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Exhibit 2.1
FIRST AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ENVISION DEVELOPMENT CORPORATION, A FLORIDA CORPORATION,
ENVISION ACQUISITION CORPORATION,
PERFUMANIA.COM, INC., A FLORIDA CORPORATION,
ENVISION DEVELOPMENT CORPORATION, A MASSACHUSETTS CORPORATION,
AND
THE STOCKHOLDERS OF ENVISION DEVELOPMENT CORPORATION,
A MASSACHUSETTS CORPORATION
March 10, 2000
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FIRST AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the
"Agreement") dated as of the 10th day of March, 2000 by and among:
Envision Development Corporation, a Florida corporation with an
address at 11701 N.W. 101st Road, Miami, FL 33178 ("Holdings");
Perfumania.com, Inc., a Florida corporation with an address at 11701
N.W. 101st Road, Miami, FL 33178 and a wholly owned subsidiary of Holdings
("Perfumania.com");
Envision Acquisition Corporation, a Massachusetts corporation and a
wholly owned direct subsidiary of Holdings ("EAC");
Envision Development Corporation., a Massachusetts corporation with an
address at 4 Mount Royal Avenue, Marlboro, MA 01752 ("Envision"); and
The Stockholders of Envision, listed on Schedule I, who own all of the
issued and outstanding capital stock of Envision (the "Stockholders").
Preliminary Statement
1. The Stockholders own the number of the issued and outstanding
shares of the common stock, no par value per share, of Envision set forth on
Schedule I attached hereto, which shares represent all of the issued and
outstanding shares of capital stock of Envision (collectively, the "Shares").
2. Holdings desires to acquire, and the Stockholders desire to
transfer, the Shares of Envision for the consideration set forth below, subject
to the terms and conditions of this Agreement.
3. This Agreement is intended to be a "plan of reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
4. This Agreement amends and restates in its entirety the
Agreement and Plan of Merger, dated February 1, 2000, by and among
Perfumania.com, Inc., EAC, Envision and the Stockholders of Envision named
therein (the "Original Agreement").
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereby agree as follows:
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Article 1
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the Business Corporation Law of the Commonwealth
of Massachusetts (the "MBCL"), EAC shall be merged with and into Envision (the
"Merger"). The Merger shall occur at the Effective Time (as defined herein).
Following the Merger, Envision shall continue as the surviving corporation (the
"Surviving Corporation") and the separate corporate existence of EAC shall
cease.
1.2 EFFECTIVE TIME. As soon as practicable after satisfaction or
waiver of all conditions to the Merger set forth in Articles 6 and 7 hereof,
the parties shall cause Articles of Merger to be filed in accordance with the
MBCL (the Articles of Merger are referred to herein as the "Merger Documents")
and shall take all such further actions as may be required by law to make the
Merger effective. The Merger shall be effective at such time as the Merger
Documents are filed with the Secretary of the Commonwealth of Massachusetts in
accordance with the MBCL, or at such later time as is specified in such
documents (the "Effective Time"). Immediately prior to the filing of the Merger
Documents, a closing (the "Closing") will be held at the offices of Palmer &
Dodge LLP, One Beacon Street, Boston, Massachusetts (or such other place as the
parties may agree) for the purpose of confirming satisfaction or waiver of all
conditions to the Merger. The Closing shall take place within three business
days after the day all of the conditions in Articles 6 and 7 are fulfilled or
waived or on such other date as the parties may agree, but not later than July
31, 2000. The date on which the Closing occurs is referred to herein as the
"Closing Date."
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the MBCL.
1.4 ARTICLES OF ORGANIZATION AND BYLAWS. The Articles of
Organization and Bylaws of EAC, in each case as in effect immediately prior to
the Effective Time shall be the Articles of Organization and Bylaws of the
Surviving Corporation immediately after the Effective Time.
1.5 DIRECTORS AND OFFICERS. The directors and officers of EAC
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation immediately after the Effective Time, each such
officer and director to hold office in accordance with their respective terms.
1.6 CONVERSION OF STOCK.
1.6.1 For purposes of this Agreement, "Merger
Consideration" means that number of shares of Common Stock, $0.01 par value per
share, of Holdings ("Holdings Common Stock") to be issued pursuant to Section
1.6.2(a), and the "Closing Price" means the average closing price of Holdings
Common Stock as reported on the American Stock Exchange ("AMEX") for the ten
consecutive trading days ending on the third trading day prior to the Closing
(the "Closing Price").
1.6.2 At the Effective Time, by virtue of the Merger and
without any action on the part of Holdings, Perfumania.com, EAC or Envision:
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(a) Subject to the provisions of this Article 1, each
share of Common Stock, without par value, of Envision ("Envision Stock") issued
and outstanding immediately prior to the Effective Time (except for Envision
Stock canceled pursuant to Section 1.6.2(b)) shall be converted into and become
the right to receive 2.6134 (the "Exchange Ratio") shares of Holdings Common
Stock; provided that if the Closing Price is less than $12.00, then the
Exchange Ratio shall be adjusted to equal the quotient obtained by dividing (i)
$24,000,000 divided by the Closing Price by (ii) 765,298. The Exchange Ratio
shall be further adjusted to reflect the effect of any stock split, reverse
split, stock dividend, reorganization, recapitalization or similar transactions
(collectively, "Stock Splits").
(b) All Envision Stock held at the Effective Time by
Envision as treasury stock shall be canceled and no payment shall be made with
respect thereto.
(c) All shares of Common Stock of EAC, $0.01 par value
per share, outstanding immediately prior to the Effective Time, shall be
converted into and become the same number of shares of Common Stock of the
Surviving Corporation.
1.7 CONVERSION OF OPTIONS.
1.7.1 As of the Effective Time, each option to purchase
Envision Stock that is outstanding under the Envision 1998 Stock Option Plan or
otherwise (each an "Envision Option") shall be deemed to be an option to
purchase a number of shares of Holdings Common Stock that is equal to the
number of shares of Envision Stock subject to the unexercised portion of such
Envision Option as of the Effective Time multiplied by the Exchange Ratio (with
any fraction resulting from such multiplication to be rounded up or down to the
nearest whole number). The exercise price per share of Holdings Common Stock of
each former Envision Option shall be equal to the exercise price of each
Envision Option as of the Effective Time, divided by the Exchange Ratio. All
other terms of the Envision Options shall remain substantially unchanged,
including without limitation the vesting schedule for the Envision Options,
such that any portion of an Envision Option which has vested shall remain
vested; provided, however, that in the case of any Envision Option to which
Section 421 of the Code applies by reason of its qualification under Section
422 of the Code, the option price, the number of shares subject to such option
and the terms and conditions of exercise of such option shall be determined in
a manner consistent with the requirements of Section 424(a) of the Code.
1.7.2 As soon as practicable after the Effective Time,
Holdings or the Surviving Corporation shall deliver to holders of former
Envision Options appropriate notices setting forth such holders' rights
pursuant to such former Envision Options, as revised pursuant to this Section
1.7.
1.7.3 Holdings shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of Holdings Common Stock
for delivery upon exercise of the options assumed by Holdings in accordance
with this Section 1.7.
1.8 CLOSING OF ENVISION'S TRANSFER BOOKS. At the date of this
Agreement, the stock transfer books of Envision shall be closed and no transfer
of Envision Stock shall thereafter be made, except at the direction of
Holdings.
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1.9 ISSUANCE OF HOLDINGS CERTIFICATES. Holdings shall authorize
one or more persons (which term, as used in this Agreement, shall include any
individual or entity) to act as Exchange Agent hereunder or may itself act as
Exchange Agent (the "Exchange Agent"). Any and all outstanding certificates
representing Envision Stock shall be surrendered to the Exchange Agent. Upon
receipt of all of the certificates held by the Stockholders, the Stockholders
shall be entitled to receive a certificate, with a legend stating that the
securities have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), and setting forth or referring to the
restrictions on transferability and sale of the securities, representing shares
of Holdings Common Stock to be received by the Stockholders pursuant to the
right to receive such shares of Holdings Common Stock into which the shares of
Envision Common Stock shall have been converted pursuant to the provisions of
this Agreement. The shares of Envision Stock outstanding immediately prior to
the Effective Time (and any certificates representing such shares) shall be
deemed canceled as of the Effective Time. The Holdings Common Stock which will
be issued in the Merger shall be deemed to have been issued at the Effective
Time. If any certificates for Holdings Common Stock are to be issued in a name
other than that in which Envision Stock was registered immediately prior to the
Effective Time, it shall be a condition of such issuance that the person
requesting such issuance shall (a) deliver to the Exchange Agent all documents
necessary and proper to evidence and effect such transfer and (b) pay any
transfer or other taxes required by reason of the issuance of certificates for
such shares of Holdings Common Stock in such other name or establish to the
satisfaction of the Exchange Agent and Holdings that such tax has been paid or
is not applicable.
1.10 FRACTIONAL SHARES. No certificates representing fractional
shares of Holdings Common Stock shall be issued upon the surrender for exchange
of Envision Stock certificates. No fractional interest shall entitle the owner
to vote or to any rights of a security holder. In lieu of fractional shares, if
the Stockholders would otherwise have been entitled to a fractional share of
Holdings Common Stock, then they will receive from Holdings at Closing an
amount in cash (without interest) determined by multiplying such fraction by
the Closing Price, subject to applicable withholding tax.
1.11 NO LIABILITY. Notwithstanding anything to the contrary in
this Agreement, none of the Exchange Agent, Holdings, Perfumania.com, EAC or
the Surviving Corporation shall be liable to a holder of a certificate for any
Holdings Common Stock (and any cash payable for fractional shares of Holdings
Common Stock or any other amount due, if any) that was properly delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
1.12 FURTHER OWNERSHIP RIGHTS IN ENVISION STOCK. All shares of
Holdings Common Stock issued upon the surrender for exchange of Envision Stock
in accordance with the terms of this Article 1 (including any cash paid in
respect thereof) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such Envision Stock. At the Effective Time, the stock
transfer books of Envision shall be closed, and thereafter there shall be no
further registration of transfers of shares of Envision Stock on the records of
the Surviving Corporation. From and after the Effective Time, the holders of
certificates evidencing ownership of shares of Envision Stock outstanding shall
cease to have any rights with respect to such shares of Envision Stock.
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1.13 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificates evidencing Envision Stock shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of Holdings Common Stock and cash for fractional
shares, if any, as may be required pursuant to Section 1.10; provided, however,
that Holdings may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Holdings or the Exchange
Agent with respect to the certificates alleged to have been lost, stolen or
destroyed.
Article 2
REPRESENTATIONS OF THE STOCKHOLDERS
The Stockholders jointly and severally represent and warrant to
Holdings as follows:
2.1 SEC FILINGS. The Stockholders have received and read or
reviewed and are familiar with the Registration Statement on Form S-1 and Forms
10-Q and 8-K of Holdings and Perfumania.com, Inc., as the case may be (the
"Registrants"), which have been filed with the Securities and Exchange
Commission (the "SEC"), and have also reviewed and are familiar with any
reports or documents filed under Sections 13(a), 14(a), and 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect
to the capital stock of the Registrants (together with other reports and
documents filed with the SEC, the "SEC Filings")
2.2 INQUIRY. The Stockholders have had an opportunity to ask
questions of and receive answers from the Registrants, or a person or persons
acting on the Registrants' behalf, concerning the terms and conditions of
Holdings Common Stock.
2.3 UNREGISTERED SHARES. The Stockholders understand that (i)
none of the shares of Holdings Common Stock being issued pursuant to this
Agreement have been registered under the Securities Act or under the securities
laws of any state or other jurisdiction in reliance upon exemptions for private
offerings and (ii) Holdings has no obligation to register the shares of
Holdings Common Stock being issued pursuant to this Agreement.
2.4 NO DISTRIBUTION. The shares of Holdings Common Stock are
being acquired solely for the Stockholders' own accounts, for investment and
not with a view to or for the resale, distribution, subdivision, or
fractionalization thereof; the Stockholders have no current plans to enter into
any contract, undertaking, agreement, or arrangement relating thereto.
