STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into this 25th
day of June, 1998, by and among WILDFIRE CAPITAL CORPORATION, a corporation
incorporated under the laws of the State of Nevada (the "Purchaser"), PACIFIC
MAGTRON, INC., a corporation incorporated under the laws of the State of
California ("Company") and XXXXXXXX X. XX, a married man, and XXX XXX, a married
woman, collectively, (the "Selling Shareholders").
W I T N E S S E T H :
WHEREAS, the Purchaser desires to acquire from the Selling
Shareholders all of the issued and outstanding capital stock of the Company on
the terms and conditions hereinafter set forth; and
WHEREAS, the Company and the Selling Shareholders deem it advisable
and for their benefit to sell their shares of capital stock of the Company to
the Purchaser, believing that it will contribute materially to the growth and
profitability of the Company.
NOW, THEREFORE, in consideration of the premises and the agreements
and covenants contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement:
1.1 "PURCHASER SHARES" means the shares of common stock, par value
$.001 per share, of the Purchaser.
1.2 "FISCAL YEAR" means the period from January 1 through December
31 for each year referenced.
The parties contemplate that (i) after the Closing the
Purchaser will own one hundred percent (100%) of the Company, and (ii) the
Company, as a new member of the Purchaser's
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consolidated group, will have its financial results included in the Purchaser's
financial results and have its federal income tax returns consolidated with the
federal income tax returns of the Purchaser covering the appropriate periods as
a result of its joining the Purchaser's consolidated group. The parties agree
that accountants of the Company may be requested to perform such review as may
be necessary to have financial results sufficient to prepare a consolidated
federal income tax return for the Company for any years required by the Internal
Revenue Code. The Purchaser shall have the right to have such tax return
reviewed by a representative of an accounting firm designated by the Purchaser.
However, the Company shall retain all responsibility and authority with respect
to such tax return.
At the appropriate times, the Purchaser may require the
auditors of the Company to prepare (i) reviewed financial statements for the
Company for the 1996 and 1997 Fiscal Years and for the nine months ended
September 30, 1998 and (ii) such financial statements regarding the Company as
the Purchaser reasonably requests for use in preparing its consolidated federal
income tax returns.
1.3 "COMPANY FINANCIAL STATEMENTS" means the (i) unaudited
financial statements of the Company for its fiscal years ended December 31, 1996
and 1997, (ii) the unaudited financial statements of the Company for the
three-month period ended March 31, 1998 and (iii) the audited financial
statements of the Company which will be prepared for the fiscal years ended
December 31, 1996 and 1997 and the nine months ended September 30, 1998. The
Company will prepare the items in (i) and (ii) above, include them in Schedule
1.3 and deliver them prior to the Closing. The Company will prepare the items in
(iii) above, include them in Schedule 1.3 and deliver them on or before December
31, 1998 or at the Closing, whichever is later.
1.4 "COMPANY SHARES" means the shares of the common stock of the
Company, no par value per share, which have been issued and which are held by
the Selling Shareholders.
1.5 "PURCHASER FINANCIAL STATEMENTS" means the audited consolidated
financial statements of the Purchaser for the 1996 and 1997 Fiscal Years and its
unaudited financial statements for the six months ended June 30, 1998. The
Purchaser has previously delivered the consolidated financial statements for the
1996 and 1997 Fiscal Years to the Selling Shareholders, which are included in
Schedule 1.5. The Purchaser will prepare its unaudited financial statements for
the six months ended June 30, 1998, include them in Schedule 1.5 and deliver
them to the Selling Shareholders prior to the Closing.
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1.6 "CONFIDENTIAL INFORMATION" means (i) any proprietary or
confidential information or know-how whether or not in written form and refers
to any information, not generally known in the relevant trade or industry, which
was obtained from one of the parties to this Agreement, or which was learned,
discovered, developed, conceived, originated or prepared by one of the parties
or its employees or agents or representatives in the scope of their employment
or consultancy; (ii) customer lists and related data base information, vendor
lists and related data base information, including existing and after acquired
vendors, product lines, including, but not limited to, any new lines or vendors
brought in by any employee, invoices, purchase orders, and related documents
containing customer and vendor information, marketing strategy, buying strategy,
including names and lists of buyers, cost structures, methods and strategies on
approaching vendors and suppliers, software, technical and business information
relating to a party's inventions or products, research and development,
production processes, manufacturing and engineering processes, machines and
equipment, finances, marketing and production and future plans and any other
information which is identified by a party as confidential; and (iii)
information related to pricing, commissions, methods, processes, suppliers,
financial data, lists, computer programs, software or procedures, discoveries,
improvements, inventions, ideas, lists, apparatus, statistics, programs,
research, development, or related information of the Purchaser or the Company
and the Selling Shareholders.
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE AND SALE. Upon the terms and subject to the conditions
contained herein, the Selling Shareholders, agree to sell and transfer the
Company Shares to the Purchaser, and the Purchaser agrees to purchase and pay
for the Company Shares by issuing restricted Purchaser Shares to the Selling
Shareholders in accordance with Schedule 2.1. Such purchase and sale shall take
place at a closing (the "Closing") to be held at the offices of the Purchaser,
0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx, 00000 on the date established
pursuant to Section 11.1, "Closing Date" (the "Closing Date"). The parties
intend that the exchange of the Company Shares for the Purchaser Shares
contemplated by this Agreement will be a tax-free reorganization under Section
368(a)(1)(B) of the Internal Revenue Code, as amended.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Except as disclosed in the Disclosure Schedules noted in this
Article 3 to be delivered by the Purchaser to the Selling Shareholders on or
before June 25, 1998 and subsequently disclosed in any Supplemental Disclosure
Schedules to be delivered by the Purchaser to the Selling Shareholders on or
before the Closing Date, or thereafter in the case of certain Purchaser
Financial Statements, the Purchaser represents and warrants to the Selling
Shareholders as of the date hereof and as of the Closing Date as follows:
3.1 AUTHORITY AND VALIDITY. This Agreement is valid and binding
upon the Purchaser and neither the execution nor the delivery of this Agreement
by the Purchaser, nor the performance by it of any of the covenants or
obligations to be performed by the Purchaser hereunder, after the conditions
precedent to its obligations set forth in Article 9, "Conditions Precedent to
Obligations of the Purchaser," have been satisfied, will result in any violation
of any order, decree or judgment of any court or other governmental body, or
statute or law applicable to the Purchaser, or in any breach of any terms or
provisions of the Purchaser's Articles of Incorporation or Bylaws, or constitute
a default under any indenture, mortgage, deed of trust or other contract to
which the Purchaser is a party or by which it is bound, or cause the creation of
a lien or encumbrance on any properties owned by it or leased to it.
3.2 GOVERNMENT APPROVALS. No consent, approval or authorization of,
or notification to or registration with, any governmental authority is required
in connection with the execution, delivery and performance of this Agreement by
the Purchaser.
3.3 ORGANIZATION. The Purchaser is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Nevada and
has full corporate power and authority to carry on its business as now being
conducted and to execute, deliver and perform its obligations under this
Agreement.
3.4 FINANCIAL STATEMENTS. The Purchaser Financial Statements, with
accompanying notes, made available by the Purchaser to the Selling Shareholders
and the Company, fairly present the financial position of the Purchaser at the
dates of the Purchaser Financial Statements and the results of
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its operations and changes in its financial position for the years and periods
ended on such dates, in conformity with accounting principles as generally
accepted and consistently applied.
3.5 ABSENCE OF CHANGE. There has been no material adverse change in
the business, properties or the consolidated condition, financial or otherwise,
of the Purchaser since December 31, 1997.
3.6 CAPITALIZATION. The authorized capital stock of the Purchaser
consists of 25,000,000 shares, par value $.001 per share, of which 1,500,000
shares are issued and outstanding. The Purchaser Shares are validly issued,
fully paid and nonassessable. The Purchase Shares constitute the only
outstanding shares of the capital stock of the Purchaser of any nature
whatsoever, voting and nonvoting. The records of the Purchaser's transfer agent,
Colonial Stock Transfer, 0000 Xxxx 000 X., Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx
00000, as set forth on Schedule 3.6, are accurate in all respects and reflect
all of the issued and outstanding shares of capital stock of the Company. All
shares of capital stock of the Purchaser are required to be certificated, and
the Purchaser has not executed and delivered any certificates for shares in
excess of the number of issued shares of the Purchaser set forth in Schedule
3.6. There are, and at the closing will be, no outstanding options, warrants or
other rights for the purchase of, or any securities convertible into, capital
stock of the Company, whether issued, unissued or held in its treasury.
3.7 DISCLOSURE STATEMENT. Set forth as Schedule 3.7 is a Disclosure
Statement constituting the Purchaser's filings in compliance with the disclosure
requirements of Rule 15c2-11 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The information with respect to the Purchaser
contained in the Disclosure Statement does not contain any untrue statement of
material fact or omit to state a material fact necessary in order to make the
statements made in the Disclosure Statement and the Schedules thereto not
misleading.
3.8 NO SUBSIDIARIES. The Purchaser does not own five percent (5%)
or more of the voting securities of any corporation (or would own such
securities in such amount upon the closing of any existing purchase obligations
for securities).
3.9 FINANCIAL STATEMENTS. The Purchaser Financial Statements that
have been provided to the Selling Shareholders (i) have been prepared from the
books and records of the Purchaser
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and (ii) fairly and accurately present the financial condition of the Purchaser
as of the date thereof and, except as disclosed therein, were prepared in
accordance with generally accepted accounting principles, and (iii) contain and
reflect all necessary adjustments for a fair and accurate presentation of the
financial condition as of such date. Except as and to the extent reflected or
reserved against in such Purchaser Financial Statements, otherwise expressly
disclosed therein or as disclosed in Schedule 3.11, the Purchaser has no
liabilities or obligations, contingent or otherwise, of a nature required to be
reflected in the Purchaser Financial Statements, in accordance with generally
accepted accounting principles.
