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EXHIBIT 10.27
AGREEMENT AND PLAN OF MERGER
AMONG
THE PRODUCERS ENTERTAINMENT GROUP LTD.,
TPEG ACQUISITION III CORP.,
XXXXXX-XXXXXXXX MUSIC COMPANY, INC.
XXXXXXXXX XXXXXX
AND
XXXXXXXX X. XXXXXXXX
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DATED: SEPTEMBER 15, 1997
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated September 15, 1997, by and among The
Producers Entertainment Group Ltd., a Delaware corporation ("TPEG"), TPEG
Acquisition III Corp., a New York corporation ("TPEG Sub III"), Xxxxxx-Xxxxxxxx
Music Company, Inc., a New York corporation ("GJM"), Xxxxxxxxx Xxxxxx and
Xxxxxxxx X. Xxxxxxxx (hereinafter referred to severally by their respective
surnames and collectively as the "Stockholders").
WHEREAS, TPEG owns of record and beneficially all of the issued and
outstanding shares of capital stock of TPEG Sub III;
WHEREAS, Xxxxxx and Xxxxxxxx own of record and beneficially all of the
issued and outstanding capital stock of GJM;
WHEREAS, TPEG Sub III desires to merge with and into GJM and TPEG desires
to have TPEG Sub III merge with and into GJM in consideration of the issuance by
TPEG of shares of TPEG Common Stock (as hereinafter defined) in exchange for all
of the capital stock of GJM issued and outstanding at the effective time of the
merger; and
WHEREAS, for federal income tax purposes, it is intended that the
contemplated merger transaction shall qualify as a reorganization under the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"), all upon the terms and subject to the conditions set forth herein and
in accordance with the Business Corporation Law of the State of New York, as the
same may be amended from time to time (the "BCL"); and
WHEREAS, TPEG and certain other subsidiaries of TPEG are entering into
separate agreements and plans of merger of even date with Xxxxxx-Xxxxxxxx
Productions, Inc. ("GJP"), a Delaware corporation, and The Xxxxxx-Xxxxxxxx
Entertainment Corporation, Inc. ("GJE"), a New York corporation, (each such
corporation being hereinafter referred to as "GJP" and "GJE", respectively, and
collectively as the "Other GJ Companies" and collectively with GJM, the "GJ
Entities"; and such other mergers and agreements being referred to collectively
as the "Other Mergers" and the "Other Merger Agreements") upon substantially the
same terms and conditions hereinafter set forth except for the Merger
Consideration (as hereinafter defined) to be paid to the holders of the capital
stock of each of GJP and GJE,
NOW, THEREFORE, the parties hereto agree as follows:
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ARTICLE 1. THE MERGER
1.1 Merger; Surviving Corporation. In accordance with the provisions of
this Agreement and the BCL, at the Effective Time (as defined in Section 1.5
hereof), TPEG Sub III shall be merged with and into GJM (the "Merger"), and GJM
shall be the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of New York, under the name "Xxxxxx Xxxxxxxx Music Company, Inc.". At the
Effective Time, the separate existence of TPEG Sub III shall cease. All
properties, franchises and rights belonging to TPEG Sub III, by virtue of the
Merger and without further act or deed, shall be vested in the Surviving
Corporation, which shall assume and be solely responsible for all the
liabilities and obligations of each of TPEG Sub III and GJM. The Merger will
otherwise also have the effects set forth in Section 906 of the BCL.
It is intended that the Merger shall constitute a reorganization within
the meaning of Section 368 of the Code and that this Agreement shall constitute
a "plan of reorganization" for purposes of the Code.
1.2 Certificate of Incorporation. The Certificate of Incorporation of
TPEG Sub III in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until altered or
amended as provided by law or by such Certificate of Incorporation. The
Certificate of Incorporation of TPEG Sub III has been delivered by TPEG Sub III
to GJM.
1.3 By-laws. (a) The By-laws of TPEG Sub III in effect immediately prior
to the Effective Time (as defined in Section 1.5 hereof) shall be the By-laws of
the Surviving Corporation until altered, amended or repealed, in whole or in
part, as provided by law, by the Certificate of Incorporation of the Surviving
Corporation or by such By-laws. The TPEG Sub III By-laws have been delivered by
TPEG Sub III to GJM.
(b) The By-laws of TPEG in effect immediately prior to the
Effective Time (and as set forth on Schedule 1.3(b)) shall be the By-laws of
TPEG until altered, amended or repealed, in whole or in part, as provided by
law, by the Certificate of Incorporation of TPEG or by the TPEG By-laws. The
TPEG By-laws have been delivered by TPEG to GJM.
1.4 Directors and Officers. (a) GJM and the Stockholders shall cause the
directors of GJM to tender their written resignations as directors, effective as
of the Effective Time, and TPEG, as the sole stockholder of the Surviving
Corporation, shall designate and elect, as of the Effective Time, a new Board of
Directors of the Surviving Corporation. Commencing at the Effective Time, the
directors and officers of the Surviving Corporation shall be as set forth on
Schedule 1.4. Each of the directors and officers of the Surviving Corporation
shall hold their respective offices in accordance with the By-laws of the
Surviving Corporation.
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(b) At or prior to the Effective Time, TPEG will take all steps
necessary and appropriate to reconstitute its Board of Directors so that, as of
the Effective Time, the Board of Directors of TPEG shall consist of seven
persons (the "TPEG Board Designees") designated as follows:
(i) three of the TPEG Board Designees will be the designees
of the pre-Merger TPEG Board of Directors;
(ii) three of the TPEG Board Designees will be the designees
of the pre-Merger GJM Board of Directors; and
(iii) the remaining TPEG Board Designee will be the joint
designee of the pre-Merger TPEG Board of Directors and the
pre-Merger GJM Board of Directors.
(iv) The names of the designees referred to in clauses (i)
through (iii) of this Section 1.4(b) will be delivered by the
parties to each other and, where required, mutually agreed upon as
required by Section 7.1(e) hereof. After the Effective Time, the
TPEG Board Designees shall serve as members of the Board of
Directors of TPEG in accordance with the TPEG By-Laws.
(c) At the Effective Time, the Board of Directors of TPEG shall
appoint four members to its Executive Committee who shall consist of two
designees of the pre-Merger TPEG Board of Directors and two designees of the
pre-Merger GJM Board of Directors.
1.5 Effective Time. The Merger shall become effective at the time of
filing of a certificate of merger in the form attached as Exhibit "A" to this
Agreement with the Secretary of State of the State of New York in accordance
with the provisions of Section 904 of the BCL (the "Certificate of Merger").
Subject to the fulfillment of the conditions set forth in Article 7, the
Certificate of Merger shall be so filed immediately after obtaining the
requisite approval of the stockholders of GJM contemplated by Section 7.1(a)
hereof. The date and time when the Merger shall become effective are referred to
herein as the "Effective Time."
1.6 Consideration for Merger. The total consideration to be paid by TPEG
to the holders of the outstanding Common Stock, no par value, of GJM (the "GJM
Common Stock") in connection with the Merger of TPEG Sub III into GJM shall
equal one million ($1,000,000) dollars (the "Merger Consideration"). The Merger
Consideration shall be paid by TPEG through the issuance by TPEG to the
Stockholders of GJM of such number of shares of TPEG Common Stock, $.001 par
value (the "TPEG Common Stock") as shall be determined by dividing the Merger
Consideration by the average of the (a) quoted closing prices of the TPEG Common
Stock on the NASDAQ SmallCap Market during the thirty (30) consecutive trading
days immediately preceding the Effective Time and (b) if there is no trading in
the TPEG Common Stock on the NASDAQ SmallCap Market on any one or more of such
trading days, by the average mean between the quoted
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closing bid and asked prices for the TPEG Common Stock on such Market on any of
such days, subject to a maximum price of one dollar and forty cents ($1.40) per
share of TPEG Common Stock (or a minimum of 714,286 shares of TPEG Common Stock)
or a minimum price of one dollar and twenty cents ($1.20) per share of TPEG
Common Stock, (or a maximum of 833,333 shares of TPEG Common Stock).
1.7 Conversion of Securities.
(a) Each share of GJM Common Stock issued and outstanding
immediately prior to the Effective Time (except for shares of GJM Common Stock
then held in its treasury, which shares shall be canceled upon the Merger),
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become such number of shares of TPEG Common Stock
as shall have been determined pursuant to Section 1.6 hereof divided by the
total number of shares of GJM Common Stock issued and outstanding immediately
prior to the Effective Time.
(b) As of the Effective Time, the holders of certificates
representing shares of issued and outstanding GJM Common Stock shall cease to
have any rights as stockholders of GJM, except such rights, if any, as they may
have pursuant to the BCL, and, except as otherwise expressly set forth herein,
their sole and exclusive right shall be the right to receive shares of TPEG
Common Stock in accordance with the provisions of this Agreement.
(c) Each share of Common Stock of TPEG Sub III ("TPEG Sub III
Common Stock") issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock of the Surviving Corporation. Each
certificate evidencing ownership of TPEG Sub III Common Stock shall continue to
evidence ownership of the same number of shares of the same class of the
Surviving Corporation. From and after the Effective Time, each outstanding
certificate theretofore representing TPEG Sub III Common Stock shall be deemed
for all purposes to evidence ownership of and to represent the number of shares
of Common Stock of the Surviving Corporation into which such TPEG Sub III Common
Stock shall have been converted. Promptly after the Effective Time, the
Surviving Corporation shall issue to TPEG, the holder of the TPEG Sub III Common
Stock, one or more certificates representing a like number of shares of Common
Stock of the Surviving Corporation in exchange for the certificates that
formerly represented TPEG Sub III Common Stock, which shall thereupon be
canceled.
1.8 Surrender and Payment. Promptly after the Effective Time, TPEG shall
deliver or cause to be delivered to each holder of record of one or more
certificates representing GJM Common Stock (collectively, the "GJM
Certificates"), certificates representing such number of shares of TPEG Common
Stock as each such holder shall be entitled to receive per share of GJM Common
Stock pursuant to Section 1.7(a) of this Agreement in exchange for the surrender
of TPEG or its transfer agent ("TPEG Transfer Agent") of such GJM Certificates.
If any Shares of TPEG
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Common Stock are to be issued in a name other than that in which a GJM
Certificate so surrendered is then registered, it shall be a condition of such
exchange that the GJM Certificate surrendered be accompanied by payment of any
applicable transfer taxes and documents required for a valid transfer or
assignment of title to such shares of TPEG Common Stock in the reasonable
judgment of TPEG and its counsel. From and after the Effective Time, until so
surrendered, each GJM Certificate shall be deemed for all purposes, except as
set forth below, to evidence the number of shares of TPEG Common Stock into
which the GJM Common Stock represented by such GJM Certificate shall have been
converted. Upon surrender of a GJM Certificate, the holder of record thereof
shall receive, together with one or more certificates representing the number of
shares of TPEG Common Stock to which he shall be entitled in accordance with
Section 1.7(a), all dividends and other distributions which shall have
theretofore been paid or made to holders of record of TPEG Common Stock after
the Effective Time with respect to such shares. TPEG shall be authorized to
deliver certificates for shares of TPEG Common Stock attributable to any GJM
Certificate theretofore issued which has been lost or destroyed upon receipt of
satisfactory evidence of ownership of the shares of GJM Common Stock formerly
represented thereby and of appropriate indemnification of TPEG in form
satisfactory to TPEG and its counsel.
1.9 Fractional Shares. No fractional shares shall be issued by TPEG in
the Merger. Each fractional interest in a share of TPEG Common Stock which would
otherwise be issued as a result of the Merger shall be rounded to the nearest
whole share of TPEG Common Stock.
1.10 No Further Transfers. At the Effective Time, the stock transfer
books of GJM shall be closed, and no further transfers of shares of GJM Common
Stock shall thereafter be made or be effective.
1.11 Other Mergers with Other GJ Companies. Notwithstanding any other
provision of this Agreement, the consummation of both of the Other Mergers among
TPEG, other TPEG subsidiaries, each of GJP and GJE and Xxxxxx and Xxxxxxxx at
the Effective Time shall constitute conditions precedent to the Merger and the
consummation of the Merger at the Effective Time shall constitute a condition
precedent to the consummation of the Other Mergers.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF GJM, XXXXXX AND XXXXXXXX.
GJM, Xxxxxx and Xxxxxxxx hereby jointly and severally represent and
warrant to TPEG and TPEG Sub III as follows:
2.1 Organization and Authorization. GJM (i) is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, (ii) has the corporate power and authority to own or lease and
operate the properties and assets now owned or leased and operated by it and to
carry on its business as it is now being conducted, and (iii) is duly
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qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the nature of its business or the ownership of its
properties or both makes such qualification necessary. GJM has delivered to TPEG
complete and correct copies of its Certificate Incorporation and By-laws, as
amended and in effect on the date of this Agreement. GJM has full and
unrestricted corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of GJM and, except for the
approval of GJM's stockholders, no other corporate proceedings on the part of
GJM are necessary to authorize this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by GJM and constitutes the legal, valid and binding
agreement of GJM, enforceable against GJM in accordance with its terms. GJM has
no wholly-owned or majority-owned subsidiaries and has no record or beneficial
title or interest in any capital stock or equity interest in any firm,
corporation, partnership, other entity or individual (each, a "Person") Neither
Xxxxxx nor Xxxxxxxx has any direct or indirect record or beneficial title or
interest in any captital stock or other equity interest of any Person (other
than GJM, the Other GJ Companies and 1037300 Ontario Limited (the "Ontario
Corporation")) engaged directly or indirectly in the businesses of developing,
producing, distributing, licensing and/or exhibiting motion pictures or
television programs or series, other than holdings of less than five (5%)
percent of publicly held Persons by both Xxxxxx and Xxxxxxxx, as a group.
2.2 Non-Contravention. The execution and delivery by GJM of this
Agreement and, subject to the approval of this Agreement by GJM's stockholders,
the consummation by GJM of the transactions contemplated hereby will not (a)
violate any provision of the Certificate of Incorporation or By-laws of GJM, (b)
violate any material provision of or result in the breach or the acceleration of
or entitle any party to accelerate (whether after the giving of notice or lapse
of time or both) any material obligation of GJM under any GJM Lease (as such
term is defined in Section 2.12 hereof), or other agreement, indenture, loan
agreement, commitment, license, instrument, order, arbitration award, judgment
or decree to which GJM is a party or by which GJM is bound, (c) result in the
creation or imposition of any lien, charge, pledge, security interest or other
encumbrance upon any asset or property of GJM or (d) violate or conflict with in
any respect any other material restriction or any law, ordinance or rule to
which GJM or the property or assets of GJM is subject.
2.3 Governmental Consents and Approvals. Except as set forth in Schedule
2.3, no consent, approval, order or authorization of, or registration or
declaration with, any government agency, court, tribunal or arbitration board or
panel (collectively "Gorvernmental Authority") is required in connection with
the execution and delivery of this Agreement by GJM or the consummation by GJM
of the transactions contemplated hereby, except for the filing of a Certificate
of Merger with the Secretary of State of the State of New York.
2.4 Capital Stock. The authorized capital stock of GJM consists of 200
shares of Common Stock, no par value, of which 100 shares are issued and
outstanding and no shares are issued and held in the treasury of GJM. As of the
date hereof, GJM has no authorized class of capital stock other than the GJM
Common Stock. All outstanding shares of GJM Common Stock
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are duly authorized, validly issued, fully paid and nonassessable and all such
outstanding shares of GJM Common Stock are held of record and beneficially
solely by Xxxxxx and Xxxxxxxx. As of the date hereof, GJM has reserved no shares
of GJM Common Stock for issuance pursuant to any
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option, warrant, subscription or other similar agreement or commitment. As of
the date hereof, except as set forth herein, or in Schedule 2.4, GJM neither has
nor is a party to any outstanding written or oral offers, subscriptions,
options, warrants, rights or other agreements, obligations or commitments
obligating GJM to issue or sell, or cause to be issued or sold, any shares of
any class of capital stock of GJM (including GJM Common Stock) or any securities
or obligations convertible into or exchangeable for or giving any Person any
right to acquire any shares of such capital stock, or obligating GJM to enter
into any such agreement or commitment and no obligation or commitment to
authorize for issuance any shares of any other class of capital stock.
2.5 Financial Statements. (a) The (a) balance sheet as of November 30,
1996 of the GJ Entities and related statements of operations, stockholders'
equity and cash flows for each of November 30, 1995 and November 30, 1996,
examined and reported upon by Xxxxxxxxx, Rich, Baker, Xxxxxx & Company,
independent accountants, complete copies of which have been delivered toTPEG,
and (b) the unaudited balance sheet as of May 31, 1997 of the GJ Entities and
the related statements of operations, stockholders' equity and cash flows for
the six-month period then ended, (collectively, the "GJ Financial Statements"),
have been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis, and fairly present the financial
position of GJM at such dates and the results of its operations and cash flows
for such periods. Except as disclosed or provided for in the GJ Financial
Statements (including the notes thereto) or in Schedule 2.5, as of the date
hereof, (i) GJM has no liabilities, commitments or obligations of any kind,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due, required to be reflected in any such financial statements, including the
notes thereto, under generally accepted accounting principles that are material
to the business or condition (financial or otherwise) of GJM, and (ii) GJM owns
the properties and assets reflected in such financial statements free and clear
of any liens, claims, charges, pledges, security interests or other
encumbrances, other than those described in the GJ Financial Statements.
(b) The books of account and other financial records of GJM (i)
reflect all material items of income and expense and all assets and liabilities
of GJM, (ii) are in all material respects complete and correct, and do not
contain or reflect any material inaccuracies or discrepancies, and (iii) have
been maintained in accordance with good business and accounting practices in all
material respects.
