EXHIBIT 6.5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
made as of the 8th day of August, 1997, by and among MDI Entertainment, Inc.,
a Delaware corporation, formerly known as Puff Process, Inc. ("Parent"), MDI
-Connecticut, Inc., a Delaware corporation ("Sub 1"), MDI - Missouri, Inc., a
Delaware corporation ("Sub 2"), Media Drop-In Productions, Inc., a Delaware
Corporation ("MDIP"), MDI-Missouri, Inc., a Missouri Corporation
("MDI-Missouri"), and Xxxxxx X. Xxxxxxx ("Xxxxxxx") and Xxxxxxxx X. Xxxxxxxx
("Xxxxxxxx").
RECITALS
A. Parent wishes to acquire MDIP and MDI-Missouri by means of mergers
of its wholly-owned subsidiaries, Sub 1 and Sub 2, with and into MDIP and
MDI-Missouri respectively in which MDIP and MDI-Missouri will be the
surviving corporations and will each become a wholly owned subsidiary of
Parent.
B. These acquisitions are intended to qualify as reorganizations
under Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code") and to be accounted for by Parent by the "purchase" method of
accounting.
C. The Boards of Directors of each of MDIP and MDI-Missouri and the
Subs have respectively authorized the merger of their respective corporations
pursuant to the terms of this Agreement.
X. Xxxxxxx and Xxxxxxxx are the sole shareholders of MDIP and
MDI-Missouri and have approved the merger of Sub 1 with and into MDIP and Sub
2 with and into MDI-Missouri pursuant to the terms of this Agreement.
E. The Board of Directors of Parent has approved the acquisition of
MDIP and MDI-Missouri pursuant to the terms of this Agreement.
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
1.1 Additional Defined Terms.
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When used herein the following terms shall have the meanings
set forth below:
(i) The "Subs" - Sub 1 and Sub 2, collectively.
(ii) The "MDI Companies" - MDIP and MDI-Missouri
collectively.
(iii) The "Shareholders" - Saferin and Xxxxxxxx,
collectively.
(iv) "Parent Stock" - Common Shares of Parent
(par value $.001).
(v) "Constituent Corporations" - the Parent, the Subs
and the MDI Companies respectively.
(vi) "Subordinated Debt" means the obligation of the
Parent to the Stockholders for the payment in the
aggregate of Three Hundred Thousand Dollars
($300,000.00) as part of the consideration for
the Merger, which indebtedness shall be
subordinate to any secured indebtedness of the
MDI Companies and shall be in the form of the
Subordinated Promissory Note attached hereto and
made a part hereof as Exhibit D (a "Subordinated
Note").
(vii) "Merger" shall mean the transactions contemplated
by this Agreement.
ARTICLE II - MERGER
2.1 Merger.
(a) As of the Effective Date (as hereinafter defined), the
separate existence of the Subs shall cease, and the Subs shall be
respectively merged into The MDI Companies pursuant to the Articles of Merger
and Certificate of Merger attached hereto and made a part hereof as Exhibits
X-0, X-0 and A-3 respectively (the "Merged Corporations"). The Effective Date
shall be the later of (i) the date of Closing pursuant to Section 2.7 hereof,
or (ii) the date that the Articles of Merger are accepted for filing by the
States of Delaware and Missouri, respectively. The Constituent Corporations
agree to execute and file the Articles of Merger with the States of Missouri
and Delaware.
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(b) The respective parties to each of the Articles of
Merger agree to amend the Articles of Merger, if necessary, to conform to any
requirement, as to form, required by the jurisdiction in which a party to
such agreement is incorporated.
2.2 By-Laws; Directors; Officers: Subject to the approvals of the
Boards of Directors of the Parent and Merged Corporations respectively after
the Effective Date, the By-Laws of the Parent and the Merged Corporations
shall be as set forth in Exhibits X-0, X-0 and B-3, attached hereto and made
a part hereof, and the officers and directors of the Parent and the Merged
Corporations shall be as listed on Exhibits C-1, C-2 and C-3 attached hereto
and made a part hereof.
2.3 Basic Agreements: The parties agree to enter into the following
agreements as of the date of Closing:
(a) Employment Agreement: Saferin, the Parent and MDIP
agree that on the Effective Date they shall execute the Employment Agreement,
attached hereto and made a part hereof, as Exhibit E.
(b) Consulting Agreement: MDIP and the Parent agree to
enter into a Consulting Agreement with Xxxxx Xxxxxxxxx Xxxxxxx in the form
attached hereto and made a part hereof as Exhibit P.
(c) Registration Rights Agreement: The Stockholders and the
Parent agree to enter into the Registration Rights Agreement in the form
attached hereto and made a part hereof as Exhibit Q.
2.4 Conversion of Shares in the Merger: The mode of carrying into
effect the Merger provided in this Agreement, shall be as set forth in the
Articles of Merger and include the following:
2.4.1 MDIP's Stock: On the Effective Date, each share of
Common Stock of MDIP, issued and outstanding shall be surrendered to MDIP,
and the holders thereof shall receive in exchange therefor 4,361.6029 shares
of the Common Stock of the Parent and $272.60 of Subordinated Debt, and each
holder of outstanding Common Stock of MDIP, upon surrender to MDIP of one or
more stock certificates for Common Stock of MDIP for cancellation, shall be
entitled to receive one or more stock certificates for the full number of
shares of the Parent's Stock to which such holder is entitled under this
paragraph 2.4.1 and a Subordinate Note for the amount of Subordinated Debt to
which
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such holder is entitled under this paragraph 2.4.1. Each issued share of MDIP
Common Stock held in its treasury on the Effective Date shall be cancelled
and shall not be converted.
2.4.2 MDI-Missouri's Stock: On the Effective Date, each
share of Common Stock of MDI-Missouri, issued and outstanding shall be
surrendered to MDI-Missouri, and the holders thereof shall receive in
exchange therefor sixty (60) shares of the Common Stock of the Parent and
$3.75 of Subordinated Debt, and each holder of outstanding Common Stock of
MDI-Missouri, upon surrender to MDI-Missouri of one or more stock
certificates for Common Stock of MDI-Missouri for cancellation, shall be
entitled to receive one or more stock certificates for the full number of
shares of the Parent's Stock to which such holder is entitled under this
paragraph 2.4.2 and a Subordinate Note for the amount of Subordinated Debt to
which such holder is entitled under this paragraph 2.4.2. Each issued share
of MDI-Missouri Common Stock held in its treasury on the Effective Date shall
be cancelled and shall not be converted.
2.4.3 Subs' Stock: On the Effective Date, each share of
Common Stock of the Subs, issued and outstanding, shall be converted into and
become one share of the Common Stock of the Merged Corporation into which the
Sub was merged, and each holder of outstanding common stock of a Sub, upon
surrender to the respective Merged Corporation, for cancellation, shall be
entitled to receive one ore more Certificates of Common Stock of the
respective Merged Corporation for the full number of shares of Merged
Corporation Stock to which such holder is entitled under this Section 2.4.3.
