UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): October 21, 1999
RIVERSIDE GROUP, INC.
(Exact name of registrant as specified in its charter)
Florida 0-9209 59-1144172
(State of other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) number)
7800 Belfort Parkway, Jacksonville, Florida 32256
(Address of principal executive offices) (Zip Code)
904-281-2200
(Registrant's telephone number, including area code)
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Item 5. Other Events
On October 21, 1999, Imagine Investments, Inc. ("Imagine"), a Texas
based company, made an $8 million investment into Riverside's subsidiary,
Buildscape, Inc. ("Buildscape") by converting $3 million of debt into common
shares and investing an additional $5 million for Buildscape preferred shares.
In this transaction, Imagine acquired from Riverside 1,880,933 of
Buildscape's 5,000,000 outstanding shares of common stock in exchange for (i)
the cancellation of $3 million of indebtedness and (ii) 520,000 shares of
Riverside's common stock held by Imagine. The Company retained the remaining
3,119,067 outstanding shares of Buildscape's common stock. In addition,
Buildscape issued to Imagine in exchange for $5,000,000, 1,666,667 shares of
Buildscape's voting Series A Cumulative Convertible Preferred Stock with a $5
million aggregate liquidation preference. As a result of this transaction, the
outstanding shares of the Company have been reduced from 5.3 million to 4.8
million and the Company owns 47% of Buildscape on a fully converted basis.
Imagine owns 38% of the common and 100% of the preferred shares of Buildscape,
or 53% on a fully converted basis.
The Company is continuing in discussions with other potential investors
for the sale of additional shares of Buildscape preferred stock.
The transactions were approved by the Company's Board of Directors
based in part upon the opinion of its financial advisor that the transaction is
fair to the Company's shareholders from a financial point of view.
Item 7. Financial Statements and Exhibits.
(b) Pro forma financial information.
It is impracticable to provide the required financial statements at
this time. Such financial statements will be filed by amendment to
this report as soon as is reasonable possible.
(c) Exhibits.
Exhibit
Number Description of Exhibit
2.1 Agreement dated October 15, 1999 among Imagine
Investments, Inc., Riverside Group, Inc.,
Cybermax, Inc., Cybermax Tech, Inc. and
Buildscape, Inc.
2.2 Series A Cumulative Convertible Preferred Stock
Purchase Agreement dated October 15, 1999 among
Riverside Group, Inc., Buildscape, Inc. and
Imagine Investments, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RIVERSIDE GROUP, INC.
By: /s/ Catherine J. Gray
___________________________
Catherine J. Gray
Senior Vice President
Date: November 5, 1999
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AGREEMENT
BY AND AMONG
IMAGINE INVESTMENTS, INC.,
RIVERSIDE GROUP, INC., CYBERMAX, INC.,
CYBERMAX TECH, INC. AND BUILDSCAPE, INC.
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October 15, 1999
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TABLE OF CONTENTS
Section Page
1. Certain Transaction to Occur Prior to or Simultaneously
with Closing.............................................................2
1.1 Assumption of Buildscape Loans..................................2
1.2 Liquidation of CMT..............................................2
1.3 Distribution to Riverside.......................................2
2. Acquisition by Imagine of Buildscape Common...............................2
2.1 Exercise of Options.............................................2
2.2 Exchange........................................................2
2.3 Calculation of Number of Riverside Shares.......................3
2.4 Option to Pay Cash for Buildscape Shares........................3
3. Closing .............................................................3
4. Representations and Warranties of the Riverside Parties...................3
4.1 Authority; Consents; Enforcement; Noncontravention..............4
4.2 Ownership of Capital Stock......................................4
4.3 Corporate Status ...............................................5
4.4 Qualification in Other States...................................5
4.5 Capitalization, Stock Ownership and Rights......................5
4.6 Financial Statements............................................5
4.7 Absence of Undisclosed Liabilities.............................6
4.8 Absence of Certain Events.......................................6
4.9 Accounts Receivable.............................................8
4.10 Books of Account, Records and Minute Books.....................8
4.11 Compliance With Legal Requirements.............................9
4.12 Computer Systems; Software.....................................9
4.13 Sufficiency of Assets.........................................11
4.14 Contracts.....................................................11
4.15 Employee Benefits.............................................12
4.16 Employees ..............................................14
4.17 Environmental Matters.........................................15
4.18 Intellectual Property.........................................17
4.19 Litigation; Orders............................................18
4.20 No Agent, Finder or Broker....................................18
4.21 Similar Business Ownership....................................18
4.22 Taxes; Tax Returns; Tax Elections.............................18
4.23 Title to Properties...........................................19
4.24 Completeness of Statement; Effect of Representations and
Warranties....................................................19
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TABLE OF CONTENTS
Section Page
4.25 Securities Representations....................................20
5. Representations and Warranties of Imagine................................20
5.1 Corporate Status ..............................................20
5.2 Authority; Consents; Enforcement; Noncontravention.............20
5.3 No Agent, Finder or Broker.....................................21
5.4 Investment Intent..............................................21
5.5 Completeness of Statement; Effect of Representations and
Warranties.....................................................21
6. Covenants of the Parties.................................................21
6.1 Covenant of Imagine............................................21
6.2 Legends........................................................21
6.3 Removal of Legend and Transfer Restrictions....................22
6.4 Actions of the Parties.........................................22
6.5 Compliance With Conditions.....................................22
6.6 Rights of First Offer..........................................22
6.7 Certain Voting Provisions......................................23
6.8 Certain Remedies ..............................................24
6.9 Shared Services Agreement.......................................24
7. Conditions To Closing....................................................24
7.1 Conditions to Obligations of Imagine..........................24
7.2 Conditions to Obligations of Riverside Parties.................25
8. Termination ............................................................26
8.1 Termination of Agreement.......................................26
8.2 Effect of Termination..........................................26
9. Indemnification; Remedies................................................27
9.1 Survival; Right to Indemnification Not Affected
by Knowledge...................................................27
9.2 Indemnification By Riverside Parties...........................27
9.3 Indemnification By Imagine.....................................28
9.4 Indemnity Claims ..............................................28
9.5 No Liability of Buildscape.....................................30
9.6 Limitation on Indemnification...................................30
10. Miscellaneous Provisions................................................30
10.1 Construction ..............................................30
10.2 Entire Agreement..............................................30
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TABLE OF CONTENTS
Section Page
10.3 Exhibits and Schedules........................................31
10.4 Expenses ..............................................31
10.5 Further Assurances............................................31
10.6 Governing Law ..............................................31
10.7 Headings ..............................................31
10.8 Definition of Knowledge........................................31
10.9 Invalidity of Provisions; Severability........................32
10.10 No Public Announcement.......................................32
10.11 No Third Party Beneficiaries.................................32
10.12 Notices......................................................32
10.13 Successors and Assigns.......................................33
10.14 Time of Essence..............................................33
10.15 Waiver.......................................................33
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EXHIBITS
Exhibit Description Section
A Shared Services Agreement......................................6.9
B Opinion from Counsel for Sellers........................... 7.1(h)
SCHEDULES
Description Schedule
Articles of Incorporation and Bylaws of the Company..........................4.3
Qualification as Foreign Corporation.........................................4.4
Capitalization...............................................................4.5
Financial Statements.........................................................4.6
Absence of Undisclosed Liabilities...........................................4.7
Absence of Certain Events....................................................4.8
Receivables..................................................................4.9
Compliance with Legal Requirements..........................................4.11
Contracts...................................................................4.14
Employee Benefit Plans...................................................4.15(a)
Employee Benefit Plans Liability.........................................4.15(b)
Compliance of Benefit Plans With ERISA and Code..........................4.15(c)
Agreements With Employees...................................................4.16
Litigation..................................................................4.19
No Agent....................................................................4.20
Tax Agreements...........................................................4.22(d)
Title to Properties.........................................................4.23
Facts Relating To Representations and Warranties - Seller...................4.24
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GLOSSARY OF DEFINED TERMS
Defined Term Section
Adverse Effect...............................................................4.4
Affiliate....................................................................9.2
Agreement...................................................................10.2
August Option............................................................Recital
Benefit Plans............................................................4.15(a)
Best Efforts..............................................................4.8(t)
Breach....................................................................6.4(a)
Buildscape..........................................................Introduction
Buildscape Agreement.........................................................2.3
Buildscape Common........................................................Recital
Buildscape Loans.........................................................Recital
Buildscape Loan Agreements...............................................Recital
Buildscape Preferred ........................................................2.3
Buildscape Shares............................................................6.6
Claim.....................................................................9.4(a)
Claim Notice..............................................................9.4(a)
Cleanup............................................................4.17(d)(2)(C)
Closing........................................................................3
Closing Date...................................................................3
CM..................................................................Introduction
CMT.................................................................Introduction
Code.....................................................................4.15(a)
Compensation Plans.......................................................4.15(a)
Computers................................................................4.12(a)
Contemplated Transactions.................................................4.1(a)
Copyrights...............................................................4.18(a)
DB Plan..................................................................4.15(b)
Damages......................................................................9.1
ERISA....................................................................4.15(a)
ERISA Affiliate..........................................................4.15(a)
Encumbrances.................................................................2.1
Environment..............................................................4.17(d)
Environmental Law........................................................4.17(d)
Fairness Opinion.............................................................2.3
Financial Statements.........................................................4.6
First Offer Shares........................................................6.6(b)
GAAP.........................................................................4.6
Governmental Body.........................................................4.1(a)
Imagine.............................................................Introduction
Imagine Indemnitees..........................................................9.2
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Indemnitee................................................................9.4(a)
Indemnifying Party........................................................9.4(a)
Intellectual Property.......................................................4.18
Interim Balance Sheet........................................................4.6
Interim Period...............................................................4.6
Knowledge...................................................................10.8
Legal Requirement.........................................................4.1(b)
Liability....................................................................4.7
Liquidation of CMT...........................................................1.2
March Option.............................................................Recital
Marks....................................................................4.18(a)
Multiemployer Plans......................................................4.15(a)
Notices....................................................................10.12
Offer.....................................................................6.6(b)
Options..................................................................Recital
Optionee..................................................................6.6(b)
Option Price.................................................................2.1
Option Shares................................................................2.1
Order....................................................................4.17(d)
Ordinary Course of Business..................................................4.7
Patents..................................................................4.18(a)
Payless......................................................................2.3
PBGC.....................................................................4.15(b)
Pension Plans............................................................4.15(a)
Person....................................................................4.1(b)
Plan Sponsor.............................................................4.15(a)
Proceeding...............................................................4.15(c)
Proprietary Rights Agreement.............................................4.16(c)
Receivables..................................................................4.9
Rights in Mask Works.....................................................4.18(a)
Riverside...........................................................Introduction
Riverside Indemnitees........................................................9.3
Riverside Party or Parties...................................................2.3
Riverside Shares.............................................................2.2
Software.................................................................4.12(b)
Tax......................................................................4.22(a)
Tax Returns..............................................................4.22(a)
Third Party Claim.........................................................9.4(b)
Threatened...............................................................4.15(c)
Trade Secrets............................................................4.18(a)
Undisclosed Liabilities......................................................4.7
VEBA.....................................................................4.15(a)
Voting Agreement..........................................................6.2(c)
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Welfare Plans............................................................4.15(a)
Wickes.......................................................................2.3
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AGREEMENT
This Agreement ("Agreement") is made this 15th day of October, 1999, by and
among Imagine Investments, Inc., a Delaware corporation ("Imagine"), Riverside
Group, Inc., a Florida corporation ("Riverside"), CyberMax, Inc., a Florida
corporation ("CM"), CyberMax Tech, Inc., a Florida corporation ("CMT"), and
Buildscape, Inc., a Florida corporation ("Buildscape").
Recitals:
A. CM, CMT and Buildscape are direct or indirect wholly-owned subsidiaries
of Riverside.
B. CMT owns 5,000,000 shares of Common Stock, $.01 par value per share, of
Buildscape ("Buildscape Common") (after giving effect to a 5,000 to 1 split of
outstanding shares of Buildscape Common to be effected by Buildscape on or prior
to the Closing Date with the consent of Imagine). Pursuant to the terms of that
certain Stock Option Agreement, dated March 12, 1999, as amended by that certain
Amendment to Stock Option Agreement by and among CMT, Imagine and Buildscape,
CMT granted Imagine the right and option to acquire 1,000,000 shares of
Buildscape Common owned by CMT (collectively, the "March Option"). Additionally,
pursuant to the terms of that certain Stock Option Agreement, dated August 12,
1999, by and among CMT, Imagine and Buildscape, CMT granted Imagine the right
and option to acquire an additional 500,000 shares of Buildscape Common owned by
CMT (the "August Option") (the March Option and the August Option are
collectively referred to as the "Options").
C. Pursuant to that certain Loan Agreement, dated March 12, 1999, that
certain Amendment to Loan Agreement, dated May 20, 1999, and that certain Loan
Agreement, dated August 12, 1999, each among Imagine, Buildscape, Riverside, CM
and CMT, and all documents and agreements (including promissory notes) executed
in connection with the foregoing, and that certain Promissory Note in the
principal amount of $135,000 dated October 13, 1999, made by Buildscape to
Imagine (collectively, the "Buildscape Loan Agreements"), Imagine has loaned to
Buildscape the aggregate amount of $3,485,000 ("Buildscape Loans").
D. Imagine has heretofore invested substantial sums of money in Riverside
and Buildscape and now desires to increase its investment in Buildscape through
the transactions described in this Agreement.
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Agreement:
Now, Therefore, the parties hereby agree as follows:
1. Certain Transaction to Occur Prior to or Simultaneously with Closing.
1.1 Assumption of Buildscape Loans. Prior to the Closing (as hereafter
defined), CMT will execute such documents and agreements necessary or
appropriate, reasonably acceptable to Imagine, to assume Buildscape's
obligations arising under the Buildscape Loan Agreements with respect to payment
of $3,000,000 of the outstanding principal amount thereof.
1.2 Liquidation of CMT. Prior to the Closing, CM shall cause CMT to be
dissolved and liquidated into CM (the "Liquidation"), and in connection with
such Liquidation, CM shall acquire all of CMT's assets (including, without
limitation, the shares of Buildscape Common owned by CMT), and CM will assume
the obligations assumed by CMT under the Buildscape Loan Agreements pursuant to
Section 1.1 and CMT's obligations under the Options.
1.3 Distribution to Riverside. At or prior to the Closing, CM shall
distribute to Riverside, as a dividend on the shares of common stock of CM owned
by Riverside, 3,119,067 shares of the Buildscape Common acquired by CM in
connection with the Liquidation.
2. Acquisition by Imagine of Buildscape Common.
2.1 Exercise of Options. At the Closing, Imagine shall exercise the
March Option, in full, and the August Option with respect to 250,000 shares of
Buildscape Common, for a total of 1,250,000 shares of Buildscape Common ("Option
Shares"). The purchase price for each Option Share shall be $2.40, for a total
price for all of the Option Shares of $3,000,000 ("Option Price"). The parties
agree that the Option Price is equal to 80% of the fair market value of such
Option Shares and, solely with respect to the Option Shares, is either equal to,
or otherwise amends the provisions related to computation of, the "Option
Price," as provided in each of the agreements granting the March Option and
August Option. At the Closing, Imagine shall pay the Option Price to CM (as
successor in interest to CMT) by cancellation of $3,000,000, of the principal
amount of the Buildscape Loans, and CM shall deliver to Imagine certificates
representing the Option Shares, free and clear of all "Encumbrances" (which, for
purposes of this Agreement, means any charge, claim, condition, equitable
interest, lien, option, pledge, security interest, right of first refusal, or
restriction of any kind, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other attribute of ownership, except for
restrictions on voting and transfer expressly provided for in this Agreement).
Upon consummation of the transactions described in this Section 2.1, the August
Option shall be terminated.
2.2 Exchange. At the Closing, Imagine and CM agree that CM shall
deliver to Imagine 630,933 shares of Buildscape Common owned by CM and that, in
exchange therefor, Imagine shall deliver that number of shares of common stock,
$.10 par value per share of Riverside ("Riverside Shares") owned by Imagine as
shall be determined pursuant to Section 2.3. At the Closing, each of Imagine and
CM will deliver to the other certificates representing the shares exchanged,
duly endorsed for transfer on the books of the issuer, free and clear of all
Encumbrances. Imagine hereby consents to the transfer by CM to Riverside of such
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Riverside Shares as a dividend on the shares of common stock of CM owned by
Riverside.
2.3 Calculation of Number of Riverside Shares. Prior to the Closing,
Riverside, on behalf of itself, CM, CMT, and Buildscape (each a "Riverside
Party" and collectively, the "Riverside Parties"), shall obtain the opinion of a
respectable investment banking firm (the "Fairness Opinion") with respect to the
fairness, from a financial point of view, of the transactions described in this
Agreement and in that certain Buildscape, Inc. Series A Cumulative Convertible
Preferred Stock ("Buildscape Preferred") Purchase Agreement, of even date
herewith ("Buildscape Agreement"), by and among Riverside, Buildscape and
Imagine. Such Fairness Opinion shall, among other things, contain such
investment banking firm's opinion as to the value or range of values of the
Riverside Shares. For purposes of calculating the number of Riverside shares to
be exchanged pursuant to Section 2.2, such value (or if a range of values is
contained in the Fairness Opinion, the highest such value) shall be used to
calculate the per share value of the Riverside Shares to be exchanged for
Buildscape Common pursuant to Section 2.2, and the number of Riverside Shares to
be exchanged shall be an amount equal to $1,892,800 (i.e., 630,933 shares of
Buildscape Common at $3.00 per share, which the parties agree is the fair market
value of each Buildscape Common Share) divided by the value of each Riverside
Share; provided, however, that in the event such Fairness Opinion determines
that the value of a Riverside Share is less than $3.64, then Imagine, in its
sole discretion, may elect either (i) to terminate this Agreement, upon notice
to Riverside given within 2 days following delivery of the Fairness Opinion to
Imagine, in which event the parties will have no liability or further
obligations herein, or (ii) deliver to CM Riverside Shares and cash having an
aggregate value of $1,892,800.00.
