AGREEMENT AND PLAN OF REORGANIZATION
AMONG
POWER MARKETING, INC.,
PMKT SUBSIDIARY CORP.,
AND
TAG ENTERTAINMENT, INC.
TABLE OF CONTENTS
1. Plan of Reorganization. . . . . . . . . . . . . . . . . . . 1
2. Terms of Merger . . . . . . . . . . . . . . . . . . . . . . 2
3. Delivery of Shares. . . . . . . . . . . . . . . . . . . . . 5
4. Representations of TAG. . . . . . . . . . . . . . . . . . . 5
5. Representations of PMKT and Xxxxxxx . . . . . . . . . . . . 7
6. Closing . . . . . . . . . . . . . . . . . . . . . . . . . .13
7. Conditions Precedent to the Obligations
of TAG. . . . . . . . . . . . . . . . . . . . . . . . . . .13
8. Conditions Precedent to the Obligation of
PMKT and PMKT Sub . . . . . . . . . . . . . . . . . . . . .15
9. Indemnification . . . . . . . . . . . . . . . . . . . .15
10. Nature and Survival of Representations. . . . . . . . .15
11. Documents at Closing. . . . . . . . . . . . . . . . . .16
12. Finder's Fees . . . . . . . . . . . . . . . . . . . . .17
13. Miscellaneous . . . . . . . . . . . . . . . . . . . . .17
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . .19
(i)
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (hereinafter the "Agreement")
is entered into effective as of this 14th day of October, 2004, by and among
Power Marketing, Inc., a Delaware corporation (hereinafter "PMKT"); PMKT
Subsidiary Corp, a California corporation (PMKT Sub"); and TAG Entertainment,
Inc., a California corporation (hereinafter "TAG"). PMKT, PMKT Sub and TAG
are sometimes referred to individually as a "Party" and collectively as the
"Parties".
RECITALS:
WHEREAS, PMKT desires to acquire TAG as a wholly-owned subsidiary and to
issue shares of PMKT common stock to the shareholders of TAG upon the terms
and conditions set forth herein and has formed PMKT Sub which shall be merged
with TAG, whereupon TAG shall be the surviving corporation of said merger and
shall remain as a wholly owned subsidiary of PMKT (PMKT Sub and TAG are
sometimes collectively hereinafter referred to as the "Constituent
Corporations") with respect to such merger.
WHEREAS, the boards of directors of PMKT and TAG, respectively, deem it
advisable and in the best interests of such corporations and their respective
shareholders that TAG merge with and into PMKT Sub pursuant to this Agreement
and the Plan and Articles of Merger in the form to be mutually agreed upon
prior to Closing and pursuant to applicable provisions of law (such
transaction hereafter referred to as the "Merger").
WHEREAS, it is the intention of the Parties that the Merger
contemplated herein qualify as a Tax free reorganization within the meaning of
Sections 368 of the Code (as defined below).
NOW THEREFORE, for the mutual consideration set out herein, and other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
1. PLAN OF REORGANIZATION. The parties hereto do hereby agree that TAG
shall be merged with and into PMKT Sub upon the terms and conditions set forth
herein. It is the intention of the parties hereto that this transaction
qualify as a tax-free reorganization under Section 368(a)(2)(D) of the
Internal Revenue Code of 1986, as amended, and related sections thereunder.
2. TERMS OF MERGER. In accordance with the provisions of this
Agreement and the requirements of applicable law, TAG shall be merged with and
into PMKT Sub as of the Effective Date (the terms "Closing" and "Effective
Date" are defined in Section 6 hereof). TAG shall be the surviving corporation
(hereinafter sometimes the "Surviving Corporation") and the separate existence
of PMKT Sub shall cease when the Merger shall become effective. Consummation
of the Merger shall be upon the following terms and subject to the following
conditions:
(a) Corporate Existence.
(1) At the Effective Date, the Surviving Corporation shall
continue its corporate existence as a California corporation and (i) it
shall thereupon and thereafter possess all rights, privileges, powers,
franchises and property (real, personal and mixed) of each of the
Constituent Corporations; (ii) all debts due to either of the
Constituent Corporations, on whatever account, all causes in action and
all other things belonging to either of the Constituent Corporations
shall be taken and deemed to be transferred to and shall be vested in
the Surviving Corporation by virtue of the Merger without further act or
deed; and (iii) all rights of creditors and all liens upon any property
of any of the Constituent Corporations shall be preserved unimpaired,
limited in lien to the property affected by such liens immediately prior
to the Effective Date, and all debts, liabilities and duties of the
Constituent Corporations shall thenceforth attach to the Surviving
Corporation.