2.5 LIMITED OPPORTUNITY FOR RESALE. The Stockholders acknowledge
and are aware that there are substantial restrictions on the transferability of
the shares of Holdings Common Stock issued pursuant to this Agreement; that the
shares of Holdings Common Stock issued pursuant to this Agreement cannot be
resold unless such shares are registered under the Securities Act and any
applicable securities law of any state or other jurisdiction, or an exemption
from registration is available; the Stockholders have no rights to require that
such shares be registered under the Securities Act; and unless such shares are
so registered or an
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exemption therefrom is available to the Stockholders, there will be no public
market for the shares of Holdings Common Stock issued pursuant to this
Agreement.
2.6 INVESTMENT EXPERIENCE. The Stockholders have such knowledge
and experience in financial and business matters that they are capable of
evaluating the relative risks and merits of the shares of Holdings Common Stock
issued pursuant to this Agreement.
2.7 STATES OF RESIDENCE. The Stockholders are residents of the
states appearing hereunder under their respective names on the signature pages
hereto.
2.8 AFFILIATES. The Stockholders have been advised that, in
addition to other restrictions on the transfer of the shares of Holdings Common
Stock issued pursuant to this Agreement, since they may be "affiliates" of
Holdings at the Closing and the distribution of such shares by the Stockholders
has not been registered under the Securities Act, Rules 144 and 145 under the
Securities Act will restrict the Stockholders' sales of Holdings Common Stock
received in the transaction. The Stockholders acknowledge that the shares of
Holdings Common Stock received by them pursuant to this Agreement shall be
subject to stop transfer instructions and may be legended to reflect the
restrictions on transfer imposed by the Securities Act.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF ENVISION AND THE STOCKHOLDERS
Envision and the Stockholders jointly and severally represent and
warrant to Holdings that:
3.1 ORGANIZATION AND QUALIFICATION. Envision is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has full corporate power and lawful authority
to own, lease and operate its assets, properties and business and to carry on
its business as now being and as heretofore conducted. Envision is qualified or
otherwise authorized to transact business as a foreign corporation in each
jurisdiction in which the failure to so qualify or be authorized has or would
have, individually or in the aggregate, a material adverse effect on Envision
or its assets, properties, business, operations or condition (financial or
otherwise) or would materially impair, delay or terminate the transactions
contemplated herein (a "Material Adverse Effect").
3.2 CAPITALIZATION AND TITLE TO SHARES.
3.2.1 Outstanding Capital Stock. Envision is authorized to
issue 1,000,000 shares of Common Stock, no par value per share, of which
765,298 shares are issued and outstanding owned beneficially and of record by
the Stockholders, free and clear of any claim, lien or other encumbrance.
Except as disclosed in this Section 3.2.1 and Section 3.2.2, no capital stock
of Envision is authorized, reserved for issuance, outstanding or issued. The
number of shares owned by each Stockholder is correctly represented in Schedule
I hereto; each shareholder is the beneficial owner of such shares. Other than
the Stockholders, there is no other holder of Envision Stock. All of the issued
and outstanding shares of Envision's capital stock are duly authorized and are
validly issued, fully paid, nonassessable and free of pre-emptive or similar
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rights. No shares of any class of Envision's capital stock are held in the
treasury of Envision. Since January 1, 2000, Envision has not made repurchases
or redemptions of shares of its capital stock. The Shares of Common Stock of
Envision held by the Stockholders constitute all of the issued and outstanding
capital stock of Envision on the Closing Date. To the best knowledge of
Envision and the Stockholders, none of the issued and outstanding shares of
Envision's capital stock has been issued in material violation of any federal
or state law.
3.2.2 Options or Other Rights. Except as set forth on
Schedule 3.2.2 (which Schedule shall include all information concerning the
vesting, including acceleration thereof, due to the execution and delivery of
this Agreement or consummation of the Merger, and whether qualified or
non-qualified), there are no rights, subscriptions, warrants, calls,
pre-emptive rights, options or other agreements or commitments of any kind to
purchase or otherwise to receive from Envision or for Envision to issue any
capital stock or any other security of Envision and there are not any
outstanding securities of any kind convertible into or exchangeable for capital
stock. Absent any action taken by Holdings with respect thereto following the
Merger, all shares which may be issued pursuant to the instruments disclosed in
Schedule 3.2.2 will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to any pre-emptive or similar rights in
accordance with the terms of such instruments. There are no shareholder
agreements, voting trusts or agreements, proxies or other agreements,
instruments or understandings with respect to the outstanding shares of capital
stock of Envision.
3.2.3 Subsidiaries. Envision does not own any capital
stock or other interests in any corporation, partnership, limited liability
company, business trust or any other entity.
3.3 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Subject to the
approval of this Agreement by the Stockholders, Envision has the full legal
right and corporate power and all authority and, except as otherwise provided
herein, all approvals required to enter into, execute and deliver this
Agreement, to consummate the transactions contemplated hereunder and to perform
fully its obligations hereunder, and this Agreement has been or will be duly
executed and delivered and is the valid and binding obligation of Envision
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights and
remedies of creditors generally, and to equitable principles.
3.4 ARTICLES OF ORGANIZATION AND BYLAWS. Envision has previously
delivered or made available to Holdings or Perfumaia.com true and complete
copies of its Articles of Organization, certified by the Secretary of the
Commonwealth of Massachusetts and Bylaws of Envision as currently in effect.
The minute books of Envision contain true and complete records of all meetings
and consents in lieu of meetings of the Board of Directors (and any committees
thereof) and of the Stockholders since the time of Envision's incorporation and
accurately reflect all transactions referred to in such minutes and consents in
lieu of meetings. The stock books of Envision are true and complete.
3.5 FINANCIAL STATEMENTS. Envision has delivered to Holdings or
Perfumania.com (A) the unaudited balance sheets of Envision as December 31,
1999 and the unaudited statements of income and retained earnings and cash
flows of Envision for the twelve month period ended December 31, 1999 (the
"Unaudited Financial Statements") and (B) the audited balance sheets (including
the related notes and independent auditors' report thereon) of Envision as at
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December 31, 1998 and December 31, 1997, and the related audited statements of
income and retained earnings and cash flows of Envision for each of the two
years in the period ended December 31, 1998, all of which are attached hereto
as Schedule 3.5 (collectively, with the Unaudited Financial Statements, the
"Financial Statements"). Except for normally recurring year-end adjustments,
which adjustments will not be material either individually or in the aggregate
to Envision, and the absence of any notes to the Unaudited Financial
Statements, (i) the balance sheets included in the Financial Statements present
fairly, in all material respects, the financial position of Envision as at the
dates presented; (ii) the other related statements included in the Financial
Statements present fairly in all material respects the results of operations
and cash flows of Envision for the twelve-month periods presented; and (iii)
each of the balance sheets, the statements of income and retained earnings and
the statements of cash flows included in the Financial Statements has been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis. The foregoing Financial
Statements of Envision are sometimes herein called the "Financials," the
balance sheet of Envision as at December 31, 1999 is sometimes herein called
the "Balance Sheet" and December 31, 1999 is sometimes herein called the
"Balance Sheet Date." Accurate and complete copies of the books and records of
Envision have been made available to Holdings or Perfumania.com.
3.6 NO MATERIAL ADVERSE CHANGE. Since the Balance Sheet Date:
(a) there have been no changes in the assets,
properties, business, operations or condition (financial or otherwise) of
Envision which either individually or in the aggregate has or could reasonably
have a Material Adverse Effect, nor, to the best knowledge of Envision and the
Stockholders, are any such changes threatened; and
(b) Envision has conducted its business only in the
ordinary and usual course and in a manner consistent with past practice, and
Envision has not, except in the ordinary course of business and except as set
forth on Schedule 3.6:
(i) declared or paid any dividend or declared
or made any other distribution of any kind to the Stockholders on
account of their equity holdings in Envision, or made any direct or
indirect issuance, redemption, cancellation, purchase or other
acquisition of any shares of their capital stock;
(ii) made any loan or advance to the
Stockholders, its officers, directors, employees, consultants or
agents of Envision ("Affiliates") (other than travel advances made in
the ordinary course of business); or incurred any indebtedness or made
any other loan or advance other than in the ordinary course of
business and in any event not more than $50,000 individually or in the
aggregate;
(iii) made any payment or commitment to pay any
severance or termination pay to any of its Affiliates, other than
payments or commitments to pay persons other than its Affiliates made
in the ordinary course of business;
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(iv) except in the ordinary course of business:
entered into any lease (as lessor or lessee); sold, abandoned,
transferred or made any other disposition of any of its assets
or properties; granted or suffered any lien or other
encumbrance on any of its assets or properties, other than
purchase money liens; entered into, cancelled or amended any
material contract or other agreement to which it is a party,
or by or to which it or their assets or properties are bound
or subject, or pursuant to which it agrees to indemnify any
party or to refrain from competing with any party;
(v) except for inventory or equipment acquired
in the ordinary course of business, made any acquisition of
all or any material part of the assets, properties, capital
stock or business of any other person;
(vi) made any capital expenditure, or commitment
therefor, involving an amount of more than $50,000
individually or in the aggregate; or
(vii) made, or have become subject to, any change
in its accounting methods, principles or practices or any
revaluation by Envision of any of its assets.
For the purposes of this Agreement the terms "Envision knows," "to the
knowledge of Envision and the Stockholders" or "to the best knowledge of
Envision and the Stockholders" or similar terms or phrases shall refer to the
actual knowledge of the responsible officers of Envision and "responsible
officers" shall be limited to Richard Simon and Gary Whear.
3.7 TAX MATTERS. Except as set forth on Schedule 3.7, all
material federal, state, county, local, foreign, and other taxes, (hereinafter,
"Taxes" or, individually, a "Tax") required to be paid by Envision through the
date hereof have been paid and all required returns relating to such Taxes have
been filed. All such returns are true, correct and complete in all material
respects. There is no material Tax deficiency or claim for additional Taxes or
interest thereon or penalties in connection therewith asserted or threatened to
be asserted in writing against Envision by any Taxing authority, and Envision
does not know of any reasonable basis upon which any such Tax deficiency could
reasonably be asserted. Except as set forth on Schedule 3.7, there has not been
any audit of any Tax return filed by Envision and no audit of any Tax return of
Envision is in progress and Envision has not been notified in writing by any
Tax authority that any such audit is contemplated or pending. No extension of
time with respect to any date on which a Tax return was or is to be filed by
Envision is in force, and no waiver or agreement by Envision is in force for
the extension of time for the assessment or payment of any Tax. Envision has
not filed a consent under Section 341(f) of the Code concerning collapsible
corporations. Envision has not made any material payments, is not obligated to
make any material payments, and is not a party to any agreement that could
reasonably be expected to obligate it to make any material payments that will
not be deductible under Section 280G of the Code. None of the Stockholders is a
foreign person within the meaning of Treasury Regulation Section 1.1445-2(b).
Envision is not a party to any Tax allocation or sharing agreement. Envision
has not been a member of an affiliated group filing a consolidated federal
income Tax return (other than a group the common parent of which was Envision)
and has no liability for the Taxes of any person (other than for itself) under
Regulation 1.1502-6 of the Code (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract or otherwise.
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3.8 COMPLIANCE WITH LAWS.
3.8.1 Envision is not in violation of any order, judgment,
settlement, stipulation, injunction, award or decree binding upon it, the
effect of which, individually or in the aggregate, has or could reasonably be
expected to have a Material Adverse Effect on Envision. Envision is not in
violation of any federal, state, local or foreign law, ordinance or regulation
of any governmental or regulatory body, including, without limitation,
regulations and requirements of the Occupational Safety and Health
Administration ("OSHA"), applicable to its businesses or assets, and laws,
ordinances, regulations and other requirements respecting labor, employment and
employment practices, terms and conditions of employment and wages and hours,
or relating to the uses of its assets, the effect of which, individually or in
the aggregate, has or could reasonably be expected to have a Material Adverse
Effect on Envision.
