Exhibit 2.1
AGREEMENT FOR SALE AND PURCHASE
THIS AGREEMENT FOR SALE AND PURCHASE (the "Agreement") is dated as of
September 30, 2001 between IMX Pharmaceuticals, Inc., a Utah corporation
("Purchaser"), and Cater Xxxxxxx, plc, an English corporation ("CB"), and
Envesta, plc, an English corporation, ("Envesta") (collectively referred to as
"Sellers").
RECITALS
1. On October 13, 2000 CB entered into an agreement to acquire 52,246.6
shares of the Series C-1 Preferred Shares, $0.1 par value, (the "TDMI
C-1 Preferred") and 246,034 shares of the Series C-2 Preferred Shares,
$.01 par value, (the "TDMI C-2 Preferred") of ThinkDirectMarketing,
Inc. ("TDMI") (the "Shares"). The agreement pursuant to which the
Shares were acquired is attached as Exhibit R-1. CB has acquired and
holds all of the Shares.
2. Pursuant to the October 13, 2000 agreement, CB has lent $4,000,000 to
TDMI. This debt is evidenced by a series of eight TDMI's promissory
notes (the "Notes"). A copy of the each Note is attached as Exhibit
R-2. The Notes are convertible into shares of various classes of TDMI
preferred stock that are convertible into shares of TDMI Common.
3. On October 13, 2000 CB acquired an option (the "Option") to acquire
shares of TDMI Common and TDMI's Class A, Class B-1, Class B-2, and
Class C-1 Preferred Stock (the "Optioned Stock"). A copy of the
agreement creating the Option (the "Option Agreement") is attached as
Exhibit R-3. All of the Optioned Stock is listed in Schedule 1 to the
Option.
4. The Shares, the Notes, and the Optioned Stock represent all of the TDMI
Common or rights to obtain TDMI Common.
5. {Intentionally left blank}
6. Envesta owns 297,555 ordinary shares,(pound)1 par value (the "Findstar
Stock") of Findstar, plc ("Findstar").
7. The Shares, the Note, the Option, the Optioned Stock, and the Findstar
Stock are hereinafter referred to as the "Property".
8. On April 19, 2001, CB changed it name from Voyager XX.xxx, plc to Cater
Xxxxxxx, plc.
9. On November 22, 2000, Purchaser and its subsidiary, imx/eti
LifePartners, Inc. filled for protection from their creditors pursuant
to Chapter 11 of the Bankruptcy Act in the United States District Court
for the Southern District of Florida (the "Bankruptcy Proceeding").
10. The Purchaser has filed a third amended Plan of Reorganization dated
August 10, 2001 (the "Plan"). The Plan was confirmed on September 26,
2001.
11. Pursuant to the Plan, prior to the closing of this transaction
Purchaser's common stock, $.001 par value, (the "IMX Common") shall
have undergone a 1 for 20 stock consolidation. Unless specifically
stated, all references to IMX Common herein shall refer to post
consolidation shares.
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12. Purchaser desires to purchase the Property from Sellers and Sellers
desire to sell the Property to Purchaser pursuant to and in accordance
with the terms and conditions of this Agreement.
The Parties agree as follows:
AGREEMENT
ARTICLE I THE PARTIES
SECTION 1.01 THE PARTIES
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(a) The Purchaser is a publicly traded Utah corporation having a
business office at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000 X 0, Xxxx Xxxxx, Xxxxxxx
00000.
(b) Each Seller is a corporation registered in England and Wales and
each has a business office at Lloyd's Avenue House, 0 Xxxxx'x Xxxxxx, Xxxxxx,
Xxxxxxx XX0X 0XX.
SECTION 1.02 ASSIGNMENT
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(a) With the prior written consent of Sellers, Purchaser may assign its
rights or part of its rights under this Agreement to corporations that are
wholly owned subsidiaries of Purchaser. No assignment shall be valid unless each
assignee assumes all applicable obligations of Purchaser under this Agreement.
No assignment shall relieve Purchaser of its obligations under this Agreement.
(b) Purchaser and Sellers may not assign their rights under this
Agreement except as provided in Subsection (a).
(c) For purposes of this Agreement, an assignment includes the purchase
or sale of over 50% of the voting securities of Purchaser or any Seller.
ARTICLE II THE ASSETS PURCHASED
SECTION 2.01 THE SHARES
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The Shares consist of 52,246.6 shares of TDMI Series C-1 Preferred and
246,034 shares of TDMI C-2 Preferred, all registered in the name of Voyager
XX.xxx, plc.
SECTION 2.02 THE NOTES
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The Notes are a series of eight TDMI promissory notes due December 31,
2001 in the aggregate principal amount of $4,000,000. The Notes are payable to
Voyager XX.xxx, plc and are held by CB.
SECTION 2.03 THE OPTION
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The Option is CB's rights to purchase the Optioned Stock and is
evidenced by the Option Agreement granting those rights to CB.
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SECTION 2.04 {Intentionally left blank}
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SECTION 2.05 {Intentionally left blank}
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SECTION 2.06 THE FINDSTAR STOCK
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The Findstar Stock consists of 297,555 shares of Findstar common stock
in the name of Envesta, plc.
SECTION 2.07 THE PROPERTY
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The "Property" consists of the Shares, the Notes, the Option, the
Optioned Stock, and the Findstar Stock.
ARTICLE III THE PURCHASE PRICE AND ITS PAYMENT
SECTION 3.01 PURCHASE PRICE
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In consideration of this Agreement and the purchase, transfer, sale,
and assignment of the Property, Purchaser shall pay to Sellers a purchase price
("Purchase Price") of $27,000,000, which shall be satisfied in accordance with
Section 3.02.
SECTION 3.02 PAYMENT OF THE PURCHASE PRICE
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Sellers shall accept the following securities as full and complete
settlement of the Purchase Price:
(a) 1,500,000 shares of IMX Common duly and validly issued and
registered in the name of Sellers.
(b) 225,000 shares of Purchaser's newly created Class B 5%
Preferred Stock, $80 stated value, duly and validly issued and registered in the
name of Sellers (the "IMX Preferred" and together with the IMX Common, the "IMX
Stock"). The IMX Preferred is convertible in to IMX Common at a rate of one
share of IMX Common for each $4.00 of stated value (subject to adjustment). The
Articles of Ammendment creating the IMX Preferred shall be in the form attached
hereto as Schedule 3.02(b).
(c) IMX's five (5%) percent promissory notes payable to the order
of Sellers (collectively the "IMX Note") in the initial aggregate principal
amount of $3,000,000. The interest on the IMX Note shall be payable annually, in
either cash or IMX Common, valued at $4.00 per share. The IMX Note shall mature
on December 31, 2006. The IMX Note shall be in the form attached hereto as
Schedule 3.02(c).
(d) Each element of the Purchase Price shall be allocated among
the Sellers as specified on Schedule 3.02(d).
SECTION 3.03 ADDITIONAL INVESTMENT
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Concurrently with the Closing pursuant to Article VI, CB shall purchase
not less than 75,000 shares of IMX Common for a purchase price of $4.00 per
share. This stock shall be considered part of the IMX Stock for all purposes
hereof, including without limitation the provisions of Articles IV and VII. CB's
obligation to purchase the IMX Common pursuant to this section shall be subject
to the consummation of the other transactions contemplated herein.
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ARTICLE IV REPRESENTATIONS
SECTION 4.01 SELLERS' REPRESENTATIONS
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Seller represents to Purchaser as follows:
(a) Each Seller is a corporation that is validly existing and in
good standing under the laws of England and Wales.
(b) TDMI is a corporation that is validly existing and in good
standing under the laws of the State of Delaware.
(c) {Intentionally left blank}
(d) {Intentionally left blank}
(e) Findstar is a corporation that is validly existing and in good
standing under the laws of the England and Wales.
(f) Sellers have delivered, or will deliver prior to the Closing
Date, to Purchaser true and complete copies of all charter documents, by-laws,
and amendments thereto for Sellers, TDMI, and Findstar.
(g) The execution, delivery, and consummation of the transactions
contemplated by this Agreement have been duly authorized by all requisite
corporate action by Sellers and will not contravene any provisions of law, any
order of any court or other agency of government applicable to Sellers, or any
of their constituent documents. Any consents, approvals, authorizations, or
orders of or registrations or qualifications with any person, bank, or any
governmental body or court having the authority or power to regulate, supervise,
or direct the business and affairs of Sellers that is necessary for the
consummation of the transactions specified in this Agreement shall have been
obtained prior to the Closing Date. Nothing in any agreement to which any Seller
is a party prohibits the execution or implementation of this Agreement.
(h) This Agreement constitutes the legal, valid and binding
obligation of each Seller enforceable against it in accordance with its terms,
subject only to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and other similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto,
and the award by courts of money damages rather than specific performance of
contractual provisions involving matters other than the payment of money.
(i) The Shares, the Notes, the Optioned Shares, and the Option
represent all of the capital equity, or rights to acquire capital equity, of
TDMI.
(j) The instruments evidencing the Notes and the Option are legal,
valid, and binding obligations of the counter-parties thereto and are
enforceable against them in accordance with their terms, subject only to the
effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and the award by courts of
money damages rather than specific performance of contractual provisions
involving matters other than the payment of money.
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(k) The instruments evidencing the Notes and Option are in full
force and effect. CB has no knowledge of and has received no notice of any
alleged violation or breach of any of these instruments from any person and
knows of no state of facts that, with the passage of time or the giving of
notice, or both, would constitute a violation or breach.
(l) Xxxx Xxxxx and Xxxxx Xxxxxx are still the Grantor
Representatives under the Option.
(m) TDMI and the Grantor Representatives have been informed of the
pendancy of this transaction.
(n) Sellers may assign the Property to Purchaser in the manner
contemplated hereby without any third party's consent. Nothing in any agreement
creating or evidencing any Property or between any Seller and any other person
prohibits the execution or implementation of this Agreement. This Agreement and
its implementation will not void any agreement creating or evidencing any
Property. Exhibits R-1, R-2, and R-3 are true and complete copies of the October
13, 2000 agreement, the Notes, and the Option Agreement, respectively.
(o) The lists, copies, and other information provided on the
Exhibits and Schedules or the certificates delivered pursuant to this Agreement
are accurate and complete in every material respect. To the knowledge of
Sellers, no party to any agreement delivered pursuant to this Agreement or
referred to in or attached to any Schedule is in default thereof excepting as
indicated in the applicable Schedule.
(p) All facts stated or referred to in the Recitals 1 - 8 are
true.
(q) Sellers have no knowledge of and have received no notice of
any material complaint about TDMI's or Findstar's business practices or of any
alleged material violation of any law or regulation with respect to its business
practices from any person.
(r) Sellers own all the Property free and clear of any liens,
claims, or other title defects. Sellers have the full power and right to
transfer title to the Property to Purchaser in the manner contemplated hereby
without any third party's consent.
(s) Sellers have no knowledge of and have not received any
notification of infringement by TDMI or Findstar or any allegation of
infringement with regard to any trademark, service xxxx or trade name used by
TDMI or Findstar from any person, and Sellers are not aware of a basis for any
claim. To the best of Sellers' knowledge, no right or other trademark, service
xxxx, or trade name used by TDMI or Findstar in connection with its business
infringes in any material way any trademark, service xxxx, or trade name of
others in any country in which the trademark, service xxxx, or trade name is
used in connection with the manufacture or sale of any product, the provision of
any service, or otherwise.
(t) All material permits or other legal authorizations necessary
for TDMI and Findstar to conduct their businesses as presently conducted have
been obtained and are in full force and effect. Seller has no knowledge of and
has received no notice of any alleged violation of any such permit from any
person and knows of no state of facts that, with the passage of time or the
giving of notice, or both, would constitute a violation.
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(u) All the liability and other insurance determined by TDMI and
Findstar to be necessary in connection with the operation of their businesses
have been obtained and are now in full force and effect. A copy of any review of
insurance coverage by any insurance broker or consultant or other person has
been delivered to Purchaser.
(v) True and complete copies of TDMI's Financial Statements are
attached as Schedule 4.01(v). The Financial Statements were prepared in
accordance with generally accepted accounting principals, consistently applied,
and accurately reflect, in all material respects, the financial condition of
TDMI and the results of its operations in for the periods to which they relate.
There has been no material change in the financial condition or the operations
of TDMI since the date of the Financial Statements not otherwise disclosed to
Purchaser. Seller has not received and has no knowledge of any auditors' letters
from TDMI's accountants.
(w) True and complete copies Envesta's Financial Statements are
attached as Schedule 4.01(w). The Financial Statements were prepared in
accordance with generally accepted accounting principals in the United Kingdom,
consistently applied, and accurately reflect, in all material respects, the
financial condition of Envesta and the results of its operations in for the
periods to which they relate. There has been no material change in the financial
condition or the operations of Envesta since the date of the Financial
Statements not otherwise disclosed to Purchaser. Envesta has not received and
has no knowledge of any auditors' letters from Findstar's accountants other than
those listed on the Schedule. True and complete copies of any auditors' letters
have been delivered to Purchaser.
(x) {Intentionally left blank}
(y) TDMI and Findstar have sufficient title to the assets shown on
its Balance Sheet (other than those assets disposed of since the date of that
Balance Sheet) to conduct their respective business as presently conducted.
(z) The Internal Revenue Service ("IRS") has not audited TDMI's
tax returns since 1995. Copies of any audit papers and any other communications
with the IRS have been delivered to Purchaser.
(aa) (i) TDMI and Findstar have duly and timely filed where
required all federal, state, local, or other tax returns required to be
filed prior to the date of this Agreement, including income,
employment, rent and sales and use tax returns, and, except as noted on
Schedule 4.01(aa), have paid all taxes shown to be due and payable on
such returns, all deficiencies and assessments notice of which has been
received, all other taxes, and all governmental charges, duties,
penalties, interest, and fines (collectively, "Other Charges") due and
payable on or before the date of this Agreement.
(ii) There are no agreements, waivers, or other
arrangements providing for an extension of time with respect to the
filing of any tax returns by TDMI or Findstar or for the payment by, or
assessment against, either of any tax, deficiency, assessment, or Other
Charges.
(iii) There are no suits, actions, claims, audits,
investigations, inquiries, or proceedings pending against TDMI or
Findstar in respect of any unpaid taxes, deficiencies, assessments, or
Other Charges and there are no such threatened suits, actions, claims,
audits, investigations, or inquiries.
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(iv) TDMI and Findstar have withheld or collected from
each payment made to each of its employees the amount of all taxes
required to be withheld or collected there from and has paid the same
to the proper tax receiving officers.
(bb) TDMI and Findstar are not parties to any civil litigation or
arbitration proceeding except as listed on Schedule 4.01(bb) or
otherwise disclosed to Purchaser. Sellers have no knowledge of and have
received no notice of any criminal, regulatory, or compliance
proceedings or threatened proceedings from or by any government or
governmental entity or agency against TDMI or Findstar except as listed
on the Schedule or otherwise disclosed to Purchaser. Seller has
provided, or will provide prior to the Closing Date, Purchaser a
summary of the proceedings listed on the Schedule or otherwise
disclosed to Purchaser.
(cc) (i) Sellers are acquiring the IMX Stock for investment
and not with a view towards distribution. Sellers acknowledge and
understand that they must bear the economic risk of an investment in
the IMX Stock being acquired pursuant hereto for an indefinite period
of time since such securities have not been registered under the
Securities Act and, therefore, cannot be sold unless they are either
subsequently registered under the Securities Act or an exemption from
such registration is available and favorable opinions of counsel in
form and substance satisfactory to Purchaser to that effect are
obtained. The certificates representing the IMX Stock (unless such
securities have been registered) shall bear on their face the following
legend:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"). These shares have been acquired for
investment and not for distribution or resale. They may not be
mortgaged, pledged, hypothecated or otherwise transferred
without an effective registration statement for such shares
under the Securities Act or an opinion of counsel for the
Corporation that such registration is not required.