3.10 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule
3.10 or as otherwise provided herein, the Purchaser has not since December 31,
1997:
3.10.1 Suffered any material change adversely affecting
its assets, liabilities, financial condition or business;
3.10.2 Made a material change in the compensation
payable or to become payable to any of its employees or agents, or in any bonus
payments or arrangements made to or with any of its employees or agents;
3.10.3 Paid or declared any dividends or distributed
any of its assets of any kind whatsoever to any of its shareholders;
3.10.4 Issued any stock, or granted any stock options
or warrants to purchase stock;
3.10.5 Sold or transferred any of its assets or
canceled any indebtedness or claims owing to it except in the ordinary course of
business, consistent with its past practices;
3.10.6 Sold, assigned or transferred any formulas,
inventions, patents, patent applications, trademarks, trade names, copyrights,
licenses, computer programs or software, know-how or other intangible assets;
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3.10.7 Amended or terminated any contract, agreement or
license to which it is a party otherwise than in the ordinary course of business
or as may be necessary or appropriate for the consummation of the transactions
described in this Agreement;
3.10.8 Borrowed any money or incurred, directly or
indirectly (as a guarantor or otherwise), any indebtedness except in the
ordinary course of business, consistent with its past practices;
3.10.9 Discharged or satisfied any lien or encumbrance
or paid any obligation or liability (absolute or contingent), other than current
liabilities shown on the Purchaser Financial Statements or current liabilities
incurred since such date in the ordinary course of business, consistent with its
past practices;
3.10.10 Mortgaged, pledged or subjected to lien, charge
or other encumbrance any of its assets; or
3.10.11 Entered into or committed to any transaction
other than transactions in the ordinary course of business, consistent with past
practices.
3.11 CONTRACTS AND OTHER DOCUMENTS. Attached hereto as Schedule
3.11 is a complete schedule listing all documents to which the Purchaser is a
party or under which it has any liability in excess of $5,000 per annum. All
such contracts, documents and agreements listed on Schedule 3.11 are valid and
enforceable and accurate and complete copies of such contracts, documents and
agreements (or, with the consent of the Selling Shareholders forms thereof) as
have been requested by the Selling Shareholders have been provided to the
Selling Shareholders. Except as disclosed on Schedule 3.11 hereof, the Purchaser
is not or will not be, merely with the passage of time, in default under any
such contract, including those listed on Schedule 3.11. Except as specified on
Schedule 3.11, there is no requirement for any contract or agreement to which
the Purchaser is a party to be novated or to have the consent of the other
contracting party in order for the contract or agreement to be valid, effective
and enforceable by the Purchaser after the Closing as it was immediately prior
thereto.
3.12 TITLE TO PROPERTIES AND ASSETS. Except as set forth in
Schedule 3.12, the Purchaser does not presently own or lease any real property.
The Purchaser has good title to all tangible
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personal property reflected on its books and records as owned by it, free and
clear of all liens and encumbrances, except (i) liens for current taxes and (ii)
other liens or encumbrances that do not materially impair the use of the
property subject thereto. Such tangible personal property is in satisfactory
condition and suitable for the purpose for which it is being used, subject in
each case to consumption in the ordinary course, ordinary wear and tear and
ordinary repair, maintenance and periodic replacement.
3.13 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
Schedule 3.13, the Purchaser is not subject to any liabilities, including
contingent liabilities, liabilities for unperformed obligations, and liabilities
for unasserted claims.
3.14 ABSENCE OF PENSION LIABILITY.
3.14.1 The Purchaser has no liability of any nature to
any person or entity for pension or retirement obligations, vested or unvested,
to or for the benefit of any of its existing or former employees.
3.14.2 The consummation of the transactions
contemplated by this Agreement will not entitle any employee of the Purchaser to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, including the Schedules, or accelerate the
time of payment or increase the amount of compensation due to any such employee.
3.14.3 Except as set forth on Schedule 3.14, the
Purchaser presently has no employee benefit plans and has no announced plan or
legally binding commitment to create any employee benefit plans.
3.15 ABSENCE OF LIENS. There are no outstanding mechanics',
materialmen's', laborers' or other liens or encumbrances filed or enforceable
against any property owned by or in the possession of the Purchaser, or, to the
best knowledge of the Purchaser, threatened to be filed against any property
owned by the Purchaser or in its possession, which properly may be filed against
such property or which are the subject of any lawsuit against the Purchaser.
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3.16 TAX RETURNS. The Purchaser (and any predecessor corporation or
partnership as to which either of them is the transferee or successor) has
filed, or has secured an extension and will (within the permitted extension)
file, all tax returns, including federal, state, local and foreign tax returns,
tax reports and forms, as to which the due date for filing is prior to the
Closing Date; has reported all reportable income on such returns; has adopted
and followed in the preparation of such returns methods of accounting accepted
by law, and has not changed any methods of accounting without compliance with
procedures required by law; has not deducted any expenses or charges or claimed
any credits which are not allowable; and has paid, or accrued and reserved for,
all taxes, penalties and interest shown to be due or required to be paid
pursuant to the returns as filed, or as adjusted pursuant to amendment or
correction. The Purchaser has no knowledge of any claim for taxes, penalties or
interest thereon in addition to those for which such taxes, penalties or
interest have been paid or accrued.
3.17 SECURITIES LAW MATTERS.
3.17.1 The Purchaser is a publicly owned company whose
shares of capital stock are not actively traded. The Purchaser is not a
reporting company under the Exchange Act;
3.17.2 The Purchaser has :
3.17.2.1 offered and sold 1,000,000 shares
of its Common Stock in an offering exempt from registration under Section 5 in
compliance with the Securities Act of 1933, as amended (the "Securities Act") by
virtue of Rule 504 under Regulation D under the Securities Act, and offered and
sold such shares within the State of Nevada in compliance with the applicable
securities laws of such state, and the purchasers of such shares are set forth
in Schedule 3.17.2.1;
3.17.2.2 offered and sold 500,000 shares
of its Common Stock in an offering exempt from registration under Section 5 of
the Securities Act by virtue of Section 4(2) of the Securities Act and offered
and sold such shares within the State of Nevada in compliance with the
applicable securities of such state;
3.17.2.3 and the officers and directors of
the Purchaser have, to the best of the knowledge of Xxxxxx Xxxxx ("Xxxxx"), made
no statements to the Purchaser's shareholders
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or third parties respecting the Purchaser's acquisition of the Company or any
particular return that a shareholder may expect on such shareholder's investment
in the Purchaser's Common Stock;
3.17.2.4 met all applicable requirements
to have its Common Stock traded, and its Common Stock does trade, on the Nasdaq
Bulletin Board;
3.17.2.5 prepared the disclosures to be
included in the filing made by Alpine Securities Corporation to comply with Rule
15c2-11 of the Exchange Act;
3.17.2.6 made all filings and reports
required under all local, state and federal laws with respect to its business or
any predecessor entity or partnership; and
3.17.2.7 made all filings and reports
required by the Securities and Exchange Commission ("SEC").
3.17.3 The Purchaser is purchasing the Company Shares
for its own account and for investment and not with a view to, or for sale in
connection with, any distribution of the Company Shares.
3.18 LITIGATION. There are no lawsuits, arbitration actions or
other proceedings (equitable, legal, administrative or otherwise) pending or (to
the best of the Purchaser's knowledge) threatened, or any customer complaints
which have not been resolved or settled, and there are no investigations pending
or threatened against the Purchaser (or involving the industry in which they are
members) which relate to and could have a material adverse effect on the
properties, businesses or assets of the Purchaser or which could adversely
affect the validity or enforceability of this Agreement or the obligation or
ability of the Purchaser to perform its obligations under this Agreement or to
carry out the transactions contemplated by this Agreement.
3.19 COMPLIANCE WITH LAWS. The Purchaser has conducted, and is
continuing to conduct, its business in material compliance with, and is in
material compliance with, all applicable statutes, orders, rules and regulations
promulgated by governmental authorities relating in any material respect to its
operations, conduct of business or use of properties, including, without
limitation, any applicable statute, order, rule or regulation relating to (i)
wages, hours, hiring, nondiscrimination,
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retirement, benefits, pensions, working conditions, and worker safety and
health; (ii) air, water, toxic substances, noise, or solid, gaseous or liquid
waste generation, handling, storage, disposal or transportation; (iii) zoning
and building codes; (iv) the production, storage, processing, advertising, sale,
distribution, transportation, disposal, use and warranty of products; or (v)
trade and antitrust regulations. The execution, delivery and performance of this
Agreement by the Purchaser and the consummation by the Purchaser of the
transactions contemplated by this Agreement will not, separately or jointly,
violate, contravene or constitute a default under any applicable statutes,
orders, rules and regulations promulgated by governmental authorities or cause a
lien on any property used, owned or leased by the Purchaser to be created
thereunder. There are no proposed changes in any applicable statutes, orders,
rules and regulations promulgated by governmental authorities that would cause
any representation or warranty contained in this Section to be untrue.
