EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
BY AND AMONG
NATIONAL MEDIA CORPORATION,
DA ACQUISITION CORP, DIRECTAMERICA CORPORATION,
CALIFORNIA PRODUCTION GROUP, INC.,
XXXX X. XXXXX, XXXXX X. XXXXXXX,
AND XXXX X. XXXXXXX
DATED AS OF OCTOBER 24, 1995
TABLE OF CONTENTS
Page
ARTICLE 1
1.1 The Merger...................................................... 2
1.2 Effective Time.................................................. 2
1.3 Effect of the Merger............................................ 2
1.4 Certificate of Incorporation; By-laws........................... 2
1.5 Directors and Officers.......................................... 3
1.6 Effect of Capital Stock......................................... 3
1.7 Taking of Necessary Action; Further Action...................... 5
1.8 Material Adverse Effect; Ordinary Course of Business............ 5
1.9 Tax Consequences................................................ 6
ARTICLE 2
2.1 Organization and Qualification; Subsidiaries.................... 6
2.2 Articles of Incorporation and By-laws........................... 6
2.3 Capitalization.................................................. 7
2.4 Authority Relative to this Agreement............................ 7
2.5 No Conflict; Required Filings and Consents...................... 8
2.6 Compliance; Permits............................................. 9
2.7 Financial Statements............................................ 9
2.8 Absence of Certain Changes or Events............................ 9
2.9 No Undisclosed Liabilities and Commitments...................... 10
2.10 Royalties and Production Schedules.............................. 10
2.11 Absence of Litigation........................................... 11
2.12 Employee Benefit Plans; Employment Agreements................... 11
2.13 Labor Matters................................................... 13
2.14 Registration Statement.......................................... 13
2.15 Restrictions on Business Activities............................. 13
2.16 Title to Property............................................... 13
2.17 Taxes........................................................... 14
2.18 Environmental Matters........................................... 16
2.19 Brokers......................................................... 17
2.20 Full Disclosure................................................. 17
2.21 Intellectual Property........................................... 17
2.22 Interested Party Transactions................................... 19
2.23 Insurance....................................................... 19
ARTICLE 3
3.1 Organization and Qualification.................................. 19
3.2 Authority Relative to this Agreement............................ 20
3.3 No Conflict; Required Filings and Consents...................... 20
3.4 Certificate of Incorporation and By-laws........................ 21
3.5 Capitalization.................................................. 21
3.6 Compliance; Permits............................................. 21
3.7 SEC Filings; Financial Statements............................... 22
3.8 Absence of Certain Changes or Events............................ 23
3.9 Restrictions on Business Activities............................. 23
(i)
3.10 Title to Property............................................... 23
3.11 Full Disclosure................................................. 23
3.12 No Undisclosed Liabilities...................................... 24
3.13 Absence of Litigation........................................... 24
3.14 Insurance....................................................... 24
3.15 Registration Statement.......................................... 24
3.16 Taxes........................................................... 25
3.17 Brokers......................................................... 25
3.18 No Stockholder Vote............................................. 25
3.19 Employee Benefit Plans.......................................... 25
ARTICLE 4
4.1 Conduct of Business by the Companies Pending the Merger......... 27
4.2 No Solicitation or Sale of Capital Stock........................ 29
4.3 Conduct of Business by Parent Pending the Merger................ 30
ARTICLE 5
5.1 Registration Under the Securities Act........................... 31
5.2 Access to Information........................................... 34
5.3 Consents; Approvals............................................. 35
5.4 Notification of Certain Matters................................. 35
5.5 Further Action.................................................. 35
5.6 Public Announcements............................................ 35
5.7 Listing of Parent Common Stock.................................. 35
5.8 Conveyance Taxes................................................ 36
ARTICLE 6
6.1 Conditions to the Merger........................................ 36
6.2 Additional Conditions to Obligations of Parent and Merger Sub... 36
6.3 Additional Conditions to Obligations of the Companies and
the Holders..................................................... 38
ARTICLE 7
7.1 Termination..................................................... 40
7.2 Effect of Termination........................................... 40
7.3 Fees and Expenses............................................... 41
ARTICLE 8
8.1 Survival........................................................ 41
8.2 Indemnification................................................. 42
8.3 Conditions of Indemnification for Third Party Claims............ 43
8.4 Payment of Claims............................................... 44
8.5 Set-Off......................................................... 44
ARTICLE 9
9.1 Disclosure Schedules............................................ 45
9.2 Notices......................................................... 45
9.3 Certain Definitions............................................. 46
9.4 Amendment....................................................... 47
9.5 Waiver.......................................................... 47
9.6 Headings........................................................ 47
9.7 Severability.................................................... 47
9.8 Entire Agreement................................................ 47
9.9 Assignment, Merger Sub.......................................... 48
(ii)
9.10 Parties In Interest............................................. 48
9.11 Failure or Indulgence Not Waiver; Remedies Cumulative........... 48
9.12 Governing Law................................................... 48
9.13 Counterparts.................................................... 48
9.14 Joint Participation............................................. 48
9.15 Exhibits and Schedules.......................................... 48
9.16 Waiver of Jury Trial............................................ 48
(iii)
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
Agreement and Plan of Merger and Reorganization, dated as of October
24, 1995 (this "Agreement"), by and among National Media Corporation, a Delaware
corporation ("Parent"), DA Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), DirectAmerica Corporation, a
Delaware corporation ("DA"), California Production Group, Inc., a Nevada
corporation ("CPG" and collectively with DA, the "Companies"), Xxxx X. Xxxxx
("Xxxxx"), Xxxxx X. Xxxxxxx ("Xxxxxxx") and Xxxx X. Xxxxxxx ("Xxxxxxx" and
collectively with Xxxxx and Xxxxxxx, the "Holders").
WITNESSETH:
WHEREAS, the Boards of Directors of Parent, Merger Sub and each of the
Companies have each determined that it is advisable and in the best interests of
their respective stockholders for the Companies to be acquired by Parent
pursuant to the merger (the "Merger") of the Companies with and into Merger Sub
upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, the Boards of Directors of Parent and
Merger Sub and the Boards of Directors and stockholders of each of the Companies
have each approved the Merger in accordance with the applicable provisions of
the Delaware General Corporation Law ("Delaware Law") and the Nevada Corporation
law ("Nevada Law") and upon the terms and subject to the conditions set forth
herein;
WHEREAS, pursuant to the Merger, all of the outstanding capital stock
of DA and CPG shall be exchanged for the Merger Consideration (as defined in
Section 1.6(a) hereof), upon the terms and subject to the conditions set forth
herein;
WHEREAS, as an inducement to the Parent's willingness to enter into
this Agreement, each of the Holders is hereby agreeing to terminate his existing
employment agreement(s) with the Companies and to enter into a new employment
agreement with Merger Sub in substantially the forms attached hereto as Exhibits
A-C; and
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Merger Sub, DA, CPG and each of the Holders hereby agree
as follows:
ARTICLE 1.
The Merger
Section 1.1 The Merger.
(a) Effective Time. At the Effective Time (as defined in Section 1.2),
and subject to and upon the terms and conditions of this Agreement, Nevada Law
and Delaware Law, respectively, DA and CPG shall each be merged with and into
the Merger Sub, the separate corporate existences of each of DA and CPG shall
cease, and the Merger Sub shall continue as the surviving corporation. The
Merger Sub, as the surviving corporation after the Merger, is hereinafter
sometimes referred to as the "Surviving Corporation."
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(b) Closing. Subject to the satisfaction or waiver of the conditions
set forth in Article VI hereof, the consummation of the Merger will take place
upon the latter of (i) the satisfaction or waiver of the conditions set forth in
Article VI hereof and (ii) October 24, 1995, at the offices of Klehr, Harrison,
Xxxxxx, Branzburg & Xxxxxx, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx
00000, or such other date, time or place is agreed to in writing by the parties
hereto (the date of the consummation of the Merger is hereinafter referred to as
the "Closing Time").
Section 1.2 Effective Time. As promptly as practicable after the
Closing Time, the parties hereto shall cause the Merger to be consummated by
filing articles of merger (the "Articles of Merger"), together with any required
certificates, with the Secretary of State of the State of Nevada and the
Secretary of State of the State of Delaware, in such form as is required by, and
executed in accordance with, the relevant provisions of Nevada Law and Delaware
Law, respectively (the time of such filing being the "Effective Time").
Section 1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Articles of Merger and
the applicable provisions of Nevada Law and Delaware Law, respectively. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all the property, rights, privileges, powers and franchises of each of the
Companies and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of each of the Companies and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 1.4 Certificate of Incorporation; By-Laws.
(a) Certificate of Incorporation. Unless otherwise determined by
Parent prior to the Effective Time, at the Effective Time, the Certificate of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by Delaware Law and such Certificate of
Incorporation; provided, however, that Article I of the Certificate of
Incorporation of the Surviving Corporation shall be amended as of the Effective
Time to read as follows:
"FIRST" The name of the corporation is "DirectAmerica Corporation".
(b) By-Laws. At the Effective Time, the By-Laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by Delaware Law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
Section 1.5 Directors and Officers. The officers and directors of
Merger Sub immediately following the Effective Time shall be as set forth on
Exhibit D attached hereto, in each case until their respective successors are
duly elected or appointed and qualified.
Section 1.6 Effect on Capital Stock. Subject to the terms and
conditions contained herein, at the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Merger Sub, DA, CPG or any of the
Holders:
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(a) Conversion of Securities. All of the shares of capital stock of DA
and CPG and all Stock Purchase Rights (as defined in Section 2.3 hereof) issued
and outstanding as of the Effective Time (collectively, the "Shares") shall be
canceled, and the holders of such Shares, shall receive, in the aggregate,
554,456 shares of validly issued, fully paid and nonassessable shares of common
stock of Parent, $.01 par value per share (the "Parent Common Stock"). No
fraction of a share of Parent Common Stock shall be issued hereunder and no cash
shall be issued in lieu of any such fractional shares which would otherwise be
issuable thereof. The Parent Common Stock issuable under this Section 1.6(a) is
referred to herein as the "Merger Consideration". Immediately upon the Effective
Time, all capital stock of the Companies and all Stock Purchase Rights shall
automatically be canceled and all rights of holders of such capital stock and
Stock Purchase Rights with respect thereto shall cease and be extinguished. The
Merger Consideration shall be allocated among the holders of the Shares as set
forth in Exhibit E attached hereto.
(b) Cancellation. Each Share held in the treasury of either of the
Companies immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of either of the Companies, cease to be
issued, be canceled and retired without payment of any consideration therefor
and cease to exist.
(c) Capital Stock of Merger Sub. Each share of common stock, $.01 par
value per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall become shares of the Surviving Corporation after the Merger
and shall thereafter constitute all of the issued and outstanding shares of the
capital stock of the Surviving Corporation. Each stock certificate of Merger Sub
evidencing ownership of any such shares shall continue to evidence ownership of
such shares of capital stock of the Surviving Corporation.
(d) Adjustments to Merger Consideration. In the event Parent shall
effect any stock split, reverse split, stock dividend (including any dividend or
other similar distribution of securities convertible into Parent Common Stock),
reorganization, recapitalization or other like change with respect to Parent
Common Stock after the date hereof and prior to the Effective Time, the number
of shares of Parent Common Stock issuable as Merger Consideration hereunder
shall be adjusted to reflect fully such split, dividend, reorganization,
recapitalization or change.
(e) Additional Merger Consideration. If the sum of (i) the royalty
payments ("Royalties") actually received by the Surviving Corporation under any
contractual rights of the Surviving Corporation to receive Royalties regarding
the sale of products for which the Surviving Corporation (or either of the
Companies) produced infomercials and (ii) the Imputed National Media Royalties
(as hereinafter defined) during the consecutive twelve (12) month period ending
January 31, 1997 (the "Period") exceeds $5 million (such excess is referred to
herein as the "Differential"), then as soon as practicable following calculation
of the appropriate number of shares, Parent shall deliver to the holders of
Shares set forth in Exhibit E, pro rata in proportion to the number of shares of
Parent Common Stock each is receiving pursuant to Section 1.6(a) hereof, an
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aggregate number of shares of Parent Common Stock that is equal to the
Differential multiplied by 1.8 divided by the Average Closing Price (as
hereinafter defined). The Surviving Corporation agrees that it shall operate its
business in good faith so as not to intentionally defeat the rights of such
holders to additional consideration under this Section 1.6(e). For purposes of
this Section 1.6(e), the following terms shall have the following meanings:
"Imputed National Media Royalties" shall mean the amount of
Royalties which would be payable to the Surviving Corporation by Parent had the
Companies not merged with and into Surviving Corporation and (i) as to
agreements in place on the Effective Date, shall be calculated based on the
royalty rates, and shall otherwise be determined, as specified therein; and (ii)
as to infomercials produced after the Effective Date, shall be calculated based
on the royalty rates and shall otherwise be determined as set forth in that
certain agreement by and between the Companies and Parent dated November 11,
1994, with respect to Blue Coral Touchless Car Products.