3.8.2 Envision has in full force and effect all licenses,
permits, or other approvals required by OSHA and other licenses, permits,
franchises, and other approvals relating to employment, and all other licenses,
permits, franchises, orders, approvals or other requirements of any federal,
state, local or foreign governmental or regulatory body (collectively,
"Permits") required for the conduct of Envision's business, the failure of
which to have in full force and effect or obtain would have a Material Adverse
Effect on Envision; all such Permits are described on Schedule 3.8; such
Permits are in full force and effect; no violations are or have been recorded
with any federal, state, local or foreign governmental or regulatory body in
respect of any Permit listed on Schedule 3.8; and no proceeding is pending as
to which notice has been served or, to the best knowledge of Envision and the
Stockholders, threatened, to revoke or limit any Permit.
3.9 NO BREACH. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby and
thereby do not and will not (a) violate any provision of the Articles of
Organization or Bylaws of Envision; (b) except as set forth in Schedule 3.9,
violate, conflict with or result in an increase in liabilities or fees payable
upon breach of any of the terms or conditions of, result in modification of the
effect of, or 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 material instrument, contract or other agreement to which
Envision is a party or to which any of its assets or properties may be bound or
subject; (c) violate any order, judgment, injunction, settlement, stipulation,
award or decree of any court, arbitrator or governmental or regulatory body
against, or binding upon, Envision or upon the securities, properties, assets
or business of Envision; (d) violate any statute, law or regulation of any
jurisdiction as such statute, law or regulation relates to Envision or to the
securities, properties, assets or business of Envision, the effect of which,
individually or in the aggregate, has or could reasonably be expected to have a
Material Adverse Effect on Envision; (e) violate any Permit, the effect of
which, individually or in the aggregate, has or could reasonably be expected to
have a Material Adverse Effect on Envision; (f) require the approval or consent
of any foreign, federal, state, local or other governmental or regulatory body
or the approval or consent of any other person other than consent of other
parties to the contracts described in Schedule 3.9; or (g) result in the
creation of any lien or other encumbrance on the assets or properties of
Envision.
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3.10 ACTIONS AND PROCEEDINGS. Except as set forth on Schedule
3.10, there are no outstanding orders, judgments, injunctions, settlement,
stipulation, awards or decrees of any court, governmental or regulatory body or
arbitration tribunal against or involving, or to the best knowledge of Envision
threatened against, Envision or any of the securities, assets, or properties of
Envision. There are no actions, suits or claims or legal, administrative or
arbitration proceedings ("Actions"), or, to the best knowledge of Envision and
the Stockholders, investigations (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) pending or, to the
best knowledge of Envision and the Stockholders, threatened, against or
involving Envision or any of the securities, assets or properties of Envision.
To the best knowledge of Envision and the Stockholders, there is no fact, event
or circumstance that may give rise to any Action that, individually or in the
aggregate, has or could reasonably be expected to have a Material Adverse
Effect on Envision.
3.11 CONTRACTS AND OTHER AGREEMENTS. Schedule 3.11 sets forth all
of the material contracts and other agreements to which Envision is a party or
by or to which it or its securities, business, assets or properties (including
Proprietary Rights as defined) are bound or subject (and under which Envision
has current or future rights or obligations) including but not limited to:
(a) contracts and other agreements with any current
officer, director, Stockholders, employee, consultant, agent or other Affiliate
of Envision;
(b) contracts and other agreements with any labor union
or association representing any employee of Envision;
(c) contracts and other agreements for the purchase or
sale of materials, supplies, equipment, merchandise or services that contain an
escalation, renegotiation or redetermination clause or that obligate Envision
to purchase all or substantially all of its requirements of a particular
product from a supplier, or for periodic minimum purchases of a particular
product from a supplier;
(d) contracts and other agreements for the sale,
transfer or disposition, in whole or in part, of any of the assets or
properties of Envision other than in the ordinary course of business or for the
grant to any person of any options, rights of first refusal, or preferential or
similar rights to purchase any of such assets or properties;
(e) partnership or joint venture agreements;
(f) contracts or other agreements under which Envision
agrees to indemnify any party for Tax liabilities or to share the Tax liability
of any party;
(g) contracts and other agreements in which Envision is
the purchaser of goods or services and calling for an aggregate purchase price
or payments in any one year of more than $50,000 in any one case (or in the
aggregate, in the case of any related series of contracts and other
agreements);
(h) contracts and other agreements providing for the
sharing of fees, revenues, profits or any other financial measure, the rebating
of charges or other similar arrangements;
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(i) contracts and other agreements relating to the
issuance of any securities of Envision or containing obligations or liabilities
of any kind to holders of the securities of Envision as such (including,
without limitation, an obligation to register any of such securities under any
federal or state securities laws);
(j) contracts and other agreements containing exclusive
rights or covenants of Envision not to compete in any line of business or in
any place or geography or with any person or covenants of any other person not
to compete with Envision or in any line of business or in any place or
geography;
(k) contracts and other agreements relating to the
acquisition by Envision of any business, properties, assets or capital stock of
any other person;
(l) options for the purchase of any asset, tangible or
intangible, for an aggregate purchase price of more than $50,000;
(m) contracts and other agreements requiring the payment
to any person of a commission or fee other than in the ordinary course of
business;
(n) contracts and other agreements for the payment of
fees or other consideration to any officer or director or affiliate of Envision
or to any other entity in which any of the foregoing has an interest;
(o) contracts and other agreements or instruments
relating to the borrowing of money or other indebtedness, including but not
limited to mortgages, pledges or security agreements (or any other instrument
granting lien or other encumbrance on any of the assets or properties of
Envision), guarantees and indemnifications;
(p) distributorship, development, franchise, royalty or
licensing or other similar agreements including but not limited to those
concerning Envision's Proprietary Rights;
(q) contracts with purchasers of services from Envision;
or
(r) leases, subleases or other agreements under which
Envision is lessor or lessee of any real property.
There have been delivered or made available to Holdings or
Perfumania.com true and complete copies of all of the contracts and other
agreements (and all amendments, waivers or other modifications thereto) set
forth on Schedule 3.11. All of the contracts and other agreements listed on
Schedule 3.11 are valid, subsisting, in full force and effect, binding upon
Envision, and to the best knowledge of Envision and the Stockholders,
enforceable and binding upon the other parties thereto in accordance with their
terms, and Envision has paid in full or accrued all amounts now due from it
thereunder and has satisfied in full or provided for all of its liabilities and
performed all of its obligations thereunder which are presently required to be
satisfied or provided for or performed, and is not in breach or default under
any of them, nor, to the best knowledge of Envision and the Stockholders, is
any other party to any such contract or other agreement in breach or default
thereunder, nor, to the best knowledge of Envision and the
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Stockholders, does any condition exist that with notice or lapse of time or
both would constitute a material breach or default thereunder.
3.12 REAL ESTATE. Envision does not own any real property or any
buildings or other structures nor has any option or any contractual obligation
to purchase or acquire any interest in real property. The leasehold interests
of Envision set forth in Schedule 3.12 are subject to no lien or other
encumbrance other than statutory and common law landlord's liens and superior
rights of lenders to landlords.
3.13 TANGIBLE PROPERTY. The material equipment, furniture,
leasehold improvements, fixtures, vehicles, any related capitalized items and
other tangible property material to the business of Envision is in good
operating condition and repair, ordinary wear and tear excepted, and Envision
has not received notice that any of such property is in violation of any
existing law or any building, zoning, health, safety or other ordinance, code
or regulation.
3.14 INTANGIBLE PROPERTY.
(a) Schedule 3.14(a) sets forth all of the patents,
registered copyrights, trademarks, service marks, domain names, corporate names
and trade names, all information regarding the registration of any of the
foregoing, or applications therefor, and all permits, grants and licenses or
other rights or agreements relating to any of the foregoing (together with all
other intellectual property rights, the "Proprietary Rights") that are material
to the business of Envision. Except as set forth on Schedule 3.14, to the best
knowledge of Envision and the Stockholders, Envision has exclusive ownership of
all Proprietary Rights used in its business as presently conducted or to be
used in its business as it is contemplated to be conducted free of all liens or
encumbrances. Except as set forth in Schedule 3.14, Envision has not received
any notices claiming any, and no Action is pending or threatened that asserts
any, infringement or violation by Envision of any Proprietary Rights of others.
Except as set forth in Schedule 3.14, to the best knowledge of Envision and the
Stockholders, none of the present activities, or contemplated activities under
planning or development, of Envision, or its products or assets infringe on or
otherwise violate any Proprietary Rights of others; and to the best knowledge
of Envision and the Stockholders, there is no infringement or violation by
others of the Proprietary Rights of Envision. Except as set forth on Schedule
3.14, to the best knowledge of Envision and the Stockholders, Envision has the
right to use, free and clear of claims or rights of others, all trade secrets,
customer lists, procedures, processes, and other information and intellectual
property required for or incident to its services or its business as presently
conducted or contemplated to be conducted. To the best knowledge of Envision
and the Stockholders, there is no violation of the confidentiality of the
Proprietary Rights of Envision. To the best knowledge of Envision and the
Stockholders, except as provided on Schedule 3.14, Envision is not making
unauthorized use of any confidential information or trade secrets of any
person, including without limitation any former employer of any past or present
employees of Envision. The Stockholders do not have any agreements or
arrangements with former employers currently in effect relating to confidential
information or trade secrets of such employers. To the best knowledge of
Envision and the Stockholders, none of the activities of the employees of
Envision on behalf of Envision violates any valid and enforceable agreements or
arrangements which any such employees have with former employers currently in
effect.
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(b) Except as set forth on Schedule 3.14(b), Envision
has not suffered and is not expected to suffer any material harm or disruption
to its business or any material fees or liabilities from the change to the year
2000. Envision takes all commercially reasonable steps to protect its
integrity, functioning and security from unauthorized access, tampering or use.
3.15 TITLE TO ASSETS; LIENS. Except as set forth on Schedule 3.15,
Envision owns outright and has good title to all of its owned assets and
properties, including, without limitation, all of the assets and properties
reflected on the Balance Sheet, free and clear of any claim, lien or other
encumbrance, except for (a) assets and properties disposed of, or subject to
purchase or sales orders, in the ordinary course of business since the
applicable Balance Sheet Date; (b) liens or other encumbrances securing the
claims of materialmen, carriers, landlords and like persons, all of which are
not yet due and payable, or (c) purchase money liens.
3.16 ABSENCE OF UNDISCLOSED LIABILITIES. As at the Balance Sheet
Date, Envision does not have debts, obligations or liabilities of any nature,
whether accrued, absolute, contingent or otherwise (including, without
limitation, liabilities as guarantor or otherwise with respect to obligations
of others or liabilities for taxes due or then accrued or to become due),
required by GAAP to be shown on a balance sheet prepared in accordance with
GAAP that were not fully, accurately and adequately reflected or reserved
against on the Balance Sheet. Envision does not have any such debts,
obligations or liabilities other than debts, obligations or liabilities (a)
fully, accurately and adequately reflected or reserved against on the Balance
Sheet, or (b) incurred since the Balance Sheet Date in the ordinary course of
business consistent with past practice since the Balance Sheet Date, which are
not in the aggregate material to Envision.
3.17 CUSTOMERS. Schedule 3.17 sets forth the ten (10) customers
who accounted for the largest sales of Envision for the twelve months ended
December 31, 1999 (the "Customers"). The relationships between Envision and its
Customers are generally good commercial working relationships. Except as
disclosed on Schedule 3.17, no Customer of Envision has cancelled or otherwise
terminated its relationship with Envision (except in the course of the natural
expiration of any contracts governing such relationship). Envision has not
received any written threat from any Customer, and to the best knowledge of
Envision and the Stockholders, there is no plan or intention of any such
Customer, to terminate early (i.e., prior to scheduled contract expiration), to
cancel or otherwise materially and adversely modify its relationship with
Envision nor to decrease materially or limit its services, supplies or
materials to Envision or its usage, or purchase of the services or products of
Envision except in the course of the natural expiration of any contracts
governing such relationship.
