AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of this 24th day of September, 1997 by and between VictorMaxx
Technologies, Inc., an Illinois corporation, (hereinafter referred to as
"VMTI"), and Sonoma Holding Corp., an Illinois corporation, (hereinafter
referred to as "SONOMA") and the holders of all of the SONOMA outstanding shares
(the "Shareholders"), as listed on Exhibit A and on the signatory pages
hereafter.
RECITALS:
A. VMTI desires to acquire all of the issued and outstanding capital
stock of SONOMA and SONOMA desires to exchange all of its shares of SONOMA
capital stock for shares of VMTI authorized but unissued shares of stock as
hereinafter provided.
B. It is the intention of the parties hereto that: (i) VMTI shall
acquire all of the issued and outstanding capital stock of SONOMA in exchange
solely for the number of shares of VMTI authorized but unissued shares of Common
Stock, par value $.001 ("Common Stock"), and Convertible Preferred Stock, par
value $.001 ("Preferred Stock"), set forth below (the "Exchange"); (ii) the
Exchange shall qualify as a tax free reorganization under Section 368(a)(1)(B)
of the Internal Revenue Code of 1986, as amended, and related sections
thereunder; and (iii) the Exchange shall qualify as a transaction in securities
exempt from registration or qualification under the Securities Act of 1933, as
amended, and under the applicable securities laws of each state or jurisdiction
where the Shareholders reside.
C. The board of directors of VMTI deem it to be in the best interest of
VMTI and its shareholders to acquire all of the issued and outstanding capital
stock of SONOMA.
D. The board of directors of SONOMA deem it to be in the best interest
of its shareholders to exchange all of the capital stock of SONOMA for shares of
VMTI authorized but unissued shares of common stock, as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
SECTION 1. EXCHANGE OF SHARES AND CREDITOR SETTLEMENTS
1.1 EXCHANGE OF SHARES. VMTI and the Shareholders hereby agree that the
Shareholders shall, on the Closing Date (as hereinafter defined), exchange all
of the issued and outstanding shares of the SONOMA capital stock in the ratio of
approximately 1,210.8558 shares of VMTI Common stock and 10 shares of VMTI
Preferred Stock (collectively sometimes referred to as the "VMTI Shares") for
each SONOMA share for a total of 12,108,558 shares of VMTI Common Stock and
100,000 shares of VMTI Preferred Stock (provided that each share of VMTI
Preferred Stock is convertible into 300 shares of VMTI Common Stock). The number
of shares of SONOMA capital stock owned by each Shareholder and the number of
shares of Common
Stock and Preferred Stock which each will receive in Exchange is set forth in
Exhibit A hereto. Additionally, on the Closing, certain creditors of VMTI (will
receive shares of the Common Stock of VMTI as settlements of their claims
against VMTI and certain individuals of the so called "restructuring group" will
receive shares of the Common Stock as compensation for work performed on this
transaction and as settlements of various employment agreements. The creditors
of VMTI will receive up to 1,550,000 shares of VMTI Common Stock and the
"restructuring group" up to 615,000 shares of VMTI Common Stock, both groups
being listed on Exhibit B, along with the allocation to each. VMTI will deliver
certificates representing the VMTI Shares and Options to the individuals
included in these two groups on the date of the Closing. In addition, SONOMA has
agreed to pay certain creditors of VMTI prior to Closing as are set forth on
Schedule 1.1 attached hereto and made a part hereof.
1.2 DELIVERY OF SHARES. On the Closing Date, the Shareholders will
deliver to VMTI the certificates representing the shares, duly endorsed (or with
executed stock powers) so as to make VMTI the sole owner thereof.
Simultaneously, VMTI will deliver certificates representing the VMTI Shares to
the Shareholders. The Exchange shall not be effected unless a minimum of
one-hundred (100%) percent of SONOMA's outstanding shares of capital stock are
delivered to VMTI on the Closing Date.
1.3 INVESTMENT INTENT. The VMTI Shares have not been registered under
the Securities Act of 1933, as amended (the "Act"), and may not be resold
unless the VMTI Shares are registered under the Act or an exemption from such
registration is available. The Shareholders represent and warrant that each of
them is acquiring the VMTI Shares for his own account, for investment, and not
with a view to the sale or distribution of the VMTI shares. Each certificate
representing the VMTI Shares will have a legend thereon incorporating language
or substantial similar language, as follows:
"THE SHARES REPRESENTED BY THE CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE ACT UNLESS IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,
REGISTRATION IS NOT REQUIRED UNDER THE ACT."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SONOMA
SONOMA hereby represents and warrants as follows:
2.1 ORGANIZATION AND GOOD STANDING: OWNERSHIP OF SHARES. SONOMA is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois. It has the corporate power to own its own property and
to carry on its business as now being conducted and is duly qualified to do
business in any jurisdiction where so required except where the failure to so
qualify would have no material impact. There are no outstanding subscriptions,
rights, options, warrants or other agreements obligating SONOMA to issue, sell
or transfer any stock or other securities of SONOMA except the warrants and
options listed on Schedule 2.1 attached hereto and made a part hereof.
