1
Exhibit 2.1
-----------------------------
XXXXXXXXXX.XXX, INC. STOCK PURCHASE AGREEMENT
-----------------------------
AMONG
E COM VENTURES, INC.,
XXXX.XXX, INC.,
AND
ENVISION DEVELOPMENT CORPORATION
APRIL 29, 2000
2
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into effective as of April 29, 2000, by and among E Com Ventures, Inc., a
Florida corporation (the "Buyer "), XXXX.XXX, Inc., a Delaware Corporation
(`ZERO") and Envision Development Corporation, a Florida corporation (the
"Seller").
WHEREAS, the Seller owns one hundred percent (100%) of the issued and
outstanding shares of common stock (the "Shares") of xxxxxxxxxx.xxx, Inc., a
Florida corporation (the "Company") which it desires to sell to Buyer; and
WHEREAS, an Affiliate of the Buyer originally organized a company (the
"Original Company") to conduct the business of selling perfumes and other
related items over the Internet and the world wide web and the business
conducted by its wholly owned subsidiary Xxxx-X-Xxxx.xxx (the "Business"); and
WHEREAS, an Affiliate of the Buyer caused the Original Company to
conduct an initial public offering of its securities; and
WHEREAS, voting control of the Original Company was later acquired by
Affiliates of the Seller and the Original Company was reorganized so that the
Business (and its assets) became owned and operated by the Company, the wholly
owned subsidiary of Seller; and
WHEREAS, certain assets unrelated to the Business (but used in
connection with Seller's business) became commingled with the assets of the
Company ("Non-Business Assets"); and
WHEREAS, the Buyer now desires to purchase the Shares in order to
reacquire the Business, all upon the terms and subject to the conditions set
forth herein; and
WHEREAS, the consideration which Buyer will pay to Seller in exchange
for the Shares shall be four hundred thousand (400,000) shares of Seller's $0.01
par value common stock (the "Exchanged Shares"); and
WHEREAS, ZERO desires to acquire from Buyer one hundred thousand
(100,000) shares of Seller's $0.01 par value common stock (the "Purchased
Shares") for a total purchase price of two million five hundred thousand dollars
($2,500,000) (the "Cash Purchase Price"). The Exchanged Shares and the Purchased
Shares are collectively referred to in this Agreement as the "EDV Shares"; and
WHEREAS, Alta Limited, a corporation organized under the laws of the
Jersey Channel Islands ("Alta") has exercised its option to acquire five hundred
thousand (500,000) shares of Seller's $0.01 par value common stock ("Exercise
Shares) from Buyer pursuant to an existing option granted by Buyer to Alta in a
certain stock option agreement dated December 10, 1999 (the "Option Exercise").
In connection with the Option Exercise, Alta is required to pay the total
3
option price of four million dollars ($4,000,000) to the Buyer (the "Exercise
Price") to effect the Exercise Option.
NOW, THEREFORE, in consideration of the forgoing and the mutual
representations, warranties, covenants, and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I. - SALE AND PURCHASE OF SHARES
1.01 SALE AND PURCHASE OF SHARES. On the terms and subject to the
conditions of this Agreement, at the Closing referred to in Section 2.01:
(a) Seller shall sell, convey, assign, transfer and deliver to
Buyer, and Buyer shall purchase, acquire and accept delivery of, the Shares,
free and clear of any and all liens, mortgages, adverse claims, charges,
security interests, encumbrances or other restrictions or limitations
whatsoever; and
(b) Buyer shall transfer to Seller the Exchanged Shares free
and clear of any and all liens, mortgages, adverse claims, charges, security
interests, encumbrances or other restrictions or limitations whatsoever, in
payment for the Shares.
1.02 ZERO PURCHASE; ALTA OPTION EXERCISE. On the Closing Date ZERO will
purchase the Purchased Shares from Buyer in the manner set forth below and ALTA
will effect the Option Exercise and will acquire the Exercise Shares in the
manner set forth below. Buyer shall transfer to ZERO and ALTA the Purchased
Shares and the Exercise Shares, respectively, free and clear of any and all
liens, mortgages, adverse claims, charges, security interests, encumbrances or
other restrictions or limitations whatsoever.
1.03 TRANSFER AGENT AND DELIVERIES. To effect the transfers
contemplated by Sections 1.01 and 1.02, at the Closing:
(a) Buyer shall deliver or cause to be delivered to Continental
Stock Transfer and Trust Company which is the transfer agent
of Seller ("Transfer Agent") the stock certificates
representing all of the Exchanged Shares, the Purchased Shares
and Exercise Shares, accompanied by stock powers duly executed
in blank and otherwise in form acceptable to the Transfer
Agent together with all documents to cause the transfer on the
books of the Seller as set forth below.
(b) Seller shall deliver or cause to be delivered to Buyer, all of
the items described in Section 2.02 including, without
limitation, stock certificates representing the Shares being
sold by Seller hereunder, accompanied by stock powers duly
executed in blank and otherwise in form acceptable to Buyer
for transfer on the books of the Company and Buyer shall
immediately deliver to seller a receipt of such items for
delivery to the Transfer Agent.
-2-
4
(c) As soon as possible following execution of this Agreement, the
Parties shall mutually establish an account at the Transfer
Agent into which ZERO and Alta shall each deposit the funds
set forth in section 1.04(a) below together with irrevocable
instructions to pay the funds so held to Buyer when the
Transfer Agent has all of the documents necessary to transfer
all of the Exercise Shares to Alta, the Exchanged Shares to
Seller and the Purchased Shares to ZERO. Attached hereto as
Exhibit "A" is an Escrow Agreement among Alta, Buyer, Seller,
ZERO and the Transfer Agent which will be executed and
delivered concurrently with this Agreement.
1.04 CONCURRENT TRANSACTIONS AND CONDITIONS TO CLOSING. Buyer's
obligation to purchase the Shares and Seller's obligation to sell the Shares are
contingent upon the occurrence of the following events:
(a) The deposit by ZERO on May 4, 2000 of two million five
hundred thousand dollars ($2,500,000) to the Transfer Agent and the deposit by
Alta on May 4, 2000 of four million dollars ($4,000,000) to the Transfer Agent.
(b) Receipt by Buyer of two million five hundred thousand
dollars ($2,500,000) from the Transfer Agent on May 4, 2000, as payment of the
Cash Purchase Price for the Purchased Shares and the concurrent transfer of the
Purchased Shares by the Transfer Agent from Buyer to Seller.
(c)Receipt by Buyer of four million dollars ($4,000,000) from
the Transfer Agent on May 4, 2000, as payment of the Exercise Price and the
concurrent transfer of the Exercise Shares by the Transfer Agent to Alta.
1.05 CLOSING BALANCE SHEET. Attached hereto as Exhibit 1.05 is a
proforma balance sheet for the Company, which includes $1,900,000 of net worth,
("The Minimum Requirements"). Seller shall have the exclusive right to manage
the Company and the Business until 12:01 a.m. EDT on Saturday, May 6, 2000. In
this regard, Seller shall have the right to sell or exchange assets of the
Company; provided, however, at the end of such period, the net worth of the
Company shall be no less than $1,900,000. As of the Closing Date, the Company
has $300,000 in cash which it will use to pay to Buyer the amounts owed for fees
and inventory purchases from January 11, 2000 through May 6, 2000. As soon as
practical (and in no event later than thirty days (30) after the Closing Date),
Seller shall cause to be prepared and delivered to the Buyer an adjusted balance
sheet for the Company dated as of May 6, 2000 ("the Closing Balance Sheet"). The
Buyer and its accountants shall be entitled to review the Closing Balance Sheet,
and any working papers, source documents, trial balances and similar materials
relating to the Closing Balance Sheet prepared by Seller or its accountants.
Seller shall also provide Buyer and its accountants with timely access, during
Seller's normal business hours, to Seller's personnel, properties, books and
records to the extent related to the Closing Balance Sheet. The Closing Balance
Sheet shall show all of the assets associated with the Business (which include
cash, inventories, fixed assets and prepaid expenses) as well as all liabilities
associated with the Business (including accounts payable and accrued
liabilities), all showing a net book value no less than $1,900,000. Prior to May
6, 2000, Seller shall cause all Non-Business Assets to be
-3-
5
transferred from the Company to the account of Seller; provided, however, if any
Non-Business Asset has not been so transferred by the Closing Date, Buyer will
cooperate with Seller to cause the Company to transfer all such Non-Business
Assets to Seller as soon as possible thereafter. Because of the "carve out" of
the Non-Business Assets, the Closing Balance Sheet may not conform to generally
accepted accounting principles and shall not be required to so conform.
