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EXHIBIT 2.1
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
This Amended and Restated Stock Purchase Agreement (the "Agreement")
is made as of October 5, 1998, by and between Technology Manufacturing &
Design, Inc., a Texas corporation (the "Company") and GWP, Inc., a Georgia
corporation (the "Purchaser"). This Agreement amends, restates and replaces in
its entirety that certain Stock Purchase Agreement, dated as of September 24,
1998, by and between the Company and Purchaser (the "Prior Stock Purchase
Agreement"), and, therefore, upon execution of this Agreement, the Prior Stock
Purchase Agreement shall have no further force and effect.
SECTION 1
AUTHORIZATION AND SALE OF CAPITAL SHARES
1.1 Authorization. The Company, subject to the terms and
conditions hereof, hereby authorizes the sale and issuance of nineteen million
(19,000,000) shares of its capital stock (the "Capital Shares") which Capital
Shares shall consist of shares of (i) the Company's common stock, no par value
(the "Common Shares") and (ii) the Company's Series C Preferred Shares (the
"Preferred Shares"), which Preferred Shares shall have the rights, privileges,
preferences and restrictions as set forth in the Statement of Designation (the
"Statement of Designation") a copy of which is attached to this Agreement as
Exhibit A, the respective amounts of each as determined by the Company on or
before the Closing (as defined below), but in any case the aggregate amount of
which shall equal nineteen million (19,000,000) shares.
1.2 Sale of Capital Shares. The Company, subject to the terms and
conditions hereof, hereby issues and sells to Purchaser, and Purchaser hereby
buys from the Company, nineteen million (19,000,000) Capital Shares for the
aggregate purchase price of FIVE HUNDRED THIRTY-SIX THOUSAND FOUR HUNDRED
EIGHTY SIX DOLLARS ($536,486).
SECTION 2
CLOSING DATE; DELIVERY
2.1 Closing Date. The closing of the purchase and sale of the
Preferred Shares shall be held at the offices of Xxxxx, Xxxxxxxx & Xxxxxxx,
LLP, Suite 3100, Promenade II, 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx
00000 at 11:00 a.m., local time on October 30, 1998 (the "Closing"), or at such
other time and place upon which the Company and Purchaser shall agree (the date
of the Closing is hereinafter referred to as the "Closing Date").
2.2 Delivery. At the Closing, the Company will deliver to
Purchaser (i) a certificate or certificates, registered in Purchaser's name,
representing the number of shares of Common Shares purchased by Purchaser
hereunder and (ii) a certificate or certificates, registered in Purchaser's
name, representing the number of shares of Preferred Shares purchased by
Purchaser hereunder, against the purchase price therefor (which purchase price
the Company hereby acknowledges has been received by the Company).
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SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Purchaser to enter into this Agreement, the
Company represents and warrants to Purchaser, except as otherwise set forth in
a written disclosure schedule executed by Seller and delivered to Buyer on or
prior to the date hereof (the "Disclosure Schedule"), a copy of which is
attached hereto and which sets forth the only exceptions to the representations
and warranties contained in this Section 3 (each disclosure in the Disclosure
Schedule will be deemed to relate to and to qualify only the particular
representation and warranty to which such disclosure expressly refers and not
to any other representation or warranty in this Agreement).
3.1 Organization and Standing; Articles and By-Laws. The Company
is a corporation duly organized, and validly existing in good standing, under
the laws of the State of Texas. The Company has requisite corporate power and
authority to own and operate its properties and assets, and to carry on its
business as presently conducted and as proposed to be conducted. The Company is
not presently qualified to do business as a foreign corporation in any
jurisdiction, except where the failure to be so qualified could not be
reasonably expected to have a materially adverse effect on the Company. The
Company has furnished Purchaser with true, correct and complete copies of its
Articles of Incorporation and By-Laws, each as amended to the date hereof.
3.2 Corporate Power. The Company has all requisite legal and
corporate power and authority to execute and deliver this Agreement and has or
will have at the Closing all legal and corporate power and authority to sell
and issue the Capital Shares, and to carry out and perform its obligations
under the terms of this Agreement.
3.3 Subsidiaries. The Company has no subsidiaries and does not
otherwise own or control, directly or indirectly, any interest in any
corporation (other than the capital stock of Dazzle Multimedia held as
investment), partnership, joint venture, trust, association or other entity.
3.4 Capitalization. Immediately prior to the Closing, the
authorized capital stock of the Company will consist of the following:
(a) Common Shares. A total of 30,000,000 authorized Common
Shares, of which 8,566,710 shares are issued and outstanding (the holders of
which are set forth in Schedule 3.4(c)). The outstanding shares have been duly
authorized and validly issued, and are fully paid and nonassessable.
