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EXHIBIT 10.30
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is being signed
as of March 20, 1998 by and among INTERVISUAL BOOKS, INC., a California
corporation ("Intervisual"), THE XXXX CREATIVE GROUP, a California corporation
(the "Company") and THE XXXX FAMILY TRUST, dated May 30, 1980, as sole
shareholder of the Company (the "Shareholder"). Certain other capitalized terms
used herein are defined in Article X and throughout this Agreement.
RECITALS
A. The Board of Directors of Intervisual and the Board of Directors
and the Shareholder of the Company have determined that it is in their
respective best interests for Intervisual to acquire the Company upon the terms
and subject to the conditions set forth in this Agreement. To effectuate the
transaction, the parties have agreed, subject to the terms and conditions set
forth in this Agreement, to merge the Company with and into Intervisual so that
Intervisual continues as the surviving corporation.
B. Pursuant to a letter agreement effective as of May 12, 1994
between Xxxxx X. Xxxx ("Xxxx") and Intervisual (the "Letter Agreement"), the
Company was established to pursue the creation of new and distinct products not
normally pursued by Intervisual in its day-to-day activities. Pursuant to the
Letter Agreement, Intervisual agreed to pay commissions or royalties to the
Company on projects accepted by Intervisual and projects which have been
developed by the Company and accepted by Intervisual account for a significant
portion of sales by Intervisual.
C. As an inducement to Intervisual entering into this Agreement, Xx.
Xxxx and the Company agree that the Letter Agreement is to be canceled and
terminated and Intervisual is to have no obligation to pay any commissions or
royalties to the Company under the Letter Agreement for any periods after
October 1, 1997.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement
and in accordance with the General Corporation Law of the State of California
(the "Corporations Code"), at the Effective Time (as defined below) the Company
shall be merged with and into Intervisual (the "Merger"). Promptly after the
execution of this Agreement, the parties agree to prepare an
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"Merger"). Promptly after the execution of this Agreement, the parties agree to
prepare an Agreement of Merger, which agreement shall be consistent with the
terms contained herein and shall be annexed hereto as Exhibit A (the "Agreement
of Merger"). The terms and conditions of the Agreement of Merger are
incorporated herein by reference as if fully set forth herein. As a result of
the Merger, the separate corporate existence of the Company shall cease and
Intervisual shall continue as the surviving corporation (the "Surviving
Corporation").
1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Merger (the "Closing") shall take place as
soon as practicable after this Agreement has been approved by the shareholders
of Intervisual or such other time as the parties may otherwise agree. To
effectuate the Merger, the parties agree to execute and file the Agreement of
Merger and such certificates of officers as necessary under California law.
1.3 CONVERSION OF COMPANY SHARES IN THE MERGER. At the Effective
Time, by virtue of the Merger and without any action on the part of Shareholder,
each issued and outstanding share of Common Stock of the Company ("Company
Common Stock"), shall be converted into the right to receive, and become
exchangeable for, 2,500 shares of validly issued, fully paid and nonassessable
shares of common stock, no par value per share of Intervisual (the "Intervisual
Common Stock") for an aggregate number of 250,000 shares plus the right to
receive the Contingent Shares in accordance with Section 1.4 below.
1.4 CONTINGENT SHARES. At the Effective Time, by virtue of the Merger
and without any action on the part of any Shareholder, each issued and
outstanding share of Company Common Stock shall be converted into the right to
receive and become exchangeable for, 780 Contingent Shares of Intervisual Common
Stock for an aggregate of 78,000 additional shares of Intervisual Common Stock
(the "Contingent Shares") pursuant to this Section 1.4.
(a) Right to Receive Contingent Shares. The right to receive
the Contingent Shares shall be based upon the amount of net sales by Intervisual
of the books and projects contained on Exhibit B hereto (the "Applicable
Projects"). The parties agree that the list of Applicable Projects shall be
amended as mutually agreed by the parties to include those additional titles or
books which directly relate to an applicable series indicated on Exhibit B
hereto. For purposes of this Agreement, the term "net sales" shall mean net
invoices to customers by Intervisual for the Applicable Projects. Calculations
of the net sales shall be cumulative based upon the total of all net sales from
the Applicable Projects.
