EXHIBIT 10.11
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement") is made as of May 1, 1997 by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Couture Collection, Inc., a New York corporation whose principal
place of business is located at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ ("AVC"), ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
individuals residing at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (collectively the "Shareholders") and ▇▇▇ ▇▇▇▇▇'▇ Private
Collection, Ltd., a Delaware corporation ("JHPC") whose principal
place of business is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Shareholders are the owners of all of the
issued and outstanding shares of stock of all classes of AVC (the
"AVC Stock");
WHEREAS, JHPC desires to acquire all of the AVC Stock
from the Shareholders, who desire to exchange all of their AVC
Stock for shares of common stock of JHPC, upon the terms and
conditions hereinafter set forth.
WHEREAS, the Shareholders, JHPC and AVC intend that the
transactions contemplated by this Agreement qualify as a tax free
Type B reorganization under Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, by reason of JHPC's acquisition of the AVC
stock solely in exchange for unregistered shares of common stock of
JHPC (the "JHPC Shares") with the result that JHPC shall have
control of AVC immediately after the Closing Date (as hereinafter
defined).
NOW, THEREFORE, the parties hereto agree as follows:
1. Agreement to Exchange Stock.
1.1 Exchange of Stock. In reliance upon the
respective warranties, representations and covenants of the parties
contained in this Agreement, and subject to the provisions of this
Agreement, JHPC agrees to acquire all of the AVC Stock from the
Shareholders, and each Shareholder agrees with JHPC to receive in
exchange for all of their respective shares of AVC Stock, the JHPC
Shares as more fully described below, effective as of the Closing
Date.
1.2 Shares to be Issued; Cash Payment; Adjustment.
(a) In consideration of the Shareholders' exchange
of AVC Stock, at Closing JHPC shall issue to the Shareholders such
number of JHPC Shares as set forth on Exhibit 1.2 annexed hereto,
JHPC shall agree to register 10,000 JHPC Shares in accordance with
the provisions of Section 9 hereof (the "Registered Shares").
(b) In addition to the issuance of the JHPC Shares,
at Closing, JHPC shall make a cash payment to the Shareholders as
set for on Exhibit 1.2; provided, however, the Shareholders shall
pledge their JHPC shares in accordance with Section 1.3 to cover
any negative book value on the Closing Balance Sheet (as defined
below).
(c) As soon as practicable (but in no event later
than 60 days) following the Closing Date, AVC shall prepare and
deliver to JHPC a balance sheet as of the Closing Date (the
"Closing Balance Sheet"). The Closing Balance Sheet shall be
prepared by AVC on a basis consistent with the balance sheet
included in the Financial Statements referred to in Section 2.6.
Following the Closing Date, JHPC shall afford AVC and its
representatives access to all books and records relating to AVC as
is necessary to enable AVC to prepare the Closing Balance Sheet. On
or before November 1, 1997, the Closing Balance Sheet shall be
adjusted by any unknown liabilities or uncollected receivables of
AVC which were incurred prior to the Closing Date, which became
known to JHPC after the Closing Date and which were not included in
the Closing Balance Sheet.
(d) JHPC may dispute any amounts reflected on the
Closing Balance Sheet by giving AVC notice specifying each of the
disputed items and setting forth in reasonable detail the basis for
such dispute. If the Closing Balance Sheet shows a deficit of
greater than $40,000 and JHPC has provided AVC notice of the
dispute, then (i) if the dispute involves less than $10,000, the
parties agree to split the disputed amount equally; or (ii) if the
disputed amount is $10,000 or more, the parties agree to submit the
items in dispute to an independent firm or person (other than a
"big six accounting firm") (the "Arbitrator"). The Arbitrator shall
determine the remaining disputed amounts, which determination shall
be final, conclusive and binding on all parties. The fees and
disbursements of the Arbitrator shall be borne equally by the
parties. If the Closing Balance Sheet shows a deficit, the
Shareholders shall either (i) promptly pay to JHPC an amount equal
to the deficit or (ii) deliver to JHPC that whole number of JHPC
Shares, which when multiplied by the greater of (A) $5.50 or (B)
the average bid and asked price of Common Stock as reported by
NASDAQ at the closing of the market at the date prior to delivery
of the JHPC Shares, equals the amount of the deficit.
1.3 Pledge. At Closing, the Shareholders shall
pledge to JHPC an aggregate of 10,000 shares of their shares of
JHPC Shares, pursuant to the provisions of a pledge agreement (the
"Pledge Agreement"), annexed hereto as Exhibit 1.3 (the "Pledged
Shares").
1.4 Closing. The closing of the sale and purchase
of the AVC Stock (the "Closing") shall take place at the offices of
▇▇▇▇▇ & Banner, at 4:00 P.M. New York time on April 30, 1997 or at
such other time, place or date as the parties hereto may agree (the
"Closing Date").