ARTICLE II. - CLOSING
2.01 CLOSING. The closing of the transactions contemplated herein (the
"Closing") shall occur on May 4, 2000 at the offices of the Buyer unless the
parties agree to another date and/or place. The term "Closing Date" shall mean
the date on which the Closing occurs.
2.02 DELIVERIES BY SELLER. At the Closing, the Seller shall deliver to
Buyer:
(a) certificates representing all of the Shares, duly endorsed
in blank for transfer, or with appropriate stock powers in blank attached;
(b) the resignations of all officers and directors of the
Company.
(c) the stock book, stock ledger, minute books and corporate
seal of the Company;
(d) a certificate executed by Seller to the effect that the
conditions set forth in Section 6.02(a) have been satisfied;
(e) possession of all originals and copies of agreements,
instruments, documents, deeds, books, records, files and other data and
information within the possession of the Seller or any Affiliate of Seller
pertaining to the Company (collectively, the "Records"); provided, however, that
the Seller may retain (1) copies of any tax returns and copies of Records
relating thereto; (2) copies of any Records that the Seller is reasonably likely
to need for complying with requirements of law; and (3) copies of any Records
that in the reasonable opinion of the Seller will be required in connection with
the performance of its obligations under Article VII;
(f) evidence satisfactory to Buyer that Buyer's designees
shall be the only authorized signatories with respect to the Company's various
accounts, credit lines, safe deposit boxes or vaults set forth or required to be
set forth in Schedule 3.18.
ARTICLE III. - REPRESENTATIONS AND WARRANTIES
OF SELLER
The Seller hereby represents and warrants to Buyer that to the best of
its knowledge:
3.01 CORPORATE EXISTENCE AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida; the Company has the corporate power to own, manage,
lease and hold its Properties and to carry on
-4-
6
its Business as and where such Properties are presently located and such
business is presently conducted; and neither the character of the Company's
Properties nor the nature of the Company's business requires the Company to be
duly qualified to do business as a foreign corporation in any jurisdiction
outside those in which it is currently qualified in Schedule 3.01 attached
hereto lists any changes in jurisdiction of qualification since January 11,
2000, and the Company is in good standing in each jurisdiction in which it is
qualified as a foreign corporation.
3.02 AUTHORITY, APPROVAL AND ENFORCEABILITY This Agreement has been
duly authorized by all necessary corporate action including approval by the
Board of Directors , no shareholder approval is required. This Agreement has
been duly executed and delivered by the Company and the Seller, and the Seller
and the Company each have all requisite power and legal capacity to execute and
deliver this Agreement and all Collateral Agreements executed and delivered or
to be executed and delivered in connection with the transactions provided for
hereby, to consummate the transactions contemplated hereby and by the Collateral
Agreements, and to perform its obligations hereunder and under the Collateral
Agreements. This Agreement and each Collateral Agreement to which the Seller
and/or the Company is a party constitutes, or upon execution and delivery will
constitute, the legal, valid and binding obligation of such party, enforceable
in accordance with its terms, except as such enforcement may be limited by
general equitable principles or by applicable bankruptcy, insolvency,
moratorium, or similar laws and judicial decisions from time to time in effect
which affect creditors' rights generally.
3.03 CAPITALIZATION AND CORPORATE RECORDS.
(a) Schedule 3.03(a) sets forth the authorized and outstanding
capital stock of the Company. The issued and outstanding shares of capital stock
are owned beneficially and of record by the persons shown on Schedule 3.03(a),
free and clear of any and all liens, mortgages, adverse claims, charges,
security interests, encumbrances or other restrictions or limitations
whatsoever. All of the outstanding shares of the Company are duly authorized,
validly issued, fully paid and non-assessable and were not issued in violation
of (i) any preemptive or other rights of any Person to acquire securities of the
Company, or (ii) any applicable federal or state securities laws, and the rules
and regulations promulgated thereunder (collectively, the "Securities Laws").
There are no outstanding subscriptions, options, convertible securities, rights
(preemptive or otherwise), warrants, calls or agreements relating to any shares
of capital stock of the Company. The copies of the Articles of Incorporation and
Bylaws of the Company provided to Buyer are true, accurate, and complete and
reflect all amendments made through the date of this Agreement. The Company's
stock and minute books made available to Buyer for review were correct and
complete as of the date of such review, no further entries have been made
through the date of this Agreement, and such minute books contain an accurate
record of all shareholder and corporate actions of the shareholders and
directors (and any committees thereof) of the Company taken by written consent
or at a meeting. All corporate actions taken by the Company have been duly
authorized or ratified. All accounts, books, ledgers and official and other
records of the Company fairly and accurately reflect all of the Company's
transactions, properties, assets and liabilities.
-5-
7
(b) Except as shown on Schedule 3.03(b) hereto, the Company
does not own, directly or indirectly, any outstanding voting securities of or
other interests in, or controls, any other corporation, partnership, joint
venture or other business entity.
3.04 NO SELLER DEFAULTS OR CONSENTS. Except as otherwise set forth in
Schedule 3.04 hereto, the execution and delivery of this Agreement and the
Collateral Agreements by the Seller and the performance by the Seller of his
obligations hereunder and thereunder will not violate any provision of law or
any judgment, award or decree or any indenture, agreement or other instrument to
which the Seller is a party, or by which the properties or assets of any Seller
is bound or affected, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under, any such indenture,
agreement or other instrument, in each case except to the extent that such
violation, default or breach could not reasonably be expected to delay or
otherwise significantly impair the ability of the parties to consummate the
transactions contemplated hereby.
3.05 NO COMPANY DEFAULTS OR CONSENTS. Except as otherwise set forth in
Schedule 3.05 attached hereto, neither the execution and delivery of this
Agreement nor the carrying out of any of the transactions contemplated hereby
will:
(a) violate or conflict with any of the terms, conditions or
provisions of the charter or bylaws of the Company;
(b) violate any Legal Requirements applicable to the Company;
(c) violate, conflict with, result in a breach of, constitute
a default under (whether with or without notice or the lapse of time or both),
or accelerate or permit the acceleration of the performance required by, or give
any other party the right to terminate, any Contract or Permit binding upon or
applicable to the Company;
(d) result in the creation of any lien, charge or other
encumbrance on any Properties of the Company; or
(e) require the Seller or the Company to obtain or make any
waiver, consent, action, approval or authorization of, or registration,
declaration, notice or filing with, any private non-governmental third party or
any Governmental Authority.
3.06 NO PROCEEDINGS. No suit, action or other proceeding is pending or,
to the Knowledge of the Company, threatened before any Governmental Authority
seeking to restrain the Company or the Seller or prohibit their entry into this
Agreement or prohibit the Closing, or seeking damages against the Company or its
Properties as a result of the consummation of this Agreement.
3.07 EMPLOYEE BENEFIT MATTERS.
The Company has no employee benefit programs subject to ERISA
or any comparable state law and:
-6-
8
(a) Except as set forth in Schedule 3.07(a) neither the execution
and delivery of this Agreement nor the consummation of any or
all of the transactions contemplated hereby will: (A) entitle
any current or former employee of the Company to severance
pay, unemployment compensation or any similar payment, (B)
accelerate the time of payment or vesting or increase the
amount of any compensation due to any such employee or former
employee, or (C) directly or indirectly result in any payment
made to or on behalf of any person to constitute a "parachute
payment" within the meaning of Section 280G of the Code;
(b) Except as set forth in Schedule 3.07(a) since January 11,
2000, there have not been any (i) work stoppages, labor
disputes or other significant controversies between the
Company and its employees, (ii) labor union grievance or
organizational efforts, or (iii) unfair labor practice or
labor arbitration proceeding pending or threatened.
(c) Except as set forth in Schedule 3.07(a), the Company is not a
party to any agreement, and has not established any policy or
practice, requiring the Company to make a payment or provide
any other form or compensation or benefit to any person
performing services for the Company upon termination of such
services which would not be payable or provided in the absence
of the consummation of the transactions contemplated by this
Agreement.
(d) Schedule 3.07(e) sets forth by number and employment
classification the approximate numbers of employees employed
by the Company as of the date of this Agreement, and, except
as set forth therein, none of said employees are subject to
union or collective bargaining agreements with the Company.
