<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 23, 1996
OPTIMAX INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
COLORADO 0-19082 84-1059458
- --------------- ------------------------ ------------------
(State or other (Commission file number (Employer Identi-
incorporation fication No.)
4465 Northpark Drive, Colorado Springs, Colorado 80907
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 590-4900
-------------------------------------------------------------------
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
<PAGE>
ITEM 2: ACQUISITION OF ASSETS.
- -------------------------------
On July 23, 1996, Optimax Industries, Inc., a Colorado corporation (the
"Company") closed upon that certain Agreement and Plan of Reorganization dated
as of May 3, 1996 (the "Agreement") between the Company, on the one hand, and
Vine Street Stores, Inc., a Massachusetts corporation ("Vine Street"), on the
other. In connection with such closing, the Company acquired (i) 100% of the
issued and outstanding shares of common stock of Vine Street and
(ii) approximately 12 acres of undeveloped real property located in Colchester,
Connecticut (the "Colchester Property").
Concurrently with the closing the Agreement and the consummation of the
acquisition of Vine Street and the Colchester Property, the Company
successfully conducted the First Closing of a Private Offering of its
securities in which it sold an aggregate of 1,190,560 Units, each Unit
consisting of one (1) share of the Company's Common Stock, $.02 par value
("Common Stock"), and one (1) Class BB Warrant at a Private Offering price of
$1.25 per Unit (the "Private Offering"). Each BB Warrant entitles the holder
to purchase one share of Common Stock until April 1, 1999 at an exercise price
of $3.00 per share. The Private Offering is being conducted by the Company
through RAS Securities Corp. ("RAS" or the "Placement Agent"). The Private
Offering is being undertaken on an 800,000 Unit minimum, best-efforts, all-or-
none basis, and thereafter on a 1,500,000 Unit maximum, best-efforts basis.
From the sale of the 1,190,560 Units which closed in the First Closing on July
23, 1996, the Company realized net proceeds of $1,254,734, after deduction of
Placement Agent's commissions of 10% and non-accountable expense allowance of
3%. The Private Offering will continue until August 31, 1996, or until the
maximum offering of 1,500,000 Units has been sold, whichever occurs first.
Acquisition of Vine Street Stores, Inc.
- ---------------------------------------
The Company consummated the acquisition of 100% of the issued and
outstanding shares of capital stock of Vine Street in exchange for issuing the
shareholders of Vine Street, pro rata, an aggregate of 1,500,000 shares of the
Company's Common Stock. The acquisition was structured as a tax-free
reorganization pursuant to Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended.
The following table sets forth the names of the persons who received
shares of the Company's Common Stock in exchange for shares of capital stock of
Vine Street:
<TABLE>
<CAPTION>
Number
Name Of Shares
---- ---------
<S> <C>
Allan M. Huberman 500,000
David Dube 500,000
RIB, LLC(1) 500,000
_________________________________
<FN>
(1) RIB, LLC is a limited liability company whose principals
are affiliates of RAS Securities Corp., the Placement Agent
for the Private Offering.
</FN>
</TABLE>
<TABLE>
<PAGE>
<PAGE>
Vine Street owns and operates under commercial leases approximately eight
plant and nursery retail concessions located in large department stores in the
Northeastern section of the United States. Its assets consist principally of
plant inventory and materials and certain contract rights represented by its
commercial leases. The consideration paid for Vine Street was determined
through arms-length negotiations which took into consideration such factors as
the book value of the entities, their operating histories, business
opportunities and other criteria.
Acquisition of Colchester Property
- ----------------------------------
Concurrently with the acquisition of Vine Street, the Company through a
newly-formed subsidiary, Colchester Property Investors, LLC ("CPI"), purchased
approximately 12 acres of undeveloped real property located in Colchester,
Connecticut. The contract to purchase the property was assigned by Vine Street
to CPI as part of the concurrent closings. In consideration of the property,
the Company paid to the Sellers $400,000 out of the proceeds of the Private
Offering and issued to the Sellers an aggregate of 1,280,000 shares of Series A
Convertible Preferred Stock (the "Convertible Preferred Stock"). The persons
who received the Convertible Preferred Stock in partial consideration of the
Colchester Property are as follows:
Number
Name Of Shares
---- ---------
<S> <C>
Elliott Construction Employees
Pension Trust 100,000
Elliott Flom 100,000
Mollie Flom 140,000
Lynn Flom 100,000
Dara Flom 100,000
Jordan Flom 100,000
MRL Enterprises, Inc. 160,000
Faye Peltz 80,000
Milton, Sullivan & Associates (1) 400,000
________
1,280,000
------------------------
<FN>
(1) The principals of Milton, Sullivan & Associates
are affiliates of RAS Securities Corp.
</FN>
</TABLE>
Holders of the Convertible Preferred Stock have no voting rights and no
rights to compel the redemption of the shares. No dividends shall be payable
on outstanding shares of Convertible Preferred Stock. Each share of
Convertible Preferred Stock is convertible at the option of the holder into one
(1) share of Common Stock for the period commencing one year from the date at
issue and ending five years from the date of issue. Further, each share of
Convertible Preferred Stock will convert, automatically, into one (1) share of
Common Stock upon the effective date of a Registration Statement ("Registration
Statement") registering for sale under the Securities Act of 1933, as amended
(the "Securities Act"), the shares of Common Stock issuable upon such
conversion (the "Conversion Stock"). The Company has made no commitment or
undertaking to file a Registration Statement registering for sale under the
Securities Act the shares of Conversion Stock.
<PAGE>
<PAGE>
The Company formed and organized under the laws of the State of Colorado a
limited liability company under the name of "Colchester Property Investors,
LLC" for the purpose of holding title to the Colchester Property. The Company
is the sole equity owner and member of the limited liability company. David
Dube will serve as the sole manager of the limited liability company.
The Company plans to utilize a portion of the Colchester Property to
develop a retail nursery that will be supplied, in part, by the Company's
existing propagation facility in Loxahatchee, Florida. The Colchester Property
has an appraised value of approximately $2 million.
In connection with the consummation of the foregoing transactions, David
Dube was elected to serve as a director of the Company joining Paul Stevens and
Stephen G. Calandrella who will continue to serve as directors. Mr. Dube was
also elected to serve as President and Chief Financial Officer of the Company
following the resignations of Messrs. Stevens and Calandrella from those
respective positions. There exist no other arrangements, understandings or
voting agreements with respect to the future constituency of the Company's
Board of Directors or its executive officers.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
- -------------------------------------------
A. Financial statements of businesses acquired.
Pursuant to Item 7(a)(4), the Registrant declares that it is
impracticable to provide the required audited financial statements relative to
the acquired business at the time of this Report. Such audited financial
statements required by Item 7(a) shall be filed not later than sixty (60) days
after the filing of this Current Report on Form 8-K.
B. Pro Forma Financial Information
Pursuant to Item 7(b) and Item 7(a)(4), the Registrant declares it is
impracticable to provide the required pro forma statements of income and cash
flows relative to the acquired business at the time of this Report. Such pro
forma financial information required by Item 7(b) shall be filed not later than
sixty (60) days after the filing of this Current Report on Form 8-K.
The Company includes herewith its unaudited Pro Forma Consolidated
Balance Sheet giving retroactive effect to June 30, 1996 to the transactions
more fully described in this Report.
C. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Title
----------- -----
<S> <C>
4.1 Certificate of Rights and Designations of Series A
Convertible Preferred Stock
10.1 Agreement and Plan of Reorganization dated May 3, 1996
</TABLE>
<PAGE>
===============================================================================
PRO FORMA CONSOLIDATED BALANCE SHEET
===============================================================================
The accompanying unaudited Pro Forma Consolidated Balance Sheet gives
retroactive effect to (i) the acquisition of Vine Street Stores, Inc. in
exchange for the issuance of 1,500,000 shares of Common Stock, (ii) the
purchase of 12 acres in Colchester, Connecticut in consideration of $400,000 in
cash and the issuance of 1,280,000 shares of Series A Convertible Preferred
Stock, and (iii) the sale of 1,190,560 Units in the Private Offering and the
receipt by the Company of net proceeds in the amount of $1,254,734 (hereafter
collectively the "Pro Forma Transactions") as if the Pro Forma Transactions had
occurred as of June 30, 1996. Such Pro Forma Financial Statements are not
necessarily indicative of future financial condition or future operations of
the Company. The Pro Forma Consolidated Balance Sheet is unaudited but
reflects all adjustments which are, in the opinion of management, necessary to
a fair presentation of the financial position of the Company at June 30, 1996
as if the Pro Forma Transactions had occurred as of that date.
<PAGE>
<PAGE>
<TABLE>
OPTIMAX INDUSTRIES, INC. AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS
<CAPTION>
At June 30,
1996 Vine Street
Actual Adjustment
----------- -----------
June 30, 1996
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 13,784 $22,928
Accounts receivables, net of allowance
for doubtful accounts 104,234 --
Inventory 319,220 1,241
Note receivable 20,000 --
Other 2,324 5,192
----------- ----------
Total Current Assets 437,238 29,361
Property and Equipment, net of
accumulated depreciation 391,401 --
Contract retainage, net of allowance
for doubtful accounts 17,497 --
Goodwill, net of accumulated amortization 139,980 --
----------- ----------
TOTAL ASSETS $1,008,440 29,361
------------ ========== ======
LIABILITIES AND STOCKHOLDERS' EQUITY DEFICIT
Current Liabilities:
Payroll taxes payable 119,656 --
Accounts payable and accrued expenses 561,770 11,394
Notes payable 445,790 --
----------- ----------
Total Current Liabilities 1,127,216 11,394
----------- ---------
TOTAL LIABILITIES 1,127,216 11,394
---------------------
Commitments and contingencies -- --
Stockholders' Equity
Preferred shares - $001 par value,
5,000,000 shares authorized, none issued,
1,280,000 issued for property, pro forma -- --
Common shares - $.02 par value,
20,000,000 shares authorized,
1,703,091 shares issued and outstanding,
2,893,651 outstanding pro forma 34,062 1,000
Additional paid-in capital 7,160,739 --
Retained earnings/(Accumulated deficit) (7,313,577) 16,967
----------- -------
Total Stockholders' Equity (118,776) 17,967
----------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,008,440 $29,361
------------------------------------------ ========== =======
<PAGE>
<PAGE>
<CAPTION>
Connecticut
Property Private Pro Forma
Adjustment Offering (Total)
----------- ---------- --------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash $(433,615) $1,254,734 $857,831
Accounts receivables, net of
allowance for doubtful accounts -- -- 104,234
Inventory -- -- 320,461
Note receivable -- -- 20,000
Other -- -- 7,516
----------- -------- ----------
Total Current Assets (433,615) 1,254,734 1,310,042
Property and Equipment, net of
accumulated depreciation 2,033,615 -- 2,425,016
Contract retainage, net of allowance
for doubtful accounts -- -- 17,497
Goodwill, net of accumulated
amortization -- -- 139,980
----------- -------- ----------
TOTAL ASSETS 1,600,000 1,254,734 3,892,535
------------ ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
DEFICIT
Current Liabilities:
Payroll taxes payable -- -- 119,656
Accounts payable and accrued expenses -- -- 573,164
Notes payable -- -- 445,790
----------- -------------------
Total Current Liabilities 1,138,610
----------- -------- ----------
TOTAL LIABILITIES 1,138,610
----------- -------------------
Commitments and contingencies -- -- --
Stockholders' Equity
Preferred shares - $001 par value,
5,000,000 shares authorized, none
issued, 1,280,000 issued for
property, pro forma 1,600,000 -- 1,600,000
Common shares - $.02 par value,
20,000,000 shares authorized,
1,703,091 shares issued and
outstanding, 2,893,651
outstanding pro forma -- 23,811 58,873
Additional paid-in capital -- 1,230,923 8,391,662
Retained earnings/(Accumulated
deficit) -- -- (7,296,610)
----------- -------- ----------
Total Stockholders' Equity 1,600,000 1,254,734 2,753,925
----------- -------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,600,000 $1,254,734 $3,892,535
-------------------- ========== ========== ==========
</TABLE>
<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OPTIMAX INDUSTRIES, INC.
Dated: July 23, 1996 By: /s/ David Dube
------------------ -------------------------
David Dube, President
<PAGE>
CERTIFICATE OF DESIGNATION OF
RIGHTS AND PREFERENCES OF SERIES A
CONVERTIBLE PREFERRED STOCK
OF OPTIMAX INDUSTRIES, INC.
- -------------------------------------------------------------------------------
Pursuant to Section 7-106-102 of the
General Corporation Law of the State of Colorado
- -------------------------------------------------------------------------------
OPTIMAX INDUSTRIES, INC., a corporation organized and existing under the
laws of the State of Colorado (the "Company"), DOES HEREBY CERTIFY that
pursuant to the authority contained in its Articles of Incorporation, as
amended, and in accordance with the provisions of the General Corporation Law
of the State of Colorado, the Company's Board of Directors has duly adopted the
following resolution creating a series of the class of its authorized Preferred
Stock, designated as Series A Convertible Preferred Stock:
RESOLVED THAT:
Whereas, by virtue of the authority contained in its Articles of
Incorporation, as amended, the Company has the authority to issue Five
Million (5,000,000) shares of $.001 par value Preferred Stock, the
designation and amount thereof and series, together with the powers,
preferences, rights, qualifications, limitations or restrictions thereof,
to be determined by the Board of Directors pursuant to the applicable law
of the State of Colorado;
Now therefore, the Company's Board of Directors hereby establishes a
series of the class of Preferred Stock authorized to be issued by the
Company as above stated, with the designations and amounts thereof,
together with the voting powers, preferences and relative, participating,
optional and other special rights of the shares of each such series, and
the qualifications, limitations or restrictions thereof, to be as follows:
1. Designations and Amounts.
------------------------
One Million Two Hundred Eighty Thousand (1,280,000) shares of the
Company's authorized Preferred Stock are designated as Series A
Convertible Preferred Stock.
2. Definitions.
-----------
For the purposes of this Resolution the following definitions shall
apply:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Company" shall mean Optimax Industries, Inc., a Colorado
corporation.
(c) "Original Issue Date" for a series of Preferred Stock shall mean
the date on which the first share of such series of Preferred Stock
was originally issued.
(d) "Preferred Stock" shall refer to Series A Convertible Preferred
Stock.
(e) "Common Stock" shall refer to the Company's $.02 par value
common stock.
(f) "Subsidiary" shall mean any corporation at least 50% of whose
outstanding voting stock shall at the time be owned directly or
indirectly by the Company or by one or more Subsidiaries.<PAGE>
<PAGE>
3. Dividends.
---------
The holders of outstanding Preferred Stock shall not be entitled to
receive any dividends by virtue of their beneficial ownership of Preferred
Stock, but rather shall be entitled to participate, pro rata, in dividends
paid on outstanding shares of Common Stock, if, when and as the Board of
Directors shall in their sole discretion deem advisable, and only from the
net profits or surplus of the Company as such shall be fixed and
determined by the Board of Directors. The determination of the Board of
Directors at any time of the amount of net profits or surplus available
for dividend shall be binding and conclusive on the holders of all the
stock of the Company at the time outstanding.
4. Liquidation Rights.
------------------
(a) In the event of any liquidation, dissolution, or winding up of
the Company, whether voluntary or involuntary, the holders of each
share of Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Company available for distribution to
its shareholders, before any payment or declaration and setting apart
for payment of any amount shall be made in respect to any outstanding
preferred stock ranking junior to the Preferred Stock or the Common
Stock, an amount equal to $1.25 per share. If upon any liquidation,
dissolution, or winding up of the Company, whether voluntary or
involuntary, the assets to be distributed to the holders of the
Preferred Stock shall be insufficient to permit the payment to such
shareholders of the full preferential amount aforesaid, then all of
the assets of the Company available to be distributed shall be
distributed ratably to the holders of the Preferred Stock.
(b) After the payment or distribution to the holders of the
Preferred Stock of the full preferential amounts aforesaid, the
holders of any preferred stock rank junior to the Preferred Stock and
the Common Stock then outstanding shall be entitled to receive all of
the remaining assets of the Company.
(c) Neither a consolidation, merger or reorganization of the
Company, a sale or other transfer of all or substantially all of its
assets, nor a sale of fifty percent (50%) or more of the Company's
capital stock then issued and outstanding nor the purchase or
redemption by the Company of stock of any class, nor the payment of a
dividend or distribution from net profits or surplus of the Company
shall be treated as or deemed to be a liquidation hereunder.
5. Redemption.
----------
Neither the Company nor any holder of Preferred Stock shall have the
right to redeem, or demand the redemption of, as the case may be, any of
the outstanding Preferred Stock.
6. Voting Rights.
-------------
Holders of Preferred Stock shall have no right to vote on any matter
voted upon by the holders of outstanding shares of Common Stock at any
regular or special meeting of shareholders.
7. Conversion.
----------
The Preferred Stock shall have the following conversion rights (the
"Conversion Rights"):
<PAGE>
<PAGE>
(a) Optional Conversion.
-------------------
For the period commencing one (1) year from the date of issuance
and ending five (5) years from the date of issuance, holders of
outstanding shares of Preferred Stock shall have an option to
convert each share of Preferred Stock into shares of the
Company's Common Stock (the "Conversion Stock"), at any time, at
a conversion value of One and 25/100 Dollars ($1.25) per share
of Common Stock.
(b) Automatic Conversion.
--------------------
The foregoing notwithstanding, the outstanding shares of
Preferred Stock shall be automatically converted into shares of
Common Stock upon the effective date of a Registration Statement
("Registration Statement") to be filed by the Company with the
Securities and Exchange Commission ("Commission") registering
for sale the issuance of the Conversion Stock. In the event of
such automatic conversion, the conversion value shall be $1.25
per share.
(c) Mechanics of Conversion.
-----------------------
The conversion of all outstanding shares of Preferred Stock to
Common Stock shall occur automatically upon the effective date
of the Registration Statement ("Triggering Event"). The Company
shall, within ten (10) days of the Triggering Event, provide
written notice, first class postage pre-paid, to each holder of
record of the Preferred Stock to be converted, at his post
office address last shown on the records of the Company, of the
conversion (the "Conversion Notice"). The Conversion Notice
shall state:
(i) That all of the holder's outstanding shares
of Preferred Stock were converted;
(ii) The number of shares of Preferred Stock held
by the holder that were converted;
(iii) The effective date of the Conversion
(the "Conversion Date") and the number of shares
of Common Stock which the holder will receive;
and
(iv) That the holder is to surrender to the
Company, in the manner and at the place
designated, his certificate or certificates
representing the shares of Preferred Stock
converted.
Thereafter, each holder of Preferred Stock to be converted shall
surrender the certificate or certificates representing such shares to
the Company, in the manner and at the place designated in the
Conversion Notice, and thereupon the requisite number of shares of
Common Stock shall be issued in the name of the person whose name
appears on the surrendered certificate or certificates as the owner
thereof, and each surrendered certificate shall be cancelled and
retired. Notwithstanding that the certificates evidencing any of the
shares of Preferred Stock shall not have been surrendered, all rights
with respect to such shares shall forthwith after the Conversion
Date, terminate, except only the right of the holders to receive the
appropriate number of shares of Common Stock upon surrender of their
certificate or certificates therefor.<PAGE>
<PAGE>
(d) Adjustment for Stock Splits and Combinations.
--------------------------------------------
If the Company shall at any time or from time to time after the
Original Issue Date for a series of the Preferred Stock effect a
subdivision of the outstanding Common Stock, the Conversion
Value then in effect immediately before that subdivision shall
be proportionately decreased, and conversely, if the Company
shall at any time or from time to time after the Original Issue
Date for a series of the Preferred Stock combine the outstanding
shares of Common Stock, the Conversion Value then in effect
immediately before the combination shall be proportionately
increased. Any adjustment under this Paragraph 7(d) shall
become effective at the close of business on the date the
subdivision or combination becomes effective.
(e) Adjustment for Reclassification, Exchange, or Substitution.
----------------------------------------------------------
If the Common Stock issuable upon the conversion of the
Preferred Stock shall be changed into the same or a different
number of shares of any class or classes of stock, whether by
capital reorganization, reclassification, or otherwise (other
than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation,
or sale of assets provided for elsewhere in this Paragraph 7),
then and in each such event the holder of each share of
Preferred Stock shall have the right thereafter to convert such
share into the kind and amount of shares of stock and other
securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of
shares of Common Stock into which such shares of Preferred Stock
might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to
further adjustments as provided herein.
(f) Reorganization, Mergers, Consolidations, or Sales of Assets.
-----------------------------------------------------------
If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision,
combination, reclassification, or exchange of shares provided
for elsewhere in this Paragraph 7) or a merger or consolidation
of the Company with or into another corporation, or the sale of
all or substantially all of the company's assets to any other
person, then, as a part of such reorganization, merger,
consolidation, or sale, provision shall be made so that the
holders of the Preferred Stock shall thereafter be entitled to
receive upon conversion of the Preferred Stock, the number of
shares of stock or other securities or property of the Company,
or of the successor corporation resulting form such merger or
consolidation or sale, to which a holder of Common Stock
deliverable upon conversion would have been entitled on such
capital reorganization, merger, consolidation, or sale. In any
such case, appropriate adjustment shall be made in the
application of the provisions of this Paragraph 7 with respect
to the rights of the holders of the Preferred Stock after the
reorganization, merger, consolidation, or sale to the end that
the provisions of this Paragraph 7 (including adjustment of the
Conversion Value then in effect and the number of shares
purchasable upon conversion of the Preferred Stock) shall be
applicable after that event as nearly equivalent as may be
practicable.<PAGE>
<PAGE>
(g) Definition.
----------
The term "Additional Shares of Common Stock" as used herein
shall mean all shares of Common Stock issued or deemed issued
(including a right or option to purchase Common Stock, or shares
of stock or an obligation convertible into Common Stock) by the
Company after the Original Issue Date for a series of Preferred
Stock, whether or not subsequently reacquired or retired by the
Company, other than (1) shares of Common Stock, and (2) shares
or other securities issued to employees, officers, directors,
consultants or other persons performing services for the Company
pursuant to any stock offering, option, plan, or arrangement
approved by the Board of Directors of the Company.
