EXHIBIT 2.2
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AGREEMENT AND PLAN OF MERGER
AMONG
IDC TECHNOLOGIES, INC.,
A NEVADA CORPORATION,
IDC ACQUISITION I CORP.,
A DELAWARE CORPORATION
AND
▇▇▇▇ ▇▇▇▇▇ PRODUCTIONS, INC.,
A DELAWARE CORPORATION
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LIST OF SCHEDULES AND EXHIBITS
TO
AGREEMENT AND PLAN OF MERGER
SCHEDULES
Schedule 4.1(a) Company and Acquisition Subsidiaries
Schedule 4.1(b) Company and Acquisition Conflicts
Schedule 4.1(c) Company Capitalization
Schedule 4.1(d) Company Financial Statements
Schedule 4.1(g) Issuance of Company Securities
Schedule 4.1(i) Company Taxes
Schedule 4.1(l) Company and Acquisition Legal Proceedings
Schedule 4.1(m) Company and Acquisition Changes or Events
Schedule 4.2(d) JKP Financial Statements
Schedule 4.2(i) JKP Legal Proceedings
Schedule 4.2(g) JKP Liabilities
Schedule 4.2(m) JKP Compliance with Law
EXHIBITS
Exhibit 6.1(a) Company Certified Resolutions
Exhibit 6.1(a2) Acquisition Certified Resolutions
Exhibit 6.1(b) Opinion of Counsel to the Company and Acquisition
Exhibit 6.1(d) Company Officer's Certificate
Exhibit 6.1(d2) Acquisition Officer's Certificate
Exhibit 6.2(a) JKP Certified Resolutions
Exhibit 6.2(b) Opinion of JKP counsel
Exhibit 6.2(d) JKP Officer's Certificate
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of August
8, 2003, by and between IDC Technologies, Inc., a Nevada corporation (the
"Company"), IDC Acquisition I Corp., a Delaware corporation ("Acquisition") and
▇▇▇▇ ▇▇▇▇▇ Productions, Inc., a Delaware corporation ("JKP").
RECITALS
WHEREAS, the Company and JKP desire to merge Acquisition with and
into JKP whereby JKP shall be the surviving entity pursuant to the terms and
conditions set forth herein and whereby the transaction shall qualify as a tax
free exchange pursuant to Section 351 of the Internal Revenue Code (the "IRC");
WHEREAS, in furtherance of such combination, the Boards of Directors
of the Company, Acquisition, and JKP have each approved the merger of
Acquisition with and into JKP (the "Merger"), upon the terms and subject to the
conditions set forth herein, in accordance with the applicable provisions of the
Delaware General Corporation Law (the "DGCL"); and
WHEREAS, the shareholder of JKP desire to exchange all of its shares
of the capital stock of JKP (the "JKP Capital Stock") for shares of the capital
stock of the Company (the "Company Capital Stock") as a tax free exchange
pursuant to Section 351 of the IRC.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as hereinafter defined) and
subject to and upon the terms and conditions of this Agreement and the DGCL
Acquisition shall be merged with and into JKP pursuant to the Merger. Following
the Merger, JKP shall continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of Acquisition shall cease.
As part of the Merger and as more fully described in Section 2.1, (i) the 19,000
issued and outstanding shares of the JKP Common Stock shall be exchanged for
Company Common Stock at the Exchange Ratio and (ii) each share of Acquisition's
issued and outstanding of common stock, par value $.001 per share (the
"Acquisition Common Stock"), shall be converted into one validly issued, fully
paid and non-assessable share of common stock, $.001, of the Surviving
Corporation (the "Surviving Corporation Common Stock").
1.2 Effective Time. The Merger shall be consummated as promptly as
practicable after satisfaction of all conditions to the Merger set forth herein,
by filing with the Secretary of State of the State of Delaware a certificate of
merger (the "Certificate of Merger"), and all other appropriate documents,
executed in accordance with the relevant provisions of the DGCL. The Merger
shall become effective upon the filing of the Certificate of Merger. The time of
such filing shall be referred to herein as the "Effective Time."
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1.3 Effects of the Merger. At the Effective Time, all the rights,
privileges, immunities, powers and franchises of Acquisition and JKP and all
property, real, personal and mixed, and every other interest of, or belonging to
or due to each of Acquisition and JKP shall vest in the Surviving Corporation,
and all debts, liabilities, obligations and duties of Acquisition and JKP, shall
become the debts, liabilities, obligations and duties of the Surviving
Corporation without further act or deed, all in the manner and to the full
extent provided by the DGCL. Whenever a conveyance, assignment, transfer, deed
or other instrument or act is necessary to vest any property or right in the
Surviving Corporation, the directors and officers of the respective constituent
corporations shall execute, acknowledge and deliver such instruments and perform
such acts, for which purpose the separate existence of the constituent
corporations and the authority of their respective directors and officers shall
continue, notwithstanding the Merger.
1.4 Certificate of Incorporation. The Certificate of Incorporation
of JKP, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation and thereafter may be
amended or repealed in accordance with its terms and applicable law.
1.5 By-Laws. At the Effective Time and without any further action on
the part of Acquisition and JKP, the By-laws of JKP shall be the By-laws of the
Surviving Corporation and thereafter may be amended or repealed in accordance
with their terms or the Certificate of Incorporation of the Surviving
Corporation and as provided by law.
1.6 Directors. The directors of JKP at the Effective Time shall be
the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
1.7 Officers. The officers of JKP at the Effective Time shall be the
officers of the Surviving Corporation, until the earlier of their resignation or
removal or until their respective successors are duly appointed and qualified,
as the case may be.
1.8 Tax-Free Reorganization. The parties intend that the Merger
shall be treated as a tax-free exchange pursuant to Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code"). No party shall take any action or
fail to take any action that would adversely affect the treatment of the Merger
as a tax-free exchange.
ARTICLE II
CONVERSION OF JKP SHARES
2.1 Exchange and Cancellation of JKP Common Stock.
(a) Subject to the provisions of Sections 2.2 and 2.3, each share of
JKP Common Stock (the "JKP Common Stock Shares") issued and outstanding
immediately prior to the Effective Time (other than shares canceled in
accordance with Section 2.1(b), shall, be converted equal into 1,000 (the
"Exchange Ratio") validly issued, fully paid and nonassessable shares of Company
Common Stock (the "Company Common Stock Shares"). As of the Effective Time, each
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JKP Common Stock Share shall no longer be outstanding and shall automatically be
canceled and retired, and each holder of a certificate representing any JKP
Common Stock Share shall cease to have any rights with respect thereto other
than the right to receive Company Common Stock Shares to be issued in
consideration therefor upon the surrender of such certificate.
(b) Each share of JKP Capital Stock held in the treasury of
JKP and each share of JKP Capital Stock owned by Acquisition or Company shall be
canceled without any conversion thereof and no payment or distribution shall be
made with respect thereto.
(c) Each issued and outstanding share of Acquisition Common
Stock shall be converted into one validly issued, fully paid and nonassessable
share of Surviving Corporation Common Stock.
2.2 Adjustment of the Exchange Ratio. In the event that, prior to
the Effective Time, any stock split, combination, reclassification or stock
dividend with respect to the Company Common Stock, any change or conversion of
Company Common Stock into other securities or any other dividend or distribution
with respect to the Company Common Stock (other than regular quarterly
dividends) should occur or, if a record date with respect to any of the
foregoing should occur, appropriate and proportionate adjustments shall be made
to the Exchange Ratio, and thereafter all references to an Exchange Ratio shall
be deemed to be to such Exchange Ratio as so adjusted.
