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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 24, 1999 (this
"AGREEMENT"), by and between Interactive Radio Group, Inc., a Delaware
corporation ("INRG"), and FTM Media, Inc., a Delaware corporation ("FTM").
WITNESSETH:
WHEREAS, FTM is a wholly owned subsidiary of FTM Media, Inc., a Colorado
corporation ("FTM COLORADO") and INRG is a majority owned subsidiary of FTM
Colorado;
WHEREAS, the Boards of Directors of INRG and FTM have determined that it
is in the best interests of their respective companies and their stockholders to
consummate the business combination transaction provided for herein in which
INRG will, subject to the terms and conditions set forth herein, merge (the
"MERGER") with and into FTM, so that FTM is the surviving corporation in the
Merger;
WHEREAS, immediately prior to the Merger, FTM Colorado will
reincorporate into Delaware by merging with and into FTM, with FTM as the
surviving corporation (such merger, the "REINCORPORATION MERGER")
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger; and
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below:
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"FTM" shall have the meaning set forth in the recitals to this
Agreement.
"FTM BOARD" shall mean the Board of Directors of FTM.
"FTM STOCK" shall mean FTM Common Stock and FTM Preferred Stock.
"INRG BOARD" shall mean the Board of Directors of INRG.
"INRG OPTION PLAN" shall mean the 1999 Interactive Radio Group, Inc.
Stock Option Plan.
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"INRG STOCK" shall mean INRG Common Stock and INRG Preferred Stock.
"PERSON" or "PERSONS" shall mean any individual, bank, corporation,
partnership, association, joint-stock company, business trust or unincorporated
organization.
"SEC" shall mean the Securities and Exchange Commission.
"TREASURY SHARES" shall mean shares of INRG Stock held by INRG or any of
its Subsidiaries, FTM Media, Inc., a Colorado corporation ("OLD FTM"), or by FTM
or any of its Subsidiaries, in each case other than in a fiduciary capacity or
as a result of debts previously contracted in good faith.
ARTICLE II
THE MERGER; EFFECTS OF THE MERGER
2.01 THE MERGER.
(a) THE SURVIVING CORPORATION. At the Effective Time, INRG shall
merge with and into FTM (the "MERGER"), the separate corporate existence of INRG
shall cease and FTM shall survive and continue to exist as a Delaware
corporation (FTM, as the surviving corporation in the Merger, sometimes being
referred to herein as the "SURVIVING CORPORATION").
(b) EFFECTIVENESS AND EFFECTS OF THE MERGER. Subject to the
satisfaction or waiver of the conditions set forth in ARTICLE VI in accordance
with this Agreement, the Merger shall become effective upon the occurrence of
both (i) the filing in the office of the Secretary of State of Delaware of
articles of merger in accordance with Section 275 of the Delaware General
Corporation Law (the "DGCL") and (ii) the filing in the office of the Secretary
of State of the State of Delaware of a certificate of merger in accordance with
Section 252 of the DGCL, or such later date and time as may be set forth in such
articles and certificate. The Merger shall have the effects prescribed in the
DGCL.
(c) CERTIFICATE OF INCORPORATION AND BY-LAWS. The certificate of
incorporation and by-laws of the Surviving Corporation shall be those of FTM, as
in effect immediately prior to the Effective Time.
2.02 EFFECTIVE DATE AND EFFECTIVE TIME.
Subject to the satisfaction or waiver of the conditions as set forth in
ARTICLE VI in accordance with this Agreement, the parties shall cause the
effective date of the Merger (the "EFFECTIVE DATE") to occur on (i) the third
business day to occur after the last of the conditions set forth in ARTICLE VI
shall have been satisfied or waived in accordance with the terms of this
Agreement or (ii) such other date to which the parties may agree. The time on
the Effective Date when the Merger shall become effective is referred to as the
"EFFECTIVE TIME."
2.03 TAX CONSEQUENCES. It is intended that the Merger shall qualify as a
reorganization under Section 368(a) of the Code.
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ARTICLE III
MERGER CONSIDERATION; EXCHANGE PROCEDURES
3.01 MERGER CONSIDERATION. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Merger and without any
action on the part of any party or stockholder:
(a) OUTSTANDING INRG COMMON STOCK. Each share, excluding Treasury
Shares, of the common stock, par value $.0001 per share, of INRG (the "INRG
COMMON STOCK"), issued and outstanding immediately prior to the Effective Time
shall become and be converted into the right to receive 1.25 shares (the
"EXCHANGE RATIO") of the common stock, par value $.001 per share, of FTM ("FTM
COMMON STOCK").
