EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is dated as of June 26, 1997 (the
"Agreement") by and among OCEAN OPTIQUE DISTRIBUTORS, INC., a Florida
corporation ("Ocean"); OCEAN ACQUISITION CORPORATION, a Florida corporation
("OAC"); SOLOVISION OPTICAL, INC., a Florida corporation ("Solovision"); XXXXXXX
XXXXXX ("Xxxxxx"); and XXXX XXXXXXXXX ("Xxxxxxxxx") and XXXXXX FAMILY TRUST
(collectively, the "Shareholders").
RECITALS:
The respective Boards of Directors of Ocean, OAC and Solovision deem it
desirable and in the best interests of their respective corporations and
shareholders that OAC merge with and into Solovision (the "Merger") in a
statutory merger in accordance with the laws of the State of Florida (the
"Applicable Statutes").
The parties desire that the Merger provided for herein shall qualify as
a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereby and the mutual representations, warranties, covenants and agreements
herein contained, the parties agree as follows:
ARTICLE I
MERGER
1.1 MERGER AND SURVIVING CORPORATION.
(a) Pursuant to the Applicable Statutes, OAC shall merge with
and into Solovision, and Solovision shall be the surviving corporation after the
Merger (the "Surviving Corporation") and shall continue to exist as a
corporation created and governed by the laws of the State of Florida under the
name "Solovision Optical, Inc."
(b) The Articles of Incorporation of the Surviving
Corporation, from and after the Effective Time of the Merger (as hereinafter
defined), shall be the Articles of Incorporation of Solovision.
(c) The Bylaws of the Surviving Corporation, from and after
the Effective Time of the Merger, shall be the Bylaws of Solovision.
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1.2 EFFECTIVENESS OF MERGER. Articles of Merger substantially in the
form set forth in Exhibit 1.2 hereto shall be delivered on the Closing Date (as
hereinafter defined) to the Secretary of State of Florida for filing in
accordance with the Applicable Statutes. The Merger shall become effective upon
the acceptance of such filing by the Secretary of State of Florida, which shall
be the "Effective Time of the Merger."
1.3 SHARES OF THE CONSTITUENT AND SURVIVING CORPORATIONS. The manner
and basis of converting and exchanging the shares of Solovision and the status
of OAC's shares shall be as follows:
(a) The shares of common stock, $1.00 par value per share, of
Solovision (the "Solovision Common Stock") outstanding at the Effective Time of
the Merger shall be converted into and become, without action on the part of the
holders thereof, an aggregate of 3,137,977 shares of the common stock, no par
value per share, of Ocean (the "Ocean Common Stock") plus 1,000,000 shares of
Series C Non-Cumulative Convertible Preferred Stock, no par value per share, of
Ocean (the "Ocean Preferred Stock"). Shares of Ocean Preferred Stock will be
entitled to vote together with the Ocean Common Stock as a single class on all
matters presented to a vote of shareholders, except as provided by law, and each
share of Ocean Preferred Stock shall be entitled to 7.155058 votes. Each share
of Ocean Preferred Stock shall be automatically converted into 7.155058 shares
of Ocean Common Stock upon the filing of an amendment to Ocean's Articles of
Incorporation increasing the number of authorized shares of Ocean Common Stock
to not less than 25,000,000 shares, and shall further have the rights and
preferences as set forth in Exhibit 1.3(a) hereto. The aggregate consideration
(the "Ocean Shares") payable by Ocean and OAC in consideration of the Merger
shall in no event equal less than 60% of the outstanding voting capital stock of
Ocean, on a fully diluted basis, after giving effect to the Merger. Each share
of Solovision Common Stock outstanding at the Effective Date of the Merger shall
be converted into and become 21,346.78 shares of Ocean Common Stock and 6,802.72
shares of Ocean Preferred Stock.
(b) Any shares of Solovision Common Stock held in the treasury
of Solovision at the Effective Time of the Merger shall be cancelled and
retired, and no shares or other securities of Ocean shall be issuable with
respect thereto. Prior to the Closing (as hereinafter defined), all outstanding
warrants, options and convertible securities issued by Solovision shall have
been cancelled.
(c) Each share of common stock, $.01 par value per share, of
OAC (the "OAC Common Stock") outstanding at the Effective Time of the Merger
shall be converted into and become one share of common stock, $1.00 par value
per share, of the Surviving Corporation, without action on the part of the
holder thereof.
(d) At the Closing, each holder of shares of Solovision Common
Stock who shall have delivered certificate(s) in negotiable form representing
all of such shares of Solovision Common Stock held by such shareholder shall be
entitled to receive in exchange therefor a certificate or certificates
representing such shareholder's pro rata portion of the Ocean Shares
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to be issued as specified in Section 1.3(a) hereof. Until so delivered, each
such outstanding certificate that immediately prior to the Effective Time of the
Merger represented shares of Solovision Common Stock shall be deemed for all
corporate purposes, but subject to the further provisions of this Article I, to
evidence the ownership of that number of Ocean Shares specified in Section
1.3(a) hereof for each share of Solovision Common Stock included therein.
1.4 EFFECT OF MERGER.
(a) Except as herein otherwise specifically set forth, the
corporate identity, existence, purposes, powers, franchises, rights and
immunities of Solovision shall continue unaffected and unimpaired by the Merger,
and the corporate identity, existence, purposes, powers, franchises, rights and
immunities of OAC shall be merged into Solovision, and Solovision, as the
Surviving Corporation and a wholly owned subsidiary of Ocean, shall be fully
vested therewith. The separate existence and corporate organization of OAC
(except insofar as they may be continued by statute) shall cease as of the
Effective Time of the Merger.
(b) At the Effective Time of the Merger:
(i) All and singular, the rights, privileges,
goodwill and franchises and all property, real, personal and mixed, and
all debts due on whatever accounts and all other things in action,
belonging to Solovision shall be, and they hereby are, bargained,
conveyed, granted, confirmed, transferred, assigned and set over to and
vested in the Surviving Corporation by operation of law and without
further act or deed, and all property and rights, and all and every
other interest of Solovision shall be the property, rights and
interests of the Surviving Corporation as they were of Solovision;
(ii) No action or proceeding, whether civil or
criminal, pending at the Effective Time of the Merger by or against
either OAC or Solovision, or any shareholder, officer or director
thereof, shall xxxxx or be discontinued by the Merger, but may be
enforced, prosecuted, settled or compromised as if the Merger had not
occurred, or the Surviving Corporation may be substituted in such
action or proceeding in place of Solovision; and
(iii) All rights of employees and creditors and all
liens upon the property of Solovision shall be preserved unimpaired,
limited to the property affected by such liens at the Effective Time of
the Merger, and all the debts, liabilities and duties of Solovision
shall be enforceable against the Surviving Corporation to the same
extent as if all such debts, liabilities and duties had been incurred
or contracted by it.
1.5 FURTHER ASSURANCES. Solovision, Xxxxxx and the Shareholders agree
that, from time to time, as and when requested by the Surviving Corporation or
by its successors and assigns, the last acting officers of Solovision, the
corresponding officers of the Surviving Corporation, or the Shareholders, as
applicable, shall, in the name of Solovision, execute and deliver, or cause to
be executed and delivered, at the sole expense of the Surviving Corporation,
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all deeds, assignments and other instruments and shall take or cause to be taken
all such other and further actions as the Surviving Corporation may deem
necessary or appropriate in order more fully to vest in and confirm to the
Surviving Corporation title to and possession of all the property, rights,
privileges, immunities, powers, purposes, franchises and all and every other
interest of Solovision referred to in Section 1.4 hereof and otherwise to carry
out the intent and purposes of this Agreement.
1.6 DIRECTORS OF SURVIVING CORPORATION. The persons constituting the
Board of Directors of the Surviving Corporation, who shall hold office from the
Effective Time of the Merger in accordance with its Bylaws until the next annual
meeting of shareholders and until their respective successors shall have been
elected and shall have qualified, shall be the persons who constituted the Board
of Directors of Solovision immediately prior to the Effective Time of the
Merger.
1.7 CLOSING; CLOSING DATE. The closing (the "Closing") provided for
herein shall take place at the offices of Broad and Xxxxxx, 000 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000 at 10:00 a.m. on the date of this
Agreement, or on such other date and at such other time as may be mutually
agreed to by the parties. Such date is referred to in this Agreement as the
"Closing Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SOLOVISION AND XXXXXX
For the purposes of this Article II, any reference to "Solovision" in a
particular representation and warranty shall, where appropriate, also include
Sorrento Eyewear, Inc., a Florida corporation ("Sorrento"), an affiliate of
Solovision that was merged into Solovision in June 1997 prior to the date of
this Agreement, unless there is also an express reference to Sorrento in the
particular text.
