<DOCUMENT>
<TYPE>EX-2.1
<SEQUENCE>3
<FILENAME>dex21.txt
<DESCRIPTION>PURCHASE AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 2.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is made and entered into as of the 8th day of April,
2001, effective as of December 31, 2000,
by and between
ADDUCTOR GRUPPEN, AB, a company duly incorporated and organized under the laws
of Sweden, hereinafter referred to as the "Purchaser",
and
PEACH ENTERTAINMENT DISTRIBUTION AKTIEBOLAG, a company duly incorporated and
organized under the laws SWEDEN, hereinafter referred to as the "Seller".
WITNESSETH:
WHEREAS, the Seller is the holder of an option (the "Option") to acquire all of
the authorized Common Stock of Private Circle, Inc. a company duly incorporated
and organized under the laws of the State of Nevada, U.S.A., having its
principal office in the City of Los Angeles, California, U.S.A., hereinafter
referred to as the "Company", and
WHEREAS, the Company is engaged, directly and indirectly in the business of
designing and selling apparel under the "Private Circle" brand, and
WHEREAS, Seller and Purchaser have entered into an agreement in principle in
December 2000 whereby Purchaser will acquire the Option from Seller, subject to
completion of due diligence by Purchaser and the execution of a definitive
agreement containing such terms as are customary in a transaction of this type.
WHEREAS, the Seller is desirous of selling to the Purchaser and the Purchaser is
desirous of purchasing from the Seller the Option in exchange for a cash payment
equal to the current amount of indebtedness owed to Seller from the Company for
money borrowed as of the Closing Date (the "Indebtedness"), which amount was SEK
21,444,000 as of December 31, 2000, subject to the terms and conditions
contained herein; and
NOW, THEREFORE, in consideration of the mutual covenants and undertakings set
forth herein, the parties agree as follows:
1. INTERPRETATION
--------------
1.1 In this Agreement
Page 1 of 14
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"Assets" means all of the Assets of the Company
wherever located, which are owned or leased
by the Company and are used in connection
with the Company's business;
"Business Day" means the day (other than a Saturday or
Sunday) on which banks are generally open in
Sweden for normal business.
"Closing" means completion of the sale and purchase of
the Option in accordance with Section 4
below;
"Confidential Information" means any and all information of any kind or
nature whatsoever, whether written or oral,
including, without limitation, financial
information, trade secrets, client lists and
other proprietary business information,
regarding the Company or the Seller, which
information is not known to the general
public or to persons unaffiliated with the
Company or the Seller, as the case may be;
"Intellectual Property" means any trademarks tradenames or domain
names;
"Material Adverse Effect" means any effect which gives rise to or is
reasonably likely to give rise to a material
adverse effect on the assets or financial
condition of the Company;
"Material Agreement" means existing agreements of the Company,
either having an annual turnover exceeding
SEK 100,000 or which cannot be terminated at
the Company's discretion by applying a notice
period shorter than three (3) months;
"Option" means the Option to acquire 100% of the
Common Stock of the Company upon payment of
SEK 10;
"Option Shares" means all of the authorized shares of the
Company's Common Stock, which are issuable
upon exercise of the Option;
"SEK" means the lawful currency of Sweden;
1.2 Any statement in this Agreement qualified by the expression "to the best of
the Seller's knowledge" or "so far as the Seller is aware" or any similar
expression shall mean that it is made after due and careful enquiry of the
board members of the Seller.
1.3 The headings in this Agreement do not affect its interpretation.
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2. SALE OF THE OPTION
------------------
The Seller shall sell and the Purchaser shall purchase the Option and all
rights now and hereafter attaching or accruing thereto, free and clear of
any pledges, liens, security interests, claims, charges and encumbrances.
3. CONSIDERATION FOR SALE AND TRANSFER (EXCHANGE)
----------------------------------------------
3.1 At the Closing, subject to the terms and conditions of this Agreement, and
in full consideration for the aforesaid sale, conveyance and delivery of
Option, the Purchaser shall pay in cash to the Seller an amount equal to the
Indebtedness on the Closing Date (the "Purchase Price"). At such time all
outstanding Indebtedness shall cease to be payable by the Company to Seller.