(b) OUTSTANDING INRG PREFERRED STOCK. Each share of INRG Series A
Preferred Stock, par value $.001, (the "INRG PREFERRED STOCK"), excluding any
Treasury Shares, issued and outstanding immediately prior to the Effective Time,
shall become and be converted into one share of a new series of preferred stock
of FTM, par value $.001 ("FTM SERIES A PREFERRED STOCK") having terms
substantially similar to those of the INRG Preferred Stock.
(c) OUTSTANDING FTM COMMON STOCK. Each share of FTM Common Stock
issued and outstanding immediately prior to the Effective Time shall be
unchanged and shall remain issued and outstanding as common stock of the
Surviving Corporation.
(d) TREASURY SHARES. Each of the shares of INRG Stock held as
Treasury Shares immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS.
At the Effective Time, holders of INRG Stock shall cease to be, and
shall have no rights as, stockholders of INRG, other than to receive any
dividend or other distribution with respect to such INRG Stock with a record
date occurring prior to the Effective Time and the consideration provided under
this Article III. After the Effective Time, there shall be no transfers on the
stock transfer books of INRG or the Surviving Corporation of shares of INRG
Stock.
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3.03 FRACTIONAL SHARES.
Notwithstanding any other provision hereof, no fractional shares of FTM
Common Stock and no certificates or scrip therefor, or other evidence of
ownership thereof, will be issued in the Merger; instead, FTM shall pay to each
holder of INRG Common Stock who would otherwise be entitled to a fractional
share of FTM Common Stock (after taking into account all Old Certificates
delivered by such holder) an amount in cash (without interest) determined by
multiplying such fraction by the average of the last sale prices of Old FTM
Common Stock, as reported by the OTC Bulletin Board for the five trading days
immediately preceding the Effective Date.
3.04 EXCHANGE PROCEDURES.
(a) At or prior to the Effective Time, FTM shall deposit, or
shall cause to be deposited, with a bank or trust company (the "EXCHANGE
AGENT"), for the benefit of the holders of certificates formerly representing
shares of INRG Common Stock ("OLD CERTIFICATES"), for exchange in accordance
with this Article III, certificates representing the shares of FTM Common Stock
("NEW CERTIFICATES") and an estimated amount of cash (such cash and New
Certificates, together with any dividends or distributions with a record date
occurring after the Effective Date with respect thereto (without any interest on
any such cash, dividends or distributions), being hereinafter referred to as the
"EXCHANGE FUND") to be paid pursuant to this Article III in exchange for
outstanding shares of INRG Common Stock.
(b) As promptly as practicable after the Effective Date, FTM
shall send or cause to be sent to each former holder of record of shares (other
than Treasury Shares) of INRG Common Stock immediately prior to the Effective
Time transmittal materials for use in exchanging such stockholder's Old
Certificates for the consideration set forth in this Article III. FTM shall
cause the New Certificates into which shares of a stockholder's INRG Common
Stock are converted on the Effective Date and/or any check in respect of any
fractional share interests or dividends or distributions which such person shall
be entitled to receive to be delivered to such stockholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of INRG Common Stock
(or indemnity reasonably satisfactory to FTM and the Exchange Agent, if any of
such certificates are lost, stolen or destroyed) owned by such stockholder. No
interest will be paid on any such cash to be paid in lieu of fractional share
interests or in respect of dividends or distributions which any such person
shall be entitled to receive pursuant to this Article III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor
any party hereto shall be liable to any former holder of INRG Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) No dividends or other distributions with respect to FTM
Common Stock with a record date occurring after the Effective Time shall be paid
to the holder of any unsurrendered Old Certificate representing shares of INRG
Common Stock converted in the Merger into the right to receive shares of such
FTM Common Stock until the holder thereof shall be entitled to receive New
Certificates in exchange therefor in accordance with this
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Article III, and no such shares of FTM Common Stock shall be eligible to vote
until the holder of Old Certificates is entitled to receive New Certificates in
accordance with this Article III. After becoming so entitled in accordance with
this Article III, the record holder thereof also shall be entitled to receive
any such dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of FTM Common Stock such
holder had the right to receive upon surrender of the Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by
