AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT ("Agreement") is made and entered into as of the 3rd day of
October, 1995, by and among PHOTOCOMM, INC., an Arizona corporation
("Photocomm"), SUNELCO, INC., a Montana corporation ("Sunelco"), and XXXXXX X.
XXXXXXXXX and XXXXXXX X. XXXXXXXXX, husband and wife (collectively,
"Brandborgs").
RECITALS
A. The respective Boards of Directors of Photocomm and Sunelco, as well
as the Brandborgs, who own all of the issued and outstanding stock of Sunelco,
have concluded that it is to their respective mutual advantage and benefit to
effect a reorganization whereby Photocomm will acquire substantially all of the
assets of Sunelco in consideration solely of voting stock of Photocomm in
accordance with the terms and conditions contained herein, such transaction to
be a reorganization under Section 368(a)(1)(C) of the Internal Revenue Code of
1986, as amended.
B. Sunelco intends, as a condition precedent to such transaction, to
authorize and adopt a plan of complete liquidation and, following the adoption
of such plan and such transaction, to carry out such liquidation.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements and subject to the
terms and conditions set forth in this Agreement, the parties agree as follows:
1.0 Sale of Assets of Sunelco to Photocomm. Upon and subject to the
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terms and conditions herein stated, Photocomm agrees to acquire from Sunelco and
Sunelco agrees to transfer, assign and convey to Photocomm upon the Closing Date
(as hereinafter defined), free and clear of all debts, liens and encumbrances
(except as otherwise provided in this Agreement), all of the assets and
properties of Sunelco (the "Assets") including all of the business, goodwill,
assets, properties and rights of every nature, kind and description, whether
tangible or intangible, real, personal or mixed, wherever located and whether or
not carried or reflected on the books and records of Sunelco, which are owned by
Sunelco or in which Sunelco has any interest (including the right to use),
accepting only the Excluded Assets and any of the foregoing which relate
exclusively to the Excluded Assets. The Assets shall include, but are not
limited to, the following:
1.1 Inventories. All inventories, including, without limitation,
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inventory of raw materials, work in process, storehouse stocks, materials,
supplies, finished goods and consigned goods owned by Sunelco or in which
Sunelco has any interest, whether located on Sunelco's business premises, in
transit to or from such premises, in storage facilities or otherwise. Attached
hereto as Schedule 1.1 is a complete list of such Inventory as of August
31,1995. An updated list of such Inventory as of the Closing Date shall be
delivered to Photocomm upon the Closing Date.
1.2 Tangible Personal Property. All tangible personal property
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including all machinery, equipment, trucks, automobiles, furniture, supplies,
spare parts, tools, stores and other tangible personal property owned by Sunelco
or in which Sunelco has any interest, other than the Inventories. Attached
hereto as Schedule 1.2 is a complete list of such Tangible Personal Property as
of August 31,1995.
1.3 Intangible Personal Property. All intangible personal property
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including all intangible properties owned by Sunelco or in which Sunelco has any
interest, including, but not limited to (i) the name "Sunelco" and any other
registered or unregistered trademarks, service marks, trade names and slogans,
all applications therefor, and all associated goodwill; (ii) all statutory,
common law or registered copyrights, all applications therefore and all
associated goodwill; (iii) all patents and patent applications, all associated
technical information, shop rights, know-how, trade secrets, processes,
operating, maintenance, and other manuals, drawings and specifications, process
flow diagrams and related data, and all associated goodwill; (iv) all "software"
and documentation thereof, (including all electronic data processing systems and
program specifications, source codes, input data and report layouts and formats,
records, files, layouts, or diagrams, functional specifications and narrative
descriptions, or flow charts); (v) all other inventions, discoveries,
improvements, processes, formulae (secret or otherwise), data, drawings,
specifications, trade secrets, confidential information know-how and ideas
(including those in possession of third-parties, but which are the property of
Sunelco), and all drawings, records, books or other tangible media embodying the
foregoing. Attached hereto as Schedule 1.3 is a complete list of such Intangible
Personal Property as of August 31,1995.
1.4 Prepaid Items. All prepaid items including insurance deposits,
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municipal or local tax payments or deposits, utility deposits and the like,
deferred charges, reserve accounts and other security or similar deposits owned
by Sunelco or in which Sunelco has any interest. Attached hereto as Schedule 1.4
is a complete list of such Prepaid Items as of August 31,1995.
l.5 Licenses and Permits. All licenses and permits issued to Sunelco in
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which Sunelco has any interest.
1.6 Contracts and Other Agreements. All contracts and other agreements,
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including contracts, agreements, warranties, guarantees, indentures, bonds,
options, leases, subleases, easements, mortgages, plans, licenses, purchase
orders, sales orders, commitments or binding arrangements of any nature
whatsoever, express or implied, written or unwritten, and all amendments
thereto, entered into by or binding upon Sunelco or to which any of its
properties may be subject, other than those, if any, which constitute Excluded
Assets or relate exclusively to the Excluded Assets. Attached hereto as Schedule
1.6 is a complete list of such Contracts and Other Agreements as of August
31,1995.
1.7 Accounts Receivable. All accounts receivable of Sunelco, including
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all accounts, notes, accounts receivable, contract rights, drafts, and other
forms of claims, demands, instruments, receivables and rights to the payment of
money or other forms of consideration, whether for goods sold or leased,
services performed or to be performed, or otherwise, owned by Sunelco or in
which Sunelco has any interest, together with all guarantees, security
agreements and rights and interests securing the same. Attached hereto as
Schedule 1.7 is a complete Accounts Receivable Aging Report as of August 31,
1995. An updated Accounts Receivable Aging Report as of the Closing Date shall
be delivered to Photocomm upon the Closing Date.
1.8 Cash and Cash Equivalents. All cash and cash equivalents to meet
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the requirements of section 11.1(n), including actual cash, bank accounts,
certificates of deposits, banker's acceptances, United States Government (or
agency) securities, or other securities owned by Sunelco or in which Sunelco has
any interest, other than those, if any, which constitute Excluded Assets or
relate exclusively to the Excluded Assets.
1.9 Books and Records. All books and records of Sunelco including
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ledgers, employee records, customer lists, files, correspondence, and other
written records of every kind owned by Sunelco or in which Sunelco has any
interest, other than those, if any, which constitute Excluded Assets or relate
exclusively to the Excluded Assets.
1.10 Warranties. All warranties or other rights of Sunelco under
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express or implied warranties from suppliers or contractors with respect to the
Assets to the extent assignable.
1.11 Goodwill. All goodwill of Sunelco as a going concern.
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1.12 Other Properties. All other properties, tangible and intangible,
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not otherwise referred to above which are owned by Sunelco or in which it has
any interest, other than those, if any, which constitute Excluded Assets or
relate exclusively to the Excluded Assets.
Value of Certain Assets. The Inventory, Accounts Receivable and Cash of
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Sunelco to be acquired by Photocomm hereunder shall have an aggregate book value
of approximately $435,000.
Excluded specifically from the Assets which Sunelco has agreed to sell
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to Photocomm are the following Assets ("Excluded Assets") which shall be
retained by Sunelco:
1.13 Corporate Records. The stock record books, the corporate seal,
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minute books and other documents and records relating to the organization of
Sunelco, all of Sunelco's tax and information returns; all correspondence
between Sunelco and its shareholders; and all other financial records of Sunelco
which do not relate in any way to Sunelco's ownership and operation of the
Assets or its business; provided, however, that upon reasonable notice from
Photocomm to Sunelco or its successors in interest based upon reasonable cause,
Sunelco or its successors in interest shall provide Photocomm with access at no
charge to any of the foregoing described material and with copies of said
documents.
1.14 Tax Refunds. All of Sunelco's rights to refunds of all or any part
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of any taxes paid by Sunelco in relation to periods prior to the Closing Date.
1.15 Agreement Rights. The rights of Sunelco under this Agreement.
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1.16 Treasury Shares. Any shares of Sunelco's capital stock held in
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treasury.
1.17 Claims Against Shareholders, Etc. All of Sunelco's claims, causes
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of action, chosen in action, and rights of set-off of any kind against or
pertaining to its shareholders, officers and directors.
2.0 Assumption of Liabilities.
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2.1 Assumed Liabilities. Upon and subject to the terms and conditions
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herein stated, Photocomm agrees to assume as of the Closing Date and to pay,
perform and discharge all the liabilities of Sunelco which are specifically set
forth on Schedule 2.1 attached hereto and made a part hereof (the "Assumed
Liabilities"). The parties acknowledge that the Assumed Liabilities may change
due to changes in Sunelco's liabilities prior to the Closing Date and that an
updated list of Assumed Liabilities as of the Closing Date shall be delivered to
Photocomm upon the Closing Date, which updated list shall become the Assumed
Liabilities. Notwithstanding the foregoing, the Assumed Liabilities shall not
exceed the book value of the Inventory, Accounts Receivable and Cash of Sunelco
acquired by Photocomm hereunder and Photocomm agrees to assume and pay such
Sunelco liabilities up to said amount even though any specific liability is not
set forth on said updated list. In the event that Sunelco or the Brandborgs have
personally guaranteed any of the assumed liabilities, Photocomm shall obtain
their novation on such liabilities if the same are not promptly paid by
Photocomm following the Closing Date.
2.2 Excluded Liabilities. All of the liabilities not specifically
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assumed by Photocomm pursuant to paragraph 2.1 above shall remain the
liabilities of Sunelco (the "Excluded Liabilities"). Sunelco agrees to indemnify
and hold harmless Photocomm, as well as its successors and assigns, from any and
all claims, charges, liabilities and expenses, including reasonable attorney's
fees, relating in any way to the Excluded Liabilities. The Excluded Liabilities
include, but are not limited to the following:
(a) All obligations and liabilities with respect to employee
wages and benefits, including specifically, unfunded employee benefit plan
obligations, and any taxes related thereto accrued prior to the Closing Date or
severance obligation for any personnel whose severance occurs prior to or on the
Closing Date.
(b) Any obligations of Sunelco to perform this Agreement.
(c) Any obligation or liability of Sunelco that is not accrued
or incurred by Sunelco on or before the Closing Date. Notwithstanding the
foregoing, Photocomm shall pay for goods in transit to Sunelco as of the Closing
Date upon their receipt. Sunelco shall provide a list of such goods in transit
to Photocomm upon the Closing Date.
(d) Any liability of Sunelco to its stockholders.
(e) Any liability of Sunelco with respect to its outstanding
shares or any warrants, obligations, or rights to purchase its shares.
(f) Any liability for taxes, except as may be
expressly assumed hereunder.
(g) Any liability known or unknown, not assumed by Photocomm
under the provisions of Section 2.1 above.
3.0 Consideration For Assets. In consideration of and in exchange for
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the transfer, assignment and conveyance of the Assets, in addition to the
assumption of Assumed Liabilities (in the approximate amount of $435,000),
Photocomm shall issue to Sunelco 225,000 shares of its Common Stock, $0.10 par
value, which shares shall be valued in the amount of $400,000.00. Said shares
shall not be registered under the Securities Act of 1933 or any similar state
securities laws, shall be registered in the name of Sunelco and shall be issued
from unreserved authorized, but unissued Common Stock of Photocomm. The parties
shall determine the final allocation of the aggregate purchase price among the
Assets as of the Closing Date, which allocation shall be used on Form 8594 and
any other notice or filing required pursuant to section 1060 of the Internal
Revenue Code of 1986, as amended (the "Code").
4.0 Representations and Warranties of Sunelco and the Brandborgs.
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Sunelco and the Brandborgs represent and warrant to Photocomm as follows, and
acknowledge and confirm that Photocomm is relying upon such representations and
warranties in connection with the execution, delivery and performance of this
Agreement, notwithstanding any investigation made by Photocomm or on its behalf:
4.1. Organization and Standing. Sunelco is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Montana, has all of the requisite corporate power and authority and has all of
the licenses, permits, authorities and consents that are necessary to own,
operate and lease its properties and to carry on its business as now being
conducted. Sunelco is duly qualified to do business and is in good standing as a
foreign corporation in all jurisdictions in which the property owned, leased or
operated by Sunelco or the nature of the business conducted by Sunelco makes
such qualification necessary. Sunelco is not a party to or subject to any
agreement, consent decree or order, or other understanding or arrangement with,
or any directive of, any governmental authority or other person which imposes
any restriction or otherwise affects in any material way the conduct of its
business in any jurisdiction or location. True and accurate copies of Sunelco's
Articles of Incorporation, as amended, and By-laws, as presently in effect, are
attached as Schedule 4.1 to this Agreement.
4.2. Capitalization. Presently and at the Closing Date, the authorized
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capital of Sunelco consists solely of 10,000 shares of common stock, no par
value, of which 4,000 shares have been validly issued and are now outstanding,
all of which are owned by the Brandborgs. All such shares of capital stock have
been validly authorized and issued and are fully paid and nonassessable.
4.3. Subsidiaries. Sunelco has no subsidiaries or affiliated companies
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and does not otherwise presently own or control, directly or indirectly, any
other corporation, association, or other business entity.
4.4. Authorization. Sunelco has all the requisite legal and corporate
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power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of Sunelco
and its officers, directors and stockholders necessary for the authorization,
execution, delivery, and performance of all obligations of Sunelco under this
Agreement has been (or will be) taken prior to the Closing. This Agreement, when
executed and delivered, shall constitute a legal, valid and binding obligation
of Sunelco and the Brandborgs, enforceable in accordance with its terms.
4.5. Governmental Consents. No consent, approval, order, or
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authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of Sunelco in connection with the execution, delivery or performance of
this Agreement or consummation of the transactions contemplated hereby.
4.6. Compliance with Other Instruments. Sunelco will not be, as a
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result of the execution, delivery or performance of this Agreement, in violation
of or default under any provision of its Articles of Incorporation or By-laws,
as amended and in effect on the date hereof, or of any provision of any
instrument, contract or lease to which it is a party, or of any provision of any
federal or state judgment, writ, decree, order, statute, rule, or governmental
regulation applicable to Sunelco.
4.7. Financial Statements. An unaudited balance sheet, income statement
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and statement of cash flows as of and for each of the calendar years ending
December 31, 1994 and 1993, and an unaudited balance sheet, income statement and
statement of cash flows as of and for the period ending August 31, 1995
(collectively, the "Sunelco Financials"), are attached hereto as Schedule 4.7.
The Sunelco Financials have been prepared by management, are true and
correct and fairly present the financial position of Sunelco as of their
respective dates and the results of its operations for the periods then ended
and contain all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation. Sunelco has established a standard system of
accounting and has consistently carried out and administered the same. Except to
the extent reflected or reserved against or disclosed in the Sunelco Financial
Statements, as of their respective dates, Sunelco has not incurred any material
liabilities or obligations of any kind, whether accrued, absolute, contingent or
otherwise, which should have been so reflected or reserved against or disclosed
(including, without limitation, all liabilities to vendors and customers of
Sunelco).
4.8 Undisclosed Liabilities. Sunelco has no liabilities or obligations,
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either absolute, accrued, contingent or otherwise, which individually or in the
aggregate are materially adverse to the financial condition and business of
Sunelco, which (i) have not been reflected in the Sunelco Financial Statements,
(ii) have not been described in this Agreement or in any of the Schedules
hereto, or (iii) have not been incurred in the ordinary course of business since
August 31, 1995, consistent with past practices.
4.9 Inventory. The inventory of Sunelco, as reflected in the Financial
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Statements, consists of a quality and quantity usable and saleable in the
ordinary course of business. The inventory does not include any obsolete or
discontinued items, but does include old, but saleable merchandise of not more
than $5,000. The inventory is stored and/or located at premises owned or leased
by Sunelco or at Sunelco's suppliers. The value at which Sunelco's inventory is
reflected in the Sunelco Financial Statements is the cost thereof on a first-in,
first-out basis and reflects write-offs or write-downs for damaged or obsolete
items in accordance with the historical inventory policy and practices of
Sunelco. Sunelco has not transferred inventory on consignment or granted return
privileges to any purchaser of its goods, other than in the ordinary course of
business, which includes a 30-day customer return policy.
4.10 Accounts Receivable. Except as set forth in Schedule 4.10, no
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amount included in the accounts receivable of Sunelco as of August 31, 1995, has
been released for an amount less than the value at which it was included or is
or will be regarded as unrecoverable in whole or in part except to the extent
there shall have been an appropriate bad debt reserve therefor. Such receivables
are not, to the best knowledge of Sunelco, subject to any counterclaim, refusal
to pay or setoff not reflected in the reserves set forth on the Sunelco
Financial Statements.
4.11 No Prebillings. Sunelco has not prebilled or received payment, and
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Sunelco will not prebill or receive payment, from any of its accounts for goods
to be delivered or for services to be rendered or for expenses to be incurred
subsequent to the Closing Date, other than in the ordinary course of business,
which shall amount to not more than $11,500.00 as of the Closing Date. Sunelco
does not book any such prebilling received as a sale, nor does it book any
profit therefrom prior to its actual shipment of the products ordered.
4.12 Changes. Except as set forth in Schedule 4.12, since May 31, 1995
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(a) Sunelco has not entered into any transaction which was not
in the ordinary course of business;
(b) There has been no adverse change in the condition
(financial or otherwise), business, property, assets or liabilities of Sunelco
other than changes in the ordinary course of business, none of which,
individually or in the aggregate, has been material;
(c) There has been no damage to, destruction of or loss of
physical property (whether or not covered by insurance) adverse to the business
or operations of Sunelco;
(d) Sunelco has not increased the compensation of any of its
officers or the rate of pay of their employees as a group, except as part of
regular compensation increases in the ordinary course of business;
(e) There has been no resignation or termination of employment
of any key officer or employee of Sunelco, and Sunelco does not know of any
impending resignation or termination of employment of any such officer or
employee that if consummated would have an adverse effect on the business of
Sunelco;
(f) There has been no labor dispute involving Sunelco or any
of its employees and none is pending or, to the best of Sunelco's knowledge,
threatened;
(g) There have not been any changes, except in the ordinary
course of business, in the contingent obligations of Sunelco, by way of
guaranty, endorsement, indemnity, warranty or otherwise;
(h) There have not been any loans made by Sunelco to any of
its employees, officers or directors other than travel advances and office
advances made in the ordinary course of business;
(i) There has been no litigation or administrative agency
charges or proceedings commenced involving, relating to or affecting the
business of Sunelco; and
(j) There has been no other event or condition of any
character pertaining to and materially adverse to the Assets or business of
Sunelco.
4.13 Title to Assets; Liens, etc. The Assets, both real, personal and
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mixed, tangible and intangible, necessary or useful to the operation of the
business of Sunelco are in good condition and repair, ordinary wear and tear
excepted, and suitable for the uses intended. The Assets are being maintained in
a state of good repair, and, in all respects, comply with and are operated in
conformity with all applicable laws, ordinances, regulations, orders, permits
and other requirements relating thereto adopted or currently in effect. Sunelco
has good and marketable title to the Assets, free and clear of all liens, other
than the lien for current taxes not yet due and payable and liens set forth on
Schedule 4.13. Schedule 4.13 identifies and sets forth a complete list of each
parcel of real estate or interest therein owned or leased by Sunelco. The
buildings and improvements owned or leased by Sunelco and the uses thereof do
not contravene any zoning or building law or ordinance or violate any
restrictive covenant. Each lease of real property creates a legal, valid and
enforceable leasehold interest in favor of Sunelco, free and clear of all liens.