Each issued share of a Sub held in its treasury on the Effective Date shall
be cancelled and shall not be converted.
2.4.4 Parent's Stock: Parent shall make available to the
Subs sufficient shares of the Parent's stock to effect the mergers pursuant
to the terms of this Agreement.
2.4.5 Surrender of Certificates: As soon as practicable
after the Effective Date, the stock certificates representing Common Stock of
the Constitute Corporations issued and outstanding at that time shall be
surrendered for exchange as above provided. Until so surrendered for
exchange, each such stock certificate nominally representing Common Stock of
a Constituent Corporation, shall be deemed for all corporate purposes (except
for payment of dividends, which shall be subject to the exchange of stock
certificates as above provided) to evidence the ownership of the number of
shares of Consolidated
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Stock which the holder thereof would be entitled to receive upon its
surrender to the Consolidated Corporation.
2.4.6 Securities Matters: The Constituent Corporations and
the Stockholders acknowledge that the shares of the Parent Stock have not and
will not be registered under either the Federal Securities Act of 1933 (the
"Act"), or applicable state securities laws (the "State Acts") and therefore,
cannot be resold unless they are registered under the Act and the State Act
or unless an exemption of such registration is available. Any shares of the
Parent Stock to be owned by the Stockholders shall be acquire by the
Stockholder for investment only, and not with a view to, offer for sale or
sell such shares.
2.5 Effect of Merger: As of the Effective Date, the Merged
Corporations shall succeed to, without other transfer, and shall possess and
enjoy all the rights, privileges, immunities, powers and franchises both of a
public and a private nature, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations, and al
property, real, personal and mixed, and all debts due to any Constituent
Corporation in whatever account, for stock subscriptions as well as for all
other things in action or belonging to each of said corporations, shall be
vested in the respective Merged Corporation; and all property, rights,
privileges, immunities, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the respective
Merged Corporation as they were of the respective Constituent Corporation,
the title to real estate, if any, vested by deed or otherwise in any of the
Constituent Corporations shall revert or be in any way impaired by the
consolidation; provided, however, that all rights of creditors and all liens
upon any property of any Constituent Corporation shall be preserved
unimpaired, limited in lien to the property affected by such liens, as of the
Effective Date, and all debts, liabilities and duties of any Constituent
Corporation shall thenceforth attach to the respective Merged Corporation and
may be enforced against it to the same extent as if said debts, liabilities
and duties had been incurred or contracted by that Merged Corporation.
2.6 Accounting Matters: The assets and liabilities of the
Constituent Corporations as at the effective time of the Merger, shall be
taken upon on the books of the respective Merged Corporation at the amounts
at which they shall be carried at that time on the books of the respective
Constituent Corporations. The amount of capital of the respective Merged
Corporation after the consolidation shall be equal to the sum of the
aggregate amount of the capital of each of the respective Constituent
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Corporations immediately prior to the Merger. The surplus of each respective
Merged Corporation after the Merger, including any surplus arising in the
Merger, shall be available to be used for any legal purposes for which
surplus may be used.
2.7 Closing: Closing of the Transactions as herein defined shall
occur simultaneously with the execution of this Agreement at the offices of
MDIP on or before August 15, 1997.
III - REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of MDIP. MDIP represents and
warrants to Sub 1 and Parent as follows:
(a) Organization: MDIP is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware. MDIP has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business. MDIP is duly
qualified and in good standing as a foreign corporation in each jurisdiction
where its ownership of property of operation of its business requires
qualification, except where the failure to be qualified would not have a
material adverse effect on MDIP.
(b) Authorized Capitalization: The authorized
capitalization of MDIP consists of Ten Thousand (10,000) shares of $.01 par
value Common Stock, of which One Thousand Seventy-Three (1,073) shares have
been issued and outstanding. The Shares have been duly authorized, validly
issued, are fully paid and nonassessable with no personal liability attaching
to the ownership thereof and were offered, issued, sold and delivered by MDIP
in compliance with all applicable state and federal laws. Except as set forth
in Exhibit F-1 attached hereto, MDIP is not a party to and is not bound by
any agreement, contract, arrangement or understanding, whether oral or
written, giving any person or entity any interest in , or any right to share,
participate in or receive any portion of, MDIP's income, profits or assets,
or obligating MDIP to distribute any portion of its income, profits or assets.
(c) Authority: MDIP has full power and lawful authority to
execute and deliver the Agreement, the Articles of Merger and any of the
other contracts or agreement attached hereto as Exhibits, which are required
to be executed on or before Closing (as herein defined the "Basic
Agreements") and to which MDIP is a party and to consummate and perform the
transactions contemplated thereby (the "Transactions"). The Basic Agreements
constitute (or shall, upon execution,
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constitute) valid and legally binding obligations of MDIP. Neither the
consummation nor performance of the Transactions, conflict with, requires the
consent, waiver or approval of, results in a breach of or default under, or
gives to others any interest or right of termination, cancellation or
acceleration in or with respect to, any material agreement by which MDIP is a
party or by which MDIP or any of its material properties or assets are bound
or affected.
(d) Company Financial Statements: MDIP's Financial Statements are
complete as of the date thereof, were prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior
periods and fairly present the financial position of MDIP as of November 30,
1996.
(e) No Undisclosed Liabilities: Except as set forth in MDIP's
Financial Statements previously delivered bo Parent and as set forth on
Exhibit G-1 attached hereto, MDIP is not aware of any material liabilities
for which MDIP is liable or will become liable in the future.
(f) Taxes: MDIP has filed all federal, state, local tax and other
returns and reports which were required to be filed with respect to all
taxes, levies, imposts, duties, licenses and registration fees, charges or
withholdings of every nature whatsoever ("Taxes"), and there exists a
substantial basis in law and fact for all positions taken in such reports. No
waivers of period of limitation are in effect with respect to any taxes
arising from and attributable to the ownership of properties or operations of
the business of MDIP.
(g) Properties: MDIP has good and marketable title to all its
material personal property, equipment, processes, patents, copyrights,
trademarks, franchises, licenses and other material properties and assets
(except for items leased or licensed to the Company), including all property
reflected in MDIP's Financial Statements (except for assets reflected therein
which have been sold in the normal course of its business where the proceeds
from such sale or other disposition have been properly accounted for in the
financial statements of MDIP), in each case free and clear of all material
liens, claims and encumbrances of every kind and character, except as set
forth in Exhibit H-1. The assets and properties owned, operated or leased by
MDIP and used in its business are in good operating condition, reasonable
wear and tear excepted, and suitable for the uses for which intended.
(h) Books and Records: The books and records of MDIP are
complete and correct in all material respects, have been
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maintained in accordance with good business practices and accurately reflect
in all material respects the business, financial condition and results of
operations of MDIP as set forth in the MDIP's Financial Statements.
