EXHIBIT 2 (A)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 17, 2000 (this "Agreement"), by
and among Digital Video Display Technologies, Inc. (DVDT) a Nevada corporation
(the "Purchaser") and E-Media(3), Inc. a Delaware corporation ( the "Merging
Corporation"). The sole shareholder of the Merging Corporation, R. A. Moss
listed on Schedule 3.02, hereto such shareholder being referred to herein
individually as "Seller".
WITNESSETH:
WHEREAS, the Boards of Directors of each of the Purchaser and the Merging
Corporation have determined that it is in the best interests of such respective
corporations to cause the Merging Corporation to merge with and into the
Purchaser, upon the terms and provisions and subject to the conditions
hereinafter set forth; and
WHEREAS, the Purchaser, and the Seller, being the owner of all of the issued and
outstanding shares of capital stock of the Merging Corporation, have agreed to
vote in favor of the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual representations,
warranties, covenants and agreements herein contained, the parties agree as
follows.
ARTICLE I
THE MERGER
SECTION 1.01
The Merger.
Subject to the terms and conditions set forth in this Agreement, and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL") and the laws of the State of Nevada, at the Effective Time (as defined
in Section 1.03 below), the Merging Corporation shall be merged with and into
the Purchaser. Upon the Effective Time, the separate corporate existence of the
Merging Corporation shall cease, and the Purchaser shall continue as the
Surviving Corporation of the Merger (the "Surviving Corporation") and shall
continue under the name Digital Video Display Technologies, Inc. or DVDT.
SECTION 1.02
Time and Place of Closing.
Unless this Agreement shall have been terminated pursuant to Section 9.01 below
and subject to the satisfaction of waiver of the conditions set forth in Article
VII, the closing of the Merger (the "Closing") will take place as promptly as
practicable (and in any event within five (5) business days) at 10:00am local
time, or at such other time, place and/or date as to which the parties shall
agree.
SECTION 1.03
Effective Time of the Merger
As soon as practicable after the satisfaction or waiver of the conditions set
forth in Article VII, the parties shall cause the Merger to be consummated by
filing (I) a properly executed certificate of merger in the form annexed hereto
as Exhibit 1.03(a) with the Secretary of State of Delaware, as provided in the
DGCL, and (ii) a properly executed certificate of merger in the form annexed
hereto as Exhibit 1.03(b) with the State Corporation of Nevada as soon as
practicable on or after the Closing Date. The Merger shall become effective upon
the later of the filing of the certificate of merger by the Secretary of State
of the State of Nevada or at such later time thereafter as is provided in such
certificates of merger (the "Effective Time").
SECTION 1.04
Effects of the Merger
The Merger shall have the effects provided by applicable law, including (without
limitation) the provisions of the DGCL and the laws of the State of Nevada.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the properties, rights, privileges, immunities, powers and
franchises of the Merging Corporation and the Purchaser shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Merging
Corporation and the Purchaser shall become the debts, liabilities and duties of
the Surviving Corporation.
SECTION 1.05
Directors and Officers of the Surviving Corporation
(a) From and after the Effective Time the Board of Directors of the Surviving
Corporation shall(a) be set at five members and (b) consist of the follow-
ing individuals;
Marilyn G. Haft
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Lee Edmondson
R. A. Moss
Keith Hawkins
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Such individuals shall serve as directors until the successors of such directors
shall have been duly elected or appointed or until their death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-laws. In the event of the death, resignation or removal of
any of such individuals, the Purchaser shall be entitled to designate the
successors for the directorships held by Lee Edmondson and Marilyn G. Haft and,
for so long as R. A. Moss and Keith Hawkins are employed by the Surviving
Corporation, they each shall be entitled to designate the successor for the
directorship held by each of them. In the event that Moss or Hawkins is no
longer employed by the Surviving Corporation, the Purchaser shall be entitled to
designate the successors to Moss and/or Hawkins. The directors of the Merging
Corporation immediately preceding the Merger shall be, and hereby are, removed
as directors of the Merging Corporation at the Effective Time.
(b) From and after the Effective Time the following persons shall be, and
hereby are, elected as the officers of the Surviving Corporation, with
corresponding positions:
Officer Title
Chairman of the Board
President
R. A. Moss Chief Operating Officer
Marilyn G Haft Chief Financial Officer, Secretary and General Counsel
Such individuals shall serve as officers in the capacity as indicated until the
successors of such officers shall have been duly elected or appointed or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-laws. The officers of the
Merging Corporation immediately preceding the Merger shall be, and hereby are,
removed as officers of the Merging Corporation at the Effective Time.
SECTION 1.06
Certificate of Incorporation and By-Laws.
(a) At the Effective Time, the Certificate of Incorporation of the Purchaser as
in effect immediately prior to the Effective Time shall be the Certificate
of Incorporation of the Surviving Corporation, which shall have been
amended and restated in substantially the same form as set forth in Exhibit
1.06(a) hereto, and shall continue as such until thereafter duly amended in
accordance with applicable law.
(b) The By-Laws of the Purchaser, as in effect at the Effective Time, shall be
the By-Laws of the Surviving Corporation and shall continue as such until
thereafter duly amended as provided by applicable law, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.07
Conversion of Capital Stock
As of the Effective Time, by virtue of the Merger and without any action on the
part of the holders of shares of common stock, no par value, of the Merging
Corporation (the "Merging Corporation Common Stock"), or the holders of the
shares of the common stock, par value $.001 per share, of the Purchaser (the
"Purchaser Common Stock");
(a) Common Stock of Purchaser. Each share of Purchaser Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted into
one validly issued, fully paid and nonassessable share of common stock, par
value $.001 per share, of the Surviving Corporation, which shall be all of
the issued and outstanding capital stock of the Surviving Corporation.
(b) Conversion of Merging Corporation Common Stock. All shares of the Merging
Corporation Common Stock which are issued and outstanding immediately prior
to the Merger shall be converted into the right to receive that number of
shares of common stock, par value $.001 per share (the Purchaser Common
Stock"), of the
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Purchaser which, on the Closing Date, has an aggregate market value of
$_______ (the aggregate number of such shares of Purchaser Common Stock
being referred to herein as the "Aggregate Merger Consideration"),
provided, however, that in no event shall the of shares of Purchasers
Common Stock issuable pursuant hereto exceed 20,000,000 (twenty million).
The aggregate number of shares of Purchasers Common Stock that each share
of Merging Corporation Common Stock shall be convertible into the right
to receive pursuant hereto shall be determined by dividing (I) the
aggregate number of shares of Purchasers Common Stock which comprise
the Aggregate Merger Consideration by (ii) 1,000,000 (one million)
aggregate number of issued and outstanding shares of Merging Corporation
Common Stock on the Effective Date).
As of the Effective Date, all such shares of Merging Corporation Common Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
received the Aggregate Merger Consideration upon the surrender of such
certificates in accordance with Section 1.08 below.
SECTION 1.08
Surrender and Exchange of Certificates
(a) At the Closing, the Seller shall surrender to the Purchaser all
certificates and other instruments evidencing all of the shares of Merging
Corporation Common Stock owned by the Seller. In exchange therefor, the
Purchaser shall deliver to such Seller the shares of Purchaser Common Stock
that such Seller is entitled to receive pursuant to Section 1.07(b) above.
SECTION 1.09
Sellers Distribution of Aggregate Merger Consideration
Seller agrees to allocate and distribute the twenty million (20,000,000) shares
to certain officers and potential employees of the Surviving Corporation in
accordance with the list in Exhibit 1.09.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this Agreement, the Seller
hereby represents and warrants to the Purchaser as follows:
SECTION 2.01
Authority of Seller
The Seller has the full legal right, power, capacity and authority to enter into
this Agreement and to carry out his obligations hereunder. This Agreement has
been duly executed and delivered by the Seller, and this Agreement constitutes a
legal, valid and binding obligation of the Seller enforceable against him in
accordance with its terms.
SECTION 2.02
Ownership of Shares
The Seller owns beneficially and of record, free and clear of all encumbrances,
the number of shares of Merging Corporation Common Stock set forth opposite such
Seller's name on Schedule 3.02 hereto.
SECTION 2.03
Section 144 Shares
Seller acknowledges and understands that the shares of Purchaser Common Stock to
be issued in accordance with the terms of the Merger will be Section 144 Shares
under the Securities Act of 1933, as amended (the "Act"). The Seller
acknowledges and understands and will inform in writing those listed in exhibit
1.09 hereto, that the shares of Purchasers Common Stock to be received pursuant
to the Merger must be held for a period of two (2) years before such shares may
be sold publicly.