2.4 Option to Pay Cash for Buildscape Shares. Notwithstanding the
foregoing provisions of this Section 2, in lieu of the exchange described in
Sections 2.2 and 2.3, Imagine, in its sole discretion, may elect to purchase
from CM that number (as Imagine shall elect) of the Buildscape Common shares at
a purchase price of $3.00 each. In such event, at the Closing, Imagine shall
deliver the aggregate purchase price for such purchased shares of Buildscape
Common by delivery of immediately available funds, and CM shall sell such number
of Buildscape Common shares to Imagine and deliver to Imagine certificates
therefor, duly endorsed for transfer on the books of Buildscape, free and clear
of all Encumbrances.
3. Closing. The closing ("Closing") shall take place at the offices of
Greenebaum Doll & McDonald, PLLC, 3300 National City Tower, Louisville,
Kentucky, at 10:00 a.m., local time. The Closing shall occur on October 15,
1999, or on such other date as the parties may agree, provided that the date of
Closing ("Closing Date") shall in no event be later than October 18, 1999.
4. Representations and Warranties of the Riverside Parties. The Riverside
Parties, jointly and severally, hereby represent and warrant to Imagine as
follows (provided, such representations and warranties are qualified in their
entirety by the provisions of (i) the Buildscape Agreement and the agreements
executed and delivered in connection therewith; and (ii) Buildscape Loan
Agreements):
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4.1 Authority; Consents; Enforcement; Noncontravention.
(a) Authority; Enforcement. This Agreement has been duly executed
by the Riverside Parties and constitutes the legal, valid and binding obligation
of Riverside Parties, enforceable against them in accordance with its terms.
Riverside Parties have the absolute and unrestricted corporate right, power,
authority and capacity to execute and deliver this Agreement. No Riverside Party
needs to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any "Governmental Body" (as hereafter defined) in order
to consummate the transactions contemplated by this Agreement (the "Contemplated
Transactions"), other than filings with the Florida Secretary of State and with
the Securities and Exchange Commission required by the rules and regulations
thereof in connection with the Buildscape Agreement or the Contemplated
Transactions. As used in this Agreement, "Governmental Body" means any (a)
nation, state, county, city, town, village, district, or other jurisdiction of
any nature; (b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal); (d) multi-national organization or body; or (e) body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature.
(b) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the compliance with, or the fulfillment of, the terms,
conditions and provisions hereof, will, except in such respects as would not
have a material "Adverse Effect" (as hereafter defined) on the Riverside Parties
taken as a whole or on Buildscape individually (a) violate any "Legal
Requirement" (which, as used in this Agreement, shall mean any federal, state,
local, municipal, foreign, international, multinational or other administrative
order, constitution, law, ordinance, principle of common law, regulation,
statute or treaty) applicable to any of the Riverside Parties or any provision
of their Articles of Incorporation or bylaws; or (b) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or result in
the imposition of or creation of any Encumbrance upon or with respect to any of
the assets or properties owned or used by any of the Riverside Parties; or (c)
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which any Riverside Party is a party or by which it is
bound or to which any of its assets or properties are subject; or (d) except as
set forth in Section 4.1(a) and except for any consent of Imagine required under
any agreement between Imagine and any of the Riverside Parties or their
affiliates, which consent is hereby given, require the approval, consent,
authorization or act of, or the making by any Riverside Party of any
declaration, filing or registration with, any "Person" (which, for the purposes
of this Agreement, shall mean any individual, entity, organization, labor union
or other entity or Governmental Body).
4.2 Ownership of Capital Stock. Riverside is the sole record and
beneficial owner of all the issued and outstanding capital stock of CM; CM is
the sole record and beneficial owner of all the issued and outstanding capital
stock of CMT; and, except for the Options, CMT is the sole record and beneficial
owner of all the issued and outstanding capital stock of Buildscape.
4.3 Corporate Status. Each Riverside Party is a corporation duly
incorporated and existing, and in good standing, under the laws of the State of
Florida, and has, and at all times has had, full corporate power and authority
to own and lease its properties as such properties are now owned and leased and
to conduct its business as and where such business has and is now being
conducted. Setforth on Schedule 4.3 are true and complete copies of the
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Articles of Incorporation and Bylaws of each Riverside Party, as amended to the
date hereof.
4.4 Qualification in Other States. Neither the nature of the business
of, nor the character and location of the properties owned or leased by,
Buildscape makes qualification of it as a foreign corporation necessary under
the laws of any jurisdiction other than as set forth on Schedule 4.4, which are
the only jurisdictions in which the character of its properties or the nature of
its business requires qualification, or, if not qualified, the failure to so
qualify would not have an a material "Adverse Effect" (as defined below in this
Section 4.4), other than the obligation to pay nominal filing fees and penalties
in order to be qualified therein. As used in this Agreement, the term "Adverse
Effect" shall mean, with respect to any Riverside Party, any adverse change,
circumstance or effect that, individually or in the aggregate with all other
adverse changes, circumstances and effects, is or is reasonably likely to be
adverse to the business, operations, assets, liabilities (including contingent
liabilities), properties, financial condition, results of operations or
prospects of such Riverside Party and no event has occurred or circumstance
exists that may result in such an adverse change, circumstance or effect.
4.5 Capitalization, Stock Ownership and Rights.
(a) Capitalization. Schedule 4.5(a) sets forth the authorized
capital stock of Buildscape as of the Closing Date.
(b) No Outstanding Rights. There are no, nor is there any
agreement, commitment or arrangement not yet fully performed which would result
in any, outstanding agreements, arrangements, subscriptions, options, warrants,
calls, rights or other commitments of any character relating to the issuance,
sale, purchase or redemption of any capital stock of Buildscape (except for (i)
options for 926,100 shares of Buildscape Common issued pursuant to Buildscape's
employee Stock Option Plan, (ii) shares of Buildscape Common issuable to Mozart,
Inc. pursuant to the Agreement dated May 21, 1999 between Mozart, Inc. and The
Riverside Group, and (iii) the transactions contemplated by the Buildscape
Agreement).
4.6 Financial Statements. Schedule 4.6 contains Buildscape's unaudited
balance sheet and statement of income, change in stockholders' equity and cash
flow for the year ended December 31, 1998, and Buildscape's unaudited balance
sheet ("Interim Balance Sheet") and statement of income, change in stockholders'
equity and cash flow for the eight months ended August 31, 1999 (the "Interim
Period"), (collectively the "Financial Statements.") The Financial Statements
represent actual, bona fide transactions, and were prepared in accordance with
"GAAP," (which, for purposes of this Agreement, means generally accepted United
States accounting principles, applied on a basis consistent with the basis on
which all of the financial statements referred to herein were prepared), present
fairly the financial condition of Buildscape as of the respective dates of the
Financial Statements, and the results of operations, changes in stockholders'
equity and cash flows of Buildscape for such periods, are consistent with the
books and records of each of Buildscape, and do not contain any items of special
or nonrecurring nature, provided the Financial Statements for the Interim Period
are subject to normal year-end adjustments, which shall not be material,
individually or in the aggregate, and the Financial Statements lack footnotes
and other presentation items (that, if presented, would not differ materially
from those included in the balance sheets contained therein).
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No financial statement of any Person other than the other Riverside Parties is
required by GAAP to be included in the Financial Statements of Buildscape.
4.7 Absence of Undisclosed Liabilities. Buildscape has no material
debts, obligations or liabilities of any nature, whether known or unknown,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, whether matured or unmatured, whether asserted or unasserted
and whether due or to become due (collectively, "Liability"), except as shown
(and in the amounts shown) on the face of the Interim Balance Sheet or as shown
on Schedule 4.7. From the date of the Interim Balance Sheet to the date hereof,
except as shown on Schedule 4.7, Buildscape has not incurred or become subject
to any material Liability, other than Liabilities incurred in the "Ordinary
Course of Business" (as defined below in this Section 4.7) all of which have
been paid in full in the Ordinary Course of Business or are reflected on their
regular books of account and none of which (a) is inconsistent with the
representations, warranties and covenants of the Riverside Parties contained
herein or with any other provisions of this Agreement or (b) has or may be
expected to have a material Adverse Effect. Any Liabilities not disclosed
pursuant to this Section 4.7 are referred to as "Undisclosed Liabilities." As
used in this Agreement, the term "Ordinary Course of Business" shall mean an
action which is consistent with the past practices Buildscape and is taken in
the ordinary course of its normal day-to-day operations, is not required to be
authorized by the board of directors of Buildscape and is similar in nature and
magnitude to actions customarily taken, without any authorization by the board
of directors of a corporation in the ordinary course of the normal day-to-day
operations of other businesses that are in the same line of business as
Buildscape.
4.8 Absence of Certain Events. Since August 31, 1999, Buildscape has
not, except as set forth on Schedule 4.8 or as contemplated by this Agreement:
(a) issued, sold, purchased or redeemed any stock, bonds,
debentures, notes or other corporate securities, or issued, sold or granted any
option, warrant or right to acquire any thereof;
(b) waived or released any debts, claims, rights of value or
suffered any extraordinary loss or written down the value of any inventories or
other assets or written down or off any receivable in excess of $10,000;
(c) made any capital expenditures or capital commitments in excess
of $7,500 for any single one or series of related transactions or in excess of
$50,000 in the aggregate;
(d) made any change in the business or operations or the manner of
conducting its business or operations, other than changes in the Ordinary Course
of Business, none of which has, and which in the aggregate have not had, a
material Adverse Effect;
(e) suffered any casualty, damage, destruction or loss to any of
its properties in excess of $5,000 for any one event or in excess of $15,000 in
the aggregate;
(f) declared, set aside or paid any dividends or distributions in
respect of shares of its capital stock;
(g) paid or obligated itself to pay any bonuses or extraordinary
compensation to, or mad eany increase (except increases in the Ordinary Course
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of Business) in the compensation payable (or to become payable by it) to, any of
its directors, officers, employees, agents or other representatives;
(h) terminated or amended or suffered the termination or amendment
of any material contract, lease, agreement, license or other instrument to which
it is or was a party;
(i) adopted, modified or amended any plan or agreement listed on
Schedule 4.15 so as to increase the benefits due its employees under any such
plan or agreement;
(j) made any loan or advance to any Person (except a normal travel
or other reasonable expense advance to its officers and employees);
(k) suffered a material Adverse Effect;
(l) subjected any of its assets or properties to any Encumbrances
or to any other similar charge of any nature whatsoever;
(m) paid any funds to any of its officers or directors, or to any
family member of any of them, or any Person in which any of the foregoing have
any direct or indirect interest, except for the payment of installments of
annual salaries and the bonuses accrued at June 30, 1999, and except for
advances and reimbursements for travel and other expenses incurred in the
Ordinary Course of Business.
(n) disposed of or encumbered, or agreed to dispose of or
encumber, any of its properties or assets other than in the Ordinary Course of
Business, consistent with past practices;
(o) entered into any transactions other than in the Ordinary
Course of Business;
(p) made any change in accounting principles, methods or
practices;
(q) entered into any agreement, contract, lease or license (or
series of related agreements, contracts, leases or licenses) not listed on
Schedule 4.14 hereto either involving more than $50,000 or made outside the
Ordinary Course of Business;
(r) been a party to any other occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business; or
(s) entered into any agreement or commitment (whether or not in
writing) to do any of the above;
and Buildscape has:
(t) used its "Best Efforts" (as hereafter defined) to preserve its
business and organization, and to keep available, without entering into any
binding agreement, the services of its employees, and to preserve the goodwill
of its customers and others having business relationships with it (as used in
this Agreement, the term "Best Efforts" shall be the efforts that a prudent
Person desirous of achieving a result would use in similar circumstances to
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ensure that such result is achieved as expeditiously as possible; provided,
however, that an obligation to use Best Efforts under any agreement does not
require the Person subject to that obligation to take actions that would result
in a materially adverse change in the benefits to such Person of such agreement
and the transactions described therein); and
(u) continued its business and maintained its operations and
equipment, books of account, records and files in the Ordinary Course of
Business.
4.9 Accounts Receivable. All accounts receivable of Buildscape
reflected in its Interim Balance Sheet or on its accounting records (the
"Receivables") represent (a) valid and bona fide obligations arising from sales
actually made or services actually rendered by Buildscape in the Ordinary Course
of Business and (b) are correct as to amount, legally enforceable according to
their terms and (c) have no right of defense, counter claims or set-off against
them. Unless paid prior to the Closing Date, such Receivables are or will be as
of the Closing Date current and collectible net of the respective reserves shown
on the Interim Balance Sheet or on the accounting records of Buildscape as of
the Closing Date (which reserves are adequate and calculated consistent with
past practice and, in the case of the reserve as of the Closing Date, will not
represent a greater percentage of the Receivables as of the Closing Date than
the reserve reflected therein and will not represent a material adverse change
in the composition of such Receivables in terms of aging).
4.10 Books of Account, Records and Minute Books. Prior to the execution
of this Agreement, Buildscape made available to Imagine for its examination the
books of account, records and minute books of Buildscape. Such books of account
and records are true and complete in all material respects, have been maintained
in accordance with sound business practices and the requisite requirements of
section 13(b)(2) of the Securities Exchange Act of 1934, as amended (regardless
of whether Buildscape is subject to such section) including the maintenance of
an adequate system of internal controls. The minute books of Buildscape contain
accurate and complete records of all meetings held of, and corporate action
taken by, the stockholders, the board of directors and the committees of the
board of directors of Buildscape, and no meeting of any such stockholders, board
of directors or committee has been held for which minutes have not been prepared
and are not contained in such minute books. No changes or additions to such
books and records of Buildscape have been made from the date such books and
records were first made available to Imagine and nothing which should be set
forth in said books and records, if prepared in the usual and customary manner
of Buildscape, has occurred from the date such books and records were first made
available to Imagine, except for such changes, additions or events which have
been made or have occurred, as the case may be, in the Ordinary Course of
Business.
4.11 Compliance With Legal Requirements. Except as set forth in
Schedule 4.11:
(a) Buildscape is, and at all times has been, in full compliance
with each Legal Requirement that is or was applicable to it or to the conduct or
operation of its business or the ownership or use of any of its assets, except
to the extent that any non-compliance would not result in a material Adverse
Effect;
(b) no event has occurred, nor does any circumstance exist, that
(with or without notice or lapse of time) (A) may constitute or result in a
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violation by either Buildscape of, or a failure to comply with, any Legal
Requirement, or (B) may give rise to any obligation on the part of Buildscape to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature, except in such respects as would not result in a material Adverse
Effect; and
(c) Buildscape has not received any notice or other communication
(whether oral or written) from any Person regarding (A) any actual, alleged,
possible or potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible or potential obligation to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature.
4.12 Computer Systems; Software.
(a) Condition of Computers. Except in such respects as would not
result in a material Adverse Effect, all computers and computer systems owned,
leased or used by Buildscape (including software, communication links and
storage media) (collectively, "Computers"):
(1) are in full operating order and fulfill, in an efficient
manner without material downtime or errors, the purposes for which they
were acquired, established and are currently used;
(2) have adequate capacity for the present needs of
Buildscape, as applicable, and (taking into account the extent to which the
computer systems are expandable) foreseeable future needs;
(3) have adequate security, back-ups, duplication, hardware
and software support and maintenance (including emergency cover) and
trained personnel to ensure:
(A) that breaches of security, errors and breakdowns are
kept to a minimum; and
(B) that no material disruption will be caused or any
material part thereof in the event of a breach of security, error or
breakdown;
(4) are properly established and documented by written
technical descriptions and manuals so as to enable them to be used and
operated by any reasonably qualified personnel;
(5) except as described in the "Shared Services Agreement" (as
hereafter defined), are under the sole control of Buildscape, are not
shared with, used by or on behalf of or accessible by any other Person and,
except for software properly licensed, are owned by Buildscape;
(6) are not obsolete and are not likely to be in need of
replacement or material upgrading within two years after the date hereof;
and
(7) comply with and are used in accordance with all Legal
Requirements.
(b) Condition of Software. Except in such respects as would not
result in a material Adverse Effect, all software used on or stored or resident
in the Computers of Buildscape ("Software"):
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(1) performs efficiently in accordance with its specifications
and does not contain any defect or feature which may have an Adverse Effect
on its performance or the performance of any other software in the future
(providing such future software is otherwise compatible);
(2) is lawfully held and used and does not infringe the
intellectual property rights of any Person and all copies held have been
lawfully made; and
(3) as to copyrights in connection with the Software:
(A) Software written or commissioned by Buildscape is
owned exclusively by it, no other person has the rights therein or rights
to the use or copies of the Software or source codes, and complete written
listings and written copies of the source codes for the Software are in the
possession of Buildscape, as applicable; and
(B) all other Software is licensed to Buildscape on an
express or implied license which does not require any further payments, is
not terminable and which imposes no material restrictions except as to
copying on the use or transfer of the Software.
