EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
AGREEMENT made the 21st day of April, 1999 by and between ADVANCED MEDICAL
SCIENCES, INC. ("Buyer") a Virginia corporation having an office at 382 Rte. 59,
#310, Monsey, New York 10952 and DEERSKIN TRADING POST, INC. (the "Seller" or
"Deerskin"), a Nevada corporation having an office at 2500 Arrowhead Drive,
Carson City, Nevada 89706.
W I T N E S S E T H:
WHEREAS, Seller owns certain assets used in connection with its mail order
business for the sale of leather apparel, other leather merchandise, housewares
and related items (the "Mail Order Business");
WHEREAS, Deerskin is a wholly-owned subsidiary of Initio, Inc., a Nevada
corporation ("Initio");
WHEREAS, Seller desires to sell and Buyer desires to purchase certain
specific, but not all, of the assets used in the Mail Order Business, and to
assume certain specific; but not all, liabilities, on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the respective agreements hereinafter
set forth, the parties agree as follows:
ARTICLE I. SALE OF ASSETS, CONSIDERATION, PAYMENT AND RELATED MATTERS.
On the basis of the representations and warran-
ties contained in and subject to the terms and conditions of this Agreement:
1.01 Sale.
(a) Seller shall at the Closing (as hereinafter defined) sell, assign,
transfer, convey and deliver to Buyer, and Buyer shall purchase, certain of
the assets, rights and entitlements (the "Acquired Assets") used by Seller
in the Mail Order Business, free and clear of all liens, claims, charges,
equities, encumbrances and restrictions of every kind, including without
limitation:
(i) all inventory related to the Mail Order Business located at
Seller's facilities in Carson City, Nevada, Teterboro, New Jersey and
Danvers, Massachusetts (including inventory in transit, for which
Seller has made payment), as of the close of business on April 30,
1999 ("Inventory"). The close of business on April 30, 1999 is
sometimes hereinafter referred to as the "Effective Date".
(ii) pre-paid advertising, including an accrual for the
advertising attributable to Unfilled Orders (as that term is
hereinafter defined) as of the Effective Date ("Pre-paid
Advertising").
(iii) other prepaid expenses as of the Effective Date ("Other
Pre-paid Expenses").
(iv) all of Seller's fixed assets as of the Effective Date
("Fixed Assets") including, but not limited to,
- 2 -
computer and telephone systems (including the right to use the related
telephone and fax numbers), materials handling equipment, all
furniture and fixtures and other fixed assets (other than leasehold
improvements in Carson City, Nevada) located in Carson City, Nevada,
Teterboro, New Jersey and Danvers, Massachusetts, excluding the assets
set forth in Exhibit A attached hereto (the "Excluded Assets").
(v) accounts receivable with respect to list rentals and loans
made to employees engaged in the Mail Order Business (including
accrued interest, if any) as of the Effective Date (the "Accounts
Receivable"). Schedule 1.01 sets forth the amount and interest rate of
loans currently outstanding to employees engaged in the Mail Order
Business, which are included within the Acquired Assets. Such loans
accelerate if the employee's employment terminates.
(vi) all security deposits as of the Effective Date held by the
lessors in connection with the leases of the Teterboro, New Jersey and
Danvers, Massachusetts facilities as well as all utility deposits
maintained by Seller (the "Security Deposits"). Schedule 1.01 sets
forth with respect to the Security Deposits the amount of each such
Security Deposit and the holder thereof.
(vii) all agreements material to operating the Mail Order
Business including, without limitation, Seller's agreements with
Globix Corporation, LinkShare Corporation, Seller's pending agreement
with Hanover Direct, Inc. for Internet
- 3 -
related services all open purchase orders as of the Effective Date all
service contracts with respect to the Fixed Assets, contracts for
discount rates for the telephone services and T-1 lines and a contract
for printing services with RR Donnelly & Company (the "Material
Agreements"). Buyer agrees that Seller may enter into agreements with
LinkShare Corporation and/or Hanover Direct, Inc. for Internet related
services after the Effective Date and such acts shall be deemed to
have been in the usual, regular and ordinary course of business of the
Seller. Seller will use its best efforts to assign the Material
Agreements to Buyer. Buyer understands that certain of the Material
Agreements may not be assignable without the consent of the other
party thereto. Seller agrees to work with Buyer to obtain such
consent.
(viii) customer list of the Mail Order Business in
machine-readable form as such list is presently maintained by Cornwall
Data Services (the "Customer List").
(ix) separations, photographs and other material relating to the
preparation or printing of artwork used in the Mail Order Business and
Seller's e-commerce business (the "Artwork").
(x) the Deerskin proprietary mail order computer software systems
(the "Deerskin Software").
(xi) all right, title and interest of Seller in trademarks,
copyrights, service marks, trade names, domain names using the words
"Deerskin", "Joan Cook" and variations thereof,
- 4 -
and other intellectual property rights, together, in each case, with
all registrations, applications, recordings, reissuances, extensions,
renewals, licenses and rights, if any, and all claims against third
parties for violation or infringement of any thereof (the foregoing
and the Deerskin Software are hereinafter called the "Intellectual
Property"), together with the goodwill of the Mail Order Business (the
"Goodwill", and together with the Customer List, the Artwork, the
Deerskin Software and the Intellectual Property, the "Intangibles").
(xii) all unshipped orders from customers as of the Effective
Date (the "Unfilled Orders") and credit card numbers (and the right to
collect monies pursuant thereto) which customers have tendered in
payment for such Unfilled Orders.
(xiii) Subject to the provisions of Section 1.06 below, all of
Seller's books of account and records, licenses, permits, sales and
manufacturing data, software programs, computer printouts, data bases
and related items, and other records, documents and instruments
relating to the Acquired Assets (or the employees to be employed by
Buyer pursuant to Section 7.01) and all copies thereof (collectively
"Records").
(b) Concurrently with the execution and delivery of this Agreement,
Seller is delivering to Buyer Schedule 1.01, which is a summary of the
Acquired Assets as at January 31, 1999. The Unaudited Schedules (as that
term is hereinafter defined) will be prepared in a manner consistent with
and will use substantially the same format as such Schedule 1.01.