(h) Notices of Record Date.
----------------------
In the event of (i) any taking by the Company of a record of the
holders of any class or series of securities for the purpose of
determining the holders thereof who are entitled to receive any
dividend or other distribution or (ii) any reclassification or
recapitalization of the capital stock of the Company, any merger
or consolidation of the Company, or any transfer of all or
substantially all of the assets of the Company to any other
corporation, entity, or person, or any voluntary or involuntary
dissolution, liquidation, or winding up of the Company, the
Company shall mail to each holder of Preferred Stock at least 30
days prior to the record date specified therein, a notice
specifying (A) the date on which any such record is to be taken
for the purpose of such dividend or distribution and a
description of such dividend or distribution, (B) the date on
which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation, or winding up
is expected to become effective, and (C) the time, if any is to
be fixed, as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of
Common Stock (or other securities) for securities or other
property deliverable upon such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation, or
winding up.
(i) Fractional Shares.
-----------------
No fractional shares of Common Stock shall be issued upon
conversion of Preferred Stock. In lieu of any fractional shares
to which the holder would otherwise be entitled, the Company
shall pay cash equal to the product of such fraction multiplied
by the fair market value of one share of the Company's Common
Stock on the date of conversion, as determined in good faith by
the Board.
(j) Notices.
-------
Any notice required by the provisions of this Paragraph 7 to be
given to the holder of shares of the Preferred Stock shall be
deemed given when personally delivered to such holder or five
(5) business days after the same has been deposited in the
United States mail, certified or registered mail, return receipt
requested, postage prepaid, and addressed to each holder of
record at his address appearing on the books of the Company.
<PAGE>
<PAGE>
(k) Payment of Taxes.
----------------
The Company will pay all taxes and other governmental charges
that may be imposed in respect of the issue or delivery of
shares of Common Stock upon conversion of shares of Preferred
Stock.
(l) No Dilution or Impairment.
-------------------------
The Company shall not amend its Articles of Incorporation or
participate in any reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities
or any other voluntary action, for the purpose of avoiding or
seeking to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in carrying out all such
action as may be reasonably necessary or appropriate in order to
protect the conversion rights of the holders of the Preferred
Stock against dilution or other impairment.
8. No Preemptive Rights.
--------------------
No holder of the Series A Preferred Stock of the Corporation shall be
entitled, as of right, to purchase or subscribe for any part of the
unissued stock of the Corporation or of any stock of the Corporation to be
issued by reason of any increase of the authorized capital stock of the
Corporation, or to purchase or subscribe for any bonds, certificates of
indebtedness, debentures or other securities convertible into or carrying
options or warrants to purchase stock or other securities of the
Corporation or to purchase or subscribe for any stock of the Corporation
purchased by the Corporation or by its nominee or nominees, or to have any
other preemptive rights now or hereafter defined by the laws of the State
of Colorado.
9. No Reissuance of Preferred Stock.
--------------------------------
No share or shares of Preferred Stock acquired by the Company by
reason of purchase, conversion, or otherwise shall be reissued, and all
such shares shall be cancelled, retired, and eliminated from the shares
which the Company shall be authorized to issue.
IN WITNESS WHEREOF, said OPTIMAX INDUSTRIES, INC, has caused this
Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock to be duly executed by its President and attested by its
Secretary and has caused its corporate seal to be affixed hereto, this
__________ day of ______________________, 1996.
OPTIMAX INDUSTRIES, INC.
Attest
- ------------------------------- By: --------------------------------
Secretary Paul Stevens, President
[Corporate Seal]
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Dated as of
March ____, 1996
between
VINE STREET STORES, INC.
and
OPTIMAX INDUSTRIES, INC.
<PAGE>
<PAGE>
<TABLE>
TABLE OF CONTENTS
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SECTION 1: GENERAL DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . .-1-
1.1 Best Knowledge.. . . . . . . . . . . . . . . . . . . . . . . . .-1-
1.2 Business Day.. . . . . . . . . . . . . . . . . . . . . . . . . .-1-
1.3 Code.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-1-
1.4 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-1-
1.5 Exchange Act.. . . . . . . . . . . . . . . . . . . . . . . . . .-1-
1.6 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . .-1-
1.7 Governmental Authority.. . . . . . . . . . . . . . . . . . . . .-1-
1.8 Governmental Requirement.. . . . . . . . . . . . . . . . . . . .-2-
1.9 IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-2-
1.10 Legal Requirements . . . . . . . . . . . . . . . . . . . . . . .-2-
1.11 Ownership Interest.. . . . . . . . . . . . . . . . . . . . . . .-2-
1.12 Person.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .-2-
1.13 Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . .-2-
1.14 Securities Act.. . . . . . . . . . . . . . . . . . . . . . . . .-2-
1.15 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-2-
SECTION 2: EXCHANGE OF SECURITIES . . . . . . . . . . . . . . . . . . . . .-3-
2.1 Exchange of Common Stock.. . . . . . . . . . . . . . . . . . . .-3-
2.2 Exchange of Certificates.. . . . . . . . . . . . . . . . . . . .-3-
2.3 Adjustment of Issuable Optimax Shares and Rights.. . . . . . . .-3-
2.4 Income Tax Considerations. . . . . . . . . . . . . . . . . . . .-4-
2.5 Compliance with Securities Laws. . . . . . . . . . . . . . . . .-4-
2.6 Private Financing. . . . . . . . . . . . . . . . . . . . . . . .-4-
SECTION 3: CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . .-5-
3.1 General Procedure. . . . . . . . . . . . . . . . . . . . . . . .-5-
3.2 Time and Place.. . . . . . . . . . . . . . . . . . . . . . . . .-5-
3.3 Condition to Closing - Minimum Exchange Tender.. . . . . . . . .-5-
3.4 Covenants Regarding Closing. . . . . . . . . . . . . . . . . . .-5-
3.5 Conditions to Obligation of Optimax. . . . . . . . . . . . . . .-6-
3.6 Conditions to Obligation of Vine Street. . . . . . . . . . . . .-9-
3.7 Specific Items to be Delivered at the Closing. . . . . . . . . -13-
3.8 Election of Directors and Executive Officers of Optimax. . . . -15-
SECTION 4: REPRESENTATIONS AND WARRANTIES BY VINE STREET . . . . . . . . -15-
4.1 Organization and Standing. . . . . . . . . . . . . . . . . . . -15-
4.2 Subsidiaries, etc. . . . . . . . . . . . . . . . . . . . . . . -15-
4.3 Qualification. . . . . . . . . . . . . . . . . . . . . . . . . -16-
4.4 Corporate Authority. . . . . . . . . . . . . . . . . . . . . . -16-
4.5 Financial Statements.. . . . . . . . . . . . . . . . . . . . . -16-
4.6 Capitalization of the Corporation. . . . . . . . . . . . . . . -17-
4.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
4.8 No Actions, Proceedings, etc.. . . . . . . . . . . . . . . . . -17-
4.9 Post Balance Sheet Changes.. . . . . . . . . . . . . . . . . . -18-
4.10 No Breaches. . . . . . . . . . . . . . . . . . . . . . . . . . -18-
4.11 Condition of the Corporation's Assets. . . . . . . . . . . . . -19-
4.12 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.13 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . -19-
4.14 Corporate Acts and Proceedings.. . . . . . . . . . . . . . . . -19-
4.15 Registered Rights and Proprietary Information. . . . . . . . . -19-
4.16 Changes in Suppliers and Customers.. . . . . . . . . . . . . . -21-
4.17 No Liens or Encumbrances.. . . . . . . . . . . . . . . . . . . -21-
4.18 Employee Matters.. . . . . . . . . . . . . . . . . . . . . . . -21-
4.19 Legal Proceedings and Compliance with Law. . . . . . . . . . . -22-
4.20 Contract Schedules.. . . . . . . . . . . . . . . . . . . . . . -22-
4.21 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . -23-
4.22 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
4.23 Environmental. . . . . . . . . . . . . . . . . . . . . . . . . -23-
4.24 Disclosure of Information. . . . . . . . . . . . . . . . . . . -25-
SECTION 5: COVENANTS OF VINE STREET . . . . . . . . . . . . . . . . . . . -25-
5.1 Preservation of Business.. . . . . . . . . . . . . . . . . . . -25-
5.2 Ordinary Course. . . . . . . . . . . . . . . . . . . . . . . . -25-
5.3 Negative Covenants.. . . . . . . . . . . . . . . . . . . . . . -26-
5.4 Access to Books and Records, Premises, etc.. . . . . . . . . . -26-
5.5 Compensation.. . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 6: REPRESENTATIONS AND WARRANTIES OF OPTIMAX. . . . . . . . . . . -28-
6.1 Organization and Standing. . . . . . . . . . . . . . . . . . . -28-
6.2 Subsidiaries, etc. . . . . . . . . . . . . . . . . . . . . . . -28-
6.3 Qualification. . . . . . . . . . . . . . . . . . . . . . . . . -28-
6.4 Corporate Authority. . . . . . . . . . . . . . . . . . . . . . -28-
6.5 Financial Statements.. . . . . . . . . . . . . . . . . . . . . -29-
6.6 Capitalization of the Corporation. . . . . . . . . . . . . . . -30-
6.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
6.8 No Actions, Proceedings, etc.. . . . . . . . . . . . . . . . . -31-
6.9 Post Balance Sheet Changes.. . . . . . . . . . . . . . . . . . -31-
6.10 No Breaches. . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.11 Condition of the Corporation's Assets. . . . . . . . . . . . . -32-
6.12 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
6.13 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . -32-
6.14 Corporate Acts and Proceedings.. . . . . . . . . . . . . . . . -33-
6.15 Registered Rights and Proprietary Information. . . . . . . . . -33-
6.16 Changes in Suppliers and Customers.. . . . . . . . . . . . . . -34-
6.17 No Liens or Encumbrances.. . . . . . . . . . . . . . . . . . . -34-
6.18 Employee Matters.. . . . . . . . . . . . . . . . . . . . . . . -35-
6.19 Legal Proceedings and Compliance with Law. . . . . . . . . . . -35-
6.20 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
6.21 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . -36-
6.22 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
6.23 Environmental. . . . . . . . . . . . . . . . . . . . . . . . . -37-
6.24 Compliance with Reporting Requirements . . . . . . . . . . . . -38-
6.25 Disclosure of Information. . . . . . . . . . . . . . . . . . . -38-
SECTION 7: COVENANTS OF OPTIMAX . . . . . . . . . . . . . . . . . . . . . -39-
7.1 Preservation of Business.. . . . . . . . . . . . . . . . . . . -39-
7.2 Ordinary Course. . . . . . . . . . . . . . . . . . . . . . . . -39-
7.3 Negative Covenants.. . . . . . . . . . . . . . . . . . . . . . -39-
7.4 Access to Books and Records, Premises, etc.. . . . . . . . . . -40-
7.5 Compensation.. . . . . . . . . . . . . . . . . . . . . . . . . -40-
7.6 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . -40-
7.7 Audited Financial Statements.. . . . . . . . . . . . . . . . . -41-
7.8 Application For NASDAQ Approval. . . . . . . . . . . . . . . . -41-
7.9 Delivery of Additional Filings.. . . . . . . . . . . . . . . . -42-
SECTION 8: TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . -42-
8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . -42-
8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . -42-
SECTION 9: INDEMNIFICATION AND REMEDIES FOR BREACH. . . . . . . . . . . . -43-
9.1 Indemnification by Optimax.. . . . . . . . . . . . . . . . . . -43-
9.2 Indemnification by Vine Street.. . . . . . . . . . . . . . . . -43-
9.3 Additional Notice. . . . . . . . . . . . . . . . . . . . . . . -44-
9.4 Determination of Damages and Related Matters.. . . . . . . . . -44-
9.5 Remedies for Breach. . . . . . . . . . . . . . . . . . . . . . -46-
SECTION 10: NONDISCLOSURE OF CONFIDENTIAL INFORMATION . . . . . . . . . . -46-
10.1 Nondisclosure of Confidential Information. . . . . . . . . . . -46-
10.2 No Publicity. . . . . . . . . . . . . . . . . . . . . . . . . -47-
SECTION 11: REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . -47-
11.1 Request for Registration - "Demand" Registration . . . . . . . -47-
11.2 Optimax Registration and "Piggyback Rights.. . . . . . . . . . -48-
11.3 Obligations of Optimax.. . . . . . . . . . . . . . . . . . . . -48-
11.4 Furnish Information. . . . . . . . . . . . . . . . . . . . . . -49-
11.5 Expenses of Demand Registration. . . . . . . . . . . . . . . -49-
11.6 Optimax Registration Expenses. . . . . . . . . . . . . . . . . -49-
11.7 Underwriting Requirements and Percentage Piggyback
Registration Rights and Allowances.. . . . . . . . . . . . . . -50-
11.8 Delay of Registration. . . . . . . . . . . . . . . . . . . . . -50-
11.9 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . -51-
11.10 Termination of Optimax's Obligations.. . . . . . . . . . . . . -52-
11.11 Lockup Agreement.. . . . . . . . . . . . . . . . . . . . . . . -53-
11.12 Proposed Transfers of Exchange Shares. . . . . . . . . . . . . -53-
11.13 Transfer of Registration Rights. . . . . . . . . . . . . . . . -54-
SECTION 12: EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . -54-
SECTION 13: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . -54-
13.1 Attorney's Fees. . . . . . . . . . . . . . . . . . . . . . . . -54-
13.2 No Brokers.. . . . . . . . . . . . . . . . . . . . . . . . . . -54-
13.3 Survival and Incorporation of Representations. . . . . . . . . -55-
13.4 Incorporation by Reference.. . . . . . . . . . . . . . . . . . -55-
13.5 Parties in Interest. . . . . . . . . . . . . . . . . . . . . . -55-
13.6 Amendments and Waivers.. . . . . . . . . . . . . . . . . . . . -55-
13.7 Waiver.. . . . . . . . . . . . . . . . . . . . . . . . . . . . -55-
13.8 Governing Law - Construction.. . . . . . . . . . . . . . . . . -56-
13.9 Limitation of Actions. . . . . . . . . . . . . . . . . . . . . -56-
13.10 Representations and Warranties.. . . . . . . . . . . . . . . . -56-
13.11 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . -56-
13.12 Fax/Counterparts.. . . . . . . . . . . . . . . . . . . . . . . -57-
13.13 Captions.. . . . . . . . . . . . . . . . . . . . . . . . . . . -58-
13.14 Severability.. . . . . . . . . . . . . . . . . . . . . . . . . -58-
13.15 Good Faith Cooperation and Additional Documents. . . . . . . . -58-
13.16 Specific Performance.. . . . . . . . . . . . . . . . . . . . . -58-
13.17 Assignment.. . . . . . . . . . . . . . . . . . . . . . . . . . -58-
13.18 Time.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -59-
/TABLE
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EXHIBITS
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Exhibit 2.1 Vine Street, Inc. List of Holders of Vine Street Common
Stock
Exhibit 3.5(o) Vine Street, Inc. Form of Shareholder Assignment
Exhibit 3.7(a)(iv) Opinion of Vine Street's Counsel
Exhibit 3.7(b)(v) Opinion of Optimax's Counsel
Exhibit 4.2 Vine Street, Inc. Subsidiaries
Exhibit 4.4 Vine Street, Inc. Corporate Authority
Exhibit 4.5 Vine Street, Inc. Financial Statements
Exhibit 4.6 Vine Street, Inc. Relative Rights and Preferences of
Shareholders of Series A Convertible Preferred Stock
Exhibit 4.7 Vine Street, Inc. Exceptions to Timely Filing of Taxes; Tax
Related Disputes
Exhibit 4.8 Vine Street, Inc. Pending or Threatened Actions or
Proceedings
Exhibit 4.9 Vine Street, Inc. Post Balance Sheet Changes
Exhibit 4.11 Vine Street, Inc. Third Party Proprietary Interest in
Intangible Assets
Exhibit 4.12 Vine Street, Inc. Exceptions to Inventory Valuation,
Condition and Marketability
Exhibit 4.13 Vine Street, Inc. Exceptions to Collectability of Accounts
Receivable (Material Counterclaims or Set-Offs)
Exhibit 4.15 Vine Street, Inc. Patents, Other Registered Rights and
Proprietary Information
Exhibit 4.16 Vine Street, Inc. Changes in Suppliers and Customers
Exhibit 4.17 Vine Street, Inc. Liens or Encumbrances
Exhibit 4.18 Vine Street, Inc. Current Employees
Exhibit 4.19 Vine Street, Inc. Pending or Threatened Legal,
Administrative, or Other Proceedings or Governmental
Investigation, Exceptions to Compliance with Laws,
Ordinances, Requirements, Regulations, or Orders
Exhibit 4.20(a) Vine Street, Inc. Material Contract Agreements
Exhibit 4.20(b) Vine Street, Inc. Labor Contracts, Employment Agreements
and Collective Bargaining Agreements
Exhibit 4.20(c) Vine Street, Inc. Liens or Security Interest Securing
Indebtedness
Exhibit 4.20(d) Vine Street, Inc. Profit Sharing, Pension, Stock Option,
Severance pay, Retirement, Bonus, Deferred Compensation,
Group Life and Health Insurance or other Employee Benefit
Plans, Agreements, Arrangements or Commitments
Exhibit 4.20(e) Vine Street, Inc. Other Material Documents or Instruments
Exhibit 4.21(f) Vine Street, Inc. Defaults or Breaches of Existing
Contracts, Agreements, Leases, Licenses, Plans,
Arrangements and Commitments
Exhibit 4.22 Vine Street, Inc. Insurance Coverage
Exhibit 4.23 Vine Street, Inc. Environmental Concerns: Hazardous Waste
Production, Storage, etc.
Exhibit 6.2 Optimax Industries, Inc. Subsidiaries
Exhibit 6.4 Optimax Industries, Inc. Corporate Authority
Exhibit 6.5 Optimax Industries, Inc. Financial Statements
Exhibit 6.7 Optimax Industries, Inc. Exceptions to Timely Filing of
Taxes; Tax Related Disputes
Exhibit 6.8 Optimax Industries, Inc. Actions, Proceedings, Orders,
Writs, Injunctions, Decrees, Liability for Damages
Exhibit 6.18 Optimax Industries, Inc. Benefit Plans, Arrangements or
Understandings
Exhibit 6.19 Optimax Industries, Inc. Pending or Threatened Legal,
Administrative, or Other Proceedings or Governmental
Investigation, Exceptions to Compliance with Laws,
Ordinances, Requirements, Regulations, or Orders
Exhibit 6.23 Optimax Industries, Inc. Environmental Concerns: Hazardous
Waste Production, Storage, etc.
</TABLE>
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT ("Agreement") is made and entered into effective this 14th
day of February 1996, by and between OPTIMAX INDUSTRIES, INC., a Colorado
corporation having its principal place of business at 4465 Northpark Drive,
Suite 400, Colorado Springs, Colorado ("Optimax"), and VINE STREET STORES,
INC., a Massachusetts corporation having its principal place of business at 132
Lincoln Street, Boston, Massachusetts 02111 ("Vine Street") (hereafter Optimax
and Vine Street may collectively be referred to as the "Companies").
WITNESSETH
WHEREAS, Optimax desires to acquire all but in no event less than 80% of
the issued and outstanding shares of common stock of Vine Street owned by its
current shareholders ("Shareholders"), subject to the terms and conditions set
forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and other good and
valuable consideration, the receipt and adequacy whereof is hereby
acknowledged, the parties agree as follows:
SECTION 1: GENERAL DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 Best Knowledge.
---------------
"Best Knowledge" shall mean both what a Person knew as well as what
the Person should have known had the Person exercised reasonable diligence.
When used with respect to a Person other than a natural person, the term "Best
Knowledge" shall include matters that are known or should have been known as a
result of the exercise of reasonable diligence to the current directors and
executive officers of the Person.
1.2 Business Day.
------------
"Business Day" means any day which is not a Saturday, Sunday or a
permitted or required bank holiday in New York, New York.
1.3 Code.
----
"Code" means the Internal Revenue Code of 1986, as amended.
1.4 ERISA.
-----
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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1.5 Exchange Act.
------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.6 Fiscal Year.
-----------
"Fiscal Year" shall mean a twelve-month period beginning January 1.
1.7 Governmental Authority.
----------------------
"Governmental Authority" shall mean any and all foreign, federal,
state or local governments, governmental institutions, public authorities and
governmental entities of any nature whatsoever, and any subdivisions or
instrumentalities thereof, including, but not limited to, departments, boards,
bureaus, commissions, agencies, courts, administrations and panels, and any
division or instrumentalities thereof, whether permanent or ad hoc and whether
now or hereafter constituted or existing.
1.8 Governmental Requirement.
------------------------
"Governmental Requirement" shall mean any and all laws (including,
but not limited to, applicable common law principles), statutes, ordinances,
codes, rules regulations, interpretations, guidelines, directions, orders,
judgments, writs, injunctions, decrees, decisions or similar items or
pronouncements, promulgated, issued, passed or set forth by any Governmental
Authority.
1.9 IRS.
---
"IRS" means the Internal Revenue Service.
1.10 Legal Requirements.
------------------
"Legal Requirements" means applicable common law and any statute,
ordinance, code or other laws, rule, regulation, order, technical or other
standard, requirement, judgment, or procedure enacted, adopted, promulgated,
applied or followed by any governmental authority, including, without
limitation, any order, decree, award, verdict, findings of fact, conclusions of
law, decision or judgment, whether or not final or appealable, of any court,
arbitrator, arbitration board or administrative agency.
1.11 Ownership Interest.
------------------
"Ownership Interest" shall mean any form of direct or indirect
interest in the ownership, equity or profits of Vine Street or Optimax, whether
certificated or non-certificated, issued or unissued, contingent or otherwise,
including, without limitation, the following: shares, or the right thereto,
executory rights to receive shares, options, warrants, instruments or
obligations convertible into shares or profit interests.
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1.12 Person.
------
"Person" shall mean any natural person, any Governmental Authority
and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit or otherwise.