(2) At the Effective Date, (i) the Articles of Incorporation and
the By-laws of the Surviving Corporation, as existing immediately prior
to the Effective Date, shall be and remain the Articles of Incorporation
and By-Laws of the Surviving Corporation; (ii) the members of the Board
of Directors of the Surviving Corporation holding office immediately
prior to the Effective Date shall remain as the members of the Board of
Directors of the Surviving Corporation (if on or after the Effective
Date a vacancy exists on the Board of Directors of the Surviving
Corporation, such vacancy may thereafter be filled in a manner provided
by applicable law and the By-laws of the Surviving Corporation); and
(iii) until the Board of Directors of the Surviving Corporation shall
otherwise determine, all persons who hold offices of the Surviving
Corporation at the Effective Date shall continue to hold the same
offices of the Surviving Corporation.
(b) Events and Covenants Regarding Closing.
(1) PMKT shall have authorized 50,000,000 shares of $.001 par
value common stock and 500,000 shares of $.001 par value preferred
stock. The preferred stock shall be subject to issuance in such series
and with such rights, preferences and designations as determined in the
sole discretion of the board of directors.
(2) PMKT shall have no more than 2,150,000 shares of its common
stock issued and outstanding on a fully diluted basis and no other
shares of capital stock, convertible instruments (whether debt and/or
equity), options or warrants to obtain common stock, issued or
outstanding not taking into effect the shares to be issued under this
Agreement.
(3) PMKT shall have, and will demonstrate to the reasonable
satisfaction of TAG that it has, no material assets and no debts,
liabilities, liens and/or judgments, contingent or fixed.
(4) Simultaneously at or promptly upon the Closing, PMKT shall issue
300,000 shares of its restricted common stock to SR Capital as a finders fee
for introducing the parties hereto.
(5) Certain principal shareholders of PMKT, namely Mc Crae Associates
and Whitehouse Partners and their affiliates, shall enter into binding and
enforceable lockup agreements in form and substance satisfactory to TAG
wherein they agree not to publicly sell any common shares of PMKT, without the
prior written consent of PMKT, for 12 months from Closing except for an
aggregate of 625,000 shares, which may be sold commencing 90 days from
Closing.
(6) PMKT hereby covenants, and all parties hereby agree, that PMKT
shall not effectuate a reverse stock split as to its shares of common stock
for a period of time of at least 14 Months from the date of Closing.
(7) TAG hereby represents warrants and covenants , and shall provide
reasonable documentary evidence to PMKT, that it has no more than 35
nonaccredited shareholders and that, other than such limited number of
nonaccredited shareholders, all of its shareholders are accredited investors
as defined in Regulation D.
(8) The Closing is contingent upon a reasonable due diligence
investigation by PMKT and TAG as to each other and all matters
related hereto. Each party hereto agrees to fully cooperate in
providing all information reasonable requested to satisfy the due
diligence inquiries of the other party.
(c) Exchange/Conversion of Securities.
As of the Effective Date and without any action on the part of
PMKT, PMKT Sub, TAG or the holders of any of the securities of any of these
corporations, each of the following shall occur:
(1) The outstanding shares of TAG Common Stock issued and
outstanding immediately prior to the Effective Date shall be converted
into shares of PMKT Common Stock up to a maximum aggregate amount of
23,900,000. Effective upon consummation of the Merger ,all shares of
TAG Common Stock shall no longer be outstanding and shall automatically
be canceled and shall cease to exist, and each certificate previously
evidencing any such shares shall thereafter represent the right to
receive, upon the surrender of such certificate in accordance with the
provisions of Section 3 hereof, certificates evidencing such number of
shares of PMKT Common Stock, respectively, into which such shares of TAG
Common Stock were converted. The holders of such certificates
previously evidencing shares of TAG Common outstanding immediately prior
to the Effective Date shall cease to have any rights with respect to
such shares of TAG Common except as otherwise provided herein or by law;
(2) Any outstanding options or warrants to purchase TAG Common
Stock shall have been exercised prior to Closing or shall be exchanged
at Closing for like derivative securities of PMKT.
(3) Any shares of TAG capital stock held in the treasury of TAG
immediately prior to the Effective Date shall automatically be canceled
and extinguished without any conversion thereof and no payment shall be
made with respect thereto;
(4) Each share of capital stock of PMKT Sub issued and
outstanding immediately prior to the Effective Date shall remain in
existence as 1,000 shares of common stock of the Surviving Corporation,
all of which shall be owned by PMKT;
(5) The 2,150,000 shares of PMKT Common Stock previously issued
and outstanding immediately prior to the Merger will remain outstanding.