(ii) Sellers, taking into account the personnel and
resources each can practically bring to bear on the purchase of the IMX
Stock contemplated hereby, are knowledgeable, sophisticated, and
experienced in making, and are qualified to make, decisions with
respect to investments in IMX Stock presenting an investment decision
like that involved in the purchase of the IMX Stock.
(iii) Sellers have had the opportunity to ask questions of
and receive answers from representatives of Purchaser or persons acting
on its behalf concerning the terms and conditions of the proposed
investment in Purchaser, have had the opportunity to obtain additional
information necessary to verify the accuracy of information previously
furnished about Purchaser, and have requested, received, reviewed, and
considered all information they deem relevant in making an informed
decision to purchase the IMX Stock.
(iv) Each Seller is an "accredited investor" as that term
is defined in Rule 501 of Regulation D promulgated under the Securities
Act.
(dd) Neither TDMI, Findstar, nor any of their officers, employees
or agents, nor any other person authorized by either of them to act on
its behalf, has, directly or indirectly, within the past five years
given or agreed to give any gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to
any customer, supplier, employee, or agent of a customer or supplier,
or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or
candidate for office or other person who is or may be in a position to
help the business of TDMI or Findstar (or assist them in connection
with any actual or proposed transaction) which (i) might subject TDMI
or Findstar to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) if not given in the past,
might have had a materially adverse effect on the assets, business or
operations of TDMI or Findstar as reflected in any of the Financial
Statements or (iii) if not continued in the future, might adversely
affect the assets, business, operations or prospects of TDMI or
Findstar.
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(ee) Each of the Schedules described in this Article IV is dated as
of September 30, 2001, the date of this Agreement, identified
specifically as a schedule to a particular article, certified by
Sellers as being true and complete in every material respect, and has
been delivered or made available to the Purchaser by the Sellers.
Information disclosed in any schedule described in this Article IV
shall not be deemed disclosed for purposes of any other schedule
hereto.
(ff) None of the representations, warranties, covenants, or
agreements by Sellers in this Agreement, nor any certificate or
schedule furnished or to be furnished pursuant hereto, contains or will
contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements of facts
contained therein, in light of the circumstances under which they were
made, not misleading.
(gg) All statements contained in any certificate or other
instruments delivered by or on behalf of the Sellers pursuant hereto or
in connection with the transactions contemplated hereby shall be deemed
a representation and warranty of the Sellers.
SECTION 4.02 PURCHASER'S REPRESENTATIONS
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Purchaser represents as follows:
(a) Purchaser is a corporation that was duly organized and is
validly existing and in good standing under the laws of the State of Utah.
(b) Purchaser owns Podiatrx, Inc., Xxxxx J, Inc, Proctozone, Inc.,
IMX Select Benefits Corporation, and six inactive (the "Subsidiaries"). Each
Subsidiary has been duly incorporated and is validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The
Purchaser's interest in the capital stock of each Subsidiary constitutes all
outstanding shares of capital stock thereof, and there are no rights,
subscriptions, warrants, options, conversion rights, calls or other agreements
or commitments of any kind outstanding respecting the issuance of any capital
stock of any Subsidiaries. Each Subsidiary, other than Podiatrx, Inc., Xxxxx J,
Inc, Proctozone, Inc., and IMX Select Benefits Corporation, is inactive with no
material assets or operations.
(c) The authorized capital stock of Purchaser consist of
51,000,000 shares, par value $.001 per share, of which 50,000,000 shares are
common stock and 1,000,000 shares are preferred stock and may be issued from
time to time in one or more series. As of the date of this Agreement,
approximately 8,917,000 shares of common stock prior to the 1 for 20
consolidation and no shares of preferred stock are issued and outstanding, and
approximately 297,000 (pre-consolidation) shares of common stock are reserved
for issuance upon the exercise of outstanding warrants, all of which shall
expire upon confirmation of the Plan. Except for the forgoing and options to
purchase 510,000 (pre-consolidation) shares of common stock owned by Xxxxxxx
Xxxxxxx (which shall expire upon confirmation of the Plan), there are no other
rights, subscriptions, warrants, options, conversion rights, calls, or other
agreements or commitments of any kind outstanding to purchase or otherwise
acquire any shares of Purchaser's stock, or any other interest or securities or
obligations of any kind exchangeable for, or convertible into any shares of
stock, of any class of or any other equity interest in Purchaser or obligating
Purchaser to grant, extend, or enter into any such agreement or commitment.
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(d) As of the day of this Agreement, Purchaser's common stock was
held by approximately 340 shareholders of record, and, to the knowledge of
Purchaser, approximately 200 additional beneficial owners whose shares are
registered in street name.
(e) Purchaser's common stock is registered under Section 12(g) of
the Securities Exchange Act of 1934.
(f) True and complete copies of Purchaser's and each Subsidiary's
certificate of incorporation and by-laws, including all amendments thereto, have
been delivered to Sellers.
(g) The execution, delivery, and performance of the transactions
contemplated by this Agreement have been duly authorized by the Board of
Directors of Purchaser, and will not contravene any provisions of law, an order
of any court or other agency of government, or of its Articles of Incorporation
or Bylaws. Any and all consents, approvals, authorizations, or orders of or
registrations or qualifications with any person, bank, governmental body, or
court having authority or power to regulate supervise or direct the business and
affairs of Purchaser necessary for the consummation of the transactions
specified in this Agreement shall have been obtained prior to the Closing Date.
(h) This Agreement constitutes the legal, valid, and binding
obligation of Purchaser enforceable against it in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other similar laws relating to or affecting
creditors' rights generally and court decisions with respect thereto, and the
award by courts of money damages rather than specific performance of contractual
provisions involving matters other than the payment of money.
(i) Nothing in any agreement to which Purchaser is a party
prohibits the execution or implementation of this Agreement.
(j) This Agreement is not in violation of any law or regulation of
any governmental jurisdiction in which Purchaser or any Subsidiary does
business.
(k) The IMX Stock, when issued in accordance with this Agreement,
upon conversion or pursuant to the IMX Preferred, or pursuant to the IMX Note,
will be duly authorized, validly issued, outstanding, fully paid, and
non-assessable.
(l) The reports and other documents filed by Purchaser with the
United States Securities and Exchange Commission ("SEC" or the "Commission") and
the Bankruptcy Court of the Southern District of Florida (the "Bankruptcy
Court") were complete and accurate when filed and have been updated or
supplemented as appropriate. The financial statements included or referenced
therein were prepared in accordance with generally accepted accounting
principals, consistently applied, and accurately reflect the financial condition
of Purchaser and the results of its operations for the periods to which they
relate. There has been no material change in the financial condition or the
operations of Purchaser that has not been included in a report filed with the
SEC or the Bankruptcy Court.
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(m) Reference is made to an unaudited consolidated balance sheet
of Purchaser and the Subsidiaries as of March 31, 2001 included in the
Purchaser's Quarterly Report on Form 10-QSB for the first quarter of 2001(the
"Balance Sheet"). The Balance Sheet is in accordance with the books and records
of the Purchaser and its Subsidiaries, was prepared in accordance with generally
accepted accounting principals, and accurately reflects in all material respects
to financial condition of the Purchaser and the Subsidiaries as of its date.
There has been no material change in the financial condition of Purchaser and
the Subsidiaries since the date of the Balance Sheet.
(n) Except as set forth on Schedule 4.02(n) or reflected in the
Balance Sheet, upon the approval of Purchaser's Plan by the Bankruptcy Court,
neither Purchaser nor any Subsidiary shall have been liability, commitment or
obligation of any nature, whether absolute, accrued, contingent or otherwise, or
whether due or to become due.
(o) Except for the Bankruptcy Proceeding or any proceeding or
referred to therein, neither Purchaser nor any subsidiary is a party to any
civil litigation or arbitration proceeding except as listed on Schedule 4.02(o).
Purchaser has no knowledge of and has received no notice of any criminal,
regulatory, or compliance proceedings or threatened proceedings from or by any
government or governmental entity or agency except as listed on the Schedule.
Purchaser has provided Seller with a copy of the pleadings or a summary of the
proceedings listed, as well as any letters from Purchaser's counsel to
Purchaser's auditors for any fiscal year after 1996 relating to litigation,
contingent liabilities, and other matters.
(p) All statements contained in any certificate or other
instruments delivered by or on behalf of the Purchaser pursuant hereto, or in
connection with the transactions contemplated hereby, shall be deemed
representations and warranties by the Purchaser.
(q) The IRS has not audited Purchaser's tax returns since 1995
except as listed on Schedule 4.02(q). Copies of any audit papers and any other
communications with the IRS have been delivered to Seller.
(r) (i) Up to and as of the Closing Date, Purchaser and each
subsidiary has duly and timely filed where required all federal, state
and local tax returns required to be filed prior to the date of this
Agreement, including income, employment, rent and sales and use tax
returns, and, except as noted on Schedule 4.02(r), has paid all taxes
due and payable on such returns, all deficiencies and assessments
notice of which has been received, all other taxes, and all Other
Charges due and payable on or before the date of this Agreement.
(ii) There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the
filing of any tax returns by Purchaser or any Subsidiary or for the
payment by, or assessment against, either of any tax, deficiency,
assessment or Other Charges.
(iii) Except as specified in the Bankruptcy proceeding,
there are no suits, actions, claims, audits, investigations, inquiries
or proceedings pending against Purchaser or any Subsidiary in respect
of any unpaid taxes, deficiencies, assessments or Other Charges and
there are no such threatened suits, actions, claims, audits,
investigations or inquiries.
(iv) Except as specified in the Bankruptcy proceeding,
purchaser has withheld or collected from each payment made to each of
its employees the amount of all taxes required to be withheld or
collected there from and has paid the same to the proper tax receiving
officers.
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(v) Except as specified in the Bankruptcy proceeding,
Purchaser is not in arrears in the payment of Federal, state and local
withholding taxes, FICA, Medicare, real estate taxes and assessments,
and sales taxes.
(s) Neither Purchaser, any Subsidiary, nor any of their officers,
employees or agents, nor any other person acting on behalf of any of them, has,
directly or indirectly, within the past five years given or agreed to give any
gift or similar benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or agent of a
customer or supplier, or official or employee of any governmental agency or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office or other person who is or may be in a position to help
the business of Purchaser or any Subsidiary (or assist it in connection with any
actual or proposed transaction) which (i) might subject Purchaser or any
Subsidiary to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of Purchaser or
any Subsidiary or (iii) if not continued in the future, might adversely affect
the assets, business, operations or prospects of Purchaser or any Subsidiary.
(t) None of the representations, warranties, covenants or
agreements by Purchaser in this Agreement, nor any certificate or schedule
furnished or to be furnished pursuant hereto, or to the Bankruptcy Court,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements of facts
contained therein, in light of the circumstances under which they were made, not
misleading.
(u) Except as set forth on Schedule 4.02(u), neither the Purchaser
nor any Subsidiary has any employees, and such schedule describes all employment
contracts.
(v) Schedule 4.02(v) lists all material contracts to which
Purchaser or any Subsidiary is a party. For purposes hereof, "material" shall
mean a contract which provides for the payment or receipt of an amount in excess
of $10,000 in any calendar year, or which is otherwise material to the conduct
of the business of the Purchaser or the Subsidiary as presently conducted.
(w) Other than as described in Schedule 4.02(w), no Subsidiary
owns any real property.
(x) Purchaser has provided Sellers with true and complete copies
of the options granted to Xxxxxxx X. Xxxxxxx, Xxxx Xxxxxxxxxx, and Xxxx Xxxxxx
(the "Medicis Options") and the agreement transferring the beneficial ownership
there of to Purchaser. The Medicis Options are in full force and effect, have
not been exercised with respect to those portions eligible for exercise in 2001,
2002, and 2003, and have not been modified or amended in any manner. Purchaser
has the beneficial ownership of the Medicis Options, subject only to a lien in
the amount of $12,500 in favor of Xx-Xxxx Xxxxxxx as described in the Plan.
(y) (i) Purchaser is acquiring the Property for investment
and not with a view towards distribution. Purchaser acknowledges and
understands that it must bear the economic risk of an investment in the
Property being acquired pursuant hereto for an indefinite period of
time since it has not been registered under the Securities Act and,
therefore, cannot be sold unless they are either subsequently
registered under the Securities Act or an exemption from such
registration is available and favorable opinions of counsel in form and
substance satisfactory to Purchaser to that effect are obtained. The
instruments representing the Shares and the Notes and any TDMI
securities obtained upon exercise of the Option (unless such securities
have been registered) shall bear on their face the following legend:
The interests represented by this instrument have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"). They have been acquired for investment and
not for distribution or resale. They may not be mortgaged,
pledged, hypothecated or otherwise transferred without an
effective registration statement for such shares under the
Securities Act or an opinion of counsel for the Corporation
that such registration is not required
11
(ii) Purchaser has had the opportunity to ask questions of
and receive answers from representatives of Sellers or persons acting
on its behalf concerning the terms and conditions of the proposed
investment in the Property, has had the opportunity to obtain
additional information necessary to verify the accuracy of information
previously furnished about the Property, and has requested, received,
reviewed, and considered all information it deems relevant in making an
informed decision to purchase the Property.
ARTICLE V CONDITIONS PRECEDENT TO THE CLOSING
SECTION 5.01 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
------------ -------------------------------------------------------
Notwithstanding any other provision herein, the obligations of the
Purchaser under this Agreement are, at the option of the Purchaser, subject to
the fulfillment of each of the conditions set forth below.
(a) The Bankruptcy Court shall have approved the Plan.
(b) The representations of the Sellers contained in this
Agreement, or otherwise made in writing in connection with the transactions
contemplated hereby, shall be true and correct in all material respects on and
as of the Closing Date. On or before the Closing Date, the Seller shall have
complied with and duly performed any and all covenants, agreements, and
conditions in all material respects, on its part to be complied with or
performed pursuant to or in connection with this Agreement on or before the
Closing Date.
(c) The Purchaser shall have received a certificate executed by
the Secretary of each Seller setting forth a copy of the resolutions adopted by
its Board of Directors approving the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby.
(d) The Purchaser shall have received the opinions of Xxxxxx,
Xxxxx & Xxxxxxx LLP, counsel for Seller as to United States matters and Xxxxxx
Xxxxx & Co., counsel for Seller as to English matters, dated as of the Closing
Date to the effect that (i) CB, Envesta, Findstar, and TDMI are corporations
that are validly existing and in good standing under the laws of the
jurisdiction of their incorporation and have the corporate power to carry on
their business as it is now being conducted; (ii) any and all consents or orders
of any and all courts or governmental agencies, administrative bodies or lenders
or others known to counsel have been obtained as of the Closing Date, which are
required for the consummation of the transactions contemplated by this
Agreement; (iii) this Agreement has been duly executed and delivered by Sellers,
and is the valid and binding obligation of Sellers, in accordance with its
terms, subject only to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and other similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto,
and the award by courts of money damages rather than specific performance of
contractual provisions involving matters other than the payment of money; and
(iv) the transactions contemplated hereby will not cause a breach of the
certificate of incorporation or by-laws of Seller or Findstar.
12
(e) No action or proceeding shall have been instituted to restrain
or prohibit the acquisition by Purchaser, or the conveyance by any Seller, of
the Property.
(f) The Property has not been subjected to any lien, charge, or
any other encumbrance not disclosed herein.
(g) TDMI and Findstar shall not have suffered any destruction or
damage by fire, explosion or other calamity exceeding Ten Thousand Dollars
($10,000.00) in value not covered by insurance, nor has any other event,
condition, or state of facts of any character occurred which materially and
adversely affects, or, to the best of the knowledge of the Sellers, threatens to
materially and adversely affect, the Property, business or financial condition
of the TDMI and Findstar.