1.13 Section.
-------
Unless otherwise stated herein, the term "Section" when used in this
Agreement shall refer to the Sections of this Agreement.
1.14 Securities Act.
--------------
"Securities Act" shall mean the Securities Act of 1933, as amended.
1.15 Taxes.
-----
"Tax" and "Taxes" shall mean any and all income, excise, franchise or
other taxes and all other charges or fees imposed or collected by any
Governmental Authority or pursuant to any Governmental Requirement, and shall
also include any and all penalties, interest, deficiencies, assessments and
other charges with respect thereto.
SECTION 2: EXCHANGE OF SECURITIES
2.1 Exchange of Common Stock.
------------------------
Subject to the terms and conditions hereinafter set forth, on the
Closing Date, each holder set forth on Exhibit 2.1 hereof ("Vine Street Common
Shareholders" or "Shareholders") shall deliver to Optimax, and Optimax shall
accept from each such holder, an aggregate of up to 1,500,000 shares of Common
Stock, no par value, of Vine Street plus the aggregate number of shares of Vine
Street common stock sold in the Private Offering (as defined in Section 2.6
herein) (collectively, the "Vine Street Common Sstock") in exchange for (the
"Exchange") a like amount of shares of Optimax Common Stock, $.02 par value
(the "Exchange Shares").
2.2 Exchange of Certificates.
------------------------
(a) Exchange Agent.
--------------
On or prior to the Closing Date, Optimax shall deposit with RAS
Securities Corp. or such other depository as may be designated by Vine Street
(the "Exchange Agent"), for the benefit of the holders of shares of Vine Street
Common Stock for exchange in accordance with this Section 2, through the
Exchange Agent, certificates representing the shares of Optimax Common Stock
issuable pursuant to Section 2.1.
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(b) Exchange Procedures.
-------------------
As soon as reasonably practicable after the date hereof, Optimax
shall cause the Exchange Agent to mail to each Vine Street Common Shareholder
whose shares of Vine Street Common Stock (the "Certificates") are exchangeable
for shares of Optimax Common Stock pursuant to Section 2.1, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and the delivery by Vine Street or its
counsel of written notice to the Exchange Agent of the consummation of the
Closing pursuant to Section 3) which letter of transmittal shall be in such
form and have such other provisions as Optimax and Vine Street may reasonably
agree upon and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Optimax Common
Stock. Subject to the terms and conditions of this Agreement and the Exchange,
upon surrender of a Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor a
Certificate representing that number of whole shares of Optimax Common Stock
which such holder has the right to receive pursuant to the provisions of this
Section 2, and cash in lieu of any fractional shares of Optimax Common Stock as
contemplated by this Section 2. No interest will be paid or will accrue on any
cash payable in lieu of any fractional shares of Optimax Common Stock.
2.3 Adjustment of Issuable Optimax Shares and Rights.
------------------------------------------------
Notwithstanding the provisions of Section 2.1 to the contrary, the
number of Exchange Shares issuable to the Shareholders on the Closing Date
pursuant to Section 2.1 (the "Exchange") shall be subject to adjustment such
that if 100% of the issued and outstanding shares of Vine Street Common Stock
are tendered for exchange for Exchange Shares, the aggregate number of shares
of Optimax Common Stock issuable in the Exchange to the Shareholders shall
represent, in the aggregate, 30.6% of the sum of (i) the total issued and
outstanding shares of Optimax Common Stock on a fully-diluted basis immediately
following consummation of the Exchange, plus (ii) the number of shares of Vine
Street issued and sold in Private Offering described in Section 2.6 below.
2.4 Income Tax Considerations.
-------------------------
It is the intention of the parties hereto that the exchange of stock
contemplated by this Agreement will qualify for treatment as a tax-free
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended, and the parties hereby agree to undertake all reasonable actions
necessary both before and after the consummation of the Exchange to effect such
treatment.
2.5 Compliance with Securities Laws.
-------------------------------
The Exchange provided for in Section 2.1 above shall be undertaken in
reliance upon an exemption from the registration requirements contained in
Section 5 of the Securities Act contained in Sections 4(2) and 3(b) thereof and
<PAGE>
<PAGE>
Regulation D, Rule 506 thereunder. Optimax shall take such actions as may be
necessary or advisable in order consummate the Exchange in conformity with
applicable laws including, without limitation, federal and state securities
laws; and Vine Street, together with its directors and officers, agrees to take
such actions as may be necessary or advisable upon the reasonable request of
Optimax to consummate the Exchange in conformity with such Legal Requirements.
2.6 Private Financing.
-----------------
As soon as practicable following the execution of this Agreement,
Vine Street agrees to undertake a private offering of shares of its securities
exclusively to persons who qualify as "accredited investors" within the meaning
of Rule 501(a) of Regulation D of the Securities Act (the "Private Offering").
The Private Offering will be undertaken on a best efforts, all-or-none minimum-
maximum basis with the minimum and maximum number of shares and Private
Offering price per share to be agreed upon by Optimax and Vine Street;
provided, however, that the minimum aggregate subscriptions paid and collected
in the Private Offering shall be sufficient to ensure that Optimax shall have
the necessary total assets and capital surplus to qualify its shares of Common
Stock for continued listing on the NASDAQ SmallCap Market ("NASDAQ") upon
closing of the Exchange. It shall be a condition to the first closing of the
Private Offering that the net proceeds realized by Optimax from the Minimum
Offering be in an amount sufficient to ensure such continued NASDAQ listing and
approval. The Private Offering shall be undertaken without registration under
the Securities Act in reliance upon an exemption from such registration
requirements contained in Rule 506, Regulation D thereunder. Vine Street
agrees to undertake the Private Offering in conformity with all applicable
Legal Requirements including, without limitation, applicable federal and state
securities laws. All shares of Vine Street Common Stock sold in the Private
Offering shall be included in the shares of Vine Street Common Stock deemed to
be outstanding for purposes of participating in the Exchange and for purposes
of Section 2.3 hereof.
2.7 Real Estate Purchase.
--------------------
Simultaneously with the closing of the Private Offering and the
consummation of the Exchange, Optimax shall close upon the Vine Street contract
to purcahse from T.F. Development (Conn.) Corp. certain real estate parcels in
Colchester, Connecticut for $400,000 in cash and the issuance of 1,280,000
Shares of Series A Convertible Preferred Stock of Optimax (the "Real Estate
Purchase").
SECTION 3: CLOSING
3.1 General Procedure.
-----------------
Subject to the terms and conditions hereinafter set forth, at the
Closing each party shall deliver such documents, instruments and materials as
may be reasonably required in order to effectuate the intent and provisions of
this Agreement, and all such documents, instruments and materials shall be
satisfactory in form and substance to counsel for each party. <PAGE>
<PAGE>
3.2 Time and Place.
--------------
Upon the terms and subject to the conditions set forth in this
Agreement, the Exchange transactions contemplated by Section 2.1 shall be
consummated and closed (the "Closing") at 10:00 a.m. at the offices of Optimax,
4465 Northpark Drive, Suite 400, Colorado Springs, Colorado 80907, on the later
of (i) ninety (90) days following the date of this Agreement, or (ii) five
Business Days after the date on which the conditions set forth in Sections 3.5
and 3.6 shall have been satisfied or waived or such other time, date and place
as the parties shall agree upon (the date of the Closing being herein referred
to as the "Closing Date").
3.3 Condition to Closing - Minimum Exchange Tender.
----------------------------------------------
In addition to the conditions precedent to Closing set forth in
Sections 3.5 and 3.6 below, it shall be a condition precedent to the obligation
of both Optimax and Vine Street to close and consummate the Exchange that
Optimax or the Exchange Agent shall have received from the Shareholders tenders
to exchange shares of Vine Street Common Stock representing, in the aggregate,
at least 80% of the total voting power of the issued and outstanding shares of
Vine Street Voting Stock on a combined basis.
3.4 Covenants Regarding Closing.
---------------------------
Vine Street and Optimax each hereby covenant and agree that they
shall (i) use reasonable efforts to cause each of their respective Exhibits to
be prepared and exchanged with the other party, and its legal counsel, within
ten (10) business days following the execution of this Agreement, except to the
extent the express terms of this Agreement provide for a different time period
for such delivery to be accomplished, (ii) cause all of their respective
representations and warranties set forth in this Agreement, and Exhibits
hereto, to be true on and as of the Closing Date, (iii) cause all of their
respective obligations that are to be fulfilled on or prior to the Closing Date
to be so fulfilled, (iv) cause all conditions to the Closing set forth in this
Agreement to be satisfied on or prior to the Closing Date, and (v) deliver to
each other at the Closing the certificates, updated lists, notices, consents,
authorizations, approvals, agreements, transfer documents, receipts and
amendments required hereby (with such additions or exceptions to such items as
are necessary to make the statements set forth in such items true and correct,
provided that if any such additions or exceptions cause any of the conditions
to its respective obligations hereunder as set forth hereinbelow not to be
performed, satisfied or fulfilled, such additions and exceptions shall in no
way limit the rights of the parties hereto to terminate this Agreement or
refuse to consummate the transactions contemplated hereby).
3.5 Conditions to Obligation of Optimax.
-----------------------------------
The obligation of Optimax to complete the Exchange on the Closing
Date on the terms set forth in this Agreement is, at the option of Optimax,
subject to the satisfaction or written waiver by Optimax of each of the
following conditions:<PAGE>
<PAGE>
(a) Accuracy of Representations and Warranties.
The representations and warranties made by Vine Street in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on the Closing Date, except to the extent that such
representations and warranties expressly relate to an earlier date in which
case they shall have been true and correct as of such earlier date.
(b) Compliance with Covenants.
All covenants which Vine Street is required to perform, satisfy or
comply with on or before the Closing Date shall have been fully complied with
or performed in all material respects.
DOC Corporate Approvals.
Any action required to be taken by the Board of Directors of Vine
Street or its Shareholders to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
shall have been duly and validly taken.
(d) Consents and Approvals.
To the extent that any material lease, mortgage, deed of trust,
contract or agreement to which Vine Street is a party shall require the consent
of any person to the Exchange or any other transaction provided for herein,
such consent shall have been obtained and Optimax shall have received
reasonably satisfactory evidence thereof; provided, however, that Vine Street
shall not make, as a condition for the obtaining of any such consent, any
agreements or undertakings not approved in writing by Optimax to the extent
that such condition otherwise has an effect on Optimax. Optimax shall have
been furnished with evidence satisfactory to it of the timely consent or
approval of, filing with or notice to, each Governmental Authority or Person
which in the good faith judgment of Optimax is necessary or required with
respect to the execution and delivery by Vine Street and the consummation by
Vine Street of the transactions contemplated hereby.
(e) Review and Due Diligence.
Optimax, its investment bankers, legal counsel and/or auditors shall
have had the opportunity to complete, and shall have completed, a satisfactory
due diligence investigation of Vine Street, together with a satisfactory review
of Vine Street's corporate status and Vine Street's property, all of which
shall be satisfactory in form and substance to Optimax in its sole discretion.
(f) No Litigation, Etc.
No action, investigation, litigation or arbitration or proceeding by
or before any Governmental Authority, or before any arbitral, mediation panel
or tribunal of any kind shall have been instituted or threatened (i) to<PAGE>
<PAGE>
restrain or prohibit the transactions contemplated by this Agreement, or (ii)
to claim that the consummation of any such transaction is illegal or (iii)
which, if determined adversely, would effect adversely Optimax or Vine Street
following consummation of the transactions contemplated hereby and Vine Street
shall have delivered to Optimax a certificate dated as of the Closing Date and
executed by Vine Street, stating that to its Best Knowledge, no such items
exist. No governmental authority or arbitral, mediation panel or tribunal of
any kind shall have taken any other action as a result of which the management
of Optimax, in its sole discretion, reasonably deems it inadvisable to proceed
with the transactions contemplated by this Agreement.
(g) No Material Adverse Change.
No material adverse change in the business, property or assets of
Vine Street shall have occurred, and no loss or damage to any of the assets,
whether or not covered by insurance, with respect to Vine Street hereto has
occurred, and Vine Street shall have delivered to Optimax a certificate dated
as of the Closing Date to such effect.
(h) Update of Contracts.
Vine Street shall have delivered to Optimax an accurate list, as of
the Closing Date, showing (i) all agreements, contracts and commitments of the
type listed on Exhibit 4.20 entered into since the date of this Agreement; and
(ii) all other agreements, contracts and commitments related to the businesses
or the assets of Vine Street entered into since the date of this Agreement,
together with true, complete and accurate copies of all such documents (the
"Vine Street New Contracts"). Optimax shall have had the opportunity to review
and approve the Vine Street New Contracts of the other, and any of the
Companies shall have the right to delay the Closing for up to ten (10) days if
it in its sole discretion deems such delay necessary to enable it to adequately
review the Vine Street New Contracts.
(i) No Adverse Information.
The investigations with respect to Vine Street, the assets and the
respective businesses performed by Optimax's respective professional advisors
and other representatives shall not have revealed any information concerning
Vine Street, its assets, liabilities or its business that has not been made
known to Optimax, in writing prior to the date of this Agreement and that, in
the reasonable opinion of such party and its advisors, materially or adversely
affects the business or assets of the other party or the viability of the
transaction contemplated by this Agreement.
(j) Ordinary Course of Business.
During the period from the date of this Agreement until the Closing
Date, Vine Street shall have carried on its business in the ordinary and usual
course, and shall have delivered to Optimax a certificate to that effect.<PAGE>
<PAGE>
(k) Liens.
Vine Street shall have delivered to Optimax a reasonably current lien
and judgment search (both state and county levels in each jurisdiction where
the party is qualified to or is doing business or owns material assets)
confirming the absence of any judicial liens, security interests, tax liens and
similar such liens affecting any of its business or assets.
(l) Approval of Counsel.
All actions, proceedings, instruments and documents required or
incidental to carry out this Agreement, including all schedules and exhibits
thereto, and all other related legal matters shall have been approved by Neuman
& Cobb, counsel to Optimax.
(m) Other Documents.
Vine Street shall have delivered or caused to be delivered all other
documents, agreements, resolutions, certificates or declarations as Optimax or
its attorneys may have reasonably requested.
(n) NASDAQ Approval.
The NASDAQ SmallCap Market ("NASDAQ") shall have reviewed and
approved in writing the Exchange, the other transactions provided for in this
Agreement, and shall have approved Optimax Common Stock and Optimax Class BB
Warrants for continued listing on NASDAQ following the Closing Date.
(o) Shareholder Assignments.
At Closing, not less than eighty percent (80%) of the combined voting
power of the issued and outstanding shares of Vine Street Common Stock shall
have been delivered for exchange pursuant to Section 2 of this Agreement.
Surrendering Vine Street Shareholders shall have executed and delivered to
Optimax Assignments substantially in the form of Exhibit 3.5(o) hereto
assigning to Optimax their Vine Street Common Stock.
(p) Appraisal Rights and/or Dissenters' Rights.
At or prior to Closing, no beneficial or record owner of any
outstanding shares of Vine Street Common Stock shall have exercised or shall
have given notice to Optimax or Vine Street of their intent to exercise any
rights under applicable state law, if any, to dissent from the Exchange or
obtain the payment of the fair market value of such shares of Vine Street
Common Stock in lieu of participating in the Exchange in accordance with the
terms and subject to the conditions set forth herein.
(q) Non-Disclosure.
On or prior to Closing, all current directors, officers and other
personnel of Optimax and all agents, advisors and consultants to Optimax with
<PAGE>
<PAGE>
access to the Optimax Registered Rights and the Optimax Proprietary Information
and/or the Vine Street Registered Rights and the Vine Street Proprietary
Information, shall have executed and delivered to Optimax a confidential
information agreement restricting such person's right to disclose any
confidential or proprietary information of Optimax or of Vine Street.
(r) Private Offering.
Vine Street shall have successfully completed and closed upon the
Minimum Offering in the Private Offering and shall have realized net proceeds
therefrom sufficient to ensure that immediately following the Closing of the
transactions provided for herein, Optimax shall have on a consolidated pro
forma basis sufficient assets and capital surplus to qualify its securities for
continued NASDAQ listing.
(s) Financial Advisory Fees.
At or prior to Closing, all obligations or commitments of Optimax and
Vine Street to their respective financial advisors and investment bankers shall
have been paid or otherwise satisfied, and Optimax and Vine Street shall each
have been delivered and received such written consents, approvals, estoppel
certificates or other instruments or undertakings from its advisors or other
third parties as each may deem reasonable, necessary or advisable.
3.6 Conditions to Obligation of Vine Street.
---------------------------------------
The obligations of Vine Street on the Closing Date under the terms
set forth in this Agreement are, at the option of Vine Street, subject to the
satisfaction or written waiver by Vine Street of each of the following
conditions:
(a) Accuracy of Representations and Warranties.
The representations and warranties made by Optimax in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on the Closing Date, except to the extent that such
representations and warranties expressly relate to an earlier date in which
case they shall have been true and correct as of such earlier date.
(b) Compliance with Covenants.
All covenants which Optimax and its subsidiaries Plants For Tomorrow,
Inc. ("Plants"), Taylor-Built Industries, Inc. ("TBI") and Switchgear Systems
International, Inc. ("SSII") (hereafter Plants, TBI and SSII shall collectively
be referred to as the "Subsidiaries") are required to perform, satisfy or
comply with on or before the Closing Date shall have been fully complied with
or performed in all material respects.<PAGE>
<PAGE>
(c) Corporate Approvals.
Any action required to be taken by the Board of Directors of Optimax,
its Subsidiaries and shareholders to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken.
(d) Consents and Approvals.
To the extent that any material lease, mortgage, deed of trust,
contract or agreement to which Optimax or any Subsidiary is a party shall
require the consent of any person to the exchange of Optimax's shares of Common
Stock or any other transaction provided for herein, such consent shall have
been obtained and Vine Street shall have received reasonably satisfactory
evidence thereof; provided, however, that Optimax and its Subsidiaries shall
not make, as a condition for the obtaining of any such consent, any agreements
or undertakings not approved in writing by Vine Street to the extent that such
condition otherwise has an effect on Vine Street or Optimax. Vine Street shall
have been furnished with evidence satisfactory to it of the timely consent or
approval of, filing with or notice to, each Governmental Authority or Person
which in the good faith judgment of Vine Street is necessary or required with
respect to the execution and delivery by Optimax and the consummation by
Optimax of the transactions contemplated hereby.
(e) Review and Due Diligence.
Vine Street, its investment bankers, legal counsel and/or auditors
shall have had the opportunity to complete, and shall have completed, a
satisfactory due diligence investigation of Optimax, its assets and
liabilities, together with a satisfactory review of Optimax's (and its
Subsidiaries') corporate status and the marketability of title to Optimax's
property, all of which shall be satisfactory in form and substance to Vine
Street in its sole discretion.
(f) No Litigation, Etc.
No action, investigation, litigation or arbitration or proceeding by
or before any Governmental Authority, or before any arbitral, mediation panel
or tribunal of any kind shall have been instituted or threatened (i) to
restrain or prohibit the transactions contemplated by this Agreement or (ii) to
claim that the consummation of any such transaction is illegal or (iii) which,
if determined adversely, would effect adversely Optimax, any subsidiary or Vine
Street following consummation of the transactions contemplated hereby and the
Companies shall have delivered to each other certificates dated as of the
Closing Date and executed by such parties, stating that to their Best
Knowledge, no such items exist. No Governmental Authority or arbitral or
mediation panel or tribunal of any kind shall have taken any other action as a
result of which the management of Vine Street, in its sole discretion,
reasonably deems it inadvisable to proceed with the transactions contemplated
by this Agreement.<PAGE>
<PAGE>
(g) No Material Adverse Change.
No material adverse change in the business, property, assets or
liabilities of any Company shall have occurred, and no loss or damage to any of
the assets, whether or not covered by insurance, with respect to Optimax or any
Subsidiary hereto has occurred, and Optimax shall have delivered to Vine Street
a certificate dated as of the Closing Date to such effect.
(h) Update of Contracts.
Optimax shall have delivered to Vine Street an accurate list, as of
the Closing Date, showing (i) all agreements, contracts and commitments of the
type listed on Exhibit 6.20 entered into since the date of this Agreement; and
(ii) all other agreements, contracts and commitments related to the businesses
or the assets of Optimax entered into since the date of this Agreement,
together with true, complete and accurate copies of all such documents (the
"Optimax New Contracts"). Vine Street shall have had the opportunity to review
and approve the Optimax New Contracts, and Vine Street shall have the right to
delay the Closing for up to ten (10) days if it in its sole discretion deems
such delay necessary to enable it to adequately review the Optimax New
Contracts.
(i) No Adverse Information.
The investigations with respect to Optimax, the assets, liabilities
and their respective businesses performed by Vine Street's respective
professional advisors and other representatives shall not have revealed any
information concerning Optimax and its Subsidiaries, their assets, liabilities
or business that has not been made known to Vine Street, in writing prior to
the date of this Agreement and that, in the reasonable opinion of Vine Street
and its advisors, materially or adversely affects the business, liabilities or
assets of Optimax or its Subsidiaries or its financial condition or the
viability of the transactions contemplated by this Agreement.
(j) Ordinary Course of Business.
During the period from the date of this Agreement until the Closing
Date, Optimax and its Subsidiaries shall have carried on their respective
businesses in the ordinary and usual course, and shall have delivered to Vine
Street a certificate to that effect.
(k) Liens.
Optimax shall have delivered to Vine Street a reasonably current lien
and judgment search (both state and county levels in each jurisdiction where
the party is qualified to or is doing business or owns material assets)
confirming the absence of any judicial liens, security interests, tax liens and
similar such liens affecting the business or assets of Optimax or any
subsidiary, except for Permitted Liens identified in Section 6.17. <PAGE>
<PAGE>
(l) Approval of Counsel.
All actions, proceedings, instruments and documents required or
incidental to carry out this Agreement, including all schedules and exhibits
thereto, and all other related legal matters shall have been approved as to
substance and form by Greenberg Traurig, counsel to Vine Street.
(mD Other Documents.
