AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), entered into this __ day
of July 1997 by and among AMERICAN UNITED GLOBAL, INC., a Delaware corporation
("AUGI"), having its principal offices at 00000 XX 00xx Xxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxxxx 00000; IDF INTERNATIONAL, INC., a New York corporation
("IDF") having its office and principal place of business located at 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; TECHSTAR ACQUISITION CORP., a Delaware
corporation ("Mergerco"), having its principal offices at 000 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000; and TECHSTAR COMMUNICATIONS, INC., a Delaware
corporation ("TechStar"), having its principal offices at 0000 Xxxx Xxxx
Xxxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, AUGI is the record and beneficial owner of one hundred percent
(100%) of the issued and outstanding shares of the capital stock of TechStar;
and
WHEREAS, (a) Mergerco, a wholly-owned direct subsidiary of IDF, has been
formed solely for the purpose of merging with TechStar; the effect of which
merger is to enable IDF to acquire all of the issued and outstanding shares of
capital stock of TechStar as at the effective date of the merger (hereinafter,
referred to as the "Stock") pursuant to the merger and for the consideration
hereinafter provided for (the "Merger"); and
WHEREAS, AUGI, the respective Boards of Directors of each of (a) IDF, (b)
TechStar, (c) Mergerco, and (d) AUGI (as the sole stockholder of TechStar), have
all authorized and approved the Merger and the consummation of the other
transactions contemplated by this Agreement, all on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth, the parties hereby covenant and agree
as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below:
1.1 "Affiliate". of a specified person means a person who directly
or indirectly through one or more intermediaries controls, is controlled by, or
is under common control with, such specified person;
1.2 "beneficial owner". with respect to any shares means a person
who shall be deemed to be the beneficial owner of such shares (i) which
such person or any of its affiliates or associates (as such term is
defined in Rule 12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or any of its
affiliates or associates has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or subject only to
the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights, exchange
rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom
such person or any of its affiliates
or associates or any person with whom such person or any of its affiliates
or associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any such shares;
1.3 "business day". means any day on which the principal offices of
the Securities and Exchange Commission ("SEC") in Washington, D.C. are
open to accept filings, or, in the case of determining a date when any
payment is due, any day on which banks are not required or authorized to
close in the City of New York, New York;
1.4 "IDF Business". shall mean the business of providing
professional engineering and consulting services to state and local
governmental agencies, major corporations, developers and other clients
concentrated primarily in the northeast region of the United States.
1.5 "IDF 8% Debentures". shall mean the $________ (not to exceed
$50,000) of IDF's 8% senior subordinated convertible debentures due 1995,
which are currently convertible into shares of IDF Common Stock at a
conversion price of approximately $.179 per share.
1.6 "TechStar Business". shall mean the business of providing site
acquisition, zoning, architectural and engineering services to the
wireless communications industry.
1.7 "IDF Group" shall mean IDF, its Subsidiaries, including H-W and
(following the Merger) TechStar, and any partnerships in which IDF or any
Subsidiary has an interest, when taken as a whole;
1.8 "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
1.9 "Governmental Authority" shall mean any nation or government,
foreign or domestic, and any territory, possession, protectorate,
province, state, county, parish, regional authority, metropolitan
authority, city, town, village, other locality, or other political
subdivision or agency, regulatory body, or other authority, commission,
tribunal, representative or official thereof, and any Person (as such term
is hereinafter defined) exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
1.10 "Knowledge" means (a) as to TechStar, the actual knowledge of
any of Xxxxx X. Xxxxxx ("Xxxxxx"), Xxxxxx Xxxxxxx ("Xxxxxxx") and Xxxxxxxx
Moskona ("Moskona"), together with the knowledge that Xxxxxx, Xxxxxxx or
Moskona would have had after making due inquiry of the officers of
TechStar who have responsibility for the subject matter in question and
who report directly to them; and (b) as to IDF, the actual knowledge of
Lembit Kald and Xxxxxx Xxxxxxx, together with the knowledge that Lembit
Kald or Xxxxxx Xxxxxxx would have had after making due inquiry of the
officers of IDF
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and H-W who have responsibility for the subject matter in question and who
report directly to them.
1.11 "person" means an individual, corporation, limited liability
company, partnership, limited partnership, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government;
1.12 "Real Estate" means, with respect to the person in question or
any Subsidiary of such person, as applicable, all of the fee or leasehold
ownership right, title and interest of such person, in and to all real
estate and improvements owned or leased by any such person and which is
used by any such person in connection with the operation of its business.
1.13 "Subsidiary" or "Subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which
such person (either above or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of
such corporation or other legal entity. H-W is a Subsidiary of IDF.
1.14 "Fully-Diluted IDF Equity". shall mean, as at the applicable
date, the sum of (i) all of the shares of IDF capital stock which shall be
issued and outstanding, plus (ii) that number of additional shares of IDF
capital stock which are issuable upon the exercise of all IDF stock options and
warrants which are issued and outstanding (including the TechStar Options) or
upon conversion into common stock of all IDF notes, preferred stock, notes,
debentures, rights or other securities convertible into IDF common stock;
provided, however, that the term "Fully-Diluted IDF Equity" shall not include or
give effect to any shares of IDF capital stock issuable upon the conversion of
any notes or other securities, or upon the exercise of any warrants, issued in
connection with the Merger Financing.
1.15 "H-W". shall mean Hayden/Xxxxxx, Inc., a New York corporation,
and an indirect wholly-owned Subsidiary of IDF.
1.16 "IDF Common Stock". shall mean the 120,000,000 shares of common
stock, $.001 par value per share, of IDF authorized for issuance pursuant to the
Certificate of Incorporation of IDF.
1.17 "Merger Financing". shall mean the sale solely to accredited
investors (as defined in Regulation D under the Securities Act of 1933, as
amended) of additional shares of capital stock and/or subordinated long-term
notes of IDF (which notes shall automatically convert to IDF preferred stock,
once authorized by the IDF shareholders, at the rate of $1.25 per share, subject
to adjustment, and shall be convertible into shares of common stock of IDF
pending such authorization), which shall result in an aggregate amount of not
less than $1.75 million and not more than $2.25 million of gross proceeds to IDF
(inclusive of $250,000 of such securities to be purchased by Xxxxxx, Xxxxxxx and
Moskona), all upon such terms and conditions as are set forth in Exhibit A
annexed hereto and made a part hereof, or upon such other terms and conditions
as shall be satisfactory to the respective Boards of Directors of each of IDF,
AUGI and TechStar.
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1.18 "TechStar Option Shares". shall mean the aggregate of 988,327
shares of IDF Common Stock represented by the sum of: (a) the 856,550 shares of
IDF Common Stock issuable upon permitted exercise of certain incentive stock
options (the "TechStar Options") to be issued to Xxxxxx, Xxxxxxx and Moskona
pursuant to the TechStar Employment Agreements; and (b) the 131,777 shares of
IDF Common Stock issuable upon permitted exercise of certain TechStar Options
granted to certain key employees of TechStar pursuant to the Side Letter
Agreement annexed hereto as Exhibit G and made a part hereof.
1.19 "TechStar Employment Agreements". shall mean the separate
employment agreements expiring November 30, 2000 among IDF, TechStar and H-W
with each of Messrs. Xxxxxx, Xxxxxxx and Moskona, in substantially the form of
Exhibits X-0, X-0 and B-3 annexed hereto.
1.19 "Lien" shall mean any mortgage, deed of trust, trust, pledge,
vendors' or other lien or charge of any kind (including any agreement to give
any of the foregoing), any conditional sale or other title retention agreement,
any lease in the nature of any of the foregoing, any claim, security interest,
assignment, or encumbrance of any kind, any negative lien and the filing of or
agreement to give any financing statement or similar notice of security
interest.
1.20 "Permit" shall mean any license, permit, franchise, clearance,
waiver, certificate, registration, order, authorization, consent, approval,
administrative finding or directive of, or release by any Governmental
Authority, except for such, the failure to have, maintain or continue in force
(including by reason of the Merger), has not and is not expected to have, a
material adverse effect on TechStar or IDF and its properties, assets or
businesses.
2. THE MERGER.
2.1 The Merger.
At the time of the Closing on the Closing Date (as such terms
are hereinafter defined) and in accordance with the provisions of this Agreement
and the applicable provisions of the Delaware General TechStar Law ("Delaware
Law"), Mergerco shall be merged with and into TechStar, with TechStar as the
surviving corporation of the Merger. The Merger shall be in accordance with the
terms and conditions of this Agreement and a certificate of merger in
substantially the form of Exhibit "A" annexed hereto (the "Certificate of
Merger"), with TechStar as the surviving corporation of such Merger (TechStar
being hereinafter sometimes referred to as the "Surviving Corporation").
Thereupon, the separate existence of Mergerco shall cease, and TechStar as the
Surviving Corporation of the Merger, shall continue its corporate existence
under Delaware Law.
2.2 Effectiveness of the Merger. As soon as practicable upon or
after the satisfaction or waiver of the conditions precedent set forth in
Section 7 below, or waiver of such performance by the party or parties for whose
benefit such covenants or agreements are to be performed, Mergerco and TechStar
(if required under Delaware Law) will execute the Certificate of Merger (subject
to such revisions as to form (but not substance) as may be required by the
relevant provisions of Delaware Law), and shall file or cause to be filed such
Certificate of
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Merger with the Secretary of State of Delaware; and the Merger shall become
effective as of the date of the filing of such Certificate of Merger, which
shall occur on the "Closing Date" (as hereinafter defined), and the Closing
shall be deemed to occur as of such Closing Date in accordance with Section 10
hereof.
2.3 Effect of the Merger. Upon the effectiveness of the Merger: (a)
the Surviving Corporation shall own and possess all assets and property of every
kind and description, and every interest therein, wherever located, and all
rights, privileges, immunities, powers, franchises and authority of a public as
well as of a private nature, of each of Mergerco and TechStar (the "Constituent
Corporations"), and all obligations owed to, belonging to or due to each of the
Constituent Corporations, all of which shall be vested in the Surviving
Corporation pursuant to Delaware Law without further act or deed, and (b) the
Surviving Corporation shall be liable for all claims, liabilities and
obligations of the Constituent Corporations, all of which shall become and
remain the obligations of the Surviving Corporation pursuant to Delaware Law
without further act or deed.
2.4 Surviving Corporation. Upon the effectiveness of the Merger, the
Certificate of Incorporation, By-Laws and directors of the Surviving Corporation
shall be identical to those of TechStar as in effect immediately prior to the
effectiveness of the Merger.
2.5 Status and Conversion of Securities. At the Closing Date and
upon the effectiveness of the Merger:
(a) Treasury Stock. Each share of capital stock of TechStar,
if any, held by TechStar as treasury stock immediately prior to the
effectiveness of the Merger shall be canceled and extinguished, and no payment
or issuance of any consideration shall be payable or shall be made in respect
thereof;
(b) Options and Warrants. As of the date of this Agreement
there are, and at the Closing Date there shall be, no options, warrants, rights,
or other agreements to acquire any securities of TechStar, or any securities
directly or indirectly convertible into or exchangeable for or exercisable to
acquire the same, and no agreements to issue or acquire or dispose of any of the
foregoing.
(c) Treatment of Mergerco Common Stock. Each of the one
hundred (100) issued and outstanding shares of common stock of Mergerco, $.01
par value per share (the "Mergerco Common Stock"), all of which shall be owned
by IDF immediately prior to the Closing Date of the Merger, shall, upon the
effectiveness of the Merger, be converted into one (1) share of Common Stock,
$.01 par value per share, of TechStar.
(d) Treatment of TechStar Stock. Each share of the Stock of
TechStar outstanding immediately prior to the effectiveness of the Merger shall
be canceled and extinguished and converted into the right to receive the Merger
Consideration payable pursuant to Section 3 below. Such Merger Consideration
shall be paid and delivered to AUGI, as the sole record and beneficial owner of
the outstanding Stock upon surrender to the Surviving Corporation of the
certificates representing such shares of outstanding Stock (all of which shall
be delivered free and clear of any and all pledges, Liens (as such term is
hereinafter defined), claims, charges, options, calls, encumbrances,
restrictions and assessments whatsoever, except any restrictions which may be
created by operation of state or federal securities laws) at the time
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and place of the Closing as provided in Section 10 below.
2.6 Books and Records. On the Closing Date, all of the stock books,
records and minute books of TechStar, all financial and accounting books and
records of TechStar and, except as may otherwise be agreed by the parties to
this Agreement at the Closing, all referral, client, customer and sales records
of TechStar, shall be the property of the Surviving Corporation.
2.7 Tax Free Reorganization. The parties to this Agreement intend
for the transactions whereby TechStar, as the Surviving Corporation upon
consummation of the Merger, will become a wholly-owned subsidiary of IDF and
AUGI shall receive the Merger Consideration upon consummation of the Merger,
shall be treated as a tax free reorganization within the meaning of Section
368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as
amended (the "Code").
3. MERGER CONSIDERATION.
3.1 Merger Consideration. On consummation of the Merger, AUGI, as
the record owner of all of the outstanding shares of Stock of TechStar, shall
receive in consideration for the Stock (the "Merger Consideration") that number
of shares of the voting capital stock of IDF as shall represent (a) sixty-six
(66%) percent of the Fully-Diluted IDF Equity immediately after giving effect to
consummation of the the Merger, less (b) the TechStar Option Shares. Based upon
(i) the Fully Diluted IDF Equity outstanding as at the date of this Agreement,
and (ii) assuming the full cash redemption and retirement of all outstanding IDF
8% Debentures as provided in Section 7.4(c) hereof, it is intended that the
aggregate Merger Consideration issuable to AUGI on the Closing Date shall
consist of 6,039,776 shares of IDF Common Stock. Such Merger Consideration shall
be subject to adjustment as provided in Section 3.3 hereof.
3.2 Contemplated IDF Capitalization. Subject to adjustment as
provided in Section 3.3 below, it is anticipated that the pro-forma equity
capital of IDF will be allocated, as follows: (a) 56.7% of the Fully-Diluted IDF
Equity immediately after giving effect to consummation of the the Merger, or
6,039,776 shares of IDF Common Stock will be owned by AUGI, (b) 9.3% of the
Fully-Diluted IDF Equity immediately after giving effect to consummation of the
the Merger, or 988,327 shares of IDF Common Stock, are represented by TechStar
Option Shares, and (c) 34% of the Fully-Diluted IDF Equity immediately after
giving effect to consummation of the the Merger, or 3,620,538 shares of IDF
Common Stock shall be owned of record by existing IDF stockholders or are
issuable upon exercise of stock options held by current IDF stockholders and
option holders.