2.6 No Undisclosed Liabilities. GJM has no liabilities other than
liabilities (i) reflected on the GJ Financial Statements, (ii) disclosed in
Schedule 2.5 hereof, or (iii) incurred in the ordinary course of GJM's business
consistent with its past practices. Reserves are to be established on the
balance sheets included in the GJ Financial Statements in amounts that have been
established on a basis consistent with the past practices of GJM and in
accordance with GAAP.
2.7 Receivables. Schedule 2.7 sets forth an aged list of the accounts
receivable of GJM as of July 31, 1997, showing separately those receivables
that, as of such date, had been due and outstanding (a) 30 days or less, (b) 31
to 60 days, (c) 61 to 90 days, (d) 91 to 120 days and (e)
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more than 120 days. Except as set forth on Schedule 2.7, all such receivables
arose from the sale of products or services to Persons not affiliated with GJM
and in the ordinary course of the business consistent with past practice and
custom of GJM and constitute or will constitute, as the case may be, only valid,
undisputed claims of GJM not subject to valid claims of set-off or other
defenses or counterclaims other than normal cash discounts granted in the
ordinary course of the business consistent with past practice. Subject to the
amounts of normal and customary reserves for doubtful accounts established by
GJM for prior periods, all such receivables outstanding as of July 31, 1997 are
good and collectible and have been or will be collected by GJM prior to, or will
be collected by the Surviving Corporation, without resort to litigation or
extraordinary collection activity, within one (1) year after, the Effective
Time.
2.8 TV Production Assets.
(a) Subject to amounts reserved therefor in the GJ Financial
Statements and as adjusted for operations and transactions through the Effective
Time consistent with the past practice and custom of GJM, the values at which
all television production cameras and equipment, post-production and editing
equipment, costumes, wardrobe, props and similar tangible assets (the "TV
Production Assets") are carried on the GJ Financial Statements reflect GJM's
historical valuation policy of stating such TV Production Assets at the lower of
or market value. GJM has good and marketable title to the TV Production Assets
free and clear of all liens and encumbrances. Except as set forth on Schedule
2.8, the TV Production Assets do not consist of items that are obsolete or
damaged; and the Production Assets do not consist of any items leased or held on
consignment. GJM has not acquired or become committed to acquire any TV
Production Assets which are not of a quality and quantity usable in the ordinary
course of their television production business. Schedule 2.8 sets forth a
complete list of the addresses of all warehouses and other facilities in which
the TV Production Assets are located (except for those items in transit) and the
individual and aggregate dollar amounts of all Production Assets (listing by
similar categories) which GJM is obligated to purchase or lease as of the date
hereof.
(b) Subject to the reserve, the TV Production Assets are in good
operating condition, are suitable and usable for the purposes for which they are
intended and are in a condition such that they can be used in the ordinary
course of the television production business of GJM consistent with past
practice.
2.9 Conduct in the Ordinary Course; Absence of Certain Changes, Events
and Conditions. Since May 31, 1997, except as disclosed on Schedule 2.9 or
specifically contemplated by this Agreement, the business of GJM has been
conducted in the ordinary course and consistent with past practice. As
amplification and not in limitation of the foregoing, except as disclosed in or
specifically contemplated by this Agreement, or in the ordinary course of
business consistent with past practice of GJM since such date, GJM has not:
(a) amended or terminated any contract, lease or license, or the
rights thereunder;
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(b) caused, permitted or allowed any material assets or properties
(whether tangible or intangible) to be subjected to any lien or encumbrance;
(c) discharged or otherwise obtained the release of any
encumbrance or paid or otherwise discharged any material liability;
(d) suffered any material adverse effect on the business, business
prospects or financial condition of or the occurrence of any event or events
which, individually, or in the aggregate, has or have had, or could reasonably
be expected to have, such a material adverse effect;
(e) made any loan to, guaranteed any indebtedness of or otherwise
incurred any indebtedness on behalf of any Person;
(f) failed to pay any creditor any material amount owed to such
creditor upon the later of when such amount became due or within any applicable
grace period;
(g) made any material changes in the customary methods of
operations, including, without limitation, practices and policies relating to
the acquisition, development, production, selling, licensing, or distribution of
television movies, series or mini-series for network TV, cable TV or other
markets;
(h) made any capital expenditure or commitment for any capital
expenditure in excess of Ten Thousand ($10,000) Dollars individually or Twenty
Five Thousand ($25,000) Dollars in the aggregate;
(i) sold, transferred, leased, subleased, licensed or otherwise
disposed of any properties or assets, real, personal or mixed (including,
without limitation, leasehold interests and intangible assets);
(j) entered into any agreement, arrangement or transaction with
any of its directors, officers, employees or shareholders or with any relative,
beneficiary, spouse or any other Affiliate of such Person ("Affiliate" shall
mean, with respect to any specified Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with such Person);
(k) (i) granted any material increase, or announced any material
increase, in the wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable by GJM to any of its employees, including, without
limitation, any increase or change pursuant to any employee compensation or
bonus plan or (ii) established or increased or promised to increase any material
benefits under any such employee plan, in either case except as required by law;
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(l) written down or written up (or failed to write down or write
up in accordance with GAAP consistent with past practice) the value of any
tangible or intangible assets or any receivables;
(m) amended, terminated, canceled or compromised any material
claims or waived any other material rights;
(n) made any change in any method of accounting or accounting
practice or policy other than such changes as are required by GAAP;
(o) accelerated or discounted the collection of accounts
receivable, or delayed the payment of accounts payable; and the collection and
payment of all such receivables and accounts payable, respectively, have at all
times been made in the ordinary course of business consistent with past
practice;
(p) failed, in any material respect, to maintain the TV Production
Assets in accordance with good business practice and in good operating condition
and repair;
(q) failed to renew any insurance policy that is scheduled to
terminate or expire within forty-five (45) calendar days of the Effective Time;
(r) incurred any indebtedness for borrowed money;
(s) terminated, discontinued, closed or disposed of any facility
or other material business operation, or laid off employees;
(t) suffered any casualty loss or damage with respect to any of
the TV Production Assets which in the aggregate have a replacement cost of more
than Ten Thousand ($10,000) Dollars whether or not such loss or damage shall
have been covered by insurance;
(u) entered into or amended in any material respect any employment
agreement or adopted, or amended in any material respect, any collective
bargaining agreement or any employee benefit plan (as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA");
(v) incurred any damage, destruction or similar loss, whether or
not covered by insurance, materially affecting the business, assets, properties
or business prospects of GJM;
(w) entered into any other transaction of a material nature other
than in the ordinary course of business;
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(x) entered into any agreement or understanding with any of its
directors, officers or beneficial owners of more than 5% of the outstanding GJM
Common Stock or any of their respective Affiliates;
(y) issued or sold any Common Stock or shares or units of capital
stock of any other class, notes, bonds, or other equity or debt securities, or
any options warrants or other rights to purchase or which are convertible into
the same, or entered into any written or oral agreement, commitment or
understanding with respect to the issuance and/or sale thereof, except as
contemplated by this Agreement;
(z) declared, set aside or paid any dividend, or made any other
distribution on its capital stock or redeemed, purchased or acquired any shares
or units thereof or entered into any agreement in respect of any of the
foregoing;
(aa) amended its Certificate of Incorporation or By-laws;
(bb) (i) purchased, sold, assigned or transferred any material
tangible or intangible assets or any material patent, trademark, trade name,
copyright, license, franchise, design or other intangible assets or property,
(ii) mortgaged, pledged or granted or suffered to exist any lien or other
encumbrance or charge on any material assets or properties, tangible or
intangible, or (iii) waived any rights of material value or canceled any
material debts or claims;
(cc) incurred any contractual obligation or liability (absolute or
contingent) in excess of $100,000 in the aggregate in one or a series of related
transactions, except current liabilities and obligations incurred in the
ordinary course of business or paid any liability or obligation (absolute or
contingent) in excess of $100,000 other than current liabilities and obligations
incurred in the ordinary course of business consistent with and in accordance
with past practices; or
(dd) agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 2.9 or granted any options to purchase, rights
of first refusal, rights of first offer or any other similar rights or
commitments with respect to any of the actions specified in this Section 2.9,
except as expressly contemplated by this Agreement.
2.10 Tax Matters. (a) GJM has duly filed all federal, state, county,
local, foreign and other income, excise, sales, customs, franchise, use,
license, real and personal property, withholding, social security and other tax
and information returns and reports required to have been filed by GJM to the
date hereof, other than income tax returns or reports for the year ending
November 30, 1997, and has paid (or, in the case of withholding taxes and
obligations, has withheld and paid over as required) all taxes, assessments,
duties and other governmental charges (collectively, "Taxes") (including
interest, penalties and additions thereto, if any) shown on such returns or
reports to be due or claimed to be due prior to the date hereof to any federal,
state, county, local, foreign or other Governmental Authority. GJM has paid, or
has made adequate provision in the GJ Financial Statements for, all Taxes
(including interest, penalties and additions thereto, if any)
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payable by GJM with respect to all periods to and including May 31, 1997. GJM
does not have any liability for any Taxes (including interest, penalties and
additions thereto, if any) of any nature whatsoever other than as reflected on
the GJ Financial Statements and, to the best knowledge of GJM, there is no basis
for any additional material claims or assessments for Taxes other than with
respect to liabilities for Taxes that may have accrued since November 30, 1996
in the ordinary course of business of GJM or liabilities for Taxes contested in
good faith and with respect to which adequate reserve has been reflected in the
GJ Financial Statements, which are described on Schedule 2.10. Except as set
forth in Schedule 2.10, no federal income tax returns of GJM have been examined
by the Internal Revenue Service (the "IRS") and no proposed additional Taxes,
interest or penalties have been asserted with respect to years not examined.
True copies of the federal, state and local income tax returns of GJM for the
years ended November 30, 1995 and November 30, 1996 have been heretofore
delivered or made available to TPEG.
(b) In furtherance of the representations and warranties set forth
in paragraph (a) of this Section 2.10 and, except as otherwise set forth in
Schedule 2.10:
(i) Filing of Returns. As of the time of filing, GJM's tax
returns correctly reflected the facts regarding GJM's income,
business, assets, operations, activities, status, other matters or
any other information shown or required to be shown thereon. No
claim has ever been made by a taxing authority in a jurisdiction
where GJM does not file tax returns with respect to a particular tax
that it is or may be subject to taxation by that jurisdiction with
respect to such tax.
(ii) Liens. There are no liens for taxes other than for
current taxes not yet due and payable for which adequate provision
shall have been made in the GJ Financial Statements on the assets of
GJM.
(iii) Foreign Person. GJM is not a person other than a United
States person within the meaning of the Code.
(iv) Audit History. No issues have been raised and no
requests for information have been made by any taxing authority in
connection with any of the GJM tax returns or with respect to any
taxes to which GJM is or may be subject. No waivers of statutes of
limitation with respect to the tax returns or any taxes to which GJM
may be subject have been given by or requested from GJM. Schedule
2.10 sets forth by Tax, taxing authority and taxable period (A) each
tax return filed by, or with respect to, any predecessor for any
taxable period ending on or after November 30, 1994, (B) the taxable
periods of GJM as to which the statute of limitations with respect
to such Taxes have not expired, and (c) with respect to such taxable
periods, those years for which
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examinations have been completed, those years for which for which
examinations are presently being conducted, those years for which
examinations have not been initiated, and those years for which
required tax returns have not yet been filed. GJM has delivered to
TPEG correct and complete copies of all such tax returns and all
examination reports, statements of deficiencies or other notices
from or correspondence with, taxing authorities with respect
thereto. Except to the extent shown on Schedule 2.10, all
deficiencies asserted or assessments made as a result of any
examinations have been fully paid, or will be fully reflected as a
liability in the GJ Financial Statements, or are being contested and
an adequate reserve therefor has been established and will be fully
reflected in the GJ Financial Statements. No power of attorney has
been granted with respect to any matter relating to Taxes that could
affect GJM.
(v) Tax-Sharing or Allocation Agreements. GJM is not a party
to or bound by any tax-indemnity, tax-sharing, or tax-allocation
agreements.
(vi) Prior Affiliated Groups. GJM has never been a member of
an Affiliated Group (within the meaning of the Code) nor has ever
been included in any group, consolidated or unitary Return. GJM does
not have any liability for the Taxes of any Person under Treas. Reg.
Section 1.1502-6 (or any similar provision of law), or as a
transferee or successor, by contract or otherwise.
(vii) Tax Elections. All material elections with respect to
Taxes affecting GJM are set forth in Schedule 2.10.
(viii) Section 341(f) Consent. GJM has not filed a consent
pursuant to the collapsible corporation provisions of Section 341(f)
of the Code (or any similar provision of law) or agreed to have
Section 341(f)(2) of the Code (or any similar provision of law)
apply to any disposition of any asset owned by it.
(ix) Doing Business: Taxable Nexus. GJM is not doing business
in or engaged in a trade or business in, or has a taxable nexus
with, any jurisdiction in which it has not filed all applicable Tax
Returns.
(xi) Records. GJM has maintained such records in reasonable
detail in respect of transactions, events and items (including those
required to support otherwise allowable deductions, losses and
credits) as are required under applicable laws in respect of Taxes.
(xii) Unpaid Tax. The unpaid Taxes of GJM shall not exceed the
reserve for tax liability (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax
income) set forth on the
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face of the Balance Sheets included in the GJ Financial Statements
(rather than in any notes thereto).
(xiii) Carryover of Unabsorbed Losses. Except as set forth in
Schedule 2.10, or as may result or arise by reason of the Merger and
other transactions contemplated by this Agreement, neither GJM nor
either of the Stockholders has taken any actions or filed any Tax
Returns which restricted GJM's utilization of any unabsorbed losses
sustained in prior periods to offset income to be earned by GJM
after the Effective Time in the lines of business conducted by GJM
as of the date hereof.
2.11 Material Contracts. Attached as Schedule 2.11 is a list which is
complete and correct in all material respects as of the date of this Agreement
of all material agreements, contracts and commitments of GJM, including all
agreements, contracts and commitments of the following types, written or oral,
to which GJM is a party or by which the properties or assets of GJM are bound as
of the date of this Agreement: (i) options to acquire television scripts and
similar prospective television production agreements and co-production
agreements for television series, made-for- television-movies and mini-series
and licensing and distribution agreements; (ii) indentures, security agreements
and other agreements and instruments relating to the borrowing of money by or
extension of credit to GJM; (iii) employment and consulting agreements; (iv)
collective bargaining agreements; (v) agreements, orders or commitments not
cancelable by GJM (without penalty) on not more than 30 days notice; (vi) motor
vehicle, equipment and other personal property leases; (vii) licenses of
material patent, trademark and other proprietary rights; (viii) agreements or
commitments for capital expenditures in excess of Twenty Five Thousand ($25,000)
Dollars in the aggregate for all facilities; (ix) brokerage or finder's
agreements (excluding the "Sirius Agreement" defined and described in Section
2.21 hereof); (x) surety bonds and letters of credit; and (xi) agreements,
contracts and commitments of a type other than those described in the foregoing
clauses (i) through (xi) which in any case involve payments or receipts of more
than Ten Thousand ($10,000) Dollars in the aggregate. GJM has delivered or made
available to TPEG and TPEG Sub III complete and correct copies of all written
agreements, contracts and commitments, together with all amendments thereto, and
accurate descriptions of all oral agreements, set forth on said Schedule 2.11.
Except as set forth in Schedule 2.11 and except for defaults or failures to
perform that do not and will not materially adversely affect the financial
condition, business or operations of GJM, or title to or use of any of the
assets or properties of GJM, such agreements, contracts and commitments are in
full force and effect and, to the best knowledge of GJM, all parties thereto
have performed all material obligations required to be performed by them to date
and are not in default in any material respect thereunder. Except as set forth
in Schedule 2.11 and except for claims, defaults or events that in the aggregate
do not and will not materially adversely affect the financial condition,
business, operations or prospects of GJM or title to or use of the assets or
properties of GJM, no claim of default by any party has been made or is now
pending under any such agreement, contract or commitment and, to the best
knowledge of GJM, no event has occurred and is continuing that with notice or
the passage of time or both would constitute a material default thereunder or
would excuse performance by any party thereto. No such agreement, contract or
commitment materially adversely affects or in the
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future may (so far as GJM can now reasonably foresee) materially adversely
affect the business, condition, properties, assets, liabilities or operations of
GJM or of the Surviving Corporation.
2.12 Real Property. (a) Schedule 2.12 sets forth a true, complete and
correct listing of all leases covering the real property in which GJM holds the
lessee's interest (collectively, the "GJM Leases"). Except as set forth in
Schedule 2.12, GJM holds the lessee's interest in all of the GJM Leases, free
and clear of all liens, claims and encumbrances. GJM does not own any real
property.
(b) Schedule 2.12 sets forth a true, complete and correct listing
of (i) all leases to which any of the GJM Leases are subordinated (collectively,
the "Underlying GJM Leases"), and (ii) all Subleases of any of the GJM Leases
(collectively, the "GJM Subleases"). True, complete and correct copies of each
GJM Lease, Underlying GJM Lease and GJM Sublease have been delivered or made
available by GJM to TPEG.
(c) Except as set forth in Schedule 2.12, GJM has no knowledge of
and has not received any notice of default from the holder of the lessor's
interest in any GJM Leases or Underlying GJM Leases or the holder of the
lessee's interest in any GJM Subleases that has not heretofore been cured.
(d) Except as set forth in Schedule 2.12, neither the premises
leased under any GJM Lease, the use thereof by GJM nor any condition existing
with respect thereto, violates any laws, ordinances, regulations or requirements
(including, without limitation, zoning and use regulations and building
department requirements) affecting the same, which violation would materially
interfere with the operation or use of such premises or materially diminish the
value thereof.
