EXHIBIT 10.29
AMENDMENT NO. 2 TO AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
This AMENDMENT NO. 2, dated as of May 20, 2002 (the "SECOND
AMENDMENT"), to the AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as
of the 6th day of December, 2001, as amended on April 19, 2002 by that certain
Amendment No. 1 to Amended and Restated Agreement and Plan of Merger (the
"EXISTING AGREEMENT"), is entered into by and among THANE INTERNATIONAL, INC., a
Delaware corporation ("THANE"), RELIANT ACQUISITION CORPORATION, a Nevada
corporation wholly owned by Thane ("ACQUISITION"), RELIANT INTERACTIVE MEDIA
CORP., a Nevada corporation (the "CORPORATION"), and XXXXX XXXXXXXXXX, XXXXXXX
XXXXXXXXXX and XXX XXXXXX, stockholders of the Corporation (individually, a
"CONTROLLING STOCKHOLDER," and collectively, the "CONTROLLING STOCKHOLDERS").
The Corporation, Acquisition, Thane and the Controlling Stockholders are
sometimes referred to herein individually as a "PARTY" and collectively as the
"PARTIES."
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Board of Directors of each of Thane, Acquisition and the
Corporation have approved this Second Amendment;
NOW, THEREFORE, in consideration of the mutual premises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto, intending to
be legally bound, hereby agree as follows:
SECTION 1. DEFINITIONS. Capitalized terms used in this Second Amendment
and not otherwise defined herein shall have the meanings set forth in the
Existing Agreement.
SECTION 2. AMENDMENTS TO THE EXISTING AGREEMENT. The Existing Agreement
is hereby amended as follows:
2.1 ARTICLE I - SUBSTITUTED DEFINITIONS. The definition of
"Reliant Escrow Shares" is amended and restated in its entirety to read as
follows:
"RELIANT ESCROW SHARES" means 100% of the shares of Thane
Common Stock issued to the Controlling Stockholders pursuant to the
Merger in accordance with Section 2.8 of the Agreement. The Reliant
Escrow Shares are to be deposited by the Controlling Stockholders in
connection with the Closing into escrow pursuant to the Escrow
Agreement in order to (i) secure the indemnification obligations of the
Corporation and the Controlling Stockholders pursuant to Article IX
hereof, (ii) secure the repayment by the Controlling Stockholders of
amounts loaned to them by Thane pursuant to the terms of each of their
respective Employment Agreements and (iii) secure the Corporation's
satisfaction of certain performance targets established by Thane, the
Corporation and the Controlling Stockholders.
2.2 ARTICLE I - ADDITIONAL DEFINITIONS. Article I of the
Existing Agreement is amended to add the following defined terms.
"CUMULATIVE FRACTION" means the quotient determined
by DIVIDING (i) the difference between the Corporation's
cumulative EBITDA for the period commencing on April 1, 2002
and ending at the end of the then current fiscal quarter MINUS
$3.0 million by (ii) $15.0 million.
"CUMULATIVE THREE YEAR EBITDA" means the sum of the
Corporation's Fiscal 2003 EBITDA, Fiscal 2004 EBITDA and
Fiscal 2005 EBITDA.
"EBITDA" means earnings before interest, income
taxes, depreciation and amortization, excluding (i)
extraordinary gains and losses and purchase accounting
adjustments, (ii) acquisitions of businesses made after the
Closing Date and (iii) the payment of any incentive bonus
amounts under the Employment Agreements, determined in
accordance with GAAP and after application of those guidelines
agreed to by the Parties as set forth on EXHIBIT W hereto.
"EXISTING THANE STOCKHOLDERS" means those
stockholders of Thane on the date hereof as set forth on
EXHIBIT X hereto.
"FISCAL 2003 EBITDA" means the Corporation's EBITDA
for the fiscal year ended March 31, 2003.
"FISCAL 2004 EBITDA" means the Corporation's EBITDA
for the fiscal year ended March 31, 2004.
"FISCAL 2005 EBITDA" means the Corporation's EBITDA
for the fiscal year ended March 31, 2005.
"PROMISSORY NOTES" means those certain Promissory
Notes, each dated as of May 22, 2002, made by the Controlling
Stockholders in favor of Thane in the aggregate principal
amount of $2,500,000.
"TARGET EBITDA" shall have the meaning set forth in
Section 2.8(c)(ii)(B).
"VESTING PERIOD" shall have the meaning set forth in
Section 2.8(c)(ii)(B).
"VESTING RELIANT ESCROW SHARES" shall have the
meaning set forth in Section 2.8(c)(ii)(B).
2.3 INTENTIONALLY OMITTED.
2.4 SECTION 2.8(C). Section 2.8(c) of the Existing Agreement is amended
and restated in its entirety to read as follows:
(c) ESCROW.
(i) In connection with the consummation of the
Merger, the Thane Escrow Shares shall be delivered to the Escrow Agent
for purposes of securing Thane's indemnification obligations pursuant
to Section 9.4 of this Agreement. The Thane Escrow Shares shall be held
by the Escrow Agent pursuant to the terms of the Escrow Agreement. The
Thane Escrow Shares shall be held as a trust fund and shall not be
subject of any Lien, attachment, trustee process or any other judicial
process of any creditor of any Party, and shall be held and disbursed
solely for purposes and in accordance with the terms of the Escrow
Agreement.
2
(ii) In connection with the consummation of the
Merger, at Closing each of the Controlling Stockholders shall deliver
irrevocable written instructions to Thane's transfer agent directing
the transfer agent to deliver all of the Thane Common Stock
constituting the Reliant Escrow Shares to the Escrow Agent for purposes
of securing (a) the indemnification obligations of the Corporation and
the Controlling Stockholders, (b) the repayment of obligations owed by
the Controlling Stockholders to Thane and (c) the Corporation's
satisfaction of certain performance targets set forth in this Section
2.8(c). The Reliant Escrow Shares shall be held by the Escrow Agent
pursuant to the terms of the Escrow Agreement. The Reliant Escrow
Shares shall be held as a trust fund and shall not be subject of any
Lien, attachment, trustee process or any other judicial process of any
creditor of any Party, and shall be held and disbursed solely for
purposes and in accordance with the terms of the Escrow Agreement. The
Reliant Escrow Shares shall be distributed as follows:
(A) Subject to subsection (C) below, twenty
percent (20%) of the number of Reliant Escrow Shares shall be
distributable to the Controlling Stockholders in accordance
with the terms of the Escrow Agreement and certain stock
pledge agreements between Thane and each of the Controlling
Stockholders.
(B) Subject to subsection (C) hereof, eighty
percent (80%) of the number of Reliant Escrow Shares (the
"VESTING RELIANT ESCROW SHARES") shall be distributable to the
Controlling Stockholders during the Vesting Period based on
the Corporation achieving an aggregate of at least $15.0
million EBITDA (the "TARGET EBITDA") during the three (3) year
fiscal period commencing on April 1, 2002 and ending March 31,
2005 (the "VESTING PERIOD"). During the Vesting Period the
Vesting Reliant Escrow Shares shall be distributed as follows:
(1) Subject to subsection (C)
hereof, following the completion of each fiscal
quarter during each fiscal year of the Vesting
Period, a number of Vesting Reliant Escrow Shares not
otherwise subject to an indemnification claim shall
be distributed to the Controlling Stockholders as set
forth on EXHIBIT Y hereto, determined by MULTIPLYING
(a) the number of Vesting Reliant Escrow Shares by
(b) the Cumulative Fraction, and subtracting from the
forgoing product the aggregate number of Vesting
Escrow Shares previously distributed to the
Controlling Stockholders.
