SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
PALM DESERT ART, INC. (formerly Database Technologies, Inc.)
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
238027106
(CUSIP Number)
PALM DESERT ART PUBLISHERS, LTD. LLC
39-725 Garand Lane, Suite J
Palm Desert, CA 92211
760-360-5911
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 22, 1998
(Date of Event which Required Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G, to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box { }.
Check the following box if a fee is being paid with this statement {X}. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Page 1 of 6 Pages
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Page 2 of 6 pages
CUSIP NO. 238027106
1. Name of Reporting Person, S.S. or I.R.S. Identification No. Of Above
Person:
Palm Desert Art Publishers, Ltd. LLC
2. Check the Appropriate Box if a member of a Group
(a) ______ (b) ______
- --------------------------------------------------------------------------------
3. SEC Use Only
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4. Source Of Funds 00
- ----------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e)
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6. Citizenship or Place of Organization CALIFORNIA
- ------------------------------------------------------
Number of 7. Sole Voting Power 20,083,918 SHARES
Shares Bene-
ficially ------------------------------------------------------------
Owned by Each 8. Shared Voting Power 0 SHARES
Reporting
Person With ------------------------------------------------------------
9. Sole Dispositive 20,083,918 SHARES
-------------------------------------------------------------
10. Shared Dispositive Power 0 SHARES
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
20,083,918 SHARES
- --------------------------------------------------------------------------------
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
---------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 80.3%
---------------------------------------------------------
14. Type of Reporting Person OO
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Page 3 of 6 pages
This Schedule 13D (the "Statement") is filed on behalf of Palm Desert Art
Publishers, Ltd. LLC, hereinafter referred to as the "Reporting Person". The
Reporting Person acquired the shares of Common Stock identified in this
Statement upon the closing on April 22, 1998 of an Asset Purchase and
Subscription Agreement dated February 5, 1998 between the Reporting Person and
the Issuer pursuant to which the Reporting Person sold all of its assets to the
Issuer in exchange for 32,763,661 shares of the Issuer's $.001 common stock, of
which 20,083,918 shares were delivered to the Reporting Person at closing and
the balance of which is to be delivered to the Reporting Person upon the
Issuer's holding of a shareholders' meeting to, among other things, authorize a
reverse split of Issuer's stock.
ITEM 1. SECURITY AND ISSUER.
This Statement relates to the Common Stock (the "Common Stock") of
Palm Desert Art, Inc. (formerly Database Technologies, Inc.) (the
"Issuer"). The Issuer's principal executive offices are located at 39-725
Garand Lane, Suite J, Palm Desert, CA 92211 (formerly located at 20
Commerce Park North, Bedford, NH 03110-6911).
ITEM 2. IDENTITY AND BACKGROUND.
(a) The name of the Reporting Person is Palm Desert Art Publishers, Ltd.
LLC.
(b) The business address of the Reporting Person is 39-725 Garand Lane,
Suite J, Palm Desert, CA 92211.
(c) The Reporting Person is in the business of owning and operating an art
framing shop and gallery located at 18727 Ventura Boulevard, Tarzana,
California 91356 and operates under the name of Palm Desert Art
Publishers, Ltd. LLC.
(d) The Reporting Person has not, during the past five years, been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) The Reporting Person has not, during the past five years, been a party
to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
Federal or State securities laws or finding any violation with respect
to such laws.
(f) The Reporting Person is a limited liability company organized and
existing under the laws of the state of California.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
This Statement relates to the Reporting Person's beneficial ownership
of an aggregate of 20,083,918 shares of Issuer's $.001 Common Stock. The
Reporting Person acquired the shares of Common Stock identified in this
Statement upon the closing on April 22, 1998 of an Asset Purchase and
Subscription Agreement dated February 5, 1998 between the Reporting Person
and the Issuer pursuant to which the Reporting Person sold all of its
assets to the Issuer in exchange for 32,763,661 shares of Issuer's $.001
common stock, of which 20,083,918 shares were delivered to the Reporting
Person at closing and the balance of which is to be delivered to the
Reporting Person upon the Issuer's holding of a shareholders' meeting to,
among other things, authorize a reverse split of Issuer's stock.
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Page 4 of 6 pages
ITEM 4. PURPOSE OF TRANSACTION.
On April 22, 1998, in consideration of 32,763,661 shares of its $.001 par
value common stock, the Issuer purchased all of the assets of the Reporting
Person pursuant to an Asset Purchase and Subscription Agreement dated
February 5, 1998.
Of the total consideration, 20,083,918 shares of the Issuer's common stock
were delivered to the Reporting Person at the closing. The remaining
12,679,743 shares are to be delivered to the Reporting Person upon the
Issuer's holding of a shareholders' meeting to, among other things,
authorize a reverse split of Issuer's stock. With this transaction, the
Reporting Person owns approximately 80.3% of the 25,000,000 shares of
common stock which has been authorized and issued by the Issuer.
In connection with this transaction, the Reporting Person, as majority
shareholder, has accepted the resignations of Robert A. Boyd and Betty L.
Wolfe as officers and directors of the Issuer and has appointed Hugh G.
Pike and Jurg Mullhaupt to serve as directors. Mr. Allan S. Wolfe remains
as a director of the Issuer. Mr. Pike serves as President and Treasurer of
Issuer and Ms. Sandra Mitchell serves as Secretary and Vice President of
Marketing.
In connection with the Asset Purchase and Subscription Agreement, the
Issuer, the Reporting Person and Allan S. Wolfe (a shareholder, former
officer, director and creditor of the Issuer) concluded on April 22, 1998,
an Asset Purchase Agreement dated February 5, 1998, pursuant to which the
Issuer agreed to transfer to Wolfe certain software assets of the Issuer
together with a promissory note from the Issuer in favor of Wolfe in the
amount of $90,000 in exchange for Wolfe's agreement to discharge the
Issuer's debt to Wolfe in the amount of $184,000. To induce Wolfe to accept
the Issuer's promissory note, the Reporting Person agreed to guaranty
payment of the note and to pledge to Wolfe as security for the guaranty all
shares of the capital stock of the Issuer which the Reporting Person
acquired under the Asset Purchase and Subscription Agreement.
With respect to the company's change of name, immediately prior to closing
the transactions contemplated of the aforementioned transactions among the
Issuer, the Reporting Person and Mr. Wolfe, it was discovered that the
Issuer's Certificate of Incorporation had lapsed by proclamation of the
State of Delaware. The Issuer was able to renew and revive its Certificate
of Incorporation, however, it was required to do so using a new corporate
name inasmuch as another company had since registered in Delaware under the
name "Database Technologies." Accordingly (and in contemplation of the
aforementioned transactions), the Issuer renewed and revived its
Certificate of Incorporation using the name "Palm Desert Art, Inc." and is
presently in good standing in the State of Delaware.
The Reporting Person is a privately-held limited liability company which
publishes on an exclusive basis the artwork of various well-known
contemporary artists. It is the Reporting Person's intention, as majority
shareholder, to cause the Issuer to acquire privately-owned and operated
art framing businesses which businesses will provide art framing services
and will display for sale artwork which is presently or which shall become
under contract to the Issuer.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the close of business on April 22, 1998, the Reporting Person
owned an aggregate of 20,038,918 shares of Common Stock.
(b) Holders of the Common Stock are entitled to vote on all matters
presented to a vote of shareholders. The Reporting Person has the sole
power to vote or direct the vote of and to dispose or direct the
disposition of the 20,083,918 shares of Common Stock identified in
this Statement.
(c) From October 22, 1997 through April 22, 1998, the Reporting Person did
not engage in any transactions involving the Issuer's Common Stock.
(d) Not applicable.
(e) Not applicable.
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Page 5 of 6 pages
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
On April 22, 1998, the Reporting Person entered into a Stock Pledge
Agreement with Mr. Allan Wolfe pursuant to which the Reporting Person
agreed to pledge to Mr. Wolfe all of the shares of the capital stock of the
Issuer which the Reporting Person had acquired under the Asset Purchase and
Subscription Agreement as security for the Reporting Person's guaranty of
the Issuer's Promissory Note in favor of Mr. Wolfe (See Item 4 above).
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Asset Purchase and Subscription Agreement dated February 5, 1998
Asset Purchase Agreement dated February 5, 1998
Promissory Note dated April 22, 1998
Guaranty dated April 22, 1998
Stock Pledge Agreement dated April 22, 1998
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Page 6 of 6 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
DATED: May __, 1998 Palm Desert Art Publishers Ltd., LLC
By: ss/Hugh G. Pike
----------------------------------
Hugh G. Pike, President
ASSET PURCHASE AND SUBSCRIPTION AGREEMENT
THIS ASSET PURCHASE AND SUBSCRIPTION AGREEMENT dated the 5th day of
February 1998, by and between Database Technologies, Inc., a Delaware
corporation, ("Database") and Palm Desert Art Publishers, Ltd., a California
corporation, ("Palm Desert"),
WITNESSETH:
WHEREAS, Palm Desert is a privately-held corporation engaged in the
business of owning contracts with artists who grant it the right to reproduce
and sell their artwork,
WHEREAS, Palm Desert is committed to acquiring privately owned and operated
art framing businesses;
WHEREAS, Palm Desert believes that the development of a public market for
its securities may further the growth and expansion of its business;
WHEREAS, the securities of Database are publicly held and traded through
the facilities of the NASD's OTC Bulletin Board; and
WHEREAS, Palm Desert desires to cause its assets to be acquired by Database
in exchange for a controlling interest in the securities of Database.
