U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended MAY 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT OF 1934
For the transition period from _______________ to________________
Commission File No. 000-17058
PHOENIX INTERNATIONAL INDUSTRIES, INC.
Exact name of small business issuer as specified in its charter
FLORIDA 59-2564162
- --------------------------------- ---------------------------------
(State or Other Jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
501 SOUTH DIXIE HIGHWAY, WEST PALM BEACH, FLORIDA 33401
-------------------------------------------------------
(Address of Principal Executive Offices)
(561) 832-5208
------------------------------------------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes No X
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: as of March 10, 1998 there were
8,310,028 shares of the issuer's Common Stock, $.001 par value, outstanding.
Transitional Small Business Disclosure Format:
Yes No
Common Stock, $.001 par value
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
INDEX TO 10-KSB
PART I
PAGE
ITEM 1 DESCRIPTION OF BUSINESS 1
ITEM 2 DESCRIPTION OF PROPERTY 7
ITEM 3 LEGAL PROCEEDINGS 7
ITEM 4 RESULTS OF VOTES OF SECURITY HOLDERS 8
PART II
ITEM 5 MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDERS MATTERS 8
ITEM 6 MANAGEMENT'S DISCUSSIONS OF DISCONTINUED
OPERATIONS 9
ITEM 7 FINANCIAL STATEMENTS 9
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 9
PART III
ITEM 9 MANAGEMENT AND DIRECTORS 10
ITEM 10 EXECUTIVE COMPENSATION 12
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 13
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 14
ITEM 13 EXHIBITS AND REPORTS 14
0
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PART 1
ITEM 1 DESCRIPTION OF BUSINESS
Historical Development
The Company was incorporated on July 22, 1985, pursuant to the laws of
the State of Florida under the name "Hydrobac, Inc." On July 7, 1986, the
Company's name was changed to"ProBac,Inc.," and on October 5, 1994, its name was
changed to Trident Environmental Systems, Inc. During those periods the
Company's primary business was in various types of products and systems for use
in the environmental clean-up industry. On October 2, 1996 the Company's name
was changed to Phoenix International Industries, Inc., and the Company's Common
Stock was reverse split 15 to 1. From January 1996 through May 31, 1997, the
Company sought acquisitions as it wound down and closed its original
environmental clean-up business. The Company, therefore, treats all matters
relating to the environmental clean-up business as discontinued operations.
Business
Today, the Company, through a wholly-owned subsidiary, Intuitive
Technology Consultants, Inc. ("ITC"), is a service provider of technical
solutions to companies seeking specialized talent in computer technology. This
encompasses software development, including resolution of the Year 2000 date
issue and other related technical areas, as well as on site staffing
augmentation for the client. The Company is divided into two (2) basic revenue
centers. First, providing software solutions on an out source basis to companies
who seek internal or commercial solutions to their business needs. These
solutions are mainly project based. Each project is developed internally by the
Company's staff of experts, and is managed by the Company until completion. The
second revenue center allows the Company to provide technically oriented staff
with select skills in computer and network engineering to a company for either
contract temporary or permanent employment by said company. The Company provides
the personnel on a fee basis (either hourly or contract, or a flat fee for
perm). The Company is not responsible in this instance for the management or
daily productivity of the project or individual.
Industry Background
Windows has obtained a 90% market share of available PC "desktops" in
both the home and business markets. Information Technology ("IT") staffing of
business development for software solutions and management of technologies has
reached an all time high. With such issues as the continued release of new
operating systems, the doubling of the speed of microchips every eighteen (18)
months, and new issues such as Millennium (Year 2000 date issue) facing
business, each company is competing to better not only it's own line of
products, but in the development of new technology as well. Information is power
to a company, and with ever increasing amounts of it, companies are competing to
retrieve, utilize and sell information.
Beginning in 1993, the Internet became the focus of marketing services
and products. Companies began to realize that an inexpensive, high rate of
return on investment in the Internet could increase their market visibility
dramatically. Over the next two years, commerce over the Internet is expected to
increase over 65,000 times (Fortune Magazine).
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With such issues facing companies, the availability of individuals who
possess the technical expertise in these areas is actually decreasing yearly. In
1996 forty-eight thousand (48,000) new graduates entered the marketplace in
technical areas to fill an estimated 148,000 positions. In 1997, the number has
decreased to twenty six thousand (26,000). Businesses are finding it more and
more difficult to find the staff to meet their needs.
In 1996, the IT Temporary Staffing Industry has been estimated to be
$46 billion with an annual growth rate of 15%. With business continuing to
invest larger amounts in their IT departments, both in new development and
redeployment of solutions to the Millennium issues, growth in the industry is
expected to continue at the current pace for the next 10 years (Fortune
Magazine).
COMPANY'S OUT SOURCE PROJECT DEVELOPMENT & IMPLEMENTATION
In an effort to curb the increasing costs of developing technology
solutions, companies are outsourcing their IT projects at an ever increasing
rate. The Company provides these services, by offering a business the
opportunity to complete their IT projects with no fixed employee costs, office
costs, or other expenses.
The Company provides the top systems engineers, network specialists and
systems architects, making these resources available to a company by managing an
IT project from beginning to end. The Company uses proven methodologies
including the latest in Client/Server, Object Oriented system design and
implementation to achieve a total solution for its clients.
In a new service entitled "Millennium and Business Exposure Analysis",
the Company delivers system re-engineering processes, which includes
rectification of the Millennium (Year 2000) "bug". It provides this service at
three basic levels:
(i) A business structure analysis is implemented, which incorporates a
complete technical analysis of the current system(s) utilized by the client;
(ii) A hardware analysis to determine if the equipment is capable of
handling the Millennium (Year 2000) change; and
(iii) Total business exposure, which involves scrutinizing the client's
vendors and, in appropriate cases, its customers, to insure that all interaction
between vendor, client and customer of client computer systems will achieve
Millennium compliance.
With experts in so many diverse areas, there is little the Company
cannot provide. Whether the project consists of a team of software engineers to
create a new solution, or redevelop an antiquated system in a newer technology,
the Company provides all levels of service. Through a process using the methods
of Rapid Application Development (RAD) and Joint Application Development (JAD)
both of which have been developed over the last ten (10) years by such
individuals as Rambaugh and Booch, the Company is able to obtain its customers
specific IT needs, and provide quick, effective solutions to those needs at a
substantially lower cost than a company would be able to provide if the project
were managed internally.
STAFFING
Many companies choose not to outsource their business development
projects for IS. The Company, as a value added service to our customers,
provides personnel with a vast array of technical backgrounds, to allow its
customers to develop, implement, support and distribute software and technical
2
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services internally. The Company has developed an extensive database of
resources for technical personnel to provide to these customers. The Company
acts as a "broker" or headhunter, providing three levels of service. First, the
Company provides temporary employees (Contractors), billed hourly by the Company
to the customer. These employees work at the customer's location under the
direct management of the customer. Each employee submits a time card to the
Company signed by the employee's direct supervisor. The Company uses this time
card to bill the customer. Invoices are generated weekly. The second service
level for staffing is permanent, whereby the Company introduces the customer to
the technical specialist, and the customer hires the person directly, with the
Company receiving a negotiated fee based on the number of requirements and
exclusivity. Further, many clients place "caps" on the Company's fees. This fee
is billed on the first date of employment of the technical specialist and is due
on net 30 day terms. The third and final level of staffing service is Contract
to Perm (C to P). In this scenario, the Company provides the technical
specialist for a period of time on a temporary basis (billed hourly to the
customer). Following this initial period, the customer hires the technical
specialist from the Company for a flat fee based on the salary at which the
technical specialist is hired. This fee is calculated on a "sliding" scale. The
longer the specialist is provided to the customer on a temporary basis, the
lower the final fee.
According to Contact Professional Magazine, the recruiting and staffing
industry will reach over 46 billion dollars in revenue this year. CNN stated
that only 26,000 technical graduates will enter the market place this year (down
from 48,000 last year). However, over 128,000 positions are open in the United
States market. This high demand for talent forces companies to use outside
resources to research, locate, screen and provide highly skilled technical
labor. The Company uses this leverage in the market to seek the upper echelon of
technical staff. The Company utilizes extensive testing, multiple interviews and
background checks (including drug and criminal if requested by the customer), to
ensure that the customer receives the best available individual for their
specific position.
TRAINING
As an additional service to its customers, the Company provides
classroom style training in the latest technologies. Because most businesses
have a staff of varied technical skills, the Company provides multiple levels of
training from beginner to advanced. It can provide Microsoft Certified trainers
if requested, to allow a student certification in the area desired by the
client, or provide informal training for companies wishing to better educate
their employees while maintaining a lower cost basis. Each student receives
individual attention in the class. State of the art, multimedia computers are
provided by the Company in the class, allowing students to work along with the
instructor for better understanding of the technology being taught. Languages,
database design and maintenance, operating systems and commercial software are
among the types of technology instructed.
When the Company provides project development to a customer, the
Company includes classroom training during the implementation phase. The Company
takes the customer's employees through the application, demonstrating the
capability and limitations of the product, to ensure that each employee of the
customer provides the highest level of productivity to the customer upon
learning the new application. This important addition to the Company's services
separates the Company from its competitors, ensuring that every implementation
of new technology is successful for the customer following delivery by the
Company.
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SUPPORT
Upon delivery of a new application, the Company provides its customer
with ongoing support for their new system(s). The Company charges either a
monthly or annual fee for this service, which is automatically renewed until the
customer terminates. These support services may include a help desk staffed by
employees (technical specialists) of the Company provided to the customer at
their location for extended services including on site training and employee
assistance, or technical assistance to the customers internal technical staff to
support and instruct on the methods of software development used by the Company
during implementation. Additionally, the Company may provide hardware support
through the use of external vendors as a value added service to its customers.
STRATEGY
The Company's objective is to continue to be a leading provider of
information technology services and to further expand its presence in the
industry. To achieve these objectives, the Company has adopted the following
strategies:
Strategic Alliances. The Company utilizes the services of other
companies which provide similar services throughout the United States, allowing
the Company to grow its marketing efforts with little or no capital expenditure.
New Service Development. The Company intends to continue to pursue new
avenues in the technology industry, and offer new and innovative services to its
customers as these new technologies emerge.
Sales and Marketing Presence. The Company intends to expand its
marketing presence through the use of print and advertising media, direct mail
and expansion of the Company's sales force through growth and acquisition.
MANAGEMENT
The Company employs recognized leaders in the industry to act as
management support to its customers, staff and affiliates. The Company utilizes
extensive screening processes beyond what the Company believes is normal for the
industry in order to obtain only the most experienced, well rounded, technically
proficient personnel to lead its efforts.
Each member of the Company's management team brings years of experience
to their area of expertise, allowing the Company to manage its projects and
staff by example. Management is hands on, further leveraging the resources and
skills of the management team. This is accomplished through example, ensuring
that all employees of the Company work as a cohesive unit with a common vision
and goal, that being the mission and vision of the Company.
CUSTOMERS
Employing a staff of no less than seven (7) marketing and accounting
representatives, the Company obtains most of its clientele through direct
marketing including cold call, telemarketing and referral. The Company customers
are primarily businesses using technology on an ongoing basis with a focus on
realized gains through investment in information technology.
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The Company targets large corporation with extensive IS/IT departments.
The average sale at the Company consists of multiple levels of service,
including project management and internal development, staffing augmentation and
training. The Company provides both fixed bid and hourly time and billing
methods of revenue generation. This allows flexibility with its customers.
For staffing services, the Company targets the Human Resource or
Project Management level at the customer. For project outsource development, the
Company targets executive level personnel. These persons are normally CFO, CEO
or CIO status, those normally in charge of the actual budget and scope of the
project.
SALES AND MARKETING
The Company currently markets its services through a direct sales force
in the United States. The Company conducts comprehensive marketing programs that
include telemarketing, public relations, direct mail, advertising, seminars, and
ongoing customer communication programs. The Company is currently on many
bidding lists, which affords it the opportunity to receive Requests for
Proposals ("RFP's") from multiple companies seeking the services it renders.
Sales and marketing personnel are located at the Company's headquarters in
Duluth, Georgia.
The Company obtains sales leads through referral, advertising,
seminars, and relationships with industry personnel. A typical sales cycle in
software project development begins with the generation of leads or the receipt
of a request for proposal ("RFP") from a prospective customer. After
qualification of the sales lead and analysis of the general requirements of the
customer, a two phase implementation proposal is created. The first phase being
that of specific information gathering, requirements definition, prototype and
functional definition and, following acceptance, a complete pricing structure
and proposal with implementation plan. The first proposal generally describes
the services the Company will provide, as well as expected milestones for
measurement of success as well as payment schedules, expected delivery schedules
and other related information. The final proposal includes specific project
definition, which includes definitive system requirements. The Company continues
"reselling" the customer on new additions to the product following completion of
the initial scope. The additions are normally generated by identification by the
Company of new solutions to customer problems.
The sales cycle for staffing usually begins with a telemarketing call
or referral. The Company informs the potential customer of the methods and
services it provides. Following agreement by the customer for the Company's
staffing services, the customer executes a blanket "Staffing Agreement" with the
Company which outlines all terms and conditions for services including
guarantees, payment and invoicing terms and other related matters. For each
person the Company supplies, the Company executes an attachment to the Staffing
Agreement which specifically states the additional terms and conditions of the
employment of the technical specialist the Company is providing. This will
include rates, billing and length of service.
The Company has entered into agreements with similar companies through
"Affiliate Agreements". These agreements allow the Company to share their vast
resources of technical personnel on a "split fee" basis. The Company provides
the personnel and shares the revenue with the affiliate company, retaining the
technical person on its staff.
In all cases, the Company maintains strict non-compete, non-solicit and
non-disclosure agreements with both its employees and customers.
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PRODUCT DEVELOPMENT AND NEW SERVICES
In an effort to continue to expand its client base, the Company engages
in the pursuit of new opportunities for services. Currently, the Company is
offering a new "Leased Resource" plan in answer to the demand for Year 2000
personnel. Because companies are not likely to be able to meet the demand they
will have for specialists in Millennium issues during 1999 and 2000, the Company
is offering its customers the option of prepaid leasing of the required
specialist on a reserved basis. The "contractor" is committed to serve this term
during the Millennium change. This offers our customer the ability to secure
resources which will not be available under normal conditions. The Company also
continues to expand its knowledge base and expertise as new technologies emerge.
Currently the Company is expanding its services in the Internet Webmaster,
providing experts to customers whose skills are highly specialized in the new
areas of the Internet including Web Design, Commerce, and Public Relations.
COMPETITION
Many similar companies, both large and small, offer similar services as
the Company. However, few offer them under one umbrella. The Company
differentiates itself from its competition by the deep experience of its
personnel, its solid references and the ability to deliver effective solutions
on time, every time.
There are limited numbers of software development firms in the market
who can be considered key players. Because of the Company's reputation as a true
solutions provider, the Company is able to grow, and has been selected over its
competition more than 70% of the time. This despite of many of the Company's
competitors having greater name recognition, more extensive management and
marketing capabilities, and significantly greater financial, technological and
personnel resources than the Company.
The Company believes that the competitive factors affecting its markets
include features such as project management openness, system scalability, the
ability of system solutions to integrate with third party products,
functionality, adaptability, ease of use, quality, performance, price, customer
service and support, effectiveness of sales and marketing efforts and Company
reputation. Although the Company believes that it currently competes favorably
with respect to such factors, there can be no assurance that the Company can
maintain its competitive position against current and potential competitors
especially those with greater financial, marketing support and other resources
than the Company.
TRADEMARKS, COPYRIGHTS AND PATENTS
The Company owns two patents for solidification of environmental waste,
which were acquired when the Company was involved in that business. However, the
Company is no longer in such business and it is believed by the Company that
these patents are of very little value today, as they have been rendered
obsolete due to the rapid development of the environmental industry. ITC and HDX
hold copyrights on the software developed by each of them. However, due to the
nature of software, placing a value on these copyrights is virtually impossible.
EMPLOYEES
At May 31, 1995, the Company had 8 employees. In February, 1998, the
Company has 36 employees.
6
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SUBSEQUENT EVENTS
On June 1, 1997, the Company acquired Intuitive Technology Consultants,
Inc. headquartered in Atlanta, Georgia.
In consideration therefore, the Company issued 1,500,000 shares of its
"restricted" Common Stock to the former shareholders of ITC in exchange for
100% (1,000,000 shares) of the authorized and issued stock of ITC.
On July 21, 1997 the Company in a "stock for stock" transaction,
completed the acquisition of 100% of the stock of HDX 9000, Inc. (HDX), of New
York, New York. In consideration therefore, the Company issued 500,000 shares of
its "restricted" Common Stock to the former shareholders of HDX in exchange for
100% (1,500 shares) of the authorized and issued stock of HDX.
On January 18, 1996, Markus A. Gertsch tendered his resignation as a
Director of the Company. The reason for Mr. Gertsch's resignation was personal
and there was no disagreement concerning any matter relating to the Company's
operations, policies or practices.
Also on January 18, 1996, the Board of Directors of the Company
appointed Gerard Haryman as President and a Director of the Company pursuant to
the applicable provisions of the Company's Bylaws. Mr. Haryman holds his
respective office until the next annual meeting of the Company's shareholders,
or his resignation, removal or death, whichever comes first.
On October 2, 1996, shareholders approved Amendments to the Articles of
Incorporation, changing the name of the Company to Phoenix International
Industries, Inc.; changing the authorized capital to 20,000,000 shares of Common
Stock, par value $.001 per share; and up to 5,000 shares of Preferred Stock for
use as needed. The Company's Common Stock was reverse split 15 to 1.
ITEM 2 DESCRIPTION OF PROPERTY
The Company's principal place of business is located at 501 South Dixie
Highway, West Palm Beach, Florida 33401, which consists of office and warehouse
space. This space aggregates approximately 3,500 square feet including four
offices and a conference room. The lease cost is $3,500.00 per month, plus
expenses, expiring in June, 1998. HDX, a wholly-owned Phoenix subsidiary, shares
the space.
The ITC subsidiary rents 10,153 square feet at 3700 Crestwood Parkway,
Suite 1000, Duluth, Georgia 30096. The rent is $17,979 per month, under a seven
year lease which expires in February, 2005. However, ITC pays approximately
one-half rent, or $9,125.10 per month for the first year.
Both of these offices are rented from unrelated third parties.
ITEM 3 LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company
(or any of its Officers and Directors in their capacities as such) is a party or
to which the property of the Company is subject and no such material proceeding
is known by management of the Company to be pending.
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ITEM 4 RESULTS OF VOTES OF SECURITY HOLDERS
No votes taken during Fiscal 1995.
PART II
ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
The following table sets forth the range of high and low bid prices as
reported on the OTCBB during the periods commencing:
<TABLE>
CLOSING BID CLOSING ASK
HIGH LOW HIGH LOW
---- --- ---- ---
1995:
- -----
<S> <C> <C> <C> <C>
07/03/95 through 09/29/95 3.28 .15 6.56 .93
10/02/95 through 12/29/95 4.21 .15 7.03 .93
1996:
- -----
01/02/96 through 03/29/96 1.20 .15 1.95 .60
04/01/96 through 06/28/96 .22 .07 .60 .22
07/01/96 through 09/18/96 .30 .11 .75 .37
09/19/96 through 09/30/96 1.125 .375 1.50 .625
10/01/96 through 12/31/96 1.50 .25 2.375 .75
1997
- ----
01/02/97 through 03/31/97 1.50 .6875 2.375 1.00
04/01/97 through 06/30/97 1.4375 .625 1.6875 .875
07/01/97 through 09/30/97 2.375 1.125 2.625 1.375
10/01/97 through 12/31/97 2.25 .46 2.625 .875
</TABLE>
The price of shares have been adjusted for all stock splits.
DIVIDENDS
The Company has paid no dividends during the past five fiscal years on
any class of its issued and outstanding securities.
The payment by the Company of dividends, if any, in the future rests
within the discretion of its Board of Directors and will depend, among other
things, upon the Company's earnings, its capital requirements and its financial
condition, as well as other relevant factors. By reason of the Company's present
financial condition, the Company does not contemplate or anticipate paying any
dividends upon the Common Stock in the foreseeable future.
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COMPANY CAPITALIZATION
There are 20,000,000 shares of Common Stock authorized for issuance. Of
this amount, 8,310,028 shares are currently issued and outstanding. There are
5,000 shares of Preferred Stock authorized, the designation and rights of which
are to be determined by the Board of Directors, none of which are issued and
outstanding.
ITEM 6 MANAGEMENT'S DISCUSSIONS OF DISCONTINUED OPERATIONS
On August 4, 1994, the Board of Directors approved a 1 for 10 reverse
split of the outstanding shares of Common Stock of ProBac International
Corporation. The reverse split was completed on September 11, 1994. The Board of
Directors increased the Company's authorized capital to 50,000,000 shares of
Common Stock and up to 5,000 shares of Preferred Stock for use as needed.
On the February 28, 1995 Balance Sheet, the Company had $5,316,403
worth of assets. Upon new management taking over in 1996, it was determined that
$5,189,263 of these assets were valueless and the Company wrote-off said assets
(See attached Notes to the Financial Statements). After the write-off, the
Company was left with $211,000 of liabilities without the assets to adequately
offset them. Subsequently, as of the date of this report, the Company has
settled those liabilities.
With regard to the Statements of Operations for the year ending May 31,
1995, the Company had zero revenue and $230,000 of expenses with respect to the
discontinued operations.
ITEM 7 FINANCIAL STATEMENTS
The Company's audited consolidated financial statements immediately
follow the signature page to this Form 10-KSB.
ITEM 8 CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None
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PART III
ITEM 9 MANAGEMENT AND DIRECTORS
The current Management and Directors of the Company as of February,
1998 are as follows:
<TABLE>
NAME AGE POSITION(S) NUMBER OF SHARES
- ---- --- ----------- ----------------
<S> <C> <C> <C>
Gerard Haryman 54 President, CEO and 300,000
Chairman of the Board
of Directors
Tom Donaldson 55 Vice President, Secretary 13,333
and Director
Harvey Birnholz 59 Treasurer, CFO and 224,000 *
Director
Timothy Palmer 55 Director 50,000
Scott Schuster 34 Director 1,119,000
</TABLE>
* Seventy-four thousand (74,000) shares are owned directly and 150,000
shares through his interest in a limited partnership.
Set forth below is a brief background of the executive officers and
directors of the Company, based on information supplied by them.
GERARD HARYMAN, has been Chairman of the Board, President and Chief
Executive Officer of the Company since January 1996. Concurrently, until
September 1996, he was President of American Diversified Group, Inc., a public
company based in West Palm Beach, Florida, importing and exporting
pharmaceuticals. Since June 1994 to the present, Mr. Haryman has been President
of Aptek Communications, Inc., a private company, based in West Palm Beach,
Florida in the business of selling and servicing portable computers. From
January 1994 to the present he has been President of Aspen Marine Group, boat
builders and distributer of Portable computers, a public company in West Palm
Beach, Florida that is currently in Chapter 11 Bankruptcy proceedings. Mr.
Haryman is one of about 20 defendants in a lawsuit brought by the Trustee of
Aspen and believes that the lawsuit will have no adverse consequences to the
Company. Since 1981 to the present, he has been President and CEO of SA, Sitmo,
developers and builders of commercial and residential properties, with corporate
offices in Paris, France. In the period from March 1995 to September 1995, Mr.
Haryman was Chairman of Life Industries, Inc., a public company, which intended
to import mineral water and other products from Mexico, which did not
materialize, leading to his resignation from the Board. Mr. Haryman was a
Finance Major at the Institute General de Finance in Paris, France.
He devotes approximately 95% of his time to the business of the Company.
TOM DONALDSON, has been Vice President, Director of Operations and a
Director of the Company (formerly Trident Environmental Systems, Inc.) since
February 1993. In December 1995, Mr. Donaldson filed for Personal Bankruptcy
under Chapter 7 of the Act. The bankruptcy was discharged in February
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of 1996. From March 1996 to March 1997, he was Assistant Manager, Marketing for
CCS Financial, Inc., a finance company in Ft. Lauderdale, Florida. In the period
January 1991 to February 1993, he was Director of Marketing for Professional
Locators, Inc., a placement firm in Boca Raton, Florida. Mr. Donaldson attended
the University of Paris (Sorbonne) and the University of Miami.
HARVEY BIRNHOLZ, has been Treasurer, Chief Financial Officer and a
Director of the Company since October 1997. From August 1990 to August 1997, he
was a Special Investigator and Corporate Auditor for the Florida Department of
Revenue and a Federal and State Tax Consultant on business evaluations. In the
period January 1995 to June 1995, he was Comptroller for nine separate Ladies
Health Centers, and from May 1961 to August 1990 (Retired), he was a Supervising
Agent for the Internal Revenue Service of the United States. Mr. Birnholz holds
a BBA degree in Accounting and Finance from the University of Miami and attended
one year of Law School at the same institution.
TIMOTHY PALMER, has been President of HDX 9000, Inc., West Palm Beach,
Florida, a computer and business consulting firm since October 1993, now a
wholly-owned subsidiary of the Company, and a Director of the Company since July
1997. From March 1997 to the present, he has been President of Quality
Advantage, Ltd. of Kingston, Jamaica, a computer and business consulting firm.
Prior to October 1993, he was manager of the Palmer Family Trust in London,
England. Mr. Palmer holds a Bachelor of Commerce Degree from McGill University
in Montreal, Canada.
SCOTT SCHUSTER, has been President and Chief Executive Officer of
Intuitive Technology Consultants, Inc., Atlanta, Georgia since August 1996, a
wholly-owned subsidiary of the Company, and a Director of the Company since June
1977. In early 1995, Mr. Schuster filed for Personal Bankruptcy under Chapter 7
of the Act. The bankruptcy was discharged in June 1995. From January 1990 to
August 1996, Mr. Schuster was an independent computer programmer and consultant.
OPTIONS & WARRANTS
As of February 1998, there are no options, warrants, rights, etc., of
any kind outstanding.
STOCK OPTION PLAN
As of May 31, 1995, and currently, the Company has no stock option plan
for its employees.
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ITEM 10 EXECUTIVE COMPENSATION
During the year 1995, the Company had no employees earning in excess of
$50,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------- ------
NAME AND SECURITIES UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
------------------ ---- ------ ----- ----------------------
<S> <C> <C> <C> <C>
Markus A. Gertsch 1995 $ 30,000 -0- 13,334
Gerard Haryman, 1996 250,000 (1) -0- -0-
President & CEO
Gerard Haryman, 1997 250,000 (1) -0- -0-
President & CEO
Scott Schuster, 1997 160,000 -0- (2) -0-
President & CEO
Intuitive Technology
Consultants, Inc.
</TABLE>
(1) Due to the cash position of the Company during 1996, 1997 and to date
in 1998, Mr. Haryman has deferred payment of his salary. Since he became CEO in
1996, Mr. Haryman has received payments of $0.00.
(2) Mr. Schuster is entitled to a quarterly bonus based on the net profit
of ITC. To date, ITC has not had a profitable quarter.
EMPLOYMENT AGREEMENTS
Gerald Haryman and Thomas Donaldson have Employment Agreements with the
Company. Scott Schuster has an Employment Agreement with ITC.
COMPENSATION OF DIRECTORS
Each outside Director of Phoenix will receive 2,000 shares of Common Stock
for each year of service plus reimbursement of out-of-pocket expenses.
Currently, the Company has no outside Directors.
12
<PAGE>
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, as of February,
1998, regarding the Company's Common Stock owned of record or beneficially by
(i) each stockholder who is known by the Company to beneficially own in excess
of 5% of the outstanding shares of Common Stock; and (ii) all Directors and
executive officers as a group. Except as otherwise indicated, each stockholder
listed below has sole voting and investment power with respect to shares
beneficially owned by such person.
In accordance with Rule 13d-3, promulgated under the Securities
Exchange Act of 1934, as amended, shares that are not outstanding but that are
issuable within 60 days upon exercise of outstanding options, warrants, rights
or conversion privileges or which are otherwise required by Rule 13d-3 to be
included have been deemed to be outstanding for the purpose of computing the
percentage of outstanding shares owned by the person owning such right, but have
not been deemed outstanding for the purpose of computing the percentage for any
other person. Currently, there were 8,310,028 shares of Common Stock issued and
outstanding and no options, warrants, etc. are outstanding.
COMMON STOCK
-------------------------
AMOUNT AND NATURE
OF BENEFICIAL % OF
NAME AND ADDRESS OWNERSHIP CLASS
- ---------------- ----------------- -----
Gerard Haryman
501 South Dixie Highway
West Palm Beach, FL 33405 300,000 3.61
Tom Donaldson
501 South Dixie Highway
West Palm Beach, FL 33405 13,333 0.16
Harvey Birnholz
301 Dunwoody Lane
Hollywood, FL 33301 224,000 2.70
Timothy Palmer
501 South Dixie Highway
West Palm Beach, FL 33401 50,000 0.60
Scott Schuster
3700 Crestwood Parkway, Suite 1000
Duluth, GA 30096 1,119,000 13.47
--------- -----
All Directors and Officers
as a Group (5 persons) 1,706,333 20.54
13
<PAGE>
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1995, the Company received a loan in the amount of Two Hundred
Forty Thousand Dollars ($240,000) from Markus A. Gertsch, then Chief Executive
Officer of the Company. The loan was for a term of three years at twelve and
one-half percent (12 1/2%) simple interest.
In September 1995 the Company received a loan of Thirty Thousand One
Hundred Thirty-Four Dollars ($30,134) from Mr. Gertsch. This loan was for twelve
(12) months.
Both of these loans were repaid to Mr. Gertsch by the issuance of
220,000 shares of the Company's Common Stock. These shares have not been
registered under the Securities Act of 1933.
ITEM 13 EXHIBITS AND REPORTS
See index of required exhibits and attachments thereto.
INDEX TO EXHIBITS
(2) PLAN OF ACQUISITIONS, REORGANIZATION, ARRANGEMENT, LIQUIDATION, OR
SUCCESSION.
Not applicable
(3) ARTICLES OF INCORPORATION AND BY-LAWS.
3.1 THE ARTICLES OF INCORPORATION OF REGISTRANT ARE ATTACHED.
3.2 AMENDMENTS TO ARTICLES OF INCORPORATION OF REGISTRANT ARE ATTACHED
3.3 BY-LAWS OF REGISTRANT ARE ATTACHED
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS.
Not applicable
(9) VOTING TRUST AGREEMENT.
Not applicable
(10) MATERIAL CONTRACTS.
10.1 Employment Agreement dated January 9, 1995 by and between
Trident Enviromental Systems, Inc. and Thomas N. Donaldson.
10.2 Employment Agreement dated January 18, 1996 by and between
Trident Environmental Industries, Inc. and Gerard Haryman.
10.3 Share Exchange Agreement dated June 2, 1997 by and among
Phoenix International Industries, Inc. and Intuitive
Technology Consultants, Inc., and Shareholders of Intuitive
Technology Contultants, Inc.
10.4 Employment Agreement dated June 13, 1997 by and between
Intuitive Technology Consultants, Inc. and Scott Schuster.
10.5 Share Exchange Agreement dated July 21, 1997 between Phoenix
International Industries, Inc. and HDX 9000, Inc.
(11) STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS.
Not applicable
(13) ANNUAL OR QUARTERLY REPORTS, FORM 10-Q.
Not applicable
(16) LETTER RE: CHANGE IN CERTIFYING ACCOUNTANTS.
Not applicable
(18) LETTER REGARDING CHANGE IN ACCOUNTING PRINCIPALS.
Not applicable
14
<PAGE>
(21) SUBSIDIARIES OF THE REGISTRANT.
See attached
(22) PUBLISHED REPORT REGARDING MATTERS SUBMITTED TO VOTE.
Not applicable
(23) CONSENT OF EXPERTS AND COUNSEL.
Not applicable
(24) POWER OF ATTORNEY.
Not applicable
(27) FINANCIAL DATA SCHEDULE.
(99) ADDITIONAL EXHIBITS.
Not applicable
15
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of West Palm Beach,
Florida on , 1998.
PHOENIX INTERNATIONAL INDUSTRIES, INC.
By: /S/ GERARD HARYMAN
-----------------------------------
Gerard Haryman, President and CEO
In accordance with the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------- ------------------- ------------------
/S/ GERARD HARYMAN President, CEO and MARCH 16, 1998
- ------------------ Chairman of the Board
/S/ TOM DONALDSON Vice President, Secretary MARCH 16, 1998
- ----------------- and Director
/S/ HARVEY BIRNHOLZ Treasurer, CFO and MARCH 16, 1998
- ------------------- Director
/S/ TIMOTHY PALMER Director MARCH 16, 1998
- ------------------
/S/ SCOTT SCHUSTER Director MARCH 16, 1998
- ------------------
16
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
( Development Stage Company )
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
FINANCIAL STATEMENTS PAGE NUMBERS
- -------------------- ------------
Report of Independent Certified Public Accountants F-2
Balance Sheets at May 31, 1995 and May 31, 1994 F-3
Statements of Operations for the fiscal years ended F-4
May 31, 1995 and May 31, 1994
Statements of Changes in Stockholders' Equity
for the fiscal years ended May 31, 1995 and
May 31, 1994 F-5
Statements of Cash Flows for the fiscal years ended
May 31, 1995 and May 31, 1994 F-6
Notes to Financial Statements F-7 to F-12
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board if Directors and Stockholders of Phoenix International
Industries, Inc.
In our opinion, the financial statements listed in the accompanying
index for the year ended May 31, 1995 present fairly, in all material
respects, the financial position of Phoenix International Industries,
Inc. and its subsidiaries at May 31, 1995 and the results of their
operations and their cash flows for the year ended in conformity with
generally accepted accounting principles. These financial statements
are the responsibility of the Company's management: our responsibility
is to express an opinion on these financial statements based on our
audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed
above.
The financial statements for the year ending May 31, 1994 as compiled
by the previous accountant are being presented for comparative purposes
only. These financial statements for the year ending May 31, 1994 have
not been audited or reviewed and accordingly we do not express an
opinion or any other form of assurance on them.
LEON P. WILDE, CPA, INC.