2.3 No Fractional Shares. No certificates or script representing
fractional shares of Company Common Stock shall be issued upon the surrender for
exchange of certificates and such fractional share shall not entitle the record
or beneficial owner thereof to vote or to any other rights as a stockholder of
the Company. The number of shares of Company Common Stock to be issued shall be
rounded up to the nearest whole share.
2.4 Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either JKP
or Acquisition or (b) otherwise to carry out the purposes of this Agreement, the
Surviving Corporation and its proper officers and directors or their designees
shall be authorized to execute and deliver, in the name and on behalf of either
JKP or Acquisition, all such deeds, bills of sale, assignments and assurances
and do, in the name and on behalf of JKP or Acquisition, all such other acts and
things necessary, desirable or proper to vest, perfect or confirm its right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of JKP or Acquisition, as applicable, and
otherwise to carry out the purposes of this Agreement.
2.5 MVI Warrants. Pursuant to Section 3 of that certain Amended and
Restated Exclusive Advisory Agreement (the "Advisory Agreement") by and between
JKP and Maximum Ventures Inc. ("MVI"), MVI will receive warrants for the
purchase of 20% of the shares of the Company Common Stock held by the former
shareholders of JKP immediately following the Effective Time at an exercise
price of $0.001 per share. MVI shall be a third party beneficiary of this
Agreement.
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ARTICLE III
CLOSING
Subject to satisfaction of the conditions to closing set forth in
this Agreement and unless this Agreement is otherwise terminated in accordance
with the provisions contained herein, the closing of the Merger and the
Contemplated Transactions (the "Closing") shall take place at the offices of
Gottbetter & Partners, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ as promptly as
practicable after satisfaction of the conditions set forth in this Agreement,
which in no event shall be more than ten days from the date of (the "Closing
Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company and Acquisition.
Each of Acquisition and the Company hereby make the following representations
and warranties to JKP, all of which shall survive the Closing:
(a) Organization and Good Standing. Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets
that it owns or uses, and to perform all its obligations under this Agreement
and the Applicable Contracts. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada,
with full corporate power and authority to conduct its business as it is now
being conducted, to own or use the properties and assets that it owns or uses,
and to perform all its obligations under this Agreement. Company has no
subsidiaries other than Acquisition and as set forth on Schedule 4.1(a) hereto
(individually, a "Subsidiary" and collectively, the "Subsidiaries"). Acquisition
has no Subsidiaries. Each of the Subsidiaries is a corporation, duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the full corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. Each of the Company, Acquisition and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it, requires
such qualification.
(b) Authority; No Conflict.
i. This Agreement and any agreement executed in connection
herewith constitute the legal, valid and binding obligations of the Company and
Acquisition, enforceable against the Company and Acquisition in accordance with
their respective terms, except as such enforceability is limited by bankruptcy,
insolvency and other laws affecting the rights of creditors and by general
equitable principles. The Company has the absolute and unrestricted right,
power, authority and capacity to execute and deliver this Agreement and any
agreement executed in connection herewith and to perform its obligations
hereunder and thereunder.
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ii. Except as set forth in Schedule 4.1(b) hereto, neither the
execution and delivery of this Agreement by each of the Company and Acquisition,
nor the consummation or performance by each of any of its respective obligations
contained in this Agreement or in connection with the Contemplated Transactions
will directly or indirectly (with or without notice or lapse of time):
a. contravene, conflict with or result in a violation of (x)
any provision of the Organizational Documents of the Company or Acquisition, as
the case may be, or (y) any resolution adopted by the board of directors or the
shareholders of the Company or Acquisition, as the case may be;
b. contravene, conflict with or result in a violation of, or
give any governmental body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which the Company or Acquisition or any of
the assets owned or used by the Company or Acquisition may be subject;
c. contravene, conflict with or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate or modify, this Agreement, or any Applicable Contract;
d. result in the imposition or creation of any material
encumbrance upon or with respect to any of the material assets owned or used by
the Company or Acquisition;
e. cause the Company or Acquisition to become subject to, or
to become liable for the payment of, any tax; or
f. cause any of the assets owned by the Company or Acquisition
to be reassessed or revalued by any taxing authority or other governmental body,
except in connection with the transfer of real estate pursuant to this Agreement
or the Contemplated Transactions.
(c) Capitalization. The entire authorized Company Capital Stock
consists of 300,000,000 shares of Company Common Stock, of which 1,048,787
shares are issued and outstanding, 30,000 shares of Series A Preferred Stock,
par value $.001 per share, of which no shares are issued and outstanding and
1,000,000 shares of blank check preferred stock of which no shares are issued
and outstanding. There are no other outstanding equity securities of the
Company. No legend or other reference to any purported encumbrance appears upon
any certificate representing the Company Capital Stock other than a standard
Securities Act legend. All of the issued and outstanding shares of the Company
Capital Stock have been duly authorized and validly issued and are fully paid
and non-assessable. Except for this Agreement and as disclosed in Schedule
4.1(c) hereto, there are no outstanding options, warrants, script, rights to
subscribe to, registration rights, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any
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shares of the Company Common Stock, or contracts, commitments, understandings,
or arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of the Company Common Stock, or securities or rights
convertible or exchangeable into shares of the Company Common Stock. None of the
outstanding Company Capital Stock was issued in violation of the Securities Act
or any other legal requirement.
(d) Assets and Liabilities. The Company has no assets or liabilities
that in the aggregate are material to the Surviving Corporation.
(e) SEC Filings. The Company has filed all reports required to be
filed with the SEC under the rules and regulations of the SEC.
(f) Absence of Material Adverse Change. Since the December 31, 2002,
there have been no events, changes or occurrences which have had or are
reasonably likely to have, individually or in the aggregate, a material adverse
effect on the Company's business or financial condition.
(g) Issuance of Company Securities. The Company Common Stock Shares
when issued in accordance with this Agreement shall be duly authorized, validly
issued, fully-paid and nonassessable. Except as set forth in Schedule 4.1(g)
hereto, there is no equity line of credit or convertible security or instrument
outstanding of the Company; provided, however, that nothing contained in this
Section 4.1(g) shall be deemed to permit any equity line of credit or
convertible security or instrument of the Company.
(h) Undisclosed Liabilities. Except as disclosed in any Schedule to
this Agreement, none of the Company, Acquisition or the Subsidiaries has any
obligations or liabilities (contingent or otherwise) in an amount in excess of
Five Thousand Dollars ($5,000) in the aggregate.
(i) Taxes.
i. The Company has filed or caused to be filed on a timely
basis all tax returns that are or were required to be filed by it pursuant to
applicable Legal Requirements. The Company has paid, or made provision for the
payment of, all taxes that have or may have become due pursuant to those tax
returns or otherwise, or pursuant to any assessment received by the Company,
except such taxes, if any, as are listed in Schedule 4.1(i) hereto and are being
contested in good faith.
ii. All tax returns filed by the Company are true, correct and
complete in all material respects.
(j) Employee Benefits. The Company does not sponsor or otherwise
maintain a "pension plan" within the meaning of Section 3(2) of ERISA or any
other retirement plan other than the Company Profit Sharing and 401(k) Plan and
Trust that is intended to qualify under Section 401 of the Code, nor do any
unfunded liabilities exist with respect to any employee benefit plan, past or
present. No employee benefit plan, any trust created thereunder or any trustee
or administrator thereof has engaged in a "prohibited transaction," as defined
in Section 4975 of the Code, which may have a material adverse effect on the
condition, financial or otherwise, of the Company.
