AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 31, 1999 (herein
sometimes referred to as the "Agreement"), by and among DEERFIELD VIDEO
PRODUCTIONS, INC., a New York corporation ("Deerfield"), XXXXXX XXXXXXX,
residing at 000 Xxxxxxxx Xxxx, Xxxxxxxxxx Xxxxx, Xxx Xxxx 00000 ("Sladkus") and
XXXXXXX X. XXXXXXX, residing at XX Xxx 0000, Xxx Xxxxx, Xxxxxxxxxxxxx 00000
("Xxxxxxx"), on the one hand, and VIRTUAL EDUCATION CORPORATION, a Delaware
corporation ("CVE Parent") and DEERFIELD ACQUISITION CORP., a New York
corporation ("Newco"), on the other hand.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of each of Newco, CVE
Parent and Deerfield deem it desirable and in the best interests of their
respective corporations and stockholders that Newco merge with and into
Deerfield (the "Merger") in accordance with this Agreement and the applicable
laws of the State of New York; and
WHEREAS, Newco is a wholly owned subsidiary of CVE Parent.
NOW, THEREFORE, the parties hereby agree as follows:
1. MERGER OF NEWCO WITH AND INTO CVE PARENT.
1.1. MERGER AND SURVIVING CORPORATION.
1.1.1. Pursuant to the applicable law of the State of New
York, Newco shall merge with and into Deerfield and Deerfield shall be the
surviving corporation after the Merger (the "Surviving Corporation") and shall
continue to exist under the provisions of the Business Corporation Law of the
State of New York ("BCL"). The name of the Surviving Corporation shall be
Deerfield
Video Productions, Inc. The separate existence of Newco shall cease upon the
Effective Date (as defined below).
1.1.2. The Articles of Incorporation of Deerfield shall from
and after the Effective Date, be the Articles of Incorporation of the Surviving
Corporation, until amended in accordance with the BCL. 1.1.3. The By-Laws of
Deerfield shall, from and after the Effective Date, be the By-Laws of the
Surviving Corporation, until altered or amended in accordance with the BCL.
1.1.3. The By-Laws of Deerfield shall, from and after the
Effective Date, be the By-Laws of the Surviving Corporation, until altered or
amended in accordance with the BCL.
1.2. EFFECTIVENESS OF THE MERGER. In the event that all of the
conditions precedent to the obligations of each of the parties hereto as
hereinafter set forth shall either have been satisfied or waived, (a)
Certificate of Merger under the applicable provisions of New York law (the
"Merger Certificate"), shall be delivered for filing on the Closing Date (as
defined below) to the Secretary of State of New York and shall become effective
upon the acceptance of the filing of such Merger Certificate by said Secretary
of State, which date shall be the "Effective Date" for purposes of this
Agreement and which date shall be as soon as practicable after the Closing. 1.3.
CONVERSION OF NEWCO STOCK AND DEERFIELD STOCK. The manner and basis of
converting the shares of capital stock of Newco and Deerfield shall be as
follows:
1.3. CONVERSION OF NEWCO STOCK AND DEERFIELD STOCK. The manner and
basis of converting the shares of capital stock of Newco and Deerfield shall be
as follows:
1.3.1. Each of the 100 issued and outstanding shares of
common stock of Newco (the "Newco Stock"), issued and outstanding at the
Effective Date and all rights with respect thereto shall, by reason of and
simultaneous with the Merger and without any action on the part of Newco, be
converted into and shall become one share of the Surviving Corporation's no par
value common stock.
1.3.2.
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1.3.2.1. Each of the 100 shares of common stock of
Deerfield (the "Deerfield Stock") issued and outstanding at the Effective Date
and all rights with respect thereto shall, by reason of and simultaneous with
the Merger and without any action on the part of the holders thereof, be
cancelled and converted into (a) a right to receive 58.1 shares of common stock,
$.01 par value per share, of CVE Parent ("CVE Parent Stock"), and (b) a right to
receive such additional shares, if earned, of CVE Parent Stock as set forth in
Section 1.6 (the "Contingent Shares").
1.3.2.2. Immediately following the Effective Date,
each holder of certificates evidencing outstanding shares of Deerfield Stock,
upon the surrender of such certificates to CVE Parent, properly endorsed, shall
be entitled to receive a certificate registered in the name of such holder for
that number of shares of CVE Parent Stock as shall be equal to 58.1 multiplied
by the number of shares of Deerfield Stock evidenced by such certificates
rounded to the nearest whole number.
1.3.2.3. All rights with respect to shares of
Deerfield Stock shall cease and terminate at the Effective Date, notwithstanding
that any certificates evidencing said shares of Deerfield Stock shall not have
been surrendered to CVE Parent, and the holders of said shares shall have no
interest in or claims against the Surviving Corporation, except for the right to
receive shares of CVE Parent Stock (including, if earned, Contingent Shares) in
accordance with the terms hereof.
1.3.3. Immediately following the Effective Date, any and all
options or other rights to acquire any shares of the
capital stock or other equity securities of Deerfield
shall be cancelled and shall thereafter be void and
of no further force and effect.
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1.4. EFFECT OF MERGER.
1.4.1. Except as otherwise specifically set forth herein,
the identity, existence, purposes, powers, franchises, rights and immunities of
Deerfield shall continue unaffected and unimpaired by the Merger, and the
corporate identity, existence, purposes, powers, franchises and immunities of
Newco shall be merged into Deerfield, and Deerfield, as the Surviving
Corporation, shall be fully vested therewith. The separate existence and
corporate organization of Newco (except insofar as may be continued by
applicable law) shall cease as of the Effective Date.
1.4.2. At the Effective Date:
1.4.2.1. The rights, privileges, good will and
franchises and all property, real, personal and mixed and all debts,
liabilities, obligations and penalties due on whatever account and all other
things in action belonging or accruing to Newco shall be bargained, conveyed,
granted, confirmed, transferred, assigned and set over to and vested in the
Surviving Corporation, by operation of law and without further act or deed, and
all property and rights and liabilities, and all and every other interest of
Newco shall be as effectively the property, rights and interests and liabilities
of the Surviving Corporation, as they were of Newco; and
1.4.2.2. No action or proceeding, whether civil or
criminal, pending at the Effective Date by or against either Deerfield or Newco,
or any stockholder, officer or director thereof, shall xxxxx or be discontinued
by the Merger, but may be enforced, prosecuted, settled or compromised as if the
Merger had not occurred, or the Surviving Corporation may be substituted in such
action or proceeding in place of Deerfield, or Newco, as the case may be; and
1.4.2.3. All rights of employees and creditors and
all liens upon the property of Deerfield and Newco shall be preserved
unimpaired, limited in lien to the property affected by such liens at the
Effective Date, and all of the debts, liabilities, obligations and duties of
Deerfield and Newco shall attach to the Surviving Corporation, and shall be
enforceable against
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the Surviving Corporation to the same extent as if all such debts, liabilities,
obligations and duties had been incurred or contracted by the Surviving
Corporation.
1.5. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The Board
of Directors of the Surviving Corporation shall consist of those persons set
forth on Exhibit A-1 hereto, which Directors shall hold office from and after
the Effective Date, in accordance with the By-Laws of the Surviving Corporation
until the next annual meeting of stockholders and until their respective
successors shall have been duly elected and qualified. The officers of the
Surviving Corporation shall be those persons set forth on Exhibit A-2 hereto;
provided, however, that the listing of such persons on said Exhibit A-2 shall
not be deemed to constitute an employment agreement with the Surviving
Corporation or any other entity or any assurance as to future employment. Such
persons shall continue to hold their respective offices until such time as their
successors shall have been duly appointed and qualified.
1.6. CONTINGENT CVE PARENT SHARES.
1.6.1. DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
1.6.1.1. "Deerfield Group" shall initially mean the
following individuals, who are employees of Deerfield on the date hereof and who
will remain employees of Deerfield after the Effective Date or become employees
of CVE Parent or an affiliate of CVE Parent on the Effective Date: (a) Xxxxxx
Xxxxxxx ("Sladkus"), president of Deerfield, whose primary duties will be sales
of New Media Engagements (defined in Section 1.6.4.) and Video Production
Engagements (Defined in Section 1.6.1.5), (b) Xxxx Xxxxxxxxx ("Xxxxxxxxx"), who
will be a sales person of New Media Engagements and Video Production
Engagements, (c) Giavani D'Arco ("D'Arco"), whose primary duty will be video
production, and (d) Xxxx Xxxxxxxxx
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("Xxxxxxxxx"), whose primary duty will be video production. From time to time
during the Earn-Out Period (defined in Section 1.6.1.3) Sladkus, Briccetti,
D'Arco and/or Xxxxxxxxx may be replaced as a member of the Deerfield Group, so
long as the person replacing one of the above persons performs substantially the
same duties as the person he is replacing. The Deerfield Group shall at no time
consist of more than four persons, comprised of (i) two persons whose primary
duties are sales of New Media Engagements and Video Production Engagements and
(ii) two persons whose primary duty is video production. The Deerfield Group
shall not be a separate division or formal group within CVE Parent or any of its
affiliates. It shall exist solely for purposes of the calculations required by
this Section 1.6;
1.6.1.2. "Deerfield Group Net Sales Revenue" shall
mean sales revenue collected by CVE Parent or its affiliates during the Earn-Out
Period and for the 12 months after the expiration of the Earn-Out Period for New
Media Engagements and Video Production Engagements which engagements (i) were
originated by members of the Deerfield Group during the Earn-Out Period and (ii)
were memorialized by a contract entered into by CVE Parent or its affiliates,
during the Earn-Out Period, less such usual and customary discounts, returns and
allowances as are granted by CVE Parent or its affiliates, as the case may be.