4. CLOSING
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4.1 Closing shall take place on or before April 16, 2001 (the "Closing Date").
4.2 (a) At Closing the Seller shall assign to the Purchaser good and
marketable title to the Option, free and clear of all liens, security
interests, claims charges and encumbrances;
(b) At the Closing Purchaser shall pay to Seller the Purchase Price in
immediately available funds as designated by Seller prior to Closing.
(c) Any instruments evidencing the Indebtedness shall be surrendered to
the Purchaser.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER
--------------------------------------------
The Seller hereby represents and warrants to the Purchaser as the date
hereof and as of the Closing Date that:
5.1 Power and authority of the Seller
(a) The Seller is a company duly organized and validly existing under the
laws of Sweden.
(b) The Seller has full power and authority to execute and deliver this
Agreement and each other document or instrument delivered in
connection herewith and to consummate the transactions contemplated
hereby.
5.2 Violation of Laws and Regulations
The execution and delivery of this Agreement by the Seller and the
completion of the transactions contemplated hereby:
Page 3 of 14
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(a) will not violate any provision of the articles of association of the
Seller;
(b) will not to any material extent violate any statute, rule, regulation,
order or decree of any public body or authority by which the Seller or
any of its properties or assets is bound; and
(c) will not to any material extent result in a violation or breach of, or
constitute a default under, any license, franchise, permit, agreement or
other instrument to which the Seller is a party, or by which the Seller
or any of its properties or assets is bound,
excluding from the foregoing Sections 5.2 (a) to (c) violations, breaches or
defaults which, either individually or in the aggregate, would not prevent
the Seller from performing its obligations under this Agreement or the
completion of the transactions contemplated by this Agreement.
5.3 Corporate records and documentation
Seller has made available to Purchaser a complete and correct copy of the
Company's certificate of incorporation and bylaws. The Company's certificate
of incorporation and bylaws are in full force and effect, and the Company is
not in violation of any of the provisions thereof.
5.4 Title to the Option
The Seller owns the Option clear of all liens, encumbrances, claims, options
and restrictions of every kind. The Seller has good and marketable title to
the Option and has the right, power and authority to exchange and deliver
the Option to the Purchaser in accordance with the terms of this Agreement.
5.5 The Option
The Option, when fully exercised, will represent one hundred per cent (100
%) of all of the Common Stock of the Company and one hundred per cent (100
%) of the voting power of the Company, the Option has been duly authorized,
validly issued and is fully paid, and the shares of Common Stock, when
issued in accordance with the Option, will be validly issued, fully paid and
non-assessable, subject to no liens, claims or assessments. There are no
outstanding obligations, warrants, debentures, options, preemptive rights or
other agreements to which the Seller or the Company is a party or otherwise
bound, providing for the issuance of any additional shares of the Company or
the purchase, repurchase, redemption or other acquisition of the Option
Shares.
5.6 Financial Statements
(a) The Company has neither an equity interest in, nor the right or option
to acquire an equity interest in, any other entity, and the Company is
not a participant, as a partner or otherwise, in any joint venture.
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<PAGE>
(b) The Company has delivered to the Purchaser its financial statements
from inception through September 30, 2000, collectively referred to as
the "Financial Statements".
(c) The foregoing Financial Statements:
(i) are complete and correct in all material respects and give a true
and fair view of the financial position and results of the
operations of the Company as of their respective dates and for
the respective periods and have been prepared from and in
accordance with the books and records of the Company;
(ii) have been prepared in accordance with good accounting practice,
applied on a basis consistent with that of preceding periods; and
(iii) contain and reflect such reserves as were necessary and required
by the laws, principles and rules referred to under (ii) above to
be reflected in such statements as of said dates for all
liabilities, actual, contingent or accrued, and for all
reasonably anticipated losses and costs (in excess of expected
receipts) and for all warranty claims, discounts or refunds with
respect to services and/or products already rendered or sold,
such reserves being based upon events or circumstances in
existence or likely to occur in the future with respect to any
contracts or commitments of the Company.
(d) Except as disclosed in the Financial Statements, the Company has not
pledged any assets, has no commitments or contingent liabilities and the
Company has full and exclusive title to all assets in the balance sheets
of the Financial Statements and the assets of the Company are not the
subject of any encumbrances or restrictions of whatever nature.