(h) Sellers have executed any Documents (as defined below) that
require their execution.
SECTION 5.02 CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION TO CLOSE
------------ --------------------------------------------------------
Notwithstanding any other provision herein, the obligations of the
Sellers under this Agreement are, at the option of each Seller, subject to the
fulfillment of each of the conditions set forth below.
(a) The Bankruptcy Court shall have approved the Plan, and the
approval shall not be the subject of any appeal.
(b) The representations of the Purchaser contained in this
Agreement, or otherwise made in writing in connection with the transactions
contemplated hereby, shall be true and correct in all material respects on and
as of the Closing Date. On or before the Closing Date, the Purchaser shall have
complied with and duly performed any and all covenants, agreements, and
conditions in all material respects, on its part to be complied with or
performed pursuant to or in connection with this Agreement on or before the
Closing Date.
(c) The Sellers shall have received a certificate dated as of the
Closing Date executed by Secretary of the Purchaser setting forth a copy of the
resolutions adopted by Purchaser's Board of Directors approving the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
(d) The Sellers shall have received an opinion of Xxxx Xxxx
Xxxxxx, Esq., counsel for the Purchaser, dated as of the Closing Date to the
effect that (i) Purchaser is a corporation that was duly incorporated and is
validly existing under the laws of the state of Utah and has the corporate power
to carry on its business as it is now being conducted; (ii) any and all consents
or orders of any and all courts (other than the Bankruptcy Court) or
governmental agencies, administrative bodies or lenders or others known to
counsel have been obtained as of the Closing Date, which are required for the
consummation of the transactions contemplated by this Agreement; (iii) this
Agreement and the IMX Note has been duly executed and delivered by Purchaser,
and is the valid and binding obligation of Purchaser, in accordance with its
terms, subject only to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and other similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto,
and the award by courts of money damages rather than specific performance of
contractual provisions involving matters other than the payment of money; (iv)
counsel has no actual knowledge of a material breach by Purchaser of any
representation made by it pursuant to this Agreement; (v) the issuance of the
IMX Stock to the Seller will be exempt from the registration provisions of the
Securities Act and will not violate the registration provisions of Section 5 of
the Securities Act; (vi) the IMX Stock has been duly authorized and, when
issued, will be duly issued, fully paid, and non-assessable; and (vii) the
transactions contemplated hereby will not cause a breach of the certificate of
incorporation or by-laws of Purchaser.
13
(e) The Sellers shall have received an opinion of Xxxxxx & Zeder,
bankruptcy counsel for the Purchaser, dated as of the Closing Date to the effect
that the Bankruptcy Court has approved Purchaser's Plan of Reorganization and is
the plan is effective and not subject to appeal.
(f) No action or proceeding shall have been instituted to restrain
or prohibit the acquisition by the Purchaser, or the conveyance by any Seller,
of the Property.
(g) Purchaser has executed any Documents (as defined below) that
require its execution.
(h) The certificate of designation respecting the IMX Preferred
shall have been filed with the Secretary of State of Utah.
(i) Each director and officer of the Purchaser and each Subsidiary
shall have resigned his position, and shall have released the Purchaser or
Subsidiary from any liability as of the Closing Date (which release shall not
affect such person's entitlement to indemnification pursuant to Section 8.10
below).
(j) The Medicis Options shall not have been transferred, amended,
or modified in any manner, and no portion exercisable in 2001, 2002, or 2003
shall have been exercised.
(k) The Purchaser shall have executed appropriate documentation to
become a party, as successor to Seller, to the stockholders agreement respecting
TDMI.
ARTICLE VI THE CLOSING
SECTION 6.01 THE CLOSING CONFERENCE AND CLOSING DATE
------------ ---------------------------------------
The Closing Conference shall take place at Sellers' business office or
at another place as agreed between the Parties. It shall be held at 10:00
o'clock AM, local time. The Closing Date shall be on September 30, 2001.
SECTION 6.02 SELLER'S RESPONSIBILITIES AT THE CLOSING CONFERENCE
------------ ---------------------------------------------------
At the Closing Conference, Sellers shall deliver all the instruments
listed in this subsection ("Documents"):
(i) The certificates evidencing the Shares, and the
Findstar Stock together with executed assignments for each certificate.
(ii) The Notes, properly endorsed for transfer.
(iii) An assignment of the Option in form satisfactory to
Purchaser, including the consent of the Grantor Representatives
thereto.
14
(iv) The opinions of Xxxxxx, Xxxxx & Xxxxxxx LLP and
Xxxxxx Xxxxx & Co.
(v) The officers' certificates as required by
Section 5.01(c).
SECTION 6.03 PURCHASER'S RESPONSIBILITIES AT THE CLOSING CONFERENCE
------------ ------------------------------------------------------
At the Closing Conference, Purchaser shall take the actions listed
below:
(a) Purchaser shall deliver certificates of IMX Common and IMX
Preferred and the IMX Note registered in the name of the appropriate Seller
representing satisfaction of the entire the Purchase Price.
(b) Purchaser shall accept the Shares, the Findstar Stock, the
Notes, and the assignment of the Option.
(c) Purchaser shall deliver the opinions of Xxxxxx & Xxxxx and
Xxxx Xxxx Xxxxxx.
(d) The Purchaser shall deliver the officers' certificate as
required by Section 5.02(c).
(e) The Purchaser shall deliver to Xxxxxxx Securities, Inc. or its
designee the commission due to it.
(f) The Purchaser shall deliver to CB all forms necessary to
enable Purchaser exercise all tranches of the Medicis Options.
ARTICLE VII OTHER COVENANTS AND POST CLOSING OBLIGATIONS
SECTION 7.01 ADDITIONAL OBLIGATIONS OF PURCHASER
------------ -----------------------------------
(a) Between the date of this Agreement and the Closing Date,
Purchaser shall permit each Seller and its authorized agents and representatives
to have access to the assets, offices, books and records and employees of the
Purchaser and each Subsidiary, and shall furnish to the Sellers such information
and documents in its possession as Sellers may reasonably request.
(b) Between the date of this Agreement and the Closing Date,
unless Sellers shall otherwise consent in writing, Purchaser shall and shall
cause each Subsidiary to conduct its operations only in the ordinary course of
business consistent with past practice and shall not enter into any material
contract, hire any employees, sell or otherwise dispose of its assets (other
than sales of inventory in the ordinary course of business), borrow money, make
any capital expenditures, purchase or acquire material assets or commit to do
any of the foregoing. Purchaser shall use all reasonable efforts to cause
Purchaser's Plan of Reorganization to be approved by the Bankruptcy Court.
(c) Purchaser shall not issue any press releases or make any other
media comments without the prior written consent of Sellers.
(d) Purchaser shall not exercise the Medicis Options exercisable
in 2001, 2002, and 2003 and shall not alter, amend, or modify the options.
SECTION 7.02 TERMINATION
------------ -----------
This Agreement and the transactions contemplated hereby may be terminated and
abandoned:
(a) by the mutual consent of Sellers and Purchaser;
15
(b) by either Sellers or Purchaser, if the Closing hereunder shall
not have occurred prior to the close of business on December 31, 2001;
(c) by either Sellers or Purchaser if any governmental authority
with jurisdiction over such matters shall have issued a final and non-appealable
order permanently restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement; or
(d) by either the Sellers or the Purchaser in the event that such
party's conditions to closing shall have become impossible to be satisfied;
provided that prior to any such termination the terminating party shall give the
other party 30 days written notice setting forth in detail the cause for
termination, and the other party shall have such 30 day period to effect a cure.
SECTION 7.03 {Intentionally left blank}
------------ --------------------------
SECTION 7.04 SELLERS' REGISTRATION RIGHTS
------------ ----------------------------
(a) Demand Registration. Purchaser agrees that upon receipt of
written notice (a "Registration Demand") from any Seller requesting registration
of shares of IMX Common held by it, whether acquired hereunder or otherwise
("Securities"), Purchaser shall with reasonable promptness, and in any case not
later than ninety (90) days after receipt by Purchaser of the Registration
Demand, file a registration statement under the Securities Act of 1933 (the
"Securities Act") with the Commission relating to the Securities as to which
registration is requested in the Registration Demand. Purchaser shall use its
best efforts to make such registration statement become effective and to qualify
the same under the Blue Sky laws of such states as may be requested; provided,
however, that with respect to compliance with Blue Sky laws, Purchaser shall not
be obligated to qualify as a foreign corporation or as a dealer in securities or
to execute or file any general consent to service of process under the laws of
any such state where it is not so subject. Purchaser shall be obligated to
effect registration and qualification pursuant to this Section 7.04 four times
at the request of Sellers; provided that if a Seller informs Purchaser by
written notice that it is withdrawing its Registration Demand and pays all of
Purchaser's out-of-pocket expenses with respect to such registration and
qualification incurred to the date of the notice under this Section 7.04, then
the registration statement need not be filed and the effort will not count as a
registration and qualification (or an exercise of rights) under this Section
7.04.
(b) Piggyback Rights. If Purchaser shall at any time propose to
file a registration statement under the Securities Act on behalf of Purchaser or
otherwise, Purchaser shall give written notice of such registration no later
than thirty (30) days before its filing with the Commission to each Seller;
provided, that registrations relating solely to securities to be issued by
Purchaser in connection with any acquisition, employee stock option or employee
stock purchase or savings plan on Form S-4 or S-8 (or successor Forms) under the
Securities Act shall not be subject to this Section 7.04. If any Seller so
requests within thirty (30) days, Purchaser shall include in any such
registration statement the Securities held by Seller and requested to be
included in such registration.
(c) Expenses. Except as otherwise specifically provided in this
Section 7.04, the entire costs and expenses of any registration and
qualification pursuant to Section 7.04 hereof shall be borne by Purchaser. Such
costs and expenses shall include, without limitation, underwriting fees or
commissions (but not with respect to Securities being sold by Sellers), the fees
and expenses of counsel for Purchaser and of its accountants, all other costs,
fees and expenses of Purchaser incident to the preparation, printing and filing
under the Securities Act of the registration statement and all amendments and
supplements thereto, the cost of furnishing copies of each preliminary
prospectus, each final prospectus and each amendment or supplement thereto to
underwriters, dealers and other purchasers and the costs and expenses (including
fees and disbursements of counsel) incurred in connection with the qualification
under the Blue Sky laws of various jurisdictions.
16
(d) Procedures.
----------
(i) In the case of each registration or qualification
pursuant to Section 7.04, Purchaser will keep Sellers advised in
writing as to the initiation of proceedings for such registration and
qualification and as to the completion thereof, and will advise
Sellers, upon request, of the progress of such proceeding.
(ii) At Purchaser's expense, Purchaser will keep each
registration and qualification under this Section 7.04 effective (and
in compliance with the Securities Act) by such action as may be
necessary or appropriate for a period of one hundred eighty (180) days
after the effective date of such registration statement, including,
without limitation, the filing of post-effective amendments and
supplements to any registration statement or prospectus necessary to
keep the registration statement current and the further qualification
under any applicable Blue Sky or other state securities laws to permit
such sale or distribution, all as requested by a Seller. Purchaser will
immediately notify each Seller at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
(iii) Purchaser will furnish to each Seller and its
underwriters, if any, (A) an opinion of counsel for Purchaser, dated
the effective date of such registration statement, and (B) a so-called
"cold comfort" letter signed by the independent public accountants who
have audited Purchaser's financial statements included in such
registration statement, and such opinion of counsel and accountants'
letter shall cover substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of such accountants' letter, with respect to events subsequent
to the date of such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to
underwriters in connection with underwritten public offerings of
securities.
(iv) Without limiting any other provision hereof, in
connection with any registration under this Section 7.04, Purchaser
will use its best efforts to comply with the Securities Act, the
Securities Exchange Act of 1934 (the "Exchange Act") and all applicable
rules and regulations of the Commission, and will make generally
available to its securities holders, as soon as reasonably practicable,
an earnings statement covering a period of at least twelve (12) months,
beginning with the first month of the first fiscal quarter after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
(v) In connection with any registration under this
Section 7.04, Purchaser will provide a transfer agent and registrar and
shall cause the securities being registered to be listed on such
securities exchange or eligible for trading on such over-the-counter
market as other securities of Purchaser of the same class are traded,
in each case not later than the effective date of such registration
statement.
17
(vi) In connection with any registration under this
Section 7.04, Purchaser will, if requested by the underwriters, if any,
enter into an underwriting agreement with such underwriters for such
offering, such agreement to contain such representations and warranties
by Purchaser and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary
distributions, including, without limitation, provisions relating to
indemnification and contribution. The representations and warranties
by, and the other agreements on the part of, Purchaser to and for the
benefit of such underwriters shall also be made to and for the benefit
of Sellers.
(vii) If Purchaser at any time proposes to register any of
its securities under the Securities Act, whether or not for sale for
its own account, and such securities are to be distributed by or
through one or more underwriters, then Purchaser will make reasonable
efforts if requested by any Seller, to arrange for such underwriters to
include such Securities as requested by that Seller among the
securities to be distributed by or through such underwriters.
(viii) In connection with the preparation and filing of each
registration statement under this Section 7.04, Purchaser will give
Sellers and their underwriters, if any, and their respective counsel
and accountants, the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed
with the Commission, and each amendment thereof or supplement thereto,
and will give each of them such access to its books and records and
such opportunities to discuss the business of Purchaser with its
officers, its counsel and the independent public accountants who have
certified its financial statements, as shall be necessary, in the
opinion of Sellers or such underwriters or their respective counsel, in
order to conduct a reasonable and diligent investigation within the
meaning of the Securities Act. Without limiting the foregoing, each
registration statement, prospectus, amendment, supplement or any other
document filed with respect to a registration under this Section 7.04
shall be subject to review and reasonable approval by Sellers and by
their counsel.
(e) Provision of Documents. Purchaser will, at the expense of
Purchaser, furnish to each Seller such number of registration statements,
prospectuses, and other documents incident to any registration or qualification
referred to in this Section 7.04 as any Seller from time to time may reasonably
request.
(f) Indemnification.
---------------
(i) Purchaser will indemnify and hold harmless Sellers
and any underwriters (as defined in the Securities Act) for Sellers and
each person, if any, who controls a Seller or such underwriters within
the meaning of the Securities Act against any losses, claims, damages
or liabilities, joint or several, and expenses (including reasonable
attorneys' fees and expenses and reasonable costs of investigation) to
which the Sellers or their underwriters or any controlling person may
be subject, under the Securities Act or otherwise, insofar as any
thereof arise out of or are based upon (a) any untrue statement or
alleged untrue statement of a material fact contained in (i) any
registration statement under which securities were registered under the
Securities Act pursuant to this Section 7.04, any prospectus or
preliminary prospectus contained therein, or any amendment or
supplement thereto, or (ii) any other document incident to the
registration of the Securities, under the Securities Act or the
qualification of the Securities under any state securities laws
applicable to Purchaser, or (b) the omission or alleged omission to
state in any item referred to in the preceding clause (a) a material
fact required to be stated therein or necessary to make the statements
therein not misleading or (c) any violation or alleged violation by
Purchaser of the Securities Act, the Exchange Act or any other federal
or state securities law, rule or regulation applicable to Purchaser and
relating to action or inaction by Purchaser in connection with any such
registration or qualification, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any
untrue statement or alleged untrue statement or omission or alleged
omission based upon information furnished to Purchaser in writing by a
Seller or by any underwriter for a Seller expressly for use therein
(with respect to which information a Seller or such underwriter shall
so indemnify and hold harmless Purchaser, any underwriters for
Purchaser and each person, if any, who controls Purchaser or such
underwriters within the meaning of the Securities Act, provided,
however, that the maximum liability of a Seller or such underwriter
under this indemnity will be limited to the amount of the net proceeds
actually received by that Seller or such underwriter from the sale of
such Securities to which such indemnification relates).
