SHARE PURCHASE AGREEMENT EXHIBIT 99
SHARE PURCHASE AND INVESTMENT AGREEMENT
AMONG
R-TEC HOLDING, INC., AN IDAHO CORPORATION AND
R-TEC CORPORATION, AN IDAHO CORPORATION
AND
XXXXX XXXXXXXX, AN INDIVIDUAL
XXXXXXX XXXXXXXX, AN INDIVIDUAL AND
XXXXX X. XXXXXXXX, AN INDIVIDUAL
DATED: SEPTEMBER 22, 2004
PURCHASE AND INVESTMENT AGREEMENT
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THIS AGREEMENT, dated for reference the 22nd day of September, 2004, between
R-TEC HOLDING, INC., a corporation duly incorporated under the laws of the State
of Idaho, and having an office situate at 0000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxx 00000, and R-TEC CORPORATION, a corporation duly incorporated under the
laws of the State of Idaho, and having an office situate at 0000 Xxxx Xxxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxx 00000 (R-TEC HOLDING, INC., and R-TEC CORPORATION are
collectively referred to herein as "R-TEC"),
OF THE FIRST PART, and
XXXXX XXXXXXXX, an individual, XXXXXXX XXXXXXXX, an individual, and XXXXX X.
XXXXXXXX, an individual (referred to collectively herein as "Investor"),
OF THE SECOND PART.
WHEREAS:
A. R-TEC is a corporation duly organized pursuant to the laws of the State of
Idaho.
B. R-TEC is in the business of developing and manufacturing testing devices
primarily for the integrative circuit industry and other activities
incidental thereto, including retail sales from R-TEC's Machine Shop (the
"Business").
C. R-TEC requires additional financing and capital in order to continue the
Business and has requested the Investor to provide such financing and
capital, which the Investor has agreed to provide on the terms and
conditions contained herein.
NOW THEREFORE, THIS AGREEMENT WITNESSES that in consideration of the promises
and the mutual covenants and agreements herein set forth, the parties hereto
covenant and agree each with the other as follows:
INTERPRETATION
In this Agreement, except as otherwise expressly provided:
"Agreement" means this agreement, including the preamble and the Schedules
hereto, as it may from time to time be supplemented or amended in writing and in
effect;
"Business Assets" means all of the real property, personal property, choses in
action, intangible or intellectual property and all other assets of whatsoever
nature owned or leased by R-TEC or in which R-TEC has any right or interest or
the right to acquire an interest, including, without limitation, the
Intellectual Property Rights and the Contracts, and specifically includes those
assets set forth in Schedule "A" hereto;
"Closing Date" means the date which is fifteen (15) days following Regulatory
Approval of the transactions contemplated in this Agreement;
"Contracts" means all of the commitments, agreements, contracts, instruments,
leases and other documents entered into by R-TEC, by which R-TEC is bound or to
which R-TEC or the Business Assets are subject (other than the Permitted Liens),
including without limitation those listed in Schedule "B" hereto;
"Financial Statements" means the audited balance sheets and statements of
earnings of R-TEC as of R-TEC's most recently completed financial period, and
the most recent compiled and un-audited financial statements of R-TEC. Copies
of both the audited and most recent compiled Financial Statements of R-TEC are
attached hereto as Schedule "C";
"Indebtedness" means any and all advances, debts, duties, endorsements,
guarantees, liabilities, obligations, responsibilities and undertakings of a
Party assumed, created, incurred or made whether voluntary or involuntary,
however arising, whether due or not due, absolute, inchoate or contingent,
liquidated or un-liquidated, determined or undetermined, direct or indirect,
express or implied, and whether such Party may be liable individually or jointly
with others;
"Intellectual Property Rights" means, collectively, all patents, patent
applications, copyrights, trademarks, trademark applications, trade names, trade
secrets, design or invention, or intellectual property owned by R-TEC and used
in connection with the conduct of the Business or Business Assets and all
goodwill connected therewith, including, without limitation, all licences or
similar rights used by or granted to R-TEC in connection with production,
research, development and design in connection with the Business or Business
Assets, and all rights to register or otherwise apply for the protection of any
of the foregoing, and specifically including the right to use or carry on
business under the trade name "R-TEC";
"Lien" means any security agreement, mortgage, debenture, charge, hypothecation,
pledge, lien, or other security interest or encumbrance of whatever kind or
nature, regardless of form and whether consensual or arising by laws, statutory
or otherwise that secures the payment of any Indebtedness or the performance of
any obligation or creates in favour of or grants to any Party any proprietary
right;
"Party" means an individual, corporation, body corporate, partnership, joint
venture, society, association, trust or unincorporated organization or any
trustee, executor, administrator, or other legal representative;
"Permitted Liens" means the Liens enumerated and described in Schedule "D";
"Regulatory Approval" means any and all approvals, consents or adjudication by
any governmental or regulatory body or agency having jurisdiction or powers of
review with respect to the affairs of R-TEC, the Investor, or, generally, the
subject matter of this transaction and specifically includes, without
limitation, NASDAQ (OTCBB) and the Securities and Exchange Commission;
"Subsidiary" means any entity wholly or partially owned by R-TEC;
"Shares" means all Shares of stock or other indicia of economic interest in
R-TEC, including collectively the Convertible Shares and Non Convertible Shares
in the capital of R-TEC;
all references in this Agreement to a designated "Section" or other subdivision
or to a Schedule is to the designated Section or other subdivision of, or
Schedule to, this Agreement;
the words "herein", "hereof" and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular Section or other
subdivision or Schedule;
the headings are for convenience only and do not form a part of this Agreement
and are not intended to interpret, define, or limit the scope, extent or intent
of this Agreement or any provision hereof;
the singular of any term includes the plural, and vice versa, the use of any
term is equally applicable to any gender and, where applicable, a body
corporate, the word "or" is not exclusive and the word "including" is not
limiting (whether or not non-limiting language, such as "without interpretation"
or "but not limited to" or words of similar import, is used with reference
thereto);
any accounting term not otherwise defined has the meanings assigned to it in
accordance with generally accepted accounting principles currently applicable in
the United States;
any reference to a statute includes and is a reference to that statute and to
the regulations made pursuant thereto, with all amendments made thereto and in
force from time to time;
where any representation or warranty is made "to the knowledge of" any Party,
such Party will not be liable for a misrepresentation or breach of warranty by
reason of the fact, state of facts, or circumstances in respect of which the
representation or warranty is given being untrue if such Party proves:
that such Party conducted a reasonable investigation so as to provide reasonable
grounds for a belief that there had been no misrepresentation or breach of
warranty; or
that fact, state of facts, or circumstance could not reasonably be expected to
have been determined as a result of a reasonable investigation, irrespective of
the actual investigation conducted by such Party;
any dollar amount referred to in this Agreement is in the currency of the United
States of America;
any other term defined within the text of this Agreement has the meanings so
ascribed;
the warranties and representations regarding R-TEC, set forth in Section 2.1 of
this Agreement, including all of its Subsections ("Subsections"), are made
subject to the disclosures in all of the Schedules referenced and provided for
in said Subsections. Disclosures made in such Schedules shall be taken as
relating to any and all representations and warranties set forth in the
Subsections where applicable and relevant and the disclosures in such Schedules
shall not be taken as relating only to the specific Subsection of the Agreement
in which reference is made to a Schedule, such that disclosure in one Schedule
for one purpose shall be deemed disclosure for all purposes where the disclosed
information is applicable and relevant to a representation or warranty appearing
elsewhere in any Subsection.
