EXHIBIT 2.1
EXECUTION COPY
FEBRUARY 21, 2002
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ZENASCENT, INC.,
ZENASCENT NEWCO INC.,
XXXXXX XXXXXXX BOXING, INC.,
XXXXXX XXXXXXX PROMOTIONS, LTD.,
XXXXXX XXXXXXX
AND
XXXXX XxXXXXXXX
DATED AS OF FEBRUARY 21, 2002
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Agreement"),
is made and entered into as of February 21, 2002, by and among ZENASCENT, INC.,
a Delaware corporation ("Acquiror"), ZENASCENT NEWCO INC., a Delaware
corporation and wholly owned subsidiary of Acquiror ("Newco"), XXXXXX XXXXXXX
BOXING, INC., a Delaware corporation ("Boxing") and the holder of all of the
issued and outstanding capital stock of XXXXXX XXXXXXX PROMOTIONS, LTD., a New
York corporation ("CKP"), CKP, XXXXXX XXXXXXX ("Xxxxxxx") and XXXXX XxXXXXXXX
("XxXxxxxxx" and, together with Xxxxxxx, the "Stockholders").
RECITALS
WHEREAS, on August 2, 2001, Acquiror, Newco, Boxing and the Stockholders
entered into an Agreement and Plan of Merger (the "Original Agreement");
WHEREAS, on September 17, 2001, Acquiror, Newco, Boxing, CKP and the
Stockholders entered into an Amended and Restated Agreement and Plan of Merger
which amended and restated in its entirety the Original Agreement (the "First
Restated Agreement");
WHEREAS, the First Restated Agreement was amended by letter agreement
dated December 21, 2001 (as so amended, the "Amended Agreement");
WHEREAS, the parties desire to amend and restate the Amended
Agreement as provided herein;
WHEREAS, Acquiror and Boxing have determined that it is in the best
interests of their respective stockholders for Newco to merge with and into
Boxing upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Acquiror, Newco and Boxing
have each approved this Agreement and the consummation of the transactions
contemplated hereby and approved the execution and delivery of this Agreement;
and
WHEREAS, for federal income tax purposes, it is intended that the merger
shall qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code");
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NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1.
MERGER OF NEWCO WITH AND INTO BOXING
AND RELATED MATTERS
1.1 THE MERGER.
(a) Upon the terms and conditions of this Agreement, at the "Effective
Time" (as defined herein), Newco shall be merged with and into Boxing (the
"Merger") in accordance with the provisions of the Delaware General Corporation
Law (the "DGCL"), the separate corporate existence of Newco shall cease and
Boxing shall continue as the surviving corporation (the "Surviving Corporation")
under the laws of the State of Delaware. The Merger shall have the effects set
forth in Section 251 of the DGCL.
(b) Subject to the provisions of this Agreement, a certificate of merger
(the "Certificate of Merger") shall be duly prepared, executed and acknowledged
by the Surviving Corporation and thereafter delivered to the Secretary of State
of the State of Delaware for filing, as provided in the DGCL, as soon as
practicable on or after the Merger Closing Date (as defined in Section 2.3). The
Merger shall become effective upon the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware or at such time thereafter as
provided in the Certificate of Merger pursuant to the mutual agreement of
Acquiror and Boxing (the "Effective Time").
(c) At the Effective Time:
(i) Boxing shall continue its existence under the laws
of the State of Delaware as the Surviving Corporation;
(ii) the separate corporate existence of Newco shall
cease;
(iii) all rights, title and interests to all assets, whether tangible
or intangible and any property or property rights owned by Newco or Boxing shall
be allocated to and vested in the Surviving Corporation without reversion or
impairment, without further act or deed, and without any transfer or assignment
having occurred, but subject to any existing liens or other encumbrances
thereon, and all liabilities and obligations of Boxing or Newco shall be
allocated to the Surviving Corporation, which shall be the primary obligor
therefor and, except as otherwise provided by law or contract, no other party to
the Merger, other than the Surviving Corporation, shall be liable therefor;
(iv) the Certificate of Incorporation of the Surviving Corporation
shall be the Certificate of Incorporation of Boxing as in effect immediately
prior to the consummation of the Merger;
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(v) the By-Laws of the Surviving Corporation shall be the By-Laws of
Boxing as in effect immediately prior to the consummation of the Merger, and
shall continue in full force and effect until thereafter amended as provided by
law and such By-Laws;
(vi) the officers and directors of the Surviving Corporation shall be
the officers and directors of Boxing as of the time immediately preceding the
Effective Time and such persons shall serve in such positions for their
respective terms provided by law or in the By-Laws of the Surviving Corporation
and until their respective successors are elected and qualified; and
(vii) the officers and directors of the Acquiror set forth on
Schedule 1.1(c)(vii)(x) shall resign upon the Effective Time and the officers
and directors of the Acquiror shall consist of those individuals identified on
Schedule 1.1(c)(vii)(y), and such persons shall serve in such positions for
their respective terms provided by law or in the By-Laws of the Acquiror and
until their respective successors are elected and qualified. For a period of at
least one year following the Effective Time, one person, who shall be reasonably
acceptable to the Stockholders, designated by the directors set forth on
Schedule 1.1(c)(vii)(x) shall serve as a director of the Acquiror (the
"Continuing Director"). In order to enable the persons set forth on Schedule
1.1(c)(vii)(y) to serve as directors as of the Effective Time, at least ten (10)
days prior to the Effective Time, Acquiror shall, in compliance with the rules
and regulations promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), prepare and file with the Securities and Exchange
Commission (the "SEC") and cause to be transmitted to its stockholders the
information required under Rule 14(f)-1.
1.2 CONVERSION OF STOCK; CONVERSION OF OUTSTANDING OPTIONS.
(a) Conversion of Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of any holder
thereof:
(i) the shares of the issued and outstanding common stock, par value
$0.01 per share, of Boxing ("Boxing Common Stock") owned by the Stockholders
(other than the XxXxxxxxx Big Content Shares (as defined herein)) as of the
Merger Closing (as defined in Section 2.3) shall be converted into and represent
the right to receive, and shall be exchangeable for, a pro rata portion of the
Stockholders Merger Consideration (as defined in Section 1.3(a)(i));
(ii) the XxXxxxxxx Big Content Shares and the shares of issued and
outstanding Boxing Common Stock owned by Xxxxxxxxxx Investments, LLC
("Xxxxxxxxxx") and Xxxxxx Investments, LLC ("Xxxxxx" and, together with
Xxxxxxxxxx, the "LM Holders") as of the Merger Closing shall be converted into
and represent the right to receive, and shall be exchangeable for, a pro rata
portion of the Big Content Merger Consideration (as defined in Section
1.3(a)(ii))
(iii) the shares of issued and outstanding Boxing Common Stock owned
by the LM Holders shall in addition be converted into and represent the right to
receive, and shall be exchangeable for, a pro rata portion of the LM Warrant (as
defined in Section 1.3(a)(iii));
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(iv) each share of capital stock of Boxing held in treasury as of the
Effective Time shall be canceled without payment of any consideration therefor
and without any conversion thereof;
(v) each share of common stock, $0.01 par value per share, of Newco
(the "Newco Common Stock") issued and outstanding prior to the Effective Time
shall be converted into and become a like number of fully paid and nonassessable
shares of common stock, par value $0.01 per share, of the Surviving Corporation.
(b) Transfer; Delivery of Certificates after Effective Time. From and
after the Effective Time, there shall be no transfers on the stock transfer
books of Boxing of shares of Boxing Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
certificates for shares of Boxing Common Stock that were outstanding immediately
prior to the Effective Time shall be delivered to Boxing, they shall be
cancelled and exchanged for the consideration to be received therefor in
connection with the Merger as provided in this Agreement.
1.3 MERGER CONSIDERATION.
(a) The Merger Consideration, consisting of the total purchase price
payable to the Stockholders and the LM Holders in connection with the
acquisition by merger of Boxing, shall be delivered and shall consist
exclusively of:
(i) Upon the Merger Closing, with respect to the shares of Boxing
Common Stock other than the XxXxxxxxx Big Content Shares, the Stockholders shall
receive that number of newly issued shares of Series B Convertible Preferred
Stock, par value $0.01 per share, of the Acquiror (the "Series B Stock") that
convert into an aggregate of 39,975,137 (the "Series B Conversion Number")
shares of common stock, $0.01 par value per share, of Acquiror (the "Acquiror
Common Stock"). The Series B Stock shall be convertible into shares of Acquiror
Common Stock in accordance with the terms of, and the Series B Stock shall have
those rights, preferences and designations set forth in, that certain
Certificate of Designation, Preferences and Rights of Series B Convertible
Preferred Stock (the "Series B Certificate of Designation"), a true and correct
copy of which is attached hereto and made a part hereof as Exhibit 1.3(a)(i) and
which will be duly authorized, approved and filed with the State of Delaware by
Acquiror prior to the Effective Time. The Series B Stock together with the
Post-Merger Shares (as defined in Section 1.3(a)(iv), if any, are referred to
herein as the "Stockholders Merger Consideration."
(ii) Upon the Merger Closing, XxXxxxxxx, with respect to the
XxXxxxxxx Big Content Shares, and the LM Holders shall receive that number of
newly issued shares of Series C Convertible Redeemable Preferred Stock, par
value $0.01 per share, of the Acquiror (the "Series C Stock") that convert into
an aggregate of 2,792,210 shares of the Acquiror Common Stock (the "Big Content
Merger Consideration"). The Series C Stock shall be convertible into shares of
Acquiror Common Stock and shall be redeemable by Acquiror in accordance with the
terms of, and the Series C Stock shall have those rights, preferences and
designations set forth in, that certain Certificate of Designation, Preferences
and Rights of Series C Convertible Redeemable Preferred Stock (the "Series C
Certificate of Designation" and, together with the Series B
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Certificate of Designation, the "Certificates of Designation"), a true and
correct copy of which is attached hereto and made a part hereof as Exhibit
1.3(a)(ii) and which will be duly authorized, approved and filed with the State
of Delaware by Acquiror prior to the Effective Time.
(iii) Upon the Merger Closing, the LM Holders shall receive a warrant
(the "LM Warrant") to purchase an aggregate of 1,000,000 shares of Acquiror
Common Stock with a per share exercise price equal to the average closing bid
price of the Acquiror Common Stock during the ten (10) trading days immediately
preceding the Merger Closing. The Series C Stock received by the LM Holders and
the LM Warrant are referred to herein as the "LM Merger Consideration." The
Stockholders Merger Consideration, the Series C Stock received by XxXxxxxxx and
the LM Merger Consideration are referred to collectively herein as the "Merger
Consideration."
(iv) Within 30 days following the Merger Closing, if Acquiror has not
received net proceeds from the Second Acquiror Financing (as defined in Section
1.4(b)) of $500,000, for each one dollar ($1.00) less than such amount, Acquiror
shall deliver to the Stockholders, pro rata in accordance with their ownership
of Acquiror, an aggregate of thirty-nine (39) shares of Acquiror Common Stock or
preferred stock convertible into such number of shares of Acquiror Common Stock.
Such shares, in aggregate, shall be referred to herein as the "Post-Merger
Shares" and shall be additional Stockholders Merger Consideration.
(b) It is intended that the delivery of the Merger Consideration shall
qualify as a tax-free exchange under the Code.
(c) The Series B Stock, the Series C Stock and (i) if issued, the shares
of Acquiror Common Stock issued upon conversion of the Series B Stock and Series
C Stock (the "Conversion Shares"), (ii) if issued to the Stockholders, the
Post-Merger Shares and (iii) the shares of Acquiror Common Stock issued to the
LM Holders upon exercise of the LM Warrant, shall be fully paid and
non-assessable and shall be free and clear of all liens, levies and
encumbrances, except that such shares shall be "restricted securities" pursuant
to Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). All of the shares of capital stock issued or issuable to the
Stockholders and the LM Holders are referred to herein collectively as the
"Merger Shares."
1.4 CERTAIN FINANCINGS.
(a) As a condition precedent to Boxing's obligations under this Agreement,
Acquiror shall, no later than February 22, 2002, have (i) consummated a sale of
notes which are convertible into Acquiror Common Stock (the "First Financing
Notes") and warrants to purchase Acquiror Common Stock (the "First Financing
Warrants" and, together with the First Financing Notes, the "First Financing
Securities") with gross proceeds to Acquiror of at least $340,000 (the "First
Acquiror Financing") and (ii) loaned to CKP, for a period of one year and at an
annual interest rate of ten percent (10%), at least $300,000 (the "Bridge Loan
Amount") of the proceeds of the First Acquiror Financing (the "Bridge Loan").
The shares of Acquiror Common Stock issuable upon conversion or exercise of the
First Financing Securities are referred to herein as the "First Financing
Shares."
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(b) Within 30 days following the Merger Closing, Acquiror shall have
consummated the sale (the "Second Acquiror Financing") of additional securities
(which may be notes which are convertible into Acquiror Common Stock, warrants
to purchase Acquiror Common Stock and/or Acquiror Common Stock) which, upon
issuance and, if applicable, conversion or exercise, as the case may be, will
increase the number of shares of outstanding Acquiror Common Stock by no more
than 862,5000 (the "Post-Merger Financing Share Number") shares of Acquiror
Common Stock (the "Post-Merger Financing Shares"). Acquiror shall receive net
proceeds from the Second Acquiror Financing of no less than $500,000.
(c) CKP and Acquiror acknowledge that CKP has received from Acquiror and
certain third party lenders $820,000 prior to the date hereof. As a condition
precedent to (i) Boxing's obligations under this Agreement, Acquiror shall
deliver to Boxing a note and warrant purchase agreement in the form attached as
Exhibit 1.4(c)(i) hereto from each of the third party lenders (the "Lenders")
who provided such funds, which shall include a warrant in the form of Exhibit
1.4(c)(ii) hereto, and (ii) Acquiror's obligations under this Agreement, CKP
shall deliver to Acquiror, for further delivery to the Lenders, a note in the
form attached hereto as Exhibit 1.4(c)(iii), in the amount loaned by each of the
Lenders to CKP. Such notes provide that they are mandatorily convertible into
equity of Acquiror upon the consummation of the Merger.
1.5 ADDITIONAL RIGHTS; TAKING OF NECESSARY ACTION; FURTHER
ACTION.
Each of Acquiror, Newco, Boxing, CKP, Xxxxxxx and XxXxxxxxx,
respectively, shall use their best efforts to take all such action as may be
necessary and appropriate to effectuate the Merger under the DGCL as promptly as
possible.
1.6 NO FURTHER RIGHTS OR TRANSFERS.
At and after the Effective Time, the Boxing Common Stock outstanding
immediately prior to the Effective Time shall cease to be issued and outstanding
or to provide the holder thereof any rights as a stockholder of Boxing, except
for the right to surrender the certificate or certificates representing such
shares and to receive the Merger Consideration to be received in the Merger as
provided in this Agreement.
ARTICLE 2.
THE CLOSINGS
2.1 BRIDGE LOAN CLOSING DATE.
Subject to the satisfaction or waiver of all of the conditions
precedent set forth in Sections 6.1(a) and 6.2(a) of this Agreement, the closing
of the Bridge Loan (the "Bridge Loan Closing") shall take place at the offices
of Xxxxxxxxx Traurig, LLP ("GT"), at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
on (a) the day on which the last of the conditions precedent set forth in
Sections 6.1(a) and 6.2(a) of this Agreement are fulfilled or waived or (b) at
such other time, date and place as the parties may agree, but in no event shall
such date be later than
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February 22, 2002 unless such date is extended by the mutual agreement of the
parties. The date that the Bridge Loan Closing occurs is referred to herein as
the "Bridge Loan Closing Date."
2.2 BRIDGE LOAN CLOSING.
At the Bridge Loan Closing, the following transactions shall occur,
all of such transactions being deemed to occur simultaneously:
(a) Boxing shall deliver, or cause to be delivered, to the Acquiror and
Newco, the following documents and shall take the following actions:
(i) A certificate of the Secretary of Boxing certifying that the
Stockholders have approved the Merger, this Agreement, and the transactions
contemplated hereby in accordance with applicable law and Boxing's Certificate
of Incorporation and By-Laws;
(ii) Boxing shall execute and deliver to its counsel, GT, a
Certificate of Merger with such amendments thereto as the parties hereto shall
deem mutually acceptable;
(iii) A certificate shall be executed by an authorized officer of
Boxing attesting to the fact that all representations and warranties made by
Boxing in this Agreement are true and correct on and as of the Bridge Loan
Closing, as though originally given to Acquiror and Newco on said date;
(iv) A certificate of good standing shall be delivered by Boxing from
the Secretary of State of the State of Delaware, dated at or about the Bridge
Loan Closing Date;
(v) An incumbency certificate shall be delivered by Boxing signed by
all of the officers and directors thereof dated at or about the Bridge Loan
Closing Date;
(vi) The Certificate of Incorporation of Boxing, certified by the
Secretary of State of the State of Delaware at or about the Bridge Loan Closing
Date, and a copy of the By-Laws of Boxing certified by the Secretary of Boxing,
dated at or about the Bridge Loan Closing Date, shall be delivered by Boxing;
(vii) Board and stockholder resolutions shall be delivered by the
Secretary of Boxing dated at or about the Bridge Loan Closing Date authorizing
the transactions contemplated by this Agreement; and
(viii) Such other documents and agreements as reasonably requested by
Acquiror and Newco to effectively consummate the transactions contemplated under
this Agreement.
(b) Acquiror and Newco shall deliver, or shall cause to be delivered, to
Boxing, the following documents and shall take the following actions:
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(i) Acquiror shall deliver to CKP the Bridge Loan
Amount;
(ii) Newco shall, if necessary, execute and deliver to GT the
Certificate of Merger with such amendments thereto as the parties hereto shall
deem mutually acceptable;
(iii) A certificate shall be executed by an authorized officer of
Acquiror:
(A) attesting to the fact that all representations and
warranties made by Acquiror under this Agreement are true and correct on and as
of the Bridge Loan Closing, as though originally given to Boxing on said date;
and
(B) attesting to the fact that (x) the First Acquiror Financing
has been consummated and Acquiror has received the proceeds of such financing
and (y) the total fees paid by Acquiror in connection with the First Acquiror
Financing do not exceed 13% of the gross proceeds thereof.
(iv) A certificate shall be executed by an authorized officer of
Newco to the effect that all representations and warranties made by Newco under
this Agreement are true and correct on and as of the Bridge Loan Closing, as
though originally given to Boxing on said date;
(v) A certificate of good standing shall be delivered by Acquiror
from the Secretary of State of the State of Delaware, dated at or about the
Bridge Loan Closing Date;
(vi) A certificate of good standing shall be delivered by Newco from
the Secretary of State of the State of Delaware, dated at or about the Bridge
Loan Closing Date;
(vii) An incumbency certificate shall be delivered by Acquiror signed
by all of its officers and directors dated at or about the Bridge Loan Closing;
(viii) An incumbency certificate shall be delivered by Newco signed
by all of its officers and directors dated at or about the Bridge Loan Closing;
(ix) A copy of the Certificate of Incorporation of Acquiror and the
Certificates of Designation certified by the Secretary of State of the State of
Delaware at or about the Bridge Loan Closing Date and a copy of the By-Laws of
Acquiror certified by the Secretary of Acquiror dated at or about the Closing;
(x) A copy of the Certificate of Incorporation of Newco certified by
the Secretary of State of the State of Delaware at or about the Bridge Loan
Closing Date and a copy of the By-Laws of Newco certified by the Secretary of
Newco dated at or about the Bridge Loan Closing Date;
(xi) A certified Board resolution shall be delivered by the Secretary
of Acquiror dated at or about the Bridge Loan Closing authorizing the
transactions contemplated by this Agreement;
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(xii) Certified Board and stockholder resolutions shall be delivered
by the Secretary of Newco dated at or about the Bridge Loan Closing authorizing
the transactions contemplated by this Agreement; and
(xiii) Such other documents and agreements as reasonably requested by
Boxing to effectively consummate the Bridge Loan.
2.3 MERGER CLOSING DATE.
Subject to satisfaction or waiver of all conditions precedent set
forth in Section 6 of this Agreement, the closing of the Merger (the "Merger
Closing") shall take place at the offices of GT at 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 on (a) the later of: (i) the first Business Day following the day
upon which all appropriate Acquiror, Newco and Boxing corporate action has been
taken in accordance with Section 3 of this Agreement; or (ii) the day on which
the last of the conditions precedent set forth in Sections 6.1(b) and 6.2(b) of
this Agreement is fulfilled or waived; or (b) at such other time, date and place
as the parties may agree, but in no event shall such date be later than March
31, 2002 unless such date is extended by the mutual agreement of the parties.