No default or event of default on the part of Sunelco, as lessee or mortgagor,
as the case may be, exists with respect to any lease or mortgage (and related
loan documents) with respect to such real property.
4.14 Patents and Other Intangible Intellectual Assets.
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(a) Schedule 4.14 sets forth a complete and correct list of
Sunelco's intellectual property, including but not limited to domestic and
foreign patents, patent applications, written records of inventions, registered
and unregistered trademarks, trade names, service marks, certification marks,
copyrights and registration applications for the above, and licenses to and from
third parties relating to any of the above.
(b) Except as set forth in Schedule 4.14, Sunelco (i) has
legal and equitable title to, or has by license or other grant, the right to
use, free and clear of all liens, all proprietary technology or information,
patents, both domestic and foreign, all registered and unregistered trademarks,
trade names, service marks, certification marks, copyrights, and applications
for any and all of the above used in the conduct of its business as now
conducted; (ii) does not, to the best of Sunelco's knowledge, infringe upon the
patent, trademark, trade name, service xxxx, copyright or proprietary
information rights of any third party in the conduct of its business as now
conducted; (iii) is not obligated or under any liability whatsoever to make any
payments by way of royalties, fees or otherwise to any owner of, licensor of, or
other claimant to any patent, trademark, trade name, service xxxx, certification
xxxx, copyright or proprietary technology or information with respect to the use
thereof or in connection with the conduct of its business or otherwise; (iv) has
not licensed or granted any rights to any third parties under its patents,
trademarks, trade names, service marks, certification marks, copyrights or
proprietary technology or information used in the conduct of its business; (v)
has no notice, knowledge or belief that any of Sunelco's patents, trademarks,
trade names, service marks, certification marks or copyrights are invalid, and
all registrations, where filed, are subsisting and are registered in the name of
Sunelco; and (vi) has no notice, knowledge or belief that any of the technology
or information used in the conduct of its business was illegally obtained.
(c) Sunelco employs procedures in its daily operations to
maintain the proprietary nature of, owns and has the unrestricted right to use
all trade secrets, including know-how, inventions, designs, processes, computer
software and documentation for such software and technical data required for or
incident to the development, manufacture, operation and sale of all products and
services sold by Sunelco, free and clear of any liens, including without
limitation, all claims of current and former employees, consultants, officers,
directors and stockholders of Sunelco.
4.15 Contracts and Obligations. Set forth in Schedule 4.15 is a list of
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all material written and oral agreements, contracts, indebtedness, liabilities
and other obligations to which Sunelco is a party or by which it is bound which
(a) obligate Sunelco to share, license or develop any product or technology; (b)
involve transactions or proposed transactions between Sunelco and its officers,
directors, stockholders, affiliates or any affiliate thereof; (c) involve
strategic arrangements or cooperation agreements; (d) involve commitments for
inventory items or supplies in excess of $10,000; (e) are for a term longer than
twelve (12) months; (f) are written distribution or dealer agreements; (g) are
with the United States of America; or (h) involve receipts or expenditures by
Sunelco greater than $50,000 in any twelve-month period. Copies of written, and
summaries of oral, agreements, contracts, indebtedness, liabilities and
obligations have been made available for inspection by Photocomm. True and
correct copies of the foregoing shall be delivered to Photocomm at Closing. All
such agreements are legal, valid and binding obligations and are in full force
and effect in all respects. Except as set forth in Schedule 4.15, Sunelco has
avoided every condition and has not performed any act the occurrence of which
would result in Sunelco's loss of any right granted under any license,
distribution or other agreement.
4.16 Catalogs and Promotional Literature. Neither the use nor the
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distribution of any advertising or promotional materials, including catalogs,
violates, infringes or conflicts with any statutory or common law copyright,
trademark, or other intellectual, proprietary, personal or other right of any
person. Sunelco has provided Photocomm with, or made available to Photocomm,
copies of each catalog distributed by Sunelco during the past two (2) years.
4.17 Products; Warranty Provisions.
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(a) Other than the standard warranties of Sunelco as set forth
in Schedule 4.17 or product manufacturer warranties, there are no product
warranties applicable to its business, whether express, implied or otherwise.
There is adequate provision in the Sunelco Financial Statements for liabilities
and obligations for damaged, defective or returned goods, or for replacement of
goods.
(b) Sunelco has no any pattern of claims or actions based upon
allegations of the same or similar product defect for any of its products.
(c) There has not been any material product recall, rework or
retrofit relating to any line of product manufactured, shipped or sold by
Sunelco, nor, to Sunelco's knowledge, is there any basis for any such product
recall, rework or retrofit.
4.18 Conflicts of Interest; Transactions with Principals. Except as
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described in Schedule 4.18. no officer, director or stockholder of Sunelco and
no affiliate (as defined under the Securities Act of 1933, as amended) of any
such officer, director or stockholder has, either directly or indirectly, (a) an
interest in any corporation, partnership, proprietorship, association or other
person or entity which furnishes or sells services or products to Sunelco or
which purchases services or products from Sunelco or whose services or products
are similar to those furnished or sold by Sunelco, or (b) a beneficial interest
in any contract, agreement or commitment to which Sunelco may be bound.
4.19 Outstanding Indebtedness. Sunelco has no indebtedness for borrowed
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money (including deferred compensation) which Sunelco has directly or indirectly
created, incurred, assumed or guaranteed, or with respect to which Sunelco has
otherwise become directly or indirectly liable other than as disclosed in
Schedule 4.19 or the Sunelco Financial Statements.
4.20 Employees. Except as set forth in Schedule 4.20, Sunelco has no
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employment contracts with any of its employees which are not terminable at will
or any consulting or independent contractor agreements with any individual or
entity, and it does not have any collective bargaining agreements covering any
of its employees. There are no employee or labor disagreements or union
organization activities pending or threatened between Sunelco and its employees,
and Sunelco is not a party to any union or collective bargaining agreement.
Sunelco complied with all applicable federal and state equal employment
opportunity laws and other laws related to employment. Sunelco is not aware that
any officer or key employee, or that any group of key employees, intends to
terminate their employment with Sunelco (or Photocomm if Photocomm elects to
employ said persons subsequent to the Closing Date), whether as a result of the
transactions contemplated hereby or otherwise, nor does Sunelco have a present
intention to terminate the employment of any of the foregoing (except subsequent
to the Closing Date). To Sunelco's knowledge, no employee of Sunelco is in
violation of any term of any employment contract, patent, proprietary
information disclosure agreement or any other contract or agreement relating to
the right of any such employee to be employed by Sunelco because of the nature
of the business conducted by Sunelco or for any other reason, and the continued
employment by Sunelco of its present employees will not result in any such
violation.
4.21 Employee Benefit Plans.
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(a) Schedule 4.21 sets forth:
(i) all "employee welfare benefit plans," as defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any other employee benefit arrangements or payroll practices,
including, without limitation, sick leave, vacation pay, salary continuation for
disability, severance hospitalization, medical insurance, and life insurance
programs maintained by Sunelco or each trade or business under common control
with Sunelco (as determined under Section 4001 (b)(1) of ERISA, an "ERISA
Affiliate") or to which Sunelco or any ERISA Affiliate has made contributions
during the preceding five (5) years (the "Welfare Plans"); and
(ii) all "employee pension benefit plans," as defined in
Section 3(2) of ERISA, maintained by Sunelco or any ERISA Affiliate or to which
Sunelco or any ERISA Affiliate has made contributions during the preceding five
(5) years thereunder, including, without limitation, retirement, pension,
savings, profit sharing, severance and stock purchase programs (the "Pension
Plans"). The Welfare Plans and Pension Plans are hereinafter collectively
referred to as the "Employee Benefit Plans."
(b) No Sunelco Employee Benefit Plan is required to be
qualified under ERISA or other applicable laws. There is no violation of ERISA
with respect to the filing of any applicable reports, documents and notices
regarding the Employee Benefit Plans with the Secretary of Labor and the
Secretary of the Treasury or the furnishing of such documents to the
participants or beneficiaries of the Employee Benefit Plans.
(c) Sunelco does not maintain retiree life or retiree health
insurance plans which provide for continuing benefits or coverage for any
participant or any beneficiary of a participant after termination of employment
except as may be required under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as
amended ("COBRA").
(d) Sunelco is in compliance with the notice and continuation
requirements of COBRA and the regulations thereunder.
(e) Sunelco has no formal plan or commitment, whether legally
binding or not, to create any additional Employee Benefit Plans or arrangement
or modify or change any existing Employee Benefit Plan, which would affect any
employee or former employee of Sunelco.
(f) Neither the execution or delivery of this Agreement nor
the consummation of the transactions contemplated hereby will result in any
rights under any of the Employee Benefit Plans becoming exercisable by the
holders thereof or result in the creation or vesting of any rights in such
holder under any of the Employee Benefit Plans, or accelerate the time of
payment or vesting or increase the amount of compensation or benefits due to any
director, officer, employee or former employee of Sunelco.
4.22 Taxes. Sunelco has filed all federal, state, county, local and
-----
foreign tax returns, reports and forms for income, excise, social security,
property, payroll, unemployment and other taxes which are required to be filed
by it, including all sales tax returns with respect to direct sales made by
Sunelco ("Tax Returns"). Sunelco has paid, or adequate provision has been made
on the Sunelco Financial Statements for the payment of, all federal, state,
county, local and foreign taxes, assessments, levies or duties, howsoever
measured or imposed, and related interest and penalties, if any (collectively,
"Taxes"). No Taxes in addition to those so paid or provided for shall be
assessed or levied against or become due or payable by Sunelco on or after the
Closing Date in respect to the period prior to and including the Closing Date,
except as shall be paid by Sunelco. No unexpired waiver of the applicable
statute of limitations with respect to any taxable year has been executed by
Sunelco. There are no tax examinations or audits underway involving Sunelco.
4.23 No Sales or Conveyance Tax Due. No sales, use or other transfer or
------------------------------
conveyance taxes are or will become payable by any of the parties to this
Agreement as a consequence of the execution, delivery or performance of this
Agreement or any of the Additional Agreements (as hereinafter defined), other
than taxes based upon the net income of the parties. Sunelco shall be
responsible for and shall promptly pay any such sales, use, transfer or
conveyance taxes which become payable with respect thereto.
4.24 Insurance. All Assets of Sunelco are covered by such fire,
---------
casualty, product liability, environmental liability and other insurance
policies issued by reputable insurers as are customarily obtained to cover
comparable properties and assets by businesses in the region in which the Assets
are located, in amounts, scope and coverage which are reasonable in light of
existing conditions. Schedule 4.24 sets forth a list and description of all of
the policies of insurance and fidelity or surety bonds carried by Sunelco,
including, but not limited to, fire, liability, product liability, workers'
compensation, officers' life, and directors' and officers' liability insurance
policies. Sunelco has not failed to give any notice or present any material
claim under any insurance policy in due and timely fashion and all insurance
premiums due and payable by Sunelco in connection with the policies set forth on
Schedule 4.24 prior to the Closing Date have been paid. During the past five (5)
years, Sunelco has not experienced any uninsured losses in respect of any claims
against Sunelco, coverage for which claims customarily would be provided by the
policies set forth in Schedule 4.24 or predecessors thereto. There are no
outstanding written requirements or written recommendations by any insurance
company that issued a policy with respect to any of the Assets, by any Board of
Fire Underwriters or other body exercising similar functions or by any
governmental authority requiring or recommending any repairs or other work to be
done on or with respect to any of the Assets or requiring or recommending any
equipment or facilities to be installed on or in connection with any of the
Assets. Sunelco does not have any knowledge of any proposed increase therein and
does not know of any conditions or circumstances applicable to its business
which might result in such increase, except for those conditions generally
applicable to the industry in which Sunelco is engaged in business. There are no
material claims, actions, suits or proceedings arising out of or based upon any
of such policies of insurance, and, to the knowledge of Sunelco, no basis for
any such material claim, action, suit or proceeding exists. There are no notices
of any pending or threatened terminations or substantial premium increases with
respect to any of such policies, and Sunelco is in compliance with all
conditions contained therein.
4.25 Disposal of Waste. Sunelco has not disposed, spilled or deposited
-----------------
at any time on any of the properties previously or currently owned or leased by
it, nor does it have any knowledge of such disposal, spill or deposit on any of
the properties currently owned or leased by it, any "Hazardous Substance" in
excess of the corresponding "Reportable Quantity" (as those terms are defined in
the Comprehensive Environmental Response compensation and Liability Act, as
amended ("CERCLA") or its state or local equivalent), oil or petroleum in excess
of 100 kilograms, or "Hazardous Waste" in any quantity (as that term is defined
in the Resource Conservation and Recovery Act, as amended, or its state or local
equivalent), or disposed, spilled or deposited any Hazardous Substances, oil,
petroleum, or Hazardous Waste (collectively, "Materials"), the nature, amount,
or concentration of which would enable the United States Environmental
Protection Agency or any state regulatory agency to undertake or require the
removal or remediation of such Materials.
4.26. Other Environmental Matters. As to all operations relating to the
---------------------------
Business: (a) Sunelco has complied with all applicable federal, state and local
laws, regulations, rulings and guidelines (collectively referred to as
"Environmental Laws") in all material respects relating to any Materials used,
generated, managed, handled, treated, stored or disposed of at, or moved or
transported from, the sites where its business is conducted; (b) Sunelco has not
received any notices that it has been designated as a "Potentially Responsible
Party," a "Responsible Party," (as those terms are defined, used or construed
pursuant to CERCLA or its state or local counterparts) or a defendant in any
action, suit or proceeding pursuant to any Environmental Law; (c) no Materials
have been delivered to any site listed by the United States Environmental
Protection Agency (i.e., CERCLA) or by any state as a site that actually or
potentially requires investigation or remedial action; (d) Sunelco is not a
party to, have received notice of, or is aware of any actual or threatened
litigation or administrative proceedings concerning environmental claims or
liabilities; and (e) there are no environmental studies or reports in the
possession or control of Sunelco.
4.27 Compliance With Laws.
--------------------
(a) Sunelco is in full compliance with all laws, rules and
regulations applicable to or affecting it or the conduct of its business and has
secured all governmental licenses, permits and approvals necessary to its
business.
(b) Other than sales tax licensing and corporate approvals to
do business, no government licenses, permits or appraisals are otherwise issued
to or relied upon by Sunelco to conduct its business.
4.28 Litigation. Except as set forth in Schedule 4.28, there is no
-----------
action, suit, arbitration, proceeding or investigation pending or threatened
against Sunelco before any court or administrative agency, nor does Sunelco know
or have any reason to know of any basis for any such action, proceeding or
investigation. Sunelco has not received any opinion or memorandum or legal
advice or notice from legal counsel to the effect that it is likely, from a
legal standpoint, that it will incur any liability which may be material to its
business.
4.29 Full Disclosure; No Misrepresentation. Sunelco has fully provided
-------------------------------------
Photocomm with all the information which Photocomm has requested for deciding
whether to enter into this Agreement. Neither this Agreement nor any certificate
or Schedule or other information furnished by or on behalf of Sunelco pursuant
to this Agreement contains any untrue statement of a material fact or, when this
Agreement and such certificates, Schedules and other information are taken in
their entirety, omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
5.0 Representations and Warranties of Photocomm. Photocomm represents
-------------------------------------------
and warrants to Sunelco as follows, and acknowledges and confirms that Sunelco
is relying upon such representations and warranties in connection with the
execution, delivery and performance of this Agreement, notwithstanding any
investigation made by Sunelco or on its behalf:
5.1. Organization and Standing. Photocomm is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
Arizona, has all of the requisite corporate power and authority and has all of
the licenses, permits, authorities and consents that are necessary to own,
operate and lease its properties and to carry on its business as now being
conducted and as proposed to be conducted. Photocomm is duly qualified to do
business and is in good standing as a foreign corporation in all jurisdictions
in which the property owned, leased or operated by Photocomm or the nature of
the business conducted by Photocomm makes such qualification necessary. Neither
Photocomm nor any Subsidiary (as defined in Section 5.3) is a party to or
subject to any agreement, consent decree or order, or other understanding or
arrangement with, or any directive of, any governmental authority or other
person which imposes any restriction or otherwise affects in any material way
the conduct of their business in any jurisdiction or location. True and accurate
copies of Photocomm's Articles of Incorporation, as amended, and By-laws, as
presently in effect, are attached as Schedule 5.1 to this Agreement.
5.2. Capitalization. (a) All issued and outstanding shares of capital
--------------
stock of Photocomm have been validly authorized and issued and are fully paid
and nonassessable. At Closing, the authorized capital of Photocomm will consist
solely of twenty five million (25,000,000) shares of Common Stock, of which, as
of August 31, 1995, 12,993,159 shares were validly issued and outstanding, fully
paid and nonassessable, and five million (5,000,000) shares of preferred stock,
of which 200,000 shares have been designated as Series AA (of which, as of
August 31, 1995, 69,365 were validly issued and outstanding, fully paid and
nonassessable), 125,000 shares have been designated as Series A (of which, as of
August 31, 1995, 109,972 were validly issued and outstanding, fully paid and
nonassessable) and 350,000 shares have been designated as Series B (of which, as
of August 31, 1995, none were validly issued and outstanding). The Board of
Directors of Photocomm has duly authorized and reserved for issuance 2,400,000
shares of Common Stock pursuant to Photocomm's stock option plan. As of August
31, 1995, options for 1,663,750 shares of Common Stock were outstanding pursuant
to Photocomm's stock option plan. Except for the Series AA, A and B preferred
stock, options to purchase up to 2,400,000 shares of Common Stock pursuant to
Photocomm's stock option plan, and option issued to the New World Power
Corporation to purchase up to 4,100,000 shares of common stock, there are no
other options, warrants, conversion privileges, preemptive rights, or other
rights presently outstanding for any capital stock.
(b) The conversion price or prices and conversion rate or
rates at which outstanding securities may be converted or exchanged into Common
Stock are shown on Schedule 5.2. Such conversion prices and rates are not
subject to adjustment as a result of any of the transactions contemplated by
this Agreement.
(c) The shares of Common Stock of Photocomm to be acquired by
the Buyer pursuant to this Agreement are not subject to any transfer
restrictions or limitations except as provided in section 6 of this Agreement.
5.3 Subsidiaries. Except for Balance of Systems Specialists, Inc., a
------------
Arizona corporation, Photocomm of Texas, Inc., a Texas corporation and Photocomm
Credit Corporation, an Arizona corporation (each a "Subsidiary" and together the
"Subsidiaries"), Photocomm has no subsidiaries or affiliated companies and does
not otherwise presently own or control, directly or indirectly, any other
corporation, association, or other business entity. Each Subsidiary is duly
organized, validly existing and in good standing under the laws of the state of
its incorporation and is wholly owned by Photocomm. Each Subsidiary is duly
qualified to do business and is in good standing as a foreign corporation in all
jurisdictions in which the property owned, leased or operated by the Subsidiary
or the nature of the business conducted by the Subsidiary makes such
qualification necessary. Each Subsidiary has all the requisite corporate power,
authority, licenses and permits that are necessary to own, operate and lease its
properties and to carry on its business as now being conducted.
5.4. Validity of Common Stock. The Photocomm Common Stock, when issued,
------------------------
sold and delivered to Sunelco in accordance with this Agreement for the
consideration expressed herein, will be validly issued, fully paid and
nonassessable and will be free and clear of all liens.