(e) Except as set forth in Schedule 2.12, to the best knowledge of
GJM, no Person has any interest in the lessee's interest under any GJM Lease,
Underlying GJM Lease or GJM Sublease or has any right or option to acquire same
or any part thereof.
(f) As of the date of this Agreement, GJM has no knowledge that
any Person has paid or been paid any money, or has made or contemplated making
any agreement, written or oral, with respect to the premises leased under any
GJM Lease, Underlying GJM Lease or GJM Sublease or portion thereof which would
preclude, be in competition with or otherwise interfere with the continued use
and occupancy of such property by the Surviving Corporation or could adversely
affect the ability of the lessee thereof to renew any GJM Lease.
(g) Hazardous materials (as such term is defined in any law
applicable to GJM or its properties or assets) have not been released or treated
on any property leased, or, to the best knowledge of GJM, occupied or used by
GJM in its television production or other business activities and have not been
generated, used, handled or stored on, or transported to or from, any such
property. GJM has disposed of all wastes, including those wastes containing
hazardous
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materials, in compliance with all applicable laws and the Permits. There are no
past, pending or, to GJM's knowledge, threatened claims against GJM or any
property covered by any GJM Lease which relate to any environmental matters and
GJM has not received any notice of such claims. No property leased, or occupied
or used from time to time by GJM in its production or other activities by GJM
and, to the best knowledge of GJM, no property adjoining any such property, is
listed or proposed for listing on the National Priorities List under the
Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA") or on the Comprehensive Environmental Response, Compensation and
Liability Information System, as updated through the date hereof ("CERCLIS") or
any analogous state list of sites requiring investigation or cleanup and GJM has
not transported or arranged for the transportation of any hazardous materials to
any location that is listed or proposed for listing on the National Priorities
List under CERCLA or on the CERCLIS or any analogous state list.
(h) There are not now and never have been any underground storage
tanks located on any real property leased or, to the best knowledge of GJM,
occupied or used by GJM from time to time in its television production or other
activities. GJM has never installed any such underground storage tanks on any
real property leased or applied by it.
2.13 Permits. GJM currently holds all material health and safety and
other permits, licenses, authorizations, certificates, exemptions and approvals
of governmental authorities (collectively, "Permits"), including, without
limitation, environmental Permits, necessary or proper for the current use,
occupancy and operation of the real property occupied or used by GJM pursuant to
the GJM Leases. All such Permits are currently valid and in full force and
effect. There is no existing practice, action or activity of GJM and no existing
condition of the assets or business of GJM which is reasonably likely to give
rise to any civil or criminal liability under, or violate or prevent compliance
with, any health or occupational safety or other similar applicable law. GJM has
not received any notice from any Governmental Authority revoking, canceling,
rescinding, materially modifying or refusing to renew any Permit or providing
written notice of violations under any law. GJM is in all material respects in
compliance with the requirements of the Permits. No consent of any Governmental
Authority will be required with respect to any Permit in the event of the
consummation of the transactions contemplated by this Agreement.
2.14 Litigation. Schedule 2.14 sets forth a true, complete and correct
listing of all pending actions, suits or proceedings to which GJM is a party.
Except as disclosed in Schedule 2.14, there are no actions, suits or proceedings
or investigations pending or, to the best knowledge of GJM, threatened against
or adversely affecting the business, operations or financial condition of GJM at
law or in equity in any court or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or any arbitrator. GJM is not in default in respect of any
judgment, order, writ, injunction or decree of any court or any federal, state,
municipal or other governmental department, commission, board, bureau,
authority, agency or instrumentality.
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2.15 Certain Interests. Except as disclosed in Schedule 2.15, neither GJM
nor any Affiliate, nor any officer or director of GJM, no relative or spouse (or
relative of such spouse) who resides with, or is a dependent of , any such
Person: (a) has any direct or indirect financial interest in any competitor,
supplier or customer of GJM or (b) owns, directly or indirectly, in whole or in
part, or has any other interest in any tangible or intangible property which GJM
uses or has used in the conduct of their respective businesses or otherwise.
2.16 Labor Relations. Schedule 2.16 contains a correct and complete list
of all collective bargaining, employment, labor and similar agreements (other
than the "GJM Benefit Plans" defined and described in Section 2.18), whether
written or oral, to which GJM is a party or by which it is or they are bound.
True and correct copies of all such agreements have been supplied to TPEG. GJM
has complied with its obligations related to, and is not in default under, any
written or oral employment agreements, collective bargaining agreements and any
written or oral personnel policies to which they are parties or by which they
are bound. GJM is in compliance with all applicable laws respecting employment
and employment practices, terms and conditions of employment and wages and
hours, and are not and have not engaged in any unfair labor practices. Except as
set forth in Schedule 2.16:
(a) there is no unfair labor practice charge or complaint against
GJM pending or, to the best knowledge of GJM, threatened before the National
Labor Relations Board or any other Governmental Authority;
(b) there has not occurred nor, to the best knowledge of GJM, has
there been threatened, a labor strike, request for representation, work slowdown
or stoppage or lockout;
(c) there has not been any representation claim or petition
pending before the National Labor Relations Board respecting any employees of
GJM during the past five (5) years;
(d) no grievance nor any arbitration proceeding arising out of any
collective bargaining agreement to which GJM is a party is pending;
(e) no charges with respect to or relating to GJM are pending
before the Equal Employment Opportunity Commission or any state, local or
foreign agency responsible for the prevention of unlawful employment practices;
(f) no claim relating to employment or loss of employment with GJM
is pending in any federal, state or local court or in or before any other
adjudicatory body and, to the best knowledge of GJM, no such claims has been
threatened;
(g) GJM has not received notice of the intent of any federal,
state, local or foreign agency responsible for the enforcement of labor or
employment laws, rules or regulations to conduct an investigation of or relating
to GJM, and no such investigation is in progress;
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(h) GJM has paid in full to all of its employees, or adequately
accrued for in accordance with GAAP, all wages, salaries, commissions, bonuses,
benefits and other compensation due to or on behalf of such employees;
(i) there is no claim with respect to payment of wages, salary or
overtime pay that has been asserted or is now pending or, to the best knowledge
of GJM, threatened before any Governmental Authority with respect to any Persons
currently or formerly employed by GJM; and
(j) GJM is not a party to, or otherwise bound by, any consent
decree with, or citation by, any Governmental Authority relating to employees or
employment practices.
2.17 Compliance with Laws. GJM has all material Permits, licenses, orders
and approvals of all federal, state or local governmental or regulatory
authorities which are required to conduct the business of GJM as presently
conducted. All such Permits, licenses, orders and approvals are in full force
and effect and, to the best knowledge of GJM, no suspension or cancellation of
any of them is threatened. Except as set forth in Schedule 2.17, none of such
Permits, licenses, orders or approvals will be adversely affected by the
consummation of the Merger. GJM is in compliance in all material respects with
the rules and regulations of all governmental agencies having authority over it,
including, without limitation, agencies concerned with occupational, safety,
environmental protection and employment practices, and GJM has not received
notice of violation of or failure to comply with any such rules or regulations
within the last three years, the failure to comply with which could have a
material adverse effect on the financial condition, business or operations of
GJM.
2.18 Employee Benefit Plans. (a) Schedule 2.18 sets forth a true,
complete and correct listing of all employee benefit plans (as defined in
Section 3(3) of ERISA) maintained by GJM (the "GJM Benefit Plans"). True,
correct and complete copies of the GJM Benefit Plans have heretofore been
delivered to TPEG.
(b) None of the GJM Benefit Plans is a multi-employer plan (within
the meaning of Section 3(37) or 4001(a)(3) of ERISA) or a single employer
pension plan (within the meaning of Section 4001(a)(15) of ERISA) subject to
Title IV of ERISA. None of the GJM Benefit Plans provides for the payment of
separation, severance, termination or similar-type benefits to any Person or
obligates GJM to pay separation, severance, termination or similar-type benefits
solely as a result of any transaction contemplated by this Agreement or as a
result of a "change in control" within the meaning of such term under Section
280G of the Code. None of the GJM Benefit Plans provides for or promises retiree
medical, disability or life insurance benefits to any current or former
employee, officer or director of GJM. Each of the GJM Benefit Plans is subject
only to the laws of the United States or a political subdivision thereof. GJM
does not sponsor, maintain or contribute to a voluntary employees' beneficiary
association intended to be exempt under Section 501(c)(9) of the Code.
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(c) Each GJM Benefit Plan is now and always has been operated in
all material respects in accordance with the requirements of all applicable
laws, including, without limitation, ERISA and the Code, and all persons who
participate in the operation of such GJM Benefit Plans and all Plan
"fiduciaries" (within the meaning of Section 3(21) of ERISA) have always acted
in accordance with all applicable laws, including, without limitation, ERISA and
the Code. GJM has performed all obligations required to be performed by it
under, is not in any respect in material default under or in violation of, and
has no knowledge of any default or violation by any party to, any GJM Benefit
Plan. No legal action, suit or claim is pending or threatened with respect to
any GJM Benefit Plan (other than claims for benefits in the ordinary course) and
no fact or event is known that could give rise to any such action, suit or
claim.
(d) Each GJM Benefit Plan, which is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code, has received a
favorable determination letter from the IRS that it is so qualified and each
trust established in connection with any GJM Benefit Plan which is intended to
be exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event is known to have occurred since the date of such determination letter
from the IRS to materially adversely affect the qualified status of any such GJM
Benefit Plan or the exempt status of any such trust.
(e) There has been no material prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
GJM Benefit Plan. GJM has not incurred any material liability for any penalty or
tax arising under Section 4971, 4972, 4980, 4980B or 6652 of the Code or any
liability under Section 502 of ERISA, and no fact or event exists which could
give rise to any such material liability. GJM has not incurred any liability
under, arising out of or by operation of Title IV of ERISA including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or (ii)
the withdrawal from any multi-employer plan, and no fact or event exists which
could give rise to any such liability. No complete or partial termination has
occurred within the five years preceding the date hereof with respect to any GJM
Benefit Plan.
(f) All contributions, premiums or payments required to be made
with respect to any GJM Benefit Plan have been made on or before their due dates
and GJM has no unfunded liabilities or obligations with respect to or arising
out of any GJM Benefit Plan. All such contributions have been fully deducted for
income tax purposes and no such deduction has been challenged or disallowed by
any government entity and no fact or event is known to exist which could give
rise to any such challenge or disallowance.
(g) Each of the guaranteed investment contracts and other funding
contracts with any insurance company that are held by any of the GJM Benefit
Plans and any annuity contracts purchased by (i) any of the GJM Benefit Plans or
(ii) any pension benefit plan (as defined in Section 3(2) of ERISA) that
provided benefits to any current or former employees of GJM was issued by an
insurance company which carried the highest rating from each of the nationally
recognized rating agencies, as of the date such contract was issued, the date
hereof and the Effective Time.
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(h) GJM is in material compliance with the requirements of the
Americans With Disabilities Act and the Workers Adjustment and Retraining
Notification Act and, as of the date hereof, GJM has incurred no liabilities
under either such statutes..
2.19 Patents, Copyrights, Trademarks, Etc. Schedule 2.19 sets forth a
true, complete and correct listing of all material patents, trade names,
trademarks, service marks, copyrights, pending applications for any of the
foregoing, and other proprietary rights of GJM and all agreements for the
licensing thereof by, or to and in favor of, GJM. Except as set forth in
Schedule 2.19, GJM owns, or possesses adequate rights to use, all material
patents, trade names, trademarks, service marks, copyrights, inventions,
processes, designs, formulae, trade secrets, know how and other proprietary
rights necessary for the conduct of their business, with no known infringement
by GJM of the rights (asserted or unasserted) of any Person arising by reason of
any of the foregoing. GJM has no knowledge of any infringement by any third
party upon any patent, trade name, trademark, service xxxx or copyright owned or
used by GJM, and GJM has not taken or omitted to take any action which would
have the effect of waiving any of its rights thereunder, in each case, except
where such infringement or waiver would not have a material adverse effect on
the business, prospects, condition (financial or other) or results of operations
of GJM.
2.20 Insurance. GJM has made available to TPEG complete and correct
copies of all insurance policies maintained by GJM, together with all riders,
endorsements and amendments thereto. All such policies are in full force and
effect and all premiums due thereon as of the date have been paid. Such
insurance policies provide GJM with adequate insurance (both as to type and
amount) with respect to risks and perils of a business of the size and type
carried on by GJM as of the date hereof. GJM has complied in all material
respects with the provisions of all such policies.
2.21 Compensation to be Paid in Connection With the Merger. Attached as
Schedule 2.21 is a true copy of an agreement, dated July 14, 1997 Sirius
Corporate Finance Inc. ("Sirius") and TPEG pursuant to which Sirius is to
receive compensation for its services in connection with the Merger (the "Sirius
Agreement"). Except for the engagement of Sirius pursuant to the Sirius
Agreement, neither GJM nor any of the Other GJ Companies, nor Xxxxxx or Xxxxxxxx
or any of their respective Affiliates has engaged or employed any investment
banking firm, broker, finder or intermediary in connection with the transactions
contemplated by this Agreement who might be entitled to any fee, commission or
other compensation in connection with or upon consummation of the Merger. GJM
and the Stockholders hereby jointly and severally indemnify, defend and hold
TPEG and all of its subsidiaries, including TPEG Sub III, harmless from and
against any and all claims, liabilities or obligations with respect to any
additional or other finder's or similar fees, commissions or expenses asserted
or claimed by Sirius, other than pursuant to the Sirius Agreement, or by any
other Person on the basis of any act or statement alleged to have been taken or
made by GJM, either of the Other GJ Companies or either of Xxxxxx or Xxxxxxxx.
2.22 BCL Section 912 Not Applicable. The provisions of Section 912 of the
BCL will not, prior to the termination of this Agreement, apply to this
Agreement or the Merger or any of the transactions contemplated hereby.
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2.23 Disclosure. The representations and warranties of GJM, and each of
Xxxxxx and Xxxxxxxx set forth in this Agreement, the certificates, statements
and other information furnished to TPEG and TPEG Sub III in writing by or on
behalf of GJM and each of Xxxxxx and Xxxxxxxx in connection with the
transactions contemplated hereby, including the Schedules hereto, do not as of
the date of this Agreement, and as of the Effective Time shall not, contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. As of the date hereof, neither GJM nor Xxxxxx or
Xxxxxxxx knows of any fact or condition which materially adversely affects, or
in the future may (so far as GJM, or Xxxxxx or Xxxxxxxx can now reasonably
foresee) materially adversely affect the condition (financial or otherwise),
properties, assets, liabilities, business, operations or business prospects of
GJM which has not been set forth herein or disclosed to TPEG in writing with
reference to this Agreement.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF TPEG
TPEG represents and warrants to GJM, Xxxxxx and Xxxxxxxx as follows:
3.1 Organization and Authorization. TPEG and each of the subsidiaries of
TPEG, including TPEG Sub III, (i) is a corporation duly organized, validly
existing and in good standing under the laws of their respective states of
incorporation, (ii) has the corporate power and authority to own or lease and
operate the properties and assets now owned or leased and operated by it and to
carry on its business as it is now being conducted, and (iii) is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of its business or the ownership of its
properties or both makes such qualification necessary. TPEG has delivered to GJM
complete and correct copies of its Certificate Incorporation and By-laws, as
amended and in effect on the date of this Agreement. TPEG has the corporate
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of TPEG and no other corporate proceedings on the part of
TPEG are necessary to authorize this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by TPEG and constitutes the legal, valid and binding
agreement of TPEG, enforceable against TPEG in accordance with its terms subject
to the laws of bankruptcy, insolvency, or creditor rights and equitable
remedies. Schedule 3.1 contains a complete list of the subsidiaries of TPEG,
including TPEG Sub III, each of which is wholly-owned by TPEG except as noted
therein.
3.2 Non-Contravention. Except as set forth in Schedule 3.2, the
execution and delivery by TPEG of this Agreement and the consummation by TPEG of
the transactions contemplated hereby will not (a) violate any provision of the
Certificate of Incorporation or By-laws of TPEG or any subsidiary of TPEG, (b)
subject to receipt of the Consents referred to in Section 7.1(c), violate any
material provision of or result in the breach or the acceleration of or entitle
any
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party to accelerate (whether after the giving of notice or lapse of time or
both) any material obligation of TPEG under any TPEG Lease (as such term is
defined in Section 3.10 hereof), or other material agreement, indenture, loan
agreement, commitment, license, instrument, order, arbitration award, judgment
or decree to which TPEG or any subsidiary of TPEG is a party or by which TPEG or
any subsidiary of TPEG is bound, (c) result in the creation or imposition of any
material lien, charge, pledge, security interest or other encumbrance upon any
asset or property of TPEG or any subsidiary of TPEG or (d) violate or conflict
with in any material respect any other material restriction or any law,
ordinance or rule to which TPEG or any subsidiary of TPEG, or the property or
assets of TPEG or any subsidiary of TPEG, is subject.
3.3 Consents and Approvals. Except for the filing of a Certificate of
Merger with the Secretary of State of the State of New York and except as set
forth in Schedule 3.3, no consent, approval, order or authorization of, or
registration or declaration with, any Governmental Authority or agency is
required in connection with the execution and delivery of this Agreement by TPEG
or the consummation by TPEG of the transactions contemplated hereby.