(d) Other Matters. Closing of the transactions contemplated herein and
consummation of the Merger shall also be subject to the following terms and
conditions:
(1) There shall be no stock dividend, stock split,
recapitalization, or exchange of shares with respect to or rights issued
in respect of PMKT's Common Stock after the date hereof and there shall
be no dividends paid on PMKT's Common Stock after the date hereof, in
each case through and including the Effective Date.
(2) TAG and PMKT shall have received all requisite director and
shareholder approval of all matters set forth herein and no shareholder
of TAG shall have exercised any dissenters rights under applicable
corporate law in an amount in excess of 20% of the outstanding common
stock of TAG..
(3) PMKT shall file an amendment to its Articles of Incorporation
with the Secretary of State of the State of Delaware in substantially
the form and substance to be agreed upon effecting, among other things,
an amendment to its Articles of Incorporation to reflect a name change
to TAG Holdings, Inc. or such other new name as may be determined.
(4) PMKT shall adopt a Stock Option Plan at Closing to include up
to 3,000,000 shares of its common stock. The Plan shall include
"incentive" stock options under Section 422 of the Internal Revenue Code
of 1986, as amended and other options and similar rights. PMKT may
grant options under said plan to existing option holders of TAG in
exchange for their TAG options, at Closing, exercisable at a price per
share, as designated by TAG subject to the reasonable approval of PMKT.
(5) There shall be delivered written resignations, effective
upon the Merger, of all of the existing PMKT and PMKT Sub officers and
directors
(6) Upon the effectiveness of the Merger, Xxxxx Xxxxxx shall
become the Chairman and Chief Executive Officer and sole director of
PMKT and the Surviving corporation and shall have the right to appoint
such other persons as he may designate and appoint as the officers
and/or directors of PMKT and the Surviving Corporation.
3. DELIVERY OF SHARES. On or as soon as practicable after the
Effective Date, TAG will use its best efforts to cause the TAG Shareholders to
surrender for cancellation certificates representing their shares of TAG
capital stock, against delivery of certificates representing the shares of
PMKT capital stock for which the TAG shares are to be converted in the Merger.
Until surrendered and exchanged as herein provided, each outstanding
certificate which, prior to the Effective Date, represented an TAG stock
certificate shall be deemed for all corporate purposes to evidence ownership
of the same number of shares of PMKT capital stock into which the TAG
certificate shall have been so converted.
4. REPRESENTATIONS OF TAG. TAG hereby represents and warrants as
follows, which warranties and representations shall also be true as of the
Effective Date:
(a) The TAG Shareholders listed on schedule of shareholders to
be delivered by Tag prior to Closing are to its knowledge, the sole owners of
record and beneficially of the issued and outstanding capital stock of TAG.
(b) The TAG Common Stock constitutes duly authorized, validly
issued shares of capital stock of PMKT, fully paid and nonassessable and
are the only capital shares of TAG outstanding.
(c) Prior to Closing TAG shall provide audited financial statements as
of and for the periods ended December 31, 2002 and 2003, and interim unaudited
June 30, 2004 financial statements, which will be delivered to PMKT
(hereinafter referred to as the "TAG Financial Statements") said TAG Financial
Statement fairly present the financial condition of TAG as of the dates
thereof and for the periods covered. There are no material liabilities or
obligations, either fixed or contingent, not disclosed in the TAG Financial
Statements or in any exhibit thereto or notes thereto other than contracts or
obligations in the ordinary course of business and expenses incurred in
connection with the transactions contemplated by this Agreement; and no such
contracts or obligations in the ordinary course of business constitute liens
or other liabilities which materially alter the financial condition of TAG as
reflected in the TAG Financial Statements. TAG has good title to all assets
shown on the TAG Financial Statements subject only to dispositions and other
transactions in the ordinary course of business, the disclosures set forth
therein and liens and encumbrances of record.
(d) Since the date of the TAG Financial Statements, there have not been
any material adverse changes in the financial position of TAG except changes
arising in the ordinary course of business, or from the incurrence of expenses
in connection with the transactions contemplated by this Agreement or as
otherwise disclosed to PMKT.
(e) TAG is not a party to any material pending litigation or, to its
best knowledge, any governmental investigation or proceeding, not reflected in
the TAG Financial Statements, and to its best knowledge, no material
litigation, claims, assessments or any governmental proceedings are threatened
against TAG.