This Agreement shall in all respects be governed and construed in accordance
with the laws of the State of Idaho.
The Schedules attached hereto and forming part of this Agreement are as follows:
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SCHEDULE ITEM
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A Business Assets
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B Contracts
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C Financial Statements
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D Permitted Liens
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E Issued Shares of R-Tec
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F Record Owners of Shares of R-Tec
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G Exceptions - Issuance, Exchange or Conversion of Shares
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H Shareholder Loans
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I Assets Not Owned or Possessed by R-Tec
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J Exceptions - Business Interests or Assets
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K Exceptions - Material Indebtedness
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L Taxes and Tax Returns
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M Exceptions - Filings Required by State and/or Federal Securities Laws
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N Exceptions - Employment, Consulting or Management Agreements
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O Exceptions - Labor and Trade Unions
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P Employees, Remuneration and Benefits
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Q Exceptions - Employee Pension, Benefit and Compensation Plans
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R Exceptions - Agreements Relating to Business Conduct and/or Business
Assets
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S Judgments, Pending or Threatened Litigation, etc.
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T Exceptions - Intellectual Property Rights/Trade Names
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U Exceptions - Registrations and Filings Re: Intellectual Property
Rights/Trade Names
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SCHEDULE ITEM
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V Exceptions - Patents, Copyrights and Encumbrances Thereon
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WARRANTIES AND REPRESENTATIONS REGARDING R-TEC
As of the date of this Agreement, R-TEC warrants and represents to the Investor,
with the intent and knowledge that the Investor will rely thereon in entering
into this Agreement and in concluding the transactions contemplated herein,
that:
the authorized capital of R-TEC Holding, Inc., consists of 60,000,000 shares of
common stock and 5,000,000 preferred shares of R-TEC Holding, Inc.;
the authorized capital of R-TEC Corporation consists of 10,000 shares of common
stock, all if which are issued and outstanding. R-TEC Holding, Inc., is the
owner of all issued and outstanding shares of R-TEC Corporation.
the only issued Shares of R-TEC are as described in Schedule "E", all of which
Shares have been validly issued and outstanding as fully paid and
non-assessable;
no other person has any interest, legal or beneficial, direct or indirect, in
any shares of, or the assets or business of, R-TEC Holding, Inc., (excluding
rights enforceable only against a record owner of Shares other than R-TEC) other
than the Shares owned by them as set out in Schedule "F" hereto;
no other person has any interest, legal or beneficial, direct or indirect, in
any shares of, or the assets or business of, R-TEC Corporation;
no Party has any agreement, right or option, consensual or arising by law,
present or future, contingent or absolute, or capable of becoming an agreement,
right to require R-TEC to issue any further or other Shares in its capital or
any other security convertible or exchangeable into Shares in its capital or to
convert or exchange any securities into or for Shares in the capital of R-TEC;
for the issue or allotment of any of the authorized but un-issued Shares in the
capital of R-TEC;
to require R-TEC to purchase, redeem or otherwise acquire any of the issued and
outstanding Shares in the capital of R-TEC; or
to purchase or otherwise acquire any Shares in the capital of R-TEC;
except as set forth in Schedule "G" hereto and, as of the Closing Date
any Party holding such right or option as aforesaid shall have elected
to or caused the exercise or conversion of such right or option into
common shares of R-TEC or expressly abandoned such rights;
the particulars in Schedule "H" are a full, complete and accurate description of
all Shareholder loans owed to or by R-TEC;
R-TEC has the power and capacity and good and sufficient right and authority to
enter into this Agreement on the terms and conditions herein set forth;
R-TEC is a Corporation duly organized, validly existing and in good standing
under the laws of the State of Idaho;
all alterations to the corporate documents of R-TEC since its organization have
been duly approved by the shareholders and/or board of directors of R-TEC and
registered in all places required by law and including all applicable regulatory
agencies in the State of Idaho;
R-TEC carries on the Business in the United States of America, and at the
present time does not carry on any business in any other country other than
sales to other countries for which R-TEC has obtained all regulatory approvals
and is otherwise in compliance with export-import laws and regulations. R-TEC
does not carry on any business other than the Business at the present time;
R-TEC has the power, authority and capacity to carry on the Business as
presently conducted by it;
R-TEC has the power, authority and capacity to own and use all of the Business
Assets;
except as set forth in Schedule "I" hereto, R-TEC owns and possesses and has
good and marketable title to and possession of all the Business Assets
including, without limitation, the Intellectual Property Rights free and clear
of all Liens, except the Permitted Liens;
R-TEC does not own or possess any asset other than the Business Assets and does
not have any interest in the assets or business of any other Party except as set
forth in Schedule "J" hereto;
R-TEC holds all material licences and permits required for the conduct in the
ordinary course of the Business and for the uses to which the Business Assets
have been or may be put and all such material licences and permits are in good
standing and the conduct and uses of the same by R-TEC are in compliance with
all laws, zoning and other bylaws, building and other restrictions, rules,
regulations and ordinances applicable to R-TEC, the Business or the Business
Assets, and neither the execution and delivery of this Agreement nor the
completion of the transactions hereby contemplated will give any person the
right to terminate or cancel the said licences or permits or affect such
compliance;
the making of this Agreement and the completion of the transactions contemplated
hereby and the performance of and compliance with the terms hereof does not and
