STOCK PURCHASE AGREEMENT
by and between
NGT ENTERPRISES, INC.
and
IMN EQUITIES INC.
TABLE OF CONTENTS
Page
ARTICLE 1 PURCHASE AND SALE OF STOCK
1.1 Purchase and Sale 1
1.2 Purchase Price 1
1.3 Exemption from Registration 1
1.4 Directors and Officers of NGT 1
ARTICLE 2 CLOSING
2.1 Time of Closing 2
2.2 Deliveries by IMN 2
2.3 Deliveries by NGT 2
2.4 Further Assurances 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF IMN
3.1 Organization, Standing and Power 3
3.2 Capital Structure 3
3.3 Authority 3
3.4 Financial Statements 4
3.5 Closing Net Worth Representation 4
3.6 Absence of Certain Changes 4
3.7 Absence of Undisclosed Liabilities 5
3.8 Assets to be Acquired 5
3.9 Litigation 5
3.10 Restrictions on Business Activities 5
3.11 Governmental Authorization 5
3.12 Title to Property 5
3.13 Intellectual Property 6
3.14 Environmental Matters 6
3.15 Taxes 7
3.16 Employee Benefit Plans 8
3.17 Employee Matters 9
3.18 Interested Party Transactions 10
3.19 Insurance 10
3.20 Compliance With Laws 10
3.21 Minute Books 10
3.22 Complete Copies of Materials 10
3.23 Brokers' and Finders' Fees 10
3.24 Board Approval 10
3.25 Representations Complete 10
3.26 Authorization 11
3.27 Compliance With Other Instruments 11
3.28 Governmental Consents 11
3.29 Litigation 11
3.30 Title to Stock 11
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3.31 Disclosure 11
3.32 Delivery of Documents 11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF NGT
4.1 Organization, Standing and Power 12
4.2 Capital Structure 12
4.3 Authority 12
4.4 Current Status of NGT 13
4.5 SEC Documents; Financial Statements 13
4.6 Litigation 13
4.7 Governmental Authorization 14
4.8 Compliance with Laws 14
4.9 Brokers' and Finders' Fees 14
4.10 Board Approval 14
4.11 Representations Complete 14
4.12 Delivery of Documents 14
4.13 Absence of Certain Changes 14
4.14 Absence of Undisclosed Liabilities 15
4.15 Taxes 15
4.16 Employee Benefit Plans 15
4.17 Employee Matters 15
4.18 Interested Party Transactions 15
4.19 Minute Books 15
4.20 Complete Copies of Materials 15
4.21 Authorization 15
4.22 Compliance with Other Insruments 15
4.23 Title to Stock 16
4.24 Disclosure 16
ARTICLE 5 COVENANTS OF NGT AND IMN
5.1 Conduct of Business of NGT 16
5.2 Conduct of Business of DHI 18
ARTICLE 6 CONDITIONS TO OBLIGATIONS OF NGT AND IMN
6.1 Consents and Approvals 20
6.2 Representations, Warranties and Agreements 20
6.3 Certificate 20
6.4 Opinion of Counsel of NGT 20
6.5 Opinion of Counsel of IMN 20
6.6 No Material Adverse Changes 20
6.7 No Actions 20
6.8 Proceedings and Documents 20
6.9 Accuracy of Documents and Information 20
ARTICLE 7 INDEMNIFICATION
7.1 Indemnification 20
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ARTICLE 8 TERMINATION
8.1 Termination by Mutual Consent 21
8.2 Termination by NGT or IMN 21
8.3 Effect of Termination 21
ARTICLE 9 MISCELLANEOUS
9.1 Notices 22
9.2 Entire Agreement; Modifications; Waiver 22
9.3 Captions 22
9.4 Counterparts 22
9.5 Publicity 22
9.6 Successors and Assigns 22
9.7 Governing Law 23
9.8 Further Assurances 23
9.9 Confidentiality and Nondisclosure Agreements 23
9.10 Transfer of DHI Books and Assets 23
9.11 Arbitration 23
9.12 Schedules 23
9.13 Severability 24
SCHEDULES
Schedule 1.1 List of Additional Assets
Schedule 2.3(b) Form of Opinion of Counsel to IMN
Schedule 2.3(c) Form of Opinion of Counsel to NGT
Schedule 2.3(d) List of Shareholders
Schedule 6.3(a) Certificate of President of NGT
Schedule 6.3(a) Certificate of President of IMN
Schedule 3.6 Changes - DHI
Schedule 3.7 Liabilities - DHI
Schedule 3.9 Material Litigation of DHI
Schedule 3.12 List of Real Property Owned or Leased
Schedule 3.16 List of Employee Benefit Plans
Schedule 3.18 Indebtedness to Interested Parties
Schedule 3.22 List of Certain Material Contracts
Schedule 4.13 Changes - NGT
Schedule 4.14 Liabilities - NGT
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THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of May 5, 1997,
by and between NGT Enterprises, Inc., a Delaware corporation ("NGT"), and IMN
Equities Inc., a Delaware corporation, ("IMN").
WHEREAS, ▇▇▇▇▇▇ ▇▇▇▇▇, Inc., a New York corporation ("DHI"), is a
wholly-owned subsidiary of IMN; and
WHEREAS, IMN is the owner of additional assets and securities as set forth
in Schedule 1.1 ("Additional Assets"); and
WHEREAS, NGT desires to purchase all the shares of capital stock of DHI
("DHI Capital Stock") and the Additional Assets from IMN, and IMN desires to
sell all the DHI Capital Stock and the Additional Assets to NGT, subject to the
terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the covenants set forth
herein, the Parties hereto (the "Parties" and, individually, a "Party") hereby
agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
1.1 Purchase and Sale. Subject to the terms and conditions of the Agreement,
NGT will purchase at the Closing (as hereinafter defined), and IMN will
sell to NGT at the Closing, all the DHI Capital Stock, which consists of
1,000,000 common shares, $.001 par value per share, ("DHI Common Shares")
and 110,000 preferred shares, $.001 par value per share ("DHI Preferred
Shares") and the Additional Assets.
1.2 Purchase Price. In consideration for the DHI Capital Stock and Additional
Assets and in full payment therefor, NGT will pay to IMN at the Time of
Closing the following amount (the "Purchase Price"): delivery of
certificate(s) for approximately 20,221,700 shares of NGT common stock,
$.001 par value per share ("NGT Shares of Common Stock") equal to
ninety-five (95%) percent of NGT's issued and outstanding Shares of Common
Stock after the issuance of such shares.
1.3 Exemption from Registration. The NGT Shares to be issued to IMN will be
issued in a transaction exempt from registration under the Securities Act
of 1933, as amended (the "Securities Act").
1.4 Directors and Officers of NGT. Effective as of the Time of Closing the
following officers shall resign from their respective positions at NGT:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President and Treasurer, and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Secretary.
The board of directors of NGT, consisting of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, shall elect the following as officers of NGT: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇,
President and Treasurer, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Secretary; and shall appoint
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as director of NGT until his successor is elected or
appointed and qualified. Immediately subsequent to such actions, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall resign from the board of directors of NGT.
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ARTICLE 2
CLOSING
2.1 Time of Closing. The transactions contemplated by the Agreement shall be
completed on the first business day on which the last of the conditions
contained in Article 6 hereof is fulfilled or waived (the "Time of
Closing"), with the expectation that the Closing shall occur on or before
May 8, 1997 at 1:00 P.M., E.D.T. The Closing shall take place at the
offices of IMN, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The
"Closing" shall mean the deliveries to be made by the Parties hereto at the
Time of Closing in accordance with the Agreement.