- 5 -
1.02 Purchase Price. In addition to Buyer assuming the Assumed Liabilities
(as that term is hereinafter defined), the purchase price (the "Purchase Price")
for the Acquired Assets shall be an amount equal to the net book value of the
Acquired Assets at the Effective Date plus $3,500,000, subject to adjustment as
hereinafter set forth. For purposes of this Agreement the "net book value" of an
Acquired Asset shall mean the net book value as shown on the books and records
of Seller maintained in accordance with generally accepted accounting principles
applied consistently with Seller's past practices, provided however, that for
purposes of this Section the net book value of the Intangibles and the Material
Agreements shall be deemed to be zero.
1.03 Payment. The Purchase Price shall be paid as follows:
(a) $2,000,000 shall be paid to Seller by the assumption by Buyer of
an equal amount of Initio's indebtedness to Pioneer Ventures Associates
Limited Partnership ("Pioneer") and the concurrent release by Pioneer of
all obligations of Initio pursuant to the indebtedness so assumed (as
contemplated by Section 6.02(c)) (the "Initio-Pioneer Agreement").
(b) Not more than $3,500,000, subject to adjustment as hereinafter set
forth, shall be paid by Buyer delivering a convertible debenture,
substantially in the form of Exhibit B attached hereto (the "Convertible
Debenture") which Convertible
- 6 -
Debenture shall be secured as set forth in the security agreement attached
hereto as Exhibit C (the "Security Agreement").
(c) In the event the net book value of the Acquired Assets as at the
Effective Date less the Assumed Liabilities (as that term is hereinafter
defined) as at the Effective Date shall be more than $2,000,000, Buyer
shall pay to Seller at the Closing the difference by certified or bank
check or wire transfer of immediately available funds. In the event the net
book value of the Acquired Assets as at the Effective Date less the Assumed
Liabilities as at the Effective Date shall be less than $2,000,000, then
the difference shall be deducted from the Convertible Debenture (which
Convertible Debenture shall be rounded down to the next $100,000) issued by
Buyer to Seller at the Closing and the balance, if any, shall be paid by
Buyer to Seller at the Closing by certified or bank check or wire transfer
of immediately available funds.
1.04 Allocation of Purchase Price. It is hereby agreed that the Purchase
Price with respect to the Acquired Assets shall be allocated in accordance with
the net book value of the items thereof as reflected on the books of the Seller
as at the Effective Date and the balance shall be allocated to the Intangibles
and the Material Agreements. Buyer and Seller will consult with each other in
the preparation of their respective tax returns so that such tax returns are
consistent with the provisions of this Section.
1.05 Assumption of Liabilities.
- 7 -
(a) Buyer shall assume and be liable to pay and discharge and hold
Seller harmless from all of the following (collectively, the "Assumed
Liabilities").
(i) all merchandise trade balances associated with the Mail Order
Business as at the Effective Date.
(ii) all letters of credit with respect to Inventory issued by
Seller outstanding at the Effective Date.
(iii) accrued expenses, including, but not limited to, customer
refunds and exchanges, in connection with the Mail Order Business as
at the Effective Date.
(iv) all customer deposits relating to the Mail Order Business as
at the Effective Date.
(b) Concurrently with the execution and delivery of this Agreement,
Seller is delivering to Buyer Schedule 1.05, which is a summary of the
Assumed Liabilities as at January 31, 1999. The Unaudited Schedules (as
that term is hereinafter defined) will be prepared in a manner consistent
with and will use substantially the same format as such Schedule 1.05.
1.06 Determination of Inventory. On April 30, 1999, or shortly thereafter
(but no later than May 30, 1999), Seller shall conduct an inventory count of all
merchandise located at Carson City, Nevada, Teterboro, New Jersey and Danvers,
Massachusetts to establish the net book value of the Inventory as of the
Effective Date. Buyer shall have a representative and Seller shall have its
accountant ("Seller's Accountant") present during the inventory count.
- 8 -
1.07 Seller's Records.
(a) Anything in Section 1.01 to the contrary notwithstanding, the
Acquired Assets shall not include (i) Seller's corporate books, stock books
and records and similar corporate documents (collectively, "Corporate
Records") and (ii) Seller's accounting books of original entry, general
ledgers and such other books and records, accounting and other, as are
required by law to be retained by Seller (collectively, "Other Records").
Notwithstanding the foregoing, however, true, correct and complete copies
of the Other Records, or such of them as Buyer may reasonably designate,
shall be delivered by Seller to Buyer from time to time promptly upon
request therefor at and following the time of the Closing.
(b) For a period of seven (7) years following the Closing or such
other period as the parties may agree, (i) Seller shall retain, and Buyer
shall have access at all reasonable times for proper purposes to, and shall
be entitled to make copies of, both the Corporate Records and the Other
Records insofar as they relate to any period through the date of Closing,
provided, however, that Seller may at any time deliver the same, or any
part thereof, to Buyer, and (ii) Buyer shall retain, and Seller shall have
access at all reasonable time for proper purposes to, and shall be entitled
to make copies of, all books, records and documents transferred or
delivered by Seller to Buyer pursuant to this Agreement (including any such
delivered pursuant to the proviso to the preceding clause (i)). Subsequent
to the
- 9 -
expiration of such seven-year (or other) period, Seller and Buyer, as
applicable, upon not less than 30-days' prior notice to the other, may
destroy any or all of the books and records so retained or held unless
within such 30-day period the other party requests the delivery to it of
any of the books and records which are proposed to be so destroyed, in
which event the same shall be delivered to such other party at its expense.
1.08 Unaudited Schedules; Audited Balance Sheet; Adjustment Procedure.
(a) As soon as practicable, Seller shall deliver to Buyer, on an
unaudited basis, Schedules 1.01 and 1.05 as at the Effective Date (the
"Unaudited Schedules"). The Unaudited Schedules shall be prepared in
accordance with generally accepted accounting principles consistently
applied with Seller's past practices. On or before August 15, 1999, Initio
shall deliver to Buyer its audited balance sheet as at the Effective Date
(the "Audited Balance Sheet"), together with a certificate of its chief
executive officer or chief financial officer, certifying final Schedules
1.01 and 1.05 (the "Final Schedules") based on and consistent with the
audited financial statements of Initio filed with the Securities and
Exchange Commission as part of Initio's annual report on Form 10-KSB (the
"Initio Financial Statement"). The Initio Financial Statement shall be
prepared in accordance with generally accepted accounting principles
applied consistently with Initio's past practices.