3.08 FINANCIAL STATEMENTS.
(a) The Seller has delivered to Buyer true and complete copies
of Financial Statements with respect to the Seller including the Business as of
and for the fiscal year ended January 29, 2000 (the "Financial Statements"). The
independent accountants have certified that such Financial Statements present
fairly the financial condition and results of operations of the Seller for the
dates or periods indicated thereon and that such Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated.
(b) The Closing Balance Sheet will contain a fair statement of
the net book value of the Business of the Company on May 6, 2000.
(c) Seller is the "ultimate parent entity" as such term is
defined in C.F.R. Section 801.1(a)(3). Seller, together with all entities
controlled by it, does not hold assets having an aggregate book value of $10
million or more as shown on its last regularly prepared balance sheet and did
not have revenues of $10 million or more as shown on its most recent fiscal year
statement (in each case determined in accordance with 16 C.F.R. Section 801.11.
The term
-7-
9
"controlled by" as used in this section shall have the same meaning set forth in
16 C.F.R. 802.1(b). This representation and warranty is made for the purpose of
determining the applicability of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, to the transactions contemplated by this Agreement.
3.09 ABSENCE OF CERTAIN CHANGES.
(a) Except as otherwise set forth in Schedule 3.09(a) attached
hereto, since January 11, 2000, there has not been:
(i) any event, circumstance or change that had or
might have a material adverse effect on the business, operations, prospects,
Properties, financial condition or working capital of the Company;
(ii) any damage, destruction or loss (whether or not
covered by insurance) that had or might have a material adverse effect on the
business, operations, prospects, Properties or financial condition of the
Company; or
(iii) any material adverse change in the Company's
sales patterns, pricing policies, accounts receivable or accounts payable.
(b) Except as otherwise set forth in Schedule 3.09(b) attached
hereto, since January 11, 2000, the Company has not done any of the following:
(i) merged into or with or consolidated with, any
other corporation or acquired the business or assets of any Person;
(ii) purchased any securities of any Person;
(iii) created, incurred, assumed, guaranteed or
otherwise become liable or obligated with respect to any indebtedness, or made
any loan or advance to, or any investment in, any person, except in each case in
the ordinary course of business;
(iv) made any change in any existing election, or
made any new election, with respect to any tax law in any jurisdiction which
election could have an effect on the tax treatment of the Company or the
Company's business operations;
(v) entered into, amended or terminated any material
agreement;
(vi) sold, transferred, leased, mortgaged, encumbered
or otherwise disposed of, or agreed to sell, transfer, lease, mortgage, encumber
or otherwise dispose of, any Properties except (i) in the ordinary course of
business, or (ii) pursuant to any agreement specified in Schedule 3.13;
(vii) settled any claim or litigation, or filed any
motions, orders, briefs or settlement agreements in any proceeding before any
Governmental Authority or any arbitrator;
-8-
10
(viii) incurred or approved, or entered into any
agreement or commitment to make, any expenditures in excess of $25,000 (other
than those required pursuant to any agreement specified in Schedule 3.13 and
those in the ordinary course of business);
(ix) changed its books of account other than in the
usual, regular and ordinary manner on a basis consistent with prior periods or
made any material change in any of its accounting methods or practices;
(x) adopted any employee benefit program, or granted
any increase in the compensation payable or to become payable to directors,
officers or employees (including, without limitation, any such increase pursuant
to any bonus, profit-sharing or other plan or commitment), other than merit
increases to employees in the ordinary course of business and consistent with
past practice;
(xi) suffered any extraordinary losses or waived any
rights of material value;
(xii) forgiven any indebtedness due or owing from
Seller to the Company;
(xiii) (A) except in the ordinary course of business,
liquidated Inventory or accepted product returns, (B) accelerated receivables,
(C) delayed payables, or (D) changed in any material respect the Company's
practices in connection with the payment of payables and/or the collection of
receivables;
(xiv) engaged in any one or more activities or
transactions with an Affiliate or outside the ordinary course of business;
(xv) declared, set aside or paid any dividends, or
made any distributions or other payments in respect of its equity securities, or
repurchased, redeemed or otherwise acquired any such securities;
(xvi) amended its charter or bylaws;
(xvii) issued any capital stock or other securities,
or granted, or entered into any agreement to grant, any options, convertible
rights, other rights, warrants, calls or agreements relating to its capital
stock; or
(xviii) committed to do any of the foregoing.
3.10 COMPLIANCE WITH LAWS. Except as otherwise set forth in Schedule
3.10(1), the Company is and has been in compliance in all respects with any and
all Legal Requirements applicable to the Company, other than failures to so
comply that would not have an adverse effect on the business, operations,
prospects, Properties or financial condition of the Company. Except as otherwise
set forth in Schedule 3.10(2), since January 11, 2000 the Company (x) has not
received or entered into any citations, complaints, consent orders, compliance
schedules, or
-9-
11
other similar enforcement orders or received any written notice from any
Governmental Authority or any other written notice that would indicate that
there is not currently compliance with all such Legal Requirements, except for
failures to so comply that would not have an adverse effect on the business,
operations, prospects, Properties or financial condition of the Company, and (y)
is not in default under, and no condition exists (whether covered by insurance
or not) that with or without notice or lapse of time or both would constitute a
default under, or breach or violation of, any Legal Requirement or Permit
applicable to the Company. Without limiting the generality of the foregoing,
since January 11, 2000 the Company has not received notice of and there is no
basis for, any claim, action, suit, investigation or proceeding that might
result in a finding that the Company is not or has not been in compliance with
Legal Requirements relating to (a) the development, testing, manufacture,
packaging, distribution and marketing of products, (b) employment, safety and
health, and (c) environmental protection, building, zoning and land use.
3.11 LITIGATION. Except as otherwise set forth in Schedule 3.11, there
are no claims, actions, suits, investigations or proceedings against the Company
pending or, to the Knowledge of the Company, threatened in any court or before
or by any Governmental Authority, or before any arbitrator, that might have an
adverse effect (whether covered by insurance or not) on the business,
operations, prospects, Properties or financial condition of the Company and
there is no basis for any such claim, action, suit, investigation or proceeding.
Schedule 3.11 also includes a true and correct listing of all material actions,
suits, investigations, claims or proceedings that were pending, settled or
adjudicated since January 11, 2000.
3.12 OWNERSHIP OF COMPANY PROPERTIES.
(a) Except as provided under the provisions of the agreements
described in Schedule 3.12(a), the Company has and will have as of the Closing
Date legal and beneficial ownership of its Properties, free and clear of any and
all liens, mortgages, pledges, adverse claims, encumbrances or other
restrictions or limitations whatsoever ("Liens").
(b) Schedule 3.12(b)(1) sets for a list of any modifications
that have occurred since January 11, 2000 with respect to all real property or
any interest therein (including without limitation any option or other right or
obligation to purchase any real property or any interest therein) currently
owned, or ever owned, by the Company, in each case setting forth the street
address or legal description of each property covered thereby (the "Owned
Premises"). Schedule 3.12(b)(2) sets forth a list of all leases, licenses or
similar agreements relating to the Company's use or occupancy of real estate
owned by a third party ("Leases") that have been modified in any respect since
January 11, 2000, true and correct copies of which have previously been
furnished to Buyer, in each case setting forth (i) the lessor and lessee thereof
and the commencement date, term and renewal rights under each of the Leases, and
(ii) the street address or legal description of each property covered thereby
(the "Leased Premises"). The Leases are in full force and effect and have not
been amended, and no party thereto is in default or breach under any such Lease.
No event has occurred which, with the passage of time or the giving of notice or
both, would cause a material breach of or default under any of such Leases. With
respect to each such Owned Premises and Leased Premises, as applicable: (i) the
Company has a valid ownership interest in
-10-
12
the Owned Premises and a valid leasehold interest in the Leased Premises, free
and clear of any Liens, covenants and easements or title defects that have had
or could have an adverse effect on the Company's use and occupancy of the Owned
Premises and the Leased Premises; (ii) the portions of the buildings located on
the Owned Premises and the Leased Premises that are used in the business of the
Company are each in good repair and condition, normal wear and tear excepted,
and are in the aggregate sufficient to satisfy the Company's current and
reasonably anticipated normal business activities as conducted thereat; (iii)
each of the Owned Premises and the Leased Premises (a) has direct access to
public roads or access to public roads by means of a perpetual access easement,
such access being sufficient to satisfy the current transportation requirements
of the business presently conducted at such parcel; and (b) is served by all
utilities in such quantity and quality as are sufficient to satisfy the current
normal business activities conducted at such parcel; and (iv) the Company has
not received notice of (a) any condemnation, eminent domain or similar
proceeding affecting any portion of the Owned Premises or the Leased Premises or
any access thereto, and, to the Knowledge of the Company, no such proceedings
are contemplated, or (b) any special assessment which may affect any of the
Owned Premises or the Leased Premises.