(f) TAG is in good standing in its jurisdiction of incorporation, and
is in good standing and duly qualified to do business in each jurisdiction
where required to be so qualified except where the failure to so qualify would
have no material negative impact on TAG.
(g) TAG has (or, by the Closing Date, will have filed) all material
tax, governmental and/or related forms and reports (or extensions thereof) due
or required to be filed and has (or will have) paid or made adequate
provisions for all taxes or assessments which have become due as of the
Closing Date.
(h) TAG has not materially breached any material agreement to which it
is a party. TAG has previously given PMKT copies or access thereto of all
material contracts, commitments and/or agreements to which TAG is a party
including all relationships or dealings with related parties or affiliates.
(i) TAG has no subsidiary corporations, except as disclosed in writing
to PMKT. All limited partnerships of which TAG is a general partner of
otherwise affiliated shall be disclosed in writing to PMKT.
(j) TAG shall make all material corporate financial records, minute
books, and other corporate documents and records available for review to
present management of PMKT prior to the Closing Date, during reasonable
business hours and on reasonable notice.
(k) The execution of this Agreement does not materially violate or
breach any material agreement or contract to which TAG is a party and has been
duly authorized by all appropriate and necessary corporate action under
California or other applicable law and TAG, to the extent required, has
obtained, or will use it best efforts to obtain prior to Closing, all
necessary approvals or consents required by applicable law, regulations, or
any agreement to which TAG is a party.
(l) All disclosure information previously provided or subsequently
provided by TAG for the purpose of being set forth in disclosure documents of
PMKT or otherwise delivered to PMKT by TAG for use in connection with the
transaction (the "Acquisition") described herein is true, complete as to the
items described) and accurate in all material respects.
5. REPRESENTATIONS OF PMKT AND OTHERS. All relevant references to
PMKT are hereby deemed to be applicable to and do hereby include PMKT Sub.
PMKT and PMKT hereby jointly and severally represent and warrant to TAG as
follows, each of which representations and warranties shall continue to be
true as of the Closing Date:
(a) As of the Closing Date, the PMKT Shares, to be issued and delivered
to the TAG Stockholders hereunder will, when so issued and delivered,
constitute, duly authorized, validly and legally issued shares of PMKT capital
stock, fully-paid and nonassessable. The total number of PMKT shares of
common stock outstanding as of the Closing Date shall be 2,150,000 prior to
the completion of the acquisition of TAG, and other matters described herein.
As of the Closing Date, PMKT will have no outstanding or authorized
securities, warrants, options, other rights to purchase or otherwise acquire
capital stock or any other securities of the Company, preemptive rights,
rights of first refusal, registration rights or related commitments of any
nature other than as described herein.
(b) PMKT has the corporate power and authority to enter into this
Agreement and to perform its respective obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, subject to conditions hereof, have been duly authorized
by all necessary corporate action, including the board of directors and
shareholders of PMKT. The execution and performance of this Agreement will
not constitute a material breach of any agreement, indenture, mortgage,
license or other instrument or document to which PMKT is a party or by which
its assets and properties are bound, and will not violate any judgment,
decree, order, writ, rule, statute, or regulation applicable to PMKT or its
properties. The execution and performance of this Agreement will not violate
or conflict with any provision of the Articles of Incorporation or by-laws of
PMKT.
(c) PMKT has delivered to TAG a true and complete copy of its unaudited
financial statements as of and for the period ended June 30, 2004, and its
audited financial statements as of and for the years ended December 31, 2003
and 2002, (the "PMKT Financial Statements"). The PMKT Financial Statements
are complete, accurate and fairly present the financial condition of PMKT as
of the dates thereof and the results of its operations for the periods then
ended. There are no material liabilities or obligations either fixed or
contingent not reflected therein. The PMKT Financial Statements have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis (except as may be indicated therein or in the notes
thereto) and fairly present the financial position of PMKT as of the dates
thereof and the results of its operations and changes in financial position
for the periods then ended. Immediately following the Closing, PMKT's present
management will cause all of PMKT's financial records, including state and
federal tax returns, to be delivered to new management nominated by TAG.
(d) Since June 30, 2004, there have not been any material adverse
changes in the financial condition of PMKT except with regard to disbursements
to pay reasonable and ordinary expenses in connection with maintaining its
corporate status and pursuing the matters contemplated in this Agreement and
the disposition of PMKT's remaining assets and the payment of all liabilities.
Prior to Closing, all accounts payable and other liabilities of PMKT shall be
paid and satisfied in full and PMKT shall, at Closing, have no obligations,
debts, claims or liabilities of any nature either contingent or fixed
(including without limitation, any tax liabilities not yet due, except for
Delaware franchise taxes, if any).