1.5 Transfer of AVC Stock and Payment of Purchase
Price at Closing. At the Closing, subject to the terms of this
Agreement, the following transactions shall occur, and each such
transaction shall be deemed to occur simultaneously with and shall
be conditioned on the occurrence of each of the other transactions:
(a) AVC Stock Certificates. The Shareholders shall
deliver certificates to JHPC representing the AVC Stock, duly
endorsed in blank, with any required stock transfer and other
documentary stamps affixed.
(b) Delivery of JHPC Shares and Cash Payment to the
Shareholders. JHPC shall deliver or instruct JHPC's transfer
agent to deliver to the Shareholders certificates representing the
JHPC Shares, registered in the respective names of the Shareholders
and the cash payment described in Section 1.2(b).
(c) Opinions of Counsel. Each party shall cause to
be delivered to the other the opinions of counsel in accordance
with the provisions of Section 8.1 hereof.
(d) Employment Agreement. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
JHPC shall execute and deliver an employment agreement between JHPC
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Employment Agreement"), in the form
attached hereto as Exhibit 1.5(d).
(e) Pledge Agreement. The Shareholders shall
execute and deliver to JHPC the Pledge Agreement in the form
attached hereto as Exhibit 1.3.
(f) Restrictive Covenant Agreement. The
Shareholders will execute the Restrictive Covenant Agreement in the
form attached hereto as Exhibit 1.5(f).
1.6 Holdback of JHPC Shares. Other than the
Registered Shares, the Shareholders agree that 50% of the balance
of the JHPC Shares shall not be sold, pledged, assigned,
transferred or hypothecated for a period of one year from the
Closing Date; and the remaining 50% shall not be sold, pledged,
assigned, transferred or hypothecated for a period of two years
from the Closing Date.
2. Representations, Warranties and Covenants of the
Shareholders and AVC. The Shareholders and AVC each hereby
represent, warrant and covenant to JHPC as follows:
2.1 Organization and Standing; Articles and Bylaws.
AVC is a corporation duly organized and validly existing under the
laws of its state of incorporation and is in good standing under
such laws. AVC has the requisite corporate power to own and
operate its properties and assets, and to carry on its business as
presently conducted and as proposed to be conducted. AVC is
qualified or licensed as a foreign corporation in all jurisdictions
where the nature of its activities or of its properties owned or
leased makes such qualification or licensing necessary at this
time. AVC has furnished JHPC with copies of its Articles of
Incorporation and Bylaws. Said copies are true, correct and
complete and contain all amendments through the date of this
Agreement.
2.2 Corporate Power. AVC and each Shareholder has,
and will have at the Closing, all requisite legal and corporate
power to enter into this Agreement, to sell the AVC Stock sold by
the Shareholders hereunder, and to carry out and perform their
obligations under the terms of this Agreement.
2.3 Subsidiaries. AVC has no subsidiaries. AVC
does not own, directly or indirectly, shares of stock or other
interests in any other corporation, association, joint venture, or
business organization.
2.4 Capitalization. AVC has the authorized number
of shares of Common Stock as set forth on Schedule 2.4. All of the
issued and outstanding shares of AVC have been duly authorized and
validly issued, and are fully paid and non-assessable and were
issued in compliance with all applicable state and federal laws
concerning the issuance of securities. The Shareholders own all of
the outstanding shares of AVC Stock, free and clear of any liens or
encumbrances. There are no outstanding options or other commitments
to issue shares of AVC.
2.5 Authorization.
(a) All corporate action on the part of AVC, its
officers, directors and stockholders necessary for the performance
by AVC of its obligations hereunder, has been taken prior to the
execution of this Agreement. This Agreement is a legal, valid, and
binding obligation of the Shareholders and AVC, enforceable against
them in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws of general
application affecting enforcement of creditor's rights, and
affecting the availability of equitable remedies.
(b) The AVC Stock exchanged by the Shareholders
under this Agreement, when delivered to JHPC in compliance with the
provisions of this Agreement, will be free of any liens or
encumbrances.
(c) No shareholder of AVC has any right of first
refusal or any preemptive rights in connection with the issuance of
the AVC Stock.
2.6 Financial Statements. AVC's financial
statements for the presented periods (the "Financial Statements")
are attached hereto as Schedule 2.6, are true and correct, have
been prepared in accordance with generally accepted accounting
principles consistently applied (except as disclosed therein), and
fairly present the financial condition of AVC and results of the
operations of AVC as of the date thereof.
