EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the " Agreement"), entered
into this 28th day of December, 1999, by and among DIGITAL LAUNCH, INC., a
publicly held Delaware corporation (hereinafter, the "Purchaser"),
XXXXXXXXXXXX.XXX, INC., a privately-held Nevada corporation (hereinafter, the
"Private Company"), and the shareholders of the Private Company whose names and
signatures are set forth upon the signature page of this Agreement (the
"Shareholders").
RECITALS:
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WHEREAS, the Purchaser wishes to acquire, and the Shareholders are
willing to sell, all of the outstanding stock of the Private Company in exchange
solely for a part of the voting stock of the Purchaser; and
WHEREAS, the parties hereto intend to qualify such transaction as a
tax-free exchange pursuant to Section 368(a)(1)(B) of the Internal Revenue Code
of 1986, as amended;
NOW, THEREFORE, based upon the stated premises, which are incorporated
herein by reference, and for and in consideration of the mutual covenants and
agreements set forth herein, the mutual benefits to the parties to be derived
from this transaction, and other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Purchaser, the Private
Company, and the Shareholders approve and adopt this Agreement and Plan of
Reorganization and mutually covenant and agree with each other as follows:
1. SHARES TO BE TRANSFERRED AND SHARES TO BE ISSUED.
1.1 On the closing date the Shareholders shall transfer
to the Purchaser certificates for the number of shares of the common stock of
the Private Company described in SCHEDULE A. attached hereto and incorporated
herein, which in the aggregate shall represent all of the issued and outstanding
shares of the common stock of the Private Company.
1.2 In exchange for the transfer of the common stock of
the Private Company pursuant to subsection 1.1 hereof, the Purchaser shall on
the closing date and contemporaneously with such transfer of the common stock of
the Private Company to it by the Shareholders issue and deliver to the
Shareholders the number of shares of Common Stock of the Purchaser specified on
SCHEDULE A hereof.
2. REPRESENTATIONS AND WARRANTIES OF THE PRIVATE COMPANV AND
SHAREHOLDERS. The Private Company, and each of the Shareholders represents and
warrants to the Purchaser as set forth below. These representations and
warranties are made as an inducement for the Purchaser to enter into this
Agreement and, but for the making of such representations and warranties and
their accuracy, the Purchaser would not be a party hereto.
2.1 OWNERSHIP OF STOCK.
a. Each of the Shareholders is the record and
beneficial owner and holder of the number of fully paid and non assessable
shares of the common stock of the Private Company listed in SCHEDULE A hereto as
of the date hereof and will continue to own such shares of the common stock of
the Private Company until the closing date and all such shares of common stock
are or will be on the closing
date owned free and clear of all liens, encumbrances, charges and assessments of
every nature and subject to no restrictions with respect to transferability.
b. Except for this Agreement, there are no
outstanding options, contracts, calls, commitments, agreements, or demands of
any character relating to the common stock of the Private Company listed in
SCHEDULE A and owned by each of the Shareholders. The Private Company does have
outstanding options and warrants against some of its unissued capital, however,
totaling 241,000 shares in options and 3,000,000 shares in warrants.
2.2 ACCURACY OF ALL STATEMENTS MADE BY THE PRIVATE
COMPANY AND THE SHAREHOLDERS. No representation or warranty by the Private
Company or the Shareholders in this Agreement, nor any statement, certificate,
schedule, or exhibit hereto furnished or to be furnished by or on behalf of the
Shareholders pursuant to this Agreement, nor any document or certificate
delivered to the Purchaser by the Shareholders pursuant to this Agreement or in
connection with actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statement contained therein not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE PRIVATE COMPANY. The
Private Company represents and warrants to the Purchaser as set forth below.
These representations and warranties are made as an inducement for the Purchaser
to enter into this Agreement and, but for the making of such representations and
warranties and their accuracy, the Purchaser would not be a party hereto.
3.1 ORGANIZATION AND AUTHORITY. The Private Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada with full power and authority to enter into and perform
the transactions contemplated by this Agreement.
3.2 CAPITALIZATION. As of the closing date, the Private
Company will have a total of no more than 4,820,000 shares of common stock
issued and outstanding and no more than 3,241,000 unissued shares committed to
options and warrants. All of the shares will have been duly authorized and
validly issued and will be fully paid and nonassessable. The Private Company
does not have issued or outstanding any other class or series of capital stock.
Other than the options and warrants referred to in paragraph 2.1(b ), there are
no options, warrants, conversion privileges, or other rights currently
outstanding for the purchase of any authorized but unissued capital stock of the
Private Company .
3.3 PERFORMANCE OF THIS AGREEMENT. The execution and
performance of this Agreement and the transfer of stock contemplated hereby have
been authorized by the board of directors of the Private Company.
3.4 FINANCIALS. The unaudited balance sheet of the
Private Company as of November 30, 1999, a copy of which has been furnished to
the Purchaser, is true and correct in all material respects.
3.5 LIABILITIES. Except as otherwise provided herein,
there are no material liabilities of the Private Company, whether accrued,
absolute, contingent or otherwise, which arose or relate to any transaction of
the Private Company, its agents or servants occurring prior to November 30, 1999
which are not disclosed by or reflected in said financial statements. As of the
date hereof, there are no known circumstances, conditions, happenings, events or
arrangements, contractual or otherwise, which may hereafter give rise to
liabilities, except in the normal course of business of thePrivate Company.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in this Agreement, since November 30, 1999, there has not been (i) any
material adverse change in the business, operations, properties, level of
inventory, assets, or condition of the Private Company, or (ii) any damage,
destruction, or loss to the Private Company (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or conditions of the Private Company.