Lake Worth, FL
February 1, 1998
F-2
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
( Development Stage Company )
BALANCE SHEET
( 000's omitted)
ASSETS
------
<TABLE>
MAY 31, MAY 31,
1995 1994
Current Assets:
<S> <C> <C>
Cash $ 104 $ 1
Notes Receivable 0 157
------- ------
Total current assets 104 158
Net Deferred Tax Asset 859 781
Property & Equipment, net 0 1
Patents and trademarks 1 0
------- ------
$ 964 $ 940
======= ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 211 $ 234
Notes payable 240 0
------ ------
Total liabilities 451 234
------ ------
Commitments and contingencies 0 0
------ ------
Stockholders' equity
Common stock, $.01 par value, authorized 10,000,
issued and outstanding 3,017 shares (1,193 in 1994) 30 12
Paid in capital 3,012 2,993
Accumulated deficit (2,529) (2,299)
------- -------
Total stockholders' equity 513 706
------- -------
$ 964 $ 940
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
( Development Stage Company )
STATEMENTS OF OPERATION
( 000's omitted)
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
MAY 31, 1995 MAY 31, 1994
Revenues:
Revenue $ 0 $ 0
------ ------
Expenses:
General and administrative 0 0
------ ------
Income(Loss) before income taxes 0 0
Income Tax Benefit(Provision) 0 0
------ ------
Net Income(Loss)continuing operations 0 0
Discontinued Operations:
Income(Loss) from discontinued
operations (308) 43
Income Tax Benefit(Provision) 78 (11)
------ ------
Net Income (loss) (230) 32
====== ======
Income(Loss) per share from:
Continuing Operations 0.00 0.00
Discontinued Operations (0.11) 0.03
------ ------
$ (0.11) $ 0.03
====== ======
Weighted average number of share 2,105 1,193
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
( Development Stage Company )
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
( 000's omitted)
<TABLE>
COMMON STOCK
-----------------
NUMBER OF PAR PAID IN ACCUMULATED
SHARES VALUE CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C> <C>
Balance May 31, 1994 1,193 $12 $2,993 ($2,299) $706
Issuance of Common Stock 1,824 18 19 37
(Cumulative) 0
Contribution of Antiques and 0 0 650 650
Art Work
Reversal of Contribution 0 0 (650) (650)
Purchase of Land in Exchange 232 2 3,596 3,598
for 232,400 shares of
common stock
Reversal of Land Transaction (232) (2) (3,596) (3,598)
Net income (loss) (230) (230)
------- ------- -------- ------- -------
Balance May 31, 1995 3,017 $30 $3,012 ($2,529) $513
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
( Development Stage Company )
STATEMENTS OF CASH FLOWS
( 000's omitted)
<TABLE>
For the For the
Fiscal year ended Fiscal year ended
May 31, 1995 May 31, 1994
Cash flows from operating activities
<S> <C> <C>
Net income(loss) $ 0 $ 0
Adjustment to reconcile net income(loss)
to net cash(used by)provided by
operating activities:
Depreciation an amortization 0 0
Changes in assets and liabilities
(Increase)Decrease in notes receivable 157 216
(Increase)Decrease in net deferred tax asset (78) 11
Increase(Decrease) in accounts payable (23) (136)
Increase(Decrease) in notes payable 240 (551)
----------- ---------
Net cash (used by) provided by operating activities 296 (460)
----------- ---------
Cash flows from investing activities:
Disposition of Property and Equipment 1 999
Acquisition of Patents and Trademarks (1) 0
Income(loss) Discontinued Operations (230) 32
----------- ---------
Net cash (used by) provided by investing activities (230) 1,031
----------- ---------
Cash flows from financing activities:
Mandatory redemption of stock 0 (574)
Issuance of common stock 37 0
----------- ---------
Net cash (used by) provided by financing activities 37 (574)
----------- ---------
Net (decrease)increase in cash and cash equivalents 103 (3)
Cash and cash equivalents at beginning of year 1 4
----------- ---------
Cash and cash equivalents at end of year $ 104 1
=========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
( Development Stage Company )
NOTES TO FINANCIAL STATEMENTS
( 000's omitted)
1. BUSINESS AND ORGANIZATION
BUSINESS
The Company is engaged, through its wholly-owned subsidiaries, in
computer and software development, consulting and other related services.
Previously the Company was involved in various types of products and systems for
use in the environmental clean-up industry. From January 1, 1996 through May 31,
1997, the Company wound down and closed its environmental clean-up business and
sought the acquisitions of computer consulting companies.
ORGANIZATION
The Company was incorporated on July 22, 1985, pursuant to the laws of
the state of Florida under the name Hydrobac, Inc. On July 7, 1986, the
Company's name was changed to Probac, Inc. and on October 5, 1994, its name was
changed to Trident Environmental Systems, Inc. During those periods the
Company's primary business was in various types of products and systems for use
in the environmental clean-up industry. The Company closed its original clean-up
business by May 31, 1997 and therefore, treats all matters relating to the
environmental clean-up business as discontinued operations.
2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The most significant estimates made by management in the
accompanying financial period. Actual results could differ from those estimates.
F-7
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
( Development Stage Company )
NOTES TO FINANCIAL STATEMENTS
( 000's omitted)
2. SIGNIFICANT ACCOUNTING POLICIES ( CONTINUED )
INCOME TAXES
The Company utilizes an asset and liability approach to accounting for
income taxes that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recognized in the Company's financial statements or tax returns. In estimating
future tax consequences, the Company generally considers all expected future
events other than enactment's of changes in the tax law or rates.
EARNINGS PER COMMON SHARE
Primary earnings per common share are calculated by dividing net
earnings applicable to common stock by the weighted average number of common
stock shares outstanding and common stock equivalents which consist of stock
options and stock warrants. On a fully-diluted basis, net earnings, weighted
average shares outstanding and common stock equivalents are adjusted to assume
the conversion of convertible subordinated debentures and preferred stock from
the date of issue. For the year ended May 31, 1995 and May 31, 1994 fully
diluted earnings per common share are not presented because there are no common
stock equivalents.
CASH AND CASH EQUIVALENTS
For the purposes of reporting cash flows, cash and cash equivalents
include short term investments with maturities of ninety days or less at
purchase date.
PRESENTATION AND RECLASSIFICATION
All dollar and share amounts, except amounts related to per share data,
are expressed in thousands of dollars. Certain items in the 1995 and 1994
financial statements have been reclassified for comparative purposes.
F-8
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
( Development Stage Company )
NOTES TO FINANCIAL STATEMENTS
( 000's omitted)
2. SIGNIFICANT ACCOUNTING POLICIES ( CONTINUED )
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is charged over
the estimated useful lives of the related assets and is computed using the MACRS
method. Repairs and maintenance are charged to operations when incurred.
Betterment's and purchases are capitalized. The cost and accumulated
depreciation of assets that are retired or disposed of are removed from the
appropriate asset and accumulated depreciation account, and any resulting gain
or loss is included in income.
3. STOCKHOLDERS EQUITY
On August 4, 1994, the Board of directors approved a 1 for 10 reverse
split of the outstanding shares of common stock of ProBac International
Corporations. The reverse split was executed on September 11, 1994. The Board of
Directors authorized shares to be increased to 50 million in order to facilitate
the subsequent reverse split. The number of shares authorized after the reverse
split 5 million. On May 31, 1995 there were three million, sixteen thousand,
five hundred (3,016,500) shares of common stock issued and outstanding.
Additionally, on May 31, 1995 there were five thousand shares (5,000) of
preferred stock authorized, none issued.
4. BANKRUPTCY PROCEEDINGS
On February 3, 1992 ProBac International filed for chapter 11
bankruptcy in the United States Bankruptcy Court, Middle District of Florida,
Tampa Division. The Case Number is #92-1352-8B1. Reference should be made to the
required disclosures made to the court including the Plan of Reorganization,
Compromise of Controversy and Final Settlement Agreement and Order Confirming
Debtor's Plan of Reorganization for a complete understanding of ProBac's
financial situation as of the date of reorganization. On June 30, 1993 the
Chapter 11 Plan of Reorganization as amended was scheduled for confirmation
hearing. The Order of Confirmation was signed by Thomas E. Raynes, Jr.,U.S.
Bankruptcy Judge on July 15, 1993.
5. NOTES RECEIVABLE
The Company was due a Note Receivable in the amount of $157,000 as part
of the settlement agreement in the Chapter 11 reorganization. As of May 31, 1995
this note was determined to be uncollectible and was written off.
F-9
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
( Development Stage Company )
NOTES TO FINANCIAL STATEMENTS
( 000's omitted)
6. PATENTS AND TRADEMARKS
The Company owns two patents for solidification of environmental waste,
which were acquired when the Company was involved in that business. The Company
is no longer involved in the environmental clean-up business and the Company
believes that these patents are of very little value due to the rapid
development in the environmental industry. The patents are valued at one
thousand dollars.
7. NOTES PAYABLE
In May 1995, the Company received a loan in the amount of Two Hundred
Forty Thousand Dollars ($240,000) from the then Chief Executive Officer of the
Company. The loan was for a term of three years at twelve and one-half percent
(12 1/2%) simple interest.
8. PROPERTY AND EQUIPMENT
All remaining office equipment, furniture and fixtures as of May 31,
1995 have been written off the financial statements. Under the agreement
mentioned in note 4, the property and equipment were given up during the
reorganization.
9. DISCONTINUED OPERATIONS
During May 31, 1995, The Company made the decision to close down its
environmental clean-up business. As such, the Company has treated this operation
as discontinued operations for all periods presented.
10. SUBSEQUENT EVENT
On October 2, 1996, shareholders approved Amendments to the Articles of
Incorporation, changing the name of the Company to Phoenix International
Industries, Inc.; changing the authorized capital to 20,000,000 (twenty million)
shares of Common Stock, par value $.001 per share; and 5,000 (five thousand)
shares of Preferred Stock for use as needed. The Company's common stock was
reverse split 15 to 1.
On January 1, 1996, the Company made the decision to close its original
clean-up business. From January 1, 1996 through May 31, 1997 the Company wound
down and closed its environmental business.
F-10
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
( Development Stage Company )
NOTES TO FINANCIAL STATEMENTS
( 000's omitted)
10. SUBSEQUENT EVENT( CONTINUED )
On June 1, 1997, the Company acquired Intuitive Technology Consultants,
Inc.(ITC), headquarted in Atlanta, Georgia. In consideration therefore, the
Company issued one million, five hundred thousand shares( 1,500,000 ) of its
"restricted" common stock to the former shareholders of ITC in exchange for 100%
(1,000,000 shares ) of the authorized and issued stock of ITC.
On July 21, 1997, the Company acquired HDX 9000, Inc.(HDX), of New
York, New York. In consideration therefore, the Company issued five hundred
thousand shares (500,000) of its "restricted" common stock to the former
shareholders of HDX in exchange for 100% (1,500 shares) of the authorized and
issued stock of HDX.
On January 18, 1996 the chief executive officer of the Company resigned
as a Director of the Company. The reason for the resignation was personal and
there was no disagreement concerning any matters relating to the Company's
operations, policies or practices. Also on January 18, 1996, the Board of
Directors of the Company appointed Gerard Haryman as President and a Director of
the Company pursuant to the applicable provisions of the Company's Bylaws. Mr.
Haryman holds his respective office until the next annual meeting of the
Company's shareholders or his resignation, removal or death, whichever comes
first.
11. INCOME TAXES
The Company's net deferred tax asset is comprised of the following:
Deferred Tax Asset May 31, 1995 May 31, 1994
Net operating loss carryforward $ 3,388 $ 3,040
Valuation allowance (2,529) (2,259)
---------- -----------
Net Deferred Tax Asset 859 781
========== ===========
Net operating loss carryforwards for Federal income tax purposes total
approximately three million, three hundred and fifty thousand ( $3,350,000) at
May 31, 1995. Net operating losses expire as follows:
F-11
<PAGE>
PHOENIX INTERNATIONAL INDUSTRIES, INC.
( Development Stage Company )
NOTES TO FINANCIAL STATEMENTS
( 000's omitted)
11. INCOME TAXES ( CONTINUED )
YEAR OF
EXPIRATION AMOUNT
---------- ------
2001 $ 106,000
2002 487,000
2003 624,000
2004 940,000
2005 427,000
2006 315,000
2007 44,000
2008 97,000
2010 310,000
-------
$ 3,350,000
==========
If certain substantial changes in the Company's ownership should occur,
there would be an annual limitation on the amount of the carryforward which
could be utilized.
12. COMMITMENTS AND CONTINGENCIES
The Company's principal business is located at 501 South Dixie Highway,
West Palm Beach, Florida, which consists of office and warehouse space. This
space aggregates approximately 3,500 square feet including four offices and a
conference room. The lease cost is $3,500 per month, plus expenses, expiring in
June 1998. HDXX, a wholly-owned Phoenix subsidiary, now shares the space.
The ITC subsidiary rents 10,153 square feet at 3700 Crestwood Parkway,
Duluth, Georgia. The rent is $17,979 per month, under a seven year lease which
expires in February, 2005. However, ITC pays approximately one-half rent, or
$9,125 per month for the first year.
Both of these offices are rented from unrelated third parties.
F-12
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
3.1 ARTICLES OF INCORPORATION OF REGISTRANT ARE ATTACHED
3.2 AMENDMENTS TO ARTICLES OF INCORPORATION OF REGISTRANT AR ATTACHED
3.3 BY-LAWS OF REGISTRANT ARE ATTACHED
10.1 Emplowment Agreement dated January 9, 1995 by and between Trident
Environmental Systems, Inc. and Thomas N. Donaldson.
10.2 Employment Agreement dated January 18, 1996 by and between Trident
Envitionmental Industries, Inc. and Gerard Haryman.
10.3 Share Exchange Agreement dated June 2, 1997 by and among Phoenix
International Industries, Inc. and Intuitive Technology Consultants,
Inc., and Shareholders of Intuitive Technology Consultants, Inc.
10.4 Employment Agreement dated June 13, 1997 by and between Intuitive
Technology Consultants, Inc. and Scott Schuster.
10.5 Share Exchange Agreement dated July 21, 1997 between Phoenix
International Industries, Inc. and HDX 9000, Inc.
21 SUBSIDIARIES OF THE REGISTRANT.
27 Financial Data Schedule.
EXHIBIT 3.1
PHOENIX INTERNATIONAL INDUSTRIES, INC.
(FORMALLY)
TRIDENT ENVIRONMENTAL SYSTEMS INC.
FLORIDA CORPORATION
FEDERAL EMPLOYER IDENTIFICATION NUMBER:
59-2564162
<PAGE>
ARTICLES OF INCORPORATION
OF
HYDROBAC CORPORATION
The undersigned subscribes ... to these Articles of Incorporation to form a
corporation for profit under the law of the State of Florida.
ARTICLE I
The name of the corporation shall be:
Hydrobac Corporation
and its initial post office address and its principal office for the conduct
of business is:
6500 Jarvis Road
Sarasota, Florida 33483
The initial registered agent for this corporation is Donald M. Nodholm, 6500
Jarvis Road, Sarasota, Florida 33483.
The Board of Directors may from time to time move the principal office to any
other address in Florida or replace the initial registered agent and appoint a
successor registered agent.
ARTICLE II
The general nature of the business to be transacted by this corporation is:
(a) To invest in, own, control and manage a business, and to develop,
manufacture and market new commercial bacteria for a profit.
(b) To buy, sell, purchase, acquire, convey, mortgage or transfer in any manner
whatsoever or retain in any manner whatsoever money, stocks, bonds, realty or
any other property in any manner not prohibited by law.
(c) To carry on any and all business as manufacturers, producers, merchants,
wholesalers and retailers, importers and exporters, generally without limitation
as to class of products and merchandise, and to manufacture, produce, adapt,
prepare, buy, sell, and otherwise deal in any materials, articles or things
required in connection with or incidental to the manufacture, production and
dealing in such products.
<PAGE>
(d) To build and construct any property in any manner not prohibited by law, and
to engage in every aspect and phase of construction or contracting work with any
material or materials whatsoever and in any manner whatsoever.
(e) To such extent as a corporation organized under The Florida General
Corporations Act may now or hereafter lawfully do, to do, and for the
accomplishment of any of the purposes or the attaining of any of the objects
enumerated in these Articles of Incorporation, or any amendments thereof, either
as principal or agent, and either alone or in connection with other firms, or
agent, and either alone or in connection with other firms, corporations or
individuals, all and every thing necessary, suitable, convenient, or proper for,
or in connection with, or incidental to, the accomplishment of any of the
purposes or the attainment of any one or more of the objects herein enumerated,
or designed directly or indirectly to promote the interest of this corporation
or to enhance the value of its property, and, in general, to engage in and carry
on any and every lawful business in any manner whatsoever not prohibited by law,
whether or not the same be necessary or incidental to the attainment of the
objects of this corporation, or whether or not such business is similiar in
nature to the objects set forth in these Articles of Incorporation, or any and
all powers, rights, and privileges which a corporation may now or hereafter be
organized, authorized or empowered to do or exercised under the Florida General
Corporations Act, or under any Act amendatory thereto, supplemental thereto or
subsititued thereof.
(f) The foregoing paragraphs shall be construed as enumerating the purposes,
objects and powers of this corporation, and no recitation, expression or
declaration of specific powers or purposes herein enumerated shall be deemed to
be exclusive, but it is hereby expressly declared that all other lawful powers
not inconsistent herewith are hereby included.
ARTICLE III
The maximum number of shares of stock of this corporation which it is authorized
to have outstanding at any one time is 100,000 shares of common stock at $0.01
par value. Said capital stock shall be non-assessable and shall be payable in
lawful money of the United States or in property, labor, or in services at a
JUST VALUATION TO BE FIXED by the stockholders at a meeting duly convened and
held. The minimum capital with which this corporation shall begin business is
ONE THOUSAND DOLLARS ($1,000.00).
ARTICLE IV
If the holder of any share or shares of the stock of this corporation desires to
dispose of the same or any part thereof, he shall not transfer or otherwise
dispose of the same to any person unless and until he has first given the
corporation the right to purchase such stock at book value. Said notice shall be
given in writing by the person desiring to dispose of such stock to the
corporation and the corporation shall have thirty (30) days in which to exercise
its right to purchse, such holder of any share or shares of the capital STOCK
DESIRING TO DISPOSE OF the same shall not transfer or otherwise dispose of the
same to any person unless and until he has first given the stockholders of the
corporation the right to purchase the same as herein provided. The stockholder
so desiring to dispose of all or any part of his stock shall give written notice
of such desire to each of the other stockholders of the corporation at their
addresses as shown on the books of the corporation, stating the number of shares
he desires to sell. Each of the other stockholders shall be entitled to purchase
an equal amount of the stock so offered for sale at book
<PAGE>
value within thirty (30) days after the service of such notice upon the last
stockholder is served. In the event that any one or more of the other
stockholders does not desire to purchase his share of the stock offered for
sale, his or their right to purchase shall inure to the benefit of the remaining
other stockholders. In such notice to exercise their option to purchase the
stock offered for sale, the other stockholders shall state the amount of such
stock which they desire to purchase; and upon receipt of such notice of
intention to purchase; and upon receipt of such notice of intention to purchase,
the stockholder offering the stock for sale shall forthwith sell, assign,
transfer and set over his shares are so transferred in the proportionate amount
requested by each, and the stockholders to whom the shares are so transferred
shall at the time pay to the seller as and for the purchase price thereof an
amount equal to the book value of the stock at the time of such transfer.
In the event that only one of the stockholders desires to exercise his option to
purchase as provided for herein, such other stockholder shall have the right to
purchase the entire amount of stock offered for sale. In the event that two of
the other stockholders elect to purchase only a portion of the stock to which he
is entitled, the remaining other stockholders shall have the right to purchase
the balance of the stock to which he is entitled. In the event that neither the
corporation nor any of the stockholders shall elect to purchase such stock
offered for sale, the holder thereof may sell and transfer the same within six
(6) months from the date of giving such notice to such person at such price as
he may see fit. Said person or persons acquiring the same shall in his or their
turn hold such stock again subject to all terms and conditions herein contained.
If such sale be not made within said period of six (6) months, no sale shall be
made without again giving notice and offering to the corporation and the other
stockholders as herein provided.
Nothing herein contained shall be construed to prevent any stockholders of the
corporation from pledging their stock as security for a debt or obligation; in
the event that such debt is foreclosed, the person acquiring such stock by such
foreclosure shall hold the stock subject to the terms and conditions contained
herein and shall immediately give the other stockholders of this corporation as
herein provided an option to purchase of the shares so acquired at the price and
under the terms hereinabove provided.
Nothing herein contained shall be construed as preventing a stockholder from
transferring his shares of stock to any person, firm or corporation or trust
with the consent of the stockholders at the first meeting of the stockholdrs or
upon written consent of all stockholders or at any other stockholder's meeting
after notice has been given in writing to all of the other stockholders at their
addresses as shown on the books of the corporation, advising the nature of the
proposed transfer.
ARTICLE V
In the event of an issue of non-issued capital stock or of new stock, should the
stock be increased, the existing stockholders at the time of such issue shall
have the right to subscribe for and to purchase such stock so issued in a number
of shares proportionate to the amount owned at the time of said subsequent
issue. In the event that one or more of the stockholders shall fail or refuse to
exercise their option, his or their right to subscribe shall inure to the
benefit to the other stockholders. Written notice of the intention to issue
non-issued capital stock or new stock shall be given by the corporation to all
stockholders and the stockholders shall notify the corporation of their
intention to subscribe within sixty (60) days after such notice.
<PAGE>
ARTICLE VI
The term for which this corporation shall exist shall be perpetual and the
business of the corporation shall be conducted, carried on and managed by the
officers of this corporation and a Board of Directors composed of one (1) or
more members, which number may be altered from time to time by the By-Laws of
this corporation within the limitations prescribed by law.
The officers of this corporation shall be a President and any other officer the
Board of Directors may seem expedient. Any two or more offices except President
and Secretary may be hold by the same person.
ARTICLE VII
The name nd post office addresses of the original subscribers to these Articles
of Incorporation, the officers, and the member of the first Board of Directors
of this corporation, who, subject to the provisions of these Articles of
Incorporation, the By-Laws and the laws of the State of Florida, shall hold
office until the first annual meeting of the corporation, or until successors
are elected and have been QUALIFIED, ARE as follows:
Name Address Office
DONALD M. NODHOLM 6500Jarvis Road President
Sarasota, Florida
33583
ARTICLE VIII
No contract, act or transaction of this corporation with any person or persons,
firm or other corporation,in the absence of fraud or wrongdoing, shall be
affected or invalidated by the fact that any director of this corporation is a
party to or interested in such contract, act or transaction, or in any way
connected with such person, persons, firm or corporation, and each and every
person who may become a director of this corporation is hereby relieved from any
liability that might otherwise exist from thus contracting with this corporation
for the benefit of himself or any other firm, association or corporation in
winch he may in anyway be interested. Any director of this corporation may vote
upon any contract or other transfaction between the corporation and any
subsidiary or controlled company without regard to the fact that he is also a
director of such subsidiary or controlled company.
ARTICLE IX
These Articles of Incorporation of this corporation may be amended, changed,
altered or repealed in the manner now or hereafter prescribed by the Florida
Statutes and all rights conferred upon stockholders herein are granted subject
to this reservation.
IN WITNESS WHEREOF, the Incorporator has subscribed his name this 18 day of
July, 1985.
Donald M.Nodholm, Incorporator
<PAGE>
STATE OF FLORIDA )
) as
COUNTY OF SARASOTA), to-wit:
I hereby certify that on this day before me, a notary public duly authorized in
the state of Florida and County of Sarasota to take acknowledgments, personally
appeared to me known to be the person, DONALD M. NODHOLM, described as the
Incorporator to the foregoing Articles of Incorporation and who executed the
same, and acknowledged before me that he signed those Articles of Incorproation.
Witness my hand and official seal in the County and State named above this 18
day of July, 1985.
N O T A R Y P U B L I C
WITNESS my respective hand and seal this 18 day of July, 1985.
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF HYDROBAC CORPORATION
The name of this corporation is HYDROBAC CORPORATION, and such name remains
unchanged. These Amended and Restated Articles of Incorporation of HYDROBAC
CORPORATION have been duly adopted by the Board of Directors of this
corporation, pursuant to Section 607.194, Florida Statutes, as amended.
Amendments to the original Articles of Incorporation of this corporation as
included herein have been adopted pursuant to Section 607.181 and Section
607.194 (4), Florida statutes, as amended. There is no discrepancy between these
Amended and Restated Articles of Incorporation and the original Articles of
Incorporation of this corporation other than the inclusion of amendments so
adopted and the omission of matters of historical interest.
ARTICLE I - EXISTENCE
This corporation, having commenced existence upon the filing of its original
Articles of Incorporation on July 22, 1985, shall continue such existence and
shall, upon the filing of these Amended and Restated Articles of Incorporation
with the Department of State of the State of Florida, be governed hereby.
ARTICLE II - PURPOSE
The general purpose for which this corporation is organized shall be the
transacting of any or all lawful business for which corporations may be
incorporated un the provisions of Chapter 607, Florida Statutes.
<PAGE>
ARTICLE III - AUTHORIZED SHARES
A. COMMON STOCK. This Corporation is authorized to issue Ten Million
(10,000,000) Shares of Common Stock, each having a par value of $.001. The
adoption of this amended article is intended to effect a reclassificaton of the
authorized and outstanding shares of common stock of the Corporation.
Accordingly, each share of common stock of the Corporation, $.01 par value,
authorized and outstanding as of the date of the adoption of this amended
article shall be reclassified into One Hundred (100) Shares of Common Stock of
the Corporation, $.001 par value. Certificates evidencing the ownership of
shares of common stock outstanding as of the date of the adoption of this
amended article shall be surrendered to the Corporation and canceled, and the
Corporation shall promptly issue replacement certificates to the holders thereof
evidencing ownership of appropriate numbers of shares of reclassified common
stock of the Corporation, $.001 par value.
B. OTHER SECURITIES. Upon the sole authority of the Board of Directors of the
corporation, the corporation may issue warrants, options, rights of subscription
and other instruments vesting in the holders thereof the right to purchase the
authorized but unissued capital stock of the corporation as authorized by this
Article and as may be authorized by these Amended and Restated Articles of
Incorporation as amended from time to time.
ARTICLE IV - REGISTERED OFFICE AND AGENT
The street address of the registered office of this corporation shall continue
to be 6500 Jarvis Road, Sarasota, Florida, 33583, and the name of the registered
agent of this corporation at that address shall continue to be Donald M.
Nodholm.
ARTICLE V - BOARD of DIRECTORS
This corporation shall hereafter have three (3) directors. The number of
directors may be increased from time to time by the Bylaws. The names and
addresses of the directors of this corporation are:
Name ADDRESS
Donald M. Nodholm 6500 Jarvis Road
Sarasota, Florida 33583
John T. Goorley 3206 Highland Terrace West
Austin, Texas 78731
Peter E. Kent 4358 Trails Drive
Sarasota, Florida 33482
The foregoing persons shall serve as the directors of this corporation until the
next annual meeting of the shareholders or until their successors are elected
and qualified.
<PAGE>
ARTICLE VI - BYLAWS
The power to adopt, alter, amend or repeal Bylaws of this corporation shall be
vested in either the Board of Directors or shareholders; provided, however, that
the Board of Directors may not alter, amend or repeal any Bylaw adopted by the
shareholders if the shareholders specifically provide that the Bylaw is not
subject to alteration, amendment or repeal by the Board of Directors.
ARTICLE VII - INDEMNIFICATION
The corporation shall indemnify any officer or director, or any former officer
or director, to the full extent permitted by law.
ARTICLE VIII - ADOPTION of AMENDMENTS
The amendments to the original Articles of Incorporation of this corporation
included herein have been adopted by all of the directors of the corporation and
all of the shareholders of the Corporation entitled to vote thereon, by written
action pursuant to Section 607.181, Florida Statutes, effective February 7,
1986.
IN WITNESS WHEREOF the undersigned President and Assistant Secretary of this
Corporation have executed these Amended and Restated Articles of Incorporation
this 13 day of MARCH, 1986.
HYDROBAC CORPORATION
By
DONALD M. NODHOLM
Its President
Attest:
JOHN H.LEWIS,
Assistant Secretary
STATE OF FLORIDA )
COUNTY OF SARASOTA )
Before me, personally appeared DONALD M. NODHOLM, to me well known and known to
me to be the person described as President of Hydrobac Corporation, and who
executed the foregoing Amended and Restated Articles of Incorporation, and who
acknowledged the execution to be his free acts and deed as such officer for the
purposes therein expressed.
Witness my hand and official seal this 13 day of March, 1986.
NOTARY PUBLIC
My Commission Expires:
The undersigned, having been designated in the foregoing Amended and Restated
Articles of Incorporation to continue to serve as Registered Agent, hereby
agrees to accept said designation.
DONALD M. NODHOLM
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
HYDROBAC CORPORATION
Article I of the Articles of Incorporation of HYDROBAC CORPORATION is amended to
read as follows:
The name of the corporation is changed to:
PROBAC INTERNATIONAL CORPORATION
This amendment was adopted by the shareholders on June 16, 1986 to be effective
July 7, 986.
IN WITNESS WHEREOF, the undersigned President and Secretary of this corporation
have executed these Articles of Amendent on July 11, 1986.
HYDROBAC CORPORATION
By
Secretary President
(CORPORATE SEAL)
STATE OF FLORIDA )
COUNTY OF SARASOTA )
BEFORE ME personally appeared DONALD M. NODHOLM, to me well known and known to
me to be the person described as President of HYDROBAC CORPORATION and who
executed the foregoing Articles of Amendment, and he acknowledged the execution
to be his free act and deed as such officer, for the purposes therein expressed.
WITNESS my hand and official seal this 11 day of JULY, 1986.
NOTARY PUBLIC
My Commission Expires:
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
PROBAC INTERNATIONAL CORPORATION
Article III.A. of the Amended and Restated Articles of Incorporation of ProBac
Internaional Corporation, as amended, is hereby amended and the corporation
shall hereafter be authorized to issue Twenty Million (20,000,000) shares of
Common Stock, each having a par value of $.001.
The registered office of the corporation is hereby changed to 4370 South Tamiami
Trail, Suite 301, Sarasota, Florida 33581. Donald M. Nodholm shall continue as
the registered agent of the corporation at such address.
This Amendment was adopted by written action of the Shareholders pursuant to
Section 607.394, Florida Statutes (1985), as amended, on August 22, 1986.
IN WITNESS WHEREOF, the undersigned President and Secretary of this corporation
have executed these Articles of Amendment on AUGUST 25, 1986.
Attest: PROBAC INTERNATIONAL CORPORATION
By
Secretary President
(CORPORATE SEAL)
STATE OF FLORIDA )
: SS
COUNTY OF SARASOTA )
BEFORE ME personally apeared DONALD M. NODHOLM, to me well known and know to me
to be the person described as President of PROBAC INTERNATIONAL CORPORATION and
who executed the foregoing Articles of Amendment, and he acknowledged the
execution to be his free act and deed as such officer, for the purposes therein
expressed.
WITNESS my hand and official seal this 25 day of AUGUST, 1986.
Notary Public
My commission expires
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
PROBAC INTERNATIONAL CORPORATION
Article III.A of the Amended and Restated Articles of Incorporation of PROBAC
INTERNATIONAL CORPORATION, as amended, is hereby amended to reclassify each
outstanding share of Common Stock, par value $.001 per share, into 2.5 shares of
Common Stock, par value $.001 per share. This amendment was adopted by written
action of the shareholders pursuant to Section 607.394, Florida Statutes (1985)
as amended, on March 10, 1987.
Article III.A. of the Amended and Restated Articles of Incorproation of PROBAC
ITNERNATINAL CORPORATION, as amended, is hereby amended and the corporation
shall hereafter be authorized to issue Fifty Million (50,000,000) share of
Common Stock, each having a par value of $.001. This amendment was adopted by
written action of the shareholders pursuant to Section 607.394, Florida Statutes
(1985) as amended, on August ~ 1987.
IN WITNESS WHEREOF, the undersigned _ President and Secretary of this
corporation have executed these Articles of Amendment on AUGUST 10, 1987.
Attest: PROBAC INTERNATIONAL CORPORATION
By
Secretary President
STATE OF FLORIDA
COUNTY OF SARASOTA
BEFORE ME personally appeared Donald M. Nodholm, to me well known and known to
me to be the person described as President of PROBAC INTERNATIONAL CORPORATION
and who executed the foregoing Articles of Amendment, and he acknowledged the
execution to be his free act and deed as such officer, for the purposes therein
expressed.
WITNESS my hand and official seal this 10 day of AUGUST, 1987.
NOTARY PUBLIC
My Commission Expires:
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
PROBAC INTERNATIONAL CORPORATION
Article III.A. of the Amended and Restated Articles of Incorporation of PROBAC
INTERNATIONAL CORPORATION, as amended, is hereby amended to effect a two for one
reverse split of all outstanding shares of Common Stock, $.001 par value, so
that each two such shares outstanding at October 30, 1987 shall, as of November
30, 1987, be deemed to equal one share of Common Stock, $.001 par value.
Certificates evidencing outstanding shares need not be surrendered but shall
hereafter be deemed to give effect to the foregoing reverse split,
notwithstanding share amounts set forth on such certificates. This amendment was
adopted by written action of the shareholders pursuant to Section 607.394,
Florida Statutes (1985) as amended, on November 30, 1987.
IN WITNESS WHEREOF, the undersigned President and Secretary of this corporation
have executed these Articles of Amendment on DECEMBER 10, 1987.
Attest: PROBAC INTERNATIONAL CORPORATION
By
Secretary President
STATE OF FLORIDA
COUNTY OF SARASOTA
BEFORE ME personally appeared DONALD M. NODHOLM, to me well known and known
to me to be the person described as President of
PROBAC INTERNATIONAL CORPORATION and who executed the foregoing Articles of
Amendment, and he acknowledged the execution to be his free act and deed as such
officer, for the purposes therein expressed.
WITNESS my hand and official seal this 10 day of DECEMBER, 1987.
NOTARY PUBLIC
<PAGE>
ARTICLES OF AMENDMENT
ARTICLE I. NAME
The name of this Florida corporation is Probac International Corporation t the
"Corporation").
ARTICLE II. AMENDMENT
The Articles of Incorporation of the Corporation are amended so that the name of
the Corporation is changed to Trident Environmental Systems Inc., and the
mailing address of the Corporation is changed to:
Trident Environmental Systems Inc. 400 Ausutralian Avenue, Suite 750 West
Palm Beach, Fl 33401
ARTICLE III, DATE AMENDMENT ADOPTED
The amendment set forth in these Articles of Amendment was adopted on October 5,
1994.
ARTICLE IV. APPROVAL OF AMENDMENT
The amendment set forth in these Articles of Amendment was proposed and adopted
by the Corporation's Board of Directors, Shareholder approval was not required
to his amendment.
An authorized representative of the Corporation executed these Articles of
Amendment on October 5, 1994.
Probac International Corporation
By:
Name: Chairman
Title:
<PAGE>
Articles of Merger
of
Probac International Corporation
ARTICLE I. NAME OF SURVIVING CORPORATION
The name of this Florida corporation is Probac International Corporation.
ARTICLE II. AGREEMENT AND PLAN OF MERGER
The Agreement and Plan of Merger is attached as an exhibit to the Articles of
Merger.
ARTICLE III. EFFECTIVE DATE OF MERGER
The corporate existence of the Surviving Corporation shall begin effective as of
the date of filing of the Articles of Merger.
ARTICLE IV. ADOPTION OF PLAN of MERGER
The plan of merger was adopted by the Board of Directors of Probac International
Corporation on September 14, 1994 (shareholder approval was not reguired as
provided for by the Florida Business Corporation Act). The plan of merger was
adopted by the shareholders of Trident Internatinal Trading LTD. Inc., on
September 26, 1994.
An authorized representative of the Merging and of the Surviving Corporations
executed these Articles of Merger on October 5, 1994.
Probac International Trident International
Corporation Trading Ltd., Inc
By: By:
Name: Name:
Title: Title
AGREEMENT AND PLAN OF MERGER
DATE: September 14, 1994
PARTIES:
TRIDENT INTERNATIONAL TRADING, LTD., INC. a New York corporation
authorized to do business in Florida, (Merging Corporation), and
PROBAC INTERNATIONAL CORPORATION, a Florida corporation, (Surviving
Corporation)
<PAGE>
SECTION 1. MERGER
On the Effective Date, the Merging Corporation shall be merged with and into the
Surviving Corporation. The separate existence of the Merging Corporation shall
cease, and both the Merging and Surviving Corporation shall be a single
corporation which shall be the Surviving Corporation. The title to all real
estate and other property owned by the Mergin Corporation and the Surviving
Corporation shall be vested in the Surviving Corporation without reversion or
impairment and without further act or deed. The Surviving Corporation shall
assume all liabilities and obligations of the Merging Corporation and the
Surviving Corporation as of the Effective Date. Any proceeding pending against
the Merging Corporation or the Surviving Corporation may be continued as if the
merger did not occur, or the Surviving Corporation may be substituted in the
proceeding for the Merging Corporation.