(b) Preferred Shares. A total of 5,000,000 authorized
preferred shares, 500,000 of which have been designated "Series A Preferred",
750,000 of which have been designated "Series B Preferred" and 3,750,000 of
which have been designated "Series C Preferred"; 230,000 of which Series A
Preferred are issued and outstanding prior to the Closing, 495,206 of which
Series B Preferred are issued and outstanding prior to the Closing, and none of
which Series C Preferred are issued and outstanding prior to the Closing.
(c) Options, Warrants, Reserved Shares. Set forth on Schedule
3.4(c) is a complete list of all outstanding shareholders, option holders and
other security holders of the Company as of the date set forth on Schedule
3.4(c). Except as specifically set forth in this Agreement, there are no other
outstanding warrants, options, conversion privileges, preemptive
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rights, or other rights or agreements to purchase or otherwise acquire or issue
any equity securities of the Company that will survive the Closing. Except as
set forth on Schedule 3.4(c), the Company is not a party or subject to any
agreement or understanding, and, to the Company's knowledge, there is no
agreement or understanding between any persons or entities, which affects or
relates to the voting or giving of written consents with respect to any
security of the Company.
3.5 Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution, delivery and performance by the Company of this
Agreement, the authorization, sale, issuance and delivery of the Capital
Shares, and the performance of all of the Company's obligations hereunder has
been taken or will be taken prior to the Closing. This Agreement, when executed
and delivered by the Company, shall constitute a valid and binding obligation
of the Company, enforceable in accordance with its terms, subject to (i) laws
of general application relating to bankruptcy, insolvency, and relief of
debtors, and (ii) rules of law governing specific performance, injunctive
relief, and other equitable remedies. The Capital Shares, when issued in
compliance with the provisions of this Agreement, will be validly issued
(including, without limitation, issued in compliance with applicable federal
and states securities laws), fully paid and nonassessable and the Preferred
Shares will have the rights, preferences, privileges and restrictions described
in the Statement of Designation; and the Capital Shares will be free of any
liens or encumbrances, other than any liens or encumbrances created by or
imposed upon the holders thereof through no action of the Company; provided,
however, that the Capital Shares will be subject to restrictions on transfer
under state and/or federal securities laws and otherwise as set forth herein.
The Capital Shares are not subject to any preemptive rights.
3.6 Material Contracts. Attached hereto as Schedule 3.6 is a list
of all agreements, contracts, leases, licenses, instruments, commitments (oral
or written), indebtedness, liabilities and other obligations to which the
Company is a party and by which it is bound that (a) are material to the
operations of its business and properties as now conducted and as presently
proposed to be conducted and require annual payment or obligations in excess of
$250,000; (b) involve, as parties thereto, any of the officers, consultants,
directors, employees or shareholders of the Company; or (c) obligate the
Company to share, license or develop any product or technology or provide any
service with respect to any such product or technology. The Company is not a
party to any agreement that restricts its ability to manufacture, market or
sell any of its products (whether by territorial restriction or otherwise).
3.7 Title to Properties and Assets. The Company has good and
marketable title to its properties and assets, and has good and valid title to
all its leasehold. The Company does not own any real property.
3.8 Compliance with Other Instruments, None Burdensome, etc.
Except as set forth on Schedule 3.8, the Company is not in, nor will the
conduct of its business as proposed to be conducted result in, violation of any
term of its Articles of Incorporation or By-Laws, and to the best of its
knowledge is not in violation of any order, statute, rule or regulation
applicable to the Company where such violation would materially and adversely
affect the Company. The execution, delivery and performance of and compliance
with this Agreement and the consummation of the transactions contemplated
hereby, and the issuance of the Capital Shares will not result in any violation
of, or conflict with, or constitute, with or without the passage of time or the
giving of notice, a default under, the Company's Articles of Incorporation or
By-laws.
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3.9 Patents and Other Intangible Assets.
(a) The Company owns all of the trade names, trademarks,
servicemarks, copyrights, patents and any applications therefor, trade secrets
and other intellectual property used in its business, including, without
limitation, all of the Company's right, title and interest in its software
(collectively, the "Intellectual Property"), and all licenses, agreements and
other arrangements under which the Company has the right to use any of the
intangible or proprietary rights of a third party (the "Licenses") are listed
in Schedule 3.9(a). The Intellectual Property and the Licenses comprise all of
the intellectual property, licenses, agreements and other arrangements which
are used in, or are necessary to conduct, the Company's business as now
conducted or proposed to be conducted without, to the knowledge of the Company,
infringing upon or otherwise acting adversely to the right or claimed right of
any person under or with respect to any of the foregoing. No proceedings are
pending or threatened which challenge the validity of the ownership by the
Company of the Intellectual Property or the use by the Company of the Licenses.