(e) PMKT is not a party to or the subject of any pending litigation,
claims, decrees, orders, stipulations or governmental investigation or
proceeding not reflected in the PMKT Financial Statements or otherwise
disclosed herein, and there are no lawsuits, claims, assessments,
investigations, or similar matters, threatened or contemplated against or
affecting PMKT, its management or its properties.
(f) PMKT is duly organized, validly existing and in good standing under
the laws of the State of Delaware; has the corporate power to own its property
and to carry on its business as now being conducted and is duly qualified to
do business in any jurisdiction where so required except where the failure to
so qualify would have no material negative impact on it.
(g) PMKT has filed all federal, state, county and local income, excise,
property and other tax, governmental and/or related returns, forms, or
reports, which are due or required to be filed by it prior to the date hereof,
except where the failure to do so would have no material adverse impact on
PMKT, and has paid or made adequate provision in the PMKT Financial Statements
for the payment of all taxes, fees, or assessments which have or may become
due pursuant to such returns or pursuant to any assessments received. PMKT is
not delinquent or obligated for any tax, penalty, interest, delinquency or
charge.
(h) There are no existing options, calls, warrants, preemptive rights
or commitments of any character relating to the issued or unissued capital
stock or other securities of PMKT, except as contemplated in this Agreement.
(i) The corporate financial records, minute books, and other documents
and records of PMKT have been made available to TAG prior to the Closing and
shall be delivered to new management of PMKT at Closing.
(j) PMKT has not breached, nor is there any pending, or to the
knowledge of management, any threatened claim that PMKT has breached, any of
the terms or conditions of any agreements, contracts or commitments to which
it is a party or by which it or its assets are is bound. The execution and
performance hereof will not violate any provisions of applicable law or any
agreement to which PMKT is subject. PMKT hereby represents that it has no
business operations or material assets and it is not a party to any material
contract or commitment other than appointment documents with its transfer
agent, and that it has disclosed to TAG all relationships or dealings with
related parties or affiliates.
(k) PMKT common stock is currently approved for quotation on the
Electronic Bulletin Board under the symbol "PMKT" and there are no stop orders
in effect with respect thereto. PMKT has not been informed, and has no reason
to believe, that its common stock will be delisted by the Electronic Bulletin
Board.
(l) All information regarding PMKT which has been provided to TAG or
otherwise disclosed in connection with the transactions contemplated herein,
is true, complete and accurate in all material respects. PMKT has provided to
TAG all material information regarding PMKT. PMKT and Xxxxxxx specifically
disclaim any responsibility regarding disclosures as to TAG, its business or
its financial condition.
(m) As of Closing the outstanding capitalization of PMKT shall consist
of 2,150,000 shares of common stock, but prior to the commitment to issue
300,000 shares to SR Capital and 21,450,000 shares to the TAG Stockholders
pursuant to the terms of this Agreement.
(n) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (a) constitute a
violation (with or without the giving of notice or lapse of time, or both) of
any provision of law or any judgment, decree, order, regulation or rule of any
court or other governmental authority applicable to PMKT, (b) require any
consent, approval or authorization of, or declaration, filing or registration
with, any person, except for compliance with applicable securities laws and
the filing of all documents necessary to consummate the transaction with any
governmental entity, (c) result in a default (with or without the giving of
notice or lapse of time, or both) under, acceleration or termination of, or
the creation in any party of the right to accelerate, terminate, modify or
cancel, any agreement, lease, note or other restriction, encumbrance,
obligation or liability to which PMKT is a party or by which either is bound
or to which any of their assets are subject, (d) result in the creation of any
material lien or encumbrance upon the assets of PMKT or the funds being
delivered in connection herewith, or (e) conflict with or result in a breach
of or constitute a default under any provision of the charter documents of
PMKT.
(o) PMKT has, and at the Closing Date PMKT shall have, disclosed to TAG
all events, conditions and facts materially affecting the business, finances
and legal status of PMKT.
(p) PMKT filed a Registration Statement with the Securities and
Exchange Commission on Form SB-2 which became effective on June 22, 2000. All
information set forth in said Registration Statement was true, correct and
complete, and in full compliance with all applicable securities laws at the
time of its filing and effectiveness. Pursuant to the effectiveness of said
Registration Statement, PMKT became subject to the reporting obligations of
the Securities Exchange Act of 1934 (the "Exchange Act") pursuant to Section
15(d) thereof. PMKT has filed all forms and reports required to be filed by
it under the Exchange Act and all such documents have been true, complete and
accurate in all material respects. PMKT is not subject at the present time,
to the requirements of Section 12(g) of the Exchange Act and is therefore not
subject to the Proxy Rules (Section 14) of the Exchange Act. Therefore any
solicitation of shareholder approval in connection with the transactions
described herein is not subject to such Proxy Rules.