SECTION 2. SHAREHOLDER APPROVAL
Forthwith upon the full execution of this agreement, the Merging Corporation and
the Surviving Corporation shall each submit this agreement to its shareholders
for approval in accordance with Business Corporation Act of the State of
Florida.
SECTION 3. EFFECTIVE DATE AND CLOSING
3.1 EFFECTIVE DATE. The merger of the Merging Corporation and the Surviving
Corporation shall be effective (Effective Date) upon the filing of the Articles
of Merger in accordance with the Business Corporation Act of the State of
Florida.
3.2 CLOSING. Subject to the satisfaction of the conditions set forth in
Sections 10 and 11 of this agreement, the closing of this merger shall take
place at the office of the Surviving Corporation on September 14, 1954, or at
such other place or at such other times as may be agreed upon by the Surviving
Corporation and the Merging Corporation. At the time of the closing:
3.2.1 FILING OF ARTICLES OF MERGER. The Surviving Corporation and the Merging
Corporation shall cause the Articles of Merger to be filed.
3.2.2 CERTIFICATION. The Merging Corporation and the Surviving Corporation shall
each deliver to the other ceritifed copies of the resolutions of the Board of
Directors and Shareholders of the delivering corporation approving the merger.
3.3 FURTHER ASSURANCES. From time to time after the closing, the parties shall
execute and deliver such other documents and take such other actions as may
reasonable required to accomplish the merger.
SECTION 4. SHARES OF STOCK
4.1 EXCHANGE OF SHARES. On or after the Effective Date, the Surviving
Corporation, upon the receipt of properly endorsed stock certificates
representing the outstanding shares of common stock of the Merging Corporation,
shall issue to the shareholders of the Merging Corporation equal to 1.3 million
shares of common stock.
<PAGE>
4.1.1. It is understood that the amount of shares issued by Probac International
Corporation are approximately 14,000,000 common stock as of May 31, 1994.
4.2 CANCELLATION OF SHARES. On the effective Date, each share of stock of the
Merging Corporation that is then issued and outstanding shall, by virtue of the
merger and without any action on the part of the Merging Corporation or the
Surviving Corporation, be immediately canceled.
4.3 CONTINUATION OF SHARES. Each share of stock of the Surviving Corporation
that is issued and outstanding as of the Effective Date shall continue to be an
issued and outstanding share of the Surviving Corporation, notwithstanding the
merger.
SECTION 5.
CORPORATE INCIDENTS
5.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of the Surviving
Corporation, as in effect immediately prior to the Effective Date, shall be the
Articles of Incorporation of the Surviving Corporation following this merger.
5.2 BYLAWS. The Bylaws of the Surviving Corporation, as in effect immediately
prior to the Effective Date, shall be the Bylaws of the Surviving Corporation
following this merger.
5.3 BOARD OF DIRECTORS AND OFFICERS. The new Board of Directors of the
Surviving Corporation shall be: L.T. Fan, Bryon Fox, Robin Sommerville,
Howard Horton, Harold Brock, R.H. Grey, Lucian Vestal and Stephan Inezedy.
SECTION 6. REPRESENTATION AND WARRANTIES OF MERGING CORPORATION
6.1 ORGANIZATION. The Merging Corporation is a corporation duly organized and
existing in good standing under the laws of the state of Florida nad has the
corporate power to own its properties and to carry on its busines as now
conducted, and is qualified to do business in no other jurisdiction. No
proceeding is pending or threatened involving the Merging Corporation in which
it is alleged that the nature of its business makes qualification necessary IN
ANY ADDITIONAL jurisdiction.
6.2 CAPITALIZATION. The issued and outstanding stock of the Merging Corporation
consists solely of common stock with a par value of .01. All of the issued and
outstanding shares of the Merging Corporation are validly issued and oustanding,
fully paid and nonassessable. There are not exisiting options, warranties,
calls, preemptive rights (except certain statutory rights not affecting the
transactions hereunder), or commitments of any kind relating to the Merging
Corporation's authorized and unissued capital stock.
6.3 SUBSIDIAIRES. The Merging Corporation has no subsidairies.
<PAGE>
6.4 VALID AND BINDING AGREEMENT. The execution and delivery of this agreement
has been approved by the Board of Directors of the Merging Corporation, and this
agreement constitutes a valid and binding obligation of the Merging Corporation
in accordance with its terms. The execution and delivery of this agreement and
the consummation thereof do not and will not violate any provision of any
judicial or governmental decree, order, or judgment or conflict with, or result
in a breach of, or 3 constitute a default under, the Articles of Incorporation
or bylaws of the Merging Corporation, or any material agreements or instrument
to which the Merging Corporation is a party or by which it is bound.
6.5 FINANCIAL STATEMENTS. The Merging Corporation has furnished Surviving
Corporation with the Merging Corporation's balance sheet as of 9/15/94, and its
income statement for the years ended on such dates, together with the report of
an Independent certified public accountants. The Merging Corporation has also
furnished the Merging Corporation's unaudited balance sheet as of 9/11/94
(Latest Balance Sheet) and its Income statement for the months ended on such
date. All such financial statements, (including the notes thereof) are correct
and complete, and the audited financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and fairly present in financial position of the Merging Corporation on the dates
thereof and the results of its operations for the periods then ended.
6.6 UNDISCLOSED LIABILITIES. THE MERGING Corporation has no liability or
obligation, absolute or contingent, including without limitation, liabilities
for federal, state, local or foreign taxes, that is not reflected on the Latest
Balance Sheet, except for changes in the amounts of the liabilities shown on the
Latest Balance Sheet that have arisen since the data of the Latest Balance Sheet
in the ordinary course of business and that are not materially adverse to the
business, assets, or operation of the Merging Corporation.
6.7 TITLE TO PROPERTIES. The Merging Corporation has good and marketable title
to all of its properties and assets, real and personal (including those
reflected in the Latest Balance Sheet except as since sold or otherwise disposed
of in the ordinary course of business), free and clear of all liens and
encumbrances except, with respect in the real property. The Merging Corporation
has received no notice of violation of any law, regulation, ordinance, or other
requirement relating in its business or operations or its owned or leased real
or personal properties.
6.8 CONDITION OF PERSONAL PROPERTY. Except as disclosed in the Latest Balance
Sheet: (1) the machinery and equipment of the Merging Corporation is in good and
usable condition, reasonable wear and tear excepted; (2) substantially all its
inventories, as valued in the Latest Balance Sheet, are good and seeable, and
not obsolete, and will be sold, used or consumed in the usual and ordinary
course of business of the Merging Corporation as now conducted; and (3) the
accounts receivable of the Merging Corporation as shown on the Latest Balance
Sheet are good and collectible at the aggregate recorded amount after reserved
thereof, subject to no counter claims or setoffs.
6.9 CONDITION OF REAL PROPERTY. The real property of the Merging Corporation,
and to the best of the Merging Corporation's knowledge, the surrounding areas,
are not currently and have not ever been subject to hazardous or toxic
substances or wastes or to their effects, and there are no claims, litigation,
administrative or other proceedings, whether actual or threatened, or judgment
or others, relating to any hazardous or toxic substances or wastes, discharges,
emissions, or other forms of pollution relating in any way to the real property
or improvements of the Merging Corporation.
<PAGE>
6.10 ADEQUANCY OF RIGHTS, PATENTS AND TRADEMARKS. The Merging Corporation owns
or possesses adequate patents, franchises, licenses or other rights to use all
trade names, trademarks, patents, copyrights, trade secrets, formulas, design
rights, and other intangible assets necessary to conduct its business, and its
business as it is expected to be conducted, to purchase and sell the products
now being purchased and sold, and to perform the services now being performed by
it.
6.11 OBLIGATIONS, LITIGATION. The Merging Corporation has performed all material
obligations required to be performed by it to date, and is not in default under
any agreement, lease or other document to which it is a party, or under any law
or order of any court or other governmental agency, which has or may have a
material effect on the busines, operations, or financial conditions of the
Merging Corporation. There are no claims, actions, suits, or proceedings pending
or threatened at law or in equity or before or by any federal, state, or other
governmental agency, which if adversely determined would have no adverse effect
on the business, operations, or financial condition of the Merging Corporation
or would precept or hinder the consummation of the merger. No party with whom
the Merging Corporation has an agreement, lease or other arrangement which is of
material importance to the Merging Corporation in default thereunder.
6.12 COMPLIANCE WITH LAWS. The business of the Merging Corporation has been
conducted consistent with the material provisions of all applicable laws and
regulations of federal, state and local governments (including, without
limitation, any applicable building, zoning, health, safety, or environmental
ordinance or regulation). No improper gifts or illegal payments have been made
or received on behalf of the Merging Corporation by any of its officers,
directors, employees, or agents.
6.13 CONTRACTS. The merging Corporation has disclosed to the Surviving
Corporation all major contracts relating to the Merging Corporation's business
including (1) all contracts with sales representatives which are not terminable
on 30 days notice or less (2) any other contract or commitment, not in the
ordinary course of business, involving a liability by or to the Merging
Corporation to pay in the aggregate more than $ 0 ; and any other contract,
agreement, or arrangement, not in the ordinary course of business, which is or
may be material to the business, operations or financial condition of the
Merging Corporation. The Merging Corporation has not entered into any employment
contract or any other contract, agreement, or commitment which will require the
Merging Corporation to provide goods or services more than 90 days free from the
date hereof, whether IN THE ORDINARY COURSE of business or otherwise.
6.14 LONG TERM DEBT. Except as disclosed in its Financial Statements, the
Merging Corporation has no obligations for the repayment of borrowed money which
has a maturity date of more than one year from the date such OBLIGATION was
incurred.
6.15 TAX MATTERS. The merging Corporation has filed all federal, state, local,
and foreign tax returns required to be filed by it and has paid all federal,
state, local and foreign tax required to be paid. All taxes and governmental
charges levied or assessed against the property or the business of the Merging
Corporation have been paid, other than taxes or charges the payment of which is
not yet due or which, if due, are not yet delinquent or which have not been
finally determined or which are being contested in good faith. The amounts set
up as provisions for taxes on the Latest Balance Sheet are sufficient for the
payment of all unpaid taxes and other governmental charges applicable to the
property or the business of the Merging Corporation for the period ended on the
date of the Latest Balance Sheet and all periods prior thereto.
<PAGE>
6.16 LABOR MATTERS. The Merging Corporation is not a party to any collective
bargaining agreement, and there is no pension or profit-sharing plan for the
Merging Corporation's employees. The Merging Corporation has complied with all
laws and regulations which relate to employee civil rights and equal employment
opportunities and there are no presently pending or threatened labor problems
which do or may in the future adversely affect the business, operations, or
financial condition of the Merging Corporation.
6.17 INSURANCE. During its past three fiscal years, the Merging Corporation has
been adequately insured with reputable insurers with respect to its properties,
assets and business against risks normally insured against by companies in
similar lines of business.
6.18 SUPPLIERS AND CUSTOMERS. The Merging Corporation is not aware that any
major customer or supplier of the Merging Corporation intends to discontinue or
diminish its business relationship with the Merging Corporation on account of
the transactions contemplated hereunder or otherwise.
6.19 COMPLETENESS OF DISCLOSURE. Neither this agreement nor any certificate,
exhibit, schedule, or other instrument furnished or to be furnished by the
Merging Corporation to the Surviving Corporation pursuant to this agreement, or
in connection with the merger, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained not misleading. There is no fact which
materially affect the business, operations, or condition (financial or
otherwise) of the Merging Corporation which has not been set forth in this
agreement or in any Exhibit, certificate, or schedule furnished under this
agreement.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF SURVIVING
CORPORATION
7.1 ORGANIZATION. The Surviving Corporation is a corporation duly organized and
existing in good standing under the laws of the State of Florida and has the
corporate power to own its properties and to carry on its business as now
conducted.
7.2 CAPITALIZATION. The issued and outstanding stock of the Surviving
Corporation consists solely of approximately 14,000,000 shares of common stock
with a par value of .001. All of the issued and outstanding shares of the
Surviving Corporation are validly issued and outstanding, fully paid and
nonassessable. There are no existing options, warrants, calls, preemptive rights
(except certain statutory rights not affecting the transactions hereunder), or
commitments of any kind relating to the Surviving Corporation's authorize and
unissued capital stock.
7.3 SHARES ISSUED IN MERGER. The shares of stock of the Surviving Corporation to
be issued to the shareholder of the Merging Corporation in the merger shall be
fully paid and nonassessable. However, the issuance of shares by the Surviving
Corporation will not be registered under the Securities Act of 1933 as amended
(act), nor the securities law of any state, and the Certificate for the Shares
shall bear a legend stating that the shares shall not be offered, sold, pledged,
hypothecated, or otherwise transferred or disposed of without registration under
the Act and any applicable state securities law or an opinion of counsel or
other evidence satisfactory to counsel for the Corporation that an exemption
from such registrations is available. The Surviving Corporation is under no
obligation to register the shares or to assist shareholders of the Merging
Corporation in complying with an exemption from registration.
<PAGE>
7.4 VALID AND BINDING AGREEMENT. The execution and delivery of this agreement
has been approved by the Board of Directors of the Surviving Corporation, and
this agreement constitutes a valid and binding obligation to the Surviving
Corporation in accordance with its terms. The execution and delivery of this
agreement and the consummation thereof do not and will not violate any provision
of any judicial or governmental decree, order, or judgment or conflict with, or
result in a breach of, or constitute a default under, the Articles of
Incorporation or bylaws of the Surviving Corporation, or any material agreement
or instrument to which the Surviving Corporation, or any material agreement or
instrument to which the Surviving Corporation is a party or by which it is
bound.
7.5 FINANCIAL STATEMENTS. The Surviving Corporation has furnished the Merging
Corp[oration with the Surviving Corporation's balance sheet as of 9/10/94, and
its income statement for the years ended on such dates, together with the report
of Peter Timmermann, 3700 South Tamiami Trail, Suite 210, Sarasota, Florida
34239, an independent certified public accountant.
7.6 LITIGATION. There are no claims, actions, suits or proceedings pending or
threatened at law or in equity or before or by any federal, state, or other
governmental agency, which if adversely determined would have an adverse affect
on the business, operations, or financial condition of the Surviving Corporation
or would prevent or hinder the consummation of the merger.
7.7 COMPLETENESS OF DISCLOSURE. Neither this agreement nor any certificate,
exhibit, schedule, or other instrument furnished or to be furnished by the
Surviving Corporation to the Merging Corporation pursuant to this agreement, or
in connection with the merger contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements contained not misleading. There is no fact which
materially adversely, affects or amy, in the future, materially adversely affect
the business, operations, or condition (financial or otherwise) of the Surviving
Corporation which has not been set forth in this agreement or in any exhibit,
certificate, or schedule furnished under this agreement.
SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties of the Merging Corporation and the Surviving
Corporation shall be true and complete as of the Closing and shall survive the
closing.
SECTION 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF MERGING
CORPORATION
The obligation of the Merging Corporation to consummate the merger is at the
option of the Merging corporation, subject to the fulfillment, prior to or at
the closing, of each of the following conditions:
9.1 REPRESENTATIONS AND PERFORMANCE. The representations and warranties made
under this agreement by the Surviving Corporation shall be true and correct in
all material respects at the time of the closing, and the Surviving Corporation
shall have performed and complied with all agreements, covenants, and conditions
required of the Surviving Corporation by the closing under the terms of this
agreement.
9.2 ADVERSE CHANGES. There shall not have been any material adverse changes in
the conditions, financial or otherwise, or business of the Surviving Corporation
since the date of the Latest Balance Sheet of the Surviving Corporation.
<PAGE>
9.3 SHAREHOLDER APPROVAL. This agreement shall have been approved by the holders
of a majority of the issued and outstanding shares of the stock of the Merging
Corporation as required under the Business Corporation Act of the state of
Florida.
9.4 DISSENTERS' RIGHTS. Prior to the approval of this agreement by the
shareholders of the Merging Corporation, the Merging Corporation shall not have
received written notice of intent to assert dissenter's rights and demand
payment of fair value for shares by reason of this merger from the holders of
more than five percent of the issued and outstanding shares of stock of the
Merging Corporation.
SECTION 10. CONDITIONS TO OBLIGATIONS OF SURVIVING
CORPORATION
The obligation of the Surviving Corporation to consummate the merger is, at the
option of the Surviving Corporation, subject to the fulfillment, prior to or at
the closing, of each of the following conditions:
10.1 REPRESENTATIONS AND PERFORMANCE. The representations and warranties made
under this agreement by the Merging Corporation shall be true and correct in all
material respects at the time of the closing, and the Merging Corporation shall
not have performed and complied with all agreements, covenants, and conditions
required of the Merging Corporation by the closing under the terms of this
agreement.
10.2 ADVERSE CHANGES. There shall not have been any material adverse changes in
the conditions, financial or otherwise, or business of the Merging Corporation
since the date of the Latest Balance Sheet of the Merging Corporation.
10.3 SHAREHOLDER APPROVAL. This agreement shall have been approved by the
holders of a majority of the issued and outstanding shares of the stock of the
Surviving Corporation as required under the Business Corporation Act of the
state of Florida or a Court Order.
10.4 DISSENTERS' RIGHTS. Prior to the approval of this agreement by the
shareholders of the Surviving Corporation, the Surviving Corporation shall not
have received written notice of intent to assert dissenters' rights and demand
payment of fair value for shares by reason of this merger from the holders of
more than five percent of the issued and outstanding shares of stock of the
Surviving Corporation.
10.5 INVESTMENT REPRESENTATIONS. The shareholders of the Merging Corporation
receiving stock of the Surviving Corporation in the merger shall execute and
deliver to Surviving Corporation an investment representation certificate
warranting and representing that the shareholder:
10.5.1 Has sufficient knowledge and experience to evaluate the merits and risks
of his or her investment in the shares of the Surviving Corporation.
10.5.2 Has been provided with, or given reasonable access to, full and fair
disclosure of all information material to his or her investment in the shares of
the Surviving Corporation.
10.5.3 Understands that no market is likely to exist for the shares of the
Surviving Corporation and does not anticipate the need to sell the shares in the
foreseeable future.
<PAGE>
10.5.4 Is acquiring the shares of the Surviving Corporation for the
shareholder's own account for investment purposes only and not with a view to
their distribution.
10.5.5 Understands that the shares will not be registered under the Securities
Act of 1993, as amended (Act) not the securities law of any state, and
accordingly theses securities may not be offered, sold, pledged, hypothecated,
or otherwise transferred or disposed of in the absence of registration or the
availability of an exemption from registration under the Act and any applicable
state securities law. The shareholder further understands that the Surviving
Corporation is under no obligation to register the shares on behalf of the
shareholder or to assist the shareholder in complying with an exemption from
registration.
10.5.6 Understands that the certificate for the shares of the Surviving
Corporation will bear a legend that the shares shall not be offered, sold,
pledged, hypothecated, or otherwise transferred or disposed of without
registration under the Act and any applicable state securities law or an opinion
of counsel or otherwise evidence satisfactory to counsel for the Corporation
that an exemption from such registrations is available.
10.6 CONDITIONS TO OBLIGATIONS OF BOTH CORPORATIONS. The obligations of the
Merging Corporation and the Surviving Corporation to consummate the merger are,
at the option of either party, subject to the condition that, at the time of the
closing, no suit, action, or other proceeding is pending or threatened before
any court or other governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this agreement
or the consummation of the merger.
SECTION 11. EXPENSES
The Surviving Corporation and the Merging Corporation shall each bear their own
expenses, including legal and accounting fees, incurred in connection with this
transaction. The Merging Corporation agrees to pay registration fees.
SECTION 12. INTENT
It is the intent of the parties that the transaction contemplated by this
agreement shall constitute a merger under the Business Corporation Act of the
state of Florida and qualify as a tax-free corporate reorganization within the
meaning of IRC s/s 368(a)(1)(A).
SECTION 13. MISCELLANEOUS PROVISIONS.
13.1 TIME OF ESSENCE. Time is of the essence of this agreement.
13.2 BINDING EFFECT. The provisions of this agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties.
13.3 NOTICE. Any notice of other communication required or permitted to be given
under this agreement shall be in writing and shall be mailed by certified mail,
return receipt requested, postage prepaid, addressed to the parties as follows:
<PAGE>
Trident International Trading, Ltd. Inc. (Merging Corp.)
400 South Australian Avenue, Suite 750
West Palm Beach, FL 33401
Probac International Corporation (Surviving Corp.)
244 Cedar Park Circle
Sarasota, FL 34242
All notices and other communications shall be deemed to be given at the
expiration of three days after the date of mailing. The address of a party to
which notices or other communications shall be mailed my be changed from time to
time by giving written notice to the other party.
13.4 LITIGATION EXPENSES. In the event of a default under this agreement, the
defaulting party shall reimburse the nondefaulting party or parties for all
costs and expenses reasonable incurred by the nondefaulting part or parties in
connection with the default, including without limitation attorney's fees.
Additionally, in the event a suit or action is failed to enforce this agreement
or with respect to this agreement, the prevailing party or parties shall be
reimbursed by the other party for all costs and expenses incurred in connection
with the suit or action, including without limitation reasonable attorney's fees
at the trail level and on appeal.
13.5 WAIVER. No waiver of any provision of this agreement shall be deemed, or
shall constitute, a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. No wavier shall be binding
unless executed in writing by the party making the waiver.
13.6 APPLICABLE LAW. This agreement shall be governed by and shall be construed
in accordance with the state of Florida.
13.7 ENTIRE AGREEMENT. This agreement constitutes the entire agreement between
the parties pertaining to its subject matter, and its supersedes all prior
contemporaneous agreements, representations and understandings of the parties.
No supplement,l modification, or amendment of this Agreement shall be binding
unless executed in writing by all parties.
DATED SEPTEMBER 14, 1994, at OKEECHOBEE, state of Florida.
TRIDENT INTERNATIONAL TRADING, LTD. INC.
(Merging Corporation)
________________________ By: _________________________
Witness Markus Gertsch
President
________________________ By: _____________________________
Witness D. Stephen Inezedy
Chairman of the Board
<PAGE>
PROBAC INTERNATIONAL CORPORATION
(Surviving Corporation)
_______________________ By: _________________________
Witness Lucian L. Vestal
President
_______________________ By: ________________________
Witness
_______________________ By: _________________________
Witness Wilfred N. Desrosiers
Treasurer
<PAGE>
STATEMENT OF CHANGE OF REGISTERED OFFICE
1. Name of Corporation: Trident Environmental Systems Inc.
2. Street address of current registered office:
1681 South Rogers Circle, Suite 12
Boca Raton, Florida 33487
3. Street address of new registered office:
501 S. Dixie Highway
West Palm Beach, Florida 33401
4. The street address of the Corporation's new registered office is
identical to the street address of the business office of its
registered agent.
5. The changes set forth in this Statement were authorized by
resolution duly adopted by the Corporation's Board of Directors or
any an officer of the Corporation so authorized by the Board of
Directors.
Trident Environmental Systems Inc.
By: __________________________
Luis A. Uriarte
Its: Assistant Secretary
Date: June 14, 1996
<PAGE>
ARTICLES OF AMENDMENT
CHANGING CORPORATE NAME FROM
TRIDENT ENVIRONMENTAL SYSTEMS INC.
TO
PHOENIX INTERNATIONAL INDUSTRIES INC.
ARTICLE I. NAME
The name of this Florida corporation is Trident Environmental Systems Inc.
ARTICLE II. AMENDMENT
The Articles of Incorporation of the Corporation are amended so that the
name of the Corporation is changed from Trident Environmental Systems Inc. to
Phoenix International Industries, Inc.
ARTICLE III. DATE AMENDMENT ADOPTED
The amendment set forth in these Articles of Amendment was adopted on
September 6, 1996.
ARTICLE IV. SHAREHOLDER APPROVAL OF AMENDMENT
The amendment set forth in these Articles of Amendment was proposed by the
Corporation's Board of Directors and approved by the shareholders by a vote
sufficient for approval of the amendment.
The undersigned representative of the Corporation executed these Articles of
Amendment on September 6, 1996.
Trident Environmental Systems Inc.
By: _______________________________
Luis A. Uriarte
Its: Assistant Secretary
<PAGE>
ARTICLES OF AMENDMENT
ARTICLE I. NAME
The name of this Florida corporation is Phoenix International Industries
Inc. (the "Corporation").
ARTICLE II. AMENDMENT
The Articles of Incorporation of the Corporation are amended so that the
Authorized capital of the Corporation is changed to 20,000,000 shares of common
stock, par value $.001 per share.
ARTICLE III. DATE AMENDMENT ADOPTED
The amendment set forth in these Articles of Amendment was adopted on
October 2, 1996.
ARTICLE IV SHAREHOLDER APPROVAL OF AMENDMENT
The amendment set forth in these Articles of Amendment was proposed by the
Corporation's Board of Directors and approved by the shareholders by a vote
sufficient for approval of the amendment.
An authorized representative of the Corporation executed these Articles of
Amendment on October 2, 1996.
Phoenix International Industries Inc.
By: ________________________________
Name: Girard Haryman
Title: President
EXHIBIT 3.3
By-Laws
of
Trident Environmental Systems Inc.
ARTICLE I. DIRECTORS
Section l. Function. All corporate powers shall be exercised by or under the
authority of the Board of Directors. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. Directors must
be natural persons who are at least 18 years of age but need not be shareholders
of the Corporation. Residents of any state may be directors.
Section 2. Compensation. The shareholders shall have authority to fix the
compensation of directors. Unless specifically authorized by a resolution of the
shareholders, the directors shall serve in such capacity without compensation.
Section 3. Presumption of Assent. A director who is present at a meeting of the
Board of Directors or a committee of the Board of Directors at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless he objects at the beginning of the meeting (or promptly upon
arriving) to the holding of the meeting or transacting the specified business at
the meeting, or if the director votes against the action taken or abstains from
voting because of an asserted conflict of interest.
Section 4. Number. The Corporation shall have at least the minimum number of
directors required by law. The number of directors may be increased or decreased
from time to time by the Board of Directors.
Section 5. Election and Term. At each annual meeting of shareholders, the
shareholders shall elect directors to hold office until the next annual meeting
or until their earlier resignation, removal from office or death. Directors
shall be elected by a plurality of the votes cast by the shares entitled to vote
in the election at a meeting at which a quorum is present.
Section 6. Vacancies. Any vacancy occurring in the Board of Directors, including
a vacancy created by an increase in the number of directors, may be filled by
the shareholders or by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall hold office only until the next election of
directors by the shareholders. If there are no remaining directors, the vacancy
shall be filled by the shareholders. Section 7. Removal of Directors. At a
meeting of shareholders, any director or the entire Board of Directors may be
removed, with or without cause, provided the notice of the meeting states that
one of the purposes of the meeting is the removal of the director. A director
may be removed only if the number of votes cast to remove him exceeds the number
of votes cast against removal.
<PAGE>
Section 8. Quorum and Voting. A majority of the number of directors fixed by
these Bylaws shall constitute a quorum for the transaction of business. The act
of a majority of directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 9. Executive and Other Committees. The Board of Directors, by resolution
adopted by a majority of the full Board of Directors, may designate from among
its members one or more committees each of which must have at least two members.
Each committee shall have the authority set forth in the resolution designating
the committee.
Section 10. Place of Meeting. Regular and special meetings of the Board of
Directors shall be held at the principal place of business of the Corporation or
at another place designated by the person or persons giving notice or otherwise
calling the meeting.
Section 11. Time. Notice and Call of Meetings. Regular meetings of the Board of
Directors shall be held without notice at the time and on the date designated by
resolution of the Board of Directors. Written notice of the time, date and place
of special meetings of the Board of Directors shall be given to each director by
mail delivery at least two days before the meeting.
Notice of a meeting of the Board of Directors need not be given to a director
who signs a waiver of notice either before or after the meeting. Attendance of a
director at a meeting constitutes a waiver of notice of that meeting and waiver
of all objections to the place of the meeting, the time of the meeting, and the
manner in which it has been called or convened, unless a director objects to the
transaction of business (promptly upon arrival at the meeting) because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors must be specified in the notice or waiver of notice of the meeting.
A majority of the directors present, whether or not a quorum exists, may adjourn
any meeting of the Board of Directors to another time and place. Notice of an
adjourned meeting shall be given to the directors who were not present at the
time of the adjournment and, unless the time and place of the adjourned meeting
are announced at the time of the adjournment, to the other directors. Meetings
of the Board of Directors may be called by the President or the Chairman of the
Board of Directors. Members of the Board of Directors and any committee of the
Board may participate in a meeting by telephone conference or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation by these means constitutes presence
in person at a meeting.
Section 12. Action By Written Consent. Any action required or permitted to be
taken at a meeting of directors may be taken without a meeting if a consent in
writing setting forth the action to be taken and signed by all of the directors
is filed in the minutes of the proceedings of the Board. The action taken shall
be deemed effective when the last director signs the consent, unless the consent
specifies otherwise.
<PAGE>
ARTICLE II. MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders of the
corporation for the election of officers and for such other business as may
properly come before the meeting shall be held at such time and place as
designated by the Board of Directors.
Section 2. Special Meeting. Special meetings of the shareholders shall be held
when directed by the President or when requested in writing by shareholders
holding at least 10% of the Corporation's stock having the right and entitled to
vote at such meeting. A meeting requested by shareholders shall be called by the
President for a date not less than 10 nor more than 60 days after the request is
made. Only business within the purposes described in the meeting notice may be
conducted at a special shareholders' meeting.
Section 3. Place. Meetings of the shareholders will be held at the principal
place of business of the Corporation or at such other place as is designated by
the Board of Directors.
Section 4. Notice. A written notice of each meeting of shareholders shall be
mailed to each shareholder having the right and entitled to vote at the meeting
at the address as it appears on the records of the Corporation. The meeting
notice shall be mailed not less than 10 nor more than 60 days before the date
set for the meeting. The record date for determining shareholders entitled to
vote at the meeting will be the close of business on the day before the notice
is sent. The notice shall state the time and place the meeting is to be held. A
notice of a special meeting shall also state the purposes of the meeting. A
notice of meeting shall be sufficient for that meeting and any adjournment of
it. If a shareholder transfers any shares after the notice is sent, it shall not
be necessary to notify the transferee. All shareholders may waive notice of a
meeting at any time.
Section 5. Shareholder Quorum. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Any number of shareholders, even if less than a quorum, may
adjourn the meeting without further notice until a quorum is obtained.
Section 6. Shareholder Voting. If a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. Each outstanding share
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. An alphabetical list of all shareholders who are entitled to
notice of a shareholders' meeting along with their addresses and the number of
shares held by each shall be produced at a shareholders' meeting upon the
request of any shareholder.
Section 7. Proxies. A shareholder entitled to vote at any meeting of
shareholders or any adjournment thereof may vote in person or by proxy executed
in writing and signed by the shareholder or his attorney-in-fact. The
appointment of proxy will be effective when received by the Corporation's
officer or agent authorized to tabulate votes. No proxy shall be valid more than
11 months after the date of its execution unless a longer term is expressly
stated in the proxy.
<PAGE>
Section 8. Validation. If shareholders who hold a majority of the voting stock
entitled to vote at a meeting are present at the meeting, and sign a written
consent to the meeting on the record, the acts of the meeting shall be valid,
even if the meeting was not legally called and noticed.
Section 9. Conduct of Business BY Written Consent. Any action of the
shareholders may be taken without a meeting consents, setting forth the action
taken, are signed by at least a majority of shares entitled to vote and are
delivered to the officer or agent of the Corporation having custody of the
Corporation's records within 60 days after the date that the earliest written
consent was delivered. Within 10 days after obtaining an authorization of an
action by written consent, notice shall be given to those shareholders who have
not consented in writing or who are not entitled to vote on the action. The
notice shall fairly summarize the material features of the authorized action. If
the action creates dissenters' rights, the notice shall contain a clear
statement of the right of dissenting shareholders to be paid the fair value of
their shares upon compliance with and as provided for by the state law governing
corporations.
ARTICLE III. OFFICERS
Section 1. Officers: Election: Resignation: Vacancies. The Corporation shall
have the officers and assistant officers that the Board of Directors appoint
from time to time. Except as otherwise provided in an employment agreement which
the Corporation has with an officer, each officer shall serve until a successor
is chosen by the directors at a regular or special meeting of the directors or
until removed. Officers and agents shall be chosen, serve for the terms, and
have the duties determined by the directors. A person may hold two or more
offices.
Any officer may resign at any time upon written notice to the Corporation. The
resignation shall be effective upon receipt, unless the notice specifies a later
date. If the resignation is effective at a later date and the Corporation
accepts the future effective date, the Board of Directors may fill the pending
vacancy before the effective date provided the successor officer does not take
office until the future effective date. Any vacancy occurring in any office of
the Corporation by death, resignation, removal or otherwise may be filled for
the unexpired portion of the term by the Board of Directors at any regular or
special meeting.
Section 2. Powers and Duties of Officers. The officers of the Corporation shall
have such powers and duties in the management of the Corporation as may be
prescribed by the Board of Directors and, to the extent not so provided, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 3. Removal of Officers. An officer or agent or member of a committee
elected or appointed by the Board of Directors may be removed by the Board with
or without cause whenever in its judgment the best interests of the Corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of an
officer, agent or member of a committee shall not of itself create contract
rights. Any officer, if appointed by another officer, may be removed by that
officer.
<PAGE>
Section 4. Salaries. The Board of Directors may cause the Corporation to enter
into employment agreements with any officer of the Corporation. Unless provided
for in an employment agreement between the Corporation and an officer, all
officers of the Corporation serve in their capacities without compensation.
Section 5. Bank Accounts. The Corporation shall have accounts with financial
institutions as determined by the Board of Directors.
ARTICLE IV. DISTRIBUTIONS
The Board of Directors may, from time to time, declare distributions to its
shareholders in cash, property, or its own shares, unless the distribution would
cause (i) the Corporation to be unable to pay its debts as they become due in
the usual course of business, or (ii) the Corporation's assets to be less than
its liabilities plus the amount necessary, if the Corporation were dissolved at
the time of the distribution, to satisfy the preferential rights of shareholders
whose rights are superior to those receiving the distribution. The shareholders
and the Corporation may enter into an agreement requiring the distribution of
corporate profits, subject to the provisions of law.
ARTICLE V. CORPORATE RECORDS
Section 1. Corporate Records. The corporation shall maintain its records in
written form or in another form capable of conversion into written form within a
reasonable time. The Corporation shall keep as permanent records minutes of all
meetings of its shareholders and Board of Directors, a record of all actions
taken by the shareholders or Board of Directors without a meeting, and a record
of all actions taken by a committee of the Board of Directors on behalf of the
Corporation. The Corporation shall maintain accurate accounting records and a
record of its shareholders in a form that permits preparation of a list of the
names and addresses of all shareholders in alphabetical order by class of shares
showing the number and series of shares held by each.
The Corporation shall keep a copy of its articles or restated articles of
incorporation and all amendments to them currently in effect; these Bylaws or
restated Bylaws and all amendments currently in effect; resolutions adopted by
the Board of Directors creating one or more classes or series of shares and
fixing their relative rights, preferences, and limitations, if shares issued
pursuant to those resolutions are outstanding; the minutes of all shareholders'
meetings and records of all actions taken by shareholders without a meeting for
the past three years; written communications to all shareholders generally or
all shareholders of a class of series within the past three years, including the
financial statements furnished for the last three years; a list of names and
business street addresses of its current directors and officers; and its most
recent annual report delivered to the Department of State.