"Average Closing Price" shall mean the average closing price of
Parent Common Stock as reported by the New York Stock Exchange for the twenty
(20) consecutive trading days ending on the date which is the last day of the
Period.
(f) Delivery of Certificates. At the Effective Time, Parent will cause
to be delivered to each holder of Shares (in accordance with Section 1.6(a)
hereof) certificate or certificates, appropriately registered in the name of the
holder, representing the shares of Parent Common Stock issuable as Merger
Consideration hereunder.
(g) Withholding Rights. Parent and the Surviving Corporation shall be
entitled to deduct and withhold from the Merger Consideration otherwise payable
to any holder pursuant to this Agreement such amounts as Parent or the Surviving
Corporation is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code") or
any provision of state, local, provincial or foreign tax law. To the extent that
amounts are so withheld, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the Shares in respect of
which such deduction and withholding was made.
(h) At the Effective Time, the stock transfer books of each of DA and
CPG shall be closed, and there shall be no further registration of transfers of
the capital stock of either DA or CPG thereafter on the records of either of the
Companies. The Merger Consideration delivered upon the surrender for exchange of
Shares in accordance with the terms hereof shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Shares, and there shall be
no further registration of transfers on the records of the Surviving Corporation
of Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, certificates representing Shares are presented to the
Surviving Corporation for any reason, they shall be canceled and deemed null and
void.
Section 1.7 Taking of Necessary Action; Further Action. Each of
Parent, Merger Sub, DA, CPG and each of the Holders in good faith will take,
and will cause any other persons who are or become holders of DA common stock,
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$.01 par value ("DA Common Stock") or CPG common stock, no par value ("CPG
Common Stock") at or prior to the Effective Time to take, all such commercially
reasonable and lawful action as may be necessary or appropriate in order to
effectuate the Merger in accordance with this Agreement as promptly as possible.
If, at any time after the Effective Time, any such further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of Parent, the Companies and
Merger Sub, the officers and directors of the Companies and Merger Sub are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
Section 1.8 Material Adverse Effect; Ordinary Course of Business. When
used in connection with either Company or any of their respective subsidiaries,
or Parent or any of its subsidiaries, as the case may be, the term "Material
Adverse Effect", or any derivation thereof, means any change or effect that,
individually or when taken together with all other such changes or effects that
have occurred prior to the date of determination of the occurrence of the
Material Adverse Effect, is or is reasonably likely to be materially adverse to
the business, assets (including intangible assets), financial condition,
prospects or results of operations of such Company and its subsidiaries or
Parent and its subsidiaries, as the case may be, in each case taken as a whole.
When used in connection with either Company or any of their respective
subsidiaries, or Parent or any of its subsidiaries, as the case may be, the term
"ordinary course of business", or derivations thereof, means the normal conduct
of business consistent with past practice except that no action which is
contrary to law, order, rule or regulation or otherwise contrary to commercial
reasonableness shall be considered to be in the ordinary course of business.
1.9 Tax Consequences. It is intended by the parties hereto, that the
Merger constitute a tax-free reorganization within the meaning of Section 368 of
the code. The parties hereto agree to utilize commercially reasonable efforts,
and to cooperate with each other, to cause the Merger to be a tax-free
reorganization within the meaning of Section 368 of the Code; provided, however,
that neither Parent nor Merger Sub shall be required to take any position
contrary to its interest.
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ARTICLE 2.
Representations and Warranties of the Companies and the Holders
Each of the Companies and each Holder hereby, jointly and severally,
represents and warrants to Parent and Merger Sub (which representations and
warranties shall be true and correct on the date hereof and at the Effective
Time and, with respect to the representation contained in Section 2.14, shall
also be true and correct each time such Registration Statement (as defined in
Section 5.1 hereof) is filed with the Securities and Exchange Commission (the
"SEC") or other regulatory agency); provided, however, that neither Xxxxxxx nor
Xxxxxxx makes any representation or warranty hereunder with respect to CPG:
Section 2.1 Organization and Qualification; Subsidiaries. Each Company
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority and is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders (collectively "Approvals") necessary to own, lease and operate the
properties it purports to own, operate or lease and to carry on its business as
it is now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority and Approvals would not or
is not reasonably likely to have a Material Adverse Effect. Each of the
Companies is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of its
properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing that would not or is not
reasonably likely to have a Material Adverse Effect. Neither Company directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any equity or similar interest in any
corporation, partnership, joint venture or other business association, entity or
person.
Section 2.2 Articles of Incorporation and By-Laws. Each Company has
heretofore delivered to Parent complete and correct copies of its Articles of
Incorporation and By-Laws, as amended to date certified as such by its Chief
Operating Officer. Each of such Articles of Incorporation and By-Laws are in
full force and effect. Neither Company is in violation of any of the provisions
of its Articles of Incorporation or By-Laws or equivalent organizational
documents.
Section 2.3 Capitalization. The authorized capital stock of DA
consists of Five Hundred Thousand (500,000) shares of DA Common Stock and no
shares of preferred stock. As of the date hereof, One Hundred and Five Thousand
(105,000) shares of DA Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable and owned of record and
beneficially by the Holders. The authorized capital stock of CPG consists of
Five Thousand (5,000) shares of CPG Common Stock and no shares of preferred
stock. As of the date hereof, Two Thousand Six Hundred Fifteen and one-half
(2615.5) shares of CPG Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable. All of such DA Common Stock and
CPG Common Stock are owned of record and beneficially by the individuals named
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on Schedule 2.3 of the Company Disclosure Schedule free and clear of all
security interests, liens, claims, pledges, agreements, limitations charges or
other encumbrances of any nature whatsoever. There are no options, warrants or
other rights, agreements, arrangements or outstanding commitments of any
character relating to the issued or unissued capital stock of either of the
Companies or obligating either of the Companies to issue or sell any shares of
capital stock of, or other equity interests in, either of the Companies
(collectively, "Stock Purchase Rights") and, except as set forth on Schedule 2.3
of the Company Disclosure Schedule, neither Company has adopted or made any
commitment to adopt any plan for the issuance of any of its capital stock or any
Stock Purchase Rights. There are no obligations, contingent or otherwise, of
either Company to repurchase, redeem or otherwise acquire any shares of capital
stock of either of the Companies or to provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any person.
Section 2.4 Authority Relative to this Agreement. Each Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by each
Company and the consummation by each Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
and no other corporate proceedings on the part of either Company are necessary
to authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and delivered by each Company
and each Holder and, assuming the due authorization, execution and delivery by
Parent and Merger Sub, as applicable, constitutes the legal, valid and binding
obligation of each Company and each Holder, enforceable against each of the
Companies and each Holder in accordance with its terms, except as the
enforceability thereof may be limited by (i) the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to or affecting the rights and remedies
of creditors generally, and (ii) the effect of general principles of equity,
whether enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought.
Section 2.5 No Conflict; Required Filings and Consents.
(a) Section 2.5(a) of that certain written disclosure schedule, dated
of even date herewith, delivered by the Companies to Parent (the "Company
Disclosure Schedule") includes a list of (i) all contracts to which either
Company is a party and which provides for aggregate payments, either to or from
a Company, of $10,000 or more and (ii) all other agreements which are material
to the business, assets (including intangible assets) financial condition,
prospects or results of operations of either Company ((i) and (ii) being,
collectively, the "Material Contracts"). The Companies have delivered to Parent
true and correct copies of all Material Contracts, as amended to date, certified
as such by the Chief Operating Officer of the Companies.
(b) Except as set forth in Section 2.5(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by each of the Companies
and each of the Holders does not, and the performance of this Agreement by each
of the Companies and each of the Holders will not, (i) conflict with or violate
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the Articles of Incorporation or By-Laws or equivalent organizational documents
of either Company, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to either Company or any Holder or by which
either Company or any such Holder or any of their respective properties is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event that, with notice or lapse of time or both, would become a default), or
impair either Company's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any Material Contract or any agreement to which
a Holder is a party, or result in the creation of a lien or encumbrance on any
of the properties or assets of either of the Companies pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which either of the Companies is
a party or by which either of the Companies or any of their respective
properties is bound or affected.
(c) The execution and delivery of this Agreement by the Companies and
the Holders does not, and the performance of this Agreement by the Companies and
the Holders will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for the filing and recordation of appropriate
merger or other documents as required by Nevada Law and Delaware Law and (ii)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent or delay the Companies or the
Holders from performing their respective obligations under this Agreement, or
would not and is not reasonable likely to otherwise have a Material Adverse
Effect. The provisions of Sections 78.378 to 78.3793, inclusive, of Nevada Law,
the provisions of Section 78.411 to 78.444, inclusive, of Nevada Law and the
provisions of Section 203 of Delaware Law are not applicable to the transaction
contemplated by this Agreement.
Section 2.6 Compliance; Permits.
(a) Neither of the Companies is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, writ, judgment or decree
applicable to it or by which it or any of its properties is bound or affected or
(ii) any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which it is a party or by
which it or any of its properties is bound or affected, except for any such
conflicts, defaults or violations which would not and is not reasonably likely
to have a Material Adverse Effect.
(b) Each of the Companies holds all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities which are material to the operation of its business
(collectively, the "Company Permits"). Each of the Companies is in compliance
with the terms of the Company Permits, except where the failure to so comply
would not and is not reasonably likely to have a Material Adverse Effect.
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Section 2.7 Financial Statements. Each of the Companies has furnished
to Parent its balance sheet as of December 31, 1994 and the related statements
of income, stockholders' equity and cash flows for such Company for the year
ended December 31, 1994 and its balance sheet (the "Balance Sheets") as of
August 31, 1995 and the related statements of income, stockholders' equity and
cash flows for such Company for the eight months ended August 31, 1995,
certified by Xxxxxxx, as the Chief Financial Officer of the Companies and, with
respect to the financial statements of DA, by Xxxx X. Xxxxx, Vice President of
Finance of DA. Except as set forth in Section 2.7 of the Company Disclosure
Schedule, all such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied ("GAAP") and
fairly present the position of each of the Companies as of December 31, 1994 and
August 31, 1995, respectively, and the results of each of their operations for
the year ended December 31, 1994 and the eight months ended August 31, 1995,
respectively. Except as set forth in Section 2.7 of the Company Disclosure
Schedule, since August 31, 1995, there has not been any change in the assets,
liabilities or financial condition of either of the Companies from that
reflected in the Balance Sheets except for changes in the ordinary course of
business which in the aggregate have not had and are not reasonably likely to
have a Material Adverse Effect.
Section 2.8 Absence of Certain Changes or Events. Except as set forth
in Section 2.8 of the Company Disclosure Schedule, since August 31, 1995 each of
the Companies has conducted its business in the ordinary course and there has
not occurred: (i) any amendments or changes in the Articles of Incorporation or
Bylaws of either of the Companies; (ii) any damage to, or destruction or loss
of, any assets of either of the Companies (whether or not covered by insurance)
that had or is reasonably likely to have a Material Adverse Effect; (iii) any
material depletion of any assets of either of the Companies; (iv) any change by
either of the Companies in its accounting methods, principles or practices; (v)
any revaluation by either of the Companies of any of its assets, including,
without limitation, writing down the value of capitalized inventory, or writing
off notes or accounts receivable other than in the ordinary course of business;
(vi) any redemption or other acquisition of capital stock by either of the
Companies or any declaration or payment of any dividend or other distribution in
cash, stock or property with respect to the capital stock of either Company;
(vii) any transfer of, or rights granted under, any material leases, licenses,
agreements, patents, trademarks, trade names or copyrights other than those
transferred or granted in the ordinary course of business; (viii) any mortgage,
pledge, security interest or imposition of lien or other encumbrance on any
asset of either of the Companies, except those that are immaterial and incurred
in the ordinary course of business, or (ix) any early collection, at a discount
or par, of any receivable of either of the Companies.
Section 2.9 No Undisclosed Liabilities and Commitments. Except as is
disclosed in the Balance Sheets and in Section 2.9 of the Company Disclosure
Schedule, neither Company has any liabilities, obligations or commitments
(absolute, accrued, contingent or otherwise) (collectively, the "Company
Liabilities") except for such Company Liabilities (i) arising in the ordinary
course of business under any contracts or agreements set forth in Sections
2.5(a) of the Company Disclosure Schedule and (ii) trade accounts payable (i.e.,
accounts payable, accrued expenses) and Taxes (as defined in Section 2.17
hereof) incurred by either of the Companies after the date of such Company's
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Balance Sheet in the ordinary course of business. Those Company Liabilities
which (A) relate to occurrences after the Closing Time; (B) are described in
clauses (i) and (ii) of the preceding sentence or (C) are set forth on either
Schedule 2.9 of the Company Disclosure Schedule or the October 15, 1995 Pro
Forma Balance Sheet of the Companies attached to or referenced by Schedule 2.9
of the Company Disclosure Schedule (the "Pro Forma Balance Sheet") are referred
to herein as the "Assumed Liabilities". As further clarification hereunder, the
term "Assumed Liabilities" shall not include (x) any Tax liability which is due
and payable on or prior to the Closing Time pursuant to any law, regulation or
order (other than as set forth in the immediately preceding sentence) or (y) any
Tax liability which otherwise relates to any period up to and including the
Closing Time (except as set forth on the Pro Forma Balance Sheet or on Schedule
2.9 of the Company Disclosure Schedule).