The date that the Merger Closing occurs is referred to herein as the "Merger
Closing Date."
2.4 MERGER CLOSING.
At the Merger Closing, the following transactions shall occur, all of
such transactions being deemed to occur simultaneously:
(a) Boxing shall deliver, or cause to be delivered, to the Acquiror and
Newco, the following documents and shall take the following actions:
(i) A certificate of the President and Secretary of Boxing certifying
to the continuing validity in all respects of the certificates delivered
pursuant to Section 2.2(a)(i), (ii), (iii), (iv) and (v) as if such certificates
had been delivered, and the statements contained therein made, on the Merger
Closing Date with respect to the Merger;
(ii) Boxing shall cause to be filed with the Secretary of State of
the State of Delaware the Certificate of Merger with such amendments thereto as
the parties hereto shall deem mutually acceptable; and
(iii) Such other documents and agreements as reasonably requested by
Acquiror and Newco to effectively consummate the transactions contemplated under
this Agreement.
(b) Acquiror and Newco will deliver, or shall cause to be delivered, to
Boxing and the Stockholders, the following documents and shall take the
following actions:
(i) A certificate or certificates representing each
Stockholder's and XX Xxxxxx'x allocable portion of the Merger
Consideration;
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(ii) A certificate executed by an authorized officer of Acquiror
certifying to the continuing validity in all respects of the certificates
delivered pursuant to Section 2.2(b)(iii), (iv), (v), (vi), (vii), (viii) as if
such certificates had been delivered, and the statements contained therein made,
on the Merger Closing Date with respect to the Merger;
(A) A certificate shall be executed by an authorized officer of
Acquiror attesting to the fact that the First Acquiror Financing has been
consummated, Acquiror has received at least 87% of the gross of such financing
and the Bridge Loan has been consummated.
(iii) Each of the officers and directors of Acquiror shall have
tendered their resignation in form and substance satisfactory to Boxing and
there shall not be any continuing obligation, financial or otherwise, to such
persons except as set forth on Schedule 4.2(o); and
(iv) Such other documents and agreements as reasonably requested by
Boxing or the Stockholders to effectively consummate the transactions
contemplated under this Agreement.
ARTICLE 3.
CERTAIN CORPORATE ACTION
3.1 BOXING ACTION.
Boxing shall cause to occur all corporate and stockholder action
necessary to effect the Merger and to consummate the other transactions
contemplated hereby.
3.2 ACQUIROR AND NEWCO CORPORATE ACTION.
Acquiror and Newco shall cause to occur all corporate and stockholder
action necessary to effect the Bridge Loan and the Merger. Without limiting the
generality of the foregoing, prior to the Bridge Loan Closing, Acquiror shall
have adopted and filed with the Secretary of State of the State of Delaware the
Certificates of Designation.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF BOXING, CKP AND THE
STOCKHOLDERS
As a material inducement to Acquiror and Newco to execute this
Agreement and consummate the Bridge Loan, the Merger and other transactions
contemplated hereby, Boxing, CKP and the Stockholders hereby make the following
representations and warranties to Acquiror and Newco. The representations and
warranties are true and correct in all material respects at this date, and will
be true and correct in all material respects on each Closing Date as though made
on and as of such date, except in those instances where actions taken pursuant
to and in
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accordance with this Agreement with respect to the Big Content Merger
Agreement (as defined herein) cause such representations and warranties to no
longer be true and correct.
(a) Corporate Existence and Power.
(i) Boxing is a corporation duly incorporated and in good standing
under the laws of the State of Delaware, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except where the failure to have any of the
foregoing would not have a Material Adverse Effect. Except as set forth on
Schedule 4.1(a), Boxing is duly qualified to do business as a foreign
corporation in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except for those jurisdictions where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect. True, correct
and complete copies of the Articles of Incorporation and By-Laws of Boxing, as
amended to date, are attached hereto as Schedule 4.1(a) and are made a part
hereof.
(ii) Boxing owns no equity interest in any entity, other than a 100%
equity interest in (A) CKP and (B) Xxxxxx Xxxxxxx Sports Network, Ltd, an
inactive New York corporation without any material liabilities.
(iii) CKP is a corporation duly incorporated and validly existing
under the laws of the State of New York, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except where the failure to have any of the
foregoing would not have a Material Adverse Effect. CKP owns no interest in any
other entity other than a right to acquire the majority of the equity interest
in Big Content, Inc., a Delaware corporation ("Big Content").
(b) Due Authorization and Requisite Approvals.
(i) This Agreement has been duly authorized, executed and delivered
by Boxing and constitutes a valid and binding agreement of Boxing, enforceable
in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium, and other similar laws relating
to, limiting or affecting the enforcement of creditors rights generally or by
the application of equitable principles. As of the Bridge Loan Closing Date, all
corporate action on the part of Boxing required under applicable law in order to
consummate the Merger will have occurred; and
(ii) This Agreement has been duly authorized, executed and delivered
by each of the Stockholders and constitutes a valid and binding agreement of
each of the Stockholders, enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, and other similar laws relating to, limiting or affecting the
enforcement of creditors rights generally or by the application of equitable
principles.
(iii) The Board of Directors of Boxing has approved the execution of
this Agreement and the consummation of the Merger and related actions
contemplated hereby.
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(c) No Contravention. The execution and delivery of the
Agreement does not, and the consummation of the transactions
contemplated hereby will not:
(i) conflict with or result in any violation of any
provision of the Articles of Incorporation or By-Laws of Boxing;
(ii) conflict with or result in any violation or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of a right or obligation or loss
under, any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise, license, judgment,
order, decree, or, to the best of its Knowledge, statute, law, ordinance, rule
or regulation applicable to Boxing or CKP, or any of their respective properties
or assets, or result in the creation or imposition of any mortgage, lien,
pledge, charge or security interest of any kind ("Encumbrance") on any assets of
Boxing or CKP, except such as is not reasonably likely to have a Material
Adverse Effect or prevent Boxing from consummating the transactions contemplated
by this Agreement; or
(iii) except as set forth on Schedule 4.1(c), require any consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, except the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware.
(d) Capitalization and Share Ownership.
(i) The authorized capital stock of Boxing consists of 1,000 shares
of Boxing Common Stock. There are currently 429.5 shares of Boxing Common Stock
outstanding, all of which are owned by the Stockholders. The outstanding shares
of capital stock of Boxing have been duly authorized and validly issued and are
fully paid and nonassessable and free of preemptive rights. Except as set forth
in this Section 4.1(d)(i), Schedule 4.1(d)(i) and actions that will be taken in
connection with the consummation of the Big Content Merger Agreement, there are
outstanding (A) no shares of capital stock or other voting securities of Boxing,
(B) no securities of Boxing convertible into or exchangeable for shares of
capital stock or voting securities of Boxing and (C) no options, warrants or
other rights to acquire from Boxing or any other person, and no obligation of
Boxing to issue, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of Boxing, and there
are no agreements or commitments to do any of the foregoing. There are no voting
trusts or voting agreements applicable to any shares of capital stock of Boxing.
The Boxing Common Stock to be surrendered in the Merger will be owned of record
and beneficially by the Stockholders and the LM Holders, free and clear of all
liens and encumbrances of any kind and nature, and have not been sold, pledged,
assigned or otherwise transferred. Except for a warrant (the "Wilshire Warrant")
issued by Xxxxxxx to Wilshire Advisers LLC pursuant to which Xxxxxxx has agreed
to sell 7.5 shares of Boxing Common Stock, there are no agreements (other than
as set forth in this Agreement) to sell, pledge, assign or otherwise transfer
such securities. Boxing will not have any liability with respect to the Wilshire
Warrant.
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(ii) The authorized capital stock of CKP consists solely of 200
shares of common stock, no par value per share ("CKP Common Stock"). There are
currently 151 shares of CKP Common Stock outstanding, all of which are owned by
Boxing free and clear of all liens and encumbrances of any kind and nature. Such
shares of CKP Common Stock have not been sold, pledged, assigned or otherwise
transferred, and there are no agreements to sell, pledge, assign or otherwise
transfer such securities. The outstanding shares of capital stock of CKP have
been duly authorized and validly issued and are fully paid and nonassessable and
free of preemptive rights. Except as set forth in this Section 4.1(d)(ii), there
are outstanding (A) no shares of capital stock or other voting securities of
CKP, (B) no securities of CKP convertible into or exchangeable for shares of
capital stock or voting securities of CKP and (C) no options, warrants or other
rights to acquire from CKP, Boxing or any other person, and no obligation of CKP
to issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of CKP, and there are no
agreements or commitments to do any of the foregoing. There are no voting trusts
or voting agreements applicable to any shares of capital stock of CKP.
(e) Financial Statements. Boxing shall prepare and deliver to Acquiror, no
less than twenty (20) days prior to the Merger Closing Date, copies of (i)
unaudited consolidated financial statements of Boxing and CKP for the six-month
period ended June 30, 2001 (the "Interim Statement"); and (ii) audited
consolidated financial statements of Boxing and CKP for the fiscal years ended
December 31, 1999 and 2000 (the "Audited Statements" and, together with the
Interim Statement, the "Financial Statements"). The Financial Statements will
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods reported upon and will fairly
present in all material respects the consolidated financial position of Boxing
and CKP as of the dates thereof and the results of operations for the periods
then ended.
(f) Real Properties.
(i) Boxing does not own or lease any real estate. CKP currently
leases real property at those locations identified on Schedule 4.1(f)(i) hereto.
CKP does not own or lease any other real estate. None of the leasehold interests
held by CKP is subject to any Encumbrance, except (a) liens for ad valorem taxes
not yet due or being contested in good faith; and (b) contractual or statutory
mechanics or materialmen's liens or other statutory or common law Encumbrances
relating to obligations of CKP that are not delinquent or are being contested in
good faith. There are no Encumbrances which materially interfere with the
present use of such leasehold interests.
(ii) Except as described on Schedule 4.1(f)(ii) hereto, neither
Boxing nor CKP has received any written notice from any governmental entity
having jurisdiction over Boxing or CKP or over any of the real property leased
by CKP of any violation by Boxing or CKP of any law, regulation or ordinance
relating to zoning, environmental matters, local building or fire codes or
similar matters relating to any of the real property leased by CKP or of any
condemnation or eminent domain proceeding.
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(iii) All of the buildings leased by CKP, and all plumbing, HVAC,
electrical, mechanical and similar systems are in good repair and adequate for
their current use, ordinary wear and tear excepted.
(iv) Except as described on Schedule 4.1(f)(iv), neither Boxing nor
CKP is a party to any lease, sublease, lease assignment or other agreement for
the use or occupancy of any of the leasehold premises wherein Boxing or CKP is
the landlord, sub-landlord or assignor, whether by name, as
successor-in-interest or otherwise. There are no outstanding agreements with any
party to acquire the leasehold premises or any portion thereof or any interest
therein.
(v) All certificates of occupancy and all other licenses, permits,
authorizations, consents, certificates and approvals required by all
governmental authorities having jurisdiction over the leasehold premises
occupied by CKP have been issued, are fully paid for and are in full force and
effect, will survive the Merger Closing and will not be invalidated, violated or
otherwise adversely affected by the Merger or the other transactions
contemplated by this Agreement.
(g) No Contingent Liabilities. Except as contained within the Financial
Statements or otherwise as described on Schedule 4.1(g), at the Closing, neither
Boxing nor CKP shall have material liabilities, whether related to tax or
non-tax matters, known or unknown, due or not yet due, liquidated or
unliquidated, fixed or contingent, determined or determinable in amount or
otherwise, and to the best Knowledge of Boxing, after due inquiry, there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, except as and to the extent reflected in
this Agreement or any Schedule or Exhibit hereto or which has been incurred in
the ordinary course of business and as accurately reflected on the books and
records of Boxing or CKP.
(h) Litigation. Except as described on Schedule 4.1(h) hereto there is no
action, suit, investigation or proceeding (or, to the Knowledge of Boxing, any
basis therefor) pending against, or to the Knowledge of Boxing, threatened
against or affecting Boxing or CKP or any of their respective properties before
any court or arbitrator or any governmental body, agency or official that (i) if
adversely determined against Boxing or CKP, as applicable, would have a Material
Adverse Effect or (ii) in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the Merger or any of the other transactions
contemplated by the Agreement.
(i) Taxes. Except as disclosed on Schedule 4.1(i), each of Boxing and CKP
has timely filed all tax returns required to be filed by it, or will timely file
when due all tax returns required to be filed by it between the date hereof and
the Closing. Each of Boxing and CKP has paid in a timely fashion or will pay
when due in a timely fashion, all taxes required to be paid in respect of the
periods covered by such returns, and the books and the financial statements of
Boxing and CKP reflect, or will reflect, adequate reserves for all taxes payable
by it which have been, or will be, accrued but are not yet due. Neither Boxing
nor CKP is delinquent in the payment of any material tax, assessment or
governmental charge. No deficiencies for any taxes have been proposed, asserted
or assessed against Boxing or CKP. Boxing is not aware of any facts which would
constitute the basis for the proposal or assertion of any such deficiency and
there is no action, suit, proceeding, audit or claim now pending or threatened
against Boxing or
15
CKP, asserting any deficiency in the payment of taxes. All taxes which Boxing or
CKP is required by law to withhold and collect have been duly withheld and
collected, and have been timely paid over to the proper authorities to the
extent due and payable. For the purposes of this Agreement, the term "tax" shall
include all federal state, local and foreign income, property, sales, excise and
other taxes of any nature whatsoever. Except as disclosed on Schedule 4.1(i),
neither Boxing nor CKP has been granted any extension or waiver of the
limitation period applicable to any tax returns. There are no Encumbrances for
taxes upon the assets of Boxing or CKP. There are no tax sharing or tax
allocation agreements to which Boxing or CKP is now or ever has been a party.
Neither Boxing nor CKP will be required under Section 481(c) of the Code to
include any material adjustment in taxable income for any period prior to the
Merger. Neither Boxing nor CKP (a) has been a member of an affiliated group
filing a consolidated federal income tax return (other than a group the common
parent of which was either Boxing or CKP) and (b) has any liability for the
taxes of any person (other than Boxing or CKP, as applicable) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract or otherwise.
(j) ERISA.
(i) Neither Boxing nor CKP maintains nor has it ever maintained,
administered or contributed to an "employee benefit plan," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(ii) Neither Boxing nor CKP is a party to any multiemployer plan as
defined in Section 4001(a) (3) of ERISA ("Multiemployer Plans"), and none of
Boxing, CKP nor any of their respective affiliate has any outstanding liability
to contribute to any Multiemployer Plan, for delinquent contributions or for
withdrawal liability pursuant to Section 4201 of ERISA.
(iii) Neither Boxing nor CKP is a party to any material employment,
severance or other similar contract, arrangement or policy or any plan or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits or
for deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights or other forms of incentive compensation or post-retirement
insurance, compensation or benefits.
(k) Insurance Coverage. Each of Boxing and CKP maintains in effect
insurance (i) on its assets, and upon its business and operations, against loss
or damage, risks, hazards and liabilities of the kinds customarily insured
against by similar entities engaged in the same or similar businesses in
adequate amounts and (ii) required to be carried by it by law or by any contract
to which it is a party. All of such policies are in full force and effect and
all premiums payable have been paid in full and each of Boxing and CKP, as
applicable is in full compliance with the terms and conditions of such policies.
Neither Boxing nor CKP has received any notice from any issuer of such policies
of its intention to cancel or refusal to renew any policy issued by it or of its
intention to renew any such policy based on a material increase in premium rates
other than in the ordinary course of business. None of such policies are subject
to cancellation by virtue of the Merger or the consummation of the other
transactions contemplated by this
16
Agreement. There is no claim by Boxing or CKP pending under any of such policies
as to which coverage has been questioned or denied.
(l) Compliance with Laws. To the best of Boxing's or CKP's Knowledge,
neither Boxing nor CKP is in violation of, nor has it violated, any applicable
provisions of any laws, statutes, ordinances or regulations, other than as would
not be reasonably likely to have a Material Adverse Effect. Without limiting the
generality of the foregoing, to the best Knowledge of Boxing, each of Boxing and
CKP has all licenses, permits, certificates and authorizations needed or
required for the conduct of its business as presently conducted and for the use
of its properties and premises occupied by it, except where the failure to
obtain a licenses, permit, certificate or authorization would not have a
Material Adverse Effect.
(m) Investment Banking Fees. Except for a fee payable to Ashwood Capital,
Inc., which will be satisfied by the Stockholders, there is no investment
banker, broker, finder or other similar intermediary which has been retained by
Boxing or the Stockholders, or is authorized by Boxing or the Stockholders to
act on their behalf, who might be entitled to any fee or commission from Boxing,
the Stockholders, Acquiror, Newco or any of their respective affiliates upon
consummation of the transactions contemplated by this Agreement.
(n) Personal Property. Each of Boxing and CKP has good and valid title to
all of the personal property, tangible and intangible, reflected on the
Financial Statements and to all other personal property owned by it, free and
clear of any Encumbrance. Each of Boxing and CKP is the owner of all of its
personal property now located in or upon its leased premises and of all personal
property which is used in the operation of its business. All such equipment,
furniture and fixtures and other tangible personal property are in good
operating condition and repair and do not require any repairs other than normal
routine maintenance to maintain such property in good operating condition and
repair.
(o) Intellectual Property; Intangible Property. The corporate names of
Boxing and CKP and the trade names and service marks listed on Schedule 4.1(o)
are the only names and service marks which are used by either Boxing or CKP in
the operation of its business (the "Names and Service Marks"). Neither Boxing
nor CKP has done business or has been known by any other name other than by its
Names and Service Marks. Except for rights granted to Big Content, each of
Boxing and CKP owns and has the exclusive right within the states and countries
in which it operates to use all intellectual property presently in use by it and
necessary for the operation of its businesses as now being conducted, which
intellectual property includes, but is not limited to, any trademarks, trade
names, service marks, including the Names and Service Marks, copyrights, trade
secrets, customer lists, inventions, formulas, methods, processes and other
proprietary information. There are no outstanding licenses or consents granting
third parties the right to use any intellectual property, including any of the
Patents, owned by either Boxing or CKP, with the exception of CKP's obligation
to provide programming content to Big Content. No royalties or fees are payable
by Boxing or CKP to any third party by reason of the use of any of its
intellectual property. Neither Boxing nor CKP has received notice of any
adversely held patent, invention, trademark, copyright, service xxxx or
tradename of any person, or any claims of any other person relating to any of
the intellectual property subject hereto, and
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there is no reasonable basis for any such charge or claim. There is no presently
known or threatened use or encroachment of any such intellectual property.
(p) Accounts Receivable. The accounts receivable of Boxing and CKP
referred to within the Financial Statements constitute valid claims in the full
amount thereof against the debtors charged therewith on the books of Boxing and
have been acquired in the ordinary course of business. Except as set forth in
Schedule 4.1(p), the accounts receivable are fully collectible to the extent of
the face value thereof (less the amount of the allowance for the doubtful
accounts reflected on the Financial Statements) in the due course of normal
commercial dealings. To the best Knowledge of Boxing, no account debtor has any
valid setoff, deduction or defense with respect thereto, and no account debtor
has asserted any such setoff, deduction or defense. There are no accounts
receivable which arise pursuant to an agreement with the United States
Government or any agency or instrumentality thereof.
(q) Contracts, Leases, Agreements and Other Commitments. Except as set
forth on Schedule 4.1(q), neither Boxing nor CKP is a party to or bound by any
oral, written or implied contracts, agreements, leases, powers of attorney,
guaranties, surety arrangements or other commitments excluding equipment and
furniture leases entered into in the ordinary course of business (which do not
exceed $25,000 in liabilities or commitments in the aggregate), except for the
following (which are hereinafter collectively called the "Material Contracts"):
(i) The leases and agreements described on Schedules
4.1(f), 4.1(q) and 4.1(r)(i); and
(ii) Agreements entered into in the ordinary course of business
involving a maximum possible expenditure or obligation on the part of either
Boxing or CKP of more than Ten Thousand Dollars ($10,000) individually.
