EXHIBIT 10.48
EQUIPMENT LEASE
THIS EQUIPMENT LEASE (the "Lease") is entered into by and between Xxxxxx
International West, Inc., a Delaware corporation ("Lessor"), and National
Metal Technologies, Inc., a California corporation ("Lessee"), as of December
__, 1998.
RECITALS
WHEREAS Lessor desires to lease to Lessee, and Lessee desires to lease
from Lessor, certain machinery and equipment on the terms and conditions set
forth in this Lease;
NOW THEREFORE in consideration of the foregoing premises and respective
agreements and undertakings herein, and of other good valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Lessor and
Lessee agree as follows:
ARTICLE 1
LEASE AND DESCRIPTION OF LEASED PROPERTY
1.01 LEASE. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Leased Property (as hereinafter defined).
1.02 PROPERTY DESCRIPTION. The property to be leased is described on
the attached Schedule A (the "Leased Property").
ARTICLE 2
TERM OF LEASE
2.01 INITIAL TERM. The term of this Lease shall be from December __,
1998 until November 30, 1999 (the "Term").
ARTICLE 3
RENTAL
3.01 RENTAL PAYMENT. The amount of the rental payment during the Term
shall be $50,000.00 payable in the form of twenty-five thousand (25,000)
shares of common stock of Photomatrix, Inc. as described in the Agreement
entered into by and among Xxxxxx International West, Inc., I-PAC
Manufacturing, Inc. and Photomatrix, Inc. dated December 1, 1998, and subject
to the representations and warranties by Photomatrix, Inc. as set forth in
such Agreement.
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ARTICLE 4
OWNERSHIP
4.01 NO SALE OR SECURITY INTENDED. This Lease constitutes a lease of
the Leased Property and not a sale or the creation of a security interest.
Lessee shall not have, or at any time acquire, any right, title, or interest
in the Leased Property except the right to possession and use as provided
for in this Lease, unless and until the Option (as hereinafter defined) is
exercised by Lessee.
4.02 SUBORDINATION. The rights of Lessee under this Lease shall be
subject to and subordinate to certain security interests in the Leased
Property held by Silvergate Bank.
ARTICLE 5
OPERATING EXPENSES
5.01 Lessee shall be responsible for all expenses in connection with
the operation of the Leased Property.
ARTICLE 6
MAINTENANCE AND REPAIRS
6.01 LESSEE'S RESPONSIBILITY. Lessee shall assume all obligation and
liability with respect to the possession of the Leased Property, and for its
use, operation, condition, and storage during the Term. Lessee shall, at
Lessee's own expense, maintain the Leased Property in good mechanical
condition and running order, allowing for reasonable wear and tear. Lessor
shall not be under any liability or obligation in any manner to provide
service, maintenance, repairs or parts for the Leased Property.
6.02 ACCESSIONS. All installations, replacements, and substitutions of
parts or accessories with respect to any of the Leased Property shall
constitute accessions and shall become part of the Leased Property and shall
be owned by Lessor.
ARTICLE 6
USE OF PROPERTY
7.01 RIGHTS OF LESSEE. Lessee shall be entitled to the absolute right
to the use, operation, possession and control of the Leased Property during
the term of this Lease, provided Lessee is not in default of any provision of
this Lease or subject to any security interest Lessor may have given or may
give to any third party during the Term. Lessee shall employ and have
absolute control, supervision and responsibility over any operators or users
of the Leased Property.
7.02 DUTIES OF LESSEE. Lessee shall use the Leased Property in a
careful and proper manner and shall not permit any Leased Property to be
operated or used in violation of any applicable federal, state, or local
statute, law, ordinance, rule or regulation relating to the possession, use
or maintenance
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of the Leased Property. Lessee agrees to reimburse Lessor in full for all
damage to the Leased Property arising from any misuse or negligent act by
Lessee, its employees and its agents. Lessee will indemnify, defend protect
and hold Lessor its officers, directors, shareholders, agents, employees,
successors and assigns harmless from any and all liabilities, claims, fines,
expenses, forfeitures or penalties for violations of any statue, law,
ordinance, rule, or regulation of any duly constituted public authority.
7.03 COMMERCIAL USE LIMITATION. Lessee represents and warrants that
the Leased Property will be used for commercial or business purposes only.
ARTICLE 8
LESSOR'S RIGHT OF INSPECTION AND REPAIR
8.01 INSPECTION AND REPAIR. Lessor, at its discretion during Lessee's
regular business hours and with twenty-four (24) hours' prior notice to
Lessee, shall have the right to enter the premises where the Leased Property
is located or used for the purpose of inspection. If any Leased Property
covered by this Lease is not being properly maintained in at least as good
condition as the leased property was in at the beginning of the Term, in the
reasonable opinion of Lessor, Lessor shall have the right, but not the
obligation, to have it repaired or maintained at the expense of Lessee.
ARTICLE 9
ASSIGNMENT OF LESSOR'S WARRANTIES
9.01 WARRANTY ASSIGNMENT. Lessor shall assign to Lessee all
manufacturer, dealer or supplier warranties applicable to the Leased Property
to enable Lessee to obtain any warranty service available for the Leased
Property. Lessor appoints Lessee as Lessor's attorney-in-fact for the
purpose of enforcing any warranty. Any enforcement by Lessee shall be at the
expense of Lessee and shall in no way render Lessor responsible to Lessee for
the performance of any of the warranties.
ARTICLE 10
TAXES AND OTHER CHARGES
10.01 TAXES. Lessee shall be liable for and pay on or before their due
dates, all sales taxes, use taxes, personal property taxes, business personal
property taxes and assessments, or other direct taxes or governmental charges
imposed on the Leased Property. The term "direct taxes" as used here shall
include all taxes, except income taxes and franchise taxes of Lessor, and
charges and fees imposed by any federal, state, county, municipal, or other
governmental authority. Lessee shall promptly notify Lessor and send Lessor
copies of any notices, reports, and inquiries from taxing authorities
concerning delinquent taxes, fees, or other charges received, or assessments
received by Lessee.
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10.02 OTHER CHARGES. Lessee shall be liable for any fees for licenses,
registrations, permits and other certificates as may be required for the
lawful operation of the Leased Property. All certificates of title shall
initially be applied for in the State of California and shall be issued and
maintained in the name of Lessor, as owner. They shall be delivered to
Lessor and Lessee shall pay all expenses in relation to them.
10.03 TAXES PAID BY LESSOR. If any taxing authority requires that a tax
as set forth in Paragraph 10.01 be paid to the taxing authority directly by
Lessor, Lessee shall, on notice from Lessor, pay to Lessor the amount of the
tax.
ARTICLE 11
NO WARRANTIES BY LESSOR; LESSEE'S ACCEPTANCE
11.01 NO WARRANTIES BY LESSOR. Lessor makes no warranty, express or
implied, as to any matter whatsoever, including the condition of the Leased
Property, its merchantability, or its fitness for any particular purpose.
11.02 EXCLUSION OF EXPRESS WARRANTIES. No agent, employee or
representative of Lessor has any authority to bind Lessor to any affirmation,
representation or warranty to bind Lessor to any affirmation, representation,
or warranty concerning the Leased Property; and unless an affirmation,
representation or warranty made by an agent, employee, or representative is
specifically included within this Lease, it shall not be enforceable by
Lessee.
11.03 ACCEPTANCE BY LESSEE. Subject to the representations and
warranties set forth in Section 4.7 of the Agreement, Lessee has inspected
the Leased Property and Lessee is satisfied with and has accepted the Leased
Property in its present condition and repair, AS-IS and WHERE-IS.
ARTICLE 12
INSURANCE
12.01 LESSEE'S DUTY TO INSURE. Lessee agrees at its own cost and
expense to maintain in full force and effect public liability and property
damage insurance issued by companies satisfactory to Lessor, insuring the
interest of Lessor, Lessee, and their authorized agents and employees. The
policy shall be for primary coverage and shall have a combined single limit
of no less than $1,000,000.00 per occurrence.
For all property covered by this Lease, Lessee shall also provide
comprehensive, fire, theft, and additional combined insurance coverage at
Lessee's own cost and expense naming Lessor as additional insured. Coverage
shall be in the amount of at least Four Hundred Fifty Thousand Dollars
($450,000.00).
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12.02 INSURANCE CERTIFICATE. Lessee shall cause the insurer to furnish
to Lessor, no less than thirty (30) days after execution of this Lease and no
less than five (5) days prior to the expiration date of existing insurance, a
certificate evidencing the required coverage. The policy shall provide that
the insurer shall not cancel or materially modify the insurance except on
thirty (30) days' advanced written notice to Lessor. If Lessee fails to
procure, maintain, or renew the insurance, Lessor may, but is not obligated
to, obtain insurance for Lessee and for the account of Lessee without
prejudice to any other rights that Lessor may have.
12.03 EXCESS LIABILITY INDEMNITY. Lessee shall indemnify, defend,
protect and hold Lessor, its officers, directors, shareholders, agents,
employees, successors and assigns harmless from and against all loss,
liability and expense, including reasonable attorneys' fees, in excess of the
provided limits of liability insurance for bodily injury (including death) or
property damage caused by or arising out of the ownership, maintenance, use
or operation of the Leased Property. Lessee shall further indemnify, defend,
protect and hold harmless Lessor, its officers, directors, shareholders,
agent, employees, successors and assigns, from and against all loss,
liability and expense, including reasonable attorneys' fees, because of
Lessee's failure to comply with any terms, provisions, and conditions of any
insurance policy insuring Lessor and Lessee, or because of Lessee's failure
to comply with the terms and provisions of this Article.
ARTICLE 13
INDEMNIFICATION AND LIABILITY
13.01 ALL LIABILITY ASSUMED BY LESSEE. Lessee assumes all risk and
liability for the loss of or damage to the Leased Property, for the death of
or injury to any person or property of another, and for all other risks and
liabilities arising from the use, operation, condition, possession, or
storage of the Leased Property. Nothing in this Lease shall authorize Lessee
or any other person to operate any of the Leased Property so as to impose any
liability or other obligation on Lessor.
13.02 LESSEE'S DUTY TO INDEMNIFY. Lessee shall indemnify, defend,
protect and hold harmless Lessor, its officers, directors, shareholders,
agents, employees, successors and assigns from all liabilities, claims,
damages, loss, expenses, including reasonable attorneys' fees, Lessor may
sustain or suffer for any of the following reasons:
(a) The loss of or damage to any of the Leased Property for any cause;
(b) The injury to or death of any person including but not limited to
agents or employees of Lessee; or
(c) Damage to any property arising from the use, possession,
selection, delivery, return, condition or operation of any Leased Property.
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Lessee shall reimburse Lessor for all expenses, losses, liabilities,
fines, penalties, and claims of every type, including reasonable attorneys'
fees, imposed on or incurred by Lessor because of the failure by Lessee to
perform any of the Lease terms. Lessee shall also pay interest at the rate
of eight percent (8%) per annum per month from the day payment is made by
Lessor through the day Lessor is reimbursed by Lessee.
