ASSET PURCHASE AND SALE AGREEMENT
By and Among
Alpha Xxxx, Inc.,
a Utah corporation,
and
Omega-Med Corporation,
a Delaware corporation.
THIS ASSET PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered into in
duplicate this 30th day of September, 1999, by and among Omega-Med Corporation,
a Delaware corporation ("Purchaser") and Alpha Xxxx, Inc., a Utah corporation
("Seller") and provides for the Purchaser to acquire substantially all of the
business assets of the Seller subject to the provisions of this Agreement,
subject to the liabilities assumed pursuant to the provisions of this Agreement
by the Purchaser and no other liabilities.
RECITALS
A. The Purchaser desires to acquire, on the terms and subject to the
conditions specified in this Agreement, the business of the Seller insofar as
the same is conducted by the use of the Acquired Assets (as that term is defined
later in this Agreement).
B. The Seller believes that it is in the best interests of the Seller, and,
therefore, it desires to, sell the Acquired Assets to the Purchaser, on the
terms and subject to the conditions specified in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT
AND WARRANT AS FOLLOWS:
ARTICLE I
DEFINITIONS
As used in this Agreement, the capitalized terms specified in this
Agreement shall have the
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meanings and definitions specified and indicated by the provisions of this
Article I, unless a different and common meaning of such a term is clearly
indicated by the context, and variants and derivatives of the those terms shall
have correlative meanings. To the extent that certain of the definitions
specified in this Article I suggest, indicate, or express agreements between or
among parties to this Agreement, or contain representations or warranties or
covenants of a party, the parties agree to the same, by execution of this
Agreement. Agreements, representations, warranties and covenants specified in
any part or provision of this Agreement shall for all purposes of this Agreement
be treated in the same manner as other such agreements, representations,
warranties and covenants specified elsewhere in this Agreement, and the article,
section or paragraph of this Agreement within which such an agreement,
representation, warranty, or covenant appears shall have no separate meaning or
effect on the same.
1.1"Acquired Assets". The assets of the Seller being acquired by the
Purchaser pursuant to the provisions of this Agreement, as specified on Schedule
2.1 of this Agreement, and all other assets of the Seller, tangible or
intangible, including contractual, warranty, and other rights, the use or value
of which will come under the Control (as that term is defined in Section 1.13 of
this Agreement) by the Purchaser when the Transaction contemplated by this
Agreement is consummated.
1.2 "Acquired Business". The business conducted by the Seller in which the
Seller utilized the Acquired Assets, as described on Schedule 2.1 to this
Agreement.
1.3 "Acquired Facilities". All office space, warehouses, stores, plants,
production facilities, manufacturing facilities, fixtures, furniture, office
equipment, computer equipment, common areas, storage facilities, rights of way,
driveways, and improvements owned or leased by the Seller or otherwise used by
the Seller in connection with the operation of its business or leased or
subleased by the Seller to others, but only to the extent that the same consist
of Acquired Assets.
1.4 "Affiliate". When used with respect to a person, an "affiliate" of that
person is a person controlling, controlled by, or under common control with that
person.
1.5 "Agreement". This Asset Purchase and Sale Agreement, including all of
its schedules and exhibits and all other documents specifically referred to in
this Agreement that have been or are to be delivered by a party to this
Agreement to another such party in connection with the Transaction or this
Agreement, and including all duly adopted amendments, modifications, and
supplements to or of this Agreement and such schedules, exhibits and other
documents.
1.6 "Assumed Liabilities". The Liabilities of the Seller being assumed by
the Purchaser pursuant to the provisions of this Agreement as specifically
identified in Schedule 2.1 to this Agreement, and no other Liabilities to the
Seller.
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1.7 "Business Day". Any day that is not a Saturday, Sunday or day on which
banks in Los Angeles, California are authorized to close.
1.8 "Closing". The completion of the Transaction, to occur as contemplated
in Article II of this Agreement.
1.9 "Closing Date". The date on which the Closing actually occurs, which
shall be no later than September 30, 1999, unless otherwise agreed by the
parties, but shall not in any event be prior to satisfaction or waiver of the
conditions to Closing specified in Article VII of this Agreement.
1.10 "Closing Time". The time at which the Closing actually occurs. All
events that are to occur at the Closing Time shall, for all purposes, be deemed
to occur simultaneously, except to the extent, if at all, that a specific order
of occurrence is otherwise described.
1.11 "Code". The Internal Revenue Code of 1986, as amended and in effect on
the date the parties sign this Agreement.
1.12 "Consideration". Ten million five hundred thousand (10,500,000) shares
of $.001 par value common stock of the Purchaser to be issued by the Purchaser
to the Seller at the Closing for the Acquired Assets ("Subject Shares").
1.13 "Control". Generally, the power to direct the management or affairs of
an Entity.
1.14 "Entity". A corporation, partnership, sole proprietorship, joint
venture, or other form of organization formed for the conduct of a business,
whether active or passive.
1.15 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended and in effect at the time of execution of this Agreement.
1.16 "GAAP". Generally Accepted Accounting Principles, as in effect on the
date of any statement, report or determination that purports to be, or is
required to be, prepared or made in accordance with GAAP. All references in this
Agreement to financial statements prepared in accordance with GAAP shall mean in
accordance with GAAP consistently applied throughout the periods to which
reference is made.
1.17 "Inventories". The stock of raw materials, work-in-process and
finished goods, including, but not limited to, finished goods purchased for
resale, held by the Seller for manufacturing, assembly, processing, finishing,
sale, or resale to others from time to time in the ordinary course of the
business of the Seller, in the form in which such inventories then are held or
after manufacturing, assembling, finishing, processing, incorporating with other
goods or items, refining, or similar processes.
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1.18 "IRS". The Internal Revenue Service.
1.19 "Liabilities". At any time ("Determination Time"), the obligations of
a person or Entity, whether known or unknown, contingent or absolute, recorded
on its books or not, resulting in any way from facts, events, agreements,
obligations or occurrences that existed, occurred or transpired at a prior point
in time, or resulted from the passage of time to the Determination Time, but not
including obligations accruing or payable after the Determination Time to the
extent (but only to the extent) that such obligations (a) result from previously
existing agreements for services, benefits, or other considerations, and (b)
accrue or become payable with respect to services, benefits, or other
considerations received by the person or Entity after the Determination Time.
1.20 "Multiemployer Plan". A "multiemployer plan," as defined in Section
3(37) of ERISA or Section 414(f) of the Code, or, in either case, successor
provisions to such provisions adopted by amendments to ERISA or the Code, as the
case may be, and including, in each case, other provisions of ERISA, of the
Code, or of other law, and regulations adopted pursuant to ERISA, or the Code,
or such other law, modifying, amending, interpreting, or otherwise affecting the
application of such provisions, either in general or as applied to the nature or
circumstances of a particular Entity that is a party to, or is affected by, or
is involved in, the Transaction and with respect to which Entity the use of the
term in this Agreement, or in the particular provision in this Agreement, is
relevant.
1.21 "Payables". Liabilities of a party resulting from the borrowing of
money or the incurring of obligations for merchandise or goods purchased.
1.22 "Pension Plan". A "pension plan" or "employee pension benefit plan,"
as defined in Section 3(2) of ERISA or successor provisions to such provision
adopted by amendments to ERISA and including other provisions of ERISA or of
other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, interpreting, or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular Entity that is a party to, or is affected by, or is involved in,
the Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular provision in this Agreement, is relevant.
1.23 "Proprietary Rights". Trade secrets, copyrights, patents, trademarks,
service marks, customer lists, and all similar types of intangible property
developed, created or owned by the Seller, or used by the Seller in connection
with its business, whether or not the same are entitled to legal protection.
1.24 "Purchaser". Omega-Med Corporation, a Delaware corporation, which,
pursuant to the provisions of this Agreement, is purchasing the Acquired Assets.
1.25 "Receivables". Accounts receivable, notes receivable, and other
obligations
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presented as assets on the books, records and financial statements of the
Entity, in accordance with GAAP, indicating moneys owed, due and payable to the
Entity or person on whose financial statements such receivables are presented.
1.26 "SEC". The Securities and Exchange Commission.
1.27 "Seller". Alpha Xxxx, Inc., a Utah corporation, which, pursuant to the
provisions of this Agreement, is selling the Acquired Assets.