SECTION 2.04
Transfer Restrictions
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Seller acknowledges, understands and agrees that the following restrictions and
limitations are applicable to the shares of Purchaser's Common Stock:
(a) The following legend will be placed on any certificate(s) or other
document(s) evidencing the shares of Purchaser Common Stock:
"The securities represented by this certificate have not been registered
and may not be transferred unless (A) the stockholder wishing to transfer
such securities provides and opinion of counsel reasonably concurred in by
counsel for Digital Video Display Technologies, Inc. (DVDT) (the "Company")
stating that the proposed transfer of the Company's securities have been
registered pursuant to the Securities Act of 1933, as amended."
(b) Stop transfer instructions have been or will be placed on any certificates
or other documents evidencing the shares of Purchaser Common Stock so as to
restrict the resale, pledge, hypothecation or other transfer thereof in
accordance with the provisions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE MERGING CORPORATION AND R.A. MOSS
As and inducement to the Purchaser to enter into this Agreement, the Merging
Corporation and R. A. Moss, hereby represent and warrant to the Purchaser as
follows:
SECTION 3.01
Organization, Authority and Qualification of the Company
The Merging Corporation is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all necessary
power and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby, to own,
operate or lease the properties and assets now owned, operated or leased by it
and to carry on its business as it has been and is currently conducted. The
Merging Corporation is not licensed or qualified to do business in any other
jurisdiction, and the operation of the Merging Corporation's business does not
require that the Merging Corporation be licensed or qualified to do business in
any other jurisdiction. All corporate actions taken by the Merging Corporation
have been duly authorized and the Merging Corporation has not taken any action
that in any respect conflicts with, constitutes a default under or results in a
violation of any provisions of its Certificate of Incorporation or by-laws. True
and correct copies of the Certificate of Incorporation and by-laws of the
Merging Corporation, each as in effect on the date hereof, have been delivered
by the Merging Corporation to the Purchaser.
SECTION 3.02
Capital Stock of the Merging Corporation: Ownership of the Shares
(a) The authorized capital stock of the Merging Corporation consists of One
Million (1,000,000) shares of common stock, no par value. As of the date
hereof, 1,000,000 shares of Merging Corporation Common Stock are issued and
outstanding, all of which are validly issued, fully paid, and
nonassessable. None of the issued and outstanding shares of Merging
Corporation Common Stock was issued in violation of any preemptive rights.
There are no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments of any character relating to the
capital stock of the Merging Corporation or obligating the Seller or the
Merging Corporation to issue or sell any shares of capital stock of, or
other interest in, the Merging Corporation. There are no outstanding
contractual obligations of the Merging Corporation to repurchase, redeem or
otherwise acquire any shares of Merging Corporation Common Stock or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other person. There are no voting
trusts, stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of
the shares of Merging Corporation Common Stock.
(b) Schedule 3.02 hereto accurately sets forth: (i) the name and address of
each person owning shares of Merging Corporation Common Stock and (ii) the
certificate number of each certificate evidencing shares of Merging
Corporation Common Stock, the number of shares evidenced by each such
certificate, the date of issuance thereof and, in the case of
cancellations, the date of cancellation.
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SECTION 3.03 No Subsidiaries.
There are no corporations, partnerships, joint ventures, associations or other
entities in which the Merging Corporation owns, of record or beneficially, any
direct or indirect equity or other interest or any right (contingent or
otherwise) to acquire the same or which is controlled by the Merging Corporation
directly or indirectly though one or more intermediaries.
SECTION 3.04
Corporate Books and Records
All accounts, books, ledgers and other records material to the business of the
Merging Corporation of whatsoever kind have been fully, properly and accurately
kept and completed in all material respects, and there are no material
inaccuracies or discrepancies of any kind contained or reflected therein, and
they give and reflect a true and fair view of the financial position of the
Merging Corporation have been provided by the Merging Corporation to the
Purchaser.
SECTION 3.05
No Conflict
Except as set forth on Schedule 3.05 hereto, neither the Merging Corporation nor
the Seller are subject to, or a party to, any charter, by-law, mortgage, lien,
agreement, contract or instrument, or to any material lease, permit, law, rule,
ordinance, regulation, order, judgment or decree, or any other material
restriction of any kind or character, which has a material adverse effect on the
business of the Merging Corporation or any of its assets or properties, or which
would prevent consummation of the transaction contemplated by this Agreement,
compliance by the Seller or the Merging Corporation with the terms, conditions
and provisions of this Agreement or any other agreement entered into by the
Seller or the Merging Corporation in connection with the transactions
contemplated hereby, or the continued operation of the business of the Merging
Corporation after the date hereof or after the Closing Date on substantially the
same basis as heretofore operated. Except as set forth on Schedule 3.05 hereto,
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will not (I) violate, conflict with or
result in the breach of any provision of the certificate of incorporation or
by-laws of the Merging Corporation, (ii) violate or result in the breach of any
of the terms of, result in a material modification of, or otherwise give any
other contracting party the right to terminate, or constitute (or with notice or
lapse of time or both constitute) a default under, any material contract or
other agreement to which the Merging Corporation or any of its assets or
properties or any of the Seller, may be bound or subject (iii) to the best
knowledge of the Merging Corporation or Seller, violate any order, writ,
judgement, injunction, award or decree of any court, arbitrator, or governmental
or regulatory body against, or binding upon Seller or the Merging Corporation or
any of its assets; or (iv) to the best knowledge of the Merging Corporation,
violate any statute, law or regulation of any jurisdiction.
SECTION 3.06
Consents and Approvals
Except for the required approval of the Merger by the Seller, as set forth on
Schedule 3.06 or as previously obtained, no consent or approval of, other
actions by, or notice to, any governmental body or agency (domestic or foreign),
or any third party is required in connection with the execution and delivery by
the Seller or the Merging Corporation of this Agreement or the consummation of
the transactions contemplated hereby.
SECTION 3.07
Financial Statements: Conduct in the Ordinary Course and Absence of Certain
Changes, Events and Conditions.
(a) The Merging Corporation will furnish the Purchaser with unaudited balance
sheets of the Merging Corporation from the date of inception to the date of
this Agreement. Such Unaudited Financial Statement, including the footnotes
thereto, are true and correct and have been prepared in accordance with
generally accepted accounting principles followed throughout the periods
indicated. The Unaudited Financial Statements fairly and accurately present
the financial condition and results of operations of the Merging
Corporation. The Unaudited Financial Statement reflects all claims against
and all debts and liabilities of the Merging Corporation, fixed or
contingent, required to be shown thereon under generally accepted
accounting principles.
(b) Since March 3, 2000, there have been no material adverse changes in the
assets or liabilities, or in the condition, financial or otherwise, or in
the results of operations, or in the prospects of the Merging Corporation,
whether as
<PAGE>
a result of any legislative or regulatory change, revocation of any
license or rights to do business, fire, explosion, accident, casualty,
labor or otherwise, and, to the best knowledge, information and belief of
the Merging Corporation and Seller, no fact or condition exists which might
cause such a material adverse change in the future. The Business of the
Merging Corporation has been conducted in the ordinary course and
consistent with past practice. As amplification and not limitation of the
foregoing, since March 3, 2000, the Merging Corporation has not:
(i) permitted or allowed any of the assets or properties (whether tangible
or intangible) of the Merging Corporation to be subject to any lien or
encumbrance;
(ii) made any change in any method of accounting or accounting practice,
principle or policy used by the Merging Company, other than such
changes required by U.S. GAAP;
(iii) amended, terminated, canceled, or compromised any material claims of
the Merging Corporation or waived any other rights or substantial value
to the Merging Corporation;
(iv) sold, transferred, leased, subleased, licensed or otherwise disposed of
any properties or assets, real, personal or mixed, other than in the
ordinary course of business consistent with past practice;
(v) issued or sold any capital stock, notes bonds or other securities, or
any properties or assets, real, personal or mixed, other than in the
ordinary course of business consistent with past practice;
(vi) redeemed any of the capital stock or declared, made or paid any
dividends, distributions, bonuses or fees (whether in cash, securities,
or property) to the holders of shares of the Merging Corporation Common
Stock
(vii) made any capital expenditures or commitment for any capital expendi-
ture.
(viii) Made any material changes in the customary methods of operations of the
Merging Corporation; or
(ix) Incurred any indebtedness
(x) There are no contracts material or otherwise entered into the Merging
Corporation other than secrecy or Non-disclosure agreements.
SECTION 3.08
No Undisclosed Liabilities
There are no material liabilities of the Merging Corporation other than
liabilities (I) reflected or reserved against in the Financial Statement, (ii)
disclosed on Schedule 3.09 hereto or (iii) incurred since the date of this
Agreement in the ordinary course of business, consistent with past practice, of
the Merging Corporation and which do not and are not reasonably likely to have a
material adverse effect on the Merging Corporation.
