)(i).
"Corporation Special Meeting" shall have the meaning set forth
in Section 5.5(a).
"DGCL" means the Delaware General Corporation Law as in effect
on the date hereof.
"Documents" means (i) this Agreement, (ii) the Affiliate
Voting Agreement, (iii) the Employment Agreements and (iv) the Escrow Agreement.
"Effective Time" means the meaning set forth in Section 2.3.
"Employment Agreement" shall mean those Employment Agreements,
dated as of the Closing Date, between the Corporation and each of the
Controlling Stockholders, substantially in the forms attached hereto as
Exhibit C.
"Environmental Law" means any Regulation, Order, settlement
agreement or Governmental Authority requirement, which relates to or otherwise
imposes liability or standards of conduct concerning the environment, health,
safety or Hazardous Substances, including
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without limitation, discharges, emissions, releases or threatened releases of
noises, odors or any Hazardous Substances, whether as matter or energy, into
ambient air, water, or land, or otherwise relating to the manufacture,
processing, generation, distribution, use, treatment, storage, disposal,
cleanup, transport or handling of Hazardous Substances, including but not
limited to CERCLA, the Superfund Amendments and Reauthorization Act of 1986, the
Hazardous Material Transportation Act, the Resource Conservation and Recovery
Act of 1976, the Toxic Substances Control Act, the Federal Water Pollution
Control Act, the Clean Water Act, the Clean Air Act, the Occupational Safety and
Health Act, any so-called "Superlien" law, all as now or hereafter amended or
supplemented, and the Regulations promulgated thereunder, and any other similar
Federal, state or local Regulations.
"ERISA" shall have the meaning set forth in Section
3.12(a)(i).
"Escrow Agent" means Citibank, N.A.
"Escrow Agreement" means that certain Escrow Agreement, to be
dated the Closing Date, among the Controlling Stockholders, the Corporation, the
Thane Securing Stockholders and the Escrow Agent, substantially in the form
attached hereto as Exhibit D.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Agent" shall have the meaning set forth in Section
2.8(b)(i).
"Exchange Fund" shall have the meaning set forth in Section
2.8(b)(i).
"Exchange Ratio" means (i) if the Xxxxx Merger is completed on
or prior to the Effective Time, 0.3352182 share of Thane Common Stock for every
one (1) share of Corporation Common Stock or (ii) if the Xxxxx Merger is not
completed on or prior to the Effective time, 0.3440462 share of Thane Common
Stock for every one (1) share of Corporation Common Stock, in either case
assuming (a) a proposed Stock Split of 32:1 prior to the Effective Time, (b)
11,583,621 shares of Corporation Common Stock outstanding on the date hereof,
(c)(i) 1,092,105 shares of Thane Common Stock outstanding if the Xxxxx Merger is
completed prior to the Effective Time (prior to a Stock Split) and (ii)
1,018,034 shares of Thane Common Stock outstanding if the Xxxxx Merger is not
completed prior to the Effective Time (prior to a Stock Split), and (d) no
Options to acquire Corporation Common Stock outstanding. The Exchange Ratio set
forth above shall be adjusted (a) proportionately (i) in the event no Stock
Split is effected by Thane prior to the Effective Time or any Stock Split so
effected prior to the Effective Time is in a ratio other than 32:1 or (ii) in
the event of a stock dividend (other than the Stock Split), recapitalization or
other transaction that has the effect of increasing or decreasing the number of
shares of capital stock held by all the stockholders of either Thane or the
Corporation as set forth above and (b) downward in the event there are more than
11,583,621 shares of Corporation Common Stock outstanding.
"Financial Statement Date" shall have the meaning set forth in
Section 3.10(a).
"GAAP" means United States generally accepted accounting
principles, consistently applied, as in existence at the date hereof.
"Governmental Authority" means any governmental, regulatory or
administrative body, agency, commission, board, arbitrator or authority, any
court or judicial authority, any
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public, private or industry regulatory authority, whether international,
national, federal, state or local.
"Guarantee" means any guarantee or other contingent liability
(other than any endorsement for collection or deposit in the ordinary course of
business), direct or indirect with respect to any obligations of another Person,
through a Contract or otherwise, including, without limitation, (a) any
endorsement or discount with recourse or undertaking substantially equivalent to
or having economic effect similar to a guarantee in respect of any such
obligations and (b) any Contract (i) to purchase, or to advance or supply funds
for the payment or purchase of, any such obligations, (ii) to purchase, sell or
lease property, products, materials or supplies, or transportation or services,
in respect of enabling such other Person to pay any such obligation or to assure
the owner thereof against loss regardless of the delivery or nondelivery of the
property, products, materials or supplies or transportation or services or (iii)
to make any loan, advance or capital contribution to or other Investment in, or
to otherwise provide funds to or for, such other Person in respect of enabling
such Person to satisfy an obligation (including any liability for a dividend,
stock liquidation payment or expense) or to assure a minimum equity, working
capital or other balance sheet condition in respect of any such obligation.
"Hazardous Substances" shall be construed broadly to include
any toxic or hazardous substance, material, or waste, any petroleum or petroleum
products, radioactive materials, asbestos in any form that has become friable,
ura formaldehyde foam insulation, dielectric fluid containing levels of
polychlorinated biphenyls, and radon gas, any chemicals, materials or substances
defined or included in the definition of "hazardous substances," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," or words of similar
import, under any applicable Environmental Law, any other chemical, material or
substance, exposure to which is prohibited, limited, or regulated by any
Governmental Authority and any other contaminant, pollutant or constituent
thereof, whether liquid, solid, semi-solid, sludge and/or gaseous, including
without limitation, chemicals, compounds, by-products, pesticides, asbestos
containing materials, petroleum or petroleum products or by-products, and
polychlorinated biphenyls, the presence of which requires investigation or
remediation under any Environmental Law or which are regulated, listed or
controlled by, under or pursuant to any Environmental Law, or which has been or
shall be determined or interpreted at any time by any Governmental Authority to
be a hazardous or toxic substance regulated under any other Regulation or Order.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and applicable rules and regulations and any similar
state acts.
"Hurdle Rate" shall have the meaning set forth in Section
9.2(a).
"Indebtedness" with respect to any Person, means (a) any
obligation of such Person for borrowed money, but in any event shall include:
(i) any obligation or liabilities incurred for all or any part of the purchase
price of property or other assets or for the cost of property or other assets
constructed or of improvements thereto, other than accounts payable included in
current liabilities and incurred in respect of property purchased in the
ordinary course of business, (whether or not such Person has assumed or become
liable for the payment of such obligation) (whether accrued, absolute,
contingent, unliquidated or otherwise, known or
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unknown, whether due or to become due); (ii) the face amount of all letters of
credit issued for the account of such Person and all drafts drawn thereunder;
(iii) obligations incurred for all or any part of the purchase price of property
or other assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current
liabilities and incurred in respect of property purchased in the ordinary course
of business (whether or not such Person has assumed or become liable for the
payment of such obligation) secured by Liens; (iv) capitalized lease
obligations; and (v) all Guarantees of such Person; (b) accounts payable of such
Person that have not been paid within sixty (60) days of their due date and are
not being contested; (c) annual employee bonus obligations that are not accrued
on the financial statements; and (d) retroactive insurance premium obligations.
"Indemnified Party" shall have the meaning set forth in
Section 9.3(a).
"Indemnifying Party" shall have the meaning set forth in
Section 9.3(a).
"Intellectual Property" means all domestic and foreign
trademarks, service marks, trade names, corporate and business names, brand
names, Internet domain names, universal resource locators ("URLs"), designs,
logos, trade dress, slogans, and general intangibles of like nature, together
with all goodwill, registrations and applications related to the foregoing
(collectively, "Trademarks"); patents and industrial designs (including any
continuations, divisionals, continuations-in-part, renewals, provisionals,
reissues, and applications for any of the foregoing); registered copyrights
(including any registrations and applications for any of the foregoing);
Software; "mask works" (as defined under 17 USC section 901) and any
registrations and applications for "mask works"; inventions (whether or not
patentable), invention disclosures, moral and economic rights of authors and
inventors (however denominated), technical data and customer lists; technology,
trade secrets and other confidential information, know-how, proprietary
processes, formulae, algorithms, models, and methodologies (whether or not
patentable) (collectively, "Trade Secrets"); all improvements and refinements of
any of the foregoing; rights of publicity and privacy relating to the use of the
names, likenesses, voices, signatures and biographical information of real
Persons; in each case used in or necessary for the business of a Person or any
of its Subsidiaries.
"Investment" means (a) any direct or indirect ownership,
purchase or other acquisition by a Person of any notes, obligations,
instruments, capital stock, Options, securities or ownership interests
(including partnership interests and joint venture interests) of any other
Person; and (b) any capital contribution or similar obligation by a Person to
any other Person.
"Knowledge" means (a) as to the Controlling Stockholders, the
actual or constructive knowledge of any of the Controlling Stockholders, (b) as
to the Corporation, the actual or constructive knowledge of the senior
management of the Corporation and the most senior person in any office or
facility of the Corporation, assuming such persons act in a prudent business
fashion, and (c) as to Thane, the actual or constructive knowledge of the senior
management of Thane assuming such persons act in a prudent business fashion. For
the purpose of this definition, the term "constructive knowledge" shall mean the
knowledge that a Person had or should have had in the proper performance of his
or her duties.
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"Xxxxx Merger" means the merger or other similar business
combination between Thane and Xxxxx Holdings, Inc., a Delaware corporation.
"License Agreements" shall have the meaning set forth in
Section 3.19(b).
"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.
"Material Adverse Effect" means a material adverse effect (i)
on the business, operations, properties, assets, liabilities or condition
(financial or otherwise) of the Corporation and its Subsidiaries, taken as a
whole, or Thane and its Subsidiaries, taken as a whole, as the case may be,
other than as a result of general economic or industry conditions or (ii) on the
ability of the Corporation or any of its Subsidiaries or Thane and its
Subsidiaries, as the case may be, to perform their respective obligations
hereunder or under any of the other Documents.
"Merger" shall have the meaning set forth in the Preamble.
"Merger Consideration" shall have the meaning set forth in
2.8(a)(ii).
"NASD" means the National Association of Securities Dealers,
Inc.
"NGCL" means the Nevada General Corporation Law as in effect
on the date hereof.
"Notice" shall have the meaning set forth in Section 10.2.
"Occurrence" means any accident, happening or event which
occurs or has occurred at any time prior to the Closing Date that is caused or
allegedly caused by any hazard or defect in manufacture, design, materials or
workmanship including, without limitation, any failure or alleged failure to
warn or any breach or alleged breach of express or implied warranties or
representations with respect to a product manufactured, shipped, sold or
delivered by or on behalf of any of the Corporation Entities or the Thane
Entities, as the case may be, which results or is alleged to have resulted in
injury or death to any Person or damage to or destruction of property (including
damage to or destruction of the product itself) or other consequential damages,
at any time.
"Option" means any subscription, option, warrant, right,
security, Contract, commitment, understanding, stock appreciation right, phantom
stock option, profit participation or arrangement by which with respect (a) any
Corporation Entity, such Corporation Entity is bound to issue any additional
shares of its capital stock or an interest in the equity or equity appreciation
of such Corporation Entity or rights pursuant to which any Person has a right to
purchase shares of such Corporation Entity's capital stock or an interest in the
equity or equity appreciation of such Corporation Entity or (b) any Thane
Entity, such Thane Entity is bound to
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issue any additional shares of its capital stock or an interest in the equity or
equity appreciation of such Thane Entity or rights pursuant to which any Person
has a right to purchase shares of such Thane Entity's capital stock or an
interest in the equity or equity appreciation of such Thane Entity.
"Order" means any writ, decree, order, judgment, injunction,
rule, ruling, Lien, voting right, consent of or by an Authority.
"Original Agreement" shall have the meaning set forth in the
Recitals.
"OTC-BB" shall have the meaning set forth in the Recitals.
"Overlap Period" shall have the meaning set forth in Section
5.8(b).
"Party" or "Parties" shall have the meanings set forth in the
Preamble.
"Permits" shall have the meaning set forth in Section 3.7.
"Permitted Liens" means (a) liens for Taxes and other
governmental charges and assessments arising in the ordinary course of business
which are not yet due and payable, (b) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens arising in the
ordinary course of business for sums not yet due and payable, and (c) other
liens or imperfections on property which are not material in amount, do not
materially interfere with, and are not violated by, the consummation of the
transactions contemplated by this Agreement, and do not materially impair the
marketability of, or materially detract from the value of or materially impair
the existing use of, the property affected by such lien or imperfection.
"Person" means any individual, partnership, corporation,
limited liability company, limited partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, Governmental Authority
or political subdivision thereof, or other entity.
"Pre-Closing Period" shall have the meaning set forth in
Section 3.17(a).
"Proposal Notice" shall have the meaning set forth in Section
5.6(a).
"Pro Rata Portion" means (a) with respect to the Controlling
Stockholders, each Controlling Stockholder's proportion of the Reliant Escrow
Shares determined (for each Controlling Stockholder) by dividing (i) the number
of shares of Thane Common Stock issuable to such Controlling Stockholder
pursuant to the Merger by (ii) the aggregate number of shares of Thane Common
Stock issuable to the Controlling Stockholders pursuant to the Merger, and (b)
with respect to the Thane Securing Stockholders, each Thane Securing
Stockholder's proportion of the Thane Escrow Shares determined (for each Thane
Securing Stockholder) by dividing (i) the number of shares of Thane Common Stock
owned by such Thane Securing Stockholder immediately prior to the Effective Time
by (ii) aggregate number of shares of Thane Common Stock owned by all of the
Thane Securing Stockholders immediately prior to the Effective Time.
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"Registration Statement" shall have the meaning set forth in
Section 6.5(a).
"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 Governmental Authority and any judicial
interpretation thereof.
"Related Party" shall have the meaning set forth in Section
3.16.
"Reliant Escrow Shares" means the number of shares of Thane
Common Stock owned by the Controlling Stockholders having a fair market value
equal to $2.4 million based on the opening price of the Thane Common Stock on
the Nasdaq National Market, or if the Thane Common Stock is not then admitted
for trading on the Nasdaq National Market, the opening price of the Thane Common
Stock on such national securities exchange or such other exchange on which the
Thane Common Stock is then listed for quotation. The Reliant Escrow Shares are
to be deposited by the Controlling Stockholders in connection with the Closing
into escrow pursuant to the Escrow Agreement in order to secure the
indemnification obligations of the Corporation and the Controlling Stockholders
pursuant to Article IX hereof. Each Controlling Stockholder shall contribute
into escrow his Pro Rata Portion of shares of the Thane Common Stock
constituting the Reliant Escrow Shares.
"Representatives" shall have the meaning set forth in Section
5.6(a).
"Schedule" shall have the meaning set forth in Article III.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Software" means any and all (a) computer programs, including
any and all software implementation of algorithms, models and methodologies,
whether in source code or object code form, (b) databases and compilations,
including any and all data and collections of data, (c) designs, processes,
procedures and data collectors, and (d) all documentation, including user
manuals and training materials, relating to any of the foregoing.
"Stock Split" shall have the meaning set forth in the
Recitals.
"Subsequent Filings" shall have the meaning set forth in
Section 3.10(d).
"Subsidiary" means, with respect to any Person, (a) a
corporation a majority of whose capital stock with voting power, under ordinary
circumstances, to elect at least a majority of directors is at the time,
directly or indirectly, owned by such Person, by a Subsidiary of such Person, or
by such Person and one or more subsidiaries of such Person, (b) a partnership in
which such Person or a Subsidiary of such Person is, at the date of
determination, a general partner of such partnership, or (c) any other Person
(other than a corporation) in which such Person, a Subsidiary of such Person or
such Person and one or more subsidiaries of such Person, directly or indirectly,
at the date of determination thereof, has (i) at least a majority ownership
interest, (ii) the power to elect or direct the election of at least a majority
of the directors or other governing body of such Person, or (iii) the power to
direct or cause the direction of the affairs or
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management of such Person. For purposes of this definition, a Person is deemed
to own any capital stock or other ownership interest if such Person has the
right to acquire such capital stock or other ownership interest, whether through
the exercise of any purchase option, conversion privilege or similar right.
"Superior Proposal" means an unsolicited Alternative
Transaction made by a third party to the board of directors of the Corporation
which in the good faith judgment of the board of directors of the Corporation,
(a) consistent with the written advice of an independent reputable investment
bank, provides higher value to the Corporation's stockholders than the
transactions contemplated by this Agreement; (b) is likely to be consummated in
accordance with its terms; and (c) all required financing is supported by a
commitment letter in customary form.
"Surviving Corporation" shall have the meaning set forth in
Section 2.1.
"Taxes" means all taxes, assessments, charges, duties, fees,
levies or other governmental charges, including, without limitation, all
Federal, state, local, foreign and other income, franchise, profits, gross
receipts, capital gains, capital stock, transfer, property, sales, use,
value-added, occupation, excise, severance, windfall profits, stamp, license,
payroll, social security, withholding and other taxes, assessments, charges,
duties, fees, levies or other governmental charges of any kind whatsoever
(whether payable directly or by withholding and whether or not requiring the
filing of a Tax Return), all estimated taxes, deficiency assessments, additions
to tax, penalties and interest and shall include any liability for such amounts
as a result either of being a member of a combined, consolidated, unitary or
affiliated group or of a contractual obligation to indemnify any Person or other
entity.
"Tax Returns" means all returns, declarations, statements,
schedules, forms, reports, information returns, elections, disclosures,
estimates or other documents (including any related or supporting information),
and any amendments thereto, filed or required to be filed with any Governmental
Authority in connection with the determination, assessment, collection or
administration of any Taxes.
"Thane" shall have the meaning set forth in the Preamble.
"Thane Commitments" shall have the meaning set forth in
Section 4.19(a).
"Thane Common Stock" shall have the meaning set forth in the
Recitals.
"Thane Employee Benefit Plans" shall have the meaning set
forth in Section 4.11(a).
"Thane Entities" shall mean collectively Thane and each of its
direct and indirect Subsidiaries set forth on Exhibit E hereto.
"Thane Escrow Shares" means shares of Thane Common Stock owned
by the Thane Securing Stockholders having a fair market value equal to $2.4
million based on the opening price of the Thane Common Stock on the Nasdaq
National Market, or if the Thane Common Stock is not admitted for trading on the
Nasdaq National Market, the opening price of
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the Thane Common Stock on such national securities exchange or such other
exchange on which the Thane Common Stock is then listed for quotation. The Thane
Escrow Shares are to be deposited in connection with the Closing into escrow
pursuant to the Escrow Agreement in order to secure the indemnification
obligations of the Thane pursuant to Article IX. Each Thane Securing Stockholder
shall contribute its Pro Rata Portion of the shares of Thane Common Stock
constituting the Thane Escrow Shares.
"Thane Financial Statements" shall have the meaning set forth
in Section 4.10(a).
"Thane Leases" shall have the meaning set forth in Section
4.14(a).
"Thane Securing Stockholders" means HIG Informercial Company,
Xxxxxxx Xxx and Xxxxxx Xxxxxxx Hay.
"Trade Secrets" shall have the meaning set forth in the
definition of "Intellectual Property" in this Article I.
"Trademarks" shall have the meaning set forth in the
definition of "Intellectual Property" in this Article I.
"Trailing EBITDA" shall mean Xxxxx Holdings, Inc.'s adjusted
earnings before interest, income taxes, depreciation and amortization, excluding
extraordinary gains and losses for the completed twelve months immediately
preceding the date hereof.
"Treasury Regulations" shall have the meaning set forth in
Section 3.12(a)(ii).
"VEBAs" shall have the meaning set forth in Section
3.12(a)(ii).
"WARN Act" means the Worker Adjustment and Retraining
Notification Act of 1988, as amended, and any applicable state or local law with
regard to "plant closings" or "mass layoffs" as such terms are defined in the
WARN Act or applicable state or local law.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Subject to the terms and conditions contained herein, at
the Effective Time, Acquisition shall be merged with and into the Corporation in
accordance with the requirements of Nevada law. Thereupon, the corporate
existence of the Corporation, with all its rights, privileges, immunities,
powers and purposes, shall continue unaffected and unimpaired by the Merger, and
the Corporation, 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 the Corporation and
Acquisition shall be a single corporation (sometimes referred to herein as the
"Surviving Corporation").
SECTION 2.2 Filing. As soon as practicable following fulfillment of the
conditions specified in Article VII and provided that this Agreement has not
been terminated and
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abandoned pursuant to Article VIII hereof, the Corporation and Acquisition will
cause an executed counterpart of the articles of merger in substantially the
form of Exhibit F hereto (the "Articles of Merger") to be filed with the office
of the Secretary of State of the State of Nevada in accordance with the
provisions of Section 92A.200 of the Nevada General Corporation Law (the
"NGCL").
SECTION 2.3 Effective Time of the Merger. The Merger shall be
effective at the time that the filing of the counterpart of the Nevada Articles
of Merger with the Secretary of State of the State of Nevada referred to in
Section 2.2 is completed, which time is sometimes referred to herein as the
"Effective Time."
SECTION 2.4 Effect of the Merger. The Merger shall have the
effects set forth in Section 92A.250 of the NGCL.
SECTION 2.5 Charter. The articles of incorporation of
Acquisition in effect at and as of the Effective Time, shall be the articles of
incorporation of the Surviving Corporation, which may be amended from time to
time after the Effective Time as provided by law.
SECTION 2.6 Bylaws. At the Effective Time, the Bylaws of
Acquisition shall be the Bylaws of the Surviving Corporation until thereafter
amended in accordance with the NGCL and as provided in the Articles of
Incorporation of the Surviving Corporation and such Bylaws.
SECTION 2.7 Directors and Officers.
(a) From and after the Effective Time, the members of the
Board of Directors of the Surviving Corporation shall be as set forth on
Schedule 2.7(a) hereto, each to hold office, subject to the applicable
provisions of the Charter and Bylaws of the Surviving Corporation, until their
respective successors shall be duly elected or appointed and qualified.
(b) From and after the Effective Time, Thane's Charter shall
provide for a Board of Directors consisting of thirteen directors divided into
three classes of four, four and five directors each, respectively, and
designated the Class I, Class II and Class III directors, respectively. A
portion of the Board of Directors shall be comprised of three (3) designees from
the Corporation Stockholders consisting of three (3) Class III directors, which
designees shall be Xxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxxxxxx and Xxx Xxxxxx. The
Thane Affiliates shall be entitled to designate the remaining directors in each
class.
(c) From and after the Effective Time, the officers of the
Surviving Corporation shall be as set forth on Schedule 2.7(a) hereto, each to
hold office, subject to the applicable provisions of the Charter and Bylaws of
the Surviving Corporation, until their respective successors shall be duly
elected or appointed and qualified.
(d) From and after the Effective Time, the following persons
shall become officers of Thane in the capacities set forth opposite such
officer's name.
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Xxxx Xxxxxx President and Chief Operating Officer of
Thane; and
Xxxxx Xxxxxxxxxx Vice Chairman of the Board of Directors of
Thane
SECTION 2.8 Conversion.
(a) At the Effective Time, all of the issued and outstanding
shares of capital stock of Acquisition and the Corporation 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 Thane Common Stock or be
canceled, as the case may be, as follows:
(i) each 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.
(ii) each issued and outstanding share of Corporation
Common Stock (other than Dissenting Shares and shares held in the
Corporation's treasury), shall be converted into and represent the
right to receive such number of shares of Thane Common Stock (the
"Merger Consideration") as equals the Exchange Ratio. At and after the
Effective Time, the holders of certificates representing shares of
Corporation Common Stock to be exchanged for shares of Thane Common
Stock pursuant to this Agreement shall cease to have any rights as
stockholders of the Corporation except for the right to surrender such
stock certificate(s) in exchange for shares of Thane Common Stock as
provided hereunder.
(iii) each treasury share of capital stock of the
Corporation, if any, shall be canceled, and no payment shall be made in
respect thereof.
(b) Mechanics of Exchange.
(i) Exchange Agent. At or prior to the Effective Time,
Thane shall deposit, or shall cause to be deposited, with a bank or
trust company designated by Thane and reasonably satisfactory to the
Corporation (the "Exchange Agent"), for the benefit of the holders of
Corporation Common Stock, for exchange in accordance with this Article
II, through the Exchange Agent, (i) certificates representing the
Merger Consideration and (ii) any dividends or distributions with
respect thereto (collectively, the "Exchange Fund") issuable pursuant
to this Section 2.8(b) in exchange for outstanding shares of
Corporation Common Stock. The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the shares of Thane Common Stock
consisting of the Merger Consideration and any such dividends or
distributions in accordance with this Section 2.8(b).