1.28 "Subsidiary". With respect to any Entity, another Entity of which
fifty percent (50%) or more of the effective voting power, or the effective
power to elect a majority of the board of directors or similar governing body,
or fifty percent (50%) or more of the true equity interest, is owned by such
first Entity, directly or indirectly.
1.29 "Transaction". The sale of the Acquired Assets, subject to the Assumed
Liabilities, for the consideration as contemplated by, and on the terms and
subject to the conditions of, this Agreement.
1.30 "Welfare Plan". A "welfare plan" or an "employee welfare benefit
plan," as defined in Section 3(1) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of ERISA
or of other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, interpreting, or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular Entity that is a party to, or is affected by, or is involved in,
the Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular provision in this Agreement, is relevant.
ARTICLE II
THE TRANSACTION
2.1 The Transaction. On the Closing Date, and at the Closing Time, on, and
in all instances subject to, each of the terms, conditions, provisions and
limitations specified in this Agreement, the Seller shall sell, transfer,
convey, assign, deliver and set over to the Purchaser, by instruments
satisfactory in form and substance to the Purchaser, and the Purchaser shall
acquire from the Seller, the Acquired Assets, subject to the Assumed
Liabilities, and only those Liabilities and no others, in exchange for the
Consideration. The Seller represents that the assets specified on Schedule 2.1
to this Agreement, the provisions of which, by this reference, are made a part
of this Agreement as though specified completely and specifically at length in
this Section 2.1 are all the assets reasonably necessary for the conduct of the
Acquired Business in the ordinary course in the same manner as that in which
such business has been conducted in the immediate past, including, without
limitation, all Proprietary Rights of the Seller so used in the ordinary conduct
of the Acquired Business and all contract, warranty, and other intangible rights
relating to or arising out
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of such Acquired Business. Neither the Purchaser nor any of its Affiliates is
assuming, becoming liable for, agreeing to discharge or in any manner becoming
in any way responsible for, any of the Liabilities of the Seller other than
those expressly specified on Schedule 2.1 and accepted by the Purchaser in this
Section 2.1.
2.2 Delivery of Consideration. The certificates evidencing and
representing the Consideration shall be issued and delivered by the Purchaser to
the Seller on the Closing Date.
2.3 Closing. The Closing of the Transaction shall occur at the offices of
Xxxxx & Xxxxxxxxx LLP, 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx,
at 10:00 A.M. on ____________, or at such other place as the Purchaser and the
Seller may agree, on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
3.1 Organization and Qualification. The Purchaser is a corporation duly
organized, validly existing and in good standing pursuant to the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to conduct its business as that business is now being conducted. The
Purchaser is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned
or leased by it, or the nature of its activities, is such that qualification as
a foreign corporation in that jurisdiction is required by law.
3.2 Authority Relative to This Agreement. The Purchaser has the requisite
corporate power and authority to carry out its obligations specified by the
provisions of this Agreement. The execution and delivery of this Agreement and
the consummation of the Transaction have been duly authorized and approved by
the requisite corporate authority of the Purchaser and no other corporate
proceedings on the part of the Purchaser are necessary to approve and adopt this
Agreement or to approve the consummation of the Transaction, including the
issuance and delivery of the Consideration. The Purchaser has, and any officer,
director or representative executing this Agreement for and on behalf of the
Purchaser has, the legal capacity and authority to enter into and deliver this
Agreement. This Agreement is a valid and legally binding obligation of the
Purchaser and is enforceable completely against the Purchaser in accordance with
its terms, except as such enforceability may be limited by general principles of
equity, bankruptcy, insolvency, moratorium and similar laws relating to
creditors' rights generally, and subject to approval of any and all governmental
regulatory agencies and authorities having jurisdiction of the relationship
between the parties contemplated by the provisions of this Agreement and the
Transaction.
3.3 Absence of Breach; No Consents. The execution, delivery and performance
of this
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Agreement, and the performance by the Purchaser of its obligations specified by
the provisions of this Agreement (except for compliance with any regulatory or
licensing laws applicable to the business of the Purchaser, all of which, to the
extent applicable to the Purchaser (and to the extent within its Control), will
be satisfied in all material respects prior to the Closing) do not (a) conflict
with, and will not result in a breach of, any of the provisions of the
Certificate of Incorporation or Bylaws of the Purchaser; (b) contravene any law,
rule or regulation of any state or commonwealth, the United States itself,
(except for compliance with regulatory or licensing laws, all of which, to the
extent applicable to the Purchaser (and to the extent within the control of the
Purchaser), will be satisfied in all material respects prior to the Closing), or
any applicable foreign jurisdiction, or contravene any order, writ, judgment,
injunction, decree, determination, or award affecting or obligating the
Purchaser, in such a manner as to provide a basis for enjoining or otherwise
preventing consummation of the Transaction; (c) conflict with or result in a
material breach of or default pursuant to any material indenture or loan or
credit agreement or any other material agreement or instrument to which the
Purchaser is a party, in such a manner as to provide a basis for enjoining or
otherwise preventing consummation of the Transaction; or (d) require the
authorization, consent, approval or license of any third party of such a nature
that the failure to obtain the same would provide a basis for enjoining or
otherwise preventing consummation of the Transaction.
3.4 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this Agreement
or the Transaction or any related transaction based upon any agreements, written
or oral, made by or on behalf of Purchaser or any of its Subsidiaries.
3.5 No Undisclosed Liabilities. The Purchaser has no Liabilities which have
not been disclosed to the Seller in writing.
3.6 Taxes. The Purchaser has properly filed or caused to be filed all
federal, state, local, and foreign income and other tax returns, reports, and
declarations that are required by applicable law to be filed by it and has paid,
or made full and adequate provision for the payment of, all federal, state,
local, and foreign income and other taxes properly due for the periods covered
by such returns, reports, and declarations.
3.7 Litigation. No investigation or review by any governmental entity with
respect to the Purchaser is pending or threatened (other than inspections and
reviews customarily made of businesses such similar to that the Purchaser), nor
has any governmental entity indicated to the Purchaser an intention to conduct
the same. There is no action, suit or proceeding pending or threatened against
or affecting the Purchaser at law or in equity, or before any federal, state,
municipal, or other governmental department, commission, board, bureau, agency,
or instrumentality.
3.8 Employees, Etc. There are no collective bargaining, bonus, profit
sharing,
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compensation, or other plans, agreements, trusts, funds, or arrangements
maintained by the Purchaser for the benefit of directors, officers or employees
of, and there are no employment, consulting, severance, or indemnification
arrangements, agreements, or understandings between the Purchaser, on the one
hand, and any current or former directors, officers or other employees (or
Affiliates thereof) of on the other hand. The Purchaser is not, and following
the Closing will not be, obligated by any express or implied contract or
agreement to employ, directly or as consultant or otherwise, any person for any
specific period of time or until any specific age.
3.9 Compliance With Laws. The Purchaser is in compliance with all, and has
received no notice of any violation of any, laws or regulations applicable to
its operations, including, without limitation, the laws and regulations relevant
to the use or utilization of premises, or with respect to which compliance is a
condition of engaging in any aspect of the business of the Purchaser and the
Purchaser has all permits, licenses, zoning rights, and other governmental
authorizations necessary to conduct its business as presently conducted.
3.10 Ownership of Assets. The Purchaser has good, marketable and insurable
title, or valid, effective and continuing leasehold rights in the case of leased
property, to all real property (as to which, in the case of owned property, such
title is fee simple) and all personal property owned or leased by it in such a
manner as to create the appearance or reasonable expectation that the same is
owned or leased by it; such ownership is free and clear of all liens, claims,
encumbrances and charges, except liens for taxes not yet due and minor
imperfections of title and encumbrances, if any, which, singly and in the
aggregate, are not substantial in amount and do not materially detract from the
value of the property subject thereto or materially impair the use thereof; no
other person has any ownership or similar right in, or contractual or other
right to acquire any such right in, any of such assets. The Purchaser does not
know of any potential action by any party, governmental or other, and no
proceedings with respect thereto have been instituted of which the Purchaser has
notice, that would materially affect the Purchaser's ability to use and to
utilize each of its assets. The Purchaser has received no notices from any
mortgagee regarding any of its leased properties.
3.11 Proprietary Rights. The Purchaser possesses full and complete
ownership of, or adequate and enforceable long-term licenses or other rights to
use (without payment), all of its Proprietary Rights; the Purchaser has not
received any notice of conflict which asserts the rights of others with respect
thereto; and the Purchaser has in all material respects performed all of the
obligations required to be performed by it, and is not in default in any
material respect, pursuant to any agreement relating to any such Proprietary
Right.