Optimax shall have delivered or caused to be delivered all other
documents, agreements, resolutions, certificates or declarations as Vine Street
or its attorneys may have reasonably requested.
(n) NASDAQ Approval.
NASDAQ shall have reviewed and approved in writing the Exchange, the
other transactions provided for in this Agreement, and shall have approved
Optimax Common Stock and Optimax Class BB Warrants for continued listing on
NASDAQ following the Closing Date.
(o) Appraisal Rights and/or Dissenters' Rights.
At or prior to Closing, no beneficial or record owner of any
outstanding shares of Vine Street Common Stock shall have exercised or shall
have given notice to Optimax or Vine Street of their intent to exercise any
rights under applicable state law, if any, to dissent from the Exchange or
obtain the payment of the fair market value of such shares of Vine Street
Common Stock in lieu of participating in the Exchange in accordance with the
terms and subject to the conditions set forth herein.
(p) No Injunctions or Restraints.
No temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Exchange shall be
in effect.
(q) Non-Disclosure.
On or prior to Closing, all current directors, officers and other
personnel of Vine Street and all agents, advisors and consultants to Vine
Street with access to the Vine Street Registered Rights and the Vine Street
Proprietary Information and/or the Optimax Registered Rights and the Optimax
Registered Rights, shall have executed and delivered to Vine Street a
confidential information agreement restricting such person's right to disclose
any confidential or proprietary information of Optimax or of Vine Street.
<PAGE>
<PAGE>
(r) Private Offering.
Vine Street shall have successfully completed and closed upon the
Minimum Offering in the Private Offering and shall have realized net proceeds
therefrom sufficient to ensure that immediately following the closing of the
transactions provided for herein, Optimax shall have on a consolidated pro
forma basis sufficient assets and capital surplus to qualify its securities for
continued NASDAQ listing.
(s) Financial Advisory Fees.
At or prior to Closing, all obligations or commitments of Optimax and
Vine Street to their respective financial advisors and investment bankers shall
have been paid or otherwise satisfied, and Optimax and Vine Street shall each
have been delivered and received such written consents, approvals, estoppel
certificates or other instruments or undertakings from its advisors or other
third parties as each may deem reasonable, necessary or advisable.
3.7 Specific Items to be Delivered at the Closing.
---------------------------------------------
The parties shall deliver the following items to the appropriate
party at the Closing of the transactions contemplated by this Agreement.
(a) To be delivered by Vine Street:
(i) A certificate dated the Closing Date of Vine Street, signed
by the President of Vine Street stating that the
representations and warranties of Vine Street set forth in
this Agreement are true and correct in all material
respects. Said certificate shall further verify and affirm
that all consents or waivers, if any, which may be
necessary to execute and deliver this Agreement have been
obtained and are in full force and effect.
(ii) A certificate dated the Closing Date of Vine Street, signed
by the President and the Chief Financial Officer of Vine
Street, in form and substance satisfactory to Optimax and
its legal counsel, certifying that all conditions precedent
set forth in this Agreement to the obligations of Vine
Street to close, have been fulfilled or waived in writing,
and that no event of default hereunder and no event which,
with the giving of notice or passage of time, or both,
would be an event of default, has occurred as of such date.
(iii) Certificates dated the Closing Date of Vine Street, signed
by the Secretary of Vine Street, (i) certifying attached
copies of resolutions duly adopted by the Board of
Directors of Vine Street, authorizing the execution of this
Agreement and the other transactions to be consummated
pursuant thereto; (ii) certifying the names and incumbency
of the officers of Vine Street who executed the Agreement
<PAGE>
<PAGE>
and any certificates delivered pursuant to this Section
3.7(a) for and on behalf of Vine Street; (iii) certifying
the authenticity of copies of the Articles of Incorporation
and Bylaws of Vine Street; and (iv) certifying the
authenticity of a reasonably current Certificate of Good
Standing, from all jurisdictions in which the company is
qualified to conduct business.
(iv) Opinion of Greenberg Traurig, counsel to Vine Street,
substantially in the form of Exhibit 3.7(a)(iv).
(b) To be delivered by Optimax:
(i) Certificate or certificates representing the number of
shares of Optimax Common Stock determined in accordance
with Sections 2.1 and 2.3 to be deposited with the Exchange
Agent for the benefit of the holders of shares of Vine
Street Common Stock for exchange in accordance with the
provisions of Section 2 of this Agreement; and
(ii) A certificate dated the Closing Date of Optimax, signed by
the President of Optimax stating that the representations
and warranties of Optimax set forth in this Agreement are
true and correct in all material respects. Said
certificate shall further verify and affirm that all
consents or waivers, if any, which may be necessary to
execute and deliver this Agreement have been obtained and
are in full force and effect.
(iii) A certificate dated the Closing Date of Optimax, signed by
the Chief Executive Officer and the Chief Financial Officer
of Optimax, in form and substance satisfactory to Vine
Street and its legal counsel, certifying that all
conditions precedent set forth in this Agreement to the
obligations of Optimax to close, have been fulfilled or
waived in writing, and that no event of default hereunder
and no event which, with the giving of notice or passage of
time, or both, would be an event of default, has occurred
as of such date.
(iv) Certificates dated the Closing Date of Optimax, signed by
the Secretary of Optimax, (i) certifying attached copies of
resolutions duly adopted by the Board of Directors of
Optimax, authorizing the execution of this Agreement and
the other transactions to be consummated pursuant thereto;
(ii) certifying the names and incumbency of the officers of
Optimax who executed the Agreement and any certificates
delivered pursuant to this Section 3.7(b) for and on behalf
of Optimax; (iii) certifying the authenticity of copies of
the Articles of Incorporation and Bylaws of Optimax and its
Subsidiaries; and (iv) certifying the authenticity of a
<PAGE>
<PAGE>
reasonably current Certificate of Good Standing, from all
jurisdictions in which Optimax and its Subsidiaries are
qualified to conduct business.
(v) Opinion of Neuman & Cobb, counsel to Optimax, substantially
in the form of Exhibit 3.7(b)(v).
(vi) A certificate dated the Closing Date of Optimax, signed by
the President of Optimax, stating that to his Best
Knowledge, the only pending investigation by the Securities
and Exchange Commission in which Optimax has been requested
to produce certain documents or otherwise provide
information is the investigation identified and disclosed
in writing in materials delivered to Vine Street and its
representatives in the course of due diligence
disclosures.
3.8 Election of Directors and Executive Officers of Optimax.
-------------------------------------------------------
(a) At Closing, David Dube shall be elected to serve as a member of
the Optimax Board of Directors until the next regular annual meeting of the
Optimax shareholders or until his successor has been duly elected and
qualified.
(b) At Closing, Paul Stevens shall resign as President and CEO of
Optimax and David Dube shall be elected to serve as President and CEO of
Optimax until the next regular annual meeting of the Company's Board of
Directors or until his successor has been duly elected and qualified.
SECTION 4: REPRESENTATIONS AND WARRANTIES BY VINE STREET
As a material inducement to Optimax to enter into this Agreement and with
the understanding and expectations that Optimax will be relying thereon in
consummating the Exchange contemplated hereunder, Vine Street (hereinafter
referred to as the "Corporation" or "Vine Street " for the purposes of this
Section 4 only) represents and warrants as follows:
4.1 Organization and Standing.
-------------------------
Vine Street is a corporation duly organized, validly existing and in
good standing under the laws of the State of Massachusetts and has all
requisite corporate power and authority to own its assets and properties and to
carry on its business as it is now being conducted.
4.2 Subsidiaries, etc.
-----------------
Except as set forth on Exhibit 4.2, the Corporation does not have any
direct or indirect Ownership Interest in any corporation, partnership, joint
venture, association or other business enterprise.<PAGE>
<PAGE>
4.3 Qualification.
-------------
Except as set forth on Exhibit 4.3 and for any jurisdiction where the
failure to be qualified to engage in business as a foreign corporation would
not have a material adverse affect on the Corporation, the Corporation is not
qualified to engage in business as a foreign corporation in any state other
than Massachusetts and there is no other jurisdiction wherein the character of
the properties presently owned by the Corporation or the nature of the
activities presently conducted by the Corporation makes necessary the
qualification, licensing or domestication of the Corporation as a foreign
corporation.
4.4 Corporate Authority.
-------------------
Except as set forth on Exhibit 4.4 hereto, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby nor compliance by the Corporation with any on the
provisions hereof will
(a) conflict with or result in a breach of any provision of its
Articles of Incorporation or By-Laws;
(b) result in a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, agreement or other instrument
or obligation to which the Corporation is a party, or by which any of its
properties or assets may be bound except for such default (or right of
termination, cancellation, or acceleration) as to which requisite waivers or
consents shall either have been obtained by the Corporation prior to the
Closing Date or the obtaining of which shall have been waived by Optimax; or
any default which would not have a material adverse effect on Vine Street, its
business, assets and financial condition.
(c) violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to the
Corporation or any of its properties or assets, which violation would not have
a material adverse effect on Vine Street, its business, assets and financial
condition. No consent or approval by any Governmental Authority is required in
connection with the execution and delivery by the Corporation of this Agreement
or the consummation by the Corporation of the transactions contemplated hereby.
4.5 Financial Statements.
--------------------
The following statements are attached to this Agreement as
Exhibit 4.5:
(a) Audited financial statements of the Corporation accompanied by a
report of its independent certified public accountants containing audited
balance sheets for the period beginning at inception and ending December 31,
1995, together with statements of operations from inception to and including
December 31, 1995; <PAGE>
<PAGE>
To the Best Knowledge of Vine Street, such financial statements,
together with and subject to the disclosures and notes thereto, if any, (i) are
in accordance with the books and records of the Corporation; (ii) present
fairly the financial condition of the Corporation as of December 31, 1995;
(iii) present fairly the results of operations for the periods covered by such
statements; (iv) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis; and (v) include all
adjustments (consisting of only normal recurring accruals) which are necessary
for a fair presentation of the financial condition of the Corporation, and of
the results of operations of the Corporation for the periods covered by such
statements.
As of Closing, except as disclosed on Exhibit 4.5(a), the Corporation
does not have any liabilities or payables (absolute or contingent, known or
unknown) except for liabilities or payables set forth on the foregoing
financial statements or which have not otherwise been disclosed in writing to
Optimax on or prior to the Closing Date.
4.6 Capitalization of the Corporation.
---------------------------------
The authorized capital stock of Vine Street consists of:
(i) 5,000,000 shares of Preferred Stock, $.001 par value, and (ii) 10,000,000
shares of Common Stock, no par value, of which 1,500,000 shares are issued and
outstanding. The names of the record owners of the issued and outstanding
Common Stock are set forth on Exhibit 2.1 hereto. All issued and outstanding
shares of Vine Street Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable. There are no outstanding rights,
options, warrants, subscriptions, calls, convertible securities or agreement of
any character or nature under which the Company is or may become obligated to
issue any shares of its capital stock of any kind, other than those shares
indicated in this Section as presently outstanding and shares issuable in
accordance with the terms of this Agreement.
4.7 Taxes.
------
Except as set forth in Exhibit 4.7, the Corporation has filed (or has
obtained extensions for filing) all income, excise, sales, corporate franchise,
property, payroll and other tax returns or reports required to be filed by it,
as of the date hereof by the United States of America, any state or other
political subdivision thereof or any foreign country and has paid all Taxes or
assessments shown to be due on such returns or reports. To the Best Knowledge
of the Corporation, except as set forth in Exhibit 4.7, the amounts set up as
provisions for Taxes in the Latest Financial Statements are sufficient for the
payment of all unpaid federal, foreign, state or local Taxes of the Corporation
accrued for or applicable to all periods ended on or prior to the date of this
Agreement, or which may subsequently be determined to be owing by the
Corporation with respect to all periods ending on or prior to the Closing Date,
subject to normal year-end adjustments, which will not be material. There are
no present disputes as to Taxes of any nature payable by the Corporation.<PAGE>
<PAGE>
4.8 No Actions, Proceedings, etc.
-----------------------------
Except as listed on the attached Exhibit 4.8, there is no action or
proceeding (whether or not purportedly on behalf of the Corporation) pending or
to its knowledge threatened by or against the Corporation which might result in
any material adverse change in the condition, financial or otherwise, of the
Corporation's business or assets. No order, writ or injunction or decree has
been issued by, or requested of any court or Governmental Agency which does nor
may result in any material adverse change in the Corporation's assets or
properties or in the financial condition or the business of the Corporation.
Except for liabilities referred to in attached Exhibit 4.8, the Corporation is
not liable for damages to any employee or former employee as a result of any
violation of any state, federal or foreign laws directly or indirectly relating
to such employee or former employee.
4.9 Post Balance Sheet Changes.
--------------------------
Except as set forth on the attached Exhibit 4.9 and as contemplated
by this Agreement, since December 31, 1995, the Corporation has not (a) issued,
bought, redeemed or entered into any agreements, commitments or obligations to
sell, buy or redeem any shares of its capital stock; (b) incurred any
obligation or liability (absolute or contingent), other than current
liabilities incurred, and obligations under contracts entered into, in the
ordinary course of business; (c) discharged or satisfied any lien or
encumbrance or paid any obligation or liability (absolute or contingent), other
than current liabilities incurred in the ordinary course of business; (d)
mortgaged, pledged or subjected to lien charges, or other encumbrance any of
its assets, other than the lien of current or real property taxes not yet due
and payable otherwise than in the ordinary course of business; (e) waived any
rights of substantial value, whether or not in the ordinary course of business;
(f) suffered any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting its assets or its business; (g)
made or suffered any amendment or termination of any material contract or any
agreement which materially adversely affects its business; (h) received notice
or had knowledge of any labor trouble other than routine grievance matters,
none of which is material; (i) increased the salaries or other compensation of
any of its directors, officers or employees or made any increase in other
benefits to which employees may be entitled, other than employee salary
increases made in the ordinary course of business and reflected on an Exhibit
hereto; (j) sold, transferred or otherwise disposed of any of its assets, other
than in the ordinary course of business; (k) declared or made any distribution
or payments to any of its shareholders, officers or employees, other than wages
and salaries made to employees in the ordinary course of business; (l) revalued
any of its assets; or (m) entered into any transactions not in the ordinary
course of business.
4.10 No Breaches.
------------
The Corporation is not in violation of, and the consummation of the
transactions contemplated hereby do not and will not result in any material
<PAGE>
<PAGE>
breach of, any of the terms or conditions of any mortgage, bond, indenture,
agreement, contract, license or other instrument or obligation to which the
Corporation is a party or by which its assets are bound which, in the
aggregate, would have a material adverse effect upon the corporation, its
business, assets or financial condition; nor will the consummation of the
transactions contemplated hereby cause Vine Street to violate any statute,
regulation, judgment, writ, injunction or decree of any court, threatened or
entered in a proceeding or action in which the Corporation is, was or may be
bound or to which any of the Corporation's assets are subject.
4.11 Condition of the Corporation's Assets.
-------------------------------------
Except as set forth on Exhibit 4.11 or with respect to any asset
which is subject to Section 4.12, 4.13 or 4.15, Vine Street's assets are
currently in good and usable condition and there are no defects or other
conditions which, in the aggregate, materially and adversely affect the
operation or values of such assets taken as a whole. Except as disclosed on
Exhibit 4.11, no person other than Vine Street (including any officer or
employee of the Corporation) has any proprietary interest in any know-how or
other intangible assets used by the Corporation in the conduct of its business.
The Company does not currently market any products for sale.
4.12 Inventory.
---------
Except as otherwise set forth on Exhibit 4.12, all inventories
reflected in the Corporation's December 31, 1995 financial statements in excess
of the reserves for excess or obsolete inventories are stated at the lowest of
cost, replacement cost or market, and, as so stated, are in good condition and
usable or salable in the category in which they are inventoried, in the
ordinary course of business of the Corporation, without discounts other than
normal trade discounts regularly offered by the Corporation, for prompt payment
or quantity purchase.
4.13 Accounts Receivable.
-------------------
The accounts receivable of the Corporation as set forth on the line
item therefor in its December 31, 1995 audited financial statements set forth
on Exhibit 4.5 represent valid and enforceable obligations due to the
Corporation, and, except to the extent of the reserve reflected in the latest
financial statements, to the Best Knowledge of Vine Street, shall be
collectible by the Corporation in the ordinary course of business. Except as
set forth on the attached Exhibit 4.13, the Corporation has not received any
notice of any material counterclaim or set-off with respect to such accounts
receivable.
4.14 Corporate Acts and Proceedings.
------------------------------
This Agreement has been duly authorized by all necessary corporate
action on behalf of Vine Street, has been duly executed and delivered by an
authorized officer of Vine Street, and is a valid and binding Agreement on the
<PAGE>
<PAGE>
part of Vine Street that is enforceable against Vine Street in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, fraudulent transfers, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and to judicial
limitations on the enforcement of the remedy of specific performance and other
equitable remedies.
4.15 Registered Rights and Proprietary Information.
---------------------------------------------
(a) Exhibit 4.15 hereto contains a true and complete list of all
patents, letters patent and patent applications, service marks, trademark and
service mark registrations and applications, copyright, copyright registrations
and applications, grants of licenses and rights to the Corporation with respect
to the foregoing, both domestic and foreign, claimed by the Corporation or used
or proposed to be used by the Corporation in the conduct of its business
(collectively herein, "Vine Street Registered Rights"). Exhibit 4.15 hereto
also contains a true and complete list of all and every trade secret, know-how,
process, formula, discovery, development, research, design, technique, customer
and supplier list, contracts, product development plans, product development
concepts, author contracts, marketing and purchasing strategy, invention, and
any other matter required for, incident to, or related to the conduct of its
business (hereafter collectively the "Vine Street Proprietary Information").
Except as described in Exhibit 4.15 hereto, the Corporation is not obligated or
under any liability whatever to make any payments by way of royalties, fees or
otherwise to any owner or licensor of, or other claimant to, any Vine Street
Registered Right or Vine Street Proprietary Information with respect to the use
thereof in the conduct of its business or otherwise.
(b) Except as described in Exhibit 4.15 hereto, to the Corporation's
Best Knowledge, the Corporation owns and has the unrestricted right to use the
Vine Street Registered Rights and Vine Street Proprietary Information required
for or incident to the design, development, manufacture, operation, sale and
use of all products and services sold or rendered or proposed to be sold or
rendered by the Corporation or relating to the conduct or proposed conduct of
its business free and clear of any right, title, interest, equity or claim of
others. As soon as practicable following the execution of this Agreement, and
except as described in Exhibit 4.15 hereto, the Corporation agrees to take all
necessary steps (including without limitation entering into appropriate
confidentiality, assignment of rights and non-competition agreements with all
officers, directors, employees and consultants of the Corporation and others
with access to or knowledge of the Vine Street Proprietary Information) to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, the Vine Street Proprietary Information and all related
documentation and intellectual property rights therein necessary for the
conduct or proposed conduct of its business.
(c) Except as described in Exhibit 4.15 hereto, the Corporation has
not sold, transferred, assigned, licensed or subjected to any right, lien,
encumbrance or claim of others, any Vine Street Proprietary Information,
including without limitation any Vine Street Registered Right, or any interest
<PAGE>
<PAGE>
therein, related to or required for the design, development, manufacture,
operation, sale or use of any product or service currently under development or
manufactured, or proposed to be developed, sold or manufactured, by it.
Exhibit 4.15 contains a true and complete list and description of all licenses
of Vine Street Proprietary Information granted to the Corporation by others or
to others by the Corporation. Except as described in Exhibit 4.15 hereto,
there are no claims or demands of any person pertaining to, or any proceedings
that are pending or threatened, which challenge the rights of the Corporation
in respect of any Vine Street Proprietary Information used in the conduct of
its business.
(d) Except as described in Exhibit 4.15 hereto, the Corporation owns
and on the Closing Date shall own, has and shall have, holds and shall hold,
exclusively all right, title and interest in the Vine Street Registered Rights,
free and clear of all liens, encumbrances, restrictions, claims and equities of
any kind whatsoever, has and shall have the exclusive right to use, sell,
license or dispose of, and has and shall have the exclusive right to bring
action for the infringement of the Vine Street Registered Rights and the Vine
Street Proprietary Information. To the Best Knowledge of Corporation, the
marketing, promotion, distribution or sale by the Corporation of any products
or interests subject to the Vine Street Registered Rights or making use of Vine
Street Proprietary Information shall not constitute an infringement of any
patent, copyright, trademark, service mark or misappropriation or violation of
any other party's proprietary rights or a violation of any license or agreement
by the Corporation. Except as described in Exhibit 4.15 hereto, to the
knowledge of the Corporation after due inquiry no facts or circumstances exist
that could result in the invalidation of any of the Vine Street Registered
Rights.
4.16 Changes in Suppliers and Customers.
----------------------------------
Except as disclosed on Exhibit 4.16, the Corporation is not aware of
any fact which indicates that any of the suppliers supplying products,
components or materials to the Corporation intends to cease selling such
products to the Corporation nor is the Corporation aware of any fact which
indicates that any major customer of the Corporation intends to terminate its
business relations with the Corporation.
4.17 No Liens or Encumbrances.
------------------------
The Corporation has good and marketable title to all of the property
and assets, tangible and intangible, employed in the operations of its
business, free of any material mortgages, security interests, pledges,
easements or encumbrances of any kind whatsoever except as set forth on the
attached Exhibit 4.17 and except for such property and assets as may be leased
by Vine Street, and except for any property which is the subject of Sections
4.12, 4.13 or 4.15. <PAGE>
<PAGE>
4.18 Employee Matters.
----------------
Exhibit 4.18 attached hereto contains a true, complete and accurate
list of all employees of the Corporation and the remuneration of each
(including wages, salaries and fringe benefits). The Corporation has no
information or facts indicating that any employee listed on Exhibit 4.18
intends to terminate his/her employment relationship with the Corporation prior
or subsequent to the Closing Date, except as may be required by this Agreement.
Except as specifically described on Exhibit 4.18, the Corporation has no
employee benefit plans (including, but not limited to, pension plans and health
or welfare plans), arrangements or understandings, whether formal or informal.