3.3 Adjustment to Merger Consideration. The aggregate number of
shares of IDF Common Stock constituting the Merger Consideration and the
aggregate number of shares of IDF Common Stock constituting the TechStar Option
Shares shall be subject to adjustment on or after the Closing Date, upon the
occurrence of any of the following:
(a) In the event of issuance of any additional shares of IDF
Common Stock or other Fully-Diluted IDF Equity between the date of this
Agreement and the Closing Date, the 6,039,776 shares of IDF Common Stock and the
988,327 TechStar Option Shares, shall be proportionately increased to such
number of shares as shall represent 56.7% and 9.3%,
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respectively of the Fully-Diluted IDF Equity as at the Closing Date immediately
after consummation of the Merger and after giving effect to (i) the issuance of
such Merger Consideration, and (ii) the potential issuance of TechStar Option
Shares;
(b) In the event of issuance of any additional shares of IDF
Common Stock subsequent to the Closing Date pursuant to the exercise or
conversion of Fully-Diluted IDF Equity outstanding at the Closing Date
(including, without limitation, all shares of IDF Common Stock potentially
issuable upon conversion of remaining IDF 8% Debentures), the shares of IDF
Common Stock representing the Merger Consideration and the TechStar Option
Shares, shall be proportionately increased to such number of shares as shall
represent 56.7% and 9.3%, respectively of the Fully-Diluted IDF Equity as at the
Closing Date immediately after consummation of the Merger and after giving
effect to (i) the exercise or conversion of such Fully-Diluted IDF Equity, (ii)
the issuance of such Merger Consideration and (iii) the potential issuance of
TechStar Option Shares;
(c) In the event that any of the TechStar Options issued
pursuant to the TechStar Employment Agreements shall, following the Closing
Date, terminate or be cancelled without having vested and being exercised, AUGI
shall be entitled to receive, as additional Merger Consideration, that number of
shares of IDF Common Stock which shall be equal to the number of TechStar Option
Shares not issued as a result of the termination or cancellation of such
TechStar Options.
4. REPRESENTATIONS AND WARRANTIES OF AUGI AND TECHSTAR.
Each of TechStar and AUGI hereby jointly and severally represent and
warrant to Mergerco and IDF as follows, it being understood and agreed that
neither IDF nor Mergerco is or will be required to undertake any independent
investigation to determine the truth, accuracy and completeness of the
representations and warranties made by AUGI in this Agreement, and it being
further understood and agreed that the survival of each such representation and
warranty shall be as set forth in Section 12.2(d) of this Agreement:
4.1 Ownership of the Stock.
The number of shares of authorized and outstanding Stock, the
record owner thereof, and the record addresses and social security number or tax
identification number of AUGI, is as set forth on Schedule 4.1 annexed hereto.
AUGI is the legal and beneficial owner of all of the shares of the Stock listed
on Schedule 4.1 hereto, free and clear of all pledges, Liens, claims, charges,
options, calls, encumbrances, restrictions and assessments whatsoever, except
for (i) certain rights of Xxxxxx, Xxxxxxx and Moskona under their respective
employment agreements with TechStar, dated as of December 11, 1996 for Xxxxxxx
and Moskona and as of May 12, 1997 for Xxxxxx (the "Prior Employment
Agreements") which shall be cancelled and rescinded ab initio as at the Closing
Date of the Merger, or (ii) any restrictions which may be created by operation
of state or federal securities laws (which restrictions are set forth on such
Schedule 4.1). All of the Stock has been duly authorized and validly issued, and
is fully paid and non-assessable and has been issued pursuant to an appropriate
exemption from the registration requirements of the Securities Act and the
various states. TechStar has no treasury stock.
4.2 Valid and Binding Agreement.
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(a) The execution, delivery and performance by AUGI and
TechStar of this Agreement, the Certificate of Merger, the Non-Competition and
Non-Disclosure Agreement (as defined in Section 7.1(g) hereof), and the other
instruments, agreements and written undertakings of AUGI and TechStar, and each
of them, which are executed in connection therewith and to which it or they,
respectively are parties (collectively, the "AUGI Transaction Agreements") and
the consummation of the Merger and the other transactions contemplated hereby,
have been duly and validly authorized by the Board of Directors of TechStar and
AUGI, and each of AUGI and TechStar has the full corporate right, power and
authority to execute and deliver this Agreement and the AUGI Transaction
Agreements to which each is a party, to perform its and their respective
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. This Agreement constitutes, and when executed
and delivered, the AUGI Transaction Agreements to which each is a party will
constitute, respectively, the legal, valid and binding obligation of AUGI and
TechStar, enforceable against them in accordance with its and their respective
terms, except to the extent limited by bankruptcy, insolvency, reorganization
and other laws affecting creditors rights generally, and except with respect to
remedies, the enforcement of which vests in the discretion of courts of
equitable jurisdiction.
(b) AUGI and TechStar each has full legal right, power and
authority to execute and deliver this Agreement and the AUGI Transaction
Agreements to which such person is a party, and to consummate the transactions
contemplated hereby and thereby. This Agreement and, when executed and
delivered, the AUGI Transaction Agreements to which AUGI and/or TechStar is a
party, constitutes and will constitute the legal, valid and binding obligations
of such person, enforceable against such person in accordance with their
respective terms, except to the extent limited by bankruptcy, insolvency,
reorganization and other laws affecting creditors rights generally, and except
with respect to remedies, the enforcement of which vests in the discretion of
courts of equitable jurisdiction.
4.3 Organization, Good Standing and Qualification; Ownership of
Assets of Business.
(a) Each of AUGI and TechStar: (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (ii) has all necessary corporate power and authority to carry on its
business and to own, lease and operate its properties; and (iii) is not
required, by the nature of its properties or business, to be qualified to do
business as a foreign corporation in any other foreign jurisdiction in which the
failure to be so qualified would have a material adverse effect on AUGI or
TechStar, its properties or assets, its business, or its condition (financial or
otherwise). Neither AUGI nor TechStar is required to be registered as an
investment advisor or investment company, as such terms are defined in the
Investment Advisers Act of 1940 and Investment Company Act of 1940,
respectively.
(b) TechStar has no Subsidiary corporations.
(c) True and complete copies of the Certificate of
Incorporation and By-Laws of TechStar (including all amendments thereto), and a
correct and complete list of the officers and directors of TechStar, are annexed
hereto as Schedule 4.3.
(d) TechStar owns all of the assets, including Intellectual
Property (as
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that term is hereinafter defined), if any, used in connection with the operation
of the TechStar Business, free and clear of all liens, pledges, claims, charges,
encumbrances, assessments and other restrictions and limitations whatsoever.
4.4 Capital Structure; Stock Ownership.
(a) Except as set forth in Schedule 4.4 annexed hereto (all of
which agreements and commitments will be terminated and canceled as of the
Closing Date, without any payment by TechStar, if there are any at the date
hereof), there are no outstanding subscriptions, options, rights, warrants,
convertible securities or other agreements or calls, demands or commitments: (i)
obligating TechStar to issue, transfer or purchase any shares of its capital
stock, or (ii) obligating AUGI to transfer any shares of the Stock owned by such
stockholder. Other than in respect of the stock purchase rights described in
Schedule 4.4 (all of which shall be terminated and canceled as of the Closing
Date, without any payment by TechStar, if there are any at the date hereof), no
shares of capital stock of TechStar are reserved for issuance pursuant to stock
options, warrants, agreements or other rights to purchase capital stock.
(b) When issued and delivered pursuant to this Agreement, all
of the Stock will be validly issued, fully-paid and non-assessable, owned by
AUGI free and clear of all pledges, Liens, claims, charges, encumbrances,
assessments, pre-emptive rights and other restrictions and limitations
whatsoever.
4.5 TechStar Investments. TechStar does not own, directly or
indirectly, any stock or other equity securities of any corporation or entity,
and does not have any direct or indirect equity or ownership interest in any
person other than the businesses conducted by TechStar.
4.6 Financial Information.
(a) Annexed hereto as Schedule 4.6(a) are (i) the unaudited
financial statements of TechStar as at April 30, 1997 and for the fiscal period
from December 12, 1996 to April 30, 1997, including balance sheet, statements of
operations, statements of stockholders' equity, and statements of cash flow, all
as prepared by the management of TechStar (the "TechStar Unaudited Financial
Statements"); and (ii) the audited financial statements of TechStar as at
December 31, 1995 and September 30, 1996 and for the fiscal year and nine (9)
months then ended, including balance sheets, statements of operations,
statements of stockholders' equity, and statements of cash flow, as audited by
Xxxxxxx Radin & Co., P.C., independent public accountants (the "TechStar Audited
Financial Statements"). Such TechStar Unaudited Financial Statements and
TechStar Audited Financial Statements are herein collectively referred to as the
"TechStar Financial Statements."
(b) The TechStar Financial Statements: (i) are true, complete
and correct in all respects and present fairly the financial position of
TechStar as of the dates thereof and for the periods reflected therein, all in
conformity with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis; (ii) make full and adequate provision, in
accordance with GAAP, for the various assets and liabilities of TechStar on a
basis and the results of its operations and
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transactions in its accounts, as of the dates and for the periods referred to
therein; (iii) reflect only assets and liabilities and results of operations and
transactions of TechStar, and do not include or reflect any assets, liabilities
or transactions of any corporation or entity except TechStar; and (iv) were
prepared from, and are consistent with, the books and records of TechStar, which
accurately and consistently reflect all transactions to which TechStar was and
is a party; provided, that the TechStar Unaudited Financial Statements omit
footnote disclosures required under GAAP and are subject to fiscal year end
audit adjustments which would not, individually or in the aggregate, be
material. All such TechStar Financial Statements are incorporated in and made a
part hereof and have been made part of the offering materials with respect to
the Merger Financing.
(c) Except as expressly set forth in the TechStar Financial
Statements and/or in the Schedules to this Agreement, or arising in the normal
course of TechStar's business since April 30, 1997, there are as at the date
hereof, no liabilities or obligations (including, without limitation, any tax
liabilities or accruals) of TechStar, whether absolute, accrued, contingent or
otherwise and whether due or to become due, that are, singly or in the
aggregate, material.
4.7 No Material Changes. Except as and to the extent described in
Schedule 4.7 annexed hereto (which Schedule may make reference to any other
Schedule hereto or to any other document(s) referred to in this Agreement which
has heretofore or herewith been delivered to IDF), since April 30, 1997, the
business of TechStar has continued to be operated only in the ordinary course,
and there has not been:
(a) Any material adverse change in the condition (financial or
otherwise), operations, business, properties, or prospects of TechStar from that
shown in the most recent TechStar Unaudited Financial Statements, or any
material transaction or commitment effected or entered into outside of the
normal course of the TechStar Business other than in connection with the Merger;
(b) Any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting the business, operations,
assets, properties, condition (financial or otherwise), or prospects of
TechStar;
(c) Any declaration, setting aside or payment of any dividend
or other distribution with respect to the Stock, any other payment of any kind
by TechStar to AUGI or any of its Affiliates outside of the ordinary course of
business, any forgiveness of any debt or obligation owed to TechStar by any of
its stockholders or any of their respective Affiliates, or any direct or
indirect redemption, purchase or other acquisition by TechStar of any capital
stock of TechStar;
(d) Any other event or condition arising from or out of or in
connection with the operation of TechStar which has materially and adversely
affected, or may reasonably be expected to materially and adversely affect,
TechStar, its assets or properties, its business, condition (financial or
otherwise), or prospects;
(e) Except to the extent set forth in the Prior TechStar
Employment Agreements or on Schedule 4.7 annexed hereto, no bonuses or salary
increases shall be made to senior executive officers or other members of the
management of TechStar; or
(f) no shares of Stock or other securities of TechStar shall
be redeemed or
10
otherwise repurchased and no additional shares of voting capital stock of
TechStar, or notes, debentures, warrants or other securities exercisable into or
convertible for shares of voting capital stock of TechStar, shall be issued to
any person other than AUGI.
4.8 Tax Returns and Tax Audits.
(a) Except as and to the extent disclosed in Schedule 4.8
annexed hereto: (i) on the date hereof, all foreign, federal, state, and local
tax returns and tax reports required to be filed by TechStar on or before the
date of this Agreement have been timely filed with the appropriate governmental
agencies in all jurisdictions in which such returns and reports are required to
be filed, except for such prior failures to file in timely fashion as have been
subsequently followed by complete and proper filing and payment of all amounts
due in respect thereof, including interest and penalties, if any; (ii) all
foreign, federal, state, and local income, franchise, sales, use, property,
excise, and other taxes (including interest and penalties and including
estimated tax installments where required to be filed and paid) due from or with
respect to TechStar as of the date hereof have been fully paid, and appropriate
accruals shall have been made on TechStar's books for taxes not yet due and
payable; (iii) as of the date hereof, all taxes and other assessments and levies
which TechStar is required by law to withhold or to collect on or before the
date hereof have been duly withheld and collected, and have been paid over to
the proper governmental authorities to the extent due and payable on or before
the date hereof; (iv) there are no outstanding or pending claims, deficiencies
or assessments for taxes, interest or penalties with respect to any taxable
period of TechStar, except claims for taxes not yet due and payable; and (v) no
tax Liens have been filed on TechStar's assets. At and after the Closing Date,
TechStar will have no liability for any foreign, federal, state, or local income
tax with respect to any taxable period ending on or before the Closing Date,
except as and to the extent disclosed in Schedule 4.8, if any.
(b) There are no audits pending or, to the knowledge of
TechStar and AUGI, threatened, with respect to any foreign, federal, state, or
local tax returns of TechStar, and no waivers of statutes of limitations have
been given or requested with respect to any tax years or tax filings of
TechStar. No presently pending assessments of tax deficiencies have been made
against TechStar or with respect to its income, receipts or net worth, and no
extensions of time are in effect for the assessment of deficiencies against
TechStar. TechStar has not received notice of any claim by any authority in a
jurisdiction in which TechStar does business and does not file tax returns that
TechStar or its income, receipts or net worth may be subject to tax in that
jurisdiction. TechStar is not a party to any tax-sharing or allocation
agreement, nor does TechStar owe any amount under any tax-sharing or allocation
agreement. TechStar has no liability for unpaid taxes because it once was a
member of an "affiliated group" within the meaning of Section 1502 of the Code.
4.9 Personal Property; Liens. TechStar has and owns good and
marketable title to all of its personal property, including without limitation,
all computer software, database and other intellectual property, free and clear
of all Liens whatsoever, except for: (a) Liens securing TechStar's indebtedness
for money borrowed, if any, as reflected in the Financial Statements, pursuant
to the security agreements listed in Schedule 4.9 annexed hereto; (b) Liens
securing the deferred purchase price of machinery, equipment, vehicles and/or
other fixed assets, if any, as reflected in the Financial Statements or as
incurred after the date thereof in the ordinary course of
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business of TechStar, pursuant to security agreements listed in Schedule 4.9;
(c) materialmen's, workmen's and other similar statutory liens arising in the
ordinary course of business, none of which are material singly or in the
aggregate, (d) Liens for taxes not yet due and payable, and (e) other Liens
which individually or in the aggregate are immaterial in amount and character
(each of the Liens described in clauses (a) through (e) of this sentence being
hereinafter referred to as "Permitted Liens"). The aggregate book value of all
items of machinery, equipment, vehicles, and other fixed assets owned or leased
by TechStar does not exceed $500,000, and all of such fixed assets are in good
operating condition and repair (reasonable wear and tear excepted) and are
adequate for their use in the TechStar Business as presently conducted.