18
(ii) Promptly upon receipt by a party indemnified under
this Section 7.04 of notice of the commencement of any action against
such indemnified party in respect of which indemnity or reimbursement
may be sought against any indemnifying party under this Section 7.04,
such indemnified party shall notify the indemnifying party in writing
of the commencement of such action, but the failure so to notify the
indemnifying party shall not relieve it of any liability which it may
have to any indemnified party otherwise than under this Section 7.04
unless such failure materially adversely affects the defense of such
action. In case notice of commencement of any such action shall be
given to the indemnifying party as above provided, the indemnifying
party shall be entitled to participate in and, to the extent it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense of such action at its own expense, with counsel
chosen by it and satisfactory to such indemnified party. The
indemnified party shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (a) the
indemnifying party agrees to pay the same, (b) the indemnifying party
fails to assume the defense of such action with counsel satisfactory to
the indemnified party or (c) the named parties to any such action
(including any impleaded parties) have been advised by counsel that
representation of such indemnified party and the indemnifying party by
the same counsel would be inappropriate under applicable standards of
professional conduct (in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party). No indemnifying party shall be liable for any
settlement entered into without its consent, which consent shall not be
unreasonably withheld.
(iii) If the indemnification provided for in this Section
7.04 is unavailable or insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages, liabilities, expenses
or actions in respect thereof referred to in this Section 7.04, then
each indemnifying party shall in lieu of indemnifying such indemnified
party contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities,
expenses or actions in such proportion as is appropriate to reflect the
relative fault of Purchaser, on the one hand, and Sellers or their
underwriters on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities,
expenses or actions as well as any other relevant equitable
considerations, including the failure to give the notice required
hereunder. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact relates to information supplied by Purchaser, on the one
hand, or Sellers or their underwriters, on the other hand, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. Purchaser
and Sellers agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata
allocation or by any other method of allocation which did not take
account of the equitable considerations referred to above. The amount
paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or actions in respect thereof referred to
above shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the contribution
provisions of this Section, in no event shall the amount contributed by
a Seller exceed the net proceeds received by it from the sale of such
shares to which such contribution claim relates. No person guilty of
fraudulent misrepresentations (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation.
19
(g) Holdback. Purchaser agrees not to offer, sell, contract to
sell or otherwise dispose of any securities of Purchaser within seven (7) days
before or one hundred eighty (180) days after the date of any final prospectus
relating to any underwritten public offering of Securities on behalf of Sellers
except pursuant to the written consent of the underwriters for such offering.
(h) Priority and Precedence. Without each Seller's prior written
consent, Purchaser shall not grant to any other holder of its securities the
right to require it to file a registration statement with respect to such
securities or to include shares owned by such holder or holders in any
registration statement unless the provisions governing such right shall provide
that Securities held by Sellers shall be entitled to priority over shares of any
other holder or holders which shall be included in such registration statement
in the event that Purchaser or the underwriters in respect of such offering
shall conclude that it is not practicable to include all of the shares of all of
the holders making such request
ARTICLE VIII MISCELLANEOUS
SECTION 8.01 ENTIRE AGREEMENT; AMENDMENTS
------------ ----------------------------
This Agreement, including those additional agreements referred to in
the Schedules, embodies the entire understanding of the Parties. No amendment or
modification of this Agreement may be made except in writing, signed by the
Parties hereto.
SECTION 8.02 EXPENSES
------------ --------
Each party hereto shall pay its own expenses incidental to the
preparation of this Agreement, and the consummation of the transactions
contemplated hereby unless expressly provided herein.
SECTION 8.03 HEADINGS
------------ --------
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
SECTION 8.04 NOTICES
------------ -------
All notices, requests, demands, approvals, consents, waivers or other
communications hereunder shall be in writing and shall be deemed duly given if
personally delivered, mailed by registered or certified mail, postage prepaid,
or sent through a nationally recognized overnight express delivery service as
follows:
If to Purchaser to: IMX Pharmaceuticals, Inc.
Attn: Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxx., Xxxxx 000 X 0
Xxxx Xxxxx, Xxxxxxx 00000
20
If to Sellers to: Cater Xxxxxxx, plc
Attn: Xxxxxxx Xxxx
Lloyd's Avenue House
0 Xxxxx'x Xxxxxx
Xxxxxx, Xxxxxxx
XX0X 0XX
A party may change their address for purposes of this Section 8.04 by giving
notice hereunder.
SECTION 8.05 GOVERNING LAW; JURISDICTION
------------ ---------------------------
This Agreement and the legal relations among the Parties hereto shall
be governed by and construed in accordance with the substantive law of the State
of Florida without regard to conflict of law principles. The Parties consent to
the jurisdiction of the courts of the State of Florida or the U.S. District
Court for the Southern District of Florida as if all parts of the agreement were
negotiated and effectuated there.
SECTION 8.06 BENEFICIARIES
------------ -------------
This Agreement shall inure to the benefit of and be binding upon the
Parties hereto and their respective successors and legal representatives.
Nothing in this Agreement, express or implied, is intended to confer on any
other person other than the Parties hereto or their respective successors and
legal representatives, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
SECTION 8.07 COUNTERPARTS
------------ ------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument. Its execution shall be effective when
copies of signed signature pages are exchanged by facsimile between the Parties.
SECTION 8.08 SEVERANCE
------------ ---------
If any section, subsection or provision of this Agreement, or the
application of such section, subsection, or provision, is held invalid, the
remainder of this Agreement and the application of such section, subsection or
provision to persons or circumstances other than those to which it is held
invalid shall not be affected thereby.
SECTION 8.09 SURVIVAL OF REPRESENTATIONS
------------ ---------------------------
The representations and warranties contained in this Agreement shall
survive the Closing for a period of one year. The covenants contained in this
Agreement shall survive the Closing until the expiration of the applicable
statute of limitations.
21
SECTION 8.10 INDEMNIFICATION
------------ ---------------
(a) Sellers shall indemnify and hold Purchaser, their officers,
directors, employees, and agents (each a "Seller Indemnified Entity") harmless
from and against, and reimburse a Seller Indemnified Entity with respect to, any
and all loss, damage, liability, cost and expense, including reasonable
attorneys' fees and costs incurred by the Seller Indemnified Entity by reason
of, or arising out of (i) the material breach of any representation made by
Sellers in this Agreement, provided, however, that the claim is made within
thirteen (13) months of the Closing Date, and (ii) Seller's failure to perform
any action required by this Agreement.
(b) Purchaser shall indemnify and hold Sellers, their officers,
directors, employees and agents (each a "Purchaser Indemnified Party") harmless
from and against, and reimburse a Purchaser Indemnified Party with respect to,
any and all loss, damage, liability, cost and expense, including reasonable
attorneys' fees and costs, incurred by the Purchaser Indemnified Party by reason
of or arising out of (i) the material breach of any representation or covenant
made by Purchaser in this Agreement, provided, however, that the claim is made
within thirteen (13) months of the Closing Date, and (ii) the failure by
Purchaser to perform any action required by this Agreement.
(c) If a party hereto seeks indemnification under this Section
8.10, such party (the "Indemnified Party") shall give written notice to the
other party (the "Indemnifying Party") of the facts and circumstances giving
rise to the claim. In that regard, if any suit, action, claim, liability or
obligation (a "Proceeding") shall be brought or asserted by any third party
which, if adversely determined, would entitle the Indemnified Party to indemnity
pursuant to this Section 8.10, the Indemnified Party shall within thirty (30)
days notify the Indemnifying Party of the same in writing, specifying in detail
the basis of such claim and the facts pertaining thereto, provided, that the
failure to so notify an Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent such failure shall have
harmed the Indemnifying Party. The Indemnifying Party, if it so elects, shall
assume and control the defense of such proceeding (and shall consult with the
Indemnified Party with respect thereto). If the Indemnifying Party elects to
assume and control the defense of a Proceeding, it will provide notice thereof
within thirty (30) days after the Indemnified Party has given notice of the
matter and the Indemnified Party shall have the right to employ counsel separate
from counsel employed by the Indemnifying Party in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
employed by the Indemnified Party shall be at the expense of the Indemnified
Party unless (i) the employment thereof has been specifically authorized by the
Indemnifying Party in writing or (ii) the Indemnifying Party has failed to
assume the defense and employ counsel. The Indemnifying Party shall not be
liable for any settlement of any Proceeding, the defense of which it has elected
to assume, which settlement is effected without the written consent of the
Indemnifying Party. If there shall be a settlement to which the Indemnifying
Party consents or a final judgment for the plaintiff in any Proceeding, the
defense of which the Indemnifying Party has elected to assume, the Indemnifying
Party shall indemnify the Indemnified Party with respect to the settlement or
judgment. If the Indemnifying Party elects to assume and control the defense,
the Indemnified Party shall take all reasonable efforts necessary to assist the
Indemnifying Party in such defense.
(d) Any amount due to Sellers hereunder shall be satisfied by
Purchaser delivering to Sellers that number of shares of IMX Common obtained by
dividing the amount due by $4.00 (subject in the case for each such delivery to
equitable adjustment in the event of any stock split, stock dividend or similar
event effecting the IMX Common, and any amount due to Purchaser by Seller
hereunder shall be satisfied by the issuance to Sellers of that number of shares
of IMX Common obtained by dividing the amount due by $4.00 (subject to
adjustment as aforesaid); provided, however, that at the election of any
indemnified party, the indemnifying party shall in lieu of delivering or issuing
stock, shall pay in cash any outs-of-pocket expenses or loss incurred.
22
(e) This Section 8.10 shall provide the exclusive remedy of the
Sellers in respect of any breach by the Purchaser of any of its representations
and warranties contained herein. This Section 8.10 shall provide the exclusive
remedy of the Purchaser in respect of any breach by any Seller of its
representations and warranties.
SECTION 8.11 BROKERS AND FINDERS
------------ -------------------
All brokers' commissions related to this transaction which are due to
Xxxxxxx Securities shall be borne by Purchaser either directly or by reimbursing
one or more of the Sellers for the commissions. Payment shall be made in IMX
Common as specified in a separate agreement between Purchaser, and Xxxxxxx
Securities. No other broker or finder shall be entitled to any fees or
commissions relating to this Agreement.
SECTION 8.12 INTERPRETATION
------------ --------------
The use of words "it" or "its," in reference to any party hereto shall
be construed to be a proper reference even though a party may be a partnership,
an individual or two or more individuals. The term "person" includes
individuals; corporations, partnerships, associations, or other legal entities;
and governments, governmental subdivisions, agencies, or instrumentalities.
Words of one gender shall be deemed to include the other, or both, or neither. A
provision of this Agreement that requires a party to perform an action shall be
construed as requiring the party to perform the action or to cause such action
to be performed. A provision of this Agreement that prohibits a party from
performing an action shall be construed as prohibiting such party from
performing such action or permitting others to perform such action. Wherever the
term "including" is used herein, the same shall be deemed to read "including,
but not limited to." The singular shall be deemed to include the plural, and the
plural shall be deemed to include the singular. The agreements contained in this
Agreement shall not be construed as independent covenants. "Any" shall be deemed
to read "any and all" whenever applicable. "Anytime" shall be deemed to read
"anytime and from time to time" whenever applicable. The conjunction "and" shall
include the conjunction "or" whenever applicable. The conjunction "or" shall
include the conjunction "and" whenever applicable.
{Balance of page intentionally left blank}
23
IN ORDER TO INDICATE THEIR INTENTION to be bound, the Parties hereto
have caused this Agreement to be duly executed as of the date first above
written by their respective duly authorized officers.
IMX PHARMACEUTICALS, INC.
By: /s/ Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx, Chairman & CEO
CATER XXXXXXX, PLC
By: /s/ Xxxxxxx Xxxx
-------------------------------------
Xxxxxxx Xxxx,
ENVESTA, PLC
By: /s/ Xxxxxxx Xxxx
-------------------------------------
Xxxxxxx Xxxx,
24
Schedule 3.02(b)
Terms of Preferred Stock
------------------------
ARTICLES OF AMENDMENT OF AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
IMX PHARMACEUTICALS, INC.
Pursuant to the provisions of Chapter 10a, Section 16-10a-602 of the
Utah Revised Business Corporation Act, IMX Pharmaceuticals, Inc. hereby amends
its Amended and Restated Articles of Incorporation as follows:
ARTICLE IV-STOCK is hereby amended by adding the following:
"The Corporation hereby creates and authorizes a series of Preferred
Stock of 350,000 shares entitled Class B Convertible Preferred Stock ("Class B
Preferred") and that each share have the following preferences, rights,
qualifications, limitations and restrictions:
1. Each share of Class B Preferred Stock shall have a stated value of
$80.00.
2. Each share of Class B Preferred Stock shall be entitled to receive an
annual dividend on December 31 of each year equal to five (5%) percent
of the per share stated value. If a dividend is not paid when due, it
shall accumulate until paid or otherwise satisfied. The Company may, in
its sole discretion, pay any current or accumulated dividend by issuing
to the holders of the Class B Preferred the number of shares of Common
Stock equal in value to the amount of unpaid dividends. For the
purposes of calculating the number of shares of Common Stock to be
issued, the Common Stock shall be valued at the average of the closing
bid and asked prices on the last 30 trading days before December 31 or,
if the dividend is not timely paid, on the 30 trading days ending five
(5) days before the dividend is paid.
3. The Class B Preferred Stock shall be convertible as follows:
(a) Number of Shares of Common Stock: One (1) share of Common
Stock shall be issued for every four ($4) dollars of stated
value of the Class B Preferred (the "Conversion Price")
(subject to adjustment as provided in section 3(f)).
(b) Method of Exercise: The conversion right may be exercised, in
whole or in part, by the surrender of the stock certificate or
stock certificates representing the Class B Preferred to be
converted at the principal office of the Company (or at any
other place as the Company may designate in a written notice
sent to the holder by first-class mail, postage prepaid, at
its address shown on the books of the Company) accompanied by
written notice of election to convert against delivery of that
number of whole shares of Common Stock as shall be computed in
accordance with section 3(a). Each Class B Preferred stock
certificate surrendered for conversion shall be endorsed by
its holder. In the event of any exercise of the conversion
right of the Class B Preferred granted herein, (i) stock
certificates for the shares of Common Stock purchased by
virtue of the exercise shall be delivered to the holder
forthwith, and (ii) unless the Class B Preferred has been
fully converted, a new Class B Preferred stock certificate,
representing the Class B Preferred not so converted, if any,
shall also be delivered to its holder forthwith. The stock
certificates for the shares of Common Stock so purchased shall
be dated the date of the surrender and the holder making the
surrender shall be deemed for all purposes to be the holder of
the shares of Common Stock so purchased as of the date of the
surrender.
(c) Commencement of Conversion Rights: The right to convert a
share of Class B Preferred shall begin on the earlier of (i)
October 1, 2002 or (ii) the effective date of a registration
statement under the Securities Act of 1933, as amended, for
the Common Stock into which the Class B Preferred may be
converted.
(d) Fractional Securities: No fractional shares of Common Stock
shall be issued in connection with any conversion of Class B
Preferred. In lieu of any fractional shares, the Company shall
make a cash payment therefore equal in amount to the
applicable fraction of the Conversion Price.
(e) Reservation of Shares: At all times that any Class B Preferred
is outstanding, the Company shall have authorized, and shall
have reserved for the purpose of issuance upon conversion or
exercise, a sufficient number of shares of Common Stock to
provide for the conversion into Common Stock of all Class B
Preferred then outstanding at the Conversion Price, as it may
be adjusted from time to time. Without limiting the generality
of the foregoing, if, at any time, the Conversion Price is
decreased, the number of shares of Common Stock authorized and
reserved for issuance upon the conversion of Class B Preferred
shall be proportionately increased.
