AGREEMENT AND PLAN OF REORGANIZATION
AND STOCK PURCHASE AGREEMENT
by and among
AUCTIONANYTHING.COM, INC.
as Acquiror
DISEASE S.I., INC.
as Acquiree
and
the Shareholders of
DISEASE S.I., INC.
May 23, 2001
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION and Stock Purchase Agreement
(the "Agreement") is made and entered into this 23rd day of May, 2001 by and
among AUCTIONANYTHING.COM, INC., a Delaware corporation (hereinafter referred to
as "AAI"), DISEASE S.I., INC. , a Florida corporation (hereinafter referred to
as the "Company"), and DR. WAYNE M. GOLDSTEIN AND BYRON S. JOHN, the
shareholders of the Company (hereinafter referred to as the "Shareholders").
RECITALS:
1. The Shareholders own all of the issued and outstanding shares of the
capital stock of the Company as set forth on Exhibit A hereto.
2. AAI is willing to acquire all of the issued and outstanding capital stock of
the Company, making the Company a wholly-owned subsidiary of AAI, and the
Shareholders desire to exchange all of their shares of the Company's capital
stock for shares of AAI's authorized but unissued shares of Common Stock as
hereinafter provided.
3. It is the intention of the parties hereto that: (i) AAI shall acquire all of
the issued and outstanding capital stock of the Company in exchange solely for
60,000,000 shares of AAI 's authorized but unissued Common Stock set forth below
(the "Exchange"); (ii) the Exchange shall qualify as a tax-free reorganization
under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and
related sections thereunder; and (iii) the Exchange shall qualify as a
transaction in securities exempt from registration or qualification under the
Securities Act of 1933, as amended, (the "Act") and under the applicable
securities laws of the state or jurisdiction where the Shareholders reside.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
SECTION 1. EXCHANGE OF SHARES
1.1 Exchange of Shares. AAI and the Shareholders hereby agree that the
Shareholders shall, on the Closing Date (as hereinafter defined), exchange all
of their issued and outstanding shares of the capital stock of the Company (the
"DSI Shares") for 60,000,000 shares of AAI Common Stock, $.001 par value (the
"AAI Shares") set forth in Exhibit A hereto. The number of shares of capital
stock owned by the Shareholders and the number of AAI Shares which the
Shareholders will be entitled to receive in the Exchange is set forth in Exhibit
A hereto.
1.2 Delivery of Shares. On the Closing Date, the Shareholders will
deliver to AAI the certificates representing the DSI Shares, duly endorsed (or
with executed stock powers) so as to make AAI the sole owner thereof. AAI shall
deliver to the Shareholders 21,209,304 shares of the 60,000,000 AAI Shares to be
delivered to the Shareholders, representing the amount of AAI Shares deliverable
based on the authorized Common Stock of AAI less the amount of shares currently
outstanding. The balance of the 60,000,000 AAI Shares will be delivered to the
Shareholders following the Closing Date as soon as AAI amends its Certificate of
Incorporation to increase the authorized capitalization in order to permit the
issuance.
1.3 Tax-Free Reorganization. The Shareholders acknowledge that, in the
event that capital stock of the Company representing at least 80% in interest of
the Company is not exchanged for shares of AAI voting capital stock pursuant
hereto, the Exchange will not qualify as a tax-free reorganization under Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
1.4 Investment Intent. The AAI Shares have not been registered under
the Securities Act of 1933, as Amended, and may not be resold unless the AAI
Shares are registered under the Act or an exemption from such registration is
available. The Shareholders represent and warrant that they are acquiring the
AAI Shares for their own account, for investment, and not with a view to the
sale or distribution of such Shares. Each certificate representing the AAI
Shares will have a legend thereon incorporating language as follows:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"). The shares have been acquired for investment and may
not be sold or transferred in the absence of an effective
Registration Statement for the shares under the Act unless in
the opinion of counsel satisfactory to the Company,
registration is not required under the Act."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS
The Company and the Shareholders hereby represent and warrant as
follows:
2.1 Organization and Good Standing; Ownership of Shares. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida, and is entitled to own or lease its properties and
to carry on its business as and in the places where such properties are now
owned, leased or operated and such business is now conducted. The Company is
duly licensed or qualified and in good standing as a foreign corporation where
the character of the properties owned by it or the nature of the business
transacted by it make such licenses or qualifications necessary. The Company
does not have any subsidiaries. There are no outstanding subscriptions, rights,
options, warrants or other agreements obligating either the Company or the
Shareholders to issue, sell or transfer any stock or other securities of the
Company.