Section 2.10 Royalties and Production Schedules. Section 2.10 of the
Company Disclosure Schedule sets forth each product for which either Company has
produced or has agreed to produce an infomercial or other program and for which
either Company expects to receive royalties or other revenues. True and correct
copies of each contract or other agreement (and each amendment thereto) pursuant
to which such royalties or other revenues are to be derived has been provided to
Parent and each of such contracts and agreements is in full force and effect.
Each of the Companies has provided Parent the production schedule and budget for
each infomercial or other program currently being produced by such Company or
which such Company has agreed to produce. Except as set forth in Section 2.10 of
the Company Disclosure Schedule, neither Company nor any Holder has any reason
to believe that either Company will incur aggregate expenses or other costs in
connection with the production of any such infomercial or other program or the
performance of any of its obligations in connection therewith which will be in
excess of the aggregate expenses and costs set forth in the production schedule
and budget for such infomercial or other program.
Section 2.11 Absence of Litigation. Except as set forth in Section
2.11 of the Company Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of either of the
Companies or any Holder, threatened against either of the Companies or any
properties or rights of either of the Companies, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign.
Section 2.12 Employee Benefit Plans; Employment Agreements.
(a) Section 2.12(a) of the Company Disclosure Schedule lists all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), regardless of whether ERISA
is applicable thereto, all other bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance or termination pay,
medical or life insurance, supplemental unemployment benefits, profit-sharing,
pension or retirement plans, agreements or arrangements and other similar fringe
or employee benefit plans, programs or arrangements, and any current or former
employment or executive compensation or severance agreements, written or
otherwise, for the benefit of, or relating to, any current or former employee of
either of the Companies or any trade or business (whether or not incorporated)
which is a member of a controlled group which includes either Company or which
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is under common control with either Company (an "ERISA Affiliate") within the
meaning of Section 414 of the Code, to which either Company or an ERISA
Affiliate is a party, with respect to which either Company or an ERISA Affiliate
has or could have any obligation, as well as each plan with respect to which
either Company or an ERISA Affiliate could incur liability if such plan has been
or were terminated (together, the "Employee Plans"), and a true and correct copy
of each such written Employee Plan has been delivered to Parent.
(b) Except as set forth in Section 2.12(b) of the Company Disclosure
Schedule, (i) none of the Employee Plans promises or provides retiree medical or
other retiree welfare benefits to any person and none of the Employee Plans is a
"multiemployer plan" as such term is defined in Section 3(37) of ERISA; (ii)
there has been no transaction or failure to act with respect to any Employee
Plan, which could result in any material liability of either Company; (iii) all
Employee Plans are in compliance in all material respects with the requirements
prescribed by any and all statutes, orders, or governmental rules and
regulations currently in effect with respect thereto, and each Company has
performed all material obligations required to be performed by it under, is not
in any material respect in default under or violation of, and has no knowledge
of any default or violation by any other party to, any of the Employee Plans
except as to which such non-compliance, non-performance or default would not
result and is not reasonably likely to result in a Material Adverse Effect; (iv)
each Employee Plan intended to qualify under Section 401(a) of the Code is the
subject of a favorable determination letter from the IRS, and nothing has
occurred which may reasonably be expected to impair such determination; (v) all
contributions required to be made to any Employee Plan, pursuant to the terms of
the Employee Plan or any collective bargaining agreement, have been made on or
before their due dates and a reasonable amount has been accrued for
contributions to each Employee Plan for the current plan years; (vi) with
respect to each Employee Plan, no "reportable event" within the meaning of
Section 4043 of ERISA (excluding any such event for which the thirty (30) day
notice requirement has been waived under the regulations to Section 4043 of
ERISA) nor any event described in Sections 4062, 4063 and 4041 of ERISA has
occurred; and (vii) neither of the Companies nor any ERISA Affiliate has
incurred, nor reasonably expects to incur, any liability under Title IV of
ERISA.
(c) Each Employee Plan that is required or intended to be qualified
under applicable law or registered or approved by a governmental agency or
authority, has been so qualified, registered or approved by the appropriate
governmental agency or authority, and nothing has occurred since the date of the
last qualification, registration or approval to adversely affect, or cause the
appropriate governmental agency or authority to revoke, such qualification,
registration or approval.
(d) All contributions (including premiums) required by law or contract
to have been made or approved by either of the Companies under or with respect
to Employee Plans have been paid or accrued by the applicable Company. Except as
disclosed in Section 2.12(d) of the Company Disclosure Schedule, without
limiting the foregoing, there are no material unfunded liabilities under any
Employee Plan.
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(e) There are no pending or, to the knowledge of either Company or any
Holder, threatened investigations, litigation or other enforcement actions
against either of the Companies with respect to any of the Employee Plans.
(f) There are no actions, suits or claims pending or, to the best
knowledge of either Company or any of the Holders, threatened by former or
present employees of either of the Companies (or their beneficiaries) with
respect to Employee Plans or the assets or fiduciaries thereof (other than
routine claims for benefits).
(g) No condition or event has occurred with respect to the Employee
Plans which has or could reasonably be expected to result in a material
liability to either of the Companies.
(h) Except as set forth in Section 2.12(h) of the Company Disclosure
Schedule, neither Company has granted, or adopted any plans providing for the
grant of, any option to purchase any capital stock of either Company.
(i) Each of the Companies has delivered to Parent (i) true and correct
copies of all agreements which it has with any of its employees; (ii) true and
correct copies of all agreements with consultants obligating it to make annual
cash payments in an amount exceeding $10,000; (iii) a schedule listing all of
its employees who have executed a non-competition agreement with it, and (iv)
true and correct copies of all plans, programs, agreements and other
arrangements of such Company with or relating to its employees which contain
change in control provisions or prohibit assignment thereof by the Company
without consent.
Section 2.13 Labor Matters. There are no controversies pending or, to
the knowledge of either Company or any of the Holders, threatened, between
either of the Companies and any of their respective employees, which
controversies have or are reasonably likely to have a Material Adverse Effect;
neither of the Companies is a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by such Company nor
does either Company or any Holder know of any activities or proceedings of any
labor union to organize any such employees; and neither Company nor any Holder
has any knowledge of any strikes, slowdowns, work stoppages, lockouts, or
threats thereof, by or with respect to any employees of either of the Companies.
Section 2.14 Registration Statement. None of the information supplied
or to be supplied by either of the Companies or any of the Holders for inclusion
or incorporation by reference in the Registration Statement does or will, at the
times filed with the SEC or other regulatory agency and when it becomes
effective under the Securities Act of 1933, as amended (the "Securities Act"),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. If at any time prior to the issuance of Parent Common
Stock in accordance with the terms of this Agreement any event occurs which
makes the information so provided by either of the Companies or any of the
Holders untrue or misleading and which should be set forth in an amendment or
supplement to the Registration Statement, the Holders shall promptly inform
Parent and Merger Sub of such occurrence.
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Section 2.15 Restrictions on Business Activities. Except for this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon either Company which has or could reasonably be expected to have
the effect of prohibiting or impairing any material business practice of either
Company, the acquisition of property by either Company or the conduct of
business by either Company as currently conducted or as proposed to be conducted
by the Companies.
Section 2.16 Title to Property. Neither of the Companies owns any real
property. Section 2.16 of the Company Disclosure Statement sets forth a true and
complete list of all real property leased by either of the Companies, and the
aggregate monthly rental or other fee payable under such lease. Each Company has
good, marketable and defensible title to all of their properties and assets,
free and clear of all liens, charges and encumbrances, except liens for taxes
not yet due and payable and such liens or other imperfections of title, if any,
as do not materially detract from the value of or interfere with the present use
of the property affected thereby or which would not and are not reasonably
likely to have a Material Adverse Effect; and to the knowledge of the Companies
and the Holders, all leases pursuant to which either Company leases from others
material amounts of real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, to the
knowledge of the Companies and the Holders, under any of such leases, any
existing material default or event of default (or event which with notice or
lapse of time, or both, would constitute a material default and in respect of
which either of the Companies has not taken adequate steps to prevent such a
default from occurring) except where the lack of such good standing, validity
and effectiveness or the existence of such default or event of default would not
and is not reasonably likely to have a Material Adverse Effect. All the
facilities of each of the Companies are in good operating condition and repair,
except where the failure of such plants, structures and equipment to be in such
good operating condition and repair would not and is not reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect.
Section 2.17 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts and governmental impositions or charges
of any kind in the nature of (or similar to ) taxes, payable to any federal,
state, provincial, local or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes and (ii) interest, penalties, additional taxes and additions to
taxes imposed with respect thereto; and "Tax Returns" shall mean returns,
reports and information statements with respect to Taxes required to be filed
with the United States Internal Revenue Service (the "IRS") or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
(b) Other than as disclosed in Section 2.17(b) of the Company
Disclosure Schedule (which Schedule sets forth each Tax Return not so filed and
the separate amount of each type of Tax payable to any taxing authority), each
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of the Companies, and any consolidated, combined, unitary or aggregate group for
Tax purposes of which either of the Companies is or has been a member, has filed
all United States federal income Tax Returns and all other material Tax Returns
required to be filed by them or any of them on or prior to the date hereof and
will file on or prior to the Effective Time all such Tax Returns required to be
filed on or prior to the Effective Time, and have paid and discharged (or will
pay and discharge prior to the Effective Time) all Taxes shown therein to be due
or are otherwise due to have been paid on an estimated basis and there are no
other Taxes that would be due if asserted by a taxing authority, except such as
are being contested in good faith by appropriate proceedings (to the extent that
any such proceedings are required) or with respect to which a Company is
maintaining on its Balance Sheet, in accordance with generally accepted
accounting principles ("GAAP"), reserves which are adequate for their payment.
Neither the IRS nor any other taxing authority or agency is now asserting or, to
the best of each Company's and each Holder's knowledge, threatening to assert
against either of the Companies any deficiency or claim for additional Taxes
other than additional Taxes with respect to which a Company is maintaining on
its Balance Sheet, in accordance with GAAP, reserves which are adequate for
their payment. To the knowledge of the Companies and the Holders, no Tax Return
of either of the Companies is currently being audited by any taxing authority.
No material tax claim has become a lien on any asset of either of the Companies
and neither of the Companies has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. Neither of the Companies is required to include in income (i) any
material items in respect of any change in accounting principles or any deferred
intercompany transactions, or (ii) any installment sale gain where, in each
case, the inclusion in income would result in a tax liability materially in
excess of the reserves therefor.
(c) Other than as disclosed in Section 2.17(c) of the Company
Disclosure Schedule: (i) neither of the Companies is a party to any agreement,
contract or arrangement that may result, separately or in the aggregate, in the
payment of any "excess parachute payment" within the meaning of Section 280G of
the Code, determined without regard to Section 280(b)(4) of the Code; and (ii)
neither of the Companies has been subject to any accumulated earning tax or
personal holding company tax.
(d) No power of attorney has been granted by either of the Companies
with respect to any matter relating to Taxes which is currently in force.
(e) Except as set forth in Section 2.17(e) of the Company Disclosure
Schedule, neither of the Companies is a party to any agreement or arrangement
(written or oral) providing for the allocation or sharing of Taxes.
(f) Except as set forth in Section 2.17(f) of the Company Disclosure
Schedule, each Company has withheld from each payment made to any of their
respective past or present employees, officers or directors the amount of all
Taxes and other deductions required to be withheld therefrom and paid the same
to the proper tax or other receiving officers within the time required by law.
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(g) Each Company has remitted to the appropriate Tax authority when
required by law to do so all amounts collected by it on account of all retail
sales Tax.
(h) Except as disclosed in Section 2.17(h) of the Company Disclosure
Schedule, there has been no material debt to a third party of either of the
Companies which has been forgiven and which has given rise to (or is expected to
give rise to) "cancellation of indebtedness income" under the provisions of the
Code.
Section 2.18 Environmental Matters.