3.18 EMPLOYEE BENEFIT PLANS. Schedule 3.18 sets forth a correct
and complete list of all pension, profit sharing, retirement, deferred
compensation, welfare, insurance, disability, bonus, vacation pay, severance
pay and similar plans, programs or arrangements, including without limitation
all employee benefit plans as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") with respect to
which Envision is the "Plan Sponsor" within the meaning of Section 3(16)(B) of
ERISA, or in which Envision participates (the "Plans"). Envision has never
maintained or contributed to a defined benefit pension plan that is subject to
Title IV of ERISA. Envision has never maintained or contributed to any
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA, and Envision
has not incurred any material liability under Sections 4062, 4063 or 4201 of
ERISA. Each Plan which is
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intended to be qualified under Section 401(a) or 501(c)(9) of the Internal
Revenue Code of 1986, as amended (the "Code"), has received a favorable
determination letter from the Internal Revenue Service. Except as set forth on
Schedule 3.18, each Plan has been administered in all material respects in
accordance with the terms of such Plan and the provisions of any and all
applicable statutes, orders or governmental rules or regulations, including
without limitation ERISA and the Code. Except as set forth on Schedule 3.18, to
the best knowledge of Envision and the Stockholders, nothing has been done or
omitted to be done with respect to any Plan which is intended to comply with
Section 401(a) of the Code that would adversely affect the qualified status of
such Plan or result in any material liability on the part of Envision
including, without limitation, under Title I of ERISA or Section 4975 of the
Code. All material reports, returns, notices and documents required to be filed
with respect to all Plans, including without limitation annual reports on Form
5500, have been timely filed. Except as set forth on Schedule 3.18, all
contributions required by law or the terms of any Plan have been made. Except
as set forth on Schedule 3.18, all claims for welfare benefits incurred by
employees of Envision on or before the Closing are or will be fully covered by
third-party insurance policies or programs. Except for continuation of health
coverage to the extent required under Section 4980B of the Code or as otherwise
set forth in this Agreement, there are no obligations under any Plan providing
group health expense reimbursements benefits after termination of employment.
Complete copies of the following documents with respect to each Plan (as
applicable) have been delivered or made available to Holdings or
Perfumania.com: (i) each relevant Plan document and subsequent amendment
thereto; (ii) each trust agreement, group annuity contract, insurance policy or
contract; (iii) each Form 5500 series annual report with each required schedule
and attachment for each of the three (3) most recent plan years; (iv) the most
recent IRS determination letter; and (v) the most recent summary plan
description and each summary of material modification thereto. For purposes of
this Section 3.18, references to Envision include Envision and its ERISA
Affiliates. An "ERISA Affiliate" of Envision means any trade or business
(whether or not incorporated) that together with Envision would have been
deemed a "single employer" within the meaning of Section 4001(b) of ERISA or
Section 414(m) of the Code at any time within the five-year period ending on
the Closing Date.
3.19 EMPLOYEE RELATIONS. As of January 31, 2000, Envision employed
an aggregate of 17 employees. Envision believes it generally enjoys a good
employer-employee relationship with its employees. Envision is not delinquent
in payments to any of its respective employees or consultants for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed by such party to the date hereof or amounts required to be reimbursed
to such employees. There is no, and during the past three years there has been
no, labor strike, dispute, work stoppage or lockout pending, or, to the best
knowledge of Envision and the Stockholders, threatened, against Envision.
3.20 INSURANCE. Schedule 3.20 sets forth a list of all policies or
binders of fire, liability, product liability, workmen's compensation,
vehicular, directors and officers and other insurance held by or on behalf of
Envision. To the best knowledge of Envision and the Stockholders, such policies
and binders are reasonably believed to be adequate for the business engaged in
by Envision.
3.21 BROKERAGE. No broker, finder, agent or similar intermediary
has acted on behalf of Envision in connection with this Agreement or the
transactions contemplated hereby, and
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there are no brokerage commissions, finders' fees or similar fees or
commissions payable in connection therewith based on any agreement, arrangement
or understanding with Envision, or any action taken by Envision.
3.22 HAZARDOUS MATERIALS. Except as set forth on Schedule 3.22,
Envision has never generated, used or handled any Hazardous Materials (as
hereinafter defined) other than normal office products, nor has Envision
treated, stored or disposed of any Hazardous Materials other than normal office
products at any site owned or leased by Envision or shipped any Hazardous
Materials for treatment, storage or disposal at any other site or facility.
Except as set forth on Schedule 3.22, to the best knowledge of Envision and the
Stockholders, no other person has ever generated, used, handled, stored or
disposed of any Hazardous Materials at any site owned (presently or formerly)
or premises leased (presently or formerly) by Envision during the period of
Envision's ownership or lease, nor has there been or is there threatened any
release of any Hazardous Materials on or at any such site or premises during
such period. For purposes of this Agreement, "Hazardous Materials" shall mean
and include any "hazardous waste" as defined in either the United States
Resource Conservation and Recovery Act, 42 U.S.C. 6901, regulations adopted
pursuant to said Act, and also any "hazardous substances" or "hazardous
materials" as defined in the United States Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601.
3.23 BANK ACCOUNTS AND POWERS OF ATTORNEY. Schedule 3.23
identifies all bank accounts used in connection with the operations of Envision
whether or not such accounts are held in the name of Envision, lists the
respective signatories therefor and lists the names of all persons holding a
power of attorney from Envision and a summary statement of the terms thereof.
Except as set forth on Schedule 3.23, Envision has not granted powers of
attorney to any person or entity.
3.24 NO MISREPRESENTATION. All documents, schedules and other
papers delivered by or on behalf of Envision or the Stockholders in connection
with this Agreement and the transactions contemplated hereby are authentic and,
to the best knowledge of Envision and the Stockholders, and are true and
complete. No representation or warranty of Envision or the Stockholders
contained in this Agreement, and, to the best knowledge of Envision and the
Stockholders, no document or other paper furnished by or on behalf of the
Stockholders to either of the Registrants (or any of their respective agents)
pursuant to this Agreement or in connection with the transactions contemplated
hereby, taken as a whole, contains a materially untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. No written information furnished or approved in writing
(which shall be reasonably promptly delivered) by Envision or the Principal
Stockholders for inclusion in the proxy statement or information statement
described in Section 5.8(a)(iii) contains, or shall contain, a materially
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3.25 REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties in this Article 3 made as of the date hereof
were true and correct on February 1, 2000 as if made on such date. From and
after February 1, 2000 through and including the date hereof,
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Envision and the Stockholders have complied in all material respects with all
covenants contained herein.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Each of Perfumania.com (only with respect to Sections 4.1 and 4.3
hereof) and Holdings represents and warrants, to the extent applicable, to
Envision and the Stockholders as follows:
4.1 ORGANIZATION. It is duly organized, validly existing and in
good standing under the laws of the State of Florida and has full corporate
power and lawful authority to own, lease and operate its assets, properties and
business and to carry on its business as now being and as heretofore conducted.
It is qualified or otherwise authorized to transact business as a foreign
corporation in each jurisdiction in which such qualification or authorization
is required by law and in which the failure to so qualify or be authorized has
or would have individually or in the aggregate a material adverse effect on it
or its assets, properties, business, operations or condition (financial or
otherwise) or would materially impair, delay or terminate the transactions
contemplated herein (a "Holdings Material Adverse Effect"). EAC is a
newly-formed entity, formed solely for the purpose of carrying out the
transactions contemplated by this Agreement, and has no other assets or
activities. All of the outstanding capital stock of EAC is owned by Holdings.
4.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. It has the
corporate power and all authority and, except as otherwise provided for herein,
approvals required to enter into, execute and deliver this Agreement and to
issue the shares of Holdings Common Stock to be issued to the Stockholders at
the Closing, to consummate the transactions hereunder, and to perform fully its
obligations hereunder, and this Agreement and has been or will be duly executed
and delivered and the valid and binding obligation of it enforceable in
accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights and remedies of
creditors generally, and to equitable principles. It has obtained the necessary
approval of its board of directors for the execution, delivery and performance
of this Agreement and the issuance of the shares of Holdings Common Stock to be
issued to the Stockholders at the Closing, and the consummation of the
transactions contemplated hereunder and thereunder, and no other corporate
proceedings or actions on the part of it are necessary therefor, except for (i)
the filing of the additional listing application with the AMEX and the receipt
of approval therefor and (ii) the receipt of the approval of the stockholders
of Holdings for the issuance of the shares comprising the Merger Consideration
in accordance with all applicable laws and regulations.
4.3 BROKERAGE. No broker, finder, agent or similar intermediary
has acted on behalf of Holdings or Perfumania.com in connection with this
Agreement or the transactions contemplated hereby, and there are no brokerage
commissions, finders' fees or similar fees or commissions payable in connection
therewith based on any agreement, arrangement or understanding with it or any
action taken by either of them.
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4.4 NO BREACH. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby and
thereby do not and will not (a) violate any provision of the Amended and
Restated Articles of Incorporation or Amended and Restated Bylaws of it; (b)
violate, conflict with or result in the breach of any of the terms or
conditions of, result in modification of the effect of, or 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 material instrument,
contract or other agreement to which it is a party or to which any of its
assets or properties may be bound or subject except as otherwise provided for
in this Section 4.4; (c) violate any order, judgment, injunction, award or
decree of any court, arbitrator or governmental or regulatory body against, or
binding upon, it or upon its securities, properties, assets or business; (d)
violate any statute, law or regulation of any jurisdiction as such statute, law
or regulation relates to it or to its securities, properties, assets or
business; (e) violate any Permit except as otherwise provided for in this
Section 4.4; (f) require the approval or consent of any foreign, federal,
state, local or other governmental or regulatory body or the approval or
consent of any other person except as otherwise provided for in this Section
4.4; or (g) result in the creation of any lien or other encumbrance on its
assets or properties; except for compliance with the applicable requirements of
the Securities Act, the Exchange Act, "blue sky" or state securities laws, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"),
the AMEX, and the laws of the Commonwealth of Massachusetts with respect to the
filing of the Articles of Merger.
4.5 DISCLOSURE. None of the SEC Filings referred to in Article 2
above, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading. The Registrants have made all filings with the SEC which they are
required to make pursuant to the Exchange Act, and they have not received any
pending request from the SEC to file or failed to file any amendment or
supplement to any such reports.
4.6 NO MATERIAL CHANGES. As of the date hereof, there has been no
material adverse change in the financial condition or results of operations of
Holdings since the filing date of Holdings' last SEC Filing.
4.7 ISSUANCE, SALE AND DELIVERY OF THE SHARES. Holdings has
available and will have available on the Closing Date a sufficient number of
authorized shares of Holdings Common Stock to enable it to consummate the
transactions contemplated hereunder. When issued in accordance with the terms
hereof, Holdings Common Stock to be sold hereunder by Holdings will be validly
issued, fully paid and non-assessable, and, subject to official notice of
issuance, duly listed on the AMEX.
4.8 EXEMPT TRANSACTION. Assuming the accuracy and truth of the
representations of the Stockholders in Article 2 and compliance by the
Stockholders of all covenants contained herein applicable to the Stockholders,
the issuance of the shares of Holdings Common Stock to the Stockholders at the
Closing will constitute a transaction exempt from (a) the registration
requirements of Section 5 of the Securities Act, in reliance upon Section 4(2)
of the Securities Act and the regulations promulgated pursuant thereto and (b)
the qualification requirements of the applicable state securities laws.
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4.9 ACTIONS AND PROCEEDINGS. Except as set forth or reflected in
the SEC Filings, there are no outstanding orders, judgments, injunctions,
awards or decrees of any court, governmental or regulatory body or arbitration
tribunal against or involving it or any of its securities, its assets, or
properties. Except as set forth or reflected in the SEC Filings, there are no
actions, suits or claims or legal, administrative or arbitration proceedings
or, to its best knowledge, investigations (whether or not the defense thereof
or liabilities in respect thereof are covered by insurance) pending or, to its
best knowledge, threatened, against or involving it or any of its securities,
assets or properties that would individually or in the aggregate have or could
reasonably be expected to have a Holdings Material Adverse Effect. To its best
knowledge, there is no fact, event or circumstance that may give rise to any
suit, action, claim, investigation or proceeding that could individually or in
the aggregate have or could reasonably be expected to have a Holdings Material
Adverse Effect. For the purposes of this Agreement, the terms "it knows", "to
its knowledge" or "to its best knowledge" with respect to Holdings or
Perfumania.com or similar terms or phrases shall refer to the actual knowledge
of William Patch.