SECTION 3.09
Indebtedness, Guaranties, Liabilities, Etc. There are no direct or indirect (i)
indebtedness of the Merging Corporation for borrowed money, (including
commitments, lines of credit and other credit availabilities); (ii) guaranties
of the Merging Corporation; and (iii) other material liabilities and obligations
of the Merging Corporation (whether absolute, accrued, contingent or otherwise).
The Merging Corporation is current in its payment of debts and performance of
obligations.
SECTION 3.10
Taxes
The Merging Corporation has filed, within the times and within the manner
prescribed by law, all federal and local tax returns and material tax reports
which are required to be filed by law, all federal and local tax returns and
(including, without limitation, any corporate income and sales tax filings
required to be made and/or paid in any jurisdiction where the Merging
Corporation is qualified to do business or is otherwise required to make such
filings). Such returns, if any, reflect accurately all liability for all
federal, state and local income, sales, payroll and withholding taxes and other
material taxes of the Merging Corporation for the period covered thereby, and
all amounts shown on such returns and reports as due and payable have been
timely paid.
SECTION 3.11
Compliance with Laws: Licenses and Permits
(a) The Merging Corporation is in material compliance with all applicable
federal, state and other laws, regulations, orders, judgments and decrees
("Requirements of Law"). The Merging Corporation has not been charged with,
or threatened with, nor is it under any investigation with respect to, any
charge concerning any violation of any Requirement of Law. To the best
knowledge of the Merging Corporation, and Seller is, neither the ownership
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nor use by the Merging Corporation of its properties nor the conduct of its
business (I) conflicts with the rights of any person, or (ii) violates or
will violate, conflicts or will conflict with, or results or will result in
a material breach, default, right to accelerate or loss of rights under, or
termination of, any of the terms or provisions of the Merging Corporation's
certificate of incorporation or by-laws as presently in effect, or any
Material Contract to which the Merging Corporation is a party or by which
it or its properties may be bound.
(b) The Merging Corporation has all material licenses and permits and other
governmental certificates, authorizations and approvals (collectively,
"Licenses") required by every federal, state and local governmental or
regulatory body for the operation of its business and the use of its
properties as presently operated or used. Schedule 3.11 contains a true and
complete list of the Licenses. The licenses are in full force and effect
and no action or claim is pending, nor, to the best knowledge of the
Merging Corporation, or Seller, is threatened, to revoke or terminate any
of the Licenses or declare any License invalid in any material respect.
SECTION 3.12
Directors
(a) Schedule 3.12 contains a complete and accurate list of each employee or
director of the Merging Corporation, and that there are no other employees
or director of the Merging Corporation and no employee benefits or
compensation are due and owing or will be due or owing.
SECTION 3.13
Accounts Receivable: Property Insurance
There are no accounts receivable, properties or insurance issued to or of the
Merging Corporation.
SECTION 3.14 Certain Interests:
No officer or director of the Merging Corporation and no relative or spouse (or
relative of such spouse) who resides with, or is a dependent of, any such
officer or director:
(i) has any direct or indirect financial interest in any competitor,
supplier or customer of the Merging Corporation, provided,
however, that the ownership of securities representing less than five
percent of the outstanding voting power of any competitor, supplier
customer, and which are listed on any national securities exchange or
traded actively in the national over-the-counter market, shall not be
deemed to be a "financial interest" so long as the person owning such
securities has no other connection or relationship with such
competitor, supplier or customer;
(ii) owns, directly or indirectly, in whole or part, or has any other
interest in any tangible or intangible property which the Merging
Corporation uses or has used in the conduct of its business or
otherwise; or
(iii) has outstanding any indebtedness to the Merging Corporation.
The Merging Corporation has no material liability or any other obligation of any
nature whatsoever to any officer, director or shareholder of the Merging
Corporation or to any relative or spouse (or relative of such spouse) who
resides with or is a dependent of, any such officer, director or shareholder.
SECTION 3.15 Intellectual Property.
(a) Schedule 3.15 (a) (I) sets forth a true and complete list and a brief
description, including a complete identification of each patent or patent
application and each registration or application for registration thereof,
of each patent to be applied for, in order to operate the business of the
Surviving Corporation, of all Intellectual Property (as defined below) in
and to which the Seller and/or Merging Corporation holds, or has a right to
hold, right, title and interest ("Owned Intellectual Property"), and
Schedule 3.15 (a) (ii) sets forth a true and complete list and a brief
description of all Intellectual Property if any to be licensed or
sublicensed to the Merging Corporation or Surviving Corporation from an
affiliate thereof or from a third party "(Licensed Intellectual Property").
Except as otherwise described in Schedule 3.15 (a) (i) with respect to each
registration or patent or application for registration or patent listed in
Schedule 3.15 (a) (i) which is held by assignment has been duly recorded
with the Patent Office or Copyright Office or the State or International
Trademark Office from which the original registration or patent issued or
before which the application for registration or patent is pending.
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Except as disclosed in Schedule 3.15(a) (iii), the rights of the Merging
Corporation in or to such Intellectual Property do not conflict with or
infringe on the rights of any other person and the Seller or the Merging
Corporation has received any claim or written notice from any person to
such effect. Seller agrees to assign all Intellectual Property listed in
Schedule 3.15 (a) (i) and 3.15 (a) (ii) to Merging Corporation and
Purchaser corporation prior to the Effective Date.
As used herein, "Intellectual Property" means (i) inventions, whether or not
patentable, whether or not reduced to practice or whether or not yet made the
subject of a pending patent application or applications, (ii) ideas and
conceptions of potentially patentable subject matter, including, without
limitation, any patent disclosures, whether or not reduced to practice and
whether or not yet made the subject of a pending patent application or
applications, (iii) all national (including U.S.) and multinational statutory
invention registrations, patents, patent registrations and patent applications
(including reissues, divisions, continuations, continuations-in-part, extensions
and reexaminations) and all rights therein provided by multinational treaties or
conventions and all improvements to the inventions disclosed in each such
registration, patent or application (iv) trademarks, service marks, trade dress,
logos, trade names and corporate names including all of the good will associated
therewith, whether or not registered, including all common law rights, and
registrations and applications for registration thereof, including, but not
limited to, all marks registered in the United States Patent and Trademark
Office, the Trademark Offices of the States and Territories of the United States
of America, and the Trademark Offices of other nations throughout the world, and
all rights therein provided by multinational treaties or conventions (v)
copyrights, whether or not registered, and registrations and applications for
registration thereof, and all rights therein provided by multinational treaties
or conventions, (vi) computer software, including without limitation, source
code, object code, operating systems and specifications, data, data bases,
files, documentation and other materials related thereto, data and
documentation, (vii) trade secrets and confidential, technical or business
information (including unpatentable and whether or not reduced to practice),
(viii) whether secret or confidential or not, technology (including know-how and
show-how) manufacturing and production processes or proposals, technical data,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information, (ix) copies and tangible embodiments of all of the foregoing, in
whatever form or medium, (x) all rights obtain and rights to apply for patents,
and to register trademarks and copyrights, and (ix) all rights to sue and
recover and retain damages and costs and attorney's fees for present and past
infringement of any of the Intellectual Property rights herein above set out.
(b) Except as disclosed in Schedule 3.15 (i) all the Owned Intellectual
Property is or will be owned by the Merging Corporation free and clear of
any encumbrances and the Merging Corporation has the entire right, title,
and interest in and to same and (ii) no actions have been made or asserted
or are pending (nor has any such action been threatened against the Merging
Corporation of any of the Owned Intellectual Property or (B) alleging that
the business of the Merging Corporation as conducted in the past or as
conducted at the date of Closing infringes or otherwise violates the
Intellectual Property rights, including patent, trademark, copyright, or
trade secret rights, of any third party. The business of the Merging
Corporation or Seller as conducted in the past and as conducted as of the
date hereof does not infringe or otherwise violate the Intellectual
Property rights, including patent, trademark, copyright, or trade secret
rights of any third party. To the best knowledge of Seller and the Merging
Corporation, no third party person is infringing, violating, or otherwise
using, in an unauthorized manner, any Owned Intellectual Property right.
Except as disclosed in Schedule 3.15 (b), the Merging Corporation has not
granted any license or other right to any other person with respect to the
Owned Intellectual Property. The consummation of the transactions
contemplated by this Agreement will not result in the termination of any of
the Owned Intellectual Property or Licensed Intellectual Property.
(c) With respect to all Licensed Intellectual Property and Owned Intellectual
Property, the registered user provisions of all nations requiring such
registrations have been complied with.