5.5 Authorization. Photocomm has all the requisite legal and corporate
-------------
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of Photocomm
and its officers, directors and stockholders necessary for the authorization,
execution, delivery, and performance of all obligations of Photocomm under this
Agreement and for the authorization, issuance and delivery of the Common Stock
being issued and sold under this Agreement by Photocomm has been (or will be)
taken prior to the Closing. This Agreement, when executed and delivered, shall
constitute a legal, valid and binding obligation of Photocomm, enforceable in
accordance with its terms.
5.6 Governmental Consents. No consent, approval, order, or
-----------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of Photocomm in connection with the execution, delivery or performance
of this Agreement or consummation of the transactions contemplated hereby. Based
in part upon the accuracy of the Buyer's representations and warranties as set
forth in Section 6.1, the sale and issuance of the Common Stock by Photocomm in
conformity with the terms of this Agreement is exempt from the registration
requirements of all applicable federal and state securities laws.
5.7 Compliance with Other Instruments. Neither Photocomm nor any
------------------------------------
Subsidiary will be, as a result of the execution, delivery or performance of
this Agreement, in violation of or default under any provision of its Articles
of Incorporation or By-laws, as amended and in effect on date hereof, or of any
provision of any instrument, contract or lease to which it is a party, or of any
provision of any federal or state judgment, writ, decree, order, statute, rule,
or governmental regulation applicable to Photocomm or any Subsidiary.
5.8 Financial Statements. A consolidated audited balance sheet, income
--------------------
statement and statement of cash flows as of and for each of the fiscal years
ending August 31, 1994 and August 31, 1993 (the "Photocomm Audited Financials"),
with related opinion of KPMG Peat Marwick, independent public accountants, and a
consolidated unaudited balance sheet, income statement and statement of cash
flows as of and for the period ending May 31, 1995 (the "Photocomm Unaudited
Financials"), are attached hereto as Schedule 5.8. The Photocomm Audited
Financials and the Photocomm Unaudited Financials are hereinafter referred to
collectively as the "Photocomm Financial Statements."
The Photocomm Audited Financials have been prepared in accordance with
generally accepted accounting principles consistently applied, are true and
correct and fairly present the financial position of Photocomm and its
Subsidiaries as of their respective dates and the results of their operations
for the periods then ended. The Photocomm Unaudited Financials have also been
prepared in accordance with generally accepted accounting principles
consistently applied and are true and correct and fairly present the financial
position of Photocomm and its Subsidiaries as of their respective dates and the
results of operations for the period then ended and contain all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation. Photocomm and its Subsidiaries have established and will continue
to maintain a standard system of accounting to be carried out and administered
in accordance with generally accepted accounting principles. Except to the
extent reflected or reserved against or disclosed in the Photocomm Financial
Statements, as of their respective dates, neither Photocomm nor any Subsidiary
has incurred any material liabilities or obligations of any kind, whether
accrued, absolute, contingent or otherwise, which under generally accepted
accounting principles should have been so reflected or reserved against or
disclosed (including, without limitation, all liabilities to vendors and
customers of Photocomm and its Subsidiaries).
5.9 Undisclosed Liabilities. Neither Photocomm nor any Subsidiary has
------------------------
any liabilities or obligations, either absolute, accrued, contingent or
otherwise, which individually or in the aggregate are materially adverse to the
financial condition and business of Photocomm or its Subsidiaries, which (i)
have not been reflected in the Photocomm Financial Statements, (ii) have not
been described in this Agreement or in any of the Schedules hereto, or (iii)
have not been incurred in the ordinary course of business since May 31, 1995,
consistent with past practices.
5.10 Changes. Except as set forth in Schedule 5.10, since May 31, 1995:
-------
(a) Neither Photocomm nor any subsidiary has entered into any
transaction which was not in the ordinary course of business;
(b) There has been no adverse change in the condition
(financial or otherwise), business, property, assets or liabilities of Photocomm
or any Subsidiary other than changes in the ordinary course of business, none of
which, individually or in the aggregate, has been material;
(c) There has been no damage to, destruction of or loss of
physical property (whether or not covered by insurance) adverse to the business
or operations of Photocomm or any Subsidiary;
(d) Neither Photocomm nor any Subsidiary has declared or paid
any dividend or made any distribution on its stock, other than regularly
scheduled dividends on Photocomm's preferred stock;
(e) There has been no litigation or administrative agency
charges or proceedings commenced involving, relating to or affecting their
business; and
(k) There has been no other event or condition of any
character pertaining to and materially adverse to the assets or business of
Photocomm and its Subsidiaries.
5.11 Title to Properties and Assets; Liens, etc. The properties and
---------------------------------------------
assets of Photocomm and its Subsidiaries, both real, personal and mixed,
tangible and intangible, necessary or useful to the operation of their business
are in good condition and repair, ordinary wear and tear excepted, and suitable
for the uses intended. The properties and assets are being maintained in a state
of good repair, and, in all respects, comply with and are operated in conformity
with all applicable laws, ordinances, regulations, orders, permits and other
requirements relating thereto adopted or currently in effect.
5.12 Taxes. Photocomm and its Subsidiaries have filed all federal,
-----
state, county, local and foreign tax returns, reports and forms for income,
excise, social security, property, payroll, unemployment and other taxes which
are required to be filed by them, including all sales tax returns with respect
to direct sales made by Photocomm or its Subsidiaries ("Tax Returns"). Photocomm
and its Subsidiaries have paid, or adequate provision has been made on the
Photocomm Financial Statements for the payment of, all federal, state, county,
local and foreign taxes, assessments, levies or duties, howsoever measured or
imposed, and related interest and penalties, if any (collectively, "Taxes"). No
unexpired waiver of the applicable statute of limitations with respect to any
taxable year has been executed by Photocomm or its Subsidiaries. There are no
tax examinations or audits underway involving Photocomm or any Subsidiary.
5.13 Disposal of Waste. Neither Photocomm nor any Subsidiary has
------------------
disposed, spilled or deposited at any time on any of the properties previously
or currently owned or leased by them, nor do any of them have any knowledge of
such disposal, spill or deposit on any of the properties currently owned or
leased by it, any "Hazardous Substance" in excess of the corresponding
"Reportable Quantity" (as those terms are defined in the Comprehensive
Environmental Response compensation and Liability Act, as amended ("CERCLA") or
its state or local equivalent), oil or petroleum in excess of 100 kilograms, or
"Hazardous Waste" in any quantity (as that term is defined in the Resource
Conservation and Recovery Act, as amended, or its state or local equivalent), or
disposed, spilled or deposited any Hazardous Substances, oil, petroleum, or
Hazardous Waste (collectively, "Materials"), the nature, amount, or
concentration of which would enable the United States Environmental Protection
Agency or any state regulatory agency to undertake or require the removal or
remediation of such Materials.
5.14 Other Environmental Matters. As to all operations relating to the
----------------------------
business: (a) Photocomm and its Subsidiaries have complied with all applicable
federal, state and local laws, regulations, rulings and guidelines (collectively
referred to as "Environmental Laws") in all material respects relating to any
Materials used, generated, managed, handled, treated, stored or disposed of at,
or moved or transported from, the sites where the Business is conducted; (b)
neither Photocomm nor any Subsidiary has received any notices that it has been
designated as a "Potentially Responsible Party," a "Responsible Party," (as
those terms are defined, used or construed pursuant to CERCLA or its state or
local counterparts) or a defendant in any action, suit or proceeding pursuant to
any Environmental Law; (c) no Materials have been delivered to any site listed
by the United States Environmental Protection Agency (i.e., CERCLA or NPL) or by
any state as a site that actually or potentially requires investigation or
remedial action; (d) neither Photocomm nor any Subsidiary is a party to, have
received notice of, or is aware of any actual or threatened litigation or
administrative proceedings concerning environmental claims or liabilities; and
(e) there are no environmental studies or reports in the possession or control
of Photocomm or any Subsidiary.
5.15 Compliance With Laws.
--------------------
(a) Photocomm and its Subsidiaries are in full compliance with
all laws, rules and regulations applicable to or affecting them or the conduct
of their business and have secured all governmental licenses, permits and
approvals necessary to their business.
(b) Other than sales tax licensing and corporate approvals to
do business, no government licenses, permits or appraisals are otherwise issued
to or relied upon by Photocomm or its Subsidiaries to conduct their business.
5.16 Filings. Photocomm has previously delivered to Sunelco an accurate
-------
and complete copy of each final registration statement, report and definitive
proxy statement, together with all amendments or supplements required to be made
with respect thereto, filed since August 31, 1993 and prior to the date hereof
by Photocomm with the Securities and Exchange Commission (the "SEC") pursuant to
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended (collectively, the "Company Reports"). Photocomm Reports (i) comply
as to form with the requirements of the Exchange Act, and the regulations
promulgated thereunder; (ii) contain all exhibits required to be included
therein by the Exchange Act and the regulations promulgated thereunder; and
(iii) do not contain any misstatement of a material fact or omit to state any
material fact necessary, in light of the circumstances under which they were
made, to make such statements not misleading.
5.17 Litigation. Except as set forth in Schedule 5.17 there is no
----------
action, suit, arbitration, proceeding or investigation pending or threatened
against Photocomm or any Subsidiary before any court or administrative agency,
nor does Photocomm, after due investigation, know or have any reason to know of
any basis for any such action, proceeding or investigation. Neither Photocomm or
its Subsidiaries have received any opinion or memorandum or legal advice or
notice from legal counsel to the effect that it is likely, from a legal
standpoint, that it will incur any liability or disadvantage which may be
material to their business.
5.18 Full Disclosure; No Misrepresentation. Photocomm has fully
----------------------------------------
provided Sunelco with all the information which Sunelco has requested for
deciding whether to enter into this Agreement and all information which
Photocomm believes is reasonably necessary to enable Sunelco to make such
decision. Neither this Agreement nor any certificate or Schedule or other
information furnished by or on behalf of Photocomm pursuant to this Agreement
contains any untrue statement of a material fact or, when this Agreement and
such certificates, Schedules and other information are taken in their entirety,
omits to state a material fact necessary to make the statements contained herein
or therein not misleading.
6. Private Placement Status; Representations and Warranties of Sunelco
--------------------------------------------------------------------
and the Brandborgs.
------------------
6.1 Sunelco and the Brandborgs represent and warrant as follows and
acknowledge and confirm that Photocomm is relying upon such representations and
warranties in connection with the execution, delivery and performance of this
Agreement, notwithstanding any investigation made by Photocomm or on its behalf:
(a) Sunelco and the Brandborgs have such knowledge and
experience in financial and business matters, or have relied upon advisors who
are so qualified, that they are capable of evaluating the merits and risks of
the investment by them in Photocomm as contemplated by this Agreement and are
able to bear the economic risk of such investment for an indefinite period of
time. Sunelco and the Brandborgs have been furnished access to such information
and documents as they have requested and have been afforded an opportunity to
ask questions of and receive answers from representatives of Photocomm
concerning the business and financial condition of Photocomm and the terms and
conditions of this Agreement and the issuance of securities contemplated hereby.
(b) Sunelco is acquiring the Common Stock of Photocomm for
investment for its own account and not with a view to, or for resale in
connection with, any distribution, other than transfer of the Common Stock to
the Brandborgs in connection with the complete liquidation of Sunelco. Sunelco
and the Brandborgs understand that the Common Stock of Photocomm to be issued to
Sunelco hereunder has not been registered under the Act by reason of a specific
exemption from the registration provisions of the Act which depends upon, among
other things, the accuracy of Sunelco's and the Brandborgs' representations
expressed herein.
(c) Sunelco and the Brandborgs acknowledge that the Common
Stock of Photocomm must be held indefinitely and may not be sold or offered for
sale in the absence of an effective registration statement as to such securities
under said Act and any applicable state securities laws or an exemption from
such registration is available.
(d) Sunelco and the Brandborgs have had an opportunity to
discuss the business, management and financial affairs of Photocomm and its
Subsidiaries with their management and an opportunity to review the facilities
of Photocomm and its Subsidiaries. Sunelco and the Brandborgs understand that
such discussions, as well as the written information provided by Photocomm, were
intended to describe the aspects of Photocomm's business and prospects which it
believes to be material but were not necessarily a thorough or exhaustive
description.
(e) Sunelco and the Brandborgs are sophisticated investors
with such knowledge and experience in financial and business matters so as to be
capable of evaluating the merits and risks of a prospective investment in the
Common Stock of Photocomm and capable of bearing the economic risks of such
investment.
(f) Sunelco and the Brandborgs, both by themselves and through
their agents, have been solely responsible for their "due diligence"
investigation of Photocomm and its management and business, for the analysis of
the merits and risks of an investment in the Common Stock of Photocomm; that in
taking any action or performing any role relative to the arranging of the
investment, they have acted solely in their interest, and that neither they nor
any of their agents or employees have acted as an agent of Photocomm or any
subsidiary, or as an issuer, underwriter, broker, dealer or investment advisor
relative to the Common Stock of Photocomm.
6.2 Legend. Each certificate representing the Common Stock of Photocomm
------
shall be endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY OTHER SECURITIES LAWS,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND OTHER APPLICABLE SECURITIES
LAWS COVERING SUCH SECURITIES, OR THE ISSUER RECEIVES AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT ANOTHER EXEMPTION FROM REGISTRATION IS AVAILABLE.
Photocomm shall not register a transfer of the Common Stock of Photocomm unless
the conditions specified in the foregoing legend are satisfied. Photocomm may
instruct its transfer agent not to register the transfer of any of such
securities, unless the conditions specified in the foregoing legend are
satisfied.
7.0 Bulk Sales Laws. (Intentionally omitted as Montana has no
-----------------
applicable bulk sales law.)
8.0 Pre-Closing Covenants.
---------------------
8.1 Access to Information; Confidentiality. (a) From the date hereof to
--------------------------------------
the Closing Date, Sunelco will (i) afford to representatives of Photocomm,
including its counsel and auditors, during normal business hours, access to any
and all of the Assets and information with respect to the business so that
Photocomm may have a reasonable opportunity to make such a full investigation of
the Assets and of the business in advance of the Closing Date as it shall
reasonably desire, and (ii) cause the directors and officers of Sunelco to
confer with representatives of Photocomm and will furnish to Photocomm, either
orally or by means of such records, documents, and memoranda as are available or
reasonably capable of preparation, such information as Photocomm may reasonably
request, and Sunelco will furnish to Photocomm's auditors all consents and
authority that they may reasonably request in connection with any examination of
Sunelco by Photocomm.
(b) Photocomm hereby acknowledges that some of the information
to be provided by Sunelco has been designated as confidential and proprietary
(the "Confidential Information"). Photocomm hereby agrees that it will keep in
confidence all Confidential Information that has been or may be provided by
Sunelco, and that Photocomm will use the same for the sole purpose of completing
its due diligence inquiry of Sunelco. Photocomm hereby agrees not to disclose
the Confidential Information to any person except those of its employees and
advisors who have a reasonable need to know such information to advise Photocomm
in connection with the transactions contemplated hereby. This Section 8.1(b)
shall be inoperative as to such portions of Confidential Information which (i)
are or become generally available to the public, other than as a result of a
disclosure by Photocomm or its employees or advisors; (ii) become available to
Photocomm on a non-confidential basis from a third party who has the right to
disclose the same; or (iii) were known to Photocomm on a non-confidential basis
prior to its disclosure by Sunelco or one of its representatives.
8.2 Interim Operations of the Business. Except as provided in Schedule
----------------------------------
8.2, Sunelco hereby covenants and agrees that between the date hereof and the
Closing Date:
(a) Sunelco shall conduct its business diligently and in the
ordinary course and in accordance with past practice, and use its best efforts
to (i) preserve its business organization intact, and (ii) keep available the
services of its present employees.
(b) Sunelco shall not mortgage or encumber any Asset.
(c) All Assets shall be used, operated, maintained and
repaired in accordance with normal and prudent business practices.
(d) Sunelco shall use its best efforts to preserve Sunelco's
relationships and goodwill with its customers, suppliers, licensors and others
having business relationships with Sunelco.
(e) Sunelco shall (i) maintain all Assets in substantially the
same condition as they are now (reasonable wear and tear, which are not such as
to adversely affect the operation of its business, excepted), (ii) maintain
insurance upon the Assets and with respect to the conduct of the business, all
such insurance to be comparable in amount, scope and coverage to that in effect
on the date of this Agreement, and (iii) give Photocomm immediate written notice
of any material damage to Sunelco's Assets by fire or other casualty.
(f) Sunelco shall maintain its books, records and accounts in
the usual, regular and ordinary manner, on a basis consistent with prior
periods, and shall not make any changes in the accounting methods or practices
followed by Sunelco or any change in the depreciation or amortization policies
or rates theretofore adopted or applied.
(g) Sunelco shall duly comply with all laws applicable to it,
the Assets and the conduct of its business.
(h) Sunelco shall perform all of its obligations without
default.
(i) Sunelco shall not grant any power of attorney with respect
to its business or the Assets.
(j) Without the prior written consent of Photocomm, Sunelco
shall not enter into any new material contracts or agreements, or cancel, amend,
modify adversely, waive any material rights under, assign, encumber or terminate
any of the existing contracts or agreements.
(k) Sunelco shall not (i) make any loan, or otherwise extend
credit to any person, firm or corporation, (ii) give any guarantee or indemnity,
or make any other similar commitment with respect to a debt or other liability
of any person, firm or corporation, or (iii) pay, discharge or satisfy any
liability for borrowed money other than the payment, discharge or satisfaction
other than in the ordinary and regular course of business.
(l) Sunelco shall not, directly or indirectly, sell, lease or
otherwise dispose of any of the Assets or make any capital expenditures, except
in the ordinary course of business and consistent with the past practices of
Sunelco, or acquire any other business.
(m) Sunelco shall not increase the compensation payable or to
become payable to any employee, officer or director of Sunelco.
(n) Sunelco will not authorize or permit (i) the Articles of
Incorporation or By-Laws of Sunelco to be amended, (ii) the merger,
consolidation or other combination of Sunelco with any other entity, (iii) the
character of its business to be changed, (iv) Sunelco to issue, sell or deliver,
or authorize the issuance, sale or delivery of, or redeem, any shares of any
class of its capital stock or any securities convertible into or exercisable or
exchangeable for any such shares, or any warrants, calls, options, stock
appreciation rights or other rights calling for the issuance, sale or delivery
of any such shares or convertible, exercisable or exchangeable securities, (v)
Sunelco to pay any dividend or other distribution with respect to its capital
stock, other than regularly scheduled dividends consistent with past practices
or redeem or repurchase any of the capital stock, or (vi) Sunelco to organize a
Subsidiary.
(o) Sunelco shall not write-down, cancel or forgive, in full
or in part, any accounts receivable of, or loans payable to Sunelco, other than
in the ordinary course of business.
(p) Sunelco will not engage in any transaction which would be
inconsistent with any representation, warranty or covenant of Sunelco set forth
herein or which would cause a breach of any such representation, warranty or
covenant.
8.3. No Public Disclosure. The parties hereto hereby covenant and agree
--------------------
that they shall not publicly disclose the existence of this Agreement or the
terms (including, without limiting the generality of the foregoing, the Purchase
Price) of the transactions contemplated by this Agreement and the Additional
Agreements except (i) with the prior written consent of the other parties, (ii)
if such disclosure is compelled by an order of a court or governmental agency
having competent jurisdiction, and after consultation by the disclosing party
with the other parties, (iii) if such disclosure shall be determined by such
party's counsel to be required or necessary for purposes of such party's
compliance with applicable stock exchange regulations or foreign, federal or
state securities laws and the rules and regulations promulgated thereunder, and
after consultation by such party with the other parties, (iv) if such disclosure
is required by lawful discovery in any judicial proceeding, and after
consultation by the disclosing party with the other parties, or (v) in any
action by any party to enforce this Agreement or any Additional Agreement.