(2) In the event that the Target
EBITDA is earned by the Corporation following the
completion of the Vesting Period, any and all
remaining Vesting Reliant Escrow Shares not otherwise
subject to an indemnification claim shall be
distributed to the Controlling Stockholders as set
forth on EXHIBIT Y hereto.
(3) In the event that the Target
EBITDA is not fully earned by the Corporation during
the Vesting Period, any and all Vesting Reliant
Escrow Shares remaining in escrow after the
disbursements provided for in subsection (B)(1) above
and not otherwise subject to an indemnification
claim, shall be disbursed to the Existing Thane
Stockholders on a prorata basis based upon their
proportionate interests set forth on EXHIBIT X
hereto.
(C) The escrow established pursuant to this
Section 2.8 and pursuant to the Employment Agreements shall
(i) during the eighteen (18) month period commencing on the
Closing Date, maintain a number of Reliant Escrow Shares owned
by the Controlling Stockholders and not otherwise subject to
the forefeiture provisions of this Section 2.8(c) having a
fair market value of at least $2.4 million based on the
opening price of the Thane Common Stock on the Nasdaq National
Market, or if the Thane Common Stock is not then admitted for
trading on the Nasdaq National Market, the opening price of
the Thane Common Stock on such national securities exchange or
such other exchange on which the Thane Common Stock is then
listed for quotation and (ii) in addition to those Reliant
Escrow Shares set forth in subsection (i) immediately above,
commencing on the Closing Date and ending on the earlier of
(x) June 1, 2005 or (y) the date on which all of the
obligations of the Controlling Stockholders under the
Promissory Notes are satisfied, maintain an aggregate of
442,854 Reliant Escrow Shares owned by the Controlling
Stockholders and not otherwise subject to the forfeiture
provisions of this Section 2.8(c).
3
(D) For purposes of the indemnification
provisions contained in Section 9.4 hereof, Claims for
indemnification by Thane or any Affiliate thereof against the
Corporation and/or the Controlling Stockholders may only be
satisfied from Reliant Escrow Shares that are no longer
subject to potential forfeiture pursuant to this Section
2.8(c). In no event shall the foregoing limit or otherwise
modify the Controlling Stockholder's obligations to indemnify
Thane in accordance with the provisions of Section 9.4.
(E) Within forty five (45) days following
the completion of each fiscal quarter of the Vesting Period or
sixty (60) days following the completion of each fiscal year
of the Vesting Period, Thane and the Controlling Stockholders
shall execute and deliver disbursement instructions to the
Escrow Agent as follows:
(1) If the Corporation's financial
statements indicate the Controlling Stockholders are
entitled to receive Vesting Reliant Escrow Shares in
accordance subsection (B) above, the parties shall
execute disbursement instructions to the Escrow Agent
to deliver the number of Vesting Reliant Escrow
Shares that are in excess of the escrow requirements
of subsection (C) above; and
(2) If the Vesting Period has
expired, in addition to (E)(1) above, if the
Corporation's Cumulative Three Year EBITDA is less
than the Target Amount, the parties shall execute
disbursement instructions to the Escrow Agent to
deliver any Vesting Reliant Escrow Shares not earned
by the Controlling Stockholders to the Existing Thane
Stockholders in the proportions set forth on EXHIBIT
X hereto.
SECTION 3. EMPLOYMENT AGREEMENTS. The form of Employment Agreements set
forth in EXHIBIT C to the Existing Agreement are hereby amended and restated in
their entirety to read as set forth on EXHIBIT Z hereto.
SECTION 4. MISCELLANEOUS. All of the terms and conditions contained in
Article X of the Existing Agreement are incorporated into this Amendment by
reference.
* * * * *
4
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
2 to Amended and Restated Agreement and Plan of Merger as of the date first
above written.
THANE INTERNATIONAL, INC.
By: /s/ XXXX X. XXXXXX
-------------------------------------------
Xxxx X. Xxxxxx
President
RELIANT INTERACTIVE MEDIA CORP.
By: /s/ XXXXX XXXXXXXXXX
-------------------------------------------
Xxxxx Xxxxxxxxxx
President
RELIANT ACQUISITION CORPORATION
By: /s/ XXXXX X. XxXXXX
-------------------------------------------
Xxxxx X. XxXxxx
Vice President and Chief Financial Officer
CONTROLLING STOCKHOLDERS
/s/ XXXXX XXXXXXXXXX
-----------------------------------------------
Xxxxx Xxxxxxxxxx
/s/ XXXXXXX XXXXXXXXXX
-----------------------------------------------
Xxxxxxx Xxxxxxxxxx
/s/ XXX XXXXXX
-----------------------------------------------
Xxx Xxxxxx
5
EXHIBIT W
CORPORATION EBITDA INCOME CALCULATION GUIDELINES
1. INTERNATIONAL AND U.S. BUSINESS TO BUSINESS. The Corporation shall be
allocated an income calculation for International and US Business to
Business sales received, including all direct and indirect revenues
received from the sale of the products, by Thane from the Corporation's
products on a Unit Royalty basis. Such Unit Royalty to be mutually
agreed to by the parties and designed to equate to 50% of the profits
received by Thane for the Corporation's products.
2. U.S. DIRECT RESPONSE.
A. The Corporation shall be allocated income of 100% of Thane's
profits or losses on a project-by-project basis for US direct
response sales received, including all direct and indirect
revenues received from the sale of the products, by Thane for
projects developed and produced by the Corporation. All such
profits or losses will be calculated at Thane's actual costs,
which will include a 4% of gross sales administration fee.
Such administration fee may be adjusted by mutual agreement of
the Parties to more accurately reflect the actual costs of
administering the projects. The Corporation shall be allocated
income of 50% of Thane's profits or losses on a
project-by-project basis for third-party funded US direct
response projects for which the Corporation has participated
in the acquisition of such project.
B. The Corporation shall be allocated income of 50% of Thane's
profits or losses on a project-by-project basis for all
products developed or acquired by Thane and the
Infomercial/Spot is produced and funded by the Corporation.
C. The Corporation shall be allocated income of 50% of Thane's
profits or losses on a project-by-project basis for all
products developed or acquired by the Corporation and the
Infomercial/Spot is produced and funded by Thane.
D. The allocation of project losses will be limited to losses
incurred in a project test phase only. Project losses beyond
the test phase of a project may be offset against future
profits generated for the same project only.
E. With regard to the Corporation's existing computer business,
no administrative fee will be included by Thane.
3. U.S. INTERNET.
A. The Corporation shall be allocated income of 100% of Thane's
profits of the Corporation's products sold through the
Internet up to 5.4% of the units sold through television sales
during the same period.