<PAGE>
Section 2. Shareholders' Inspection Rights. A shareholder is entitled to inspect
and copy, during regular business hours at a reasonable location specified by
the Corporation, any books and records of the Corporation. The shareholder must
give the Corporation written notice of this demand at least five business days
before the date on which he wishes to inspect and copy the record(s). The demand
must be made in good faith and for a proper purpose. The shareholder must
describe with reasonable particularity the purpose and the records he desires to
inspect, and the records must be directly connected with this purpose. This
Section does not affect the right of a shareholder to inspect and copy the
shareholders' list described in this Article if the shareholder is in litigation
with the Corporation. In such a case, the shareholder shall have the same rights
as any other litigant to compel the production of corporate records for
examination.
The Corporation may deny any demand for inspection if the demand was made for an
improper purpose, or if the demanding shareholder has within the two years
preceding his demand, sold or offered for sale any list of shareholders of the
Corporation or of any other corporation, has aided or abetted any person in
procuring any list of shareholders for that purpose, or has improperly used any
information secured through any prior examination of the records of this
Corporation or any other corporation.
Section 3. Financial Statements for Shareholders. Unless modified by resolution
of the shareholders within 120 days after the close of each fiscal year, the
Corporation shall furnish its shareholders with annual financial statements
which may be consolidated or combined statements of the Corporation and one or
more of its subsidiaries, as appropriate, that include a balance sheet as of the
end of the fiscal year, an income statement for that year, and a statement of
cash flows for that year. If financial statements are prepared for the
Corporation on the basis of generally accepted accounting principles, the annual
financial statements must also be prepared on that basis.
If the annual financial statements are reported upon by a public accountant, his
report must accompany them. If not, the statements must be accompanied by a
statement of the President or the person responsible for the Corporation's
accounting records stating his reasonable belief whether the statements were
prepared on the basis of generally accepted accounting principles and, if not,
describing the basis of preparation and describing any respects in which the
statements were not prepared on a basis of accounting consistent with the
statements prepared for the preceding year. The Corporation shall mail the
annual financial statements to each shareholder within 120 days after the close
of each fiscal year or within such additional time thereafter as is reasonably
necessary to enable the Corporation to prepare its financial statements.
Thereafter, on written request from a shareholder who was not mailed the
statements, the Corporation shall mail him the latest annual financial
statements.
Section 4. Other Resorts to Shareholders. If the Corporation indemnifies or
advances expenses to any director, officer, employee or agent otherwise than by
court order or action by the shareholders or by an insurance carrier pursuant to
insurance maintained by the Corporation, the Corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next annual shareholders' meeting, or
<PAGE>
prior to the meeting if the indemnification or advance occurs after the
giving of the notice but prior to the time the annual meeting is held. This
report shall include a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation.
If the Corporation issues or authorizes the issuance of shares for promises to
render services in the future, the Corporation shall report in writing to the
shareholders the number of shares authorized or issued, and the consideration
received by the corporation, with or before the notice of the next shareholders'
meeting.
ARTICLE VI. STOCK CERTIFICATES
Section 1. Issuance. The Board of Directors may authorize the issuance of some
or all of the shares of any or all of its classes or series without
certificates. Each certificate issued shall be signed by the President and the
Secretary (or the Treasurer). The rights and obligations of shareholders are
identical whether or not their shares are represented by certificates.
Section 2. Registered Shareholders. No certificate shall be issued for any share
until the share is fully paid. The Corporation shall be entitled to treat the
holder of record of shares as the holder in fact and, except as otherwise
provided by law, shall not be bound to recognize any equitable or other claim to
or interest in the shares.
Section 3. Transfer of Shares. Shares of the Corporation shall be transferred on
its books only after the surrender to the Corporation of the share certificates
duly endorsed by the holder of record or attorney-in-fact. If the surrendered
certificates are canceled, new certificates shall be issued to the person
entitled to them, and the transaction recorded on the books of the Corporation.
Section 4. Lost. Stolen or Destroyed Certificates. If a shareholder claims to
have lost or destroyed a certificate of shares issued by the Corporation, a new
certificate shall be issued upon the delivery to the Corporation of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed, and, at the discretion of the Board of Directors, upon the deposit
of a bond or other indemnity as the Board reasonably requires.
ARTICLE VII. INDEMNIFICATION
Section l. Right to Indemnification. The Corporation hereby indemnifies each
person (including the heirs, executors, administrators, or estate of such
person) who is or was a director or officer of the Corporation to the fullest
extent permitted or authorized by current or future legislation or judicial or
administrative decision against all fines, liabilities, costs and expenses,
including attorneys' fees, arising out of his or her status as a director,
officer, agent, employee or representative. The foregoing right of
indemnification shall not be exclusive of other rights to
<PAGE>
which those seeking an indemnification may be entitled. The Corporation may
maintain insurance, at its expense, to protect itself and all officers and
directors against fines, liabilities, costs and expenses, whether or not the
Corporation would have the legal power to indemnify them directly against such
liability.
Section 2. Advances. Costs, charges and expenses (including attorneys' fees)
incurred by a person referred to in Section l of this Article in defending a
civil or criminal proceeding shall be paid by the Corporation in advance of the
final disposition thereof upon receipt of an undertaking to repay all amounts
advanced if it is ultimately determined that the person is not entitled to be
indemnified by the Corporation as authorized by this Article, and upon
satisfaction of other conditions required by current or future legislation.
Section 3. Savings Clause. If this Article or any portion of it is invalidated
on any ground by a court of competent jurisdiction, the Corporation nevertheless
indemnifies each person described in Section l of this Article to the fullest
extent permitted by all portions of this Article that have not been invalidated
and to the fullest extent permitted by law.
ARTICLE VIII. AMENDMENT
These Bylaws may be altered, amended or repealed, and new Bylaws adopted, by a
majority vote of the directors or by a vote of the shareholders holding a
majority of the shares.
I certify that these are the Bylaws adopted by the Board of Directors of the
Corporation.
Date Signed: 1-8-95
- ---------------------------
Thomas N. Donaldson
Vice President
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT made this 9th day of January, 1995, by and between Trident
Environmental Systems, Inc., a Florida corporation, hereinafter sometimes called
the "Employer", having its principal place of business in West Palm Beach,
Florida, and Thomas N. Donaldson, of Hallandale, Florida, hereinafter sometimes
called the "Employee".
WHEREAS, the Employee and Employer desire to set forth in writing their
contract with respect to Employee's employment by Employer;
NOW, THEREFORE, in consideration of their mutual promises set forth herein,
the parties hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
accepts such employment, upon the terms and conditions set forth in this
Agreement.
2. DUTIES AND AUTHORITY.
A. Employee will occupy the position of Executive Vice President,
(hereinafter referred to as "Position" or "Assignment") with the Employer and
may serve as a member of the Board of Directors of the Employer.
B. In this position, Employee will have the responsibility of Chief
Operating Officer, subject to the control of the President and Board of
Directors, and have general supervision, direction and control, as necessary,
over the business and affairs of the Corporation and its Employees. Employee
will be primarily responsible for carrying out all orders and resolutions of the
President and/or Board of Directors and such duties as may from time to time be
assigned to Employee by the President and/or Board of Directors.
C. In the absence of the Chairman of the Board and President at any
Shareholders or Board of Directors meeting, Employee will preside over that
Shareholders meeting and, in the event Employee is then a Director of the
Employer, will preside over the Board of Directors meeting.
D. Employee agrees to devote his full time attention and best efforts to
the performance of employment hereunder.
3. TERM OF EMPLOYMENT. The term of employment shall begin on the date of
this Agreement, and shall extend for a period of ten (10) consecutive years or
until terminated as provided herein.
<PAGE>
4. COMPENSATION. Employee will receive compensation during the term of
this Agreement as follows:
A. A base annual salary of One Hundred Twenty Thousand Dollars
($120,000) payable either bi-monthly or monthly at the discretion of the
Employer. The base salary shall be adjusted at the end of each year of
employment to reflect any change in the cost of living by multiplying the salary
for the prior year by a fraction, the numerator of which is the National
Consumer Price Index (NCPI) for the month most recently released by the Bureau
of Labor Statistics of the United States Department of Labor and the denominator
of which is the NCPI for the identical month in the preceding year. If this
index is discontinued, changed or unavailable, Employer shall determine and
utilize a similar criterion for reflecting any increase in the cost of living.
Additionally, at its discretion, the Board of Directors may elect to increase
Employee's base annual salary at any time durring the term of this agreement.
B. An incentive salary (Bonus) equal to a minimum of two percent (2%) of
the adjusted net profits (hereinafter defined) of the Employer during each
fiscal year beginning or ending during the term of this Agreement. Said Bonus to
be paid to the Employee in cash or company stock or any combination thereof with
the method of payment to be at the sole discretion of the Employee. "Adjusted
net profit" shall be the net profit before federal and state income taxes,
determined in accordance with accepted accounting practices by the independent
accounting firm employed by the Employer as auditors and adjusted to exclude:
(i) any incentive salary payments paid pursuant to this Agreement; (ii) any
contributions to pension and/or profit-sharing plans; (iii) any extraordinary
gains or losses (including, but not limited to, gains or losses on disposition
of assets); (iv) any refund or deficiency of federal and state income taxes paid
in a prior year; and (v) any provision for federal or state income taxes made in
prior years which is subsequently determined as unnecessary. The determination
of the adjusted net profits made by the independent accounting firm employed by
the Employer shall be final and binding upon Employee and the Employer. For the
first and last fiscal years ending and beginning, respectively, during the term
of this Agreement, the incentive salary shall be computed for the proportion of
the fiscal year coextensive with this Agreement. The incentive salary shall be
paid within sixty (60) days after the end of each fiscal year. The maximum
incentive salary payable for any one year shall not exceed two hundred percent
of Employee's base annual salary unless authorized by the Board of Directors.
C. The Board of Directors and the Employee may agree to waive the cost of
living adjustment in (A) above or the incentive pay in (B) above. Both parties
must agree to waive these requirements or the original clause shall stand in
effect.
2
<PAGE>
D. Due to the nature of the Corporation's business and its unpredictable
cash flow; for the good of the Corporation and at the sole discretion of the
Employee, Employee may elect to (a) accept partial payment of Employee's base
salary and/or bonus in unrestricted, free-trading common stock of the
Corporation, or (b) accept partial payment of Employee's salary in cash with the
balance to be paid to Employee in cash upon demand at a later date. Should
Employee elect (a) above, the value of shares issued in lieu of cash shall be
determined by the bid price of the Corporation's common stock at the close of
the market on the Employee's scheduled payday as defined in (4.A.) of this
agreement. The percentage, if any, of salary and/or bonus taken in stock in lieu
of cash is at the sole discretion of the Employee. Should Employee elect (b)
above, the percentage of salary Employee agrees to accept as partial payment is
at the sole discretion of Employee, as is the due date of the payment of any
balance of salary owed employee.
5. DEFERRED COMPENSATION. In the event that Employee retires after
performing services for the Employer up until Employee reaches the age of 65 or
retires at an earlier age with the approval of the Employer, Employee will be
entitled to deferred compensation payments after retirement upon the following
terms and conditions:
A. For a period of twenty (20) years ("Retirement Period") Employee will
receive all of the following: (i). Base Payments equal to thirty percent (30%)
of the average total salary (base salary plus incentive salary) paid to Employee
during the last three (3) full years of employment or based upon his/her total
period of employment, should that period be less that three (3) full years,
prior to the month of retirement ("Retirement Salary Base"); (ii). Advisor
Payments equal to thirty percent (30%) of the Retirement Salary Base, Employee
will serve as an advisor and consultant to the Employer regarding its business.
Employee will hold himself available to perform services at reasonable times at
the request of the Board of Directors of the Employer, consistent with any
business activities Employee may be engaged in at such time. The Board of
Directors of the Employer shall have the right to require the presence of
Employee at any Board of Directors meeting, not exceeding more than one meeting
per month, to act and serve in the advisory capacity. Attendance at these Board
of Directors meetings shall not be required should Employee's health prevent
attendance; however, Employer shall have the right to demand a written statement
from Employee prepared by a licensed medical examiner evidencing inability of
Employee to attend the meeting or meetings. Employee will be reimbursed for all
reasonable and necessary travel and incidental expenses incurred by Employee in
connection with the performance of advisory services; and (iii). Non-competition
Payments equal to forty percent (40%) of the Retirement Base Salary provided
that Employee will not, directly or indirectly, perform any
3
<PAGE>
business, commercial, or consulting services to any person, firm, or
organization or become associated as a manager, Employee, director, or owner of
any business organization competing directly or indirectly with the Employer,
whether or not compensated without the prior written consent of Employer. In the
event that Employer and Employee are unable to agree on whether a particular
business in which Employee attempts to engage is directly or indirectly in
competition with the Employer, the matter will be submitted to arbitration under
the provisions of Paragraph 22 of this agreement.
B. The deferred compensation payments shall be made in equal monthly
installments on the first day of each month, starting the month following the
month of retirement.
C. In the Event of the death of Employee prior to the expiration of the
"Retirement Period", the Employer will pay all remaining Base Payments specified
in subparagraph A(i), and no other deferred compensation payments, to any
beneficiary of Employee designated by Employee in a written document filed with
the Employer, or in the absence of such designation, the estate of Employee. The
Employer may elect to pay these remaining Base Payments in a lump sum or in the
equal monthly installments specified in subparagraph B.
D. Employee shall not sell, assign, transfer, or pledge, or in any other
way dispose of or encumber, voluntarily or involuntarily, by gift, testamentary
disposition, inheritance, transfer to any inter-vivos trust, seizure and sale by
legal process, operation of law, bankruptcy, winding up of a corporation, or
otherwise, the right to receive any deferred compensation pursuant to this
Agreement.
6. RELOCATION. In the event Employee is transferred and assigned to a new
principal place of work located more than fifty (50) miles from Employee's
present residence, Employer will pay for all reasonable relocation expenses
including:
A. Transportation fares, meals, and lodging for Employee, his spouse, and
family from Employee's present residence to any new residence located near the
new principal place of work.
B. Moving of Employee's household goods and the personal effects of
Employee and Employee's family from Employee's present residence to the new
residence.
C. Lodging and meals for Employee and Employee's family for a period of not
more than sixty (60) consecutive days while occupying temporary living quarters
located near the new principal place of work.
D. Round trip travel, meals and lodging expenses for Employee's family for
no more than two (2) house hunting trips to locate a new residence, each trip
not to exceed fourteen (14) days; and
E. Expenses in connection with the sale of the residence of Employee
including Realtor fees, property appraisals, mortgage prepayment penalties,
termite inspector fees, title insurance policy and revenue stamps, escrow fees,
4
<PAGE>
fees for drawing documents, state or local sales taxes, mortgage discount points
(if in lieu of a prepayment penalty), and seller's attorney's fees (not to
exceed one percent (1%) of the sales price). At the option of Employee and in
lieu of reimbursement for these expenses, Employee may sell the residence of
Employee to the Employer at the fair market value of the residence determined by
an appraiser chosen by the Employer. The appraisal will be performed within ten
(10) days after notice of transfer and notice of appraised value will be
submitted by report to Employee. Employee will have the right to sell the
residence to the Employer at the appraised price by giving notice of intent to
sell within thirty (30) days from the date of the appraisal report. The term
"residence" shall mean the property occupied by Employee as the principal
residence at the time of transfer and does not include summer homes,
multiple-family dwellings, houseboats, boats, or airplanes but does include
condominium or cooperative apartment units and duplexes (two family) occupied by
Employee.
7. MEDICAL AND GROUP INSURANCE. At the expense of the Employer, Employer
agrees to include Employee in the group medical and hospital plan of Employer,
when such plan is established, and will provide group life insurance for
Employee in the amount of not less than Three Hundred Fifty Thousand Dollars
($350,000) during the term of employment.
8. VACATION, SICK/PERSONAL LEAVE. For the first two (2) years of
employment, Employee shall be entitled to three (3) weeks of paid vacation
during each year of employment; for the third year and each year thereafter,
said vacation time shall increase to four (4) weeks during each year. The time
for the vacation shall be mutually agreed upon by Employee and Employer. If
vacation is not taken for the benefit of the Employer, Employee shall be
reimbursed at his base salary rate for time not taken. Employee shall receive
thirty (30) days Sick/Personal Leave for each year of employment. Unused
Sick/Personal Leave will accrue and be retained by Employee to be used at his
discretion.
9. AUTOMOBILE. Employer will provide to Employee, during the term of this
agreement, the use of a new luxury automobile of the Employees choice, said
automobile may be leased, rented or purchased by Employer at Employer's
discretion. Value of said automobile shall be determined by the following
guidelines: for the initial automobile; a vehicle that could normally be
purchased with a 20% down payment and total monthly payments not to exceed
$800.00 for a period of five (5) years. Employer will replace the automobile
with a new, comparable vehicle every two (2) years regardless of necessary
payment increases due to price increases of a comparable vehicle. Employer will
pay all automobile operating expenses incurred by Employee in the performance of
Employee's business duties. The Employer will procure and maintain in force an
automobile liability policy for the automobile with coverage, including
Employee, in the minimum amount of One Million Dollars ($1,000,000) combined
single limit on bodily injury and property damage.
5
<PAGE>
10. EXPENSE REIMBURSEMENT. Employee shall be entitled to reimbursement
for all reasonable expenses, including travel and entertainment, incurred by
Employee in the performance of Employee's duties. Employee will maintain records
and written receipts as required by federal and state tax authorities to
substantiate expenses as an income tax deduction for Employer and shall submit
vouchers for expenses for which reimbursement is made.
11. LOW INTEREST LOAN.
A. From time to time, Employee may borrow sums from Employer up to a
maximum aggregate of Three Hundred Fifty Thousand Dollars ($350,000) provided
the Employer has excess funds available for such purposes. The Board of
Directors shall establish the amount of such funds available annually. Each loan
shall be evidenced by a Promissory Note payable in not more than sixty (60)
monthly principal and interest installment payments starting with the first day
of the month following the month in which the loan is made, with interest at the
rate of three percent (3%) per year on the unpaid balance of the loan or loans
outstanding.
B. In the event Employee severs employment with Employer for reasons other
than permanent disability, death, or retirement while a loan or loans are
outstanding, the unpaid principal amount then outstanding shall be due and
payable within thirty (30) days after the date of termination. In the event
severance of employment is due to permanent disability, death, or retirement,
Employee, or the legal representative of Employee, shall repay any outstanding
loan in accordance with the terms of the promissory note.
C. Should there be a default in the payment of any installment of principal
and interest when due, then the entire sum of principal and interest, at the
option of the Employer, shall immediately become due and payable without demand
or notice. In case this note shall not be paid when due according to its terms,
Employee shall pay all costs of collection and reasonable attorney's fees
whether or not suit is filed on the note.
12. PERMANENT DISABILITY.
A. In the event Employee becomes permanently disabled (hereinafter defined)
during employment with Employer, Employer may terminate this agreement by giving
thirty (30) days notice to Employee of its intent to terminate, and, unless
Employee resumes performance of the duties set forth in Paragraph 2 within five
(5) days of the date of notice and continues performance for the remainder of
the notice period, this agreement will terminate at the end of the thirty (30)
day period. "Permanently disabled" for the purpose of this agreement will mean
the inability, due to physical or mental ill health, or any reason beyond the
control of Employee to perform Employee's duties for sixty (60) consecutive days
or for an aggregate of ninety (90) days during any one employment year
irrespective of whether such days are consecutive.
B. Upon termination of employment under the provisions of subparagraph
(12A) above, Employee will be entitled to any deferred compensation to which the
Employee may be entitled under the provisions of
6
<PAGE>
Paragraph 5 herein paid to him upon giving notice to the Employer. For the
purposes of Paragraph 5, termination under subparagraph (12A) of this agreement
shall be considered "retirement"; Employee will be excused from performing
advisory services as required under Paragraph 5(B)(ii.) but shall nevertheless
be entitled to Advisory Payments except the extent limited by death of Employee
as set forth in Paragraph 5(C) herein.
C. Employer shall maintain, at its expense, a disability Policy covering
Employee for a dollar amount specified by Employee. This amount may not exceed
one hundred percent (100%) of the base salary. Benefits of this policy shall
begin on the date the Employee's Sick/Personal Leave days are exhausted and
shall continue until the Employee's deferred compensation as outlined in
paragraph 5 of this agreement goes into effect.
13. DEATH. In the event that Employee dies during the term of this
agreement, this agreement shall immediately terminate except as provided in
paragraph 5C. herein.
14. TERMINATION.
A. This agreement may be terminated by Employer by giving ten (10) days
notice to Employee if Employee willfully breaches or habitually neglects the
duties to be performed under Paragraph 2, habitually engages in the use of
illegal substances or the excessive use of alcohol, or engages in any conduct
which is illegal or dishonest resulting in damage to the reputation of Employer.
B. This agreement may be terminated by Employee, without cause, by giving
ninety (90) days notice to Employer.
C. In the event employment is terminated pursuant to subparagraphs (14A) or
(14B), Employee will be entitled to only base salary compensation earned prior
to the date of termination as provided for in Paragraph 3 of this agreement
computed pro rata up to and including the date of termination, plus one twelfth
(1/12) of one years base salary. Employee shall not receive the incentive salary
payments or the deferred compensation payments provided for in Paragraphs 3(B)
and 4, respectively.
D. Should Employer wish to terminate the Employee for any reason, other
than those listed in subparagraph (14A) of this agreement, Employee shall
receive the compensation due for the remainder of the Term of Employment
(defined in paragraph (3) of this agreement), said compensation shall be in a
lump sum equal to the total amount of the base salary as defined in subparagraph
(4A) of this agreement, in this case "cost of living" increases would not be
applicable. Employee would still receive the "Bonus" as defined in paragraph
(4B) of this agreement. Upon termination as defined in this paragraph, Employee
would, regardless of age, tenure or Employer approval, immediately become
eligible to also receive Deferred Compensation as defined in sub-paragraphs five
A through five D (5A-5D) of this agreement.
7
<PAGE>
E. In the event Employer is acquired, is a non surviving party in a merger,
or transfers substantially all of its assets, this agreement shall not be
terminated and Employer agrees to take all actions necessary to ensure that the
transferee or surviving company is bound by the provisions of this agreement.
15. NOTICES. Any notice provided for in this Agreement shall be given in
writing. Notices shall be effective from the date of service, if served
personally on the party to whom notice is to be given, or on the second day
after mailing, if mailed by first class mail, postage prepaid. Notices shall be
properly addressed to the parties at their respective addresses: Employer:400
Australian Avenue South, Suite 750, West Palm Beach, FL 33401 Employee: 1951
Atlantic Shores Blvd. # 9, Hallandale, FL 33009,or to such other address as
either party may later specify by notice to the other.
16. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings., oral or written, with
respect to the subject matter hereof. This Agreement may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment or modification is sought.
17. WAIVER. The waiver by the Employer of a breach of any of the provisions
of this Agreement by the Employee shall not be construed as a waiver of any
subsequent breach by the Employee.
18. GOVERNING LAW; VENUE. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida. Palm Beach County, Florida,
shall be the proper venue for any litigation arising out of this Agreement.
19. PARAGRAPH HEADINGS. Paragraph headings are for convenience only and are
not intended to expand or restrict the scope or substance of the provisions of
this Agreement.
20. ASSIGNABILITY. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Employer. This Agreement is a personal employment agreement
and the rights, obligations and interests of the Employee hereunder may not be
sold, assigned, transferred, pledged or hypothecated.
21. SEVERABILITY. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement shall remain in full force and effect and shall in no way be impaired.
22. ARBITRATION. Any controversy or claim arising out of or relating to
this contract, or breach thereof, shall be settled by arbitration in accordance
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<PAGE>
with the Rules of the American Arbitration Association and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the ___
day of _____________, 19___.
FOR EMPLOYEE
- --------------------------- ---------------------------
Thomas N. Donaldson Witness
---------------------------
FOR THE COMPANY
TRIDENT ENVIRONMENTAL SYSTEMS, INC., a Florida corporation
- ----------------------------- --------------------------
Markus A. Gertsch, President Witness
- ----------------------------- --------------------------
Thomas J. Craft, Jr., Secretary Witness
9
EMPLOYMENT AGREEMENT
AGREEMENT made this 18th day of January, 1996, between Trident
Environmental Industries, Inc., a Florida corporation, hereinafter sometimes
called the "Employer", having its principal place of business in West Palm
Beach, Florida, and Gerard Haryman, of Palm Beach, Florida, hereinafter
sometimes called the "Employee".
WHEREAS, the Employee and Employer desire to set forth in writing their
contract with respect to Employee's employment by Employer;
NOW, THEREFORE, in consideration of their mutual promises set forth
herein, the parties hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
accepts such employment, upon the terms and conditions set forth in this
Agreement.
2. DUTIES AND AUTHORITY.
A. Employee will occupy the position of President, (hereinafter
referred to as "Position" or "Assignment") with the Employer and may serve as a
Director of the Employer.
B. In this position, Employee will have the responsibility and
authority of Chief Executive Officer, subject to the control of the Board of
Directors, and have general supervision, direction and control, as necessary,
over the business and affairs of the Corporation and its Employees. Employee
will be primarily responsible for carrying out all orders and resolutions of the
Board of Directors and such duties as may from time to time be assigned to
Employee by the Board of Directors.
C. In the absence of the Chairman of the Board at any Shareholders or
Board of Directors meeting, Employee will preside over that Shareholders meeting
and, in the event Employee is then a Director of the Employer, will preside over
the Board of Directors meeting.
D. Employee agrees to devote his full time attention and best efforts
to the performance of employment hereunder.
3. TERM OF EMPLOYMENT. The term of employment shall begin on the date
of this Agreement, and shall extend for a period of 10 consecutive years or
until terminated as provided herein.
4. COMPENSATION. Employee will receive compensation during the term of
this Agreement as follows:
<PAGE>
A. A base annual salary of Two Hundred fifty Thousand Dollars
($250,000) payable either bi-monthly or monthly at the discretion of the
Employer. The base salary shall be adjusted at the end of each year of
employment to reflect any change in the cost of living by multiplying the salary
for the prior year by a fraction, the numerator of which is the National
Consumer Price Index (NCPI) for the month most recently released by the Bureau
of Labor Statistics of the United States Department of Labor and the denominator
of which is the NCPI for the identical month in the preceding year. If this
index is discontinued, changed or unavailable, Employer shall determine and
utilize a similar criterion for reflecting any increase in the cost of living.
Additionally, at its discretion, the Board of Directors may elect to increase
Employees base annual salary at any time durring the term of this agreement.
B. An incentive salary (Bonus) equal to a minimum of three percent (3%)
of the adjusted net profits (hereinafter defined) of the Employer during each
fiscal year beginning or ending during the term of this Agreement. Said Bonus to
be paid to the Employee in cash or company stock or any combination thereof with
the method of payment to be at the sole discreaton of the Employee. "Adjusted
net profit" shall be the net profit before federal and state income taxes,
determined in accordance with accepted accounting practices by the independent
accounting firm employed by the Employer as auditors and adjusted to exclude:
(i) any incentive salary payments paid pursuant to this Agreement; (ii) any
contributions to pension and/or profit-sharing plans; (iii) any extraordinary
gains or losses (including, but not limited to, gains or losses on disposition
of assets); (iv) any refund or deficiency of federal and state income taxes paid
in a prior year; and (v) any provision for federal or state income taxes made in
prior years which is subsequently determined as unnecessary. The determination
of the adjusted net profits made by the independent accounting firm employed by
the Employer shall be final and binding upon Employee and the Employer. For the
first and last fiscal years ending and beginning, respectively, during the term
of this Agreement, the incentive salary shall be computed for the proportion of
the fiscal year coextensive with this Agreement. The incentive salary shall be
paid within sixty (60) days after the end of each fiscal year. The maximum
incentive salary payable for any one year shall not exceed two hundred percent
of Employee's base salary unless authorized by the Board of Directors.
C. The Board of Directors and the Employee may agree to waive the cost
of living adjustment in (A) above or the incentive pay in (B) above. Both
parties must agree to waive these requirements or the original clause shall
stand in effect.
<PAGE>
D. Due to the nature of the Corporation's business and its
unpredictable cash flow; for the good of the Corporation and at the sole
discretion of the Employee, Employee may elect to (a) accept partial payment of
Employee's base salary and/or bonus in unrestricted, free-trading common stock
of the Corporation, or (b) accept partial payment of Employee's salary in cash
with the balance to be paid to Employee in cash upon demand at a later date.
Should Employee elect (a) above, the value of shares issued in lieu of cash
shall be determined by the bid price of the Corporation's common stock at the
close of the market on the Employee's scheduled payday as defined in 4. A. of
this agreement. The percentage, if any, of salary and/or bonus taken in stock in
lieu of cash is at the sole discretion of the Employee. Should Employee elect
(b) above, the percentage of salary Employee agrees to accept as partial payment
is at the sole discretion of Employee, as is the due date of the payment of any
balance of salary owed employee.
5. DEFERRED COMPENSATION. In the event that Employee retires after
performing services for the Employer up until Employee reaches the age of 65 or
retires at an earlier age with the approval of the Employer, Employee will be
entitled to deferred compensation payments after retirement upon the following
terms and conditions:
A. For a period of twenty (20) years ("Retirement Period") Employee
will receive all of the following: (i) Base Payments equal to thirty percent
(30%) of the average total salary (base salary plus incentive salary) paid to
Employee during the last three (3) full years of employment or based upon
his/her total period of employment, should that period be less that three (3)
full years, prior to the month of retirement ("Retirement Salary Base"); (ii)
Advisor Payments equal to thirty percent (30%) of the Retirement Salary Base,
provided that Employee serves as an advisor and consultant to the Employer
regarding its business. Employee will hold himself available to perform services
at reasonable times at the request of the Board of Directors of the Employer,
consistent with any business activities Employee may be engaged in at such time.
The Board of Directors of the Employer shall have the right to require the
presence of Employee at any Board of Directors meeting, not exceeding more than
one meeting per month, to act and serve in the advisory capacity. Attendance at
these Board of Directors meetings shall not be required should Employee's health
prevent attendance; however, Employer shall have the right to demand a written
statement from Employee prepared by a licensed medical examiner evidencing
inability of Employee to attend the meeting or meetings. Employee will be
reimbursed for all reasonable and necessary travel and incidental expenses
incurred by Employee in connection with the performance of advisory services;
and (iii) Non competition Payments equal to forty percent (40%) of the
Retirement Base Salary provided that Employee will not, directly or indirectly,
perform any business, commercial, or consulting
<PAGE>
services to any person, firm, or organization or become associated as a manager,
Employee, director, or owner of any business organization competing directly or
indirectly with the Employer, whether or not compensated without the prior
written consent of Employer. In the event that Employer and Employee are unable
to agree on whether a particular business in which Employee attempts to engage
is directly or indirectly in competition with the Employer, the matter will be
submitted to arbitration under the provisions of Paragraph 22 of this agreement.
B. The deferred compensation payments shall be made in equal monthly
installments on the first day of each month, starting in the month following the
month of retirement.
C. In the Event of the death of Employee prior to the expiration of the
"Retirement Period", the Employer will pay all remaining Base Payments specified
in subparagraph A(i), and no other deferred compensation payments, to any
beneficiary of Employee designated by Employee in a written document filed with
the Employer, or in the absence of such designation, the estate of Employee. The
Employer may elect to pay these remaining Base Payments in a lump sum or in the
equal monthly installments specified in subparagraph B.
D. Employee shall not sell, assign, transfer, or pledge, or in any
other way dispose of or encumber, voluntarily or involuntarily, by gift,
testamentary disposition, inheritance, transfer to any inter-vivos trust,
seizure and sale by legal process, operation of law, bankruptcy, winding up of a
corporation, or otherwise, the right to receive any deferred compensation
pursuant to this Agreement.
6. RELOCATION. In the event Employee is transferred and assigned to a
new principal place of work located more than fifty (50) miles from Employee's
present residence, Employer will pay for all reasonable relocation expenses
including:
A. Transportation fares, meals, and lodging for Employee, his spouse,
and family from Employee's present residence to any new residence located near
the new principal place of work.
B. Moving of Employee's household goods and the personal effects of
Employee and Employee's family from Employee's present residence to the new
residence.
C. Lodging and meals for Employee and Employee's family for a period of
not more than sixty (60) consecutive days while occupying temporary living
quarters located near the new principal place of work.
D. Round trip travel, meals and lodging expenses for Employee's family
for no more than two (2) house hunting trips to locate a new residence, each
trip not to exceed fourteen (14) days; and
E. Expenses in connection with the sale of the residence of Employee
including Realtor fees, property appraisals, mortgage prepayment penalties,
<PAGE>
termite inspector fees, title insurance policy and revenue stamps, escrow fees,
fees for drawing documents, state or local sales taxes, mortgage discount points
(if in lieu of a prepayment penalty), and seller's attorney's fees (not to
exceed one percent (1%) of the sales price). At the option of Employee and in
lieu of reimbursement for these expenses, Employee may sell the residence of
Employee to the Employer at the fair market value of the residence determined by
an appraiser chosen by the Employer. The appraisal will be performed within ten
(10) days after notice of transfer and notice of appraised value will be
submitted by report to Employee. Employee will have the right to sell the
residence to the Employer at the appraised price by giving notice of intent to
sell within thirty (30) days from the date of the appraisal report. The term
"residence" shall mean the property occupied by Employee as the principal
residence at the time of transfer and does not include summer homes,
multiple-family dwellings, houseboats, boats, or airplanes but does include
condominium or cooperative apartment units and duplexes (two family) occupied by
Employee.
7. MEDICAL AND GROUP INSURANCE. At the expense of the Employer,
Employer agrees to include Employee in the group medical and hospital plan of
Employer, when such plan is established, and will provide group life insurance
for Employee in the amount of not less than Three Hundred Fifty Thousand Dollars
($350,000) during the term of employment.
8. VACATION & SICK/PERSONAL LEAVE. For the first two (2) years of
employment, Employee shall be entitled to three (3) weeks of paid vacation
during each year of employment; for the third year and each year thereafter,
said vacation time shall increase to four (4) weeks during each year. The time
for the vacation shall be mutually agreed upon by Employee and Employer. If
vacation is not taken, for the benefit of the Employer, Employee shall be
compensated at one and one half (1 1/2) times his base salary rate for time not
taken. Employee shall receive 30 days Sick/Personal Leave for each year of
employment. Unused Sick/Personal Leave will accrue and be retained by Employee
to be used at his discretion.
9. AUTOMOBILE. AUTOMOBILE. Employer will provide to Employee, during
the term of this agreement, the use of a new luxury automobile of the Employees
choice, said automobile may be leased, rented or purchased by Employer at
Employer's discretion. Value of said automobile shall be determined by the
following guidelines: for the initial automobile; a vehicle that could normally
be purchased with a twenty percent (20%) down payment and total monthly payments
not to exceed $1,500.00 for a period of five (5) years. Employer will replace
the automobile with a new, comparable vehicle every two (2) years regardless of
necessary payment increases due to price increases of a comparable vehicle.
Employer will pay all automobile operating expenses incurred by Employee in the
performance of Employee's business
<PAGE>
duties. The Employer will procure and maintain in force an automobile liability
policy for the automobile with coverage, including Employee, in the minimum
amount of One Million Dollars ($1,000,000) combined single limit on bodily
injury and property damage.
10. EXPENSE REIMBURSEMENT. Employee shall be entitled to reimbursement
for all reasonable expenses, including travel and entertainment, incurred by
Employee in the performance of Employee's duties. Employee will maintain records
and written receipts as required by federal and state tax authorities to
substantiate expenses as an income tax deduction for Employer and shall submit
vouchers for expenses for which reimbursement is made.