- 10 -
(b) Seller agrees that its books and records, including, without
limitation, the work papers of Seller's Accountant with respect to the
Initio Financial Statements, shall be available for inspection and copying
by Buyer's accountant ("Buyer's Accountant") during normal business hours
after it delivers the Final Schedules. Buyer shall have the right to notify
Seller in writing within 30 days of its receipt of the Final Schedules that
Buyer disagrees with the Final Schedules. In the event Buyer shall so
notify Seller of one or more objections within such period, the parties'
respective accountants shall attempt to resolve such objection within a
period of 30 days after the receipt of such notice by Seller. In the event
that such objection cannot be resolved within such 60- day period, the
Buyer's Accountant and the Seller's Accountant shall appoint a third firm
of public accountants (the "Third Firm") which shall resolve such
objections based solely on discussions with the Buyer's Accountant and the
Seller's Accountant and a review of their respective work papers. The
determination of the Third Firm shall be final and binding upon Buyer and
Seller. The expense of engaging the Third Firm shall be borne equally by
Buyer and Seller unless the purchase price shall increase by more than
$25,000 as a result of the forgoing procedure, in which event the expense
of engaging the Third Firm shall be borne by the Seller or the Purchase
Price shall decrease by more than $25,000, in which event the expense of
engaging the Third Firm shall be borne by Buyer.
- 11 -
(c) In the event that the Final Schedules shall require an increase or
decrease in the Purchase Price of less than $25,000, no adjustment to the
Purchase Price shall be made. In the event that the Final Schedules shall
require an increase in the Purchase Price of more than $25,000, Buyer shall
pay the amount of such increase within ten days after the final
determination of such amount. In the event that the Final Schedules shall
require a decrease in the Purchase Price of more than $25,000, then Seller
shall, at its option, within ten days after the final determination of such
amount, either pay the amount of such decrease to Buyer in cash, or deliver
the Convertible Debenture to Buyer in exchange for a new Convertible
Debenture having a principal amount rounded down to the next lowest
$100,000, together with any difference payable in cash by Buyer.
1.09 Bulk Transfer. The parties have agreed to waive compliance with the
procedures set forth in all applicable bulk transfer, bulk sales and similar
laws and requirements of all jurisdictions in connection with the transactions
provided for in this Agreement.
1.10 Sales Taxes. All sales taxes applicable to the transfer of Acquired
Assets to Buyer pursuant to this Agreement shall be paid by Buyer. A check(s) in
payment of such sales taxes to the order of the appropriate taxing authorities
will be delivered by Buyer to Seller at Closing.
- 12 -
ARTICLE II. CLOSING AND RELATED MATTERS.
2.01 Closing. Consummation of the transactions provided for in this
Agreement ("Closing") shall be made at the offices of Milberg Weiss Bershad
Hynes & Lerach LLP, One Pennsylvania Plaza, New York, New York 10119, on that
date which is not more than five days after the delivery by Seller to Buyer of
the Unaudited Schedules, or at such other place or date as the parties hereto
shall agree in writing, provided, however, that this Agreement shall terminate
and be of no further force or effect if the Closing does not take place on or
before June 15, 1999.
2.02 Liquidated Damages; Break-Up Fee. The parties hereto agree that in the
event either party breaches this Agreement and fails to consummate the
transactions contemplated herein without good cause, the damage or injury to the
other party would be irreparable, the exact amount of which would be difficult
to ascertain and that for such reason the party in breach shall pay to the other
party as liquidated damages or a break-up fee the amount of $100,000.00, payable
within five days after demand by the party which is not in breach. It is agreed
that the failure of either party to consummate the transactions contemplated
herein because of the failure or refusal of Pioneer to (i) consummate the
transactions contemplated either by the Letter Proposal (as that term is here
and after defined) or (ii) release Seller as contemplated by Sections 1.03 and
6.02(c) shall not be deemed a breach of this Agreement for purposes of this
Section.
- 13 -
2.03 Documents and Actions. At the Closing, each of the parties shall
appropriately execute and deliver all such bills of sale, instruments of
transfer, assignment and assumption, certificates and other instruments and
documents and take all such other actions as are, or as may be necessary or
required to consummate and give full effect to the transactions, provided for in
this Agreement. Promptly following the Closing, Seller shall take all such steps
as may be necessary or required to put Buyer in actual possession and operating
control of the Acquired Assets.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to and agree with Buyer as set forth in
Exhibit 3 to this Agreement.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to and agrees with Seller as set forth in
Exhibit 4 to this Agreement.
ARTICLE V. PRE-CLOSING MATTERS.
5.01 Information as to Operations of Buyer. Until the Closing:
(a) Seller shall afford to Buyer, its attorneys, accountants and other
representatives, upon reasonable request, full and free access during
normal business hours to all properties, books, records and other documents
of Seller, including the right to make extracts therefrom or copies
thereof, and shall furnish Buyer with, or with copies of, all such
agreements, documents and records, financial and operating data
- 14 -
and other information concerning Seller as Buyer may reasonably request.
Buyer shall hold in strict confidence and shall not use or otherwise
publicly disclose, and shall cause its officers, attorneys, accountants and
other representatives to hold in strict confidence and not to use or
publicly disclose, all information so furnished or made available by Seller
which Seller indicates in advance is confidential, other than information
which is or becomes publicly available or otherwise in the public domain.
Should this Agreement be terminated or the transactions contemplated hereby
not be consummated for any reason, Buyer shall, upon request, return to
Seller all written information so furnished and all copies thereof and
extracts therefrom.
(b) Seller shall refrain from taking or omitting to take any action or
entering into any transaction which, had such action been taken or omitted
or such transaction entered into immediately prior to execution of this
Agreement, would have caused any of the representations, warranties or
agreements of Seller in this Agreement to be untrue, incorrect or
inaccurate in any material respect as of the time of execution of this
Agreement or would cause any such representations, warranties or agreements
to be untrue, incorrect or inaccurate in any material respect as of the
time immediately following such action, omission or transaction or as of
the date of Closing. Without limiting the generality of the foregoing,
except as otherwise set forth or provided in this Agreement, Seller shall
(i) conduct its business only in the usual, regular and ordinary course in
the
- 15 -
same manner as heretofore, (ii) use its best efforts to preserve its
business, properties and assets, maintain its business organization intact,
keep available the services of its present officers and employees and
preserve its goodwill and existing relationships with customers, suppliers
and others having dealings with it, (iii) maintain its properties in
customary repair, order and condition, reasonable use and wear and tear
excepted, (iv) maintain insurance on its properties and with respect to the
conduct of its business in amounts not less than and of such kinds as are
comparable to the insurance in effect on the date of this Agreement, (v)
maintain its books, accounts and records in the usual, regular and ordinary
manner, (vi) refrain from entering into any employment agreement with any
employee which cannot be terminated on less than 30 days notice to such
employee, (vii) refrain from granting any salary increases or bonuses
without the prior written consent of Buyer, (viii) refrain from forgiving
in whole or in part any of the Accounts Receivable, without Buyer's prior
written consent, and (ix) refrain from making any additional loans to
employees engaged in the Mail Order Business, without Buyer's prior written
consent.