(c) Ownership of Software. No Software owned by or licensed to
Buildscape is used by or licensed or sublicensed to any other Person.
(d) Operation of Computers. No person is in a position, by virtue
of its or his rights in the Computers, to prevent or impair the proper and
efficient functioning of the Computers or to demand any payment for services
rendered (except for normal salaries and wages due Buildscape employees in the
ordinary course of business or as otherwise disclosed pursuant hereto), or to
impose any onerous condition, in order to preserve the proper and efficient
functioning of the Computers in the future. Buildscape's employees are
adequately trained to enable them to use and operate Buildscape's Computers to
the full extent of the capabilities of the Computers without material assistance
from any other Person. All Data and Records stored by electronic means are
capable of ready access through the Computers. The Contemplated Transactions
will not cause any license agreements referred to in this Section 4.12 to be
terminated or the terms varied or any rates or royalties payable to be
increased.
(e) Year 2000. All Software owned, leased or licensed to
Buildscape, presently used or proposed to be used in its business, will, except
in such respect as would not result in a material Adverse Effect (i) accurately
process date-related information before, during and after January 1, 2000,
including accepting the date input, providing the date out-put, and performing
calculations on dates or portions of dates; (ii) function without interruption
before, during and after January 1, 2000 without any changes in operations;
(iii) respond to the word-digit date input in a way that resolves any ambiguity
as to century in a defined manner; and (iv) store and provide output date
information in ways that are unambiguous as to century.
4.13 Sufficiency of Assets. Buildscape owns or leases all buildings,
machinery, equipment, and other tangible property necessary for the conduct of
its business as presently conducted and as presently proposed to be conducted.
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4.14 Contracts. Schedule 4.14 contains a complete and accurate list of
the following types and forms of contracts and other agreements to which
Buildscape is a party:
(a) any agreement (or group of related agreements), written or
oral, for the lease of personal property to or from any Person providing for
lease payments in excess of $5,000 per annum or which may not be terminated by
Buildscape without penalty or payment on 30 days, or less, notice;
(b) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the performance
of which shall extend over a period of more than one year, or involve
consideration in excess of $5,000;
(c) any agreement concerning a partnership or limited partnership,
joint venture, limited liability company or limited liability partnership,
including any agreement with such an organization which provides for a sharing
of profits, losses, costs or liabilities with any other Person;
(d) any agreement granting a power of attorney to any Person;
(e) any agreement involving a written warranty or guaranty and any
other similar understanding with respect to contractual performance extended by
Buildscape other than in the Ordinary Course of Business;
(f) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $6,000 or under which
it has imposed an Encumbrance on any of its assets, tangible or intangible;
(g) any contract, arrangement or commitment containing covenants
by Buildscape not-to-compete in any line of business with any Person or
restricting the customers from whom, or the area in which, Buildscape may
solicit or conduct business or any contract, arrangement or commitment involving
a covenant of confidentiality;
(h) any agreement under which it has advanced or lent any amount
of money or property to any of its directors, officers, and employees outside of
the Ordinary Course of Business;
(i) any agreement under which the consequences of a default or
termination could have a material Adverse Effect; or
(j) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000.
Buildscape has delivered to Imagine a correct and complete copy of each written
agreement listed in Schedule 4.14 (as amended to the date hereof) and a written
summary setting forth the terms andconditions of each oral agreement referred to
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in Schedule 4.14. With respect to each such agreement: (A) the agreement is
legal, valid, binding, enforceable and in full force and effect; (B) the
agreement shall continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the consummation of the
Contemplated Transactions; (C) no party is in breach or default, and no event
has occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (D) no party has repudiated any provision of the agreement.
4.15 Employee Benefits.
(a) Benefit Plans. Except as set forth on Schedule 4.15(a),
Buildscape is not, nor has been, a "Plan Sponsor" (as defined in section
3(16)(B) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) or an "ERISA Affiliate" (which shall mean, with respect to
Buildscape, any other Person that, together with Buildscape, would be treated as
a single employer under section 414 of the Internal Revenue Code of 1986, as
amended ("Code")), nor has either Buildscape or an ERISA Affiliate, and neither
Buildscape nor an ERISA Affiliate does now, contribute to any "employee pension
benefit plans" ("Pension Plans") or "employee welfare benefit plans" ("Welfare
Plans") (as described in section 3(2) and (1), respectively, of ERISA), or to
any "multiemployer plan" ("Multiemployer Plans") (as defined in either section
3(37) of ERISA or section 414(f) of the Code). Except as set forth on Schedule
4.15(a), neither Buildscape nor an ERISA Affiliate has, nor has either
Buildscape or an ERISA Affiliate had at any time, any obligation, arrangement,
practice, plan or agreement to provide present or future benefits, other than
salary, as compensation for services rendered, to any of its present or former
employees, officers, directors, agents or representatives, nor any voluntary
employees' beneficiary association under section 501(c)(9) of the Code ("VEBA")
whose members include employees of either Buildscape or an ERISA Affiliate, nor
any obligation, arrangement, practice, plan or agreement providing stock
options, stock purchase, deferred compensation, severance, "fringe benefits" (as
described in section 132 of the Code), or any other employee benefits of any
nature whatsoever ("Compensation Plans"). Welfare Plans, Pension Plans and
Compensation Plans are collectively referred to as "Benefit Plans." Except as
set forth on Schedule 4.15(a), the consummation of the Contemplated Transactions
shall not result in the payment, vesting or acceleration of any benefit or right
under any Benefit Plan.
(b) Funding Method for Pension Plans. The funding method used in
each of the Pension Plans subject to Title I, Subtitle B, Part 3 of ERISA ("DB
Plan") is acceptable under ERISA, there is no accumulated funding deficiency,
whether or not waived, with respect to any DB Plan, and no event has occurred or
circumstance exists that may result in any accumulated funding deficiency as of
the last day of the current plan year of any DB Plan. All minimum funding
standards have been met, and all contributions required, under section 302 of
ERISA and section 412 of the Code, have been made. If each DB Plan identified on
Schedule 4.15(a) were terminated as of the Closing Date, it would have
sufficient assets so as to be terminated in a "standard termination" (as
described in section 4041(b) of ERISA). There is no liability for any
contributions or excise taxes due and unpaid under any Pension Plans as of the
date hereof. There is no Liability, and there are no circumstances which may
arise which would give rise to any such Liability, of Buildscape to the Pension
Benefit Guaranty Corporation ("PBGC") under Title IV of ERISA.
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(c) Compliance of Benefit Plans With ERISA and Code. Buildscape
has performed all of its obligations under all Benefit Plans and has made
appropriate entries in its financial records and statements for all Liabilities
under all Benefit Plans that have accrued but are not due. All of the Benefit
Plans and any related trust agreements or annuity contracts (or any funding
instrument) comply currently, and have complied in the past, with the provisions
of ERISA and the Code, where required in order to be a qualified plan under
section 401(a) of the Code and tax exempt under section 501 of the Code, and all
other Legal Requirements, and any applicable collective bargaining agreements.
No event has occurred or circumstance exists that will or could give rise to
disqualification or loss of tax exempt status of any such Plan or trust. Neither
Buildscape nor any Person who is a fiduciary or otherwise has a relationship to
a Benefit Plan has any liability to the Internal Revenue Service ("IRS") or the
PBGC with respect to a Benefit Plan, or any Liability under sections 502 or 4071
of ERISA. All contributions and payments made or accrued with respect to all
Benefit Plans are deductible under sections 162 or 404 of the Code. No amount,
or any asset of any Benefit Plan, is subject to tax as unrelated business
taxable income. All filings required by ERISA and the Code as to each Benefit
Plan have been timely filed, and all notices and disclosures to participants
required by either ERISA or the Code have been timely provided. Other than
routine claims for benefits submitted by participants or beneficiaries in the
ordinary course, no claim against, or "Proceeding" (as defined below in this
Section 4.15(c)) involving any Benefit Plan is pending or "Threatened" (as
defined below in this Section 4.15(c)). As used herein, the term "Proceeding"
shall mean any action, arbitration, audit, hearing, investigation, litigation or
suit (whether civil, criminal, administrative, investigative or informal)
commenced, brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator and the term "Threatened" shall mean that a
claim, Proceeding, dispute action or other matter shall have been Threatened if
any demand or statement has been made (orally or in writing) or any notice has
been given (orally or in writing), or if any other event has occurred or any
other circumstances exist, that would lead a prudent Person to conclude that
such a claim, Proceeding, dispute, action or other matter is likely to be
asserted, commenced, taken or otherwise pursued in the future.
(d) Post-Retirement Benefits. Buildscape does not provide health
or welfare benefits for any retired or former employee nor is it obligated to
provide any health or welfare benefits to any active employee following such
employee's retirement or other termination of service.
(e) Administration and Cost of Plans. Each of the Welfare Plans
and Pension Plans has been administered in compliance with the requirements of
the Code and ERISA and all reports required by any governmental agency with
respect to each such Plan have been timely filed, except as identified on
Schedule 4.15(c). No statement, either written or oral, has been made to any
Person with regard to any Benefit Plan that was not in accordance with the
Benefit Plan. Each Benefit Plan, other than a DB Plan, can be terminated within
30 days without payment of any additional contribution or amount and without the
vesting or acceleration of any benefits promised by such Plan. No event has
occurred or circumstance exists that could result in a material increase in
premium costs of Benefit Plans that are insured, or a material increase in
benefit costs of such Plans that are self-insured.
(f) No Prohibited Transactions. Neither Buildscape nor any of its
directors, officers or employees who are fiduciaries, nor any other fiduciary of
any of the Pension Plans or Welfare Plans, has engaged in any transaction in
violation of section 406 of ERISA (for which no exemption exists under section
408 of ERISA) or any "prohibited transaction" (as defined in section 4975(c)(1)
of the Code) for which no exemption exists under sections 4975(c)(2) or 4975(d)
of the Code.
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4.16 Employees.
(a) Compensation. Buildscape has not, because of past practices or
previous commit ments with respect to its officers or employees, established any
rights or expectations on the part of such officers or employees to receive
additional compensation inconsistent with past practices with respect to any
period after the date hereof, other than their present salaries, except as set
forth on Schedule 4.16.
(b) Agreements With Employees. Except as described in Schedule
4.16, Buildscape is not a party to or bound by any oral or written:
(1) employee collective bargaining agreement, employment
agreement (other than employment agreements terminable without premium or
penalty on notice of 30 days or less under which the only monetary
obligation is to make current wage or salary payments and provide current
employee benefits), consulting, advisory or service agreement, deferred
compensation agreement, confidentiality agreement or covenant not to
compete; or
(2) contract or agreement with any agent, officer or employee
(other than employment agreements disclosed in response to clause (1) or
excluded from the scope of clause (1)).
(c) Confidentiality and Noncompetition Agreements. No officer,
employee or director of Buildscape is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such officer, employee or director and any
other Person ("Proprietary Rights Agreement") that in any way adversely affects
or will affect (1) the performance of his or her duties as an officer, employee
or director of Buildscape, or (ii) the ability of Buildscape to conduct its
business.
4.17 Environmental Matters.
(a) Compliance with Environmental Laws. Buildscape is, and at all
times has been, in full compliance with, and has not been and is not in
violation of or liable under, any "Environmental Law" (as defined in Section
4.17(d)). Buildscape has no basis to expect, nor has it or any other Person for
whose conduct it is or may be held to be responsible received, any actual or
Threatened "Order" (as defined in Section 4.17(d)), notice, or other
communication from any Person, of any actual or potential violation or failure
to comply with any Environmental Law, or of any actual or Threatened obligation
to undertake or bear the cost of any "Environmental, Health, and Safety
Liabilities" (as defined in Section 4.17(d)).
(b) No Claims. There are no pending or Threatened claims,
Encumbrances, or other restrictions of any nature, resulting from any
Environmental, Health, and Safety Liabilities or arising under or pursuant to
any Environmental Law, with respect to or affecting any of the properties and
assets (whether real, personal, or mixed) in which Buildscape has or had an
interest.
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(c) No Environmental Liabilities. Neither Buildscape, nor any
other Person for whose conduct it is or may be held responsible, has any
Environmental, Health, and Safety Liabilities with respect to any properties and
assets (whether real, personal, or mixed) in which Buildscape (or any
predecessor) has or had an interest.
(d) Environmental Definitions. The following terms pertaining to
environmental matters shall have the meaning set forth below:
(1) Environment. Soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life, and
any other environmental medium or natural resource.
(2) Environmental, Health, and Safety Liabilities. Any cost,
damages, expense, liability, obligation, or other responsibility arising
from or under Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:
(A) any environmental, health, or safety matters or
conditions (including on-site or off-site contamination, occupational
safety and health, and regulation of chemical substances or products);
(B) fines, penalties, judgments, awards, settlements,
legal or administrative Proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses arising
under Environmental Law or Occupational Safety and Health Law;
(C) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other
remediation or response actions ("Cleanup") required by applicable
Environmental Law or Occupational Safety and Health Law (whether or not
such Cleanup has been required or requested by any Governmental Body or any
other Person) and for any natural resource damages; or
(D) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety
and Health Law.
(3) Environmental Law. Any Legal Requirement that requires
or relates to:
(A) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous substances
or materials, violations of discharge limits, or other prohibitions and of
the commencements of activities, such as resource extraction or
construction, that could have significant impact on the Environment;
(B) preventing or reducing to acceptable levels the
release of pollutants or hazardous substances or materials into the
Environment;
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(C) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(D) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to human
health or the Environment when used or disposed of;
(E) protecting resources, species, or ecological
amenities;
(F) reducing to acceptable levels the risks inherent in
the transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(G) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up or
prevention; or
(H) making responsible parties pay private parties, or
groups of them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to recover
for injuries done to public assets.
(4) Occupational Safety and Health Law. Any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether
governmental or private (including those promulgated or sponsored by
industry associations and insurance companies), designed to provide safe
and healthful working conditions.
(5) Order. Any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other Governmental Body or by any
arbitrator.
4.18 Intellectual Property.
(a) Definition of Intellectual Property. The term "Intellectual
Property" as used in this Agreement shall mean and include all of the following:
(1) the name "Buildscape," registered and unregistered
trademarks, service marks, domain names and applications (collectively,"Marks");
(2) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents"); (3) all copyrights
in both published worksand unpublished works (collectively, "Copyrights"); (4)
all rights in mask works (collectively, "Rights in Mask Works"); and (5) all
know-how, trade secrets, confidential information, customer lists, software,
technical information, data, process technology, plans, drawings, and blue
prints (collectively, "Trade Secrets").
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(b) Ownership of Intellectual Property. Buildscape owns or has the
right to use all of the Intellectual Property necessary for the operation of its
business as currently conducted and proposed to be conducted. Buildscape owns
all right, title, and interest in and to all of its Intellectual Property, free
and clear of all liens, security interests, charges, encumbrances, equities, and
other adverse claims, and has the right to use all of such Intellectual Property
without payment to a third party.
(c) No Infringement; Royalties. To the "Knowledge" (as defined in
Section 10.8) of the Riverside Parties, the use by Buildscape of its
Intellectual Property does not infringe upon proprietary rights of any other
Person, and Buildscape is not aware of any infringement by any other Person with
respect to either Buildscape's Intellectual Property rights. Except as set forth
on Schedule 4.14 hereto, no royalties are paid by or to Buildscape with respect
to its Intellectual Property.
(d) Employee Agreements. All current employees of Buildscape have
executed written agreements that assign to Buildscape, all rights to any
inventions, improvements, discoveries, or information relating to their
respective businesses.
4.19 Litigation; Orders.
(a) Proceedings. There is no Proceeding pending or, to the
Knowledge of the Riverside Parties, Threatened, against or relating to
Buildscape or its property or assets. None of the Riverside Parties knows or
have any reasonable grounds to know of any basis or alleged basis for any such
Proceedings or of any governmental investigation relative to Buildscape or its
property or assets, and no event has occurred, nor does any circumstance exist
that may give rise to or serve as a basis for the commencement of any such
Proceedings. Buildscape is in full compliance with all its contracts and all
Legal Requirements and Orders applicable to it.
(b) Orders. There is no "Governmental Order" (as defined at the
end of this Section 4.19(b)) to which Buildscape, or any of its assets is
subject; none of the Riverside Parties is subject to any Governmental Order that
relates to the business of, or any of the assets owned or used by, Buildscape;
and no officer, director, agent, or employee of Buildscape is subject to any
Governmental Order that prohibits such officer, director, agent, or employee
from engaging in or continuing any conduct, activity, or practice relating to
the business of Buildscape. As used in this Agreement, the term "Governmental
Order" shall mean any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
4.20 No Agent, Finder or Broker. Except as set forth on Schedule 4.20, none of
the Riverside Parties has any Liability or obligation, contingent or otherwise,
to pay any fees or commissions to any agent, broker or finder with respect to
the Contemplated Transactions.
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4.21 Similar Business Ownership. None of the Riverside Parties, nor, to
the knowledge of the Riverside Parties, any of their officers or directors, nor
any family member of any of them, owns, directly or indirectly, any interest in,
or is an officer, director or principal of, any corporation, partnership,
proprietorship, association or other entity (other than the Riverside Parties or
Wickes, Inc.) which is engaged in a business similar to that of Buildscape,
which has conducted any business of any type whatsoever with Buildscape, or
which is a party to any contract or agreement to which Buildscape is a party or
to which it may be bound.