9.0 Additional Agreements. At the Closing, the following additional
----------------------
agreements (the "Additional Agreements") shall be executed and delivered by the
parties thereto as applicable:
9.1 Registration Rights Agreement. Sunelco and Photocomm shall enter
-------------------------------
into a Registration Rights Agreement substantially in the form of Exhibit A
attached hereto with respect to the shares of the Common Stock to be acquired by
Sunelco from Photocomm.
9.2 Lease Agreement. The Brandborgs and Photocomm shall enter into a
----------------
Lease Agreement ("Lease") with respect to the business premises presently used
by Sunelco as its primary business premises in the form of Exhibit B attached
hereto.
9.3 Employment Agreements. The Brandborgs, individually, and Photocomm
---------------------
shall enter into the Employment Agreements attached hereto as Exhibits C and D.
9.4 Covenants Not to Compete. The Brandborgs, individually, and
---------------------------
Photocomm shall enter into the Non-Competition and Non-Disclosure Agreements
attached hereto as Exhibits E and F.
10.0 Agreement Expenses. Each of the parties shall bear its own
-------------------
expenses in connection with the transactions covered or contemplated by this
Agreement, and each represents and warrants to the other that there is no
broker, agent or other person entitled to compensation or a fee in connection
with this Agreement or with the transactions contemplated hereby, except such
fees or compensations as each of the parties is hereby representing and
warranting that it is exclusively liable to pay.
11. Conditions Precedent to Closing.
-------------------------------
11.1 Conditions to the Obligations of Photocomm. The performance of the
------------------------------------------
obligations of Photocomm hereunder is subject to the fulfillment, or waiver by
Photocomm, on or before the Closing Date of the following conditions:
(a) Authorization. All action necessary to authorize the
-------------
execution, delivery and performance of this Agreement and the Additional
Agreements by Sunelco and the Brandborgs (as the case may be) and the
consummation of the transactions contemplated hereby and thereby shall have been
duly and validly taken by Sunelco and the Brandborgs, as applicable, and Sunelco
and the Brandborgs shall have full power and right to consummate the
transactions contemplated hereby and thereby.
(b) Conduct of Business in Ordinary Course. To the Closing
-----------------------------------------
Date, Sunelco shall have conducted its business only in the ordinary course,
consistent with the past practices of Sunelco, the limitations of Section 8.2,
and the other covenants and representations made by the Brandborgs and Sunelco
herein, except for actions expressly permitted by this Agreement, matters
incident to carrying out this Agreement, or such further matters as may be
consented to in writing by Photocomm. The inventory, accounts receivable and
cash of Sunelco to be acquired by Photocomm hereunder shall have an aggregate
book value of approximately $520,000 and the amount of the Assumed Liabilities
shall be the same amount.
(c) Consents and Approvals. Sunelco and the Brandborgs shall
----------------------
have obtained all consents and approvals and waivers and given such notices as
may be necessary to consummate the transactions contemplated hereby and by the
Additional Agreements, including but not limited to (i) requisite stockholder
approval or notification and (ii) the consent to the transactions contemplated
hereby of the parties to all material agreements under which Sunelco would
otherwise be in default as a result of the transactions contemplated hereby. All
consents, authorizations, orders or approvals of, and filings or registrations
with, any federal, state or local governmental commission, board or other
regulatory body which is required for or in connection with the execution,
delivery, and performance of this Agreement and the Additional Agreements by
Sunelco and the Brandborgs and the consummation of the transactions contemplated
hereby shall have been obtained.
(d) No Litigation or Legislation. No federal, state, local or
----------------------------
foreign statute, rule or regulation shall have been enacted or litigation,
proceeding, government inquiry or investigation commenced or threatened which
prohibits, restricts or delays the consummation of the transactions contemplated
by this Agreement and by the Additional Agreements or any of the conditions to
the consummation of such transactions or adversely affects the desirability of
consummating the transactions contemplated hereby and thereby.
(e) Accuracy of Representations and Warranties. Each of the
--------------------------------------------
representations and warranties of Sunelco and the Brandborgs set forth in
Sections 4 and 6 hereof shall be true and correct in all material respects on
and as of the Closing Date.
(f) Delivery of Closing Documents. Photocomm shall have
--------------------------------
received the closing documents set forth in Section 13.1 hereof, including, but
not limited to, the Additional Agreements.
(k) Due Diligence. Photocomm shall be satisfied in its sole
--------------
discretion with its due diligence inquiry of Sunelco, its business, and the
Assets, including. without limitation, the updated Inventory list and Accounts
Receivable Aging Report to be delivered at the Closing.
(l) Tax Returns. Sunelco shall have timely filed with the
------------
proper governmental agencies, and have provided Photocomm with true and complete
copies of, the federal, state and local income tax returns of Sunelco for the
calendar year ending in December 31, 1994.
(m) No Adverse Change. There shall not have occurred a
-------------------
material adverse change to Sunelco, its business, or the Assets.
(n) Value of Certain Assets. The Inventory, Accounts
---------------------------
Receivable and Cash of Sunelco to be acquired by Photocomm hereunder shall have
an aggregate book value of approximately $435,000.
11.2 Conditions to the Obligations of Sunelco. The performance of the
-----------------------------------------
obligations of Sunelco hereunder is subject to the fulfillment, or waiver by
Sunelco, on or before the Closing Date of the following conditions:
(a) Authorization. All action necessary to authorize the
-------------
execution, delivery and performance of this Agreement and the Additional
Agreements by Photocomm, and the consummation of the transactions contemplated
hereby and thereby, shall have been duly and validly taken by Photocomm, and
Photocomm shall have full power and right to consummate the transactions
contemplated hereby and thereby.
(b) Delivery of Closing Documents. Sunelco shall have received
-----------------------------
the closing documents set forth in Section 13.2 hereof.
(c) No Litigation or Legislation. No federal, state, local or
----------------------------
foreign statute, rule or regulation shall have been enacted or litigation,
proceeding, government inquiry or investigation commenced or threatened which
prohibits, restricts or delays the consummation of the transactions contemplated
by this Agreement and by the Additional Agreements or any of the conditions to
the consummation of such transactions or adversely affects the desirability of
consummating the transactions contemplated hereby and thereby.
(d) Accuracy of Representations and Warranties. Each of the
--------------------------------------------
representations and warranties of Photocomm set forth in Section 5 hereof shall
be true and correct in all respects on and as of the Closing Date.
11.3 Option to Terminate. In the event any of the conditions precedent
-------------------
to the obligation of any of the parties to consummate the transactions
contemplated hereby is not satisfied and/or waived on or before the Closing
Date, then any party whose obligation is subject to such conditions shall have
the right to terminate this Agreement by written notice to the other parties.
Upon the effective date of any termination made pursuant to this Section 11.3,
none of the parties to this Agreement shall have any further liability or
obligation to the other parties hereunder, unless otherwise specifically stated.
12. Closing. The closing ("Closing") shall occur at the offices of
-------
Xxxxxx, Xxxxx & Xxxxxx, P.C., 000 X. Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000
at 2:00 p.m. on October 3,1995, or such other time as the parties mutually agree
(the "Closing Date"). The Closing shall constitute the acts which take place on
the Closing Date by which the transactions contemplated by this Agreement are
consummated.
13. Closing Documents. On the Closing Date, the parties shall exchange
----------------
documents as follows:
13.1 Delivery by Sunelco. Sunelco shall deliver to Photocomm:
-------------------
(a) A copy of the resolutions duly adopted by the Board of
Directors and shareholders of Sunelco authorizing and approving the execution,
delivery and performance of this Agreement and the applicable Additional
Agreements, and the execution and delivery of any and all other documents and
agreements contemplated hereunder and thereunder, certified by the Secretary or
an Assistant Secretary of Sunelco.
(b) A certificate signed by Sunelco to the effect that Sunelco
has fully performed all of its pre-closing commitments hereunder and that all
its warranties and representations contained herein continue to be true and
accurate as of the Closing Date.
(c) The opinion of counsel to Sunelco dated as of the Closing
Date to Photocomm to the following effect:
(1) Sunelco is a corporation duly organized, validly existing
and in good standing under the laws of the State of Montana,
and is entitled to own its properties and to carry on its
business in the places where such properties are located and
where such business is being conducted.
(2) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action of
Sunelco and this Agreement has been duly executed and
delivered by Sunelco and constitutes a valid and binding
obligation of Sunelco in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditor's rights and the
remedies of specific performance and injunction and other
forms of equitable relief which may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought. No further corporate
authorization or by any other person is necessary with respect
to the execution and delivery of this Agreement by Sunelco or
its obligations hereunder.
(3) To the best of said counsel's knowledge Sunelco has the
right to transfer the business, properties and assets as set
forth in paragraph 1.0 hereof to Photocomm pursuant hereto.
(4) Except as may be specified by such counsel, they do not
know of any litigation, proceeding or governmental
investigation pending or threatened against, or relating to,
Sunelco or Sunelco's properties or business or the
transactions contemplated under this Agreement.
(d) The Assets to be conveyed pursuant hereto shall be
conveyed by bills of sale, assignments or other instruments of transfer as shall
be appropriate to carry out the intent of this Agreement and as shall be
sufficient to convey to Photocomm all of the rights, title and interest of
Sunelco in and to the Assets to be conveyed hereunder. Any sales and transfer
taxes imposed upon Sunelco in connection with the sale and transfer of assets
hereunder shall be paid by Sunelco.
(e) A copy of the Articles of Incorporation and the
By-Laws of Sunelco, as amended to the Closing Date, certified by
the Secretary or an Assistant Secretary of Sunelco.
(f) A Certificate of Good Standing as of a recent date issued
by the Secretary of the State of Montana to the effect that Sunelco is in good
standing under the laws of that state.
(g) The Additional Agreements.
(h) Written evidence satisfactory to Photocomm that
Sunelco has obtained all necessary governmental or regulatory
approvals for the transactions contemplated hereby.
(k) Such further instruments or documents as Photocomm
or its counsel may reasonably request to assure the effective
carrying out of the transactions contemplated hereby.
13.2 Delivery by Photocomm. Photocomm shall deliver to Sunelco:
---------------------
(a) A copy of the resolutions duly adopted by the Board of
Directors of Photocomm authorizing and approving the execution, delivery and
performance of this Agreement and the applicable Additional Agreements, and the
execution and delivery of any and all other documents and agreements
contemplated hereunder and thereunder, certified by the Secretary or an
Assistant Secretary of Photocomm.
(b) A stock certificate representing 225,000 shares of
Photocomm Common Stock, $0.10 per share, issued in the name of Sunelco. The
stock certificate shall contain a restrictive legend to the effect that the
shares represented by said certificate have not been registered under either the
federal or state securities laws and are not transferable except pursuant to an
exemption from said securities laws or subsequent registration of said shares.
(c) A certificate signed by an authorized officer of Photocomm
to the effect that Photocomm has fully performed all of its pre closing
commitments hereunder and that all of its warranties and representations
contained herein continues to be true and correct as of the Closing Date.
(d) The opinion of counsel to Photocomm dated as of the
Closing Date to Sunelco to the following effect:
(1) Photocomm is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Arizona, and is entitled to own its properties and to carry on
its business in the places where such properties are located
and where such business is being conducted.
(2) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action of
Photocomm and this Agreement has been duly executed and
delivered by Photocomm and constitutes a valid and binding
obligation of Photocomm in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditor's rights and the
remedies of specific performance and injunction and other
forms of equitable relief which may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought. No further corporate
authorization or by any other person is necessary with respect
to the execution and delivery of this Agreement by Photocomm
or its obligations hereunder.
(3) Except as may be specified by such counsel, they do not
know of any litigation, proceeding or governmental
investigation pending or threatened against, or relating to,
Photocomm or Photocomm's properties or business or the
transactions contemplated under this Agreement.
(4) The shares of Photocomm Common Stock to be issued to
Sunelco, when issued, shall be fully paid, non assessable, and
validly issued.
(e) A Certificate of Good Standing as of a recent date issued
by the Corporation Commission of the State of Arizona to the effect that
Photocomm is in good standing under the laws of that state.
(f) The Additional Agreements.
(g) Written evidence satisfactory to Sunelco that Photocomm
has obtained all necessary governmental or regulatory approvals for the
transactions contemplated hereby.
(h) Such further instruments or other documents as Sunelco or
its counsel may reasonably request to assure the effective carrying out of the
transactions contemplated hereby.
13.3 Form of Closing Documents. All closing documents shall be in form
-------------------------
and substance reasonably satisfactory to counsel for the respective parties.
13.4 Additional Documents. The parties further agree that at any time
---------------------
subsequent to the date hereof, they will, upon request and at the expense of the
requesting party, do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, all such further acts, assignments,
transfers, conveyances, powers of attorney or assurances as may be required for
the better assigning, transferring, granting, conveying and assuring to the
parties any of the properties and assets to be conveyed pursuant hereto.
14.0 Indemnification.
---------------
14.1 Sunelco and the Brandborgs. Sunelco and the Brandborgs agree to
---------------------------
and do hereby indemnify, and hold harmless Photocomm, its directors, officers,
employees and agents, against and in respect to any claims, losses, expenses,
obligations and liabilities, including reasonable attorney's fees, which arise
or result from or relate to any breach of or failure by Sunelco or the
Brandborgs to perform any of their warranties, representations, guarantees,
commitments, covenants, or conditions under this Agreement. Sunelco and the
Brandborgs shall remain liable for all claims, liabilities, debts, defaults and
obligations, whether or not known, which are not expressly assumed hereunder by
Photocomm and Sunelco and the Brandborgs shall defend at their entire expense,
including reasonable attorney's fees and other costs of litigation, and
indemnify and hold harmless Photocomm against any and all such claims, debts,
defaults, obligations, liabilities or suits.
14.2 Photocomm. Photocomm agrees to and hereby indemnifies and holds
---------
harmless the Brandborgs and Sunelco, its officers, directors, employees and
agents, against and in respect to any claims, losses, expenses, costs,
obligations and liabilities, including reasonable attorney's fees, which Sunelco
or the Brandborgs may incur or suffer by reason of a breach of or failure by
Photocomm to perform any of its warranties, representations, guarantees,
commitments or covenants in this Agreement, or by reason of any act or omission
of Photocomm subsequent to the Closing Date which constitutes a breach or
default hereunder.
15. Benefits of this Agreement. Nothing in this Agreement shall be
---------------------------
construed to give any benefits to any person (including, without limiting the
generality of the foregoing, any present or former employee of Sunelco) or
corporation or other entity, other than the Brandborgs, Sunelco, and Photocomm,
and this Agreement shall be for the sole and exclusive benefit of the
Brandborgs, Sunelco, and Photocomm.
16. Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of, and be binding upon, the successors, heirs, executors, administrators and
permitted assigns of the parties hereto. This Agreement may not be assigned by
any of the parties hereto without the prior written consent of the other
parties.
17. Notices. Any notice from one party to the other shall be deemed
-------
given when delivered to, or on the day after being sent by a nationally
recognized overnight courier service addressed to, the person at the address
listed below or to such other person and/or address as may be designated from
time to time in writing:
(a) if to Sunelco or the Brandborgs:
000 0xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxxx Xxxxxx, Esq.
Xxxxxx, Xxxxx & Xxxxxx, P.C.
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000, or
000 X. Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
(b) if to Photocomm:
Photocomm, Inc.
0000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, President
with a copy to:
Xxxxxx X. Xxxx, Esq.
Oman, Xxxxxxxxxxx & Politan, P.L.C.
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
18. Severability. In the event any covenant, condition or other
------------
provision of this Agreement is held to be invalid or unenforceable by a final
judgment of a court of competent jurisdiction, then such covenant, condition or
other provision shall be automatically terminated and performance thereof
waived, and such invalidity or unenforceability shall in no way affect any of
the other covenants, conditions or provisions hereof, and the parties hereto
shall negotiate in good faith to agree to such amendments, modifications or
supplements of or to this Agreement or such other appropriate actions as, to the
maximum extent practicable, shall implement and give effect to the intentions of
the parties as reflected herein.
19. Entire Agreement. This Agreement and the Additional Agreements
-----------------
contain all of the terms agreed upon by the parties with respect to the subject
matter hereof and thereof and there are no representations or understandings
between the parties except as provided herein and therein. This Agreement may
not be amended or modified in any way except by a written amendment to this
Agreement duly executed by the parties.
20. Waiver. No waiver of a breach of, or default under, any provision
------
of this Agreement shall be deemed a waiver of such provision or of any
subsequent breach or default of the same or similar nature or of any other
provision or condition of this Agreement.
21. Applicable Law. This Agreement shall be governed by and construed
---------------
(both as to validity and performance) and enforced in accordance with the laws
of the State of Arizona.
22. Attorneys' Fees. In any action brought to enforce the provisions of
---------------
this Agreement, the prevailing party shall be entitled to recover its attorneys'
fees and costs as determined by the court and not the jury.
23. Equitable Relief. The parties agree that the remedies at law for
-----------------
any breach of the terms of this Agreement are inadequate. Accordingly, the
parties consent and agree that an injunction may be issued to restrain any
breach or alleged breach of such provisions. The parties agree that terms of
this Agreement shall be enforceable by a decree of specific performance. Such
remedies shall be cumulative and not exclusive, and shall be in addition to any
other remedies which the parties may have at law or in equity.
24. Counterparts. This Agreement may be executed in any number of
------------
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument, but all of such counterparts taken together shall be
deemed to constitute one and the same instrument. No party shall be bound until
each party has signed at least one (1) such counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
their respective names as of the day and year first above written.
SUNELCO, INC.
a Montana corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxxx
Its: /s/ President
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------
XXXXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------
XXXXXXX X. XXXXXXXXX
PHOTOCOMM, INC.
an Arizona corporation
By:/s/ Xxxxxx X. XxXxx
-------------------------
Xxxxxx X. XxXxx
Chief Financial Officer
Exhibit A
---------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of the 3rd day of October, 1995, by and between PHOTOCOMM, INC.
an Arizona corporation with offices at 0000 Xxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxx
00000 (the "Company"), and SUNELCO, INC., a Montana corporation with offices at
000 0xx Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000 ("Sunelco," being sometimes
referred to herein as "Purchaser").
W I T N E S S E T H:
This Agreement is made with reference to the following facts.
A. The Company is issuing 225,000 shares of its common stock, $0.10 par
value (the "Common Stock") to the Purchaser pursuant to that certain Agreement
and Plan of Reorganization, dated October 3, 1995, by and among, inter alia, the
Company and the Purchaser (the "Agreement").
B. The Purchaser has requested, and the Company is willing to provide,
certain registration rights with respect to the shares of Common Stock to be
issued to the Purchaser.
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Definitions. As used herein:
-----------
(a) The term "Act" shall mean the Securities Act of 1933, as
amended.
(b) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing an S-3 registration
statement in compliance with the Act and the declaration or ordering of the
effectiveness of such registration statement.
(c) The term "Registrable Securities" means (i) all of the
shares of Common Stock issued to or purchased by the Purchaser pursuant to the
Agreement, and (ii) any Common Stock issued or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as a dividend
or other distribution with respect to, or in exchange for or in replacement of,
such Common Stock, excluding in all cases, however, any Registrable Securities
sold by a person in a transaction in which his or her rights under this
Agreement are not assigned or assignable; provided, however, that shares of
Common Stock or other securities shall only be treated as Registrable Securities
if and so long as they have not been sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction.