The Company has maintained and protected the Intellectual Property with
appropriate confidentiality agreements and such other measures as are customary
to protect the proprietary trade secret or confidential information contained
therein. The Company has no knowledge of the infringement or infringing use of
any of the Intellectual Property or Licenses by any other person. The Company
has good and marketable title to all the Intellectual Property free of any
rights, liens or claims of others, and its Licenses and other rights to use
will be adequate and enforceable. The Company 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, copyright or other intangible asset, with respect to the
use thereof or in connection with the conduct of its business or otherwise. The
Company has not licensed anyone to use any of the Intellectual Property.
(b) To the best knowledge of the Company, no infringement of
any intangible property right or other proprietary right of any third party has
occurred or will result in any way from the conduct of the business as now
conducted or proposed to be conducted by the Company or from the signing and
execution of this Agreement or the consummation of any or all of the
transactions contemplated hereunder, and no claim has been made by any third
party based upon an allegation of any such infringement.
3.10 Litigation, etc. There are no actions, suits, proceedings or
investigations pending against the Company or its properties or against any
officer, director or employee of the Company in connection with such officer's,
director's or employee's relationship with or actions taken on behalf of the
Company which actions, suits, proceedings or investigations could reasonably be
expected to have a material adverse effect on the Company. The foregoing
includes, without limitation, actions pending involving the prior employment of
any of the Company's employees, their use in connection with the Company's
business of any information or techniques allegedly proprietary to any of their
former employees, or their obligations under any agreements with prior
employers.
3.11 Employees. To the best of the Company's knowledge, no
employee of the Company is in violation of any term of any employment contract,
patent disclosure agreement or any other contract or agreement relating to the
relationship of such employee with the Company or any other party because of
the nature of the business conducted or to be conducted by the Company. The
Company is not aware that any of its employees is obligated under any contract
or other agreement,
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or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the duties to the Company or that would
conflict with the Company's business as proposed to be conducted. The Company
does not believe it is or will be necessary to utilize any inventions, trade
secrets or proprietary information of any of its employees made prior to their
employment, except for inventions, trade secrets or proprietary information
that have been assigned to the Company.
3.12 Governmental Consent, etc. All consents, approvals or
authorizations of (or designations or declarations of filing with) any
governmental authority on the part of the Company required in connection with
the valid execution and delivery of this Agreement, or the offer, sale or
issuance of the Capital Shares or the consummation of any other transaction
contemplated hereby shall have been obtained prior to and be effective as of
the Closing, except qualification (or taking such action as may be necessary to
secure an exemption from qualification, if available) of the offer and sale of
the Capital Shares under applicable state securities laws, which qualifications,
if required, will be accomplished in a timely manner.
3.13 Offering. Subject to the Purchaser's representations in
Section 4 hereof, the offer, sale and issuance of the Capital Shares to be
issued in conformity with the terms of this Agreement constitute transactions
exempt from the registration and prospectus delivery requirements of Section 5
of the Federal Securities Act of 1933, as amended (the "Securities Act").
3.14 Tax Matters. Except as set forth on Schedule 3.14, the
Company: (i) has timely filed all tax returns that are required to have been
filed by it with all appropriate federal, state, county and local governmental
agencies (and all such returns (x) fairly reflect the Company's operations for
tax purposes and (y) were properly completed in accordance with the laws,
regulations and administrative requirements of each taxing authority); and (ii)
has not waived any statute of limitations with respect to taxes or agreed to
any extension of time with respect to a tax assessment or deficiency. The
Company's tax returns have not been reviewed or audited by any federal, state,
local or county taxing authority. Except as set forth on Schedule 3.14, there
is no pending dispute with any taxing authority relating to any of said returns
which, if determined adversely to the Company, would result in the assertion by
any taxing authority of any valid deficiency in any material amount for taxes.
3.15 Environmental and Safety Regulations. The Company knows of no
violation or violations by the Company, its employees or agents of any
environmental or safety statute, law or regulation that in the aggregate would
have a material adverse effect on the business, properties, prospects or
financial condition of the Company and, to the best of its knowledge, no
material expenditures are or will be required in order to comply with any such
existing statute, law or regulation. No action, proceeding, permit revocation,
writ, injunction or claim is pending or, to the best of the Company's
knowledge, threatened concerning the Company's facilities and the Company is
not aware of any fact or circumstance which could involve the Company in any
environmental litigation or impose any material environmental liability upon
the Company. As of the Closing, no Hazardous Material (as defined below) is
present on any Company facility and, to the best of the Company's knowledge, no
reasonable likelihood exists that any Hazardous Material present on other
property will come to be present on a Company facility. There are no
underground storage tanks, asbestos or PCBs present on any Company facility.