(c) Set forth on Schedule 3.12(c) is a list and description
of any modifications that have occurred since January 11, 2000 with respect to
all material foreign and domestic patents, patent rights, trademarks, service
marks, trade names, brands and copyrights (whether or not registered and, if
applicable, including pending applications for registration) owned, Used,
licensed or controlled by the Company and all goodwill associated therewith. The
Company owns or has the right to use and shall as of the Closing Date own or
have the right to use any and all information, know-how, trade secrets, patents,
copyrights, trademarks, tradenames, software, formulae, methods, processes and
other intangible properties that are necessary or customarily Used by the
Company for the ownership, management or operation of its Properties
("Intangible Rights") including, but not limited to, the Intangible Rights
listed on Schedule 3.12(c). Except as set forth on Schedule 3.12(c): (i) the
Company is the sole and exclusive owner of all right, title and interest in and
to all of the Intangible Rights, and has the exclusive right to use and license
the same, free and clear of any claim or conflict with the Intangible Rights of
others; (ii) no royalties, honorariums or fees are payable by the Company to any
person by reason of the ownership or use of any of the Intangible Rights; (iii)
there have been no claims made against the Company asserting the invalidity,
abuse, misuse, or unenforceability of any of the Intangible Rights and no
grounds for any such claims exist; (iv) the Company has not made any claim of
any violation or infringement by others of any of its Intangible Rights or
interests therein and, to the Knowledge of the Company, no grounds for any such
claims exist; (v) the Company has not received any notice that it is in conflict
with or infringing upon the asserted intellectual property rights of others in
connection with the Intangible Rights, and neither the use of the Intangible
Rights nor the operation of the Company's businesses is infringing or has
infringed upon any intellectual property rights of others; (vi) the Intangible
Rights are sufficient and include all intellectual property rights necessary for
the Company to lawfully conduct its business as presently being conducted; (vii)
no interest in any of the Company's Intangible Rights has been assigned,
transferred, licensed or sublicensed by the Company to any person other than the
Buyer pursuant to this Agreement; (viii) to the extent that any item
constituting part of the Intangible Rights has been registered with, filed in or
issued by, any Governmental Authority, such
-11-
13
registrations, filings or issuances are listed on Schedule 3.12(c) and were duly
made and remain in full force and effect; and (ix) to the Knowledge of the
Company, there has not been any act or failure to act by the Company or any of
its directors, officers, employees, attorneys or agents during the prosecution
or registration of, or any other proceeding relating to, any of the Intangible
Rights or of any other fact which could render invalid or unenforceable, or
negate the right to issuance of any of the Intangible Rights. To the extent any
of the Intangible Rights constitutes proprietary or confidential information,
the Company has adequately safeguarded such information from disclosure. All of
the Intangible Rights are assignable to the Buyer without alteration or
impairment.
(d) Set forth on Schedule 3.12(d) is a list of any additions,
deletions or modifications that have occurred since January 11, 2000 with
respect to all authorizations, consents, approvals, franchises, licenses and
permits required by any Person (other than a Governmental Authority) for the
operation of the business of the Company as presently operated (the "Other
Person Authorizations"). All of the Other Person Authorizations have been duly
issued or obtained and are in full force and effect, and the Company is in
compliance with the terms of all the Other Person Authorizations. Neither the
Company nor any Seller has any knowledge of any facts which could be expected to
cause them to believe that the Other Person Authorizations will not be renewed
by the appropriate Person in the ordinary course. Each of the Other Person
Authorizations may be assigned and transferred to the Buyer in accordance with
this Agreement and will continue in full force and effect thereafter, in each
case without (i) the occurrence of any breach, default or forfeiture of rights
thereunder, or (ii) the consent, approval, or act of, or the making of any
filings with, any Person.
3.13 COMMITMENTS.
(a) Except as otherwise set forth in Schedule 3.13, since
January 11, 2000 the Company has not become a party to or bound by any of the
following nor has the Company terminated or modified the terms of any of the
following, whether written or oral:
(i) any Contract that cannot by its terms be
terminated by the Company with 30 days' or less notice without penalty or whose
term continues beyond one year after the date of this Agreement;
(ii) contract or commitment for capital expenditures
by the Company in excess of $25,000 per calendar quarter in the aggregate;
(iii) lease or license with respect to any
Properties, real or personal, whether as
landlord, tenant, licensor or licensee;
(iv) agreement, contract, indenture or other
instrument relating to the borrowing of money or the guarantee of any obligation
or the deferred payment of the purchase price of any Properties;
(v) partnership agreement;
-12-
14
(vi) contract with any Affiliate of the Company
(including the Seller) relating to the provision of goods or services by or to
the Company;
(vii) agreement for the sale of any assets, other
than inventory in the normal course of business, that in the aggregate have a
net book value on the Company's books of greater than $25,000;
(viii) agreement that purports to limit the Company's
freedom to compete freely in any line
of business or in any geographic area;
(ix) preferential purchase right, right of first
refusal, or similar agreement; or
(x) other Contract that is material to the business
of the Company.
(b) All of the Contracts listed or required to be listed in
Schedule 3.13 are valid, binding and in full force and effect, and the Company
has not been notified or advised by any party thereto of such party's intention
or desire to terminate or modify any such Contract in any respect, except as
disclosed in Schedule 3.13. Neither the Company nor, to the Knowledge of the
Company, any other party is in breach of any of the terms or covenants of any
Contract listed or required to be listed in Schedule 3.13. Following the
Closing, Buyer will be entitled to all of the benefits of the Company under each
Contract listed or required to be listed in Schedule 3.13.
(c) Except as otherwise set forth in Schedule 3.13(c), the
Company is not a party to or bound by any Contract or Contracts the terms of
which were arrived at by or otherwise reflect less-than-arm's-length
negotiations or bargaining.
3.14 INSURANCE. Schedule 3.14 hereto is a complete and correct list of
any additions, deletions or modifications since January 11, 2000 to insurance
policies that relate to the Company or its Properties. Such policies are
sufficient for compliance by the Company with all applicable Legal Requirements
and all material Contracts. None of the insurance carriers has indicated to the
Company an intention to cancel any such policy. The Company has no claim pending
or anticipated against any of the insurance carriers under any of such policies
and, to the Knowledge of the Company, there has been no actual or alleged
occurrence of any kind, which could reasonably be expected to give rise to any
such claim.
3.15 INVENTORIES. Except as otherwise set forth in Schedule 3.15(1),
the Inventory of the Company as of the Closing Date shall consist of items of a
quality, condition and quantity consistent with normal seasonally-adjusted
Inventory levels of the Company and be usable and saleable in the ordinary and
usual course of business for the purposes for which intended. Except as
otherwise set forth in Schedule 3.15(2), such Inventory is valued on the
Company's books of account on a basis consistent with the Company's historical
practices prior to January 11, 2000.
3.16 EQUIPMENT AND OTHER TANGIBLE PROPERTY. Except as otherwise set
forth on Schedule 3.16, the Company's equipment, furniture, machinery, vehicles,
structures, fixtures and
-13-
15
other tangible property included in the Properties (the "Tangible Company
Properties"), other than Inventory, is suitable for the purposes for which
intended and in good operating condition and repair consistent with normal
industry standards, except for ordinary wear and tear, and except for such
Tangible Company Properties as shall have been taken out of service on a
temporary basis for repairs or replacement consistent with the Company's prior
practices and normal industry standards.