(b) Issuance of Contingent Shares. Intervisual shall issue to
Shareholder the Contingent Shares as and when net sales of the Applicable
Projects reach the following thresholds:
(i) 26,000 Contingent Shares when the Company's net
sales from the Applicable Projects exceed $5,000,000;
(ii) 26,000 Contingent Shares when the Company's net
sales from the Applicable Projects exceed $6,000,000; and
(iii) 26,000 Contingent Shares when the Company's net
sales from the Applicable Projects exceed $7,000,000.
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Within 60 days after the Effective Date of the Merger,
and then again within 60 days after the end of each fiscal year of the Company,
the Company shall calculate the net sales from the Applicable Projects and
deliver to the Shareholder a schedule indicating such sales. Based upon the
amount of net sales from the Applicable Projects indicated in such schedules,
the Company shall then issue to Shareholder the appropriate number of Contingent
Shares, if any, as the appropriate thresholds are reached.
1.5 FILING OF AGREEMENT OF MERGER. At the time of the Closing, the
parties shall cause the Merger to be consummated by filing the duly executed
Agreement of Merger with the Secretary of State of the State of California in
accordance with the relevant provisions of the Corporations Code (the date and
time of such filing is referred to herein as the "Effective Date" or "Effective
Time").
1.6 ISSUANCE OF SHARES; DELIVERY OF CERTIFICATES. At the Effective
Time, the Shareholder shall deliver the certificate representing all issued and
outstanding shares of Company Common Stock to Intervisual for cancellation and
conversion. As soon as reasonably practicable after the Effective Time,
Intervisual shall issue the certificates evidencing the Intervisual Common Stock
issuable pursuant to Section 1.3. The shares of Intervisual Common Stock
issuable by Intervisual in the Merger and the Contingent Shares referenced in
Section 1.4 are sometimes referred to herein as the "Intervisual Shares."
1.7 ACCOUNTING AND TAX TREATMENT. The parties hereto acknowledge and
agree that the transactions contemplated hereby shall be treated as a tax-free
reorganization under Section 368 of the Code for tax purposes.
1.8 ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS
(a) Articles of Incorporation. The Articles of Incorporation
of Intervisual in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until amended in
accordance with the provisions thereof and as provided by law.
(b) Bylaws. The Bylaws of Intervisual in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
until amended in accordance with the provisions thereof and as provided by law.
(c) Directors and Officers. The directors and officers of
Intervisual shall be the directors and officers of the Surviving Corporation
until their resignations or until their respective successors are selected and
qualified.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF INTERVISUAL
Intervisual makes the following representations and warranties to the
Shareholder:
2.1 CORPORATE STATUS AND COMPANY RECORDS. Intervisual is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California.
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2.2 CORPORATE POWER AND AUTHORITY. Intervisual has the corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Intervisual has taken all action necessary to authorize its execution and
delivery of this Agreement, the performance of its respective obligations
hereunder and the consummation of the transactions contemplated hereby, except
that shareholder approval of the Merger is required. This Agreement constitutes
a legal, valid and binding obligation of Intervisual, enforceable against
Intervisual in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
2.3 INTERVISUAL COMMON STOCK. Upon consummation of the Merger and the
issuance and delivery of certificates representing the Intervisual Shares to the
Shareholder in accordance with the terms hereof, the Intervisual Shares will be
validly issued, fully paid and non-assessable.