13.3 OBLIGATIONS SURVIVE LEASE TERM. The indemnities and assumptions
of risk, liabilities and obligations by Lessee arising under the Lease during
the Lease's term shall continue in effect for a period of two (2) years after
the termination of Lease, regardless of the reason for termination.
ARTICLE 14
ACCIDENT, LOSS OF PROPERTY, OR DAMAGE TO PROPERTY
14.01 NOTIFICATION TO LESSOR. If any Leased Property covered by this
Lease is damaged, lost, stolen, or destroyed, or if any property is damaged
as a result of its operation, use, maintenance or possession, Lessee shall
promptly notify Lessor of the occurrence, and shall file all necessary
accident reports, including those required by law and those required by
insurers of the Leased Property.
14.02 COOPERATION IN DEFENSE OF CLAIMS. Lessee, its employees and
agents shall cooperate fully with Lessor and all insurers providing the
insurance under this Lease in the investigation and defense of any and all
claims or suits. Lessee shall promptly deliver to Lessor any and all papers,
notices and documents served on or delivered to Lessee, its employees or its
agents in connection with any claim, suit, action or proceeding at law or in
equity commenced or threatened against Lessee, Lessor, or both concerning the
Leased Property.
14.3 LOSS. If any Leased Property becomes lost, stolen, destroyed, or
damaged beyond repair, Lessee shall pay Lessor in cash its then orderly
liquidation value (the "OLV") less any net proceeds of insurance for the
property received by Lessor. Upon payment, this Lease shall terminate with
respect to that item of Leased Property and Lessee shall become entitled to
the Leased Property on an "as-is-where-is" basis, without warranty, express
or implied, for any matter whatsoever. For purposes of this Agreement, the
term OLV shall mean the orderly liquidation value of such Leased Property at
the time of loss, taking into account its age, usage and normal wear and tear
from the date of execution of this Lease.
ARTICLE 15
ASSIGNMENT
15.01 ASSIGNMENT BY LESSOR. Lessor may assign this Lease or any rights
under it at any time without Lessee's consent. In the event of any assignment,
Lessor's assignee shall have all the rights, powers, privileges and remedies of
Lessor set forth in this Lease and this Lease shall be binding on the assignee,
including without limitation, the provisions regarding Lessee's Option (as
hereinafter defined).
15.02 WAIVER OF DEFENSES. Lessee agrees not to raise any claim or defense
against Lessor
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arising out of this Lease as a defense, counter-claim or offset to any action
by any assignee for the unpaid balance of any charges due under this Lease or
for possession of the Leased Property.
15.03 ASSIGNMENT OR SUBLETTING BY LESSEE. Lessee shall not assign this
Lease or any property, or assign any interest in the Lease or the Leased
Property, or sublet any of the Leased Property without the express prior
written consent of Lessor.
ARTICLE 16
ACTIONS CONSTITUTING DEFAULT
16.01 LESSEE IN DEFAULT. Lessor, at its option, may by written notice
to Lessee, declare Lessee in default on the occurrence of any of the
following:
(a) Failure by Lessee to make payments or perform any of its
obligations under (i) this Lease, and/or (ii) a promissory note of even date
herewith by Lessee in favor of Lessor in the principal sum of Three Hundred
Fifty Thousand Dollars ($350,000.00) (the "Goodwill Note"), and/or (iii) a
premises lease with a commencement date of February 1, 1999 between Lessee
and Lessor (the "Premises Lease");
(b) Institution by or against Lessee of any proceeding in bankruptcy
or insolvency, or the reorganization of Lessee under any law, or the
appointment of a receiver or trustee for the goods and chattels of Lessee, or
any assignment by Lessee for the benefit of creditors;
(c) Expiration or cancellation of any insurance policy to be paid for
by Lessee as provided for under the terms of this Lease; or
(d) Involuntary transfer of Lessee's interest in this Lease by
operation of law.
ARTICLE 17
RIGHTS, REMEDIES, AND OBLIGATIONS ON DEFAULT
17.01 LESSOR'S RIGHTS AND REMEDIES. After the default of Lessee, and on
notice from Lessor that Lessee is in default, Lessor shall have the following
options:
(a) To terminate the Lease and Lessee's rights under this Lease
including Lessee's Option (as hereinafter defined);
(b) To declare the balance of all unpaid charges of any kind required
of Lessee under the Lease to be due and payable immediately, in which event
Lessor shall be entitled to the balance due together with interest at the
rate of eight percent (8%) per annum from the date of notification of default
to the date of payment; and
(c) To repossess the Leased Property without process free of all
rights of Lessee in and
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to the Leased Property. Lessee authorizes Lessor or Lessor's agent to enter
on any premises where the Leased Property is located and repossess and remove
it. Lessee specifically waive any right of action Lessee might otherwise
have arising out of the entry and repossession, and releases Lessor of any
claim for trespass or damage caused by reason of the entry, repossession or
removal.
17.02 LESSEE'S OBLIGATION FOR LESSOR'S COSTS. After default, Lessee
shall reimburse Lessor for all reasonable expenses of repossession and
enforcement of Lessor's rights and remedies, together with interest at the
rate of eight percent (8%) per annum from the date of payment.
Notwithstanding any other provisions of this Lease, if Lessor places all or
any part of Lessor's claim against Lessee in the hands of an attorney for
collection, Lessee shall pay Lessor its reasonable attorneys' fees.
17.03 REMEDIES CUMULATIVE. The remedies of Lessor shall be cumulative
to the extent permitted by law, and may be exercised partially, concurrently,
or separately. The exercise of one remedy shall not be deemed to preclude
the exercise of any other remedy.
17.04 EFFECT OF FORBEARANCE. No failure on the part of Lessor to
exercise any remedy or right and no delay in the exercise of any remedy or
right shall operate as a waiver. No single or partial exercise by Lessor of
any remedy or right shall include any other or further exercise of that
remedy or right or the exercise of any other rights or remedies. No
forbearance by Lessor to exercise any rights or privileges under this Lease
shall be construed as a waiver, but all rights and privileges shall continue
in effect as if no forbearance had occurred. Acceptance by Lessor of
payments made by Lessee after default shall not be deemed a waiver of
Lessor's rights and remedies arising from Lessee's default.
17.05 FORFEITURE OF LESSEE'S INTEREST ON DEFAULT. Upon default, for any
reason, Lessee and Lessee's successor in interest shall have no right, title
or interest in the Leased Property, its possession or its use. Lessor shall
retain all payments of any kind made by Lessee under this Lease.
ARTICLE 18
LIENS
18.01 ENCUMBRANCES OR LIEN; NOTICE. Lessee shall not pledge, encumber,
create a security interest in, or permit any lien to become effective on any
Leased Property. If any of these events takes place, Lessee shall be deemed
to be in default at the option of Lessor. Lessee shall promptly notify
Lessor of any liens, charges or other encumbrances of which Lessee has
knowledge. Lessee shall promptly pay or satisfy any obligation from which
any lien or encumbrance arises, and shall otherwise keep the Leased Property
and all right, title and interest free and clear of all liens, charges and
encumbrances. Lessee shall deliver to Lessor appropriate satisfactions,
waivers or evidence of payment.
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ARTICLE 19
OPTION
19.01 GRANT OF OPTION. Lessor hereby grants to Lessee the option to
purchase the Leased Property (the "Option") as set forth herein, provided
Lessee is not in default under this Lease at the time Lessee exercises the
Option.
19.02 PURCHASE PRICE. The purchase price of the Leased Property shall
be Four Hundred Ninety Thousand Dollars ($490,000.00), to be reflected by a
promissory note on the terms and conditions set forth on Exhibit "B" (the
"Equipment Note"), with interest at eight percent (8%) per annum. The
purchase price of the Leased Property under this Option shall be reduced by
any insurance proceeds and payment received under the numbered paragraph
entitled "Loss".
19.03 METHOD OF EXERCISING THE OPTION. Lessee shall exercise the Option
by giving written notice (the "Option Notice") to Lessor on or before
December 1, 1999. The Option Notice shall be accompanied by the executed
Equipment Note. Upon receipt of the executed Equipment Note, Lessor shall
deliver a Xxxx of Sale for the Leased Property to Lessee.
19.04 LESSEE'S LIABILITY. Failure to exercise the Option shall not
relieve Lessee of its liability under the Goodwill Note or the Premises Lease.
ARTICLE 20
RETURN OF PROPERTY ON EXPIRATION; HOLDING OVER
20.01 LESSEE'S RETURN OF PROPERTY. If Lessee does not exercise the
Option, upon the expiration date of this Lease with respect to any or all of
the Leased Property, all rights of Lessee hereunder shall terminate and
Lessee shall return the Leased Property to Lessor at the location designated
by Lessor, at Lessee's sole expense, together with all accessories, free from
all damage and in the same condition and appearance as when received by
Lessee, allowing for ordinary wear and tear. If Lessee fails to or refuses
to return the Leased Property to Lessor, Lessor shall have the right to take
possession of the Leased Property and for that purpose to enter any premises
where the Leased Property is located without being liable in any suit,
action, defense or other proceedings to Lessee.
20.02 HOLDING OVER. Should Lessee, without the express consent of
Lessor, continue to hold and retain the Leased Property after the expiration
or earlier termination of the Term, or collection of rent by Lessor shall
operate and be construed as creating a month-to-month rental and not for any
other term whatsoever. During any such holdover period, Lessee shall pay to
Lessor for each month (or portion thereof) Lessee remains in possession of
the Leased Property, the sum of Nine Thousand Three Hundred Seventy-Five
Dollars ($9,375.00) which shall be credited to the purchase price of Leased
Property under the Option hereunder or the Option in favor of Lessee by
Silvergate Bank, as the case may be, if it is exercised by Lessee. Said
month-to-month rental may be terminated by Lessor by giving Lessee thirty
(30) days written notice, and at any time thereafter Lessor may re-enter and
take possession of the Leased Property.
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ARTICLE 21
NOTICES
21.01 Any notice or other communication to be given under this Agreement
by either party to the other will be in writing and delivered personally or
mailed by certified mail, postage prepaid and return receipt requested, or
delivered by an express overnight delivery service, charges prepaid, or
transmitted by facsimile, as follows:
If to Lessor: Xxxxxx International West, Inc.
P. O. Xxx 0000
Xxx Xxxxx, XX 00000-0000
Fax No. (___)_____________
With copy to: J. Xxxxxxx Xxxxxx, Esq.
Xxxxxx & Xxxxxx, A.P.L.C.
000 Xxxxxx xx xx Xxxxx, Xxx. 000
Xxx Xxxxx, XX 00000
Fax No. (000) 000-0000
If to Lessee: National Metal Technologies, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Fax No. (000) 000-0000
With copy to: Xxxxx X. Xxxx, Esq.
Sullivan, Hill, Xxxxx, Rez & Xxxxx
000 Xxxx X Xxxxxx, Xxx. 0000
Xxx Xxxxx, XX 00000
Fax No. (000) 000-0000
Any address or name specified above may be changed by a notice given by
the addressee to the other party in accordance with this numbered paragraph.