2.7 Changes in Financial Condition. Since February
28, 1997, (a) neither the Shareholders nor AVC have entered into
any transaction, which was not in the ordinary course of business,
including, but not limited to, granting or releasing any lien,
transferring or otherwise disposing of any assets, compromising any
debt, releasing any rights of material value or granted any
material concessions; (b) there has been no material adverse change
in the condition (financial or otherwise), business, property,
assets, or liabilities of AVC; (c) there has been no damage to,
destruction of, or loss of physical property (whether or not
covered by insurance) materially adversely affecting the business
or operations of AVC; (d) AVC has not declared or paid any dividend
or made any distribution on its shares; (e) AVC has not materially
increased the compensation of any employee, or the rate of pay of
employees as a group; (f) neither the Shareholders nor AVC has
received notice that there has been a loss of any major customer of
the Shareholders or AVC, nor any material order cancellation; (g)
there has been no resignation or termination of employment of any
senior or key officer or employee of AVC, and neither the
Shareholders nor AVC (including, without limitation, the members of
AVC's board of directors and its executive officers as of the date
of this Agreement) knows of an impending resignation or termination
of employment of any officer or employee of AVC that if consummated
could have a materially adverse effect on the business of AVC; (h)
there has been no labor dispute involving AVC or its employees and
none is pending or, to the best knowledge of AVC (including,
without limitation, the members of AVC's board of directors and its
executive officer as of the date of this Agreement), threatened;
(i) neither the Shareholders nor any of the officers or employees
of AVC have lent AVC any funds; and (j) to the best of their
knowledge, there has been no other event or condition materially
adversely affecting the assets or business of AVC.
2.8 Material Contracts and Commitments. All of the
material contracts, commitments, agreements and instruments to
which AVC is a party are legal, valid, binding, and in full force
and effect in all material respects and enforceable by AVC in
accordance with their terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws of general
application affecting enforcement of creditor's rights, and except
as limited by application of legal principles affecting the
availability of equitable remedies. AVC is not in default under
any of such contracts. All such material contracts are attached
hereto as Schedule 2.8.
2.9 Compliance with Other Instruments, etc. AVC is
not in violation of any term of its Articles of Incorporation or
Bylaws, and neither the Shareholders nor AVC are in violation in
any material respect of any mortgage, indenture, contract,
agreement, instrument, or any judgment, decree, order, statute,
rule, or regulation applicable to it or them. The execution,
delivery, and performance by the Shareholders of this Agreement,
and the exchange of the AVC Stock pursuant hereto, will not result
in any such violation or be in conflict with or constitute a
default under any such term, or cause the acceleration or maturity
of any loan or material obligation to which AVC or the Shareholders
are parties or by which the Shareholders or AVC are bound, or
result in the creation or imposition or any material lien, claim,
charge, restriction, equity, or encumbrance of any kind whatsoever
upon, or (except as contemplated herein) give to any other person
any interest or right (including any right of termination or
cancellation) in or with respect to any of the properties, assets,
business, or agreements of AVC.
2.10 Litigation, etc. There are no actions,
proceedings or investigations pending or threatened against AVC in
any way relating to AVC, any basis therefor or threat thereof,
which, either individually or in the aggregate, could result in any
material adverse change in the business, prospects, conditions,
affairs, or operations of AVC or in any of its properties or
assets, or in any impairment of the right or ability of AVC to
carry on its business as proposed to be conducted, or in any
material liability on the part of AVC, or which could affect the
validity of this Agreement or any action taken or to be taken in
connection herewith.
2.11 Governmental Consent, etc. No consent,
approval or authorization of, or designation, declaration or filing
with, any governmental unit or any other entity is required on the
part of the Shareholders or AVC in connection with the valid
execution and delivery of this Agreement, or the exchange of the
AVC Stock pursuant hereto or by this Agreement or necessary or
appropriate for consummation of the transactions contemplated
hereby.