3.12 Subsidiaries. The Purchaser has no Subsidiaries.
3.13 Trade Names. The Purchaser has not utilized any fictitious business
names or similar name in the conduct of its business or in the utilization of
its assets.
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3.14 Employee Benefit Plans. The Purchaser does not maintain or contribute
to any Pension Plan or any Welfare Plan, nor is the Purchaser presently, nor has
it been within the last six (6) years, a participating employer in any
Multiemployer Plan, affecting, in any case, employees of the Purchaser.
3.15 Facilities. The Purchaser's facilities are (as to physical plant and
structure) structurally sound and none of the Purchaser's facilities, nor any of
the vehicles or other equipment used by the Purchaser in connection with its
business, has any material defects and all of them are in all material respects
in good operating condition and repair and are adequate for the uses to which
they are being put; none of Purchaser facilities, vehicles or other equipment is
in need of maintenance or repairs except for ordinary, routine maintenance and
repairs which are not material in nature or cost. The Purchaser is not in
breach, violation or default of any lease affecting the Purchaser's assets with
respect to, or as a result of, which the other party (whether lessor, lessee,
sublessor, or sublessee) thereto has the right to terminate the same, and the
Purchaser has not received notice of any claim or assertion that it is or may be
in any such breach, violation or default.
3.16 Accounts Receivable. All accounts receivable of the Purchaser
represent transactions in the ordinary course of business, and are current and
collectible.
3.17 Inventories. All Inventories of the Purchaser are of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which, in the
aggregate, are immaterial in amount. Items included in such Inventories are
carried on the books of the Purchaser at the lower of cost or market and, in any
event, at not greater than their net realizable value, on an item by item basis,
after appropriate deduction for costs of completion, marketing costs,
transportation expense and allocation of overhead.
3.18 Contracts. The Purchaser is not a party to or affected by any
contracts, agreements or understandings, whether express or implied, written or
verbal; provided, however, that the Purchaser, may be a party to or affected by
any such contracts, agreements, or understandings that fall into one of the
following categories: (1) those that are terminable on notice of less than
thirty-two (32) days and do not involve payments or obligations of more than One
Thousand Dollars ($1,000.00) in any period of thirty-one (31) days or less (on
termination or otherwise); or (2) those that involve aggregate payment or
obligation remaining unpaid as of the date of the Agreement of less than Five
Thousand Dollars ($5,000.00). The Purchaser is not a party to any executory
contract to sell or transfer any part of any leasehold interest in any asset
utilized by the Purchaser. True and accurate copies of all such leases, and of
all amendments, supplements, extensions and modifications thereof, have
heretofore been delivered to the Seller by the Purchaser.
3.19 Accounts Payable. The accounts payable of the Purchaser at the time of
the Closing will be all amounts owed by the Purchaser in respect of trade
accounts due and other Payables of the Purchaser.
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3.20 Labor Matters. There are no activities or controversies, including,
without limitation, any labor organizing activities, election petitions or
proceedings, proceedings preparatory thereto, unfair labor practice complaints,
labor strikes, disputes, slowdowns, or work stoppages, pending or, to the best
of the knowledge of the Purchaser, threatened, affecting employees of the
Purchaser.
3.21 Insurance. The Purchaser has insurance policies in full force and
effect insuring the assets of the Purchaser and such insurance policies provide
for coverages which are usual and customary in the business of the Purchaser as
to amount and scope, and are adequate to protect the assets of the Purchaser
against any reasonably foreseeable risk of loss, including business
interruption. The Purchaser has not within the past three (3) years received any
notice of cancellation of any insurance agreement affecting the assets of the
Purchaser.
3.22 Title to and Utilization of Real Properties. The Purchaser owns fee,
simple, insured title to all real property utilized and has the unbridled right
to use the same, and is not aware of any claim, notice or threat to the effect
that its right to own and use such property is subject in any way to any
challenge, claim, assertion of rights, proceedings toward condemnation or
confiscation, in whole or in part, or is otherwise subject to challenge. Each
parcel of real property by the Purchaser in its business is free of any and all
hazardous wastes, toxic substances, or other types of contamination or matters
of environmental concern, and the Purchaser is not subject to any Liability
resulting from or related to any such wastes, substances, contaminants, or
matters of environmental concern in connection with any such property. The
Purchaser has, in conjunction with acquiring ownership of, or property any
leasehold interest in, each parcel of real property by the Purchaser in its
business assets, (1) caused an audit and examination to be made as to the
existence of any hazardous wastes, toxic substances or other types of
contamination or matters of environmental concern affecting each such property,
which examination indicated that such property was free of any such wastes,
substances, contaminants or other matters of environmental concern, and the
Purchaser has delivered a copy of the report of such audit and examination to
the Seller; and (2) obtained an appropriate policy of title insurance insuring
the interest of the Purchaser in such property, which insurance policy was not
subject to any exceptions not reasonably acceptable in the ordinary course of
business, and a copy of which has been delivered to the Seller.
3.23 Full Disclosure. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Purchaser to the Seller
pursuant to the provisions of this Agreement, taken together in the aggregate,
do not and will not contain any untrue statement of a material fact, or omit to
state any material fact necessary to make the statements made, in the light of
the circumstances under which they are made, not misleading.
3.24 Capitalization; the Subject Stock; Related Matters. The authorized
capital stock of
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the Purchaser consists of thirty million (30,000,000) shares of $.001 par value
common stock. There is no other capital stock authorized for issuance. As of the
date of this Agreement, there are zero (0) shares of such common stock issued
and outstanding. The Subject Shares, when issued, will be duly, legally and
validly issued and will be non-assessable.
3.25 Options, Warrants and Other Rights and Agreements Affecting the
Purchaser's Capital Stock. The Purchaser has no authorized or outstanding
options, warrants, calls, subscriptions, rights, convertible securities or other
securities, as defined by the provisions of the Securities Act of 1933 ("Act")
("Securities"), or any commitments, agreements, arrangement or understandings of
any manner or nature whatsoever obligating the Purchaser, in any such case, to
issue shares of the Purchaser's capital stock or other securities or securities
convertible into or evidencing the right to purchase shares of the Purchaser's
capital stock or other Securities. Neither the Purchaser nor any officer,
director, or shareholder of the Purchaser is a party to any agreement,
understanding, arrangement or commitment, or obligated by an provision which
creates any rights in any person with respect to the authorization, issuance,
voting, sale or transfer of any shares of the Purchaser's capital stock or other
Securities.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as follows:
4.1 Organization and Qualification. The Seller is a corporation duly
organized, validly existing and in good standing pursuant to the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to conduct its business as that business is now being conducted. The
Seller is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned or
leased by it, or the nature of its activities, is such that qualification as a
foreign corporation in that jurisdiction is required by law.
4.2 Authority Relative to This Agreement. The Seller has the requisite
corporate power and authority to carry out its obligations specified by the
provisions of this Agreement. The execution and delivery of this Agreement and
the consummation of the Transaction have been duly authorized and approved by
the requisite corporate authority of the Seller and no other corporate
proceedings on the part of the Seller are necessary to approve and adopt this
Agreement or to approve the consummation of the Transaction, including the
issuance and delivery of the Consideration, except for shareholder approval
specified elsewhere in this Agreement. The Seller has, and any officer, director
or representative executing this Agreement for and on behalf of the Seller has,
the legal capacity and authority to enter into and deliver this Agreement. This
Agreement is a valid and legally binding obligation of the Seller and is
enforceable completely against the Seller in accordance with its terms, except
as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to
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creditors' rights generally, and subject to approval of any and all governmental
regulatory agencies and authorities having jurisdiction of the relationship
between the parties contemplated by the provisions of this Agreement and the
Transaction.