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(k) Governmental Authorizations. The Company, Acquisition and the
Subsidiaries have all permits that are or will be legally required to enable
them to conduct their business in all material respects as now conducted.
(l) Legal Proceedings; Orders.
i. Except as set forth in Schedule 4.1(l) hereto, there is no
material pending Proceeding:
a. that has been commenced by or against the Company,
Acquisition or the Subsidiaries, or any of the assets owned or used by, the
Company, Acquisition or the Subsidiaries; or
b. that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any
Contemplated Transactions.
ii. Except as set forth in Schedule 4.1(l) hereto:
a. there is no material Order to which the Company or
the Subsidiaries, or any of the assets owned or used by the Company, Acquisition
or the Subsidiaries, is subject; and
b. no officer, director, agent, or employee of the
Company or Acquisition is subject to any material Order that prohibits such
offer, director, agent or employee from engaging in or continuing any conduct,
activity or practice relating to the business of the Company or Acquisition, as
the case may be.
(m) Absence of Certain Changes and Events. Except as set forth in
Schedule 4.1(m) hereto, since December 31, 2002, the Company and the
Subsidiaries and Acquisition, since the date of its inception, have conducted
their business only in the Ordinary Course of Business, there has not been any
material adverse effect on the Company's, Acquisition's or the Subsidiaries'
business or operations, and there has not been any:
i. change in the authorized or issued Company Capital Stock or
the authorized or issued capital stock of Acquisition and the Subsidiaries;
grant of any stock option or right to purchase shares of capital stock of the
Company; issuance of any equity lines of credit, security convertible into such
capital stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
ii. amendment to the Organizational Documents of the Company,
Acquisition or the Subsidiaries;
iii. damage to or destruction or loss of any material asset or
property of the Company, Acquisition or the Subsidiaries, whether or not covered
by insurance, materially and adversely affecting the properties, assets,
business, financial condition, or prospects of the Company, Acquisition or the
Subsidiaries;
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iv. receipt of notice that any of their substantial customers
have terminated or intends to terminate their relationship, which termination
would have a material adverse effect on their financial condition, results or
operations, business assets or properties;
v. entry into any transaction other than in the Ordinary
Course of Business;
vi. entry into, termination of, or receipt of written notice
of termination of any material (i) license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) contract or
transaction;
vii. sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any asset or property of the
Company, Acquisition or the Subsidiaries or mortgage, pledge, or imposition of
any lien or other encumbrance on any material asset or property of the Company,
Acquisition or the Subsidiaries;
viii. cancellation or waiver of any claims or rights with a
value to the Company in excess of $10,000;
ix. material change in the accounting methods used by the
Company, Acquisition or the Subsidiaries; or
x. agreement, whether oral or written, by the Company,
Acquisition or the Subsidiaries to do any of the foregoing.
(n) No Default or Violation. The Company, Acquisition and the
Subsidiaries (i) are in material compliance with all applicable terms and
requirements of each material contract under which they have or had any
obligation or liability or by which they or any of the assets owned or used by
them is or was bound and (ii) is not in material violation of any Legal
Requirement.
(o) Certain Payments. Since December 31, 2002 neither the Company,
Acquisition or the Subsidiaries, nor any director, officer, agent or employee of
the Company or the Subsidiaries has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback or other
payment to any Person, private or public, regardless of form, whether in money,
property or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Company, Acquisition or the Subsidiaries or (iv) in violation of
any Legal Requirement, or (b) established or maintained any fund or asset that
has not been recorded in the books and records of the Company, Acquisition or
the Subsidiaries.
(p) Brokers or Finders. Except for the fees referenced in the
Advisory Agreement, the Company and Acquisition have not incurred any obligation
or liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
4.2 Representations and Warranties of JKP. JKP hereby makes the
following representations and warranties to the Company, all of which shall
survive the Closing:
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(a) Organization and Good Standing. JKP 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 conduct its businesses as it is now
being conducted, to own or use the properties and assets that it owns or uses,
and to perform all of its obligations under this Agreement.
(b) Authority; No Conflict.
i. This Agreement and any agreement executed in connection
herewith have been duly authorized by all required action of JKP and constitute
the legal, valid and binding obligations of JKP, enforceable against JKP in
accordance with their respective terms. JKP has the absolute and unrestricted
right, power and authority to execute and deliver this Agreement and such other
agreements and to perform its obligations hereunder and thereunder.
ii Neither the execution and delivery of this Agreement by
JKP, nor the consummation or performance by it of any of its obligations
contained in this Agreement or in connection with the Contemplated Transactions
by the Company will, directly or indirectly (with or without notice or lapse of
time):
a. contravene, conflict with or result in a violation of (x)
any provision of the Organizational Documents of JKP or (y) any resolution
adopted by the board of directors or the shareholders of JKP;
b. contravene, conflict with or result in a violation of, or
give any governmental body or other Person the right to challenge any of the t
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which JKP or any of the assets owned or
used by JKP may be subject;
c. contravene, conflict with or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate or modify, this Agreement or any Applicable Contract;
d. result in the imposition or creation of any material
encumbrance upon or with respect to any of the material assets owned or used by
JKP;
e. cause JKP to become subject to, or to become liable for the
payment of, any tax; or
f. cause any of the assets owned by JKP to be reassessed or
revalued by any taxing authority or other governmental body, except in
connection with the transfer of real estate pursuant to this Agreement or the
Contemplated Transactions.
iii. JKP is not required to obtain any consent from any Person
in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
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(c) Capitalization. The entire authorized JKP Capital Stock consists
of 20,000 shares of JKP Common Stock, of which 19,000 shares are issued and
outstanding. With the exception of the JKP Common Stock Shares, there are no
other outstanding equity securities of the Company. No legend or other reference
to any purported encumbrance appears upon any certificate representing the JKP
Common Stock Shares. The JKP Common Stock Shares have been duly authorized and
validly issued and are fully paid and non-assessable. There are no outstanding
options, warrants, script, rights to subscribe to, registration rights, calls or
commitments of any character whatsoever relating to, or, securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of JKP Common Stock, or contracts,
commitments, understandings, or arrangements by which JKP is or may become bound
to issue additional shares of JKP Common Stock, or securities or rights
convertible or exchangeable into shares of JKP Common Stock. To the knowledge of
JKP, none of the outstanding JKP Common Stock Shares were issued in violation of
the Securities Act or any other legal requirement. JKP does not own, and has no
contract to acquire, any equity securities or other securities of any Person or
any direct or indirect equity or ownership interest in any other business.
(d) Financial Statements. JKP has delivered to the Company a balance
sheet of JKP as at December 31, 2002 (the "JKP Balance Sheet"), and a statement
of operations for the period from inception to December 31, 2002. Such financial
statements are set forth in Schedule 4.2(d) hereto and fairly present the
financial condition and the results of operations of JKP as at December 31, 2002
of and for the period then ended.
(e) Absence of Material Adverse Change. Since the date of the most
recent JKP Balance Sheet provided under Section 4.2(d) hereof, there have been
no events, changes or occurrences which have had or are reasonably likely to
have, individually or in the aggregate, a material adverse effect on JKP.