2.12 List of Properties and Assets. Schedule 2.12
attached hereto is a complete and correct list setting forth the
following information:
(i) all real property owned of record or
beneficially by AVC and all leases of real property to which AVC is
a party, with a brief description of the property and any buildings
or structures located thereon and, in the case of each lease, the
rental terms (including rents, termination dates and renewal
conditions);
(ii) all licenses, leases and other rights to
personal property to which AVC is a party, with a brief description
of the property to which each such license, lease or other right
relates and the rental or other applicable usage terms (including
rents, termination dates and renewal conditions), other than leases
with respect to office equipment, fixtures and other incidental
personal property none of which involves payments in excess of
$5,000 per annum and all of which in the aggregate do not involve
payments in excess of $5,000 per annum;
(iii) all personal property owned of record or
beneficially by AVC other than office equipment, fixtures and other
incidental personal property having an aggregate value not in
excess of $5,000;
(iv)(A) all patents, trademarks and trade names,
trademark and trade name registrations, servicemark, brandmark and
brand name registrations, copyrights and copyright registrations,
unexpired as of the date hereof, all applications pending on said
date for patents, for trademark or trade name registrations, for
servicemark, brandmark or brand name registrations or for copyright
registrations, and all other proprietary or trade rights, used
and/or owned in whole or in part as noted thereon on said date by
AVC and (B) all other agreements to which AVC is a party which
relate in whole or in part to any items of the categories mentioned
in (A) next above or to other proprietary rights, whether owned by
AVC or otherwise;
(v) all policies of insurance in force (with a
notation as to the status of premiums paid or payable thereon)
insuring the properties, buildings, machinery, equipment, fixtures
or other assets of AVC;
(vi) all material contracts and commitments
(including, without limitation, mortgages, leases, indentures and
loan agreements) to which AVC is a party, or to which it or any of
its material assets or properties is subject;
(vii) all oral and written collective bargaining
agreements, employment and consulting agreements, executive
compensation plans, bonus plans or other incentive compensation
plans, deferred compensation agreements, employee pension plans or
retirement plans, severance pay arrangements, employee profit
sharing plans, employee stock purchase and stock option plans,
group life insurance, hospitalization insurance or other plans or
arrangements providing for benefits for employees of AVC
(indicating, with respect to each of the persons named pursuant to
Section 2.21 below, the amount received in the fiscal period ended
February 28, 1997 under each such agreement, plan or arrangement);
(viii) the name of each bank or other financial
institution from which loans, lines of credit or other credit
commitments to AVC are outstanding, the amount of each such loan or
commitment and the principal terms thereof;
(ix) all arrangements respecting loans to, or
guarantees of loans to, employees of AVC made by or to AVC.
True and complete copies of all documents and true and
complete written summaries of all oral agreements referred to in
such list have been delivered to JHPC and its counsel.
2.13 Books and Records. The books and records of
AVC are in all respects complete and correct, have been maintained
in accordance with good business practices and accurately reflect
the basis for the financial condition and results of operations of
AVC set forth in the Financial Statements referred to in Section
2.6 hereof.
2.14 Patents, Trademarks, etc. To the best
knowledge of AVC after due inquiry, AVC owns, or is licensed to
use, all patents, trade names, trademarks, copyrights, technology,
know-how and processes now used by it in connection with its
business. No trade name, trademark or service ▇▇▇▇ used by AVC is
now challenged in any way or involved in any pending or threatened
infringement proceeding. AVC is not a licensor in respect of any
service ▇▇▇▇ or trade name or registration or application therefor,
trademark, trademark registration or application, copyright,
copyright registration or application, patent or patent
registration or application. To the best knowledge of AVC, AVC is
not in violation of any service ▇▇▇▇ or trade name or registration
or application therefor, trademark, trademark registration or
application, copyright, copyright registration or application,
patent or patent registration or application of any other person.
None of the rights of AVC to any such patents, trademarks, trade
names, copyrights, designs and any licenses relating thereto will
be impaired in any way by the transactions contemplated by this
Agreement.
2.15 Accounts Receivable and Accounts Payable. The
accounts receivable of AVC as reflected on the Financial Statements
and on Schedule 2.15 and all accounts receivable arising thereafter
and prior to the Closing Date arose or will arise from bona fide
transactions in the ordinary course of business. To AVC's
knowledge, the accounts receivable are fully collectible, less the
applicable allowance of $10,000 for doubtful accounts and subject
to year-end adjustments consistent with practices in prior years.
No counterclaims or offsetting claims with respect to such accounts
receivable are pending or are threatened. Said applicable
allowance shall be held in escrow pursuant to the pledge agreement
described in Section 1.3. The accounts payable reflected on any
Financial Statements and on Schedule 2.15 and all accounts payable
arising thereafter and prior to the Closing Date arose from bona
fide transactions in the ordinary course of business and have been
paid or if not paid, are not in default. JHPC shall hold in
escrow, pursuant to the pledge agreement described in Section 1.3,
JHPC Shares having a value equal to $5,000 to cover any accounts
payable which arose prior to the Closing Date and were not included
in the Closing Balance Sheet.
2.16 Transactions with Management. Except for
employment agreements which are attached hereto as Schedule 2.16,
AVC is not now, nor during the period since July 1996 (its date of
incorporation) has been, a party to any contract, lease or
commitment with any officer, director or stockholder of AVC, nor
any "associate" of any such officers, directors or stockholders (as
the term "associate" is defined in Rule 405 of the Rules and
Regulations promulgated under the Securities Act of 1933) nor are
there now, or since July 1996 have there been, any loans
outstanding to any of such persons from AVC.
2.17 Disclosure. All facts material to the
financial condition, assets, business and prospects of AVC have
been disclosed (or with respect to facts arising hereafter will be
promptly disclosed prior to the Closing Date) to JHPC in writing.