4.10 Real Property.
(a) TechStar neither owns nor has any interest of any kind
(whether ownership, lease or otherwise) in any real property except to the
extent of TechStar's leasehold interests under the leases for its business
premises, if any, true and complete copies of which leases (including all
amendments thereto) are annexed hereto as Schedule 4.10 (the "Leases").
(b) TechStar and, to TechStar's and AUGI's knowledge, the
landlords thereunder are presently in compliance in all material respects with
all of their respective obligations under the Leases, and the premises leased
thereunder are in good condition (reasonable wear and tear excepted) and are
adequate for the operation of the TechStar Business.
(c) TechStar is in actual possession of the properties demised
under the Leases. The Leases are free and clear of any Lien or any sublease or
right of occupancy granted by TechStar, except as set forth on Schedule 4.10
hereto, if at all.
(d) TechStar has the right of ingress and egress through a
public road or street, to and from the properties demised under the Leases.
(e) The properties demised under the Leases and the
improvements thereon constitute all of the real property and leases currently
used exclusively or materially for the TechStar Business and are adequate and
sufficient for the current operations of TechStar and the TechStar Business.
(f) To the knowledge of TechStar and AUGI, there is no pending
proceeding for the taking or condemnation of all or any portion of the
properties demised under the Leases or pending taking or condemnation proceeding
which would result in a termination of any Lease of real property, and none of
the same is threatened.
(g) There are no material items of maintenance that have been
materially deferred with respect to any of the improvements on the real property
demised under the Leases.
(h) TechStar has received no uncured notice from applicable
governmental authorities of any outstanding violations of any building or zoning
laws, codes or regulations, or governmental or judicial orders issued pursuant
thereto, with respect to the real property and the improvements thereon demised
under the Leases, and there are no such violations.
4.11 Accounts Receivable. All accounts receivable shown on the
balance sheet as of April 30, 1997 included in the TechStar Financial Statements
(the "Balance Sheet"), and all
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accounts receivable thereafter created or acquired by TechStar prior to the
Closing Date, have arisen or will arise in the ordinary course of the TechStar
Business. Except as set forth on Schedule 4.11 annexed hereto, to the best of
AUGI's knowledge (but without guaranteeing the collectibility of any accounts
receivable) all of such accounts receivable (a) are and will be subject to no
counterclaims, set-offs, allowances or discounts of any kind, except to the
extent of the allowance for doubtful accounts as of the April 30, 1997 reflected
in the Balance Sheet, and (b) have been, are and will be valid and collectible
in the ordinary course of business within two hundred and ten (210) days after
the Closing Date (subject to the aforesaid allowance for doubtful accounts),
without necessity of instituting any legal proceedings for collection.
4.12 Inventories. All supplies and other inventories shown on the
Balance Sheet, and all inventories thereafter acquired by TechStar prior to the
Closing Date, have been and will be valued at the lower of cost or market, are
owned by TechStar, which has good and marketable title thereto, and consisted
and will consist of items which are of a quality and quantity which are clean,
current, saleable and useable in the ordinary course of the TechStar Business
for customary commercial purposes, and are substantially at TechStar's normal
working levels of the same in the current conduct of its businesses in the
ordinary course.
4.13 Insurance Policies. Schedule 4.13 annexed hereto contains a
true and correct schedule of all insurance coverages held by TechStar concerning
its businesses and properties (including but not limited to professional
liability insurance). All such policies are in full force and effect and
TechStar is not in default thereunder in any material respect. To the knowledge
of TechStar and AUGI, such policies provide adequate insurance coverage for
TechStar, its properties and businesses, as presently conducted.
4.14 Permits and Licenses; Consents. TechStar possesses and is in
material compliance with every Permit of any Governmental Authority having
jurisdiction over TechStar, or its businesses, properties, or assets, necessary
in order to operate its businesses in the manner presently conducted; all of
TechStar's Permits are valid, current and in full force and effect; and none of
such Permits will be voided, revoked or terminated, or are voidable, revocable
or terminable, upon and by reason of the Merger and the change of ownership of
TechStar pursuant to this Agreement. Schedule 4.14 hereto lists all of the
Permits of or in respect of any Governmental Authority or any other Person (as
such term is hereinafter defined) which are required for the execution or
delivery by TechStar and AUGI of this Agreement and the consummation of the
transactions contemplated hereby.
13
4.15 Contracts and Commitments.
(a) Schedule 4.15 annexed hereto lists all material contracts,
leases, commitments, technology agreements, software development agreements,
software licenses, indentures and other agreements to which TechStar is a party
(collectively, "Material Contracts") including, without limitation, the
following: (i) any contract for the purchase of equipment, supplies, other
materials, or other inventory items other than purchase orders for supplies
entered into in the ordinary course of business; (ii) any contract related to
the purchase or lease of any capital asset involving aggregate payments of more
than $5,000 per annum that is not cancelable by TechStar on less than thirty
(30) days notice; (iii) all technology agreements, software development
agreements and software licenses (except for pre-printed shrinkwrap licenses for
commercially available and non-custom software applications) involving TechStar
or any Affiliate of TechStar, regardless of the duration thereof or the amount
of payments called for or required thereunder; (iv) any guarantee, make-whole
agreement, or similar agreement or undertaking to support, directly or
indirectly, the financial or other condition of any other person or entity; (v)
each contract for or relating to the employment of any officer, employee,
technician, agent, consultant, or advisor to or for TechStar that is not
cancelable by TechStar without penalty, premium or liability (for severance or
otherwise) on less than thirty (30) days' prior written notice; (vi) license,
royalty, franchise, distributorship, dealer, manufacturer's representative,
agency and advertising agreements; (vii) any contract with any collective
bargaining unit; (viii) any mortgage of real property; (ix) any factoring
agreement with respect to the accounts receivable of TechStar; (x) any pledge or
other security agreement by TechStar other than guaranties entered into in the
ordinary course of business which are not material to TechStar, (xi) any joint
venture agreement or similar arrangement; (xii) any non-competition agreement or
similar arrangement; and (xiii) any contract, lease, commitment, indenture, or
other agreement to which TechStar is a party that may not be terminated without
penalty, premium or liability by TechStar on not more than thirty (30) days'
prior written notice.
(b) Except as set forth in Schedule 4.15: (i) all Material
Contracts are in full force and effect; (ii) TechStar and, to the knowledge of
TechStar and AUGI, the other parties thereto, each are in compliance with all of
their respective obligations under the Material Contracts in all material
respects, and are not in breach or default thereunder, nor has there occurred
any condition or event which, after notice or lapse of time or both, would
constitute a default thereunder; and (iii) none of the Material Contracts will
be voided, revoked or terminated, or voidable, revocable or terminable, in whole
or in part, upon and by reason of the Merger and the change of ownership of
TechStar pursuant to this Agreement or otherwise as a result of the transactions
contemplated hereby.
(c) No purchase commitment by TechStar is in excess of the
normal, ordinary and usual requirements of the business of TechStar.
(d) There is no outstanding power of attorney granted by
TechStar to any person, firm or corporation for any purpose whatsoever.
4.16 Customers and Suppliers. Neither AUGI nor TechStar has actual
knowledge of any existing, announced or anticipated changes in the policies of,
or the relationships with, or the business of, any material clients, customers,
or suppliers of TechStar which could materially adversely affect TechStar or its
condition, financial or otherwise, business, or prospects.
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4.17 Labor, Benefit and Employment Agreements.
(a) Except as set forth in Schedule 4.17 annexed hereto,
TechStar is not a party to any agreement with respect to the employment or
compensation of any non-hourly and/or non-union employee(s). TechStar is not
now, nor has it ever been, a party to or subject to any collective bargaining
agreement or other labor agreement. Schedule 4.17 sets forth the amount of all
compensation or remuneration (including any discretionary bonuses) paid by
TechStar during the 1996 calendar year or to be paid by TechStar during the 1997
calendar year to employees or consultants who presently receive aggregate
compensation or remuneration at an annual rate in excess of $50,000.
(b) No union is now certified or, to the best of the knowledge
of TechStar and AUGI, claims to be certified as a collective bargaining agent to
represent any employees of TechStar, and there are no labor disputes existing
or, to the best of the knowledge of TechStar and AUGI, threatened, involving
strikes, slowdowns, work stoppages, job actions or lockouts of any employees of
TechStar.
(c) There are no unfair labor practice charges or petitions
for election pending or being litigated before the National Labor Relations
Board or any other federal or state labor commission relating to any employees
of TechStar. Except as set forth on Schedule 4.17, TechStar has not received any
written notice of any actual or alleged violation of any law, regulation, order
or contract term affecting the collective bargaining rights of employees, equal
opportunity in employment, or employee health, safety, welfare or wages and
hours.
(d) TechStar has not, at any time, been and is not now
required to make contributions to, be a party to or covered by (or had any of
its employees covered by), and has not withdrawn from (partially or otherwise),
and has not had and does not have any obligations to or in respect of any
"multiemployer plan" (as defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")).
(e) Except as disclosed in Schedule 4.17, TechStar does not
maintain, or have any liabilities or obligations of any kind with respect to,
any bonus, commission, deferred compensation, excess benefits, pension, thrift,
savings, employee ownership, salary continuation, severance, profit sharing,
retirement, supplemental retirement, or other such benefit plan, and does not
have any potential or contingent liability in respect of any actions or
transactions relating to any such plan other than to make contributions thereto
if, as, and when due in respect of periods subsequent to the date hereof.
Without limitation of the foregoing, (i) TechStar has made all required
contributions to or in respect of any and all such benefit plans, (ii) no
"accumulated funding deficiency" (as defined in Section 412 of the Code has been
incurred in respect of any of such benefit plans, and the present value of all
vested accrued benefits thereunder does not, on the date hereof, exceed the
assets of any such plan allocable to the vested accrued benefits thereunder,
(iii) there has been no "prohibited transaction" (as defined in Section 4975 of
the Code) with respect to any such plan, and no transaction which could give
rise to any tax or penalty under Section 4975 of the Code or Section 502 of
ERISA, and (iv) there has been no "reportable event" (within the meaning of
Section 4043(b) of ERISA) with respect to any such plan. All of such plans which
constitute, are intended to constitute, or have been treated by TechStar as
"employee pension benefit plans" or other plans within Section 3 of ERISA have
been determined by the Internal Revenue Service to be "qualified" under Section
401(a) of the
15
Code, and have been administered and are in compliance with ERISA and the Code;
and neither TechStar nor AUGI has any knowledge of any state of facts,
conditions or occurrences such as would impair the "qualified" status of any of
such plans.
(f) Except for the group insurance programs or 401(k) plan
listed in Schedule 4.17, TechStar does not maintain any medical, health, life,
dental, short- or long-term disability, hospitalization, accident, death
benefits, or other employee benefit insurance programs, or sick leave or
vacation or holiday or leave policies, or any welfare plans (within the meaning
of Section 3(1) of ERISA) for the benefit of any current or former employees,
and, except as required by law, TechStar has no liability, fixed or contingent,
for health or medical benefits to any former employee.
4.18 No Breach of Statute, Decree or Other Instrument.
(a) Except as set forth in Schedule 4.18 annexed hereto and as
otherwise would not have a material adverse effect on the existing businesses,
assets, financial condition or prospects of TechStar: (i) neither the execution
and delivery of this Agreement or any other TechStar Agreement by TechStar
and/or AUGI, nor the performance of, or compliance with, the terms and
provisions of this Agreement or any other TechStar Agreement on the part of
TechStar and/or AUGI, will violate or conflict with any term of the Certificate
of Incorporation or By-Laws of TechStar or, to the knowledge of TechStar and
AUGI, any statute, law, rule or regulation of any governmental authority
affecting the existing business of TechStar, or will cause or permit the
material modification of the effect of, the imposition of any Lien in respect
of, or the acceleration of any obligations or terms or the termination of any
rights or imposition of any burdens under, or conflict with, result in a breach
of, or constitute a default under, any of the terms, conditions or provisions of
any judgment, order, award, injunction or decree, or any of the material terms,
conditions or provisions of any contract, lease, agreement, indenture or other
instrument to which TechStar or AUGI is a party or by which TechStar or AUGI is
bound; and (ii) no consent, authorization or approval of or filing with any
governmental authority or agency, or any third party, will be required on the
part of TechStar or AUGI as conditions precedent to the consummation of the
transactions contemplated hereby, or result in the cancellation of any Permits
presently held by TechStar which are required for the operation of its business
as conducted on the date hereof.
(b) In connection with and as respects the Merger, TechStar
and AUGI have waived any and all rights which it or they may have (by way of
right of first refusal, right of first offer, or otherwise) to purchase any of
the Stock by reason of the proposed disposition thereof by AUGI pursuant to the
Merger. In addition, by its execution of this Agreement, AUGI does hereby waive
any rights of appraisal which it may have under the Delaware General Corporation
Law.
16
4.19 Compliance with Laws.
(a) Except as set forth in Schedule 4.19 to this Agreement,
TechStar has been, and is now in compliance (except to the extent, disclosed on
Schedule 4.19, that incidental and non-material non-compliance has not had and
can not reasonably be expected to have a material adverse effect on TechStar,
its properties or assets, its businesses, its condition (financial or
otherwise), or its prospects) with each of the following which is applicable to
or binding upon or affecting TechStar or its properties, assets, or business, or
to which TechStar, or its properties, assets, or business are subject: every
statute, ordinance, code or other law, treaty, rule, regulation, order,
technical or other standard, requirement or procedure existing, enacted,
adopted, administered, enforced, or promulgated, by any Governmental Authority
(each of the foregoing, a "Law"), and every Permit, and every order, judgment,
writ, injunction, award, decree, demand, assessment or determination of any
arbitrator and of every Governmental Authority (each of the foregoing, an
"Order"; each Law, Permit, and Order being sometimes hereinafter referred to as
a "Requirement of Law"). Neither TechStar nor its properties, assets, or
business are subject to or directly affected by any Requirement of Law of any
Governmental Authority, other than those similarly affecting similar enterprises
engaged in a material way in the same business activities.
(b) TechStar has not, at any time, to the knowledge of AUGI:
(i) acquired, handled, utilized, stored, generated, processed, transported, or
disposed of any hazardous or toxic substances, whether in violation of any
foreign, federal, state, or local environmental or occupational health and
safety laws or regulations or otherwise, (ii) otherwise committed any material
violation of any foreign, federal, state, or local environmental or occupational
health and safety laws or regulations (including, without limitation, the
provisions of the Environmental Protection Act and other applicable
environmental statutes and regulations) or any violation of the Occupational
Safety and Health Act, or (iii) been in violation of any material requirements
of its insurance carriers from time to time.