3.7 LITIGATION. There are no legal, administrative or
other proceedings, investigations or inquiries, product liability or other
claims, judgments, injunctions or restrictions, either threatened, pending, or
outstanding against or involving the Private Company or its subsidiaries, if
any, or their assets, properties, or business, nor does the Private Company or
its subsidiaries know, or have reasonable grounds to know, of any basis for any
such proceedings, investigations or inquiries, product liability or other
claims, judgments, injunctions or restrictions. In addition, there are no
material proceedings existing, pending or reasonably contemplated to which any
officer, director, or affiliate of the Private Company or as to which any of the
Shareholders is a party adverse to the Private Company or any of its
subsidiaries or has a material interest adverse to the Private Company or any of
its subsidiaries.
3.8 TAXES. All federal, state, foreign, county and local
income, profits, franchise, occupation, property, sales, use, gross receipts and
other taxes (including any interest or penalties relating thereto ) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by the Private Company, and there are no unpaid taxes
which are, or could become a lien on the properties and assets of the Private
Company, except as provided for in the financial statements of the Private
Company, or have been incurred in the normal course of business of the Private
Company since that date. All tax returns of any kind required to be filed have
been filed and the taxes paid or accrued.
3.9 ACCURACY OF ALL STATEMENTS MADE BY THE PRIVATE
COMPANY. No representation or warranty by the Private Company in this Agreement,
nor any statement, certificate, schedule, or exhibit hereto furnished or to be
furnished by or on behalf of the Private Company pursuant to this Agreement, nor
any document or certificate delivered to the Purchaser by the Private Company
pursuant to this Agreement or in connection with actions contemplated hereby,
contains or shall contain any untrue statement of material fact or omits or
shall omit a material fact necessary to make the statement contained therein not
misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Private Company and to the Shareholders as set
forth below. These representations and warranties are made as an inducement for
the Private Company and the Shareholders to enter into this Agreement and, but
for the making of such representations and warranties and their accuracy, the
Private Company and the Shareholders would not be parties hereto.
4.1 ORGANIZATION AND GOOD STANDING. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full power and authority to enter into and
perform the transactions contemplated by this Agreement.
4.2 CAPITALIZATION. As of the closing of this Agreement,
the Purchaser will have a total of no more than 13,732,000 shares of common
stock issued and outstanding, and no shares of preferred stock issued and
outstanding, after giving effect to (i) the issuance of the shares to the
Shareholders under this Agreement, (ii) a 1-for-2 reverse split of all issued
and outstanding shares to be effected prior to the Closing, (iii) the issuance
of 4,000,000 (post-reverse split) shares of common stock to investors for an
investment of $2 million in Purchaser, and (iv) the issuance of 250,000
(post-reverse split) shares of common stock to investors for an investment of
$100,000 in Purchaser. All of the shares will
have been duly authorized and validly issued and will be fully paid and
nonassessable. Except for (a) the Purchaser's obligations hereunder with respect
to the shares to be issued pursuant to subsection 1 .2 hereof and (b) currently
outstanding options to purchase common stock of Purchaser, which options are to
be terminated on or prior to the closing, there are no options, warrants,
conversion privileges, or other rights currently outstanding for the purchase of
any authorized but unissued stock of the Purchaser, and there are not any
outstanding obligations under which any third party could assert that it is
entitled to shares of capital stock of the Purchaser or any instruments which
could be converted into or exercised for such capital stock.
4.3 PERFORMANCE OF THIS AGREEMENT. The execution and
performance of this Agreement and the issuance of stock contemplated hereby have
been authorized by the board of directors of the Purchaser, and the person
executing this Agreement on behalf of the Purchaser is duly authorized to bind
the Purchaser to the obligations hereunder. To the extent that any actions of
the Purchaser in contemplation of or affecting this Agreement may have required
or will require approval of the stockholders of the Purchaser under applicable
law or the Purchaser's Charter or Bylaws, including without limitation the
Purchaser's reverse split of its issued and outstanding shares, the Purchaser
has received, or on or before the closing shall have received, all necessary
stockholder approvals and such actions are, or as of the closing shall be, duly
authorized, binding and enforceable.
4.4 FINANCIALS. The unaudited balance sheets, statements
of income and cash flows of the Purchaser as of and for the period ending
November 30, 1999, and as of and for the year ended December 31, 1998, and the
audited balance sheets, statements of income and cash flows of the Purchaser as
of and for the period ending December 31, 1997, copies of which have been
furnished to the Private Company and the Shareholders, are true and correct in
all material respects.
4.5 LIABILITIES. There are no material liabilities of the
Purchaser, whether accrued, absolute, contingent or otherwise, which arose or
relate to any transaction of the Purchaser , its agents or servants which are
not disclosed by or reflected in the foregoing financial statements, other than
normal year-end adjustments. As of the date hereof, there are no known
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, which may hereafter give rise to liabilities, except in the normal
course of business of the Purchaser.
4.6 LITIGATION. There are no legal, administrative or
other proceedings, investigations or inquiries, product liability or other
claims, judgments, injunctions or restrictions, either threatened, pending, or
outstanding against or involving the Purchaser or its subsidiaries, if any, or
their assets, properties, or business. In addition, there are no material
proceedings existing, pending or reasonably contemplated to which any officer,
director, or affiliate of the Purchaser is a party adverse to the Purchaser or
any of its subsidiaries or has a material interest adverse to the Purchaser or
any of its subsidiaries.