1.6.1.3. "Earn-Out Period" shall mean the twenty-four
(24) month period beginning on the Effective Date and expiring on the day
immediately prior to the twenty-four (24) month anniversary of the Effective
Date;
1.6.1.4. "New Media Engagement" shall mean a project
for which CVE Parent or any of its affiliates is engaged during the Earn-Out
Period to create for a customer of CVE Parent a production on new media (e.g.,
CD ROM or Internet);
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1.6.1.5. "Video Production Engagement" shall mean a
project for which CVE Parent or any of its affiliates is engaged during the
Earn-Out Period to create a video production for a customer of CVE Parent.
1.6.2. ISSUANCE OF CONTINGENT SHARES.
1.6.2.1. If the Deerfield Group Net Sales Revenue
exceeds $2,200,000, CVE Parent will issue and deliver up to an aggregate of
52,290 additional shares of CVE Parent Stock ("Contingent Shares") to Sladkus
and Xxxxxxx, of which Sladkus shall be entitled to 80% of such shares and of
which Xxxxxxx shall be entitled to 20% of such shares. The aggregate number of
Contingent Shares shall be calculated by multiplying 52,290 by a fraction, (x)
the numerator of which shall be the difference between the Deerfield Group Net
Sales Revenue (but not more than $3,000,000) and $2,200,000, and (y) the
denominator of which shall be 800,000.
1.6.2.2. There shall be no Contingent Shares issued
if the Deerfield Group Net Sales Revenue is less than $2,200,000.
1.6.2.3. In no event shall more than 52,290
Contingent Shares be issued.
1.6.2.4. Anything herein to the contrary
notwithstanding, CVE Parent shall not be required to issue fractional shares in
connection with the calculation of Contingent Shares to be issued. If the
calculation called for by this Section 1.6 would otherwise result in the
issuance of a fractional share of CVE Parent Stock, CVE Parent shall instead pay
to each of Sladkus and Xxxxxxx an amount of cash equal to the product of (x) the
fraction of the share that would otherwise be required and (y) the fair market
value of one share of CVE Parent Stock on the date on which CVE Parent is
required to issue the Contingent Shares that would have generated the need for a
fractional share.
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1.6.2.5. EXAMPLE: Assume Deerfield Group Net Sales
Revenue is $2,850,000. The number of Contingent Shares to be issued would be
calculated as follows:
$2,850,000 - $2,200,000 = $650,000 x 52,290
--------
$800,000
.8125 x 52,290 = 42,485
CVE Parent would be required to issue 42,485 Contingent Shares
and make a cash payment representing the fractional share in
accordance with Section 1.6.2.4.
1.6.2.6. DETERMINATION OF ADJUSTMENTS. 13 months
after the expiration of the Earn-Out Period, CVE Parent shall provide to Xxxxxxx
and Sladkus a report (the "Report") setting forth the amount of Deerfield Group
Net Sales Revenue that has been collected by CVE Parent .
1.6.2.7. If Sladkus and Xxxxxxx object to the Report,
they may give notice of their objections to CVE Parent within fifteen (15)
business days after their receipt of the Report. If no such assertion is made
within such fifteen (15) day period, or if Sladkus, Xxxxxxx and CVE Parent agree
upon all matters in dispute, the Report, as adjusted to reflect any such
agreements, shall be final and binding on all parties hereto for the purpose of
determining the number of Contingent Shares, if any, to be issued pursuant to
this Section 1.6.
1.6.2.8. If the parties are unable to resolve all
items in dispute within 30 days after the delivery of the Report, those items
shall be submitted for resolution to a firm of independent certified public
accountants jointly selected by Sladkus, Xxxxxxx and CVE Parent. The
determination of such accounting firm shall be final and binding upon all
parties hereto. The parties will use their best efforts to resolve these matters
as rapidly as practical. The fees of any firm employed pursuant to the
provisions of this paragraph shall be borne one-half by Sladkus and Xxxxxxx and
one-half by CVE Parent.
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1.6.2.9. Once the Report is deemed final, within five
(5) business days after such agreement, CVE Parent shall issue the Contingent
Shares and make any required cash payments in lieu of fractional shares.
1.6.2.10.The right to receive the Contingent Shares
may not be sold, pledged or transferred except in compliance with applicable
securities laws and is subject to CVE Parent receiving an opinion of counsel
acceptable to CVE Parent's counsel to that effect.
2. CLOSING.
2.1. CLOSING. The closing of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Xxxxxx X. Xxxxxx, Esq., The
Inns of Court, 00 Xxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxx 00000 at 10:00 A.M. on
the third business day after the day on which the transactions contemplated by
this Agreement shall have been approved and ratified by all necessary and
appropriate corporate proceedings or at such other place, date or time as shall
be mutually agreed upon by the parties (such date or such other agreed upon time
and date is called the "Closing Date").
3. REPRESENTATIONS AND WARRANTIES OF DEERFIELD AND SLADKUS
3.1. Deerfield and Sladkus hereby represent and warrant to and
agree with Newco and CVE Parent as follows:
3.1.1. ORGANIZATION, STANDING, QUALIFICATION. Deerfield is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York, with full power to conduct its business as it is now
conducted and to own or lease and operate the assets and properties now owned or
leased and operated by it, and with full corporate power to execute and deliver
this Agreement and consummate the Merger. Deerfield is not required by the
conduct of
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its business or the ownership of its property to qualify to do business as a
foreign corporation in any other jurisdiction.
3.1.2. CAPITALIZATION OF DEERFIELD. The total authorized
capital stock of Deerfield consists of two hundred (200) shares of voting common
stock, without par value ("Deerfield Stock"), of which one hundred (100) shares
are issued and outstanding. All such issued and outstanding shares have been
duly authorized and validly issued and are fully paid and non-assessable.
Sladkus is the beneficial owner and holder of record of eighty (80) shares of
Deerfield Stock. Sladkus has good and marketable title to said shares free and
clear of all liens, claims, equities, mortgages, security interests and
encumbrances of any kind or nature (all of the foregoing, "Encumbrances").
3.1.3. OPTIONS, ETC. Deerfield has no outstanding (a)
options, warrants or other rights to purchase, acquire or convert into any
shares of its capital stock or other equity securities, or (b) any other
agreement or right (preemptive, contractual or otherwise) to issue or sell any
shares of its capital stock or other equity securities. There are no "phantom
stock rights" or agreements or similar rights or agreements intended to or which
confer upon any person, firm or entity ("Person") rights similar to any rights
accruing to owners of shares of capital stock of Deerfield. None of the shares
of Deerfield Stock were issued in violation of the Securities Act of 1933, as
amended (the "Act"), or the securities or blue sky laws of any state or other
jurisdiction.
3.1.4. NO RESTRICTIONS ON SECURITIES. Deerfield is not a
party to any agreement (a) creating rights in any person with respect to shares
of its capital stock, or (b) relating to the voting of shares of its capital
stock on any matter.
3.1.5. VALIDITY, ETC. This Agreement has been duly executed
and delivered by Deerfield and Sladkus, is a valid and binding obligation and
agreement of each of them, enforceable in
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accordance with its terms (subject to any applicable bankruptcy or similar laws
affecting the enforcement of creditors' rights generally). The execution,
delivery and performance of this Agreement (i) will not violate or result in a
breach of or constitute a default under any note, mortgage, loan, contract,
judgment or decree to which Deerfield or Sladkus is a party or by which either
of their properties or assets are bound, (ii) will not afford any creditor of
Deerfield the right to accelerate and declare at once due and payable any
indebtedness of Deerfield due in installments or not yet due, and (iii) will not
cause a forfeiture of any license or operating permit required to continue the
operation of Deerfield's business.
3.1.6. TRANSACTIONS. Deerfield has not entered into and is
not a party to any agreement, commitment or understanding binding upon
Deerfield, except for transactions in the normal course of business, in amounts,
quantities and nature which are normal and reasonable in relation to the normal
and reasonable requirements of Deerfield's business as the same has been
conducted heretofore and which have been fully recorded on the books and records
of Deerfield.
3.1.7. CORPORATE PROPERTY. Sladkus has not, nor to the best
of his knowledge after due inquiry has anyone else, removed from the past or
current premises of Deerfield any lists, records, books, files, drawings,
designs, computer software or data, or any other related property or things
belonging to Deerfield. Nor does Sladkus or, to the best of his knowledge after
due inquiry does anyone else, have in his/their possession or under his/their
control any lists, records, books, files, drawings, designs, computer software
or data, or any other related property or things belonging to Deerfield.
3.1.8. CONSENTS. No consent of any third party or
governmental authority, and no other consent of any other person or entity is
required to consummate the transactions contemplated hereby, and the execution
and delivery and the performance of this Agreement and the
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transactions contemplated hereby will not interfere with the continued
operation, after the consummation of the transactions contemplated hereby, of
the business in which Deerfield is engaged. The Board of Directors of Deerfield
has approved the transactions contemplated by this Agreement and the execution
and delivery hereof. Neither the execution of this Agreement nor the
consummation of the transactions contemplated by this Agreement nor the
fulfillment of or the compliance with the terms, conditions and provisions
hereof, will conflict with or result in a breach of any relevant laws or of any
of the terms or provisions of, or constitute a default or an event which, with
notice or lapse of time or both, would constitute a default under, the Articles
of Incorporation or the By-Laws of Deerfield, or any lease, license, promissory
note, conditional sales contract, commitment, indenture, deed of trust,
instrument or other agreement or order or decree to which Deerfield or Sladkus
is a party or by which Deerfield's property is bound, or constitute an event
which would permit any party to any such agreement or document to terminate or
accelerate such agreement or document, or result in the creation or imposition
of a lien, charge or Encumbrance (defined in Section 3.1.2) against any asset of
Deerfield. This Agreement represents a valid and binding obligation of Sladkus
and Deerfield in accordance with its terms.