(c) Neither TechStar nor any of its directors, officers or
employees has received any written notice of default or violation, nor, to the
best of the knowledge of TechStar and AUGI, is TechStar or any of its directors,
officers or employees in default or violation, with respect to any judgment,
order, writ, injunction, decree, demand or assessment issued by any court or any
federal, state, local, municipal, or other governmental agency, board,
commission, bureau, instrumentality or department, domestic or foreign, relating
to any aspect of TechStar's business, affairs, properties, or assets. Neither
TechStar nor any of its directors, officers or employees, has received written
notice of, been charged with, or, to its or their knowledge, is under
investigation with respect to, any violation of any provision of any federal,
state, local, municipal, or other law or administrative rule or regulation,
domestic or foreign, relating to any aspect of TechStar's business, affairs,
properties or assets, which violation would have a material adverse effect on
TechStar, its properties or assets, its businesses, its condition (financial or
otherwise), or its prospects.
(d) Schedule 4.19 sets forth the date(s), if any, of the last
known audits or inspections (if any) of TechStar conducted by or on behalf of
the Environmental Protection Agency, the Occupational Safety and Health
Administration, and any other Governmental Authority.
4.20 Litigation. Except as disclosed in Schedule 4.20 annexed
hereto, there
17
are no private or governmental orders, claims, actions, suits, arbitrations,
investigations, administrative or other proceedings (including, without
limitation, any claim alleging the invalidity, infringement or interference of
any patent, patent application, software, technology or other intellectual
property rights owned or licensed by TechStar) or investigations (collectively,
the "Actions") pending or, to the knowledge of TechStar or any of AUGI, are any
Actions threatened, against TechStar or relating to its businesses or
properties, at law or in equity or before or by any court or any Governmental
Authority or challenging the validity or propriety of the transaction
contemplated hereby. Except as disclosed in Schedule 4.20 annexed hereto,
neither TechStar nor any of AUGI is aware of any state of facts, events,
conditions or occurrences which might properly constitute grounds for or the
basis of any meritorious Action against or with respect to TechStar, which
would, if determined adversely, have a material adverse effect on TechStar, the
TechStar Business or any material portion of its assets, or impair the ability
of AUGI to deliver in the Merger all of its shares of Stock free and clear of
all pledges, Liens, claims, charges, options, calls, encumbrances, restrictions
and assessments whatsoever (except any restrictions which may be created by
operation of state or federal securities laws).
4.21 Intellectual Property. Schedule 4.21 annexed hereto correctly
sets forth a list and brief description of the nature and ownership of: (a) all
patents, patent applications, copyright registrations and applications,
registered trade names, service marks, trademark registrations and applications,
both domestic and foreign, which are presently owned, filed or held by TechStar
and/or any of its directors, officers, stockholders or employees and which in
any way relate to or are used in the TechStar Business; (b) all licenses,
computer software licenses, and software access or joint development agreements,
both domestic and foreign, which are owned or controlled by TechStar and/or any
of its directors, officers, stockholders or employees and which in any way
relate to or are used in the TechStar Business; and (c) all franchises, licenses
and/or similar arrangements granted to TechStar by others and/or to others by
TechStar (collectively, the "Intellectual Property"). None of the Intellectual
Property set forth or required to be set forth in Schedule 4.21 is subject to
any pending challenge known to AUGI or TechStar, infringes on or misappropriates
the rights of any others, or is subject to loss or expiration in the near future
(or the threat of such loss or expiration). Except as set forth on Schedule
4.21, TechStar owns good and marketable title to the Intellectual Property free
and clear of any Liens.
4.22 Transactions with Affiliates. No material asset employed in the
business of TechStar is owned by, leased from or leased to the stockholder of
TechStar, any of its Affiliates, members of their families or any partnership,
corporation, trust or other entity for their benefit, or any other officer,
director or employee of TechStar or any Affiliate of TechStar (collectively,
"TechStar Affiliates"). TechStar has made no loans to nor conducted any
transactions with any TechStar Affiliates except as disclosed on the schedules
hereto.
4.23 Bank Accounts. Annexed hereto as Schedule 4.23 is a correct and
complete list of all bank accounts, lock boxes and safe deposit boxes maintained
by or on behalf of TechStar, with indication of all persons having signatory,
access or other authority with respect thereto.
4.24 Schedules Incorporated by Reference. The making of any
recitation in any Schedule hereto shall be deemed to constitute a representation
and warranty that such recitation is an accurate statement and disclosure of the
information required by the corresponding Section(s)
18
of this Agreement (or taken as a whole), as, to the extent, and subject to the
qualifications and limitations, set forth in such corresponding Section(s).
4.25 Certain Legal Proceedings. Except as described in writing to
IDF by TechStar, during the past five-year period, neither TechStar, any officer
or director of TechStar, nor any person intended to become an officer or
director of TechStar or as a nominee of TechStar to become a director of IDF
upon the Merger, has been the subject of:
(a) a petition under the Federal bankruptcy laws or any other
insolvency law or has a receiver, fiscal agent or similar officer been appointed
by a court for the business or property of such person, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an executive
officer at or within two years before the time of such filing;
(b) a conviction in a criminal proceeding or a named subject
of a pending criminal proceeding (excluding minor traffic violations which do
not relate to driving while intoxicated or driving under the influence);
(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from, or otherwise limiting, the following activities:
(i) acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the united States
Commodity Futures Trading Commission or any associated person of any of the
foregoing, or as an investment advisor, underwriter, broker or company, bank,
savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of Federal, state or other securities laws or commodities laws;
(d) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of such person
to engage in any activity described in the preceding sub-paragraph, or to be
associated with persons engaged in any such activity;
(e) a finding by a court of competent jurisdiction in a civil
action or by the Securities and Exchange Commission (the "Commission") to have
violated any securities law, regulation or decree and the judgment in such civil
action or finding by the Commission has not been subsequently reversed,
suspended or vacated; or
(f) a finding by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
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4.26 Investment. AUGI purchased the outstanding capital stock of
TechStar for its own account, for investment purposes only, and not with a view
to the resale or distribution thereof.
4.27 No Misleading Statements. None of the information supplied or
to be supplied by or about TechStar for inclusion or incorporation by reference
in the offering materials concerning the Merger Financing or in any information
supplied to IDF concerning the Merger contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF IDF AND MERGERCO.
IDF and Mergerco hereby jointly and severally represent and warrant
to AUGI, as follows, it being understood and agreed that (i) unless the context
otherwise indicates, all references in this Article 5 to IDF includes IDF and
its consolidated direct and indirect Subsidiaries, including H-W; and (ii)
neither AUGI nor TechStar is or will be required to undertake any independent
investigation to determine the truth, accuracy and completeness of the
representations and warranties made by IDF or Mergerco in this Agreement:
5.1 Organization, Good Standing and Qualification. Each of Mergerco
and IDF is a corporation duly organized, validly existing and in good standing
under the laws of the States of Delaware and New York, respectively, with all
necessary power and authority to execute and deliver this Agreement, the
TechStar Employment Agreements, and the other instruments, agreements and
written undertakings of IDF and Mergerco, and each of them, which are executed
in connection therewith and to which it or they, respectively are parties
(collectively, the "IDF Transaction Agreements"), to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated hereby
and thereby. True and complete copies of the Certificate of Incorporation and
By-Laws of Mergerco and of IDF (including all amendments thereto), and a correct
and complete list of the officers and directors of Mergerco and of IDF, are
annexed hereto as Schedule 5.1.
5.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement and the IDF Transaction Agreements and the
consummation of the Merger and the other transactions contemplated hereby and
thereby by Mergerco and IDF have been duly and validly authorized by the Board
of Director and sole stockholder of Mergerco, and by the Board of Directors of
IDF; and Mergerco and IDF have the full corporate right, power and authority to
execute and deliver this Agreement and the IDF Transaction Agreements, to
perform their respective obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby. No further corporate
authorization is necessary on the part of Mergerco or IDF to consummate the
transactions contemplated hereby and thereby.
5.3 Valid and Binding Agreement. This Agreement and the other IDF
Transaction Agreements constitutes the legal, valid and binding obligation of
Mergerco, enforceable against Mergerco in accordance with its and their terms,
except to the extent limited by bankruptcy, insolvency, reorganization and other
laws affecting creditors rights generally, and except with respect to remedies,
the enforcement of which vests in the discretion of courts of equitable
jurisdiction, and this Agreement and, when executed and delivered by IDF, and
the
20
other IDF Transaction Agreements constitute, and will constitute, the legal,
valid and binding obligations of Mergerco and IDF (as the case may be),
enforceable against Mergerco and IDF in accordance with its and their respective
terms, except to the extent limited by bankruptcy, insolvency, reorganization
and other laws affecting creditors rights generally, and except with respect to
remedies, the enforcement of which vests in the discretion of courts of
equitable jurisdiction.
5.4 No Breach of Statute or Contract. Neither the execution and
delivery of this Agreement and the other IDF Transaction Agreements by Mergerco
or IDF, nor compliance with the terms and provisions of this Agreement or the
other IDF Transaction Agreements on the part of Mergerco or IDF, will: (a)
violate any statute or regulation of any Governmental Authority affecting
Mergerco or IDF; (b) require the issuance of any authorization, license, consent
or approval of any Governmental Authority; or (c) conflict with or result in a
breach of any of the terms, conditions or provisions of any judgment, order,
injunction, decree, note, indenture, loan agreement or other agreement or
instrument to which Mergerco or IDF is a party, or by which Mergerco or IDF is
bound, or constitute a default thereunder.
5.5 Capitalization of IDF.
(a) Schedule 5.5 annexed contains a description of: (i) the
authorized, issued and outstanding shares of IDF Common Stock; and (ii) all
Fully-Diluted IDF Equity which may be issued upon exercise of all outstanding
stock options or warrants, or upon conversion of all issued and outstanding
notes, preferred stock, rights or other securities convertible or exchangeable
for shares of IDF Common Stock.
(b) When issued and delivered pursuant to this Agreement, all
of the Merger Consideration will be validly issued, fully-paid and
non-assessable, owned by IDF free and clear of all pledges, Liens, claims,
charges, encumbrances, assessments, pre-emptive rights and other restrictions
and limitations whatsoever.
5.6 Investment. IDF owns the outstanding capital stock of Mergerco
for its own account, for investment purposes only, and not with a view to the
resale or distribution thereof.
5.7 Business of Mergerco. Mergerco has been formed solely for the
purposes of consummating the transactions contemplated by this Merger Agreement,
has not conducted and will not conduct any independent business operations until
the Closing Date of the Merger.
5.8 Financial Information.
(a) Annexed hereto as Schedule 5.8(a) are (i) the unaudited
consolidated financial statements of IDF as at December 31, 1996 and for the six
months ended December 31, 1996, including balance sheet, statements of
operations, statements of stockholders' equity, and statements of cash flow, as
reviewed but not audited by Xxxxx, Xxxxxx & Company LLP, and the unaudited
consolidated balance sheet and statement of operations as at March 31, 1997 and
for the nine months then ended, as prepared by management of IDF (collectively,
the "IDF Unaudited Financial Statements"); and (ii) the audited consolidated
financial statements of IDF as at June 30, 1996 and June 30, 1995 and for the
two fiscal years then ended, including balance sheets, statements of operations,
statements of stockholders'
21
equity, and statements of cash flow, as audited by Xxxxx, Xxxxxx & Company LLP
(the "IDF Audited Financial Statements"). Such IDF Unaudited Financial
Statements and IDF Audited Financial Statements are herein collectively referred
to as the "IDF Financial Statements."
(b) The IDF Financial Statements: (i) are true, complete and
correct in all respects and present fairly the consolidated financial position
of IDF and its Subsidiaries as of the dates thereof and for the periods
reflected therein, all in conformity with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis; (ii) make full and
adequate provision, in accordance with GAAP for the various assets and
liabilities of IDF on a basis and the results of its operations and transactions
in its accounts, as of the dates and for the periods referred to therein; (iii)
reflect only assets and liabilities and results of operations and transactions
of IDF, and do not include or reflect any assets, liabilities or transactions of
any corporation or entity except IDF and its Subsidiaries; and (iv) were
prepared from, and are consistent with, the books and records of IDF, which
accurately and consistently reflect all transactions to which IDF was and is a
party; provided, that the IDF Unaudited Financial Statements omit footnote
disclosures required under GAAP and are subject to fiscal year end audit
adjustments which would not, individually or in the aggregate, be material.
(c) Except as expressly set forth in the IDF Financial
Statements and/or in the Schedules to this Agreement, or arising in the normal
course of IDF's business since March 31, 1997, there are as at the date hereof,
no liabilities or obligations (including, without limitation, any tax
liabilities or accruals) of IDF, whether absolute, accrued, contingent or
otherwise and whether due or to become due, that are, singly or in the
aggregate, material.
5.9 No Material Changes. Except as and to the extent described in
Schedule 5.9 annexed hereto (which Schedule may make reference to any other
Schedule hereto or to any other document(s) referred to in this Agreement which
has heretofore or herewith been delivered to IDF), since March 31, 1997, the
business of IDF has continued to be operated only in the ordinary course, and
there has not been:
(a) Any material adverse change in the condition (financial or
otherwise), operations, business, properties, or prospects of IDF from that
shown in the most recent IDF Unaudited Financial Statements, or any material
transaction or commitment effected or entered into outside of the normal course
of the IDF Business other than in connection with the Merger;
(b) Any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting the business, operations,
assets, properties, condition (financial or otherwise), or prospects of IDF;
(c) Any declaration, setting aside or payment of any dividend
or other distribution with respect to the Stock, any other payment of any kind
by IDF to any of its stockholders or Affiliates outside of the ordinary course
of business, any forgiveness of any debt or obligation owed to IDF by any of its
stockholders or any of their respective Affiliates, or any direct or indirect
redemption, purchase or other acquisition by IDF of any capital stock of IDF; or
(d) Any other event or condition arising from or out of or in
connection with the operation of IDF which has materially and adversely
affected, or may
22
reasonably be expected to materially and adversely affect, IDF, the IDF
Business, its assets or properties, its business, condition (financial or
otherwise), or prospects.
5.10 Tax Returns and Tax Audits.
(a) Except as and to the extent disclosed in Schedule 5.10
annexed hereto: (i) on the date hereof, all foreign, federal, state, and local
tax returns and tax reports required to be filed by IDF on or before the date of
this Agreement have been timely filed with the appropriate governmental agencies
in all jurisdictions in which such returns and reports are required to be filed,
except for such prior failures to file in timely fashion as have been
subsequently followed by complete and proper filing and payment of all amounts
due in respect thereof, including interest and penalties, if any; (ii) all
foreign, federal, state, and local income, franchise, sales, use, property,
excise, and other taxes (including interest and penalties and including
estimated tax installments where required to be filed and paid) due from or with
respect to IDF as of the date hereof have been fully paid, and appropriate
accruals shall have been made on IDF's books for taxes not yet due and payable;
(iii) as of the date hereof, all taxes and other assessments and levies which
IDF is required by law to withhold or to collect on or before the date hereof
have been duly withheld and collected, and have been paid over to the proper
governmental authorities to the extent due and payable on or before the date
hereof; (iv) there are no outstanding or pending claims, deficiencies or
assessments for taxes, interest or penalties with respect to any taxable period
of IDF, except claims for taxes not yet due and payable; and (v) no tax Liens
have been filed on IDF's assets. At and after the Closing Date, IDF will have no
liability for any foreign, federal, state, or local income tax with respect to
any taxable period ending on or before the Closing Date, except as and to the
extent disclosed in Schedule 5.10, if any.