2.2 Deliveries by IMN. At the Closing, IMN shall deliver to NGT certificates,
all duly and properly executed, representing all the issued and outstanding
shares of DHI Capital Stock, and the shares of stock of the Additional
Assets, with stock powers attached containing notarial acknowledgments or
signature bank guarantees in proper form, which validly evidence the
transfer of the certificates.
2.3 Deliveries by NGT. At the Closing, NGT shall deliver or cause to be
delivered to IMN all duly and properly executed, the following:
(a) A certificate representing the NGT shares issuable to IMN, as
provided in Section 1.2 of the Agreement.
(b) An opinion of ▇▇▇▇ & ▇▇▇▇▇▇▇, Esqs., counsel to IMN dated the
date of the Closing, in the form attached hereto as Schedule
2.3(b).
(c An opinion of ▇▇▇▇ ▇▇▇▇▇▇▇, Esq., counsel to NGT, dated the date
of the Closing, in the form attached hereto as Schedule 2.3(c).
(d) A list of shareholders of NGT, including names, addresses and
numbers of shares.
(e) A list of the Additional Assets as set forth in Schedule 1.1
2.4 Further Assurances. At or after the Time of Closing, each Party shall
prepare, execute, and deliver, at the preparer's expense, such further
instruments of conveyance, sale, assignment, or transfer, and shall take or
cause to be taken such other or further action, as any Party shall
reasonably request of any other Party at any time or from time to time in
order to consummate, in any other manner, the terms and provisions of the
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF IMN
In the Agreement, any reference to any event, change, condition or
effect being "material" with respect to any entity or group of entities means
any material event, change, condition or effect related to the financial
condition, properties, assets (including intangible assets), liabilities,
business, operations or results of operations of such entity or group of
entities. In the Agreement, any reference to a "Material Adverse Effect" with
respect to any entity or group of entities means any event, change or effect
that is materially adverse to the financial condition, properties, assets,
liabilities, business, operations or results of operations of such entity.
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In the Agreement, any reference to a Party's "knowledge" means such Party's
actual knowledge after reasonable inquiry of officers, directors and other
employees of such Party reasonably believed to have knowledge of such matters.
IMN represents and warrants to NGT as follows:
3.1 Organization, Standing and Power. DHI is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. DHI has the corporate power to own its properties and to
carry on its business as now being conducted and as proposed to be
conducted and is duly qualified to do business and is in good standing in
each jurisdiction in which the failure to be so qualified and in good
standing would have a Material Adverse Effect on DHI. IMN is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. IMN has the corporate power to own its
properties and to carry on its business as now being conducted. IMN has
delivered a true and correct copy of the certificate of incorporation and
bylaws or other charter documents, as applicable, of DHI, each as amended
to date, to NGT. DHI is not in violation of any of the provisions of its
certificate of incorporation or bylaws or equivalent organizational
documents. IMN is the owner of all outstanding shares of DHI Capital Stock
and all such shares are duly authorized, validly issued, fully paid and
nonassessable. DHI does not directly or indirectly own any equity or
similar interest in, or any interest convertible or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
3.2 Capital Structure. The DHI Capital Stock consists of 5,000,000 common
shares, $.001 par value each, ("DHI Common Shares"), of which 1,000,000
shares are issued and outstanding as of the date hereof, and 1,000,000
shares of preferred stock, $.001 par value each, ("DHI Preferred Shares"),
of which 110,000 shares are issued and outstanding as of the date hereof,
all of which shares are owned by IMN. There are no other outstanding shares
of DHI Capital Stock or voting securities and no outstanding commitments to
issue any shares of capital stock or voting securities, except that each
DHI Preferred Share is convertible at the option of the holder thereof into
one DHI Common Share. All outstanding shares of DHI Capital Stock are duly
authorized, validly issued, fully paid and nonassessable and are free of
any liens or encumbrances other than any liens or encumbrances created by
or imposed upon the holders thereof, and are not subject to preemptive
rights or rights of first refusal created by statute, the certificate of
incorporation or bylaws of DHI or any agreement to which IMN or DHI are a
party or by which either is bound. All outstanding shares of DHI Capital
Stock were issued in compliance with all applicable federal and state
securities laws.
3.3 Authority. IMN has all requisite corporate power and authority to enter
into the Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of the Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of IMN. The Agreement has been duly executed
and delivered by IMN and constitutes the valid and binding obligation of
IMN enforceable against IMN in accordance with its terms, except that such
enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to creditors' rights generally,
and is subject to general principles of equity. The execution and delivery
of the Agreement by IMN does not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of,
or default under (with or without notice or lapse of time, or both), or
give rise to a right of termination, cancellation or acceleration of any
material obligation or loss of any material benefit under (i) any provision
of the certificate of incorporation or bylaws of DHI, or (ii) any material
mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to DHI or any of its
properties or assets. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency
or commission or other governmental authority or instrumentality
("Governmental Entity") is required by or with respect to IMN or DHI in
connection with the execution and delivery of the Agreement or the
consummation of the transactions contemplated hereby, except for (i) such
consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable state securities laws and
the securities laws of any foreign country, and (ii) such other consents,
authorizations, filings, approvals and registrations which, if not obtained
or made, would not have a Material Adverse Effect on IMN and/or and would
not prevent, or materially alter or delay any of the transactions
contemplated by the Agreement.
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3.4 Financial Statements. IMN has delivered to NGT DHI's audited financial
statements for each of the fiscal years ended December 31, 1994, 1995 and
1996, respectively, and a compilation of IMN for the three-month period
ended March 31, 1997 (collectively, the "Financial Statements"). The
Financial Statements are complete and correct in all material respects and
have been prepared in accordance with generally accepted accounting
principles (except that the unaudited financial statements do not have
notes thereto) applied on a consistent basis throughout the periods
indicated and with each other. The Financial Statements accurately set out
and describe in all material respects the financial condition and operating
results of DHI as of the dates, and for the periods, indicated therein,
subject to normal year-end adjustments. DHI maintains and will continue to
maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
3.5 Closing Net Worth Representation. IMN will deliver to NGT two (2) days
prior to the Closing a representation that the aggregate net tangible book
value of DHI and the Additional Assets conforms to the representations set
forth in Article 3.8 (the "Closing Net Worth Representation").
3.6 Absence of Certain Changes. Since December 31, 1996, (the "DHI Financial
Statement Date"), except as set forth or referred to on Schedule 3.6 or in
some other disclosure schedule hereto, DHI has conducted its business in
the ordinary course consistent with past practice and there has not
occurred: (i) any change, event or condition (whether or not covered by
insurance) that has resulted in, or might reasonably be expected to result
in, a Material Adverse Effect to DHI; (ii) any acquisition, sale or
transfer of any material asset of DHI other than in the ordinary course of
business and consistent with past practice; (iii) any material change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates) by DHI; (iv) any declaration, setting
aside, or payment of a dividend or other distribution with respect to the
shares of DHI, or any direct or indirect redemption, purchase or other
acquisition by DHI of any of an shares of DHI Capital Stock; (v) any
material contract entered into by DHI, other than in the ordinary course of
business and as provided to NGT, or any material amendment or termination
of, or default under, any material contract to which DHI is a party or by
which it is bound; (vi) any material amendment or change to the certificate
of incorporation or bylaws of DHI; (vii) any increase in or modification of
the compensation or benefits payable or to become payable by DHI to any of
its directors or employees other than in the ordinary course of business
and consistent with past practice or (viii) any negotiation or agreement by
IMN or DHI to do any of the things described in the preceding clauses (i)
through (vii) (other than negotiations with NGT and its representatives
regarding the transactions contemplated by this Agreement).