(d) The Merging Corporation has, or has caused to be, delivered to Purchaser
correct and complete copies of all licenses and sublicenses, if any, for
Licensed Intellectual Property set forth in Schedule 3.15 (a) (ii) and any
and all ancillary documents pertaining thereto (including, but not limited
to, all amendments, consents and evidence of commencement dates and
expiration dates). With respect to each of such licenses and sublicenses:
(i) such license or sublicense, together with all ancillary documents
delivered pursuant to the first sentence of this Section), is legal,
valid, binding, enforceable and in full force and effect and represent
the entire
<PAGE>
agreement between the respective licensor and licensee with respect to
the subject matter of such license or sublicense;
(ii) except as otherwise set forth in Schedule 3.15 (a) (ii) such license or
sublicense will not cease to be legal, valid, binding, enforceable and
in full force and effect on terms identical to those currently in
effect as a result of the consummation of the transactions contemplated
by this Agreement, nor will the consummation of the transaction
contemplated by this Agreement constitute a breach or default under
such license or sublicense or otherwise give the licensor or
sublicensor a right to terminate such license or sublicense;
(iii) except as other disclosed in Schedule 3.15 (a) (ii) with respect to
each such license or sublicense; neither Seller nor the Merging
Corporation have received any notice of termination or cancellation
under such license or sublicense and no licensor or sublicensor has any
right of termination or cancellation under such license or sublicense
except in connection with the default of the Merging Corporation
thereunder, (B) has received any notice of a breach or default under
such license or sublicense, which breach or default has not been cured,
and (C) has granted to any other person any right, adverse or
otherwise, under such license or sublicense;
(iv) Neither the Merging Corporation nor Seller or any other party to such
license or sublicense is in breach or default in any material respect,
and, to the best knowledge of Seller and the Merging Corporation, no
event has occurred that, with notice or lapse of time would constitute
such a breach or default or permit termination, modification or
acceleration under such license or sublicense.
(v) No actions have been made or asserted or are pending (nor to the best
knowledge of the Seller or Merging Corporation, has any such action
been threatened) against the Merging Corporation either (a) based upon
or challenging or seeking to deny or restrict the use by the Merging
Corporation of any of the Licensed Intellectual Property or (b)
alleging that any Licensed Intellectual Property is being licensed,
sublicensed or used in violation of any Intellectual Property right,
including any patent, trademark, copyright or trade secret right or any
other rights of any Person; and
(vi) To the knowledge of the Seller and the Merging Corporation no third
party person in infringing, violating, or otherwise using in an
unauthorized manner Licensed Intellectual Property.
(e) Except as set forth in Schedule 3.15, neither Seller nor the Merging
Corporation are aware of any reason that would prevent any pending
applications to register trademarks, service marks or copyrights or any
pending patent applications for being granted.
(f) The Intellectual Property set forth in Schedule 3.15 (a) (I) and (ii) and
3.15 (b) constitutes all the material Intellectual Property used or held or
intended to be used by the Merging Corporation in the business of the
Merging Corporation as conducted in the past or used because of this Merger
were not consummated and at the date of Closing and constitutes all
material Intellectual Property necessary in the conduct of the business of
the Merging Corporation as conducted in the past and intended to be used in
the merger to fulfill its business plan, and at the date of Closing and
there are no other items of Intellectual Property that are material to the
Merging Corporation or the business of the Merging Corporation as conducted
in the past and at the date of Closing.
SECTION 3.16
Litigation
There is no action, suit, proceeding at law or in equity by any person, or any
arbitration or any administrative or other proceeding by or before any
governmental or other instrumentality or agency, pending or to the best
knowledge of Seller or the Merging Corporation, threatened against or affecting
the Merging Corporation, the business of the Merging Corporation or any of the
Merging Corporation's properties, assets or rights and neither Seller nor the
Merging Corporation knows of any facts or circumstances which would provide a
valid basis for any such action or proceeding. Neither Seller nor Merging
Corporation are subject to any judgements, orders or decrees, entered into any
lawsuit or proceeding which relate to the Merging Corporation or the Merging
Corporation's business in any way.
SECTION 3.24
<PAGE>
Brokers
No broker, finder or investment banker other than Anthony Capsouto (who is to
receive One Million (1,000,000) Section 144 common stock shares of Purchaser
from Seller) is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Merging Corporation or Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Merging Corporation and the Seller to enter into this
Agreement the Purchaser hereby, represents and warrants to the Merging
Corporation and the Seller as follows:
SECTION 4.01
Organization, Powers, Etc.
The Purchaser 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 purports to own or use and to perform all its
obligations under the material contracts.
SECTION 4.02
Authorization, Conflicts and Validity
(a) The Purchaser has the full legal right, power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by the Purchaser and the
consummation of the transactions contemplated hereby have been duly
authorized by the Purchaser. This Agreement has been duly and validly
authorized, executed and delivered by the Purchaser and constitutes the
legal, valid, and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms.
(b) Neither the execution and delivery of this Agreement nor the consummation
or performance of any of the transactions contemplated hereby will,
directly or indirectly (with or without notice or lapse of time): (I)
contravene, conflict with, or result in a violation of any provision of the
Certificate of Incorporation or by-laws of the Purchaser, or any resolution
adopted by the board of directors or the stockholders, of the Purchaser,
(ii) contravene, conflict with, or result in a violation of, or give any
governmental body or other person the right to challenge any of the
transactions contemplated hereby or to exercise any remedy or obtain any
relief under, any legal requirement or any order to which the Purchaser may
be subject; or (iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any governmental body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
governmental authorization that is held by the Purchaser.
SECTION 4.03
Capital Stock of the Parent
The authorized capital stock of the Purchaser consists of 50,000,000 shares of
common stock, par value $0.001 per share. Upon consummation of the transactions
contemplated by this Agreement and the surrender of the certificates
representing the shares of Merging Corporation Common Stock in accordance with
Section 1.08 below, the Seller will acquire the shares of Purchaser Common Stock
free and clear of all encumbrances and the shares of Purchaser Common Stock will
be fully paid and nonassessable.
SECTION 4.04
Litigation
Except as set forth on Schedule 4.04, there is no action, suit, proceeding at
law or in equity by any person, or any arbitration or any administrative or
other proceeding by or before any governmental or other instrumentality or
agency, pending or, to the best knowledge of the Purchaser, threatened against
or affecting the Purchaser, the business of the Purchaser or any of the
Purchaser's properties, assets or rights and the Purchaser knows of no facts or
circumstances which would provide a valid basis for any such action or
proceeding. The Purchaser is not subject to any judgements, orders or decrees
entered in any lawsuit or proceeding which relate to the Purchaser or the
business in any way.
SECTION 4.05
<PAGE>
SEC Reports
The Purchaser has furnished to the Merging Corporation true and complete copies
of (I) the Purchaser's Current Report filed December 5,1999 and (iii) the
Parent's Information Statement, dated 1999 filed by the Purchaser with the
Securities and Exchange Commission (the "SEC") (such reports and statements
being referred to as the "SEC Reports"). As of their respective dates, such SEC
Reports did not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Purchaser has filed all material documents required to be
filed by it with the SEC and all such documents complied as to form with the
applicable requirements of law.
SECTION 4.06
No Subsequent Events
Since the date of the most recent SEC Reports to the best of the Purchaser
knowledge, no event has occurred which would require that the Purchaser file
with the SEC a Current Report on Form 8-K under the Securities Exchange Act of
1934 as amended.
SECTION 4.07
Brokers
No broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01
Approval of Merger
The Seller, as the owner of all of the issued and outstanding shares of Merging
Corporation Common Stock, hereby approves the Merger and the consummation of all
of the transactions contemplated by this Agreement.
SECTION 5.02
Conduct of Business Prior to the Closing
(a) The Merging Corporation and the Seller covenant and agree that between the
date hereof and the Effective Time, neither the Seller nor the Merging
Corporation shall conduct the business of the Merging Corporation, other
than in the ordinary course and consistent with the Merging Corporation's
prior practice. Without limiting the generality of the foregoing, the
Merging Corporation agrees to
(i) continue its advertising and promotional activities, and pricing and
purchasing policies, in accordance with past practice;
(ii) not shorten or lengthen the customary payment cycles for any of its
payables or receivables;
(iii) use its reasonable best efforts to preserve its current relationships
with its consultants, potential employers, customers, suppliers and
other persons with which it has significant business relationships; and
(iv) not engage in any practice, take any action, fail to take any action or
enter into any transaction which could cause any representation or
warranty of Seller or the Merging Corporation to be materially untrue
or result in a material breach of any covenant made by Seller or the
Merging Corporation in this Agreement.