(f) Adjustment of Conversion Price: The Conversion Price shall be
subject to adjustment from time to time upon the happening of
certain events, as follows:
(1) Reclassification, Consolidation or Merger or Share
Issuances. In case of any reclassification or change
of the outstanding Common Stock issuable upon
conversion of Class B Preferred (other than a change
in par value, or from par value to no par value, or
from no par value to par value, or as a result of
subdivision or combination), or in case of any
consolidation or merger of the Company with or into
another corporation (other than a merger with another
Company in which the Company is the surviving Company
and which does not result in any reclassification or
change -- other than a change in par value, or from
par value to no par value, or from no par value to
par value, or as a result of a subdivision or
combination -- of the outstanding Common Stock
issuable upon the conversion), or certain issuances
of any shares of Common Stock for consideration less
than the Conversion Price, the rights of the holders
of the outstanding Class B Preferred shall be
adjusted in the manner described below:
(a) If the Company is the surviving Company, the
Class B Preferred shall, without payment of
additional consideration therefore, be
deemed modified so as to provide that upon
conversion thereof the holder of the Class B
Preferred being converted shall be entitled
to receive, in lieu of each share of Common
Stock theretofore issuable upon conversion,
the kind and amount of shares of stock,
other securities, money and property
receivable upon the reclassification,
change, consolidation, or merger by the
holder of one share of Common Stock issuable
upon conversion of the Class B Preferred had
the conversion occurred immediately prior to
the reclassification, change, consolidation,
or merger. The Class B Preferred shall be
deemed thereafter to provide for adjustments
that shall be as nearly equivalent as may be
practicable to the adjustments provided for
in this Section 3(f). The provisions of this
clause (a) shall apply in the same manner to
successive reclassifications, changes,
consolidations, and mergers.
(b) In the event that the Company is not the
surviving Company, the surviving corporation
shall, without receipt of any additional
consideration therefore, issue a new Class B
Preferred providing that upon conversion
thereof, the holder thereof shall be
entitled to receive, in lieu of each share
of Common Stock theretofore issuable upon
conversion of the Class B Preferred, the
kind and amount of shares of stock, other
securities, money, and property receivable
upon the reclassification, change,
consolidation, or merger by the holder of
one share of Company Common Stock issuable
upon conversion of the Class B Preferred had
the conversion occurred immediately prior to
the reclassification, change, consolidation,
or merger. The new Class B Preferred shall
provide for adjustments that shall be as
nearly equivalent as may be practicable to
the adjustments provided for in this Section
3(f). The provisions of this clause (b)
shall apply in the same manner to successive
reclassifications, changes, consolidations
and mergers.
(c) Issuance of Common Stock. If the Company
shall issue any shares of Common Stock (or
any security convertible into or
exchangeable for shares of Common Stock)
other than Excluded Stock (as defined below)
without consideration or for a consideration
per share less than the Conversion Price,
the Conversion Price shall be adjusted, as
of the date of such issuance, to that price
determined by multiplying the Conversion
Price theretofore in effect by a fraction
(1) the numerator of which shall be the
total number of shares of Common Stock
outstanding on a fully-diluted basis
immediately prior to such issuance and (2)
the denominator of which shall be the total
number of shares of Common Stock outstanding
on a fully-diluted basis immediately after
such issuance of Common Stock. "Excluded
Stock" means (i) shares of Common Stock
issuable upon conversion of Class B
Preferred Stock as contemplated by Section
3(a) hereof and (ii) the shares of Common
Stock issuable under the terms of those
certain September 30, 2001 promissory notes
(all as adjusted equitably for stock
dividends, stock splits and combinations,
and shall include any additional shares of
Common Stock as may be issued by virtue of
applicable anti-dilution provisions).
(2) Subdivision or Combination of Shares. If the Company,
at any time while any of the Class B Preferred is
outstanding, shall subdivide or combine its Common
Stock, the Conversion Price (i) shall be
proportionately reduced, in case of subdivision of
shares, as of the effective date of the subdivision,
or (ii) shall be proportionately increased, in the
case of combination of shares, as of the effective
date of the combination.
(3) Certain Dividends or Distributions. While any of the
Class B Preferred is outstanding, the following shall
apply:
(a) Stock Dividends. If the Company shall pay a
dividend payable in Common Stock, effect a
stock split or make any other distribution
of Common Stock in respect of its Common
Stock, the Conversion Price shall be
adjusted, as of the date of the payment or
other distribution, to that price determined
by multiplying the Conversion Price
theretofore in effect by a fraction (1) the
numerator of which shall be the total number
of shares of Common Stock outstanding
immediately prior to dividend, stock split,
or distribution and (2) the denominator of
which shall be the total number of shares of
Common Stock outstanding immediately after
the dividend, stock split, or distribution
(plus, in the event that the Company paid
cash for fractional shares, the number of
additional shares which would have been
outstanding had the Company issued
fractional shares in connection with said
dividend, stock split, or distribution).
(b) Liquidating Dividends etc. If the Company
shall make a distribution of its property to
the holders of its Common Stock (other than
a distribution in accordance with Section 6)
as a dividend in liquidation or partial
liquidation or by way of return of capital
or other than as a dividend payable out of
funds legally available for dividends under
the Articles of Incorporation and the laws
of the State of Utah, the holders of the
Class B Preferred shall, upon conversion
thereof, be entitled to receive, in addition
to the number of shares of Common Stock
receivable thereupon, and without payment of
any consideration therefore, a sum equal to
the amount of any property as would have
been payable to them as owners of that
number of shares of Common Stock of the
Company receivable upon the conversion, had
they been the holders of record of Common
Stock on the record date for the
distribution and an appropriate provision
therefore shall be made a part of any
distribution.
(4) Notice of Adjustments. Whenever the Conversion Price
shall be adjusted pursuant to section 3(f) hereof,
the Company shall make a certificate signed by its
President or a Vice President and by its Treasurer,
Assistant Treasurer, Secretary, or Assistant
Secretary, setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the
adjustment, the method by which the adjustment was
calculated (including a description of the basis on
which the Board of Directors made any determination
hereunder), and the Conversion Price after giving
effect to the adjustment, and shall cause copies of
the certificate to be mailed (by first-class mail,
postage prepaid) to each holder of Class B Preferred
at its address shown on the books of the Company. The
Company shall make a certificate and mail it to each
holder promptly after each adjustment.
4. Except as otherwise provided by law, each holder of Class B Preferred,
by virtue of its ownership thereof, shall be entitled to cast that
number of votes equal to the number of shares of Common Stock into
which that holders Class B Preferred is then convertible pursuant to
Section 3(a) on each matter submitted to the Company's shareholders for
voting. Each vote shall be cast together with those cast by the holders
of Common Stock and not as a separate class except as otherwise
provided by law. The Class B Preferred shall not have cumulative voting
rights.
5. The Class B Preferred Stock shall be callable, upon not more than
ninety (90) days or less than thirty (30) days notice, at its stated
value at any time after January 31, 2003. A holder of Class B Preferred
Stock shall have until the date set forth in the notice as the call
date to exercise his conversion rights. If less than all the
outstanding Class B Preferred Stock is to be called, the certificates
to be called shall be selected at random or called pro-rata as
determined by the Board of Directors.
6. If the Company shall be voluntarily or involuntarily liquidated,
dissolved, or wound up, at any time any Class B Preferred shall be
outstanding, the holders of the then outstanding Class B Preferred
shall have a preference against the property of the Company available
for distribution to the holders of the Corporation's other equity
securities equal to the amount of $80.00 per share (the "Preferential
Amount"). In addition, the holders of the Class B Preferred shall be
entitled to receive a participating share of any further assets
available for distribution to holders of Common Stock, which
participating share shall be the same as that which the holders would
have been entitled to receive if, on the record date for determining
the recipients of any distributions, the holders were the holders of
record of the number of shares of Common Stock into which the
outstanding shares of Class B Preferred were then convertible. If the
assets of the Company available for distribution to the holders of
shares of the Class B Preferred upon dissolution, liquidation, or
winding up of the Company shall be insufficient to pay in full all
amounts to which the holders are entitled pursuant to the immediately
preceding portions of this paragraph, no distribution shall be made on
account of any shares of any other class or series of capital stock of
the Company ranking on a parity with or junior to the shares of the
Class B Preferred and any distribution to any other class of shares
ranking on a parity with the Class B Preferred shall be made ratably in
proportion to the full distributable amounts for which holders of all
the parity shares are respectively entitled upon the dissolution,
liquidation, or winding up.
7. The certificate evidencing ownership of the Class B Preferred Stock
shall be in the form attached to this resolution."
The foregoing Amendment to the Amended and Restated Articles of
Incorporation of IMX Pharmaceuticals, Inc. was approved and adopted by the Board
of Directors on __________, 2001 in accordance with the authorization of Article
IV of the Corporation's Amended and Restated Articles of Incorporation and with
the provisions of Chapter 10a, Section 16-10a-602 of the Utah Revised Business
Corporation Act. The Amendment was duly adopted by the Board of Directors
without Shareholder action and Shareholder action was not required.
IN WITNESS WHEREOF, the undersigned, pursuant to the approval and
authority given by the Board of Directors, has executed these Articles of
Amendment this ______ day of October, 2001.
-----------------------------------
Name:
Title:
Schedule 3.02(c)
Form of IMX Note
----------------
Promissory Note
---------------
$1,866,667 September 30, 2001
This Promissory Note ("Note") is given by IMX Pharmaceuticals Inc.
("IMX"), having an office at 0000 Xxxxxxxxx Xxxx., Xxxxx 000 X 0, Xxxx Xxxxx, XX
00000 for the benefit of Cater Xxxxxxx, plc. ("Holder"), on the following terms:
1. Definitions. As used in this Agreement:
1.1. "IMX" shall mean IMX Pharmaceuticals Inc.
1.2. "Holder" shall mean "Cater Xxxxxxx, plc."
1.3 "Interest Rate" shall be five (5%) percent.
1.4 "Maturity Date" shall be December 31, 2006.
2. Terms of Payment.
2.1. For valuable consideration, IMX does hereby promise to pay to the
order of Holder on the Maturity Date the sum of One Million Eight Hundred
Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($1,866,667).
2.2. Notwithstanding the forgoing, accrued interest at the Interest
Rate shall be due and payable on December 31 of each year.
2.3. All payments due under this Note shall payable in US Dollars
at the office of Holder, Lloyd's Avenue House, 0 Xxxxx'x Xxxxxx, Xxxxxx, Xxxxxxx
XX0X 0XX, or at any other place as the Holder hereof may from time to time
designate in writing. Notwithstanding the foregoing, the Company may, in its
sole discretion, pay any current or past due interest by issuing shares of its
Common Stock to the Holder of this Note. For the purposes of calculating the
number of shares of Common Stock to be issued, the Common Stock shall be valued
at the average of the closing bid and asked prices on the last 30 trading days
before December 31 or, if the interest is not timely paid, on the 30 trading
days ending five (5) days before the interest is paid.
3. Prepayment of Whole Note. IMX may at any time during the term of this
Note pay the balance in full and there shall be no prepayment premium.
4. Late Charge. If any payment is more than fifteen (15) days late, IMX
hereby agrees to immediately, without demand from Holder, pay a late charge of
nine percent (9%) of all overdue amounts.
5. Default. A default shall exist under this Note if any interest payment
is not made within ten (10) days after notice to IMX of its non-payment or the
principal due under this Note is not paid when due. Any default under this Note
shall entitle Holder to immediately demand that the full amount then due and
owing be paid immediately. No provision of this Note shall limit any legal or
equitable rights available to Holder in the event of IMX's default hereunder.
6. No Waiver. Neither the failure nor any delay on the part of any party
to exercise any right, remedy, power, or privilege under this Note shall operate
as a waiver of that right, remedy, power, or privilege, including, without
limitation, collection of payments due hereunder in a timely manner. No waiver
of any right, remedy, power, or privilege with respect to any particular
occurrence shall be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence, including, without limitation,
collection of payments due hereunder in a timely manner.
7. Collection Costs. In the event of IMX's default under this Note and
Holder's demand for full payment as a result of the default, IMX hereby agrees
to pay Holder additional interest on the unpaid balance at the rate of nine
percent (9%) per month.
8. Attorneys' Fees. In any arbitration or other legal proceeding to
enforce the terms of this Agreement or to redress any violation of this
Agreement, the prevailing party shall be entitled to recover as damages its
attorneys' fees and costs incurred, whether or not such action is pursued to
conclusion and an award rendered. For the purposes of this provision, the
"prevailing party" shall be that party who has been successful with regard to
the main issue, even if that party did not prevail on all the issues.
9. Copy Received. IMX hereby acknowledges receipt of a fully executed copy
of this Note.
10. Governing Law. The laws of the State of Florida applicable to contracts
made or to be wholly performed there (without giving effect to choice of law or
conflict of law principles) shall govern the validity, construction, performance
and effect of this Note.
11. Construction. The terms and conditions of this Note shall be construed
as a whole according to its fair meaning and not strictly for or against any
party. The parties acknowledge that each of them has reviewed this Note and has
had the opportunity to have it reviewed by their attorneys and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in the interpretation of this Note.
12. Enforceability. If any term of this Note or the application of any term
of this Note should be held to be invalid, void, or unenforceable, all
provisions, covenants and conditions of this Note, and all of its applications,
not held invalid, void, or unenforceable, shall continue in full force and
effect and shall not be affected, impaired, or invalidated in any way.
IMX PHARMACEUTICALS INC.
By:
----------------------------------
Xxxxxxx X. Xxxxxxx, Chairman & CEO
2
Promissory Note
---------------
$1,133,333 September 30, 2001
This Promissory Note ("Note") is given by IMX Pharmaceuticals Inc.
("IMX"), having an office at 0000 Xxxxxxxxx Xxxx., Xxxxx 000 X 0, Xxxx Xxxxx, XX
00000 for the benefit of Envesta, plc. ("Holder"), on the following terms:
1. Definitions. As used in this Agreement:
1.1. "IMX" shall mean IMX Pharmaceuticals Inc.
1.2. "Holder" shall mean "Envesta, plc."
1.3 "Interest Rate" shall be five (5%) percent.
1.4 "Maturity Date" shall be December 31, 2006.
2. Terms of Payment.
2.1. For valuable consideration, IMX does hereby promise to pay to
the order of Holder on the Maturity Date the sum of One Million One Hundred
Thirty-Three Thousand Three Hundred Thirty Three Dollars ($1,133,333).
2.2. Notwithstanding the forgoing, accrued interest at the Interest
Rate shall be due and payable on December 31 of each year.
2.3. All payments due under this Note shall payable in US Dollars
at the office of Holder, Lloyd's Avenue House, 0 Xxxxx'x Xxxxxx, Xxxxxx, Xxxxxxx
XX0X 0XX, or at any other place as the Holder hereof may from time to time
designate in writing. Notwithstanding the foregoing, the Company may, in its
sole discretion, pay any current or past due interest by issuing shares of its
Common Stock to the Holder of this Note. For the purposes of calculating the
number of shares of Common Stock to be issued, the Common Stock shall be valued
at the average of the closing bid and asked prices on the last 30 trading days
before December 31 or, if the interest is not timely paid, on the 30 trading
days ending five (5) days before the interest is paid.
3. Prepayment of Whole Note. IMX may at any time during the term of this
Note pay the balance in full and there shall be no prepayment premium.
4. Late Charge. If any payment is more than fifteen (15) days late, IMX
hereby agrees to immediately, without demand from Holder, pay a late charge of
nine percent (9%) of all overdue amounts.
5. Default. A default shall exist under this Note if any interest payment
is not made within ten (10) days after notice to IMX of its non-payment or the
principal due under this Note is not paid when due. Any default under this Note
shall entitle Holder to immediately demand that the full amount then due and
owing be paid immediately. No provision of this Note shall limit any legal or
equitable rights available to Holder in the event of IMX's default hereunder.