11. LOW INTEREST LOAN.
A. From time to time, Employee may borrow sums from Employer up to a
maximum aggregate of $350,000 provided the Employer has excess funds available
for such purposes. The Board of Directors shall establish the amount of such
funds available annually. Each loan shall be evidenced by a Promissory Note
payable in not more than sixty (60) monthly principal and interest installment
payments starting with the first day of the month following the month in which
the loan is made, with interest at the rate of three percent (3%) per year on
the unpaid balance of the loan or loans outstanding.
B. In the event Employee severs employment with Employer for reasons
other than permanent disability, death, or retirement while a loan or loans are
outstanding, the unpaid principal amount then outstanding shall be due and
payable within thirty (30) days after the date of termination. In the event
severance of employment is due to permanent disability, death, or retirement,
Employee, or the legal representative of Employee, shall repay any outstanding
loan in accordance with the terms of the promissory note.
C. Should there be a default in the payment of any installment of
principal and interest when due, then the entire sum of principal and interest,
at the option of the Employer, shall immediately become due and payable without
demand or notice. In case this note shall not be paid when due according to its
terms, Employee shall pay all costs of collection and reasonable attorney's fees
whether or not suit is filed on the note.
12. PERMANENT DISABILITY.
A. In the event Employee becomes permanently disabled (hereinafter
defined) during employment with Employer, Employer may terminate this agreement
by giving thirty (30) days notice to Employee of its intent to terminate, and,
unless Employee resumes performance of the duties set forth in Paragraph 2
within five (5) days of the date of notice and continues performance for the
remainder of the notice period, this agreement will terminate at the end of the
thirty (30) day period. "Permanently disabled" for the purpose of this agreement
will mean the inability, due to physical or mental ill health, or any reason
beyond the control of Employee to perform Employee's duties for sixty (60)
<PAGE>
consecutive days or for an aggregate of ninety (90) days during any one
employment year irrespective of whether such days are consecutive.
B. Upon termination of employment under the provisions of subparagraph
(12A) above, Employee will be entitled to any deferred compensation to which the
Employee may be entitled under the provisions of Paragraph 5 herein paid to him
upon giving notice to the Employer. For the purposes of Paragraph 5, termination
under subparagraph (12A) of this agreement shall be considered "retirement";
Employee will be excused from performing advisory services as required under
Paragraph 5(B)(ii.) but shall nevertheless be entitled to Advisory Payments
except the extent limited by death of Employee as set forth in Paragraph 5(C)
herein.
C. Employer shall maintain, at its expense, a disability Policy
covering Employee for a dollar amount specified by the Board of Directors of
Employer. This amount may not exceed one hundred percent (100%) of the base
salary. Benefits of this policy shall begin on the date the Employee's
Sick/Personal Leave days are exhausted and shall continue until the Employee's
deferred compensation as outlined in paragraph 5 of this agreement goes into
effect.
13. DEATH. In the event that Employee dies during the term of this
agreement, this agreement shall immediately terminate except as provided in
paragraph 5C. herein.
14. TERMINATION.
A. This agreement may be terminated by Employer by giving ten (10)
days notice to Employee if Employee willfully breaches or habitually neglects
the duties to be performed under Paragraph 2, habitually engages in the use of
illegal substances or the excessive use of alcohol, or engages in any conduct
which is illegal or dishonest resulting in damage to the reputation of Employer.
B. This agreement may be terminated by Employee, without cause, by
giving ninety (90) days notice to Employer.
C. In the event employment is terminated pursuant to subparagraphs (A)
or (B), Employee will be entitled to only base salary compensation earned prior
to the date of termination as provided for in Paragraph 3 of this agreement
computed pro rata up to and including the date of termination, plus one twelfth
(1/12) of one years base salary. Employee shall not receive the incentive salary
payments or the deferred compensation payments provided for in Paragraphs 3(B)
and 4, respectively.
D. Should Employer wish to terminate the Employee for any reason, other
than those listed in subparagraph 14A of this agreement, Employee shall receive
the compensation due for the remainder of the Term of Employment (defined in
paragraph three (3) of this agreement), said compensation shall be in a lump sum
equal to the total amount of the base salary as defined in subparagraph four "A"
(4A) of this agreement, in this case "cost of living" increases would not be
applicable. Employee would still receive the "Bonus" as
<PAGE>
defined in paragraph four "B" (4B) of this agreement. Upon termination as
defined in this paragraph, Employee would, regardless of age, tenure or Employer
approval, immediately become eligible to also receive Deferred Compensation as
defined in sub-paragraphs five "A" through five "D" (5A-5D) of this agreement.
E. In the event Employer is acquired, is a non surviving party in a
merger, or transfers substantially all of its assets, this agreement shall not
be terminated and Employer agrees to take all actions necessary to ensure that
the transferee or surviving company is bound by the provisions of this
agreement.
15. NOTICES. Any notice provided for in this Agreement shall be given
in writing. Notices shall be effective from the date of service, if served
personally on the party to whom notice is to be given, or on the second day
after mailing, if mailed by first class mail, postage prepaid. Notices shall be
properly addressed to the parties at their respective addresses: Employer: 501
S. Dixie Hwy. West Palm Beach, FL 33401, Employee: 123 Via Viscaya, Palm Beach,
Florida 23480, or to such other address as either party may later specify by
notice to the other.
16. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings., oral or written, with
respect to the subject matter hereof. This Agreement may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment or modification is sought.
17. WAIVER. The waiver by the Employer of a breach of any of the
provisions of this Agreement by the Employee shall not be construed as a waiver
of any subsequent breach by the Employee.
18. GOVERNING LAW; VENUE. This Agreement shall be construed and
enforced in accordance with the laws of the State of Florida. Palm Beach County,
Florida, shall be the proper venue for any litigation arising out of this
Agreement.
19. PARAGRAPH HEADINGS. Paragraph headings are for convenience only and
are not intended to expand or restrict the scope or substance of the provisions
of this Agreement.
20. ASSIGNABILITY. The rights and obligations of the Employer under
this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Employer. This Agreement is a personal employment
agreement and the rights, obligations and interests of the Employee hereunder
may not be sold, assigned, transferred, pledged or hypothecated.
<PAGE>
21. SEVERABILITY. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement shall remain in full force and effect and shall in no way be impaired.
22. ARBITRATION. Any controversy or claim arising out of or relating to
this contract, or breach thereof, shall be settled by arbitration in accordance
with the Rules of the American Arbitration Association and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
18th day of January, 1996.
FOR EMPLOYEE
/S/ GERARD HARYMAN
- -----------------------------------
Gerard Haryman
FOR THE COMPANY
TRIDENT ENVIRONMENTAL INDUSTRIES, INC., a Florida corporation
/S/ THOMAS N. DONALDSON
- -----------------------------------------
Thomas N. Donaldson
Exec. Vice President
/S/ THOMAS J. CRAFT, JR.
- -----------------------------
Thomas J. Craft, Jr.
Secretary/Director
EXHIBIT 10.3
SHARE EXCHANGE AGREEMENT
BY AND AMONG
PHOENIX INTERNATIONAL INDUSTRIES, INC.,
INTUITIVE TECHNOLOGY CONSULTANTS, INC.,
AND
SHAREHOLDERS OF INTUITIVE TECHNOLOGY CONSULTANTS, INC.
FOR THE EXCHANGE OF
CAPITAL STOCK
OF
INTUITIVE TECHNOLOGY CONSULTANTS, INC.
DATED AS OF JUNE 2, 1997
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<PAGE>
THIS SHARE EXCHANGE AGREEMENT, dated as of June 2, 1997, by and among
PHOENIX INTERNATIONAL INDUSTRIES, INC., a Florida corporation ("Phoenix") and
INTUITIVE TECHNOLOGY CONSULTANTS, INC., a Georgia corporation and the
Shareholders of INTUITIVE TECHNOLOGY CONSULTANTS, INC. ("ITC") as set forth on
Schedule "A" attached hereto and made a part hereof (individually a
"Shareholder" and collectively, the "Shareholders"),
WHEREAS, Phoenix is a corporation organized under the laws of the State of
Florida and is responsible for filing certain reports with the Securities and
Exchange Commission pursuant to Section 13 of the Securities Exchange Act of
1934;
WHEREAS, ITC is a corporation organized under the laws of the State of
Georgia;
WHEREAS ITC believes it is in the best interest of its shareholders (and
the shareholders of Phoenix after giving effect to the transactions contemplated
hereby) to avail itself of the advantages of being part of a "publicly traded
corporation";
WHEREAS, the Shareholders own 100% the issued and outstanding shares of
common stock (the "Shares") of ITC; and
WHEREAS, the Shareholders desire to exchange the Shares for shares of the
common stock, par value $.01 per share, of PHOENIX INTERNATIONAL INDUSTRIES,
INC., upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, THE PARTIES DESIRE THIS TO BE A TAX-FREE EXCHANGE UNDER THE
INTERNAL REVENUE CODE;
NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein, the parties hereto hereby agree as follows:
ARTICLE I
EXCHANGE OF SHARES FOR COMMON STOCK
SECTION 1.1. AGREEMENT TO EXCHANGE SHARES FOR COMMON STOCK. On the Closing
Date (as hereinafter defined) and upon the terms and subject to the conditions
set forth in this Agreement, the Shareholders shall sell, assign, transfer,
convey and deliver the Shares (representing 1,000,000 shares or 100% of the
common stock of ITC) to Phoenix, and Phoenix shall accept the Shares from the
Shareholders in exchange for the shares of Common Stock as defined below.
2
<PAGE>
SECTION 1.2. CLOSING. The closing of such exchange (the "Closing") shall
take place at 10:00 a.m. E.S.T. on the second business day after the conditions
to closing set forth in Articles VI and VII have been satisfied or waived, or at
such other time and date as the parties hereto shall agree in writing (the
"Closing Date"), at the offices of Phoenix, 501 S. Dixie Hwy., West Palm Beach,
Florida 33401. At the Closing, the Shareholders shall deliver to Phoenix or its
designee(s) stock certificates representing the Shares, duly endorsed in blank
for transfer or accompanied by appropriate stock powers duly executed in blank.
In full consideration and exchange for the Shares, Phoenix shall exchange with
the Shareholders the Exchange Consideration as provided for in Section 1.3
hereof.
SECTION 1.3. EXCHANGE CONSIDERATION. In exchange for the Shares, Phoenix
will exchange with the Shareholders on the Closing Date, 1,500,000 shares of the
common stock, par value $.01 per share (the "Common Stock"), of PHOENIX
INTERNATIONAL INDUSTRIES, INC. (or 1.5 shares of Common Stock for each Share
exchanged) (the "Exchange Consideration"). No fractional shares will be issued
in connection with the exchange.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ITC
ITC hereby represents, warrants and agrees as follows:
SECTION 2.1. CORPORATE ORGANIZATION.
(a) ITC 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 own its properties and assets and to conduct
its business as now conducted and is duly qualified to do business in good
standing in each jurisdiction in where the nature of the business conducted by
ITC or the ownership or leasing of its properties makes such qualification and
being in good standing necessary, except where the failure to be so qualified
and in good standing will not have a material adverse effect on the business,
operations, properties, assets, condition or results of operation of ITC (a "ITC
Material Adverse Effect");
(b) Copies of the Articles of Incorporation and By-laws of ITC, with
all amendments thereto to the date hereof, have been furnished to Phoenix, and
such copies are accurate and complete as of the date hereof. The minute books of
ITC are current as required by law, contain the minutes of all meetings of the
Board of Directors, committees of the Board of Directors and Shareholders from
date of incorporation to this date, and adequately reflect all material actions
taken by the Board of Directors, committees of the Board of Directors and
Shareholders of ITC.
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<PAGE>
SECTION 2.2. CAPITALIZATION OF THE COMPANY. The authorized capital stock
of ITC consists of 1,000,000 shares of common stock, with a par value of $.01
per share, of which 1,000,000 shares are outstanding. All of the shares of
capital stock have been duly authorized and validly issued, and are fully paid
and nonassessable and no personal liability attaches to the ownership thereof.
Except as set forth in this Section 2.2, the Shares are the sole outstanding
shares of capital stock of ITC, and there are no outstanding options, warrants,
agreements, commitments, conversion rights, preemptive rights or other rights to
subscribe for, purchase or otherwise acquire any of the shares of capital stock
or any unissued or treasury shares of capital stock of ITC.
SECTION 2.3. SUBSIDIARIES AND EQUITY INVESTMENTS. ITC has no subsidiaries
or equity investments.
SECTION 2.4. AUTHORIZATION AND VALIDITY OF AGREEMENTS. ITC has all
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by ITC and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action and no other corporate proceedings on the part of ITC
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby.
SECTION 2.5. NO CONFLICT OR VIOLATION. The execution, delivery and
performance of this Agreement by ITC and each Shareholder does not and will not
violate or conflict with any provision of the Articles of Incorporation or
By-laws of ITC, and does not and will not violate any provision of law, or any
order, judgment or decree of any court or other governmental or regulatory
authority, nor violate nor will result in a breach of or constitute (with due
notice or lapse of time or both) a default under or give to any other entity any
right of termination, amendment, acceleration or cancellation of any contract,
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which ITC or any Shareholder is a party or by which
any of them is bound or to which any of its or their respective properties or
assets is subject, nor will result in the creation or imposition of any lien,
charge or encumbrance of any kind whatsoever upon any of the properties or
assets of ITC, nor will result in the cancellation, modification, revocation or
suspension of any of the licenses, franchises, permits to which ITC is bound.
SECTION 2.6. CONSENTS AND APPROVALS. If applicable, each party to this
agreement will set forth as Schedule 2.6; a true and complete list of each
consent, waiver, authorization or approval of any governmental or regulatory
authority, domestic or foreign, or of any other person, firm or corporation, and
each declaration to or filing or registration with any such governmental or
regulatory authority, that is required in
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<PAGE>
connection with the execution and delivery of this Agreement by ITC and each
Shareholder or the performance by ITC and each Shareholder of its or their
obligations hereunder.
SECTION 2.7. FINANCIAL STATEMENTS. ITC has heretofore furnished to Phoenix
audited balance sheets as of April 30, 1997, accompanied by the reports thereon
of ITC's Accountants, (the audited balance sheets being hereinafter referred to
as the "balance sheet"). The balance sheet, including the notes thereto, (i)
were prepared in accordance with generally accepted accounting principles, (ii)
present fairly, in all material aspects, the financial position, results of
operations and changes in financial position of ITC as of such dates and for the
periods then ended, (iii) are complete, correct and in accordance with the books
of account and records of ITC, (iv) can be reconciled with the financial
statements and the financial records maintained and the accounting methods
applied by ITC for federal income tax purposes, (v) and contain all entries
recommended by ITC's Accountants.
SECTION 2.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since April 30, 1997
and except as set forth on Schedule 2.8, if applicable:
(a) ITC has operated in the ordinary course of business consistent
with past practice and there has not been any material adverse change in the
assets, properties, business, operations, prospects, net income or conditions
financial or otherwise of ITC. ITC does not know or has reason to know of any
event, condition, circumstance or prospective development which threatens or may
threaten to have a material adverse effect on the assets, properties,
operations, prospects, net income or financial condition of ITC;
(b) there has not been any substantive change in any method of
accounting or accounting practice of ITC;
(c) there has not been any declarations, setting aside or payment of
dividends or distributions with respect to shares of ITC or any redemption,
purchase or other acquisition of any other ITC's securities; and
(d) there has not been an increase in the compensation payable or to
become payable to any director or officer of ITC.
SECTION 2.9. TAX MATTERS. Except as reflected in ITC's audited balance
sheets, all returns, reports, or information return or other document (including
any relating or supporting information) required to be filed before the Closing
in respect of ITC has been filed, and ITC has paid, accrued or otherwise
adequately reserved for the payment of all Taxes required to be paid in respect
of the periods covered by such
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<PAGE>
returns and has adequately reserved for the payment of all Taxes with respect to
periods ended on or before the Closing for which tax returns have not yet been
filed. All Taxes of ITC have been paid or adequately provided for and ITC knows
of no proposed additional tax assessment against ITC not adequately provided for
in the Financial Statements. No deficiency for any Taxes has been asserted or
assessed by a taxing authority against ITC, there is no outstanding audit
examination, deficiency or refund litigation with respect to any Taxes of ITC.
In the ordinary course, ITC makes adequate provision on its books for the
payment of Taxes (including for the current fiscal period) owed by ITC. ITC has
not executed an extension or waiver of any statute of limitations on the
assessment or collection of tax that is currently in effect.
"Taxes" shall, for purposes of this Agreement, mean all taxes however
denominated, including any interest, penalties or addition to tax that may
become payable in respect thereof, imposed by any governmental body which taxes
shall include, without limiting the generality of the foregoing, all income
taxes, payroll and employee withholding taxes, unemployment insurance, social
security, sales and use taxes, excise taxes, franchise taxes, receipts taxes,
occupations taxes, real and personal property taxes, stamp taxes, transfer
taxes, workman's compensation taxes and any other obligation of the same or a
similar nature.
SECTION 2.10. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 2.10, or as disclosed in its audited balance sheets of April 30, 1997,
ITC has no indebtedness or liability, absolute or contingent, known or unknown,
which is not shown or provided for on the balance sheet of ITC as of that date
included in the Financial Statements other than liabilities incurred or accrued
in the ordinary course of business since April 30, 1997. Except as shown in such
balance sheets or in the notes to the Financial Statements, ITC is not directly
or indirectly liable upon or with respect to (by discount, repurchase agreements
or otherwise), or obligated in any other way to provide funds in respect of, or
to guarantee or assume, any debt, obligation or dividend of any person.
SECTION 2.11. INTERESTS IN REAL PROPERTY. Schedule 2.11 sets forth an
accurate and complete list of the location of each item of real property ("Real
Property") owned or leased by ITC. ITC as of the closing date, owns no "Real
Property".
Schedule 2.11 sets forth an accurate and complete list (by lessee) in the
summary description of all leases of Real Property to which ITC is a party. ITC
has a valid leasehold interest in each Real Property lease held by it as lessee
or sub-lessee as of the date hereof, in each case free and clear of all Liens,
except for those Liens described in Schedule 2.11. All such Real Property leases
are in full force and effect and ITC has received no notice of any default
thereunder or waived or is aware of any event or circumstances with which the
giving of notice or lapse of time or both would
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constitute a default hereunder. ITC has received no notice nor has any knowledge
of any pending, threatened or contemplated condemnation proceeding affecting any
Real Property owned or leased by it or any part thereof or of any sale or other
disposition thereof in lieu of condemnation.
All of the buildings, fixtures and other improvements described in
Schedule 2.11 are in good operating condition, subject to ordinary wear and
tear.
SECTION 2.12. PERSONAL PROPERTY. ITC owns all personal property (including
properties that may be deemed to be a mix of personal property and Real
Property, ("Personal Property")) purported to be owned by it as of the date
hereof, in each case free and clear of all Liens, except for those Liens
described in Schedule 2.12. All of the Personal Property owned or leased by, and
commonly used or necessary for or in the operations of ITC: (i) is in such
operating condition repair as may be necessary to carry on the business of ITC
as it is now being conducted, subject only to ordinary wear and tear; and (ii)
is sufficient, in the aggregate, for all purposes of the business of ITC as
presently conducted.
SECTION 2.13. LICENSES, PERMITS AND GOVERNMENTAL APPROVALS. Schedule 2.13
sets forth a true and complete list of all licenses, permits, franchises,
authorizations and approvals issued or granted to ITC by any federal, state or
local government, or any department, agency, board, commission, bureau or
instrumentality of any of the foregoing (the "Licenses and Permits"), and all
pending applications therefor. Each License and Permit is valid and in full
force and effect, and, to ITC's best knowledge, is not subject to any pending or
threatened administrative or judicial proceeding to revoke, cancel, suspend or
declare such License and Permit invalid in any respect. The Licenses and Permits
are sufficient and adequate in all material respects to permit the continued
lawful conduct of ITC's business in the manner now conducted and as has been
proposed by ITC to be conducted. Except as set forth in Schedule 2.13, no such
License and Permit will in any way be affected by, or terminate or lapse by
reason of the transactions contemplated by this Agreement.
SECTION 2.14. COMPLIANCE WITH LAW. The operations of ITC have been
conducted in accordance with all applicable laws, regulations, orders and other
requirements of all courts and other governmental or regulatory authorities
having jurisdiction over ITC and its assets, properties and operations,
including, without limitation, all such laws, regulations, orders and
requirements promulgated by or relating to consumer protection, equal
opportunity, health, environmental protection, architectural barriers to the
handicapped, fire, zoning and building and occupation safety except where such
non-compliance would not have a ITC Material Adverse Effect. ITC has not
received notice of any violation of any such law, regulation, order or other
legal requirement, and is not in default with respect to any order, writ,
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judgment, award, injunction or decree of any national, state or local court or
governmental or regulatory authority or arbitrator, domestic or foreign,
applicable to ITC or any of its assets, properties or operations.
SECTION 2.15. LITIGATION. Except as set forth on Schedule 2.15, there are
no claims, actions, suits, proceedings, labor disputes or investigations pending
or, to the best of the ITC's knowledge, threatened before any federal, state or
local court or governmental or regulatory authority, domestic or foreign, or
before any arbitrator of any nature, brought by or against ITC or any of its
officers, directors, employees, agents or affiliates involving, affecting or
relating to any assets, properties or operations of ITC or the transactions
contemplated by this Agreement, nor is any basis known to it for any such
action, suit, proceeding or investigation. Schedule 2.15 sets forth a list and a
summary description of all such pending actions, suits, proceedings, disputes or
investigations. Neither ITC nor any of its assets or properties is subject to
any order, writ, judgment, award, injunction or decree of any federal, state or
local court or governmental or regulatory authority or arbitrator, that would
have a ITC Material Adverse Effect on its assets, properties, operations,
prospects, net income or financial condition or which would or might interfere
with the transactions contemplated by this Agreement.
SECTION 2.16. CONTRACTS. Schedule 2.16 sets forth a true and complete list
of all material contracts, agreements and other instruments to which ITC is a
party or otherwise relating to or affecting any of its assets, properties or
operations, including, without limitation, all written or oral, express or
implied, material, (a) contracts, agreements and commitments not made in the
ordinary course of business; (b) purchase and supply contracts; (c) contracts,
loan agreements, repurchase agreements, mortgages, security agreements, trust
indentures, promissory notes and other documents or arrangements relating to the
borrowing of money or for lines of credit; (d) leases and subleases of real or
personal property; (e) agreements and other arrangements for the sale of any
assets other than in the ordinary course of business or for the grant of any
options or preferential rights to purchase any assets, property or rights; (f)
contracts or commitments limiting or restraining ITC from engaging or competing
in any lines of business or with any person, firm, or corporation; (h)
partnership and joint venture agreements; and (i) all amendments, modifications,
extensions or renewals of any of the foregoing (the foregoing contracts,
agreements and documents are hereinafter referred to collectively as the
"Commitments" and individually as a "Commitment"). Each Commitment is valid,
binding and enforceable against the parties thereto in accordance with its
terms, and in full force and effect on the date hereof. ITC has performed all
obligations required to be performed by it to date under, and is not in default
in respect of, any Commitment, and to ITC's best knowledge no event has occurred
which, with due notice or lapse of time or both, would constitute such a
default. To the best of ITC's knowledge, no other party to any
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Commitment is in default in respect thereof, and no event has occurred which,
with due notice or lapse of time or both, would constitute such a default.
SECTION 2.17. EMPLOYEE PLANS. ITC has complied in all material respects
with the requirements of Section 4980B of the Internal Revenue Code of 1986, as
amended (the "Code"), and Sections 601 to 608 of ERISA relating to continuation
coverage for group health plans. Schedule 2.17 lists every pension, savings,
retirement, severance health, insurance or other employee benefit plan
(collectively referred to herein as the "Plans") which ITC maintains, or has any
obligation to contribute to.
SECTION 2.18. INSURANCE. Schedule 2.18 lists the fidelity bonds and the
aggregate coverage amount and type and generally applicable deductibles of all
policies of title, liability, fire, casualty, business interruption, workers'
compensation, disability and other forms of insurance insuring the properties,
assets and operations of the business of ITC. Except as set forth in Schedule
2.18, all such policies and bonds are in full force and effect, underwritten by
financially sound and reputable insurers (to ITC's best knowledge) and
sufficient for all applicable requirements of law and will not in any way be
effected by or terminated or lapsed by reason of the consummation of the
transactions contemplated by this Agreement. ITC is not in material default
under any provisions of any such policy of insurance and has not received notice
of cancellation of any such insurance. Except as set forth in Schedule 2.18,
there is no claim by ITC pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds.
SECTION 2.19. ENVIRONMENTAL MATTERS. ITC has obtained and maintained in
effect all licenses, permits and other authorizations required under all
applicable laws, regulations and other requirements of governmental or
regulatory authorities relating to pollution or to the protection of the
environment ("Environmental Laws") and is in compliance with all Environmental
Laws and with all such licenses, permits and authorizations except where the
failure to comply would not have a ITC Material Adverse Effect. ITC has not
performed or suffered any act which could give rise to, or has otherwise
incurred liability to any person (governmental or not) under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. S 9601 et seq.
or any other Environmental Laws, nor has ITC received notice of any such
liability or any claim therefor or submitted notice pursuant to Section 103 of
such Act to any governmental agency with respect to any of its respective
assets.
SECTION 2.20. LABOR MATTERS.
(a) Except as set forth in Schedule 2.20: (i) ITC is not a party to
any outstanding employment agreements or contracts with officers or employees
that are
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not terminable at will, or that provide for the payment of any bonus or
commission; (ii) ITC is not a party to any agreement, policy or practice that
requires it to pay termination or severance pay to salaried, non-exempt or
hourly employees (other than as required by law); (iii) ITC is not a party to
any collective bargaining agreement or other labor union contract applicable to
persons employed by ITC nor does ITC know of any activities or proceedings of
any labor union to organize any such employees. ITC has not breached or
otherwise failed to comply with any provisions of any employment or labor
agreement, and there are no grievances outstanding thereunder.
(b) Except as set forth in Schedule 2.20: (i) ITC is in compliance
in all material respects with all applicable laws relating to employment and
employment practices, wages, hours, and terms and conditions of employment; (ii)
there is no unfair labor practice charge or complaint pending before the
National Labor Relations Board ("NLRB"); (iii) there is no labor strike,
material slowdown or material work stoppage or lockout actually pending or, to
ITC's best knowledge, threatened against or affecting ITC, and ITC has not
experienced any strike, material slow down or material work stoppage, lockout or
other collective labor action by or written respect to employees of ITC since
its inception; (iv) there is no representation claim or petition pending before
the NLRB and no question concerning representation exists relating to the
employees of ITC; (v) there are no charges with respect to or relating to ITC
pending before the Equal Employment Opportunity Commission or any state, local
or foreign agency responsible for the prevention of unlawful employment
practices; (vi) ITC has received no formal notice from any federal, state, local
or foreign agency responsible for the enforcement of labor or employment laws of
an intention to conduct an investigation of ITC and no such investigation is in
progress.
SECTION 2.21. DISCLOSURE. This Agreement, the schedules hereto and any
certificate attached hereto or delivered in accordance with the terms hereby by
or on behalf of ITC in connection with the transactions contemplated by this
Agreement, when taken together, do not contain any untrue statement of a
material fact or omit any material fact necessary in order to make the
statements contained herein and/or therein not misleading.
SECTION 2.22. SURVIVAL. Each of the representations and warranties set
forth in this Article II shall be deemed represented and made by ITC at the
Closing as if made at such time and shall survive the Closing for a period
terminating on the third anniversary.
ARTICLE III
Attached separately as Addendum 1
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF PHOENIX
Phoenix represents, warrants and agrees as follows:
SECTION 4.1. CORPORATE ORGANIZATION.
(a) Phoenix is a publicly traded, non reporting corporation (listed
on the NASDAQ Over the Counter Bulletin Board under the trading symbol "PHXU")
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 own its
properties and assets and to conduct its business as now conducted and is duly
qualified to do business in good standing in each jurisdiction in where the
nature of the business conducted by Phoenix or the ownership or leasing of its
properties makes such qualification and being in good standing necessary, except
where the failure to be so qualified and in good standing will not have a
material adverse effect on the business, operations, properties, assets,
condition or results of operation of Phoenix (a "Phoenix Material Adverse
Effect").
SECTION 4.2. CAPITALIZATION OF THE COMPANY; TITLE TO THE SHARES. The
authorized capital stock of Phoenix consists of (a) 20,000,000 shares of common
stock, par value $.01 per share, of which approximately 4,800,000 shares are
outstanding and (b) 1,000 shares of preferred stock, none of which is issued or
outstanding (the "Phoenix Shares"). All of the outstanding shares of capital
stock have been duly authorized and validly issued, and are fully paid and
nonassessable and no personal liability attaches to the ownership thereof.
Exceptions, if any, are set forth on Schedule 4.2, the Phoenix Shares currently
are the sole outstanding shares of capital stock of Phoenix, and there are no
outstanding warrants, agreements, commitments, conversion rights, preemptive
rights or other rights to subscribe for, purchase or otherwise acquire any of
the shares of capital stock or any unissued or treasury shares of capital stock
of Phoenix. Phoenix reserves the right to issue additional shares as desired.
SECTION 4.3. SUBSIDIARIES AND EQUITY INVESTMENTS; prior to the date of
closing of this Agreement, Phoenix has no subsidiaries or equity investments.
SECTION 4.4 AUTHORIZATION AND VALIDITY OF AGREEMENTS: Phoenix has all
corporate power and authority to execute and deliver this Agreement to perform
its obligations hereunder and to consummate the transactions the transactions
contemplated hereby. The execution and delivery of this Agreement by Phoenix and
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the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Phoenix are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby.
SECTION 4.5 NO CONFLICT OR VIOLATION: Except as otherwise set forth on
Schedule 4.6, the execution, delivery and performance of this Agreement by
Phoenix does not and will not violate or conflict with any provision of the
Articles of Incorporation or by-laws of Phoenix, and does not and will not
violate any provision of law, or any order, judgment or decree of any court or
other governmental or regulatory authority, nor violate nor will result in a
breach of or constitute (with due notice or lapse of time or both) a default
under or give to any other entity any right of termination, amendment,
acceleration or cancellation of any contract, lease, loan agreement, mortgage,
security agreement , trust indenture or other agreement or instrument to which
Phoenix is a party or by which it is bound or to which any of its respective
properties or assets is subject, nor will result in the creation or imposition
any lien, charge or encumbrance of any kind whatsoever upon any of the
properties or assets of Phoenix, nor will result in the cancellation,
modification, revocation or suspension of any of the licenses, franchises,
permits to which Phoenix is bound.
SECTION 4.6. CONSENTS AND APPROVALS. Schedule 4.6 sets forth a true and
complete list, if applicable, of each consent, waiver, authorization or approval
of any governmental or regulatory authority, domestic or foreign, or of any
other person, firm or corporation, and each declaration to or filing or
registration with any such governmental or regulatory authority, that is
required in connection with the execution and delivery of this Agreement by
Phoenix or the performance by Phoenix of its obligations hereunder.
SECTION 4.7. FINANCIAL STATEMENTS. Phoenix has heretofore furnished to ITC
(a) financial statements as of and for the year ended on December 31, 1996,
accompanied by the reports thereon of Phoenix's Accountants, (the financial
statement listed above being hereinafter referred to as the "Financial
Statement"). The Financial Statement, including the notes thereto, (i) were
prepared in accordance with generally accepted accounting principles, (ii)
present fairly, in all material respects, the financial position, results of
operations and changes in financial position of Phoenix as of such dates and for
the periods then ended, (iii) are complete, correct and in accordance with the
books of account and records of Phoenix, (iv) can be reconciled with the
financial statements and the financial records maintained and the accounting
methods applied by Phoenix for federal income tax purposes, and (v) contain all
entries recommended by Phoenix's Accountants.
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SECTION 4.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1996, and except (i) as contemplated by this Agreement or(ii) as set forth on
Schedule 4.8:
(a) Phoenix has operated in the ordinary course of business
consistent with past practice and there has not been any material adverse change
in the assets, properties, business, operations, prospects, net income or
conditions financial or otherwise of Phoenix. Phoenix does not know or has
reason to know of any event, condition, circumstance or prospective development
which threatens or may threaten to have a material adverse effect on the assets,
properties, operations, prospects, net income or financial condition of Phoenix;
(b) there has not been any substantive change in any method of
accounting or accounting practice of Phoenix;
(c) there have not been any declarations, setting aside or payment
of dividends or distributions with respect to shares of Phoenix or any
redemption, purchase or other acquisition of any other Phoenix's securities; and
(d) there has not been an increase in the compensation payable or to
become payable to any director or officer of Phoenix other than pursuant to
employment agreements or consistent with prior past practices.
SECTION 4.9. TAX MATTERS. All returns, reports, or information return or
other document (including any relating or supporting information) required to be
filed before the Closing in respect of Phoenix has been filed, and Phoenix has
paid, accrued or otherwise adequately reserved for the payment of all Taxes
required to be paid in respect of the periods covered by such returns and has
adequately reserved for the payment of all Taxes with respect to periods ended
on or before the Closing for which tax returns have not yet been filed. All
Taxes of Phoenix have been paid or adequately provided for and Phoenix knows of
no proposed additional tax assessment against Phoenix not adequately provided
for in the Financial Statements. No deficiency for any Taxes has been asserted
or assessed by a taxing authority against Phoenix, there is no outstanding audit
examination, deficiency or refund litigation with respect to any Taxes of
Phoenix. In the ordinary course, Phoenix makes adequate provision on its books
for the payment of Taxes (including for the current fiscal period) owed by
Phoenix. Phoenix has not executed an extension or waiver of any statute of
limitations on the assessment or collection of tax that is currently in effect.
Taxes shall for purposes of this Agreement mean all taxes however
denominated, including any interest, penalties or addition to tax that may
become payable in respect thereof, imposed by any governmental body which taxes
shall
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include, without limiting the generality of the foregoing, all income taxes,
payroll and employee withholding taxes, unemployment insurance, social security,
sales and use taxes, excise taxes, franchise taxes, receipts taxes, occupations
taxes, real and personal property taxes, stamp taxes, transfer taxes, workman's
compensation taxes and any other obligation of the same or a similar nature.
Schedule 4.9 sets forth an accurate and complete list of all tax loss
carry-forwards.
SECTION 4.10. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 4.10 or 4.16, Phoenix has no indebtedness or liability, absolute or
contingent, known or unknown, which is not shown or provided for on the balance
sheet of Phoenix as of December 31, 1996, other than liabilities incurred or
accrued in the ordinary course of business since December 31, 1996. Except as
shown in such balance sheets or in the notes to the Financial Statements,
Phoenix is not directly or indirectly liable upon or with respect to (by
discount, repurchase agreements or otherwise), or obligated in any other way to
provide funds in respect of, or to guarantee or assume, any debt, obligation or
dividend of any person, except endorsements in the ordinary course of business
in connection with the deposit of items for collection.
SECTION 4.11. INTERESTS IN REAL PROPERTY. Other than the office lease
relating to the property located at 501 S. Dixie Hwy., West Palm Beach, Fl
33410, Phoenix does not own or lease any real property.
SECTION 4.12. PERSONAL PROPERTY. Phoenix owns all personal property
(including properties that may be deemed to be a mix of personal property and
Real Property, ("Personal Property")) purported to be owned by it as of the date
hereof, in each case free and clear of all Liens, except for those Liens
described in Schedule 4.12. All of the Personal Property owned or leased by, and
commonly used or necessary for or in the operations of, any of, Phoenix: (i) is,
in the aggregate, in such operating condition repair as may be necessary to
carry on the business of Phoenix as it is now being conducted, subject only to
ordinary wear and tear; and (ii) is sufficient, in the aggregate, for all
purposes of the business of Phoenix.
