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REORGANIZATION AND STOCK SUBSCRIPTION AGREEMENT
This Stock Subscription and Warrant Purchase Agreement
("Agreement") is made as of June 24, 1999 among ITS Systems, Inc., a
Texas Corporation ("ITS" or the "Company"), Pensar, LLC, a Texas
limited liability company ("Pensar"), Unifund America, Inc., a New York
corporation ("Unifund America") and Unifund Financial Group, Inc., New
York corporation ("Unifund Group", together Unifund America and Unifund
Group sometimes may be referred to as "Unifund" or the "Consultant").
RECITALS
WHEREAS, ITS is engaged in the business of designing and selling
electronic test equipment for the testing of printed circuit boards. ITS owns
certain intellectual property and other assets. ITS is overburdened with
long-term debt.
WHEREAS, the ITS wishes to avail itself of the advice and services of
Consultant and Consultant wishes to be engaged by the Company.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties agree as follows:
AGREEMENT
The parties therefore agree as follows:
1. Engagement and Term. Subject to the terms and conditions of this Agreement,
ITS agrees to engage Consultant, and Consultant agrees to serve ITS, as its
consultant, for a period of one year from the date hereof. Consultant's
duties under this Agreement shall include:
1.1 the provision of strategic advice regarding the restructuring of ITS.
Specifically, the Consultant has advised ITS of a sale/lease-back
structure that will relieve ITS of debt and allow it to operate a
leaner and potentially more profitable operation. In accordance with
the Consultant's advise, ITS will transfer its assets to Pensar in
exchange for which Pensar will assume all of ITS' liabilities. In
addition, Pensar and ITS will enter into a ten-year distribution
agreement granting ITS the exclusive, worldwide right to market, sell
and distribute products based on Pensar technology. Further, ITS will
form a Delaware corporation. All shareholders, except Pensar, will
exchange all their stock in ITS for stock in the new entity. In
addition, the Consultant shall provide the following additional
duties:
1.2 the service by R. Xxxxx Xxxxxx on the new Delaware corporation's board
of directors;
1.3 the referral of outside directors with management and business
expertise to serve on the new Delaware corporation's board of
directors;
1.4 the provision of strategic advice to the new Delaware corporation in
the areas of corporate planning, financial planning, management,
technology and marketing;
1.5 the assembly of a team of professionals to provide the new Delaware
corporation with legal and accounting services; and
1.6 the referral of additional personnel as needed in the areas of
technology, management consulting and other areas as the needs are
identified.
2. Compensation. ITS agrees that Unifund Group shall be paid a fee payable in
the form of 770,000 shares of common stock of the new Delaware corporation.
In the event that the new Delaware corporation is not formed, then Unifund
Group shall be paid 770,000 shares of ITS.
3. The parties agree that Xxxxx Birmingham shall be awarded 193,000 shares of
common stock in the new Delaware corporation in consideration of $5,000 and
his services as President of the new Delaware corporation.
4. Indemnification. ITS agrees to indemnify and hold harmless Consultant from
and against claims, demands, losses, liability, damages or expenses arising
in any way from the advice rendered by Consultant to ITS so long as such
advice was not rendered in a grossly negligent manner or was a result of
willful misconduct or unlawful acts. The new Delaware corporation shall
provide the same indemnification.
5. No authority to bind Company. Consultant has no authority to enter into
contracts or agreements on behalf of ITS. This Agreement does not create a
partnership or joint venture between the parties.
6. Assignment. This Agreement shall not be assigned by the Consultant without
ITS' prior written permission which such permission can be withheld for any
reason or for no reason.
7. Waiver; Extensions. The waiver by either party of a breach of any provision
of this Agreement shall not operate or be construed, as a waiver of any
subsequent breach. No extension of time for performance of any obligations
or acts shall be deemed an extension of the time for performance of any
obligations or acts.
8. Non-waiver of Rights. No failure or delay of either party in the exercise
of any right given to such party hereunder shall constitute a waiver
thereof, nor shall any single or partial exercise of any right preclude
other or future exercises thereof or of any other right.
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9. Modification. No change, modification or waiver of any term of this
Agreement shall be valid unless it is in writing and signed by both ITS (or
the new Delaware corporation, as the case may be) and the Consultant.
10. Entire Agreement. This Agreement constitutes the entire agreement between
the parties and supersedes all prior agreements or understandings between
the ITS and the Consultant.
11. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with, the laws of New York State applicable to
agreements made and to be performed wholly within such state without regard
to its conflicts of law principles.
12. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall
constitute but on and the same instrument.
13. Pronouns. All pronouns and any variations thereof shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity
of the parties or the context and facts may require.
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed on the day and year first written above.
Unifund America, Inc.:
By: ___________________________
Unifund Financial Group, Inc.:
By: ___________________________
International Test Systems, Inc.:
By: __________________________
Pensar LLC
By: __________________________
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