The Material Contracts constitute all of the material agreements and
instruments which are necessary and desirable to operate the businesses as
currently conducted by Boxing and CKP. True, correct and complete copies of each
Material Contract described and listed under subsection 4.1(q) will be made
available to Acquiror within twenty (20) business days prior to the Closing
Date. The term "Material Contract" excludes purchase orders entered into in the
ordinary course for personal property or inventory which may be returned to the
vendor without penalty. With the exception of the promotional agreement with
Xxxxx Xxxxxx that is subject to litigation, all of the Material Contracts are
valid, binding and enforceable against the respective parties thereto in
accordance with their respective terms. Each of Boxing and CKP and, to the best
Knowledge of Boxing, all other parties to all of the Material Contracts have
performed all obligations required to be performed to date under such Material
Contracts, and neither Boxing nor CKP nor, to the best Knowledge of Boxing, any
other party, is in default or in arrears under the terms thereof, and no
condition exists or event has occurred which, with the giving of notice or lapse
of time or both, would constitute a default thereunder. Following the Merger,
the Surviving Corporation as the surviving entity shall become entitled to all
rights of Boxing under the Material Contracts. The consummation of this
Agreement and the Merger will not result in an impairment or termination of any
of the rights of Boxing or CKP under any Material Contract.
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None of the terms or provisions of any Material Contract materially adversely
affects the business, financial condition or results of operations of Boxing or
CKP.
(r) Labor Relations; Employees.
(i) Neither Boxing nor CKP is a party to any collective bargaining
agreements and other agreements requiring arbitration of employment disputes.
Set forth on Schedule 4.1(r)(i) is a list of all employment agreements and all
severance agreements which have not been fully performed to which either Boxing
or CKP is a party or by which it is bound.
(ii) Set forth on Schedule 4.1(r)(ii) is a list of all key management
employees of Boxing and CKP, together with their rate of compensation and title.
(iii) Boxing will deliver to Acquiror true and correct copies of all
of the documents referred to on Schedule 4.1(r)(i) hereof and all of the
personnel policies, employee and/or supervisor handbooks, procedures and forms
of employment applications, if any, relating to the employees of Boxing and CKP.
(iv) There is no union representing or purporting to represent any of
the employees of Boxing or CKP, and neither Boxing nor CKP is subject to or
currently negotiating any collective bargaining agreements with any union
representing or purporting to represent the employees of any of the foregoing.
(v) Except as set forth on Schedule 4.1(r)(v),
(A) Each of Boxing and CKP has complied in all material respects
with all laws relating to labor, employment and employment practices, including
without limitation, any provisions thereof relating to wages, hours and other
terms of employment, collective bargaining, nondiscrimination and the payment of
social security, unemployment compensation and similar taxes, and neither Boxing
nor CKP is (1) liable for any arrearages of wages or any taxes or penalties for
failure to comply with any of the foregoing or (2) delinquent in the payment of
any severance, salary, bonus, commission or other direct or indirect
compensation for services performed by any employee to the date hereof, or any
amount required to be reimbursed to any employee or former employee; and
(B) There are no charges, suits, actions, administrative
proceedings, investigations and/or claims pending or, to the Knowledge of
Boxing, threatened against Boxing or CKP, whether domestic or foreign, before
any court, governmental agency, department, board or instrumentality, or before
any arbitrator (collectively "Actions"), concerning or in any way relating to
the employees or employment practices of Boxing or CKP, including, without
limitation, Actions involving unfair labor practices, wrongful discharge and/or
any other restrictions on the right of Boxing or CKP to terminate its respective
employees, employment discrimination, occupational safety and health, and
workers' compensation.
(vi) There are no express or implied agreements, policies, practices,
or procedures, whether written or oral, pursuant to which any employee of Boxing
or CKP is not terminable at will and except as required by law, no employee is
entitled to any benefit or to
19
participate in any employee benefit plan of Boxing or CKP following such
termination of employment.
(vii) Except as set forth in Schedule 4.1(r)(vii), neither Boxing nor
CKP is a party to any oral or written (A) agreement with any executive officer
or other key employee of Boxing or CKP (1) the benefits of which are contingent,
or the terms of which are materially altered, upon the occurrence of a
transaction involving Boxing or CKP of the nature of the transactions
contemplated by this Agreement, (2) providing any term of employment or
compensation guarantee extending for a period longer than one year, or (3)
providing severance benefits or other benefits after the termination of
employment of such executive officer or key employee regardless of the reason
for such termination of employment; or (B) agreement or plan which will remain
in effect after the Closing, including, without limitation, any stock option
plan, stock appreciation right plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
(viii) Neither Boxing nor CKP has taken any action which requires or,
taken together with the transactions contemplated hereby, would require the
giving of any notice under the Worker Adjustment Retraining and Notification Act
or any comparable state or local law or regulation.
(s) Conflicting Interests. Except as set forth on Schedule 4.1(s) and for
the relationship between Boxing, CKP, the Stockholders and Big Content of which
the Acquiror is aware, (i) neither Xxxxxxx, XxXxxxxxx or any of their respective
relatives or affiliates, nor any director, officer, employee or affiliate of
Boxing (A) sells or purchases goods or services from Boxing or CKP or has any
pecuniary interest in any supplier or client of any of the foregoing or in any
other business enterprise with which Boxing or CKP conducts business or with
which any of the foregoing is in competition, or (B) is indebted to Boxing or
CKP except for money borrowed and as set forth on the Financial Statements, and
(ii) neither Boxing, nor any director, officer, employee or affiliate of CKP (A)
sells or purchases goods or services from CKP or has any pecuniary interest in
any supplier or client of any of the foregoing or in any other business
enterprise with which CKP conducts business or with which any of the foregoing
is in competition, or (B) is indebted to CKP except for money borrowed and as
set forth on the Financial Statements.
(t) Suppliers and Customers. Set forth on Schedule 4.1(t) is a list of the
five largest customers of CKP and/or Boxing based on the percentage of revenue
represented by those customers for the fiscal year ended December 31, 2000. The
relationship of CKP and/or Boxing with its suppliers and customers is a good
commercial working relationship and no material supplier or customer of CKP
and/or Boxing has canceled, curtailed or otherwise terminated or threatened to
cancel or otherwise terminate its relationship with CKP and/or Boxing. Boxing
has no Knowledge, or reason to believe, that the Merger or any other transaction
contemplated hereby would adversely affect any such material supplier or
customer relationship.
20
(u) Environmental Protection. Neither Boxing nor CKP has been notified by
any governmental authority, agency or third party, and Boxing has no Knowledge
of any violation by it or CKP of any Environmental Statute (as defined below).
All registrations by Boxing and CKP with, licenses from or permits issued by
governmental agencies pursuant to environmental, health and safety laws are in
full force and effect. The term "Environmental Statutes" means all statutes,
ordinances, regulations, orders and requirements of common law concerning
discharges to the air, soil, surface water or groundwater and concerning the
storage, treatment or disposal of any waste or hazardous substance. There is no
hazardous substance at any premises currently or previously occupied by Boxing
or CKP. Neither Boxing or CKP has received any notice or any request for
information, notice of claim, demand or other notification that it may be
potentially responsible with respect to any investigation or clean-up of any
threatened or actual release of hazardous substances. All hazardous wastes and
substances have been stored, treated, disposed of and transported in conformance
with all requirements applicable to such hazardous substances and wastes.
(v) Absence of Certain Changes or Events. Except as and to the extent set
forth on the Financial Statements, to the extent contained in this Agreement or
any schedule hereto, or as set forth on Schedule 4.1(v), between December 31,
2000 and the Merger Closing, there has not been: (i) any Material Adverse Change
in the business, assets, properties, results of operations or financial
condition of Boxing or CKP; (ii) any entry by Boxing or CKP into any material
commitment or transaction which is not in the ordinary course of business; (iii)
any change by Boxing or CKP except insofar as may be required by a change in
generally accepted accounting principles; (iv) any declaration, payment or
setting aside for payment of any dividends or other distributions (whether in
cash, stock or property) in respect of capital stock of Boxing or CKP, or any
direct or indirect redemption, purchase or any other type of acquisition by
Boxing or CKP of any shares of its capital stock or any other securities; (v)
any agreement by Boxing or CKP, whether in writing or otherwise, to take any
action which, if taken prior to the date of this Agreement, would have made any
representation or warranty in this Section 4.1 untrue or incorrect; (vi) any
acquisition of the assets of Boxing or CKP, other than in the ordinary course of
business and consistent with past practice; or (vii) any execution of any
agreement with any executive officer of Boxing or CKP providing for his or her
employment, or any increase in the compensation or in severance or termination
benefits payable or to become payable by Boxing or CKP to its officers or key
employees, or any material increase in benefits under any collective bargaining
agreement or in benefits under any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, insurance or other plan or arrangement or
understanding (whether or not legally binding) providing benefits to any present
or former employee of Boxing or CKP. Since the date of the Financial Statements,
there has not been and there is not threatened, any material adverse change in
the financial condition, business or results of operations of the business or
any material physical damage or loss to any of the properties or assets of the
business or to the premises occupied in connection with the business, whether or
not such loss is covered by insurance.
(w) Investment.
Each of Xxxxxxx and XxXxxxxxx:
21
(i) understands that the Merger Shares are not being registered under
the Securities Act and are not being registered under any state "blue sky" laws,
and that all such securities may not be transferred except in compliance with
such laws;
(ii) understands that the Merger Shares are "restricted securities"
as that term is defined in Rule 144 under the Securities Act and that the Merger
Shares must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available; and
(iii) represents that he is purchasing the Merger Shares for his own
account for investment and not with a view to the public distribution thereof or
with any present intention of distributing or selling any of the Merger Shares.
(x) Statements And Other Documents Not Misleading. Neither this Agreement,
including all exhibits and schedules and other closing documents, nor any other
financial statement, document or other instrument heretofore or hereafter
furnished by Boxing to Acquiror in connection with the Bridge Loan and the
Merger or the other transactions contemplated hereby, contains or will contain
any untrue statement of any material fact or omit or will omit to state any
material fact required to be stated in order to make such statement,
information, document or other instruments, in light of the circumstances in
which they are made, not misleading. There is no fact known to Boxing or the
Stockholders which may have a Material Adverse Effect on the business financial
condition or results of operations of Boxing and CKP or of any of their
properties or assets which has not been set forth in this Agreement as an
exhibit or schedule hereto.
4.2 REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND NEWCO.
As a material inducement to Boxing and the Stockholders to execute
this Agreement and to consummate the Bridge Loan, the Merger and the other
transactions contemplated hereby, Acquiror hereby makes the following
representations and warranties. The representations and warranties are true and
correct in all material respects at this date, and will be true and correct in
all material respects on each Closing Date as though made on and as of such
date:
(a) Corporate Existence and Power. Each of Acquiror and Newco is presently
a corporation duly incorporated, validly existing and in good standing, as the
case may be, under the laws of its jurisdiction of incorporation. Each of
Acquiror and Newco has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except where the failure to have any of the foregoing would not have
a Material Adverse Effect. Each of Acquiror and Newco is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect. True, complete and correct copies of
the Certificate of Incorporation and By-Laws of Acquiror and Newco, as amended
to date, are attached hereto as Schedule 4.2(a) and are made a part hereof.
22
(b) Due Authorization. This Agreement and the other agreements described
herein to which Acquiror or Newco will become a party at the Closing have been,
or as of the Closing will be, duly authorized, executed and delivered by
Acquiror or Newco, as applicable, and constitute, or as of the Closing will
constitute, a valid and binding agreement of Acquiror or Newco, as applicable,
enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, and other similar laws
relating to, limiting or affecting the enforcement of creditors rights generally
or by the application of equitable principles. As of the Closing all corporate
action on the part of Acquiror and Newco required under applicable law in order
to consummate the Merger will have occurred, including, without limitation,
approval by the Board of Directors of Acquiror of the transactions contemplated
hereby for purposes of Section 203 of the DGCL. Following the Merger, the
Stockholders will not be deemed to be "interested stockholders" as such term is
defined in Section 203 of the DGCL.
(c) No Contravention. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby will not:
(i) conflict with or result in any violation of any
provision of the Certificate of Incorporation or By-Laws of
Acquiror or Newco;
(ii) conflict with or result in any violation or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any right or obligation or to a
loss or a benefit under, any provision of the Certificate of Incorporation or
By-Laws of Acquiror or Newco or any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Acquiror or Newco or their properties or assets or
result in the creation or imposition of any Encumbrance on any asset of Acquiror
or Newco: or
(iii) require any consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, is required by or with respect to Acquiror or Newco in connection with
the execution and delivery of this Agreement or the consummation by them of the
transactions contemplated hereby, except such filings as may be needed in
connection with the Acquiror Financing and the filing of the Certificates of
Designation, all of which will be obtained or done by the Bridge Loan Closing
Date, and the filing of the Certificate of Merger with the Secretary of the
State of Delaware.
(d) Capitalization.
(i) As of the date of this Agreement, the authorized capital stock of
Acquiror consists solely of 20,000,000 shares of Acquiror Common Stock and
5,000,000 shares of preferred stock, par value $0.01 per share ("Acquiror
Preferred Stock").
(ii) As of the date of this Agreement, there are
currently outstanding:
23
(A) 9,633,310 shares of Acquiror Common Stock
(the "Outstanding Stock");
(B) warrants to acquire 5,300,573 shares of Acquiror Common
Stock (the "Outstanding Warrants"), of which there are Outstanding Warrants to
acquire (x) 3,666,481 shares of Acquiror Common Stock at an exercise price in
excess of $1.50 per share (the "Underwater Warrants") and (y) 1,634,092 shares
of Acquiror Common Stock at an exercise price below $1.00 per share; and
(C) options to acquire 452,332 shares of Acquiror Common Stock
(the "Outstanding Options"), of which there are Outstanding Options to acquire
(x) 258,000 shares of Acquiror Common Stock at an exercise price in excess of
$1.50 per share (the "Underwater Options" and, together with the Underwater
Warrants, the "Underwater Warrants and Options") and (y) 194,332 shares of
Acquiror Common Stock at an exercise price below $1.00 per share.
(iii) Upon the Merger Closing, there shall be outstanding only the
following securities of the Acquiror:
(A) the Outstanding Stock;
(B) the Outstanding Warrants and shares of Acquiror Common Stock
for which they have been exercised;
(C) the Outstanding Options and shares of Acquiror Common Stock
for which they have been exercised;
(D) 135,000 shares of Series A Convertible Preferred Stock
("Series A Stock") that are convertible into 1,350,000 shares of Acquiror Common
Stock (the "Series A Common Shares") and warrants (the "Series A Warrants") to
acquire 1,350,000 shares of Acquiror Common Stock (the "Series A Warrant Shares"
and, together with the Series A Common Shares, the "Series A Conversion
Shares"), which are exercisable, as of the date hereof, for an aggregate of
$405,000 (which exercise price will not be lowered without the prior consent of
Boxing);
(E) the First Financing Securities, which shall be convertible
into and/or exercisable for, in aggregate, no more than 1,792,000 shares of
Acquiror Common Stock (the "First Financing Common Stock");
(F) 399,331 shares of Acquiror Common Stock (the "Conversion
Common Stock") issued upon conversion of certain promissory notes of Acquiror;
and
(G) the Series B Stock, the Series C Stock and the LM Warrant.
(iv) Acquiror has reserved the Post-Merger Financing Share Number of
the Post-Merger Financing Shares for delivery in connection with the Second
Acquiror Financing. Acquiror is not obligated to issue Post-Merger Financing
Shares in excess of the Post-Merger Financing Share Number.
24
(v) All shares of capital stock of Acquiror outstanding immediately
following the Merger Closing will have been duly authorized and validly issued,
fully paid and nonassessable and free of preemptive rights. Acquiror shall, as
of the Merger Closing, have no outstanding options, warrants, convertible notes
and other instruments convertible into or exercisable for Acquiror Common Stock
except as set forth in paragraph (iii) above.
(vi) The authorized capital stock of Newco consists solely of 1,000,
of which 1 share is issued and outstanding and owned of record and beneficially
by Acquiror. The outstanding share of Newco common stock has been duly
authorized and validly issued and is fully paid and nonassessable and free of
preemptive rights.
(e) Financial Statements. Acquiror has delivered to Boxing copies of (i)
audited financial statements of Acquiror for the fiscal years ended December 31,
1999 and 2000 and (ii) unaudited financial statements of Acquiror for the
nine-month period ended September 30, 2001 (collectively, the "Acquiror
Financial Statements"). The Acquiror Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods reported upon and will fairly present in all material
respects the financial position of Acquiror as of the dates thereof and the
results of operations for the periods then ended.
(f) Real Properties. Neither Acquiror nor Newco owns or
leases any real property.
(g) Liabilities and Cash. At the Bridge Loan Closing and the Merger
Closing, Acquiror and Newco shall have total liabilities, whether related to tax
or non-tax matters, known or unknown, due or not yet due, liquidated or
unliquidated, fixed or contingent, determined or determinable in amount or
otherwise and whether or not included or required to be included in the Acquiror
Financial Statements or any schedules to this Agreement (the "Acquiror
Liabilities"), not exceeding $100,000 unless otherwise agreed to by the Parties.
The Parties acknowledge and agree that the items set forth on Schedule 4.2(g)
have been agreed to for purposes of the preceding sentence, but in the event
that such liabilities require satisfaction by Acquiror, Acquiror shall be
required to indemnify the Stockholders with respect thereto in accordance with
Article 7.
(h) Litigation. Except as described on Schedule 4.2(h) hereto there is no
action, suit, investigation or proceeding (or, to the Knowledge of Acquiror or
Newco any basis therefor) pending against, or to the Knowledge of Acquiror or
Newco threatened, against or affecting Acquiror, Newco or any of their
respective properties before any court or arbitrator or any governmental body,
agency or official that (i) if adversely determined against Acquiror or Newco,
would have a Material Adverse Effect or (ii) in any manner challenges or seeks
to prevent, enjoin, alter or materially delay the Merger or any of the other
transactions contemplated by the Agreement.
(i) Taxes. Except as disclosed on Schedule 4.2(i), Acquiror has timely
filed all tax returns required to be filed by it, or will timely file when due
all tax returns required to be filed by it between the date hereof and the
Closing. Acquiror has paid in a timely fashion or will pay when due in a timely
fashion, all taxes required to be paid in respect of the periods covered by
25
such returns, and the books and the financial statements of Acquiror reflect, or
will reflect, adequate reserves for all taxes payable by Acquiror which have
been, or will be, accrued but are not yet due. Acquiror is not delinquent in the
payment of any material tax, assessment or governmental charge. No deficiencies
for any taxes have been proposed, asserted or assessed against Acquiror.
Acquiror is not aware of any facts which would constitute the basis for the
proposal or assertion of any such deficiency and there is no action, suit,
proceeding, audit or claim now pending or threatened against Acquiror, asserting
any deficiency in the payment of taxes. All taxes which Acquiror is required by
law to withhold and collect have been duly withheld and collected, and have been
timely paid over to the proper authorities to the extent due and payable. For
the purposes of this Agreement, the term "tax" shall include all federal state,
local and foreign income, property, sales, excise and other taxes of any nature
whatsoever. Acquiror has not been granted any extension or waiver of the
limitation period applicable to any tax returns. There are no Encumbrances for
taxes upon the assets of Acquiror. There are no tax sharing or tax allocation
agreements to which Acquiror is now or ever has been a party. Acquiror will not
be required under Section 481(c) of the Code to include any material adjustment
in taxable income for any period prior to the Merger. Acquiror (a) has not been
a member of an affiliated group filing a consolidated federal income tax return
(other than a group the common parent of which was Acquiror) and (b) has no
liability for the taxes of any person (other than Acquiror) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract or otherwise.
(j) ERISA.
(i) Acquiror does not nor has it ever maintained, administered or
contributed to an "employee benefit plan," as defined in Section 3(3) of ERISA.
(ii) Acquiror is not a party to any Multiemployer Plans, and neither
Acquiror nor any affiliate has any outstanding liability to contribute to any
Multiemployer Plan, for delinquent contributions or for withdrawal liability
pursuant to Section 4201 of ERISA.
(iii) Acquiror is not a party to any material employment, severance or
other similar contract, arrangement or policy or any plan or arrangement
(written or oral) providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation rights
or other forms of incentive compensation or post-retirement insurance,
compensation or benefits.
(k) Compliance with Laws. Neither Acquiror nor Newco is in violation of,
nor has either Acquiror or Newco violated, any applicable provisions of any
laws, statutes, ordinances or regulations, except for such violation that would
not cause a Material Adverse Effect.