(ii) Exchange Procedures. Thane shall instruct the
Exchange Agent to, as soon as reasonably practicable after the
Effective Time, mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Corporation Common Stock (the "Certificates") (i)
a letter of
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transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and shall be in
customary form) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing
the Merger Consideration. Upon surrender to the Exchange Agent of a
Certificate for cancellation together with such letter of transmittal,
properly completed and duly executed, and such other documents as may
be required pursuant to such instructions, the holder of such
Certificate(s) shall be entitled to receive in exchange thereof (i) a
certificate representing the Merger Consideration in respect of the
shares of Corporation Common Stock formerly represented by such
Certificate (after taking into account all Corporation Common Stock
then held by such holder), including any fractional share of Thane
Common Stock to which such holder is entitled pursuant to Section
2.8(b)(v), and (ii) any dividends or other distributions to which such
holder is entitled pursuant to Section 2.8(b)(iii), and the Certificate
so surrendered shall forthwith be canceled. No interest will be paid or
accrued on any unpaid dividends and distributions payable to holders of
Certificates. In the event of a transfer of ownership of Corporation
Common Stock which is not registered in the transfer records of the
Corporation, a certificate representing the proper number of shares of
Thane Common Stock may be issued to a transferee if the Certificate
representing such shares of Corporation Common Stock is presented to
the Exchange Agent, accompanied by all documents required to evidence
and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by
this Section 2.8(b), each Certificate shall be deemed at any time after
the Effective Time to represent only the right to receive upon such
surrender (i) the certificate representing the Merger Consideration,
including any fractional share of Thane Common Stock to which such
holder is entitled pursuant to Section 2.8(b)(v), and (ii) any
dividends or other distributions to which such holder is entitled
pursuant to Section 2.8(b)(iii).
(iii) Distributions with Respect to Unsurrendered
Certificates. No dividends or other distributions with respect to Thane
Common Stock with a record date on or after the date of the Effective
Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Corporation Common Stock, represented thereby
until such holder shall surrender such Certificate in accordance with
this Article II. Subject to the effect of applicable laws, following
surrender of any such Certificate there shall be paid to the holder of
the certificate representing shares of Thane Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender,
the amount of dividends or other distributions with a record date after
the Effective Time theretofore paid with respect to such shares of
Thane Common Stock to which such holder is entitled pursuant to this
Article II and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date on or after the
date of the Effective Time but prior to such surrender and with a
payment date subsequent to such surrender payable with respect to such
shares of Thane Common Stock.
(iv) Further Ownership Rights in Corporation Common Stock.
All shares of Thane Common Stock issued upon the surrender for exchange
of Certificates in accordance with the terms of this Article II shall
be deemed to have been issued (and
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paid) in full satisfaction of all rights pertaining to the shares of
Corporation Common Stock previously represented by such Certificates.
If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall
be canceled and exchanged as provided in this Article II except as
otherwise provided by law.
(v) No Fractional Thane Common Stock. Notwithstanding any
other provision at this Agreement, each holder of shares of Corporation
Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Thane Common Stock
(after taking into account all Certificates delivered by such holder)
shall be entitled to receive an additional fraction of a share of Thane
Common Stock to create a whole share such that no such holder will
receive any fractional share of Thane Common Stock.
(vi) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of Corporation
Common Stock on the date that is one year after the Effective Time
shall be delivered to Thane, upon demand, and any holders of
Corporation Common Stock who have not theretofore complied with this
Section 2.8(b) shall thereafter look only to Thane for (i) the shares
of Thane Common Stock representing Merger Consideration, including any
fractional share of Thane Common Stock to which such holder is entitled
pursuant to Section 2.8(b)(v), and (ii) any dividends or other
distributions with respect to Thane Common Stock to which they are
entitled pursuant to Section 2.8(iii), in each case, without any
interest thereon.
(vii) Withholding. Thane or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Corporation Common
Stock such amounts as Thane or the Exchange Agent are required to
deduct and withhold under applicable law with respect to the making of
such payment. To the extent that amounts are so withheld by Thane or
the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of
Corporation Common Stock in respect of whom such deduction and
withholding was made by Thane or the Exchange Agent.
(viii) No Liability. None of Thane, the Surviving
Corporation or the Exchange Agent shall be liable to any person in
respect of any Merger Consideration or any dividends or distributions
with respect thereto, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
If any Certificate shall not have been surrendered prior to the date
that is three years after the Effective Time (or immediately prior to
such earlier date on which any Merger Consideration, including any
fractional share of Thane Corporation Stock issuable pursuant to
Section 2.8(b)(v), or any dividends or distributions payable to the
holder of such Certificate pursuant to this Article II, would otherwise
escheat to or become the property of any Governmental Authority), any
such Merger Consideration or dividends or distributions in respect
thereof shall, to the extent permitted by applicable law, become the
property of Thane, free and clear of all claims or interests of any
person previously entitled thereto.
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(ix) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such
person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration, including any fractional share of Thane Common Stock
issuable pursuant to Section 2.8(b)(v), and any unpaid dividends and
distributions in respect thereof, in each case pursuant to this
Agreement.
(c) Escrow.
(i) In connection with the consummation of the Merger, the
Thane Escrow Shares shall be delivered to the Escrow Agent for purposes
of securing Thane's indemnification obligations pursuant to Section 9.4
of this Agreement. The Thane Escrow Shares shall be held by the Escrow
Agent pursuant to the terms of the Escrow Agreement. The Thane Escrow
Shares shall be held as a trust fund and shall not be subject of any
Lien, attachment, trustee process or any other judicial process of any
creditor of any Party, and shall be held and disbursed solely for
purposes and in accordance with the terms of the Escrow Agreement.
(ii) In connection with the consummation of the Merger, at
Closing each of the Controlling Stockholders shall deliver irrevocable
written instructions to Thane's transfer agent directing the transfer
agent to deliver a number of shares of Thane Common Stock constituting
the Reliant Escrow Shares to the Escrow Agent for purposes of securing
the Corporation's and the Controlling Stockholder's indemnification
obligations pursuant to Section 9.4 of this Agreement. The Reliant
Escrow Shares shall be held by the Escrow Agent pursuant to the terms
of the Escrow Agreement. The Reliant Escrow Shares shall be held as a
trust fund and shall not be subject of any Lien, attachment, trustee
process or any other judicial process of any creditor of any Party, and
shall be held and disbursed solely for purposes and in accordance with
the terms of the Escrow Agreement.
(d) Adjustments in Thane Common Stock. If subsequent to the
date of this Agreement but prior to the Effective Time, the outstanding shares
of Corporation Common Stock or Thane Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities through recapitalization, reorganization, reclassification, stock
dividend, stock split, reverse stock split or other like changes in the
Corporation's or Thane's capitalization, as the case may be, then an appropriate
and proportionate adjustment shall be made to the Exchange Ratio.
(e) Dissenting Reliant Shares.
(i) Upon properly filing a notice of election to dissent
in accordance with Sections 92A.420 and 92A.430 of the NGCL, a
dissenting Corporation stockholder shall thereafter be entitled only to
payment as provided in Sections 92A.460 through 92A.500,
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inclusive, of the NGCL. If notice of election to dissent is withdrawn
in writing by the dissenting Corporation stockholder prior to the time
an offer is made by the Corporation to pay for his, her or its shares
of Corporation Common Stock, then, such dissenting Corporation
stockholder's dissenting shares of Corporation Common Stock shall cease
to be dissenting shares and shall remain issued and outstanding.
(ii) The Corporation shall give Thane (i) prompt notice of
any written notices of election to dissent, withdrawals of such
election, and any other instruments that relate to such election
received by the Corporation and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for the fair value
of the dissenting shares of Corporation Common Stock as determined by
the Corporation's Board of Directors under the NGCL. The Corporation
shall not, except with the prior written consent of Thane, make any
payment with respect to any demands for appraisal of shares of
Corporation Common Stock or offer to settle or settle any such demands.
(f) Taking of Necessary Action; Further Action. If, at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement or to vest Thane with full right, title
and possession of all assets, property, rights, privileges, powers and
franchises of the Corporation, or to perfect Thane's ownership of any and all
Intellectual Property, or to complete and prosecute all domestic and foreign
patent and trademark filings related to the Corporation Intellectual Property,
the officers and directors of the Corporation and the Corporation Thane are
fully authorized to take and will take all such lawful and necessary action.
(g) Tax Consequences. It is intended by the parties hereto
that the Merger shall constitute a "reorganization" within the meaning of
Section 368(a) of the Code and that this Agreement shall constitute a "plan of
reorganization" within the meaning of Sections 354(a) and 361(a) of the Code.
The parties shall not take a position on any Tax Return inconsistent with this
Section 2.8(j).
(h) Stock Option Plan. On or prior to the Closing, Thane shall
adopt the 2002 Stock Option Plan in the form of Exhibit G hereto.
SECTION 2.9 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at 9:00 a.m.,
eastern standard time, on the date two (2) Business Days after all of the
conditions set forth in Article VII hereof shall have been satisfied or duly
waived or at such other time and date as the parties hereto shall agree in
writing (the "Closing Date"), at the offices of White & Case LLP, 000 X.
Xxxxxxxx Xxxx., Xxxxx, Xxxxxxx 00000 or at such other place as the parties
hereto shall agree in writing.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
AND THE CONTROLLING STOCKHOLDERS
Except as specifically identified in the Corporation Schedules
delivered to Thane concurrent with the execution of this Agreement
(individually, a "Schedule") with reference to the particular representation or
warranty being qualified, the Corporation and each of the Controlling
Stockholders hereby jointly and severally represent and warrant to Thane as
follows:
SECTION 3.1 Organization and Standing. The Corporation is duly
incorporated, validly existing and in good standing as a domestic corporation
under the laws of the State of Nevada and has all requisite corporate power and
authority to own its properties and assets and to carry on its business as it is
now being conducted. Except as set forth on Schedule 3.1, the Corporation is
duly qualified or licensed to transact business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the properties
owned or leased by it or the nature of its business makes such qualification
necessary, except where the failure to so qualify or be in good standing could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 3.2 Authorization. The Corporation has the corporate
power to execute, deliver and perform its obligations under each of the
Documents to which it is a party and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of each of the Documents
and to consummate the transactions contemplated hereby and thereby, subject to
the Corporation Stockholder Approval. No other corporate proceedings on the part
of the Corporation are necessary therefor other than the Corporation Stockholder
Approval.
SECTION 3.3 Due Execution and Delivery; Binding Obligations.
Each of the Corporation and the Controlling Stockholders has duly executed and
delivered this Agreement. This Agreement constitutes, and each of the other
Documents, when executed and delivered by the Corporation and, assuming due
authorization and execution by the other parties hereto and thereto, will
constitute legal, valid and binding obligations of the Corporation and the
Controlling Stockholders enforceable against it and them, respectively in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
SECTION 3.4 No Violation. The execution, delivery and
performance by the Corporation and the Controlling Stockholders of each of the
Documents to which it or he is a party and the consummation of the transactions
contemplated hereby and thereby does not and will not contravene any Applicable
Law, except for any such contraventions that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
execution, delivery and performance by the Corporation and the Controlling
Stockholders of this Agreement and the other Documents to which it is a party
and the consummation of the
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transactions contemplated hereby and thereby (i) will not (a) violate, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under any Contract, lease, loan agreement, Corporation Employee Benefit Plan,
mortgage, security agreement, trust indenture or other agreement, instrument or
Corporation Commitment to which the Corporation or any of its Subsidiaries or
any Controlling Stockholder is a party or by which any of them is bound or to
which any of their properties or assets is subject, except to the extent any
such conflict or breach, singly or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, (b) result in the creation or
imposition of any Lien (other than a Permitted Lien) upon any of the properties
or assets of any of them, or (c) except as set forth on Schedule 3.4, obligate
the Corporation to make any payment or incur any additional obligation, or give
rise to any right of any Person with respect to the Corporation, under any term
or provision of any Contract, the Charter or Bylaws of the Corporation, any
Corporation Employee Benefit Plan or any Applicable Law, that relates to a
change of control or ownership of the Corporation or any similar provision, (ii)
will not violate any provision of the Charter or Bylaws of the Corporation, and
(iii) will not result in Thane or any of its Affiliates being an "interested
stockholder," under Sections 78.411 through 78.444 inclusive of the NGCL.
SECTION 3.5 Consents and Approvals. Except as set forth on
Schedule 3.5, assuming all filings, if any, required by the HSR Act are duly
made and the waiting period thereunder has been terminated or has expired, and
except for the Corporation Stockholder Approval and filings under applicable
securities laws, no consent, permit, approval or authorization of, or
declaration, filing, application, transfer or registration with, any
Governmental Authority, or any other Person or entity is required to be made or
obtained by the Corporation by virtue of the execution, delivery, or performance
of this Agreement or any of the other Documents to which it is a party.
SECTION 3.6 Subsidiaries. Set forth on Schedule 3.6 hereto is
a complete and accurate list of all Subsidiaries of the Corporation. Each
Subsidiary is a corporation duly organized, validly existing and in corporate
and Tax 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
Subsidiary is duly qualified or licensed to do business and is in corporate and
Tax 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. Such jurisdictions are set forth in Schedule 3.6 hereto. All of the
outstanding shares of the capital stock, all Options to acquire capital stock,
and all securities that are exchangeable or convertible into capital stock, of
each Subsidiary are owned by the Corporation or a direct or indirect
wholly-owned Subsidiary of the Corporation, are duly authorized, validly issued,
fully paid and nonassessable, and have been issued in compliance with all
applicable Regulations and Contracts. The Corporation or its direct or indirect
wholly-owned Subsidiary has good and marketable title to all of the shares of
outstanding capital stock, all Options to acquire capital stock, and all
securities that are exchangeable or convertible into capital stock, of each
Subsidiary, free and clear of all Liens, Contracts, Options or other limitations
whatsoever. True, complete and correct copies of each Subsidiary's charter and
bylaws as presently in effect are set forth in Schedule 3.6 hereto. No shares of
capital stock of any Subsidiary are reserved for issuance and there are no
outstanding Options, Claims, Contracts, convertible or exchangeable securities
or other commitments, contingent or otherwise,
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relating to the capital stock of any Subsidiary or pursuant to which any
Subsidiary is or may become obligated to issue or exchange any shares of capital
stock. Except as set forth in Schedule 3.6 hereto, the Corporation does not have
any obligation to make any additional Investments in any Person.
SECTION 3.7 Permits. Except as set forth on Schedule 3.7, each
of the Corporation Entities has such licenses, permits, exemptions, consents,
waivers, authorizations, orders and approvals from appropriate Governmental
Authorities ("Permits") as are necessary to own, lease, license or operate their
respective properties and to conduct their respective businesses as currently
owned and conducted and all such Permits are valid and in full force and effect,
except such Permits the failure to have or to be in full force and effect could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 3.8 Capital Stock. On the date hereof, the authorized
capital stock of the Corporation consists solely of 50,000,000 shares of
Corporation Common Stock. As of the date hereof, of the 50,000,000 shares of
Corporation Common Stock authorized, (i) 11,289,621 shares of Common Stock are
issued and outstanding, and (ii) 119,000 shares are reserved for issuance
pursuant to outstanding Options and warrants and existing employee stock option
plans. As of the Closing Date, the Corporation shall have 11,583,621 shares of
Corporation Common Stock and no Options, warrants or other securities, Contracts
or agreements to purchase shares of Corporation Common Stock (other than as
provided herein) issued and outstanding. As of the date hereof, there are no
(and as of the Closing Date, there will be no) authorized and/or outstanding
shares of preferred stock. As of the date hereof, the only securities
convertible, exchangeable or exercisable into shares of Corporation Common
Stock, including outstanding Options and warrants, are as described in detail on
Schedule 3.8, which schedule includes the number and exercise prices of such
convertible securities. On the date hereof and immediately following the
Closing, each share of capital stock of the Corporation that is issued and
outstanding will be duly authorized, validly issued, fully paid and
nonassessable and will not be subject to nor issued in violation of, any
preemptive rights, and none of the securities of the Corporation were issued in
violation of the Securities Act, any state "blue sky" law or any other
applicable securities laws. Except as set forth on Schedule 3.8 or as
contemplated by this Agreement, at the date hereof there are, and immediately
following the Closing there will be (a) no outstanding or authorized Options,
warrants, agreements, conversion rights, preemptive rights, other rights,
subscriptions, claims of any character, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to shares of
capital stock of the Corporation or any of its Subsidiaries or pursuant to which
the Corporation or any of its Subsidiaries is or may become obligated to issue
shares of its capital stock or any securities convertible into, exchangeable
for, or evidencing the right to subscribe for, purchase or acquire, any shares
of the capital stock of the Corporation or any of its Subsidiaries, (b) no
restrictions upon the dividends, voting or, except as required by the Securities
Act and state "blue sky" laws, the transfer of any shares of capital stock of
the Corporation pursuant to its Charter, Bylaws or other governing documents or
any agreement or other instruments to which it is a party or by which it is
bound, and (c) no shares of Corporation Common Stock are held by the Corporation
in its treasury. Neither the Corporation nor any of its Subsidiaries has
authorized or outstanding bonds, debentures, notes or other Indebtedness the
holders of which have the right to vote (or convertible or exercisable for or
exchangeable into securities the
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holders of which have the right to vote) with the stockholders of such Person on
any matter. Except as contemplated by this Agreement or as set forth on Schedule
3.8, there are no outstanding contractual obligations of the Corporation or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
Corporation Common Stock or the capital stock of any of its Subsidiaries.
SECTION 3.9 Litigation. Schedule 3.9 hereto sets forth a true
and complete list of all Claims and Orders involving the Corporation since
January 1, 1996. Except as set forth in Schedule 3.9 hereto, to the best
Knowledge of the Corporation and the Controlling Stockholders, there is no Claim
or Order threatened against the Corporation nor is there any reasonable basis
therefor including, without limitation, as a result of the Corporation's
execution of this Agreement and the consummation of the transactions
contemplated hereby. Except as set forth on Schedule 3.9 hereto, the Corporation
is fully insured with respect to each of the matters set forth on Schedule 3.9
and the Corporation has not received any opinion or a memorandum or advice from
legal counsel to the effect that it is exposed, from a legal standpoint, to any
liability or obligations which could have an adverse effect in excess of
$50,000.
SECTION 3.10 Financial Statements; No Undisclosed Liabilities;
Commission Documents.
(a) Attached as Schedule 3.10(a) hereto are (i) audited
consolidated year-end balance sheets of the Corporation as of December 31, 2000
and 1999 and statements of income, stockholders' equity and cash flow of the
Corporation for each of the fiscal years then ended and (ii) an unaudited
consolidated balance sheet of the Corporation as of September 30, 2001 and
unaudited consolidated statements of income, stockholders' equity and cash flow
for the nine-month period then ended. Such balance sheets and the notes thereto
fairly present the financial position of the Corporation at the respective dates
thereof in accordance with GAAP and such statements of income, stockholders'
equity and cash flow and the notes thereto fairly present the results of
operations for the periods referred to therein, in accordance with GAAP, except
that the unaudited financial statements have no notes attached thereto and do
not have year-end audit adjustments (none of which would be material or
recurring). All of the foregoing financial statements (i) are in accordance with
the Regulations of the Commission and (ii) were prepared from the books and
records of the Corporation. The Corporation does not utilize any percentage of
completion or similar method of accounting for revenue, income or cost
recognition purposes. The Corporation has not in the past five (5) fiscal years
written off any research and development costs, incurred any reorganization,
restructuring or similar costs or changed the book value of any assets,
liabilities or goodwill of any Subsidiary or business acquired by the
Corporation. Except as set forth in Schedule 3.10(a) hereto, the Corporation
does not have any obligation to make any additional Investments in any Person.
All properties used in the Corporation's business operations during the period
covered by the foregoing financial statements are reflected in the financial
statements in accordance with and to the extent required by GAAP. The foregoing
consolidated balance sheets and statements of operations, stockholders' equity
and cash flows and the notes thereto are herein collectively referred to as the
"Corporation Financial Statements" and December 31, 2000 is herein referred to
as the "Financial Statement Date." The Corporation's EBITDA for the year ended
December 31, 2001, including the add back of up to $2.38 million for stock
bonuses paid by the Corporation to the
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Controlling Stockholders will equal or exceed $3.4 million excluding one time
charges incurred by the Corporation in connection with the transactions
contemplated by this Agreement.
(b) Except as set forth in Schedule 3.10(b) hereto, the
Corporation does not have any Indebtedness, obligation or liability (whether
accrued, absolute, contingent, unliquidated or otherwise, known or unknown to
the Corporation, whether due or to become due) arising out of transactions
entered into at or prior to the Closing Date, or any state of facts existing at
or prior to the Closing Date, other than: (i) liabilities set forth in the
September 30, 2001 balance sheet of the Corporation, or (ii) liabilities and
obligations that have arisen after September 30, 2001 in the ordinary course of
business (none of which is a liability resulting from breach of a Contract,
Regulation, Order or warranty, tort, infringement or Claim).
(c) There is no Person that has Guaranteed, or provided any
financial accommodation of, any Indebtedness, obligation or liability of the
Corporation or for the benefit of the Corporation for the periods covered by the
Financial Statements other than as set forth in the Corporation Financial
Statements. The management of the Corporation has disclosed to the Corporation's
independent auditors all facts and circumstances known to them that are material
and bear upon the accuracy of the audited financial statements. The
Corporation's accounting systems and controls are sufficient to detect material
fraud and inaccuracies in the financial reporting processes and reports.
(d) Except as set forth on Schedule 3.10(d), since the
registration of the Corporation's Common Stock under Section 12(g) of the
Exchange Act, the Corporation has filed all forms, reports and documents with
the Commission (including all exhibits thereto) required under the Securities
Act or the Exchange Act or the rules and regulations promulgated thereunder
(collectively, the "Commission Documents"), each of which complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act as in effect on the dates so filed. None of the Commission
Documents (as of their respective filing dates) contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading. Any forms, reports
and documents filed by the Corporation with the Commission subsequent to the
date hereof and prior to the Closing Date (collectively, the "Subsequent
Filings") will comply in all material respects with all applicable requirements
of the Securities Act and the Exchange Act and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading, except to
the extent of any information provided to the Corporation for inclusion in a
Subsequent Filing by or on behalf of Thane. The Corporation will timely furnish
to Thane copies of each Subsequent Filing.
SECTION 3.11 Change in Condition. Except as set forth on
Schedule 3.11 and as disclosed in the Commission Documents, since the Financial
Statement Date, the Corporation and its Subsidiaries have operated their
respective businesses in the ordinary course consistent with past practices and
there has not occurred any event, occurrence or conditions, or to the Knowledge
of the Corporation and the Controlling Stockholders, any circumstance or
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development that could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
SECTION 3.12 Employee Benefit Plans and Labor Matters.
(a) List of Plans. Set forth in Schedule 3.12 attached hereto
is an accurate and complete list of all (i) "employee benefit plans," within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations thereunder ("ERISA"); (ii) bonus,
stock option, stock purchase, restricted stock, incentive, fringe benefit,
"voluntary employees' beneficiary associations" ("VEBAs") under Section
501(c)(9) of the Code and the regulations thereunder as amended from time to
time (the "Treasury Regulations"), profit-sharing, pension or retirement,
deferred compensation, medical, life insurance, disability, accident, salary
continuation, severance, accrued leave, vacation, sick pay, sick leave,
supplemental retirement and unemployment benefit plans, programs and/or
arrangements, whether or not insured; and (iii) employment, consulting,
termination, and severance Contracts or agreements; in each case, whether or not
subject to ERISA; that are maintained or contributed to (or required to be
contributed to) for the benefit of any current or former employee of the
Corporation or any of its Subsidiaries, or with respect to which any potential
liability is borne, by the Corporation or any of its Subsidiaries (including,
for this purpose and for the purpose of all of the representations in this
Section 3.12, all employers (whether or not incorporated) that would be treated
together with the Corporation and/or any of its Subsidiaries as a single
employer within the meaning of Section 414 of the Code) ("Corporation Employee
Benefit Plans").
(b) Status of Plans. Except to the extent that a breach of any
of the following representations would not, individually or in the aggregate,
reasonably be expected to result in a material liability to the Corporation or
its Subsidiaries, (i) each Corporation Employee Benefit Plan (including any
related trust) complies in all material respects in form with the requirements
of all applicable laws, including, without limitation, ERISA and the Code, and
has at all times been maintained and operated in substantial compliance with its
terms and the requirements of all applicable laws, including, without
limitation, ERISA and the Code; (ii) no complete or partial termination of any
Corporation Employee Benefit Plan has occurred or is expected to occur; (iii)
neither the Corporation nor any of its Subsidiaries has any commitment,
intention or understanding to create, modify or terminate any Corporation
Employee Benefit Plan and (iv) except as required to maintain the tax-qualified
status of any Corporation Employee Benefit Plan intended to qualify under
Section 401(a) of the Code, no condition or circumstance exists that would
prevent the amendment or termination of any Corporation Employee Benefit Plan.
(c) No Pension Plans. No Corporation Employee Benefit Plan is
an "employee pension benefit plan" (within the meaning of Section 3(2) of ERISA,
whether or not subject to ERISA) subject to Section 412 of the Code or Section
302 or Title IV of ERISA, or any Applicable Law of a non-U.S. jurisdiction.
Neither the Corporation nor any of its Subsidiaries has ever maintained or
contributed to, or had any obligation to contribute to (or borne any liability
with respect to) any "multiple employer plan" (within the meaning of the Code or
ERISA) or any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA).
