1
APPENDIX A
JANEX INTERNATIONAL, INC. FUNDEX GAMES, LTD.
GLOBAL MERGER AGREEMENT
1999
FUTECH INTERACTIVE PRODUCTS, INC.
DAMERT COMPANY TRUDY CORPORATION
2
TABLE OF CONTENTS
SECTION
-------
ARTICLE I
THE MERGERS
The Mergers................................................. 1.1
The Merger of Futech into New Futech...................... 1.1.1
The Merger Into New Futech................................ 1.1.2
The Merger Into New Sub................................... 1.1.3
Agreement is Conditional on Merger of All Merging
Companies.............................................. 1.1.4
Effective Time.............................................. 1.2
Effect of the Mergers....................................... 1.3
Certificate of Incorporation; Bylaws........................ 1.4
Directors and Officers...................................... 1.5
Consideration for the Merger, Conversion of Securities...... 1.6
Shares of Dissenting Holders................................ 1.7
Exchange of Securities and Payment of Merger
Consideration............................................. 1.8
Exchange Agent............................................ 1.8.1
Exchange Procedures....................................... 1.8.2
No Further Ownership Rights in Stock of Merging
Companies.............................................. 1.8.3
Termination of Exchange Fund.............................. 1.8.4
Delivery to a Public Official............................. 1.8.5
Proxy Statements; Registration Statement.................... 1.9
Meetings of Stockholders.................................... 1.10
Vote Required............................................... 1.11
Appropriate Action; Consents; Filings....................... 1.12
Shareholders' Agreement to Vote............................. 1.13
ARTICLE II
ADDITIONAL AGREEMENTS
Notification of Certain Matters............................. 2.1
Public Announcements........................................ 2.2
Access to Customer Files and Other Records.................. 2.3
Due Diligence Investigation; Confidentiality................ 2.4
Employment Agreements....................................... 2.5
Interim Events.............................................. 2.6
401(K) Plan................................................. 2.7
Employment Agreements....................................... 2.8
i
3
SECTION
-------
Indemnification............................................. 2.9
Revisions of Loans.......................................... 2.10
Expenses and Costs of Mergers............................... 2.11
Restrictive Covenants....................................... 2.12
Other Agreements for Particular Parties..................... 2.13
Other Discussions........................................... 2.14
Best Efforts to Register Stock.............................. 2.15
ARTICLE III
REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
OF
EACH MERGING COMPANY
AND
ITS SHAREHOLDERS
Due Incorporation........................................... 3.1
Capitalization.............................................. 3.2
Subsidiaries................................................ 3.3
Financial Information....................................... 3.4
Taxes....................................................... 3.5
Material Changes............................................ 3.6
Title to Assets; Liens...................................... 3.7
Litigation.................................................. 3.8
Compliance with Laws........................................ 3.9
Insurance................................................... 3.10
Licenses.................................................... 3.11
Hazardous Materials......................................... 3.12
Judgments Against the Merging Company and/or Business....... 3.13
Complete Sale............................................... 3.14
Assets in Good Condition.................................... 3.15
Disclosure Materials........................................ 3.16
Defaults.................................................... 3.17
Material Contracts.......................................... 3.18
Outstanding Liabilities..................................... 3.19
Inventory................................................... 3.20
Receivables................................................. 3.21
Employees................................................... 3.22
No Conflicts................................................ 3.23
Violations of Law........................................... 3.24
ii
4
SECTION
-------
Condition and Sufficiency of Assets......................... 3.25
Bank Accounts............................................... 3.26
Environmental Matters....................................... 3.27
Intellectual Property....................................... 3.28
Customers and Suppliers..................................... 3.29
Changes to the Merging Company's Documents.................. 3.30
Stockholders Agreements and Other Agreements................ 3.31
Certain Payments............................................ 3.32
Filings Complete............................................ 3.33
Products.................................................... 3.34
Patents..................................................... 3.35
Indemnification; Survival................................... 3.36
ARTICLE IV
CONDITIONS OF MERGER
Conditions to Obligation of Each Party to Effect the
Merger.................................................... 4.1
Stockholder Approval...................................... 4.1.1
No Order.................................................. 4.1.2
No Challenge.............................................. 4.1.3
Representations; Warranties and Covenants................. 4.1.4
Consents Obtained......................................... 4.1.5
No Material Adverse Change................................ 4.1.6
Opinions of Counsel....................................... 4.1.7
Assignments............................................... 4.1.8
Maintenance of Assets..................................... 4.1.9
Ordinary Course of Business............................... 4.1.10
Special Conditions for Particular Parties................... 4.2
ARTICLE V
TERMINATION, AMENDMENT AND WAIVER
Termination................................................. 5.1
Effect of Termination....................................... 5.2
Amendment................................................... 5.3
Waiver...................................................... 5.4
iii
5
SECTION
-------
ARTICLE VI
GENERAL PROVISIONS
Tax Treatment............................................... 6.1
Further Assurances.......................................... 6.2
Severability................................................ 6.3
Entire Agreement............................................ 6.4
Assignment.................................................. 6.5
Parties in Interest......................................... 6.6
Successors and Assigns...................................... 6.7
Governing Law............................................... 6.8
Modification................................................ 6.9
Attorney's Fees............................................. 6.10
Counterparts................................................ 6.11
Notices..................................................... 6.12
Paragraph Titles and Headings............................... 6.13
Brokerage, Finder's or Financial Advisor's Commissions...... 6.14
Miscellaneous............................................... 6.15
LIST OF EXHIBITS
List of Directors and Officers of New Futech and New Sub.... 1.5
Merger Consideration and Conversion of Stock Options........ 1.6
Form of Promissory Notes Constituting Merger
Consideration.......................................... 1.6-A
Fundex Stock Options and Conversion to Shares of New
Futech................................................. 1.6-B
Votes Required for Merger Approval.......................... 1.11
Terms of Employment Agreements.............................. 2.8.1
Job Description for William Burnham....................... 2.8.1-1
Form for Employment Agreements.............................. 2.8.2
Provisions Regarding Shareholder Loans and Guarantees....... 2.10
Other Agreements for Particular Parties..................... 2.13
Disclosure Schedules........................................ 3
Disclosure Schedule of DaMert Company..................... 3-A
DaMert Disclosure Regarding Employees.................. 3A-3.22
DaMert Disclosure Regarding Bank Accounts.............. 3A-3.26
DaMert Disclosure Regarding Customers and Suppliers.... 3A-3.29
DaMert Disclosure Regarding Patents.................... 3A-3.35
iv
6
SECTION
-------
Disclosure Schedule of Fundex Games, Ltd.................. 3-B
Fundex Disclosure Regarding Capitalization............. 3B-3.2
Fundex Disclosure Regarding Outstanding Liabilities.... 3B-3.19
Fundex Disclosure Regarding Employees.................. 3B-3.22
Fundex Disclosure Regarding No Conflicts............... 3B-3.23
Fundex Disclosure Regarding Patents.................... 3B-3.35
Disclosure Schedule of Futech Interactive Products,
Inc.................................................... 3-C
Futech Disclosure Regarding Stock Options, Warrants,
etc................................................... 3C-3.2
Futech Disclosure Regarding Litigation................. 3C-3.8
Futech Disclosure Regarding Outstanding Liabilities.... 3C-3.19
Futech Disclosure Regarding Changes to Futech
Documents............................................. 3C-3.30
Futech Disclosure Regarding Patents.................... 3C-3.35
Disclosure Schedule of Janex International, Inc........... 3-D
Janex Disclosure Regarding Outstanding Liabilities..... 3D-3.19
Janex Disclosure Regarding Employees................... 3D-3.22
Disclosure Schedule of Trudy Corporation.................. 3-E
Allowed Excess Liabilities.................................. 3.36
Form of Legal Opinion....................................... 4.1.7
Conditions for Particular Merging Companies................. 4.2
Surviving Provisions of Letters of Intent................... 6.5
Mailing List for Notices.................................... 6.13
Brokerage Fees Payable...................................... 6.14
v
7
MERGER AGREEMENT
THIS MERGER AGREEMENT, dated as of June 4, 1999 (the "Agreement"), is among
Futech Interactive Products, Inc., an Arizona corporation ("FUTECH"), Trudy
Corporation, a Delaware corporation ("TRUDY"), Fundex Games, Ltd., a Nevada
corporation ("FUNDEX"), DaMert Company, a California corporation ("DAMERT"),
Janex International, Inc., a Colorado corporation ("JANEX"), Futech Interactive
Products (Delaware) Inc., a newly formed Delaware corporation ("FUTECH
DELAWARE"), Futech Toys & Games, Inc., a newly formed Nevada corporation ("NEW
SUB") (collectively, the "MERGING COMPANIES"), and those shareholders of Futech,
Trudy, Fundex, DaMert and Janex identified on the signature pages of this
Agreement (the "SHAREHOLDERS"). This Agreement terminates and supersedes the
Agreement and Plan of Merger, dated February 26, 1999, between Futech and Trudy.
This Agreement does not terminate or supersede the letter agreement, dated March
3, 1999, on "Soundprints" letterhead, relating to, among other things, Futech's
obligation to provide Trudy with certain working capital.