NOW, THEREFORE, in consideration of their respective promises and
undertakings herein contained, the parties hereto, each intending to be legally
bound hereby, do hereby covenant and agree as follows:
ARTICLE I
AGREEMENTS TO TRANSFER AND ACQUIRE;
CONSIDERATION; CLOSING
ss.1.1. Agreement to Transfer. On the Closing Date (as defined in ss.1.4)
Palm Desert shall sell, convey, transfer, assign, and deliver to Database, and
Database shall acquire and accept, substantially all of the assets of Palm
Desert, both real and personal, including, without limitation, Palm Desert's
furniture, fixtures, business machines, inventories, supplies, semi-finished
products, products under development, trademarks, licenses, copyrights, trade
names, leasehold interests, options to purchase real or personal property,
rights under contracts, notes receivable, securities, franchises, claims, choses
in action, permits or licenses to conduct the business of Palm Desert as now
carried on, such business as a going concern and its good will, subject to no
mortgages, pledges, liens, encumbrances, title retention or other security
agreements or arrangements or charges of any kind whatsoever, but excepting:
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(a) Palm Desert's minute book, stock transfer ledger and other
organizational or corporate records and any document or record which Palm
Desert is required by law to retain in its possession;
(b) all cash on hand or in banks in excess of the sum of $90,000 (all
of the foregoing being referred to herein as the "Assets to be Acquired");
and
(c) any property or asset of Palm Desert whose sale or assignment or
attempted sale or assignment hereunder without the consent of another
person would constitute a breach of any agreement or commitment to which
Palm Desert is a party or by which it may be bound, if the consent of such
person shall not have been obtained prior to the Closing Date; provided,
however, that in such event, such property or asset or the proceeds thereof
shall be held and/or received by Palm Desert for the benefit of Database
and that Database may act as Palm Desert's agent in order to obtain for
Database the benefits flowing from ownership of such property or asset.
ss.1.2. Agreement to Acquire; Consideration. On the Closing Date, Database
shall acquire the Assets to be Acquired in consideration of 32,763,661 shares
(the "Shares") of the common stock, par value $.001 per share, of Database (the
"Common Stock"). On the Closing Date, Database shall deliver 20,083,918 of the
Shares to Palm Desert, and shall deliver the remaining 12,679,743 Shares within
90 days of the Closing Date. The Shares, when delivered, shall have been duly
and validly issued and shall be fully-paid and non-assessable.
ss.1.3. No Liabilities Assumed. Database shall assume none of the
liabilities of Palm Desert, whether absolute, accrued, contingent or otherwise.
ss.1.4. The Closing. The consummation of the sale, conveyance, transfer,
assignment and delivery to Database of the Assets to be Acquired shall
constitute the Closing. The Closing shall take place at the offices of Database
on February 8, 1998 (the "Closing Date") or at such other time or place as shall
be mutually agreed upon by Database and Palm Desert.
ss.1.5. Action to be Taken at and After Closing.
(a) At the Closing, Palm Desert shall deliver to Database:
(1) such bills of sale with covenants of general warranty and
such other good and sufficient instruments of assignment, transfer or
conveyance as shall be necessary or appropriate to vest in or confirm
to Database good and marketable title to all properties and assets
included in the Assets to be Acquired, subject to
<PAGE>
no mortgage, pledge, lien, encumbrance, conditional sale agreement,
title retention or other security agreement or arrangement or charge
of any kind whatsoever;
(2) actual possession and operating control of the Assets to be
Acquired;
(3) originals or, if unavailable, copies of all Palm Desert's
books, records, documents and files, together with all other data
relating to the Assets to be Acquired (with the same to remain in the
custody of Database for not less than two years and thereafter in
accordance with its usual business practice, subject to access thereto
by Palm Desert at any reasonable time upon reasonable notice);
(4) executed copies of the consents referred to in ss.ss.2.7 and
4.3 hereof;
(5) all such other deeds, endorsements, assignments and other
instruments as are, in the opinion of Database's counsel, reasonably
necessary to vest in Database good and marketable title to the Assets
to be Acquired and
(6) the certificates and opinions of counsel contemplated by
ss.ss.8.6 and 8.7.
(b) From time to time at the request of Database, whether at or after
the Closing and without further consideration, Palm Desert at its expense
shall execute and deliver to Database such further instruments of sale,
conveyance, transfer, assignment and confirmation and take such other
action as Database may reasonably request in order more effectively to
sell, convey, transfer, vest and confirm in Database any of the Assets to
be Acquired.
(c) At the Closing, Database shall deliver to Palm Desert:
(1) Duly authorized and executed certificates evidencing the
Shares or irrevocable instructions to the Company's transfer agent
directing that such certificates be issued;
(2) the written resignations of all officers and directors of
Database other than Allan Wolfe and written instruments terminating
the employment of all Database employees;
(3) executed copies of the consents referred to in ss.ss. 3.8 and
5.4 hereof, and
<PAGE>
(4) the certificates and opinions of counsel contemplated by
ss.ss. 7.6 and 7.7.
(d) Immediately following the Closing, Allan Wolfe, as the sole
remaining director of Database, shall elect such persons as Palm Desert
shall designate as officers and directors of Database.
ss.1.6. Termination and Abandonment. The transactions contemplated herein
may be terminated or abandoned at any time prior to, but not after, the Closing
by mutual consent of Database and Palm Desert.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PALM DESERT
Palm Desert represents and warrants to Database as follows:
ss.2.1. Incorporation; Corporate Power. Palm Desert is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. Palm Desert has full power and authority (corporate and other) to
own and lease its properties and assets and to conduct its business as and where
such properties and assets are now owned or leased and such business is now
conducted. The character of the properties and assets now owned and leased by
Palm Desert and the nature of the business now conducted by it do not make it
necessary for Palm Desert to be licensed or qualified to do business as a
foreign corporation in any jurisdiction.
ss.2.2. Due Authorization of Agreement; No Conflict With Other Instruments.
Palm Desert has full power and authority and has taken all necessary and proper
action to authorize the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance of all
terms and conditions hereof to be performed by Palm Desert. This Agreement
constitutes the valid and legally binding obligation of Palm Desert and is
enforceable against it in accordance with its terms. The execution and delivery
of this Agreement, the consummation of the transactions contemplated hereby, and
the fulfillment of, and compliance with, the terms and provisions hereof do not
and will not (i) violate any provision of law or administrative regulation or
any judicial or administrative order, award, judgment or decree applicable to
Palm Desert; (ii) conflict with, result in a breach of or constitute a default
under any of the terms, conditions or provisions of Palm Desert's Articles of
Incorporation or By-laws; (iii) conflict with, result in a breach of or
constitute a default under or accelerate or permit the acceleration of the
performance required by, any agreement or instrument to which Palm Desert is a
party or by which it is bound; (iv) result in the creation of any lien, charge,
or encumbrance upon any of the Assets to be Acquired under any such agreement or
<PAGE>
instrument; or (v) terminate or give any party thereto the right to terminate
any such agreement or instrument, except such breaches, defaults, liens,
charges, encumbrances, or rights of acceleration or termination as have been
consented to or waived by the other party or parties to such agreement or
instrument or by Database.
ss.2.3. Compliance with Law. To the best of Palm Desert's knowledge and
except as otherwise disclosed by Palm Desert in writing to Database, the
operations of Palm Desert have been conducted in substantial compliance with all
applicable laws, regulations and other requirements of all federal, state and
local governmental authorities, and of all states, municipalities and other
political subdivisions and agencies thereof, having jurisdiction over Palm
Desert, including, without limitation, all such laws, regulations and
requirements relating to consumer protection, equal opportunity, health,
occupational safety, pension and securities matters.
ss.2.4. Books and Records. The books of account, minute book, stock record
book, and other records of Palm Desert, all of which have been made available to
Database, are complete and correct and have been maintained in accordance with
sound business practices and the requirements of Section 13(b)(2) of the
Securities Exchange Act of 1934, as amended. The minute book of Palm Desert
contains accurate and complete records of all meetings held of, and corporate
action taken by, the stockholders and the Board of Directors of Palm Desert, and
no meeting of either of them has been held for which minutes have not been
prepared and are not contained in such minute book.
ss.2.5. Taxes. Palm Desert has duly filed all tax reports and returns
required to be filed by it and all such returns are true, correct and complete.
Palm Desert has duly paid all taxes and other charges due or claimed to be due
from it by federal, state, local or foreign taxing authorities (including,
without limitation, those due in respect of Palm Desert's properties, income,
franchises, licenses, sales or payrolls), except such taxes, if any, as are
being contested in good faith and as to which it has set aside adequate
reserves. There are no tax liens upon any of the Assets to be Acquired, except
liens for current taxes not yet due. Palm Desert has not given or been requested
to give any waiver or extension of any statute of limitations relating to the
payment of taxes. All taxes that Palm Desert is or was required by law to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper governmental authorities.
ss.2.6. Patents, Trademarks, Trademarks, Etc. No proceeding charging Palm
Desert with infringement of any patent, trademark or copyright has been filed or
is threatened to be filed. Palm Desert owns, or is licensed or otherwise has all
necessary rights to use, convey and transfer, free and clear of the claims of
others, all patents, trademarks, licenses, trade names, technology, trade
<PAGE>
secrets, copyrights, know-how, patterns, manufacturing processes, formulae and
customer lists constituting a part of the Assets to be Acquired and used in or
useful to the conduct of the business of Palm Desert as heretofore conducted.
2.7. Consents. Except as otherwise disclosed by Palm Desert in writing to
Database, no consent of any person is necessary to the consummation of the
transactions contemplated hereby, including, without limitation, consents from
parties to loans, contracts, licenses, leases or other agreements and consents
from governmental agencies, whether federal, state or local. Prior to the
Closing Date, Palm Desert will have obtained all such consents, and executed
counterpart copies of all consents other than those contemplated by ss.1.1(d)
above shall be delivered to Database at the Closing.
ss.2.8. Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or, to the best knowledge of Palm
Desert, threatened against or involving the business or operations of Palm
Desert, and Palm Desert does not know, or have any reason to know, of any valid
basis for any such action, inquiry, proceeding or investigation.
ss.2.9. Brokers and Finders. Excepting only Palm Desert's understandings
and agreements with Dowe & Dowe and A. Joseph Lussier, neither Palm Desert nor
any of its officers or directors has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement.
ss.2.10. Palm Desert's Investment Representations and Warranties.
(a) Palm Desert acknowledges that Database is offering the Shares in
reliance upon the representations, warranties and other information set forth
herein by Palm Desert.
(b) Palm Desert represents that it has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of acquisition of the Shares and of making an informed investment decision
with respect thereto.