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2.2 CORPORATE AUTHORITY. SONOMA has the corporate power to enter into
this Agreement and to perform their respective obligations hereunder. The
execution and delivery of this Agreement and the consummation of the transaction
contemplated hereby have been duly authorized by the Board of Directors of
SONOMA. The execution and performance of this Agreement will not constitute a
material breach of any agreement, indenture, mortgage, license or other
instrument or document to which SONOMA is a party and will not violate any
judgment, decree, order, writ, rule, statute, or regulation applicable to SONOMA
or its properties. The execution and performance of this Agreement will not
violate or conflict with any provision of the respective Articles of
Incorporation or by-laws of SONOMA.
2.3 OWNERSHIP OF SHARES. The Shareholders are the owner of record and
beneficially of 10,000 shares of common stock of SONOMA, which shares are free
and clear of all rights, claims, liens and encumbrances, and have not been sold,
pledged, assigned or otherwise transferred except pursuant to this Agreement.
The shares represent all of the outstanding capital stock of SONOMA.
2.4 FINANCIAL STATEMENTS, BOOKS AND RECORDS. Schedule 2.4 consists of
the unaudited financial statements of SONOMA as of June 30, 1997 (the "Financial
Statements"). The Financial Statements fairly represent the financial position
of SONOMA as at such date and the results of their operations for the periods
then ended. The Financial Statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis with prior periods
except as otherwise stated therein. The books of account and other financial
records of SONOMA are in all respects complete and correct in all material
respects and are maintained in accordance with good business and accounting
practices.
2.5 ACCESS TO RECORDS. The corporate financial records, minute books
and other documents and records of SONOMA have been made available to VMTI prior
to the Closing hereof. In the event SONOMA may acquire or purchase another
entity prior to Closing, SONOMA will share with VMTI whatever information SONOMA
is permitted to show and whatever SONOMA may deem appropriate under the
circumstances. In the event SONOMA contemplates any conversion of its debt to
equity before the Closing, SONOMA will so advise VMTI prior to Closing.
2.6 NO MATERIAL ADVERSE CHANGES. Since the date of the Financial
Statements there has not been:
(i) any material adverse changes in the financial
position of SONOMA except changes arising in the ordinary
course of business, which changes will in no event materially
and adversely affect the financial position of SONOMA;
(ii) any damage, destruction or loss materially
affecting the assets prospective business, operations or
condition (financial or otherwise) of SONOMA whether or not
covered by insurance;
(iii) any declaration, setting aside or payment of
any dividend or distribution with respect to any redemption or
repurchase of SONOMA's capital stock;
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(iv) any sale of an asset (other than in the ordinary
course of business) or any mortgage or pledge by SONOMA of any
properties or assets; or
(v) adoption of any pension, profit sharing,
retirement, stock bonus, stock option or similar plan or
arrangement.
2.7 TAXES. SONOMA by the Closing Date, will have filed all material
tax, governmental and/or related forms and reports (or extensions thereof) due
or required to be filed and has (or will have) paid or made adequate provisions
for all taxes or assessments which have become due as of the Closing Date.
2.8 COMPLIANCE WITH LAWS. SONOMA has complied with all federal, state,
county and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to it or its business which, if not
complied with, would materially and adversely affect the business of SONOMA.
2.9 NO BREACH. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not.
(i) violate any provision of the Articles of
Incorporation or By-Laws of SONOMA;
(ii) violate, conflict with or result in the breach of
any of the terms of, result in a material modification of,
otherwise give any other contracting party the right to
terminate, or constitute (or with notice or lapse of time or
both constitute) a default under, any contract or other
agreement to which SONOMA is a party or by or to which it or
any of its assets or properties may be bound or subject;
(iii) violate any order, judgment, injunction, award
or decree of any court, arbitrator or governmental or
regulatory body against, or binding upon, SONOMA or upon the
properties or business of SONOMA; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated herein
which could have a materially adverse effect on the business or
operations of SONOMA.
2.10 ACTIONS AND PROCEEDINGS. SONOMA is not a party to any material
pending litigation or, to its knowledge, and governmental investigation or
proceeding not reflected in the SONOMA Financial Statements, and to its best
knowledge, no material litigation, claims, assessments or any governmental
proceedings are threatened against SONOMA except as set forth on Schedule 2.10
attached hereto and made a part hereof.
2.11 AGREEMENTS. Schedule 2.11 sets forth any material contract or
arrangement to which SONOMA is a party or by or to which it or its assets,
properties or business are bound or subject, whether written or oral.
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2.12 BROKERS OR FINDERS. No broker's or finder's fee will be payable by
SONOMA in connection with the transactions contemplated by this Agreement, nor
will any such fee be incurred as a result of any actions by SONOMA or any of its
Shareholders except appearing on Schedule 2.12 and 3.14 as one Schedule attached
hereto and made apart hereof.
2.13 REAL ESTATE. Except as set forth on Schedule 2.13, SONOMA owns no
real property or is a party to any leasehold agreement.
2.14 TANGIBLE ASSETS. SONOMA has full title and interest in all
machinery, equipment, furniture, leasehold improvements, fixtures, projects,
owned or leased by SONOMA, any related capitalized items or other tangible
property material to the business of SONOMA (the "Tangible Assets"). SONOMA
holds all rights, title and interest in all the Tangible Assets owned by it on
the Balance Sheet or acquired by it after the date on the Balance Sheet free and
clear of all liens, pledges, mortgages, security interests, conditional sales
contracts or any other encumbrances. All of the Tangible Assets are in good
operating condition and repair and are usable in the ordinary course of business
of SONOMA and conform to all applicable laws, ordinances and government orders,
rules and regulations relating to their construction and operation.
