Exhibit G
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of
March 31, 1999, by and among, Gateway Advisors ("Gateway"), Xxxxx Xxxxxxxxx
("Bejan"), Xxxxx Xxxxxxxxx ("Mosen"), and Xxxxx Xxxx ("Xxxxx") (collectively,
the "Contributors") and E-Taxi, Inc., a Delaware corporation (the "Company").
For purposes of this Agreement, Gateway shall include its affiliates. The
Company and the Contributors are referred to collectively herein as the
"Parties."
RECITALS
A. Gateway, Bejan, Mosen, and Xxxxx own 24%, 52%, 12% and 12%,
respectively, of TechStore LLC, a California limited liability company
("TechStore"), representing all of the ownership interest in TechStore, as of
the date hereof.
B. Each of the Contributors desires to contribute to the Company his
or her equity interest in TechStore (collectively, the "Contributed
Interests"), in exchange for (i) shares of common stock of the Company (the
"Common Exchange Shares"); and (ii) shares of preferred stock of the Company
(the "Series A Preferred Stock") (together, the "Exchange Shares").
C. The exchange of shares of common stock (the "Exchange") and the
subsequent acquisitions of other e-commerce companies will be effected in
preparation for the merger of the Company with and into a publicly traded
company (the "Roll-Up").
AGREEMENT
The Parties hereby agree as follows:
ARTICLE I - CONTRIBUTION AND EXCHANGE
1.1 EXCHANGE. On the date hereof (the "Exchange Date"), the
Contributors shall contribute to the Company all of their respective interests
in TechStore and the Company shall (i) issue 480,000, 1,040,000, 240,000 and
240,000 shares of common stock of the Company to Gateway, Bejan, Mosen and
Xxxxx, respectively; and (ii) issue 96,000, 208,000, 48,000 and 48,000 shares
of the Series A Preferred Stock to Gateway, Bejan, Mosen and Xxxxx,
respectively. The foregoing amounts of Series A Preferred Stock convert into
384,000, 832,000, 192,000, and 192,000 shares of common stock of E-Taxi,
respectively. The Series A Preferred Stock shall have the rights, preferences,
privileges and restrictions set forth in the Company's Certificate or
Incorporation, a copy of which is attached hereto as Exhibit A. (the
"Certificate"). The Company's issuance of the Common Exchange Shares, and the
issuance of the Series A Preferred Stock to each of the Contributors, shall be
the sole consideration for the Contributed Interests by the Company.
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1.2 STOCK CERTIFICATES. On the Exchange Date, the Seller shall deliver
to Buyer documents evidencing ownership in Purchased Interest (as hereinafter
defined).The Company will deliver to each Contributor on the Exchange Date a
duly issued and authenticated certificate evidencing the Common Exchange Shares
and the Series A Preferred Stock issuable to such Contributor pursuant to
Section 1.1.
ARTICLE 2 - CONTRIBUTORS' REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Each of the Contributor's represents, warrants and agrees, severally
for himself or herself, as follows:
2.1 OWNERSHIP OF CONTRIBUTED INTERESTS DELIVERED IN EXCHANGE. All
ownership interests in TechStore shall tbe delivered by the Contributor in
exchange for the Exchange Shares are owned by the Contributor, of record and
beneficially, free and clear of any pledge, lien, security interest, charge,
claim, option or encumbrance of any kind, and upon the delivery of documents
evidencing such Contributed Interests, all of the Contributor's right, title
and interest in and to such Contributed Interests shall have been contributed,
transferred and assigned to the Company free and clear of any pledge, lien,
security interest, charge, claim, option or encumbrance of any kind.
2.2 LEGEND. The certificate representing the Exchange Shares to be
issued to the Contributor hereunder shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS AND MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IF SO
REGISTERED OR IF EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS ARE AVAILABLE.
NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF THE COMPANY HAS BEEN FURNISHED
WITH AN OPINION OF COUNSEL FOR THE HOLDER (WHICH COUNSEL SHALL BE ACCEPTABLE TO
THE COMPANY), SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY, TO THE EFFECT
THAT SUCH TRANSFER IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND
THE RULES AND REGULATIONS IN EFFECT THEREUNDER.
2.3 SECURITIES UNREGISTERED. The Contributor acknowledges that he or
she has been advised that (a) the Exchange Shares have not been registered
under the Securities Act of 1933, as amended, and the rules and regulations
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promulgated thereunder (the "Act"), (b) the Exchange Shares must be held
indefinitely, and the Contributor must continue to bear the economic risk of
the investment in the Exchange Shares unless they are subsequently registered
under the Act or an exemption from such registration is available, (c) there
currently is no public market for the Exchange Shares, (d) when and if Exchange
Shares can be transferred pursuant to this Agreement, Rule 144 promulgated
under the Act is not presently available with respect to the sale of any
securities of the Company, and the Company has made no covenant to make such
Rule available, (e) when and if Exchange Shares may be disposed of pursuant to
this Agreement without registration in reliance on Rule 144, such disposition
can be made only in limited amounts in accordance with the terms and conditions
of such Rule, (f) if the Rule 144 exemption is not available, public sale
without registration will require compliance with Regulation A or some other
exemption under the Act, (g) a restrictive legend in the form heretofore set
forth shall be placed on the certificates or instruments representing the
Exchange Shares, and (h) a notation shall be made in the appropriate records of
the Company indicating that the Exchange Shares are subject to restrictions on
transfer and, if the Company should at some time in the future engage the
services of a stock transfer agent, appropriate stop transfer restrictions will
be issued to such transfer agent with respect to the Exchange Shares.