(q) There are no existing or threatened liabilities, claims, lawsuits
and there is no basis for the same, with respect to PMKT's original stock
issuance to its founders, its subsequent securities offerings, solicitation of
proxies in connection with any stockholders' meeting, other dealings with its
stockholders, the public trading of PMKT's securities, activities of brokers
in connection with PMKT's securities. This includes matters relating to state
or federal securities laws as well as general common law or state corporation
law principles.
(r) This Agreement is enforceable against PMKT and PMKT Sub in
accordance with its terms.
(s) PMKT Sub has been formed solely to consummate the Merger and has no
business operations and has no outstanding liabilities of any kind whatsoever.
6. CLOSING. The Closing of the transactions contemplated herein shall
take place on such date (the "Closing") as mutually determined by the parties
hereto when all conditions precedent have been met and all required documents
have been delivered, which Closing is expected to be on or about November 1,
2004, or such later date as mutually agreed to by all parties hereto. The
"Effective Date" of the Merger shall be that date on which aPlan and Articles
of Merger, in form and substance satisfactory to the Parties is filed with
the Secretaries of State of California.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TAG. All obligations of
TAG under this Agreement are subject to the fulfillment, prior to or as of the
Closing and/or the Effective Date, as indicated below, of each of the
following conditions:
(a) The representations and warranties by or on behalf of PMKT,
PMKT Sub and Xxxxxxx contained in this Agreement or in any certificate
or document delivered pursuant to the provisions hereof shall be true in
all material respects at and as of the Closing and Effective Date as
though such representations and warranties were made at and as of such
time.
(b) PMKT and PMKT Sub shall have performed and complied with all
covenants, agreements, and conditions set forth in, and shall have
executed and delivered all documents required by this Agreement to be
performed or complied with or executed and delivered by them prior to or
at the Closing.
(c) On or before the Closing, the shareholders of PMKT by
majority written consent, the sole director of PMKT and PMKT Sub, and
PMKT as sole shareholder of PMKT Sub shall have approved in accordance
with applicable state corporation law the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein.
(d) On or before the Closing Date, PMKT and PMKT Sub shall have
delivered certified copies of resolutions of the sole shareholder and
director of PMKT Sub and of the sole director and shareholders of PMKT
approving and authorizing the execution, delivery and performance of
this Agreement and authorizing all of the necessary and proper action to
enable PMKT and PMKT Sub to comply with the terms of this Agreement
including the election of TAG's nominees to the Board of Directors of
PMKT, the adoption of a Stock Option Plan in the form provided by TAG
and all matters outlined herein.
(e) The Merger shall be permitted by applicable state law and
PMKT shall have sufficient shares of its capital stock authorized to
complete the Merger.
(f) At Closing, all directors and officers of PMKT and PMKT Sub
shall have resigned in writing from their positions as directors and
officers of PMKT and/or PMKT Sub effective upon the election and
appointment of the TAG nominees as designated by TAG.
(g) At the Closing, all instruments and documents delivered to
TAG Shareholders pursuant to the provisions hereof shall be reasonably
satisfactory to legal counsel for TAG.
(h) At the Closing, upon consummation of the Merger, PMKT shall
have the authorized and issued capital as described in Section 2(b)(2)
hereof.
(i) The shares of restricted PMKT capital stock to be issued to
TAG Shareholders at Closing will be validly issued, nonassessable and
fully-paid under Delaware corporation law and will be issued in a
nonpublic offering in compliance with all federal and applicable state
securities laws.
(j) TAG shall have received the advice of its tax advisor that
this transaction is a tax free reorganization as to the exchanging TAG
common shareholders.
(k) TAG shall have received all necessary and required approvals
and consents from required parties and its shareholders.