No representation or warranty of AVC and the Shareholders contained
in this Agreement, and no statement, certificate, schedule, list or
other information furnished by or on behalf of AVC to JHPC in
connection with this Agreement, contains any untrue statement of a
material fact or omits to state a material fact necessary in order
to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
2.18 Title to and Condition of Properties. AVC has
good and marketable title to all of its tangible and intangible
property and assets, including those reflected in the Financial
Statements (except as such assets have been sold or otherwise
disposed of in the ordinary course of business), and such property
and assets are subject to no mortgage or security interest,
conditional sales contract, charge, lien or encumbrance (except for
the lien of current taxes not yet due and payable and such
imperfections of title, easements and encumbrances, if any, as are
not substantial in character, amount, or extent and do not detract
from the value of, or interfere with the present use of the
properties subject thereto or affected thereby, or otherwise impair
the business operations of AVC), and AVC has not sold or disposed
of any of its material property and assets or obligated itself to
do so except in the ordinary course of business. Except for such
minor defects as are not substantial in character and which do not
have a materially adverse effect upon the validity thereof, all
material real and personal property leases to which AVC is a party,
are in good standing, valid and effective, and there is not under
any such lease any existing default or event which with notice of
lapse of time or both would constitute a default and in respect of
which AVC has not taken reasonable steps to prevent such a default
from occurring.
2.19 Taxes. AVC has timely filed all tax returns
that are required to have been filed by it prior to the date of
this Agreement with appropriate federal, state, country, and local
governmental agencies or instrumentalities, and each of said
returns correctly reflects AVC's income, employee withholding and
its tax liability required to be shown therein. AVC has paid or
established reserves for all income, franchise, employee
withholding and other taxes due by it as reflected on said returns.
The provisions for taxes due by AVC as shown in the Financial
Statements are sufficient for the payment in full of all unpaid
federal, state, county, and local taxes in respect of its business
and operations for the periods then ended and all prior periods.
There is no pending dispute with any taxing authority relating to
any of said returns which if determined adversely to AVC would
result in the assertion by any taxing authority of any valid
deficiency in a material amount for taxes. No federal income tax
return of AVC has been audited nor are there any pending or
threatened audits of such returns.
2.20 Employees of AVC. Schedule 2.20 contains a
true and correct statement of the names, dates of hire, accrued
vacation and sick time and current rates of compensation of each
employee (whether in the form of salary, bonuses, commissions or
other supplemental compensation now or hereafter payable) of AVC.
JHPC shall have the right to inspect AVC's personnel and payroll
files for all such employees on or prior to the Closing Date, at
reasonable times and upon reasonable notice. AVC does not have any
pension, profit-sharing, option, or other incentive or employee
benefit plan (including obligations to or customary arrangements
with employees for incentive compensation, allowances, vacation,
severance pay or other benefits) except as listed in Schedule 2.20.
2.21 Bank Accounts and Powers of Attorney. Schedule
2.21 sets forth a true and complete list of:
(a) The name of each bank in which AVC has accounts
or safe deposit boxes and the names of all persons authorized to
draw thereon or have access thereto; and
(b) Each power of attorney granted by AVC,
identifying the nature of the power and the holder or holders
thereof.
2.22 Customers. AVC has prepared and has in its
possession a list of its customers, which list is substantially
true and correct and attached hereto as Schedule 2.22. Schedule
2.15 indicates the amounts, if any, due by such customers to AVC.
2.23 Brokers. AVC has not engaged any finder,
broker, agent, financial advisor or other intermediary who has
acted on behalf of AVC in connection with this Agreement or the
negotiation or consummation of this Agreement or the transactions
contemplated hereby who is entitled to any compensation by JHPC.
2.24 Offering. The offer, issuance and exchange of
the AVC Stock in conformity with the terms of this Agreement does
not violate the Securities Act of 1933, as amended, or the
securities laws of the State of New York.
3. Representations, Warranties and Covenants of JHPC.
JHPC hereby represents, warrants and covenants to the Shareholders
as follows:
3.1 Organization and Good Standing of JHPC. JHPC
is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware. JHPC has the
requisite corporate power to own and operate its properties and
assets and to carry on its business as presently conducted. JHPC
is qualified as a foreign corporation in New York. JHPC has
furnished or will furnish AVC with copies of its Articles of
Incorporation and its By-laws. Said copies are true, correct and
complete and contain all amendments through the date of this
Agreement.
3.2 Authority of JHPC. JHPC has and will have at
Closing the full legal and corporate power and authority to enter
into this Agreement, issue the JHPC Shares and carry out the terms
of this Agreement. Neither the execution or delivery of this
Agreement by JHPC, nor performance hereunder will result in a
violation or breach of any term or provision nor constitute a
default under any indenture, mortgage, deed of trust or other
contract or agreement to which JHPC is a party. Except as provided
herein, no consent of any party to any such agreement or instrument
is required for the execution, delivery or performance of this
Agreement, and the consummation of the transactions contemplated
hereby will not result in a breach of, or give rise to a right of
cancellation of, any such agreement or instrument.