ARTICLE 5
COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
5.1 CONDUCT OF BUSINESS UNTIL THE CLOSING. During the period from
the date hereof to the Closing Date, Envision shall:
5.1.1 Preservation of Personnel. Use reasonable efforts to
preserve intact and keep available the services of Envision's present
employees, and to facilitate the employment of such persons by Holdings or
Perfumania.com on or before the Closing;
5.1.2 Insurance. Use reasonable efforts to keep in effect
casualty, public liability, worker's compensation and other insurance policies
in coverage amounts not less than those in effect at the date of this
Agreement;
5.1.3 Preservation and Advancement of the Business;
Maintenance of Properties, Contracts. (a) Use reasonable efforts in each case
to preserve and advance the business, (b) advertise, promote and market its
services in accordance with past practices over the last twelve months, (c)
keep its properties intact, (d) preserve its goodwill and its business and its
Customers as customers, (e) maintain all physical properties in good repair and
operating condition subject only to ordinary wear and tear, in each case in
accordance with past practices, (f) perform and comply in all material respects
with the terms of, and shall not amend, terminate, release, cancel or assign
any rights or obligations under, or otherwise modify the rights and obligations
of, the contracts set forth in Schedule 3.11 hereto, and (g) not enter into any
material contract or commitment adversely affecting the businesses of such
except for the normal purchase of materials, supplies and services in the
ordinary course of their business;
5.1.4 Intellectual Property Rights. Use reasonable best
efforts to preserve and protect the Proprietary Rights; and
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5.1.5 Ordinary Course of Business. Operate its business
solely in the ordinary course and in the normal, usual and customary manner.
5.2 NEGATIVE COVENANTS PENDING CLOSING. During the period from
the date hereof to the Closing Date:
5.2.1 Transactions with Others. Neither Envision, and its
directors, officers and employees, nor the Stockholders, nor any
representatives of the foregoing will, directly or indirectly, solicit
inquiries from any person or enter into any agreement, or facilitate to do any
of the following, with any person for the sale, acquisition, license, lease or
any other transfer of all or any portion of capital stock or the assets
(including, but not limited to, the Proprietary Rights) of Envision, or
otherwise sell or transfer, or mortgage, pledge or create or permit to be
created any lien or other encumbrance or security interest on, any of the
capital stock or assets of Envision other than sales and purchases in the
ordinary course of business, or enter into any material corporate transaction
that would impair, impede or delay the consummation of the transactions
contemplated herein;
5.2.2 Liabilities. Envision will not incur or discharge
any obligation or liability other than in the ordinary course of business or
incur any indebtedness for borrowed money, other than in the ordinary course of
business;
5.2.3 Compensation. Envision will not increase the rates
of direct or bonus compensation payable or to become payable to any officer,
employee, agent or consultant other than in the ordinary course of business or
hire or terminate any employee or consultant without the prior approval of
Holdings;
5.2.4 Capital Stock. Envision will not make any change in
the number of shares of the capital stock authorized, issued or outstanding or,
except with respect to option grants to Robert Haskell disclosed in Schedule
3.2.2 in accordance with the terms of his employment offer letter, dated
December 13, 1999, grant any option, warrant or other right to purchase, or to
convert any obligation into, shares of capital stock, or declare or pay any
dividend or distribution on any shares of capital stock, or sell or transfer
any shares of its capital stock, except with respect to options to be granted
to new employees hired by Envision prior to the Closing, subject to the prior
approval of Holdings;
5.2.5 Charter and Bylaws. Envision will not amend its
Articles of Organization or Bylaws or otherwise alter its corporate structure
or ownership and Holdings will not amend in a manner materially adverse to the
Stockholders or Richard Simon its Amended and Restated Articles of
Incorporation or Bylaws, except in either case for any changes occurring as a
result of a merger between Holdings and any of its wholly owned subsidiaries,
so long as any such merger does not cause the transaction contemplated by this
Agreement to fail to qualify as a reorganization within the meaning of Section
368 of the Code; or
5.2.6 Acquisitions. Envision will not make any acquisition
of assets or property other than in the ordinary course of business.
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5.3 CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES.
5.3.1 From the date hereof through the Closing Date, the
Stockholders and Envision shall use reasonable best efforts to conduct their
and its business and affairs in such a manner so that the representations and
warranties contained in Sections 2 and 3 hereof shall continue to be true and
correct in all material respects on and as of the Closing Date as if made on
and as of the Closing Date, and Holdings shall promptly be given notice of any
event, condition or circumstance occurring from the date hereof through the
Closing Date that would constitute a violation or breach of this paragraph.
5.3.2 From the date hereof through the Closing Date,
Holdings shall use reasonable best efforts to conduct its business and affairs
and to cause Perfumania.com to conduct its business and affairs in such a
manner so that the representations and warranties contained in Section 4 hereof
shall continue to be true and correct in all material respects on and as of the
Closing Date as if made on and as of the Closing Date, and Envision shall
promptly be given notice of any event, condition or circumstance occurring from
the date hereof through the Closing Date that would constitute a violation or
breach of this paragraph.
5.4 CORPORATE EXAMINATIONS AND INVESTIGATIONS.
(a) Prior to the Closing, Holdings shall be entitled,
through its affiliates, employees and representatives, to have access to the
assets, properties, business and operations of Envision, as is reasonably
necessary or appropriate in connection with Holdings' investigation of
Envision. Any such investigation and examination shall be conducted at
reasonable times and under reasonable circumstances so as to minimize any
disruption to or impairment of Envision's businesses and Envision shall
cooperate fully therein. Envision shall provide Holdings and its affiliates and
advisors with full access to Envision's financial, legal and business records
and to arrange for Holdings to discuss with Envision's advisors and any party
to a material agreement with Envision such matters as Holdings may reasonably
request. Holdings must obtain Envision's approval prior to initiating any such
discussion with an Envision advisor (except for Envision's accountants or
attorneys) or a party to an Envision material agreement. In order that Holdings
may have full opportunity to make such review, Envision and the Stockholders
shall furnish the representatives of Holdings with all such information and
copies of such documents concerning the affairs of Envision as such
representatives may reasonably request and cause its officers, employees,
consultants, agents, accountants and attorneys to cooperate fully with such
representatives in connection with such review and shall make full disclosure
to Holdings of all material facts affecting the assets, properties, business,
operations and financial condition of Envision.
(b) Except as provided in this Section 5.4, each of the
parties agrees to hold in confidence and not to use, disclose or reveal to any
other person any confidential or proprietary information disclosed to the other
in connection with the transactions contained in this Agreement or the
negotiations between such parties until such information has become generally
available to the public through no fault or omission on the part of the
receiving party. Notwithstanding the foregoing, each party shall be permitted
to make such disclosures to persons, the public or to governmental agencies as
its counsel shall deem necessary to maintain compliance with and to prevent
violation of applicable federal or state laws or the requirements
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of the AMEX. In the event that the Closing does not occur, Holdings and
Perfumania.com will promptly return to Envision all copies of any materials or
other written information furnished to Holdings or Perfumania.com by Envision
or the Stockholders except for one copy to be retained by counsel for Holdings
to enable compliance hereunder. If the confidentiality provisions hereof
conflict with the provisions of a previously executed confidentiality
agreement, the provisions of such prior agreement shall govern.
5.5 EXPENSES. Holdings shall assume and pay directly all expenses
of Holdings, Perfumania.com, EAC and Envision incurred in connection with the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, including, without limitation, all fees and expenses of
each of their respective agents, representatives, counsel and accountants.
5.6 AUTHORIZATION FROM OTHERS. Prior to the Closing, Holdings,
Envision and the Stockholders will take all reasonable actions necessary to
comply promptly with all legal or other requirements which apply with respect
to the transactions contemplated hereby, and Holdings, Envision and the
Stockholders will use their reasonable best efforts to obtain all
authorizations, consents and Permits of others required to permit the
consummation by them of the transactions contemplated by this Agreement.
5.7 STOCKHOLDERS VOTE; CONSUMMATION OF AGREEMENT. Each of the
Stockholders shall vote his or her Shares in favor of or consent to the Merger.
Each of Holdings, the Stockholders and Envision shall use their respective
reasonable best efforts to perform and fulfill all conditions and obligations
to be performed and fulfilled by them under this Agreement and to consummate
the transactions hereunder and further to ensure that to the extent in their
respective control or capable of influence by it or them, no breach of any of
Holdings', Perfumania.com's, Envision's or the Stockholders' respective
representations, warranties and agreements hereunder or contemplated hereby
occurs or exists on or prior to the Closing to the end that the transactions
contemplated by this Agreement shall be fully carried out.
5.8 HOLDINGS STOCKHOLDER APPROVAL.
(a) Holdings, acting through its Board of Directors,
shall, in accordance with applicable law and its Amended and Restated Articles
of Incorporation and Bylaws:
(i) as soon as practicable after the date
hereof, duly hold a meeting of its stockholders for the purpose of considering
and acting on the issuance of the shares comprising the Merger Consideration or
solicit written consents from its stockholders approving the issuance of the
shares comprising the Merger Consideration;
(ii) subject to the fiduciary duties of the
Board of Directors under applicable law as advised in writing by legal counsel,
include in the proxy statement or information statement sent to the Company's
stockholders the recommendation of its Board of Directors that stockholders of
the Company vote in favor of the issuance of the shares comprising the Merger
Consideration; and
(iii) use all reasonable efforts (A) to obtain
and furnish the information required to be included by it in the proxy
statement or information statement, as applicable, and
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to cause such information (excluding information furnished by Envision) not to
contain any statement which, at the time and in light of the circumstances
under which it is made, is false or misleading with respect to any material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statement therein not false or misleading, (B)
to cause the proxy statement or information statement, as applicable, to be
mailed to its stockholders at the earliest practicable time and (C) to obtain
the necessary approvals by its stockholders of the transactions contemplated
hereby.
5.9 FURTHER ASSURANCES. Each of the parties shall execute such
documents, further instruments of transfer and assignment and other papers and
take such further actions and cooperate with each other as may be reasonably
required or desirable to carry out the provisions hereof and to consummate the
transactions contemplated hereby.
5.10 MATERIAL EVENTS. At all times prior to the Closing, each
party shall promptly notify the others in writing of the occurrence of any
event which will or may reasonably be expected to result in the failure to
satisfy any of the conditions of Articles 6 or 7 hereof.
5.11 TAX-FREE TRANSACTION. Holdings, Perfumania.com, EAC and
Envision will each use commercially reasonable efforts consistent with the
economic arrangements between the parties to cause the Merger to be treated as
a reorganization within the meaning of Section 368 of the Code, and none of
such parties shall take any action that would cause the Merger to fail to
qualify as a reorganization within the meaning of Section 368 of the Code. Each
of the parties shall report the Merger for income tax purposes as a
reorganization within the meaning of Section 368 of the Code (and any
comparable state or local tax statute). Holdings, Perfumania.com and Envision
will each make and will use reasonable efforts to obtain from its affiliates
such reasonable representations as may be requested by legal counsel for the
purpose of rendering the opinions contemplated by Sections 6.7 and 7.11.
5.12 EMPLOYMENT OFFERS TO ENVISION EMPLOYEES. Subject to a review
of personnel records, Holdings shall make offers of employment to each employee
of Envision or shall retain each such employee as an employee of Envision.