3.1.9. CORPORATE CHARGES. Neither Sladkus nor to the best of
his knowledge anyone else, has incurred any credit card or other charges for
which Deerfield may be liable except for normal and reasonable charges in
connection with the business of Deerfield.
3.1.10. CORPORATE OPPORTUNITIES AND RELATED BUSINESS. Neither
Sladkus nor to the best of his knowledge anyone else, has diverted any orders or
jobs from customers or prospective customers of Deerfield to Sladkus or any
Person, firm or corporation, nor has Sladkus or to the best of his knowledge
after due inquiry anyone else, induced any customer of Deerfield to cancel
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any order or job previously placed with Deerfield, and Sladkus has not withheld
from Deerfield any orders or jobs or prospective orders or jobs from customers
or prospective customers of Deerfield. Sladkus is not an owner, shareholder,
lender, director, agent, employee or consultant of any corporation, partnership
or other entity that is a supplier of goods or services, a customer or a
competitor to or of Deerfield, or that leases any real or personal property to
Deerfield, or that otherwise does business with Deerfield.
3.1.11. TAXES AND TAX RETURNS. The amounts
established as liabilities or reserves for taxes on the Financial Statements
(defined in Section 3.1.16.1) are sufficient for the payment of all federal,
state and local taxes, and all employment and payroll-related taxes, including
any penalties or interest thereon, whether or not based upon or measured by, in
whole or in part, net income of Deerfield accrued for or applicable to all
periods ended on or prior to the date of the Financial Statements. Deerfield has
duly made all deposits required by law to be made with respect to employees'
withholding taxes. Deerfield has duly filed with all appropriate governmental
agencies and bodies, whether federal, state or local, all income, sales,
license, franchise, excise, gross receipts, employment and payroll-related and
real and personal property tax returns and all other tax returns which were
required to be filed, all of which properly reflect the taxes owed by them for
the periods covered thereby and, to the extent due, Deerfield has paid all taxes
shown to be due on such returns. With respect to sales of goods and services by
Deerfield, Deerfield has not received any notice of assessment or deficiency or
proposed assessment by the Internal Revenue Service or any other taxing
authority in connection with such tax returns which has not been satisfied in
full and there is no pending tax examination of or tax claim asserted against
Deerfield or any of its properties. None of the federal income tax returns of
Deerfield has been audited by the Internal Revenue Service. No agreement for the
extension
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of time or waiver of the statute of limitations for the assessment of any tax
deficiency or adjustment for any year is in effect as against Deerfield. True,
correct and complete copies of all federal, state and local income and/or
franchise tax returns filed by Deerfield since December 31, 1996 have previously
been made available to CVE Parent. Schedule 3.1.11 sets forth a list of all
jurisdictions with respect to which Deerfield files tax returns.
3.1.12. RETIREMENT PLANS. Deerfield maintains a Xxxxx plan
that has never been funded. There are no other retirement or other employee
benefit plans, or any employment, compensation or severance pay agreements or
arrangements with respect to which Deerfield has any obligations, contingent or
otherwise. Deerfield has no commitment, whether formal or informal and legally
binding or not, to create any additional plan.
3.1.13. LITIGATION. Except as set forth in Schedule 3.1.13,
there is no action, suit, claim, inquiry, proceeding or investigation by or
before any court or Governmental Body pending or, to the best knowledge of
Sladkus, threatened against or involving Deerfield or Sladkus, nor is there any
valid basis for any such action, proceeding or investigation which could
materially and adversely affect the business, operations, prospects or financial
condition of Deerfield. Except as set forth in Schedule 3.1.13, Deerfield is not
in default under or in violation of any agreement, commitment or restriction to
which it is a party or by which it or any of its properties or assets is bound,
which default or violation could materially and adversely affect its business,
operations, prospects or financial condition. Except as set forth in Schedule
3.1.13, Deerfield is not subject to any judgment, order or decree.
3.1.14. COMPLIANCE WITH LAWS. Deerfield has complied with,
and is now in compliance with, in all material respects, and the operations of
Deerfield have been conducted, and are now being conducted, in all material
respects, in accordance with all applicable laws, rules,
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regulations and other requirements of all governmental bodies having authority
or jurisdiction over Deerfield. Neither Sladkus nor Deerfield has received any
notification of any asserted present or past failure to comply with any such
laws, rules or regulations. All licenses, permits and orders required by
Deerfield to conduct its business and to sell its products and services have
been obtained by Deerfield and are in effect; and there exists no outstanding
notice, order or directive by any governmental authority to the effect that
Deerfield has failed to comply in any respect with any law, rule, regulation or
ordinance, or that a license, permit or order is required to be obtained by
Deerfield. No governmental license, permit or authorization, and no
registration, declaration or filing with any court, governmental authority or
regulatory agency, is required as a condition for the valid and binding
execution, delivery and performance of this Agreement by Sladkus, Xxxxxxx and
Deerfield.
3.1.15. TITLE TO ASSETS.
3.1.15.1. REAL PROPERTY. Deerfield owns no real
property. The lease between Deerfield, as tenant, and Sasco 1997 Nireo LLC, as
landlord, for Deerfield's former offices at 00 Xxxxxxxx, Xxxxxxxxx, Xxx Xxxx
expired on October 15, 1999. Deerfield has satisfied all of its obligations
under said lease, and at the time of the expiration thereof, there were no
uncured defaults thereunder. Deerfield has no liability with respect to such
lease.
3.1.15.2. TANGIBLE PERSONAL PROPERTY. Set forth on
Schedule 3.1.15.2 annexed hereto is a true, accurate and complete list of all
the personal property owned or leased by Deerfield as of September 30, 1999.
Deerfield has good and marketable title to all of the personal property used by
it, free and clear of all mortgages, security interests, pledges, liens,
conditional sales agreements, charges or Encumbrances of any kind, except as set
forth in the Schedule 3.1.15.2 annexed. Except as set forth in Schedule
3.1.15.2, there is no financing statement under the
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Uniform Commercial Code that names Deerfield as the debtor. At the Closing, each
and all of the loans set forth in Schedule 3.1.15.2 shall be eliminated so that
Deerfield will own all personal property free and clear of liens, Encumbrances
and charges. Except as may be otherwise set forth on Schedule 3.1.15.2, each
item comprising the personal property is in good and usable condition, ordinary
wear and tear excepted, fit for its intended purpose, and is owned free and
clear of all interests of any kind and nature.
3.1.15.3. EQUIPMENT. The equipment of Deerfield is
structurally sound with no known defects and is in good operating condition and
repair (ordinary wear and tear excepted) and is adequate for the uses to which
it is being put, and none of such equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs. Neither Deerfield nor
Sladkus has received notification that Deerfield is in violation of any
applicable law, ordinance or regulation in respect of its equipment or its
operation, and, to the best of Sladkus' knowledge, there is no such violation
which could have a material adverse effect on Deerfield.
3.1.15.4. SUFFICIENCY OF PROPERTIES AND ASSETS. The
properties and assets owned and leased by Deerfield include all rights,
properties and other assets necessary to permit Deerfield to conduct its
business in all material respects in the same manner as it is conducted as of,
and has been conducted prior to, the date of this Agreement.
3.1.15.5. TRADEMARKS, TRADE NAMES AND COPYRIGHTS.
Schedule 3.1.15.5contains a true and complete list of all copyrights,
trademarks, trade names, licenses, patents, permits, slogans, privileges,
internet domain name registrations and other similar intangible property rights
and interests applied for, issued to or owned by Deerfield, or under which
Deerfield is licensed or franchised, or used or useful in the conduct of its
business, all of which are valid and in good standing and to the best knowledge
of Sladkus and Deerfield uncontested (collectively,
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"Rights"). Deerfield owns or validly licenses all Rights and other proprietary
information used in the conduct of its business as currently being conducted.
Deerfield has delivered to CVE Parent copies of each registration, application
for registration and all contracts or agreements which evidence ownership or
other interest of Deerfield of such Rights, licenses, or other authority. To the
knowledge of each of Deerfield and Sladkus, Deerfield is not infringing upon or
otherwise acting adversely to any trademarks, trade names, copyrights, patents,
patent applications, internet domain name registrations, know-how, methods, or
processes owned by any other Person or Persons, and there is no claim or action
pending, or to the best knowledge of Deerfield or Sladkus threatened, with
respect thereto. The consummation of the transactions contemplated hereby will
enable CVE Parent to use and exploit the Rights and, to the best knowledge of
Deerfield or Sladkus, no claims have been asserted by any person to the use of
any such Rights, and there is no valid basis for any such claims.