2.4 SALES. If any of the Exchange Shares are to be disposed of in
accordance with Rule 144 under the Act or otherwise, the Contributor shall
promptly notify the Company of such intended disposition and shall deliver to
the Company at or prior to the time of such disposition such documentation as
the Company may reasonably request in connection with such sale and, in the
case of a disposition pursuant to Rule 144, shall deliver to the Company an
executed copy of any notice on Form 144 required to be filed with the
Securities and Exchange Commission.
2.5 INVESTMENT REPRESENTATIONS. Contributor is acquiring the Exchange
Shares for investment for his or her own account and not with a view to, or for
resale in connection with, the distribution or other disposition thereof. The
Contributor further represents and warrants that (a) Contributor has been given
the opportunity to obtain any information or documents relating to (and to ask
questions and receive answers about such documents) the Company and the business
and prospects of the Company which Contributor deems necessary to evaluate the
merits and risks related to his investment in the Exchange Shares and to verify
the information received; (b) Contributor's financial condition is such that
Contributor can afford to bear the economic risk of holding the unregistered
Exchange Shares for an indefinite period of time and has adequate means for
providing for his current needs and personal contingencies; (c) Contributor can
afford to suffer a complete loss of the investment in the Exchange Shares; (d)
all information which Contributor has provided to the Company concerning
Contributor and his financial position is correct and complete as of the date of
this Agreement; (e) Contributor understands and has taken cognizance of all risk
factors related to the acquisition of the Exchange Shares; (f) Contributor's
knowledge and experience in financial and business matters are such that
Contributor is capable of evaluating the merits and risks of Contributor's
acquisition of the Exchange Shares as contemplated by this Agreement.
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ARTICLE 3 - ADDITIONAL REPRESENTATIONS OF CONTRIBUTORS
Each of Bejan, Mosen, and Xxxxx represents, warrants and agrees,
severally for himself or herself, as follows, subject to the Representations
Schedule attached hereto as an Exhibit and incorporated by reference:
3.1. PRESIDENT OF TECHSTORE. Xxxxx Xxxx is the duly elected President
of TechStore.
3.2. BUSINESS. TechStore is in the business of selling computer
related equipment and software over the internet (the "Business").
3.3. ORGANIZATION AND GOOD STANDING. TechStore is a limited liability
company duly organized, validly existing and in good standing under the laws
of the State of California and has the corporate power and authority to own,
lease and operate its properties and to transact its business as it is now
being conducted, holds all material franchises, licenses and permits necessary
and required therefor, and is duly qualified or licensed to do business and is
in good standing in each jurisdiction where the nature of the business
conducted by it or the ownership, lease or operation of its properties
requires a license or qualification.
3.4. CONSENTS AND APPROVALS. Except as set forth in Schedule 3.4,
execution and delivery of this Agreement and the transactions contemplated
hereby will not: (a) violate any provision of the Articles of Organization or
Bylaws of TechStore; (b) violate any statute, rule, regulation, order or
decree of any public body or authority (including governmental self-regulatory
agencies) by which TechStore, any of its properties or assets, or the Seller
may be bound; (c) require any filing with or permit, consent or approval of
any public body or authority (including non-governmental self-regulatory
agencies); or (d)result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, pledge, indenture,
license, franchise, permit, agreement or other instrument or obligation to
which TechStore or the Seller, or any of the properties or assets of TechStore
or any shareholder, may be bound.
3.5. CAPITALIZATION. Immediately following the consummation of the
Purchase Agreements, by and between each of Bejan and TechStore and Gateway,
dated as of the date hereof (the "Purchase Agreements") and prior to the
consummation of the Roll-Up Transactions, all the issued and outstanding
Members' interest, on a percentage basis, will be as follows: Gateway=24%,
Bejan=52%, Mosen=12%, and Xxxxx=12%. Since December 1, 1998, and except for
interests issued to Gateway, no ownership interest in TechStore has been
issued or have been transferred to or from TechStore. All issued and
outstanding ownership interests in TechStore have been validly issued and are
fully paid and non-assessable, have not been issued in violation of and are
not currently subject to, any preemptive rights. Except as disclosed in
Schedule 3.5, there are not, as of the date hereof, any outstanding or
authorized convertible securities, subscriptions, options, warrants, calls,
rights, commitments, or any other agreements of any character to which
TechStore is a party that, directly
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orindirectly (i) obligate TechStore to issue any ownership interests or any
securities convertible into, or exercisable or exchangeable for, or evidencing
the right to subscribe for any shares of capital stock, (ii)call for or relate
to the sale, pledge, transfer or other disposition by TechStore of its
ownership interests, or (iii)relate to the voting or control of the ownership
interests.
3.6 FINANCIAL STATEMENTS.
(a)TechStore has previously provided to the
Company audited financial statements of TechStore
since its inception, including Balance Sheets as of
December 31, 1998, and the related Statements of
Operations and Statements of Cash Flow for the year
then ended (collectively, "TechStore Financial
Statements").