The Corporation does not now and has never contributed to a "multi-employer
plan" as defined in Section 400(a)(3) of the ERISA. The Corporation has
complied with all applicable provisions of ERISA and all rules and regulations
promulgated thereunder, and neither the Corporation nor any trustee,
administrator, fiduciary, agent or employee thereof has at any time been
involved in a transaction that would constitute a "prohibited transaction"
within the meaning of Section 406 of ERISA as to any covered plan of the
Corporation. The Corporation is not a party to any collective bargaining or
other union agreement. The Corporation has not, within the past five (5) years
had, or been threatened with, any union activities, work stoppages or other
labor trouble with respect to its employees which had a material adverse effect
on the Corporation, its business or assets. Except as set forth in Exhibit
4.9, since December 31, 1995, the Corporation has not made any commitment or
agreements to increase the wages or modify the conditions or terms of
employment of any of the employees of the Corporation used in connection with
its business, and between the date of this Agreement and the Closing Date, the
Corporation will not make any agreement to increase the wages or modify the
conditions or terms of employment of any of the employees of the Corporation
used in the conduct of its business, without the prior written consent of all
parties hereto.
4.19 Legal Proceedings and Compliance with Law.
-----------------------------------------
Except as set forth in Exhibit 4.19, Vine Street has not received
notice of any legal, administrative, arbitration or other proceeding or
governmental investigation pending or threatened (including those relating to
the health, safety, employment of labor, or protection of the environment)
pertaining to Vine Street which might result in the aggregate in money damages
payable by Vine Street in excess of insurance coverage or which might result in
a permanent injunction against Vine Street or which would have a material
adverse effect on Vine Street, its business, assets or financial condition.
Except as set forth in such Exhibit, Vine Street has substantially complied
with, and is not in default in any respect under any laws, ordinances,
requirements, regulations, or orders applicable to the business of Vine Street,
the violation of which might materially and adversely affect it. Except as set
forth in such Exhibit, Vine Street is not a party to any agreement or
instrument, nor is it subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree, rule, regulation, code or
ordinance which materially and adversely affects, or might reasonably be<PAGE>
<PAGE>
expected materially and adversely to affect the business, operations,
prospects, property, assets or condition, financial or otherwise, of Vine
Street.
4.20 Contract Schedules.
------------------
Attached as Exhibits 4.20(A) to 4.20(e) hereto are an accurate list
of the following:
(a) All contracts, leases, agreements, covenants, licenses,
instruments or commitments of Vine Street pertaining to the business of Vine
Street calling for the payment of $5,000 or more or which is otherwise material
to the business of Vine Street, including, without limitation, the following:
(i) Executory contracts for the sale of products and services;
(ii) Executory contracts for the purchase, sale or lease of any
assets;
(iii) Management or consulting contracts;
(iv) Patent, trademark and copyright applications, registrations
or licenses, and know-how, intellectual property and trade
secret agreements or other licenses;
(v) Note agreements, loan agreements, indentures and the like,
other than those entered into and executed in the ordinary
course of business;
(vi) All sales, agency, distributorship or franchise agreements;
and
(vii) Any other contracts not in the ordinary course of
business.
(b) All labor contracts, employment agreements and collective
bargaining agreements to which Vine Street is a party.
(c) All instruments evidencing any liens or security interest
securing any indebtedness of Vine Street covering any asset of Vine Street.
(d) All profit sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health insurance or
other employee benefit plans, agreements, arrangements or commitments of any
nature whatsoever, whether or not legally binding, and all agreements with any
present or former officer, director or shareholder of the Corporation.
(e) Any and all documents, instruments and other writings not listed
in any other schedule hereto which are material to the business operations of
Vine Street.<PAGE>
<PAGE>
Except as set forth in Exhibit 4.20(f), all of such contracts,
agreements, leases, licenses, plans, arrangements and commitments and all other
such items set forth above are valid, binding and in full force and effect in
accordance with their terms and conditions, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium, fraudulent
transfer, reorganization or other similar laws affecting the enforcement of
contracts generally, and there is no existing material default thereunder or
breach thereof by the Corporation, or to Vine Street's knowledge by any party
to such contracts, or any conditions which, with the passage of time or the
giving of notice or both, might constitute such a default by the Corporation or
by any other party to the contracts.
4.21 Labor Matters.
-------------
There are no strikes, slowdowns, stoppages, organizational efforts,
discrimination charges or other labor disputes pending or, to the knowledge of
Vine Street or any of its agent or employees, threatened against Vine Street.
4.22 Insurance.
---------
Vine Street maintains in full force and effect insurance coverage on
its assets and business in such amounts and against such risks and losses as
set forth in Exhibit 4.22.
4.23 Environmental.
-------------
Except as disclosed on Exhibit 4.23, Vine Street has never owned or
operated any real property except for leased office space:
(a) to the Best Knowledge of Vine Street, no real property (or the
subsurface soil and the ground water thereunder) now or previously leased by
Vine Street (the "Leased Premises") either contains any Hazardous Substance (as
hereinafter defined) or has underneath it any underground fuel or liquid
storage tanks;
(b) to the Best Knowledge of Vine Street, there has been no
generation, transportation, storage, treatment or disposal of any Hazardous
Substance on or beneath the Leased Premises, now or in the past;
(c) Vine Street is not aware of any pending or threatened litigation
or proceedings before any court or administrative agency in which any person
alleges, or threatens to allege, the presence, release, threat of release,
placement on or in the Leased Premises, or the generation, transportation,
storage, treatment or disposal at the Leased Premises, of any Hazardous
Substance;
(d) Vine Street has not received any notice and has no knowledge
that any Governmental Authority or any employee or agent thereof has determined
or alleged, or is investigating the possibility, that there is or has been any
<PAGE>
<PAGE>
presence, release, threat of release, placement on or in the Leased Premises,
or any generation, transportation, storage, treatment or disposal at the Leased
Premises, of any Hazardous Substance;
(e) To Vine Street's Best Knowledge, there have been no
communications or agreements with any Governmental Authority or agency
(federal, state, or local) or any private person or entity (including, without
limitation, any prior owner of the Leased Premises and any present or former
occupant or tenant of the Leased Premises) relating in any way to the presence,
release, threat of release, placement on or in the Leased Premises, or any
generation, transportation, storage, treatment or disposal at the Leased
Premises, of any Hazardous Substance. Vine Street further agrees and covenants
that Vine Street will not store or deposit on, otherwise release or bring onto
or beneath, the Leased Premises any Hazardous Substance prior to the Closing
Date; and
(f) there is no litigation, proceeding, citizen's suit or
governmental or other investigation pending, or, to Vine Street's Best
Knowledge, threatened, against Vine Street, and Vine Street knows of no facts
or circumstances which might give rise to any future litigation, proceeding,
citizen's suit or governmental or other investigation, which relate to Vine
Street's compliance with environmental laws, regulations, rules, guidelines and
ordinances.
For purposes of this Section 4.23, "Hazardous Substance" shall mean
and include (1) a hazardous substance as defined in 42 U.S.C. Section 9601(14),
the Regulations at 40 C.F.R. Part 302, (2) any substance regulated under the
Emergency Planning and Community Right to Know Act (including without
limitation any extremely hazardous substances listed at 40 C.F.R. Part 355 and
any toxic chemical listed at 40 C.F.R. Part 372), (3) hazardous wastes and
hazardous substances as specified under any New York state or local
Governmental Requirement governing water pollution, groundwater protection, air
pollution, solid wastes, hazardous wastes, spills and other releases of toxic
or hazardous substances, transportation of hazardous substances, materials and
wastes and occupational or employee health and safety, and (4) any other
material, gas or substance known or suspected to be toxic or hazardous
(including, without limitation, any radioactive substance, methane gas,
volatile hydrocarbon, industrial solvent, and asbestos) or which could cause a
material detriment to, or materially impair the beneficial use of, the Leased
Premises, or constitute a material health, safety or environmental risk to any
person exposed thereto or in contact therewith. For purposes of this Section
4.23, "Hazardous Substance" shall not mean and shall not include the following,
to the extent used normally and required for everyday uses or normal
housekeeping or maintenance: (A) fuel oil and natural gas for heating, (B)
lubricating, cleaning, coolant and other compounds customarily used in building
maintenance, (C) materials routinely used in the day-to-day operations of an
office, such as copier toner, (D) consumer products, (E) material reasonably
necessary and customarily used in construction and repair of an office project,
and (F) fertilizers, pesticides and herbicides commonly used for routine office
landscaping.<PAGE>
<PAGE>
4.24 Disclosure of Information.
-------------------------
The Corporation represents and warrants that all statements, data and
other written information provided by it to any party hereto as well as their
respective consultants and representatives have been accurate copies or true
originals. The Corporation represents and warrants that, to its Best
Knowledge, (i) there exists no material information concerning the Corporation
which has been requested but not been disclosed to or made available to the
other parties and their representatives or consultants and which would be
material to a decision to consummate the transactions provided for in this
Agreement and (ii) in the aggregate, such information does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made in them, in light of the circumstances
under which they are made, not misleading.
SECTION 5: COVENANTS OF VINE STREET
5.1 Preservation of Business.
------------------------
Until Closing, Vine Street shall use its best efforts to :
(a) preserve intact the present business organization of Vine
Street;
(b) maintain its property and assets in its present state of repair,
order and condition, reasonable wear and tear excepted;
(c) preserve and protect the goodwill and advantageous relationships
of Vine Street with its customers and all other persons having business
dealings with Vine Street;
(d) preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade secrets,
service marks, copyrights, bonds and other similar rights of Vine Street;
and
(e) comply with all laws applicable to the conduct of its business
5.2 Ordinary Course.
---------------
Vine Street shall conduct its business only in the usual, regular and
ordinary course, in substantially the same manner as previously, and shall not
make any substantial change to its methods of management or operation in
respect of such business or property. Without limiting the foregoing, Vine
Street shall not, with respect to Vine Street:
(a) sell, mortgage, pledge or encumber or agree to sell, mortgage,
pledge or encumber, any of its property or assets, other than in the ordinary
course of business;<PAGE>
<PAGE>
(b) incur any obligation (contingent or otherwise) or purchase,
acquire, transfer, or convey, any material assets or property or enter into any
contract or commitment, except in the ordinary course of business.
5.3 Negative Covenants.
------------------
Except as contemplated by this Agreement or disclosed in Exhibits to
this Agreement, from the date hereof until the Closing Date, unless and until
Optimax otherwise consents in writing, Vine Street will not (a) change or alter
the physical contents or character of the inventories of its business, if any,
so as to materially affect the nature of Vine Street's business or materially
and adversely change the total dollar valuation of such inventories from that
reflected on its December 31, 1995 financial statements referred to in Section
4.5 other than in the ordinary course of business; (b) incur any obligations or
liabilities (absolute or contingent) other than current liabilities incurred
and obligations under contracts entered into in the ordinary course of
business; (c) mortgage, pledge or voluntarily subject to lien, charge or other
encumbrance any assets, tangible or intangible, other than the lien of current
property taxes not due and payable; (d) sell, assign or transfer any of its
assets or cancel any debts or claims, other than in the ordinary course of
business; (e) waive any right of any substantial value; (f) declare or make any
payment or distribution to Shareholders or issue, purchase or redeem any shares
of its capital stock or other equity securities or issue or sell any rights to
acquire the same; (g) grant any increase in the salary or other compensation of
any of its directors, officers, or employees or make any increase in any
benefits to which such employees might be entitled; (h) institute any bonus,
benefit, profit sharing, stock option, pension, retirement plan or similar
arrangement, or make any changes in any such plans or arrangements presently
existing; or (i) enter into any material transactions or series of transactions
other than in the ordinary course of business.
5.4 Access to Books and Records, Premises, etc.
-------------------------------------------
From the date of this Agreement through the Closing Date, Vine Street
will grant Optimax and its authorized representatives reasonable access to its
books and records, premises, products, employees and customers and other
parties with whom it has contractual relations during reasonable business hours
and in a manner not to disrupt or interfere with Vine Street's business
relationships for purposes of enabling Optimax to fully investigate the
business of Vine Street. Vine Street will also deliver copies of its monthly
statements of operations and financial condition for the period subsequent to
its December 31, 1995 financial statements referred to in Section 4.5 to
Optimax within a reasonable time of such statements becoming available.
5.5 Compensation.
------------
Vine Street shall not enter into or agree to enter into any
employment contract or agreement for consulting, professional, or other
services which will adversely and materially affect the operation of Vine<PAGE>
<PAGE>
Street prior to the Closing Date, except for any extensions of said contracts
or agreements on substantially the same terms and conditions as were previously
in effect.
5.6 No Solicitation.
---------------
(a) Except in connection with the transactions contemplated by this
Agreement, Vine Street shall not, nor shall it permit any of its subsidiaries
to, nor shall it authorize or permit any officer, director or employee of or
any investment banker, attorney or other advisor or representative of, Vine
Street or any of its subsidiaries to, (i) solicit, initiate or encourage the
submission of, any takeover proposal, (ii) enter into any agreement with
respect to any takeover proposal or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
takeover proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
executive officer of Vine Street or any of its subsidiaries or any investment
banker, attorney or other advisor or representatives of Vine Street or any of
its subsidiaries or otherwise, shall be deemed to be a breach of this Section
by Vine Street. For purposes of this Agreement, "takeover proposal" means any
proposal for a merger, consolidation or reorganization or other business
combination involving Vine Street or any of its subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly, an equity interest in,
any voting securities of, or options, rights, warrants or other interests
convertible or exercisable for or into such voting securities, or a substantial
or material portion of the assets or business of Vine Street or any of its
subsidiaries, other than the transactions contemplated by this Agreement.
(b) Except upon a material breach of this Agreement by Optimax or
following termination hereof, except for action permitted or contemplated by
this Agreement, including a party's right to terminate this Agreement under
certain circumstances, neither the Board of Directors of Vine Street nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Optimax, the approval or recommendation by such
Board of Directors of any such committee of this Agreement or the Exchange or
(ii) approve or recommend, or propose to approve or recommend, any takeover
proposal.
(c) Vine Street promptly shall advise Optimax orally and in writing
of any takeover proposal or any inquiry with respect to or which could lead to
any takeover proposal and the identity of the person making any such takeover
proposal or inquiry. Vine Street will keep Optimax fully informed of the
status and details of any such takeover proposal or inquiry.
(d) The provisions of this Section 5.6 shall not be construed to
prevent any investment banker, attorney or other advisor or representative of
Vine Street to engage in discussions with third parties in the ordinary course
of business with respect to transactions not involving the parties to this
Agreement.<PAGE>
<PAGE>
SECTION 6: REPRESENTATIONS AND WARRANTIES OF OPTIMAX
As a material inducement to Vine Street to enter into this Agreement and
with the understanding and expectations that Vine Street will be relying
thereon in consummating the Exchange contemplated hereunder, Optimax and its
Subsidiaries Plants For Tomorrow, Inc. ("Plants"), Taylor-Built Industries,
Inc. ("TBI") and Switchgear Systems International, Inc. ("SSII") (hereafter
collectively referred to as the "Subsidiaries") (hereinafter Optimax and its
Subsidiaries shall collectively be referred to as the "Corporation" unless the
context otherwise requires for the purposes of this Section 6 only) hereby
represents and warrants as follows:
6.1 Organization and Standing.
-------------------------
Optimax, Plants and SSI are corporations duly organized, validly
existing and in good standing under the laws of the State of Colorado and TBI
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Texas, and each has all requisite corporate power and
authority to own its assets and properties and to carry on its business as it
is now being conducted.
6.2 Subsidiaries, etc.
-----------------
Except as set forth on Exhibit 6.2 hereto, the Corporation does not
have any direct or indirect Ownership Interest in any corporation, partnership,
joint venture, association or other business enterprise.
6.3 Qualification.
-------------
Except as set forth on Exhibit 6.3 and for any jurisdiction where the
failure to be qualified to engage in business as a foreign corporation would
not have a material adverse effect on the corporation, the Corporation is not
qualified to engage in business as a foreign corporation in any state other
than Colorado, Florida and Texas and there is no other jurisdiction wherein the
character of the properties presently owned by the Corporation or the nature of
the activities presently conducted by the Corporation makes necessary the
qualification, licensing or domestication of the Corporation as a foreign
corporation.
DOC Corporate Authority.
-------------------
Except as set forth on Exhibit 6.4 hereto, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby nor compliance by Optimax with any on the provisions hereof
will
(a) conflict with or result in a breach of any provision of its
Articles of Incorporation or By-Laws or similar documents of any Subsidiary;
<PAGE>
<PAGE>
(b) result in a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, agreement or other instrument
or obligation to which the Corporation is a party, or by which any of its
properties or assets may be bound except for such default (or right of
termination, cancellation, or acceleration) as to which requisite waivers or
consents shall either have been obtained by the Corporation prior to the
Closing Date or the obtaining of which shall have been waived by Vine Street;
or
(c) violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to the
Corporation or any of its properties or assets. No consent or approval by any
Governmental Authority is required in connection with the execution and
delivery by the Corporation of this Agreement or the consummation by the
Corporation of the transactions contemplated hereby, except for possible notice
under plant closing laws.
6.5 Financial Statements.
--------------------
The following statements are attached to this Agreement as Exhibit
6.5:
(a) Audited financial statements of the Corporation accompanied by a
report of its independent certified public accountants containing audited
balance sheets of Optimax for the period beginning at inception and ending
December 31, 1994, together with statements of operations for the Corporation
from inception to and including December 31, 1994;
(b) Unaudited financial statements of the corporation containing
balance sheets and statements of operations for the Corporation covering the
period from the end of the period covered by the most recent audited financial
statements of the corporation through December 31, 1995.
To the Best Knowledge of the Corporation, such financial statements,
together with and subject to the disclosures and notes thereto, (i) are in
accordance with the books and records of the Corporation; (ii) present fairly
the financial condition of the Corporation; as of the dates of the balance
sheets; (iii) present fairly the results of operations for the periods covered
by such statements; (iv) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis; (v) include all
adjustments (consisting of only normal recurring accruals) which are necessary
for a fair presentation of the financial condition of the Corporation, and of
the results of operations of the Corporation for the periods covered by such
statements; and (vi) fully comply with all requirements of Regulation SB and
all applicable securities laws.
As of Closing, except as set forth in Exhibit 6.5(b) hereto, the
Corporation will not have any liabilities or payables (absolute or contingent,
known or unknown), except as reflected in the financial statements, or<PAGE>
<PAGE>
described in its reports filed under Section 13(a) of the Exchange Act (copies
of which shall have been provided to Vine Street and its counsel) or set forth
in Exhibits to this Agreement, except as disclosed to Vine Street prior to the
Closing Date.
6.6 Capitalization of the Corporation.
---------------------------------
(a) The authorized capital stock of Optimax consists entirely of
20,000,000 shares of Common Stock having a par value of $.02 per share, and
5,000,000 shares of Preferred Stock having a par value of $.001 per share. As
of the date of this Agreement, 1,703,091 shares of Common Stock are issued and
outstanding. As of the Closing Date, no more than 1,703,091 shares of Common
Stock and no shares of Preferred Stock will be issued and outstanding. All
outstanding shares of Optimax's capital stock have been validly issued, are
fully paid and non-assessable, and are not subject to pre-emptive rights. The
shares of Common Stock to be issued to the Shareholders on the Closing Date in
accordance with Section 2.1 hereof have been duly approved by the Directors of
Optimax and will, upon their issuance, have been validly issued and will be
fully paid and non-assessable. As of the date of this Agreement, Optimax has
outstanding options and warrants exercisable to purchase, in the aggregate,
764,124 shares of the Company's Common Stock, all of which have been duly
reserved for issuance. As of the Closing Date, Optimax will have outstanding
options and warrants exercisable to purchase, in the aggregate, no more than
764,124 shares of Optimax Common Stock, all of which shall be duly reserved for
issuance. There are no other equity securities of Optimax authorized, issued
or outstanding, and there are no authorized, issued or outstanding
subscriptions, options, warrants, contracts, calls, commitments or other
purchase rights of any nature or character relating to any of Optimax's capital
stock, equity securities, debt or other securities convertible into stock or
equity securities of Optimax. As of the date of this Agreement, there are no
outstanding contractual obligations of Optimax or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of Optimax
or any of its Subsidiaries.
(b) The authorized capital stock of Taylor-Built consists entirely
of 10,000 shares of Common Stock having a par value of $1.00 per share, of
which 1,000 shares are issued and outstanding. The authorized capital stock of
Plants consists entirely of 100,000,000 shares of Common Stock having a par
value of $.001 per share and 50,000,000 shares of Preferred Stock having a par
value of $.01 per share, of which 100,000 shares are issued and outstanding.
The authorized capital stock of SSII consists entirely of 100,000,000 shares of
Common Stock having a par value of $.001 per share and 50,000,000 shares of
Preferred Stock having a par value of $.01 per share, of which 100,000 shares
are issued and outstanding. Optimax is sole shareholder of 100% of the issued
and outstanding shares of Common Stock of Taylor-Built, Plants and SSII. All
outstanding shares of capital stock of the Subsidiaries have been validly
issued, are fully paid and non-assessable, and are not subject to pre-emptive
rights. As of the date of this Agreement and as of the Closing Date, there are
no outstanding options, warrants or other rights exercisable to purchase or
convertible into any shares of capital stock of any of the Subsidiaries. There
are no other equity securities of any Subsidiary, authorized, issued or<PAGE>
<PAGE>
outstanding, and there are no authorized, issued or outstanding subscriptions,
options, warrants, contracts, calls, commitments or other purchase rights of
any nature or character relating to any of the Subsidiaries' capital stock,
equity securities, debt or other securities convertible into stock or equity
securities of any Subsidiary. As of the date of this Agreement, there are no
outstanding contractual obligations of any Subsidiary to repurchase, redeem or
otherwise acquire of any its shares of capital stock.