Upon the terms and subject to the conditions of this Agreement (a) Futech
will merge into Futech Delaware, (b) then Trudy, DaMert and Janex will each
merge simultaneously with and into Futech Delaware, which will be the surviving
corporation, and (c) then Fundex will merge with and into New Sub, which will be
the surviving corporation and a wholly-owned subsidiary of Futech Delaware. The
parties intend that said Mergers (the "MERGERS") will qualify as reorganizations
under Section 368 of the Internal Revenue Code of 1986 as amended (the "CODE").
By executing this Agreement, each of the Merging Companies and their
respective Shareholders represent and warrant to the other Merging Companies and
Shareholders that:
(i) the board of directors of the Merging Company has determined that the
Mergers are fair to the Merging Company and its stockholders,
including any stockholders that are not parties to this Agreement, and
(ii) the board of directors of the Merging Company has approved and adopted
this Agreement and the transactions contemplated by it, and recommends
approval and adoption of this Agreement by its stockholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements in this Agreement, and intending to be legally bound by this
Agreement, the Merging Companies and Shareholders agree as follows:
ARTICLE I
The Mergers
1.1 THE MERGERS.
1.1.1 The Merger of Futech Into New Futech. Upon the terms and
subject to the conditions set forth in this Agreement, and in accordance
with applicable law, immediately prior to the Effective Time (as defined in
Section 1.2), Futech will merge with and into Futech Delaware. As a result
of this merger, the separate corporate existence of Futech will cease and
Futech Delaware will continue as the surviving corporation of the Merger.
1.1.2 The Merger into New Futech. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with applicable
law, at the
A-1
8
Effective Time (as defined in Section 1.2) each of Trudy, DaMert and Janex
will merge with and into Futech Delaware. As a result of this Merger, the
separate corporate existence of each of Trudy, DaMert and Janex will cease
and Futech Delaware will continue as the surviving corporation ("NEW
FUTECH") of the Merger.
1.1.2 The Merger into New Sub. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with applicable
law, at the Effective Time Fundex will merge with and into New Sub. As a
result of this Merger, the separate corporate existence of Fundex will
cease and New Sub will continue as the surviving corporation of this
Merger.
1.1.3 Agreement is Conditional on Merger of All Merging
Companies. The obligations of each Merging Company under this Agreement
are conditional upon all of the Merging Companies being included in the
Mergers.
1.2 EFFECTIVE TIME. As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in Article IV below, the
Merging Companies and Shareholders will cause the Mergers to be consummated by
filing articles of merger or other appropriate documents with the applicable
government offices or agencies in such form as required by, and executed in
accordance with the relevant provisions of, applicable law (11:59 p.m. on the
date of effectiveness of the last such filing being the "EFFECTIVE TIME").
Immediately prior to the filings, the closing of the Mergers (the "CLOSING")
will be held at the offices of Futech, at 2999 North 44th Street, Suite 225,
Phoenix, Arizona 85018-7247.
1.3 EFFECT OF THE MERGERS. At the Effective Time, the effect of each
Merger will be as provided in the provisions of applicable law. Without limiting
the generality of the foregoing, and subject to it, at the Effective Time,
except as otherwise provided in this Agreement:
(i) all the property, rights, privileges, powers and franchises of
Trudy, Futech, Futech Delaware, DaMert and Janex will vest in New
Futech, and all debts, liabilities and duties of Trudy, Futech,
Futech Delaware, DaMert and Janex will become the debts,
liabilities and duties of New Futech; and
(ii) all the property rights, privileges, powers and franchises of
Fundex will vest in New Sub, and all debts, liabilities and duties
of Fundex will become the debts, liabilities and duties of New
Sub.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS. At the Effective Time, the
Certificate of Incorporation and the Bylaws of Futech Delaware, as in effect
immediately prior to the Effective Time, will be the Certificate of
Incorporation and the Bylaws of New Futech, except that the Certificate of
Incorporation and Bylaws will be revised to change the name of New Futech to
"Futech Interactive Products, Inc." The Articles of Incorporation and Bylaws of
New Sub will not be affected by the Mergers.
1.5 DIRECTORS AND OFFICERS. At the Effective Time, the directors and
officers of New Futech and of New Sub will be the persons listed on EXHIBIT 1.5,
each to hold office in accordance with the charter documents of New Futech and
New Sub, respectively, until their successors are duly elected or appointed and
qualified.
1.6 CONSIDERATION FOR THE MERGER, CONVERSION OF SECURITIES. At the
Effective Time, by virtue of the Mergers and without any action on the part of
the Merging Companies, the Shareholders or the holders of any of the following
securities, except as provided in Section 1.7 below, each of the issued and
outstanding shares of capital stock of each of the
A-2
9
Merging Companies (other than shares owned by any of the Merging Companies or by
New Futech or by New Sub, which shares will be canceled, retired and will cease
to exist without the delivery of any consideration) will be converted into the
right to receive that amount of cash, promissory notes of New Futech, or shares
of common stock of New Futech specified in or determined in accordance with
EXHIBIT 1.6 (collectively, the "MERGER CONSIDERATION"). Approximately 70% of the
stock of Janex is owned by Futech, and the shares of New Futech that would
otherwise be issued to shareholders of Janex will be issued directly to
shareholders of Futech as though they owned the Janex stock directly. The
options to acquire capital stock of any of the Merging Companies issued and
outstanding at the Effective Time will be converted into options to acquire
common stock of New Futech to and only to the extent and as specified in or
determined in accordance with EXHIBIT 1.6.
As of the Effective Time, and except as otherwise provided in Section 1.7
below, the outstanding securities of the Merging Companies will no longer be
outstanding and will automatically be canceled, retired and will cease to exist,
and each holder of a certificate representing any shares of any Merging Company
will cease to have any rights with respect to those shares, except the right to
receive the consideration issuable for those shares upon the surrender of such
certificate in accordance with Section 1.8, without interest.
The Merging Companies and the Shareholders have agreed upon values of the
stock of New Futech for purposes of determining the number of shares to be
issued under this Agreement as consideration for the Mergers, and also as
consideration under the Employment Agreements described in this Agreement. No
representation or warranty has been made by Futech, Futech Delaware, or New
Futech, or any other person or entity, as to the value of the New Futech stock
to be issued pursuant to this Agreement, and the parties to acquire said stock
take full risk and responsibility as to said value, other than as expressly
provided for in this Agreement.
Wherever New Futech stock is to be issued, New Futech may in its discretion
pay cash in lieu of issuing fractional shares, based upon a value of $7.50 per
share. Also, New Futech may in its discretion pay cash in lieu of all or a
portion of any amounts due under any Promissory Notes described on EXHIBIT 1.6.
All New Futech stock issued pursuant to this Agreement, including any stock
issued pursuant to the Employment Agreements referred to herein, shall be
registered with the Securities Exchange Commission, subject to all restrictions
required by law, if any, to be placed on said stock and subject to all
restrictions placed upon said stock by the underwriter(s) of the stock. All such
stock shall be eligible to participate, on the same terms and in the same
proportions as granted to other shareholders of New Futech, in any "piggy-back"
or other registration rights which may be made available, between the Closing
and one year thereafter, to any shareholder of New Futech.
1.7 SHARES OF DISSENTING HOLDERS. Any issued and outstanding shares of
any Merging Company held by persons who object to the Mergers and comply with
all provisions of applicable law concerning the right of such holders to dissent
from a Merger and demand appraisal of their shares ("DISSENTING HOLDERS") will
be deemed to be converted, as of the Effective Time, into the right to receive
the amount of cash, promissory notes and common stock of New Futech calculated
in accordance with EXHIBIT 1.6. The consideration to be received by such
Dissenting Holders will be held back and not issued by New Futech until such
time, and in any event not prior to the Effective Time, that such Dissenting
Holder has either withdrawn his demand for appraisal or lost his right of
appraisal, pursuant to the applicable law. After the Dissenting Holder has
A-3
10
withdrawn his demand for appraisal, or lost his right of appraisal, and upon
surrender, in the manner provided by Section 1.8.2, of the certificate or
certificates that formerly evidenced the shares of stock of a Merging Company
owned by the Dissenting Holder, such Dissenting Holder will be entitled to
receive from New Futech the consideration calculated in accordance with EXHIBIT
1.6, without interest.
If any Dissenting Holders are entitled to receive payment of the fair value
of such shares held by them in accordance with applicable law, then New Futech
will make such payment in full satisfaction of the Dissenting Holders' rights to
receive the consideration calculated in accordance with EXHIBIT 1.6 and New
Futech will have no obligation to issue the consideration calculated in
accordance with EXHIBIT 1.6 that was to be received by any Dissenting Holder who
received payment of the fair value of such shares held by such Dissenting
Holders.
Prior to the Effective Time, each Merging Company will give to New Futech
and each other Merging Company notice of any demands by Dissenting Holders.
Futech, prior to the Effective Time, and New Futech after the Effective Time,
will have the right to participate in all negotiations and proceedings with
respect to any such demands. A Merging Company will not, except with the prior
written consent of Futech, prior to the Effective Time, and New Futech after the
Effective Time, voluntarily make any payment with respect to, or settle or offer
to settle, any such demand for payment.
Futech shall be entitled to terminate this Agreement in its entirety, at
the election of Futech's Board of Directors, if dissenter's rights are exercised
by shareholders who would receive five percent (5%) or more of total
consideration referred to on EXHIBIT 1.6.