3.20 CERTAIN ACTIVITIES. The Purchaser has not, directly or
indirectly, engaged in or been a party to any of the following activities:
3.20.1 Bribes, kickbacks or gratuities to any person or
entity, including domestic or foreign government officials or any other payments
to any such persons or entity, whether legal or not legal, to obtain or retain
business or to receive favorable treatment of any nature with regard to business
(excluding commissions or gratuities paid or given in full compliance with
applicable law and constituting ordinary and necessary expenses incurred in
carrying on its business in the ordinary course);
3.20.2 Contributions (including gifts), whether legal
or not legal, made to any domestic or foreign political party, political
candidate or holder of political office;
3.20.3 Holding of or participation in bank accounts,
funds or pools of funds created or maintained in the U.S. or any foreign
country, without being reflected on the corporate books of account, or as to
which receipts or disbursements therefrom have not been reflected on such books,
the purpose of which is to obtain or retain business or to receive favorable
treatment with regard to business;
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3.20.4 Receiving or disbursing monies, the actual
nature of which has been improperly disguised or intentionally misrecorded on or
improperly omitted from the corporate books of account;
3.20.5 Paying fees to domestic or foreign consultants
or commercial agents which exceed the reasonable value of the ordinary and
customary consulting and agency services purported to have been rendered;
3.20.6 Paying or reimbursing (including gifts)
personnel of the Purchaser for the purpose of enabling them to expend time or to
make contributions or payments of the kind or for the purposes referred to in
Paragraphs 3.20.1 through 3.20.5 above;
3.20.7 Participating in any manner in any activity
which is illegal under the international boycott provisions of the Export
Administration Act, as amended, or the international boycott provisions of the
Internal Revenue Code, or guidelines or regulations thereunder; and
3.20.8 Making or permitting unlawful charges,
mischarges or defective or fraudulent pricing under any contract or subcontract
under a contract with any department, agency or subdivision thereof, of the
United States government, state or municipal government or foreign government.
3.21 INSURANCE COVERAGE. All policies of fire, liability or other
forms of insurance which the Purchaser has obtained are set forth on Schedule
3.21. All of the insurance represented by such policies is in full force and
effect.
3.22 ARTICLES OF INCORPORATION AND BY-LAWS. The Purchaser has
delivered to the Selling Shareholders true, accurate and complete copies of the
Articles of Incorporation and By-Laws of the Purchaser, together with all
amendments to each of the same as of the date of this Agreement.
3.23 CORPORATE MINUTES. The minute books of the Purchaser made
available for inspection by the Selling Shareholders prior to the Closing are
the correct and only such minute books and contain complete and accurate records
of any and all proceedings and actions at all meetings (including written
consents executed in lieu of meetings) of its shareholder and Board of Directors
and
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committees thereof, through the Closing Date. The stock records of the Purchaser
made available for inspection by the Selling Shareholders prior to the Closing
are the correct and only such stock records and each accurately reflect all
issues and transfers of record of the capital stock of the Purchaser.
3.24 DEFAULT ON INDEBTEDNESS. The Purchaser is not in default in
any respect under any evidence of indebtedness for borrowed money.
3.25 CONSENTS. The Purchaser does not require any authorizations,
consents, approvals and waivers or other actions in order to make any license,
lease, contract or agreement listed under Schedule 3.13 valid and fully
enforceable by the Purchaser and effective after the issuance of the Purchaser
Shares to the Selling Shareholders as such license, lease, contract or agreement
was immediately prior thereto.
3.26 INDEBTEDNESS TO PURCHASER. No employee, officer or director of
the Purchaser or any third party is indebted to the Purchaser.
3.27 COMPLETENESS OF REPRESENTATIONS AND SCHEDULES. The Schedules
hereto, where applicable to the Purchaser, completely and correctly present in
all material respects the information required by this Agreement. This
Agreement, the certificates to be delivered by the Purchaser at the Closing, the
Schedules and the provisions of this Article 3, and the documents and written
information pertaining to the Purchaser furnished to the Selling Shareholders or
their agents by or on behalf of the Purchaser, do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make this Agreement, or such certificates, schedules, documents or written
information not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLING SHAREHOLDERS
Except as disclosed in the Disclosure Schedules noted in this
Article 4 and Article 5, "Representations and Warranties of the Company," to be
delivered by the Selling Shareholders and the Company to the Purchaser on or
before June 25, 1998 and subsequently disclosed in any Supplemental Disclosure
Schedules to be delivered by the Selling Shareholders and the Company to the
Purchaser on the Closing Date, or thereafter in the case of certain Company
Financial Statements, the
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Selling Shareholders hereby represent and warrant to the Purchaser as of the
date hereof and as of the Closing Date as follows:
4.1 AUTHORITY AND VALIDITY.
4.1.1 This Agreement is valid and binding upon the
Selling Shareholders and neither the execution nor delivery of this Agreement by
the Selling Shareholders nor the performance by the Selling Shareholders of any
of their respective covenants or obligations hereunder will constitute a default
under any contract, agreement or obligation to which the Selling Shareholders
are a party or by which the Selling Shareholders or any of their respective
properties is bound. This Agreement is enforceable severally against the Selling
Shareholders in accordance with its terms.
4.1.2 The execution, delivery and performance of this
Agreement by the Company have been duly authorized by its Board of Directors.
This Agreement is valid and binding upon the Company, and is enforceable against
the Company in accordance with its terms. The execution, delivery and
performance of this Agreement by the Company will not result in the violation or
breach of any term or provision of charter instruments applicable to the Company
or constitute a default under any indenture, mortgage, deed of trust or other
contract or agreement to which the Company is a party or by which it or any of
its properties is bound, or cause the creation of a lien or encumbrance on any
properties owned by or leased to or by it.
4.2 GOVERNMENTAL APPROVALS. No consent, approval or authorization
of, or notification to or registration with, any governmental authority, either
federal, state or local, is required in connection with the execution, delivery
and performance of this Agreement by the Selling Shareholders or the Company.
4.3 TITLE. Each of the Selling Shareholders has full right and
title to the number of the Company Shares set forth opposite his or her name in
Schedule 4.3; such Company Shares constitute all the Company Shares which are
owned, directly or indirectly, by the Selling Shareholders; and at the time of
transfer thereof to the Purchaser, all of the Company Shares to be transferred
by the Selling Shareholders will be free of all liens, claims or encumbrances of
any kind, and will be fully transferable to the Purchaser.
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4.4 ORGANIZATION AND GOOD STANDING. The Company is a corporation
duly organized and existing in good standing under the laws of the State of
California. The Company has full corporate power and authority to carry on its
business as now conducted and to own or lease and operate the properties and
assets now owned or leased and operated by it. The Company is duly qualified to
transact business in all states and jurisdictions in which the business or
ownership of its property makes it necessary so to qualify (other than
jurisdictions in which the nature of the property owned or business conducted,
when considered in relation to the absence of serious penalties, renders
qualification as a foreign corporation unnecessary as a practical matter).
4.5 CAPITALIZATION. The authorized capital stock of the Company
consists solely of Company Shares, as set forth in Schedule 4.5. The Company
Shares are validly issued, are fully paid and nonassessable, and subject to no
restrictions on transfer. The Company Shares constitute the only outstanding
shares of the capital stock of the Company of any nature whatsoever, voting and
non-voting. All shares of capital stock of the Company are required to be
certificated, and the Company has executed and delivered no certificates for
shares in excess of the number of issued shares of the Company set forth above.
There are, and at Closing will be, no outstanding options, warrants or other
rights for the purchase of, or any securities convertible into, capital stock of
the Company, whether issued, unissued or held in its treasury.
4.6 NO SUBSIDIARIES. The Company does not own five percent (5%) or
more of the voting securities of any corporation (or would own such securities
in such amount upon the closing of any existing purchase obligations for
securities).
4.7 FINANCIAL STATEMENTS. The Company Financial Statements which
have been provided to the Purchaser (i) have been prepared from the books and
records of the Company and (ii) fairly and accurately presents the financial
condition of the Company as of the date thereof and, except as disclosed
therein, were prepared in accordance with generally accepted accounting
principles, and (iii) contain and reflect all necessary adjustments for a fair
and accurate presentation of the financial condition as of such date. Except as
and to the extent reflected or reserved against in such Company Financial
Statements, or otherwise expressly disclosed therein, the Company has no
liabilities or obligations, contingent or otherwise, of a nature required to be
reflected in the Company Financial Statements, in accordance with generally
accepted accounting principles.
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4.8 DISCLOSURE STATEMENT. Set forth as Exhibit 4.8 is a disclosure
statement ("Disclosure Statement") of the Company. The information with respect
to the Company is contained in the Disclosure Statement and does not contain an
untrue statement of material fact or omit to state a material fact necessary in
order to make the statements made in the Disclosure Statement and the exhibits
thereto not misleading.
4.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule 4.9
or otherwise provided herein, the Company has not since December 31, 1997:
4.9.1 Suffered any material change adversely affecting
its assets, liabilities, financial condition or business;
4.9.2 Made a material change in the compensation
payable or to become payable to any of its employees or agents, or in any bonus
payments or arrangements made to or with any of its employees or agents;
4.9.3 Paid or declared any dividends or distributed any
of its assets of any kind whatsoever to any of its shareholders;
4.9.4 Issued any stock, or granted any stock options or
warrants to purchase stock;
4.9.5 Sold or transferred any of its assets or canceled
any indebtedness or claims owing to it except in the ordinary course of
business, consistent with its past practices;
4.9.6 Sold, assigned or transferred any formulas,
inventions, patents, patent applications, trademarks, trade names, copyrights,
licenses, computer programs or software, know-how or other intangible assets;
4.9.7 Amended or terminated any contract, agreement or
license to which it is a party otherwise than in the ordinary course of business
or as may be necessary or appropriate for the consummation of the transactions
described in this Agreement;
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4.9.8 Borrowed any money or incurred, directly or
indirectly (as a guarantor or otherwise), any indebtedness except in the
ordinary course of business, consistent with its past practices;
4.9.9 Discharged or satisfied any lien or encumbrance
or paid any obligation or liability (absolute or contingent), other than current
liabilities shown on the Company Financial Statements or current liabilities
incurred since such date in the ordinary course of business, consistent with its
past practices;
4.9.10 Mortgaged, pledged or subjected to lien, charge
or other encumbrance any of its assets; or
4.9.11 Entered into or committed to any transaction
other than transactions in the ordinary course of business, consistent with past
practices.