(l) Reporting Company; Reports. The Common Stock of Acquiror is eligible
for trading on the OTC Electronic Bulletin Board. Acquiror is a reporting
company under the Exchange Act. All material filings required to be made by
Acquiror since January 1, 2000 under the Securities Act and the Exchange Act
have been filed with the SEC, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits, amendments and
26
supplements appertaining thereto, and complied, as of their respective dates, in
all material respects with all applicable requirements of the appropriate
statutes and the rules and regulations thereunder. Acquiror has made available
to Boxing a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed with the SEC by Acquiror pursuant
to the requirements of the Securities Act or Exchange Act since January 1, 2000
(as such documents have since the time of their filing been amended, the
"Acquiror SEC Reports"). As of their respective dates, the Acquiror SEC Reports
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(m) Investment Banking Fees. Except as set forth on Schedule 4.2(m), there
is no investment banker, broker, finder or other similar intermediary which has
been retained by, or is authorized by Acquiror or Newco to act on its behalf who
might be entitled to any fee or commission from Acquiror or Newco or any of
their respective affiliates upon consummation of the transactions contemplated
by this Agreement other than for fees that may be payable in connection with the
Second Acquiror Financing that will not exceed 13% of the gross proceeds of the
Second Acquiror Financing.
(n) Contracts, Leases, Agreements and Other Commitments. Except as set
forth on Schedule 4.2(n), Acquiror is not a party to or bound by any oral,
written or implied contracts, agreements, leases, powers of attorney,
guaranties, surety arrangements or other commitments (which are hereinafter
collectively called the "Acquiror Contracts"). All of the Acquiror Contracts are
terminable by Acquiror at will without payment or penalty.
(o) Employees. Set forth on Schedule 4.2(o) is a list of all employment
agreements and all severance agreements to which Acquiror and/or Newco is a
party or by which they are bound. Except as set forth on Schedule 4.2(o), all
such agreements are terminable by Acquiror at will without payment or penalty.
Except for the persons listed on Schedule 4.2(o), Acquiror has no employees. The
maximum amount of cash payments owed by Acquiror (the "Severance Payments") as
set forth on Schedule 4.2(o) shall be $140,000. $70,000 of the Severance
Payments will be made pro rata from the first $500,000 raised by Acquiror
following the Second Acquiror Financing (the "Subsequent Financing") and the
balance of the Severance Payments will be made from the next $70,000 raised by
Acquiror after the Subsequent Financing. Acquiror shall seek in good faith to
raise such additional funds.
(p) Financing. The First Acquiror Financing and the Second Acquiror
Financing will be exempt from the registration requirements of the Securities
Act, and, except for those made in accordance with the last sentence of this
Section 4.2(p), the qualification or registration requirements of applicable
"blue sky" laws and that no form of general solicitation or general advertising
will be used by Acquiror or its representatives in connection with such offers
and sales. The gross proceeds of the First Acquiror Financing and the Second
Acquiror Financing will be at least $1,150,000 and the maximum number of shares
of Acquiror Common Stock that shall be issuable by Acquiror in connection with
such financings shall be 2,654,500 shares. Acquiror will have taken all action
necessary to comply with applicable "blue sky" laws in connection with the First
Acquiror Financing and the Second Acquiror Financing.
27
(q) Statements And Other Documents Not Misleading. Neither this Agreement,
including all exhibits and schedules and other closing documents, nor any other
financial statement, document or other instrument heretofore or hereafter
furnished by Acquiror or Newco to Boxing in connection with the Merger or the
other transactions contemplated hereby, or any information furnished by Acquiror
or Newco taken as a whole contains or will contain any untrue statement of any
material fact or omit or will omit to state any material fact required to be
stated in order to make such statement, information, document or other
instruments, in light of the circumstances in which they are made, not
misleading. There is no fact known to Acquiror or Newco taken as a whole which
may have a Material Adverse Effect on the business, prospects, financial
condition or results of operations of Acquiror or Newco taken as a whole or of
any of its properties or assets which has not been set forth in this Agreement
as an exhibit or schedule hereto.
ARTICLE 5.
AGREEMENTS OF THE PARTIES
5.1 ACCESS TO INFORMATION.
At all times prior to the Closing or the earlier termination of this
Agreement in accordance with the provisions of Section 8, and in each case
subject to Section 5.2 below, each of the parties hereto shall provide to the
other parties (and the other parties' authorized representatives) full access
during normal business hours and upon reasonable prior notice to the premises,
properties, books, records, assets, liabilities, operations, contracts,
personnel, financial information and other data and information of or relating
to such party (including without limitation all written proprietary and trade
secret information and documents, and other written information and documents
relating to intellectual property rights and matters), and will cooperate with
the other party in conducting its due diligence investigation of such party. In
addition Boxing shall cause Big Content to provide such full access to Acquiror
(and its authorized representatives).
5.2 CONFIDENTIALITY; NO SOLICITATION.
(a) Confidentiality of Boxing-Related Information. With respect to
information concerning Boxing, CKP or Big Content that is made available to
Acquiror pursuant to the terms of this Agreement, Acquiror agrees that it shall
hold such information in strict confidence, shall not use such information
except for the sole purpose of evaluating the Merger and related transactions
and shall not disseminate or disclose any of such information other than to its
directors, officers, employees, stockholders, affiliates, agents and
representatives who need to know such information for the sole purpose of
evaluating the Merger and the related transactions (each of whom shall be
informed in writing by Acquiror or its representatives of the confidential
nature of such information and directed by Acquiror in writing to treat such
information confidentially). If this Agreement is terminated pursuant to the
provisions of Section 8, Acquiror shall immediately return all such information,
all copies thereof and all information prepared by Acquiror based upon the same;
provided, however, that one copy of all such material may be
28
retained by Acquiror's outside legal counsel for purposes only of resolving any
disputes under this Agreement. The above limitations on use, dissemination and
disclosure shall not apply to information that (i) is learned by Acquiror from a
third party entitled to disclose it; (ii) becomes known publicly other than
through Acquiror or any party who received the same through Acquiror, provided
that Acquiror has no Knowledge that the disclosing party was subject to an
obligation of confidentiality; (iii) is required by law or court order to be
disclosed by Acquiror; or (iv) is disclosed with the express prior written
consent thereto of Boxing and CKP. Acquiror shall undertake all necessary steps
to ensure that the secrecy and confidentiality of such information will be
maintained in accordance with the provisions of this paragraph (a).
Notwithstanding anything contained herein to the contrary, in the event a party
is required by court order or subpoena to disclose information which is
otherwise deemed to be confidential or subject to the confidentiality
obligations hereunder, prior to such disclosure, the disclosing party shall: (A)
promptly notify the non-disclosing party and, if having received a court order
or subpoena, deliver a copy of the same to the non-disclosing party; (B)
cooperate with the non-disclosing party, at the expense of the non-disclosing
party in, obtaining a protective or similar order with respect to such
information; and (C) provide only such of the confidential information as the
disclosing party is advised by its counsel is necessary to strictly comply with
such court order or subpoena.
(b) Confidentiality of Acquiror-Related Information. With respect to
information concerning Acquiror that is made available to Boxing and the
Stockholders pursuant to the provisions of this Agreement, each of Boxing,
Xxxxxxx and XxXxxxxxx agrees that it/he shall hold such information in strict
confidence, shall not use such information except for the sole purpose of
evaluating the Merger and the related transactions, and shall not disseminate or
disclose any of such information other than to its directors, officers,
employees, stockholders, affiliates, agents and representatives who need to know
such information for the sole purpose of evaluating the Merger and the related
transactions (each of whom shall be informed in writing by Boxing or its
representatives of the confidential nature of such information and directed by
such party in writing to treat such information confidentially). If this
Agreement is terminated pursuant to the provisions of Section 8, each of Boxing,
Xxxxxxx and XxXxxxxxx agrees to return immediately all such information, all
copies thereof and all information prepared by Boxing based upon the same;
provided, however, that one copy of all such material may be retained by
Boxing's outside legal counsel for purposes only of resolving any disputes under
this Agreement. The above limitations on use, dissemination and disclosure shall
not apply to information that (i) is learned by Boxing or the Stockholders from
a third party entitled to disclose it; (ii) becomes known publicly other than
through Boxing or the Stockholders or any party who received the same through
Boxing or the Stockholders; provided that neither Boxing nor the Stockholders
have any Knowledge that the disclosing party was subject to an obligation of
confidentiality; (iii) is required by law or court order to be disclosed by
Boxing or the Stockholders; or (iv) is disclosed with the express prior written
consent thereto of Acquiror. Boxing agrees to undertake all necessary steps to
ensure that the secrecy and confidentiality of such information will be
maintained in accordance with the provisions of this paragraph (b).
Notwithstanding anything contained herein to the contrary, in the event a party
is required by court order or subpoena to disclose information which is
otherwise deemed to be confidential or subject to the confidentiality
obligations hereunder, prior to such disclosure, the disclosing party shall: (i)
29
promptly notify the non-disclosing party and, if having received a court order
or subpoena, deliver a copy of the same to the non-disclosing party; (ii)
cooperate with the non-disclosing party at the expense of the non-disclosing
party in obtaining a protective or similar order with respect to such
information; and (iii) provide only such of the confidential information as the
disclosing party is advised by its counsel is necessary to strictly comply with
such court order or subpoena.
(c) Nondisclosure. Neither Boxing, the Stockholders, Acquiror nor Newco
shall disclose to the public or to any third party the existence of this
Agreement or the transactions contemplated hereby or any other material
non-public information concerning or relating to any other party hereto, other
than with the express prior written consent of the other parties hereto, except
as may be required by law or court order or to enforce the rights of such
disclosing party under this Agreement, in which event the contents of any
proposed disclosure shall be discussed with the other party before release;
provided, however, that notwithstanding anything to the contrary contained in
this Agreement, any party hereto may disclose this Agreement to any of its
directors, officers, employees, stockholders, affiliates, agents and
representatives who need to know such information for the sole purpose of
evaluating the Merger, and to any person whose consent is required in connection
with the Merger or this Agreement. The parties anticipate issuing a mutually
acceptable, joint press release announcing the execution of this Agreement and
the consummation of the Merger.
(d) No Solicitation. In consideration of the substantial expenditure of
time, effort and money to be undertaken by Acquiror in connection with the
transactions contemplated by this Agreement, neither Boxing nor any of its
affiliates will, prior to the earlier of the Merger Closing or the termination
of this Agreement directly or indirectly, through any officer, director, agent
or otherwise: (i) solicit, initiate or encourage the submission of inquiries,
proposals or offers from any person or entity relating to any acquisition or
purchase of assets of or any equity interest in Boxing or CKP or any of their
respective affiliates or any tender offer (including a self-tender offer),
exchange offer, merger, consolidation, business combination, sale of a
substantial amount of assets or sale of securities, liquidation, dissolution or
similar transaction involving Boxing or CKP or any of their respective
affiliates (a "Transaction Proposal"); (ii) enter into or participate in any
discussions or negotiations regarding a Transaction Proposal, or furnish to any
other person or entity any information with respect to the business, properties
or assets of Boxing or CKP or any of their respective affiliates in connection
with a Transaction Proposal; or (iii) otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage any effort or attempt by any
other person to do or seek a Transaction Proposal. Boxing shall promptly notify
Acquiror if any such proposal or offer, or any inquiry or contact with any
person or entity with respect thereto is made.
5.3 INTERIM OPERATIONS.
During the period from the date of this Agreement and continuing
until the earlier of the Merger Closing or the termination of this Agreement:
(a) Interim Operations of Boxing and CKP. Boxing agrees (except as
expressly contemplated by this Agreement or as necessary to carry out the terms
hereof, including any
30
Exhibits and Schedules hereto, or to the extent that Acquiror shall otherwise
consent in writing) that:
(i) Ordinary Course. Each of Boxing and CKP shall carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and, to the extent consistent with such business,
use all reasonable efforts to preserve intact its present business
organizations, keep available the services of its present officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it.
(ii) Dividends; Changes in Stock. Neither Boxing nor CKP shall (a)
declare, set aside or pay any dividend, on, or make other distributions in
respect of, any of its capital stock, (b) split, combine or reclassify any of
its capital stock or issue, authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (c) redeem, repurchase or otherwise acquire any shares of its
capital stock, (d) otherwise change its capitalization or (e) propose to do any
of the foregoing.
(iii) Issuance of Securities. Except as contemplated by this
Agreement, neither Boxing nor CKP shall sell, issue, pledge, authorize or
propose the sale or issuance of, pledge or purchase or propose the purchase of,
any shares of its capital stock of any class or securities convertible into, or
rights, warrants or options to acquire, any such shares or other convertible
securities.
(iv) Governing Documents. Neither Boxing nor CKP shall
amend its Articles of Incorporation or its By-Laws.
(v) No Dispositions. Neither Boxing nor CKP shall sell, lease,
pledge, encumber or otherwise dispose of or agree to sell, lease, pledge,
encumber or otherwise dispose of, any of its material assets except in the
ordinary course of business consistent with prior practice.
(vi) Indebtedness. Neither Boxing nor CKP shall incur any
indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or guarantee any debt securities of others other than
in the ordinary course of business consistent with prior practice and in no
event amounting in the aggregate to more than $20,000 except as may be necessary
in obtaining the CKP Bridge Amount.
(vii) Benefit Plans; Etc. Nether Boxing nor CKP shall adopt or amend
in any material respect any collective bargaining agreement or employee benefit
plan.
(viii) Executive Compensation. Neither Boxing nor CKP shall grant to
any executive officer any increase in compensation or in severance or
termination pay, or enter into any employment agreement with any executive
officer.
(ix) Acquisitions. Neither Boxing nor CKP shall acquire (by merger,
consolidation or acquisition of stock or assets or otherwise) any corporation,
partnership or other business organization or subdivision thereof, or make any
investment by either purchase of stock
31
or securities, contributions to capital, property transfer or, except in the
ordinary course of business, purchase of any property or assets, of any other
individual or entity.
(x) Tax Elections. Neither Boxing nor CKP shall make
any material tax election or settle or compromise any material
federal, state, local or foreign tax liability.
(xi) Waivers and Releases. Neither Boxing nor CKP shall waive,
release, grant or transfer any rights of material value or modify or change in
any material respect any Material Agreement other than in the ordinary course of
business and consistent with past practice.
(xii) Other Actions. Neither Boxing nor CKP shall enter into any
agreement or arrangement to do any of the foregoing. Neither Boxing nor CKP
shall take any action, or fail to take any action, that is reasonably likely to
result in any of the representations and warranties of them set forth in this
Agreement becoming untrue in any material respect.
(b) Interim Operations of Acquiror and Newco. Acquiror and Newco agree
(except as expressly contemplated by this Agreement or as necessary to carry out
the terms hereof, including any Exhibits and Schedules hereto, or to the extent
that Boxing and the Stockholders shall otherwise consent) that:
(i) Ordinary Course. Acquiror and Newco shall conduct
no business activity other than in connection with the
transactions contemplated by this Agreement.
(ii) Dividends; Changes in Stock. Neither Acquiror nor Newco shall
(and neither shall propose to) (a) declare or pay any dividend, on, or make
other distributions in respect of, any of its capital stock, (b) split, combine
or reclassify any of its capital stock or issue, authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, (c) repurchase or otherwise acquire any shares
of its capital stock; (d) otherwise change its capitalization; or (e) propose to
do any of the foregoing.
(iii) No Dispositions. Neither Acquiror nor Newco shall sell, lease,
pledge, encumber or otherwise dispose of, or agree to sell, lease, pledge,
encumber or otherwise dispose of, any of its assets that are material, or any
other assets except in the ordinary course of business consistent with prior
practice.
(iv) Other Actions. Acquiror shall not take any action, or fail to
take any action, that is reasonably likely to result in any of its
representations and warranties set forth in this Agreement becoming untrue in
any material respect.
5.4 CONSENTS.
Acquiror and Boxing shall cooperate and use their best efforts to
obtain, prior to the Closing, all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts as are necessary for the consummation of the transactions
contemplated by this Agreement; provided, however, that no loan agreement or
contract for borrowed monies shall be repaid and no contract shall be amended
materially to increase the amount payable thereunder or otherwise to be
materially more burdensome in order
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to obtain any such consent, approval or authorization without first obtaining
the written approval of the other parties hereto.
5.5 ALL REASONABLE EFFORTS.
Subject to the terms and conditions of this Agreement and to the
fiduciary duties and obligations of the boards of directors of the parties
hereto to their respective stockholders, as advised by their counsel, each of
the parties to this Agreement shall use all 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 under applicable laws and regulations, or to remove any
injunctions or other impediments or delays, legal or otherwise, as soon as
reasonably practicable, to consummate the Merger and the other transactions
contemplated by this Agreement.
5.6 PUBLIC ANNOUNCEMENTS.
Acquiror, Newco and Boxing shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the Merger, this Agreement or the other transactions contemplated by this
Agreement and shall not issue any other press release or make any other public
statement without prior consent of the other parties, except as may be required
by law or, with respect to Acquiror, by obligations pursuant to rule or
regulation of the Exchange Act, the Securities Act, any rule or regulation
promulgated thereunder or any rule or regulation of the NASD.
5.7 NOTIFICATION OF CERTAIN MATTERS.
Boxing shall give prompt notice to Acquiror, and Acquiror shall give
prompt notice to Boxing of (a) the occurrence or non-occurrence of any event,
the occurrence or non-occurrence of which would cause any of its representations
or warranties in this Agreement to be untrue or inaccurate in any material
respect, as to Boxing, at or prior to any Closing, and, as to Acquiror or Newco,
as of any Closing and (b) any material failure of Boxing, on the one hand, or
Acquiror and Newco, on the other hand, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
them under this Agreement; provided, however, the delivery of any notice
pursuant to this Section shall not limit or otherwise affect the remedies
available to the party receiving such notice under this Agreement as expressly
provided in this Agreement.
5.8 EXPENSES.
All costs and expenses incurred in connection with the Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated. In the event that the Merger
is consummated, Boxing shall be responsible for legal or other expenses incurred
by itself, but not for those incurred by Acquiror, in connection with the
preparation and negotiation of this Agreement.
5.9 PROHIBITION ON SHORT SALES.
The Stockholders shall not make any short sales of Acquiror Common
Stock following the date hereof through the Merger Closing or earlier
termination of this Agreement.
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5.10 ACTIONS BY ACQUIROR FOLLOWING THE MERGER CLOSING.
(a) Following the Merger, Acquiror shall promptly use its best efforts to
cause the following to occur and shall, if necessary or desirable to effect such
actions, prepare, file and mail to its stockholders, a Proxy Statement
containing such information as required by the Exchange Act seeking (i) approval
of an amendment to the Certificate of Incorporation of Acquiror (x) increasing
the authorized number of shares of Acquiror Common Stock to 100,000,000, (y)
changing the name of Acquiror from "Zenascent, Inc." to "CKP, Inc." and (z)
effecting a reverse stock split so that the total number of shares of common
stock of Acquiror outstanding following such reverse split will be between
15,000,000 and 20,000,000 and (ii) such other actions requested by the
Stockholders.
(b) Following the meeting of Acquiror's stockholders related to the
actions described in Section 5.10(a) (the "Meeting Date"), Acquiror shall use
its reasonable best efforts to prepare and file with the SEC within 45 days
after the Meeting Date and have declared effective under the Securities Act
within 150 days following the Meeting Date a registration statement on Form SB-2
or S-1 or such other form as is appropriate in order to register the reoffer and
redistribution the shares of Acquiror Common Stock sold in the First Acquiror
Financing or the Second Acquiror Financing and any other shares of Acquiror
Common Stock with respect to which the holder thereof has valid registration
rights.
5.11 DOCUMENTS AT CLOSING.
Each party to this Agreement agrees, subject to the terms and
conditions of this Agreement, to execute and deliver at each Closing those
documents identified in Sections 2.2 and 2.4 that are required to be delivered
by each such party.
5.12 PROHIBITION ON TRADING IN ACQUIROR STOCK.
(a) Each of the Stockholders acknowledges that the United States
securities laws prohibit any person who has received material non-public
information concerning the matters which are the subject matter of this
Agreement from purchasing or selling the securities of the Acquiror, or from
communicating such information to any person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell securities
of the Acquiror. Accordingly, until the Closing, each of the Stockholders agrees
that he shall not and shall instruct his representatives not to purchase or sell
any securities of the Acquiror, or communicate such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell securities of the Acquiror, until counsel
for Acquiror believes that any such non-public information has been adequately
disseminated to the public.
(b) Following the Merger Closing, each of the Stockholders agrees that for
a period of eighteen months he will not sell, dispose, convey or otherwise
transfer any shares of Series C Stock or the Acquiror Common Stock into which it
is convertible.
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5.13 RESERVATION OF SHARES; POST-CLOSING AMENDMENTS TO ACQUIROR'S
CERTIFICATE OF INCORPORATION.