3.4 Capital Stock. The authorized capital stock of TPEG consists of
50,000,000 Shares of TPEG Common Stock, par value $.001 per share, of which
12,912,761 shares were issued and outstanding as of September 12, 1997, and
10,000,000 Shares of Series A Preferred Stock, $.001 par value per share (the
"Series A Stock"), of which 1,000,000 shares were issued and outstanding as of
June 30, 1997. All outstanding Shares of TPEG Common Stock are duly authorized,
validly issued, fully paid and nonassessable. Schedule 3.4 sets forth the total
number of Shares of TPEG Common Stock reserved for issuance pursuant to
outstanding stock options, warrants of all series, and Series A Stock. As of the
date hereof, except as contemplated by this Agreement and the agreements
governing the Other Mergers or as set forth in Schedule 3.4, neither TPEG nor
any of subsidiary of TPEG has or is a party to any outstanding offers,
subscriptions, options, warrants, rights or other agreements or commitments
obligating TPEG or any such subsidiary to issue or sell, or cause to be issued
or sold, any shares of capital stock of TPEG (including TPEG Common Stock) or of
any such subsidiary or any securities or obligations convertible into or
exchangeable for or giving any Person any right to acquire any such shares, or
obligating TPEG or any such subsidiary to enter into any such agreement or
commitment.
3.5 Financial Statements. The consolidated balance sheet as of June 30,
1996 of TPEG and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
then ended, examined and reported upon by Xxxxxxx & Andelson, independent
accountants, complete copies of which have previously been delivered to GJM
(plus the unaudited financial statements included in its Quarterly Reports on
Form 10-Q through the quarter ended March 31, 1997, which are described in
Section 3.6 hereof, the "TPEG Financial Statements"), have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis and fairly present the financial position of TPEG at such date and the
results of its operations and cash flows for such periods. Except as disclosed
or provided for in such TPEG Financial Statements (including the notes thereto)
or in Schedule 3.5, (i) TPEG had no liabilities, commitments or obligations of
any kind, whether accrued, absolute, contingent
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or otherwise, and whether due or to become due, required to be reflected in any
such financial statements, including the notes thereto, under generally accepted
accounting principles that are material to the business or condition (financial
or otherwise) of TPEG as of March 31, 1997, and (ii) TPEG owns the properties
and assets reflected in such TPEG Financial Statements free and clear of any
liens, charges, pledges, security interests or other encumbrances, other than
those (a) described in the TPEG Financial Statements, (b) which do not have a
material adverse effect on the business, financial condition or results of
operations of TPEG and its subsidiaries, taken as a whole, or (c) which do not
adversely affect title to or the use of such properties or assets.
3.6 Periodic SEC Filings. TPEG has heretofore delivered or made
available to GJM, receipt of which is hereby acknowledged by GJM, (i) its Annual
Reports on Form 10-K for the years ended June 30, 1995 and June 30, 1996 as
filed with the U.S. Securities and Exchange Commission (the "SEC"); (ii) all
Quarterly Reports on Form 10-Q for the quarterly periods commencing with the
quarter ended September 30, 1995 through the quarter ended March 31, 1997; and
(iii) any other reports or registration statements filed by TPEG with the SEC
since March 31, 1997. As of their respective dates, such reports and statements
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.7 Conduct in the Ordinary Course; Absence of Certain Changes, Events
and Conditions. Since March 31, 1997, except as disclosed on Schedule 3.7 or
specifically contemplated by this Agreement, the business of TPEG and of its
subsidiaries has been conducted in the ordinary course and consistent with past
practice. As amplification and not in limitation of the foregoing, except as
disclosed in or specifically contemplated by this Agreement or the agreements
governing the Other Mergers, or in the ordinary course of business consistent
with past practice of TPEG and its subsidiaries since such date, neither TPEG
nor its subsidiaries have:
(a) amended or terminated any contract, lease or license, or the
rights thereunder;
(b) caused, permitted or allowed any material assets or properties
(whether tangible or intangible) to be subjected to any lien or encumbrance;
(c) discharged or otherwise obtained the release of any
encumbrance or paid or otherwise discharged any material liability;
(d) suffered any material adverse effect on the business, business
prospects or financial condition of or the occurrence of any event or events
which, individually, or in the aggregate, has or have had, or could reasonably
be expected to have, such a material adverse effect;
(e) made any loan to, guaranteed any indebtedness of or otherwise
incurred any Indebtedness on behalf of any Person or individual;
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(f) failed to pay any creditor any material amount owed to such
creditor upon the later of when such amount became due or within any applicable
grace period;
(g) made any material changes in the customary methods of
operations, including, without limitation, practices and policies relating to
the acquisition, development, production, selling, licensing, or distribution of
television movies, series or mini-series for network TV, cable TV or other
markets;
(h) made any capital expenditure or commitment for any capital
expenditure in excess of Ten Thousand ($10,000) Dollars individually or Twenty
Five Thousand ($25,000) Dollars in the aggregate;
(i) sold, transferred, leased, subleased, licensed or otherwise
disposed of any properties or assets, real, personal or mixed (including,
without limitation, leasehold interests and intangible assets);
(j) entered into any agreement, arrangement or transaction with
any of its directors, officers, employees or shareholders (or with any relative,
beneficiary, spouse or Affiliate of such Person);
(k) (i) granted any material increase, or announced any material
increase, in the wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable by TPEG to any of its employees, including, without
limitation, any increase or change pursuant to any employee compensation or
bonus plan or (ii) established or increased or promised to increase any material
benefits under any such employee plan, in either case except as required by Law;
(l) written down or written up (or failed to write down or write
up in accordance with GAAP consistent with past practice) the value of any
tangible or intangible assets or any receivables;
(m) amended, terminated, canceled or compromised any material
claims or waived any other material rights;
(n) made any change in any method of accounting or accounting
practice or policy other than such changes as are required by GAAP;
(o) accelerated or discounted the collection of accounts
receivable, or delayed the payment of accounts payable; and the collection and
payment of all such receivables and accounts payable, respectively, have at all
times been made in the ordinary course of business consistent with past
practice;
(p) failed, in any material respect, to maintain the TV Production
Assets in accordance with good business practice and in good operating condition
and repair;
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(q) failed to renew any insurance policy that is scheduled to
terminate or expire within forty-five (45) calendar days of the Effective Time;
(r) incurred any indebtedness for borrowed money;
(s) terminated, discontinued, closed or disposed of any facility
or other material business operation, or laid off employees;
(t) suffered any casualty loss or damage with respect to any of
the TV Production Assets which, in the aggregate, have a replacement cost of
more than Ten Thousand ($10,000) Dollars whether or not such loss or damage
shall have been covered by insurance;
(u) except as contemplated by this Agreement, entered into or
amended in any material respect any employment agreement or adopted, or amended
in any material respect, any collective bargaining agreement or any employee
benefit plan (as such term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA");
(v) incurred any damage, destruction or similar loss, whether or
not covered by insurance, materially affecting the business, assets, properties
or business prospects of TPEG or of any of its subsidiaries;
(w) entered into any other transaction of a material nature other
than in the ordinary course of business;
(x) entered into any agreement or understanding with any of its
directors, officers or beneficial owners of more than 5% of the outstanding TPEG
Common Stock or any of their respective Affiliates (as defined below);
(y) issued or sold any Common Stock or shares or units of capital
stock of any other class, notes, bonds, or other equity or debt securities, or
any options, warrants or other rights to purchase or which are convertible into
the same, or entered into any written or oral agreement, commitment or
understanding with respect to the issuance and/or sale thereof, except as
contemplated by this Agreement and the Other Merger Agreements; or
(z) declared, set aside or paid any dividend (except for quarterly
dividends required to be paid by TPEG on its outstanding Series A Stock), or
made any other distribution on its capital stock or redeemed, purchased or
acquired any shares or units thereof or entered into any agreement in respect of
any of the foregoing;
(aa) amended its Certificate of Incorporation or By-laws;
(bb) (i) purchased, sold, assigned or transferred any material
tangible or intangible assets or any material patent, trademark, trade name,
copyright, license, franchise, design
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or other intangible assets or property, (ii) mortgaged, pledged or granted or
suffered to exist any lien or other encumbrance or charge on any material assets
or properties, tangible or intangible, or (iii) waived any rights of material
value or canceled any material debts or claims;
(cc) incurred any contractual obligation or liability (absolute or
contingent) in excess of One Hundred Thousand ($100,000) Dollars in the
aggregate in one or a series of related transactions, except current liabilities
and obligations incurred in the ordinary course of business, made any capital
improvement in excess of One Hundred Thousand ($100,000) Dollars or paid any
liability or obligation (absolute or contingent) in excess of One Hundred
Thousand ($100,000) Dollars, other than current liabilities and obligations
incurred in the ordinary course of business consistent with and in accordance
with past practices; or
(dd) agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 3.7 or granted any options to purchase, rights
of first refusal, rights of first offer or any other similar rights or
commitments with respect to any of the actions specified in this Section 3.7,
except as expressly contemplated by this Agreement.
3.8 Taxes. TPEG has duly filed all federal, state, county, local,
foreign and other income, excise, sales, customs, franchise, use, license, real
and personal property, withholding, social security and other tax (the "Taxes")
and information returns and reports required to have been filed by TPEG and its
Subsidiaries to the date hereof, other than income tax returns for the year
ended June 30, 1997, and has paid (or, in the case of withholding taxes and
obligations, has withheld and paid over as required) all Taxes (including
interest, penalties and additions thereto, if any) shown on such returns or
reports to be due or claimed to be due prior to the date hereof to any federal,
state, county, local, foreign or other Governmental Authority. TPEG has paid or
made adequate provision in the TPEG Financial Statements for all Taxes
(including interest, penalties and additions thereto, if any) payable by TPEG
with respect to all periods to and including March 31, 1997. TPEG does not have
any liability for any Taxes (including interest, penalties and additions
thereto, if any) of any nature whatsoever other than as reflected in the TPEG
Financial Statements and, to the best knowledge of TPEG, there is no basis for
any additional material claims or assessments for Taxes other than with respect
to liabilities for Taxes that may have accrued since March 31, 1997 in the
ordinary course of business of TPEG and its subsidiaries or liabilities for
Taxes contested in good faith, which are described on Schedule 3.8. No federal
income tax returns of TPEG have been examined by the IRS and no proposed
additional Taxes, interest or penalties have been asserted with respect to years
not examined. True copies of the federal, state and local income tax returns of
TPEG for the years ended June 30, 1996 and June 30, 1995 have been heretofore
delivered or made available to GJM. No consent has been filed by TPEG pursuant
to Section 341(f) of the Code.
3.9 Real Property. (a) Schedule 3.9 sets forth a true, complete and
correct listing of all leases covering the real property in which TPEG or any
subsidiary of TPEG holds the lessee's interest (collectively, the "TPEG
Leases"). Except as set forth in Schedule 3.9, TPEG or a subsidiary of TPEG
holds the lessee's interest in all of the TPEG Leases, free and clear of all
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material liens and encumbrances. Neither TPEG nor any of its subsidiaries owns
any real property.
(b) Schedule 3.9 sets forth a true, complete and correct listing
in all material respects of (i) all leases to which any of the TPEG Leases are
subordinated (collectively, the "Underlying TPEG Leases"), and (ii) all
subleases of any of the TPEG Leases (collectively, the "TPEG Subleases"). True,
complete and correct copies of each TPEG Lease, Underlying TPEG Lease and TPEG
Subleases have been delivered or made available by TPEG to GJM.
(c) Except as set forth in Schedule 3.9, TPEG has no knowledge of
and has not received any notice of default from the holder of the lessor's
interest in any TPEG Lease or Underlying TPEG Lease or the holder of the
lessee's interest in any TPEG Subleases that has not heretofore been cured.
(d) Except as set forth in Schedule 3.9, neither the premises
leased under any TPEG Lease, the use thereof by TPEG or a subsidiary of TPEG,
nor any condition existing with respect thereto, violates any laws, ordinances,
regulations or requirements (including, without limitation, zoning and use
regulations and building department requirements) affecting the same, which
violation would materially interfere with the operation or use of such premises
or materially diminish the value thereof.
(e) Except as set forth in Schedule 3.9, to the best knowledge of
TPEG, no Person has any interest in the lessee's interest under any TPEG Lease,
Underlying TPEG Lease or TPEG Sublease or has any right or option to acquire
same or any part thereof.
(f) Except as set forth in Schedule 3.9, TPEG has no knowledge and
has received no notice of any condemnation proceeding affecting any premises
leased under any TPEG Lease.
(g) As of the date of this Agreement, TPEG has no knowledge that
any Person has paid or been paid any money, or has made or contemplated making
any agreement, written or oral, with respect to premises leased under any TPEG
Lease, Underlying TPEG Lease or TPEG Sublease or portion thereof which would
preclude, be in competition with or otherwise interfere with the continued use
and occupancy of such property by TPEG or could adversely affect the ability of
the lessee thereof to renew any TPEG Lease.
(h) Hazardous materials (as such term is defined in any law
applicable to TPEG or its properties or assets) have not been released or
treated on any property leased, or, to the best of TPEG's knowledge, occupied or
used by TPEG in its television production or other business activities and have
not been generated, used, handled or stored on, or transported to or from, any
such property. TPEG has disposed of all wastes, including those wastes
containing hazardous materials, in compliance with all applicable laws and the
Permits. There are no past, pending or, to the best of TPEG's knowledge,
threatened claims against TPEG or any property covered by any
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TPEG Lease which relate to any environmental matters and TPEG has not received
any written notice of such claims. No property leased, or occupied or used from
time to time by TPEG in its production or other activities by TPEG and, to the
best of TPEG's knowledge, no property adjoining any such property, is listed or
proposed for listing on the National Priorities List under the Comprehensive
Environmental Response Compensation and Liability Act of 1980 ("CERCLA") or on
the Comprehensive Environmental Response, Compensation and Liability Information
System, as updated through the date hereof ("CERCLIS") or any analogous state
list of sites requiring investigation or cleanup and TPEG has not transported or
arranged for the transportation of any hazardous materials to any location that
is listed or proposed for listing on the National Priorities List under CERCLA
or on the CERCLIS or any analogous state list.
(i) There are not now and never have been any underground storage
tanks located on any real property leased or, to the best knowledge of TPEG,
occupied or used by TPEG from time to time in its television production or other
activities. TPEG has not installed any such underground storage tanks on any
real property leased or occupied by it.
3.10 Litigation. Schedule 3.10 sets forth a true, complete and correct
listing of all pending actions, suits or proceedings to which TPEG or any
subsidiary of TPEG is a party. Except as disclosed in Schedule 3.10, there are
no actions, suits or proceedings or investigations pending or, to the best
knowledge of TPEG, threatened against or adversely affecting the business,
operations or financial condition of TPEG and its subsidiaries, taken as a
whole, at law or in equity in any court or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality or any arbitrator. Neither TPEG nor any subsidiary of TPEG is in
default in respect of any judgment, order, writ, injunction or decree of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency, authority or instrumentality.
3.11 Labor Relations. Schedule 3.11 contains a correct and complete list
of all collective bargaining, employment, labor and similar agreements (other
than the "TPEG Benefit Plans" defined and described in Section 3.13), whether
written or oral, to which TPEG or any subsidiary of TPEG is a party or by which
it is or they are bound. True and correct copies of all such agreements have
been supplied to GJM. TPEG and each subsidiary of TPEG have complied with their
respective obligations related to, and are not in default under, any written or
oral employment agreements, collective bargaining agreements or any written or
oral personnel policies to which they are parties or by which they are bound.
TPEG and each subsidiary of TPEG are in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not and have not engaged in any unfair
labor practices. Except as set forth in Schedule 3.11:
(a) there is no unfair labor practice charge or complaint against
TPEG or any subsidiary of TPEG pending or, to the best knowledge of TPEG,
threatened before the National Labor Relations Board or any other Governmental
Authority;
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(b) there has not occurred nor, to the best knowledge of TPEG, has
there been threatened, a labor strike, request for representation, work slowdown
or stoppage or lockout;
(c) there has not been any representation claim or petition
pending before the National Labor Relations Board respecting any employees of
TPEG or any subsidiary of TPEG during the past five (5) years;
(d) no grievance nor any arbitration proceeding arising out of any
collective bargaining agreement to which TPEG or any TPEG subsidiary is a party
is pending;
(e) no charges with respect to or relating to TPEG or any TPEG
subsidiary are pending before the Equal Employment Opportunity Commission or any
state, local or foreign agency responsible for the prevention of unlawful
employment practices;
(f) no claim relating to employment or loss of employment with
TPEG or any TPEG subsidiary is pending in any federal, state or local court or
in or before any other adjudicatory body and, to the best knowledge of TPEG, no
such claims has been threatened;
(g) neither TPEG nor any TPEG subsidiary has received written
notice of the intent of any federal, state, local or foreign agency responsible
for the enforcement of labor or employment laws, rules or regulations to conduct
an investigation of or relating to TPEG, and, to the best knowledge of TPEG, no
such investigation is in progress;
(h) TPEG and each subsidiary of TPEG have paid in full to all of
its employees, or adequately accrued for in accordance with GAAP, all wages,
salaries, commissions, bonuses, benefits and other compensation due to or on
behalf of such employees;
(i) there is no claim with respect to payment of wages, salary or
overtime pay that has been asserted or is now pending or, to the best knowledge
of TPEG, threatened before any Governmental Authority with respect to any
Persons currently or formerly employed by TPEG or any subsidiary of TPEG; and
(j) neither TPEG nor any subsidiary of TPEG is a party to, or
otherwise bound by, any consent decree with, or citation by, any Governmental
Authority relating to employees or employment practices.
3.12 Permits; Compliance with Laws. TPEG has all material permits,
licenses, orders and approvals of all federal, state or local governmental or
regulatory authorities which are required to conduct the business of TPEG and
its subsidiaries as presently conducted. All such permits, licenses, orders and
approvals are in full force and effect and, to the best knowledge of TPEG, no
suspension or cancellation of any of them is threatened. Except as set forth in
Schedule 3.12, none of such permits, licenses, orders or approvals will be
adversely affected by the consummation of the Merger. TPEG and its subsidiaries
are in compliance in all material respects
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with the rules and regulations of all governmental agencies having authority
over TPEG and its subsidiaries, including, without limitation, agencies
concerned with occupational safety, environmental protection and employment
practices, and neither TPEG nor any subsidiary of TPEG has received notice of
violation of or failure to comply with any such rules or regulations within the
last three years, the failure to comply with which could have a material adverse
effect on the financial condition, business or operations of TPEG and its
subsidiaries, taken as a whole.