4.3 Absence of Breach; No Consents. The execution, delivery, and
performance of this Agreement, and the performance by the Seller of its
obligations hereunder, do not (1) contravene any law, ordinance, rule, or
regulation of any State or Commonwealth or political subdivision of the United
States except for and compliance with regulatory or licensing laws all of which,
to the extent applicable to the Seller (and to the extent within the control of
the Seller), will be satisfied in all material respects prior to the Closing),
or of any applicable foreign jurisdiction, or contravene any order, writ,
judgment, injunction, decree, determination, or award of any court or other
authority having jurisdiction, or cause the suspension or revocation of any
authorization, consent, approval, or license, presently in effect, which affects
or obligates, the Seller or all or any part of the Acquired Business or any
material properties of the Acquired Business, except in any such case where such
contravention will not have a material adverse effect on the business, condition
(financial or otherwise), operations or prospects of the Acquired Business and
will not have a material adverse effect on the validity of this Agreement or on
the validity of the consummation the Transaction; (2) conflict with or result in
a material breach of or default under any material indenture or loan or credit
agreement or any other material agreement or instrument to which the Seller or
any of part of the Acquired Business is a party or by which any of the material
properties of the Acquired Business may be affected or obligated; (3) require
the authorization, consent, approval, or license of any third party; or (4)
constitute grounds for the loss or suspension of any permits, licenses, or other
authorizations used in the Acquired Business.
4.4 Brokers. No broker, finder, or investment banker is entitled to any
brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of Seller or any of its
Subsidiaries. The Seller does not have any obligation to pay finder's or
broker's fees or commissions in connection with the exercise of options to renew
or extend real estate leases to which the Seller is a party.
4.5 No Undisclosed Liabilities. The Seller has no Liabilities relating to
or affecting the Acquired Business or the Acquired Assets which have not been
disclosed to the Purchaser in writing. Without limiting the foregoing, (a) there
are no unpaid leasehold improvements at any of the Acquired Facilities for which
the Acquired Business is or will be responsible, and (b) there are no deferred
rents due to lessors at or with respect to any of such Acquired Facilities.
4.6 Taxes. The Seller has properly filed or caused to be filed all federal.
state, local, and foreign income and other tax returns, reports, and
declarations that are required by applicable law to be filed by them and that
relate to or in any way affect the Acquired Business or the Acquired Assets, and
have paid, or made full and adequate provision for the payment of, all federal,
state, local, and foreign income and other taxes properly due for the periods
covered by such returns, reports, and declarations.
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4.7 Litigation. No investigation or review by any governmental entity with
respect to the Acquired Business or any of the Acquired Assets or the use
thereof is pending or threatened (other than inspections and reviews customarily
made of businesses such as the Acquired Business), nor has any governmental
entity indicated to the Seller an intention to conduct the same. There is no
action, suit or proceeding pending or threatened against or affecting the
Acquired Business or the Acquired Assets at law or in equity, or before any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality.
4.8 Employees, Etc. There are no collective bargaining, bonus, profit
sharing, compensation, or other plans, agreements, trusts, funds, or
arrangements maintained by the Seller, and there are no employment, consulting,
severance, or indemnification arrangements, agreements, or understandings
between the Seller, on the one hand, and any current or former employees of the
Seller (or Affiliates thereof) on the other hand. The Seller is not, and
following the Closing will not be, obligated by any express or implied contract
or agreement to employ, directly or as consultant or otherwise, any person for
any specific period of time or until any specific age.
4.9 Compliance With Laws. The Acquired Business and each of the Acquired
Assets is in compliance with all, and has received no notice of any violation of
any, laws or regulations applicable to its operations, including, without
limitation, the laws and regulations relevant to the use or utilization of
premises, or with respect to which compliance is a condition of engaging in any
aspect of the business of the Acquired Business, and the Acquired Business has
all permits, licenses, zoning rights, and other governmental authorizations
necessary to conduct its business as presently conducted. All such permits,
licenses, zoning rights, and other governmental authorizations will, as a part
and consequence of the Transaction, be transferred to the Purchaser at the
Closing.
4.10 Ownership of Assets. The Seller has good, marketable and insurable
title, or valid, effective and continuing leasehold rights in the case of leased
property, to all real property (as to which, in the case of owned property, such
title is fee simple) and all personal property owned or leased by it and
comprising a part of the Acquired Assets or the Acquired Business, or used by it
in the conduct of the Acquired Business in such a manner as to create the
appearance or reasonable expectation that the same is owned or leased by it;
such ownership is free and clear of all liens, claims, encumbrances and charges,
except liens for taxes not yet due and minor imperfections of title and
encumbrances, if any, which, singly and in the aggregate, are not substantial in
amount and do not materially detract from the value of the property subject
thereto or materially impair the use thereof; no other person has any ownership
or similar right in, or contractual or other right to acquire any such right in,
any of such assets; and such ownership will be conveyed to the Purchaser at the
Closing pursuant to the Transaction. The Seller does not know of any potential
action by any party, governmental or other, and no proceedings with respect
thereto have been
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instituted of which the Seller has notice, that would materially affect the
Seller's ability to use and to utilize each of such assets in the business of
the Acquired Business. The Seller has received no notices from any mortgagee
regarding any leased properties of the Acquired Business or the leasehold
interest in which comprises any part of the Acquired Assets.
4.11 Proprietary Rights. The Seller possesses full and complete ownership
of, or adequate and enforceable long-term licenses or other rights to use
(without payment), all Proprietary Rights used in the Acquired Business or
utilized in conjunction with the Acquired Assets, and all such ownership,
license or other rights shall be conveyed to the Purchaser at the Closing
pursuant to the Transaction; the Seller has not received any notice of conflict
which asserts the rights of others with respect thereto; and the Seller has in
all material respects performed all of the obligations required to be performed
by it, and is not in default in any material respect, pursuant to any agreement
relating to any such Proprietary Right.
4.12 Trade Names. The Seller has not utilized any trade name, fictitious
business name, or other similar name to conduct any part of the Acquired
Business or to utilize any of the Acquired Assets during the ten (10) years
preceding the date of this Agreement.
4.13 Employee Benefit Plans. The Seller does not maintain or contribute to
any Pension Plan or Welfare Plan, nor is the Seller presently, nor has it been
within the last six (6) years, a participating employer in any Multiemployer
Plan, affecting, in any case, employees of the Acquired Business or employees of
the Sellers.
4.14 Facilities. The Acquired Facilities are (as to physical plant and
structure) structurally sound and none of the Acquired Facilities, nor any of
the vehicles or other equipment used by the Acquired Business in connection with
its business, has any material defects and all of them are in all material
respects in good operating condition and repair and are adequate for the uses to
which they are being put; none of such Acquired Facilities, vehicles or other
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs which are not material in nature or cost. The Seller is
not in breach, violation or default of any lease affecting the Acquired Business
or the Acquired Assets with respect to, or as a result of, which the other party
(whether lessor, lessee, sublessor, or sublessee) thereto has the right to
terminate the same, and the Seller has not received notice of any claim or
assertion that it is or may be in any such breach, violation or default.
4.15 Accounts Receivable. All accounts receivable of the Seller represent
transactions in the ordinary course of business, and are current and
collectible.
4.16 Inventories. All Inventories of the Seller are of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which, in the
aggregate, are immaterial in amount. Items included in such Inventories are
carried on the books of the Seller at the lower of cost or market and, in any
event,
14
at not greater than their net realizable value, on an item by item basis, after
appropriate deduction for costs of completion, marketing costs, transportation
expense and allocation of overhead.
4.17 Contracts. The Acquired Assets and the Acquired Business are not
parties to or affected by any contracts, agreements or understandings, whether
express or implied, written or verbal; provided, however, that the Acquired
Assets or the Acquired Business may be parties to or affected by any such
contracts, agreements, or understandings that fall into one of the following
categories: (1) those that are terminable on notice of less than thirty-two (32)
days and do not involve payments or obligations of more than One Thousand
Dollars ($1,000.00) in any period of thirty-one (31) days or less (on
termination or otherwise); or (2) those that involve aggregate payment or
obligation remaining unpaid as of the date of the Agreement of less than Five
Thousand Dollars ($5,000.00). The Seller is not a party to any executory
contract to sell or transfer any part of any leasehold interest included in the
Acquired Assets or utilized by the Acquired Business. True and accurate copies
of all such leases, and of all amendments, supplements, extensions and
modifications thereof, have heretofore been delivered to the Purchaser by the
Seller.
4.18 Accounts Payable. The accounts payable of the Seller at the time of
the Closing will be all amounts owed by the Seller in respect of trade accounts
due and other Payables of the Acquired Business or relating to the Acquired
Assets.
4.19 Labor Matters. There are no activities or controversies, including,
without limitation, any labor organizing activities, election petitions or
proceedings, proceedings preparatory thereto, unfair labor practice complaints,
labor strikes, disputes, slowdowns, or work stoppages, pending or, to the best
of the knowledge of the Seller, threatened, affecting employees of the Seller.