(f) Books and Records. The books of account, minute books, stock
record books, and other records of JKP, all of which have been made available to
the Company, are complete and correct and have been maintained in accordance
with sound business practices, including the maintenance of an adequate system
of internal controls. The minute books of JKP contain accurate and complete
records of all meetings held of, and corporate action taken by, the
shareholders, the Board of Directors, and any committees of the Board of
Directors of JKP.
(g) No Undisclosed Liabilities. There are no material liabilities of
JKP, whether absolute, accrued, contingent, or otherwise, other than:
i. Liabilities set forth on, reserved against or reflected in
the JKP Balance Sheet;
ii. Liabilities disclosed in this Agreement, the Exhibits
attached hereto, and in Schedule 4.2(g) or lists furnished pursuant hereto; or
iii. Liabilities incurred in the Ordinary Course of Business
since the JKP Balance Sheet date, none of which had or is likely to have a
material adverse effect on the business, financial condition or results of
operations of JKP, and none of which is required to be recorded
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under GAAP in respect of any period prior to the JKP Balance Sheet date, and
none of which is in respect of a material claim for damages, fines or other
legal relief.
(h) Title to Properties; Encumbrances. JKP has good and marketable
title to all the properties, interest in such properties and assets, real and
personal, reflected in the JKP Balance Sheet or acquired after the date of such
balance sheet (except properties, interests and assets sold or otherwise
disposed of since such date, in the Ordinary Course of Business), free and clear
of all mortgages, liens, pledges, charges or encumbrances except (i) mortgages
and other encumbrances referred to in such balance sheet, (ii) a factor's lien
on JKP's accounts receivable held by Summit Financial Resources, (iii) liens for
current taxes not yet due and payable and (iv) such imperfections of title and
easements as do not materially detract from or interfere with the present use of
the properties subject thereto or affected thereby, or otherwise materially
impair the value of such properties or the present business operations at such
properties.
(i) Legal Proceedings; Orders.
i. Except as set forth in Schedule 4.2(i) hereto, there is no
material pending Proceeding:
a. that has been commenced or threatened by or against
JKP or any of its officers and directors as such or that otherwise relates to or
may affect the business of, or any of the assets owned or used by, JKP; or
b. that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any
Contemplated Transactions.
ii. Except as set forth in Schedule 4.2(i) hereto:
a. there is no material Order to which JKP, or any of
the assets owned or used by JKP, is subject; and
b. no officer, director, agent, or employee of JKP is
subject to any material Order that prohibits such offer, director, agent or
employee from engaging in or continuing any conduct, activity or practice
relating to the business of JKP.
(j) Brokers or Finders. Except for the fees referenced in the
Advisory Agreement, JKP has incurred no liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
(k) No Default or Violation. To the knowledge of JKP, JKP (i) is in
material compliance with all applicable terms and requirements of each contract
under which JKP has or had any obligation or liability or by which JKP or any of
the assets owned or used by JKP is or was bound and (ii) is not in violation of
any Legal Requirement.
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(l) Taxes.
i. JKP has filed or caused to be filed on a timely basis all
tax returns that are or were required to be filed by it pursuant to applicable
Legal Requirements. JKP has paid, or made provision for the payment of, all
taxes that have or may have become due pursuant to those tax returns or
otherwise, or pursuant to any assessment received by JKP, except such taxes, if
any, as are listed in Schedule 4.2(l) hereto and are being contested in good
faith as to which adequate reserves have been provided in the JKP Balance
Sheets.
ii. All tax returns filed by JKP are true, correct and
complete in all material respects.
(m) Absence of Certain Changes and Events. Except as set forth in
Schedule 4.2(m) hereto, since the date of the JKP Balance Sheet, JKP has
conducted its business only in the Ordinary Course of Business, there has not
been any material adverse effect on JKP's business or operations, and there has
not been any:
▇. ▇▇▇▇▇ of any stock option or right to purchase shares of
capital stock of JKP; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
ii. amendment to the Organizational Documents of JKP;
iii. damage to or destruction or loss of any asset or property
of JKP, whether or not covered by insurance or any other event or circumstance,
materially and adversely affecting the properties, assets, business, financial
condition, or prospects of JKP;
iv. receipt of notice that any of its substantial customers
have terminated or intends to terminate their relationship, which termination
would have a material adverse effect on its financial condition, results or
operations, business assets or properties;
v. entry into any transaction other than in the Ordinary
Course of Business;
vi. entry into, termination of, or receipt of written notice
of termination of any material (i) license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) contract or
transaction;
vii. sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any asset or property of JKP
or mortgage, pledge, or imposition of any lien or other encumbrance on any
material asset or property of JKP;
viii. cancellation or waiver of any claims or rights with a
value to JKP in excess of $10,000;
ix. material change in the accounting methods used by JKP;
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x. increase in salaries or bonuses or retention of any new
consultant, except for MVI, or executive; or
xi. agreement, whether oral or written, by JKP to do any of
the foregoing.
(n) Compliance with Law. Except as set forth in Schedule 4.2(m)
hereto:
(a) JKP has complied in all material respects with, and is not in
violation of, in any material respect, any Law to which it or its business is
subject; and
(b) JKP has obtained all licenses, permits, certificates or other
governmental authorizations (collectively "Authorizations") necessary for the
ownership or use of its assets and properties or the conduct of its business
other than Authorizations (i) which are ministerial in nature and which JKP has
no reason to believe would not be issued in due course and (ii) which, the
failure of JKP to possess, would not subject JKP to penalties other than fines
not to exceed $20,000 in the aggregate ("Immaterial Authorizations"); and
(c) JKP has not received written notice of violation of, or knows of
any material violation of, any Laws to which it or its business is subject or
any Authorization necessary for the ownership or use of its assets and
properties or the conduct of its business (other than Immaterial
Authorizations).
(d) Environmental Laws. JKP has not received any notice or claim
(and is not aware of any facts that would form a reasonable basis for any
claim), or entered into any negotiations or agreements with any other Person,
and, to the best knowledge of JKP, JKP is not the subject of any investigation
by any governmental or regulatory authority, domestic or foreign, relating to
any material or potentially material liability or remedial action under any
Environmental Laws. There are no pending or, to the knowledge of JKP,
threatened, actions, suits or proceedings against JKP or any of its properties,
assets or operations asserting any such material liability or seeking any
material remedial action in connection with any Environmental Laws.
(e) Intellectual Property. (i) JKP owns, or is validly licensed or
otherwise has the right to use, all patents, and patent rights ("Patents") and
all trademarks, trade secrets, trademark rights, trade names, trade name rights,
service marks, service ▇▇▇▇ rights, copyrights and other proprietary
intellectual property rights and computer programs (the "Intellectual Property
Rights"), in each case, which are material to the conduct of the business of
JKP.
(ii) To the best knowledge of JKP, JKP has not interfered with,
infringed upon (without license to infringe), misappropriated or otherwise come
into conflict with any Patent of any other Person. JKP has not interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property Rights of any other Person. JKP has not received any
written charge, complaint, claim, demand or notice alleging any such
interference, infringement, is appropriation or violation (including any claim
that JKP must license or refrain from using any Patents or Intellectual Property
Rights of any other Person) which has not been
15
settled or otherwise fully resolved. To the best knowledge of JKP, no other
Person has interfered with, infringed upon (without license to infringe),
misappropriated or otherwise come into conflict with any Patents or Intellectual
Property Rights of JKP.