6. No Waiver. Neither the failure nor any delay on the part of any party
to exercise any right, remedy, power, or privilege under this Note shall operate
as a waiver of that right, remedy, power, or privilege, including, without
limitation, collection of payments due hereunder in a timely manner. No waiver
of any right, remedy, power, or privilege with respect to any particular
occurrence shall be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence, including, without limitation,
collection of payments due hereunder in a timely manner.
7. Collection Costs. In the event of IMX's default under this Note and
Holder's demand for full payment as a result of the default, IMX hereby agrees
to pay Holder additional interest on the unpaid balance at the rate of nine
percent (9%) per month.
8. Attorneys' Fees. In any arbitration or other legal proceeding to
enforce the terms of this Agreement or to redress any violation of this
Agreement, the prevailing party shall be entitled to recover as damages its
attorneys' fees and costs incurred, whether or not such action is pursued to
conclusion and an award rendered. For the purposes of this provision, the
"prevailing party" shall be that party who has been successful with regard to
the main issue, even if that party did not prevail on all the issues.
9. Copy Received. IMX hereby acknowledges receipt of a fully executed copy
of this Note.
10. Governing Law. The laws of the State of Florida applicable to contracts
made or to be wholly performed there (without giving effect to choice of law or
conflict of law principles) shall govern the validity, construction, performance
and effect of this Note.
11. Construction. The terms and conditions of this Note shall be construed
as a whole according to its fair meaning and not strictly for or against any
party. The parties acknowledge that each of them has reviewed this Note and has
had the opportunity to have it reviewed by their attorneys and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in the interpretation of this Note.
12. Enforceability. If any term of this Note or the application of any term
of this Note should be held to be invalid, void, or unenforceable, all
provisions, covenants and conditions of this Note, and all of its applications,
not held invalid, void, or unenforceable, shall continue in full force and
effect and shall not be affected, impaired, or invalidated in any way.
IMX PHARMACEUTICALS INC.
By:
----------------------------------
Xxxxxxx X. Xxxxxxx, Chairman & CEO
2
Schedule 3.02(d)
Allocation of Purchase Price
----------------------------
IMX Common (shares)
-------------------
Cater Xxxxxxx plc 933,333
Envesta plc 566,667
-------
Total 1,500,000
IMX Preferred (shares)
----------------------
Cater Xxxxxxx plc 140,000
Envesta plc 85,000
------
Total 225,000
IMX Note (dollars)
------------------
Cater Xxxxxxx plc $1,866,667
Envesta plc $1,133,333
----------
Total $3,000,000
Schedule 4.01(v)
TDMI's Financial Statements
---------------------------
See attached.
XXXXXXXXXXXXXXXXXXXX.XXX, INC.
Financial Statements for the period
Ended December 31, 2000
XXXXXXXXXXXXXXXXXXXX.XXX, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2000
TABLE OF CONTENTS PAGE
----------------- ----
ACCOUNTANTS' COMPILATION REPORT 1
FINANCIAL STATEMENTS:
Balance Sheet 2-3
Statement of Operations 4
Statement of Stockholders' Deficit 5
Statement of Cash Flows 6
SUPPLEMENTAL INFORMATION:
Statement of Operations for the Month, Quarter and
Year Ended December 31, 2000 7
Statement of Cash Flows for the Month, Quarter and
Year Ended December 31, 2000 8
Statement of Xxxxxxxx for the Month, Quarter and
Year Ended December 31, 2000 9
ACCOUNTANTS' COMPILATION REPORT
To the Board of
Xxxxxxxxxxxxxxxxxxxx.xxx, Inc.
We have compiled the accompanying balance sheet of Xxxxxxxxxxxxxxxxxxxx.xxx,
Inc. as of December 31, 2000, and the related statements of operations,
stockholders' deficit, and cash flows for the year then ended, and supplemental
information - for the month, quarter and year ended in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and supplemental information
contained herein, and accordingly, do not express an opinion or any other form
of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position, results of operations, and
cash flows. Accordingly, these financial statements are not designed for those
who are not informed about such matters.
SIMON, TAPPER & EDELMAN, P.A.
Certified Public Accountants
January 20, 2001
XXXXXXXXXXXXXXXXXXXX.XXX, INC.
BALANCE SHEET
DECEMBER 31, 2000
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 537,577
Accounts receivable 31,743
Prepaid expenses 28,195
-----------
Total Current Assets $ 597,515
PROPERTY AND EQUIPMENT
Computer equipment and software 474,891
Telephone equipment 18,049
Office equipment 3,212
Furniture and fixtures 69,616
Less accumulated depreciation (126,500)
-----------
Net Property and Equipment 439,268
OThER ASSETS
Security deposits 17,757
Capitalized development costs, less accumulated
amortization of $243,470 345,347
Customer list, less accumulated
amortization of $72,608 27,926
-----------
Total Other Assets 391,030
TOTAL ASSETS $ 1,427,813
------------
See Accountants' Compilation Report
XXXXXXXXXXXXXXXXXXXX.XXX, INC.
BALANCE SHEET
DECEMBER 31, 2000
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 202,630
Deferred revenues 162,599
Notes payable 4,881,934
-----------
Total Current Liabilities $ 5,247,163
STOCKHOLDERS' DEFICIT
Preferred stock $0.01 par value, 10,000 shares
authorized, 2,540 shares issued and outstanding 25
Common stock $0.01 par value, 2,000,000 shares
authorized, 134,000 shares issued and outstanding 1,340
Additional paid in capital 3,540,385
Accumulated deficit (7,361,100)
-----------
Total Stockholders' Deficit (3,819,350)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,427,813
------------
See Accountants' Compilation Report
XXXXXXXXXXXXXXXXXXXX.XXX, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
INCOME $ 383,957
OPERATING EXPENSES
Salaries $1,505,881
Depreciation and amortization 267,114
Consulting fees 2,129
Commission 1,062
Marketing and public relations 784,376
Professional fees 250,189
Travel and entertainment 154,004
Rent and utilities 118,331
Royalties 180,000
Payroll taxes 109,841
Insurance 75,316
Equipment rental 53,757
Postage and delivery 106,725
Telephone 46,148
Office supplies and expense 29,937
Computer supplies 9,070
Recruiting costs 87,326
Printing and reproduction 131,171
Maintenance and repairs 927
Seminars and conferences 1,053
Dues and subscriptions 11,540
Bank and credit card charges 1,552
Other 26,190
----------
Total Operating Expenses 3,953,639
-----------
LOSS BEFORE EXTAORDINARY ITEM (3,569,682)
EXTRAORDINARY ITEM-Gain on extinguishment of
Debt interest (net of year 2000 accrued interest of $81,848)
NET LOSS $(3,508,681)
===========
See Accountants' Compilation Report
XXXXXXXXXXXXXXXXXXXX.XXX, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2000
Total
Preferred Stock Common Stock Additional Accumulated Stockholders'
Shares Value Shares Value Paid In Capital Deficit Deficit
Balance at January 1, 2000 2,500 $25 440 $ 4 $2,500,412 $(3,852,419) $(1,35l,978)
Stock issued for exchange of services 40 40,000 40,000
Stock purchases 900 9 9
Employee stock options issued 1,373 1,373
Non-employee stock options issued
999,927 999,927
Common stock split 100 to 1 132,660 1,327 (1,327)
Net loss
(3,508,681) (3,508,681)
----- --- ------- ------ ---------- ----------- -----------
STOCKHOLDERS' DEFICIT -
December 3l, 2000 2,540 $25 134,000 $l,340 $3,540,385 $(7,361,100) $(3,819,350)
===== === ======= ====== ========== =========== ===========
See Accountants' Compilation Report
XXXXXXXXXXXXXXXXXXXX.XXX, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(3,508,681)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization $ 267,114
Insurance of stock for services 40,000
(Increase) decrease in:
Restricted cash 85,508
Accounts receivable (26,259)
Prepaid expenses (24,331)
Security deposit 4,078
Increase (decrease) in:
Accounts payable and accrued expenses (114,518)
Deferred revenues 125,149
----------
Total Adjustments 356,741
-----------
NET CASH USED IN OPERATING ACTIVITIES (3,151,940)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in loans/notes payable 3,079,937
Repayment of loans/notes payable (60,000)
Issuance of stock options 1,001,300
Proceeds from sale of stock 9
----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,021,246
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of fixed assets (331,891)
Capitalized development costs (136,225)
----------
NET CASH USED IN INVESTING ACTIVITIES (468,116)
-----------
NET INCREASE IN CASH 401,190
CASH BALANCE - beginning of period 136,387
-----------
CASH BALANCE - end of period $ 537,577
===========
See Accountants' Compilation Report
XXXXXXXXXXXXXXXXXXXX.XXX, INC.
SUPPLEMENTAL INFORMATION
STATEMENT OF OPERATIONS
FOR THE MONTH, QUARTER AND YEAR ENDED DECEMBER 31, 2000
MONTH ENDED QTR ENDED YEAR ENDED
12/31/00 12/31/00 12/31/00
-------- -------- --------
INCOME $ 34,139 $ 105,146 $ 383,957
OPERATING EXPENSES
Salaries 230,385 512,486 1,505,881
Depreciation an amortization 25,656 76,276 267,114
Consulting fees -- 2,129
Commissions 462 1,062 1,062
Marketing and public relations 50,519 237,613 784,376
Professional fees 35,634 132,133 250,189
Travel and entertainment 26,871 56,806 154,004
Rent and utilities 13,422 32,643 118,331
Royalties 12,000 180,000
Payroll taxes 11,756 30,346 109,841
Insurance 10,464 26,062 75,316
Equipment rental 1,769 4,714 53,757
Postage and delivery 2,767 4,590 106,725
Telephone 6,727 19,817 46,148
Office supplies and expense 3,714 10,831 29,937
Computer supplies 1,092 3,781 9,070
Recruiting costs 682 17,688 87,326
Printing and reproduc iOn 3,211 54,537 131,171
Maintenance and repairs 161 230 927
Seminars and conferences -- 1,053
Dues and subscriptions 573 1,727 11,540
Bank and credit card charges 71 233 1,552
Other 6,830 9,574 26,190
---------- ----------- -----------
Total Operating Expenses 423,766 1,245,349 3,953,639
---------- ----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (398,627) (1,140,203) (3,569,682)
EXTRAORDINARY ITEM -- 142,849 61,001
---------- ----------- -----------
NET LOSS $ (398,627) $ (997,354) $(3,508,681)
========== =========== ===========
See Accountants' Compilation Report
XXXXXXXXXXXXXXXXXXXX.XXX, INC.
SUPPLEMENTAL INFORMATION
STATEMENT OF CASH FLOWS
FOR THE MONTH, QUARTER AND YEAR ENDED DECEMBER 31, 2000
MONTH ENDED QTR ENDED YEAR ENDED
12/31/00 12/31/00 12/31/00
-------- -------- --------
CASH FLOWS FROM OPERATITNG ACTIVITIES
Net lass $ (398,627) $ (997,354) $(3,508,681)
----------- ----------- -----------
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 25,656 76,276 267,114
Issuance of stock for services 40,000
(Increase) decrease in:
Restricted cash -- -- 85,508
Accounts receivable 753 6,249 (26,259)
Prepaid expenses (4,862) 18,374 (24,331)
Security deposits (18) 791 4,078
Increase (decrease) in:
Accounts payable and accrued expenses (147,329) (603,828) (114,518)
Deferred revenues 3,863 12,061 125,149
----------- ----------- -----------
Total Adjustments (121,937) (490,077) 356,741
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (520,564) (1,487,431) (3,151,940)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in loans/notes payable 750,400 1,169,948 3,079,937
Repayment of loans/notes payable -- (60,000) (60,000)
Issuance of stock options -- 941,297 1,001,300
Proceed from sale of stock -- -- 9
----------- ----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIYITIES 750,400 2,051,245 4,021,246
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of fixed assets (4,979) (51,170) (331,891)
Capitalized development costs -- -- (136,225)
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (4,979) (51,170) (468,116)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 224,857 512,644 401,190
CASH BALANCE-beginning of period 312,720 24,933 136,387
----------- ----------- -----------
CASH BALANCE-endofperiod $ 537,577 $ 537,577 $ 537,577
=========== =========== ===========
See Accountants' Compilation Report
XXXXXXXXXXXXXXXXXXXX.XXX, INC.
SUPPLEMENTAL INFORMATION
STATEMENT OF XXXXXXXX
FOR THE MONTH, QUARTER AND YEAR ENDED DECEMBER 31, 2000
MONTH ENDED QTR ENDED YEAR ENDED
12/31/00 12/31/00 12/31/00
-------- -------- --------
Gross Subscriptions $ 33,852 $ 102,855 $ 305,170
Embedded Technology transactions 14,765 19,993 77,616
Other -- -- 106,000
-------- --------- ---------
TOTAL XXXXXXXX $ 48,617 $ 122,848 $ 488,786
======== ========= =========
See Accountants' Compilation Report
Schedule 4.01(w)
Envesta's Financial Statements
------------------------------
See attached.
ACCOUNTANTS REPORT ON ENVESTA
--------------------------------------------------------------------------------
The following is a copy of a report on the results of Envesta plc for the three
financial years ended 30th April 1999 and for the 11 months ended 31st March
2000 by Spokes & Company, Registered Auditors:
The Directors
Envesta plc
0 Xxxxx'x Xxxxxx
Xxxxxx
XX0X 0XX
The Directors
Xxxxxxx Xxxxxx
00/00 Xxxxxxxx
Xxxxxx
XX0X 0XX
24 May 2001
Dear Sirs,
1. INTRODUCTION
We report on the financial information set out below. This financial information
has been prepared for inclusion in the prospectus dated 24 May 2001.
Basis of preparation
The financial information set out below is based on the financial statements of
Envetsa plc for each of the three years ended 30th April 1999 and for the 11
months ended 31st March 2000.
The financial statements for each of the years ended 30th April 1997, 1998 and
1999 were audited by BDO Xxxx Xxxxxxx, Registered Auditors and the Audit Reports
for each of these years was unqualified. The financial statements for the 11
months ended 31st March 2000 were audited by Spokes & Company, Registered
Auditors and the Audit Report for this period was unqualified.
Responsibility
Such financial statements are the responsibility of the directors of Envesta plc
who approved their issue.
The directors of Envesta plc are responsible for the contents of the prospectus
dated 24 May 2001 in which this report is included.
It is our responsibility to compile the financial information set out in our
report from the financial statements, to form an opinion of the financial
information and to report our opinion to you.
Basis of Opinion
We conducted our work in accordance with the Statements of Investment Circular
Reporting Standards issued by the Auditing Practices Board. Our work included an
assessment of evidence relevant to the amounts and disclosure in the financial
information. The evidence included that recorded by BDO Xxxx Xxxxxxx and Spokes
& Company as the auditors who audited the financial statements underlying the
financial information.
It also included an assessment of significant estimates and judgements made by
those responsible for the preparation of the financial statements underlying the
financial information and whether the accounting policies are appropriate to the
entity's circumstances, consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial information
is free from material mis-statement whether caused by fraud or other
irregularity or error.
Opinion
In our opinion, the financial information gives, for the purposes of the
prospectus dated 24 May 2001, a true and fair view of the state of affairs of
Envesta plc as at the dates stated and of its profits, cash flows and recognised
gains and losses for the periods then ended.