2.4 NO VIOLATION. The execution and delivery of this Agreement by
Intervisual and the performance of its obligations hereunder and the
consummation of the transactions contemplated by this Agreement will not: (a)
contravene any provision of the Articles of Incorporation or Bylaws of
Intervisual; (b) violate any law, injunction, judgment or order of any
Governmental Authority applicable to Intervisual; (c) result in any breach of,
or constitute a default under any material Contract applicable to Intervisual;
(d) result in the creation of any Lien upon the assets of Intervisual; or (e)
require the consent or authorization of any Governmental Authority.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDER AND THE COMPANY
Each of the Shareholder and the Company jointly and severally makes
the following representations and warranties to Intervisual:
3.1 CORPORATE STATUS AND COMPANY RECORDS. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the state of California and has the requisite power and authority to own its
properties and to carry on its business as now being conducted. The Company does
not own any securities of or other interests in any other corporation, joint
venture or other business entity. The copies of the articles of incorporation,
bylaws, minute books, and stock ledgers of the Company provided to Intervisual
are true, accurate and complete.
3.2 POWER AND AUTHORITY. The Company has the corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The Company
has taken all action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby. This Agreement is the legal, valid and
binding obligation of each of the Company and the Shareholder, enforceable
against each of them in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
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generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
3.3 CAPITALIZATION. The Company has authorized 100,000 shares of
common stock, no par value per share, of which 100 shares are issued and
outstanding as of the date hereof. All issued and outstanding shares of the
Company are validly issued, fully paid, and nonassessable and have been issued
in compliance with applicable securities laws. Shareholder owns all of the
issued and outstanding shares of the Company, free and clear of all liens,
restrictions and claims. There are no outstanding rights or other agreements
obligating the Company to issue any additional capital stock.
3.4 NO VIOLATION. The execution and delivery of this Agreement by the
Company and the Shareholder, the performance by them of their respective
obligations hereunder and the consummation by them of the transactions
contemplated by this Agreement will not: (a) contravene any provision of the
articles of incorporation or bylaws of the Company; (b) violate or conflict with
any law, injunction, judgment or order of any Governmental Authority which is
applicable to the Company or the Shareholder; (c) result in any breach of, or
constitute a default under any Contract applicable to the Company or the
Shareholder; (d) result in the creation of any Lien upon the assets of the
Company; or (e) require the consent or authorization of any Governmental
Authority.
3.5 FINANCIAL STATEMENTS. True and correct copies of the unaudited
balance sheet of the Company (the "Balance Sheet") as of September 31, 1997 (the
"Balance Sheet Date"), and the related unaudited statements of income and
retained earnings (collectively the "Financial Statements") have been previously
delivered to Intervisual. The Financial Statements fairly present the financial
position of the Company at the Balance Sheet Date and the results of operations
and cash flows for the periods covered thereby, and have been prepared in
accordance with GAAP consistently applied throughout the periods indicated,
except as specifically disclosed therein and except for normal year-end
adjustments and the absence of footnotes. The books and records of the Company
are sufficient to permit an audit in accordance with GAAP.
3.6 LIABILITIES OF THE COMPANY. The Company does not have any
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
except: (a) to the extent reflected or taken into account in the Balance Sheet
and not heretofore paid or discharged; (b) liabilities incurred in the ordinary
course of business consistent with past practice since the Balance Sheet Date
and (c) liabilities incurred in the ordinary course of business prior to the
Balance Sheet Date which, in accordance with GAAP consistently applied, were not
recorded thereon. The Company does not owe any amounts to the Shareholder and
Shareholder does not owe any amounts to the Company. All of the liabilities of
the Company do not, and as of the Closing will not, exceed $5,000. Since the
Balance Sheet Date there has not been any change in the financial condition or
operations of the Company, except changes in the ordinary course of business,
which have not been materially adverse.
3.7 LITIGATION. There is no action, suit, or other legal or
administrative proceeding or governmental investigation pending, or to the
Company's or the Shareholder's knowledge, threatened, anticipated or
contemplated against or affecting the Company, or its assets, or which questions
the validity or enforceability of this Agreement or the transactions
contemplated hereby. No outstanding orders, decrees or stipulations have been
issued by any Governmental Authority in any proceeding to which the Company is
or was a party.
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3.8 GOOD TITLE TO AND CONDITION OF ASSETS. The Company has good and
marketable title to all of its Assets (as hereinafter defined), free and clear
of any Liens or restrictions on use. For purposes of this Agreement, the term
"Assets" means all of the properties and assets of the Company, whether tangible
or intangible, wherever located.