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3.7 Absence of Undisclosed Liabilities. DHI has no material obligations or
liabilities of any nature (matured or unmatured, fixed or contingent) other
than (i) those set forth or adequately provided for in the DHI Financial
Statements; (ii) those incurred in the ordinary course of business and not
required to be set forth in the DHI Financial Statements under generally
accepted accounting principles; (iii) those incurred in the ordinary course
of business since the DHI Financial Statements and consistent with past
practice; and (iv) those incurred in connection with the execution of the
Agreement. All undisclosed liabilities are disclosed in Schedule 3.7.
3.8 Assets to be Acquired. The total of the net worth of DHI and the value of
the Additional Assets will be as of the date of Closing as follows: net
assets in excess of $7,000,000 and gross assets in excess of $20,000,000.
3.9 Litigation. There is no private or governmental action, suit, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or, to the knowledge of IMN or its
subsidiary, DHI, threatened against DHI or any of their respective
properties or any of their respective officers or directors (in their
capacities as such) that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on DHI except as
disclosed in Schedule 3.9. There is no judgment, decree or order against
DHI, or, to the knowledge of IMN or its subsidiary, DHI, any of their
respective directors or officers (in their capacities as such), that could
prevent, enjoin, or materially alter or delay any of the transactions
contemplated by the Agreement, or that could reasonably be expected to have
a Material Adverse Effect on DHI.
3.10 Restrictions on Business Activities. There is no agreement, judgment,
injunction, order or decree binding upon DHI which has or could reasonably
be expected to have the effect of prohibiting or materially impairing any
current or future business practice of DHI, any acquisition of property by
DHI or the conduct of business by DHI as currently conducted or as proposed
to be conducted by DHI.
3.11 Governmental Authorization. DHI has obtained each federal, state, county,
local or foreign governmental consent, license, permit, grant, or other
authorization of a Governmental Entity (i) pursuant to which DHI currently
operates or holds any interest in any of its properties or (ii) that is
required for the operation of DHI [(i) and (ii) herein collectively called
"DHI Authorizations"], and all of such DHI Authorizations are in full force
and effect, except where the failure to obtain or have any such DHI
Authorizations could not reasonably be expected to have a Material Adverse
Effect on DHI.
3.12 Title to Property. DHI has good and marketable title to all of its
respective properties, interests in properties and assets, real and
personal, reflected in the DHI Financial Statements or acquired after the
DHI Financial Statements (except properties, interests in properties and
assets sold or otherwise disposed of since the DHI Financial Statements
Date in the ordinary course of business), or with respect to leased
properties and assets, valid leasehold interests in, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or
character, except (i) the lien of current taxes not yet due and payable,
(ii) such imperfections of title, liens and easements as do not and will
not materially detract from or interfere with the use of the properties
subject thereto or affected thereby, or otherwise materially impair
business operations involving such properties and (iii) liens securing debt
which is reflected on the DHI Financial Statements. The property and
equipment of DHI that are used in the operations of its businesses are in
all material respects in good operating condition and repair, ordinary wear
and tear excepted. All properties used in the operations of DHI are
reflected in the DHI Financial Statements to the extent generally accepted
accounting principles require the same to be reflected. Schedule 3.12
identifies each parcel of real property owned or leased by DHI.
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3.13 Intellectual Property.
(a) DHI owns or is licensed or otherwise possesses legally enforceable
rights to use all trademarks, trade names, service marks, copyrights,
and any applications therefor, and tangible or intangible proprietary
information or material ("Intellectual Property") that are used in the
business of DHI as currently conducted by DHI, except to the extent
that the failure to have such rights has not had and would not
reasonably be expected to have a Material Adverse Effect on DHI.
(b) DHI has not been sued in any suit, action or proceeding which involves
a claim of not brought any action, suit or proceeding for infringement
of Intellectual Property or breach of any license or agreement
involving Intellectual Property against any third party. The conduct
of its business does not infringe any trademark, service ▇▇▇▇,
copyright, trade secret or other proprietary right of any third party,
where such infringement would have a Material Adverse Effect on DHI.
3.14 Environmental Matters.
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall mean any federal, state or
local laws, ordinances, codes, regulations, rules, policies and
orders that are intended to assure the protection of the
environment, or that classify, regulate, call for the remediation
of, require reporting with respect to, or list or define air,
water, groundwater, solid waste, hazardous or toxic substances,
materials, wastes, pollutants or contaminants, or which are
intended to assure the safety of employees, workers or other
persons, including the public.
(ii) "Hazardous Materials" shall mean any toxic or hazardous
substance, material or waste or any pollutant or contaminant, or
infectious or radioactive substance or material, including
without limitation, those substances, materials and wastes
defined in or regulated under any Environmental and Safety Laws.
(iii)"Property" shall mean all real property leased or owned by DHI
either currently or in the past.
(iv) "Properties" shall mean all buildings and improvements on the
Property of DHI.
(b) IMN represents and warrants as follows:
(i) to IMN's knowledge, no methylene chloride or asbestos is
contained in or has been used at or released from the Property or
the Properties; and
(ii) to IMN's knowledge, all Hazardous Materials and wastes have been
disposed of in accordance with all Environmental and Safety Laws.
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3.15 Taxes. DHI and any consolidated, combined or unitary group for Tax purposes
of which DHI is or has been a member have timely filed all Tax Returns
required to be filed by them and have paid all Taxes shown thereon to be
due. The Financial Statements (i) fully accrue all actual and contingent
liabilities for Taxes with respect to all periods through December 31, 1996
and DHI has not and will not incur any Tax liability in excess of the
amount reflected on the Financial Statements with respect to such periods,
and (ii) properly accrue in accordance with generally accepted accounting
principles all liabilities for Taxes payable after December 31, 1996 with
respect to all transactions and events occurring on or prior to such date.
No material Tax liability since December 31, 1996 has been incurred by DHI
other than in the ordinary course of business and adequate provision has
been made in the Financial Statements for all Taxes since that date in
accordance with generally accepted accounting principles on at least a
quarterly basis. DHI has withheld and paid to the applicable financial
institution or Tax Authority (as subsequently defined) all amounts required
to be withheld. No notice of deficiency or similar document of any Tax
Authority has been received by either DHI, and there are no liabilities for
Taxes with respect to the issues that have been raised (and are currently
pending) by any Tax Authority that could, if determined adversely to DHI,
materially and adversely affect the liability of DHI for Taxes. There is
(i) no material claim for Taxes that is a lien against the property of DHI
other than liens for Taxes not yet due and payable, (ii) DHI has received
no notification of any audit of any Tax Return of DHI being conducted or
pending by a Tax authority, (iii) no extension or waiver of the statute of
limitations on the assessment of any Taxes granted by DHI and currently in
effect, and (iv) no agreement, contract or arrangement to which DHI is a
party that may result in the payment of any material amount. DHI will not
be required to include any material adjustment in Taxable income for any
Tax period (or portion thereof) under state or foreign Tax laws as a result
of transactions, events or accounting methods employed prior to the
Agreement. DHI is not a party to any tax sharing or tax allocation
agreement nor does DHI owe any amount under any such agreement. For
purposes of the Agreement, the following terms have the following meanings:
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means (i) any
net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or
other tax governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Entity (a "Tax Authority")
responsible for the imposition of any such tax (domestic or foreign), (ii)
any liability for the payment of any amounts of the type described in (i)
as a result of being a member of an affiliated, consolidated, combined or
unitary group for any Taxable period and (iii) any liability for the
payment of any amounts of the type described in (i) or (ii) as a result of
any express or implied obligation to indemnify any other person. As used
herein, "Tax Return" shall mean any return, statement, report or form
(including, without limitation,) estimated Tax returns and reports,
withholding Tax returns and reports and information reports and returns
required to be filed with respect to Taxes.