(b) There are no audits pending or, to the knowledge of IDF,
threatened, with respect to any foreign, federal, state, or local tax returns of
IDF, and no waivers of statutes of limitations have been given or requested with
respect to any tax years or tax filings of IDF. No presently pending assessments
of tax deficiencies have been made against IDF or with respect to its income,
receipts or net worth, and no extensions of time are in effect for the
assessment of deficiencies against IDF. IDF has not received notice of any claim
by any authority in a jurisdiction in which IDF does business and does not file
tax returns that IDF or its income, receipts or net worth may be subject to tax
in that jurisdiction. IDF is not a party to any tax-sharing or allocation
agreement, nor does IDF owe any amount under any tax-sharing or allocation
agreement. IDF has no liability for unpaid taxes because it once was a member of
an "affiliated group" within the meaning of Section 1502 of the Code.
5.11 Personal Property; Liens. IDF has and owns good and marketable
title to all of its personal property, including without limitation, all
computer software, database and other intellectual property, free and clear of
all Liens whatsoever, except for: (a) Liens securing IDF's indebtedness for
money borrowed, if any, as reflected in the Financial Statements, pursuant to
the security agreements listed in Schedule 5.11 annexed hereto; (b) Liens
securing the deferred purchase price of machinery, equipment, vehicles and/or
other fixed assets, if any, as reflected in the Financial Statements or as
incurred after the date thereof in the ordinary course of business of IDF,
pursuant to security agreements listed in Schedule 5.11; (c) materialmen's,
workmen's and other similar statutory liens arising in the ordinary course of
business, none of which are material singly or in the aggregate, (d) Liens for
taxes not yet due and payable, and (e) other Liens which individually or in the
aggregate are immaterial in amount and character (each
23
of the Liens described in clauses (a) through (e) of this sentence being
hereinafter referred to as "Permitted Liens"). The aggregate book value of all
items of machinery, equipment, vehicles, and other fixed assets owned or leased
by IDF does not exceed $500,000, and all of such fixed assets are in good
operating condition and repair (reasonable wear and tear excepted) and are
adequate for their use in IDF's business as presently conducted.
5.12 Real Property.
(a) IDF neither owns nor has any interest of any kind (whether
ownership, lease or otherwise) in any real property except to the extent of
IDF's leasehold interests under the leases for its business premises, if any,
true and complete copies of which leases (including all amendments thereto) are
annexed hereto as Schedule 5.12 (the "Leases").
(b) Except as set forth on Schedule 5.12, IDF and, to IDF's
knowledge, the landlords thereunder are presently in compliance in all material
respects with all of their respective obligations under the Leases, and the
premises leased thereunder are in good condition (reasonable wear and tear
excepted) and are adequate for the operation of IDF's current business.
(c) IDF is in actual possession of the properties demised
under the Leases. The Leases are free and clear of any Lien or any sublease or
right of occupancy granted by IDF, except as set forth on Schedule 5.12 hereto,
if at all.
(d) IDF has the right of ingress and egress through a public
road or street, to and from the properties demised under the Leases.
(e) The properties demised under the Leases and the
improvements thereon constitute all of the real property and leases currently
used exclusively or materially for the IDF Business and are adequate and
sufficient for the current operations of IDF and the IDF Business.
(f) To the knowledge of IDF, there is no pending proceeding
for the taking or condemnation of all or any portion of the properties demised
under the Leases or pending taking or condemnation proceeding which would result
in a termination of any Lease of real property, and none of the same is
threatened.
(g) There are no material items of maintenance that have been
materially deferred with respect to any of the improvements on the real property
demised under the Leases.
(h) IDF has received no uncured notice from applicable
governmental authorities of any outstanding violations of any building or zoning
laws, codes or regulations, or governmental or judicial orders issued pursuant
thereto, with respect to the real property and the improvements thereon demised
under the Leases, and there are no such violations.
5.13 Accounts Receivable. All accounts receivable shown on the
balance sheet as of March 31, 1997 included in the IDF Financial Statements (the
"Balance Sheet"), and all accounts receivable thereafter created or acquired by
IDF prior to the Closing Date, have arisen or will arise in the ordinary course
of the IDF Business. Except as set forth on Schedule 4.11 annexed hereto, to
IDF's knowledge (but without guaranteeing the collectability of any accounts
24
receivable), all of such accounts receivable (a) are and will be subject to no
counterclaims, set-offs, allowances or discounts of any kind, except to the
extent of the allowance for doubtful accounts as of the March 31, 1997 reflected
in the Balance Sheet, and (b) have been, are and will be valid and collectible
in the ordinary course of business within 210 days after the Closing Date
(subject to the aforesaid allowance for doubtful accounts), without necessity of
instituting any legal proceedings for collection.
5.14 Inventories. All supplies and other inventories shown on the
Balance Sheet, and all inventories thereafter acquired by IDF prior to the
Closing Date, have been and will be valued at the lower of cost or market, and
consisted and will consist of items which are of a quality and quantity which
are useable in the ordinary course of IDF's business for customary commercial
purposes, and are substantially at IDF's normal working levels of the same in
the current conduct of its businesses in the ordinary course.
5.15 Insurance Policies. Schedule 5.15 annexed hereto contains a
true and correct schedule of all insurance coverages held by IDF concerning its
businesses and properties (including but not limited to professional liability
insurance). All such policies are in full force and effect and IDF is not in
default thereunder in any material respect. To the knowledge of IDF, such
policies provide adequate insurance coverage for IDF, its properties and
businesses, as presently conducted.
5.16 Permits and Licenses; Consents. IDF possesses and is in
material compliance with every Permit of any Governmental Authority having
jurisdiction over IDF, or its businesses, properties, or assets, necessary in
order to operate its businesses in the manner presently conducted; all of IDF's
Permits are valid, current and in full force and effect; and none of such
Permits will be voided, revoked or terminated, or are voidable, revocable or
terminable, upon and by reason of the Merger and the change of control of IDF
pursuant to this Agreement. Schedule 5.16 hereto lists all of the Permits of or
in respect of any Governmental Authority or any other Person (as such term is
hereinafter defined) which are required for the execution or delivery by IDF of
this Agreement and the consummation of the transactions contemplated hereby.
25
5.17 Contracts and Commitments.
(a) Schedule 5.17 annexed hereto lists all material contracts,
leases, commitments, technology agreements, software development agreements,
software licenses, indentures and other agreements to which IDF is a party
(collectively, "Material Contracts") including, without limitation, the
following: (i) any contract for the purchase of equipment, supplies, other
materials, or other inventory items other than purchase orders for supplies
entered into in the ordinary course of business; (ii) any contract related to
the purchase or lease of any capital asset involving aggregate payments of more
than $5,000 per annum that is not cancelable by IDF on less than thirty (30)
days notice; (iii) all technology agreements, software development agreements
and software licenses (except for pre-printed licenses for commercially
available and non-custom software applications) involving IDF or any Affiliate,
regardless of the duration thereof or the amount of payments called for or
required thereunder; (iv) any guarantee, make-whole agreement, or similar
agreement or undertaking to support, directly or indirectly, the financial or
other condition of any other person or entity; (v) each contract for or relating
to the employment of any officer, employee, technician, agent, consultant, or
advisor to or for IDF that is not cancelable by IDF without penalty, premium or
liability (for severance or otherwise) on less than thirty (30) days' prior
written notice; (vi) license, royalty, franchise, distributorship, dealer,
manufacturer's representative, agency and advertising agreements; (vii) any
contract with any collective bargaining unit; (viii) any mortgage of real
property; (ix) any factoring agreement with respect to the accounts receivable
of IDF; (x) any pledge or other security agreement by IDF other than guaranties
entered into in the ordinary course of business which are not material to IDF,
(xi) any joint venture agreement or similar arrangement; (xii) any
non-competition agreement or similar arrangement; and (xiii) any contract,
lease, commitment, indenture, or other agreement to which IDF is a party that
may not be terminated without penalty, premium or liability by IDF on not more
than thirty (30) days' prior written notice. The term "Material Contract" shall
not include any contract or agreement, the failure of which to maintain, perform
or continue in effect (including by reason of the Merger) has not and is not
reasonably expected to adversely affect IDF and its assets, properties,
businesses or financial condition.
(b) Except as set forth in Schedule 5.17: (i) all Material
Contracts are in full force and effect; (ii) IDF and, to the knowledge of IDF,
the other parties thereto, each are in compliance with all of their respective
obligations under the Material Contracts in all material respects, and are not
in breach or default thereunder, nor has there occurred any condition or event
which, after notice or lapse of time or both, would constitute a default
thereunder; and (iii) none of the Material Contracts will be voided, revoked or
terminated, or voidable, revocable or terminable, in whole or in part, upon and
by reason of the Merger and the change of ownership of IDF pursuant to this
Agreement.
(c) No purchase commitment by IDF is in excess of the normal,
ordinary and usual requirements of the business of IDF.
(d) There is no outstanding power of attorney granted by IDF
to any person, firm or corporation for any purpose whatsoever, except which may
be included as part of the terms of a security agreement or other Material
Contract entered into by IDF in connection with a financing or otherwise in the
ordinary course of its businesses.
5.18 Customers and Suppliers. IDF has no actual knowledge of any
existing, announced or anticipated changes in the policies of, or the
relationships with, or the business of,
26
any material clients, customers, or suppliers of IDF which will materially
adversely affect IDF or its condition, financial or otherwise, business, or
prospects.
5.19 Labor, Benefit and Employment Agreements.
(a) Except as set forth in Schedule 5.19 annexed hereto, IDF
is not a party to any agreement with respect to the employment or compensation
of any non-hourly and/or non-union employee(s). IDF is not now, nor has it ever
been, a party to or subject to any collective bargaining agreement or other
labor agreement. Schedule 5.19 sets forth the amount of all compensation or
remuneration (including any discretionary bonuses) paid by IDF during the 1996
calendar year or to be paid by IDF during the 1997 calendar year to employees or
consultants who presently receive aggregate compensation or remuneration at an
annual rate in excess of $50,000.
(b) No union is now certified or, to the best of the knowledge
of IDF and each of AUGI, claims to be certified as a collective bargaining agent
to represent any employees of IDF, and there are no labor disputes existing or,
to the best of the knowledge of IDF, threatened, involving strikes, slowdowns,
work stoppages, job actions or lockouts of any employees of IDF.
(c) There are no unfair labor practice charges or petitions
for election pending or being litigated before the National Labor Relations
Board or any other federal or state labor commission relating to any employees
of IDF. Except as set forth on Schedule 5.19, IDF has not received any written
notice of any actual or alleged violation of any law, regulation, order or
contract term affecting the collective bargaining rights of employees, equal
opportunity in employment, or employee health, safety, welfare, or wages and
hours.
(d) IDF has not, at any time, been and is not now required to
make contributions to, be a party to or covered by (or had any of its employees
covered by), and has not withdrawn from (partially or otherwise), and has not
had and does not have any obligations to or in respect of any "multiemployer
plan" (as defined in Section 3(37) of ERISA.
(e) Except as disclosed in Schedule 5.19, IDF does not
maintain, or have any liabilities or obligations of any kind with respect to,
any bonus, commission, deferred compensation, excess benefits, pension, thrift,
savings, employee ownership, salary continuation, severance, profit sharing,
retirement, supplemental retirement, or other such benefit plan, and does not
have any potential or contingent liability in respect of any actions or
transactions relating to any such plan other than to make contributions thereto
if, as, and when due in respect of periods subsequent to the date hereof.
Without limitation of the foregoing, (i) IDF has made all required contributions
to or in respect of any and all such benefit plans, (ii) no "accumulated funding
deficiency" (as defined in Section 412 of the Code has been incurred in respect
of any of such benefit plans, and the present value of all vested accrued
benefits thereunder does not, on the date hereof, exceed the assets of any such
plan allocable to the vested accrued benefits thereunder, (iii) there has been
no "prohibited transaction" (as defined in Section 4975 of the Code) with
respect to any such plan, and no transaction which could give rise to any tax or
penalty under Section 4975 of the Code or Section 502 of ERISA, and (iv) there
has been no "reportable event" (within the meaning of Section 4043(b) of ERISA)
with respect to any such plan. All of such plans which constitute, are intended
to constitute, or have been treated by IDF as "employee pension benefit plans"
or other plans within Section 3 of ERISA have been
27
determined by the Internal Revenue Service to be "qualified" under Section
401(a) of the Code, and have been administered and are in compliance with ERISA
and the Code; and AUGI has no knowledge of any state of facts, conditions or
occurrences such as would impair the "qualified" status of any of such plans.
(f) Except for the group insurance programs listed in Schedule
5.19, IDF does not maintain any medical, health, life, dental, short- or
long-term disability, hospitalization, accident, death benefits, or other
employee benefit insurance programs, or sick leave or vacation or holiday or
leave policies, or any welfare plans (within the meaning of Section 3(1) of
ERISA) for the benefit of any current or former employees, and, except as
required by law, IDF has no liability, fixed or contingent, for health or
medical benefits to any former employee.
5.20 No Breach of Statute, Decree or Other Instrument.
Except as set forth in Schedule 5.20 annexed hereto and as
otherwise would not have a material adverse effect on the existing businesses,
assets, financial condition or prospects of IDF: (i) neither the execution and
delivery of this Agreement by IDF, nor the performance of, or compliance with,
the terms and provisions of this Agreement on the part of IDF, will violate or
conflict with any term of the Certificate of Incorporation or By-Laws of IDF or,
to the knowledge of IDF, any statute, law, rule or regulation of any
governmental authority affecting the existing businesses of IDF, or will cause
or permit the material modification of the effect of, the imposition of any Lien
in respect of, or the acceleration of any obligations or terms or the
termination of any rights or imposition of any burdens under, or conflict with,
result in a breach of, or constitute a default under, any of the terms,
conditions or provisions of any judgment, order, award, injunction or decree, or
any of the material terms, conditions or provisions of any contract, lease,
agreement, indenture or other instrument to which IDF is a party or by which IDF
is bound; and (ii) no consent, authorization or approval of or filing with any
governmental authority or agency, or any third party, will be required on the
part of IDF as conditions precedent to the consummation of the transactions
contemplated hereby, or result in the cancellation of any Permits presently held
by IDF which are required for the operation of its business as conducted on the
date hereof.