B. The Corporation shall be allocated income of 50% of Thane's
profits of the Corporation's products through the Internet
above 5.4% of the units sold through television sales during
the same period.
(i)
4. FAVORED PROFIT STRUCTURE. In no event shall Thane's administration fees
or other costs allocated to the Corporation's products and/or projects
be structured to be less favorable overall to the Corporation than any
other third-party that has contracted with Thane for distribution.
(ii)
EXHIBIT X
EXISTING THANE STOCKHOLDERS
DATE OF NUMBER OF
NAME OF STOCKHOLDER ISSUANCE SHARES
------------------- ---------- -----------
H.I.G. Direct Marketing Holdings, Inc. 06/10/1999 19,484,256
Xxxxxxx X. Xxx 06/10/1999 4,498,752
Xxxxxx XxXxxxx Hay 06/10/1999 4,498,752
Xxxx X. Xxxxxx 06/10/1999 85,760
Xxxxxx Xxxxx 06/10/1999 45,760
Xxxxx Xxxxx 06/10/1999 11,488
Xxxxx Xxxxxx 06/10/1999 52,608
Xxxxx Xxxxxxx 06/10/1999 35,456
Xxxx Xxx 06/10/1999 22,912
Xxx Xxxxxx 06/10/1999 22,912
Xxxxx Xxxx 06/10/1999 6,880
Amir Tukulj 1/12/2001 640,000
KPI, Inc. 03/15/2002 1,330,953
Xxxx Xxxxx 03/15/2002 471,572
Xxxxxx Xxxxx 03/15/2002 471,572
Xxxxxx Shapps 03/15/2002 9,952
Xxxxxx Xxxxx 03/15/2002 12,122
Xxxx Xxxx 03/15/2002 24,243
Xxxxx Xxxxx 03/15/2002 24,243
Xxxxxx Xxxxxxxx 03/15/2002 4,849
Xxxxxxxxx Xxxxx 03/15/2002 7,273
Xxxxx Xxxx 03/15/2002 14,546
Xxxxxx Genio 03/15/2002 4,849
Xxxxx Xxxxxx 03/15/2002 2,424
Xxxxx Xxxxxx 03/15/2002 2,424
Xxxxx Xxxxxxxx 03/15/2002 1,212
Xxx Xxxxxxx 03/15/2002 1,212
Xxx Xxxx 03/15/2002 1,212
Xxxxxxx Xxxxxx 03/15/2002 1,212
-----------
TOTAL 31,791,406
===========
EXHIBIT Y
CONTROLLING STOCKHOLDERS
CONTROLLING STOCKHOLDER PERCENTAGE OWNERSHIP OF RELIANT ESCROW SHARES
----------------------- ---------------------------------------------
Xxxxx Xxxxxxxxxx 50%
Xxxxxxx Xxxxxxxxxx 33%
Xxx Xxxxxx 17%
EXHIBIT Z
FORM OF EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into on May 22, 2002 by and among
Thane International, Inc., a Delaware corporation ("Thane"), Reliant Interactive
Media Corp., a Nevada corporation (the "Corporation"), and _____________, an
individual residing at _________________________________ (the "Executive"),
under the following terms and conditions:
RECITALS:
WHEREAS, on or about December 6, 2001, Thane, Reliant Acquisition
Corporation, a Nevada corporation wholly owned by Thane ("Acquisition"), the
Corporation, and certain controlling stockholders of the Corporation, including
the Executive, entered into an Amended and Restated
Agreement and Plan of
Merger, as amended by that certain Amendment No. 1 to Amended and Restated
Agreement and Plan of Merger, dated as of April 19, 2002, and by that certain
Amendment No. 2 to Amended and Restated
Agreement and Plan of Merger, dated as
of May 20, 2002 (the "Merger Agreement"), pursuant to which (i) Acquisition
shall be merged with and into the Corporation (the "Merger") with the
Corporation surviving such Merger as a wholly owned subsidiary of Thane and (ii)
the stockholders of the Corporation shall receive shares of the common stock of
Thane; and
WHEREAS, the Executive is a stockholder of the Corporation and will
personally derive significant value from the Merger; and
WHEREAS, the Executive and the Corporation entered into that certain
Employment Agreement, dated as of September 9, 2000 (the "Former Contract"),
pursuant to which the Executive was entitled to certain compensation and
benefits; and
WHEREAS, the execution and delivery of this Employment Agreement, as a
new contract to completely supersede the Former Contract, (i) is an inducement
to each of the Corporation and Thane to enter into the Merger Agreement and is a
condition to Thane's consummation of the Merger and (ii) provides significant
consideration to the Executive; and
WHEREAS, the Corporation desires to retain and employ the Executive,
and the Executive desires to be employed by the Corporation on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, it is hereby covenanted and agreed by the Corporation and the
Executive as follows:
1. Employment Period. The Corporation hereby agrees to employ the
Executive as its Chief Executive Officer, and the Executive, in such capacity,
agrees to provide services to the Corporation for the period beginning on the
date of the closing of the Merger (the "Commencement Date") and ending on March
31, 2005 (the "Employment Period").
2. Performance of Duties. The Executive agrees that during the
Employment Period, while he is employed by the Corporation, he shall devote
substantially all of his business
time, energies and talents to serving in the capacity of Chief Executive Officer
of the Corporation in the best interests of the Corporation, and to perform the
duties assigned to him by the Board of Directors of the Corporation (the
"Board") faithfully, efficiently and in a professional manner. The Executive
shall not, without prior written consent from the Board (which consent shall not
be unreasonably withheld):
(a) serve as or be a consultant to or employee, officer,
agent or director of any corporation, partnership or other entity other than the
Corporation or its affiliates (other than civic, charitable, or other public
service organizations); or
(b) have more than a five percent (5%) ownership interest
in any enterprise other than Thane or its affiliates. Set forth on Schedule 2(b)
attached hereto is a detailed list of the Executive's ownership interests as of
the date hereof.
3. Compensation. Subject to the terms and conditions of this
Employment Agreement, during the Employment Period, while he is employed by the
Corporation, the Executive shall be compensated by the Corporation for his
services as follows:
(a) Base Salary. The Executive shall receive, for each
12-consecutive month period beginning on the Commencement Date and each
anniversary thereof, a rate of salary that is not less than $_________ per year
(the "Base Salary"), payable in substantially equal monthly or more frequent
installments and subject to normal tax withholding. During the Employment Period
the Executive's Base Salary shall be reviewed by the Board on or before each
anniversary of the Commencement Date to determine whether an increase in the
Executive's rate of compensation is appropriate.
(b) Incentive Bonus. During each year of the Employment
Period the Executive shall, to the extent provided below, be entitled to receive
a cash incentive bonus (the "Incentive Bonus Amount") based on the Corporation's
performance as follows:
(i) If the Corporation's earnings before
interest, income taxes, depreciation and amortization, excluding (A)
extraordinary gains and losses and purchase accounting adjustments, (B)
acquisitions of businesses made after the Commencement Date and (C) the
payment of any Incentive Bonus Amounts ("EBITDA"), as determined in
accordance with U.S. generally accepted accounting principles,
consistently applied, as in existence at the date hereof ("GAAP") for
the 2003 fiscal year (the "2003 EBITDA") equals or exceeds $7.0
million, the Executive shall receive an Incentive Bonus Amount equal to
5.0% of the amount by which the 2003 EBITDA exceeds $7.0 million. For
purposes of this Agreement, the term "fiscal year" shall mean, for any
given year, the period beginning on April 1 in the preceding year and
ending on March 31 in such year.