will not:
conflict with or result in a breach of or violate any of the terms, conditions,
or provisions of the corporate documents of R-TEC;
conflict with or result in a breach of or violate any of the material terms,
conditions or provisions of any law, judgment, order, injunction, decree,
regulation or ruling of any court or governmental authority, domestic or
foreign, to which R-TEC or its shareholders are subject or constitute or result
in a material default under any agreement, contract or commitment to which R-TEC
or its shareholders are a party;
give to any Party any remedy, cause of action, right of termination,
cancellation or acceleration in or with respect to any agreement, contract, or
commitment to which R-TEC is a party including the Intellectual Property Rights,
Contracts and Permitted Liens;
to the knowledge of R-TEC, give to any government or governmental authority of
the United States or any jurisdiction thereof or any regional district,
district, city or municipality or any subdivision thereof, including any
governmental department, commission, bureau, board, or administrative agency any
right of termination, cancellation, or suspension of, or constitute a breach of
or result in a default under any permit, license, control, or authority issued
to R-TEC and which is materially necessary or desirable in connection with the
conduct and operation of the Business and the ownership, leasing or use of the
Business Assets; or
constitute a default by R-TEC or an event which, with the giving of notice or
lapse of time or both, might constitute an event of default or non-observance
under any agreement, contract, indenture or other instrument relating to any
Indebtedness of R-TEC which would give any Party the right to accelerate the
maturity for the payment of any amount payable under that agreement, contract,
indenture, or other instrument including the Contracts and the Permitted Liens;
the Financial Statements were prepared in accordance with generally accepted
accounting principles applicable in the United States, applied on a basis
consistent with prior years, and are true and correct in every material respect
and present fairly and accurately the financial condition and position of R-TEC
as of the dates set out therein and the results of its operations for the
periods covered thereby;
the provisions for bad debts as recorded in the Financial Statements are, and
collections since the date of the Financial Statements have, proven to be
adequate;
except as set forth in Schedule "K" hereto, there is no material Indebtedness of
R-TEC which is not disclosed or reflected in the Financial Statements;
R-TEC has filed all federal and state income tax returns required to be filed
and paid any and all taxes shown to be due thereon for all years to and
including the last completed fiscal year of R-TEC, and R-TEC has withheld and
remitted to the applicable tax collecting authority all amounts required to be
remitted respecting payments to employees or to non-residents, or otherwise and
has paid all instalments of corporate taxes due and payable;
all tax returns and reports of R-TEC required by law to be filed prior to the
date hereof, including all United States federal and state income tax returns
have been filed and are true, complete and correct, and all taxes and other
government charges including all income, excise, sales, business and property
taxes and other rates, charges, assessment, levies, duties, taxes,
contributions, fees and licenses required to be paid have been paid, and if not
required to be paid as of the date hereof, have been accrued in the Financial
Statements or are identified on Schedule "L" hereto;
adequate provision has been made for taxes payable by R-TEC for which tax
returns are not yet required to be filed and there are no agreements, waivers or
other arrangements providing for an extension of time with respect to the filing
of any tax return, or payment of any tax, governmental charge or deficiency by
R-TEC, and there are no material contingent tax liabilities to the best of the
knowledge of R-TEC or any grounds which would prompt a re-assessment, including
aggressive treatment of income and expenses in filing earlier tax returns;
R-TEC has made all elections as may be required to be made under all United
States tax legislation in connection with any distributions by R-TEC and all
such elections were true and correct and in the prescribed forms and were made
within the prescribed time periods;
except as set forth on Schedule "M" hereto, all filings required under state
and/or federal securities laws, including the Securities Act of 1933, the
Exchange Act of 1934, and the Idaho Securities Act have been duly filed and
recorded with the appropriate authorities and represent true and accurate
representations of the condition of R-TEC with respect to the issues included
therein. No material misstatements or omissions have been included therein, and
R-TEC is not currently in violation of any securities regulation or statute;
R-TEC has not prior to the date hereof:
acquired or had the use of any material property from a Party with whom R-TEC
was not dealing at arm's length;
disposed of anything to a Party with whom R-TEC was not dealing at arm's length
for proceeds materially less than or materially greater than the fair market
value thereof; or
discontinued carrying on any business in respect of which non-capital losses
were incurred, excluding the shutdown of the automation division;
Except as otherwise disclosed herein, all material transactions of R-TEC have
been promptly and properly recorded or filed in or with its respective books and
records;
other than as may be disclosed in the Financial Statements or regulatory
filings, R-TEC has not experienced nor, to the knowledge of R-TEC, has there
been any occurrence or event which has had, or might reasonably be expected to
have, a materially adverse effect on the Business or the result of its
operations save and except a need for working capital;
R-TEC has no employment, consulting or management contract or commitment with
any Party, including those with any director or officer of R-TEC, whether oral,
written or implied which cannot be terminated by R-TEC without cause upon giving
thirty (30) days notice without the payment of or any liability to pay any
bonus, damages, share of profits or penalty except as set forth in Schedule "N"
hereto and none of the employees of R-TEC have been certified to be represented
by a trade union or have entered into a collective agreement or otherwise
attempted to be represented by a trade union and there are no collective
agreements or proceedings under any labor legislation applicable to R-TEC which
are or could become an obligation of or be binding upon R-TEC except as
referenced in Schedule "O" hereto;
the name of each present employee of R-TEC, the duration of the employment of
each employee with R-TEC and the remuneration and benefit obligations of R-TEC
in respect of each such employee is accurately set out in Schedule "P", and the
full amounts of salaries, pensions, bonuses, commissions and other remuneration
of any nature, including accrued vacation pay, severance pay and unpaid earned
