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EXHIBIT 2.3
STOCK PURCHASE AGREEMENT AND
PLAN OF MERGER
UNICO INC.,
UNITED MARKETING SOLUTIONS INC.,
NEXT GENERATION MEDIA CORP. and
UNITED MARKETING MERGER CORP.
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated the 8th day of
May, 1998, among UNICO, INC., a Delaware corporation ("Seller"), UNITED
MARKETING SOLUTIONS INC., a Virginia corporation formerly known as United Coupon
Corporation ("UMSI"), NEXT GENERATION MEDIA CORP., a Nevada corporation
("Buyer"), and UNITED MARKETING MERGER CORP., a Virginia corporation ("Newco").
RECITALS
A. Seller owns 100% of the issued and outstanding shares of the
capital stock of UMSI.
B. Seller desires to sell, and Buyer desires to purchase, all of
Seller's shares of capital stock of UMSI, for the
consideration and upon the terms and subject to the conditions
hereinafter set forth.
C. The parties desire that Newco shall be merged with and into
UMSI (said transaction being hereinafter referred to as the
"Merger") pursuant to a plan of merger substantially in the
form set forth in Annex A hereto (the "Plan of Merger").
D. The parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in
connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and for other
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:
1. Purchase and Sale of Stock and Merger.
1.1. Agreement to Purchase and Sell. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date (as defined below),
Seller shall sell to Buyer, and Buyer shall purchase from Seller, 1 share of
common stock (the "UMSI Shares"), par value $20.00, of UMSI ("UMSI Common")
representing 100% of the issued and outstanding capital stock of UMSI.
1.2. Purchase Price. In exchange for the UMSI Shares, Buyer agrees to
pay the purchase price in the form of (a) 200,000 shares of Buyer's common
stock, par value $0.01 ("NexGen Common") divided ratably (and rounded to the
nearest whole share) among the holders of the common stock of Seller (the
"Merger Consideration") and (b) up to $150,000 cash (the "Debt Pay-Off
Consideration," and, together with the Merger Consideration, the "Purchase
Price") for the payment of debts of Seller to the extent that creditors of
Seller (other than BancFirst, an
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Oklahoma banking corporation ("BancFirst")) do not consent to the assignment of
such debt by Seller, the assumption of such debt by Buyer and the release of
Seller in respect of such debt by such creditor. The Merger Consideration shall
be paid to the holders of Seller's issued and outstanding common stock, par
value $0.01 per share ("Unico Common), provided, however, that the Merger
Consideration will not be paid to Buyer for any shares of Unico Common held by
Buyer. The Debt Pay-Off Consideration shall be paid to Seller. The Merger
Consideration may be adjusted according to the following:
1.2.1. Merger Consideration Adjustment - Cash Component. At
the time of the vote of the holders of Seller's capital stock on the
Transactions (as defined herein), the holders of Seller's common stock ("Unico
Common Holders") who shall receive Merger Consideration, may elect to receive
cash in lieu of NexGen Common. If any Unico Common Holder so elects, Buyer shall
pay to each Unico Common Holder so electing a cash component of the Merger
Consideration equal to $0.10 multiplied by the number of shares of Unico Common
held by such Unico Common Holder.
1.2.2. Merger Consideration Adjustment - NexGen Common
Component. If any Unico Common Holder votes to receive cash in lieu of NexGen
Common, the Unico Common Holders that do not so elect shall receive their
ratable shares of the Merger Consideration in NexGen Common as if all Unico
Common Holders were receiving NexGen Common for their ratable share of the
Merger Consideration.
1.3. Payment of Purchase Price. The Purchase Price shall be payable as
follows:
1.3.1. Buyer shall pay the Unico Common Holders the Merger
Consideration upon the Closing (as defined herein).
1.3.2. Buyer shall pay Seller the Debt Pay-Off Consideration
within ninety (90) days of the Closing.
1.4. Closing. The closing of the purchase and sale of the UMSI Shares
(the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxxxxx,
Washington, D.C., as soon after the vote of the shareholders of Seller as is
practicable (such date, the "Closing Date").
1.5. Merger. UMSI and Newco are constituent corporations (the
"Constituent Corporations") to the Merger as contemplated by the Virginia Stock
Corporation Act, as amended (the "VSCA"). At the Effective Time (as defined
herein):
1.5.1. Newco shall be merged with and into UMSI in
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accordance with the applicable provisions of the VSCA, with UMSI being the
surviving corporate entity (the "Surviving Corporation").
1.5.2. The separate existence of Newco shall cease, and the
Merger shall in all respects have the effect provided for in subsection 1.8.
1.5.3. The Articles of Incorporation of UMSI at the Effective
Time shall become the Articles of Incorporation of the Surviving Corporation.
1.5.4. The bylaws of UMSI at the Effective Time shall become
the bylaws of the Surviving Corporation.
1.6. Filing; Plan of Merger. The Merger shall not become effective
unless this Agreement and the Plan of Merger are duly adopted by the respective
boards of directors of the Constituent Corporations and approved by shareholders
holding the requisite number of shares of Seller and each of the Constituent
Corporations. Upon fulfillment or waiver of the conditions in Section 5 and
provided that this Agreement has not been terminated pursuant to Section 6.2,
the Constituent Corporations will cause the Plan of Merger to be certified,
executed, acknowledged and filed with the Virginia Corporation Commission as
provided in the VSCA. The Plan of Merger is incorporated herein by reference,
and adoption of this Agreement by the Boards of Directors of the Constituent
Corporations and approval by the shareholders of the Constituent Corporations
and of Seller shall constitute adoption and approval of the Plan of Merger.
1.7. Effective Time. The Merger shall be effective at the day and hour
specified in the Articles of Merger (including the Plan of Merger) filed with
the Virginia Corporation Commission (the "Effective Time").
1.8. Effect of Merger. From and after the Effective Time, the Merger
shall have the effect described in the VSCA. At the Effective Time, by virtue of
the Merger and without any action on the part of Constituent Corporations, each
share of the common stock of Newco issued and outstanding immediately prior to
the Effective Time shall no longer be issued and outstanding, and each share of
the UMSI Common issued and outstanding immediately prior to the Effective Time
shall continue to be issued and outstanding. The Surviving Corporation shall
become, by virtue of the Merger and without any action on the part of the
Constituent Corporations, a wholly-owned subsidiary of Buyer.
2. Representations and Warranties of Seller and UMSI. Seller and UMSI each
represents and warrants to Buyer as follows:
2.1. Capital Structure, Organization, Standing and Authority. The
authorized capital stock of Seller consists of 20,000,000 shares of Unico
Common, par value $0.01 per share,
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and 5,000,000 shares of Preferred Stock, par value $0.01 per share ("Unico
Preferred") of which Seller has one designated series (the "Unico Series C
Preferred"). No other classes of capital stock of Seller are authorized. As of
the date hereof, 2,119,077 shares of Unico Common and 428,185 shares of Unico
Series C Preferred are issued and outstanding, and no other shares of capital
stock of Seller are issued and outstanding. All outstanding shares of Unico
Common and Unico Series C Preferred have been duly authorized and are validly
issued, fully paid and nonassessable. Except as set forth on Schedule 2.1,
Seller has no warrants, options, rights, convertible securities and other
arrangements or commitments that obligate it to issue or dispose of any of its
capital stock or other ownership interests, and stock appreciation rights,
performance units and similar stock-based rights whether or not they obligate
the issuer thereof to issue stock, or other securities or to pay cash
(collectively, "Rights") authorized, issued or outstanding with respect to the
capital stock of Seller. Holders of Unico Common do not have preemptive rights.
Seller is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware with full corporate power and authority
to carry on its business in any other state of the United States or foreign
jurisdiction where such failure would have a material adverse effect on the
financial condition, results of operations, business or business prospects of
Seller.