3.17 PERMITS; ENVIRONMENTAL MATTERS.
(a) Except as otherwise set forth in Schedule 3.17(a), the
Company has all Permits necessary for the Company to construct, own, operate,
use and/or maintain its Properties and to conduct its business and operations as
presently conducted and as expected to be conducted in the future. Except as
otherwise set forth in Schedule 3.17(a), all such Permits are in effect, no
proceeding is pending or, to the Knowledge of the Company, threatened to modify,
suspend or revoke, withdraw, terminate, or otherwise limit any such Permits, and
no administrative or governmental actions have been taken or, to the Knowledge
of the Company, threatened in connection with the expiration or renewal of such
Permits which could adversely affect the ability of the Company to own, operate,
use or maintain any of its Properties or to conduct its business and operations
as presently conducted and as expected to be conducted in the future. Except as
otherwise set forth in Schedule 3.17(a), (i) no violations have occurred that
remain uncured, unwaived, or otherwise unresolved, or are occurring in respect
of any such Permits, other than inconsequential violations, and (ii) no
circumstances exist that would prevent or delay the obtaining of any requisite
consent, approval, waiver or other authorization of the transactions
contemplated hereby with respect to such Permits that by their terms or under
applicable law may be obtained only after Closing.
(b) Except as set forth on Schedule 3.17(b), there are no
claims, liabilities, investigations, litigation, administrative proceedings,
whether pending or, to the Knowledge of the Company, threatened, or judgments or
orders relating to any Hazardous Materials (collectively called "Environmental
Claims") asserted or threatened against the Company or relating to any real
property currently or formerly owned, leased or otherwise used by the Company.
Neither the Company nor, to the Knowledge of the Company, any prior owner,
lessee or operator of said real property, has caused or permitted any Hazardous
Material to be used, generated, reclaimed, transported, released, treated,
stored or disposed of in a manner which could form the basis for an
Environmental Claim against the Company or the Buyer. Except as set forth on
Schedule 3.17(b), the Company has not assumed any liability of any Person for
cleanup, compliance or required capital expenditures in connection with any
Environmental Claim.
(c) Except as set forth on Schedule 3.17(c), no Hazardous
Materials are or were stored or otherwise located, and no underground storage
tanks or surface impoundments are or were located, on real property currently or
formerly owned, leased or Used by the Company or, to the Knowledge of the
Company, on adjacent parcels of real property, and no part of such real property
or, to the Knowledge of the Company, any part of such adjacent parcels of real
-14-
16
property, including the groundwater located thereon, is presently contaminated
by Hazardous Materials.
(d) Except as set forth on Schedule 3.17(d), the Company has
been and is currently in compliance with all applicable Environmental Laws,
including obtaining and maintaining in effect all Permits required by applicable
Environmental Laws.
3.18 BANKS. Schedule 3.18 sets forth (i) the name of each bank, trust
company or other financial institution and stock or other broker with which the
Company has an account, credit line or safe deposit box or vault, (ii) the names
of all persons authorized to draw thereon or to have access to any safe deposit
box or vault, (iii) the purpose of each such account, safe deposit box or vault,
and (iv) the names of all persons authorized by proxies, powers of attorney or
other like instrument to act on behalf of the Company in matters concerning any
of its business or affairs. Except as otherwise set forth in Schedule 3.18, no
such proxies, powers of attorney or other like instruments are irrevocable.
3.19 SUPPLIERS AND CUSTOMERS. Schedule 3.19 sets forth any change since
January 11, 2000 in (i) the principal suppliers of the Company together with the
dollar amount of goods purchased by the Company from each such supplier during
each such period, and (ii) the principal customers of the Company during such
period together with the dollar amount of goods and/or services sold by the
Company to each such customer during each such period. Except as otherwise set
forth in Schedule 3.19, to the Knowledge of the Company, the Company maintains
good relations with all suppliers and customers as well as with governments,
partners, financing sources and other parties with whom the Company has
significant relations, and no such party has canceled, terminated or made any
threat to the Company to cancel or otherwise terminate its relationship with the
Company or to materially decrease its services or supplies to the Company or its
direct or indirect purchase or usage of the products or services of the Company.
3.20 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company, Seller
nor any other Affiliate or agent of the Company, or any other person acting on
behalf of or associated with the Company, acting alone or together, has: (a)
received, directly or indirectly, any rebates, payments, commissions,
promotional allowances or any other economic benefits, regardless of their
nature or type, from any customer, supplier, employee or agent of any customer
or supplier, official or employee of any government (domestic or foreign), or
any political party or candidate for office (domestic or foreign) or other
person; or (b) directly or indirectly, given or agreed to give any money, gift
or similar benefit to any customer, supplier, employee or agent of any customer
or supplier, official or employee of any government (domestic or foreign), or
any political party or candidate for office (domestic or foreign), or other
person who was, is or may be in a position to help or hinder the business of the
Company (or assist the Company in connection with any actual or proposed
transaction) which (i) may subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, (ii) if not given in
the past, may have had an adverse effect on the assets, business, operations or
prospects of the Company, or (iii) if not continued in the future, may adversely
affect the assets, business, operations or prospects of the Company.
-15-
17
3.21 TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule 3.21
and except for normal advances to employees consistent with past practices,
payment of compensation for employment to employees consistent with past
practices, and participation in scheduled Plans or Benefit Programs and
Agreements by employees, the Company has not purchased, acquired or leased any
property or services from, or sold, transferred or leased any property or
services to, or loaned or advanced any money to, or borrowed any money from, or
entered into or been subject to any management, consulting or similar agreement
with, or engaged in any other significant transaction with Seller or any
officer, director or shareholder of the Seller or its Affiliates. Except as set
forth on Schedule 3.21, neither Seller nor any Affiliate of the Seller is
indebted to the Company for money borrowed or other loans or advances, and the
Company is not indebted to Seller or any Affiliate of Seller.
3.22 OTHER INFORMATION. The information furnished by the Seller and the
Company to Buyer pursuant to this Agreement (including, without limitation,
information contained in the exhibits hereto, the Schedules identified herein,
the instruments referred to in such Schedules and the certificates and other
documents to be executed or delivered pursuant hereto by the Seller and/or the
Company at or prior to the Closing) is not, nor at the Closing will be, false or
misleading in any material respect, or contains, or at the Closing will contain,
any misstatement of material fact, or omits, or at the Closing will omit, to
state any material fact required to be stated in order to make the statements
therein not misleading.
3.23 LIMITATION. To the extent that Buyer or any Affiliate of Buyer
knows that any representation or warranty is untrue or has sufficient
information to ascertain that any representation or warranty is incorrect or
untrue, Buyer shall not have the right to rely on such representation or
warranty for any purpose.
ARTICLE IV. - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Seller that:
4.01 CORPORATE EXISTENCE AND QUALIFICATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida; has the corporate power to own, manage, lease and hold its properties
and to carry on its business as and where such properties are presently located
and such business is presently conducted; and is duly qualified to do business
and is in good standing as a foreign corporation in each of the jurisdictions
where the character of its properties or the nature of its business requires it
to be so qualified.
4.02 AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been
duly executed and delivered by Buyer and Buyer has all requisite corporate power
and legal capacity to execute and deliver this Agreement and all Collateral
Agreements executed and delivered or to be executed and delivered by Buyer in
connection with the transactions provided for hereby, to consummate the
transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. The
execution and delivery of this Agreement and the Collateral Agreements and the
performance of the
-16-
18
transactions contemplated hereby and thereby have been duly and validly
authorized and approved by all corporate action necessary on behalf of Buyer.
This Agreement and each Collateral Agreement to which Buyer is a party
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligation of Buyer, enforceable in accordance with its terms,
except as such enforcement may be limited by general equitable principles or by
applicable bankruptcy, insolvency, moratorium, or similar laws and judicial
decisions from time to time in effect which affect creditors' rights generally.
4.03 NO PROCEEDINGS. No suit, action or other proceeding is pending or,
to Buyer's knowledge, threatened before any Governmental Authority seeking to
restrain Buyer or prohibit its entry into this Agreement or prohibit the
Closing, or seeking Damages against Buyer or its properties as a result of the
consummation of this Agreement.
4.04 TITLE. Seller will receive good title to the EDV Shares free and
clear of all liens, claims, encumbrances, charges or liabilities of any kind or
nature whatsoever.