5.02 Adverse Circumstances.
(a) Seller shall promptly notify Buyer, as soon as it obtains
knowledge, of any facts, circumstances or occurrences which have adversely
affected or might reasonably be expected to adversely affect its business,
properties, assets, financial condition or prospects or which could or
reasonably might be
- 16 -
expected to cause any of the representations, warranties or agreements in
this Agreement to be untrue, incorrect or inaccurate in any material
respect.
(b) Should Buyer elect to consummate the Closing after receipt of any
notice pursuant to subsection 5.02(a), then, anything elsewhere in this
Agreement to the contrary notwithstanding, Buyer shall be deemed to have
waived any rights or claims which it might possess under this Agreement, or
otherwise, against Seller with respect to the matters referred to in such
notice.
5.03 Operations between the Effective Date and Closing.
(a) Seller and Buyer agree that for the period from the Effective Date
through Closing, Seller shall conduct the Mail Order Business for the
benefit and account of Buyer as follows:
(i) all sales of the Mail Order Business shall be credited to
Buyer;
(ii) all costs incurred during this period of the Mail Order
Business shall be charged to Buyer;
(iii) all costs of payroll and benefits for employees at Carson
City, Nevada, Teterboro, New Jersey and Danvers, Massachusetts, except
for Martin Fox, Daniel DeStefano and one secretary based in Teterboro,
New Jersey and one driver based in Teterboro, New Jersey, shall be
charged to Buyer;
- 17 -
(iv) all expenses of occupancy of Carson City, Nevada, Teterboro,
New Jersey and Danvers, Massachusetts shall be charged to Buyer.
(b) It is anticipated that the Mail Order Business will require more
cash than will be received during the period from May 1, 1999 through the
date of Closing. Buyer agrees to deposit with Seller on or before April 28,
1999, the amount of $34,000, representing the approximate rents due for the
month of May 1999 for the Carson City, Nevada, Teterboro, New Jersey and
Danvers, Massachusetts facilities. In addition, Buyer shall transfer to
Seller the sum of $10,000 every seventh day after such date by wire
transfer of immediately available funds, which the parties agree is the
estimated short fall of the Mail Order Business' cash flow prior to
Closing. In addition, prior to Closing, Buyer shall pay to Seller such
additional funds as Seller shall deem necessary to provide sufficient cash
flow for the ordinary operations of the Mail Order Business, which shall be
consistent with the Seller's past practices. Preliminary adjustment for all
of the above shall be made at Closing. A final adjustment for the above
shall be made concurrently with any adjustment required by reason of the
delivery of the Final Schedule. Such adjustments shall also include
adjustments for miscellaneous accrued expenses and prepaid expenses
incurred in the ordinary course of the Mail Order Business, including,
without limitation, with respect to utilities and insurance.
- 18 -
(c) As promptly as practicable after the Effective Date, Seller will
send to Buyer by telecopier or such other means as Buyer shall reasonably
request such information concerning the operations of the Mail Order
Business as Buyer shall request, including without limitation, daily check
runs, daily sales reports and daily deposits.
(d) In the event this Agreement terminates in accordance with Section
2.01, Seller shall within five business days after such termination pay to
Buyer an amount equal to the amounts transferred pursuant to Subsection (b)
above unless Seller shall be entitled to liquidated damages pursuant to
Section 2.02 in which event Buyer shall be entitled to a credit for the
amounts so transferred. In the event Seller shall be entitled to liquidated
damages pursuant to Section 2.02 and the amount transferred pursuant to
Subsection (b) above shall exceed the amount specified in Section 2.02,
Seller shall pay within five business days after the termination of this
Agreement the excess to Buyer.
ARTICLE VI. CONDITIONS PRECEDENT.
6.01 Conditions Precedent to Obligation of Buyer. The obligation of Buyer
to consummate the transactions provided for in this Agreement shall be subject
to the fulfillment at or prior to the Closing of each of the following
conditions (any or all of which may be waived, in whole or in part, by Buyer in
its discretion):
- 19 -
(a) Each of the representations and warranties of Seller in, or in any
instrument delivered in connection with or pursuant to, this Agreement
shall, except as otherwise contemplated or permitted by this Agreement, be
true and correct in all material respects on and as of the date of Closing.
Seller shall have duly performed and complied in all material respects with
all agreements, covenants and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing. Buyer shall
have received Seller's certificate, dated the date of Closing, to the
foregoing effect.
(b) A lease of the property owned by Seller located in Carson City,
Nevada shall have been entered into in substantially the form of Exhibit D
attached hereto.
(c) A Consulting Agreement shall have been entered into by Seller in
substantially the form of Exhibit E attached hereto.
(d) Martin Fox and Daniel DeStefano (the "Principal Shareholders") and
Initio shall execute and deliver to Buyer an agreement pursuant to which
each agrees to be bound by the terms of Section 7.08.
(e) Buyer shall receive at the Closing an opinion of Milberg Weiss
Bershad Hynes & Lerach LLP in the form of Exhibit F attached hereto.
6.02 Conditions Precedent to Obligation of Seller. The obligation of Seller
to consummate the transactions provided for in this Agreement shall be subject
to the fulfillment at or
- 20 -
prior to the Closing of each of the following conditions (any or all of which
may be waived, in whole or in part, by Seller in its discretion):
(a) Each of the representations and warranties of Buyer in, or in any
instrument delivered in connection with or pursuant to, this Agreement
shall, except as otherwise contemplated or permitted by this Agreement, be
true and correct in all material respects on and as of the date of Closing.
Buyer shall have duly performed and complied in all material respects with
all agreements, covenants, and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing. Seller shall
have received Buyer's certificate, dated the date of Closing, to the
foregoing effect.
(b) Buyer shall have consummated its transactions with Pioneer and its
acquisition of Remarkable Products and Creadis Promotions, Inc. as
contemplated by the Letter Proposal between Buyer and Pioneer, dated March
12, 1999.