(b)TechStore Financial Statements have been
prepared in accordance with generally accepted
accounting principles applied on a consistent basis
(except as may be indicated therein or in the
accompanying notes or schedules thereto) and fairly
present the financial position of TechStore as of
the dates thereof and the results of operations and
changes in financial position of TechStore for then
ended, subject to any other adjustments described
therein.
3.7. STATUS OF LIABILITIES. Since December 1, 1998, and except as set
forth on Schedule 3.7, TechStore has paid all normal and recurring
installments (i) of bank and other long term debt, (ii) under leases and
contractual obligations and (iii) any and all other amounts due and payable to
any persons or entities. TechStore does not have any liabilities (whether
absolute, accrued, contingent, unliquidated or otherwise) except (a)
liabilities, obligations or contingencies which are accrues or reserved
against in the balance sheet of TechStore as of December 31, 1998 ("TechStore
Balance Sheet"), (b) normally recurring liabilities incurred after the date of
the TechStore Balance Sheet in the ordinary course of business and consistent
with past practice, and (c) liabilities incurred after the date of the
TechStore Balance Sheet not incurred in the ordinary course of business which
do not exceed $25,000.
3.8. ASSETS. Except as set forth in Schedule 3.8, TechStore, has good,
valid and marketable title to all of the assets, properties (tangible and
intangible) and rights used in or related to the business as presently
conducted (the "Assets"), free and clear of all mortgages, liens, pledges,
security interests, charges, claims, restrictions, and encumbrances of any
nature whatsoever ("Encumbrances"), except for liens for current taxes not yet
due and payable.
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3.9. TAXES AND TAX RETURNS. Except as set forth in Schedule 3.9,
TechStore has filed or caused to be filed on a timely basis all federal,
state, local, foreign and other tax returns, reports and declarations
(collectively, "Tax Returns") required to be filed by TechStore in connection
with the Business. All Tax Returns filed by or on behalf of TechStore in
connection with the Business are materially complete in all respects. To the
knowledge of each of the Contributors, TechStore has paid all income,
estimated, excise, franchise, gross receipts, capital stock, profits, stamp,
occupation, sales, use, transfer, value added, property (whether real,
personal or mixed), employment, unemployment, disability, withholding, social
security, workers' compensation and other taxes, and interest, penalties,
fines, costs and assessments (collectively, "Taxes"), due and payable with
respect to the periods covered by such Tax Returns (whether or not reflected
thereon). To the knowledge of each of the Contributors, there are no tax liens
on any of the properties or assets, real, personal or mixed, tangible or
intangible, of TechStore. Since January 1, 1999, TechStore has not incurred
any Tax liability in connection with the Business other than in the ordinary
course of business. No deficiency in Taxes for any period has been asserted in
writing by any taxing authority which remains unpaid at the date hereof, no
written inquiries or notices have been received by TechStore from any taxing
authority with respect to possible claims for Taxes, each Contributor has no
reason to believe or has knowledge that such an inquiry or notice is pending
or threatened, and, to the knowledge of each Contributor, there is no basis
for additional claims or assessments for Taxes. TechStore has not agreed to
the extension of the statute of limitations with respect to any Tax Return or
tax period.
3.10. MATERIAL CHANGES. Since January 1, 1999 and except as set forth
in Schedule 3.10, there has not been (i) any material adverse change in the
Assets, the operations, prospects, or condition (financial or otherwise) of
the Business or of TechStore, (ii) any damage, destruction or loss, whether or
not covered by insurance, affecting the Assets, the operations, prospects or
condition (financial or otherwise) of the Business, (iii) any material
increase in the rate of compensation payable or to become payable by either of
TechStore to any of its employees engaged in the conduct of the Business or
any material increase in the rate of the amounts paid, payable or to become
payable under any bonus, insurance, pension or other benefit plan, or any
arrangement made for or with any such employees, (iv) any material actual or
threatened trouble or disruption of TechStore's relations with its agents,
customers, or suppliers, with respect to the Business, (v) any resignations or
threatened resignations of employees of the Business with salaries exceeding
$50,000; or (vi) any material liability incurred with respect to the Business,
other than liabilities incurred in the ordinary course of business consistent
with past practice, or any lien or encumbrance discharged or satisfied with
respect to the Business or the Assets, or any failure to pay or discharge when
due any liability of which the failure to pay or discharge has caused or will
cause any material damage or risk of material loss to the Business or any of
the Assets. There has been no amendment, waiver or termination of any material
agreement, contract, commitment, lease, plan, permit, authorization or
arrangement ("Contract or License") which has been delivered to the Company in
connection with its due diligence review, or any other Contract or License,
which materially relates to TechStore or the Business, or any waiver of any
rights of substantial value with respect to the Business or the Assets,
whether or not in the ordinary course of business.
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3.11. LEGAL PROCEEDINGS; COMPLIANCE WITH LAW.