ARTICLE V. - COOPERATION
Each of the parties hereto shall use commercially reasonable efforts to
take, or cause to be taken, all appropriate actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
herein, including, without limitation, (i) cooperating with the other in the
preparation and filing of all forms, notifications, reports and information, if
any, required or reasonably deemed advisable pursuant to any law, statute, rule
or regulation; (ii) using commercially reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of any Government Entity or other Persons (including parties to Contracts
with the Company as are necessary for the consummation of the transactions
contemplated hereby), (iii) making on a prompt and timely basis all governmental
or regulatory notifications and filings required to be made by it for the
consummation of the transactions contemplated hereby, (iv) defending all Legal
Proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby and to lift or rescind any injunction or restraining Order
or other Order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, and (v) executing and delivering such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby. Buyer
and Seller shall agree to jointly elect to have Section 338 (h)(10) of the
Internal Revenue Code apply to the transfer of the Shares and shall execute and
file an election to that effect as soon as reasonably possible (the "338
Election").
ARTICLE VI. - CONDITIONS TO SELLER'S AND BUYER'S OBLIGATIONS
6.01 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of Seller
to carry out the transactions contemplated by this Agreement are subject, at the
option of Seller, to the satisfaction or waiver of the following conditions at
or prior to the Closing:
-17-
19
(a) Buyer shall have furnished Seller with a certified copy of
all necessary corporate action on its behalf approving its execution, delivery
and performance of this Agreement.
(b) All representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing, and Buyer shall have performed and satisfied in all material
respects all covenants and agreements required by this Agreement to be performed
and satisfied by Buyer at or prior to the Closing.
(c) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by or on behalf of the Company
or Seller) shall be pending or threatened before any Governmental Authority
seeking to restrain the Company or prohibit the Closing or seeking Damages
against the Company as a result of the consummation of this Agreement.
6.02 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
carry out the transactions contemplated by this Agreement are subject, at the
option of Buyer, to the satisfaction, or waiver by Buyer, of the following
conditions at or prior to the Closing:
(a) All representations and warranties of the Company and
Seller contained in this Agreement shall be true and correct in all material
respects at and as of the Closing, and the Company and Seller shall have
performed and satisfied in all material respects all agreements and covenants
required by this Agreement to be performed and satisfied by it at or prior to
the Closing.
(b) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by or on behalf of Buyer) shall
be pending or threatened before any court or governmental agency seeking to
restrain Buyer or prohibit the Closing or seeking Damages against Buyer or the
Company or its Properties as a result of the consummation of this Agreement.
(c) Except for matters disclosed in Schedule 3.09(a) or
3.09(b) attached hereto, since January 11, 2000 and up to and including the
Closing, there shall not have been any event, circumstance, change or effect
that, individually or in the aggregate, had or might have a material adverse
effect on the Company's Business, operations, prospects, Properties or financial
condition.
(d) All agreements, commitments and understandings between
the Company and Seller (or any Affiliate thereof) shall have been terminated in
all respects on terms satisfactory to Buyer, and all obligations, claims or
entitlements thereunder shall be unconditionally waived and released by the
Seller and/or such Affiliates, as applicable, and written evidence thereof
satisfactory in form and substance to Buyer shall have been delivered to Buyer.
(e) All proceedings to be taken by the Company in connection
with the transactions contemplated hereby and all documents incident thereto
shall be satisfactory in form and substance to Buyer and its counsel, and Buyer
and said counsel shall have received all
-18-
20
such counterpart originals or certified or other copies of such documents as it
or they may reasonably request.
(f) Buyer shall have received written evidence, in form and
substance satisfactory to Buyer, of the consent to the transactions contemplated
by this Agreement of all governmental, quasi-governmental and private third
parties (including, without limitation, persons or other entities leasing real
or personal property to the Company) where the absence of any such consent would
result in a violation of law or a breach or default under any agreement to which
the Company is subject.
(g) No proceeding in which the Seller or the Company shall be
a debtor, defendant or party seeking an order for its own relief or
reorganization shall have been brought or be pending by or against such person
under any United States or state bankruptcy or insolvency law.
ARTICLE VII. - POST-CLOSING OBLIGATIONS
7.01 FURTHER ASSURANCES. Following the Closing, the Company, the Seller
and the Buyer shall execute and deliver such documents, and take such other
action, as shall be reasonably requested by any other party hereto to carry out
the transactions contemplated by this Agreement. In addition, Buyer shall
continue to allow the Seller to utilize the facilities and employees of the
Company and the Buyer in connection with payroll for Seller's employees, payment
of accounts payable of Seller and for other similar transition requirements.
Such use and services shall terminate within 30 days and shall be subject to the
same terms and charges in accordance with the Intercompany Services Agreement,
dated May 1, 1999; provided, however, Seller shall use reasonable efforts to
transition these functions as soon as reasonably possible on a practical basis.
7.02 PUBLICITY. A press release concerning this transaction must be
issued. None of the parties hereto shall issue or make, or cause to have issued
or made, any public release or announcement concerning this Agreement or the
transactions contemplated hereby, without the advance approval in writing of the
form and substance thereof by each of the other parties, except as required by
law or by the rules of the National Association of Securities Dealers or the
United States Securities and Exchange Commission (in which case, so far as
possible, there shall be consultation among the parties prior to such
announcement), and the parties shall endeavor jointly to agree on the text and
timing of any announcement or circular so approved or required.
7.03 POST-CLOSING INDEMNITY BY THE SELLER. Subject to the provisions of
Section 8.01, from and after the Closing, the Seller shall indemnify and hold
harmless Buyer and its Affiliates, directors, officers and employees from and
against any and all Damages arising out of, resulting from or in any way related
to (i) a breach of, or the failure to perform or satisfy any of, the
representations, warranties, covenants and agreements made by the Seller in this
Agreement or in any document or certificate delivered by the Seller at the
Closing pursuant hereto, and (ii) the occurrence of any event on or prior to the
date of Closing that is (or would be, but for any
-19-
21
deductible thereunder) covered by individual policies of insurance, blanket
insurance policies or self insurance programs maintained by the Company.
7.04 NONDISCLOSURE.
(a) GENERAL. Seller shall not at any time, disclose, directly
or indirectly, to any person, firm, corporation, partnership, association or
other entity, any confidential information relating to the Company or to Buyer,
its subsidiaries or Affiliates, or any information concerning their respective
financial condition, customers, sources of leads and methods of obtaining new
business or the methods generally of doing and operating their respective
businesses, except to the extent that such information is a matter of public
knowledge or is required to be disclosed by law of judicial or administrative
process. Buyer shall not at any time, disclose, directly or indirectly, to any
person, firm, corporation, partnership, association or other entity, any
confidential information relating to Seller, its subsidiaries or Affiliates, or
any information concerning their respective financial condition, customers,
sources of leads and methods of obtaining new business or the methods generally
of doing and operating their respective businesses, except to the extent that
such information is a matter of public knowledge or is required to be disclosed
by law of judicial or administrative process.
(b) INJUNCTION. It is recognized and hereby acknowledged by
the parties hereto that a breach or violation by Seller of any or all of the
covenants and agreements contained in this Agreement may cause irreparable harm
and damage to Buyer in a monetary amount which may be virtually impossible to
ascertain. As a result, Seller recognizes and hereby acknowledges that Buyer
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any breach or violation of any or all of the covenants
and agreements contained in this Agreement by Seller and/or its associates,
Affiliates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other rights
or remedies the Buyer may possess hereunder, at law or in equity. Nothing
contained in this Section 7.04 shall be construed to prevent Buyer from seeking
and recovering from Seller damages sustained by it as a result of any breach or
violation by Seller of any of the covenants or agreements contained herein.
7.05 ASSIGNMENT OF CONTRACTS. At the option of Buyer, and
notwithstanding anything in this Agreement to the contrary, neither this
Agreement nor the consummation of the transactions contemplated by this
Agreement shall constitute an assignment of any claim, contract, license,
franchise, lease, commitment, sales order, sales contract, supply contract,
service agreement, purchase order or purchase commitment if an attempted
assignment thereof without the consent of a third party thereto would constitute
a breach thereof or in any way adversely affect the rights of Buyer thereunder.
If such consent is not obtained, or if any attempt at an assignment thereof
would be ineffective or would affect the rights of the Company thereunder so
that Buyer would not in fact receive all such rights, the Seller shall cooperate
with Buyer to the extent necessary to provide for Buyer the benefits under such
claim, contract, license, franchise, lease, commitment, sales order, sales
contract, supply contract, service agreement, purchase order or purchase
commitment, including enforcement for the benefit of Buyer of any and all rights
of the Seller against a third party thereto arising out of the breach or
-20-
22
cancellation by such third party or otherwise. The foregoing shall not apply to
Seller's right to transfer all Non-Business Assets from Buyer to Seller prior to
the Closing Date.