(c) Initio shall have been released from $2,000,000 of its convertible
subordinated debenture by Pioneer and Initio shall have issued a
replacement convertible subordinated debenture in the amount of $1,000,000
for the balance of such convertible subordinated debenture. Such
replacement convertible subordinated debenture shall have the same terms
and conditions as currently exist, provided however, that the conversion
price thereunder shall be adjusted to be the greater of $2.50 or the book
value per share of Initio after taking into account the
- 21 -
consummation of the transactions contemplated by this Agreement and the tax
benefit attributable to the then net operating loss carry forward of
Initio, but in no event shall the conversion price be more than $3.00 per
share.
(d) Buyer shall have completed its reverse stock split so that, at the
Closing, Buyer shall have outstanding no more than 3,000,000 common shares.
(e) Buyer shall have completed its reincorporation in the State of
Nevada (under the name America's Shopping Mall, Inc.).
(f) Buyer shall have assumed the lease of Seller's property located in
Teterboro, New Jersey pursuant to an Agreement executed by Initio in
substantially the form of Exhibit G attached hereto.
(g) Seller shall receive at the Closing an opinion of Caro &
Associates, P.C., in the form of Exhibit H attached hereto.
6.03 Compliance with Conditions. All of the conditions to the respective
obligations of the parties set forth in Sections 6.01 and 6.02 are and shall be
deemed covenants by the other, Seller on the one hand and Buyer on the other, to
comply with and satisfy as promptly as practicable each such condition as
requires action by it (to the extent within its power) and to use its
commercially reasonable efforts to obtain compliance with and satisfaction of
each such condition as
- 22 -
requires action by any other party or persons, including any person not a
party.
ARTICLE VII. ADDITIONAL AGREEMENTS OF THE PARTIES.
7.01 Employees. All employees of Deerskin except for those named in
Schedule 7.01 attached hereto, shall become employees of Buyer and Buyer shall
assume responsibility for all salaries and benefits for such employees accrued
after the Effective Date. The foregoing shall not be deemed to require Buyer to
assume Seller's medical plan or to retain any of Seller's employees for any
specified period of time, provided, however, that Seller shall assign to Buyer
and Buyer shall assume the Seller's cafeteria plan as of the Effective Date. The
net balance of such cafeteria plan shall be either added to or subtracted from
the Purchase Price, as appropriate, and shall be payable at the Closing in cash.
7.02 Real Estate Matters. Seller and Buyer have agreed that Seller shall
remain the lessee at Seller's facility in Danvers, Massachusetts, which lease
expires May 31, 2000. All costs incurred pursuant to Seller's lease of the
Danvers facility and all costs of utilities and ordinary maintenance incurred in
connection with such facility after the Effective Date shall be paid by Buyer
within three (3) days of receipt of Seller's request for such payment. Seller's
request for payment shall include copies of bills or invoices requiring payment.
7.03 Refunds. Seller shall reimburse Buyer for amounts of refunds less the
value of merchandise determined in
- 23 -
accordance with Seller's practices and procedures (applied prior to the
Effective Date on a consistent basis) made to customers of the Mail Order
Business, for items Seller shipped on or before April 30, 1999, provided,
however, that Seller shall not be required to reimburse Buyer for any refund
made after July 31, 1999. All returned merchandise which is the subject of a
refund shall be Buyer's property.
7.04 Material Agreements; Purchase Orders. All Material Agreements,
including all open purchase orders, as of the Effective Date, which remain open
at the date of Closing, relating to the Mail Order Business shall be assumed by
Buyer.
7.05 Pre-paid Advertising Adjustment. Book value of Pre-paid Advertising is
calculated based upon the percent complete for such advertising event and an
adjustment will be made such that if such percent complete is too high, Buyer
shall remit to Seller, and, if too low, Seller shall remit to Buyer the
appropriate amount provided, however, if such amount is less than $5,000 no
payment shall be made by either party. If such amount is greater than $5,000,
the entire amount due under this section shall be paid within ten days of the
date used to make the calculation. The first adjustment under this section shall
be made as of July 31, 1999 and the final adjustment under this section shall be
made as of January 31, 2000. It is agreed that an advertising event shall be
deemed 100% complete by the end of 13 months after issuance.
- 24 -
7.06 Letters of Credit. With respect to Letters of Credit relating to
purchases of inventory written by Seller prior to the Effective Date, which
remain outstanding as of the Closing Date, Buyer at the Closing will deposit
with the issuing bank such funds as shall be required to obtain the issuing
bank's release of Seller's liability for such Letters of Credit. With respect to
Letters of Credit relating to purchase of inventory which will be written by
Seller after the Effective Date but prior to the Closing Date, Buyer will
provide a letter of credit facility, provided, however, in the event this
Agreement is terminated, title to the merchandise subject to such Letter of
Credit shall pass to Seller and Seller shall remit Buyer's actual cost within
three (3) days of the receipt of merchandise.
7.07 Change of Corporate Name. At the Closing, Seller shall take all such
corporate actions, and shall execute and promptly following the Closing file all
such appropriate certificates and documents, as are necessary to change its
corporate name to a name which does not contain the words "Deerskin", "Trading
Post", "Joan Cook" or any variation thereof.
7.08 Covenant Not to Compete. In order to induce Buyer to enter into and
consummate the transactions provided for in this Agreement, Seller covenants and
agrees on behalf of itself, Initio and the Principal Shareholders that (i)
during the period of three (3) years following the date of Closing neither
Seller, nor Initio nor the Principal Shareholders, will directly or indirectly,
whether for itself or himself or for any other
- 25 -
person, firm, corporation or entity, engage in, or have any interest in any
business or other entity which engages in, the business of selling by mail order
leather apparel or other leather merchandise of the type currently sold by
Seller anywhere in the continental United States or goods of the type included
in the Deerskin Holiday 1998 catalog or (ii) at any time after the Closing,
unless such employee's employment with Buyer had previously been terminated
without being solicited by Seller, Initio or the Principal Shareholder, hire any
of Buyer's employees, provided, however, that the foregoing shall not prohibit
Initio or the Principal Shareholder, at any time from owning in the aggregate
not more than 10% of the stock or other equity interest of any publicly-traded
entity.
7.09 Payment of Liabilities. Seller will pay or, in the event of a dispute,
adequately reserve against, all of its liabilities arising prior to the
Effective Date which are not included within the Assumed Liabilities and shall
hold Buyer harmless therefrom.