(ii) If the Corporation's EBITDA for the 2004
fiscal year (the "2004 EBITDA") equals or exceeds $9.0 million, the
Executive shall receive an Incentive Bonus Amount equal to 5.0% of the
amount by which the 2004 EBITDA exceeds $9.0 million.
(iii) If the Corporation's EBITDA for the 2005
fiscal year (the "2005 EBITDA") equals or exceeds $12.0 million, the
Executive shall receive an Incentive
2
Bonus Amount equal to 5.0% of the amount by which the 2005 EBITDA
exceeds $12.0 million.
(iv) For purposes of calculating the
Corporation's EBITDA in this Section 3, Thane and the Corporation shall
follow the guidelines set forth on Schedule 3(b) attached hereto.
(v) The Corporation shall pay any earned
Incentive Bonus Amount within thirty (30) days after completion of its
audited financial statements for the previous fiscal year.
(c) Executive Loan. On the Commencement Date, Thane shall
lend to the Executive a principal amount of $_________ (the "Executive Loan"),
which will be evidenced by the secured promissory note in substantially the form
of Exhibit A attached hereto and subject to the Pledge Agreement substantially
in the form of Exhibit B attached hereto. If the Corporation's cumulative EBITDA
for the 2003, 2004 and 2005 fiscal years (the "Three-Year Fiscal Period") equals
or exceeds $15.0 million, the Executive shall be entitled to (i) full
forgiveness of all principal and interest outstanding on the Executive Loan (the
"Executive Loan Forgiveness") and (ii) a cash bonus equal to $_______ (the
"EBITDA Bonus"). All amounts of Executive Loan Forgiveness and EBITDA Bonus
shall be calculated based on the Corporation's financial statements at the end
of each fiscal year during the Three-Year Fiscal Period. For each fiscal quarter
during the Three-Year Fiscal Period, the Executive shall be entitled to receive
(to the extent not previously forgiven or paid (as applicable) in any previous
fiscal quarter) a ratable portion of the Executive Loan Forgiveness and the
EBITDA Bonus calculated by multiplying (A) the full amount of each of the
Executive Loan and the EBITDA Bonus by (B) a fraction: (x) the numerator of
which is the Corporation's cumulative EBITDA as of the end of then current
fiscal quarter, and (y) the denominator of which is $15.0 million, and
subtracting from the foregoing product the aggregate amount of the Executive
Loan Forgiveness and the EBITDA Bonus previously distributed to the Executive.
All earned portions of the Executive Loan Forgiveness and the EBITDA Bonus must
be received by the Executive (i) within forty-five (45) days of the end of each
fiscal quarter and (ii) within sixty (60) days of the end of each fiscal year.
(d) The Executive shall be entitled to receive the
following perquisites:
(i) The Corporation shall provide health and
medical insurance for the Executive in a form and program to be chosen
by the Corporation for certain of its executive employees as a group.
Additionally, the Executive shall be provided with vacation and such
other non-cash benefits provided to other similarly situated executives
of Thane.
(ii) The Corporation shall provide the Executive
with directors and officers liability insurance on substantially the
same terms and conditions as other similarly situated executives of
Thane.
(iii) The Corporation shall reimburse the
Executive's current monthly automobile lease payment until the earlier
of (A) the expiration of the Executive's current automobile lease or
(B) the end of the Employment Period, after which time the
3
Corporation shall provide the Executive with a monthly automobile
allowance consistent with those provided to other similarly situated
executives of Thane.
(e) The Executive shall be reimbursed by the Corporation
for all reasonable business, promotional, travel and entertainment expenses
incurred or paid by the Executive during the Employment Period in the
performance of his services under this Employment Agreement: (i) provided that
such expenses constitute business deductions from taxable income for the
Corporation and are excludable from taxable income to the Executive under the
governing laws and regulations of the Internal Revenue Code unless otherwise
agreed to by the Corporation's Board of Directors; and (ii) to the extent that
such expenses do not exceed the amounts allocable for such expenses in budgets
that are approved from time to time by the Corporation. In order that the
Corporation reimburse the Executive for such allowable expenses, the Executive
shall furnish to the Corporation, in a timely fashion, the appropriate
documentation required by the Internal Revenue Code in connection with such
expenses and shall furnish such other documentation and accounting as the
Corporation may from time to time reasonably request.
4. Restrictive Covenants. The Executive acknowledges and agrees
that: (i) the Executive has a major responsibility for the operation,
development and growth of the Corporation's business; (ii) the Executive's work
for the Corporation has brought him and will continue to bring him into close
contact with confidential information of the Corporation, Thane and each of
their respective customers; and (iii) the agreements and covenants contained in
this paragraph 4 and in the Merger Agreement are essential to protect the
business interests of the Corporation and Thane and that the Corporation and
Thane would not enter into the Employment Agreement but for such agreements and
covenants. Accordingly, the Executive covenants and agrees to the following:
(a) Confidential Information. Except as may be required
by the lawful order of a court or agency of competent jurisdiction, the
Executive agrees to keep secret and confidential, both during the Employment
Period and indefinitely after the Executive's employment with the Corporation
terminates, all non-public information concerning the Corporation, Thane and
each of their respective affiliates that was acquired by, or disclosed to, the
Executive during the course of his employment by the Corporation, including
information relating to customers (including, without limitation, credit
history, repayment history, financial information and financial statements),
costs, and operations, financial data and plans, whether past, current or
planned and not to disclose the same, either directly or indirectly, to any
other person, firm or business entity, or to use it in any way; provided,
however, that the provisions of this paragraph 4(a) shall not apply to
information that: (a) was, is now, or becomes generally available to the public
(but not as a result of a breach of any duty of confidentiality by which the
Executive is bound); (b) was disclosed to the Executive by a third party not
subject to any duty of confidentiality to the Corporation or Thane prior to its
disclosure to the Executive; or (c) is disclosed by the Executive in the
ordinary course of the Corporation's or Thane's business as a proper part of his
employment in connection with communications with customers, vendors and other
proper parties, provided that it is for a proper purpose solely for the benefit
of the Corporation and/or Thane. The Executive further agrees that he shall not
make any statement or disclosure that (i) would be prohibited by applicable
Federal or state laws, or (ii) is intended or
4
reasonably likely to be detrimental to the Corporation, Thane or any of their
respective subsidiaries or affiliates.
(b) Non-Competition. The Executive, the Corporation and
Thane agree that reasonable restrictions upon competition with the Corporation
and/or Thane following termination of the Executive's employment with the
Corporation are necessary to protect the business interests of the Corporation
and Thane.
(i) For purposes of the scope of this Section
4(b), the extent of each of the Corporation's and Thane's business (the
"Business") shall be limited to the actual and intended business of the
Corporation and Thane, as demonstrated by each of their books, records,
contracts, advertising, strategic plans and financial and budget
documents, created or relied upon during the Employment Period and as
of the date the Executive leaves the employment of the Corporation.