2.2 Ownership of Shares. The Shareholders are the owners of record and
beneficially of all of the shares of capital stock of the Company, all of which
Shares are free and clear of all rights, claims, liens and encumbrances, and
have not been sold, pledged, assigned or otherwise transferred except pursuant
to this Agreement.
2.3 Financial Statements, Books and Records. There has been previously
delivered to AAI the unaudited balance sheet of the Company as at April 30, 2001
(the "Balance Sheet"). The Balance Sheet is true and accurate and fairly
represents the financial position of the Company as at such date, and has been
prepared in accordance with generally accepted accounting principles
consistently applied.
2.4 No Material Adverse Changes. Since the date of the Balance Sheet
there has not been:
(i) any material adverse change in the assets, operations,
condition (financial or otherwise) or prospective business of the Company;
(ii) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition (financial or otherwise)
of the Company, whether or not covered by insurance;
(iii) any declaration, setting aside or payment of any
dividend or distribution with respect to any redemption or repurchase of the
Company's capital stock;
(iv) any sale of an asset (other than in the ordinary course
of business) or any mortgage or pledge by the Company of any properties or
assets; or
(v) adoption of any pension, profit sharing, retirement,
stock bonus, stock option or similar plan or arrangement.
2.5 Taxes. The Company has prepared and filed all appropriate federal,
state and local tax returns for all periods prior to and through the date hereof
for which any such returns have been required to be filed by it and has paid all
taxes shown to be due by said returns or on any assessments received by it or
has made adequate provision for the payment thereof.
2.6 Compliance with Laws. The Company has complied with all federal,
state, county and local laws, ordinances, regulations, inspections, orders,
judgments, injunctions, awards or decrees applicable to it or its business
which, if not complied with, would materially and adversely affect the business
of the Company.
2.7 No Breach. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Articles of Incorporation or
By-Laws of the Company;
(ii) violate, conflict with or result in the breach of any of
the terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract or other agreement to
which the Company is a party or by or to which it or any of its assets or
properties may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory body against, or binding
upon, the Company, or upon the properties or business of the Company; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated herein which could have
a materially adverse effect on the business or operations of the Company.
2.8 Actions and Proceedings. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving the Company. There is no action, suit
or claim or legal, administrative or arbitral proceeding or (whether or not the
defense thereof or liabilities in respect thereof are covered by insurance)
pending or threatened against or involving the Company or any of its properties
or assets. There is no fact, event or circumstances that may give rise to any
suit, action, claim, investigation or proceeding.
2.9 Brokers or Finders. No broker's or finder's fee will be payable by
the Company in connection with the transactions contemplated by this Agreement,
nor will any such fee be incurred as a result of any actions by the Company or
the Shareholders.
2.10 Real Estate. The Company neither owns real property nor is a party
to any leasehold agreement.
2.11 Tangible Assets. The Company has full title and interest in all
machinery, equipment, furniture, leasehold improvements, fixtures, vehicles,
structures, owned or leased by the Company, any related capitalized items or
other tangible property material to the business of the Company (the "Tangible
Assets"). The Company holds all rights, title and interest in all the Tangible
Assets owned by it on the Balance Sheet or acquired by it after the date of the
Balance Sheet, free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts or any other encumbrances. All of the
Tangible Assets are in good operating condition and repair and are usable in the
ordinary course of business of the Company and conform to all applicable laws,
ordinances and governmental orders, rules and regulations relating to their
construction and operation.
2.12 Liabilities. The Company does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation, any liability on account of taxes, any other governmental
charge or lawsuit (all of the foregoing collectively defined to as
"Liabilities"), which were not fully, fairly and adequately reflected on the
Balance Sheet. As of the Closing Date, the Company will not have any
Liabilities, other than Liabilities fully and adequately reflected on the
Balance Sheet, except for Liabilities incurred in the ordinary course of
business.