3.9 COMPLIANCE WITH LAWS. The Company has not received notice of any
violation of any applicable material federal, state, or local statute, law, or
regulation affecting the properties or the operation of its business (including,
but not limited to, environmental laws); and to the best knowledge of the
Company and the Shareholder, there are no such violations.
3.10 TAX MATTERS. The Company has provided Intervisual true and
correct copies of its federal income tax and California franchise tax returns
since incorporation. Within the times and in the manner prescribed by law, the
Company has filed all federal, state, and local tax returns required by law and
have paid all taxes, assessments, and penalties due and payable. The provisions
for taxes reflected in the Financial Statements are adequate for federal, state,
county, and local taxes for the period ending on the Balance Sheet Date and for
all prior periods, whether disputed or undisputed. There are no present disputes
about taxes payable by the Company. Prior to the Merger, the Company will have
paid all tax liabilities which may be owed to the California Franchise Tax Board
and shall deliver to the Company a "certificate of satisfaction" from the
California Franchise Tax Board stating that all tax liabilities of the Company
have been paid or secured.
3.11 LICENSES AND PERMITS. The Company possesses all material
licenses and required governmental or official approvals, permits or
authorizations (collectively, the "Permits") for its business and operations as
currently conducted. All such Permits are in full force and effect, and the
Company is in compliance with the respective requirements thereof.
3.12 INTELLECTUAL PROPERTY. All trademarks, service marks, trade
names, copyrights, know-how, patents, trade secrets, licenses (including
licenses for the use of computer software programs), and other intellectual
property used by the Company in the conduct of its business (the "Intellectual
Property") belong exclusively to the Company. Neither Xxxx nor Shareholder has
any rights to or interest in the Company's Intellectual Property. The Company
has full legal right, title and interest in and to, or the right to use, the
Intellectual Property. The use and exploitation of the Company's Intellectual
Property does not infringe or misappropriate any rights held or asserted by any
Person, and to the Company's and the Shareholder's knowledge, no Person is
infringing on the Intellectual Property. No payments are required for the
continued use by the Company of the Intellectual Property. To the knowledge of
the Company and the Shareholder, none of the Intellectual Property has been
declared invalid or unenforceable, or is the subject of any pending or
threatened action for opposition, cancellation, infringement, invalidity, or
misappropriation or like claim.
3.13 CONTRACTS. True and correct copies of each material Contract to
which the Company is a party and which is material to its business, or prospects
(the "Designated Contracts"), have been provided to Intervisual. To the
knowledge of the Company and the Shareholder, the Company has not violated any
of the material terms or conditions of any Designated Contract, and all of the
material covenants to be performed by any other party thereto have been
performed in all material respects and there are no claims for breach,
indemnification or termination under any Designated Contract. No event has
occurred which constitutes, or after notice or the passage of time would
constitute, a material default by the Company under any Designated Contract.
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3.14 ACTIVE BUSINESS; EMPLOYEES. Except for the receipt of commission
or royalty payments from Intervisual, the Company is not actively engaged in a
trade or business. The Company does not currently have any employees and will
not hire any employees prior to the Effective Time. All employment taxes and
other obligations relating to employees have been satisfied.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The
Company shall not, between the date of this Agreement and the Effective Time do
or agree to do any of the following:
(a) amend its articles of incorporation or bylaws;
(b) (i) issue, sell, dispose of, or encumber of any shares of
its capital stock, or any options, convertible securities or other rights to
acquire any shares of such capital stock, or (ii) sell, dispose of, or encumber
its assets, tangible or intangible, except in the ordinary course of business
consistent with past practice;
(c) declare, make or pay any dividend or other distribution
with respect to any of its capital stock or pay any bonuses to the Shareholder;
(d) reclassify, combine, split, redeem, purchase or otherwise
acquire any of its capital stock;
(e) incur any indebtedness or assume, guarantee or endorse or
become responsible for, the obligations of any Person, or make any loans or
advances;
(f) pay, discharge or satisfy any existing claims, liabilities
or obligations, other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of due and payable
liabilities reflected or reserved against in its financial statements, as
appropriate, or liabilities incurred after the date hereof in the ordinary
course of business and consistent with past practice;
(g) actively engage in a trade or business; or
(h) agree to take or authorize any of the foregoing actions or
any action which would make any representation or warranty in Article III untrue
or incorrect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary to carry
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out the terms of this Agreement and the transactions contemplated hereby. Each
of the parties agrees to cooperate with the other in the preparation and filing
of all forms, reports and information required pursuant to any law or regulation
or The Nasdaq Stock Market in connection with the transactions contemplated by
this Agreement.