Solovision, Xxxxxx and the Xxxxxx Family Trust, jointly and severally,
make the following representations and warranties to Ocean and OAC:
2.1 VALID CORPORATE EXISTENCE; QUALIFICATION. Solovision is a
corporation duly organized, validly existing and, except as set forth on
Schedule 2.1 attached hereto, in good standing under the laws of the State of
Florida. Solovision has the corporate power to carry on its business as now
conducted and to own its assets. Solovision is not qualified to conduct business
in any foreign jurisdiction, there being no foreign jurisdictions in which the
failure to qualify would have a material adverse effect on Solovision and its
assets, properties or business, and there has not been any claim by any
jurisdiction to the effect that Solovision is required to qualify or otherwise
be authorized to do business as a foreign corporation therein. The copies of
Solovision's Articles of Incorporation, as amended to date (certified by the
Secretary of State of Florida), and Solovision's Bylaws, as amended to date
(certified by Solovision's Secretary),
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are true and complete copies of those documents as in effect on the date hereof.
The minute books of Solovision contain accurate records of all meetings of its
Board of Directors and all committees thereof and of its shareholders since its
incorporation, and accurately reflect all transactions referred to therein.
2.2 CAPITALIZATION. The authorized capital stock of Solovision consists
of 1,000 shares of Solovision Common Stock, of which 147 shares are currently
issued and outstanding and will be issued and outstanding as of the Closing. All
of such issued and outstanding shares of Solovision Common Stock are duly
authorized, validly issued, fully paid and nonassessable and are owned of record
and beneficially by the holders thereof as set forth on Schedule 2.2 hereto.
Except as set forth on Schedule 2.2, there are no subscriptions, options,
warrants, rights or calls or other commitments or agreements to which Solovision
is a party or by which it is bound, calling for the issuance, transfer, sale or
other disposition of any class of securities of Solovision, and there are no
outstanding securities of Solovision convertible or exchangeable, actually or
contingently, into shares of Solovision Common Stock or any other securities of
Solovision. All transfer taxes, if any, with respect to transfers of capital
stock of Solovision made prior to the date hereof have been paid.
2.3 SUBSIDIARIES. Solovision has no subsidiaries and does not directly
or indirectly control any corporations, partnerships or other business entities.
2.4 CONSENTS. No consent of any governmental or other regulatory
agencies, foreign or domestic, or any other third parties is required to be
received by or on the part of Solovision to enable Solovision to enter into and
carry out this Agreement.
2.5 CORPORATE AUTHORITY; BINDING NATURE OF AGREEMENT. Solovision has
the power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby has been duly authorized by the Board of
Directors and shareholders of Solovision, and no other corporate proceedings on
the part of Solovision or its shareholders are necessary to authorize the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement constitutes the valid and
binding obligation of each of Solovision, Xxxxxx and the Shareholders and is
enforceable against each of Solovision, Xxxxxx and the Shareholders and in
accordance with its terms.
2.6 FINANCIAL STATEMENTS. The audited financial statements of
Solovision at December 31, 1996 and 1995, and for the years then ended, and of
Sorrento at December 31, 1996, and for the year then ended, and the unaudited
financial statements of each of Solovision and Sorrento at March 31, 1997, and
for the three months then ended (collectively, the "Solovision Financial
Statements"), copies of which are attached hereto as Schedule 2.6, (a) are true,
correct and complete, (b) are in accordance with the books and records of
Solovision and Sorrento, (c) fairly, completely and accurately present the
financial position of Solovision and Sorrento as of such dates and the results
of their operations for such periods, and (d) were prepared in conformity with
generally accepted accounting principles consistently applied throughout the
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periods covered thereby and with the requirements of Regulation S-B, promulgated
by the Securities and Exchange Commission (the "SEC"). Such audited financial
statements have been audited by Xxxxxxx & Xxxxx, independent certified public
accountants, whose report thereon is included therein.
2.7 LIABILITIES. As of March 31, 1997 (the "Solovision Balance Sheet
Date"), neither Solovision nor Sorrento had any material debts, liabilities or
obligations, contingent or absolute, other than those debts, liabilities and
obligations reflected or reserved against in the balance sheet of Solovision or
Sorrento, as the case may be, as of the Solovision Balance Sheet Date (the
"Solovision Balance Sheet"). On or before the Closing Date, each of Xxxxxx and
Xxxxxxxxx shall have contributed to the capital of Solovision or Sorrento, as
appropriate, any shareholder loans made to either of those corporations by him
or any of his affiliates, except for a $100,000 loan to Solovision from SAO Lens
& Equipment Co.
2.8 ACTIONS SINCE THE SOLOVISION BALANCE SHEET DATE. Except as
otherwise expressly provided or set forth in, or required by, this Agreement, or
as set forth in Schedule 2.8 hereto, since the Solovision Balance Sheet Date,
neither Solovision nor Sorrento has: (a) issued or sold, or agreed to issue or
sell, any of its capital stock, options, warrants, rights or calls to purchase
such stock, any securities convertible or exchangeable into such capital stock
or other corporate securities, or effected any subdivision or other
recapitalization affecting its capital stock; (b) incurred any material
obligation or liability, absolute or contingent, except those arising in the
ordinary and usual course of business or in connection with the transactions
contemplated hereby; (c) discharged or satisfied any lien or encumbrance, except
in the ordinary and usual course of business, or paid or satisfied any
liability, absolute or contingent, other than liabilities as of the Solovision
Balance Sheet Date and current liabilities incurred since the Solovision Balance
Sheet Date in the ordinary and usual course of business; (d) made any wage or
salary increases or granted any bonuses other than wage and salary increases and
bonuses granted in accordance with its normal salary increase and bonus
policies; (e) mortgaged, pledged or subjected to any lien, pledge, charge or
other encumbrance any of its properties or assets, or permitted any of its
property or assets to be subjected to any lien, pledge, charge or other
encumbrance, except in the ordinary and usual course of business; (f) sold,
assigned or transferred any of its properties or assets, except in the ordinary
and usual course of business; (g) other than this Agreement or the transactions
contemplated hereby, entered into any transaction or course of conduct not in
the ordinary and usual course of business; (h) waived any rights of substantial
value, or cancelled, modified or waived any indebtedness for borrowed money held
by it, except in the ordinary and usual course of business; (i) declared, paid
or set aside any dividends or other distributions or payments on its capital
stock, or redeemed or repurchased, or agreed to redeem or repurchase, any shares
of its capital stock; (j) made any loans or advances to any person, or assumed,
guaranteed, endorsed or otherwise became responsible for the obligations of any
person; or (k) incurred any indebtedness for borrowed money (except endorsement,
for collection or deposit, of negotiable instruments received in the ordinary
and usual course of business). Copies of each of Solovision's and Sorrento's
accounts payable list as of June 26, 1997, are attached as part of Schedule 2.8.
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2.9 ADVERSE DEVELOPMENTS. Since the Solovision Balance Sheet Date,
there have been no material adverse changes in the assets, properties,
operations or financial condition of Solovision, and no event has occurred that
could be reasonably expected to have a material adverse effect upon the business
of Solovision and neither Solovision, after reasonable inquiry, Xxxxxx nor any
of the Shareholders is aware of any development or threatened development of a
nature that has, or that could be reasonably expected to have, a material
adverse effect upon the business of Solovision or upon any of its assets,
properties, operations or financial condition.
2.10 TAXES. Except as set forth in Schedule 2.10 hereto, all taxes,
including, without limitation, income, property, sales, use, franchise, capital
stock, excise, value added, employees' income withholding, social security and
unemployment taxes imposed by the United States, by any state, locality or
foreign country, or by any other taxing authority, which have or may become due
or payable by Solovision and all interest and penalties thereon, whether
disputed or not, have been paid in full or adequately provided for by reserves
shown in the Solovision Financial Statements; all deposits required by law to be
made by Solovision or with respect to estimated income, franchise and employees'
withholding taxes have been duly made; and all tax returns, including estimated
tax returns, required to be filed have been duly filed. No extension of time for
the assessment of deficiencies for any year is in effect. Except as set forth in
Schedule 2.10, no deficiency notice is proposed, or, to the knowledge of
Solovision, after reasonable inquiry, or to the knowledge of Xxxxxx or any of
the Shareholders, threatened against Solovision. Except as set forth on Schedule
2.10, the federal and state income tax returns of Solovision have never been
audited.
2.11 OWNERSHIP OF ASSETS; TRADEMARKS, PATENTS. Schedule 2.11 hereto
sets forth a true and complete list of all personal property owned by Solovision
with a value greater than $5,000. Except as set forth in Schedule 2.11,
Solovision owns outright, and has good and marketable title to all of its
assets, properties and businesses (including all assets reflected in the
Solovision Balance Sheet, except as the same may have been disposed of in the
ordinary and usual course of business since the Solovision Balance Sheet Date),
free and clear of all liens, mortgages, pledges, claims, conditional sales
agreements, restrictions on transfer or other encumbrances or charges
whatsoever. Schedule 2.11 sets forth a true and complete list and brief
description of all patents, copyrights, trademarks, trade names or other similar
intangible assets that are owned by Solovision or in which Solovision has an
interest. Except as set forth in Schedule 2.11, no other person, firm or
corporation has any proprietary or other interest in any such intangible assets.