(c) The term "Other Shareholders" means the holders of
securities of the Company who are entitled to have shares of the Common Stock
included in a registration of the Company's securities other than the Holders
with respect to the Registrable Securities.
(d) The term "Holder" means the Purchaser and any other holder
of Registrable Securities to whom the registration rights have been transferred
pursuant to Section 9 hereof.
(e) The term "Initiating Holders" means any Holder or Holders
of not less than fifty percent (50%) of the then outstanding Registrable
Securities.
(f) The term "SEC" means the Securities and Exchange
commission or any successor agency thereto.
(g) The term "1934 Act" means the Securities Exchange Act of
1934, as amended.
2. Requested Registration.
----------------------
(a) The Initiating Holders shall be entitled to submit
pursuant to this Section 2 a written request for registration. Upon receipt by
the Company from the Initiating Holders, at any time after the six-month
anniversary and prior to the second annual anniversary of the Closing Date of
the Agreement, of a written request that the Company effect any registration,
qualification or compliance with respect to the Registrable Securities, the
Company will:
(i) give written notice of the proposed registration,
qualification or compliance to all other Holders within
ten (10) days after receipt thereof; and
(ii) use its best reasonable efforts to effect an S-3
registration (as well as qualification under the applicable
blue sky or other state securities laws, and appropriate
compliance with exemptive regulations issued under the Act and
any other governmental requirements or regulations) as may be
so requested and as would permit or facilitate the sale and
distribution of all or such portion of the Registrable
Securities as are specified in such request, together with all
or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written
request received by the Company within sixty (60) days after
such written notice is given; provided, that the Company shall
not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this
Section 2:
(A) In any particular jurisdiction in which the
Company would be required to execute a general
consent to service of process (unless the Company is
already subject to service of process under said
state's securities laws), to register as a dealer, or
to cause any officer or employee of the Company to
register as a salesman in effecting such
registration, qualification or compliance;
(B) After the Company has effected one (1) such
registration pursuant to this Section 2;
(C) If the Company shall furnish to such Holders a
certificate signed by the Chief Executive Officer of
the Company stating that in the good faith judgment
of the Board of Directors it would be seriously
detrimental to the Company or its stockholders for a
registration statement to be filed in the near
future, then the Company's obligation to use its best
efforts to register, qualify or comply under this
Section 2 shall be deferred for a period not to
exceed 180 days from the date of receipt of written
request from the Initiating Holders; provided,
however, that the Company may not utilize this right
more than once in any twelve-month period; or
(D) Within one hundred twenty (120) days of the
effective date of any other registration effected by
the Company, or prior to the effective date of such
registration statement if the Company shall have
theretofore or thereafter given written notice of
such registration statement to the Holders of
Registrable Securities and shall have thereafter
pursued the preparation, filing and effectiveness of
such registration statement with diligence.
3. Expenses of Registration. All expenses incurred in connection with
------------------------
any registration, qualification or compliance pursuant to Section 2 of this
Agreement, including without limitation, all registration, filing and
qualification fees, printing expenses, escrow fees, fees and disbursements of
counsel for the Company, accounting fees and expenses, and expenses of any
special audits incidental to or required by such registration, shall be borne by
selling Holder, up to the aggregate amount of $15,000 and by the Company
thereafter; provided, however, that the Company shall not be required to pay
underwriters' fees, discounts or commissions relating to Registrable Securities,
or any fees for counsel to the selling Holders; and provided further, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 2 hereof if the registration request is
subsequently withdrawn at the request of the Holders.
4. Registration Procedures. If and whenever the Company is required by
-----------------------
the provisions of this Agreement to use its best efforts to effect the
registration of any Registrable Securities under the Act, the Company will, as
expeditiously as possible:
(a) Prepare and file with the SEC an S-3 registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for such period as may be necessary to
permit the successful marketing of such securities but not exceeding one hundred
twenty (120) days or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs.
(b) Furnish to each Holder participating in the registration such
number of prospectuses and preliminary prospectuses in conformity with the
requirements of the Act, and such other documents as such Holder may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities being sold by such Holder.
(c) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
5. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each Holder of
Registrable Securities with respect to which a registration statement has been
filed under the Act pursuant to this Agreement, each of such Holder's partners,
officers and directors, and each person, if any, who controls any such Holder
within the meaning of the Act or the 1934 Act, as follows:
(i) against any and all loss, liability, claim (joint or several),
damage and expense whatsoever arising out of any untrue statement or
alleged untrue statement of a material fact contained in such
registration statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or prospectus (or
any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, unless such untrue statement or omission or
such alleged untrue statement or omission was made in reliance upon and
in strict conformity with written information furnished to the Company
by any Holder expressly for use in such registration statement (or any
amendment thereto) or such preliminary prospectus or prospectus (or any
amendment or supplement thereto), any violation or alleged violation by
the Company of the Act, the 1934 Act, any state securities law or any
rule or regulation promulgated under the Act, the 1934 Act or any state
securities law;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of
any litigation, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission or any such alleged
untrue statement or omission, if such settlement is effected with the
written consent of the Company; and
(iii) against any and all legal or other expense reasonably incurred in
investigating, preparing or defending against any litigation, commenced
or threatened, or any claim based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under clause (i) or (ii)
above, which expenses under this clause (iii) shall be paid by the
Company as incurred;
provided, however, that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement, alleged
untrue statement, omission or alleged omission made in a preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement becomes effective, or in the amended prospectus
filed with the SEC pursuant to Rule 424(b) (the "Final Prospectus"), such
indemnity agreement shall not inure to the benefit of any Holder or other
indemnitee, if a copy of the Final Prospectus was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Act.
In no case shall the Company be liable under this indemnity agreement
with respect to any loss, liability, claim, damage or expense with respect to
any claim made against any Holder or other indemnitee unless the Company shall
be notified in writing of the nature of the claim within a reasonable time after
the assertion thereof, if prejudicial to its ability to defend such action, but
failure to so notify the Company shall not relieve the Company from any
liability which it may have otherwise than on account of this indemnity
agreement. In case of any such notice, the Company shall be entitled to
participate at its expense in the defense, or if it so elects within a
reasonable time after receipt of such notice, to assume the defense of any suit
brought to enforce any such claim; but if it so elects to assume the defense,
such defense shall be conducted by counsel chosen by it and approved by the
Holder and other defendant or defendants, if any, in any suit so brought, which
approval shall not be unreasonably withheld. In the event that the Company
elects to assume the defense of any such suit and retain such counsel, the
Holder and other defendant or defendants which may be represented without
conflict by one counsel, shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the Company, but only if representation
of such Holder and other defendant or defendants by the counsel retained by the
Company would be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by such counsel
in such proceeding.
(b) Each Holder severally agrees that it will indemnify and hold
harmless the Company, each officer and director of the Company, each person, if
any, who controls the Company within the meaning of the Act, each underwriter of
Registrable Securities included in any registration statement which has been
filed under the Act pursuant to this Agreement, each person, if any, who
controls such underwriter,within the meaning of the Act, each other Holder, each
of such other Holder's partners, officers and directors, and each person
controlling such other Holder within the meaning of the Act against any and all
loss, liability, claim, damage and expense described in clauses (a)(i) through
(a)(iii), inclusive, of this Section 5, but only with respect to statements or
omissions, or alleged statements or omissions made in any registration statement
(or any amendment thereto) or any preliminary prospectus or prospectus (or any
amendment or supplement thereto) in reliance upon and in strict conformity with
written information furnished to the Company by such Holder expressly for use in
such registration statement (or any amendment thereto) or such preliminary
prospectus or prospectus (or any amendment or supplement thereto) and only to
the extent of proceeds received by such Holder from the sale of its Registrable
Securities in the offering as to which the registration statement relates;
provided, however, that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement, alleged
untrue statement, omission or alleged omission made in a preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement becomes effective, or in the amended prospectus
filed with the SEC pursuant to Rule 424(b) (the "Final Prospectus"), such
indemnity agreement shall not inure to t.he benefit of any person entitled to be
indemnified pursuant to this Section (b), if a copy of the Final Prospectus was
not furnished to the person or entity asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Act. In case any
action shall be brought against the Company or any person so indemnified
pursuant to the provisions of this Section (b) and in respect of which indemnity
may be sought against any Holder, the Holders from whom indemnity is sought
shall have the rights and duties given to the Company, and the Company and the
other persons so indemnified shall have the rights and duties given to the
persons entitled to indemnification by the provisions of Section (a) of this
Section 5.
6. Information by Holder. The Holder or Holders of Registrable
-----------------------
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, and the distribution proposed by
such Holder or Holders, as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section
7. Sale Without Registration. If at the time of any transfer (other
--------------------------
than a transfer not involving a change in beneficial ownership) of any
Registrable Securities, such Registrable Securities shall not be registered
under the Act, the Company may require, as a condition of allowing such
transfer, that the Holder or transferee furnish to the Company (a) such
information as is necessary in order to establish that such transfer may be made
without registration under the Act, and (b) (if the transfer is not made in
compliance with Regulation S or Rule 144A) at the expense of the Holder or
transferee, an opinion of counsel satisfactory to the Company in form and
substance to the effect that such transfer may be made without registration
under the Act; provided that nothing contained in this Section 7 shall relieve
the Company from complying with any request for registration, qualification, or
compliance made pursuant to the other provisions of this Agreement.
8. Eligibility for Form S-3 and Rule 144. The Company represents and
--------------------------------------
warrants to the Holder, its successors and assigns, that it meets the
eligibility requirements of Form S-3 under the Act to register secondary
offerings of its Common Stock and agrees that it shall continue to meet such
requirements so long as the Holder has demand registration rights under this
agreement. With a view to making available to the Holders the benefits of
certain other rules and regulations of the SEC which may permit the sale of the
Registrable Securities to the public without registration, the Company agrees to
use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Securities Exchange Act
of 1934; and
(c) Furnish the Holders forthwith upon request (i) a written statement
by the Company as to its compliance with the public information requirements of
said Rule 144 or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly
report of the Company, and (iii) such other reports and documents as may be
reasonably requested in availing the Holders of any rule or regulation of the
SEC permitting the sale of any such securities without registration.
9. Transfer of Registration Rights. The rights to cause the Company to
--------------------------------
register securities granted by the Company under Section 2 hereof may be
assigned in writing by the Purchaser to its shareholders upon the liquidation of
Purchaser as contemplated in the Agreement and upon transfer of the Registrable
Securities to such shareholders (or any family trust controlled by them);
provided, that such transfer may otherwise be effected in accordance with
applicable securities laws; and provided further, that the Company is given
written notice by such holder of shares of the Common Stock at the time of or
within a reasonable time after said transfer, stating the name and address of
said transferee or assignee and identifying the securities with respect to which
such registration rights are being assigned. No other transfer of the
Registration Rights shall be allowed.
10. Registration by Company. If at any time the Company proposes to
------------------------
issue common stock pursuant to a registration under the Act, or register its
common stock pursuant to the request of Other Shareholders, the Company will
give prompt written notice to each Holder of its intention to effect such a
registration and, subject to the limitations, conditions and indemnities
contained herein, will include in such registration (and related qualification
under blue sky laws or other compliance) those shares of Registrable Securities
for which the Company has received a written request for inclusion within twenty
(20) business days after receipt by each Holder of the Company's notice. Each
participating Holder agrees to pay the additional registration expenses
allocable to the inclusion of such Holder's Registrable Securities on a pro rata
basis, provided, however, the aggregate amount allocable to all of the Holders
shall not exceed $15,000.
11. Successors. All the covenants and provisions of this Agreement by
------------
or for the benefit of the Company and the Initiating Holders shall inure to the
benefit of their respective successors and assigns hereunder.
12. Notices. Any notice from one party to the other shall be deemed
---------
given when delivered to, or on the day after being sent by a nationally
recognized overnight courier service addressed to, the person at the address
listed below or to such other person and/or address as may be designated from
time to time in writing:
(a) if to the Company:
Photocomm, Inc.
0000 X. Xxxx Xxxx
Xxxxxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxx, Esq.
Oman, Xxxxxxxxxxx & Politan, P.L.C.
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
(b) if to Sunelco:
Sunelco, Inc.
000 0xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxxx Xxxxxx, Esq.
Xxxxxx, Xxxxx & Xxxxxx, P.C.
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000, or
000 X. Xxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx 00000
13. Applicable Law. This Agreement shall be governed by and construed
---------------
(both as to validity and performance) and enforced in accordance with the laws
of the State of Arizona applicable to agreements made and to be performed wholly
within such jurisdiction.
14. Federal Court. Each party agrees that, in the event of any
--------------
litigation among the parties (or some of them) concerning this Agreement or the
transactions contemplated hereby, the initiating party shall use reasonable
efforts to bring such action in a federal court of competent personal and
subject matter jurisdiction.
15. Counterparts. This Agreement may be executed in any number of
------------
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument, but all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day, month and year hereinabove set forth.
PHOTOCOMM, INC.
By: /s/ Xxxxxx X. XxXxx
---------------------------
Xxxxxx X. XxXxx
Chief Financial Officer
SUNELCO, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------
Its:/s/ President
EXHIBIT B
COMMERCIAL LEASE
This lease agreement is entered into this 3rd day of October, 1995 by
and between Xxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxx, husband and wife,
whose address is 000 Xxxxx 0xx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000 (referred to in
this agreement as the "Lessor"), and Photocomm, Inc., a corporation organized
under the laws of the State of Arizona whose address is 768 l X. Xxxx Road P. O.
Box 14670, Scottsdale, Arizona 85267-4670 (referred to in this agreement as the
"Lessee").
In consideration of the promises and agreements made by and between the
Lessor and the Lessee in this agreement, the parties agree as follows:
Section 1. Description of leased property. The Lessor agrees to lease
-------------------------------
to the Lessee, and the Lessee agrees to rent and hire from the Lessor on the
terms and conditions set forth in this agreement, the land and improvements
located in Ravalli County, Montana, described as follows:
Xxx 0, Xxxxxxxx Xxxxxxxxxx Xxxx, Xxxxxxx Xxxxxx,
Xxxxxxx according to the official recorded plat
thereof.
The common business address for such property is 000
Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000
(referred to in this lease as the "Premises").
Section 2. Term of lease. The term of this lease shall be three years,
-------------
commencing on October 2, 1995 and terminating at 5:00 o'clock p.m. on September
30, 1998 unless terminated sooner pursuant to the provisions of this agreement.
Section 3. Option to Renew and Extension of lease. At the end of the
----------------------------------------
initial term of this lease, Lessor hereby grants to Lessee the option to renew
the lease for an additional period of two years upon the same terms as the
original lease term except that the adjustment to rental required by Section 4
shall apply. Such option shall be exercised by Lessee giving Lessor written
notice at least sixty (60) days before the end of the initial term of this
lease. If the option to renew is not exercised, or if the option to renew is
exercised and thereafter expires, the lease will automatically be extended for
one year periods after such event, whichever the case may be, on the same terms
and conditions except for the adjustments to rent required by Section 4 hereof,
unless either party gives a written notice of termination or modification of the
lease to the other party at least sixty (60) days before the end of the term of
the lease.
Section 4. Rent. The monthly rent for the Premises shall be $l,500,
----
payable in advance on the first day of each month. The monthly rent shall remain
fixed for the first two years of the initial term but will be adjusted annually
thereafter based upon cost of living adjustments using the Department of Labor's
All- Cities Consumer Price Index for September, 1997, compared to the same index
number for each subsequent September throughout the term. provided that no
annual increase shall be greater than ten percent (10%) of the prior year's
rent.
Section 5. Place of payments. All payments made under this lease shall
-----------------
be sent to the Lessor at the address shown at the beginning of this lease or to
such other person and/or address as the Lessor may designate in writing.
Section 6. Taxes and assessments. The Lessee will pay all real property
---------------------
taxes and installments of assessments falling due during the term of the lease
imposed on the Premises, and all personal property taxes, business taxes and
fees, imposed on or with respect to the Premises or the Lessee's use of the
Premises. The Lessor will provide the Lessee with copies of the bills for the
real estate taxes and assessments, and the Lessee will pay the amounts payable
under those bills to the Lessor on or before the dates in November and May that
those bills are payable, or fifteen days after receiving copies of the bills
from the Lessor, whichever comes later. Taxes and assessments for the year 1995
shall be pro-rated with Lessor paying 3/4 of such taxes and assessments and
Lessee paying 1/4 of such taxes and assessments.
Section 7. Utilities. The Lessee will be responsible for contracting
---------
and paying for all utility services furnished to the Premises during the term of
this lease including but not limited to electric, gas, water, sewer, garbage,
alarm, and telephone service.
Section 8. Insurance. During the term of this lease, the Lessee shall,
---------
at its own expense, obtain and maintain insurance that is customarily required
for the type of business activity conducted by the Lessee and for Lessee's
inventory, equipment and contents of the building from which Lessee does
business including casualty insurance against all customary risks of loss or
damage. The Lessee will pay all premiums for such policies on or before the date
that they are due. The Lessor shall, at their own expense, insure the building
located on the Premises for loss or damage by fire, water or other casualty for
not less than the replacement value of such Building.
Section 9. Waiver of Subrogation. For and in consideration of the
----------------------
execution hereof by each of the parties, each party does herein release and
relieve the other and waive his entire claim of recovery against the other for
loss or damage to property arising out of or incident to fire and lightning and
the perils included in the extended coverage endorsement in, on or about the
said Premises, even though caused by the negligence of any of said parties or
agents or employees or otherwise. Said waiver is only to the extent that there
is effective, valid and collectible insurance in force and applicable to cover
the Premises and its improvements. This waiver shall be inapplicable if it would
have the effect, but only to the extent that it would have the effect, of
invalidating any insurance coverage of either party.
Section 10. Payment of expenses by the Lessor. If the Lessee fails to
---------------------------------
pay any obligation of Lessee hereunder including but not limited to any taxes,
assessments, or other fees relating to the Property as they become due and
owing, to discharge liens, security interests, and other encumbrances on the
Property, to pay insurance premiums and maintain insurance coverage on the
Property, to repair, maintain, and protect the Property, or to perform any of
the Lessee's other obligations under this agreement, then the Lessor may, at its
option, perform those obligations and pay those expenses. The payment of
expenses or the performance of acts by the Lessor will not constitute a waiver
of any default by the Lessee, or a waiver of the Lessor's remedies in the event
of a default. The Lessor will xxxx the Lessee for any expenses paid by the
Lessor pursuant to this section, and the Lessee will reimburse the Lessor within
thirty days for the payments, together with interest on such payments from the
date of each payment at the rate of Ten percent (10%) per year. If the Lessee
fails to reimburse the Lessor for the payments and interest within thirty days,
then the Lessor may declare the Lessee to be in default.
Section 11. Condition, examination and acceptance of Premises. (a) The
--------------------------------------------------
Lessee acknowledges that the Lessee has inspected the Premises, is satisfied
with the condition of the Premises, and accepts the Premises in their present
condition.
(b) The Lessee acknowledges that the Lessee's decision to enter into
this lease was based upon the Lessee's own inspection and use of the premises
and the Lessee's own judgment of their suitability and desirability for the
Lessee's purposes, and that the Lessee has not been governed or influenced by
any representation of the Lessor as to the condition, suitability, character or
earning capacity of the Premises.