Any notice will be deemed given and effective (i) if given by personal
delivery, as of the date of delivery in person; or (ii) if given by mail,
upon receipt as set forth on the return receipt; or (iii) if given by
overnight courier, one (1) business day after timely deposit with the
courier; or (iv) if given by facsimile, upon receipt of the appropriate
confirmation of transmission by facsimile. The inability to deliver because
of a changed address of which no notice was given or the rejection or other
refusal to accept any notice will be deemed to be the receipt of the notice
as of the date of such inability to deliver or the rejection or refusal to
accept.
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ARTICLE 22
MISCELLANEOUS
This Lease shall be construed in accordance with the laws of the State
of California.
Paragraph titles or captions contained herein are inserted as a matter
of convenience and for reference and in no way define, limit, extend or
describe the scope of this Lease or any provision hereof.
Except as may otherwise be set forth in this Lease, this Lease shall be
binding upon and shall inure to the benefit of the parties, their
beneficiaries, representatives, assigns and all other successors-in-interest.
All exhibits and schedules referred to herein are deemed incorporated in
this Lease by reference.
This Lease and the exhibits and schedules hereto contain all of the
agreements and understandings of the parties with respect to the matters
referred to herein, and no prior agreement or understanding pertaining to any
such matters shall be effective for any purposes.
The singular number and the masculine and neuter gender as used in this
Lease shall also include the plural number and the feminine gender.
The parties shall sign or cause to be signed all documents and shall
perform or cause to be performed all acts necessary to consummate the
transactions contemplated hereunder.
Each of the parties has agreed to the use of the particular language of
the provisions of this Lease, and any question of doubtful interpretation
shall not be resolved by any rule of interpretation providing for
interpretation against the party who causes the uncertainty to exist or
against the draftsman.
In any action, arbitration or other proceeding brought for the
interpretation or enforcement of any of the terms or provisions of this
Lease, or because of any alleged dispute, breach, default or
misrepresentation in connection with the provisions of this Agreement, the
successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action, arbitration, or
proceeding, in addition to any damages or injunctive or other relief to which
said party may be entitled, and whether or not such action, arbitration or
other proceeding proceeds to judgment or award. The venue for any such
action, arbitration or other proceeding shall be San Diego County, California.
This Lease may not be superseded, amended or added to except by an
agreement in writing, signed by the parties.
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If any section, paragraph, subparagraph or provision of this Lease is
held by a court of competent jurisdiction to be illegal or invalid, said
provision shall be deemed to be severed and deleted; and neither such
provision, its severance or deletion shall affect the validity of the
remaining provisions of this Lease.
The parties may execute this Lease in two or more counterparts, which
shall, in the aggregate, be deemed an original instrument as against any
party who has signed it.
Time is of the essence in the performance of this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the date first above written. This Lease shall become effective only upon
the signature of all parties listed below.
LESSOR: LESSEE:
Xxxxxx International West, Inc. National Metal Technologies, Inc.
a Delaware corporation a California corporation
By:________________________________ By:_____________________________
Xxxxxx Xxxxxxx, Chairman of the Xxxxxxx X. Xxxxx, CEO
Board
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SECURED PROMISSORY NOTE
$350,000.00 December __, 0000
Xxx Xxxxx, Xxxxxxxxxx
In installments as herein stated, for value received, the undersigned
promises to pay to Xxxxxx International West, Inc., a Delaware corporation,
or order, at San Diego, California, or at such other places as the holder may
from time to time designate, the sum of Three Hundred Fifty Thousand Dollars
($350,000.00), with interest from December 1, 1998 until paid at the rate of
eight percent (8%) per annum, principal payable in sixteen (16) consecutive
quarterly installments of or equal to Twenty-One Thousand Eight Hundred
Seventy-Five Dollars ($21,875.00), plus accrued interest, as set forth below,
on the 20th day of the month following the end of each quarter, beginning on
March 20, 2000. Such quarterly installments shall continue until the entire
indebtedness evidenced by this note is fully paid.
The quarterly principal payments as set forth herein shall be made as
follows:
A. $9,375.00 shall be paid in lawful money of the United States or in
common stock of Photomatrix, Inc. ("Stock"), as determined by the holder of
this note, in its sole discretion; and
B. $12,500.00 shall be paid in lawful money of the United States or in
Stock, as determined by the undersigned, in its sole discretion.
Interest shall be payable only in lawful money of the United States.
Notwithstanding anything to the contrary contained in this note, in the
event the Stock is no longer listed on NASDAQ, all principal payments due
hereunder shall be paid in lawful money of the United States.
Notice of the determination of whether the quarterly payment shall be in
lawful money of the United States or in Stock shall be given in writing to
the other party at least ten (10) days before each respective payment is due.
The party making the determination may designate that the entire portion to
which its determination rights extend shall be in lawful money of the United
States or Stock, or that a designated percentage shall be in lawful money of
the United States and a designated percentage shall be in Stock. Failure of
a party to give notice of its determination by the date such determination is
to be made shall be deemed to be a determination that the payment shall be in
lawful money of the United States.
In the event any payment or portion thereof is to be made in Stock, the
number of shares of Stock to be issued shall be based on the market rate of
the Stock. For purposes of this note, the market rate of the Stock shall be
the average of all trading day closing prices for Photomatrix, Inc. common
stock during the calendar month immediately preceding a payment date.
Should interest not be paid when due, it shall thereafter bear like
interest as the principal, but such unpaid interest so compounded shall not
exceed an amount equal to simple interest on the unpaid principal at the
maximum rate permitted by law.
Should a default occur under this note, the whole sum of principal and
accrued interest shall, without notice, become immediately due and payable in
lawful money of the United States.
The failure of the holder hereof to exercise any of the options herein,
or to promptly enforce any of the provisions of this note shall not
constitute a waiver of the right to exercise or enforce any option or
provision.
Time is of the essence in performance hereof.
In the event an action is instituted under this note by one party
against the other, the party prevailing in such action shall be entitled to
recover reasonable attorneys' fees and costs from the other party whether or
not such action proceeds to judgment.
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, and endorsers hereof.
This note shall be the joint and several obligation of all makers,
sureties, and endorsers, and shall be binding upon them and their successors
and assigns.
This note is secured by a Security Agreement of even date herewith
entered into by and between the undersigned and Xxxxxx International West,
Inc.
If substantially all of the assets subject to said Security Agreement
are sold or transferred by the undersigned, or if Photomatrix, Inc. sells
substantially all of its assets or its subsidiary (the undersigned), or if
there is a fifty percent (50%) change in ownership of Photomatrix, Inc. or
the undersigned in a single transaction or a series of related transactions,
Xxxxxx International West, Inc. may, at its option exercisable within thirty
(30) days of receiving notice from Photomatrix, Inc. or the undersigned of
such change in ownership, declare all sums due hereunder to be immediately
due and payable in lawful money of the United States or in Stock.
The undersigned and Xxxxxx International West, Inc. have entered into a
Lease Agreement for the premises located at 0000 Xxxxx Xxxxxxx, Xxxxxxxxx,
Xxxxxxxxxx, with a commencement date of February 1, 1999. A default under
the Lease Agreement shall be deemed a default under this note and a default
under this note shall be deemed a default under the Lease Agreement.
The undersigned and Xxxxxx International West, Inc. have entered into an
Equipment Lease
-2-
of even date herewith. A default under the Equipment Lease shall be deemed a
default under this note and a default under this note shall be deemed a
default under the Equipment Lease.
In the event the undersigned executes a promissory note in connection
with an option to purchase the equipment under the Equipment Lease the
("Equipment Note"), a default under the Equipment Note shall be deemed a
default under this note and a default under this note shall be deemed a
default under the Equipment Note.
No portion of this note shall be or be deemed to be offset or
compensated by all or any part of any claim, cause of action, counterclaim,
or cross-claim, whether liquidated or unliquidated, which the undersigned may
have or claim to have against the holder of this note.
National Metal Technologies, Inc.,
a California corporation
By: ______________________________
Xxxxxxx X. Xxxxx, CEO
-3-
AGREEMENT
AGREEMENT (this "Agreement") dated as of December 1, 1998, by and
among PHOTOMATRIX, INC., a California corporation, I-PAC MANUFACTURING, INC.,
a California corporation (the "Buyer"), AND XXXXXX INTERNATIONAL WEST, INC.,
a Delaware corporation (the "Company").
RECITALS
A. The Company is engaged in the metal stamping business (the
"Business").
B. The Buyer desires to purchase from the Company and the Company
desires to sell to the Buyer, the Business of the Company and certain
property and assets of the Company.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree
as follows.
1. PURCHASE AND SALE
1.1 ASSETS TO BE TRANSFERRED. Subject to the terms and conditions of
this Agreement, effective as of December 1, 1998 (the "Effective Date"), the
Company shall sell, transfer, convey, assign, and deliver to the Buyer, and
the Buyer shall purchase and accept, all of the business, rights, claims and
assets (of every kind, nature, character and description, whether real,
personal or mixed, whether tangible or intangible, whether accrued,
contingent or otherwise, and wherever situated) of the Company, other than
the Excluded Assets (as hereinafter defined) (collectively the "Purchased
Assets"). The Purchased Assets shall include only the following:
(a) ACCOUNTS RECEIVABLE. All accounts receivable of the
Company on the Effective Date which remain uncollected as of the execution of
this Agreement (the "Accounts Receivable"). A Schedule of Accounts
Receivable at the date hereof has been furnished to the Buyer and is attached
as Schedule 1.1a. The Buyer assumes all risk of collectibility of the
Accounts Receivable.
(b) WIP INVENTORY. All inventories of work-in-process of the
Company on November 18, 1998 to be used for fulfilling the Assumed Contracts,
as hereinafter defined, existing on the Effective Date, together with related
packaging materials and supplies (collectively the "WIP Inventory"). A
Schedule of WIP Inventory at the date hereof has been furnished to the Buyer.
(c) CONTRACTS. All contracts, contractual rights, purchase
orders and sales orders (hereinafter in this Section 1.1(c) "Contracts") of
the Company that are either (i) described and set forth on Schedule 1.1(c) of
the Disclosure Schedule attached hereto, or (ii) that Buyer elects to assume
at any time after the Effective Date, by giving written notice to the Company
as set forth in Section 12.7 hereof; provided that such election by the Buyer
shall not constitute a waiver of any rights of indemnification or other
rights under this Agreement which the Buyer may have by virtue of the
existence or breach of any such Contract, or any of its provisions or by
virtue of any failure to disclose any amendment or modification to any term
of any such contract.