4.7 TAXES. All federal, state, foreign, county and local
income, profits, franchise, occupation, property, sales, use, gross receipts and
other taxes (including any interest or penalties relating thereto) and
assessments which are due and payable have been duly reported, fully paid and
discharged as reported by the Purchaser, and there are no unpaid taxes which are
or could become a lien on the properties and assets of the Purchaser. All tax
returns of any kind required to be filed have been filed and the taxes paid or
accrued.
4.8 LEGALITY OF SHARES TO BE ISSUED. The shares of Common
Stock of the Purchaser to be issued by the Purchaser pursuant to this Agreement,
when so issued and delivered, will have been duly
and validly authorized and issued by the Purchaser and will be fully paid and
nonassessable.
4.9 ACCURACY OF ALL STATEMENTS MADE BY THE PURCHASER. No
representation or warranty by the Purchaser in this Agreement, nor any
statement, certificate, schedule, or exhibit hereto furnished or to be furnished
by the Purchaser pursuant to this Agreement, nor any document or certificate
delivered to the Private Company or the Shareholders pursuant to this Agreement
or in connection with actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits to state or shall omit to state a
material fact necessary to make the statement contained therein not misleading.
5 COVENANTS OF THE PARTIES.
5.1 CORPORATE RECORDS.
a. Promptly following the execution of this
Agreement by the Private Company, such entity shall deliver to the Purchaser
copies of the certificate of incorporation, as amended, and the current bylaws
of the Private Company, and copies of the resolutions duly adopted by the board
of directors of the Private Company approving this Agreement and the
transactions herein contemplated.
b. Promptly following the execution of this
Agreement by the Purchaser, such entity shall deliver to the Private Company
copies of the certificate of incorporation, as amended, and the current bylaws
of the Purchaser, and copies of the resolutions duly adopted by the board of
directors of the Purchaser approving this Agreement and the transactions herein
contemplated.
5.2 ACCESS TO INFORMATION.
a. The Purchaser and its authorized
representatives shall have full access during normal business hours to all
properties, books, records, contracts, and documents of the Private Company, and
the Private Company shall furnish or cause to be furnished to the Purchaser and
its authorized representatives all information with respect to its affairs and
business as the Purchaser may reasonably request. The Purchaser shall hold, and
shall cause its representatives to hold, confidential all such information and
documents, other than information that (i) is in the public domain at the time
of its disclosure to the Purchaser; (ii) becomes part of the public domain after
disclosure through no fault of the Purchaser; (iii) is known to the Purchaser or
any ofits officers or directors prior to disclosure; or (iv) is disclosed in
accordance with the written consent ofthe Private Company. In the event this
Agreement is terminated prior to closing, the Purchaser shall, upon the written
request of the Private Company. promptly return all copies of all documentation
and information provided by the Private Company hereunder.
b. The Private Company and its authorized
representatives shall have full access during normal business hours to all
properties, books, records, contracts, and documents of the Purchaser, and the
Purchaser shall furnish or cause to be furnished to the Private Company and its
authorized representatives all information with respect to its affairs and
business the Private Company may reasonably request, including such information
as may be reasonably required in order to conduct an audit of the financial
statements of the Purchaser and the Private Company on a consolidated basis. The
Private Company shall hold, and shall cause its representatives to hold,
confidential all such information and documents, other than information that (i)
is in the public domain at the time of its disclosure to the Private Company;
(ii) becomes part of the public domain after disclosure through no fault of the
Private Company; (iii) is known to the Private Company or any of its officers or
directors prior to disclosure; or (iv) is
disclosed in accordance with the written consent of the Purchaser. In the event
this Agreement is terminated prior to closing, the Private Company shall, upon
the written request of the Purchaser promptly return all copies of all
documentation and information provided by the Purchaser hereunder.
5.3 ACTIONS PRIOR TO CLOSING. From and after the date of
this Agreement and until the closing date:
a. The Purchaser and the Private Company shall
each carry on its business diligently and substantially in the same manner as
heretofore, and neither party shall make or institute any unusual or novel
methods of purchase, sale, management, accounting or operation.
b. Neither the Purchaser nor the Private
Company shall enter into any contract or commitment, or engage in any
transaction, not in the usual and ordinary course of business and consistent
with its business practices, except that the Purchaser shall continue to proceed
diligently to consummate the sale of its entire skin-care assets and business to
a third party for consideration consisting solely of such third party's
agreement to assume all of the Company's liabilities and obligations relating to
such skin-care business.
c. Neither the Purchaser nor the Private
Company shall amend its articles of incorporation or bylaws or make any changes
in authorized or issued capital stock, except as provided or contemplated in
this Agreement.
d. The Purchaser and the Private Company shall
each use its best efforts (without making any commitments on behalf of the
company) to preserve its business organization intact, except as described in
(b), above.
e. Neither the Purchaser nor the Private
Company shall do any act or-omit to do any act, or permit any act or omission to
act, which will cause a material breach of any material contract, commitment, or
obligation of such party.
f. The Purchaser and the Private Company shall
each duly comply with all applicable laws as may be required for the valid and
effective issuance or transfer of stock contemplated by this Agreement.
g. Neither the Purchaser nor the Private
Company shall sell or dispose of any property or assets, except products sold in
the ordinary course of business and as provided in (b), above.
h. The Purchaser and the Private Company shall
each promptly notify the other of any lawsuits, claims, proceedings, or
investigations that may be threatened, brought, asserted, or commenced against
it, its officers or directors involving in any way the business, properties, or
assets of such party.