(a) Except in all cases, in the aggregate, as have not had and could
not reasonably be expected to have a Material Adverse Effect, each of the
Companies (and with respect to clause (iii) below, each Holder) (i) has obtained
all applicable permits, licenses and other authorizations which are required
under federal, state, provincial or local laws relating to pollution or
protection of the environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants or hazardous or
toxic materials or wastes into ambient air, surface water, ground water or land
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants
or hazardous or toxic materials or wastes by either of the Companies (or their
respective agents); (ii) is in compliance with all terms and conditions of such
required permits, licenses and authorization, and also is in compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in such laws or
contained in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder; (iii) as of
the date hereof, is not aware of nor have received notice of any event,
condition, circumstance, activity, practice, incident, action or plan which is
reasonably likely to interfere with or prevent continued compliance with or
which would give rise to any common law or statutory liability, or otherwise
form the basis of any claim, action, suit or proceeding, based on or resulting
from the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge or release into the
environment, of any pollutant, contaminant or hazardous or toxic material or
waste by either of the Companies (or any of their respective agents); (iv) have
taken all actions necessary under applicable requirements of federal, state or
local laws, rules or regulations to register any products or materials required
to be registered by either Company (or any of their respective agents)
thereunder; and (v) has complied with all applicable occupational safety and
health requirements of federal, state or local laws, rules or regulations
relating to the use of storage of any hazardous, toxic or carcinogenic
substances.
(b) Set forth on Section 2.18 of the Company Disclosure Schedule are
all known or suspected environmental conditions or problems at each site of
operation of either Company, including but not limited to the presence of
asbestos (friable or encapsulated), transformers containing PCBs, radon and any
aboveground or underground storage tanks.
(c) None of the sites of operation of either Company is a Superfund
site under the Comprehensive Environmental Response, Cleanup and Liability Act,
42 U.S.C. ss. 9601 et seq. or has been proposed for listing on the National
Priorities List under that Act. Any deed restriction or public notice required
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by any federal, state or local law, rule or regulation because any site of
operation of either Company is contaminated has been complied with, and each
such deed restriction or public notice has been disclosed on Schedule 2.18 of
the Company Disclosure Schedule.
Section 2.19 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of either Company or any of the Holders.
Section 2.20 Full Disclosure. No statement contained herein or in any
certificate or schedule furnished or to be furnished by either Company or any
Holder to Parent or Merger Sub in, or pursuant to the provisions of, this
Agreement contains or shall contain any untrue statement of a material act or
omits or will omit to state any material fact necessary, in the light of the
circumstances under which it was made, to make the statements herein or therein
not misleading.
Section 2.21 Intellectual Property.
(a) Each of the Companies owns, or is licensed or otherwise possesses
legally sufficient rights to use, all patents, trademarks, trade names, service
marks, copyrights and any applications therefor, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are used or proposed to be used in the business of
such Company as currently conducted in any material respect, including, but not
limited to, any such intellectual property utilized in the context of any
infomercials produced by the Companies. Section 2.21(a) of the Company
Disclosure Schedule lists all current and past (lapsed, expired, abandoned or
canceled) patents, registered and material unregistered trademarks and service
marks, registered and material unregistered copyrights, trade names and any
applications therefor owned by either of the Companies (the "Company
Intellectual Property Rights"), and specifies the jurisdictions in which each
such Company Intellectual Property Right has been issued or registered or in
which an application for such issuance and registration has been filed,
including the respective registration or application numbers and the names of
all registered owners. Section 2.21(a) of the Company Disclosure Schedule lists
(i) any requests either of the Companies has received to make any registration
of the type referred to in the immediately preceding sentence, including the
identity of the requestor and the item requested to be so registered, and the
jurisdiction for which such request has been made; (ii) all material licenses,
sublicenses and other agreements as to which either of the Companies is a party
and pursuant to which any person is authorized to use any Company Intellectual
Property Right, or any trade secret material to either of the Companies, and
includes the identity of all parties thereto, a description of the nature and
subject matter thereof, the applicable royalty and the term thereof; and (iii)
all material licenses, sublicenses and other agreements as to which either of
the Companies is a party and pursuant to which either of the Companies is
authorized to use any intellectual property rights ("Third Party Intellectual
Property Rights"), or other trade secret of a third party in or as any product,
and includes the identity of all parties thereto, a description of the nature
and subject matter thereof, the applicable royalty and the term thereof.
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(b) Except as set forth in Section 2.21(b) of the Company Disclosure
Schedule, neither of the Companies is, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any license, sublicense or agreement described in
Section 2.21(a) of the Company Disclosure Schedule. No claims with respect to
the Company Intellectual Property Rights, any trade secret material to either of
the Companies, or Third Party Intellectual Property Rights to the extent arising
out of any use, reproduction or distribution of such Third Party Intellectual
Property Rights by or through either of the Companies, are currently pending or,
to the knowledge of either of the Companies or any Holder are threatened by any
person, nor does either of the Companies or any Holder know of any valid grounds
for any bona fide claims (i) to the effect that the manufacture, sale, licensing
or use of any product (including all infomercials produced by either of the
Companies) as now used, sold or licensed or proposed for use, sale or license by
either of the Companies infringes on any copyright, patent, trademark, service
xxxx or trade secret; (ii) against the use by either of the Companies of any
trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in the business of
either of the Companies as currently conducted or as proposed to be conducted by
either of the Companies; (iii) challenging the ownership, validity or
effectiveness of any of the Company Intellectual Property Rights or other trade
secret material to either of the Companies; or (iv) challenging the license or
legally enforceable right to use of the Third Party Intellectual Property
Rights. To the knowledge of each Company and each Holder, all patents,
registered trademarks, trade names and copyrights held by each of the Companies
are valid and subsisting. Except as set forth in Section 2.21(b) of the Company
Disclosure Schedule, to the knowledge of each Company and each Holder, there is
no material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property Rights by any third party, including any employee
or former employee of either of the Companies.
(c) Except as set forth in Section 2.21(c) of the Company Disclosure
Schedule, neither of the Companies (nor does any Holder in the case of clause
(ii) below) (i) has been sued or charged in writing as a defendant in any claim,
suit, action or proceeding which involves a claim or infringement of trade
secrets, any patents, trademarks, service marks, trade names or copyrights and
which has not been finally terminated prior to the date hereof or been informed
or notified by any third party that either of the Companies may be engaged in
such infringement or (ii) has knowledge of any infringement liability with
respect to, or infringement by, either of the Companies of any trade secret,
patent, trademark, service xxxx, trade names or copyright of another.
(d) Neither of the Companies is aware that any employee of either of
the Companies is obligated under any contract or contracts (including licenses,
agreements, covenants and other commitments of any nature), or is subject to any
order, writ, judgment, injunction, decree, determination or award of any court,
administrative agency or other tribunal, that restricts the employee's
activities on behalf of either of the Companies as presently conducted or
interfere with the use of such employee's best efforts to promote the interests
of such Company.
Section 2.22 Interested Party Transactions. Except as set forth in
Section 2.22 of the Company Disclosure Statement, no director, officer or
employee of either of the Companies and no Holder nor any relative or any
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affiliate of any of the foregoing (i) has any pecuniary interest in, or receives
any compensation for services, from, any supplier, customer, licensor or
licensee of either of the Companies or in any other business enterprise with
which either of the Companies conducts business or with which either of the
Companies is in competition or (ii) is indebted to either of the Companies;
provided, however, that the foregoing representation does not apply to the
ownership by any Holder of up to two percent (2%) of the outstanding equity
securities of any company whose stock is traded on a national securities
exchange or quoted on a national interdealer quotation system. Section 2.22 of
the Company Disclosure Statement sets forth all compensation, paid during the
last twelve months, by the Companies to any Holder and to all relatives and
affiliates of any Holder.
Section 2.23 Insurance. Section 2.23 of the Company Disclosure
Schedule lists all insurance policies, including, but not limited to producers'
errors and omissions polices, and fidelity bonds covering the assets, business,
equipment, properties, operations, employees, officers and directors of either
of the Companies. There is no claim by either of the Companies pending under any
of such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums payable
under all such policies and bonds have been paid and each of the Companies is
otherwise in full compliance with the terms of such policies and bonds. Neither
of the Companies knows of any threatened termination of, or any threatened
material premium increase with respect to, any such policies.
ARTICLE 3.
Representation and Warranties of Parent and Merger Sub
Parent and Merger Sub hereby, jointly and severally, represent and
warrant to the Companies and to each Holder (which representations and
warranties shall be true and correct on the date hereof and at the Effective
Time and, with respect to the representation contained in Section 3.15, shall be
true and correct at such time the Registration Statement is declared effective
by the SEC) that:
Section 3.1 Organization and Qualification. Parent and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority and is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority and Approvals would not and is not reasonably likely to have a
Material Adverse Effect. Parent and each of its subsidiaries is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not and are not reasonably likely to
have a Material Adverse Effect.
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Section 3.2 Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby (subject to the satisfaction
of the conditions to consummation set forth herein) have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. The Board of Directors of Parent has determined that it is
advisable and in the best interest of Parent's stockholders for Parent to enter
into and perform this Agreement. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by each of the Companies and each of the
Holders, constitutes a legal, valid and binding obligation of Parent and Merger
Sub, enforceable against each of them in accordance with its terms, except as
the enforceability thereof may be limited by (i) the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to or affecting the rights and remedies
of creditors generally, and (ii) the effect of general principles of equity,
whether enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought.
Section 3.3 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 3.3(a) of that certain written
disclosure schedule, dated of even date herewith, delivered by Parent and Merger
Sub to the Companies (the "Parent Disclosure Schedule"), the execution and
delivery of this Agreement by Parent and Merger Sub does not, and the
performance of this Agreement by Parent and Merger Sub shall not, (i) conflict
with or violate the Certificate of Incorporation or By-Laws of Parent or Merger
Sub, (ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Parent or any of its subsidiaries or by which its or their
respective properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or impair Parent's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any Material Contract
or any material agreement to which Parent is a party or result in the creation
of a lien or encumbrance on any of the properties or assets of Parent or any of
its subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
are bound or affected, except in any such case for any such breaches, defaults
or other occurrences that would not and is not reasonably likely to have a
Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and Merger
Sub will not require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for the filing and recordation of
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appropriate merger or other documents as required by Nevada Law and Delaware
Law; (ii) for applicable requirements, if any, of the Securities Act and
applicable state securities laws ("Blue Sky Laws") and (iii) where the failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the Merger,
or otherwise prevent Parent or Merger Sub from performing their respective
obligations under this Agreement, and would not and is not reasonably likely to
have a Material Adverse Effect.
Section 3.4 Certificate of Incorporation and By-Laws. Parent has
heretofore furnished to the Companies complete and correct copies of its and
Merger Sub's Certificates of Incorporation and By-Laws, as amended to date
certified as such by Parent's Secretary. Such Certificates of Incorporation and
By-Laws are in full force and effect. Neither Parent nor Merger Sub is in
violation of any of the provisions of its Certificate of Incorporation or
By-Laws or equivalent organizational documents.
Section 3.5 Capitalization. As of September 30, 1995, the authorized
capital stock of Parent consisted of (i) 50,000,000 shares of Parent Common
Stock of which: 14,584,998 shares were issued and outstanding, 686,710 shares
were held in treasury, 2,110,666 shares were reserved for issuance pursuant to
outstanding options under Parent's stock option plans, 7,165,816 shares were
reserved for future issuance pursuant to the exercise or conversion, as
applicable, of other options, warrants and other similar rights to acquire
Parent Common Stock, and 2,557,960 shares were reserved for future issuance with
respect to the conversion of Parent's outstanding Series B Convertible Preferred
Stock; and (ii) 10,000,000 shares of preferred stock, $.01 par value per share
("Parent Preferred Stock"), 255,796 shares of Series B Convertible Preferred
Stock of which were issued and outstanding. The authorized capital stock of
Merger Sub consists of 1,000 shares of common stock, $.01 par value per share,
1,000 shares of which, as of the date hereof, are issued and outstanding. All of
the outstanding shares of Parent's and Merger Sub's respective capital stock
have been duly authorized and validly existing and are fully paid and
nonassessable. Parent owns all of the capital stock of Merger Sub.
Section 3.6 Compliance; Permits.
(a) Except as set forth in Section 3.6(a) of the Parent Disclosure
Schedule, neither Parent nor any of its subsidiaries is in conflict with, in
default with respect to or in violation of (i) any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
its or any of their respective properties is bound or affected or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries is or any
of their respective properties is bound or affected, except for any such
conflicts, defaults or violations which would not and are not reasonably likely
to have a Material Adverse Effect.
(b) Parent and its subsidiaries hold all material permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental authorities which are material to the operation of the
business of Parent and its subsidiaries taken as a whole as it is now being
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conducted (collectively, the "Parent Permits"). Parent and its subsidiaries are
in compliance with the terms of the Parent Permits, except where the failure to
so comply would not and is not reasonably likely to have a Material Adverse
Effect.