2.2. Authorization; Validity and Effect of Transaction Documents. The
execution and delivery of this Agreement and all other Transaction Documents (as
defined herein) by Seller, and the consummation by it of the transactions
contemplated hereby and thereby (the "Transactions"), have been duly authorized
by all requisite corporate action (subject to receipt of approval of the Unico
Common Holders of this Agreement and the Plan of Merger). This Agreement
constitutes, and all other agreements and documents contemplated hereby (the
"Transaction Documents"), which are to be executed and delivered by Seller, when
executed and delivered pursuant hereto, will constitute the valid and legally
binding obligations of Seller, enforceable in accordance with their respective
terms (subject to receipt of approval of the Seller's shareholders of this
Agreement and the Plan of Merger). The execution and delivery of this Agreement
and any other Transaction Document does not, and the consummation of the
Transactions will not: (i) require the consent of any third party (other than
the approval of the Seller's shareholders of this Agreement and the Plan of
Merger and the consent of BancFirst), (ii) violate any statute or law or any
rule, regulation, order, writ, injunction, arbitration award, or decree of any
court, administrative or governmental agency, instrumentality, commission,
authority, board or other body (a "Governmental Authority") or require any
authorization, consent, approval, exemption or other action by or notice to any
Governmental Authority; (iii) result in the breach of any term or provision of,
or constitute a default under, or result in the acceleration of or entitle any
party to accelerate (whether after
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the giving of notice or the lapse of time or both) any obligation under, or
result in the creation or imposition of any lien, charge, pledge, security
interest, encumbrance, assessment or adverse claim (a "Lien") upon any part of
the property of Seller pursuant to any provision of, any material contract,
indenture, mortgage, lease, license, Lien, or other agreement or instrument to
which Seller is a party or by which it is bound, or (iv) violate or conflict
with any provision of the bylaws or articles of incorporation of the Seller as
amended to the date of this Agreement.
2.3. Ownership of Subsidiary. Seller's sole operating subsidiary is
UMSI, a Delaware corporation. The authorized capital stock of UMSI consists of
100 shares of UMSI Common, par value $20.00 per share. No other classes of
capital stock of UMSI are authorized. As of the date hereof, one share of UMSI
Common is issued and outstanding, and no other shares of capital stock of UMSI
are issued and outstanding. All outstanding shares of UMSI Common have been duly
authorized and are validly issued, fully paid and nonassessable. No shares of
capital stock have been reserved for any purpose. UMSI has no Rights authorized,
issued or outstanding with respect to the capital stock of UMSI. Seller is the
sole holder of 100% of the issued and outstanding capital stock of UMSI, free
and clear of all Liens, encumbrances, charges, defaults, pledges or equitable
interests other than the Lien of BancFirst. UMSI is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Virginia with full corporate power and authority to carry on its
business as it is currently being conducted in any other state of the United
States or foreign jurisdiction where such failure would have a material adverse
effect on the financial condition, results of operations, business or business
prospects of UMSI.
2.4. Authorization; Validity and Effect of Transaction Documents -
UMSI. The execution and delivery of this Agreement and all other Transaction
Documents by UMSI, and the consummation by it of the Transactions have been duly
authorized by all requisite corporate action. This Agreement and the Transaction
Documents which are to be executed and delivered by UMSI, when executed and
delivered pursuant hereto, will constitute the valid and legally binding
obligations of UMSI, enforceable in accordance with their respective terms
(subject to receipt of approval of the Unico Common Holders of this Agreement
and the Plan of Merger). The execution and delivery of this Agreement and any
other Transaction Document does not, and the consummation of the Transactions
will not: (i) require the consent of any third party (other than the approval of
Seller's shareholders of this Agreement and the Plan of Merger and the consent
of BancFirst), (ii) violate any statute or law or any rule,
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regulation, order, writ, injunction, arbitration award, or decree of any
Governmental Authority or require any authorization, consent, approval,
exemption or other action by or notice to any Governmental Authority; (iii)
result in the breach of any term or provision of, or constitute a default under,
or result in the acceleration of or entitle any party to accelerate (whether
after the giving of notice or the lapse of time or both) any obligation under,
or result in the creation or imposition of any Lien upon any part of the
property of UMSI pursuant to any provision of, any material contract, indenture,
mortgage, lease, license, Lien, or other agreement or instrument to which UMSI
is a party or by which it is bound, or (iv) violate or conflict with any
provision of the bylaws or articles of incorporation of UMSI as amended to the
date of this Agreement.
2.5. Assets and Contract Rights. Seller has no significant assets other
than the UMSI Shares and its contract rights pursuant to this Agreement and the
other Transaction Documents.
2.6. Litigation. Other than as provided in Schedule 2.6, there are no
actions, suits, investigations, inquiries or other proceedings with respect to
Seller or UMSI involving claims by or against Seller or UMSI which are pending
or threatened against any such entity, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality regarding Seller's ownership of the UMSI
Shares, Seller's business or UMSI's business.
2.7. Interested Party Transactions. No current or former officer,
director, or shareholder of Seller, or any family member of any such natural
person: (a) is owed or will be owed any debt by UMSI, either directly or
indirectly; (b) is indebted or will be indebted to UMSI; or (c) is, directly or
indirectly, interested in any contract of UMSI or any other entity now owning or
which has owned in the past calendar year any assets of UMSI, other than Xx.
Xxxxxx Xxxxxxx, in respect of whom UMSI has executed an employment agreement and
an indemnification in connection with a line of credit established for the
benefit of UMSI.
2.8. Securities Filings; Statements True.
2.8.1. Seller has timely filed all reports, proxy statements,
registration statements and all similar documents (the "Securities Documents")
filed, or required to be filed, pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended,
the Investment Company Act of 1940, as amended, the Trust Indenture Act of 1939,
as amended, and the rules and regulations of the Securities and Exchange
Commission (the "SEC") promulgated thereunder (collectively, the
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"Securities Laws") since January 1, 1995, with the exception of Seller's annual
report on Form 10-K for fiscal year 1997 that was filed with the SEC on April
16, 1998. Seller has provided to Buyer a true and complete copy of each
Securities Document filed by Seller with the SEC that Seller was required to
file during such period. As of their respective dates of filing, such Securities
Documents complied with the Securities Laws as then in effect, and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
2.8.2. The consolidated balance sheets of Seller as of
December 31, 1997, 1996 and 1995, and the related consolidated statements of
income, shareholders' equity and cash flows (including related notes and
schedules, if any) for each of the three years ended December 31, 1997, 1996 and
1995, as filed by Seller in Securities Documents and the consolidated balance
sheets of Seller (including related notes and schedules, if any) and the related
consolidated statements of income, changes in shareholders' equity and cash
flows (including related notes and schedules, if any) including in Securities
Documents filed by Seller with respect to periods ended subsequent to December
31, 1997 (collectively, the "Financial Statements") fairly present or will
fairly present, as the case may be, the consolidated financial position of
Seller and UMSI as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity and statements of cash flows for the
periods then ended (subject, in the case of unaudited interim statements, to the
absence of notes and to normal year-end audit adjustments that are not material
in amount or effect) in conformity with U.S. generally accepted accounted
principles on a consistent basis.
2.8.3. No statement, certificate, instrument or other writing
furnished or to be furnished hereunder by Seller or UMSI contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
2.9. Adverse Change. Since December 31, 1997, Seller and UMSI have not
incurred any liability except as disclosed in the most recent Seller Financial
Statements, or entered into any transactions with affiliates, in each case other
than in the ordinary course of business consistent with past practices, nor has
there been any adverse change or any event involving a prospective adverse
change in the business, financial condition or results of operations of Seller
or of UMSI. All liabilities (including contingent liabilities) of Seller and
UMSI are
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disclosed in the most recent Financial Statements of Seller or were incurred in
the ordinary course of business since the date of Seller's most recent Financial
Statements.
2.10. Loans. All of the loans on the books of Seller and UMSI are valid
and properly documented, and were made in the ordinary course of business.
Neither the terms of such loans, nor any of the loan documentation, nor the
manner in which such loans have been administered and serviced, violates any
federal, state or local law, rule, regulation or ordinance applicable thereto.
Attached at Schedule 2.10 is (a) a summary of all outstanding material debt
obligations of Seller including the name and address of each creditor, the
outstanding principal and interest owed as of the date hereof and the material
terms of such debt obligation, and (b) a copy of written evidence from BancFirst
that BancFirst will not object to the Transactions, consents to the acquisition
of UMSI by Buyer, releases Seller from its obligations in regard to its debt to
BancFirst and agrees to the assumption by Buyer of such obligations in regard to
the debt of Seller to BancFirst.