(l) At the Closing, PMKT and PMKT Sub shall have delivered to
TAG an opinion of its counsel dated as of the Closing to the effect
that:
(i) PMKT and PMKT Sub, each is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction of incorporation;
(ii) This Agreement has been duly authorized, executed and
delivered by PMKT and PMKT Sub and is a valid and binding
obligation of PMKT and PMKT Sub enforceable in accordance with its
terms;
(iii) PMKT and PMKT Sub each through its Board of Directors
and stockholders have taken all corporate action necessary for
performance under this Agreement;
(iv) The documents executed and delivered to TAG and TAG
Shareholders hereunder are valid and binding in accordance with
their terms and vest in TAG Shareholders, as the case may be, all
right, title and interest in and to the shares of PMKT's Common
Stock to be issued pursuant to Section 2 hereof, and the shares of
PMKT capital stock when issued will be duly and validly issued,
fully-paid and nonassessable; and
(vi) The execution, delivery and performance of this Agreement
and the, consummation of the transactions contemplated hereby will not
(a) to the best of such counsel's knowledge, constitute a violation
(with or without the giving of notice or lapse of time, or both) of any
provision of law or any judgment, decree, order, regulation or rule of
any court or other governmental authority applicable to PMKT, (b)
require any consent, approval or authorization of, or declaration,
filing or registration with, any person, except for compliance with
applicable securities laws (including exemptions from registration) and
the filing of all documents necessary to consummate the transaction with
any governmental entity, (c) to the best of such counsel's knowledge
result in a default (with or without the giving of notice or lapse of
time, or both) under, acceleration or termination of, or the creation in
any party of the right to accelerate, terminate, modify or cancel, any
agreement, lease, note or other restriction, encumbrance, obligation or
liability to which PMKT is a party or by which either is bound or to
which any of their assets are subject, (d) result in the creation of any
material lien or encumbrance upon the assets of PMKT or the funds being
delivered in connection herewith, or (e) conflict with or result in a
breach of or constitute a default under any provision of the charter
documents of PMKT;
(vii) Legal counsel for PMKT has represented PMKT since its
inception and is not aware, after diligent inquiry, of any liabilities,
claims, or other potential for contingent liabilities or lawsuits
involving PMKT.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PMKT AND PMKT SUB. All
obligations of PMKT and PMKT Sub under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
(a) The representations and warranties by TAG contained in this
Agreement or in any certificate or document delivered pursuant to the
provisions hereof shall be true in all material respects at and as of
the Closing as though such representations and warranties were made at
and as of such time.
(b) TAG shall have performed and complied with, in all material
respects, all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by them prior to or at the
Closing;
(c) TAG shall cause at or as soon as practicable after Closing,
each of its shareholders to deliver to PMKT, a letter commonly known as
an "Investment Letter," in form and substance satisfactory to PMKT
acknowledging that the shares of PMKT Common Stock are being acquired by
said shareholders for investment purposes.
(d) TAG shall deliver an opinion of its legal counsel to the
effect that:
(i) TAG is a corporation duly organized, validly existing
and in good standing under the laws of the state of its
incorporation;
(ii) This Agreement has been duly authorized, executed and
delivered by TAG.
9. INDEMNIFICATION. For a period of two years from the Closing,
PMKT and PMKT Sub agree to jointly and severally indemnify and hold harmless
TAG, its officers, directors and employees, and TAG agrees to indemnify and
hold harmless PMKT and PMKT Sub, against and in respect of any liability,
damage or deficiency, all actions, suits, proceedings, demands, assessments,
judgments, costs and expenses including attorney's fees incident to any of the
foregoing, resulting from any material misrepresentations made by an
indemnifying party to an indemnified party, an indemnifying party's breach of
covenant or warranty or an indemnifying party's nonfulfillment of any
agreement hereunder, or from any material misrepresentation in or omission
from any certificate furnished or to be furnished hereunder, subject to a
threshold limit of $50,000 and except as otherwise covered by insurance.
10. NATURE AND SURVIVAL OF REPRESENTATIONS. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby for two
years from the Closing. All of the parties hereto are executing and carrying
out the provisions of this Agreement in reliance solely on the
representations, warranties and covenants and agreements contained in this
Agreement and not upon any investigation upon which it might have made or any
representation, warranty, agreement, promise or information, written or oral,
made by the other party or any other person other than as specifically set
forth herein.
11. DOCUMENTS AT CLOSING. At the Closing, the following documents
shall be delivered:
(a) TAG will deliver, or will cause to be delivered, to PMKT the
following:
(i) a certificate executed by the President and Secretary
of TAG to the effect that all representations and warranties made
by TAG under this Agreement are true and correct as of the
Closing, the same as though originally given to PMKT or PMKT Sub
on said date;
(ii) a certificate from the state of TAG's incorporation
dated at or about the Closing to the effect that TAG is in good
standing under the laws of said state;
(iii) Investment Letters in the form to be agreed upon
executed by each TAG Common Shareholder, , unless waived by PMKT;
(iv) such other instruments, documents and certificates, if
any, as are required to be delivered pursuant to the provisions of
this Agreement;
(v) executed copies of the Plan and Articles of Merger in
form and substance to be mutually agreed upon by the Parties for
filing with the Secretary of State of California; and certified
copies of resolutions adopted by the shareholders and directors of
TAG authorizing the Merger; and
(vi) all other items, the delivery of which is a condition
precedent to the obligations of PMKT and PMKT Sub, as set forth
herein.