3.3 Changes in Financial Condition. Since January
31, 1997 (a) there has been no material adverse change in the
condition (financial or otherwise), business, property, assets, or
liabilities of JHPC; (b) JHPC has received no notice that there has
been a loss of any major customer of JHPC, nor any material order
cancellation; (c) there has been no resignation or termination of
employment of any senior or key officer or employee of JHPC, and
JHPC (including, without limitation, the members of JHPC's board of
directors and its executive officers as of the date of this
Agreement) knows of no impending resignation or termination of
employment of any officer or employee of JHPC that if consummated
could have a material adverse effect on the business of JHPC.
3.4 Compliance with Other Instruments, etc.. JHPC
is not in violation of any term of its Articles of Incorporation or
Bylaws, and is not in violation in any material respect of any
mortgage, indenture, contract, agreement, instrument, or any
judgment, decree, order, statute, rule, or regulation applicable to
it. The execution, delivery, and performance by JHPC of this
Agreement and the exchange of the JHPC Shares pursuant hereto, will
not result in any such violation or be in conflict with or
constitute a default under any such term, or cause the acceleration
or maturity of any loan or material obligation to which JHPC is a
party or by which JHPC is bound, or result in the creation or
imposition or any material lien, claim, charge, restriction,
equity, or encumbrance of any kind whatsoever upon, or (except as
contemplated herein) give to any other person any interest or right
(including any right of termination or cancellation) in or with
respect to any of the properties, assets, business, or agreements
of JHPC.
3.5 Litigation, etc. There are no material
actions, proceedings or investigations pending or threatened
against JHPC in any way relating to JHPC, any basis therefor or
threat thereof, which, either individually or in the aggregate,
could result in any material adverse change in the business,
prospects, conditions, affairs, or operations of JHPC or in any of
its properties or assets, or in any impairment of the right or
ability of JHPC to carry on its business as proposed to be
conducted, or in any material liability on the part of JHPC, or
which could affect the validity of this Agreement or any action
taken or to be taken in connection herewith.
3.6 Governmental Consent, etc. Except with respect
to the future registration of the Registered Shares, no consent,
approval or authorization of, or designation, declaration or filing
with, any governmental unit or any other entity is required on the
part of JHPC in connection with the valid execution and delivery of
this Agreement, or the exchange of the JHPC Stock pursuant hereto
or necessary or appropriate for consummation of transactions
contemplated.
3.7 Brokerage and Finder's Fees. JHPC has not
employed any broker, finder or agent, nor has JHPC become in any
way obligated for finder's, broker's, agent's or similar fee with
respect to the transactions referred to herein.
3.8 Information Correct and Complete. All
information contained in the representations and warranties made in
this Section 3 by JHPC is correct and complete and will be correct
and complete on the Closing Date.
3.9 Address. The address given for JHPC in Section
10 is its true and correct primary place of business, and it has no
present intention of moving to any other state or jurisdiction.
3.10 Opportunity to Seek Information. The
Shareholders and AVC each has been given the opportunity to ask
questions of, and receive answers from, the management of JHPC
regarding the terms and conditions of this Agreement, and the
transactions contemplated hereby, as well as the affairs of JHPC
and related matters.
3.11 Capitalization. JHPC has the authority to
issue 10,000,000 shares of stock, a single class designated as
Common Stock. There are currently issued and outstanding 1,722,323
shares of Common Stock. All of the issued and outstanding shares
of JHPC have been duly authorized and validly issued, and are fully
paid and non-assessable and were issued in compliance with all
applicable state and federal laws concerning the issuance of
securities.
3.12 JHPC Shares Duly Authorized. The shares of
Common Stock of JHPC issued to the Shareholders under this
Agreement, when issued in compliance with the provisions of this
Agreement, will be validly issued, fully paid and nonassessable,
and will be free of any liens or encumbrances. No shareholder of
JHPC has any right of first refusal or any preemptive rights in
connection with the issuance of the JHPC Shares. The issuance of
the JHPC Shares in conformity with this Agreement does not violate
the Securities Act of 1933, as amended, or the regulations
thereunder, or the securities laws of the State of New York.
4. Survival of Representations, Warranties and
Covenants. The representations, warranties and covenants contained
herein shall survive the delivery, and payment for, AVC Stock for
18 months from the Closing Date (except for the representations
contained in Section 2.19, which shall survive for the period
during which the statute of limitations representing such taxes
remains open).