(e) The activities of the Company during the period from October 1, 2000 to
the date hereof have been conducted in the ordinary course of business
with a view to maintaining its business as a going concern and there has
not occurred or arisen since September 30, 2000 with respect to the
Company:
(i) any material adverse change in its financial conditions or in the
operations of its business; or
(ii) any obligations, commitments or liabilities, liquidated or
unliquidated, contingent or otherwise, except obligations,
commitments and liabilities arising in the ordinary course of
business and which are not material in relation to its business;
or
(iii) any amendment or termination, or any agreement to amend or
terminate any Material Agreement, save in the ordinary course of
business; or
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(iv) any extraordinary event or any extraordinary loss suffered or
any waiver of any debts, claims, rights under any Material
Agreement, or other rights representing a value in excess of SEK
100,000; or
(v) any damage, destruction, or loss or any other event or
condition, whether covered by insurance or not, materially and
adversely affecting its properties and business representing
loss to property in the aggregate in excess of SEK 100,000; or
(vi) any sale, assignment, transfer, pledge, lease or other disposal
of any individual asset with a value in excess of SEK 100,000;
or
(vii) any increase in the rates of compensation (including bonuses)
payable or to become payable to any officer, employee, agent,
independent contractor or consultant; or
(viii) any change of accounting methods, principles or practices; or
(ix) any investment in fixed assets that exceed individually SEK
100,000 or in the aggregate SEK 100,000; or
(x) any transaction other than in the ordinary course of business;
and the Company has not agreed or arranged to do any of the foregoing.
(f) Since September 30, 2000 no dividends or interim dividends have been
declared or paid by the Company.
(g) All accounts receivable of whatever nature appearing in the accounts of
the Company are fully collectible, subject to reasonable reserves
consistent with past practice.
5.7 Taxes
(a) All notices, computations and returns which ought to have been given or
made have been properly and duly submitted by the Company to the
relevant taxation or excise authority and all information, notices,
computations and returns submitted to such authorities are true and
accurate and are not subject of any material dispute nor are likely to
become the subject of any material dispute with such authorities.
(b) All taxes of any nature whatsoever for which the Company is liable have
been duly paid or reserved for in the accounts.
(c) The Company has never suffered any investigation, audit or visit by any
taxation or excise authority, and the Seller is not aware of any such
investigation, audit or visit planned for the next twelve months.
Page 6 of 14
<PAGE>
(d) All amounts required to be withheld or collected under applicable
foreign, federal, state, local or other tax laws and regulations by the
Company for income taxes, social security taxes, unemployment insurance
and other employee withholding taxes, or other taxes, have been so
withheld or collected, and such withholding or collection has either
been paid to the respective governmental agencies or set aside in
accounts for such purpose or accrued and reserved against and entered
on the Financial Statements.
5.8 Assets and Properties
(a) The Company has exclusive title to the Assets, except for such assets
that are leased. Except as noted in the Financial Statements, the
Assets are not subject to encumbrances, mortgages, liens, charges or
other restrictions.
(b) All personal property of the Company are usable to the benefit of the
Company's business and are in good physical repair and condition,
ordinary wear and tear excepted.
(c) All Assets whether or not recorded on the books of the Company that
heretofore have been used in the Company's business have been included
in the transfer to the Purchaser under the terms of this Agreement.
5.9 Compliance with statutes and licenses
The operations of the Company have been conducted in all respects in
accordance with and meet the applicable laws and regulations of all
governmental, municipal or other authorities having jurisdiction over the
Company. All governmental and other authority licenses and permits required
for the operation of the Company are, to a material extent, in full force
and effect and no violations are or have been recorded in respect of any
such existing licenses or permits and remain uncorrected and no proceeding
is pending which seeks the revocation or limitation of any such existing
licenses or permits.
5.10 Agreements
(a) All Material Agreements have been disclosed to the Purchaser.
(b) The Company has neither received nor given notice of termination of any
Material Agreement.
(c) No party to any Material Agreement has the right to terminate or modify
its obligations as a result of the transactions contemplated herein.