4.10 CONTRACTS AND OTHER DOCUMENTS. Attached hereto as Schedule
4.10 is a complete schedule listing of all documents to which the Company is a
party or under which it has any liability. All such contracts, documents and
agreements listed on Schedule 4.10 are valid and enforceable and accurate and
complete copies of such contracts, documents and agreements (or, with the
consent of the Purchaser, forms thereof) as have been requested by the Purchaser
have been provided to the Purchaser. Except as disclosed on Schedule 4.10
hereof, the Company is not or will not be, merely with the passage of time, in
default under any such contract, including those listed on Schedule 4.10. Except
as specified on Schedule 4.10, there is no requirement for any contract or
agreement to which the Company is a party to be novated or to have the consent
of the other contracting party in order for the contract or agreement to be
valid, effective and enforceable by the Company after the Closing as it was
immediately prior thereto.
4.11 TITLE TO PROPERTIES AND ASSETS. Except as set forth in
Schedule 4.11, the Company does not presently own or lease any real property.
The Company has good title to all tangible personal property reflected on its
books and records as owned by it, free and clear of all liens and encumbrances,
except (i) liens for current taxes, and (ii) other liens or encumbrances that do
not materially impair the use of the property subject thereto. Such tangible
personal property is in satisfactory condition and suitable for the purpose for
which it is being used, subject in each case to
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consumption in the ordinary course, ordinary wear and tear and ordinary repair,
maintenance and periodic replacement.
4.12 ABSENCE OF UNDISCLOSED LIABILITIES. The Company is not subject
to any liabilities, including contingent liabilities, liabilities for
unperformed obligations, and liabilities for unasserted claims, other than
liabilities and obligations incurred in the ordinary course of business, none of
which is materially adverse.
4.13 ABSENCE OF PENSION LIABILITY.
4.13.1 The Company has no liability of any nature to
any person or entity for pension or retirement obligations, vested or unvested,
to or for the benefit of any of its existing or former employees.
4.13.2 The consummation of the transactions
contemplated by this Agreement will not entitle any employee of the Company to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, including the Schedules, or accelerate the
time of payment or increase the amount of compensation due to any such employee.
4.13.3 Except as set forth on Schedule 4.13, the
Company presently has no employee benefit plans and has no announced plan or
legally binding commitment to create any employee benefit plans.
4.14 ABSENCE OF LIENS. Except as set forth in Schedule 4.14, there
are no outstanding mechanics', materialmens', laborers' or other liens or
encumbrances filed or enforceable against any property owned by or in the
possession of the Company, or, to the best knowledge of the Selling
Shareholders, threatened to be filed against any property owned by the Company
or in its possession, which properly may be filed against such property or which
are the subject of any lawsuit against the Company.
4.15 TAX RETURNS. The Company (and any predecessor corporation or
partnership as to which either of them is the transferee or successor) has
timely filed, or has timely secured an
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extension and will (within the permitted extension) file, all tax returns,
including federal, state, local and foreign tax returns, tax reports and forms,
as to which the due date for filing is prior to the Closing Date; has reported
all reportable income on such returns; has adopted and followed in the
preparation of such returns methods of accounting accepted by law, and has not
changed any methods of accounting without compliance with procedures required by
law; has not deducted any expenses or charges or claimed any credits which are
not allowable; and has paid, or accrued and reserved for, all taxes, penalties
and interest shown to be due or required to be paid pursuant to the returns as
filed, or as adjusted pursuant to amendment or correction. The Selling
Shareholders have no knowledge of any claim for taxes, penalties or interest
thereon in addition to those for which such taxes, penalties or interest have
been paid or accrued.
4.16 LITIGATION. Except as set forth on Schedule 4.16, there are no
lawsuits, arbitration actions or other proceedings (equitable, legal,
administrative or otherwise) pending or (to the best of the Selling
Shareholders' knowledge) threatened, or any customer complaints which have not
been resolved or settled, and there are no investigations pending or threatened,
against the Selling Shareholders or the Company (or involving the industry in
which they are members) which relate to and could have a material adverse effect
on the properties, businesses or assets of the Company or which could adversely
affect the validity or enforceability of this Agreement or the obligation or
ability of the Selling Shareholders or the Company to perform their respective
obligations under this Agreement or to carry out the transactions contemplated
by this Agreement.
4.17 COMPLIANCE WITH LAWS. The Company has conducted, and is
continuing to conduct, its business in material compliance with, and is in
material compliance with, all applicable statutes, orders, rules and regulations
promulgated by governmental authorities relating in any material respect to its
operations, conduct of business or use of properties, including, without
limitation, any applicable statute, order, rule or regulation relating to (i)
wages, hours, hiring, nondiscrimination, retirement, benefits, pensions, working
conditions, and worker safety and health; (ii) air, water, toxic substances,
noise, or solid, gaseous or liquid waste generation, handling, storage, disposal
or transportation; (iii) zoning and building codes; (iv) the production,
storage, processing, advertising, sale, distribution, transportation, disposal,
use and warranty of products; or (v) trade and antitrust regulations. The
execution, delivery and performance of this Agreement by the Selling
Shareholders and the Company and the consummation by the Selling Shareholders
and the Company of the transactions contemplated by this Agreement will not,
separately or jointly, violate, contravene or constitute a default
-19-
under any applicable statutes, orders, rules and regulations promulgated by
governmental authorities or cause a lien on any property used, owned or leased
by the Company to be created thereunder. There are no proposed changes in any
applicable statutes, orders, rules and regulations promulgated by governmental
authorities that would cause any representation or warranty contained in this
Section to be untrue.
4.18 CERTAIN ACTIVITIES. The Company has not, directly or
indirectly, engaged in or been a party to any of the following activities:
4.18.1 Bribes, kickbacks or gratuities to any person or
entity, including domestic or foreign government officials or any other payments
to any such persons or entity, whether legal or not legal, to obtain or retain
business or to receive favorable treatment of any nature with regard to business
(excluding commissions or gratuities paid or given in full compliance with
applicable law and constituting ordinary and necessary expenses incurred in
carrying on its business in the ordinary course).
4.18.2 Contributions (including gifts), whether legal
or not legal, made to any domestic or foreign political party, political
candidate or holder of political office;
4.18.3 Holding of or participation in bank accounts,
funds or pools of funds created or maintained in the U.S. or any foreign
country, without being reflected on the corporate books of account, or as to
which receipts or disbursements therefrom have not been reflected on such books,
the purpose of which is to obtain or retain business or to receive favorable
treatment with regard to business;
4.18.4 Receiving or disbursing monies, the actual
nature of which has been improperly disguised or intentionally misrecorded on or
improperly omitted from the corporate books of account;
4.18.5 Paying fees to domestic or foreign consultants
or commercial agents which exceed the reasonable value of the ordinary and
customary consulting and agency services purported to have been rendered;
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4.18.6 Paying or reimbursing (including gifts)
personnel of the Company for the purpose of enabling them to expend time or to
make contributions or payments of the kind or for the purposes referred to in
Paragraphs 4.18.1 through 4.18.5 above;
4.18.7 Participating in any manner in any activity
which is illegal under the international boycott provisions of the Export
Administration Act, as amended, or the international boycott provisions of the
Internal Revenue Code, or guidelines or regulations thereunder; and
4.18.8 Making or permitting unlawful charges,
mischarges or defective or fraudulent pricing under any contract or subcontract
under a contract with any department, agency or subdivision thereof, of the
United States government, state or municipal government or foreign government.
4.19 INSURANCE COVERAGE. All policies of fire, liability or other
forms of insurance which the Company has obtained are set forth on Schedule
4.19. All of the insurance represented by such policies is in full force and
effect.
4.20 ARTICLES OF INCORPORATION AND BY-LAWS. The Company has
delivered to the Purchaser true, accurate and complete copies of the Articles of
Incorporation and By-Laws of the Company, together with all amendments to each
of the same as of the date of this Agreement.
4.21 CORPORATE MINUTES. The minute books of the Company delivered
to the Purchaser at the Closing are the correct and only such minute books and
do and will contain complete and accurate records of any and all proceedings and
actions at all meetings (including written consents executed in lieu of
meetings) of its shareholder and Board of Directors and committees thereof,
through the Closing Date. The stock records of the Company delivered to the
Purchaser at the Closing are the correct and only such stock records and each
accurately reflect all issues and transfers of record of the capital stock of
the Company.
4.22 DEFAULT ON INDEBTEDNESS. The Company is not in default in any
respect under any evidence of indebtedness for borrowed money.
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4.23 CONSENTS. The Company does not require any authorizations,
consents, approvals and waivers or other actions in order to make any license,
lease, contract or agreement listed under Schedule 4.23 valid and fully
enforceable by the Selling Shareholders and the Company and effective after the
issuance of the Company Shares to the Purchaser as such license, lease, contract
or agreement was immediately prior thereto.
4.24 SATISFACTION OF INDEBTEDNESS. Schedule 4.24 sets forth the
indebtedness of the Selling Shareholders, any employee of the Selling
Shareholders, any employee of the Company, or any other party, to the Company.
4.25 COMPLETENESS OF REPRESENTATIONS AND SCHEDULES. The Schedules
hereto, where applicable to the Selling Shareholders and the Company, completely
and correctly present in all material respects the information required by this
Agreement. This Agreement, the certificates to be delivered by the Selling
Shareholders at the Closing, the Schedules and the provisions of this Article 4,
and the documents and written information pertaining to the Company furnished to
the Purchaser or its agents by or on behalf of the Selling Shareholders or the
Company, do not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make this Agreement, or such certificates,
schedules, documents or written information not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Independent of
the representations and warranties of the Selling Shareholders in Article 4,
"Representations and Warranties of Selling Shareholders," the Company represents
and warrants to the Purchaser all of the matters regarding the Company set forth
in Sections 4.1, 4.2 and 4.4 through 4.25, and matters regarding the Company
specifically represented and warranted in those Sections to the knowledge of the
Selling Shareholders are represented and warranted in this Section to the
knowledge of the Company.