(a)Except as set forth in Schedule 3.11(a), to the
knowledge of each of the Contributors, there is no lawsuit, action,
arbitration, administrative or other proceeding, criminal prosecution or
governmental investigation or inquiry ("Litigation") that is pending or, to
the knowledge of each of the Contributors, threatened against or related to or
otherwise affecting TechStore, the Business, the Assets or any property leased
or rented to TechStore. There has been no material Default (defined below)
under any Regulations (defined below) applicable to TechStore with respect to
the Business or the Assets, including Regulations relating to pollution or
protection of the environment. As used in this Agreement, "Default" means (a)
a breach, default or violation, or (b) the occurrence of an event that with
the passage of time or the giving of notice, or both, would constitute a
breach, default or violation. As used in this Agreement, "Regulation" means
any statute, law, ordinance, regulation, order or rule of any federal, state,
local, foreign or other governmental agency or body or of any other type of
regulatory body, including, without limitation, those covering environmental,
energy, safety, health, transportation, bribery, record keeping, zoning,
anti-discrimination, antitrust, wage and hour, and price and wage control
matters.
(b) Except as set forth in Schedule 3.11(b) and without
limiting the generality of subsection (a), there has not been at any time
since TechStore's inception, or otherwise, to the knowledge of each of the
Contributors (i) any Environmental Condition (defined below) at or relating to
the premises at which the Business has been conducted, or at or relating to
any property owned, leased or operated by TechStore (or any predecessor
thereof) with respect to the Business at any time, or at or relating to any
property at which wastes generated by TechStore or the Business have been
deposited or disposed of, nor have TechStore received written notice of any
such Environmental Condition, or (ii) any written notice received by TechStore
that TechStore violated any Regulation or Environmental Law governing the
shipment or storage of hazardous materials. "Environmental Condition" means
any condition or circumstance, whether created by TechStore or any third
party, that (i) requires abatement or correction under an Environmental Law
(defined below), (ii) is reasonably likely to give rise to any civil or
criminal liability under an Environmental Law, or (iii) is reasonably likely
to create a public or private nuisance, including, but not limited to, the
presence of asbestos, PCBs, hazardous substances, radioactive waste or radon.
"Environmental Law" includes all Statutes and Regulations relating to
pollution or protection of the environment as well as any principles of common
law under which a party may be held liable for the release or discharge of any
materials into the environment including, but not limited to, nuisance and
trespass.
(c) Except as set forth in Schedule 3.11(c), TechStore has
obtained all governmental permits, licenses, registrations, certificates of
occupancy, approval and other authorizations (the "Governmental Permits") that
are required for the complete operation of the Business as presently operated
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and that if not obtained could have a material adverse effect on the Business.
To the knowledge of each of the Contributors all of the material Governmental
Permits are presently in full force, and, to the knowledge of each of the
Contributors, no revocation, modification, cancellation or withdrawal thereof
has been threatened. TechStore has filed such timely and complete renewal
applications as may be required with respect to their Governmental Permits
that if not obtained would have a material adverse effect on the Business.
TechStore are in full compliance with their Governmental Permits.
3.12. INTELLECTUAL PROPERTY.
(a) Except as set forth in Schedule 3.12(a), TechStore owns
or has the legal right to use without limitation and payment of royalties, the
patents, patent applications, inventions, copyrights, trademarks, trade names,
licenses, software (whether existing and under development) and other legally
protectable rights used in the Business (the "Intellectual Properties"). All
the Intellectual Properties are valid and in good standing, freely assignable,
and are subject to no material liens, charges, contractual rights or, to the
knowledge of each of the Contributors, claims or other interests of any other
person and are adequate and sufficient to permit TechStore to conduct the
Business. No rights under any patents, inventions, copyrights, trademarks,
trade names, licenses or other legally protectable rights owned solely or
partially by others, including directors, officers or employees of TechStore,
are required by TechStore in connection with the conduct of the Business, and
the consummation of the transactions contemplated by this Agreement will not
materially alter or impair any such rights.
(b) Except as set forth in Schedule 3.12(b), each of the
Contributors has no knowledge of, and has received no notice to the effect
that any product TechStore manufactures or sells or distributes or any
services TechStore provides, or the marketing or use by TechStore of any such
product or service, may infringe any patent, trademark, trade name, copyright
or legally protectable right of another. All trade secrets, if any, owned or
used by TechStore are, to the knowledge of each Contributor, owned free of any
adverse claims, rights or encumbrances as to its exclusive rights thereto, and
TechStore has used reasonable efforts to protect its rights to continued
secrecy thereof.
3.13. DISTRIBUTORS, CUSTOMERS OR SUPPLIERS. Neither of the
Contributors is aware that any customer, distributor or supplier intends to
cease doing business with TechStore or to alter materially the amount of
business done with TechStore due to consummation of the transactions
contemplated by this Agreement or any other reason.
3.14. REAL PROPERTY.
(a) TechStore operates the Business on parcels of real
property located at 00 Xxxxxxxxxx Xxxx., Xxxxxx, Xxxxxxxxxx 00000
(collectively, the "Leased Parcels").
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(b) TechStore has not received written notice of any
governmental assessments made against the Leased Parcels which are unpaid
(except any ad valorem taxes for the current tax year which are due or payable
and not delinquent).
(c) TechStore has not received any written notice of any
violation of any laws, rules, regulations or ordinances (including, without
limitation, zoning and environmental laws, regulations or ordinances) relating
to the Leased Parcels or requesting or requiring the performance of any
repairs, alterations or other work in order so to comply.