3.1.16. FINANCIAL STATEMENTS, ETC.
3.1.16.1. FINANCIAL STATEMENTS. Deerfield and Sladkus
have heretofore delivered to CVE Parent (a) Deerfield's balance sheet as of
September 30, 1999 (the "Balance Sheet") and (b) Deerfield's income statement
for the nine (9) months ended September 30, 1999 (the "Income Statement"). The
Balance Sheet and the Income Statement, including in each case the footnotes
thereto, are together referred to herein as the "Financial Statements." The
Financial Statements have been prepared in accordance with Generally Accepted
Accounting Principles, consistently applied throughout the periods involved, and
present fairly the financial position of Deerfield as of the dates set forth and
the results of its operations for the periods indicated. All of Deerfield's
indebtedness, liabilities, claims and obligations (including, without
limitation, liabilities for taxes of any type imposed by any jurisdiction to
which either Deerfield or its assets is or was subject)
17
as of September 30, 1999, whether contingent or otherwise, are reflected in the
Balance Sheet or are described on Schedule 3.1.16.1 (the "Exception Schedule")
annexed hereto and all items of Deerfield's income, expense, profit and loss are
reflected in the Income Statement or are described on the Exception Schedule.
3.1.16.2. ABSENCE OF UNDISCLOSED LIABILITIES. Except
as and to the extent reflected or reserved against in the Financial Statements,
as of September 30, 1999, Deerfield had no liabilities or obligations, secured
or unsecured (whether absolute or contingent) of a nature required to be
reflected in audited financial statements, including notes thereto. Neither
Deerfield nor Sladkus knows of, or has any reasonable grounds to know of, the
basis for the assertion against Deerfield as of September 30, 1999 of any
material claim or liability of any nature not fully reflected or reserved
against in the Financial Statements or any material liability or claim of any
nature arising since that date, except those incurred in the ordinary course of
business.
3.1.16.3. ORDINARY COURSE OF BUSINESS. The business
of Deerfield has been operated only in the ordinary and usual course from
September 30, 1999 through the date hereof.
3.1.16.4. ABSENCE OF CHANGES. Deerfield's net worth
is not less than the net worth reflected in the Financial Statements as of
September 30, 1999. Except as set forth in Schedule 3.1.16.4, since September
30, 1999, there has not been (a) any material adverse change in the financial
condition or in the operations, business, prospects, properties or assets of
Deerfield; (b) any material damage, destruction or loss to any of the properties
or assets of Deerfield, whether or not covered by insurance, which might
adversely affect or impair the ability of Deerfield to conduct its business or
the continuation of such business after the consummation of the transactions
contemplated hereby; (c) any labor trouble or any event or condition of any
character
18
related thereto which may materially and adversely affect Deerfield's business
or the continuation of such business after the consummation of the transactions
contemplated hereby; (d) any declaration, setting aside or payment of any
dividend or any distribution with respect to Deerfield's capital stock; (e) any
redemption, purchase or other acquisition by Deerfield of any of its capital
stock; (f) any contingent liability incurred by Deerfield as a guarantor or
otherwise with respect to the obligations of others; (g) any mortgage,
Encumbrance or lien placed upon any of the properties of Deerfield and which
remain in existence on the date of this Agreement or on the Closing Date; (h)
any purchase, sale or other disposition or any other agreement for the purchase,
sale or disposition of any of the properties or assets of Deerfield except in
the ordinary course of business; (i) any expense allowance paid Sladkus whether
in the form of advance or loan except for reimbursement of expenses previously
incurred or reasonable expenses incurred in the ordinary course of business.
3.1.16.5. CONDITIONS AFFECTING DEERFIELD'S BUSINESS
There are no conditions known to Deerfield or Sladkus with respect to markets,
facilities, personnel, supplies or business relationships of Deerfield that may
materially and adversely affect Deerfield's business or prospects.
3.1.16.6. ACCOUNTS RECEIVABLE. All receivables for
Deerfield, as set forth on the Balance Sheet as of September 30, 1999, are
valid, represent obligations for services performed prior to September 30, 1999,
and were obtained in the ordinary course of business and in accordance with
Deerfield's customary credit practices. Receivables of Deerfield at Closing are
the same as the receivables as of September 30, 1999, excepting only additions
and reductions made in the ordinary course of business after that date. CVE
Parent is aware that a total of not more than $99,000 of Deerfield's accounts
receivable are in collection. With the exception of
19
said $99,000, all accounts receivable and other claims in favor of Deerfield
included on the Balance Sheet or subsequently arising have been collected or are
collectable. Except as set forth and detailed on the Exception Schedule, during
the two years prior to the Closing Date, there have been no transactions between
Deerfield and any other company or entity affiliated with Deerfield.
3.1.17. BANKRUPTCY. Deerfield has not filed any petition in
bankruptcy, nor commenced any other proceeding for protection from creditors in
the United States, any state of the United States or in any other jurisdiction,
nor has any such proceeding been filed or commenced, or, to the best of Sladkus'
knowledge, been threatened against Deerfield.
3.1.18. BROKERS. Neither Sladkus nor Deerfield has any
contract with, nor is he/it under any obligation to, any broker, finder or other
intermediary in connection with the transactions contemplated hereby, and he/it
agrees to indemnify fully and hold Newco and CVE Parent harmless with respect to
any claims asserted by any broker, finder or other intermediary who claims
compensation by virtue of allegedly representing him/it.
3.1.19. SUBSIDIARIES. Deerfield does not own any shares of
stock, or any equity or ownership interest, or any instruments convertible into
an equity or ownership interest, of any other corporation, partnership, joint
venture or other entity.
3.1.20. CORPORATE DOCUMENTS. Deerfield and Sladkus have made
available to Newco and CVE Parent for examination true, correct and complete
copies of the following items of Deerfield: the certificate of incorporation and
any amendments thereto; the bylaws; all corporate minutes and written consents,
containing all records of all meetings, actions and proceedings of Deerfield's
shareholders and directors; the stock certificate book and transfer ledger; and,
the corporate minute book(s); and corporate income tax returns for the years
1996, 1997 and 1998
20
and monthly income statements for the months ending January 31, 1998 through
September 30, 1999.
3.1.21. RELIANCE. Deerfield and Sladkus acknowledge and agree
that Newco and CVE Parent are relying upon the representations and warranties of
Deerfield and Sladkus set forth herein, regardless of any independent
investigation made by or on behalf of Newco or CVE Parent, and Deerfield and
Sladkus agree that Newco and CVE Parent are justified in doing so.
3.1.22. OFFICERS, DIRECTORS; BONUSES. Schedule 3.1.22
attached hereto correctly sets forth, as of the date hereof, the names,
positions, and annual compensation, including bonuses, of all officers and
directors of Deerfield, together with a statement showing (a) the amount of
bonuses, if any, to be paid to any other employee pursuant to any past custom,
or present intention, and (b) the amount of insurance, if any, in favor of any
officer or other employee. Except as set forth on Schedule 3.1.22, since
September 30, 1999, there have been, and to the date of Closing there will be,
(a) no increase in the salary or other form of compensation of any of the
officers, executives, employees or agents of Deerfield and no bonuses paid to
such officers, executives, employees or agents, (b) no loans made to any of the
officers, executives, employees or agents of Deerfield, (c) no dividends or
other distributions declared or paid by Deerfield, and (d) no purchase by
Deerfield of its capital stock.
3.1.23. CONTRACTS AND AGREEMENTS.
3.1.23.1. Set forth on Schedule 3.1.23.1 annexed
hereto is a true, accurate and complete list of all agreements, commitments and
understandings, written or oral, to which Deerfield is party or bound, excluding
employment contracts which can be terminated by Deerfield on 30 days' notice or
less without a penalty or severance obligations, but including (i) labor union
or collective bargaining agreements, (ii) benefit programs for Deerfield's
employees,
21
including retirement, welfare, hospitalization, surgical, dental and major
medical group and individual insurance, deferred compensation, bonus, vacation
pay, severance pay, or other fringe benefit arrangement, agreement, policy,
practice or custom; (iii) contracts that are not terminable at will by Deerfield
without penalty within 30 days of the date of this Agreement; (iv) any purchase
contract or purchase commitment not in the ordinary course of business in excess
of Five Thousand Dollars ($5,000.00); (v) agreements calling for the payment or
receipt of royalties or license fees of any nature or which involve the license
of intangible property; (vi) any lease of equipment, machinery or other personal
property; (vii) any contract which would be deemed breached as a result of
consummation of this Agreement (all of which together are referred to as the
"Contracts").
3.1.23.2. Except as set forth in Schedule 3.1.23.2,
all the Contracts are presently valid, binding and enforceable by Deerfield in
accordance with their terms and are in full force and effect, and there is no
material default by Deerfield or the written claim of default by any party
thereto, or any threatened cancellation thereof known to Sladkus. Sladkus has
heretofore delivered to CVE Parent a copy of each Contract. Deerfield is not a
party to any collective bargaining agreement. Deerfield and Sladkus have no
reason to believe that any of Deerfield's ten largest customers or suppliers
would not do the business said customer or supplier now does with Deerfield,
with CVE Parent after the consummation of the transactions contemplated hereby.
There are no defaults under any Contract and, to the best of Deerfield's and
Sladkus' knowledge, there are no extant circumstances that would become a
default under any Contract with the giving of notice or the passage of time.
3.1.24. INTEREST IN CREDITORS. Excluding any interest in
Deerfield, neither Sladkus nor spouse or ancestral lineal descendant of Sladkus,
has any direct or indirect interest in any
22
creditor, competitor, supplier, lessor or customer of Deerfield, other than the
interests set forth in Schedule 3.1.24. 3.1.25. BANKS, SAFETY DEPOSIT BOXES.