(c) Palm Desert represents that its financial condition is such that it is
able to bear all risks of (i) holding the Shares and (ii) losing its entire
investment in the Shares. Palm Desert represents and warrants that it is
acquiring the Shares for its own account, for investment and not with a view
towards any resale or other distribution thereof
(d) Palm Desert acknowledges its understanding (i) that the Shares have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act") or any state securities act in reliance on an exemption for private
offerings, (ii) that there are
<PAGE>
substantial restrictions on the transfer of Shares under the Securities Act,
(iii) that it may not transfer the Shares unless it supplies Database with a
written opinion of counsel reasonably satisfactory to Database to the effect
that, or in the opinion of counsel for Database, such transfer complies with all
applicable federal and state securities laws, (iv) that a restrictive legend to
the foregoing effect shall be imprinted on each certificate evidencing the
Shares, (v) that Database has no obligation, nor does it intend, to cause the
Shares to be registered under the Securities Act or to take any action to comply
or assist Palm Desert to comply with any exemption under the Securities Act,
including but not limited to Rule 144 promulgated under the Securities Act and
(vi) that no securities commission or regulatory authority has approved, passed
upon, or endorsed the merits of the offer and sale of the Shares, nor shall any
such agency will do so.
ss.2.11. Full Disclosure. All the representations and warranties made by
Palm Desert herein or in any Schedule hereto, and all of the statements,
documents or other information pertaining to the transaction contemplated herein
made or given by Palm Desert, its agents or representatives are true and
complete, and do not omit any information required to make the statements and
information provided, in light of the transactions contemplated herein, true,
complete and non-misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DATABASE
Database represents and warrants to Palm Desert as follows:
ss.3.1. Incorporation; Corporate Power. Database is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. Database has full power and authority (corporate and other) to own and
lease its properties and assets and to conduct its business as and where such
properties and assets are now owned or leased and such business is now
conducted. The character of the properties and assets now owned and leased by
Database and the nature of the business now conducted by it do not make it
necessary for Database to be licensed or qualified to do business as a foreign
corporation in any jurisdiction.
ss.3.2. Due Authorization of Agreement; No Conflict With Other Instruments.
Database has full power and authority and has taken all necessary and proper
action to authorize the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance of all
terms and conditions hereof to be performed by Database. This Agreement
constitutes the valid and legally binding obligation of Database and is
enforceable against them in accordance with its terms. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby, and the fulfillment of, and compliance with, the terms and provisions
hereof do not and will not (i) violate any provision of law or administrative
regulation
<PAGE>
or any judicial or administrative order, award, judgment or decree applicable to
Database; (ii) conflict with, result in a breach of or constitute a default
under any of the terms, conditions or provisions of Database's Articles of
Incorporation or By-laws; (iii) conflict with, result in a breach of or
constitute a default under or accelerate or permit the acceleration of the
performance required by any agreement or instrument to which Database is a party
or by which it is bound; (iv) result in the creation of any lien, charge, or
encumbrance upon any of Database's assets under any such agreement or
instrument; or (v) terminate or give any party thereto the right to terminate
any such agreement or instrument, except a breach, default, lien, charge,
encumbrance, or right of acceleration or termination which has been consented to
or waived by the other party or parties to such agreement or instrument or by
Palm Desert.
ss.3.3. Compliance with Law. To the best of Database's knowledge and except
as otherwise disclosed by Database in writing to Palm Desert, the operations of
Database have been conducted in substantial compliance with all applicable laws,
regulations and other requirements of all federal, state and local governmental
authorities, and of all states, municipalities and other political subdivisions
and agencies thereof, having jurisdiction over Database, including, without
limitation, all such laws, regulations and requirements relating to consumer
protection, equal opportunity, health, occupational safety, pension and
securities matters.
ss.3.4. Capitalization. The authorized capitalization of Database consists
of 25,000,000 shares of Common Stock, of which 2,466,082 shares are now, and
immediately prior to closing shall be, issued and outstanding. All outstanding
shares of Common Stock have been authorized and validly issued and are fully
paid and nonassessable. Database is not a party to any agreement relating to the
issuance, sale or transfer of any shares of Common Stock. None of the
outstanding shares of Common Stock was issued in violation of the Securities Act
or any state securities law. Database has now, and will continue to have through
the Closing Date, not less than 350 registered holders of the shares of its
Common Stock.
ss.3.5. Financial Statements. Database has delivered to Palm Desert: (a)
audited its consolidated balance sheet as at April 30, 1997 (the "Balance
Sheet") and as at April 30, 1996 and 1995, and the related consolidated
statements of income, changes in stockholders' equity and cash flow for each of
the fiscal years then ended, together with the report thereon of its independent
certified public accountants, and (b) its unaudited consolidated balance sheet
at October 30, 1997 (the "Interim Balance Sheet") and the related unaudited
consolidated statements of income, changes in stockholders' equity, and cash
flow for the nine months then ended, including in each case the notes thereto.
Such financial statements and notes fairly present the financial condition and
the results of operations, changes in stockholders' equity, and cash
<PAGE>
flow of Database as at the respective dates of and for the periods referred to
in such financial statements, all in accordance with generally accepted
accounting principles consistently applied, subject, in the case of interim
financial statements, to normal recurring year-end adjustments and the absence
of notes.
ss.3.6. Books and Records. The books of account, minutebook, stock record
book, and other records of Database, all of which have been made available to
Palm Desert, are complete and correct and have been maintained in accordance
with sound business practices and the requirements of Section 13(b)(2) of the
Securities Exchange Act of 1934, as amended. The minute book of Database
contains accurate and complete records of all meetings held of, and corporate
action taken by, the stockholders and the Board of Directors of Database, and no
meeting of either of them has been held for which minutes have not been prepared
and are not contained in such minute book.
ss.3.7. Taxes. Database has duly filed all tax reports and returns required
to be filed by it and all such returns are true, correct and complete. Database
has duly paid all taxes and other charges due or claimed to be due from it by
federal, state, local or foreign taxing authorities (including, without
limitation, those due in respect of Database's properties, income, franchises,
licenses, sales or payrolls), except such taxes, if any, as are being contested
in good faith and as to which it has set aside adequate reserves. There are no
tax liens upon any of its assets, except liens for current taxes not yet due.
Database has not given or been requested to give any waiver or extension of any
statute of limitations relating to the payment of taxes. All taxes that Database
is or was required by law to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper governmental
authorities.
ss.3.8. Consents. Except as otherwise disclosed by Database in writing to
Palm Desert, no consent of any person is necessary to the consummation of the
transactions contemplated hereby, including, without limitation, consents from
parties to loans, contracts, licenses, leases or other agreements and consents
from governmental agencies, whether federal, state or local. Prior to the
Closing Date, Database will have obtained all such consents, and executed
counterpart copies of all such consents shall be delivered to Palm Desert at the
Closing.
ss.3.9. Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or, to the best knowledge of
Database, threatened against or involving the business or operations of
Database, and Database does not know, or have any reason to know, of any valid
basis for any such action, inquiry, proceeding or investigation.
ss.3.10. OTC Bulletin Board Service. The Common Stock meets all eligibility
requirements for quotation through the OTC Bulletin
<PAGE>
Board Service of the National Association of Securities Dealers, Inc. Trading in
the shares has not been halted.
ss.3.11. SEC Filings. Database is required by Section 15(d) of the
Securities Exchange Act of 1934, as amended, to file annual and periodic reports
with the Securities and Exchange Commission pursuant to Section 13 of said Act.
Database has filed all reports required of it.
ss.3.12. Brokers and Finders. Excepting only Database's understandings and
agreements with Arcadia Ventures, neither Database nor any of its officers or
directors has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
ss.3.13. Full Disclosure. All the representations and warranties made by
Database herein or in any Schedule hereto, and all of the statements, documents
or other information pertaining to the transaction contemplated herein made or
given by Database, its agents or representatives are true and complete, and do
not omit any information required to make the statements and information
provided, in light of the transactions contemplated herein, true, complete and
non-misleading.
ss.3.14. No Material Adverse Change. Since the date of the Interim Balance
Sheet, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition of Database, and no
event has occurred or circumstance exists that may result in such a material
adverse change.
ARTICLE IV
COVENANTS OF PALM DESERT
Palm Desert hereby covenants and agrees with Database:
ss.4.1. Access and Investigation. Between the date of this Agreement and
the Closing Date, Palm Desert will (i) afford Database full and free access to
Palm Desert's personnel, properties, contracts, books and records, and other
documents and data, and (ii) furnish Database with copies of all such contracts,
books and records, and other existing documents and data as Database may
reasonably request.
ss.4.2. Conduct of Palm Desert's Business Pending Closing. Between the date
of this Agreement and the Closing Date, Palm Desert will: (i) conduct its
business only in the ordinary course; (ii) use its best efforts to preserve
intact its current business organization; (iii) maintain its corporate
existence, and (iv) refrain from taking or permitting to be taken any action not
contemplated by this Agreement that is inconsistent with the representations and
warranties given by Palm Desert herein.
<PAGE>
ss.4.3. Consents. Subject to the provisions of ss. 1.1(d), Palm Desert
shall use its best efforts to obtain at the earliest practicable date and prior
to the Closing all consents necessary to the consummation of the transactions
contemplated hereby and shall deliver each such consent to Database promptly
after it is obtained.
ss.4.4. Covenant to Satisfy Conditions. Palm Desert will use its best
efforts to insure that the conditions set forth in Article VIII hereof are
satisfied, insofar as such matters are within its control.
ARTICLE V
COVENANTS OF DATABASE
Database hereby covenants and agrees with Palm Desert:
ss.5.1. Access and Investigation. Between the date of this Agreement and
the Closing Date, Database will (i) afford Palm Desert full and free access to
Database's personnel, properties, contracts, books and records, and other
documents and data, and (ii) furnish Palm Desert with copies of all such
contracts, books and records, and other existing documents and data as Palm
Desert may reasonably request.
ss.5.2. Conduct of Database's Business Pending Closing. Between the date of
this Agreement and the Closing Date, Database will: (i) conduct its business
only in the ordinary course; (ii) use its best efforts to preserve intact its
current business organization; (iii) maintain its corporate existence, and (iv)
refrain from taking or permitting to be taken any action not contemplated by
this Agreement that is inconsistent with the representations and warranties
given by Database herein.
ss.5.3. Employees. Database agrees to offer employment to all existing
employees of Palm Desert. Database further agrees to apply all payments for
accrued wages, salaries and employee benefits which it may receive from Palm
Desert at the Closing to the payment of the obligations represented by such
payments.
ss.5.4. Consents. Database shall use its best efforts to obtain at the
earliest practicable date and prior to the Closing all consents necessary to the
consummation of the transactions contemplated hereby and shall deliver each such
consent to Palm Desert promptly after it is obtained.
ss.5.5. Covenant to Satisfy Conditions. Database will use its best efforts
to insure that the conditions set forth in Article VII hereof are satisfied,
insofar as such matters are within its control.