4.22 Taxes; Tax Returns; Tax Elections.
(a) Definition of Tax and Tax Return. The term "Tax" as used
herein shall mean any taxes, however denominated, including income tax, capital
gains tax, value-added tax, sales tax, property tax, gift tax, estate tax,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, sales, use, transfer, registration, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever and any related
charge or amount (including any fine, penalty, interest or addition to tax),
imposed, assessed or collected by or under the authority of any Governmental
Body or payable pursuant to any tax-sharing agreement or any other arrangement
relating to the sharing or payment of any such tax, levy, assessment, tariff,
duty, deficiency or fee, including any interest, penalty, or addition thereto,
whether disputed or not. The term "Tax Returns" as used herein shall mean any
return (including any information return), report, declaration of estimated
Taxes, statement, schedule, notice, form, or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
(b) Tax Returns. Buildscape has prepared, signed and filed all Tax
Returns required to be filed prior to the date hereof. All Tax Returns were
correct and complete in all material respects, and all Taxes or installments
thereof of every kind and nature whatsoever which were due and owing on Tax
Returns or which were or are otherwise due and owing under all applicable laws
and regulations for any periods for which Tax Returns were due, whether or not
reflected on the Tax Returns, were timely paid. The provisions for Taxes in the
Interim Balance Sheet of Buildscape are sufficient for the payment of all Taxes
attributable to all periods ended on or before June 30, 1999, and adequate
accruals have been made for all liabilities for Taxes accruing since June 30,
1999. There are no Proceedings, investigations or claims now pending, nor, to
the Knowledge of the Riverside Parties, proposed against Buildscape, nor are
there any matters under discussion with the Internal Revenue Service, or other
governmental authority, relating to any Taxes or assessments, or any claims or
deficiencies with respect thereto.
(c) Withholdings. Buildscape has withheld proper and accurate
amounts from its employees in full and complete compliance with the tax
withholding provisions of the Code and other applicable Legal Requirements, and
has filed proper and accurate federal, foreign, state and local Tax Returns and
reports for all years and periods (and portions thereof) for which any Tax
Returns were due with respect to employee income, income tax withholding,
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withholding taxes, social securitytaxes and unemployment taxes. All payments due
on account of employee tax withholdings, including income tax withholdings,
social security taxes or unemployment taxes in respect to years and periods (and
portions thereof) ended on or prior to the date hereof were paid prior to such
date on or before their due date.
(d) Tax Agreements. Except as set forth on Schedule 4.22(d),
Buildscape is not, nor has it ever been, a party to any tax allocation or
sharing agreement; has not been a member of an affiliated group filing a
consolidated federal income tax return; or has (or will have following the
Closing) any liability for the Taxes of any corporation or other entity
(including any other of the Riverside Parties), including, without limitation,
liability for Taxes under Treas. Reg. ss.1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or
otherwise.
4.23 Title to Properties. Except as set forth on Schedule 4.23,
Buildscape has good and marketable title to all of its properties, interests in
properties and assets, tangible and intangible, owned or used by it in its
business (excluding leased properties), all such properties, interest in
properties and assets are free and clear of all Encumbrances, except the lien
for current ad valorem taxes not yet due and payable and except for such
Encumbrances as would not have a material Adverse Effect on Buildscape or
adversely affect Buildscape's use of such properties and interests.
4.24 Completeness of Statement; Effect of Representations and
Warranties. No representation or warranty of the Riverside Parties in this
Agreement contains any untrue statement of a material fact, omits any material
fact necessary to make such representation or warranty, under the circumstances
which it was made, not misleading, or contains any misstatement of a material
fact. All representations and warranties contained in Section 4 are correct and
complete as of the date hereof and shall be correct and complete as of the
Closing Date as though made then with the Closing Date being substituted for the
date hereof throughout this Section 4. Nothing in the Schedules shall be deemed
adequate to disclose an exception to a representation or warranty made in this
Agreement, unless the Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
excep tion to a representation or warranty made in this Agreement (unless the
representation or warranty has to do with the existence of the document or other
item itself). All of the representations and warranties made by the Riverside
Parties are made with the knowledge, expectation, understanding and desire that
Buyer place complete reliance thereon.
4.25 Securities Representations. All outstanding shares of Buildscape
Common are (and upon the transfer to Imagine of shares of Buildscape Common
pursuant to the provisions of Section 2.1, they will be), free and clear of all
Encumbrances and have been validly issued and are fully paid and nonassessable.
5. Representations and Warranties of Imagine. Imagine hereby represents and
warrants to the Riverside Parties as follows:
5.1 Corporate Status. Imagine is a corporation duly incorporated and
existing, and is in good standing under the laws of the State of Delaware.
Imagine has full corporate power and authority to own and lease its properties
as such properties are now owned and leased and to conduct its business as and
where such businesses have and are now being conducted.
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5.2 Authority; Consents; Enforcement; Noncontravention.
(a) Authority of Imagine. This Agreement constitutes the legal,
valid and binding obligation of Imagine, enforceable against Imagine in
accordance with its terms. Imagine has the absolute and unrestricted corporate
right, power, authority, and capacity to execute and deliver this Agreement and
to perform its obligations under this Agreement. Imagine does not need to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any Governmental Body in order to consummate the Contemplated
Transactions.
(b) Enforcement. This Agreement has been duly executed and
delivered by Imagine and constitutes the legal, valid and binding obligation of
Imagine, enforceable in accordance with its terms.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the compliance with, or the fulfillment of, the terms,
conditions and provisions hereof or thereof, will (a) violate any Legal
Requirement of Imagine, any provision of its certificate of incorporation or
bylaws; or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Imagine is a party or by which it is
bound or to which any of its assets or properties are subject; or (d) require
the approval, consent, authorization or act of, or the making by Imagine of any
declaration, filing or registration with, any Person.
5.3 No Agent, Finder or Broker. Imagine has no Liability or obligation,
contingent or otherwise, to pay any fees or commissions to any agent, broker or
finder with respect to the Contemplated Transactions.
5.4 Investment Intent. Imagine is acquiring the shares of Buildscape
Common solely for its own account for investment purposes, and not with a view
to the public distribution thereof.
5.5 Completeness of Statement; Effect of Representations and
Warranties. The representations and warranties of Imagine contained in this
Section 5.5 are true and complete in all respects as of the date hereof. No
representation or warranty of Imagine in this Agreement contains any untrue
statement of a material fact, omits any material fact necessary to make such
representation or warranty, under the circumstances which it was made, not
misleading, or contains any misstate ment of a material fact. All of the
representations and warranties made by Imagine are made with the knowledge,
expectation, understanding and desire that the Riverside Parties place complete
reliance thereon.
6. Covenants of the Parties.
6.1 Covenant of Imagine. Imagine hereby covenants that it will not
dispose of any of the Buildscape Common (other than in conjunction with an
effective registration statement for the Buildscape Common under the Securities
Act, in compliance with Rule 144 promulgated under the Securities Act or in
compliance with another exemption from applicable securities laws, as reasonably
determined by counsel to the Company) unless and until Imagine shall have
furnished Buildscape with an opinion of counsel (satisfactory to counsel for
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Buildscape) to the effect that (i) such disposition will not require
registration under the Securities Act and (ii) appropriate action necessary for
compliance with the Securities Act and other applicable state, local or foreign
law has been taken.
6.2 Legends. Each certificate representing shares of Buildscape Common
shall be endorsed with the following legends:
(a) Federal Legend.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144
PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR
OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN
CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SHARES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii)
PURSUANT TO AN OPINION OF COUNSEL, THAT SUCH REGISTRATION OR
COMPLIANCE IS NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION.
(b) Other Legends. Any other legends required by applicable state
blue sky laws.
(c) Voting Agreement. Certificates of shares of Buildscape Common
to be distributed to Riverside pursuant to the provisions of Section 1.3 shall
contain a legend to the effect that voting of the shares represented by such
certificate or certificates is subject to the Voting Agreement contained in
Section 6.7 ("Voting Agreement").
6.3 Removal of Legend and Transfer Restrictions. Any legend endorsed on
a certificate pursuant to Section 6.2(a) or 6.2(b) and the stop transfer
instructions with respect to such legended certificate shall be removed, and
Buildscape shall issue a certificate without such legend to the holder of such
certificate if such shares of Buildscape Common are registered under the
Securities Act and a prospectus meeting the requirements of Section 10 of the
Securities Act is available or if such holder satisfies the requirements of Rule
144(k).
6.4 Actions of the Parties.
(a) No Actions Constituting a Breach. From the date hereof through
the Closing Date, neither Imagine nor any of the Riverside Parties will take or
knowingly permit to be done anything which would constitute a "Breach" (as
defined in Section 9.2 of this Agreement) and each of the parties hereto shall
cause the deliveries for which such party is responsible at the Closing to be
duly and timely made.
6.5 Compliance With Conditions. Each party hereto agrees to cooperate
fully with each other party, and shall use its reasonable best efforts to cause
the conditions precedent for which such party is responsible to be fulfilled.
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Each party hereto further agrees to use its reasonable best efforts, and act in
good faith, to consummate this Agreement and the Contemplated Transactions as
promptly as possible.
6.6 Rights of First Offer.
(a) Restrictions on Transfer. Until the occurrence of the closing
of an underwritten public offering pursuant to an effective registration
statement under the Securities Act covering the offering and sale to the public
of Buildscape Common on behalf of Buildscape ("IPO"), neither Imagine nor
Riverside (each a "Transferor") shall transfer any of its shares of Buildscape
Common or Buildscape Preferred (the "Buildscape Shares"), except as provided by
the terms of this Section 6.6. For purposes of this Agreement, the term
"transfer" shall mean any voluntary sale, transfer, assignment, gift,
Encumbrance and all other kinds of voluntary transfers.
(b) Transfer Offer. If a Transferor desires to transfer any of its
Buildscape Shares, it shall first offer ("Offer") to transfer such shares to the
other ("Optionee"). The Offer shall contain the terms and conditions upon which
the Transferor desires to transfer such First Offer Shares, including the number
of Buildscape Shares to be transferred ("First Offer Shares") and the purchase
price therefor.
(c) Option of Optionee. For 21 days following receipt of the
Offer, the Optionee shall have the option to purchase all of the First Offer
Shares that the Transferor desires to transfer at the purchase price and other
terms and conditions set forth in the Offer. If the Optionee desires to purchase
such First Offer Shares, it shall give notice to the Transferor within such
21-day period.
(d) Right to Transfer. The Optionee shall have the right to
purchase all, and not less than all, of the First Offer Shares. If the Optionee
fails to accept the Offer in full within 21 days after receipt of the Offer,
then the Transferor shall thereafter be free to transfer the First Offer Shares
on such terms and conditions as it may elect, provided that the purchase price
at which the Transferor subsequently transfers the First Offer Shares shall not
be less than the price contained in the Offer.
(e) Exceptions. Notwithstanding the foregoing provisions of this
Section 6.6, each of Imagine and Riverside may pledge any of its Buildscape
Shares as collateral security, or otherwise transfer its Buildscape Shares to
its respective Affiliates, so long as the pledgee and Affiliate, as the case may
be, (i) agree to be bound by the provisions of the Voting Agreement, and (ii)
agree that any subsequent transfers of Buildscape Shares are subject to the
foregoing provisions of this Section 6.6.
6.7 Certain Voting Provisions. As a material inducement and as a
condition for Imagine to enter into and perform this Agreement, Riverside hereby
agrees as follows:
(a) Voting Agreement. Following the Closing, and until the earlier
to occur of (i) the expiration of the two year period following the Closing or
(ii) the closing of an IPO (the "Term"), Riverside hereby agrees that, except as
set forth in Section 6.7(c), below, it shall vote all of its Buildscape Shares
(whether owned as of the Closing or acquired at any time thereafter during the
Term) on all matters which Riverside would otherwise be entitled to vote such
Buildscape Shares solely in conformance with the directions and instructions of
Imagine, at Imagine's sole discretion.
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(b) Grant of Proxy. In order to secure Riverside's compliance with
the covenants set forth in Section 6.7(a) above, Riverside hereby appoints
Imagine as Riverside's true and lawful attorney and proxy, with full power of
substitution for and in the name, place and stead of Riverside, to vote all of
Riverside's Buildscape Shares consistent with Riverside's agreements contained
in Section 6.7(a) above. The foregoing proxy shall be deemed coupled with an
interest and irrevocable for the Term.
(c) Change in Control. The provisions of Section 6.7(a) and 6.7(b)
shall not be applicable to (and Riverside retains all rights to vote its
Buildscape Shares with respect to) any required approval by the shareholders of
Buildscape with respect to (i) a merger or consolidation of Buildscape if
Buildscape is not the surviving corporation in such merger or consolidation (or
if it is the surviving corporation, Imagine and Buildscape do not own in the
aggregate a majority of the outstanding voting stock of such corporation on a
fully diluted basis), (ii) the sale of all or substantially all of Buildscape's
assets to another Person, (iii) any liquidation or dissolution of Buildscape, or
(iv) any other matter related to a proposal that would result in Imagine and
Riverside not owning in the aggregate a majority of the outstanding voting stock
of Buildscape on a fully diluted basis.
6.8 Certain Remedies. Without limiting any other remedy which may be
available to either Imagine or Buildscape in the event of a breach or threatened
breach by the other of the provisions of Section 6.6 or 6.7 or in the event of a
breach or threatened breach of any other provision of this Agreement, Riverside
and Imagine agree that the provisions of Section 6.6 and 6.7 may be enforced
through any equitable remedy, including specific enforcement and injunction, and
the party against whom such equitable enforcement is sought hereby waives any
claim or defense that the enforcing party has an adequate remedy at law.
6.9 Shared Services Agreement. At the Closing, Buildscape and Riverside
shall enter into a Shared Services Agreement in the form of Exhibit A attached
hereto.
7. Conditions To Closing.
7.1 Conditions to Obligations of Imagine. The obligation of Imagine to
take the actions required to be taken by Imagine at the Closing is subject to
the satisfaction at or prior to the Closing of each of the following conditions,
any one or more of which Imagine may waive in whole or in part at or prior to
the Closing:
(a) Representations True. The representations and warranties of
the Riverside Parties contained in this Agreement (considered collectively) and
each of these representations and warranties (considered individually) must have
been true and correct as of the date hereof, and must be true and correct in all
material respects on and as of the Closing Date (including those representations
and warranties which specifically speak as of the date hereof) with the same
effect as though such representations and warranties had been made and this
Agreement had been delivered on and as of the Closing Date, without giving
effect to any supplement to the Schedules.
(b) Covenants Performed. All of the covenants, agreements and
conditions of the Riverside Parties to be performed or complied with at or prior
to the Closing pursuant to the term of this Agreement must have been duly
performed and complied with in all material respects.
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(c) Necessary Consents Received. The Riverside Parties shall have
received consents, permits and waivers in form and substance reasonably
satisfactory to Imagine, necessary or appropriate for consummation of the
Contemplated Transactions.
(d) Compliance Certificate. Each of the Riverside Parties shall
have delivered to Imagine a certificate, executed on behalf of each of them by
their respective Presidents or Vice- Presidents, dated as of the Closing Date,
certifying to the fulfillment of the conditions specified in subsections (a) and
(b) of this Section 7.1.
(e) Secretary's Certificate of Buildscape. Buildscape shall have
delivered a certificate, executed on behalf of Buildscape by its Secretary,
dated as of the Closing Date, certifying the Board of Directors resolutions
approving this Agreement and the Contemplated Transactions and certifying the
current versions of the Articles of Incorporation and Bylaws and the composition
of the Board of Directors of Buildscape upon Closing.
(f) Secretary's Certificate of CM. CM shall have delivered a
certificate, executed on behalf of CM by its Secretary, dated as of the Closing
Date, certifying the Board of Directors resolutions approving this Agreement and
the Contemplated Transactions.
(g) Secretary's Certificate of Riverside. Riverside shall have
delivered a certificate, executed on behalf of Riverside by its Secretary or
Assistant Secretary, dated as of the Closing Date, certifying the Board of
Directors or Executive Committee resolutions approving this Agreement and the
Contemplated Transactions.
(h) Opinion of Counsel. Imagine shall have received an opinion
from Holland & Knight LLP satisfactory in form to special counsel for Imagine,
substantially in the form attached hereto as Exhibit B.
(i) Compliance with Laws. The purchase and exchange described in
Section 1.3 and 4 hereof by Imagine shall be legally permitted by all laws and
regulations to which Imagine or CMT are subject.
(j) Fairness Opinion. The Riverside Parties shall have received
the Fairness Opinion and such Fairness Opinion shall be satisfactory to Imagine.
(k) Buildscape Agreement. All of the transactions contemplated by
the Buildscape Agreement shall have been consummated.
7.2 Conditions to Obligations of Riverside Parties. The obligation of
the Riverside Parties to take the actions required to be taken by them at the
Closing is subject to the satisfaction at or prior to the Closing of each of the
following conditions, any one or more of which the Riverside Parties may waive
in whole or in part at or prior to the Closing:
(a) Representations True. The representations and warranties of
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Imagine contained in this Agreement (considered collectively) and each of the
representations and warranties (considered individually) must have been true and
correct as of the date hereof, and must be true and correct in all material
respects on and as of the Closing Date (including those representations and
warranties which speak specifically as of the date hereof) with the same effect
as though such representations and warranties had been made and this Agreement
had been delivered on and as of the Closing Date.