The Contracts described in subsections (i) and (ii) above are
hereinafter collectively described as the "Assumed Contracts." To the extent
that any Assumed Contract for which assignment to the
1
Buyer is provided herein is not assignable without the consent of another
party, this Agreement shall not constitute an assignment or an attempted
assignment thereof if such assignment or attempted assignment would
constitute a breach thereof. The Company and the Buyer agree to use their
reasonable best efforts (without any requirement on the part of the Buyer or
the Company to pay any money or agree to any change in the terms of any such
Contract) to obtain the consent of such other party to the assignment of any
such Assumed Contract to the Buyer in all cases in which such consent is or
may be required for such assignment. If any such consent shall not be
obtained by the Effective Date, the Company agrees to cooperate with the
Buyer in any reasonable arrangement designed to provide for the Buyer the
benefits intended to be assigned to the Buyer under the relevant Assumed
Contract, including enforcement at the cost and for the account of the Buyer
of any and all rights of the Company against the other party thereto arising
out of the breach or cancellation thereof by such other party or otherwise.
(d) LITERATURE. All sales literature, promotional literature,
instructional materials, manufacturing instructions, engineering aids, quoting
records, catalogs and similar materials of the Company in the Company's control.
(e) TRADE RIGHTS. All the Company's interest, if any, in any
Trade Rights. As used herein, the term "Trade Rights" shall mean and
include: (i) all United States and foreign copyrights, copyright
registrations and copyright applications, including all claims for
infringement, and all other rights associated with the foregoing and the
underlying works of authorship; (ii) all United States and foreign patents
and patent applications, including all claims for infringement and all
international proprietary rights associated therewith; (iii) all contracts or
agreements granting any right, title, license or privilege under the
intellectual property rights of any third party; and (iv) all inventions,
manufacturing techniques, vendor qualifications, mask works and mask work
registrations, know-how, discoveries, improvements, designs, trade secrets,
shop and royalty rights, customer tooling specifications, employee covenants
and agreements respecting intellectual property and non-competition and all
other types of intellectual property.
1.2 EXCLUDED ASSETS. The provisions of Section 1.1 notwithstanding,
the Company shall not sell, transfer, assign, convey or deliver to the Buyer,
and the Buyer will not purchase or accept the following assets of the Company
(collectively the "Excluded Assets"):
(a) LEASED EQUIPMENT. The equipment subject to the Equipment
Lease (as hereinafter defined).
(b) CONSIDERATION. The consideration delivered by the Buyer to
the Company pursuant to this Agreement.
(c) TAX CREDITS. Federal, state and local income and franchise
tax credits and tax refund claims.
(d) CERTAIN BALANCE SHEET ITEMS. The assets reflected on the
balance sheet of the Company dated as of the Effective Date (the "Final
Closing Balance Sheet") under the following line items: "other receivables,"
"due from affiliated companies," "employee advances" and "prepaid income
taxes".
(e) CORPORATE FRANCHISE. The Company's franchise to be a
corporation, its certificate of incorporation, corporate seal, stock books,
minute books and other corporate records having exclusively to do with the
corporate organization and capitalization of the Company. The
2
Buyer and its designated agents shall have reasonable access to such books
and records and may make excerpts therefrom and copies thereof.
(f) TAX RECORDS. The Company's income and franchise tax
returns and tax records.
(g) CORPORATE NAME. The name "Xxxxxx International West, Inc."
and all rights to use or allow others to use such name.
(h) CASH AND CASH EQUIVALENTS. All cash and cash equivalents
of the Company on the Effective Date.
(i) PREPAID EXPENSES. All prepaid expenses and deposits
reflected on the Final Closing Balance Sheet
(j) OTHER INVENTORY. All inventories of raw materials and
finished goods (including all such in transit) of the Company on the
Effective Date. However, the Buyer shall purchase and the Company shall sell
such usable raw materials from the Company on and after the Effective Date at
an agreed-upon market value on the date of inventory purchase, as shall be
needed for the purpose of fulfilling the Assumed Contracts. Notwithstanding
the foregoing, the Company shall have the right to sell to third parties all
inventories of raw material and finished goods not needed to fulfill the
Assumed Contracts.
(k) TURKISH GOODWILL. The goodwill associated with the
potential agreement being discussed as of the date hereof between the Company
and the Turkish government for the Company to build a links manufacturing
plant in Turkey.
(l) REAL PROPERTY. The real property currently occupied by the
Company at 0000 Xxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx.
(m) EQUIPMENT OWNED BY THIRD PARTIES. The tools, dies and
presses owned by the United States government (the "Government Equipment")
and by the Company's customers as set forth on Schedule 1.2m (the "Customer
Equipment").
2. ASSUMPTION OF LIABILITIES
2.1 LIABILITIES TO BE ASSUMED. Subject to the terms and conditions of
this Agreement, on the Effective Date, the Buyer shall assume and agree to
perform and discharge to the extent indicated below, the following, and only
the following specific debts, liabilities and obligations of the Company
(collectively the "Assumed Liabilities") (and also as set forth on Schedules
1.1c and 2.1b):
(a) CERTAIN CONTRACTUAL LIABILITIES. The Buyer hereby assumes
and agrees to perform the obligations of the Company that are required to be
performed after the Effective Date under the Assumed Contracts (including the
liabilities of the Company in respect of a breach of or default under any
Assumed Contracts arising or based on matters occurring prior to the
Effective Date, provided such breach or default has been disclosed to the
Buyer in writing).
(b) COMPANY EQUIPMENT LEASES. The Buyer hereby assumes and
agrees to perform the obligations of the Company under those equipment leases
set forth on Schedule 2.1(b).
2.2 LIABILITIES NOT TO BE ASSUMED. Except as and to the extent
specifically set forth in Section 2.1, the Buyer is not assuming any debts,
liabilities, obligations or contracts of the Company
3
and all such debts, liabilities, obligations and contracts shall be and
remain the responsibility of the Company. Buyer is expressly not assuming
any claims or liabilities relating to products sold by the Company prior to
the Effective Date.
3. PURCHASE PRICE - PAYMENT
3.1 PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Purchased Assets shall be: (a) the assumption of the Assumed Liabilities by
the Buyer on the Effective Date; (b) the issuance to the Company upon
execution of this Agreement, Seventy-Five Thousand (75,000) unregistered
shares (the "Shares"), of the Common Stock of Photomatrix (which, upon
issuance against delivery of the Purchased Assets, shall be fully paid and
nonassessable) which Shares will be subject to a legend as to their
unregistered nature and will be credited to the principal amount of the Note
(described below) as set forth therein; (c) the issuance to the Company
concurrently herewith of the Promissory Note of the Buyer in the form
attached hereto as EXHIBIT A (the "Note"), which Note will be in the
aggregate principal amount of Three Hundred Fifty Thousand Dollars
($350,000.00) and will be secured by a security agreement encumbering all the
assets (except accounts receivable) of the Buyer or Buyer's assignee as
hereinafter set forth, in the form attached hereto as EXHIBIT B (the
"Security Agreement"); (d) the payment to the Company on or before January
15, 1999 for the Accounts Receivable; and (e) the payment to the Company on
or before March 31, 1999 for the WIP Inventory.
3.2 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid by
the Buyer as follows:
(a) ASSUMPTION OF LIABILITIES. The assumption by the Buyer of
the Assumed Liabilities.
(b) SHARES. As soon as practicable after the execution of this
Agreement, the Buyer will deliver to the Company a certificate representing
the Shares bearing a legend regarding the unregistered nature of the Shares.
(c) NOTE. Concurrently herewith, the Buyer shall deliver to
the Company the Note and the Security Agreement.
(d) ACCOUNTS RECEIVABLE. The purchase price of the Accounts
Receivable is Thirty-Six Thousand Dollars ($36,000.00), payable on or before
January 15, 1999.
(e) WIP INVENTORY. The Buyer and the Company have conducted a
physical inventory of the WIP Inventory as of the Effective Date and have
listed all of the WIP Inventory on a written list, a copy of which is
attached as EXHIBIT C (the "WIP Inventory"). The purchase price for the WIP
Inventory is Thirty-Two Thousand One Hundred Seventy Dollars and Eighteen
Cents ($32,170.18), payable on or before March 31, 1999.
3.3 ALLOCATION OF PURCHASE PRICE. The consideration paid by the Buyer
to the Company for the transfer of the Purchased Assets pursuant to this
Agreement shall be allocated as follows:
Accounts Receivable $ 36,000.00
WIP Inventory $ 32,170.18
Goodwill $500,000.00
4
Both parties shall be obligated to report the transaction on all applicable
tax filings consistent with the allocation pursuant to this Section 3.3.
3.4 ROYALTY. As additional consideration for the Purchased Assets,
the Buyer shall pay to the Company an amount equal to one and three quarters
percent (1.75%) of gross product sales made by the Buyer to the existing and
former customers of the Company as of the date hereof, including without
limitation, the customers as listed on the customer list attached hereto as
EXHIBIT D (the "Customer List"), during the three (3) year period from and
after the Effective Date. The consideration payable pursuant to this section
is hereinafter called the "Percentage Consideration" and the period of time
during which it is payable is hereinafter called the "Payout Period."
Within thirty (30) days after the close of each six (6) calendar months
during the Payout Period, the Buyer shall furnish to the Company a written
statement showing the total amount of gross product sales during the
preceding six (6) months, and shall accompany each such statement with a
payment to the Company equal to the above stated percentage of gross product
sales for such six-month period. The Percentage Consideration shall be
payable in unregistered shares of the Common Stock of Photomatrix at their
then current market price or in cash, at the election of the Buyer. Market
price shall mean the average closing price for all trading days during the
calender month immediately preceding the end of the six-month reporting
period described above.
The term "gross product sales" as used in this Agreement shall include
the gross sales prices of all goods sold to customers listed on the Customer
List, excepting any refunds, returns, normal industry discounts or
allowances, insurance and freight charges and the amount of all sales taxes
for which the Buyer must account to any governmental agency.
The Buyer shall keep complete and proper books, records and accounts of
its gross product sales as aforesaid for a period of at least five (5) years.
The Company and its agents shall have the right during regular business hours
and upon at least three business days' notice to the Buyer, to examine,
inspect and copy all such books, records and accounts, including any sales or
use tax reports or returns pertaining to such sales, for the purpose of
investigating and verifying the accuracy of any statement of gross product
sales. The Company may once in any calendar year cause an audit, at its
expense, of the Buyer's gross product sales to be made by an accountant of
the Company's selection, and if any six (6) month statement of gross product
sales previously made to the Company shall be found to be inaccurate, then
there shall be an adjustment and one party shall pay to the other on demand
such sums as may be necessary to settle in full the accurate amount of
Percentage Consideration that should have been paid for the period or periods
covered by such inaccurate statement or statements. In the event any
inaccuracy in any six (6) month statement of gross product sales exceeds five
(5%), the costs of such audit shall be borne by the Buyer.
5
3.5 EQUIPMENT LEASE. On the execution of this Agreement, the Company
as lessor and the Buyer as lessee shall enter into an equipment lease for all
machinery, furniture, fixtures, tools, tooling, vehicles and all other
personal property not included in inventory (other than personal property
leased pursuant to the Contracts) owned, utilized or held for use by the
Company on the Effective Date as set forth on a schedule furnished to the
Buyer (the "Equipment"), which equipment lease (the "Equipment Lease") shall
be for a term of twelve (12) months, with an option to purchase the
Equipment, and shall be in substantially the form attached hereto as EXHIBIT
E. The Equipment shall be accepted in its AS-IS condition, subject to the
representations set forth in Section 4.7.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
The Company represents and warrants to and agrees with the Buyer as set
forth below. The following representations, warranties and covenants are
true and correct on the Effective Date shall be unaffected by any
investigation heretofore or hereafter made by the Buyer, or any knowledge of
the Buyer other than as specifically disclosed in the Disclosure Schedule
delivered to the Buyer at the time of the execution of this Agreement, and
shall survive the closing of the transactions provided for herein.