2.11. Taxes. Other than as described on Schedule 2.11, Seller and UMSI
have timely filed (or requests for extensions have been timely filed and any
such extensions have been granted and have not expired) all federal, state and
local (and, if applicable, foreign) tax returns required by applicable law to be
filed by them and have paid, or where payment is not required to have been made,
have set up an adequate reserve or accrual for the payment of, all taxes
required to be paid in respect of the period covered by such returns and will
have paid, or where payment is not required to have been made, will have set up
an adequate reserve or accrual for the payment of, all taxes for any subsequent
periods ending on or prior to the Closing Date. Neither Seller nor UMSI will
have any liability for any such taxes in excess of the amounts so paid or
reserves or accruals so established. All federal, state and local (and, if
applicable, foreign) tax returns filed by Seller and UMSI are complete and
accurate. Neither Seller nor UMSI is delinquent in the payment of any tax,
assessment or governmental charge.
2.12. Compliance with Laws. Each of Seller and UMSI is in compliance
with all statutes and regulations, and has obtained and maintained all permits,
licenses and registrations applicable to the conduct of its business, and
neither Seller nor UMSI has received notification (a) asserting a violation or
possible violation of any such statute or regulation, (b) threatening to revoke
any permit, license, registration or other government authorization, or (c)
restricting or in any way limiting its operations.
2.13. No Brokers. Neither Seller nor UMSI has entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Buyer, Seller or UMSI to pay any finder's fees, brokerage
or agent's commissions
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or other like payments in connection with the negotiations leading to this
Agreement and the other Transaction Documents or the consummation of the
Transactions, and Seller is not aware of any claim or basis for any claim for
payment of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement and the
other Transaction Documents or the consummation of the Transactions.
2.14. Certain Information. When the proxy statement is mailed, and at
the time of the meeting of Seller's shareholders to vote upon this Agreement and
the Plan of Merger, the proxy statement and all amendments and supplements
thereto, with respect to all information set forth therein provided by Seller,
(a) shall comply with the applicable provisions of the Securities Laws and (b)
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
2.15. Insurance. Set forth in Schedule 2.15 is a complete list of
insurance policies that Seller maintains with respect to itself and/or UMSI,
together with a copy of the declarations page of each such policy setting forth,
with respect to each policy, the amount and type of coverage, limits and
deductibles, inception and expiration dates and insurance carrier. Such policies
are in full force and effect.
2.16. Employees. Set forth in Schedule 2.16 is an accurate and complete
list of the names of all persons employed by UMSI ("Employees"), together with
the following information with respect to each Employee: base compensation and
department. Except as set forth in Schedule 2.16, no Employee has given notice
to terminate his or her employment, nor has any Employee threatened to give
notice of termination. Except as set forth in Schedule 2.16, neither Seller nor
UMSI has promised or agreed to give any Employee a pay raise or any additional
compensation other than with respect to a review in the ordinary course of
business consistent with past practice. Schedule 2.16 also sets forth the names
of all Employees with whom Seller or UMSI has entered into an employment
agreement and/or a non-compete agreement, as well as the material terms of any
such agreement.
2.17. Employee Benefit Plans; ERISA Compliance. With respect to each
employee benefit plan, as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and every other fringe
benefit, stock option, bonus, incentive compensation, deferred compensation,
excess, supplemental executive compensation, employee stock purchase, vacation,
sickness or disability, severance or separation, restricted stock or other
employee benefit plan, policy or arrangement, whether written or oral,
maintained or contributed to within the last five years by UMSI or by a Common
Control
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Entity (as defined below) for the benefit of Employees or former employees or
under which UMSI has or may have any liability or obligation (the "Benefit
Plans") maintained by UMSI or any corporation or other trade or business under
common control with UMSI (as determined under Section 414(b) or (c) of the Code,
a "Common Control Entity"): (i) there is no actual or contingent liability under
Title IV of ERISA or the Code to any person or entity, including the Pension
Benefit Guaranty Corporation, the IRS, any such plan or the participants (or
their beneficiaries) in any such plan; (ii) the assets of UMSI have not been
subject to a lien under ERISA or the Code; and (iii) there is no basis for such
liability or the assertion of any such lien with respect to the assets of UMSI
as the result of or after the consummation of the transactions contemplated by
this Agreement. UMSI and each Common Control Entity has at all times complied
with the continuation of coverage requirements of Section 601 through 609 of
ERISA and Section 4980B of the Code ("COBRA"). No Benefit Plan provides health,
dental, life insurance or other welfare benefits (whether on an insured or
self-insured basis) to Employees or former employees after their retirement or
other termination of employment from UMSI (other than continuation coverage
required under COBRA which may be purchased at the sole expense of the employee
or former employee).
2.18. Employee Relations. For the past three years, neither Seller nor
UMSI has engaged in any unfair labor practice with respect to any Employees or
former employees; no unfair labor practice complaint has been brought or is
pending before the National Labor Relations Board with respect to any Employees
or former employees; there has been no labor strike, dispute, slowdown or
stoppage involving any Employees or former employees, nor is there any now
pending or threatened; no representation question has been raised or now exists
respecting Employees or former employees; neither Seller nor UMSI has been
notified of any material grievance, and no arbitration proceeding arising out of
or under any collective bargaining agreement has been brought or is pending with
respect to any Employees or former employees; and neither Seller nor UMSI has
been or is a party to any collective bargaining agreement.
2.19. Suppliers. Except as set forth in Schedule 2.19, no supplier of
the Seller or UMSI has, in the six months prior to the date hereof, given
written notice to Seller or UMSI to cancel or otherwise terminate or reduce, or
given such notice orally or threatened to cancel, terminate or reduce, its
relationship with Seller or UMSI other than in the ordinary course of business
consistent with past experience.
2.20. Environmental Laws. Neither Seller nor USMI has received any
notification that: Hazardous Materials (as defined below) have been generated,
used, treated or stored at, or transported to or from, any real property used in
UMSI's business; Hazardous Materials have been released or disposed of on any
such property; or Seller or UMSI is not in compliance with
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applicable Environmental Laws and the requirements of any permits issued under
such Environmental Laws with respect to any such property, nor have any of the
foregoing events occurred. There are no pending or threatened claims, suits,
demands, investigations, proceedings or other actions relating to any
Environmental Law with respect to any such property. For purposes of this
Agreement, "Environmental Laws" shall mean any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, permit, policy or order now in
effect and in each case as amended to date and any judicial or administrative
interpretation thereof relating to Hazardous Materials, environmental matters,
the protection of public health and safety from environmental or health concerns
or otherwise relating to environmental conditions; and "Hazardous Materials"
shall mean all hazardous substances, wastes, materials or constituents, solid
wastes, special wastes, toxic substances, pollutants, contaminants, petroleum or
petroleum derived substances or wastes, radioactive materials, urea
formaldehyde, polychlorinated biphenyls, radon gas and related materials,
including, without limitation, any such materials defined, listed, identified
under or described in any Environmental Laws.
2.21. No Misrepresentation or Omission. No representation or warranty
by Seller or UMSI in this Section 2 or in any other section of this Agreement,
or in any certificate or other document furnished or to be furnished by Seller
or UMSI pursuant hereto, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading.
The representations and warranties of Seller and UMSI set forth above (other
than in Sections 2.1., 2.2., 2.3., 2.4. and 2.8.) shall survive the Closing for
a period of three years. The representations and warranties of Seller and UMSI
set forth in Sections 2.1., 2.2., 2.3., 2.4. and 2.8.), and the covenants of
Seller and UMSI set forth herein shall survive the Closing indefinitely.