SECTION 4.13. LICENSES, PERMITS AND GOVERNMENTAL APPROVALS. Schedule 4.13
sets forth a true and complete list of all licenses, permits, franchises,
authorizations and approvals issued or granted to Phoenix by any federal, state
or local government, or any department, agency, board, commission, bureau or
instrumentality of any of the foregoing (the "Licenses and Permits"), and all
pending applications therefor. Each License and Permit is valid and in full
force and effect, and, to Phoenix's best knowledge, is not subject to any
pending or threatened administrative or judicial proceeding to revoke, cancel,
suspend or declare such License and Permit invalid in
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any respect. The Licenses and Permits are sufficient and adequate in all
material respects to permit the continued lawful conduct of Phoenix's business
in the manner now conducted and as has been proposed by Phoenix to be conducted.
Except as set forth in Schedule 4.13, no such License and Permit will in any way
be affected by, or terminate or lapse by reason of the transactions contemplated
by this Agreement.
SECTION 4.14. COMPLIANCE WITH LAW. The operations of Phoenix have been
conducted in accordance with all applicable laws, regulations, orders and other
requirements of all courts and other governmental or regulatory authorities
having jurisdiction over Phoenix and its assets, properties and operations,
including, without limitation, all such laws, regulations, orders and
requirements promulgated by or relating to consumer protection, equal
opportunity, health, environmental protection, architectural barriers to the
handicapped, fire, zoning and building and occupation safety except where such
non-compliance would not have a Phoenix Material Adverse Effect. Phoenix has not
received notice of any violation of any such law, regulation, order or other
legal requirement, and is not in default with respect to any order, writ,
judgment, award, injunction or decree of any national, state or local court or
governmental or regulatory authority or arbitrator, domestic or foreign,
applicable to Phoenix or any of its assets, properties or operations.
SECTION 4.15. LITIGATION. Except as disclosed its financial statement
there are no claims, actions, suits, proceedings, labor disputes or
investigations pending or, to the best of the Phoenix's knowledge, threatened
before any federal, state or local court or governmental or regulatory
authority, domestic or foreign, or before any arbitrator of any nature, brought
by or against Phoenix or any of its officers, directors, employees, agents or
affiliates involving, affecting or relating to any assets, properties or
operations of Phoenix or the transactions contemplated by this Agreement, nor is
any basis known to Phoenix for any such action, suit, proceeding or
investigation. Schedule 4.15 sets forth a list and a summary description of all
such pending actions, suits, proceedings, disputes or investigations. Neither
Phoenix nor any of its assets or properties is subject to any order, writ,
judgment, award, injunction or decree of any federal, state or local court or
governmental or regulatory authority or arbitrator, that would have a Phoenix
Material Adverse Effect on its assets, properties, operations, prospects, net
income or financial condition or which would or might interfere with the
transactions contemplated by this Agreement.
SECTION 4.16. CONTRACTS. Schedule 4.16 sets forth a true and complete list
of all material contracts, agreements and other instruments to which Phoenix is
a party or otherwise relating to or affecting any of its assets, properties or
operations, including, without limitation, all written or oral, express or
implied, material, (a) contracts, agreements and commitments not made in the
ordinary course of business; (b) purchase and supply contracts; (c) contracts,
loan agreements, repurchase
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agreements, mortgages, security agreements, trust indentures, promissory notes
and other documents or arrangements relating to the borrowing of money or for
lines of credit; (d) leases and subleases of real or personal property; (e)
agreements and other arrangements for the sale of any assets other than in the
ordinary course of business or for the grant of any options or preferential
rights to purchase any assets, property or rights; (f) contracts or commitments
limiting or restraining Phoenix from engaging or competing in any lines of
business or with any person, firm, or corporation; (h) partnership and joint
venture agreements; and (i) all amendments, modifications, extensions or
renewals of any of the foregoing (the foregoing contracts, agreements and
documents are hereinafter referred to collectively as the "Commitments" and
individually as a "Commitment"). Each Commitment is valid, binding and
enforceable against the parties thereto in accordance with its terms, and in
full force and effect on the date hereof. Phoenix has performed all obligations
required to be performed by it to date under, and is not in default in respect
of, any Commitment, and to Phoenix's best knowledge no event has occurred which,
with due notice or lapse of time or both, would constitute such a default. To
the best of Phoenix's knowledge, no other party to any Commitment is in default
in respect thereof, and no event has occurred which, with due notice or lapse of
time or both, would constitute such a default.
SECTION 4.17. EMPLOYEE PLANS. Phoenix has complied in all material
respects with the requirements of Section 4980B of the Code and Sections 601 to
608 of ERAS relating to continuation coverage for group health plans. Schedule
4.17 lists every pension, savings, retirement, severance health, insurance or
other employee benefit plan (collectively referred to herein as the "Plans")
which Phoenix maintains, or has any obligation to contribute to.
SECTION 4.18. INSURANCE. Schedule 4.18 lists the fidelity bonds and the
aggregate coverage amount and type and generally applicable deductibles of all
policies of title, liability, fire, casualty, business interruption, workers'
compensation, disability and other forms of insurance insuring the properties,
assets and operations of the business of Phoenix. Except as set forth in
Schedule 4.18, all such policies and bonds are in full force and effect,
underwritten by financially sound and reputable insurers (to Phoenix's best
knowledge) and sufficient for all applicable requirements of law and will not in
any way be effected by or terminated or lapsed by reason of the consummation of
the transactions contemplated by this Agreement. Phoenix is not in material
default under any provisions of any such policy of insurance and has not
received notice of cancellation of any such insurance. Except as set forth in
Schedule 4.18, there is no claim by Phoenix pending under any of such policies
or bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds.
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SECTION 4.19. ENVIRONMENTAL MATTERS. Phoenix has obtained and maintained
in effect all licenses, permits and other authorizations required under all
applicable laws, regulations and other requirements of governmental or
regulatory authorities relating to pollution or to the protection of the
environment ("Environmental Laws") and is in compliance with all Environmental
Laws and with all such licenses, permits and authorizations except where the
failure to comply would not have a Phoenix Material Adverse Effect. Phoenix has
not performed or suffered any act which could give rise to, or has otherwise
incurred liability to any person (governmental or not) under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. S 9601 et seq.
or any other Environmental Laws, nor has Company received notice of any such
liability or any claim therefor or submitted notice pursuant to Section 103 of
such Act to any governmental agency with respect to any of its respective
assets.
SECTION 4.20. LABOR MATTERS.
(a) Except as set forth in Schedule 4.20: (i) Phoenix is not a party
to any outstanding employment agreements or contracts with officers or employees
that are not terminable at will, or that provide for the payment of any bonus or
commission; (ii) Phoenix is not a party to any agreement, policy or practice
that requires it to pay termination or severance pay to salaried, non-exempt or
hourly employees (other than as required by law); (iii) Phoenix is not a party
to any collective bargaining agreement or other labor union contract applicable
to persons employed by Phoenix nor does Phoenix know of any activities or
proceedings of any labor union to organize any such employees. Phoenix has not
breached or otherwise failed to comply with any provisions of any employment or
labor agreement, and there are no grievances outstanding thereunder.
(b) Except as set forth in Schedule 4.20: (i) Phoenix is in
compliance in all material respects with all applicable laws relating to
employment and employment practices, wages, hours, and terms and conditions of
employment; (ii) there is no unfair labor practice charge or complaint pending
before the National Labor Relations Board ("NLRB"); (iii) there is no labor
strike, material slowdown or material work stoppage or lockout actually pending
or, to Phoenix's best knowledge, threatened against or affecting Phoenix, and
Phoenix has not experienced any strike, material slow down or material work
stoppage, lockout or other collective labor action by or written respect to
employees of Phoenix since September 30, 1995; (iv) there is no representation
claim or petition pending before the NLRB and no question concerning
representation exists relating to the employees of Phoenix; (v) there are no
charges with respect to or relating to Phoenix pending before the Equal
Employment Opportunity Commission or any state, local or foreign agency
responsible for the prevention of unlawful employment practices; (vi) Phoenix
has received no formal notice from any federal,
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state, local or foreign agency responsible for the enforcement of labor or
employment laws of an intention to conduct an investigation of Phoenix and no
such investigation is in progress.
SECTION 4.21. INVESTMENT INTENT. The Shares will be acquired hereunder
solely for the account of Phoenix and its specified designees, for investment,
and not with a view to the resale or distribution thereof.
SECTION 4.22. DISCLOSURE. This Agreement, the schedules hereto and any
certificate attached hereto or delivered in accordance with the terms hereby by
or on behalf of Phoenix in connection with the transactions contemplated by this
Agreement, when taken together, do not contain any untrue statement of a
material fact or omit any material fact necessary in order to make the
statements contained herein and/or therein not misleading.
SECTION 4.23. SURVIVAL. Each of the representations and warranties set
forth in this Article IV shall be deemed represented and made by Phoenix at the
Closing as if made at such time and shall survive the Closing for a period
terminating on the third anniversary.
ARTICLE V
COVENANTS
SECTION 5.1. CERTAIN CHANGES AND CONDUCT OF BUSINESS.
From and after the date of this Agreement and until the
Closing Date, ITC shall conduct, its business solely in the ordinary course
consistent with past practices and, in a manner consistent with all
representations or warranties of ITC and,
(A) without the prior written consent of Phoenix, ITC will
not, except as required or permitted pursuant to the terms hereof:
(i) make any material change in the conduct of its businesses
and operations enter into any transaction other than in the ordinary course of
business consistent with past practices;
(ii) make any change in its Articles of Incorporation or
By-laws; issue any additional shares of capital stock or equity securities or
grant any option, warrant or right to acquire any capital stock or equity
securities or issue any security convertible into or exchangeable for its
capital stock or alter in any material term of any
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of its outstanding securities or make any change in its outstanding shares of
capital stock or its capitalization, whether by reason of a reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, stock dividend or otherwise;
(iii) (A) incur, assume or guarantee any indebtedness for
borrowed money, issue any notes, bonds, debentures or other corporate securities
or grant any option, warrant or right to purchase any thereof, except pursuant
to transactions in the ordinary course of business consistent with past
practices, or (B) issue any securities convertible or exchangeable for debt
securities of ITC;
(iv) subject any of its assets, or any part thereof, to any
Lien or suffer such to be imposed other than such Liens as may arise in the
ordinary course of business consistent with past practices by operation of law
which will not have a material adverse effect on ITC;
(v) acquire any assets, raw materials or properties, or enter
into any other transaction, other than in the ordinary course of business
consistent with past practices;
(vi) enter into any new (or amend any existing) employee
benefit plan, program or arrangement or any new (or amend any existing)
employment, severance or consulting agreement, grant any general increase in the
compensation of officers or employees (including any such increase pursuant to
any bonus, pension, profit-sharing or other plan or commitment) or grant any
increase in the compensation payable or to become payable to any employee,
except in accordance with pre-existing contractual provisions or consistent with
past practices;
(vii) make or commit to make any material capital expenditure;
(viii) pay, loan or advance any amount to, or sell, transfer
or lease any properties or assets to, or enter into any agreement or arrangement
with, any of its affiliates;
(ix) guarantee any indebtedness for borrowed money or any
other obligation of any other person;
(x) fail to keep in full force and effect insurance comparable
in amount and scope to coverage maintained by it (or on behalf of it) on the
date hereof;
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(xi) take any other action that would cause any of the
representations and warranties made by it in this Agreement not to remain true
and correct in all material;
(xii) make any loan, advance or capital contribution to or
investment in any person;
(xiii) make any change in any method of accounting or
accounting principle, method, estimate or practice;
(xiv) settle, release or forgive any claim or litigation or
waive any right;
(xv) commit itself to do any of the foregoing
(B) ITC will commit itself to,
(i) continue to maintain, in all material respects, its
properties in accordance with present practices in a condition suitable for its
current use;
(ii) file, when due or required, federal, state, foreign and
other tax returns and other reports required to be filed and pay when due all
taxes, assessments, fees and other charges lawfully levied or assessed against
it, unless the validity thereof is contested in good faith and by appropriate
proceedings diligently conducted;
(iii) continue to conduct its business in the ordinary course
consistent with past practices;
(ix) keep its books of account, records and files in the
ordinary course and in accordance with existing practices; and
(v) continue to maintain existing business relationships with
suppliers and client.
SECTION 5.2. ACCESS TO PROPERTIES AND RECORDS. ITC shall afford Phoenix,
its accounts, counsel and representatives and Phoenix shall afford to ITC, its
accountants, counsel and representatives full access during normal business
hours throughout the period prior to the Closing Date (or the earlier
termination of this Agreement) to all of such parties properties, books,
contracts, commitments and records and, during such period, shall furnish
promptly to the requesting party all other information concerning the other
party's business, properties and personnel as the requesting party may
reasonably request, provided that no investigation or receipt of
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information pursuant to this Section 5.2 shall affect any representation or
warranty of or the conditions to the obligations of any party.
SECTION 5.3. NEGOTIATIONS. From and after the date hereof until the
earlier of the Closing or the termination of this Agreement, no party to this
Agreement nor its officers or directors (subject to such director's fiduciary
duties) nor anyone acting on behalf of party or persons shall, directly or
indirectly, encourage, solicit, engage in discussions or negotiations with, or
provide any information to, any person, firm, or other entity or group
concerning any merger, sale of substantial assets, purchase or sale of shares of
common stock or similar transaction involving any party thereof. A party shall
promptly communicate to any other party any inquiries or communications
concerning any such transaction which they may receive or of which they may
become aware of.
SECTION 5.4. CONSENTS AND APPROVALS. The parties, (i) shall use their
reasonable commercial efforts to obtain all necessary consents, waivers,
authorizations and approvals of all governmental and regulatory authorities,
domestic and foreign, and of all other persons, firms or corporations required
in connection with the execution, delivery and performance by them of this
Agreement, and (ii) shall diligently assist and cooperate with each party in
preparing and filing all documents required to be submitted by a party to any
governmental or regulatory authority, domestic or foreign, in connection with
such transactions and in obtaining any governmental consents, waivers,
authorizations or approvals which may be required to be obtained connection with
such transactions .
SECTION 5.5. Public Announcement. Unless otherwise required by applicable
law, the parties hereto shall consult with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
and shall not issue any such press release or make any such public statement
prior to such consultation.
SECTION 5.6. EMPLOYMENT CONTRACT. Phoenix hereby acknowledges and accepts
all terms and conditions of the existing employment contract dated
____________________1997, between ITC and Scott A. Schuster.
SECTION 5.7. RESIGNATIONS OF ITC'S OFFICERS AND DIRECTORS. On the Closing
Date, Phoenix shall receive the resignations of all officers and directors of
ITC and Phoenix shall cause Scott A. Schuster to be appointed to as a director
of both Phoenix and ITC and as President of ITC.
ARTICLE VI
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CONDITIONS TO OBLIGATIONS OF PHOENIX
The obligations of PHOENIX to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, at or before the Closing Date, of
the following conditions, any one or more of which may be waived by Phoenix in
its sole discretion:
SECTION 6.1. REPRESENTATIONS AND WARRANTIES OF ITC. All representations
and warranties made by ITC in this Agreement shall be true and correct on and as
of the Closing Date as if again made by ITC on and as of such date.
SECTION 6.2. AGREEMENTS AND COVENANTS. ITC and the Shareholders shall have
performed and complied in all material respects to all agreements and covenants
required by this Agreement to be performed or complied with by any of them on or
prior to the Closing Date.
SECTION 6.3. CONSENTS AND APPROVALS. All consents, waivers, authorizations
and approvals of any governmental or regulatory authority, domestic or foreign,
and of any other person, firm or corporation, required in connection with the
execution, delivery and performance of this Agreement shall be in full force and
effect on the Closing Date.
SECTION 6.4. NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other order issued by any court or governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any government or governmental or
regulatory authority, which declares this Agreement invalid in any respect or
prevents the consummation of the transactions contemplated hereby, or which
materially and adversely affects the assets, properties, operations, prospects,
net income or financial condition of ITC shall be in effect; and no action or
proceeding before any court or governmental or regulatory authority, domestic or
foreign, shall have been instituted or threatened by any government or
governmental or regulatory authority, domestic or foreign, or by any other
person, or entity which seeks to prevent or delay the consummation of the
transactions contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement.
SECTION 6.5. EMPLOYMENT CONTRACT. On or before the Closing Date, Scott A.
Schuster shall have entered into an employment agreement with ITC.
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SECTION 6.6. OPINION OF COUNSEL. Phoenix shall have received a favorable
opinion, dated as of the Closing Date from legal counsel to ITC, in form and
substance reasonably satisfactory to Phoenix and its counsel.
SECTION 6.7. OTHER CLOSING DOCUMENTS. Phoenix shall have received such
other certificates, instruments and documents in confirmation of the
representations and warranties of ITC or in furtherance of the transactions
contemplated by this Agreement as Phoenix or its counsel may reasonably request.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF ITC
The obligations of ITC and the Shareholders to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by ITC and the Shareholders in their sole discretion, as the case may be.
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF PHOENIX. All
representations and warranties made by Phoenix in this Agreement shall be true
and correct on and as of the Closing Date as if again made by Phoenix on and as
of such date.
SECTION 7.2. AGREEMENTS AND COVENANTS. Phoenix shall have performed and
complied in all material respects to all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.
SECTION 7.3. CONSENTS AND APPROVALS. All consents, waivers, authorizations
and approvals of any governmental or regulatory authority, domestic or foreign,
and of any other person, firm or corporation, required in connection with the
execution, delivery and performance of this Agreement, shall have been duly
obtained and shall be in full force and effect on the Closing Date.
SECTION 7.4. NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other order issued by any court or other governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any government or
governmental or regulatory authority, domestic or foreign, that declares this
Agreement invalid or unenforceable in any respect or which prevents the
consummation of the transactions contemplated hereby, or which materially and
adversely affects the assets, properties, operations, prospects, net income or
financial condition of Phoenix and its subsidiaries, taken as a
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whole, shall be in effect; and no action or proceeding before any court or
government or regulatory authority, domestic or foreign, shall have been
instituted or threatened by any government or governmental or regulatory
authority, domestic or foreign, or by any other person, or entity which seeks to
prevent or delay the consummation of the transactions contemplated by this
Agreement or which challenges the validity or enforceability of this Agreement.
SECTION 7.5. OPINION OF COUNSEL. Phoenix shall have received a favorable
opinion, dated as of the Closing Date from legal counsel to Phoenix in form and
substance reasonably satisfactory to ITC and its counsel.
SECTION 7.6. OTHER CLOSING DOCUMENTS. ITC shall have received such other
certificates, instruments and documents in confirmation of the representations
and warranties of Phoenix or in furtherance of the transactions contemplated by
this Agreement as ITC or its counsel may reasonably request.
SECTION 7.7. NASDAQ, OTCBB LISTING. ITC shall have received satisfactory
confirmation that upon the Closing of the transaction contemplated by this
Agreement the shares of Phoenix's Common Stock will continue to be listed as a
publicly traded company.
ARTICLE VIII
TERMINATION AND ABANDONMENT
SECTION 8.1. METHODS OF TERMINATION. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time before the
Closing:
(a) By the mutual written consent of the Shareholders, ITC, and
Phoenix.
(b) By Phoenix, upon a material breach of any representation,
warranty, covenant or agreement on the part of ITC and the Shareholders set
forth in this Agreement, or if any representation or warranty of ITC or the
Shareholders shall become untrue, in either case such that any of the conditions
set forth in Article VI hereof would not be satisfied (a "ITC Breach"), and such
breach shall, if capable of cure, have not been cured within ten (10) days after
receipt by the party in breach of a notice from the non-breaching party setting
forth in detail the nature of such breach;
(c) By the Shareholders and ITC, upon a material breach of any
representation, warranty, covenant or agreement on the part of Phoenix set forth
in this
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Agreement, or, if any representation or warranty of Phoenix shall become untrue,
in either case such that any of the conditions set forth in Article VII hereof
would not be satisfied (a "Phoenix Breach"), and such breach shall, if capable
of cure, not have been cured within ten (10) days after receipt by the party in
breach of a notice from the non-breaching party setting forth in detail the
nature of such breach;
(d) By either the Shareholders and ITC or Phoenix, if the Closing
shall not have consummated before thirty (30) days after the date hereof;
provided, however, that this Agreement may be extended by written notice of
either ITC or Phoenix, if the Closing shall not have been consummated as a
result of Phoenix, the Shareholders or ITC having failed to receive all required
regulatory approvals or consents with respect to this transaction or as the
result of the entering of an order as described in this Agreement; and further
provided, however, that the right to terminate this Agreement under this Section
8.1(d) shall not be available to any party whose failure to fulfill any
obligations under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before this date.
(e) By either the Shareholders and ITC or Phoenix if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action (which order, decree or ruling the parties hereto shall use its best
efforts to lift), which permanently restrains, enjoins or otherwise prohibits
the transactions contemplated by this Agreement.
SECTION 8.2. PROCEDURE UPON TERMINATION. In the event of termination and
abandonment of this Agreement by ITC, the Shareholders or Phoenix pursuant to
Section 8.1, written notice thereof shall forthwith be given to the other
parties and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action. If this Agreement is
terminated as provided herein, no party to this Agreement shall have any
liability or further obligation to any other party to this Agreement except as
provided in Sections 11.1, 11.4 hereof; provided, however, that no termination
of this Agreement pursuant to this Article VIII shall relieve any party of
liability for a breach of any provision of this Agreement occurring before such
termination.
ARTICLE IX
SHAREHOLDERS' REPRESENTATIVE
SECTION 9.1. SHAREHOLDERS' REPRESENTATIVE. Each of the Shareholders hereby
irrevocably makes, constitutes and appoints Scott A. Schuster as his agent and
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representative and attorney-in-fact (the "Shareholders' Representative") for all
purposes under this Agreement.
Each Shareholder hereby authorizes the Shareholders' Representative, on
behalf and in the name of such Shareholder, to:
(a) Receive all notices or documents given or to be given to him by
Phoenix pursuant hereto or in connection herewith and to receive and accept
service of legal process in connection with any suit or other proceeding arising
under this Agreement. The Shareholders' Representative promptly shall forward a
copy of such notice or process to each Shareholder ;
(b) Deliver at the Closing the certificates for the Shares of each
Shareholder in exchange for his portion of the Exchange Consideration;
(c) Sign and deliver to Phoenix at the Closing a receipt for his
portion of the Exchange Consideration and transmit the Exchange Consideration to
each Shareholder;
(d) Deliver to Phoenix at the Closing all certificates and documents
to be delivered to Phoenix by the Shareholders pursuant to this Agreement,
together with any other certificates and documents executed by each Shareholder
and deposited with the Shareholders' Representative for such purpose;
(e) Engage such legal counsel, and such accountants and other
advisors for Shareholders and incur such other expenses on behalf of
Shareholders in connection with this Agreement and the transactions contemplated
hereby as the Shareholders' Representative may deem appropriate; and
(f) Take such action on behalf of such Shareholders as the
Shareholders' Representative may deem appropriate in respect of:
(i) Waiving any inaccuracies in the representations or
warranties of Phoenix contained in this Agreement or in any document delivered
by it pursuant hereto;
(ii) Waiving the fulfillment of any of the conditions
precedent to the Shareholders' obligations hereunder;
(iii) Taking such other action as he is authorized to take
under this Agreement;
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(iv) Receiving all documents or certificates and making all
determinations on behalf of the Shareholders required under this Agreement; and
(v) All such other matters as the Shareholders' Representative
may deem necessary or appropriate to consummate this Agreement and the
transactions contemplated hereby.
The appointment of the Shareholders' Representative hereunder is
irrevocable and is deemed coupled with an interest and any action taken by
Shareholders' Representative pursuant to the authority granted in this Section
9.1 shall be effective and absolutely binding on each Shareholder
notwithstanding any contrary action of or direction from a Shareholder. The
death or incapacity of any Shareholder shall not terminate the prior authority
and agency of the Shareholders' Representative.
ARTICLE X
POST-CLOSING AGREEMENTS
SECTION 10.1. CONSISTENCY IN REPORTING. Each party hereto agrees that: (i)
the transaction is intended to qualify as a tax-free transaction under the Code;
(ii) the transaction shall be reported for Federal income tax purposes as a
tax-free transaction; (iii) for purposes of all financial statements, tax
returns and reports, and communications with third parties, the transactions
contemplated in this agreement and ancillary or collateral transactions will be
treated as a tax-free transaction; and (iv) if the characterization of any
transaction contemplated in this agreement or any ancillary or collateral
transaction is challenged, each party hereto will testify, affirm and ratify
that the characterization contemplated in such agreement was with the
characterization intended by the party; provided, however, that nothing herein
shall be construed as giving rise to any obligation if the reporting position is
determined to be incorrect by final decision of a court of competent
jurisdiction.
SECTION 10.2. INDEMNITY. Phoenix shall honor the terms and conditions of
the indemnification agreements listed on Schedule 4.16 as in effect on the date
of Closing.
SECTION 10.3. FUNDING OF ITC BY PHOENIX. Phoenix agrees to fund ITC in the
manner set forth in the "ITC Twelve (12) Month Budget commencing June 1, 1997",
a copy of which is attached hereto as Exhibit "A". All funding and "Receivable
Financing" will be done by or through Phoenix, and ITC is not authorized to
borrow against any of its assets without the written consent of Phoenix. Other
than by or through Phoenix, ITC is not authorized to pledge, hypothecate or
receive loans against
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its receivables. All assets of ITC, including but not limited to receivables,
are considered the property of Phoenix. To ensure adequate funding is available
for ITC to meets its goals as set forth in Exhibit "A", Phoenix will make
available for the first six month period of Exhibit "A", a direct loan not to
exceed forty two thousand dollars ($42,000) per month, in addition, for as long
as needed, Phoenix will provide receivable financing of up to seventy five
percent (75%) for approved, creditworthy, accounts (as evidenced by the lenders
and lending institution, based upon the reasonable and necessary standards of
the industry). Accounts deemed to be non-creditworthy, will be reviewed by
Phoenix and ITC, on an individual basis, in an attempt to find alternative
financing. Should said review find the account(s) to be non-financeable, the
account(s) would be rejected by ITC and not be considered as revenue.
SECTION 10.4 PERFORMANCE OF ITC. ITC asserts that the "ITC Twelve (12)
Month Budget" (Exhibit "A") is sound and that the projected revenues and profits
are reasonable and will be attained. Based on the limited operating history of
ITC, monthly performance reviews will be conducted by Phoenix and should ITC
fail to achieve at least eighty five percent (85%) of the revenues and profits,
cumulative year to date as projected per Exhibit "A", notwithstanding that the
foregoing would constitute a breach of this agreement, changes and adjustments
may be implemented by Phoenix to reduce ITC's funding requirements and Phoenix's
capital exposure.
SECTION 10.5 REMEDIES FOR BREACH OF AGREEMENT BY PHOENIX. Should Phoenix
breach any term or condition of this agreement, the following shall, at the
option of ITC, occur;
(a) Phoenix shall execute a stock swap with the former shareholders
of ITC, whereby such shareholders shall return all Phoenix stock to Phoenix, and
shall receive one hundred percent (100%) of the capital stock, voting and
nonvoting of ITC. Phoenix shall guarantee that ITC shall be returned to the
Shareholders in the same or greater net worth determined in accordance with
standard accounting principles, as of the date of Phoenix's acquisition of ITC.
Any deficiency shall be funded by Phoenix as a capital contribution to ITC.
(b) These remedies shall not be exclusive.
SECTION 10.6 REMEDIES FOR BREACH OF AGREEMENT BY ITC. Should ITC breach
any term or condition of this agreement, the following shall, at the option of
Phoenix, occur;
(a) ITC and the former Shareholders of ITC shall execute a stock
swap with Phoenix, whereby such shareholders shall return all Phoenix stock to
Phoenix, and shall receive one hundred percent (100%) of the capital stock,
voting and nonvoting of ITC. Phoenix shall not guarantee that ITC shall be
returned to the Shareholders in the same or greater net worth determined in
accordance with standard accounting principles, as of the date of Phoenix's
acquisition of ITC. Any outstanding notes or
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unpaid loans to ITC by Phoenix, unless otherwise agreed upon by both parties,
will immediately become due and payable.
(b) These remedies shall not be exclusive.
SECTION 10.7 DIVESTURE OF THE ASSETS OF ITC. Phoenix agrees not to sell,
remove or divest in any manner the real or personal property of ITC that would
prohibit ITC from performing its normal business.
SECTION 10.8 DIVERSION OF FUNDS OF ITC. Phoenix agrees not to divert any
funds generated by ITC in any manner that would prohibit ITC from attaining its
goals of revenue and/or profit as projected in Exhibit "A" of this agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. SURVIVAL OF PROVISIONS. The respective representations,
warranties, covenants and agreements of each of the parties to this Agreement
(except covenants and agreements which are expressly required to be performed
and are performed in full on or before the Closing Date) shall survive the
Closing Date and the-consummation of the transactions contemplated by this
Agreement, subject to Sections 2.22 and 4.25. In the event of a breach of any of
such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach available to it under the provisions of this
Agreement or otherwise, whether at law or in equity, regardless of any
disclosure to, or investigation made by or on behalf of such party on or before
the Closing Date.
SECTION 11.2. PUBLICITY. Neither party shall cause the publication of any
press release or other announcement with respect to this Agreement or the
transactions contemplated hereby without the consent of the other party, unless
a press release or announcement is required by law. If any such announcement or
other disclosure is required by law, the disclosing party agrees to give the
nondisclosing party prior notice and an opportunity to comment on the proposed
disclosure.
SECTION 11.3. SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES. This
Agreement shall inure to the benefit of, and be binding upon, the parties hereto
and their respective successors and assigns; provided, however, that no party
shall assign or delegate any of the obligations created under this Agreement
without the prior written consent of the other party.
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SECTION 11.4. FEES AND EXPENSES. Except as otherwise expressly provided in
this Agreement, all legal and other fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees, costs or expenses.
SECTION 11.5. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been given or
made if in writing and delivered personally or sent by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the following
addresses:
(a) If to Phoenix, to:
Phoenix International Industries, Inc.
501 S. Dixie Hwy.
West Palm Beach, FL 33401
Attention: Gerard Haryman, Pres.
(b) If to ITC and/or Shareholders, to:
Intuitive Technology Consultants, Inc.
4187 Northeast Expressway, Suite 200
Atlanta, GA 30340
Attention: Scott A. Schuster, Pres.
or to such other persons or at such other addresses as shall be furnished by
either party by like notice to the other, and such notice or communication shall
be deemed to have been given or made as of the date so delivered or mailed. No
change in any of such addresses shall be effective insofar as notices under this
Section 10.6 are concerned unless such changed address is located in the United
States of America and notice of such change shall have been given to such other
party hereto as provided in this Section 10.6.
SECTION 11.7. ENTIRE AGREEMENT. This Agreement, together with the exhibits
hereto, represents the entire agreement and understanding of the parties with
reference to the transactions set forth herein and no representations or
warranties have been made in connection with this Agreement other than those
expressly set forth herein or in the exhibits, certificates and other documents
delivered in accordance herewith. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings and
agreements between the parties relating to the subject matter of this Agreement
and all prior drafts of this Agreement, all of which are merged into this
Agreement. No prior drafts of this Agreement and no words or phrases from any
such prior drafts shall be admissible into evidence in any action or suit
involving this Agreement.
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SECTION 11.8. SEVERABILITY. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
SECTION 11.9. TITLES AND HEADINGS. The Article and Section headings
contained in this Agreement are solely for convenience of reference and shall
not affect the meaning or interpretation of this Agreement or of any term or
provision hereof.
SECTION 11.10. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
SECTION 11.11. CONVENIENCE OF FORUM; CONSENT TO JURISDICTION. Any dispute
arising out of this agreement shall be resolved by binding arbitration in
accordance with the Civil Arbitration Rules of the American Arbitration
Association. The arbitration will be held in West Palm Beach, Florida and will
be conducted by one arbitrator mutually agreeable to ITC, Shareholders and
Phoenix. If the parties cannot agree within thirty (30) days of a written demand
by a party for arbitration, the arbitrator shall be selected by the American
Arbitration Association. Arbitration is final without appeal. Judgment upon any
arbitration award may be entered in any court of competent jurisdiction.
SECTION 11.12. ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereto, this being in addition to any
other remedy to which they are entitled at law or in equity.
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SECTION 11.13. GOVERNING LAW. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of Florida
without giving effect to the choice-of-law provisions thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
FOR: PHOENIX INTERNATIONAL INDUSTRIES, INC.
- ---------------------------------- --------------------------
Gerard Haryman Date
President
FOR: INTUITIVE TECHNOLOGY CONSULTANTS, INC.
- ---------------------------------- --------------------------
Scott A. Schuster Date
President
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 13th day of June, 1997, by and between Intuitive
Technology Consultants, Inc., a Georgia Corporation (hereinafter referred to as
Employer), having its principle place of business In Atlanta, Georgia, and Scott
A. Schuster, of Flowery Branch, Georgia (hereinafter referred to as Employee,
Whereas, the Employee and Employer desire to set forth in writing their contract
with respect to Employee s employment by Employer;
NOW, THEREFORE, In consideration of their mutual promises set forth herein, the
parties hereby agree as follows;
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby accepts
such employment, upon the terms and conditions set forth in this Agreement.
2. DUTIES AND AUTHORITY.
a) Employee will occupy the position of President and Chief Executive
Officer,(hereinafter referred to as "Positions" or "Assignment" with the
Employer and willserve as a Director of the Employer.
b.) In the position stated in Paragraph 2(a) above, Employee w111 have
theresponsibility and authority of President, subject to the control of the
Board ofDirectors, and have general supervision, direction and control, as
necessary,over the business and affairs of Employer and its Employees as
describe inSchedule "A" attached hereto. Employee will be responsible for
carrying out allorders and resolutions of the Board of Directors of Employers
and such duties asmay from time to time, within the context of Employee s
Position, be assigned toEmployee by the Board of Directors. Employee will be
subject to a quarterlyperformance review by the Board of Directors.
c.) Employee agrees to devote his full time, attention and test
efforts to theperformance of the duties described hereunder.
3. TERM OF EMPLOYMENT. The term of employment shall begin on the date of
thisAgreement, and shall extend for a period of three consecutive years, or
until terminated as provided herein.
4. COMPENSATION. Employee will receive, as compensation, during the term
hereof, the following:
a.) A base annual salary (hereinafter referred to as Base Salary) of One
HundredSixty Thousand Debars ($160,000.00), with one twenty-fourth (1/24) of the
salary payable on the first day and fifteenth day of each month for the term of
this Agreement Said Base Salary will be reviewed annually by the Board of
Directors of Employer and may, at the sole discretion of the Board of Directors,
be increased following the aforementioned review.
b) An Incentive salary (hereinafter referred to as "Bonus") equal to a
minimum of five percent (5%) of the adjusted net profits (hereinafter defined)
of the Employer during each fiscal year beginning or ending during the term of
this Agreement. Adjusted Net Profits shall be the net profit before federal,
state and local income taxes, as determined in accordance with
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accepted accounting practices by an independent accounting firm, employed by
Employer as auditors, and adjusted to exclude:
i) any incentive salary payments paid pursuant to this Agreement; and
ii) any contributions to pension and/or profit-sharing plans; and
iii) any extraordinary gains or losses not caused by the efforts of
Employee in his execution of his Position (including, but not limited to, gains
or losses on disposition of assets); and
iv) any refund or deficiency of federal state or local Income taxes paid
in a prior year; and;
v) any provision for federal, state or local income taxes made in prior
years which is subsequently determined as unnecessary.
c) The audit provided by the Independent accounting firm employed by the
Employer shall be final and binding upon Employee and Employer.
d) The Incentive salary shall be paid quarterly, as opposed to annually
and paid on the last workday in the month following the end any fiscal quarter
(a quarter shall be defined as one fourth (1/4) of the Employers fiscal year and
shall include three (3) consecutive months) of Employer, It Employer is meeting
the cumulative performance targets as set forward In Schedule "A" of this
Agreement, and will be based upon estimated annual adjusted net profit (as
defined herein) and if necessary adjusted up of down from quarter to quarter.
e) For the first and last fiscal years of Employer, ending and beginning,
respectively, during the term of this Agreement. the Bonus shall be computed for
the proportion of the fiscal year coextensive with this Agreement.
f) The maximum Bonus payable for any one calendar year shall not exceed
two hundred fifty percent of the Base Salary of Employee, unless authorized by
the Board of Directors of Employer.