wages of the present officers, directors, employees, salesmen, consultants and
agents of R-TEC, as of the date hereof, will have been paid up to the date
hereof;
there are no pension, profit sharing, incentive, bonus, group insurance or
similar plans or other compensation plans affecting R-TEC other than those
described in Schedule "Q" hereto and R-TEC has no unfunded or unpaid liability
in respect of any such plan;
R-TEC does not have any contract, agreement, undertaking or arrangement, whether
oral, written or implied, which cannot be terminated on not more than one
month's notice and R-TEC has no outstanding agreement, contract or commitment
(whether written or oral) whatsoever relating to or affecting the conduct of the
Business or any of the Business Assets or for the purchase, sale or lease of any
of the Business Assets other than the Contracts and the Permitted Liens except
as described in Schedule "R" hereto;
there are no actions, suits, judgments, investigations or proceedings
outstanding or pending or to the knowledge of R-TEC threatened against or
affecting R-TEC at law or in equity or before or by any court or federal, state,
municipal or other governmental authority, department, commission, board,
tribunal, bureau or agency, and R-TEC is not a party to or threatened overtly in
writing with any litigation except as described in Schedule S hereto;
except as set forth in Schedule "T", R-TEC does not have any knowledge of any
infringement of the Intellectual Property Rights or any unauthorized use of
misleading or similar names to R-TEC's name or any other trade or brand name in
use in any area where the Business is conducted; and:
R-TEC has neither, during the three years preceding the date of this Agreement,
been a party to any proceeding, nor to the knowledge of R-TEC, is any proceeding
overtly threatened in writing as to which there is a reasonable possibility of a
determination adverse to R-TEC involving a claim of infringement by any person
of any of the Intellectual Property Rights;
none of the Intellectual Property Rights are subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use thereof by R-TEC
or restricting the licensing thereof by R-TEC to any person;
R-TEC has no knowledge that the use of the Intellectual Property Rights
conflicts with, infringes upon or violates any patent, trademark, trade name,
trademark or trade name registration, service xxxx, brand xxxx or brand name or
any pending application relating thereto, or any trade secret, know-how,
programs or processes, or any similar rights, of any person;
to the knowledge of R-TEC, R-TEC either owns the entire right, title and
interest in, to and under, or has acquired an exclusive licence to use, any and
all patents, trademarks, trade names, brand names and copyrights that are
material to the Intellectual Property Rights;
the Intellectual Property Rights are in full force and effect and have not been
used or enforced or failed to be used or enforced in a manner that would result
in the abandonment, cancellation or unenforceability of any of the Intellectual
Property Rights; and
except as set forth in Schedule "U" all registrations and filings necessary to
preserve the rights of R-TEC in and to the Intellectual Property Rights have
been made.
R-TEC:
is not in breach material of any of the terms, covenants, conditions, or
provisions of, is not in default under, and has not done or omitted to do
anything which, with the giving of notice or lapse of time or both, which would
constitute a breach of or a default under any Contract;
is not in material violation of nor is any present use by R-TEC of any Business
Assets in violation of or contravention of any applicable law, statute, order,
rule or regulation of the United States of America or any state therein or any
regional district, district, city or municipality or any subdivision thereof;
and
is not in breach or default under any judgment, injunction or other order or is
aware of any judicial, administration, governmental, or other authority or
arbitrator by which R-TEC is bound or to which R-TEC or any Business Assets are
subject, excluding laws and regulations of general application; and R-TEC has
not received written notice that any default, breach, or violation is being
alleged;
R-TEC has not guaranteed, or agreed to guarantee, any Indebtedness or other
obligation of any Party except as described in the Financial Statements;
reasonable wear and tear excepted, the Business Assets are in good working order
and in a functional state of repair and to the knowledge of R-TEC, there are no
latent defects; and
no dividends of any kind or other distribution on any Shares of R-TEC have been
declared or paid by R-TEC except distributions disclosed in the Financial
Statements;
between the date of the Financial Statements and the date hereof:
no capital expenditures or commitments therefore have been made by R-TEC;
there has been no material adverse change in the financial condition or position
of R-TEC other than a continued decline in working capital, and no damage, loss
or destruction materially affecting the Business Assets or the right, capacity,
or ability of R-TEC to carry on the Business;
R-TEC has not increased the pay of or paid or agreed to pay any pension, bonus,
share of profits or other similar benefit to or for the benefit of any agent,
employee, director, or officer of R-TEC, except increases in the normal course
of business to employees other than officers and directors;
R-TEC has conducted the Business in its usual and normal manner and has
maintained the Business Assets in good condition and has made all repairs and
replacements considered necessary; and
R-TEC has not waived or surrendered any right of material value;
except as set forth in Schedule "V" all patents, copyrights, intellectual
property and pending patents are the exclusive property of R-TEC free and clear
of all other known claims or encumbrances;
no Party has any agreement, right or option, consensual or arising by law,
present or future, contingent or absolute, or capable of becoming an agreement,
right or option:
to require a Subsidiary to issue any further or other securities in its capital
or any other security convertible or exchangeable into securities in its capital
or to convert or exchange any securities into or for Shares in the capital of
the Subsidiary;
for the issue or allotment of any of the authorized but unmissed securities in
the capital of the Subsidiary;
to require a Subsidiary to purchase, redeem or otherwise acquire any of the
issued and outstanding securities in the capital of the Subsidiary; or
to purchase or otherwise acquire any securities in the capital of a Subsidiary;
INVESTOR'S WARRANTIES AND REPRESENTATIONS
Each Investor severally warrants and represents to R-TEC, with the intent that
it will rely thereon in entering into this Agreement and in concluding the
transactions contemplated herein that:
CONECTL is a corporation duly incorporated pursuant to the laws of the State of
Idaho and is validly existing and in good standing under the laws of the State
of Idaho, and has the power, authority and capacity to enter into this Agreement
and to carry out its terms.