6.7 Taxes.
-----
Except as set forth in Exhibit 6.7, the Corporation has filed (or has
obtained extensions for filing) all income, excise, sales, corporate franchise,
property, payroll and other tax returns or reports required to be filed by it,
as of the date hereof by the United States of America, any state or other
political subdivision thereof or any foreign country and has paid all Taxes or
assessments shown to be due on such returns or reports. The amounts set up as
provisions for Taxes in the Latest Financial Statements are sufficient for the
payment of all unpaid federal, foreign, state or local Taxes of the Corporation
accrued for or applicable to all periods ended on or prior to the date of this
Agreement, or which may subsequently be determined to be owing by the
Corporation with respect to all periods ending on or prior to the Closing Date,
subject to normal year-end adjustments, which will not be material. There are
no present disputes as to Taxes of any nature payable by the Corporation.
There will be no Taxes which will be owing by Optimax or any Subsidiary with
respect to periods ending on or prior to the Closing Date, except for Taxes for
which Optimax has made sufficient reserves of cash or cash equivalents to pay
such Taxes.
6.8 No Actions, Proceedings, etc.
-----------------------------
Except as listed on the attached Exhibit 6.8, there is no action or
proceeding (whether or not purportedly on behalf of the Corporation) pending or
to its knowledge threatened by or against the Corporation, which might result
in any material adverse change in the condition, financial or otherwise, of the
Corporation's business or assets. No order, writ or injunction or decree has
been issued by, or requested of any court or Governmental Agency which does nor
may result in any material adverse change in the Corporation's assets or
properties or in the financial condition or the business of the Corporation.
The Corporation is not liable for damages to any employee or former employee as
a result of any violation of any state, federal or foreign laws directly or
indirectly relating to such employee or former employee.
6.9 Post Balance Sheet Changes.
--------------------------
Except as set forth on Exhibit 6.9 and as contemplated by this
Agreement, since the date of the latest financial statements, the Corporation
has not (a) issued, bought, redeemed or entered into any agreements,
commitments or obligations to sell, buy or redeem any shares of its capital
stock; (b) incurred any obligation or liability (absolute or contingent), other
than current liabilities incurred, and obligations under contracts entered
<PAGE>
<PAGE>
into, in the ordinary course of business; (c) discharged or satisfied any lien
or encumbrance or paid any obligation or liability (absolute or contingent),
other than current liabilities incurred in the ordinary course of business; (d)
mortgaged, pledged or subjected to lien charges, or other encumbrance any of
its assets, other than the lien of current or real property taxes not yet due
and payable; (e) waived any rights of substantial value, whether or not in the
ordinary course of business; (f) suffered any damage, destruction or loss,
whether or not covered by insurance, materially and adversely affecting its
assets or its business; (g) made or suffered any amendment or termination of
any material contract or any agreement which adversely affects its business;
(h) received notice or had knowledge of any labor trouble other than routine
grievance matters, none of which is material; (i) increased the salaries or
other compensation of any of its directors, officers or employees or made any
increase in other benefits to which employees may be entitled, other than
employee salary increases made in the ordinary course of business and reflected
on an Exhibit hereto; (j) sold, transferred or otherwise disposed of any of its
assets, other than in the ordinary course of business; (k) declared or made any
distribution or payments to any of its shareholders, officers or employees,
other than wages and salaries made to employees in the ordinary course of
business; (l) revalued any of its assets; or (m) entered into any transactions
not in the ordinary course of business.
6.10 No Breaches.
------------
Except as set forth on Exhibit 6.10, the Corporation is not in
violation of, and the consummation of the transactions contemplated hereby do
not and will not result in any material breach of, any of the terms or
conditions of any mortgage, bond, indenture, agreement, contract, license or
other instrument or obligation to which the Corporation is a party or by which
its assets are bound; nor will the consummation of the transactions
contemplated hereby cause Optimax or any Subsidiary to violate any statute,
regulation, judgment, writ, injunction or decree of any court, threatened or
entered in a proceeding or action in which the Corporation is, was or may be
bound or to which any of the Corporation's assets are subject.
6.11 Condition of the Corporation's Assets.
-------------------------------------
Except as set forth on Exhibit 6.11 or with respect to any asset
which is subject to Section 6.12, 6.13 or 6.15, the Corporation's assets are
currently in good and usable condition and there are no defects or other
conditions which, in the aggregate, materially and adversely affect the
operation or values of such assets. Except as disclosed on Exhibit 6.11, no
person other than the Corporation (including any officer or employee of the
Corporation) has any proprietary interest in any know-how or other intangible
assets used by the Corporation in the conduct of its business. All product
which is currently being marketed by the Corporation is operable for its
intended purposes in accordance with its written specifications and trade
representations.<PAGE>
<PAGE>
6.12 Inventory.
---------
Except as otherwise set forth on Exhibit 6.12, all inventories
reflected in the Corporation's latest financial statements in excess of the
reserves for excess or obsolete inventories are stated at the lowest of cost,
replacement cost or market, and, as so stated, are in good condition and usable
or salable in the category in which they are inventoried, in the ordinary
course of business of the Corporation, without discounts other than normal
trade discounts regularly offered by the Corporation, for prompt payment or
quantity purchase.
6.13 Accounts Receivable.
-------------------
The accounts receivable of the Corporation represent valid and
enforceable obligations due to the Corporation, and, except to the extent of
the reserve reflected in the latest financial statements, to the Best Knowledge
of the Corporation, shall be collectible by the Corporation in the ordinary
course of business. Except as set forth on the attached Exhibit 6.13, the
Corporation has not received any notice of any material counterclaim or set-off
with respect to such accounts receivable.
6.14 Corporate Acts and Proceedings.
------------------------------
This Agreement has been duly authorized by all necessary corporate
action on behalf of Optimax, has been duly executed and delivered by authorized
officers of Optimax, and is a valid and binding Agreement on the part of
Optimax that is enforceable against Optimax in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, fraudulent transfers, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and to judicial
limitations on the enforcement of the remedy of specific performance and other
equitable remedies. All corporate action necessary to issue and deliver to the
Vine Street Shareholders the Exchange Shares and Exchange Rights (each as
described in Sections 2.1, 2.2 and 2.3) has been taken by Optimax.
6.15 Registered Rights and Proprietary Information.
---------------------------------------------
(a) Exhibit 6.15 hereto contains a true and complete list of all
patents, letters patent and patent applications, service marks, trademark and
service mark registrations and applications, copyright, copyright registrations
and applications, grants of licenses and rights to the Corporation with respect
to the foregoing, both domestic and foreign, claimed by the Corporation or used
or proposed to be used by the Corporation in the conduct of its business
(collectively herein, "Optimax Registered Rights"). Exhibit 6.15 hereto also
contains a true and complete list of all and every trade secret, know-how,
process, formula, discovery, development, research, design, technique, customer
and supplier list, contracts, product development plans, product development
concepts, author contracts, marketing and purchasing strategy, invention, and
any other matter required for, incident to, or related to the conduct of its
<PAGE>
<PAGE>
business (hereafter collectively the "Optimax Proprietary Information").
Except as described in Exhibit 6.15 hereto, the Corporation is not obligated or
under any liability whatever to make any payments by way of royalties, fees or
otherwise to any owner or licensor of, or other claimant to, any Optimax
Registered Right or Optimax Proprietary Information with respect to the use
thereof in the conduct of its business or otherwise.
(b) Except as described in Exhibit 6.15 hereto, to the Corporation's
Best Knowledge, the Corporation owns and has the unrestricted right to use the
Optimax Registered Rights and Optimax Proprietary Information required for or
incident to the design, development, manufacture, operation, sale and use of
all products and services sold or rendered or proposed to be sold or rendered
by the Corporation or relating to the conduct or proposed conduct of its
business free and clear of any right, title, interest, equity or claim of
others. As soon as practicable following the execution of this Agreement and
except as described in Exhibit 6.15 hereto, the Corporation agrees to take all
necessary steps (including without limitation entering into appropriate
confidentiality, assignment of rights and non-competition agreements with all
officers, directors, employees and consultants of the Corporation and others
with access to or knowledge of the Optimax Proprietary Information) to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, the Optimax Proprietary Information and all related documentation
and intellectual property rights therein necessary for the conduct or proposed
conduct of its business.
(c) Except as described in Exhibit 6.15 hereto, the Corporation has
not sold, transferred, assigned, licensed or subjected to any right, lien,
encumbrance or claim of others, any Optimax Proprietary Information, including
without limitation any Optimax Registered Right, or any interest therein,
related to or required for the design, development, manufacture, operation,
sale or use of any product or service currently under development or
manufactured, or proposed to be developed, sold or manufactured, by it.
Exhibit 6.15 contains a true and complete list and description of all licenses
of Optimax Proprietary Information granted to the Corporation by others or to
others by the Corporation. Except as described in Exhibit 6.15 hereto, there
are no claims or demands of any person pertaining to, or any proceedings that
are pending or threatened, which challenge the rights of the Corporation in
respect of any Optimax Proprietary Information used in the conduct of its
business.
(d) Except as described in Exhibit 6.15 hereto, the Corporation owns
and on the Closing Date shall own, has and shall have, holds and shall hold,
exclusively all right, title and interest in the Optimax Registered Rights,
free and clear of all liens, encumbrances, restrictions, claims and equities of
any kind whatsoever, has and shall have the exclusive right to use, sell,
license or dispose of, and has and shall have the exclusive right to bring
action for the infringement of the Optimax Registered Rights and the Optimax
Proprietary Information. To the Best Knowledge of Corporation, the marketing,
promotion, distribution or sale by the Corporation of any products or interests
subject to the Optimax Registered Rights or making use of Optimax Proprietary
<PAGE>
<PAGE>
Information shall not constitute an infringement of any patent, copyright,
trademark, service mark or misappropriation or violation of any other party's
proprietary rights or a violation of any license or agreement by the
Corporation. Except as described in Exhibit 6.15 hereto, to the knowledge of
the Corporation after due inquiry no facts or circumstances exist that could
result in the invalidation of any of the Optimax Registered Rights.
6.16 Changes in Suppliers and Customers.
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Except as disclosed on Exhibit 6.16, the Corporation is not aware of
any fact which indicates that any of the suppliers supplying products,
components or materials to the Corporation intends to cease selling such
products to the Corporation nor is the Corporation aware of any fact which
indicates that any major customer of the Corporation intends to terminate its
business relations with the Corporation.
6.17 No Liens or Encumbrances.
------------------------
The Corporation has good and marketable title to all of the property
and assets, tangible and intangible, employed in the operations of its
business, free of any material mortgages, security interests, pledges,
easements or encumbrances of any kind whatsoever except as set forth on the
attached Exhibit 6.17 and except for such property and assets as may be leased
by the Corporation, and except for any property which is the subject of
Sections 6.12, 6.13 or 6.15.
6.18 Employee Matters.
----------------
As of the Closing Date, the Corporation shall have no employees and
shall not be a party to or bound by any employment agreements or commitments.
Except as specifically described on Exhibit 6.18, the Corporation has no
employee benefit plans (including, but not limited to, pension plans and health
or welfare plans), arrangements or understandings, whether formal or informal.
The Corporation does not now and has never contributed to a "multi-employer
plan" as defined in Section 400(a)(3) of the ERISA. The Corporation has
complied with all applicable provisions of ERISA and all rules and regulations
promulgated thereunder, and neither the Corporation nor any trustee,
administrator, fiduciary, agent or employee thereof has at any time been
involved in a transaction that would constitute a "prohibited transaction"
within the meaning of Section 406 of ERISA as to any covered plan of the
Corporation. The Corporation is not a party to any collective bargaining or
other union agreement. The Corporation has not, within the past five (5) years
had, or been threatened with, any union activities, work stoppages or other
labor trouble with respect to its employees which has a material adverse effect
on the Corporation, its business or assets.
6.19 Legal Proceedings and Compliance with Law.
-----------------------------------------
Except as set forth in Exhibit 6.19, the Corporation has not received
notice of any legal, administrative, arbitration or other proceeding or<PAGE>
<PAGE>
governmental investigation pending or threatened (including those relating to
the health, safety, employment of labor, or protection of the environment)
pertaining to the Corporation which might result in the aggregate in money
damages payable by the Corporation in excess of insurance coverage or which
might result in a permanent injunction against the Corporation. Except as set
forth in such Exhibit, the Corporation has substantially complied with, and is
not in default in any respect under any laws, ordinances, requirements,
regulations, or orders applicable to the business of the Corporation, the
violation of which might materially and adversely affect it. Except as set
forth in such Exhibit, the Corporation is not a party to any agreement or
instrument, nor is it subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree, rule, regulation, code or
ordinance which materially and adversely affects, or might reasonably be
expected materially and adversely to affect the businesses, operations,
prospects, property, assets or condition, financial or otherwise, of the
Corporation.
6.20 Contracts.
---------
Attached as Exhibits 6.20(a) to 6.20(e) hereto are an accurate list
and summary description of the following:
(a) All contracts, leases, agreements, covenants, licenses,
instruments or commitments of the Corporation pertaining to the business of the
Corporation calling for the payment of $5,000 or more or which is otherwise
material to the business of the Corporation, including, without limitation, the
following:
(i) Executory contracts for the sale of products and services;
(ii) Executory contracts for the purchase, sale or lease of any
assets;
(iii) Management or consulting contracts;
(iv) Patent, trademark and copyright applications, registrations
or licenses, and know-how, intellectual property and trade
secret agreements or other licenses;
(v) Note agreements, loan agreements, indentures and the like,
other than those entered into and executed in the ordinary
course of business;
(vi) All sales, agency, distributorship or franchise agreements;
and
(vii) Any other contracts not in the ordinary course of
business.
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<PAGE>
(b) All labor contracts, employment agreements and collective
bargaining agreements to which Optimax or any Subsidiary is a party.
(c) All instruments evidencing any liens or security interest
securing any indebtedness of Optimax or any Subsidiary covering any asset of
Optimax or any Subsidiary.
(d) All profit sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health insurance or
other employee benefit plans, agreements, arrangements or commitments of any
nature whatsoever, whether or not legally binding, and all agreements with any
present or former officer, director or shareholder of the Corporation.
(e) Any and all documents, instruments and other writings not listed
in any other schedule hereto which are material to the business operations of
Optimax or any Subsidiary.
Except as set forth in Exhibit 6.20(f), all of such contracts,
agreements, leases, licenses, plans, arrangements and commitments and all other
such items set forth above are valid, binding and in full force and effect in
accordance with their terms and conditions, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium, fraudulent
transfer, reorganization or other similar laws affecting the enforcement of
contracts generally, and there is no existing material default thereunder or
breach thereof by the Corporation, or to the Corporation's knowledge by any
party to such contracts, or any conditions which, with the passage of time or
the giving of notice or both, might constitute such a default by the
Corporation or by any other party to the contracts.
6.21 Labor Matters.
-------------
There are no strikes, slowdowns, stoppages, organizational efforts,
discrimination charges or other labor disputes pending or, to the knowledge of
the Corporation or any of its agent or employees, threatened against the
Corporation.
6.22 Insurance.
---------
Optimax maintains in full force and effect insurance coverage on the
assets and business of the Corporation in such amounts and against such risks
and losses as set forth in Exhibit 6.22.
6.23 Environmental.
-------------
Except as disclosed on Exhibit 6.23:
(a) to the Best Knowledge of the Corporation, no real property (or
the subsurface soil and the ground water thereunder) now or previously owned by
the Corporation (the "Real Property") either contains any Hazardous Substance
(as hereinafter defined) or has underneath it any underground fuel or liquid
storage tanks;<PAGE>
<PAGE>
(b) to the Best Knowledge of the Corporation, there has been no
generation, transportation, storage, treatment or disposal of any Hazardous
Substance on or beneath the Real Property, now or in the past;
(c) the Corporation is not aware of any pending or threatened
litigation or proceedings before any court or administrative agency in which
any person alleges, or threatens to allege, the presence, release, threat of
release, placement on or in the Real Property, or the generation,
transportation, storage, treatment or disposal at the Real Property, of any
Hazardous Substance;
(d) the Corporation has not received any notice and has no knowledge
that any Governmental Authority or any employee or agent thereof has determined
or alleged, or is investigating the possibility, that there is or has been any
presence, release, threat of release, placement on or in the Real Property, or
any generation, transportation, storage, treatment or disposal at the Real
Property, of any Hazardous Substance;
(e) to the Corporation's Best Knowledge, there have been no
communications or agreements with any Governmental Authority or agency
(federal, state, or local) or any private person or entity (including, without
limitation, any prior owner of the Real Property and any present or former
occupant or tenant of the Real Property) relating in any way to the presence,
release, threat of release, placement on or in the Real Property, or any
generation, transportation, storage, treatment or disposal at the Real
Property, of any Hazardous Substance. The Corporation further agrees and
covenants that the Corporation will not store or deposit on, otherwise release
or bring onto or beneath, the Real Property any Hazardous Substance prior to
the Closing Date; and
(f) there is no litigation, proceeding, citizen's suit or
governmental or other investigation pending, or, to the Corporation's Best
Knowledge, threatened, against the Corporation, and the Corporation knows of no
facts or circumstances which might give rise to any future litigation,
proceeding, citizen's suit or governmental or other investigation, which relate
to the Corporation's compliance with environmental laws, regulations, rules,
guidelines and ordinances.
For purposes of this Section 6.23, "Hazardous Substance" shall mean
and include (1) a hazardous substance as defined in 42 U.S.C. Section 9601(14),
the Regulations at 40 C.F.R. Part 302, (2) any substance regulated under the
Emergency Planning and Community Right to Know Act (including without
limitation any extremely hazardous substances listed at 40 C.F.R. Part 355 and
any toxic chemical listed at 40 C.F.R. Part 372), (3) hazardous wastes and
hazardous substances as specified under any Colorado, Florida or Texas state or
local Governmental Requirement governing water pollution, groundwater
protection, air pollution, solid wastes, hazardous wastes, spills and other
releases of toxic or hazardous substances, transportation of hazardous
substances, materials and wastes and occupational or employee health and
safety, and (4) any other material, gas or substance known or suspected to be
<PAGE>
<PAGE>
toxic or hazardous (including, without limitation, any radioactive substance,
methane gas, volatile hydrocarbon, industrial solvent, and asbestos) or which
could cause a material detriment to, or materially impair the beneficial use
of, the Real Property, or constitute a material health, safety or environmental
risk to any person exposed thereto or in contact therewith. For purposes of
this Section 6.23, "Hazardous Substance" shall not mean and shall not include
the following, to the extent used normally and required for everyday uses or
normal housekeeping or maintenance: (A) fuel oil and natural gas for heating,
(B) lubricating, cleaning, coolant and other compounds customarily used in
building maintenance, (C) materials routinely used in the day-to-day operations
of an office, such as copier toner, (D) consumer products, (E) material
reasonably necessary and customarily used in construction and repair of an
office project, and (F) fertilizers, pesticides and herbicides commonly used
for routine office landscaping.
6.24 Compliance with Reporting Requirements.
--------------------------------------
Optimax represents, warrants and agrees that, as of the date of
Closing, Optimax has filed all forms, reports and documents with the Securities
and Exchange Commission (the "Commission") and NASDAQ required to be filed by
it pursuant to the Securities Act and the Exchange Act, including, without
limitation, all reporting requirements of Section 13(a) of the Exchange Act,
the rules and regulations of the Commission and the rules of NASDAQ. The
reports filed with the Commission and/or NASDAQ, to Optimax's Best Knowledge,
do not, and did not as of their respective dates, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.25 Disclosure of Information.
-------------------------
The Corporation represents and warrants that all statements, data and
other written information provided by it to any party hereto as well as their
respective consultants and representatives have been accurate copies or true
originals and have been provided with the knowledge of the Corporation that the
receiving party will rely upon same in connection with that parties' decision
to consummate the transactions provided for in this Agreement. The Corporation
represents and warrants that, to its Best Knowledge, (i) there exists no
material information concerning the Corporation which has been requested but
not been disclosed to or made available to the other parties and their
representatives or consultants and which would be material to a decision to
consummate the transactions provided for in this Agreement and (ii) in the
aggregate, such information does not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made in them, in light of the circumstances under which they are made, not
misleading.<PAGE>
<PAGE>
SECTION 7: COVENANTS OF OPTIMAX
7.1 Preservation of Business.
------------------------
Until Closing, Optimax shall use its best efforts to :
(a) preserve intact the present business organization of the
Corporation;
(b) maintain its property and assets in its present state of repair,
order and condition, reasonable wear and tear excepted;
(c) preserve and protect the goodwill and advantageous relationships
of the Corporation with its customers and all other persons having business
dealings with the Corporation;
(d) preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade secrets,
service marks, copyrights, bonds and other similar rights of the Corporation;
and
(e) comply with all laws applicable to the conduct of its business.
7.2 Ordinary Course.
---------------
Optimax shall not, without the prior written consent of Vine Street:
(a) sell, mortgage, pledge or encumber or agree to sell, mortgage,
pledge or encumber, any of the property or assets of Optimax or the
Subsidiaries;
(b) incur any obligation (contingent or otherwise) or purchase,
acquire, transfer, or convey, any material assets or property or enter into any
contract or commitment;
7.3 Negative Covenants.
------------------
Except as contemplated by this Agreement or as disclosed in Exhibits
to this Agreement, from the date hereof until the Closing Date, unless and
until Vine Street otherwise consents in writing, Optimax and the Subsidiaries
will not (a) change or alter the physical contents or character of the
inventories of its business, so as to materially affect the nature of the
Corporation's business or materially and adversely change the total dollar
valuation of such inventories from that reflected on the financial statements
referred to in Section 4.5 other than in the ordinary course of business; (b)
incur any obligations or liabilities (absolute or contingent) other than
current liabilities incurred and obligations under contracts entered into in
the ordinary course of business; (c) mortgage, pledge or voluntarily subject to
lien, charge or other encumbrance any assets, tangible or intangible, other
than the lien of current property taxes not due and payable; (d) sell, assign
<PAGE>
<PAGE>
or transfer any of its assets or cancel any debts or claims, other than in the
ordinary course of business; (e) waive any right of any substantial value; (f)
declare or make any payment or distribution to Shareholders or issue, purchase
or redeem any shares of its capital stock or other equity securities or issue
or sell any rights to acquire the same; (g) grant any increase in the salary or
other compensation of any of its directors, officers, or employees or make any
increase in any benefits to which such employees might be entitled; (h)
institute any bonus, benefit, profit sharing, stock option, pension, retirement
plan or similar arrangement, or make any changes in any such plans or
arrangements presently existing; or (i) enter into any transactions or series
of transactions other than in the ordinary course of business.