7.10 Further Assurances. From and after the date of this Agreement and the
date of Closing, the parties hereto shall from time to time, at the request of
any other party and without further consideration, do, execute and deliver, or
cause to be done, executed and delivered, all such further acts, things and
instruments as may be reasonably requested or required more
- 26 -
effectively to evidence and give effect to the transactions
provided for in this Agreement.
ARTICLE VIII. SURVIVAL AND INDEMNIFICATION.
8.01 Survival. All of the provisions of, and all of the representations,
warranties, covenants and agreements of the parties in, or in any document or
other instrument executed or delivered pursuant to or in connection with, this
Agreement shall, unless waived, survive and continue in full force and effect
from and after the date of Closing.
8.02 Indemnification. Buyer and Seller:
(a) Shall each indemnify and hold the other free and harmless from and
against and shall reimburse the other for any and all claims, liabilities,
damages, losses, judgments, costs and expenses including reasonable counsel
fees and other reasonable out-of-pocket expenses (the foregoing being
hereinafter collectively referred to as "damages") arising out of or
resulting from any inaccuracy or inadequacy in or breach or default of any
of its representations, warranties, covenants or agreements in, or in any
document or other instrument executed or delivered pursuant to or in
connection with, this Agreement, provided, however, that notwithstanding
the foregoing Seller shall not be liable to Buyer hereunder for damages in
excess of the Purchase Price.
(b) Shall give the other written notice of any claim, demand, action,
suit or proceeding raised, brought, threatened, made or commenced against
it relating to any matter to which the
- 27 -
indemnification provisions of this Section 8.02 apply, and the party
receiving such notice shall have the right, at its expense, to control the
settlement and defense thereof using counsel of its own choice. Nothing
herein shall limit the right of any party to settle any claim, demand,
action, suit or proceeding brought or threatened against it, provided,
however, that in any such event any other party shall not be bound by the
amount or terms of any such settlement not consented to by it.
(c) The provisions of this Section 8.02 shall not be construed as a
waiver by any party of any other rights or remedies which it may possess,
whether under this Agreement, at law or in equity, arising out of or
resulting from any breach or default of or inaccuracy or inadequacy in any
other party's representations, warranties, covenants or agreements. All of
such other rights and remedies shall be cumulative with the rights and
remedies set forth herein.
8.03 Survival of Representations. The representations and warranties of
Buyer and Seller shall survive the Closing and remain in full force and effect
for a period of one year after the final calculation of the Purchase Price
pursuant to Section 1.08.
8.04 Products Liability Insurance. To the extent that Seller's product
liability insurance is a "claims made" policy, Seller hereby agrees that it will
maintain such product liability insurance in full force and effect at current
policy levels for at least one year after the date of the Closing.
- 28 -
ARTICLE IX. MISCELLANEOUS.
9.01 Brokers. Seller and Buyer each represents and warrants to the other
that it has had no dealings with and has not employed any broker, agent, finder
or other person and that no such person brought about or is entitled to any
commission, brokerage or finder's fee or similar payment in connection with, or
with the transactions provided for in, this Agreement.
9.02 Expenses. Each party shall bear and pay all legal, accounting and
other fees and expenses incurred by it in connection with, and with the
transactions provided for in, this Agreement and the performance of all its
obligations and agreements hereunder.
9.03 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered or if mailed by first
class registered or certified mail return receipt requested, or by first class
mail if received, addressed to the parties at their respective addresses set
forth or referred to on the first page and signature page of this Agreement,
with copies to their respective counsel, Milberg Weiss Bershad Hynes & Lerach
LLP, Att: Arnold N. Bressler, Esq., One Pennsylvania Plaza, New York, New York
10119, in the case of Seller, and Caro & Associates, P.C., Attention: Chase A.
Caro, Esq., 60 East 42nd Street, Suite 2001, New York, New York 10165, in the
case of Buyer or to such other person or address as may be designated by like
notice hereunder.
- 29 -
9.04 Parties in Interest. This Agreement shall be binding upon, and shall
inure to the benefit of and be enforceable by, the parties hereto and their
respective legal representatives, successors and assigns, but no other person
shall acquire or have any rights under this Agreement.
9.05 Entire Agreement; Modification; Waiver. This Agreement (as below
defined) contains the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes all prior
negotiations and understandings, if any, and there are no agreements,
representations or warranties other than those set forth, provided for or
referred to herein. All exhibits and schedules to this Agreement are expressly
made a part of this Agreement as fully as though completely set forth herein,
and all references to this Agreement herein, in any of such writings or
elsewhere shall be deemed to refer to and include all such writings. Neither
this Agreement nor any provisions hereof may be modified, amended, waived,
discharged or terminated, in whole or in part, except in writing signed by the
party to be charged. Any party may extend the time for or waive performance of
any obligation of any other party or waive any inaccuracies in the
representations or warranties of any other party or compliance by any other
party with any of the provisions of this Agreement. No waiver of any such
provisions or of any breach of or default under this Agreement shall be deemed
or shall constitute a waiver of any other provisions,
- 30 -
breach or default, nor shall any such waiver constitute a continuing waiver.
9.06 Interpretation.
(a) This Agreement shall be governed and construed and enforced in
accordance with the laws of the State of New York applicable to contracts
made and to be performed exclusively in that State without giving effect to
the principles of conflict of laws.
(b) All pronouns and words used in this Agreement shall be read in the
appropriate number and gender, the masculine, feminine and neuter shall be
interpreted interchangeably and the singular shall include the plural and
vice versa, as the circumstances may require.
9.07 Headings; Counterparts. The article and section headings in this
Agreement are for reference purposes only and shall not define, limit or affect
the meaning or interpretation of this Agreement. This Agreement is being
executed in two or more counterparts, each of which shall be deemed an original
but
- 31 -
all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
ADVANCED MEDICAL SCIENCES, INC.
By /s/ Irwin Schneidmill
----------------------------
Irwin Schneidmill, President
DEERSKIN TRADING POST INC.
By /s/ Martin Fox
----------------------------
Martin Fox, Chairman
- 32 -
EXHIBIT 3
to
ASSET PURCHASE AGREEMENT
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer that except as otherwise set forth
or referred to in this Agreement and a separate letter or schedule dated and
executed contemporaneously herewith from the Seller to (and received by) Buyer
(hereinafter referred to as the "Seller's Schedule"):
3.01 Corporate Organization, Good Standing and Corporate Power. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and has all requisite corporate power and authority to
conduct its business and own, lease and operate its properties as and in the
places where such business is now conducted and such properties are now owned,
leased or operated. Seller is duly qualified to do business in the states where
it is required to be so qualified and is not required to be qualified or
licensed as a foreign corporation in any other jurisdiction. Seller has no
subsidiaries. The execution delivery and performance by Seller of this Agreement
are within Seller's corporate powers and have been duly authorized by all
corporate action.