(f) Employees. (a) To the knowledge of JKP, JKP has complied in all
respects with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, other than
instances of non-compliance which, individually or in the aggregate, could not
reasonably be expected to result in penalties other than fines in an amount not
exceeding $50,000 in the aggregate, and JKP is not liable for any arrears of
wages or any taxes or penalties for failure to comply with any such Laws; (b)
JKP believes that JKP's relations with its employees is satisfactory; (c) there
are no controversies pending or, to the best knowledge of JKP, threatened
between JKP and any of its employees, which controversies have or could
reasonably be expected to have a material adverse effect; (d) JKP is not a party
to any collective bargaining agreement or other labor union contract applicable
to persons employed by JKP, nor, to the best knowledge of JKP, are there any
activities or proceedings of any labor union to organize any such employees; (e)
to the knowledge of JKP, there are no unfair labor practice complaints pending
against JKP before the National Labor Relations Board or any current union
representation questions involving employees of JKP; (f) there is no strike,
slowdown, work stoppage or lockout existing, or, to the best knowledge of JKP,
threatened, by or with respect to any employees of JKP; (g) to the knowledge of
JKP, no charges are pending before the Equal Employment Opportunity Commission
or any state, local or foreign agency responsible for the prevention of unlawful
employment practices with respect to JKP; (h) there are no claims pending
against JKP before any workers' compensation board; and (i) JKP has not received
notice that any Federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws intends to conduct an investigation of
or relating to JKP and, to the best knowledge of JKP, no such investigation is
in progress.
(g) Employee Benefit Plans. There no "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) or "employee welfare benefit plans" (as
defined in Section 3(1)of ERISA) maintained, or contributed to, by JKP for the
benefit of any current or any former employees, officers or directors of JKP.
ARTICLE V
COVENANTS
5.1 Covenants of the Company and Acquisition.
(a) Conduct of Business. Prior to and through the Closing Date, each
of the Company and Acquisition shall:
i. conduct its business only in the Ordinary Course of
Business;
ii. use its commercially reasonable efforts to preserve intact
the current business organization of the Company and Acquisition, as the case
may be, keep available the
16
services of the current officers, employees and agents of the Company and
Acquisition, as the case may be, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents and others having
business relationships with the Company and Acquisition, as the case may be;
iii. not pay, incur or declare any dividends or distributions
with respect to its shareholders or amend its Certificate of Incorporation or
By-Laws, without the prior written consent of JKP and MVI;
iv. not authorize, issue, sell, purchase or redeem any shares
of its capital stock or any options or other rights to acquire ownerships
interests without the prior written consent of JKP and MVI;
v. not incur any indebtedness for money borrowed or issue and
debt securities, or incur or suffer to be incurred any liability or obligation
of any nature whatsoever, except those incurred in the Ordinary Course of
Business, or cause or permit any material lien, encumbrance or security interest
to be created or arise on or in respect of any material portion of its
properties or assets;
vi. not make any investment of a capital nature either by
purchased stock or securities, contribution to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other Person;
vii. not do any other act which would cause representation or
warranty of the Company in this Agreement to be or become untrue in any material
respect or that is not in the ordinary course of business consistent with past
practice;
viii. report periodically to JKP and MVI concerning the status
of the business and operations of the Company; and
ix. confer with JKP and MVI concerning operational matters of
a material nature.
(b) Proposals; Other Offers. Commencing on the date of execution of
this Agreement through the Closing Date, each of the Company and Acquisition
shall not, directly or indirectly (whether through an employee, a
representative, an agent or otherwise), solicit or encourage any inquiries or
proposals, engage in negotiations for or consent to or enter into any agreement
providing for the acquisition of its business. Each of the Company and
Acquisition shall not, directly or indirectly (whether through an employee, a
representative, an agent or otherwise) disclose any nonpublic information
relating to the Company and Acquisition or afford access to any of the books,
records or other properties of the Company and Acquisition to any person or
entity that is considering, has considered or is making any such acquisition
inquiry or proposal relating to the Company's and Acquisition's business.
(c) Further Assurances. Prior to the Closing Date, with the
cooperation of JKP where appropriate, each of the Company and Acquisition shall
use commercially reasonable efforts to:
17
i. promptly comply with all filing requirements which federal,
state or local law may impose on the Company or Acquisition, as the case may be,
with respect to the Contemplated Transactions by this Agreement; and
ii. take all actions necessary to be taken, make any filing
and obtain any consent, authorization or approval of or exemption by any
governmental authority, regulatory agency or any other third party (including
without limitation, any landlord or lessor of the Company and any party to whom
notification is required to be delivered or from whom any form of consent is
required) which is required to be filed or obtained by the Company or
Acquisition in connection with the Contemplated Transactions by this Agreement.
(d) Access to Additional Agreements and Information. Prior to the
Closing Date, the Company and Acquisition shall make available to JKP and MVI
(as well as its shareholders, counsel, accountants and other representatives)
any and all agreements, contracts, documents, other instruments and personnel
material of the Company's and Acquisition's business, including without
limitation, those contracts to which the Company or Acquisition is a party and
those by which each of its business or any of the Company's or Acquisition's
assets are bound.
5.2 Covenants of JKP.
(a) Conduct of Business. Prior to and through the Closing Date, JKP
shall:
i. conduct its business only in the Ordinary Course of
Business;
ii. use its commercially reasonable efforts to preserve intact
the current business organization of JKP, keep available the services of the
current officers, employees and agents of JKP, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents and
others having business relationships with JKP;
iii. not pay, incur or declare any dividends or distributions
with respect to its shareholders or amend its Certificate of Incorporation or
By-Laws, without the prior written consent of the Company and MVI;
iv. not authorize, issue, sell, purchase or redeem any shares
of its capital stock or any options or other rights to acquire ownerships
interests without the prior written consent of the Company and MVI;
v. not incur any indebtedness for money borrowed or issue and
debt securities, or incur or suffer to be incurred any liability or obligation
of any nature whatsoever, except those incurred in the Ordinary Course of
Business, or cause or permit any material lien, encumbrance or security interest
to be created or arise on or in respect of any material portion of its
properties or assets;
vi. not make any investment of a capital nature either by
purchased stock or securities, contribution to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other Person;
18
vii. not do any other act which would cause representation or
warranty of JKP in this Agreement to be or become untrue in any material respect
or that is not in the Ordinary Course of Business consistent with past practice;
viii. report periodically to the Company and MVI concerning
the status of the business and operations of JKP; and
ix. confer with the Company and MVI concerning operational
matters of a material nature.
(b) Proposals; Other Offers. Commencing on the date of execution of
this Agreement through the Closing Date, JKP shall not, directly or indirectly
(whether through an employee, a representative, an agent or otherwise), solicit
or encourage any inquiries or proposals, engage in negotiations for or consent
to or enter into any agreement providing for the acquisition of its business.
JKP shall not, directly or indirectly (whether through an employee, a
representative, an agent or otherwise) disclose any nonpublic information
relating to JKP or afford access to any of the books, records or other
properties of JKP to any person or entity that is considering, has considered or
is making any such acquisition inquiry or proposal relating to the JKP's
business.
(c) Further Assurances. Prior to the Closing Date, with the
cooperation of the Company where appropriate, JKP shall:
i. promptly comply with all filing requirements which federal,
state or local law may impose on JKP with respect to the Contemplated
Transactions by this Agreement; and
ii. take all actions necessary to be taken, make any filing
and obtain any consent, authorization or approval of or exemption by any
governmental authority, regulatory agency or any other third party (including
without limitation, any landlord or lessor of the Company and any party to whom
notification is required to be delivered or from whom any form of consent is
required) which is required to be filed or obtained by JKP in connection with
the Contemplated Transactions by this Agreement.