Such assets so owned are sufficient to permit Solovision to conduct its business
as now conducted. Except as set forth in Schedule 2.11, Solovision is not a
party to or bound by any license or agreement requiring the payment to any
person, firm or corporation of any royalty. Solovision is not infringing upon
any patent, copyright, trade name or trademark or otherwise is violating the
rights of any third party with respect thereto, and no proceedings have been
instituted and no claim has been received by Solovision alleging any such
violation.
2.12 INSURANCE. Schedule 2.12 hereto sets forth a true and complete
list and brief description of all policies of fire, liability and other forms of
insurance held by Solovision. Except as set forth in Schedule 2.12, such
policies are valid, outstanding and enforceable
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policies, as to which premiums have been paid currently, are with reputable
insurers believed by Solovision, after reasonable inquiry, to be financially
sound and are consistent with the practices of similar concerns engaged in
substantially similar operations as those currently conducted by Solovision.
Except as set forth in Schedule 2.12, neither Solovision, after reasonable
inquiry, Xxxxxx nor any of the Shareholders is aware of any state of facts or of
the occurrence of any event that might reasonably (a) form the basis for any
material claim against Solovision not fully covered by insurance for liability
on account of any express or implied warranty or tortious omission or
commission, or (b) result in a material increase in insurance premiums.
2.13 LITIGATION; COMPLIANCE WITH LAW. Except as set forth in Schedule
2.13 hereto, there are no actions, suits, proceedings or governmental
investigations relating to Solovision or any of its properties, assets or
businesses pending or, to the knowledge of Solovision, after reasonable inquiry,
or to the knowledge of Xxxxxx or any of the Shareholders, threatened, or any
order, injunction, award or decree outstanding against Solovision or against or
relating to any of its properties, assets or businesses; and neither Solovision,
Xxxxxx nor any of the Shareholders is aware of any basis for any such action,
suit, proceeding, governmental investigation, order, injunction or decree.
Solovision is not in violation of any law, regulation, ordinance, order,
injunction, decree, award, or other requirement of any governmental body, court
or arbitrator relating to its properties, assets or business, the violation of
which would have a material adverse effect on Solovision.
2.14 REAL PROPERTY. Schedule 2.14 hereto sets forth a brief description
of all real properties that are owned by or leased to Solovision, including
Solovision's interest therein. Except as set forth in Schedule 2.14, Solovision
does not own outright the fee simple title in and to any real property. The real
property leases described in Schedule 2.14 that relate to the leased properties
described therein are in full force and effect, and all amounts payable
thereunder have been paid. All uses of such real property by Solovision conform
in all material respects to the terms of the leases relating thereto and, to the
knowledge of Solovision, Xxxxxx and the Shareholders, conform in all material
respects to all applicable building and zoning ordinances, laws and regulations.
None of such leases may be expected to result in the expenditure of material
sums for the restoration of the premises upon the expiration of their respective
terms.
2.15 AGREEMENTS AND OBLIGATIONS; PERFORMANCE. Except as listed and
briefly described in Schedule 2.15 hereto (the "Solovision Listed Agreements"),
Solovision is not a party to, or bound by, any: (a) written or oral agreement or
other contractual commitment, understanding or obligation that involves
aggregate payments or receipts in excess of $5,000 (such agreements are listed
in Schedule 2.15); (b) contract, arrangement, commitment or understanding that
involves aggregate payments or receipts in excess of $5,000 that cannot be
cancelled on 30 days' or less notice without penalty or premium or any
continuing obligation or liability (such agreements are listed in Schedule
2.15); (c) contractual obligation or contractual liability of any kind to any
shareholders of Solovision; (d) contract, arrangement, commitment or
understanding with their customers or any officer, employee, shareholder,
director, representative or agent
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thereof for the repurchase of products, sharing of fees, the rebating of charges
to such customers, bribes, kickbacks from such customers or other similar
arrangements; (e) contract for the purchase or sale of any materials, products
or supplies that contains, or that commits or will commit them for, a fixed term
(such agreements are listed in Schedule 2.15); (f) contract of employment with
any officer or employee not terminable at will without penalty or premium or any
continuing obligation or liability; (g) deferred compensation, bonus or
incentive plan or agreement not cancelable at will without penalty or premium or
any continuing obligation or liability; (h) management or consulting agreement
not terminable at will without penalty or premium or any continuing obligation
or liability; (i) lease for real or personal property (including borrowings
thereon), license or royalty agreement; (j) agreement, commitment or
understanding relating to indebtedness for borrowed money; (k) union or other
collective bargaining agreement; (l) contract that, by its terms, requires the
consent of any party thereto to the consummation of the transactions
contemplated hereby; (m) contract containing covenants limiting the freedom of
Solovision to engage or compete in any line or business or with any person in
any geographical area; (n) contract or option relating to the acquisition or
sale of any business; (o) voting trust agreement or similar shareholders'
agreement; (p) option for the purchase of any asset, tangible or intangible; or
(q) other contract, agreement, commitment or understanding that materially
affects any of its properties, assets or business, whether directly or
indirectly, or that was entered into other than in the ordinary course of
business. A true and correct copy of each of the written Solovision Listed
Agreements has been delivered to Ocean. Solovision has in all material respects
performed all obligations required to be performed by it to date under all of
the Solovision Listed Agreements, is not in default in any material respect
under any of the Solovision Listed Agreements, and has received no notice of any
default or alleged default thereunder which has not heretofore been cured or
which notice has not heretofore been withdrawn. Neither Solovision, after
reasonable inquiry, Xxxxxx nor any of the Shareholders is aware of any material
default under any of the Solovision Listed Agreements by any other party thereto
or by any other person, firm or corporation bound thereunder except as set forth
in the Solovision Financial Statements. Copies of lists of Solovision's or
Sorrento's customers or suppliers have been delivered to Ocean.
2.16 CONDITION OF ASSETS. Except for servicing requirements, all
machinery and equipment used by Solovision in the conduct of its business are in
good operating condition and repair, ordinary wear and tear excepted. The
inventories of Solovision are and will be in usable and saleable condition, and
each item of such inventory is saleable at least at the value at which it is
carried on its books.
2.17 ACCOUNTS RECEIVABLE. All of the accounts receivable of Solovision
reflected in the Solovision Financial Statements, except those owed to it since
the dates thereof, which are subject to the reserves reflected in the Solovision
Financial Statements, constitute bona fide accounts receivable resulting from
bona fide sales of services or goods in the ordinary course of its business, and
neither Solovision, after reasonable inquiry, Xxxxxx nor any Shareholder knows,
nor does it have reason to know, of any valid defense or right of set-off to the
rights of Solovision to collect such accounts receivable in full, less such
reserves. Copies of each of
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Solovision's and Sorrento's accounts receivable list as of June 26, 1997, are
attached hereto as Schedule 2.17.
2.18 PERMITS AND LICENSES. Schedule 2.18 hereto sets forth a true and
complete list of all permits, licenses, orders, franchises and approvals from
all federal, state, local and foreign governmental regulatory bodies held by
Solovision. Solovision has all permits, licenses, orders and approvals of all
federal, state, local and foreign governmental or regulatory bodies required to
carry on its business as currently conducted and to sell its services and
products; all such permits, licenses, orders, franchises and approvals are in
full force and effect, and, to the knowledge of Solovision, Xxxxxx and the
Shareholders, no suspension or cancellation of any of such permits, licenses,
orders, franchises and approvals is threatened; and Solovision is in compliance
in all material respects with all requirements, standards and procedures of the
federal, state, local and foreign governmental bodies that have issued such
permits, licenses, orders, franchises and approvals. Schedule 2.11 also sets
forth a brief description of all vans, automobiles, trucks or other vehicles
owned or leased by Solovision and the state of title thereof.
2.19 INTEREST IN ASSETS. Except as set forth in Schedule 2.14 hereto
with respect to the real property leased by Solovision, no officer, director or
holder of capital stock of Solovision or any affiliate thereof owns any property
or rights, tangible or intangible, used in or related, directly or indirectly,
to the business of Solovision.
2.20 SALARY INFORMATION. Schedule 2.20 hereto contains a true and
complete list of the names and current salary rates of and bonus commitments to
all present officers of Solovision and all other employees whose base annual
compensation exceeds $30,000.
2.21 EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 2.21
hereto, Solovision does not maintain, or make any employer contributions under,
any "pension" or "welfare" benefit plans, as defined by the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
2.22 NO BREACH. Neither the execution and delivery of this Agreement,
nor compliance by Solovision with any of the provisions hereof, nor the
consummation of the transactions contemplated hereby, will:
(a) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Solovision;
(b) violate or, alone or with notice or the passage of time,
result in the material breach or termination of, or otherwise give any
contracting party the right to terminate, or declare a default under, the terms
of any agreement or other document or undertaking, oral or written, to which
Solovision is a party or by which it or any of its properties or assets may be
bound (except for such violations, conflicts, breaches or defaults as to which
required waivers or consents by other parties have been, or will, prior to the
Closing, be, obtained);
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(c) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Solovision;
(d) violate any judgment, order, injunction, decree or award
against, or binding upon, Solovision or any of its properties or assets; or
(e) violate any law or regulation of any jurisdiction relating
to Solovision or its securities, assets or properties, the violation of which
would have a material adverse effect on Solovision.