1.8 EXCHANGE OF SECURITIES AND PAYMENT OF MERGER CONSIDERATION.
1.8.1 Exchange Agent. As soon as necessary and practicable to permit
the Exchange Agent to perform its obligations under this Agreement, but in
no event later than the Closing Date, Futech, Futech Delaware and/or New
Futech will deposit with American Securities Transfer & Trust, Inc. or such
other bank or trust company selected by Futech (the "EXCHANGE AGENT"), for
the benefit of the Shareholders of the Merging Companies, for exchange in
accordance with this Agreement, cash, promissory notes and common stock of
New Futech, in amounts equal to the Merger Consideration calculated in
accordance with EXHIBIT 1.6.
1.8.2 Exchange Procedures. As soon as reasonably practicable after
the Closing Date, the Exchange Agent will mail to each holder of record on
the Effective Date a certificate or certificates which immediately prior to
the Closing Date represented outstanding shares of any of the Merging
Companies (the "OLD CERTIFICATES") whose shares were converted into the
right to receive a share of the Merger Consideration pursuant to Section
1.6:
(i) a letter of transmittal to be executed by the holder (which
will specify that delivery of the Old Certificates will be
effected, and risk of loss and title to the Old Certificates
will pass, only upon delivery of the Old Certificates to the
Exchange Agent, and which will be in such form and have such
other provisions as New Futech may reasonably specify); and
(ii) instructions for surrender of the Old Certificates in exchange
for the applicable share of the Merger Consideration.
Upon surrender to the Exchange Agent of an Old Certificate for
cancellation, together with such letter of transmittal, duly executed by
the holder, the holder of
A-4
11
such Old Certificate will be entitled to receive the portion of the Merger
Consideration which such holder has the right to receive pursuant to
Section 1.6, and the Old Certificate so surrendered will be canceled. If a
transfer of ownership of capital stock has not been registered in the
transfer records of the Merging Company, then the portion of the Merger
Consideration payable in respect of that capital stock may be issued to a
transferee if the Old Certificate representing that capital stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid.
In the case of any lost, mislaid, stolen or destroyed Old Certificate,
the holder may be required, as a condition precedent to the delivery to
such holder of the portion of the Merger Consideration applicable thereto,
to deliver to New Futech an affidavit and personal indemnity (or a bond in
a reasonably sufficient amount) with reference to the circumstances of such
loss or destruction as New Futech may reasonably request.
Until surrendered as contemplated by this Section 1.8, each Old
Certificate will be deemed at any time after the Closing Date to represent
only the right to receive upon such surrender the applicable portion of the
Merger Consideration as contemplated by this Section 1.8.
1.8.3 No Further Ownership Rights in Stock of Merging Companies. The
payments and deliveries made under this Agreement upon surrender for
exchange of equity securities of the Merging Companies in accordance with
the terms of this Agreement will be deemed to have been issued in full
satisfaction of all rights pertaining to such equity securities of the
Merging Companies after the Closing Date. If, after the Closing Date, Old
Certificates are presented to the Surviving Corporation or its transfer
agent for any reason, such Old Certificates will be canceled and exchanged
as provided in this Agreement.
1.8.4 Termination of Exchange Fund. Any portion of the Merger
Consideration which remains undistributed to holders of Old Certificates at
the end of six months after the Closing Date will be delivered to New
Futech upon demand by New Futech, and any holders of Old Certificates who
have not complied with this Section 1.8 will then look only to New Futech
for payment of their claim for the corresponding portion of the Merger
Consideration.
1.8.5 Delivery to a Public Official. None of the parties to this
Agreement will be liable to any holder of equity securities of the Merging
Companies for any portion of the Merger Consideration otherwise due under
this Agreement that is delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
1.9 PROXY STATEMENTS; REGISTRATION STATEMENT. As promptly as practicable
after the execution of this Agreement, the Merging Companies will prepare and
file with the SEC preliminary proxy materials which will constitute the Proxy
Statements of those Merging Companies that have securities registered under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and the
Registration Statement with respect to the common stock of New Futech to be
issued in connection with the Mergers. Each Merging Company which does not have
securities registered under the Exchange Act will prepare appropriate notices,
disclosure materials and proxies for special stockholder meetings of its
shareholders.
A-5
12
As promptly as practicable after comments, if any, are received from the
SEC on the materials filed with the SEC and the furnishing by the Merging
Companies of all required information, the Merging Companies will file with the
SEC a combined Proxy Statement or Proxy Statements and Registration Statement on
Form S-4 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), and Form 8-A promulgated under the Exchange Act (or on such
other form as will be appropriate), relating to the approval, as and if
required, of the Merger by the stockholders of the Merging Companies, and will
use all reasonable efforts to cause the Registration Statements to become
effective as soon as practicable.
Subject to the applicable fiduciary duties of directors of the Merging
Companies, as determined by such directors after consultation with independent
legal counsel, the Proxy Statements will include the recommendation of the Board
of Directors of each of the Merging Companies in favor of the Merger.
1.10 MEETINGS OF STOCKHOLDERS. Promptly after the S-4 becomes effective,
but subject to Section 1.9 above, each of the Merging Companies will take all
action necessary in accordance with applicable law and its Articles or
Certificate of Incorporation and Bylaws to convene a meeting of their respective
stockholders to consider the Mergers. Each of the Merging Companies will consult
with each other and will use all reasonable efforts to hold the stockholders'
meetings on the same day. Subject to the applicable fiduciary duties of
directors, as determined by such directors after consultation with independent
legal counsel, each of the Merging Companies will use its best efforts to
solicit from its stockholders proxies in favor of the Mergers and will take all
other action necessary or advisable to secure the vote or consent of
stockholders required by applicable law to approve the Mergers.
1.11 VOTE REQUIRED. Each of the Merging Companies and its Shareholders
represents and warrants that Exhibit 1.11 accurately describes the only vote or
votes of the holders of any class or series of stock of that Merging Company
that is necessary to approve the Mergers.
1.12 APPROPRIATE ACTION; CONSENTS; FILINGS. Each Merging Company and its
Shareholders will use all reasonable efforts to:
(i) take, or cause to be taken, all appropriate action, and do, or cause
to be done, all things necessary, proper or advisable under
applicable law to consummate and make effective the transactions
contemplated by this Agreement;
(ii) obtain all consents, licenses, permits, waivers, approvals,
authorizations or orders required under law (including, without
limitation, all foreign and domestic federal, state and local
governmental and regulatory rulings and approvals and from parties
to contracts) required in connection with the authorization,
execution and delivery of this Agreement and the consummation by
them of the transactions contemplated by this Agreement, including,
without limitation, the Mergers; and
(iii) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Mergers
required under (A) the Securities Act and the Exchange Act and the
rules and regulations thereunder, and any other applicable federal
or state securities laws, (B) the Hart-Scott-Rodino Act (if
applicable), and (C) any other applicable law.
A-6
13
The Merging Companies and the Shareholders will cooperate with each other
in connection with the making of all such filings, including providing copies of
all such documents upon request to the non-filing parties and their advisors
prior to filing and, if requested, to accept all reasonable additions, deletions
or changes suggested in connection with such filings. Each Merging Company and
its Shareholders will furnish all information required for any application or
other filing to be made pursuant to the rules and regulations of any applicable
law (including all information required to be included in the Proxy Statements
and the Registration Statement) in connection with the transactions contemplated
by this Agreement. If at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, then the
proper officers and directors of each party to this Agreement will use all
reasonable efforts to take all such necessary action.
1.13 SHAREHOLDERS' AGREEMENT TO VOTE. Each of the Shareholders hereby
agrees to vote said Shareholder's shares of stock in the Merging Companies in
favor of the Mergers as set out in this Agreement.
ARTICLE II
ADDITIONAL AGREEMENTS
2.1 NOTIFICATION OF CERTAIN MATTERS. Each Merging Company and its
Shareholders will give prompt notice to the other parties to this Agreement, of:
(i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause any
representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect; and
(ii) the failure of the Merging Company to comply with or satisfy any
material covenant, condition or agreement to be complied with or
satisfied by it under this Agreement.
2.2 PUBLIC ANNOUNCEMENTS. Each Merging Company will consult with the
other Merging Companies before issuing any press release or otherwise making any
public statements with respect to the Mergers, except as may be required by law.
2.3 ACCESS TO CUSTOMER FILES AND OTHER RECORDS. For a period of seven
years following the Closing, where there is a legitimate purpose not injurious
to New Futech, or if there is an audit by any taxing authority, other
governmental inquiry, or litigation or prospective litigation to which any
Shareholder is or may become a party, the affected Shareholders will be granted
access, at reasonable times and after reasonable notice, to all customer files
and other records transferred to New Futech pursuant to this Agreement.
2.4 DUE DILIGENCE INVESTIGATION. Each Merging Company will have the
period of time up to and through the date of this Agreement (the "DUE DILIGENCE
PERIOD") in which to conduct any due diligence investigations of the other
Merging Companies, including UCC-1 searches, which it may deem necessary or
appropriate to ascertain the financial viability and value of the other Merging
Companies. Throughout the Due Diligence Period, each Merging Company, and its
agents, will have the right to inspect:
(i) all books, records and computer systems maintained by the other
Merging Companies, in order to authenticate and audit all
financial information provided to it;
A-7
14
(ii) all equipment and machinery used in the operations of the other
Merging Companies to verify that it is in an acceptable state of
repair;
(iii) all material agreements to which the other Merging Companies are
parties; and
(iv) all facilities and physical operations of the other Merging
Companies, including facilities warehousing inventory.