Schedule
3.1.25 lists the names and addresses of all banks or
financial institutions in which Deerfield has an account, deposit or safety
deposit box, with the names of all persons authorized to draw on these accounts
or deposits or to have access to the boxes.
3.1.26. MINUTE BOOKS. The minute books of Deerfield reflect
that no actions have been taken by its shareholders, board of directors and
committees outside the ordinary course of business. Sladkus will indemnify and
hold Newco and CVE Parent harmless from and against any third party liability or
claim based upon or resulting from lack of formality or due corporate
authorization of actions taken by Deerfield prior to the Closing.
3.1.27. INSURANCE. Schedule 3.1.27 contains a list (stating
coverages, deductibles, self-insured retentions, co-insurance provisions and the
like) of all material policies of fire, liability, worker's compensation and
other forms of insurance owned or held by or covering Deerfield or all or any
portion of its property, assets or employees. All such policies are in full
force and effect, all billed premiums (including retrospective premiums) with
respect thereto covering all periods up to and including the Closing Date have
been paid and no notice of cancellation or termination has been received with
respect to any such policy. Such policies are sufficient for compliance with all
requirements of law and of all agreements to which Deerfield is a party, will
remain in full force and effect though the respective dates set forth in
Schedule 3.1.27 without the payment of additional premiums, and will not in any
way be affected by, or terminate or lapse by reason of, the consummation of the
transactions contemplated hereby. Schedule 3.1.27 identifies all risks that have
been designated as being self-insured. No insurance has been
23
canceled or refused with respect to any operations, property or assets of
Deerfield, nor has the coverage of any insurance been limited by any insurance
carrier which has carried, or received any application for, any such insurance
during the last three years and no insurer has notified Deerfield of its
intention not to renew any such insurance.
3.1.28. EMPLOYMENT PRACTICES. Deerfield has paid in full to
its employees, agents and contractors all wages, salaries, commissions, bonuses
and other direct compensation for all services performed by them, other than
amounts that have not yet become payable, in accordance with Deerfield's
customary practices. Deerfield is not liable for any severance pay or other
payments on account of termination of any former employee. Except as set forth
in Schedule 3.1.28, Deerfield is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours. Deerfield does not have in effect,
nor has it ever had in effect, any severance policy.
3.1.29. PERSONNEL. Schedule 3.1.29 lists (a) the current
salary rates of all salaried employees of Deerfield and (b) the wage rate ranges
for all non-salaried employees and officers of Deerfield by classification,
including in the case of (a) and (b) all bonuses or other payments.
3.1.30. STOCK RECEIVED AS INVESTMENT.
3.1.30.1. INVESTMENT INTENT. All shares of CVE Parent
Common Stock to be acquired by Sladkus pursuant to this Agreement are being
acquired by Sladkus solely for the purpose of investment and not with a view to,
or for sale in connection with, any distribution thereof. Sladkus acknowledges
that he has been advised that all such shares of CVE Parent Common Stock have
not been registered under the Securities Act of 1933, as amended (the "Act"), or
the securities laws of any state or other jurisdiction and Sladkus acknowledges
that such shares of CVE Parent Common Stock may not be sold or otherwise
transferred unless they are registered
24
under the Act or unless an exemption from such registration is otherwise
available. Sladkus understands and agrees that all such shares of CVE Parent
Common Stock shall bear a legend in substantially the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS A REGISTRATION STATEMENT WITH
RESPECT TO THESE SHARES HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT, OR THE CORPORATION HAS BEEN FURNISHED WITH AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED."
3.1.30.2. PURCHASER LOCK-UP AGREEMENT. In the event
at any time CVE Parent shall have completed an initial public offering of its
common stock (including the common stock of a successor corporation) and in
connection therewith the underwriters shall require, as a condition to effecting
such offering, the execution of "lock-up agreements" (I.E. agreements
prohibiting the sale of shares of common stock by the holders thereof for a
period of time), Sladkus shall promptly, and without payment of any
consideration, execute the form of lock-up agreement presented by the
underwriters.
3.1.31. DISCLOSURE. No representations or warranties by
Deerfield or Sladkus in this Agreement, and no statement contained in any
document, including but not limited to Financial Statements, the schedules and
exhibits annexed hereto, any certificate, or any other writing furnished or to
be furnished by Sladkus or Deerfield or any of its representatives pursuant to
the provisions hereof or in connection with the transactions contemplated
hereby, contains any untrue statement of material fact or omits to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not
25
misleading. Documents delivered or to be delivered to Newco and CVE Parent
pursuant to this Agreement are or will be true and complete copies of what they
purport to be.
3.1.32. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Deerfield and Sladkus set forth in this
Agreement shall be true from the date hereof through and including the Closing.
All such representations and warranties contained in this Agreement shall
survive the Closing for a period of two years from the date of the Closing.
4. REPRESENTATIONS AND WARRANTIES OF XXXXXXX
4.1. Xxxxxxx hereby warrants and represents to and agrees with
Newco and CVE Parent as follows:
4.1.1. OWNERSHIP OF SHARES. Xxxxxxx is the beneficial owner
and holder of record of twenty (20) shares of Deerfield Stock, which represents
twenty percent (20%) of the issued and outstanding Deerfield Stock. All such
shares have been duly authorized and validly issued and are fully paid and
non-assessable. Xxxxxxx has good and marketable title to said shares free and
clear of all Encumbrances of any kind or nature. Said shares represent all of
the shares of Deerfield, of any class, owned by him. Xxxxxxx acquired said
shares on April 5, 1984. Since that date, his sole relationship with Deerfield
has been as a passive investor. He has never been employed by or performed
services for Deerfield, or in any way been active in Deerfield's business or
affairs.
4.1.2. VALIDITY. This Agreement has been duly executed and
delivered by him, is a valid and binding obligation and agreement of him,
enforceable in accordance with its terms (subject to any applicable bankruptcy
or similar laws affecting the enforcement of creditors' rights generally). The
execution, delivery and performance of this Agreement will not violate or result
26
in a breach of or constitute a default under any note, mortgage, loan, contract,
judgment or decree to which he is a party or by which he or his properties or
assets are bound.
4.1.3. BROKERS. Xxxxxxx does not have any contract with, nor
is he under any obligation to any broker, finder or other intermediary in
connection with the transactions contemplated hereby, and he agrees to indemnify
fully and hold CVE Parent and Newco harmless with respect to any claims asserted
by any broker, finder or other intermediary who claims compensation by virtue of
allegedly representing him.
4.1.4. RELIANCE. Xxxxxxx acknowledges and agrees that CVE
Parent and Newco are relying upon the representations and warranties of Xxxxxxx
set forth herein, regardless of any independent investigation made by or on
behalf of CVE Parent and Newco, and that he agrees that CVE Parent and Newco are
justified in doing so.
4.1.5. INVESTMENT INTENT.
4.1.5.1. All shares of CVE Parent Common Stock to be
acquired by Xxxxxxx pursuant to this Agreement are being acquired by him solely
for the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof. Xxxxxxx acknowledges that he has been advised
that all such shares of CVE Parent Common Stock have not been registered under
the Act, or the securities laws of any state or other jurisdiction and Xxxxxxx
acknowledges that such shares of CVE Parent Common Stock may not be sold or
otherwise transferred unless they are registered under the Act or unless an
exemption from such registration is otherwise available. Xxxxxxx understands and
agrees that all such shares of CVE Parent Common Stock shall bear a legend in
substantially the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY
27
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
A REGISTRATION STATEMENT WITH RESPECT TO THESE SHARES HAS
BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR THE CORPORATION
HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL SATISFACTORY TO
THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED."
4.1.5.2. PURCHASER LOCK-UP AGREEMENT. In the event at
any time CVE Parent shall have completed an initial public offering of its
common stock (including the common stock of a successor corporation) and in
connection therewith the underwriters shall require, as a condition to effecting
such offering, the execution of "lock-up agreements" (I.E. agreements
prohibiting the sale of shares of common stock by the holders thereof for a
period of time), Xxxxxxx shall promptly, and without payment of any
consideration, execute the form of lock-up agreement presented by the
underwriters.
4.1.6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Xxxxxxx set forth in this Agreement shall be
true from the date hereof through and including the Closing. All such
representations and warranties contained in this Agreement shall survive the
Closing for a period of two years from the date of the Closing.
5. REPRESENTATIONS AND WARRANTIES OF CVE PARENT AND NEWCO.
5.1. Newco and CVE Parent hereby jointly and severally represent
and warrant to Deerfield as follows:
5.1.1. ORGANIZATION AND GOOD STANDING.
5.1.1.1. Newco is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
with full corporate power and authority to conduct its business as now conducted
and to own or lease and operate the assets and properties now owned or leased
and operated by it.
28
5.1.1.2. CVE Parent is a corporation, duly organized,
validly existing and in good standing, under the laws of the State of Delaware
and is qualified to do business in the State of New York, with full corporate
power and authority to conduct its business as now conducted and to own or lease
and operate the assets and properties now owned or leased and operated by it.
5.1.1.3. CVE Parent owns 100% of the outstanding
capital stock of Creative Visual Enterprises, Ltd., a Delaware corporation
("CVE").
5.1.2. CAPITALIZATION OF CVE PARENT. The total authorized
capital stock of CVE Parent consists of 21,000,000 shares, of which 20,000,000
are shares of common stock, par value $0.0001 per share, and 1,000,000 are
preferred stock, $.001 par value. 2,020,718 shares of common stock are issued
and outstanding and no shares of preferred stock are issued. All of such issued
and outstanding shares of common stock have been duly authorized and validly
issued, are fully paid and non-assessable.