2.23 BROKERS. Except as set forth in Schedule 2.23 hereto, neither
Solovision, Xxxxxx nor any of the Shareholders has engaged, consented to or
authorized any broker, finder, investment banker or other third party to act on
its behalf, directly or indirectly, as a broker or finder in connection with the
transactions contemplated by this Agreement, and Solovision, Xxxxxx and the
Shareholders agree to indemnify Ocean and OAC against, and to hold them harmless
from, any claim for brokerage or similar commissions or other compensation that
may be made against Ocean or OAC by any third party in connection with the
transactions contemplated hereby, which claim is based upon any action by
Solovision, Xxxxxx or any of the Shareholders.
2.24 UNTRUE OR OMITTED FACTS. No representation, warranty or statement
furnished by or to be furnished by Solovision, Xxxxxx or any of the Shareholders
in this Agreement or in any certificate, schedule or document delivered pursuant
to this Agreement contains any untrue statement of a material fact, or omits to
state a fact necessary in order to make such representations, warranties or
statements not misleading. Without limiting the generality of the foregoing,
there is no fact known to Solovision, after reasonable inquiry, Xxxxxx or any of
the Shareholders that has had, or that may be reasonably expected to have, a
material adverse effect on Solovision or any of its assets, properties,
operations or businesses that has not been disclosed in this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF OCEAN AND OAC
Ocean and OAC, jointly and severally, make the following
representations and warranties to Solovision:
3.1 VALID CORPORATE EXISTENCE; QUALIFICATION. Ocean and OAC are
corporations duly organized, validly existing and, except as set forth on
Schedule 3.1 attached hereto, in good standing under the laws of the State of
Florida. Each of Ocean and OAC has the corporate power to carry on its business
as now conducted and to own its assets. Ocean and OAC are not qualified to
conduct business in any foreign jurisdiction, there being no foreign
jurisdictions in which the failure to qualify would have a material adverse
effect on Ocean or OAC. There has
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not been any claim by any jurisdiction to the effect that Ocean is required to
qualify or otherwise be authorized to do business as a foreign corporation
therein. The copies of Ocean's and OAC's Articles of Incorporation, as amended
to date (as certified by the Secretary of State of Florida) and Ocean's and
OAC's Bylaws, as amended to date (as certified by the Secretary of Ocean and
OAC, respectively), which have heretofore been delivered to Solovision, are true
and complete copies of those documents as now in effect. The minute books of
Ocean and OAC contain accurate records of all meetings of their respective
Boards of Directors and all committees thereof and of their respective
shareholders since their incorporation, and accurately reflect all transactions
referred to therein.
3.2 CAPITALIZATION. The authorized capital stock of OAC consists of
1,000 shares of OAC Common Stock, 100 shares of which are issued and outstanding
and owned of record and beneficially by Ocean. All of such issued and
outstanding shares of OAC Common Stock are duly authorized, validly issued,
fully paid and nonassessable. The authorized capital stock of Ocean consists of
10,000,000 shares of Ocean Common Stock, of which 3,767,589 shares are issued
and outstanding and 3,094,434 are reserved for issuance, and 5,000,000 shares of
Ocean Preferred Stock, of which 1,164,508 shares have been issued and a lesser
number of which are currently outstanding as a result of conversions to date
into shares of Ocean Common Stock of shares of Ocean's Series A Cumulative
Convertible 3% Preferred Stock (the "Series A Preferred Stock"). The number of
issued and outstanding shares of Ocean Common Stock may increase, and the number
of shares of Ocean Common Stock reserved for issuance may decrease by a like
number, because of certain pending conversions into Ocean Common Stock of
certain 8% Five-Year Convertible Subordinated Debentures and certain shares of
the Series A Preferred Stock. All of such issued and outstanding shares of Ocean
Common Stock and Ocean Preferred Stock are duly authorized, validly issued,
fully paid and nonassessable. The Ocean Shares to be issued and delivered as
contemplated by Section 1.3 hereof are duly and validly authorized and, when so
issued and delivered, will be duly and validly issued, fully paid and
nonassessable and there will not be any preemptive rights with respect to the
Ocean Shares. Except as set forth in Schedule 3.2 hereto, there are no
subscriptions, options, warrants, rights or calls or other commitments or
agreements to which Ocean or OAC is a party or by which either of them is bound,
calling for the issuance, transfer, sale or other disposition of any class of
securities of Ocean or OAC. Except as set forth in Schedule 3.2, there are no
outstanding securities of Ocean convertible or exchangeable, actually or
contingently, into shares of Ocean Common Stock, Ocean Preferred Stock, OAC
Common Stock or any other securities of Ocean or OAC. All transfer taxes, if
any, with respect to transfers of capital stock of Ocean or OAC made prior to
the date hereof have been paid.
3.3 SUBSIDIARIES. Schedule 3.3 hereto sets forth a complete list of the
names, jurisdictions of incorporation and capital stock of all corporations,
partnerships and other business entities controlled by Ocean (collectively, the
"Ocean Subsidiaries"). Each of the Ocean Subsidiaries are corporations duly
organized, validly existing and, except as set forth on Schedule 3.1 attached
hereto, in good standing under the laws of the jurisdiction of their
incorporation and have the corporate power to carry on their business as now
conducted and to own their assets. Each of the Ocean Subsidiaries are duly
qualified to do business and are in
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good standing as foreign corporations in the jurisdictions set forth on Schedule
3.3, such jurisdictions being the only foreign jurisdictions in which the
failure to qualify would have a material adverse effect on the Ocean
Subsidiaries and their respective assets, properties or businesses, and there
has not been a claim by any jurisdiction to the effect that they are required to
qualify or otherwise be authorized to do business as a foreign corporation
therein. All of the outstanding capital stock of each of the Ocean Subsidiaries
is validly issued, fully paid and non-assessable and all of the shares of such
capital stock that are owned by Ocean or the Ocean Subsidiaries are free and
clear of all liens, claims, charges or encumbrances of any nature whatsoever.
There are no outstanding securities convertible into shares of capital stock or
any subscriptions, options, warrants, rights or calls, or other commitments or
agreements to which Ocean or any of the Ocean Subsidiaries are a party or by
which it or any of them are bound, calling for the issuance, transfer, sale or
disposition of any of the capital stock or other securities of any of the Ocean
Subsidiaries. Copies of the Articles of Incorporation and Bylaws, as amended to
date, of each of the Ocean Subsidiaries, which have heretofore been delivered to
Solovision, are true and complete copies of those documents, as in effect on the
date hereof. The minute books of the Ocean Subsidiaries contain accurate records
of all meetings of their respective Boards of Directors and all committees
thereof and of their shareholders since their respective dates of incorporation,
and accurately reflect all transactions referred to therein. Except as set forth
on Schedule 3.3 and except for investments in the Ocean Subsidiaries, neither
Ocean nor any of the Ocean Subsidiaries have made any investments in, or owns,
any of the capital stock of, or any other proprietary interest in any other
corporation, partnership or other business entity.
3.4 CONSENTS. Schedule 3.4 hereto sets forth a true and complete list
of all consents of governmental and other regulatory agencies, foreign or
domestic, and of other third parties (other than OAC's shareholders) required to
be received by or on the part of Ocean or OAC to enable them to enter into and
carry out this Agreement in all material respects. All such requisite consents
have been, or prior to the Closing will have been, obtained.
3.5 CORPORATE AUTHORITY; BINDING NATURE OF AGREEMENT. Each of Ocean and
OAC has the corporate power to enter into this Agreement and to carry out their
respective obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Boards of Directors of Ocean and OAC and no other corporate
proceedings on the part of Ocean or OAC are necessary to authorize the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement constitutes the valid and binding
obligations of each of Ocean and OAC and is enforceable against them in
accordance with its terms.
3.6 FINANCIAL STATEMENTS. The audited consolidated financial statements
of Ocean at June 30, 1996 and 1995, and for the years then ended, and the
unaudited consolidated financial statements of Ocean at March 31, 1997, and for
the nine months then ended (collectively, the "Ocean Financial Statements"),
copies of which are attached hereto as Schedule 3.6, (a) are true, correct and
complete, (b) are in accordance with the books of records of Ocean and the Ocean
Subsidiaries, (c) fairly, completely and accurately present the financial
position of Ocean and
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the Ocean Subsidiaries as of such dates and the results of its operations for
such periods, and (d) were prepared in conformity with generally accepted
accounting principles consistently applied throughout the periods covered
thereby and with the requirements of Regulation S-B, promulgated by the SEC.
Such audited financial statements have been audited by Xxxxx Xxxxxxxx LLP,
independent certified public accountants, whose report thereon is included
therein.