2.15 LIABILITIES. SONOMA did not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation, any liability on account of taxes, any governmental charge
or lawsuit (all of the foregoing collectively defined to as "Liabilities"),
which are not fully, fairly and adequately reflected on the Financial Statement
except for a specific Liabilities set forth on Schedule 2.15 attached hereto and
made a part hereof. As of the Closing Date, SONOMA will not have any
Liabilities, other than Liabilities fully and adequately reflected on the
Financial Statements except for Liabilities incurred in the ordinary course of
business. To the best knowledge of the Shareholders, there is no circumstance,
condition, event or arrangement which may hereafter give rise to any Liabilities
not in the ordinary course of business.
2.16 OPERATIONS OF SONOMA. From the date of the Financial Statements
through the Closing Date hereof SONOMA has not and will not have:
(i) incurred any indebtedness or borrowed money;
(ii) declared or paid any dividend or declared or
made any distribution of any kind to any shareholder, or made
any direct or indirect redemption, retirement, purchase or
other acquisition of any shares in its capital stock;
(iii) made any loan or advance to any shareholder,
officer, director, employee, consultant, agent or other
representative or made any other loan or advance otherwise
than in the ordinary course of business;
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(iv) except in the ordinary course of business,
incurred or assumed any indebtedness or liability (whether or
not currently due and payable);
(v) disposed of any assets of SONOMA except in the
ordinary course of business;
(vi) materially increased the annual level of
compensation of any executive employee of SONOMA;
(vii) increased, terminated, amended or otherwise
modified any plan for the benefit of employees of SONOMA.
(viii) issued any equity securities or rights to
acquire such equity securities; or
(ix) except in the ordinary course of business,
entered into or modified any contract, agreement or
transaction.
2.17 CAPITALIZATION. The authorized capital stock of SONOMA consists of
10,000 shares of common stock, no par value, of which 10,000 shares are
presently issued and outstanding. SONOMA has not granted, issued or agreed to
grant, issue or make any warrants, options, subscription rights or any other
commitments of any character relating to the issued or unissued shares of
capital stock of SONOMA except for the warrants and options set forth on
Schedule 2.1 attached hereto and made a part hereof.
2.18 MATERIAL STATEMENTS AND FACTS. No representation or warranty by
SONOMA in this Agreement or in any document or schedule to be delivered by them
pursuant hereto, and no written statement, certificate or instrument furnished
or to be furnished VMTI pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not materially misleading or necessary
to complete and correct presentation of all material aspects of the business of
SONOMA.
2.19 DISCLOSURE. SONOMA has (and at the Closing it will have) disclosed
in writing all events, conditions and facts materially affecting the business,
financial conditions or results of operation of SONOMA, all of which have been
set forth herein. SONOMA has not now and will not have, at the Closing, withhold
disclosure of any such events, conditions and facts which they have knowledge of
or have reasonable grounds to know may exist.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF VMTI
VMTI hereby represents and warrants as follows:
3.1 ORGANIZATION AND GOOD STANDING. VMTI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois. It has the corporate power to own its own property and to carry on its
business as now being conducted and is duly
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qualified to do business in any jurisdiction where so required except where the
failure to so qualify would have no material negative impact, except as set
forth on Schedule 3.1.
3.2 CORPORATE AUTHORITY. VMTI has the corporate power to enter into
this Agreement and to perform their respective obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of VMTI. The execution and performance of this Agreement will not
constitute a material breach of any agreement, indenture, mortgage, license or
other instrument or document to which VMTI is a party and will not violate any
judgment, decree, order, writ, rule, statute, or regulation applicable to VMTI
or its properties. The execution and performance of this Agreement will not
violate or conflict with any provision of the respective Articles of
Incorporation or by-laws of VMTI.
3.3 THE VMTI SHARES. As of the Closing Date, the VMTI shareholders are
the owners of 5,726,442 shares of VMTI Common Stock, none of whom owns in excess
of 5% of the issued and outstanding shares, except as may be set forth on
Schedule 3.3 attached hereto and made a part hereof, and no shares of Preferred
Stock has been issued except as may be set forth on Schedule 3.3 attached hereto
and made a part hereof. There are outstanding warrants, issued stock options,
stock rights or other commitments of any character relating to the issued or
unissued shares of capital stock of VMTI all of which are set forth on Schedule
3.3 attached hereto. The VMTI shares set forth herein represent all of the
outstanding capital stock of VMTI.
At the Closing, the VMTI Shares to be issued and delivered to the
SONOMA Shareholders hereunder will when so issued and delivered, constitute
valid and legally issued shares of VMTI capital stock, fully-paid and
nonassessable.
3.4 FINANCIAL STATEMENT: BOOKS AND RECORDS. Schedule 3.4 consists of
the audited financial statements of VMTI for the fiscal year ended December 31,
1996 and interim unaudited financial statements (collectively the "Financial
Statements"). The Financial Statements fairly represent the financial position
of VMTI as at such date and the results of their operations for the periods then
ended. The Financial Statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis with prior periods
except as otherwise stated therein. The books of account and other financial
records of VMTI are in all respects complete and correct in all material
respects and are maintained in accordance with good business and accounting
practices.
3.5 NO MATERIAL ADVERSE CHANGES.
Since the date of the interim unaudited financial statements on
Schedule 3.4;
(i) there has not been any material adverse changes
in the financial position of VMTI except changes arising in
the ordinary course of business, which changes will in no
event materially and adversely affect the financial position
of VMTI and the proposed audit will be consistent with the
representations made by VMTI to SONOMA.
