AGREEMENT AND PLAN OF MERGER
by and among
FIN SPORTS U.S.A., INC.,
PTM ACQUISITION CORP.
and
PACIFIC TITLE/MIRAGE, INC.
Dated December 14, 1999
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER.................................................. 1
ARTICLE II REPRESENTATIONS AND WARRANTIES.............................. 4
ARTICLE III COVENANTS................................................... 12
ARTICLE IV CERTAIN COVENANTS........................................... 13
ARTICLE V CONDITIONS.................................................. 15
ARTICLE VI INDEMNIFICATION............................................. 17
ARTICLE VII CLOSING DATE................................................ 18
ARTICLE VIII POST CLOSING MATTERS........................................ 19
ARTICLE IX MISCELLANEOUS............................................... 19
EXHIBIT A CERTIFICATE OF INCORPORATION
EXHIBIT B BY-LAWS
SCHEDULES
i
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 14, 1999 by and among
Pacific Title/Mirage, Inc., a Delaware corporation ("PTM"), Fin Sports U.S.A.,
Inc., a Nevada corporation ("Parent") and PTM Acquisition Corp., a Delaware
corporation ("Sub").
W I T N E S S E T H :
WHEREAS, the respective Board of Directors of PTM, FSI and Sub (sometimes
referred to collectively as the "Constituent Corporations" or individually as a
"Constituent Corporation"), deem it advisable that Sub merge with and into PTM
pursuant to this Agreement and a Certificate of Merger be executed by PTM
("Certificate of Merger"), whereby the holder of shares of capital stock of Sub
outstanding at the Effective Time (as hereinafter defined) will have the right
to receive shares of PTM common stock, $0.01 par value per share (the "PTM
Shares"), and the holders of shares of capital stock of PTM outstanding at the
Effective Time will have the right to receive shares of FSI common stock, $0.001
par value per share (the "FSI Shares"), in the manner and in such amount as is
set forth in Article I hereof and upon the terms and conditions otherwise set
forth in this Agreement (the "Merger"); and
WHEREAS, to effectuate the foregoing, the parties desire to adopt a plan of
reorganization in accordance with the provisions of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties do hereby agree, subject to the
terms and conditions hereinafter set forth, as follows:
ARTICLE I
THE MERGER
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1.1 Execution of Certificate of Merger and Certificate of Merger. Subject
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to the provisions of this Agreement, the Certificate of Merger with respect to
the Merger shall be executed and acknowledged by PTM and thereafter delivered
for filing to the Secretary of State of Delaware on the Closing Date (as
hereinafter defined) of the Merger. The Merger shall become effective upon the
filing of the Certificate of Merger with the Secretary of State of Delaware or
such later time as may be set forth in the Certificate of Merger (the date and
time when the Merger becomes effective shall be called the "Effective Time"). At
the Effective Time, the separate existence of Sub shall cease and it shall be
merged with and into PTM. PTM as it exists from and after the Effective Time, is
sometimes hereinafter referred to as the Surviving Corporation.
1.2 Consummation of the Merger. As soon as practicable after the approval
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of the Merger by the shareholders of PTM and the satisfaction of the other
conditions hereinafter set forth, FSI, Sub and PTM will cause the Merger to be
consummated in accordance with applicable law.
1.3 Conversion of Shares. At the Effective Time, each outstanding share
--------------------
of Sub Capital Stock (the "Sub Shares") (currently 1,000 shares) immediately
prior to the Effective Time shall be canceled and shall be converted into PTM
Shares (at the ratio of one Sub Share for each PTM Share) by virtue of the
Merger and without any action on the part of the holder thereof. At the
Effective Time, the PTM Shares and the PTM Series A Junior Convertible Preferred
Stock of PTM (the "Series A Shares") outstanding immediately prior to the
Effective Time shall be canceled and shall be converted into FSI Shares (at the
ratio of 1.0937432 FSI Shares for each PTM Share and each Series A Share) by
virtue of the Merger and without any action on the part of the holder thereof.
Also at the Effective Time, the PTM Series B Senior Convertible Preferred Stock
of PTM (the "Series B Shares") outstanding immediately prior to the Effective
Time shall be canceled and shall be converted into FSI Shares and xxxxx warrants
for FSI Shares (at the ratio of 0.2856811467 FSI Share and .80806210937 xxxxx
warrant share for each Series B Share) by virtue of the Merger and without any
action on the part of the holder thereof. As a result of the Merger, the holder
of Sub Shares immediately prior to the Effective Time will hold 1,000 PTM Shares
in the aggregate, and the holders of PTM capital stock immediately prior to the
Effective Time will hold 11,294,084 FSI Shares in the aggregate.
1.4 Stock Split; Authorized Shares. Prior to the Effective Time, FSI
------------------------------
shall cause the number of its outstanding shares to be increased from 1,083,324
shares to 1,666,666 shares through a forward split at the ratio of 1.5384741
shares for each FSI Share then outstanding. Prior to the Effective Time, FSI
shall cause its authorized shares to be increased from 50,000,000 shares to
100,000,000 shares.
1.5 Additional Financing. Prior to the Effective Time, FSI shall have
--------------------
received irrevocable subscriptions for the purchase of up to $18,000,000
(6,000,000 Units) at a price of $3.00 per Unit, each Unit consisting of one
share of Common Stock and a warrant for the right to purchase .01 share of
Common Stock at an exercise price of $7.50 per share. Prior to the Effective
Time, a minimum of $8,000,000 shall have been deposited into escrow pursuant to
the terms of the Escrow Agreement, among FSI, MG Securities Group, Inc. and Bank
One, as Escrow Agent.
1.6 Exchange of Certificates. After the Effective Time, each holder of a
------------------------
certificate theretofore evidencing outstanding PTM capital stock (other than
shares held by dissenting shareholders and shares that are automatically
canceled as hereinafter provided), upon surrender of the same to FSI's transfer
agent (the "Transfer Agent") or such other agent or agents as shall be appointed
by FSI, shall be entitled to receive in exchange therefor a certificate or
certificates evidencing the number of full shares of FSI for which the PTM
capital stock theretofore represented by the certificate or certificates so
surrendered shall have been exchanged. Until so surrendered, each outstanding
certificate which, prior to the Effective Time, represented PTM capital stock
(other than shares previously held by dissenting shareholders) will be deemed
for all corporate purposes to evidence ownership of the number of full FSI
Shares for which the PTM capital stock represented thereby were exchanged;
provided, however, that until such outstanding certificates formerly evidencing
PTM capital stock are so surrendered, no dividend payable to holders of record
of FSI Shares as of any date subsequent to the Effective Time shall be paid to
the holder of such outstanding certificates in respect thereof, and all such
amounts shall be held in trust by FSI pending the surrender of such
certificates. After the Effective Time, there shall be no further registry of
transfers on the records of PTM of PTM capital stock
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outstanding prior to the Effective Time and, if a certificate evidencing such
PTM capital stock is presented to FSI, it shall be canceled and exchanged for a
certificate evidencing shares of FSI Shares as herein provided. After the
Effective Time, the holder of the certificate theretofore evidencing outstanding
Sub Shares, upon surrender of the same to PTM or such other agent or agents as
shall be appointed by PTM, shall be entitled to receive in exchange therefor a
certificate or certificates evidencing the number of full shares of PTM Shares
for which the Sub Shares theretofore represented by the certificate or
certificates so surrendered shall have been exchanged. Until so surrendered,
each outstanding certificate which, prior to the Effective Time, represented Sub
Shares will be deemed for all corporate purposes to evidence ownership of the
number of full PTM Shares for which the Sub Shares represented thereby were
exchanged; provided, however, that until such outstanding certificates formerly
evidencing Sub Shares are so surrendered, no dividend payable to holders of
record of PTM Shares as of any date subsequent to the Effective Time shall be
paid to the holder of such outstanding certificates in respect thereof, and all
such amounts shall be held in trust by PTM pending the surrender of such
certificates.