(b) The Merging Corporation and the Seller covenant and agree that, prior to
the Effective Time, without the prior written consent of the Purchaser, the
Merging Corporation shall not do, nor shall the Seller cause the Merging
Corporation to do, any of the things enumerated in the third sentence of
Section 3.07 (b) hereof (including, without limitation, clauses (i) through
(x) thereof).
SECTION 5.03
<PAGE>
Access to Information
From the date hereof until the Effective Time, upon reasonable notice, the
Merging Corporation shall, and cause its officers, directors, employees, agents,
accountants and counsel to:
(i) afford the officers, employees and authorized agents, accountants,
counsel and representatives of the Purchaser reasonable access, during
normal business hours, to the offices, properties, plants, other
facilities, books and records of the Merging Corporation and to those
officers, directors, employees, agents, accountants and counsel of the
Merging Corporation who have any knowledge relating to the Merging
Corporation; and
(ii) furnish to the officers, employees and authorized agents, accountants,
counsel and representatives of the Purchaser such additional financial
and operating data and other information regarding the assets
(including, without limitation, any contracts, licenses and patents in
effect as of the date hereof and any contracts or licenses being
negotiated or entered into between the date hereof and the Closing
Date), properties and goodwill of the Merging Corporation (or legible
copies thereof) as the Purchaser may, from time to time, reasonably
request.
SECTION 5.04
Confidentiality
The Seller agrees to, and will cause their agents, representatives, affiliates
and employees to
(i) treat and hold as confidential (and not disclose or provide access to
any person to) all information relating to trade secrets, processes,
patent or trademark applications, product development, price, customer
and supplier lists, pricing and marketing plans, policies and
strategies, details of client or consultant contracts, operations
methods, product development techniques, business acquisition plans,
new personnel acquisition plans and any other confidential information
with respect to the Merging Corporation and the Surviving Corporation,
(ii) in the event that Seller or any such agent, representative, affiliate
or employee becomes legally compelled to disclose any such information,
provide Purchaser with prompt written notice of such requirement so
that the Purchaser or the Surviving Corporation may seek a protective
order or other remedy or waive compliance with this Section 5.04,
(iii) in the event that such protective order or other remedy is not obtained
or the Purchaser waives compliance with this Section 5.04, furnish only
that portion of such confidential information which is legally required
to be provided and exercise its best efforts to obtain assurances that
confidential treatment will be accorded such information,
(iv) promptly furnish (prior to, at, or as soon as practicable following,
the Closing) to the Merging Corporation, the Surviving Corporation or
the Purchaser any and all copies (in whatever form or medium) of all
such confidential information then in the possession of Seller or any
of their agents, representatives, affiliates or employees and destroy
any and all additional copies then in the possession of Seller or any
of his agents, representatives, affiliates or employees of such
information and of any analyses, compilations, studies or other
documents prepared, in whole or in part, on the basis thereof;PROVIDED,
HOWEVER, that this sentence shall not apply to any information that, at
the time of disclosure, is available publicly and was not disclosed in
breach of this Agreement by the Seller, his agents, representatives,
affiliates or employees; PROVIDED FURTHER, that specific information
shall not be deemed to be within the foregoing exception merely because
it is embraced in general disclosures in the public domain. In
addition, any combination of features shall not be deemed to be within
the foregoing exception merely because the individual features are in
the public domain unless the combination itself and its principle of
operation are in the public domain. The Seller agrees and acknowledges
that remedies at law for any breach of his obligations under this
Section 5.04 are inadequate and that, in addition thereto, the
Purchaser shall be entitled to seek equitable relief, including
injunction and specific performance, in the event of any such breach.
SECTION 5.05
Notices and Consents
<PAGE>
(a) The Merging Corporation and the Seller shall promptly give such notices to
third parties and use their reasonable efforts to obtain such third party
consents and estoppel certificates as the Purchaser may reasonably deem
necessary or desirable in connection with the transactions contemplated by
this Agreement.
(b) The Purchaser shall cooperate and use all reasonable efforts to assist the
Merging Corporation and the Seller in giving such notices and obtaining
such consents and estoppel certificates; PROVIDED, HOWEVER, that the
Purchaser shall have no obligation to give any guarantee or other
consideration of any nature in connection with any such notice, consent or
estoppel certificate or to consent to any change in the terms of any
agreement or arrangement which the Purchaser, at its reasonable discretion,
may deem adverse to the interest of the Purchaser or the Merging
Corporation.
(c) Neither the Merging Corporation nor the Seller knows of any reason why all
the consents, approvals and authorizations necessary for the consummation
of the transactions contemplated hereby will not be received.
(d) The Seller and the Purchaser agree that, in the event any consent, approval
or authorization necessary or desirable to preserve, for the Surviving
Company, any material right or benefit under any lease, license, contract,
commitment or other agreement or arrangement to which the Merging
Corporation is a party, is not obtained prior to the Effective Time, the
Seller will, subsequent to the Effective Time, cooperate with the Purchaser
and the Surviving Corporation in attempting to obtain such consent,
approval or authorization as promptly thereafter as practicable. If such
consent, approval or authorization cannot be obtained, the Seller will use
his reasonable best efforts to provide the Surviving Corporation with the
material rights and benefits of the affected lease, license, contract,
commitment or other agreement or arrangement, and, if the Seller provides
such rights and benefits, the Surviving Corporation shall assume the
obligations and burdens thereunder.
SECTION 5.06
Notice of Developments
Prior to the Effective Time, the Merging Corporation and the Purchaser shall
promptly notify each other in writing of:
(i) all events, circumstances, facts and occurrences arising subsequent
to the date of this Agreement which could result in any
breach of a representation or warranty or covenant of Seller, the
Merging Corporation or the Purchaser in this Agreement or which could
have the effect of making any representation or warranty of such
parties in this Agreement untrue or incorrect in any respect, and
(ii) all other material developments affecting the assets, liabilities,
business, financial condition, operations, results of operations,
customer or supplier relations, employee relations, projections or
prospects of the Merging Corporation or the Purchaser.
SECTION 5.07
No Solicitation or Negotiation
The Seller and the Merging Corporation agree that between the date of this
Agreement and the earlier of (i) the Effective Time and (ii) the termination of
this Agreement, neither the Seller nor the Merging Corporation nor any of their
respective affiliates, officers, directors, representatives or agents will:
(a) solicit, initiate, consider, encourage or accept any other proposals or
offers from any person:
(i) relating to any acquisition or purchase of all, or any portion of, the
capital stock of the Merging Corporation or assets of the Merging
Corporation,
(ii) to enter into any business combination with the Merging Corporation or
assets of the Merging Corporation, or
(iii) to enter into any other extraordinary business transaction involving or
otherwise relating to the Merging Corporation, or
(b) participate in any discussions, conversations, negotiations and other
communications regarding, or furnish to any other person any information
with respect to, or other person any information with respect to, or
otherwise
<PAGE>
cooperate in any way, assist or participate in, facilitate or encourage
any effort or attempt by any other person to seek to do any of the
foregoing. The Merging Corporation and the Seller shall notify the
Purchaser promptly if any such proposal, offer, inquiry or other contact
with any person with respect thereto, is made and shall, in any such notice
to the Purchaser, indicate, in reasonable detail, the identity of the
person making such proposal, offer, inquiry or contact and the terms and
conditions of such proposal, offer, inquiry or other contact. Except as
required pursuant to applicable law, the Merging Corporation and the Seller
agree not to, without the prior written consent of the Purchaser, release
any person from, or waive any provision of, any confidentiality or
standstill agreement to which Seller or the Merging Corporation is a party.
SECTION 5.08
Further Action
Each of the parties hereto shall use all reasonable efforts to take, or cause to
be taken, all appropriate action, of or cause to be done all things reasonably
necessary, proper or advisable under applicable laws, and execute and deliver
such documents and other papers, as may be reasonably required to carry out the
provisions of this Agreement and consummate and make effective the transactions
contemplated by this Agreement.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01
Conditions to Obligation of the Merging Corporation
The obligation of the Merging Corporation to consummate the merging contemplated
by this Agreement shall be subject to the fulfillment, at or prior to the
Closing, of each of the following conditions:
(a) Representations Warranties and Covenants. The representations and
warranties of the Purchaser contained in this Agreement shall have been
true and correct when made and shall be true and correct in all material
respects as of the Closing Date, with the same force and effect as if made
as of the Closing Date, other than such representations and warranties as
are made as of another date, which shall be true and correct in all
material respects as of such other date, the covenants and agreements
contained in this Agreement to be complied with by the Purchaser on or
before the Closing shall have been complied with in all material respects,
and the Merging Corporation shall have received a certificate from the
Purchaser to such effect signed by a duly authorized officer thereof;
(b) Resolution. The Merging Corporation shall have received a true and complete
copy, certified by the President of the Purchaser, of the resolutions duly
and validly adopted by the Board of Directors of the Purchaser evidencing
each such Board of Directors' authorization of the execution and delivery
of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby;
(c) Incumbency Certificate. The Merging Corporation shall have received a
certificate of the Secretary of the Purchaser certifying the names and
signatures of the officers of the Purchaser authorized to sign this
Agreement and the other documents to be delivered hereunder; and
(d) Stock Option Agreement. The Purchaser shall have executed Stock Option
Agreements with Seller (the "Stock Option Agreement") in form and substance
satisfactory to Seller, pursuant to which the Purchaser shall grant to
Seller stock options to purchase shares of Purchaser Common Stock under the
Purchaser's Stock Option Plan, subject to the terms and conditions
contained in the Stock Option Agreements.