3. Representations and Warranties of Buyer. Buyer and Newco each represents and
warrants to Seller as follows:
3.1. Capital Structure, Organization, Standing and Authority. The
authorized capital stock of Buyer consists of 50,000,000 shares of NexGen
Common, par value $0.01 per share, and 1,000,000 shares of preferred stock, par
value $0.001 per share ("NexGen Preferred") of which Buyer has designated two
series, the "Series A Preferred Stock" and the "Series B Preferred Stock." No
other classes of capital stock of Seller are authorized. As of the date hereof,
3,113,450 shares of NexGen Common, 250,000 shares of Series A Preferred Stock
and 70,000 shares of Series B Preferred Stock are issued and outstanding, and no
other shares of capital stock of Buyer are issued and outstanding. All
outstanding shares of XxxXxx Xxxxxx
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xxx XxxXxx Xxxxxxxxx have been duly authorized and are validly issued, fully
paid and nonassessable. Except as set forth on Schedule 3.1, Buyer has no Rights
authorized, issued or outstanding with respect to the capital stock of Buyer.
Holders of NexGen Common do not have preemptive rights. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Nevada. Newco is a corporation duly incorporated, validly existing and
in good standing under the laws of the Commonwealth of Virginia. Buyer owns all
of the issued and outstanding shares of capital stock of Newco.
3.2. Authorization; Validity and Effect of Transaction Documents. The
execution and delivery of this Agreement and all other Transaction Documents by
each of Buyer and Newco, and the consummation by it of the Transactions, have
been duly authorized by all requisite corporate action. This Agreement
constitutes, and all other Transaction Documents to be executed and delivered by
Buyer, when executed and delivered pursuant hereto, will constitute, the valid
and legally binding obligations of Buyer, enforceable in accordance with their
respective terms. The execution and delivery of this Agreement and the other
Transaction Documents does not, and the consummation of the Transactions will
not, (i) require the consent of any third party, (ii) violate any statute or law
or any rule, regulation, order, writ, injunction, arbitration award or decree of
any Governmental Authority or require any authorization, consent, approval,
exemption or other action by or notice to any Governmental Authority, (iii)
result in the breach of any term or provision of, or constitute a default under,
or result in the acceleration of or entitle any party to accelerate (whether
after the giving of notice or the lapse of time or both) any obligation under,
or result in the creation or imposition of any Lien upon any part of the
property of Buyer pursuant to any provision of, any material contract,
indenture, mortgage, lease, license, Lien, or other agreement or instrument to
which Buyer is a party or by which it is bound, or (iv) violate or conflict with
any provision of the bylaws or articles of incorporation of Buyer, as amended to
the date of this Agreement.
3.3. Investment Intent. Buyer is acquiring the UMSI Shares for Buyer's
own account for investment with no present intention of distributing or
reselling any such Shares with a view to any distribution within the meaning of
the Securities Act, and Buyer will not, directly or indirectly, voluntarily
offer, sell, pledge or otherwise dispose of (or solicit any offers to purchase
or otherwise acquire or take a pledge of) any UMSI Shares, except as
contemplated by the Pledge Agreement, unless (i) registered pursuant to the
provisions of the Securities Act or (ii) an exemption from registration is
available under the Securities Act.
3.4. Litigation. There are no actions, suits, investigations, inquiries
or other proceedings with respect to
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Buyer or Newco involving claims by or against Buyer or Newco which are pending
or threatened against any such entity, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality regarding Buyer's or Newco's business.
3.5 Securities Filings; Statements True.
3.5.1. Buyer has timely filed all Securities Documents filed,
or required to be filed, pursuant to the Securities Laws since February 6, 1997
with the exception of an amended current report and an amended quarterly report
to be filed, respectively, on Form 8-K and Form 10-Q to update timely filed
reports to include certain pro forma data concerning Buyer's acquisition of
certain assets of Pompton Valley Publishing Company, Inc. on September 29, 1997,
which such reports shall be filed with the SEC prior to the Closing. Buyer has
provided or will provide prior to the Closing to Seller a true and complete copy
of each Securities Document filed by Buyer with the SEC that Buyer was required
to file during such period. As of their respective dates of filing, such
Securities Documents complied with the Securities Laws as then in effect, and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.5.2. The consolidated balance sheet of Buyer as of December
31, 1997, and the related consolidated statements of income, shareholders'
equity and cash flows (including related notes and schedules, if any) for the
year ended December 31, 1997, as filed by Buyer in Securities Documents and the
consolidated balance sheets of Buyer (including related notes and schedules, if
any) and the related consolidated statements of income, changes in shareholders'
equity and cash flows (including related notes and schedules, if any) including
in Securities Documents filed by Buyer with respect to periods ended subsequent
to December 31, 1997 (collectively, the "Financial Statements") fairly present
or will fairly present, as the case may be, the consolidated financial position
of Buyer as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity and statements of cash flows for the periods
then ended (subject, in the case of unaudited interim statements, to the absence
of notes and to normal year-end audit adjustments that are not material in
amount or effect) in conformity with U.S. generally accepted accounted
principles on a consistent basis.
3.5.3. No statement, certificate, instrument or other writing
furnished or to be furnished hereunder by Buyer contains or will contain any
untrue statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
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3.6. Adverse Change. Since December 31, 1997, Buyer has not incurred
any liability except as disclosed in the most recent Buyer Financial Statements,
or entered into any transactions with affiliates, in each case other than in the
ordinary course of business consistent with past practices, nor has there been
any adverse change or any event involving a prospective adverse change in the
business, financial condition or results of operations of Buyer. All liabilities
(including contingent liabilities) of Buyer are disclosed in the most recent
Financial Statements of Buyer or were incurred in the ordinary course of
business since the date of Buyer's most recent Financial Statements.
3.7. Taxes. Buyer's sole operating subsidiary, Independent News Inc.
("INI"), has timely filed (or requests for extensions have been timely filed and
any such extensions have been granted and have not expired) all federal, state
and local (and, if applicable, foreign) tax returns required by applicable law
to be filed by it and has paid, or where payment is not required to have been
made, has set up an adequate reserve or accrual for the payment of, all taxes
required to be paid in respect of the period covered by such returns and will
have paid, or where payment is not required to have been made, will have set up
an adequate reserve or accrual for the payment of, all taxes for any subsequent
periods ending on or prior to the Closing Date. Buyer will not have any
liability for any such taxes or in excess of the amounts so paid or reserves or
accruals so established. All federal, state and local (and, if applicable,
foreign) tax returns filed by Buyer are complete and accurate. INI and, to the
best of Buyer's knowledge, Buyer are not delinquent in the payment of any tax,
assessment or governmental charge.
3.8. Compliance with Laws. Buyer is in compliance with all statutes and
regulations, and has obtained and maintained all permits, licenses and
registrations applicable to the conduct of its business, and Buyer has not
received notification (a) asserting a violation or possible violation of any
such statute or regulation, (b) threatening to revoke any permit, license,
registration or other government authorization, or (c) restricting or in any way
limiting its operations.
3.9. No Brokers. Buyer has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of
Buyer, Seller or UMSI to pay any finder's fees, brokerage or agent's commissions
or other like payments in connection with the negotiations leading to this
Agreement and the other Transaction Documents or the consummation of the
Transactions, and Buyer is not aware of any claim or basis for any claim for
payment of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement and the
other Transaction Documents or the consummation of the Transactions.
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3.10. Certain Information. When the proxy statement is mailed to
Seller's shareholders, and at the time of the meeting of Seller's shareholders
to vote upon this Agreement and the Plan of Merger, the proxy statement and all
amendments and supplements thereto, with respect to all information set forth
therein provided by Buyer (a) shall comply with the applicable provisions of the
Securities Laws and (b) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances in which
they were made, not misleading.
3.11. Material Contracts. Set forth in Schedule 3.11 is a list of all
material contracts entered into by Buyer since February 6, 1997. Buyer has
furnished to Seller copies of all material contract listed on Schedule 3.11
prior to the execution of this Agreement.
3.12. Employee Relations. Buyer has not engaged in any unfair labor
practice with respect to any Employees or former employees; no unfair labor
practice complaint has been brought or is pending before the National Labor
Relations Board with respect to any Employees or former employees; there has
been no labor strike, dispute, slowdown or stoppage involving any Employees or
former employees, nor is there any now pending or threatened; no representation
question has been raised or now exists respecting Employees or former employees;
Buyer has not been notified of any material grievance, and no arbitration
proceeding arising out of or under any collective bargaining agreement has been
brought or is pending with respect to any Employees or former employees; and
Buyer has not been or is not a party to any collective bargaining agreement.