1.7 No Fractional Shares. No fractional FSI Shares will be issued, but in
--------------------
lieu thereof any fractional FSI Shares shall be rounded to the nearest whole
share.
1.8 Change of Name. Simultaneously with the Merger, and at the Effective
--------------
Time, in accordance with the terms of the Certificate of Merger, the Surviving
Corporation's name shall be changed to Lifef/x Networks, Inc., and FSI shall
file a Certificate of Amendment to its Articles of Incorporation changing its
name to "Lifef/x, Inc."
1.9 Certificate of Incorporation: By-laws; Directors. The Certificate of
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Incorporation and By-laws of PTM shall be amended and restated effective as of
the Effective Time in the form attached hereto as Exhibits A and B,
respectively. At the Effective Time, the directors of FSI and PTM shall be as
set forth in Section 8.1 and shall serve for a full year term or until their
successors are duly elected and qualified.
1.10 Option Plan. Effective upon the Merger, FSI shall adopt a stock
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option plan and assume certain of PTM's outstanding stock option obligations and
issue replacement options with appropriate adjustments, if any, as to numbers of
shares and exercise prices affected thereby.
1.11 Co-Obligor. FSI hereby agrees that, effective upon the Merger, FSI
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shall become a co-obligor with PTM with respect to all indebtedness of PTM to
Safeguard Scientifics (Delaware), Inc. and its affiliates (collectively,
"Safeguard") arising on or prior to September 30, 1999 and outstanding as of the
Effective Time (the "Safeguard Debt"). FSI hereby assumes all obligations of PTM
with respect to such indebtedness and agrees to be jointly and severally liable
therefor with PTM. FSI shall execute such further instruments, agreements and
documents as Safeguard may request in order to effectuate the purposes of this
Section.
1.12 Debt Conversion. Promptly following the Merger, the Safeguard Debt
---------------
shall be converted into warrants for 3,997,500 FSI Shares, at an exercise price
of $0.01 per share. Such warrants shall be issued to Safeguard upon surrender of
the promissory notes evidencing the Safeguard Debt (or affidavits of lost notes,
as appropriate).
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1.13 Warrant Carry Forward. Effective upon the Merger, the warrants for
---------------------
11,725,000 PTM Shares held by Safeguard prior to the Merger shall be converted
into warrants for FSI Shares on a share for share basis (1:1). One half of such
warrants shall have an exercise price of $2.50 per share and the other half
shall have an exercise price of $5.00 per share. In addition, at the Closing,
FSI shall grant to Safeguard warrants to purchase 5,862,500 FSI Shares at an
exercise price of $6.00 per share.
1.14 Warrant Terms. All of the warrants issued to Safeguard pursuant to
-------------
Sections 1.12 and 1.13 shall have a term of ten years and shall become
exerciseable one year after the Merger, subject to certain early exercise
provisions set forth in the warrants. FSI shall at all times reserve a
sufficient number of FSI Shares to accommodate the exercise of such warrants.
At the closing, FSI shall grant to Safeguard registration rights for the shares
underlying such warrants on the terms described in its Private Placement
Memorandum, dated October 29, 1999, as amended and supplemented (the "PPM").
1.15 Indemnification Agreement. At the Closing, FSI, PTM and Safeguard
-------------------------
shall execute and deliver a form of indemnification agreement mutually
satisfactory to the parties relating to Safeguard's indemnification of PTM and
FSI with respect to certain liabilities.
1.16 Spin Off. The parties acknowledge and agree that as soon as all
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relevant third party consents and approvals have been obtained, PTM shall
transfer substantially all of the assets and liabilities of its Optical and
Scanning and Recording Divisions to a newly formed entity ("Newco") to be owned
by one or more of PTM's pre-Merger stockholders in exchange for an assumption of
the related liabilities. The parties hereby acknowledge that such transfer may
not occur until after the Effective Time. If and to the extent Newco is formed
prior to the Effective Time, Newco, FSI and PTM shall execute and deliver a form
of indemnification agreement mutually satisfactory to the parties relating to
Newco's indemnification of PTM and FSI with respect to PTM's Optical and
Scanning and Recording Divisions and its now defunct Digital Division.
1.17 Legal Opinion. At the Closing, counsel to FSI shall provide to PTM
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and its stockholders a legal opinion in form and substance satisfactory to PTM
and containing among other things, an opinion that no approval of the FSI
shareholders is required for the Merger or any related transactions (except as
may be described in its Information Statement (the "Information Statement")
filed on November 17, 1999 with the Securities and Exchange Commission
("Commission")).
1.18 Lock Up-Leak Out Agreement. At the Effective Time, FSI shall deliver
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to the other parties thereto a lock up-leak out agreement restricting the sale
of FSI Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
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2.1 Representations and Warranties of FSI and Sub. FSI and Sub represent
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and warrant to PTM, as follows:
(a) Power and Authority. Each of FSI and Sub has the corporate power
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and authority to enter into this Agreement and to carry out its obligations
hereunder. The execution
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and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Boards of Directors of FSI
and Sub, and Sub's sole shareholder and no other corporate proceedings or
approvals on the part of FSI, Sub and their respective shareholders are
necessary to authorize this Agreement and the transactions contemplated hereby.
(b) FSI Financial Statements. FSI has heretofore delivered to PTM
------------------------
its audited Balance Sheet and Income Statements for the fiscal year ended
December 31, 1998 (the "1998 Statements") and its Balance Sheet as at September
30, 1999 (the "September Balance Sheet"). As of the respective dates of the 1998
Statements and the September Balance Sheet (collectively, the "Financial
Statements"), the Financial Statements did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Sub has no assets or liabilities other than
those arising under this Agreement.
(c) No Material Adverse Effect. Except as set forth in Schedule
--------------------------
2.1(c) or in the Financial Statements since September 30, 1999, there has not
been any material adverse change in the business, operations, properties,
assets, condition, financial or otherwise, or prospects of FSI or Sub.
(d) Due Organization; Power; Qualification: Subsidiaries and
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Affiliates, Etc.