Each Merging Company will be given access to the other parties' federal and
state income tax returns, sales tax returns, financial statements (internal and
those issued to third parties), personal property tax returns, and all other
governmental filings, for the three previous years for the purpose of conducting
due diligence investigations.
Each Merging Company and its respective representatives will further have
the authority to communicate with the creditors, debtors, suppliers, agents and
employees of the other Merging Companies. Each Merging Company agrees to aid the
others in the investigations and evaluations of the operations and financial
condition of the other Merging Companies and their assets, and to provide
whatever information and documents any Merging Company reasonably deems
necessary or appropriate to the making of an informed decision regarding the
Mergers, provided such information or documents are available or can be obtained
without unreasonable efforts or expense.
2.5 CONFIDENTIALITY. Between the date of this Agreement and the Closing,
the parties to this Agreement will maintain in confidence, and will cause their
directors, officers, employees, agents, and advisors to maintain in confidence,
and not use to the detriment of the other parties to this Agreement, any
written, oral, or other information obtained in confidence from the other
parties in connection with this Agreement or the transactions contemplated
hereby, unless: (i) such information is already known to such other party or to
others not bound by a duty of confidentiality, or such information becomes
publicly available through no fault of such party, (ii) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the transactions
contemplated by this Agreement, or (iii) the furnishing or use of such
information is required by or necessary or appropriate in connection with legal
proceedings.
If the Mergers are not consummated, then each party hereto will return or
destroy as much of such written information as the other parties hereto may
reasonable request.
2.6 INTERIM EVENTS. Each Merging Company agrees that it will take no
action prior to the Closing, other than in the ordinary course of its business,
which would or might have a material adverse effect upon its financial
condition, and no benefits will be paid or incurred to shareholders, officers,
or directors between the date hereof and the Closing other than as is consistent
with past activities and practices or is disclosed on the Merging Company's
Disclosure Schedule (see EXHIBIT 3). Each Merging Company will use its best
efforts to preserve for New Futech the present relationships of the Merging
Company with its employees, customers and others having business relations with
it. Each Merging Company will not allow its trade payables to go unpaid, except
in the ordinary course of its business.
A-8
15
Prior to the Closing, and except as otherwise consented to or approved by
all of the Merging Companies in writing, which consent will not be unreasonably
withheld, no Merging Company will:
(i) change its Articles or Certificate of Incorporation or Bylaws;
(ii) change the number of shares of stock issued and outstanding
(other than to cause its equity securities, including options and
equity participation interests, to conform to the capitalization
described in the Merging Company's Disclosure Schedule (see
Section 3.2 below);
(iii) merge or consolidate with or into any other corporation or other
entity;
(iv) declare or pay any dividend or repurchase or otherwise acquire
any shares of stock; or
(v) except in the ordinary course of business and consistent with
past practice, increase the compensation payable to or to become
payable to any shareholder, director, officer, employee or agent,
or to pay any bonus, severance payment or other compensation to
any shareholder, director, officer, employee or agent, or enter
into any agreement of any type which is not terminable by the
Merging Company on no more than 30 days notice.
2.7 401(K) PLAN. New Futech will take all actions necessary immediately
after the Closing of the Merger either: (i) to roll over each Merging Company's
401(k) Plan or similar employee benefit plans, if any, into its 401(k) Plan; or
(ii) to continue the Merging Company's 401(k) Plan as a separate and distinct
plan with no amendments or alterations adverse to the interests of the employees
covered by such Plan.
2.8 EMPLOYMENT AGREEMENTS. At the Closing, and subject to the
consummation of the Mergers, New Futech (and New Sub, as the case may be) will
execute and deliver Employment Agreements with the persons and on the terms
described on EXHIBIT 2.8.1. The Employment Agreements will be in the form of
EXHIBIT 2.8.2, except as modified as called for on EXHIBIT 2.8.1.
2.9 INDEMNIFICATION. New Futech will indemnify and hold harmless each
Merging Company, and its directors, officers and employees from and against any
liability, obligation, loss, cost and expense, including attorneys' fees,
reasonably incurred by any of them in connection with any claim, arbitration,
mediation or litigation made or commenced against any of them by a shareholder
of that Merging Company in respect of the Mergers, except for claims of breach
of this Agreement by the indemnified party.
2.10 REVISION OF LOANS. The amount and terms of certain loans between New
Futech as successor to the Merging Companies and certain Shareholders will be
revised as stated in EXHIBIT 2.10. The revised loans will be evidenced by
promissory notes and related loan agreements reflecting the revised terms.
New Futech will obtain releases of the personal guaranties of certain
Shareholders, and assume debts owing by certain of the Merging Companies to
certain of the Shareholders, as specified in EXHIBIT 2.10.
2.11 EXPENSES AND COSTS OF MERGERS. Futech and New Futech will pay and be
responsible for all costs and expenses (including, without limitation, legal,
accounting, auditing, stock transfer agent, cash and securities disbursing
agent, SEC fees and due diligence) of all of the Merging Companies regarding the
Mergers. Such obligation will be limited to costs and expenses approved in
writing by Futech or New Futech.
A-9
16
2.12 RESTRICTIVE COVENANTS.
2.12.1 The Shareholders shall not, except as representatives of and
as directed by New Futech, without the prior written consent of New Futech,
which consent may be withheld for any or no reason, for a period of two (2)
years following the Closing, directly or indirectly, own, manage, operate,
control, be employed by, participate in, render services to, make loans to,
or be connected in any manner with the ownership, management, operation, or
control of any business located anywhere in the world, in any business
competitive with the business of New Futech (which shall be deemed to
include all business operations designing, developing, manufacturing,
publishing, marketing and/or distributing books, greeting cards, games
and/or toys, or parts or components thereof); provided, however, that these
restrictions when applied to Carl E. Voigt, IV and Carl E. Voigt, III shall
be limited to games and/or toys business operations; and provided further
however that these restrictions when applied to Fred or Gail DaMert shall
be limited to the games and toys business being conducted by DaMert as of
the date of this Agreement.
In the event of any actual or threatened breach of the provisions of
this Section, New Futech and/or New Sub shall be entitled to seek an
injunction restraining the actual or threatened breach, and/or any other
available remedies for such breach or threatened breach, including pursuing
a recovery for damages.
2.12.2 The Shareholders shall not at any time, without the prior
written consent of New Futech, which consent may be withheld for any or no
reason, disclose, in any fashion other than as required in the day to day
affairs of New Futech and/or New Sub, to any person or entity: (i) the
names of customers of New Futech and/or New Sub or the business, or the
names of other persons or entities having business dealings with New Futech
and/or New Sub or the Business, or (ii) any of the business methods or
confidential information of New Futech and/or New Sub or the business,
including but not limited to their customer lists, prospective customers,
customers purchasing habits, customer contact personnel, marketing and
servicing techniques, financial matters, sales and marketing systems and
methods, marketing development and business expansion plans and
projections, personnel training and development programs, customer and
supplier relationships, and trade secrets. The obligation of
confidentiality shall not apply to any information which: (i) is in
possession of the individual Shareholder prior to the receipt thereof from
the other Merging Companies and/or New Futech; (ii) is available or becomes
available to the public through no fault of the Shareholder; or (iii) is
received by the Shareholder from a third party having the right to disclose
it.
2.12.3 The Shareholders shall not, at any time within two (2) years
after the Closing, without the prior written consent of New Futech, which
consent may be withheld for any reason or no reason, directly or indirectly
induce, encourage or solicit or assist any person who was or is employed
(whether as an employee or as an independent contractor) by a Merging
Company during the two years preceding the Closing, to leave the employ of
New Futech.
2.12.4 The parties acknowledge and agree that the restrictions
contained herein, including but not limited to the time period and
geographical area restrictions, are fair and reasonable and necessary for
the successful operation of New Futech's business, that violation of any of
them would cause irreparable injury, and that the restrictions contained
herein are not unreasonably restrictive of any party's ability to earn a
living. If the scope of any restriction in this Section is too broad to
permit enforcement of
A-10
17
such restriction to its fullest extent, then such restriction shall be
enforced to the maximum extent permitted by law, and all parties hereto
consent and agree that such scope shall be modified judicially or by
arbitration in any proceeding brought to enforce such restriction. The
parties hereto acknowledge and agree that remedies at law for any breach or
violation of the provisions of this Section would alone be inadequate, and
agree and consent that temporary and permanent injunctive relief may be
granted in connection with such violations, without the necessity of proof
of actual damage, and such remedies shall be in addition to other remedies
and rights the parties may have at law or in equity. The parties agree that
no party shall be required to give notice or post any bond in connection
with applying for or obtaining any such injunctive relief.
2.12.5 The parties acknowledge and agree that the covenants in this
Section shall be construed as an agreement independent of any other
provision of this Agreement, so that the existence of any claim or cause of
action by a Shareholder against Futech, New Futech, or New Sub, whether
predicated on this Section or otherwise, shall not constitute a defense to
the enforcement of this Section.
2.12.6 If New Futech defaults under its obligations to pay the Fundex
shareholders as provided for on EXHIBIT 1.6, and the Fundex shareholders as
a result thereof repossess the stock of New Sub, then the restrictive
covenant provisions appearing in Sections 2.12.1 and 2.12.3 shall terminate
as to the Fundex Shareholders as of the date of repossession.