(d) Actions by JKP. JKP shall take no action or enter into any
agreements or arrangements except in the Ordinary Course of Business and as may
be required by this Agreement.
(e) No Change in Capital Stock. Prior to the Effective Time, no
change will be made in the authorized, issued or outstanding capital stock of
JKP, and no subscriptions, options, rights, warrants, calls, commitments or
agreements relating to the authorized, issued or outstanding capital stock of
JKP will be entered into, issued, granted or created.
(f) Access to Additional Agreements and Information. Prior to the
Closing Date, JKP shall make available to the Company and MVI (as well as its
shareholders, counsel, accountants and other representatives) any and all
agreements, contracts, documents, other instruments and personnel material of
JKP's business, including without limitation, those contracts to which JKP is a
party and those by which its business or any of JKP's assets are bound.
19
(g) Further Assurances. Prior to the Closing Date, with the
cooperation of the Company and Acquisition where appropriate, JKP shall use
commercially reasonable efforts to:
i. promptly comply with all filing requirements which federal,
state or local law may impose on JKP with respect to the Contemplated
Transactions by this Agreement; and
ii. take all actions necessary to be taken, make any filing
and obtain any consent, authorization or approval of or exemption by any
governmental authority, regulatory agency or any other third party (including
without limitation, any landlord or lessor of JKP and any party to whom
notification is required to be delivered or from whom any form of consent is
required) which is required to be filed or obtained by JKP in connection with
the Contemplated Transactions by this Agreement.
5.3 Governmental Filings and Consents. The Company, Acquisition and
JKP shall cooperate with one another in filing any necessary applications,
reports or other documents with any federal or state agencies, authorities or
bodies having jurisdiction with respect to the business of the Company, or
Acquisition or the by this Agreement and in seeking any necessary approval,
consultation or prompt favorable action of, with or by any of such agencies,
authorities or bodies.
5.4 Publicity. Any public announcement or press release relating to
this Agreement or the Contemplated Transactions must be approved by MVI, JKP and
the Company in writing before being made or released.
ARTICLE VI
CONDITIONS
6.1 Conditions to Obligations of JKP. The obligation of JKP to
consummate the Contemplated Transactions is subject to the fulfillment of each
of the following conditions:
(a) Copies of Resolutions. At the Closing (i) the Company shall have
furnished JKP with a certificate of its Chief Executive Officer in the form of
EXHIBIT 6.1(a) annexed hereto, certifying that attached thereto are copies of
resolutions duly adopted by the board of directors of the Company authorizing
the execution, delivery and performance of this Agreement and all other
necessary or proper corporate action to enable the Company to comply with the
terms of this Agreement and (ii) Acquisition shall have furnished JKP with a
certificate of its Chief Executive Officer in the form of EXHIBIT 6.1(a2)
annexed hereto, certifying that attached thereto are copies of resolutions duly
adopted by the board of directors of Acquisition authorizing the execution,
delivery and performance of this Agreement and all other necessary or proper
corporate action to enable Acquisition to comply with the terms of this
Agreement.
(b) Opinion of Company's Counsel. The Company shall have furnished
to JKP, at the Closing, with an opinion of its legal counsel, dated as of the
Closing Date, substantially in the form of EXHIBIT 6.1(b) annexed hereto.
20
(c) Accuracy of Representations and Warranties; Performance of
Covenants. Each of the representations and warranties of the Company and
Acquisition set forth in this Agreement was true, correct and complete in all
material respects when made and shall also be true, correct and complete in all
material respects at and as of the Closing Date, with the same force and effect
as if made at and as of the Closing Date. The Company shall have performed and
complied in all material respects with all agreements and covenants required by
this Agreement to be performed by the Company and Acquisition at or prior to the
Closing Date.
(d) Delivery of Certificate. (A) The Company shall have delivered to
JKP a certificate, in the form of EXHIBIT 6.1(d) annexed hereto, dated the
Closing Date, and signed by the Chief Executive Officer of the Company affirming
that the representations and warranties as set forth in Section 4.1 were and are
true, correct and complete as required by Section 6.1(c) and (B) Acquisition
shall have delivered to JKP a certificate, in the form of EXHIBIT 6.1(d2)
annexed hereto, dated the Closing Date, and signed by the Chief Executive
Officer of Acquisition affirming that the representations and warranties as set
forth in Section 4.1 were and are true, correct and complete as required by
Section 6.1(c).
(e) Consents and Waivers. At the Closing, any and all necessary
consents, authorizations, orders or approvals shall have been obtained, except
as the same shall have been waived by JKP.
(f) Litigation. On the Closing Date, there shall be no effective
injunction, writ or preliminary restraining order or any order of any kind
whatsoever with respect to the Company issued by a court or governmental agency
(or other governmental or regulatory authority) of competent jurisdiction
restraining or prohibiting the consummation of the Contemplated Transactions or
making consummation thereof unduly burdensome to JKP. On the Closing Date and
immediately prior to consummation of the Contemplated Transactions, no
proceeding or lawsuit shall have been commenced, be pending or have been
threatened by any governmental or regulatory agency or authority or any other
Person with respect to the Contemplated Transactions.
(g) Delivery of Documents and Other Information. Prior to the
Closing Date, the Company and Acquisition shall have made available or delivered
to JKP all of the agreements, contracts, documents and other instruments
required to be delivered pursuant to the provisions of this Agreement.
6.2 Conditions to Obligations of the Company and Acquisition. The
obligations of the Company and Acquisition to consummate the Contemplated
Transactions are subject to the fulfillment of each of the following conditions:
(a) Copies of Resolutions. At the Closing, JKP shall have furnished
the Company with a certificate of its Chief Executive Officer, in the form of
EXHIBIT 6.2(a) annexed hereto, certifying that attached thereto are copies of
resolutions duly adopted by the board of directors of JKP authorizing the
execution, delivery and performance of the terms of this Agreement and all other
necessary or proper corporate action to enable JKP to comply with the terms of
this Agreement.
21
(b) Opinion of JKP's Counsel. JKP shall have furnished to the
Company, at the Closing, with an opinion of counsel to JKP, dated as of the
Closing Date, substantially in the form of EXHIBIT 6.2(b) annexed hereto.
(c) Accuracy of Representations and Warranties; Performance of
Covenants. Each of the representations and warranties of JKP was true, correct
and complete in all material respects when made and shall also be true, correct
and complete in all material respects at and as of the Closing Date, with the
same force and effect as if made at and as of the Closing Date. JKP shall have
performed and complied in all material respects with all agreements and
covenants required by this Agreement to be performed by JKP at or prior to the
Closing Date.
(d) Delivery of Certificate. JKP shall have delivered to the Company
a certificate, in the form of EXHIBIT 6.2(d) annexed hereto, dated the Closing
Date and signed by the Chief Executive Officer of JKP, affirming that the
representations and warranties of JKP as set forth in Section 4.2 were and are
true, correct and complete and JKP's agreements and covenants have been
performed as required by Section 6.2(d).
(e) Consents and Waivers. On or prior to the Closing Date, any and
all necessary consents, authorizations, orders or approvals shall have been
obtained, except as the same shall have been waived by the Company.