4.20 Insurance. The Seller has insurance policies in full force and effect
insuring the Acquired Assets and the Acquired Business, and such insurance
policies provide for coverages which are usual and customary in the business of
the Acquired Business as to amount and scope, and are adequate to protect the
Acquired Business against any reasonably foreseeable risk of loss, including
business interruption. The Seller has not within the past three (3) years
received any notice of cancellation of any insurance agreement affecting the
Acquired Assets or the Acquired Business.
4.21 Title to and Utilization of Real Properties. The Seller owns fee,
simple, insured title to all real property included in the Acquired Assets and
has the unbridled right to use the same, and is not aware of any claim, notice
or threat to the effect that its right to own and use such property is subject
in any way to any challenge, claim, assertion of rights, proceedings toward
condemnation or confiscation, in whole or in part, or is otherwise subject to
challenge. Each parcel of real property the ownership of, or leasehold interest
in, which is included among the Acquired Assets is free of any and all hazardous
wastes, toxic substances, or other types of
15
contamination or matters of environmental concern, and the Seller is not subject
to any Liability resulting from or related to any such wastes, substances,
contaminants, or matters of environmental concern in connection with any such
property. The Seller has, in conjunction with acquiring ownership of, or any
leasehold interest in, each parcel of real property the ownership of, or
leasehold interest in, which is included among the Acquired Assets, (1) caused
an audit and examination to be made as to the existence of any hazardous wastes,
toxic substances or other types of contamination or matters of environmental
concern affecting each such property, which examination indicated that such
property was free of any such wastes, substances, contaminants or other matters
of environmental concern, and the Seller has delivered a copy of the report of
such audit and examination to the Purchaser; and (2) obtained an appropriate
policy of title insurance insuring the interest of the Seller in such property,
which insurance policy was not subject to any exceptions not reasonably
acceptable in the ordinary course of business, and a copy of which has been
delivered to the Purchaser.
4.22 Full Disclosure. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Seller to the Purchaser
pursuant to the provisions of this Agreement, taken together in the aggregate,
do not and will not contain any untrue statement of a material fact, or omit to
state any material fact necessary to make the statements made, in the light of
the circumstances under which they are made, not misleading.
4.23 The Seller's Acquisition Intention. The Subject Shares will be
acquired by the Seller (i) for the Seller's own account as a principal and not
as a nominee or as an agent; (ii) for investment purposes only; and (iii) with
no contemplation of, or for resale regarding, any distribution or public
offering of all or any portion of the Subject Shares within the meaning of the
Act. The Seller has no intention, agreement or arrangement to divide the Subject
Shares, or any of them, with any other person or to resell, assign, transfer,
convey or otherwise dispose of all or any part of the Subject Shares, unless and
until the Seller determines, at some future date, changed circumstances, not in
contemplation at the time of the acquisition of the Subject Shares, make such
disposition available.
4.24 Exemption from Registration. The Subject Shares (i) are "securities"
as that term is defined by the provisions of the Act and the California
Corporate Securities Law of 1968 ("Blue Sky Law") and (ii) have not been (a)
registered pursuant to the provisions of the Act or (b) qualified or registered
pursuant to the requirements of the Blue Sky Law, by reason of the delivery of
such Subject Shares in a transaction exempt from the (1) registration
requirements of the Act pursuant to the provisions of Section 4(2) of the Act
and (2) qualification requirements of the Blue Sky Law pursuant to the
provisions of Section 25102 subdivision (f) of the Blue Sky Law and the rules
and regulations promulgated pursuant thereto. The Seller also understands that
the Subject Shares (1) are "restricted securities" as that term is defined by
the provisions of Rule 144 promulgated pursuant to the Act; and (2) must be held
by the Seller indefinitely, unless a subsequent disposition of the Subject
Shares is registered pursuant to the provisions of the Act or is exempt from
such registration.
16
4.25 Evaluation of Risks. The Seller has such knowledge and experience in
business and financial matters that the Seller is capable of evaluating the
Purchaser and the proposed activities thereof, the risks and merits of the
Subject Shares and of making an informed decision thereon, and the Seller is not
utilizing any other person regarding the evaluation of those risks and merits.
ARTICLE V
COVENANTS OF THE PURCHASER
5.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, the Purchaser will take every action reasonably required of it in
order to satisfy the conditions to closing set forth in this Agreement and
otherwise to ensure the prompt and expedient consummation of the Transaction
substantially as contemplated by this Agreement, and will exert all reasonable
efforts to cause the Transaction to be consummated; provided, however, in all
instances that the representations and warranties of the Seller in this
Agreement are and remain true and accurate and that the covenants and agreements
of the Seller in this Agreement are honored and that the conditions to the
obligations of the Purchaser set forth in this Agreement are not incapable of
satisfaction.
5.2 Cooperation. The Purchaser shall cooperate with the Seller and its
counsel, accountants and agents in every way in carrying out the Transaction,
and in delivering all documents and instruments deemed reasonably necessary or
useful by counsel to the Seller.
5.3 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Purchaser in connection with this Agreement and the
Transaction shall be paid by the Purchaser, except as otherwise provided
(directly or indirectly) herein.
5.4 Publicity. Prior to the Closing any written news releases by the
Purchaser pertaining to this Agreement or the Transaction shall be submitted to
the Seller for review and approval prior to release by the Purchaser, and shall
be released only in a form approved by the Seller; provided, however, that (1)
such approval shall not be unreasonably withheld, and (2) such review and
approval shall not be required of releases by the Purchaser if prior review and
approval would prevent the timely and accurate dissemination of such press
release as required to comply, in the judgment of counsel, with any applicable
law, rule or policy.
5.5 Access and Information. The Purchaser shall afford to the Seller and to
the Seller's accountants, counsel, and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to all
of its properties, books, contracts, commitments, records (including, but not
limited to, tax returns), and personnel relating to the Purchaser and, during
such period, the Purchaser shall furnish promptly to the Seller (1) all written
communications relating to the business of the Purchaser, (2) internal monthly
financial statements of the Purchaser when and as available, and (3) all other
information relating to the business of the Purchaser as the Seller may
reasonably request, but no investigation pursuant to this Section 5.5
17
shall affect any representations or warranties of the Purchaser or the
conditions to the obligations of the Seller to consummate the Transaction. In
the event of the termination of this Agreement, the Seller will, and will cause
its representatives to, deliver to the Purchaser or destroy all documents, work
papers, and other material, and all copies thereof, obtained by it or on its
behalf from the Purchaser as a result of this Agreement or in connection
herewith, whether so obtained before or after the execution hereof, and will
hold in confidence all confidential information that has been designated as such
by the Purchaser in writing or by appropriate and obvious notation, and will not
use any such confidential information except in connection with the Transaction,
until such time as such information is otherwise publicly available. Seller and
its representatives shall assert their rights hereunder in such manner as to
minimize interference with the business of the Purchaser.
5.6 Conduct of Business Pending the Transaction. Prior to the consummation
of the Transaction or the termination of this Agreement pursuant to its terms,
unless the Seller shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed, and except as otherwise contemplated by this
Agreement, the Purchaser will comply with each of the following:
(1) The business of the Purchaser will be conducted only in the ordinary
and usual course, the Purchaser shall keep intact the business
organization and goodwill of the its business, keep available the
services of the employees of the Purchaser and maintain good
relationships with suppliers, lenders, creditors, distributors,
employees, customers and others having business or financial
relationships with the Purchaser, and the Purchaser shall immediately
notify the Seller of any event or occurrence or emergency material to,
and not in the ordinary and usual course of business of, the
Purchaser.
(2) The Purchaser shall not create, incur or assume any long-term or
short-term indebtedness for money borrowed or make any capital
expenditures or commitment for capital expenditures, affecting the
business of the Purchaser.
(3) The Purchaser shall not (a) adopt, enter into, or amend any bonus,
profit sharing, compensation, stock option, warrant, pension,
retirement, deferred compensation, employment, severance, termination,
or other employee benefit plan, agreement, trust fund, or arrangement
for the benefit or welfare of any employees of the Purchaser or (b)
agree to any material (in relation to historical compensation)
increase in the compensation payable or to become payable to, or any
increase in the contractual term of employment of, any such employee.
(4) The Purchaser shall not sell, lease, mortgage, encumber, or otherwise
dispose of or grant any interest in any of its assets.