2.13 Operations of the Company. From the date of the Balance Sheet
and through the Closing Date hereof the Company has not and will not have:
(i) incurred any indebtedness for borrowed money;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to any shareholder, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares in its
capital stock;
(iii) made any loan or advance to any shareholder, officer,
director, employee, consultant, agent or other representative or made any other
loan or advance otherwise than in the ordinary course of business;
(iv) except in the ordinary course of business, incurred or
assumed any indebtedness or liability (whether or not currently due and
payable);
(v) disposed of any assets of the Company except in the
ordinary course of business; or
(vi) materially increased the annual rate of compensation of
any executive employee of the Company;
(vii) increased, terminated, amended or otherwise modified any
plan for the benefit of employees of the Company;
(viii) issued any equity securities or rights to acquire such
equity securities; or
(ix) except in the ordinary course of business, entered into
or modified any contract, agreement or transaction.
2.14 Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of common stock, $.001 par value, of which
60,000,000 shares are presently issued and outstanding. Neither the Company nor
the Shareholders has granted, issued or agreed to grant, issue or make available
any warrants, options, subscription rights or any other commitments of any
character relating to the issued or unissued shares of capital stock of the
Company.
2.15 Full Disclosure. No representation or warranty by the Company or
the Shareholders in this Agreement or in any document or schedule to be
delivered by them pursuant hereto, and no written statement, certificate or
instrument furnished or to be furnished to AAI pursuant hereto or in connection
with the negotiation, execution or performance of this Agreement, contains or
will contain any untrue statement of a material fact or omits or will omit to
state any fact necessary to make any statement herein or therein not materially
misleading or necessary to a complete and correct presentation of all material
aspects of the businesses of the Company.
2.16 Representations and Warranties on Closing Date. The
representations and warranties contained in this Section 2 shall be true and
complete on the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF AAI
AAI hereby represents and warrants to the Company and the Shareholders
as follows:
3.1 Organization and Good Standing. AAI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is entitled to own or lease its properties and to carry on its
business as and in the places where such properties are now owned, leased, or
operated and such business is now conducted. The authorized capital stock of AAI
consists of 50,000,000 shares of Common Stock, of which 28,790,696 shares are
presently issued and outstanding. AAI is duly licensed or qualified and in good
standing as a foreign corporation where the character of the properties owned by
AAI or the nature of the business transacted by it make such license or
qualification necessary. AAI does not have any subsidiaries other than North
Orlando Sports Promotions, Inc.
3.2 The AAI Shares. The AAI Shares to be issued to the Shareholders
have been or will have been duly authorized by all necessary corporate and
stockholder actions and, when so issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable.
3.3 Financial Statements; Books and Records. There has been previously
delivered to the Company, the audited balance sheet of AAI as at January 31,2000
and the unaudited balance sheet as at October 31, 2000 (the "AAI Balance Sheet")
and the related audited statements of operations for the periods then ended (the
"Financial Statements"). The Financial Statements are true and accurate and
fairly represent the financial position of the Company as at such dates and the
results of its operations for the periods then ended, and have been prepared in
accordance with generally accepted accounting principles consistently applied.
3.4 No Material Adverse Changes. Since the date of the AAI
Balance Sheet and except as otherwise disclosed in AAI's reports or filings
made under the Securities Exchange Act of 1934, there has not been:
(i) any material adverse change in the assets, operations,
condition (financial or otherwise) or prospective business of AAI;
(ii) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition (financial or otherwise)
of AAI, whether or not covered by insurance;
(iii) any declaration, setting aside or payment of any
dividend or distribution with respect to any redemption or repurchase of AAI's
capital stock;
(iv) any sale of an asset (other than in the ordinary course
of business) or any mortgage or pledge by AAI of any properties or assets; or
(v) adoption of any pension, profit sharing, retirement,
stock bonus, stock option or similar plan or arrangement.
The parties acknowledge that at the Closing, AAI will have
delivered to the Company its audited balance sheet dated January 31, 2001 and
its unaudited balance sheet dated April 30, 2001.
3.5 Taxes. AAI has prepared and filed all appropriate federal, state
and local tax returns of every kind and category (including, without limitation,
income taxes, estimated taxes, excise taxes, sales taxes, inventory taxes, use
taxes, gross receipt taxes, franchise taxes and property taxes) for all periods
prior to and through the date hereof for which any such returns have been
required to be filed by it or the failure to make such filings and resulting
liability would not be material relative to the results of operations of AAI.
AAI has paid all taxes shown to be due by said returns or on any assessments
received by it or has made adequate provision for the payment thereof.
3.6 Compliance with Laws. AAI has complied with all federal, state,
county and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to their businesses, including Federal
and State securities laws, which, if not complied with, would materially and
adversely affect the business of AAI or the trading market for the shares of
AAI's Common Stock.