3.02 No Violations. No provision of Seller's Certificate of Incorporation
or By-laws, or of any agreement, instrument or understanding, or of any law,
regulation, rule, order, judgment, decree, of any court or governmental
authority,
to which Seller is a party or by which it is bound or subject, has been or will
be violated by the execution by Seller of, or the performance or satisfaction of
any agreement or condition upon its part to be performed or satisfied under,
this Agreement,
3.03 Books and Records. The books and records of the Seller have been
prepared in conformity with generally accepted accounting principles and
practices consistently applied through the periods covered and fairly present in
all material respects the financial condition and results of operations of the
Seller as at the dates thereof and for the periods covered thereby. The books of
account and other financial records of Seller are in all material respects
complete and correct. Seller does not maintain a separate financial statement
for itself.
3.04 Reports. Seller has delivered to Buyer the annual report on Form
10-KSB of Initio for fiscal 1998 and the quarterly reports on Form 10-QSB of
Initio for fiscal 1999, which reports are accurate and complete.
3.05 Property; Leases.
(a) Other than the Excluded Assets the Acquired Assets are
substantially all the material assets used by Seller in operating the Mail
Order Business as it is currently being operated. For purposes of the
foregoing only, it is agreed that an asset having a value of less than
$30,000 shall not be considered material.
(b) Seller has good and marketable title to all of its assets,
personal, tangible and intangible, which are the subject
- 2 -
of this Agreement, including without limitation, the Acquired Assets, in
each case free and clear of all liens, security interests, claims, charges
and encumbrances except as expressly set forth in the Seller's Schedule.
(c) All machinery, fixtures, equipment and similar assets, which are
material to operating the Mail Order Business as it is currently being
operated, are in good operating condition and repair, reasonable wear and
tear excepted. Buyer recognizes that from time to time such equipment will
not be functioning and will require repair or replacement and Buyer is
acquiring such equipment "as is."
(d) All leases to which Seller is a party are in good standing, and
are valid, binding and enforceable in accordance with the respective
provisions thereof.
3.06 Default. Neither Seller nor, to the best of Seller's knowledge, any
other party thereto is in material violation of or default under, and no event
(including, without limitation, execution of and consummation of the
transactions provided for in this Agreement) has occurred which with the passage
of time or notice from or action by any party thereto or otherwise could result
in a material breach of or default under, or give any other person the right to
terminate, as the case may be, any material indenture, mortgage, security, loan,
lease or other agreement (including, without limitation, those listed or
referred to in the Seller's Schedule) to which Seller is a party or by which it
is bound or to which any of its assets are subject
- 3 -
or result in the creation, imposition or acceleration of any material lien,
encumbrance, charge, equity or restriction of any nature in favor of any other
person upon any of the assets of Seller.
3.07 Permits; Compliance with Laws. Seller possesses all necessary valid
licenses, permits, franchises, consents, authorizations and approvals of or from
governmental departments, agencies and instrumentalities for the business and
operations of Seller as presently conducted and is not in material default with
respect to nor in violation of, and has not received notice of any violation of
or of any proceedings for the termination or revocation (other than by reason of
normal expiration according to their terms) of, any such license, permit,
franchise, consent, authorization or approval or, to the best of its knowledge,
any applicable Federal, state, local or foreign law, statute, ordinance,
regulation, order or requirement relating to its business, operations or assets,
or the use thereof, which default or violation could have a materially adverse
affect upon its business, operations or assets. The Seller's Schedule includes a
list (including expiration dates) of all material licenses, permits, consents,
authorizations and approvals of or from governmental departments, agencies and
instrumentalities held by Deerskin in the conduct of the Mail Order Business.
3.08 Intellectual Property. Seller owns and has good and marketable title to the
Intellectual Property, free and clear of any and all liens, security interests,
claims, charges and
- 4 -
encumbrances. The use of the Intellectual Property by Seller does not conflict
in any material respect with any rights, including, without limitation,
copyrights or trademark rights, of others. No litigation or other proceedings
have been instituted or are pending or threatened which challenge the ownership
or use of the Intellectual Property. Seller has not entered into any license or
other agreement granting to anyone the right to use any of the Intellectual
Property and, to the best of Seller's knowledge, none of the Intellectual
Property is being used or infringed in any material respect by any other person.
The Intellectual Property includes all material intangible and similar rights
presently owned or used by Seller. The only Intellectual Property which Seller
has registered with the U.S. Patent and Trademark Office are set forth in the
Seller's Schedule. Other than standard licenses in connection with its computer
systems, Seller's Mail Order Business is not dependant on any intellectual
property licensed from another person, firm or entity.
3.09 Customer List. Seller hereby represents and warrants to Buyer that,
prior to the date hereof, it has not disclosed the Customer List of the Mail
Order Business to any person, other than to Seller's employees and agents and
other than in the ordinary course of Seller's list rental business. Seller
agrees to maintain the confidentiality of such Customer List after the date
hereof and after the Closing.
- 5 -
3.10 Litigation. Except as set forth in Seller's Schedule, there are no
actions, suits, claims, arbitrations, administrative or other proceedings or
governmental investigations pending or, to the best of Seller's knowledge,
threatened against, relating to or affecting Seller or the business, operations
or assets of Seller, whether or not fully covered by insurance, or which
question or seek to prevent consummation of the transactions provided for in
this Agreement, whether at law or in equity, or before or by any Federal, state,
local, foreign or other governmental department, agency or instrumentality nor
to the best of Seller's knowledge is there any basis therefor. Seller is not
bound or adversely affected by or in default with respect to any judgment,
order, writ, injunction or decree of any court or of any governmental
department, agency or instrumentality.
3.11 Authorization, Validity. This Agreement and each of the other
instruments executed or to be executed by Seller pursuant to this Agreement has
been duly authorized and constitutes the valid and legally binding obligation of
Seller in accordance with its terms except as enforcement may be limited by
applicable bankruptcy, insolvency and other laws relating to or affecting
creditors' rights generally and subject also to general principles of equity
affecting the right to specific performance and injunctive relief.