For the purposes of this Section, the term "Hazardous Material" shall mean any
material or substance that is prohibited or regulated by any
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environmental law or that has been designated by any governmental authority to
be radioactive, toxic, hazardous or otherwise a danger to health, reproduction
or the environment.
3.16 Employee Benefit Plans. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974, as amended.
3.17 Prior Registration. The Company has not granted or agreed to
grant any person or entity any requests to have any securities of the Company
registered under the Securities Act.
3.18 No Further Obligation. The Company has not been induced by
and has not relied upon any representations, warranties or statements, whether
express or implied, made by Purchaser or any agent, employee, attorney or other
representative of Purchaser or by any person representing or purporting to
represent Purchaser that are not expressly set forth in this Agreement, whether
or not any such representations, warranties or statements were made in writing
or orally. By way of example and not limitation: the Purchaser's commitment to
the Company is limited to the purchase price paid for the Capital Shares; the
Purchaser has not made, and will not make, any commitment to participate in any
later financing round or to otherwise support the Company financially except as
may be agreed by Purchaser in a definitive agreement between the Purchaser and
the Company; the Purchaser does not have, and will not have, an obligation to
help the Company design, manufacture or sell its products or services except as
may be agreed by Purchaser in a definitive agreement between the Purchaser and
the Company covering such activities; and the Purchaser does not have, and will
not have, an obligation to support or endorse any of the Company's products,
services or technology except as may be agreed by Purchaser in a definitive
agreement between the Purchaser and the Company; and nothing herein shall be
construed to prohibit or restrict in any way Purchaser from competing with the
Company including, but not limited to, developing, making, selling, and/or
supporting, itself or with others, competing products, technology or services.
3.19 Disclosure. This Agreement with the Disclosure Schedule and
Exhibits attached hereto, when taken as a whole, does not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Purchaser hereby represents and warrants to the Company with respect
to the purchase of the Capital Shares as follows:
4.1 Investment Experience. It has substantial experience in
evaluating and investing in private placement transactions of securities of
similar types and terms to those of the Capital Shares and in investing in
businesses similar to that of the Company, such that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests.
4.2 Exemption from Registration. It acknowledges that the Capital
Shares must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available.
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4.3 No Public Market. It understands that no public market now
exists for any of the securities issued by the Company and that the Company has
made no assurances that a public market will ever exist for the Company's
securities.
4.4 Access to Data. It has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management. It has also had an opportunity to ask questions of, and receive
answers from, said management of the Company concerning the Company and the
terms and conditions of this transaction. In addition, the Company has advised
it that Purchaser or its agents have the right to inspect, at the principal
offices of the Company during normal business hours, such books, records and
documents with respect to the Company and its business, operations and finances
as Purchaser reasonably deems material to its investment in the Capital Shares;
and Purchaser confirms that all such documents, records and books pertaining to
its investment in the Capital Shares as it has so requested have been made
available to Purchaser.
4.5 Projections and Forecasts. Purchaser acknowledges that
certain of the information included within materials provided to Purchaser by
the Company with respect to the business of the Company and the securities
being sold hereby contains, and documents included within other materials which
Purchaser may have reviewed pursuant to requests described in the last sentence
of the preceding paragraph may also have contained (collectively, the
"Transaction Documents"), projections of future operations or financial
performance by the Company. Purchaser recognizes and acknowledges that although
any such projections or predictions of future performance by the Company or its
business were prepared in good faith by Company's management and, to the best
of Company's knowledge, are not materially misleading, they constitute mere
predictions of future events based on assumptions which may or may not occur
(and as to the occurrence of which the Company can give no assurance), and such
predictions may not be relied upon to indicate actual results which will be
obtained.
4.6 Restrictions on Transfer. Purchaser acknowledges that the
Capital Shares will be issued (i) pursuant to applicable exemptions from
registration under the securities laws of certain states and (ii) that the
Capital Shares have not been (or will not have been) registered under the
Securities Act, in reliance upon certain exemptions from registration contained
therein, including the exemptions from registration provided by Section 4(2) of
the Securities Act, and, in connection therewith, Purchaser hereby covenants
and agrees that it will not offer, sell or otherwise transfer the Capital
Shares unless and until such securities are registered pursuant to the
Securities Act and the laws of all jurisdictions which in the opinion of the
Company may be applicable, or unless such securities are otherwise exempt from
registration thereunder. The Company shall be entitled to rely upon an opinion
of counsel satisfactory to the Company with respect to compliance with the
above laws. Purchaser acknowledges and agrees that the Company will have no
obligation to register the Capital Shares, or to take any other steps to make
available any exemptions from the registration requirements of the Securities
Act for the resale by Purchaser of any of the Capital Shares.