5.4 SHAREHOLDERS' MEETING OR CONSENT. If required under
the law of Delaware, the Purchaser shall promptly submit this Agreement and the
transaction contemplated hereby for the approval of its stockholders at a
meeting of stockholders or for consent of the stockholders and, subject to the
fiduciary duties of the Board of directors of the Purchaser under applicable
law, shall use its best efforts to obtain stockholder approval and adoption of
this Agreement and the transactions contemplated hereby. In connection with such
meeting or consent of stockholders, the Purchaser shall prepare a proxy or
information statement to be furnished to the stockholders of the Purchaser
setting forth information about this Agreement and the transactions contemplated
hereby. The Private Company shall promptly furnish to the Purchaser all
information, and take such other actions, as may reasonably be requested in
connection with any action to be taken by the Purchaser in connection with the
immediately preceding sentence. The Private Company shall have the right to
review and provide comments to the proxy or information statement prior to
mailing to the stockholders of the Purchaser.
5.5 NO COVENANT AS TO TAX OR ACCOUNTING CONSEQUENCES. It
is expressly understood and agreed that neither the Purchaser nor its officers
or agents has made any warranty or agreement, expressed or implied, as to the
tax or accounting consequences of the transactions contemplated by this
Agreement or the tax or accounting consequences of any action pursuant to or
growing out of this Agreement.
5.6 INDEMNIFICATION. The Private Company shall indemnify
Purchaser for any loss, cost, expense, or other damage (including, without
limitation, attorneys' fees and expenses) suffered by Purchaser resulting from,
arising out of or incurred with respect to the falsity or the breach of any
representation, warranty, or covenant made by the Private Company herein, and
any claims arising from the operations of the Private Company prior to the
closing date. Purchaser shall indemnify and hold the Private Company and the
Shareholders harmless from and against any loss, cost, expense, or other damage
(including, without limitation, attorneys' fees and expenses) resulting from,
arising out of, or incurred with respect to, or alleged to result from, arise
out of or have been incurred with respect to, the falsity or the breach of any
representation, covenant, warranty, or agreement made by Purchaser herein, and
any claims arising from the operations of Purchaser prior to the closing date.
The indemnity agreement contained herein shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
party and shall survive the consummation of the transactions contemplated by
this Agreement.
5.7 PUBLICITY. The parties agree that no publicity,
release, or other public announcement concerning this Agreement or the
transactions contemplated by this Agreement shall be issued by the Private
Company or the Shareholders without the advance approval of both the form and
substance of the same by the Purchaser and its counsel, which approval, in the
case of any publicity, release, or other public announcement required by
applicable law, shall not be unreasonably withheld or delayed.
5.8 EXPENSES. Except as otherwise expressly provided
herein, each party to this Agreement shall bear its own respective expenses
incurred in connection with the negotiation and preparation of this Agreement,
in the consummation of the transactions contemplated hereby, and in connection
with all duties and obligations required to be performed by each of them under
this Agreement.
5.9 FURTHER ACTIONS. Each of the parties hereto shall
take all such further action, and execute and deliver such further documents, as
may be necessary to carry out the transactions contemplated by this Agreement.
6. Conditions Precedent to the Purchaser' s Obligations. Each and
every obligation of the Purchaser to be performed on the closing date shall be
subject to the satisfaction prior thereto of the following conditions:
6.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by the Private Company and the Shareholders
in this Agreement or given on their behalf hereunder
shall be substantially accurate in all material respects on and as of the
closing date with the same effect as though such representations and warranties
had been made or given on and as of the closing date.
6.2 PERFORMANCE OF OBLIGATIONS AND COVENANTS. The Private
Company and the Shareholders shall have performed and complied with all
obligations and covenants required by this Agreement to be performed or complied
with by them prior to or at the closing.
6.3 OFFICER'S CERTIFICATE. The Purchaser shall have been
furnished with a certificate (dated as of the closing date and in form and
substance reasonably satisfactory to the Purchaser), executed by an executive
officer of the Private Company, certifying to the fulfillment of the conditions
specified in subsections 6.1 and 6.2 hereof.
6.4 NO LITIGATION OR PROCEEDINGS. There shall be no
litigation or any proceeding by or before any governmental agency or
instrumentality pending or threatened against any party hereto that seeks to
restrain or enjoin or otherwise questions the legality or validity of the
transactions contemplated by this Agreement or which seeks substantial damages
in respect thereof.
6.5 NO MATERIAL ADVERSE CHANGE. As of the closing date
there shall not have occurred any material adverse change, financially or
otherwise, which materially impairs the ability of the Private Company to
conduct its business or the earning power thereof on the same basis-as in the
past.
6.6 SHAREHOLDERS' EXECUTION OF AGREEMENT. This Agreement
shall have been duly executed and delivered by each of the parties owning in the
aggregate all of the outstanding stock of the Private Company as of the closing
date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PRIVATE COMPANY AND
THE SHAREHOLDERS. Each and every obligation of the Private Company and the
Shareholders to be performed on the closing date shall be subject to the
satisfaction prior thereto of the following conditions:
7.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by the Purchaser in this Agreement or given
on its behalf hereunder shall be substantially accurate in all material respects
on and as of the closing date with the same effect as though such
representations and warranties had been made or given on and as of the closing
date.
7.2 PERFORMANCE OF OBLIGATIONS AND COVENANTS. The
Purchaser shall have performed and complied with all obligations and covenants
required by this Agreement to be performed or complied with by it prior to or at
the closing.
7.3 OFFICER'S CERTIFICATE. The Private Company shall have
been furnished with a certificate (dated as of the closing date and in form and
substance reasonably satisfactory to the Private Company), executed by an
executive officer of the Purchaser, certifying to the fulfillment of the
conditions specified in subsections 7. 1 and 7.2 hereof.