(d) The Company is not in default under any Material Agreement, which
default will have a Material Adverse Effect.
5.11 Litigation
No actions, suits, proceedings or governmental investigation is pending or
to the best of the Seller's knowledge, threatened against the Company. To
the best of the Seller's knowledge, the
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<PAGE>
Company is not in default with respect to any order, injunction or decree
by any court or governmental department or agency.
5.12 Intellectual Property
The Company owns or has valid licenses, or other agreements to use, the
Intellectual Property, free and clear of all liens, pledges, or other
encumbrances. The use by the Company of the Intellectual Property does not
infringe the rights of any third parties.
5.13 Employees
(a) The Company has disclosed to Purchaser all written or oral contracts
of employment with any employee of the Company, and the Company is not
a party to or subject to any collective bargaining agreements and has
not been a party to or subject to any collective bargaining agreement
or plan during the last 5 years.
(b) There are no deferred compensation agreements, pensions, profit
sharing, severance pay, retirement plans or other agreement plans,
practices or programs providing any employee benefits. Full
reservations have been made in the Financial Statements for all
present and/or future liabilities in respect of pensions and other
payments related to compensations to be paid to employees.
(c) Neither the Seller nor any director, officer or other Employee of the
Seller, the Company, or any relatives of any of the foregoing owns,
directly or indirectly, individually or collectively, any interest in
any corporation, company, partnership, entity or organization which is
in a business similar or competitive to the businesses of the Company.
(d) The Seller and the members of the board of directors of the Company
have no claims for compensation of any nature whatsoever relating to
the period before or after the Closing other than those obligations
identified pursuant to this Agreement.
(e) The Company has complied in all material respect with all applicable
laws, ordinances, rules, regulations, agreement and requirements
relating to the employment of labor. The Company is not liable for any
arrears of wages or any taxes or penalties for failure to comply with
any of the foregoing.
5.14 Environmental
(a) The Company has complied in all material respects with all relevant
environmental laws and environmental licenses and all environmental
licenses are valid and subsisting and the Company has not received any
written notice that any such environmental license is being revoked,
amended, varied, withdrawn or not renewed.
(b) No proceedings have been issued or are outstanding against the Company
in respect of any breach of any legislation concerning the
environment.
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<PAGE>
5.15 Conduct of Business
(a) The Company has conducted its business at all times in accordance with
and has complied with applicable national and local laws relating to
its operations and business, and is not a party to or subject to any
judgement, decree or order entered in any suit or proceeding brought by
any governmental or local agency or authority or any other person or
party enjoining or otherwise restraining or restricting the Company
with respect to any business activity or practice in the conduct of
business which is related to, necessary or incidental to the business
conducted by it and will not be, in respect of circumstances, existing
before or upon the Closing Date or related thereto; there is no
controversy or investigation pending or threatened with respect to the
Company's business by any governmental or local agency or authority or
any other person or party.
(b) The Company is not and shall not be liable, due to circumstances
existing before or upon Closing or related thereto, to compensate for
damages caused to the environment, or third parties by
products/services sold or otherwise in excess of what has been provided
for in the accounts.
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
----------------------------------------------
The Purchaser hereby represents and warrants to Seller as of the Closing
Date that:
6.1 Power and authority of the Purchaser
(a) The Purchaser is a company duly organized and validly existing under
the laws of Sweden.
(b) The Purchaser has full power and authority to purchase the Option and
to perform all other undertakings hereunder and the execution, delivery
and performance of this Agreement. This Agreement is a valid and
binding obligation of the Purchaser enforceable against the Purchaser
in accordance with the terms herein.
6.2 Violation of Laws and Regulations
Assuming all filings, registrations, approvals, notifications etc required
by applicable laws are duly made, the execution and delivery of this
Agreement by the Purchaser and the completion of the transactions
contemplated hereby:
(a) will not violate any provision of the articles of association of the
Purchaser;
(b) will not violate any statute, rule, regulation, order or decree of any
public body or authority by which the Purchaser or any of its
properties or assets is bound; and
Page 9 of 14
<PAGE>
(c) will not result in a violation, breach of or constitute a default under
any license, franchise, permit, agreement or other instrument to which
the Purchaser is a party, or by which the Purchaser or any of its
properties or assets is bound,
excluding from the foregoing Sections 6.2 (a) to (c) violations, breaches
or defaults which, either individually or in the aggregate, would not
prevent the Purchaser from performing its obligations under this Agreement
or the completion of the transactions contemplated by this Agreement.