4.7 Restrictive Legends. Purchaser acknowledges and agrees that
each certificate or other document representing the Capital Shares will bear a
legend substantially as follows:
THE SECURITIES EVIDENCED HEREBY WERE ISSUED AND
SOLD WITHOUT REGISTRATION UNDER THE FEDERAL
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SECURITIES ACT OF 1933, (THE "FEDERAL ACT"), OR THE
SECURITIES LAWS OF ANY STATE, IN RELIANCE UPON
CERTAIN EXEMPTIVE PROVISIONS OF SAID ACTS. SAID
SECURITIES CANNOT BE SOLD OR TRANSFERRED EXCEPT IF,
IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY, ANY SUCH SALE OR TRANSFER WOULD BE: (1)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE FEDERAL ACT OR PURSUANT TO AN EXEMPTION
FROM SUCH REGISTRATION; AND (2) IN A TRANSACTION
WHICH IS EXEMPT FROM THE APPLICABLE SECURITIES LAWS
OF ANY STATE OR IN A TRANSACTION WHICH IS OTHERWISE
IN COMPLIANCE WITH SAID SECURITIES LAWS.
4.8 Further Acknowledgments. Purchaser acknowledges and is aware
of the following:
(a) that there has never been represented, guaranteed, or
warranted to Purchaser by any representative of the Company, or any other
person on behalf of the Company or otherwise, expressly or by implication, any
of the following:
(b) the approximate or exact length of time that it will be
required to remain as owner of the Capital Shares; or
(c) the past performance or experience on the part of the
Company or its subsidiaries, or its executive officers, or of any other person,
that will in any way indicate predictable results of the ownership of stock in
the Company or of the overall future of the Company or its subsidiaries.
4.9 Authorization. This Agreement when executed and delivered by
Purchaser will constitute a valid and legally binding obligation of Purchaser,
enforceable in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency, and relief of debtors, and (ii)
rules of law governing specific performance, injunctive relief, and other
equitable remedies.
SECTION 5
PURCHASER'S CONDITIONS TO CLOSING
Purchaser's obligation to purchase the Capital Shares at the Closing
is, at the option of Purchaser, subject to the fulfillment of the following
conditions:
5.1 Representations and Warranties Correct. The representations
and warranties made by the Company in Section 3 hereof shall be true and
correct when made, and shall be true and correct on the Closing Date with the
same force and effect as if they had been made on and as of such date.
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5.2 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the Closing
Date shall have been performed or complied with in all material respects.
5.3 Compliance with State Securities Laws. The Company shall have
obtained all permits and qualifications required by any state for the offer and
sale of the Capital Shares or shall have the availability of exemptions
therefrom.
5.4 Statement of Designation. The Statement of Designation shall
have been duly adopted by the Company by all necessary corporate action of its
Board of Directors (and shareholders if necessary) and the Statement of
Designation shall have been filed with and accepted by the Secretary of State
of the State of Texas.
5.5 RRH Consent. RRH Capital Management ("RRH") shall have
executed in favor of Purchaser that certain Consent and Waiver Agreement, dated
on or about the date hereof, in the form attached hereto as Exhibit B.
5.6 Legal Matters. All material matters of a legal nature which
pertain to this Agreement and the transactions contemplated hereby shall have
been reasonably approved by counsel to Purchaser.
5.7 Officer's Certificate. At the Closing, the Company shall have
delivered to Purchaser a certificate of the Company, executed by the President
of the Company, certifying that the conditions specified in Section 5.1 and 5.2
have been fulfilled.
SECTION 6
COMPANY'S CONDITIONS TO CLOSING
The Company's obligation to sell and issue the Capital Shares at the
Closing Date is, at the option of the Company, subject to the fulfillment as of
the Closing Date of the following conditions:
6.1 Representations and Warranties Correct. The representations
made by Purchaser in Section 4 hereof shall be true and correct when made, and
shall be true and correct on the Closing Date with the same force and effect as
if they were made on and as of such date.
6.2 Compliance with State Securities Laws. The Company shall have
obtained all permits and qualifications required by any state for the offer and
sale of the Capital Shares or shall have the availability of exemptions
therefrom.
6.3 Statement of Designation. The Statement of Designation shall
have been duly adopted by the Company by all necessary corporate actions of its
Board of Directors (and shareholders if necessary) and the Statement of
Designation shall have been filed with and accepted by the Secretary of State
of the State of Texas.
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6.4 RRH Consent. RRH Capital Management ("RRH") shall have
executed in favor of Purchaser that certain Consent and Waiver Agreement, dated
on or about the date hereof, in the form attached hereto as Exhibit B.