(5) The Purchaser shall not enter into, or terminate, any material
contract, agreement,
18
commitment, or understanding relating to or affecting the business of
the Purchaser.
(6) The Purchaser shall not enter into any agreement, commitment, or
understanding, whether in writing or otherwise, with respect to any of
the matters referred to in subparagraphs (1) through (5) above.
(7) The Purchaser will continue properly and promptly to file when due all
federal, state, local, foreign, and other tax returns, reports, and
declarations required to be filed by it, and will pay, or make full
and adequate provision for the payment of, all taxes and governmental
charges due from or payable by it.
(8) The Purchaser will comply with all laws and regulations applicable to
the operations of the Purchaser.
(9) The Purchaser will maintain in full force and effect insurance
coverage relating to its business of a type and amount customary in
the business of the Purchaser (but not less than that presently in
effect).
5.7 Updating of Exhibits. The Purchaser shall notify the Seller of any
changes, additions or events which may cause any change in or addition or events
to any schedules or exhibits delivered by the Purchaser pursuant to this
Agreement, promptly after the occurrence of the same and at the Closing by the
delivery of updates of all schedules and exhibits. No notification made pursuant
to this section shall be deemed to cure any breach of any representation or
warranty made in this Agreement, unless the Seller specifically agrees thereto
in writing nor shall any such notification be considered to constitute or give
rise to a waiver by the Seller of any condition set forth in this Agreement.
5.8 Issuance and delivery of the Consideration. On the Closing, the
Purchaser shall issue or caused to be issued to the Seller a certificate
evidencing ten million five hundred thousand (10,500,000) shares of the
Purchaser's $.001 par value common stock; which certificates shall specify
appropriate legends regarding the restricted nature of those shares.
ARTICLE VI
COVENANTS OF THE SELLER
6.1 Affirmative Covenants. From the date hereof through the Closing Date,
the Seller will take every action reasonably required of it to satisfy the
conditions to closing set forth in this Agreement and otherwise to ensure the
prompt and expedient consummation of the Transaction substantially as
contemplated hereby, and will exert all reasonable efforts to cause the
Transaction to be consummated; provided, however, in all instances that the
representations and warranties of the Purchaser in this Agreement are and remain
true and accurate and that the covenants
19
and agreements of the Purchaser in this Agreement are correct and that the
conditions to the obligations of the Seller set forth in this Agreement are not
incapable of satisfaction.
6.2 Name. The Seller agrees that following consummation of the Transaction,
neither it nor any Entity under its control or Affiliated with it shall make any
attempt to make any use of any name under which the Acquired Business has
conducted business, or authorize others to do so, without the consent of the
Purchaser.
6.3 Access and Information. The Seller shall afford to the Purchaser and to
the Purchaser's accountants, counsel, and other representatives reasonable
access during normal business hours throughout the period prior to the Closing
to all of its properties, books, contracts, commitments, records (including, but
not limited to, tax returns), and personnel relating to the Acquired Assets or
the Acquired Business and, during such period, the Seller shall furnish promptly
to the Purchaser (1) all written communications relating to the Acquired Assets
or the Acquired Business, (2) internal monthly financial statements of the
Acquired Business when and as available, and (3) all other information relating
to the Acquired Assets or the Acquired Business as the Purchaser may reasonably
request, but no investigation pursuant to this Section 6.4 shall affect any
representations or warranties of the Seller, or the conditions to the
obligations of the Purchaser to consummate the Transaction. In the event of the
termination of this Agreement, the Purchaser will, and will cause its
representatives to, deliver to the Seller or destroy all documents, work papers,
and other material, and all copies thereof, obtained by it or on its behalf from
the Seller as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof, and will hold in confidence all
confidential information that has been designated as such by the Seller in
writing or by appropriate and obvious notation, and will not use any such
confidential information except in connection with the Transaction, until such
time as such information is otherwise publicly available. Purchaser and its
representatives shall assert their rights hereunder in such manner as to
minimize interference with the business of the Seller.
6.4 No Solicitation. The Seller and those acting on behalf of the Seller
will not, and the Seller will use its best efforts to cause its employees,
agents, and representatives (including any investment banker) not, directly or
indirectly, to solicit, encourage, or initiate any discussions with, or
negotiate or otherwise deal with, or provide any information to, any person or
Entity other than the Purchaser and its officers, employees, and agents,
relating to the Acquired Assets or the Acquired Business. The Seller will notify
the Purchaser immediately upon receipt of any inquiry, offer or proposal
relating to any of the foregoing. None of the foregoing shall prohibit providing
information to others in a manner in keeping with the ordinary conduct of the
Seller's business, or providing information to government authorities.
6.5 Conduct of Business Pending the Transaction. The Seller covenants and
agrees with the Purchaser that, prior to the consummation of the Transaction or
the termination of this Agreement pursuant to its terms, unless the Purchaser
shall otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed, and except as otherwise contemplated by
20
this Agreement, the Seller's will comply with each of the following:
(1) The Acquired Business, and the other businesses of the Seller that
relate to, use or affect the Acquired Assets, if any, will be
conducted only in the ordinary and usual course, the Seller shall keep
intact the business organization and goodwill of the Acquired
Business, keep available the services of the employees of the Seller
and maintain good relationships with suppliers, lenders, creditors,
distributors, employees, customers and others having business or
financial relationships with the Acquired Business, and it shall
immediately notify the Purchaser of any event or occurrence or
emergency material to, and not in the ordinary and usual course of
business of, the Acquired Business or affecting any material part of
the Acquired Assets.
(2) The Seller shall not create, incur or assume any long-term or
short-term indebtedness for money borrowed or make any capital
expenditures or commitment for capital expenditures, affecting the
Acquired Business or any of the Acquired Assets, except in the
ordinary course of business and consistent with past practice.
(3) The Seller shall not (a) adopt, enter into, or amend any bonus, profit
sharing, compensation, stock option, warrant, pension, retirement,
deferred compensation, employment, severance, termination, or other
employee benefit plan, agreement, trust fund, or arrangement for the
benefit or welfare of any employees of the Seller, or (b) agree to any
material (in relation to historical compensation) increase in the
compensation payable or to become payable to, or any increase in the
contractual term of employment of, any such employee.
(4) The Seller shall not sell, lease, mortgage, encumber, or otherwise
dispose of or grant any interest in any of the Acquired Assets except
for sales, encumbrances and other dispositions or grants in the
ordinary course of business of the Acquired Business and consistent
with past practice and except for liens for taxes not yet due or liens
or encumbrances that are not material in amount or effect and do not
impair the use of the property, or as specifically provided for or
permitted in this Agreement.
(5) The Seller shall not enter into, or terminate, any material contract,
agreement, commitment, or understanding relating to or affecting the
Acquired Assets or the Acquired Business.
(6) The Seller shall not enter into any agreement, commitment, or
understanding, whether in writing or otherwise, with respect to any of
the matters referred to in subparagraphs (1) through (5) above.
21
(7) The Seller will continue properly and promptly to file when due all
federal, state, local, foreign, and other tax returns, reports, and
declarations required to be filed by it relating to the Acquired
Assets or the Acquired Business, and will pay, or make full and
adequate provision for the payment of, all taxes and governmental
charges due from or payable by it relating to the Acquired Assets or
the Acquired Business.
(8) The Seller will comply with all laws and regulations applicable to the
operations of the Acquired Business and the utilization of the
Acquired Assets.
(9) The Seller will maintain in full force and effect insurance coverage
relating to the Acquired Assets or the Acquired Business of a type and
amount customary in the business of the Acquired Business (but not
less than that presently in effect).
6.6 Cooperation. The Seller will cooperate with the Purchaser and its
counsel, accountants, and agents in every way in consummating and closing the
Transaction and in delivering all documents and instruments deemed reasonably
necessary or useful by the Purchaser.
6.7 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Seller in connection with this Agreement and the
Transaction shall be paid by the Seller except as otherwise provided (directly
or indirectly) herein.
6.8 Publicity. Prior to the Closing any written news releases by the Seller
relating to this Agreement or the Transaction shall be submitted to the
Purchaser for review and approval prior to release by the Seller, and shall be
released only in a form approved by the Purchaser.