(ii) The Executive and Corporation agree that,
for a period commencing on the Commencement Date and ending on the
later of (A) the one (1) year anniversary of the date on which the
Executive's employment with the Corporation is terminated either (x)
for cause, (y) upon the Executive's disability pursuant to Section 5(e)
or (z) upon the voluntary resignation of the Executive pursuant to
Section 5(b), or (B) March 31, 2005 (the "Non-Competition Period"), the
Executive shall not serve as or be a consultant to or employee,
officer, agent, director or owner of more than five percent (5%) of
another corporation, partnership or other entity that competes with the
Corporation or Thane in the Business; provided, however, in the event
the Executive's employment with the Corporation is terminated without
cause, the Non-Competition Period shall immediately terminate if the
Corporation (or Thane) does not continue to pay the Executive's salary
pursuant to Section 5(a) hereof.
(iii) That the nature of the television production
business of the Corporation is interstate and international in scope,
that the global scope of the business renders a global restriction
reasonable and a more narrowly tailored geographic restriction
insufficient to protect the legitimate business interests of the
Corporation.
(c) Remedies. If the Executive breaches, or threatens to
commit a breach of any of the provisions contained in paragraphs 4(a) and 4(b)
(the "Restrictive Covenants"), the Corporation and Thane shall have the
following rights and remedies, each of which shall be enforceable, and each of
which is in addition to, and not in lieu of, any other rights and remedies
available to the Corporation and Thane at law or in equity.
(i) The Executive shall account for and pay over
to the Corporation all compensation, profits, and other benefits which
inure to the Executive's benefit which are derived or received by the
Executive or any person or business entity controlled by the Executive,
or his relatives, resulting from any action or transactions
constituting a breach of any of the Restrictive Covenants.
(ii) Notwithstanding the provisions of
subparagraph 4(c)(i) above, the Executive acknowledges and agrees that
in the event of a violation or threatened violation
5
of any of the Restrictive Covenants, the Corporation and Thane shall
have no adequate remedy at law and shall therefore be entitled to
enforce each such provision by temporary or permanent injunction or
mandatory relief obtained in any court of competent jurisdiction
without the necessity of proving damages, posting any bond or other
security, and without prejudice to any other rights and remedies that
may be available at law or in equity, and the Corporation and Thane
shall also be entitled to recover its attorneys' fees and costs
incurred to enforce any of the Restrictive Covenants from the
Executive.
(d) Severability. If any of the Restrictive Covenants, or
any part thereof, are held to be invalid or unenforceable, the same shall not
affect the remainder of the covenant or covenants, which shall be given full
effect, without regard to the invalid or unenforceable portions. Without
limiting the generality of the foregoing, if any of the Restrictive Covenants,
or any part thereof, are held to be unenforceable because of the duration of
such provision or the area covered thereby, the parties hereto agree that the
court making such determination shall have the power to reduce the duration
and/or area of such provision and, in its reduced form, such provision shall
then be enforceable.
(e) Proprietary Rights. The Executive acknowledges and
agrees that all know-how, documents, reports, plans, proposals, marketing and
sales plans, client lists, client files, and any materials made by the Executive
or by the Corporation are the property of the Corporation and shall not be used
by the Executive in any way adverse to the Corporation's interests. The
Executive shall not deliver, reproduce or in any way allow such documents or
things to be delivered or used by any third party without specific direction or
consent of the Board. The Executive hereby assigns to the Corporation any rights
which he may have in any such trade secret or proprietary information.
5. Termination and Compensation Due Upon Termination. The
Executive's right to compensation for periods after the date the Executive's
employment with the Corporation terminates shall be determined in accordance
with the following:
(a) Termination Without Cause or Resignation for Good
Cause. In the event the Corporation terminates the Executive's employment under
this Agreement without cause or the Executive resigns for Good Cause pursuant to
Section 5(d),
(i) and for the twelve month period immediately
preceding the effective date of termination the Corporation had
positive net income, upon the Executive's prior voluntary execution of
a written release (to be drafted and provided by the Corporation) of
any and all claims, including without limitation any claims for lost
wages or benefits, stock options, compensatory damages, punitive
damages, attorneys' fees, equitable relief, or any other form of
damages or relief (excluding claims for amounts which may be payable
pursuant to this Agreement) the Executive may assert against the
Corporation which release shall be mutually agreed upon by the
Corporation and the Executive:
(A) the Corporation shall pay the Executive in
accordance with the provisions of paragraph 3 any compensation
and benefits (including any earned
6
portions of the Incentive Bonus Amount, the Executive Loan
Forgiveness and the EBITDA Bonus) owed to the Executive
through the effective date of termination;
(B) the Executive shall be entitled to receive
all payment of his salary (as of the effective date of
termination) in accordance with the provisions of subparagraph
3(a) for the lesser of (1) twelve months or (2) the remainder
of the Employment Period; (C) the Executive shall be entitled
to receive any Incentive Bonus Amount if and when earned in
accordance with the provisions of subparagraph 3(b) through
the remainder of the Employment Period; and
(D) the Executive shall be entitled to receive
the greater amount of (1) the actual Executive Loan
Forgiveness and EBITDA Bonus earned in accordance with the
provisions of subparagraph 3(c) during the Employment Period
or (2) the amount of any Executive Loan Forgiveness and EBITDA
Bonus earned by the Executive in accordance with the
provisions of subparagraph 3(c) prior to the effective date of
termination, first divided by the actual number of days the
Executive was employed by the Corporation, then multiplied by
the total number of days contained in the Employment Period,
in either case excluding any amounts of Executive Loan
Forgiveness or EBITDA Bonus distributed to the Executive
pursuant to Section 5(a)(i)(A) above; or
(ii) for the twelve month period immediately
preceding the effective date of termination the Corporation had a net
loss, upon the Executive's prior voluntary execution of a written
release (to be drafted and provided by the Corporation) of any and all
claims, including without limitation any claims for lost wages or
benefits, stock options, compensatory damages, punitive damages,
attorneys' fees, equitable relief, or any other form of damages or
relief (excluding claims for amounts which may be payable pursuant to
this Agreement) the Executive may assert against the Corporation;
(A) the Corporation shall pay the Executive in
accordance with the provisions of paragraph 3 any compensation
and benefits (including any earned portions of the Incentive
Bonus Amount, the Executive Loan Forgiveness and the EBITDA
Bonus) owed to the Executive through the effective date of
termination;
(B) the Executive shall be entitled to receive
all payment of his salary (as of the effective date of
termination) in accordance with the provisions of subparagraph
3(a) for the lesser of (1) twelve months or (2) the remainder
of the Employment Period;
(C) the Executive shall be entitled to receive
any Incentive Bonus Amount if and when earned in accordance
with the provisions of subparagraph 3(b) through the remainder
of the Employment Period; and
(D) the Executive shall be entitled to receive
any Executive Loan Forgiveness and EBITDA Bonus if and when
earned in accordance with the provisions of subparagraph 3(c)
through the remainder of the Employment Period.