As of the Merger Closing, Acquiror shall have authorized and reserved
for issuance sufficient shares of Series B Stock and Series C Stock to permit
the issuance of the Series B Stock and Series C Stock. Acquiror shall use best
efforts to secure approval by its stockholders as promptly as is practicable
following the Effective Date of an amendment to its Certificate of Incorporation
that effectuates: (a) an increase in the number of shares of Acquiror Common
Stock authorized thereunder so as to have authorized and available for issuance
a sufficient number of shares of Acquiror Common Stock to fully cover conversion
or exercise, as the case may be, of the Series A Stock, the Series A Warrants,
the Series B Stock, the Series C Stock and the LM Warrants (b) a change in its
name to "CKP, Inc." and (c) and effecting a reverse stock split so that the
total number of shares of common stock of Acquiror outstanding following such
reverse split will be between 15,000,000 and 20,000,000. Upon securing such
stockholder approval, Acquiror shall promptly file an appropriate amendment to
its Certificate of Incorporation with the Secretary of State of the State of
Delaware.
5.14 INDEMNIFICATION: DIRECTORS' AND OFFICERS' INSURANCE.
(a) Acquiror shall, to the fullest extent permitted under applicable law,
and for six years from and after the Effective Time, to the fullest extent
permitted under applicable law, indemnify, defend and hold harmless each person
who is now, or has been at any time prior to the date hereof or who becomes
prior to the Effective Time, an officer, director or employee of the Acquiror
(the "Indemnified Parties") from and against (i) all losses, claims, damages,
costs, expenses, liabilities or judgments or amounts that are paid in settlement
with the approval of the indemnifying party (which approval shall not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer or
employee of the Acquiror, whether pertaining to any matter existing or occurring
at or prior to the Effective Time and whether asserted or claimed prior to, or
at or after, the Effective Time ("Indemnified Liabilities") and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the full extent permitted under the DGCL. Acquiror will
pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by law.
Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Party (whether
arising before or after the Effective Time), (i) the Indemnified Parties may
retain counsel satisfactory to them and Acquiror; (ii) Acquiror shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefore are received; (iii) the Acquiror will use all
reasonable efforts to assist in the vigorous defense of any such matter,
provided that Acquiror shall not be liable for any settlement of any claim
effected without its written consent, which consent, however, shall not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under this Section 5.14, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify the Acquiror (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 5.14 except to the extent such failure prejudices
such party); provided, however, that the Indemnified Party to whom any
35
expenses are advanced must provide an undertaking to Acquiror to repay such
advance if it is ultimately determined that such person is not entitled to
indemnification under the DGCL. The Indemnified Parties as a group may retain
only one law firm to represent them with respect to such matter (in addition to
local counsel) unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two or
more Indemnified Parties.
(b) For a period of six years after the Effective Time, Acquiror or the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officer's liability insurance maintained by Acquiror
(provided that Acquiror or the Surviving Corporation may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims or matters
existing or occurring before the Effective Time.
(c) This Section 5.14 shall survive the consummation of the Merger. The
provisions of this Section 5.14 are intended to be for the benefit of, and shall
be enforceable by, each Indemnified Party, his heirs and his representatives.
The rights provided Indemnified Parties shall be in addition to, and not in lieu
of, any rights to indemnity which such parties may have under the Certificate or
By-Laws of the Acquiror or the Surviving Corporation or any other agreements or
otherwise.
5.15 ACKNOWLEDGMENT OF APPROVALS; APPROVAL OF THE STOCKHOLDERS.
By virtue of their respective signatures to this Agreement, Acquiror,
Newco, Boxing and the Stockholders acknowledge their approval of this Agreement
and their consent to the consummation of the transactions identified herein.
5.16 MATTERS OF CORPORATE GOVERNANCE.
(a) Concurrent with the Merger Closing, all members of Acquiror's Board of
Directors shall resign and shall be replaced with a Board of Directors of five
(5) members, consisting of: (i) one designee of Acquiror's Board of Directors
immediately prior to the Closing (the "Acquiror Designee"); and (ii) four (4)
designees of the Stockholders. Immediately following the Effective Date, the
Acquiror's Board of Directors shall execute and deliver to the Secretary of
Acquiror board resolutions authorizing the transactions contemplated in this
Agreement.
(b) Each of the Stockholders agrees that he will vote all voting
securities of Acquiror owned beneficially or of record by him in a manner
consistent with the approval of Acquiror's post-closing obligations under this
Agreement.
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5.17 AGREEMENT NOT TO COMPETE.
For so long as either of the Stockholders owns in excess of twenty
percent of the outstanding shares of Acquiror Common Stock (determined on a
fully-converted and fully diluted basis), received by such Stockholder in the
Merger, such Stockholder agrees that he will not, other than on behalf of the
Surviving Corporation and its affiliates:
(a) solicit any business, entity or individual with whom Boxing or CKP has
done or will do business with, including, but not limited to, past, present or
future fighters, licensors, licensees, vendees or strategic partners, in any way
relating to the business of promoting live boxing events, packaging bouts for
distribution through various media, licensing rights to both past and future
boxing events for commercial use, and other activities related to or involving
the boxing industry (the "Business");
(b) induce or actively attempt to influence any other employee or
consultant of Boxing or CKP to terminate his or her employment or engagement
with Boxing or CKP; or
(c) directly or indirectly engage in the Business or own
any interest in a competing venture.
5.18 MERGER WITH BIG CONTENT.
Promptly following the execution of this Agreement, Boxing shall (a)
seek to negotiate, enter into and consummate an agreement and plan of merger
with Big Content (the "Big Content Merger Agreement") and (b) take all corporate
action necessary to consummate the Big Content Merger Agreement. The Big Content
Merger Agreement, and all associated documentation and agreements, shall: (x)
provide for the merger of Big Content with and into Boxing on a tax-free basis
in consideration of the issuance to the stockholders of Big Content by Boxing of
thirty (30) shares of common stock of Boxing Common Stock; (y) contain such
other economic terms substantially as set forth in Exhibit 5.18 hereto; and (z)
contain such other terms and conditions that are satisfactory to Acquiror and
Boxing.
ARTICLE 6.
CONDITIONS TO CONSUMMATION OF THE BRIDGE LOAN AND THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF THE STOCKHOLDERS AND BOXING.
(a) Bridge Loan. The obligations of Boxing to cause CKP to consummate the
Bridge Loan and the other transactions contemplated to be consummated by Boxing
at the Bridge Loan Closing are subject to the satisfaction (or waiver by Boxing)
at or prior to the Bridge Loan Closing (or at such other time prior thereto as
may be expressly provided in this Agreement) of each of the following
conditions:
(i) The representations and warranties of Acquiror and Newco set out
in this Agreement shall be true and correct in all material respects (other than
representations and
37
warranties that contain materiality qualifications which shall be true and
correct in all respects) as of the date when made and at and as of the Bridge
Loan Closing Date, with the same force and effect as though made as of the
Bridge Loan Closing Date, except for changes expressly permitted by this
Agreement or where such representations or warranties are expressly limited by
their terms to a prior date.
(ii) The representation contained in Section 4.2(g)
shall be true and correct.
(iii) Acquiror shall have complied (i) in a timely manner and in all
material respects with the respective covenants and agreements set out in this
Agreement and (ii) fully with its obligations under Sections 1.4 and 3.2 of this
Agreement.
(iv) The Merger shall have been approved by Newco in accordance with
the provisions of the DGCL. The Board of Directors of Newco and Acquiror shall
have approved the execution of this Agreement and the Merger thereby.
(v) There shall be delivered to Boxing an officer's certificate of
Acquiror attesting (i) to the satisfaction of the conditions contained in
paragraphs (i) and (ii) of this Section 6.1(a) and (ii) the other matters
required by Section 2.2(b)(iii).
(vi) All director, stockholder, lender, lessor and other parties'
consents and approvals, as well as all filings with, and all necessary consents
or approvals of, all federal, state and local governmental authorities and
agencies, as are required under this Agreement, applicable law or any applicable
contract or agreement (other than as contemplated by this Agreement) to complete
the Merger shall have been secured.
(vii) Acquiror shall have adopted and filed with the Secretary of
State of Delaware the Certificates of Designation.
(viii) No statute, rule, regulation, executive order, decree,
injunction or restraining order shall have been enacted, entered, promulgated or
enforced by any court of competent jurisdiction or governmental authority that
prohibits or restricts the consummation of the Merger or the related
transactions.
(b) The Merger. The obligations of Boxing to consummate the Merger and the
other transactions contemplated to be consummated by it at the Merger Closing
are subject to the satisfaction (or waiver by Boxing) at or prior to the Merger
Closing (or at such other time prior thereto as may be expressly provided in
this Agreement) of each of the following conditions:
(i) The Bridge Loan shall have been consummated;
(ii) The representations and warranties of Acquiror and Newco set out
in this Agreement shall be true and correct in all material respects (other than
representations and warranties that contain materiality qualifications which
shall be true and correct in all respects) as of the date when made and at and
as of the Effective Time, with the same force and effect as though made as of
the Effective Time, except for changes expressly permitted by this Agreement or
where such representations or warranties are expressly limited by their terms to
a prior date;
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(iii) The representation contained in Section 4.2(g)
shall be true and correct;
(iv) Acquiror shall have and caused its directors to
comply with Section 5.16(a) of this Agreement;
(v) There shall be delivered to Boxing the officer's
certificates of Acquiror as required by Sections 2.4(b)(ii) and
(iii);
(vi) All director, stockholder, lender, lessor and other parties'
consents and approvals, as well as all filings with, and all necessary consents
or approvals of, all federal, state and local governmental authorities and
agencies, as are required under this Agreement, applicable law or any applicable
contract or agreement (other than as contemplated by this Agreement) to complete
the Merger shall have been secured;
(vii) Xxxxxxx shall have received irrevocable proxies duly executed by
such parties as requested by Xxxxxxx (the "Proxy Parties"), in form and
substance satisfactory to Xxxxxxx, enabling Xxxxxxx to vote the shares of
Acquiror Common Stock (or securities convertible into Acquiror Common Stock)
owned by the Proxy Parties for all purposes;
(viii) Boxing shall have consummated the
transactions contemplated by the Big Content Merger Agreement on
terms and conditions satisfactory to Boxing; and
(ix) No statute, rule, regulation, executive order, decree,
injunction or restraining order shall have been enacted, entered, promulgated or
enforced by any court of competent jurisdiction or governmental authority that
prohibits or restricts the consummation of the Merger or the related
transactions.
6.2 CONDITIONS TO ACQUIROR'S OBLIGATIONS.
(a) Bridge Loan. The obligation of Acquiror to consummate the Bridge Loan
and the other transactions contemplated to be consummated by it at the Bridge
Loan Closing are subject to the satisfaction (or waiver by Acquiror) at or prior
to the Bridge Loan Closing (or at such other time prior thereto as may be
expressly provided in this Agreement) of each of the following conditions:
(i) The representations and warranties of Boxing, CKP and the
Stockholders set out in this Agreement shall be true and correct in all material
respects (other than representations and warranties that contain materiality
qualifications which shall be true and correct in all respects) as of the date
when made and at and as of the Bridge Loan Closing Date, with the same force and
effect as though made as of the Bridge Loan Closing Date, except for changes
expressly permitted by this Agreement or where such representations or
warranties are expressly limited by their terms to a prior date;
(ii) Boxing and CKP shall have complied in a timely manner and in all
material respects with their covenants and agreements set out in this Agreement;
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(iii) There shall be delivered to Acquiror an officer's certificate of
Boxing to the effect that all of the representations and warranties of Boxing
and CKP set forth herein are true and complete in all material respects as of
the Bridge Loan Closing, and that Boxing and CKP have complied in all material
respects with the covenants and agreements set forth herein that they are
required to comply with by the Bridge Loan Closing;
(iv) Boxing and CKP shall have secured the approval of its
stockholders necessary under the DGCL, its Certificate of Incorporation and
By-Laws to approve the Merger, this Agreement and the transactions contemplated
hereby, and shall have delivered a certificate of an authorized officer of
Boxing to this effect;
(v) All director, stockholder, lender, lessor and other parties'
consents and approvals, as well as all filings with, and all necessary consents
or approvals of, all federal, state and local governmental authorities and
agencies, as are required under this Agreement, applicable law or any applicable
contract or agreement (other than as contemplated by this Agreement) to complete
the Merger shall have been secured;
(vi) The Board of Directors of Boxing shall have
approved the Merger in accordance with the DGCL; and
(vii) No statute, rule, regulation, executive order, decree,
injunction or restraining order shall have been enacted, entered, promulgated or
enforced by any court of competent jurisdiction or governmental authority that
prohibits or restricts the consummation of the Merger or the related
transactions.
(b) Merger. The obligation of Acquiror to consummate the Merger and the
other transactions contemplated to be consummated by it at the Merger Closing
are subject to the satisfaction (or waiver by Acquiror) at or prior to the
Merger Closing (or at such other time prior thereto as may be expressly provided
in this Agreement) of each of the following conditions:
(i) The Bridge Loan shall have been consummated;
(ii) The representations and warranties of Boxing, CKP and the
Stockholders set out in this Agreement shall be true and correct in all material
respects (other than representations and warranties that contain materiality
qualifications which shall be true and correct in all respects) as of the date
when made and at and as of the Effective Time, with the same force and effect as
though made as of the Effective Time, except for changes expressly permitted by
this Agreement or where such representations or warranties are expressly limited
by their terms to a prior date;
(iii) Boxing and CKP shall have complied in a timely manner and in all
material respects with their covenants and agreements set out in this Agreement;
(iv) There shall be delivered to Acquiror an officer's
certificate of Boxing as required by Section 2.4(a)(i);
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(v) All director, stockholder, lender, lessor and other parties'
consents and approvals, as well as all filings with, and all necessary consents
or approvals of, all federal, state and local governmental authorities and
agencies, as are required under this Agreement, applicable law or any applicable
contract or agreement (other than as contemplated by this Agreement) to complete
the Merger shall have been secured;
(vi) Boxing shall have consummated the transactions contemplated by
the Big Content Merger Agreement on terms and conditions satisfactory to
Acquiror;
(vii) Wilshire Advisers LLC shall have confirmed that, following the
Merger, the Wilshire Warrant shall be exercisable for shares of Acquiror Common
Stock; and
(viii) No statute, rule, regulation, executive order, decree,
injunction or restraining order shall have been enacted, entered, promulgated or
enforced by any court of competent jurisdiction or governmental authority that
prohibits or restricts the consummation of the Merger or the related
transactions.
ARTICLE 7.
INDEMNIFICATION
7.1 INDEMNIFICATION.
(a) Acquiror, on the one hand, and the Stockholders, on the other hand (as
applicable, the "Indemnitor"), shall indemnify, defend and hold harmless the
other (the "Indemnitee") from and against any and all demands, claims, actions
or causes of action, judgments, assessments, losses, liabilities, damages or
penalties and reasonable attorneys' fees and related disbursements
(collectively, "Claims") incurred by the Indemnitee which arise out of or result
from a misrepresentation or breach of warranty contained in Article 4 hereof or
the breach of any covenant, obligation or agreement of an Indemnitor contained
in this Agreement. Such obligation shall remain in full force and effect
irrespective of whether or not the Indemnitee was aware of any such
misrepresentation or breach, as the case may be, at the time of the Bridge Loan
Closing or the Merger Closing. If the Indemnitor disputes the amount of such
Claim or liability for such Claim, the controversy in question shall be
submitted to arbitration pursuant to Section 9.8 hereof.
(b) Methods of Asserting Claims for Indemnification. All
claims for indemnification under this Agreement shall be asserted
as follows:
(i) Third Party Claims. In the event that any Claim for which the
Indemnitee would be entitled to indemnification under this Agreement is asserted
against or sought to be collected from the Indemnitee by a third party the
Indemnitee shall promptly notify the Indemnitor of such Claim, specifying the
nature thereof, the applicable provision in this Agreement or other instrument
under which the Claim arises, and the amount or the estimated amount thereof
(the "Claim Notice"). The Indemnitor shall have thirty (30) days (or, if
shorter, a period to a date not less than ten (10) days prior to when a
responsive pleading or other document
41
is required to be filed but in no event less than ten (10) days from delivery or
mailing of the Claim Notice) (the "Notice Period") to notify the Indemnitee (a)
whether or not it disputes the Claim and (b) if liability hereunder is not
disputed, whether or not it desires to defend the Indemnitee. If the Indemnitor
elects to defend by appropriate proceedings, such proceedings shall be promptly
settled or prosecuted to a final conclusion in such a manner as to avoid any
risk of damage to the Indemnitee; and all costs and expenses of such proceedings
and the amount of any judgment shall be paid by the Indemnitor.
(ii) Participation. If the Indemnitee desires to participate in, but
not control, any such defense or settlement, it may do so at its sole cost and
expense. If the Indemnitor has disputed the Claim, as provided above, and shall
not defend such Claim, the Indemnitee shall have the right to control the
defense or settlement of such Claim, in its sole discretion, and shall be
reimbursed by the Indemnitor for its reasonable costs and expenses of such
defense.
(iii) Non-Third Party Claims. In the event that the Indemnitee should
have a Claim for indemnification hereunder which does not involve a Claim being
asserted against it or sought to be collected by a third party, the Indemnitee
shall promptly send a Claim Notice with respect to such Claim to the Indemnitor.
If the Indemnitor does not notify the Indemnitee within the Notice Period that
the Indemnitor disputes such Claim, the Indemnitor shall pay the amount thereof
to the Indemnitee. If the Indemnitor disputes the amount of such Claim or
liability for such Claim, the controversy in question shall be submitted to
arbitration pursuant to Section 9.8 hereafter.
(c) Method of Satisfying Indemnification Claims.
(i) Except with respect to claims made by the
Stockholders relating to a breach of the representations and warranties of
Acquiror and Newco contained in Sections 4.2(d) and 4.2(g), at any time it is
determined pursuant to this Article 7 that Acquiror or the Stockholders are owed
any amount for indemnification (as applicable, the "Acquiror Owed Definitive
Amount" or the "Shareholder Owed Definitive Amount"), such amount (the
"Definitive Amount") shall be paid by delivery to the Indemnitee by the
Indemnitor of such number of shares of Acquiror Common Stock determined by
dividing the Definitive Amount by 1.50.
(ii) At any time it is determined that there has been a breach by
Acquiror of the representation and warranty of Acquiror and Newco contained in
Section 4.2(d) and that the Total Pre-Merger Share Number is greater than
17,273,065, Acquiror shall deliver to the Stockholders the number of shares of
Acquiror Common Stock (or Series B Stock convertible into such number of shares
of Acquiror Common Stock) equal to three (3) times the number of shares by which
the Total Pre-Merger Share Number exceeds 17,273,065.
It is expressly acknowledged that the sole remedy for the
failure to obtain net proceeds of $500,000 from the Second Acquiror Financing is
delivery to the Stockholders of the Post-Merger Shares as provided in Section
1.3(a)(iv).
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(iii) At any time it is determined pursuant to this Article 7 that the
Stockholders are owed any Acquiror Owed Definitive Amount as a result of a
breach by Acquiror of the representations and warranties of Acquiror and Newco
contained in Section 4.2(g), such amount shall be paid by delivery to the
Stockholders by Acquiror of the number of shares of Acquiror Common Stock (or
Series B Stock convertible into such number of shares of Acquiror Common Stock)
determined as follows:
N equals: X minus (the Series B Conversion Number plus the Series C
Conversion Number plus the number of Post-Merger Shares delivered to the
Stockholders) where:
o N equals: the number of shares of Acquiror Common Stock to be
delivered to the Stockholders.
o X equals: (6,480,000 minus Q) divided by P.
o P equals: ((1,620,000 minus Q) minus the Acquiror Owed
Definitive Amount) divided by the Total Pre-Merger Share Number.
o Q equals: 500,000 minus the net proceeds of the Second Acquiror
Financing
Notwithstanding the foregoing, until such time as a
claim has been made by a third party with respect to the liabilities of Acquiror
set forth on Schedule 7.1(c)(iii), no such liability shall be deemed to be an
Acquiror Owed Definitive Amount and no adjustment in accordance with this
Section 7.1(c)(iii) shall be made with respect thereto.
(iv) If any amount becomes owed to the Stockholders pursuant to this
Section 7.1, such amount will be deemed to be an adjustment to the total
purchase price payable to the Stockholders in connection with the acquisition by
merger of Boxing and any shares of Acquiror Common Stock delivered pursuant to
this Section 7.1 shall be deemed to be Merger Consideration. If any amount
becomes owed to Acquiror pursuant to this Section 7.1, each of the Stockholders
will be responsible solely for his pro rata portion of such amount, up to a
maximum of the total number of shares of Acquiror Common Stock (or Series B
Stock convertible into such number of shares of Acquiror Common Stock) received
by such Stockholder in the Merger. All calculations under this Section 7.1 shall
be made cumulatively.