the execution and delivery of this Agreement and the completion of the
transactions contemplated hereby has been duly and validly authorized by all
necessary corporate action on the part of CONECTL, and this Agreement
constitutes a legal, valid and binding obligation of the Investor in accordance
with its terms except as limited by laws of general application affecting the
rights of creditors;
CONECTL's Articles of Incorporation do not prohibit or in any way limit the
Investor's ability to validly and effectively enter into and complete any
transaction contemplated by this Agreement;
the authorized capital of CONECTL is 10,000,000 common shares without par value
all of which issued and outstanding excluding. All of the issued and
outstanding shares of CONECTL are duly authorized, validly issued, fully paid,
no assessable, and free of all preemptive rights. All of the shares to be
issued pursuant to this Agreement, when issued in accordance with this
Agreement, will be duly authorized, validly issued, fully paid, no assessable,
and free of all preemptive rights. There are no existing options, warrants,
rights, call or commitments of any character relating to shares of Investor
common stock or other capital stock of Investor, There are no outstanding
securities or other instruments convertible into or exchangeable for shares of
Investor common stock or other capital stock of Investor and no commitments to
issue such securities or instruments, and no Person has any right of first
refusal, preemptive right, subscription right or similar right with respect to
any shares of investor common stock or other capital stock of Investor.
there are no present or previous disputes, claims, actions, suits, judgments,
investigations or proceedings outstanding, pending, or threatened against the
Investor, at law or in equity, before or by any federal, provincial, state,
municipal or other governmental department, commission, board, bureau, agency or
court; except as set forth on Schedule "V",:
(i) There is no (A) outstanding judgment, order, decree, award,
stipulation, injunction of any governmental entity or arbitrator
against or affecting Investor or Investor's properties, assets or
business or (B) action pending against the Investor or his
properties, assets or business.
(ii) To the knowledge of the Investor, there is no (A) outstanding
judgment, order, decree, award, stipulation, injunction of any
governmental entity or arbitrator against or affecting any
officer or director of CONECTL (in their capacities as such), (B)
action threatened against the CONECTL or its properties, assets
or business, (C) action pending or threatened against the
officers or directors of CONECTL or its business or (D) basis for
the institution of any action against CONECTL or any of its
officers or directors, properties or assets which, if decided
adversely, would have a material adverse effect on CONECTL.
COVENANTS OF R-TEC AND INVESTOR
While this Agreement is in effect, R-TEC:
will to afford to the Investor (at the Investor's cost) and his authorized
representatives access during normal business hours to all properties, books,
contracts, commitments, records of R-TEC and furnish such copies (certified if
requested) thereof and other information as the Investor may reasonably request,
and to permit the Investor and his authorized representatives to make such audit
of the books of account of R-TEC and physical verification of the Business
Assets as the Investor may reasonably see fit;
will conduct its business and affairs diligently and only in the ordinary
course, and use reasonable efforts to preserve and maintain the goodwill of
R-TEC, the Business Assets and the Business;
will not make or agree to make any payment to any director, officer, employee or
agent of R-TEC except in the ordinary course of business and at the regular
rates of salary and commission for such person or as reasonable reimbursement
for expenses incurred by such person in connection with the Business;
will deliver to the Investor as soon as available and in any event within ninety
(90) days after the end of each fiscal year of R-TEC, audited Financial
Statements, including a balance sheet of R-TEC as of the end of such fiscal year
and consolidated statements of income, retained earnings and changes in
financial position of R-TEC for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year, and in
each case prepared in accordance with generally accepted accounting principles
applicable in the United States of America and reported on by independent
accountants selected by R-TEC, together with the report of such accountants
thereon. R-TEC shall not pursue any transaction which involves the sale of all
or substantially all of R-TEC's assets, merger of R-TEC with another, or sale of
all or substantially all of the Shares of R-TEC unless the consent of the
Investor is obtained prior to any such negotiations being entered.
While this Agreement is in effect, Investor shall:
(a) comply promptly with all requirements that applicable legal
requirements may impose upon it with respect to the transactions
contemplated by this Agreement;
(b) use his reasonable best efforts to obtain any consent, authorization
or approval of, or exemption by, any person required to be obtained or
made by Investor in connection with the transactions contemplated by
this Agreement;
(c) use his reasonable best efforts to preserve intact his business
organization, employees and other business relationships, to operate
his business in the Ordinary Course and to maintain its books, records
and accounts in accordance with GAAP;
(d) promptly advise R-TEC orally and, within three business days
thereafter, in writing of any change in the Investor's business or
condition that has had or may have a material adverse effect on the
Investor prior to closing; and
(e) deliver to the R-TEC prior to closing, a written statement disclosing
any untrue statement in this Agreement or any Schedule hereto (or
supplement thereto) or document furnished pursuant hereto, or any
omission to state any material fact required to make the statements
herein or therein contained complete and not misleading, promptly upon
the discovery of such untrue statement or omission, accompanied by a
written supplement to any Schedule to this Agreement that may be
affected thereby; provided, however, that the disclosure of such
untrue statement or omission shall not prevent R-TEC from terminating
this Agreement.