(b) Covenants Performed. All of the covenants, agreements and
conditions of Imagine to be performed or complied with at or prior to the
Closing pursuant to the terms of this Agreement must have been duly performed
and complied with in all material respects.
(c) Secretary's Certificate. Imagine shall have delivered a
Certificate executed on behalf of Imagine by its Secretary or an Assistant
Secretary, dated as of the Closing Date, certifying the approval of this
Agreement by Imagine's Board of Directors.
(d) Compliance Certificate. Imagine shall have delivered to CMT a
certificate, executed by its President or a Vice President, dated as of the
Closing Date certifying as to the fulfillment of the conditions specified in
Section (a) and (b) of this Section 7.2.
(e) Fairness Opinion. The Riverside Parties shall have received
the Fairness Opinion which shall state that the Contemplated Transactions are
fair to the Riverside Parties and their shareholders from a financial point of
view.
(f) Buildscape Agreement. All of the transactions contemplated by
the Buildscape Agreement shall have been consummated.
8. Termination.
8.1 Termination of Agreement. This Agreement may, by notice given at or
prior to the Closing, be terminated as follows:
(a) Mutual Consent. The parties may terminate this Agreement by
mutual consent.
(b) Conditions Not Satisfied.
(1) Imagine may terminate this Agreement if any of the
conditions in Section 7.1 have not been satisfied as of the Closing Date or
if satisfaction of such a condition is or becomes impossible (other than
through the failure of Imagine to comply with its obligations under this
Agreement) and Imagine has not waived such condition at or prior to the
Closing.
(2) The Riverside Parties (by their unanimous vote) may
terminate this Agreement if any of the conditions in Section 7.2 have not
been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of any
of the Riverside Parties to comply with their obligations under this
Agreement) and such condition has not been waived at or prior to the
Closing.
(c) Breach by a Party. Any party may terminate this Agreement if a
material Breach of any provisions of this Agreement has been committed by
another party and such Breach has not been waived at or prior to the Closing.
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(d) Closing Did Not Timely Occur. Any party may terminate this
Agreement if the Closing has not occurred (other than through the failure of any
party seeking to terminate this Agreement to comply fully with its obligations
under this Agreement) on or before October 15, 1999, or such later date as the
parties may agree upon.
8.2 Effect of Termination. Each party's right of termination under
Section 8.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 8.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Section 10.10 will survive; provided, that if this
Agreement is terminated by a party because of the Breach of the Agreement by
another party or parties or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of another party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
9. Indemnification; Remedies.
9.1 Survival; Right to Indemnification Not Affected by Knowledge. All
representations, warranties, covenants and obligations in this Agreement, the
Schedules, the certificates delivered pursuant to Sections 7.1 and 7.2, and any
other certificate or document delivered pursuant to this Agreement will survive
the Closing, provided that the representations and warranties of the Riverside
Parties contained in Section 4 shall expire on the second anniversary of the
Closing, other than the representations and warranties contained in Sections
4.1(a) (Authority), 4.5 (Capitalization), 4.15(b) (Employee Benefit Plans), 4.17
(Environmental) and 4.22 (Taxes), which shall not expire. The right to
indemnification, payment of "Damages" (as defined in Section 9.2) or other
remedy based on such representations, warranties, covenants and obligations will
not be affected by any investigation conducted with respect to, or any Knowledge
acquired at any time, whether before or after the execution and delivery of this
Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant or obligation. The
waiver of any condition based on the accuracy of any representation or warranty,
or on the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, payment of Damages or other remedy based on
such representations, warranties, covenants and obligations.
9.2 Indemnification By Riverside Parties. Each of the Riverside
Parties, jointly and severally, shall indemnify and hold Imagine, and its
directors, officers, shareholders, Affiliates successors and assigns ("Imagine
Indemnitees") harmless for, and shall pay to the Imagine Indemnitees the amount
of, all debts, obligations, losses, claims, damages (including incidental and
consequential damages), liabilities, deficiencies, Proceedings, demands,
assessments, orders, judgments, writs, decrees, costs and other expenses
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim, of any nature
and of any kind whatsoever ("Damages"), arising, directly or indirectly, from or
in connection with:
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(a) any "Breach" (as defined below in this Section 9.2) of any
representation or warranty made by any of the Riverside Parties (without giving
effect to any supplement to the Schedules) in this Agreement;
(b) any Breach of any representation or warranty made by any of
the Riverside Parties in this Agreement as if such representation or warranty
were made on and as of the Closing Date without giving effect to any supplement
to the Schedules, other than any such Breach that is disclosed in a supplement
to the Schedules and is expressly identified in the Certificate delivered
pursuant to Section 7.1 as having caused the conditions specified in Section 7.1
not to be satisfied; or
(c) any Breach by any of the Riverside Parties of any covenant,
agreement or obligation of any of the Riverside Parties in this Agreement;
The remedies provided in this Section 9.2 shall be the exclusive remedies of
Imagine Indemnitees solely with respect to any Breaches of the representations
and warranties of the Riverside Parties contained in Section 4. As used in this
Agreement, the term "Affiliate" shall mean any Person controlled by, controlling
or under common control with such Person. For the purposes of this definition,
"control" of a Person means the power, direct or indirect, to direct or cause
the direction of the management and policies of such Person, whether by
ownership of securities, contract, law or otherwise; and the terms "controlling"
and "controlled" shall have meanings correlative to the foregoing. As used in
this Agreement, a "Breach" of a representation, warranty, covenant, obligation
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has been (x) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation or other provision, or (y) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence or circumstance.
9.3 Indemnification By Imagine. Imagine shall indemnify and hold the
Riverside Parties and their directors, officers, shareholders, Affiliates,
successors and assigns ("Riverside Indemnitees") harmless for, and will pay to
the Riverside Indemnitees the amount of, all Damages arising directly or
indirectly from or in connection with:
(a) any Breach of any representation or warranty made by Imagine
in this Agreement;
(b) any Breach of any representation or warranty made by Imagine
in this Agreement as if such representation or warranty were made on and as of
the Closing Date, other than any such Breach that is expressly identified in the
Certificate delivered pursuant to Section 7.2 as having caused the condition
specified in Section 7.2 not to be satisfied; or
(c) any Breach by Imagine of any covenant, agreement or obligation
of Imagine in this Agreement.
The remedies provided in this Section 9.3 shall be the exclusive remedies of the
Riverside Indemnitees solely with respect to Breaches of any representations and
warranties of Imagine contained in Section 5.
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9.4 Indemnity Claims.
(a) Notification of Claims. In the event that any claim ("Claim")
is hereafter asserted by a party hereto as to which such party may be entitled
to indemnification hereunder, such party ("Indemnitee") shall notify the party
required by the terms of this Agreement to indemnify the Indemnitee
("Indemnifying Party") thereof ("Claims Notice") within 30 days after (1)
receipt of "Notice" (as defined in Section 10.12) of commencement of any
third-party litigation against such Indemnitee, (2) receipt by such Indemnitee
of written notice of any third-party claim pursuant to an invoice, notice of
claim or assessment, against such Indemnitee, or (3) such Indemnitee becomes
aware of the existence of any other event in respect of which indemnification
may be sought from the Indemnifying Party. The Claims Notice shall describe the
Claim and the specific facts and circumstances in reasonable detail, shall
include a copy of the Notice referred to in (1) and (2), above, shall indicate
the amount, if known, or an estimate, if possible, of Damages that have been or
may be incurred or suffered.
(b) Defense of Third Party Claim by Indemnifying Party. The
Indemnifying Party may elect to defend or compromise any Claim by a third party
("Third Party Claim"), at its or his own expense and by its or his own counsel,
who shall be reasonably acceptable to the Indemnitee. The election by the
Indemnifying Party to defend or compromise a claim shall constitute an avowal by
the Indemnifying Party that the Indemnifying Party is obligated to indemnify the
Indemnitee with respect to such claim. The Indemnitee may participate, at its or
his own expense, in the defense of any Claim assumed by the Indemnifying Party.
Without the approval of the Indemnitee, which approval shall not be unreasonably
withheld or delayed, the Indemnifying Party shall not agree to any compromise of
a Claim defended by the Indemnifying Party which would require the Indemnitee to
perform or take any action or to refrain from performing or taking any action.
(c) Assumption of Defense by Indemnitee. Notwithstanding the
foregoing, if an Indemnitee determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its Affiliates other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnitee may, by notice to the
Indemnifying Party, assume the exclusive right to defend, compromise, or settle
such Proceeding, but the Indemnifying Party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld or
delayed).
(d) Defense of Claim by Indemnitee. If, within 30 days of the
Indemnifying Party's receipt of a Claim Notice involving a Third Party Claim,
the Indemnifying Party shall not have notified the Indemnitee of its or his
election to assume the defense, the Indemnitee shall have the right to assume
control of the defense or compromise of such Claim, and the costs and expenses
of such defense, including costs of investigation and reasonable attorneys'
fees, shall be added to the Claim. The Indemnitee shall have the right to
compromise such Claim upon Notice to, but without the consent of, the
Indemnifying Party.
(e) Cooperation of Parties. The party assuming the defense of any
Claim shall keep the other party reasonably informed at all times of the
progress and development of the party's defense of and compromise efforts with
respect to such Claim and shall furnish the other party with copies of all
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relevant pleading, correspondence and other papers. In addition, the parties to
this Agreement shall cooperate with each other, and make available to each other
and their representatives all available relevant records or other materials
required by them for their use in defending, compromising or contesting any
Claim. The failure to timely notify the Indemnifying Party of the commencement
of such actions in accordance with Section 9.4(a) shall relieve the Indemnifying
Party from the obligation to indemnify under Section 9.2 or 9.3, as the case may
be, but only to the extent the Indemnifying Party establishes by competent
evidence that it is has been materially and adversely prejudiced thereby.
9.5 No Liability of Buildscape. In the event any Imagine Indemnitee, at
its election, makes a Claim against Riverside or CM (and not against Buildscape)
for Imagine's Damages, neither Riverside nor CM shall, nor shall they be
entitled to, maintain, assert or make a claim against Buildscape, or its
directors, officers, Affiliates, successor or assigns, for contribution,
indemnity or for any other recovery.
9.6 Limitation on Indemnification. No Indemnitee shall be entitled to
indemnification for Damages pursuant to this Section 9 until such time as the
amount of such Damages incurred by such Indemnitee equals $50,000, after which
time such Indemnitee shall be entitled to indemnification for the entire amount
of such Damages incurred by such Indemnitee.
10. Miscellaneous Provisions.
10.1 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any Legal Requirement shall
be deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. Nothing in the Schedules shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless the Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the Schedules (other than an exception expressly set forth as such in the
Schedules with respect to a specifically identified representation or warranty),
the statements in the body of this Agreement will control. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The parties
intend that each representation, warranty, covenant and obligation contained
herein shall have independent significance. If any party has breached any
representation, warranty, covenant or obligation contained herein in any
respect, the fact that there exists another representation, warranty, covenant
or obligation relating to the same subject matter (regardless of the relative
levels of specificity) which the party has not breached shall not detract from
or mitigate the fact that the party is in breach of the first representation,
warranty, covenant or obligation. Unless the context clearly states otherwise,
the use of the singular or plural in this Agreement shall include the other and
the use of any gender shall include all others. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this Agreement.
Unless otherwise expressly provided, the word "including" does not limit the
preceding words or terms.
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10.2 Entire Agreement. As used herein, the term "Agreement" shall mean
this Agreement and the documents and Schedules to be delivered in connection
herewith, all written statements (including financial statements and
information) and all certificates, documents and instruments which are
identified herein as having been or to be furnished to Imagine. This Agreement
embodies the entire agreement and understanding of the parties hereto with
respect to the subject matter herein contained, and supersedes all prior
agreements, correspondence, arrangements and understandings relating to the
subject matter hereof. This Agreement may be amended, modified, superseded, or
canceled only by a written instrument signed by all of the parties hereto, and
any of the terms, provisions, and conditions hereof may be waived, only by a
written instrument signed by the waiving party.
10.3 Exhibits and Schedules. All Exhibits to this Agreement and the
Schedules hereto shall constitute part of this Agreement and shall be deemed to
be incorporated herein by reference, in their entirety and made a part hereof,
as if set out in full at the point where they first are mentioned. References in
this Agreement to a specific Schedule shall refer solely to such Schedule and
shall not be deemed to include material included in any other Schedule, unless
the Schedule specifically states that the material is to be included in another
specified Schedule.
10.4 Expenses. Each party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution and performance
of this Agreement and the transactions contemplated herein, including all fees
and expenses of agents, representatives, counsel and accountants.
10.5 Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as any other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
10.6 Governing Law. This Agreement is executed and delivered in, and
shall be governed by the laws of, the state of Delaware, without giving effect
to any conflict of law rule or principle that might require the application of
the laws of another jurisdiction.
10.7 Headings. The headings in this Agreement are included for purposes
of convenience only and shall not be considered a part of this Agreement in
construing or interpreting any provision hereof.
10.8 Definition of Knowledge. An individual will be deemed to have
"Knowledge" of a particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting
a reasonably comprehensive investigation concerning the existence of such fact
or other matter.
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A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
10.9 Invalidity of Provisions; Severability. If any provision of this
Agreement or the application thereof to any Person or circumstance shall to any
extent be held in any Proceeding to be invalid, illegal or unenforceable, the
remainder of this Agreement, or the application of such provision to persons or
circumstances other than those to which it was held to be invalid, illegal or
unenforceable, shall not be affected thereby, and shall be valid, legal and
enforceable to the fullest extent permitted by law, but only if and to the
extent such enforcement would not materially and adversely frustrate the
parties' essential objectives as expressed herein. Notwithstanding the
foregoing, each party hereto agrees that it has reviewed the provisions of this
Agreement, and that the same, taken as a whole, are fair and reasonable. The
parties hereto shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions, the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
10.10 No Public Announcement. Neither Imagine, nor any of the Riverside
Parties shall, without the approval of the other, make any press release or
other public announcement concerning the Contemplated transactions, except as
and to the extent that any such party shall be so obligated by law or the rules
of any stock exchange, in which case the other parties shall be advised and the
parties shall use their Reasonable Best Efforts to cause a mutually agreeable
release or announcement to be issued; provided, the foregoing shall not preclude
communications or disclosures necessary to implement the provisions of this
Agreement or to comply with the accounting and Securities and Exchange
Commission disclosure obligations.
10.11 No Third Party Beneficiaries. This Agreement is not intended to,
and shall not be construed to, confer upon any third Person any right, remedy or
benefit nor is it intended to be enforceable by any third Person, and shall only
be enforceable by the parties hereto, and their respective successors, permitted
assigns, heirs and personal representatives.
10.12 Notices.
(a) Giving of Notices. All notices, requests, consents, approvals,
waivers, demands and other communications hereunder (collectively, "Notices")
shall be deemed to have been given if in writing and (1) personally delivered
against a written receipt, or (2) sent by confirmed telephonic fac simile, or
(3) delivered to a reputable express messenger service (such as Federal Express,
DHL Courier and United Parcel Service) for overnight delivery, addressed as
follows (or to such other address as a party shall have given Notice to the
other):
If to the Riverside Parties: Steven Wilson
Riverside Group, Inc.
7800 Belfort Parkway, Suite 100
Jacksonville, FL 32245
Fax: 904/296-0584
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With a copy (which shall not
constitute notice) to: T. Malcolm Graham, Esq.
Holland & Knight LLP
50 North Laura Street, Suite 3900
Jacksonville, Florida 32202
Fax: 904/358-1872
If to Imagine: Gary Goltz, Esq.
Imagine Investments, Inc.
8510 North Central Expressway,
Suite 1901
Dallas, Texas 75206
Fax: 214/365-6905
With a copy (which shall not
constitute notice) to: Michael M. Fleishman, Esq.
Greenebaum Doll & McDonald PLLC
3300 National City Tower
Louisville, Kentucky 40202
Fax: 502/587-3695
(b) Time Notices Deemed Given. All Notices shall be effective upon
being properly personally delivered, or upon confirmation of a telephonic
facsimile, or upon the delivery to a reputable express messenger service. The
period in which a response to any such notice must be given shall commence to
run from the date on the receipt of a personally delivered notice, or the date
of confirmation of a telephonic facsimile or two days following the proper
delivery of the Notice to a reputable express messenger service, as the case may
be.
10.13 Successors and Assigns.
(a) Assignment. The rights of any party under this Agreement shall
not be assignable by such party hereto prior to the Closing without the consent
of the others.
(b) Successors. All of the terms, provisions and conditions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their successors and permitted assigns,
heirs and personal representatives. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties and their
successor and permitted assigns.
10.14 Time of Essence. Time is of the essence to the performance of the
obligations set forth in this Agreement.
10.15 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
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or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party, (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given, and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
In Witness Whereof, the parties hereto have duly executed this
Agreement as of the date first above written.
Imagine Investments, Inc.
By:________________________________________________
Title:_____________________________________________
("Imagine")
Riverside Group, Inc.
By:________________________________________________
Title:_____________________________________________
("Riverside")
CyberMax, Inc.
By:________________________________________________
Title:_____________________________________________
("CM")
CyberMax Tech, Inc.
By:_______________________________________________
Title:____________________________________________
("CMT")
Buildscape, Inc.
By:_______________________________________________
Title:____________________________________________
("Buildscape")
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----------------------------------------------------------------------
BUILDSCAPE, INC.