5.1.3. VALIDITY, ETC. This Agreement has been duly executed
and delivered by Newco and CVE Parent, is a valid and binding obligation and
agreement of each of them, enforceable in accordance with its terms (subject to
any applicable bankruptcy or similar laws affecting the enforcement of
creditors' rights generally). The execution, delivery and performance of this
Agreement (i) will not violate or result in a breach of or constitute a default
under any note, mortgage, loan, contract, judgment or decree to which Newco, CVE
Parent or CVE is a party or by which any of them or any of their properties or
assets is bound, (ii) will not afford any creditor of Newco, CVE Parent or CVE
the right to accelerate and declare at once due and payable any indebtedness of
Newco, CVE Parent or CVE due in installments or not yet due, and (iii) will not
cause a forfeiture of any license or operating permit required to continue the
operation of Newco's, CVE Parent's or CVE's business.
29
5.1.4. CONSENTS. No consent of any third party or
governmental authority, and no other consent of any other person or entity is
required to consummate the transactions contemplated hereby, and the execution
and delivery and the performance of the transactions contemplated by this
Agreement will not interfere with the continued operation of Newco's, CVE
Parent's or CVE's business. The Board of Directors of each of Newco and CVE
Parent has approved the transactions contemplated by this Agreement and has
approved the execution and delivery hereof. Neither the execution of this
Agreement nor the consummation of the transactions contemplated by this
Agreement nor the fulfillment of or the compliance with the terms, conditions
and provisions hereof, will conflict with or result in a breach of any relevant
laws or of any of the terms or provisions of, or constitute a default or an
event which, with notice or lapse of time or both, would constitute a default
under, the Articles of Incorporation or the By-Laws of Newco or CVE Parent, or
any lease, license, promissory note, conditional sales contract, commitment,
indenture, deed of trust, instrument or other agreement or order or decree to
which Newco, CVE Parent or CVE is a party or by which Newco's, CVE Parent's, or
CVE's property is bound, or constitute an event which would permit any party to
any such agreement or document to terminate or accelerate such agreement or
document, or result in the creation or imposition of a lien, charge or
Encumbrance against any asset of Newco, CVE Parent or CVE. This Agreement
represents a valid and binding obligation of Newco and CVE Parent in accordance
with its terms.
5.1.5. RELIANCE. Newco and CVE Parent acknowledge and agree
that Deerfield, Sladkus and Xxxxxxx are relying upon the representations and
warranties of Newco and CVE Parent set forth herein, regardless of any
independent investigation made by or on behalf of Deerfield, Sladkus or Xxxxxxx,
and Newco and CVE Parent agree that they are justified in doing so.
30
5.1.6. DISCLOSURE. No representations or warranties by Newco
and CVE Parent and no statement contained in any document, including but not
limited to any certificate, or any other writing furnished or to be furnished by
Newco or CVE Parent or any of its representatives pursuant to the provisions
hereof or in connection with the transactions contemplated hereby, contains any
untrue statement of material fact or omits to state any material fact necessary,
in light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading. Documents delivered or to be
delivered to Deerfield pursuant to this Agreement are or will be true and
complete copies of what they purport to be.
5.1.7. BROKERS. Neither Newco, CVE Parent nor CVE has a
contract with or is under an obligation to, any broker, finder or other
intermediary in connection with the transactions contemplated hereby, and each
of Newco and CVE Parent agrees to indemnify fully and hold harmless Deerfield,
Sladkus and Xxxxxxx with respect to any claims asserted by any broker, finder or
other intermediary.
5.1.8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Newco and CVE Parent set forth in this
Agreement shall be true from the date hereof through and including the Closing.
All such representations and warranties of Newco and CVE Parent contained in
this Agreement shall survive the Closing for a period of two years from the date
of the Closing.
6. PRE-CLOSING COVENANTS OF DEERFIELD, SLADKUS AND XXXXXXX.
6.1. STOCKHOLDERS APPROVAL. Sladkus and Xxxxxxx hereby covenant and
agree to vote their Deerfield Stock in favor of the adoption of the Merger and
the transactions contemplated by this Agreement.
31
6.2. ACCESS TO BOOKS AND RECORDS. From the date hereof until the
Closing Date, Deerfield and Sladkus shall permit the officers, accountants,
attorneys and other representatives of Newco and CVE Parent, upon reasonable
prior notice, to enter upon Deerfield's premises and have access to, examine
and, at Newco's and CVE Parent's expense, make copies of the books, records and
files of Deerfield and furnish Newco and CVE Parent with such information as
Newco and CVE Parent may reasonably request. All such inspections shall be made
with due regard for the operation of Deerfield. It is acknowledged that any
examination, inquiry, or investigation made by or on behalf of Newco and CVE
Parent, whether prior or subsequent to the date hereof, shall not in any way
alter the representations and warranties made by Deerfield, Sladkus or Xxxxxxx
in this Agreement or the survival of such representations and warranties at
Closing.
6.3. CONDUCT OF THE BUSINESS. From the date hereof until the
Closing Date, Deerfield shall, and Sladkus shall cause Deerfield to, actively
and to the best of its management's ability conduct its business in the same
manner and under the same business policies as prior to the date hereof, and to
cause Deerfield to preserve its relationships with its business suppliers and
customers. During such period, Deerfield shall not, and Sladkus shall ensure
that Deerfield does not, unless authorized in writing by Newco and CVE Parent:
6.3.1. Issue or sell any capital stock, notes (including
notes to finance equipment purchases without Newco's and CVE Parent's prior
written consent to each such equipment purchase), bonds or other securities or
any option to purchase the same or enter into any agreement with respect
thereto, or acquire any stock of any corporation or any interest in any business
entity;
32
6.3.2. Declare, set aside or make any dividend or other
distribution on its capital stock or redeem, purchase or acquire any shares
thereof or enter into any agreement in respect of the foregoing;
6.3.3. Create, incur, pledge, or grant or suffer to exist,
any lien or other Encumbrance or charge on any of its assets or properties,
tangible or intangible, including those to finance the purchase or leasing of
equipment unless Newco and CVE Parent shall give their prior written consent to
each such equipment purchase or lease;
6.3.4. Incur any obligation or liability (absolute or
contingent) not within the ordinary course of business and consistent with past
practices, or pay any liability or obligation (absolute or contingent), other
than incurred in the ordinary course of Deerfield's business;
6.3.5. Enter into, renew, extend, amend or modify any
contract, commitment or transaction other than in the ordinary course of
business and consistent with past practices;
6.3.6. Amend Deerfield's Certificate of Incorporation or
By-Laws;
6.3.7. Sell, exchange or otherwise dispose of any assets of
Deerfield, except in the ordinary course of the business and consistent with
past practices;
6.3.8. Create, modify or terminate any corporate bank
account, power of attorney or safety deposit box;
6.3.9. Agree to pay, conditionally or otherwise, any pension
or any severance pay to any director, officer, agent, or employee under any
existing pension plan or otherwise, or increase the compensation paid by it at
the date hereof to any of its officers or employees, except to the extent
obligated to do so by existing plans or other commitments that have been fully
disclosed to Newco and CVE Parent prior to the date hereof, and except that
Deerfield may increase the
33
annual salary of Iyhan Sulcevski, Deerfield's office manager, from $27,000 to
not more than $30,000.
6.3.10. Amend any collective bargaining agreement to which
Deerfield is a party or is subject, except to the extent that such agreement
expires and/or is negotiated by or through any trade association or similar
organization.
6.3.11. Make any capital expenditures or capital additions or
betterments except as may be involved in ordinary repairs, maintenance, and
replacements.
6.3.12. Create or incur any indebtedness, whether funded or
not, except unsecured liabilities incurred in the ordinary course of business.
6.4. PRESERVATION OF ASSETS. From the date hereof until the Closing
Date, Deerfield shall keep its assets and properties in the same state of repair
as they are on the date hereof, normal wear and tear excepted, and use its best
efforts to retain the services of its employees, and preserve for Newco and CVE
Parent the goodwill of its customers, licensors, lessors, vendors and suppliers
and others having business relations with it and will operate its business only
in the ordinary course.
6.5. SATISFACTION OF CONDITIONS. During the period from the date
hereof until the Closing, Sladkus shall use his best efforts to cause the
satisfaction of the conditions to the obligations of Newco and CVE Parent set
forth in Section 8.1 hereof.
7. [INTENTIONALLY OMITTED]
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NEWCO AND CVE PARENT.
8.1. The obligations of Newco and CVE Parent pursuant to this
Agreement are subject to the satisfaction and fulfillment of each of the
following conditions, provided, however, that Newco
34
and CVE Parent may, in their sole discretion, waive any of such conditions and
proceed with the transactions contemplated hereby:
8.1.1. BOARD OF DIRECTORS' APPROVAL. The Merger and the
transactions contemplated by this Agreement shall have been approved and
ratified by all necessary and appropriate corporate proceedings required under
the applicable provisions of the laws of the State of New York;
8.1.2. REPRESENTATIONS AND WARRANTIES, ETC. All of the
representations and warranties of Deerfield, Sladkus and Xxxxxxx contained
herein shall be true and correct as if made on and as of the Closing Date, and
there shall be delivered to Newco and CVE Parent at the Closing a certificate,
in form and substance satisfactory to Newco and CVE Parent and its counsel, duly
executed by Sladkus, Xxxxxxx and Deerfield to that effect. All of the covenants
in this Agreement to be complied with and performed by Sladkus, Xxxxxxx and/or
Deerfield on or before the Closing Date, including the covenants set forth in
Article 6, shall have been complied with and performed.