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(ii) any damage, destruction or loss materially
affecting the assets, prospective business, operations or
condition (financial or otherwise) of VMTI whether or not
covered by insurance;
(iii) any declaration setting aside or payment of any
dividend or distribution with respect to any redemption or
repurchase of VMTI capital stock;
(iv) any sale of an asset (other than in the ordinary
course of business) or any mortgage pledge by VMTI of any
properties or assets; or
(v) adoption of any pension, profit sharing,
retirement, stock bonus, stock option or similar plan or
arrangement.
3.6 TAXES. VMTI has (or by the Closing Date, will have filed) all
material tax, governmental and/or related forms and reports (or extensions
thereof) due or required to be filed and has (or will have) paid or made
adequate provisions for all taxes or assessments which have become due as of the
Closing Date.
3.7 COMPLIANCE WITH LAWS. VMTI has complied with all federal, state,
county and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to it or its business, which, if not
complied with, would materially and adversely affect the business of VMTI or the
trading market for the VMTI Shares and specifically, and to the best of its
knowledge VMTI complied with provisions for registration under the Securities
Act of 1933 and all applicable blue sky laws in connection with its public stock
offering and there are no outstanding, pending or threatened stop orders or
other actions or investigations relating thereto.
3.8 ACTIONS AND PROCEEDINGS. VMTI is not a party to any material
pending litigation or, to its knowledge, any governmental proceedings are
threatened against VMTI, except as set forth on Schedule 3.8 attached hereto and
made a part hereof.
3.9 PERIODIC REPORTS. VMTI has delivered to SONOMA true and complete
copies of Forms 10-K and 10-Q report pursuant to SEC Rules and Regulations for
reporting companies under the Securities Exchange Act of 1934, as amended as
well as the prospectus filed in 1995 with the SEC under the Act. As of their
respective dates, such reports and statements did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstance under which they were made, not misleading. VMTI presently has no
subsidiaries. Schedule 3.9 sets forth all of the documentation of such reports
VMTI has delivered to SONOMA.
3.10 DISCLOSURE. VMTI has (and at the Closing it will have) disclosed
in writing all events, conditions and facts materially affecting the business,
financial conditions or results of operation of VMTI all of which have been set
forth herein. VMTI has not now and will not have, at the Closing, withhold
disclosure of any such events, conditions, and facts which they have knowledge
of or have reasonable grounds to know may exist.
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3.11 CAPITALIZATION. The authorized Capital Stock of VMTI consists of
20,000,000 shares of Common Stock of which 5,726,442 shares of VMTI Common Stock
are issued and outstanding and has authorized 1,000,000 shares of Preferred
Stock of which none is issued and outstanding.
3.12 ACCESS TO RECORDS. The corporate financial records, minute books,
and other documents and records of VMTI have been made available to SONOMA prior
to the closing hereof.
3.13 NO BREACH. The execution, delivery and performance of this of this
Agreement and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Articles of
Incorporation or By-Laws of VMTI;
(ii) violate, conflict with or result in the breach
of any of the terms of, result in a material modification of,
otherwise give any other contracting party the right to
terminate, or constitute (or with notice or lapse of time or
both constitute) a default under, any contract or other
agreement to which VMTI is a party or by or to which it or any
of its assets or properties may be bound or subject;
(iii) violate any order, judgment, injunction, award
or decree of any court, arbitrator or governmental or
regulatory body against, or binding upon, VMTI or upon the
securities, properties or business to VMTI; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated
herein.
3.14 BROKERS OR FINDERS. No broker's or finder's fee will be payable by
VMTI in connection with the transactions contemplated by this Agreement, nor
will any such fee be incurred as a result of any actions of VMTI except
appearing of Schedule 2.12 and 3.14 as one Schedule attached hereto and made a
part hereof.
3.15 OTC BULLETIN BOARD. VMTI shares are listed on the OTC Bulletin
Board under the symbol "VMAX". No representation is being made by VMTI of any
trading of the shares of VMTI. At the Closing Date, VMTI's Rule 15c2-11
documentation, reports required to be filed with the SEC (but as of the date of
this Agreement, VMTI states that it is not current with such reports), as
discussed above shall have been updated and shall be current in all material
respects, except as may appear on Schedule 3.15, attached hereto which
exceptions shall be permitted only by the written consent of SONOMA.
3.16 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. VMTI has the full
legal right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered and is the valid
and binding obligation of VMTI enforceable in accordance with its terms, except
as may be limited by bankruptcy, moratorium, insolvency or other similar laws
9
generally affecting the enforcement of creditors' rights. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and the performance by VMTI of this Agreement, in accordance with its
respective terms and conditions will not:
(i) require the approval or consent of any
governmental or regulatory body or the approval or consent of
any other person;
(ii) conflict with or result in any breach or
violation of any of the terms and conditions of, or constitute
(or with any notice or lapse of time or both would constitute)
a default under, any order, judgment or decree applicable to
VMTI, or any instrument, contract or other agreement to which
VMTI is a party or by or to which VMTI is bound or subject; or
(iii) result in the creation of any lien or other
encumbrance on the assets or properties of VMTI
3.17 MATERIAL STATEMENTS AND FACTS. No representation or warranty by
VMTI in this Agreement or in any document or schedule to be delivered by them
pursuant hereto, and no written statement, certificate or instrument furnished
or to be furnished by VMTI pursuant hereto or in connection with the
negotiation, execution or performance of this Agreement contains or will contain
any untrue statement of a material fact or omits or will omit to state any fact
necessary to make any statement herein or therein not materially misleading or
necessary to complete and correct presentation of all material aspects of the
business of VMTI.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF SONOMA. All obligations
of SONOMA under this Agreement are subject to the fulfillment, prior to or as of
the Closing Date, as indicated below, of each of the following conditions:
(a) The representations and warranties by or on behalf of VMTI
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true in all material respects at and as of
Closing Date as though such representations and warranties were made at and as
of such tune.