3.13 Employee Benefit Plans. (a) Schedule 3.13 sets forth a true,
complete and correct listing of all employees benefit plans (as defined in
Section 3(3) of ERISA) maintained by TPEG or any subsidiary of TPEG (the "TPEG
Benefit Plans"). True, correct and complete copies of the TPEG Benefit Plans
have heretofore been delivered to GJM.
(b) None of the TPEG Benefit Plans is a multi-employer plan
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA) or a single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA)
Subject to Title IV of ERISA. None of the TPEG Benefit Plans provides for the
payment of separation, severance, termination or similar-type benefits to any
Person or obligates TPEG to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction contemplated by this
Agreement or as a result of a "change in control" within the meaning of such
term under Section 280G of the Code. None of the TPEG Benefit Plans provides for
or promises retiree medical, disability or life insurance benefits to any
current or former employee, officer or director of TPEG. Each of the TPEG
Benefit Plans is Subject only to the laws of the United States or a political
Subdivision thereof. TPEG does not sponsor, maintain or contribute to a
voluntary employees' beneficiary association intended to be exempt under Section
501(c)(9) of the Code.
(c) Each TPEG Benefit Plan is now and always has been operated in
all material respects in accordance with the requirements of all applicable
laws, including, without limitation, ERISA and the Code, and all persons who
participate in the operation of such TPEG Benefit Plans and all Plan
"fiduciaries" (within the meaning of Section 3(21) of ERISA) have always acted
in accordance with all applicable laws, including, without limitation, ERISA and
the Code. TPEG has performed all obligations required to be performed by it
under, is not in any respect in material default under or in violation of, and
has no knowledge of any default or violation by any party to, any TPEG Benefit
Plan. No legal action, suit or claim is pending or threatened with respect to
any TPEG Benefit Plan (other than claims for benefits in the ordinary course)
and no fact or event is known that could give rise to any such action, suit or
claim.
(d) Each TPEG Benefit Plan which is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has received a
favorable determination letter from the IRS that it is so qualified and each
trust established in connection with any TPEG Benefit Plan which is intended to
be exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event is known to have occurred since the date of such determination letter
from the IRS to materially adversely affect the qualified status of any such
TPEG Benefit Plan or the exempt status of any such trust.
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(e) There has been no material prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
TPEG Benefit Plan. TPEG has not incurred any material liability for any penalty
or tax arising under Section 4971, 4972, 4980, 4980B or 6652 of the Code or any
liability under Section 502 of ERISA, and no fact or event exists which could
give rise to any such material liability. TPEG has not incurred any liability
under, arising out of or by operation of Title IV of ERISA including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan Subject to Title IV of ERISA or (ii)
the withdrawal from any multi-employer plan, and no fact or event exists which
could give rise to any such liability. No complete or partial termination has
occurred within the five years preceding the date hereof with respect to any
TPEG Benefit Plan.
(f) All contributions, premiums or payments required to be made
with respect to any TPEG Benefit Plan have been made on or before their due
dates and TPEG has no unfunded liabilities or obligations with respect to or
arising out of any TPEG Benefit Plan. All such contributions have been fully
deducted for income tax purposes and no such deduction has been challenged or
disallowed by any government entity and no fact or event is known to exist which
could give rise to any such challenge or disallowance.
(g) Each of the guaranteed investment contracts and other funding
contracts with any insurance company that are held by any of the TPEG Benefit
Plans and any annuity contracts purchased by (i) any of the TPEG Benefit Plans
or (ii) any pension benefit plan (as defined in Section 3(2) of ERISA) that
provided benefits to any current or former employees of TPEG was issued by an
insurance company which carried the highest rating from each of the nationally
recognized rating agencies, as of the date such contract was issued, the date
hereof and the Effective Time.
3.14 Patents, Trademarks, Etc. Schedule 3.14 sets forth a true, complete
and correct listing of all material patents, trade names, trademarks, service
marks, copyrights, pending applications for any of the foregoing, and other
proprietary rights of TPEG and its subsidiaries and all agreements for the
licensing thereof. Except as set forth in Schedule 3.14, TPEG and/or its
subsidiaries own, or possess adequate rights to use, all material patents, trade
names, trademarks, copyrights, inventions, processes, designs, formulae, trade
secrets, know how and other proprietary rights necessary for the conduct of its
business, with no known infringement by TPEG or any of its subsidiaries of the
rights (asserted or unasserted) of any Person arising by reason of any of the
foregoing. TPEG has no knowledge of any infringement by any third party upon any
patent, trade name, trademark or copyright owned or used by TPEG or any of its
subsidiaries, and TPEG has not taken or omitted to take any action which would
have the effect of waiving any of its rights thereunder, in each case, except
where such infringement or waiver would not have a material adverse effect on
the business, prospects, condition (financial or other) or results of operations
of TPEG and its subsidiaries, taken as a whole.
3.15 Insurance. TPEG has made available to GJM complete and correct
copies of all insurance policies maintained by TPEG, together with all riders,
endorsements and amendments
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thereto. All such policies are in full force and effect, and all premiums due
thereon have been paid. Such insurance policies provide TPEG and its
subsidiaries with adequate insurance (both as to type and amount) with respect
to risks and perils of business of the size and type carried on by TPEG and its
subsidiaries as of the date hereof. TPEG and its subsidiaries have complied in
all material respects with the provisions of all such policies.
3.16 Compensation to be Paid In Connection With the Merger. Except for
the engagement of Sirius pursuant to the Sirius Agreement, neither TPEG nor any
subsidiary or Affiliate of TPEG has engaged or employed any investment banking
firm, broker, finder or intermediary in connection with the transactions
contemplated by this Agreement who might be entitled to any fee, commission or
other compensation in connection with or upon consummation of the Merger. TPEG
and all subsidiaries of TPEG hereby, jointly and severally agree to indemnify,
defend and hold GJM and the Stockholders harmless from and against any and all
claims, liabilities or obligations with respect to any additional or other
finder's or similar fees, commissions or expenses asserted or claimed by Sirius,
other than pursuant to the Sirius Agreement, or by any other Person on the basis
of any act or statement alleged to have been taken or made by TPEG or any of its
officers, directors or other Affiliates.
3.17 Disclosure. The representations and warranties of TPEG set forth in
this Agreement, the certificates, statements and other information furnished to
GJM, Xxxxxx and Xxxxxxxx in writing by or on behalf of TPEG in connection with
the transactions contemplated hereby, including the Schedules hereto, do not as
of the date of this Agreement, and as of the Effective Time shall not, contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. TPEG knows of no fact or condition which
materially adversely affects, or in the future may (so far as TPEG can now
reasonably foresee) materially adversely affect the condition (financial or
otherwise), properties, assets, liabilities, business or operations of TPEG
which has not been set forth herein or disclosed to GJM in writing with
reference to this Agreement.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
REGARDING TPEG SUB III
TPEG and TPEG Sub III jointly and severally represent and warrant to GJM,
Xxxxxx and Xxxxxxxx as follows:
4.1 Organization. TPEG Sub III is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and is a
wholly owned subsidiary of TPEG.
4.2 Authority Relative to this Agreement. TPEG Sub III has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder.
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The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by TPEG Sub III's
Board of Directors and approved by its sole stockholder, TPEG, and no other
corporate proceedings on the part of TPEG Sub III are necessary to authorize the
execution and delivery of this Agreement and the transactions contemplated
hereby.
4.3 Binding Agreement. This Agreement has been duly and validly executed
and delivered by TPEG Sub III and constitutes the valid and binding agreement of
TPEG Sub III, enforceable against TPEG Sub III in accordance with its terms
subject to the laws of bankruptcy, insolvency, moratorium or other laws
affecting the rights of creditors generally or limitations upon equitable
remedies.
4.4 Special Purpose Subsidiary. TPEG Sub III has been organized by TPEG
solely for the purpose of entering into this Agreement and consummating the
Merger. TPEG Sub III has not engaged, and prior to the Merger will not engage,
in any other business or activity.
ARTICLE 5. COVENANTS RELATING TO CONDUCT OF BUSINESS
Covenants of GJM, Xxxxxx and Xxxxxxxx and TPEG and TPEG Sub III. During
the period from the date of this Agreement and continuing until the Effective
Time, GJM, and Xxxxxx and Xxxxxxxx hereby further jointly and severally agree
and TPEG, and TPEG Sub III hereby further jointly and severally agree that,
except as expressly contemplated or permitted by this Agreement or the
agreements governing the Other Mergers, or to the extent that the other party or
parties shall otherwise consent in writing:
5.1 Ordinary Course. GJM, TPEG and TPEG Sub III shall each carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and use all reasonable efforts to preserve intact
its present business organization, maintain its rights and franchises and
preserve its relationships with writers, directors, producers and others
involved in developing and/or producing television movies, series or mini-series
and licensors or licensees or distributors or purchasers of such television
movies, series or mini-series, (including networks, distributors and other
purchasers of such products) and others having business dealings with GJM or
TPEG or any of its subsidiaries, as the case may be, to the end that their
respective goodwill and ongoing businesses shall not be impaired in any material
respect at or after the Effective Time. No party shall (i) enter into any new
material line of business or acquire any other Person engaged in any such new
line of business, (ii) change its business policies in any respect which is
material to such party, (iii) enter into any new lease or materially modify any
existing lease or close any existing office or other facility without giving the
other party prior written notice thereof, or (iv) incur or commit to any capital
expenditures or any obligations or liabilities in connection therewith other
than capital expenditures and obligations or liabilities incurred or committed
to in the ordinary course of business consistent with past practice and not
exceeding, in any case, the sum of One Hundred Thousand ($100,000) Dollars.
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5.2 Dividends; Changes in Stock. Neither GJM, TPEG, TPEG Sub III or any
other subsidiary of TPEG shall, or shall propose to, (i) declare or pay any
dividends on, or make other distributions in respect of, any shares of its
capital stock of any class, except for required quarterly dividends on TPEG's
outstanding Series A Stock, (ii) 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) repurchase,
redeem or otherwise acquire, any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock.
5.3 Issuance of Securities. Other than as contemplated by this
Agreement, or the agreements governing the Other Mergers, neither TPEG, TPEG Sub
III or GJM shall issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock of any class or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect to
any of the foregoing, other than the issuance by TPEG of shares of TPEG Common
Stock, upon the exercise of outstanding stock options or warrants or conversion
of outstanding shares of Series A Stock referred to elsewhere in this Agreement,
in each case outstanding on the date of this Agreement and in each case in
accordance with their existing terms and conditions.
5.4 Governing Documents. Except as contemplated by this Agreement or the
agreements governing the Other Mergers, neither GJM, TPEG, TPEG Sub III or any
other subsidiary of TPEG shall amend or propose to amend its Certificate of
Incorporation or By-laws as in effect as of the date hereof.
5.5 No Solicitations. From the date hereof through September 30, 1997,
none of GJM, Grosso, Jacobson, TPEG, TPEG Sub III or any other subsidiary of
TPEG shall, or shall authorize or permit any of its respective officers,
directors, employees or Affiliates or any investment banking firms, financial
advisors, attorneys, accountants or other representatives or agents retained by
any of such parties to, solicit or encourage (including by way of furnishing
nonpublic information), or take any other action to facilitate any inquiries or
the making of any proposals which constitute, or may reasonably be expected to
lead to, any Competing Transaction (as defined below), or agree to or endorse
any Competing Transaction, or participate in any discussions or negotiations, or
provide third parties with any nonpublic information, relating to any such
inquiry or proposal. Each of GJM, Xxxxxx, Xxxxxxxx and TPEG shall promptly
advise the other or others both orally and in writing of any such inquiries or
proposals. As used in this Agreement, "Competing Transaction" shall mean any
proposed tender or exchange offer, sale of assets, proposal for merger,
consolidation or other business combination involving GJM, TPEG or TPEG Sub III
or any other subsidiary of TPEG or any proposal or offer to acquire directly or
through the sale or grant of any option, convertible security or any other right
to purchase (by way of exercise, exchange or conversion of such option,
convertible security or right) more than five (5%) percent of the total
outstanding capital stock, or any substantial portion of the assets, of GJM,
TPEG, TPEG Sub III or any other subsidiary of TPEG, as the case may be, other
than pursuant to the transactions contemplated by this Agreement. This Section
5.5 shall not prohibit disclosure by TPEG that is required in any filing by
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TPEG with the SEC or the NASDAQ SmallCap Market or as otherwise under applicable
law, in the opinion of the Board of Directors of TPEG, as of the date of such
filing or such other required disclosure as to the transactions contemplated
hereby or as to any Competing Transaction. Notwithstanding the foregoing, the
executive officers and directors of TPEG, as the case may be, shall have the
right, in the exercise of their fiduciary duties, solely to respond to
unsolicited bona fide written offers submitted by any third party with respect
to any potential Competing Transaction by furnishing information and data
concerning TPEG and its subsidiaries, as the case may be.
5.6 No Dispositions. Neither TPEG, TPEG Sub III or GJM shall sell,
lease, encumber or otherwise dispose of, or agree to sell, lease, encumber or
otherwise dispose of, any of its assets (other than the sale or license or
distribution of television movies, series or mini-series, or performance of
services in the ordinary course of business) which are material, individually or
in the aggregate, to such party.
5.7 Indebtedness. Neither TPEG, TPEG Sub III, or GJM shall incur any
short or long-term indebtedness for borrowed money or guarantee any such short
or long-term indebtedness or issue or sell any short or long-term debt
securities or warrants, options or other rights to acquire any short or
long-term debt securities of such party or guarantee any short or long-term debt
securities other than (i) in replacement of existing or maturing debt or (ii) in
the ordinary course of business consistent with past practice.
5.8 Other Actions. Neither TPEG, TPEG Sub III or GJM shall take any
action that would or reasonably might be expected to, result in any of their
respective representations and warranties set forth in this Agreement being or
becoming untrue in any material respect or in any of the conditions to the
Merger set forth in Article 7 hereof not being satisfied.
5.9 Advice of Changes; Government Filings. Each of the parties shall
confer on a regular and frequent basis with the other, report on operational
matters and promptly advise the other orally and in writing of any change or
event having, or which, insofar as can reasonably be foreseen, could have, a
material adverse effect on such party or which would cause or constitute a
material breach of any of the representations, warranties or covenants of such
party contained herein. TPEG shall (i) file all reports required to be filed
with the SEC between the date of this Agreement and the Effective Time and (ii)
and shall deliver to the other party copies of all such reports promptly after
the same are filed. Each party shall promptly provide the other (or its counsel)
with copies of all other filings made by such party with any state or federal
governmental agency or authority in connection with this Agreement, the Merger
or the transactions contemplated hereby or thereby.
5.10 Accounting Methods. Neither TPEG, TPEG Sub III or GJM shall change
their respective methods of accounting in effect at the date hereof except as
required by changes in generally accepted accounting principles as concurred in
by the independent auditors of GJM or TPEG, as the case may be. Neither GJM nor
TPEG will change their respective fiscal years without the consent of the other
party.
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5.11 Benefit Plans. Without the prior written consent of the other party
or parties, neither GJM, TPEG, TPEG Sub III or any other subsidiary of TPEG
shall (i) enter into, adopt, amend (except as may be required by law) or
terminate any employee benefit plan or any agreement, arrangement, plan or
policy between such party and one or more of its directors or officers, (ii)
except for normal increases in the ordinary course of business consistent with
past practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to such party, increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any plan or arrangement as in effect on the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock units or performance units or shares) or
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing, or (iii) except for the employment agreements between the Surviving
Corporation and each of Xxxxxx and Xxxxxxxx and the extension of the duration of
the employment agreements between TPEG and Xxxxx Xxxxx and Xxxxxx Xxxxxxxxx and
grants of stock options to GJM employees at the Effective Time described in
Section 6.8 hereof, enter into or renew any contract, agreement, commitment or
arrangement providing for the payment to any director, officer or employee of
such party of compensation or benefits contingent, or the terms of which are
materially altered, upon the occurrence of any of the transactions contemplated
by this Agreement.
5.12 Publicity. Except as otherwise required by law or the rules of the
NASDAQ SmallCap Market, so long as this Agreement is in effect, neither GJM,
Xxxxxx, Xxxxxxxx or TPEG shall issue or cause the publication of any press
releases or other public announcements with respect to the transactions
contemplated by this Agreement without the consent of the other party or
parties, which consent shall not be unreasonably withheld or delayed.
ARTICLE 6. ADDITIONAL AGREEMENTS
GJM and Xxxxxx and Xxxxxxxx hereby further jointly and severally agree, and TPEG
and TPEG Sub III, hereby further jointly and severally agree as follows:
6.1 Appraisals. The Board of Directors of TPEG (the "TPEG Board") shall
has received appraisals from the following reputable, independent appraisers
with respect to the contracts, assets and other properties of GJM as follows:
(a) The aggregate value of the right, title and interest of GJM in
the television movies series and mini-series as appraised by Xxxxxx Consultants,
Inc.; and
(b) The aggregate value of GJM in costumes, props and related
tangible properties as appraised by Xxxxxx Consultants, Inc.