(i) Insurance: Exhibit I-1 contains an accurate and
complete list and brief description of all performance bonds and policies of
insurance, including fire and extended coverage, general liability, workers
compensation, products liability, property, and other forms of insurance or
indemnity bonds held by MDIP. MDIP is not in default with respect to any
provisions of any such policy or indemnity bond and has not failed to give
any notice or present any claim thereunder in due and timely fashion. To the
best of MDIP's knowledge, all policies of insurance and bonds are: (1) in
full force and effect; (2) are sufficient for compliance by MDIP with all
requirements of law and of all agreements and instruments to which MDIP is a
party; (3) are valid, outstanding and enforceable; (4) provide adequate
insurance coverage for the assets, business and operations of MDIP in the
amounts at least equal to customary coverage in MDIP's history; (5) will
remain in full force and effect through the Closing; and (6) will not be
affected by, and will not terminate or lapse by reasons of, the transactions
contemplated by this Agreement.
(j) Transactions with Certain Persons: Except as disclosed
in Exhibit J-1, MDIP has no outstanding material agreement, understanding,
contract, lease, commitment, loan or other material arrangement with any
officer, director or shareholder of MDIP or any relative of any such person,
or any corporation or other entity in which such person owns a beneficial
interest.
(k) Material Contract: Except as set forth in Exhibit K-1,
MDIP has no purchase, sale, commitment, or other contract, the breach or
termination of which would have a materially adverse effect on the business,
financial condition, results of operations, assets, liabilities, or prospects
of MDIP.
(l) Employment Matters: Exhibit L-1 contains a list of all
officers, their base salaries, accrued vacation pay, sick pay, and severance
pay through November 30, 1996. Except as set forth in Exhibit L-1, MDIP is
not a party to any employment agreement, or any pension, profit sharing,
retirement or other deferred compensation plan or agreement. MDIP has not
incurred any unfunded deficiency or liability within the meaning o the
Employee Retirement Income Security Act of 1974 ("ERISA"), has not incurred
any liability to the Pension Benefit Guaranty
8
Corporation established under ERISA in connection with any employee benefit
plan. MDIP has not been a party to a "prohibited transaction", which would
subject MDIP to any tax or penalty. There is no collective bargaining
agreement or negotiations therefor, labor grievance or arbitration proceeding
against MDIP pending or threatened, and to the knowledge of MDIP, there are
no union organizing activities currently pending or threatened against or
involving MDIP.
(m) Authorizations: MDIP has no licenses, permits,
approvals and other authorizations from any governmental agencies and other
entities that are materially necessary for the conduct of its business,
except as set forth in Exhibit M-1 which contains a list of all material
licenses, permits, approvals, and other material authorizations, as well as a
list of all material copyrights, patents, trademarks, trade names, service
marks, franchises, licenses and other material permits, each of which is
valid and in full force and effect.
(n) No Powers of Attorney: MDIP has no powers of attorney
or similar authorizations outstanding.
(o) Compliance with Laws: To the best of MDIP's knowledge,
MDIP is not in violation of any federal, state, local or other law,
ordinance, rule or regulation applicable to its business, and has not
received any actual or threatened complaint, citation or notice of violation
or investigation from any governmental authority, in each case where such
violation would have a material adverse effect on MDIP.
(p) Compliance with Environmental Laws: MDIP is in
compliance with all applicable pollution control and environmental laws,
rules and regulations in all material respects. MDIP has no environmental
licenses, permits and other authorizations held by MDIP relative to
compliance with environmental laws, rules and regulations.
(q) No Litigation: There are no actions, suits, claims,
complaints or proceedings pending or threatened against MDIP, at law or in
equity, or before or by any governmental department, commission, court,
board, bureau, agency or instrumentality; and there are no facts which would
provide a valid basis for any such action, suit or proceeding, which, if
determined adversely to MDIP, would have a material averse effect on MDIP.
There are no orders, judgments or decrees of any governmental authority
outstanding which specifically apply to MDIP or any of its assets.
9
(r) Validity: All material contracts, agreements, leases
and licenses to which MDIP is a party or by which it or any of its material
properties or assets are bound or affected, are valid and in full force and
effect; and no breach or default exists, or upon the giving of notice or
lapse of time, or both, would exist, on the part of MDIP or by any other
party thereto.
(s) No Adverse Changes: Since November 30, 1996, there have
been no actual or threatened developments of nature that is materially
adverse to or involves any materially adverse effect upon the business,
financial condition, results of operations, assets, liabilities, or prospects
of MDIP.
(t) Fees: All negotiations relating to the Basic Agreements
and the Transactions have been conducted by MDIP in such a manner as not to
give rise to any valid claim for any finder's fees, brokerage commission,
financial advisory fee or related expense or other like payment for which
MDIP or Sub 1 and Parent may be liable.
(u) Full Disclosure: All statements of MDIP contained in
the Basic Agreements and in any other written documents delivered by or on
behalf of the MDIP or Shareholders to Parent are true and correct in all
material respects and do not omit any material fact necessary to make the
statements contained therein not misleading in light of the circumstances
under which they were made. Except as described on Exhibit S attached hereto
and made a part hereof, there are no facts known to MDIP which could have a
materially adverse effect upon the business, financial condition, results of
operations, assets, liabilities, or prospects of MDIP, which have not been
disclosed to Sub 1 and Parent in the Basic Agreements.
3.2 Representations and Warranties of MDI-Missouri:
(a) Organization: MDI-Missouri is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware. MDI-Missouri has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business. MDI-Missouri is duly qualified and in good standing as a foreign
corporation in each jurisdiction where its ownership of property of operation
of its business requires qualification, except where the failure to be
qualified would not have a material adverse effect on MDI-Missouri.
(b) Authorized Capitalization: The authorized
capitalization of MDI-Missouri consists of One Hundred Thousand
10
(100,000) shares of $1.00 par value Common Stock, which Two Thousand (2,000)
shares have been issued and outstanding. The Shares have been duly
authorized, validly issued, are fully paid and nonassessable with no personal
liability attaching to the ownership thereof and were offered, issued, sold
and delivered by MDI-Missouri in compliance with all applicable state and
federal laws. Except as set forth in Exhibit F-2 attached hereto,
MDI-Missouri is not a party to and is not bound by any agreement, contract,
arrangement or understanding, whether oral or written, giving any person or
entity any interest in , or any right to share, participate in or receive any
portion of, MDI-Missouri's income, profits or assets, or obligating
MDI-Missouri to distribute any portion of its income, profits or assets.
(c) Authority: MDI-Missouri has full power and lawful
authority to execute and deliver the Basic Agreements to which MDI-Missouri
is a party and to consummate and perform the Transactions. The Basic
Agreements constitute (or shall, upon execution, constitute) valid and
legally binding obligations of MDI-Missouri. Neither the consummation nor
performance of the Transactions, conflict with, requires the consent, waiver
or approval of, results in a breach of or default under, or gives to others
any interest or right of termination, cancellation or acceleration in or with
respect to, any material agreement by which MDI-Missouri is a party or by
which MDI-Missouri or any of its material properties or assets are bound or
affected.
(d) MDI-Missouri's Financial Statements: MDI-Missouri's
Financial Statements are complete as of the date thereof, were prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with prior periods and fairly present the financial position of
MDI-Missouri as of November 30, 1996.