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3.16 Employee Benefit Plans.
(a) Schedule 3.16 lists, with respect to DHI and any trade or business
(whether or not incorporated) which is treated as a single employer
with DHI (an "ERISA Affiliate"), (i) all material employee benefit
plans, (ii) each loan to a non-officer employee in excess of $10,000,
loans to officers and directors and any stock option, stock purchase,
phantom stock, stock appreciation right, supplemental retirement,
severance, sabbatical, medical, dental, vision care, disability,
employee relocation, cafeteria benefit or dependent care, life
insurance or accident insurance plans, programs or arrangements, (iii)
all bonus, pension, profit sharing, savings, deferred compensation or
incentive plans, programs or arrangements, (iv) other fringe or
employee benefit plans, programs or arrangements that apply to senior
management of DHI and that do not generally apply to all employees,
and (v) any current or former employment or executive compensation or
severance agreements, written or otherwise, as to which unsatisfied
obligations of DHI of greater than $10,000 remain for the benefit of,
or relating to, any present or former employee, consultant or director
of DHI (together, the "DHI Employee Plans").
(b) IMN has furnished to NGT a copy of each of the DHI Employee Plans and
related plan documents (including trust documents, insurance policies
or contracts, employee booklets, summary plan descriptions and other
authorizing documents, and, to the extent still in its possession, any
material employee communications relating thereto) and has, with
respect to each DHI Employee Plan which is subject to ERISA reporting
requirements. Any DHI Employee Plan intended to be qualified under the
Code has either obtained from the Internal Revenue Service a favorable
determination letter as to its qualified status under the Code,
including all amendments to the Code effected by the Tax Reform Act of
1986 and subsequent legislation, or has applied to the Internal
Revenue Service for such a determination letter prior to the
expiration of the requisite period under applicable Treasury
Regulations or Internal Revenue Service pronouncements in which to
apply for such determination letter and to make any amendments
necessary to obtain a favorable determination, or has been established
under a standardized prototype plan for which an Internal Revenue
Service opinion letter has been obtained by the plan sponsor and is
valid as to the adopting employer. DHI has also furnished NGT with the
most recent Internal Revenue Service determination or opinion letter
issued with respect to each such DHI Employee Plan, and nothing has
occurred since the issuance of each such letter which could reasonably
be expected to cause the loss of the tax-qualified status of any DHI
Employee Plan.
(c) Administration
(i) None of the DHI Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person;
(ii) there has been no "prohibited transaction," as such term is
defined the Code, with respect to any DHI Employee Plan, which
could reasonably be expected to have, in the aggregate, a
Material Adverse Effect;
(iii)each DHI Employee Plan has been administered in accordance with
its terms and in compliance with the requirements prescribed by
any and all statutes, rules and regulations, except as would not
have, in the aggregate, a Material Adverse Effect; and DHI and
any ERISA Affiliate have performed all material obligations
required to be performed by them under, are not in any material
respect in default under or violation of, and have no knowledge
of any material default or violation by any other party to, any
of the DHI Employee Plans;
(iv) neither DHI nor any ERISA Affiliate is subject to any liability
or penalty under with respect to any of the DHI Employee Plans;
(v) all material contributions required to be made by DHI or ERISA
Affiliate to any DHI Employee Plan have been made on or before
their due dates and a reasonable amount has been accrued for
contributions to each DHI Employee Plan for the current plan
years
(d) The consummation of the transactions contemplated by the Agreement
will not (i) entitle any current or former employee or other service
provider of DHI or any other ERISA Affiliate to severance benefits or
any other payment (including, without limitation, unemployment
compensation, golden parachute or bonus), except as expressly provided
in the Agreement, or (ii) accelerate the time of payment or vesting of
any such benefits, or increase the amount of compensation due any such
employee or service provider.
(e) There has been no amendment to, written interpretation or announcement
(whether or not written) by DHI or other ERISA Affiliate relating to,
or change in participation or coverage under, any DHI Employee Plan
which would materially increase the expense of maintaining such Plan
above the level of expense incurred with respect to that Plan for the
most recent fiscal year included in the DHI Financial Statements.
9
3.17 Employee Matters. To DHI's best knowledge, DHI is in compliance in all
material respects with all currently applicable laws and regulations
respecting employment, discrimination in employment, terms and conditions
of employment, wages, hours and occupational safety and health and
employment practices, and is not engaged in any unfair labor practice. To
DHI's best knowledge, there are no pending claims against DHI under any
workers compensation plan or policy or for long term disability. There are
no proceedings pending or, to the knowledge of DHI, threatened, between DHI
and its employees, which proceedings have or could reasonably be expected
to have a Material Adverse Effect on DHI. DHI is not a party to any
collective bargaining agreement or other labor unions contract nor does DHI
know of any activities or proceedings of any labor union or organize any
such employees. In addition, DHI has provided all employees, with all
relocation benefits, stock options, bonuses and incentives, and all other
compensation that such employee has earned up through the date of the
Agreement or that such employee was otherwise promised in their employment
agreements with DHI.
10
3.18 Interested Party Transactions. DHI is not indebted to any director,
officer, employee or agent of DHI (except for amounts due as normal
salaries and bonuses and in reimbursement of ordinary expenses), and no
such person is indebted to DHI, except as disclosed in Schedule 3.18.
3.19 Insurance. DHI has policies of insurance and bonds of the type and in
amounts customarily carried by business entities similar to those of DHI.
There is no material claim pending under any of such policies or bonds as
to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under
all such policies and bonds have been paid and DHI is otherwise in
compliance with the terms of such policies and bonds. DHI has no knowledge
of any threatened termination of, or material premium increase with respect
to, any of such policies.
3.20 Compliance With Laws. To DHI's best knowledge, DHI has complied with, is
not in violation of, and have not received any notices of violation with
respect to, any federal, state, local or foreign statute, law or regulation
with respect to the conduct of its business, or the ownership or operation
of its business, except for such violations or failures to comply as could
not be reasonably expected to have a Material Adverse Effect on DHI.
3.21 Minute Books. The minute books of DHI made available to NGT contain a
complete and accurate summary of all meetings of directors and shareholders
or actions by written consent since the time of incorporation of DHI
through the date of the Agreement, and reflect all transactions referred to
in such minutes accurately in all material respects.
3.22 Complete Copies of Materials. IMN has delivered or made available true and
complete copies of each agreement not in the ordinary course of business to
which DHI is a party as listed in Schedule 3.22 hereto.
3.23 Brokers' and Finders' Fees. IMN has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with the Agreement or any transaction contemplated hereby.
3.24 Board Approval. The Board of Directors of IMN has unanimously approved the
Agreement.
3.25 Representations Complete. None of the representations or warranties made by
IMN, or schedules, exhibits or certificates furnished by IMN pursuant to
the Agreement or any written statement furnished to NGT pursuant hereto or
in connection with the transactions contemplated hereby, when all such
documents are read together in their entirety, contains or will contain at
the Time of Closing any untrue statement of a material fact, or omits or
will omit at the Time of Closing to state any material fact necessary in
order to make the statements contained herein or therein, in the light of
the circumstances under which made, not misleading; provided, however, that
for purposes of this representation, any document attached hereto as a
"Superseding Document" (even if not attached hereto) that provides
information inconsistent with or in addition to any other written statement
furnished to NGT in connection with the transaction contemplated hereby,
shall be deemed to supersede any other document or written statement
furnished to NGT with respect to such inconsistent or additional
information.