4.1 CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. The Company has all requisite corporate power and authority to
own, operate and lease its properties, to carry on its business as and where
such is now being conducted, to enter into this Agreement and the other
documents and instruments to be executed and delivered by the Company
pursuant hereto and to carry out the transactions contemplated hereby and
thereby. Except as set forth in Schedule 4.1 of the Disclosure Schedule, the
Company is duly licensed or qualified to do business as a foreign
corporation, and is in good standing, in the State of California and in each
other jurisdiction wherein the character of the properties owned or leased by
it, or the nature of its business, makes such licensing or qualification
necessary. The states in which the Company is licensed or qualified to do
business are listed in Schedule 4.1 of the Disclosure Schedule. The Company
does not own any interest in any corporation, partnership or other entity.
4.2 NO DISSOLUTION, LIQUIDATION, ETC. Neither the Board of Directors
nor the holders of any class of outstanding capital stock of the Company has
adopted any resolution or taken any other action with respect to dissolution,
liquidation, winding up, reorganization or bankruptcy (voluntary or
involuntary) of the Company, no such resolution or other action is proposed,
under consideration or contemplated, and there is no proceeding or other
action pending, threatened, proposed or contemplated by any stockholder or
creditor of the Company or any court, administrative or governmental agency,
instrumentality, commission, authority, board or body with respect to any
dissolution, liquidation, winding up, reorganization or bankruptcy (voluntary
or involuntary) of the Company, nor is there any basis for any such
proceeding or other action.
4.3 AUTHORITY. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by the Company
pursuant hereto and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by the Board of Directors and
shareholders of the Company. No other or further corporate act or proceeding
on the part of the Company, its Board of Directors or any of its shareholders
is necessary to authorize this Agreement or the other documents and
instruments to be executed and delivered by the Company pursuant hereto or
the consummation of the transactions contemplated hereby and thereby. This
6
Agreement constitutes, and when executed and delivered, the other documents
and instruments to be executed and delivered by the Company pursuant hereto
will constitute, valid binding agreements of the Company, enforceable in
accordance with their respective terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors'
rights generally, and by general equitable principles.
4.4 NO VIOLATION. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by the
Company pursuant hereto, and the consummation by the Company of the
transactions contemplated hereby and thereby (a) will not violate any statute
or law or any rule, regulation, order, writ, injunction or decree of any
court or governmental authority, (b) will not require any authorization,
consent, approval, exemption or other action by or notice to any court,
administrative or governmental agency, instrumentality, commission,
authority, board or body, and (c) subject to obtaining the consents referred
to in Schedule 4.4 of the Disclosure Schedule, will not violate or conflict
with, or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any Lien (as defined in Section 4.6) upon any of the assets of
the Company under, any term or provision of the Certificate of Incorporation,
By-laws or other constituent documents of the Company or of any contract,
commitment, understanding, arrangement, agreement or restriction of any kind
or character to which the Company is a party or by which the Company, any
shareholder of the Company or any of the Company's assets or properties may
be bound or affected. In addition to and without in any way limiting the
foregoing, the Company affirmatively represents, warrants and covenants that
no action or relief is being sought or will be sought by the Company in any
court, including in the United States Bankruptcy Court for the Southern
District of California in Case No. 98-04646-H11 which in any way limits or
would limit the ability or authority of the Company to enter into and timely
close the transactions pursuant to this Agreement.
4.5 ABSENCE OF CERTAIN CHANGES. Except as and to the extent set forth
in Schedule 4.5 of the Disclosure Schedule, since September 30, 1998 there
has not been:
(a) Any adverse change in the financial condition, assets,
liabilities, business, prospects or operations of the Company; or
(b) Any loss, damage or destruction, whether covered by
insurance or not, affecting the Company's business or properties.
4.6 OWNERSHIP OF PURCHASED ASSETS. The Company has good and
marketable title to all the Purchased Assets, and except for the lien by
Silvergate Bank as set forth on Schedule 4.6 (the "Silvergate Lien") free and
clear of all mortgages, liens (statutory or otherwise), security interests,
claims, pledges, licenses, equities, options, conditional sales contracts,
lease purchase agreements, financing leases, assessments, levies, easements,
covenants, reservations, restrictions, rights-of-way, exceptions,
limitations, charges or encumbrances of any nature whatsoever (collectively,
"Liens"), Except for the Silvergate Lien, none of the Purchased Assets are
subject to any restrictions with respect to the transferability thereof.
Except for the Silvergate Lien, the Company has complete and unrestricted
power and right to sell, assign, convey and deliver the Purchased Assets to
the Buyer as contemplated hereby. The Buyer will receive good and marketable
title to all the Purchased Assets, free and clear of all Liens other than the
Silvergate Lien and the lien on the assets granted by the Buyer to the
Company in the Security Agreement.
4.7 CONDITION OF THE EQUIPMENT. To the best knowledge of Xxxxxxx
Xxxxxxx, all of
7
the Equipment is in working order.
4.8 LICENSES AND PERMITS. To the best knowledge of Xxxxxxx Xxxxxxx,
the Company has all licenses, permits, approvals, authorizations and consents
of all governmental and regulatory authorities and all certification
organizations required for the conduct of the business (as presently
conducted) at its current location. The Company has no notice of any
noncompliance with any such permits and license, approvals, authorizations
and consents except where failure to comply would not have a material adverse
effect on the business, assets, liabilities, financial condition, operations
or prospects.
4.9 NO DEFAULT. Except as set forth on Schedule 4.9 of the Disclosure
Schedule, each Assumed Contract is valid and in full force and effect, and
there exists no material default or event of default by the Company or event,
occurrence, condition or act relating to the Company (including this
transaction ) which, with the giving of notice, the lapse of time or the
happening of any other event or condition, would become a material default or
event of default thereunder. To the best knowledge of the Company, there
exists no default or event of default by any other party to any Assumed
Contract or any event, occurrence, condition or act (including this
transaction ) which, with the giving of notice, the lapse of time or the
happening of any other event or condition, would become a default or event of
default by any other party thereunder. The Company has fully performed all
of the terms and conditions of each Assumed Contract in all material
respects, and, to the best of Company's knowledge, all of the covenants to be
performed by any other party thereto have been fully performed in all
material respects. A true, correct, accurate and complete copy of each
written Assumed Contract previously has been delivered to the Buyer.
4.10 NO BROKERS OR FINDERS. Neither the Company nor any of its
directors, officers, employees, stockholders or agents have retained,
employed or used any broker or finder in connection with the transaction
provided for herein or in connection with the negotiation thereof.
4.11 INVESTMENT REPRESENTATIONS. The Company understands that the
Shares have not been registered under the Securities Act of 1933 (the
"Securities Act"). With respect to all of the Shares being issued and to be
issued to the Company pursuant to this Agreement and/or the Note, the Company
hereby represents, warrants and agrees as follows:
(a) PURCHASE ENTIRELY FOR OWN ACCOUNT. The Shares will be
acquired for investment for the Company's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and the Company has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, the Company further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participation to such person or to any third person with respect to any
of the Shares.
(b) RESTRICTED SECURITIES. The Company understands that the
Shares being issued and to be issued to the Company are and will be
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from Photomatrix in a transaction not
involving a public offering and that under such laws and applicable
regulations such Shares may be resold without registration under the
Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, the Company represents that it is
familiar with Securities and Exchange Commission Rule 144 ("Rule 144"), as
presently in effect, and understands the resale limitations imposed thereby
and by the Act.
(c) INVESTMENT EXPERIENCE. The Company is aware of the risks
associated with
8
investing in "restricted securities" and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment and has such
knowledge and experience in financial or business matters that it is capable
of evaluating the merits and risks of its investment in the Shares. The
Company also represents that it has not been organized for the purpose of
acquiring the Shares.
(d) FURTHER LIMITATIONS ON DISPOSITION. Without in any way
limiting the representations set forth above, the Company further agrees not
to make any disposition of all or any portion of the Shares unless and until
the transferee has agreed in writing for the benefit of Photomatrix, Inc. to
be bound by this Agreement, provided and to the extent such Agreement is then
applicable and:
(i) there is then in effect a registration statement of
Photomatrix, Inc. under the Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or
(ii) (a) the Company shall have notified Photomatrix of
the proposed disposition and shall have furnished Photomatrix with a detailed
statement of the circumstances surrounding the proposed disposition, and (b)
if reasonably requested by Photomatrix the Company shall have furnished
Photomatrix with an opinion of counsel, reasonably satisfactory to
Photomatrix that such disposition will not require registration of such
shares under the Act.
(e) LEGENDS. It is understood that the certificate evidencing
the Shares may bear one (1) or more of the following legends:
(i) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(ii) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
(f) INFORMATION. The Company has received and reviewed
carefully a copy of Photomatrix's latest reports on Forms 10-K and 10-Q and
has been given access to full and complete information regarding Photomatrix
and has utilized such access to the Company's satisfaction to verify any
information the Company may have obtained relating to Photomatrix which is
relevant to the Company's investment decision. The Company has been given
the opportunity to discuss all material aspects of this transaction with
representatives of Photomatrix and any questions asked of such
representatives have been answered to the Company's full satisfaction.
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE BUYER
The Buyer represents and warrants to and agrees with the Company as set
forth below. The following representations, warranties and covenants to the
Company are true and correct on the Effective Date shall be unaffected by
any investigation heretofore or hereafter made by the Company or any notice
to the Company, and shall survive the closing of the transactions provided
for herein.
5.1 CORPORATE ORGANIZATION. The Buyer is, and any assignee of the
Buyer shall be, a
9
corporation duly organized, validly existing and in good standing under the
laws of the State of California. The Buyer has, and any assignee of the
Buyer shall have, all requisite corporate power to enter into this Agreement
and the other documents and instruments to be executed and delivered by the
Buyer and to carry out the transactions contemplated hereby and thereby.
5.2 AUTHORITY. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by the Buyer
pursuant hereto and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by the Board of Directors of the Buyer
and shall be duly authorized by the Board of Directors of any assignee of the
Buyer. No other corporate act or proceeding on the part of the Buyer, its
shareholder, or any assignee is or will be necessary to authorize this
Agreement or the other documents and instruments to be executed and delivered
by the Buyer or its assignee, pursuant hereto or the consummation of the
transactions contemplated hereby and thereby. This Agreement constitutes,
and when executed and delivered, the other documents and instruments to be
executed and delivered by the Buyer, or its assignee, pursuant hereto will
constitute, valid and binding agreements of the Buyer, or its assignee, as
the case may be, enforceable in accordance with their respective terms,
except as such may be limited by bankruptcy, insolvency, reorganization or
other laws affecting creditors' rights generally, and by general equitable
principles.