3.14. Suppliers. No supplier of the Buyer has, in the six months prior
to the date hereof, given written notice to Buyer to cancel or otherwise
terminate or reduce, or given such notice orally or threatened to cancel,
terminate or reduce, its relationship with Buyer other than in the ordinary
course of business consistent with past experience.
3.15. Environmental Laws. Buyer has not received any notification that:
Hazardous Materials have been generated, used, treated or stored at, or
transported to or from, any real property used in Buyer's business; Hazardous
Materials have been released or disposed of on any such property; or Buyer is
not in compliance with applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws with respect to any such property,
nor have any of the foregoing events occurred. There are no pending or
threatened claims, suits, demands, investigations, proceedings or other actions
relating to any Environmental Law with respect to any such property.
3.16. No Misrepresentation or Omission. No
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representation or warranty by Buyer in this Section 3 or in any other Section of
this Agreement, or in any certificate or other document furnished or to be
furnished by Buyer pursuant hereto, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
The representations and warranties of Buyer and Newco set forth above (other
than in Sections 3.1., 3.2. and 3.5.) shall survive the Closing for a period of
three years. The representations and warranties of Buyer and Newco set forth in
Sections 3.1., 3.2., and 3.5.), and the covenants of Buyer and Newco set forth
herein shall survive the Closing indefinitely.
4. Other Covenants and Agreements.
4.1. Indemnification by Seller. Upon the terms and subject to the
conditions set forth in Section 4.3 hereof and this Section 4.1, Seller agrees
to indemnify and hold Buyer and Newco harmless against, and will reimburse Buyer
(or Newco if Buyer so requests) on demand for, any payment, loss, cost or
expense (including reasonable attorney fees and reasonable costs of
investigation incurred in defending against such payment, loss, cost or expense
or claim therefor) made or incurred by or asserted against Buyer or Newco at any
time after the Closing Date in respect of any omission, misrepresentation,
breach of warranty, or nonfulfillment of any term, provision, covenant or
agreement on the part of Seller or UMSI contained in this Agreement, or from any
misrepresentation in, or omission from, any certificate or other instrument
furnished or to be furnished by Seller or UMSI to Buyer pursuant to this
Agreement.
4.2. Indemnification by Buyer. Upon the terms and subject to the
conditions set forth in Section 4.3 hereof and this Section 4.2, Buyer agrees to
indemnify and hold Seller harmless against, and will reimburse Seller on demand
for, any payment, loss, cost or expense (including reasonable attorney fees and
reasonable costs of investigation incurred in defending against such payment,
loss, cost or expense or claim therefor) made or incurred by or asserted against
Seller at any time after the Closing Date in respect of any omission,
misrepresentation, breach of warranty, or nonfulfillment of any term, provision,
covenant or agreement on the part of Buyer contained in this Agreement, or from
any misrepresentation in, or omission from, any certificate or other instrument
furnished or to be furnished by Buyer to Seller pursuant to this Agreement.
4.3. Conditions of Indemnification. With respect to any actual or
potential claim, any written demand, the commencement of any action, or the
occurrence of any other event which involves any matter or related series of
matters (a "Claim") against which a party hereto is indemnified (the
"Indemnified Party") by the other party (the "Indemnifying Party") under
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Section 4.1 or 4.2 hereof:
4.3.1. Promptly after the Indemnified Party first receives
written documents pertaining to the Claim, or if such Claim does not involve a
third party Claim (a "Third Party Claim"), promptly after the Indemnified Party
first has actual knowledge of such Claim, the Indemnified Party shall give
notice to the Indemnifying Party of such Claim in reasonable detail and stating
the amount involved, if known, together with copies of any such written
documents.
4.3.2. If the Claim involves a Third Party Claim, then the
Indemnifying Party shall have the right, at its sole cost, expense and ultimate
liability regardless of the outcome, and through counsel of its choice (which
counsel shall be reasonably satisfactory to the Indemnified Party), to litigate,
defend, settle or otherwise attempt to resolve such Third Party Claim; provided,
however, that if in the Indemnified Party's reasonable judgment a conflict of
interest may exist between the Indemnified Party and the Indemnifying Party with
respect to such Third Party Claim, then the Indemnified Party shall be entitled
to select counsel of its own choosing, reasonably satisfactory to the
Indemnifying Party, in which event the Indemnifying Party shall be obligated to
pay the fees and expenses of such counsel. Notwithstanding the preceding
sentence, the Indemnified Party may elect, at any time and at the Indemnified
Party's sole cost, expense and ultimate liability, regardless of the outcome,
and through counsel of its choice, to litigate, defend, settle or otherwise
attempt to resolve such Third Party Claim. If the Indemnified Party so elects
(for reasons other than the Indemnifying Party's failure or refusal to provide a
defense to such Third Party Claim), then the Indemnifying Party shall have no
obligation to indemnify the Indemnified Party with respect to such Third Party
Claim, but such disposition will be without prejudice to any other right the
Indemnified Party may have to indemnification under Section 4.1 or 4.2 hereof,
regardless of the outcome of such Third Party Claim. If the Indemnifying Party
fails or refuses to provide a defense to any Third Party Claim, then the
Indemnified Party shall have the right to undertake the defense, compromise or
settlement of such Third Party Claim, through counsel of its choice, on behalf
of and for the account and at the risk of the Indemnifying Party, and the
Indemnifying Party shall be obligated to pay the costs, expenses and attorney
fees incurred by the Indemnified Party in connection with such Third Party
Claim. In any event, Buyer and Seller shall fully cooperate with each other and
their respective counsel in connection with any such litigation, defense,
settlement or other attempted resolution.
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4.4. Taxes and Expenses.
4.4.1. Seller covenants and agrees to pay any and all taxes on
the transfer to Buyer of the UMSI Shares. Except as otherwise specifically
provided for in this Agreement, Seller will assume and pay all costs,
liabilities and other obligations incurred by Seller in connection with the
performance of and compliance with all Transactions and other agreements and
conditions contained in this Agreement and the other Transaction Documents to be
performed or complied with by Seller, including legal and accounting fees. To
the extent that such costs, together with other cost, liabilities and other
obligations of Seller are not paid by Seller in the ordinary course and exceed
the Debt Pay-Off Consideration ninety days following the Closing Date, such
excess costs shall become an obligation of the Surviving Corporation.
4.4.2. Except as otherwise specifically provided for in this
Agreement, Buyer will assume and pay all costs, liabilities and other
obligations incurred by Buyer in connection with the performance of and
compliance with all Transactions and other agreements and conditions contained
in this Agreement and the other Transaction Documents to be performed or
complied with by Buyer, including legal and accounting fees.
4.5. Proprietary Information.
4.5.1. Seller covenants and represents that from and after the
Closing, Seller and its affiliates will not have any interest in, or claim to,
any patents, trademarks, trade names, service marks, copyrights or applications
therefor, or licenses to use any of the foregoing, or designs, methods,
inventories or know-how related thereto (collectively "Business Property
Rights") owned or held by UMSI, and all such Business Property Rights which are
necessary to, or used in the conduct of UMSI's business, and all knowledge or
information of a confidential nature acquired at or before the Closing Date with
respect to the UMSI and its business will be held in confidence by Seller and
will not be disclosed or made public, except for the benefit of Buyer or UMSI,
or made use of by or through Seller, directly or indirectly.
4.5.2. Seller, on its own behalf and on behalf of its
affiliates, acknowledges that a breach of subsection 4.5.1. hereof would cause
irreparable damage to Buyer, and in the event of Seller's actual or threatened
breach of the provisions of subsection 4.5.1. hereof, Buyer shall be entitled to
a temporary restraining order and an injunction restraining such Seller from
breaching such covenants without the necessity of posting bond or proving
irreparable harm, such being conclusively admitted by Seller. Nothing shall be
construed as prohibiting Buyer from pursuing any other available remedies for
such breach or threatened breach, including the recovery of damages.