(e) No Undisclosed Liabilities: Except as set forth in
MDI-Missouri's Financial Statements previously delivered to Parent and as set
forth on Exhibit G-2 attached hereto, MDI-Missouri is not aware of any
material liabilities for which MDI-Missouri is liable or will become liable
in the future.
(f) Taxes: MDI-Missouri has filed all federal, state, local
tax and other returns and reports which were required to be filed with
respect to all taxes, levies, imposts, duties, licenses and registration
fees, charges or withholdings of every nature whatsoever ("Taxes"), and there
exists a substantial basis in law and fact for all positions taken in such
reports. No waivers of period of limitation are in effect with respect to any
taxes
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arising from and attributable to the ownership of properties or operations of
the business of MDI-Missouri.
(g) Properties: MDI-Missouri has good and marketable title
to all its material personal property, equipment, processes, patents,
copyrights, trademarks, franchises, licenses and other material properties
and assets (except for items leased or licensed to the Company), including
all property reflected in MDI-Missouri's Financial Statements (except for
assets reflected therein which have been sold in the normal course of its
business where the proceeds from such sale or other disposition have been
properly accounted for in the financial statements of MDI-Missouri), in each
case free and clear of all material liens, claims and encumbrances of every
kind and character, except as set forth in Exhibit H-2. The assets and
properties owned, operated or leased by MDI-Missouri and used in its business
are in good operating condition, reasonable wear and tear excepted, and
suitable for the uses for which intended.
(h) Books and Records: The books and records of
MDI-Missouri are complete and correct in all material respects, have been
maintained in accordance with good business practices and accurately reflect
in all material respects the business, financial condition and results of
operations of MDI-Missouri as set forth in the MDI-Missouri's Financial
Statements.
(i) Insurance: Exhibit I-2 contains an accurate and
complete list and brief description of all performance bonds and policies of
insurance, including fire and extended coverage, general liability, workers
compensation, products liability, property, and other forms of insurance or
indemnity bonds held by MDI-Missouri. MDI-Missouri is not in default with
respect to any provisions of any such policy or indemnity bond and has not
failed to give any notice or present any claim thereunder in due and timely
fashion. To the best of MDI-Missouri's knowledge, all policies of insurance
and bonds are: (1) in full force and effect; (2) are sufficient for
compliance by MDI-Missouri with all requirements of law and of all agreements
and instruments to which MDI-Missouri is a party; (3) are valid, outstanding
and enforceable; (4) provide adequate insurance coverage for the assets,
business and operations of MDI-Missouri in the amounts at least equal to
customary coverage in MDI-Missouri's history; (5) will remain in full force
and effect through the Closing; and (6) will not be affected by, and will not
terminate or lapse by reasons of, the transactions contemplated by this
Agreement.
(j) Transactions with Certain Persons: Except as disclosed
in Exhibit J-2, MDI-Missouri has no outstanding
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material agreement, understanding, contract, lease, commitment, loan or other
material arrangement with any officer, director or shareholder of
MDI-Missouri or any relative of any such person, or any corporation or other
entity in which such person owns a beneficial interest.
(k) Material Contract: Except as set forth in Exhibit K-2,
MDI-Missouri has no purchase, sale, commitment, or other contract, the breach
or termination of which would have a materially adverse effect on the
business, financial condition, results of operations, assets, liabilities, or
prospects of MDI-Missouri.
(l) Employment Matters: Exhibit L-2 contains a list of all
officers, their base salaries, accrued vacation pay, sick pay, and severance
pay through November 30, 1996. Except as set forth in Exhibit L-2,
MDI-Missouri is not a party to any employment agreement, or any pension,
profit sharing, retirement or other deferred compensation plan or agreement.
MDI-Missouri has not incurred any unfunded deficiency or liability within the
meaning o the Employee Retirement Income Security Act of 1974 ("ERISA"), has
not incurred any liability to the Pension Benefit Guaranty Corporation
established under ERISA in connection with any employee benefit plan.
MDI-Missouri has not been a party to a "prohibited transaction", which would
subject MDI-Missouri to any tax or penalty. There is no collective bargaining
agreement or negotiations therefor, labor grievance or arbitration proceeding
against MDI-Missouri pending or threatened, and to the knowledge of
MDI-Missouri, there are no union organizing activities currently pending or
threatened against or involving MDI-Missouri.
(m) Authorizations: MDI-Missouri has no licenses, permits,
approvals and other authorizations from any governmental agencies and other
entities that are materially necessary for the conduct of its business,
except as set forth in Exhibit M-2 which contains a list of all material
licenses, permits, approvals, and other material authorizations, as well as a
list of all material copyrights, patents, trademarks, trade names, service
marks, franchises, licenses and other material permits, each of which is
valid and in full force and effect.
(n) No Powers of Attorney: MDI-Missouri has no powers of
attorney or similar authorizations outstanding.
(o) Compliance with Laws: To the best of MDI-Missouri's
knowledge, MDI-Missouri is not in violation of any federal, state, local or
other law, ordinance, rule or regulation
13
applicable to its business, and has not received any actual or threatened
complaint, citation or notice of violation or investigation from any
governmental authority, in each case where such violation would have a
material adverse effect on MDI-Missouri.
(p) Compliance with Environmental Laws: MDI-Missouri is in
compliance with all applicable pollution control and environmental laws,
rules and regulations in all material respects. MDI-Missouri has no
environmental licenses, permits and other authorizations held by MDI-Missouri
relative to compliance with environmental laws, rules and regulations.
(q) No Litigation: There are no actions, suits, claims,
complaints or proceedings pending or threatened against MDI-Missouri, at law
or in equity, or before or by any governmental department, commission, court,
board, bureau, agency or instrumentality; and there are no facts which would
provide a valid basis for any such action, suit or proceeding, which, if
determined adversely to MDI-Missouri, would have a material averse effect on
MDI-Missouri. There are no orders, judgments or decrees of any governmental
authority outstanding which specifically apply to MDI-Missouri or any of its
assets.
(r) Validity: All material contracts, agreements, leases
and licenses to which MDI-Missouri is a party or by which it or any of its
material properties or assets are bound or affected, are valid an din full
force and effect; and no breach or default exists, or upon the giving of
notice or lapse of time, or both, would exist, on the part of MDI-Missouri or
by any other party thereto except with respect to a dispute between
MDI-Missouri with its landlord over insufficient air conditioning on leased
premises in Hartford, Connecticut.
(s) No Adverse Changes: Since November 30, 1996, there have
been no actual or threatened developments of nature that is materially
adverse to or involves any materially adverse effect upon the business,
financial condition, results of operations, assets, liabilities, or prospects
of MDI-Missouri.
(t) Fees: All negotiations relating to the Basic Agreements
and the Transactions have been conducted by MDI-Missouri in such a manner as
not to give rise to any valid claim for any finder's fees, brokerage
commission, financial advisory fee or related expense or other like payment
for which MDI-Missouri or Sub 2 and Parent may be liable.