2.13 OTHER AGREEMENTS FOR PARTICULAR PARTIES. Certain additional
agreements with particular parties are described on EXHIBIT 2.13.
2.14 OTHER DISCUSSIONS. In consideration of the substantial expenditures
of time, effort and expense to be undertaken by the Merging Companies in
connection with their due diligence reviews, the Shareholders and the Merging
Companies agree that they shall not, between the date this Agreement is signed
and the earlier to occur of the Closing and August 30, 1999: (i) actively seek
or otherwise initiate discussions with any other prospective acquirer of the
stock, assets or business of the Merging Company; or (ii) assist or participate
in any due diligence in connection with any such transaction. Additionally,
during such period of time, the Merging Company shall not actively seek or
otherwise initiate discussions with any other company governing the purchase by
the Merging Company of the capital stock or assets of such other company or
concerning a merger, share exchange, consolidation or similar transaction
involving the Merging Company and such other company.
2.15 BEST EFFORTS TO REGISTER STOCK. After the Closing, New Futech will
use its best efforts to register the New Futech common stock with the SEC on
Form 8-A and list the common stock on a national securities exchange.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
OF EACH MERGING COMPANY AND ITS SHAREHOLDERS
The following representations, warranties and indemnities are being made,
as of the date hereof and as of the date of the Closing, by each Merging
Company, and the Merging Company's Shareholders (only those shareholders
included in the defined term "Shareholders"), to the other Merging Companies and
their shareholders (not including just those shareholders included in the
defined term "Shareholders"); provided, however, that,
A-11
18
notwithstanding whether any representation or warranty is made only to the
knowledge of a Merging Company, all representations and warranties of any
Shareholder, unless otherwise specifically identified below, are made only to
the best knowledge of the Shareholder (the representation and warranty of the
Shareholder is to the knowledge of the Shareholder as to the facts presented in
the representation and warranty, and is not as to just the knowledge of the
Merging Company as to those facts). These representations, warranties and
indemnities are subject to any limitations and qualifications or other
disclosures contained in the corresponding sections of the Disclosure Schedule
of the particular Merging Company and its Shareholders, attached hereto as
EXHIBITS 3. A breach of a representation or warranty of a Shareholder of a
Merging Company will be deemed also to be a breach of that representation or
warranty by the Merging Company.
3.1 DUE INCORPORATION. Each Merging Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Each Merging Company is duly licensed or qualified to do
business and is in good standing in each state where the property owned or held
under lease is such as to require it to be so licensed or qualified, except
those states where the failure to be so licensed or qualified would not have a
material adverse effect on its financial condition or operations or its
business. To the knowledge of the Merging Company and its Shareholders, the
Merging Company has the corporate power and authority to own and operate its
properties and carry on its business as now conducted.
True, correct and complete copies of the corporate formation documents for
the Merging Company, and all minutes, resolutions and consents, have been or
will be delivered to the Surviving Corporation. To the knowledge of the Merging
Company and its Shareholders, the minute book(s) of the Merging Company
correctly record all resolutions of the directors and shareholders of the
Merging Company, and its stock records correctly reflect the ownership of its
stock.
3.2 CAPITALIZATION. Each of the Merging Companies has authorized, issued
and outstanding equity securities only as shown on Section 3.2 of its Disclosure
Schedule. Other than as set forth in Section 3.2 of the Disclosure Schedule for
a specific Merging Company, there are no other rights, subscriptions, options,
warrants, conversion rights or agreements of any kind outstanding to purchase or
otherwise acquire from the Merging Company any shares of its capital stock, or
securities or obligations of any kind convertible into or exchangeable for any
shares of its capital stock. To the knowledge of each Merging Company and its
Shareholders, all issued shares of the Merging Company have been duly
authorized, and the issued and outstanding shares of stock are fully paid,
non-assessable (except with respect to any Merging Company that does business in
Wisconsin, as provided in Wisconsin Statutes sec.180.0622(2), as judicially
interpreted), and were not issued in violation of the terms of any agreement or
other understanding, and were issued in compliance with all applicable federal
and state securities or "blue sky" laws and regulations.
3.3 SUBSIDIARIES. Except as set forth in Section 3.3 of its Disclosure
Schedule, no Merging Company owns or has any agreement, whether written or oral,
regarding rights or contracts to acquire any equity securities or other
securities of any company, or any direct or indirect equity or ownership
interest in any other entity.
3.4 FINANCIAL INFORMATION. Each Merging Company has furnished the other
parties to this Agreement with true, correct and complete copies of the Merging
Company's financial statements and other books and records. To the knowledge of
the Merging Company and its Shareholders, the Merging Company's year-end
financial statements were
A-12
19
prepared in accordance with its books and records and in accordance with
generally accepted accounting principles consistently applied, and present
fairly the financial condition of the Merging Company as of their respective
dates and the results of operations and changes in financial positions for the
periods then ended. The financial statements do not contain any material items
of special or non-recurring income or other income not earned in the ordinary
course of business, except as expressly specified therein.
To the knowledge of the Merging Company and its Shareholders, at the
Closing, all of the books and records of the Merging Company will be in its
possession, other than the capital stock books and stock transfer records which
may be in the possession of the Merging Company's transfer agent and registrar.
3.5 TAXES. To the knowledge of the Merging Company and its Shareholders,
except as may be disclosed in Section 3.5 of the Merging Company's Disclosure
Schedule, all federal and state income, excise, franchise, payroll, property,
sales, and other tax returns required to be filed by or with respect to the
Merging Company (except returns not yet due) including returns of the
Shareholders in the case of any Merging Company that is or was qualified as an S
corporation (for the period of such qualification) have been filed, are complete
and accurately reflect in all material respects all matters therein required to
be reflected, and all taxes shown on such returns to be due, and any assessments
received by either the Merging Company or its Shareholders with respect thereto,
have been paid in full.
3.6 MATERIAL CHANGES. To the knowledge of the Merging Company and its
Shareholders, except as may be disclosed in Section 3.6 of the Merging Company's
Disclosure Schedule, from the date of the most recent financial statements
provided to the other parties to this Agreement, and through the date hereof,
the business of the Merging Company has been conducted only in the ordinary
course, there have not been any material adverse changes in the financial
condition and operations of said business, and there has been no damage,
destruction or other occurrence (whether or not insured against) to tangible
property which materially adversely affects the financial condition or
operations of said business.
3.7 TITLE TO ASSETS; LIENS. To the knowledge of the Merging Company and
its Shareholders, the Merging Company owns all assets it purports to own,
including all assets reflected in its financial statements. Except as may be set
forth in Section 3.7 of its Disclosure Schedule, all assets of the Merging
Company are free and clear of all restrictions, claims, liens, encumbrances or
rights of others, other than those imposed under its Articles or Certificate of
Incorporation or Bylaws, and other than as set forth in the Merging Company's
financial statements, and other than for debts incurred or amended in the
ordinary course of business, including debts to fund Futech acquisitions, since
the date of the most recent financial statements provided by the Merging
Company. The stock of the Merging Companies owned by the Shareholders is free
and clear of any and all liens, claims or encumbrances, except for pledges of
stock securing only the debts of the Merging Companies.
3.8 LITIGATION. To the knowledge of the Merging Company and its
Shareholders, and except as disclosed in Section 3.8 of the Merging Company's
Disclosure Schedule, there is no litigation, proceeding, or investigation
pending against the Merging Company and no reasonable grounds to believe there
is any basis for the commencement of any litigation, proceeding or investigation
against it.
A-13
20
3.9 COMPLIANCE WITH LAWS. To the knowledge of the Merging Company and its
Shareholders, the Merging Company is in substantial compliance with all laws
applicable to it or its business including, without limitation, laws prohibiting
discrimination or harassment, regulating working conditions or governing
employment relations and employee benefits. The Merging Company and its
Shareholders are not aware of any investigation or allegations of any person
with respect to any alleged violation of any provision of any federal, state or
local law, regulation, ordinance, order or administrative ruling, relating to
the Merging Company or its business, except as may be set forth in Section 3.9
of its Disclosure Schedule.
3.10 INSURANCE. Each Merging Company carries commercially reasonable
insurance against personal injury and property damage to third persons and in
respect of its products and services, and other insurance, including any and all
workman's compensation insurance required by law. Neither the Merging Company
nor its Shareholders have received any notice that the Merging Company is in
default with respect to any provision contained in any insurance policy, and
they are not aware of any such default. The Merging Company has made copies of
all of its insurance policies available to New Futech.
3.11 LICENSES. To the knowledge of the Merging Company and its
Shareholders, the Merging Company has any and all material licenses and permits
necessary and/or appropriate to operate its business in the manner in which the
business is currently operated.
3.12 HAZARDOUS MATERIALS. To the knowledge of the Merging Company and its
Shareholders, the business of the Merging Company has never dealt in any manner
with any hazardous or toxic materials or waste.
3.13 JUDGMENTS AGAINST THE MERGING COMPANY AND/OR ITS BUSINESS. Neither
the Merging Company nor its business is under any governmental investigation, no
such investigation has been threatened, and there are no outstanding judgments
against the Merging Company, its business or its assets.
3.14 COMPLETE SALE. All material assets used by the Merging Company in
the operation of its business are reflected in the financial statements of the
Merging Company that have been provided to the other parties to this Agreement.