11
3.26 Authorization. All acts and conditions required by law on the part of the
IMN to authorize the execution and delivery of the Agreement by IMN and the
transactions contemplated herein and the performance of all obligations of
IMN hereunder have been duly performed and obtained, and the Agreement
constitutes a valid and legally binding obligation of the IMN, enforceable
in accordance with its terms, subject, as to the enforcement of remedies,
to applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting creditors' rights generally, to general equitable principles
and to limitations on the enforceability of indemnification provisions as
applied to certain types of claims arising hereafter, if any, under the
federal securities laws.
3.27 Compliance With Other Instruments. The execution, delivery and performance
of the Agreement and the consummation of the transactions contemplated
hereby will not result in any violation or default of any provision of any
instrument, judgment, order, writ, decree or contract to which IMN is a
party or by which it is bound, or require any consent under or be in
conflict with or constitute, with or without the passage of time and giving
of notice, either a violation or default under any such provision.
3.28 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, regional, state or local governmental authority of the United
States on the part of IMN is required in connection with the consummation
of the transactions contemplated by the Agreement, except for filings, if
any, required pursuant to applicable federal and state securities laws,
which filings will be made within the required statutory period.
3.29 Litigation. There is no action, suit, proceeding, or investigation pending
or, to IMN's knowledge, currently threatened against IMN or DHI which
questions the validity of the Agreement or the right of IMN to enter into
the Agreement or to consummate the transactions contemplated hereby.
3.30 Title to Stock. IMN has good title to the capital stock (including the DHI
Capital Stock and the capital stock which constitutes the Additional
Assets) to be transferred by IMN to NGT under the Agreement, free and clear
of any lien, pledge, security interest or other encumbrance (other than
restrictions on transfer arising under applicable securities laws) and,
upon delivery of the shares of capital stock at the Closing as provided for
in the Agreement, and assuming NGT is acquiring the capital stock in good
faith and without notice of any adverse claim, NGT will acquire good title
thereto, free and clear of any lien, pledge, security interest or
encumbrance (other than restrictions on transfer arising under applicable
securities laws).
3.31 Disclosure. IMN has fully provided NGT and NGT's legal counsel with all the
information in IMN's possession that NGT has requested in determining
whether to purchase the capital stock offered by IMN. Neither Article 3 of
the Agreement nor any schedule attached to the Agreement nor any
certificate delivered pursuant hereto that, in any such case, has been or
will be provided by or on behalf of IMN contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements made herein or therein not misleading in light of the
circumstances under which they were made.
3.32 Delivery of Documents. IMN has delivered or will deliver to NGT at or prior
to the Closing all Schedules and documents required to be delivered under
the Agreement.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF NGT
NGT hereby represents and warrants to IMN as follows:
4.1 Organization, Standing and Power. NGT is a corporation duly organized,
validly existing and in good standing under the laws of Delaware, its
jurisdiction of organization. NGT has the corporate power to own its
properties and to carry on its business as now being conducted and as
proposed to be conducted and is duly qualified to do business and is in
good standing in each jurisdiction in which the failure to be so qualified
and in good standing would have a Material Adverse Effect on NGT. NGT has
delivered a true and correct copy of its certificate of incorporation and
bylaws or other charter documents, as applicable, each as amended to date,
to IMN. NGT is not in violation of any of the provisions of its certificate
of incorporation or bylaws or equivalent organizational documents. Except
as disclosed in the NGT SEC Documents (as defined in Section 4.5), NGT does
not directly or indirectly own any equity or similar interest in, or any
interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
4.2 Capital Structure. The authorized capital stock of NGT consists of
12,000,000 shares of common stock, $.001 par value per share, of which
there were issued and outstanding as of the close of business on March 31,
1997, 4,257,199 shares of NGT Common Stock. NGT shall, prior to the Time of
Closing, amend its certificate of incorporation to authorize 45,000,000
shares of common stock, $.001 par value per share and 5,000,000 shares of
"blank check" preferred stock, $.001 par value per share. Prior to the Time
of Closing, NGT shall effectuate a reverse split of its issued and
outstanding shares of common stock in the ration of 4:1. All outstanding
shares of NGT Common Stock have been duly authorized, validly issued, fully
paid and are nonassessable and free of any liens or encumbrances other than
any liens or encumbrances created by or imposed upon the holders thereof,
and are not subject to preemptive rights or rights of first refusal created
by statute, the certificate of incorporation or bylaws of NGT or any
agreement to which NGT is a party or by which it is bound. The shares of
NGT Common Stock to be issued pursuant to the Agreement will be duly
authorized, validly issued, fully paid, and nonassessable. There are no
options, warrants, calls, rights, commitments or agreements of any
character to which NGT is a party or by which it is bound obligating NGT to
issue, deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any shares of NGT Common Stock or
obligating NGT to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement.
4.3 Authority. NGT has all requisite corporate power and authority to enter
into the Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of the Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of NGT. The Agreement has been duly executed
and delivered by NGT and constitutes the valid and binding obligations of
NGT. The execution and delivery of the Agreement do not, and the
consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any material obligation or loss of a
material benefit under (i) any provision of the certificate of
incorporation or bylaws of NGT, as amended, or (ii) any material mortgage,
indenture, lease, contract or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to NGT or its properties or
assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to NGT in connection with the execution and delivery of the
Agreement by NGT or the consummation by NGT of the transactions
contemplated hereby.
13
4.4 Current Status of NGT. NGT is a debt-free company currently trading on the
NASD Electronic Bulletin Board. It is current in all its federal filings
necessary to maintain its status as a fully reporting publicly traded
company and will be at the Time of Closing.
4.5 SEC Documents; Financial Statements. NGT has made available to IMN a true
and complete copy of each statement, report, and other filing filed with
the SEC by NGT since September 30, 1995, and, prior to the Time of Closing,
NGT will have furnished IMN with true and complete copies of any additional
documents filed with the SEC by NGT prior to the Time of Closing
(collectively, the "NGT SEC Documents"). In addition, NGT has made
available to IMN all exhibits to the NGT SEC Documents filed prior to the
date hereof, and will promptly make available to IMN all exhibits to any
additional NGT SEC Documents filed prior to the Time of Closing. All
documents required to be filed as exhibits to the NGT SEC Documents have
been so filed, and all material contracts so filed as exhibits are in full
force and effect, except those which have expired in accordance with their
terms, and NGT is not in default thereunder. As of their respective filing
dates, the NGT SEC Documents complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as no documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were
made, not misleading, except to the extent corrected by a subsequently
filed NGT SEC Document prior to the date hereof. The financial statements
of NGT, including the notes thereto, included in the NGT SEC Documents (the
"NGT Financial Statements") were complete and correct in all material
respects as of their respective dates, complied as to form in all material
respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto as of their
respective dates, and have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent throughout the
periods indicated and consistent with each other (except as may be
indicated in the notes thereto or, in the case of unaudited statements
included in Quarterly Reports on Form 10-QSB, as permitted by Form 10-QSB
of the SEC). The NGT Financial Statements fairly present the consolidated
financial condition and operating results of NGT at the dates and during
the periods indicated therein (subject, in the case of unaudited
statements, to normal, recurring year-end adjustments). There has been no
change in NGT accounting policies except as described in the notes to the
NGT Financial Statements.
4.6 Litigation. There is no private or governmental action, suit, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or, to the knowledge of NGT, threatened
against NGT or any of their respective properties or any of their
respective officers or directors (in their capacities as such). There is no
judgment, decree or order against NGT or, to the knowledge of NGT, any of
their respective directors or officers (in their capacities as such) that
could prevent, enjoin, or materially alter or delay any of the transactions
contemplated by the Agreement.