14
(u) Full Disclosure: All statements of MDI-Missouri
contained in the Basic Agreements and in any other written documents
delivered by or on behalf of the MDI-Missouri or Shareholders to Parent are
true and correct in all material respects and do not omit any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances under which they were made. There are no facts known to
MDI-Missouri which could have a materially adverse effect upon the business,
financial condition, results of operations, assets, liabilities, or prospects
of MDI-Missouri, which have not been disclosed to Sub 2 and Parent in the
Basic Agreements.
3.3 Representations and Warranties of Shareholders: Each
Shareholder represents and warrants to the Parent, with respect to the shares
of the MDI Companies owned by that Shareholder, as follows:
(a) Title to the Shares: At Closing, Shareholder shall own
of record and beneficially the number of the shares listed on Exhibit N of
the respective MDI Company, free and clear of all liens, encumbrances,
pledges, claims, options, charges and assessments of any nature whatsoever,
with full right and lawful authority to transfer the shares to the Parent.
Except for certain rights of Shareholders which shall be waived at the
Closing, no person has any preemptive rights or rights of first refusal with
respect to any of the shares. There exists no voting agreement, voting trust,
or outstanding proxy with respect to any of the shares. There are no
outstanding rights, options, warrants, calls, commitments, or any other
agreements of any character, whether oral or written, with respect to the
shares.
(b) Investment Intent: Each Shareholder is acquiring the
shares of the Parent for his own account for investment purposes only, and
not with a view to the sale or distribution of any part thereof, and each
Shareholder has no present intention of selling, granting participation in,
or otherwise distributing the same. Each Shareholder understands the specific
risks related to an investment in the shares of Parent, especially as it
relates to the financial performance of Parent.
3.4 Representations and Warranties of Parent: Parent represents
and warrants to the Shareholders as follows:
(a) Parent is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of Delaware. Parent
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its
15
business. Parent is duly qualified and in good standing as a foreign
corporation in each jurisdiction where its ownership of property or operation
of this business requires qualification, except where the failure to be
qualified would not have a material adverse effect on Parent.
(b) Authorized Capitalization: The authorized
capitalization of Parent consists of Two Hundred Million (200,000,000) shares
of .001 par value Common Stock, of which not more than Two Million Five
Hundred Thousand (2,500,000) shares have been issued and are outstanding.
Parent's shares have been duly authorized, validly issued, are fully paid and
nonassessable with no personal liability attaching to the ownership thereof
and were offered, issued, sold and delivered by Parent in compliance with all
applicable state and federal laws. Except as set forth in Exhibit O attached
hereto, Parent is not a party to and is not bound by any agreement, contract,
arrangement or understanding, whether oral or written, giving an person or
entity any interest in, or any right to share, participate in or receive any
portion of Parent's income, profits or assets, or obligating Parent to
distribute any portion of its income, profits or assets.
(c) Authority: The execution, delivery and performance by
Parent of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly and validly authorized and approved by all
necessary corporate action on the part of Parent, and this Agreement is a
valid and binding agreement of Parent enforceable against it in accordance
with its terms subject to applicable laws relating to bankruptcy and
receivers and to general rules and principles of equity. Neither the
execution and delivery by Parent of this Agreement, nor the consummation of
the transactions contemplated hereby, will (i) conflict with or result in a
breach of any provision Parent's Articles of Incorporation or By-Laws, (ii)
result in a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, permit, lease, agreement or other
instrument or obligation to which Parent is a party, or by which it or any of
its properties or assets may be bound, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, or any
of its properties or assets.
(d) Brokers and Finders: Parent has not employed any broker
or finder on its behalf or incurred any liability for any brokerage or
finders' fees or commissions in connection with the transactions contemplated
hereby.
16
(e) The Subs: The Subs are first tier wholly owned
subsidiaries of Parent.
(f) Parent's Financial Statements: Parent's Financial
Statements are complete, were prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods and
fairly present the financial position of Parent as of January 31, 1997.
(g) No Undisclosed Liabilities: Except as set forth in
Parent's Financial Statements previously delivered to the MDI Companies,
Parent is not aware of any material liabilities for which it is liable or
will become liable in the future.
(h) Adverse Change: There has been no material adverse
change in the business, financial condition, operations, financial results or
prospects of Parent since January 31, 1997.
(i) No Prior Registration Rights: Except as provided by
this Agreement, there exist no statutory, contractual or other rights or
arrangements granting to any person or entity the right to participate in any
registration of Parent stock, or the right to cause Parent to prepare and/or
file a registration statement under the Securities Act, or otherwise
enabling, or purporting to enable, any person or entity to participate in an
offering of Parent stock or to cause Parent to register shares of Parent
stock.
(j) Tax Representations: The MDI Companies and the
Shareholders have informed Parent that it is a material factor in their
entering into this Agreement that the transactions contemplated by this
Agreement constitute a tax free reorganization within the provisions of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code. Consequently, Parent
represents, warrants, covenants and agrees, as follows:
(i) Parent has no plan or intention to redeem
or otherwise reacquire any of the Parent Stock issued in the Mergers.
(ii) Parent has no plan or intention to
liquidate the MDI Companies, to merge the MDI Companies with and into another
corporation or each other, to sell or otherwise dispose of the stock of the
MDI Companies or to cause the MDI Companies to sell or otherwise dispose of
any of the assets of the MDI Companies, except for dispositions made in the
ordinary course of business.
17
(iii) The Subs will have no liabilities except
obligations arising in the normal course in connection with the incorporation
and organization, assumed by the MDI Companies, and will not transfer to the
MDI Companies any assets subject to liability in the mergers.
(iv) Following the Mergers, Parent will cause
the MDI companies to continue the historic businesses of the MDI Companies or
use a significant portion of the businesses of the MDI Companies in a
business.
(v) Following the Mergers, Parent will not
permit the MDI Companies to issue additional shares of stock that would
result in Parent's losing control of the MDI Companies within the meaning of
Section 368(c) of the Code.
(vi) Following the transactions contemplated
by this Agreement, all United States tax returns filed by Parent, by the
Subs, and by the MDI Companies will be filed in a manner consistent with the
transactions contemplated by this Agreement constituting a tax-free
reorganization within the provisions of Section 368 of the Code.
(vii) Parent and each affiliate thereof shall
timely file a valid protective carryover basis election pursuant to the
requirements of Treas. Reg. Section 1.338-4T, with respect to the
transactions contemplated by this Agreement. Further, Parent and its
affiliates shall cooperate with MDI Companies to file any additional tax
elections as may be necessary or desirable to reduce the federal tax
liabilities of the Shareholders or the MDI Companies.
(viii) Neither Parent nor any of the Subs is on
the date hereof, nor shall on the Closing Date be, an "investment company"
within the meaning of Section 368(a)(2)(f) of the Code.