RESERVED
INVESTMENT
The Investor covenants and agrees, as of the Closing Date, to purchase from
R-TEC that number of shares and warrants in the capital stock of R-TEC that will
result in the Investor holding, in the aggregate, all of the authorized and
unissued common shares and a sufficient number of preferred shares for Investor
to have voting rights of not less than forty nine percent (49%) of all shares
able to vote on any matter coming before the shareholders of R-TEC, with options
to purchase shares three years and one week from the Effective Date of this
Agreement preferred shares equal to an additional two percent (2%) of the total
shares able to vote on any matter coming before the shareholders of R-TEC (the
"Share Acquisition") in exchange for One Million (1,000,000) shares of CONECTL
stock. Xxxxx XxXxxxxx, Xxxxxxx XxXxxxxx, and Xxxxx X. Xxxxxxxx shall allocate
their respective ownership interests and their contributions of shares of
CONECTL stock in the manner selected by them, warranting that an aggregate
contribution of One Million (1,000,000) shares of CONECTL stock will be
transferred to R-TEC upon closing.
The Shares transferred to Investor pursuant to this Provision are "Restricted
Securities" for purposes of Rule 144 under the 1933 Securities Act. Pursuant to
that Rule, the Shares must either be registered, sold in reliance upon an
applicable exemption, or sold through compliance with the restrictions of Rule
144.
Other than the shares of R-TEC to be issued in connection with the Share
Acquisition or otherwise referred to in this Agreement, R-TEC shall not to issue
or option any additional shares in the capital stock of R-TEC without the
Investor's prior written consent.
Prior to completing the Share Acquisition as set forth in Subsection 6.1 of this
Agreement, the Investor shall be reasonably satisfied that the representations,
covenants, and financial statements provided by R-TEC are not false in any
material respect. Investor shall be entitled to require a certificate from each
officer and director of R-TEC in a form satisfactory to counsel for the Investor
attesting that the representations and warranties of R-TEC or R-TEC be delivered
on the Closing Date.
Upon closing, Five Hundred Thousand (500,000) Shares of CONECTL stock shall be
placed with an escrow agent selected by Investor. In the event any
representation or warranty set forth herein proves to be inaccurate, Investor
may, at Investor's sole option, take any reasonable steps Investor deems
appropriate to remedy or otherwise address such representation or warranty.
Investor shall be entitled to offset any expenses associated with such remedy
out of those escrowed shares at the rate of two (2) shares per dollar invested.
Upon written confirmation of a final resolution of all outstanding issues and
potential warranty liability between R-TEC and Quantum Foods, Two Hundred Fifty
Thousand (250,000) shares, less any shares transferred to Investor pursuant to
this Section 6.4, shall be released from Escrow and delivered to R-TEC by the
escrow agent. On the second anniversary of this agreement, any remaining shares
held in escrow shall be delivered to R-TEC by the escrow agent. Notwithstanding
the foregoing, Investor must expend at least Fifteen Thousand Dollars ($15,000)
for the offset provided under this Paragraph to be effective.
BOARD OF DIRECTORS AND OFFICERS OF R-TEC
R-TEC and Investor agree to cause the Board of Directors of R-TEC, on completion
of the Share Acquisition, to consist of three (3) directors, a majority of whom
shall be nominees of the Investor.
R-TEC and Investor agree that, on completion of the Share Acquisition, the
offices of President and Chief Executive Officer of R-TEC shall be filled by one
or more nominees of Investor. In the event that any of the members of the Board
of Directors of R-TEC shall fail to vote in a manner which would result in R-TEC
being unable to carry out the provisions of this Agreement, then the Investor
and R-TEC agree to exercise their right as shareholders of R-TEC to remove such
director from the Board of Directors of R-TEC and to elect in their place or
instead thereof such individual who will use his or her best efforts to carry
out the provisions of this Agreement.
NON-MERGER
The representations, warranties, covenants and agreements of R-TEC contained
herein and those contained in the documents and instruments delivered pursuant
hereto are to be true at the time of the Share Acquisition and will survive,
notwithstanding the completion of the transactions herein contemplated, or the
waiver of any condition contained herein (unless such waiver expressly releases
R-TEC from such representation, warranty, covenant or agreement) and the same
will remain in full force and effect.
The representations, warranties, covenants and agreements of the Investor
contained herein and those contained in the documents and instruments delivered
pursuant hereto will be true at all times and will survive, and notwithstanding
the completion of the transactions herein contemplated, or the waiver of any
condition contained herein (unless such waiver expressly releases the Investor
from such representation, warranty, covenant or agreement), the same will remain
in full force and effect.