(d) TechStore has not received written notice of any
assessment for public improvements or otherwise which is due and remains
unpaid with respect to any portion of the Leased Parcels and TechStore has not
received any written notice of any currently proposed or pending assessment
for public improvements or otherwise with respect to the Leased Parcels.
(e) The plumbing, heating, electrical, ventilation and air
conditioning systems, elevator systems and all other mechanical systems and
equipment at the buildings and other improvements constituting of the Leased
Parcels are in good working order, subject to normal wear and tear and the age
and condition of the Leased Parcels.
(f) To the knowledge of each Contributor, the Leased
Parcels (or uses to which they are put) materially conform in all respects
with all applicable zoning regulations or ordinances.
3.15. LICENSES. TechStore has the right to use all computer software,
including all property rights constituting part of the computer software, used
in connection with and material to the operation of the Business (the
"Computer Software").
3.16. ACCOUNTS RECEIVABLE; INVENTORIES AND EQUIPMENT. Except as set
forth in Schedule 3.16, the accounts receivable of the Business are in their
entirety valid accounts receivable, arising in the ordinary course of
business. The inventories and equipment of the Business are in all material
respects merchantable and fully usable in the ordinary course of business.
3.17. COMPENSATION. Each of the Contributors warrants that the
transactions contemplated by this Agreement will not result in any liability
for severance or separation pay to any employee or independent contractor of
the Business.
3.18. EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 3.18,
TechStore does not maintain or sponsor, nor are they required to make
contributions to, any pension, profit-sharing, savings, bonus, incentive or
deferred compensation, severance pay, medical, life insurance, welfare or
other employee benefit plan. All pension, profit-sharing, savings, bonus,
incentive or deferred compensation, severance pay, medical, life insurance,
welfare or other employee benefit plans within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (hereinafter
referred to as "ERISA"), in which the employees participate (such plans and
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related trust, insurance and annuity contracts, funding media and related
agreements and arrangements being hereinafter referred to as the "Benefit
Plans") materially comply with all requirements of the Department of Labor and
the Internal Revenue Service, and with all other applicable laws, and
TechStore has not taken or failed to take any action with respect to the
Benefit Plans which might create any liability on the part of the Contributors
or the Company. Each "fiduciary" (within the meaning of Section 3(21)(A) of
ERISA) as to each Benefit Plan has materially complied with all requirements
of ERISA and all other applicable laws in respect of each such Benefit Plan.
In addition:
(i) TechStore does not maintain, sponsor or contribute to,
and has never maintained, sponsored or contributed to, any "defined benefit
plan" (within the meaning of Section 3 (35) of ERISA);
(ii) TechStore does not maintain, sponsor, contribute to,
and has never maintained, sponsored or contributed to, any "Multiemployer
Plan" (within the meaning of Section 3(37) or 4001(a)(3) of ERISA;
(iii) Except as set forth on Schedule 3.18(iii), TechStore
does not maintain, sponsor or contribute to, and has never maintained,
sponsored or contributed to, any "defined contribution plan" (within the
meaning of Section 3(34),of ERISA);
(iv) other than claims in the ordinary course for benefits
with respect to the Benefit Plans, to the knowledge of each Contributor there
are no actions, suits or claims (including claims for income Taxes, interest,
penalties, fines or excise Taxes with respect thereto) pending with respect to
any Benefit Plan, or any circumstances which might give rise to any such
action, suit or claim (including claims for income Taxes, interest, penalties,
fines or excise Taxes with respect thereto);
(v) all materially required reports, returns and similar
documents with respect to the Benefit Plans required to be filed with any
governmental agency have been so filed on or before their due date; or
(vi) TechStore has no obligation to provide health or other
welfare benefits to former, retired or terminated employees, except as
specifically required under Section 4980B of the Code or Section 601 of ERISA.
TechStore has materially complied with the notice and continuation
requirements of Section 4980B of the Code or Section 601 of ERISA and the
regulations thereunder.
3.19. LABOR RELATIONS AND EMPLOYMENT MATTERS.
(a) LABOR RELATIONS. Except as set forth in Schedule
3.19(a), none of TechStore's employees is represented by any labor union.
There have been no material violations of any federal, state or local
statutes, laws, ordinances, rules, regulations, orders or directives with
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respect to the employment of individuals by, or the employment practices or
work conditions of TechStore in connection with the Business or the terms and
conditions of employment or wages and hours. Except as set forth in Schedule
3.19(a), TechStore, in connection with the Business, is not engaged in any
unfair labor practice or other unlawful employment practice and there has not
been, nor to the knowledge of each of the Contributors is there threatened or
contemplated any charges of unfair labor practices or other employee-related
complaints or investigations pending or threatened against TechStore before
the National Labor Relations Board, the Equal Employment Opportunity
Commission, the Occupational Safety and Health Review Commission, the Internal
Revenue Service, the Pension Benefit Guaranty Corporation, the Immigration and
Naturalization Service, the Department of Labor, the state or local equal
employment opportunity authority, state department of labor (or labor
commission or wage and hour occupational safety and health authority, state
authority), state workers' compensation authority, state unemployment
insurance/ compensation authority or any other federal, state, local or other
governmental authority. Except as set forth in Schedule 3.19(a), there is no
strike, picketing, slowdown, work stoppage, grievance or organizational
attempt pending against TechStore nor, to the knowledge of each of the
Contributors, threatened against or involving the Business. No issue with
respect to union representation is pending against TechStore nor to the
knowledge of each of the Contributors, threatened with respect to the
employees of the Business. Except as set forth in Schedule 3.19(a), no union
or collective bargaining unit or other labor organization has ever been
certified or recognized by the Business as the representative of any of the
employees of the Business.