Section 3.7 SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents required to be
filed with the SEC, and has heretofore delivered to the Companies, in the form
filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years
ended March 31, 1995 and 1994, and its quarterly report on Form 10-Q for the
fiscal quarter ended June 30, 1995, (ii) all proxy statements relating to
Parent's meetings of stockholders (whether annual or special) held since Xxxxx
00, 0000, (xxx) all other reports or registration statements filed by and on
behalf of Parent with the SEC since March 31, 1995 and (iv) all amendments and
supplements to all such reports and registration statements filed with the SEC
(collectively, the "Parent SEC Reports"). The Parent SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Parent's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports has been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and each
fairly presents the consolidated financial position of Parent and its
subsidiaries at and as of the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or will not be material in amount.
(c) There are no amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements, documents
or other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
Section 3.8 Absence of Certain Changes or Events. Except as set forth
in Section 3.8 of the Parent Disclosure Schedule, since June 30, 1995, Parent
has conducted its business in the ordinary course and there has not occurred:
(i) any Material Adverse Effect; (ii) any amendments or changes in the
Certificate of Incorporation or By-Laws of Parent; (iii) any damages to,
destruction or loss of any assets of the Parent (whether or not covered by
insurance) that could have a Material Adverse Effect; (iv) any revaluation by
Parent of any of its assets, including, without limitation, writing down the
value of capitalized inventory or writing off notes or accounts receivable other
than in the ordinary course of business; or (v) any other action or event that
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would have required the consent of either of the Companies pursuant to Section
4.3 had such action or event occurred after the date of this Agreement.
Section 3.9 Restrictions on Business Activities. Except for this
Agreement and as set forth in Section 3.9 of the Parent Disclosure Schedule,
there is no existing material agreement, judgment, injunction, order or decree
binding upon Parent or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Parent or any of its subsidiaries, any acquisition of property by
Parent or any of its subsidiaries or the conduct of business by Parent or any of
its subsidiaries as currently conducted or as proposed to be conducted by
Parent.
Section 3.10 Title to Property. Except as set forth in Section 3.10 of
the Parent Disclosure Schedule, parent and each of its subsidiaries have good,
marketable and defensible title to all of their properties and assets, free and
clear of all liens, charges and encumbrances except liens for taxes not yet due
and payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which would not and are not reasonably likely to
have a Material Adverse Effect; and, to Parent's knowledge, all leases pursuant
to which Parent or any of its subsidiaries lease from others material amounts of
real or personal property are in good standing, are valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
Parent, under any of such leases, any existing material default or event of
default (or event which, with notice or lapse of time, or both, would constitute
a material default and in respect of which Parent or such subsidiary has not
taken adequate steps to prevent such a default from occurring) except where the
lack of such good standing, validity and effectiveness, or the existence of such
default or event of default would not and is not reasonably likely to have a
Material Adverse Effect.
Section 3.11 Full Disclosure. No statement contained herein or in any
certificate or schedule furnished or to be furnished by Parent or Merger Sub to
either Company or to any Holder in, or pursuant to the provisions of, this
Agreement contains or will contain any untrue statement of a material fact or
omits or shall omit to state any material fact necessary, in the light of the
circumstances under which it was made, to make the statements herein or therein
not misleading.
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Section 3.12 No Undisclosed Liabilities.
(a) Except as is disclosed in Section 3.12 of the Parent Disclosure
Schedule or the Parent SEC Reports, neither Parent nor any of its subsidiaries
has any liabilities (absolute, accrued, contingent or otherwise) which are, in
the aggregate, material to the business, operations or financial condition of
Parent and its subsidiaries taken as a whole, except liabilities (i) adequately
provided for in Parent's balance sheet (including any related notes thereto) as
of June 30, 1995 included in the Parent SEC Reports (the "June 30 Balance
Sheet"), (ii) incurred in the ordinary course of business and not required under
GAAP to be reflected on the June 30 Balance Sheet, or (iii) incurred since June
30, 1995 in the ordinary course of business which would not have a Material
Adverse Effect, and liabilities incurred in connection with this Agreement.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.
Section 3.13 Absence of Litigation. Except as set forth in Section
3.13 of the Parent Disclosure Schedule or as reflected in the Parent SEC
Reports, there are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of Parent, threatened against Parent or any of its
subsidiaries, or any properties or rights of Parent or any of its subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, that could have a Material Adverse
Effect.
Section 3.14 Insurance. Parent and its subsidiaries maintain
directors' and officers' liability, fire and casualty, general liability,
business interruption, product liability and sprinkler and water damage
insurance that Parent believes to be reasonably prudent for its business.
Section 3.15 Registration Statement. Subject to the accuracy of the
representations of the Companies in Section 2.14, the Registration Statement
pursuant to which the Parent Common Stock to be issued in the merger will be
registered with the SEC shall not, at the time the Registration Statement
(including any amendments or supplements thereto) is declared effective by the
SEC, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements included therein, in
light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, Parent makes no representation or warranty with
respect to any information supplied by either Company or any Holder which is
contained in, or furnished in connection with the preparation of the
Registration Statement.
Section 3.16 Taxes. Other than as disclosed on Section 3.16 of
the Parent Disclosure Schedule, Parent and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of which
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Parent or any of its subsidiaries is or has been a member, have filed all United
States federal income Tax Returns and all other material Tax Returns required to
be filed by them or any of them, and have paid and discharged all Taxes shown
therein to be due and there are not other Taxes that would be due if asserted by
a taxing authority, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are required)
or with respect to which Parent is maintaining reserves in accordance with GAAP
in its financial statements to the extent currently required which are in all
material respects adequate for their payment, except, in each instance, to the
extent the failure to do so would not and is not reasonably likely to have a
Material Adverse Effect. Neither the IRS nor any other taxing authority or
agency is now asserting or, to the best of Parent's knowledge, threatening to
assert against Parent or any of its subsidiaries any deficiency or claim for
additional Taxes other than additional Taxes with respect to which Parent is
maintaining reserves in accordance with GAAP in its financial statements which
are in all material respects adequate for their payment, except, in each
instance, to the extent that the failure to do so would not and is not
reasonably likely to have a Material Adverse Effect. Except as set forth in
Section 3.16 of the Parent Disclosure Schedule, no Tax Return of either Parent
or any of its subsidiaries is currently being audited by any taxing authority
except as would not and is not reasonably likely to have a Material Adverse
Effect. Except as set forth in Section 3.16 of the Parent Disclosure Schedule,
no material tax claim has become a lien on any assets of Parent or any
subsidiary thereof and neither Parent nor any of its subsidiaries has, except as
would not and is not reasonably likely to have a Material Adverse Effect,
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax.
Section 3.17 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or Merger Sub.
Section 3.18 No Stockholder Vote. No vote of the stockholders of
Parent is necessary to approve the Merger or the issuance of Parent Common
Stock therein.
Section 3.19 Employee Benefit Plans.
(a) Section 3.19 of the Parent Disclosure Schedule lists all employee
benefit plans (as defined in Section 3(3) of ERISA), regardless of whether ERISA
is applicable thereto, all other bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, medical or life insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement plans
and other similar fringe benefit plans or programs, written or otherwise, for
the benefit of, or relating to, any current employee of Parent or any trade or
business (whether or not incorporated) which is a member of a controlled group
which includes Parent or which is under common control with Parent (an "ERISA
Affiliate of Parent") within the meaning of Section 414 of the Code, to which or
an ERISA Affiliate of Parent is a party, with respect to which Parent or an
ERISA Affiliate of Parent has or could have any obligation, as well as each plan
with respect to which Parent or an ERISA Affiliate of Parent could incur
liability if such plan has been or were terminated (together, the "Parent
Employee Plans"), and a true and correct copy of each such written Parent
Employee Plan has been delivered to the Companies.
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(b) Except as set forth in Section 3.19 of the Parent Disclosure
Schedule, (i) none of the Parent Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person and none of the Parent
Employee Plans is a "multiemployer plan" as such term is defined in Section
3(37) of ERISA; (ii) there has been no transaction or failure to act with
respect to any Parent Employee Plan, which could result in any material
liability of Parent; (iii) all Parent Employee Plans are in compliance in all
material respects with the requirements prescribed by any and all statutes,
orders, or governmental rules and regulations currently in effect with respect
thereto, and Parent has performed all material obligations required to be
performed by it under, is not in any material respect in default under or
violation of, and has no knowledge of any default or violation by any other
party to, any of the Parent Employee Plans except as to which such
non-compliance, non-performance or default would not result and is not
reasonably likely to result in a Material Adverse Effect; (iv) each Parent
Employee Plan intended to qualify under Section 401(a) of the Code is the
subject of a favorable determination letter from the IRS, and nothing has
occurred which may reasonably be expected to impair such determination; (v) all
contributions required to be made to any Parent Employee Plan, pursuant to the
terms of the Parent Employee Plan or any collective bargaining agreement, have
been made on or before their due dates and a reasonable amount has been accrued
for contributions to each Parent Employee Plan for the current plan years; (vi)
with respect to each Parent Employee Plan, no "reportable event" within the
meaning of Section 4043 of ERISA (excluding any such event for which the thirty
(30) day notice requirement has been waived under the regulations to Section
4043 of ERISA) nor any event described in Sections 4062, 4063 and 4041 of ERISA
has occurred; and (vii) neither Parent nor any ERISA Affiliate of Parent has
incurred, nor reasonably expects to incur, any liability under Title IV of
ERISA.
(c) Each Parent Employee Plan that is required or intended to be
qualified under applicable law or registered or approved by a governmental
agency or authority, has been so qualified, registered or approved by the
appropriate governmental agency or authority, and nothing has occurred since the
date of the last qualification, registration or approval to adversely affect, or
cause the appropriate governmental agency or authority to revoke, such
qualification, registration or approval.
(d) All contributions (including premiums) required by law or contract
to have been made or approved by Parent under or with respect to Parent Employee
Plans have been paid or accrued by Parent. Except as disclosed in Section
3.19(d) of the Parent Disclosure Schedule, without limiting the foregoing, there
are no material unfunded liabilities under any Parent Employee Plan.
(e) There are no pending or, to the knowledge of Parent, threatened
investigations, litigation or other enforcement actions against Parent with
respect to any of the Parent Employee Plans.
(f) There are no actions, suits or claims pending or, to the best
knowledge of Parent, threatened by former or present employees of Parent (or
their beneficiaries) with respect to Parent Employee Plans or the assets or
fiduciaries thereof (other than routine claims for benefits).
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(g) No condition or event has occurred with respect to the Parent
Employee Plans which has or could reasonably be expected to result in a material
liability to Parent.
ARTICLE 4.
Conduct of Business Pending the Merger
Section 4.1 Conduct of Business by the Companies Pending the Merger.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, each Company
covenants and agrees that, unless Parent shall otherwise agree in writing, such
Company shall conduct its business only in, and such Company shall not take any
action except in, the ordinary course of business; and such Company shall use
reasonable commercial efforts to (i) preserve substantially intact its business
organization, (ii) pay its trade payables and other liabilities in accordance
with their terms as they became due, (iii) collect its receivables and other
claims in full in accordance with their terms, as they become due, (iv) keep
available the services of each of its present officers, employees and
consultants, (v) take all reasonable action in the ordinary course of business
necessary to prevent the loss, cancellation, abandonment forfeiture or
expiration of any Company Intellectual Property, and (vi) preserve each of its
present relationships with customers, suppliers and other persons with which
such Company has significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement, neither of the Companies
shall, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, directly
or indirectly do, or propose to do, any of the following without the prior
written consent of Parent:
(a) amend or otherwise change its Articles of Incorporation or
By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of its capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind (including Stock Purchase Rights) to acquire any shares of
its capital stock, or any other ownership interest (including, without
limitation, any phantom interest) of either of the Companies;
(c) sell, lease, assign, transfer, pledge, dispose of or encumber any
of its assets (whether real, personal or intellectual property) (except for (i)
sales of assets in the ordinary course of business; and (ii) dispositions of
obsolete or worthless assets).