the stockholders of INRG for twelve months after the Effective Time shall be
paid to FTM. Any stockholders of INRG who have not theretofore complied with
this Article III shall thereafter look only to FTM for payment of the shares of
FTM Common Stock, cash in lieu of any fractional shares and unpaid dividends and
distributions on the FTM Common Stock deliverable in respect of each share of
INRG Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
3.05 OPTIONS.
At the Effective Time, all stock options to purchase shares of INRG
Common Stock (each, a "INRG STOCK OPTION"), which are then outstanding and
unexercised, shall cease to represent a right to acquire shares of INRG Common
Stock and shall be converted automatically into options to purchase shares of
FTM Common Stock, and FTM shall assume each such INRG Stock Option subject to
the terms thereof, (i) PROVIDED, HOWEVER, that from and after the Effective
Time, (ii) the number of shares of FTM Common Stock purchasable upon exercise of
such INRG Stock Option shall be equal to 1.25 times the number of shares of INRG
Common Stock that were purchasable under such INRG Stock Option immediately
prior to the Effective Time and there shall be no change in the aggregate
exercise price of each INRG Stock Option. The terms of each INRG Stock Option
shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, stock dividend, recapitalization or
other similar transaction with respect to FTM Common Stock on or subsequent to
the Effective Date. Notwithstanding the foregoing, each INRG Stock Option which
is intended to be an "incentive stock option" (as defined in Section 422 of the
Code) shall be adjusted in accordance with the requirements of Section 424 of
the Code. Accordingly, with respect to any incentive stock options, fractional
shares shall be rounded down to the nearest whole number of shares and where
necessary the per share exercise price shall be rounded down to the nearest
cent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01 REPRESENTATIONS AND WARRANTIES. INRG hereby represents and warrants
to FTM, and FTM hereby represents and warrants to INRG as follows:
(a) ORGANIZATION, STANDING AND AUTHORITY. Such party is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization. Such party is duly qualified to do
business and is in good standing in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified. It
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has in effect all federal, state, local, and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as it is now conducted.
(b) CORPORATE POWER. Such party and each of its Subsidiaries has
the corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and it has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement, and to consummate the transactions contemplated hereby and thereby.
(c) CORPORATE AUTHORITY. (i) In the case of the representations
and warranties of INRG, (A) subject to receipt of the requisite approval and
adoption of this Agreement and the Merger by the holders of a majority of the
outstanding shares of INRG Common Stock entitled to vote thereon, this Agreement
and the transactions contemplated hereby and thereby have been authorized by all
necessary corporate action of INRG and the INRG Board prior to the date hereof
and (B) this Agreement is a legal, valid and binding agreement of INRG,
enforceable in accordance with its respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles). (ii) In the case of the representations and warranties of FTM, (A)
subject in the case of this to receipt of the requisite approval and adoption of
this Agreement and the Merger by the holders of a majority of the outstanding
shares of FTM Common Stock entitled to vote thereon, this Agreement is a legal,
valid and binding agreement of FTM, enforceable in accordance with its
respective terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles).
ARTICLE V
COVENANTS
INRG hereby covenants to and agrees with FTM, and FTM hereby covenants
to and agrees with INRG, that:
5.01 REASONABLE BEST EFFORTS.
Subject to the terms and conditions of this Agreement, it shall use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
5.02 STOCKHOLDER APPROVALS.
Each of them shall take, in accordance with applicable law, and its
respective articles or certificate of incorporation and by-laws, all action
necessary to convene, respectively, (i) an appropriate meeting of stockholders
of FTM to consider and vote upon (A) the approval and adoption of this Agreement
and the Merger (including the issuance of the
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shares of FTM Common Stock to be issued in the Merger pursuant to this
Agreement) and (B) any other matters required to be approved by FTM stockholders
for consummation of the Merger (including any adjournment or postponement, the
"FTM MEETING"), and (ii) an appropriate meeting of stockholders of INRG to
consider and vote upon the approval and adoption of this Agreement and the
Merger and any other matters required to be approved by INRG's stockholders for
consummation of the Merger (including any adjournment or postponement, the "INRG
MEETING"; and each of the FTM Meeting and the INRG Meeting, a "MEETING"),
respectively, as promptly as practicable after the Registration Statement is
declared effective. The FTM Board and the INRG Board shall recommend such
approval, and each of FTM and INRG shall take all reasonable lawful action to
solicit such approval by its respective stockholders. Notwithstanding the
foregoing, the approval of the Merger by the stockholders of FTM and INRG may
take the form of action by written consent.
5.03 REGISTRATION STATEMENT. Each of FTM and INRG agrees to cooperate in
the preparation of a registration statement on Form S-4 (the "REGISTRATION
STATEMENT") to be filed by FTM with the SEC in connection with the issuance of
FTM Common Stock in the Merger (including the proxy statement and prospectus and
other proxy solicitation materials of INRG constituting a part thereof (the
"PROXY STATEMENT") and all related documents).