5.2 CANCELLATION OF LETTER AGREEMENT. Subject to the consummation of
the Merger Xxxx agrees that the Letter Agreement is terminated without any other
action on the part of the parties to such agreement. Subject to the consummation
of the Merger, Xxxx further agrees that Intervisual shall have no obligation for
any commissions or royalties payable by Intervisual under the Letter Agreement
attributable to periods after October 1, 1997.
5.3 ASSIGNMENT OF INTELLECTUAL PROPERTY. Xxxx agrees and acknowledges
that Xxxx has no interest in the Intellectual Property of the Company and agrees
to take such actions and execute such additional documents as reasonably
requested by Intervisual to effectuate the transfer, assignment and delivery to
Intervisual of all Intellectual Property as of Effective Date.
5.4 VOTING OF SHARES. The Shareholder agrees to vote all of its
shares of Intervisual Common Stock in favor of approving this Agreement, the
Merger and the transactions contemplated hereby when such matter is put to a
vote of Intervisual's shareholders. From the date of this Agreement until such
approval by Intervisual's shareholders, the Shareholder agrees not to sell or
otherwise dispose of any of its shares of Intervisual Common Stock so that the
Shareholder would hold less than a majority of Intervisual's issued and
outstanding shares of Common Stock.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF INTERVISUAL
The obligations of Intervisual to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions, any or all of which may be waived in whole or in part by
Intervisual:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Shareholder and the
Company contained in this Agreement shall be true and correct at and as of the
Effective Time. The Company and the Shareholder shall have performed and
complied with all of their respective obligations required by this Agreement to
be performed or complied with at or prior to the Effective Time.
6.2 NO MATERIAL ADVERSE CHANGE. Between the date hereof and the
Effective Time there shall have been no Material Adverse Change to the Company,
and there shall have been delivered to Intervisual a certificate to that effect,
dated the Effective Date and signed by or on behalf of the Company and the
Shareholder.
6.3 COMPANY LIABILITIES. All the liabilities of the Company in the
aggregate shall not be greater than $5,000.
6.4 NO ADVERSE LITIGATION. There shall not be pending or threatened
any action or proceeding before any court or governmental body seeking to
restrain, prohibit, invalidate or collect damages arising out of the Merger or
any other transaction contemplated hereby.
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6.5 FAIRNESS OPINION. Intervisual shall have received a fairness
opinion from a firm engaged in the business of advising others as to the value
of properties, businesses or securities indicating that the consideration to be
received by Intervisual in the Merger is fair from a financial point of view to
the Intervisual shareholders, exclusive of the Shareholder and Xxxx.
6.6 SHAREHOLDER APPROVAL. The Agreement and the transactions
contemplated hereby shall have been approved by the requisite vote of the
shareholders of Intervisual under applicable law.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE SHAREHOLDER
The obligations of the Company and the Shareholder to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions, any or all of which may be waived in whole or in part
by the Company and the Shareholder:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Intervisual contained in this
Agreement shall be true and correct at and as of the Effective Time. Intervisual
shall have performed and complied with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Effective Time.
7.2 NO ADVERSE LITIGATION. There shall not be pending or threatened
any action or proceeding before any court or governmental body seeking to
restrain, prohibit, invalidate or collect damages arising out of the Merger or
any other transaction contemplated hereby.