6.9 Updating of Exhibits and Disclosure Documents. The Seller shall notify
the Purchaser of any changes, additions, or events which may cause any change in
or addition to any schedules or exhibits delivered by it pursuant to this
Agreement promptly after the occurrence of the same and again at the Closing by
delivery of appropriate updates to all such schedules and exhibits. No such
notification made pursuant to this section shall be deemed to cure any breach of
any representation or warranty made in this Agreement, unless the Purchaser
specifically agrees thereto in writing nor shall any such notification be
considered to constitute or give rise to a waiver by the Purchaser of any
condition set forth in this Agreement.
6.10 Payment of Unassumed Liabilities. The Seller agrees promptly to pay
when due, or otherwise to discharge, without cost or expense to the Purchaser,
each and every Liability of the Seller that is not specifically assumed by the
Purchaser pursuant to this Agreement, as described in Section 2.1 above.
6.11 Continued Action Regarding Exemption. The Seller shall take any and
all additional action which is necessary or appropriate to maintain the
exemptions from registration
22
and qualification provided by Section 4(2) of the Act and Section 25102
subdivision (f) of the Blue Sky Law and the rules and regulations promulgated
pursuant thereto.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Obligation of Purchaser. The obligation of the Purchaser
to effect the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless the Purchaser shall waive such
fulfillment in writing:
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties (including lenders,
holders of debt securities and lessors) required to consummate the
Transaction.
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state court which prohibits the
consummation of the Transaction.
(3) The Seller shall have performed in all material respects each of its
agreements and obligations specified in this Agreement and required to
be performed on or prior to the Closing and shall have complied with
all material requirements, rules, and regulations of all regulatory
authorities having jurisdiction relating to the Transaction.
(4) No material adverse change shall, in the judgment of the Purchaser,
have taken place in the business condition (financial or otherwise),
operations, or prospects of the Acquired Business or the Acquired
Assets since the date of this Agreement other than those, if any, that
result from the changes permitted by this Agreement.
(5) The representations and warranties of the Seller set forth in this
Agreement shall be true in all material respects as of the date of
this Agreement and, except in such respects as, in the judgment of the
Purchaser, do not materially and adversely affect the business,
condition (financial or otherwise), operations, or prospects of the
Acquired Business or the Acquired Assets, as of the Closing, as if
made as of the Closing.
(6) The Purchaser shall have received from the Seller an officers'
certificate, executed by the Chief Executive Officer and Chief
Financial Officer of the Seller (in their capacities as such), dated
the Closing Date, as to the satisfaction of the conditions in
Paragraphs (3), (4), and (5) of this section.
7.2 Conditions to Obligation of the Seller. The obligation of the Seller to
effect the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless the Seller shall waive such
fulfillment in writing:
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(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties (including lenders,
holders of debt securities and lessors required by law to consummate
the Transaction.
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state authority which prohibits the
consummation of the Transaction.
(3) The Purchaser shall have performed in all material respects its
agreements and obligations specified in this Agreement required to be
performed on or prior to the Closing.
(4) The representations and warranties of the Purchaser set forth in this
Agreement shall be true in all material respects as of the date of
this Agreement and, except in such respects as do not materially and
adversely affect the business of the Purchaser, as of the Closing Date
as if made as of the Closing Date.
(5) The Seller shall have received from the Purchaser an officers'
certificate, executed by the Chief Financial Officer and the Chief
Executive Officer of the Purchaser (in their capacities as such),
dated the Closing Date, as to the satisfaction of the conditions of
Paragraphs (3) and (4) of this section (to the best of their
knowledge).
ARTICLE VIII
DOCUMENTS TO BE DELIVERED AND INSTRUMENTS AT CLOSING
8.1 The Purchaser to the Seller. On the Closing, the Purchaser shall
deliver or cause to be delivered the following instruments and documents to the
Seller:
(1) A certificate evidencing and representing ten million five hundred
thousand (10,500,000) shares of the Purchaser's $.001 par value common
stock, which certificates shall specify appropriate legends regarding
the restricted nature of those shares; and
(2) The Officers' Certificate contemplated by the provisions of Paragraph
(5) of Section 7.2 of this Agreement.
8.2 The Seller to the Purchaser. On the Closing, the Seller shall deliver
or cause to be delivered the following instruments and documents to the
Purchaser:
(1) A Xxxx of Sale, executed by the President and the Secretary of the
Seller, pursuant to which title to the Acquired Assets are transferred
and vested in the Purchaser; and
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(2) The Officers' Certificate contemplated by the provisions of Paragraph
(6) of Section 7.1 of this Agreement.
ARTICLE IX
TERMINATION, AMENDMENT WAIVER
9.1 Termination. This Agreement and the Transaction may be terminated at
any time prior to the Closing:
(1) By mutual consent of the Purchaser and the Seller; or
(2) By either Purchaser or the Seller, upon written notice to the other,
if the conditions to such party's obligations to consummate the
Transaction, in the case of Purchaser, as specified in Section 7.1 of
this Agreement, or, in the case of the Seller, as provided in Section
7.2 of this Agreement, were not, or cannot reasonably be, satisfied on
or before September 30, 1999, unless the failure of condition is the
result of the material breach of this Agreement by the party seeking
to terminate this Agreement.
9.2 Amendment. This Agreement may be amended by the Purchaser and the
Seller by action taken at any time. This Agreement may not be amended, except by
an instrument in writing signed on behalf of the Purchaser and the Seller.
9.3 Waiver. At any time prior to the Closing, the Purchaser or the Seller
may (i) extend the time for the performance of any of the obligations or other
acts of the other party, (ii) waive any inaccuracies in the representations and
warranties specified in this Agreement or in any document delivered pursuant to
this Agreement, or (iii) waive compliance with any of the agreements or
conditions specified in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
10.1. Notices. Any notice, direction or instrument required or permitted to
be given pursuant to this Agreement shall be given in writing by (a) telegram,
facsimile transmission or similar method, if confirmed by mail as herein
provided, by mail; (b) if mailed postage prepaid, by certified mail, return
receipt requested; or (iii) hand delivery to any party at the addresses of the
parties specified, below. If given by telegram or facsimile transmission or
similar method or by hand delivery, such notice, direction or instrument shall
be deemed to have been given or made on the day on which it was given, and if
mailed, shall be deemed to have been given or made on the second (2nd) business
day following the day after which it was mailed. Any party may, from time
25
to time by similar notice, give notice of any change of address, and in such
event, the address of such party shall be deemed to be changed accordingly. The
address, telephone number and facsimile transmission number for the notice of
each party are:
If to Seller: Alpha Xxxx, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
If to Purchaser: Omega-Med Corporation
0000 Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
10.2. Recovery of Enforcement Costs. In the event any party shall institute
any action or proceeding to enforce any provision of this Agreement to seek
relief from any violation of this Agreement, or to otherwise obtain any judgment
or order relating to or arising from the subject matter of this Agreement, each
prevailing party shall be entitled to receive from each losing party such
prevailing party's actual attorneys' fees and costs incurred to prosecute or
defend such action or proceeding.
10.3. Assignment. No party shall have the right, without the consent of the
other party, to assign, transfer, sell, pledge, hypothecate, delegate, or
otherwise transfer, whether voluntarily, involuntarily or by operation of law,
any of such party's rights or obligations created by the provisions of this
Agreement, nor shall the parties' rights be subject to encumbrance or the claim
of creditors. Any such purported assignment, transfer, or delegation shall be
null and void.
10.4. Captions and Interpretations. Captions of the articles, sections and
paragraphs of this Agreement are for convenience and reference only, and the
works specified therein shall in no way be held to explain, modify, amplify or
aid in the interpretation, construction, or meaning of the provisions of this
Agreement. The language in all parts to this Agreement, in all cases, shall be
construed in accordance with the fair meaning of that language as if prepared by
all parties and not strictly for or against any party. Each party and counsel
for such party have reviewed this Agreement. The rule of construction, which
requires a court to resolve any ambiguities against the drafting party, shall
not apply in interpreting the provisions of this Agreement.
10.5 Entire Agreement. This Agreement and the exhibits to this Agreement
are the final written expression and the complete and exclusive statement of all
the agreements, conditions, promises, representations, warranties and covenants
between the parties with respect to the subject matter of this Agreement, and
this Agreement supersedes all prior or contemporaneous agreements, negotiations,
representations, warranties, covenants, understandings and discussions by and
between and among the parties, their respective representatives, and any other
person, with respect to the subject matter specified in this Agreement. No
provision of any exhibit or schedule to this Agreement shall supersede or annul
the terms and provisions of this Agreement, unless the
26
matter specified in such exhibit or schedule shall explicitly so provide to the
contrary, in the event of ambiguity in meaning or understanding between the
provisions of this Agreement proper and the appended exhibits or schedules, the
provisions of this Agreement shall prevail and control in all instances.