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4.6. Operation of the Business. Except as contemplated herein or as
otherwise consented to by Buyer in writing, prior to the Closing Seller will,
and will cause UMSI to:
4.6.1. Use its best efforts to keep UMSI intact and not take
or permit to be taken or do or suffer to be done anything other than in the
ordinary course of the business of UMSI as presently conducted, including
without limitation incurring any contractual obligation outside the ordinary
course of the business as presently conducted, and to maintain the goodwill
associated with the business;
4.6.2. Not take any action that could result in the breach of
any of the representations, warranties or covenants of Seller or UMSI pursuant
to this Agreement, or that could cause any of the representations, warranties or
covenants of Seller or UMSI not to be true and correct in all material respects
immediately after such action or on the Closing Date; and
4.6.3. Recommend to the Unico Common Holders to vote in favor
of the Merger which will result in the sale of the UMSI Shares, Seller's sole
significant asset.
4.7. Access for Due Diligence Investigation. To the extent within
Seller's and Buyer's ability and control, each of the parties hereto have
afforded, and until the Closing, shall continue to afford, to the other parties
hereto and their respective representatives (including, without limitation,
directors, officers, employees, investment bankers, accountants, counsel, and
other advisors) full access during normal business hours to all of the assets,
books, and records of such party and such other information with regard to such
party as any other party hereto may from time to time request, and to make
copies of such books, records and other documents and to discuss the business of
such party with such persons (including, without limitation, directors,
officers, employees, accountants, counsel, suppliers, customers and creditors)
as each of the other parties hereto deems necessary or appropriate for making a
due diligence investigation of the other parties hereto. Buyer and Seller shall
coordinate contact with third parties concerning their due diligence
investigations.
4.8. Notification of Certain Events.
4.8.1. Each party shall give prompt notice to the other
parties hereto of (i) the occurrence, or failure to occur, of any event that
could cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate at any time from the date hereof to the
Closing Date or which if known as of the date hereof would have been required to
be disclosed to the other parties hereto, and (ii) any failure of such party to
comply with any covenant, condition, or agreement to be complied with or
satisfied by it under this Agreement.
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4.8.2. Each party shall give prompt notice to the other
parties hereto of any determination by it that an event described in clause
4.8.1.(i) or (ii) could reasonably be expected to interfere with the Closing on
the scheduled Closing Date.
4.9. Permits and Consents. Seller and Buyer agree to cooperate and use
their best efforts to obtain any license, permit, authorization or approval (a
"Permit"), and to make any registration, declaration, or filing, required to be
obtained or made with any Governmental Authority or any other person or entity,
to consummate the Transactions. This covenant shall survive the Closing.
4.10. UCC and Lien Searches. Buyer shall, at its sole cost and expense,
obtain copies of written reports of UCC and judgment lien searches in each
jurisdiction in which Seller or UMSI is organized or in which assets thereof are
located, such reports to be dated within ten days of the Closing Date. Seller
and UMSI represent and warrant that all of the assets of Seller and UMSI are
located in Fairfax County, Virginia.
4.11. Seller Shareholder Meeting; Registration Statement; Proxy
Statement/Prospectus. As promptly as practicable after the date hereof, Buyer
shall prepare and file a registration statement under the Securities Act with
the SEC. Seller will furnish to Buyer the information required to be included in
the registration statement with respect to the business and affairs of Seller
and UMSI before it is filed with the SEC and again before any amendments are
filed. Buyer shall use its best efforts to cause such registration statement to
be declared effective under the Securities Act. The registration statement shall
include the form of proxy statement/prospectus. Buyer and Seller shall use their
best efforts to cause the proxy statement/prospectus to be approved by the SEC
for mailing to the Seller's shareholders. Seller shall cause the proxy
statement/prospectus to be mailed to and call for a vote of its shareholders of
record in accordance with all applicable notice requirements under the
Securities Laws and the VSCA.
5. Conditions of Closing.
5.1. Buyer's and Seller's Conditions of Closing. The obligation of
Buyer to purchase and pay for the UMSI Shares, and the obligation of Seller to
sell the UMSI Shares shall be subject to and conditioned upon the satisfaction
at the Closing of each of the following conditions:
5.1.1. Any and all Permits from third parties and Governmental
Authorities required to consummate the Transactions shall have been obtained.
5.1.2. No suit, action, investigation, inquiry or other legal
or administrative proceeding by any Governmental
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Authority or other person shall have been instituted or threatened which
questions the validity or legality of the Transactions or which could reasonably
be expected to adversely affect the ability of Buyer to consummate such
Transactions.
5.1.3. Buyer's registration statement (including any
post-effective amendments thereto) shall be effective under the Securities Act,
and Buyer shall have received all state securities or "Blue Sky" permits or
other authorizations, or confirmations as to the availability of an exemption
from registration requirements as may be necessary, and no proceedings shall be
pending or to the knowledge of Buyer threatened by the SEC or any state "Blue
Sky" securities administration to suspend the effectiveness of such registration
statement, and the NexGen Common to be issued as contemplated in the Plan of
Merger shall have either been registered or be subject to exemption from
registration under applicable state securities laws.
5.1.4. As of the Closing, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the Transactions or
any of them not be consummated as so provided, or imposing any material
conditions on the consummation of such Transactions by Seller or Buyer.
5.1.5. The parties hereto shall have executed and delivered to
the other parties hereto all other Transaction Documents and shall have received
and delivered to the other parties the following documents:
a. Written evidence by Buyer of the consummation of
its acquisition of 100% of the subordinated debt of Seller and the Unico Series
C Preferred, and contemporaneous cancellation of the subordinated debt of Seller
to Buyer and waiver of all rights of the Unico Series C Preferred other than
voting and conversion rights;
b. Written evidence from BancFirst that BancFirst
will not object to the Transactions, consents to the acquisition of UMSI by
Buyer, releases Seller from its obligations in regard to its debt to BancFirst
and agrees to the assumption by Buyer of such obligations in regard to the debt
of Seller to BancFirst;
c. A stock purchase and shareholder agreement between
Messrs. Xxxx Xxxx ("Sens") and Xxxxxx Xxxxxxx ("Xxxxxxx") providing for, among
other things, an agreement between Sens and Xxxxxxx concerning the structure of
Buyer's board of directors upon consummation of the Transactions;
d. Employment agreements between Xxxxxxx and each of
Buyer and the Surviving Corporation for the appointment of Xxxxxxx as CEO of
each such corporation;
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e. A consulting agreement between Buyer and Sens
providing for the engagement of Sens as a consultant to Buyer;
f. Stock option agreements between Buyer and each of
Sens and Xxxxxxx Xxxxxxx ("Xxxxxxx") providing for 150,000 stock options,
exercisable at $0.50 per share for a term of ten years from the date of their
issuance to acquire one share per option of NexGen Common, for each of Sens and
Xxxxxxx;
g. A stock purchase agreement among Buyer, Xxxxxxx,
Xxxxxx Xxxxxxx ("Xxxxxxx") and Xxxx Xxxxxx ("Xxxxxx") providing for the exchange
of Unico Common of each of Xxxxxxx, Xxxxxxx and Xxxxxx for shares of NexGen
Common at a ratio of ten shares of Unico Common per share of NexGen Common;
h. The cancellation of certain indebtedness of the
Buyer to certain shareholders of Buyer, and the cancellation of certain
indebtedness of certain shareholders of Buyer to Buyer;
i. Evidence of the reservation of 100,000 shares of
NexGen Common by Buyer's board of directors for awards to key employees of Buyer
and/or UMSI by Buyer's board of directors; and
j. Evidence of a restructuring of Buyer's loan from
KeyBank National Association to extend repayment past January 1, 2000, and Buyer
shall undertake its best efforts to reduce substantially the debt prior to
maturity.
5.2. Buyer's Conditions of Closing. The obligation of Buyer to purchase
and pay for the UMSI Shares shall be subject to and conditioned upon the
satisfaction at the Closing of each of the following conditions:
5.2.1. All representations and warranties of Seller and UMSI
contained in this Agreement and the other Transaction Documents shall be true
and correct at and as of the Closing Date, Seller shall have performed all
agreements and covenants and satisfied all conditions on its part required to be
performed or satisfied by the Closing Date pursuant to the terms of this
Agreement, and Buyer shall have received a certificate of the Seller dated the
Closing Date to such effect.