28
5.21 Compliance with Laws.
(a) Except as set forth in Schedule 5.21 to this Agreement,
IDF has been, and is now in compliance (except to the extent, disclosed on
Schedule 5.21, that incidental and non-material non-compliance has not had and
can not reasonably be expected to have a material adverse effect on IDF, its
properties or assets, its businesses, its condition (financial or otherwise), or
its prospects) with each of the following which is applicable to or binding upon
or affecting IDF or its property, assets, or business, or to which IDF, or its
property, assets, or business are subject: every statute, ordinance, code or
other law, treaty, rule, regulation, order, technical or other standard,
requirement or procedure existing, enacted, adopted, administered, enforced, or
promulgated, by any Governmental Authority (each of the foregoing, a "Law"), and
every Permit, and every order, judgment, writ, injunction, award, decree,
demand, assessment or determination of any arbitrator and of every Governmental
Authority (each of the foregoing, an "Order"; each Law, Permit, and Order being
sometimes hereinafter referred to as a "Requirement of Law"). Neither IDF nor
its properties, assets, or business are subject to or directly affected by any
Requirement of Law of any Governmental Authority, other than those similarly
affecting similar enterprises engaged in a material way in the same business
activities.
(b) IDF has not, at any time: (i) acquired, handled, utilized,
stored, generated, processed, transported, or disposed of any hazardous or toxic
substances, whether in violation of any foreign, federal, state, or local
environmental or occupational health and safety laws or regulations or
otherwise, (ii) otherwise committed any material violation of any foreign,
federal, state, or local environmental or occupational health and safety laws or
regulations (including, without limitation, the provisions of the Environmental
Protection Act and other applicable environmental statutes and regulations) or
any violation of the Occupational Safety and Health Act, or (iii) been in
violation of any material requirements of its insurance carriers from time to
time.
(c) Neither IDF nor any of its directors, officers or
employees has received any written notice of default or violation, nor, to the
best of the knowledge of IDF, is IDF or any of its directors, officers or
employees in default or violation, with respect to any judgment, order, writ,
injunction, decree, demand or assessment issued by any court or any federal,
state, local, municipal, or other governmental agency, board, commission,
bureau, instrumentality or department, domestic or foreign, relating to any
aspect of IDF's business, affairs, properties, or assets. Neither IDF nor any of
its directors, officers or employees, has received written notice of, been
charged with, or, to its or their knowledge, is under investigation with respect
to, any violation of any provision of any federal, state, local, municipal, or
other law or administrative rule or regulation, domestic or foreign, relating to
any aspect of IDF's business, affairs, properties or assets, which violation
would have a material adverse effect on IDF, its properties or assets, its
businesses, its condition (financial or otherwise), or its prospects.
(d) Schedule 5.21 sets forth the date(s), if any, of the last
known audits or inspections (if any) of IDF conducted by or on behalf of the
Environmental Protection Agency, the Occupational Safety and Health
Administration, and any other Governmental Authority.
5.22 Litigation. Except as disclosed in Schedule 5.22 annexed
hereto, there are no private or governmental orders, claims, actions, suits,
arbitrations, investigations,
29
administrative or other proceedings (including, without limitation, any claim
alleging the invalidity, infringement or interference of any patent, patent
application, software, technology or other intellectual property rights owned or
licensed by IDF) or investigations (collectively, the "Actions") pending or, to
the knowledge of IDF, are any Actions threatened, against IDF or relating to its
businesses or properties, at law or in equity or before or by any court or any
Governmental Authority. Except as disclosed in Schedule 5.22 annexed hereto, IDF
is not aware of any state of facts, events, conditions or occurrences which
might properly constitute grounds for or the basis of any meritorious Action
against or with respect to IDF, which would, if determined adversely, have a
material adverse effect on IDF, the IDF Business or any material portion of its
assets, or impair the ability of IDF to deliver the Merger Consideration free
and clear of all pledges, Liens, claims, charges, options, calls, encumbrances,
restrictions and assessments whatsoever (except any restrictions which may be
created by operation of state or federal securities laws).
5.23 Intellectual Property. Schedule 5.23 annexed hereto correctly
sets forth a list and brief description of the nature and ownership of: (a) all
patents, patent applications, copyright registrations and applications,
registered trade names, service marks, trademark registrations and applications,
both domestic and foreign, which are presently owned, filed or held by IDF
and/or any of its directors, officers, stockholders or employees and which in
any way relate to or are used in the business of IDF; (b) all licenses, computer
software licenses, and software access or joint development agreements, both
domestic and foreign, which are owned or controlled by IDF and/or any of its
directors, officers, stockholders or employees and which in any way relate to or
are used in the business of IDF; and (c) all franchises, licenses and/or similar
arrangements granted to IDF by others and/or to others by IDF (collectively, the
"Intellectual Property"). None of the Intellectual Property set forth or
required to be set forth in Schedule 5.23 is subject to any pending challenge
known to IDF, infringes on or misappropriates the rights of any others, or is
subject to loss or expiration in the near future (or the threat of such loss or
expiration). Except as set forth on Schedule 5.23, IDF owns good and marketable
title to the same free and clear of any Liens.
5.24 Transactions with Affiliates. Except as set forth on Schedule
5.24, no material asset employed in the business of IDF is owned by, leased from
or leased to any of the stockholders of IDF, any of their respective Affiliates,
members of their families or any partnership, corporation or trust for their
benefit, or any other officer, director or employee of IDF or any Affiliate of
IDF.
5.25 Bank Accounts. Annexed hereto as Schedule 5.25 is a correct and
complete list of all bank accounts and safe deposit boxes maintained by or on
behalf of IDF, with indication of all persons having signatory, access or other
authority with respect thereto.
5.26 Certain Legal Proceedings. Except as described in writing to
AUGI by the IDF Group, during the past five-year period, neither the IDF Group,
any officer or director of the IDF Group, nor any person intended to become an
officer or director of the IDF Group or as a nominee of the IDF Group to become
a director of IDF upon the Merger, has been the subject of:
(a) a petition under the Federal bankruptcy laws or any other
insolvency law or has a receiver, fiscal agent or similar officer been appointed
by a court for the business or property of such person, or any partnership in
which he was a general partner at or
30
within two years before the time of such filing, or any corporation or business
association of which he was an executive officer at or within two years before
the time of such filing;
(b) a conviction in a criminal proceeding or a named subject
of a pending criminal proceeding (excluding minor traffic violations which do
not relate to driving while intoxicated or driving under the influence);
(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from, or otherwise limiting, the following activities:
(i) acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the united States
Commodity Futures Trading Commission or any associated person of any of the
foregoing, or as an investment advisor, underwriter, broker or company, bank,
savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of Federal, state or other securities laws or commodities laws;
(d) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of such person
to engage in any activity described in the preceding sub-paragraph, or to be
associated with persons engaged in any such activity;
(e) a finding by a court of competent jurisdiction in a civil
action or by the Securities and Exchange Commission (the "Commission") to have
violated any securities law, regulation or decree and the judgment in such civil
action or finding by the Commission has not been subsequently reversed,
suspended or vacated; or
(f) a finding by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
5.27 No Misleading Statements. None of the information supplied or
to be supplied by or about the IDF Group for inclusion or incorporation by
reference in the offering materials concerning the Merger Financing or in any
information supplied to IDF concerning the Merger contains any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
5.28 Schedules Incorporated by Reference. The making of any
recitation in any Schedule hereto shall be deemed to constitute a representation
and warranty that such recitation is an accurate statement and disclosure of the
information required by the corresponding Section(s)
31
of this Agreement (or taken as a whole), as, to the extent, and subject to the
qualifications and limitations, set forth in such corresponding Section(s).
6. NOTICES.
6.1 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or by confirmation of facsimile delivery or by nationwide overnight
delivery service, or on the third day after mailing if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid, and properly addressed as follows:
(a) If to AUGI or TechStar:
TechStar Communications, Inc.
0000 Xxxx Xxxx Xxxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, President
-and-
American United Global, Inc.
00000 XX 00xx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Chief Executive Officer
with a copy sent concurrently to:
Xxxxxxxxx Xxxxxxx Xxxxxxx
Xxxxxx Xxxxx & Xxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
(b) If to IDF or Mergerco:
IDF International, Inc.
d/b/a Hayden/Xxxxxx, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Lambit Kald, President
with a copy sent concurrently to:
Xxxxx X. Xxxxxxx, Esq.
00 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
or to such other address as any party shall have specified by notice in writing
given to all other
32
parties.
7. CONDITIONS PRECEDENT TO CLOSING; ADDITIONAL AGREEMENTS OF THE PARTIES.
7.1 IDF and Mergerco's Conditions Precedent. The obligations of IDF
and Mergerco to close the transactions contemplated by this Merger Agreement are
hereby conditioned upon the fulfillment by AUGI or TechStar, at or prior to the
Closing, of the following conditions precedent, unless waived in writing by IDF:
(a) Accuracy of Representations and Warranties of AUGI and
TechStar. All representations and warranties made by AUGI and TechStar in this
Agreement, in any Schedule(s) hereto, and/or in any AUGI Transaction Agreement
delivered to Mergerco or IDF under, pursuant to, or in connection with, this
Agreement will be true and correct in all material respects on and as of the
date hereof and will be true and correct in all material respects on the Closing
Date, unless such warranty is specifically stated to be as of an earlier date,
in which case it shall be true and correct as of such earlier date, and AUGI and
TechStar shall deliver a certificate to such effect.
(b) Performance by TechStar and AUGI. TechStar and AUGI shall
have performed, satisfied and complied with all covenants, agreements and
conditions required by this Agreement and any AUGI Transaction Agreement to be
performed, satisfied or complied with by them on or before the Closing Date
hereof.
(c) Execution and Delivery of Certificate of Merger. TechStar
and Mergerco and, to the extent necessary or appropriate, their respective
officers and directors, shall have executed and delivered the Certificate of
Merger in the form of Exhibit A to this Agreement for filing with the
appropriate governmental authority immediately upon execution and delivery of
this Agreement.
(d) Execution and Delivery of TechStar Employment Agreements.
Each of Xxxxxx, Xxxxxxx and Moskona shall have executed and delivered to IDF
their respective TechStar Employment Agreement in the form of Exhibits X-0, X-0,
and B-3 to this Agreement.
(e) Certain IDF and TechStar Indebtedness. IDF is currently
indebted to Xxxxxx X. Xxxxx in the amount of approximately $800,000, inclusive
of accrued interest, and TechStar is currently indebted to AUGI in the amount of
$300,000. On the Closing Date of the Merger, all of such indebtedness shall be
exchanged for five year notes of IDF in substantially the form of Exhibit C
annexed hereto (the "IDF Notes"); which IDF Notes shall:
(i) be guaranteed as to payment, jointly and severally,
by all of the IDF Subsidiaries, including H-W and TechStar;
(ii) bear interest at the rate of 8% per annum payable
quarterly; and
(iii) be due and payable as to principal on a date which
shall be the earlier to occur of: (A) five years from the
Closing Date of the
33
Merger, or (B) to the maximum extent and in the manner set
forth on Schedule 7.1(e) annexed hereto, the consummation of
any public or private placement of securities (other than the
Merger Financing) of IDF or any of its Subsidiaries, which
individually or in the aggregate results in gross cash
proceeds of $2.5 million or more; provided, however, that the
$300,000 payable to AUGI may be prepaid by TechStar on or
before December 31, 1997 out of available cash resources of
TechStar but not out of any of the proceeds of the Merger
Financing.
(f) Certain AUGI Indebtedness. AUGI is currently indebted to
Messrs. Xxxxxxx and Moskona in the amount of $600,000 pursuant to a three year
Citibank NA prime rate notes, payable as to $100,000 in December 1997, $200,000
in December 1998 and $300,000 in December 1999 (the "AUGI Notes"). On the
Closing Date of the Merger, the 1998 and 1999 payments under such AUGI Notes
shall be assigned by AUGI to TechStar and assumed by TechStar; provided, that
AUGI shall make the 1997 principal payment and all interest payments under the
AUGI Notes, and unconditionally guaranty all payments by TechStar of such AUGI
Notes which have been assumed by TechStar. Annexed hereto as Exhibit D is a true
copy of the assignment and assumption agreement between AUGI and TechStar in
respect of such AUGI Notes to be executed and delivered on the Closing Date of
the Merger.
(g) Execution and Delivery of Non-Competition Agreement. On
the Closing Date of the Merger, AUGI shall have executed and delivered to IDF a
non-competition and non-disclosure agreement in the form of Exhibit E to this
Agreement (the "Non-Competition Agreement"), pursuant to which, inter alia, AUGI
shall agree not to engage in competition with the TechStar Business and the IDF
Business upon the terms and for the period specified in such Non-Competition
Agreement.
(h) Due Diligence. IDF shall be satisfied in all respects with
the results of its due diligence investigation of TechStar.
(i) Merger Financing. Simultaneous with the Closing of the
Merger, IDF shall obtain proceeds of not less than $1.75 million and not more
than $2.25 million from the Merger Financing, prior to expenses related to such
Merger Financing as disclosed on Exhibit A.
(j) Investment by TechStar Management. As part of the Merger
Financing referred to in Section 7.1(h) above, Messrs. Xxxxxx, Moskona and
Xxxxxxx shall, in the aggregate, have invested not less than $250,000 in IDF on
the same terms and conditions as the other investors in the Merger Financing.
(k) Operation of TechStar Business. At all times prior to the
Closing Date of the Merger, the business of TechStar will have been operated in
the normal course, with no material variations in historic payment or collection
practices or expense, with no incurrence of any material obligations outside of
the normal course of business, and with no material adverse change from the
results of operations reflected in the financial information previously
provided.
(l) Third Party Consents. TechStar shall have caused to be
obtained and there shall be in full force and effect at the Closing Date,
without burden to the ongoing
34
business of TechStar, all material consents, waivers or other approvals from any
lessor, supplier, government agency, customer, or other party which may be
required in order for TechStar to continue the normal course of the operation of
its business from and after the Closing Date.
(m) Fairness Opinion. IDF shall have obtained a written
opinion from an independent investment banking firm which shall be satisfactory
to the Board of Directors of IDF, to the effect that the Merger is fair to the
shareholders of IDF from a financial point of view.
(n) Conduct of Business; Payments of Compensation, Dividends
and Distributions. From and after June 16, 1997 (the date of execution of a
letter of intent among the parties hereto) through and including the Closing
Date and except as set forth in this Merger Agreement or on any Schedule to this
Agreement:
(i) other than as disclosed in writing to IDF, no assets
of TechStar shall have been paid as a dividend or distributed to AUGI or
any AUGI Affiliate prior to the Closing Date, except to the extent
necessary to pay taxes on income of TechStar earned through the Closing
Date; and
(ii) neither of AUGI nor TechStar shall have engaged in
any of the following without, in each instance, the prior written consent
of AUGI:
(1) amended TechStar's Certificate of
Incorporation or By-Laws;
(2) issued any shares of TechStar's capital stock;
(3) issued or created any warrants, obligations,
subscriptions, options, convertible securities or other
commitments under which any additional shares of TechStar's
capital stock might be directly or indirectly issued;
(4) amended, canceled or modified any existing
Material Contract binding on TechStar, except in the ordinary
course of the TechStar Business;
(5) paid, granted or authorized any salary
increases or bonuses or entered into or amended or terminated
any employment, consulting or management agreements by or on
behalf of TechStar, other than raises or bonuses previously
committed and disclosed to IDF and in the ordinary course of
the TechStar Business;
(6) except in the ordinary course of the TechStar
Business, modified any agreement to which TechStar is a party
or by which it may be bound, or modify any payment terms with
any creditor;
(7) made any material change in TechStar's
management personnel;
35
(8) except pursuant to commitments in effect on
the date hereof (to the extent disclosed in this Agreement or
in any Schedule hereto), made any capital expenditure(s) or
commitment(s) on behalf of TechStar, whether by means of
purchase, lease or otherwise, or any operating lease
commitment(s), in excess of $25,000 in the aggregate;
(9) sold, assigned or disposed of any capital
asset(s) of TechStar with a net book value in excess of
$25,000 as to any one item;
(10) changed the method of TechStar's collection
of accounts or notes receivable, accelerated or slowed its
payment of accounts payable, or prepaid any of its obligations
or liabilities, other than prepayments to take advantage of
trade discounts not otherwise inconsistent with or in excess
of historical prepayment practices;
(11) voluntarily subjected any of the assets or
properties of TechStar to any further Liens or encumbrances;
(12) forgiven any liability or indebtedness owed
to TechStar by AUGI or any of TechStar's or AUGI's Affiliates;
or
(13) agreed to do, or take any action in
furtherance of, any of the foregoing.