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(d) Liabilities. Except for such failures which could not,
individually or in the aggregate, reasonably be expected to result in a material
liability to the Corporation and its Subsidiaries, (i) neither the Corporation
nor any of its Subsidiaries maintains any Corporation Employee Benefit Plan
which is a "group health plan" (as such term is defined in Section 607(1) of
ERISA or Section 5000(b)(1) of the Code) that has not been administered and
operated in all respects in compliance with the applicable requirements of Part
6 of Subtitle B of Title I of ERISA and Section 4980B of the Code ("COBRA") and
neither the Corporation nor any of its Subsidiaries is subject to any liability,
including, without limitation, additional contributions, fines, taxes, penalties
or loss of tax deduction as a result of such administration and operation; (ii)
each Corporation Employee Benefit Plan that is intended to meet the requirements
of Section 125 of the Code meets such requirements, and each program of benefits
for which employee contributions are provided pursuant to elections under any
Corporation Employee Benefit Plan meets the requirements of the Code applicable
thereto; and (iii) neither the Corporation nor any of its Subsidiaries maintains
any Corporation Employee Benefit Plan which is an "employee welfare benefit
plan" (as such term is defined in Section 3(1) of ERISA) that has provided any
"disqualified benefit" (as such term is defined in Section 4976(b) of the Code)
with respect to which an excise tax could be imposed. No Corporation Employee
Benefit Plan which is such a group health plan is a "multiple employer welfare
arrangement," within the meaning of Section 3(40) of ERISA.
Neither the Corporation nor any of its Subsidiaries maintains
any Corporation Employee Benefit Plan (whether qualified or non-qualified under
Section 401(a) of the Code) providing for post-employment or retiree health,
life insurance and/or other welfare benefits and having unfunded liabilities,
and neither the Corporation nor any of its Subsidiaries have any obligation to
provide any such benefits to any retired or former employees or active employees
following such employees' retirement or termination of service (except, in any
case, to the extent required by COBRA). Except as set forth in Schedule 3.12(d),
neither the Corporation nor any of its Subsidiaries has any unfunded liabilities
pursuant to any Corporation Employee Benefit Plan that is an employee pension
benefit plan within the meaning of Section 3(3) of ERISA but is not intended to
be qualified under Section 401(a) of the Code. No Corporation Employee Benefit
Plan holds as an asset any interest in any annuity contract, guaranteed
investment contract or any other Investment or insurance contract, policy or
instrument issued by an insurance company that, to the Knowledge of the
Corporation and the Controlling Stockholders, is the subject of bankruptcy,
conservatorship, insolvency, liquidation, rehabilitation or similar proceedings.
Neither the Corporation nor any of its Subsidiaries has
incurred any liability for any tax or excise tax arising under Chapter 43 of the
Code, and no event has occurred and no condition or circumstance has existed
that would give rise to any such liability.
There are no actions, suits, claims or disputes pending, or,
to the Knowledge of the Corporation and the Controlling Stockholders,
threatened, anticipated or expected to be asserted against or with respect to
any Corporation Employee Benefit Plan or the assets of any such plan (other than
routine claims for benefits and appeals of denied routine claims). No civil or
criminal action brought pursuant to the provisions of Title I, Subtitle B, Part
5 of ERISA is pending, threatened, anticipated, or expected to be asserted
against the Corporation or any of its
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Subsidiaries or, to the Knowledge of the Corporation and the Controlling
Stockholders, any fiduciary of any Corporation Employee Benefit Plan, in any
case with respect to any Corporation Employee Benefit Plan. No Corporation
Employee Benefit Plan or, to the Knowledge of the Corporation and the
Controlling Stockholders, any fiduciary thereof has been the direct or indirect
subject of an audit, investigation or examination by any governmental or
quasi-governmental agency.
(e) Contributions. Full payment has been timely made of all
amounts which the Corporation or any of its Subsidiaries is required, under
applicable law or under any Corporation Employee Benefit Plan or any agreement
relating to any Corporation Employee Benefit Plan to which the Corporation or
any of its Subsidiaries is a party, to have paid as contributions or premiums
thereto as of the last day of the most recent fiscal year of such Corporation
Employee Benefit Plan ended prior to the date hereof, except to the extent that
any failure to make such timely payment would not reasonably be expected to
result in a material liability to the Corporation Entities. All such
contributions and/or premiums have been fully deducted for income tax purposes
and no such deduction has been challenged or disallowed by any governmental
entity. Benefits under all Corporation Employee Benefit Plans are as represented
and have not been materially increased subsequent to the date as of which
documents have been provided.
(f) Tax Qualification. Each Corporation Employee Benefit Plan
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service (or has
submitted, or is within the remedial amendment period for submitting, an
application for a determination letter from the Internal Revenue Service, and is
awaiting receipt of a response) and, to the knowledge of the Corporation and the
Controlling Stockholders, no event has occurred and no condition exists which
could reasonably be expected to result in the revocation of, or the refusal by
the Internal Revenue Service to issue, any such favorable determination. No
Corporation Employee Benefit Plan is a VEBA. Since the date of each most recent
determination referred to in this paragraph (f), no event has occurred and no
condition or circumstance exists that could reasonably be expected to result in
the revocation of any such determination or that could adversely affect the
qualified status of any such Corporation Employee Benefit Plan or the exempt
status of any such trust.
(g) Transactions. Neither the Corporation nor any of its
Subsidiaries nor any of their respective directors, officers, employees or, to
the Knowledge of the Corporation and the Controlling Stockholders, other Persons
who participate in the operation of any Corporation Employee Benefit Plan or
related trust or funding vehicle, has engaged in any transaction with respect to
any Corporation Employee Benefit Plan or breached any applicable fiduciary
responsibilities or obligations under Title I of ERISA that would reasonably be
expected to subject the Corporation or any of its Subsidiaries to a material
tax, penalty or liability for prohibited transactions or breach of any
obligations under ERISA or the Code.
(h) Triggering Events. Except as set forth on Schedule 3.12,
the execution of this Agreement and the consummation of the transactions
contemplated hereby do not constitute a triggering event under any Corporation
Employee Benefit Plan, policy, arrangement or agreement which (either alone or
upon the occurrence of any additional or subsequent event) will
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or may reasonably be expected to result in any material payment (whether of
severance pay or otherwise), "excess parachute payment" (as such term is defined
in Section 280G of the Code), acceleration, vesting or increase in benefits to
any employee or former employee or director of the Corporation or any of its
Subsidiaries.
(i) Documents. The Corporation has delivered or made available
to Thane and its counsel true and complete copies of all material documents in
connection with each Corporation Employee Benefit Plan, including (where
applicable): (i) all Corporation Employee Benefit Plans as in effect on the date
hereof, together with all amendments thereto; (ii) all current summary plan
descriptions and summaries of material modifications; (iii) all current trust
agreements and other material documents establishing other funding arrangements
(and all amendments thereto); (iv) the most recent Internal Revenue Service
determination letter obtained with respect to each Corporation Employee Benefit
Plan intended to be qualified under Section 401(a) of the Code; (v) the annual
report on Internal Revenue Service Form 5500-series for each of the last three
years for each Corporation Employee Benefit Plan with respect to which such
forms have been filed; and (vi) the most recently prepared financial statements
for each Corporation Employee Benefit Plan for which such statements are
prepared.
(j) Except as set forth on Schedule 3.12:
(i) there is no labor strike, dispute, slowdown, stoppage
or lockout actually pending, or to the Knowledge of the Corporation and
the Controlling Stockholders, threatened against or affecting the
Corporation or any of its Subsidiaries and during the past five (5)
years there has not been any such action;
(ii) to the Knowledge of the Corporation and the
Controlling Stockholders, there are no union claims to represent the
employees of any of the Corporation Entities;
(iii) none of the Corporation Entities is a party to or
bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of any of
the Corporation Entities;
(iv) none of the employees of any of the Corporation
Entities are represented by any labor organization and neither the
Corporation nor the Controlling Stockholders have any Knowledge of any
current union organizing activities among the employees of any of the
Corporation Entities, nor does any question concerning representation
exist concerning such employees;
(v) true, correct and complete copies of all written
personnel policies, rules and procedures applicable to employees of any
of the Corporation Entities have heretofore been delivered to Thane;
(vi) to the Knowledge of the Corporation and the
Controlling Stockholders, no federal, state, local or foreign agency
responsible for the enforcement of
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labor or employment laws is conducting an investigation with respect to
or relating to any of the Corporation Entities; and
(vii) there are no complaints, controversies, lawsuits or
other proceedings pending or, to the Knowledge of the Corporation and
the Controlling Stockholders, any applicant for employment or classes
of the foregoing alleging breach of any express or implied Contract or
employment, any law or regulation governing employment or the
termination thereof or other discriminatory, wrongful or tortious
conduct in connection with the employment relationship; and the
execution of this Agreement and the consummation of the transactions
contemplated hereby shall not result in a breach or other violation of
any collective bargaining agreement to which any of the Corporation
Entities is a party.
(k) Since the enactment of the WARN Act, none of the
Corporation Entities has effectuated (i) 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 any of the
Corporation Entities, or (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of any of the Corporation Entities;
nor has any of the Corporation Entities been affected by any transaction or
engaged in layoffs or employment terminations sufficient in number to trigger
application of any similar state or local law. Except as set forth in Schedule
3.12, none of the employees of any of the Corporation Entities has suffered an
"employment loss" (as defined in the WARN Act) with regard to their employment
with any such Corporation Entity since January 1, 1999.
SECTION 3.13 Interests in Real Property.
(a) Schedule 3.13 sets forth a true and complete list of all
real property owned and all material real property leased by any of the
Corporation Entities. Each of the Corporation Entities has good and marketable
title in fee simple to all real property owned by it, free and clear of all
Liens, except for Permitted Liens, and valid and enforceable leasehold interests
in all real property leased by it.
(b) None of the real property owned by, or the leasehold
estates of, any of the Corporation Entities are subject to (i) any Liens other
than Permitted Liens or (ii) any easements, rights of way, licenses, grants,
building or use restrictions, exceptions, reservations, limitations or other
impediments that, in either case (i) or (ii), will materially adversely affect
the value thereof for their present use, taken as a whole, or that materially
interfere with or impair the present and continued use thereof, taken as a
whole, in the usual and normal conduct of the business of any such Person.
(c) To the Knowledge of the Corporation and the Controlling
Stockholders, all improvements on such real property and the operations therein
conducted conform in all material respects to all applicable health, fire,
environmental, safety, zoning and building laws, ordinances and administrative
regulations (whether through grandfathering provisions, permitted use
exceptions, variances or otherwise), except for possible nonconforming uses or
violations that do not and will not interfere with the present use, operation or
maintenance thereof as now
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used, operated or maintained or access thereto, and that do not and will not
materially affect the value thereof for their present use. None of the
Corporation Entities has received notice of any violation of or noncompliance
with any such laws, ordinances or administrative regulations from any applicable
Governmental Authority, except for notices of violations or failures so to
comply, if any, that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 3.14 Leases.
(a) (i) Except as set forth on Schedule 3.14, none of the
Corporation Entities is in breach of or default (and no event has occurred
which, with due notice or lapse of time or both, may constitute a breach or
default) under any lease required to be set forth on Schedule 3.13 (the
"Corporation Leases") and (ii) no party to any Corporation Lease has given, or
to the Knowledge of Corporation threatened to give, or advised that it will be
giving the Corporation or any Subsidiary of the Corporation written notice of or
made a claim with respect to any breach or default, the consequences of which,
in either case (i) or (ii) could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 3.14, after taking into
account the exercise of any Options (which are exercisable solely at the
discretion of the Corporation or any Subsidiary), none of the Corporation Leases
terminate by their respective terms before February 28, 2004.
(c) Except as set forth on Schedule 3.14, none of the
Corporation Leases require a consent to be obtained for the execution, delivery
and performance of any of the Documents or the consummation of any of the
transactions contemplated hereby or thereby.
(d) None of the Corporation Entities has any ownership,
financial or other interest in the landlords under any of the Corporation
Leases.
SECTION 3.15 Compliance with Law. The operations of each of
the Corporation Entities has been conducted in compliance with all Applicable
Laws and applicable regulations, including, without limitation, any regulations
and other requirements of the Better Business Bureau or the Federal Trade
Commission, except for violations or failures to comply, if any, that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. To the Knowledge of the Corporation and the Controlling
Stockholders, neither the Corporation nor any Subsidiary has received written
notice of any violation of or noncompliance with any Applicable Laws, except as
set forth on Schedule 3.15 and except for notices of violations or failures so
to comply, if any, that could not, individually or in the aggregate, are likely
to have a Material Adverse Effect.
SECTION 3.16 Related Party Transactions. Except as set forth
on Schedule 3.16 and except for the consummation of the transactions
contemplated by the Documents (including, without limitation, the Voting
Agreement), (i) neither the Corporation nor any of its Subsidiaries is a party
to any Contract or arrangement with or for the benefit of any Person who, to the
Corporation's Knowledge, based on a review of Schedule 13Ds and Schedule 13Gs
filed under
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the Exchange Act prior to the date of this Agreement, is a holder of five
percent (5%) or more of the outstanding equity securities of the Corporation or
any officer, director, partner or Affiliate of any such Person ("Related
Party"); (ii) all material transactions between the Corporation and its
Subsidiaries, on the one hand, and a Related Party, on the other hand, are on
terms and conditions which could reasonably be expected to be obtained from a
non-Affiliate in an arm's length transaction; and (iii) no Related Party is a
supplier, lessor, lessee or competitor of the Corporation or any of its
Subsidiaries. Since December 31, 1999, the Corporation has not made any
payments, loaned or borrowed any funds or property or made any credit
arrangement or accommodation with any stockholder, Affiliate or employee of the
Corporation except for the payment of employee salaries and director
compensation in the ordinary course of business.
SECTION 3.17 Tax Matters.
(a) Each of the Corporation Entities has duly and properly
filed, on a timely basis, all Tax Returns required to be filed by, or with
respect to, each such Corporation Entity on or prior to the Closing Date. The
Tax Returns accurately reflect all liability for Taxes of each of the
Corporation Entities for the periods covered thereby. All Taxes with respect to
the income, assets or operations of the Corporation Entities for all taxable
years or other taxable periods that end on or before the Closing Date, and, with
respect to any taxable year or other taxable period beginning on or before and
ending after the Closing Date, the portion of such taxable year or period ending
on and including the Closing Date ("Pre-Closing Period") have been timely paid
or will be timely paid in full on or prior to the Closing Date or accrued and
adequately disclosed and fully provided for in accordance with GAAP either in
the Corporation Financial Statements or, with respect to taxable periods
beginning on or after January 1, 2001, on the books and records of the
Corporation.
(b) All material Taxes that the Corporation Entities are or
were required by law to withhold or collect in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party and have been duly and timely withheld or collected and, to the
extent required, have been timely paid to the proper Governmental Authority.
There are no Liens with respect to Taxes upon any of the properties or assets,
real or personal, tangible or intangible, of a Corporation Entity except for
Permitted Liens.
(c) None of the Corporation Entities has been the subject of
an audit or other examination with respect to Taxes by any Governmental
Authority, and, to the Knowledge of the Corporation and the Controlling
Stockholders, no such audit or examination is contemplated or pending. None of
the Corporation Entities has received any written notices from any Governmental
Authority relating to any issue which could materially affect the Tax liability
of a Corporation Entity.
(d) None of the Corporation Entities (i) has entered into an
agreement or waiver that is currently effective, or been requested to enter into
an agreement or waiver, that extends any statute of limitations relating to the
payment or collection of Taxes of a Corporation Entity, and (ii) is presently
contesting the Tax liability of a Corporation Entity before any court, tribunal
or agency.
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(e) None of the Corporation Entities has been included in any
"consolidated," "unitary," or "combined" Tax Return provided for under the law
of the United States, any foreign jurisdiction or any state or locality with
respect to Taxes for any taxable period for which the statute of limitations has
not expired (other than a group of which the Corporation and/or its Subsidiaries
are the only members). None of the Corporation Entities has any obligation by
Contract, agreement, arrangement or otherwise to permit any Person, other than
the Corporation and its Subsidiaries, to use the benefit of a refund, credit or
offset of Tax of any of the Corporation or its Subsidiaries.
(f) There are no tax sharing, allocation, indemnification or
similar agreements in effect as between a Corporation Entity (or any predecessor
or affiliate thereof) and any other party under which the Corporation Entity
could be liable for any material Taxes or other claims of any party after the
Closing Date.
(g) No Corporation Entity has applied for, been granted, or
agreed to any accounting method change for which it will be required to take
into account any adjustment under Section 481 of the Code or any similar
provision of the Code or the corresponding tax laws of any nation, state or
locality; no Corporation Entity or Controlling Stockholder has any Knowledge
that the Internal Revenue Service or any other taxing authority has proposed or
purported to require any such adjustment or change in accounting method, and no
Corporation Entity or Controlling Stockholder has any Knowledge or belief that
any such adjustment under Section 481 of the Code or the corresponding tax laws
of any nation, state or locality will be required of the Corporation Entity upon
the completion of, or by reason of, the transaction contemplated by this
Agreement.
(h) No Corporation Entity is a party to any agreement that
would require the Corporation Entity (or any affiliate thereof) to make any
payment that would not be deductible pursuant to Section 162(m) of the Code.
(i) There are no deferred intercompany transactions between
the Corporation Entities and there is no excess loss account (within the meaning
of Treasury Regulations Section 1.1502-19) with respect to the stock of a
Corporation Entity that will or may result in the recognition of a material
amount of taxable income upon the consummation of the transaction contemplated
by this Agreement.
(j) No Indebtedness of a Corporation Entity consists of
"corporate acquisition indebtedness" within the meaning of Section 279 of the
Code.
(k) No Corporation Entity has been during the five-year period
ending on the date of this Agreement, or will have been during the five-year
period ending on the Closing Date, a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
(l) No written claim has ever been made by any taxing
authority in a jurisdiction where a Corporation Entity does not file Tax Returns
that the Corporation Entity is or may be subject to taxation by that
jurisdiction.
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(m) No election under Section 341(f) of the Code has been made
or shall be made prior to the Closing Date to treat a Corporation Entity as a
"consenting corporation," as defined in Section 341 of the Code;
(n) No Corporation Entity is a party to any agreement that
would require a Corporation Entity or any affiliate thereof to make any payment
that would constitute an "excess parachute payment" for purposes of Sections
280G and 4999 of the Code.
SECTION 3.18 Environmental Matters. Except as set forth on
Schedule 3.18, (i) the Corporation and its Subsidiaries are in compliance in all
material respect with all applicable Environmental Laws, and have obtained, and
are in compliance in all material respect with, all permits required under
applicable Environmental Laws; (ii) there are no Actions by any Governmental
Authority or other Person or entity pending or, to the Knowledge of the
Corporation and the Controlling Stockholders threatened, against the Corporation
or any of its Subsidiaries under any Environmental Law; and (iii) to the
Knowledge of the Corporation and the Controlling Stockholders, there are no
facts, circumstances or conditions relating to the business or operations of the
Corporation or any of its Subsidiaries that could reasonably be expected to give
rise to any material claim, proceeding, Action or liability under any
Environmental Law.
SECTION 3.19 Intellectual Property.
(a) Schedule 3.19(a) sets forth, for the Intellectual Property
owned by the Corporation or any Subsidiary of the Corporation, a complete and
accurate list of all U.S. and foreign (i) patents and patent applications; (ii)
trademark registrations (including Internet domain registrations), trademark
applications, and material unregistered trademarks; (iii) copyright and mask
work registrations, copyright and mask work applications and material
unregistered copyrights; and (iv) all Software (other than readily available
"off-the-shelf" commercial software programs having an acquisition price of less
than $5,000), in the case of subclauses (i) through (iv) above, material to the
Corporation's and its Subsidiaries' respective businesses which are owned,
licensed, or leased, by the Corporation or any of its Subsidiaries, identifying
which Intellectual Property is owned, licensed, or leased, as the case may be.
The Intellectual Property of the Corporation and its Subsidiaries constitutes
all the intellectual property necessary to operate the business of the
Corporation and its Subsidiaries as of the Closing Date in substantially the
manner in which it is currently operated. To the extent indicated on Schedule
3.19(a), the Intellectual Property of the Corporation and its Subsidiaries has
been duly registered in, filed in or issued by the United States Patent and
Trademark Office, United States Copyright Office, a duly authorized and
appropriate domain name registrar, the appropriate offices in the various states
of the United States and the appropriate offices of other jurisdictions (foreign
and domestic), and each such registration, filing and issuance remains in full
force and effect as of the Closing Date.
(b) Schedule 3.19(b) sets forth a complete and accurate list
of all material oral or written agreements (whether between the Corporation or
any of its Subsidiaries and third parties or inter-corporate) to which the
Corporation or any of its Subsidiaries is a party or otherwise bound, (i)
granting or obtaining any right to use or practice any rights under any
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Intellectual Property (other than licenses for readily available "off-the-shelf"
commercial software programs having an acquisition price of less than $5,000),
or (ii) restricting the Corporation's or any of its Subsidiaries' right to use
any Intellectual Property, including, without limitation, any license
agreements, development agreements, distribution agreements, settlement
agreements, consent to use agreements, and covenants not to xxx (collectively,
the "License Agreements"). The License Agreements of the Corporation and its
Subsidiaries are valid and binding obligations of the Corporation and its
Subsidiaries, as applicable, enforceable in accordance with their terms, and to
the Corporation's Knowledge, there exists no event or condition which will
result in a violation or breach of, or constitute (with or without due notice of
lapse of time or both) a default by any party under any such License Agreement.
Except as set forth in Schedule 3.19(b), neither the Corporation nor any of its
Subsidiaries have licensed or sublicensed its rights in any material
Intellectual Property other than pursuant to a valid and binding License
Agreement. No royalties, honoraria or other fees are currently payable by the
Corporation or any of its Subsidiaries to any third parties for the use of or
right to use any Intellectual Property except pursuant to any License Agreement
and set forth on Schedule 3.19.
(c) Except as set forth on Schedule 3.19(c), the Corporation
or a Subsidiary of the Corporation owns, or to the Corporation's Knowledge, has
a valid right to use, free and clear of all Liens, other than Permitted Liens,
all of the Intellectual Property of the Corporation and its Subsidiaries. The
Corporation or a Subsidiary of the Corporation is listed in the records of the
appropriate United States, state, or foreign registry as the sole current owner
of record for each application and registration and has the exclusive right to
file, prosecute and maintain all applications and registrations with respect to
the Intellectual Property that is listed on Schedule 3.19(c).
(d) Except as set forth on Schedule 3.19(d), the Intellectual
Property owned by the Corporation or any of its Subsidiaries and, to the
Corporation's Knowledge, any material Intellectual Property licensed to the
Corporation or any of its Subsidiaries, has not been canceled, expired,
abandoned or otherwise terminated and all renewal fees in respect thereof have
been duly paid, and to the Corporation's Knowledge is valid and enforceable.
(e) Except as set forth on Schedule 3.19(e), neither the
Corporation nor any of its Subsidiaries has received any written notice or claim
and there is no pending or, to the Knowledge of the Corporation and the
Controlling Stockholders, threatened claim, suit, arbitration, interference or
other adversarial or contested proceeding before any court, agency, arbitral
tribunal, or registration authority in any jurisdiction (foreign or domestic)
involving the Intellectual Property owned by the Corporation or any of its
Subsidiaries, or, to the Knowledge of the Corporation and the Controlling
Stockholders, the material Intellectual Property licensed to the Corporation or
any of its Subsidiaries, alleging that the activities or the conduct of the
Corporation's or any of its Subsidiaries' businesses infringe upon, dilute,
violate or constitute the unauthorized use, misuse or misappropriation of the
intellectual property rights of any third party or challenging the Corporation's
or any of its Subsidiaries' ownership, use, validity, enforceability or
registrability of any of their respective Intellectual Property. There are no
settlements, forbearances to xxx, consents, judgments, or orders or similar
obligations to which the Corporation or any Subsidiary of the Corporation is a
party other than the License Agreements which (i) restrict the Corporation's or
any of its Subsidiaries' right to use any
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Intellectual Property, (ii) restrict the Corporation's or any Subsidiary's
businesses in order to accommodate a third party's intellectual property rights
or (iii) permit third parties to use any Intellectual Property owned by the
Corporation or any Subsidiary of the Corporation. Except as set forth on
Schedule 3.19(e), to the Knowledge of the Corporation and the Controlling
Stockholders, there does not exist any valid basis for any such claims.
(f) Except as set forth on Schedule 3.19(f), to the
Corporation's and the Controlling Stockholder's Knowledge, the conduct of the
Corporation's and any of its Subsidiaries' business as currently conducted or
planned to be conducted does not infringe upon (either directly or indirectly
such as through contributory infringement or inducement to infringe) any
Intellectual Property owned or controlled by any third party. Except as set
forth on Schedule 3.19(f), to the Corporation's Knowledge, no third party is
misappropriating, infringing, diluting or violating any Intellectual Property
owned by the Corporation or any Subsidiary of the Corporation and no such
claims, suits, arbitrations or other adversarial proceedings have been brought
or threatened against any third party by the Corporation or any Subsidiary of
the Corporation.