(f) Litigation. On the Closing Date, there shall be no effective
injunction, writ or preliminary restraining order or any order of any kind
whatsoever with respect to JKP issued by a court or governmental agency (or
other governmental or regulatory authority) of competent jurisdiction
restraining or prohibiting the consummation of the Contemplated Transactions or
making the consummation thereof unduly burdensome to the Company or JKP. On the
Closing Date, no proceeding or lawsuit shall have been commenced, threatened or
be pending or by any governmental or regulatory agency or authority or any other
person with respect to the Contemplated Transactions.
(g) Delivery of Documents and Other Information. Prior to the
Closing Date, JKP shall have made available or delivered to the Company all of
the agreements, contracts, documents and other instruments required to be
delivered pursuant to the provisions of this Agreement.
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Agreement. This Agreement may be
terminated at any time by mutual consent of the parties hereto, provided that
such consent to terminate is in writing and is signed by each of the parties
hereto.
7.2 Termination for Failure to Close. This Agreement shall be
automatically terminated if the Closing shall not have occurred within ten (10)
days of the date hereof (except if such 10th day is not a Business Day, then the
next Business Day).
22
7.3 Termination by Operation of Law. This Agreement may be
terminated by any party hereto if there shall be any statute, rule or regulation
that renders consummation of the Contemplated Transactions illegal or otherwise
prohibited, or a court of competent jurisdiction or any government (or
governmental authority) shall have issued an order, decree or ruling, or has
taken any other action restraining, enjoining or otherwise prohibiting the
consummation of such transactions and such order, decree, ruling or other action
shall have become final and nonappealable.
7.4 Termination for Failure to Perform Covenants or Conditions. This
Agreement may be terminated prior to the Closing Date:
(a) by JKP if: (i) any of the representations and warranties made in
this Agreement by the Company or Acquisition shall not be materially true and
correct, when made or at any time prior to consummation of the Contemplated
Transactions as if made at and as of such time; (ii) any of the conditions set
forth in Section 6.1 hereof have not been fulfilled in all material respects by
the Closing Date; (iii) the Company or Acquisition shall have failed to observe
or perform any of its material obligations under this Agreement; or (iv) as
otherwise set forth herein; or
(b) by the Company or Acquisition if: (i) any of the representations
and warranties of JKP shall not be materially true and correct when made or at
any time prior to consummation of the Contemplated Transactions as if made at
and as of such time; (ii) any of the conditions set forth in Section 6.2 hereof
have not been fulfilled in all material respects by the Closing Date; (iii) JKP
shall have failed to observe or perform any of their material respective
obligations under this Agreement; or (iv) as otherwise set forth herein.
7.5 Effect of Termination or Default; Remedies. In the event of
termination of this Agreement as set forth above, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto,
provided that such party is a Non-Defaulting Party (as defined below). The
foregoing shall not relieve any party from liability for damages actually
incurred as a result of such party's breach of any term or provision of this
Agreement.
7.6 Remedies; Specific Performance. In the event that any party
shall fail or refuse to consummate the Contemplated Transactions or if any
default under or beach of any representation, warranty, covenant or condition of
this Agreement on the part of any party (the "Defaulting Party") shall have
occurred that results in the failure to consummate the Contemplated
Transactions, then in addition to the other remedies provided herein, the
non-defaulting party (the "Non-Defaulting Party") shall be entitled to seek and
obtain money damages from the Defaulting Party, or may seek to obtain an order
of specific performance thereof against the Defaulting Party from a court of
competent jurisdiction, provided that the Non-Defaulting Party seeking such
protection must file its request with such court within forty-five (45) days
after it becomes aware of the Defaulting Party's failure, refusal, default or
breach. In addition, the Non-Defaulting Party shall be entitled to obtain from
the Defaulting Party court costs and reasonable attorneys' fees incurred in
connection with or in pursuit of enforcing the rights and remedies provided
hereunder.
23
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 Survival of Representations and Warranties of the Company. All
representations and warranties of the Company shall survive the execution and
delivery of this Agreement and the Closing hereunder and shall thereafter
continue in full force and effect until the the second anniversary of the
Closing Date and shall then terminate except to the extent that notice of the
Company's or Acquisition liability in respect of any inaccuracy in or breach of
any representation or warranty shall have been given on or prior to such second
anniversary.
8.2 Survival of Representations and Warranties of JKP. All
representations and warranties of JKP shall terminate upon the Closing except to
the extent that notice of JKP's liability in respect of any inaccuracy in or
breach of any representation or warranty shall have been given on or prior to
Closing.
8.3 Obligation of the Company to Indemnify. (a) The Company agrees
to indemnify, defend and hold harmless JKP (and its directors, officers,
employees, affiliates, shareholders, debenture holders, agents, attorneys,
successors and assigns) from and against all losses, liabilities, damages,
deficiencies, costs or expenses (including interest, penalties and reasonable
attorneys' and consultants' fees and disbursements) (collectively, "Losses")
based upon, arising out of or otherwise in respect of any (i) inaccuracy in any
representation or warranty of the Company contained in this Agreement or in the
Schedules and Exhibits hereto or (ii) breach by the Company of any covenant or
agreement contained in this Agreement. Losses specifically does not include
economic loss from the decrease in the per Share Market Value of the Company
Common Stock.
8.4 Obligation of JKP to Indemnify. JKP agrees to indemnify, defend
and hold harmless the Company (and its directors, officers, employees,
affiliates, shareholders, agents, attorneys, successors and assigns) from and
against any Losses based upon, arising out of or otherwise in respect of any (i)
inaccuracy in any representation or warranty of JKP contained in this Agreement
or (ii) breach by JKP of any covenant or agreement contained in this Agreement.
8.5 Notice and Opportunity to Defend. (a) Promptly after receipt by
any Person entitled to indemnity under this Agreement (an "Indemnitee") of
notice of any demand, claim or circumstances which, with the lapse of time,
would or might give rise to a claim or the commencement (or threatened
commencement) of any action, proceeding or investigation (an "Asserted
Liability") that may result in a Loss, the Indemnitee shall give notice thereof
(the "Claims Notice") to any other party (or parties) who is or may be obligated
to provide indemnification pursuant to Section 8.3 or 8.4 (the "Indemnifying
Party"). The Claims Notice shall describe the Asserted Liability in reasonable
detail and shall indicate the amount (estimated, if necessary and to the extent
feasible) of the Loss that has been or may be suffered by the Indemnitee.
(b) The Indemnifying Party may elect to compromise or defend, at its
own expense and by its own counsel, any Asserted Liability. If the Indemnifying
Party elects to compromise or defend such Asserted Liability, it shall within 30
days after the date the Claims
24
Notice is given (or sooner, if the nature of the Asserted Liability so requires)
notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnifying Party, in the compromise of, or
defense against, such Asserted Liability. If the Indemnifying Party elects not
to compromise or defend the Asserted Liability, fails to notify the Indemnitee
of its election as herein provided or contests its obligation to indemnify under
this Agreement, the Indemnitee may pay, compromise or defend such Asserted
Liability and all reasonable expenses incurred by the Indemnitee in defending or
compromising such Asserted Liability, all amounts required to be paid in
connection with any such Asserted Liability pursuant to the determination of any
court, governmental or regulatory body or arbitrator, and amounts required to be
paid in connection with any compromise or settlement consented to by the
Indemnitee, shall be borne by the Indemnifying Party. Except as otherwise
provided in the immediately preceding sentence, the Indemnitee may not settle or
compromise any claim over the objection of the Indemnifying Party. In any event,
the Indemnitee and the Indemnifying Party may participate, at their own expense,
in (but the Indemnitee may not control) the defense of such Asserted Liability.