3.15 ASSETS IN GOOD CONDITION. Except as may be stated in Section 3.15 of
the Disclosure Schedule for the Merging Company, each material asset of the
Merging Company which is a tangible asset is in good working order and
condition, reasonable wear and tear excepted.
3.16 DISCLOSURE MATERIALS. To the knowledge of the Merging Company and
its Shareholders, all of the information disclosed by the Merging Company to any
of the other parties to this Agreement, as a whole, does not contain any
statement that, as of the date hereof, is false or misleading, and does not omit
to state any material fact (i) necessary to make the statements made, in light
of the circumstances under which they were made, not false or misleading, or
(ii) necessary to provide the other parties to this Agreement with complete and
accurate information as to the assets and financial condition of the business of
the Merging Company.
3.17 DEFAULTS. To the knowledge of the Merging Company and its
Shareholders, except as may be described in Section 3.17 of the Merging
Company's Disclosure Schedule, there are no defaults or events that, with the
giving of notice or the passage of
A-14
21
time, would constitute defaults under any material document under which the
Merging Company is obligated.
3.18 MATERIAL CONTRACTS. Except as disclosed in Section 3.18 of its
Disclosure Schedule, the Merging Company is not a party to or bound by any
agreement not made in the ordinary course of its business which is material to
its financial condition or operations.
3.19 OUTSTANDING LIABILITIES. To the knowledge of the Merging Company and
its Shareholders, there are no liabilities of the Merging Company other than as
are shown on its most recent balance sheet provided to the other Merging
Companies, and other than (i) matters disclosed in Section 3.19 of its
Disclosure Schedule, and (ii) liabilities arising after the balance sheet date
in the normal course of business out of purchases and sale of goods. There are
no liabilities relating to the Merging Company's business which are more than
ninety (90) days past due, except as otherwise stated in Section 3.19 of its
Disclosure Schedule.
3.20 INVENTORY. Except as disclosed in Section 3.20 of its Disclosure
Schedule, the inventory held by the Merging Company is useable and in good
condition, with not more than 3% thereof (plus any inventory reserve set up on
the financial statements of the Merging Company) being obsolete, and all of the
inventory is owned by the Merging Company, none of it being held on consignment.
3.21 RECEIVABLES. All accounts receivable of the Merging Company arose in
the regular course of business, and, to the best knowledge of the Merging
Company and its Shareholders, represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business
and are collectable, subject to the Merging Company's customary bad debt
reserves, and subject to no defenses or counterclaims.
3.22 EMPLOYEES. All employee benefits for the Merging Company's employees
are described in Section 3.22 of its Disclosure Schedule. To the knowledge of
the Merging Company and its Shareholders, and except as may be described in
Section 3.22 of the Merging Company's Disclosure Schedule, the Merging Company
is in compliance with all terms of all of its employee benefit plans.
Prior to the Closing, each Merging Company will provide to the other
Merging Companies a complete and accurate list of the following information for
each employee, including each employee on leave of absence or layoff status:
name, job title, current compensation, vacation and sick pay accrued, and
services credited for purposes of vesting and eligibility to participate in any
of the Merging Company's employee benefit plans.
Except as may be disclosed in Section 3.22 of the Disclosure Schedule for a
Merging Company, and except as described in Section 2.8 above, all employment
agreements, consulting agreements and related types of agreements between the
Merging Company and its Shareholders shall automatically terminate as of the
Closing, without compensation being due for services rendered thereunder after
the Closing.
3.23 NO CONFLICTS. To the knowledge of the Merging Company and its
Shareholders, the execution, delivery and performance of this Agreement and the
other documents and instruments to be executed and delivered pursuant hereto,
and the consummation of the transactions contemplated herein or therein:
(i) Will not violate or conflict with any applicable material, federal,
state, foreign, local or other law, ordinance, rule, regulation, or
governmental requirement or restriction of any kind, including any
rules, regulations, and orders promulgated
A-15
22
thereunder, and any final orders, decrees, consents, or judgments of
any regulatory agency or court;
(ii) Will not require any authorization, consent, approval, exemption or
other action by or notice to any government entity (including, without
limitation, under any "plant closing" or similar law); the Merging
Company is not required to give any notice or to obtain any consent
from any person or entity which is party to a material contract or
agreement with the Merging Company or from any governmental agency in
connection with the execution and delivery of this Agreement or the
consummation of the Mergers, other than the approval of the Board of
Directors and stockholders of the Merging Company pursuant to the
applicable law, as required by applicable federal and state securities
laws and as set forth in Section 3.23 of its Disclosure Schedule;
(iii) Will not violate or conflict with, or constitute a default (or event
which, with notice or lapse of time, or both, would constitute a
default) under, and will not result in the termination of, or
accelerate the performance required by, or result in the creation of
any lien, claim or encumbrance upon any of the Merging Company's
assets under its Articles or Certificate of Incorporation or Bylaws,
or any material contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to which the
Merging Company is a party or by which the Merging Company or any of
the Merging Company's assets may be bound or affected, other than
those material contracts and agreements which require the consent of
the other party thereto as set forth in Section 3.23 of its
Disclosure Schedule; and
(iv) Will not give any governmental body the right to revoke, withdraw,
suspend, cancel, terminate or modify any governmental authorization
held by the Merging Company or that otherwise relates to its business,
except with respect to immaterial circumstances.
3.24 VIOLATIONS OF LAW.
(a) To the knowledge of the Merging Company and its Shareholders, none of
the present or past operations of the Merging Company's business, the
products of the business, or the Merging Company's assets violate or
conflict, in any material respect, with any permits, any law (including
environmental laws, other than as set forth in Section 3.24 of its
Disclosure Schedule), governmental specification, authorization, or
requirement, or any decree, judgment, order or similar restriction. To
the knowledge of the Merging Company and its Shareholders, the Merging
Company is not the subject of an inspection or inquiry regarding
violations or alleged violations of any law by any state, federal or
local agency.
(b) To the knowledge of the Merging Company and its Shareholders, there are
no pending administrative or judicial proceedings, threatened
proceedings, orders, notice of violations, inspection reports, and
similar occurrences, if any, relating to the conduct of its business or
the Merging Company's assets.
(c) The Merging Company has not been the subject of an Occupational and
Safety Health Administration inspection or found by any agency to be in
violation of any state or federal occupational safety or health law in
the conduct of its business.
3.25 CONDITION AND SUFFICIENCY OF ASSETS. To the knowledge of the Merging
Company and its Shareholders, and except as may be stated in Section 3.25 of the
A-16
23
Merging Company's Disclosure Schedule, all material assets of the Merging
Company are in good operating condition and repair, and are adequate for the
uses to which they are being put, and none of such items is in need of
maintenance or repairs, except for ordinary, routine maintenance and repairs
that are not material in nature. To the knowledge of the Merging Company and its
Shareholders, the assets are sufficient for the continued conduct of the Merging
Company's business after the Closing in substantially the same manner as
conducted prior to the Closing.
3.26 BANK ACCOUNTS. The Merging Company has disclosed, or will disclose
prior to the Closing, to the other Merging Companies the names and locations of
all banks, trust companies, savings and loan associations and other financial
institutions at which the Merging Company maintains a safe deposit box, lock box
or checking, savings, custodial or other account of any nature, the type and
number of each such account and the signatories therefor, a description of any
compensating balance arrangements, and the names of all individuals authorized
to draw thereon, make withdrawals therefrom or otherwise have access thereto.
3.27 ENVIRONMENTAL MATTERS. For purposes of this Section:
(i) "Environmental Law" means all federal, state, local, foreign, and
other applicable jurisdiction laws relating to the environment or the
use, disposal, existence, or release of any Hazardous Materials,
including but not limited to any and all laws concerning, affecting,
controlling, or in any way relating to, whether in whole or in part,
noise levels, ground vibrations, air pollutants, water pollutants,
process waste water, or Hazardous Materials;
(ii) "Environmental Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water, groundwater or
property;
(iii) "Hazardous Materials" means: (A) any waste, hazardous waste,
pollutant, contaminant, or hazardous or toxic substance regulated by
law; (B) asbestos; (C) formaldehyde; (D) polychlorinated biphenyls;
(E) radioactive materials; (F) waste oil and other petroleum
products; and (G) any other substance which constitutes a nuisance
or hazard to the environment or the public health, safety, or
welfare.
3.27.1 Other than as set forth in Section 3.27 of its Disclosure
Schedule, to the knowledge of the Merging Company and its Shareholders, the
Merging Company is, and at all times has been, in full compliance with, and
has not been and is not in violation of or liable under, any Environmental
Law. The Merging Company has no basis to expect, nor has the Merging
Company or (to the knowledge of the Merging Company or its Shareholders)
any other person for whose conduct the Merging Company is or may be held to
be responsible received, any actual or threatened order, notice, or other
communication from (i) any governmental body or private citizen acting in
the public interest, or (ii) the current or prior owner or operator of any
of the Merging Company's properties or assets, of any actual or potential
violation or failure to comply with any Environmental Law, or of any actual
or threatened obligation to undertake or bear the cost of any
environmental, health and safety liabilities with respect to any of the
Merging Company's properties or assets (whether real, personal, or mixed)
in which the Merging Company has had an interest, or with respect to any of
the Merging Company' properties at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used or
A-17
24
processed by the Merging Company, or (to the knowledge of the Merging
Company or its Shareholders) any other person for whose conduct the Merging
Company is or may be held responsible, or from which Hazardous materials
have been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
3.27.2 The Merging Company has delivered to the other Merging
Companies complete copies and results of any reports, studies, analyses,
tests, or monitoring possessed or initiated by the Merging Company or its
Shareholders pertaining to Hazardous Materials or hazardous activities in,
on, or under the Merging Company's properties or concerning compliance by
the Merging Company or any other person for whose conduct it is or may be
held responsible, with Environmental Laws.