7.3 NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall not have occurred with respect to Intervisual, any Material Adverse
Change.
ARTICLE VIII
INDEMNIFICATION
8.1 AGREEMENT BY THE SHAREHOLDER TO INDEMNIFY. The Shareholder agrees
to indemnify and hold Intervisual harmless from and against all expenses,
losses, costs, deficiencies, liabilities and damages (including, without
limitation, reasonable attorneys' fees) incurred or suffered by Intervisual
arising out of or resulting from: (a) any inaccuracy of a representation or
warranty made by the Shareholder or the Company in this Agreement; (b) any
breach of the covenants or agreements made by the Shareholder or the Company in
this Agreement; or (c) any inaccuracy in any certificate delivered by the
Shareholder or the Company pursuant to this Agreement.
8.2 AGREEMENT BY THE INTERVISUAL TO INDEMNIFY. Intervisual agrees to
indemnify and hold Shareholder harmless from and against all expenses, losses,
costs, deficiencies, liabilities and damages (including, without limitation,
reasonable attorneys' fees) incurred or suffered by
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Shareholder arising out of or resulting from: (a) any inaccuracy of a
representation or warranty made by Intervisual in this Agreement; (b) any breach
of the covenants or agreements made by the Intervisual in this Agreement; or (c)
any inaccuracy in any certificate delivered by Intervisual pursuant to this
Agreement.
8.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Company, Intervisual and the
Shareholder in this Agreement or pursuant hereto shall survive for a period of
two years after the Effective Time. Notwithstanding the previous sentence, the
representations and warranties contained in Section 3.10 shall survive the
applicable statute of limitations.
8.4 LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything
contained in this Article VIII to the contrary, neither Intervisual nor
Shareholder shall obligated to indemnify the other until the aggregate of all
amounts to be paid as a result of such indemnification equals or exceeds
$10,000, in which event the full amount of such obligation (relating back to the
first dollar) and all additional obligations shall be due and owing.
ARTICLE IX
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after the Effective Time of the Intervisual Shares:
9.1 DISPOSITION OF SHARES. The Shareholder represents and warrants
that the Intervisual Shares being acquired by the Shareholder hereunder are
being acquired and will be acquired for the Shareholder's own account and will
not be sold or otherwise disposed of, except pursuant to an exemption from the
registration requirements under the Securities Act. Shareholder is acquiring the
Intervisual Shares for investment purposes only and not for resale or
distribution. Xxxx, trustee of the Shareholder, is the current Chairman of the
Board and Chief Executive Officer of Intervisual and the Shareholder has had the
opportunity to obtain such information pertaining to Intervisual as the
Shareholder deems necessary or advisable. The Shareholder has such knowledge and
experience in business or financial matters that the Shareholder is capable of
evaluating the merits and risks of an investment in the Intervisual Shares.
Shareholder acknowledges that the Intervisual Shares are "restricted" securities
and have not been registered for resale.
9.2 LEGEND. The certificates representing the Intervisual Shares
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO,
OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
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ARTICLE X
DEFINITIONS
10.1 DEFINED TERMS. As used herein, the following terms shall have
the following meanings:
"Contract" means any agreement, contract, lease, note, mortgage,
loan agreement, covenant, employment agreement, license, instrument,
purchase and sales order, commitment, undertaking, obligation, whether
written or oral, express or implied.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in effect
in the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not limited to, any
conditional sale or other title retention agreement, any lease in the
nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code or comparable law or any
jurisdiction in connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or
effect), in the condition (financial or otherwise), properties, assets,
liabilities, rights, obligations, operations, business or prospects which
change (or effect) individually or in the aggregate, is materially adverse
to such condition, properties, assets, liabilities, rights, obligations,
operations, business or prospects.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated association,
joint venture, Governmental Authority or other entity, of whatever nature.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
10.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise
requires.
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(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) Unless otherwise expressly indicated herein, all matters of
an accounting nature in connection with this Agreement and the transactions
contemplated hereby shall be determined in accordance with GAAP applied on
a basis consistent with prior periods, where applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the
neuter and feminine, where the context so permits.