7.4 NO LITIGATION OR PROCEEDINGS. There shall be no
litigation or any proceeding by or before any governmental agency or
instrumentality pending or threatened against any party hereto that seeks to
restrain or enjoin or otherwise questions the legality or validity of the
transactions contemplated by this Agreement or which seeks substantial damages
in respect thereof.
7.5 NO MATERIAL ADVERSE CHANGE. As of the closing date
there shall not have
occurred any material adverse change, financially or otherwise, which materially
impairs the ability of the Purchaser to conduct its business, except that it is
agreed the Purchaser shall have sold its skin-care business in its entirety.
7.6 OTHER TRANSACTIONS.
a. Purchaser's shareholders shall have duly
authorized, and Purchaser shall have effected, a 1-for-2 reverse split of all of
its issued and outstanding shares of capital stock, and the authorized common
stock of the Company shall be 50 million shares.
b. Purchaser shall have received for
cancellation, and shall have cancelled, 700,000 pre-reverse split shares of its
common stock, and Purchaser shall have issued and outstanding not more than
8,912,000 shares (post-reverse split) before the issuance of the shares to the
Shareholders hereunder, but including all shares issued to investors in
Purchaser's common stock after the date hereof and through the closing of this
transaction.
c. All outstanding options to purchase common
stock of Purchaser shall have expired or terminated, or Purchaser shall have
received written acknowledgment from the holders of such options that such
holders agree to terminate such options effective not later than the closing of
this transaction, except for amounts which, in the aggregate, are not material.
d. Purchaser shall have authorized the issuance
of the following new options, each with a three-year term, to purchase shares of
Purchaser's common stock: (i) Option to purchase 1,250,000 shares, at an
exercise price of$O.50 per share, to Xxxxxx XxXxxxxxx, (ii) Option to purchase
1,250,000 shares, at an exercise price of $1.00 per share, to Xxxxxx XxXxxxxxx,
and (iii) Options to purchase 1,000,000 shares, at an exercise price of$O.50 per
share, to certain new members of management of Purchaser designated by Xxxxxx
XxXxxxxxx on or prior to the closing.
e. The officers and directors of Purchaser
shall have tendered their written resignations, to be effective as of the
closing of this transaction.
f. Purchaser shall have consummated the sale of
all of the assets relating to its skin-care business to a third party in
consideration of the agreement by such third party to assume all of Purchaser's
liabilities and obligations relating to such skin-care business. It is
understood and acknowledged that as of the date hereof Purchaser has, and as of
the Closing of the transaction contemplated by this agreement, notwithstanding
the contemplated sale of all of the Purchaser's skin-care business assets, it is
expected that the Company will continue to have, approximately $700,000 in
current liabilities, consisting principally of accounts payable to vendors,
suppliers, consultants and other third parties. The Purchaser has agreed to sell
its entire skin-care business and related assets to a buyer ("Buyer") that will
agree to assume all of such liabilities and indemnify the Purchaser against all
liabilities and claims related to the Purchaser's skin-care business. However,
the Purchaser has not consummated such transaction, and the purchaser has not
obtained releases from the foregoing liabilities from such vendors and
creditors. The Purchaser intends to work with the Buyer to obtain such releases,
but no assurances can be made, and no representations have been made by the
Purchaser, that any releases will be obtained. Therefore, the extent to which
the Purchaser may be relieved of such liabilities likely will depend upon the
Buyer's financial condition, about which no representations are made by the
Purchaser, and its ability to honor its agreement to assume such liabilities. In
addition, the sale of the skin-care business to the Buyer will require the
approval of the Purchaser's shareholders. If such approval is not obtained, the
transaction will not be consummated, and the Buyer will not assume the
Purchaser's liabilities relating to
the skin-care business.
g. The Purchaser shall have raised, subject
only to the release from escrow upon the closing of this Agreement, aggregate
gross proceeds of $2,000,000 through one or more private placements of common
stock, including any amounts advanced to Private Company by Purchaser prior to
the Closing.
8. SECURITIES LAW PROVISIONS.
8.1 RESTRICTED SECURITIES. Each of the Shareholders,
severally and not jointly, represents that he or it is aware that the shares
issued or transferred to him or it will not have been registered pursuant to the
Securities Act of 1933, as amended (the "1933 Act"), or any state securities
act, and thus will be restricted securities as defined in Rule 144 promulgated
by the Securities and Exchange Commission (the "SEC"). Therefore, under current
interpretations and applicable rules, he or it likely will have to retain such
shares for a period of at least one year and at the expiration of such one year
period his or its sales may be confined to brokerage transactions of limited
amounts requiring certain notification filings with the SEC and such disposition
may be available only if the issuer is current in its filings with the SEC under
the Securities Exchange Act of 1934, as amended, or other public disclosure
requirements.
8.2 NON-DISTRIBUTIVE INTENT. Each of the Shareholders,
severally and not jointly, covenants and warrants that the shares received are
acquired for his or its own account and not with the present view towards the
distribution thereof and he or it will not dispose of such shares except (i)
pursuant to an effective registration statement under the 1933 Act, or (ii) in
any other transaction which, in the opinion of counsel acceptable to the issuer,
is exempt from registration under the 1933 Act, or the rules and regulations of
the SEC thereunder. In order to effectuate the covenants of this subsection 8.2,
an appropriate legend will be placed upon each of the certificates of common
stock issued or transferred pursuant to this Agreement, and stop transfer
instructions shall be placed with the transfer agent for the securities.