3.28 INTELLECTUAL PROPERTY.
(a) The Merging Company has provided the other Merging Companies with a
true correct and complete list of (i) all patents held by the Merging
Company and all re-examinations, re-issues, divisions, continuations,
continuations in part and extensions thereof and all pending patent
applications by the Merging Company, including for each such patent the
serial or patent number, country, filing and expiration date and title,
(ii) all registered trademarks of the Merging Company and pending
trademark registrations by the Merging Company, including for each such
trademark, the registration number, country, filing and expiration
date, mark and class, (iii) all registered copyrights of the Merging
Company and copyright applications by the Merging Company, including
the service marks, trade names and brand names of the Merging Company,
used in its business (whether or not registered) (all of the foregoing
collectively referred to as the "Intellectual Property"). To the
knowledge of the Merging Company and its Shareholders, all such
patents, trademarks and copyrights are properly registered, any
applications therefor have been properly made, and all annuity,
maintenance, renewal and other fees in connection with any of the
foregoing are current.
(b) The Merging Company has provided the other Merging Companies with a
list of all material licenses, contracts, commitments (including
without limitation, confidentiality agreements) to which the Merging
Company is a party or otherwise subject relating to the Intellectual
Property, including, without limitation, computer software (except for
standard licensing agreements or provisions from the seller or licensor
of such software). During the preceding three (3) fiscal years and the
current fiscal year to date, no claim or allegation of infringement has
been made by or against the Merging Company, whether relating to any
item of Intellectual Property or otherwise, no claim or allegation of
misappropriation or misuse of any item of Intellectual Property has
been made by or against the Merging Company, and no claim or allegation
has been asserted against the Merging Company with respect to the
ownership or use of any of the Intellectual Property by the Merging
Company or challenging or questioning the validity or effectiveness of
any such license, contract or commitment, and there does not exist to
the knowledge of any Shareholder or of the Merging Company any valid
basis for any such claim or allegation.
(c) To the knowledge of the Merging Company and its Shareholders, the
Merging Company has good and valid title to, or otherwise possesses
rights to use, the Intellectual Property.
A-18
25
3.29 CUSTOMERS AND SUPPLIERS. The Merging Company has provided the other
Merging Companies with a list of its five (5) largest customers in terms of
dollar volume of sales for the three (3) preceding fiscal years and for the
current fiscal year, showing the approximate total dollar amount of sales to
each such customer during each such fiscal year. The Merging Company has
provided the other Merging Companies with a list of the five (5) largest
suppliers in terms of dollar volume of purchases for the last fiscal year and
for the current fiscal year showing the approximate total dollar amount of
purchases from each supplier during each such fiscal year. Except as may be
disclosed in Section 3.29 of its Disclosure Schedule, since January 1, 1997, the
Merging Company has not received any notice from and has not otherwise been
informed or made aware that any such five (5) largest customers or five (5)
largest suppliers will be terminating or curtailing its business with the
Merging Company in a manner that would have a material adverse effect on the
Merging Company.
3.30 CHANGES TO THE MERGING COMPANY'S DOCUMENTS. Except as may be
described in Section 3.30 of its Disclosure Schedule, or disclosed in EXHIBIT
1.6, none of the following has occurred within the last twelve months prior to
the date of this Agreement with respect to the Merging Company: (i) any change
in the Articles or Certificate of Incorporation or Bylaws; (ii) any change in
the number of shares of stock issued and outstanding, other than upon exercise
of stock options; (iii) the merger or consolidation of the Merging Company with
or into any other corporation or other entity: (iv) declaration or payment by
the Merging Company of any dividend or any repurchase by the Merging Company of
any shares of its stock; or (v) except in the ordinary course of business and
consistent with the Merging Company's past practice, any increase in the
compensation payable by the Merging Company to any shareholder, director,
officer, employee or agent, or payment of any bonus, severance payment or other
compensation to any shareholder, director, officer, employee or agent, or the
entering into of any agreement of any type which is not terminable by the
Merging Company on no more than 30 days notice.
3.31 STOCKHOLDERS AGREEMENTS AND OTHER AGREEMENTS. To the knowledge of
the Merging Company and its Shareholders, there are no stockholder agreements or
similar arrangements restricting voting rights or the transferability of any
interest in the Merging Company relating to the capital stock of the Merging
Company, or otherwise relating to the Merging Company. This representation and
warranty does not include any pledge by a Shareholder or other stockholder of
capital stock of the Merging Company, the terms of which may restrict
transferability of such capital stock. Furthermore, there are no employment
agreements, consulting agreements or similar type agreements relating to the
Merging Company which are not terminable by the Merging Company on not more than
90 days notice.
3.32 CERTAIN PAYMENTS. To the knowledge of the Merging Company and its
Shareholders, neither the Merging Company nor any shareholder, director,
officer, agent or employee of the Merging Company, or any other person
associated with or acting for or on behalf of the Merging Company, has directly
or indirectly: (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, or (iii) to obtain special concessions or for special concessions
already obtained, for or in respect of the Merging Company, or (iv) in violation
of any law; or (b) established or maintained any fund or asset that has not been
recorded in the books and records of the Merging Company.
A-19
26
3.33 FILINGS COMPLETE. Each Merging Company will cooperate with the other
Merging Companies with respect to all filings that any of the Merging Companies
make in connection with the Mergers and all matters connected therewith.
3.34 PRODUCTS. To the knowledge of the Merging Company and its
Shareholders, except as disclosed Schedule 3.34 for the Merging Company, the
products offered currently or in the past by the Merging Company for sale meet
all material product and/or process specifications which they purport or are
required to meet, and satisfy in all material respects all applicable laws where
the products are currently being sold or have been sold within the last five
years, except where the Merging Company has chosen not to sell products because
the products would violate a law of that place.
3.35 PATENTS. All patents and patent applications or licenses of the
Merging Company are described in Section 3.35 of the Disclosure Schedule.
3.36 INDEMNIFICATION; SURVIVAL. Each Merging Company and its
Shareholders, jointly and severally, hereby agree to indemnify New Futech and
its officers, directors and controlling persons and defend and hold them free
and harmless from and against any liability, obligation, loss, cost and expense,
including attorney's fees, incurred by them in connection with any material
breach by the Merging Company of any of its representations, warranties or
covenants, contained in this Agreement. For this purpose, any breach or
combination of breaches will be considered material only if they exceed in the
aggregate the amount set forth in EXHIBIT 3.36 as to any Merging Company.
The representations and warranties in this Section, and elsewhere in this
Agreement, and all indemnification provisions in this Agreement, will survive
the Closing for a period of 18 months thereafter, after which they will expire
except as to any claims asserted on or before that date. The rights of New
Futech and the other parties to this Agreement based upon the representations
and warranties of the Merging Company will not be affected by any investigation
conducted with respect thereto, or any knowledge acquired, or capable of being
acquired, at any time, whether before or after the execution of this Agreement,
with respect to the accuracy or inaccuracy of or compliance with, any such
representation or warranty.
Disclosures made anywhere in this Agreement or its Exhibits shall be deemed
to be disclosures for all purposes of this Agreement.
ARTICLE IV
CONDITIONS OF MERGER
4.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Mergers will be subject to
the satisfaction at or prior to the Effective Time of the following conditions,
provided that the failure of Conditions 4.1.4 through 4.1.10 hereof with respect
to any particular Merging Company and its Shareholders will not act as a
condition to the obligations of that Merging Company, or its Shareholders.
4.1.1 Stockholder Approval. This Agreement and the Merger to which
the Merging Company is a party will have been approved and adopted by the
requisite vote of the stockholders of each Merging Company.
4.1.2 No Order. No federal or state governmental or regulatory
authority or other agency or commission, or federal or state court of
competent jurisdiction, will have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation,
A-20
27
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which in effect restricts, prevents or prohibits
the consummation of the transactions contemplated by this Agreement.
4.1.3 No Challenge. There will not be pending any action, proceeding
or investigation before any court or administrative agency or by any
government agency or any other person: (i) challenging or seeking material
damages in connection with the Mergers or the conversion of any Merging
Company's equity securities into New Futech's stock, promissory notes and
cash pursuant to the Mergers, or (ii) seeking to restrain, prohibit or
limit the exercise of full rights of ownership or operation by New Futech
or its subsidiaries of all or any portion of the business or assets of any
Merging Company, which in either case is reasonably likely to have a
material adverse effect on any party to this Agreement.
4.1.4 Representations, Warranties and Covenants. The representations
and warranties of each Merging Company and its Shareholders contained in
this Agreement will be true and correct in all material respects on and as
of the Effective Time, with the same force and effect as though made on and
as of the Effective Time. Each Merging Company and its Shareholders will
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it
or them on or prior to the Effective Time. Each Merging Company and its
Shareholders will have delivered to New Futech and to the other parties to
this Agreement at the Closing a certificate, dated the Effective Time, to
the foregoing effect.