SECTION 6.02
Conditions to Obligation of the Purchaser
The obligations of the Purchaser to consummate the Merger contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
<PAGE>
(a) Representations, Warranties and Covenants. The representations and
warranties of the Merging Corporation and the Seller contained in this
Agreement shall have been true and correct when made and shall be true and
correct in all material respects as of the Closing Date, with the same
force and effect as if made as of the Closing Date, other than such
representations and warranties as are made as of such other date, the
covenants and agreements contained in this Agreement to be complied with by
the Seller and the Merging Corporation on or before the Closing shall have
been complied with in all material respects, and the Purchaser shall have
received a certificate from the Merging Corporation and the Seller to such
effect signed by the Merging Corporation and the Seller
(b) Resolutions. The Purchaser shall have received (I) a true and complete
copy, certified by the President of the Merging Corporation, of the
resolutions duly and validly adopted by the Board of Directors of the
Merging Corporation evidencing such Board of Directors' authorization of
the execution and delivery of this Agreement and the consummation of the
Merger and the other transactions contemplated hereby, and (ii) a true and
complete copy of the resolution of the Seller, as the holder of all the
issued and outstanding shares of the Merging Corporation Common Stock,
approving the Merger and the other transactions contemplated hereby;
(c) The Purchaser shall have received (i) executed copies of employment
agreements between Purchaser and each of Seller, Keith Hawkins, Richard
"Stien" Davis, Gina Cavalier-King (ii) transfer of all rights and interest
in Intellectual Property discussed in Section 3.15 and Exhibit 3.15 by
Seller, Keith Hawkins, Richard "Stien" Davis, and Gina Cavalier-King.
(d) Consents and Approvals. Except as set forth on any Schedule hereto, the
Purchaser and the Merging Corporation shall have received each in form and
substance reasonably satisfactory to the Purchaser all material
authorization, consents, orders and approvals and all third party consents
and estoppel certificates listed in Schedule 3.06 hereto;
(e) Organization Documents. The Purchaser shall have received a copy of (I) the
Certificate of Incorporation, as amended, of the Merging Corporation,
certified by the Secretary of State of Nevada and accompanied by a
certificate of the Secretary of the Merging Corporation, dated as of the
Closing Date, stating that no amendments have been made to such Certificate
of Incorporation since such date, and (ii) the By-laws of the Merging
Corporation, certified by the Secretary of the Merging Corporation.
(f) Minute Books The Purchaser shall have received a copy of the minute books
of the Merging Corporation, certified by its Secretary as of the Closing
Date.
(g) Good Standing Qualification to Do Business. The Purchaser shall have
received a good standing certificate for the Merging Corporation from the
Secretary of State of Delaware.
(h) Intellectual Property. The Parent shall have received copies of all source
codes, object codes and protected processes referred to in Schedules 3.15
(a) (I) and (ii)
(i) No Material Adverse Effect. No event or events shall have occurred between
the date hereof and the Closing Date which, individually or in the
aggregate, have or are reasonably likely to have, a material adverse effect
on the Merging Corporation or the Merging Corporation's business.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01
Survival of Representations and Warranties
The representations and warranties in this Agreement, and all statements
contained in this Agreement or any Exhibit or Schedule or any certificate,
Financial Statement or report or other document delivered pursuant to this
Agreement or in connection with the transactions contemplated hereby
(collectively, the "Acquisition Documents"), shall survive the Closing for the
time periods as prescribed by the applicable statute of limitations. Neither the
period of survival nor the liability of any party with respect to such party's
representations and warranties shall be reduced by
<PAGE>
any investigation made at any time by or on behalf of any party. If written
notice of a claim has been given prior to the expiration of the applicable
statue of limitation by a party in whose favor such representations and
warranties have been made to the party that made such representations and
warranties, then the relevant representations and warranties shall survive as to
such claim, until the claim has been finally resolved.
SECTION 7.02
Indemnification by Seller
Except as otherwise limited by this Article, the Purchaser and its affiliates,
officers, directors, employees, agents, successors and assigns shall be
indemnified and held harmless by Seller for any and all liabilities, losses,
damages, claims, costs and expenses, interest, awards, judgements and penalties
(including, without limitation, reasonable attorneys' and consultants' fees and
expenses) actually suffered or incurred by them (hereinafter a "Purchaser's
Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty made by the Merging Corpo-
ration or the Seller contained herein or in any document delivered
by the Merging Corporation or the Seller pursuant to this
Agreement or the transactions contemplated hereby; or
(ii) the breach of any covenant or agreement by the Merging Corporation or
the Seller, or the breach of any covenant or agreement to be performed
prior to the Closing by the Merging Corporation or the Seller contained
herein; or
(iii) liabilities of the Merging Corporation not reflected on the Financial
Statement and not otherwise scheduled, whether arising before or after
the Effective Time, arising from or relating to the ownership or
activities of the Merging Corporation or the conduct of the business of
the Merging Corporation through the Effective Time; or
(iv) any and all Purchaser's Losses suffered or incurred by the Purchaser or
the Surviving Corporation by reason of or in connection with any claim
or cause of action of any third party to the extent arising out of any
action, inaction, event, condition, liability or obligation occurring
or existing on or prior to the Effective Time.
To the extent that a court of competent jurisdiction may refuse to enforce all
or any part of Seller's undertakings set forth in this Section 7.02, such party
shall contribute the maximum amount of what it is permitted to contribute.
SECTION 7.03
INDEMNIFICATION BY PURCHASER
Except as otherwise limited by this Article, the Merging Corporation, the Seller
and their respective affiliates, employees, agents, successors and assigns shall
be indemnified and held harmless by the Purchaser for any and all liabilities,
losses, damages, claims, costs and expenses, interest, awards, judgements and
penalties (including, without limitation, reasonable attorneys' and consultants'
fees and expenses) actually suffered or incurred by them (hereinafter "Seller's
Loss") arising out of or resulting from:
(i) the breach of any representation or warranty made by the Purchaser
contained herein or in any document delivered by the Purchaser pursuant
to this Agreement or the transactions contemplated hereby; or
(ii) the breach of any covenant or agreement by the Purchaser, or the breach
of any covenant or agreement to be performed prior to the Closing by
the Purchaser contained herein; or
SECTION 7.04
General Indemnification Provisions
(a) For the purposes of this Agreement, the term "Indemnitee" shall refer to
the Person or Persons indemnified, or entitled, or claiming to be entitled,
to be indemnified, pursuant to the provisions of Section 7.02 or Section
7.03, as the case may be, the term "Indemnitor" shall refer to the Person
or Persons having the obligation to indemnify pursuant to such provisions
and "Losses" shall refer to the Seller's Losses or the Purchaser's Losses,
as the case may be.