7.2 CONTINUING DIRECTOR.
All decisions to be made by Acquiror pursuant to this Article 7 shall be
made by the Continuing Director. If there is no Continuing Director as defined
in this Agreement, Acquiror shall appoint an independent member of the Board of
Directors to serve as the "Continuing Director" for purposes of this Article 7.
43
ARTICLE 8.
TERMINATION
8.1 TERMINATION.
This Agreement may be terminated and the Merger may be abandoned at
any time prior to or at the Closing:
(a) by mutual written consent of Acquiror and Boxing;
(b) by either Acquiror or Boxing:
(i) if the Bridge Loan Closing shall not have occurred on or before
February 22, 2002, unless otherwise extended in writing by all of the parties
hereto; provided, however, that the right to terminate this Agreement under this
Section 8.1(b)(i) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted in, the
failure of the Bridge Loan Closing to occur on or before that date; provided
further, however, if (a) the Bridge Loan does not occur solely as a result of
the inability of Acquiror to consummate the First Acquiror Financing and (b)
Acquiror has used reasonable commercial efforts to consummate the First Acquiror
Financing, Boxing shall not have a claim for damages under this Agreement; or
(ii) if the Merger Closing shall not have occurred on or before March
31, 2002, unless otherwise extended in writing by all of the parties hereto;
provided, however, that the right to terminate this Agreement under this Section
8.1(b)(ii) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before that date; provided further,
however, if (a) the Bridge Loan does not occur solely as a result of the
inability of Acquiror to consummate the First Acquiror Financing and (b)
Acquiror has used reasonable commercial efforts to consummate the First Acquiror
Financing, Boxing shall not have a claim for damages under this Agreement; or
(iii) if any court of competent jurisdiction, or any governmental
body, regulatory or administrative agency or commission having appropriate
jurisdiction shall have issued an order, decree or filing or taken any other
action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable; or
(c) by Boxing if any of the conditions specified in Section 6.1 have not
been met or if satisfaction of such a condition is or becomes impossible (other
than through the failure of Boxing to comply with its obligations under this
Agreement) and Boxing has not waived such conditions on or before the applicable
Closing; or
(d) by Acquiror
44
(i) if any of the conditions specified in Section 6.2 have not been
met or if satisfaction of such a condition is or becomes impossible (other than
through the failure of Acquiror or Newco to comply with their respective
obligations under this Agreement) and Acquiror has not waived such condition on
or before the applicable Closing; or
(ii) within five (5) business days after the receipt by Acquiror of
the Financial Statements (which shall include on a pro forma basis the financial
results of Big Content for all periods reflected therein) if Acquiror is not
reasonably satisfied (x) that the financial condition of Boxing and CKP is
materially as disclosed to Acquiror, (y) with the anticipated financial
condition of Boxing following the consummation of the transactions contemplated
by the Big Content Merger Agreement or (z) with the results of its due diligence
investigation of Big Content.
8.2 NOTICE AND EFFECT OF TERMINATION.
In the event of the termination and abandonment of this Agreement
pursuant to Section 8.1, written notice thereof shall forthwith be given to the
other party or parties specifying the provision pursuant to which such
termination is made. Upon termination, this Agreement shall forthwith become
void and all obligations of the parties under this Agreement will terminate
without any liability on the part of any party or its directors, officers or
stockholders and none of the parties shall have any claim or action against any
other party, except that the provisions of this Section 8.2 and Sections 5.2 and
5.8, shall survive any termination of this Agreement and any obligation for
repayment of the Bridge Loan which has already been funded shall survive.
Nothing contained in this Section 8.2 shall relieve any party from any liability
for any breach of this Agreement other than in the event of a termination
pursuant to Section 8.1.
8.3 EXTENSION; WAIVER.
Any time prior to any Closing, the parties may (a) extend the time
for the performance of any of the obligations or other acts of any other party
under or relating to this Agreement; (b) waive any inaccuracies in the
representations or warranties by any other party or (c) waive compliance with
any of the agreements of any other party or with any conditions to its own
obligations. Any agreement on the part of any other party to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
8.4 AMENDMENT AND MODIFICATION.
This Agreement may be amended only by written agreement signed by
each of Acquiror, Newco, Boxing, CKP, Xxxxxxx and XxXxxxxxx.
45
ARTICLE 9.
MISCELLANEOUS
9.1 SURVIVAL; REMEDIES.
All representations, warranties, covenants and agreements of
Acquiror, Newco, Boxing and the Stockholders contained in or made pursuant to
this Agreement shall survive the Merger Closing for a period of two (2) years.
The right to indemnification, payment of damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
damages, or other remedy based on such representations, warranties, covenants,
and obligations. The rights and remedies of the parties to this Agreement are
cumulative, not alternative. In addition to their respective rights to damages
or other remedies they may have, and without limitation thereof, Acquiror,
Newco, Boxing and the Stockholders shall have the right to obtain injunctive
relief to restrain any breach or otherwise to specifically enforce the
provisions of this Agreement, it being agreed by the parties that money damages
alone would be inadequate to compensate any party hereto for such breach or
other failure to perform the obligations of any other party to this Agreement.
9.2 NOTICES.
All notices requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given on the date if delivered personally or
by telecopier (if sent prior to 5:00 p.m. New York City time), or upon the
second business day after it shall have been deposited by certified or
registered mail with postage prepaid, or upon the next business day after it
shall have been deposited with a nationally recognized overnight courier such as
federal express, or sent by telex or telegram, as follows (or at such other
address or facsimile number for a party as shall be specified by like notice):
(a) if to Boxing or CKP, with a copy to:
to it at:
Xxxxxx Xxxxxxx Boxing, Inc. Xxxxxxx X. Xxxxxxx, Esquire
0 Xxxxxxx Xxxxxxx Xxxxxxxxx Xxxxxxx, XXX
Xxxxxxxxxxx, Xxx Xxxx 00000 000 Xxxx Xxxxxx
Xxxx: Xxxxxx Xxxxxxx, Xxxxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
46
(b) if to Xxxxxxx or XxXxxxxxx, with a copy to:
to him at:
1 Montauk Highway Xxxxxxx X. Xxxxxxx, Esquire
Southampton, New York 11968 Xxxxxxxxx Xxxxxxx, LLP
Fax: (000) 000-0000 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
(c) if to Acquiror or with a copy to:
Newco, to it at:
Zenascent, Inc. Xxxxx X. Xxxxxxxx, Esquire
00 Xxxx 00xx Xxxxxx Xxxxxxxx & Xxxxxxxxxx, LLP
Xxxxx 000 000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx, President Fax: (000) 000-0000
Fax: (000) 000-0000
Following the Merger, all notices to Acquiror and Newco shall be
given in the same manner to the Continuing Director and such other persons as
directed by the Continuing Director at the addresses specified by the Continuing
Director.
9.3 AGREEMENT; ASSIGNMENT.
This Agreement, including all Exhibits and Schedules hereto,
constitutes the entire Agreement among the parties with respect to its subject
matter and supersedes all prior agreements and understandings, both written and
oral, among the parties or any of them with respect to such subject matter and
shall not be assigned by operation of law or otherwise.
9.4 BINDING EFFECT; BENEFIT.
This Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and assigns. Nothing in this Agreement
is intended to confer on any person other than the parties to this Agreement or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.5 HEADINGS.
The descriptive headings of the sections of this Agreement are
inserted for convenience only, do not constitute a part of this Agreement and
shall not affect in any way the meaning or interpretation of this Agreement.
47
9.6 COUNTERPARTS.
This Agreement may be executed in two or more counterparts and
delivered via facsimile, each of which shall be deemed to be an original, and
all of which together shall be deemed to be one and the same instrument.
9.7 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the laws that might
otherwise govern under principles of conflicts of laws applicable thereto.
9.8 ARBITRATION.
If a dispute arises as to the interpretation of this Agreement, it
shall be decided finally in an arbitration proceeding conforming to the Rules of
the American Arbitration Association applicable to commercial arbitration then
in effect at the time of the dispute. The arbitration shall take place in New
York, New York. The decision of the Arbitrators shall be conclusively binding
upon the parties and final, and such decision shall be enforceable as a judgment
in any court of competent jurisdiction. The parties shall share equally the
costs of the arbitration.
9.9 SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void, unenforceable or against its regulatory policy, the remainder of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
9.10 CERTAIN DEFINITIONS.
As used herein:
(a) "ADJUSTED FULLY-DILUTED NUMBER" shall mean the number of shares of
Acquiror Common Stock outstanding on a fully diluted basis immediately following
the Effective Time (assuming for this purpose, without limitation, that (i) the
Post-Merger Financing Shares have been issued to persons other than the
Stockholders and are outstanding and (ii) all convertible instruments of the
Acquiror have been converted into Acquiror Common Stock); provided, however,
that the Underwater Warrants and Options shall not be included in this number.
(b) "AFFILIATE" shall have the meanings ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(c) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which federally chartered financial institutions are not open for
business in the City of New York, New York.
48
(d) "CLOSING DATE" shall mean the Bridge Loan Closing Date
or the Merger Closing Date, as applicable.
(e) "CONTINUING DIRECTOR" shall have the meaning ascribed to such term in
Section 1.1(c)(vii).
(f) "XXXXXXXXX BIG CONTENT SHARES" shall mean the shares of Boxing Common
Stock received by XxXxxxxxx upon the consummation of the transactions
contemplated by the Big Content Merger Agreement.
(g) "ENCUMBRANCE" shall mean any lien, encumbrance, pledge, hypothecation,
claim or charge except for minor imperfections of title and encumbrances, if
any, which either individually or in aggregate, are not material in amount and
do not cause a Material Adverse Effect.
(h) "KNOWLEDGE" shall mean the actual current knowledge of the party,
and/or the executive management of the party to this Agreement, as the case may
be, to whom knowledge is ascribed.
(i) "MATERIAL ADVERSE EFFECT" shall mean any adverse effect on the
business, condition (financial or otherwise) or results of operation of the
relevant party and its subsidiaries, if any, which is material to such party and
its subsidiaries, if any, taken as a whole.
(j) "OUTSTANDING STOCK" shall have the meaning ascribed to such term in
Section 4.2(d).
(k) "PERSON" means any individual, corporation, partnership, association,
trust or other entity or organization, including a governmental or political
subdivision or any agency or institution thereof.
(l) "SEVERANCE PAYMENTS" shall have the meaning ascribed to such term in
Section 4.2(o).
(m) "TOTAL PRE-MERGER SHARE NUMBER" means the Total Share Number minus the
shares of Acquiror Common Stock issuable upon conversion of the Series B Stock
and Series C Stock, the Post-Merger Shares, the shares of Acquiror Common Stock
issuable upon exercise of the LM Warrant and the shares of Acquiror Common Stock
issuable upon exercise of the Underwater Warrants and Options.
(n) "TOTAL SHARE NUMBER" means the total number of shares of Acquiror
Common Stock outstanding or issuable immediately following the Effective Time,
including, without limitation, the Outstanding Stock, the shares issuable upon
exercise of the Outstanding Warrants, the shares issuable upon exercise of the
Outstanding Options, the Series A Conversion Shares, the First Financing Common
Stock, the Conversion Common Stock, the shares of Acquiror Common Stock issuable
upon conversion of the Series B Stock and the Series C Stock, the Post-Merger
Shares, the Post-Merger Financing Shares and the shares of Acquiror Common Stock
issuable upon exercise of the LM Warrant.
49
IN WITNESS WHEREOF, each of the undersigned has signed or has caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.
ZENASCENT, INC.,
a Delaware Corporation
By: /s/Xxxxxx Xxxxx
--------------------------------------------
Name: Xxxxxx Xxxxx
Title: Secretary
ZENASCENT NEWCO INC.,
a Delaware Corporation
By: /s/Xxxxxx Xxxxx
--------------------------------------------
Name: Xxxxxx Xxxxx
Title: President
XXXXXX XXXXXXX BOXING, INC.,
a Delaware Corporation
By: /s/Xxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
XXXXXX XXXXXXX PROMOTIONS, LTD.,
a New York Corporation
By: /s/Xxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
/s/Xxxxxx Xxxxxxx
--------------------------------------------
XXXXXX XXXXXXX
/s/Xxxxx XxXxxxxxx
--------------------------------------------
XXXXX XxXXXXXXX
50
Exhibit 1.3(a)(i)
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
ZENASCENT, INC.
------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------
IT IS HEREBY CERTIFIED that:
1. The name of the company is Zenascent, Inc., a Delaware
corporation (the "Company").
2. The certificate of incorporation of the Company authorizes the issuance
of Twenty Million (20,000,000) shares of common stock, $0.01 par value per share
(the "Common Stock") and Five Million (5,000,000) shares of preferred stock,
$0.01 par value per share (the "Preferred Stock"), and expressly vests in the
Board of Directors of the Company the authority provided therein to issue any or
all of said shares of Preferred Stock in one (1) or more series and by
resolution or resolutions to establish the designation and number and to fix the
relative rights and preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, and pursuant to the provisions of Section
151 of the General Corporation Law of the State of Delaware, has adopted the
following resolution creating a Series B Convertible Preferred Stock which
contains the rights and preferences set forth in this Certificate of
Designation:
RESOLVED, that up to _________________ (_______) shares of the
Five Million (5,000,000) authorized shares of Preferred Stock shall be
designated Series B Convertible Preferred Stock, $0.01 par value per
share, and shall possess the rights and preferences set forth in this
Certificate of Designation.
Section 1. Designation and Amount. The shares of such series shall have a
par value of $0.01 per share and shall be designated as Series B Convertible
Preferred Stock (the "Series B Preferred Stock") and the number of shares
constituting the Series B Preferred Stock shall be _________________
(___________).
1
Section 2. Rank. The Series B Preferred Stock shall rank: (i) subject to
the requirements of Section 8, junior to any other class or series of capital
stock of the Company hereafter created specifically ranking by its terms senior
to the Series B Preferred Stock (the "Senior Securities"); (ii) prior to all of
the Common Stock now or hereafter authorized and issued; (iii) prior to any
class or series of capital stock of the Company hereafter created not
specifically ranking by its terms senior to or on parity with any Series B
Preferred Stock of whatever subdivision (collectively with the Common Stock, the
"Junior Securities"); and (iv) subject to the requirements of Section 8, on
parity with any class or series of capital stock of the Company hereafter
created specifically ranking by its terms on parity with the Series B Preferred
Stock (the "Parity Securities") in each case as to the distribution of assets
upon liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary (all such distributions being referred to collectively as
"Distributions").
Section 3.Dividends.
(a) The holders of the Series B Preferred Stock (collectively, the
"Holders") shall not be entitled to receive dividends unless, within six (6)
months following the date of issuance of the Series B Preferred Stock to the
Holders (the "Amendment Date"), the Company has not amended its certificate of
incorporation in order to authorize a sufficient number of shares of Common
Stock into which all of the issued and outstanding shares of Series B Preferred
Stock may be converted. In the event the Company does not make such an amendment
by the Amendment Date, the Holders shall be entitled to receive cumulative
dividends per share at the rate of eight percent (8%) per annum of the Per Share
Liquidation Preference (as defined below), which shall accrue daily from the
date of issuance of the Series B Preferred Stock, and which shall be compounded
quarterly. Such dividends shall be payable by the Company (i) prior to payment
of any dividend with respect to Junior Securities and shall be equal, if not
greater, in amount to any such dividend on a per share basis; and (ii) on parity
with any dividend with respect to the Parity Securities and at an amount equal
to the dividend on a per share basis received by the holders of the Parity
Securities.
(b) Any and all dividends shall be payable out of any cash legally
available therefor, and if there is not a sufficient amount of cash available,
then out of the remaining assets of the Company legally available therefor
(valued at the fair market value thereof on the date of payment, as determined
by the Board of Directors of the Company); provided, however, that to the extent
funds or assets are not legally available for the payment of any dividend, then
the Company shall pay such unpaid dividends promptly as funds or assets become
legally available therefor.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Company, either voluntarily or involuntarily, the Holders shall be entitled to
receive, immediately after any distributions to Senior Securities required by
the Company's certificate of incorporation, as amended, or any certificate(s) of
designation, and prior in preference to any distribution to Junior Securities,
but on parity with any distribution to the holders of Parity Securities, an
aggregate amount equal to the sum of (i) $4,860,000 and (ii) any due but unpaid
dividends on the Series B
2
Preferred Stock (the "Liquidation Preference"). For purposes hereof, the "Per
Share Liquidation Preference" shall mean the Liquidation Preference divided by
[THE NUMBER OF SHARES OF SERIES B PREFERRED STOCK]. If upon the occurrence of
such event, and after payment in full of the preferential amounts with respect
to the Senior Securities, the assets and funds available to be distributed among
the Holders and the holders of Parity Securities shall be insufficient to permit
the payment of the full preferential amounts due to the Holders and the holders
of the Parity Securities, respectively, then the entire assets and funds of the
Company legally available for distribution shall be distributed among the
Holders and the holders of the Parity Securities, pro rata, based on the
respective liquidation amounts to which each such series of stock is entitled by
the Company's certificate of incorporation, as amended, and any certificate(s)
of designation relating thereto.
(b) Upon the completion of the distribution required by Section 4(a),
if assets remain in the Company, they shall be distributed to holders of Junior
Securities in accordance with the Company's certificate of incorporation, as
amended, and any certificate(s) of designation relating thereto.
(c) Each of (i) the sale, conveyance or disposition of all or
substantially all of the assets or Common Stock of the Company; (ii) the
voluntary or involuntary dissolution or winding up of the Company; and (iii) a
merger or consolidation of the Company in which the Company's stockholders do
not retain a majority of the voting power in the surviving entity, shall be
treated as a liquidation, dissolution or winding up of the Company (each, a
"Liquidation Event") within the meaning of Section 4(a).
(d) Prior to the closing of a transaction that will result in a
Liquidation Event, the Company shall send to the Holders at least twenty (20)
days' prior written notice of the date when such Liquidation Event shall take
place. Any Holder may elect to convert, pursuant to Section 6, his shares of
Series B Preferred Stock prior to a Liquidation Event.
Section 5. Redemption. The Holders shall not have any right, at any time
or under any circumstances, to require the Company to redeem any of the Series B
Preferred Stock.
Section 6.Conversion of Series B Preferred Stock.
(a) Voluntary Conversion. Each Holder may, at any time at the sole
option of the Holder, convert whole shares of Series B Preferred Stock into one
hundred (100) fully-paid and non-assessable shares of Common Stock, subject to
adjustment as provided in Section 6(d). The number of shares of Common Stock
issuable upon conversion of one (1) share of Series B Preferred Stock is
hereafter referred to as the "Conversion Rate".
(b) Mechanics of Conversion. In order to convert Series B Preferred
Stock into shares of Common Stock, the Holder shall (i) surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Company or of any transfer agent for the Series B Preferred Stock, and (ii) give
written notice to the Company, at its principal office, of the election to
convert the Series B Preferred Stock, and shall state in such notice the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. The Company shall, as soon as practicable thereafter, issue and
deliver to such Holder, or to the nominee or
3
nominees of such Holder, a certificate or certificates for the number of shares
of Common Stock to which such Holder shall be entitled as aforesaid. The date of
such surrender of the shares of Series B Preferred Stock to be converted and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date.
(c) Automatic Conversion. In the event the Company amends its
certificate of incorporation by the Amendment Date to authorize a sufficient
number of shares of Common Stock into which all of the issued and outstanding
shares of Series B Preferred Stock are convertible, then each then-outstanding
share of Series B Preferred Stock shall, by virtue of such conditions and
without any action on the part of the Holders, be deemed automatically converted
into that number of shares of Common Stock into which the Series B Preferred
Stock would then be converted at the then-effective Conversion Rate.
(d) Adjustments to Conversion Rate.
(i) Adjustment to the Conversion Rate due to Stock Splits, Stock
Dividend or Other Similar Event. If, prior to the conversion of all of the
outstanding shares of Series B Preferred Stock, the number of outstanding shares
of Common Stock is increased by a stock split, stock dividend or other similar
event, the Conversion Rate shall be proportionately reduced, or if the number of
outstanding shares of Common Stock is decreased by a combination or
reclassification of shares, or other similar event, the Conversion Rate shall be
proportionately increased.