(b) VMTI shall have performed and complied in all material
respects, with all covenants, agreements, and conditions set forth in, and shall
have executed and delivered all documents required by this Agreement to be
performed or complied with or executed and delivered by them prior to or at the
Closing.
(c) On or before the Closing, the Board of Directors of VMTI
shall have approved in accordance with Illinois law the execution, delivery and
performance of this Agreement and the consummation of the transaction
contemplated herein and authorizing all of the necessary and proper action to
enable VMTI to comply with the terms of the Agreement including the election of
SONOMA's nominees to the Board of Directors of VMTI.
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(d) The Exchange shall be permitted by Illinois law and VMTI
shall have sufficient shares of VMTI's capital stock authorized to complete the
Exchange.
(e) On the Closing Date, the Board of Directors shall include
persons designated by SONOMA. Xxxxxxx Xxxxx, Xxxx Minkoff and Xxxxx Xxxxxxxx,
shall resign as an officer, director (and any other persons) shall resign as
officers and directors of VMTI.
(f) At the Closing, all instruments and documents delivered to
SONOMA Shareholders pursuant to provisions hereof shall be reasonably
satisfactory to legal counsel for SONOMA.
(h) At the Closing, VMTI shall have delivered to SONOMA an
opinion of counsel dated as of the Closing to the effect that:
(i) VMTI is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Illinois;
(ii) This Agreement has been duly authorized executed
and delivered by VMTI and is a valid and binding obligation of
VMTI enforceable in accordance with its terms;
(iii) VMTI through its Board of Directors have taken
all corporate action necessary for performance under this
Agreement;
(iv) The documents executed and delivered to SONOMA
and the SONOMA Shareholders hereunder are valid and binding in
accordance with their terms and vest in SONOMA, any notices of
notes, warrants and options, if any, as the case may be, all
right, title and interest in and to the shares of VMTI shares
to be issued pursuant to section 1.1 hereof, and such shares
of capital stock issued will be duly and validly issued,
fully-paid and nonassessable; and
(v) VMTI has the corporate power to execute, deliver
and perform under this Agreement.
(i) The shares of restricted VMTI capital stock to be issued
to SONOMA Shareholders at Closing will be validly issued, nonassessable and
full-paid under Illinois corporation law and will be issued in a non-public
offering and isolated transaction in compliance with all federal and state
securities laws, bearing a restrictive legend, as is more fully set forth above.
4.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF VMTI. All obligations of
VMTI under this Agreement are subject to the fulfillment, prior to or at
Closing, of each of the following conditions:
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(a) The representations and warranties by SONOMA and its
shareholders, contained in this Agreement or in any certificate or document
delivered pursuant to the provisions hereof shall be true in all material
respects at and as of the Closing as though such representations and warranties
were made at and as of such time;
(b) SONOMA shall have performed and complied with, in all
material respects, with all covenants, agreements, and conditions set forth in,
and shall have executed and delivered all documents required by this Agreement
to be performed or complied or executed and delivered by them prior to or at the
Closing;
(c) SONOMA shall deliver on behalf of its shareholders to VMTI
a letter commonly known as an "Investment Letter," or investment representations
acknowledging that the shares of VMTI Common Stock are being acquired for
investment purposes.
(d) SONOMA shall deliver an opinion of its legal counsel to
the effect that:
(i) SONOMA is a corporation duly organized validly
existing and in good standing under the laws of the State of
Illinois and is duly qualified to do business in any
jurisdiction where so required except where the failure to so
qualify would have no material adverse impact on the company;
(ii) SONOMA has the corporate power to carry on its
business as now being conducted; and
(iii) This Agreement has been duly authorized,
executed and delivered by SONOMA.
SECTION 5. COVENANTS
5.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Closing
Date, the parties acknowledge that they have been entitled, through their
employees and representatives, to make such investigation of the assets,
properties, business and operations, books, records and financial condition of
the other as they each may reasonably require. No investigations, by a party
hereto shall, however, diminish or waive any of the representations, warranties,
covenants or agreements of the party under this Agreement.
5.2 EXPENSES. Each party hereto agrees to pay its own costs and
expenses incurred in negotiating this Agreement and consummating the
transactions described herein.
5.3 FURTHER ASSURANCES. The parties shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Each such party shall use its best efforts to
12
fulfill or obtain the fulfillment of the conditions to the Closing, including,
without limitation, the execution and delivery of any documents or other papers,
the execution and delivery of which are necessary or appropriate to the Closing.
5.4 CONFIDENTIALITY. In the event the transactions contemplated by this
Agreement are not consummated, VMTI, SONOMA and the Shareholders agree to keep
confidential any information disclosed to each other in connection therewith for
a period of two (2) years from the date hereof; provided, however, such
obligation shall not apply to information which:
(i) at the time of the disclosure was public
knowledge;
(ii) after the time of disclosure becomes public
knowledge (except due to the action of the receiving party);
or
(iii) the receiving party had within its possession
at the time of disclosure.