3.7 LIABILITIES. As at March 31, 1997 (the "Ocean Balance Sheet Date"),
Ocean and the Ocean Subsidiaries have no material debts, liabilities or
obligations, contingent or absolute, other than those debts, liabilities and
obligations reflected or reserved against in Ocean's consolidated balance sheet
at the Ocean Balance Sheet Date (the "Ocean Balance Sheet").
3.8 ACTIONS SINCE THE OCEAN BALANCE SHEET DATE. Except as otherwise
expressly provided or set forth in, or required by, this Agreement, or as set
forth in Schedule 3.8 hereto, since the Ocean Balance Sheet Date, neither Ocean
nor any of the Ocean Subsidiaries have: (a) issued or sold, or agreed to issue
or sell any of their capital stock, options, warrants, rights or calls to
purchase such stock, any securities convertible or exchangeable into such
capital stock or other corporate securities, or effected any subdivision or
other recapitalization affecting its capital stock; (b) incurred any material
obligation or liability, absolute or contingent, except those arising in the
ordinary and usual course of business or in connection with the transactions
contemplated hereby; (c) discharged or satisfied any lien or encumbrance, except
in the ordinary and usual course of business, or paid or satisfied any
liability, absolute or contingent, other than liabilities as at the Ocean
Balance Sheet Date and current liabilities incurred since the Ocean Balance
Sheet Date in the ordinary and usual course of business; (d) made any wage or
salary increases or granted any bonuses other than wage and salary increases and
bonuses granted in accordance with its normal salary increase and bonus
policies; (e) mortgaged, pledged or subjected to any lien, pledge, charge or
other encumbrance any of its properties or assets, or permitted any of their
property or assets to be subjected to any lien, pledge, charge or other
encumbrance, except in the ordinary and usual course of business; (f) sold,
assigned or transferred any of their properties or assets, except in the
ordinary and usual course of business; (g) other than this Agreement or the
transactions contemplated thereby, entered into any transaction or course of
conduct not in the ordinary and usual course of business; (h) waived any rights
of substantial value, or cancelled, modified or waived any indebtedness for
borrowed money held by it, except in the ordinary and usual course of business;
(i) declared, paid or set aside any dividends or other distributions or payments
on its capital stock, or redeemed or repurchased, or agreed to redeem or
repurchase, any shares of their capital stock; (j) made any loans or advances to
any person, or assumed, guaranteed, endorsed or otherwise became responsible for
the obligations of any person; or (k) incurred any indebtedness for borrowed
money (except for endorsement, for collection or deposit, of negotiable
instruments received in the ordinary and usual course of business). Copies of
the accounts payable lists of Ocean as of June 14, 1997, and of Classic Optical,
Inc., a Michigan corporation ("Classic Optical") as of June 16, 1997, are
attached as part of Schedule 3.8. As of the close of business on June 25, 1997,
Ocean had at least $400,000 from the combination of cash, cash equivalents and
credit availability under the Coast Business Credit loan.
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3.9 ADVERSE DEVELOPMENTS. Since the Ocean Balance Sheet Date, there
have been no material adverse changes in the assets, properties, operations or
financial condition of Ocean or the Ocean Subsidiaries, and no event has
occurred that could be reasonably expected to have a material adverse effect
upon the business of Ocean or the Ocean Subsidiaries, and Ocean is not aware,
after reasonable inquiry, of any development or threatened development of a
nature that has, or that could be reasonably expected to have, a material
adverse effect upon the business of Ocean or the Ocean Subsidiaries or upon any
of their respective assets, properties, operations or financial condition.
3.10 TAXES. Except as set forth in Schedule 3.10 hereto, all taxes,
including, without limitation, income, property, sales, use, franchise, capital
stock, excise, value added, employees' income withholding, social security and
unemployment taxes imposed by the United States, by any state, locality or
foreign country, or by any other taxing authority, which have or may become due
or payable by Ocean or the Ocean Subsidiaries and all interest and penalties
thereon, whether disputed or not, have been paid in full or adequately provided
for by reserves shown in the Ocean Financial Statements; all deposits required
by law to be made by Ocean or the Ocean Subsidiaries or with respect to
estimated income, franchise and employees' withholding taxes have been duly
made; and all tax returns, including estimated tax returns, required to be filed
have been duly filed. No extension of time for the assessment of deficiencies
for any year is in effect. Except as set forth in Schedule 3.10, no deficiency
is proposed or to the knowledge of Ocean, after reasonable inquiry, threatened
against Ocean or the Ocean Subsidiaries. Except as set forth on Schedule 3.10,
the federal and state income tax returns of Ocean and the Ocean Subsidiaries
have never been audited.
3.11 OWNERSHIP OF ASSETS, TRADEMARKS, PATENTS. Schedule 3.11 hereto,
sets forth a true and complete list of all personal property owned by Ocean and
the Ocean Subsidiaries with a value greater than $20,000. Except as set forth in
Schedule 3.11, each of Ocean and the Ocean Subsidiaries own outright, and have
good and marketable title to all of their respective assets, properties and
businesses (including all assets reflected in the Ocean Balance Sheet, except as
the same may have been disposed of in the ordinary and usual course of business
since the Ocean Balance Sheet Date) free and clear of all liens, mortgages,
pledges, claims, conditional sales agreements, restrictions on transfer or other
encumbrances or charges whatsoever. Schedule 3.11 sets forth a true and complete
list and brief description of all patents, copyrights, trademarks, trade names
or other similar intangible assets that are owned by Ocean or the Ocean
Subsidiaries or in which either it or the Ocean Subsidiaries have an interest.
Except as set forth on Schedule 3.11, no other person, firm or corporation has
any proprietary or other interest in any such intangible assets. Such assets so
owned are sufficient to permit Ocean and the Ocean Subsidiaries to conduct its
business as now conducted. Except as set forth on Schedule 3.11, neither Ocean
nor any of the Ocean Subsidiaries is a party to or bound by any license or
agreement requiring the payment to any person, firm or corporation of any
royalty. Neither Ocean nor any of the Ocean Subsidiaries are infringing upon any
patent, copyright, trade name or trademark or otherwise is violating the rights
of any third party with respect thereto, and no proceedings have instituted and
no claim has been received by Ocean or the Ocean Subsidiaries alleging any such
violation.
3.12 INSURANCE. Schedule 3.12 hereto sets forth a true and complete
list and brief description of all policies of fire, liability and other forms of
insurance held by Ocean and the Ocean Subsidiaries. Except as set forth in
Schedule 3.12, such policies are valid, outstanding
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and enforceable policies, as to which premiums have been paid currently, are
with reputable insurers believed by Ocean, after reasonable inquiry, to be
financially sound and are consistent with the practices of similar concerns
engaged in substantially similar operations as those currently conducted by
Ocean and the Ocean Subsidiaries. Except as set forth in Schedule 3.12, Ocean is
not aware, after reasonable inquiry, of any state of facts or of the occurrence
of any event that might reasonably (a) form the basis for any material claim
against Ocean or any of the Ocean Subsidiaries not fully covered by insurance
for liability on account of any express or implied warranty or tortious omission
or commission, or (b) result in a material increase in insurance premiums.
3.13 LITIGATION; COMPLIANCE WITH LAW. Except as set forth in Schedule
3.13 hereto, there are no actions, suits, proceedings or governmental
investigations relating to Ocean or the Ocean Subsidiaries or any of their
respective properties, assets or businesses pending or, to the knowledge of
Ocean, threatened, or any order, injunction, award or decree outstanding,
against Ocean or the Ocean Subsidiaries or against or relating to any of their
respective properties, assets or businesses; and Ocean is not aware, after
reasonable inquiry, of any basis for any such action, suit, proceeding,
governmental investigation, order, injunction or decree. Neither Ocean nor any
of the Ocean Subsidiaries are in violation of any law, regulation, ordinance,
order, injunction, decree, award, or other requirement of any governmental body,
court or arbitrator relating to their respective properties, assets or business,
the violation of which would have a material adverse effect on Ocean or the
Ocean Subsidiaries.
3.14 REAL PROPERTY. Schedule 3.14 hereto sets forth a brief description
of all real properties that are leased to Ocean or the Ocean Subsidiaries.
Neither Ocean nor any of the Ocean Subsidiaries own outright the fee simple
title in and to any real property. The real property leases described in
Schedule 3.14 that relate to the leased properties described therein are now in
full force and effect, and all amounts payable thereunder have been paid. All
uses of such real property by Ocean or the Ocean Subsidiaries conform in all
material respects to the terms of the leases relating thereto and, to the best
knowledge of Ocean, conform in all material respects to all applicable building
and zoning ordinances, laws and regulations. None of such leases may be expected
to result in the expenditure of material sums for the restoration of the
premises upon the expiration of their respective terms.