3.12 Authorizations; Approvals. No authorization or approval of, or filing
with, or compliance with any applicable
- 6 -
order, judgment, decree, statute, rule or regulation of, any court or
governmental authority, or approval, consent, release or action of any third
party, is required in connection with the execution and delivery by Seller of,
or the performance or satisfaction of any agreement of Seller contained in or
contemplated by, this Agreement.
3.13 Employees. Except as set forth in Seller's Schedule, Seller has no
employment agreement with any employee nor does Seller maintain any pension
plans. Prior to the date hereof, Seller has not been notified by any employee
earning in excess of $50,000 per annum of an intention to terminate his or her
employment.
3.14 Payment of Taxes. Seller has paid or adequately reserved against all
taxes, assessments and governmental charges and levies imposed upon it
including, without limitation all sales taxes.
3.15 Disclosure. Neither this Agreement nor the schedules and exhibits to
this Agreement nor any other written certificate, statement or document
furnished or to be furnished by Seller in connection with the transactions
provided for in this Agreement contains or will contain any untrue statement of
a material fact or omits or will omit to state any material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which made, not misleading, and to the best of Seller's
knowledge and belief, all such material books, records, agreements, documents,
financial
- 7 -
and operating data and other information of or relating to Seller as Buyer has
requested or may request has heretofore been or will be made available to Buyer.
Without limiting the generality of the foregoing, to the best of Seller's
knowledge, there has not occurred and does not exist in any event, circumstance
or development not disclosed to Buyer relating to Seller (as contrasted with
general industry, economic or business conditions) which has materially
adversely affected or in the future reasonably may, so far as Seller can now
foresee, materially adversely affect the business, operations or assets of
Seller.
- 8 -
EXHIBIT 4
to
ASSET PURCHASE AGREEMENT
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to and agrees with Seller that:
4.01 Corporate Organization; Good Standing and Corporate Power. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Virginia. The execution delivery and performance by Buyer of
this Agreement are within Buyer's corporate powers and have been duly authorized
by all corporate action.
4.02 No Violations; Validity. No provision of Buyer's Certificate of
Incorporation or By-laws, or of any agreement, instrument or understanding, or
of any law, regulation, rule, order, judgment, decree of any court or
governmental authority, to which Buyer is a party or by which it is bound or
subject, has been or will be violated by the execution by Buyer of, or the
performance or satisfaction of any agreement or condition upon its part to be
performed or satisfied under, this Agreement.
4.03 Letter Proposal. The Letter Proposal between Pioneer and America's
Shopping Mall, Inc., dated March 12, 1999 (the "Letter Proposal") is in full
force and effect and was entered into on behalf of Buyer using the trade name
"America's Shopping Mall, Inc."
4.04 Permits; Compliance with Laws. Buyer possesses all necessary valid
licenses, permits, franchises, consents,
authorizations and approvals of or from governmental departments, agencies and
instrumentalities for the business and operations of Buyer as presently
conducted and is not in material default with respect to nor in violation of,
and has not received notice of any violation of or of any proceedings for the
termination or revocation (other than by reason of normal expiration according
to their terms) of, any such license, permit, franchise, consent, authorization
or approval or, to the best of its knowledge, any applicable Federal, state,
local or foreign law, statute, ordinance, regulation, order or requirement
relating to its business, operations or assets, or the use thereof, which
default or violation could have a materially adverse affect upon its business,
operations or assets.
4.05 Litigation. There are no actions, suits, claims, arbitrations,
administrative or other proceedings or governmental investigations pending or,
to the best of Buyer's knowledge, threatened against, relating to or affecting
Buyer or the business, operations or assets of Buyer, whether or not fully
covered by insurance, or which question or seek to prevent consummation of the
transactions provided for in this Agreement, whether at law or in equity, or
before or by any Federal, state, local, foreign or other governmental
department, agency or instrumentality nor to the best of Buyer's knowledge is
there any basis therefor. Buyer is not bound or adversely affected by or in
default with respect to any judgment, order, writ, injunction
- 2 -
or decree of any court or of any governmental department, agency or
instrumentality.
4.06 Authorization, Validity. This Agreement and each of the other
instruments executed or to be executed by Seller pursuant to this Agreement has
been duly authorized and constitutes the valid and legally binding obligation of
Buyer in accordance with its terms except as enforcement may be limited by
applicable bankruptcy, insolvency and other laws relating to or affecting
creditors' rights generally and subject also to general principles of equity
affecting the right to specific performance and injunctive relief.
4.07 Authorizations; Approvals. No authorization or approval of, or filing
with, or compliance with any applicable order, judgment, decree, statute, rule
or regulation of, any court or governmental authority, or approval, consent,
release or action of any third party, is required in connection with the
execution and delivery by Buyer of, or the performance or satisfaction of any
agreement of Buyer contained in or contemplated by, this Agreement.
4.08 Disclosure. Neither this Agreement nor the schedules and exhibits to
this Agreement nor any other written certificate, statement or document
furnished or to be furnished by Buyer in connection with the transactions
provided for in this Agreement contains or will contain any untrue statement of
a material fact or omits or will omit to state any material fact necessary in
order to make the statements contained herein or
- 3 -
therein, in light of the circumstances under which made, not misleading, and to
the best of Buyer's knowledge and belief, all such material books, records,
agreements, documents, financial and operating data and other information of or
relating to Buyer as Seller has requested or may request has heretofore been or
will be made available to Seller. Without limiting the generality of the
foregoing, to the best of Buyer's knowledge, there has not occurred and does not
exist in any event, circumstance or development not disclosed to Seller relating
to Buyer (as contrasted with general industry, economic or business conditions)
which has materially adversely affected or in the future reasonably may, so far
as Buyer can now foresee, materially adversely affect the business, operations
or assets of Buyer.
- 4 -
SCHEDULE 7.01
Excluded Employees
Martin Fox
Daniel DeStefano
Oscar Atkinson
EXHIBIT A
Excluded Assets
1. Cash and Marketable Securities
2. Real property located in Carson City, Nevada.
3. Real property located in Peabody, Massachusetts.
4. 1990 Limousine
5. 1995 Limousine
6. Chrysler Automobile
7. Daniel DeStefano's Office Furniture Martin Fox's Office Furniture
8. 1 Fax Machine located in Teterboro, New Jersey
9. 1 Copy Machine located in Teterboro, New Jersey
10. 1990 Mazda Automobile
11. Loan Receivable with respect to loan made to Michael Divardi