3.7 No Breach. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will
not:
(i) violate any provision of the Certificate of Incorporation
or By-Laws of AAI ;
(ii) violate, conflict with or result in the breach of any of
the terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract or other agreement to
which AAI is a party or by or to which it or any of its assets or properties may
be bound or subject;
(iii) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory body against, or binding
upon, AAI or upon the properties or business of AAI; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated herein which could have
a material adverse effect on the business or operations of AAI.
3.8 Actions and Proceedings. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving AAI. There is no action, suit or claim
or legal, administrative or arbitral proceeding or (whether or not the defense
thereof or liabilities in respect thereof are covered by insurance) pending or
threatened against or involving AAI or any of its properties or assets. Except
as set forth on Schedule 3.8, there is no fact, event or circumstances that may
give rise to any suit, action, claim, investigation or proceeding.
3.9 Brokers or Finders. No broker's or finder's fee will be payable by
AAI in connection with the transactions contemplated by this Agreement, nor will
any such fee be incurred as a result of any actions by AAI.
3.10 Liabilities. AAI does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation, any liability on account of taxes, any other governmental
charge or lawsuit (all of the foregoing collectively defined to as
"Liabilities"), which were not fully, fairly and adequately reflected on the
Balance Sheet. As of the Closing Date, AAI will not have any Liabilities, other
than Liabilities fully and adequately reflected on the AAI Balance Sheet or
AAI's balance sheet dated December 31, 2000, except for Liabilities incurred in
the ordinary course of business. All Liabilities and agreements of AAI are
assumable by third parties.
The parties acknowledge that at the Closing, AAI will have
delivered to the Company its audited balance sheet dated January 31, 2001 and
its unaudited balance sheet dated April 30, 2001.
3.11 Operations of AAI. Except as set forth on Schedule 3.11 or in
AAI's reports or filings made under the Securities Exchange Act of 1934, since
the date of the AAI Balance Sheet and through the Closing Date hereof, AAI has
not and will not have:
(i) incurred any indebtedness for borrowed money;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to any shareholder, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares in its
capital stock;
(iii) made any loan or advance to any shareholder, officer,
director, employee, consultant, agent or other representative or made any other
loan or advance otherwise than in the ordinary course of business;
(iv) except in the ordinary course of business, incurred or
assumed any indebtedness or liability (whether or not currently due and
payable);
(v) disposed of any assets of AAI except in the ordinary
course of business; or
(vi) materially increased the annual level of compensation of
any executive employee of AAI;
(vii) increased, terminated amended or otherwise modified any
plan for the benefit of employees of AAI ;
(viii) issued any equity securities or rights to acquire such
equity securities; or
(ix) except in the ordinary course of business, entered into
or modified any contract, agreement or transaction.
3.12 Authority to Execute and Perform Agreements. AAI has the full
legal right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform fully their obligations
hereunder. This Agreement has been duly executed and delivered and is the valid
and binding obligation of AAI, enforceable in accordance with its terms, except
as may be limited by bankruptcy, moratorium, insolvency or other similar laws
generally affecting the enforcement of creditors' rights. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and the performance by AAI of this Agreement, in accordance with its
respective terms and conditions will not:
(i) require the approval or consent of any governmental or
regulatory body, the Stockholders of AAI, or the approval or consent of any
other person;
(ii) conflict with or result in any breach or violation of any
of the terms and conditions of, or constitute (or with any notice or lapse of
time or both would constitute) a default under, any order, judgment or decree
applicable to AAI, or any instrument, contract or other agreement to which AAI
is a party or by or to which AAI is bound or subject; or
(iii) result in the creation of any lien or other encumbrance
on the assets or properties of AAI.
3.13 Delivery of Periodic Reports; Compliance with 1934 Act. AAI has
provided the Company and to Shareholders with all of its Periodic Reports filed
with the Securities and Exchange Commission since January 1, 1998. AAI has filed
all required Periodic Reports and is in compliance with its reporting
obligations under the Securities Exchange Act of 1934. All reports filed
pursuant to such Act are complete and correct in all material respects. All
material contracts relative to AAI are included in the Periodic Reports. All
material contracts and commitments for the provision or receipt of services or
involving any obligation on the part of AAI are included as exhibits to such
periodic reports or are listed on Schedule 3.13 hereto.