6.5 Guaranty of USXX. U. S. Technologies, Inc. ("USXX") shall
have entered into a Guaranty Agreement with the Company, dated on or about the
date hereof, in the form attached hereto as Exhibit C.
6.6 Legal Matters. All material matters of a legal nature which
pertain to this Agreement and the transactions contemplated hereby, shall have
been reasonably approved by counsel to the Company.
6.7 Officer's Certificate. At the Closing, Purchaser shall have
delivered to the Company a certificate of the Purchaser, executed by an
authorized officer of the Purchaser reasonably satisfactory to the Company,
certifying that the conditions specified in Section 6.1 has been fulfilled.
SECTION 7
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
7.1 Financial Information. Subject to Section 7.6, the Company
will mail the following reports to Purchaser for so long as Purchaser is a
holder of any of the Capital Shares:
(a) as soon as practicable after the end of each fiscal year,
and in any event within 90 days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of operations and consolidated statements of cash flows
of the Company and its subsidiaries, if any, for such year, prepared in
accordance with generally accepted accounting principles and setting forth in
each case in comparative form similar information for the previous fiscal year,
all in reasonable detail;
(b) as soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of the Company and
in any event within 45 days thereafter, a consolidated balance sheet of the
Company and its subsidiaries, if any, as of the end of each such quarterly
period, and consolidated statements of operations and consolidated statements
of cash flows of the Company and its subsidiaries, if any, for such period and
for the current fiscal year to date, prepared in accordance with generally
accepted accounting principles (other than for accompanying notes), all in
reasonable detail;
(c) contemporaneously with their delivery to holders of the
Company's Common Shares, a copy of each report or other communication delivered
to holders of its Common Shares; and
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(d) for as long as Purchaser is eligible to receive reports
under this Section 7.1, it shall also have the right, at its expense, to
discuss the affairs, finances and accounts of the Company with the Company's
officers, all at such reasonable times and as may be reasonably requested;
provided, however, that the Company shall not be obligated to provide any
information that the Board of Directors of the Company reasonably considers to
contain confidential information of the Company.
7.2 Shareholder Buy/Sell Agreements. The Company shall obtain,
from a sufficient amount of shareholders listed on Schedule 3.4(c) (other than
GWP) to comprise at least eighty percent (80%) (on a fully diluted basis) of
the total amount of the Company's issued and outstanding Capital Shares, an
executed Buy/Sell Agreement substantially in the form of Exhibit D attached
hereto, on or before November 30, 1998.
7.3 Amendment to Articles of Incorporation. The Company agrees to
properly notice and conduct a shareholder's meeting or obtain a unanimous
written consent of shareholders in lieu of a meeting, on or before November 30,
1998, for the purpose of amending the Company's Articles of Incorporation, such
amendments to provide that (i) the number of shares of common stock that the
Company is authorized to issue is fifty million (50,000,000) and (ii) the total
number of shares of preferred stock that the Company shall have the authority
to issue is twenty million (20,000,000).
7.4 Purchaser's Put Option. The Company agrees that (i) in the
event that the shareholders fail to approve the amendment set forth in Section
7.3 above, then, provided that Purchaser has voted all of its shares of Capital
Shares in favor of such amendment, Purchaser shall have the option to
immediately put its Preferred Shares to the Company for a purchase price to the
Company of Five Million Dollars ($5,000,000), such amount to be paid by the
Company within thirty (30) days of Purchaser's exercise of such option; (ii) in
the event that any security or any warrant, option or right to purchase any
security that is convertible into voting capital stock of the Company is in
fact so converted and, solely as a result of such conversion, Purchaser has
less that fifty-one percent (51%) (on a "fully diluted basis") of the total
outstanding voting shares of the capital stock of the Company or, if less than
eighty percent (80%) of the shares are tendered to Purchaser as set forth in
Section 8.2 of this Agreement, then, in either case, Purchaser shall have the
option to immediately (x) put its Preferred Shares purchased under this
Agreement to the Company and the Company shall pay Purchaser Five Million
Dollars ($5,000,000) within thirty (30) days of Purchaser's exercise of such
option or (y) purchase additional shares of the Company's voting capital stock,
common or preferred, at Purchaser's option, for an aggregate price of One
Hundred Dollars ($100), in an amount sufficient to provide Purchaser with at
least sixty-seven percent (67%) (on a "fully diluted basis") of the total amount
of the then outstanding shares of the voting capital stock of the Company. For
purposes of this Agreement, "fully diluted basis" shall be determined by
calculating the aggregate amount of the capital stock of the Company that would
be outstanding assuming that all rights, options, warrants, convertible or
exchangeable securities (including, but not limited to, all convertible or
exchangeable debt), or rights, options, or warrants to purchase such
convertible or exchangeable securities, had been fully and completely
exercised, converted or exchanged, as the case may be, into shares of the
capital stock of the Company.