(b) NO LITIGATION. Except as set forth in Schedule 3.19(b),
to the best of each Contributor's knowledge, no wrongful discharge, breach of
contract (written, oral or implied), discrimination, defamation or other
employment-related litigation of any kind is pending or threatened against
TechStore, nor does any basis therefor exist.
(c) COMPLIANCE WITH IRCA AND COBRA. Each of the
Contributors warrants that TechStore has complied with all requirements and
regulations under the Immigration Reform and Control Act of 1986 ("IRCA"),
concerning the review, collection and retention of evidence of the legal right
of each of TechStore's covered employees to live and work in the United States
(including, but not limited to, Immigration and Naturalization Service "I-9"
forms), and under Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), concerning providing eligible employees and dependents notice of
their rights to continue group health insurance coverage, if any, at rates
permitted by COBRA in the event of certain qualifying events.
3.20. INCREASES IN COMPENSATION OR BENEFITS. Subsequent to December
1, 1998 and except as set forth in Schedule 3.20, there have been no increases
in the compensation of any TechStore's employees' current salary payable or to
become payable to any of the employees of TechStore in connection with the
Business and there have been no payments or provisions for any awards,
bonuses, stock options, loans, profit sharing, pension, retirement or welfare
plans or similar or other disbursements or arrangements for or on behalf of
such employees (or related parties thereof), in each case, other than (i)
pursuant to currently existing plans or arrangements, or (ii) as was required
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from time to time by governmental legislation affecting wages. All bonuses
heretofore granted to employees of the Business have been paid in full to such
employees.
3.21. INSURANCE. TechStore, in connection with the Business,
maintains insurance policies covering all the material Assets and properties
of the Business and the various occurrences that may arise in connection with
the operation of the Business. Such policies are in full force and effect and
no premiums are more than thirty (30) days past due. TechStore, in connection
with the Business, has complied with all the material provisions of such
policies. To the knowledge of each Contributor, such insurance is of
comparable amounts and coverage as that which companies engaged in similar
businesses maintain in accordance with reasonable business practices. Each of
the Contributors has no knowledge of any written notices of any pending or
threatened termination or premium increases with respect to any of such
policies. Neither TechStore, in connection with the Business, nor the Business
has had any casualty loss or occurrence which may give rise to any claim of
any kind not covered by insurance and each of the Contributors has no
knowledge of any occurrence which may give rise to any claim of any kind not
covered by insurance, subject to a reasonable deductible. To the knowledge of
each Contributor, all claims against TechStore, in connection with the
Business, or the Business covered by insurance have been reported to the
insurance carrier on a timely basis. To the knowledge of each Contributor,
none of the insurance policies of TechStore, in connection with the Business,
or the Business will terminate or be adversely affected by the consummation of
the transactions contemplated by this Agreement.
3.22. CONDUCT OF BUSINESS. TechStore is not restricted from conducting
the Business in any location by agreement or court decree.
3.23. ACCOUNTS PAYABLE, INDEBTEDNESS, ETC. The accounts and notes
payable and accrued expenses reflected on the most recent balance sheet of
TechStore and the accounts and notes payable and accrued expenses incurred by
TechStore in connection with the Business after the date of such balance sheet
are in all respects valid claims that arose in the ordinary course of
business. Since December 31, 1998, the accounts and notes payable, accrued
expenses and debts of the Contributor in connection with the Business have
been paid in a manner consistent with past practice.
3.24. LICENSURE, ETC. To the knowledge of each Contributor, each
individual employed or contracted with by TechStore in connection with the
Business, who is required to be licensed by any governmental entity to perform
his or her job services is duly licensed to provide such services and is
otherwise in material compliance with all federal, state and local laws, rules
and regulations relating to such professional licensure and otherwise meets
the qualifications to provide such services.
3.25. BOOKS AND RECORDS. The books and records of TechStore are
complete and correct in all material respects and have been maintained in
accordance with good business practices.
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3.26. ACCURACY OF INFORMATION. No representation or warranty by the
Contributors in this Agreement and no information contained herein or
otherwise delivered to the Company contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements contained herein or therein not misleading.
3.27. TRANSACTIONS WITH CERTAIN PERSONS. Except as set forth in
Schedule 3.27, none of the directors or officers of TechStore, nor any of the
Contributors or members of their respective families, is a party to any
transaction with TechStore, including, without limitation, any contract,
agreement or other arrangement (i)providing for the furnishing of services by,
(ii)providing for the rental of real estate or personal property from, or
(iii) otherwise requiring payments (other than for services as an officer,
director or employee) to any such person or to any corporation, partnership,
trust or other entity in which any such person has, directly or indirectly, an
interest as an officer, director, trustee, stockholder or partner. There is no
property, tangible or intangible, real or personal, valued in excess of
$10,000 which is (a) owned by any Contributor or member of his family, any
current or former officer, director or stockholder of the Company, or persons
not dealing with any of them at arms length, and (b) which is presently used
by TechStore in connection with its business.