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(i) Each of FSI and Sub is a corporation duly organized, validly
existing, and in good standing under the laws of the states of their
respective states of incorporation and has the corporate power to own its
property and to carry on its business as now conducted. The nature of the
business now conducted by FSI and Sub, the character of the property owned
by it, or any other state of facts does not require FSI or Sub to be
qualified to do business as a foreign corporation in any jurisdiction.
Neither FSI nor Sub conducts any active trade or business.
(ii) Except as set forth in Schedule 2.1(d), neither FSI nor Sub
has any subsidiaries or affiliates (as that term is used in the regulations
promulgated under the Securities Act of 1933), as amended (the "Securities
Act").
(e) Capitalization.
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(i) The total authorized capital stock of FSI consists of
50,000,000 shares of common stock ($0.001 par value) as of the date hereof
and shall consist of 100,000,000 shares of common stock ($.001 par value)
as of the Closing Date. As of the date hereof, the aggregate of 1,083,324
FSI Shares and as of the date of the Closing and prior to the Effective
Time 1,666,666 FSI Shares represent all of the issued and outstanding stock
of FSI. The total authorized capital stock of Sub consists of 1,000 shares
of common stock ($0.01 par value). The aggregate of 1000 Sub Shares
represents all of the issued and outstanding stock of Sub. All of the
outstanding FSI Shares and Sub Shares have been duly authorized and validly
issued and are fully paid and non-assessable. All of the issued and
outstanding Sub Shares are held by FSI.
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(ii) Except as set forth on Schedule 2.1(e)(ii) or as
contemplated in the PPM or in Article I hereof, there are no present and on
the Closing Date there will be no outstanding subscriptions, options,
warrants, contracts, calls, puts, agreements, demands or other commitments
or rights of any type to purchase or acquire any securities of FSI or Sub,
nor are there outstanding securities of FSI or Sub which are convertible
into or exchangeable for any shares of capital stock of FSI or Sub, and
each of FSI and Sub has no obligation of any kind to issue any additional
securities.
(f) Financial Information: No Material Adverse Change.
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(i) FSI has furnished to PTM the Financial Statements. The
Financial Statements have been prepared in accordance with generally
accepted accounting principles, and fairly present in all material
respects, the financial condition of FSI as at the respective dates
thereof, and the results of operation of FSI for the periods then ended.
(ii) Since September 30, 1999, there has been no material
adverse change in the business or financial condition or the operations of
FSI except as set forth on Schedule 2.1(f).
(iii) At September 30, 1999, there were no material liabilities,
absolute or contingent of FSI that were not shown or reserved against on
the balance sheets included in the Financial Statements, except obligations
under the contracts shown on or as otherwise disclosed in Schedule 2.1(f).
(iv) Since September 30, 1999, FSI has not sold or otherwise
disposed of or encumbered any of the properties or assets reflected on the
Financial Statements, or other assets owned or leased by it, except in the
ordinary course of business, or as otherwise disclosed on Schedule 2.1(f).
(g) Tax Matters.
-----------
(i) Except as to taxes contested in good faith, each of FSI and
Sub has filed or caused to be filed with the appropriate Federal, state,
county, local and foreign governmental agencies or instrumentalities all
tax returns and tax reports required to be filed, and all taxes,
assessments, fees and other governmental charges have been fully paid when
due (subject to any extensions filed).
(ii) There is not pending nor, to the best knowledge of each of
FSI and Sub, is there any threatened Federal, state or local tax audit of
FSI or Sub. There is no agreement with any Federal, state or local taxing
authority by FSI or Sub that may affect the subsequent tax liabilities of
PTM.
(iii) Without limiting the foregoing: (a) the Financial
Statements include adequate provisions for all taxes, assessments, fees,
penalties and governmental charges which have been or in the future may be
assessed against FSI or Sub with respect to the period then ended and all
periods prior thereto; and (b) neither FSI nor Sub is, on the date hereof,
liable for taxes, assessments, fees or governmental charges.
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(h) No Conflict or Default. Neither the execution and delivery of
----------------------
this Agreement, nor compliance with the terms and provisions hereof, including
without limitation the consummation of the transactions contemplated hereby,
will violate any statute, regulation or ordinance of any governmental authority,
or conflict with or result in the breach of any term, condition or provision of
the Articles of Incorporation, Certificate of Incorporation or By-laws of FSI or
Sub, nor of any agreement, deed, contract, mortgage, indenture, writ, order,
decree, legal obligation or instrument to which FSI or Sub is a party or by
which either of them or any of their assets or properties are or may be bound;
or constitute a default (or an event which, with the lapse of time or the giving
of notice, or both, would constitute a default) thereunder, nor result in the
creation or imposition or any lien, charge or encumbrance, or restriction of any
nature whatsoever with respect to any properties or assets of FSI or Sub, nor
give to others any interest or rights, including rights of termination,
acceleration or cancellation in or with respect to any of the properties,
assets, contracts or business of FSI or Sub.
(i) Party to Agreements. Except as set forth on Schedule 2.1(i),
-------------------
neither FSI nor Sub is a party to any contract or other arrangement except those
made in the ordinary course of business or which are terminable on the giving of
sixty (60) days' (or less) notice of FSI's or Sub's intent to terminate such
contract. Except as set forth on Schedule 2.1(i), neither FSI nor Sub is in
default in any material respect under any contract or agreement to which it is a
party or by which it or any of its assets is or may be bound.
(j) Litigation. There are no actions, suits, investigations, or
----------
proceedings pending, nor, to the knowledge of each of FSI or Sub, threatened
against FSI or Sub, the performance of the terms and conditions hereof, or the
consummation of the transactions contemplated hereby, in any court or by or
before any governmental body or agency, including without limitation any claim,
proceeding or litigation for the purpose of challenging, enjoining or preventing
the execution, delivery or consummation of this Agreement. Neither FSI nor Sub
is subject to any order, judgment, decree, stipulation or consent or any
agreement with any governmental body or agency which affects its business or
operations.
(k) Securities Filings. The common stock of FSI is listed on the
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NASD OTC Electronic Bulletin Board. FSI has heretofore provided to PTM true and
correct copies of its annual report on Form 10-SB dated December 14, 1998 and
its quarterly reports on Form 10Q-SB dated April 19, 1999, July 30, 1999, and
November 12, 1999. All such reports are true, correct and accurate as of the
dates of filing and do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as disclosed on Schedule 2.1(k), no material adverse
change in the business, financial condition or operations of FSI or Sub has
occurred since the date of such reports. Each of FSI and Sub will have on the
Closing Date made all filings required to be made by FSI and Sub with the
Commission and any state securities authorities.
(l) Governmental Approval. Each of FSI and Sub has all permits,
---------------------
licenses, orders and approvals of all Federal, state, local or foreign
governmental or regulatory bodies required for FSI and Sub to conduct its
business as presently conducted. All such permits, licenses, orders and
approvals are in full force and effect and no suspension or cancellation of any
of them is threatened, and none of such permits, licenses, orders or approvals
will be
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affected by the consummation of the transactions contemplated by this Agreement.