7
(b) Voluntary Resignation. The Executive may terminate
his employment with the Corporation for any reason (or no reason at all) at any
time by giving the Corporation sixty (60) days prior written notice of voluntary
resignation; provided, however, that the Corporation may decide that the
Executive's voluntary resignation be effective immediately upon notice of such
resignation. The Corporation shall have no obligation to make payments of any
kind to the Executive in accordance with the provisions of paragraph 3 for
periods after the date on which the Executive's employment with the Corporation
terminates due to the Executive's voluntary resignation.
(c) Termination for Cause. The Corporation shall have no
obligation to make payments of any kind to the Executive in accordance with the
provisions of paragraph 3 or otherwise for periods after the Executive's
employment with the Corporation is terminated on account of the Executive's
discharge for cause. For purposes of this paragraph 5, the Executive shall be
considered terminated for "cause" if he is discharged by the Corporation on
account of the occurrence of one or more of the following events:
(i) the Executive becomes addicted to drugs or
alcohol;
(ii) the Executive discloses confidential
information in violation of paragraph 4(a) or engages in competition in
violation of paragraph 4(b) to the detriment of the Corporation and/or
Thane;
(iii) the Corporation is directed by regulatory or
governmental authorities to terminate the employment of the Executive
or the Executive engages in activities that cause actions to be taken
by regulatory or governmental authorities that have a material adverse
effect on the Corporation;
(iv) the Executive is convicted of a felony crime
(other than a felony resulting from a minor traffic violation);
(v) the Executive flagrantly and repeatedly
disregards his duties under this Employment Agreement after (A) written
notice has been given to the Executive by the Board that it views the
Executive to be flagrantly disregarding his duties under this Agreement
and (B) the Executive has been given a period of thirty (30) days after
such notice to cure such misconduct. However, no notice or cure period
shall be required if Executive's disregard of his duties has materially
and adversely affected the Corporation and/or Thane;
(vi) any event of willful misconduct to the
extent that, in the reasonable judgment of the Board, the Executive's
credibility and reputation no longer conform to the standard of the
Corporation's and Thane's executives; or
(vii) the Executive commits an act of fraud
against the Corporation and/or Thane, violates a duty of loyalty to the
Corporation and/or Thane as defined under
Florida law or violates
paragraph 2.
(d) Relocation of Executive. In the event that the
Corporation requests the Executive to relocate to an office outside of the
Tampa/St. Petersburg area, the Executive may
8
object to such request in writing within thirty (30) days of receiving such
request. If the Corporation insists on the Executive relocating outside of the
Tampa/St. Petersburg area after receiving the Executive's written objection to
such relocation request, the Executive may resign for "Good Cause."
(e) Disability. The Corporation shall have no obligation
to make payments to the Executive in accordance with the provisions of paragraph
3 for periods after the date the Executive's employment with the Corporation
terminates on account of any long-term disability, except payments due and owing
through the effective date of termination. For purposes of this subparagraph
5(e), long-term disability shall mean any disability that has a material adverse
effect upon the ability of the Executive to perform on a full-time basis his
customary duties hereunder on a full-time basis either in the judgment of the
Executive's doctors or that continues for a period of ninety (90) days out of
any one hundred and fifty (150) day period.
(f) Death. The Corporation shall have no obligation to
make payments to the Executive in accordance with the provisions of paragraph 3
for periods after the date of the Executive's death, except payments due and
owing as of such date including earned salary, bonuses and Options.
6. Successors. This Agreement shall be binding on, and inure to
the benefit of, each of the Corporation and Thane and each of their respective
successors and assigns and any person acquiring, whether by merger,
consolidation, purchase directly or indirectly of all or substantially all of
the Corporation's assets and business, or otherwise.
7. Nonalienation. The interests of the Executive under this
Agreement are not subject to the claims of his or her creditors, other than the
Corporation, and may not otherwise be voluntarily or involuntarily assigned,
alienated or encumbered except to the Executive's estate upon his or her death.
8. Waiver of Breach. The waiver by either the Corporation and
Thane, on one hand, or the Executive, on the other hand, of a breach of any
provision of this Agreement shall not operate as, or be deemed a waiver of, any
subsequent breach by either the Corporation, Thane, or the Executive.
9. Notice. Any notice to be given hereunder by a party hereto
shall be in writing and shall be deemed to have been given when received or,
when deposited in the U.S. mail, certified or registered mail, postage prepaid:
(a) to the Executive addressed as follows:
(b) to the Corporation addressed as follows:
Reliant Interactive Media Corp.
0000 Xxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000
0
Xxxxx, Xxxxxxx 00000
Attention: Board of Directors
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Thane International, Inc.
00-000 Xxxxx Xxxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxx, Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and a copy to:
H.I.G. Capital LLC
0000 Xxxxxxxx Xxx Xxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and a copy to:
White & Case LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
10. Amendment. This Agreement may be amended or canceled by mutual
agreement of the parties in writing without the consent of any other person and
no person, other than the parties hereto (and the Executive's estate upon his
death), shall have any rights under or interest in this Agreement or the subject
matter hereof. The parties hereby agree that no oral conversations shall be
deemed to be a modification of this Agreement and neither party shall assert the
same.
11. Applicable Law. The provisions of this Agreement shall be
construed in accordance with the internal laws of the State of
Florida.
12. WAIVER OF JURY TRIAL. THE EXECUTIVE AND THE CORPORATION
EXPRESSLY WAIVE ANY RIGHT EITHER MAY HAVE TO A JURY TRIAL CONCERNING ANY CIVIL
ACTION THAT MAY ARISE FROM THIS AGREEMENT, OR THE RELATIONSHIP OF THE PARTIES
HERETO.
10
13. Termination. All of the provisions of this Agreement shall
terminate after the expiration of the Employment Period, except that paragraph
4(a) shall survive indefinitely, paragraph 4(b) shall terminate upon the
expiration of the Non-Competition Period and paragraph 5(b) shall terminate upon
the expiration of the Employment Period.
* * *
11
IN WITNESS WHEREOF, the Executive, the Corporation and Thane have
executed this Employment Agreement as of the day and year first above written.
----------------------------------------
RELIANT INTERACTIVE MEDIA CORP.
By:
-------------------------------------
Its:
------------------------------------
THANE INTERNATIONAL, INC.
By:
-------------------------------------
Its:
------------------------------------
EXHIBIT B
FORM OF STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made and entered into
as of May __, 2002, by the undersigned, in favor of Thane International, Inc., a
Delaware corporation (the "Lender").
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the undersigned hereby agrees as follows:
1. For the purpose of securing the full and prompt payment of any
and all indebtedness or obligations of the undersigned to the Lender now or
hereafter arising under the Promissory Note dated as of the date hereof executed
by the undersigned in favor of the Lender (the "Note"), or any renewals,
replacements, modifications or substitutions in writing for the Note (the
"Obligations"), the undersigned hereby grants to the Lender a lien upon,
security interest in and security title to and hereby assigns, transfers and
pledges to the Lender all of the undersigned's right, title and interest in and
to ______ shares of the common stock, $0.001 par value per share, of the Lender
owned by the undersigned (the "Purchaser Stock"), together with all direct and
remote proceeds of the Purchaser Stock, including without limitation all
payments, rights, dividends, distributions, certificates, substitutions,
additions, replacements, renewals, interest or other rights or distributions
which are declared, issued, paid or payable with respect to or on account of the
Purchaser Stock. All such property, including the direct and remote proceeds
thereof, is hereinafter collectively referred to as the "Collateral".