5.2.2. Seller shall have delivered to Buyer certificates of
each of Seller's and UMSI's corporate Secretary certifying:
(i) Resolutions of its Board of Directors authorizing
execution and delivery of this Agreement and the other Transaction
Documents and the performance of all Transactions; and
(ii) The incumbency of its officers executing this
Agreement and all other Transaction Documents executed
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on Seller's behalf.
5.2.3. Seller shall have delivered to Buyer certificates of
the Secretary of State of Delaware and the Virginia Corporation Commission
certifying as of a date reasonably close to the Closing Date that each of Seller
and UMSI, respectively, has filed all required reports, paid all required fees
and taxes, and is, as of such date, in good standing and authorized to transact
business as a domestic corporation.
5.2.4. Seller shall have delivered the stock and minute book
of UMSI and the written resignations, effective on the Closing Date, of all
members of the Board of Directors and all officers of UMSI, and shall have
caused all persons who have been designated by Buyer to be duly elected as
directors and officers of UMSI.
5.2.5. Seller shall have delivered to Buyer certificates and
other instruments representing all the UMSI Shares issued and outstanding, duly
endorsed for transfer or accompanied by appropriate stock powers (in either case
executed in blank or in favor of Buyer), together with all other documents
necessary or appropriate to validly transfer the UMSI Shares to Buyer free and
clear of all Liens.
5.2.6. There shall not have occurred any material adverse
change in the business, client relations, operations, properties, prospects,
assets or condition of UMSI, and no event shall have occurred or circumstance
shall exist that has specific application to UMSI (other than general economic
or industry conditions) that could reasonably be expected to result in such a
material adverse change.
5.3. Seller's Conditions of Closing. The obligation of Seller to sell
the UMSI Shares shall be subject to and conditioned upon the satisfaction at the
Closing of each of the following conditions:
5.3.1. All representations and warranties of Buyer contained
in this Agreement and the other Transaction Documents shall be true and correct
at and as of the Closing Date, Buyer shall have performed all agreements and
covenants and satisfied all conditions on its part required to be performed or
satisfied by the Closing Date pursuant to the terms of this Agreement, and
Seller shall have received a certificate of Buyer dated the Closing Date to such
effect.
5.3.2. Buyer shall have delivered to Seller a certificate of
its corporate Secretary certifying:
(i) Resolutions of its Board of Directors authorizing
execution of this Agreement and the execution, performance and delivery
of all agreements, documents and
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transactions contemplated hereby; and
(ii) The incumbency of its officers executing this
Agreement and all agreements and documents contemplated hereby.
5.3.3. Buyer shall have delivered the Merger Consideration as
provided for in Section 2 herein on the Closing Date.
6. Miscellaneous.
6.1. Notice. Any notice or other communication required or permitted
hereunder shall be in writing and personally delivered, mailed by registered or
certified mail (return receipt requested and postage prepaid), sent by telegram
(with messenger service specified), sent by telecopier (with a confirming copy
sent by regular mail), or sent by prepaid overnight courier service, and
addressed to the relevant party at its address set forth below, or at such other
address as such party may, by written notice, designate as its address for
purposes of notice hereunder.
(a) If to Buyer, at:
Next Generation Media Corp.
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telecopy: (000) 000-0000
(b) If to Seller, at:
UNICO, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxxxx X. Xxxxx III, Esq.
Xxxxx & Xxxxx
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
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Notice shall be effective immediately upon personal delivery or telecopy, seven
(7) business days after deposit in the mail, or one (1) business day after
deposit with a telegraph company or overnight courier service.
6.2. Termination.
6.2.1. Right of Termination Without Breach. This Agreement may
be terminated without further liability of any party at any time prior to the
Closing by mutual written agreement of the parties. Without the mutual written
agreement of the parties hereto, this Agreement will terminate on December 31,
1998.
6.2.2. Termination for Breach.
(i) Termination By Buyer. If there has been a
material breach by Seller or UMSI of any of Seller's or UMSI's agreements,
representations or warranties contained in this Agreement which has not been
waived in writing by Buyer, then Buyer may, by written notice to Seller at any
time prior to the Closing that such breach is continuing, terminate this
Agreement with the effect set forth in Section 6.2.2. (iii) hereof.
(ii) Termination By Seller. If there has been a
material breach by Buyer of any of Buyer's agreements, representations or
warranties contained in this Agreement which has not been waived in writing by
Seller, then Seller may, by written notice to Buyer at any time prior to the
Closing that such breach is continuing, terminate this Agreement with the effect
set forth in Section 6.2.2. (iii).
(iii) Effect of Termination. Termination of this
Agreement pursuant to this Section 6.2.2. shall not in any way terminate, limit
or restrict the rights and remedies of any party hereto against any other party
which has breached or failed to perform any of the representations, warranties,
covenants, or agreements of this Agreement prior to termination hereof.
6.3 Disclosures and Announcements. Both the timing and the content of
all disclosures to third parties (other than disclosures to agents acting on
behalf of Buyer or Seller for purposes of conducting their respective due
diligence investigation) and public announcements concerning the transactions
provided for in this Agreement by either Seller or Buyer shall be subject to the
approval of the other in all essential respects until the Closing following
which the specific terms of the Transaction Documents shall remain confidential
between the parties, except to the extent that disclosure of such terms is
required under applicable laws or regulations.
6.4. Further Assurances. Each party will do such acts, and execute and
deliver to any other party such additional documents or instruments as may be
reasonably requested in order to effect
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the purpose of this Agreement and the other Transaction Documents and to better
assure and confirm unto the requesting party its rights, powers and remedies
hereunder and thereunder.
6.5. Binding Effect; No Assignment. This Agreement and the other
Transaction Documents shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding the
foregoing, no party shall assign any of its rights or delegate any of its
obligations under any Transaction Document without the prior written consent of
the other parties thereto, which may be withheld at their respective discretion.
6.6. Entire Agreement. This Agreement and the other Transaction
Documents constitute the full and entire understanding and agreement among the
parties with regard to their respective subject matters and supersede any and
all prior written or oral agreements, understandings, representations and
warranties made with respect thereto. No amendment, supplement or modification
of this Agreement or any other Transaction Document nor any waiver of any
provision hereof or thereof shall be made except in writing executed by all
parties hereto or thereto.
6.7. Governing Law. THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF VIRGINIA, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF
CONFLICTS OF LAWS. Each of the parties hereto (a) agrees that any legal suit,
action or proceeding arising out of or relating to this Agreement will be
instituted exclusively in the state courts of Virginia or in the United States
District Court for the Eastern District of Virginia, (b) waives any objection
which such party may have now or hereafter to the venue of any such suit, action
or proceeding, and (c) irrevocably consents to the jurisdiction of the state
courts of Virginia and the United States District Court for the Eastern District
of Virginia in any such suit, action or proceeding. Each party further agrees to
accept and acknowledge service of any and all process which may be served in any
such suit, action or proceeding in such courts and agrees that service of
process upon such party mailed by certified mail to the party's address
specified pursuant to Section 6.1 will be deemed in every respect effective
service of process upon such party in any such suit, action or proceeding.
6.8. Survival. All representations, warranties, indemnities, covenants
and agreements made by the parties to this Agreement and the other Transaction
Documents shall survive the execution of this Agreement and the Closing.
Notwithstanding any investigation conducted before the date of this Agreement or
the Closing, or the decision of any party to execute this Agreement or proceed
to Closing, each party shall be entitled to rely on the representations and
warranties of the other party set forth
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herein or in any other Transaction Document.
6.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
6.10. Interpretation. No provision of this Agreement or any other
Transaction Document shall be interpreted or construed against any party because
that party or its legal representative drafted such provision. The titles of the
paragraphs of this Agreement and other Transaction Documents are for convenience
of reference only and are not to be considered in construing this Agreement or
the relevant Transaction Document. For all purposes of this Agreement and the
other Transaction Documents, unless the context otherwise requires or as
otherwise expressly provided, (a) all defined terms shall include both the
singular and the plural forms thereof; (b) reference to any gender shall include
all other genders; (c) all references to words such as "herein", "hereof", and
the like shall refer to this Agreement as a whole and not to any particular
Article or Section within this Agreement; (d) the term "include" means "include
without limitation"; and (e) the term "or" is intended to include the term
"and/or".