3.28. NO BROKERS. Neither of the Contributors has entered into any
agreement, arrangement or understanding with any person or firm which will
result in an obligation of any of the parties to this Agreement to pay any
finder's fee, brokerage commission or similar payment in connection with the
transactions contemplated hereby.
ARTICLE 4 - THE COMPANY'S REPRESENTATIONS AND WARRANTIES
As a condition to the performance by the Contributors of their
obligations under this Agreement, the Company hereby represents and warrants
to the Contributors as follows as of the execution date of this Agreement:
4.1. EXECUTION AND DELIVERY. This Agreement has been duly executed and
delivered by the Company and is valid and binding obligation enforceable
against the Company in accordance with its terms.
4.2. CONSENTS AND APPROVALS. Except for filings required by applicable
securities laws, no consent, approval or authorization of, or declaration,
filing or registration with, any United States federal or state governmental
or regulatory authority is required to be made or obtained by the Company in
connection with the execution, delivery and performance of this Agreement and
the consummation of the acquisition of the Contributed Interests.
4.3. NO BROKERS. The Company has not employed, and is not subject to
the valid claim of, any broker, finder, consultant or other intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission in connection with such transactions.
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4.4. NO CONFLICT OR VIOLATION. Neither the execution and delivery of
this Agreement nor the consummation of the sale of the Contributed Interests
will result in a violation by the Company of any statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or award.
4.5. ACQUISITION FOR INVESTMENT. The Contributed Interests being
purchased by the Company hereunder are being purchased by the Company in good
faith for investment for its own account and not with a view to a distribution
or resale of any of such Contributed Interests in violation of any applicable
securities laws, subject nevertheless to any requirement at law that the
disposition of the Company's property shall at all times be within the
Company's control.
4.6. ACCREDITED INVESTOR. The Company acknowledges that it is an
"accredited investor" as defined in Rule 501 under the Securities Act of 1933,
as amended (the "Securities Act").
4.7. LEGEND. The certificates representing the Contributed Interests
to be delivered to the Company hereunder shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS AND MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IF SO
REGISTERED OR IF EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS ARE AVAILABLE.
NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF THE COMPANY HAS BEEN
FURNISHED WITH AN OPINION OF COUNSEL FOR THE HOLDER (WHICH COUNSEL SHALL BE
ACCEPTABLE TO THE COMPANY), SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY,
TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
THE ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER."
4.8. SECURITIES UNREGISTERED. The Company acknowledges that it has
been advised that (a) the Contributed Interests to be delivered to the Company
hereunder will not have been registered under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the "Act"), (b)
such Contributed Interests must be held indefinitely, and the Company must
continue to bear the economic risk of the investment in such Contributed
Interests unless they are subsequently registered under the Act or an
exemption from such registration is available, (c) there may not be a public
market for such Contributed Interests, (d) Rule 144 promulgated under the Act
is not presently available with respect to the sale of any securities of the
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Company, and the Company has made no covenant to make such Rule available, (e)
when and if the Contributed Interests may be disposed of without registration
in reliance on Rule 144, such disposition can be made only in limited amounts
in accordance with the terms and conditions of such Rule, (f) if the Rule 144
exemption is not available, public sale without registration will require
compliance with Regulation A or some other exemption under the Act and (g) a
restrictive legend in the form heretofore set forth shall be placed on the
certificates representing the Contributed Interests.
4.9. ISSUANCE OF EXCHANGE SHARES. The Exchange Shares have been duly
authorized by all necessary corporate action on the part of the Company and
are validly issued, fully paid, and non-assessable, and each of the
Contributors will acquire valid title to such shares, free and clear of any
encumbrances.
4.10. STOCK. All issued and outstanding shares of Company Common Stock
and the Series A Preferred Stock have been validly issued and are fully paid
and non-assessable, have not been issued in violation of and are not currently
subject to, any preemptive rights.
4.11. BOOKS AND RECORDS. The books and records of the Company are
complete and correct in all material respects and have been maintained in
accordance with good business practices.
4.12. ACCURACY OF INFORMATION. No representation or warranty by the
Company in this Agreement and no information contained herein or otherwise
delivered to the Contributors contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
contained herein or therein not misleading.
ARTICLE 5 - ROLL-UP COVENANT OF THE CONTRIBUTORS
Each Contributor hereby covenants to the Company to use the
Contributor's good faith, reasonable efforts to effect the Roll-Up as soon as
practicable.
ARTICLE 6 - CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF THE CONTRIBUTORS AND THE COMPANY. The
respective obligations of each party to consummate the Exchange shall be subject
to the fulfillment, at or prior to the Closing, of the following conditions:
(a) NO INJUNCTION. Neither the Company nor
TechStore shall be suject any order, decree or
injunction of a court of compenent jurisdiction
within the Unitd States which i) prevents or
materially delays the consummaion of the Exchange,
or (ii) would impose any material limitation on the
ability of the Company effectively to exercise full
rights of
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ownership of TechStore or the assets or business of
TechStore.
(b) NO GOVERNMENTAL PROCEEDING OR LITIGATION.
No investigation and no suit, action or proceeding
before any court or any governmental or regulatory
authority shall be pending or threatenened by any
state or federal governmental or regulatory
authority against the Company, TechStore, or any of
their affiliates, associates, officers or directors
seeking to restrain, prevent or change in any
material respect the transaction contemplated hereby
or seeking damages in connection with such
transactions.