7.06 338 ELECTION. Buyer and Seller will each execute and file the 338
Election in the manner prescribed by applicable regulations for doing so.
7.07 RATIFICATION OF SHAREHOLDERS. Buyer and Seller shall use their
best efforts to support ratification and/or approval and shall urge their
respective Affiliates to ratify and/or approve any action which may be required
to consummate this Agreement.
7.08 MEDIATOR INDEMNIFICATION. Buyer and Seller each acknowledge that
various individuals (who may or may not be related to Buyer or Seller and
various individuals assisting them, participated in mediating the agreements
contained in this Agreement and in the preparation of this Agreement and all of
the transactions which are contemplated by this Agreement (the "Mediators"). The
Mediators for Buyer are Xxxxx X. Xxxxxxxxxxx and Xxxxxx X. Xxxxxxxx. The
Mediators for Seller are Xxxx X. Xxxxxxx and Xxxxxx Xxxxxxx. They have been
assisted by Xxxxx X. Xxxxxxx (who is also a Mediator). Buyer and Seller further
acknowledge and agree that none of the Mediators in their individual capacities
or otherwise shall have any personal responsibility or liability of any kind or
nature whatsoever resulting from their efforts to assist the parties in reaching
the resolution of various matters resolved by this Agreement. Therefore, Buyer
and Seller hereby each agrees to indemnify each of its Mediators, to hold each
of them harmless and to defend each of them with separate independent counsel
(reasonably selected) of his choice from and against any action, liability,
loss, cost, expense, claim or proceeding ensuing out of, or in any way connected
with this Agreement, the matters covered by this Agreement and any actions taken
by either party in connection therewith. None of the Mediators for either party
have purported to give legal, accounting or business advice to that party or the
other party and each party has retained such legal counsel and other advisors as
it deemed appropriate in connection with the preparation of this Agreement, the
ratification or adoption of this Agreement, or the consummation of the
transactions contemplated hereby and relied upon such professional advice.
ARTICLE VIII. - MISCELLANEOUS
8.01 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of Buyer and Seller; or
(b) by either Buyer or Seller:
(i) if the Closing shall not have occurred on or
before May 9, 2000; provided, however, that the right to terminate the Agreement
under this subsection shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before the date;
-21-
23
(ii) if (A) there shall be a final nonappealable
Order of a Government Entity restraining or prohibiting the consummation of the
transactions contemplated by this Agreement, or (B) there shall be a law,
statute, rule, regulation or Order decree enacted, entered, promulgated or
enforced by any Government Entity which prohibits or materially restricts the
consummation of the transactions contemplated hereby; or
(c) by Seller, if Buyer shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (i) would give rise to the failure of a condition set forth
in Section 6.01, and (ii) cannot be or has not been cured within 45 days after
the giving of written notice to Buyer of such breach (a "Buyer Material Breach")
(provided that Seller is not then in Seller Material Breach (as defined in
Section 8.01(d)) of any representation, warranty, covenant or other agreement
contained in this Agreement); or
(d) by Buyer, if Seller shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) would give rise to the failure of a condition set forth
in Section 6.02, and (B) cannot be or has not been cured within 45 days after
the giving of written notice to Seller of such breach (a "Seller Material
Breach") (provided that Buyer is not then in Buyer Material Breach of any
representation, warranty, covenant or other agreement contained in this
Agreement).
In the event of termination of this Agreement by Seller or Buyer
pursuant to this Section, written notice thereof shall promptly be given to the
other party hereto, and upon such notice this Agreement shall terminate. Except
for Sections 8.7 and 8.11 or as provided elsewhere herein, in the event of the
termination of this Agreement pursuant to this Section, this Agreement shall
forthwith become void and of no further force and effect, there shall be no
liability on the part of Seller or Buyer or any of their respective
Representatives to the other, all rights and obligations of any party hereto
shall cease and the parties shall be released from any and all obligations.
Notwithstanding the foregoing, nothing contained in this Agreement shall relieve
any party from liability for damages resulting from the breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
8.02 LIMITATION ON LIABILITY.
(a) Subject to the limitations contained in Section 3.23,
representations, warranties, agreements, and indemnities of the Seller set forth
in this Agreement or in connection with the transactions contemplated hereby
shall survive the Closing for one year.
(b) For purposes of this Section 8.02(b), a party making a
claim for indemnity under Section 7.03 is hereinafter referred to as an
"Indemnified Party" and the party against whom such claim is asserted is
hereinafter referred to as the "Indemnifying Party." All claims by any
Indemnified Party under Section 7.03 shall be asserted and resolved in
accordance with the following provisions. If any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party is asserted against
or sought to be collected from such Indemnified Party by such third party, said
Indemnified Party shall with reasonable promptness notify in writing the
-22-
24
Indemnifying Party of such claim or demand stating with reasonable specificity
the circumstances of the Indemnified Party's claim for indemnification;
provided, however, that any failure to give such notice will not waive any
rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually prejudiced or to the extent that any applicable
period set forth in Section 8.01(b) has expired without such notice being given.
After receipt by the Indemnifying Party of such notice, then upon reasonable
notice from the Indemnifying Party to the Indemnified Party, or upon the request
of the Indemnified Party, the Indemnifying Party shall defend, manage and
conduct any proceedings, negotiations or communications involving any claimant
whose claim is the subject of the Indemnified Party's notice to the Indemnifying
Party as set forth above, and shall take all actions necessary, including but
not limited to the posting of such bond or other security as may be required by
any Governmental Authority, so as to enable the claim to be defended against or
resolved without expense or other action by the Indemnified Party. Upon request
of the Indemnifying Party, the Indemnified Party shall, to the extent it may
legally do so and to the extent that it is compensated in advance by the
Indemnifying Party for any costs and expenses thereby incurred,
(i) take such action as the Indemnifying Party may
reasonably request in connection with such action,
(ii) allow the Indemnifying Party to dispute such
action in the name of the Indemnified Party and to conduct a defense to such
action on behalf of the Indemnified Party, and
(iii) render to the Indemnifying Party all such
assistance as the Indemnifying Party may reasonably request in connection with
such dispute and defense.
8.03 NOTICES. Any notice, request, instruction, correspondence or other
document to be given hereunder by any party hereto to another (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed by registered or certified mail, postage prepaid and return receipt
requested, or by telecopier, as follows:
BUYER: E Com Ventures, Inc.
00000 X.X. 000xx Xxxx
Xxxxx, XX 00000
Facsimile: (000) 000-0000
E-Mail: xxxxx@xxxxxxxxxx.xxx
--------------------
Attention: Xxxx Xxxxxx
With a copy to:
--------------
Xxxxxxxxx Traurig, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telecopy No. (000) 000-0000
-23-
25
SELLER: Envision Development Corporation
0 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
E-Mail: xxxxxxxx@xxxxxxx.xxx
--------------------
Attention: Xxxxxxx X. Xxxxxx, CFO
With a copy to:
--------------
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
E-Mail: x_xxxxxxxx@xxxxxx.xxx
---------------------
Attention: Xxxx Xxxxxxxx, Esq.
ZERO: XXXX.XXX, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
E-Mail: xxx.xxxx.xxx
Attention: Xxxx Xxxxxxxxx
Each of the above addresses for notice purposes may be changed by providing
appropriate notice hereunder. Notice given by personal delivery or registered
mail shall be effective upon actual receipt. Notice given by telecopier shall be
effective upon actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next normal business day after
receipt if not received during the recipient's normal business hours. All
Notices by telecopier shall be confirmed by the sender thereof promptly after
transmission in writing by registered mail or personal delivery. Anything to the
contrary contained herein notwithstanding, notices to any party hereto shall not
be deemed effective with respect to such party until such Notice would, but for
this sentence, be effective both as to such party and as to all other persons to
whom copies are provided above to be given.
8.03 GOVERNING LAW. The provisions of this agreement and the documents
delivered pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Florida (excluding any conflict of law rule or
principle that would refer to the laws of another jurisdiction). Each party
hereto irrevocably submits to the jurisdiction of the Circuit Court of the State
of Florida, Miami-Dade County, in any action or proceeding arising out of or
relating to this Agreement or any of the Collateral Agreements, and each party
hereby irrevocably agrees that all claims in respect of any such action or
proceeding must be brought and/or defended in such court; provided, however,
that matters which are under the exclusive jurisdiction of the Federal courts
shall be brought in the Federal District Court for the Southern District of
Florida. Each party hereto consents to service of process by any means
authorized by the applicable law
-24-
26
of the forum in any action brought under or arising out of this Agreement or any
of the Collateral Agreements, and each party irrevocably waives, to the fullest
extent each may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court. EACH PARTY HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY
LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
ARISING HEREUNDER.