5.5 STOCK CERTIFICATES. At the Closing, the Shareholders shall have
delivered the certificates representing the Shares duly endorsed (or with
executed stock powers) so as to make VMTI the sole owner thereof. At such
Closing, VMTI shall issue to the Shareholders, the creditors, and the
restructuring group the VMTI Shares.
5.6 INVESTMENT LETTERS. The Shareholders, the creditors and the
restructuring group shall have delivered to VMTI an "Investment Letter" agreeing
that the shares are being acquired for investment purposes only and not with the
view to public resale or distribution.
5.7 RELEASE OF CERTAIN VMTI PEOPLE. SONOMA, the Shareholders and their
respective beneficiaries (collectively the "Releasors") hereby release and
discharge Xxxxxxx Xxxxxx, Xxx Xxxxxxx and Xxxxx Xxxxxxxx and their heirs,
executors, successors and assigns (the "Releasees") from all Claims which
against Releasees, the Releasors and the Releasors' successors and assigns ever
had, now have or hereafter can, shall or may have for, upon or by reason of any
matter, cause or thing whatsoever from the beginning of the world to the day of
the date of this Agreement and for which the Releases would otherwise be liable;
except that the Releasors do not release the Releasees from any claims arising
out of this Agreement.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF VMTI
(a) Notwithstanding any right of SONOMA and the Shareholders fully to
investigate the affairs of VMTI, the Shareholders have the right to rely fully
upon the representations VMTI and its officers made to its auditors who have
audited VMTI's most current fiscal year financial statements prior to Closing.
All such representations shall survive the execution and delivery hereof and the
Closing hereunder for twelve (12) months following the Closing.
(b) Notwithstanding any right of VMTI to investigate the affairs of
SONOMA and its Shareholders, VMTI has the right to rely fully upon
representations,
13
warranties, covenants and agreements of SONOMA and its Shareholders contained in
this Agreement or in any document delivered to VMTI by SONOMA and its
Shareholders or any of their representatives, in connection with the
transactions contemplated by this Agreement. All such representations,
warranties, covenants and agreements shall survive the execution and delivery
hereof and the closing hereunder for twelve (12) months following the Closing.
SECTION 7. VMTI'S REPRESENTATIONS TO AUDITORS
SONOMA and its Shareholders will rely on VMTI's auditor's report for
the fiscal year ended on December 31, 1996, which report will be, in part, based
on representations made by Xxxxxxx Xxxxxx and Xxxxx Xxxxxxxx to said auditors.
SECTION 8. DOCUMENTS AT CLOSING AND TIDE CLOSING
8.1 DOCUMENTS AT CLOSING. At the Closing, the following transactions
shall occur, all of such transactions being deemed to occur simultaneously:
(a) SONOMA will deliver, or will cause to be delivered, to
VMTI the following:
(i) a certificate executed by the President and
Secretary of SONOMA to the effect that all representations and
warranties made by SONOMA under this Agreement are true and
correct as of the Closing, the same as though originally given
to VMTI on said date;
(ii) a certificate from the State of Illinois dated
at or about the Closing to the effect that SONOMA is in good
standing under the laws of said State;
(iii) Investment enters or investment representations
in the form executed by each SONOMA Shareholder;
(iv) Stock certificates representing those shares of
SONOMA Shares to be exchanged for VMTI;
(v) an undertaking to certain members of the
restructuring group of a "put" option for a total of 100,000
shares of Common Stock of VMTI, at price of .50 cents per
share (subject to anti-dilution) to the post-merger entity one
year after the Closing.
(vi) such other instruments, documents and
certificates, if any, as are required to be delivered pursuant
to the provisions of this Agreement, including but not limited
to certified copies of resolutions of SONOMA's Board of
Directors authorizing this transaction and an opinion of
counsel of SONOMA as described herein;
14
(b) VMTI will deliver or cause to be delivered to SONOMA and
the SONOMA Shareholders:
(i) stock certificates representing those shares of
VMTI Shares to be issued as a part of the Exchange as
described in Section 1 hereof;
(ii) a certificate from VMTI executed by the
President or Secretary of VMTI, to the effect that all
representations and warranties of VMTI made under this
Agreement are true and correct as of the Closing, the same as
though originally given to SONOMA on said date;
(iii) certified copies of resolutions by VMTI's Board
of Directors authorizing this transaction;
(iv) certificates from the Illinois Secretary of
State dated at or about the Closing Date that VMTI is in good
standing under the laws of said State;
(v) option of VMTI's counsel as described in Section
4.1 (h) above;
(vi) such other instruments and documents as are
required to be delivered pursuant to the provisions of this
Agreement;
(vii) resignations of existing officers and directors
of VMTI, as set forth in the Agreement;
(viii) all other items, the delivery of which is a
condition precedent to the obligations of VMTI, as set forth
in Section 4 hereof.
8.2 THE CLOSING. The Closing shall take place simultaneously with the
execution of this Agreement or at such other later time or place as may be
agreed upon by the parties hereto. At the Closing, the parties shall provide
each other with such documents as may be necessary or appropriate in order to
consummate the transactions contemplated hereby including evidence of due
authorization of the Agreement and the transactions contemplated hereby.