No approval or authorization of or filing with any governmental authority on the
part of FSI or Sub is required as a condition to the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby other
than the filing of documents contemplated by this Agreement including without
limitation the Certificate of Merger and the Information Statement.
(m) Salaries. There is set forth on Schedule 2.1(m) annexed hereto
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and made a part hereof, a true and complete list, as of the date of this
Agreement, of all of the persons who are employed by FSI and Sub, together with
their compensation (including bonuses) for the calendar year ended December 31,
1998, and the rate of compensation (including bonus arrangements) currently
being paid to each such employee.
(n) Accrued Compensation. FSI and Sub do not have any outstanding
--------------------
liability for payment of wages, vacation pay (whether accrued or otherwise),
salaries, bonuses, pensions or contributions under any labor or employment
contract, whether oral or written, or by reason of any past practices with
respect to such employees based upon or accruing with respect to services of
present or former employees of FSI or Sub, except as disclosed in Schedule
2.1(n).
(o) Employee Benefit Plans. FSI and Sub do not have any pension
----------------------
plan, profit sharing plan or employee's savings plan, and neither is otherwise
subject to any applicable provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA") except as set forth on Schedule 2.1(o).
(p) Material Contracts, etc. Schedule 2.1(p) contains an accurate
-----------------------
list of all contracts, commitments, leases, instruments, agreements, licenses or
permits, written or oral, to which FSI and/or Sub is a party or by which either
or their respective properties are bound (including without limitation contracts
with customers, joint venture or partnership agreements, contracts with any
labor organizations, employment agreements, consulting agreements, loan
agreements, indemnity or guaranty agreements, bonds, mortgages, options to
purchase land, liens, pledges or other security agreements) that (i) may give
rise to obligations or liabilities exceeding $10,000, (ii) generate revenues or
income exceeding $10,000, or (iii) to which FSI or Sub and any affiliate of FSI
or Sub is a party or any officer, director or shareholder of FSI or Sub is a
party (collectively, the "Material Contracts") as of December 31, 1998 and as of
September 30, 1999.
(q) Title and Authority. To the actual knowledge of FSI and Sub, the
-------------------
shareholders as listed in Schedule 2.1(q) are together the holders of
record and sole beneficial owners of all of the outstanding shares of FSI
Shares and Sub Shares.
(r) Financial Information: Contingent Liabilities.
---------------------------------------------
(i) At September 30, 1999, there were no material liabilities,
absolute or contingent of FSI or Sub that were not shown or reserved
against on the balance sheets included in the Financial Statements, except
obligations under the contracts shown on Schedule 2.1(r).
(ii) Since September 30, 1999, neither FSI nor Sub has sold or
otherwise disposed of or encumbered any of the properties or assets
reflected on the
8
Financial Statements, or otherwise owned or leased by it, except in the
ordinary course or business, or as otherwise disclosed on Schedule 2.1(r).
2.2 Representations and Warranties of PTM: Except as the context
-------------------------------------
otherwise requires, the following representations and warranties are made solely
with respect to PTM's Lifef/x division. PTM represents and warrants to FSI and
Sub as follows:
(a) PTM has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of PTM, and, except for the
approval of PTM's shareholders, no other corporate proceedings on the part of
PTM are necessary to authorize this Agreement and the transactions contemplated
hereby.
(b) PTM has heretofore delivered to Sub (i) minutes of Directors' and
shareholders' meetings and written consents for the period January 1, 1998
through July 29, 1999, and (ii) its Pro Forma Financial Statements for September
30, 1999 giving effect to the Merger (the "PTM Financial Statements").
(c) Except as set forth on Schedule 2.2(c), or in the PTM Financial
Statements since September 30, 1999 there has not been any material adverse
change in the business, operations, properties, assets, condition, financial or
otherwise of PTM.
(d) Due Organization; Power; Qualification; Subsidiaries and
--------------------------------------------------------
Affiliates: Etc.
---------------
(i) PTM is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware and has the
corporate power to own its property and to carry on its business as now
conducted. The nature of the business now conducted by PTM, the character
of the property owned by it, or any other state of facts does not require
PTM to be qualified to do business as a foreign corporation in any
jurisdiction other than the State of California.
(ii) Except as set forth in Schedule 2.2(d), PTM has no
subsidiaries (as that term is used in the regulations promulgated under the
Securities Act).
(e) Capitalization.
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(i) The total authorized capital stock of PTM consists of
25,000,000 shares of common stock, $.01 par value per share, of which
320,100 shares are issued and outstanding as of the date hereof and
20,000,000 shares of Preferred Stock, $.01 par value, of which 8,000,000
shares of Series A Shares and 7,680,000 shares of Series B Shares are
issued and outstanding. All the outstanding PTM capital stock has been duly
authorized and validly issued, and are fully paid and non-assessable.
(ii) There are no present and on the Closing Date there will be
no outstanding options, warrants, convertible securities or rights which
may require PTM to issue additional shares of its capital stock other than
as listed on Schedule 2.2(e).
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(f) Financial Information: No Material Adverse Change.
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(i) At September 30, 1999, there were no material liabilities,
absolute or contingent of PTM that were not shown or reserved against on
the balance sheets included in the PTM Financial Statements, except
obligations under the contracts shown on or as otherwise disclosed in
Schedule 2.2(f).
(ii) Since September 30, 1999, PTM has not sold or otherwise
disposed of or encumbered any of the properties or assets reflected on the
PTM Financial Statements, or other assets owned or leased by it, except in
the ordinary course of business or as contemplated by Section 1.16 or as
otherwise disclosed on Schedule 2.2(f).
(g) Tax Matters.
-----------
(i) Except as to taxes contested in good faith, PTM has filed
or caused to be filed with the appropriate Federal, state, county, local
and foreign governmental agencies or instrumentalities all tax returns and
tax reports required to be filed, and all taxes, assessments, fees and
other governmental charges have been fully paid when due (subject to any
extensions filed).
(ii) There is not pending nor, to the best knowledge of PTM, is
there any threatened Federal, state or local tax audit of PTM. There is no
agreement with any Federal, state or local taxing authority that may affect
the subsequent tax liabilities of PTM.
(iii) Without limiting the foregoing: (a) the PTM Financial
Statements include adequate provisions for all taxes, assessments, fees,
penalties and governmental charges which have been or in the future may be
assessed against PTM with respect to the period then ended and all periods
prior thereto; and (b) PTM is not, on the date hereof, liable for taxes,
assessments, fees or governmental charges.