(ii) Adjustment Due to Consolidation, Merger, Exchange of
Shares, Recapitalization, Reorganization or Other Similar Event. If, prior to
the conversion of all of the outstanding shares of Series B Preferred Stock,
there shall be a merger, consolidation, exchange of shares, recapitalization,
reorganization or other similar event, as a result of which shares of Common
Stock shall be changed into the same or a different number of shares of the same
or another class or classes of stock or securities of the Company or another
entity, or there is a sale of all or substantially all of the Company's assets
that is not deemed to be a liquidation, dissolution or winding up pursuant to
Section 4(a), then the Holders thereafter shall have the right to receive upon
conversion of the Series B Preferred Stock, upon the basis and upon the terms
and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such stock, securities and/or
other assets which the Holder would have been entitled to receive in such
transaction had the Series B Preferred Stock been converted immediately prior to
such transaction, and in any such case appropriate provisions shall be made with
respect to the rights and interests of the Holders of the Series B Preferred
Stock to the end that the provisions hereof shall thereafter be applicable, as
nearly as may be practicable in relation to any securities thereafter
deliverable upon the exercise thereof. The Company shall not effect any
transaction described in this Section 6(d)(ii) unless (a) it first gives twenty
(20) days prior written notice of such merger, consolidation, exchange of
shares, recapitalization, reorganization or other similar event (during which
time the Holder shall be entitled to convert its shares of Series B Preferred
Stock into Common Stock to the extent permitted hereby) and (b) the resulting
successor or acquiring company (if not the Company) assumes by written
instrument the obligation of the Company under this Certificate of Designation,
including the obligations of this Section 6(d)(ii).
4
(e) Fractional Shares. If any adjustment under Section 6(d) would
create a fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be disregarded and the number
of shares of Common Stock issuable upon conversion shall be the next higher
whole number of shares.
(f) Taxes, etc. The Company will pay any taxes that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
shares of the Series B Preferred Stock.
(g) Assurances. The Company will not, by amendment of its certificate
of incorporation, as amended, or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 6 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of the Series B Preferred Stock against impairment.
Section 7. Voting Rights. Except to the extent otherwise expressly
provided by the General Corporation Law of the State of Delaware, each share of
Series B Preferred Stock shall entitle the Holder thereof to such number of
votes as equals the number of shares of Common Stock into which each share of
the Series B Preferred Stock is then convertible on all matters to be voted on
by the stockholders of the Company.
Section 8. Protective Provisions. Affirmative consent of the holders of
not less than a majority of the outstanding shares of the Series B Preferred
Stock shall be required to approve the following actions:
(a) alter or change the rights, preferences,
privileges, restrictions and conditions of the Series B Preferred
Stock;
(b) do any act or thing to reclassify any outstanding class or series
of capital stock of the Company into a class or series of capital stock having
preferences or priority as to dividends or assets senior to or on parity with
the Series B Preferred Stock;
(c) alter or amend the Company's certificate of
incorporation;
(d) merge or consolidate with one or more corporations in a
transaction pursuant to which the stockholders of the Company hold less than a
majority of the voting power of the surviving corporation;
(e) sell all or substantially all of the Company's
assets;
(f) voluntarily liquidate or dissolve the Company;
5
(g) declare or pay a dividend on the Common Stock or Junior
Securities (other than a dividend payable solely in shares of Common Stock);
(h) increase or decrease the size of the authorized
number of shares of the Series B Preferred Stock; or
(i) create any new class of securities having preferences senior to
or on parity with the Series B Preferred Stock.
Section 9.Miscellaneous.
(a) Amendment and Waiver. No amendment, modification or waiver will
be binding or effective with respect to any provisions of this Certificate of
Designation without the prior written consent or affirmative vote of the holders
of not less than a majority of the Series B Preferred Stock outstanding at the
time such action is taken.
(b) Notices. Except as otherwise expressly provided herein, all
notices referred to herein will be in writing and will be delivered by
registered or certified mail, return receipt requested and postage prepaid, or
by reputable overnight courier service, charges prepaid, and will be deemed to
have been given when so mailed or sent (i) to the Company, at its principal
executive office, and (ii) to any stockholder, at such holder's address as it
appears in the stock records of the Company (unless otherwise indicated by
notice given to the Company by any such holder).
[SIGNATURE PAGE FOLLOWS ON NEXT PAGE]
6
IN WITNESS WHEREOF, Zenascent, Inc. has caused this Certificate of
Designation to be executed this ____ day of _________, 2002.
ZENASCENT, INC.
By:____________________________________
Name:
Title:
Attest:
By:____________________________
Name:
Title:
7
Exhibit 1.3(a)(ii)
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES C CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
ZENASCENT, INC.
------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------
IT IS HEREBY CERTIFIED that:
1. The name of the company is Zenascent, Inc., a Delaware
corporation (the "Company").
2. The certificate of incorporation of the Company authorizes the issuance
of Twenty Million (20,000,000) shares of common stock, $0.01 par value per share
(the "Common Stock") and Five Million (5,000,000) shares of preferred stock,
$0.01 par value per share (the "Preferred Stock"), and expressly vests in the
Board of Directors of the Company the authority provided therein to issue any or
all of said shares of Preferred Stock in one (1) or more series and by
resolution or resolutions to establish the designation and number and to fix the
relative rights and preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, and pursuant to the provisions of Section
151 of the General Corporation Law of the State of Delaware, has adopted the
following resolution creating a Series B Convertible Preferred Stock which
contains the rights and preferences set forth in this Certificate of
Designation:
RESOLVED, that up to _________________ (_______) shares of the
Five Million (5,000,000) authorized shares of Preferred Stock shall be
designated Series C Convertible Redeemable Preferred Stock, $0.01 par
value per share, and shall possess the rights and preferences set forth in
this Certificate of Designation.
Section 1. Designation and Amount. The shares of such series shall have a
par value of $0.01 per share and shall be designated as Series C Convertible
Redeemable Preferred
1
Stock (the "Series C Preferred Stock") and the number of shares constituting the
Series C Preferred Stock shall be _____________ (__________).
Section 2. Rank. The Series C Preferred Stock shall rank: (i) subject to
the requirements of Section 8, junior to the Series B Convertible Preferred
Stock of the Company and any other class or series of capital stock of the
Company hereafter created specifically ranking by its terms senior to the Series
C Preferred Stock (the "Senior Securities"); (ii) prior to all of the Common
Stock now or hereafter authorized and issued; (iii) prior to any class or series
of capital stock of the Company hereafter created not specifically ranking by
its terms senior to or on parity with any Series C Preferred Stock of whatever
subdivision (collectively with the Common Stock, the "Junior Securities"); and
(iv) subject to the requirements of Section 8, on parity with any class or
series of capital stock of the Company hereafter created specifically ranking by
its terms on parity with the Series C Preferred Stock (the "Parity Securities")
in each case as to the distribution of assets upon liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary (all such
distributions being referred to collectively as "Distributions").
Section 3. Dividends. The holders of the Series C Preferred Stock
(collectively, the "Holders") shall be entitled to receive dividends, on an
as-converted basis, at any time dividends are declared and paid on the Company's
Common Stock.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Company, either voluntarily or involuntarily, the Holders shall be entitled to
receive, immediately after any distributions to Senior Securities required by
the Company's certificate of incorporation, as amended, or any certificate(s) of
designation, and prior in preference to any distribution to Junior Securities,
but on parity with any distribution to the holders of Parity Securities, an
aggregate amount equal to the sum of (i) $4,800,000 and (ii) any due but unpaid
dividends on the Series C Preferred Stock (the "Liquidation Preference"). For
purposes hereof, the "Per Share Liquidation Preference" shall mean the
Liquidation Preference divided by [THE NUMBER OF SHARES OF SERIES C PREFERRED
STOCK]. If upon the occurrence of such event, and after payment in full of the
preferential amounts with respect to the Senior Securities, the assets and funds
available to be distributed among the Holders and the holders of Parity
Securities shall be insufficient to permit the payment of the full preferential
amounts due to the Holders and the holders of the Parity Securities,
respectively, then the entire assets and funds of the Company legally available
for distribution shall be distributed among the Holders and the holders of the
Parity Securities, pro rata, based on the respective liquidation amounts to
which each such series of stock is entitled by the Company's certificate of
incorporation, as amended, and any certificate(s) of designation relating
thereto.
(b) Upon the completion of the distribution required by Section 4(a),
if assets remain in the Company, they shall be distributed to holders of Junior
Securities in accordance with the Company's certificate of incorporation, as
amended, and any certificate(s) of designation relating thereto.
2
(c) Each of (i) the sale, conveyance or disposition of all or
substantially all of the assets or Common Stock of the Company; (ii) the
voluntary or involuntary dissolution or winding up of the Company; and (iii) a
merger or consolidation of the Company in which the Company's stockholders do
not retain a majority of the voting power in the surviving entity, shall be
treated as a liquidation, dissolution or winding up of the Company (each, a
"Liquidation Event") within the meaning of Section 4(a).
(d) Prior to the closing of a transaction that will result in a
Liquidation Event, the Company shall send to the Holders at least twenty (20)
days' prior written notice of the date when such Liquidation Event shall take
place. Any Holder may elect to convert, pursuant to Section 6, his shares of
Series C Preferred Stock prior to a Liquidation Event.
Section 5. Redemption. The Holders shall not have any right, at any time
or under any circumstances, to require the Company to redeem any of the Series C
Preferred Stock. The Company may redeem any or all of the Series C Preferred
Stock for the Per Share Liquidation Preference times the number of shares to be
redeemed upon thirty (30) days prior written notice to the Holders or any Holder
(the "Redemption Notice"). A Redemption Notice may be given by the Company to
any Holder with respect to any shares at any time; provided, however, that no
such Redemption Notice may be given for any shares with respect to which the
Company has received a Conversion Notice (as defined below) unless the
Redemption Notice is delivered within thirty (30) days of the receipt of such
Conversion Notice.
Section 6. Conversion of Series C Preferred Stock.
(a) Voluntary Conversion. Each Holder may, at any time at the sole
option of the Holder, convert whole shares of Series C Preferred Stock into one
hundred (100) fully-paid and non-assessable shares of Common Stock, subject to
adjustment as provided in Section 6(d). The number of shares of Common Stock
issuable upon conversion of one (1) share of Series C Preferred Stock is
hereafter referred to as the "Conversion Rate".
(b) Mechanics of Conversion. In order to convert Series C Preferred
Stock into shares of Common Stock, the Holder shall (i) surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Company or of any transfer agent for the Series C Preferred Stock, and (ii) give
written notice (the "Conversion Notice") to the Company, at its principal
office, of the election to convert the Series C Preferred Stock, and shall state
in the Conversion Notice the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The Company shall, as
soon as practicable thereafter, issue and deliver to such Holder, or to the
nominee or nominees of such Holder, a certificate or certificates for the number
of shares of Common Stock to which such Holder shall be entitled as aforesaid.
On the 31st day following the date of such surrender of the shares of Series C
Preferred Stock to be converted, the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock unless
prior to such date the Company has delivered to the Holder a Redemption Notice
with respect to such shares.
3
(c) Adjustments to Conversion Rate.
(i) Adjustment to the Conversion Rate due to Stock Splits, Stock
Dividend or Other Similar Event. If, prior to the conversion of all of the
outstanding shares of Series C Preferred Stock, the number of outstanding shares
of Common Stock is increased by a stock split, stock dividend or other similar
event, the Conversion Rate shall be proportionately reduced, or if the number of
outstanding shares of Common Stock is decreased by a combination or
reclassification of shares, or other similar event, the Conversion Rate shall be
proportionately increased.
(ii) Adjustment Due to Consolidation, Merger, Exchange of
Shares, Recapitalization, Reorganization or Other Similar Event. If, prior to
the conversion of all of the outstanding shares of Series C Preferred Stock,
there shall be a merger, consolidation, exchange of shares, recapitalization,
reorganization or other similar event, as a result of which shares of Common
Stock shall be changed into the same or a different number of shares of the same
or another class or classes of stock or securities of the Company or another
entity, or there is a sale of all or substantially all of the Company's assets
that is not deemed to be a liquidation, dissolution or winding up pursuant to
Section 4(a), then the Holders thereafter shall have the right to receive upon
conversion of the Series C Preferred Stock, upon the basis and upon the terms
and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such stock, securities and/or
other assets which the Holder would have been entitled to receive in such
transaction had the Series C Preferred Stock been converted immediately prior to
such transaction, and in any such case appropriate provisions shall be made with
respect to the rights and interests of the Holders of the Series C Preferred
Stock to the end that the provisions hereof shall thereafter be applicable, as
nearly as may be practicable in relation to any securities thereafter
deliverable upon the exercise thereof. The Company shall not effect any
transaction described in this Section 6(c)(ii) unless (a) it first gives twenty
(20) days prior written notice of such merger, consolidation, exchange of
shares, recapitalization, reorganization or other similar event (during which
time the Holder shall be entitled to convert its shares of Series C Preferred
Stock into Common Stock to the extent permitted hereby) and (b) the resulting
successor or acquiring company (if not the Company) assumes by written
instrument the obligation of the Company under this Certificate of Designation,
including the obligations of this Section 6(c)(ii).
(d) Fractional Shares. If any adjustment under Section 6(c) would
create a fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be disregarded and the number
of shares of Common Stock issuable upon conversion shall be the next higher
whole number of shares.
(e) Taxes, etc. The Company will pay any taxes that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
shares of the Series C Preferred Stock.
(f) Assurances. The Company will not, by amendment of its certificate
of incorporation, as amended, or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid
4
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 6 and in
the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of the Series C Preferred Stock
against impairment.
Section 7. Voting Rights. Except to the extent otherwise expressly
provided by the General Corporation Law of the State of Delaware, each share of
Series C Preferred Stock shall entitle the Holder thereof to such number of
votes as equals the number of shares of Common Stock into which each share of
the Series C Preferred Stock is then convertible on all matters to be voted on
by the stockholders of the Company.
Section 8. Protective Provisions. Affirmative consent of the holders of
not less than majority of the outstanding shares of Series C Preferred Stock
shall be required to approve the following actions:
(a) alter or change the rights, preferences, privileges, restrictions
and conditions of the Series C Preferred Stock;
(b) do any act or thing to reclassify any outstanding class or series
of capital stock of the Company into a class or series of capital stock having
preferences or priority as to dividends or assets senior to or on parity with
the Series C Preferred Stock;
(c) alter or amend the Company's certificate of incorporation;
(d) declare or pay a dividend on the Common Stock or Junior
Securities (other than a dividend payable solely in shares of Common Stock); or
(e) increase or decrease the size of the authorized number of shares
of the Series C Preferred Stock.
Section 9. Miscellaneous.
(a) Amendment and Waiver. No amendment, modification or waiver will
be binding or effective with respect to any provisions of this Certificate of
Designation without the prior written consent or affirmative vote of the holders
of not less than a majority of the Series C Preferred Stock outstanding at the
time such action is taken.
(b) Notices. Except as otherwise expressly provided herein, all
notices referred to herein will be in writing and will be delivered by
registered or certified mail, return receipt requested and postage prepaid, or
by reputable overnight courier service, charges prepaid, and will be deemed to
have been given when so mailed or sent (i) to the Company, at its principal
executive office, and (ii) to any stockholder, at such holder's address as it
appears in the stock records of the Company (unless otherwise indicated by
notice given to the Company by any such holder).
[SIGNATURE PAGE FOLLOWS ON NEXT PAGE]
5
IN WITNESS WHEREOF, Zenascent, Inc. has caused this Certificate of
Designation to be executed this ____ day of _________, 2002.
ZENASCENT, INC.
By:____________________________________
Name:
Title:
Attest:
By:____________________________
Name:
Title:
6
Exhibit 1.4(c)(i)
Form of Note and Warrant Purchase Agreement
XXXXXX XXXXXXX PROMOTIONS, LTD.
NOTE AND WARRANT PURCHASE AGREEMENT
THIS NOTE AND WARRANT PURCHASE AGREEMENT is made as of the ___ day of
_______, 200_ (the "EFFECTIVE DATE") by and among XXXXXX XXXXXXX PROMOTIONS,
LTD., a New York corporation (the "COMPANY"), and [Purchaser] (the "PURCHASER").
The parties hereby agree as follows:
1. AMOUNT AND TERMS OF THE LOAN; ISSUANCE OF WARRANTS
1.1 THE LOAN. Subject to the terms of this Agreement, the Purchaser
agrees to lend to the Company the amount set forth in the promissory
note in substantially the form attached hereto as Exhibit A (the
"NOTE"). The amount of the Note is also the "LOAN AMOUNT." Unless
otherwise defined, the capitalized terms herein shall have the
meanings assigned to such terms in the Note.
1.2 ISSUANCE OF WARRANTS. The Company will sell to the Purchaser, upon
the closing of the Merger Agreement by and among Xxxxxx Xxxxxxx
Boxing, Inc., the Company, Zenascent, Inc. ("Zenascent"), Xxxxxx
Xxxxxxx and Xxxxx XxXxxxxxx, a warrant to purchase [1/2 of the Loan
Amount] shares of common stock, par value $.001 per share (the
"Zenascent Common Stock"), of Zenascent (the "Merger Agreement"). The
warrant shall be in substantially the form attached hereto as Exhibit
B (the "WARRANT"). Prior to issuance of the Warrant, the Purchaser
hereby agrees to pay to the Company the Aggregate Warrant Purchase
Price of $0.001 per share covered by the Warrant.
1.3 The Company and the Purchasers, having adverse interests and as a
result of arm's length bargaining, agree that:
(a) Neither the Purchaser nor any affiliated company
has rendered any services to the Company in connection
with this Agreement;
(b) The Warrant is not being issued as compensation;
(c) The aggregate fair market value of the Note, if issued apart from
the Warrant, is $[AMOUNT OF NOTE], and the aggregate fair market
value of the Warrant, if issued apart from the Note, is $0.001 per
share covered by the Warrant; and
1
(d) All tax returns and other information return of each party
relative to this Agreement and the Note and Warrant issued pursuant
hereto shall consistently reflect the matters agreed to in (a)
through (c) above.
2. THE CLOSING
2.1 CLOSING DATE. The closing of the purchase and sale of the Note (the
"CLOSING") shall be held on the Effective Date, or at such other time
as the Company and the Purchaser shall agree (the "CLOSING DATE").
2.2 DELIVERY. At the Closing (i) the Purchaser will deliver to the
Company a check or wire transfer funds in the amount of the Loan
Amount; and (ii) the Company shall issue and deliver to the Purchaser
a Note in favor of the Purchaser payable in the principal amount of
the Loan Amount.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company hereby represents and warrants to each Purchaser as follows:
3.1 CORPORATE POWER. The Company will have at the Closing Date all
requisite corporate power to execute and deliver this Agreement and
to carry out and perform its obligations under the terms of this
Agreement.
3.2 AUTHORIZATION. All corporate action on the part of the Company, its
directors and its shareholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company
and the performance of the Company's obligations hereunder.
3.3 OFFERING. Assuming the accuracy of the representations and warranties
of the Purchaser contained in Section 4 hereof, the offer, issue, and
sale of the Notes and Warrants are and will be exempt from the
registration and prospectus delivery requirements of the Securities
Act of 1933, as amended (the "1933 ACT"), and have been registered or
qualified (or are exempt from registration and qualification) under
the registration, permit, or qualification requirements of all
applicable state securities laws.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 PURCHASE FOR OWN ACCOUNT. The Purchaser represents that it is
acquiring the Note, the Warrant and the Zenascent Common Stock
issuable upon exercise of the Warrant (collectively, the
"SECURITIES") solely for its own account and beneficial interest for
investment and not for sale or with a view to distribution of the
Securities or any part thereof, has no present intention of selling
(in connection with a distribution or otherwise), granting any
participation in, or otherwise distributing the same, and does not
presently have reason to anticipate a change in such intention.
2
4.2 INFORMATION AND SOPHISTICATION. The Purchaser acknowledges that it
has received all the information it has requested from the Company
and it considers necessary or appropriate for deciding whether to
acquire the Securities. The Purchaser represents that it has had an
opportunity to ask questions and receive answers from the Company and
Zenascent regarding the terms and conditions of the offering of the
Securities and to obtain any additional information necessary to
verify the accuracy of the information given the Purchaser. The
Purchaser further represents that it has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risk of this investment.
4.3 ABILITY TO BEAR ECONOMIC RISK. The Purchaser acknowledges that
investment in the Securities involves a high degree of risk, and
represents that it is able, without materially impairing its
financial condition, to hold the Securities for an indefinite period
of time and to suffer a complete loss of its investment.
4.4 ACCREDITED INVESTOR STATUS. The Purchaser is an
"ACCREDITED INVESTOR" as such term is defined in Rule
501 under the Securities Act.
4.5 FURTHER ASSURANCES. The Purchaser agrees and covenants that at any
time and from time to time it will promptly execute and deliver to
the Company such further instruments and documents and take such
further action as the Company may reasonably require in order to
carry out the full intent and purpose of this Agreement.