3.14 Capitalization. The authorized capital stock of AAI consists of
50,000,000 shares of common stock, $.001 par value, of which 28,790,696 shares
are presently issued and outstanding. Except as indicated in Schedule 3.14
hereto, AAI has not granted, issued or agreed to grant, issue or make available
any warrants, options, subscription rights or any other commitments of any
character relating to the issued or unissued shares of capital stock of AAI.
3.15 Full Disclosure. No representation or warranty by AAI in this
Agreement or in any document or schedule to be delivered by it pursuant hereto,
and no written statement, certificate or instrument furnished or to be furnished
to the Company or the Shareholders pursuant hereto or in connection with the
execution or performance of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not materially misleading or necessary
to a complete and correct presentation of all material aspects of the business
of AAI.
3.16 Representations and Warranties on Closing Date. The
representations and warranties contained in this Section 3 shall be true and
complete on the Closing Date with the same force and effect as through such
representations and warranties had been made on and as of the Closing Date.
SECTION 4. COVENANTS OF COMPANY AND SHAREHOLDERS
The Company and the Shareholders covenant to AAI as follows:
4.1 Conduct of Business. From the date hereof through the Closing Date,
the Shareholders and The Company shall cause the Company to conduct its business
in the ordinary course and, without the prior written consent of AAI , shall
ensure that the Company does not undertake any of the actions specified in
Section 2.13 hereof.
4.2 Preservation of Business. From the date hereof through the Closing
Date, the Shareholders and the Company shall cause the Company to use its best
efforts to preserve its business organization intact, keep available the
services of its present employees, consultants and agents, maintain its present
suppliers and customers and preserve its goodwill.
4.3 Litigation. The Company shall promptly notify AAI of any lawsuits,
claims, proceedings or investigations which after the date hereof are threatened
or commenced against the Company or against any officer, director, employee,
consultant, agent, shareholder or other representative with respect to the
affairs of the Company.
4.4 Continued Effectiveness of Representations and Warranties. From the
date hereof through the Closing Date, the Shareholders and the Company shall
cause the Company to conduct its business in such a manner so that the
representations and warranties contained in Section 2 shall continue to be true
and correct on and as of the Closing Date and as if made on and as of the
Closing Date, and shall:
(i) promptly give notice to the Company or any event,
condition or circumstance occurring from the date hereof through the Closing
Date which would render any of the representations or warranties materially
untrue, incomplete, insufficient or constitute a violation or breach of this
Agreement; and
(ii) supplement the information contained herein in order that
the information contained herein is kept current, complete and accurate in all
material respects.
SECTION 5. COVENANTS OF AAI
AAI covenants to the Company and the Shareholders as follows:
5.1 Conduct of Business. From the date hereof through the Closing Date,
AAI shall conduct its business in the ordinary course and, without the prior
written consent of the Company, shall ensure that AAI does not undertake any of
the actions specified in Section 3.10 hereof.
5.2 Preservation of Business. From the date hereof through the Closing
Date, AAI shall preserve its business organization intact and use its best
efforts to preserve AAI's goodwill.
5.3 Litigation. AAI shall promptly notify the Company of any lawsuits,
claims, proceedings or investigations which after the date hereof are threatened
or commenced against AAI or against any officer, director, employee, consultant,
agent, or stockholder with respect to the affairs of AAI.
5.4 Continued Effectiveness of Representations and Warranties. From the
date hereof through the Closing Date, AAI shall conduct its business in such a
manner so that the representations and warranties contained in Section 3 shall
continue to be true and correct on and as of the Closing Date and as if made on
and as of the Closing Date, and shall:
(i) promptly give notice to the Company of any event,
condition or circumstance occurring from the date hereof through the Closing
Date which would render any of the representations or warranties materially
untrue, incomplete, insufficient or constitute a violation or breach of this
Agreement; and
(ii) supplement the information contained herein in order that
the information contained herein is kept current, complete and accurate in all
material respects.
5.5 Filing of Form 10-KSB Annual Report. Prior to the Closing, AAI will
have filed its Annual Report on Form 10-KSB and the Company and the Shareholders
will have the benefit of the representations and warranties contained in Section
3 with respect thereto.
5.6 No Other Negotiations. From the date hereof until the earlier of
the termination of this Agreement or consummation of this Agreement, AAI will
not permit and will not authorize any officer or director of AAI or any other
person on its behalf to, directly or indirectly, solicit, encourage, negotiate
or accept any offer from any party concerning the possible disposition of all or
any substantial portion of the capital stock by merger, sale or any other means
or any other transaction that would involve a change in control of AAI, or any
transaction in which AAI contemplates issuing equity or debt securities.