(h) No Conflict of Default. Except as set forth on Schedule 2.2(h),
----------------------
neither the execution and delivery of this Agreement, nor compliance with the
terms and provisions hereof, including without limitation the consummation of
the transactions contemplated hereby, will violate any statute, regulation or
ordinance of any governmental authority, or conflict with or result in the
breach of any term, condition or provision of the Certificate of Incorporation
or By-laws of PTM, nor of any agreement, deed, contract, mortgage, indenture,
writ, order, decree, legal obligation or instrument to which PTM is a party or
by which it or any of its respective assets or properties are or may be bound;
or constitute a default (or an event which, with the lapse of time or the giving
of notice, or both, would constitute a default) thereunder, nor result in the
creation of imposition of any lien, charge or encumbrance, or restriction of any
nature whatsoever with respect to any properties or assets of PTM, nor give to
others any interest of rights, including rights of termination, acceleration or
cancellation in or with respect to any of the properties, assets, contracts or
business of PTM.
(i) Party to Agreements. Except as set forth on Schedule 2.2(i), PTM
-------------------
is not a party to any contract or other arrangement except those made in the
ordinary course of business or which are terminable on the giving of sixty (60)
days' (or less) notice of PTM's intent to
10
terminate such contract. Except as set forth on Schedule 2.2(i), PTM is not in
default in any material respect under any contract or agreement to which it is a
party or by which it or any of its assets is or may be bound.
(j) Litigation. Except as set forth on Schedule 2.2(j), there are no
----------
actions, suits, investigations, or proceedings pending, nor, to the knowledge of
PTM, threatened, against PTM, the performance of the terms and conditions
hereof, or the consummation of the transactions contemplated hereby, in any
court or by or before any governmental body or agency, including without
limitation any claim, proceeding or litigation for the purpose of challenging,
enjoining or preventing the execution, delivery or consummation of this
Agreement. PTM is not subject to any order, judgment, decree, stipulation or
consent or any agreement with any governmental body or agency which affects its
business or operations.
(k) Governmental Approval. PTM has all permits, licenses, orders and
---------------------
approvals of all Federal, state, local or foreign governmental or regulatory
bodies required for PTM to conduct its business as presently conducted. All such
permits, licenses, orders and approvals are in full force and effect and no
suspension or cancellation of any of them is threatened, and none of such
permits, licenses, orders of approvals will be affected by the consummation of
the transactions contemplated by this Agreement. No approval or authorization of
or filing with any governmental authority on the part of PTM is required as a
condition to the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby other than the filing of documents
contemplated by this Agreement including without limitation the Certificate of
Merger and the Information Statement.
(l) Salaries. There is set forth on Schedule 2.2(l) annexed hereto
--------
and made a part hereof, a true and complete list, as of the date of this
Agreement, of all the persons who are both currently employed by PTM and will be
employed by the Surviving Corporation following the Merger, together with their
compensation (including bonuses) for the calendar year ended December 31, 1998
and the rate of compensation (including bonus arrangements) currently being paid
to each such employee.
(m) Accrued Compensation. PTM does not have any outstanding
--------------------
liability for payment of wages, vacation pay (whether accrued or otherwise),
salaries, bonuses, pensions or contributions under any labor or employment
contract, whether oral or written or by reason of any past practices with
respect to such employees based upon or accruing with respect to services of
present or former employees of PTM, except as disclosed in Schedule 2.2(m) or in
the PTM Financial Statements.
(n) Employee Benefit Plans. PTM does not have any pension plan,
----------------------
profit sharing plan or employees' savings plan, and PTM is not otherwise subject
to any applicable provisions of ERISA except as set forth on Schedule 2.2(n).
(o) Material Contracts, etc. Schedule 2.2(o) contains an accurate
-----------------------
list of all contracts, commitments, leases, instruments, agreements, licenses or
permits, written or oral, to which PTM is a party or by which it or its
properties are bound (including without limitation contracts with customers,
joint venture or partnership agreements, contracts with any labor organizations,
employment agreements, consulting agreements, loan agreements, indemnity or
11
guaranty agreements, bonds, mortgages, options to purchase land, liens, pledges
or other security agreements) (other than those being transferred by PTM in
connection with the spin off contemplated by Section 1.16 hereof) that (i) may
give rise to obligations or liabilities exceeding $10,000, (ii) generate
revenues or income exceeding $10,000, or (iii) to which PTM and any affiliate of
PTM is a party or any officer, director or shareholder of PTM is a party
(collectively, the "Material Contracts").
(p) Title and Authority. To the actual knowledge of PTM, the
-------------------
shareholders as listed in Schedule 2.2(p) are together the holders of record and
sole beneficial owners of all of the outstanding shares of PTM capital stock.
ARTICLE III
COVENANTS
---------
3.1 PTM. PTM agrees that prior to the Closing Date:
---
(a) Except as otherwise contemplated hereby or set forth on Schedule
3.1, no dividend shall be declared or paid by other distribution (whether in
cash, stock, property or any combination thereof) or payment declared or made in
respect to PTM capital stock, nor shall PTM purchase, acquire or redeem or
split, combine or reclassify any shares of its capital stock unless prior to the
record date for such dividend or the effective date of such split, combination
or reclassification, it tenders to FSI its agreement to amend this Agreement so
as to effect an appropriate adjustment in the number of shares deliverable upon
the Effective Time.
(b) Except for such option grants to existing or prospective
employees and consultants as may be contemplated by the PTM Financial Statements
or the PPM (including the capitalization charts set forth therein), no change
shall be made in the number of shares of authorized or issued PTM capital stock;
nor shall any option, warrant, call, right, commitment or agreement of any
character be granted or made by PTM relating to its authorized or issued PTM
capital stock; nor shall PTM issue, grant or sell any securities or obligations
convertible into or exchangeable for shares of PTM capital stock.
(c) PTM will not take, agree to take, or knowingly permit to be taken
any action or do or knowingly permit to be done anything in the conduct of the
business of PTM or otherwise, which would be contrary to or in breach of any of
the terms or provisions of this Agreement, or which would cause any of PTM's
representations and warranties contained herein to be or become untrue in any
material respect at the Closing Date.
(d) Except as set forth on Schedule 2.2(c) or as contemplated by the
PPM or Article I hereof, PTM will not (i) incur any indebtedness for borrowed
money; (ii) assume, guarantee, endorse, or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other individual, firm or corporation, or (iii) make any loans, advances or
capital contributions to or investments in, any other individual, firm or
corporation.
(e) Except as contemplated in the PTM Financial Statements or the
PPM, PTM will not make, alter or change any employment or other contract with
any of its Lifef/x division management personnel or make, adapt, alter, revise,
or amend any pension, bonus,
12
profit-sharing or other employee benefit plan, or grant any salary increase or
bonus to any person in its Lifef/x division without prior written consent of FSI
or Sub, except for normal year-end or anniversary salary adjustments for
employees, excluding officers.
3.2 FSI and Sub. Each of FSI and Sub agree that prior to the Closing Date:
-----------
(a) Except as set forth in Section 1.4 hereof, no dividend shall be
declared or paid or other distribution (whether in cash, stock, property or any
combination thereof) or payment declared or made in respect of FSI Shares or Sub
Shares, nor shall FSI or Sub purchase, acquire or redeem or split, combine or
reclassify any shares of its capital stock unless prior to the record date for
such dividend or the effective date of such split, combination or
reclassification, it tenders to PTM its agreement to amend this Agreement so as
to effect an appropriate adjustment in the number of shares deliverable upon the
Effective Time.