(g) The Corporation and each of its Subsidiaries take
reasonable measures to protect the confidentiality of its Trade Secrets,
including requiring their employees and other parties having access thereto to
execute written non-disclosure agreements. To the Knowledge of the Corporation
and the Controlling Stockholders, no Trade Secret of the Corporation or its
Subsidiaries has been disclosed or authorized to be disclosed to any third party
other than pursuant to a non-disclosure agreement. Except as set forth on
Schedule 3.19(g), to the Knowledge of the Corporation and the Controlling
Stockholders, no party to any non-disclosure agreement relating to its Trade
Secrets is in breach or default thereof. Thane has been provided with a copy of
the Corporation's form of non-disclosure agreement and the non-disclosure
agreements referred to in this clause (g) contain substantially the same terms
and conditions as the form of non-disclosure agreement.
(h) No current or former partner, director, officer, or
employee of the Corporation or any Subsidiary of the Corporation (or any of
their respective predecessors in interest) will, after giving effect to the
transactions contemplated herein, directly own or retain any rights to use any
of the Intellectual Property owned or used by the Corporation or any Subsidiary
of the Corporation.
(i) With respect to the Software set forth in Schedule 3.19(i)
which is owned by the Corporation, such Software was either developed (i) by
employees of the Corporation or any Subsidiary of the Corporation within the
scope of their employment or (ii) by independent contractors who have assigned
their rights to the Corporation or any Subsidiary of the Corporation pursuant to
signed, written agreements.
(j) The Trademarks listed on Schedule 3.19(j), for which the
Corporation or any Subsidiary of the Corporation has obtained or applied for a
registration that are material to the Corporation's business have been
continuously used in the form appearing in, and in connection with the goods and
services listed in, their respective registration certificates, and are all the
Trademarks that are material to the Corporation and its Subsidiaries. To the
Knowledge
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of the Corporation and the Controlling Stockholders, there has been no prior use
of the material Trademarks by any third party which would confer upon said third
party superior rights in the material Trademarks. To the Knowledge of the
Corporation and the Controlling Stockholders, the Corporation and its
Subsidiaries have undertaken reasonable policing of the material Trademarks
against third party infringement.
SECTION 3.20 Registration Rights. Except as set forth on
Schedule 3.20, neither the Corporation nor any of its Subsidiaries is under any
obligation to register any of its outstanding securities pursuant to the
Securities Act.
SECTION 3.21 Insurance. Except as set forth on Schedule 3.21,
the Corporation and its Subsidiaries maintain, with reputable insurers,
insurance in such amounts, including deductible arrangements, and of such a
character as is customary for companies engaged in the same or similar business.
Schedule 3.21 sets forth a list and brief description of all policies of title,
fire, liability, casualty, business interruption, errors and omissions, workers'
compensation and other forms of insurance including, but not limited to,
directors and officers insurance, held by the Corporation and its Subsidiaries
as of the date hereof, and all such policies are in full force and effect in
accordance with their terms. To the Knowledge of the Corporation and the
Controlling Stockholders, neither the Corporation nor any of its Subsidiaries is
in default under any material provisions of any such policy of insurance and, to
the Knowledge of the Corporation and the Controlling Stockholders, as of the
date hereof, all premiums due have been paid and neither the Corporation nor any
of its Subsidiaries has received notice of cancellation or termination (or
intent to cancel or terminate) of any such insurance. Neither the Corporation
nor any of its Subsidiaries has received a written refusal of coverage
thereunder, or any notice that any issuer of any such policy has filed for
protection under applicable bankruptcy laws or is otherwise in the process of
liquidating or has been liquidated or any other indication that such policies
are no longer in full force and effect or that the issuer of any such policy is
no longer willing or able to perform its obligations thereunder.
SECTION 3.22 Material Contracts.
(a) Schedule 3.22 sets forth a true and complete list of all
Contracts and other instruments (with the exception of the License Agreements
listed on Schedule 3.19(b)) to which the Corporation or any of its Subsidiaries
is a party that are material to the business, operations, properties, prospects
or financial condition of any of them (collectively, the "Corporation
Commitments"), including without limitation:
(i) any material agreement, Contract or commitment
relating to the employment of any Person by the Corporation or any of
its Subsidiaries, or any bonus, deferred compensation, pension, profit
sharing, Option, employee stock purchase, retirement or other employee
benefit plan;
(ii) any material agreement, indenture or other instrument
which contains restrictions with respect to payment of dividends or any
other distribution in respect of its capital stock;
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(iii) any agreement, Contract or commitment relating to
capital expenditures in excess of $100,000 in any fiscal year;
(iv) any agreement to acquire, directly or indirectly, any
equity interest in or assets of any other Person (other than purchases
of supplies, inventory, or equipment in the ordinary course of
business) whether or not the transactions contemplated thereby have
been consummated, and under which the Corporation or any of its
Subsidiaries continues to have any outstanding obligations;
(v) any loan (other than accounts receivable from trade
debtors arising in the ordinary course of business) or advance to
(other than travel or entertainment advances to employees made in the
ordinary course of business), or Investment in, any Person or any
agreement, Contract or commitment relating to the making of any such
loan, advance or Investment;
(vi) any agreement relating to Indebtedness in excess of
$100,000;
(vii) any guarantee or other contingent liability in
respect of any Indebtedness or obligation of any other Person (other
than the endorsement of negotiable instruments for collection in the
ordinary course of business) in excess of $100,000;
(viii) any material management service, consulting,
financial advisory or any other similar type Contract including,
without limitation, any Contract with any investment or commercial
bank;
(ix) any material agreement, Contract or commitment
limiting the ability of the Corporation or any of its Subsidiaries to
engage in any line of business or to compete with any Person;
(x) any agreement, Contract or commitment which involves
payments in excess of $100,000 in any calendar year and is not
cancelable without penalty within thirty (30) days;
(xi) any agreement, Contract or commitment for the
disposal of a material amount of assets or properties of the
Corporation or any of its Subsidiaries (other than sales to customers
in the ordinary course of business);
(xii) any agreement, Contract or commitment which is
material to the Corporation or any of its Subsidiaries and contain a
"change in control" or similar provision;
(xiii) any agreement, Contract or commitment relating to
any material joint venture, partnership, strategic alliance or similar
arrangement;
(xiv) any material agreement, Contract or commitment with
any Affiliate;
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(xv) any source code agreements with third parties; and
(xvi) any other material agreement, Contract or
commitment.
(b) Except as set forth on Schedule 3.22, each Corporation
Commitment is in full force and effect on the date hereof. Neither the
Corporation nor any of its Subsidiaries is in default in respect of any
Corporation Commitment, and no event has occurred which, with due notice or
lapse of time or both, would constitute such a default, except for any such
defaults that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. To the Knowledge of the Corporation
and the Controlling Stockholders, no other party to any of Corporation
Commitments is in default in respect thereof, and no event has occurred which,
with due notice or lapse of time or both, would constitute such a default.
(c) The Corporation's fulfillment Contract with Reliant
Fulfillment Services, Inc. expired in October 2001. There have been and are no
written or oral extensions or amendments of such fulfillment Contract and all
obligations owed thereunder have been satisfied in full and no further
performance is required thereunder.
(d) The Corporation's Sales Agreement with TigerDirect-Inc.,
dated as of January 10, 2001, may be terminated by the Corporation without
penalty upon sixty (60) days prior written notice to TigerDirect-Inc. There have
been and are no written or oral extensions or amendments of such sales
agreement.
SECTION 3.23 Questionable Payments. None of the Corporation,
any of its Subsidiaries nor, to the Corporation's and the Controlling
Stockholders' Knowledge, any employee, agent or representative of the
Corporation or any of its Subsidiaries acting on their behalf has, directly or
indirectly, made any bribes, kickbacks, illegal payments or illegal political
contributions using corporate funds of the Corporation or any Subsidiary or made
any illegal payments to obtain or retain business using corporate funds of the
Corporation or any Subsidiary in violation of the U.S. Foreign Corrupt Practices
Act of 1977.
SECTION 3.24 Brokers. The Corporation Entities and their
agents and representatives have incurred no obligation or liability, contingent
or otherwise, for brokerage or finders' fees, agents' commissions, investment
banking fees, or other similar payment in connection with this Agreement.
SECTION 3.25 Books and Records. Except as set forth on
Schedule 3.25, the respective minute books of the Corporation and its
Subsidiaries, to the extent previously made available to Thane and its
representatives, contain, and the respective minutes of books of the Corporation
and its Subsidiaries made available to Thane after the date hereof will contain,
accurate records of all meetings of, and corporate actions taken by (including
action taken by written consent) the respective stockholders and Board of
Directors of the Corporation and its Subsidiaries. None of the Corporation
Entities has any of its records, systems, controls, data or information
recorded, stored, maintained, operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic, mechanical or photographic
process, whether
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computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of the Corporation or
its Subsidiaries.
SECTION 3.26 Personal Property. Except as set forth on
Schedule 3.26 and except for properties and assets reflected in the Corporation
Financial Statements, or acquired since December 31, 2000, which have been sold
or otherwise disposed of in the ordinary course of business, each of the
Corporation and its Subsidiaries has good, valid and marketable title to (a) all
of its owned personal properties and assets (tangible and intangible),
including, without limitation, all of the personal properties and assets
reflected in the Corporation Financial Statements, except as may be indicated in
the notes thereto, and (b) all of the personal properties and assets (tangible
or intangible) purchased by the Corporation and its Subsidiaries since December
31, 2000, in each case free and clear of all Liens, except for Permitted Liens.
All of the tangible personal property owned by each of the Corporation Entities
is in good operating condition and repair, ordinary wear and tear excepted, and
is adequate and suitable for the purposes for which they are presently being
used.
SECTION 3.27 Advertising. Except as set forth on Schedule 3.27
hereto, over the last five years, the Corporation Entities have complied with
all Regulations, Orders and Contracts applicable to the advertising, marketing,
distribution and sale of the products that any of them owns, sells for itself or
others or otherwise provides advertising or other services. To Knowledge of the
Corporation and the Controlling Stockholders, there are currently no Claims
against any of the Corporation Entities for not being able to substantiate the
Claims made about the products produced or marketed by any such Corporation
Entities.
SECTION 3.28 Customer Warranties.
(a) There have been no pending, nor to the best Knowledge of
the Corporation and the Controlling Stockholders, threatened, any Claims under
or pursuant to any warranty, whether expressed or implied, on products or
services sold prior to the Closing Date by the Corporation that are not
disclosed or referred to in the Corporation Financial Statements and that are
not fully reserved against in accordance with GAAP.
(b) All services rendered by any of the Corporation Entities
(whether directly or indirectly through independent contractors) have been in
conformity in all material respects with all applicable Contract commitments and
all implied and express warranties, and none of the Corporation Entities has nor
shall have any liability whatsoever for damages relating to or arising from any
service, except for amounts incurred in the ordinary course of business which do
not have an adverse effect in excess of $5,000 in the aggregate (excluding
product liability Claims set forth in Section 3.29 below).
SECTION 3.29 Products Liability. Except as set forth in
Schedule 3.29 hereto, (a) there has been no Claim by or before any Governmental
Authority against or involving the Corporation or concerning any product
manufactured, shipped, sold or delivered by or on behalf of the Corporation
relating to or resulting from an alleged defect in design, manufacture,
materials or workmanship of any product manufactured, shipped, sold or delivered
by or on behalf of the Corporation or any alleged failure to warn, or any
alleged breach of implied
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warranties or representations, and, to the Knowledge of the Corporation and the
Controlling Stockholders, none has been threatened nor is there any valid basis
for any such Claim; (b) to the Knowledge of the Corporation and the Controlling
Stockholders, there has not been any Occurrence; (c) there has not been any
recall, rework, post-sale warning or similar action conducted with respect to
any product manufactured (or to be manufactured), shipped, sold or delivered by
or on behalf of the Corporation, or any investigation or consideration of or
decision made by any Person or Governmental Authority concerning whether to
undertake or not undertake, any recall, rework, post-sale warning or similar
action and (d) to the Knowledge of the Corporation and the Controlling
Stockholders, there has been no material defect in design, manufacturing,
materials or workmanship including, without limitation, any failure to warn, or
any breach of express or implied warranties or representations, which involve
any product manufactured, shipped, sold or delivered by or on behalf of the
Corporation, in the case of classes (a) through (d) above, that would have an
adverse effect on the Corporation in excess of $100,000. All manufacturing
standards applied, testing procedures used, and product specifications disclosed
to customers by the Corporation have complied in all material respects with all
requirements established by any applicable Regulation or Order of any
Governmental Authority.
SECTION 3.30 Capital Expenditures and Investments. The
Corporation has outstanding Contracts and a budget for capital expenditures and
investments as set forth in Schedule 3.30 hereto which includes a schedule of
all monies disbursed on account of capital expenditures and investments made by
the Corporation since the Corporation Financial Statement Date.
SECTION 3.31 Accounts Receivable; Inventories. The accounts
receivable of the Corporation reflected in the Corporation Financial Statements
and such additional accounts receivable as are reflected on the books of the
Corporation on the date hereof are current, good and collectible except to the
extent reserved against thereon (which reserves have been determined based upon
actual prior experience and GAAP and are consistent with prior practices). All
such accounts receivable, (except to the extent so reserved against) are valid,
genuine and subsisting, arise out of bona fide sales and deliveries of goods,
performance of services or other business transactions and are not subject to
defenses, deductions, set-offs or counterclaims. The inventories reflected on
the Corporation Financial Statements and held by the Corporation on the date
hereof do not include any items which are not usable or saleable in the ordinary
course of business of the Corporation or are obsolete or discounted items. Such
inventories have been reflected on such balance sheets at the lower of cost or
market value (taking into account the usability or salability thereof) in
accordance with GAAP. None of such inventories have been written up in value or
repurchased by, or returned to, the Corporation at an increased value. All such
inventories are owned free and clear and are not subject to any Lien except to
the extent reserved against or reflected in the Corporation Financial
Statements.
SECTION 3.32 Disclosure. Neither this Agreement nor any of the
Contracts, exhibits, attachments, written statements, documents, certificates or
other items prepared for or supplied to Thane by or on behalf of the Corporation
or the Controlling Stockholders with respect to the transactions contemplated
hereby contains any untrue statement of a material fact or omits a material fact
necessary to make each statement contained herein or therein not
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misleading. There is no fact which the Corporation or the Controlling
Stockholders has not disclosed to Thane herein and of which the Corporation or
the Controlling Stockholders, or any of their respective officers, directors or
executive employees is aware which could reasonably be anticipated to have a
Material Adverse Effect on the Corporation. The Corporation and the Controlling
Stockholders have disclosed to Thane all material information relating to the
business of the Corporation or the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THANE
Except as specifically identified in the Schedules delivered
to the Corporation concurrent with the execution of this Agreement with
reference to the particular representation or warranty being qualified, Thane
hereby represents and warrants to the Corporation and the Controlling
Stockholders as follows:
SECTION 4.1 Organization and Standing. Each of the Thane
Entities is duly organized and validly existing in good standing as a
corporation under the laws of its jurisdiction of organization and has all
requisite corporate power and authority to own its properties and assets and to
carry on its business as it is now being conducted. Except as set forth on
Schedule 4.1, each of the Thane Entities is duly qualified or licensed to
transact business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
the nature of its business makes such qualification necessary, except where the
failure to so qualify or be in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.2 Authorization. Each of Thane and Acquisition has
the corporate power to execute, deliver and perform their respective obligations
under this Agreement and each of the other Documents to which it is a party and
has taken all necessary corporate action to authorize the execution, delivery
and performance by it of this Agreement and each such other Documents and to
consummate the transactions contemplated hereby and thereby, subject to the
approval of its stockholders under the DGCL. No other corporate proceedings on
the part of Thane or Acquisition are necessary therefor (other than the approval
of the Thane stockholders under the DGCL).
SECTION 4.3 Due Execution and Delivery; Binding Obligations.
Each of Thane and Acquisition has duly executed and delivered this Agreement.
This Agreement constitutes, and each of the other Documents, when executed and
delivered by Thane and Acquisition and, assuming due authorization and execution
by the other parties hereto and thereto, will constitute legal, valid and
binding obligations of Thane and Acquisition enforceable against it in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
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SECTION 4.4 Capital Stock. On the date hereof, the authorized
capital stock of Thane consists of (i) 1,700,000 shares of Thane Common Stock,
(ii) 200,000 shares of Class B Common Stock, par value $.0001 per share ("Class
B Common Stock"), and (iii) 100,000 shares of preferred stock, par value $1.00
per share. As of the date hereof, of the 2,000,000 aggregate shares of Thane
capital stock authorized, (i) 1,018,034 shares of Thane Common Stock are issued
and outstanding, and (ii)(a) 90,000 shares of Thane Common Stock are reserved
for issuance pursuant to outstanding Options granted under existing employee
stock option plans, (b) 188,679.2 shares of Thane Common Stock are reserved for
issuance pursuant to outstanding warrants to purchase Thane Common Stock, not
including shares issuable pursuant to anti-dilution warrants outstanding, all of
which warrants shall by their terms terminate as of the Closing Date and (c)
30,000 shares of Class B Common Stock are reserved for issuance pursuant to
outstanding warrants to purchase Class B Common Stock. As of the date hereof,
there are no (and as of the Closing Date, there will be no) outstanding shares
of Thane Class B Common Stock or preferred stock. As of the date hereof, the
only securities convertible, exchangeable or exercisable into shares of Thane
Common Stock, including outstanding Options and warrants, are as described in
detail on Schedule 4.4(a), which Schedule includes the number and exercise
prices of such convertible securities. On the date hereof and immediately
following the Closing, each share of capital stock of Thane that is issued and
outstanding will be duly authorized, validly issued, fully paid and
nonassessable and will not be subject to nor issued in violation of any
preemptive rights, and none of the securities of Thane were issued in violation
of the Securities Act, any state "blue sky" law or any other applicable
securities laws. Except as set forth on Schedule 4.4(a) or as contemplated by
this Agreement, at the date hereof there are, and immediately following the
Closing there will be (a) no outstanding or authorized Options, warrants,
agreements, conversion rights, preemptive rights, other rights, subscriptions,
claims of any character, obligations, convertible or exchangeable securities, or
other commitments, contingent or otherwise, relating to shares of capital stock
of Thane or any of its Subsidiaries or pursuant to which Thane or any of its
Subsidiaries is or may become obligated to issue shares of its capital stock or
any securities convertible into, exchangeable for, or evidencing the right to
subscribe for, purchase or acquire, any shares of the capital stock of Thane or
any of its Subsidiaries, (b) no restrictions upon the dividends, voting or,
except as required by the Securities Act and state "blue sky" laws, the transfer
of any shares of capital stock of Thane pursuant to its Charter, Bylaws or other
governing documents or any agreement or other instruments to which it is a party
or by which it is bound, and (c) no shares of Thane Common Stock are held by
Thane in its treasury. Except as set forth on Schedule 4.4(b), neither Thane nor
any of its Subsidiaries has authorized or outstanding bonds, debentures, notes
or other Indebtedness the holders of which have the right to vote (or
convertible or exercisable for or exchangeable into securities the holders of
which have the right to vote) with the stockholders of such Person on any
matter. Except as contemplated by this Agreement or as set forth on Schedule
4.4(c), there are no outstanding contractual obligations of Thane or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of Thane
Common Stock or the capital stock of any of its Subsidiaries.
SECTION 4.5 No Violation. The execution, delivery and
performance by Thane of this Agreement and each of the other Documents to which
it is a party and the consummation of the transactions contemplated hereby and
thereby does not and will not contravene any Applicable Law, except for any such
contraventions that could not, individually or in the
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aggregate, reasonably be expected to have a Material Adverse Effect. Except as
set forth on Schedule 4.5, the execution, delivery and performance by Thane of
this Agreement and the other Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby (i) will not
(x) violate, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contract, lease, loan agreement, Thane
Employee Benefit Plan, mortgage, security agreement, trust indenture or other
agreement, instrument or Thane Commitment to which Thane is a party or by which
it is bound or to which any of its properties or assets is subject, except to
the extent any such conflict or breach, singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, (y) result in the
creation or imposition of any Lien (other than a Permitted Lien) upon any of the
properties or assets of any of Thane, or (z) except as set forth on Schedule
4.5, obligate Thane to make any payment or incur any additional obligation, or
give rise to any right of any Person with respect to Thane, under any term or
provision of any Contract, the Charter or Bylaws of Thane, any Thane Employee
Benefit Plan or any Applicable Law, that relates to a change of control or
ownership of Thane or any similar provision, (ii) will not violate any provision
of the Charter or Bylaws of Thane.
SECTION 4.6 Consents and Approvals. Except as set forth on
Schedule 4.6, assuming all filings, if any, required by the HSR Act are duly
made and the waiting period thereunder has been terminated or has expired, and
except for the approval of Thane's stockholders, no consent, permit, approval or
authorization of, or declaration, filing, application, transfer or registration
with, any Governmental Authority, or any other Person or entity is required to
be made or obtained by Thane by virtue of the execution, delivery, or
performance of this Agreement or any of the other Documents to which it is a
party.
SECTION 4.7 Subsidiaries. Set forth on Schedule 4.7(a) hereto
is a complete and accurate list of all Subsidiaries of Thane. Each Subsidiary is
a corporation duly organized, validly existing and in corporate and Tax 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 Subsidiary is duly
qualified or licensed to do business and is in corporate and Tax 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. Such
jurisdictions are set forth in Schedule 4.7(a) hereto. All of the outstanding
shares of the capital stock, all Options to acquire capital stock, and all
securities that are exchangeable or convertible into capital stock, of each
Subsidiary are owned by Thane or a direct or indirect wholly-owned Subsidiary of
Thane, are duly authorized, validly issued, fully paid and nonassessable, and
have been issued in compliance with all applicable Regulations and Contracts.
Thane or its direct or indirect wholly-owned Subsidiary has good and marketable
title to all of the shares of outstanding capital stock, all Options to acquire
capital stock, and all securities that are exchangeable or convertible into
capital stock, of each Subsidiary, free and clear of all Liens, Contracts,
Options or other limitations whatsoever. True, complete and correct copies of
each Subsidiary's charter and bylaws as presently in effect are set forth in
Schedule 4.7(b) hereto. No shares of capital stock of any Subsidiary are
reserved for issuance and there are no outstanding Options, Claims, Contracts,
convertible or exchangeable securities or other commitments, contingent or
otherwise, relating to the capital stock of any Subsidiary or pursuant to which
any Subsidiary is or may become obligated to issue or exchange any shares of
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capital stock. Except as set forth in Schedule 4.7(c) hereto, Thane does not
have any obligation to make any additional Investments in any Person.
SECTION 4.8 Permits. Except as set forth on Schedule 4.8, each
of the Thane Entities has such Permits as are necessary to own, lease, license
or operate their respective properties and to conduct their respective
businesses as currently owned and conducted and all such Permits are valid and
in full force and effect, except such Permits that the failure to have or to be
in full force and effect could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
SECTION 4.9 Litigation. Schedule 4.9 hereto sets forth a true
and complete list of all Claims and Orders involving Thane since January 1,
1998. Except as set forth in Schedule 4.9 hereto, to the Knowledge of Thane,
there is no Claim or Order threatened against Thane nor is there any reasonable
basis therefor including, without limitation, as a result of Thane's execution
of this Agreement and the consummation of the transactions contemplated hereby.
Except as set forth on Schedule 4.9 hereto, Thane is fully insured with respect
to each of the matters set forth on Schedule 4.9 and Thane has not received any
opinion or a memorandum or advice from legal counsel to the effect that it is
exposed, from a legal standpoint, to any liability or obligations which could
have an adverse effect in excess of $50,000.
SECTION 4.10 Financial Statements; No Undisclosed Liabilities.
(a) Attached as Schedule 4.10(a) hereto are (i) audited
consolidated year-end balance sheets of Thane as of March 31, 2001, 2000 and
1999 and statements of income, stockholders' equity and cash flow of Thane for
each of the fiscal years then ended and (ii) an unaudited consolidated balance
sheet of Thane as of September 30, 2001 and unaudited consolidated statements of
income, stockholders' equity and cash flow for the six-month period then ended.
Such balance sheets and the notes thereto fairly present the financial position
of Thane at the respective dates thereof in accordance with GAAP and such
statements of income, stockholders' equity and cash flow and the notes thereto
fairly present the results of operations for the periods referred to therein, in
accordance with GAAP, except that the unaudited financial statements have no
notes attached thereto and do not have year-end audit adjustments (none of which
would be material or recurring). All of the foregoing financial statements were
prepared from the books and records of Thane. Thane does not utilize any
percentage of completion or similar method of accounting for revenue, income or
cost recognition purposes. Thane has not in the past five (5) fiscal years
written off any research and development costs, incurred any reorganization,
restructuring or similar costs or changed the book value of any assets,
liabilities or goodwill of any Subsidiary or business acquired by Thane. Except
as set forth in Schedule 4.10(a) hereto, Thane does not have any obligation to
make any additional Investments in any Person. All properties used in Thane's
business operations during the period covered by the foregoing financial
statements are reflected in the financial statements in accordance with and to
the extent required by GAAP. The foregoing consolidated balance sheets and
statements of operations, stockholders' equity and cash flows and the notes
thereto are herein collectively referred to as the "Thane Financial Statements."