6.2 GJ Financial Statements. GJM shall deliver to TPEG the GJ Financial
Statements, including the audited financial statements prepared and reported
upon by Xxxxxxxxx, Rich, Baker, Xxxxxx & Company and the unaudited comparative
GJ Financial statements for the
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six months ended May 31, 1997 by not later than September 30, 1997 so as to
enable TPEG to comply in a timely manner with its reporting obligations under
the Securities Exchange Act of 1934, as amended, and rules and regulations of
the SEC thereunder. The GJ Financial Statements shall (a) be prepared and
presented in accordance with GAAP and shall fairly present the financial
condition of GJM as of the dates therein set forth and GJM's results of
operations for the periods reported upon, and (b) be presented in such form as
shall comply with relevant provisions of Item 2 of SEC Form 8-K, Item 310 of SEC
Regulation S-B and such other SEC regulations as are relevant to and govern the
content, form and filing by TPEG of such GJ Financial Statements.
6.3 Access to Information; Confidentiality. Upon reasonable notice, GJM
and TPEG shall each afford to the officers, employees, accountants, counsel and
other representatives of the other during normal business hours during the
period prior to the Effective Time, access to all its properties, books,
contracts, commitments and records and, during such period, each of GJM and TPEG
shall make available to the other all other information concerning the business,
properties and personnel as such other party may reasonably request. Each of the
parties will hold any such information obtained from the other which is
nonpublic in confidence except to the extent that such information (a) is or
becomes publicly known through sources other than any of the parties to the
Agreement or (b) is required to be disclosed in response to legal process or
pursuant to the requirements of federal securities or other law. No
investigation by either GJM, Xxxxxx or Xxxxxxxx or by TPEG shall affect the
representations and warranties of the other or others, except to the extent such
representations and warranties are by their terms qualified by disclosures made
to such other party.
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6.4 Further Covenants of Xxxxxx and/or Xxxxxxxx
(a) Xxxxxxxx X. Xxxxxxxx shall not directly or indirectly divert
any television, video or other film production, distribution or related business
activities or operations to Ontario Corporation or to any successor or assignee
thereof except as set forth in the employment agreement between TPEG and
Xxxxxxxx in the form annexed hereto as Exhibit "F2" and the production agreement
between TPEG and Xxxxxxxx X. Xxxxxxxx Associates, Inc. in the form annexed
hereto as Exhibit "B2 "; and
(b) In the event that both Xxxxxx and Xxxxxxxx cease to be
employed by TPEG or by any of its subsidiaries, but continue to own,
beneficially, and as a group at least twenty-five (25%) percent of the total
number of Shares of TPEG Common Stock issued to both of them pursuant to the
Merger and the Other Mergers TPEG shall cause one (1) designee of both Xxxxxx
and Xxxxxxxx (who may be either Xxxxxx or Xxxxxxxx) to continue to serve as a
member of the TPEG Board subject to the condition that both Xxxxxx and Xxxxxxxx
shall (i) remain subject to the obligation to retain on a confidential basis all
non-public information and data concerning TPEG and/or any of its subsidiaries
of which Xxxxxx or Xxxxxxxx, as the case may be, becomes apprised in his
capacity as a member of the TPEG Board and (ii) not directly or indirectly
appropriate or seek to appropriate, personally or for the benefit of any Person
in which Xxxxxx and/or Xxxxxxxx has any equity interest or by which either
Xxxxxx or Xxxxxxxx is employed, any business opportunities of which Xxxxxx or
Xxxxxxxx, as the case may be, shall become apprised in his capacity as a member
of the TPEG Board, all as more fully described in the Confidentiality and
Standstill Agreement annexed hereto as Exhibit "C".
6.5 Further Covenants of TPEG.
(a) Subject to the indemnification of TPEG by GJM, Xxxxxx and
Xxxxxxxx set forth in Section 2.21 hereof, TPEG shall pay the Sirius fee
pursuant to the Sirius Agreement;
(b) Upon the consummation of the Merger and subject to the
provisions of Articles 9 and 10 hereof, TPEG shall bear the expense of all legal
fees, accounting and auditing fees and disbursements incurred by TPEG and by
each of GJM, Xxxxxx and Xxxxxxxx in connection with this Agreement and the Other
Mergers;
(c) TPEG shall extend through the fifth (5th) anniverssary of the
Effective Time the respective employment agreements of Xxxxx Xxxxx, Chief
Executive Officer of TPEG ("Xxxxx") and Xxxxxx Xxxxxxxxx, Senior Vice President
of TPEG ("Xxxxxxxxx"), such extentions shall be in the form of Exhibits "D1" and
"D2" annexed hereto; and
(d) TPEG shall extend through the fifth (5th) anniverssary of the
Effective Time the existing production agreement between TPEG and Mountaingate
Productions LLC ("Mountaingate"), such extension shall be in the form of Exhibit
"E" annexed hereto.
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6.6 Stockholders Meeting; Approval by Stockholders. (a) GJM shall call a
meeting of its stockholders (the "GJM Stockholders Meeting"), to be held by not
later than September 30, 1997 for the purpose of voting upon the approval of
this Agreement and of the Merger and the other transactions contemplated hereby.
GJM will, through its Board of Directors, recommend to its stockholders approval
of such matters.
(b) Each of Messrs. Xxxxxx and Xxxxxxxx shall vote, or cause to be
voted, all shares of GJM Common Stock held by each of them, of record and/or
beneficially, as of the record date for the determination of GJM stockholders
entitled to notice of and to vote at the GJM Stockholders' Meeting, for the
approval of this Agreement, the Merger and all of the other transactions
contemplated hereby.
6.7 Conditions Precedent; Agreements and Other Mergers. The parties
named in Article 7 of this Agreement shall execute and deliver the agreements
which constitute conditions precedent to the Merger at or prior to the Effective
Time, and both of the Other Mergers shall have been consummated at or prior to
the Effective Time.
6.8 Legal Conditions to Merger. Each of TPEG, TPEG Sub III, GJM and
Xxxxxx and Xxxxxxxx shall use all reasonable efforts (i) to take, or cause to be
taken, all actions necessary to comply promptly with all legal requirements
which may be imposed on such party with respect to the Merger and to consummate
the transactions contemplated by this Agreement, (including the satisfaction of
all of the conditions precedent set forth in Article 7 hereof), and (ii) to
obtain (and to cooperate with the other party in order to obtain) any consent,
authorization, order or approval of, or any exemption by, any governmental
entity and or any other public or private third party which is required to be
obtained or made by such party in connection with the Merger and the
transactions contemplated by this Agreement.
6.9 TPEG Stock Options. (a) At the Effective Time, the TPEG Board shall
grant new incentive stock options (within the meaning of Section 422 of the
Code) to purchase shares of TPEG Common Stock to the executives and key
employees of GJM identified in Schedule 6.9 hereto in connection with their
continuing employment relationships with the Surviving Corporation following the
Merger.
(b) TPEG shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of TPEG Common Stock for delivery upon
exercise of the TPEG stock options described in paragraph (a) of this Section
6.9.
6.10 NASDAQ and BSE Listing. TPEG shall use its best efforts to have the
shares of TPEG Common Stock to be issued pursuant to the Merger listed on the
NASDAQ SmallCap Market and the Boston Stock Exchange as of the Effective Time or
as soon thereafter as practicable. TPEG shall file with the NASDAQ SmallCap
Market, the Boston Stock Exchange and with the SEC such applications, reports
and such other documents and shall take such other actions as are reasonably
required to effect such listing of such shares of TPEG Common Stock on the
NASDAQ
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SmallCap Market and the Boston Stock Exchange.
ARTICLE 7. CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each of the parties to effect the Merger shall be
subject to the satisfaction prior to or at the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been approved
and adopted by the affirmative vote of the holders of all of the outstanding
shares of GJM Common Stock entitled to vote thereon.
(b) The Other Mergers among TPEG, the other subsidiaries of TPEG
and GJP and GJE, respectively, shall each have been consummated in accordance
with the Other Merger Agreements.
(c) Other Approvals. All authorizations, consents, or approvals
of, and all expirations or waiting periods imposed by, any third parties,
including the consent of Xxxxxx Xxxxxxx & Company L.P. (collectively, the
"Consents"), which are necessary for the consummation of the Merger, other than
immaterial Consents, the failure to obtain which would have no material adverse
effect on the business, business prospects or financial condition of GJM, the
Surviving Corporation, TPEG, TPEG Sub III or any other subsidiary of TPEG shall
have been received. TPEG shall have received all state securities or blue sky
permits and other authorizations required, if any, to issue the shares of TPEG
Common Stock to be issued in exchange for the GJM Common Stock and to consummate
the Merger.
(d) 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
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding by any governmental entity seeking any of the foregoing shall be
pending. 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.
(e) Burdensome Conditions. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any federal or state governmental entity which
imposes any condition or restriction upon GJM, the Surviving Corporation or TPEG
which would so materially adversely impact the economic or business benefits of
the transactions contemplated by this Agreement as to render inadvisable, in the
reasonable judgment of such party, the consummation of the Merger.
(f) Board Designees. The respective Boards of Directors of GJM and
TPEG shall have each submitted their list of TPEG Board Designees and shall have
agreed in writing to their joint TPEG Board Designee in accordance with the
provisions of Section 1.4 by not less than three (3) days prior to the Effective
Time.
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(g) Executive Employment Agreements. Each of Xxxxxx and Xxxxxxxx
shall have executed and delivered to TPEG employment agreements with the
Surviving Corporation in the forms Exhibits "F1" and "F2," annexed hereto (the
"Employment Agreements").
(h) Production Agreements. Each of Xxxxxx and Xxxxxxxx and their
respective Affiliates shall have executed and delivered to TPEG production
agreements with the Surviving Corporation in the forms Exhibits "B1" and "B2,"
annexed hereto (the "Production Agreements").
(i) Confidentiality and Standstill Agreement. Each of Xxxxxx and
Xxxxxxxx shall have executed and delivered to TPEG the Confidentiality and
Standstill Agreement in the form of Exhibit "C" annexed hereto.
(j) Registration Rights and Stock Disposition Agreement. TPEG and
each of Xxxxxx and Xxxxxxxx shall enter into a Registration Rights and Stock
Dispostion Agreement (the "Stock Disposition Agreement") whereby (i) Xxxxxx and
Xxxxxxxx will be entitled to have TPEG include their respective shares of TPEG
Common Stock in registration statements to be filed by TPEG under the Securities
Act of 1933, as amended, and (ii) Xxxxxx and Xxxxxxxx shall each agree not to
sell or otherwise dispose of any shares of TPEG Common Stock issued to each of
them pursuant to the Merger through June 30, 1998, which Stock Disposition
Agreement shall be in the form of Exhibit G annexed hereto.
7.2 Conditions to Obligations of TPEG and TPEG Sub III. The obligations
of TPEG and TPEG Sub III to effect the Merger are subject to the satisfaction of
the following conditions by GJM, Xxxxxx and Xxxxxxxx unless waived by TPEG and
TPEG Sub III:
(a) Consummation of the Other Mergers. The Other Mergers among
TPEG, the other subsidiaries of TPEG and GJP and GJE, respectively, shall each
have been consummated in accordance with the Other Merger Agreements.
(b) Representations and Warranties. The joint and several
representations and warranties of GJM, Xxxxxx and Xxxxxxxx set forth in this
Agreement shall be true and correct as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an earlier date)
as of the Effective Time as though made on and as of the Effective Time, except
as otherwise contemplated by this Agreement, and TPEG and TPEG Sub III shall
have received a certificate signed on behalf of GJM by the President and Chief
Financial Officer of GJM and by each of Xxxxxx and Xxxxxxxx to such effect.
(c) Performance of Obligations of GJM and Stockholders . GJM,
Xxxxxx and Xxxxxxxx shall have performed in all material respects all of their
joint and several obligations required to be performed by them or any of them
under this Agreement, at or prior to the Effective Time, and TPEG and TPEG Sub
III shall have received a certificate signed on behalf of GJM by the President
and Chief Financial Officer of GJM and by each of Xxxxxx and Xxxxxxxx to such
effect.
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(d) Consents Under Agreements. GJM shall have obtained the consent
or approval of each person (other than the Consents) whose consent or approval
shall be required in order to permit the succession by the Surviving Corporation
pursuant to the Merger to any obligation, right or interest of GJM under any
loan or credit agreement, note, mortgage, indenture, lease, license, production,
distribution or other agreement (including the consent of Xxxxxx Xxxxxxx & Co.,
L.P.) or instrument, except those for which failure to obtain such consents and
approvals would not, in the reasonable opinion of TPEG and TPEG Sub III,
individually or in the aggregate, have a material adverse effect on the
Surviving Corporation or TPEG or upon the consummation of the transactions
contemplated hereby.
(e) Appraisals. The Appraisals delivered to the Board of Directors
of TPEG pursuant to the provisions of Section 6.1 hereof shall not have been
withdrawn or so modified, in whole or in part, as to cast doubt in any material
respect upon the valuations set forth in such appraisals.
(f) "Cold Comfort Letter". GJM shall have delivered or shall cause
to be delivered to TPEG a "cold comfort" letter of Xxxxxxxxx, Rich, Baker,
Xxxxxx & Company, GJM's independent accountants, dated as of a date within two
business days prior to the Effective Time and addressed to TPEG, in form and
substance reasonably satisfactory to TPEG and setting forth the substance and
scope of the information set forth in Schedule 7.2(f).
(g) Employment Agreements. Simultaneous with and upon the
execution of this Agreement, each of Xxxxxx and Xxxxxxxx shall have executed and
delivered the Employment Agreements in the forms annexed hereto as Exhibits "F1"
and "F2," respectively, with the Surviving Corporation.
(h) Production Agreements. Simultaneous with and upon the
execution of this Agreement, each of Xxxxxx and Xxxxxxxx and their respective
Affiliates shall have executed and delivered the Production Agreements in the
forms annexed hereto as Exhibits "B1" and "B2," respectively, with the Surviving
Corporation.
(i) Stock Disposition Agreement. Each of Xxxxxx and Xxxxxxxx shall
have executed and delivered the Stock Dispostion Agreement in the form of
Exhibit "G" annexed hereto.
(j) Confidentiality and Standstill Agreement. Each of Xxxxxx and
Xxxxxxxx shall have executed and delivered the Confidentiality and Standstill
Agreement in the form of Exhibit "C" annexed hereto.
(k) No Material Adverse Change. There shall have been no material
adverse change in the financial condition, results of operations, assets,
liabilities, properties, business or business prospects of GJM between the date
of this Agreement and the Effective Time.
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(l) Opinion. TPEG shall have received the opinion of Messrs. Xxx,
Xxxxxxx and Xxxxx, LLP, counsel to GJM, Xxxxxx and Xxxxxxxx, dated the Effective
Time, substantially in the form of Exhibit "H" annexed hereto.
(m) TPEG shall have received from GJM any and all clearance or
similar certificates required by any jurisdictions in order lawfully to
consummate the Merger and the transfer of the shares of GJM Common Stock
pursuant thereto
7.3 Conditions to Obligations of GJM, Xxxxxx and Xxxxxxxx. The joint and
several obligations of GJM, Xxxxxx and Xxxxxxxx to effect the Merger are subject
to the satisfaction of the following conditions by TPEG and TPEG Sub III unless
waived by GJM, Xxxxxx and Xxxxxxxx:
(a) Consummation of the Other Mergers. The Other Mergers among
TPEG, the other subsidiaries of TPEG and GJP and GJE, respectively, shall each
have been consummated in accordance with the Other Merger Agreements.
(b) Representations and Warranties. The representations and
warranties of TPEG and of TPEG Sub III set forth in this Agreement shall be true
and correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Effective
Time as though made on and as of the Effective Time, except as otherwise
contemplated by this Agreement, and GJM, Xxxxxx and Xxxxxxxx shall have received
a certificate signed on behalf of TPEG by the Chief Executive Officers and Chief
Financial Officers of TPEG and TPEG Sub III to such effect.
(c) Performance of Obligations of TPEG. TPEG and TPEG Sub III
shall have performed in all material respects all obligations required to be
performed by each of them under this Agreement, at or prior to the Effective
Time, and GJM, Xxxxxx and Xxxxxxxx shall have received a certificate signed on
behalf of TPEG and TPEG Sub III by the Chief Executive Officers and Chief
Financial Officers of TPEG and TPEG Sub III to such effect.
(d) Consents Under Agreements. TPEG shall have obtained the
consent or approval of each person (other than the Consents) whose consent or
approval shall be required with respect to the Merger and in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of TPEG Sub III under any loan or credit
agreement, note, mortgage, indenture, lease, license, production, distribution
or other agreement (including the consent of Xxxxxx Xxxxxxx & Company, L.P.) or
instrument, except those for which failure to obtain such consents and approvals
would not, in the reasonable opinion of GJM, individually or in the aggregate,
have a material adverse effect on the Surviving Corporation or TPEG or upon the
consummation of the transactions contemplated hereby.
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(e) Employment Agreements. The Surviving Corporation shall have
executed and delivered the Employment Agreements with each of Xxxxxx and
Xxxxxxxx in the forms annexed hereto as Exhibits "F1" and "F2," respectively.
(f) Production Agreements. The Surviving Corporation shall have
executed and delivered the Production Agreements with each of Xxxxxx, Xxxxxxxx
and their respective Affiliates in the forms annexed hereto as Exhibits "B1" and
"B2," respectively.
(g) Extension Agreements. TPEG and each of Xxxxx and Xxxxxxxxx
shall have executed extensions of their respective existing employment
agreements and TPEG and Mountaingate shall have executed an extension of the
existing production agreement as required by Section 6.5 hereof.
(h) Stock Disposition Agreement. TPEG shall have executed and
delivered the Stock Disposition Agreement with Xxxxxx and Xxxxxxxx in the form
of Exhibit "G" annexed hereto.
(i) Confidentiality and Standstill Agreement. TPEG shall have
executed and delivered the Confidentiality and Standstill Agreement in the form
of Exhibit "C" annexed hereto.