(o) Termination of Prior Employment Agreements. The Prior
Employment Agreements among TechStar (formerly BTS Acquisition Corp.) and each
of Messrs. Xxxxxx, Xxxxxxx and Moskona shall have been terminated and superseded
in all respects by the TechStar Employment Agreements.
(p) Conversion of Mergerco Shares. The outstanding shares of
capital stock of Mergerco shall have been converted, pursuant to the Merger,
into outstanding shares of Stock.
7.2 AUGI's and TechStar's Conditions. The obligations of AUGI and
TechStar to close transactions contemplated by this Merger Agreement is hereby
conditioned upon the fulfillment by IDF and/or H-W, at or prior to the Closing,
of the following conditions precedent, unless waived in writing by AUGI:
(a) Accuracy of Representations and Warranties of IDF and
Mergerco. All representations and warranties made by Mergerco and/or IDF in this
Agreement, in any Schedule(s) hereto, and/or in any IDF Transaction Agreement
delivered to TechStar or AUGI under, pursuant to, or in connection with, this
Agreement are true and correct in all material respects on and as of the date
hereof and will be true and correct in all material respects on the Closing
Date, unless such warranty is specifically stated to be as of an earlier date,
in which case it shall be true and correct as of such earlier date, and IDF and
Mergerco shall deliver a certificate to such effect.
(b) Performance by Mergerco and IDF. Mergerco and IDF shall
have performed, satisfied and complied with all covenants, agreements and
conditions required by this
36
Agreement to be performed, satisfied or complied with by them on or before the
Closing Date.
(c) Delivery of Merger Consideration. IDF shall have delivered
to AUGI, upon the consummation of the Merger, certificates of IDF Common Stock
representing the full Merger Consideration.
(d) Execution and Delivery of Certificate of Merger. TechStar
and Mergerco and, to the extent necessary or appropriate, their respective
officers and directors, shall have executed and delivered the Certificate of
Merger in the form of Exhibit A to this Agreement for filing with the
appropriate governmental authority immediately upon execution and delivery of
this Agreement.
(e) Execution and Delivery of Employment Agreements. Each of
Xxxxxx, Xxxxxxx and Moskona shall have executed and delivered their respective
TechStar Employment Agreement in the form of Exhibits X-0, X-0, and B-3 to this
Agreement, and Kald shall have executed and delivered his employment agreement
in the form of Exhibit I to this Agreement.
(f) IDF Notes. IDF and TechStar shall have delivered to each
of Xxxxxx X. Xxxxx and AUGI, respectively, $800,000 and $300,000 IDF Notes in
accordance with Exhibit C annexed hereto in cancellation of exiting indebtedness
as set forth in Section 7.1(e).
(g) Assignment and Assumption Agreement. On the Closing Date,
TechStar shall have executed and delivered to AUGI the assignment and assumption
agreement in respect of the AUGI Notes in the form of Exhibit D annexed hereto.
(h) Due Diligence. AUGI shall be satisfied in all respects
with the results of its due diligence investigation of IDF and its Subsidiaries,
including H-W.
(i) Merger Financing. Simultaneous with the Closing of the
Merger, IDF shall obtain proceeds of not less than $1.75 million and not more
than $2.25 million from the Merger Financing, prior to expenses related to such
Merger Financing as disclosed on Exhibit A; such expenses not to exceed $200,000
in the aggregate.
(j) Investment by TechStar Management. As part of the Merger
Financing referred to in Section 7.2(i) above, Messrs. Xxxxxx, Moskona and
Xxxxxxx shall, in the aggregate, have invested not less than $250,000 in IDF on
the same terms and conditions as the other investors in the Merger Financing.
(k) Settlement of Certain IDF Obligations. As at Closing Date
of the Merger, in addition to the refinancing of the IDF and TechStar
indebtedness evidenced by the IDF Notes, IDF shall have utilized the net
proceeds of the Merger Financing to have effected settlements, in a manner
reasonably satisfactory to AUGI (involving lump sum payments or payment
agreements) of approximately $2.5 million of IDF indebtedness or other accrued
obligations to creditors which are specified on Schedule 7.2(k) annexed hereto
(the "IDF Obligations"); such IDF Obligations to include, without limitation:
(i) all IDF Obligations in respect of accrued and unpaid
37
withholding, income and other federal or state taxes,
(ii) all IDF Obligations in respect of premiums and
unpaid contributions in respect of its defined contribution savings
and investment plan (estimated at approximately $175,000),
(iii) the disputed premiums in respect of H-W's health
insurance policy with Cigna, and
(iv) certain accrued and unpaid accounts payable in
respect of professional fees and disbursements outstanding for more
than 90 days from April 30, 1997.
(l) Operation of IDF Business. At all times prior to the
Closing Date of the Merger, the IDF Business will have been operated by IDF and
H-W in the normal course, with no material variations in historic payment or
collection practices or expense, with no incurrence of any material obligations
outside of the normal course of business, and with no material adverse change
from the results of operations reflected in the financial information previously
provided.
(m) Third Party Consents. IDF shall have caused to be obtained
and there shall be in full force and effect at the Closing Date, without burden
to the ongoing IDF Business, all material consents, waivers or other approvals
from any lessor, supplier, government agency, customer, or other party which may
be required in order for IDF and H-W to continue the normal course of the
operation of the IDF Business from and after the date of closing.
(n) Fairness Opinion. AUGI shall have obtained a written
opinion from an independent investment banking firm which shall be satisfactory
to the Board of Directors of AUGI, to the effect that the Merger is fair to the
stockholders of AUGI from a financial point of view.
(o) Conduct of Business; Payments of Compensation, Dividends
and Distributions. From and after June 16, 1997 (the date of execution of a
letter of intent among the parties hereto) through and including the Closing
Date and except as set forth in this Merger Agreement or on any Schedule to this
Agreement:
(i) other than as disclosed in writing to AUGI, no
assets of IDF or H-W shall have been paid as a dividend or distributed to
IDF or any IDF Affiliate prior to the Closing Date, except to the extent
necessary to pay taxes on income of H-W or other IDF Subsidiaries earned
through the Closing Date; and
(ii) neither of IDF nor H-W shall have engaged in any of
the following without, in each instance, the prior written consent of
AUGI:
(1) amended IDF's or H-W's Articles of
Incorporation or By-Laws;
(2) issued any shares of IDF or H-W's capital
stock, other than to AUGI as Merger Consideration or in
connection with the Merger Financing;
38
(3) issued or created any warrants, obligations,
subscriptions, options, convertible securities or other
commitments under which any additional shares of IDF or H-W's
capital stock might be directly or indirectly issued;
(4) amended, canceled or modified any existing
Material Contract binding on IDF or H-W, except in the
ordinary course of the IDF Business;
(5) paid, granted or authorized any salary
increases or bonuses or enter into any employment, consulting
or management agreements by or on behalf of IDF or H-W, other
than raises or bonuses previously committed and in the
ordinary course of the IDF Business;
(6) except in the ordinary course of the IDF
Business, modified any agreement to which IDF or H-W is a
party or by which it may be bound, or modify any payment terms
with any creditor;
(7) made any material change in IDF or H-W's
management personnel;
(8) except pursuant to commitments in effect on
the date hereof (to the extent disclosed in this Agreement or
in any Schedule hereto), made any capital expenditure(s) or
commitment(s) on behalf of IDF or H-W, whether by means of
purchase, lease or otherwise, or any operating lease
commitment(s), in excess of $25,000 in the aggregate;
(9) sold, assigned or disposed of any capital
asset(s) of IDF or H-W with a net book value in excess of
$25,000 as to any one item;
(10) changed the method of IDF or H-W's collection
of accounts or notes receivable, accelerated or slowed its
payment of accounts payable, or prepaid any of its obligations
or liabilities, other than prepayments to take advantage of
trade discounts not otherwise inconsistent with or in excess
of historical prepayment practices;
(11) voluntarily subjected any of the assets or
properties of IDF or H-W to any further Liens or encumbrances;
(12) forgiven any liability or indebtedness owed
to IDF or H-W by any of their Affiliates; or
(13) agreed to do, or take any action in
furtherance of, any of the foregoing.
(p) Termination of Prior Employment Agreements. The Prior
Employment Agreements among TechStar (former BTS Acquisition Corp.) and each of
Messrs. Xxxxxx, Xxxxxxx and Moskona shall have been terminated and superseded in
all respects by the
39
TechStar Employment Agreements.
(q) Cancellation of AUGI Stock Options. The stock options to
purchase an aggregate of 900,000 shares of AUGI Common Stock, $.01 par value per
share (the "AUGI Options") which have been issued to Messrs. Kandel, Luciani,
Moskona and other officers and personnel of TechStar shall have been cancelled
by a written agreement from each of such Persons satisfactory to AUGI and its
legal counsel.
7.3 The Parties' Conditions Precedent. The respective obligations of
the parties to close the transactions contemplated by this Agreement are
conditioned upon the fulfillment, at or prior to Closing, of the following
conditions unless waived in writing by the person for whose benefit such
condition has been made:
(a) Resolutions; Incumbency; Certified Bylaws and Certificate
of Incorporation; Good Standing Certificate. On the Closing Date, each of the
corporate parties shall have delivered to each of the other parties hereto the
following: (i) copies of resolutions of such parties' Board of Directors and, to
the extent reasonably requested or required by Delaware law, stockholders of the
corporate entity, in form reasonably satisfactory to counsel for the other
parties to this Agreement, authorizing such corporate party's execution,
delivery and performance of this Agreement and the Merger, and all actions to be
taken by such corporate party hereunder, certified by the Secretary of such
corporate party as of the date hereof to be in accurate and complete and in full
force and effect; (ii) certificates evidencing the incumbency and signatures of
relevant officers of such corporate party, certified by the Secretary of such
corporate party as of the date of this Agreement to be complete and accurate;
(iii) a copy of the bylaws and of the certificate of incorporation of such
corporate party, certified by the Secretary of such corporate party to be
complete and accurate and in full force and effect as of the date hereof; and
(iv) certificates, dated as of a date not more than five (5) days prior to the
Closing Date, by the Secretary of State of the state of incorporation of such
corporate party, evidencing the good standing of such corporate party in such
state.
(b) Opinion of Counsel. Each party to this Agreement has
received the opinion of counsel to each other party to this Agreement, dated as
of the Closing Date substantially in the form of Exhibit F hereto .
(c) Grant of Additional IDF Stock Options. In addition to the
TechStar Options granted by IDF to Messrs. Xxxxxx, Xxxxxxx and Moskona pursuant
to the terms of the TechStar Employment Agreements, on the Closing Date pursuant
to Exhibit G annexed hereto IDF shall issue, in lieu of options to purchase
120,000 shares of AUGI Common Stock held by other officers and personnel of
TechStar, options to purchase an aggregate of 131,777 additional shares of IDF
Common Stock, upon terms and conditions functionally identical to the TechStar
Options.
(d) Votes of AUGI. Subject to receipt of the Merger
Consideration, AUGI hereby covenants and agrees to vote all of the Stock of
TechStar owned by AUGI IN FAVOR of the Merger and all of the other transactions
contemplated by this Agreement and the AUGI Transaction Agreements.
40
(e) Surviving Corporation a Subsidiary. Upon completion of the
Merger, the Surviving Corporation shall remain a wholly-owned subsidiary of IDF.
The Certificate of Incorporation of TechStar, as the Surviving Corporation,
shall be in form and substance annexed hereto as Exhibit H and made a part
hereof.
(f) Boards of Directors. At the effectiveness of the Merger,
the initial Boards of Directors of IDF and of all members of the IDF Group,
including each of TechStar and H-W shall consist of five persons: Xxxxxx X.
Xxxxx, Xxxxxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxxx X. Xxxxxx and Xxxxxx Xxxx. In
addition, upon completion of any subsequent public offering of securities of
IDF, the Board of Directors of IDF shall be expanded to include two additional
directors who shall be unaffiliated with AUGI or IDF, if required by the
exchange on which IDF's securities shall be listed. In the event that any either
of Messrs. Xxxxxx or Kald is unable or unwilling to serve, a person designated
by H-W shall take the place of such unavailable director; provided, that if
either Xxxxxxx or Xxxxxx is unable or unwilling to serve as a TechStar director,
such person's replacement shall be Moskona, if he shall then be employed by
TechStar. In the event that any of Messrs. Xxxxx, Xxxxxxx or Xxxxxx are unable
or unwilling to serve, a person designated by AUGI shall take the place of such
unavailable director. For so long as any of Messrs. Xxxxxxx, Xxxxxx and Kald are
employed by any of TechStar, AUGI shall vote its shares of IDF Common Stock in
favor of their continued nomination to the Boards of Directors of TechStar. AUGI
also agrees to vote its shares of IDF Common Stock to elect Messrs. Xxxxxx and
Kald or their replacements designated by H-W, as provided above, to the Board of
Directors of H-W.
(g) Management. At the effective time of the Merger, the
senior executive officers of each of IDF, TechStar and H-W shall be as follows:
IDF:
Name Title
---- -----
Xxxxxx X. Xxxxx Chairman of the Board of Directors
Xxxxx X. Xxxxxx President and Chief Executive Officer
Xxxxxx Xxxxxxx Senior Vice President, Chief Financial Officer
and Secretary
Xxxx Xxxxxxx Executive Vice President
Lembit Kald Executive Vice President
TechStar:
Name Title
---- -----
Xxxxxx Xxxxxxx President and Chief Executive Officer
Xxxxxx Xxxxxxx Chief Financial Officer
Xxxx Xxxxxxx Executive Vice President
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H-W:
Name Title
---- -----
Lembit Kald President and Chief Executive Officer
Xxxxxx Xxxxxxx Chief Financial Officer
Xxxxxx Xxxxxxx Executive Vice President
(h) Expenses. Each party (including Messrs. Xxxxxx, Xxxxxxx
and Moskona) shall be responsible for the payment of its own costs and expenses
(including professional fees, of its attorneys, accountants and other advisors)
in connection with the transactions contemplated hereby. In connection therewith
(a) IDF shall be responsible for the costs of auditing its own consolidated
financial statements as at June 30, 1997 and for the fiscal year then ended, and
(b) AUGI shall be responsible for the costs of auditing TechStar financial
statements as at June 30, 1997 and for the fiscal period then ended.