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(b) Except as set forth in Schedule 4.10(b) hereto, Thane does
not have any Indebtedness, obligation or liability (whether accrued, absolute,
contingent, unliquidated or otherwise, known or unknown to Thane, whether due or
to become due) arising out of transactions entered into at or prior to the
Closing Date, or any state of facts existing at or prior to the Closing Date,
other than: (i) liabilities set forth in the September 30, 2001 balance sheet of
Thane, or (ii) liabilities and obligations that have arisen after September 30,
2001 in the ordinary course of business (none of which is a liability resulting
from breach of a Contract, Regulation, Order or warranty, tort, infringement or
Claim).
(c) There is no Person that has Guaranteed, or provided any
financial accommodation of, any Indebtedness, obligation or liability of Thane
or for the benefit of Thane for the periods covered by the Thane Financial
Statements other than as set forth in the Thane Financial Statements or as set
forth on Schedule 4.10(c). The management of Thane has disclosed to Thane's
independent auditors all facts and circumstances known to them that are material
and bear upon the accuracy of the audited financial statements. Thane's
accounting systems and controls are sufficient to detect material fraud and
inaccuracies in the financial reporting processes and reports.
SECTION 4.11 Change in Condition. Except as set forth on
Schedule 4.11, since March 31, 2001, the Thane Entities have operated their
respective businesses in the ordinary course consistent with past practices and
there has not occurred any event, occurrence or conditions, or to the Knowledge
of Thane, any circumstance or development that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.12 Employee Benefit Plans and Labor Matters.
(a) List of Plans. Set forth in Schedule 4.12 attached hereto
is an accurate and complete list of all (i) "employee benefit plans," within the
meaning of Section 3(3) of ERISA; (ii) bonus, stock option, stock purchase,
restricted stock, incentive, fringe benefit, VEBAs under Section 501(c)(9) of
the Code and the Treasury Regulations thereunder, profit-sharing, pension or
retirement, deferred compensation, medical, life insurance, disability,
accident, salary continuation, severance, accrued leave, vacation, sick pay,
sick leave, supplemental retirement and unemployment benefit plans, programs
and/or arrangements, whether or not insured; and (iii) employment, consulting,
termination, and severance Contracts or agreements, in each case whether or not
subject to ERISA; that are maintained or contributed to (or required to be
contributed) for the benefit of any current or former employee of any of the
Thane Entities, or with respect to which any potential liability is borne by,
any of the Thane Entities (including, for this purpose and for the purpose of
all of the representations in this Section 4.12, all employers (whether or not
incorporated) that would be treated together with any of the Thane Entities as a
single employer within the meaning of Section 414) of the Code ("Thane Employee
Benefit Plans").
(b) Status of Plans. Except to the extent that a breach of any
of the following representations would not, individually or in the aggregate,
reasonably be expected to result in a material liability to any of the Thane
Entities, (i) each Thane Employee Benefit Plan (including any related trust)
complies in form with the requirements of all applicable laws, including,
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without limitation, ERISA and the Code; (ii) no complete or partial termination
of any Thane Employee Benefit Plan has occurred or is expected to occur; (iii)
none of the Thane Entities has any commitment, intention or understanding to
create, modify or terminate any Thane Employee Benefit Plan; and except as
required to maintain the tax-qualified status of any Thane Employee Benefit Plan
intended to qualify under Section 401(a) of the Code, no condition or
circumstance exists that would prevent the amendment or termination of any Thane
Employee Benefit Plan.
(c) No Pension Plans. No Thane Employee Benefit Plan is
an "employee pension benefit plan" (within the meaning of Section 3(2) of ERISA)
subject to Section 412 of the Code or Section 302 or Title IV of ERISA. None of
the Thane Entities has ever maintained or contributed to, or had any obligation
to contribute to (or borne any liability with respect to) any "multiple employer
plan" (within the meaning of the Code or ERISA) or any "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA).
(d) Liabilities. Except for such failures which could
not, individually or in the aggregate, reasonably be expected to result in a
material liability to the Thane Entities, (i) neither Thane nor any of its
Subsidiaries maintains any Thane Employee Benefit Plan which is a "group health
plan" (as such term is defined in Section 607(1) of ERISA or Section 5000(b)(1)
of the Code) that has not been administered and operated in all respects in
compliance with the applicable requirements of COBRA and neither Thane nor any
of its Subsidiaries is subject to any liability, including, without limitation,
additional contributions, fines, taxes, penalties or loss of tax deduction as a
result of such administration and operation; (ii) each Thane Employee Benefit
Plan that is intended to meet the requirements of Section 125 of the Code meets
such requirements, and each program of benefits for which employee contributions
are provided pursuant to elections under any Thane Employee Benefit Plan meets
the requirements of the Code applicable thereto; and (iii) neither Thane nor any
of its Subsidiaries maintains any Thane Employee Benefit Plan which is an
"employee welfare benefit plan" (as such term is defined in Section 3(1) of
ERISA) that has provided any "disqualified benefit" (as such term is defined in
Section 4976(b) of the Code) with respect to which an excise tax could be
imposed. No Thane Employee Benefit Plan which is such a group health plan is a
"multiple employee welfare arrangement," within the meaning of Section 3(40) of
ERISA.
None of the Thane Entities maintains any Thane Employee
Benefit Plan (whether qualified or non-qualified under Section 401(a) of the
Code) providing for post-employment or retiree health, life insurance and/or
other welfare benefits and having unfunded liabilities, and none of the Thane
Entities has any obligation to provide any such benefits to any retired or
former employees or active employees following such employees' retirement or
termination of service (except, in any case, to the extent required by COBRA).
Except as set forth in Schedule 4.12(d), none of the Thane Entities has any
unfunded liabilities pursuant to any Thane Employee Benefit Plan that is an
employee pension benefit plan within the meaning of Section 3(3) of ERISA, but
is not intended to be qualified under Section 401(a) of the Code. No Thane
Employee Benefit Plan holds as an asset any interest in any annuity contract,
guaranteed investment contract or any other Investment or insurance contract,
policy or instrument issued by
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an insurance company that, to the Knowledge of Thane, is the subject of
bankruptcy, conservatorship, insolvency, liquidation, rehabilitation or similar
proceedings.
None of the Thane Entities has incurred any liability for any
tax or excise tax arising under Chapter 43 of the Code, and no event has
occurred and no condition or circumstance has existed that would give rise to
any such liability.
There are no actions, suits, claims or disputes pending, or,
to the Knowledge of Thane, threatened, anticipated or expected to be asserted
against or with respect to any Thane Employee Benefit Plan or the assets of any
such plan (other than routine claims for benefits and appeals of denied routine
claims). No civil or criminal action brought pursuant to the provisions of Title
I, Subtitle B, Part 5 of ERISA is pending or, to the Knowledge of Thane,
threatened, anticipated, or expected to be asserted against any of the Thane
Entities or, to the Knowledge of Thane, any fiduciary of any Thane Employee
Benefit Plan, in any case with respect to any Thane Employee Benefit Plan. No
Thane Employee Benefit Plan or, to the Knowledge of Thane, any fiduciary thereof
has been the direct or indirect subject of an audit, investigation or
examination by any governmental or quasi-governmental agency.
(e) Contributions. Full payment has been timely made of
all amounts which Thane or any of its Subsidiaries is required, under applicable
law or under any Thane Employee Benefit Plan or any agreement relating to any
Thane Employee Benefit Plan to which Thane or any of its Subsidiaries is a
party, to have paid as contributions or premiums thereto as of the last day of
the most recent fiscal year of such Thane Employee Benefit Plan ended prior to
the date hereof, except to the extent that any failure to make such timely
payment would not reasonably be expected to result in a material liability to
the Thane Entities. All such contributions and/or premiums have been fully
deducted for income tax purposes and no such deduction has been challenged or
disallowed by any governmental entity. Benefits under all Thane Employee Benefit
Plans are as represented and have not been materially increased subsequent to
the date as of which documents have been provided.
(f) Tax Qualification. Each Thane Employee Benefit Plan
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service (or has
submitted, or is within the remedial amendment period for submitting, an
application for a determination letter from the Internal Revenue Service, and is
awaiting receipt of a response) and, to the Knowledge of Thane which could
reasonably be expected to result in the revocation of, or a refusal by the
Internal Revenue Service to issue, any such favorable determination. Each VEBA
has received a favorable determination letter from the Internal Revenue Service
regarding its exempt status under Section 501(c)(9) of the Code.
(g) Transactions. None of the Thane Entities or any of
their respective directors, officers, employees or, to the Knowledge of Thane,
other Persons who participate in the operation of any Thane Employee Benefit
Plan or related trust or funding vehicle, has engaged in any transaction with
respect to any Thane Employee Benefit Plan or breached any applicable fiduciary
responsibilities or obligations under Title I of ERISA that would reasonably be
expected to subject any Thane Entities to a material tax, penalty or liability
for prohibited transactions or breach of any obligations under ERISA or the
Code.
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(h) Triggering Events. Except as set forth in Schedule
4.12, the execution of this Agreement and the consummation of the transactions
contemplated hereby, do not constitute a triggering event under any Thane
Employee Benefit Plan, policy, arrangement, statement or agreement which (either
alone or upon the occurrence of any additional or subsequent event) will or may
reasonably be expected to result in any material payment (whether of severance
pay or otherwise) "excess parachute payment" (as such term is defined in Section
280G of the Code), acceleration, vesting or increase in benefits to any employee
or former employee or director of the any of the Thane Entities.
(i) Documents. Thane has delivered or made available to
the Corporation and its counsel true and complete copies of all material
documents in connection with each Thane Employee Benefit Plan, including (where
applicable): (i) all Thane Employee Benefit Plans as in effect on the date
hereof, together with all amendments thereto; (ii) all current summary plan
descriptions and summaries of material modifications; (iii) all current trust
agreements, and other material documents establishing other funding arrangements
(and all amendments thereto and the latest financial statements thereof); (iv)
the most recent Internal Revenue Service determination letter obtained with
respect to each Thane Employee Benefit Plan intended to be qualified under
Section 401(a) of the Code or exempt under Section 501(c)(9) of the Code; (v)
the annual report on Internal Revenue Service Form 5500-series or 990 for each
of the last three years for each Thane Employee Benefit Plan with respect to
which such forms have been filed; and (vi) the most recently prepared financial
statements for each Thane Employee Benefit Plan for which such statements are
prepared.
(j) Except as set forth on Schedule 4.12;
(i) there is no labor strike, dispute, slowdown,
stoppage or lockout actually pending, or to the Knowledge of Thane,
threatened against or affecting any of the Thane Entities and during
the past five (5) years there has not been any such action;
(ii) to the Knowledge of Thane, there are no
union claims to represent the employees of any of the Thane Entities;
(iii) none of the Thane Entities is a party to or
bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of any
Thane Entity;
(iv) none of the employees of any of the Thane
Entities are represented by any labor organization and Thane does not
have any Knowledge of any current union organizing activities among the
employees of any Thane Entity, nor does any question concerning
representation exist concerning such employees;
(v) true, correct and complete copies of all
written personnel policies, rules and procedures applicable to
employees of any of the Thane Entities have heretofore been delivered
to the Corporation;
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(vi) to the Knowledge of Thane, no federal,
state, local or foreign agency responsible for the enforcement of labor
or employment laws is conducting an investigation with respect to or
relating to any Thane Entity; and
(vii) there are no complaints, controversies,
lawsuits or other proceedings pending or, to the Knowledge of Thane,
any applicant for employment or classes of the foregoing alleging
breach of any express or implied Contract or employment, any law or
regulation governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the
employment relationship; and the execution of this Agreement and the
consummation of the transactions contemplated hereby shall not result
in a breach or other violation of any collective bargaining agreement
to which any Thane Entity is a party.
(k) Since the enactment of the WARN Act, none of the
Thane Entities has effectuated (i) 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 the any Thane Entity, or (ii)
a "mass layoff" (as defined in the WARN Act) affecting any site of employment or
facility any Thane Entity; nor has any Thane Entity been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law. Except as set
forth in Schedule 4.12, none of the employees of any Thane Entity has suffered
an "employment loss" (as defined in the WARN Act) with regard to their
employment with any Thane Entity since January 1, 1997.
SECTION 4.13 Interests in Real Property.
(a) Schedule 4.13 sets forth a true and complete list of
all real property owned and all material real property leased by any of the
Thane Entities. Each of the Thane Entities has good and marketable title in fee
simple to all real property owned by it, free and clear of all Liens, except for
Permitted Liens, and valid and enforceable leasehold interests in all real
property leased by it.
(b) None of the real property owned by, or the leasehold
estates of, any of the Thane Entities is subject to (i) any Liens other than
Permitted Liens or (ii) any easements, rights of way, licenses, grants, building
or use restrictions, exceptions, reservations, limitations or other impediments
that, in either case (i) or (ii), will materially adversely affect the value
thereof for their present use, taken as a whole, or that materially interfere
with or impair the present and continued use thereof, taken as a whole, in the
usual and normal conduct of the business of any such Person.
(c) To the Knowledge of Thane, all improvements on such
real property and the operations therein conducted conform in all material
respects to all applicable health, fire, environmental, safety, zoning and
building laws, ordinances and administrative regulations (whether through
grandfathering provisions, permitted use exceptions, variances or otherwise),
except for possible nonconforming uses or violations that do not and will not
interfere with the present use, operation or maintenance thereof as now used,
operated or maintained or access thereto, and that do not and will not
materially affect the value thereof for their present use. To
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the Knowledge of Thane, none of the Thane Entities has received notice of any
violation of or noncompliance with any such laws, ordinances or administrative
regulations from any applicable Governmental Authority, except for notices of
violations or failures so to comply, if any, that could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.14 Leases.
(a) (i) Except as set forth on Schedule 4.14, none of the
Thane Entities is in breach of or default (and no event has occurred which, with
due notice or lapse of time or both, may constitute a breach or default) under
any lease required to be set forth on Schedule 4.13 (the "Thane Leases") and
(ii) no party to any Thane Lease has given, or to the Knowledge of Thane
threatened to give, or advised that it will be giving any Thane Entity written
notice of or made a claim with respect to any breach or default, the
consequences of which, in either case (i) or (ii) could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 4.14, after taking
into account the exercise of any Options (which are exercisable solely at the
discretion of a Thane Entity), none of the Thane Leases terminate by their
respective terms before June 1, 2003.
(c) Except as set forth on Schedule 4.14, none of the
Thane Leases require a consent to be obtained for the execution, delivery and
performance of any of the Documents or the consummation of any of the
transactions contemplated hereby or thereby.
(d) None of the Thane Entities has any ownership,
financial or other interest in the landlords under any of the Thane Leases.
SECTION 4.15 Compliance with Law. The operations of each of
the Thane Entities has been conducted in compliance with all Applicable Laws,
including, without limitation, any regulations and other requirements of the
Better Business Bureau or the Federal Trade Commission, except for violations or
failures to comply, if any, that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. To the Knowledge of
Thane, none of the Thane Entities has received written notice of any
noncompliance with any Applicable Laws, except as set forth on Schedule 4.15 and
except for notices of violations or failures so to comply, if any, that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.16 Related Party Transactions. Except as set forth
on Schedule 4.16 and except for the consummation of the transactions
contemplated by the Documents to which Thane is a party, (i) neither Thane nor
any of its Subsidiaries is a party to any Contract or arrangement with or for
the benefit of any Person who, to Thane's Knowledge, is a Related Party; (ii)
all material transactions between Thane and its Subsidiaries, on the one hand,
and a Related Party, on the other hand, are on terms and conditions which could
reasonably be expected to be obtained from a non-Affiliate in an arm's length
transaction; and (iii) no Related Party is a supplier, lessor, lessee or
competitor of Thane or any of its Subsidiaries. Since June
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30, 2000, Thane has not made any payments, loaned or borrowed any funds or
property or made any credit arrangement or accommodation with any stockholder,
Affiliate or employee of Thane except for the payment of employee salaries and
director compensation in the ordinary course of business.
SECTION 4.17 Tax Matters.
(a) Each of the Thane Entities has duly and properly
filed, on a timely basis, all material Tax Returns required to be filed by, or
with respect to, each such Thane Entity on or prior to the Closing Date. The Tax
Returns have accurately reflected all liability for Taxes of each of the Thane
Entities for the periods covered thereby. All Taxes with respect to the income,
assets or operations of the Thane Entities for all Pre-Closing Periods have been
timely paid or will be timely paid in full on or prior to the Closing Date or
accrued and adequately disclosed and fully provided for in accordance with GAAP
either in the Thane Financial Statements or, with respect to taxable periods
beginning on or after April 1, 2001, on the books and records of Thane.
(b) All material Taxes that any of the Thane Entities are
or were required by law to withhold or collect in connection with amounts paid
or owing to any employee, independent contractor, creditor, stockholder or other
third party and have been duly and timely withheld or collected and, to the
extent required, have been timely paid to the proper Governmental Authority.
There are no Liens with respect to Taxes upon any of the properties or assets,
real or personal, tangible or intangible, of any Thane Entity except for
Permitted Liens.
(c) No Thane Entity has been the subject of an audit or
other examination with respect to Taxes by any Governmental Authority, and, to
the Knowledge of Thane, no such audit or examination is contemplated or pending.
No Thane Entity has received any written notices from any Governmental Authority
relating to any issue that could materially affect the Tax liability of a Thane
Entity.
(d) No Thane Entity (i) has entered into an agreement or
waiver that is currently effective, or been requested to enter into an agreement
or waiver, that extends any statute of limitations relating to the payment or
collection of Taxes of a Thane Entity or (ii) is presently contesting the Tax
liability of any Thane Entity before any court, tribunal or agency.
(e) No Thane Entity has been included in any
"consolidated," "unitary" or "combined" Tax Return provided for under the law of
the United States, any foreign jurisdiction or any state or locality with
respect to Taxes for any taxable period for which the statute of limitations has
not expired (other than a group of which Thane and/or its Subsidiaries are the
only members). No Thane Entity has any obligation by Contract, agreement,
arrangement or otherwise to permit any Person, other than a Thane Entity, to use
the benefit of a refund, credit or offset of Tax of any Thane Entity.
(f) There are no tax sharing, allocation, indemnification
or similar agreements in effect as between any Thane Entity (or any predecessor
or affiliate thereof) and any other
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party under which any Thane Entity or Corporation Entity could be liable for any
material Taxes or other claims of such other party after the Closing Date.
(g) No Thane Entity has applied for, been granted, or
agreed to any accounting method change for which it will be required to take
into account any adjustment under Section 481 of the Code or any similar
provision of the Code or the corresponding tax laws of any nation, state or
locality; no Thane Entity has any Knowledge that the U.S. Internal Revenue
Service or any other taxing authority has proposed or purported to require any
such adjustment or change in accounting method, and no Thane Entity has any
Knowledge or belief that any such adjustment under Section 481 of the Code or
the corresponding tax laws of any nation, state or locality will be required of
Thane Entity upon the completion of, or by reason of, the transaction
contemplated by this Agreement.
(h) There are no deferred intercompany transactions
between any Thane Entities, and there is no excess loss account (within the
meaning of Treasury Regulations Section 1.1502-19) with respect to the stock of
any Thane Entity that will or may result in the recognition of a material amount
of taxable income upon the consummation of the transaction contemplated by this
Agreement.
(i) No Indebtedness of any Thane Entity consists of
"corporate acquisition indebtedness" within the meaning of Section 279 of the
Code.
(j) No Thane Entity is, has been during the five-year
period ending on the date of this Agreement, or will have been during the
five-year period ending on the Closing Date, a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code.
(k) No written claim has ever been made by any taxing
authority in a jurisdiction where any Thane Entity does not file Tax Returns
that any Thane Entity is or may be subject to taxation by that jurisdiction.
(l) No election under Section 341(f) of the Code has been
made or shall be made prior to the Closing Date to treat a Thane Entity as a
"consenting corporation," as defined in Section 341 of the Code.
(m) No Thane Entity is a party to any agreement that
would require a Thane Entity or any Affiliate thereof to make any payment that
would constitute an "excess parachute payment" for purposes of Sections 280G and
4999 of the Code.
SECTION 4.18 Environmental Matters. Except as set forth on
Schedule 4.18, (i) the Thane Entities are in compliance in all material respect
with all applicable Environmental Laws, and have obtained, and are in compliance
in all material respect with, all permits required under applicable
Environmental Laws; (ii) there are no Actions by any Governmental Authority or
other Person or entity pending or, to the Knowledge of Thane, against any Thane
Entities under any Environmental Law; and (iii) to the Knowledge of Thane, there
are no facts, circumstances or conditions relating to the business or operations
of any Thane Entity that could
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reasonably be expected to give rise to any material claim, proceeding, Action or
liability under any Environmental Law.
SECTION 4.19 Intellectual Property.
(a) Schedule 4.19(a) sets forth, for the Intellectual
Property owned by the Thane Entities, a complete and accurate list of all U.S.
and foreign (i) patents and patent applications; (ii) trademark registrations
(including Internet domain registrations), trademark applications, and material
unregistered trademarks; (iii) copyright and mask work registrations, copyright
and mask work applications, and material unregistered copyrights; and (iv) all
Software (other than readily available "off-the-shelf" commercial software
programs having an acquisition price of less than $5,000), in the case of
subclauses (i) through (iv) above, material to the Thane Entities' respective
businesses which are owned, licensed, or leased, by the Thane Entities,
identifying which Intellectual Property is owned, licensed, or leased, as the
case may be. The Intellectual Property of the Thane Entities constitutes all the
intellectual property necessary to operate their respective businesses as of the
Closing Date in substantially the manner in which it is currently operated. To
the extent indicated on Schedule 4.19(a), the Intellectual Property of the Thane
Entities has been duly registered in, filed in or issued by the United States
Patent and Trademark Office, United States Copyright Office, a duly authorized
and appropriate domain name registrar, the appropriate offices in the various
states of the United States and the appropriate offices of other jurisdictions
(foreign and domestic), and each such registration, filing and issuance remains
in full force and effect as of the Closing Date.
(b) Schedule 4.19(b) sets forth a complete and accurate
list of all material oral or written agreements (whether between any Thane
Entity and third parties or inter-corporate) to which any Thane Entity is a
party or otherwise bound, (i) granting or obtaining any right to use or practice
any rights under any Intellectual Property (other than licenses for readily
available "off-the-shelf" commercial software programs having an acquisition
price of less than $5,000), or (ii) restricting any of the Thane Entities right
to use any Intellectual Property, including, without limitation, any License
Agreements. The License Agreements of Thane and its Subsidiaries are valid and
binding obligations of Thane and its Subsidiaries, as applicable, enforceable in
accordance with their terms, and to Thane's Knowledge, there exists no event or
condition which will result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default by any party under any
such License Agreement. Except as set forth in Schedule 4.19(b), no Thane Entity
has licensed or sublicensed its rights in any material Intellectual Property
other than pursuant to a valid and binding License Agreement. No royalties,
honoraria or other fees are currently payable by the Thane Entities to any third
parties for the use of or right to use any Intellectual Property except pursuant
to any License Agreement and set forth on Schedule 4.19(b).
(c) Except as set forth in Schedule 4.19(c), the Thane
Entities own, or to the Knowledge of Thane, have valid rights to use, free and
clear of all Liens other than Permitted Liens, all of the Intellectual Property
of the Thane Entities. A Thane Entity is listed in the records of the
appropriate United States, state, or foreign registry as the sole current owner
of record for each application and registration and has the exclusive right to
file, prosecute and
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maintain all applications and registrations with respect to the Intellectual
Property that is listed on Schedule 4.19(c).
(d) Except as set forth in Schedule 4.19(d), the
Intellectual Property owned by the Thane Entities and, to the Knowledge of
Thane, any material Intellectual Property licensed to the Thane Entities, has
not been canceled, expired, abandoned or otherwise terminated and all renewal
fees in respect thereof have been duly paid, and to the Knowledge of Thane is
valid and enforceable.
(e) Except as set forth in Schedule 4.19(e), no Thane
Entity has received any written notice or claim and there is no pending or,
threatened claim, suit, arbitration, interference or other adversarial or
contested proceeding before any court, agency, arbitral tribunal, or
registration authority in any jurisdiction (foreign or domestic) involving the
Intellectual Property owned by the Thane Entities, or, to the Knowledge of
Thane, the material Intellectual Property licensed to the Thane Entities,
alleging that the activities or the conduct of the Thane Entities businesses
infringe upon, dilute, violate or constitute the unauthorized use, misuse or
misappropriation of the intellectual property rights of any third party or
challenging the Thane Entities' ownership, use, validity, enforceability or
registrability of any of their respective Intellectual Property. There are no
settlements, forbearances to xxx, consents, judgments, or orders or similar
obligations to which any Thane Entity is a party other than the License
Agreements which (i) restrict any Thane Entities' right to use any Intellectual
Property, (ii) restrict the Thane Entities' businesses in order to accommodate a
third party's intellectual property rights or (iii) permit third parties to use
any Intellectual Property owned by any Thane Entity. Except as set forth in
Schedule 4.19(e), to the Knowledge of Thane, there does not exist any valid
basis for any such claims.