5. Indemnification.
5.1 Indemnification by The Shareholders. The
Shareholders hereby agree to indemnify and hold harmless JHPC, its
officers and directors, against any and all losses, claims,
demands, liabilities and expenses (including reasonable legal or
other expenses incurred by JHPC in connection with defending any
such claims or liabilities) to which any such indemnified party may
become subject under the federal securities laws, under any other
statutes, at common law or otherwise, insofar as such losses,
claims, demands, liabilities or expenses (a) arise out of or are
based upon any untrue statement of a material fact made by the
Shareholders or AVC in this Agreement, or (b) arise out of an
omission of a material fact, or (c) arise out of or are based upon
any breach of any material representation, warranty or agreement
made by the Shareholders or AVC herein or (d) arise out of the
failure to disclose unaccrued trade liabilities.
5.2 Indemnification by JHPC. JHPC hereby agrees to
indemnify and hold the Shareholders harmless against any and all
losses, claims, demands, liabilities and expenses (including
reasonable legal or other expenses incurred by the Shareholders in
connection with defending any such claims or liabilities) to which
any such indemnified party may become subject under the federal
securities laws, under any such statutes, at common law or
otherwise, insofar as such losses, claims, demands, liabilities or
expenses (a) arise out of or are based upon any untrue statement of
a material fact made by JHPC in this Agreement, (b) arise out of or
are based upon any breach of any material representation, warranty
or agreement made by JHPC herein or (c) arise out of an omission of
a material fact.
6. Fees and Expenses. The Shareholders shall pay all
fees and expenses incurred by them and AVC incident to the
negotiation of this Agreement, carrying this Agreement into effect,
and the consummation of the transactions contemplated hereby. JHPC
shall pay all fees and expenses incurred by it incident to the
negotiation of this Agreement, carrying this Agreement into effect,
and the consummation of the transactions contemplated hereby.
7. Representation by Counsel. All parties to this
Agreement have been represented by counsel of their own selection,
which counsel participated in the drafting of this Agreement.
Accordingly, no provision of this Agreement is to be construed
against any party by reason that such party drafted such provision.
8. Conditions to Obligations of the Parties.
8.1 The obligations of the parties under this
Agreement are subject to the satisfaction of the following
conditions at or prior to the Closing Date:
(a) Opinion of AVC Counsel. The Shareholders and AVC
shall have delivered to JHPC the opinion of ▇▇▇▇▇▇▇▇, Rather,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel to the Shareholders and AVC, dated
the Closing Date, and satisfactory to counsel for JHPC, to the
effect that: (i) this Agreement has been duly executed by the
Shareholders and AVC and constitutes the legal, valid and binding
agreement of the Shareholders and AVC enforceable in accordance
with its terms, subject to limitations on enforceability imposed by
bankruptcy, insolvency, reorganization, moratorium, or similar laws
of general application affecting enforcement of creditor's rights,
and affecting the availability of equitable remedies; (ii) all
corporate or other proceedings which were required to be taken by
AVC to enable the Shareholders or AVC to carry out this Agreement
have been taken; (iii) AVC is duly incorporated, validly existing
and in good standing under the laws of its state of incorporation,
with the corporate power to own or lease and operate its properties
and assets and to carry on its business in the manner in which such
business is now being conducted, and is duly qualified to do
business as a foreign corporation in every jurisdiction wherein the
character of the real properties owned or leased by it makes such
qualification necessary; (iv) all of the issued and outstanding
shares of AVC have been duly authorized and validly issued, and are
fully paid and non-assessable and none of such shares were issued
in violation of any preemptive rights of stockholders; (v) to such
counsel's knowledge, neither the execution nor delivery of this
Agreement nor the consummation of the transactions contemplated
herein will result in a violation of any judicial or governmental
decree, order or judgment or constitute a default or result in a
termination under any material agreement or other instrument to
which the Shareholders or AVC are parties or by which any of them
is bound and which is known to such counsel, and to counsel's
knowledge, no consent of any party to any such agreement or
instrument is required for the execution, delivery or performance
of this Agreement, except those which have been obtained and (vi)
to counsel's knowledge, there are no actions, suits or proceedings
pending or threatened against AVC in any court, or by or before any
arbitrator or governmental agency or authority.