(c) The Lessee acknowledges and confirms that the Lessee has examined
and inspected the Premises, is fully familiar with it, is entering into this
agreement based on such inspection and examination, and accepts the Premises AS
IS, in its present condition; that no representations of any kind have been made
by the Lessor or any representative of the Lessor with respect to the condition,
character, or earning capacity of the Premises or the suitability of the
Premises for any purpose for which the Lessee may desire to use them; and that
the Lessor has not made, and expressly disclaims, any warranties, express or
implied, as to the condition, character, or earning capacity of the Premises or
the suitability of the Premises for any purpose for which the Lessee may desire
to use them.
Section 12. Warranties of Lessor. The Lessor warrants that the Lessor
--------------------
owns the Premises and has the right to lease them, and that the Lessee shall
enjoy peaceable use of the Premises, free from interruption or hindrance by the
Lessor or any other person, for so long as the Lessee performs its obligations
under this agreement.
Section 13. Restrictions on use of the Premises: The Lessee shall use
-----------------------------------
the Premises for office, warehouse and light manufacturing assembly or for
related activities. The Lessee shall not use or permit the use of the Premises
for any illegal, immoral, offensive, objectionable, improper, or disreputable
purpose, any purpose which may result in damage to the Premises, any purpose
which may cause a public or private nuisance or disturb other persons in the
area, any purpose which is dangerous or prohibited by any insurance policy, any
purpose which may increase the cost of insurance policies on the Premises or
result in the cancellation of any insurance policy, or any purpose which
violates any federal, state or local statute or regulation.
Section 14. Repairs and maintenance. The Lessee shall be responsible
------------------------
for maintaining and repairing the Premises at the Lessee's expense. If the
Premises are damaged by fire or other casualty, insurance proceeds payable as a
result may be used, at Lessor's election to repair and replace the damaged
property. If not so used, such insurance proceeds shall be delivered to Lessor
and Lessee, as their interests may appear, and this lease shall be terminated.
From the date of such damage, and until the Premises are fully restored, the
rental shall xxxxx if there is total destruction, or if there is partial damage
and the Lessee is able to use part or all of the Premises for their intended
purpose, the rental amount shall be prorated based upon the square footage of
space of the building useable by Lessee, provided that office and warehouse
costs are allocated based upon market conditions in Ravalli County, Montana, for
the types of space.
Section 15. Alterations, additions and improvements. (a) The Lessee may
---------------------------------------
make nonstructural alterations, additions or improvements to the Premises at its
own expense at any time during the term of this Lease without obtaining the
prior consent of the Lessor, but shall not demolish or remove any substantial
portion of the Premises without obtaining the prior written consent of the
Lessor.
(b) All alterations, additions and improvements shall be made at the
expense of the Lessee, shall be performed in a workmanlike manner, and shall not
weaken the structural strength or reduce the value of the Premises or change the
purposes for which the Premises may be used. No liens of any type shall be
allowed to attach to the Premises unless prior written consent is received from
Lessor.
Section 16. Ownership of alterations, additions and improvements. All
-----------------------------------------------------
alterations, additions and improvements made by the Lessee with the exception of
removable partitions, shelving, counters, machinery and other trade fixtures and
signs shall at the option of the Lessor become part of the Premises and the
property of the Lessor unless the Lessor agrees otherwise in writing.
Section 17. Signs. Any signs installed by the Lessee must comply with
-----
all applicable sign ordinances.
Section 18. Inspection and entry of Premises. The Lessor shall have the
--------------------------------
right to enter the Premises at reasonable times after giving the Lessee
reasonable prior notice to inspect them.
Section 19. Notification of damage, loss and claims. The Lessee shall
----------------------------------------
notify the Lessor immediately in writing of any damage or loss suffered by the
Premises, of any accidents involving the Premises, and of any claims, suits, or
other legal proceedings relating in any manner to the Premises, and shall
promptly advise the Lessor in writing of further developments relating to any
such events and provide the Lessor with copies of all documents relating to such
events.
Section 20. Condemnation. (a) If all or any part of the Premises are
------------
taken or condemned by any public or quasi-public authority under the power of
eminent domain, the entire damages awarded as a result of the condemnation of
the Premises shall belong to the Lessor, and the Lessee shall not be entitled to
any part of the damages, with the exception of any damages expressly awarded to
the Lessee for damage to equipment and fixtures that belong to the Lessee,
removal and reinstallation of such equipment and fixtures, loss of business, or
moving expenses.
(b) If the entire Premises are taken or condemned, or a taking or
condemnation makes the Premises unsuitable for their intended use, this lease
shall terminate as of the date that the Lessee is required to surrender
possession of the Premises or becomes unable to use the Premises for their
intended use, whichever comes first, and the Lessee shall not be obligated to
pay any rent for periods after that date.
(c) If a portion of the Premises are taken or condemned, but the
remainder of the Premises is suitable for the Lessee's purposes, this lease
shall remain in effect with respect to the remainder of the Premises, and the
rent payable under this lease shall be reduced in proportion to the reduction in
square footage in the building on the Premises to the Lessee. The Lessor shall
be obligated to remedy any physical damage to the Premises caused by the taking
or condemnation within a reasonable period of time. The Lessee shall have the
right to declare the Premises unsuitable for their intended use and to terminate
this lease if the Lessor fails or refuses to remedy any physical damage to the
Premises caused by the taking or condemnation within a reasonable period of
time.
Section 21. Indemnification by Lessee. Except as provided in Section 9
-------------------------
and except with respect to loss or injury caused by Lessor, the Lessee shall
indemnify the Lessor against and hold the Lessor harmless from any and all
claims, actions, damages losses, injuries, demands, liabilities, costs and
expenses, including attorneys' fees arising from the occupancy, use, condition
caused by Lessee or operation of the Premises by the Lessee during the term of
this lease, or from any injury or damage to any person or property on the
Premises during the term of this lease.
Section 22. Assignment and subletting by the Lessee. The Lessee does
----------------------------------------
not have the right to sublease, assign, mortgage, pledge or otherwise transfer
or encumber its rights under this lease, either voluntarily or by action of law,
or to permit the Premises to be used or occupied by others, without the prior
written consent of the Lessor. Any attempt by the Lessee to take any such action
without the prior written consent of the Lessor shall be void and ineffective,
and the Lessee shall continue to be liable under this lease and bound by its
terms and conditions. The Lessor agrees that they will not unreasonably withhold
their consent to an assignment of this lease or a sublease of the Premises if
the Lessee provides evidence that the intended assignee or sublessee is
financially responsible and intends to use the Premises in a manner which is
acceptable to the Lessor.
Section 23. Assignment by the Lessor. (a) The Lessor has the right to
------------------------
sell, assign, pledge, mortgage, or otherwise transfer or encumber the Premises,
this lease or any of its rights under this lease without obtaining the consent
of the Lessee, provided that the transfer or encumbrance is subject to the
rights of the Lessee under this lease. Notwithstanding any such assignment, the
Lessor warrants that the Lessee shall quietly enjoy the use of the Premises
subject to the terms and conditions of this lease. No such assignment shall
release or excuse the Lessor from performing any of its obligations under this
lease.
(b) If the Lessor transfers or assigns the Premises, this lease or any
of its rights under this lease, the right of the transferee or assignee to
receive the amounts due from the Lessee under this lease shall be free from all
defenses, setoffs and counterclaims that the Lessee may be entitled to assert
against the Lessor. The Lessee may separately assert any such defenses, setoffs
and counterclaims against the Lessor.
Section 24. Events of default. The Lessor, at its option, may declare
-----------------
the Lessee to be in default under this lease upon the occurrence of any of the
following events:
(i) The Lessee fails to make any lease payment payable under this
agreement within fifteen (15) days after such payment is due;
(ii) The Lessee fails to perform any of its other obligations under
this agreement within thirty (30) days after it receives a request for such
performance from the Lessor; provided, that if the nature of the obligation is
such that the Lessee cannot perform the obligation within thirty (30)days after
it receives a request for performance from the Lessor, the Lessee will not be in
default if it commences efforts to perform the obligation within thirty (30)
days after it receives a request for performance and diligently pursues those
efforts to completion;
(iii) The Lessee files a petition in bankruptcy, makes an assignment
for the benefit of creditors, consents to the appointment of a receiver or
trustee for substantially all of its property, or takes any action under any
other law relating to the relief of debtors;
(iv) An involuntary petition in bankruptcy is filed against the Lessee,
or a receiver or trustee is appointed to take possession of substantially all of
the property of the Lessee, and such petition or appointment is not withdrawn
within ninety (90) days;
(v) The Premises, the Lessee's rights under this lease, or a material
portion of the Lessee's property is subjected to any levy, seizure, execution or
sale by any creditor or government agency;
(vi) The Lessee's rights under this agreement are voluntarily or
involuntarily assigned, or the Premises are subleased or lent to any other
person, without the prior written consent of the Lessor:
(vii) The Lessee fails to maintain in effect any insurance
policy that it has agreed to provide;
(viii) The Lessee vacates or abandons the Premises; or
(ix) The Lessor determines that the Premises are being abused or
neglected, or are in danger of being damaged or destroyed due to labor disputes
or any other hazard.
Section 25. Charge for notice of default. If an event of default occurs
----------------------------
and the Lessor sends a notice of default to the Lessee, the Lessee must pay the
Lessor $150 per notice to reimburse the Lessor for the costs of sending the
notice of default, including but not limited to attorneys fees. The amount of
this fee will be set forth in the notice of default, and the default will not be
considered cured until this fee is paid.
Section 26. Lessor's rights upon default. If the Lessor notifies the
-----------------------------
Lessee in writing that it is in default under this agreement, and the Lessee
fails to cure the default within the required number of days after it receives
such written notice, the Lessor may, without making further notice or demand
upon the Lessee, take any or all of the following actions:
(i) Notify the Lessee that this lease has been terminated.
(ii) Require the Lessee to deliver possession of the Premises
and if the Lessee fails or refuses to deliver possession of the
Premises, to enter and take possession of the Premises, to remove the
property and personnel of the Lessee from the Premises at the expense
of the Lessee and to store the property in any reasonable manner and
place selected by the Lessor at the expense of the Lessee
(iii) Terminate this lease and thereafter hold, renovate, or
dispose of the Premises or any part of the Premises on any terms
selected by the Lessor, free and clear of any rights of the Lessee and
without any duty to account to the Lessee for any proceeds of such use.
(iv) Relet the Premises in any commercially reasonable manner,
and apply the proceeds of such reletting, after deducting all costs and
expenses incurred in connection with retaking possession of,
remodeling, and reletting the Premises, in payment of the Lessee's
obligations under this agreement, with the Lessee remaining responsible
for any deficiency.
(v) If the Lessee's default consists of failure to obtain,
maintain or pay for any of the insurance policies which this agreement
requires it to maintain, or failure to pay any tax, assessment, or
other charge which this agreement requires it to pay, or failure to
keep the Premises free from liens, levies and encumbrances, or failure
to indemnify the Lessor against any claim, action, damage, loss,
injury, demand, liability, cost or expense, the Lessor shall have the
right, but not be obligated, to take that action itself, and to xxxx
the Lessee for the costs of taking that action. If the Lessee fails to
pay such costs with the next payment due under this lease, the Lessee
agrees to pay late charges on those costs at the rate provided for in
this agreement.
(vi) Pursue any and all other rights or remedies available to
the Lessor at law or in equity.
Section 27. Mitigation. If the Lessor terminates this lease or
----------
terminates the Lessee's right to possess the Premises, the Lessor will mitigate
its damages by making reasonable efforts to relet the Premises on reasonable
terms. The Lessor may relet the Premises for a shorter or longer period of time
than the Lessee's remaining term under this lease, and in addition may make any
necessary repairs or alterations required in connection with the reletting.
Section 28. Effect of exercise of remedies. The exercise of any right
------------------------------
or remedy available to the Lessor under this agreement, at law, or in equity
shall not prevent the Lessor from exercising any other such remedy.
Section 29. Surrender of Premises upon termination of lease. Upon the
------------------------------------------------
expiration or termination of this lease, the Lessee shall remove all of its
personal property from the Premises and surrender possession of the Premises and
all keys to the Premises To the Lessor, free and clear of all encumbrances, in
the condition they were in at the beginning of the lease with the exception of
ordinary and reasonable wear and tear. The Lessee shall repair all damage to the
Premises caused by the removal of equipment, trade fixtures, machinery, signs
and other personal property.
Section 30. Lessee's liability for damage and abuse. If the Premises
---------------------------------------
are returned to the Lessor with damage, abuse, excessive wear and tear, missing
property, modifications not authorized by the Lessor, or otherwise not in the
condition they were in when they were delivered to the Lessee, the Lessee shall
be responsible for paying the costs of repairing the damage and returning the
Premises to the condition they were in when the Lessee took possession,
reasonable and ordinary wear and tear excepted.
Section 31. Failure of Lessee to remove property. Any improvements,
-------------------------------------
fixtures, machinery and equipment remaining in the Premises more than thirty
(30) days after the expiration or termination of this lease shall, at the option
of the Lessor, be deemed abandoned and shall become the property of the Lessor,
without entitling the Lessee to any payment or offset. If the Lessor does not
elect to assume ownership of any improvements, fixtures, machinery and equipment
left in the premises, it shall have the right to remove such property from the
Premises and store it at the risk and expense of the Lessee.
Section 32. Failure to surrender Premises. If the Lessee fails to
-------------------------------
surrender the Premises to the Lessor upon the expiration or termination of this
lease, the Lessee's occupancy of the Premises shall be treated as a tenancy from
month-to-month, terminable at will by the Lessor, at a rental of 1.20 times the
last monthly rental rate payable in advance on the 1st day of each month. The
Lessee shall not acquire any additional rights or interest in the Premises by
failing to surrender them, and the Lessor shall have the right to take legal
action to obtain the removal of the Lessee from the Premises.
Section 33. Waiver of offsets. The Lessee waives any and all existing
-----------------
and future claims and offsets against the amounts payable to the Lessor under
this agreement, and agrees to pay the amounts due under this agreement
regardless of any offset or claim it may have against the Lessor.
Section 34. Successors bound by agreement. This agreement is binding
------------------------------
upon and shall inure to the benefit of the parties and their heirs, executors,
representatives, successors and assigns.
Section 35. Entire agreement. This instrument constitutes the entire
-----------------
agreement between the parties. No party shall be bound by any statements,
promises, understandings, conditions, warranties, or representations, oral or
written, not contained in this agreement. Each party acknowledges that the
execution of this agreement was not induced or motivated by any promise or
representation made by any other party, other than the promises and
representations expressly set forth in this agreement. All previous statements,
negotiations, preliminary instruments and agreements made by the parties or
their representatives are superseded by and merged into this agreement, except
as expressly provided in this agreement.
Section 36. Modification of agreement. No modification of this
---------------------------
agreement shall be valid or binding unless the modification is in writing,
signed by both parties to this agreement.
Section 37. Waiver. No waiver of any provision of this agreement shall
------
be valid or binding unless the waiver is in writing, signed by the party waiving
the provision. The failure of any party to this agreement to exercise any right
or remedy provided for in this agreement or to insist upon the strict
performance of any provision of this agreement shall not be a waiver of that
party's right to exercise that right or remedy or insist upon the strict
performance of that provision in the future.
Section 38. Severability of invalid provisions. If any provision of
------------------------------------
this agreement is declared or becomes invalid, unenforceable or contrary to law,
the parties agree that the provision shall be severed from the remaining
provisions of this agreement and shall not affect the validity or enforceability
of the other provisions of this agreement.
Section 39. Notice. Any notice that this agreement requires or permits
------
to be delivered to any person shall be in writing and shall be delivered to such
person either personally or by depositing the same in the United States mails,
certified mail, return receipt requested, postage prepaid, addressed to such
person at the address set forth at the beginning of this agreement, or such
other address as such person may indicate by written notice as herein provided.
Section 40. Attorneys' fees. If either of the parties to this agreement
---------------
institute legal proceedings to enforce the terms of this agreement, the parties
agree that the unsuccessful party to the proceedings shall pay the reasonable
attorney's fees and legal costs of both parties, as they may be approved by the
court having jurisdiction over the proceedings. If either of the parties to this
agreement is required to appear in a bankruptcy or receivership proceeding in
which the other party is a debtor, the debtor will pay the reasonable attorney's
fees, court costs, witness fees, and other costs which the other party incurs as
a result of the proceeding.
Section 41. Corporate action. The Lessee represents and warrants that
-----------------
all corporate actions necessary to authorize the execution and performance of
this agreement have been taken.
Section 42. Time of essence. Time shall be of the essence in complying
---------------
with the terms and conditions of this agreement.
Section 43. Computation of time. Whenever the last day for the exercise
-------------------
of any privilege or the discharge of any duty under this agreement shall fall
upon a Saturday, a Sunday, or any public or legal holiday, whether state or
federal, the party having the privilege or duty shall have until 5:00 p.m. on
the next regular business day to exercise the privilege or discharge the duty.
Section 44. Headings. The headings, titles and subtitles in this
--------
agreement are inserted for convenience of reference only, do not in any way
limit or amplify the terms and provisions of the agreement, and are to be
ignored in any construction of the provisions of the agreement.
Section 45. Applicable law. This agreement shall be governed by and
---------------
construed in accordance with the laws of the state of Montana.
IN WITNESS WHEREOF, the parties have executed this agreement on the
date set forth above.
LESSOR: LESSEE:
PHOTOCOMM, INC.
/s/ Xxxxxx X. Xxxxxxxxx /s/ Xxxxxx X. XxXxx
----------------------- ----------------------
Xxxxxx X. Xxxxxxxxx Xxxxxx X. XxXxx
By: Its C.F.O.
/s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
EMPLOYMENT AGREEMENT EXHIBIT C
(Xxxxxx X. Xxxxxxxxx)
This agreement is made and entered into this 3rd day of October, 1995,
but effective as of 10/3/95 (the "Effective Date"), by and between PHOTOCOMM,
INC., an Arizona corporation (the "Company") and XXXXXX X. XXXXXXXXX
("Employee").
WHEREAS, Employee was previously employed as President, and
together with his spouse, Xxxxxxx Xxxxxxxxx, were the sole
stockholders of Sunelco, Inc. ("Sunelco"); and
WHEREAS, The Company has acquired the entire business and assets of
Sunelco, which business shall be conducted as an integral operating unit of the
Company; and
WHEREAS, Employee was a key executive in Sunelco, with expertise in the
design, development, marketing, distribution and sale of Sunelco's products and
services, knowledge of the operation of the business, including particularly
distribution, sales, and customer relation matters; and
WHEREAS, The Company desires to assure continuance of Employee's
service in connection with such business; and
WHEREAS, the parties agree that a covenant not to compete is essential
to the growth and stability of the business of Sunelco during the first years
after its acquisition by the Company and to the continuing viability of such
business whenever the employment to which this Agreement relates is terminated,
in accordance therewith the Company has entered into, or will contemporaneously
herewith enter into that certain Non- Competition and Non-Disclosure Agreement
as part of the consideration herein (the "Non-Competition and Non-Disclosure
Agreement").
NOW THEREFORE, in consideration of the mutual agreements herein set forth, the
parties agree as follows:
1. Duties.
Upon the effective date, the Company shall employ Employee, and the
Employee agrees to be employed by the Company as Interim Manager of the Sunelco
division of the Company, and as such to assist the Company in the transition and
organization of the Sunelco business and asset into the Sunelco division, to
prepare the next catalog of Sunelco products for distribution and perform such
additional different or other duties related to the business as may from time to
time be delegated by the Company. The Employee shall devote substantially all of
his time to such duties, except for vacation periods as designated by the
Company's policies, and shall otherwise observe and abide by the reasonable
corporate polices and decisions of the Company in all business matters, and
shall be responsible and accountable to the senior manager designated by the
Chief Executive Office of the Company from time to time.