(k) No Litigation: There are no actions, suits, claims
complaints or proceedings pending or threatened against Parent, at law or in
equity, or before or by any governmental department, commission, court,
board, bureau, agency or instrumentality; and there are no facts which would
provide a valid basis for any such action, suit or proceeding, which, if
determined adversely to Parent, would have a material adverse effect on
Parent. There are no orders, judgments or decrees of any governmental
authority outstanding which specifically apply to Parent or any of its assets.
18
(l) Due Diligence Documents: All documents provided to the
MDI Companies and the Shareholders by the Parent in connection with this
Agreement are true and complete and have not been subsequently modified or
amended by the Parent.
(m) Taxes: Parent has filed all federal, state, local tax
and other returns and reports which were required to be filed with respect to
all taxes, levies, imposts, duties, licenses and registration fees, charges
or withholdings of every nature whatsoever ("Taxes"), and there exists a
substantial basis in la and fact for all positions taken in such reports. No
waivers of periods of limitation are in effect with respect to any Taxes
arising from and attributable to the ownership of properties or operations of
the business of Parent.
(n) Transactions: Except for this Agreement and the
Transactions, as contemplated hereby, Parent has no outstanding material
agreement, understanding, contract, lease, commitment, loan or other material
arrangement to which it or its assets are bound.
(o) Full Disclosure: All statements of Parent contained in
the Basic Agreements and in any other written documents delivered by or on
behalf of Parent to the MDI Companies or Shareholders are true and correct in
all material respects and do not omit any material fact necessary to make the
statements contained therein not misleading in light of the circumstances
under which they were made. There are no facts known to Parent which could
have a materially adverse affect upon the business, financial condition,
results of operations, assets, liabilities, or prospects of Parent, which
have not been disclosed to the MDI Companies or Shareholders in the Basic
Agreements.
(p) Compliance with Securities Laws: Parent is in
compliance with all applicable federal and state securities laws and
regulations, has made all requisite filings thereunder, and has not received
any notice of violation of any kind with respect to the foregoing.
IV - COVENANTS
4.1 Covenants of the MDI Companies: The MDI Companies covenant and
agree that from the date hereof to the Closing without the prior written
consent of Parent:
(a) Ordinary Course of Business: The MDI Companies will
operate their business only in the ordinary course and will
19
use their best efforts to preserve their respective business, organization,
goodwill and relationships.
(b) Maintain Properties: The MDI Companies will maintain
all of their properties in good working order, repair and condition
(reasonable wear and use excepted) and will take all steps reasonably
necessary to maintain in full force and effect its patents, trademarks,
service marks, trade names, brand names, copyrights and other intangible
assets.
(c) Compensation: The MDI Companies will not (1) enter into
or alter any employment agreements; (2) grant any increase in compensation
other than normal merit increases consistent with their general prevailing
practices to any officer or employee; or (3) enter into or alter any labor or
collective bargaining agreement or any bonus or other employee fringe benefit.
(d) No Indebtedness: The MDI Companies will not create,
incur, assume, guarantee or otherwise become liable with respect to any
obligation for borrowed money, indebtedness, capitalized lease or similar
obligations, except in the ordinary course of business consistent with past
practices, where the entire net proceeds thereof are deposited with and used
by and in connection with the business of the MDI Companies.
(e) Maintain Books: The MDI Companies will maintain their
books, accounts and records in the usual, regular ordinary and sound business
manner and in accordance with generally accepted accounting principles
applied on a basis consistent with past practices.
(f) No Amendments: The MDI Companies will not amend their
corporate charter or by-laws (or similar documents) without prior consent of
Parent and the MDI Companies will maintain their respective corporate
existence, licenses, permits, powers and rights in full force and effect.
(g) Taxes and Accounting Matters: The MDI Companies will
file when due all federal, state and local tax returns and reports which
shall be accurate and complete, including but not limited to income,
franchise, excise, ad valorem, and other taxes with respect to their
businesses and properties, and to pay as they become due all taxes or
assessments, except for taxes for which adequate reserves are established and
which are being contested in good faith by appropriate proceedings. The MDI
Companies will not change its accounting methods or practices or any
depreciation, amortization or inventory valuation policies or practices.
20
(h) No Disposition or Encumbrance: Except in the ordinary
course of business consistent with past practice, the MDI Companies will not
(1) dispose of or encumber any of their properties and assets, (2) discharge
or satisfy any lien or encumbrance or pay any obligation or liability (fixed
or contingent) except for previously scheduled repayment of debt, (3) cancel
or compromise any debt or claim, (4) transfer or grant any rights under any
concessions, leases, licenses, agreements, patents, inventions, proprietary
technology or process, trademarks, service marks or copyrights, or with
respect to any know-how, or (5) enter into or modify in any material respect
or terminate any existing license, lease, or contract.
(i) Insurance: The MDI Companies will maintain in effect
all its current insurance policies.
(j) No Securities Insurances: The MDI Companies will not
issue any shares of any class of capital stock, or enter into any contract,
option, warrant or right calling for the issuance of any such shares of
capital stock, or create or issue any securities convertible into any
securities of the MDI Companies.
(k) No Dividends: The MDI Companies will not declare, set
aside or pay any dividends or other distributions of any nature whatsoever.
(l) Contracts: The MDI Companies will not enter into or
assume any contract, agreement, obligation, lease, license or commitment
except in the ordinary course of business consistent with past practice or as
contemplated by this Agreement.
(m) No Breach: The MDI Companies will not do any act or
omit to do any act which would cause a breach of any of its material
contracts, commitments or obligations.
(n) Due Compliance: The MDI Companies will comply will all
laws, regulations, rules and ordinances applicable to it and to the conduct
of its business, the violation of which would have a material adverse effect
on the MDI Companies.
(o) No Waivers of Rights: The MDI Companies will not amend,
terminate or waive any material right whether or not in the ordinary course
of business.
(p) Capital Commitments: The MDI Companies will not make or
commit to make any material capital expenditure, capital addition or capital
improvement.
21
(q) No Related Party Transactions: The MDI Companies will
not make any loans to, or enter into any transaction, agreement, arrangement
or understanding of any material nature with any of their officers, directors
or employees.
(r) Notice of Change: The MDI Companies will promptly
advise Parent in writing of any material adverse change, or the occurrence of
any event which involves any substantial possibility of a material adverse
change, in their business, financial condition, results of operations,
assets, liabilities or prospects.
(s) Consents: The MDI Companies will use their best good
faith efforts to obtain the consent or approval of each person or entity
whose consent or approval is required for the consummation of the
Transactions contemplated hereby and to do all things necessary to consummate
the Transactions contemplated by the Basic Agreements.
4.2 Covenants of Parent: Parent covenants and agrees to perform the
following acts:
(a) No Indebtedness: Parent will not create, incur, assume,
guarantee or otherwise become liable with respect to any obligation for
borrowed money, indebtedness, capitalized lease or similar obligation, except
in the ordinary course of business consistent with past practices, where the
entire net proceeds thereof are deposited with and used by and in connection
with the business of Parent.
(b) No Amendments: Parent will not amend its corporate
charter or bylaws (or similar documents) without prior consent of the MDI
Companies (except as described above in Section 1.3(a) and Parent will
maintain its corporate existence, licenses, permits, powers and rights in
full force and effect.