SECTION 9. MISCELLANEOUS
9.1 WAIVERS. The waiver of a breach of this Agreement or the failure of
any party hereto to exercise any right under this Agreement shall in no way
constitute waiver as to future breach whether similar or dissimilar in nature or
as to the exercise of any further right under this Agreement.
9.2 AMENDMENT. This Agreement may be amended or modified only by an
instrument of equal formality signed by the parties or the duly authorized
representatives of the respective parties.
9.3 ASSIGNMENT. This Agreement is not assignable except by operation of
law.
15
9.4 NOTICE. Until otherwise specified in writing, the mailing addresses
and fax numbers of the parties of this Agreement shall be as follows:
SONOMA: c/o Xxxxx Xxxxxxxx
The Sonoma Holding Corp.
00 X. Xxxxxxx Xxxx, Xxxxx 0000
Xxxxx Xxxxxxxxxx, XX 00000
Shareholders:
VMTI: Xxxxx Xxxxxxxx
000 Xxxxxx Xxxxx, #000
Xxxxxx, XX 00000
Fax: (000) 000-0000
Any notice or statement given under this Agreement shall be deemed to
have been given if sent by registered mail addressed to the other party at the
address indicated above or at such other address which shall have been furnished
in writing to the addressor.
9.5 GOVERNING LAW. This Agreement shall be construed, and the legal
relations be the parties determined, in accordance with, the laws of the State
of Illinois, thereby precluding any choice of law rules which may direct the
application of the laws of any other jurisdiction.
9.6 ARBITRATION.
(a) All disputes and differences arising in connection with or
relating to the provisions of this Agreement, including what constitutes a
dispute or difference, shall be settled and finally determined by arbitration
unless agreement in writing has been reached between the parties within ninety
(90) days after either party shall have given written notice to the other party
of the existence of a dispute or difference which it desires to have arbitrated.
Such notice shall state the point or points in dispute.
(b) Arbitration shall be conducted in Chicago, Illinois in
accordance with the rules of the American Arbitration Association by three (3)
arbitrators, one of whom shall be selected by the Seller, one by VMTI and a
Chairman of the Arbitration Court selected by the two arbitrators so selected.
The applicable law shall be as provided above. Each party shall notify the other
party of the arbitrator selected by it within sixty (60) days of the giving of
written notice referred to above. In the event that the two arbitrators selected
by the parties are unable to reach agreement as to the third arbitrator, the
third arbitrator shall be selected by the American Arbitration Association.
Arbitration shall be held in the jurisdiction of the party against which or whom
the arbitration is instituted. Each party shall be given the opportunity to
present to the arbitrators its evidence, witnesses and arguments, and the right
to be represented by counsel of its selection when the other party be
represented by counsel, of its selection when the other party presents its
evidence, witnesses and arguments. In the event one of the parties shall fail,
after reasonable notice, to appear and participate in the arbitration
16
proceedings as normally interpreted by the above-mentioned rules, the
arbitrators shall be entitled to make their decision and award on the basis of
evidence, witnesses and arguments presented by the party appearing.
(c) The decision and the award of the arbitrators shall be in writing
and shall be final and binding upon the parties hereto. Judgment upon the award
rendered my be entered in any court having jurisdiction thereof, or application
may be made to such court for a judicial acceptance of the award and an order of
enforcement, as the case may be. The expenses of arbitration shall be borne in
accordance with the determination of the arbitrators with respect thereto.
Pending decision by the arbitrators with respect to the dispute or difference
undergoing arbitration, all other obligations of the parties hereto shall
continue as stipulated herein, and all monies not directly involved in such
dispute or difference shall be paid when due.
9.7 PUBLICITY. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued by either
party hereto at any time from the signing hereof without advance approval in
writing of the form and substance by the other xxxxx.
9.8 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the purchase and issuance of the
Shares and the VMTI Shares and related transactions, and supersede all prior
agreements, written or oral, with respect thereto.
9.9 HEADINGS. The headings in this Agreement are for reference purposes
only and shall not in any way effect the meaning or interpretation of this
Agreement.
9.10 SEVERABILITY OF PROVISIONS. The invalidity or unenforceability of
any term, phrase, clause, paragraph, restriction, covenant, agreement or the
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
9.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original copy
hereof, but all of which together shall consider but one and the same document.
9.12 BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
SONOMA HOLDING CORP.
ATTEST: Xxxxx Xxxxxxxx By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------- -------------------------------
Xxxxxxxx X. Xxxxxx, President
-----------------------------
(Print Name and Title)
VICTORMAXX TECHNOLOGIES, INC.
ATTEST: Xxxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxxx
-------------------------- -------------------------------
Xxxxx Xxxxxxxx, CFO
---------------------------
(Print Name and Title)
SONOMA SHAREHOLDERS:
Declaration of Trust by
Xxxxx Xxxxxxx Xxxxxxxx
By: /s/ Xxxxx Xxxxxxx Xxxxxxxx
-----------------------------
Declaration of Trust by
Xxxxxxxx X. Xxxxxx
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------
Chicago Mortgage & Financial
Services, Inc.