SECTION 6. COVENANTS
6.1 Corporate Examinations and Investigations. Prior to the Closing
Date, the parties acknowledge that they have been entitled, through their
employees and representatives, to make such investigation of the assets,
properties, business and operations, books, records and financial condition of
the other as they each may reasonably require. No investigation by a party
hereto shall, however, diminish or waive in any way any of the representations,
warranties, covenants or agreements of the other party under this Agreement.
6.2 Expenses. Each party hereto agrees to pay its own costs and
expenses incurred in negotiating this Agreement and consummating the
transactions described herein, except the Company will advance to AAI
immediately following the execution hereof, $30,000 to be used by AAI solely to
complete the audit for its 2000 fiscal year and to complete the related filing
of AAI's Annual Report on Form 10-KSB. Such loan will be evidenced by a demand
promissory note in the form of Exhibit B hereto.
6.3 Further Assurances. The parties shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Each such party shall use its best efforts to fulfill or obtain the
fulfillment of the conditions to the Closing, including, without limitation, the
execution and delivery of any documents or other papers, the execution and
delivery of which are necessary or appropriate to the Closing.
6.4 Confidentiality. In the event the transactions contemplated by this
Agreement are not consummated, each of the parties hereto agree to keep
confidential any information disclosed to each other in connection therewith for
a period of one (1) year from the date hereof; provided, however, such
obligation shall not apply to information which:
(i) at the time of disclosure was public knowledge;
(ii) after the time of disclosure becomes public knowledge
(except due to the action of the receiving party); or
(iii) the receiving party had within its possession at the
time of disclosure.
SECTION 7. CONDITIONS PRECEDENT TO THE OBLIGATION OF AAI TO CLOSE
The obligation of AAI to enter into and complete the Closing is
subject, at the option of AAI, to the fulfillment on or prior to the Closing
Date of the following conditions, any one or more of which may be waived by AAI
in writing.
7.1 Representations and Covenants. The representations and warranties
of the Company and the Shareholders contained in this Agreement shall be true in
all material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date. The Company and the
Shareholders shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by the Company and the Shareholders on or prior to the Closing Date. The
Company and the Shareholders shall have delivered to AAI, if requested, a
certificate, dated the Closing Date, to the foregoing effect.
7.2 Governmental Permits and Approvals; Corporate Resolutions. Any and
all permits and approvals from any governmental or regulatory body required for
the lawful consummation of the Closing shall have been obtained. The Board of
Directors of the Company shall have approved the transactions contemplated by
this Agreement and the Company shall have delivered to AAI, if requested by AAI,
resolutions by its Board of Directors, certified by the Secretary of the
Company, authorizing the transactions contemplated by this Agreement.
7.3 Third Party Consents. All consents, permits and approvals from
parties to any contracts, loan agreements or other agreements with the Company
which may be required in connection with the performance by the Company of its
obligations under such contracts or other agreements after the Closing shall
have been obtained.
7.4 Satisfactory Business Review. AAI shall have satisfied itself,
after AAI and its representatives have completed the review of the business of
the Company contemplated by this Agreement, that none of the information
revealed thereby or in the Balance Sheet has resulted in, or in the reasonable
opinion of AAI may result in, a material adverse change in the assets,
properties, business, operations or condition (financial or otherwise) of the
Company.
7.5 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body or instituted or
threatened by any governmental or regulatory body to restrain, modify or prevent
the carrying out of the transactions contemplated hereby or to seek damages or a
discovery order in connection with such transactions, or which has or may have,
in the reasonable opinion of AAI , a materially adverse effect on the assets,
properties, business, operations or condition (financial or otherwise) of the
Company.
7.6 Certificate of Good Standing. AAI shall have received a certificate
of good standing dated at or about the Closing Date to the effect that the
Company is in good standing under the laws of its jurisdictions of
incorporation.
7.7 Stock Certificates: At the Closing, the Shareholders shall have
delivered the certificates representing the DSI Shares, duly endorsed (or with
executed stock powers) so as to make AAI the sole owner thereof.
7.8 Other Documents. The Company and the Shareholders shall have
delivered such other documents, instruments and certificates, if any, as are
required to be delivered pursuant to the provisions of this Agreement or which
may be reasonably requested in furtherance of the provisions of this Agreement.