8.3 EVIDENCE OF COMPLIANCE WITH PRIVATE OFFERING
EXEMPTION. Each of the Shareholders, severally and not jointly, hereby
represents and warrants that he or it, either individually or together with his
or its representative, has such knowledge and experience in business and
financial matters that he or it is capable of evaluating the risks of this
Agreement and the transactions contemplated hereby, and that the financial
capacity of such party is of such proportion that the total cost of such
person's commitment in the shares would not be material when compared with his
or its total financial capacity. Upon the written request of the issuer of the
securities issued or transferred pursuant to this Agreement, any party hereto
shall provide such issuer with evidence of compliance with the requirements of
any federal or state exemption from registration. The Purchaser and the Private
Company shall each file, with the assistance of the other and its respective
legal counsel, such notices, applications, reports, or other instruments as may
be deemed by each of them to be necessary or appropriate in an effort to
document reliance on such exemptions, unless an exemption requiring no filing is
available in the particular jurisdiction, all to the extent and in the manner as
may be deemed by such parties to be appropriate.
9. CHANGE OF MANAGEMENT. Upon and as a condition of closing this
Agreement, the directors of the Purchaser shall appoint as directors and
officers of Purchaser such persons as shall be designated in writing by Xx.
Xxxxxx XxXxxxxxx on or prior to the closing, and Purchaser's current directors
and officers shall submit their written resignations, effective immediately
following the closing of
this Agreement.
10. CLOSING.
10.1 TIME AND PLACE. The closing of this transaction
("closing") shall take place at 10:00 a.m., on February 15, 2000, or at such
other time as the parties hereto shall agree upon. Such date is referred to in
this Agreement as the "closing date."
10.2 DOCUMENTS TO BE DELIVERED BY THE PRIVATE COMPANY AND
THE SHAREHOLDERS. At the closing the Private Company and the Shareholders shall
deliver to the purchaser the following documents:
a. Certificates for the number of shares of
common stock of the Private Company in the manner and form required by
subsection 1.1 hereof.
b. The certificate required pursuant to
subsection 6.3 hereof.
c. A certified copy of the duly adopted
resolutions of the Private Company's board of directors authorizing the
transaction contemplated by this Agreement.
d. Such other documents of transfer,
certificates of authority, and other documents as the Private Company and the
Shareholders may reasonably request.
10.3 DOCUMENTS TO BE DELIVERED BY THE PURCHASER. At the
closing the Purchaser shall deliver to the Private Company and the Shareholders
the following documents:
a. Certificates for the number of shares of
common stock of the Purchaser as determined in sub-section 1.2 hereof.
b. The certificate required pursuant to
subsection 7.3 hereof.
c. A certified copy of the duly adopted
resolutions of the Purchaser's board of directors and, if applicable,
stockholders, authorizing the transaction contemplated by this Agreement.
d. Such other documents of transfer,
certificates of authority, and other documents as the Private Company and the
Shareholders may reasonably request.
11. TERMINATION. This Agreement may be terminated by the Purchaser
or the Private Company, or by all of the Shareholders, by notice to the others
if (i) at any time prior to the closing date any event shall have occurred or
any state of facts shall exist that renders any of the conditions to its or
their obligations to consummate the transactions contemplated by this Agreement
incapable of fulfillment, or (ii) at 5.00 p.m., New York time, on March 1, 2000,
if the closing shall not have occurred. Following termination of this Agreement
no party shall have liability to another party relating to such termination,
other than any liability resulting from the breach of this Agreement by a party
prior to the date of termination.
12. MISCELLANEOUS.
12.1 NOTICES. All communications provided for herein shall
be in writing and shall be deemed to be given or made when served personally or
when deposited in the United States mail, certified return receipt requested,
addressed as follows, or at such other address as shall be designated by any
party hereto in written notice to the other party hereto delivered pursuant to
this subsection:
Purchaser: Digital Launch, Inc.
000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: CEO
Private Company: XxxxxxxXxxxx.Xxx, Inc.
0000 Xxxxxxxxx Xxxx XX
Xxxxx 0000
Xxxxxxx. XX 00000
Attn: CEO
Shareholders: Xx. Xxxxxx XxXxxxxxx
0000 Xxxxxxxxx Xxxx XX
Xxxxx 0000
Xxxxxxx, XX 00000
12.2 DEFAULT. Should any party to this Agreement default
in any of the covenants, conditions, or promises contained herein, the
defaulting party shall pay all costs and expenses, including a reasonable
attorney's fee, which may arise or accrue from enforcing this agreement, or in
pursuing any remedy provided hereunder or by applicable law.
12.3 ASSIGNMENT. This Agreement may not be assigned in
whole or in part by the parties hereto without the prior written consent of the
other party or parties, which consent shall not be unreasonably withheld.
12.4 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, their heirs,
executors, administrators, successors and assigns.
12.5 PARTIAL INVALIDITY. If any term, covenant, condition,
or provision of this Agreement or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder of
this Agreement or application of such term or provision to persons or
circumstances other than those as to which it is held to be invalid or
unenforceable shall not be affected thereby and each term, covenant, condition,
or provision of this Agreement shall be valid and shall be enforceable to the
fullest extent permitted by law.
12.6 ENTIRE AGREEMENT. This Agreement constitutes the
entire understanding between the parties hereto with respect to the subject
matter hereof and supersedes all negotiations, representations, prior
discussions, and preliminary agreements between the parties hereto relating to
the subject matter of this Agreement.
12.7 INTERPRETATION OF AGREEMENT. This Agreement shall be
interpreted and construed as
if equally drafted by all parties hereto.
12.8 SURVIVAL OF COVENANTS, ETC. All covenants,
representations, and warranties made herein to any party, or in any statement or
document delivered to any party hereto, shall survive the making of this
Agreement and shall remain in full force and effect for a period of five years
after the closing date.