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ARTICLE 6
PRE-CLOSING COVENANTS OF THE SELLING SHAREHOLDERS AND THE COMPANY
The Selling Shareholders and the Company independently covenant and
agree, pending the Closing of the transactions contemplated by this Agreement,
to comply with and perform, and hereby independently represent and warrant that
as of the Closing they will have complied with and performed, the following
covenants and undertakings.
6.1 NO DISTRIBUTIONS TO SELLING SHAREHOLDERS. The Company will not
pay or declare any dividend on, or make any other distribution of, any of its
assets of any kind whatsoever to the Selling Shareholders, or redeem, purchase
or otherwise acquire any of its capital stock.
6.2 ISSUANCE OF CAPITAL STOCK. The Company will not issue any
stock, or grant any stock options or warrants to purchase stock, or issue any
securities convertible into its capital stock, for consideration or otherwise,
except as provided for in this Agreement.
6.3 ARTICLES OF INCORPORATION AND BY-LAWS. The Company will not
amend or alter in any way its Articles of Incorporation or By-Laws, except to
change the name of the Company, without the prior written consent of the
Purchaser.
6.4 OPERATIONS OF THE COMPANY. Except as contemplated by this
Agreement, the Company will conduct its business and operations only in the
ordinary course. Without limiting the generality of the foregoing, and except as
contemplated by this Agreement, prior to the Closing Date, without the prior
written consent of the Purchaser, the Company will not take any action which
would result in a breach of any representation or warranty contained in Article
4, "Representations and Warranties of Selling Shareholders," and Article 5,
"Representations and Warranties of the Company," as if such representations and
warranties were by their terms applicable to such period.
6.5 TERMINATION OF INTEREST IN THE COMPANY SHARES. The Selling
Shareholders shall take such actions as are necessary to ensure that as of the
Closing Date they have full right and title to, and rights to convey, all the
issued and outstanding shares of the capital stock of the Company and there
shall be no outstanding options on, rights to or claims regarding the capital
stock of the Company.
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ARTICLE 7
POST-CLOSING COVENANTS BY THE SELLING SHAREHOLDERS
7.1 RESALE OF PURCHASER SHARES. The Selling Shareholders hereby
agree that for a period of one (1) year after the receipt of the Purchaser
Shares, the Selling Shareholders will not offer or sell any of Purchaser Shares,
except with the prior written consent of the Purchaser, pursuant to an available
exemption under the Securities Act or to a registration statement. If the
Purchaser has registered the sale of the Purchaser Shares held by the Selling
Shareholders with the SEC. In the case of such registration, the Purchaser's
consent for any such offer and sale shall not be unreasonably withheld, even if
such sale is made before the first anniversary of the issuance of the Purchase
Shares. After expiration of said one-year period, any sale of the Purchaser
Shares must be pursuant to an available exemption from the Securities Act and
shall also be subject to the Purchaser's consent, which consent shall not be
unreasonably withheld. The Selling Shareholders agree to retain a copy of any
letter referenced above for a reasonable period and to furnish a copy thereof to
the Purchaser within ten (10) days after completion of any sale. As used herein,
"U.S.A." and "U.S. Person" shall have the same meanings as in the certificate
legend set forth in Section 8.1.
ARTICLE 8
SECURITIES LAWS
8.1 CERTIFICATES EVIDENCING PURCHASER SHARES. The Purchaser Shares
delivered to the Selling Shareholders pursuant to Section 2.1, "Purchase and
Sale," shall be in registered form and bear the following legend:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 AND, EXCEPT PURSUANT TO AN
EXEMPTION THEREFROM OR REGISTRATION OF THE SHARES UNDER SUCH ACT,
MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES OF AMERICA, INCLUDING THE STATES AND POSSESSIONS AND OTHER
AREAS SUBJECT TO ITS JURISDICTION (THE "U.S.A."), OR TO CITIZENS OR
RESIDENTS OF THE U.S.A., CORPORATIONS, PARTNERSHIPS OR OTHER
ENTITIES CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE U.S.A. OR
ESTATES OR TRUSTS THE INCOME OF WHICH IS SUBJECT TO UNITED STATES
FEDERAL INCOME TAXATION REGARD LESS OF ITS SOURCE ("U.S. PERSONS").
SPECIFIC RESTRICTIONS ON REOFFERS AND RESALES OF THE SHARES ARE SET
FORTH IN
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SECTION 7.1 OF THE STOCK PURCHASE AGREEMENT UNDER WHICH THESE
SHARES WERE ISSUED, TO WHICH THE OWNER OF SUCH SHARES, BY
ACCEPTANCE HEREOF, ASSENTS. COPIES OF THE FORM OF SECTION 7.1 OF
SUCH STOCK PURCHASE AGREEMENT CAN BE OBTAINED FROM THE SECRETARY OF
THE CORPORATION UPON REQUEST."
8.2 REPRESENTATION AND WARRANTY BY THE SELLING SHAREHOLDERS. The
Selling Shareholders, represent and warrant to the Purchaser that:
8.2.1 The Selling Shareholders have been furnished
information concerning the Purchaser in the Disclosure Statement, including the
Purchaser's Financial Statements, have had an opportunity to discuss the
Purchaser's business and affairs with its executives in order to secure such
further information about the Purchaser as the Selling Shareholders have desired
to receive and have not looked to the Purchaser, or any agents or employees of
the Purchaser, to provide them with any information except for such documents as
have been specifically requested and delivered prior to the date of this
Agreement;
8.2.2 The Selling Shareholders have knowledge and
experience in financial and business matters such that they are capable of
evaluating the merits and risks of the prospective investment in the Purchaser
Shares to be received hereunder;
8.2.3 The Selling Shareholders are and will be
accepting the Purchaser Shares for their respective own accounts for investment
and not with a view to, or for sale in connection with, any distribution of the
Purchaser Shares; and
8.2.4 The Selling Shareholders acknowledge that they
are aware that the Purchaser Shares have not been registered under the
Securities Act, that the Purchaser Shares may not be offered or sold within the
U.S.A. or to U.S. Persons (as defined in the legend contained in Section 8.1)
unless an exemption from such registration is available or that the Purchaser
has registered the Purchaser Shares under the Securities Act, and that,
accordingly, it must bear the economic risk of the investment in the Purchaser
Shares for an indefinite period of time.
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ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser under this Agreement shall be
subject to the satisfaction, on or prior to the Closing Date, of all of the
following conditions, any one or more of which may be waived by the Purchaser:
9.1 REPRESENTATIONS AND WARRANTIES ACCURATE. All representations
and warranties of the Selling Shareholders and the Company contained in this
Agreement shall have been true in all material respects when made, and also at
and as of the Closing Date as if such representations and warranties were made
at and as of the Closing Date. The Selling Shareholders shall furnish the
Purchaser with a certificate, dated the Closing Date and signed on behalf of the
Company by a duly authorized officer thereof, and by the Selling Shareholders,
stating the above in such form as the Purchaser may reasonably request.
Acceptance of the Purchaser Shares by the Selling Shareholders shall constitute
an affirmation by the Selling Shareholders of the truth, as of the Closing Date,
of the representations and warranties made by them in this Agreement. Any
Supplemental Disclosure Schedules prepared by the Selling Shareholders and
delivered to the Purchaser after June 25, 1998 shall be subject to review and
acceptance by the Purchaser as of the Closing Date, in its sole discretion.
9.2 PERFORMANCE BY THE SELLING SHAREHOLDERS AND THE COMPANY.
9.2.1 The Selling Shareholders and the Company shall
have performed and complied in all material respects with all agreements,
covenants and conditions required by this Agreement to be performed and complied
with by them, and the Selling Shareholders shall deliver a certificate to that
effect, dated the Closing Date and signed in the manner set forth in Section
9.1, "Representations and Warranties Accurate."
9.2.2 The Selling Shareholders shall deliver to the
Purchaser evidence that they have full right and title to, and rights to convey,
the Company Shares and that there are no outstanding options on, rights to or
claims regarding the capital stock of the Company.
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9.3 LEGAL PROHIBITION. On the Closing Date, there shall exist no
injunction or final judgment, law or regulation prohibiting the consummation of
the transactions contemplated by this Agreement.
9.4 TENDER OF ALL OUTSTANDING THE COMPANY SHARES. The Selling
Shareholders shall, pursuant to this Agreement, tender the Company Shares to the
Purchaser at the Closing in transferrable form acceptable to the Purchaser in
accordance with Article 2, "Purchase and Sale."
9.5 FINANCIAL CONDITIONS. The review of the Company Financial
Statements shall not have revealed any matter which, in the reasonable business
judgment of the Purchaser, makes the transactions contemplated by this Agreement
on the terms herein set forth inadvisable for the Purchaser.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING SHAREHOLDERS AND THE COMPANY
The obligations of the Selling Shareholders and the Company under
this Agreement shall be subject to the satisfaction, on or prior to the Closing
Date, of all of the following conditions, any one or more of which may be waived
by the Selling Shareholders and the Company:
10.1 REPRESENTATIONS AND WARRANTIES ACCURATE. All representations
and warranties of the Purchaser contained in this Agreement shall have been true
in all material respects when made, and also at and as of the Closing Date as if
such representations and warranties were made at and as of the Closing Date. The
Purchaser shall deliver to the Selling Shareholders a certificate, dated as of
the Closing Date and signed by an officer of the Purchaser, stating the above in
such form as the Selling Shareholders may reasonably request. Acceptance of the
Company Shares by the Purchaser shall constitute an affirmation by the Purchaser
of the truth, as of the Closing Date, of the representations and warranties made
by the Purchaser in this Agreement. Any Supplemental Disclosure Schedules
prepared by the Purchaser and delivered to the Selling Shareholders after June
26, 1998 shall be subject to review and acceptance by the Selling Shareholders
as of the Closing Date, in their sole discretion.