Unless otherwise stated, employment of Envision employees by Envision, Holdings
or Perfumania.com following the Closing shall be, for at least one year
following the Closing, on an at-will basis in positions comparable with those
at Envision, at a salary and benefit level equal to or greater than the salary
and benefit level provided by Envision to each such employee. Holdings or
Perfumania.com shall credit each employee of Envision with a number of years of
service equal to such employee's number of years of service with Envision for
purposes of the Holdings or Perfumania.com salary and bonus structure, vacation
and sick leave benefits and all Holdings or Perfumania.com employee benefit
plans in which such employees will be eligible to participate, other than for
purposes of any benefit accrual under any defined benefit pension plan.
Following the Effective Time, in its sole discretion, Holdings or
Perfumania.com shall: (i) continue and maintain the current Envision 401(k)
Plan; (ii) merge the current Envision 401(k) Plan and the current Holdings or
Perfumania.com 401(k) Plan; or (iii) terminate the current Envision 401(k)
Plan. In the event that Holdings or Perfumania.com merges the current Envision
401(k) Plan and the current Holdings or Perfumania.com 401(k) Plan or
terminates the current Envision 401(k) Plan, any former employee of Envision
who accepts employment with Holdings or Perfumania.com (a "Transferring
Employee") shall be eligible to participate in the Holdings or Perfumania.com
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401(k) Plan, in accordance with the terms of such plan, provided that Holdings
or Perfumania.com shall give each Transferring Employee who participates in the
Holdings or Perfumania.com 401(k) Plan credit for the years of service of such
Transferring Employee to Envision solely for purposes of determining years of
vesting service under the Holdings or Perfumania.com 401(k) Plan. To the extent
a Transferring Employee is eligible, Envision shall fully vest each such
Transferring Employee's rights under the Envision 401(k) Plan and shall further
perform all of Envision's obligations to Transferring Employees under the terms
of the Envision 401(k) Plan.
5.13 NOMINATION AS A DIRECTOR OF HOLDINGS. Holdings covenants and
agrees to elect Richard Simon to its Board of Directors prior to or
contemporaneously with the Closing, effective at the later to occur of the
Closing or the expiration of the waiting period with respect to the information
statement filed on January 21, 2000 in accordance with Rule 14f-1 of the
Exchange Act, and to nominate Richard Simon for election to serve as a director
of Holdings at the Annual Meeting of Stockholders (or at any special meetings
of stockholders held in lieu thereof) to be held in 2000 for a term expiring
not sooner than the 2003 Annual Meeting of Stockholders. As and while a
director, Mr. Simon shall be entitled to receive all compensation,
reimbursement and perquisites paid to other employee-directors of Holdings
similarly situated.
5.14 TRANSFERS BY ENVISION STOCKHOLDERS. Each Stockholder agrees
that such Stockholder shall not, directly or indirectly, transfer, sell,
assign, distribute, exchange, mortgage, pledge, hypothecate or otherwise
dispose (a "Transfer") of any shares (including any share received from a Stock
Split thereto), or any interest therein, of Holdings Common Stock received
pursuant to this Agreement, unless (i) such Transfer is pursuant to an
effective registration statement under the Securities Act and has been
registered under all applicable state securities or "blue sky" laws or (ii)
such Stockholder shall have furnished Holdings with a written legal opinion in
form and substance reasonably satisfactory to Holdings and its counsel to the
effect that no such registration is required because of the availability of an
exemption from registration under the Securities Act and all applicable state
securities or "blue sky" laws.
5.15 AMEX LISTING APPLICATION. If Perfumania.com has not filed, or
an already filed application is insufficient to list shares of Holdings,
Holdings shall file with the AMEX a listing application covering the shares
comprising the Merger Consideration (the "Listing Application") within 10 days
following the date hereof and shall use its reasonable best efforts to cause
the Listing Application to become effective as soon as practicable.
5.16 RULE 144 REQUIREMENTS. Holdings agrees to:
(a) Comply with the requirements of Rule 144(c) under
the Securities Act with respect to current public information about Holdings;
(b) Use its reasonable best efforts to file with the
Commission in a timely manner all reports and other documents required of
Holdings under the Securities Act and the Exchange Act; and
(c) For two years from the Closing Date, furnish to any
Stockholder upon reasonable request (i) a written statement by Holdings as to
its compliance with the requirements
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of said Rule 144(c) and the reporting requirements of the Securities Act and
the Exchange Act, (ii) a copy of the most recent annual or quarterly report of
Holdings when available, and (iii) such other reports and documents of Holdings
as such Stockholder may reasonably request to avail itself of any similar rule
or regulation of the Commission allowing it to sell any such securities without
registration.
5.17 LICENSE TO NAME. Without limiting Envision's right of
exclusive ownership of its name as of the Closing, effective as of the date
hereof, Envision hereby grants to Holdings a fully paid-up, worldwide,
exclusive (against third parties but not against Envision) license to all of
its right, title and interest in and to the name "Envision Development
Corporation." The license granted pursuant to this Section 5.17 shall terminate
upon the termination of this Agreement pursuant to Section 9.1, or upon
ownership of such name by Holdings or Perfumania.com, and may not be
sublicensed by Holdings, except to a wholly owned subsidiary of Holdings,
without the prior written consent of Envision, which shall not be unreasonably
withheld. Perfumania.com hereby irrevocably assigns, and Envision hereby
consents to such assignment of, all of Perfumania.com's rights, title and
interest under, to and from Section 5.17 of the Original Agreement to Holdings
and to any of its successors and assigns by operation of law.
ARTICLE 6
CONDITIONS PRECEDENT TO THE OBLIGATION
OF HOLDINGS TO CLOSE
The obligation of Holdings to close is subject, at the option of
Holdings acting in accordance with the provisions of this Agreement with
respect to termination hereof, to the fulfillment of the following conditions,
any one or more of which may be waived by it:
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Envision and the Stockholders 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, except for misrepresentations and breaches of warranties that would not,
individually or in the aggregate, reasonably expected to have a Material
Adverse Effect; provided that the representations and warranties of Envision
and the Stockholders in Sections 3.2.1 and 3.2.2 shall be true and correct on
and as of the date hereof and shall be true and correct on and as of the
Effective Time with the same force and effect as if made on and as of the
Effective Time, and provided, further, that for the purposes of this sentence,
the representations and warranties of Envision and the Stockholders shall be
construed as if they did not contain any qualification that refers to a
Material Adverse Effect or materiality. Each of Envision and the Stockholders
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
such party on or prior to the Closing Date. Envision and the Stockholders shall
have delivered to Holdings certificates, dated the Closing Date and signed by
the President of Envision to the foregoing effect.
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6.2 CERTIFICATE OF CLERK OF ENVISION. Envision shall have
delivered to Holdings a certificate of the Clerk of Envision dated as of the
Closing Date, certifying as to (i) the Articles of Organization and the Bylaws
of Envision, as in effect on and as of the Closing Date and (ii) the resolutions
of the Board of Directors of Envision authorizing and approving the execution,
delivery and performance by Envision of this Agreement and the transactions
contemplated hereby.
6.3 THIRD PARTY CONSENTS AND PERMITS. All consents and approvals
from parties to material contracts or other agreements with Envision and all
Permits (including any state securities law approvals required in connection
with the Merger and the issuance of Holdings Common Stock) that may be required
in connection with the performance by Holdings, Perfumania.com, Envision or the
Stockholders of their respective obligations under this Agreement shall have
been obtained. In addition, all requirements pursuant to the HSR Act, any other
federal or state law (including approval of the Stockholders pursuant to
applicable law) or regulation and the rules of the AMEX shall have been
fulfilled.
6.4 EMPLOYMENT AGREEMENT. Richard Simon and Holdings or
Perfumania.com shall have entered into a mutually agreed upon Employment
Agreement.
6.5 LITIGATION. No temporary restraining order, preliminary or
permanent injunction or other order (whether temporary, preliminary or
permanent) issued by any court of competent jurisdiction or other legal
restraint or prohibition shall be in effect which prevents the consummation of
the Merger on substantially the same terms and conferring on Holdings
substantially all the rights and benefits as contemplated herein, nor shall any
proceeding brought by any governmental authority, domestic or foreign, seeking
any of the foregoing be pending, and there shall not be any action taken, or any
law or order enacted, entered, enforced or deemed applicable to the Merger,
which makes the consummation of the Merger on substantially the same terms and
conferring on Holdings substantially all the rights and benefits as contemplated
herein illegal.
6.6 RELEASES. Except as disclosed in Schedule 6.6, Holdings shall
have received (a) written resignations of all directors of Envision, effective
as of Closing, (b) evidence reasonably satisfactory that all agreements between
Envision on the one hand, and the Stockholders and the directors, officers and
other affiliates of Envision on the other hand, have been terminated without
premium or penalty to Envision or Holdings and (c) written evidence reasonably
satisfactory that all holders of any indebtedness for borrowed money of Envision
(or beneficiary of any guarantee made by Envision of the indebtedness of any
other person) shall have been released and discharged, including any lien or
other encumbrance, without premium or penalty to Envision or Holdings.
6.7 TAX OPINION. Holdings shall have received the written opinion
of Simpson Thacher & Bartlett, counsel to Holdings, dated the Closing Date and
in form and substance reasonably satisfactory to it, to the effect that the
Merger will be treated for Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code.
6.8 FINAL APPROVALS. The stockholders of Holdings shall have
approved the issuance of the shares comprising the Merger Consideration in
accordance with all applicable laws and
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regulations. The AMEX shall have approved for listing the shares comprising the
Merger Consideration.
Article 7
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE STOCKHOLDERS AND ENVISION TO CLOSE
The obligation of the Stockholders and Envision to consummate the
transactions contemplated hereby is subject, at the option of the Stockholders
and Envision acting in accordance with the provisions of this Agreement with
respect to termination hereof, to the fulfillment of the following conditions,
any one or more of which may be waived:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of Holdings and Perfumania.com contained in this Agreement shall
be true in all respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date, except for such
misrepresentations and breaches of warranties that would not, individually or in
the aggregate, reasonably be expected to have a Holdings Material Adverse
Effect; provided that for the purposes of this sentence, the representations and
warranties of Holdings and Perfumania.com shall be construed as if they did not
contain any qualification that refers to a Holdings Material Adverse Effect or
materiality. Holdings and Perfumania.com 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 it on or prior to the Closing
Date. Holdings shall have delivered to the Stockholders a certificate, dated the
Closing Date and signed by an officer of Holdings, to the foregoing effect.
7.2 CERTIFICATE OF SECRETARY OF HOLDINGS. Holdings shall have
delivered to Envision a certificate of the Secretary of Holdings dated as of the
Closing Date, certifying as to (i) the Articles of Incorporation and the Bylaws
of Holdings, as in effect on and as of the Closing Date and (ii) the resolutions
of the Board of Directors of Holdings authorizing and approving the execution,
delivery and performance by Holdings of this Agreement and the transactions
contemplated hereby.
7.3 CERTIFICATE OF CLERK OF EAC. EAC shall have delivered to
Envision a certificate of the Clerk of EAC dated as of the Closing Date,
certifying as to (i) the Articles of Organization and the Bylaws of EAC, as in
effect on and as of the Closing Date and (ii) the resolutions of the Board of
Directors and Stockholders of EAC authorizing and approving the execution,
delivery and performance by EAC of this Agreement and the transactions
contemplated hereby.
7.4 LITIGATION. No temporary restraining order, preliminary or
permanent injunction or other order (whether temporary, preliminary or
permanent) issued by any court of competent jurisdiction or other legal
restraint or prohibition shall be in effect which prevents the consummation of
the Merger on substantially the same terms and conferring on Envision and the
Stockholders substantially all the rights and benefits as contemplated herein,
nor shall any proceeding brought by any governmental authority, domestic or
foreign, seeking any of the foregoing be pending, and there shall not be any
action taken, or any law or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the
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Merger on substantially the same terms and conferring on Envision and the
Stockholders substantially all the rights and benefits as contemplated herein
illegal.
7.5 BUSINESS SINCE THE DATE OF THE SEC FILINGS. There shall have
been no Holdings Material Adverse Effect since the date of Holdings' most recent
SEC Filing.