ARTICLE XI
TERMINATION
11.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time:
(a) by mutual written consent of all of the parties hereto at
any time prior to the Closing; or
(b) by Intervisual in the event of a material breach by the
Company or the Shareholder of any provision of this Agreement; or
(c) by the Company in the event of a material breach by
Intervisual of any provision of this Agreement; or
(d) by either Intervisual or the Company if the Closing shall
not have occurred by July 30, 1998.
11.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement pursuant to Section 11.1, this Agreement shall forthwith become void
and of no further force and effect and the parties shall be released from any
and all obligations hereunder; provided, however, that (i) nothing herein shall
relieve any party from liability for damages resulting from the willful breach
of any of its representations, warranties, covenants or agreements set forth in
this Agreement and (ii) no termination of this Agreement shall nullify the
cancellation of the Letter Agreement contained in Section 5.2 above.
ARTICLE XII
GENERAL PROVISIONS
12.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed
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by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall designate
in writing to the other party):
(a) IF TO INTERVISUAL TO:
Intervisual Books, Inc.
0000 Xxxxx Xxxx Xxxx., Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: President
Telecopy: (000) 000-0000
WITH A COPY TO:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(b) IF TO THE COMPANY AND/OR THE SHAREHOLDER
TO:
The Xxxx Family Trust
Attn: Xxxxx X. Xxxx
00000 Xxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
WITH A COPY TO:
Xxxxxxx, Xxxxxxx & Xxxxxx, LLP
Penthouse, Suite 1200
0000 Xxxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Notice shall be deemed given on the date sent if sent by overnight
delivery or facsimile transmission and on the date delivered (or the date of
refusal of delivery) if sent by certified or registered mail.
12.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto) and other documents delivered at the Closing pursuant
hereto, contains the entire understanding of the parties in respect of its
subject matter and supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such subject matter. The
Exhibits and Schedules constitute a part hereof as though set forth in full
above.
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12.3 EXPENSES. Except as otherwise provided herein, the parties shall
pay their own fees and expenses, including their own counsel fees, incurred in
connection with this Agreement or any transaction contemplated hereby.
12.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties.
12.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by the Company or the Shareholder without the
prior written consent of Intervisual.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
12.7 HEADINGS. The headings contained herein and on the schedules are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement or the schedules.
12.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be construed
in accordance with and governed for all purposes by the laws of the State of
California applicable to contracts executed and to be wholly performed within
such State.
12.9 MANDATORY ARBITRATION. Any controversy or claim between or among
the parties hereto including, but not limited to, those arising out of or
relating to this Agreement or any related agreements or instruments, excluding
any claim based on or arising from an alleged intentional tort or fraud, shall
be determined by binding arbitration in Orange County, California in accordance
with the Rules of Practice and Procedure for the Arbitration of Commercial
Disputes of Judicial Arbitration and Mediation Services, Inc. (J.A.M.S.).
Judgment upon any arbitration award may be entered in any court having
jurisdiction. Any party to this Agreement may bring an action, including a
summary or expedited proceeding, to compel arbitration of any controversy or
claim to which this Agreement applies in any court having jurisdiction over such
action.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
INTERVISUAL BOOKS, INC., a California
corporation
By: /s/
---------------------------------------------------
Xxxxxx Xxxxxx Xxxxxxxx
President and Chief Operating Officer
THE XXXX CREATIVE GROUP, a California
corporation
By: /s/
---------------------------------------------------
Xxxxx X. Xxxx, President
THE XXXX FAMILY TRUST
/s/
---------------------------------------------------
Xxxxx X. Xxxx, Trustee
/s/
---------------------------------------------------
Xxxxxxxx X. Xxxx, Trustee
For the purposes of agreeing to Sections 5.2 and 5.3, Xxxxx X. Xxxx hereby
executes this Agreement in his individual capacity.
/s/
---------------------------------------------------
Xxxxx X. Xxxx, an individual
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