3.15 AGREEMENTS AND OBLIGATIONS; PERFORMANCE. Except as listed and
briefly described in Schedule 3.15 hereto (the "Ocean Listed Agreements"),
neither Ocean nor any of the Ocean Subsidiaries are a party to, or bound by any:
(a) written or oral agreement or other contractual commitment, understanding or
obligation that involves aggregate payments or receipts in excess of $25,000
(such agreements are listed in Schedule 3.15); (b) contract, arrangement,
commitment or understanding which involves aggregate payments or receipts in
excess of $25,000 that cannot be cancelled on 30 days or less notice without
penalty or premium or any continuing obligation or liability (such agreements
are listed in Schedule 3.15); (c) contractual obligation or contractual
liability of any kind to any of its shareholders; (d) contract, arrangement,
commitment or understanding with its customers or any officer, employee,
shareholder, director, representative or agent thereof for the repurchase of
products, sharing of
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fees, the rebating of charges to such customers, bribes, kickbacks from such
customers or other similar arrangements; (e) contract for the purchase or sale
of any materials, products or supplies that contain, or that commits or will
commit it for, a fixed term (such agreements are listed in Schedule 3.15); (f)
contract of employment with any officer or employee not terminable at will
without penalty or premium or any continuing obligation or liability; (g)
deferred compensation, bonus or incentive plan or agreement not cancelable at
will without penalty or premium or any continuing obligation or liability; (h)
management or consulting agreement not terminable at will without penalty or
premium or any continuing obligation or liability; (i) lease for real or
personal property (including borrowings thereon), license or royalty agreement;
(j) agreement, commitment or understanding relating to indebtedness for borrowed
money; (k) union or other collective bargaining agreement; (l) contract that, by
its terms, requires the consent of any party thereto to the consummation of the
transactions contemplated hereby; (m) contract containing covenants limiting the
freedom of Ocean or any of the Ocean Subsidiaries to engage or compete in any
line or business or with any person in any geographical area; (n) contract or
option relating to the acquisition or sale of any business; (o) voting trust
agreement or similar shareholders' agreement; (p) option for the purchase of any
asset, tangible or intangible; or (q) other contract, agreement, commitment or
understanding that materially affects any of their properties, assets or
business, whether directly or indirectly, or that was entered into other than in
the ordinary course of business. A true and correct copy of each of the written
Ocean Listed Agreements have been delivered to Solovision. Each of Ocean and the
Ocean Subsidiaries has in all material respects performed all obligations
required to be performed by them to date under all of the Ocean Listed
Agreements, are not in default in any material respect under any of the Ocean
Listed Agreements and have received no notice of any default or alleged default
thereunder which has not heretofore been cured or which notice has not
heretofore been withdrawn. Ocean, after reasonable inquiry, does not know of any
material default under any of the Ocean Listed Agreements, by any other party
thereto or by any other person, firm or corporation bound thereunder except as
set forth in the Ocean Financial Statements. Copies of all contracts of
employment to which either Ocean or any of the Ocean Subsidiaries is a party are
attached as part of Schedule 3.15.
3.16 CONDITION OF ASSETS. Except for servicing requirements, all
machinery and equipment used by Ocean and the Ocean Subsidiaries in the conduct
of their respective business are in good operating condition and repair,
ordinary wear and tear excepted. Except as set forth in Schedule 3.16 attached
hereto, the inventories of each of Ocean and the Ocean Subsidiaries are and will
be in usable and saleable condition, and such inventory in the aggregate is
saleable at least at the value at which it is carried on their books, subject to
reasonable and customary reserves for the return of inventory.
3.17 ACCOUNTS RECEIVABLE. All of the accounts receivable of Ocean
reflected in the Ocean Financial Statements, except those owed to it since the
dates thereof, which are subject to the reserves reflected in the Ocean
Financial Statements, constitute bona fide accounts receivable resulting from
bona fide sales of services or goods in the ordinary course of its business, and
Ocean, after reasonable inquiry, does not know, nor does it have reason to know
of any valid defense or right of set-off to the rights of Ocean and the Ocean
Subsidiaries to
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collect such accounts receivable in full, less such reserves. Copies of the
accounts receivable lists of Ocean and Classic Optical as of May 31, 1997, are
attached hereto as Schedule 3.17.
3.18 PERMITS AND LICENSES. Schedule 3.18 hereto sets forth a true and
complete list of all permits, licenses, orders, franchises and approvals from
all federal, state, local and foreign governmental regulatory bodies held by
Ocean and the Ocean Subsidiaries. Each of Ocean and the Ocean Subsidiaries have
all material permits, licenses, orders and approvals of all federal, state,
local and foreign governmental or regulatory bodies required of them to carry on
their business as presently conducted; all such permits, licenses, orders,
franchises and approvals are in full force and effect, and to the knowledge of
Ocean, no suspension or cancellation of any of such permits, licenses, orders,
franchises and approvals is threatened; and each of Ocean and the Ocean
Subsidiaries are in compliance in all material respects with all requirements,
standards and procedures of the federal, state, local and foreign governmental
bodies that have issued such permits, licenses, orders, franchises and
approvals.
3.19 INTEREST IN ASSETS. Except as set forth in Schedule 3.19 hereto,
no shareholder, officer or director of Ocean or any of the Ocean Subsidiaries
nor any affiliate thereof owns any property or rights, tangible or intangible,
used in or related directly or indirectly, to the business of Ocean and the
Ocean Subsidiaries.
3.20 SALARY INFORMATION. Schedule 3.20 hereto contains a list of the
names and current salary rates of and bonus commitments to all present officers
of Ocean and all other employees whose base annual compensation exceeds $30,000.
3.21 EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 3.21
hereto, neither Ocean nor any of the Ocean Subsidiaries maintain, or make any
employer contributions under, any "pension" or "welfare" benefit plans, as
defined by ERISA.
3.22 NO BREACH. Neither the execution and delivery of this Agreement,
nor compliance by Ocean or OAC with any of the provisions hereof, nor the
consummation of the transactions contemplated hereby, will:
(a) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Ocean, OAC or any of the Ocean Subsidiaries;
(b) violate or, alone or with notice or the passage of time,
result in the material breach or termination of, or otherwise give any
contracting party the right to terminate, or declare a default under, the terms
of any agreement or other document or undertaking, oral or written to which
Ocean or any of the Ocean Subsidiaries are a party or by which any of their
respective properties or assets may be bound (except for such violations,
conflicts, breaches or defaults as to which required waivers or consents by
other parties have been, or will, prior to the Closing, be, obtained);
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(c) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Ocean or any of
the Ocean Subsidiaries;
(d) violate any judgment, order, injunction, decree or award
against, or binding upon, Ocean or any of the Ocean Subsidiaries or upon their
respective properties or assets; or
(e) violate any law or regulation of any jurisdiction relating
to Ocean or any of its Subsidiaries, their respective securities, assets or
properties, the violation of which would have a material adverse effect on Ocean
or any of the Ocean Subsidiaries.
3.23 BROKERS. Except as set forth in Schedule 3.23 hereto, Ocean has
not engaged, consented to or authorized any broker, finder, investment banker or
other third party to act on its behalf, directly or indirectly, as a broker or
finder in connection with the transactions contemplated by this Agreement, and
Ocean agrees to indemnify and hold harmless Solovision and its shareholders from
and against any claim for brokerage or similar commissions or other compensation
that may be made against Solovision by any third party in connection with the
transactions contemplated hereby, which claim is based upon any action by Ocean.
3.24 UNTRUE OR OMITTED FACTS. No representation, warranty or statement
furnished by or to be furnished by Ocean or OAC in this Agreement or in any
certificate, schedule or document delivered pursuant to this Agreement contains
any untrue statement of a material fact, or omits to state a fact necessary in
order to make such representations, warranties or statements not misleading.
Without limiting the generality of the foregoing, there is no fact known to
Ocean and OAC, after reasonable inquiry, that has had, or that may be reasonably
expected to have, a material adverse effect on Ocean or any of the Ocean
Subsidiaries or any of their respective assets, properties, operations or
businesses that has not been disclosed in this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXX AND THE
SHAREHOLDERS
Xxxxxx and each of the Shareholders severally make the following
representations and warranties to Ocean and OAC:
4.1 OWNERSHIP OF SOLOVISION COMMON STOCK. Each of the Shareholders owns
his or its shares of Solovision Common Stock free and clear of all liens,
pledges, security interests, claims, restrictions on transfer or other adverse
claims, encumbrances or charges whatsoever. There are no outstanding options,
rights or calls or other commitments or agreements of any kind with respect to
the shares of Solovision Common Stock owned by such Shareholder.
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4.2 RELATED BUSINESSES. Solovision and Sorrento are the sole entities
that have been engaged in any aspect of the optical business during 1997 and
that are directly or indirectly affiliated with, related to, controlled by or
under common control with, or that directly or indirectly controls, Solovision,
Sorrento, Xxxxxx or any of the Shareholders.
4.3 UNTRUE OR OMITTED FACTS. No representation, warranty or statement
furnished by or to be furnished by Xxxxxx or any of the Shareholders in this
Agreement or in any certificate, schedule or document delivered pursuant to this
Agreement contains any untrue statement of a material fact, or omits to state a
fact necessary in order to make such representations, warranties or statements
not misleading.