7.4 Access to Books and Records, Premises, etc.
-------------------------------------------
From the date of this Agreement through the Closing Date, Optimax
will grant Vine Street and its authorized representatives reasonable access to
its and the Subsidiaries' books and records, premises, products, employees and
customers and other parties with whom it has contractual relations during
reasonable business hours for purposes of enabling Vine Street to fully
investigate the business of Optimax and the Subsidiaries. Optimax will also
deliver copies of the monthly statements of operations and financial condition
for the period subsequent to the latest financial statements to Vine Street
within a reasonable time of such statements becoming available.
7.5 Compensation.
------------
Optimax and the Subsidiaries shall not enter into or agree to enter
into any employment contract or agreement for consulting, professional, or
other services which will adversely and materially affect the operation of
Optimax or the Subsidiaries prior to the Closing Date, except for any
extensions of said contracts or agreements on substantially the same terms and
conditions as were previously in effect.
7.6 No Solicitation.
---------------
(a) Except in connection with the transactions contemplated by this
Agreement, Optimax shall not, nor shall it permit any of its Subsidiaries to,
nor shall it authorize or permit any officer, director or employee of or any
investment banker, attorney or other advisor or representative of, Optimax or
any of its Subsidiaries to, (i) solicit, initiate or encourage the submission
of, any takeover proposal, (ii) enter into any agreement with respect to any
takeover proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take
any other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any takeover proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the proceeding sentence by any executive officer of
Optimax or any of its Subsidiaries or any investment banker, attorney or other
advisor or representatives of Optimax or any of its Subsidiaries or otherwise,
shall be deemed to be a breach of this Section by Optimax. For purposes of
<PAGE>
<PAGE>
this Agreement, "takeover proposal" means any proposal for a merger,
consolidation or reorganization or other business combination involving Optimax
or any of its Subsidiaries or any proposal or offer to acquire in any manner,
directly or indirectly, an equity interest in, any voting securities of, or
options, rights, warrants or other interests convertible or exercisable for or
into such voting securities, or a substantial or material portion of the assets
or any business of Optimax or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
(b) Except upon material breach of this Agreement by Vine Street or
following termination hereof, except for action permitted or contemplated by
this Agreement, including a party's right to terminate this Agreement under
certain circumstances, neither the Board of Directors of Optimax nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Vine Street, the approval or recommendation by
such Board of Directors of any such committee of this Agreement or the Exchange
or (ii) approve or recommend, or propose to approve or recommend, any takeover
proposal.
(c) Optimax promptly shall advise Vine Street orally and in writing
of any takeover proposal or any inquiry with respect to or which could lead to
any takeover proposal and the identity of the person making any such takeover
proposal or inquiry. Optimax will keep Vine Street fully informed of the
status and details of any such takeover proposal or inquiry.
(d) The provisions of this Section 7.6 shall not be construed to
prevent any investment banker, attorney or other advisor or representative of
Optimax or any Subsidiary to engage in discussions with third parties in the
ordinary course of business with respect to transactions not involving the
parties to this Agreement.
7.7 Audited Financial Statements.
----------------------------
(a) Optimax shall deliver as promptly as possible after the date
hereof but in no event later than prior to the Closing Date (i) the audited
consolidated balance sheet of Optimax and its Subsidiaries as of December 31,
1995, and the related audited consolidated statements of income, stockholders'
equity and cash flows for the fiscal year ended December 31, 1995, accompanied
by the report of its independent financial accountant, in form and substance
satisfactory to Vine Street, its counsel and auditor.
(b) The foregoing financial statements shall be subject to the
representations and warranties contained in Section 6.5 hereof to the same
extent as if such financial statements were expressly referred to therein.
7.8 Application For NASDAQ Approval.
-------------------------------
Within seven (7) business days following the receipt by Optimax from
Vine Street of Vine Street's draft audited financial statements for the periods
ended December 31, 1995 and pro forma financial information prepared to give
<PAGE>
<PAGE>
effect to the consummation of the Exchange described herein, Optimax agrees to
use its best efforts to prepare and file with NASDAQ such applications,
notices, reports and other information as may be reasonably required to obtain
the approval by NASDAQ of the continued NASDAQ listing of the Optimax's
securities following consummation of the transactions provided for herein.
Vine Street agrees to provide Optimax with such documents, information and
other materials as Optimax may reasonably request in connection with effecting
such application and to otherwise cooperate with Optimax in its efforts to
obtain such NASDAQ approval.
7.9 Delivery of Additional Filings.
------------------------------
Following the execution of this Agreement and until the Closing Date,
Optimax shall provide Vine Street with copies of any and all reports, filings,
notices or other information which Optimax may prepare and file with or receive
from the Commission, NASDAQ or any other regulatory authority, (and shall give
Vine Street an opportunity to review and comment on any such filings) as well
as copies of any pleadings, notices or other filings made in connection with
any pending litigation, arbitration, investigation or proceeding in which
Optimax or any Subsidiary is party or otherwise involved.
SECTION 8: TERMINATION
8.1 Termination.
-----------
This Agreement may be terminated and abandoned solely as follows:
(a) At any time until the Closing Date by the mutual agreement of
Optimax and Vine Street.
(b) By any party hereto, if for any reason the parties have failed
to close this Agreement on or before thirty (30) days from the date of this
Agreement, provided that the party requesting termination is not then in
default thereunder.
(c) By any party hereof, if the other party shall have breached any
representation, warranty or covenant contained in this Agreement and shall have
failed to cure such breach within ten (10) days following written notice
thereof by the party seeking termination.
(d) By any party hereof prior to March 31, 1996 if the results of
the due diligence investigation of the other shall not be satisfactory to such
party in its sole discretion.
In the event of any termination pursuant to this Section 8.1(b) or
(c), written notice setting forth the reasons therefor shall forthwith be given
by the terminating party to all of the other parties hereto.
<PAGE>
<PAGE>
8.2 Effect of Termination.
---------------------
If the Exchange is terminated and abandoned as provided for in this
Section 8, this Agreement shall forthwith become wholly void and of no effect
without liability to any party to this Agreement; provided, however, that no
such termination shall terminate or limit the rights of any such terminating
party to enforce any remedy otherwise available for any breach hereof.
SECTION 9: INDEMNIFICATION AND REMEDIES FOR BREACH
9.1 Indemnification by Optimax.
--------------------------
(a) Optimax shall defend, indemnify and hold Vine Street, its
officers, employees, directors, affiliates, controlling persons, agents,
advisors, consultants and other representatives (all of such persons being
deemed to be within the meaning of the term "Vine Street" for purposes of Vine
Street's rights and remedies), harmless against and in respect of any damage,
loss, liability, cost or expense, including expert witness fees and reasonable
attorneys' fees and expenses, whether or not recoverable under applicable state
law, resulting or arising from or incurred in connection with:
(i) any misrepresentation, breach of warranty, or
nonfulfillment or nonperformance of any agreement on the
part of Optimax under this Agreement, or any
misrepresentation or omission from any exhibit, schedule,
list, certificate or other instrument furnished or to be
furnished by it under this Agreement, or any noncompliance
on the part of Optimax with applicable law;
(ii) any and all liabilities of Optimax of any nature
whatsoever, whether accrued, absolute, contingent or
otherwise and whether known or unknown, except to the
extent that any such liability arises from Vine Street's
failure to perform or discharge, when due, Vine Street's
future obligations; and
(iii) any actions, suits, proceedings, damages, assessments,
judgments, costs or expenses incident to any of the
foregoing.
(b) Promptly after the receipt by Vine Street of notice of any claim
asserted by a third party that may give rise to Optimax's liability to Vine
Street under this Section, Vine Street shall give to Optimax written notice of
such claim (but the failure to so give such notice shall not relieve Optimax of
any obligation hereunder unless such failure shall proximately cause actual
harm or material prejudice to Optimax in connection with any such claim), and
Optimax shall be entitled to participate at its own expense in the defense of
any such claim. Vine Street shall not pay, acknowledge, compromise or settle
any such claim without the written consent of Optimax, unless such payment,
acknowledgement, compromise or settlement results in a full and complete
release and discharge of Optimax from any liability.<PAGE>
<PAGE>
9.2 Indemnification by Vine Street.
------------------------------
(a) Vine Street shall defend, indemnify and hold Optimax, its
officers, employees, directors, affiliates, controlling persons, partners,
shareholders, agents, advisors, consultants and other representatives (all of
such persons being deemed to be within the meaning of the term "Optimax" for
purposes of Optimax's rights and remedies), harmless against and in respect of
any damage, loss, liability, cost or expense, including expert witness fees and
reasonable attorneys' fees, whether or not recoverable under applicable state
law, resulting or arising from or incurred in connection with:
(i) any misrepresentation, breach of warranty, or
nonfulfillment or nonperformance of any agreement on the
part of Vine Street under this Agreement, or any
misrepresentation or omission from any exhibit, schedule,
list, certificate or other instrument furnished or to be
furnished by it under this Agreement.
(ii) any and all liabilities of Vine Street of any nature
whatsoever, whether accrued, absolute, contingent or
otherwise and whether known or unknown, except to the
extent that any such liability arises from Optimax's
failure to perform or discharge, when due, Optimax's future
obligations;
(iii) any actions, suits, proceedings, damages, assessments,
judgments, costs or expenses incident to any of the
foregoing.
(b) Promptly after the receipt by Optimax of notice of any claim
asserted by a third party that may give rise to Vine Street's liability to
Optimax under this Section, Optimax shall give to Vine Street written notice of
such claim (but the failure to so give such notice shall not relieve Vine
Street of any obligation hereunder unless such failure shall proximately cause
actual harm or material prejudice to Vine Street in connection with any such
claim) and Vine Street shall be entitled to participate at its own expense in
the defense of any such claim. Optimax shall not pay, acknowledge, compromise
or settle any such claim without the written consent of Vine Street, unless
such payment, acknowledgement, compromise or settlement results in a full and
complete release and discharge of Vine Street from any liability.
9.3 Additional Notice.
-----------------
Notwithstanding the provisions of Sections 9.1 or 9.2 above, promptly
after the receipt by any party hereto of notice of any claim asserted by a
third party that may give rise to the liability of any party for which the
right to indemnification may be claimed under this Section, such party shall
give to each other party written notice of such claim as soon as practicable
(but the failure to so give such notice shall not relieve any party of any
obligation hereunder unless such failure shall proximately cause actual harm or
<PAGE>
<PAGE>
material prejudice to any party in connection with any such claim). The
provisions of this Section 9.3 in addition to and not in lieu of the covenants
of the parties contained in Sections 9.1 or 9.2 above.
OPT Determination of Damages and Related Matters.
--------------------------------------------
(a) Upon the occurrence of any event which would give rise to a
claim by Optimax against, or to a right of defense and indemnity against Vine
Street pursuant to this Section 9, or in the event that any suit, action,
investigation, claim or proceeding is begun, made or instituted as a result of
which Vine Street may become obligated to Optimax hereunder, Optimax shall give
notice to Vine Street of the occurrence of such event and shall identify
Optimax's choice of counsel to represent such investigation, claim or
proceedings, provided that the failure of Optimax to give notice shall not
affect the indemnification obligations of Vine Street hereunder. Optimax (i)
shall have the exclusive right to so defend, contest or protect against such
matter utilizing the counsel of Optimax's choice (who shall be reasonably
acceptable to a representative of Vine Street), and (ii) without further notice
may set off or apply against all amounts due Vine Street hereunder, or their
affiliates, under any instrument or pursuant to any obligation other than an
obligation to pay Vine Street compensation for services rendered on behalf of
Optimax, the full amount for which indemnification hereunder is provided. Vine
Street shall have the right, but not the obligation, to participate, at its own
expense, in the defense thereof by counsel of their choice.
(b) As Optimax incurs expenses for which indemnification hereunder
is provided and after any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction,
and the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, Optimax shall forward to Vine Street notice of any
sums due and owing by them pursuant to this Agreement with respect to such
matter and they shall be required to pay all of the sums so due and owing to
Optimax by certified or bank cashier's check within ten (10) days of such
notice.
(c) Upon the occurrence of any event which would give rise to a
claim by Vine Street against, or to a right of defense and indemnity against
Optimax pursuant to this Section 9, or in the event that any suit, action,
investigation, claim or proceeding is begun, made or instituted as a result of
which Optimax may become obligated to Vine Street hereunder, Vine Street shall
give notice to Optimax of the occurrence of such event and shall identify their
choice of counsel to represent such investigation, claim or proceedings,
provided that the failure of either or both of them to give notice shall not
affect the indemnification obligations of Optimax hereunder. Vine Street (i)
shall have the exclusive right to so defend, contest or protect against such
matter utilizing the counsel of their choice (who shall be reasonably
acceptable to a representative of Optimax), and (ii) without further notice may
set off or apply against all amounts due Optimax hereunder, or their
affiliates, under any instrument or pursuant to any obligation, the full amount
for which indemnification hereunder is provided. Optimax shall have the right,
but not the obligation, to participate, at its own expense, in the defense
thereof by counsel of its choice.<PAGE>
<PAGE>
(d) As Vine Street incur expenses for which indemnification
hereunder is provided and after any final judgment or award shall have been
rendered by a court, arbitration board or administrative agency of competent
jurisdiction, and the expiration of the time in which to appeal therefrom, or a
settlement shall have been consummated, Vine Street shall forward to Optimax
notice of any sums due and owing by it pursuant to this Agreement with respect
to such matter and shall be required to pay all of the sums so due and owing to
Vine Street by certified or bank cashier's check within ten (10) days of such
notice. Optimax shall be required to pay all of the sums due and owing to Vine
Street within ten (10) days of such notice.
9.5 Remedies for Breach.
-------------------
In the event of any breach of any of the provisions of this
Agreement, including but not limited to any breach of any covenant, warranty or
representation made by any party hereto, the breaching or defaulting party
shall be liable pursuant to the provisions of 9.1 or 9.2 above. In the event
of any material breach by any party of any provision under this Agreement,
either party may file suit. Nothing contained in this Agreement shall be deemed
to preclude a party to sue for or seek specific performance of the provisions
of this Agreement in the appropriate circumstance. The provisions of this
Section 9 shall survive any termination hereof.
SECTION 10: NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.1 Nondisclosure of Confidential Information.
-----------------------------------------
Each of the parties hereto recognizes and acknowledges that it has
and will have access to certain nonpublic information of the others which shall
be deemed the confidential information of the other Companies (including, but
not limited to, business plans, costs, trade secrets, licenses, research
projects, profits, markets, sales, customer lists, strategies, plans for future
development, financial information and any other information of a similar
nature) that after the consummation of the transactions contemplated hereby
will be valuable, special and unique property of the Companies. Information
received by the other party or its representatives shall not be deemed
Confidential Information and afforded the protections of this Section 10 if, on
the Closing Date, such information has been (i) developed by the receiving
party independently of the disclosing party, (ii) rightfully obtained without
restriction by the receiving party from a third party, provided that the third
party had full legal authority to possess and disclose such information, (iii)
publicly available other than through the fault or negligence of the receiving
party, (iv) released without restriction by the disclosing party to anyone,
including the United States government, or (v) properly and lawfully known to
the receiving party at the time of its disclosure, as evidenced by written
documentation conclusively established to have been in the possession of the
receiving party on the date of such disclosure. Each of the parties hereto
agrees that it shall not disclose, and that it shall use its best efforts to
prevent disclosure by any other Person of, any such confidential information to
any Person for any purpose or reason whatsoever, except to authorized<PAGE>
<PAGE>
representatives of the Companies who agree to be bound by this confidentiality
agreement. Notwithstanding, a party may use and disclose any such confidential
information to the extent that a party may become compelled by Legal
Requirements to disclose any such information; provided, however, that such
party shall use all reasonable efforts and shall have afforded the other
Companies the opportunity to obtain an appropriate protective order or other
satisfactory assurance of confidential treatment for any such information
compelled to be disclosed. In the event of termination of this Agreement, each
party shall use all reasonable efforts to cause to be delivered to the other
parties, and to retain no copies of, any documents, work papers and other
materials obtained by such party or on such party's behalf during the conduct
of the matters provided for in this Agreement, whether so obtained before or
after the execution hereof. Each of the Companies recognizes and agrees that
violation of any of the agreements contained in this Section 10 will cause
irreparable damage or injury to the Companies, the exact amount of which may be
impossible to ascertain, and that, for such reason, among others, the Companies
shall be entitled to an injunction, without the necessity of posting bond
therefor, restraining any further violation of such agreements. Such rights to
any injunction shall be in addition to, and not in limitation of, any other
rights and remedies the Companies may have against each other. The provisions
of this Section 10.1 shall survive any termination of this Agreement.
10.2 No Publicity.
------------
Until the Closing or the termination of this Agreement in accordance
with its terms, neither Optimax nor Vine Street shall, directly or indirectly,
issue any press release, or make any public statement, concerning the
transactions contemplated by this Agreement without the prior written consent
of Optimax (in the case of such a release or statement by Vine Street) or of
Vine Street (in the case of such a release or statement by Optimax). This
Section 10.2 shall not, however, preclude any party from making any disclosure
required by applicable law, and in the event any party, or any officer,
director, employee, agent or representative of a party, believes that any press
release, public statement or other disclosure is so required, such party will
notify and consult with the other parties with respect thereto as promptly as
is practicable under the circumstances.
SECTION 11: REGISTRATION RIGHTS
11.1 Request for Registration - "Demand" Registration.
------------------------------------------------
(a) If the Company shall receive a written request (specifying that
it is being made pursuant to this Section 11.1) from the holders of at least
fifty percent (50%) of the then outstanding Optimax Exchange Shares who
received such shares in connection with the Exchange provided for in Section 2
hereof (collectively the "Registration Rights Holders") that the Company file a
registration statement under the Act, or a similar document pursuant to any
other statute then in effect corresponding to the Act, covering the
registration of the Exchange Shares, then the Company shall promptly notify all
other Shareholders of such request and shall use its best efforts, subject to
<PAGE>
<PAGE>
Sections 11.1(b) and 11.1(d) below, to cause all Exchange Shares that
Shareholders have requested be registered to be registered under the Act;
provided that the Company shall not be required to include in any such
registration the Exchange Shares of any Shareholders who fail to give notice to
the Company, in writing, within fifteen (15) days after receipt of said notice
from the Company, of their desire to join in such demand registration request
as above described.
(b) Notwithstanding the foregoing: (1) the Company shall not be
obligated to effect a registration pursuant to this Section 11.1 during the
period starting with the date thirty (30) days prior to the Company's estimated
date of filing of, and ending on a date four (4) months following the effective
date of, a registration statement pertaining to an underwritten public offering
of securities for the account of the Company, provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective and that the Company's estimate of
the date of filing such registration statement is made in good faith; and (2)
if the Company shall furnish to such Shareholders a certificate signed by the
President of the Company stating that in the good faith judgment of the Board
of Directors it would be seriously detrimental to the Company and its
shareholders for a registration statement to be filed in the near future, then
the Company's obligation to use its best efforts to file a registration
statement may, once in a twelve month period, be deferred for a period not to
exceed ninety (90) days and at the end of such ninety (90) day period, if the
Shareholders wish to request a registration pursuant to this Section 11.1, they
shall recommence the procedure set forth in this Section 11.1.
(c) The Company shall be obligated to effect only two (2) completed
registrations pursuant to this Section 11.1; provided, however, that if the
Company is eligible to utilize Form S-3 or a then-current equivalent to Form S-
3 to register for resale the Exchange Shares, the Company shall be obligated to
effect up to two (2) registrations on Form S-3 in each calendar year until such
time as all outstanding Exchange Shares have been resold by the Shareholders
pursuant to the exercise of Registration Rights contained in this Section 11.
(d) Notwithstanding any other provision of this Section 11.1, if the
underwriter advises holders making a written request as described in Section
11.1(a) above that marketing factors require a limitation of the number of
shares to be underwritten, the requesting Shareholders shall so advise the
Company, and the Company shall so advise all Shareholders of Exchange Shares
that the underwriter believes may be included in the registration in
proportion, as nearly as practicable, to the respective amounts of Exchange
Shares then requested to be registered by such Shareholders.
11.2 Optimax Registration and "Piggyback Rights.
------------------------------------------
Subject to the various provisions of Section 11.7 hereof, if at any
time Optimax proposes to register any of its Common Stock under the Act in
connection with the public offering of such securities solely for cash on a
form that would also permit the registration of the Exchange Shares (which
<PAGE>
<PAGE>
would exclude, for instance, Form S-8 registrations covering employee benefit
plans and Form S-4 registrations covering shares issued in an acquisition)
Optimax shall, each such time, promptly give Shareholders written notice of
such determination. Upon the written request of Shareholders given within
twenty (20) days after mailing of any such notice by Optimax, Optimax, subject
to the provisions of Section 11.7 below, shall use its best efforts to cause to
be registered under the Act all of the Exchange Shares that Shareholders have
requested be registered.
11.3 Obligations of Optimax.
----------------------
Whenever required to use its best efforts to effect a registration
hereunder, Optimax shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange Commission
(the "SEC") a registration statement with respect to such Exchange Shares and
use its best efforts to cause such registration statement to become and remain
effective.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to keep such registration statement
effective, and to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement.
(c) Furnish to Shareholders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as it may reasonably request in order to
facilitate the disposition of Exchange Shares owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the securities covered by the registration statement, provided
that Optimax shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, and further provided that
(anything in this Agreement to the contrary notwithstanding with respect to the
bearing of expenses) if any jurisdiction in which the securities shall be
qualified shall require that expenses incurred in connection with the
qualification of the securities in that jurisdiction be borne by Shareholders,
then such expenses shall be payable by Shareholders pro rata, to the extent
required by such jurisdiction.