6.3 Investment Representation
Purchaser represents to the Seller that it is acquiring the Option for
investment and with no present intention of distributing or reselling the
Option or any part thereof in violation of any applicable law.
7. COVENANTS AND OTHER UNDERTAKINGS OF THE PARTIES
-----------------------------------------------
7.1 The Seller has afforded and shall continue to afford to the officers,
representatives and advisers of the Purchaser access to the plants,
properties, books and records of the Company and will furnish to the
Purchaser such additional financial and operation data and other
information as to the business and properties of the Company ("Due
Diligence").
7.2 Notwithstanding the above, the Seller shall provide such other information,
and execute and deliver all such other and additional instruments, notices,
releases, undertakings, consents and other documents, and shall do all such
other acts and things, as may be reasonably requested by Purchaser as
necessary to assure to Purchaser all the rights and interests granted or
intended to be granted under this agreement.
7.3 The Seller and/or any related parties to the Seller covenants with the
Purchaser (for itself and as agent for Seller and the related parties) that
it shall not:
a) for a period of two (2) years from the Closing Date be concerned in any
business carrying on businesses carried on by the Company as of the
Closing Date in any jurisdiction where the Company transacts business;
or
b) make use of or (except as required by law or any competent regulatory
body) disclose or divulge to any third party any information of a
secret or confidential nature relating to the business or affairs of
the Company or its customers or suppliers; or
c) make any use of the Company's customer database as from the Closing
Date.
d) The Seller will provide such other information, and execute and deliver
all such other and additional instruments, notices, releases,
undertakings, consents and other documents, and will do all such other
acts and things, as may be reasonably requested by the Purchaser as
necessary to assure to the Purchaser all the rights and interest
granted or intended to be granted under this Agreement. The Seller
shall take or shall
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<PAGE>
cause to be taken such other reasonable actions as the Purchaser may
require to more effectively transfer, convey and assign to, and vest in
the Purchaser, and put the Purchaser in possession of, the Option as
contemplated by this Agreement.
7.4 From and after the Closing Date Purchaser shall make reasonable
efforts to cause Seller and any of Seller's affiliates to be released from
any guarantees or indemnification arrangements in respect of obligations
or indebtedness of the Company to any third party. Purchaser agrees to
indemnify and hold harmless Seller and its affiliates from and against any
claims, expenses or liabilities relating to such guarantees or
indebtedness.
7.5 Purchaser has advised Seller that it will be consolidating the
Company on Purchaser's financial statements for the year ended December
31, 2000. Seller agrees, for itself and its affiliates, that it will
refrain from taking any action which would interfere with Purchaser's
ability to effect such consolidation as of December 31, 2000.
8. INDEMNIFICATION
-------------------
8.1 Breach of Warranties
Seller and Purchaser shall each indemnify and hold harmless the other and
their respective agents, employees and affiliates, against and in respect of
any damages, losses, costs or expenses that arise in connection with any
breach by the other party of its respective representations, warranties or
covenants given herein ("Losses").
8.2 Notification
(a) In case either party (the "Indemnified Party") becomes aware of any
claim for which the other party (the "Indemnifying Party") may be
liable, the Indemnified Party shall, in order to maintain the right to
bring a claim against the Indemnifying Party:
(i) as soon as reasonably practicable, but in no event later than
twenty (20) days after the date the Indemnified Party becomes
aware of any circumstance giving rise to a claim, give written
notice thereof to the Indemnifying Party;
(ii) not make any admission of liability, agreement or compromise with
any person, body or authority in relation thereto, without
obtaining the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed;
(iii) take such action, as the Indemnified Party may reasonably request,
to avoid dispute, appeal, compromise or defend such claim, with
the proviso, however, that the Indemnified Party shall not, nor
cause the Company to, accept or pay or compromise or make any
submission in respect of such claim, without the Indemnifying
Party's prior written consent, which consent shall not be
unreasonably withheld or delayed; and
<PAGE>
(iv) give the Indemnifying Party and its duly authorized
representatives, reasonable access to relevant accounts, documents
and records and to take photocopies thereof.