<PAGE>
ARTICLE VI
COVENANTS OF ALLAN WOLFE
Wolfe hereby covenants and agrees with Palm Desert and Database as follows:
ss.6.1. Proxy. Wolfe agrees to vote, at a special meeting of the
shareholders of Database to be held as soon as practicable following the
consummation of the transactions contemplated hereby, all shares of Database
common stock that he beneficially owns and has the right to vote in favor of
each of the following proposals:
(a) The change of the Database's corporate name to the name "Palm
Desert Art Publishers" or such other name as may be proposed by Database's
board of directors (post-closing);
(b) To approve a reverse split of the Common Stock;
(c) To elect any nominees of Palm Desert to Database's board of
directors; and
(d) To ratify the replacement of the Database's independent auditor if
any
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PALM DESERT
Each and every obligation of Palm Desert under this Agreement to be
performed on or before the Closing shall be subject to the satisfaction, on or
before the Closing, of each of the following conditions, unless waived in
writing by Palm Desert:
ss.7.1. Related Agreement. Database and Allan Wolfe shall have entered into
a certain Asset Purchase Agreement of even date herewith, by which agreement
Wolfe shall have agreed to purchase the so-called software assets of Database
ss.7.2. Representations and Warranties True. The representations and
warranties of Allan Wolfe and the representations and warranties contained in
Article III and each other document delivered or to be delivered by Database to
Palm Desert pursuant hereto or in connection with the transactions contemplated
hereby shall be true, complete and accurate in all material respects as of the
date when made and at and as of the Closing as though such representations and
warranties were made at and as of such date, except for changes expressly
permitted or contemplated by the terms of this Agreement.
ss.7.3. Performance. Database shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing.
<PAGE>
ss.7.4. Consents. All consents from third parties and government agencies
required to consummate the transactions contemplated hereby shall have been
obtained. In the event that Database, after having used its best efforts to do
so, is unable to obtain prior to the Closing Date all required consents,
Database shall, if acceptable to Palm Desert, continue to use its best efforts
to obtain such consents and shall indemnify Palm Desert for the loss of any
economic benefit which Palm Desert may suffer as a result of Database's failure
to obtain any required consent.
ss.7.5. No Government Proceeding or Litigation. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
ss.7.6. Certificates. Palm Desert shall have received such certificates of
public officials and of the officers of Database evidencing the accuracy of
Database's representations and warranties, its compliance with the covenants set
forth in this Article VII and such other matters as Palm Desert may reasonably
request.
ss.7.7. Opinion of Counsel. Palm Desert shall have received the opinion of
McLane, Graf, Raulerson & Middleton, Professional Association, special counsel
to Database with respect to the matters addressed in, and in substantially the
form of, paragraphs 1 - 7 of Exhibit A hereto, but subject to such
qualifications and limitations as are reasonably acceptable to Palm Desert.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF DATABASE
Each and every obligation of Database under this Agreement to be performed
on or before the Closing shall be subject to the satisfaction, on or before the
Closing, of each of the following conditions, unless waived in writing by
Database:
ss.8.1. Related Agreement. Palm Desert shall have entered into a certain
Asset Purchase Agreement of even date herewith, by which agreement Allan Wolfe
shall have agreed to purchase the so- called software assets of Database
ss.8.2. Representations and Warranties True. The representations and
warranties contained in Article II and each other document delivered or to be
delivered by Palm Desert to Database pursuant hereto or in connection with the
transactions contemplated hereby shall be true, complete and accurate in all
material respects as of the date when made and at and as of the Closing as
though such representations and warranties were made at and as of such date,
except for changes expressly permitted or contemplated by the terms of this
Agreement.
<PAGE>
ss.8.3. Performance. Palm Desert shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing.
ss.8.4. Consents. All consents from third parties and government agencies
required to consummate the transactions contemplated hereby shall have been
obtained. In the event that Palm Desert, after having used its best efforts to
do so, is unable to obtain prior to the Closing Date all required consents, Palm
Desert shall, if acceptable to Database, continue to use its best efforts to
obtain such consents and shall indemnify Database for the loss of any economic
benefit which Database may suffer as a result of Palm Desert's failure to obtain
any required consent.
ss.8.5. No Government Proceeding or Litigation. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
ss.8.6. Certificates. Database shall have received such certificates of
public officials and the officers of Palm Desert evidencing the accuracy of Palm
Desert's representations and warranties, its compliance with the covenants set
forth in this Article VIII and such other matters as Database may reasonably
request.
ss.8.7. Opinion of Counsel. Database shall have received the opinion of
Dowe and Dowe, special counsel to Palm Desert with respect to the matters
addressed in, and in substantially the form of, paragraphs 1 - 4 and 7 of
Exhibit A hereto, but subject to such qualifications and limitations as are
reasonably acceptable to Database.
ARTICLE IX
MISCELLANEOUS PROVISIONS
ss.9.1. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations, and discussions, whether oral or written, of the parties, and
there are no warranties, representations, or other agreements between the
parties in connection with the subject matter hereof except as specifically set
forth herein. No supplement, modification, waiver, or termination of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
<PAGE>
ss.9.2. Survival of Warranties. The respective representations and
warranties of Palm Desert and Database contained herein or in any certificate or
other document delivered pursuant hereto shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
ss.9.3. Waiver of Compliance. Any failure of Palm Desert, on the one hand,
or Database, on the other, to comply with any obligation, covenant, agreement or
condition herein may be expressly waived in writing by Database or Palm Desert,
respectively, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
ss.9.4. Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties.
ss.9.5. Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to its conflicts of law doctrine.
ss.9.6. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
ss.9.7. Headings. The headings of the sections and articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
ss.9.8. Third Parties. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person other than the parties hereto and their
successors or assigns, any rights or remedies under or by reason of this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers,
have caused this Agreement to be duly executed and delivered on the day and year
first above written.
DATABASE TECHNOLOGIES, INC.
By: ss/Allan S. Wolfe
------------------------------------
Name: Alan Wolfe
Title: President
PALM DESERT ART PUBLISHERS, LTD.
By: ss/Hugh G. Pike
------------------------------------
Name: Hugh G. Pike
Title: President
ALLAN S. WOLFE
(With respect to obligations set
forth in Article VI only)
ss/Allan S. Wolfe
----------------------------------------
<PAGE>
Exhibit A
PROPOSED OPINION OF COUNSEL
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of ____________________ , and has all
power and authority (corporate and other) necessary to own and lease its
properties and assets and carry on its business as presently conducted.
2. The Company has all necessary power and authority to enter into and to
perform its obligations under the Agreement. All corporate action required to be
taken by the Company in order to authorize the transactions contemplated by the
Agreement has been duly and validly taken. The Agreement has been duly and
validly executed and delivered by the Company and constitutes a valid and
legally binding agreement enforceable in accordance with its terms, subject to
the General Qualifications set forth in the American Bar Association Legal
Opinion Accord (1991) (the "Enforceability Qualification").
3. No authorization, approval, exemption or by any governmental or public
body or authority is required in connection with the authorization, execution,
delivery or performance of the terms of the Agreement by the Company, except
such authorizations, approvals, exemptions or consents as have been duly and
validly obtained or which, if not obtained, will not have a material adverse
effect on the financial condition or business of the Company or impair its
ability to perform its obligations under the Agreement.
4. Neither the execution and delivery of the the consummation of the
transactions contemplated therein nor compliance with the terms and provisions
thereof will conflict with or result in a breach of (i) any of the terms,
conditions or provisions of the Certificate of Incorporation or by-laws of the
Company as presently in effect, or (ii), to the best of our knowledge after only
such limited investigation [as is described above], any law, regulation, order,
writ, injunction or decree of any court or governmental instrumentality or
agency or of any agreement or instrument to which the Company is a party or by
which it is bound or to which it is subject, or constitute a default thereunder,
or result in the creation or imposition of any lien, charge or encumbrance upon
any of the property or assets of the Company.
5. The shares of Common Stock issuable pursuant to the Agreement, when and
as issued, sold against payment therefor and delivered in accordance with the
terms of the Agreement, will be duly authorized, validly issued, fully paid and
non-assessable.
6. In reliance upon the representations of [the Purchaser]
<PAGE>
contained in the Agreement [and in its investor questionnaire], and except as
otherwise disclosed in Exhibit _____________, the offer and sale to [the
Purchaser] of the shares of Common Stock in accordance with the Agreement are
(i) exempt from the registration requirements of Section 5 of the Securities Act
of 1933, as amended, (the "1933 Act") pursuant to the exemption contained in
Section _______ of the 1933 Act and [Regulation D promulgated thereunder,
assuming the timely filing of Form D with the Securities and Exchange Commission
and (ii) exempt from the registration requirements of Section _______ of the
[State] Securities Act.
7. To the best of our knowledge after only such limited investigation as is
described [above] and except as disclosed Exhibit _______ to the Agreement,
there is no action at law, suit in equity or other proceeding or investigation
in any court or by or before any other governmental or public authority or
agency or any arbitrator against or affecting, or threatened against, the
Company, which, if determined adversely, either individually or in the
aggregate, would have a material adverse effect on the financial condition or
business of the Company or impair the Company's ability to perform its
obligations under the Agreement.
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made this 5th day of February 1998, by and among DATABASE
TECHNOLOGIES, INC., a Delaware corporation ("Database"), PALM DESERT ART
PUBLISHERS, LTD., a California corporation ("Palm Desert") and ALLAN WOLFE of
Bedford, New Hampshire ("Wolfe") and,
WHEREAS, Database is presently controlled by Wolfe and engaged in the
business of developing and marketing computer software and Palm Desert is
engaged in the business of selling art work;
WHEREAS, to avail itself of the existing public market for Database's
securities, Palm Desert has agreed to sell all of its assets to Database in
exchange for a controlling interest in the securities of Database
WHEREAS, Database is indebted to Wolfe in the approximate amount of
$184,000 in respect of those debts, claims and liabilities identified on
Schedule A hereto (the "Indebtedness");
WHEREAS, Database desires to discharge its indebtedness to Wolfe by (i)
issuing to Wolfe its promissory note in the amount of $90,000 (the "Note") and
(ii) transferring to Wolfe, or his nominee, all tangible and intangible assets
associated with Database's software business, including, without limitation, all
those assets listed on Schedule B hereto (the "Software Assets"), subject to
certain of Database's liabilities;
WHEREAS, to induce Wolfe to accept Database's promissory note, Palm Desert
has agreed to execute and deliver to Wolfe its guaranty (the "Guaranty") of the
Note and to pledge to Wolfe all shares of the capital stock of Database that it
shall acquire (the "Shares") as security for the Guaranty;
NOW, THEREFORE, the parties hereto, in consideration of the premises set
forth herein and each intending to be legally bound hereby, do covenant and
agree as follows:
1. Agreement to Transfer. On the Closing Date (as defined below) Database
shall:
(i) sell, convey, transfer, assign, and deliver the Software Assets to
Wolfe, subject to no mortgages, pledges, liens, encumbrances, title
retention or other security agreements or arrangements or charges of any
kind whatsoever; and
(ii) deliver the Note to Wolfe.