(c) CONSENTS. TechStore shall have
obtained all permits, authorizations, consents and
approvals referred to in Section 3.4 hereof in form
and substance satisfactory to such parties, and they
shall have received evidence satisfactory to them of
the receipt of such permits, authorizations,
consents and approvals.
(d) TRANSACTION. A definitive agreement
to merge with and into Computer Marketplace, Inc. or
TriStep shall be executed.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to consummate the Exchange shall be subject to the fulfillment, at or
prior to the Closing, of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of the Contributors
contained herein shall be true and correct in all
material respects on the date of this Agreement, and
(except as to representations that specify a
particular time) on the Closing Date as though such
representations and warranties were made on that
date.
(b) PERFORMANCE. The Contributors shall have performed
and complied in all material respects with all
agreements, obligations and conditions required by
this Agreement to be performed or complied with by
them on or prior to the Closing.
(c) ABSENCE OF MATERIAL ADVERSE CHANGE. Since December
31, 1998, there has been no material adverse change,
nor the occurrence of any event reasonably likely to
cause a material adverse change, in the business,
operations, properties, assets, liabilities,
condition (financial or otherwise), or future
prospects of the TechStore, whether or not occurring
in the ordinary course of business, except for any
change directly resulting from action of TechStore
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that was disclosed to the Company and to which the
Company consented.
6.3 CONDITIONS TO OBLIGATIONS OF THE CONTRIBUTORS. The obligations of
the Contributors to consummate the Exchange shall be subject to the fulfillment
at or prior to the Closing of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of the Company
contained herein shall be true and correct in all
material respects on the date of this Agreement and
on the Closing Date (except as to representations
that specify a particular time) as though such
representations and warranties were made on that
date.
(b) PERFORMANCE. The Company shall have performed and
complied in all material respects with all
agreements obligations and conditions required by
this Agreement to be performed or complied with by
them on or prior to the Closing.
ARTICLE 7 - CLOSING
Subject to the provisions of Articles 6, the closing of the Exchange
(the "Closing") shall take place at the offices of Gateway Advisors, Inc., 000
Xxxxx 0xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxxxxxxxxx, at 11:00 a.m., on March
31, 1999, or at such other time and place as the Contributors and the Company
mutually agree upon orally or in writing (which time and place are designated
as the "Closing") The date on which the Closing actually occurs is herein
referred to as the "Closing Date."
ARTICLE 8 - MISCELLANEOUS
8.1 BINDING EFFECT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties hereto and their respective
heirs, legal representatives, successors and assigns.
8.2 AMENDMENT. This Agreement may be amended only by a written
instrument signed by the Parties hereto which specifically states that it is
amending this Agreement.
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8.3 APPLICABLE LAW. The laws of the State of California shall govern
the interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principles of conflicts of
law.
8.4 NOTICES. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid, to the Party to whom it is directed at the address set forth
below each party's signature, or such other address as the Company shall have
specified by notice in writing to the Contributors or an Contributor shall
have specified by notice in writing to the Company.
8.5 RECAPITALIZATIONS, ETC. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to the Exchange
Shares, to any and all shares of capital stock of the Company or any capital
stock, partnership units or any other security evidencing ownership interests
in any successor or assign of the Company (whether by merger, consolidation,
sale of assets or otherwise) which may be issued in respect of, in exchange
for, or in substitution of the Common Stock by reason of any stock dividend,
split, reverse split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise.
8.6 REMEDIES. The Parties acknowledge that it would be impossible to
fix money damages and that violations of this Agreement will cause irreparable
injury for which adequate remedy at law is not available and, therefore, this
Agreement must be enforced by specific performance or injunctive relief. The
Parties agree that any Party may, in its sole discretion, apply to any court
of competent jurisdiction for specific performance or injunctive or such other
relief as such court may deem just and proper in order to enforce this
Agreement or prevent any violation hereof and, to the extent permitted by
applicable law, each Party waives any objection or defense to the imposition
of such relief. Nothing herein shall be construed to prohibit any party from
bringing any action for damages in addition to an action for specific
performance or an injunction for a breach of this Agreement.
8.7 DOMAIN NAMES. The Parties hereto agree and acknowledge that the
following domain names are the personal property of Xxxxx Xxxxxxxxx:
Xxxxxx.xxx, xxxxx.xxx, xxxxxx.xxx, xxxxxxx.xxx, xxxxxxxx.xxx,
xxxxxxxxxxxxx.xxx, xxxxxxxxxxx.xxx, xxxxxxxxxxx.xxx, xxxx0xxxx.xxx,
xxxxxxxxxxx.xxx, xxxxxxxxxx.xxx, xxxxxxxx.xxx, xxxxxxxxxxxx.xxx,
xxxxxxxxxxx.xxx, xxxxxxxxxxx.xxx, and xxxxxxx.xxx.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date hereof.
CONTRIBUTORS:
E-Taxi, Inc.:
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Gateway Advisors Inc.
By:___________________________
Xxxxxx X. Xxxxxxx
President
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Xxxxx Xxxxxxxxx
-------------------------------------------
Xxxxx Xxxxxxxxx
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Xxxxx Xxxx
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