2. The undersigned hereby represents and warrants to the Lender
that:
(a) Except as set forth in (i) that certain Amended and
Restated Affiliate Voting and Lock-Up Agreement, dated as of December 6, 2001,
by and among Reliant Interactive Media Corp., a Nevada corporation ("Reliant"),
the Lender, the undersigned and the stockholders of Reliant named therein and
(ii) that certain Escrow Agreement, dated as of May 22, 2002, by and among the
Lender, Reliant, Citibank, N.A., the undersigned, the stockholders of Reliant
named therein and the stockholders of the Lender named therein, the undersigned
is the legal owner of, and has the complete unconditional authority to pledge
the Purchaser Stock and holds the same free and clear of all liens, charges,
encumbrances and security interests of every kind and nature.
(b) the execution, delivery and performance by the
undersigned of this Agreement and the Note will not violate the terms of any
instrument, document or agreement to which the undersigned is a party, or by
which the undersigned or any of his or her property is bound, or be in conflict
with, result in a breach of or constitute (with giving of notice or lapse of
time or both) a default under any such instrument, document or agreement, or
result in the creation or imposition of any lien upon any of the property or
assets of the undersigned, except for the lien in favor of the Lender created
hereunder.
(c) the undersigned has the full right, power and
authority to execute, deliver and perform under this Agreement and the Note, and
this Agreement and the Note each
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with their respective terms.
(d) the Agreement shall constitute a valid first priority
lien on the first priority and prior perfected security interest in favor of the
Lender in the Purchaser Stock which is enforceable against the undersigned and
all other persons or entities.
3. The undersigned shall, at his own expense, do, make, procure,
execute and deliver all acts, things, writings and assurances as the Lender may
at any time reasonably request to protect, assure or enforce the Lender's
interests, rights and remedies created by, provided in or arising from this
Agreement.
4. The undersigned agrees to pay all taxes, charges, liens and
assessments against the Collateral, and upon the failure of the undersigned to
do so the Lender, at its option, may pay any of them and shall be the sole judge
of the legality or validity thereof and the amount necessary to discharge the
same. All advances, charges, costs, taxes, liens, assessments and expenses,
including reasonable attorneys' fees, incurred or paid by the Lender in
exercising any right, power or remedy conferred in this Agreement, or in the
enforcement thereof, shall become a part of the Obligations and shall bear
interest from the date incurred or paid by the Lender at the lesser of (i) the
rate of interest the undersigned has contracted to pay in the Note or (ii) the
highest rate permissible under applicable law.
5. The occurrence of any Event of Default under (and as such term
is defined in) the Note also shall constitute an event of default under this
Agreement (herein also referred to as an "Event of Default").
6. Upon the occurrence of an Event of Default, the Lender may, in
its sole discretion and without notice to or demand upon the undersigned,
declare immediately due and payable all of the Obligations secured hereby and
exercise any one or more of the rights and remedies granted pursuant to this
Agreement. In furtherance of the Lender's rights and remedies hereunder and not
in limitation thereof, the Lender shall have full power and authority to
possess, own, sell, assign, transfer and deliver the whole of the Collateral, or
any part thereof, in such order as the Lender may elect. If any notification to
the undersigned of an intended disposition by the Lender of any of the
Collateral is required by law, such notification, if mailed, shall be deemed
reasonably and properly given if mailed at least ten (10) days before such
disposition, in accordance with the notice provisions set forth below. For the
purposes aforesaid, the Lender is authorized in the undersigned's name to sign
and execute any transfer, conveyance or instrument in writing which may be
necessary or lawful in the premises.
7. At any time after an Event of Default has occurred, the Lender
in its name, in the name of its nominee or in the name of the undersigned may,
in its discretion and without notice to or demand upon the undersigned: (a)
notify any person obligated on any of the Collateral of its rights hereunder and
direct that such person transmit to Lender any and all certificates representing
any renewals of or dividends on the Collateral; (b) collect by legal proceedings
or otherwise all dividends, interest, principal payments and other sums now or
hereafter payable upon or on account of the Collateral; (c) enter into any
renewal, modification, extension,
-2-
substitution, reorganization, deposit, merger or consolidation agreement or any
agreement in any way relating to or affecting the Collateral, and in connection
therewith may deposit or surrender control of the Collateral thereunder, accept
other property in exchange for the Collateral and do and perform such acts and
things as it may deem proper, and any money or property received in exchange for
the Collateral or otherwise shall be either applied to the Obligations or
thereafter held by the Lender as Collateral pursuant to the provisions hereof in
a non-interest bearing or cash collateral account unless and until such
application will cause all of the Obligations to be paid in full; (d) make any
compromise, settlement or release the Lender deems desirable or proper with
reference to the Collateral; (e) insure, process and preserve the Collateral;
(f) cause the Collateral to be transferred to its name or to the name of its
nominee with or without disclosing that the Collateral is subject to the lien
and security interest hereunder; (g) exercise as to the Collateral all the
rights, powers and remedies of an owner; (h) perform any obligation of the
undersigned hereunder; and (i) send any Collateral to its issuer or the issuer's
agent for collection, sale, redemption or substitution without liability for
loss in transit or for any act or default of the Person to whom such Collateral
may be sent, all without releasing, impairing, affecting or lessening the
liability of the undersigned; however, the Lender shall have no obligation to do
any of the foregoing. In furtherance of the foregoing, the undersigned hereby
appoints the Lender as his lawful attorney-in-fact to carry out the foregoing
acts, including the authority to redeem or collect and give full receipt for any
distributions declared, paid, payable or issued in respect of the Collateral and
to endorse the name of the undersigned on any of the Collateral and on all
proceeds therefrom that may come into the Lender's possession and to deposit or
otherwise collect the same.
8. Notwithstanding anything contained herein to the contrary,
unless and until the occurrence of an Event of Default, the undersigned shall be
entitled to exercise any and all voting powers pertaining to any of the
Collateral (and to give written consents in lieu of voting thereon) for all
purposes not inconsistent with the terms hereof, except that the undersigned
shall not have any right to exercise any such power if the action or omission to
act in favor of which the undersigned intends to exercise such power would have
a material adverse effect on the value of the Collateral. Upon occurrence and
during the continuance of an Event of Default, the Lender, or its nominee,
without notice or demand of any kind, shall have the sole and exclusive right to
exercise all voting powers pertaining to any and all of the Collateral (and to
give written consents in lieu of voting thereon) and may exercise such power in
such manner as the Lender, in its sole discretion, shall determine. THIS PROXY
IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE BY THE UNDERSIGNED'S DEATH OR
OTHERWISE. Without the written consent of the Lender, the exercise by the Lender
of any of its rights and remedies under this paragraph shall not be deemed a
disposition of collateral under Article 9 of the Uniform Commercial Code nor an
acceptance by the Lender of any of the Collateral in satisfaction of any of the
Obligations.