2. Agreement to Acquire. On the Closing Date, Wolfe shall accept the Assets
and the Note and execute and deliver to Database such instrument evidencing the
discharge of the Indebtedness as Database shall reasonably request.
<PAGE>
3. Assumption of Liabilities. On the Closing Date, by an appropriate
written instrument or instruments satisfactory in form and substance to Database
and Palm Desert, Wolfe shall assume and agree to pay, perform and discharge
those certain debts, obligations and liabilities of Database set forth on the
Schedule of Assumed Liabilities attached hereto as Exhibit C (the "Assumed
Liabilities"). The Assumed Liabilities shall include all liabilities of Database
existing on the Closing Date other than the obligations of Database arising
under this Agreement and that certain Asset Purchase and Subscription Agreement
of even date herewith and the transactions contemplated by such agreements.
Wolfe shall not assume, pay or discharge any liability or obligation that is not
an Assumed Liability. Database's obligations to its transfer agent shall be
apportioned as of the Closing Date
4. The Closing. The consummation of the transactions contemplated hereby
shall constitute the Closing. The Closing shall take place on February 8, 1998
at the offices of Database immediately following the closing of Database's
purchase of Palm Desert's assets and the issuance to Palm Dessert of the Shares
or at such other time or place as shall be mutually agreed upon by the parties.
5. Documents to be Delivered at the Closing. At the Closing the following
documents or instruments shall be delivered, together with such other documents
as shall be necessary to consummate the transactions contemplated by this
Agreement.
(a) Database shall deliver, or cause to be delivered, to Wolfe:
(i) such bills of sale with covenants of general warranty and such
other good and sufficient instruments of assignment, transfer or conveyance
as shall be necessary or appropriate to vest in or confirm to Wolfe good
and marketable title to all properties and assets included in the Software
Assets;
(ii) actual possession and operating control of the Software Assets;
(iii) originals or, if unavailable, copies of all Database's books,
records, documents and files, together with all other data, relating to the
Software Assets and the business conducted in regard thereto (with the same
to remain in the custody of Wolfe for not less than two years and
thereafter in accordance with his usual business practice, subject to
access thereto by Database at any reasonable time upon reasonable notice);
(iv) the Note;
<PAGE>
(v) the Guaranty and Stock Pledge Agreement of Palm Desert, each of
which shall be acceptable in form and substance to Wolfe and his counsel;
(vi) such other deeds, endorsements, assignments and other instruments
as are, in the opinion of Wolfe's counsel, reasonably necessary to give
effect to this Agreement.
(b) Wolfe shall deliver to Database all such instruments as are, in the
opinion of Palm Desert's counsel reasonably necessary to evidence the discharge
of the Indebtedness, and otherwise give effect to the purposes and intent of
this Agreement.
6. Conditions Precedent to Buyer's Obligations. The obligations of the
parties under this Agreement are contingent upon the consummation of the sale of
Palm Desert's assets to Database.
7. Further Assurances. From time to time at the request of Wolfe, whether
at or after the Closing and without further consideration, Database, at its
expense, shall execute and deliver to Wolfe such other and further instruments
of sale, conveyance, transfer, assignment and confirmation and take such other
action as Wolfe may reasonably request in order more effectively to sell,
convey, transfer, vest and confirm in Wolfe any of the Software Assets.
After the Closing Wolfe and his administrator, executor, or other personal
representative shall have reasonable access to Database's books and records to
assist him or them in preparing or filing of any tax return, and for any other
business purpose.
8. Affirmative Covenants. Palm Desert and Database, jointly and severally,
covenant that, until payment in full of the Note and unless otherwise consented
to in writing by Wolfe, they will:
(a) Corporate Existence, etc. Maintain Database's corporate existence
and its qualification to do business and its good standing in each
jurisdiction in which such qualification is necessary for the proper
conduct of its business, and maintain in full force and effect all
licenses, permits and other authorizations necessary for the ownership and
operation by Database of the properties and business acquired from Palm
Desert.
(b) Insurance. Keep all insurable property owned by Database insured
at all times against fire and extended coverage risks and other hazards of
the kinds customarily insured against, and in amounts customarily carried,
by corporations engaged in comparable businesses and comparably situated;
keep Database adequately insured at all times against liability on account
of injury to persons or property
<PAGE>
and comply with the insurance provisions of all applicable workmen's
compensation laws;
(c) Taxes. Pay or cause to be paid all taxes, fees, assessments and
governmental charges or levies upon any of the property or assets of
Database or upon Database or its income or profits before the same shall
become delinquent, and all lawful claims of whatsoever nature which, if
unpaid, might become a lien or charge upon any such property, assets,
income or profits; provided, however, that Database shall not be required
to pay and discharge any such tax, fee, assessment, charge, levy or claim
so long as the validity thereof shall be contested in good faith by
appropriate proceedings diligently conducted (unless and until foreclosure,
distraint, sale or other similar process shall have been commenced).
(d) Additional Information. Furnish promptly to Wolfe such financial
and other information regarding Database and its business and affairs as
Wolfe may from time to time reasonably request.
9. Negative Covenants. Palm Desert and Database covenant that until payment
in full of the Note, Database will not, without the prior written consent of
Wolfe:
(a) Wolfe. Take, or suffer to be taken, any action to remove Wolfe as
a director of Database.
(b) Liens. Create, incur, issue, assume or suffer to exist any
mortgage, pledge, lien or other encumbrance on or security interest in any
of its assets, whether now owned or hereafter acquired, except:
(i) mortgages, pledges, liens, encumbrances or security interests
in favor of Wolfe;
(ii) liens for taxes or other governmental charges which are not
due or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings diligently conducted;
(iii) deposits or pledges to secure workmen's compensation,
unemployment insurance, old age benefits or other social security
obligations or in connection with or to secure the performance of
bids, tenders, trade contracts or leases or to secure statutory
obligations or surety or appeal bonds or other pledges or deposits of
like nature and all in the ordinary course of business; and
(iv) mechanics', carriers', workmen's, repairmen's or other like
liens arising in the ordinary course of business in respect of
obligations not yet due or which are being contested in good faith and
by appropriate
<PAGE>
proceedings diligently conducted.
(c) Indebtedness. Database shall not at any time create, incur, assume
or suffer to exist any Indebtedness, except:
(i) Indebtedness existing under Note; or
(ii) Current accounts payable arising out of transactions (other
than borrowings) in the ordinary course of business, without Wolfe's
prior written approval, which approval will not be unreasonably
withheld or delayed so long as any such new Indebtedness is expressly
subordinate to the Note.
(d) Contingent Liabilities. Assume, guarantee, endorse or otherwise
become or remain directly or indirectly liable for the obligations of any
person, firm or corporation, except:
(i) guarantees in favor of Wolfe; and
(ii) the endorsement of negotiable or other instruments for
deposit or collection or similar transactions in the ordinary course
of its business.
(e) Loans and Advances. Make or have outstanding any loans or advances
or extend credit to any person, firm or corporation, except:
(i) loans or advances in the ordinary course of business to
suppliers; and
(ii) trade credit extended under usual and customary terms in the
ordinary course of business;
(f) Disposition of Assets. Sell, lease, abandon or otherwise dispose
of all or any substantial portion of Database's properties or assets.
(g) Issuance of Securities. Issue any shares of the capital stock of
Database or any right instrument convertible into the capital stock of
Database.
(h) Dividends. Declare, make, pay, become or remain liable to make or
pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of any
shares of the capital stock of Database or on account of the purchase,
redemption, retirement or acquisition of any shares of the capital stock of
Database.
10. Wolfe's Covenants. Upon Database's full payment of the Note, Wolfe
shall tender to Database his written resignation as a
<PAGE>
director Database and provide Database with a written discharge of Database's
obligations under the Note.
11. Merger Clause and Restrictions on Assignment. This Agreement and the
related Promissory Note, Guaranty and Stock Pledge Agreement and a certain Asset
Purchase and Subscription Agreement of even date herewith constitute the
complete agreement and understanding of the parties thereto as to the matters
provided for therein and all prior agreements, representations and
understandings of the parties are merged herein and therein. This Agreement may
only be amended or changed by a writing signed by all the parties to be charged.
The rights of any party under this Agreement may not be assigned without
the express written consent of all other parties, which consent shall be granted
or withheld in the sole discretion of any party.
12. Miscellaneous. This Agreement shall be enforced and interpreted in
accordance with the law of the State of Delaware. The captions and headings in
this Agreement have been included to purposes of convenience and shall not be
considered part of the Agreement. Notwithstanding the Closing, any part of this
Agreement which expressly, or by implication, requires performance by any party
after the Closing, shall survive the Closing, and where appropriate, may be
specifically enforced.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers,
have caused this Agreement to be duly executed and delivered as of the day and
year first above written.
DATABASE TECHNOLOGIES, INC.
By: ss/Allan S. Wolfe
-----------------------------------
Name: Allan S. Wolfe
Title: President
PALM DESERT ART PUBLISHERS, LTD.
By: ss/Hugh G. Pike
-----------------------------------
Name:
Title:
ALLAN WOLFE
ss/Allan S. Wolfe
---------------------------------------
PROMISSORY NOTE
$90,000.00 MANCHESTER, NEW HAMPSHIRE
APRIL ___, 1998
FOR VALUE RECEIVED, the undersigned, PALM DESERT ART, INC. (f/k/a Database
Technologies, Inc.), a Delaware corporation, (the "Maker") hereby promises to
pay to the order of ALLAN WOLFE, or to any holder hereof, (the "Holder") on or
before [90 days] July __, 1998 (the "Maturity Date") the principal sum of Ninety
Thousand Dollars ($90,000.00), together with interest at the rate of 9% per
annum from the date hereof through the date upon which the principal balance
shall have been paid in full.
All payments by the Maker hereunder shall be applied first to accrued
interest, then to principal currently due in accordance with the terms hereof,
the balance (if any) to prepayment of principal. Interest will be calculated on
the basis of the actual number of days elapsed over a year of 365 days. The
Maker shall have the right to prepay principal at any time or from time to time
without any prepayment fee or penalty whatsoever.
This Note is the promissory note referred to in, has been issued pursuant
to and is entitled to the benefits of a certain Asset Purchase Agreement between
the Maker and Holder (the "Agreement"), a Guaranty issued by Palm Desert Art
Publishers, Ltd., a California corporation and an affiliate of the Maker, (the
"Guarantor") and a Stock Pledge Agreement of the Guarantor, all being of even
date herewith.