7.5 Failure to Close Capital Share Purchase. The Company
acknowledges that, pursuant to a certain letter agreement between the Company
and Purchaser, dated September 5, 1998,
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Purchaser has previously paid to the Company, an amount equal to the aggregate
purchase price for the Capital Shares as set forth in Section 1.2 of this
Agreement and has agreed to pay an additional amount, pursuant to Section 8.1
below, of up to One Hundred Ninety-Three Thousand Five Hundred Four Dollars
($193,514). The Company agrees that if, for any reason, the transactions
contemplated by this Agreement are not consummated, including, without
limitation, the proper transfer of the Capital Shares to Purchaser, then such
payment, together with any additional payments made pursuant to this Agreement,
shall be deemed a loan to the Company by Purchaser and the Company further
agrees to execute a note, in the form attached as Exhibit E hereto, in favor of
Purchaser in the principal amount of Seven Hundred Thirty Thousand Dollars
($730,000).
7.6 Termination of Covenants. The covenants set forth in Section
7.1(a), (b) and (c) shall terminate and be of no further force or effect at
such time as the Company is required to file reports pursuant to Sections 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The covenants in Sections 7.2 and 7.3 shall survive Closing and expire upon
Purchaser's exercise of any of its options under Section 7.4, and the covenants
in Sections 7.4 shall survive Closing and expire on April 1, 2002.
7.7 Negative Covenants. The Company agrees that, so long as
Purchaser is the holder of any Capital Shares, the Company will not, without
the prior written consent of Purchaser:
(a) authorize or create any new class or series of stock or
any other securities convertible into equity securities of the Company having
voting rights or a preference over or on parity with the Capital Shares;
(b) amend the Company's Articles of Incorporation or Bylaws
in a manner that adversely affects the rights, preferences, privileges or
powers of, or the restrictions provided for the benefit of, the Capital Shares
or otherwise amend or change the rights, preferences, privileges or powers of,
or the restrictions provided for the benefit of, the Capital Shares;
(c) undertake any merger, consolidation, or other corporate
reorganization;
(d) sell, convey or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than 50%
of the voting power of the Company is disposed of;
(e) issue convertible debt;
(f) increase or decrease (other than to comply with Sections
7.3 and 7.4) the total number of authorized shares of Capital Shares;
(g) purchase, redeem or otherwise acquire any capital stock
of the Company provided, however, that this restriction shall not apply to the
repurchase of shares of capital stock from directors, officers, consultants or
employees of the Company under which the Company has the option to repurchase
such shares upon the occurrence of certain events, including termination of
employment or services; or
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(h) license, agree to license or grant any option to license
any Intellectual Property of the Company except in the ordinary course of
business.
SECTION 8
COVENANTS OF PURCHASER
The Purchaser hereby covenants and agrees as follows:
8.1 Additional Paid-in Capital. Purchaser shall provide to the
Company, as additional paid in capital for the Common Shares purchased
hereunder, up to the amount of One Hundred Ninety-Three Thousand Five Hundred
Fourteen Dollars ($193,514), such additional paid in capital to be used, in the
sole discretion of the Company, to satisfy the current liabilities of the
Company.
8.2 Purchase of Shareholder's Shares. During the period beginning
twenty four (24) months from the date hereof and ending thirty-six (36) months
from the date hereof, Purchaser desires to and hereby agrees to purchase, on a
date within such period of time to be determined by Purchaser (the "Purchase
Date"), all the outstanding shares of the Company's capital stock and all of
the outstanding warrants and options issued by the Company, which are owned on
the Purchase Date by the shareholders listed on Schedule 3.4(c) (or their
proper transferees), in the amounts set forth thereon opposite their name, for
an aggregate purchase price equal to forty-nine percent (49%) of an amount
which is equal to the difference of eight (8) times EBITDA of the Company for
the latest full twelve (12) months preceding the date of purchase hereunder,
minus Two Million Dollars ($2,000,000) (the "Purchase Price"). EBITDA for such
period will be calculated in a manner consistent with the manner of calculation
of EBITDA employed by the Company in its income statement for the year ending
December 31, 1997. The payment of the Purchase Price, at the discretion of the
Purchaser, shall be either in cash or in the registered common shares of USXX
(the value of such USXX shares to be determined on the basis of the average
closing price for the previous fifteen (15) trading days preceding the date of
purchase), or both. Purchaser shall only be obligated to purchase capital
shares under this Section 8.2 if eighty percent (80%) of the shares of the
capital stock listed on Schedule 3.4(c), assuming conversions of all in the
money options and warrants, are tendered to Purchaser. Purchaser and the
Company agree that the shareholders listed on Schedule 3.4(c) (or their proper
transferees) shall be deemed third party beneficiaries of the covenant set
forth in this Section 8.2.