10.2 REVERSE STOCK SPLIT AND POST-CLOSING CAPITALIZATION. The
Purchaser shall effect a reverse split of its shares of Common Stock outstanding
immediately prior to the Closing on a three for two basis so that for every
three shares a shareholder owns prior to the split, the shareholder
-27-
will receive two shares. Accordingly, immediately prior to the Closing the
Purchaser will have 1,000,000 of Common Stock issued and outstanding and will
issue 9,000,000 shares of its Common Stock to the Selling Shareholders at the
Closing. Therefore, the ownership of the Purchaser's issued and outstanding
Common Stock immediately after the Closing will be as set forth in Schedule 10.2
10.3 PERFORMANCE BY THE PURCHASER. The Purchaser shall have
performed and complied in all material respects with all agreements, covenants
and conditions required by this Agreement to be performed and complied with by
it prior to or on the Closing Date, and there shall be delivered to the Selling
Shareholders a certificate to that effect, dated the Closing Date and signed in
the manner set forth in Section 10.1, "Representations and Warranties Accurate."
10.4 LEGAL PROHIBITION. On the Closing Date, there shall exist no
injunction or final judgment, law or regulation prohibiting the consummation of
the transactions contemplated by this Agreement.
10.5 LEGAL OPINION. On the Closing Date, the Purchaser shall
deliver an opinion to the Selling Shareholders from its legal counsel in form
attached as Exhibit 10.4 hereto.
10.6 ISSUANCE OF THE PURCHASER SHARES. The Purchaser shall,
pursuant to this Agreement, issue the Purchaser Shares to the Selling
Shareholders at the Closing in accordance with Article 2, "Purchase and Sale."
10.7 APPROVAL OF SHAREHOLDERS. The shareholders of the Purchaser
shall have approved the transactions contemplated in this Agreement in
accordance with Nevada law.
10.8 FINANCIAL CONDITIONS. The review of the Purchaser Financial
Statements shall not have revealed any matter which, in the reasonable business
judgment of the Selling Shareholders, makes the transactions contemplated by
this Agreement on the terms herein set forth inadvisable for the Selling
Shareholders.
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ARTICLE 11
CLOSING
11.1 CLOSING DATE. The Closing Date shall be July 10, 1998, or such
later date as the Purchaser and Selling Shareholders may mutually select, but in
no event later than July 30, 1998. No extension of the Closing Date beyond July
30, 1998 shall be made unless mutually agreed between the parties to this
Agreement. Such agreement to extend the Closing Date shall be deemed sufficient
if executed by the Purchaser, the Selling Shareholders and the Company.
11.2 DELIVERIES BY THE PURCHASER ON THE CLOSING DATE. The Purchaser
shall deliver to the Selling Shareholders at Closing:
11.2.1 The certificates contemplated by Sections 10.1,
"Representations and Warranties Accurate," and 10.2, "Performance by the
Purchaser";
11.2.2 The share certificates representing the
Purchaser Shares; and
11.2.3 The resignations of the directors and officers
of the Purchaser effective immediately upon the Closing and appointment of the
new directors as specified in Article 14, "Post-Closing Covenants by the
Purchaser."
11.3 DELIVERIES BY THE SELLING SHAREHOLDERS ON THE CLOSING DATE.
The Selling Shareholders shall deliver to the Purchaser at Closing:
11.3.1 The certificates contemplated by Sections 9.1,
"Representations and Warranties Accurate," and 9.2, "Performance by the Selling
Shareholders and the Company";
11.3.2 The original minute book, stock record book,
seal of the Company and all books and records of the Company; and
11.3.3 The share certificates representing all of the
Company Shares held by the Selling Shareholders, with attached stock powers duly
executed by the Selling Shareholders.
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ARTICLE 12
TERMINATION
12.1 TERMINATION EVENTS. This Agreement may be terminated and
abandoned, by notice given by the Purchaser, or by the Selling Shareholders and
the Company, as the case may be, in the manner hereinafter provided:
12.1.1 By the Purchaser, if without fault of the
Purchaser all of the conditions set forth in Article 9, "Conditions Precedent to
Obligations of the Purchaser," shall not have been satisfied (or are incapable
of being satisfied) on or before the Closing Date and have not been waived by
the Purchaser on or before such date;
12.1.2 By the Selling Shareholders and the Company, if
without their fault all of the conditions set forth in Article 10, "Conditions
Precedent to Obligations of the Selling Shareholders and the Company,"shall not
have been satisfied (or are incapable of being satisfied) on or before the
Closing Date and have not been waived by the Selling Shareholders and the
Company on or before such Date;
12.1.3 By the mutual consent and agreement of the
Purchaser, the Selling Shareholders and the Company; and
12.1.4 By either the Purchaser or by the Selling
Shareholders and the Company if after completion of their respective due
diligence of each other either the Purchaser or the Selling Shareholders and the
Company for any reason are not satisfied with the results of their respective
due diligence investigations of the other party and give notice to the other
party to such effect. The parties shall complete their respective due diligence
investigations on or before the Closing Date and if the Selling Shareholders and
the Company or the Purchaser fail to give such notice on or before the foregoing
date, they shall be deemed to be satisfied with their respective due diligence
examinations for purposes of this Paragraph 12.1.4.
12.2 RELATIONSHIPS WITH THIRD PARTIES. In consideration of the
undertaking by the parties of the substantial legal, accounting and other
expenses incident to their entering into this Agreement and proceeding toward
the Closing, the parties agree that until the Closing Date or upon
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earlier termination of this Agreement, they will not enter into or pursue any
arrangements or negotiations with any other party relative to the sale or merger
of the Company into any other party or any sale of assets for control relative
to any extraordinary transaction involving the Company without the consent of
the Purchaser.
12.3 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 12.1, "Termination Events," this Agreement shall forthwith
become void, and there shall be no liability or continuing obligations on the
part of the parties hereunder.
ARTICLE 13
INDEMNIFICATION
13.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS.
The representations and warranties made by the parties in this Agreement and in
the certificates delivered at the Closing, and all of the covenants of the
parties in this Agreement, shall survive the execution and delivery of this
Agreement and the Closing Date and (except for those contained in Sections 3.6,
4.3, 4.5, 4.15 and 7.1 and any substantially identical representations,
warranties and covenants effectively made in Article 5 or in any certificate
delivered at the Closing) shall expire on the last day of the thirtieth full
calendar month following the Closing Date. Any claim for indemnification (other
than a claim based upon Sections 3.6, 4.3 or 4.5, which can be asserted at any
time, or based upon Section 4.15, which can be asserted within the limit
provided therein, or based on Section 7.1, which can be asserted prior to the
last day of the thirtieth full calendar month following the Closing Date) shall
be effective only if notice of such claim is given by the party claiming
indemnification or other relief to the party against whom such indemnification
or other relief is claimed before said expiration date.
13.2 INDEMNIFICATION BY THE PURCHASER AND HOFER.
13.2.1 The Purchaser and Hofer agree to indemnify and
hold the Selling Shareholders harmless, from and after the Closing Date, against
and in respect of all matters in connection with any losses, liabilities or
damages (including reasonable attorneys' fees) incurred by the Selling
Shareholders that result from any misrepresentation or breach of the warranties
by the Purchaser in Article 3, "Representations and Warranties of the
Purchaser,"or any breach or nonfulfillment of any agreement or covenant on the
part of the Purchaser contained in this Agreement, and all suits, actions,
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proceedings, demands, judgments, costs and expenses incident to the foregoing
matters, including reasonable attorneys' fees.
13.2.2 In no event shall liability of the Purchaser or
Hofer under Section 13.2.1 above to the Selling Shareholders (other than for
costs and reasonable attorneys' fees incurred by such Selling Shareholders to
which they may be entitled pursuant to Section 13.5, "Arbitration," or Section
15.2.3)(i) exceed the total value of the Company Shares which have been (and
will, pursuant to the formula of Article 2 hereof, be required to be) delivered
to the Purchaser, which value shall be deemed to be $7,000,000 for purposes of
this Paragraph 13.2.2. or (ii) exceed, in the case of Hofer, $750,000 if the
loss, liability or damage arises from a matter addressed in the legal opinion
attached as Exhibit 10.4 hereto. Further, Hofer shall have no liability under
Paragraph 13.2.1 above to the Selling Shareholders for the failure of the
Purchaser to satisfy any post-closing covenant.
13.2.3 Notwithstanding the provisions of Paragraph
13.2.1 above, the Selling Shareholders shall be entitled to seek indemnification
from the Purchaser pursuant to Paragraph 13.2.1 of this Section 13.2 only to the
extent that the aggregate of the losses, liabilities, costs and damages
(including reasonable attorneys' fees) incurred by the Selling Shareholders
which they would be entitled to claim under such Paragraph 13.2.1 exceeds
$25,000.
13.3 INDEMNIFICATION BY THE SELLING SHAREHOLDERS.
13.3.1 The Selling Shareholders, on a joint and not a
several basis, agree to indemnify and hold the Purchaser harmless, from and
after the Closing Date, against and in respect of all matters in connection with
any losses, liabilities, costs or damages (including reasonable attorneys' fees)
incurred by the Purchaser resulting from (i) any breach of its representations
and warranties in Section 4.3, "Title,"or (ii) any breach or nonfulfillment of
their covenants in Article 7, "Post-Closing Covenants By the Selling
Shareholders."