5.3 VALID ISSUANCE OF SHARES. The Shares, when issued, sold and
delivered in accordance with the terms hereof for the consideration set forth
herein, will be duly authorized, validly issued, fully paid and nonassessable
and, based in part upon the representations of the Company in this Agreement,
will be issued in compliance with all applicable federal and state securities
laws.
5.4 NO BROKERS OR FINDERS. Neither the Buyer nor any of its
directors, officers, employees, shareholders or agents have retained,
employed or used any broker or finder in connection with the transaction
provided for herein or in connection with the negotiation thereof.
5.5 LITIGATION. Except as otherwise disclosed in writing, there is
no litigation, suit, investigation or proceeding pending or, to the knowledge
of Buyer, threatened, before any court, agency or other governmental body
against Buyer (or any corporation or entity affiliated with Buyer) which
seeks to enjoin or prohibit or otherwise prevent the transactions
contemplated hereby, or which, if resolved adversely to Buyer, would have a
material adverse effect on Buyer's business, assets, liabilities, financial
condition or operations.
5.6 NO DEFAULTS. The consummation of the transactions contemplated
by this Agreement will not cause Buyer or any of its affiliates to be in
default under (i) its certificate of incorporation or bylaws or under any
material note, indenture, mortgage, lease, purchase or sales order, or any
other material contract, agreement or instrument to which Buyer is a party or
by which it or its properties are bound or affected or (ii) with respect to
any order, writ, injunction, judgment or decree of any court or any federal,
state, municipal or other domestic or foreign governmental department,
commission, board, bureau or agency.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PHOTOMATRIX
Photomatrix represents and warrants to and agrees with the Company as
set forth below. The following representations, warranties and covenants to
the Company are true and correct on the date hereof, shall remain true and
correct to and including the Effective Date, shall be unaffected by any
investigation heretofore or hereafter made by the Company or any notice to
the Company, and shall
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survive the closing of the transaction provided for herein.
6.1 CORPORATE ORGANIZATION. Photomatrix is a corporation duly
organized, validly existing and in good standing under the laws of the State
of California. Photomatrix has all requisite corporate power to enter into
this Agreement and the other documents and instruments to be executed and
delivered by Photomatrix and to carry out the transactions contemplated
hereby and thereby.
6.2 AUTHORITY. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by Photomatrix
pursuant hereto and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by the Board of Directors of
Photomatrix. No other corporate act or proceeding on the part of Photomatrix
or its shareholders is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by Photomatrix
pursuant hereto or the consummation of the transactions contemplated hereby
and thereby. To the extent of the representations, warranties and covenants
expressly made by Photomatrix under this Agreement, this Agreement
constitutes, and when executed and delivered, the other documents and
instruments to be executed and delivered by Photomatrix pursuant hereto will
constitute, valid and binding agreements of Photomatrix, enforceable in
accordance with their respective terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors'
rights generally, and by general equitable principles.
6.3 VALID ISSUANCE OF SHARES. The Shares, when issued, sold and
delivered in accordance with the terms hereof for the consideration set forth
herein, will be duly authorized, validly issued, fully paid and nonassessable
and, based in part upon the representations of the Company in this Agreement,
will be issued in compliance with all applicable federal and state securities
laws.
6.4 NO BROKERS OR FINDERS. Neither Photomatrix nor any of its
directors, officers employees or agents have retained, employed or used any
broker or finder in connection with the transaction provided for herein or in
connection with the negotiation thereof.
6.5 LITIGATION. Except as otherwise disclosed in writing, there is
no litigation, suit, investigation or proceeding pending or, to the knowledge
of Photomatrix, threatened, before any court, agency or other governmental
body against Photomatrix (or any corporation or entity affiliated with
Photomatrix) which seeks to enjoin or prohibit or otherwise prevent the
transactions contemplated hereby, or which, if resolved adversely to
Photomatrix, would have a material adverse effect on Photomatrixs business,
assets, liabilities, financial condition or operations.
6.6 NO DEFAULTS. The consummation of the transactions contemplated
by this Agreement will not cause Photomatrix or any of its affiliates to be
in default under (i) its certificate of incorporation or bylaws or under any
material note, indenture, mortgage, lease, purchase or sales order, or any
other material contract, agreement or instrument to which Photomatrix is a
party or by which it or its properties or the Shares are bound or affected or
(ii) with respect to any order, writ, injunction, judgment or decree of any
court or any federal, state, municipal or other domestic or foreign
governmental department, commission, board, bureau or agency.
6.7 SECURITIES LAW. Neither this Agreement nor any of the
transactions contemplated hereby require qualifications or filing with,
notice to or any authorization, consent or approval of the Securities
Commissioner of the State of California, the federal Securities and Exchange
Commission, or the comparable regulatory body of any other state or
jurisdiction, except (a) for the filing of a
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Notice of Transaction Pursuant to Section 25102(f) of the California
Corporate Securities Law of 1968, and (b) for the filing of a Form D pursuant
to Securities and Exchange Commission Regulation D, both of which filings
shall be accomplished by Photomatrix at its expense.
6.8 PHOTOMATRIX STOCK. Photomatrix is authorized to issue 30,000,000
shares of common stock to which 9,931,000 shares are currently outstanding.
There are no other shares of stock of Photomatrix issued and outstanding.
Each share of common stock entitles the holder thereof to one vote on all
matters submitted to vote of the shareholders, except that the holders have
cumulative voting rights for the election of directors. The holders of
common stock do not have preemptive rights or rights to convert their common
stock into other securities. Holders of common stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors out of
funds legally available therefor. In the event of a liquidation, dissolution
or winding up of Photomatrix, holders of the common stock have the right to
ratable portion of the assets remaining after payment of liabilities. All
shares of common stock outstanding and to be outstanding upon completion of
this transaction are and will be fully paid and non-assessable. There is no
issued and outstanding preferred stock. None of the outstanding Photomatrix
shares have been issued in violation of any preemptive right or agreement,
commitment or obligation binding on Photomatrix or any of the Photomatrix
shareholders or any applicable securities laws.
6.9 CONVERSION OF THE SHARES. If, prior to the closing of this
transaction, there is any stock split, reverse stock split or recapitization
of Photomatrix, the number of shares to be issued to the Company will be
proportionately adjusted.
6.10 RESTRICTIVE DOCUMENTS. Photomatrix is not subject to, or a party
to, any charter, bylaw, mortgage, lien, lease, permit, agreement, contract,
or instrument, or any law, rule, ordinance, regulation, order, judgement or
decree, or any other restriction or requirement of any kind or character,
which materially adversely affects Photomatrix or which would prevent the
consummation of the transaction contemplated by this Agreement or the
continued operation of Photomatrix after the date hereof or the Effective
Date on substantially the same basis as it has heretofore been operated or
which would restrict its ability to acquire any property or conduct business
in any area.
6.11 10-Q AND NO MATERIAL CHANGES. Photomatrix has heretofore
furnished the Company its Form 10-Q dated September 30, 1998 (the "10-Q").
Except as otherwise disclosed in writing, the 10-Q accurately presents the
financial condition of Photomatrix at the date thereof, and there have been
no material changes in the condition of Photomatrix.
6.12 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
10-Q, Photomatrix does not have any outstanding claims against it,
liabilities or indebtedness, contingent or otherwise, other than (i)
liabilities not of a character or amount required to be shown, accrued or
escrowed against a balance sheets under generally accepted accounting
principles and (ii) liabilities incurred subsequent to the date of the 10-Q
in the ordinary course of business, consistent with past practice.
Photomatrix does not know and has no reason to know of any basis for the
assertion against Photomatrix of any material claim, charge, or other
liability of any nature not fully disclosed in the 10-Q or in this Agreement.
The adjusted tax basis and the fair market value of the assets of
Photomatrix exceed the liabilities of Photomatrix as of the date hereof and
will exceed the liabilities of Photomatrix as of the Effective Date.
6.13 GOVERNMENTAL APPROVALS. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received by Photomatrix and
the Company.
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6.14 MARKET RATE OF SHARES. In the event the market rate of the
Shares issued to the Company pursuant to Section 3.1 this Agreement (75,000
Shares) and the Equipment Lease (25,000 Shares), is less than Two Dollars
($2.00) per Share on December 1, 2000, Photomatrix will pay to the Company on
or before December 15, 2000 the difference between the market rate (as that
term is defined in the Note) and Two Dollars ($2.00) for all such shares
issued (the "Difference"). Photomatrix's failure to pay the Difference by
December 15, 2000 shall constitute a default under the Note. The Company
shall have the right to transfer the Shares, or any of them, with or without
the foregoing price protection by Photomatrix (the "Price Protection"). If
the Shares, or any of them, are transferred with the Price Protection,
Photomatrix shall pay the Difference to the transferee as to those Shares; if
the Shares, or any of them, are transferred without the Price Protection,
Photomatrix shall pay the Difference to the Company.
6.15 NASDAQ. Photomatrix is and shall remain listed on the NASDAQ at
all times until all shares of Photomatrix which are to be issued to the
Company under this Agreement, and pursuant to the Note, have been issued. In
the event Photomatrix is not listed on the NASDAQ, any payments subsequently
due under the Note and the Equipment Lease Note shall, at the discretion of
the Company, be all in lawful money of the United States.
6.16 INFORMATION TO THE COMPANY. All information regarding
Photomatrix reasonably requested by the Company in order to make its decision
whether to accept payments under the Note in cash or in shares of Photomatrix
shall be promptly provided to the Company and shall be true, accurate and
compete in all material respects.
6.17 ALL SHARES. All representations and warranties by Photomatrix
related to the Shares shall apply to the Shares and to any other shares
issued by Photomatrix to the Company as set forth in this Agreement, the Note
and the Equipment Lease.
7. OTHER MATTERS
7.1 COVENANT OF CONFIDENTIALITY.
The Company shall not at any time subsequent to the Effective Date,
except as explicitly requested by the Buyer, (i) use for any purpose, (ii)
disclose to any person, or (iii) keep or make copies of documents, tapes,
discs or programs containing, any confidential information concerning the
Company. For purposes hereof, "confidential information" shall mean and
include, without limitation, all Trade Rights in which the Company has an
interest, all customer lists and customer information, and all other
information concerning the Company's processes, apparatus, equipment,
packaging, products, marketing and distribution methods, not previously
disclosed to the public directly by the Company. Confidential information
shall not include information in the public domain, information acquired from
a third party without the third party violating a confidentiality obligation
to the disclosing party, information known by the receiving party prior to
the disclosure or information that the receiving party can demonstrate that
it independently developed. The Company agrees that the provisions and
restrictions contained in this Section 7.1 are necessary to protect the
legitimate continuing interests of the Buyer in acquiring the business and
goodwill of the Business through the purchase of the Purchased Assets and the
assumption of the Assumed Liabilities, and that any violation or breach of
these provisions will result in irreparable injury to the Buyer for which a
remedy at law would be inadequate and that, in addition to any relief at law
which may be available to the Buyer for such violation or breach and
regardless of any other provision contained in this Agreement, the Buyer
shall be entitled to injunctive and other equitable relief as a court may
grant after considering the intent of this Section 7.1.