If the Indemnifying Party chooses to defend any claim, the Indemnitee shall make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense.
8.6 Losses. The sole remedy for recovering Losses due to JKP or the
Company, as the case may be, under this Article 8 shall be the additional
issuance of the number of shares of Company Common Stock equal to the dollar
value of such Loss divided by the per Share Market Value.
ARTICLE IX
DEFINITIONS
The following terms, which are capitalized in this Agreement, shall
have the meanings set forth below for the purpose of this Agreement.
"Applicable Contract" means any Contract (a) under which the Company
has or may acquire any rights, (b) under which the Company or JKP, as the case
may be, has or may become subject to any obligation or liability or (c) by which
the Company or JKP, as the case may be, or any of the assets owned or used by it
is or may become bound.
"Contemplated Transactions" means all of the transactions
contemplated by this Agreement, including, without limitation:
(1) the Merger; and
(2) the performance by the parties of their respective covenants and
obligations under this Agreement.
"Environmental Laws" means all applicable federal, state, local or
foreign laws, rules and regulations, orders, decrees, judgments, permits,
filings and licenses relating (i) to protection and clean-up of the environment
and activities or conditions related thereto, including those relating to the
generation, handling, disposal, transportation or release of hazardous
25
substances and (ii) the health or safety of employees in the workplace
environment, all as amended from time to time, and shall also include any common
law theory based on nuisance, trespass, negligence or other tortious conduct.
"ERISA" means the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to such law or any
successor law.
"Law" means all applicable laws, statutes, ordinances, rules,
regulations, orders, writs, injunctions, judgments or decrees entered, enacted,
promulgated, enforced or issued by any court or other governmental or regulatory
authority, domestic or foreign.
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational or other administrative law, ordinance,
principle of common law, regulation, statute, treaty, court or arbitrator.
"Order" means any award, decision, injunction, judgment, order,
ruling, subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other governmental body or by any arbitrator.
"Ordinary Course of Business" means an action taken by a Person
where:
(1) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(2) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
(3) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"Organizational Documents" means the articles or certificate of
incorporation and the by-laws of a corporation and any amendment thereto.
"per Share Market Value" of the Company Common Stock means on any
particular date (a) the last sale price of shares of Company Common Stock on
such date or, if no such sale takes place on such date, the last sale price on
the most recent prior date, in each case as officially reported on the principal
national securities exchange on which the Company Common Stock is then listed or
admitted to trading, or (b) if the Company Common Stock is not then listed or
admitted to trading on any national securities exchange, the closing bid price
per share as reported by Nasdaq Stock Market, Inc. (the "Nasdaq"), or (c) if the
Company Common Stock is not then listed or admitted to trading on the Nasdaq,
the closing bid price per share of the Company Common Stock on such date as
reported on the National Association of Securities Dealers, Inc. over-the
counter Bulletin Board (the "OTCBB") or if there is no such price on such date,
then the last bid price on the date nearest preceding such date, or (d) if the
Company Common Stock is not quoted on the OTCBB, the closing bid price for a
share of Company Common Stock on such date in the over-the-
26
counter market as reported by the Pinksheets LLC (or similar organization or
agency succeeding to its functions of reporting prices) or if there is no such
price on such date, then the last bid price on the date nearest preceding such
date, or (e) if the Company Common Stock is not publicly traded, the fair market
value of a share of the Company Common Stock as determined by an appraiser
selected in good faith by JKP and MVI.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or governmental body.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any governmental body or arbitrator.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
ARTICLE X
MISCELLANEOUS
10.1 Fees and Expenses. Except as otherwise provided in this
Agreement, each party hereto will bear its own legal, accounting and other fees
and expenses incident to the Contemplated Transactions herein. Any fees and
expenses required to be paid by any party hereunder shall be limited to
reasonable and necessary fees and expenses
10.2 Modification, Amendments and Waiver. The parties hereto may
amend, modify or otherwise waive any provision of this Agreement by mutual
consent, provided that such consent and any amendment, modification or waiver is
in writing and is signed by each of the parties hereto.
10.3 Assignment. Neither the Company nor JKP shall have the
authority to assign its respective rights or obligations under this Agreement
without the prior written consent of the other party.
10.4 Successors. This Agreement shall be binding upon and, to the
extent permitted in this Agreement, shall inure to the benefit of the parties
and their respective successors and permitted assigns.
10.5 Entire Agreement. This Agreement and the exhibits, schedules
and other documents referred to herein contain the entire agreement among the
parties hereto with respect to the Contemplated Transactions and supersede all
prior agreements with respect thereto, whether written or oral.
10.6 Governing Law. This Agreement and the exhibits hereto shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to
27
principles of conflicts or choice of laws thereof. Any action to enforce the
terms of this Agreement or any of its exhibits shall be brought exclusively in
the state and/or federal courts situated in the County of Los Angeles in the
State of California. Service of process in any action by either party to enforce
the terms of this Agreement may be made by serving a copy of the summons and
complaint, in addition to any other relevant documents, by commercial overnight
courier to the other party at its principal address set forth in this Agreement.
10.7 Notices. Any notice, request, demand, waiver, consent,
approval, or other communication which is required or permitted to be given to
any party hereunder shall be in writing and shall be deemed given only if
delivered to the party personally or sent to the party by telecopy (promptly
followed by a hard-copy delivered in accordance with this Section 10.7) or by
registered or certified mail (return receipt requested), with postage and
registration or certification fees thereon prepaid, addressed to the party at
its address set forth below:
If to JKP: ▇▇▇▇ ▇▇▇▇▇ Productions, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Acquisition: IDC Acquisition I Corp.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company: IDC Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Gottbetter & Partners, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. If mailed as aforesaid, the day of mailing or
transmission shall be the date any such notice shall be deemed to have been
delivered.
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10.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which shall
constitute but one agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
10.9 Rights Cumulative. All rights, powers and privileges conferred
hereunder upon the parties, unless otherwise provided, shall be cumulative and
shall not be restricted to those given by law. Failure to exercise any power
given any party hereunder or to insist upon strict compliance by any other party
shall not constitute a waiver of any party's right to demand exact compliance
with any of the terms or provisions hereof.
10.10 Severability of Provisions. The provisions of this Agreement
shall be considered severable in the event that any of such provisions are held
by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable. Such invalid, void or otherwise unenforceable provisions shall be
automatically replaced by other provisions which are valid and enforceable and
which are as similar as possible in term and intent to those provisions deemed
to be invalid, void or otherwise unenforceable. Notwithstanding the foregoing,
the remaining provisions hereof shall remain enforceable to the fullest extent
permitted by law.
10.11 Headings. The headings set forth in the articles and sections
of this Agreement and in the exhibits and the schedules to this Agreement are
inserted for convenience of reference only and shall not be deemed to constitute
a part hereof.
[SIGNATURE PAGE FOLLOWS]
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the date and year first above written.
IDC TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, CEO
IDC ACQUISITION I CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, CEO
▇▇▇▇ ▇▇▇▇▇ PRODUCTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chairman and CEO
The undersigned, Secretary of ▇▇▇▇ ▇▇▇▇▇ Productions, Inc., hereby
certifies on the date and year first above written that this Agreement and Plan
of Merger has been adopted pursuant to Section 251(c) of the Delaware General
Corporation Law and that the conditions specified in the first sentence of said
section have been satisfied.
▇▇▇▇ ▇▇▇▇▇ PRODUCTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Secretary
30