(c) No Securities Issuances: Parent will not issue any
shares of any class of capital stock, or enter into any contract, option,
warrant or right calling for the issuance of any such shares of capital
stock, or create or issue any securities convertible into any securities of
Parent except for the transactions contemplated herein.
(d) No Dividends: Parent will not declare, set aside or pay
any dividends or other distributions of any nature whatsoever.
22
(e) Contracts; Parent will not enter into or assume any
contact, agreement, obligation, lease, license, or commitment.
(f) Capital Commitments: Parent will not make or commit to
make any material capital expenditure, capital addition or capital
improvement.
(g) Notice of Change: Parent will promptly advise the MDI
Companies in writing of any material adverse change, or the occurrence of any
event which involves any substantial possibility of a material adverse
change, in their businesses, financial conditions, results of operations,
assets, liabilities or prospects.
(h) Consents: Parent will use its best good faith efforts
to obtain the consent or approval of each person or entity whose consent or
approval is required for the consummation of the Transactions contemplated
hereby and to do all things necessary to consummate the Transactions
contemplated by the Basic Agreements.
V
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF PARENT TO CLOSE
The obligation of Parent to close the Transactions is subject to the
fulfillment by the MDI Companies contained in this Agreement shall have been
true and correct when made and shall be true and correct as of the Closing
with the same force and effect as if made at the Closing. The MDI Companies
shall have performed all agreements, covenants and conditions required to be
performed by the MDI Companies and Shareholders prior to the Closing.
5.1 Compliance with Representations, Warranties and Covenants: The
representations and warranties of the MDI Companies and Shareholders
contained in this Agreement shall have been true and correct when made and
shall be true and correct as of the Closing with the same force and effect as
if made at the Closing. The MDI Companies and Shareholders shall have
performed all agreements, covenants and conditions required to be performed
by the MDI Companies prior to the Closing.
23
5.2 No Adverse Change: Subsequent to the date hereof and prior to
the Closing, there shall have been no event which has had or may have a
material adverse effect upon the businesses, financial conditions, results of
operations, assets, liabilities or prospects of the MDI Companies.
5.3 No Legal Proceedings: No suit, action or other legal or
administrative proceeding before any court or other governmental agency shall
be pending or threatened seeking to enjoin the consummation of the
Transactions.
5.4 Documents to be Delivered by the MDI Companies and Shareholders:
The MDI Companies and Shareholders shall have delivered the following
documents:
(a) Stock certificates representing all of the shares of
the MDI Companies duly endorsed in blank or accompanied by duly executed
stock powers.
(b) A copy of (i) the Articles of Incorporation of the MDI
Companies, as amended to date, certified as correct by the MDI Companies; and
(ii) the Bylaws of the MDI Companies certified as correct by the MDI
Companies; and (iii) a certificate from each of the MDI Companies, to the
effect that the Company is in good standing and has paid all franchise taxes
in such state.
(c) All of the Basic Agreements shall be executed by all
parties thereto other than Parent.
(d) All corporate and other records of or applicable to the
MDI Companies included but not limited to current and up-to-date minute
books, stock transfer books and registers, books of accounts, leases and
material contracts.
VI
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE MDI COMPANIES
AND SHAREHOLDERS TO CLOSE
The obligation of the MDI Companies and the Shareholders to close
the Transactions subject to the fulfillment prior to Closing of each of the
following conditions, any of which may be waived in whole or in part by the
Parent and Subs:
6.1 Compliance with Representations, Warranties and Covenants: The
representations and warranties made by Parent in this Agreement shall have been
true and correct when made and shall be true and correct in all material
respects at the Closing
24
with the same force and effect as if made at the Closing, and Parent and Subs
shall have performed al agreements, covenants and conditions required to be
performed by Parent and Subs prior to the Closing.
6.2 No Legal Proceedings: No suit, action or other legal or
administrative proceedings before any court or other governmental agency
shall be pending or threatened seeking to enjoin the consummation of the
Transactions contemplated hereby.
6.3 Other Agreements: All parties other than the MDI Companies and
Shareholders shall have executed and delivered the Basic Agreements.
6.4 Payments: Shareholders shall have received from Parent
certificates for all shares of Parent Stock and Subordinate Notes to be
issued at the Closing by Parent pursuant to the terms hereof to all of the
Basic Agreements.
6.5 Tax Opinions: Xxxxxx Xxxxxxxx, LLP, auditors to the MDI
Companies, shall have provided the MDI Companies and Shareholders with
written confirmation that (i) after the Transactions are completed, the book
value of the assets and liabilities of the MDI Companies may be recorded at
the same book values as recorded by the MDI Companies prior to the
Transactions, and (ii) except for income tax due on proceeds of the
Subordinate Notes, the Transactions are free from federal income tax to the
Shareholders.
6.6 Listing: The common stock of Parent shall have been approved for
listing on the NASDAQ Bulletin Board.
6.7 Stock Certification: The transfer agent for Parent's common
stock shall have provided a certification as to the number of shares
currently issued and outstanding, which shall in no event exceed Two Million
Five Hundred Thousand (2,500,000) shares. Counsel for the Parent shall have
provided an opinion that all of the issued and outstanding shares of Parent
have been duly authorized and issued, and are fully paid, and all shares
issued since January 1, 1997 have been issued in compliance with all
applicable federal and state securities laws.
6.8 Resignations: Resignations of all of the current officer and
directors of Parent shall have been tendered effective immediately after the
Merger becomes effective.
VII
25
CONDITION SUBSEQUENT
It is the intention of Parent to enter into an Investment Banking
Agreement with Xxxxx Capital Corporation in the form attached hereto and made
a part hereof as Exhibit R, pursuant to which Xxxxx shall assist the Parent
in becoming listed on the NASDAQ Bulletin Board or a similar national
securities exchange acceptable to Shareholders (the "Listing"), and shall
represent the Parent in connection with a private placement offering in an
amount up to One Million Dollars ($1,000,000.00) (the "Offering"). In the
event that for any reason Xxxxx is unable to complete the Listing or complete
Seven Hundred Thousand Dollars ($700,000.00) of the Offering on or before
ninety (90) days from the date of Closing, then Saferin, in his sole and
absolute discretion, by written notice to the Parent and the Merged Companies
shall have the right at any time hereafter until Completion of the Listing
and the Offering, to declare the Transactions annulled and void ah initio, in
which even within five (5) days after the date of Saferin's notice, the
parties agree as follows:
(a) Shareholders shall surrender to Parent certificate
representing all shares of common stock of the Parent issued pursuant to this
Agreement, duly endorsed in blank, and all Subordinate Notes duly endorsed in
blank.
(b) Parent shall surrender to the Merged Companies
certificates representing all shares of common stock of the Merged Companies
issued pursuant to this Agreement, duly endorsed in blank.
(c) Parent shall cause the Merged Companies to issue to the
Shareholder the number of shares of the MDI Companies owned by the respective
Shareholders prior to consummation of the Transactions.