(f) Except as set forth in Schedule 4.19(f), to the
Knowledge of Thane, the conduct of each Thane Entities' business as currently
conducted or planned to be conducted does not infringe upon (either directly or
indirectly such as through contributory infringement or inducement to infringe)
any Intellectual Property owned or controlled by any third party. Except as set
forth in Schedule 4.19(f), to the Knowledge of Thane, no third party is
misappropriating, infringing, diluting or violating any Intellectual Property
owned by any Thane Entity and no such claims, suits, arbitrations or other
adversarial proceedings have been brought or threatened against any third party
by any Thane Entity.
(g) Each Thane Entity takes reasonable measures to
protect the confidentiality of its Trade Secrets, including requiring their
employees and other parties having access thereto to execute written
non-disclosure agreements. To the Knowledge of Thane, no Trade Secret of any
Thane Entity has been disclosed or authorized to be disclosed to any third party
other than pursuant to a non-disclosure agreement. Except as set forth in
Schedule 4.19(g), to the Knowledge of Thane, no party to any non-disclosure
agreement relating to its Trade Secrets is in breach or default thereof. The
Corporation has been provided with a copy of Thane's form of non-disclosure
agreement and the non-disclosure agreements referred to in this clause (g)
contain substantially the same terms and conditions as the form of
non-disclosure agreement.
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(h) No current or former partner, director, officer, or
employee of any Thane Entity (or any of its respective predecessors in interest)
will, after giving effect to the transactions contemplated herein, directly own
or retain any rights to use any of the Intellectual Property owned or used by
any Thane Entity.
(i) With respect to the Software set forth in Schedule
4.19(i) which is owned by a Thane Entity, such Software was either developed (i)
by employees of such Thane Entity within the scope of their employment or (ii)
by independent contractors who have assigned their rights to such Thane Entity
pursuant to signed, written agreements.
(j) The Trademarks listed on Schedule 4.19(j), for which
any Thane Entity has obtained or applied for a registration that are material to
the Thane Entity business have been continuously used in the form appearing in,
and in connection with the goods and services listed in, their respective
registration certificates, and are all the Trademarks that are material to each
Thane Entity. To the Knowledge of Thane, there has been no prior use of the
material Trademarks by any third party that would confer upon said third party
superior rights in the material Trademarks. To the Knowledge of Thane, the Thane
Entities have undertaken reasonable policing of the material Trademarks against
third party infringement.
SECTION 4.20 Insurance. Except as set forth on Schedule 4.20,
each of the Thane Entities maintains, with reputable insurers, insurance in such
amounts, including deductible arrangements, and of such a character as is
customary for companies engaged in the same or similar business. Schedule 4.20
sets forth a list and brief description of all policies of title, fire,
liability, casualty, business interruption, errors and omissions, workers'
compensation and other forms of insurance including, but not limited to,
directors and officers insurance, held by the Thane Entities as of the date
hereof, and all such policies are in full force and effect in accordance with
their terms. To the Knowledge of Thane, no Thane Entity is in default under any
material provisions of any such policy of insurance and, to the Knowledge of
Thane, as of the date hereof, all premiums due have been paid and no Thane
Entity has received notice of cancellation or termination (or intent to cancel
or terminate) of any such insurance. Neither Thane nor any of its Subsidiaries
has received a written refusal of coverage thereunder, or any notice that any
issuer of any such policy has filed for protection under applicable bankruptcy
laws or is otherwise in the process of liquidating or has been liquidated or any
other indication that such policies are no longer in full force and effect or
that the issuer of any such policy is no longer willing or able to perform its
obligations thereunder.
SECTION 4.21 Material Contracts.
(a) Schedule 4.21 sets forth a true and complete list of
all Contracts and other instruments (with the exception of the License
Agreements listed on Schedule 4.19(b)) to which each Thane Entity is a party
that are material to the business, operations, properties, prospects or
financial condition of any of them (collectively, the "Thane Commitments"),
including without limitation:
(i) any material agreement, Contract or
commitment relating to the employment of any Person by any Thane
Entity, or any bonus, deferred compensation,
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pension, profit sharing, Option, employee stock purchase, retirement or
other employee benefit plan;
(ii) any material agreement, indenture or other
instrument which contains restrictions with respect to payment of
dividends or any other distribution in respect of its capital stock;
(iii) any agreement, Contract or commitment
relating to capital expenditures in excess of $100,000 in any fiscal
year;
(iv) any agreement to acquire, directly or
indirectly, any equity interest in or assets of any other Person (other
than purchases of supplies, inventory, or equipment in the ordinary
course of business) whether or not the transactions contemplated
thereby have been consummated, and under which an Thane Entity
continues to have any outstanding obligations;
(v) any loan (other than accounts receivable
from trade debtors arising in the ordinary course of business) or
advance to (other than travel or entertainment advances to employees
made in the ordinary course of business), or Investment in, any Person
or any agreement, Contract or commitment relating to the making of any
such loan, advance or Investment;
(vi) any agreement relating to Indebtedness in
excess of $100,000;
(vii) any guarantee or other contingent liability
in respect of any Indebtedness or obligation of any other Person (other
than the endorsement of negotiable instruments for collection in the
ordinary course of business) in excess of $100,000;
(viii) any material management service, consulting,
financial advisory or any other similar type Contract including,
without limitation, any Contract with any investment or commercial
bank;
(ix) any material agreement, Contract or
commitment limiting the ability of any Thane Entity to engage in any
line of business or to compete with any Person;
(x) any agreement, Contract or commitment which
involves payments in excess of $100,000 in any calendar year and is not
cancelable without penalty within thirty (30) days;
(xi) any agreement, Contract or commitment for
the disposal of a material amount of assets or properties of any Thane
Entity (other than sales to customers in the ordinary course of
business);
(xii) any agreement, Contract or commitment which
is material to any Thane Entity and contain a "change in control" or
similar provision;
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(xiii) any agreement, Contract or commitment
relating to any material joint venture, partnership, strategic alliance
or similar arrangement;
(xiv) any material agreement, Contract or
commitment with any Affiliate;
(xv) any source code agreements with third
parties; and
(xvi) any other material agreement, Contract or
commitment.
(b) Except as set forth on Schedule 4.21, each Thane
Commitment is in full force and effect on the date hereof. No Thane Entity is in
default in respect of any Thane Commitment, and no event has occurred which,
with due notice or lapse of time or both, would constitute such a default,
except for any such defaults that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. To the Knowledge of
Thane, no other party to any of the Thane Commitments is in default in respect
thereof, and no event has occurred which, with due notice or lapse of time or
both, would constitute such a default.
SECTION 4.22 Questionable Payments. No Thane Entity nor, to
the Knowledge of Thane, any employee, agent or representative of any Thane
Entity acting on their behalf has, directly or indirectly, made any bribes,
kickbacks, illegal payments or illegal political contributions using corporate
funds of any Thane Entity or made any illegal payments to obtain or retain
business using corporate funds of any Thane Entity in violation of the U.S.
Foreign Corrupt Practices Act of 1977.
SECTION 4.23 Brokers. Except as set forth on Schedule 4.23,
Thane and its agents and representatives have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees, agents'
commissions, investment banking fees, or other similar payment in connection
with this Agreement.
SECTION 4.24 Books and Records. Except as set forth on
Schedule 4.24, the respective minute books of each Thane Entity, to the extent
previously made available to the Corporation and its representatives, contain,
and the respective minutes of books of the Thane Entities made available to the
Corporation after the date hereof will contain, accurate records of all meetings
of, and corporate actions taken by (including action taken by written consent)
the respective Stockholders and Board of Directors of the Thane Entities. To the
Knowledge of Thane, no Thane Entity has any of its records, systems, controls,
data or information recorded, stored, maintained, operated or otherwise wholly
or partly dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of Thane or its Subsidiaries.
SECTION 4.25 Personal Property. Except as set forth on
Schedule 4.25 and except for properties and assets reflected in the Thane
Financial Statements or acquired after March 31, 2001, which have been sold or
otherwise disposed of in the ordinary course of business, each Thane Entity has
good, valid and marketable title to (a) all of its owned personal
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properties and assets (tangible and intangible), including, without limitation,
all of the personal properties and assets reflected in the relevant Thane
Financial Statements, except as may be indicated in the notes thereto, and (b)
all of the personal properties and assets (tangible or intangible) purchased by
the Thane Entities since March 31, 2001, in each case free and clear of all
Liens, except for Permitted Liens. All of the tangible personal property owned
by each Thane Entity is in good operating condition and repair, ordinary wear
and tear excepted, and is adequate and suitable for the purposes for which they
are presently being used.
SECTION 4.26 Advertising. Except as set forth on Schedule 4.26
hereto, over the last five years, the Thane Entities have complied with all
Regulations, Orders and Contracts applicable to the advertising, marketing,
distribution and sale of the products that any of them owns, sells for itself or
others or otherwise provides advertising or other services. To Knowledge of
Thane, there are currently no Claims against any of the Thane Entities for not
being able to substantiate the Claims made about the products produced or
marketed by any such Thane Entities.
SECTION 4.27 Customer Warranties.
(a) There have been no pending, nor to the best Knowledge
of Thane, threatened, any Claims under or pursuant to any warranty, whether
expressed or implied, on products or services sold prior to the Closing Date by
Thane that are not disclosed or referred to in the Thane Financial Statements
and that are not fully reserved against in accordance with GAAP.
(b) All services rendered by any of the Thane Entities
(whether directly or indirectly through independent contractors) have been in
conformity in all material respects with all applicable Contract commitments and
all implied and express warranties, and none of the Thane Entities has nor shall
have any liability whatsoever for damages relating to or arising from any
service, except for amounts incurred in the ordinary course of business which do
not have an adverse effect in excess of $5,000 in the aggregate (excluding
Product Liability Claims discussed in Section 4.28 below).
SECTION 4.28 Products Liability. Except as set forth in
Schedule 4.28 hereto, (a) there has been no Claim by or before any Governmental
Authority against or involving Thane or concerning any product manufactured,
shipped, sold or delivered by or on behalf of Thane relating to or resulting
from an alleged defect in design, manufacture, materials or workmanship of any
product manufactured, shipped, sold or delivered by or on behalf of Thane or any
alleged failure to warn, or any alleged breach of implied warranties or
representations, and, to the Knowledge of Thane, none has been threatened nor is
there any valid basis for any such Claim; (b) to the Knowledge of Thane, there
has not been any Occurrence; (c) there has not been any recall, rework,
post-sale warning or similar action conducted with respect to any product
manufactured (or to be manufactured), shipped, sold or delivered by or on behalf
of Thane, or any investigation or consideration of or decision made by any
Person or Governmental Authority concerning whether to undertake or not
undertake, any recalls, reworks, post-sale warnings or similar actions and (d)
to the Knowledge of Thane, there has been no material defect in design,
manufacturing, materials or workmanship including, without limitation, any
failure to warn, or
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any breach of express or implied warranties or representations, which involve
any product manufactured, shipped, sold or delivered by or on behalf of Thane,
in the case of clauses (a) through (d) above, that would have an adverse effect
on Thane in excess of $100,000. All manufacturing standards applied, testing
procedures used, and product specifications disclosed to customers by Thane have
complied in all material respects with all requirements established by any
applicable Regulation or Order of any Governmental Authority.
SECTION 4.29 Capital Expenditures and Investments. Thane has
outstanding Contracts and a budget for capital expenditures and investments as
set forth in Schedule 4.29 hereto which includes a schedule of all monies
disbursed on account of capital expenditures and investments made by Thane since
March 31, 2001.
SECTION 4.30 Accounts Receivable; Inventories. The accounts
receivable of Thane reflected in the Thane Financial Statements and such
additional accounts receivable as are reflected on the books of Thane on the
date hereof are current, good and collectible except to the extent reserved
against thereon (which reserves have been determined based upon actual prior
experience and GAAP and are consistent with prior practices). All such accounts
receivable, (except to the extent so reserved against) are valid, genuine and
subsisting, arise out of bona fide sales and deliveries of goods, performance of
services or other business transactions and are not subject to defenses,
deductions, set-offs or counterclaims. The inventories reflected on Thane
Financial Statements and held by Thane on the date hereof do not include any
items which are not usable or saleable in the ordinary course of business of
Thane or are obsolete or discounted items. Such inventories have been reflected
on such balance sheets at the lower of cost or market value (taking into account
the usability or salability thereof) in accordance with GAAP. None of such
inventories have been written up in value or repurchased by, or returned to,
Thane at an increased value. All such inventories are owned free and clear and
are not subject to any Lien except to the extent reserved against or reflected
in the Thane Financial Statements.
SECTION 4.31 Disclosure. Neither this Agreement nor any of the
Contracts, exhibits, attachments, written statements, documents, certificates or
other items prepared for or supplied to the Corporation by or on behalf of Thane
with respect to the transactions contemplated hereby contains any untrue
statement of a material fact or omits a material fact necessary to make each
statement contained herein or therein not misleading. There is no fact which
Thane has not disclosed to the Corporation herein and of which Thane or any of
its officers, directors or executive employees is aware which could reasonably
be anticipated to have a Material Adverse Effect on Thane. Thane has disclosed
to the Corporation all material information relating to the business of Thane or
the transactions contemplated by this Agreement.
SECTION 4.32 Xxxxx Holdings, Inc. The Trailing EBITDA for
Xxxxx Holdings, Inc. shall not be less than 4,250,000 excluding one time charges
incurred by Xxxxx in connection with the Xxxxx Merger.
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ARTICLE V
COVENANTS OF THE CORPORATION
SECTION 5.1 Operation of Business.
(a) Except as contemplated hereby or as consented to in
writing by Thane, between the date hereof and the Closing Date, the Corporation
shall, and shall cause each of the Subsidiaries to: (i) in all material respects
carry on their respective businesses in, and not enter into any material
transaction other than in accordance with, the regular and ordinary course, (ii)
use their commercially reasonable efforts to preserve intact their business
organizations, (iii) keep available the services of their officers and
employees, (iv) preserve their relationships with customers, suppliers and
others having material business dealings with them, and (v) maintain, in all
material respects, its assets and properties and keep its books in accordance
with present practices in a condition suitable for its current use.
(b) Without limiting the generality of Section 5.1(a),
and, except as otherwise expressly permitted or required by this Agreement or
set forth in Schedule 5.1(b), between the date hereof and the Closing Date, the
Corporation shall not, and shall not permit any of its Subsidiaries to, without
the prior written consent of Thane or as contemplated hereby:
(i) (x) declare, set aside or pay any dividends
on (whether in cash, shares of capital stock of the Corporation, or
other property), or make any other actual, constructive or deemed
distributions, including bonuses, in respect of, any of its capital
stock, or otherwise make any payments to stockholders of the
Corporation in their capacity as such, (y) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (z) redeem or otherwise acquire any
shares of capital stock of the Corporation or any of its Subsidiaries
or any other securities thereof or any rights, warrants or Options to
acquire any such shares or other securities or set apart money or other
property for any mandatory purchase or analogous fund for the
redemption, purchase or acquisition of any shares of capital stock of
the Corporation;
(ii) authorize, issue, deliver, sell, pledge,
dispose of or otherwise encumber any shares of its capital stock or
other voting securities or equity equivalent or any securities
convertible into or exchangeable or exercisable for, or any rights,
warrants or Options to acquire, any such shares or voting securities or
convertible securities or equity equivalent or any phantom stock or
stock appreciation rights or enter into any agreement or Contract with
respect to the sale or issuance of any of such securities; other than
the issuance of shares of Corporation Common Stock upon exercise of
warrants or Options outstanding on the date hereof;
(iii) amend its Charter or Bylaws or equivalent
governing documents;
(iv) acquire or agree to acquire by merging with,
or by purchasing a material amount of assets of or equity in, or by any
other manner, any business or any
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corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets
other than inventory in the ordinary course of business;
(v) sell, lease or otherwise dispose of or agree
to sell, lease or otherwise dispose of, any of its assets other than
sales of inventory in the ordinary course of business, or which involve
assets having a current value not in excess of $25,000 individually or
$100,000 in the aggregate or allow any properties or assets (including,
without limitation, Intellectual Property) to become subject to any
Lien other than a Permitted Lien;
(vi) incur or Guarantee any Indebtedness in
excess of $25,000 in any calendar year or issue or sell any debt
securities or guarantee any debt securities of others, or make any
loans, advances or capital contributions to, or Investments, in each
case in excess of $25,000 in the aggregate in any calendar year in, any
other Person other than a wholly owned Subsidiary;
(vii) grant any severance or termination pay not
currently required to be paid under existing severance plans or enter
into or adopt, or amend any existing, severance plan, agreement or
arrangement, or enter into or amend any employee benefit plan except as
required by Applicable Law, or enter into, amend or terminate any
employment or consulting agreement, except, in each case as required by
Applicable Law;
(viii) enter into any Contract or commitment with
respect to capital expenditures other than expenditures necessary for
the continued operations of the Corporation in the ordinary course of
its business, other than capital expenditures or commitments which have
been previously approved by the Corporation's Board of Directors or
approved in writing by Thane;
(ix) except to the extent required under existing
employee and director benefit plans, agreements or arrangements as in
effect on the date of this Agreement or as required under Applicable
Law, make a material amendment or modification of the compensation,
bonus or fringe benefits of any of its directors, officers or employees
of the Corporation or any of its Subsidiaries;
(x) agree to the settlement of any material
claim or litigation;
(xi) make or rescind any material Tax election,
settle or compromise any material Tax liability, or file or cause to be
filed any amended Tax Return or any claim for a Tax refund, except, in
each case, as required by Applicable Law;
(xii) except as required by Applicable Law or
GAAP, make any change in its method of accounting or accounting
policies;
(xiii) except as set forth on the schedules hereto,
accelerate the payment, right to payment or vesting of any bonus,
severance, profit sharing, retirement, deferred
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compensation, Option, insurance or other compensation or benefits
provided, however, the Corporation may pay bonuses of not more than
$50,000 to each of the Controlling Stockholders on or prior to December
31, 2001;
(xiv) pay, discharge or satisfy any material
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge
or satisfaction of any such claims, liabilities or obligations in the
ordinary course of business and consistent with past practice;
(xv) enter into any agreement, understanding or
commitment that significantly restrains, limits or impedes the
Corporation's or any of its Subsidiaries' ability to compete with or
conduct any business or line of business, including, but not limited
to, geographic limitations on the Corporation's or any of its
Subsidiaries' activities;
(xvi) materially modify, amend or terminate any
Corporation Commitment or waive any of its rights or claims thereunder
or enter into any Contract, agreement, commitment or arrangement that,
if in existence on the date hereof, would be a Corporation Commitment;
(xvii) establish, adopt, enter into, amend or
terminate any collective bargaining, bonus, profit sharing, thrift,
compensation, Option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees, except, in the case of collective
bargaining, pension or retirement arrangements, or trusts, as required
by Applicable Law;
(xviii) execute any new lease or sublease for real
property or cancel, modify, terminate or amend any lease or sublease
for real property;
(xix) adopt or enter into a plan of complete or
partial liquidation, dissolution, winding up, merger, consolidation,
restructuring, recapitalization or other reorganization of the
Corporation or any of its Subsidiaries, other than liquidations,
dissolutions, mergers, consolidations, restructurings,
recapitalizations, or other reorganizations involving only wholly-owned
Subsidiaries of the Corporation and no other Person;
(xx) plan, announce, implement or effect any
reduction in force, lay-off, early retirement program, severance
program or other program or effort concerning the termination of
employment of employees of the Corporation or its Subsidiaries;
(xxi) fail to maintain its Intellectual Property
as currently maintained, or allow any material Intellectual Property of
the Corporation or its Subsidiaries to expire or to become abandoned,
canceled or otherwise terminated;
(xxii) commence or terminate the employment of, or
materially amend the employment terms of, or materially change the
responsibilities or duties of, the
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Chairman, Chief Executive Officer, President, or Chief Financial
Officer or any other executive officer of the Corporation;
(xxiii) transfer, license, sell or otherwise dispose
of any Intellectual Property or Software other than in the ordinary
course of business;
(xxiv) enter into any agreement, arrangement or
transaction with or for the benefit of any Person who is an Affiliate
of the Corporation;
(xxv) create any Subsidiary;
(xxvi) take any action including, without
limitation, the adoption of any Stockholder rights plan or amendments
to its Charter, Bylaws or other governing documents, which would,
directly or indirectly, restrict or impair the ability of Thane to
vote, or otherwise to exercise the rights and receive the benefits of a
stockholder with respect to, securities of the Corporation that may be
acquired or controlled by Thane;
(xxvii) take any action that would reasonably be
expected to cause any representations made by the Corporation in this
Agreement not to remain true and correct; and
(xxviii) agree, in writing or otherwise, to take any
of the foregoing actions.
SECTION 5.2 Access to Books and Records. Upon reasonable
notice, the Corporation shall afford, and shall cause each of its Subsidiaries
to afford, Thane and its accountants, counsel and representatives full access to
all the Corporation's and its Subsidiaries' properties, books, Contracts,
commitments, records (including, but not limited to, Tax Returns), employees,
customers, suppliers and accountants and, shall furnish promptly to Thane (a) a
copy of each report, schedule and other document filed or received by the
Corporation or any of its Subsidiaries pursuant to the requirements of federal
or state securities laws, and (b) all other information concerning the
Corporation's and its Subsidiaries' businesses, properties and personnel as
Thane may reasonably request, provided that no investigation or receipt of
information pursuant to this Section 5.2 shall affect any representation or
warranty of the Corporation or the Controlling Stockholders. In addition, the
Corporation shall provide Thane with monthly reports reflecting cash receipts
and disbursements in reasonable detail to allow Thane the ability to monitor
Schedule 5.1(b), and shall provide such documents and other information
reasonably requested by Thane.
SECTION 5.3 Compliance with Conditions; Commercially
Reasonably Efforts. The Corporation shall use its commercially reasonable
efforts to cause all of the obligations imposed upon it in this Agreement to be
duly complied with and to cause all conditions precedent to the obligations of
the Corporation and Thane to be satisfied. Upon the terms and subject to the
conditions of this Agreement, the Corporation shall use its commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
Applicable Law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby.
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SECTION 5.4 Consents and Approvals.
(a) The Corporation shall (i) use its commercially
reasonable efforts to obtain all necessary consents, waivers, authorizations and
approvals of all Governmental Authorities and of all other Persons, firms or
corporations required in connection with the execution, delivery and performance
by them of this Agreement, any other Document or any of the transactions
contemplated hereby or thereby, and (ii) diligently assist and cooperate with
Thane in preparing and filing all documents required to be submitted by Thane to
any Governmental Authority in connection with such transactions and in obtaining
any governmental consents, waivers, authorizations or approvals which may be
required to be obtained by Thane in connection with such transactions (which
assistance and cooperation shall include, without limitation, timely furnishing
to Thane all information concerning the Corporation and its Subsidiaries that
counsel to Thane determines is required to be included in such documents or
would be helpful in obtaining any such required consent, waiver, authorization
or approval).
(b) The Corporation acknowledges that Thane will use the
Corporation Financial Statements for use in the Registration Statement to be
provided to the Corporation Stockholders pursuant to Section 6.5, and the
Corporation agrees to use its best efforts to obtain its auditor's consent for
such inclusion.
SECTION 5.5 Corporation Stockholder Approval.
(a) The Corporation shall, as soon as practicable, but in
no event later than thirty (30) days after the Commission declares the
Registration Statement effective, hold a special meeting of its stockholders
(the "Corporation Special Meeting") in order for the Corporation's stockholders
to consider and vote upon, among other things, the adoption of this Agreement
and the other Documents to which the Corporation is a party and the approval of
the transactions contemplated hereby and thereby in accordance with the NGCL and
applicable NASD rules and regulations.
(b) The Corporation shall, through its Board of
Directors, recommend to its stockholders that stockholder approval be given, and
the Corporation shall use its commercially reasonable efforts to cause each
member of the Corporation's Board of Directors to vote their shares of
Corporation Common Stock to approve the items to be considered by the
Corporation's stockholders at the Corporation Special Meeting.
SECTION 5.6 No Solicitation.
(a) Until the earlier of the Effective Time and the date
of termination of this Agreement pursuant to the provisions of Section 8.1,
neither the Corporation nor any of its Subsidiaries will take, nor will the
Corporation permit any of the Corporation's or its Subsidiaries' Affiliates
(including the Controlling Stockholders) or representatives to take any of the
following actions with any Person other than Thane and its designees: (a)
solicit, encourage, initiate, entertain, accept receipt of, review or encourage
any proposals or offers from, or participate in or conduct discussions with or
engage in negotiations with, any Person relating to any offer or proposal, oral,
written or otherwise, formal or informal, with respect to any possible
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Business Combination with the Corporation or any of its Subsidiaries (whether
such Subsidiaries are in existence on the date hereof or are hereafter
organized), (an "Alternative Transaction"), (b) provide information with respect
to the Corporation or any of its Subsidiaries (whether such Subsidiaries are in
existence on the date hereof or are hereafter organized) to any Person, other
than Thane, relating to (or which the Corporation believes would be used for the
purpose of formulating an offer or proposal with respect to), or otherwise
assist, cooperate with, facilitate or encourage any effort or attempt by any
such Person with regard to, any possible Business Combination with the Company
or any Subsidiary of the Corporation (whether such Subsidiary is in existence on
the date hereof or are hereafter organized), (c) agree to, enter into a Contract
with any Person, other than Thane, providing for, or approve a Business
Combination with the Corporation or any Subsidiary (whether such Subsidiary is
in existence on the date hereof or are hereafter organized) or (d) authorize or
permit any of the Corporation's representatives to take any such action.