SECTION 8. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY AND
SHAREHOLDERS TO CLOSE
The obligation of the Company and the Shareholders to enter into and
complete the Closing is subject, at the option of the Company and the
Shareholders, to the fulfillment on or prior to the Closing Date of the
following conditions, any one or more of which may be waived in writing by the
Company.
8.1 Representations and Covenants. The representations and warranties
of AAI contained in this Agreement shall be true in all material respects on the
Closing Date with the same force and effect as though made on and as of the
Closing Date. AAI shall have performed and complied with all covenants and
agreements required by the Agreement to be performed or complied with by AAI on
or prior to the Closing Date. AAI shall have delivered to the Company and the
Shareholders, if requested, a certificate, dated the Closing Date and signed by
an executive officer of AAI, to the foregoing effect.
8.2 Governmental Permits and Approvals; Corporate Resolutions. Any and
all permits and approvals from any governmental or regulatory body required for
the lawful consummation of the Closing shall have been obtained. The Board of
Directors of AAI shall have approved the transactions contemplated by this
Agreement, and AAI shall have delivered to the Company and the Shareholders, if
requested, resolutions by their Board of Directors certified by the Secretary of
AAI authorizing the transactions contemplated by this Agreement.
8.3 Third Party Consents. All consents, permits and approvals from
parties to any contracts, loan agreements or other agreements with AAI which may
be required in connection with the performance by AAI of their obligations under
such contracts or other agreements after the Closing shall have been obtained.
8.4 Satisfactory Business Review. The Company and the Shareholders
shall have satisfied themselves, after review of the information provided hereby
or in connection herewith, or following any discussions with management or
representatives of AAI that none of the information revealed thereby has
resulted in or in the reasonable opinion of the Company may result in a material
adverse change in the assets, properties, business, operations or condition
(financial or otherwise) of AAI.
8.5 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body or instituted or
threatened by any governmental or regulatory body to restrain, modify or prevent
the carrying out of the transactions contemplated hereby or to seek damages or a
discovery order in connection with such transactions, or which has or may in the
reasonable opinion of the Company, have a materially adverse effect on the
assets, properties, business, operations or condition (financial or otherwise)
of AAI.
8.6 Stock Certificates. At the Closing, the Shareholders shall
receive certificates representing the AAI Shares to be received pursuant hereto
and subject to the conditions previously described.
8.7 Other Documents. AAI shall have delivered such other instruments,
documents and certificates, if any, as are required to be delivered pursuant to
the provisions of this Agreement or which may be reasonably requested in
furtherance of the provisions of this Agreement.
8.8 Filing of Form 10-KSB. AAI shall have filed its Annual Report on
Form 10-KSB with the Securities and Exchange Commission.
SECTION 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF AAI
Notwithstanding any right of the Company and the Shareholders fully to
investigate the affairs of AAI, the former shall have the right to rely fully
upon the representations, warranties, covenants and agreements of AAI contained
in this Agreement or in any document delivered by AAI or any of its
representatives, in connection with the transactions contemplated by this
Agreement. All such representations, warranties, covenants and agreements shall
survive the execution and delivery hereof and the Closing Date hereunder for
twelve (12) months following the Closing.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS
Notwithstanding any right of AAI fully to investigate the affairs of
the Company, AAI have the right to rely fully upon the representations,
warranties, covenants and agreements of the Company and the Shareholders
contained in this Agreement or in any document delivered to AAI by the latter or
any of their representatives in connection with the transactions contemplated by
this Agreement. All such representations, warranties, covenants and agreements
shall survive the execution and delivery hereof and the Closing Date hereunder
for twelve (12) months following the Closing.
SECTION 11. INDEMNIFICATION
11.1 Obligation of AAI to Indemnify. Subject to the limitations on the
survival of representations and warranties contained in Section 9, AAI hereby
agrees to indemnify, defend and hold harmless the Company and the Shareholders
from and against any losses, liabilities, damages, deficiencies, costs or
expenses (including interest, penalties and reasonable attorneys' fees and
disbursements) (a "Loss") based upon, arising out of or otherwise due to any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of AAI contained in this Agreement or in any document or other writing
delivered pursuant to this Agreement.
11.2 Obligation of the Company and the Shareholders to Indemnify.
Subject to the limitations on the survival of representations and warranties
contained in Section 10, the Company and the Shareholders agree to indemnify,
defend and hold harmless AAI from and against any Loss, based upon, arising out
of or otherwise due to any inaccuracy in or any breach of any representation,
warranty, covenant or agreement made by any of them and contained in this
Agreement or in any document or other writing delivered pursuant to this
Agreement.