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) amend the terms of, repurchase, redeem or otherwise
acquire for value, any of its securities, or propose to do any of the foregoing;
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(e) sell, transfer, license, sublicense or otherwise dispose of any
Company Intellectual Property Rights, or amend or modify any existing agreements
with respect to any Company Intellectual Property Rights or Third Party
Intellectual Property Rights, other than nonexclusive licenses in the ordinary
course of business;
(f) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) incur any indebtedness for borrowed money or representing the
deferred purchase price of any property or assets or issue debt securities or
assume, guarantee or endorse or otherwise as an accommodation become responsible
for, the obligations of any person, or make any loans or advances to or
investments in any person, except in the ordinary course of business; (iii)
create, incur, assume or suffer to exist, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind or nature upon its property or
assets, income or profits, whether now owned or hereafter acquired; (iv) assume,
guarantee, endorse or otherwise in anyway be or become responsible or liable
for, directly or indirectly, any contingent obligation; (v) enter into or amend
any contract or agreement other than in the ordinary course of business; (vi)
authorize any capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of $10,000 for the Companies, taken as a whole; (vii) enter
into any agreement or become liable under any agreement for the lease, hire or
use of any real or personal property; or (viii) enter into or amend any
contract, agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 4.1(f);
(g) increase the compensation payable or to become payable to any of
their officers or employees (except for such increases as may be set forth in
the employment agreements for each of the Holders attached hereto as Exhibits
A-C) or grant any severance or termination pay to, or enter into any employment
or severance agreement with, any director, officer or other employee of either
of the Companies, or establish, adopt, enter into or amend any Employee Plan;
(h) take any action, other than as required by GAAP, to change
accounting policies or procedures (including, without limitation, procedures
with respect to revenue recognition, payments of accounts payable and collection
of accounts receivable);
(i) make any material Tax election inconsistent with past practices or
settle or compromise any material, federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations for any
assessment of any Tax, except to the extent the amount of any such settlement
has been reserved for on the Balance Sheet of such Company;
(j) pay, discharge or satisfy any principal of any debt with a
maturity of more than one year, for borrowed money or for the deferred purchase
price of property or services, except at the stated maturity of such debt or as
required by mandatory prepayment provisions relating thereto (subject to any
subordination provisions applicable thereto); or amend any provision pertaining
to the subordination or the terms of payment of any debt;
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(k) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) other than
debt with a maturity of more than one year for borrowed money or for the
deferred purchase price of property or services, other than the payment,
discharge or satisfaction in the ordinary course of business of liabilities
reflected or reserved against on the Balance Sheet of such Company or incurred
in the ordinary course of business;
(l) liquidate or dissolve itself (or suffer any liquidation or
dissolution); or
(m) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through (l) above, or any action which would make
any of the representations or warranties contained in Article 2 of this
Agreement untrue or incorrect or prevent either Company from performing or cause
either Company not to perform its covenants hereunder or result in any of the
conditions to the Merger set forth herein not being satisfied.
Section 4.2 No Solicitation or Sale of Capital Stock.
(a) Each Company and each Holder agrees that neither it nor any of
their respective officers or directors shall, and each Company and each Holder
shall direct and use their best efforts to cause the employees, agents,
directors and representatives of each Company and of each Holder (including,
without limitation, any attorney or accountant retained by any of them) not to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making of any proposals or offers (including, without limitation, any proposals
or offers to stockholders of either Company) with respect to a merger,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, either Company or
a change in composition of a majority of directors on the Board of Directors of
either Company (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal.
(b) Each Company and each Holder (to the extent such Holder is aware
of such Acquisition Proposal) shall immediately notify Parent after receipt of
any Acquisition Proposal or any request for information relating to either of
the Companies in connection with an Acquisition Proposal or for access to the
properties, books or records of either of the Companies by any person or entity
that informs such Company or such Holder that it is considering making, or has
made, an Acquisition Proposal. Such notice to Parent shall be made orally and in
writing and shall indicate in reasonable detail the identity of the offeror and
the terms and conditions of such proposal, inquiry or contact.
(c) Each Company shall ensure that its officers, directors and
employees, and each Company and each Holder shall ensure that its or his
advisors and representatives are aware of the restrictions described in this
Section, and shall be responsible for any breach of this Section 4.2 by such
officers, directors, employees, advisors or representatives.
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(d) No Holder shall sell, transfer, pledge or otherwise dispose of any
of his shares or any rights therein prior to the Effective Time or earlier
termination of this Agreement other than for transfers to existing directors or
employees of or consultants to one or both of the Companies and provided that
any such transferee enters into an agreement with Parent at the time and as an
inducement for such transfer, in form and substance reasonably satisfactory to
Parent, agreeing to cooperate in all respects with the completion of the Merger.
Section 4.3 Conduct of Business by Parent Pending the Merger. During
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, Parent covenants and
agrees that, unless both Companies shall otherwise agree in writing, other than
actions taken by Parent or its subsidiaries in contemplation of the Merger,
neither Parent nor Merger Sub shall directly or indirectly do, or propose to
take or agree in writing or otherwise to take any action which would prevent
Parent from performing or cause Parent not to perform its obligations hereunder.
ARTICLE 5.
Additional Covenants
Section 5.1 Registration Under the Securities Act.
(a) Parent shall use its best efforts to file, as promptly as
practicable after the execution of this Agreement (but in no event later than
the fifth business day following the Effective Time), and to cause to become
effective as soon thereafter as is reasonably practicable, a registration
statement on Form S-3 (together with all supplements and amendments thereto, the
"Registration Statement") with the SEC covering the public resale by the
recipients of the Parent Common Stock issuable to them hereunder as Merger
Consideration.
(b) Parent shall pay all Registration Expenses (as defined below) in
connection with the registration contemplated by this Section 5.1. Each selling
shareholder shall pay all underwriting and selling discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such
shareholder's shares of Parent Common Stock pursuant to the Registration
Statement. For purposes of this Agreement, "Registration Expenses" shall mean
any and all expenses incurred by Parent incident to the performance of or
compliance by Parent with this Section 5.1, including all SEC, stock exchange or
NASD registration and filing fees, all fees and expenses incurred in connection
with compliance with state securities or "blue sky" laws (including reasonable
fees and disbursements of Parent's counsel), all fees and expenses incurred in
connection with the preparation and printing of the Registration Statement and
the related prospectus and the fees and disbursements of Parent's counsel and
independent public accountants, but excluding fees of counsel to the selling
shareholders and underwriting and selling discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such selling shareholders'
shares of Parent Common Stock pursuant to the Registration Statement.
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(c) In connection with the obligations of Parent under this Section
5.1, Parent shall:
(i) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
(x) keep such Registration Statement effective for the applicable period under
this Agreement and (y) cause each prospectus included as part of such
Registration statement (a "Prospectus") to be supplemented by any required
prospectus supplement and, as so supplemented, to be filed pursuant to rule 424
under the Securities Act and (z) keep each Prospectus current during the period
described under Section 4(3) and Rule 174 under the Securities Act that is
applicable to transactions by brokers or dealers with respect to the securities
covered by such Prospectus;
(ii) furnish to each selling shareholder, without
charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto and such other documents as
such Holder may reasonably request, in order to facilitate the public sale or
other disposition of the Parent Common Stock covered by the Registration
Statement;
(iii) use its reasonable best efforts to register or
qualify the Parent Common Stock covered by the Registration Statement under all
applicable Blue Sky Laws of such jurisdictions as any selling shareholder with
Parent Common Stock covered by the Registration Statement shall reasonably
request in writing by the time the Registration Statement is declared effective
by the SEC; provided, however, that Parent shall not be required to (x) qualify
as a foreign entity or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 5.1(c)(iii), (y)
file any general consent to service of process or (z) subject itself to taxation
in any such jurisdiction if it is not so subject.
(iv) notify each selling shareholder (v) when the
Registration Statement has become effective and when any post-effective
amendments and supplements thereto have been filed and become effective, (w) of
any request by the SEC or any state securities authority for amendments and
supplements to the Registration Statement and related Prospectus or for
additional information after the Registration Statement has become effective,
(x) of the issuance by the SEC or any state securities authority of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (y) of the happening of any
event which makes any statement made in the Registration Statement or the
related Prospectus untrue in any material respect or which requires the making
of any changes in the Registration statement or Prospectus in order to make the
statements therein not misleading and (z) of any determination by the Parent
that a post-effective amendment to the Registration Statement would be
appropriate;
(v) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement at the earliest possible moment and provide prompt notice to each
selling shareholder of the withdrawal of any such order;
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(d) Parent may require each selling shareholder to furnish to Parent
such information regarding the selling shareholder and the proposed distribution
by such selling shareholder of Parent Common Stock covered by the Registration
Statement as Parent may from time to time reasonably request in writing. Each
such selling shareholder shall provide Parent with any such information within
five business days after such information is requested and shall provide to
Parent, within five business days after such selling shareholder receives a
draft of the Registration Statement or amendment thereto in which such
information is included, comments on such Registration Statement or amendment
thereto. Parent agrees to supplement or amend the Registration statement, if
required by the rules, regulations or instructions applicable to the
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration or if reasonably requested by a
selling shareholder with respect to information relating to such selling
shareholder in order to accurately reflect information regarding such selling
shareholder or such selling shareholder's plan of distribution as required by
the Registration Statement, and to use its best efforts to cause any such
amendment to become effective and such Registration Statement to become usable
as soon as thereafter practicable. Parent agrees to furnish to the selling
shareholders copies of any such supplement or amendment promptly after its being
made available for use or filed with the SEC.
(e) Each selling shareholder agrees that, upon receipt of any notice
from Parent of the happening of any event of the kind described in Section
5.1(c)(iv)(x)(y) or (z) hereof, such selling shareholder will forthwith
discontinue disposition of Parent Common Stock pursuant to the Registration
Statement until such selling shareholder's receipt of the copies of the
supplemented or amended Prospectus and, if so directed by Parent, such selling
shareholder will deliver to Parent (at its expense) all copies in its
possession, other than permanent file copies then in such selling shareholder's
possession, of the Prospectus current at the time of receipt of such notice.
(f) (i) Parent agrees to indemnify and hold harmless, each selling
shareholder from and against any and all losses, claims, damages, liabilities
and expenses (including, without limitation, any legal or other expenses
reasonably incurred by such selling shareholder in connection with defending or
investigating any such action or claim) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus, or caused by any omission or alleged omission to
state therein a material fact necessary to make the statements therein in light
of the circumstances under which they were made not misleading, except insofar
as such losses, claims, damages, liabilities or expenses arise out of or are
based upon any untrue statement or omission or alleged untrue statement or
omission which has been made therein or omitted therefrom in reliance upon and
in conformity with information relating to any selling shareholder furnished to
parent by a selling shareholder for use therein; provided, however, that the
indemnification provided for in this paragraph shall not inure to the benefit of
any selling shareholder with respect to any sale or disposition of Parent Common
Stock by such selling shareholder in violation of Section 5.1(e) hereof or his
employment agreement.
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(ii) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless Parent, each other selling shareholder, each
director and officer of Parent and each person, if any, who controls Parent
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act or is under common control with or is controlled by Parent to
the same extent as the foregoing indemnity from Parent to the selling
shareholders.
(iii) If any action, suit or proceeding shall be
instituted involving any person in respect of which such person is entitled to
indemnity pursuant to either paragraph (i) or (ii) above, such person (the
"indemnified party") shall promptly notify the parties against whom
indemnification is being sought (each an "indemnifying party") and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such indemnified party, shall
have the right to counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (x) the indemnifying parties have
agreed in writing to pay such fees and expenses, (y) the indemnifying parties
shall have failed to assume the defense and employ counsel or (z) the named
parties to any such action, suit, or proceeding (including any impleaded
parties) include both such indemnifying parties and such indemnified party and
such indemnified party shall have been advised by its counsel that
representation of such indemnified party and any indemnifying party by the same
counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed due to actual or potential differing interests between them (in which
case the indemnifying parties shall not have the right to assume the defense of
such action, suit or proceeding on behalf of the indemnified party)). It is
understood, however, that the indemnifying parties shall, in connection with any
one such action, suit or proceeding, or substantially similar action, suit or
proceeding or related actions, suits or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys (in addition
to any local counsel) at any time for all of the Holders. The indemnifying
parties shall not be liable for any settlement of any action, suit or proceeding
effected without their written consent, but if settled with such written consent
or if there be a final judgment for the plaintiff, the indemnifying parties
agree to indemnify and hold harmless the indemnified party from and against any
loss, action, damage, liability or expense by reason of such settlement or
judgment.
(iv) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are subject matter of such action, suit or proceeding.
(g) The Holders acknowledge that Parent has granted certain of its
securityholders the right to include additional shares of Parent Common Stock in
the Registration Statement.
Section 5.2 Access to Information. Each Company shall afford to the
officers, employees, accountants, counsel and other representatives of Parent,
reasonable access, during the period prior to the Effective Time, to all its
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properties, books, contracts, commitments and records and, during such period,
each Company shall furnish promptly to Parent all information concerning its
business, properties and personnel as Parent may reasonably request, and each
Company shall make available to Parent the appropriate individuals (including
attorneys, accountants and other professionals) for discussion of its business,
properties and personnel as Parent may reasonably request. Parent and Merger Sub
acknowledge and agree that all such information shall be maintained in strict
confidence and may not be used for any purpose other than to facilitate the
Merger.
Section 5.3 Consents; Approvals. Each Company, each Holder and Parent
shall each use their best efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States and
foreign governmental and regulatory rulings and approvals), and each Company,
each Holder and Parent shall make all filings (including, without limitation,
all filings with United States and foreign governmental or regulatory agencies)
required in connection with the authorization, execution and delivery of this
Agreement by the Companies, the Holders and Parent and the consummation by them
of the transactions contemplated hereby.