(b) Except as contemplated by the PPM or set forth in Sections 1.4
and 1.5 hereof, no change shall be made in the number of shares of authorized or
issued FSI Shares or Sub Shares; nor shall any option, warrant, call, right,
commitment or agreement of any character be granted or made by FSI or Sub
relating to its authorized or issued FSI Shares or Sub Shares; nor shall FSI or
Sub issue, grant or sell any securities or obligations convertible into or
exchangeable for shares of FSI Shares or Sub Shares.
(c) Neither FSI nor Sub will take, agree to take, or knowingly permit
to be taken any action, or do or knowingly permit to be done anything in the
conduct of the business of FSI or Sub or otherwise, which would be contrary to
or in breach of any of the terms or provisions of this Agreement, or which would
cause any of FSI's or Sub's representations and warranties contained herein to
be or become untrue in any material respect at the Closing Date including
without limitation amending FSI's or Sub's charter documents and By-laws, except
as otherwise provided hereby.
(d) Except as contemplated by Article I, neither FSI nor Sub will (i)
incur any indebtedness for borrowed money; (ii) assume, guarantee, endorse, or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other individual, firm or corporation; or
(iii) make any loans, advances or capital contributions to or investments in,
any other individual, firm or corporation.
(e) Neither FSI nor Sub will not make, alter or change any employment
or other contract with any of its management personnel or make, adopt, alter,
revise, or amend any pension, bonus, profit-sharing or other employee benefit
plan, or grant any salary increase or bonus to any person without the prior
written consent of PTM, except for normal year end or anniversary salary
adjustments for employees, excluding officers.
ARTICLE IV
CERTAIN COVENANTS
-----------------
4.1 Shareholders' Meeting. PTM will take all actions necessary in
---------------------
accordance with applicable law and its Certificate of Incorporation and By-laws
to convene a meeting or obtain the written consent of its stockholders as
promptly as practicable to consider and vote upon the approval of the Merger.
13
4.2 Conduct of Business Pending the Merger. Prior to the effective date
--------------------------------------
of the Merger, unless FSI, Sub and PTM shall otherwise agree in writing, each
company shall not (i) operate its business otherwise than in the ordinary
course, or (ii) authorize, recommend or propose any merger, consolidation,
acquisition of assets, disposition of assets, material change in its
capitalization or any comparable event, not in the ordinary course of business
(in each case, other than the transactions contemplated hereby or in the PPM and
transactions as to which written notice has been given to the other company
prior to the date hereof).
4.3 Information Provided by FSI and Sub. The information to be provided
-----------------------------------
by FSI and Sub for use in the Information Statement to be used in connection
with the Merger, shall, at the time such information is provided and at the
Effective Time, be true and correct in all material respects and shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein to make the statements made, in the light of the
circumstances under which they were made, not misleading.
4.4 Information Provided by PTM. The information to be provided by PTM
---------------------------
for use in the Information Statement to be used in connection with the Merger,
shall, at the time such information is provided to FSI and at the Effective
Time, be true and correct in all material respects and shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein to make the statements made, in the light of the circumstances
under which they were made, not misleading.
4.5 Information Statement. In connection with the preparation of the
---------------------
Information Statement and/or any other filings, PTM, FSI and Sub will cooperate
with each other and will furnish the information relating to PTM, FSI and Sub,
as the case may be, required by the Securities Act and/or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to be set forth in such
Information Statement and/or any other filings.
4.6 Disclosure. Each party acknowledges that it has, and will have,
----------
possession of important confidential information ("Confidential Information")
regarding the other parties. Each party hereto agrees that it shall not use any
confidential information except in furtherance of the transactions contemplated
hereby and shall not divulge, communicate, furnish or make accessible any
Confidential Information to any person, firm, partnership, corporation or other
entity. No party hereto shall make any public statement from the date of this
Agreement forward, including without limitation any press release, with respect
to this Agreement and the transactions contemplated hereby, without the prior
written consent of the other parties (which consent may not be unreasonably
withheld), except as may be required by law, in which case the parties shall
consult with each other as to the nature and scope of the required disclosure
and any protective measures which should be taken to preserve the
confidentiality of the disclosed information. If any party becomes legally
compelled to disclose information relating to this Agreement, such party shall
provide the other parties with notice of such requirement to allow such party to
seek a protective order or other remedy. If such protective order or other
remedy is not obtained, or if compliance hereof is waived, each party agrees to
disclose only that portion of information which is legally required to be
disclosed and to permit the other parties at their expense to take all
reasonable steps to preserve the confidentiality of the transactions hereunder.
14
4.7 Recommendation of Approval. The Board of Directors of FSI, Sub and
--------------------------
PTM shall continue to recommend to their respective shareholders approval of
this Agreement and the Merger except as the fiduciary obligations and other
duties of each such Board of Directors may otherwise require.
4.8 Access. Prior to the closing, PTM shall afford to the officers,
------
attorneys, accountants, and other authorized representatives of FSI and Sub free
and full access to the premises, books and records of PTM in order that FSI and
Sub may make such investigation as it may desire of the affairs of PTM, provided
such access is not unreasonably disruptive to PTM's business or the sale of its
two divisions. Prior to the closing, FSI and Sub shall afford to the officers,
attorneys, accountants, and other authorized representatives of PTM free and
full access to the premises, books and records of FSI and Sub so that either of
them may make such investigations as it may desire of the affairs of FSI and
Sub, provided such access is not unreasonably disruptive to FSI and Sub.
4.9 No Solicitation. None of PTM, FSI and Sub will (nor will any of them
---------------
permit any agent or affiliate to) solicit, initiate or encourage any Acquisition
Proposal (as hereinafter defined) or furnish any information to, or cooperate
with, any person, corporation, firm or other entity with respect to an
Acquisition Proposal. As used herein "Acquisition Proposal" means a proposal for
a merger or other business combination involving such entity or for the
acquisition of a substantial equity interest in, or a substantial portion of the
assets of such entity other than the Merger, the spin off of PTM's assets
relating to PTM's optical and scanning and records divisions as contemplated by
Article I hereof and any disposition of the residual assets and liabilities of
PTM's now-defunct digital division.