(j) Options for GJM Employees. At the Effective Time, TPEG shall
grant incentive stock options to purchase an aggregate of 20,000 shares of TPEG
Common Stock to the GJM executives and key employees who will become employed by
the Surviving Corporation and whose names are set forth on Schedule 6.9 annexed
hereto. Schedule 6.9 also sets forth the number of such stock options to be
granted to each such employee.
(k) Opinion. GJM shall have received the opinion of Xxxxxxx,
Xxxxxxx & Xxxx, counsel to TPEG, dated the Effective Time, substantially in the
form of Exhibit "I" annexed hereto.
(l) No Material Adverse Change. There shall have been no material
adverse change in the financial condition, results of operations, assets,
liabilities, properties or business of TPEG or any subsidiary of TPEG between
the date of this Agreement and the Effective Time.
7.4 Condition Subsequent to Merger. GJM shall deliver, and Xxxxxx and
Xxxxxxxx shall cause GJM to deliver to TPEG, the GJ Financial Statements on or
before such date and in such form for filing by TPEG in accordance with such SEC
regulations as are required by the provisions of Section 6.2 hereof.
ARTICLE 8. INDEMNIFICATION
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8.1 Survival of Representations and Warranties. (a) The joint and
several representations and warranties of GJM, Xxxxxx and Xxxxxxxx (the "GJM
Parties") contained in this Agreement, and all statements made by any or all of
the GJM Parties which are contained in this Agreement, the Schedules and the
Exhibits to this Agreement, or any certificate, financial statement, report or
other document delivered pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement (collectively, the "Transaction
Documents"), shall survive the Merger for a period terminating at the close of
business on the first (1st) anniversary of the Effective Time, except that (i)
the joint and several representations and warranties of the GJP Parties
contained in each of Sections 2.1, 2.2, 2.4 2.10 2.12(g) and (h) and 2.21 and
the representations and warranties (including, without limitation, the
representations and warranties contained in Sections 2.5(a)(ii) and the second
sentence of Sections 2.8 and 2.11) of the GJP Parties relating to title to the
assets, properties and contractual rights of GJP shall survive the Merger for a
period terminating at the close of business on the sixth (6th) anniversary of
the Effective Time, and (ii) notwithstanding anything contained herein to the
contrary, any representation, warranty, covenant or agreement by the GJM Parties
contained in this Agreement with respect to which there shall occur any
fraudulent or intentional misrepresentation (including any intentional failure
to disclose a material fact) or intentional breach of covenant or agreement
shall survive the Merger indefinitely, notwithstanding any applicable statute of
limitations (each such period described in clauses (i) through (iii) above is
referred to herein as a "Survival Period"). Neither any Survival Period, nor the
liability of the GJM Parties under or in connection with the Transaction
Documents, shall be reduced by any investigation made at any time by or on
behalf of TPEG.
(b) The representations and warranties of TPEG contained in the
Transaction Documents shall survive the Mergers for a period terminating at the
close of business on the first (1st) anniversary of the Effective Time. Neither
the Survival Period specified in this Section 8.1(b), nor the liability of TPEG
under or in connection with the Transaction Documents shall be reduced by any
investigation made at any time by or on behalf of the GJM Parties.
(c) Notwithstanding anything contained in this Article 8 to the
contrary, any matter with respect to which a claim has been asserted by notice
by any indemnified party to the GJM Parties or TPEG, as the case may be, that is
pending or unresolved at the end of the applicable Survival Period shall
continue to be covered by this Article 8 notwithstanding the termination or
expiration of such Survival Period until such claim is finally and fully
satisfied or otherwise resolved by the parties under this Agreement or by a
court of competent jurisdiction and any amounts payable hereunder are finally
determined and paid by the GJM Parties or TPEG, as the case may be, to such
Indemnified Party.
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8.2 Indemnification by the GJM Parties.
(a) The GJM Parties shall jointly and severally indemnify and hold
harmless TPEG and its subsidiaries (including TPEG Sub III) and the Surviving
Corporation and their Affiliates, officers, directors, employees, agents,
attorneys, successors and assigns (each a "TPEG Indemnified Party") from and
against any and all liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without limitation,
reasonable attorneys' and consultants' fees and expenses) suffered or incurred
by them (including, without limitation, in connection with any action brought or
otherwise initiated by any of them or required to enforce the provisions
hereunder) (hereinafter collectively referred to as the "Losses"), arising out
of or resulting from any or all of the following:
(i) the breach of any representation or warranty made by any
of the GJM Parties contained in this Agreement or in any of the
other Transaction Documents;
(ii) the breach of any covenant or agreement by any of the
GJM Parties contained in this Agreement or in any of the other
Transaction Documents;
(iii) Indemnification with respect to tax liabilities and
assessments for periods in accordance with the provisions of Section
8.3 hereof; or
(iv) any other matter as to which the GJM Parties, pursuant
to any other provision of this Agreement or of any of the other
Transaction Documents, have agreed to indemnify a TPEG Indemnified
Party.
(b) A TPEG Indemnified Party shall give the GJM Parties notice of
any matter which such TPEG Indemnified Party has determined has given or could
give rise to a right of indemnification under this Agreement, promptly, but in
any event within thirty (30) days of such determination, stating the amount of
the Losses, if known, and the method of computation thereof, and containing a
reference to the provisions of this Agreement in respect of which such right of
indemnification is claimed or arises; provided, however, that the failure to
provide such notice shall not release the GJM Parties from any of their joint
and several obligations or reduce the amount of the GJM Parties liabilities
under this Article 8 except to the extent that the GJM Parties are materially
prejudiced by such failure, as determined by a court of competent jurisdiction,
and shall not relieve the GJM Parties from any other obligation or liability
that they may have to any TPEG Indemnified Party otherwise than under this
Article 8. The obligations and liabilities of the GJM Parties under this Article
8 with respect to Losses arising from claims of any third party which are
subject to the indemnification provided for in this Article 8 ("Third Party
Claims") shall be governed by and contingent upon the following additional terms
and conditions: If a TPEG Indemnified Party shall receive actual notice of any
Third Party Claim, the TPEG Indemnified Party shall give the GJM Parties notice
of such Third Party Claim promptly, but in any event within thirty (30) days of
the receipt by the TPEG Indemnified Party
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of such notice; provided, however, that the failure to provide such notice shall
not release the GJM Parties from any of their obligations under this Article 8
except to the extent the GJM Parties are materially prejudiced by such failure,
as determined by a court of competent jurisdiction, and shall not relieve the
GJM Parties from any other obligation or liability that they may have to any
TPEG Indemnified Party otherwise than under this Article 8. If the GJM Parties
acknowledge in writing their obligation to indemnify a TPEG Indemnified Party
hereunder against any Losses that may result from a Third Party Claim, then the
GJM Parties shall be entitled to assume and control the defense of such Third
Party Claim, at their expense and through counsel of their choice, if the GJM
Parties give notice of their intention to do so to such TPEG Indemnified Party
within thirty (30) days of the receipt of such notice from such TPEG Indemnified
Party; provided, however, that if there exists or is reasonably likely to exist
a conflict of interest that would make it inappropriate in the judgment of the
TPEG Indemnified Party, in its or his reasonably exercised discretion, for the
same counsel to represent both the TPEG Indemnified Party and the GJM Parties,
then such TPEG Indemnified Party shall be entitled to retain its or his own
counsel, in each jurisdiction for which such TPEG Indemnified Party determines
counsel is required, at the expense of the GJM Parties. In the event the GJM
Parties exercise the right to undertake the defense against a Third Party Claim
as provided above, the TPEG Indemnified Party shall cooperate with the GJM
Parties in such defense and make available to the GJM Parties, at the GJM
Parties' expense, all witnesses, pertinent records, materials and information in
the TPEG Indemnified Party's possession or under the TPEG Indemnified Party's
control relating thereto as is reasonably required by the GJM Parties.
Similarly, in the event the TPEG Indemnified Party is, directly or indirectly,
conducting the defense of a Third Party Claim, the GJM Parties shall cooperate
with the TPEG Indemnified Party in such defense and make available to such TPEG
Indemnified Party, at the GJM Parties' expense, all such witnesses, records,
materials and information in the GJM Parties' possession or under the GJM
Parties' control relating thereto as is reasonably required by the TPEG
Indemnified Party. In furtherance of the foregoing, the GJM Parties shall be
obligated to keep the TPEG Indemnified Party fully informed in a timely fashion
of all developments pertaining to a Third Party Claim and to furnish the TPEG
Indemnified Party with true copies of all pleadings, judgments, papers and
settlement agreements in connection therewith. No Third Party Claim may be
settled by the GJM Parties without the prior written consent of the TPEG
Indemnified Party unless the settlement provides for a full and unconditional
release of the TPEG Indemnified Party.
8.3 Indemnification by GJM Parties as to Tax Matters.
(a) The GJM Parties shall jointly and severally indemnify and hold
harmless TPEG and its subsidiaries from and against the following Taxes (except
to the extent of amounts, including deferred taxes to take into account of
timing differences between Tax income and financial income, as have been
specifically identified and reserved therefor as taxes in the GJ Financial
Statements) and, except as otherwise provided in Section 8.3(b) hereof, against
any loss, damage, liability or expense (including reasonable fees for attorneys
and other outside consultants) incurred in contesting or otherwise in connection
with any such Taxes or pursuing
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any claim hereunder; (i) Taxes imposed on GJM with respect to periods ending at
or prior to the Effective Time; (ii) with respect to taxable periods beginning
before the Effective Time and ending after the Effective Time, Taxes imposed
which are allocable, pursuant to Section 8.3(b), to the portion of such period
ending at the Effective Time; (iii) Taxes imposed on TPEG as a result of any
breach of warranty or misrepresentation under Section 2.10 or the failure by GJM
to fulfill its obligations under this Section 8.3(a)(i); and (iv) unpaid Taxes
of any Person (including GJM) under Treas. Reg. Section 1.1502-6 (or any similar
provision of law), or as a transferee or successor, by contract or otherwise.
(b) In the case of Taxes that are payable with respect to a
taxable period that begins before the Effective Time and ends after the
Effective Time, the portion of any such Tax that is allocable to the portion of
the period ending on the Effective Time shall be:
(i) in the case of Taxes that are either (x) based upon or
related to income or receipts, or (y) imposed in connection with any
sale or other transfer or assignment of property (other than
pursuant to the Merger contemplated by the Agreement), deemed equal
to the amount which would be payable if the taxable year ended at
the Effective Time; and
(ii) in the case of Taxes not described in subparagraph (i)
of this Section 8.3(b) that are imposed on a periodic basis and
measured by the level of any item, deemed to be the amount of such
Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the
immediately preceding period) multiplied by a fraction the numerator
of which is the number of calendar days in the period ending on the
date of the Effective Time and the denominator of which is the
number of calendar days in the entire period.
(c) Tax Returns. Tax Returns not yet filed for any taxable period
that commences prior to the Effective Time shall be prepared, and each item
thereon treated, in a manner consistent with past practices of GJM.
(d) Refunds. Any Tax refund (or comparable benefit resulting from
a reduction in Tax liability) for a period ending as of or prior to the
Effective Time arising out of the carryback of a loss or credit incurred by GJM
in a taxable period ending after the Effective Time shall be the property of
TPEG or the Surviving Corporation, as the case may be, but the amount of any
such refunds received by TPEG or the Surviving Corporation shall be offset
against any claims by TPEG or the Surviving Corporation against the GJM Parties
pursuant to Article 8 hereof.
(e) Contests.
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(i) In the case of an audit or administrative or judicial
proceeding that relates to periods ending at or before the Effective
Time, the GJM Parties shall have the right, at their expense, to
participate in and control the conduct of such audit or proceeding
but only to the extent that such audit or proceeding relates solely
to a potential adjustment for which the GJM Parties have
acknowledged GJM's liability in writing and the issue underlying the
potential adjustment does not recur for any period ending subsequent
to the Effective Time. The GJM Parties shall keep TPEG fully
informed of the progress of any such audit or proceeding and, if it
appears in the sole discretion of TPEG, that such audit or
proceeding may adversely affect TPEG or TPEG Sub III, TPEG also may
participate in any such audit or proceeding. If the GJM Parties do
not assume the defense of any such audit or proceeding promptly,
TPEG may defend and settle the same (for the GJM Parties' account)
in such reasonable manner as it may deem appropriate. In the event
that a potential adjustment as to which the GJM Parties would be
liable is present in the same proceeding as a potential adjustment
for which TPEG or TPEG Sub III would be liable, TPEG shall have the
right, at its expense, to control the audit or proceeding with
respect to the latter potential adjustment.
(ii) With respect to a potential adjustment for which both
GJM and TPEG and/or TPEG Sub III could be liable, or which involves
an issue that recurs for any period ending after the Effective Time
(whether or not the subject of audit at such time), (i) both the GJM
Parties and TPEG may participate in the audit or proceeding, and
(ii) the audit or proceeding shall be controlled by that party which
would bear the burden of the greater portion of the dollar amount of
the adjustment and any corresponding adjustments that may reasonably
be anticipated for future Tax periods. The principle set forth in
the preceding sentence shall also govern for purposes of deciding
any issue that must be decided jointly (in particular, choice of
judicial forum) in circumstances in which separate issues are
otherwise controlled hereunder by TPEG and the GJM Parties.
(iii) Except as provided in clause (i) of this Section 6(e),
neither TPEG nor the GJM Parties shall enter into any compromise or
agree to settle any claim pursuant to any Tax audit or proceeding
which would adversely affect the other party for such year or a
subsequent year without the written consent of the other party,
which consent may not be unreasonably withheld.
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(f) Miscellaneous.
(i) The GJM Parties and TPEG agree to treat all payments
made by either to or for the benefit of the other under this Article
8, under other indemnification provisions of this Agreement and for
any misrepresentations or breaches of warranties or covenants as
adjustments to the Merger Consideration to be paid by TPEG to the
Stockholders of GJM pursuant to the Merger or as capital
contributions for Tax purposes and that such treatment shall govern
for purposes hereof.
(ii) Notwithstanding any provision herein to the contrary,
the obligation of the GJM Parties to indemnify and hold harmless
TPEG and TPEG Sub III pursuant to the provisions of this Section
8.3, and the representations and warranties contained in Section
2.10 hereof, shall terminate as of the close of business on the
120th day following expiration of the applicable statutes of
limitations with respect to the Tax liabilities in question (after
giving effect, however, to any waiver, mitigation or extension of
any such statutes).
(g) Additional Tax Agreements.
(i) Tax Elections. The GJM Parties jointly and severally
covenant and agree that no new elections with respect to Taxes or
any changes in current elections with respect to Taxes affecting GJM
shall be made after the date of this Agreement without the prior
written consent of TPEG.
(ii) Nonforeign Affidavit. GJM shall furnish TPEG an
affidavit stating that the indicated number is the transferor's
United States taxpayer identification number and that the transferor
is not a foreign person, pursuant to Section 1445(b)(2) of the Code.
(iii)Cooperation and Records Retention. The GJM Parties and
TPEG shall (A) each provide the other with such assistance as may
reasonably be requested by any of them in connection with the
preparation of any Tax Return, audit, or other examination by any
taxing authority or judicial or administrative proceedings relating
to liability for Taxes, provided, however, that TPEG shall cause its
officers who are serving as duly authorized officers of the
Surviving Corporation to sign and file any such Returns unless such
officers consist of any of the GJM Parties; (B) each retain and
provide the other, and TPEG shall retain and cause TPEG Sub III to
retain and provide the GJM Parties with, any records or other
information that may be relevant to such Tax Return, audit or
examination, proceeding, or determination, and (C) each provide the
other with any
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final determination of any such audit or examination, proceeding, or
determination that affects any amount required to be shown on any
Tax Return of the other for any period. Without limiting the
generality of the foregoing, TPEG shall retain, and shall cause TPEG
Sub III to retain, and the GJM Parties shall retain, until the
applicable statutes of limitations (including any extensions) have
expired, copies of all Tax Returns, supporting work schedules, and
other records or information that may be relevant to such returns
for all tax periods or portions thereof ending before or including
the Effective Time and shall not destroy or otherwise dispose of any
such records without first providing the other party with a
reasonable opportunity to review and copy the same.
(iv) Transfer Taxes. GJM or the Stockholders, as the case may
be, shall pay any sales, stock transfer and/or documentary taxes
applicable to the Merger at the Effective Time, provided, however,
that TPEG shall promptly reimburse GJM and/or the Stockholders for
the cost thereof;
(v) Preparation of W-2's, etc. Pursuant to Revenue Procedure
84-77 (1984-2 C.B. 753), provided that GJM provides TPEG with all
necessary payroll records for the calendar year which includes the
Effective Time, TPEG shall furnish a Form W-2 to each employee
employed by TPEG or any of its subsidiaries (including TPEG Sub III)
after the Effective Time who had been employed by GJM disclosing all
wages and other compensation paid for such calendar year, and taxes
withheld therefrom, and the GJM Parties shall be relieved of the
responsibility to do so.
8.4 Indemnification by TPEG.
(a) The GJM Parties (each a "GJM Indemnified Party") shall be
indemnified and held harmless by TPEG from and against for any and all
liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, reasonable attorneys'
and consultants' fees and expenses) suffered or incurred by them (including,
without limitation, in connection with any action brought or otherwise initiated
by any of them or required to enforce the provisions hereunder) (hereinafter
collectively referred to as the "Losses"), arising out of or resulting from:
(i) the breach of any representation or warranty made by
TPEG or by TPEG Sub III contained in this Agreement or any of the
other Transaction Documents; and
(ii) the breach of any covenant or agreement by TPEG
contained in this Agreement or any of the other Transaction
Documents.