9. (a) Notwithstanding anything contained herein to the
contrary, unless and until the occurrence of an Event of Default, the
undersigned shall be entitled to receive and retain any cash dividends declared
and paid on the Purchaser Stock. Any and all stock or liquidating dividends,
other distributions in cash and other property, return of capital, cash and
other property received upon a merger or reorganization, or other distributions
made on or in respect of the Collateral, whether resulting from a subdivision,
combination or reclassification of the
-3-
outstanding capital stock of Lender, or received in exchange for the Collateral
or any part thereof or as a result of any merger, consolidation, acquisition or
other exchange of assets to which the Lender may be a party or otherwise, shall
be and become part of the Collateral pledged hereunder and, if received by the
undersigned, shall be held in trust on behalf of the Lender and forthwith be
delivered to the Lender to be held subject to the terms of this Agreement.
(b) Upon the occurrence and during the continuance of an
Event of Default, all rights of the undersigned to receive any cash dividends
pursuant to Section 9(a) hereof shall cease, and all such rights shall thereupon
become vested in the Lender, which shall have the sole and exclusive right to
receive and retain the dividends which the undersigned would otherwise be
authorized to receive and retain pursuant to Section 9(a) hereof. In such event,
the undersigned shall pay over to the Lender any dividends received by it with
respect to the Collateral and any and all money and other property paid over to
or received by the Lender pursuant to the provisions of this Section 9(b) shall
be retained by the Lender as Collateral hereunder and shall be applied in
accordance with the provisions hereof.
10. Beyond the exercise of reasonable care to assure the safe
custody of the Collateral in the physical possession of the Lender or its
agents, as the case may be, pursuant to this Agreement, neither the Lender nor
its agents shall have any duty or liability to collect any sums due in respect
of the Collateral or to protect, preserve or exercise any rights pertaining to
the Collateral, and the Lender shall be relieved of all responsibility for the
Collateral upon surrender of the Collateral to the undersigned.
11. By accepting this Agreement below, the Lender acknowledges
that the pledge of the Purchaser Stock has not been registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
that no such registration is contemplated. The Lender represents that the
interest in the Purchaser Stock which it is accepting through the pledge of such
securities to it pursuant to this Agreement is for its own account, and the
Lender accepts such pledge with no intent of participating directly or
indirectly in a distribution of such securities in violation of the Act or any
state securities laws. The undersigned clearly understands that, upon the
occurrence of any Event of Default, the Lender shall be entitled to place all or
any part of the Collateral privately with a purchaser or purchasers for sale.
12. This Agreement will terminate when all the Obligations of the
undersigned to the Lender have been fully paid and performed, at which time the
Lender, unless the Lender is then obliged by law to do otherwise, shall reassign
and deliver to the undersigned, or to such person or persons as the undersigned
shall designate, against receipt, such of the Collateral (if any) pledged by the
undersigned and as shall not have been sold or otherwise applied by the Lender
pursuant to the terms hereof and shall still be held by it hereunder, together
with appropriate instruments of reassignment and release. Any such assignment
shall be without recourse upon or warranty by the Lender and at the expense of
the undersigned.
13. Every power and proxy given to the Lender herein is coupled
with an interest and is irrevocable by death or otherwise. The rights, powers
and remedies given to the Lender by this Agreement shall be in addition to all
rights, powers and remedies given to the Lender by virtue of any statute or rule
of law, and all such rights, powers and remedies are cumulative and
-4-
not alternative and may be exercised and enforced successively or concurrently.
Any forbearance, failure or delay by the Lender in exercising any right, power
or remedy hereunder shall not be deemed to be a waiver of such right, power or
remedy, and any single or partial exercise of any right, power or remedy
hereunder shall not preclude the further exercise thereof; and every right,
power and remedy of the Lender hereunder shall continue in full force and effect
until such right, power or remedy is specifically waived by an instrument in
writing executed by the Lender.
14. Words importing the singular number shall include the plural
number and vice versa, and any pronoun used shall be deemed to cover all
genders. "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof. The terms
"undersigned" and "Lender" as used in this Agreement shall include, where
applicable, the respective heirs, executors, administrators, successors,
representatives, receivers, trustees and permitted assigns of those parties.
15. If any provision hereof or the application thereof to any
Person or circumstance shall to any extent be invalid or unenforceable, the
remainder of this Agreement, or the application of such provision to Persons or
circumstances other than those to which it is invalid or unenforceable, shall
not be affected thereby, and each provision of this Agreement shall be valid and
shall be enforced to the fullest extent permitted by law.
16. The internal laws of the State of
Florida shall govern the
construction of and the interests, rights and duties of the parties to this
Agreement, without regard to any conflicts of law or choice of law rules.
17. No notice or other communication shall be deemed given unless
sent in any of the manners, and to the persons, specified in this Section 17.
All notices and other communications hereunder shall be in writing and shall be
deemed given (a) upon receipt if delivered personally (unless subject to clause
(b)) or if mailed by registered or certified mail, (b) at noon on the date after
dispatch if sent by overnight courier or (c) upon the completion of transmission
(which is confirmed by telephone or by a statement generated by the transmitting
machine) if transmitted by telecopy or other means of facsimile which provides
immediate or near immediate transmission to compatible equipment in the
possession of the recipient, in any case to the parties at the following
addresses or telecopy numbers (or at such other address or telecopy number for a
party as will be specified by like notice):
if to the undersigned:
------------------------------
------------------------------
------------------------------
if to the Lender: Thane International, Inc.
00-000 Xxxxx Xxxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxx, Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
-5-
with a copy to: H.I.G. Capital, LLC
0000 Xxxxxxxx Xxx Xxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx Xxxxxxxx
and a copy to: White & Case LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
18. THE UNDERSIGNED HEREBY WAIVES ANY RIGHT HE OR SHE MAY HAVE
UNDER ANY APPLICABLE LAW TO A TRIAL BY JURY WITH RESPECT TO ANY SUIT OR LEGAL
ACTION WHICH MAY BE COMMENCED BY OR AGAINST THE LENDER CONCERNING THE
INTERPRETATION, CONSTRUCTION, VALIDITY, ENFORCEMENT OR PERFORMANCE OF THIS
AGREEMENT. THE UNDERSIGNED FURTHER AGREES AND CONSENTS TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT SITTING IN MIAMI-DADE COUNTY,
FLORIDA WITH RESPECT TO
ANY SUCH SUIT OR LEGAL ACTION, AND THE UNDERSIGNED FURTHER AGREES AND CONSENTS
TO VENUE OF ANY STATE OR FEDERAL COURT SITTING IN MIAMI-DADE COUNTY,
FLORIDA
WITH REGARD TO ANY SUCH SUIT OR LEGAL ACTION.
(Signature Page Follows)
-6-
IN WITNESS WHEREOF, the undersigned has made and entered into this
Pledge Agreement as of the day and year first above written.
--------------------------------------------
ACCEPTANCE
The foregoing Pledge Agreement is accepted by the Lender as of the date
first written above.
LENDER:
THANE INTERNATIONAL, INC.
By:
-----------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
-7-