2. Term.
The Employee's employment shall continue for a period beginning on the
effective date of this Agreement and ending on April 15, 1996. The parties may,
but have no obligation, to negotiate a renewal or extension of this employment
contract on mutually agreeable terms. Notwithstanding the foregoing, between
January 1, 1996, and April 15, 1996, Employee's only duties shall consist of
completing the 1996 Sunelco sales catalog for the division and completion of
personnel training for sales persons hired prior to February 29, 1996, and
Employee shall devote such time to such activities as may be necessary even
though such time may be less than full time.
3. Compensation.
The Company shall pay and the Employee shall accept as full
consideration for the services to be rendered hereunder compensation consisting
of the following:
a. A salary of $2,500 per month through December 31, 1995, and a salary
of $2,000 per month for January 1, 1996, through March 31, 1996, with a $6,000
payment on April 15, 1996.
b. The Employee shall also receive such other benefits as may be made
available from time to time to other management employees of the Company with
similar position, age and years of service as Employee.
c. Such other items of compensation as may be agreed upon
by Employees and the Company from time to time.
4. Company's Covenants.
In connection with the Company's employment of Employee as provided
hereunder, the Company agrees that so long as this Agreement is in effect and
Employee has not breached any of the terms hereof, the Company will not (a)
change or add to Employee's duties as an employee of the Company which would
necessitate as a practical matter the relocation of Employee's principal place
of residence as of the date of this Agreement (which is Hamilton, Montana); or
(b) materially reduce Employee's duties as an employee of the Company from those
described herein, or materially reduce Employee's authority in Employee's
position as described herein.
5. Miscellaneous.
a. Governing Law. The validity, construction,
interpretation and enforceability of this Agreement and the
capacity of the parties shall be determined and governed by the
laws of the State of Arizona.
b. Assignment. This Agreement is personal to each of the
parties hereto, and neither party may assign or delegate any of
the rights or obligations hereunder without first obtaining a
written consent of the other party.
c. Rights and Remedies. Both parties recognize that the services to be
rendered under this Agreement by Employee are special, unique and extraordinary
character. In the event of the occurrence of any of the following, either party
may, at its option, terminate this Agreement or elect to institute and prosecute
proceedings in any court of competent jurisdiction, either in law or equity, to
obtain damages or to enforce specific performance of the Agreement to enjoin the
other party as appropriate and to recover reasonable attorneys' fees and costs
of prosecuting such action:
I if there is a substantial breach by either party of
any of the terms and conditions of this Agreement and
such breach remains uncured after the expiration of
ten (10) days from the date of receipt of written
notice by the other party; or
ii. if there is a breach by Employee of any of the
covenants of the Non-Competition and Non- Disclosure
Agreement or if there is any act of dishonesty,
malfeasance or gross negligence by Employee.
Termination for any cause shall not constitute a waiver of the Company's rights
under the Non-Competition and Non-Disclosure Agreement nor a release of Employee
from his other obligations hereunder. The rights and remedies provided each of
the parties herein shall be cumulative and in addition to any other rights and
remedies provided by law or otherwise, any failure in the exercise by either
party of its rights to terminate this Agreement or to enforce any provision of
this Agreement for default or violation by the other party shall not prejudice
such party's right of termination or enforcement for any further or other
default or violation.
d. Collateral Agreements. This Agreement and the Non- Competition and
Non-Disclosure Agreement constitute the entire Agreement between the parties
respecting the employment of Employee, and there are no representations,
warranties or commitments, except as set forth herein. This Agreement may be
amended only by an instrument in writing executed by the parties hereto.
e. Notices. Any notice, request, demand or other communication
hereunder shall be in writing and shall be deemed to be duly given when
personally delivered to an officer of the Company (other than to Employee, if
Employee is or becomes an officer of the Company) or to Employee, as the case
may be, or when delivered by mail at the following addresses:
Xxxxxx X. Xxxxxxxxx
000 0xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
PhotoComm, Inc.
0000 X. Xxxx Xxxx
Xxxxxxxxxx. Xxxxxxx 00000
With a copy to:
Xxxxxx X. Xxxx, Esq.
Oman, Xxxxxxxxxxx & Politan, P.L.C.
0000 X. Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the first date above written.
/s/ Xxxxxx X. Xxxxxxxxx
---------------------------
XXXXXX X. XXXXXXXXX
(EMPLOYEE)
PHOTOCOMM, INC., an Arizona
Corporation
By: /s/ Xxxxxx X. XxXxx
---------------------------
Its /s/ Photocomm C.F.O.
(COMPANY)
EMPLOYMENT AGREEMENT EXHIBIT D
(Xxxxxxx X. Xxxxxxxxx)
This Agreement is made and entered into this 3rd day of October, 1995,
but effective as of 10-1-95 (the "Effective Date"), by and between PHOTOCOMM,
INC., an Arizona corporation (the "Company") and XXXXXXX X. XXXXXXXXX
("Employee").
WHEREAS, Employee was previously employed as Vice President, Secretary
and office administrator, and together with her spouse, Xxxxxx Xxxxxxxxx, were
the sole stockholders of Sunelco, Inc. ("Sunelco"); and
WHEREAS, The Company has acquired the entire business and assets of
Sunelco, which business shall be conducted as an integral operating unit of the
Company; and
WHEREAS, Employee was a key executive in Sunelco, with expertise in the
design, development, marketing, distribution and sale of Sunelco's products and
services, knowledge of the operation of the business, including particularly
distribution, sales, and customer relation matters; and
WHEREAS, The Company desires to assure continuance of Employee's
service in connection with such business; and
WHEREAS, the parties agree that a covenant not to compete is essential
to the growth and stability of the business of Sunelco during the first years
after its acquisition by the Company and to the continuing viability of such
business whenever the employment to which this Agreement relates is terminated,
in accordance therewith the Company has entered into, or will contemporaneously
herewith enter into that certain Non- Competition and Non-Disclosure Agreement
as part of the consideration herein (the "Non-Competition and Non-Disclosure
Agreement").
NOW THEREFORE, in consideration of the mutual agreements herein set forth, the
parties agree as follows:
1. Duties.
Upon the effective date, the Company shall employ Employee, and the
Employee agrees to be employed by the Company as General Manager of the Sunelco
division of the Company, and as such day to day operations of the division and
perform such additional different or other duties related to the business as may
from time to time be delegated by the Company. The Employee shall devote
substantially all of her time to such duties, except for vacation periods as
designated by the Company's policies, and shall otherwise observe and abide by
the reasonable corporate policies and decisions of the Company in all business
matters, and shall be responsible and accountable to the senior manager
designated by the Chief Executive Office of the Company from time to time.
2. Term.
The Employee's employment shall begin on the effective date of this
Agreement and continue until December 31, 1996.
3. Compensation.
The Company shall pay and the Employee shall accept as full
consideration for the services to be rendered hereunder compensation consisting
of the following:
a. A salary of $585.00 per month through December 31,
1995, and $4,000.00 per month thereafter.
b. The Employee shall also receive such other benefits as may be made
available from time to time to other management employees of the Company with
similar position, age and years of service as Employee.
c. Such other items of compensation as may be agreed upon
by Employee and the Company from time to time.
4. Company's Covenants
In connection with the Company's employment of Employee as provided
hereunder, the Company agrees that so long as this Agreement is in effect and
Employee has not breached any of the terms hereof, the Company will not (a)
change or add to Employee's duties as an employee of the Company which would
necessitate as a practical matter the relocation of Employee's principal place
of residence as of the date of this Agreement (which is Hamilton, Montana); or
(b) materially reduce Employee's duties as an employee of the Company from those
described herein, or materially reduce Employee's authority in Employee's
position as described herein. Notwithstanding the provisions hereof, a
reasonable amount of travel, as may vary and be necessitated from time to time
because of Employee's duties hereunder will not be deemed to be a change or
addition to Employee's duties prohibited hereunder.
6. Miscellaneous.
a. Governing Law. The validity, construction, interpretation and
enforceability of this Agreement and the capacity of the parties shall be
determined and governed by the laws of the State of Arizona.
b. Assignment. This Agreement is personal to each of the parties
hereto, and neither party may assign or delegate any of the rights or
obligations hereunder without first obtaining a written consent of the other
party.
c. Rights and Remedies. Both parties recognize that the services to be
rendered under this Agreement by Employee are special, unique, and of
extraordinary character. In the event of the occurrence of any of the following,
either party may, at its option, terminate this Agreement or elect to institute
and prosecute proceedings in any court of competent jurisdiction, either in law
or equity, to obtain damages or to enforce specific performance of the Agreement
to enjoin the other party as appropriate and to recover reasonable attorneys'
fees and costs of prosecuting such action:
i. if there is a substantial breach by
either party of any of the terms and
conditions of this Agreement and such breach
remains uncured after the expiration of ten
(10) days from the date of receipt of
written notice by the other party; or
ii. if there is a breach by Employee of any
of the covenants of the Non-Competition and
Non-Disclosure Agreement or if there is any
act of dishonesty, malfeasance or gross
negligence by Employee.
Termination for any cause shall not constitute a waiver of the Company's rights
under the Non-Competition and Non-Disclosure Agreement nor a release of Employee
from her other obligations hereunder. The rights and remedies provided each of
the parties herein shall be cumulative and in addition to any other rights and
remedies provided by law or otherwise. Any failure in the exercise by either
party of its rights to terminate this Agreement or to enforce any provision of
this Agreement for default or violation by the other party shall not prejudice
such party's right of termination or enforcement for any further or other
default or violation.
d. Collateral Agreements. This Agreement and the Non- Competition and
Non-Disclosure Agreement constitute the entire Agreement between the parties
respecting the employment of Employee, and there are no representations,
warranties or commitments, except as set forth herein. This Agreement may be
amended only by an instrument in writing executed by the parties hereto.
e. Notices. Any notice, request, demand or other communication
hereunder shall be in writing and shall be deemed to be duly given when
personally delivered to an officer of the Company (other than to Employee, if
Employee is or becomes an officer of the Company) or to Employee, as the case
may be, or when delivered by mail at the following addresses:
Xxxxxxx Xxxxxxxxx
000 0xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
PhotoComm, Inc.
0000 X. Xxxx Xxxx
Xxxxxxxxxx, XX 00000
With a copy to:
Xxxxxx X. Xxxx, Esq.
Oman, Xxxxxxxxxxx & Politan, P.L.C
0000 X. Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the first date above written.
/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------
XXXXXXX X. XXXXXXXXX
(EMPLOYEE)
PHOTOCOMM, INC., an Arizona
Corporation
By:/s/ Xxxxxx X. XxXxx
------------------------
Xxxxxx X. XxXxx
Chief Financial Officer
(COMPANY)
NON-COMPETITION AND NON-DISCLOSURE EXHIBIT E
AGREEMENT
(Xxxxxx X. Xxxxxxxxx)
This Non-Competition and Non-Disclosure Agreement (the "Agreement") is
made and entered into this 3rd day of October, 1995, by and between XXXXXX X.
XXXXXXXXX ("Covenantor") and PHOTOCOMM, INC., an Arizona corporation (the
"Company") and is made with reference to the following:
RECITALS
A. The Company is engaged in the business of manufacturing,
distributing, marketing and selling solar electric products. The Company
currently conducts business world wide.
B. Covenantor is or will be a shareholder of the Company and has been
or will be employed by the Company pursuant to an Employment Agreement entered
into contemporaneous herewith (the "Employment Agreement").
C. Pursuant to that certain Agreement and Plan of Reorganization
entered into contemporaneous herewith by and among Sunelco, Inc. (owned by
Xxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxx), as Seller and the Company as
Purchaser (the "Purchase Agreement"), the Company is acquiring all of the
business and assets of Sunelco.
D. Covenantor acknowledges that the Company and its employees and
shareholders have over many years devoted substantial time, effort and resources
to developing the Company's trade secrets and its other confidential and
proprietary information, as well as the Company's relationships with customers,
suppliers, employees and others doing business with the Company; that such
relationships, trade secrets and other information are vital to the successful
conduct of the Company's business in the future; that the Company is entering
into the Purchase Agreement relying on the fact that Covenantor, as shareholder
and officer of Sunelco, has established personal and professional relationships
with customers, suppliers, employees and others having business relationships
with the business of Sunelco which is being purchased by the Company, and
Covenantor has had unlimited access to Sunelco's trade secrets and other
confidential and proprietary information, and because of Covenantor's employment
pursuant to the Employment Agreement, Covenantor will have substantial access to
the Company's other trade secrets and confidential information; and that because
of such relationships and because of Covenantor's access to the Company's
confidential information and trade secrets, Covenantor would be in a unique
position to divert business from the Company and to commit irreparable damage to
the Company were Covenantor to be allowed to compete with the Company or to
commit any of the other acts prohibited below; that the enforcement of said
restrictive covenants against Covenantor would not impose any undue burden upon
Covenantor; that none of said restrictive covenants is unreasonable as to period
or geographic area; and that the ability to enforce said restrictive covenants
against Covenantor is a material inducement to the decision of the Company to
consummate the transactions contemplated in the Purchase Agreement.
NOW, THEREFORE in consideration of the foregoing recitals, the mutual
agreements hereinafter set forth and the mutual benefits to be derived
therefrom, Covenantor covenants and agrees as follows:
1. Definitions.
-----------
(a) The term "Company," as used herein, means not only
Photocomm, Inc., but also any company, partnership or entity which, directly or
indirectly, controls, is controlled by or is under common control with
Photocomm, Inc.
(b) The term "Confidential Information", as used herein, means
all information or materials not generally known by non-Company personnel which
(i) gives the Company some competitive business advantage or the opportunity of
obtaining such advantage or the disclosure of which could be detrimental to the
interest of the Company; (ii) which is owned by the Company or in which the
Company has an interest and (iii) which is either (A) marked "Confidential
Information", "Proprietary Information" or other similar marking, (B) known by
Covenantor to be considered confidential and proprietary by the Company, or (C)
from all the relevant circumstances would reasonably by assumed by Covenantor to
be confidential and proprietary to the Company. Confidential Information
includes, but is not limited to, the following types of information and other
information of a similar nature (whether or not reduced to writing): trade
secrets, inventions, drawings, file data, documentation, diagrams,
specifications, know how, processes, formulas, models, flow charts, software in
various stages of development, source codes, object codes, research and
development procedures, research or development and test results, marketing
techniques and materials, marketing, development and distribution plans, price
lists, pricing policies, business plans, information relating to customers
and/or suppliers' identities, characteristics and agreements, financial
information and projections, and employee files. Confidential Information also
includes any information described above which the Company obtains from another
party and which the Company treats as proprietary or designates as Confidential
Information, whether or not owned or developed by the Company. Notwithstanding
the above, however, no information constitutes confidential information if it is
generic information or general knowledge which Covenantor would have learned in
the course of similar employment eleswhere in the trade or if it is otherwise
publicly known and in the public domain.
(c) The term "Closing" shall have the meaning ascribed to it
in the Purchase Agreement.
2. Covenant Not to Compete. Covenantor shall not at any time prior to
-----------------------
the later to occur of (a) the end of the five (5) year period immediately
following the Closing or (b) the end of the one (1) year period following
termination of Covenantor's employment with the Company (the "Restricted
Period"), have any ownership interest (of record or beneficial) in or have any
interest (other than in the Company) as an employee, salesman, consultant,
officer or director in, or otherwise aid or assist in any manner (i) any firm,
corporation, partnership, proprietorship or other business that engages anywhere
in North America in a business which is similar to that in which the Company is
engaged (or in which Sunelco is engaged, the business of which is being
purchased by the Company) in such territory as of the Closing, so long as the
Company, or any successor in interest of the Company to the business and
goodwill of the Company, remains engaged in such business in such territory or
continues to solicit customers or potential customers provided, however, that
Covenantor may own, directly or indirectly, solely as an investment, securities
of any person which are traded on any national securities exchange if such
shareholder (i) is not a controlling person of, or a member of a group which
controls, such person or (ii) does not, directly or indirectly own one percent
or more of any class of securities of such person.
3. Solicitation of Business. During the Restricted Period, Covenantor
------------------------
shall not solicit or assist any other person to solicit any business (other than
for the Company) from any present or past customer of the Company or Sunelco, or
request or advise any present or future customer, vendor or consultant of the
Company to withdraw, curtail or cancel its business dealings with the Company;
or commit any other act or assist others to commit any other act which might
injure the business of the Company.
4. Employees. During the Restricted Period, Covenantor shall not
---------
directly or indirectly (i) solicit or encourage any employee of the Company to
leave the employ of the Company or (ii) hire any employee who has left the
employ of the Company if such hiring is proposed to occur within one year after
the termination of such employee's employment with the Company.
5. Nondisclosure. From and after the Closing, Covenantor shall not (nor
-------------
will Covenantor assist any other person to do so) directly or indirectly reveal,
report, publish or disclose the Confidential Information to any person, firm or
corporation not expressly authorized by the Company to receive such Confidential
Information, or use (or assist any person to use) such Confidential Information
except for the benefit of the Company.
6. Ownership and Return of Materials. To the extent that Covenantor has
---------------------------------
not already done so, Covenantor shall immediately following termination of
employment with the Company surrender to the Company all notes, data, sketches,
drawings, manuals, documents, records, data bases, programs, blueprints,
memoranda, specifications, customer lists, financial reports, equipment and all
other physical forms of expression incorporating or containing any Confidential
Information, it being distinctly understood that all such writings, physical
forms of expression and other things are the exclusive property of the Company.
7. Consideration. In consideration for entering into this Agreement,
-------------
the Company agrees to pay Covenantor the aggregate amount of One Hundred Twenty
Five Thousand and no/100ths Dollars ($125,000.00), payable in monthly
installments of Two Thousand Eighty Three and 33/100th Dollars ($2,083.33)
commencing thirty (30) days after the Closing, and continuing thereafter on the
same day each month until fully paid.
8. Rights and Remedies Upon Breach. If Covenantor breaches, or
-----------------------------------
threatens to commit a breach of, any of the provisions of this Agreement (the
"Restrictive Covenants"), the Company shall have the following rights and
remedies, each of which shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or in equity;
(a) Specific Performance. The right and remedy to have the
---------------------
Restrictive Covenants specifically enforced or to have any
actual or threatened breach thereof enjoined by any court
having equity jurisdiction, all without the need to post a
bond or any other security or to prove any amount of actual
damage or that money damages would not provide an adequate
remedy, it being acknowledged and agreed that any such breach
or threatened breach will cause irreparable injury to the
Company and that monetary damages will not provide an adequate
remedy to the Company; and
(b) Accounting and Indemnification. The right and remedy to
-------------------------------
require Covenantor (i) to account for and pay over to the
Company all compensation, profits, monies, accruals,
increments or other benefits derived or received by Covenantor
or any associated party deriving such benefit as a result of
any such breach of the Restrictive Covenants; and (ii) to
indemnify the Company against any other losses, damages
(including special and consequential damages), costs and
expenses, including actual attorney's fees and court costs,
which may be incurred by them and which result from or arise
out of any such breach or threatened breach of the Restrictive
Covenants. Notwithstanding anything in this subparagraph (b)
to the contrary, the liabilities and obligations of Covenantor
under this subparagraph shall be limited to the sum of
$400,000 plus attorney's fees, expert fees and court costs.