Section 5.4 Notification of Certain Matters. Each Company and each
Holder shall give prompt notice to Parent, and Parent shall give prompt notice
to each of the Companies and to each Holder of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate, and (ii) any failure of such Company, Parent or Merger
Sub, as the case may be, materially to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it or him hereunder;
provided, however, that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 5.5 Further Action. Upon the terms and subject to the
conditions hereof, each of the parties hereto in good faith shall use all
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, to obtain in a timely manner all necessary
filings, and to otherwise satisfy or cause to be satisfied all conditions
precedent to its obligations under this Agreement.
Section 5.6 Public Announcements. Parent shall not, without the prior
consent of the Companies (and after consultation with the Holders), issue any
press release or otherwise make any public statements with respect to the Merger
or this Agreement except to the extent advisable under the federal securities
laws (which determination shall be made in consultation with Parent's counsel)
and the Companies and/or the Holders shall not issue any such press release or
make any such public statement without the prior consent of Parent.
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Section 5.7 Listing of Parent Common Stock. Parent shall use its
reasonable best efforts to cause the shares of Parent Common Stock to be
issuable as Merger Consideration hereunder to be approved for listing on the New
York Stock Exchange as soon as practicable after the Effective Time. Within five
(5) business days following the Effective Time, Parent shall file an application
with the New York Stock Exchange to have the Parent Common Stock issuable as
Merger Consideration hereunder be approved for listing (subject to notice of
issuance) on the New York Stock Exchange.
Section 5.8 Conveyance Taxes. Parent, the Companies and the Holders
shall cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Time.
ARTICLE 6.
Conditions to the Merger
Section 6.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by any administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; and there shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal;
(b) Each of the Holders shall have entered into an employment
agreement with the Surviving Corporation substantially on the terms contained in
the form of employment agreement for such Holder attached as either Exhibit A,
Exhibit B or Exhibit C, as the case may be.
Section 6.2 Additional Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions.
(a) Representations and Warranties. The representations and warranties
of each of the Companies and each of the Holders contained in this Agreement
(together with the Company Disclosure Schedule) shall be true and correct in all
respects on and as of the Effective Time, except for (i) changes contemplated by
this Agreement, (ii) those representations and warranties which address matters
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only as of a particular date (which shall remain true and correct as of such
date) and (iii) instances where the failure to be true and correct would not and
is not reasonably likely to have a Material Adverse Effect on the Companies,
with the same force and effect as if made on and as of the Effective Time, and
Parent and Merger Sub shall have received a certificate to such effect signed by
the President, Chairman and Chief Financial Officer of each Company and each
Holder.
(b) Agreements and Covenants. Each Company and each Holder shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Effective Time, and Parent and Merger Sub shall have received a certificate
to such effect signed by the President, Chairman and Chief Financial Officer of
each Company and each Holder;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required or advisable (in Parent's discretion) to be
obtained, and all filings required to be made, by the Companies for the
authorization, execution and delivery of this Agreement and the consummation by
them of the transactions contemplated hereby shall have been obtained or made by
the Companies. At the Effective Time, each of the Companies shall deliver to
Parent and Merger Sub copies of the resolutions adopted by the shareholders and
board of directors of such Company approving the Merger and the other
transactions contemplated hereby, certified by the Secretary of such Company as
being in full force and effect and not modified in any manner whatsoever;
(d) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any governmental
authority or administrative agency before any governmental authority,
administrative agency or court of competent jurisdiction, in either case,
seeking to prohibit or limit Parent from exercising all material rights and
privileges pertaining to its ownership of the Surviving Corporation or the
ownership or operation by Parent or any of its subsidiaries of all or a material
portion of the business or assets of Parent or any of its subsidiaries, or
seeking to compel Parent or any of its subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of Parent or any
of its subsidiaries, as a result of the Merger or the transactions contemplated
by this Agreement;
(e) Material Adverse Change. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance affecting the business,
results of operations or financial condition of either Company having or
reasonably likely to have a Material Adverse Effect;
(f) Legal Opinion. Parent shall have received an opinion, dated the
Effective Date, from Xxxxx & Xxxxxxx L.L.P. counsel to each of the Companies,
substantially in the form of, and covering such matters as are set forth in,
Exhibit F hereto;
(g) Consent. Parent shall have received the consent of Meridian Bank
to the transactions contemplated by this Agreement and such consent shall not be
conditioned upon the performance by Parent or any of its subsidiaries of any
material act or obligation;
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(h) Private Placement Representations. Parent shall have received a
certificate dated as of the Effective Time from each Holder, substantially in
the form of Exhibit G hereto, to ensure that the issuance of Parent Common Stock
as Merger Consideration hereunder will be a valid private placement under
Section 4(2) of the Securities Act and will not require any filings to be made
with any state securities regulatory authority under any Blue Sky Laws;
(i) Other Certificates. The Companies and the Holders shall have
furnished Parent such other certificates and documents as Parent shall have
reasonably requested;
(j) Employment Matters. All unliquidated claims which may arise under,
and/or all material ambiguities contained in, any agreement either Company may
have with any of its employees or consultants (the determination of whether any
such unliquidated claim or ambiguity exists is to be made by Parent in its
reasonable discretion) shall be clarified and satisfied to the reasonable
satisfaction of Parent, and no such clarification shall result in any additional
material obligation on the part of the Surviving Corporation or Parent;
(k) All holders of Shares at the Effective Time (other than the
Holders) shall have delivered to Parent, in form and substance reasonably
satisfactory to Parent, documentation to the effect that they (i) have had an
opportunity to review the terms of the Merger; (ii) acquired their shares with
complete knowledge of the transactions contemplated hereby; (iii) will comply
with the provisions of Section 1.7 and Article 5 hereof as if they were named a
Holder herein; and (iv) such other matters as Parent may reasonably request; and
(l) Surety Agreement. Xxxxx shall have delivered to the Surviving
Corporation a Surety Agreement substantially in the form of, and covering the
matters set forth in, the Form of Surety Agreement attached hereto as Exhibit X.
Xxxxx hereby undertakes to cause Xxxxx Xxxxx to execute and deliver to the
Surviving Corporation a promissory note in the amount of $32,000 (in form and
substance reasonably satisfactory to Parent) within thirty (30) days of the date
of this Agreement.
(m) Working Capital. The amount by which the aggregate amount of the
current assets of the Companies exceeds the aggregate amount of the current
liabilities of the Companies as of the Closing Time (which amounts shall be
determined in accordance with GAAP and as if the Companies have (if they have
not) complied fully with all of their covenants contained in this Agreement
(including, without limitation, their covenants contained in Section 4.1
hereof)) shall be equal to or greater than $275,000.
Section 6.3 Additional Conditions to Obligation of the Companies and
the Holders. The obligation of each of the Companies and each Holder to effect
the Merger is also subject to the following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub contained in this Agreement (together with the Parent
Disclosure Schedule) shall be true and correct in all respects on and as of the
Effective Time, except for (i) changes contemplated by this Agreement, (ii)
those representations and warranties which address matters only as of a
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particular date (which shall remain true and correct as of such date) and (iii)
instances where the failure to be true and correct would not and is not
reasonably likely to have a Material Adverse Effect on Parent and Merger Sub,
with the same force and effect as if made on and as of the Effective Time, and
the Company shall have received a certificate to such effect signed by the
President and Chief Financial Officer of Parent;
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, and such Company and such Holder shall have received a
certificate to such effect signed by the President and Chief Financial Officer
of Parent;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by Parent and Merger Sub for the authorization, execution and delivery of
this Agreement and the consummation by them of the transactions contemplated
hereby shall have been obtained or made by Parent and Merger Sub. At the
Effective Time, each of Parent and Merger Sub shall deliver to the Companies and
to the Holders copies of the resolutions adopted by Parent and Merger Sub
approving the Merger and the other transactions contemplated hereby certified by
the Secretary of Parent or Merger Sub, as the case may be, as being in full
force and effect and not modified in any manner whatsoever;
(d) Material Adverse Change. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance in the business, results
of operations or financial condition of Parent or any subsidiary of Parent
having or reasonably likely to have a Material Adverse Effect; and
(e) Legal Opinion. The Holders shall have received an opinion, dated
the Effective Date, from Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx, counsel to
Parent and Merger Sub, that upon delivery of the Parent Common Stock as Merger
Consideration in accordance with the terms of this Agreement, such Parent Common
Stock will be duly authorized, validly issued, fully paid and nonassessable.
(f) Parent Common Stock Certificates. Parent shall have tendered for
delivery to each holder of Shares set forth on Exhibit E certificates
representing the number of shares of Parent Common Stock set forth next to such
holders name on Exhibit E.
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ARTICLE 7.
Termination
Section 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Companies:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Companies; or
(b) by either Parent or either of the Companies if the Merger shall
not have been consummated by December 31, 1995 (provided that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the,
in full or in part, cause of or resulted in, in full or in part, the failure of
the Merger to occur on or before such date); or
(c) by Parent or either of the Companies if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a non-appealable final order, decree or ruling or taken any
other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; or
(d) by Parent or either of the Companies, upon a breach of any
representation, warranty, covenant or agreement on the part of either Company or
any Holder (in the case of a termination by Parent) or Parent and Merger Sub (in
the case of a termination by either Company), respectively, set forth in this
Agreement or if any representation or warranty of either of the Companies, any
Holder or Parent and Merger Sub, respectively, shall have become untrue, in
either case, such that the conditions set forth in Section 6.2(a) or 6.2(b), or
Section 6.3(a) or 6.3(b), would not be satisfied (a "Terminating Breach");
provided that, if such Terminating Breach is curable prior to the expiration of
30 days from its occurrence (but in no event later than December 31, 1995) by
Parent or such Company, as the case may be, through the exercise of its
reasonable best efforts and for so long as Parent, such Company or such Holder,
as the case may be, continues to exercise such reasonable best efforts, neither
Company nor Parent, respectively, may terminate this Agreement under this
Section 7.1(d) unless such 30- day period expires without such Terminating
Breach having been cured.
Section 7.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
null and void and there shall be no liability on the part of any party hereto or
any of its affiliates, directors, officers or stockholders except (i) as set
forth in Section 7.3, Article 8 and Section 9.8 hereof, and (ii) nothing herein
shall relieve any party from liability for any willful breach hereof (provided
that any fee paid by either of the Companies pursuant to Section 7.3(b) hereof
shall be credited towards any such liability of either of the Companies or the
Holders).
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Section 7.3 Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred by the Companies or Parent in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated.
(b) The Companies hereby jointly and severally agree to pay Parent a
fee of Two Hundred and Ten Thousand ($210,000.00) Dollars if either (i) this
Agreement is terminated by Parent pursuant to Section 7.1(d) or (ii) this
Agreement is terminated (other than as set forth in clause (i) or by one or both
Companies pursuant to Section 7.1(d) hereof) and an agreement or agreements are
entered into prior to March 1, 1996 providing for, in one or a series of related
transactions, the sale of substantially all of the assets of either Company or
capital stock representing a majority of the voting stock or equity interests of
either Company. The fee payable pursuant to this Section 7.3(b), shall be paid
within one business day after the termination of this Agreement by Parent or the
date such agreement is entered into, as the case may be. Notwithstanding
anything herein to the contrary, in no event shall either Company be required to
pay any fee pursuant to this Section 7.3(b) if, immediately prior to the
termination of the Agreement, Parent is in material breach of its obligations
under this Agreement.
ARTICLE 8.
Survival of Representations and Warranties; Indemnification
Section 8.1 Survival. All statements contained in any certificate or
other instrument delivered by or on behalf of either of the Companies, any of
the Holders or Parent pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement shall be considered representations
and warranties by such Company, Holder, Parent or Merger Sub with the same force
and effect as if contained in this Agreement. All representations, warranties,
covenants and agreements by either of the Companies, any Holder, Parent or
Merger Sub shall survive the Effective Time for a period of two years after the
Effective Time (provided that the representations, warranties covenants and
agreements contained in Sections 2.9 and 2.17 and this Article 8 (including,
without limitation, Section 8.2(a)(ii)) in so far as they relate to any Tax
shall survive until the expiration of the applicable statute of limitation for a
claim by the applicable taxing authority for such Tax) notwithstanding any
investigation at any time by or on behalf of any party to which such
representation or warranty was given, and shall not be considered waived by the
consummation of the Merger contemplated by this Agreement with knowledge of any
breach or misrepresentation by any of the parties hereto.
Section 8.2 Indemnification.