7.6 THIRD PARTY CONSENTS AND PERMITS. All consents and approvals
from parties to material contracts or other agreements with Holdings and all
Permits (including any state securities law approvals required in connection
with the issuance of Holdings Common Stock) that may be required in connection
with the performance by Envision or Holdings of its obligations under this
Agreement shall have been obtained.
7.7 EMPLOYMENT AGREEMENT. Holdings or Perfumania.com and Richard
Simon shall have entered into a mutually agreed upon Employment Agreement.
7.8 ELECTION AS DIRECTOR. Holdings shall have completed all
required corporate action to elect Richard Simon to serve as a director of
Holdings immediately following the later of the Closing or the expiration of the
waiting period with respect to the information statement filed on January 21,
2000 in accordance with Rule 14f-1 of the Exchange Act.
7.9 DEBT. Richard Simon shall have been released, or provisions
shall have been made to his reasonable satisfaction that immediately following
the Closing he shall be released, from all obligations of Envision under which
he is a personal guarantor or have personal liability as described in Schedule
7.9.
7.10 STOCKHOLDER APPROVAL. The Stockholders shall have approved all
actions necessary for the consummation of the transactions contemplated hereby.
The stockholders of Holdings shall have approved the issuance of the shares
comprising the Merger Consideration in accordance with all applicable laws and
regulations. The AMEX shall have approved for listing the shares comprising the
Merger Consideration.
7.11 TAX OPINION. Envision shall have received the written opinion
of Palmer & Dodge LLP, counsel to Envision, dated the Closing Date and in form
and substance reasonably satisfactory to it, to the effect that the Merger will
be treated for Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code.
Article 8
INDEMNIFICATION
8.1 SURVIVAL. Notwithstanding any right of any party to fully
investigate the affairs of the other party and notwithstanding any knowledge of
facts determined or determinable by such party pursuant to such investigation or
right of investigation, each party has the right to rely fully upon the
representations, warranties, covenants and agreements of each other party in
this Agreement or in any certificate, financial statement or other document
delivered by any party pursuant hereto. All such representations, warranties,
covenants and agreements shall survive the execution and delivery hereof and the
Closing hereunder, subject to the limitations set forth in Section 8.4. No
person shall have a right to recovery against any party (or any officer,
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director, employee or agent of a party) other than through the exercise of the
indemnification rights set forth in Section 8.2, which shall constitute the sole
and exclusive remedy after the Closing Data for any breach by a party of any
representation, warranty or covenant contained herein or in any certificate or
other instrument delivered pursuant hereto, other than a fraudulent or
intentional breach.
8.2 OBLIGATION OF THE STOCKHOLDERS TO INDEMNIFY. Subsequent to the
Effective Time, Richard L. Simon, Gary Whear and Leonard J. Umina (the
"Principal Stockholders") shall, jointly and severally, indemnify and hold
harmless Holdings (and their respective directors, officers, employees, agents,
affiliates and assigns) from and against all losses, liabilities, damages,
deficiencies, costs or expenses, including interest and penalties imposed or
assessed by any judicial or administrative body and reasonable attorneys' fees,
whether or not arising out of third-party claims and including all amounts paid
in investigation, defense or settlement of the foregoing pursuant to this
Section 8 ("Losses") based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty or covenant of the
Company or the Stockholders contained in Article 3 or in any certificate
delivered pursuant hereto.
8.3 LIMITATIONS ON INDEMNIFICATION. Notwithstanding the foregoing,
the right to indemnification under this Section 8 shall be subject to the
following terms:
(a) No indemnification shall be payable pursuant to
Section 8.2 unless and until the amount of all claims for indemnification
pursuant to the applicable Section exceeds $100,000 in the aggregate, whereupon
indemnification pursuant to such Section shall be payable only to the extent all
such claims exceed $100,000.
(b) No indemnification shall be payable pursuant to
Section 8.2 after the first anniversary of the Effective Time (the "Expiration
Date"), except with respect to claims made prior to the Expiration Date but not
then resolved.
(c) The aggregate liability of the Principal Stockholders
pursuant Section 10.2 shall not exceed $1,000,000.
(d) The limitations of Sections 8.3(a), (b) and (c) shall
not apply in the case of a fraudulent or intentional misrepresentation or breach
by any party, but no person shall be liable for any such misrepresentation or
breach by any other person, and the limitation of Section 8.3(c) shall not apply
to any misrepresentation or breach of warranty of Section 3.2.
(e) In determining the amount of any indemnity, there
shall be taken into account any tax benefit, insurance proceeds or other similar
recovery or offset realized, directly or indirectly, by the party to be
indemnified.
8.4 NOTICE AND DEFENSE OF CLAIMS. Promptly after receipt of notice
of any claim, liability or expense for which a party seeks indemnification
hereunder, such party shall give written notice thereof to the indemnifying
party, but such notification shall not be a condition to indemnification
hereunder except to the extent of actual prejudice to the indemnifying party.
The notice shall state the information then available regarding the amount and
nature of such
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claim, liability or expense and shall specify the provision or provisions of
this Agreement under which the liability or obligation is asserted. If within 30
days after receiving such notice the indemnifying party gives written notice to
the indemnified party stating that it intends to defend against such claim,
liability or expense at its own cost and expense, then defense of such matter,
including selection of counsel (subject to the consent of the indemnified party
which consent shall not be unreasonably withheld), shall be by the indemnifying
party and the indemnified party shall make no payment on such claim, liability
or expense as long as the indemnifying party is conducting a good faith and
diligent defense. Notwithstanding the foregoing, the indemnified party shall at
all times have the right to fully participate in such defense at its own expense
directly or through counsel; provided, however, if the named parties to the
action or proceeding include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate under applicable standards of professional conduct, the expense of
separate counsel for the indemnified party shall be paid by the indemnifying
party. If no such notice of intent to dispute and defend is given by the
indemnifying party, or if such diligent good faith defense is not being or
ceases to be conducted, the indemnified party shall, at the expense of the
indemnifying party, undertake the defense of such claim, liability or expense
with counsel selected by the indemnified party, and shall have the right to
compromise or settle the same exercising reasonable business judgment. The
indemnified party shall make available all information and assistance that the
indemnifying party may reasonably request and shall cooperate with the
indemnifying party in such defense.
Article 9
TERMINATION OF AGREEMENT
9.1 TERMINATION. This Agreement may be terminated prior to the
Closing as follows:
(a) at the election of Envision upon written
notice to Holdings from Envision if any one or more of the conditions in Article
7 to the obligation of Envision to close has become incapable of being fulfilled
or is not waived;
(b) at the election of Holdings upon written
notice to Envision from Holdings if any one or more of the conditions in Article
6 to the obligation of Holdings to close has become incapable of being fulfilled
or is not waived;
(c) at the election of Envision upon written
notice to Holdings from Envision if Holdings has breached any representation or
warranty or any covenant or agreement contained in this Agreement required to be
performed as of such date of notice and has not, within fifteen (15) business
days of receipt by Holdings of written notice from Envision of such breach of
representation, warranty, covenant or agreement, cured such breach;
(d) at the election of Holdings upon written
notice to Envision or the Stockholders if Envision or the Stockholders have
breached any representation or warranty or any covenant or agreement contained
in this Agreement required to be performed as of such date of notice and have
not, within fifteen (15) business days of receipt by Envision or the
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Stockholders of written notice from Holdings of such breach of representation,
warranty, covenant or agreement, cured such breach;
(e) at any time on or prior to the Closing, by
mutual written agreement of Envision, the Stockholders and Holdings;
(f) by either party, if the Closing does not
occur on or prior to July 31, 2000, provided that the terminating party is not,
at the time of such termination pursuant to this Section 9.1(f), in breach of
any material term of this Agreement;
(g) at the election of Envision or the
Stockholders if the Closing Price of the Holdings Common Stock is less than
$9.00.
9.2 EFFECT OF TERMINATION.
9.2.1 Except as provided in Section 9.2.2 below, if this
Agreement is terminated and the transactions contemplated hereby are not
consummated as provided in Section 9.1, each and every representation and
warranty, and all covenants and agreements (except as provided in Section 9.2),
contained in this Agreement or any Schedule hereto, or any certificate, document
or other instrument delivered by the parties in connection herewith, shall
expire and none of the parties hereto shall be under any liability whatsoever
with respect to any such representation or warranty; provided, however, that
notwithstanding the foregoing, each party shall, subject to Section 9.2.2, be
and remain liable to the other in the event that the failure so to close
hereunder shall occur as a consequence of the failure of a party to fully
perform its covenants and agreements hereunder or the material breach by a party
of its representations or warranties contained herein.
9.2.2 In the event of any termination of this Agreement
prior to the Closing, the Stockholders shall not have any personal liability to
Holdings arising under this Agreement except to the extent of a fraudulent
misrepresentation or intentional tort by the Stockholders.
9.2.3 In the event of any termination of this Agreement
prior to the Closing, Holdings' obligations under Section 5.5 and the parties'
obligations of confidentiality under Sections 5.4(b) and 10.1 of this Agreement
and any other confidentiality agreement between the parties shall survive such
termination.
Article 10
MISCELLANEOUS
10.1 PUBLICITY. Prior to the Closing, no publicity release or
public announcement concerning this Agreement or the transactions contemplated
hereby shall be made without advance approval thereof by Envision and Holdings,
except to the extent allowed in Section 5.4(b). After the Closing no such
release or announcement may be made by the Stockholders without advance approval
thereof by Holdings, except to the extent required by law on the reasonable
advice of counsel to such party.
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<PAGE> 33
10.2 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission with confirmation retained
or sent by certified, registered or express mail, postage prepaid. Any such
notice shall be deemed given when so delivered personally, telegraphed, telexed
or sent by facsimile transmission with confirmation retained or, if mailed, two
days after the date of deposit in the United States mail, as follows:
(a) if to Holdings, Perfumania.com or EAC, to:
Envision Development Corporation
11701 N.W. 101st Road
Miami, FL 33178
Attention: William Patch, President
and Chief Operating Officer
Facsimile: (305) 889-1602
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Gary Horowitz, Esq.
Facsimile: (212) 455-2502
(b) if to Envision or the Stockholders:
Envision Development Corporation
4 Mount Royal Avenue
Marlboro, MA 01752
Attention: Richard Simon, President
Facsimile: (508) 481-1771
with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108
Attention: Marc A. Rubenstein, Esq.
Facsimile: (617) 227-4420
Any party may by notice given in accordance with this Section 10.2 to
the other parties designate another address or person for receipt of notices
hereunder.
10.3 ENTIRE AGREEMENT. This Agreement (including the Schedules),
any confidentiality agreement entered between any of the parties hereto and any
collateral agreements executed in connection with the consummation of the
transactions contemplated herein (hereinafter the "Collateral Agreements")
contain the entire agreement among the parties with respect to the purchase of
the Shares and related transactions, and supersedes all prior
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<PAGE> 34
agreements, written or oral, with respect thereto (including the executed Letter
of Intent dated January 14, 2000).
10.4 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES; PRESERVATION
OF REMEDIES. This Agreement may be amended, superseded, canceled, renewed or
extended only by a written instrument signed by Holdings, Envision, and the
holders of 66 2/3% of the outstanding shares of capital stock of Envision or, in
the case of a waiver of compliance with any terms hereof, by the party waiving
compliance which, in the case of Envision, shall mean Envision and the holders
of 66 2/3% of the outstanding shares of capital stock of Envision as of the date
hereof and in the case of the Stockholders, shall mean the holders of 66 2/3% of
the outstanding shares of capital stock of Envision as of the date hereof. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity except where
this Agreement expressly provides otherwise. The rights and remedies of any
party based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representation, warranty, covenant or agreement contained in this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is not inaccuracy or breach.
10.5 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Massachusetts exclusive of
its choice of law rules.