Xxxxxx and the Xxxxxx Family Trust makes the following representations
and warranties to Ocean and OAC:
4.4 LIABILITIES FROM PREVIOUS OPERATIONS. Solovision has no debts,
liabilities or obligations, contingent or absolute, arising from the conduct of
business by, or any transactions between Solovision or Sorrento and, any of the
entities listed on Schedule 4.4 attached hereto or pursuant to any of the
unincorporated names, regardless of the form of any entity using any of those
names, listed on Schedule 4.4 attached hereto.
ARTICLE V
CLOSING DELIVERIES
5.1 ITEMS TO BE DELIVERED BY SOLOVISION. At the Closing, Solovision
will deliver to Ocean:
(a) at least one counterpart original signed by Xxxxxx of a
three-year Employment Agreement between Ocean and Xxxxxx providing an annual
salary for Xxxxxx of $175,000 in substantially the form of Exhibit 5.1(a)
attached hereto (the "Xxxxxx Employment Agreement");
(b) the written opinion of counsel for Solovision, dated the
Closing Date, in substantially the form of Exhibit 5.1(b) attached hereto;
(c) certified copies of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement by
Solovision and the consummation of the transactions contemplated hereby;
(d) executed investment letters from each of the Shareholders,
Xxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx in substantially the form of Exhibit
5.1(d);
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(e) executed letter agreement among Xxxxxx, Xxxxx X. Xxxxxxx
and Xxxxx X. Xxxxxxx in substantially the form of Exhibit 5.1(e);
(f) documentary evidence that Xxxxxx and Xxxxxxxxx have
contributed any debt owed either of them or any of their affiliates by
Solovision or Sorrento, except $100,000 owed by Solovision to SAO Lens &
Equipment Co., to Solovision's equity capital;
(g) at least one counterpart original executed by Miami
Opti-Mart, Inc., a Florida corporation ("Miami Opti-Mart"), of the lease for
office space at 0 X.X. 00xx Xxxxxx, Xxxxx, Xxxxxxx 00000, between Miami
Opti-Mart and Ocean (the "Opti-Mart Lease");
(h) the Articles of Merger required by Section 1.2 hereof; and
(i) all other documents reasonably requested by Ocean or its
legal counsel in order to consummate the transactions contemplated by this
Agreement.
5.2 ITEMS TO BE DELIVERED BY OCEAN. At the Closing, Ocean or OAC will
deliver to Solovision:
(a) certificates evidencing the Ocean Shares;
(b) at least one counterpart original executed by Ocean of the
Xxxxxx Employment Agreement;
(c) certified copy of action by Ocean's Directors appointing
Xxxxxx and Xxxxxxxxx as Directors and a certificate dated the Closing Date,
signed by the President of Ocean, certifying that Ocean's Board of Directors is
composed of five members, who are Xxxxxxx X. Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx X.
Xxxx, Xxxxxx and Xxxxxxxxx;
(d) a certificate dated the Closing Date, signed by the
President of Ocean, as to the completion on or before the Closing Date of
Ocean's refinancing with Coast Business Credit, accompanied by Coast Business
Credit's consent to the transaction contemplated by this Agreement;
(e) the written opinion of counsel for Ocean and OAC, dated
the Closing Date, in substantially the form of Exhibit 5.2(a) attached hereto;
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(f) certified copies of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement by Ocean and
OAC and the consummation of the transactions contemplated hereby;
(g) documentary evidence that the shares of Ocean Common Stock
being issued as part of the Ocean Shares and the shares of Ocean Common Stock
underlying the shares of Ocean Preferred Stock issued as part of the Ocean
Shares have been approved for listing on the Nasdaq SmallCap Market(R);
(h) at least one counterpart original executed by Ocean of the
Opti-Mart Lease;
(i) the Articles of Merger required by Section 1.2 hereof; and
(j) all other documents reasonably requested by Ocean or its
legal counsel in order to consummate the transactions contemplated by this
Agreement.
ARTICLE VI
POST-CLOSING COVENANTS
Ocean, Xxxxxx and Xxxxxxxxx agree that, subsequent to the Closing Date:
6.1 DIRECTORS' MEETINGS. Ocean's Board of Directors shall hold monthly
meetings for at least one year following the Closing Date. At or before each
such meeting, Ocean's management shall provide appropriate written reports to
Ocean's Board of Directors concerning Ocean's business.
6.2 AUTHORITY TO SIGN CHECKS. Two signatures shall be required on all
checks issued by Ocean, except as otherwise authorized by Ocean's Board of
Directors.
6.3 RELATED TRANSACTIONS. Any transaction between Ocean and any of its
directors or officers, or any affiliate of any of them, including but not
limited to any monetary advances by Ocean, must be approved by a disinterested
majority of Ocean's Board of Directors prior to the consummation of any such
transaction.
6.4 REGISTRATION OF OCEAN COMMON STOCK. Ocean shall include the Ocean
Common Stock in the Registration Statement on Form SB-2 (the "Registration
Statement") that it currently has in process. Ocean shall use its reasonable
best efforts to file the Registration Statement with the SEC as soon as
practicable after the date of this Agreement and to cause the Registration
Statement to become effective as soon thereafter as reasonably practicable.
6.5 INCREASE IN AUTHORIZED COMMON STOCK. As soon as reasonably
practicable after the date of this Agreement, Ocean shall take all actions
necessary to amend its Articles of Incorporation to increase its authorized
common stock to at least 25,000,000 shares.
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ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.1 SURVIVAL. The parties agree that their respective representations,
warranties, covenants and agreements contained in this Agreement, or in any
certificate, schedule or other documents delivered pursuant to this Agreement,
shall survive the Closing for a period of one year, with the exception of those
regarding taxes set forth in Sections 2.10 and 3.10 hereof, which shall survive
until the expiration of the respective periods within which such taxes may be
assessed, and those made by Xxxxxx in Sections 4.2 and 4.4 hereof, which shall
survive indefinitely.
7.2 INDEMNIFICATION.
(a) Xxxxxx and the Shareholders, jointly and severally, hereby
indemnify and hold harmless Ocean, OAC and the directors, officers, employees,
and agents of Ocean and OAC in respect of any and all adverse charges,
complaints, notices, actions, suits, proceedings, hearings, investigations,
claims, demands, judgments, orders, decrees, stipulations, injunctions, damages,
dues, penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including all attorneys'
fees and court costs, in any court or quasi-judicial or administrative agency of
any federal, state, local or foreign jurisdiction or before an arbitrator (the
"Adverse Consequences") that are incurred by any of them in connection with any
of the following and that in the aggregate exceed $25,000:
(i) Any misrepresentation or breach of any
representation or warranty made by Xxxxxx, a Shareholder or Solovision in this
Agreement or in any Schedule, Exhibit, or other document attached hereto or
delivered to Ocean or OAC by Xxxxxx, a Shareholder, Solovision or any officer of
Solovision in connection with the transactions contemplated hereby.
(ii) Any misrepresentation contained in any statement
in writing or certificate furnished by either Xxxxxx, a Shareholder or any
officer of Solovision pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement.
(iii) Any misrepresentation in or omission from any
list, Schedule, Exhibit, certificate or other instrument required to be
furnished or specifically contemplated to have been furnished pursuant to this
Agreement to Ocean, OAC or any of their respective authorized representatives.
(iv) Any litigation involving either Ocean or OAC
because of the execution and delivery by Xxxxxx, a Shareholder or Solovision of
this Agreement or the consummation of the transactions contemplated hereby.
(v) The operations of Solovision prior to the
Effective Date, other than any liabilities of Solovision existing on the
Effective Date that had been incurred in the
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ordinary course of business, in each case subject to any reserve that had been
established by Solovision in the ordinary course of business prior to the
Effective Date.
(b) Xxxxxx and the Xxxxxx Family Trust, jointly and severally,
hereby indemnify and hold harmless Ocean, OAC, on a dollar-for-dollar basis, and
the directors, officers, employees, and agents of Ocean and OAC in respect of
any and all Adverse Consequences that are incurred by any of them in connection
with (i) any misrepresentation or breach of the representation or warranty made
by Xxxxxx and the Xxxxxx Family Trust in Section 2.2, 4.2 or 4.4 of this
Agreement or (ii) any claim against Xxxxxx personally arising from activities
prior to the date of this Agreement.
(c) Xxxxxx and the Shareholders, jointly and severally, hereby
indemnify and hold harmless Ocean, OAC and the directors, officers, employees,
and agents of Ocean and OAC in respect of any and all Adverse Consequences that
are incurred by any of them as a result of the exercise of shareholder
dissenters' rights by any of the shareholders of Solovision.