4.1.5 Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made by any Merging Company or its Shareholders for the
authorization, execution and delivery of this Agreement and the
consummation by them of the transactions contemplated hereby will have been
obtained and made.
4.1.6 No Material Adverse Change. The operations, assets and
financial condition of each Merging Company have not suffered a material
adverse change between the date of this Agreement and the date of Closing.
4.1.7 Opinions of Counsel. Each Merging Company will have received
an opinion of outside counsel for each of the other Merging Companies,
dated the Closing, substantially to the effect set forth in EXHIBIT 4.1.7.
Each Merging Company agrees to provide such an opinion letter.
4.1.8 Assignments. The assignment of all material permits, licenses
and contracts, required to be assigned and necessary to continue the
operations of its business will have been made by each Merging Company.
4.1.9 Maintenance of Assets. Each Merging Company will have
maintained its assets in the same condition as of the date of this
Agreement (subject only to ordinary wear and tear).
4.1.10 Ordinary Course of Business. Each Merging Company will have
conducted its business diligently and substantially in the same manner as
prior to the execution of this Agreement and will not have entered into any
material contract, commitment or transaction not in the usual and ordinary
course or business.
A-21
28
4.2 SPECIAL CONDITIONS FOR PARTICULAR PARTIES. The obligations of each
Merging Company will be subject to the satisfaction at or prior to the Effective
Time of the conditions set out with respect to that Merging Company on EXHIBIT
4.2.
ARTICLE V
TERMINATION, AMENDMENT AND WAIVER
5.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of any Merging Company, by mutual
consent of each Merging Company and its Shareholders.
5.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 5.1, this Agreement will forthwith become void and
all rights and obligations of any party hereto will cease.
5.3 AMENDMENT. This Agreement may be amended by the Merging Companies and
the Shareholders by action taken by or on behalf of their respective Boards of
Directors, and by such shareholders, at any time prior to the Effective Time;
provided, however, that, after approval of the Merger by the stockholders of any
Merging Company, no amendment may be made which would reduce the amount or
change the type of consideration into which each share of that Merging Company
will be converted pursuant to this Agreement upon consummation of the Mergers.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
5.4 WAIVER. At any time prior to the Effective Time, any party hereto
may: (i) extend the time for the performance of any of the obligations or other
duties of the other parties hereto, and (ii) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver will be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
ARTICLE VI
GENERAL PROVISIONS
6.1 TAX TREATMENT. The transactions contemplated hereby are intended to
qualify as tax-free reorganizations under the provisions of Section 368 of the
Code. Each Merging Company and its Shareholders acknowledges, however, that they
have each been represented by their own tax advisors in connection with this
transaction, that no Merging Company has made any representation or warranty to
any other with respect to the treatment of such transaction or the effect
thereof under applicable tax laws, regulations or interpretations. Each party
agrees to use commercially reasonable efforts to obtain tax-free treatment of
the Mergers to the extent such treatment is available under applicable tax laws.
6.2 FURTHER ASSURANCES. From time to time, at any other party's request
and without further consideration, each party will execute and deliver to the
other such documents and take such action as the other party may reasonably
request in order to consummate more effectively the transactions contemplated
hereby.
6.3 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, then all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as
A-22
29
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto will negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
6.4 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties and supersedes all prior agreements and undertakings, both written
and oral, between the parties, or any of them with respect to the subject matter
hereof and, except as otherwise expressly provided herein, is not intended to
confer upon any other person any rights or remedies hereunder. Notwithstanding
the foregoing, the terms of certain letters of intent survive the execution of
this Agreement to and only to the extent described on EXHIBIT 6.5.
6.5 ASSIGNMENT. This Agreement may not be assigned by operation of law or
otherwise.
6.6 PARTIES IN INTEREST. This Agreement will be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or will confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
6.7 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
6.8 GOVERNING LAW. This Agreement will be governed by, construed and
enforced in accordance with the laws of the State of Arizona, without giving
effect to the conflicts of laws rules thereof. The courts of the State of
Arizona will have the sole and exclusive jurisdiction and venue in any case or
controversy arising under this Agreement or by reason of this Agreement. The
parties agree that any litigation or arbitration arising from the interpretation
or enforcement of this Agreement will be only in either Maricopa County Superior
Court or in the United States Federal District Court for the District of
Arizona, and shall be only in the United States Federal District Court for the
District of Arizona if such venue is available. Solely for this purpose each
party to this Agreement (and each person who will become a party) hereby
expressly and irrevocably consents to the jurisdiction and venue of such courts.
6.9 MODIFICATION. Any modification or waiver of any term of this
Agreement, including a modification or waiver of this term, must be in writing
and signed by the parties to be bound by the modification or waiver.
6.10 ATTORNEY'S FEES. Should any party to this Agreement or the
stockholders of any Merging Company institute any action or proceeding to
enforce this Agreement or any provision hereof, or for damages by reason of any
alleged breach of this Agreement, or of any provision hereof, or for a
declaration of rights hereunder, then the prevailing party(s) of such action or
proceeding will be entitled to receive from the other involved party or parties
all costs and expenses, including reasonable attorneys' fees and expert witness
fees incurred by the prevailing party(s) in connection with such action or
proceeding.
6.11 COUNTERPARTS. This Agreement may be executed by the parties in one
or more counterparts, and any number of counterparts signed in the aggregate by
the parties will constitute a single instrument. The parties authorize and agree
to accept facsimile
A-23
30
signatures in counterparts to this Agreement, and that said facsimile signatures
will for all purposes be binding upon the parties as if the same were original
signatures.
6.12 NOTICES. Any notice or communication given under the terms of this
Agreement ("Notice") will be in writing and will be delivered in person or
mailed by certified mail, return receipt requested, in the United States Mail,
postage pre-paid, addressed as specified in EXHIBIT 6.13 hereto or at such other
address as a person may from time to time designate by Notice hereunder. Notice
will be effective upon delivery in person, or if mailed, at midnight on the
third business day after the date of mailing.
6.13 PARAGRAPH TITLES AND HEADINGS. The titles and headings of sections
of this Agreement are for the convenience of reference only, and are not
intended to define, limit, or describe the scope or intent of any provision of
this Agreement, and will not affect the construction of any provision of this
Agreement.
6.14 BROKERAGE, FINDER'S OR FINANCIAL ADVISOR'S COMMISSIONS. The parties
each represent and warrant that all negotiations relevant to this Agreement have
been carried out by them directly, without the intervention of any person, other
than as specified on EXHIBIT 6.14. Any other brokerage, finder's or financial
advisor's fee that should arise from this transaction will be paid by the party
who contracted with such person. That party will indemnify and hold harmless the
other party against and in respect to any claim for such fee relative to this
Agreement, or to the transaction contemplated hereby.
6.15 MISCELLANEOUS. The parties agree that each party and its counsel
have reviewed and revised this Agreement, or had an opportunity to review and
revise this Agreement, and that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party will not apply to the
interpretation of this Agreement or any amendments or exhibits hereto. No waiver
of any provision of this Agreement will be effective unless made in writing. The
parties do not intend to confer any benefit upon any person, firm, or
corporation other than the parties hereto. No representation or warranty herein
may be relied upon by any person not a party to this Agreement.
A-24
31
IN WITNESS WHEREOF, each of the Merging Companies have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized, and each of the Shareholders have executed
this Agreement on their own behalf.
FUTECH: Futech Interactive Products, Inc., an Arizona
corporation
By
--------------------------------------------------
Vincent W. Goett, CEO
FUTECH Futech Interactive Products (Delaware), Inc., a
DELAWARE: Delaware corporation
By
--------------------------------------------------
Vincent W. Goett, CEO
NEW SUB: Futech Toys & Games, Inc., a Nevada corporation
By
--------------------------------------------------
Carl E. Voigt, IV, President
FUNDEX: Fundex Games, Ltd., a Nevada corporation
By
--------------------------------------------------
Carl E. Voigt, IV, President and CEO
JANEX: Janex International, Inc., a Colorado corporation
By
--------------------------------------------------
Vincent W. Goett, President
A-25
32
TRUDY: Trudy Corporation, a Delaware corporation
By
-----------------------------------------------
William W. Burnham, Chairman and CEO
DaMERT: DaMert Company, a California corporation
By
--------------------------------------------------
Frederick A. DaMert, Chairman
SHAREHOLDERS:
DaMert:
---------------------------------------------------
Frederick A. DaMert, Trustee of the DaMert Trust,
UTD September 28, 1998
---------------------------------------------------
Gail Patton DaMert, Trustee of the DaMert Trust,
UTD September 28, 1998
Fundex:
---------------------------------------------------
Carl E. Voigt, IV
---------------------------------------------------
Carl E. Voigt, III
Futech:
---------------------------------------------------
Vincent W. Goett
Trudy:
---------------------------------------------------
William W. Burnham
A-26
33
AGREEMENT OF CERTAIN SHAREHOLDERS
TO VOTE FOR THE MERGER
The undersigned shareholders of the Merging Companies hereby agree to vote
their shares of the Merging Companies in favor of the Mergers. The signatures
appearing below bind the undersigned shareholders only to the obligation
appearing in the preceding sentence, and not to the entire Agreement appearing
above or any provision contained therein.
Trudy:
---------------------------------------------------
Alice B. Burnham
---------------------------------------------------
Elisabeth T. Prial
A-27