8.04 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of each of the parties to this Agreement shall be deemed to have been
made again at and as of the Closing by and on behalf of the party on behalf of
whom such certificates are delivered.
8.05 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with all exhibits and schedules attached hereto, constitutes the entire
agreement between and among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
8.06 BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned, by operation of law
or otherwise, by any party hereto without the prior written consent of the other
party, provided, however, that nothing herein shall prohibit the assignment of
Buyer's rights and obligations to any direct or indirect subsidiary or prohibit
the assignment of Buyer's rights (but not obligations) to any lender. Nothing in
this Agreement, express or implied, is intended to confer upon any person or
entity other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
8.07 REMEDIES. The rights and remedies provided by this Agreement are
cumulative, and the use of any one right or remedy by any party hereto shall not
preclude or constitute a waiver of its right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights and remedies
a party may have by law, statute or otherwise.
8.08 EXHIBITS AND SCHEDULES. The Exhibits and Schedules referred to
herein are attached hereto and incorporated herein by this reference. Disclosure
of a specific item in any one Schedule shall be deemed restricted only to the
Section to which such disclosure specifically relates except where (i) there is
an explicit cross-reference to another Schedule, and (ii) Buyer could reasonably
be expected to ascertain the scope of the modification to a representation
intended by such cross-reference.
-25-
27
8.09 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 REFERENCES AND CONSTRUCTION.
(a) Whenever required by the context, and is used in this
Agreement, the singular number shall include the plural and pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identification the person may require. References to
monetary amounts, specific named statutes and generally accepted accounting
principles are intended to be and shall be construed as references to United
States dollars, statutes of the United States of the stated name and United
States generally accepted accounting principles, respectively, unless the
context otherwise requires.
(b) The provisions of this Agreement shall be construed
according to their fair meaning and neither for nor against any party hereto
irrespective of which party caused such provisions to be drafted. Each of the
parties acknowledge that it has consulted with an attorney in connection with
the preparation and execution of this Agreement.
8.11 SURVIVAL. Any provision of this Agreement which contemplates
performance or the existence of obligations after the Closing Date, and any and
all representations and warranties set forth in this Agreement, shall not be
deemed to be merged into or waived by the execution and delivery of the
instruments executed at the Closing, but shall expressly survive Closing and
shall be binding upon the party or parties obligated thereby in accordance with
the terms of this Agreement, subject to any limitations expressly set forth in
this Agreement.
8.12 ATTORNEYS' FEES. In the event any suit or other legal proceeding
is brought for the enforcement of any of the provisions of this Agreement, the
parties hereto agree that the prevailing party or parties shall be entitled to
recover from the other party or parties upon final judgment on the merits
reasonable attorneys' fees (and sales taxes thereon, if any), including
attorneys' fees for any appeal, and costs incurred in bringing such suit or
proceeding.
ARTICLE IX. - DEFINITIONS
Capitalized terms used in this Agreement are used as defined in this
Article IX or elsewhere in this Agreement.
9.01 AFFILIATE. The term "Affiliate" shall mean, with respect to any
person, any other person controlling, controlled by or under common control with
such person. The term "Control" as used in the preceding sentence means, with
respect to a corporation, the right to exercise, directly or indirectly, more
than 50% of the voting rights attributable to the shares of the controlled
corporation and, with respect to any person other than a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person.
-26-
28
9.02 COLLATERAL AGREEMENTS. The term "Collateral Agreements" shall mean
any or all of the exhibits to this Agreement and any and all other agreements,
instruments or documents required or expressly provided under this Agreement to
be executed and delivered in connection with the transactions contemplated by
this Agreement.
9.03 CONTRACTS. The term "Contracts," when described as being those of
or applicable to any person, shall mean any and all contracts, agreements,
franchises, understandings, arrangements, leases, licenses, registrations,
authorizations, easements, servitudes, rights of way, mortgages, bonds, notes,
guaranties, liens, indebtedness, approvals or other instruments or undertakings
to which such person is a party or to which or by which such person or the
property of such person is subject or bound, excluding any Permits.
9.04 DAMAGES. The term "Damages" shall mean any and all damages,
liabilities, obligations, penalties, fines, judgments, claims, deficiencies,
losses, costs, expenses and assessments (including without limitation income and
other taxes, interest, penalties and attorneys' and accountants' fees and
disbursements).
9.05 FINANCIAL STATEMENTS. The term "Financial Statements" shall mean
any or all of the financial statements, including balance sheets and related
statements of income and statements of changes in financial position and the
accompanying notes thereto of the Company's business prepared (to the knowledge
of Seller's current officers and directors) in accordance with generally
accepted accounting principles consistently applied, except as may be otherwise
provided herein.
9.06 GOVERNMENTAL AUTHORITIES. The term "Governmental Authorities"
shall mean any nation or country (including but not limited to the United
States) and any commonwealth, territory or possession thereof and any political
subdivision of any of the foregoing, including but not limited to courts,
departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
9.07 HAZARDOUS MATERIAL. The term "Hazardous Material" means all or any
of the following: (a) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as "hazardous
substances," "hazardous materials," "Hazardous wastes," "toxic substances" or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity or "EP toxicity"; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million.
9.08 INVENTORY. The term "Inventory" shall mean all goods, merchandise
and other personal property owned and held for sale, and all raw materials,
works-in-process, materials and supplies of every nature which contribute to the
finished products of the Company in the
-27-
29
ordinary course of its business, specifically excluding, however, damaged,
defective or otherwise unsaleable items.
9.09 KNOWLEDGE OF THE COMPANY. The term "Knowledge of the Company"
shall mean the actual knowledge of any current director or officer of that
company.
9.10 LEGAL REQUIREMENTS. The term "Legal Requirements," when described
as being applicable to any person, shall mean any and all laws (statutory,
judicial or otherwise), ordinances, regulations, judgments, orders, directives,
injunctions, writs, decrees or awards of, and any Contracts with, any
Governmental Authority, in each case as and to the extent applicable to such
person or such person's business, operations or properties.
9.11 PERMITS. The term "Permits" shall mean any and all permits,
rights, approvals, licenses, authorizations, legal status, orders or Contracts
under any Legal Requirement or otherwise granted by any Governmental Authority.
9.12 PERSON. The term "Person" shall mean any individual, partnership,
joint venture, firm, corporation, association, limited liability company, trust
or other enterprise or any governmental or political subdivision or any agency,
department or instrumentality thereof.
9.13 PROPERTIES. The term "Properties" shall mean any and all
properties and assets (real, personal or mixed, tangible or intangible) owned or
used by the Company in connection with the Business but shall not include the
Non-Business Assets.
9.14 REAL PROPERTY. The term "Real Property" shall mean the real
property Used by the Company in the conduct of its business.
9.15 REGULATIONS. The term "Regulations" shall mean any and all
regulations promulgated by the Department of the Treasury pursuant to the
Internal Revenue Code.
-28-
30
9.16 USED. The term "Used" shall mean, with respect to the Properties,
Contracts or Permits of the Company, those owned, leased, licensed or otherwise
held by the Company which were acquired for use or held for use by the Company
in connection with the Company's Business and operations, whether or not
reflected on the Company's books of account EXECUTED as of the date first
written above.
BUYER:
E COM VENTURES, INC.
By: /s/XXXX XXXXXX
------------------------------------
Name: XXXX XXXXXX
Title: CHIEF EXECUTIVE OFFICER
COMPANY:
By: /s/XXXXXXX PATCH
------------------------------------
Name: XXXXXXX PATCH
Title: PRESIDENT AND COO
SELLER:
ENVISION DEVELOPMENT CORPORATION
By: /s/XXXXXXX PATCH
------------------------------------
Name: XXXXXXX PATCH
Title: PRESIDENT AND COO
ZERO:
XXXX.XXX, Inc.
By: /s/XXXX XXXXXXXXX
------------------------------------
Name: XXXX XXXXXXXXX
Title: CHIEF EXECUTIVE OFFICER
-29-