SERIES A CUMULATIVE CONVERTIBLE
PREFERRED STOCK PURCHASE AGREEMENT
----------------------------------------------------------------------
October 15, 1999
<PAGE>
TABLE OF CONTENTS
Section Page
1. Authorization and Sale of the Preferred Shares.............................1
1.1 Authorization; Filing of Articles of Amendment.......................1
1.2 Sale and Issuance of the Series A Preferred Stock....................1
2. Closing Date; Delivery.....................................................1
2.1 Closing Date.........................................................1
2.2 Delivery.............................................................1
3. Representations and Warranties of the Company and Riverside................2
3.1 Organization and Standing............................................2
3.2 Corporate Power......................................................2
3.3 Subsidiaries.........................................................2
3.4 Capitalization.......................................................2
3.5 Authorization........................................................3
3.6 No Preemptive Rights.................................................3
3.7 Intellectual Property; Year 2000.....................................3
3.8 No Conflicts.........................................................5
3.9 Proprietary Agreements; Employees....................................5
3.10 Litigation, etc.....................................................5
3.11 Governmental Consent................................................6
3.12 Offering............................................................6
3.13 Taxes .............................................................6
3.14 Title .............................................................7
3.15 Material Contracts and Commitments..................................7
3.16 Financial Statements................................................7
3.17 Absence of Changes..................................................8
3.18 Outstanding Indebtedness............................................8
3.19 Registration Rights.................................................8
3.20 Transactions with Related Parties...................................8
3.21 Certain Transactions................................................9
3.22 Accounts Receivable.................................................9
3.23 Corporate Documents.................................................9
3.24 Employee Benefit Plans and Employment Matters.......................9
3.25 Environmental Protection...........................................10
3.26 Insurance..........................................................11
3.27 Labor Agreements and Actions.......................................11
3.28 Disclosure.........................................................11
4. Representations and Warranties of Purchaser...............................11
4.1 Authority...........................................................11
4.2 Investment Intent...................................................11
4.3 Series A Preferred Stock Not Registered.............................12
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TABLE OF CONTENTS
Section Page
4.4 Knowledge and Experience............................................12
4.5 Accredited Investor.................................................12
5. Additional Agreements of the Parties......................................12
5.1 Covenant of Purchaser...............................................12
5.2 Legends ............................................................12
5.3 Removal of Legend and Transfer Restrictions.........................13
5.4 Registration Rights Agreement.......................................13
6. Conditions to Closing.....................................................13
6.1 Conditions to Purchaser's Obligations...............................13
6.2 Conditions to Obligations of the Company............................14
7. Affirmative Covenants of the Company and Riverside.......................15
7.1 Financial Information...............................................15
7.2 Corporate Existence, Licenses and Permits; Maintenance of
Properties..........................................................16
7.3 Taxes ............................................................16
7.4 Insurance...........................................................16
7.5 Books and Accounts..................................................16
7.6 Inspection..........................................................16
7.7 Certain Transactions................................................16
7.8 Indemnity...........................................................17
7.9 Indemnification Procedures..........................................17
7.10 Limitation on Indemnification.......................................18
8. Miscellaneous.............................................................18
8.1 Governing Law.......................................................18
8.2 Survival............................................................18
8.3 Successors and Assigns..............................................18
8.4 Entire Agreement....................................................18
8.5 Notices, Etc........................................................18
8.6 Severability........................................................19
8.7 Finder's Fees and Other Fees........................................19
8.8 Titles and Subtitles................................................19
8.9 Counterparts........................................................20
8.10 Delays or Omissions................................................20
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<PAGE>
EXHIBITS
Description Exhibit
Articles of Amendment..........................................................A
Schedule of Exceptions.........................................................B
Registration Rights Agreement..................................................C
Employee Stock Option Plan.....................................................D
Riverside Group and Mozart, Inc. Agreement.....................................E
Contracts......................................................................F
Opinion of Counsel.............................................................G
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BUILDSCAPE, INC.
SERIES A CUMULATIVE CONVERTIBLE
PREFERRED STOCK PURCHASE AGREEMENT
This Series A Cumulative Convertible Preferred Stock Purchase Agreement
(this "Agreement") is made as of the 15th day of October, 1999, by and among
Buildscape, Inc., a Florida corporation (the "Company"), Riverside Group, Inc.,
a Florida corporation ("Riverside"), and Imagine Investments, Inc., a Delaware
corporation ("Purchaser").
The parties hereby agree as follows:
11. Authorization and Sale of the Preferred Shares.
11.1 Authorization; Filing of Articles of Amendment. The Company has
authorized the issuance and sale pursuant to the terms and conditions hereof of
up to 3,000,000 shares of its Series A Cumulative Convertible Preferred Stock,
par value $0.01 per share (the "Series A Preferred Stock"), having the rights,
preferences and privileges as set forth in the Articles of Amendment attached
hereto as Exhibit A (the "Amendment"). The Company shall adopt and file the
Amendment with the Secretary of State of the State of Florida prior to the
Closing Date (as defined below).
11.2 Sale and Issuance of the Series A Preferred Stock. Subject to the
terms and conditions hereof, at the Closing the Company will issue and sell to
Purchaser and Purchaser will purchase from the Company an aggregate of 1,666,667
shares of Series A Preferred Stock at a purchase price equal to $3.00 per share.
12. Closing Date; Delivery.
12.1 Closing Date. The closing of the sale of the Series A Preferred
Stock hereunder (the "Closing") shall be held at the offices of Greenebaum Doll
& McDonald PLLC, 3300 National City Tower, Louisville, Kentucky on October ___,
1999, or at such other time and place as the Company and a majority in interest
of the Purchaser mutually agree upon (such date is hereinafter referred to as
the "Closing Date"); provided, however, the Company shall provide wire transfer
instructions to the Purchaser at least two business days prior to the Closing
Date.
12.2 Delivery.
(a) Subject to the terms of this Agreement, at the Closing, the
Company will deliver to the Purchaser a certificate or certificates representing
1,666,667 shares of Series A Preferred Stock to be issued to Purchaser, against
payment of the purchase price therefor by delivery of a check or wire transfer,
payable to the Company; provided, there shall be credited against the payment of
the purchase price an amount equal to $485,000 of the outstanding principal
balance of, and all accrued and unpaid interest, owed to Imagine by the Company
under the "Buildscape Loans," as of the Closing Date. "Buildscape Loans" means
that certain Loan Agreement, dated March 12, 1999, that certain Amendment to
Loan Agreement, dated May 20, 1999, and that certain Loan Agreement, dated
August 12, 1999, and Promissory Note each among Purchaser, the Company,
Riverside, CyberMax, Inc. and CyberMax Tech, Inc., and all documents and
agreements (including promissory notes) executed in connection with the
foregoing, and that certain Promissory Note, dated October 13, 1999, in the
principal amount of $135,000, made by the Company to Imagine.
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13. Representations and Warranties of the Company and Riverside. The
Company and Riverside hereby jointly and severally represent and warrant to
Purchaser that except as set forth on the Schedule of Exceptions attached hereto
as Exhibit B:
13.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and has all requisite corporate power and authority to carry on its
businesses as now conducted and as proposed to be conducted. The Company is
qualified or licensed to do business as a foreign corporation in all
jurisdictions where such qualification or licensing is required, except where
the failure to so qualify individually or in the aggregate would not cause a
Material Adverse Effect. In this Agreement, the term "Material Adverse Effect"
shall mean a material adverse change in the business, prospects, conditions,
affairs or operations of the Company taken as a whole.
13.2 Corporate Power. The Company has all requisite corporate power
necessary for the authorization, execution and delivery of this Agreement and
the Registration Rights Agreement in the form attached hereto as Exhibit C (the
"Registration Rights Agreement"). This Agreement and the Registration Rights
Agreement are valid and binding obligations of the Company enforceable in
accordance with their terms, except as the same may be limited by bankruptcy,
insolvency, moratorium, and other laws of general application affecting the
enforcement of creditors' rights.
13.3 Subsidiaries. The Company does not control, directly or
indirectly, any other corporation, partnership, joint venture, limited liability
company, association or business entity or other similar entity.
13.4 Capitalization.
(a) Authorized Shares. The authorized capital stock of the Company
as of the Closing Date will consist of 10,500,000 shares of Common Stock and
3,000,000 shares of Preferred Stock, with all such shares of Preferred Stock
designated Series A Preferred Stock with such rights and preferences as provided
in the Amendment, which has been validly adopted by the Company's Board of
Directors and stockholders.
(b) Issued Shares. Immediately prior to the Closing, 5,000,000
shares of Common Stock, and no shares of Series A Preferred Stock will be issued
and outstanding. All such issued and outstanding shares have been duly
authorized and validly issued, are fully paid and nonassessable, and were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. The Company has properly reserved at least 1,666,667 shares of
Common Stock for issuance upon conversion of the Series A Preferred Stock.
(c) Rights, Warrants, Etc. Except as set forth in this Agreement,
the Amendment, Buildscape Employee Stock Option Plan attached hereto as Exhibit
D, the agreement dated May 21, 1999 between The Riverside Group and Mozart, Inc.
attached hereto as Exhibit E and the Registration Rights Agreement, there are no
outstanding rights, options, warrants, conversion rights or other agreements
either directly or indirectly for the purchase or acquisition from the Company
of any shares of its capital stock.
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13.5 Authorization.
(a) Corporate Action. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for (i) the sale and
issuance of the Series A Preferred Stock, (ii) the issuance of the Common Stock
upon conversion of the Series A Preferred Stock, and (iii) the authorization,
execution and performance of the Company's obligations hereunder and under the
Registration Rights Agreement has been taken.
(b) Valid Issuance. The Series A Preferred Stock, when issued in
compliance with the provisions of this Agreement, and the shares of Common Stock
issued upon conversion of the Series A Preferred Stock, will be validly issued,
fully paid and nonassessable and will be free of any liens or other
encumbrances; provided, however, that all such shares may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein, and as may be required by future changes in such laws. The rights,
preferences, privileges and restrictions of the Series A Preferred Stock are as
set forth in the Amendment.
13.6 No Preemptive Rights. No Person (as hereafter defined) has any
right of first refusal or any preemptive rights in connection with the issuance
of the Series A Preferred Stock, the issuance of the Common Stock upon
conversion of the Series A Preferred Stock, or, except as set forth in this
Agreement and the Registration Rights Agreement, any future issuances of any
securities by the Company. In this Agreement, the term "Person" shall mean an
individual, partnership, venture, limited liability company, unincorporated
association, organization, syndicate, corporation, trust and trustee, executor,
administrator or other legal or personal representative or any government or any
agency or political subdivision thereof.
13.7 Intellectual Property; Year 2000.
(a) Intellectual Property. Except in such respects as would not
have a Material Adverse Effect, the Company owns legally enforceable rights to
use or is licensed to use by a Person which, to the Company's knowledge, has
legally enforceable rights to license, all worldwide intellectual property,
including but not limited to patents, trademarks, trade names, domain names,
brand names, trade secrets, inventions, know-how, copyrights, and proprietary
rights of any kind, and any registrations or applications therefor (herein
"Intellectual Property Rights"), employed in the operation of or otherwise
material to its business as now conducted and as currently proposed to be
conducted, with no infringement or violation of or conflict with the rights of
any Person respecting any Intellectual Property Rights owned by the Company or
to the knowledge of the Company, respecting any Intellectual Property Rights
licensed to the Company. The Company makes the foregoing representation to its
knowledge with respect to patents, trademarks, trade names and brand names owned
or licensed. To the knowledge of the Company, the operation of the Company's
business as now conducted or as currently proposed to be conducted does not
infringe, violate or conflict with any Intellectual Property Rights of any
Person. There are no options, licenses, or agreements of any kind relating to
the foregoing Intellectual Property Rights outside of the Company's ordinary
course of business, nor is the Company bound by or a party to any option,
license or agreement of any kind with respect to Intellectual Property Rights of
any Person outside of the Company's ordinary course of business. The Company is
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not obligated to make any paymentsby way of royalties, fees or otherwise to any
owner, licensor of, or other claimant to any Intellectual Property Rights or
other intangible asset, with respect to the use thereof outside of the Company's
ordinary course of business. The Company has not received any communications
alleging that it has violated or, by conducting its business as currently
proposed, would violate any of the Intellectual Property Rights of any Person,
nor, upon due inquiry, is the Company aware of any basis for the foregoing.
There are no agreements, understandings, instruments, contracts, judgments,
orders, writs or decrees to which the Company is a party, or by which it or any
of the Company's asset would be bound, which involve indemnification by the
Company with respect to infringements or other violations of any Intellectual
Property Rights other than those contained in license and distribution
agreements entered into in the ordinary course of business by the Company. The
execution, delivery and performance of this Agreement and the consummation of
the transaction contemplated hereby will not constitute a breach of any license
or other agreement involving any Intellectual Property Rights, nor will it cause
or give a right of forfeiture or termination of any such Intellectual Property
Rights. Except in such respects as would not have a Material Adverse Effect, (i)
the Company has made all necessary filings and recordations to protect and
maintain its interest in its Intellectual Property Rights; (ii) all Company
Intellectual Property Rights are valid, subsisting and enforceable; and (iii) to
the knowledge of the Company, there is no unauthorized use, infringement or
misappropriation of any of the Company's Intellectual Property Rights by any
Person, including any employee, former employee, independent contractor or
consultant of the Company. The Company has taken reasonable and practicable
steps designed to safeguard and maintain the secrecy and confidentiality of, and
the proprietary rights in, the Company's Intellectual Property Rights. All
officers, employees and consultants of the Company having access to, or
developing any Intellectual Property Rights have executed and delivered (or
shall execute and deliver) an agreement regarding the protection of Company's
proprietary information. The Company has not received any notice that any
current or prior officer, employee, or consultant of the Company claims or has a
right to claim, and none of the foregoing possess or have any basis to claim, an
ownership interest in any Company Intellectual Property Rights as a result of
having been involved in the development or licensing of any such Intellectual
Property Rights while employed by or consulting to the Company.
(b) Year 2000. Except in such respects as would not have a
Material Adverse Effect, any software developed and, to the best of the
Company's knowledge (based solely on the developers' written representations (if
any), any other software owned or licensed, by the Company and used in the
conduct of the Company's business as presently conducted and currently as
proposed to be conducted, will (i) accurately process date-related information
before, during and after January 1, 2000, including accepting the date input,
providing the date output, and performing calculations on dates or portions of
dates; (ii) function without interruption before, during and after January 1,
2000 without any change in operation; (iii) respond to two-digit date input in a
way that resolves any ambiguity as to century in a defined manner; and (iv)
store and provide output date information in ways that are unambiguous as to
century.
13.8 No Conflicts. Except as set forth on Schedule 3.8, neither the
execution and delivery of this Agreement and the Registration Rights Agreement
by the Company nor the consummation of the transactions contemplated hereby or
thereby, will (i) conflict with or violate the Articles of Incorporation, Bylaws
or resolutions of the directors or shareholders of the Company or (ii) either
with or without notice or the passage of time conflict with, violate, result in
the breach of any term of, constitute a default under, require the consent or
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approval of or any notice to or filing with anythird party or governmental
authority under, or create a lien or encumbrance on any of the shares of capital
stock or the assets of the Company under, (x) any note, mortgage, deed of trust
or other agreement or instrument to which the Company is a party or by which the
Company or any of its assets is bound, or (y) any law, order, rule, regulation,
decree, writ, injunction, license, approval, authorization, franchise or permit
of any governmental body having jurisdiction over the Company or any of its
properties.
13.9 Proprietary Agreements; Employees. Each employee and/or
independent contractor of the Company has executed an agreement regarding
confidentiality and proprietary information, the form of which has been provided
to special counsel to the Purchaser. None of its employees or independent
contractors is in violation thereof, and the Company will use its best efforts
to prevent such violations and to protect its rights under such agreements. To
the knowledge of the Company, no employee or independent contractor of the
Company is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that could interfere with
the individual's ability adequately to perform the services for the Company that
the Company intends the individual to perform or otherwise interfere with the
use of his or her best efforts to promote the interests of the Company or that
could conflict with the Company's business as conducted or as proposed to be
conducted or that could prevent such employee from assigning inventions to the
Company. The Company does not believe that it is or will be necessary for the
Company to utilize any inventions of any of its employees made prior to their
employment by the Company.
13.10 Litigation, etc. There is no action, proceeding or investigation
pending, or to the knowledge of the Company, threatened, against the Company or
its officers, directors or shareholders, or to the best of the Company's
knowledge, against employees of the Company (or, to the best of the Company's
knowledge, any basis therefor or threat thereof): (a) which might result, either
individually or in the aggregate, in (i) any Material Adverse Effect, or (ii)
any material impairment of the right or ability of the Company to carry on its
business as now conducted or as proposed to be conducted, or (iii) any material
liability on the part of the Company; or (b) which questions the validity of
this Agreement and the Registration Rights Agreement, or any action taken or to
be taken in connection herewith, including in each case, without limitation,
actions pending or threatened involving the prior employment (whether as an
employee, independent contractor or otherwise) of any of the Company's employees
or independent contractors, the use in connection with the Company's business of
any information or techniques allegedly proprietary to any of the former
employers of such employees or independent contractors or their obligations
under any agreements with prior employers. The Company is not a party to or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company currently intends to initiate.
13.11 Governmental Consent. Except for the filing of a Form D with the
Securities and Exchange Commission and the filing of notices required under
applicable state securities laws, no consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Company is required in connection with: (a) the valid execution and
delivery of this Agreement or the Registration Rights; or (b) the offer, sale or
issuance of the Series A Preferred Stock or the issuance of the shares of Common
Stock issuable upon conversion of the approval of or any notice to or filing
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with any Series A Preferred Stock; or (c) the obtaining of the consents, permits
and waivers specified in subsection 5.1(b) hereof.