8.1.3. STOCK CERTIFICATES. The stock certificates for the
shares of Deerfield Stock owned by Sladkus and Xxxxxxx shall have been delivered
at the Closing in accordance with this Agreement, together with duly executed
stock powers therefor.
8.1.4. GOOD STANDING. At the Closing, Sladkus and Xxxxxxx
shall deliver to Newco and CVE Parent a good standing certificate from the
Secretary of State of the State of New York, as of a recent date, showing
Deerfield to be duly organized, validly existing and in good standing under the
laws of the State of New York.
8.1.5. All terms, conditions and covenants to be complied
with by Sladkus, Xxxxxxx and/or Deerfield on or before the Closing Date shall
have been fully complied with or performed in all material respects.
35
8.1.6. The business of Deerfield shall not have been
adversely affected in any material way, whether or not insured against. Further,
none of Deerfield's ten largest customers or suppliers shall have ceased or
indicated any intention to cease doing business with Deerfield or indicated any
intention not to do business with CVE Parent after the consummation of the
transactions contemplated hereby.
8.1.7. This Agreement and the transactions contemplated
herein and hereby shall have been duly and validly authorized, approved, and
adopted by the Board of Directors and the Shareholder of Newco and the Board of
Directors of CVE Parent in accordance with the requirements of applicable law.
8.1.8. No suit, action or other proceeding shall be
threatened or pending before any court or governmental agency which is likely to
result in the restraint, prohibition, or the obtaining of material damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated herein.
8.1.9. Newco and CVE Parent shall have received an opinion,
in form and content satisfactory to Newco and CVE Parent and their counsel, from
Young & Moriwaki, LLP, counsel for Deerfield, Sladkus and Xxxxxxx, to the effect
that:
8.1.9.1. Deerfield is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
Deerfield has all requisite corporate power and authority to carry on its
business as it is now conducted and to own and use its properties in connection
therewith.
8.1.9.2. The authorized capital stock of Deerfield
consists of 200 shares of common stock, of which 100 are issued and outstanding
and no shares are held in the treasury of Deerfield. All of the issued and
outstanding shares of capital stock of Deerfield are (i) duly
36
authorized, validly issued, fully paid and nonassessable, (ii) are held of
record as follows: Xxxxxx Xxxxxxx, 80 shares, and Xxxxxxx X. Xxxxxxx, 20 shares,
and (iii) are free and clear of all preemptive rights, liens, encumbrances,
charges and assessments. To counsel's knowledge, there are no outstanding or
authorized (i) options, warrants, rights, contracts, calls, rights, puts, rights
to subscribe, conversion rights or other agreements or commitments to which
Deerfield is a party or which are binding upon Deerfield providing for the
issuance, disposition or acquisition of any of its capital stock, (ii) stock
appreciation, phantom stock or similar rights with respect to Deerfield, or
(iii) agreements, voting trusts, proxies, or understandings with respect to the
voting of any shares of capital stock of Deerfield.
8.1.9.3. Deerfield, Sladkus and Xxxxxxx have all
requisite power and authority to execute and deliver the Agreement and to
perform their obligations thereunder. The Agreement has been duly and validly
executed and delivered by Deerfield, Sladkus and Xxxxxxx and constitutes a valid
and binding obligation of them, enforceable against them in accordance with its
terms, except as such enforceability may be subject to or affected by applicable
bankruptcy, insolvency, reorganization, moratorium, usury, fraudulent transfer
or other laws relating to or affecting the rights and remedies of creditors
generally.
8.1.9.4. Neither the execution and delivery by
Deerfield, Sladkus and Xxxxxxx of this Agreement, nor the consummation by
Deerfield, Sladkus and Xxxxxxx of the transactions contemplated hereby (i)
requires on the part of Deerfield, Sladkus or Xxxxxxx any filing with, or
permit, authorization, consent or approval of, any governmental entity which has
not been filed or obtained, or (ii) conflicts with, results in a breach of,
constitutes (with or without due notice or lapse of time or both) a default
under, results in the acceleration of, creates in any party the right to
accelerate, terminate, modify or cancel or requires any notice, consent or
waiver (which has
37
not been obtained) under, any contract, lease, sublease, license, sublicense,
franchise, permit, indenture or other agreement or instrument known to counsel
to which Deerfield, Sladkus or Xxxxxxx is a party or by which Deerfield, Sladkus
or Xxxxxxx is bound or to which any of their respective assets is subject.
8.1.10. That no material transactions shall have been entered
into by Deerfield other than transactions in the usual course of business
between September 30, 1999 and the Closing Date or other than as referred to in
this Agreement, except with the written consent of Newco and CVE Parent; that
none of the properties or assets of Deerfield shall have been sold or otherwise
disposed of other than in the usual course of business during such period,
except with the written consent of Newco and CVE Parent; and that Deerfield
during such period shall have performed and complied with the other provisions
and conditions of this Agreement on its part to be performed and complied with.
8.1.11. The following shall have been delivered to CVE
Parent:
8.1.11.1. Resignations of all officers, directors and
shareholders of Deerfield, to be effective immediately following the Closing;
8.1.11.2. General releases by all officers, directors
and shareholders of Deerfield of any liability of Deerfield to them or any claim
which they may have against Deerfield;
8.1.11.3. The minute books, stock record books,
corporate seal and other books and records of Deerfield;
8.1.11.4. A general release by Xxxxxxxx Xxxxx
("Minte"), a former shareholder of Deerfield, of any liability of Deerfield to
him for any claim which he may have against Deerfield.
8.1.12 Sladkus and CVE Parent or an affiliate of CVE Parent
shall have executed and delivered to each other an Employment Agreement, such
Employment Agreement to be in a
38
form substantially similar to that provided in Exhibit B. Such Employment
Agreement shall provide for a term of five (5) years commencing on the Closing
Date.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF DEERFIELD, SLADKUS AND
XXXXXXX.
9.1. The obligations of Deerfield, Sladkus and Xxxxxxx under this
Agreement shall be subject to the satisfaction and fulfillment of the following
conditions, any or all of which may be waived by Deerfield, Sladkus and/or
Xxxxxxx at their sole discretion:
9.1.1. REPRESENTATIONS AND WARRANTIES, ETC. All of the
representations and warranties of Newco and CVE Parent contained herein shall be
true and correct as if made on and as of the Closing Date, and there shall be
delivered to Deerfield, Sladkus and Xxxxxxx at the Closing a certificate, in
form and substance satisfactory to Deerfield, Sladkus, Xxxxxxx and their
counsel, duly executed by Newco and CVE Parent, to that effect.
9.1.2. All terms, conditions and covenants to be complied
with by Newco and CVE Parent on or before the Closing Date shall have been fully
complied with or performed in all material respects.
9.1.3. This Agreement and the transactions contemplated
herein and hereby shall have been duly and validly authorized, approved, and
adopted by the Board of Directors and Shareholder of Newco and by the Board of
Directors of CVE Parent in accordance with the requirements of applicable law.
9.1.4. No suit, action or other proceeding shall be
threatened or pending before any court or governmental agency which is likely to
result in the restraint, prohibition, or the obtaining of material damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated herein.
39
9.1.5. Deerfield, Sladkus and Xxxxxxx shall have received an
opinion, in form and content satisfactory to Sladkus, Xxxxxxx and their counsel,
from Xxxxxx X. Xxxxxx, counsel for Newco and CVE Parent, to the effect that:
each of Newco and CVE Parent is a duly organized and existing corporation in
good standing under the laws of their respective state of incorporation and that
CVE Parent is authorized to do business in New York; the shares of common stock
of CVE Parent being issued hereunder are validly issued, fully paid and
non-assessable, and such shares are free and clear of all liens, Encumbrances,
charges and assessments; this Agreement has been duly executed and delivered by
Newco and CVE Parent and constitutes the legal, valid, and binding obligation of
Newco and CVE Parent, enforceable in accordance with its terms.
9.1.6. REQUIRED ITEMS. CVE Parent shall have delivered to
Sladkus and Xxxxxxx certificates representing an aggregate of 5,810 shares of
CVE Parent stock
9.1.7. Sladkus and CVE Parent or an affiliate of CVE Parent
shall have executed and delivered to each other an Employment Agreement, such
Employment Agreement to be in a form substantially similar to that provided in
Exhibit B. Such Employment Agreement shall provide for a term of five (5) years
commencing on the Closing Date.
10. INJUNCTIVE RELIEF.
10.1. The parties hereto recognize that irreparable damage will
result to the parties if any of the parties fails or refuses to perform their
obligations under this Agreement, and that the remedy at law for any such
failure or refusal will be inadequate. Accordingly, in addition to any other
remedies and damages available (none of which remedies or damages are hereby
waived), the parties shall be entitled, in such event, to injunctive and other
equitable relief, including without limitation, specific performance.
40
11. INVALIDITY AND SEVERABILITY.
11.1. If any provisions of this Agreement are held invalid or
unenforceable, such invalidity or unenforceability shall not affect the other
provisions of this Agreement and, to that extent, the provisions of this
Agreement are intended to be and shall be deemed severable.