2. PROFIT & LOSS ACCOUNTS
Year Ended 30th April 11 Months
-------------------- ----------
31st March
----------
Note 1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
TURNOVER 6.2 25,250,555 24,442,762 28,821,615 21,773,602
- Continuing Operations -- -- -- --
- Discontinued Operations 25,250,555 24,442,762 28,821,615 21,773,602
Direct Costs (23,341,701) (22,424,497) (27,409,576) (21,173,487)
----------- ----------- ----------- -----------
Gross Profit 1,908,854 2,018,265 1,412,039 600,115
Administrative Expenses (1,644,011) (1,752,986) (1,208,498) (1,226,630)
Profit on Sales of Intangible Assets -- -- -- --
----------- ----------- ----------- -----------
Operating Profit/(Loss) 6.3 264,843 265,279 203,541 (626,515)
- Continuing Operations -- -- -- --
- Discontinued Operations 264,843 265,279 203,541 (626,515)
Interest Receivable 18,355 84,415 113,886 100,322
Interest Payable and Similar Charges 6.4 (51,252) (112,992) (180,326) (346,151)
----------- ----------- ----------- -----------
Profit/(Loss) on Ordinary Activities
Before Taxation 231,946 236,702 137,101 (872,344)
Tax on Profit/(Loss) on Ordinary
Activities 6.7 (3,103) (86,400) (77,632) (2,131)
----------- ----------- ----------- -----------
Profit/(Loss) on Ordinary Activities
After Taxation 228,843 150,302 59,469 (874,475)
Dividends (including non equity) 6.8 (30,000) (106,250) (106,250) (27,131)
----------- ----------- ----------- -----------
Retained Profit/(Loss) for the Period 198,843 44,052 (46,781) (901,606)
=========== =========== =========== ===========
Earnings per Ordinary Share
- Basic 6.9 2.437p O.789p O.l93p (5.89)p
- Diluted 6.9 2.437p O.759p 0.l85p (5.86)p
1. RECONCILIATION OF SHAREHOLDERS' FUNDS
Year Ended 30th April 11 Months
-------------------- ----------
31st March
----------
Note 1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Profit/(Loss) for the Period 228,843 150,302 59,469 (874,475)
Dividends (30,000) (106,250) (106,250) (27,131)
Other Net Recognised Gains During Period 2,875 -- -- --
Proceeds from Share Issues 2,223,863 -- -- 39,000
Share Issue Expenses (224,680) (300) -- --
--------- ---------- --------- ----------
Total Movements During the Period 2,200,901 43,752 (46,781) (862,606)
Shareholders' Funds at Start of Period 831,541 3,032,442 3,076,194 3,029,413
--------- ---------- --------- ----------
Shareholders' Funds at End of Period 3,032,442 3,076,194 3,029,413 2,166,807
========= ========== ========= ==========
2. BALANCE SHEETS
30th April 31st March
---------- ----------
Note 1997 1998 1999 2000
---- ---- ---- ----
Fixed Assets (pound) (pound) (pound) (pound)
Tangible Assets 6.10 985,559 956,325 862,835 624,300
---------- ---------- ---------- ----------
985,559 956,325 862,835 624,300
---------- ---------- ---------- ----------
Current Assets
Stocks 6.11 1,739,468 2,974,259 4,282,777 4,695,379
Debtors - Due Within One Year 6.12 4,781,379 5,020,387 5,602,339 2,978,282
- Due After One Year 19,516 19,725 - -
Cash at Bank & in Hand 2,571,409 1,563,202 337,728 21,814
---------- ---------- ---------- ----------
9,111,772 9,577,573 10,222,844 7,695,475
CREDITORS: Amounts falling
due within one year 6.13 (6,780,818) (7,201,723) (7,831,049) (5,934,068)
---------- ---------- ---------- ----------
Net Current Assets 2,330,954 2,375,850 2,391,795 1,761,407
---------- ---------- ---------- ----------
Total Assets Less Current
Liabilities 3,316,513 3,332,175 3,254,630 2,385,707
Creditors: Amounts falling due
after more than one year 6.14 (284,071) (255,981) (225,217) (218,900)
---------- ---------- ---------- ----------
3,032,442 3,076,194 3,029,413 2,166,807
========== ========== ========== ==========
Capital & Reserves
Share Capital - Equity 6.17 152,500 152,500 152,500 158,500
Share Capital - Non Equity 6.17 500,000 500,000 500,000 500,000
Share Premium Account 6.19 1,941,867 1,941,567 1,941,567 1,974,567
Revaluation Reserve 6.19 2,875 2,875 2,875 2,875
Profit & Loss Account 6.19 435,200 479,252 432,471 (469,135)
---------- ---------- ---------- ----------
Equity Shareholders' Funds 3,032,442 3,076,194 3,029,413 2,166,807
========== ========== ========== ==========
5. CASH FLOW STATEMENTS
Note Year Ended 30th April 11 Months
--------------------- ----------
31st March
----------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Reconciliation of Operating
Profit/(Loss) to Net Cash
Inflow from Operating
Activities
Operating Profit/(Loss) 264,843 265,279 203,541 (626,515)
Depreciation 103,539 106,737 97,866 73,416
Loss/(Profit) on Sale of (740) (4,488) 7,480 2,287
Intangible Fixed Assets
(Increase) in Stocks (1,421,070) (1,234,791) (1,308,518) (412,602)
(Increase)/Decrease in Debtors (93,789) (232,508) (579,873) (2,624,057)
Increase/(Decrease) in Creditors 388,011 213,689 (1,125,815) (3,694,210)
--------- ----------- ----------- -----------
Net Cash Outflow from (759,206) (886,082) (2,705,319) (2,033,567)
Operating Activities
CASH FLOW STATEMENTS
Net Cash Outflow from (759,206) (886,082) (2,705,319) (2,033,567)
Operating Activities
Returns on Investments and 6.21 (18,708) (102,522) (100,691) (272,960)
Servicing of Finance
Taxation
UK corporation tax paid (7,587) (8,466) (94,723) (29,316)
Capital Expenditure and 6.21 (49,143) (73,015) (11,856) 162,832
Financial Investment
Equity Dividends Paid - - (76,250) (86,250)
Acquisitions and disposal
Net cash inflow from purchase of 38,192 - - -
subsidiary
--------- ----------- ----------- -----------
Cash Outflow before (796,452) (1,070,085) (2,988,839) (2,259,261)
Financing
Financing 6.21 2,242,252 46,919 1,778,324 39,000
--------- ----------- ----------- -----------
Increase/(Decrease) in Cash 1,445,800 (1,023,166) (1,210,515) (2,220,261)
========= =========== =========== ===========
Reconciliation of Net Cash
Flow to Movement In Net Debt
Increase/(Decrease) in Cash in
the Year 1,445,800 (1,023,166) (1,210,515) (2,220,261)
Cashflow from Movement in Net
Debt and
Lease Financing (347,069) (47,219) (1,778,324) -
Debt Acquired with Subsidiary (849,584) - - -
--------- ----------- ----------- -----------
Decrease/(Increase) in Net Debt 249,147 (1,070,385) (2,988,839) (2,220,261)
Net Debt at Start of Period 1,107,051 1,356,198 285,813 (2,703,026)
--------- ----------- ----------- -----------
Net Debt at End of Period 6.22 1,356,198 285,813 (2,703,026) (4,923,287)
========= ======= =========== ===========
6. NOTES TO THE FINANCIAL INFORMATION
6.1 Accounting Policies
The financial statements have been prepared under the historical cost
convention, modified for the revaluation of freehold property, and are in
accordance with applicable accounting standards. The following accounting
policies, which have not changed during the period, have been consistently
applied:
Basis of Consolidation
The consolidated financial statements incorporate the results of Xxxxxxxxx Group
plc and all of its subsidiary undertakings using the acquisition method of
accounting. Results of subsidiary undertakings are included from the date of
acquisition.
Turnover
Turnover represents services rendered and amounts recoverable on
contracts exclusive of Value Added Tax.
Depreciation
Depreciation is provided on all tangible fixed assets other than land at rates
calculated to write off the cost or valuation, less estimated residual value of
each asset over their expected useful life as follows:
Buildings 2% straight line
Plant and machinery 25% reducing balance
Fixtures and equipment 25% reducing balance and 33% straight line
Motor vehicles 25% on reducing balance
Stocks
Stocks are stated at the lower of cost and net realisable value. Cost is
calculated as follows:
Building materials and loose tools
Purchase cost on a first in and first out basis.
Work in progress and own developments
Cost of direct materials and labour plus attributable overheads based on normal
level of activity less foreseeable losses.
Stock of properties
Cost of purchase, direct expenditure and professional fees
Net realisable value is based on estimated selling price less further costs
expected to be incurred on completion and disposal.
Amounts Recoverable on Contracts
Amounts recoverable on contracts are valued at cost including overhead expenses
plus that proportion of attributable profits, estimated to be earned to date
based on the stage of completion, less provision for any known or anticipated
losses and payments on account.
Leased Assets
-------------
Where assets are financed by leasing agreements that give rights approximating
to ownership (finance leases), the assets are treated as if they had been
purchased outright. The amount capitalised is the present value of the minimum
lease payments payable over the term of the lease. The corresponding leasing
commitments are shown as amounts payable to the lessor. Depreciation on the
relevant assets is charged to the profit and loss account.
Lease payments are analysed between capital and interest components so that the
interest element of the payment is charged to the profit and loss account over
the period of the lease and represents a constant proportion of the balance of
capital repayments outstanding. The capital part reduces the amounts payable to
the lessor. All other leases are treated as operating leases. Their rentals are
charged to the profit and loss account on a straight line basis over the term of
the lease.
Deferred Taxation
-----------------
Provision is made at current corporation tax rates for taxation deferred in
respect of all material timing differences, except to the extent that, in the
opinion of the Directors, there is reasonable probability that the liability
will not arise in the foreseeable future.
Pension Costs
-------------
The group operates a defined contribution pension scheme with the charge to the
profit and loss account representing the contribution payable in respect of the
year.
6.2 Turnover and Profit
Year Ended 30th April 11 Months
--------------------- ----------
31st March
----------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Analysis by class of business:
Continuing operations: - - - -
Discontinued operations:
Building contractors 24,797,587 23,875,389 27,534,531 17,208,582
Property development 50,000 1,442 1,230,058 4,558,414
Joinery manufacture 402,968 565,931 57,026 6,606
Total Turnover 25,250,555 24,442,762 28,821,615 21,773,602
Profit before tax
Continuing operations: - - - -
Discontinued operations:
Building contractors 280,633 260,285 263,645 (873,744)
Property development 6,485 45,388 136,091 246,680
Joinery manufacture (22,275) (40,394) (196,195) 549
Operating Profit/(Loss) 264,843 265,279 203,541 (626,515)
6.3 Operating Profit/(Loss)
The operating profit/(loss) is arrived at after charging or crediting:
Year Ended 30th April 11 Months
--------------------- ----------
31st March
----------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Operating leases - Vehicle hire 174,958 198,072 201,909 137,778
- Land and buildings 24,000 24,000 26,000 -
Depreciation of tangible fixed assets 103,359 106,737 97,866 73,416
Loss/(Profit)on disposal of tangible (740) (4,488) 7,480 2,287
fixed assets
Exceptional items - - 16,424 -
Auditors' remuneration - Audit 20,900 24,600 25,000 25,000
- non audit* 1,560 5,350 7,810 -
------- ------- ------- -------
Exceptional items represent the administrative costs incurred by the group in
fulfilling obligations which existed at the date of closure of the Oxford office
in 1999.
* In 1997 a further (pound)42,412 was allocated to the share premium account.
6.4 Interest Payable and Similar Charges
Year Ended 30th April 11 Months
--------------------- ---------
31st March
---------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Finance leases and hire purchase
contracts 1,706 884 - -
Bank loans and overdrafts 44,724 111,999 180,326 346,151
Other interest 4,822 109 - -
------ ------- ------- -------
51,252 112,992 180,326 346,151
====== ======= ======= =======
6.5 Employees
Staff costs, including directors' remuneration were as follows:
Year Ended 30th April 11 Months
--------------------- ---------
31st March
---------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Wages and salaries 2,171,282 2,864,577 2,776,054 2,168,878
Social security costs 214,536 277,242 270,098 215,040
Other pension costs 103,247 113,416 115,047 106,846
--------- --------- --------- ---------
2,489,065 3,255,235 3,161,199 2,490,764
========= ========= ========= =========
The average weekly number of employees, including directors, was as follows:
1997 1998 1999 2000
------ ---- ---- -----
Number Number Number Number
Office and management 86 98 92 68
Direct labour 24 35 27 20
---- --- --- ----
110 133 119 88
=== === === ===
6.6 Directors' Remuneration
Year Ended 30th April 11 Months
--------------------- ---------
31st March
---------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Total emoluments 251,650 291,036 309,761 288,239
Contributions to defined contribution
pension schemes 33,912 32,320 33,964 27,483
Highest paid director - total 95,744 94,811 87,044 91,946
emoluments
- defined contribution
pension scheme 13,000 14,783 15,767 13,983
Amounts paid to third parties for
making available the services of
persons as directors* 35,000 35,000 35,000 30,413
Number of directors participating in the
defined contribution pension scheme 6 5 4 4
*Payable to Bayard Estates limited, a company controlled by KG Xxxxxxx.
6.7 Taxation
Year Ended 30th April 11 Months
--------------------- 31st March
1997 1998 1999 2000
---- ---- ---- ----------
(pound) (pound) (pound) (pound)
UK corporation tax
Current period 31% 3,103 86,400 71,500 --
Prior periods -- -- 6,132 2,131
----- ------ ------ -----
3,103 86,400 77,632 2,131
===== ====== ====== =====
6.8 Dividends
Year Ended 30th April 11 Months
--------------------- 31st March
1997 1998 1999 2000
---- ---- ---- ----------
(pound) (pound) (pound) (pound)
Proposed ordinary dividend (0.5p per share) -- 76,250 76,250 --
Preference dividends (non equity) 30,000 30,000 30,000 27,131
------ ------- ------- ------
30,000 106,250 106,250 27,131
====== ======= ======= ======
6.9 Earnings per Ordinary Share
The earnings per ordinary share are calculated on the basis of the weighted
average 15,298,849 (1999: 15,250,000 1998: 15,250,000 1997: 8,158,766) shares in
issue and on earnings after taxation and preference dividend of(pound)(901,606)
(1999:(pound)29,469 1998:(pound)120,302 1997:(pound)198,842). There was no
impact on profit attributable to ordinary shareholders of the outstanding share
options for the purpose of calculating diluted earnings per share. However, the
share options increase the weighted average of ordinary shares, for the purpose
of calculating diluted earnings per ordinary share, by 100,000 (1999: 699,500
1998: 600,000 1997: nil).