<PAGE>
(b) An Indemnitee shall give, within fifteen (15) calendar days, the Indemnitor
notice of any matter which an Indemnitee has determined has given or could
give rise to a right of indemnification under this Agreement, stating the
amount of the loss, if known, and method of computation thereof, all with
reasonable particularity and containing a reference to the provisions of
this Agreement in respect of which such right of indemnification is claimed
or arises. The obligations and Liabilities of the Indemnitor under this
Article with respect to Losses arising from claims of any third party that
are subject to the indemnification provided for in this Article ("Third
Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: if an Indemnitee shall receive notice of
any Third Party Claim, the Indemnitee shall give the Indemnitor notice of
such Third Party Claim within ten (10) calendar days (PROVIDED, HOWEVER,
that failure to give such notice shall not preclude indemnification under
this Article VII unless there is actual prejudice to the rights of the
Indemnitor) and shall permit the Indemnitor, at its option, to participate
in the defense of such Third Party Claim by counsel of its own choice and
at its expense. If, however, the Indemnitor acknowledges in writing its
obligation to indemnify the Indemnitee hereunder against any Losses that
may result form such Third Party Claims (subject to the limitations set
forth herein), then the Indemnitor shall be entitled, at its option, to
assume and control the defense of such Third Party Claim by counsel of its
own choice if it gives notice of its intention to do so to the Indemnitee
within five (5) calendar days; PROVIDED, HOWEVER, if the Indemnitee shall
determine that its interests conflict with those of the Indemnitor, the
Indemnitee shall be entitled to be represented at the Indemnitee's expense
by separate counsel of its choice and to participate in the defense of any
such Third Party Claim. In the event the Indemnitor exercises the right to
undertake any such defense against any such Third Party Claim as provided
above, the Indemnitee shall cooperate with the Indemnitor in such defense
and make available to the Indemnitor, at the Indemnitor's expense, all
witnesses, pertinent records, materials and information in the Indemnitee's
possession or under the Indemnitee's control relating thereto as is
reasonably required by the Indemnitor. Similarly, in the event the
Indemnitee is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnitor shall cooperate with the Indemnitee
in such defense and make available to the Indemnitee, at the Indemnitor's
expense, all such witnesses, pertinent records, materials and information
in the Indemnitor's possession or under the Indemnitor's control relating
thereto as is reasonably required by the Indemnitee. No such Third Party
Claim, except the settlement thereof, that involves the payment of money
only and for which the Indemnitee is released by the third party claimant
and is totally indemnified by the Indemnitor, may be settled by the
Indemnitor without the written consent of the Indemnitee, which consent
shall not be unreasonably withheld; PROVIDED, HOWEVER, that if a Third
Party Claim is brought that relates in part to matters for which
indemnification pursuant to this Agreement may be available and in part to
matters for which such indemnificaition may not be available, a party may
settle any segregable portion of such Third Party Claim as to which such
indemnification may not be available. Similarly, no Third Party Claim that
is being defended in good faith by the Indemnitor shall be settled by the
Indemnitee without the written consent of the Indemnitor; PROVIDED,
HOWEVER, that if a Third Party Claim is brought that relates in part to
matters for which indemnification pursuant to this Agreement may be
available and in part to matters for which such indemnification may not be
available, a party may settle any segregable portion of such Third Party
Claim as to which such indemnification may not be available.
ARTICLE VIII
TERMINATION AND WAIVER
SECTION 8.01
Termination
This Agreement may be terminated at any time prior to the Closing: (i) by the
mutual written consent of each of the Purchaser, the Merging Corporation, Seller
or (ii) by the Purchaser, the Merging Corporation, or the Seller' in the event
that the Closing does not occur by June 15, 2000.
SECTION 8.02
Effect of Termination
In the event of termination of this Agreement as provided in Section 8.01, this
Agreement shall forthwith become void and there shall be no liability on the
part of either party hereto except that nothing herein shall relieve either
party herein, from liability for any breach of his Agreement.
<PAGE>
SECTION 8.03
Waiver
The Purchaser may (a) extend the time for the performance of any of the
obligations or other acts of the Merging Corporation or the Seller, (b) waive
any inaccuracies in the representations and warranties of the Merging
Corporation or the Seller contained herein or in any document delivered by the
Merging Corporation or the Seller pursuant hereto, or (c) waive compliance with
any of the agreements or conditions of the Merging Corporation or the Seller
contained herein. The Merging Corporation or the Seller may (a) extend the time
for the performance of any of the obligations or other acts of the Purchaser,
(b) waive any inaccuracies in the representations and warranties of the
Purchaser contained herein or in any document delivered by the Purchaser
pursuant hereto, or (c) waive compliance with any of the agreements or
conditions of the Purchaser contained herein. Any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01
Expenses
All costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred.
SECTION 9.02
Notices
All notices, requests, claims, demands and other communications hereunder shall
be in writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipts) by delivery in person, by courier service, by
cable, by telecopy, by telegram, by telex or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with the Section 9.02):
If to the Merging Corporation or the Seller:
Mr. Randy Moss
5901 Warner Ave. #432
Huntington Beach, Ca 92649
If to the Purchaser:
Marilyn G. Haft, Esq.
The Marshall Firm
111 West 40th Street, 11th Floor
New York, NY 10018
SECTION 9.03
Public Announcements
No party to this Agreement shall make, or cause to be made, any press release or
public announcements in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media without the
prior written consent of the Purchaser, in the case of the Merging Corporation
and the Seller, or the Merging Corporation and the Seller, in the case of the
Purchaser. The parties shall cooperate as to the timing and the contents of any
such press release or public announcement.
SECTION 9.04
Headings and Interpretation
<PAGE>
The descriptive headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement. As used herein, unless the context indicates otherwise, the
conjunctive includes the disjunctive, and the disjunctive includes the
conjunctive. As used herein, unless the context indicates otherwise, the
singular includes the plural and the plural includes the singular.
SECTION 9.05
Severability
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
SECTION 9.06
Entire Agreement
This Agreement constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, between the Merging Corporation, the Seller
and the Purchaser with respect to the subject matter hereof.
SECTION 9.07
Assignment
This Agreement may not be assigned by operation of law or otherwise without the
express written consent of Seller and Purchaser (which consent may be granted or
withheld in the sole discretion of Seller and Purchaser); PROVIDED, HOWEVER,
that the Purchaser may assign this Agreement to an affiliate of the Purchaser
with the prior written consent of Seller, which consent shall not be
unreasonably withheld.
SECTION 9.08
No Third Party Beneficiaries
This Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
SECTION 9.09
Amendment
This Agreement may not be amended or modified except (a) by an instrument in
writing signed by, or on behalf of, each Seller and the Purchaser or (b) by a
waiver in accordance with Section 9.03.
SECTION 9.10
"person" Defined
As used herein, "person" shall mean and include any individual, partnership,
joint venture, corporation, trust, unincorporated organization, and government
or other department or agency thereof.
SECTION 9.11
Governing Law
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of New York, applicable to contracts executed in and to be
performed entirely within that state. All actions and proceedings arising out of
or relating to this Agreement shall be heard and determined in any New York
state or federal court sitting in the City of New York.
SECTION 9.12
Counterparts
This Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which, when executed, shall be
deemed to be an original, but all or which taken together shall constitute one
and the same agreement.
<PAGE>
SECTION 9.13
Specific Performance
The parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
IN WITNESS WHEREOF, the Seller has executed, and the Purchaser and the Merging
Corporation has caused this Agreement to be executed as of the date first
written above.
MERGING CORPORATION SELLER:
E-Media3
By: /s/ RANDY MOSS By: /s/ RANDY MOSS
------------------------- --------------------------
Randy Moss, President Randy Moss
PURCHASER:
Digital Video Display Technology ("DVDT")
By: /s/ LEE EDMONDSON
-------------------------
Lee Edmondson, CEO
<PAGE>
SCHEDULE 3.15 (a) (1)
MERGED INTELLECTUAL PROPERTY
1. INTERNET WEB PROPERTIES
o 4 Just Odds Web Site
o Premiere Poster Web Site
o Digital Video Music Web Sites (5)
2. DOMAIN NAMES
o E-Media3.com
o E-Media3.net
o E-Media2.com
o E-Media2.net
o 4justodds.com
3. PATENTS- TO BE APPLIED FOR UNDER DVDT
Open System Patents
Centralized Server Programming and Storage
1. Multiple streaming imbedment
2. Streaming and Download Development
3. Advertising Stream Applications
4. Location Based server applications
5. Database development (content management)
6. Statistical and usage software
7. Remote Upgrade- System
Control Panel GUI & Programming
1. CP/server interface
2. Menu creation and hard drive storage
3. Multimedia Interface
4. Advertising Streaming and hard drive storage
5. Remote Upgrade- Local
6. Information Up-Streaming and E-Commerce applications
Closed System Patents
VIDEO JUKEBOX (location Based Unit)
1. Efficiency Remote Venue Programming and Re-programming
2. Multiplex bill boarding (display) Monitor (separate) System
3. Credit Card/Cash hardware/software interfacing with location based
unit
Games/Sports Bar Top Unit
1. Bar top unit interfacing with satellite for live video feeds
2. Internet interfacing for multi-player interactions
3. Credit Card/Cash hardware/software interfacing with location based
unit
4. Multiplex interfacing with video system
Server Side (Location Control)
1. Multiple stream inbedment - Synchronized Server Applications with
Locations
2. Streaming and Download Development
3. Advertising Stream Applications
4. Database development (content management)
5. Statistical and usage software
6. Automated digital transfer format mechanism
Client Side (location based unit)
1. CP/server interface
2. Server interface
3. Multimedia Storage (both feature and advertising)
4. Specialty features (multi-user interfacing)
5. Internet/Direct ordering of products and service capabilities
These patents were developed by:
R.A. Moss
Stein Davis
Keith Hawkins
<PAGE>
EXHIBIT 1.09
SHARE DISTRIBUTION
R.A.MOSS 14,000,000
ANTHONY CAPSOUTO 1,000,000
TOTAL EXECUTIVE (SEE BELOW) 5,000,000
EXECUTIVE DISTRIBUTION
R.A. MOSS Chief Of Operations 1,000,000
KEITH HAWKINS VP- New Business/Projects 750,000
STEIN DAVIS VP-Technologies 750,000
GINA CAVALIER-KING Director New Business 250,000
KEITH GLANTZ Director of Sports 500,000
TO BE DISTRIBUTED 1,750,000
<PAGE>
SCHEDULE 3.02
LIST OF SELLING STOCKHOLDERS AND STOCK OWNERSHIP IN
MERGING CORPORATION
Percentage of Ownership and of
------------------------------
Aggregate Merger Consideration
------------------------------
Name and Address Shares Shares to be Delivered
---------------- ------ ----------------------
R.A. Moss 1,000,000 100%
5901 Warner Avenue, #432
Huntington Beach, CA 92649
EXHIBIT 2 (B)
-------------
STOCK SUBSCRIPTION OFFER
------------------------
TO: BOARD OF DIRECTORS:
1. Subscription: RANDY MOSS (the "Undersigned") hereby offers to subscribe
-------------
for Twenty Million (20,000,000) shares of restricted Common Stock (the "Stock")
of DIGITAL VIDEO DISPLAY TECHNOLOGY CORP., a Nevada corporation ("the Company").