ARTICLE V
CONDITIONS
----------
5.1 Conditions to the Obligations of FSI and Sub. The obligations of FSI
--------------------------------------------
and Sub to consummate the Merger contemplated by this Agreement are subject to
the satisfaction, at or before the consummation of the Merger, of each of the
following conditions:
(a) No action shall have been taken, and no statute, rule, regulation
or order shall have been promulgated, enacted, entered, enforced or deemed
applicable to the Merger by any Federal, state or foreign government or
governmental authority or by any court, domestic or foreign, including entry of
a preliminary or permanent injunction, which would (i) make the Merger illegal,
(ii) require the divestiture by FSI or Sub or any other subsidiary of FSI or Sub
of the shares of any company or of a material portion of the business of FSI or
Sub and their respective subsidiaries taken as a whole, (iii) impose material
limits on the ability of FSI or Sub to effectively control the business of FSI
or Sub and their respective subsidiaries, (iv) otherwise materially adversely
affect FSI or Sub and their respective subsidiaries taken as a whole, or (v) if
the Merger is consummated, subject any officer, director, or employee of FSI or
Sub to criminal penalties or to civil liabilities not adequately covered by
insurance or enforceable indemnification maintained by FSI or Sub;
(b) No action or proceeding before any court or governmental
authority, domestic or foreign, by any government or governmental authority or
by any other person,
15
domestic or foreign, shall be threatened, instituted or pending which would
reasonably be expected to result in any way of the consequences referred to
in clauses (i) through (v) of paragraph (a) above;
(c) PTM shall have complied in all material respects with its
agreements and covenants herein, and all representations and warranties of PTM
herein shall be true and correct in all material respects at the time of
consummation of the Merger as if made at that time, except to the extent they
expressly relate to an earlier date, and FSI and Sub shall each have received a
certificate to that effect to the best of the knowledge of PTM, signed by the
Chief Executive Officer of PTM;
(d) The holders of no more than ten percent (10%) of the issued and
outstanding PTM capital stock with respect to which the Merger is proposed shall
have exercised their right to dissent as dissenting stockholders.
5.2 Conditions to the Obligations of PTM. The obligations of PTM to
------------------------------------
consummate the Merger are subject to the satisfaction, at or before the
consummation of the Merger, of each of the following conditions:
(a) The stockholders of PTM shall have duly approved the Merger in
accordance with applicable law;
(b) No action shall have been taken, and no statute, rule, regulation
or order shall have been promulgated, enacted, entered, enforced or deemed
applicable to the Merger by any Federal, state or foreign government or
governmental authority or by any court, domestic or foreign, including the
entry of a preliminary or permanent injunction, which would (i) make the
Merger illegal, (ii) require the divestiture by PTM or any other subsidiary
of PTM of the shares of any company or of a material portion of the
business of PTM and its subsidiaries taken as a whole, (iii) impose
material limits on the ability of PTM to effectively control the business
of PTM and its subsidiaries, (iv) otherwise materially adversely affect PTM
and its subsidiaries taken as a whole or (v) if the Merger is consummated,
subject any officer, director or employee of PTM to criminal penalties or
to civil liabilities not adequately covered by insurance or enforceable
indemnification maintained by PTM;
(c) No action or proceeding before any court or governmental
authority, domestic or foreign, by any government or governmental authority or
by any other person, domestic or foreign, shall be threatened, instituted or
pending which would reasonably be expected to result in any of the consequences
referred to in clauses (i) through (v) of paragraph (b) above;
(d) FSI and Sub shall each have complied in all material respects
with their respective agreements and covenants herein, and all representations
and warranties of FSI and Sub herein shall be true and correct in all material
respects at the time of consummation of the Merger as if made at that time,
except to the extent they expressly relate to an earlier date, and PTM shall
have received a certificate to that effect to the best of the knowledge of each
of FSI and Sub, signed by the Presidents of each of FSI and Sub;
16
(e) All necessary third party and governmental consents and approvals
required for the Merger shall have been obtained; and
(f) FSI shall have changed its name to Lifef/x, Inc., shall have
caused the number of its outstanding FSI Shares to be increased from 1,083,324
shares to 1,666,666 shares through a forward stock split and shall have caused
the number of its authorized shares to be increased from 50,000,000 shares to
100,000,000 shares.
5.3 Conditions to Each Party's Obligations. The obligation of each party
--------------------------------------
to consummate the Merger contemplated by this Agreement is subject to the
satisfaction, at or before the consummation of the Merger, of each of the
following conditions:
(a) The Information Statement shall be filed under the Exchange Act
and shall not be subject to a stop order or any threatened stop order;
(b) FSI shall have received subscriptions for financing in form and
substance satisfactory to FSI and PTM.
ARTICLE VI
INDEMNIFICATION
---------------
6.1 By FSI and Sub. FSI and Sub, jointly and severally, hereby agree, to
--------------
indemnify and hold PTM, its officers, directors, employees and agents and each
person, if any, who controls PTM within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act harmless from and against the
following:
(a) Any and all liabilities, losses, claims, costs, expenses, damages
and judgments (including, without limitation, any legal or other expenses
incurred in connection with investigating or defending any matter, including any
action, that could give rise to such liabilities, losses, claims, costs,
expenses, damages and judgments) (collectively, the "Losses") resulting from any
breach of any representation or warranty, or non-performance of any covenant or
agreement on the part of FSI or Sub contained in this Agreement or in any
statement or certificate furnished or to be furnished by FSI or Sub pursuant
hereto or in connection with the transactions contemplated hereby; and
(b) Any and all Losses they suffer resulting from any untrue
statement or alleged untrue statement of a material fact concerning FSI or Sub
contained in the Information Statement and the PPM or resulting from any
omission or alleged omission to state therein a material fact concerning FSI or
Sub required to be stated therein or necessary to make the statements therein
concerning FSI or Sub not misleading.
6.2 By PTM. PTM, hereby agrees to indemnify and hold FSI and Sub, their
------
respective officers, directors, employees and agents and each person, if any,
who controls FSI or Sub within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act harmless from and against the following:
(a) Any and all Losses resulting from any breach of any
representation or warranty, or non-performance of any covenant or agreement on
the part of PTM contained in this
17
Agreement or in any statement or certificate furnished or to be furnished by PTM
pursuant hereto or in connection with the transactions contemplated hereby; and
(b) Any and all Losses they suffer resulting from any untrue
statement or alleged untrue statement of a material fact concerning PTM
furnished in writing to FSI or Sub by PTM expressly for use in the Information
Statement and the PPM or resulting from any omission or alleged omission to
state in any such writing a material fact concerning PTM required to be stated
therein or necessary to make the statements therein concerning PTM not
misleading.
6.3 Defense. In case any action shall be commenced involving any person
-------
in respect of which indemnity may be sought pursuant to Section 6.1 or 6.2 (the
"Indemnified Party"), the Indemnified Party shall promptly notify the person
against whom such indemnity may be sought (the "Indemnifying Party") in writing
and the Indemnifying Party shall assume the defense of such action. Any
Indemnified Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the Indemnifying Party or (ii) the Indemnifying Party shall have failed to
timely assume the defense of such action. No Indemnified Party shall, without
the prior written consent of the Indemnifying Party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action.
6.4 Exclusive Remedy. The remedies provided for in this Section 6 are the
----------------
exclusive remedies of the parties with respect to the breach of any
representation, warranty, covenant or agreement set forth herein.