9. Severability of Covenants/Blue Penciling. The Restrictive Covenants
-----------------------------------------
shall be subject to Section 13(g) hereof and Covenantor hereby waives any and
all right to attack the validity of the Restrictive Covenants on the grounds of
the breadth of their geographic scope or the length of their term.
10. Enforceability in Jurisdictions. The Company and Covenantor intends
-------------------------------
to and do hereby confer jurisdiction to enforce the Restrictive Covenants upon
the courts of any jurisdiction within the geographical scope of such covenants.
If the courts of any one or more of such jurisdictions hold the Restrictive
Covenants wholly unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the Company and Covenantor that such
determination not bar or in any way affect the right of the Company to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such covenants, as to breaches of such covenants in such
other respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.
11. Attorney's Fees. In the event of any action, suit, or other
----------------
proceeding concerning the negotiation, interpretation, validity, performance, or
breach of this Agreement, the prevailing party shall recover all of such party's
actual attorney's fees, expenses, and costs, not limited to costs of suit,
incurred in each and every such action, suit, or other proceeding, including any
and all appeals or petitions relating thereto. As used herein "actual attorneys'
fees" means the full and actual cost of any legal services actually performed in
connection with the matter for which such fees are sought calculated on the
basis of the usual fees charged by the attorneys performing such services, and
shall not be limited to "reasonable attorneys' fees" as that term may be defined
in statutory or decisional authority.
12. Miscellaneous.
-------------
(a) Modification. This Agreement, the Employment Agreement and
------------
the Purchase Agreement and all other documents entered into pursuant to its
terms set forth the entire understanding of the parties with respect to the
subject matter hereof, supersedes all existing agreement between them concerning
such subject matter, and may be modified only by a written instrument duly
executed by each party.
(b) Successors and Assigns. The terms and provisions of this
-----------------------
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto, their personal representatives, administrators, executors, heirs,
successors and assigns.
(c) Waiver. The failure of either party hereto at any time to
------
enforce performance by the other party of any provision of this Agreement shall
in no way affect such party's rights thereafter to enforce the same; nor shall
the waiver by either party of any breach of any provision hereof be deemed to be
a waiver by such party of any other breach of the same or any other provision
hereof.
(d) Notices. All notices, requests and other communications
-------
hereunder shall be in writing and shall be delivered by courier or other means
of personal service (including by means of a nationally recognized courier
service or professional messenger service), or sent telex or telecopy or mailed
first class, postage prepaid, by certified mail, return receipt requested, in
all cases addressed to:
Company: PHOTOCOMM, INC.
0000 X. Xxxx Xxxx
Xxxxxxxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxx
Oman, Xxxxxxxxxxx & Politan,
P.L.C.
0000 X. Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Covenantor: Xxxxxx X. Xxxxxxxxx
000 0xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
All notices, requests and other communications shall be deemed given on
the date of actual receipt or delivery as evidenced by written receipt,
acknowledgment or other evidence of actual receipt of delivery to the address.
In case of service by telecopy, a copy of such notice shall be personally
delivered or sent by registered or certified mail, in the manner set forth
above, within three business days thereafter. Any party hereto may from time to
time by notice in writing served as set forth above designate a different
address or a different or additional personal to which all such notices or
communications thereafter are to be given.
(e) Time of Essence. Time is hereby declared to be of the
----------------
essence of this Agreement and of every part hereof.
(f) Severance and Enforcement. All Sections, clauses and
---------------------------
covenants contained in this Agreement are severable, and in the event any of
them shall be held to be invalid by any court, this Agreement shall be
interpreted as if such invalid Sections, clauses or covenants were not contained
herein. Without limitation, the parties intend that the covenants contained in
this Agreement shall be severable insofar as the geographic and time
restrictions set forth herein are concerned. If, in any judicial proceeding, a
court shall refuse to enforce the geographic and/or time restriction set forth
herein to their fullest extent, then the geographic and/or time restrictions set
forth herein shall be reduced to the extent necessary to permit enforcement of
the foregoing covenant to the fullest extent possible.
(g) Governing Law and Venue. This Agreement is to be governed
-----------------------
by and construed in accordance with the laws of the State of Arizona applicable
to contracts made and to be performed wholly within such State, and without
regard to the conflicts of laws principles thereof. Subject to Section 11
hereof, any suit brought hereon shall be brought in the state or federal courts
sitting in Phoenix, Arizona, the parties hereto hereby waiving any claim or
defense that such forum is not convenient or proper. Subject to Section 11
hereof, each party hereby agrees that any such court shall have in personam
jurisdiction over it and consents to service of process in any manner authorized
by Arizona law.
(h) Gender. Where the context so requires, the use of the
------
masculine gender shall include the feminine and/or neuter genders and the
singular shall include the plural, and vice versa, and the word "person" shall
include any corporation, firm, partnership or other form of association.
(i) Counterparts. This Agreement may be executed in one o
------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
(j) Construction. The language in all parts of this Agreement
------------
shall in all cases be construed simply, accordingly to its fair meaning, and not
strictly for or against any of the parties hereto. Without limitation, there
shall be no presumption against any party on the ground that such party was
responsible for drafting this Agreement or any part thereof.
IN WITNESS WHEREOF, the parties hereto duly executed this Agreement as
of the date and year first above written.
COVENANTOR: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxx
THE COMPANY: Photocomm, Inc., an Arizona
corporation
By:/s/ Xxxxxx X. XxXxx
---------------------------
Xxxxxx X. XxXxx
Chief Financial Officer
NON-COMPETITION AND NON-DISCLOSURE EXHIBIT F
AGREEMENT
(Xxxxxxx X. Xxxxxxxxx)
This Non-Competition and Non-Disclosure Agreement (the "Agreement") is
made and entered into this 3rd day of October, 1995, by and between XXXXXXX X.
XXXXXXXXX ("Covenantor") and PHOTOCOMM, INC., an Arizona corporation (the
"Company") and is made with reference to the following:
RECITALS
A. The Company is engaged in the business of manufacturing,
distributing, marketing and selling solar electric products. The Company
currently conducts business world wide.
B. Covenantor is or will be a shareholder of the Company and has been
or will be employed by the Company pursuant to an Employment Agreement entered
into contemporaneous herewith (the "Employment Agreement").
C. Pursuant to that certain Agreement and Plan of Reorganization
entered into contemporaneous herewith by and among Sunelco, Inc. (owned by
Xxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxx), as Seller and the Company as
Purchaser (the "Purchase Agreement"), the Company is acquiring all of the
business and assets of Sunelco.
D. Covenantor acknowledges that the Company and its employees and
shareholders have over many years devoted substantial time, effort and resources
to developing the Company's trade secrets and its other confidential and
proprietary information, as well as the Company's relationships with customers,
suppliers, employees and others doing business with the Company; that such
relationships, trade secrets and other information are vital to the successful
conduct of the Company's business in the future; that the Company is entering
into the Purchase Agreement relying on the fact that Covenantor, as shareholder
and officer of Sunelco, has established personal and professional relationships
with customers, suppliers, employees and others having business relationships
with the business of Sunelco which is being purchased by the Company, and
Covenantor has had unlimited access to Sunelco's trade secrets and other
confidential and proprietary information, and because of Covenantor's employment
pursuant to the Employment Agreement, Covenantor will have substantial access to
the Company's other trade secrets and confidential information; and that because
of such relationships and because of Covenantor's access to the Company's
confidential information and trade secrets, Covenantor would be in a unique
position to divert business from the Company and to commit irreparable damage to
the Company were Covenantor to be allowed to compete with the Company or to
commit any of the other acts prohibited below; that the enforcement of said
restrictive covenants against Covenantor would not impose any undue burden upon
Covenantor; that none of said restrictive covenants is unreasonable as to period
or geographic area; and that the ability to enforce said restrictive covenants
against Covenantor is a material inducement to the decision of the Company to
consummate the transactions contemplated in the Purchase Agreement.
NOW, THEREFORE in consideration of the foregoing recitals, the mutual
agreements hereinafter set forth and the mutual benefits to be derived
therefrom, Covenantor covenants and agrees as follows:
1. Definitions.
-----------
(a) The term "Company," as used herein, means not only
Photocomm, Inc., but also any company, partnership or entity which, directly or
indirectly, controls, is controlled by or is under common control with
Photocomm, Inc.
(b) The term "Confidential Information", as used herein, means
all information or materials not generally known by non-Company personnel which
(i) gives the Company some competitive business advantage or the opportunity of
obtaining such advantage or the disclosure of which could be detrimental to the
interest of the Company; (ii) which is owned by the Company or in which the
Company has an interest and (iii) which is either (A) marked "Confidential
Information", "Proprietary Information" or other similar marking, (B) known by
Covenantor to be considered confidential and proprietary by the Company, or (C)
from all the relevant circumstances would reasonably by assumed by Covenantor to
be confidential and proprietary to the Company. Confidential Information
includes, but is not limited to, the following types of information and other
information of a similar nature (whether or not reduced to writing): trade
secrets, inventions, drawings, file data, documentation, diagrams,
specifications, know how, processes, formulas, models, flow charts, software in
various stages of development, source codes, object codes, research and
development procedures, research or development and test results, marketing
techniques and materials, marketing, development and distribution plans, price
lists, pricing policies, business plans, information relating to customers
and/or suppliers' identities, characteristics and agreements, financial
information and projections, and employee files. Confidential Information also
includes any information described above which the Company obtains from another
party and which the Company treats as proprietary or designates as Confidential
Information, whether or not owned or developed by the Company. Notwithstanding
the above, however, no information constitutes confidential information if it is
generic information or general knowledge which Covenantor would have learned in
the course of similar employment eleswhere in the trade or if it is otherwise
publicly known and in the public domain.
(c) The term "Closing" shall have the meaning ascribed to it
in the Purchase Agreement.
2. Covenant Not to Compete. Covenantor shall not at any time prior to
-----------------------
the later to occur of (a) the end of the five (5) year period immediately
following the Closing or (b) the end of the one (1) year period following
termination of Covenantor's employment with the Company (the "Restricted
Period"), have any ownership interest (of record or beneficial) in or have any
interest (other than in the Company) as an employee, salesman, consultant,
officer or director in, or otherwise aid or assist in any manner (i) any firm,
corporation, partnership, proprietorship or other business that engages anywhere
in North America in a business which is similar to that in which the Company is
engaged (or in which Sunelco is engaged, the business of which is being
purchased by the Company) in such territory as of the Closing, so long as the
Company, or any successor in interest of the Company to the business and
goodwill of the Company, remains engaged in such business in such territory or
continues to solicit customers or potential customers provided, however, that
Covenantor may own, directly or indirectly, solely as an investment, securities
of any person which are traded on any national securities exchange if such
shareholder (i) is not a controlling person of, or a member of a group which
controls, such person or (ii) does not, directly or indirectly own one percent
or more of any class of securities of such person.
3. Solicitation of Business. During the Restricted Period, Covenantor
------------------------
shall not solicit or assist any other person to solicit any business (other than
for the Company) from any present or past customer of the Company or Sunelco, or
request or advise any present or future customer, vendor or consultant of the
Company to withdraw, curtail or cancel its business dealings with the Company;
or commit any other act or assist others to commit any other act which might
injure the business of the Company.
4. Employees. During the Restricted Period, Covenantor shall not
---------
directly or indirectly (i) solicit or encourage any employee of the Company to
leave the employ of the Company or (ii) hire any employee who has left the
employ of the Company if such hiring is proposed to occur within one year after
the termination of such employee's employment with the Company.
5. Nondisclosure. From and after the Closing, Covenantor shall not (nor
-------------
will Covenantor assist any other person to do so) directly or indirectly reveal,
report, publish or disclose the Confidential Information to any person, firm or
corporation not expressly authorized by the Company to receive such Confidential
Information, or use (or assist any person to use) such Confidential Information
except for the benefit of the Company.
6. Ownership and Return of Materials. To the extent that Covenantor has
---------------------------------
not already done so, Covenantor shall immediately following termination of
employment with the Company surrender to the Company all notes, data, sketches,
drawings, manuals, documents, records, data bases, programs, blueprints,
memoranda, specifications, customer lists, financial reports, equipment and all
other physical forms of expression incorporating or containing any Confidential
Information, it being distinctly understood that all such writings, physical
forms of expression and other things are the exclusive property of the Company.
7. Consideration. In consideration for entering into this Agreement,
-------------
the Company agrees to pay Covenantor the aggregate amount of One Hundred Twenty
Five Thousand and no/100ths Dollars ($125,000.00), payable in monthly
installments of Two Thousand Eighty Three and 33/100th Dollars ($2,083.33)
commencing thirty (30) days after the Closing, and continuing thereafter on the
same day each month until fully paid.
8. Rights and Remedies Upon Breach. If Covenantor breaches, or
-----------------------------------
threatens to commit a breach of, any of the provisions of this Agreement (the
"Restrictive Covenants"), the Company shall have the following rights and
remedies, each of which shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or in equity;
(a) Specific Performance. The right and remedy to have the
---------------------
Restrictive Covenants specifically enforced or to have any
actual or threatened breach thereof enjoined by any court
having equity jurisdiction, all without the need to post a
bond or any other security or to prove any amount of actual
damage or that money damages would not provide an adequate
remedy, it being acknowledged and agreed that any such breach
or threatened breach will cause irreparable injury to the
Company and that monetary damages will not provide an adequate
remedy to the Company; and
(b) Accounting and Indemnification. The right and remedy to
-------------------------------
require Covenantor (i) to account for and pay over to the
Company all compensation, profits, monies, accruals,
increments or other benefits derived or received by Covenantor
or any associated party deriving such benefit as a result of
any such breach of the Restrictive Covenants; and (ii) to
indemnify the Company against any other losses, damages
(including special and consequential damages), costs and
expenses, including actual attorney's fees and court costs,
which may be incurred by them and which result from or arise
out of any such breach or threatened breach of the Restrictive
Covenants. Notwithstanding anything in this subparagraph (b)
to the contrary, the liabilities and obligations of Covenantor
under this subparagraph shall be limited to the sum of
$400,000 plus attorney's fees, expert fees and court costs.
9. Severability of Covenants/Blue Penciling. The Restrictive Covenants
-----------------------------------------
shall be subject to Section 13(g) hereof and Covenantor hereby waives any and
all right to attack the validity of the Restrictive Covenants on the grounds of
the breadth of their geographic scope or the length of their term.
10. Enforceability in Jurisdictions. The Company and Covenantor intends
-------------------------------
to and do hereby confer jurisdiction to enforce the Restrictive Covenants upon
the courts of any jurisdiction within the geographical scope of such covenants.
If the courts of any one or more of such jurisdictions hold the Restrictive
Covenants wholly unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the Company and Covenantor that such
determination not bar or in any way affect the right of the Company to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such covenants, as to breaches of such covenants in such
other respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.
11. Attorney's Fees. In the event of any action, suit, or other
----------------
proceeding concerning the negotiation, interpretation, validity, performance, or
breach of this Agreement, the prevailing party shall recover all of such party's
actual attorney's fees, expenses, and costs, not limited to costs of suit,
incurred in each and every such action, suit, or other proceeding, including any
and all appeals or petitions relating thereto. As used herein "actual attorneys'
fees" means the full and actual cost of any legal services actually performed in
connection with the matter for which such fees are sought calculated on the
basis of the usual fees charged by the attorneys performing such services, and
shall not be limited to "reasonable attorneys' fees" as that term may be defined
in statutory or decisional authority.
12. Miscellaneous.
-------------
(a) Modification. This Agreement, the Employment Agreement and
------------
the Purchase Agreement and all other documents entered into pursuant to its
terms set forth the entire understanding of the parties with respect to the
subject matter hereof, supersedes all existing agreement between them concerning
such subject matter, and may be modified only by a written instrument duly
executed by each party.
(b) Successors and Assigns. The terms and provisions of this
-----------------------
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto, their personal representatives, administrators, executors, heirs,
successors and assigns.
(c) Waiver. The failure of either party hereto at any time to
------
enforce performance by the other party of any provision of this Agreement shall
in no way affect such party's rights thereafter to enforce the same; nor shall
the waiver by either party of any breach of any provision hereof be deemed to be
a waiver by such party of any other breach of the same or any other provision
hereof.
(d) Notices. All notices, requests and other communications
-------
hereunder shall be in writing and shall be delivered by courier or other means
of personal service (including by means of a nationally recognized courier
service or professional messenger service), or sent telex or telecopy or mailed
first class, postage prepaid, by certified mail, return receipt requested, in
all cases addressed to:
Company: PHOTOCOMM, INC.
0000 X. Xxxx Xxxx
Xxxxxxxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxx
Oman, Xxxxxxxxxxx & Politan,
P.L.C.
0000 X. Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Covenantor: Xxxxxxx Xxxxxxxxx
000 0xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
All notices, requests and other communications shall be deemed
given on the date of actual receipt or delivery as evidenced by written receipt,
acknowledgment or other evidence of actual receipt of delivery to the address.
In case of service by telecopy, a copy of such notice shall be personally
delivered or sent by registered or certified mail, in the manner set forth
above, within three business days thereafter. Any party hereto may from time to
time by notice in writing served as set forth above designate a different
address or a different or additional personal to which all such notices or
communications thereafter are to be given.
(e) Time of Essence. Time is hereby declared to be of the
----------------
essence of this Agreement and of every part hereof.
(f) Severance and Enforcement. All Sections, clauses and
---------------------------
covenants contained in this Agreement are severable, and in the event any of
them shall be held to be invalid by any court, this Agreement shall be
interpreted as if such invalid Sections, clauses or covenants were not contained
herein. Without limitation, the parties intend that the covenants contained in
this Agreement shall be severable insofar as the geographic and time
restrictions set forth herein are concerned. If, in any judicial proceeding, a
court shall refuse to enforce the geographic and/or time restriction set forth
herein to their fullest extent, then the geographic and/or time restrictions set
forth herein shall be reduced to the extent necessary to permit enforcement of
the foregoing covenant to the fullest extent possible.
(g) Governing Law and Venue. This Agreement is to be governed
-----------------------
by and construed in accordance with the laws of the State of Arizona applicable
to contracts made and to be performed wholly within such State, and without
regard to the conflicts of laws principles thereof. Subject to Section 11
hereof, any suit brought hereon shall be brought in the state or federal courts
sitting in Phoenix, Arizona, the parties hereto hereby waiving any claim or
defense that such forum is not convenient or proper. Subject to Section 11
hereof, each party hereby agrees that any such court shall have in personam
jurisdiction over it and consents to service of process in any manner authorized
by Arizona law.
(h) Gender. Where the context so requires, the use of the
------
masculine gender shall include the feminine and/or neuter genders and the
singular shall include the plural, and vice versa, and the word "person" shall
include any corporation, firm, partnership or other form of association.
(i) Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
(j) Construction. The language in all parts of this Agreement
------------
shall in all cases be construed simply, accordingly to its fair meaning, and not
strictly for or against any of the parties hereto. Without limitation, there
shall be no presumption against any party on the ground that such party was
responsible for drafting this Agreement or any part thereof.
IN WITNESS WHEREOF, the parties hereto duly executed this Agreement as
of the date and year first above written.
COVENANTOR: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxxx
THE COMPANY: Photocomm, Inc., an Arizona
corporation
By:/s/ Xxxxxx X. XxXxx
------------------------
Xxxxxx X. XxXxx
Chief Financial Officer