SECTION 9
MISCELLANEOUS
9.1 Governing Law. This Agreement shall be governed in all
respects by the internal laws of the State of Georgia, without regard to
provisions regarding conflicts of law.
9.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby for a period of six (6) months.
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9.3 Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors and assigns of the parties hereto.
9.4 Entire Agreement. This Agreement and the other documents
delivered pursuant hereto at the Closing constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or termination is
sought.
9.5 Notices, etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, sent by facsimile, or otherwise delivered by
hand or by a nationally-recognized overnight courier, addressed (a) if to
Purchaser, at One Buckhead Plaza, 0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000, Attention: President, GWP, Inc., or at such other
address as Purchaser shall have furnished to the Company in writing; (b) if to
the Company, at 0000X Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx 00000, Attention:
President, Technology Manufacturing & Design, Inc., or at such other address as
the Company shall have furnished in writing to Purchaser with a required copy
to Xxxx X. Xxxxxxxxx, 00 Xxxxxxxxx Xxxxx Xxxx, Xxxxx Xxxxx, Xxx Xxxx 00000.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given (x) in the case of
personal delivery or delivery by telecopier, on the date of such delivery, (y)
in the case of a nationally-recognized overnight courier, on the next business
day after the date when sent, and (z) in the case of mailing, on the third
business day following that on which the piece of mail containing such
communication has been deposited in a regularly maintained receptacle for the
deposit of the United States mail, addressed and mailed as aforesaid.
9.6 Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any holder
of any Capital Shares, upon any breach or default of the Company under this
Agreement, shall impair any such right, power or remedy of such holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
holder of any breach or default under this Agreement, or any waiver on the part
of any holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.
9.7 Expenses. The Company and Purchaser shall each bear its own
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby.
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9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
9.9 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
9.10 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
9.11 Amendment and Waiver. Any term of this Agreement may be
amended and the observance of any term of the Agreement may be waived (either
generally or in a particular instance) only with the written consent of the
Company and Purchaser.
9.12 Confidentiality. Each party hereto agrees that, except with
the prior written permission of the other parties, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement or any of the other agreements
referenced herein, discussions or negotiations relating to this Agreement or any
of the other agreements referenced herein, the performance of its obligations
hereunder or under any of the other agreements referenced herein or the
ownership of Capital Shares purchased hereunder. Notwithstanding the foregoing,
any such information, knowledge or data shall not be deemed confidential and a
party shall have no obligation with respect to any such information which (a) is
already known to that party as evidenced by documentation in such party's files,
or (b) is or becomes publicly known, through publication, inspection of a
product, or otherwise, and through no negligence or other wrongful act of that
party, or (c) is received by that party from a third party without similar
restriction and without breach of this Agreement, or (d) is independently
developed by that party. The parties hereto further agree that there shall be no
press release or other public statement issued by any party relating to this
Agreement or the transactions contemplated hereby, unless the parties otherwise
agree in writing or unless otherwise required by law. In the event of any
disclosure required by law, the party required to make such disclosure shall
notify the other party hereto and shall use reasonable efforts to obtain
confidential treatment of any materials so disclosed. The provisions of this
Section 9.12 shall be in addition to, and not in substitution for, the
provisions of any separate nondisclosure agreement executed by the parties
hereto with respect to the transactions contemplated hereby.
9.13 Public Announcements. No party hereto shall use any other
party's name or refer to any other party directly or indirectly in connection
with any other party's relationship with the first party in any advertisement,
news release or professional or trade publication, or in any other manner,
unless otherwise required by law or with such other party's prior written
consent, which consent will generally not be granted and may be withheld for
any reason or no reason.
[ Signatures Appear on the Following Page ]
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IN WITNESS WHEREOF, this Agreement is hereby executed as of the date
first above written.
"COMPANY"
TECHNOLOGY MANUFACTURING &
DESIGN, INC.
[CORPORATE SEAL] By: /s/ Xxxxx Xxxxxx
----------------------------------
Name: Xxxxx Xxxxxx
----------------------------------
Its: President
----------------------------------
"PURCHASER"
GWP, INC.
[CORPORATE SEAL] By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
----------------------------------
Its: President
----------------------------------
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SCHEDULES
3.4(c) Security Holders
EXHIBITS
A Statement of Designation
B Consent and Waiver
C Guaranty Agreement
D Buy/Sell Agreement
E Promissory Note