12.9 FURTHER ACTION. The parties hereto agree to execute
and deliver such additional documents and to take such other and further action
as may be required to carry out fully the transactions contemplated herein.
12.10 AMENDMENT. This Agreement or any provision hereof may
not be changed, waived, terminated, or discharged except by means of a written
supplemental instrument signed by the party or parties against whom enforcement
of the change, waiver; termination, or discharge is sought.
12.11 FULL KNOWLEDGE. BY THEIR SIGNATURES, THE PARTIES
ACKNOWLEDGE THAT THEY HAVE CAREFULLY READ AND FULLY UNDERSTAND THE TERMS AND
CONDITIONS OF THIS AGREEMENT, THAT EACH PARTY HAS HAD THE BENEFIT OF COUNSEL, OR
HAS BEEN ADVISED TO OBTAIN COUNSEL, AND THAT EACH PARTY HAS FREELY AGREED TO BE
BOUND BY THE TERMS AND CONDITIONS OF THIS AGREEMENT. IN P ARTICULAR, ALL PARTIES
OTHER THAN THE PURCHASER ACKNOWLEDGE THAT THEY HAVE BEEN ADVISED BY COUNSEL TO
THE PURCHASER THAT SUCH COUNSEL DOES NOT REPRESENT THE INTERESTS OF SUCH PARTIES
IN CONNECTION WITH THIS AGREEMENT AND THE MATTERS RELATED HERETO, AS SUCH
COUNSEL IS REPRESENTING SOLELY THE PURCHASER IN CONNECTION THEREWITH. EACH OF
SUCH PERSONS AND ENTITIES AGREE THAT THEY WILL NOT RAISE THE ABSENCE OF LEGAL
COUNSEL AS A DEFENSE TO THE ENFORCEMENT OF THIS AGREEMENT.
12.12 HEADINGS. The descriptive headings of the various
sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
12.13 COUNTERPARTS. This Agreement may be executed in two
or more partially or fully executed counterparts, each of which shall be deemed
an original and shall bind the signatory, but al1 of which together shall
constitute but one and the same instrument.
12.14 GOVERNING LAW. This Agreement shall be governed by
the laws of the State of New York, without giving effect to the conflict of laws
provisions thereof.
IN WITNESS WHEREOF, the parties hereto executed the foregoing Agreement
and Plan of Reorganization as of the day and year first above written.
PURCHASER: DIGITAL LAUNCH, INC.
By: /s/ Xxxxxxx X. XxXxxxx
President
PRIVATE COMPANY: XXXXXXXXXXXX.XXX, INC.
By: /s/ Xxxxxx X. XxXxxxxxx
President
SHAREHOLDERS:
/s/ Xxxxxx XxXxxxxxx /s/ Xxxxxx Xxxxxxxx
/s/ Ray Story /s/ Xxxxxx Xxxxx
/s/ Xxxxx Xxxxxxxx /s/ Xxxx Xxxxxxx
/s/ Xxx Xxxxxxxxxx /s/ Xxx Xxxx
[signatures continued on next page]
[signatures continued from previous page]
/s/ Xxxxx Xxxxxx /s/ Xxxx Xxxx
/s/ Xxxxx Xxxxxx /s/ Xxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx /s/ Xxxxx Xxxxxx
TDV CONSULTING
/s/ Xxxxxx Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
Title: Manager
XXXXXX X. XxXXXXXXX FAMILY, LLLP GLOBAL FUNDING GROUP, INC.
By: /s/ Xxxxxx X. XxXxxxxxx By: /s/ Xxxxx Xxxxxx
Title: General Partner Title: vice President
Mandalay Sports Action Entertainment, Inc.
By: /s/ Xxxxx X. Xxxxxxxx XX
Title: Partner
SCHEDULE A
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
NO. OF SHARES NO. OF SHARES
NAME OF SHAREHOLDER OF THE PRIVATE OF COMMON
COMPANY STOCK OF THE
TO BE CANCELED PURCHASER TO
BE ISSUED
Xxxxxx X. XxXxxxxxx 241,000 241,000
Xxxxxx X. XxXxxxxxx Family, LLLP 2,065,000 2,065,000
Mandalay Sports Action Entertainment, Inc. 482,000 482,000
Global Funding Group, Inc. 600,000 600,000
TDV Consulting 300,000 300,000
Xxxxxx Xxxxxxxx 416,000 416,000
Ray Story 241,000 241,000
Xxxxxx Xxxxx 50,000 50,000
Xxxxx Xxxxxxxx 100,000 100,000
Xxxx Xxxxxxx 100,000 100,000
Xxx Xxxxxxxxxx 25,000 25,000
Xxx Xxxx 25,000 25,000
Xxxxx Xxxxxx 25,000 25,000
Xxxx Xxxx 25,000 25,000
Xxxxx Xxxxxx 25,000 25,000
Xxxxxx Xxxxxxxx 25,000 25,000
Xxxxx Xxxxxxxx 25,000 25,000
Xxxxx Xxxxxx 25,000 25,000
Xxxxxx Xxxxx 25,000 25,000
TOTAL 4,820,000 4,820,000
DIGITAL LAUNCH, INC.
000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
January 21, 2000
Xx. Xxxxxx XxXxxxxxx
President & CEO
XxxxxxxXxxxx.Xxx, Inc.