14
4.7 Governmental Authorization. NGT has obtained each federal, state, county,
local or foreign governmental consent, license, permit, grant, or other
authorization of a Governmental Entity (i) pursuant to which NGT currently
operates or holds any interest in any of its properties or (ii) that is
required for the operation of NGT's business or the holding of any such
interest [(i) and (ii) herein collectively called "NGT Authorizations"],
and all of such NGT Authorizations are in full force and effect, except
where the failure to obtain or have any of such NGT Authorizations could
not reasonably be expected to have a Material Adverse Effect on NGT.
4.8 Compliance With Laws. To NGT's knowledge, NGT has complied with, is not in
violation of, and has not received any notices of violation with respect to
any federal, state, local or foreign statute, law or regulation with
respect to the conduct of its business, or the ownership or operation of
its business, except for such violations or failures to comply as could not
be reasonably expected to have a Material Adverse Effect on NGT.
4.9 Brokers' and Finders' Fees. NGT has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with the Agreement or any transaction contemplated hereby.
4.10 Board Approval. The Board of Directors of NGT has unanimously approved the
Agreement.
4.11 Representations Complete. None of the representations or warranties made by
NGT herein or certificate furnished by NGT pursuant to the Agreement, or
the NGT SEC Documents, or any written statement furnished to IMN pursuant
hereto or in connection with the transactions contemplated hereby, when all
such documents are read together in their entirety, contains or will
contain at the Time of Closing any untrue statement of a material fact, or
omits or will omit at the Time of Closing to state any material fact
necessary in order to make the statements contained herein or therein, in
the light of the circumstances under which made, not misleading.
4.12 Delivery of Documents. NGT has delivered or will deliver to IMN at or prior
to the Closing all Schedules and documents required to be delivered under
the Agreement.
4.13 Absence of Certain Changes. Since December 31, 1996, except as set forth or
referred to on Schedule 4.13 or in some other disclosure schedule hereto,
NGT has conducted its business in the ordinary course consistent with past
practice and there has not occurred: (i) any change, event or condition
(whether or not covered by insurance) that has resulted in, or might
reasonably be expected to result in, a Material Adverse Effect to NGT; (ii)
any acquisition, sale or transfer of any material asset of NGT other than
in the ordinary course of business and consistent with past practice; (iii)
any material change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by NGT; (iv) any
declaration, setting aside, or payment of a dividend or other distribution
with respect to the shares of NGT, or any direct or indirect redemption,
purchase or other acquisition by NGT of any of an shares of NGT Capital
Stock; (v) any material contract entered into by NGT, other than in the
ordinary course of business and as provided to IMN or any material
amendment or termination of, or default under, any material contract to
which NGT is a party or by which it is bound; (vi) any material amendment
or change to the certificate of incorporation or bylaws of NGT; (vii) any
increase in or modification of the compensation or benefits payable or to
become payable by NGT to any of its directors or employees other than in
the ordinary course of business and consistent with past practice or (viii)
any negotiation or agreement by NGT to do any of the things described in
the preceding clauses (i) through (vii) (other than negotiations with IMN
and its representatives regarding the transactions contemplated by this
Agreement).
15
4.14 Absence of Undisclosed Liabilities. NGT has no material obligations or
liabilities of any nature (matured or unmatured, fixed or contingent) other
than (i) those set forth or adequately provided for in the NGT Financial
Statements, (ii) those incurred in the ordinary course of business and not
required to be set forth in the NGT Financial Statements under generally
accepted accounting principles, (iii) those incurred in the ordinary course
of business since the NGT Financial Statements and consistent with past
practice; and (iv) those incurred in connection with the execution of the
Agreement. All undisclosed liabilities are disclosed in Schedule 4.14.
4.15 Taxes. NGT has timely filed all Tax Returns required to be filed by it and
has paid all Taxes shown thereon to be due. No further taxes are due.
4.16 Employee Benefit Plans. NGT has no employee benefit plans.
4.17 Employee Matters. NGT has no employees and has had no employees for in
excess of six years.
4.18 Interested Party Transactions. NGT is not indebted to any director,
officer, employee or agent of NGT (except for amounts due as normal
salaries and bonuses and in reimbursement of ordinary expenses), and no
such person is indebted to NGT.
4.19 Minute Books. The minute books of NGT made available to IMN contain a
complete and accurate summary of all meetings of directors and shareholders
or actions by written consent since the time of incorporation of NGT
through the date of the Agreement, and reflect all transactions referred to
in such minutes accurately in all material respects.
4.20 Complete Copies of Materials. NGT is not a party to any agreement not in
the ordinary course of business.
4.21 Authorization. All acts and conditions required by law on the part of the
NGT to authorize the execution and delivery of the Agreement by NGT and the
transactions contemplated herein and the performance of all obligations of
NGT hereunder have been duly performed and obtained, and the Agreement
constitutes a valid and legally binding obligation of the IMN, enforceable
in accordance with its terms, subject, as to the enforcement of remedies,
to applicable bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting creditors' rights generally, to general equitable principles
and to limitations on the enforceability of indemnification provisions as
applied to certain types of claims arising hereafter, if any, under the
federal securities laws.
4.22 Compliance With Other Instruments. The execution, delivery and performance
of the Agreement and the consummation of the transactions contemplated
hereby will not result in any violation or default of any provision of any
instrument, judgment, order, writ, decree or contract to which NGT is a
party or by which it is bound, or require any consent under or be in
conflict with or constitute, with or without the passage of time and giving
of notice, either a violation or default under any such provision.
16
4.23 Title to Stock. NGT has good title to the capital stock to be transferred
pursuant to the Agreement, free and clear of any lien, pledge, security
interest or other encumbrance (other than restrictions on transfer arising
under applicable securities laws) and, upon delivery of the shares of
capital stock at the Closing as provided for in the Agreement, IMN will
acquire good title thereto, free and clear of any lien, pledge, security
interest or encumbrance (other than restrictions on transfer arising under
applicable securities laws).
4.24 Disclosure. NGT has fully provided IMN and IMN's legal counsel with all
the information in NGT's possession that has requested in determining
whether to purchase the capital stock offered by IMN. Neither Article 4
of the Agreement nor any Schedule attached to the Agreement nor any
certificate delivered pursuant hereto that, in any such case, has been
or will be provided by or on behalf of NGT contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements made herein or therein not misleading
in light of the circumstances under which they were made.