ARTICLE VII
CLOSING DATE
------------
7.1 The closing for the consummation of the Merger contemplated by this
Agreement shall unless another date or place is agreed to in writing by the
parties hereto, take place at the offices of Xxxxxx Xxxxxx Xxxxx Xxxx & Xxxxxx,
LLP, on the date which is no later than the fifth business day after the last to
occur of the following dates:
(a) The date the stockholders of PTM shall have given the approval
referred to in, Section 4.1, hereof; or
(b) The date on which all the other conditions set forth in Article V
hereof shall have been satisfied, except to the extent any such conditions shall
have been waived by FSI, Sub or PTM; or
(c) The Termination Date pursuant to the PPM unless the Termination
Date is extended; or
(d) February 28, 2000.
18
ARTICLE VIII
POST CLOSING MATTERS
--------------------
8.1 Directors and Officers. At the closing, FSI will cause all of its
----------------------
officers and directors to resign from office and to cause to be elected to the
Board of Directors of FSI and the Surviving Corporation those persons designated
by PTM, to wit:
FSI directors: Xxxxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxxx, Xxx
Xxxxxx and Xxxxxx Xxxxxxxx;
Surviving Corporation directors: Xxxxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxxxxxx and
Xxxxxxx Xxxxxxx.
8.2 Registration Statement. FSI shall file a registration statement as
----------------------
soon as practicable after the Closing but in no event later than 150 days after
the date hereof to ensure that the FSI Shares issued hereunder to the holders
thereof (the "Holders"), are registered for resale under the Securities Act.
FSI shall, until such time as such FSI Shares may be sold under Rule 144
under the Act without volume limitation:
(a) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for the Requisite
Period as defined in the registration rights agreements to be executed by FSI in
connection with the financing described in Section 1.5.
(b) execute such further documents and instruments and take such
further actions as may be necessary, proper or advisable in order to facilitate
the public offering of such FSI Shares under the aforesaid registration
statement.
FSI shall pay the expenses for the registration statement(s) filed pursuant
to this Section 8.2, except for underwriting discounts and commissions, which
shall be borne by the Holders.
8.3 Downstream of Offering Proceeds. Within one business day following
-------------------------------
the closing of the financing described in Section 1.5, FSI shall contribute to
PTM the proceeds of such financing, less any deductions for transaction fees,
including, without limitation, legal fees.
8.4 SHI Warrant. If and to the extent Savage Holdings, Inc. ("SHI")
-----------
exercises its warrant granted by PTM, at an exercise price of $500,000, FSI
shall issue to SHI 166,667 Units in full satisfaction of PTM's obligations
thereunder.
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Termination. With respect to each company, this Agreement may be
-----------
terminated and the Merger may be abandoned (i) by the mutual consent of FSI and
PTM at any time; (ii) by either PTM or FSI if the Merger has not been
consummated prior to February 28, 2000. In the
19
event of such termination and abandonment, none of FSI, Sub nor PTM (or any of
their directors or officers) shall have any liability or further obligation to
any other party to this Agreement, except that nothing herein will relieve any
party from liability for any willful breach of this Agreement.
9.2 Expenses. Whether or not the Merger is consummated, all out-of-pocket
--------
costs and expenses incurred in connection with the Merger and this Agreement
will be paid by the party incurring such expenses, except that PTM shall bear
all auditing costs relating to the books and records of PTM, all legal costs and
fees for preparing registration statements to be filed with the Federal and/or
state securities agencies, proxy statements, proxy solicitation costs, proxy
mailing costs, due diligence fees and costs, costs and fees of any registration
statements and legal fees and costs in preparation of merger and related
documents (including legal fees and costs to Robson, Ferber, Frost, Chan &
Xxxxxx as counsel to PTM's consultants, not to exceed $35,000).
9.3 Brokers. No broker or finder is entitled to any brokerage or finder's
-------
fee or other commission or fee from any company or based upon arrangements made
by or on behalf of any company with respect to the transactions contemplated by
this Agreement, except as disclosed on Schedule 9.3 annexed hereto.
9.4 Arbitration. Any controversy arising out of, connected to, or
-----------
relating to any transactions herein contemplated, or this Agreement, or the
breach thereof, including, but not limited to any claims of violations of
Federal and/or state securities laws, banking statues, consumer protection
statutes, Federal and/or state anti-racketeering (e.g. RICO) claims as well as
any common law claims and any state law claims of fraud, negligence, negligent
misrepresentations, and/or conversion and any disputes as to the arbitrability
of any such claim shall be settled by arbitration in Los Angeles County, State
of California; and in accordance with the commercial rules of the American
Arbitration Association. Any judgment on the arbitrator's award may be entered
in any court having jurisdiction thereof. In the event of such a dispute, FSI
and Sub, on the one hand, and PTM, on the other hand, shall each select an
arbitrator, both of whom shall select a third arbitrator which shall constitute
the three person arbitration board. The decision of a majority of the board of
arbitrators, who shall render their decision within thirty (30) days of
appointment of the final arbitrator, shall be binding upon the parties.
9.5 Other Actions. Each of the parties hereto agrees to execute and
-------------
deliver such other documents, certificates, agreements and other writings and to
take such other actions as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
9.6 Entire Agreement; Waiver and Amendment. This Agreement, the exhibits
--------------------------------------
and schedules hereto and the PPM contain the entire agreement by and among FSI,
Sub and PTM with respect to the Merger and the other transactions contemplated
hereby. Any and all prior discussions, negotiations, commitments and
understandings relating to the subject matter of this Agreement are superseded
by this Agreement. This Agreement may not be modified, amended or terminated
except by a written agreement specifically referring to this Agreement signed by
all of the parties hereto. No waiver of any breach or default hereunder shall be
considered valid unless in writing signed by the party giving such waiver, and
no such waiver shall be deemed a waiver of any subsequent breach or default of
the same or similar nature.
20
9.7 Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Delaware without regard to its
principles of conflicts of laws.
9.8 Descriptive Headings. The descriptive headings are for convenience of
--------------------
referenced only and shall not affect in any way the meaning or interpretation of
this Agreement.
9.9 Notices. All notes or other communications hereunder shall be in
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writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail postage prepaid, addressed as follows:
If to FSI or Sub, to: Fin Sports U.S.A., Inc.
0000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxxxxxxx, Esq.
Hermes Building, Suite 205
455 East Xxxxx Xxxxx
Xxxx Xxxx Xxxx, XX 00000-0000
If to PTM, to: Pacific Title/Mirage, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx XX 00000
with a copy to:
Loeb & Loeb LLP
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
and in all cases with a copy to:
Xxxxxx Xxxxxx Xxxxx Xxxx & Xxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
9.10 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first
hereinabove written.
FIN SPORTS U.S.A., INC.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------------
Xxxxx Xxxxxxx , President
---------------------
PTM ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------------
Xxxxx Xxxxxxx , President
---------------------
PACIFIC TITLE/MIRAGE, INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
-----------------------------------------
Xxxxxxx Xxxxxxxxxx, CEO
[AGREEMENT AND PLAN OF MERGER]
22
EXHIBITS AND SCHEDULES OMITTED