CONDITIONS PRECEDENT
The obligations of the Investor to consummate the transactions herein
contemplated specifically including the Share Acquisition are subject to the
fulfilment of each of the following conditions at the times stipulated:
the representations and warranties of R-TEC contained herein are true and
correct in all material respects at all times except as may be in writing
disclosed to and approved by the Investor;
all covenants, agreements and obligations hereunder on the part of R-TEC to be
performed or complied with at any relevant time, including its obligation to
deliver the documents and instruments herein provided for, have been performed
and complied with at and as of such relevant time;
R-TEC will not have experienced any material event, circumstance or condition or
have taken any action or become subject to any action of any character adversely
affecting R-TEC or the Business or as would materially reduce the value of
R-TEC, the Business or the shares in the capital of R-TEC to the Investor;
R-TEC will have undertaken and obtained all regulatory approvals required for
such transactions to be consummated, including appropriate notifications to or
approvals from the Securities and Exchange Commission;
no damage by fire, negligence or otherwise to the Business Assets will have
occurred which is not covered to at least eighty percent (80%) of replacement
cost by one or more policies of insurance and which, in the sole opinion of the
Investor, will materially and adversely affect the Business Assets, the Business
or R-TEC's operations, prospects or earnings;
no federal, state, regional or municipal government or any agency thereof will
have enacted any statute or regulation, announced any policy or taken any action
that will materially and adversely affect the Business or the Business Assets or
the right of the Investor to the full enjoyment thereof;
all necessary Regulatory Approval to the transaction contemplated herein has
been obtained by the Investor;
all required approvals of the Board of Directors of the Investor and
shareholders of the Investor have been obtained as may be required by the
policies of the NASDAQ and/or the Securities and Exchange Commission, as same
are applicable under such policies;
The conditions set forth in Section 9.1 save and except for those contained in
Section 9.1(f), (g) and (h) are for the exclusive benefit of the Investor and
may be waived by the Investor in writing in whole or in part at any time
The obligations of R-TEC to consummate the transactions herein contemplated are
subject to the fulfilment of each of the following conditions at the times
stipulated, that:
the representations and warranties of the Investor contained herein are true and
correct in all material respects except as may be in writing disclosed to and
approved by R-TEC;
all covenants, agreements and obligations hereunder on the part of the Investor
to be performed or complied with have been performed and complied with as of
each closing;
The conditions set forth in Section 9.3 are for the exclusive benefit of R-TEC
and may be waived by R-TEC in whole or in part at any time.
TRANSACTIONS OF R-TEC AT THE CLOSING
At closing, R-TEC will execute and deliver or cause to be executed and delivered
all documents, instruments, resolutions and share certificates as are necessary
to effectively carry out the transactions contemplated hereby, including without
limitation:
certified copies of resolutions of the directors of R-TEC authorizing the
issuance of the appropriate shares and the registration thereof in the
appropriate name;
certified copies of the resolutions of the shareholders of R-TEC approving and
authorizing the issuance of the appropriate shares and transfer of control of
R-TEC as contemplated by this Agreement;
duly issued share certificates in the name of the Investor and/or Investor's
designee(s) representing the shares of R-TEC provided for in subsection 6.1;
all necessary resolutions appointing the appropriate number of nominees to the
Board of Directors of R-TEC;
a closing warranty and certificate from R-TEC confirming that the conditions to
be satisfied, unless waived, set out in Section 9.1 have been satisfied at the
Closing Date and that all representations and warranties contained in Section 2
of this Agreement are true at and as of the closing;
a certificate from an officer of R-TEC in the form required by the Investor
confirming the due issuance of the shares of R-TEC in respect to the share
acquisition;
all such other documents and instruments as the appropriate counsel may
reasonably require, including up-to-date financial statements and officer's
certificates.
TRANSACTIONS OF THE INVESTOR PRIOR TO CLOSING
The Investor will take all such reasonable steps to obtain disinterested
shareholder approval to the transactions contemplated herein at an annual or
general meeting of the shareholders of the Investor;
The Investor will deliver or cause to be delivered to R-TEC one or more
certificates representing the shares of CONECTL being transferred to R-TEC in
connection herewith.
POST CLOSING AGREEMENTS
R-TEC will indemnify and hold harmless the Investor from and against:
any and all losses, damages or deficiencies resulting from any
misrepresentation, breach of warranty or non-fulfilment of any covenant on the
part of R-TEC under this Agreement or from any misrepresentation in or omission
from any certificate or other instrument furnished or to be furnished to the
Investor hereunder;
any and all losses, damages, or deficiencies resulting from any failure of R-TEC
to obtain proper regulatory approvals, failure to abide by applicable
regulations, or any other conduct by R-TEC occurring prior to the Share
Acquisition;
any and all losses, damages or deficiencies resulting from any Indebtedness of
R-TEC save and except the Indebtedness disclosed in the Financial Statements and
regular payments pursuant to the Contracts; and
any and all actions, suits, proceedings, demands, assessments, judgments, costs
and legal and other expenses incidental to any of the foregoing.
The Investor covenants and agrees to defend, indemnify and hold harmless R-TEC
from and against any damages arising out of or resulting from: (i) any
inaccuracy in or breach of any representation, warranty, covenant or agreement
made by Investor in this Agreement or in any writing delivered pursuant to this
Agreement or at closing; or (ii) the failure of Investor to perform or observe
fully any covenant, agreement or provision to be performed or observed by
Investor pursuant to this Agreement.
TIME OF THE ESSENCE
Time is of the essence of this Agreement.
FURTHER ASSURANCES
The parties will execute and deliver such further documents and instruments and
do all such acts and things as may be reasonably necessary or requisite to carry
out the full intent and meaning of this Agreement and to effect the transactions
contemplated by this Agreement.
SUCCESSORS
This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
COUNTERPARTS
This Agreement may be executed in several counterparts, each of which will be
deemed to be an original and all of which will together constitute one and the
same instrument.
NOTICE
Any notice required or permitted to be given under this Agreement will be
validly given if in writing, faxed, delivered or sent by pre-paid certified
mail, posted to the addresses set forth above or to such other address as any
Party may specify by notice in writing to the other.
Any notice delivered on a business day will be deemed conclusively to have been
effectively given on the date notice was delivered.
Any notice sent by prepaid certified mail will be deemed conclusively to have
been effectively given on the seventh business day after posting; but if at the
time of posting or between the time of posting and the seventh business day
thereafter there is a strike, lockout or other labor disturbance affecting
postal service, then the notice will not be effectively given until actually
delivered.
AGENTS
R-TEC warrants to the Investor that no agent or other intermediary has been
engaged by either of them in connection with the transactions herein
contemplated.