ARTICLE 5
COVENANTS OF NGT AND IMN
5.1 Conduct of Business of NGT. During the period from the date of the
Agreement and continuing until the earlier of the termination of the
Agreement or the Time of Closing, NGT will (except to the extent expressly
contemplated by the Agreement or as consented to in writing by IMN), carry
on its business in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted, to pay debts and Taxes when due
subject and to use all reasonable efforts to preserve intact its present
business unimpaired at the Time of Closing. NGT agrees to promptly notify
IMN of any event or occurrence not in the ordinary course of its business,
and of any event which could have a Material Adverse Effect on NGT and any
material change in its capitalization. Without limiting the foregoing,
except as expressly contemplated by the Agreement, NGT shall not do, cause
or permit any of the following, without the prior written consent of IMN:
(a) Charter Documents. Cause or permit any amendments to its certificate
of incorporation or bylaws, except as expressly contemplated by the
Agreement;
(b) Dividends; Changes in Capital Stock. Except as provided in section
4.2, declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of NGT Capital Stock,
or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of NGT Capital Stock, or repurchase
or otherwise acquire, directly or indirectly, any shares of its
capital stock except from former employees, directors and consultants
in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to it;
17
(c) Material Contracts. Enter into any material contract or commitment;
(d) Issuance of Securities. Issue, deliver or sell or authorize or propose
the issuance, delivery or sale of, or purchase or propose the purchase
of, any shares of its capital stock or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other
agreements or commitments of any character obligating it to issue any
such shares or other convertible securities;
(e) Dispositions. Sell, lease, license or otherwise dispose of or encumber
any of its properties or assets which are material, individually or in
the aggregate, to its business, taken as a whole, except in the
ordinary course of business consistent with past practice;
(f) Indebtedness. Incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(g) Leases. Enter into any operating lease;
(h) Capital Expenditures. Make any capital expenditures, capital additions
or capital improvements except in the ordinary course of business and
consistent with past practice;
(i) Employee Benefit Plans; New Hires; Pay Increases. Adopt any employee
benefit or stock purchase or option plan, or hire any employee;
(j) Severance Arrangements. Grant any severance or termination pay (i) to
any director or officer or (ii) to any other employee;
(k) Lawsuits. Commence a lawsuit or arbitration proceeding, unless it is
related to a breach of the Agreement;
(l) Acquisitions. Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets, except the
acquisition contemplated by the Agreement;
(m) Taxes. Other than in the ordinary course of business, make or change
any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, file any material Tax Return or
any amendment to a material Tax Return, enter into any closing
agreement, settle any material claim or assessment in respect of
Taxes, or consent to any extension or waiver of the limitation period
applicable to any material claim or assessment in respect of Taxes;
(n) Other. Take, or agree in writing or otherwise to take, any of the
actions described in this Article 5 above, or any action which would
cause a material breach of its representations or warranties contained
in the Agreement or prevent it from materially performing or cause it
not to materially perform its covenants hereunder; or
(o) Payment of Obligations. Pay, discharge or satisfy in an amount in
excess of $10,000 in any one case or $100,000 in the aggregate, any
claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise) arising other than in the
ordinary course of business, other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in the DHI
Financial Statements.
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5.2 Conduct of Business of DHI. During the period from the date of the
Agreement and continuing until the earlier of the termination of the
Agreement or the Time of Closing, except as expressly contemplated by the
Agreement, IMN and DHI shall not do, cause or permit any of the following,
or allow, cause or permit IMN's subsidiary, DHI, to do, cause or permit any
of the following, without the prior written consent of NGT:
(a) Material Contracts. Enter into any material contract or commitment, or
violate, amend or otherwise modify or waive any of the terms of any of
its material contracts, other than in the ordinary course of business
consistent with past practice;
(b) Issuance of Securities. Issue, deliver or sell or authorize or propose
the issuance, delivery or sale of, or purchase or propose the purchase
of, any shares of its capital stock or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other
agreements or commitments of any character obligating it to issue any
such shares or other convertible securities.
(c) Intellectual Property. Transfer to any person or entity any rights to
its Intellectual Property other than in the ordinary course of
business consistent with past practice;
(d) Exclusive Rights. Enter into or amend any material agreements pursuant
to which any other party is granted exclusive marketing or other
exclusive rights of any type or scope with respect to any of DHI's
services.
(e) Dispositions. Sell, lease, license or otherwise dispose of or encumber
any of its properties or assets which are material, individually or in
the aggregate, to its and its parent's/subsidiaries' business, taken
as a whole, except in the ordinary course of business consistent with
past practice;
(f) Indebtedness. Incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(g) Leases. Enter into any operating lease in excess of $10,000 per annum;
(h) Payment of Obligations. Pay, discharge or satisfy in an amount in
excess of $10,000 in any one case or $100,000 in the aggregate, any
claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise) arising other than in the
ordinary course of business, other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in the DHI
Financial Statements;
(i) Capital Expenditures. Make any capital expenditures, capital additions
or capital improvements except in the ordinary course of business and
consistent with past practice;
(j) Insurance. Materially reduce the amount of any material insurance
coverage provided by existing insurance policies;
(k) Termination or Waiver. Terminate or waive any right of substantial
value, other than in the ordinary course of business;
(l) Employee Benefit Plans; New Hires; Pay Increases. Adopt or amend any
employee benefit or stock purchase or option plan, or hire any new
officer level employee, or increase the salaries or wage rates of its
employees except in the ordinary course of business in accordance with
its standard past practice;
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(m) Severance Arrangements. Grant any severance or termination pay (i) to
any director or officer or (ii) to any other employee except (A)
payments made pursuant to written agreements outstanding on the date
hereof or (B) grants which are made in the ordinary course of business
in accordance with its standard past practice;
(n) Lawsuits. Commence a lawsuit other than (i) for the routine collection
of bills, (ii) in such cases where it in good faith determines that
failure to commence suit would result in the material impairment of a
valuable aspect of its business, provided that it consults with NGT
prior to the filing of such a suit, or (iii) for a breach of the
Agreement;
(o) Acquisitions. Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to its and its
parent's/subsidiaries' business, taken as a whole;
(p) Taxes. Other than in the ordinary course of business, make or change
any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, file any material Tax Return or
any amendment to a material Tax Return, enter into any closing
agreement, settle any material claim or assessment in respect of
Taxes, or consent to any extension or waiver of the limitation period
applicable to any material claim or assessment in respect of Taxes;
(q) Notices. DHI shall give all notices and other information required to
be given to the employees of DHI any collective bargaining unit
representing any group of employees of DHI, the National Labor
Relations Act, the Internal Revenue Code, the Consolidated Omnibus
Budget Reconciliation Act, and other applicable law in connection with
the transactions provided for in the Agreement;
(r) Revaluation. Revalue any of its assets, including without limitation
writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; or
(s) Other. Take or agree in writing or otherwise to take, any of the
actions described in Sections 5.2(a) through (r) above, or any action
which would cause a material breach of its representations or
warranties contained in this agreement or prevent it from materially
performing or cause it not to materially perform its covenants
hereunder.
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ARTICLE 6
CONDITIONS TO OBLIGATIONS OF NGT AND IMN
The obligations of NGT on the one hand, and IMN, on the other hand, to
consummate the transactions contemplated hereby are subject to satisfaction of
the following conditions on or prior to the Closing:
6.1 Consents and Approvals. The Parties hereto shall have obtained all consents
and approvals of third parties and Governmental Authorities, if any,
required to consummate the transactions contemplated by the Agreement.
6.2 Representations, Warranties and Agreements. All representations and
warranties made herein by NGT and IMN, shall be true, accurate and correct
in all respects as of the date made and as of the Closing. NGT and IMN,
shall have performed all obligations and agreements undertaken by each of
them herein to be performed at or prior to the Closing.
6.3 Certificate. NGT shall have received from IMN, and IMN shall have received
from NGT, a certificate, dated as of the Closing and executed by the
President and Secretary of NGT or IMN, as the case may be, to the effect
that the conditions set forth in Sections 6.1 and 6.2 respectively, shall
have been satisfied.
6.4 Opinion of Counsel of NGT. IMN shall have received at the Closing the
opinion of ▇▇▇▇ ▇▇▇▇▇▇▇, Esq., counsel to NGT, in the form set forth in
Schedule 2.3(c).
6.5 Opinion of Counsel of IMN. NGT shall have received at the Closing the
opinion of ▇▇▇▇ & ▇▇▇▇▇▇▇, Esqs., counsel to IMN, in the form set forth in
Schedule 2.3(b).
6.6 No Material Adverse Changes. There shall not have occurred any material
adverse change in the financial condition, properties, assets (including
intangible assets), liabilities, business, operations or results of
operations of NGT, IMN, DHI, if any, taken as a whole.
6.7 No Actions. Consummation of the transactions contemplated by the Agreement
shall not violate any order, decree or judgment of any court or
governmental body having jurisdiction.