13
7.2 SALES TAX MATTERS. The Buyer shall pay all sales tax in
connection with this transaction.
7.3 GOVERNMENT EQUIPMENT AND CUSTOMER EQUIPMENT. Although the
Government Equipment and Customer Equipment are not included in the Purchased
Assets, the Buyer shall retain the care and custody thereof, until removed by
the owner(s) thereof. Buyer shall protect the Government Equipment and the
Customer Equipment from loss and damage and shall indemnify, protect, defend
and hold the Company harmless from any claim, losses, liabilities or damages
in connection with the care and custody of the Government Equipment and the
Customer Equipment. The Buyer shall be responsible for the assignment to
Buyer of any contracts in connection with the Government Equipment; the
Company shall cooperate in effecting any such assignment. The Company shall
advise the customers owning the Customer Equipment of this transaction.
7.4 ASSIGNMENT BY THE BUYER. Concurrently with the execution of this
Agreement, the Buyer shall assign all of its rights and obligations under
this Agreement to National Metal Technologies, Inc., a California
corporation, a subsidiary of I-PAC Manufacturing, Inc.
8. FURTHER COVENANT OF THE COMPANY
The Company covenants and agrees as follows:
8.1 EMPLOYEES. The Company understands that employment with the
Buyer is not offered or implied for any employees of the Company. The
Company agrees to provide the Buyer an opportunity to meet and interview all
employees of the Company. In the event that the Buyer would like to retain
any such persons following the execution of this Agreement, the Company
agrees to terminate such designated persons as of such date. The Company
shall be solely responsible for, and shall pay or cause to be paid, all
severance payments, accrued vacation pay or other termination benefits, to
such persons.
14
9. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS
Each and every obligation of the Buyer to be performed on the closing
of this transaction shall be subject to the satisfaction prior to or at the
closing of each of the following conditions:
9.1 CONVEYANCE AND ASSIGNMENT. The Company shall have duly executed
and delivered to Purchaser the Assignment and Assumption Agreement and a Xxxx
of Sale in the form attached hereto as EXHIBIT F, and any additional
documents as the Buyer may reasonably request (the "Conveyance Documents"),
to the reasonable satisfaction of the Buyer and its counsel to sell, convey,
assign, grant and otherwise transfer to the Buyer all of the Company's right,
title and interest in and to the Purchased Assets.
9.2 LEASE OF PREMISES. Upon execution of this Agreement, the
Company as landlord and the Buyer as tenant shall enter into a lease for the
premises currently occupied by the Company at 0000 Xxxxx Xxxxxxx, Xxxxxxxxx,
Xxxxxxxxxx ("Premises"), which lease (the "Lease") shall commence as of
February 1, 1999, with a right to early occupancy upon execution thereof, and
shall be for an initial term of fifteen (15) years, with an option to renew
for two successive five-year extension periods, and shall be in substantially
the form attached hereto as EXHIBIT G. The Buyer's obligations under the
Lease shall be guaranteed by Photomatrix (the "Lease Guaranty") substantially
in the form attached hereto as EXHIBIT H.
9.3 REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties made by the Company in this Agreement, and the statements
contained in the Disclosure Schedule or in any instrument, list, certificate
or writing delivered by the Company pursuant to this Agreement, shall be true
and correct in all material respects
9.4 COMPLIANCE WITH AGREEMENT. The Company shall have in all material
respects performed and complied with all of its agreements and obligations
under this Agreement which are to be performed or complied with by its prior
to or on the Effective Date.
9.5 ABSENCE OF SUIT. Except as otherwise disclosed in writing, no
action, suit or proceeding before any court or any governmental authority
shall have been commenced or threatened, and no investigation by any
governmental or regulating authority shall have been commenced, against the
Buyer, the Company or any of the affiliates, officers or directors of any of
them, seeking to restrain, prevent or change the transactions contemplated
hereby, or questioning the validity or legality of any such transactions, or
seeking damages in connection with, or imposing any condition on, any such
transactions.
9.6 CONSENTS AND APPROVALS. All approvals, consents and waivers that
are required to effect the transactions contemplated hereby shall have been
received, and executed counterparts thereof shall have been delivered to the
Buyer. Notwithstanding the foregoing, receipt of the consent of any third
party to the assignment of an Assumed Contract which is not (and is not
required to be) disclosed in the Disclosure Schedule shall not be a condition
to the Buyer's obligation to close, provided that the aggregate of all such
Contracts does not represent a material portion of the Company's sales or
expenditures. After the closing, the Company will continue to use their best
efforts to obtain any such consents or approvals, and the Company shall not
hereby be relieved of any liability hereunder for failure to perform any of
its covenants or for the inaccuracy of any representation or warranty.
9.7 NON-COMPETE AGREEMENT. The Company shall deliver a covenant not
to compete
15
agreement to the Buyer in the form attached hereto as EXHIBIT I.
9.8 CONSENT OF PHOTOMATRIX'S AND THE COMPANY'S LENDERS. Photomatrix
shall have five (5) business days after the execution of this Agreement to
obtain the consent of its bank for Photomatrix to enter into this Agreement.
If Photomatrix does not notify the Company of its bank's consent by such
date, this Agreement shall be null and void. The Company shall have five (5)
business days after the execution of this Agreement to obtain the consent of
Silvergate Bank to enter into the Equipment Lease, with the Buyer's right to
purchase the Equipment in the event the Company defaults in its obligations
to Silvergate Bank. If the Company does not notify the Buyer of Silvergate
Bank's consent by such date, this Agreement shall be null and void.
10. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
Each and every obligation of the Company to be performed on the closing
of this transaction shall be subject to the satisfaction prior to or at the
closing of the following conditions:
10.1 PAYMENT. The Buyer shall have delivered to the Company (i) the
Note and (ii) the Shares.
10.2 ASSIGNMENT AND ASSUMPTION AGREEMENT. The Buyer shall have duly
executed and delivered to the Company the Assignment and Assumption Agreement.
10.3 LEASE OF PREMISES. The Company and the Buyer shall have
executed the Lease. Photomatrix shall have executed the Lease Guaranty.
10.4 SECURITY AGREEMENT. The Company and the Buyer shall have
executed the Security Agreement.
10.5 REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties made by the Buyer and Photomatrix in this Agreement shall be
true and correct in all material respects Without affecting the foregoing,
each representation and warranty made by Photomatrix in this Agreement shall
be true and correct in all material respects at such time as any Shares are
to be issued to the Company pursuant to the Note.
10.6 COMPLIANCE WITH AGREEMENT. The Buyer shall have in all material
respects performed and complied with all of the Buyer's agreements and
obligations under this Agreement which are to be performed or complied with
by the Buyer prior to or on the Effective Date
10.7 ABSENCE OF SUIT. No action, suit or proceeding before any court
or any governmental authority shall have been commenced or threatened, and no
investigation by any governmental or regulating authority shall have been
commenced, against the Buyer, the Company or any of the affiliates, officers
or directors of any of them, seeking to restrain, prevent or change the
transactions contemplated hereby, or questioning the validity or legality of
any such transactions, or seeking damages in connection with, or imposing any
condition on, any such transactions.
16
11. INDEMNIFICATION
11.1 BY THE COMPANY. Subject to the terms and conditions of this
Article 11, the Company hereby protects, indemnifies, defends and holds
harmless the Buyer, and its directors, officers, shareholders, employees,
agents and representatives, and controlled and controlling persons
(hereinafter "Buyer's Affiliates"), from and against all Claims asserted
against, resulting to, imposed upon, or incurred by the Buyer, the Buyer's
Affiliates or the business and assets transferred to the Buyer pursuant to
this Agreement, directly or indirectly, by reason of, arising out of or
resulting from (a) the material inaccuracy or material breach of any
representation or warranty of the Company contained in or made pursuant to
this Agreement or in any agreement, document or instrument executed and
delivered pursuant hereto or in connection with the transactions contemplated
hereby; (b) the material breach of any covenant of the Company contained in
this Agreement or in any agreement, document or instrument executed and
delivered pursuant hereto or in connection with the transactions contemplated
hereby; (c) any Claim of or against the Company, the Purchased Assets or the
business of the Company not specifically assumed by the Buyer pursuant
hereto, including liability for taxes; or (d) any Claim arising from or in
connection with the manufacture, sale, delivery, operation or breach of
warranty of any products manufactured or sold prior to the execution of this
Agreement. As used in this Article 11, the term "Claim" shall include (i)
all debts, duties, liabilities and obligations of any nature; (ii) all
losses, damages (including, without limitation, consequential damages),
injuries, declines in value, lost opportunities, claims, demands, fines,
taxes, judgments, awards, settlements, costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated
matter), penalties, court costs and attorneys fees and expenses); and (iii)
all demands, claims, suits, actions, costs of investigation, causes of
action, proceedings and assessments, whether or not ultimately determined to
be valid. Schedule 11.1 contains a true, correct and compete copy of the
Company's standard warranty or warranties for sales of its products. Upon
request for warranty work by a customer, Buyer shall notify the Company in
writing. If the Company does not object within ten (10) days, Buyer shall
have the right to perform the warranty work and deduct the cost of such work
from amounts due the Company under the Note or a note executed under the
Equipment Lease.
11.2 BY THE BUYER. Subject to the terms and conditions of this Article
11, the Buyer hereby agrees to protect, indemnify, defend and hold harmless
the Company, and its directors, officers, shareholders, employees, agents and
representatives, and controlled and controlling persons (hereinafter
"Company's Affiliates"), from and against all Claims asserted against,
resulting to, imposed upon or incurred by the Company or the Company's
Affiliates, directly or indirectly, by reason of, arising out of or resulting
from (a) the material inaccuracy or material breach of any representation or
warranty of the Buyer contained in or made pursuant to this Agreement or in
any agreement, document or instrument executed and delivered pursuant hereto
or in connection with the transactions contemplated hereby (regardless of
whether such breach is deemed "material"); (b) the material breach of any
covenant of the Buyer contained in this Agreement or in any agreement,
document or instrument executed and delivered pursuant hereto or in
connection with the transactions contemplated hereby (regardless of whether
such breach is deemed "material"); (c) all Claims of or against the Company
specifically assumed by the Buyer pursuant hereto; or (d) any Claim arising
from or in connection with the manufacture, sale, delivery, operation or
breach of warranty of any products manufactured or sold by the Buyer
subsequent to December 1, 1998.