(b) Opinion of JHPC Counsel. JHPC shall have
delivered to the Shareholders and AVC the opinion of ▇▇▇▇▇ &
Banner, counsel to JHPC, dated the Closing Date to the effect that:
(i) this Agreement has been duly executed by JHPC and constitutes
the legal, valid and binding agreement of JHPC enforceable in
accordance with its terms, subject to limitations on enforceability
imposed by bankruptcy, insolvency, reorganization, moratorium, or
similar laws of general application affecting enforcement of
creditor's rights, and affecting the availability of equitable
remedies; (ii) all corporate or other proceedings which were
required to be taken by JHPC to enable it to carry out this
Agreement have been taken; (iii) JHPC is duly incorporated, validly
existing and in good standing under the laws of the state of
Delaware, with the corporate power to own or lease and operate its
properties and assets and to carry on its business in the manner in
which such business is now being conducted, and is duly qualified
to do business as a foreign corporation in the state of New York;
(iv) the JHPC shares to be issued to the Shareholders have been
duly authorized and validly issued, and are fully paid and non-
assessable and none of such shares were issued in violation of any
preemptive rights of stockholders; (v) to such counsel's knowledge,
neither the execution nor delivery of this Agreement nor the
consummation of the transactions contemplated herein will result in
a violation of any judicial or governmental decree, order or
judgment or constitute a default or result in a termination under
any material agreement or other instrument to which JHPC is a party
or by which it is bound, and to counsel's knowledge, no consent of
any party to any such agreement or instrument is required for the
execution, delivery or performance of this Agreement, except those
which have been obtained.
8.2 Legal Action. There shall not have been
instituted or threatened any legal proceeding seeking to prohibit
the consummation of the transactions contemplated by this
Agreement.
8.3 Representations Remain Accurate.
(a) The Shareholders shall deliver a certificate at
the Closing setting forth that the representations and warranties
of AVC and the Shareholders contained in this Agreement shall be
true and correct in all material respects at and as of the Closing
as if made at and as of such time, except as affected by
transactions contemplated hereby and except to the extent that any
such representation or warranty is made as of a specified date in
which case such representation or warranty shall have been true and
correct as of such date.
(b) JHPC shall deliver a certificate at the Closing
setting forth that the representations and warranties of JHPC
contained in this Agreement shall be true and correct in all
material respects at and as of the Closing as if made at and as of
such time, except as affected by transactions contemplated hereby
and except to the extent that any such representation or warranty
is made as of a specified date in which case such representation or
warranty shall have been true and correct as of such date.
9. Registration Rights.
9.1 Inclusion of JHPC Shares in Registration
Statements. If during the one year period following the date of
this Agreement, JHPC shall register any shares of its Common Stock
in a registration statement, other than a Form S-8 Registration
Statement, JHPC will give the Shareholders at least ten days'
advance written notice thereof and include in such registration
statement (and any related qualification under Blue Sky laws or
other compliance), the 10,000 JHPC Shares owned by the
Shareholders. All costs of such registration shall be borne by
JHPC.
9.2 Indemnification. The respective
indemnification rights of the Shareholders and JHPC pursuant to
Section 5 of this Agreement shall apply with respect to statements
or omissions made by the Shareholders or JHPC incident to any
registration, qualification or compliance pursuant to this Section
9.
9.3 Information by the Shareholders. The
Shareholders shall furnish to JHPC such written information
regarding their proposed distribution as JHPC may reasonably
request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this
Section 9.
10. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, or one business day after being sent by a
recognized national overnight carrier or five days after being
mailed (by registered or certified mail, return receipt requested,
postage prepaid), in each case addressed as follows (or at such
other address for a party as shall be specified by like notice):
(a) if to JHPC:
▇▇▇ ▇▇▇▇▇'▇ Private Collection, Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
with a copy sent to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ & Banner
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Shareholders:
Mr. ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy sent to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇, Rather, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
11. Assignment. This Agreement may not be assigned by
any party hereto without the prior written consent of the other
parties hereto.
12. Miscellaneous. This Agreement may not be amended
except by a writing signed by the parties hereto and shall be
binding upon and incur to the benefit of the parties, their
permitted successors and assigns. Any provision of this Agreement
which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. The captions in this
Agreement are for convenience only and shall not define or limit
any of the terms hereof. This Agreement (including the schedules
hereto and instruments referred to herein) constitutes the entire
agreement of the parties and supersedes all prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof. This Agreement shall be
governed by and construed in accordance with the substantive laws
of the State of New York without reference to the conflicts of law
rules thereof. The parties consent to the jurisdiction of any
state or federal court sitting in the Borough of Manhattan in the
State of New York and agree that any action arising out of this
Agreement or its subject matter may be heard and determined in any
such court. The parties waive any right to trial by jury in any
such action. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
13. Access to Properties and Records; Due Diligence.
On reasonable notice, AVC shall afford to JHPC and its accountants,
counsel and representatives full access during normal business
hours throughout the period prior to the Closing of all its
properties, books, contracts, commitments and records (including
but not limited to tax returns) and, during such period, shall
furnish promptly to JHPC information concerning its business,
properties and personnel as JHPC may reasonably request.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or have caused this Agreement to be duly executed by an
officer duly authorized, all as of the date first written above.
▇▇▇ ▇▇▇▇▇'▇ PRIVATE COLLECTION, LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ COUTURE COLLECTION, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
WPDOCS\HJELM\ALVNAACQ.AG1