Profit Sharing Plan & Trust
By: [ILLEGIBLE]
-----------------------------
Its Trustee
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EXHIBIT A
---------------------------------- ------------------------------------- ------------------------------------
NAME No. of SONOMA Shares No. of VMTI Shares to
of Common Stock be received at Closing
Common Preferred
(convertible into
300 Common)
---------------------------------- ------------------------------------- ------------------------------------
Trust For:
Xxxxx Xxxxxxx Xxxxxxxx 3,500 4,237,995 35,000
---------------------------------- ------------------------------------- ------------------------------------
Trust For:
Xxxxxxxx X. Xxxxxx 3,500 4,237,995 35,000
---------------------------------- ------------------------------------- ------------------------------------
Chicago Mortgage and
Financial Services, Inc.
Profit Sharing Plan
& Trust 3,000 3,632,565 30,000
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
---------------------------------- ------------------------------------- ------------------------------------
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SCHEDULE 1
LIABILITIES GROSS WEIGHTED ALLOCATION
-------------------------------------------------- BALANCE OF BALANCE OF OF COMMON
CLASSIFICATION LIABILITIES LIABILITIES (2) STOCK
ACCRUED COMPENSATION
Xxx Xxxxxxx 23,598 23,598 35,792
Xxxxxxx Xxxxxx/Xxxx Xxxxx 36,600 36,600 55,512
Xxxxx Xxxxxxxx 41,827 41,827 63,440
LITIGATION SETTLEMENTS
Xxxxx Xxx (1) 1,000,000
TECHNOLOGY ROYALTIES
3D ImageTek 135,104 101,328 153,687
LOANS
Xxxxx Xxxxxxxx 5,200 5,200 7,887
ACCOUNTS PAYABLE
Xxxx Xxx 35,335 35,335 53,594
Morse, Zelnick, Rose and Lander 62,690 62,690 95,084
Nashua Corp. 25,830 25,830 39,177
Capstone Associates/Xxxxx Xxxxxxxx 7,829 7,829 11,875
Xxxxx Xxxxxxxx 4,000 4,000 6,067
Xxxxxxx Cunie/Xxxx Xxxxx 12,385 12,385 18,785
Xxx Xxxxxxx 6,000 6,000 9,100
------------- ------------- -------------
TOTAL 396,399 362,623 1,550,000
============= ============= =============
GROSS
BALANCE OF
LIABILITIES ALLOCATION
EMPLOYMENT OF COMMON
EMPLOYMENT AGREEMENTS AGREEMENTS STOCK
----------------------------------------------- ------------- ------------
Xxxxxxx Xxxxxx/Xxxx Xxxxx 300,000 58,947
Xxx Xxxxxxx 229,167 45,029
Xxxxx Xxxxxxxx 183,333 36,023
------------- ------------
712,500 140,000
============= ============
(1) Settlement of claims arising from an alleged breach of a settlement
agreement dated July 18, 1995.
(2) Of the 1,550,000 common shares allocated to settle the claims of the various
creditors, 1,000,000 shares have been specifically allocated to settle the
claim of Xxxxx Xxx. For the allocation of the remaining 550,000 shares, the
individual claims, not including the management contracts, have been
weighted at 100%, with the exception of the stream of royally payments due
to 3-D ImageTek, which were weighted at 75%.
SCHEDULE 1.1
CREDITOR SETTLEMENTS. SONOMA has agreed to provide cash funds to settle
the following obligations of VMTI:
a) $5,000 to American Express. To the extent that the outstanding
balance payable to American Express is less than $5,000 on the
Closing Date, the difference between $5,000 and the balance
payable to American Express shall be payable to Capstone
Associates.
b) SONOMA will pay the remaining liability of approximately
$9,153 payable to First Financial Leasing Corp. In exchange,
SONOMA will receive the equipment (copier and telephone
system) detailed on Schedule 1.4.
c) SONOMA has agreed to pay Coopers & Xxxxxxx ("Coopers") $10,700
for services performed on the audits of VMTI for the periods
ending December 31, 1995 and 1996. Coopers will receive $5,000
of the balance prior to the Closing Date of this transaction
and the remainder 90 days subsequent to the Closing Date of
this transaction.
d) SONOMA has agreed to pay Xxxxxx, Xxxxxxx & Xxxxxxx $3,000 for
services performed on the audit of VMTI for the period ending
December 31, 1996.
Unsettled liabilities will remain the responsibility of the post-merger entity.
20
SCHEDULES 2.12 AND 3.14
All of the parties to this Agreement agree and represent to one another
that there has been no broker or finder with respect to any part of this
transaction, except CorCapital Financial Partners, Inc., including but not
limited to its respective officers, directors, principals, employees, agents and
shareholders, (collectively, referred to hereafter as "CorCapital"), all of whom
are waiving and are not claiming any fee or compensation by reason thereof.
CorCapital further agrees to execute and be bound by the terms of this
Agreement, as if it were an original signator to said Agreement, and to be bound
to the release set forth below.
RELEASE OF FEES, COMPENSATION OR OTHER
RENUMERATION AS SET FORTH HEREON
CorCapital hereby releases and discharges VMTI, Xxxxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxx Xxxxxxxx, SONOMA, its Shareholders, all of their respective
heirs, executors, successors and assigns (the "Releasees") from all claims which
against Releasees, CorCapital and its successor and assigns ever had, now have
or hereafter can, shall, or may, have for upon, or by reason of any matter cause
or thing whatsoever from the beginning of the world to the day of the date of
this Agreement and for which the Releasees would otherwise be liable. The
undersigned further represents that he is duly authorized to execute this
document and to cause the undersigned to be bound by reason thereof.
CorCapital Financial Partners, Inc.
By: Xxxxx Xxx
----------------------------------------
Its duly authorized agent
21