6.10 Tangible Fixed Assets
Freehold Plant Fixtures
Land and and And Motor
Buildings Machinery Equipment Vehicles Total
--------- --------- --------- -------- -----
Cost or valuation (pound) (pound) (pound) (pound) (pound)
At 1st May 1996 36,360 165,789 194,800 235,993 632,942
Additions 648,670 16,219 47,366 51,204 763,459
Disposals (40,030) - - (66,899) (106,929)
-------- ------- ------- -------- ---------
At 30th April 1997 645,000 182,008 242,166 220,298 1,289,472
Additions - 7,060 67,626 16,884 91,570
Disposals - - - (36,187) (36,187)
-------- ------- ------- -------- ---------
At 30th April 1998 645,000 189,068 309,792 200,995 1,344,855
Additions - 13,616 19,959 58,674 92,249
Disposals - (110,315) (33,419) (59,488) (203,222)
-------- --------- -------- -------- ---------
At 30th April 1999 645,000 92,369 296,332 200,181 1,233,882
Additions - - 41,917 71,876 113,793
Disposals - (92,369) (338,249) (272,057) (702,675)
-------- --------- -------- -------- ---------
At 31st March 2000 645,000 - - - 645,000
======== ========= ======== ======== =========
Depreciation
At 1st May 1996 - 79,944 62,006 100,296 242,246
Charge for the year 2,875 24,186 47,051 29,427 103,539
Surplus on revaluation (2,875) - - - (2,875)
On disposals - - - (38,997) (38,997)
-------- --------- -------- -------- ---------
At 30th April 1997 - 104,130 109,057 90,726 303,913
Charge for the year 6.900 19,616 48,753 31,468 106,737
On disposals - - - (22,120) (22,120)
-------- --------- -------- -------- ---------
At 30th April 1998 6,900 123,746 157,810 100,074 388,530
Charge for the year 6,900 12,667 45,610 32,689 97,866
On disposals - (63,435) (9,999) (41,915) (115,349)
-------- --------- -------- -------- ---------
At 30th April 1999 13,800 72,978 193,421 90,848 371,047
Charge for the year 6,900 5,364 32,428 28,724 73,416
On disposals - (78,342) (225,849) (119,572) (423,763)
-------- --------- -------- -------- ---------
At 31st March 2000 20,700 - - - 20,700
======== ========= ======== ======== =========
Freehold Plant Fixtures
Land and and And Motor
Buildings Machinery Equipment Vehicles Total
--------- --------- --------- --------- -------
Net Book Values (pound) (pound) (pound) (pound) (pound)
At 30th April 1997 645,000 77,878 133,109 129,572 985,559
======== ======== ======== ======== ========
At 30th April 1998 638,100 65,322 151,982 100,921 956,325
======== ======== ======== ======== ========
At 30th April 1999 631,200 19,391 102,911 109,333 862,835
======== ======== ======== ======== ========
At 31st March 2000 624,300 - - - 624,300
======== ======== ======== ======== ========
On an historical cost basis, freehold land and buildings would have been
included as follows:
Year Ended 30th April 31st March
------------------------------- ----------
1997 1998 1999 2000
(pound) (pound) (pound) (pound)
Cost 645,000 645,000 645,000 645,000
------- ------- ------- -------
Cumulative Depreciation based on cost 2,875 9,775 16,675 23,575
------- ------- ------- -------
The freehold land and buildings were revalued as at 30th April 1997 by the
directors in conjunction with professional advice on an open market, existing
use basis. The surplus arising of (pound)2,875 has been credited to revaluation
reserve. All other tangible assets are stated at historical cost.
6.11 Stocks
Year Ended 30th April 31st March
-------------------------- ----------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Building materials and loose tools 14,004 14,315 5,956 -
Work in progress 8,784 8,225 6,182 -
Stock of property 1,716,680 2,951,719 4,270,639 4,695,379
--------- --------- --------- ---------
Goods for resale 1,739,468 2,974,259 4,282,777 4,695,379
========= ========= ========= =========
6.12 Debtors
Year Ended 30th April 31st March
---------------------------------- ----------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Trade debtors 2,246,959 1,651,229 1,537,105 135,202
Amounts recoverable on contracts 2,400,249 3,137,357 3,548,723 16,355
Other debtors 8,257 96,415 109,246 2,778,933
Prepayments and accrued income 125,914 135,386 407,265 47,792
--------- --------- --------- ---------
4,781,379 5,020,387 5,602,339 2,978,282
========= ========= ========= =========
6.13 Creditors: Amount falling due within one year.
Year Ended 30th April 31st March
------------------------------ -----------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Bank overdraft (secured) - 14,959 - -
Bank loans (secured) 926,015 1,006,449 2,815,537 4,726,201
Trade creditors 3,182,493 2,858,131 2,697,457 895,989
Contract accruals 2,104,621 2,753,423 1,951,040 -
Other taxes and social security 293,283 213,333 81,289 153,483
Corporation tax - 79,580 44,938 17,754
Finance lease and hire purchase contracts 5,125 - - -
Other creditors 66,275 44,047 46,968 86,727
Accruals and deferred income 193,006 145,551 107,570 53,914
Preference dividends 10,000 10,000 10,000 -
Ordinary dividends - 76,250 76,250 -
--------- --------- --------- ----------
6,780,818 7,201,723 7,831,049 5,934,068
========= ========= ========= ==========
6.14 Creditors: Amount falling due after one year.
Year Ended 30th April 31st March
------------------------------ ----------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Finance lease and hire purchase contracts - - - -
Bank loans (secured) 284,071 255,981 225,217 218,900
------- ------- ------- -------
284,071 255,981 225,217 218,900
======= ======= ======= =======
6.15 Loans
Year Ended 30th April 31st March
---------------------------- ----------
1997 1998 1999 2000
---- ---- ---- ----
Amounts repayable: (pound) (pound) (pound) (pound)
After one & within two years 32,000 32,000 32,000 32,000
Between two and five years 96,000 96,000 96,000 96,000
Due after 5 years 156,011 127,981 97,217 90,900
------- ------- ------- -------
284,071 255,981 225,217 218,900
======= ======= ======= =======
6.16 Provisions for Liabilities & Charges
Year Ended 30th April 31st March
--------------------------- ----------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Deferred Taxation
-----------------
Amounts unprovided
Accelerated capital allowances 27,454 20,448 - -
====== ====== ====== ======
6.17 Share Capital
1.5.96 To
30.4.99
---------
(pound)
Authorised:
6% Cumulative Redeemable Preference Shares 2003 of(pound)1 each (non equity) 500,000
Ordinary Shares of 1p each (equity) 220,000
=========
Allotted Called Up & Fully Paid:
6% Cumulative Redeemable Preference Shares 2003 of (pound)1 each (non equity) 500,000
Ordinary Shares of 1p each (equity) 152,500
=========
1.5.99 To
31.3.00
---------
Authorised:
6% Cumulative Redeemable Preference Shares 2003 of (pound)1 each (non equity) 500,000
Ordinary Shares of 1p each (equity) 220,000
=========
Allotted Called Up & Fully Paid:
6% Cumulative Redeemable Preference Shares 2003 of (pound)1 each (non equity) 500,000
Ordinary Shares of 1p each (equity) 158,500
========
Preference shares carry preferred rights to repayment of capital and dividends,
but do not participate any further in the assets of the company. These shares do
not carry voting rights and are redeemable at par. On 17 July 2000 the
preference shares were fully redeemed by the issue of 1,100,000 Ordinary shares
of 1p each at a value of 45.45p per share.
6.18 Share Options
The following share options were outstanding as at 31st March 2000:
Number Price
------- -----
6th May 1997 65,000 40.0p
18th August 1998 50,000 33.5p
20th January 1999 150,000 35.0p
19th August 1999 145,000 40.5p
(19) Statement of Movement on Reserves
Share Premium Revaluation Profit & Loss
Account Reserve Account
------- ------- -------
(pound) (pound) (pound)
On 1st May 1996 - - 317,541
Exercise of share options 75,967 - _
Bonus issue - (81,184)
Net proceeds of other share issues 1,865,900 - _
Transfer relating to revalued property - 2,875 -
Profit for the Year - - 198,843
--------- ------ --------
At 30th April 1997 1,941,867 2,875 435,200
Additional costs of previous share issues (300) - _
Profit for the Year - - 44,052
--------- ------ --------
At 30th April 1998 1,941,567 2,875 479,252
Loss for the Year - - (46,781)
--------- ------ --------
At 30th April 1999 1,941,567 2,875 432,471
Loss for the Period - - (874,475)
Dividends paid - - (27,131)
Shares issued in the Period 33,000 - -
--------- ------ --------
At 31st March 2000 1,974,567 2,875 (469,135)
========= ====== ========
6.20 Pension Scheme
The group operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the group in an independently
administered fund. The pension cost charge of (pound)106,846
(1999:(pound)115,047 1998:(pound)113,416 1997:(pound)103,247) represents
contributions payable by the group to the fund.
6.21 Gross Cash Flows
Year Ended 30th April 31st March
------------------------------------------- -----------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Returns on Investments and Servicing
Of Finance
Interest received 18,355 77,915 111,807 100,322
Interest paid (7,063) (150,437) (182,498) (346,151)
Preference dividends paid (30,000) (30,000) (30,000) (27,131)
---------- -------- ---------- --------
Net cash outflow for returns on investments
and servicing of finance (18,708) (102,522) (100,691) (272,960)
========== ======== ========== ========
Capital Expenditure and Financial
Investment
Payments to acquire tangible fixed assets (117,812) (91,570) (92,249) (113,793)
Proceeds from the sale of fixed assets 68,669 18,555 80,393 276,625
---------- -------- ---------- --------
Net cash (outflow)/inflow from investing
activities (49,143) (73,015) (11,856) 162,832
========= ======== ========== ========
Financing
Issue of share capital (net of expenses) 1,895,183 (300) - 39,000
Capital element of finance leases (13,433) (5,125) - -
Bank loans 895,000 80,453 1,809,088 -
Repayment of bank loans (534,498) (28,109) (30,764) -
---------- -------- ---------- --------
Net cash inflow from financing 2,242,252 46,919 1,778,324 39,000
========== ======== ========== ========
6.22 Analysis of Net Cash and Debt
At 1.5.99 Cash Flow At 3 1.3.00
--------- --------- -----------
(pound) (pound) (pound)
Cash at bank and in hand 337,728 (315,914) 21,814
Overdrafts - _ -
Debt due within 1 year (2,815,537) (1,910,664) (4,726,201)
Debt due after 1 year (225,217) 6,317 (218,900)
----------- ----------- -----------
Net Debt (2,703,026) (2,220,261) (4,923,287)
=========== =========== ===========
At 1.5.98 Cash Flow At 30.4.99
--------- --------- ----------
(pound) (pound) (pound)
Cash at bank and in hand 1,563,202 (1,225,474) 337,728
Overdrafts (14,959) 14,959 -
Debt due within 1 year (1,006,449) (1,809,088) (2,815,537)
Debt due after 1 year (255,981) 30,764 (225,217)
----------- ----------- -----------
Net Funds/(Debt) 285,813 (2,988,839) (2,703,026)
=========== =========== ===========
At 1.5.97 Cash Flow At 30.4.98
----------- --------- ----------
(pound) (pound) (pound)
Cash at bank and in hand 2,571,409 (1,008,207) 1,563,202
Overdrafts - (14.959) (14,959)
Debt due within 1 year (926,015) (80,434) (1,006,449)
Debt due after 1 year (284,071) 28,090 (255,981)
Finance leases (5,125) 5,125 -
----------- ----------- -----------
Net Funds/(Debt) 1,356,198 (1,070,385) 285,813
=========== =========== ===========
At 1.5.96 Cash Flow Acquisitions At 30.4.97
--------- --------- ------------ ----------
(pound) (pound) (pound) (pound)
Cash at bank and in hand 1,125,609 1,445,800 - 2,571,409
Debt due within 1 year - (426,015) (500,000) (926,015)
Debt due after 1 year - 65,513 (349,584) (284,071)
Finance leases (18,558) 13,433 - (5,125)
---------- ---------- -------- ----------
Net Funds/(Debt) 1,107,051 1,098,731 (849,584) 1,356,198
========== ========== ======== ==========
6.23 Post Balance Sheet Events
On 7 June 2000 the Company sold its interests in all its subsidiaries to other
members of its then ultimate holding company, Artisan (UK) plc, hence all
activities were classified as discontinued. All disposals were at net assets
value.
On 17 July 2000 the preference shares were fully redeemed by the issue of
1,100,000 Ordinary shares of 1p each at a value of 45.45p per share.
On 9 June 2000 the Company acquired 73 per cent. of Propertytrade plc paid for
by the issue of 6,300,000 Ordinary Shares of 1p each.
On 21 June 2000 the Company acquired certain investments from Artisan (UK) plc
for (pound)1,000,000.
In April 2001, the Company disposed of the goodwill and assets of its subsidiary
company, Propertytrade plc for a consideration of (pound)33,250 and also
disposed of its 15 per cent. interest in Partners in Property Solutions Limited
for (pound)90,000.
6.24 Contingencies
At 30th April 1999, the Company had given performance guarantees on contracts to
the extent of approximately (pound)309,000. There were no contingencies at 30
April 1997, 30 April 1998 or 31 March 2000.
6.25 Commitments Under Operating Leases
The group had annual commitments under non-cancellable operating leases set out
below:
Year Ended 30th April 31st March
--------------------------------- ----------
1997 1998 1999 2000
---- ---- ---- ----
(pound) (pound) (pound) (pound)
Land and buildings operating leases which expire:
Within one year - - 3,847 _
Between two and five years 24,000 26,000 - _
====== ====== ======== =====
Other operating leases which expire:
Within one year 50,956 24,957 31,161 62,974
Between two and five years 110,336 173,954 109,938 16,385
======= ======= ======= ======
Consent
We consent to the inclusion in the prospectus dated 24 May, 2001 of this report
and accept responsibility for this report for the purposes of paragraph 45
(1)(b)(iii) of Schedule 1 to the Public Offers of Securities Regulations 1995.
Yours faithfully Xxxxxx Park House
Spokes & Company 00 Xxxxxxxxx Xxxx
Chartered Accountants and Registered Auditors Xxxxxxxxxxxxx
Xxxx, XX00 0XX
PRO FORMA STATEMENT OF NET ASSETS
Envesta plc
(Unaudited) Sale of
30 September Acquisition of Open Propertytrade Pro Forma
2000 Findstar Pic Offer and Investments Net Assets
------------ ------------ ----- --------------- ----------
a b c d
Note (pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
Fixed assets
Intangible fixed assets 0 7,458 0 0 7,458
Tangible fixed assets 46 78 0 (26) 98
Investments 1,000 0 0 (1,000) 0
----- ----- --- ---- -----
1,046 7,536 0 (1,026) 7,556
----- ----- --- ---- -----
Current assets
Stocks 0 11 0 0 11
Debtors 200 134 0 (73) 261
Cash at bank and in hand 661 (61) 405 170 1,175
----- ----- --- ---- -----
861 84 405 97 1,447
Creditors: Amounts falling due
within one year (288) (617) 0 0 (905)
----- ----- --- ---- -----
Net Current assets/(liabilities) 573 (553) 405 97 542
----- ----- --- ---- -----
Total assets (less current liabilities) 1,619 7,003 405 (929) 8,098
Creditors: Amounts falling due after
more than one year 0 (1,003) 0 0 (1,003)
Minority interest 30 0 0 (30) 0
----- ----- --- ---- -----
Net assets/(liabilities) 1,649 6,000 405 (959) 7,095
===== ===== === ==== =====
Capital and reserves
Share capital-Ordinary shares 236 583 137 0 956
Share premium account 5,250 2,917 268 0 8,435
Profit and loss account (3,837) 0 0 (959) (4,796)
----- ----- --- ---- -----
Equity shareholders funds 1,649 3,500 405 (959) 4,595
Preference share capital 0 2,500 0 0 2,500
----- ----- --- ---- -----
1,649 6,000 405 (959) 7,095
===== ===== === ==== =====
Notes
(a) The Envesta balance sheet has been extracted from the unaudited interim
results to 30 September 2000.
(b) The acquisition of Findstar is based on the (pound)7 million acquisition,
satisfied as (pound)3.5 million of Ordinary shares, (pound)2.5 million of
Preference shares and (pound) 1 million of Loan Notes. Acquisition expenses
of (pound)61,000 have been included together with the assumed assets and
liabilities of Findstar acquired, based on the 31 December 2000 audited
accounts.
(c) The Open Offer assumes the underwritten amount of (pound)500,000 and the
irrevocable undertaking of (pound)147,500 is raised at 5p per share less the
related issue cost.
(d) Propertytrade and the other Envesta investments are assumed to be sold at
their current market values.
Schedule 4.01(aa)
Taxes
None
Schedule 4.01(bb)
Proceedings
None
Schedule 4.02(n)
Liabilities
None except as shown on the Balance Sheet or in the Plan.
Schedule 4.02(o)
Proceedings
None
Schedule 4.02(q)
IRS Audits
None
Schedule 4.02(r)
Taxes
The IRS has asserted a claim for approximately $3,700 in back taxes.
Schedule 4.02(u)
Employees
- Xxxxxxx Xxxxxx
- Xxxx Xxxx Xxxxxx
- Xxxxx Lonbons (employee of subsidiary)
Schedule 4.02(v)
Material Contracts
None
Schedule 4.02(w)
Real Property
Elbow Lake property