6.8 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be in form and substance
reasonably satisfactory to counsel for each of the Parties hereto, and each
such Party (or its counsel) shall have received all such counterpart
originals or certified or other copies of such documents as it may
reasonably request.
6.9 Accuracy of Documents and Information. The copies of all material
instruments, agreements, other documents and written information delivered
to any Party by any other Party or its representatives shall be complete
and correct in all material respects as of the Closing.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification. IMN will indemnify and hold harmless NGT and its
respective officers, directors, agents and employees, and each person, if
any, who controls or may control NGT within the meaning of the Securities
Act from and against any and all losses, costs, damages, liabilities and
expenses arising from claims, demands, actions, causes of action,
including, without limitation, reasonable legal fees, net of any recoveries
under existing insurance policies, tax benefits received by NGT or its
affiliates as a result of such damages, indemnities from third parties or
in the case of third party claims, by any amount actually recovered by NGT
or its affiliates pursuant to counterclaims made by any of them directly
relating to the facts giving rise to such third party claims (collectively,
"Damages") arising out of any misrepresentation or breach of or default in
connection with any of the representations, warranties, covenants and
agreements given or made by IMN in the Agreement, or any exhibit or
schedule to the Agreement. NGT and its affiliates shall act in good faith
and in a commercially reasonable manner to mitigate any Damages they may
suffer.
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ARTICLE 8
TERMINATION
8.1 Termination by Mutual Consent. At any time prior to the Closing, the
Agreement may be terminated by written consent of NGT and IMN.
8.2 Termination by NGT or IMN.
(a) NGT may terminate the Agreement at any time prior to the Closing by
delivery of written notice to IMN if: (1) IMN has breached or violated
any covenant or agreement contained in the Agreement in any material
respect and, if such breach or violation is curable, has failed to
cure such violation within ten (10) days of receiving written notice
thereof; (2) any representation or warranty made by IMN relating to
DHI or otherwise is false or inaccurate in any material respect or
there is any material misrepresentation or omission by IMN; or (3) the
Closing has not occurred by May 16, 1997.
(b) IMN may terminate the Agreement at any time prior to the Closing by
delivery of written notice to NGT if: (1) NGT has breached or violated
any covenant or agreement contained in the Agreement in any material
respect and, if such breach or violation is curable, has failed to
cure such violations within ten (10) days of receiving written notice
thereof; (2) any representation or warranty made by NGT is false or
inaccurate in any material respect or there is any material
misrepresentation or omission by NGT; or (3) the Closing has not
occurred by May 16, 1997.
8.3 Effect of Termination. In the event of termination as provided above, all
Parties hereto shall bear their own costs associated with the Agreement and
all transactions mentioned herein and there shall be no obligation on the
part of any Party's officers, directors or shareholders; provided, however,
that (a) Sections 9.5 and 9.9 shall survive such termination and continue
in full force and effect and (b) nothing herein will relieve any Party from
liability for any breach of the Agreement prior to such termination.
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ARTICLE 9
MISCELLANEOUS
9.1 Notices. Any notice given hereunder shall be in writing and shall be deemed
effective upon the earlier of personal delivery (including personal
delivery by facsimile) or the third day after mailing by certified or
registered mail, postage prepaid, as follows:
(a) If to NGT:
NGT Enterprises Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(b) If to IMN :
IMN Equities, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or to such other address as any Party may have furnished in writing to
the other Party in the manner provided above.
9.2 Entire Agreement; Modifications; Waiver. The Agreement and the documents
and instruments and other agreements specifically referred to herein
constitutes the final, exclusive and complete understanding of the Parties
with respect to the subject matter hereof and supersedes any and all prior
agreements, understandings and discussions with respect thereto. No
variation or modification of the Agreement and no waiver of any provision
or condition hereof, or granting of any consent contemplated hereby, shall
be valid unless in writing and signed by the Party against whom enforcement
of any such variation, modification, waiver or consent is sought. The
rights and remedies available to each Party pursuant to the Agreement and
all exhibits hereunder shall be cumulative.
9.3 Captions. The captions in the Agreement are for convenience only and shall
not be considered a part of or affect the construction or interpretation of
any provision of the Agreement.
9.4 Counterparts. The Agreement may be executed in any number of counterparts,
each of which when so executed shall constitute an original copy hereof,
but all of which together shall constitute one agreement.
9.5 Publicity. Except for disclosure (if any) required by any law to which any
Party is subject, the timing and content of any announcements, press
releases and public statements to be made prior to the Closing concerning
the transactions contemplated hereby shall be determined solely by NGT in
consultation with IMN.
9.6 Successors and Assigns. No Party may, without the prior express written
consent of each other Party, assign the Agreement in whole or in part. The
Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the Parties hereto.
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9.7 Governing Law. The Agreement shall be governed by and construed in
accordance with the laws of the State of New York as applied to contracts
between New York residents made and to be performed entirely within the
State of New York.
9.8 Further Assurances. At the request of any of the Parties, and without
further consideration, the other Parties agree to execute such documents
and instruments and to do such further acts as may be necessary or
desirable to effectuate the transactions contemplated hereby, required by
law, statute, rule or regulation, all confidential information
9.9 Confidentiality and Nondisclosure Agreements. Except as which shall have
been furnished or disclosed by one Party to the other pursuant to the
Agreement, including without limitation, business, financial and customer
development plans, forecasts, strategies and information, shall be held in
confidence pursuant hereto and shall not be disclosed to any person other
than their respective employees, directors, legal counsel, accountants or
financial advisors, with a need to have access to such information, and
shall not make any use whatsoever of such information except to evaluate
such information internally. The confidentiality provisions set forth
herein shall survive until two years from the date hereof, unless the Party
desiring to disclose the information can document that (i) such information
is (through no improper action or inaction by such Party or any affiliate,
agent, consultant or employee) generally available to the public, or (ii)
was in its possession or known by it prior to receipt from the other Party,
or (iii) was rightfully disclosed to it by a third party, or (iv) was
independently developed by employees of such Party who have had no access
to such information.
9.10 Transfer of DHI Books and Assets. IMN agrees, upon the request of NGT to
do, execute, acknowledge and deliver or to cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, power of attorney and assurances as may be required
for the better assigning, transferring, conveying and confirming to NGT, or
to its successors and assigns, or for the aiding, assisting, collecting and
reducing to possession of any or all of the books and records of DHI.
9.11 Arbitration. Other than as set forth in Article 8.1, any controversy
between the Parties hereto involving the construction or application of any
terms, covenants or conditions of the Agreement, or any claims arising out
of or relating to the Agreement or the breach thereof, termination thereof
will be submitted to and settled by final and binding arbitration in New
York City, New York, in accordance with the rules of the American
Arbitration Association then in effect, and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. In the event of any arbitration under the Agreement, the
prevailing Party shall be entitled to recover from the losing Party
reasonable expenses, attorneys' fees, and costs incurred therein or in the
enforcement or collection of any judgment or award rendered therein. The
"prevailing party" means the Party determined by the arbitrator to have
most nearly prevailed, even if such Party did not prevail in all matters,
not necessarily the one in whose favor a judgment is rendered.
9.12 Schedules. All of the exhibits referred to in the Agreement are hereby
incorporated in the Agreement by reference and shall be deemed and
construed to be a part of the Agreement for all purposes.
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9.13 Severability. The invalidity or unenforceability of any one or more
phrases, sentences, clauses or provisions of the Agreement shall not affect
the validity or enforceabilty of the remaining portions of the Agreement or
any part thereof.
IN WITNESS WHEREOF, each Party has executed the Agreement as of the date
first above written.
NGT ENTERPRISES, INC.
By: s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
President
IMN EQUITIES INC.
By: s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
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