(i) Confidentiality; Publicity. Except as and to the extent
otherwise required by law or upon advise of legal counsel, each of the parties
hereto shall maintain strict confidentiality with respect to this transaction
and all confidential information delivered to such party pursuant hereto, and
with respect to the negotiations relating to the transactions contemplated
hereby. In addition, none of the parties shall issue any press release or make
any other public announcement regarding the transactions contemplated hereby
without the prior consent and approval of the other parties in each instance,
which approval shall not be unreasonably withheld or delayed.
(j) Kald Employment Agreement. On the Closing Date, IDF and
Lembit Kald shall have executed an employment agreement in substantially the
form of Exhibit I annexed hereto and made a part hereof (the "Kald Employment
Agreement").
(k) Xxxxx Consulting Agreement. On the Closing Date, IDF and
Xxxxxx X. Xxxxx shall have executed a consulting agreement in substantially the
form of Exhibit J annexed hereto and made a part hereof (the "Xxxxx Consulting
Agreement").
7.4 Additional Post-Closing Agreements. The parties hereto shall use
their best efforts to cause the following events to occur as soon as practicable
following the Closing Date; provided, that the occurrence of the following shall
not be a condition precedent to consummate the transactions contemplated by this
Agreement:
(a) Bank Financing. Each of AUGI and IDF do hereby agree to
use their collective best efforts to obtain a secured line of credit of
approximately $4.0 million for the IDF Group from any recognized lending
institution, on such terms and conditions as the Board of Directors of AUGI and
IDF shall mutually determine.
(b) Authorization of Preferred Stock. IDF shall, at its next
annual shareholders meeting, to occur on or about October 31, 1997, propose (i)
to amend the Certificate of Incorporation of IDF to authorize a series of
preferred stock into which the IDF indebtedness evidencing the Merger Financing
shall automatically convert, such amendment to be
42
in the form to be annexed to the documents relating to the Merger Financing, and
(ii) to amend the Certificate of Incorporation to change the name of IDF to such
name as shall be proposed by the Board of Directors of IDF. By its execution of
this Agreement, AUGI hereby covenants and agrees to vote IN FAVOR of the
foregoing amendments to the Certificate of Incorporation of IDF.
(c) Redemption of IDF 8% Debentures. Subject to the right of
the holders to convert the IDF 8% Debentures into shares of IDF Common Stock,
prior to the Closing Date, IDF shall offer to redeem and repurchase for cash at
the face amount plus accrued interest thereon, all outstanding IDF 8%
Debentures, and shall use a portion of the net proceeds of the Merger Financing
for such purposes; provided, however, that neither the failure of IDF to so
redeem and repurchase outstanding IDF 8% Debentures, nor the conversion of all
or any portion of such IDF 8% Debentures into IDF Common Stock by the holders
thereof, shall constitute a condition to the obligations of any party hereto to
consummate the Merger upon the terms and conditions set forth herein.
8. AMENDMENTS AND MODIFICATIONS.
8.1 Amendments and Modifications. No amendment or modification of
this Agreement or any Exhibit or Schedule hereto shall be valid unless made in
writing and signed by the party to be charged therewith.
9. NON-ASSIGNABILITY; BINDING EFFECT.
9.1 Non-Assignability; Binding Effect. Neither this Agreement, nor
any of the rights or obligations of the parties hereunder, shall be assignable
by any party hereto without the prior written consent of all other parties
hereto. Otherwise, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and permitted assigns.
10. CLOSING.
10.1 Place and Date of Closing. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Messrs. Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Quentel, counsel to
TechStar and AUGI, located at 000 Xxxx 00xx Xxxxxx - 35th floor, Xxx Xxxx, Xxx
Xxxx 00000, at 10:30 A.M. local time on a date (the "Closing Date") which shall
be not later than August 31, 1997 (unless such Closing Date shall be extended by
mutual agreement of IDF and AUGI); provided, that parties may participate in the
closing by telephonic conference call if they so desire. The effectiveness of
the Merger shall occur on the Closing Date simultaneous with the Closing.
10.2 Filing of Merger Certificate. On the Closing Date, Mergerco and
TechStar shall file or cause to be filed the Certificate of Merger with the
Secretary of State of Delaware.
10.3 Delivery and Exchange of Certificates, Agreements and
Instruments. On the Closing Date, AUGI shall deliver to IDF certificates
evidencing all of the Stock and IDF shall deliver to AUGI certificates
evidencing the Merger Consideration and deliver to Xxxxxx, Xxxxxxx
43
and Moskona the TechStar Stock Options. In addition, the appropriate parties
shall duly execute and deliver all agreements annexed hereto as Exhibits and all
related certificates and instruments required to be delivered on the Closing
Date.
11. GOVERNING LAW; JURISDICTION.
This Agreement shall be construed and interpreted and the rights
granted herein governed in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed wholly within such State.
Except as otherwise provided in Section 12.2(c) below, any claim, dispute or
controversy arising under or in connection with this Agreement or any actual or
alleged breach hereof shall be settled exclusively by arbitration to be held
before one or more arbitrators in New York, New York, or in any other locale or
venue as legal jurisdiction may otherwise be had over the party against whom the
proceeding is commenced, in accordance with the commercial arbitration
procedures of Jams/End-Dispute resolution or such other as shall be mutually
agreeable. The parties hereto hereby agree to submit to the jurisdiction of such
arbitrators in New York, New York for such purpose, and waive all objections to
venue, forum non conveniens, and related objections in connection therewith. As
part of his or her award, the arbitrators shall make a fair allocation of the
fees of Jams/End-Dispute or such other as shall be mutually agreeable, the cost
of any transcript, and the parties' reasonable attorneys' fees, taking into
account the merits and good faith of the parties' claims and defenses. Judgment
may be entered on the award of such arbitrator(s) so rendered in any court of
competent jurisdiction. Any process or other papers hereunder may be served by
registered or certified mail, return receipt requested, or by personal service,
provided that a reasonable time for appearance or response is allowed.
12. INDEMNIFICATION.
12.1 General.
(a) By the IDF Group. Without prejudice to any rights of
contribution as between IDF, TechStar or any other Subsidiary of IDF, from and
after the Closing Date, and each member of the IDF Group shall jointly and
severally defend, indemnify and hold harmless AUGI and its officers, directors,
agents, representatives, and controlling persons (all of the foregoing, the
"AUGI Group") from, against and in respect of any and all claims, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees (collectively,
"Losses") that the AUGI Group may incur, sustain or suffer as a result of any
breach of, or failure by IDF or Mergerco to perform, any of the material
representations, warranties, covenants or agreements of IDF or Mergerco
contained in this Agreement or in any Exhibit or any Schedule(s) furnished by or
on behalf of IDF or Mergerco under this Agreement.
(b) By AUGI. From and after the Closing Date, AUGI shall
indemnify, defend and hold harmless the IDF Group, and each of them, from,
against and in respect of any and all Losses that such IDF or any other member
of the IDF Group may incur, sustain or suffer as a result of any breach of, or
failure by AUGI or TechStar to perform, any of the representations, warranties,
covenants or agreements of AUGI contained in this Agreement or in any Exhibit or
any Schedule(s) furnished by or on behalf of AUGI under this Agreement.
44
12.2 Limitations on Certain Indemnities.
(a) The Basket. Notwithstanding any other provision of this
Agreement to the contrary, neither the IDF Group, on one hand, nor AUGI, on the
other hand, shall be liable for indemnification hereunder with respect to
Losses, unless and until the aggregate amount of all Losses incurred by the
party or parties entitled to indemnification in the aggregate shall exceed the
sum of $100,000 (the "Basket"). The indemnifying party or parties shall
thereafter be liable, jointly and severally, for performance of its or their
indemnification obligations under this Agreement in respect of all Losses in
excess of the Basket, provided that the maximum aggregate liability set forth in
Section 12.2(b) below.
(b) Damages and Equitable Relief. Notwithstanding the
provisions of Section 12.2(b) above, nothing contained in this Agreement shall
be deemed to limit or restrict the right of any party hereto from seeking such
monetary damages and/or equitable remedies (including injunctive relief) as may
be available from any court of competent jurisdiction in the event of a breach
by any other party or parties of any material covenant on its or their part
contained in the AUGI Notes, or any other document or instrument in connection
with the transaction contemplated hereby, the Non-Competition and Non-Disclosure
Agreement and/or the Employment Agreements.
(c) Time Limitation on Indemnity for Breach of
Representations, Warranties, Agreements, and Covenants. AUGI shall be entitled
to indemnification by the IDF Group, and the IDF Group shall be entitled to
indemnification by AUGI, pursuant to this Agreement for Losses relating to: (i)
breach of any representation or warranty or agreement or covenant hereunder only
in respect of claims for which notice of claim shall have been given to the
indemnifying party on or before June 30, 2000, or (ii) with respect to Losses
relating to a breach of any representations or warranties in respect of tax or
environmental matters, the expiration of the final statute of limitations
applicable to such matters.
(d) Prejudice of Rights to Defend. No party shall be entitled
to indemnification pursuant to this Agreement in the event that the subject
claim for indemnification relates to a third-party claim and the party seeking
such indemnification knowingly delayed giving notice thereof to the party from
whom it seeks such indemnification to such an extent as to cause material
prejudice to the defense of such third-party claim.
(f) Insurance Coverage. Notwithstanding any other term or
provision of this Section 12.2, absent only a finding by a court of competent
jurisdiction from which no appeal can or shall be taken that an indemnifying
party shall have committed statutory or common law fraud, no indemnifying party
shall be required to indemnify any indemnified party hereunder for Losses to the
extent that such Losses shall have been reimbursed by insurance proceeds, but
shall be required to provide such indemnity until the Loss has, in fact, been
reimbursed. In the event that insurance does not cover the full amount of such
Losses, the indemnifying party shall remain liable for the full amount of the
difference between the insurance payment as described above and the amount of
the Losses, subject to the limitations set forth above.
12.3 Claims for Indemnity. Whenever a claim shall arise for which
any party shall be entitled to indemnification hereunder, the indemnified party
shall notify the indemnifying party in writing within sixty (60) days of the
indemnified party's first receipt of notice of, or the
45
indemnified party's obtaining actual knowledge of, such claim, and in any event
within such shorter period as may be necessary for the indemnifying party or
parties to take appropriate action to resist such claim. Such notice shall
specify all facts known to the indemnified party giving rise to such indemnity
rights and shall estimate (to the extent reasonably possible) the amount of
potential liability arising therefrom. If the indemnifying party shall be duly
notified of such dispute, the parties shall attempt to settle and compromise the
same or may agree to submit the same to arbitration or, if unable or unwilling
to do any of the foregoing, such dispute shall be settled by appropriate
litigation, and any rights of indemnification established by reason of such
settlement, compromise, arbitration or litigation shall promptly thereafter be
paid and satisfied by those indemnifying parties obligated to make
indemnification hereunder.
12.4 Right to Defend. If the facts giving rise to any claim for
indemnification shall involve any actual or threatened action or demand by any
third party against an indemnified party or any of its Affiliates, the
indemnifying party or parties shall be entitled (without prejudice to the
indemnified party's right to participate at its own expense through counsel of
its own choosing), at their expense and through a single counsel of their own
choosing, to defend or prosecute such claim in the name of the indemnifying
party or parties, or any of them, or if necessary, in the name of the
indemnified party. In any event, the indemnified party shall give the
indemnifying party advance written notice of any proposed compromise or
settlement of any such claim. If the remedy sought in any such action or demand
is solely money damages, the indemnifying party shall have fifteen (15) days
after receipt of such notice of settlement to object to the proposed compromise
or settlement, and if it does so object, the indemnifying party shall be
required to undertake, conduct and control, through counsel of its own choosing
and at its sole expense, the settlement or defense thereof, and the indemnified
party shall cooperate with the indemnifying party in connection therewith.
13. COSTS.
13.1 Finder's or Broker's Fees. Each of TechStar and AUGI (on the
one hand) and IDF and Mergerco (on the other hand) represents and warrants that
neither they nor any of their respective Affiliates have dealt with any broker
or finder in connection with any of the transactions contemplated by this
Agreement, and no broker or other person is entitled to any commission or
finder's fee in connection with any of these transactions.
14. FORM OF AGREEMENT.
14.1 Effect of Headings. The Section headings used in this Agreement
and the titles of the Schedules hereto are included for purposes of convenience
only, and shall not affect the construction or interpretation of any of the
provisions hereof or of the information set forth in such Schedules.
14.2 Entire Agreement; Waivers. This Agreement constitutes the
entire agreement between the parties pertaining to the subject matter hereof,
and supersedes all prior agreements or understandings as to such subject matter,
including without limitation, the letter of intent among the parties dated June
16, 1997. No party hereto has made any representation or warranty or given any
covenant to the other except as set forth in this Agreement and the other
Transaction Agreements and the Schedules and Exhibits hereto. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver. No
46
waiver shall be binding unless executed in writing by the party making the
waiver.
14.3 Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
14.4 Severability. In any provision of this Agreement is held
invalid or unenforceable, either in its entirety or by virtue of its scope or
application to given circumstances, such provision shall thereupon be deemed
modified only to the extent necessary to render the same valid or not applicable
to given circumstances, or excised from this Agreement, as the situation may
require, and this Agreement shall be construed and enforced as if such provision
had been included as so modified in scope or application, or had not been
included herein, as the case may be.
15. PARTIES.
15.1 Parties in Interest. Nothing in this Agreement, whether
expressed or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective heirs, executors, administrators, personal representatives,
successors and permitted assigns, nor is anything in this Agreement intended to
relieve or discharge the obligations or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over or against any party to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on and as of
the date first set forth above.
TECHSTAR COMMUNICATIONS, INC. AMERICAN UNITED GLOBAL, INC.
By:___________________________ By:_____________________________
Xxxxx X. Xxxxxx, President Xxxxxx X. Xxxxx, President
IDF INTERNATIONAL, INC. TECHSTAR ACQUISITION CORP.
By:_____________________________ By:_____________________________
Lembit Kald, President Lembit Kald, President
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Exhibits
A - Certificate of Merger of TechStar into Mergerco
B-1 - Form of Employment Agreement of
Xxxxx X. Xxxxxx
B-2 - Form of Employment Agreement of
Xxxxxx Xxxxxxx
B-3 - Form of Employment Agreement of
Xxxxxxxx Xxxxxxx
X-0 - Form of Employment Agreement of
Lembit Kald
C - Form of IDF Notes
D - Form of Assumption Agreement
E - Form of Non-Competition Agreement
F - Form of Opinions of Legal Counsel
G - Side Letter Agreement regarding certain IDF Options
H - Form of Certificate of Incorporation of the Surviving
Corporation
I _ Form of Kald Employment Agreement
J _ Form of Xxxxx Consulting Agreement
48