5. MISCELLANEOUS
5.1 BINDING AGREEMENT. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors
and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any third party any rights,
remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of New York as applied to agreements
among New York residents, made and to be performed entirely within
the State of New York.
5.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
5.4 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
5.5 NOTICES. Any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given upon
personal delivery or upon deposit with the United States Post Office,
postage prepaid, addressed to the Company at 0 Xxxxxxx Xxxxxxx,
Xxxxxxxxxxx, Xxx Xxxx 00000, or to a Purchaser at [ADDRESS OF
PURCHASER], or at such other address as such party may designate by
ten (10) days advance written notice to the other party.
3
5.6 MODIFICATION; WAIVER. No modification or waiver of any
provision of this Agreement or consent to departure
therefrom shall be effective unless in writing and
approved by the Company and the Purchaser.
5.7 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto constitute
the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or
bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein.
IN WITNESS WHEREOF, the parties have executed this NOTE AND WARRANT
PURCHASE AGREEMENT as of the date first written above.
COMPANY:
XXXXXX XXXXXXX PROMOTIONS, LTD.
By:
----------------------------
Name:
Title:
PURCHASER:
[PURCHASER]
By:
---------------------------
Name:
Title:
4
Exhibit 1.4(c)(ii)
Form of Warrant
EXHIBIT B
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
ZENASCENT, INC.
WARRANT TO PURCHASE COMMON STOCK
NO. W-__ ____________, 2002
VOID AFTER _________, 2007
THIS CERTIFIES THAT, for value received, [PURCHASER], with its principal office
at [ADDRESS OF PURCHASER], or its assigns (the "HOLDER"), is entitled to
subscribe for and purchase at the Exercise Price (defined below) from ZENASCENT,
INC., a Delaware corporation, with its principal office at 0 Xxxxxxx Xxxxxxx,
Xxxxxxxxxxx, Xxx Xxxx 00000 (the "CORPORATION") up to ___________ Thousand
(__,000) shares of common stock, par value $.001 per share, of the Corporation
(the "COMMON STOCK").
1. DEFINITIONS. AS USED HEREIN, THE FOLLOWING TERMS SHALL HAVE
THE FOLLOWING RESPECTIVE MEANINGS:
(a) "Exercise Period" shall mean the period commencing with the date
hereof and ending five years from the date hereof, unless sooner terminated as
provided below.
(b) "Exercise Price" shall mean $.50 per share, subject to adjustment
pursuant to Section 5 below.
(c) "Exercise Shares" shall mean the shares of Common Stock issuable upon
exercise of this Warrant.
2. EXERCISE OF WARRANT. THE RIGHTS REPRESENTED BY THIS WARRANT MAY BE EXERCISED
IN WHOLE OR IN PART AT ANY TIME DURING THE EXERCISE PERIOD, BY DELIVERY OF THE
FOLLOWING TO THE CORPORATION AT ITS ADDRESS SET FORTH ABOVE (OR AT SUCH OTHER
ADDRESS AS IT MAY DESIGNATE BY NOTICE IN WRITING TO THE HOLDER):
(a) An executed Notice of Exercise in the form attached
hereto;
(b) Payment of the Exercise Price either in cash or by
check; and
(c) This Warrant.
Upon the exercise of the rights represented by this Warrant, a certificate
or certificates for the Exercise Shares so purchased, registered in the name of
the Holder or persons affiliated with the Holder, if the Holder so designates,
shall be issued and delivered to the Holder within a reasonable time after the
rights represented by this Warrant shall have been so exercised.
The person in whose name any certificate or certificates for Exercise
Shares are to be issued upon exercise of this Warrant shall be deemed to have
become the holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Corporation are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
3. COVENANTS OF THE CORPORATION.
3.1 Covenants as to Exercise Shares. The Corporation covenants and agrees
that all Exercise Shares that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued and
outstanding, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issuance thereof. The Corporation further covenants
and agrees that the Corporation will at all times during the Exercise Period,
have authorized and reserved, free from preemptive rights, a sufficient number
of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant. If at any time during the Exercise Period the
number of authorized but unissued shares of Common Stock shall not be sufficient
to permit exercise of this Warrant, the Corporation will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes.
3.2 No Impairment. Except and to the extent as waived or consented to by
the Holder, the Corporation will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may be necessary or appropriate in order to
protect the exercise rights of the Holder against impairment.
3.3 Notices of Record Date. In the event of any taking by the Corporation
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend which is the same as cash dividends paid in previous
quarters) or other distribution, the Corporation shall mail to the Holder, at
least ten (10) days prior to the date specified herein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend or
distribution.
4. REPRESENTATIONS OF HOLDER.
4.1 Acquisition of Warrant for Personal Account. The Holder represents and
warrants that it is acquiring the Warrant solely for its account for investment
and not with a view to or for sale or distribution of said Warrant or any part
thereof. The Holder also represents that the entire legal and beneficial
interests of the Warrant and Exercise Shares the Holder is acquiring is being
acquired for, and will be held for, its account only.
4.2 Securities Are Not Registered.
2
(a) The Holder understands that the Warrant and the Exercise Shares
have not been registered under the Securities Act of 1933, as amended (the
"ACT") on the basis that no distribution or public offering of the stock of the
Corporation is to be effected. The Holder realizes that the basis for the
exemption may not be present if, notwithstanding its representations, the Holder
has a present intention of acquiring the securities for a fixed or determinable
period in the future, selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the securities. The
Holder has no such present intention.
(b) The Holder recognizes that the Warrant and the Exercise Shares
must be held indefinitely unless they are subsequently registered under the Act
or an exemption from such registration is available. The Holder recognizes that
the Corporation has no obligation to register the Warrant or the Exercise Shares
of the Corporation, or to comply with any exemption from such registration.
(c) The Holder is aware that neither the Warrant nor the Exercise
Shares may be sold pursuant to Rule 144 adopted under the Act unless certain
conditions are met, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale following the required holding period under Rule
144 and the number of shares being sold during any three month period not
exceeding specified limitations. Holder is aware that the conditions for resale
set forth in Rule 144 have not been satisfied and that the Corporation presently
has no plans to satisfy these conditions in the foreseeable future.
4.3 Disposition of Warrant and Exercise Shares. The Holder understands and
agrees that all certificates evidencing the shares to be issued to the Holder
may bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
5. ADJUSTMENT OF EXERCISE PRICE. In the event of changes in the outstanding
Common Stock of the Corporation by reason of stock dividends, split-ups,
recapitalizations, reclassifications, combinations or exchanges of shares,
separations, reorganizations, liquidations, or the like prior to the exercise of
this Warrant (or portion thereof), the number and class of shares available
under the Warrant (or portion thereof) in the aggregate and the Exercise Price
shall be correspondingly adjusted to give the Holder of the Warrant (or portion
thereof), on exercise for the same aggregate Exercise Price, the total number,
class, and kind of shares as the Holder would have owned had the Warrant (or
portion thereof) been exercised prior to the event and had the Holder continued
to hold such shares until after the event requiring adjustment. The form of this
Warrant need not be changed because of any adjustment in the number of Exercise
Shares subject to this Warrant.
6. FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of
this Warrant as a consequence of any adjustment pursuant hereto. All Exercise
Shares (including fractions) issuable upon exercise of this Warrant may be
aggregated for purposes of determining whether the exercise would result in the
issuance of any fractional share. If, after aggregation, the exercise would
result in the issuance of a fractional share, the Corporation shall, in lieu of
issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from multiplying the then
current fair market value of an Exercise Share by such fraction.
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7. NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Corporation.
8. TRANSFER OF WARRANT. Subject to applicable laws, the restriction on transfer
set forth on the first page of this Warrant, this Warrant and all rights
hereunder are transferable, by the Holder in person or by duly authorized
attorney, upon delivery of this Warrant and the form of assignment attached
hereto to any transferee designated by Holder. The transferee shall sign an
investment letter in form and substance satisfactory to the Corporation.
9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost,
stolen, mutilated or destroyed, the Corporation may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Corporation, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.
10. NOTICES, ETC. All notices and other communications required or permitted
hereunder shall be in writing and shall be sent by telex, telegram, express mail
or other form of rapid communications, if possible, and if not then such notice
or communication shall be mailed by first-class mail, postage prepaid, addressed
in each case to the party entitled thereto at the following addresses: (a) if to
the Corporation, to Zenascent, Inc., Attention: President, 0 Xxxxxxx Xxxxxxx,
Xxxxxxxxxxx, Xxx Xxxx 00000 and (b) if to the Holder, [ADDRESS OF HOLDER], or at
such other address as one party may furnish to the other in writing. Notice
shall be deemed effective on the date dispatched if by personal delivery,
telecopy, telex or telegram, two days after mailing if by express mail, or three
days after mailing if by first-class mail.
11. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.
12. GOVERNING LAW. This Warrant and all rights, obligations and liabilities
hereunder shall be governed by the laws of the State of New York.
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IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed
by its duly authorized officer as of _____________, 2002.
ZENASCENT, INC.
By:
---------------------------------
Name:
Title:
ATTEST:
------------------
Secretary
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NOTICE OF EXERCISE
TO: XXXXXX XXXXXXX PROMOTIONS, LTD.
(1) The undersigned hereby elects to purchase ______________ shares of the
Common Stock of XXXXXX XXXXXXX PROMOTIONS, LTD. (the "COMPANY") pursuant
to the terms of the attached Warrant, and tenders herewith payment of the
exercise price in full, together with all applicable transfer taxes, if
any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
------------------------
(Name)
------------------------
------------------------
(Address)
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(3) The undersigned represents that (i) the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment
and not with a view to, or for resale in connection with, the distribution
thereof and that the undersigned has no present intention of distributing
or reselling such shares; (ii) the undersigned is aware of the Company's
business affairs and financial condition and has acquired sufficient
information about the Company to reach an informed and knowledgeable
decision regarding its investment in the Company; (iii) the undersigned is
experienced in making investments of this type and has such knowledge and
background in financial and business matters that the undersigned is
capable of evaluating the merits and risks of this investment and
protecting the undersigned's own interests; (iv) the undersigned
understands that the shares of Common Stock issuable upon exercise of this
Warrant have not been registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), by reason of a specific exemption from the
registration provisions of the Securities Act, which exemption depends
upon, among other things, the bona fide nature of the investment intent as
expressed herein, and, because such securities have not been registered
under the Securities Act, they must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such
registration is available; (v) the undersigned is aware that the aforesaid
shares of Common Stock may not be sold pursuant to Rule 144 adopted under
the Securities Act unless certain conditions are met and until the
undersigned has held the shares for the number of years prescribed by Rule
144, that among the conditions for use of the Rule is the availability of
current information to the public about the Company and the Company has
not made such information available and has no present plans to do so; and
(vi) the undersigned agrees not to make any disposition of all or any part
of the aforesaid shares of Common Stock unless and until there is then in
effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with said
registration statement, or the undersigned has provided the Company with
an opinion of counsel satisfactory to the Company, stating that such
registration is not required.
----------------------- ----------------------------
(Date) (Signature)
----------------------------
(Print name)
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ASSIGNMENT FORM
(To assign the foregoing Warrant,
execute this form and supply
required information. Do not use
this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to
Name:___________________________________________________________________________
(Please Print)
Address:________________________________________________________________________
(Please Print)
Dated: _________________
Holder's Signature: _____________________________________
Holder's Address: _____________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
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Exhibit 1.4(c)(iii)
Form of Note
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH
RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION.
CONVERTIBLE PROMISSORY NOTE
$_______ _______ __, 200_
New York, New York
For value received XXXXXX XXXXXXX PROMOTIONS, LTD., a New York corporation
("PAYOR" or the "COMPANY") promises to pay to [PURCHASER], or its assigns
("HOLDER") the principal sum of $[AMOUNT] with interest on the outstanding
principal amount at the rate of 10% per annum, compounded annually based on a
365-day year. Interest shall commence with the date hereof and shall continue on
the outstanding principal until paid in full. Principal and accrued interest
shall be due on or before the earlier to occur of (i) January 31, 2003 or (ii)
an Event of Default (as defined below) (each, the "MATURITY DATE").
1. All payments of interest and principal shall be in lawful money of the
United States of America. All payments shall be applied first to accrued
interest and thereafter to principal.
2. If there shall be any Event of Default hereunder, Payor shall pay all
reasonable attorneys' fees and court costs incurred by Holder in enforcing and
collecting this Note, and this Note shall accelerate and all principal and
unpaid accrued interest shall become due and payable. The occurrence of any one
or more of the following shall constitute an Event of Default:
(a) Payor fails to pay (i) timely the principal amount due under
this Note on the date the same becomes due and payable or (ii)
any accrued interest or other amounts due under this Note
within three (3) business days following the date the same
becomes due and payable;
(b) Payor files any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law or
any other law for the relief of, or relating to, debtors, now
or hereafter in effect, or makes any assignment for the
benefit of creditors or takes any corporate action in
furtherance of any of the foregoing; or
(c) An involuntary petition is filed against Payor (unless such
petition is dismissed or discharged within sixty (60) days
under any bankruptcy statute now or hereafter in effect, or a
custodian, receiver, trustee, assignee for the benefit of
creditors (or other
1
similar official) is appointed to take possession, custody or
control of any property of Payor; or
(d) The Payor shall after any required notice thereunder and after
the expiration of applicable grace periods (i) default in the
repayment of any principal of or the payment of any interest
on any indebtedness, or (ii) breach or violate any term or
provision of any promissory note, loan agreement, mortgage,
indenture or other evidence of such indebtedness, if the
effect of such breach is to permit the acceleration of such
indebtedness.
4. Payor hereby waives demand, notice, presentment,
protest and notice of dishonor.
5. Upon the closing of the Merger Agreement by and among Xxxxxx Xxxxxxx
Boxing, Inc., the Company, Zenascent, Inc. ("Zenascent"), Xxxxxx Xxxxxxx and
Xxxxx XxXxxxxxx, all principal and interest due on this Note shall be converted
into shares of common stock, par value $.001 per share (the "Zenascent Common
Stock"), of Zenascent at a conversion price equal to the Fair Market Value (as
hereinafter defined) of the Zenascent Common Stock. "Fair Market Value" shall
mean the average of the five (5) lowest closing bid prices of the Zenascent
Common Stock during twenty-two (22) trading days immediately preceding date of
the closing of the Merger Agreement; provided, however, that the Fair Market
Value shall not be lower than $0.68 or higher than $1.00.
6. The terms of this Note shall be construed in accordance with the laws
of the State of New York, as applied to contracts entered into by New York
residents within the State of New York, which contracts are to be performed
entirely within the State of New York.
7. Any term of this Note may be amended or waived with the
written consent of Payor and Holder.
XXXXXX XXXXXXX PROMOTIONS, LTD.
By:
--------------------------------
Xxxxxx Xxxxxxx, President
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Exhibit 5.18
Terms to be Contained in the
Big Content Merger Agreement
1. Parties. Xxxxxx Xxxxxxx Boxing, Inc. ("Boxing"), Big Content Acquisition,
Inc., a wholly owned subsidiary of Boxing ("Acquisition"), and Big Content, Inc.
("Big Content").
2. Merger. Acquisition will be merged with and into Big Content (the "Merger")
and Big Content will become a wholly owned subsidiary of Boxing.
3. Merger Consideration. In the Merger:
3.1. All of the stockholders of Big Content will receive their pro rata
portion of 30 shares of common stock of Boxing which, upon the merger
between Acquiror and Boxing (the "Zenascent Merger"), will be converted
into the Series C Stock and the LM Warrant.
3.2. Xxxxxxxxxx will receive a $1,000,000 promissory note, due in 10 years
with interest payable quarterly at the rate of ten percent (10%) per annum
(the "Note").
4. Expense Reimbursement. Upon the closing of the Zenascent Merger, the LM
Holders will be reimbursed for $100,000 of expenses incurred by them in
connection with Big Content, certain transactions between Big Content and Boxing
and the Zenascent Merger. As promptly as reasonably practicable following the
Zenascent Merger, the LM Holders will be reimbursed for an additional $100,000
of expenses incurred by them in connection with Big Content, certain
transactions between Big Content and Boxing and the Zenascent Merger.
5. Consulting Agreement. Effective upon the Zenascent Merger, Big Content and
Xxxxxxxxxx will enter into a ten-year consulting agreement (the "Consulting
Agreement") paying Xxxxxxxxxx $5,000 per week. There shall be a seven (7) day
period to cure any failure to make such payment following written notice of such
failure. In addition, (i) Xxxxxxxxxx shall receive ten percent of the net
revenues (defined as total revenues minus all direct costs) derived by CKP from
any boxing event promoted by CKP with total revenues in excess of $500,000 and
(ii) fifteen percent (15%) of the net proceeds to Zenascent of any financing
consummated following the Zenascent Merger (not including the Second Acquiror
Financing) shall be used to acquire from the LM Holders Series C Preferred Stock
held by them at a price equal to the liquidation preference for such shares. The
Consulting Agreement will terminate upon the receipt by the LM Holders of an
aggregate of (a) $4.3 million (the "Early Payment"), if such amounts are
received no later than March 25, 2005, or (b) $5.3 million, if such amounts are
received no later than March 25, 2012 (the "Regular Payment"), in connection
with all payments under and pursuant to: the Note, Expense Reimbursement,
Consulting Agreement Payments, Commissions, redemption of Series
1
C Stock, proceeds from the sale of Zenascent Common Stock purchased upon
exercise of the LM Warrant or the "Restrictions" set forth below, .
6. Sales Commission Agreement. Acquisition and Xxxxxxxxxx shall enter into a
Sales Commission Agreement whereby Xxxxxxxxxx shall receive a sales commission
(the "Commission") equal to twenty percent (20%) of all net revenues derived by
Acquisition from the exploitation of the boxing library currently owned by Big
Content. The Sales Commission Agreement shall terminate upon the earlier of the
Early Payment or the Regular Payment.
7. Repurchase Option. Upon the earlier payment of the Early Payment or the
Regular Payment, Acquiror shall have the right to redeem all Series C Stock then
owned by the LM Holders for an aggregate purchase price of $10.00.
8. Security Agreement. The LM Holders will have a first priority lien on all of
the assets of Big Content which will secure the Note and the payment obligations
under the Consulting Agreement. In the event of a breach of the Consulting
Agreement by Big Content, all obligations under the Note and the Consulting
Agreement will accelerate and become immediately due and payable.
9. Restrictions. During the term of the Consulting Agreement, Boxing, Xxxxxxx
and XxXxxxxxx shall be subject to the following restrictions:
9.1. Neither Xxxxxxx nor XxXxxxxxx shall transfer, sell, pledge,
hypothecate or otherwise encumber the shares of preferred stock of
Acquiror or Acquiror Common Stock without the express written consent of
English, as Manager of Xxxxxxxxxx, except that Xxxxxxx and XxXxxxxxx may
each sell up to one-half of such shares, and upon any such sale, the
amount received by Xxxxxxx or XxXxxxxxx, as the case may be, shall be
distributed (i) one-half to Xxxxxxxxxx, to satisfy the Early Payment
and/or the Regular Payment, and one-half to the party whose stock was sold
until $2.5 million of the Early Payment and/or the Regular Payment has
been paid and then (ii) one-third to Xxxxxxxxxx, to satisfy the Early
Payment and/or the Regular Payment, and two-thirds to the party whose
stock was sold until the balance of the Early Payment and/or the Regular
Payment has been paid. In addition, any dividends or distributions on
preferred stock of Acquiror or Acquiror Common Stock received by Xxxxxxx
or XxXxxxxxx shall be distributed one-half to Xxxxxxxxxx. Following any
such distribution to Xxxxxxxxxx, Xxxxxxxxxx shall convey and transfer to
the person making such payment Series C Stock with a liquidation
preference equal to the amount so paid.
9.2. For so long as the Note remains unpaid and there is outstanding
Series C Stock owned by the LM Holders, CKP and Big Content shall not
sell, convey or otherwise transfer any of their properties or assets other
than in the ordinary course of business unless such transfer is consented
to by Xxxxxxxxxx.
10. Equity Kicker. Xxxxxxx and XxXxxxxxx will enter into an agreement with
Xxxxxxxxxx that provides that at such time as Xxxxxxx and XxXxxxxxx have
received, directly or indirectly:
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00.0.Xx excess of $10,000,000 and up to $15,000,000 from the sale of
Zenascent Common Stock, each of them shall pay to Xxxxxxxxxx ten percent
(10%) of the net proceeds to them of such excess at the time of any such
sale; and
10.2. In excess of $15,000,000 and up to $50,000,000 from the sale of
Zenascent Common Stock, each of them shall pay to Xxxxxxxxxx fifteen
percent (15%) of the net proceeds to them of such excess at the time of
any such sale.
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