11.4 Furnish Information.
-------------------
It shall be a condition precedent to the obligations of Optimax to
take any action pursuant to this Agreement as to Shareholders that Shareholders
shall furnish to Optimax such information regarding them, the Exchange Shares
<PAGE>
<PAGE>
held by them, and the intended method of disposition of such securities as
Optimax shall reasonably request and as shall be requested or required by the
SEC or otherwise in connection with the action to be taken by Optimax.
11.5 Expenses of Demand Registration.
-------------------------------
All expenses incurred in connection with registration pursuant to
Section 11.1 hereof (excluding underwriters' discounts and commissions),
including, without limitation, all registration and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements of one counsel for the
selling Shareholders shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 11.1 if the registration request is
subsequently withdrawn, unless the Shareholders agree to forfeit their right to
a demand registration pursuant to Section 11.1; provided further that the
Shareholders may withdraw a request made within forty-five (45) days before or
after the end of a fiscal year if the audited financial statements of the
Company for such year and at such year-end materially and adversely differ from
the information known to the Shareholders at the time of their request, in
which event the Shareholders shall not be required to pay any of the expenses
and shall retain the right to require the Company to register Exchange Shares
pursuant to Section 11.1.
11.6 Optimax Registration Expenses.
-----------------------------
In the case of any registration effected pursuant to Section 11.2,
Shareholders shall bear any additional registration and qualification fees and
expenses (including underwriters' discounts and commissions), and any
additional, identifiable costs and disbursements of counsel for Optimax that
result from the inclusion of securities held by Shareholders in such
registration, with such additional expenses of the registration being borne by
Shareholders on the basis of the amount of securities so registered; provided,
however, that if any such cost or expense is attributable solely to
Shareholders and does not constitute a normal cost or expense of such a
registration, such cost or expense shall be allocated to Shareholders. In
addition, Shareholders shall bear the fees and costs of their own counsel.
11.7 Underwriting Requirements and Percentage Piggyback Registration
Rights and Allowances.
---------------------------------------------------------------------
- -----
In connection with any offering involving an underwriting of shares
being issued by Optimax as described in Section 11.2 above, Optimax shall not
be required under Section 11.2 hereof to include Shareholders's Exchange Shares
in such underwriting unless they accept the terms of the underwriting as agreed
upon between Optimax and the underwriters selected by them, and then only in
such quantity as will not, in the written opinion of the underwriters,
jeopardize the success of the offering by Optimax. If the total amount of
securities that Shareholders request to be included in such offering is an
<PAGE>
<PAGE>
amount of securities that the underwriters state in their written opinion
jeopardizes the success of the offering, Optimax shall only be required to
include in the offering so many of the securities of Shareholders as the
underwriters opine (in writing) will not jeopardize the success of the
offering, subject to the following provisions and exceptions:
(a) Except as provided in Section 11.7(b) below, all limitations on
the number of Exchange Shares to be included in the applicable underwriting
shall be pro rata with respect to the number of Exchange Shares requested to be
registered as between holders as of the date of the written request provided by
Shareholders to Optimax pursuant to Section 11.2 above. If Shareholders
disapprove of the terms of any such underwriting, they may elect to withdraw
therefrom by written notice to Optimax and the underwriter, and any Exchange
Shares excluded or withdrawn from such underwriting shall be withdrawn from
registration.
(b) Notwithstanding any provision to the contrary elsewhere herein;
(i) if Directors and Officers of Optimax elect to include any shares of Common
Stock held by them in any registration effected by Optimax as described in
Section 11.2 hereof, then such shares, subject to the underwriter's opinion and
percentage limitations described in Section 11.7(b)(ii) immediately following,
shall be considered Exchange Shares under this Agreement entitled to
"piggyback registration" rights under Section 11.2 hereof, and (ii) if the
underwriter for an underwriting contemplated under Section 11.2 hereof
determines that marketing factors permit the registration of securities other
than those offered for Optimax's account in such underwriting ("Piggybacked
Securities"), the registration rights granted elsewhere herein to Shareholders
shall apply to such number of the Exchange Shares requested to be registered by
such Directors and Officers.
11.8 Delay of Registration.
---------------------
Notwithstanding any other provision of this Agreement, Shareholders
shall have no right to take any action to restrain, enjoin, or otherwise delay
any registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Agreement.
11.9 Indemnification.
---------------
In the event any Exchange Shares are included in a registration
statement under this Agreement;
(a) To the extent permitted by law, Optimax will indemnify and hold
harmless holders requesting or joining in a registration, any underwriter (as
defined in the Act) for it, and each person, if any, who controls such holder
or underwriter within the meaning of the Act, against any losses, claims,
damages, or liabilities, joint or several, to which they may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based on any
untrue or alleged untrue statement of any material fact contained in such<PAGE>
<PAGE>
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading or arise out of any violation by Optimax of
any rule or regulation promulgated under the Act applicable to Optimax and
relating to action or inaction required of Optimax in connection with any such
registration; and will reimburse such holder, underwriter, or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; and, upon request, Optimax shall pay in cash promptly
after demand therefor in advance of any final determination of any right to
indemnification hereunder to each claimed indemnitee hereunder all legal and
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, if, and only if,
such claimed indemnitee first delivers a written undertaking to Optimax
agreeing to repay such advances if he or it ultimately is determined by a court
of competent jurisdiction not to be entitled to indemnification hereunder;
provided, however, that the indemnity agreement contained in this Section
11.9(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of Optimax (which consent shall not be unreasonably withheld) nor shall Optimax
be liable in any such case for any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon an untrue statement
or omission made in connection with such registration statement, preliminary
prospectus, final prospectus, or amendments or supplements thereto, in reliance
upon and in conformity with information furnished in writing expressly for use
in connection with such registration by Shareholders, underwriter, or
controlling person.
(b) To the extent permitted by law, Shareholders upon joining in a
registration will indemnify and hold harmless Optimax, each of its directors,
each person, if any, who controls Optimax within the meaning of the Act, and
each agent and any underwriter for Optimax (within the meaning of the Act)
against any losses, claims, damages, or liabilities, joint or several, to which
Optimax or any such director, officer, controlling person, agent, or
underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in such registration
statement, preliminary or final prospectus, or amendments or supplements
thereto, in reliance upon and in conformity with information furnished by
Shareholders in writing expressly for use in connection with such registration;
and Shareholders will reimburse any legal or other expenses reasonably incurred
<PAGE>
<PAGE>
by Optimax or any such director, officer, controlling person, agent, or
underwriter in connection with investigating or defending any such loss, claim,
damage, liability, or action; and, upon request, Shareholders shall pay in cash
promptly after demand therefor in advance of any final determination of any
right to indemnification hereunder to each claimed indemnitee hereunder all
legal and other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided such claimed indemnitee first delivers a written undertaking to
Shareholders agreeing to repay such advances if it ultimately is determined by
a court of competent jurisdiction not to be entitled to indemnification
hereunder; provided, however, that the indemnity agreement contained in this
Section 11.9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of Shareholders (which consent shall not be unreasonably withheld).
Any obligation on the part of Shareholders under this SubSection 11.9(b) shall
be several and not joint; and, with regard to advances of expenses, such an
advance shall be payable by Shareholders only upon a showing that the losses,
claims, damages or liabilities involved arise out of or are based upon
information furnished by Shareholders in writing expressly for use in
connection with the registration involved.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party under this Section, notify the indemnifying party in writing of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties. The failure to
notify an indemnifying party promptly of the commencement of any such action,
if prejudicial to his ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section, but the omission so to notify the indemnifying party will not relieve
him of any liability that he may have to any indemnified party otherwise than
under this Section.
11.10 Termination of Optimax's Obligations.
------------------------------------
Optimax shall have no obligations pursuant to Sections 11.1 and
11.2 if the benefits of Rule 144 promulgated under the Act as currently in
effect or any other similar rule or regulation that may hereinafter be enacted
by the SEC permitting Shareholders to sell securities of Optimax to the public
without registration on terms and conditions as beneficial to Shareholders as
those of Rule 144 as it exists at the date of this Agreement, are available to
Shareholders, then Optimax shall have no obligation to register securities
pursuant to this Agreement to a holder who owns less than one percent (1%) of
Optimax's Common Stock (on a fully diluted basis) and whose sales are not
required to be aggregated with others.<PAGE>
<PAGE>
11.11 Lockup Agreement.
----------------
In consideration for Optimax agreeing to its obligations under this
Agreement, Shareholders agree in connection with any registration of Optimax's
securities that, upon the request of the underwriters managing any underwritten
offering of Optimax's securities, not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any Exchange
Shares (other than those included in the registration) without the prior
written consent of such underwriters for such period of time as the
underwriters may specify; provided that all officers and directors of Optimax
enter into a similar lock-up agreement and that all agreements by which Optimax
grants or has granted registration rights to Shareholders of Optimax include,
and are hereby deemed to include, similar restrictions.
11.12 Proposed Transfers of Exchange Shares.
-------------------------------------
The holder of each certificate representing Exchange Shares, by
accepting those securities, agrees to comply in all respects with the following
provisions:
(a) Prior to any proposed transfer of any Exchange Shares, the
holder of those Exchange Shares shall give written notice to Optimax of such
holder's intention to effect the transfer.
(b) Each such notice shall describe the manner and
circumstances of the proposed transfer, shall be accompanied by such
information as is necessary in order to establish that such transfer may be
made without registration under the Act and, other than in connection with a
proposed transfer in accordance with Rule 144 or any other similar rule or
regulation that may hereafter be enacted by the SEC permitting a holder to sell
securities to the public without registration on terms and conditions analogous
to those of Rule 144, and except with respect to transactions not involving a
change in beneficial ownership or transactions involving the distribution
without consideration of Exchange Shares by the Acquired Companies to their
shareholders as a dividend, shall also be accompanied by either (1) a written
opinion of legal counsel who shall be reasonably satisfactory to Optimax and
its counsel stating that the proposed transfer of the Exchange Shares may be
effected without registration under the Act and without qualification; or (2) a
"no action" letter from the SEC; or (3) an appropriate registration statement
with respect to such Exchange Shares filed by Optimax with the Commission and
declared effective by the SEC.
(c) Having satisfied Section 11.12(b) above, the holder of such
Exchange Shares shall be entitled to transfer the Exchange Shares in accordance
with the terms of the notice delivered by the holder to Optimax.
(d) Each certificate evidencing the Exchange Shares transferred
shall bear the appropriate restrictive legends as set forth on the Exchange
Shares themselves prior to transfer. But Optimax shall remove such restrictive
legend upon the request of Shareholders if (1) Optimax has received an opinion
of counsel who is reasonably acceptable to it and its counsel to the effect
<PAGE>
<PAGE>
that registration of any and all future transfers is not required; and (2) an
appropriate registration statement with respect to such Exchange Shares has
been filed by Optimax with the SEC and declared effective by the SEC; or (3)
such transfer shall be made in compliance with the requirements of Rule 144 or
its successor. In these events, Optimax shall cause new certificates without
the said restrictive legend to be issued promptly to Shareholders in exchange
for outstanding legended certificates, and such unlegended securities shall no
longer be Exchange Shares under this Agreement.
11.13 Transfer of Registration Rights.
-------------------------------
The registration rights of Shareholders under this Agreement may be
transferred to any transferee who acquires Exchange Shares; provided, however,
that such transfer of rights shall be effective only where Optimax is given
written notice by Shareholders stating the name and address of the transferee
and identifying the securities with respect to which the rights under this
Agreement are being assigned.
SECTION 12: EXPENSES
Each of the parties will pay all costs and expenses of its performance and
compliance with this Agreement. Notwithstanding the foregoing, if the
Agreement is not consummated by reason of a default of one of the Companies
provided for in Section 8.1(c), then the expenses of each of the Companies in
connection with the transaction contemplated herein shall be paid by such
defaulting Company. In no event will any party to this Agreement be liable to
any other party for incidental damages, lost profits, income tax consequences,
lost savings or any other consequential damages, even if such party has been
advised of the possibility of such damages, or for punitive damages, resulting
from the breach of any obligation under this Agreement. The provisions of this
Section 12 shall survive any termination hereof.
SECTION 13: MISCELLANEOUS
13.1 Attorney's Fees.
---------------
In any action at law or in equity or in any arbitration proceeding,
for declaratory relief or to enforce any of the provisions or rights or
obligations under this Agreement, the unsuccessful party to such proceeding,
shall pay the successful party or parties all statutorily recoverable costs,
expenses and reasonable attorneys' fees incurred by the successful party or
parties including without limitation costs, expenses, and fees on any appeals
and the enforcement of any award, judgment or settlement obtained, such costs,
expenses and attorneys' fees shall be included as part of the judgment. The
successful party shall be that party who obtained substantially the relief or
remedy sought, whether by judgment, compromise, settlement or otherwise.
<PAGE>
<PAGE>
13.2 No Brokers.
----------
Optimax represents and warrants to Vine Street and Vine Street
represents and warrants to Optimax, that except as disclosed on Exhibit 13.2,
neither it nor any party acting on its behalf has incurred any liability,
either express or implied, to any "broker," "finder," financial advisor,
employee or similar person in respect of any of the transactions contemplated
hereby. Optimax agrees to indemnify Vine Street against, and hold it harmless
from, and Vine Street agrees to indemnify Optimax against, and hold it harmless
from, any liability, cost or expense (including, but not limited to, fees and
disbursements of counsel) resulting from any agreement, arrangement or
understanding made by such party with any third party, including employees of
Vine Street, for brokerage, finders' or financial advisory fees or other
commissions in connection with this Agreement or the transactions contemplated
hereby. The provisions of this Section shall survive any termination of this
Agreement.
13.3 Survival and Incorporation of Representations.
---------------------------------------------
The representations, warranties, covenants and agreements made
herein or in any certificates or documents executed in connection herewith
shall survive the execution and delivery thereof, and all statements contained
in any certificate or other document delivered by any party hereunder or in
connection herewith shall be deemed to constitute representations and
warranties made by that party to this Agreement.
13.4 Incorporation by Reference.
--------------------------
All Exhibits to this Agreement and all documents delivered pursuant
to or referred to in this Agreement are herein incorporated by reference and
made a part hereof.
13.5 Parties in Interest.
-------------------
Nothing in this Agreement, whether express or implied, is intended
to, or shall, confer any rights or remedies under, or by reason of, this
Agreement, on any person other than the parties hereto and their respective and
proper successors and assigns and indemnitees pursuant to Section 9, except for
the Registration Rights Holders with respect to the provisions of Section 11.
Nothing in this Agreement shall act to relieve or discharge the obligation or
liability of any third persons to any party to this Agreement.
13.6 Amendments and Waivers.
----------------------
This Agreement may not be amended, nor may compliance with any
term, covenant, agreement, condition or provision set forth herein be waived
(either generally or in a particular instance and either retroactively or
prospectively) unless such amendment or waiver is agreed to in writing by all
parties hereto.
<PAGE>
<PAGE>
13.7 Waiver.
------
No waiver of any breach of any one of the agreements, terms,
conditions, or covenants of this Agreement by the parties shall be deemed to
imply or constitute a waiver of any other agreement, term, condition, or
covenant of this Agreement. The failure of any party to insist on strict
performance of any agreement, term, condition, or covenant, herein set forth,
shall not constitute or be construed as a waiver of the rights of either or the
other thereafter to enforce any other default of such agreement, term,
condition, or covenant; neither shall such failure to insist upon strict
performance be deemed sufficient grounds to enable either party hereto to
forego or subvert or otherwise disregard any other agreement, term, condition,
or covenants of this Agreement.
13.8 Governing Law - Construction.
----------------------------
This Agreement, and the rights and obligations of the respective
parties, shall be governed by and construed in accordance with the laws of the
State of Colorado, excluding conflict of law provisions which would act to
apply the laws of another state. Notwithstanding the preceding sentence, it is
acknowledged that each party hereto is being represented by, or has waived the
right to be represented by, independent counsel. Accordingly, the parties
expressly agree that no provision of this Agreement shall be construed against
any party on the ground that the party or its counsel drafted the provision.
Nor may any provision of this Agreement be construed against any party on the
grounds that party caused the provision to be present.
13.9 Limitation of Actions.
---------------------
No action may be brought by any party to this Agreement to enforce
any covenant made by any party hereto or to seek damages or equitable relief
arising from any claimed breach or nonperformance of a covenant,
representation, warranty or other performance provided for herein unless such
action is commenced within eighteen (18) months of the date of Closing. The
parties hereto agree to be bound by the aforesaid limitation of actions
notwithstanding the provisions of any applicable statutory limitation of
actions to the contrary.
13.10 Representations and Warranties.
------------------------------
The representations and warranties contained in Sections 4 and 6 of
this Agreement shall survive the Closing Date and shall remain operative in
full force and effect for the period of time set forth in Section 13.9 above
regardless of any investigation at any time made by or on behalf of either
Optimax or Vine Street and shall not be deemed merged in any document or
instrument so executed or delivered by either Optimax or Vine Street.
<PAGE>
<PAGE>
13.11 Notices.
-------
Any notice, communication, offer, acceptance, request, consent,
reply, or advice (herein severally and collectively, for convenience, called
"Notice"), in this Agreement provided or permitted to be given, served, made,
or accepted by any party or person to any other party or parties, person or
persons, hereunder must be in writing, addressed to the party to be notified at
the address set forth below, or such other address as to which one party
notifies the other in writing pursuant to the terms of this Section, and must
be served by (1) telefax or other similar electronic method, or (2) depositing
the same in the United States mail, certified, return receipt requested and
postage paid to the party or parties, person or persons to be notified or
entitled to receive same, or (3) delivering the same in person to such party.
Notice shall be deemed to have been given immediately when sent by
telefax and confirmed received or other electronic method and seventy-two hours
after being deposited in the United States mail, or when personally delivered
in the manner hereinabove described. Notice provided in any manner not
specified above shall be effective only if and when received by the party or
parties, person or persons to be, or provided to be notified.
All notices, requests, demands and other communications required or
permitted under this Agreement shall be addressed as set forth below:
If Optimax, to: Optimax Industries, Inc.
4465 Northpark Drive, Suite 400
Colorado Springs, Colorado 80907
Attention: Stephen G. Calandrella
Fax: (719) 590-4888
With copy to: Clifford L. Neuman, Esq.
Neuman & Cobb
1507 Pine Street
Boulder, Colorado 80302
Fax: (303) 449-1045
If Vine Street, to: David Dube, President
Vine Street Stores, Inc.
132 Lincoln Street
Boston, Massachusetts 02111
Fax:
With copy to: A. Jeffrey Robinson, Esq.
Greenberg Traurig
1221 Brickell Ave., 22nd Floor
Miami, Florida 33131
Fax: (305) 579-0717
<PAGE>
<PAGE>
Any party receiving a facsimile transmission shall be entitled to rely upon a
facsimile transmission to the same extent as if it were an original. Any party
may alter the address to which communications or copies are to be sent by
giving notice of such change of address in conformity with the provisions of
this Section for the giving of notice.
13.12 Fax/Counterparts.
----------------
This Agreement may be executed by telex, telecopy or other
facsimile transmission, and such facsimile transmission shall be valid and
binding to the same extent as if it were an original. Further, this Agreement
may be signed in one or more counterparts, all of which when taken together
shall constitute the same documents. For all evidentiary purposes, any one
complete counter set of this Agreement shall be considered an original.
13.13 Captions.
--------
The caption and heading of various sections and paragraphs of this
Agreement are for convenience only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions hereof.
13.14 Severability.
------------
Wherever there is any conflict between any provision of this
Agreement and any Governmental Requirement or judicial precedent, the latter
shall prevail, but in such event the provisions of this Agreement thus affected
shall be curtailed and limited only to the extent necessary to bring it within
the requirement of the law. In the event that any part, section, paragraph or
clause of this Agreement shall be held by a court of proper jurisdiction to be
invalid or unenforceable, the entire Agreement shall not fail on account
thereof, but the balance of the Agreement shall continue in full force and
effect unless such construction would clearly be contrary to the intention of
the parties or would result in unconscionable injustice.
13.15 Good Faith Cooperation and Additional Documents.
-----------------------------------------------
The parties shall use their best good faith efforts to fulfill all
of the conditions set forth in this Agreement over which it has control or
influence. Each party covenants and agrees to cooperate in good faith and to
enter into and deliver such other documents and papers as the other party
reasonably shall require in order to consummate the transactions contemplated
hereby, provided in each instance, any such document is in form and substance
approved by the parties and their respective legal counsel.
13.16 Specific Performance.
--------------------
The obligations of the parties under Section 10 are unique. If
either party should default in its obligations under said Section, the parties
each acknowledge that it would be extremely difficult and impracticable to
<PAGE>
<PAGE>
measure the resulting damages; accordingly, the non-defaulting party, in
addition to any other available rights and remedies, may sue in equity for
injunction (mandatory or prohibitive) or specific performance (all without the
need to post a bond or undertaking of any nature), and the parties each
expressly waive the defense that a remedy at law in damages is adequate.
13.17 Assignment.
----------
Neither party may directly or indirectly assign or delegate, by
operation of law or otherwise, all or any portion of its/their/his rights,
obligations or liabilities under this Agreement without the prior written
consent of all other parties, which consent may be withheld in their respective
sole and absolute discretion. Any purported assignment or delegation without
such consent shall be null and void.
For purposes of this Section, the term "Agreement" shall include
this Agreement and the Exhibits and other documents attached hereto or
described in this Section 13. This Agreement, and other documents delivered
pursuant to this Agreement, contain all of the terms and conditions agreed upon
by the parties relating to the subject matter of this Agreement and supersede
all prior and contemporaneous agreements, letters of intent, representations,
warranties, disclosures, negotiations, correspondence, undertakings and
communications of the parties, oral or written, respecting that subject matter.
13.18 Time.
----
Time is of the essence of this Agreement and each of its
provisions.
IN WITNESS WHEREOF, the parties have signed the Agreement the date and
year first above written.
OPTIMAX INDUSTRIES, INC., a Colorado corporation,
By: /s/ Stephen G. Calandrella
--------------------------------------
Authorized Signatory
VINE STREET STORES, INC., a Massachusetts
corporation,
By: /s/ David Dube
--------------------------------------
Authorized Signatory