(d) Ocean and OAC hereby jointly and severally indemnify and
hold harmless Xxxxxx, the Shareholders, Solovision and the directors, officers,
employees, and agents of Solovision in respect of any and all Adverse
Consequences that are incurred by any of them in connection with any of the
following and that in the aggregate exceed $100,000:
(i) Any misrepresentation or breach of any
representation or warranty made by Ocean or OAC in this Agreement or in any
Schedule, Exhibit, or other document attached hereto or delivered to Xxxxxx or a
Shareholder by Ocean, OAC or any officer of either Ocean or OAC in connection
with the transactions contemplated hereby.
(ii) Any misrepresentation contained in any statement
in writing or certificate furnished by an officer of either Ocean or OAC
pursuant to this Agreement or in connection with the transactions contemplated
by this Agreement.
(iii) Any misrepresentation in or omission from any
list, Schedule, Exhibit, certificate or other instrument required to be
furnished or specifically contemplated to have been furnished pursuant to this
Agreement to Xxxxxx, a Shareholder, Solovision or any of their authorized
representatives.
(iv) Any litigation involving Xxxxxx, a Shareholder
or Solovision because of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(e) Whenever any claims shall arise for indemnification
hereunder, the party seeking indemnification ("Indemnitee") shall promptly
notify the other party ("Indemnitor") of the claim and, when known, the facts
constituting the basis for such claim. If any claim for indemnification
hereunder results from or is in connection with any claim or Adverse Consequence
by a person who is not a party to this Agreement ("Third-Party Claim"), such
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notice shall also specify, if known, the amount or an estimate of the amount of
the liability arising therefrom. The Indemnitee shall give the other party
prompt notice of any such claim and the Indemnitor shall undertake the defense
thereof by representatives of its own choosing, reasonably satisfactory to the
Indemnitee, at the expense of the Indemnitor. The Indemnitee shall have the
right to participate in any such defense of a Third-Party Claim with advisory
counsel of its own choosing, at its own expense. If Indemnitor, within a
reasonable time after notice of any such Third-Party Claim, fails to defend, the
Indemnitee or any subsidiary or affiliate of the Indemnitee shall have the right
to undertake the defense, compromise or settlement of such Third-Party Claim on
behalf of, and for the account of, Indemnitor, at the expense and risk of
Indemnitor. Indemnitor shall not, without the Indemnitee's written consent,
settle or compromise any such Third-Party Claim or consent to entry of any
judgment that does not include, as an unconditional term thereof, the giving by
the claimant or the plaintiff to Indemnitee of an unconditional release from all
liability in respect of such Third-Party Claim. Notwithstanding any provision
herein to the contrary, failure of Indemnitee to give any notice required by
this section shall not constitute a waiver of Indemnitee's right to
indemnification or a defense to any claim by Indemnitee hereunder, except to the
extent that the Indemnitor has been prejudiced thereby.
(f) All indemnification hereunder, except as otherwise
expressly provided in this Section 7.2(f), shall be effected upon demand by
payment of cash, delivery of a cashier's check or wire transfer in the amount of
the indemnification liability. Any indemnification of Ocean pursuant to Section
7.2(b) or (c) of this Agreement may instead, at Xxxxxx'x sole option, be
effected by surrendering to Ocean for cancellation such number of the shares of
Ocean Common Stock that the Xxxxxx Family Trust receives pursuant to the
transactions contemplated by this Agreement, whether by issuance at Closing or
later mandatory conversion of the Ocean Preferred Stock, as shall equal the
amount of the indemnification due Ocean. For purposes of the foregoing sentence,
such shares of Ocean Common Stock shall be valued at the closing bid price per
share of the Ocean Common Stock on the date upon which demand for
indemnification is made.
(g) The indemnities contained herein shall survive the Closing
and any investigation made in connection with the transactions contemplated by
this Agreement.
7.3 POST-CLOSING INDEMNIFICATION FOR FORMER OCEAN DIRECTORS. For four
years after the Effective Time of the Merger, Ocean shall indemnify and hold
harmless Xxxx X. Xxxxx, Xxxxx Xxxxxxxxx and Xxxx X. Xxxx, who are either current
or former directors of Ocean who will no longer be serving as such after the
Effective Time of the Merger with respect to acts or omissions occurring prior
to the Effective Time of the Merger (including, without limitation, the
transactions contemplated by this Agreement) to the fullest extent permitted by
Florida law in effect as of the Effective Time of the Merger.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 EXPENSES. Each of the parties shall bear its own expenses in
connection with this Agreement and the transactions contemplated hereby.
8.2 CONFIDENTIAL INFORMATION. Each party agrees that such party and its
representatives will hold in a fiduciary capacity and in strict confidence all
information, knowledge, data and documents received from the other parties and,
if the transactions herein contemplated shall not be consummated, each party
will continue to hold such information and documents in strict confidence and
will return to such other parties all such documents (including the schedules
and exhibits attached to this Agreement) then in such receiving party's
possession without retaining copies thereof; provided, however, that each
party's obligations under this Section 8.2 to maintain such confidentiality
shall not apply to any information or documents that are in the public domain at
the time furnished by the others or that become in the public domain thereafter
through any means other than as a result of any act of the receiving party or of
its agents, officers, directors or shareholders constituting a breach of this
Agreement, or that are required by applicable law to be disclosed. The parties
agree that the remedy at law for any breach of the provisions of this Section
8.2 will be inadequate, and Ocean, OAC or Solovision shall be entitled to
injunctive relief to compel the breaching party to perform or refrain from
action required or prohibited hereunder.
8.3 PUBLICITY. The parties agree that no publicity, releases or other
public announcement concerning the Agreement or the transactions contemplated by
this Agreement shall be issued by either party without the express prior written
consent of both the form and substance of the same, by Xxxxxxx Xxxxxx on behalf
of Solovision and its shareholders and by Xxxxxxx X. Xxxxxx on behalf of Ocean,
except that in the case of any publicity, release or other public announcement
required by applicable law, such approval shall not be unreasonably withheld or
delayed.
8.4 FURTHER ASSURANCES. The parties hereto will execute and deliver
such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purposes of this Agreement.
8.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings with respect to the subject matter hereof.
The representations, warranties, covenants and agreements set forth in this
Agreement and in the financial statements, schedules or exhibits delivered
pursuant hereto constitute all the representations, warranties, covenants and
agreements of the parties and upon which the parties have relied and except as
may be specifically provided herein, no change, modification, amendment,
addition or termination of this Agreement or any part thereof shall be valid
unless in writing and signed by or on behalf of the party to be charged
therewith.
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8.6 WAIVER. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
party at a later time to enforce the same. No waiver of any nature, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or of any
breach of any other term, representation or warranty of this Agreement.
8.7 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be given or made pursuant to any of the provisions of
this Agreement shall be deemed to have been duly given or made for all purposes
if sent by certified or registered mail, return receipt requested and postage
prepaid, overnight courier, Express Mail, hand delivered or sent by facsimile
with receipt confirmed as follows:
If to Ocean at:
00000 X.X. 000xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
Broad and Xxxxxx
000 X. Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: A. Xxxxxx Xxxxxxxx, P.A.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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If to Solovision, Xxxxxx and/or the Shareholders, at:
0 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx, Esq.
Montello & Xxxxxx, P.A.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or at such other address as any party may specify by notice given to the other
parties in accordance with this Section 8.6. The date of giving of any such
notice shall be the date of the actual receipt thereof.
8.8 ATTORNEYS' FEES. All costs and expenses incurred in the enforcement
of this Agreement, including reasonable attorneys' fees, shall be paid to the
prevailing party by the non- prevailing party, upon demand.
8.9 CHOICE OF LAW. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of Florida, except that body
of law relating to choice of law. Should any clause, section or part of this
Agreement be held or declared to be void or illegal for any reason, all other
clauses, sections or parts of this Agreement which can be effected without such
illegal clause, section or part shall nevertheless continue in full force and
effect.
8.10 NO ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors, assigns, heirs and
personal representatives; provided, however, that no party may assign any of its
or his rights or delegate any of its or his duties under this Agreement without
the prior written consent of the other parties.
8.11 HEADINGS. The headings or captions under sections of this
Agreement are for convenience and reference only and do not in any way modify,
interpret or construe the intent of the parties or effect any of the provisions
of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed on behalf of
each of the parties hereto, as of the date first above written.
OCEAN OPTIQUE DISTRIBUTORS, INC.
By: \s\XXXXXXX X. XXXXXX
--------------------------------
Xxxxxxx X. Xxxxxx,
President
OCEAN ACQUISITION CORPORATION
By: \s\XXXXXXX X. XXXXXX,
--------------------------------
Xxxxxxx X. Xxxxxx,
President
SOLOVISION OPTICAL, INC.
By: \s\XXXXXXX XXXXXX, PRESIDENT
--------------------------------
Xxxxxxx Xxxxxx, President
\s\XXXXXXX XXXXXX
--------------------------------
XXXXXXX XXXXXX
\s\XXXX XXXXXXXXX
--------------------------------
XXXX XXXXXXXXX
XXXXXX FAMILY TRUST
By: \s\XXXXXXX XXXXXX, TRUSTEE
--------------------------------
XXXXXXX XXXXXX, Trustee
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