Events of Default.
(a) If one or more of the following described Events of Default shall occur
and be continuing, that is to say:
(i) The Maker shall default in the payment of principal of or interest
on this Note when due, and such default shall have continued for a period
of ten days;
(ii) The Maker shall default in any payment of principal of or
interest on any other obligation for borrowed money beyond any period of
grace provided with respect thereto if the effect of such default is to
cause such obligation to become due prior to its stated maturity;
(iii) Any representation or warranty made by the Maker or the
Guarantor in the Agreement or in any document or instrument delivered in
connection therewith shall prove to have been false or misleading in any
material respect as of the time made or furnished; or
(iv) The Maker or the Guarantor shall default in the observance or
performance of any other covenant, condition or provision of the
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Agreement or of any document or instrument delivered in connection
therewith, and such default shall not have been remedied within 30 days
after notice thereof shall have been given to them by the Lender.then, and
in any such event, the holder of this Note shall be entitled by written,
telephonic or telegraphic notice to the Maker to declare this Note and
interest accrued hereunder and all other liabilities of the Maker hereunder
to be forthwith due and payable and the same shall thereupon become and be
due and payable without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived.
(b) If one or more of the following described Events of Default shall occur
and be continuing, that is to say:
(i) A proceeding shall have been instituted in respect of the Maker
(1) seeking the entry of an order for relief against the Maker,
or seeking a declaration that it is insolvent, or resulting in a
finding that it is insolvent, or seeking the dissolution, arrangement,
adjustment, composition or other similar relief with respect to the
Maker, its assets or its debts under any law now or hereafter in
effect relating to bankruptcy, insolvency, relief of debtors or
protection of creditors, or
(2) seeking the appointment of a receiver, trustee, custodian,
liquidator, assignee, sequestrator or other similar official for the
Maker or for all or any substantial part of its property,
and such proceeding results in the entry, making or grant of any such
order, finding or appointment, or such proceeding shall remain undismissed
and unstayed for a period of 30 consecutive days, or, if such proceeding is
brought under the federal bankruptcy code, the Maker fails to file a proper
answer (including a request that the petitioner post adequate bond under
Section 303(e) of said code) thereto within 10 days of receipt of notice of
said proceeding; or
(ii) the Maker shall become insolvent, shall become generally unable
to pay its debts as they become due, shall voluntarily suspend transaction
of its business, shall make a general assignment for the benefit of
creditors, shall institute a proceeding described in the foregoing
paragraph (b)(i) hereof or shall by any act indicate its consent to or
acquiescence in any proceeding or action described in said paragraph (b)(i)
hereof (whether or not such proceeding is actually instituted or diligently
prosecuted), or shall dissolve, wind-up or liquidate itself, or shall take
any action in furtherance of any of the foregoing,
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then, and in any such event, this Note and interest accrued hereunder and all
other liabilities of the Maker hereunder shall thereupon become and be forthwith
due and payable without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived.
General Provisions.
In the event this Note shall have been declared or shall have become due
and payable, the Holder shall have the right, in addition to all other rights
and remedies available to it, without notice to the Maker, to set off against
and to appropriate and apply to the then unpaid balance of this Note any debt
owing to, and any other funds held in any manner for the account of, the Maker
by the Holder. Such right shall exist whether or not the Holder shall have made
any demand hereunder, whether or not any such debt owing to or funds held for
the account of the Maker is or are matured or unmatured, and regardless of the
existence or adequacy of any collateral, guaranty or any other security, right
or remedy available to the Holder.
In the event the Holder is at any time required to turn over, disgorge or
repay (whether to the Maker, a trustee in Bankruptcy, or to third parties) any
payment previously received by the Holder with respect to this Note (whether
received from the Maker or third parties), then the amount of the liabilities of
the Maker hereunder shall be increased by the amount so turned over or disgorged
by the Holder, plus reasonable expenses incurred by the Holder in the process,
to the same extent as if the amount and expenses in question had been advanced
by the Holder at the inception of this Note and had remained unpaid since that
date, all of which shall be payable immediately, without further demand.
No delay or omission on the part of the Holder in exercising any right
hereunder shall operate as a waiver of such right, or of any other right, nor
shall any delay, omission or waiver on any one occasion be deemed a bar to or
waiver of the same or any other right on any future occasion. No single or
partial exercise of any right, power or privilege hereunder shall preclude other
exercises thereof, or the exercise of any other power hereunder.
The Maker hereby unconditionally waives presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note.
In case a suit or action is instituted to collect this Note or any portion
hereof, the Maker shall pay, in addition to costs and disbursements allowed by
law, such sum as the court may judge reasonable as attorneys' fees in such suit
or action.
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This Note is intended to take effect as a sealed instrument. The rights,
obligations and duties of the parties hereunder shall be construed in accordance
with and be governed by the laws of the State of New Hampshire. The Maker hereby
agrees that any action hereon or relating hereto may be maintained in a court of
competent subject-matter jurisdiction located in the State of New Hampshire, and
consents to the jurisdiction of any such court for all purposes connected
herewith.
This Note is fully negotiable, and upon negotiation may be enforced by the
Holder in accordance with its terms. The rights, obligations and duties of the
Maker hereunder shall not be assigned or delegated.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note on the
day and year first written above.
PALM DESERT ART, INC.
By: ss/ Hugh G. Pike
-----------------------------------
Name: Hugh G. Pike
Title: President
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STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On April 24, 1998 before me, Marianne M. Parsons "Notary Public" personally
appeared Hugh Gene Pike personally known to me
to be the person whose name is
subscribed to the within instrument and
acknowledged to me that he executed the
same in his authorized capacity and that
by his signature on the instrument the
person or the entity upon behalf of
which the person acted, executed the
instrument.
WITNESS my hand and official seal.
ss/Marianne M. Parsons
----------------------------------------
Marianne M. Parons
[SEAL] Comm. #1152975
Notary Public-California
Riverside County
My Comm. Exp.Aug. 24, 2001
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GUARANTY
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
are hereby acknowledged, PALM DESERT ART PUBLISHERS, LTD. (the "Guarantor"), a
California corporation and the principal shareholder of PALM DESERT ART, INC.
(f/k/a Database Technologies, Inc.), a Delaware corporation (the "Company"),
unconditionally guaranties, in accordance with the terms hereof and without any
prior written notice, the payment and performance of the Liabilities (as defined
herein) of the Company to ALLAN WOLFE of Bedford, New Hampshire ("Wolfe").
As used herein, the term "Liabilities" includes, without limitation, any
and all liabilities, debts, and obligations of the Company to Wolfe, of each and
every kind, nature and description. "Liabilities" also include, without
limitation, each obligation to repay all loans, advances, indebtedness, notes,
obligations and amounts now or at any time hereafter owing by the Company to
Wolfe (including all future advances or the like, whether or not given pursuant
to a commitment by Wolfe), whether or not such are liquidated, unliquidated,
secured, unsecured, direct, indirect, absolute, contingent, or of any other
type, nature or description, or by reason of any cause of action which Wolfe now
or hereafter may hold against the Company. "Liabilities" also include, without
limitation, all notes and other obligations of the Company now or hereafter
assigned to or held by Wolfe, of each and every kind, nature and description.
"Liabilities" also include, without limitation, all interest, penalties and
costs and other amounts which may be charged to the Company or which may be due
from the Company to Wolfe from time to time and all costs and expenses incurred
or paid by Wolfe to enforce any agreement between the Company and Wolfe or
pursuant to any instrument furnished by the Company to Wolfe (including, without
limitation, costs of collection, reasonable attorneys' fees, court and
litigation costs and expenses). "Liabilities" also include, without limitation,
any and all obligations of the Company to act or to refrain from acting in
accordance with the terms, provisions and covenants of any agreement between the
Company and Wolfe or pursuant to any instrument furnished by the Company to
Wolfe. As used herein, the term "indirect" includes, without limitation, all
obligations and liabilities which Wolfe may incur or become liable for on
account of or as a result of any transactions between Wolfe and the Company.
"Costs of Collection" include, without limitation, all reasonable
attorneys' fees and out-of-pocket expenses incurred by Wolfe's attorneys and all
costs incurred by Wolfe including, without limitation, costs and expenses
associated with travel on behalf of Wolfe, which costs and expenses are directly
or indirectly related to or incurred in respect of Wolfe's efforts to collect or
enforce any of the Liabilities, or to enforce any of Wolfe's rights, remedies or
powers against or in respect of the Company or any other guarantor or person
liable in respect of the Liabilities (whether or not suit is instituted in
connection with
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such efforts). The Costs of Collection shall be added to the Liabilities of the
Company to Wolfe, as if such had been lent, advanced and credited by Wolfe to,
or for the benefit of, the Company.
For said good and valuable consideration, the Guarantor shall also
indemnify, defend, and hold Wolfe harmless of and from any liability, claim or
demand suffered by or asserted against Wolfe with respect to Wolfe's
relationship with the Company, the Guarantor or any other guarantor or endorser
of the Liabilities (each of which may be defended, compromised, settled or
pursued by Wolfe with counsel of Wolfe's selection, but at the expense of the
Guarantor).
The obligations of the Guarantor hereunder shall not be affected by any
fraudulent, illegal or improper act by the Company, nor by any release,
discharge or invalidation, by operation of law or otherwise, of the Liabilities.
Interest and Costs of Collection shall continue to accrue and shall continue to
be deemed Liabilities guarantied hereunder, notwithstanding any stay of the
enforcement thereof against the Company or the disallowance of any claim
therefor against the Company.
This instrument incorporates all discussions and negotiations between the
Guarantor and Wolfe concerning the guaranty and indemnification provided by the
Guarantor hereunder. No such discussions or negotiations shall limit, modify or
otherwise affect the provisions hereof. No provision hereof may be altered,
amended, waived, canceled or modified, except by Wolfe.
The Guarantor waives presentment, demand, notice and protest with respect
to the Liabilities, and further waives any delay on the part of Wolfe, and
further waives any right to require Wolfe to pursue or to proceed against the
Company or any collateral which Wolfe might have been granted to secure the
Liabilities or to secure the obligations of the Guarantor hereunder, and further
waives notice of acceptance of this Guaranty.
Wolfe's books and records showing the account between Wolfe and the Company
shall be admissible in any action or proceeding and constitute prima facie
evidence and proof of the items contained therein.