10.6 ENFORCEABILITY IN JURISDICTIONS; CONSENT. The parties hereto
intend to and hereby confer jurisdiction to enforce the provisions of this
Agreement, expressly including without limitation, the provisions of Section 8
hereof, upon the courts of Massachusetts and Florida. In the case of any claim
brought by Envision or the Stockholders, any legal action, suit or proceeding
arising out of or relating to such claim may be instituted against Holdings,
Perfumania.com and/or EAC in any state or federal court located in Boston,
Massachusetts and Holdings, Perfumania.com and/or EAC agree not to assert, by
way of motion, as a defense, or otherwise, in any such action, suit or
proceeding, any claim that it is not subject personally to the jurisdiction of
such courts that the action, suit or proceeding is brought in an inconvenient
forum, that the venue of the action, suit or proceeding is improper or that this
Agreement or the subject matter hereof or thereof may not be enforced in or by
such court. In the case of any claim brought by Holdings or Perfumania.com, any
legal action, suit or proceeding arising out of or relating to such claim may be
instituted against the Stockholders and/or Envision in any state or federal
court located in Miami, Florida and the Stockholders and/or Envision agree not
to assert, by way of motion, as a defense, or otherwise, in any such action,
suit or proceeding, any claim that it is not subject personally to the
jurisdiction of such courts that the action, suit or proceeding is brought in an
inconvenient forum, that the venue of the action, suit or proceeding is improper
or that this Agreement or the subject matter hereof or thereof may not be
enforced in or by such court.
33
<PAGE> 35
10.7 BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
legal representatives, except that nothing in this Agreement, express or
implied, is intended to or shall confer upon any person not a party hereto any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement. This Agreement is not assignable, and any purported assignment shall
be void, except by operation of law or by Holdings to any of its affiliates.
10.8 COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
10.9 EXHIBITS AND SCHEDULES. The Exhibits and Schedules are a part
of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
10.10 HEADINGS. The headings and titles in this Agreement are for
reference only, and shall not affect the interpretation of this Agreement.
10.11 SCHEDULES. With respect to the Schedules supplied by Envision
and the Stockholders to Holdings or Perfumania.com, the section numbers and
letters of such Schedules correspond to the section and subsection numbers and
letters of this Agreement to which they refer; however, disclosure made by
Envision and the Stockholders under any one section of the Schedules shall also
be applicable to any other section of the Schedules.
10.12 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 36
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
ENVISION DEVELOPMENT CORPORATION
A FLORIDA CORPORATION
By:
-------------------------------------------
William Patch
President and Chief Operating Officer
PERFUMANIA.COM
A FLORIDA CORPORATION
By:
-------------------------------------------
William Patch
President and Chief Operating Officer
ENVISION ACQUISITION CORPORATION
By:
-------------------------------------------
William Patch
President
By:
-------------------------------------------
William Patch
Treasurer
ENVISION DEVELOPMENT CORPORATION
A MASSACHUSETTS CORPORATION
By:
-------------------------------------------
Richard L. Simon
President and Chief Executive Officer
35
<PAGE> 37
By:
-------------------------------------------
Richard L. Simon
Treasurer
STOCKHOLDERS:
-----------------------------------------------
Richard L. Simon
Address: 33 Fox Run Road
Sudbury, MA 01742
-----------------------------------------------
Gary Whear
Address: 257 Loring Avenue
Salem, MA 01970
-----------------------------------------------
Leonard J. Umina
Address: 607 Sudbury Street
Marlborough, MA 01752
LMMK TRUST
By:
-------------------------------------------
Leonard J. Umina, Trustee
Address: 607 Sudbury Street
Marlborough, MA 01752
-----------------------------------------------
John Hathaway
Address: 7 Rooks Road
Westford, MA 01886
-----------------------------------------------
Christopher W. Walsh
Address: 7 Tory Lane
Northborough, MA 01732
36
<PAGE> 38
-----------------------------------------------
John Donovan, Sr.
Address: 65 Commons Drive, Apt. 609
Shrewsbury, MA 01545
-----------------------------------------------
Donald Wunschel
Address: 16 Churchill Road
Chelmsford, MA 01824
-----------------------------------------------
George Hathaway
Address: 2905 Bryer Ridge Drive
Export, PA 15632
-----------------------------------------------
Rita Hathaway
Address: 2905 Bryer Ridge Drive
Export, PA 15632
-----------------------------------------------
John Connors
Address: 3 Stonemeadow Drive
Westwood, MA 02090
-----------------------------------------------
Frederick Achille
Address: 746 Apple Court
Marco Island, FL 34145
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<PAGE> 39
SCHEDULE I
CURRENTLY ISSUED AND OUTSTANDING SHARES OF
ENVISION DEVELOPMENT CORPORATION
<TABLE>
<CAPTION>
Number of Envision
Stockholders Shares Owned
------------ ------------------
<S> <C>
Richard Simon 533,324*
Gary Whear 134,839*
Leonard J. Umina 60,338*
LMMK Trust 3,363
John Hathaway 9,867*
Christopher W. Walsh 6,734
John Donovan, Sr 1,683
Donald Wunschel 1,683
George Hathaway 6,734
Rita Hathaway 1,683
John Connors 3,367
Frederick Achille 1,683
TOTAL: 765,298
=======
</TABLE>
*Includes 6,500 shares issued on December 21, 1999.
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<PAGE> 40
SCHEDULES
Schedule I. Stockholders of Envision
Schedule 3.2.2 Options or Other Rights
Schedule 3.5 Financial Statements
Schedule 3.6 No Material Adverse Change
Schedule 3.7 Tax Matters
Schedule 3.8 Compliance with Laws
Schedule 3.9 No Breach
Schedule 3.10 Actions and Proceedings
Schedule 3.11 Material Contracts
Schedule 3.12 Real Estate
Schedule 3.14 Intangible Property
Schedule 3.15 Title to Assets; Liens
Schedule 3.17 Customers
Schedule 3.18 Employee Benefit Plans
Schedule 3.20 Insurance
Schedule 3.22 Hazardous Materials
Schedule 3.23 Bank Accounts
Schedule 6.6 Releases
Schedule 7.9 Debt of Richard L. Simon
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Article 1 THE MERGER..................................................................................2
1.1 The Merger.....................................................................................2
1.2 Effective Time.................................................................................2
1.3 Effects of the Merger..........................................................................2
1.4 Articles of Organization and Bylaws............................................................2
1.5 Directors and Officers.........................................................................2
1.6 Conversion of Stock............................................................................2
1.7 Conversion of Options..........................................................................3
1.8 Closing of Envision's Transfer Books...........................................................3
1.9 Issuance of Holdings Certificates..............................................................4
1.10 Fractional Shares..............................................................................4
1.11 No Liability...................................................................................4
1.12 Further Ownership Rights in Envision Stock.....................................................4
1.13 Lost, Stolen or Destroyed Certificates.........................................................5
Article 2 REPRESENTATIONS OF THE STOCKHOLDERS.........................................................5
2.1 SEC Filings....................................................................................5
2.2 Inquiry........................................................................................5
2.3 Unregistered Shares............................................................................5
2.4 No Distribution................................................................................5
2.5 Limited Opportunity for Resale.................................................................5
2.6 Investment Experience..........................................................................6
2.7 States of Residence............................................................................6
2.8 Affiliates.....................................................................................6
Article 3 REPRESENTATIONS AND WARRANTIES OF ENVISION AND THE STOCKHOLDERS.............................6
3.1 Organization and Qualification.................................................................6
3.2 Capitalization and Title to Shares.............................................................6
3.3 Authority to Execute and Perform Agreements....................................................7
3.4 Articles of Organization and Bylaws............................................................7
3.5 Financial Statements...........................................................................7
3.6 No Material Adverse Change.....................................................................8
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
3.7 Tax Matters....................................................................................9
3.8 Compliance with Laws..........................................................................10
3.9 No Breach.....................................................................................10
3.10 Actions and Proceedings.......................................................................11
3.11 Contracts and Other Agreements................................................................11
3.12 Real Estate...................................................................................13
3.13 Tangible Property.............................................................................13
3.14 Intangible Property...........................................................................13
3.15 Title to Assets; Liens........................................................................14
3.16 Absence of Undisclosed Liabilities............................................................14
3.17 Customers.....................................................................................14
3.18 Employee Benefit Plans........................................................................14
3.19 Employee Relations............................................................................15
3.20 Insurance.....................................................................................15
3.21 Brokerage.....................................................................................15
3.22 Hazardous Materials...........................................................................16
3.23 Bank Accounts and Powers of Attorney..........................................................16
3.24 No Misrepresentation..........................................................................16
3.25 Representations, Warranties and Covenants.....................................................16
Article 4 REPRESENTATIONS AND WARRANTIES OF HOLDINGS.................................................17
4.1 Organization..................................................................................17
4.2 Authority to Execute and Perform Agreements...................................................17
4.3 Brokerage.....................................................................................17
4.4 No Breach.....................................................................................18
4.5 Disclosure....................................................................................18
4.6 No Material Changes...........................................................................18
4.7 Issuance, Sale and Delivery of the Shares.....................................................18
4.8 Exempt Transaction............................................................................18
4.9 Actions and Proceedings.......................................................................19
Article 5 COVENANTS AND AGREEMENTS...................................................................19
5.1 Conduct of Business Until the Closing.........................................................19
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
5.2 Negative Covenants Pending Closing............................................................20
5.3 Continued Effectiveness of Representations and Warranties.....................................21
5.4 Corporate Examinations and Investigations.....................................................21
5.5 Expenses......................................................................................22
5.6 Authorization from Others.....................................................................22
5.7 Stockholders Vote; Consummation of Agreement..................................................22
5.8 Holdings Stockholder Approval.................................................................22
5.9 Further Assurances............................................................................23
5.10 Material Events...............................................................................23
5.11 Tax-Free Transaction..........................................................................23
5.12 Employment Offers to Envision Employees.......................................................23
5.13 Nomination as a Director of Holdings..........................................................24
5.14 Transfers by Envision Stockholders............................................................24
5.15 AMEX Listing Application......................................................................24
5.16 Rule 144 Requirements.........................................................................24
5.17 License to Name...............................................................................25
Article 6 CONDITIONS PRECEDENT TO THE OBLIGATION OF HOLDINGS TO CLOSE...............................25
6.1 Representations, Warranties and Covenants.....................................................25
6.2 Certificate of Clerk of Envision..............................................................26
6.3 Third Party Consents and Permits..............................................................26
6.4 Employment Agreement..........................................................................26
6.5 Litigation....................................................................................26
6.6 Releases......................................................................................26
6.7 Tax Opinion...................................................................................26
6.8 Final Approvals...............................................................................26
Article 7 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE STOCKHOLDERS AND ENVISION TO CLOSE...........27
7.1 Representations, Warranties and Covenants.....................................................27
7.2 Certificate of Secretary of Holdings..........................................................27
7.3 Certificate of Clerk of EAC...................................................................27
7.4 Litigation....................................................................................27
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
7.5 Business Since the Date of the SEC Filings....................................................28
7.6 Third Party Consents and Permits..............................................................28
7.7 Employment Agreement..........................................................................28
7.8 Election as Director..........................................................................28
7.9 Debt..........................................................................................28
7.10 Stockholder Approval..........................................................................28
7.11 Tax Opinion...................................................................................28
Article 8 INDEMNIFICATION............................................................................28
8.1 Survival......................................................................................28
8.2 Obligation of the Stockholders to Indemnify...................................................29
8.3 Limitations on Indemnification................................................................29
8.4 Notice and Defense of Claims..................................................................29
Article 9 TERMINATION OF AGREEMENT...................................................................30
9.1 Termination...................................................................................30
9.2 Effect of Termination.........................................................................31
Article 10 MISCELLANEOUS..............................................................................31
10.1 Publicity.....................................................................................31
10.2 Notices.......................................................................................32
10.3 Entire Agreement..............................................................................32
10.4 Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies....................33
10.5 Governing Law.................................................................................33
10.6 Enforceability in Jurisdictions; Consent......................................................33
10.7 Binding Effect; No Assignment.................................................................34
10.8 Counterparts..................................................................................34
10.9 Exhibits and Schedules........................................................................34
10.10 Headings......................................................................................34
10.11 Schedules.....................................................................................34
10.12 Severability..................................................................................34
</TABLE>
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