The par value of the Common Stock is US$.001 per share. The Undersigned agrees
to provide shares of stock in eMedia3, Inc., as full consideration for such
Stock, receipt of which is hereby acknowledged.
2. Representations and Warranties of the Undersigned: The Undersigned
------------------------------------------------------
hereby represents and warrants that:
A. The Undersigned is financially responsible, able to meet its
obligations hereunder, and acknowledges this investment may be long
term and is by its nature speculative; further, the Undersigned
acknowledges it is financially capable of bearing the risk of this
investment.
B. The Undersigned has had substantial experience in business or
investments in one or more of the following:
(i) knowledge of and investment experience with securities, such
as stocks and bonds;
<PAGE>
(ii) ownership of interests in new ventures and/or start-up
companies;
(iii)experience in business and financial dealings and parlance,
and the Undersigned can protect its own interests in an investment of
this nature and does not have a "Purchaser Representative," as that
term is defined in Regulation D of the Securities Act of 1933, as
amended, (the "Securities Act") and does not need such a
Representative.
C. The Undersigned is capable of bearing the high degree of economic
risks and burdens of this investment, including, but not limited to,
the possibility of complete loss of all its investment capital and the
lack of a liquid public market, such that it may not be able to
readily liquidate the investment whenever desired or at the then
current asking price of the Stock.
D. The Undersigned has had access to the information set forth in
Paragraph 4 hereof and was able to request copies of such information,
ask questions of and receive answers from the Company regarding such
information and any other information it desired concerning the terms
and conditions of this transaction and all such questions have been
answered to its full satisfaction. The Undersigned understands that
the Stock has not been registered under the Securities Act and the
applicable state securities laws in reliance on the exemption provided
by Section 4(2) of the Securities Act and Regulation D relating to
transactions not involving a public offering. The Undersigned further
understands that it is purchasing the Stock without being furnished
any offering literature, prospectus or private offering memorandum,
other than that supplied under or identified in this Offer.
E. At no time was the Undersigned presented with or solicited by any
leaflet, public promotional meeting, circular, newspaper or magazine
article, radio or television advertisement, or any other form of
general advertising otherwise than in connection and concurrently with
this Offer.
F. The Undersigned is aware of the following:
(i) The Company's financial and operating history;
(ii) The existence of substantial restrictions on the
transferability of Stock;
<PAGE>
(iii) The Stock will not be, and the Undersigned will have no
rights to require, that the Company register the Stock under the
Securities Act or any state securities laws; and
(iv) The Undersigned may not be able to avail
himself/herself/itself of the provisions of Rule 144 adopted by the
Securities and Exchange Commission under the Securities Act or any
applicable state securities acts with respect to the release of the
Stock, and, accordingly, it may not be possible for the Undersigned to
liquidate part or all of his/her/its investment in the Company or to
liquidate at the then current asking price of the Stock, if any.
G. It has at no time been represented, guaranteed, or warranted to the
Undersigned by an officer or director of the Company, or the agents or
employees thereof, or any other person, expressly or impliedly, any of
the following:
(i) An exact or approximate length of time that the Undersigned
will or will not remain as owner of the Stock;
(ii) A percentage of profit and/or amount or type of
consideration, profit, loss, credits or deductions to be realized, if
any, as a result of the Undersigned's ownership of the Stock; or
(iii) Past performance on the part of any director or officer of
the Company, or the agents or employees thereof, that will in any way
indicate the predictable results accruing from ownership of the Stock.
(H) The Company is under no duty to register the Stock or comply with
any exemption from registration under the Securities Act or any state
securities law, including supplying to the appropriate agency or to
the Undersigned any information required in connection with transfers
under appropriate rules and regulations.
(I) The undersigned is an "accredited" investor, as that term is
defined in Regulation D and other applicable securities laws, rules
and regulations.
The foregoing representations and warranties shall be true and accurate
as of the date hereof and as of the date of any acceptance of this Offer by the
Company and shall survive the date of such acceptance by the Company.
3. Indemnification: The Undersigned acknowledges that he/she/it understands
----------------
the meaning and legal consequences of the representations and warranties
contained in Paragraph 2 hereof and the Undersigned hereby agrees to indemnify
and hold harmless all loss, damage or
<PAGE>
liability due to or arising out of (i) a breach of any such representation or
warranty, or (ii) a breach of any warranty of the Undersigned contained in this
Offer.
4. Access to and Furnishing Information: The Company has provided the
---------------------------------------
Undersigned access to and furnished to the Undersigned, if requested, all
corporate records, including Articles of Incorporation, By-Laws, Minutes,
agreements, information relating to officers, directors, stockholders and
employees, financial records and information related to the business and
operations of the Company, all as set forth in the Company's filings on the
EDGAR data system at the SEC, as of the date hereof. The Undersigned hereby
acknowledges that he/she/it has had an opportunity to review and understand the
foregoing and has, if deemed necessary, consulted with a legal and/or tax
advisor.
5. Transferability: The Undersigned agrees not to transfer or assign this
----------------
Offer, or any of the Undersigned's interest therein, and further agrees that the
assignment and transferability of the Stock acquired pursuant hereto shall be
made only in accordance with this Offer. The Company shall issue stop transfer
instructions to its transfer agent for its Common Stock with respect to the
Stock and shall place the following legend on the certificates representing the
Stock:
"The shares represented by this certificate have been acquired
pursuant to a transaction effected in reliance upon Section 4(2)
of the Securities Act of 1933, as amended, (the "Act") and have
not been the subject of a Registration Statement under the Act or
any state securities act. These securities may not be sold or
otherwise transferred in the absence of such registration or
applicable exemption therefrom under the Act or any applicable
state securities act."
<PAGE>
6. Revocation: The undersigned agrees that it shall not cancel, terminate
-----------
or revoke this Agreement or any provisions hereof or any agreement of the
Undersigned made hereunder.
7. Notices: All notices or other communications given or made hereunder
--------
shall be in writing and shall be delivered or mailed by registered or certified
mail, return receipt requested, postage prepaid, to the Undersigned or to the
Company at their respective addresses set forth above.
8. Governing Law: This Agreement and other transactions contemplated
---------------
hereunder shall be construed in accordance with and governed by the laws of the
State of Nevada.
9. Entire Agreement: This Offer constitutes the entire agreement among the
-----------------
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by all parties.
10. Other Documents: The Undersigned expressly agrees to satisfactorily
----------------
perform all other acts and execute and deliver all other documents as may be
necessary or appropriate, in the opinion of counsel for the Company, to carry
out the intent and purposes of this Offer, and fully comply with all applicable
federal and state securities laws.
IN WITNESS WHEREOF, the parties hereto have executed this Offer as of the
date and year set forth below.
DATED this _____ day of ________________, 2000.
------------------------------
Signature of Purchaser
----------------------------
Printed Name of Purchaser
----------------------------
Address
----------------------------
City Country
<PAGE>
THIS OFFER IS ACCEPTED BY:
DIGITAL VIDEO DISPLAY TECHNOLOGY CORP.
By:
