AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into as of
the 12 day of April, 2000, by and among Interspace Enterprises, Inc., a Delaware
corporation("IEI") and Marathon Marketing Corp., a Colorado corporation ("MM")
WHEREAS, IEI is authorized to issue up to 25,000,000 shares of common
stock, $.0001 par value ("IEI Common Stock") of which 6,668,200 shares are
issued and outstanding; and
WHEREAS MM is authorized to issue up to 40,000,000 shares of common
stock, $.0001 par value ("MM Stock"); of which 672,000 shares are issued and
outstanding; and
WHEREAS the respective Boards of Directors of IEI and MM believe it to
be in the best interests of their respective corporations and shareholders for
IEI to merge with and into MM (MM and IEI sometimes referred to as the
"Constituent Corporations") upon the terms and conditions herein contained; and
in connection therewith have each adopted, approved and authorized the execution
and delivery of this Agreement and Plan of Merger (the "Agreement"); and
WHEREAS, the Boards of Directors of MM and IEI have submitted this
Agreement and the subject merger to their shareholders for approval as required
by the corporate law of the respective States of incorporation.
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto do hereby agree as follows:
I. MERGER
1.01 EFFECTIVE TIME. The merger contemplated by this Agreement shall be
effective on the date and time that the Certificate of Merger is filed with the
Secretary of State of the State of Delaware (the "Effective Time").
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1.02 MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the General Corporation Law of the State
of Delaware (the "GCL"), IEI shall be merged with and into MM at the Effective
Time (the "Merger"). As of the Effective Time, the separate corporate existence
of IEI shall cease and MM shall continue as the surviving corporation (the
"Surviving Corporation") under the new name of Interspace Enterprises, Inc. and
shall succeed to and assume all the rights and obligations of IEI in accordance
with the Colorado Revised Statutes. Without limiting the generality of the
foregoing:
(a) MM, as the surviving corporation, shall continue its
corporate existence under the laws of the State of Colorado and shall possess
all of the rights, privileges, immunities, powers, franchises and authority
(both public and private) of, and be subject to all of the restrictions,
disabilities and duties of, MM and IEI;
(b) all of the assets and property of IEI of every kind,
nature and description (real, personal and mixed and both tangible and
intangible) and every interest therein, wheresoever located, including without
limitation all debts or other obligations belonging or due to IEI, all stock
subscriptions, claims and chooses in action shall be and be deemed to be vested,
absolutely and unconditionally in MM (to the same extent, degree and manner as
previously vested in IEI);
(c) all debts and obligations of IEI, all rights of creditors
of IEI and all liens encumbering any of the property of IEI vested in MM shall
remain in full force and effect without modification or impairment and shall be
and be deemed to be enforceable against MM and its assets and properties with
the same full force and effect as if such debts, obligations or liens had been
originally incurred or created by MM in its own name and for its own behalf.
1.03 CLOSING. Subject to the satisfaction or waiver of the last of the
conditions set forth in Article VI hereof, the closing of the Merger will take
place at 10:00 am on April 12, 2000, at the law offices of MICHAEL A. LITTMAN,
10200 W. 44TH Avenue, Suite 400, Wheat Ridge, Colorado 80033 or at such other
time and place as the parties to this Agreement shall agree (the "Closing
Date"). Subject to the terms and conditions of this Agreement, on the Closing
Date: (a) the parties hereto shall each deliver to the other the documents,
agreements, payments and consideration required to be delivered by each to the
other party hereto as herein expressly provided and (b) the Constituent
Corporations shall execute two originals of a Certificate of Merger in the forms
required for filing with the Secretary's of State of Delaware and Colorado,
which Certificates of Merger shall be filed by the parties with the Secretary's
of State of Delaware and Colorado immediately after execution on the Closing
Date. Subsequent to the Closing the parties hereto shall thereafter execute,
acknowledge, deliver and/or record such other and further instruments, documents
or certificates and/or take an perform such other and further actions as may be
required to effect and/or implement the merger.
1.04 NAME. The name of the Surviving Corporation shall be "Interspace
Enterprises, Inc."
1.05 CONSTITUTIONAL DOCUMENTS, DIRECTORS AND OFFICERS. On and as of
the Effective Time:
(a) The Certificate of Incorporation of MM on such date in
full force and effect shall be the Certificate of Incorporation of MM, as the
surviving corporation, until the same shall be altered, amended, modified,
terminated or rescinded in the manner provided by the Colorado Revised Statutes;
which rights of alteration, amendment, modification, termination and/or
rescission are hereby expressly reserved by MM;
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(b) The By-Laws of MM on such date in full force and effect,
shall be the By-Laws of MM, as the surviving corporation, until the same shall
be altered, amended, modified, terminated or rescinded in the manner provided in
the Certificate of Incorporation and/or the GCL; which rights of alteration,
amendment, modification, termination and/or rescission are hereby expressly
reserved by MM;
(c) The members of the Board of Directors, and the officers of
MM, the Surviving Corporation, shall consist of the directors and officers of
IEI immediately prior to the Effective Time; each to serve in such capacity
until the earlier of their resignation or removal or until their successors are
duly elected and qualified.
1.06 PRINCIPAL OFFICE. The principal office of the Surviving
Corporation shall be 7825 Fay Avenue, Suite 200, La Jolla, CA 92037.
II. EFFECT OF MERGER ON CAPITAL STOCK OF CONSTITUENT CORPORATIONS - EXCHANGE OF
CERTIFICATES
2.01 CONVERSION OF CAPITAL STOCK OF IEI. As of the Effective Time, the
shares of IEI Stock shall be converted and exchanged into shares of MM Common
Stock and cash consideration in the following manner:
(a) Each issued and outstanding share of IEI Stock shall, by
virtue of the merger and without any action on the part of the holder thereof,
be converted and exchanged into one fully paid and nonassessable share of MM
Common Stock;
(b) After the Effective Time, each holder, other than a
Dissenting Shareholder, of an outstanding certificate which prior to the
Effective Time represented shares of IEI Stock shall surrender such certificate
("Old Certificate") to MM, and such holder shall be entitled upon such surrender
to receive in exchange therefor a certificate for that number of shares of MM
Common Stock which such holder is entitled to receive under Section 2.01(a)(i)
of this Agreement. Until surrendered as contemplated by this sub-section, each
Old Certificate for shares of IEI Stock shall be deemed at all times after the
Effective Time to represent and evidence (for all corporate purposes) that
number of shares of MM Common Stock into which the shares of IEI Stock
theretofore represented by such Old Certificate shall have been converted
pursuant to Section 2.01(a)(i) hereof. From and after the Effective Time the
sole rights of the holders of Old Certificates representing shares of IEI Stock
shall be those to which they are entitled as owners of MM Common Stock into
which the shares of IEI Stock evidenced by such Old Certificates have been
converted as herein provided;
(c) Upon the issuance of the MM Common Stock to the
shareholders of IEI as herein provided in exchange for their shares of IEI
Stock, there shall be credited to the capital of MM an amount equal to the net
book value of the shares of MM Common Stock so issued; and of the amount so
credited, the portion thereof in excess of the aggregate par value thereof shall
be credited to the capital surplus account.
(d) Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding shares of IEI Stock held by a person who
complies with all of the provisions of Delaware law concerning the rights of
holders of IEI Stock to object to the Merger and require appraisal of their
shares ("Dissenting Shares" and "Dissenting Shareholders", as the case may be)
shall not be converted as described in Section 2.01(a) but shall, instead
entitle the holder thereof to receive such consideration as may be determined to
be due to such Dissenting Shareholder pursuant to Delaware law. If, after the
Effective Time, such Dissenting Shareholder withdraws his demand for appraisal
or fails to perfect or otherwise loses his right of appraisal pursuant to
Delaware law, each of his shares shall be deemed to be converted as of the
Effective time into the MM Common Stock specified in ss.2.01(a).
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III. REPRESENTATIONS AND WARRANTIES OF MM
In order to induce IEI to execute and perform this Agreement, MM does
hereby represent, warrant, covenant and agree (which representations,
warranties, covenants and agreements shall be and be deemed to be continuing and
survive the execution and delivery of this Agreement, the Closing and the
Effective Time) as follows:
3.01 ORGANIZATION AND QUALIFICATION
(a) MM is a corporation duly organized, validly existing, and
in good standing under the laws of Colorado, with all requisite power and
authority to own, lease, license, and use its properties and assets and to carry
on the business in which it is now engaged. MM is duly qualified to transact the
business in which it is engaged and is in good standing as a foreign corporation
in every jurisdiction in which its ownership, leasing, licensing, or use of
property or assets or the conduct of its business makes such qualification
necessary.
(b) MM has furnished to IEI its Certificate of Incorporation
and By-Laws, as presently in effect, certified by the Secretary of the
corporation. MM is not in material violation or breach of, or in default with
respect to, any term of its Certificate of Incorporation or By-Laws.
3.02 CAPITALIZATION The authorized capital stock of MM consists of
40,000,000 shares of MM Common Stock of which 672,000 shares were issued and
outstanding as of April 4, 2000.
3.03 ABSENCE OF LITIGATION. There is no action, lawsuit, proceeding
or investigation of any kind or nature pending or, to its knowledge, threatened
against MM before any court, tribunal or administrative agency or board which it
reasonably expects, individually or in the aggregate, to materially and
adversely: (a) affect the solvency of MM, (b) affect its ability to perform
hereunder, or (c) render any one or more of this Agreement and/or any of the
agreements referred to herein and/or the transactions contemplated hereunder
void or voidable.
3.04 CONTRACTS AND OTHER INSTRUMENTS. MM is not a party to nor it or
its assets bound by any agreement of any kind, nature or description except as
set forth in the Registration Statement. MM is not in breach or violation of or
default under any contract or instrument to which MM is a party and/or by which
its assets are bound; and no event has occurred which with the lapse of time or
action by a third party could result in a breach or violation of or default by
MM under any contract or other instrument to which MM is a party of by which it
or any of its assets are bound or affected, nor is there any court or regulatory
order pending against or affecting MM and/or any of its assets. MM is not a
party to any agreement performable in the future.
3.05 AUTHORITY MM has all requisite power and authority to execute,
deliver, and perform this Agreement. All necessary corporate proceedings of MM
have been or as of the Effective Time will have been duly taken to authorize the
execution, delivery, and performance of this Agreement by MM. This Agreement has
been duly authorized, executed, and delivered by MM, constitutes the legal,
valid, and binding obligation of, MM, and is enforceable as to MM in accordance
with its terms subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the rights of
creditors generally and the discretion of courts in granting equitable remedies.
Except for the provisions of the Colorado Revised Statutes governing the filing
of the Statement and Certificate of Merger, no consent, authorization, approval,
order, license, certificate, or permit of or from, or declaration or filing
with, any federal, state, local, or other governmental authority or any court or
other tribunal is required by MM for the execution, delivery, or performance of
this Agreement by MM.
3.06 MM COMMON STOCK All of the shares of MM Common Stock to be issued
by MM pursuant to this Agreement shall be and be deemed to be duly and validly
authorized and, when issued to the shareholders of IEI in exchange for their IEI
Stock, duly and validly issued, fully paid and nonassessable and free and clear
of all federal and state issuance, stock and/or company taxes, liens, claims,
encumbrances and charges.
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3.07 CERTIFICATE The representations, warranties, covenants and
agreements of MM contained in this Agreement, including, without limitation,
those contained in this Article III, are true, accurate and correct in all
respects as of the date hereof and shall be true, accurate and correct and
complete, in all respects, as of the Closing; and at the Closing MM shall
deliver to IEI a certificate, executed by the chief executive officer of MM
remaking, on behalf of MM, each of the representations, warranties, covenants
and agreements of MM set forth in this Agreement, including without limitation,
those set forth in this Article III. hereof.
3.08 FINANCIAL STATEMENTS AND CONDITION
(a) MM has delivered to IEI a true, correct and complete copy
of its Form 10-SB dated December 10, 1999 ("Registration Statement") filed
pursuant to the Securities Exchange Act of 1934, as amended (the "34 Act") which
contains therein the audited balance sheet, statement of income, statement of
retained earnings, and statement of cash flows of IEI for the fiscal year ended
August 31, l999 (the "Audited Financial Statements").
(b) At or prior to the Closing, MM shall have filed its Form
10Q for the period ended February 29, 2000 including unaudited financial
statements ("Interim Statements", the Audited Financial Statements and Interim
Statements collectively the "Financial Statements").
(c) The Financial Statements were prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout the period involved, are true, correct and complete in all material
respects, are in accordance with the books and records of MM and fairly present
(and will fairly present) together with the notes thereto, the financial
position and results of operations of IEI for the periods therein indicated.
(d) Since the dates of the Financial Statements, there have
not been, nor prior to the Closing will there be, any material adverse changes
in the business or condition, financial or otherwise, of MM.
3.09 FILINGS MM has delivered (or will deliver, prior to the Closing)
to IEI true, correct and complete copies of the Registration Statement
(including exhibits) together with each of its other reports to shareholders and
filings with the Commission for the year ended December 31, l999 and through the
date of the Closing. MM has duly and timely filed (and will, prior to the
Closing duly and timely file) all reports required to be filed by it under the
Securities Act of l933, as amended ("33Act") and the 34 Act (collectively the
"Federal Securities Laws") None of the foregoing reports nor any reports sent to
the shareholders of IEI contained any untrue statement of material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements in such reports, in light of the circumstances under which
they were made, not misleading.
3.10 BOARD ACTION During the period from the date hereof until the
Closing there shall not be taken an action by the Board of Directors of MM
without the prior written consent of IEI in each instance.
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IV. REPRESENTATIONS AND WARRANTIES OF IEI
In order to induce MM to execute and perform this Agreement, IEI does
hereby represent, warrant, covenant and agree (which representations,
warranties, covenants and agreements shall be and be deemed to be continuing and
survive the execution and delivery of this Agreement, the Closing and the
Effective Time) as follows:
4.01 ORGANIZATION AND GOOD STANDING IEI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with full power and authority to own or lease its properties and to
carry on its business as presently being conducted and enter into and perform
each of the transactions, covenants and agreements provided for in this
Agreement.
4.02 EXECUTION AND PERFORMANCE AUTHORIZED The execution, delivery and
performance of this Agreement and all other documents and related agreements
contemplated hereunder, have been duly approved by IEI's board of directors and
shareholders; such execution and delivery and the consummation by IEI of the
transactions, covenants and agreements contemplated hereunder have been duly
authorized by the taking of all necessary corporate action; and no further
action is required to be taken by law and/or pursuant to the certificate of
incorporation, by-laws or otherwise of IEI to authorize the execution, delivery
and/or performance of this Agreement, and/or the taking of all action required
to be taken by IEI with respect to this Agreement and the consummation of the
transactions and performance of this Agreement and the other agreements
contemplated hereunder. The Agreement and the other documents contemplated
hereunder, are valid and binding and fully enforceable against IEI in accordance
with their respective terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally and the discretion of courts in
granting equitable remedies. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with, any
federal, state, local, or other governmental authority or any court or other
tribunal is required by IEI for the execution, delivery, or performance of this
Agreement and the other agreements referred to herein.
4.03 ABSENCE OF LITIGATION There is no action, lawsuit, proceeding or
investigation of any kind or nature pending or, to its knowledge, threatened
against IEI before any court, tribunal or administrative agency or board which
it reasonably expects, individually or in the aggregate, to materially and
adversely: (a) affect the solvency of IEI, (b) affect its ability to perform
hereunder, or (c) render any one or more of this Agreement and/or any of the
agreements referred to herein and/or the transactions contemplated hereunder
void or voidable.
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4.04 NO OTHER DEFAULT The execution and delivery of this Agreement and
the other agreements referred to herein, and the consummation of the
transactions contemplated hereunder will not conflict with or violate or require
any consent under and will not result in any breach or termination of
certificate of incorporation or by-laws of IEI, or any other agreement to which
IEI is a party or by which its properties are subject or by which it is bound.
IEI is not in violation of, or in default under, (i) any term or provision of
its constitutional documents; (ii) any material term or provision or any
financial covenant of any indenture, mortgage, contract, commitment or other
agreement or instrument to which it is a party or by which it or any or its
properties or business is or may be bound or affected; or (iii) any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over it or any of its
properties or business. IEI owns, possesses or has obtained all governmental and
other licenses, permits, certifications, registrations, approvals or consents
and other authorizations necessary to own or lease, as the case may be, and to
operate its properties and to conduct its business or operations as presently
conducted and all such governmental and other licenses, permits, certifications,
registrations, approvals, consents and other authorizations are outstanding and
in good standing, and there are no proceedings pending or, to the best of its
knowledge, threatened, or any basis therefor existing, seeking to cancel,
terminate or limit such licenses, permits, certifications, registrations,
approvals or consents or authorizations, or related to the breach or failure to
comply of IEI with any law, rule, regulation, judgment, order or decree;
4.05 PERMITS AND FILINGS Except for the filing of the Certificate of
Merger, there is no requirement applicable to IEI to make any further filing
with, or to obtain any permit, authorization, consent or approval of, any
governmental or other regulatory authority as a condition of the lawful
consummation of the transactions contemplated under this Agreement.
4.06 CORPORATE DOCUMENTS IEI has furnished to MM true, correct and
complete copies of its certificate of incorporation, by-laws and minute book,
and a certificate of good standing from the State of Delaware dated within
thirty (30) days of the Closing Date. The minute book contains a record, which
is complete and accurate in all material respects, of all meetings and all
corporate actions of the shareholders and Board of Directors of IEI. IEI is not
in material violation or breach of, or in default with respect to, (a) any term
of its constitutional documents or any agreement to which it is a party or by
which its assets are bound, or (b) any law, rule, regulation, judgment, order or
decree of any governmental agency or court having jurisdiction over it or its
assets.
4.07 CAPITALIZATION The authorized capital stock of IEI consists of
25,000,000 shares of common stock ("IEI Stock") of which 6,668,200 shares are
issued and outstanding ("Outstanding IEI Stock"). The shares of Outstanding IEI
Stock are duly authorized, validly issued, fully paid, and nonassessable. There
are no commitments, plans, arrangements to issue, options, warrants, security,
or other rights calling for the issuance of, any shares of capital stock or
other ownership interest in IEI or any security or other instrument convertible
into, exercisable for, or exchangeable for capital stock of or ownership in IEI.
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4.08 TAX AND OTHER LIABILITIES IEI has no liability of any nature,
accrued, absolute or contingent, secured or unsecured including without
limitation liabilities for payroll and other employee taxes, federal, state,
local, or foreign taxes or liabilities to customers or suppliers, other than
liabilities which are reflected on the Financial Statement. Except for the
liabilities included on the Financial Statement, as of the date of such
Financial Statement, IEI had no liabilities, either fixed or contingent, which
would have been required to be recorded under GAAP as of such date, and to the
knowledge of IEI no such liabilities, other than liabilities arising in the
ordinary course of business and/or pursuant to this Agreement have accrued
and/or will accrue between such date and the Effective Time. IEI has filed all
federal, state, municipal and local tax returns (whether relating to income,
sales, franchise, withholding, real or personal property or otherwise) required
to be filed under the laws of the United States and all applicable states, and
has paid in full all taxes which are due pursuant to such returns or claimed to
be due by any taxing authority or otherwise due and owing. No penalties or other
charges are or will become due with respect to the late filing of any such
return. To the best of the knowledge of IEI, after due investigation, each such
tax return heretofore filed by IEI correctly and accurately reflects the amount
of its tax liability thereunder. IEI has withheld, collected and paid all other
levies, assessments, license fees and taxes to the extent required and, with
respect to payments, to the extent that the same have become due and payable;
4.09 LITIGATION AND CLAIMS There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation pending
or, or to the knowledge of IEI threatened, with respect to IEI or any of its
business, properties, or assets.
4.10 PROPERTIES As of the Effective Time, IEI will have good title to
all properties and assets used in its business or owned by it free and clear of
all liens, claims, mortgages, security interests, pledges, charges, and
encumbrances.
4.11 CONTRACTS AND OTHER INSTRUMENTS IEI is not a party to nor it or
its assets bound by any agreement of any kind, nature or description except as
set forth in the Registration Statement. IEI is not in breach or violation of or
default under any contract or instrument to which IEI is a party and/or by which
its assets are bound; and no event has occurred which with the lapse of time or
action by a third party could result in a breach or violation of or default by
IEI under any contract or other instrument to which IEI is a party of by which
it or any of its assets are bound or affected, nor is there any court or
regulatory order pending against or affecting IEI and/or any of its assets. IEI
is not a party to any agreement performable in the future
4.12 EMPLOYEES IEI has no employees and no welfare benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA")or otherwise of any kind, nature or description.
4.13 PRE CLOSING ACTIVITY IEI shall not enter into or consummate any
transactions prior to the Closing other than in the ordinary course of business
and will pay no dividend, or increase the compensation of any officer, director
or employee and will not enter into any transaction or agreement which would
adversely affects its financial condition. IEI shall deliver to MM at or prior
to the Closing copies of any and all reports relating to the financial and/or
business condition of IEI which are created or published subsequent to the date
hereof together with any reports or communications sent to the stockholders of
IEI subsequent to the date hereof.
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4.14 ACCURACY No statement, representation or warranty contained
herein, in any certificate delivered pursuant to this Agreement, the
Registration Statement and/or in any report filed with the Securities Exchange
Commission (the "Commission") contains or will contain any untrue statement of a
material fact or omits to state any material fact necessary to make such
statement, representation or warranty not misleading.
4.15 PURCHASE FOR INVESTMENT PURPOSES ONLY The shareholders of IEI are
acquiring the MM Common Stock as a result of the Merger for investment purposes
only and not with the view to the resale or distribution thereof. Each of the
shareholders of IEI is an "accredited investor" under the regulations
promulgated under the 33Act or otherwise meets one of the definitions for
persons entitled to acquire unregistered securities pursuant to an exemption
from registration under the 33 Act. Neither IEI nor its shareholders have
received and/or relied upon any representations or warranties from MM other than
those contained in this Agreement and the attached schedules or exhibits hereto.
IEI represents and warrants that it and its shareholders have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment in MM Common Stock. IEI and its shareholders
understand and acknowledge that the MM Common Stock has not been registered
under the Act or under any state securities act and are being issued to the
shareholders of IEI pursuant to an exemption from registration under the Act.
The reliance by MM upon such exemption is predicated upon the representations
and warranties of IEI contained herein. In this regard, IEI and its shareholders
understand and agrees that there may be affixed to the certificates representing
the shares of MM Common Stock acquired by the shareholders of IEI hereunder a
legend advising of the unregistered, restricted nature of the shares.
4.16 CERTIFICATE The representations, warranties, covenants and
agreements of IEI contained in this Agreement, including, without limitation,
those contained in this Article IV, are true, accurate and correct in all
respects as of the date hereof and shall be true, accurate and correct and
complete, in all respects, as of the Closing.
V. COVENANTS AND OTHER AGREEMENTS
5.01 CONDUCT OF BUSINESS OF IEI Except as herein expressly provided to
the contrary or as otherwise agreed to in writing by MM, during the period from
the execution of this Agreement until the earlier to occur of the Effective Time
or the termination of this Agreement as herein provided, IEI will conduct its
operations according to its ordinary and usual course of business and consistent
with past practice. In this regard, except as expressly provided in this
Agreement to the contrary or otherwise agreed to by MM in writing or as required
by law or agreement, IEI will not, between the date of this Agreement and the
earlier to occur of the Effective Time or the termination of this Agreement as
hereinprovided:
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(a) Make or become obligated to make, any payment to any director,
officer, employee, or agent;
(b) Declare any dividend or make any other distribution to shareholders;
(c) Incur any indebtedness for borrowed money except in the ordinary
course of business;
(d) Sell, lease, license, encumber or dispose of any material portion of
its properties or assets except in the ordinary course of business;
(e) Expend funds for any individual capital expenditure in excess of
$1,000 or aggregate capital expenditures in excess of $5,000;
(f) Issue any shares of capital stock, modify or reorganize its equity
capitalization or grant any option or other right to acquire any
shares of its capital stock;
(g) Amend its certificate of incorporation or by-laws.
(h) Change its business, operations or financial condition, or the manner
of managing or conducting its business and operations if such changes,
if any, have a material adverse effect on such business, operations or
financial condition, taken as a whole;
(i) Change its accounting methods or practices (including, without
limitation, any change in depreciation, amortization and/or good will
policies or rates;
(j) Incur any damage, destruction or loss (whether or not covered by
insurance) which materially and adversely affects its assets,
business, operations or financial condition;
(k) Make any loan to any person or entity and/or issue any guaranty for or
with respect to its own or another's obligations; or
(l) Waive or release any right or claim;
5.02 TRANSACTION COSTS AND EXPENSES Each of the parties hereto shall
pay its own respective costs incurred in connection with this transaction
including, without limitation, all legal, accounting, auditing and appraisal
fees in negotiating and preparing this Agreement and in consummating, closing
and implementing the transactions contemplated hereby.
5.03 SUBSEQUENT EVENTS Each of the parties hereto shall promptly advise
the other parties hereto, in writing of (a) the occurrence of any event which
renders any of the representations or warranties of such party set forth herein
inaccurate in any material respect, and (b) the failure of such party to comply
with or accomplish, in any material respect, any of the covenants or agreements
of such party set forth herein.
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5.04 INDEMNITY
(a) IEI does hereby agree to indemnify and hold harmless MM
and its employees, officers, directors and successors against and in respect of
any and all claims, suits, actions, proceedings (formal or informal),
governmental investigations, judgments, deficiencies, set-offs, damages,
settlements, liabilities, and reasonable legal and other expenses (including
reasonable attorneys' fees and defense costs) as and when incurred arising out
of or based upon any breach by IEI of any representation, warranty, covenant, or
agreement of IEI contained in this Agreement;
(b) MM does hereby agree to indemnify and hold harmless IEI
and its employees, officers, directors and successors against and in respect of
any and all claims, suits, actions, proceedings (formal or informal),
governmental investigations, judgments, deficiencies, set-offs, damages,
settlements, liabilities, and reasonable legal and other expenses (including
reasonable attorneys' fees and costs of defense) as and when incurred arising
out of or based upon any breach of any representation, warranty, covenant, or
agreement of MM contained in this Agreement.
(c) The parties' respective indemnity obligations
hereunder shall be subject to the following terms, limitations and conditions:
(i) A person claiming the right to indemnity coverage under
this Section 5.04 ("indemnitee") shall give the party from whom he or
it seeks indemnity coverage ("indemnitor") prompt notice of the
assertion of any indemnified claim on the basis of which an indemnitee
intends to seek indemnification from an indemnitor as provided herein;
provided, however, that the obligation of an indemnitor shall be
reduced for the failure to give timely notice at any particular time
only to the extent that the indemnitor has been actually prejudiced
thereby;
(ii) The indemnitor shall have the duty to zealously and
competently defend, with counsel selected by indemnitor after
consultation with the primary indemnitee, any matter subject to
indemnity coverage under subparagraphs (a) or (b) of this section and
to pay all costs of such defense. In any case where indemnitor's
obligation to provide a zealous defense is compromised by conflict of
interest between itself and an indemnitee or between indemnitees, the
indemnitor shall, upon the request of an indemnitee, provide separate
legal representation to obviate the conflict of interest. When
indemnitor has assumed the defense obligations of this section,
indemnitor shall have the right to settle the matter without the
indemnitees' consent, provided indemnitor in fact commits sufficient
funds to satisfy the settlement in full. In the event that an
indemnitor fails to defend as provided in this section, any indemnitee
shall have the right (but not the obligation) to select and be
represented by counsel of its choice, to manage its own legal
representation or defense and to settle any claim, debt or other
indemnified matter hereunder, and the indemnitor shall be liable to
such indemnitee for all costs, expenses, damages and settlements
incurred by such indemnitee;
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(iii) With respect to any claim for which an indemnitor shall
indemnify any indemnitee, the indemnitor shall be subrogated to all
rights of any indemnitee against any and all third parties up to the
amount paid by indemnitor to indemnitees or set off by such indemnity
against an indemnitor;
(iv) No indemnitor shall be liable for that portion of any
claim for which an indemnitee actually receives from any insurance, the
defense, cost of defense or insurance proceeds covering such claim (the
deductible pertaining to any such insurance shall not be considered to
be insurance proceeds or cost of defense).
5.05 RELATED AGREEMENTS Each of the parties shall execute and deliver
at Closing the related agreements, instruments and documents specified for
delivery at Closing or the Effective Time in Sections 6.02 and 6.03 and
elsewhere in this agreement or in a related agreement to which each,
respectively, is a party.
5.06 IEI LIABILITIES Prior to the Closing MM shall have paid in full
any and all liabilities of MM of every kind, nature and description.
5.07 INSPECTION At all times prior to the Closing, during normal
business hours an upon reasonable notice, each party will permit the other to
examine its books and records and the books and records of its subsidiaries, to
discuss the same with such party's authorized representative and to make copies
thereof and abstracts therefrom. It is recognized that each party may provide
the other with information (including, without limitation, information contained
in its books and records and/or pursuant to the inspection described in the
preceding sentence) which is confidential or proprietary information. During the
period from the date hereof until the fourth annual anniversary of the Closing
(or the termination of this Agreement if the Merger is abandoned) the recipient
of any such information shall protect such information from disclosure to
persons, other than members of its own organization and its professional
advisers, in the same manner as it protects its own confidential or proprietary
information from unauthorized disclosure, and not use such information to the
competitive detriment of the disclosing party. In addition if this Agreement is
terminated for any reason, each party shall promptly return or cause to be
returned all documents or other written records of such confidential or
proprietary information, together with all copies of such writings and, in
addition, shall either furnish or cause to be furnished, or shall destroy, or
shall maintain with such standard of care as is exercised with respect to its
own confidential or proprietary information, all copies of all documents or
other written records developed or prepared by such party on the basis of such
confidential or proprietary information. No information shall be considered
confidential or proprietary if it is (a) information already in the possession
of the party to whom disclosure is made, (b) information acquired by the party
to whom disclosure is made from other sources, or (c) information in the public
domain or generally available to interested persons or which at a later date
passes into the public domain or becomes available to the party to whom
disclosure is made without any wrongdoing by the party to whom the disclosure is
made.
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VI. CONDITIONS
6.01 CONDITIONS TO OBLIGATION TO EFFECT THE MERGER The respective
obligations of each party to consummate the Merger shall be subject to and
conditioned upon the satisfaction at or prior to the Closing Date of the
following conditions:
(a) To the extent required by the Delaware GCL and/or Colorado
law or the party's certificate of incorporation or by-laws, shareholder approval
shall have been obtained;
(b) No statute, rule, regulation executive order, decree,
temporary restraining order, preliminary or permanent injunction or other order
issued by any court or competent jurisdiction or other governmental entity
preventing the consummation of the Merger shall be in effect; provided that each
of the parties shall have used reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered;
(c) There shall not have occurred or been discovered any
material breach or inaccuracy of any representation or warranty made by any
other party in this Agreement, and there shall not have occurred any material
breach of any covenant or obligation required by this Agreement or by law to
have been performed by any other party prior to the Effective Time; and
(d) Each party shall have received all documents and
agreements required to be delivered to it at or before the Closing.
6.02 MM OBLIGATIONS AT CLOSING
(a) At the Closing, MM shall deliver or cause to be delivered
to IEI, in form satisfactory to IEI, the following:
(i) A true copy of the minutes of the meeting of MM's Board of Directors
approving the Plan of Merger and the Merger and authorizing the
execution, delivery and performance of this Agreement;
(ii) A certificate of good standing for MM issued within thirty (30) days
prior to the Closing Date by the Secretary of State of Delaware; and
(iii)All other schedules, certificates and other documents required by
this Agreement or by law to be delivered by MM on or before Closing or
the Effective Time.
(b) At the Closing, MM shall deliver or cause to be delivered
to the Exchange Agent (as defined) the consideration (set forth in Section
2.01(a) hereof) to be received by each holder of IEI Stock (other than
Dissenting Shareholders) who shall have surrendered to MM, at or before the
Closing his, her or its certificate representing all shares of IEI Stock owned
and/or held by such shareholders; and the Exchange Agent (as defined) shall,
immediately following the recordation of the Certificates of Merger in the
States of Delaware and Colorado, distribute such consideration to, or in
accordance with the written directions of, such holders of IEI Stock as their
respective interests may appear. Michael A. Littman, Esq. is hereby designated
by the parties hereto as the Exchange Agent; and by his execution of this
Agreement, Mr. Littman accepts such engagement and agrees to perform the duties
of Exchange Agent as herein set forth.
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6.03 IEI'S OBLIGATIONS AT CLOSING
At or prior to the Closing, IEI shall deliver or cause to be delivered
to MM, in form satisfactory to MM, the following:
(a) A true copy of the minutes of the meeting of the Board of
Directors of IEI adopting the Agreement and Plan of Merger and Merger,
recommending the Agreement and Plan of Merger and Merger to the shareholders of
IEI and authorizing MM's execution, delivery and performance of this Agreement;
(b) A true copy of the notice of shareholders meeting and
proof of service thereof upon all IEI shareholders of record in accordance with
the Delaware law together with the minutes of the shareholder's meeting
evidencing shareholder approval of the Plan of Merger and the execution,
delivery and performance of this Agreement; or, alternatively, a unanimous
written consent executed by all of the shareholders of IEI containing the
foregoing approvals;
(c) An opinion of counsel to IEI reasonably acceptable to MM
with respect to such matters and in such form as shall be reasonably requested
by and acceptable to MM;
(d) Documentary proof reasonably acceptable to MM that all of
the liabilities of IEI of every kind, nature and description have been paid in
full as at and through the date of the Closing, except as may be excluded in
Schedule 6..03(d) hereto;
(e) All of the books and records of IEI;
(f) A certificate of good standing for IEI issued within
thirty (30) days prior to the Closing Date by the Secretary of State of
Delaware; and
(g) All other schedules, certificates and other documents
required by this Agreement to be delivered by IEI on or before Closing or the
Effective Time;
VII. ABANDONMENT
7.01 ABANDONMENT OF MERGER The rights and obligations of the
Constituent Corporations under this Agreement may be terminated and the Merger
abandoned prior to the Effective Time by the mutual agreement of the Board of
Directors of both of the Constituent Corporations.
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VIII. MISCELLANEOUS
8.01 BROKERAGE FEES No party to this Agreement has consented to or
authorized any broker or agent to act on its behalf, directly or indirectly, as
a broker or finder in connection with the transaction contemplated by this
Agreement. In the event any claim is made for a broker's or finder's fee in
connection with the transactions contemplated hereunder, the party responsible
for retaining or securing said broker or finder shall be solely responsible for
the payment of any broker's or finder's fees incurred as a result thereof.
Further, the responsible party or parties shall indemnify the other parties
against any loss or liabilities by reason of such broker's or finder's fees.
8.02 FURTHER ACTIONS At any time and from time to time, each party
agrees, at its expense, to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes of this
Agreement.
8.03 SURVIVAL Except as otherwise provided herein, the covenants,
agreements, representations, and warranties contained in or made pursuant to
this Agreement shall survive the Effective Time and any delivery of
consideration at Closing or the Effective Time irrespective of any investigation
made by or on behalf of any party.
8.04 MODIFICATION This Agreement and the related instruments and
agreements hereto set forth the entire understanding of the parties with respect
to the subject matter hereof, supersede all existing agreements among them
concerning such subject matter, and may be modified only by a written instrument
duly executed by all of the parties hereto.
8.05 NOTICES All notices, elections, reports or other correspondence
required or permitted hereunder shall be in writing and deemed to have been
properly given or delivered when mailed by certified mail, return receipt
requested, postage prepaid, delivered by overnight express courier, delivery
fees prepaid, or transmitted by fax with receipt confirmed, to the party to whom
directed at the below specified addresses:
If to MM:
With a copy to: Michael A. Littman, Esq.
10200 W. 44TH Avenue, No. 400
Wheat Ridge, CO 80033
If to IEI: Daniel P. Murphy
7825 Fay Avenue, Suite 200
La Jolla, CA 92037
With a copy to:
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Any such notice shall be deemed given three days after deposit with the mail,
one day following delivery thereof to an overnight express courier or upon
confirmation of receipt when sent by fax. The address of a party may be changed
in accordance with the notice provisions of this section.
8.06 WAIVER Any waiver by any party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions will not be considered a waiver, or
deprive that party, of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
8.07 BINDING EFFECT The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, and in addition shall inure to the benefit of the
indemnitees and their respective successors, assigns, heirs, and personal
representatives.
8.08 NO THIRD-PARTY BENEFICIARIES This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement (except as provided in Section 8.07).
8.09 SEVERABILITY AND REFORMATION If any provision of this Agreement is
invalid, illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances,
in either case unless the result thereof would preclude the consummation in all
material respects of the Merger contemplated by this Agreement and the
associated transactions or result in an unjust modification of the balance of
rights and obligations hereunder. To the extent provided in this section, a
court having jurisdiction of a matter involving the interpretation of this
Agreement shall be authorized to reform this Agreement to the minimum extent
necessary to accomplish the objectives of this section.
8.10 HEADINGS The headings of this Agreement are solely for convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
8.11 GOVERNING LAW To the extent permitted by law, this Agreement shall
be governed by and construed in accordance with the laws of the state of
Colorado, without giving effect to conflict of laws. To the maximum extent
permitted by law and subject to the provisions of Section 8.14 hereof, any
action or proceeding initiated by any party to this Agreement, any indemnitee or
any other person claiming rights under this Agreement shall be brought in an
appropriate state or federal court in Denver County, Colorado, and any person
claiming rights under this agreement consents to the jurisdiction and proper
venue of such forum.
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8.12 SEPARATE COUNTERPARTS This Agreement may be executed in several
identical counterparts, each one of which shall be considered an original and
all of which when taken together shall constitute but one instrument.
8.13 INCORPORATION OF RECITALS, EXHIBITS AND SCHEDULES All related
instruments and agreements executed in connection herewith are incorporated
herein by this reference and expressly made a part of this Agreement.
8.14 ARBITRATION Except in cases where the remedy of preliminary
injunction is reasonably sought by a party because of the irreparability and
immediacy of the harm alleged to be caused or threatened, in the event there
shall arise any dispute or claim in law or equity arising out of this Agreement
or any breach thereof or any resulting transaction between the parties under
this Agreement and if such dispute cannot be resolved through negotiation, the
parties agree that such dispute shall be submitted to arbitration under the
rules and regulations of the American Arbitration Association then obtaining.
The arbitration shall be held in Denver, Colorado, before a single arbitrator.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date of the day and year first above written.
Interspace Enterprises, Inc.
BY/s/Daniel P. Murphy
Daniel P. Murphy, President
Marathon Marketing Corp.
By/s/M.A. Littman
M.A. Littman as Attorney-in-Fact
for Scott Deitler, President
The undersigned, Michael A. Littman agrees to serve as Exchange Agent in
accordance with the terms and conditions of this Agreement.
/s/Michael A. LIttman
--------------------------------------
Michael A. Littman
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