Notwithstanding the foregoing, the Corporation and its board of directors shall
be permitted to engage in discussions or negotiations with, or provide any
information or data to, any Person in response to an unsolicited bona fide
written inquiry, proposal or offer of an Alternative Transaction by any such
Person, if and only to the extent that, in any such case, (i) the board of
directors of the Corporation concludes in good faith that such inquiry, proposal
or offer of an Alternative Transaction constitutes a Superior Proposal, (ii) the
board of directors of the Corporation determines in good faith (after
considering the written advice of outside counsel) that failing to take such
action would be reasonably likely to constitute a breach of its fiduciary duties
to the Corporation's stockholders under applicable Law, (iii) prior to providing
any non-public information or data to any Person in connection with any such
written offer of an Alternative Transaction by any such Person, the board of
directors of the Corporation receives from such person an executed
confidentiality agreement on the same terms and conditions as Thane executed and
(iv) prior to providing any information or data to any Person or entering into
any negotiations with any Person, the Corporation notifies (the "Proposal
Notice") Thane promptly, but in any event within twenty-four (24) hours, of such
inquiries, proposals or offers received by, any such information or data
requested from, or any such discussions or negotiations sought to be initiated
or continued with, the Corporation, its directors, or employees or any of its
agents or representatives and, in connection with such notice, shall provide
Thane with the name(s) of such Person(s) and the material terms and conditions
of any inquiries, proposals or offers; provided, however, that the Corporation
shall not provide any information or data to any such Person or enter into
discussions or negotiations with any such Person until two Business Days have
expired following the delivery of the Proposal Notice to Thane. The Corporation
agrees that it will promptly keep Thane informed of the status and terms of any
such inquiries, proposals or offers and the status and terms of any such
proposals or offers and the status and terms of any such discussions or
negotiations. The Corporation agrees that it will use commercially reasonable
efforts to promptly inform its officers, directors, key employees and
representatives of the obligations undertaken in this Section 5.6. Nothing in
this Section 5.6 shall permit the Corporation to terminate this Agreement. Each
of the Corporation and Thane acknowledge that this Section 5.6 was a significant
inducement for Thane to enter into this Agreement and the absence of such
provision would have resulted in a failure to induce Thane to enter into this
Agreement.
(b) The Corporation shall immediately, but in any event
within five (5) business days of the execution of this Agreement, request each
Person which has heretofore
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executed a confidentiality agreement in connection with its consideration of
acquiring the Corporation or any portion thereof or any Alternative Transaction
to return or destroy all confidential information heretofore furnished to such
Person by or on behalf of the Corporation and the Corporation shall use its
commercially reasonable efforts to have such information returned.
SECTION 5.7 Notification of Certain Matters. From the date
hereof through the Closing Date, the Corporation shall promptly notify Thane of
the occurrence or non-occurrence of any fact or event which has caused or could
reasonably likely cause (x) any representation or warranty made by it in this
Agreement or the other Documents to be untrue or inaccurate in any material
respect at any time or (y) any covenant, condition or agreement under this
Agreement or the other Documents not to be complied with or satisfied by it in
any material respect; provided, however, that no such notification shall modify
the representations or warranties of any party or the conditions to the
obligations of any party hereunder. The Corporation shall promptly notify Thane
of any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement or the other Documents.
SECTION 5.8 Certain Tax Covenants.
(a) The Corporation and each of its Subsidiaries agree,
from and after the date of this Agreement and until the Closing, to prepare all
Tax Returns in a manner which is consistent with the past practices of the
Corporation and each Subsidiary, as the case may be, with respect to the
treatment of items on such Tax Returns, unless otherwise required by Applicable
Law.
(b) The Corporation and its Subsidiaries shall timely pay
in full on or prior to the Closing Date all material Taxes and Tax liabilities
required to be paid by or with respect to them for all Pre-Closing Periods,
other than those Taxes that have been accrued and adequately disclosed and fully
provided for in accordance with GAAP either in the Corporation Financial
Statements or, with respect to taxable periods beginning on or after January 1,
2001, on the books and records of the Corporation. For purposes of this
Agreement the immediately preceding sentence, Taxes and Tax liabilities of the
Corporation or any of its Subsidiaries that relate to any taxable year or other
taxable period beginning on or before the Closing Date and ending after the
Closing Date (each an "Overlap Period") shall be apportioned between the portion
of the Overlap Period ending on and including the Closing Date and the portion
of the Overlap Period beginning on the day after the Closing Date as follows:
(i) in the case of Taxes other than income, sales and use and withholding Taxes,
on a per diem basis, and (ii) in the case of income, sales and use and
withholding Taxes, as determined from the books and records of the Corporation
and its Subsidiaries as though the taxable year of the Corporation or any
relevant Subsidiary terminated at the close of business on the Closing Date.
(c) No Corporation Entity shall take any action that
could cause the Merger to fail to qualify as a Reorganization pursuant to
Section 368(a) of the Code.
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SECTION 5.9 Confidentiality. Except as may be required by
lawful order of a Governmental Authority of competent jurisdiction, the
Corporation and each of the Controlling Stockholders agrees to keep secret and
confidential, after the Closing, all non-public information concerning Thane and
its Affiliates that was acquired by, or disclosed to, the Corporation and each
of the Controlling Stockholders prior to the Closing Date, except any of the
same which (a) was, is now, or becomes generally available to the public (but
not as a result of a breach of any duty of confidentiality by which such Seller
and its Affiliates are bound); (b) was disclosed to the Corporation and each of
the Controlling Stockholders by a third party not subject to any duty of
confidentiality to Thane prior to its disclosure to the Corporation and each of
the Controlling Stockholders by Thane; and (c) is disclosed by such Seller in
the ordinary course of Thane's business as a proper part of his employment in
connection with communications with customers, vendors and other proper parties,
provided that it is for a proper purpose solely for the benefit of Thane.
SECTION 5.10 Certain Tax Covenants.
(a) The Corporation shall provide to Thane at or before
the Closing the appropriate affidavit required by Section 1445(b) of the Code to
enable Thane not to withhold Tax under Section 1445(a) of the Code with respect
to the transactions contemplated by this Agreement.
(b) No Corporation Entity shall take any action that
could cause the Merger to fail to qualify as a Reorganization pursuant to
Section 368(a) of the Code.
SECTION 5.11 Options Cancellation. Prior to the Closing, the
Controlling Stockholders shall cause all Options to purchase Corporation Common
Stock outstanding on the date of this Agreement to be cancelled and shall
provide Thane evidence of such termination, satisfactory to Thane in its sole
discretion.
ARTICLE VI
COVENANTS OF THANE
SECTION 6.1 Operation of Business. Except as contemplated
hereby, as set forth on Schedule 6.1 hereto or as consented to in writing by the
Corporation, between the date hereof and the Closing Date, Thane shall, and
shall cause each of the Thane Entities to: (i) use their commercially reasonable
efforts to preserve intact their business organizations, (ii) keep available the
services of their officers and employees, (iii) preserve their relationships
with customers, suppliers and others having material business dealings with
them, and (iv) maintain, in all material respects, its assets and properties and
keep its books in accordance with present practices in a condition suitable for
its current use.
SECTION 6.2 Access to Books and Records. Upon reasonable
notice, Thane shall afford, and shall cause each of the Thane Entities to
afford, to the Corporation and the Corporation's accountants, counsel and
representatives full access to the Thane Entities' properties, books, Contracts,
commitments, records (including, but not limited to, Tax Returns),
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employees, customers, suppliers and accountants, and shall furnish promptly to
the Corporation all other information concerning the Thane Entities' businesses,
properties and personnel as the Corporation may reasonably request, provided
that no investigation or receipt of information pursuant to this Section 6.2
shall affect any representation or warranty of Thane or the conditions to the
obligations of the Corporation.
SECTION 6.3 Compliance with Conditions; Commercially
Reasonable Efforts. Thane will use its commercially reasonable efforts to cause
all of the obligations imposed upon it in this Agreement to be duly complied
with, and to cause all conditions precedent to the obligations of the
Corporation and Thane to be satisfied. Upon the terms and subject to the
conditions of this Agreement, Thane shall use its commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable consistent with Applicable Law
to consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
SECTION 6.4 Consents and Approvals. Thane shall (a) use its
commercially reasonable efforts to obtain all necessary consents, waivers,
authorizations and approvals of all Governmental Authorities and of all other
Persons (including the approval of its stockholders as may be required under the
DGCL), firms or corporations required in connection with the execution, delivery
and performance by them of this Agreement, any other Document to which it is a
party or any of the transactions contemplated hereby or thereby, and (b)
diligently assist and cooperate with the Corporation in preparing and filing all
documents required to be submitted by the Corporation to any Governmental
Authority in connection with such transactions (including the Thane Financial
Statements) and in obtaining any governmental consents, waivers, authorizations
or approvals which may be required to be obtained by the Corporation in
connection with such transactions (which assistance and cooperation shall
include, without limitation, timely furnishing to the Corporation all
information concerning the Thane Entities that counsel to the Corporation
determines is required to be included in such documents or would be helpful in
obtaining any such required consent, waiver, authorization or approval).
SECTION 6.5 Registration Statement; Listing.
(a) As promptly as practicable after the date hereof, but
no later than December 31, 2001, the parties shall prepare and file with the
Commission a registration statement on Form S-4 under the Securities Act
relating to the offering and issuance of the shares of Thane Common stock
pursuant to the Merger (the "Registration Statement") and preliminary proxy
materials under the Securities Exchange Act relating to the Corporation Special
Meeting. The parties shall use their respective commercially reasonable efforts
to respond to the comments of the Commission thereon and will make any further
filings (including amendments and supplements) in connection therewith that may
be necessary, proper, or advisable. The Corporation will provide Thane with such
reasonable information and assistance in connection with the foregoing filings
that Thane may reasonably request. Thane will take all commercially reasonable
actions that may be necessary, proper, or advisable under state securities laws
in connection with the offering and issuance of shares of Thane Common Stock.
Thane shall afford the Corporation and its counsel a reasonable opportunity to
review and comment upon any description of the Corporation and its Affiliates,
this Agreement, the other Documents or the
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transactions contemplated hereby and thereby set forth in such proxy statement
(including all drafts or amendments thereto). Thane shall notify the Corporation
promptly of the receipt of any comments from the Commission or its staff and of
any request by the Commission or its staff for amendments or supplements to such
proxy statement or for additional information and will supply the Corporation
with copies of all correspondence between Thane or any of its representatives,
on the one hand, and the Commission or its staff, on the other hand, with
respect to such proxy statement. If at any time prior to such stockholders
meeting there shall occur any event that would be required, under the Exchange
Act and the rules and regulations thereunder, to be set forth in an amendment or
supplement to such proxy statement, the parties will promptly prepare and mail
to stockholders such an amendment or supplement.
(b) Thane shall use commercially reasonable efforts to
cause its outstanding Thane Common Stock immediately after the Merger to be
approved for quotation on the Nasdaq National Market System or, in Thane's
reasonable discretion another national securities exchange, subject to official
notice of issuance, as promptly as practicable after the date hereof, and in any
event prior to the Effective Time.
SECTION 6.6 Confidential Information. Thane acknowledges that
the information being provided under Section 5.2 may be material non-public
information and hereby covenants and agrees to keep, and cause its Affiliates
and representatives to keep, confidential any information identified by the
Corporation as confidential, unless (a) such information becomes generally
available to the public (other than as a result of a breach of this provision by
Thane), (b) such information was available to Thane on a non-confidential basis
from a source (other than the Corporation or its representatives) that, to
Knowledge of Thane, is not and was not prohibited from disclosing such
information to Thane by a contractual, legal or fiduciary obligation or (c)
Thane is required by law to disclose such information, including without
limitation, in the Registration Statement and related filings; provided, that in
an event specified in clause (c), Thane shall provide the Corporation with
prompt prior written notice of such required disclosure, Thane shall disclose
only that portion of the confidential information that Thane is advised by
counsel is legally required. Thane agrees that it will comply, and will cause
its representatives to comply, with all securities laws applicable to the
receipt of material non-public information and restrictions on trading in
securities when in possession of such information. Thane agrees not to use any
confidential information in violation of any law.
SECTION 6.7 Notification of Certain Matters. From the date
hereof through the Closing Date, Thane shall promptly notify the Corporation of
the occurrence or non-occurrence of any fact or event of which the Corporation
is aware which has caused or could reasonably likely cause (a) any
representation or warranty made by it in this Agreement or the other Documents
to be untrue or inaccurate in any material respect at any time or (b) any
covenant, condition or agreement under this Agreement or the other Documents not
to be complied with or satisfied by it in any material respect; provided,
however, that no such notification shall modify the representations or
warranties of any party or the conditions to the obligations of any party
hereunder. Thane shall promptly notify the Corporation of any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement or the other Documents.
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SECTION 6.8 Working Capital. Following the Closing, Thane
shall make available to the Corporation access to capital on a prudent business
basis to maintain the existing operations of the Corporation and its
Subsidiaries. In addition, following the Closing from time to time as determined
in good faith by Thane in light of the needs of the Corporation, Thane shall
make available to the Corporation additional working capital in an aggregate
amount of up to Fifteen Million ($15,000,000) to facilitate future growth by
means other than acquisitions.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
SECTION 7.1 Conditions to the Corporation's Obligations. The
obligations of the Corporation hereunder required to be performed at the Closing
shall be subject, at its election, to the satisfaction or waiver (which waiver,
if so requested by Thane, shall be made in writing), at or prior to the Closing,
of the following conditions:
(a) The representations and warranties of Thane contained
in this Agreement and all information contained in any exhibit or schedule
hereto delivered by, or on behalf of, Thane, to the Corporation and the
Controlling Stockholders, shall be true and correct in all material respects
when made and on the Closing Date as though then made (except that to the extent
such representation and warranty is qualified by materiality, such
representation and warranty shall be true and correct), except as expressly
provided herein. The president of Thane shall have delivered to the Corporation
and the Controlling Stockholders a certificate (which shall be addressed to the
Corporation and the Controlling Stockholders), dated the Closing Date, in the
form designated Exhibit H hereto, certifying to the foregoing.
(b) Thane shall have performed in all material respects
all obligations and agreements, and complied in all material respects with all
covenants, contained in this Agreement and the other Documents, to be performed
and complied with by Thane at or prior to the Closing Date.
(c) All material governmental and regulatory approvals
and clearances and all third-party consents necessary for the consummation of
the transactions contemplated by the Documents to occur on the Closing Date
shall have been obtained and shall be in full force and effect, the Corporation
and the Controlling Stockholders shall reasonably be satisfied that the
consummation of such transactions does not and will not contravene any
Applicable Law, except to the extent any contravention or contraventions,
individually or in the aggregate, could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(d) Thane shall have delivered to the Corporation and the
Controlling Stockholders a certificate, executed by Thane or on its behalf by a
duly authorized representative, dated as of the Closing Date, certifying that
each of the conditions specified in this Section 7.1 has been satisfied with
respect to Thane.
(e) A registration statement on Form S-4 registering the
issuance of the shares of Thane Common Stock issuable to the Corporation
stockholders pursuant to the Merger shall
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have been declared effective by the Commission and no proceedings for a stop
order suspending the effectiveness of the Registration Statement or the Thane
Common Stock shall have been instituted or pending or threatened.
(f) There shall be no litigation, proceeding or other
action seeking an injunction or other restraining order, damages or other relief
from a Governmental Authority pending or threatened which, in the reasonable
judgment of the Corporation, would materially adversely affect the consummation
of the transactions contemplated by the Documents on the terms contemplated
hereby and thereby and there shall be no litigation, proceeding or other action
(including, without limitation, relating to environmental matters or the Thane
Employee Benefit Plans) pending or threatened against the Thane Entities which
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Corporation shall have received a certificate,
dated the Closing Date, of the president and chief financial officer of Thane,
in the form of Exhibit I hereto, certifying to the foregoing.
(g) Thane shall have delivered to the Corporation and the
Controlling Stockholders certificates of the appropriate public officials, if
available, to the effect that each of the Thane Entities is a validly existing
corporation in good standing (to the extent that the concept of good standing is
recognized under the laws of the relevant jurisdiction of organization) in its
jurisdiction of organization dated not more than ten (10) days prior to the
Closing Date.
(h) Thane shall have delivered to the Corporation and the
Controlling Stockholders a certificate of the Secretary of its Board of
Directors, in the form of Exhibit J hereto, (i) certifying that a true and
correct copy of the Charter and Bylaws of the each of the Thane Entities and all
resolutions of the Board of Directors and shareholders of Thane authorizing the
execution and delivery of this Agreement and each Document to which Thane is a
party and authorizing the performance by Thane of the transactions contemplated
hereby and thereby is attached thereto and (ii) containing the incumbency and
specimen signature of each of the officers of Thane.
(i) An opinion of counsel of Thane addressed to the
Corporation dated as of the Closing Date, satisfactory in form and substance to
the Corporation with respect to the matters set forth in Exhibit K.
SECTION 7.2 Conditions to Thane's Obligations. The obligations
of Thane required to be performed at the Closing shall be subject, at its
election, to the satisfaction or waiver (which waiver, if so requested by the
Corporation, shall be made in writing), at or prior to the Closing, of the
following conditions:
(a) The representations and warranties of the Corporation
and the Controlling Stockholders contained in this Agreement and all information
contained in any exhibit or schedule hereto delivered by, or on behalf of, the
Corporation or the Controlling Stockholders, to Thane, shall be true and correct
in all material respects when made and on the Closing Date as though then made
(except that to the extent such representation and warranty is qualified by
materiality, such representation and warranty shall be true and correct), except
as expressly
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provided herein. Each of the president of the Corporation and the Controlling
Stockholders shall have delivered to Thane a certificate (which shall be
addressed to Thane and, if applicable, its lenders), dated the Closing Date, in
the form designated Exhibit L hereto, certifying to the foregoing.
(b) The Corporation and the Controlling Stockholders
shall have performed in all material respects all obligations and agreements,
and complied in all material respects with all covenants, contained in this
Agreement and the other Documents, to be performed and complied with by the
Corporation or the Controlling Stockholders at or prior to the Closing Date.
(c) All material governmental and regulatory approvals
and clearances and all third-party consents necessary for the consummation of
all of the transactions contemplated by the Documents to occur on the Closing
Date shall have been obtained and shall be in full force and effect, and Thane
shall be reasonably satisfied that the consummation of such transactions does
not and will not contravene any Applicable Law, except to the extent any
contravention or contraventions, individually or in the aggregate, could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(d) The Corporation shall have delivered to Thane a
certificate, executed by it or on its behalf by a duly authorized
representative, dated as of the Closing Date, certifying that each of the
conditions specified in this Section 7.2 has been satisfied.
(e) All Documents and all documents, instruments,
agreements and arrangements relating to the transactions contemplated by the
Documents shall be reasonably satisfactory to Thane, shall have been executed
and delivered by the parties thereto, be in full force and effect and no party
to any of the foregoing (other than Thane) shall have breached any of its
material obligations thereunder.
(f) There shall be no litigation, proceeding or other
action seeking an injunction or other restraining order, damages or other relief
from a Governmental Authority pending or threatened which, in the reasonable
judgment of Thane, would materially adversely affect the consummation of the
transactions contemplated by the Documents on the terms contemplated hereby and
thereby and there shall be no litigation, proceeding or other action (including,
without limitation, relating to Taxes, environmental matters or Corporation
Employee Benefit Plans) pending or threatened against the any of the Corporation
Entities which could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Thane shall have received certificates (which
shall be addressed to Thane and, if applicable, its lenders), dated the Closing
Date, of the president and chief financial officer of the Corporation, in the
form of Exhibit M hereto, certifying to the foregoing.
(g) The Corporation shall have delivered to Thane
certificates of the appropriate public officials to the effect that each of the
Corporation Entities is a validly existing corporation in good standing in its
jurisdiction of organization dated not more than ten (10) days prior to the
Closing Date.
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(h) The Corporation shall have delivered to Thane a
certificate of the Secretary of the Corporation (i) certifying that a true and
correct copy of the Charter and Bylaws of the Corporation and all resolutions of
the Board of Directors authorizing the execution and delivery of this Agreement
and each Document to which the Corporation is a party and authorizing the
performance by the Corporation of the transactions contemplated hereby and
thereby is attached thereto and (ii) containing the incumbency and specimen
signature of each of the officers of the Corporation, in the form designated
Exhibit N hereto.
(i) This Agreement and the Merger shall have received the
requisite Corporation and Thane Stockholder Approval.
(j) The Corporation and the Controlling Stockholders
shall have furnished to Thane such other and further documentation and
certificates, including certificates of the Corporation's officers and others,
as Thane shall reasonably request to evidence compliance with the conditions set
forth in this Agreement.
(k) There shall be no litigation, proceeding or other
action seeking an injunction or other restraining order, damages or other relief
from a Governmental Authority pending or threatened which could adversely affect
the trading of the Corporation stock.
(l) During the seven-calendar-day period ending on the
Closing Date, (A) trading in securities generally on the securities exchange
shall not have been suspended and (B) a general banking moratorium shall not
have been declared by Federal or New York authorities.
(m) An opinion of counsel of the Corporation and the
Controlling Stockholders addressed to Thane dated as of the Closing Date,
satisfactory in form and substance to Thane with respect to the matters set
forth in Exhibit O.
(n) Each of the Controlling Stockholders shall have
executed and delivered the Affiliate Voting Agreement and such agreement shall
be in full force and effect.
(o) Each of the Controlling Stockholders shall have (i)
executed and delivered the Escrow Agreement and (ii) delivered the Reliant
Escrow Shares subject thereof in accordance with the terms of such Escrow
Agreement, and such agreement shall be in full force and effect.
(p) The Controlling Stockholders shall have executed and
delivered the Employment Agreements.
(q) Thane shall have completed its due diligence
investigation with respect to the Corporation and shall be satisfied with the
results of such investigation in its sole and absolute discretion.
(r) Holders of not more than five percent (5%) of the
outstanding shares of Corporation Common Stock shall have perfected dissenters
rights, in accordance with Sections 92A.410 and 92A.420 of the NGCL, with
respect to the approval by the Corporation's stockholders of the Merger.
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(s) All Options to purchase Corporation Common Stock
outstanding on the date of this Agreement shall have been cancelled and the
Corporation shall provide Thane with evidence, satisfactory to Thane in its sole
discretion, of such cancellation.
(t) Each of the Controlling Stockholders shall have
executed and delivered irrevocable written instructions to Thane's transfer
agent as contemplated in Section 2.8(c)(ii) hereof.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination of Agreement. Either of the Parties
may terminate this Agreement with the prior authorization of its Board of
Directors (whether before or after stockholder approval) as provided below:
(a) The Parties may terminate this Agreement by mutual
written consent at any time prior to the Effective Time.
(b) The Corporation may terminate this Agreement by
giving written notice to Thane at any time prior to the Effective Time (i) in
the event Thane has breached any representation, warranty or covenant contained
in this Agreement in any material respect, the Corporation has notified Thane of
such breach, and the breach has continued without cure for a period of thirty
(30) days after notice of such breach or (ii) if the Closing shall not have
occurred within forty-five (45) days from the date on which the Commission
declares the Registration Statement effective, but in no event later than June
30, 2002, by reason of the failure of any condition precedent under Section 7.1;
provided, however, the Corporation may not terminate the Agreement pursuant to
this Section 8.1(b)(ii) if at the time of such termination a Closing otherwise
cannot occur as a result of the Corporation's breach of any representation,
warranty or covenant contained in this Agreement or its inability to satisfy
each Closing condition set forth in Section 7.2 hereto.
(c) Thane may terminate this Agreement by giving written
notice to the Corporation at any time prior to the Effective Time (i) in the
event the Corporation has breached any representation, warranty or covenant
contained in this Agreement in any material respect, Thane has notified the
Corporation of such breach, and the breach has continued without cure for a
period of thirty (30) days after notice of such breach or (ii) if the Closing
shall not have occurred within forty-five (45) days from the date on which the
Commission declares the Registration Statement effective, but in no event later
than June 30, 2002, by reason of the failure of any condition precedent under
Section 7.1; provided, however, Thane may not terminate the Agreement pursuant
to this Section 8.1(c)(ii) if at the time of such termination a Closing
otherwise cannot occur as a result of Thane's breach of any representation,
warranty or covenant contained in this Agreement or its inability to satisfy
each Closing condition set forth in Section 7.1 hereto.
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(d) Either the Corporation or Thane may terminate this
Agreement by giving written notice to the other of its intent to do so in the
event the requisite stockholder approval of the other Party is not obtained
following a meeting of the stockholders of the Corporation held for the purpose
of considering the Merger.
(e) Thane may terminate this Agreement by giving written
notice to the Corporation of its intent to do so in the event that Thane is not
satisfied, in its sole and absolute discretion, with its due diligence
investigation of the Corporation.
(f) The Corporation may terminate this Agreement in the
event the Board of Directors recommends and the stockholders of the Corporation,
including the Controlling Stockholders, approve a Superior Proposal following a
meeting of the stockholders of the Corporation held for the purpose of
considering the Merger.