13.12 Offering. In reliance on the representations and warranties of
the Purchaser in Section 4 hereof, the offer, sale and issuance of the Series A
Preferred Stock and the Warrants in conformity with the terms of this Agreement
will not result in a violation of the requirements of Section 5 of the
Securities Act of 1933, as amended (the "Securities Act") or the qualification
or registration requirements of applicable blue sky laws.
13.13 Taxes. All tax returns, reports and statements that are required
to have been filed by or on behalf of the Company or any other members of the
Group (as herein defined) have been duly filed on a timely basis with all
appropriate federal, state, county and local governmental agencies or
instrumentalities, except where such failure, individually or in the aggregate,
to do so would not have a Material Adverse Effect upon the Company. The term
"Group" shall mean, individually and collectively, (i) Company, (ii) Riverside,
and (iii) any individual, trust, corporation, partnership or other entity as to
which the Company is liable for taxes incurred by such individual or entity
either as a transferee, or pursuant to Treasury Regulations Section 1.1502-6, or
pursuant to any other provision of federal, state, local or foreign law or
regulations. All such tax returns, reports and statements are correct and
complete in all material respects. None of the Company or any other Group member
has elected pursuant to the Internal Revenue Code of 1986, as amended ("Code"),
to be treated as a Subchapter S corporation or a collapsible corporation
pursuant to Section 1362(a) or Section 341(f) of the Code, or has made any other
election pursuant to the Code (other than elections which relate solely to
methods of accounting, depreciation or amortization) which individually or in
the aggregate would have a Material Adverse Effect. The Company has paid or
properly established reserves in accordance with GAAP (as defined below) for all
income, franchise, sales, use, license, payroll, transfer and other taxes,
assessments, governmental charges, penalties, interest and fines due and payable
by the Company on or before the Closing and the Company has not, nor following
the Closing will have any, liability for the foregoing for any other Group
Member. There are no tax liens on any assets of the Company other than liens for
taxes not yet due and payable. Proper and accurate amounts have been withheld by
the Company for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid to the
respective governmental agencies. None of the Company or any other Group member
has executed or filed with the Internal Revenue Service or any other
governmental authority any agreement or other document extending, or having the
effect of extending, the period of assessment or collection of any taxes. No tax
audits or other administrative or judicial proceedings are pending or threatened
with regard to any taxes for which the Company may be liable and no action for
assessment or collection of any tax is pending or proposed against the Company
or any other Group member for which the Company will incur any liability. The
Company does not have any obligation under any tax sharing agreement. The
Company and each member of the Group have disclosed on its federal income tax
returns all positions taken therein that could give rise to a substantial
understatement penalty within the meaning of Code Section 6662.
13.14 Title. The Company owns its property and assets free and clear of
all liens, mortgages, loans or other encumbrances except liens for current taxes
and mechanic's, materialmen's and similar liens that do not individually or in
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the aggregate materially impair the Company's ownership or use of such property
or assets. With respect to the property and assets leased by the Company, the
Company is in compliance with such leases and holds valid leasehold interests
free and clear of any liens, claims or other encumbrances.
13.15 Material Contracts and Commitments. All of the contracts,
mortgages, indentures, agreements, instruments and transactions to which the
Company is a party or by which it is bound (including purchase orders to the
Company or placed by the Company) which (i) involve obligations of, or payments
to, the Company in excess of $50,000 Dollars, (ii) are between the Company and
any officer, director, affiliate, consultant or employee, (iii) are not in the
ordinary course of business, (iv) confer agency on any Person, (v) create or
maintain joint venture, partnership or similar arrangements, (vi) license
intellectual property to or from any Person or (vii) involve a sharing of
profits, are set forth on the list attached hereto as Exhibit F (the
"Contracts"), copies of which have been delivered to special counsel to the
Purchaser. All of the Contracts are valid, binding and in full force and effect
in all material respects and enforceable by the Company in accordance with their
respective terms subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and rules or laws concerning
equitable remedies. The Company is not in default under any of the Contracts.
13.16 Financial Statements. The Company has delivered to the Purchaser
the unaudited balance sheets and related statements of operation as of December
31, 1998 and the unaudited balance sheets and related statements of operation
for the 8 month period ended August 31, 1999 (the "Financial Statements"). The
Financial Statements are complete and correct in all material respects and have
been prepared in accordance with Generally Accepted Accounting Principles
("GAAP") applied on a consistent basis throughout the periods indicated, except
for the absence of footnotes to such Financial Statements. The Financial
Statements accurately set out and describe the financial condition and operating
results of the Company as of the dates, and during the periods, indicated
therein (subject, in the case of unaudited financial statements, to normal
non-material year-end audit adjustments and the omission of footnotes). The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP. As of the date of the
Financial Statements, the Company had no material liabilities, debts or
obligations (whether absolute, accrued, contingent or otherwise) except for
liabilities or obligations reflected or reserved against in the Financial
Statements. Since August 31, 1999, the Company has not incurred any liabilities,
debts or obligations (whether absolute, accrued, contingent or otherwise),
except for current liabilities incurred in the ordinary course of business
consistent with past practice, which liabilities are consistent with the
representations and warranties contained in this Agreement.
13.17 Absence of Changes. Since August 31, 1999 or as contemplated
hereby (a) the Company has not entered into any transaction which was not in the
ordinary course of business, (b) there has been no material adverse change in
the condition (financial or otherwise) of the business, property, prospects,
assets or liabilities of the Company other than changes in the ordinary course
of its business, which changes, individually or in the aggregate, could not
result in a Material Adverse Effect, (c) there has been no damage to,
destruction of or loss of physical property (whether or not covered by
insurance), which, individually or in the aggregate, has a Material Adverse
Effect, (d) the Company has not declared or paid any dividend or made any
distribution on its stock, or redeemed, purchased or otherwise acquired any of
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its stock, (e) the Company has not materially changed any compensation
arrangement or agreement with any of its key employees or executive officers, or
materially changed the rate of pay and provision of employee benefits and
prerequisites of its employees and independent contractors as a group, or
granted to any employee, independent contractors or any other person, or
modified in any respect, any stock options, stock appreciation right or other
compensation that is based in any respect on the value of any class of equity of
the Company, (f) the Company has not changed or amended any material contract by
which the Company or any of its assets are bound or subject, except as
contemplated by this Agreement, (g) there has been no resignation or termination
of employment of any key officer, employee or independent contractor of the
Company and the Company does not know of any impending resignation or
termination of employment of any such officer, employee or independent
contractor that if consummated could result in a Material Adverse Effect, (h)
there has been no change, except in the ordinary course of business, in the
contingent obligations of the Company (nor in any contingent obligation of the
Company regarding any director, stockholder or key employee, officer or
independent contractor of the Company) by way of guaranty, endorsement,
indemnity, warranty or otherwise, (i) there have been no loans made by the
Company to any of its employees, independent contractors, officers or directors
other than travel advances and other similar types of advances made in the
ordinary course of business and consistent with past practice and generally
applicable Company policy, (j) there has been no waiver by the Company of a
valuable right or of a debt owing to it, and (k) there has not been any
satisfaction or discharge of any lien, claim or other encumbrance or any payment
of any obligation by the Company, except in the ordinary course of business and
which is not material to the assets, properties, financial condition, operating
results, prospects or business of the Company.
13.18 Outstanding Indebtedness. Except as shown on the Financial
Statements, the Company has no indebtedness for borrowed money which it has
directly or indirectly created, incurred, assumed or guaranteed, or with respect
to which it has otherwise become liable, directly or indirectly.
13.19 Registration Rights. Other than as granted pursuant to the
Registration Rights Agreement, the Company has not granted or agreed to grant
any rights to register (as that term is defined in the Registration Rights
Agreement) securities, including demand or piggyback registration rights, to any
Person.
13.20 Transactions with Related Parties. In the past 12 months, (i) the
Company has not at any time, directly or indirectly, purchased, leased or
otherwise acquired any property or obtained any services from, or sold, leased
or otherwise disposed of any property or furnished any services to (except in
each case with respect to remuneration for services rendered as a director,
officer or employee of Company), in the ordinary course of business or
otherwise, any shareholder, any family member of any shareholder or any other
Person (other than the Company) that, directly or indirectly, alone or together
with others, controls, is controlled by or is under common control with the
Company or any shareholder or any family member of any shareholder (the Persons
listed in this clause (i) being referred to herein collectively as "Affiliated
Persons" and individually as an "Affiliated Person"); (ii) the Company does not
owe any amount to any Affiliated Person; and (iii) no Affiliated Person owes any
amount to the Company and no part of the property or assets of any Affiliated
Person is used by the Company in the conduct or operation of its business.
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13.21 Certain Transactions. The Company is not indebted, directly or
indirectly, to any Affiliated Person, in any amount whatsoever; and no
Affiliated Person is indebted to the Company or has any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship. No such
Affiliated Person is, directly or indirectly, interested in any contract with
the Company (other than bona fide employment agreements, copies of which have
been previously delivered to special counsel to Purchaser). The Company is not
guarantor or indemnitor of any indebtedness of any Person.
13.22 Accounts Receivable. All accounts receivable of the Company as
shown on the balance sheet as of August 31, 1999 and all such receivables which
have arisen thereafter represent bona fide transactions occurring in the
ordinary course of business by the Company, net of reserves for bad debts shown
on such balance sheet, and, as to the period after August 31, 1999, net of
reserves established consistent with prior practice in amount and nature.
13.23 Corporate Documents. The Company has furnished counsel to
Purchaser with copies of its Articles of Incorporation and Bylaws. Said copies
are true, correct and complete and contain all amendments through the Closing
Date.
13.24 Employee Benefit Plans and Employment Matters.
(a) There are no Employee Benefit Plans. "Employee Benefit Plan"
means any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended from time to time ("ERISA")
and any other plan, policy, program, practice, agreement, understanding or
arrangement (whether written or oral) providing compensation or other benefits
to any current or former officer, employee or consultant (or to any dependent or
beneficiary thereof), of the Company or any ERISA Affiliate, which are now, or
within the last three years were maintained, by the Company or any ERISA
Affiliate, or under which the Company or any ERISA Affiliate has or had any
obligation to contribute or under which the Company or any ERISA Affiliate has
or could have any liability, whether actual or contingent (including any
liability arising out of an indemnification guarantee, hold-harmless or similar
agreement), including, without limitation, all employee pension, profit-sharing,
savings, retirement, incentive, bonus, deferred compensation, vacation, holiday,
cafeteria, medical, disability, life, accident or other insurance, stock
purchase, stock option, stock appreciation right, phantom stock, restricted
stock or other equity-based compensation plans, and any other plans, policies,
programs, practices or arrangements. "ERISA Affiliate" means any entity (whether
or not incorporated) other than the Company that, together with the Company, is
or was a member of a controlled group of corporations within the meaning of
Section 414(b) of the Code, of a group of trades or businesses under common
control within the meaning of Section 414(c) of the Code, or in the case of any
Employee Benefit Plan subject to Part 3 of Subtitle B of Title I of ERISA of an
affiliated service group within the meaning of Section 414(m) of the Code.
(b) All Employee Benefit Plans comply in all material respects
with and are and have been operated in material accordance with each applicable
provision of ERISA, the Code, other federal statutes, state law and the
regulations and rules promulgated pursuant thereto or in connection therewith.
Each Plan which is a group health plan (within the meaning of Section 5000(b)(1)
of the Code) complies with and has been maintained and operated in accordance
with each of the requirements of Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA.
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(c) With respect to the Employee Benefit Plans, individually and
in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations which have not been accounted for by reserves on the
financial statements or books of the Company.
(d) All Employee Benefit Plans that have been canceled or
terminated prior to the date of this Agreement have been canceled or terminated
in accordance with all applicable provisions of ERISA, the Code, other federal
statutes, state law and the regulations and rules promulgated pursuant thereto
or in connection therewith.
13.25 Environmental Protection.
(a) The Company is in compliance with Environmental Laws and the
Company has obtained and is in compliance with all necessary permits, licenses,
approvals and authorizations required under applicable Environmental Laws,
except for such noncompliance which would not have, or could not reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect.
(b) The Company has not, and to its knowledge, no third party has
released Hazardous Materials at, from, on, in, to or under any of the properties
or assets owned, leased or operated (or formerly owned or operated) by the
Company, and to the Company's knowledge, there are no underground storage tanks,
polychlorinated biphenyl-containing equipment or asbestos-containing material at
any of the properties or assets owned, leased or operated (or formerly owned or
operated) by the Company.
(c) There are no past, pending or, to the Company's knowledge,
threatened, claims, notices of violation, investigations, litigation,
administrative proceedings, orders, judgments against the Company relating to
Hazardous Materials, Environmental Laws or relating to any other location where
Hazardous Materials from the Company, or to the knowledge of the Company, any of
its predecessors have been transported, stored, handled, disposed, treated or
have otherwise come to be located ("Environmental Claims") and the Company is
not aware of any facts, events, conditions or circumstances which could
reasonably be expected to form the basis of any Environmental Claims against the
Company.
In this Agreement, the term "Environmental Laws" shall mean any and all federal,
state, local and foreign, civil and criminal laws, statutes, rules, ordinances,
codes, regulations, permits relating to the protection of health and the
environment, worker health and safety and or governing the use, handling,
storage, discharge or disposal of Hazardous Material, including but not limited
to the Comprehensive Environmental Response, Compensation and Liability Act, 42
USC (S) 9601 et. seq., the Resource Conservation and Recovery Act, 42 USC (S)
6901 et. seq., the Occupational Health and Safety Act, 29 USC (S) 651 et. seq.,
and the state analogues thereto, all as amended or superseded from time to time;
and the term "Hazardous Materials" shall mean petroleum and petroleum products,
radioactive materials, asbestos-containing materials, radon, lead-based paint,
polychlorinated biphenyls, pesticides and any other chemicals, substances,
wastes or materials defined, listed or regulated by any Environmental Law.
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13.26 Insurance. The Company has in full force and effect fire and
casualty insurance policies, and insurance against other hazards, risks and
liabilities to persons and property to the extent and in the manner customary
for companies in similar businesses similarly situated.
13.27 Labor Agreements and Actions. To the knowledge of the Company, no
officer, key employee or independent contractor intends to terminate his or her
employment with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing. Subject to general principles
related to wrongful termination of employees and to the terms of employment
agreements listed on the Schedule of Exceptions, the employment of each officer
and employee of the Company is terminable at the will of the Company.
13.28 Disclosure. No representation or warranty by the Company in this
Agreement, or in any document or certificate furnished or to be furnished to the
Purchaser pursuant hereto or in connection with the transactions contemplated
hereby, when taken together, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements made herein and therein, in the light of the circumstances under
which they were made, not misleading.
14. Representations and Warranties of Purchaser. Purchaser represents and
warrants to the Company as follows:
14.1 Authority. Purchaser has the full right, power and authority to
enter into and perform this Agreement and the Registration Rights Agreement.
This Agreement and the Registration Rights Agreement constitute or will
constitute the valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with their respective terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to creditors' rights generally, and (ii)
general principles of equity.
14.2 Investment Intent. Purchaser is acquiring the Series A Preferred
Stock and the Common Stock issuable upon conversion of Series A Preferred Stock
(collectively the "Securities") for investment for Purchaser's own account, and
not with a view to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act.
14.3 Series A Preferred Stock Not Registered. Purchaser understands and
acknowledges that the offering of the Series A Preferred Stock pursuant to this
Agreement will not be registered under the Securities Act or qualified under
applicable blue sky laws on the grounds that the offering and sale of securities
contemplated by this Agreement are exempt from registration under the Securities
Act and exempt from qualifications available under applicable blue sky laws, and
that the Company's reliance upon such exemptions is predicated upon Purchaser's
representations set forth in this Agreement. Purchaser understands and
acknowledges that the Securities must be held until the Securities are
registered under the Securities Act and/or qualified under applicable blue sky
laws or an exemption from such registration and/or such qualification is
available.
14.4 Knowledge and Experience. Purchaser (i) has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of Purchaser's prospective investment in the Securities; (ii)
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has the ability to bear the economic risks of Purchaser's prospective
investment; (iii) has been furnished with and has had access to such information
as Purchaser has considered necessary to make a determination as to the purchase
of the Securities together with such additional information as is necessary to
verify the accuracy of the information supplied; (iv) has had all questions
which have been asked by Purchaser satisfactorily answered by the Company; and
(v) has not been offered the Securities by any form of advertisement, article,
notice or other communication published in any newspaper, magazine, or similar
media or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any such media.
14.5 Accredited Investor. Purchaser is an "accredited investor" as that
term is defined in Rule 501(a) under the Securities Act.
15. Additional Agreements of the Parties.
15.1 Covenant of Purchaser. Purchaser hereby covenants that it will not
dispose of any of the Securities (other than in conjunction with an effective
registration statement for the Securities under the Securities Act, in
compliance with Rule 144 promulgated under the Securities Act or in compliance
with another exemption from applicable securities laws) unless and until, if
reasonably requested by the Company, Purchaser shall have furnished the Company
with an opinion of counsel to the effect that (i) such disposition will not
require registration under the Securities Act and (ii) appropriate action
necessary for compliance with the Securities Act and other applicable state,
local or foreign law has been taken. It is agreed that the Company will not
require opinions of counsel for transactions made pursuant to Rule 144.