0000 Xxxxxxxxx Xxxx, XX
Xxxxx 0000
Xxxxxxx, XX 00000
Re: AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
Dear Xx. XxXxxxxxx:
This is to confirm the following clarifications and amendment to the
Agreement and Plan of Reorganization, dated as of December 28, 1999 (the
"Agreement"), by and among Digital Launch, Inc. (the "Company"),
XxxxxxxXxxxx.Xxx, Inc. ("GET"), and the Shareholders of GET. For good and
adequate consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company, GET and the GET Shareholders agree as follows:
1. In Section 4.2 [Capital Stock] of the Agreement, there is
hereby added at the end of the Section the following: "except that a service
provider to the Company is the beneficiary of a non-qualified stock option
agreement, which vested in part in 1998-1999, under which he is entitled to
exercise options on a total of up to 27,500 shares of Common Stock, at an
exercise price of $0.75 per share."
2. In Section 7.6(c) of the Agreement, there is hereby added at
the end of the sentence the following: ", it being agreed that the currently
outstanding options to purchase 27,500 shares of the Company's Common Stock at
an exercise price of $0.75 per share, as set forth in Section 4.2, shall not
have expired or been terminated as of the Closing, and shall remain subject to
exercise as provided in the related stock option agreement."
3. The parties have agreed and hereby confirm that the Company's
outstanding Common Stock shall not be reverse split prior to the closing of the
transaction described in the Agreement, and that notwithstanding anything to the
contrary in the Agreement, there shall not be returned to the Company for
cancellation, and the Company shall not have any obligation to cancel, 700,000
shares of its Common Stock. Therefore, the following changes shall be made in
the Agreement to reflect such further agreements:
(i) The first sentence of Section 4.2 shall be amended to
read in its entirety as follows: "As of the closing of this Agreement, the
Purchaser will have a total of no more than 28,164,000 shares of common stock
issued and outstanding, and no shares of preferred stock issued and outstanding,
after giving effect to (i) the issuance of the shares to the Shareholders under
this Agreement, (ii) the issuance of 8,000,000 shares of common stock to
investors for an investment of $2 million in Purchaser, and (iii) the issuance
of 500,000 shares of common stock to investors for an investment of $100,000 in
Purchaser.
(ii) Paragraph (a) of Section 7.6 is hereby deleted.
(iii) Paragraph (b) of Section 7.6 shall be amended to read
as follows: "Purchaser shall have issued and outstanding not more than
18,524,000 shares before the issuance of the shares to the Shareholders
hereunder, but including all shares issued to investors in Purchaser's common
stock after the date hereof and through the closing of this transaction."
(iv) Paragraph (d) of Section 7.6 shall be amended to read
as follows: "Purchaser shall have authorized the issuance of the following new
options, each with a three-year term, to purchase shares of Purchaser's common
stock: (i) Option to purchase 2,500,000 shares, at an exercise price of $0.25
per share, to Xxxxxx XxXxxxxxx, (ii) Option to purchase 2,500,000 shares, at an
exercise price of $0.50 per share, to Xxxxxx XxXxxxxxx, and (iii) Options to
purchase 2,000,000 shares, at an exercise price of $0.25 per share, to certain
new members of management of Purchaser designated by Xxxxxx XxXxxxxxx on or
prior to the closing." The foregoing changes are intended solely to reflect such
changes to stock options as are customary in light of the cancellation of the
Company's reverse split. The Company makes no representations or warranties of
any kind as to the treatment or effect of such options with respect to the
Company's income taxes or financial statements.
(v) The Company hereby waives the requirement in
paragraph 2.1(a) of the Agreement that the Shareholders continue to hold their
shares of the common stock of GET to the extent that such Shareholders may
transfer their respective shares to Globalepartners, LLC, a Georgia limited
liability company. Attached hereto is an Addendum to SCHEDULE A of the Agreement
to reflect the identity of the Shareholders of GET at the closing of the
transaction, and the agreement not to reverse split the Company's shares
4. Notwithstanding anything to the contrary in the Agreement, the
parties agree that as of the closing, the Company shall assume all currently
outstanding obligations of GET to holders of options and warrants to purchase
shares of capital stock of GET which had been committed to by GET as of the date
of execution of the Agreement. On or prior to closing, GET shall provide to the
Company a complete detail of these options and warrants obligations.
5. By its signature below, GlobalePartners, LLC, hereby agrees to
all of the terms of the Agreement as though its signature were set forth thereon
at and as of the original date of execution of the Agreement.
6. The Agreement is otherwise unmodified and continues in full
force and effect.
Please acknowledge your agreement to this Amendment by signing a copy
of this letter and returning one signed copy to the undersigned.
Sincerely yours,
DIGITAL LAUNCH, INC.
By /s/ Xxxxxxxx X. XxXxxxx
President
Accepted and agreed to as of the
date set forth below.
XXXXXXXXXXXX.XXX, INC.
By: /s/ Xxxxxx X. XxXxxxxxx
President and Chief Executive Officer
Date: 1-21-00
SHAREHOLDERS OF GET:
/s/ Xxxxxx X XxXxxxxxx
GLOBALEPARTNERS, LLC,
a Georgia Limited Liability Company
By: /s/ Xxxxxx XxXxxxxxx
Title: Manager
Date: 1-21-00
ADDENDUM TO SCHEDULE A
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
------------------------------------------------------------------------------------------------------------------
No. of Shares of
No. of Shares of the Private Common Stock of the PURCHASER
NAME OF SHAREHOLDER COMPANY TO BE CANCELED TO BE ISSUED
------------------------------------------------------------------------------------------------------------------
Globalepartners, LLC 4,579,000 9,158,000
------------------------------------------------------------------------------------------------------------------
Xxxxxx X. XxXxxxxxx 241,000 482,000
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
TOTAL 4,820,000 9,640,000
------------------------------------------------------------------------------------------------------------------