SECTION 12. THE CLOSING
The Closing shall take place not later than May 21, 2001. At the
Closing, the parties shall provide each other with such documents as may be
necessary or appropriate in order to consummate the transactions contemplated
hereby including evidence of due authorization of the Agreement and the
transactions contemplated hereby.
SECTION 13. MISCELLANEOUS
13.1 Waivers. The waiver of a breach of this Agreement or the failure
of any party hereto to exercise any right under this Agreement shall in no event
constitute waiver as to any future breach whether similar or dissimilar in
nature or as to the exercise of any further right under this Agreement.
13.2 Amendment. This Agreement may be amended or modified only by an
instrument of equal formality signed by the parties or the duly authorized
representatives of the respective parties.
13.3 Assignment. This Agreement is not assignable except by operation
of law.
13.4 Notices. Until otherwise specified in writing, the mailing
addresses of both parties of this Agreement shall be as follows:
The Company or
Shareholders: DISEASE S.I., INC.
12356 Rockledge Circle
Boca Raton, FL 33428
AAI : AUCTIONANYTHING.COM, INC.
35 West Pine Street, Suite 227
Orlando, FL 32801
Any notice or statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor.
13.5 Governing Law. This Agreement shall be construed, and the legal
relations be the parties determined, in accordance with the laws of the State of
Florida, thereby precluding any choice of law rules which may direct the
applicable of the laws of any other jurisdiction.
13.6 Publicity. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued by either
party hereto at any time from the signing hereof without advance approval in
writing of the form and substance thereof by the other party except as required
to stay in compliance with the AAI's reporting obligations under the Securities
Exchange Act of 1934.
13.7 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the purchase and issuance of the
Shares and the AAI Shares and related transactions, and supersede all prior
agreements, written or oral, with respect thereto.
13.8 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
13.9 Severability of Provisions. The invalidity or unenforceability of
any term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
13.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original copy
hereof, but all of which together shall consider but one and the same document.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
AUCTIONANYTHING.COM, INC.
By: /s/Martin M. Meads
------------------------------
Name: Martin M. Meads
Its: CEO
By: /s/Raymond J. Hotalling
------------------------------
Name: Raymond J. Hotalling
Its: President
DISEASE S.I., INC.
By: /s/Wayne Goldstein
------------------------------
Name: Wayne M. Goldstein
Its: President
SHAREHOLDERS:
/s/Wayne Goldstein
Dr. Wayne M. Goldstein
/s/Brian S. John
Brian S. John
Exhibit A
EXCHANGE WITH DISEASE S.I., INC.
Shares of AAI Shares to Total AAI
Name of the Company to be Received Shares to be
Shareholders be Exchanged At Closing Received
Dr. Wayne M. Goldstein 35,000,000 12,372,087 35,000,000*
Byron S. John 25,000,000 8,837,297 25,000,000*
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*The balance of the 60,000,000 shares not delivered at the Closing, and
to be delivered following the increase in AAI's authorized capitalization, will
be issued in the same proportions.
Exhibit B
DEMAND PROMISSORY NOTE
$30,000.00 May ___, 2001
FOR VALUE RECEIVED, AUCTIONANYTHING.COM, INC. (a Delaware corporation
("Maker"), promises to pay upon demand to the order of DISEASE S.I., INC., a
Florida corporation ("Payee"), the principal sum of THIRTY THOUSAND DOLLARS
($30,000) together with interest thereon at the rate of five percent (5%) per
annum commencing with the date hereof. Both principal and interest are payable
in lawful money of the United States upon written demand for payment at a
location or address designated by Payee in writing.
Maker agrees to waive demand, notice of non-payment and protest, and in
the event suit shall be brought for the collection hereof, or the same has to be
collected upon demand of an attorney, to pay reasonable attorney's fees for
making such collection. Any proceeding relating to the enforcement of this Note
shall be brought in Circuit Court for Palm Beach County. This Note is to be
construed and enforced according to the laws of the State of Florida.
In the event of non-payment of this Note following demand and ,
commencing May 31, 2001, interest on this Note shall be payable at the rate of 1
1/2% per month, but in any event not in excess of the legally permissible rate
of interest.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
by its duly authorized officer as of the day first above written.
AUCTIONANYTHING.COM, INC.
By:
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Name:
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Its:
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