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(b) A GJM Indemnified Party shall give TPEG notice of any matter
which a GJM Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement, promptly, but in any event within
thirty (30) days of such determination, stating the amount of the Losses, if
known, and method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises; provided, however, that the failure to provide such notice
shall not release TPEG from any of its obligations or reduce the amount of
TPEG's liabilities under this Article 8 except to the extent that TPEG is
materially prejudiced by such failure, as determined by a court of competent
jurisdiction, and shall not relieve TPEG from any other obligation or liability
that it may have to a GJM Indemnified Party otherwise than under this Article 8.
The obligations and liabilities of TPEG under this Article 8 with respect to
Losses arising from claims of any third party which are subject to the
indemnification provided for in this Article 8 ("Third Party Claims") shall be
governed by and contingent upon the following additional terms and conditions:
If a GJM Indemnified Party shall receive actual notice of any Third Party Claim,
the GJM Indemnified Party shall give TPEG notice of a Third Party Claim
promptly, but in any event within thirty (30) days of the receipt by such GJM
Indemnified Party of such notice; provided, however, that the failure to provide
such notice shall not release TPEG from any of its obligations under this
Article 8 except to the extent TPEG is materially prejudiced by such failure, as
determined by a court of competent jurisdiction, and shall not relieve TPEG from
any other obligation or liability that it may have to any GJM Indemnified Party
otherwise than under this Article 8. If TPEG acknowledges in writing its
obligation to indemnify a GJM Indemnified Party hereunder against any Losses
that may result from a Third Party Claim, then TPEG shall be entitled to assume
and control the defense of a Third Party Claim, at its expense and through
counsel of its choice, if it gives notice of its intention to do so to the GJM
Indemnified Party within thirty (30) days of the receipt of such notice from
such GJM Indemnified Party; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the GJM Indemnified Party, in its or his
reasonably exercised discretion, for the same counsel to represent both such GJM
Indemnified Party and TPEG, then the GJM Indemnified Party shall be entitled to
retain its own counsel, in each jurisdiction for which the GJM Indemnified Party
determines counsel is required, at the expense of TPEG. In the event TPEG
exercises the right to undertake any such defense of a Third Party Claim as
provided above, the GJM Indemnified Party shall cooperate with TPEG in such
defense and make available to TPEG, at TPEG's expense, all witnesses, pertinent
records, materials and information in the GJM Indemnified Party's possession or
under the GJM Indemnified Party's control relating thereto as is reasonably
required by TPEG. Similarly, in the event the GJM Indemnified Party is, directly
or indirectly, conducting the defense of a Third Party Claim, TPEG shall
cooperate with the GJM Indemnified Party in such defense and make available to
the GJM Indemnified Party, at TPEG's expense, all such witnesses, records,
materials and information in TPEG's possession or under TPEG's control relating
thereto as is reasonably required by the GJM Indemnified Party. No Third Party
Claim may be settled by TPEG without the prior written consent of the GJM
Indemnified Party unless the settlement provides for the full and unconditional
release of the GJM Indemnified Party.
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8.5 Payment of Indemnification Liability. All indemnification
obligations or liabilities of the GJM Parties or of TPEG, as the case may be,
shall be payable to the Indemnified Parties within ten (10) days (the
"Indemnification Payment Date") after the date that such obligation or liability
has been determined by written stipulation or agreement between or among the
parties, by a final non-appealable judgment or arbitration award or, in the case
of liabilities for any Taxes, the receipt by TPEG and/or the Surviving
Corporation from any Govenmental Authority of an assessment, claim or lien for
Taxes which is subject to the indemnification provisions of Section 8.3 hereof.
8.6 Form of Payment of Indemnification Liability. The GJM Parties or
TPEG, as the case may be, shall be permitted to satisfy their respective
indemnification obligations under this Article 8 by paying the full dollar
amount of the indemnified Losses (the "Loss Amount") to the Indemnified Parties
in the form of Shares of TPEG Common Stock, the number of which, for purposes of
this Article 8, shall be determined by dividing the Loss Amount by the average
of the closing prices of the (a) quoted closing price of the TPEG Common Stock
on the NASDAQ SmallCap Market during the thirty (30) consecutive trading days
immediately preceding the Indemnification Payment Date or (b) if there is no
trading in the TPEG Common Stock on the NASDAQ SmallCap Market on any one or
more of such trading days, by the average mean between the quoted closing bid
and asked prices for the TPEG Common Stock on such market on any of such days,
subject to a discount of ten percent (10%) from the price of the Shares of the
TPEG Common Stock so determined and further subject to a minimum price of one
dollar twenty cents ($1.20) per share; provided, however, that with respect to
the GJM Parties' liabilities for Taxes which are the subject of the
representations and warranties set forth in Section 2.10 hereof and the
indemnification provisions of Section 8.3 hereof and/or liabilities for
environmental matters which are the subject of the representations and
warranties set forth in Section 2.12(g) and (h) hereof, the GJM Parties shall
pay the Loss Amount by certified check (or other form of cash payment or
transfer mutually acceptable to the parties) payable directly to the order of
the Governmental Authority assessing or otherwise claiming or levying such Taxes
or to TPEG as TPEG may direct on or before the Indemnification Date.
8.7 Joint and Several Liability of GJM Parties. Each reference in this
Article 8 to the "GJM Parties" shall mean each of GJM, Xxxxxx and Xxxxxxxx, and
all of them, individually and collectively, jointly and severally, and the GJM
Parties shall be jointly and severally liable for all present and future
indebtedness, liabilities and obligations to each TPEG Indemnified Party
pursuant to or in connection with Section 8.2. Notwithstanding the joint and
several liability of the GJM Parties as aforesaid, each of Xxxxxx and Xxxxxxxx
hereby irrevocably waives any right to seek or obtain from GJM and/or the
Surviving Corporation after the Effective Time, whether by contribution,
reimbursement, joinder of parties, cross-claim or otherwise, any amounts paid or
payable by Xxxxxx and/or Xxxxxxxx pursuant to or in connection with Section 8.2.
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8.8 Cross-Indemnification With Other Mergers. Notwithstanding any other
provisions of this Agreement, all of the indemnification provisions set forth in
this Article 8 shall be deemed applicable to and may be invoked against the GJM
Parties or TPEG, as the case may be, in the event that:
(i) any of the parties to the Other Mergers breaches any
representations and warranties set forth in the agreements or other
Transaction Documents governing either of such Other Mergers;
(ii) any of the parties to the Other Mergers breaches any
covenants or agreements by any of such parties set forth in any of
the agreements or other Transaction Documents governing either of
such Other Mergers;
(iii)the indemnification provisions with respect to tax
liabilities and assessments of GJP or GJE, respectively, under the
agreements governing the Other Mergers are invoked; or
(iv) any other matters to which the parties to either of the
Other Mergers have agreed to indemnify any of the other parties to
such Other Mergers; it being expressly understood and agreed by the
GJM Parties and by TPEG that (A) any claims for indemnification
arising under either or both of the Other Mergers shall invoke all
of the indemnification and other remedies provided for in this
Agreement, and (B) the GJM Parties shall be jointly and severally
liable for any indebtedness, obligations or liabilities of the GJP
Parties (as defined in the agreement governing the Other Merger to
which GJP is a Party) and or the GJE Parties (as defined in the
agreement governing the Other Merger to which GJE is a Party) to the
TPEG Indemnified Parties, and the TPEG Parties shall be jointly and
severally liable for any indebtedness, obligations or liabilities of
the TPEG Parties (as defined in the agreement governing the Other
Mergers with GJP and GJE, respectively) to the GJM Indemnified
Party, in each case without offset, deduction, defense or
counterclaim available to the GJM Parties or the TPEG Parties, as
the case may be, under this Agreement.
8.9 Minimum Claim. Anything in this Article 8 to the contrary
notwithstanding, the TPEG Indemnified Parties, as a group, shall not have any
claims for indemnification against the GJM Parties, and the GJM Indemnified
Parties, as a group, shall not have any claims for indemnification against TPEG
unless the amount of such individual claims for Losses, or the amount of such
claim when added to all other claims for Losses for which such party could have
sought indemnification hereunder and under the Other Merger Agreements but for
the provisions of this Section 8.9, exceeds, in the aggregate, Ten Thousand
($10,000) Dollars (the "Indemnification Minimum Amount"); provided, however,
that in determining amounts to be included in the Indemnification Minimum
Amount, if any, but for no
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other purpose, all representations, warranties and covenants in this Agreement,
made by the GJM Parties or by TPEG, as the case may be, shall be read without
regard to any materiality standard or any knowledge qualification set forth in
this Agreement.
8.10 Maximum Claim. Anything in this Article 8 to the contrary
notwithstanding, neither TPEG nor the GJM Parties shall have any liability under
this Article 8 in respect of any Losses to the extent the aggregate of such
Losses under this Article 8 and under the Other Merger Agreements, exceeds, in
the aggregate, the sum of One Million ($1,000,000) Dollars.
8.11 Other Remedies. The indemnification provisions of this Article 8 are
in addition to, and not in derogation of, any statutory, equitable, or common
law remedies which any party hereto may have for breach of any representation,
warranty or covenant set forth in this Agreement, any Schedule or Exhibit
annexed hereto or in any of the other Transaction Documents.
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ARTICLE 9. TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the GJM Stockholders :
(a) by the mutual consent of GJM, Xxxxxx and Xxxxxxxx and TPEG;
(b) by either GJM or TPEG upon written notice to the other party
if any governmental entity of competent jurisdiction shall have issued a final
permanent order enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement, and in any such case the time for
appeal or petition for reconsideration of such order shall have expired without
such appeal or petition being granted;
(c) by either GJM or TPEG if the Merger shall not have been
consummated on or before October 31, 1997.
9.2 Effect of Termination. In the event of termination of this Agreement
by either GJM or TPEG as provided in Section 9.1 hereof, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of any party or parties hereto to the other party or parties and each of GJM (on
its own behalf and on behalf of Xxxxxx and Xxxxxxxx) and TPEG shall bear and be
solely responsible for their respective professional fees, expenses and other
costs incurred in the negotiation and execution of the Agreement and any other
matters undertaken with respect to the transactions contemplated hereby, except
(i) with respect to or by reason of the application of the provisions of Article
10 of this Agreement, and (ii) with respect to any liabilities or damages
incurred or suffered by a party or parties as a result of the breach in any
material respect by the other party or parties of any of its or their
representations, warranties, covenants or agreements set forth in this
Agreement.
9.3 Amendment. This Agreement may be amended by the parties hereto, at
any time before or after approval of the matters presented in connection with
the Merger by the GJM Stockholders, but, after any such stockholder approval, no
amendment shall be made which by law requires further approval by such
stockholders without seeking such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, may, to the extent legally permitted, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed by or on behalf of such
party.
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ARTICLE 10. REMEDIES IN EVENT OF THIRD
PARTY COMPETING TRANSACTION
Notwithstanding any provision to the contrary set forth in this Agreement
or in any other agreements, instruments or other documents delivered by the
parties pursuant hereto,
10.1 Remedies for Competing Transaction. TPEG and TPEG Sub III further
agree and GJM, Xxxxxx and Xxxxxxxx further jointly and severally agree that, in
the event that any of TPEG, TPEG Sub III, GJM, Xxxxxx and/or Xxxxxxxx elects or
elect to execute a letter of intent or become a party to or make a written or an
oral commitment with respect to a Competing Transaction (all such actions,
collectively, the "Competing Transaction Commitment") prior to the Effective
Time or the earlier termination of this Agreement in accordance with Article 9
hereof, whichever sooner occurs, then such party or parties shall be legally
obligated, promptly upon the written demand of the other party or parties, to
promptly reimburse the other party for all of its reasonable legal, accounting
and other professional costs and related disbursements, upon submission of
reasonably itemized bills, vouchers and/or statements therefor plus such
monetary damages as a court of competent jurisdiction may award.
10.2 Procedure for Exercising Remedies. If any of TPEG, GJM, Xxxxxx
and/or Xxxxxxxx as the case may be, undertakes a Competing Transaction
Commitment, it, he or they shall be required to give prompt written notice
thereof to the other party or parties and its or their counsel, whereupon the
other party or parties shall submit as promptly as practicable reasonably
itemized bills, vouchers and/or statements with respect to its reasonable legal,
accounting and other professional costs and related disbursements incurred in
connection with this Agreement and the transactions contemplated hereby. The
party undertaking the Competing Transaction Commitment shall be required, within
seven (7) days after receipt of such bills, vouchers and/or statements, to
reimburse the other party in full for all of such fees, costs and expenses plus
such monetary damages as a court of competent jurisdiction may award.
10.3 Other Remedies for Competing Transaction. The reimbursement of fees
and expenses plus such monetary damages as a court of competent jurisdiction may
award, if the other party or parties undertakes a Competing Transaction
Commitment prior to the Effective Time or to the earlier termination of this
Agreement in accordance with Article 9 hereof, whichever sooner occurs, shall
not constitute sole and exclusive remedy available to the other party or parties
in consequence of TPEG, GJM, Xxxxxx or Xxxxxxxx, as the case may be, having
undertaken such Competing Transaction Commitment or having engaged in a
Competing Transaction.
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ARTICLE 11. GENERAL PROVISIONS
11.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed (postage prepaid) by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to TPEG, TPEG subsidiaries or the Surviving Corporation, to
The Producers Entertainment Group Ltd.
0000 Xxxxxxxx Xxxxxxxxx - Xxxxxxxxx Xxx
Xxx Xxxxxxx, XX 00000
Telecopy No. (000) 000-0000
Attn: Xxxxx Xxxxx, CEO
with a copy to
Xxxxxxx & Xxxxxxx, P.C.
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
and
Xxxxxxx, Xxxxxxx & Xxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No. (000) 000-0000
Attn: Xxxxxx Xxxx, Esq.
and
(b) if to GJM, Xxxxxx or Xxxxxxxx, to or c/o
Xxxxxx-Xxxxxxxx Music Company, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No. (000) 000-0000
Attn: Xxxxxxxx X. Xxxxxxxx, President
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with a copy to
Xxx, Xxxxxxx & Xxxxx, LLP
Xxx Xxx Xxxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telecopy No. (000) 000-0000
Attn: Xxxxxxx Xxxxxxx, Esq.
Any notice sent by registered or certified mail as aforesaid shall be
deemed delivered to the party or parties to whom it is addressed on the third
(3rd) business day following the date upon which each notice has been deposited
in the U.S. mail.
11.2 Interpretation. (a) When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section or Exhibit
or Schedule to this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the naming or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party or
parties to whom such information is to be made available. The phrases "the date
of this Agreement", "the date hereof" and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to September 15, 1997.
(b) All references in this Agreement to "the knowledge of" or "to
the best knowledge of" of any party shall mean "actual knowledge" of the party
charged with such knowledge or "constructive knowledge" which such party should
have obtained, in the reasonable exercise of his or its duties, after reasonable
inquiry.
(c) All references herein to any joint and several agreements or
obligations of Xxxxxx and Xxxxxxxx pertaining to actions or transactions to be
taken, or not to be taken, by GJM, in accordance with the terms of this
Agreement shall constitute, and be deemed to constitute, the agreements and
obligations of Xxxxxx and Xxxxxxxx to cause GJM to take or not to take any such
actions or transactions.
11.3 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
11.4 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership.
This Agreement (including the documents and the instruments referred to herein)
(a) constitutes the entire agreement and supersedes all prior agreements
(including the letter of intent between GJM, GJP, Xxxxxx and Xxxxxxxx and TPEG
dated April 25, 1997) and understandings, both written and oral, among the
parties with respect to the subject matter hereof, provided that the relevant
provisions of Articles hereof relating to Confidentiality shall survive the
execution and
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delivery of this Agreement and (b) except as expressly provided herein, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. The parties hereby acknowledge that, except as hereinafter
agreed to in writing, no party shall have the right to acquire or shall be
deemed to have acquired shares of common stock of the other party pursuant to
the Merger until consummation thereof.
11.5 Governing Law. This Agreement shall be governed and construed in
accordance with the internal laws of the State of New York, without regard to
any applicable conflicts of law.
11.6 Publicity. Except as otherwise required by law (including federal
securities law including regulations of the SEC) or the rules and regulations of
the NASDAQ SmallCap Market, so long as this Agreement is in effect, neither GJM,
Xxxxxx or Xxxxxxxx nor TPEG shall issue or cause the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.
11.7 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
11.8 Disclosure Schedules. The Schedules annexed hereto and referred to
herein are a part of this Agreement for all purposes. The inclusion of an item
in any Schedule does not necessarily imply that such item or matter is material
or significant. Terms which are defined in this Agreement shall have the same
meanings when used in the Schedules hereto. Disclosure of any item or matter on
(a) any one Schedule hereto shall be deemed to constitute disclosure of such
item or matter for each of the other Schedules hereto with respect to which
disclosure of such item or matter is required and (b) any schedule required to
be delivered by GJP or GJE or by TPEG or the other TPEG subsidiaries, as the
case may be, pursuant to or under the agreements governing the Other Mergers
shall be deemed to constitute disclosure of such item or matter with respect to
which disclosure of such item or matter is required hereunder.
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IN WITNESS WHEREOF, GJM, TPEG and TPEG Sub III each have caused this
Agreement to be signed by their respective officers thereunto duly authorized
and Xxxxxx and Xxxxxxxx each have signed this Agreement on and as of the date
and year first above written.
Attest: THE PRODUCERS ENTERTAINMENT
GROUP LTD.
_____________________________ By: _____________________________________
Name: Title:
Title:
Attest: TPEG ACQUISITION III CORP.
_____________________________ By: _____________________________________
Name: Title:
Title:
Attest: XXXXXX-XXXXXXXX MUSIC
COMPANY, INC.
_____________________________ By: _____________________________________
Name: Title:
Title:
_____________________________________
XXXXXXXXX XXXXXX
_____________________________________
XXXXXXXX X. XXXXXXXX
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