The obligations of the Guarantor hereunder are primary, with no recourse
necessary by Wolfe against the Company or any collateral given to secure the
Liabilities or against any other person liable for or on the Liabilities prior
to proceeding against the Guarantor hereunder. The Guarantor assents to any
indulgence or waiver which Wolfe may grant or give the Company or any other
person liable or obligated to Wolfe for or on account of the Liabilities. The
Guarantor authorizes Wolfe to alter, amend, cancel, waive or modify any term or
condition of the Liabilities
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and obligations of any other person liable or obligated to Wolfe for or on
account of the Liabilities without notice to, or consent from, the Guarantor. No
compromise, settlement or release by Wolfe of the Liabilities or obligations of
any other such person (whether or not jointly liable with the Guarantor) and no
release of any collateral securing the Liabilities or obligations of any other
such person shall affect the obligations of the Guarantor hereunder. No action
by Wolfe which has been assented to herein shall affect the obligations of the
Guarantor to Wolfe hereunder.
The Guarantor shall not exercise any right of subrogation, reimbursement,
indemnity, contribution or the like (including any right to proceed upon any
collateral granted by the Company to the Guarantor) against the Company or any
other person liable or obligated for or on account of the Liabilities unless and
until all of the Liabilities have been satisfied in full.
The Guarantor will pay on demand all reasonable attorneys' fees and
out-of-pocket expenses incurred by Wolfe's attorneys and all costs incurred by
Wolfe which are directly or indirectly related to Wolfe's efforts to collect or
to enforce any of the obligations of the Guarantor hereunder or to enforce any
of Wolfe's rights, remedies or powers against or in respect of the Guarantor
(whether or not suit is instituted by or against Wolfe).
This instrument shall inure to the benefit of Wolfe, and his heirs,
successors and assigns, shall be binding upon the heirs, successors and assigns
of the Guarantor, and shall apply to all liabilities of the Company and any
successor to the Company, including any successor by operation of law.
The rights, remedies, powers, privileges and discretions of Wolfe hereunder
(hereinafter, the "Wolfe's Rights and Remedies") shall be cumulative and not
exclusive of any rights or remedies which he would otherwise have. No delay or
omission by Wolfe in exercising or enforcing any of Wolfe's Rights and Remedies
shall operate as, or constitute, a waiver thereof. No waiver by Wolfe of any of
Wolfe's Rights and Remedies, of any default, of any remedies under any other
agreement with the Guarantor, or of any default under any agreement with the
Company or any other person liable or obligated for or on account of the
Liabilities shall operate as a waiver of any other of Wolfe's Rights and
Remedies or of any default or remedy hereunder or thereunder. No exercise of any
of Wolfe's Rights and Remedies, and no other agreement or transaction of
whatever nature entered into between Wolfe and the Guarantor, Wolfe and the
Company or Wolfe and any other person at any time, shall preclude any other
exercise of Wolfe's Rights and Remedies. No waiver by Wolfe of any of Wolfe's
Rights and Remedies on any one occasion shall be deemed a waiver on any
subsequent occasion, nor shall it be deemed a continuing waiver. All of Wolfe's
Rights and Remedies and all of Wolfe's rights, remedies, powers, privileges and
discretion under any other agreement or
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transaction with the Guarantor, the Company or any other such person shall be
cumulative and not alternative or exclusive, and may be exercised by Wolfe at
such time or times and in such order of preference as Wolfe in its sole
discretion may determine.
This instrument shall take effect as a sealed instrument and shall be
governed, construed and interpreted in accordance with the laws of the State of
New Hampshire. The Guarantor submits to the jurisdiction of the courts of the
State of New Hampshire for all matters in connection herewith as well as for all
purposes in connection with any other relationship between the Guarantor and
Wolfe. It is the intention of the Guarantor that the provisions of the within
guaranty and indemnification be liberally construed to the end that Wolfe may be
put in as good a position as if the Company had promptly, punctually and
faithfully performed all Liabilities and the Guarantor had promptly, punctually
and faithfully performed hereunder.
Any determination that any provision hereof is invalid, illegal or
unenforceable in any respect in any instance shall not affect the validity,
legality or enforceability of such provision in any other instance and shall not
affect the validity, legality or enforceability of any other provision contained
herein.
This instrument shall remain in full force and effect until the earlier of
(a) the satisfaction and performance by the Company of all of its obligations
under a certain Promissory Note of even date herewith, as the same may be
amended from time to time, or (b) the delivery of written notice of termination
of this Guaranty dated and signed by Wolfe. No termination hereof shall affect
any Liability in existence or outstanding ten (10) days following the date of
such actual receipt or delivery (including, without limitation, those which are
contingent or not then due and those which arise out of any check, draft, item
or paper which was made, executed or drawn prior to the expiration of such ten
(10) day period, even if received by Wolfe thereafter) nor any obligation of the
Guarantor hereunder which by its terms includes any Liability or obligation of a
contingent nature (including, without limitation, the indemnification provided
for herein).
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty made to be
effective as of the 22nd day of April, 1998.
PALM DESERT ART PUBLISHERS, LTD.
By: ss/Hugh G. Pike
-----------------------------------
Name:
Title: President
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STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On this the _____ day of ___________________________ 1998, before me, a
Notary Public or Justice of the Peace in and for the State of
________________________ personally appeared ______________________ who
acknowledged that he/she is the __________________________ of Palm Desert Art
Publishers, Ltd. and acting in that capacity and being authorized to do so,
executed the foregoing instrument for and on behalf of Palm Desert Art
Publishers, Ltd. for the purposes therein contained.
See attached
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Notary Public/Justice of the Peace
My Commission Expires:
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STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
On April 24, 1998 before me, Marianne M. Parsons "Notary Public" personally
appeared Hugh Gene Pike personally known to me
to be the person whose name is
subscribed to the within instrument and
acknowledged to me that he executed the
same in his authorized capacity and that
by his signature on the instrument the
person or the entity upon behalf of
which the person acted, executed the
instrument.
WITNESS my hand and official seal.
ss/Marianne M. Parsons
----------------------------------------
Marianne M. Parons
[SEAL] Comm. #1152975
Notary Public-California
Riverside County
My Comm. Exp.Aug. 24, 2001
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STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT (the "Agreement"), dated as of this 9th day of
February, by and between ALLAN WOLFE of Bedford, New Hampshire ("Pledgee") and
PALM DESERT ART PUBLISHERS, LTD., a California corporation ("Pledgor"),
WITNESSETH THAT:
WHEREAS, the Pledgor is the controlling shareholder of Palm Desert Art,
Inc. (f/k/a Database Technologies, Inc.) ("DBI")
WHEREAS, DBI is indebted to Pledgee and desires Pledgee to accept its
promissory note (the "Note");
WHEREAS, to induce Pledgee to accept the Note, Pledgor has executed and
delivered to the Pledgee its guaranty of the Note ("the "Guaranty") and has
agreed to pledge to Pledgee all shares of the capital stock of DBI that it now
owns or may hereafter acquire and all securities convertible into such capital
stock (the "Shares") as security for the Guaranty, subject, nevertheless, to the
terms and conditions hereof.
NOW, THEREFORE, the parties hereto, in consideration of the premises set
forth herein and each intending to be legally bound hereby, do covenant and
agree as follows:
1. Pledged Stock. The term "Pledged Stock" shall mean the Shares, together
with all certificates, options, rights or other distributions issued as an
addition to, in substitution or in exchange for, or on account of any of such
Shares, and all proceeds of all of the foregoing, now or hereafter owned or
acquired by the Pledgor.
2. Delivery. Upon the execution and delivery hereof, the Pledgor shall
deliver to the Pledgee all certificates for the Pledged Stock, endorsed in blank
and with undated stock powers duly executed in blank attached.
3. Security Interest.
(a) As security for the full and timely performance of all of its
obligations (the "Obligations") under the Guaranty, the Pledgor hereby
grants to the Pledgee a lien upon and a security interest in the Pledged
Stock. In addition to the rights granted hereby, the Pledgee shall have all
the rights and remedies of a secured party under the Uniform Commercial
Code.
(b) At any time the Pledgee, at its option, may have any part or all
of the Pledged Stock registered in its name or that of its nominee, and the
Pledgor hereby covenants that, upon the Pledgee's request, the Pledgor will
cause the issuer, transfer agent or registrar of the Pledged Stock to
effect
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such registration.
(i) If that shall be done prior to the occurrence of an event of
default under the Note (an "Event of Default"), the Pledgor shall
nevertheless retain all voting rights with respect to the Pledged
Stock, and, for that purpose, the Pledgee shall execute and deliver to
the Pledgor a conditional revocable proxy or proxies, substantially in
the form of Exhibit I hereto, with respect to all of the shares of
Pledged Stock (which proxies shall expire automatically upon the
occurrence of an Event of Default). Unless and until an Event of
Default has occurred, Pledgee shall not cause the Pledged Stock to be
registered in its name without first giving 48 hours' written notice
to Pledgee.
(ii) Immediately and without further notice, upon the occurrence
of an Event of Default and so long as the same shall continue, whether
or not the Pledged Stock shall have been registered in the name of the
Pledgee or its nominee, the Pledgee or its nominee shall have the
right to exercise all voting rights as to all shares and with respect
to all of the Pledged Stock, all other corporate rights and all
conversion, exchange, subscription or other rights, privileges or
options pertaining thereto as if it were the absolute owner thereof
including, without limitation, the right to exchange any or all of the
Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof, or upon
the exercise by such issuer of any right, privilege or option
pertaining to any of the Pledged Stock, and, in connection therewith,
to deliver any of the Pledged Stock to any committee, depository,
transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to
account for property actually received by it; but (1) the Pledgee
shall have no duty to exercise any of the aforesaid rights, privileges
or options and shall not be responsible for any failure to do so or
delay in so doing; and (2) Pledgee may by written notice to Pledgor
relinquish, either partially or completely in accordance with any
terms or conditions Pledgee may set forth in such notice, any or all
voting rights Pledgee may acquire pursuant to this Section 3(b)(ii).
(c) Unless an Event of Default shall have occurred and be continuing
and notwithstanding the security interest created in the Pledged Stock
hereunder, the Pledgor shall be entitled to receive for its own use all
dividends declared and paid on the Pledged Stock, and, if the Pledgee has
elected to cause the Pledged Stock to be registered in its name or the
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name of its nominee, it shall receive all dividends paid upon the Pledged
Stock as the trustee of the Pledgor and promptly pay over all such
dividends to the Pledgor in the form in which they were received. Upon the
occurrence of an Event of Default, the Pledgee may require any such cash
dividends to be delivered to the Pledgee as additional security hereunder
or applied toward the satisfaction of the Obligations.