(d) Each party shall take any other actions reasonably
requested by any other party to return the requesting party to its position
prior to the consummation of this Agreement, provided the foregoing shall not
require any party to pay any fees or expenses incurred by any other party in
connection with the Transactions.
Upon performance of those items set forth in paragraphs (a) through
(d) above, each of the parties hereby waives, releases and discharges all
other parties from all obligations under the Basic Agreements.
26
VIII
MODIFICATION, WAIVERS,
TERMINATION AND EXPENSES
8.1 Modification: Shareholders and Constituent Corporations may
amend, modify or supplement this Agreement in any manner as they may all
mutually agree in writing.
8.2 Waivers: The parties may in writing extend the time for or waive
compliance by the other with any of the covenants or conditions of the other
contained herein.
8.3 Termination and Abandonment: This Agreement may be terminated
and the Transactions may be abandoned before the Closing.
(a) By the mutual consent of all parties hereto;
(b) By Parent, if the representations and warranties of the
MDI Companies or Shareholders set forth herein shall not be accurate, or the
conditions precedent set forth in Article VI shall have not have been
satisfied, in all material respects; or
(c) By the MDI Companies or Shareholders, if the
representations and warranties of Parent set forth herein shall not be
accurate, or the conditions precedent set forth in Article V shall not have
been satisfied in all material respects.
Termination shall be effective on the date of receipt of written
notice specifying the reasons therefor.
IX - MISCELLANEOUS
9.1 Representations and Warranties to Survive: Unless otherwise
provided, all of the representations and warranties contained in this
Agreement and in any certificate, exhibit or other document delivered
pursuant to this Agreement shall survive the Closing for a period of two (2)
years. No investigation made by any party hereto or their representatives
shall constitute a waiver of any representation or warranty, and no such
representations or warranty shall be merged into the Closing.
9.2 Binding Effect of the Basic Agreements: The Basic Agreements and
the certificate and other instruments delivered by or on behalf of the
parties pursuant thereto, constitute the entire agreement between the
parties. The terms and conditions of the Basic Agreements shall inure to the
benefit of and be binding upon the respective heirs, legal representatives,
27
successor and assigns of the parties hereto. Nothing in the Basic Agreements,
expressed or implied, confers any rights or remedies upon any party other
than the parties hereto and their respective heirs, legal representatives and
assigns. Whenever Shareholders are authorized to act hereunder, any action
authorized by those Shareholders holding a majority of the Shares shall be
deemed the act of and binding on all Shareholders.
9.3 Applicable Law: The Basic Agreements are made pursuant to, and
will be construed under, the laws of the State of Delaware.
9.4 Notices: All notices, request, demands and other communications
hereunder shall be in writing and will be deemed to have been duly given when
delivered or mailed, first class postage prepaid:
(a) If to MDI Companies
of Saferin:
Media Drop-In Productions, Inc.
ATTN: Xxxxxx X. Xxxxxxx, President
000 Xxx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
FAX: (000) 000-0000
With a copy to:
Xxxxx Xxxxxxxx, Esquire
Xxxxxx, Heyman, Greenberg,
Xxxxxxxx & Belgrad, P.A.
10th Floor, Sun Life Building
00 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
(b) If to Parent or Subs:
G. Xxxxx Xxxxxx
Xxxxxx & Associates, P.C.
0000 X. 00xx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
28
(c) If to Xxxxxxxx:
Xxxxxxxx X. Xxxxxxxx
Azura International Holdings, Ltd.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
C. Robton Xxxxxxx-Xxxxxxx, Esquire
Albert, Ward & Xxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
These addresses may be changed from time to time by written notice
to the other parties.
9.5 Headings: The headings contained in this Agreement are for
reference only and will not affect in any way the meaning or interpretation
of this Agreement.
9.6 Counterparts: This Agreement may be executed in counterparts,
each of which will be deemed an original and all of which together will
constitute one instrument.
9.7 Severability: If any one or more of the provisions of this
Agreement shall, for any reasons, be held to be invalid, illegal or
unenforceable under applicable law, this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein. The remaining provisions of this Agreement shall be given effect to
the maximum extent then permitted by law.
9.8 Forbearance Waiver: Failure to pursue any legal or equitable
remedy or right available to a party shall not constitute a waiver of such
right, nor shall any such forbearance, failure or actual waiver imply or
constitute waiver of subsequent default or breach.
29
9.9 Attorneys' Fees and Expenses: The prevailing party in any legal
proceeding based upon this Agreement shall be entitled to reasonable
attorney's fees and expenses and court costs.
9.10 Expenses: Each party shall pay all fees and expenses incurred
by it incident to this Agreement and in connection with the consummation of
all transactions contemplated by this Agreement. However, should either party
choose to terminate this Agreement under Section 8.3(a), that party
initiating the termination shall be responsible for all legal fees and other
expenses incurred in connection with the preparation of this Agreement.
9.11 Exhibits: All of the Exhibits to this Agreement are
incorporated herein in the places referenced in this Agreement as if fully
set forth herein.
9.12 Integration: This Agreement and all documents and instruments
executed pursuant hereto merge and integrate all prior agreements and
representations respecting the Transactions, whether written or oral, and
constitute the sole agreement of the parties in connection therewith. This
Agreement has been negotiated by and submitted to the scrutiny of both
Shareholders and Parent and their counsel and shall be given a fair and
reasonable interpretation in accordance with the words hereof, without
consideration or weight being given to its having been drafted by either
party hereto or its counsel.
30
IN WITNESS WHEREOF, the undersigned parties hereto have duly
executed this Agreement on the date first above written.
PARENT:
ATTEST: MDI ENTERTAINMENT, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxx
-------------------------- --------------------------------
Xxxxx X. Xxxxxx, Secretary Xxxxx Xxxxxxx, President
MDI COMPANIES:
ATTEST: MEDIA DROP-IN PRODUCTIONS, INC.
/s/ Xxxxxxx Xxxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
-------------------------- --------------------------------
Secretary Xxxxxx X. Xxxxxxx, President
ATTEST: MDI-MISSOURI, INC., a Missouri
corporation
/s/ Xxxxxxx Xxxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
-------------------------- --------------------------------
Secretary Xxxxxx X. Xxxxxxx, President
WITNESS: SHAREHOLDERS:
/s/ Xxxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxx
-------------------------- --------------------------------
XXXXXX X. XXXXXXX
/s/ Xxxxx Xxxxx /s/ Xxxxxxxx X. Xxxxxxxx
-------------------------- --------------------------------
Xxxxx Xxxxx XXXXXXXX X. XXXXXXXX
SUBS:
ATTEST: MDI-CONNECTICUT, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxx
-------------------------- --------------------------------
Xxxxx X. Xxxxxx, Secretary Xxxxx Xxxxxxx, President
ATTEST: MDI-MISSOURI, INC., a Delaware
corporation
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxx
-------------------------- --------------------------------
Xxxxx X. Xxxxxx, Secretary Xxxxx Xxxxxxx, President
31