PROPER LAW
It is acknowledged and understood by R-TEC and its shareholders that the Law
Firm of Xxxxxx, Berlin, Kading, Xxxxxxx & XxXxxxxx, Chartered, acted solely on
behalf of the Investor in connection with this Agreement and has merely recorded
the information contained herein in accordance with the instructions of the
Investor and has not advised R-TEC or its shareholders with regard to this
Agreement, and hereby advises each of the foregoing to seek independent legal
advice with respect to their rights and obligations under this Agreement.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed and
delivered on the date first written above.
THE CORPORATE SEAL of R-TEC )
HOLDING, INC. was hereunto affixed in the )
presence of: )
)
)
------------------------------------- )
Authorized Signatory ) c/s
)
)
------------------------------------- )
Authorized Signatory )
(Notary Attached on Separate Page)
THE CORPORATE SEAL of R-TEC )
CORPORATION was hereunto affixed in the )
presence of: )
)
------------------------------------- )
Authorized Signatory ) c/s
)
)
------------------------------------- )
Authorized Signatory )
(Notary Attached on Separate Page)
SIGNED, SEALED & DELIVERED by
XXXXX XXXXXXXX
------------------------------------
XXXXX XXXXXXXX
SIGNED, SEALED & DELIVERED by
XXXXXXX XXXXXXXX
------------------------------------
XXXXXXX XXXXXXXX
SIGNED, SEALED & DELIVERED by
XXXXX X. XXXXXXXX
------------------------------------
XXXXX X. XXXXXXXX
(Notary Acknowledgments Attached on
Separate Page)
STATE OF IDAHO )
ss.
County of Ada )
On this 22nd day of September, 2004, before me, the undersigned Notary
Public in and for said State, personally appeared Xxxxxxx X. Xxxxxxxx, known or
identified to me to be the Chairman of the Board of Directors of R-Tec Holding,
Inc., the corporation that executed the within instrument or the person who
executed the instrument on behalf of said corporation, and acknowledged to me
that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
_______________________________________________
Notary Public for Idaho
My Commission Expires: _____________________
STATE OF IDAHO )
ss.
County of Ada )
On this 22nd day of September, 2004, before me, the undersigned Notary
Public in and for said State, personally appeared Xxxxxxx X. Xxxxxxxx, known or
identified to me to be the Chairman of the Board of Directors of R-Tec
Corporation, the corporation that executed the within instrument or the person
who executed the instrument on behalf of said corporation, and acknowledged to
me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
_______________________________________________
Notary Public for Idaho
My Commission Expires: _____________________
STATE OF IDAHO )
ss.
County of Ada )
On this 22nd day of September, 2004, before me, the undersigned Notary
Public in and for said State, personally appeared Xxxxx XxXxxxxx, known or
identified to me to be the person who executed the foregoing instrument, and
acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
_______________________________________________
Notary Public for Idaho
My Commission Expires: _____________________
STATE OF IDAHO )
ss.
County of Ada )
On this 22nd day of September, 2004, before me, the undersigned Notary
Public in and for said State, personally appeared Xxxxxxx XxXxxxxx, known or
identified to me to be the person who executed the foregoing instrument, and
acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
_______________________________________________
Notary Public for Idaho
My Commission Expires: _____________________
STATE OF IDAHO )
ss.
County of Ada )
On this _____ day of September, 2004, before me, the undersigned Notary
Public in and for said State, personally appeared Xxxxx X. Xxxxxxxx, known or
identified to me to be the person who executed the foregoing instrument, and
acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
_______________________________________________
Notary Public for Idaho
My Commission Expires: _____________________
SCHEDULE "A"
BUSINESS ASSETS
SCHEDULE "B"
CONTRACTS
SCHEDULE "C"
FINANCIAL STATEMENTS
SCHEDULE "D"
PERMITTED LIENS
SCHEDULE "E"
ISSUED SHARES OF R-TEC
SCHEDULE "F"
RECORD OWNERS OF SHARES OF R-TEC
SCHEDULE "G"
EXCEPTIONS - ISSUANCE, EXCHANGE OR CONVERSION
OF SHARES
SCHEDULE "H"
SHAREHOLDER LOANS
SCHEDULE "I"
ASSETS NOT OWNED OR POSSESSED BY R-TEC
SCHEDULE "J"
EXCEPTIONS - BUSINESS INTERESTS OR ASSETS
SCHEDULE "K"
EXCEPTIONS - MATERIAL INDEBTEDNESS
SCHEDULE "L"
TAXES AND TAX RETURNS
SCHEDULE "M"
EXCEPTIONS - FILINGS REQUIRED BY STATE AND/OR FEDERAL SECURITIES LAWS
SCHEDULE "N"
EXCEPTIONS - EMPLOYMENT, CONSULTING OR MANAGEMENT AGREEMENTS
SCHEDULE "O"
EXCEPTIONS - EXCEPTIONS - LABOR AND TRADE UNIONS
SCHEDULE "P"
EXCEPTIONS - EMPLOYEES, REMUNERATION AND BENEFITS
SCHEDULE "Q"
EXCEPTIONS - EMPLOYEE PENSION, BENEFIT AND COMPENSATION PLANS
SCHEDULE "R"
EXCEPTIONS - AGREEMENTS RELATING TO BUSINESS CONDUCT AND/OR BUSINESS ASSETS
SCHEDULE "S"
JUDGMENTS, THREATENED OR PENDING LITIGATION, ETC.
SCHEDULE "T"
EXCEPTIONS - INTELLECTUAL PROPERTY RIGHTS/TRADE NAMES
SCHEDULE "U"
EXCEPTIONS - REGISTRATIONS AND FILINGS RE: INTELLECTUAL PROPERTY RIGHTS/TRADE
NAMES
SCHEDULE "V"
EXCEPTIONS - PATENTS, COPYRIGHTS AND ENCUMBRANCES THEREON