(d) Upon the occurrence of an Event of Default, the Pledgee may,
without demand of performance or other demand, advertisement or notice
(except the notice specified below of the time and place of public or
private sale) of any kind to or upon the Pledgor or any other person (all
of which are, to the extent permitted by law, hereby expressly waived),
forthwith realize upon the Pledged Stock or any part thereof, and may
forthwith sell or otherwise dispose of and deliver the Pledged Stock or any
part thereof or interest therein, or agree to do so, in one or more parcels
at public or private sale or sales, at any exchange, broker's board or at
any of the Pledgee's offices or elsewhere, at such prices and on such terms
(including, without limitation, a requirement that any purchaser of all or
any part of the Pledged Stock purchase the shares constituting the Pledged
Stock for investment and without any intention to make distribution thereof
as it may deem best, for cash or on credit, or for future delivery without
assumption of any credit risk, with the right to the Pledgee or any
purchaser to purchase upon any such sale the whole or any part of the
Pledged Stock free of any right or equity of redemption in the Pledgor,
which right or equity is hereby expressly waived and released.
(e) The proceeds of any such disposition other action by the Pledgee
shall be applied as follows:
(i) First, to the costs and expenses incurred in connection
therewith or incidental thereto or to the care or safekeeping of any
of the Pledged Stock or in any way relating to the rights of the
Pledgee hereunder, including reasonable attorneys' fees and legal
expenses;
(ii) Second, to the satisfaction of the Obligations;
(iii) Third, to the Pledgor to the extent of any surplus.
(f) Except as may otherwise be expressly required by applicable law,
the Pledgee need not give more than five (5) days' notice of the time and
place of any public sale or of the time after which a private sale may take
place, which notice the Pledgor hereby deems reasonable; provided, however,
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that the Pledgee at any time, without any notice to the Pledgor, may sell
any shares of Pledged Stock for which a market exists at the market price
for such shares.
4. Representations and Warranties of the Pledgor. The Pledgor represents
and warrants that:
(a) It has all requisite power and authority to enter into this
Agreement, to pledge the Pledged Stock, and to carry out the transactions
contemplated hereby.
(b) It is the legal and beneficial owner of all of the Pledged Stock.
(c) All of the shares of Pledged Stock have been duly and validly
issued, are fully-paid and nonassessable, and are owned by the Pledgor free
of any pledge, mortgage, hypothecation, lien, charge, encumbrance or
security interest therein or in the proceeds thereof, except such as are
granted hereunder.
(d) There are no restrictions upon the transfer of the Pledged Stock;
the Pledgor has the right to transfer the Pledged Stock free of any
encumbrances, without obtaining the consents of other stockholders or third
parties.
(e) The execution and delivery of this Agreement and the performance
of its terms will not result in any violation of any provision of the
Pledgor's charter or bylaws, or violate or constitute a default under the
terms of any agreement, indenture or other instrument, license, judgment,
decree, order, law, statute, ordinance or other governmental rule or
regulation applicable to the Pledgor or any of its property.
(f) Upon delivery of the Pledged Stock to the Pledgee or its nominee,
this Agreement shall create a valid first lien upon and perfected security
interest in, the Pledged Stock and the proceeds thereof, subject to no
prior security interest, lien, charge, encumbrance or agreement purporting
to grant to any third party a security interest in the property or assets
of the Pledgor which would include the Pledged Stock.
5. Covenants of Pledgor. Pledgor covenants as follows:
(a) The Pledgor hereby covenants that until all of the Obligations
have been satisfied in full it will not sell, convey or otherwise dispose
of any of the Pledged Stock or any interest therein or create, incur or
permit to exist any pledge, mortgage, lien, charge, encumbrance or other
security interest in any of the Pledged Stock or the proceeds thereof,
other than that created hereby.
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(b) The Pledgor hereby covenants that until all of the Obligations
have been satisfied in full it will not consent to or approve of the
issuance of any additional shares of any class of capital stock of any
issuer of the Pledged Stock, or any securities convertible into or
exchangeable for any such shares, or any warrants, options, rights or other
commitments entitling any person to purchase or otherwise acquire any such
shares.
(c) If, during the term of this Agreement, any stock dividend,
reclassification, adjustment or other changes are made or declared in the
capital structure of DBI, all new, substituted and additional shares or
other securities issued by reason of any such change shall be held by the
Pledgor under the terms of this Agreement and delivered to the Pledgee and
become subject to this Agreement in the same manner as the shares of
Pledged Stock originally pledged hereunder.
(d) If, during the term of this Agreement, subscription warrants or
other rights or options shall be issued in respect of shares of Pledged
Stock, such warrants, rights and options shall immediately be assigned by
the Pledgor to the Pledgee and (if exercised by the Pledgor) all new stock
or other securities issued pursuant thereto shall likewise be immediately
assigned to the Pledgee to be held under the terms of this Agreement in the
same manner as the shares of Pledged Stock originally pledged hereunder.
(e) The Pledgor, at its own expense, shall defend the Pledgee's right,
title and interest in and to the Pledged Stock against the claims of all
third persons.
6. Pledgee's Rights Remedies and Duties.
(a) The rights granted to the Pledgee hereunder are the rights of a
secured party. Accordingly, except as otherwise expressly provided herein,
Pledgee shall have no right to exercise any right of ownership of the
Shares or sell, pledge, encumber, assign or transfer the Shares, except
upon the lawful exercise of its rights as a secured party.
(b) Beyond the exercise of reasonable care to assure the safe custody
of the Pledged Stock while held hereunder, the Pledgee shall have no duty
or liability to preserve rights pertaining thereto and shall be relieved of
all responsibility for the Pledged Stock upon surrendering it to the
Pledgor.
(c) No course of dealing between the Pledgor and the Pledgee, nor any
failure to exercise, nor any delay in exercising, any right, power or
privilege of the Pledgee hereunder or under the Guaranty shall operate as a
waiver thereof, nor shall any single or partial exercise of any
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right, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.
(d) The rights and remedies provided herein and in the Guaranty and in
all other agreements, instruments and documents delivered pursuant to or in
connection with the Guaranty are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law, including, but
without limitation, the rights and remedies of a secured party under the
Uniform Commercial Code.
7. Termination of Security Interest. Upon payment and performance in full
of the Obligations, this Agreement and the security interest created hereunder
shall terminate and be without further force and effect, whereupon the Pledgee
shall re-deliver the shares of Pledged Stock (or such of them as have not been
sold or otherwise disposed of hereunder) to the Pledgor, endorsed in blank and
with blank stock powers attached, together with a written cancellation of any
proxies then outstanding.
8. Further Assurances. The Pledgor shall at any time, and from time to
time, execute and deliver upon the written request of the Pledgee such further
documents and do such further acts and things as the Pledgee may reasonably
request to effect the purposes of this Agreement, including, without limitation,
delivering to the Pledgee upon the occurrence of an Event of Default irrevocable
proxies with respect to the Pledged Stock in form satisfactory to the Pledgee.
Until receipt thereof, this Agreement shall constitute the Pledgor's proxy to
the Pledgee or its nominee to vote all shares of Pledged Stock then registered
in the Pledgor's name at any and all such times as Pledgee has the right to vote
such shares pursuant to the terms of this Agreement. The power of attorney
granted hereby is coupled with an interest and is irrevocable.
9. Notices.
(a) The Pledgor will promptly deliver to the Pledgee all written
notices and will promptly give the Pledgee written notice of any other
notices received by it with respect to Pledged Stock, and the Pledgee will
promptly give like notice to the Pledgor of any such notices received by it
or its nominee.
(b) All notices, statements, requests and demands given to or made
upon either party hereto in accordance with the provisions of this
Agreement shall be deemed to have been given or made when deposited in the
mail, postage prepaid, addressed, if to the Pledgee, to:
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Allan Wolfe
20 Commerce Park North
Bedford, New Hampshire 03110
with a copy to:
Edward L. Hahn, Esq.
McLane, Graf, Raulerson & Middleton, P.A.
900 Elm Street
P.O. Box 326
Manchester, New Hampshire 03105-0326
and if to the Pledgor, to:
Palm Desert Art Publishers, Ltd.
39-725 Garand Lane, Suite J
Palm Desert, California 92211
with a copy to:
Daniel W. Dowe, Esq.
Dowe & Dowe
67 Wall Street, Suite 2411
P.O. Box 326
New York, New York 10005
or in accordance with any unrevoked written direction from either party to
the other party hereto.
10. Modification. This Agreement contains the entire agreement between the
parties hereto with respect to the transactions contemplated herein and shall
not be modified or amended except by an instrument in writing signed by or on
behalf of the parties hereto.
11. Choice of Law. This Agreement shall be deemed to be a contract under
the laws of the State of Delaware for all purposes shall be governed by and
construed and enforced in accordance with the laws of said State. Any action or
other judicial proceeding for the enforcement of this contract or any of its
provisions may be instituted in any court of competent jurisdiction.
12. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Pledgor and the Pledgee and their respective
successors and assigns.
13. Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part, such provision shall be ineffective to the
extent of such invalidity or unenforceability without in any manner affecting
the validity or enforceability of the remaining provisions hereof.
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14. Prior Understandings. This Agreement supersedes all prior
understandings and agreements, whether written or oral, among the parties hereto
relating to the transactions provided for herein.
WITNESS the due execution hereof as of the day and year first above
written.
ALLAN WOLFE
PALM DESERT ART PUBLISHERS, LTD.
By: ss/Hugh G. Pike
-----------------------------------
Name:
Title:
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EXHIBIT I
CONDITIONAL REVOCABLE PROXY
ALLAN WOLFE does hereby constitute and appoint PALM DESERT ART PUBLISHERS,
LTD. with full power of substitution and resubstitution, as its true and lawful
attorney-in-fact and proxy to vote all the shares of Database Technologies, Inc.
which it has the power to vote at any annual or special meeting of the
shareholders of said coproration and at any adjournment thereof to be held while
this proxy shall remain outstanding.
This proxy is issued pursuant to the terms of a certain Stock Pledge
Agreement by and between the parties hereto and is subject to the terms and
conditions thereof. This proxy is coupled with an interest on the part of Palm
Desert Art Publishers, Ltd. in the shares of said corporation and shall be
irrevocable so long as it shall remain outstanding; provided, however, that it
shall be revoked without any action on the part of any party hereto in the event
that an Event of Default (as defined in the Stock Pledge Agreement) shall occur
and be continuing.
WITNESS the due execution hereof as of this ___ day of _______, 1998.
ALLAN WOLFE
ss/Allan S. Wolfe
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