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of each of the parties to consummate the Merger is
conditioned upon the satisfaction at or prior to the Effective Time of each of
the following:
6.01 STOCKHOLDER VOTE. Approval and adoption of this Agreement and the
Merger by the requisite vote of the stockholders of INRG and approval and
adoption of this Agreement and the Merger (including the issuance of shares of
FTM Common Stock to be issued in the Merger pursuant to this Agreement) by the
requisite vote of the stockholders of FTM.
6.02 REGULATORY APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions or restrictions which either the FTM Board or the INRG Board
reasonably determines in good faith would, following the Effective Time, have a
material adverse effect on the Surviving Corporation and its Subsidiaries taken
as a whole.
6.03 THIRD PARTY CONSENTS. All consents or approvals of all persons
(other than Regulatory Authorities) required for the consummation of the Merger
shall have been obtained and shall be in full force and effect, unless the
failure to obtain any such consent or approval is not reasonably likely to have,
individually or in the aggregate, a material adverse effect on INRG or FTM.
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6.04 NO INJUNCTION, ETC. No order, decree or injunction of any court or
agency of competent jurisdiction shall be in effect, and no law, statute or
regulation shall have been enacted or adopted, that enjoins, prohibits or makes
illegal the consummation of any of the transactions contemplated hereby.
6.05 EFFECTIVE REGISTRATION STATEMENT. The Registration Statement shall
have become effective and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC or any other
Regulatory Authority.
6.06 TAX OPINION. INRG and FTM shall have received an opinion from Irell
& Manella LLP, tax counsel, dated as of the Effective Time, substantially to the
effect that, on the basis of the facts, representations and assumptions set
forth in such opinions which are consistent with the state of facts existing at
the Effective Time, the Merger will be treated for Federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code and that
accordingly:
(i) No gain or loss will be recognized by FTM or INRG as a
result of the Merger;
(ii) No gain or loss will be recognized by the
stockholders of INRG who exchange their INRG Stock solely for FTM Stock
pursuant to the Merger (except with respect to cash received in lieu of
a fractional share interest in FTM Stock); and
(iii) The tax basis of the FTM Stock received by
stockholders who exchange all of their INRG Stock solely for FTM Stock
in the Merger will be the same as the tax basis of the INRG Stock
surrendered in exchange therefor.
In rendering such opinion, such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of FTM, INRG and others.
6.07 The Reincorporation Merger shall have been consummated.
ARTICLE VII
TERMINATION
7.01 TERMINATION. This Agreement may be terminated, and the Merger may
be abandoned at any time prior to the Effective Time (either before or after the
approval of the shareholders of either or both of FTM or INRG), by the mutual
consent of FTM and INRG.
7.02 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this ARTICLE
VII, no party to this Agreement shall have any liability or further obligation
to any other party hereunder.
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ARTICLE VIII
MISCELLANEOUS
8.01 SURVIVAL. All representations, warranties, agreements and covenants
contained in this Agreement shall not survive the Effective Time or termination
of this Agreement if this Agreement is terminated prior to the Effective Time.
8.02 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefited by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto and executed in the same manner as this Agreement.
8.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
8.04 GOVERNING LAW. This Agreement shall be governed by, and interpreted
in accordance with, the laws of the State of California, without regard to the
conflict of law principles thereof (except to the extent that mandatory
provisions of Federal law or of the corporation laws of the State of Delaware
are applicable).
8.05 NOTICES. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to INRG, to: Interactive Radio Group
6991 East Camelback Road
Suite D-103
Scottsdale, Arizona 85251
If to FTM, to: FTM Media, Inc.
6991 East Camelback Road
Suite D-103
Scottsdale, Arizona 85251
With copies to: Irell & Manella LLP
1800 Avenue of the Stars
Suite 900
Los Angeles, CA 90067
Attn: Richard C. Wirthlin, Esq.
8.06 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and this Agreement supersedes any
and all other oral or written agreements (other than the INRG Option Agreement)
heretofore made. Nothing in this Agreement expressed or implied, is intended to
confer upon any person,
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other than the parties hereto or their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
INTERACTIVE RADIO GROUP
By: /s/ Ron Conquest
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Name: Ron Conquest
Title: Chief Executive Officer and President
FTM MEDIA, INC.
By: /s/ Ron Conquest
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Name: Ron Conquest
Title: Chief Executive Officer and President
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