SECTION 8.2 Effect of Termination.
(a) If any party validly terminates this Agreement
pursuant to Section 8.1 above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to the other Party
(except for any liability of Party then in breach and as set forth in Section
8.2(b) below); provided, that the confidentiality provisions contained in
Sections 5.9 and 6.6 above) shall survive such termination.
(b) If this Agreement is terminated:
(i) by the Corporation in accordance with
Section 8.1(b) or (d), then Thane shall, on the day next succeeding the
date of such termination: (A) reimburse the Corporation in immediately
available funds for the reasonable out-of-pocket expenses incurred by
the Corporation (including, without limitation, printing fees, filing
fees and fees and expenses of its legal and financial advisors and all
fees and expenses payable to any financing sources) related to the
Merger, this Agreement, and the transactions contemplated hereby, and
(B) pay to the Corporation in immediately available funds an amount
equal to $2,000,000.
(ii) by Thane in accordance with Section 8.1(c)
or (d), then the Corporation shall, on the day next succeeding the date
of such termination: (A) reimburse Thane in immediately available funds
for the reasonable out-of-pocket expenses incurred by Thane (including,
without limitation, printing fees, filing fees and fees and expenses of
its legal and financial advisors) related to the Merger, this
Agreement, the transactions contemplated hereby and any related
financing, and (B) pay to Thane in immediately available funds an
amount equal to $2,000,000.
(iii) by Thane in accordance with Section 8.1(e),
then Thane shall reimburse the Corporation in immediately available
funds for the reasonable out-of-pocket expenses incurred by the
Corporation (including, without limitation, printing fees, filing fees
and fees and expenses of its legal and financial advisors) related to
the Merger Agreement, and the transactions contemplated hereby.
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(iv) If this Agreement is terminated by the
Corporation in accordance with Section 8.1(f), then the Corporation
shall, on the day next succeeding the date of such termination, (A)
reimburse Thane in immediately available funds for the out-of-pocket
expenses of Thane (including, without limitation, printing fees, filing
fees and fees and expenses of its legal and financial advisors) related
to the Merger, this Agreement, the transactions contemplated hereby and
(B) pay to Thane in immediately available funds an amount equal to
$5,000,000.
(c) Each Party shall either destroy or redeliver all
documents and other material of any other Party relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the Party furnishing the same.
(d) All information received by any Party hereto with
respect to the business of any other Party (other than information which is a
matter of public Knowledge or which has heretofore been or is hereafter
published in any publication for public distribution or filed as public
information with any governmental authority) shall not at any time be used for
the advantage of, or disclosed to third parties by, such Party to the detriment
of the Party furnishing such information.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Survival; Indemnification.
(a) All of the terms and conditions of this Agreement,
together with the representations, warranties, covenants and agreements (except
covenants and agreements which are expressly required to be performed and are
performed in full on or before the Closing Date) contained herein or in any
instrument or document delivered pursuant to this Agreement, shall be deemed
made at the Closing as if made at such time (except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of such specified
date) and shall survive the Closing for eighteen (18) months, except that (i)
with respect to claims asserted pursuant to this Section 9.1 before the
expiration of the applicable representation, warranty, covenant, or agreement,
such claims shall survive until the date they are finally liquidated or
otherwise resolved, (ii) the representations and warranties in Sections 3.12,
3.17, 3.18, 4.12, 4.17 and 4.18 and their related schedules shall survive until
thirty (30) days after the end of the applicable statute of limitations (as
waived, tolled or amended), and (iii) the representations and warranties in
Sections 3.4, 3.8, 3.24, 4.4, 4.23 and their related schedules and this Section
9.1 shall survive indefinitely; provided that the representations, warranties
and indemnities for which as indemnification Claims shall be pending as of the
end of the applicable period referred to herein shall survive with respect to
such Claim until the final disposition thereof. All statements as to factual
matters contained in any certificate, document or other instrument executed and
delivered by the parties pursuant hereto shall be deemed to be representations,
warranties and covenants by such party hereunder. The representations and
warranties in this Agreement and the schedules attached hereto or in any writing
delivered in connection herewith shall in no event be affected by any
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investigation, inquiry or examination made for or on behalf of any party or be
affected by the Knowledge of any officer, director, stockholder, employee,
partner or agent of any party seeking indemnification hereunder or by the
acceptance of any certificate or opinion from any third party. In addition, in
no event will any disclosure of any event or circumstance made after the date
hereof and prior to the Closing serve to amend any representation or warranty
for any purpose of this Agreement. No Claim may be commenced under this Section
9.1 (or otherwise) following expiration of the applicable period of survival,
and upon such expiration the Indemnifying Party shall be released from all
liability with respect to claims under each such section not theretofore made by
the Indemnified Party. A Claim shall be made or commenced hereunder by the
Indemnified Party delivering to the Indemnifying Party a written notice
specifying in reasonable detail the nature of the claim, the amount claimed (if
known or reasonably estimable), and the factual basis for the claim.
(b) (i) The Controlling Stockholders jointly and
severally agree after the Closing Date to indemnify and hold harmless the
Corporation, Thane, their Affiliates, and their respective officers, directors,
employees, stockholders and duly authorized agents and each of their affiliates
and each other Person controlling Thane or the Corporation or any of their
Affiliates within the meaning of either section 15 of the Securities Act or
Section 20 of the Exchange Act and any partner of any of them on an after-Tax
basis from and against all (I) losses, claims, damages or liabilities resulting
from any claim, lawsuit or other proceeding by any Person to which any party
indemnified under this clause may become subject which is related to or arises
out of (A) any breach of, or failure to perform, any of the covenants (other
than the covenant of the Corporation contained in 5.1(a)(vi) hereof) or
agreements made in this Agreement by the Corporation and/or the Controlling
Stockholders, (B) any breach or failure of any representation or warranty made
by the Corporation and/or the Controlling Stockholders in this Agreement to be
true and correct as of the applicable time; provided, however, that, for
purposes of this clause (B), the determination of any such breach or failure, or
the existence of any facts resulting in any breach or failure of, any such
representation or warranty, shall be determined without regard to any
"material," "materially," "Material Adverse Effect" or similar exception or
qualification contained herein or therein; or (C) any action or omission of the
Controlling Stockholders or any Corporation Entity in connection with the
transactions contemplated hereby or by the other Documents, and (II) Taxes
imposed on (A) the properties, income or operations of a Corporation Entity or
for which a Corporation Entity may otherwise be liable, for all pre-Closing
periods; (B) a Corporation Entity or for which a Corporation Entity may be
liable, as a result of any transaction contemplated by this Agreement; or (C) a
Corporation Entity as a result of the provisions of Treasury Regulations Section
1.1502-6 or the analogous provisions of any state, local or foreign law and will
reimburse Thane and any other party indemnified under this clause for all
reasonable out-of-pocket expenses (including, without limitation, reasonable
counsel fees and disbursements) incurred by Thane or any such other party
indemnified under this clause and further agrees that the indemnification and
reimbursements commitments herein shall apply whether or not Thane or any such
other party indemnified under this clause is a formal party to any such
lawsuits, claims or other proceedings. The foregoing provisions are expressly
intended to cover, without limitation, reimbursement of legal and other expenses
incurred in a deposition or other discovery proceeding, delayed or conditioned.
The representations and warranties in this Agreement and the schedules attached
hereto or in any writing delivered in connection herewith shall in no event be
affected by any investigation,
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inquiry or examination made for or on behalf of any party or be affected by the
Knowledge of any officer, director, stockholder, employee, partner or agent of
any party seeking indemnification hereunder or by the acceptance of any
certificate or opinion from any third party. In addition, in no event will any
disclosure of any event or circumstance made after the date hereof and prior to
the Closing serve to amend any representation or warranty for any purpose of
this Agreement.
(ii) Thane agrees after the Closing Date to
indemnify and hold harmless the Corporation, its Affiliates, and their
respective officers, directors, employees and duly authorized agents from and
against all losses, claims, damages or liabilities resulting from any claim,
lawsuit or other proceeding by any Person to which any party indemnified under
this clause may become subject which is related to or arises out of (A) any
breach of, or failure to perform, any of the covenants (other than the covenant
of Thane contained in 5.1(a)(vi) hereof) or agreements made in this Agreement by
Thane, (B) any breach or failure of any representation or warranty made by Thane
in this Agreement to be true and correct as of the applicable time; provided,
however, that, for purposes of this clause (B), the determination of any such
breach or failure, or the existence of any facts resulting in any breach or
failure of, any such representation or warranty, shall be determined without
regard to any "material," "materially," "Material Adverse Effect" or similar
exception or qualification contained herein or therein; or (C) any action or
omission of Thane in connection with the transactions contemplated hereby or by
the other Documents, and will reimburse the Corporation and any other party
indemnified under this clause for all reasonable out-of-pocket expenses
(including, without limitation, reasonable counsel fees and disbursements)
incurred by the Corporation or any such other party indemnified under this
clause and further agrees that the indemnification and reimbursements
commitments herein shall apply whether or not the Corporation or any such other
party indemnified under this clause is a formal party to any such lawsuits,
claims or other proceedings. The foregoing provisions are expressly intended to
cover, without limitation, reimbursement of legal and other expenses incurred in
a deposition or other discovery proceeding, delayed or conditioned. The
representations and warranties in this Agreement and the schedules attached
hereto or in any writing delivered in connection herewith shall in no event be
affected by any investigation, inquiry or examination made for or on behalf of
any party or be affected by the Knowledge of any officer, director, stockholder,
employee, partner or agent of any party seeking indemnification hereunder or by
the acceptance of any certificate or opinion from any third party. In addition,
in no event will any disclosure of any event or circumstance made after the date
hereof and prior to the Closing serve to amend any representation or warranty
for any purpose of this Agreement.
SECTION 9.2 Limitations.
(a) Neither party shall be required to indemnify the
other party under Section 9.1 until the indemnifiable damages, individually or
in the aggregate, exceed $200,000 (the "Hurdle Rate") (except with respect to
breaches of the representations set forth in Section 3.17 and 4.15 (Taxes) or
with respect to the indemnity set forth in Section 9.1(b)(i)(II)), at which
point such 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
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such time as they exceed the Hurdle Rate, whereupon the party to be indemnified
shall be entitled to seek indemnification for the full amount of such damages.
(b) Absent fraud, after the Closing, the aggregate amount
of indemnifiable damages for which either party shall be liable under Section
9.1 (other than Sections 3.2, 3.6, 3.17, 3.25, 4.2, 4.15, 4.21 and 9.1(b)(i)(II)
or for knowing or intentional misrepresentations or breaches of covenants and
agreements or fraud) shall not exceed $2,400,000.
SECTION 9.3 Third Party Claims.
(a) If a Person entitled to indemnity hereunder (an
"Indemnified Party") asserts that any party hereto (the "Indemnifying Party")
has become obligated to the Indemnified Party pursuant to Section 9.1(b), or if
any suit, action, investigation, claim or proceeding is begun, made or
instituted as a result of which the Indemnifying Party may become obligated to
the Indemnified Party hereunder, the Indemnified Party agrees to notify the
Indemnifying Party promptly and to cooperate with the Indemnifying Party, at the
Indemnifying Party's expense, to the extent reasonably necessary for the
resolution of such claim or in the defense of such suit, action or proceeding,
including making available any information, documents and things in the
possession of the Indemnified Party which are reasonably necessary therefor.
Notwithstanding the foregoing notice requirement, the right to
indemnification hereunder shall not be affected by any failure to give, or delay
in giving, notice unless, and only to the extent that, the rights and remedies
of the Indemnifying Party shall have been prejudiced as a result of such failure
or delay.
(b) In fulfilling its obligations under Section 9.1,
after providing each Indemnified Party with a written acknowledgment of any
liability under Section 9.1 as between such Indemnified Party and the
Indemnifying Party, the Indemnifying Party shall have the right to investigate,
defend, settle or otherwise handle, with the aforesaid cooperation, any claim,
suit, action or proceeding brought by a third party in such manner as the
Indemnifying Party may in its sole discretion deem appropriate; provided,
however, that (i) counsel retained by the Indemnifying Party is reasonably
satisfactory to the Indemnified Party and (ii) the Indemnifying Party shall not,
except with the consent of the Indemnified Party, enter into any settlement or
agreement that does not include as an unconditional term thereof the giving by
the Person or Persons asserting such claim to all Indemnified Parties of an
unconditional release from all liability with respect to such claim or consent
to entry of any judgment. Notwithstanding anything to the contrary contained
herein, the Indemnifying Party may retain one firm of counsel to represent all
Indemnified Parties in such claim, action or proceeding; provided, however, that
in the event that the defendants in, or targets of, any such claim, action or
proceeding include more than one Indemnified Party, and any Indemnified Party
shall have reasonably concluded, based on the opinion of its own counsel, that
there may be one or more legal defenses available to it which are in conflict
with those available to any other Indemnified Party, then such Indemnified Party
may employ separate counsel to represent or defend it or any other Person
entitled to indemnification and reimbursement hereunder with respect to any such
claim, action or proceeding in which it or such other Person may become involved
or is named as defendant and the Indemnifying Party shall pay the reasonable
fees and disbursement of such counsel.
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Notwithstanding the Indemnifying Party's election to assume the defense or
investigation of such claim, action or proceeding, the Indemnified Party shall
have the right to employ separate counsel at the expense of the Indemnifying
Party and to direct the defense or investigation of such claim, action or
proceeding if (A) in the written opinion of counsel to the Indemnified Party,
use of counsel of the Indemnifying Party's choice could reasonably be expected
to give rise to a conflict of interest, or (B) the Indemnifying Party shall not
have employed counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party within a reasonable time after notice of the
assertion of any such claim or institution of any such action or proceeding. In
all other situations, the Indemnified Party shall have the right to participate
in the defense or investigation of such claim, action or proceeding if the
Indemnifying Party shall authorize the Indemnified Party to employ separate
counsel at the Indemnifying Party's expense or if the fees and expenses of
counsel for the Indemnified Party shall be borne by the Indemnified Party. If
the Indemnifying Party does not notify the Indemnified Party within thirty (30)
days after the receipt of the Indemnified Party's notice of a claim of indemnity
hereunder that it elects to undertake the defense thereof, the Indemnified Party
shall have the right to contest, settle or compromise the claim but shall not
thereby waive any right to indemnity therefor pursuant to this Agreement.
SECTION 9.4 Security for the Indemnification Obligation.
(a) Each Controlling Stockholder hereby agrees that,
subject to the following provisions of this Section 9.4, any Claims for
indemnification by Thane or any Affiliate thereof against the Corporation and/or
the Controlling Stockholders (or any of them) hereunder may be satisfied by
Thane or such Affiliate solely by recourse against the Escrow Shares pursuant to
the terms of the Escrow Agreement based on the fair market value of a share of
Thane Common Stock. If the Escrow Shares are insufficient to set off any Claim
for indemnifiable damages made hereunder (or have been delivered to the holders
prior to the making or resolution of such Claim), then Thane or any Affiliate
thereof may take any action or exercise any remedy available to it against the
Controlling Stockholders by appropriate legal proceedings to collect such
indemnifiable damages. To the extent the Escrow Shares are sufficient in value
to cover the claimed amount of all indemnification Claims, then Thane agrees to
first seek indemnification against the Escrow Shares prior to seeking redress
against any of the Controlling Stockholders' other assets.
(b) Thane hereby agrees that, subject to the following
provisions of this Section 9.4, any Claims for indemnification by the
Corporation or any Affiliate thereof against Thane hereunder may be satisfied by
the Corporation or such Affiliate solely by recourse against the Thane Escrow
Shares pursuant to the terms of the Escrow Agreement based on the fair market
value of a share of Thane Common Stock at the time of such satisfaction. If the
Thane Escrow Shares are insufficient to set off any Claim for indemnifiable
damages made hereunder (or have been delivered to the holders prior to the
making or resolution of such Claim), then the Corporation or any Affiliate
thereof may take any action or exercise any remedy available to it against Thane
by appropriate legal proceedings to collect such indemnifiable damages. To the
extent the Thane Escrow Shares are sufficient in value to cover the claimed
amount of all indemnification Claims, then the Corporation agrees to first seek
indemnification against the Thane Escrow Shares prior to seeking redress against
Thane's other assets.
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(c) Each Indemnifying Party shall pay the indemnification
amount claimed by the Indemnified Party in immediately available funds promptly
or as an adjustment to the securities as contemplated in Section 9.4(d) below
within ten (10) days after the Indemnified Party provides the Indemnifying Party
with written notice of a Claim hereunder unless the Indemnifying Party in good
faith disputes such Claim. If the Indemnifying Party disputes such Claim in good
faith, then promptly after the resolution of such dispute, the amount finally
determined to be due shall be paid by the Indemnifying Party to the Indemnified
Party in immediately available funds within ten (10) days of such dispute
resolution. In the event the Indemnifying Party fails to pay the Indemnified
Party the amount of such indemnification Claim within such ten (10) day period
the Indemnifying Party shall pay the Indemnified Party interest on the amount of
such indemnification Claim at a rate of ten percent (10%) per annum, compounded
monthly from the date of the original written notice of such indemnification
Claim until the indemnification Claim is paid in full.
(d) If any Indemnifying Party fails to comply with its
obligations to make cash payments to an Indemnified Party in an aggregate amount
sufficient to reimburse the Indemnified Party for all losses resulting from an
indemnified Claim, the Indemnified Party may pursue any and all rights and
remedies against the Indemnifying Party available in law or in equity, subject
only to the limitations set forth in Section 9.2 above. In addition, and not in
limitation of or in substitution for the foregoing, in the event Thane is the
Indemnified Party, Thane may cause the cancellation of shares of Thane Common
Stock retained by the breaching Indemnifying Parties so long as the aggregate
fair market value of such canceled securities does not exceed the amount of such
indemnity obligations, and reissue to the Indemnified Party shares of Thane
Common Stock so canceled in the amount of such indemnification Claim, plus any
accrued and unpaid interest. To effect any such election, Thane shall deliver to
the breaching Indemnifying Party a written notice (i) identifying the breaching
Indemnifying Party and stating that such breaching Indemnifying Party has failed
to make the payments to such Indemnified Party in the respect of a loss in the
full amounts required pursuant to this Article IX; (ii) the amount of such
unreimbursed loss, and (iii) the number of shares of Thane Common Stock which
the Indemnified Party has elected to cause the Corporation to cancel in
satisfaction of such unpaid loss. Thane may designate for cancellation from each
breaching Indemnifying Party such number of shares of Thane Common Stock as it
may determine in its sole discretion, so long as the aggregate fair market value
of such canceled securities does not exceed the aggregate unreimbursed loss at
the time of delivery of the applicable cancellation notice to the Indemnifying
Parties. Upon delivery of a cancellation notice the securities identified in
such notice as canceled securities shall be deemed for all purposes to be
canceled and, accordingly, Thane's books and records shall thereafter reflect
that such securities are no longer outstanding for any purpose, unless within
fifteen (15) days following delivery thereof the Indemnifying Parties deliver a
written notice to Thane objecting thereto, in which event such securities shall
not be canceled but shall be held by the Indemnifying Party, and the
Indemnifying Party shall (and Thane shall place stop transfer instructions on
such shares to assist the Indemnifying Party to) ensure that no interest therein
will be transferred, pending resolution of the dispute. Each party to such
dispute shall seek to resolve such dispute expeditiously and in good faith. If
and at such time as any securities are canceled pursuant to this Section 9.4(d),
the holders thereof shall promptly surrender to Thane the certificates
representing such canceled securities, duly endorsed for transfer as requested
by Thane, so that new certificates representing any securities
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represented thereby which are not so canceled may be issued to the holder
thereof and certificates representing the canceled securities may be destroyed
by Thane or reissued to the Indemnified Party.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendment and Modification. This Agreement may be
amended, modified and supplemented only by written agreement of all the parties
hereto with respect to any of the terms contained herein. No course of dealing
between or among the parties shall be deemed effective to modify, amend, waive
or discharge any part of this Agreement or any rights or obligations of any
party under or by reason of this Agreement.
SECTION 10.2 Notices. All notices, demands, requests,
consents, approvals or other communications (collectively, "Notices") required
or permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served, delivered by a
reputable air courier service with tracking capability, with charges prepaid, or
transmitted by hand delivery or facsimile, addressed as set forth below, or to
such other address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by facsimile. Notice otherwise sent as provided
herein shall be deemed given on the next Business Day following delivery of such
notice to a reputable air courier service.
If to the Corporation, to it at:
Reliant Interactive Media Corp.
0000 X. Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Xxxx Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
if to Thane:
Thane International, Inc.
00-000 Xxxxx Xxxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxx
Facsimile: (000) 000-0000
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and a copy (which shall not constitute notice) to:
White & Case LLP
000 X. Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
SECTION 10.3 Governing Law. The Agreement shall be governed by
the internal laws of the State of Florida as to all matters, including but not
limited to matters of validity, construction, effect and performance.
SECTION 10.4 Entire Agreement. This Agreement (including all
agreements entered into pursuant hereto and all certificates and instruments
delivered pursuant hereto and thereto) constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements, representations, understandings, negotiations and
discussions between the parties or their Affiliates, whether oral or written,
with respect to the subject matter hereof, including, without limitation, the
term sheet dated November 5, 2001.
SECTION 10.5 Waivers and Extensions. Any party to this
Agreement may waive any right, breach or default which such party has the right
to waive, provided that such waiver will not be effective against the waiving
party unless it is in writing, is signed by such party, and specifically refers
to this Agreement. Waivers may be made in advance or after the right waived has
arisen or the breach or default waived has occurred. Any waiver may be
conditional. No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach thereof
nor of any other agreement or provision herein contained. No waiver or extension
of time for performance of any obligations or acts shall be deemed a waiver or
extension of the time for performance of any other obligations or acts.
SECTION 10.6 Titles and Headings; Interpretation. Titles and
headings of sections of this Agreement are for convenience only and shall not
affect the construction of any provision of this Agreement.
SECTION 10.7 Exhibits and Schedules. Each of the annexes,
exhibits and schedules referred to herein and attached hereto is an integral
part of this Agreement and is incorporated herein by reference.
SECTION 10.8 Expenses; Brokers. Subject to the provisions of
Section 9.4, each party shall pay or cause to be paid, whether or not the
Closing occurs hereunder, their respective out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by this Agreement, the
other Documents and all matters related thereto (including, without limitation,
reasonable fees and disbursements of counsel and consultants). Notwithstanding
the foregoing, the parties agree that except as set forth in Section 8.2, any
filing fees, printing fees and other expenses relating to the registration of
the Thane Common Stock
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(other than expenses of legal and financial advisor which shall be borne by each
party respectively) shall be split equally between the parties. Each of the
parties represents to the others that neither it nor any of its Affiliates has
used a broker or other intermediary, in connection with the transactions
contemplated by this Agreement for whose fees or expenses any other party will
be liable and respectively agrees to indemnify and hold the others harmless from
and against any and all claims, liabilities or obligations with respect to any
such fees or expenses asserted by any Person on the basis of any act or
statement alleged to have been made by such party or any of its Affiliates.
SECTION 10.9 Press Releases and Public Announcements. All
press releases and similar public announcements relating to the transactions
contemplated by the Documents shall be made only if mutually agreed upon by the
Corporation and Thane, except to the extent that such disclosure is, in the
opinion of counsel, required by law or by stock exchange regulation; provided
that any such required disclosure shall only be made by one party, to the extent
consistent with law, after consultation with the other party.
SECTION 10.10 Assignment; No Third Party Beneficiaries. This
Agreement and the rights, duties and obligations hereunder may not be assigned
or delegated by either the Corporation or Thane without the prior written
consent of the other. Any assignment or delegation of rights, duties or
obligations hereunder made without the prior written consent of the other party
hereto shall be void and of no effect. This Agreement and the provisions hereof
shall be binding upon and shall inure to the benefit of each of the parties and
their respective successors and permitted assigns. This Agreement is not
intended to confer any rights or benefits on any Persons that are not party
hereto other than as expressly set forth herein.
SECTION 10.11 Severability. This Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this Agreement or of
any other term or provision hereof. Furthermore, in lieu of any such invalid or
unenforceable term or provision, the parties hereto intend that there shall be
added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.
SECTION 10.12 Counterparts; Facsimile. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original,
and all of which taken together shall constitute one and the same instrument.
SECTION 10.13 Further Assurances. Each party hereto, upon the
request of any other party hereto, shall do all such further acts and execute,
acknowledge and deliver all such further instruments and documents as may be
necessary or desirable to carry out the transactions contemplated by this
Agreement.
SECTION 10.14 Remedies Cumulative. The remedies provided
herein shall be cumulative and shall not preclude the assertion by any party
hereto of any other rights or the seeking of any remedies against the other
party hereto.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Amended and Restated Agreement and Plan of Merger as of the date first above
written.
THANE INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
RELIANT INTERACTIVE MEDIA CORP.
By:
------------------------------------
Name:
Title:
RELIANT ACQUISITION CORPORATION
By:
------------------------------------
Name:
Title:
CONTROLLING CORPORATION STOCKHOLDERS
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Xxxxx Xxxxxxxxxx
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Xxxxxxx Xxxxxxxxxx
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Xxx Xxxxxx