15.2 Legends. Each certificate representing the Securities may be
endorsed with the following legends:
(a) Federal Legend.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144
PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR
OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN
CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SHARES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii)
PURSUANT TO AN OPINION OF COUNSEL, THAT SUCH REGISTRATION OR
COMPLIANCE IS NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION.
(b) Other Legends. Any other legends required by applicable state
blue sky laws. The Company need not register a transfer of legended Securities,
and may also instruct its transfer agent not to register the transfer of the
Securities, unless the conditions specified in each of the foregoing legends are
satisfied.
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15.3 Removal of Legend and Transfer Restrictions. Any legend endorsed
on a certificate pursuant to subsection 5.2(a) and the stop transfer
instructions with respect to such legended Securities shall be removed, and the
Company shall issue a certificate without such legend to the holder of such
Securities if such Securities are registered under the Securities Act and a
prospectus meeting the requirements of Section 10 of the Securities Act is
available or if such holder satisfies the requirements of Rule 144(k), or to the
reasonable satisfaction of the Company, the proposed transfer is in accordance
with an exemption from federal and state securities laws.
15.4 Registration Rights Agreement. At the Closing, the Company and
Purchaser shall execute and deliver the Registration Rights Agreement.
16. Conditions to Closing.
16.1 Conditions to Purchaser's Obligations. The obligation of Purchaser
to purchase the Series A Preferred Stock at the Closing is subject to the
fulfillment to Purchaser's satisfaction, on or prior to the Closing Date, of the
following conditions, any of which may be waived by Purchaser:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company and
Riverside in Section 3 hereof shall be true and correct when made, and shall be
true and correct on the Closing Date with the same force and effect as if they
had been made on and as of said date. The Company shall have performed in all
material respects all obligations and conditions herein required to be performed
or observed by it on or prior to the Closing Date.
(b) Consents and Waivers. The Company shall have obtained any and
all consents, permits and waivers necessary or appropriate for consummation of
the transactions contemplated by this Agreement and the Registration Rights
Agreement.
(c) Compliance Certificate. The Company shall have delivered to
Purchaser a certificate, executed on behalf of the Company by its President,
dated as of the Closing Date, certifying to the fulfillment of the conditions
specified in subsections (a) and (b) of this Section 6.1.
(d) Secretary's Certificate. The Company shall have delivered a
certificate, executed on behalf of the Company by its Secretary, dated as of the
Closing Date, certifying the Board of Directors and shareholder resolutions
approving this Agreement and the Registration Rights Agreement and the issuance
of the Series A Preferred Stock, the reservation of the underlying Common Stock
and certifying the current versions of the Articles of Incorporation and Bylaws
and the composition of the Board of Directors of the Company upon Closing.
(e) Opinion of Counsel. Purchaser shall have received an opinion
from Holland & Knight, satisfactory in form to special counsel for Purchaser,
substantially in the form attached hereto as Exhibit G.
(f) Compliance with Laws. The purchase of the Series A Preferred
Stock by the Purchaser hereunder shall be legally permitted by all laws and
regulations to which the Purchaser or the Company are subject.
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16.2 Conditions to Obligations of the Company. The Company's obligation
to sell and issue the Series A Preferred Stock at the Closing is subject to the
fulfillment to the satisfaction of the Company on or prior to the Closing Date
of the following conditions, any of which may be waived by the Company:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Purchaser in Section
4 hereof shall be true and correct when made, and shall be true and correct on
the Closing Date with the same force and effect as if they had been made on and
as of said date. The Purchaser shall have performed in all material respects all
obligations and conditions herein required to be performed or observed by them
on or prior to the Closing Date.
(b) Compliance with Laws. The purchase of the Series A Preferred
Stock by the Purchaser hereunder shall be legally permitted by all laws and
regulations to which the Purchaser or the Company are subject.
(c) Secretary's Certificate. Purchaser shall have delivered a
Certificate executed on behalf of Purchaser by a Secretary or an Assistant
Secretary of Purchaser, dated as of the Closing Date, certifying the approval of
this Agreement by the Board of Directors of Purchaser.
(d) Compliance Certificate. Purchaser shall have delivered to the
Company a certificate, executed by its President or a Vice President, dated as
of the Closing Date certifying as to the fulfillment of the conditions specified
in Section 6.2(a).
17. Affirmative Covenants of the Company and Riverside. The Company and
Riverside hereby covenant and agree as follows:
17.1 Financial Information. Until the date on which the Company is
required to file a report pursuant to Section 13(a) of the Securities Exchange
Act of 1934 (the "Exchange Act"), by reason of the Company having registered any
of its securities pursuant to Section 12(g) of the Exchange Act, the Company
will furnish to Purchaser:
(a) so long as Purchaser or its affiliates own any of the Series A
Preferred Stock or Common Stock issued upon conversion of the Series A Preferred
Stock, as soon as practicable after the end of each fiscal year, and in any
event within 120 days thereafter, unaudited consolidated balance sheets of the
Company and its subsidiaries, if any, as at the end of such fiscal year, and
consolidated statements of operations and consolidated statements of cash flow
of the Company and its subsidiaries, if any, for such year, prepared in
accordance with generally accepted accounting principles, all in reasonable
detail and certified by independent public accountants of recognized national
standing selected by the Company; and
(b) so long as Purchaser or its Affiliated Persons own all of the
Series A Preferred Stock purchased pursuant hereto (as adjusted for stock
splits, combinations, dividends, distributions or recapitalizations or the like)
or all Common Stock issued upon conversion of the Series A Preferred Stock, as
soon as practicable after the end of each fiscal quarter, and in any event
within 45 days thereafter, consolidated balance sheets of the Company and its
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subsidiaries, if any, as at the end of such fiscal quarter, and unaudited
consolidated statements of operations and consolidated statements of cash flow
of the Company and its subsidiaries, if any, for such quarter, prepared in
accordance with GAAP (except for required footnotes), all in reasonable detail,
subject to changes resulting from year-end audit adjustments and inter-period
allocations; and
(c) so long as the Purchaser or its Affiliated Persons own all of
the Series A Preferred Stock purchased pursuant hereto, or all Common Stock
issued upon conversion of the Series A Preferred Stock, as soon as practicable
after the end of each month and in any event within 30 days thereafter,
consolidated balance sheets of the Company and its subsidiaries, if any, as of
the end of such month and consolidated statements of income and cash flow
statements, for such month and for the current fiscal year to date, prepared in
accordance with GAAP (except for required footnotes), all in reasonable detail,
subject to changes resulting from year-end audit adjustments and inter-period
allocations; and
(d) so long as Purchaser or its Affiliated Persons own all of the
Series A Preferred Stock purchased pursuant hereto, or all Common Stock issued
upon conversion of the Series A Preferred Stock, as soon as practicable and in
any event no later than 30 days before the end of the fiscal year, an annual
budget (consisting of projected income statements and projected cash flow
statements reported on a monthly basis) and business plan for the subsequent
fiscal year.
17.2 Corporate Existence, Licenses and Permits; Maintenance of
Properties. So long as any shares of the Series A Preferred Stock shall remain
outstanding, the Company will at all times cause to be done all things necessary
to maintain, preserve and renew its existence as a corporation organized under
the laws of a state of the United States of America (except in connection with a
merger or consolidation in which the Company is not the surviving corporation)
and will do all things reasonably necessary to preserve and keep in force and
effect, and cause each of its subsidiaries (if any) to preserve and keep in
force and effect, all patents, trademarks, service marks, trade names,
copyrights, trade secrets, proprietary rights, licenses and permits necessary
and material to the conduct of its and their respective businesses, and will
maintain and keep, and cause each of its subsidiaries (if any) to maintain and
keep, its and their properties in good repair, working order and condition
(except for normal wear and tear), and from time to time make all needful and
proper repairs, renewals and replacements.
17.3 Taxes. So long as any shares of the Series A Preferred Stock shall
remain outstanding, the Company will duly pay and discharge all taxes,
assessments and governmental charges upon or against the Company, or its
properties, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings and the Company and shall have set
aside on its books adequate reserves with respect thereto.
17.4 Insurance. So long as any shares of the Series A Preferred Stock
shall remain outstanding, the Company will apply for and continue in full force
and effect adequate insurance covering the respective risks of the Company and
its subsidiaries (if any) of such types and in at least such amounts and with
such deductibles as are customary for other corporations engaged in similar
lines of business and with good and responsible insurance companies.
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17.5 Books and Accounts. So long as any shares of the Series A
Preferred Stock shall remain outstanding, the Company will, and will cause each
subsidiary (if any) to, maintain proper books of record and account in which
full, true and correct entries shall be made of its transactions and set aside
on its books from its earnings for each fiscal year all such proper reserves as
in each case shall be required in accordance with generally accepted accounting
principles.
17.6 Inspection. Until the Company is required to file a report
pursuant to Section 13(a) of the Exchange Act, by reason of the Company having
registered any of its securities pursuant to Section 12(g) of the Exchange Act,
the Company shall permit Purchaser, at Purchaser's expense, upon reasonable
notice to the Company specifying a proper purpose, to visit and inspect the
Company's properties, to examine its books of account and records and to discuss
the Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by Purchaser; provided, however, that the
Company shall not be obligated pursuant to this Section 7.6 to provide access to
any information which it reasonably considers to be a trade secret or similar
confidential information unless and until such Purchaser executes a
confidentiality/non-disclosure agreement reasonably acceptable to both parties.
17.7 Certain Transactions. Until the Company is required to file a
report pursuant to Section 13(a) of the Exchange Act by reason of the Company
having registered any of its securities pursuant to Section 12(g) of the
Exchange Act, the Company will not enter into a contract or other transaction
between the Company and one or more of its directors or officers or any
corporation or other entity in which such directors or officers have a material
financial interest unless such contract or transaction has been approved in
accordance with the procedures required for approval of a contract or
transaction between the Company and one or more of its directors pursuant to
Section 607.0832 of the Florida Business Corporation Act.
17.8 Indemnity.
(a) The Company and Riverside agree to indemnify and hold harmless
Purchaser, its respective affiliates, officers, directors and employees
(collectively, the "Purchaser Indemnified Parties") from and against any
liabilities, obligations, losses, damages, amounts paid in settlement,
penalties, actions, judgments, fines, suits, claims, costs, reasonable
attorneys' fees, reasonable costs of investigation, expenses and disbursements
of any kind ("Losses") which may be imposed upon, incurred by or asserted
against such Purchaser Indemnified Party in any manner relating to or arising
out of any untrue representation, breach of warranty or failure to perform any
covenants or agreement by the Company contained herein, in the Warrants, in the
Registration Rights Agreement, or in any certificate or document delivered
pursuant hereto or thereto. The Company shall also advance expenses as incurred
to the fullest extent permitted under applicable law; provided, however, that
the Purchaser Indemnified Party provides an undertaking to repay such advances
to the Company if it is ultimately determined that such Purchaser Indemnified
Party is not entitled to indemnification. The Purchaser Indemnified Party and
the Company will cooperate in the defense of any such matter.
(b) Purchaser agrees to indemnify and hold harmless the Company,
and its Affiliates, officers, directors, and employees (collectively, the
"Company Indemnified Parties") from and against any Losses which may be imposed
upon, incurred by or asserted against such Company Indemnified Party in any
manner relating to or arising out of any untrue representation, breach of
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warranty or failure to perform any covenants or agreements by such Purchaser
contained herein, or any certificate or document delivered pursuant hereto.
17.9 Indemnification Procedures. Any Person entitled to indemnification
under Section 7.9 ("Indemnified Party") seeking indemnification pursuant to
Section 7.9 with respect to a claim, action, suit or proceeding by a Person who
is not an Indemnified Party shall give prompt written notice to the Company of
the assertion of any claim, or the commencement of any action, suit or
proceeding, in respect of which indemnity may be sought hereunder, provided that
the failure to give such notice shall not affect the Indemnified Party's rights
to indemnification hereunder unless such failure shall prejudice in any material
respect the Company's ability to defend such claim, action, suit or proceeding.
The Company shall have the right to assume the defense of any such action, suit
or proceeding at its expense; provided, however, that if the Company shall elect
not to assume the defense of any such action, suit or proceeding, or fails to
make such an election within twenty days after it receives such notice pursuant
to the first sentence of this Section 7.10, the Indemnified Party may assume
such defense with counsel of its choice and at the expense of the Company and
shall defend such claim, action, suit or proceeding diligently and in good
faith. The Indemnified Party shall have the right to participate in (but not
control) the defense of an action, suit or proceeding defended by the Company
hereunder and to retain its own counsel in connection with such action, suit or
proceeding, but the fees and expenses of such counsel shall be at the
Indemnified Party's expense; provided, however, that the Company shall bear the
expenses as incurred of counsel to the Indemnified Party if (i) the Company and
the Indemnified Party have mutually agreed in writing to the retention of such
counsel or (ii) the named parties in any such action, suit or proceeding
(including impleaded parties) include the Company and the Indemnified Party, and
representation of the Company and the Indemnified Party by the same counsel
would, in the reasonable opinion of counsel to the Indemnified Party, create a
conflict of interest.
17.10 Limitation on Indemnification. No Indemnified Party shall be
entitled to indemnification pursuant to Section 7.8 or 7.9 hereof until such
time as the amount of losses incurred by such Indemnified Party equals $50,000,
after which time such Indemnified Party shall be entitled to indemnification for
the entire amount of such losses.
18. Miscellaneous.
18.1 Governing Law. The corporate laws of the State of Florida shall
govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement or the Registration Rights
Agreement be governed by and construed and enforced in accordance with the
internal laws of the State of Delaware, without regard to the principles of
conflicts of law thereof.
18.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive the Closing of the transactions
contemplated hereby, notwithstanding any investigation made by Purchaser,
provided that the representations and warranties of the Company contained in
Section 3 shall expire on the second anniversary of the Closing, other than the
representations and warranties contained in Section 3.2 (Corporate Power), 3.4
(Capitalization), 3.5 (Authority, Organization), 3.13 (Taxes), 3.24 (Employee
Benefit Plans and Employment Matters) and 3.25 (Environmental Protection) which
shall not expire. All statements as to factual matters contained in any
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certificate or other instrument delivered by or on behalf of the Company and
Riverside pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company and
Riverside hereunder as of the date of such certificate or instrument.
18.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
18.4 Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof and they
supersede, merge and render void every other prior written and/or oral
understanding or agreement among or between the parties hereto.
18.5 Notices, Etc. All notices and other communications hereunder shall
be in writing and shall be deemed given upon (a) transmitter's confirmation of
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) the expiration of five
business days after the day when mailed in the United States by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to the Company: Buildscape, Inc.
7800 Belfort Park, Suite 100
Jacksonville, Florida 32256
Fax: (904) 296-0584
Attn: Chief Executive Officer
If to Purchaser: 8150 N. Central Expressway
Suite 1901
Dallas, Texas 75206
Fax: (214) 365-6905
Attn: Chief Executive Officer
If to Riverside: 7800 Belfort Parkway
Jacksonville, Florida 32256
Fax: (904) 296-0584
Attn: Chief Executive Officer
18.6 Severability. In case any provision of this Agreement
shall be found by a court of law to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
18.7 Finder's Fees and Other Fees.
(a) With the exception of the agreement with Mozart,
Inc. attached hereto as Exhibit E, the Company (i) represents and warrants that
it has retained no finder or broker in connection with the transactions
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contemplated by this Agreement and, (ii) hereby agrees to indemnify and to hold
Purchaser harmless from and against any liability for commission or compensation
in the nature of a finder's fee to any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which the Company, or any of its employees or representatives, is
responsible.
(b) Purchaser (i) represents and warrants that it has
retained no finder or broker in connection with the transactions contemplated by
this Agreement and (ii) hereby agrees to indemnify and to hold the Company
harmless from and against any liability for any commission or compensation in
the nature of a finder's fee to any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which Purchaser, or any of its employees or representatives, are
responsible.
18.8 Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
18.9 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
18.10 Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to the Company or to any holder of any
securities issued or to be issued hereunder shall impair any such right, power
or remedy of the Company or such holder, nor shall it be construed to be a
waiver of any breach or default under this Agreement, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any delay or omission to exercise any right, power or remedy or any waiver
of any single breach or default be deemed a waiver of any other right, power or
remedy or breach or default theretofore or thereafter occurring. All remedies,
either under this Agreement, or by law otherwise afforded to the Company or any
holder, shall be cumulative and not alternative.
IN WITNESS WHEREOF, the parties hereto have executed this Series A
Convertible Preferred Stock Purchase Agreement as of the date first written
above.
Buildscape, Inc.
By:___________________________________
Title_________________________________
("Company")
Riverside Group, Inc.
By:__________________________________
Title:_______________________________
("Riverside")
Imagine Investments, Inc.
By:__________________________________
Title:_______________________________
("Purchaser")
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EXHIBIT A
Articles of Amendment
See Attached.
<PAGE>
EXHIBIT B
Schedule of Exceptions
See Attached.
<PAGE>
EXHIBIT C
Registration Rights Agreement
See Attached.
<PAGE>
EXHIBIT D
Employee Stock Option Plan
See Attached.
<PAGE>
EXHIBIT E
Riverside Group and Mozart, Inc. Agreement
See Attached.
<PAGE>
EXHIBIT F
Contracts
See Attached.
<PAGE>
EXHIBIT G
Opinion of Counsel
See Attached.
<PAGE>