6.11. No Waiver; Remedies Cumulative. No waiver by any party hereto of
any one or more defaults by any other party or parties in the performance of any
of the provisions of this Agreement shall operate or be construed as a waiver of
any future default or defaults, whether of a like or different nature. No
failure or delay on the part of any party in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any party hereto at law, in equity or
otherwise.
6.12. Incorporation of Exhibits. All exhibits and schedules attached
hereto are by this reference incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
6.13. Severability. If any term, covenant or condition of this
Agreement, or the application of such term, covenant or condition to any party
or circumstance shall be found by a court of competent jurisdiction to be, to
any extent, invalid or unenforceable, the remainder of this Agreement and the
application of such term, covenant, or condition to parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition shall be valid and
enforced to the fullest extent permitted by law. Upon determination that any
such term
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is invalid, illegal or unenforceable, the parties hereto shall amend this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner.
6.14. Stand Still. Except with the written consent of both Buyer and
Seller, each of the parties hereto, covenants that between the date hereof and
the Effective Time, other than as provided for in the Transaction Documents,
neither it nor any of its subsidiaries shall:
a. carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted, or
establish or acquire any new subsidiary or engage in any new activity;
b. declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock;
c. issue any shares of its capital stock;
d. issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock dividend, stock split or like change
in capitalization;
e. amend its articles of incorporation or bylaws; impose or
permit imposition of any lien, charge or encumbrance on any share of stock held
by it in any subsidiary, or permit such lien, charge or encumbrance to exist; or
waive or release any material right or cancel or compromise any debt or claim,
in each case other than in the ordinary course of business;
f. merge with any other entity or permit any other entity to
merge into it, or consolidate with any other entity; acquire control over any
other entity; or liquidate, sell or otherwise dispose of any assets or acquire
any assets, other than in the ordinary course of its business consistent with
past practices;
g. fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to the
conduct of its business;
h. increase the rate of compensation of any of its directors,
officers or employees, or pay or agree to pay any bonus to, or provide any other
employee benefit or incentive to, any of its directors, officers or employees;
i. enter into any material agreement, arrangement or
commitment not made in the ordinary course of business;
j. dispose of any material assets other than in the ordinary
course of business; or
k. agree to do any of the foregoing.
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6.15 Execution Date. On the date of the execution of this Agreement,
Buyer shall enter into, among others, the agreements referred to in subsections
5.1.5.(a) and 5.1.5.(c). Buyer shall have immediately available funds of
approximately $350,000 to complete the transaction referred to in subsection
5.1.5.(a) on the same date as the date of the execution of this Agreement. Buyer
will use the remainder of such funds (i) to cause to be paid to BancFirst a
"curtail fee" in order for the parties to receive the document referred to in
subsection 5.1.5.(b) prior to the Closing; (ii) to pay certain outstanding
obligations of Buyer mutually agreed upon by Buyer and Seller; and (iii) to
provide the balance to Seller in the form of a working capital loan that Seller
shall use for repayment of certain debt of Seller to UMSI upon terms to be
established between Buyer and Seller.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first set forth above.
NEXT GENERATION MEDIA
CORP. (BUYER)
By: /s/ Xxxxx Xxxxxx
----------------------------
Xxxxxxxx Xxxxxx
President
UNITED MARKETING MERGER
CORP. (NEWCO)
By: /s/ Xxxxx Xxxxxx
----------------------------
Xxxxxxxx Xxxxxx
President
UNICO, INC. (SELLER)
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Xxxxxx Xxxxxxx
President
UNITED MARKETING SOLUTIONS INC.
(UMSI)
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Xxxxxx Xxxxxxx
President
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ANNEX A
PLAN OF MERGER
OF
UNITED MERGER INC.
WITH AND INTO
UNITED MARKETING SOLUTIONS INC.
Section 1. Corporations Proposing to Merger and Surviving Corporation.
United Marketing Merger Corp., a Virginia corporation ("Newco") shall be merged
(the "Merger") with and into United Marketing Solutions Inc., a Virginia
corporation ("UMSI"), pursuant to the terms and conditions of this Plan of
Merger and of the Stock Purchase Agreement dated as of May 8, 1998 (the
"Agreement"), by and among Next Generation Media Corp., a Nevada Corporation and
parent corporation of Newco ("Buyer"), Unico Inc., a Delaware corporation and
parent corporation of UMSI ("Seller"), UMSI and Newco. The effective time for
the Merger (the "Effective Time") shall be set forth in the Articles of Merger
to be filed with the Clerk of the State Corporation Commission of the
Commonwealth of Virginia. UMSI shall continue as the surviving corporation (the
"Surviving Corporation") in the Merger and the separate corporate existence of
Newco shall cease.
Section 2. Effects of the Merger. The Merger shall have the effect set
forth in section 13.1-721 of the Virginia Stock Corporation Act (the "VSCA").
Section 3. Articles of Incorporation and Bylaws. The Articles of
Incorporation and the Bylaws of UMSI as in effect immediately prior to the
Effective Time shall remain in effect as the Articles of Incorporation and
Bylaws of the Surviving Corporation following the Effective Time until changed
in accordance with their terms and the VSCA.
Section 4. Conversion of Shares. At the Effective Time, each share of
the common stock of UMSI issued and outstanding immediately prior to the
Effective Time shall continue to be issued and outstanding, and each share of
the common stock of Newco issued and outstanding immediately prior to the
Effective Time shall cease to continue to be issued and outstanding.
Section 5. Merger Consideration. As used herein, the term "Merger
Consideration" shall mean the shares of Buyer's common stock (rounded to the
nearest whole number) and, if applicable, cash, as provided herein. No
fractional shares of Buyer's common stock will be issued as part of the Merger
Consideration.
5.1. Buyer agrees to pay the purchase price in the form of (a)
200,000 shares of Buyer's common stock, par value $0.01 ("NexGen Common")
divided ratably (and rounded to the nearest
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whole share) among the holders of the common stock of Seller (the "Merger
Consideration") and (b) up to $150,000 cash (the "Debt Pay-Off Consideration,"
and, together with the Merger Consideration, the "Purchase Price") for the
payment of debts of Seller to the extent that creditors of Seller (other than
BancFirst, an Oklahoma banking corporation ("BancFirst")) do not consent to the
assignment of such debt by Seller, the assumption of such debt by Buyer and the
release of Seller in respect of such debt by such creditor. The Merger
Consideration shall be paid to the holders of Seller's issued and outstanding
common stock, par value $0.01 per share ("Unico Common), provided, however, that
the Merger Consideration will not be paid to Buyer for any shares of Unico
Common held by Buyer. The Debt Pay-Off Consideration shall be paid to Seller.
The Merger Consideration may be adjusted according to the following:
5.2. At the time of the vote of the holders of Seller's
capital stock on the Merger, the holders of Seller's common stock ("Unico Common
Holders") who shall receive Merger Consideration, may elect to receive cash in
lieu of NexGen Common. If any Unico Common Holder so elects, Buyer shall pay to
each Unico Common Holder so electing a cash component of the Merger
Consideration equal to $0.10 multiplied by the number of shares of Unico Common
held by such Unico Common Holder.
5.3 If any Unico Common Holder votes to receive cash in lieu
of NexGen Common, the Unico Common Holders that do not so elect shall receive
their ratable shares of the Merger Consideration in NexGen Common as if all
Unico Common Holders were receiving NexGen Common for their ratable share of the
Merger Consideration.
Section 6. Amendment. At any time before the Effective Time, this Plan
of Merger may be amended, provided that: (i) any such amendment is approved by
the Board of Directors of UMSI and Newco; and (ii) no such amendment made
subsequent to the submission of this Plan of Merger to the shareholders of UMSI
and the shareholders of Seller shall have any of the effects specified in
section 13.1-718.1 of the VSCA without the approval of the shareholders affected
thereby.
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The undersigned, Presidents of each of UMSI and Newco, declare that the
facts herein stated are true as of May 8, 1998.
UNITED MARKETING SOLUTIONS INC.
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: President
UNITED MARKETING MERGER CORP.
By: /s/ Xxxxx Xxxxxx
----------------------------
Name: Xxxxxxxx Xxxxxx
Title: President
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