12. MUTUAL INDEMNIFICATIONS.
12.1. INDEMNIFICATION BY DEERFIELD AND SLADKUS. Deerfield and
Sladkus shall indemnify and hold Newco and CVE Parent harmless from and against
any and all losses, claims, demands, expenses, costs, obligations, damages and
liabilities, including interest, penalties (and further including, but not
limited to, the costs of investigation and defense, reasonable attorney's fees
and appellate fees and costs), which Newco and CVE Parent may incur, suffer or
sustain, which arise, result from or relate to (i) any inaccuracy in any of the
representations and warranties of Deerfield, Sladkus or Xxxxxxx in this
Agreement (including the annexed schedules and exhibits) or any actions,
omissions or statements or acts inconsistent with any such representations or
warranties, (ii) breach by Deerfield, Sladkus or Xxxxxxx of any covenant,
representation, warranty or agreement herein or hereunder, (iii) all debts,
claims or liabilities of whatever nature of Deerfield incurred prior to or as of
the Closing Date and not reflected on the Balance Sheet or on the Exception
Schedule, (iv) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses incident to any of the matters set
forth in this Section 12.1 including those incurred in connection with actions
brought to recover from Sladkus pursuant to this Section 12.1, or (v) any claim
by Minte against Deerfield, Sladkus, Doscher, Newco or CVE Parent, including but
not limited to any claim that relates to or arises from this Agreement or the
transactions contemplated hereby.
12.2. INDEMNIFICATION BY XXXXXXX. Xxxxxxx shall indemnify and hold
Newco and CVE Parent harmless from and against any and all losses, claims,
demands, expenses, costs, obligations,
41
damages and liabilities, including interest, penalties (and further including,
but not limited to, the costs of investigation and defense, reasonable
attorney?s fees and appellate fees and costs), which CVE Parent may incur,
suffer or sustain, which arise, result from or relate to (i) any inaccuracy in
any of the representations and warranties of Xxxxxxx in this Agreement
(including the annexed schedules and exhibits) or any actions, omissions or
statements or acts inconsistent with any such representations or warranties,
(ii) breach by Xxxxxxx of any covenant, representation, warranty or agreement
herein or hereunder, (iii) all debts, claims or liabilities of whatever nature
of Deerfield incurred prior to or as of the Closing Date and not reflected on
the Balance Sheet or the Exception Schedule, or (iv) any and all actions, suits,
proceedings, claims, demands, assessments, judgments, costs and expenses
incident to any of the matters set forth in this Section 12.2 including those
incurred in connection with actions brought to recover from Xxxxxxx pursuant to
this Section 12.2, but excluding any claim by Minte against Deerfield, Sladkus,
Doscher, Newco or CVE Parent.
12.3. INDEMNIFICATION BY NEWCO AND CVE PARENT. Newco and CVE Parent
shall indemnify and hold Sladkus, Xxxxxxx and Deerfield harmless from and
against any and all losses, claims, demands, expenses, costs, obligations,
damages and liabilities, including interest, penalties (and further including,
but not limited to, the costs of investigation and defense, reasonable
attorney's fees and appellate fees and costs), which Deerfield, Sladkus or
Xxxxxxx may incur, suffer or sustain, which arise, result from or relate to (i)
any inaccuracy in any of the representations and warranties of Newco and CVE
Parent in this Agreement (including the annexed schedules and exhibits) or any
actions, omissions or statements or acts inconsistent with any such
representations or warranties, (ii) breach by Newco and CVE Parent of any
covenant, representation, warranty or agreement herein or hereunder, (iii) any
and all actions, suits,
42
proceedings, claims, demands, assessments, judgments, costs and expenses
incident to any of the matters set forth in this Section 12.3 including those
incurred in connection with actions brought to recover from Newco and CVE Parent
pursuant to this Section 12.3.
13. TERMINATION.
13.1. This Agreement may be terminated at any time prior to the
Effective Date, whether before or after approval by the stockholders of
Deerfield, by mutual consent of the Board of Directors of Deerfield and the
Board of Directors of Newco.
14. MISCELLANEOUS.
14.1. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to be effective
only if delivered by hand or mailed by prepaid registered or certified mail,
return receipt requested, or sent by Federal Express or a like overnight courier
service for delivery on the next business day to the parties at their addresses
set forth above, or to such other address as each party may specify by written
notice to the other from time to time in accordance with the terms of this
section, with a copy sent in the same manner as said notice was given to the
party to:
Young & Moriwaki, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000, and
Xxxxxx X. Xxxxxx, Esq.
The Inns of Court
00 Xxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Such notices, requests, demands, and other communications hereunder shall be
deemed to have been duly given upon such personal delivery (or on the date such
personal delivery is first refused by the other party) or on the date three (3)
days after the date postmarked by the United States
43
Post Office, or on the next business day after deposited with Federal Express or
a like overnight courier service in a properly addressed prepaid wrapper for
delivery on the next business day, as the case may be.
14.2. BENEFITS, ETC. The rights created by this Agreement shall
inure to the benefit of, and the obligations created hereby shall be binding
upon, the successors, heirs and permitted assigns, if any, of the respective
parties hereto.
14.3. ENTIRE AGREEMENT; CHANGES. This Agreement and the Exhibits and
Schedules annexed hereto, and the instruments delivered in accordance herewith
constitute the entire agreement among the parties and supersede all prior
agreements and understandings, written or oral, among the parties relating to
the subject matter hereof. This Agreement may be modified, amended or
supplemented only by a writing signed by the party against whom enforcement of
such modification, amendment or supplement is sought.
14.4. ASSIGNMENT. Newco, CVE Parent, Sladkus and Xxxxxxx may not
assign their respective rights, or delegate their respective duties hereunder,
except that Newco and CVE Parent shall each have the right to assign their
rights and delegate their duties hereunder to any successor corporation, limited
liability company or any other entity that results from a merger, consolidation,
reorganization or business combination to which Newco or CVE Parent, as the case
may be, is a party.
14.5. WAIVER. Waiver by any party of a breach of any provision of
this Agreement by any other party shall not operate or be construed as a waiver
of any subsequent breach by such other party. The failure of any party hereto to
take any action by reason of such breach shall not deprive such party of the
right to take action at any time while such breach continues.
44
14.6. GOVERNING LAW. This Agreement and all amendments hereof and
waivers and consents hereunder shall be governed by and construed under the laws
of the State of New York without regard to the conflicts of law principles
thereof.
14.7. JURISDICTION. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement shall be
brought and litigated only in the Supreme Court of the State of New York, County
of Westchester, or the United States District Court for the Southern District of
New York (White Plains Division if permitted by the court) and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein.
14.8. RESPONSIBILITY FOR A REORGANIZATION STRUCTURE. The Merger is
intended to qualify as a tax-free reorganization. Structuring the transactions
contemplated by this Agreement and Plan of Merger to satisfy the requirements of
Internal Revenue Code ss.368(a)(1)(A) is the sole responsibility of Deerfield,
Sladkus and Xxxxxxx. In no event shall Newco or CVE Parent incur any liability
or responsibility to Deerfield, Sladkus or Xxxxxxx as a result of a
determination at any time that the transactions contemplated by this Agreement
do not or did not satisfy the requirements of Internal Revenue Code
ss.368(a)(1)(A).
14.9. EXPENSES. Deerfield, Sladkus and Xxxxxxx shall each bear their
own expenses incident to the preparation, negotiation, execution and delivery of
this Agreement.
14.10. CAPTIONS. The captions in this Agreement are for convenience
of reference only and shall not be given any effect in the interpretation of
this Agreement.
14.11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
45
14.12. GENDER AND NUMBER. All references in this Agreement to the
masculine gender shall include the feminine and neuter genders, and vice versa,
and all references to the singular shall include the plural, and vice versa.
14.13. CONTINUITY AND FURTHER ASSURANCES. On and after the Closing,
Deerfield, Sladkus and Xxxxxxx agree to cooperate with Newco and CVE Parent and
provide their best efforts to assist Newco and CVE Parent in connection with the
continuity and smooth transition of Deerfield's business. At any time or from
time to time after the Closing, Sladkus and Xxxxxxx shall, at the request of
Newco and CVE Parent, take all actions necessary to put Newco and CVE Parent in
actual possession and control of Deerfield's business and shall execute and
deliver such further instruments of sale, conveyance, transfer, assignment and
consent and take such other action as Newco and CVE Parent may reasonably
request in order to more effectively consummate the transactions contemplated
hereby or assist Newco and CVE Parent in exercising their rights with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
DEERFIELD VIDEO PRODUCTIONS, INC.
(A New York Corporation)
By: /s/ XXXXXX XXXXXXX
-----------------------------------
Xxxxxx Xxxxxxx, President
/s/ XXXXXX XXXXXXX
-----------------------------------
Xxxxxx Xxxxxxx, Individually
/s/ XXXXXXX X. XXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxx, Individually
46
VIRTUAL EDUCATION CORPORATION .
(A Delaware Corporation)
By: /s/ XXXXXXX X. XXXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxxx, President
DEERFIELD ACQUISITION CORP.
(A New York Corporation)
By: /s/ XXXXXXX X. XXXXXXXX
-----------------------------------
47
EXHIBIT A-1
DIRECTORS
Xx. Xxxxxxx X. Xxxxxxxx
Xxxx Xxxxxxxxx
Xxxxx Pesky
EXHIBIT A-2
OFFICERS
Xx. Xxxxxxx X. Xxxxxxxx President and Chief Executive Officer
Xxxx Xxxxxxxxx Executive Vice President and Secretary
48