10.6 Choice of Law and Consent to Jurisdiction. This Agreement shall be
deemed to have been entered into in the State of Delaware. All questions
concerning the validity, interpretation, or performance of any of the terms,
conditions and provisions of this Agreement or of any of the rights or
obligations of the parties shall be governed by, and resolved in accordance
with, the laws of the State of Delaware without regard to conflicts of law
principles.
10.7 Number and Gender. Whenever the singular number is used in this
Agreement and, when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa.
10.8 Successors and Assigns. This Agreement and each of its provisions
shall obligate the heirs, executors, administrators, successors, and assigns of
each of the parties. Nothing specified in this article, however, shall be a
consent to the assignment or delegation by any party of such party's respective
rights and obligations created by the provisions of this Agreement.
10.9 Third Party Beneficiaries. Except as expressly specified by the
provisions of this Agreement, this Agreement shall not be construed to confer
upon or give to any person, other than the parties hereto, any right, remedy or
claim pursuant to, or by reason of, this Agreement or of any term or condition
of this Agreement.
10.10 Severability. In the event any part of this Agreement, for any
reason, is determined by a court of competent jurisdiction to be invalid, such
determination shall not affect the validity of any remaining portion of this
Agreement, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated. It
is hereby declared the intention of the parties that they would have executed
the remaining portion of this Agreement without including any such part, parts,
or portion which, for any reason, may be hereafter determined to be invalid.
10.11 Governmental Rules and Regulations. The transactions contemplated by
the provisions of this Agreement are and shall remain subject to any and all
present and future orders, rules and regulations of any duly constituted
authority having jurisdiction of that transaction.
10.12 Execution in Counterparts. This Agreement may be prepared in multiple
copies and forwarded to each of the parties for execution. All of the signatures
of the parties may be affixed to one copy or to separate copies of this
Agreement and when all such copies are received and signed by all the parties,
those copies shall constitute one agreement which is not otherwise separable or
divisible. Counsel for the Purchaser shall keep all of such signed copies and
shall
27
conform one copy to show all of those signatures and the dates thereof and shall
mail a copy of such conformed copy to each of the parties within thirty (30)
days after the receipt by such counsel of the last signed copy, and such counsel
shall cause one such conformed copy to be filed in the principal office of such
counsel.
10.13 Reservation of Rights. The failure of any party at any time or times
hereafter to require strict performance by any other party of any of the
warranties, representations, covenants, terms, conditions and provisions
specified in this Agreement shall not waive, affect of diminish any right of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions, warranties,
terms, and conditions specified in this Agreement. Any waiver of any default
shall not waive or affect any other default, whether prior or subsequent
thereto, and whether the same or of a different type. None of the
representations, warranties, covenants, conditions, provisions and terms
specified in this Agreement shall be deemed to have been waived by any act or
knowledge of any party, its agents, trustees, officers, or employees and any
such waiver shall be made only by an instrument in writing, signed by the
waiving party and directed to any non-waiving party specifying such waiver, and
each party reserves such party's rights to insist upon strict compliance
herewith at all times.
10.14 Survival of Covenants, Representations and Warranties. All covenants,
representations, and warranties made by each party to this Agreement shall be
deemed made for the purpose of inducing the other party to enter into and
execute this Agreement. The representations, warranties, and covenants specified
in this Agreement shall survive the Closing and shall survive any investigation
by either party whether before or after the execution of this Agreement. The
covenants, representations, and warranties of the Seller and the Purchaser are
made only to and for the benefit of the other and shall not create or vest
rights in other persons.
10.15 Concurrent Remedies. No right or remedy specified in this Agreement
conferred on or reserved to the parties is exclusive of any other right or
remedy specified in this Agreement or by law or equity provided or permitted;
but each such right and remedy shall be cumulative of, and in addition to, every
other right and remedy specified in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, and may be enforced concurrently
therewith or from time to time. The termination of this Agreement for any reason
whatsoever shall not prejudice any right or remedy which any party may have,
either at law, in equity, or pursuant to the provisions of this Agreement.
10.17 Force Majeure. If any party is rendered unable, completely or
partially, by the occurrence of an event of "force majeure" (hereinafter
defined) to perform such party's obligations created by the provisions of this
Agreement, such party shall give to the other party prompt written notice of the
event of "force majeure" with reasonably complete particulars concerning such
event; thereupon, the obligations of the party giving such notice, so far as
those obligations are affected by the event of "force majeure," shall be
suspended during, but no longer than, the
28
continuance of the event of "force majeure." The party affected by such event of
"force majeure" shall use all reasonable diligence to resolve, eliminate and
terminate the event of "force majeure" as quickly as practicable. The
requirement that an event of "force majeure" shall be remedied with all
reasonable dispatch as hereinabove specified, shall not require the settlement
of strikes, lockouts or other labor difficulties by the party involved, contrary
to such party's wishes, and the resolution of any and all such difficulties
shall be handled entirely within the discretion of the party concerned. The term
"force majeure" as used herein shall be defined as and mean any act of God,
strike, civil disturbance, lockout or other industrial disturbance, act of the
public enemy, war, blockage, public riot, earthquake, tornado, hurricane,
lightening, fire, epidemics, quarantine restrictions, public demonstration,
storm, flood, explosion, freight embargoes, governmental action, governmental
delay, restraint or inaction, unavailability of equipment, default of a party's
subcontractors or suppliers, and any other cause or event, whether of the kind
enumerated specifically herein, or otherwise, which is not reasonably within the
control of the party claiming such suspension.
10.18 Consent to Agreement. By executing this Agreement, each party, for
itself represents such party has read or caused to be read this Agreement in all
particulars, and consents to the rights, conditions, duties and responsibilities
imposed upon such party as specified in this Agreement. Each party represents,
warrants and covenants that such party executes and delivers this Agreement of
its own free will and with no threat, undue influence, menace, coercion or
duress, whether economic or physical. Moreover, each party represents, warrants,
and covenants that such party executes this Agreement acting on such party's own
independent judgment.
10.19 Waiver and Modification. No modification, supplement or amendment of
this Agreement or of any covenant, representation, warranty, condition, or
limitation specified in this Agreement shall be valid unless the same is made in
writing and duly executed by both parties. No waiver of any covenant,
representation, warranty, condition, or limitation specified in this Agreement
shall be valid unless the same is made in writing and duly executed by the party
making the waiver. No waiver of any provision of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver.
10.20 Further Assurances. The parties shall from time to time sign and
deliver any further instruments and take any further actions as may be necessary
to effectuate the intent and purposes of this Agreement.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed in
duplicate on the date first written above by their respective officers thereunto
duly authorized.
Omega-Med Corporation,
a Delaware corporation
By: /s/ [ILLEGIBLE]
-----------------------------
Its: President
By: /s/ [ILLEGIBLE]
-----------------------------
Its: Secretary
Alpha Xxxx, Inc.,
a Utah corporation
By: /s/ [ILLEGIBLE]
-----------------------------
Its: President
By: /s/ [ILLEGIBLE]
-----------------------------
Its: Secretary
30
SCHEDULE 2.1
Assets Description
------ -----------
1. Cash All operating cash and cash equivalents.
2. Inventories R & D inventories relating to the infusion pump
including the following:
inner cans
outer cans
valves
annular rings
packing cans
keys
syringe reservoirs
pistons
Decoria inventory of body jewelry
3. Capital Assets Furniture fixtures and equipment
4 desks
4 executive chairs
3 conference chairs
1 Compaq 2240 Presario computer and monitor
1 Brother MFC 4350 printer
Plant equipment
1 compressor
1 pump filling machine
1 xxxxxxxx lathe
2 vacuum pumps miscellaneous and sundry shop tools
2 tumblers
Molds
syringe mold
valve mold
annular ring mold
key mold
piston mold
4. Intangible Assets Licensing agreement with Xxxxxx Xxxxxxx dated
May 15, 1998
Strategic Alliance agreement with Angel Ear
Piercing Co. dated October 20, 1998
All patent applications relating to ear piercing owned
by Omega Med, a Utah corporation
Trade names: "Angel's Touch", "Rites of Passage",
"Flexy", "Decoria"