13.3.2 The Selling Shareholders, on a joint and not a
several basis, agree to indemnify and hold the Purchaser harmless, from and
after the Closing Date, against and in respect of all matters in connection with
any losses, liabilities or damages (including reasonable attorneys' fees)
incurred by the Purchaser resulting from any misrepresentation or breach of its
warranties in Article 4, "Representations and Warranties of Selling
Shareholders," Article 5, "Representations and Warranties
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of the Company," or Article 8, "Securities Laws," (other than Section 4.3), or
any breach or nonful fillment of any agreement or covenant on the part of the
Selling Shareholders contained in this Agreement (other than those in Article 7,
"Post-Closing Covenants By the Selling Shareholders") and all suits, actions,
proceedings, demands, judgments, costs and expenses incident to the foregoing
matters, including reasonable attorneys' fees. In addition, in the event that
any matter covered by indemnification is clearly also covered by insurance held
by the Company, the Purchaser shall cause the Company to make reasonable efforts
to recover on such insurance in mitigation of its indemnification claim.
13.3.3 Notwithstanding the provisions of Paragraph
13.3.2 above, the Purchaser shall be entitled to seek indemnification from the
Selling Shareholders pursuant to Para graph 13.3.2 of this Section 13.3 only to
the extent that the aggregate of the losses, liabilities, costs and damages
(including reasonable attorneys' fees) incurred by the Purchaser which it would
be entitled to claim under such Paragraph 13.3.2 exceeds $25,000. In no event
shall the liability of the Selling Shareholders under Paragraph 13.3.1 and
13.3.2 above to the Purchaser (other than for costs and reasonable attorneys'
fees incurred by the Purchaser to which the Purchaser may be entitled pursuant
to Section 13.5, "Arbitration"or Section 15.2.3) exceed $750,000 in aggregate to
the Selling Shareholders.
13.4 INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold the Purchaser harmless, from and after the Closing Date,
against and in respect of all matters in connection with any losses, liabilities
or damages (including reasonable attorneys' fees) incurred by the Purchaser
resulting from any misrepresentation or breach of its warranties in Article 5,
and all suits, actions, proceedings, demands, judgments, costs and expenses
incident to the foregoing matters, including reasonable attorneys' fees;
provided, however, that the Purchaser shall not be entitled to make a claim
against the Company (i) to the extent that such claim could not be asserted
against the Selling Shareholders because excluded from indemnification under the
provisions in Paragraph 13.3.2 or (ii) if resolved against the Purchaser
pursuant to the procedures provided in Section 13.5, "Arbitration." Subject to
the foregoing, the liability of the Company hereunder is separate and
independent of any liability of the Selling Shareholders. Nothing herein shall
require the Purchaser to assert its indemnification rights against the Company
prior to asserting its indemnification rights against the Selling Shareholders,
and either or both rights may be pursued by the Purchaser independently, in such
priority as the Purchaser may in its discretion decide, or jointly. No agreement
between the Purchaser
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and the Company shall be binding upon or have any evidentiary value in any
dispute between the Purchaser and the Selling Shareholders.
13.5 ARBITRATION. If the Purchaser believes that a matter has
occurred that entitles it to indemnification under Section 13.3,
"Indemnification by the Selling Shareholders," or Section 13.4, "Indemnification
by the Company,"or the Selling Shareholders believe that a matter has occurred
that entitles them to indemnification under Section 13.2, "Indemnification by
the Purchaser," it (the "Indemnified Party") shall give notice to the party or
parties against whom indemnification is sought (each, an "Indemnifying Party")
describing such matter in reasonable detail. The Indemnifying Party shall be
entitled to give such notice prior to the establishment of the amount of its
losses, liabilities, costs or damages, and to supplement its claim from time to
time thereafter by further notices as they are established. The Indemnifying
Party shall respond to such claim for indemnification within thirty (30) days
after receipt of the claim stating its acceptance or objection to the
indemnification claim, and explaining its position in respect thereto in
reasonable detail. If such Indemnifying Party does not timely so respond, it
will be deemed to have accepted the Indemnified Party's indemnification claim as
specified in the notice given by the Indemnified Party. If the Indemnifying
Party gives a timely objection notice, then the parties will negotiate in good
faith to attempt to resolve the dispute, and upon the expiration of an
additional thirty (30) day period from the objection notice or such longer
period as to which the Indemnified and Indemnifying Parties may agree, any such
dispute may be submitted to arbitration in Santa Xxxxx County, California to a
member of the American Arbitration Association mutually appointed by the
Indemnified and Indemnifying Parties (or, in the event the Indemnified and
Indemnifying Parties cannot agree on a single such member, to a panel of three
(3) members of such Association selected in accordance with the rules of such
Association), who may promptly arbitrate such dispute in accordance with the
rules of such Association and report to the parties upon such disputed items,
and such report shall be final, binding and conclusive on the parties. Judgment
upon .the award by the arbitrator(s) may be entered in any court having
jurisdiction. The prevailing party in any such arbitration shall be entitled to
recover from, and have paid by, the other party hereto all fees and
disbursements of such arbitrator or arbitrators. For this purpose, a party shall
be deemed to be the prevailing party only if such party would be deemed to be a
prevailing party under Section 15.2.3.
13.6 NO FINDERS. Except as set forth in Schedule 13.6, the
Purchaser represents and warrants to the Selling Shareholders, and the Selling
Shareholders represent and warrant to the Purchaser, respectively, that they
have not become obligated to pay any fee or commission to any
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broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement. The Purchaser agrees to indemnify and hold the
Selling Shareholders harmless from any breach of the Purchaser's representation
in the previous sentence, and the Selling Shareholders agree to indemnify and
hold the Purchaser harmless from any breach of their representation in the
previous sentence.
13.7 THIRD PERSON CLAIM PROCEDURES. If a third person asserts a
claim against a party to this Agreement, and it is intended to seek
indemnification against another party or parties (the "Indemnifying Party")
under the provisions of this Article 13 in connection with the matter involved
in such claim, the party intending to seek such indemnification (the
"Indemnified Party") shall promptly, but in no event later than ten (10) days
prior to the time at which an answer or other responsive pleading or notice with
respect to the claim is required, notify the Indemnifying Party of such claim.
The Indemnifying Party shall have the right at its election to take over the
defense or settlement of such claim by giving prompt notice to the Indemnified
Party that it will do so, such election to be made and notice given in any event
at least 24 hours prior to the time at which an answer or other responsive
pleading or notice with respect thereto is required. If the Indemnifying Party
makes such election, it may conduct the defense of such claim through counsel of
its choosing (subject to the Indemnified Party's approval, not to be
unreasonably withheld), will be responsible for the expenses of such defense,
and shall be bound by the results of its defense or settlement of the claim to
the extent it produces damage or loss to the Indemnified Party. The Indemnifying
Party shall not settle such claims without prior notice to and consultation with
the Indemnified Party, and no such settlement involving any injunction or
material and adverse effect on the Indemnified Party may be agreed to without
its consent. So long as the Indemnifying Party is diligently contesting any such
claim in good faith, the Indemnified Party shall not pay or settle any such
claim. If the Indemnifying Party does not make such election, or having made
such election does not proceed diligently to defend such claim prior to the time
at which an answer or other responsive pleading or notice with respect thereto
is required, or does not continue diligently to contest such claim, then the
Indemnified Party may take over defense and proceed to handle such claim in its
exclusive discretion, and the Indemnifying Party shall be bound by any defense
or settlement that the Indemnified Party may make in good faith with respect to
such claim. The parties agree to cooperate in defending such third party claims,
and the defending party shall have access to records, information and personnel
in control of the other part which are pertinent to the defense thereof. The
Purchaser, the Company, the Selling Shareholders and Hofer do not know of any
such third party or any pending or threatened third party claim.
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13.8 LIMITATION OF REMEDIES.
13.8.1 Except as provided in Paragraph 13.8.2 of this
Section 13.8, if the parties choose to arbitrate, the parties understand that
this requires that all disputed claims will be submitted to arbitration in
accordance with Section 13.5, "Arbitration." In such case, no party to this
Agreement shall be liable to any other party or parties or have any remedies
against any other party or parties under this Agreement other than through
arbitration as provided in this Article 13. If the parties choose not to
arbitrate under Section 13.5, "Arbitration," except as provided in Paragraph
13.8.2 of this Section 13.8, they may pursue any remedy at law or equity.
13.8.2 Notwithstanding the provisions of Paragraph
13.8.1 of this Section 13.8, the Purchaser shall, in addition to rights to
indemnification provided in this Article 13, be entitled to such equitable
remedies for any breach of Article 7 of this Agreement as are available under
applicable law. Such remedies shall not be subject to arbitration, except that
if the Purchaser elects to submit any dispute over a claim for equitable relief
to arbitration in accordance with California law, such dispute will be submitted
for and decided by arbitration. In such event, arbitrators shall be chosen in
the manner set forth in Section 13.5, "Arbitration."
ARTICLE 14
POST-CLOSING COVENANTS BY THE PURCHASER
With respect to its post-Closing operation of the Company, the
Purchaser covenants to and agrees with the Selling Shareholders as follows:
14.1 ELECTION OF DIRECTORS OF THE PURCHASER. The Purchaser and its
directors shall nominate and vote for the election Xxxxxxxx X. Xx, Xxxxx Xx, Xxx
Xxx and Jey Xxxx Xxx as directors of the Purchaser and shall not vote for the
removal of, and vote for the reappointment through the 1999 Fiscal Year of, such
individuals as directors. Accordingly, after the Closing the directors of the
Purchaser will be Xxxxxxxx X. Xx, Xxxxx Xx, Xxx Xxx and Jey Xxxx Xxx.