5. MEDICAL, DENTAL, LIFE And OTHER Insurance. It is understood that Employer
currently has Medical, Dental and Prescription coverage with Employers
HealthInsurance. Insurance coverage for Employee shall be supplied to Employee
under theterms and conditions of Employer and paid for by Employer. Should the
Board ofDirectors elect to change said insurance(s), Employee will be supplied
with coverageequal to or greater than that currently in effect, with all
coverage paid for by Employer.Additionally, Employer may, at its sole cost and
discretion, implement a "Key Man" Life Insurance policy taken against Employee
and naming Employer as beneficiary of saidpolicy.
6. VACATION, SICK AND PERSONAL LEAVE. For the first year of employment,
Employee shall be entitled to three weeks of paid vacation, Increasing to four
weeks for the second year and four weeks for the third year. The dates for
vacation shall be mutually agreed upon by Employee and Employer. Vacation leave
must be taken annually or be lost, however, if vacation is not taken for the
benefit of the Employer, Employee shall be compensated at his base salary rate
for time not taken. Employee shall receive ten (10) Sick/Personal days per
calendar year. Unused Sick and Personal/Leave will accrue to a maximum of thirty
(30) days and be retained by Employee to be used at his discretion.
7. EXPENSE REIMBURSEMENT. Employee shall be entitled to reimbursement for
all reasonable expenses, including but not limited to, travel and entertainment,
lodging and meals,
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incurred by Employee In the performance of Employee s duties. Employee will
maintain records and written receipts as required by federal and state tax
authorities to substantiate expenses and shall submit original vouchers for
expenses for which reimbursement is made.
8. PERMANENT DISABILITY.
a) In the event Employee becomes permanently disabled (hereinafter
defined) during employment with Employer, Employer may terminate this Agreement
by giving thirty (30) days written notice to Employee of Employers intent to
terminate, and, unless Employee resumes performance of the duties set forth in
Paragraph (2.) above, within five (5) days of the date of notice and continues
performance for the remainder of the notice period, this Agreement will
terminate at the end of the thirty (30) day period.
b) Permanently Disabled for the purpose of this Agreement, shall mean the
inability, due to physical or mental ill health or any reason beyond the control
of Employee, to perform Employee's duties for sixty (60) consecutive days, or
for an aggregate of ninety (90) days during any one employment year irrespective
of whether such days are consecutive.
c) Upon termination of employment under Paragraph 8(a) above, Employee
will be entitled to any deferred compensation to which the Employee may be
entitled. Said compensation shall be paid immediately upon the termination of
this Agreement.
9. CONFIDENTIALITY. Employee agrees to keep confidential always, both
during his term of employment with the company, and at all times after that, any
and all information of which he shall have knowledge from time to time,
regardless of how said knowledge Is gained, concerning any and all aspects of
the business, personnel, services and products of Employer or any subsidiary of,
or affiliate of Employer, and that Employee will not disclose, at any time,
except to authorized officers, employees of Employer, or as authorized for the
proper discharge of Employee's functions, any such information to any person
firm, company or other entity unless and until Employee shall have received from
Employer written authorization to do so. Further, Employee agrees not to use any
such information at any time, for his own purposes and/or benefit, for the
purpose and/or benefit of others, or for any purposes whatsoever not connected
directly with and solely for the benefit of the business of Employer or its
subsidiaries and/or associated companies.
10. INVENTIONS AND INTELLECTUAL COPYRIGHTS Employee agrees that any invention,
discovery, design or Improvement (whether or not patentable or capable of
registration, copyright or other protection) in or relating to the business of
Employer. its subsidiaries and/or associated companies or associated companies,
or in relation to any design or development being undertaken by it or which is
otherwise suitable for its business, which Employee makes In the course of his
normal or assigned duties during the term of this Agreement, shall be the
exclusive property of Employer. Employee further agrees to promptly disclose any
suds invention, discovery, design or Improvement to the Board of Directors of
Employer or to the person(s) designated by Employer's Board of Directors and to
no other person. Employee further agrees to, at Employer's sole request, whether
during or after the end of this Agreement, do everything deemed necessary by
Employer, to enable Employer or any one designated by Employer, at Employer's
sole expense, to obtain letters, patent(s) (including any extensions
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thereto), design, copyright or other protection relating thereto, and that
Employee will assign to employer or anyone designated by Employer, title to any
such letter, patent copyright or other protection.
11. OTHER EMPLOYMENT. Employee agrees that, during the term of this Agreement,
not to engage in any occupation outside the Employer, nor enter into business on
his own behalf without obtaining the prior written consent of Employers Board of
Directors. Such consent will not normally be withheld unless the nature and/or
extent of the second occupation 15, In the opinion of Employer, prejudicial to
the interests of Employer
12. TERMINATION.
a) This Agreement may be terminated by Employer by giving ten (10) days
written notice to Employee if Employee breaches this Agreement or habitually
neglects the duties and obligations to be performed under Paragraphs 2, 9, 10,
11, and 13, or habitually engages In the use of illegal substances or the
excessive use of alcohol, or engages in any conduct which is illegal or
dishonest which results in damage to the reputation of Employer.
b) This Agreement may be terminated by Employee, only upon breach by
Employer of its responsibilities with regard to funding requirements, fiduciary
duties or its obligation under this Agreement, by giving sixty (60) days written
notice to Employer. However, should this Agreement be terminated by employee,
all benefits to Employee resulting from this Agreement are nullified and
Employer will invoke Paragraph 13 of this Agreement in its entirety.
c) In the event employment is terminated pursuant to Paragraphs 12(a)
above, Employee will be entitled to only Base Salary compensation earned prior
to the date of termination as provided for in Paragraph 3 of this Agreement,
computed pro rata up to and including the date of termination, plus one twelfth
(1/12) of one years base salary. Employee shall not receive any incentive salary
payment(s) due and payable beyond the date of termination. However, should the
Agreement terminated under the provisions of Paragraph 12(b) above, Employee
shall receive all compensation due him through the full period of this Agreement
In a lump sum payment due on the last date of employment, and additionally,
Employee shall be entitled to all Bonus payments as stated herein, through the
date of termination of this Agreement
d) In the event Employer is acquired, Is a non surviving party in a
merger, or transfers substantially all of Its assets, this Agreement shall not
be terminated and Employer agrees to take all actions necessary to ensure that
the transferee or surviving company is bound by the provisions of this
Agreement.
13. NON COMPETE. Employee agrees that during the term of his employment and for
a period of one (1) year following the expiration date of this Agreement, or
termination date of employment, Employee shall not, either directly or
indirectly, through any partnership or corporation or personally, solicit,
dive", call on, or attempt to call on, any customer of Employer for the purpose
of competing with Employer for any business of Employer. This provision shall
not limit Employee's ability to earn a living.
14. REMEDY FOR BREACH. In the event of a breach or threatened breach by
Employee of any of his obligations under this Agreement, employee acknowledges
that Employer will not have an adequate remedy at law and shall be entitled to
such equitable and injunctive relief as may be
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available to restrain Employee from the violation of the provisions under
Paragraph 1 3(a) above. Nothing herein shall be construed as prohibiting
Employer from pursuing any other remedies available such breach or threatened
breach, including the recovery of damages form Employee. In the event it should
become necessary for Employer to litigate its rights pursuant to this Agreement,
Employer shall be entitled to an award of reasonable attorney fees, both trial
and appellate, should Employer prevail In such action.
15. NOTICES. Any notice provided for in this Agreement shall be given In
writing. Notices shall be effective from the date of service, if served
personally on the party to whom notice is to be given, or on the second day
after mailing, if mailed by first class mail, postage prepaid. Notices shall be
property addressed to the parties at the if respective addresses:
Employer:
Intuitive Technology Consultants, Ins.
510 South Dixie Highway
West Palm Beach, Florida 33401
Employee:
Scott A Schuster
B204 Germantown Drive
Flowery Branch, GA 30542
or to such other address as either party may later specify by written notice
to the other party
16. WAIVER. The waiver by the Employer of any breach of the provisions of this
Agreement by the Employee shall not be construed as a waiver of any subsequent
breech by the Employee.
17. GOVERNING LAW AND VENUE. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida. Palm Beach County, Florida,
shall be the proper venue for any litigation arising out of this Agreement.
18. PARAGRAPH HEADINGS. Paragraph headings are for convenience only and are
not Intended to expand or restrict the scope or substance of the provisions
of this Agreement.
19. ASSIGNABILITY. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the successor
and assigns of the Employer. This Agreement is a personal employment agreement
and the rights, obligations and interest of the Employee hereunder may not be
sold, assigned, transferred, pledged or hypothecated.
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20. SEVERABILITY. If any provision of this Agreement is held by a Court of
competent jurisdiction to be invalid or unenforceable, the jurisdiction of the
Agreement shall remain in full force and effect and shell in no way be impaired.
21. ARBITRATION, Any controversy or claim arising out of, or relating to this
Agreement or breach thereon shall be settled by arbitration in accordance with
the Rules of the American Arbitration Association and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
22. PREVAILING PARTY. In the event of litigation arising out of this Agreement,
the prevailing party is entitled to receive Costs and reasonable attorney fees
resulting from said litigation.
22. ENTIRE AGREEMENT. This sets forth the entire agreement between the parties
hereto, and supersedes all prior agreements and understandings, either oral or
written. with respect to the subject matter hereof; This Agreement may be
changed only by an agreement in writing signed by the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on this ____ day of
___________, 1997.
For Employee:__________________ Witness: ___________________
For Employer: ________________ Witness: ___________________
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EXHIBIT 10.5
SHARE EXCHANGE AGREEMENT
BY AND AMONG
PHOENIX INTERNATIONAL INDUSTRIES, INC., AND
HDX 9000, INC. AND SHAREHOLDERS OF HDX 9000 INC.
FOR THE EXCHANGE OF CAPITAL STOCK OF HDX 9000, INC.
DATED AS OF ________________________________, 1997
THIS SHARE EXCHANGE AGREEMENT, dated as above, by and among PHOENIX
INTERNATIONAL INDUSTRIES, INC., a Florida corporation ("Phoenix") and HDX 9000,
INC., a Delaware corporation and the Shareholders of HDX 9000, INC. ("HDX") as
set forth on Schedule "A" attached hereto and made a part hereof (individually a
"Shareholder" and collectively, the "Shareholders"),
WHEREAS, Phoenix is a corporation organized under the laws of the State of
Florida and is responsible for filing certain reports with the Securities and
Exchange Commission pursuant to Section 13 of the Securities Exchange Act of
1934;
WHEREAS, HDX is a corporation organized under the laws of the State of
Delaware;
WHEREAS, HDX believes it is in the best interest of its shareholders (and the
shareholders of Phoenix after giving effect to the transactions contemplated
hereby) to avail itself of the advantages of being part of a "publicly traded
corporation", and
WHEREAS, the Shareholders own 100% the issued and outstanding shares of
common stock (the "Shares") of HDX; and
WHEREAS, the Shareholders desire to exchange the Shares for shares of the common
stock, par value $.01 per share, of PHOENIX INTERNATIONAL INDUSTRIES, INC., upon
the terms and subject to the conditions set forth in this Agreement, and
WHEREAS, the parties desire this to be a tax-free exchange under the Internal
Revenue Code.
NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein, the parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
EXCHANGE OF SHARES FOR COMMON STOCK
SECTION 1.1 Agreement to Exchange Shares for Common Stock: On the Closing
Date (as hereinafter defined) and upon the terms and subject to the conditions
set forth in this Agreement, the Shareholders shall sell, assign, transfer,
convey and deliver the Shares (representing 1,500 shares or 100% of the common
stock of HDX) to Phoenix, and Phoenix shall accept the Shares from the
Shareholders in exchange for the shares of Common Stock of Phoenix as defined
below.
SECTION 1.2 Closing: The closing of such exchange (the "Closing") shall
take place at 10:00 a.m. EST on the second business day after the conditions to
closing set forth in Articles VI and VII have been satisfied or waived, or at
such other time and date as the parties hereto shall agree in writing (the
"Closing Date"), at the offices of Phoenix, 501 S. Dixie Hwy., West Palm Beach,
Florida 33401. At the Closing, the Shareholders shall deliver to Phoenix or its
designee(s) stock certificates representing the Shares, duly endorsed in blank
for transfer or accompanied by appropriate stock powers duly executed in blank.
In full consideration and exchange for the Shares, Phoenix shall exchange with
the Shareholders the Exchange Consideration as provided for in Section 1.3
hereof.
SECTION 1.3 Exchange Consideration: In exchange for the Shares, Phoenix
will exchange with the Shareholders on the Closing Date, or at a time mutually
agreed upon by both parties, not to exceed 30 days; 500,000 shares of the common
stock of Phoenix, restricted pursuant to rule 144 of the Securities and Exchange
Commission (the Exchange Consideration).
SECTION 1.4 Performance Bonus: Additionally, HDX will receive as a
performance bonus, 1.5 PHXU shares of the restricted common stock of Phoenix,
for every $1.00 in net profit produced by HDX in the first 12 months after
acquisition, to a maximum of 1,000,000 shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF HDX
HDX hereby represents, warrants and agrees as follows:
SECTION 2.1 Corporate Organization:
(a) HDX is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to own its properties and assets and to conduct
its business as now conducted and is duly qualified to do business in good
standing in each jurisdiction in where the nature of the business conducted by
HDX or the ownership or leasing of its properties makes such qualification and
being in good standing necessary, except where the failure to be so qualified
and in good standing will not have a material adverse effect on the business,
operations, properties, assets, condition or results of operation of HDX (a "HDX
Material Adverse Effect");
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(b) Copies of the Articles of Incorporation and By-laws of HDX, with
all amendments thereto to the date hereof, have been furnished to Phoenix, and
such copies are accurate and complete as of the date hereof. The minute books of
HDX are current as required by law, contain the minutes of all meetings of the
Board of Directors, committees of the Board of Directors and Shareholders from
date of incorporation to this date, and adequately reflect all material actions
taken by the Board of Directors, committees of the Board of Directors and
Shareholders of HDX.
SECTION 2.2 Capitalization of the Company: The authorized capital stock of
HDX consists of; 1,500 shares of common stock, with a par value of $.01 per
share, of which 1,500 shares are outstanding. All of the shares of capital stock
have been duly authorized and validly issued, and are fully paid and
non-assessable and no personal liability attaches to the ownership thereof.
Except as set forth in this Section 2.2, the Shares are the sole outstanding
shares of capital stock of HDX, and there are no outstanding options, warrants,
agreements, commitments, conversion rights, preemptive rights or other rights to
subscribe for, purchase or otherwise acquire any of the shares of capital stock
or any unissued or treasury shares of capital stock of HDX.
SECTION 2.3 Subsidiaries and Equity Investments: HDX has equity
investments as set out in Schedule 2.3.
SECTION 2.4 Authorization and Validity of Agreements: HDX has all
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by HDX and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action and no other corporate proceedings on the part of HDX
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby.
SECTION 2.5 No Conflict or Violation: The execution, delivery and
performance of this Agreement by HDX and each Shareholder does not and will not
violate or conflict with any provision of the Articles of Incorporation or
By-laws of HDX, and does not and will not violate any provision of law, or any
order, judgment or decree of any court or other governmental or regulatory
authority, nor violate nor will result in a breach of or constitute (with due
notice or lapse of time or both) a default under or give to any other entity any
right of termination, amendment, acceleration or cancellation of any contract,
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which HDX or any Shareholder is a party or by which
any of them is bound or to which any of its or their respective properties or
assets is subject, nor will result in the creation or imposition of any lien,
charge or encumbrance of any kind whatsoever upon any of the properties or
assets of HDX, nor will result in the cancellation, modification, revocation or
suspension of any of the licenses, franchises, permits to which HDX is bound.
SECTION 2.6 Consents and Approvals: If applicable, each party to this
agreement will set forth as Schedule 2.6; a true and complete list of each
consent, waiver, authorization or approval of any governmental or regulatory
authority, domestic or foreign, or of any other person, firm or corporation, and
each declaration to or filing or registration with any such
<PAGE>
governmental or regulatory authority, that is required in connection with the
execution and delivery of this Agreement by HDX and each Shareholder or the
performance by HDX and each Shareholder of its or their obligations hereunder.
SECTION 2.7 Financial Statements: HDX has heretofore furnished to Phoenix
audited balance sheets as of June 30, 1997, accompanied by the reports thereon
of HDX's Accountants, (the audited balance sheets being hereinafter referred to
as the "balance sheet"). The balance sheet, including the notes thereto, (i)
were prepared in accordance with generally accepted accounting principles, (ii)
present fairly, in all material aspects, the financial position, results of
operations and changes in financial position of HDX as of such dates and for the
periods then ended, (iii) are complete, correct and in accordance with the books
of account and records of HDX, (iv) can be reconciled with the financial
statements and the financial records maintained and the accounting methods
applied by HDX for federal income tax purposes, (v) and contain all entries
recommended by HDX's Accountants.
SECTION 2.8 Absence of Certain Changes or Events: Since June 30, 1997 and
except as set forth on Schedule 2.8, if applicable:
(a) HDX has operated in the ordinary course of business consistent
with past practice and there has not been any material adverse change in the
assets, properties, business, operations, prospects, net income or conditions
financial or otherwise of HDX. HDX does not know or has reason to know of any
event, condition, circumstance or prospective development which threatens or may
threaten to have a material adverse effect on the assets, properties,
operations, prospects, net income or financial condition of HDX;
(b) there has not been any substantive change in any method of
accounting or accounting practice of HDX;
(c) there has not been any declarations, setting aside or payment of
dividends or distributions with respect to shares of HDX or any redemption,
purchase or other acquisition of any other HDX's securities; and
(d) there has not been an increase in the compensation payable or
due any director or officer of HDX.
SECTION 2.9 Tax Matters: Except as reflected in HDX's audited balance
sheets, all returns, reports, or information return or other document (including
any relating or supporting information) required to be filed before the Closing
in respect of HDX has been filed, and HDX has paid, accrued or otherwise
adequately reserved for the payment of all Taxes required to be paid in respect
of the periods covered by such returns and has adequately reserved for the
payment of all Taxes with respect to periods ended on or before the Closing for
which tax returns have not yet been filed. All Taxes of HDX have been paid or
adequately provided for and HDX knows of no proposed additional tax assessment
against HDX not adequately provided for in the Financial Statements. No
deficiency for any Taxes has been asserted or assessed by a taxing authority
against HDX, there is no outstanding audit examination, deficiency or refund
litigation with respect to any Taxes of HDX. In the ordinary course, HDX makes
adequate provision on its books for the payment of Taxes (including for the
current fiscal period) owed by HDX. HDX has not executed an extension or waiver
of any statute of limitations on the assessment or collection of tax that is
currently in effect. "Taxes" shall, for purposes of this Agreement, mean all
taxes however denominated, including any interest, penalties or addition to tax
that may become payable in respect thereof, imposed by any governmental body
which taxes shall include, without
<PAGE>
limiting the generality of the foregoing, all income taxes, payroll and employee
withholding taxes, unemployment insurance, social security, sales and use taxes,
excise taxes, franchise taxes, receipts taxes, occupations taxes, real and
personal property taxes, stamp taxes, transfer taxes, workman's compensation
taxes and any other obligation of the same or a similar nature.
SECTION 2.10 Absence of Undisclosed Liabilities: Except as set forth on
Schedule 2.10, or as disclosed in its audited balance sheets of June 30, 1997,
HDX has no indebtedness or liability, absolute or contingent, known or unknown,
which is not shown or provided for on the balance sheet of HDX as of that date
included in the Financial Statements other than liabilities incurred or accrued
in the ordinary course of business since June 30, 1997. Except as shown in such
balance sheets or in the notes to the Financial Statements, HDX is not directly
or indirectly liable upon or with respect to (by discount, repurchase agreements
or otherwise), or obligated in any other way to provide funds in respect of, or
to guarantee or assume, any debt, obligation or dividend of any person.
SECTION 2.11 Interests in Real Property: Schedule 2.11 sets forth an
accurate and complete list of the location of each item of real property ("Real
Property") owned or leased by HDX. HDX as of the closing date, owns no "Real
Property". Schedule 2.11 sets forth an accurate and complete list (by lessee) in
the summary description of all leases of Real Property to which HDX is a party.
HDX has a valid leasehold interest in each Real Property lease held by it as
lessee or sub-lessee as of the date hereof, in each case free and clear of all
Liens, except for those Liens described in Schedule 2.11. All such Real Property
leases are in full force and effect and HDX has received no notice of any
default thereunder or waived or is aware of any event or circumstances with
which the giving of notice or lapse of time or both would constitute a default
hereunder. HDX has received no notice nor has any knowledge of any pending,
threatened or contemplated condemnation proceeding affecting any Real Property
owned or leased by it or any part thereof or of any sale or other disposition
thereof in lieu of condemnation. All of the buildings, fixtures and other
improvements described in Schedule 2.11 are in good operating condition, subject
to ordinary wear and tear.
SECTION 2.12 Personal Property: HDX owns all personal property (including
properties that may be deemed to be a mix of personal property and Real
Property, ("Personal Property")) purported to be owned by it as of the date
hereof, in each case free and clear of all Liens, except for those Liens
described in Schedule 2.12. All of the Personal Property owned or leased by, and
commonly used or necessary for or in the operations of HDX: (i) is in such
operating condition repair as may be necessary to carry on the business of HDX
as it is now being conducted, subject only to ordinary wear and tear; and (ii)
is sufficient, in the aggregate, for all purposes of the business of HDX as
presently conducted.
SECTION 2.13 Licenses, Permits and Governmental Approvals: Schedule 2.13
sets forth a true and complete list of all licenses, permits, franchises,
authorizations and approvals issued or granted to HDX by any federal, state or
local government, or any department, agency, board, commission, bureau or
instrumentality of any of the foregoing (the "Licenses and Permits"), and all
pending applications therefore. Each License and Permit is valid and in full
force and effect, and, to HDX's best knowledge, is not subject to any pending or
threatened administrative or judicial proceeding to revoke, cancel, suspend or
declare such License and Permit invalid in any respect. The Licenses and Permits
are sufficient and adequate in all material respects to permit the
<PAGE>
continued lawful conduct of HDX's business in the manner now conducted and as
has been proposed by HDX to be conducted. Except as set forth in Schedule 2.13,
no such License and Permit will in any way be affected by, or terminate or lapse
by reason of the transactions contemplated by this Agreement.
SECTION 2.14 Compliance with Law: The operations of HDX have been
conducted in accordance with all applicable laws, regulations, orders and other
requirements of all courts and other governmental or regulatory authorities
having jurisdiction over HDX and its assets, properties and operations,
including, without limitation, all such laws, regulations, orders and
requirements promulgated by or relating to consumer protection, equal
opportunity, health, environmental protection, architectural barriers to the
handicapped, fire, zoning and building and occupation safety except where such
non-compliance would not have a HDX Material Adverse Effect. HDX has not
received notice of any violation of any such law, regulation, order or other
legal requirement, and is not in default with respect to any order, writ,
judgment, award, injunction or decree of any national, state or local court or
governmental or regulatory authority or arbitrator, domestic or foreign,
applicable to HDX or any of its assets, properties or operations.
SECTION 2.15 Litigation: Except as set forth on Schedule 2.15, there are
no claims, actions, suits, proceedings, labor disputes or investigations pending
or, to the best of the HDX's knowledge, threatened before any federal, state or
local court or governmental or regulatory authority, domestic or foreign, or
before any arbitrator of any nature, brought by or against HDX or any of its
officers, directors, employees, agents or affiliates involving, affecting or
relating to any assets, properties or operations of HDX or the transactions
contemplated by this Agreement, nor is any basis known to it for any such
action, suit, proceeding or investigation. Schedule 2.15 sets forth a list and a
summary description of all such pending actions, suits, proceedings, disputes or
investigations. Neither HDX nor any of its assets or properties is subject to
any order, writ, judgment, award, injunction or decree of any federal, state or
local court or governmental or regulatory authority or arbitrator, that would
have a HDX Material Adverse Effect on its assets, properties, operations,
prospects, net income or financial condition or which would or might interfere
with the transactions contemplated by this Agreement.
SECTION 2.16 Contracts: Schedule 2.16 sets forth a true and complete list
of all material contracts, agreements and other instruments to which HDX is a
party or otherwise relating to or affecting any of its assets, properties or
operations, including, without limitation, all written or oral, express or
implied, material, (a) contracts, agreements and commitments not made in the
ordinary course of business; (b) purchase and supply contracts; (c) contracts,
loan agreements, repurchase agreements, mortgages, security agreements, trust
indentures, promissory notes and other documents or arrangements relating to the
borrowing of money or for lines of credit; (d) leases and subleases of real or
personal property; (e) agreements and other arrangements for the sale of any
assets other than in the ordinary course of business or for the grant of any
options or preferential rights to purchase any assets, property or rights; (f)
contracts or commitments limiting or restraining HDX from engaging or competing
in any lines of business or with any person, firm, or corporation; (h)
partnership and joint venture agreements; and (i) all amendments, modifications,
extensions or renewals of any of the foregoing (the foregoing contracts,
agreements and documents are hereinafter referred to collectively as the
"Commitments" and individually as a "Commitment"). Each Commitment is valid,
binding and
<PAGE>
enforceable against the parties thereto in accordance with its terms, and in
full force and effect on the date hereof. HDX has performed all obligations
required to be performed by it to date under, and is not in default in respect
of, any Commitment, and to HDX's best knowledge no event has occurred which,
with due notice or lapse of time or both, would constitute such a default. To
the best of HDX's knowledge, no other party to any Commitment is in default in
respect thereof, and no event has occurred which, with due notice or lapse of
time or both, would constitute such a default.
SECTION 2.17 Employee Plans: HDX has complied in all material respects
with the requirements of Section 4980B of the Internal Revenue Code of 1986, as
amended (the "Code"), and Sections 601 to 608 of ERISA relating to continuation
coverage for group health plans. Schedule 2.17 lists every pension, savings,
retirement, severance health, insurance or other employee benefit plan
(collectively referred to herein as the "Plans") which HDX maintains, or has any
obligation to contribute to.
SECTION 2.18 Insurance: Schedule 2.18 lists the fidelity bonds and the
aggregate coverage amount and type and generally applicable deductibles of all
policies of title, liability, fire, casualty, business interruption, workers'
compensation, disability and other forms of insurance insuring the properties,
assets and operations of the business of HDX. Except as set forth in Schedule
2.18, all such policies and bonds are in full force and effect, underwritten by
financially sound and reputable insurers (to HDX's best knowledge) and
sufficient for all applicable requirements of law and will not in any way be
effected by or terminated or lapsed by reason of the consummation of the
transactions contemplated by this Agreement. HDX is not in material default
under any provisions of any such policy of insurance and has not received notice
of cancellation of any such insurance. Except as set forth in Schedule 2.18,
there is no claim by HDX pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds.
SECTION 2.19 Environmental Matters: HDX has obtained and maintained in
effect all licenses, permits and other authorizations required under all
applicable laws, regulations and other requirements of governmental or
regulatory authorities relating to pollution or to the protection of the
environment ("Environmental Laws") and is in compliance with all Environmental
Laws and with all such licenses, permits and authorizations except where the
failure to comply would not have a HDX Material Adverse Effect. HDX has not
performed or suffered any act which could give rise to, or has otherwise
incurred liability to any person (governmental or not) under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.S 9601 et seq.
or any other Environmental Laws, nor has HDX received notice of any such
liability or any claim therefore or submitted notice pursuant to Section 103 of
such Act to any governmental agency with respect to any of its respective
assets.
SECTION 2.20 Labor Matters:
(a) Except as set forth in Schedule 2.20: (i) HDX is not a party to
any outstanding employment agreements or contracts with officers or employees
that are not terminable at will, or that provide for the payment of any bonus or
commission; (ii) HDX is not a party to any agreement, policy or practice that
requires it to pay termination or severance pay to salaried, non-exempt or
hourly employees (other than as required by law); (iii) HDX is not a party to
any collective bargaining agreement or other labor union contract applicable to
persons employed by
<PAGE>
HDX nor does HDX know of any activities or proceedings of any labor union to
organize any such employees. HDX has not breached or otherwise failed to comply
with any provisions of any employment or labor agreement, and there are no
grievances outstanding thereunder.
(b) Except as set forth in Schedule 2.20: (i) HDX is in compliance
in all material respects with all applicable laws relating to employment and
employment practices, wages, hours, and terms and conditions of employment; (ii)
there is no unfair labor practice charge or complaint pending before the
National Labor Relations Board ("NLRB"); (iii) there is no labor strike,
material slowdown or material work stoppage or lockout actually pending or, to
HDX's best knowledge, threatened against or affecting HDX, and HDX has not
experienced any strike, material slow down or material work stoppage, lockout or
other collective labor action by or written respect to employees of HDX since
its inception; (iv) there is no representation claim or petition pending before
the NLRB and no question concerning representation exists relating to the
employees of HDX; (v) there are no charges with respect to or relating to HDX
pending before the Equal Employment Opportunity Commission or any state, local
or foreign agency responsible for the prevention of unlawful employment
practices; (vi) HDX has received no formal notice from any federal, state, local
or foreign agency responsible for the enforcement of labor or employment laws of
an intention to conduct an investigation of HDX and no such investigation is in
progress.
SECTION 2.21 Disclosure: This Agreement, the schedules hereto and any
certificate attached hereto or delivered in accordance with the terms hereby by
or on behalf of HDX in connection with the transactions contemplated by this
Agreement, when taken together, do not contain any untrue statement of a
material fact or omit any material fact necessary in order to make the
statements contained herein and/or therein not misleading.
SECTION 2.22 Survival: Each of the representations and warranties set
forth in this Article II shall be deemed represented and made by HDX at the
Closing as if made at such time and shall survive the Closing for a period
terminating on the third anniversary.
ARTICLE III
(not applicable, purposely left out)
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PHOENIX
Phoenix represents, warrants and agrees as follows:
SECTION 4.1 Corporate Organization: Phoenix is a publicly traded, non
reporting corporation (listed on the NASDAQ Over the Counter Bulletin Board
under the trading symbol "PHXU") 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 own its properties and assets and to conduct its business
as now conducted and is duly qualified to do business in good standing in each
jurisdiction in where the nature of the business conducted by Phoenix or the
ownership or leasing of its properties makes such qualification and being in
good standing necessary, except where the failure to be so qualified and in good
standing will not have a material adverse effect on the business, operations,
properties, assets, condition or results of operation of Phoenix (a "Phoenix
Material Adverse Effect").
<PAGE>
SECTION 4.2 Capitalization of the Company: Title to the Shares. The
authorized capital stock of Phoenix consists of (a) 20,000,000 shares of common
stock, par value $.01 per share, of which approximately 7,000,000 shares are
outstanding and (b) 1,000 shares of preferred stock, none of which is issued or
outstanding (the "Phoenix Shares"). All of the outstanding shares of capital
stock have been duly authorized and validly issued, and are fully paid and
non-assessable and no personal liability attaches to the ownership thereof.
Exceptions, if any, are set forth on Schedule 4.2, the Phoenix Shares currently
are the sole outstanding shares of capital stock of Phoenix, and there are no
outstanding warrants, agreements, commitments, conversion rights, preemptive
rights or other rights to subscribe for, purchase or otherwise acquire any of
the shares of capital stock or any unissued or treasury shares of capital stock
of Phoenix. Phoenix reserves the right to issue additional shares as desired.
SECTION 4.3 Subsidiaries and Equity Investments: As of the date of closing
Phoenix has only one subsidiary, Intuitive Technology Consultants, Inc. of
Atlanta, Georgia, which is wholly owned by Phoenix, prior to the date of closing
of this Agreement, Phoenix has no other subsidiaries or equity investments.
SECTION 4.4 Authorization and Validity of Agreements: Phoenix has all
corporate power and authority to execute and deliver this Agreement to perform
its obligations hereunder and to consummate the transactions the transactions
contemplated hereby. The execution and delivery of this Agreement by Phoenix and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Phoenix are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby.
SECTION 4.5 No Conflict or Violation: Except as otherwise set forth on
Schedule 4.6, the execution, delivery and performance of this Agreement by
Phoenix does not and will not violate or conflict with any provision of the
Articles of Incorporation or by-laws of Phoenix, and does not and will not
violate any provision of law, or any order, judgment or decree of any court or
other governmental or regulatory authority, nor violate nor will result in a
breach of or constitute (with due notice or lapse of time or both) a default
under or give to any other entity any right of termination, amendment,
acceleration or cancellation of any contract, lease, loan agreement, mortgage,
security agreement , trust indenture or other agreement or instrument to which
Phoenix is a party or by which it is bound or to which any of its respective
properties or assets is subject, nor will result in the creation or imposition
any lien, charge or encumbrance of any kind whatsoever upon any of the
properties or assets of Phoenix, nor will result in the cancellation,
modification, revocation or suspension of any of the licenses, franchises,
permits to which Phoenix is bound.
SECTION 4.6 Consents and Approvals: Schedule 4.6 sets forth a true and
complete list, if applicable, of each consent, waiver, authorization or approval
of any governmental or regulatory authority, domestic or foreign, or of any
other person, firm or corporation, and each declaration to or filing or
registration with any such governmental or regulatory authority, that is
required in connection with the execution and delivery of this Agreement by
Phoenix or the performance by Phoenix of its obligations hereunder.
<PAGE>
SECTION 4.7 Financial Statements: Phoenix has heretofore furnished to HDX
(a) financial statements as of and for the year ended on December 31, 1996,
accompanied by the reports thereon of Phoenix's Accountants, (the financial
statement listed above being hereinafter referred to as the "Financial
Statement"). The Financial Statement, including the notes thereto, (i) were
prepared in accordance with generally accepted accounting principles, (ii)
present fairly, in all material respects, the financial position, results of
operations and changes in financial position of Phoenix as of such dates and for
the periods then ended, (iii) are complete, correct and in accordance with the
books of account and records of Phoenix, (iv) can be reconciled with the
financial statements and the financial records maintained and the accounting
methods applied by Phoenix for federal income tax purposes, and (v) contain all
entries recommended by Phoenix's Accountants.
SECTION 4.8 Absence of Certain Changes or Events: Since December 31, 1996,
and except (i) as contemplated by this Agreement or(ii) as set forth on Schedule
4.8:
(a) Phoenix has operated in the ordinary course of business
consistent with past practice and there has not been any material adverse change
in the assets, properties, business, operations, prospects, net income or
conditions financial or otherwise of Phoenix. Phoenix does not know or has
reason to know of any event, condition, circumstance or prospective development
which threatens or may threaten to have a material adverse effect on the assets,
properties, operations, prospects, net income or financial condition of Phoenix;
(b) there has not been any substantive change in any method of
accounting or accounting practice of Phoenix;
(c) there have not been any declarations, setting aside or payment
of dividends or distributions with respect to shares of Phoenix or any
redemption, purchase or other acquisition of any other Phoenix's securities; and
(d) there has not been an increase in the compensation payable or to
become payable to any director or officer of Phoenix other than pursuant to
employment agreements or consistent with prior past practices.