9. ANNOUNCEMENTS
-----------------
No announcements concerning this transaction or any ancillary matter will be
made before, on or after Closing by any party to this agreement (or any
person connected with the party) except as required by law or the rules of
any stock exchange without the prior written approval of the Seller and
Purchaser.
10. NOTICES
-----------
(a) All notices, consents or other communications under or in connection
with this Agreement shall be given in writing or by facsimile to such
place as the parties shall furnish to each other from time to time. Any
such notice or consent will be deemed to be given as follows:
(i) if in writing, when delivered; and
(ii) if by facsimile, when received.
However, a notice given in accordance with the above but received on a
non-Business Day or after business hours in the place of receipt will
only be deemed to be given at the opening of business on the next
Business Day.
11. CONFIDENTIALITY
-------------------
The parties undertake not to disclose any Confidential Information unless
(i) required to do so by law; (ii) required to do so by any applicable stock
exchange regulations; (iii) such disclosures are made in connection with the
ordinary course of business of such party; or (iv) disclosure has been
consented to by the other party.
12. LANGUAGE
------------
The language of this Agreement is English and all documents and notices
hereunder shall be in English unless otherwise agreed by both parties.
<PAGE>
13. WHOLE AGREEMENT
-------------------
This Agreement and other documents referred to herein which form a part
hereof, contain the entire understanding of the parties hereto with respect
to the subject matter contained herein and therein. All prior negotiations
and agreements between the parties hereto with respect to the transactions
provided for herein are superseded by this Agreement. This Agreement may
be executed in counterparts. A facsimile signature shall have the same
legal effect as an original.
14. WAIVER
----------
The failure of any party to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver of any right
hereunder, nor shall it deprive that party of the right thereafter to insist
upon the strict adherence to that term or any other terms of this Agreement.
15. AMENDMENTS
----------------
No change, termination or attempted modification of any of the provisions of
this Agreement shall be binding on the Seller or on the Purchaser unless
agreed by both parties in writing. No modification, termination, rescission,
discharge or cancellation of this Agreement shall affect the right of the
Purchaser or the Seller to enforce any claim, whether or not liquidated,
that accrued prior to the date of such notification, termination,
rescission, discharge or cancellation of this Agreement.
16. INVALIDITY
--------------
If for any reason any term, warranty, representation, covenant or condition
herein shall be declared or deemed void, invalid or unenforceable, such
shall not render void, invalid or unenforceable this Agreement or any other
term, covenant or condition herein contained if in spite of the exclusion of
the invalid provision, the Agreement can be given effect in line with the
main purposes of the parties.
17. ASSIGNMENT
--------------
This Agreement may not be transferred, assigned, pledged or hypothecated by
any party hereto, other than by operation of law. This Agreement shall be
binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and permitted assignees.
<PAGE>
18. FEES AND EXPENSES
---------------------
Except as otherwise set forth in this Agreement, each party shall pay its
own and its advisers' fees and expenses (including financial and legal
advisors) whether relating to the preparation, the carrying out of this
Agreement, the Closing hereunder or the completion of the transactions
herein contemplated and no such fees or cost will be charged to the
Company.
19. GOVERNING LAW AND DISPUTES
-------------------------------
19.1 This Agreement shall be governed by the substantive laws of Sweden.
19.2 Any dispute, controversy or claim arising out of or in connection with this
Agreement, or the breach, termination or invalidity thereof shall be
settled by arbitration in accordance with Swedish Laws. The place of
arbitration including the making of the award shall be Stockholm, Sweden.
The language to be used in the arbitration proceedings shall be English.
_____________________
IN WITNESS WHEREOF, the parties have duly executed this on the date first
written above.
PEACH ENTERTAINMENT ADDUCTOR GRUPPEN, AB
DISTRIBUTION AKTIEBOLAG
/s/ /s/ Rude Klereby
------------------------- ----------------
Director Rude Klereby, Chairman
</TEXT>
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