(vii) the legal opinion required by Section 8(d) hereof.
(b) PMKT and PMKT Sub will deliver or cause to be delivered to TAG:
(i) stock certificates representing those securities of PMKT
to be issued as a part of the Merger as described in Section 2
hereof;
(ii) a certificate of the President/Secretary of PMKT and
PMKT Sub, respectively, to the effect that all representations and
warranties of PMKT and PMKT Sub, respectively, made under this
Agreement are true and correct as of the Closing, the same as
though originally given to TAG on said date;
(iii) certified copies of resolutions adopted by PMKT's and
PMKT Sub's Board of Directors and PMKT's and PMKT Sub's
Stockholders authorizing the Merger and all related matters;
(iv) certificates from the jurisdiction of incorporation of
PMKT and PMKT Sub dated at or about the Closing Date that each of
said corporations is in good standing under the laws of said
state;
(v) opinion of PMKT's counsel as described in Section 7(l)
above;
(vi) such other instruments and documents as are required
to be delivered pursuant to the provisions of this Agreement;
(vii) resignations of of all officers and directors of of
PMKT and PMKT Sub; and
(Viii) all other items, the delivery of which is a
condition precedent to the obligations of TAG, as set forth in
Section 7 hereof.
12. FINDER'S FEES. , PMKT and PMKT Sub, jointly and severally,
represent and warrant to TAG, and TAG represents and warrants to each of ,
PMKT and PMKT Sub, that none of them, or any party acting on their behalf, has
incurred any liabilities, either express or implied, to any "broker" of
"finder" or similar person in connection with this Agreement or any of the
transactions contemplated hereby, other than the 300,000 shares issuable to SR
Capital. In this regard, PMKT and PMKT Sub, jointly and severally, on the
one hand, and TAG on the other hand, will indemnify and hold the other
harmless from any claim, loss, cost or expense whatsoever (including
reasonable fees and disbursements of counsel) from or relating to any such
express or implied liability, other than as described in this Agreement.
13. MISCELLANEOUS.
(a) Further Assurances. At any time, and from time to time,
after the Effective Date, each party will execute such additional
instruments and take such action as may be reasonably requested by the
other party to confirm or perfect title to any property transferred
hereunder or otherwise to carry out the intent and purposes of this
Agreement.
(b) Waiver. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions hereunder
may be waived in writing by the party to whom such compliance is owed.
(c) Termination. All obligations hereunder may be terminated at
the discretion of either party's Board of Directors if (i) the closing
conditions specified in Sections 7 and 8 are not met by November 1,
2004, (with the exception of the delivery of the Investment Letters)
unless unanimously extended, or (ii) any of the representations and
warranties made herein have been materially breached.
(d) Amendment. This Agreement may be amended only in writing as
agreed to by all parties hereto.
(e) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered
in person or sent by prepaid first class registered or certified mail,
return receipt requested to the last known address of the noticed party.
(f) Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(h) Binding Effect. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their respective
heirs, administrators, executors, successors and assigns.
(i) Entire Agreement. This Agreement and the attached Exhibits
including the Plan and Articles of Merger is the entire agreement of the
parties covering everything agreed upon or understood in the
transaction. There are no oral promises, conditions, representations,
understandings, interpretations or terms of any kind as conditions or
inducements to the execution hereof.
(j) Time. Time is of the essence.
(k) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force
and effect.
(l) Responsibility and Costs. Whether the Merger is consummated
or not, all fees, expenses and out-of-pocket costs and expenses,
including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred by the parties hereto shall
be borne solely and entirely by the party that has incurred such costs
and expenses, unless the failure to consummate the Merger constitutes a
breach of the terms hereof, in which event the breaching party shall be
responsible for all costs of all parties hereto.
(m) Applicable Law. This Agreement shall be construed and
governed by the laws of the State of Delaware.
N WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
Power Marketing, Inc.
By:_________________________________
Xxxx Xxxxxxx, President/Secretary
PMKT Subsidiary Corp
By:_________________________________
Xxxx Xxxxxxx, President/Secretary
TAG Entertainment, Inc.
By:_________________________________
Xxxxx Xxxxxx, President
C:\TGK\REORGSUB.Power,TAG.wpd