SECTION 4.9 Tax Matters: All returns, reports, or information return or
other document (including any relating or supporting information) required to be
filed before the Closing in respect of Phoenix has been filed, and Phoenix has
paid, accrued or otherwise adequately reserved for the payment of all Taxes
required to be paid in respect of the periods covered by such returns and has
adequately reserved for the payment of all Taxes with respect to periods ended
on or before the Closing for which tax returns have not yet been filed. All
Taxes of Phoenix have been paid or adequately provided for and Phoenix knows of
no proposed additional tax assessment against Phoenix not adequately provided
for in the Financial Statements. No deficiency for any Taxes has been asserted
or assessed by a taxing authority against Phoenix, there is no outstanding audit
examination, deficiency or refund litigation with respect to any Taxes of
Phoenix. In the ordinary course, Phoenix makes adequate provision on its books
for the payment of Taxes (including for the current fiscal period) owed by
Phoenix. Phoenix has not executed an extension or waiver of any statute of
limitations on the assessment or collection of tax that is currently in effect.
Taxes shall for purposes of this Agreement mean all taxes however denominated,
including any interest, penalties or addition to tax that may become payable in
respect thereof, imposed by any governmental body which taxes shall include,
without limiting the generality of the foregoing, all income taxes, payroll and
employee withholding taxes, unemployment insurance, social security, sales and
use taxes, excise taxes, franchise taxes,
<PAGE>
receipts taxes, occupations taxes, real and personal property taxes, stamp
taxes, transfer taxes, workman's compensation taxes and any other obligation of
the same or a similar nature. Schedule 4.9 sets forth an accurate and complete
list of all tax loss carry-forwards.
SECTION 4.10 Absence of Undisclosed Liabilities: Except as set forth on
Schedule 4.10 or 4.16, Phoenix has no indebtedness or liability, absolute or
contingent, known or unknown, which is not shown or provided for on the balance
sheet of Phoenix as of December 31, 1996, other than liabilities incurred or
accrued in the ordinary course of business since December 31, 1996. Except as
shown in such balance sheets or in the notes to the Financial Statements,
Phoenix is not directly or indirectly liable upon or with respect to (by
discount, repurchase agreements or otherwise), or obligated in any other way to
provide funds in respect of, or to guarantee or assume, any debt, obligation or
dividend of any person, except endorsements in the ordinary course of business
in connection with the deposit of items for collection.
SECTION 4.11 Interests in Real Property: Other than the office lease
relating to the property located at 501 S. Dixie Hwy., West Palm Beach, Fl
33410, Phoenix does not own or lease any real property.
SECTION 4.12 Personal Property: Phoenix owns all personal property
(including properties that may be deemed to be a mix of personal property and
Real Property, ("Personal Property")) purported to be owned by it as of the date
hereof, in each case free and clear of all Liens, except for those Liens
described in Schedule 4.12. All of the Personal Property owned or leased by, and
commonly used or necessary for or in the operations of, any of, Phoenix: (i) is,
in the aggregate, in such operating condition repair as may be necessary to
carry on the business of Phoenix as it is now being conducted, subject only to
ordinary wear and tear; and (ii) is sufficient, in the aggregate, for all
purposes of the business of Phoenix.
SECTION 4.13 Licenses, Permits and Governmental Approvals: Schedule 4.13
sets forth a true and complete list of all licenses, permits, franchises,
authorizations and approvals issued or granted to Phoenix by any federal, state
or local government, or any department, agency, board, commission, bureau or
instrumentality of any of the foregoing (the "Licenses and Permits"), and all
pending applications therefore. Each License and Permit is valid and in full
force and effect, and, to Phoenix's best knowledge, is not subject to any
pending or threatened administrative or judicial proceeding to revoke, cancel,
suspend or declare such License and Permit invalid in any respect. The Licenses
and Permits are sufficient and adequate in all material respects to permit the
continued lawful conduct of Phoenix's business in the manner now conducted and
as has been proposed by Phoenix to be conducted. Except as set forth in Schedule
4.13, no such License and Permit will in any way be affected by, or terminate or
lapse by reason of the transactions contemplated by this Agreement.
SECTION 4.14 Compliance with Law: The operations of Phoenix have been
conducted in accordance with all applicable laws, regulations, orders and other
requirements of all courts and other governmental or regulatory authorities
having jurisdiction over Phoenix and its assets, properties and operations,
including, without limitation, all such laws, regulations, orders and
requirements promulgated by or relating to consumer protection, equal
opportunity, health, environmental protection, architectural barriers to the
handicapped, fire, zoning and building and occupation safety except where such
non-compliance would not have a Phoenix Material Adverse
<PAGE>
Effect. Phoenix has not received notice of any violation of any such law,
regulation, order or other legal requirement, and is not in default with respect
to any order, writ, judgment, award, injunction or decree of any national, state
or local court or governmental or regulatory authority or arbitrator, domestic
or foreign, applicable to Phoenix or any of its assets, properties or
operations.
SECTION 4.15 Litigation: Except as disclosed its financial statement there
are no claims, actions, suits, proceedings, labor disputes or investigations
pending or, to the best of the Phoenix's knowledge, threatened before any
federal, state or local court or governmental or regulatory authority, domestic
or foreign, or before any arbitrator of any nature, brought by or against
Phoenix or any of its officers, directors, employees, agents or affiliates
involving, affecting or relating to any assets, properties or operations of
Phoenix or the transactions contemplated by this Agreement, nor is any basis
known to Phoenix for any such action, suit, proceeding or investigation.
Schedule 4.15 sets forth a list and a summary description of all such pending
actions, suits, proceedings, disputes or investigations. Neither Phoenix nor any
of its assets or properties is subject to any order, writ, judgment, award,
injunction or decree of any federal, state or local court or governmental or
regulatory authority or arbitrator, that would have a Phoenix Material Adverse
Effect on its assets, properties, operations, prospects, net income or financial
condition or which would or might interfere with the transactions contemplated
by this Agreement.
SECTION 4.16 Contracts: Schedule 4.16 sets forth a true and complete list
of all material contracts, agreements and other instruments to which Phoenix is
a party or otherwise relating to or affecting any of its assets, properties or
operations, including, without limitation, all written or oral, express or
implied, material, (a) contracts, agreements and commitments not made in the
ordinary course of business; (b) purchase and supply contracts; (c) contracts,
loan agreements, repurchase agreements, mortgages, security agreements, trust
indentures, promissory notes and other documents or arrangements relating to the
borrowing of money or for lines of credit; (d) leases and subleases of real or
personal property; (e) agreements and other arrangements for the sale of any
assets other than in the ordinary course of business or for the grant of any
options or preferential rights to purchase any assets, property or rights; (f)
contracts or commitments limiting or restraining Phoenix from engaging or
competing in any lines of business or with any person, firm, or corporation; (h)
partnership and joint venture agreements; and (i) all amendments, modifications,
extensions or renewals of any of the foregoing (the foregoing contracts,
agreements and documents are hereinafter referred to collectively as the
"Commitments" and individually as a "Commitment"). Each Commitment is valid,
binding and enforceable against the parties thereto in accordance with its
terms, and in full force and effect on the date hereof. Phoenix has performed
all obligations required to be performed by it to date under, and is not in
default in respect of, any Commitment, and to Phoenix's best knowledge no event
has occurred which, with due notice or lapse of time or both, would constitute
such a default. To the best of Phoenix's knowledge, no other party to any
Commitment is in default in respect thereof, and no event has occurred which,
with due notice or lapse of time or both, would constitute such a default.
<PAGE>
SECTION 4.17 Employee Plans: Phoenix has complied in all material respects
with the requirements of Section 4980B of the Code and Sections 601 to 608 of
ERAS relating to continuation coverage for group health plans. Schedule 4.17
lists every pension, savings, retirement, severance health, insurance or other
employee benefit plan (collectively referred to herein as the "Plans") which
Phoenix maintains, or has any obligation to contribute to.
SECTION 4.18 Insurance: Schedule 4.18 lists the fidelity bonds and the
aggregate coverage amount and type and generally applicable deductibles of all
policies of title, liability, fire, casualty, business interruption, workers'
compensation, disability and other forms of insurance insuring the properties,
assets and operations of the business of Phoenix. Except as set forth in
Schedule 4.18, all such policies and bonds are in full force and effect,
underwritten by financially sound and reputable insurers (to Phoenix's best
knowledge) and sufficient for all applicable requirements of law and will not in
any way be effected by or terminated or lapsed by reason of the consummation of
the transactions contemplated by this Agreement. Phoenix is not in material
default under any provisions of any such policy of insurance and has not
received notice of cancellation of any such insurance. Except as set forth in
Schedule 4.18, there is no claim by Phoenix pending under any of such policies
or bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds.
SECTION 4.19 Environmental Matters: Phoenix has obtained and maintained in
effect all licenses, permits and other authorizations required under all
applicable laws, regulations and other requirements of governmental or
regulatory authorities relating to pollution or to the protection of the
environment ("Environmental Laws") and is in compliance with all Environmental
Laws and with all such licenses, permits and authorizations except where the
failure to comply would not have a Phoenix Material Adverse Effect. Phoenix has
not performed or suffered any act which could give rise to, or has otherwise
incurred liability to any person (governmental or not) under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. S 9601 et seq.
or any other Environmental Laws, nor has Company received notice of any such
liability or any claim therefore or submitted notice pursuant to Section 103 of
such Act to any governmental agency with respect to any of its respective
assets.
SECTION 4.20 Labor Matters:
(a) Except as set forth in Schedule 4.20: (i) Phoenix is not a party
to any outstanding employment agreements or contracts with officers or employees
that are not terminable at will, or that provide for the payment of any bonus or
commission; (ii) Phoenix is not a party to any agreement, policy or practice
that requires it to pay termination or severance pay to salaried, non-exempt or
hourly employees (other than as required by law); (iii) Phoenix is not a party
to any collective bargaining agreement or other labor union contract applicable
to persons employed by Phoenix nor does Phoenix know of any activities or
proceedings of any labor union to organize any such employees. Phoenix has not
breached or otherwise failed to comply with any provisions of any employment or
labor agreement, and there are no grievances outstanding thereunder.
<PAGE>
(b) Except as set forth in Schedule 4.20:
(i) Phoenix is in compliance in all material respects with all
applicable laws relating to employment and employment practices, wages, hours,
and terms and conditions of employment;
(ii) there is no unfair labor practice charge or complaint
pending before the National Labor Relations Board ("NLRB");
(iii) there is no labor strike, material slowdown or material
work stoppage or lockout actually pending or, to Phoenix's best knowledge,
threatened against or affecting Phoenix, and Phoenix has not experienced any
strike, material slow down or material work stoppage, lockout or other
collective labor action by or written respect to employees of Phoenix since
September 30, 1995;
(iv) there is no representation claim or petition pending
before the NLRB and no question concerning representation exists relating to the
employees of Phoenix; (v) there are no charges with respect to or relating to
Phoenix pending before the Equal Employment Opportunity Commission or any state,
local or foreign agency responsible for the prevention of unlawful employment
practices;
(vi) Phoenix has received no formal notice from any federal,
state, local or foreign agency responsible for the enforcement of labor or
employment laws of an intention to conduct an investigation of Phoenix and no
such investigation is in progress.
SECTION 4.21 Investment Intent: The Shares will be acquired hereunder
solely for the account of Phoenix and its specified designees, for investment,
and not with a view to the resale or distribution thereof.
SECTION 4.22 Disclosure: This Agreement, the schedules hereto and any
certificate attached hereto or delivered in accordance with the terms hereby by
or on behalf of Phoenix in connection with the transactions contemplated by this
Agreement, when taken together, do not contain any untrue statement of a
material fact or omit any material fact necessary in order to make the
statements contained herein and/or therein not misleading.
SECTION 4.23 Survival: Each of the representations and warranties set
forth in this Article IV shall be deemed represented and made by Phoenix at the
Closing as if made at such time and shall survive the Closing for a period
terminating on the third anniversary.
ARTICLE V
COVENANTS
SECTION 5.1 Certain Changes and Conduct of Business: From and after the
date of this Agreement and until the Closing Date, HDX shall conduct, its
business solely in the ordinary course consistent with past practices and, in a
manner consistent with all representations or warranties of HDX and,
(a) without the prior written consent of Phoenix, HDX will not,
except as required or permitted pursuant to the terms hereof:
<PAGE>
(i) make any material change in the conduct of its businesses
and operations enter into any transaction other than in the ordinary course of
business consistent with past practices;
(ii) make any change in its Articles of Incorporation or
By-laws; issue any additional shares of capital stock or equity securities or
grant any option, warrant or right to acquire any capital stock or equity
securities or issue any security convertible into or exchangeable for its
capital stock or alter in any material term of any of its outstanding securities
or make any change in its outstanding shares of capital stock or its
capitalization, whether by reason of a reclassification, recapitalization, stock
split or combination, exchange or readjustment of shares, stock dividend or
otherwise;
(iii) (A) incur, assume or guarantee any indebtedness for
borrowed money, issue any notes, bonds, debentures or other corporate securities
or grant any option, warrant or right to purchase any thereof, except pursuant
to transactions in the ordinary course of business consistent with past
practices, or (B) issue any securities convertible or exchangeable for debt
securities of HDX;
(iv) subject any of its assets, or any part thereof, to any
Lien or suffer such to be imposed other than such Liens as may arise in the
ordinary course of business consistent with past practices by operation of law
which will not have a material adverse effect on HDX;
(v) acquire any assets, raw materials or properties, or enter
into any other transaction, other than in the ordinary course of business
consistent with past practices;
(vi) enter into any new (or amend any existing) employee
benefit plan, program or arrangement or any new (or amend any existing)
employment, severance or consulting agreement, grant any general increase in the
compensation of officers or employees (including any such increase pursuant to
any bonus, pension, profit-sharing or other plan or commitment) or grant any
increase in the compensation payable or to become payable to any employee,
except in accordance with pre-existing contractual provisions or consistent with
past practices;
(vii) make or commit to make any material capital expenditure;
(viii) pay, loan or advance any amount to, or sell, transfer
or lease any properties or assets to, or enter into any agreement or arrangement
with, any of its affiliates;
(ix) guarantee any indebtedness for borrowed money or any
other obligation of any other person;
(x) fail to keep in full force and effect insurance comparable
in amount and scope to coverage maintained by it (or on behalf of it) on the
date hereof;
(xi) take any other action that would cause any of the
representations and warranties made by it in this Agreement not to remain true
and correct in all material;
(xii) make any loan, advance or capital contribution to or
investment in any person;
(xiii) make any change in any method of accounting or
accounting principle, method, estimate or practice;
(xiv) settle, release or forgive any claim or litigation or
waive any right;
(xv) commit itself to do any of the foregoing
(b) HDX will commit itself to,
(i) continue to maintain, in all material respects, its
properties in accordance with present practices in a condition suitable for its
current use;
(ii) file, when due or required, federal, state, foreign and
other tax returns and other reports required to be filed and pay when due all
taxes, assessments, fees and other
<PAGE>
charges lawfully levied or assessed against it, unless the validity thereof is
contested in good faith and by appropriate proceedings diligently conducted;
(iii) continue to conduct its business in the ordinary course
consistent with past practices;
(ix) keep its books of account, records and files in the
ordinary course and in accordance with existing practices; and
(v) continue to maintain existing business relationships with
suppliers and client.
SECTION 5.2 Access to Properties and Records: HDX shall afford Phoenix,
its accounts, counsel and representatives and Phoenix shall afford to HDX, its
accountants, counsel and representatives full access during normal business
hours throughout the period prior to the Closing Date (or the earlier
termination of this Agreement) to all of such parties properties, books,
contracts, commitments and records and, during such period, shall furnish
promptly to the requesting party all other information concerning the other
party's business, properties and personnel as the requesting party may
reasonably request, provided that no investigation or receipt of information
pursuant to this Section 5.2 shall affect any representation or warranty of or
the conditions to the obligations of any party.
SECTION 5.3 Negotiations: From and after the date hereof until the earlier
of the Closing or the termination of this Agreement, no party to this Agreement
nor its officers or directors (subject to such director's fiduciary duties) nor
anyone acting on behalf of party or persons shall, directly or indirectly,
encourage, solicit, engage in discussions or negotiations with, or provide any
information to, any person, firm, or other entity or group concerning any
merger, sale of substantial assets, purchase or sale of shares of common stock
or similar transaction involving any party thereof. A party shall promptly
communicate to any other party any inquiries or communications concerning any
such transaction which they may receive or of which they may become aware of.
SECTION 5.4 Consents and Approvals: The parties, (i) shall use their
reasonable commercial efforts to obtain all necessary consents, waivers,
authorizations and approvals of all governmental and regulatory authorities,
domestic and foreign, and all other persons, firms or corporations required in
connection with the execution, delivery and performance by them of this
Agreement, and (ii) shall diligently assist and cooperate with each party in
preparing and filing all documents required to be submitted by a party to any
governmental or regulatory authority, domestic or foreign, in connection with
such transactions and in obtaining any governmental consents, waivers,
authorizations or approvals which may be required to be obtained connection with
such transactions .
SECTION 5.5 Public Announcement: Unless otherwise required by applicable
law, the parties hereto shall consult with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
and shall not issue any such press release or make any such public statement
prior to such consultation.
<PAGE>
SECTION 5.6 Employment Contract: Phoenix hereby acknowledges and accepts
all terms and conditions of the existing employment contract dated
______________________1997, between HDX and John Stopp.
SECTION 5.7 Resignations of HDX's Officers and Directors: On the Closing
Date, Phoenix shall receive the resignations of all officers and directors of
HDX and Phoenix shall cause John Stopp to be appointed to as President of HDX.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PHOENIX
The obligations of PHOENIX to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing Date, of the
following conditions, any one or more of which may be waived by Phoenix in its
sole discretion:
SECTION 6.1 Representations and Warranties of HDX: All representations and
warranties made by HDX in this Agreement shall be true and correct on and as of
the Closing Date as if again made by HDX on and as of such date.
SECTION 6.2 Agreements and Covenants: HDX and the Shareholders shall have
performed and complied in all material respects to all agreements and covenants
required by this Agreement to be performed or complied with by any of them on or
prior to the Closing Date.
SECTION 6.3 Consents and Approvals: All consents, waivers, authorizations
and approvals of any governmental or regulatory authority, domestic or foreign,
and of any other person, firm or corporation, required in connection with the
execution, delivery and performance of this Agreement shall be in full force and
effect on the Closing Date.
SECTION 6.4 No Violation of Orders: No preliminary or permanent injunction
or other order issued by any court or governmental or regulatory authority,
domestic or foreign, nor any statute, rule, regulation, decree or executive
order promulgated or enacted by any government or governmental or regulatory
authority, which declares this Agreement invalid in any respect or prevents the
consummation of the transactions contemplated hereby, or which materially and
adversely affects the assets, properties, operations, prospects, net income or
financial condition of HDX shall be in effect; and no action or proceeding
before any court or governmental or regulatory authority, domestic or foreign,
shall have been instituted or threatened by any government or governmental or
regulatory authority, domestic or foreign, or by any other person, or entity
which seeks to prevent or delay the consummation of the transactions
contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement.
SECTION 6.5 Employment Contract: On or before the Closing Date, John Stopp
shall have entered into an employment agreement with HDX.
SECTION 6.6 Opinion of Counsel: Phoenix shall have received a favorable
opinion, dated as of the Closing Date from legal counsel to HDX, in form and
substance reasonably satisfactory to Phoenix and its counsel.
<PAGE>
SECTION 6.7 Other Closing Documents: Phoenix shall have received such
other certificates, instruments and documents in confirmation of the
representations and warranties of HDX or in furtherance of the transactions
contemplated by this Agreement as Phoenix or its counsel may reasonably request.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF HDX
The obligations of HDX and the Shareholders to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by HDX and the Shareholders in their sole discretion, as the case may be.
SECTION 7.1 Representations and Warranties of Phoenix: All representations
and warranties made by Phoenix in this Agreement shall be true and correct on
and as of the Closing Date as if again made by Phoenix on and as of such date.
SECTION 7.2 Agreements and Covenants: Phoenix shall have performed and
complied in all material respects to all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.
SECTION 7.3 Consents and Approvals: All consents, waivers, authorizations
and approvals of any governmental or regulatory authority, domestic or foreign,
and of any other person, firm or corporation, required in connection with the
execution, delivery and performance of this Agreement, shall have been duly
obtained and shall be in full force and effect on the Closing Date.
SECTION 7.4 No Violation of Orders: No preliminary or permanent injunction
or other order issued by any court or other governmental or regulatory
authority, domestic or foreign, nor any statute, rule, regulation, decree or
executive order promulgated or enacted by any government or governmental or
regulatory authority, domestic or foreign, that declares this Agreement invalid
or unenforceable in any respect or which prevents the consummation of the
transactions contemplated hereby, or which materially and adversely affects the
assets, properties, operations, prospects, net income or financial condition of
Phoenix and its subsidiaries, taken as a whole, shall be in effect; and no
action or proceeding before any court or government or regulatory authority,
domestic or foreign, shall have been instituted or threatened by any government
or governmental or regulatory authority, domestic or foreign, or by any other
person, or entity which seeks to prevent or delay the consummation of the
transactions contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement.
SECTION 7.5 Opinion of Counsel: Phoenix shall have received a favorable
opinion, dated as of the Closing Date from legal counsel to Phoenix in form and
substance reasonably satisfactory to HDX and its counsel.
SECTION 7.6 Other Closing Documents: HDX shall have received such other
certificates, instruments and documents in confirmation of the representations
and warranties of
<PAGE>
Phoenix or in furtherance of the transactions contemplated by this Agreement as
HDX or its counsel may reasonably request.
SECTION 7.7 NASDAQ, OTCBB Listing: HDX shall have received satisfactory
confirmation that upon the Closing of the transaction contemplated by this
Agreement the shares of Phoenix's Common Stock will continue to be listed as a
publicly traded company.
ARTICLE VIII
TERMINATION AND ABANDONMENT
SECTION 8.1 Methods of Termination: This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time before the
Closing:
(a) by the mutual written consent of the Shareholders, HDX, and
Phoenix.
(b) by Phoenix, upon a material breach of any representation,
warranty, covenant or agreement on the part of HDX and the Shareholders set
forth in this Agreement, or if any representation or warranty of HDX or the
Shareholders shall become untrue, in either case such that any of the conditions
set forth in Article VI hereof would not be satisfied (a "HDX Breach"), and such
breach shall, if capable of cure, have not been cured within ten (10) days after
receipt by the party in breach of a notice from the non-breaching party setting
forth in detail the nature of such breach;
(c) by the Shareholders and HDX, upon a material breach of any
representation, warranty, covenant or agreement on the part of Phoenix set forth
in this Agreement, or, if any representation or warranty of Phoenix shall become
untrue, in either case such that any of the conditions set forth in Article VII
hereof would not be satisfied (a "Phoenix Breach"), and such breach shall, if
capable of cure, not have been cured within ten (10) days after receipt by the
party in breach of a notice from the non-breaching party setting forth in detail
the nature of such breach;
(d) by either the Shareholders and HDX or Phoenix, if the Closing
shall not have consummated before thirty (30) days after the date hereof;
provided, however, that this Agreement may be extended by written notice of
either HDX or Phoenix, if the Closing shall not have been consummated as a
result of Phoenix, the Shareholders or HDX having failed to receive all required
regulatory approvals or consents with respect to this transaction or as the
result of the entering of an order as described in this Agreement; and further
provided, however, that the right to terminate this Agreement under this Section
8.1(d) shall not be available to any party whose failure to fulfill any
obligations under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before this date.
(e) by either the Shareholders and HDX or Phoenix if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action (which order, decree or ruling the parties hereto shall use its best
efforts to lift), which permanently restrains, enjoins or otherwise prohibits
the transactions contemplated by this Agreement.
<PAGE>
SECTION 8.2 Procedure Upon Termination: In the event of termination and
abandonment of this Agreement by HDX, the Shareholders or Phoenix pursuant to
Section 8.1, written notice thereof shall forthwith be given to the other
parties and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action. If this Agreement is
terminated as provided herein, no party to this Agreement shall have any
liability or further obligation to any other party to this Agreement except as
provided in Sections 11.1, 11.4 hereof; provided, however, that no termination
of this Agreement pursuant to this Article VIII shall relieve any party of
liability for a breach of any provision of this Agreement occurring before such
termination.
ARTICLE IX
SHAREHOLDERS' REPRESENTATIVE
SECTION 9.1. Shareholders' Representative. Each of the Shareholders
hereby irrevocably makes, constitutes and appoints Timothy C Palmer as his agent
and representative and attorney-in-fact (the "Shareholders' Representative") for
all purposes under this Agreement. Each Shareholder hereby authorizes the
Shareholders' Representative, on behalf and in the name of such Shareholder, to:
(a) receive all notices or documents given or to be given to him by
Phoenix pursuant hereto or in connection herewith and to receive and accept
service of legal process in connection with any suit or other proceeding arising
under this Agreement. The Shareholders' Representative promptly shall forward a
copy of such notice or process to each Shareholder ;
(b) deliver at the Closing the certificates for the Shares of each
Shareholder in exchange for his portion of the Exchange Consideration;
(c) sign and deliver to Phoenix at the Closing a receipt for his
portion of the Exchange Consideration and transmit the Exchange Consideration to
each Shareholder;
(d) deliver to Phoenix at the Closing all certificates and documents
to be delivered to Phoenix by the Shareholders pursuant to this Agreement,
together with any other certificates and documents executed by each Shareholder
and deposited with the Shareholders' Representative for such purpose;
(e) engage such legal counsel, and such accountants and other
advisors for Shareholders and incur such other expenses on behalf of
Shareholders in connection with this Agreement and the transactions contemplated
hereby as the Shareholders' Representative may deem appropriate; and
(f) take such action on behalf of such Shareholders as the
Shareholders' Representative may deem appropriate in respect of:
(i) waiving any inaccuracies in the representations or
warranties of Phoenix contained in this Agreement or in any document delivered
by it pursuant hereto;
(ii) waiving the fulfillment of any of the conditions
precedent to the Shareholders' obligations hereunder;
(iii) taking such other action as he is authorized to take
under this Agreement;
<PAGE>
(iv) receiving all documents or certificates and making all
determinations on behalf of the Shareholders required under this Agreement; and
(v) all such other matters as the Shareholders' Representative
may deem necessary or appropriate to consummate this Agreement and the
transactions contemplated hereby. The appointment of the Shareholders'
Representative hereunder is irrevocable and is deemed coupled with an interest
and any action taken by Shareholders' Representative pursuant to the authority
granted in this Section 9.1 shall be effective and absolutely binding on each
Shareholder notwithstanding any contrary action of or direction from a
Shareholder. The death or incapacity of any Shareholder shall not terminate the
prior authority and agency of the Shareholders' Representative.
ARTICLE X
POST-CLOSING AGREEMENTS
SECTION 10.1 Consistency in Reporting: Each party hereto agrees that: (i)
the transaction is intended to qualify as a tax-free transaction under the Code;
(ii) the transaction shall be reported for Federal income tax purposes as a
tax-free transaction; (iii) for purposes of all financial statements, tax
returns and reports, and communications with third parties, the transactions
contemplated in this agreement and ancillary or collateral transactions will be
treated as a tax-free transaction; and (iv) if the characterization of any
transaction contemplated in this agreement or any ancillary or collateral
transaction is challenged, each party hereto will testify, affirm and ratify
that the characterization contemplated in such agreement was with the
characterization intended by the party; provided, however, that nothing herein
shall be construed as giving rise to any obligation if the reporting position is
determined to be incorrect by final decision of a court of competent
jurisdiction.
SECTION 10.2 Indemnity: Phoenix shall honor the terms and conditions of
the indemnification agreements listed on Schedule 4.16 as in effect on the date
of Closing.
SECTION 10.3 Funding of HDX by Phoenix: Phoenix agrees to fund HDX in the
manner set forth in the "HDX Twelve (12) Month Budget commencing August 1,
1997", a copy of which is attached hereto as Exhibit "A". All funding and
"Receivable Financing" will be done by or through Phoenix, and HDX is not
authorized to borrow against any of its assets without the written consent of
Phoenix. Other than by or through Phoenix, HDX is not authorized to pledge,
hypothecate or receive loans against its receivables. All assets of HDX,
including but not limited to receivables, are the property of Phoenix.
Phoenix will use its best efforts to provide receivable financing of
up to seventy five percent (75%) for approved, creditworthy, accounts (as
evidenced by the lenders and lending institution, based upon the reasonable and
necessary standards of the industry). Accounts deemed to be non-creditworthy,
will be reviewed by Phoenix and HDX, on an individual basis, in an attempt to
find alternative financing. Should said review find the account(s) to be
non-financeable, the account(s) would be rejected by HDX and not be considered
as revenue.
SECTION 10.4 Performance of HDX: HDX asserts that the "HDX Twelve (12)
Month Budget" (Exhibit "A") is sound and that the projected revenues and profits
are reasonable and will be attained. Based on the limited operating history of
HDX, monthly performance reviews will be
<PAGE>
conducted by Phoenix and should HDX fail to achieve at least eighty five percent
(85%) of the revenues and profits, cumulative year to date as projected per
Exhibit "A", notwithstanding that the foregoing would constitute a breach of
this agreement, changes and adjustments may be implemented by Phoenix to reduce
HDX's funding requirements and Phoenix's capital exposure.
SECTION 10.5 Remedies for Breach of Agreement by Phoenix: Should Phoenix
breach any term or condition of this agreement, the following shall, at the
option of HDX, occur;
(a) Phoenix shall execute a stock swap with the former shareholders
of HDX, whereby such shareholders shall return all Phoenix stock to Phoenix, and
shall receive one hundred percent (100%) of the capital stock, voting and
nonvoting of HDX. Phoenix shall guarantee that HDX shall be returned to the
Shareholders in the same or greater net worth determined in accordance with
standard accounting principles, as of the date of Phoenix's acquisition of HDX.
Any deficiency shall be funded by Phoenix as a capital contribution to HDX.
(b) These remedies shall not be exclusive.
SECTION 10.6 Remedies for Breach of Agreement by HDX: Should HDX breach
any term or condition of this agreement, the following shall, at the option of
Phoenix, occur;
(a) HDX and the former Shareholders of HDX shall execute a stock
swap with Phoenix, whereby such shareholders shall return all Phoenix stock to
Phoenix, and shall receive one hundred percent (100%) of the capital stock,
voting and nonvoting of HDX. Phoenix shall not guarantee that HDX shall be
returned to the Shareholders in the same or greater net worth determined in
accordance with standard accounting principles, as of the date of Phoenix's
acquisition of HDX. Any outstanding notes or unpaid loans to HDX by Phoenix,
unless otherwise agreed upon by both parties, will immediately become due and
payable.
(b) These remedies shall not be exclusive.
SECTION 10.7 Divestiture of the Assets of HDX: Phoenix agrees not to sell,
remove or divest in any manner the real or personal property of HDX that would
prohibit HDX from performing its normal business.
SECTION 10.8 Diversion of Funds of HDX: Phoenix agrees not to divert any
funds generated by HDX in any manner that would prohibit HDX from attaining its
goals of revenue and/or profit as projected in Exhibit "A" of this agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1 Survival of Provisions: The respective representations,
warranties, covenants and agreements of each of the parties to this Agreement
(except covenants and agreements which are expressly required to be performed
and are performed in full on or before the Closing Date) shall survive the
Closing Date and the-consummation of the transactions contemplated by this
Agreement, subject to Sections 2.22 and 4.25. In the event of a breach of any of
such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach available to it under the provisions of this
Agreement or otherwise, whether at law or in equity, regardless of any
disclosure to, or investigation made by or on behalf of such party on or before
the Closing Date.
<PAGE>
SECTION 11.2 Publicity: Neither party shall cause the publication of any
press release or other announcement with respect to this Agreement or the
transactions contemplated hereby without the consent of the other party, unless
a press release or announcement is required by law. If any such announcement or
other disclosure is required by law, the disclosing party agrees to give the
non-disclosing party prior notice and an opportunity to comment on the proposed
disclosure.
SECTION 11.3 Successors and Assigns: No Third-Party Beneficiaries. This
Agreement shall inure to the benefit of, and be binding upon, the parties hereto
and their respective successors and assigns; provided, however, that no party
shall assign or delegate any of the obligations created under this Agreement
without the prior written consent of the other party.
SECTION 11.4 Fees and Expenses: Except as otherwise expressly provided in
this Agreement, all legal and other fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees, costs or expenses.
SECTION 11.5 Notices: All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been given or
made if in writing and delivered personally or sent by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the following
addresses:
(a) If to Phoenix, to:
Phoenix International Industries, Inc.
501 S. Dixie Hwy.
West Palm Beach, FL 33401
Attention: Gerard Haryman, President.
(b) If to HDX and/or Shareholders, to:
HDX 9000 Inc.
17D 100 UN Plaza
New York NY 10017
Attention: John Stopp, President.
or to such other persons or at such other addresses as shall be furnished by
either party by like notice to the other, and such notice or communication shall
be deemed to have been given or made as of the date so delivered or mailed. No
change in any of such addresses shall be effective insofar as notices under this
Section 10.6 are concerned unless such changed address is located in the United
States of America and notice of such change shall have been given to such other
party hereto as provided in this Section 10.6.
<PAGE>
SECTION 11.7 Entire Agreement: This Agreement, together with the exhibits
hereto, represents the entire agreement and understanding of the parties with
reference to the transactions set forth herein and no representations or
warranties have been made in connection with this Agreement other than those
expressly set forth herein or in the exhibits, certificates and other documents
delivered in accordance herewith. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings and
agreements between the parties relating to the subject matter of this Agreement
and all prior drafts of this Agreement, all of which are merged into this
Agreement. No prior drafts of this Agreement and no words or phrases from any
such prior drafts shall be admissible into evidence in any action or suit
involving this Agreement.
SECTION 11.8 Severability: This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
SECTION 11.9 Titles and Headings: The Article and Section headings
contained in this Agreement are solely for convenience of reference and shall
not affect the meaning or interpretation of this Agreement or of any term or
provision hereof.
SECTION 11.10 Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
SECTION 11.11 Convenience of Forum: Consent to Jurisdiction. Any dispute
arising out of this agreement shall be resolved by binding arbitration in
accordance with the Civil Arbitration Rules of the American Arbitration
Association. The arbitration will be held in West Palm Beach, Florida and will
be conducted by one arbitrator mutually agreeable to HDX, Shareholders and
Phoenix. If the parties cannot agree within thirty (30) days of a written demand
by a party for arbitration, the arbitrator shall be selected by the American
Arbitration Association. Arbitration is final without appeal. Judgment upon any
arbitration award may be entered in any court of competent jurisdiction.
SECTION 11.12 Enforcement of the Agreement: The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereto, this being in addition to any
other remedy to which they are entitled at law or in equity.
<PAGE>
SECTION 11.13 Governing Law: This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of Florida
without giving effect to the choice-of-law provisions thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
FOR: PHOENIX INTERNATIONAL INDUSTRIES, INC.
- -------------------- -----------------
Gerard Haryman Date
President
FOR: HDX 9000, INC.
- -------------------- ------------------
Timothy C. Palmer Date
Chairman
SUBSIDIARIES OF THE REGISTRANT
1) Intuitive Technology Consultants, Inc.
3700 Crestwood Parkway, Suite 1000
Duluth, GA 30096
2) HDX 9000, Inc.
501 South Dixie Highway
West Palm Beach, FL 33401
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