(a) Each of the Holders shall jointly and severally indemnify and hold
harmless Parent and the Surviving Corporation against all loss, liability,
damage or expense (including reasonable fees and expenses of counsel in any
matter, whether involving a third party or between the indemnifying or
indemnified parties) Parent or Surviving Corporation may suffer, sustain or
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become subject to as a result of (i) any breach by such Holder or a Company of
any of its or his representations, warranties, covenants or other agreements
contained in this Agreement, (whether or not Parent or the Surviving Corporation
had knowledge, at or prior to the Effective Time, of the breach), (ii) the
failure by the Companies to pay, perform or discharge prior to the Effective
Time any Company Liabilities (other than the Assumed Liabilities), (iii) any
liability or obligation arising prior to the Effective Time, or after the
Effective Time as a result of events occurring prior to the Effective Time, from
or in connection with the violation of any federal, state or local statute, rule
or regulation, decree or ordinance applicable to either of the Companies, (iv)
any other claim (other than the Assumed Liabilities), whether made before or
after the date of this Agreement, or any litigation, proceeding or governmental
investigation, whether commenced before or after the date of this Agreement
(including, without limitation, any claims or costs associated with those
certain litigation matters captioned Alternative Pioneering Systems, Inc. v.
Direct Innovative Products, Inc., et al., Xxxxxxx X. XxXxxxxx v. Xxxx X. Xxxxx,
et al., and Lifequest, Inc. x. Xxxxx-Xxxxxx Corp., et al. (collectively, the
"Litigation")), arising out of the operations of either of the Companies prior
to the Effective Time (regardless of whether or not referred to on a schedule to
this Agreement or otherwise disclosed or known to Parent as of the date of this
Agreement), or (v) any claim by any person that the Merger Consideration payable
hereunder should have been paid in a manner inconsistent with the manner set
forth in Exhibit E. Notwithstanding the foregoing, (w) neither Xxxxxxx nor
Xxxxxxx shall have any indemnification obligations under clause (i), (ii), (iii)
or (iv) of this Section 8.2(a) as a result of breaches, failures, liabilities or
obligations by or on behalf of CPG or claims against CPG, (x) no Holder shall
have any indemnification obligation for (I) any claim or liability to the extent
covered by insurance maintained by Parent or the Surviving Corporation or
arising out of an infomercial produced on behalf of Parent or any of its
subsidiaries or (II) any payment made in settlement of a claim that is disputed
by the Holders (unless the Holders consent to the settlement, which consent
shall not be unreasonably withheld), (y) the maximum aggregate amount that any
Holder shall be required to pay Parent and Surviving Corporation hereunder
(other than on account of any breach, failure, liability, obligation or claim
known to such Holder as of the Effective Time) shall be equal to the number
obtained by multiplying $1,000,000 by that percentage (the "Indemnification
Percentage") set forth next to such Holder's name on Exhibit H attached hereto
and (z) no Holder shall be required to pay Parent or Surviving Corporation any
amount hereunder until the aggregate amount of all claims by Parent and
Surviving Corporation hereunder exceeds $50,000 (at which time all amounts in
excess of the first $50,000 of claims hereunder shall be payable in accordance
with the terms of this Article 8).
(b) Each of the Holders shall reimburse the Company for the amount, if
any, that is equal to the Deficiency multiplied by such Holder's Indemnification
Percentage. For purposes of this Agreement, a "Deficiency" shall mean the
amount, if any, by which the consolidated working capital of the Companies as of
the Closing Time (determined in accordance with GAAP) is less than $275,000;
provided, however, that the Holders shall not have any obligation under this
subparagraph for (i) the first $25,000 of any Deficiency attributable to the
difference between the actual amount of any of the Companies' current assets or
current liabilities (other than liabilities for Taxes) as of the Closing Time
and the amount of such assets or liabilities as set forth on the Pro Forma
Balance Sheet and (ii) the first $25,000 of any Deficiency attributable to the
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difference between the aggregate amount of the Companies' actual current
liabilities for Taxes as of the Closing Time and the aggregate amount of the
Companies' current liabilities for Taxes as set forth on the Pro Forma Balance
Sheet. All disputes with respect to the amount of any of the Companies' current
assets or current liabilities as of the Closing Time shall be determined by
Parent's regularly engaged independent accountants, whose determination shall be
final and binding on the parties hereto. Parent's sole source for recovering any
amounts payable by a Holder to Parent hereunder shall be to offset such amounts
against any amounts payable to Holder pursuant to Section 1.6(e) hereof or
pursuant to any bonus on other management incentive plan maintained by either
Parent or the Surviving Corporation, the source of such recovery to be in the
sole and absolute discretion of Parent. In the event Parent elects to recover
such amounts against the amount payable to such Holder pursuant to Section
1.6(e) hereof, the amount of such recovery shall be determined by multiplying
the number of shares of Parent Common Stock not delivered to such Holder as a
result of this paragraph multiplied by the Average Closing Price.
(c) Parent and the Surviving Corporation shall jointly and severally
indemnify and hold harmless each Holder against all loss, liability, damage or
expense (including reasonable fees and expenses of counsel in any matter,
whether involving a third party or between the indemnifying and indemnified
parties) such Holder may suffer, sustain or become subject to as a result of any
breach of any warranties, covenants or other agreements contained in this
Agreement or any misrepresentation by Parent or Merger Sub, or as a result of
any of Parent's or Merger Sub's representations or warranties not being true and
correct as of the Effective Time (whether or not such Holder had knowledge,
prior to the Effective Time, of the misrepresentation or breach of warranty).
(d) Each party acknowledges that reliance shall not be an element of
any claim by the other for breach of warranty or misrepresentation under this
Agreement.
Section 8.3 Conditions of Indemnification for Third Party Claims. The
obligations and liabilities of the parties under this Agreement with respect to,
relating to, caused (in whole or in part) by or arising out of claims of third
parties (individually, a "Third Party Claim" and collectively "Third Party
Claims") including, without limitation, any Federal, state or local taxing
authorities, shall be subject to the following terms and conditions:
(a) The party entitled to be indemnified hereunder (the "Indemnified
Party") shall give the party obligated to provide the indemnity (the
"Indemnifying Party") prompt notice of any Third Party Claim, and, provided that
the Indemnifying Party acknowledges in writing its obligation to indemnify in
accordance with the terms and subject to the limitations on such party's
obligation to indemnify contained in this Agreement with respect to that claim
(or part of that claim), the Indemnifying Party may undertake the defense of
that claim by representatives chosen by it and reasonably acceptable to the
Indemnified Party. Any such notice of a Third Party Claim shall identify with
reasonable specificity the basis for the Third Party Claim, the facts giving
rise to the Third Party Claim, and the amount of the Third Party Claim (or, if
such amount is not yet known, a reasonable estimate of the amount of the Third
Party Claim). The Indemnified party shall make available to the Indemnifying
Party copies of all relevant documents and records in its possession.
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(b) If the Indemnifying Party, within ten (10) business days after
receiving notice of any such Third Party Claim, fails to assume the defense in
accordance with Section 8.3(a) hereof, the Indemnified Party shall (upon further
notice to the Indemnifying Party and subject to Section 8.3(c) hereof) have the
right to undertake the defense, compromise or settlement of the Third Party
Claim.
(c) Anything in this Section 8.3 to the contrary notwithstanding, (i)
the Indemnifying party shall not, without the written consent of the Indemnified
Party, settle or compromise any Third Party Claim or consent to the entry of
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party an unconditional release
from all liability in respect of the Third Party Claim; and (ii) if there is a
reasonable probability that a claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other money
payments, the Indemnified Party shall have the right, at its own cost and
expense, to participate in the defense of the Third Party Claim.
Section 8.4 Payment of Claims. Any party obligated to indemnify
another party hereunder shall advance any amounts so payable to the Indemnified
Party as such amounts are incurred by such Indemnified Party.
Section 8.5 Set-Off. Except as set forth in Section 8.2(b) hereof, any
party (the "Entitled Party") entitled to indemnification from another party
hereunder (the "Obligated Party") pursuant to the terms of this Agreement shall
have the right to set-off against any amounts payable by such Entitled Party to
the Obligated Party under this Agreement or any other agreement(s) such
Obligated Party may have with the Entitled Party (including, without limitation,
any employment agreement) all amounts payable to the Entitled Party by the
Obligated Party under this Section 8.
ARTICLE 9.
General Provisions
Section 9.1 Disclosure Schedules. Any disclosure made with reference
to one or more sections of the Company Disclosure Schedule or the Parent
Disclosure Schedule shall be deemed disclosed with respect to each other section
therein as to which such disclosure is relevant provided such relevance is
reasonably apparent.
Section 9.2 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered if delivered personally, three days after
being sent by registered or certified mail (postage prepaid, return receipt
requested), one day after dispatch by recognized overnight courier (provided
delivery is confirmed by the carrier) and upon transmission by telecopy,
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confirmed received, to the parties at the following addresses (or at such other
address for a party as shall be specified by like changes of address):
(a) If to Parent or Merger Sub:
National Media Corporation
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxxxxxxx Xxxxxxxx, Vice Chairman
With a copy to:
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx
(b) If to DA, CPG or any Holder:
c/o DirectAmerica Corporation
000 Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: President
With a copy to:
Xxxxx & Xxxxxxx, L.L.P.
Columbia Square
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telecopier No. (000) 000-0000
Attention: Xxxx X. Xxx
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Section 9.3 Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliates" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person, including, without limitation, any
partnership or joint venture in which either of the Companies (either alone, or
through or together with any other subsidiary) has, directly or indirectly, an
interest of 10 percent or more;
(b) "business day" means any day other than a day on which banks in
New York are required or authorized to be closed.
(c) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3)) of the Exchange Act); and
(d) "subsidiary" or "subsidiaries" of either Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which a Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or indirectly,
more than 50% of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
Section 9.4 Amendment. This Agreement may be amended by the Companies
and Parent (without the consent of any Holder) by action taken by or on behalf
of their respective Boards of Directors at any time prior to the Effective Time;
provided, however, that no amendment may be made which by law requires further
approval by the stockholders of the Companies without such further approval;
provided, further, that no amendment that adversely affects a Holder shall be
binding on or effective as to such Holder without such Holder's written consent.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
Section 9.5 Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
Section 9.6 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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Section 9.7 Severability. If any term or other provision of this
Agreement is held to be invalid, illegal or incapable of being enforced under
any rule of law or public policy by a court of competent jurisdiction, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner so that the transactions
contemplated hereby are fulfilled to the extent possible.
Section 9.8 Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements and
undertakings (including, without limitation, any agreements or understandings
contained in the letter dated September 8, 1995 by and among Parent, the
Companies and the Holders) both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, is not intended to confer upon any other person any
rights or remedies hereunder. Notwithstanding the foregoing, the parties hereto
acknowledge that the terms and provisions of that certain Confidentiality
Agreement dated September 8, 1995 by and among the Companies and Parent (the
"Confidentiality Agreement") shall survive the execution of this Agreement and
continue in full force and effect. Each Holder hereto agrees to comply with all
terms of the Confidentiality Agreement as if he were named a party therein.
Section 9.9 Assignment, Merger Sub. This Agreement shall not be
assigned by operation of law or otherwise, except that Parent and Merger Sub may
assign all or any of their rights hereunder to any affiliate provided that no
such assignment shall relieve the assigning party of its obligations hereunder.
Section 9.10 Parties In Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
Section 9.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
Section 9.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS EXECUTED AND FULLY PERFORMED WITHIN THE STATE OF
DELAWARE (WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES).
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Section 9.13 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same Agreement.
Section 9.14 Joint Participation. Each of the Companies and each of
the Holders has participated in the drafting of this Agreement and expressly
acknowledges such joint participation, to avoid application of any rule
construing contractual language against the party which drafted the language.
Section 9.15 Exhibits and Schedules. All Exhibits and Disclosure
Schedules attached hereto are delivered pursuant to this Agreement are
incorporated by reference into, and made a part of, this Agreement.
Section 9.16 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB THE
COMPANIES AND THE HOLDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, Parent, Merger Sub, each of the Companies and each
Holder have caused this Agreement to be executed as of the date first written
above.
National Media Corporation
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
DA Acquisition Corp.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President
DirectAmerica Corporation
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
California Production Group, Inc.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
[SIGNATURES CONTINUED]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
HOLDERS:
/s/ Xxxx X. Xxxxx
-------------------------
Xxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxx
-------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxxx
-------------------------
Xxxx X. Xxxxxxx
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The following is a summary of all omitted Exhibits to the foregoing Merger
Agreement:
Exhibit A - Xxxxx Employment Agreement (filed as Exhibit 10.1 to the
Form 8-K).
Exhibit B - Xxxxxxx Employment Agreement
(filed as Exhibit 10.2 to the Form 8-K).
Exhibit C - Xxxxxxx Employment Agreement.
Exhibit D - List of Directors and Officers.
Exhibit E - Recipients of Merger Consideration.
Exhibit F - Form of Legal Opinion.
Exhibit G - Investor Representations.
Exhibit H - Indemnification Percentages.
Exhibit I - Form of Surety Agreement.
Parent hereby agrees to furnish supplementally to the SEC copies of
Exhibits C-I upon request of the SEC.
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