14.2 ELECTION OF DIRECTORS OF THE COMPANY. The Purchaser and its
directors shall nominate and vote for the election of Xxxxxxxx X. Xx, Xxxxx Xx,
Xxx Xxx and Jey Xxxx Xxx as directors of the Company and shall not vote for the
removal of, and vote for the reappointment through the 1999
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Fiscal Year, of such individuals as directors. Accordingly, after the Closing
the directors of the Company will be Xxxxxxxx X. Xx, Xxxxx Xx, Xxx Xxx and Jey
Xxxx Xxx.
14.3 LISTING IN STANDARD & POOR'S CORPORATE REPORTS. The Purchaser
shall use its best efforts in listing the Purchaser in Standard & Poor's
Corporate Reports "(Standard & Poor") and qualify its Common Stock for trading
in the states listed in Schedule 14.3 through the listing of the Company through
Standard & Poor's.
14.4 CONSULTING SERVICES. Hofer will use his best efforts to
introduce the Purchaser to an investment banking relationship and advise and
assist the Company in connection with a secondary public offering of its equity
securities.
ARTICLE 15
MISCELLANEOUS
15.1 ACCESS AND INFORMATION.
15.1.1 The Company and the Purchaser shall provide to
each other and their respective counsel, accountants and other representatives
reasonable access upon reasonable notice during normal business hours during the
period between the date hereof and the Closing Date, to all of the properties,
books, records, contracts and commitments of each other, and shall furnish, or,
authorize their respective counsel and accountants to furnish, to the Purchaser
or the Company, as the case may be, and their respective representatives all
such information as the parties may reasonably request of each other. The
Purchaser hereby has the permission of the Company to contact and carry on
discussions with the customers, prospective customers, suppliers, employees and
all persons and entities under contract with the Company upon reasonable notice.
Both the Purchaser and the Company and Selling Shareholders will cooperate with
all reasonable requests by the other party for information and shall use their
best efforts to secure the cooperation of third parties who may be reasonably
requested to furnish such information to each other.
15.1.2 The Purchaser and the Company and the Selling
Shareholders shall keep all Confidential Information derived from the other
party relating to their respective businesses confidential pending the Closing
of the transaction contemplated by this Agreement. The Purchaser and
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Selling Shareholders shall, and the Purchaser and Selling Shareholders shall
cause their respective officers, directors, agents and representatives to, keep
all Confidential Information derived from the other party relating to the
business of the Purchaser and the Company confidential until the Confidential
Information is made public by the party owning or controlling the Confidential
Information or the Confidential Information otherwise becomes publicly known.
15.1.3 If this Agreement should be terminated pursuant
to Article 12, the Purchaser and the Selling Shareholders shall return all such
Confidential Information which they have received from the other party and shall
not disclose or use such information in any manner, except to the extent
required to so disclose the same by law and except for information already
publicly available.
15.2 EXPENSES.
15.2.1 The Purchaser shall be solely responsible for
paying its own expenses and costs incident to the preparation of this Agreement
and to the consummation of the transactions contemplated by this Agreement, and
shall have no obligation for paying such expenses or costs of the other parties.
15.2.2 The Company shall be solely responsible for
paying its own expenses and costs, and those of the Selling Shareholders,
incident to the preparation of this Agreement and to the consummation of the
transactions contemplated by this Agreement. The Selling Shareholders shall have
no obligation to reimburse the expenses or costs of the Purchaser.
15.2.3 Notwithstanding any of the other provisions
hereof, in the event of arbitration and/or litigation with respect to the
interpretation or enforcement of this Agreement or any provisions hereof, the
prevailing party in any such matter shall be entitled to recover from the other
party his or its reasonable costs and expense, including reasonable attorneys'
fees, incurred in such arbitration and/or litigation. For purposes of this
Paragraph 15.2.3, a party shall be deemed to be the prevailing party only if
such party (A)(i) receives an award or judgment in such arbitration or (ii) is
ordered to pay the other party or (B)(i) succeeds in having imposed a material
equitable remedy on the other party (such as an injunction or order compelling
specific performance), or (ii) succeeds in defeating the other party's request
for such an equitable remedy.
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15.3 ASSIGNMENT. The rights and obligations of any party under this
Agreement may not be assigned or transferred without the prior written consent
of the Purchaser or the Selling Shareholders, as the case may be. Any assignment
in violation of this paragraph shall be void.
15.4 CHOICE OF LAWS. This Agreement shall be governed, construed
and enforced in accordance with the laws of the State of California.
15.5 JURISDICTION; AGENTS FOR SERVICE OF PROCESS. Any judicial
proceeding brought against any of the parties to this Agreement on any dispute
arising out of this Agreement or any matter related hereto brought in the courts
of the State of California, Santa Xxxxx County, or in the appropriate United
States District Court for such County and, by execution and delivery of the
Agreement, each of the parties to this Agreement accepts for himself or itself
the exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement.
15.6 CAPTIONS. Captions and headings used herein are for
convenience only and shall not be used in construing or interpreting this
Agreement.
15.7 GENDER AND NUMBER. Whenever the context of this Agreement so
requires, the masculine gender includes the feminine or neuter, the neuter
includes the masculine or feminine, and the singular number includes the plural.
15.8 SEVERABILITY. Each provision hereof is severable from this
Agreement, and if one or more provisions hereof are declared invalid, the
remaining provisions shall nevertheless remain in full force and effect. If
Section 7.1, "Resale of Purchaser Shares," is declared excessively broad, as to
time, area or otherwise, it shall be construed as limited to the broadest time,
area or other scope permitted by applicable law.
15.9 NO THIRD-PARTY BENEFICIARIES. Each of the provisions of this
Agreement is for the sole and exclusive benefit of the parties thereto,
respectively, as their interests appear, and shall not be deemed for the benefit
of any other person.
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15.10 AMENDMENT. This Agreement may be amended only by the mutual
written agreement of the Purchaser, the Selling Shareholders and the Company.
Any such written amendment executed as set forth in the preceding sentence shall
be binding upon all parties hereto. The failure of any party to enforce at any
time any of the provisions of this Agreement shall in no way be deemed a waiver
of any such provision, nor in any way affect the validity of this Agreement or
any part thereof.
15.11 SUCCESSORS AND ASSIGNS. Subject to Section 15.3,
"Assignment," this Agreement shall be binding upon and inure to the benefit of
the successors and assigns and heirs of the parties hereto.
15.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and by the different parties hereto on separate counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
15.13 ENTIRE AGREEMENT. This Agreement and its Schedules constitute
the entire contract among the parties hereto with respect to the subject matter
thereof, superseding all prior communications and discussions, and no party
hereto shall be bound by any communication on the subject matter hereof unless
such is in writing signed by any necessary party thereto and bears a date
subsequent to the date hereof. The exhibits and schedules shall be construed
with and deemed as an integral part of this Agreement to the same extent as if
the same had been set forth verbatim herein. Information set forth in any
exhibit, schedule or provision of this Agreement shall be deemed to be set forth
in every other exhibit, schedule or provision of this Agreement and therefore
shall be deemed to be disclosed for all purposes of this Agreement.
15.14 PUBLIC ANNOUNCEMENTS. Through the Closing Date no party shall
issue any press release or public announcement in connection with this Agreement
or the transactions contemplated hereby without prior notice to and written
consent of the other party.
15.15 FURTHER ASSURANCES. Each of the parties hereto shall use
commercially practicable efforts to fulfill all of the conditions set forth in
this Agreement over which it has control or influence (including obtaining any
consents necessary for the performance of such party'S obligations hereunder)
and to consummate the transactions contemplated hereby, and shall execute and
deliver such further instruments and provide such documents as are necessary to
effect this Agreement.
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15.16 NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be validly given if delivered
personally, or if delivered by courier, or if delivered by telex or telecopier
with receipt confirmed, or if sent by certified or registered air mail return
receipt requested, addressed, if to the Purchaser to:
Wildfire Capital Corporation
Xxxxxx Ranch Corporate Center
0000 Xxxxx Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
with a copy to: Xxxx X. Xxxxxx, Esq.
Xxxxxx, Xxxxxx & Xxxxxxx, X.X.
620 Judge Building
0 Xxxx Xxxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
or to such other person or at such other place as the Purchaser shall furnish to
the Selling Shareholders in writing; if to the Selling Shareholders or the
Company to them at:
Pacific Magtron, Inc.
Attn: Xxxxxxxx X. Xx
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
with a copy to: Xxxxxxxxx X. Xxxxxxxx, III, Esq.
Xxxxxxx Lang, P.A.
Renaissance Xxx
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
or to such other person or at such other place as the Selling Shareholders shall
furnish the Purchaser in writing. Notice given by telex shall be deemed
delivered when received as evidenced by their answer back. Notice given by
telecopier shall be deemed delivered when receipt thereof is confirmed by
subsequent telephone call. Notice given by certified or registered air mail as
set out above shall be deemed delivered at the earlier of (i) actual receipt as
evidenced by the return receipts, or (ii) five (5) business days after the date
the same is postmarked (if postmarked in the United States and addressed to a
recipient in the United States) or seven (7) business days after the date the
same is postmarked (if postmarked outside the United States or addressed to a
recipient outside the United States).
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IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the day and year first above written.
SELLING SHAREHOLDERS:
/s/ Xxxxxxxx X. Xx
------------------------------------
XXXXXXXX X. XX
/s/ Xxx Xxx
------------------------------------
XXX XXX
COMPANY:
PACIFIC MAGTRON, INC.,
a California corporation
By /s/ Xxxxxxxx X. Xx
----------------------------------
Xxxxxxxx X. Xx
Its President
PURCHASER:
WILDFIRE CAPITAL CORPORATION,
a Nevada corporation
By /s/ Xxx Xxxxx
----------------------------------
Xxx Xxxxx
Its President
AS TO SECTIONS 3.17.2.3 AND 13.2 AND
ARTICLE 14 ABOVE:
/s/ Xxxxxx Xxxxx
------------------------------------
Xxxxxx Xxxxx
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