17
11.3 INDEMNIFICATION OF THIRD-PARTY CLAIMS. The obligations and
liabilities of any party to indemnify any other under this Article 11 with
respect to Claims relating to third parties shall be subject to the following
terms and conditions:
(a) NOTICE AND DEFENSE. The party or parties to be indemnified
(whether one or more, the "Indemnified Party") will give the party from whom
indemnification is sought (the "Indemnifying Party") written notice of any
such Claim, and the Indemnifying Party will undertake the defense thereof by
counsel reasonably satisfactory to the Indemnified Party; PROVIDED, HOWEVER,
that the Indemnified Party shall at all times also have the right to
participate fully in the defense at its own expense. Failure to give such
notice shall not affect the Indemnifying Party's duty or obligations under
this Article 11, except to the extent the Indemnifying Party is prejudiced
thereby. So long as the Indemnifying Party is defending any such Claim
actively and in good faith, the Indemnified Party shall not settle such
Claim. The Indemnified Party shall make available to the Indemnifying Party
or its representatives all records and other materials required by them and
in the possession or under the control of the Indemnified Party, for the use
of the Indemnifying Party and its representatives in defending any such
Claim, and shall in other respects give reasonable cooperation in such
defense.
(b) FAILURE TO DEFEND. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to defend such Claim
actively and in good faith, the Indemnified Party will (upon further notice)
have the right to undertake the defense, compromise or settlement of such
Claim or consent to the entry of a judgment with respect to such Claim, on
behalf of and for the account and risk of the Indemnifying Party, and the
Indemnifying Party shall thereafter have no right to challenge the
Indemnified Party's defense, compromise, settlement or consent to judgment.
(c) INDEMNIFIED PARTY'S RIGHTS. Anything in this Section 11.3
to the contrary notwithstanding, (i) if there is a reasonable probability
that a Claim may materially and adversely affect the Indemnified Party other
than as a result of money damages or other money payments for such Claim, or
if the amount of the Claim being asserted exceeds (in the Indemnified Party's
judgment) by more than $10,000 of the insurance coverage which has been
admitted by the applicable insurance carriers, the Indemnified Party shall
have the right to defend, compromise or settle such Claim with legal counsel
that is reasonably acceptable to the Indemnifying Party, and shall be
entitled to recover from the Indemnifying Party for such amounts, (ii) the
Indemnifying Party shall not, without the written consent of the Indemnified
Party, settle or compromise any Claim or consent to the entry of any judgment
which does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such Claim, and (iii) the Indemnified Party shall
have the right to defend and settle breach of warranty claims for products
other than portions of such Claims which seek recovery for personal injury.
The parties shall cooperate with each other with respect to any claim for
which indemnification is sought hereunder and to cooperate in the defense of
any claim.
11.4 PAYMENT. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 11.
Upon judgment, determination, settlement or compromise of any
third party Claim, the Indemnifying Party shall pay promptly on behalf of the
Indemnified Party, and/or to the Indemnified Party in reimbursement of any
amount theretofore required to be paid by it, the amount so determined by
judgment, determination, settlement or compromise and all other Claims of the
Indemnified Party with respect thereto, unless in the case of a judgment an
appeal is made from the judgment. If the Indemnifying Party desires to
appeal from an adverse judgment, then the Indemnifying Party shall post and
pay the cost of the security or bond to stay execution of the
18
judgment pending appeal. Upon the payment in full by the Indemnifying Party
of such amounts, the Indemnifying Party shall succeed to the rights of such
Indemnified Party, to the extent not waived in settlement, against the third
party who made such third party Claim.
11.5 NO WAIVER. The closing of the transactions contemplated by this
Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of
condition constituting the basis of the Claim at or before the closing, and
regardless of whether such breach, violation or failure is deemed to be
"material".
11.6 SURVIVAL. All of the representations and warranties of this
Agreement shall survive the Effective Date for a period of twenty-four (24)
months, except that the representations and warranties with respect to the
Shares shall survive for a period of twenty-four (24) months after each
issuance thereof.
12. MISCELLANEOUS
12.1 FURTHER ASSURANCE. From time to time, the parties hereto will
execute and deliver to the other party such documents and take such other
action as may be reasonably required in order to consummate more effectively
the transactions contemplated hereby and to vest in the Buyer good, valid and
marketable title to the business and assets being transferred hereunder.
12.2 ASSIGNMENT. Except as expressly provided herein, the rights and
obligations of a party hereunder may not be assigned, transferred or
encumbered without the prior written consent of the other parties.
12.3 PARTIES IN INTEREST. This Agreement shall be binding upon, inure
to the benefit of, and be enforceable by the respective successors and
permitted assigns of the parties hereto. Nothing contained herein shall be
deemed to confer upon any other person any right or remedy under or by reason
of this Agreement.
12.4 ARBITRATION.
(a) The parties recognize that disputes as to certain matters
may from time to time arise which relate to either party's rights and/or
obligations hereunder. It is the objective of the parties to establish
procedures to facilitate the resolution of such disputes in an expedient
manner by mutual cooperation and without resort to litigation. To accomplish
this objective, the parties agree to follow the procedures set forth in this
Section 12.4 if and when such a dispute arises between the parties.
(b) If a dispute arises between the parties relating to the
interpretation or performance of this Agreement (other than any action to
enforce the confidentiality covenants in Section 7.1 which may be brought in
any court of competent jurisdiction), and the parties cannot resolve the
dispute within thirty (30) days of a written request by either party to the
other, the parties agree to hold a meeting, attended by individuals with
decision-making authority regarding the dispute, to attempt in good faith to
negotiate a resolution of the dispute prior to pursuing other available
remedies. If, within thirty (30) days after such meeting, the parties have
not succeeded in negotiating a resolution of the dispute, such dispute shall
be submitted to final and binding arbitration under the then current
commercial rules and regulations of the American Arbitration Association
("AAA") relating to voluntary arbitrations in San Diego, California. The
arbitration shall be conducted by one
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arbitrator who is knowledgeable in the subject matter at issue (with at least
10 years experience) in the dispute and who will be selected by mutual
agreement of the parties or, failing such agreement, shall be selected in
accordance with the AAA rules. If the arbitration shall involve claims in
excess of Three Hundred Thousand Dollars ($300,000), then, at the option of
any of the parties, a total of three (3) such arbitrators shall be selected
in the above-specified manner. Such arbitration shall include a reasonable
right to discovery by and among each of the parties as approved by the
arbitrator(s) in accordance with AAA rules. Each party shall initially bear
its own costs and legal fees associated with such arbitration. The
prevailing party in any such arbitration shall be entitled to recover from
the other party the reasonable attorneys' fees, costs and expenses incurred
by such prevailing party in connection with such arbitration. The decision
of the arbitrator shall be final and may be sued on or enforced by the party
in whose favor it runs in any court of competent jurisdiction at the option
of the successful party. The rights and obligations of the parties to
arbitrate any dispute relating to the interpretation or performance of this
Agreement, or the grounds for the termination thereof, shall survive the
expiration or termination of this Agreement for any reason.
12.5 GOVERNING LAW. This Agreement may not be modified or terminated
orally, and shall be construed and interpreted according to the internal laws
of the State of California, excluding any choice of law rules that may direct
the application of the laws of another jurisdiction.
12.6 AMENDMENT AND MODIFICATION. The Buyer and the Company may amend,
modify and supplement this Agreement in such manner as may be agreed upon by
them in writing.
12.7 NOTICE. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered;
(b) sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their
respective addresses indicated herein by registered or certified U.S. mail,
return receipt requested and postage prepaid, or by private overnight mail
courier service. The respective addresses to be used for all such notices,
demands or requests are as follows:
(a) If to the Buyer, to:
Xxxxxxx X. Xxxxx
I-PAC Manufacturing, Inc..
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax No. (000) 000-0000
(b) If to Photomatrix, to:
Xxxxxxx X. Xxxxx
Photomatrix, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax No. (000) 000-0000
cc: Xxxxx X. Xxxx, Esq.
Sullivan, Hill, Xxxxx, Rez & Xxxxx
000 X X Xxxxxx, Xxx. 0000
Xxx Xxxxx, XX 00000
Fax No. (000) 000-0000
or to such other person or address as the Buyer or Photomatrix shall furnish
to the Company in writing.
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(c) If to the Company, to:
Xxxxxx International West, Inc.
P. O. Xxx 0000
Xxx Xxxxx, XX 00000-0000
Fax No. (____)______________
cc: J. Xxxxxxx Xxxxxx, Esq.
000 Xxxxxx xx xx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Fax No. (000) 000-0000
or to such other person or address as the Company shall furnish to the Buyer
in writing.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this
paragraph, such communication shall be deemed delivered the next business day
after transmission (and sender shall bear the burden of proof of delivery);
if sent by overnight courier pursuant to this paragraph, such communication
shall be deemed delivered upon receipt; and if sent by U.S. mail pursuant to
this paragraph, such communication shall be deemed delivered as of the date
of delivery indicated on the receipt issued by the relevant postal service,
or, if the addressee fails or refuses to accept delivery, as of the date of
such failure or refusal. Any party to this Agreement may change its address
for the purposes of this Agreement by giving notice thereof in accordance
with this Section.
12.8 BROKER FEES. The Company, Photomatrix and the Buyer each
represent and warrant to each other that there is no broker involved or in
any way connected with the transfer provided for herein. The Buyer and
Photomatrix, jointly and severally, agree to hold the Company harmless from
and against all claims for brokerage commissions or finder's fees incurred
through any act of the Buyer or Photomatrix in connection with the execution
of this Agreement or the transactions provided for herein. The Company
agrees to hold the Buyer and Photomatrix harmless from and against all claims
for brokerage commissions or finder's fees incurred through any act of the
Company in connection with the execution of this Agreement or the
transactions provided for herein.
12.9 EXPENSES. Except as otherwise provided herein, each of the
parties shall bear its own expenses and the expenses of its counsel and other
agents in connection with the transactions contemplated hereby. The Company
shall pay and shall indemnify, defend and hold the Buyer harmless from and
against all fees and expenses of the Company's legal, accounting, investment
banking and other professional counsel in connection with the transactions
contemplated hereby. The Buyer shall pay, and shall indemnify, defend and
hold the Company harmless from and against, each of the following:
(a) TRANSFER TAXES. Any sales, use, excise, transfer or other
similar tax imposed with respect to the transactions provided for in this
Agreement, and any interest or penalties related thereto.
(b) PROFESSIONAL FEES. All fees and expenses of the Buyer's
legal, accounting, investment banking and other professional counsel in
connection with the transactions contemplated hereby.
12.10 COSTS OF LITIGATION OR ARBITRATION. The parties agree that
(subject to the discretion,
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in an arbitration proceeding, of the arbitrator as set forth in Section 12.4)
the prevailing party in any action brought with respect to or to enforce any
right or remedy under this Agreement shall be entitled to recover from the
other party or parties all reasonable costs and expenses of any nature
whatsoever incurred by the prevailing party in connection with such action,
including without limitation attorneys' fees and prejudgment interest.
12.11 ENTIRE AGREEMENT. All exhibits and schedules referenced in this
Agreement are deemed incorporated herein. This instrument embodies the
entire agreement between the parties hereto with respect to the transactions
contemplated herein, and there have been and are no representations or
warranties between the parties other than those set forth or provided for
herein.
12.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.13 HEADINGS. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
12.14 FURTHER DOCUMENTS. The Buyer and the Company each agree to
execute all other documents and to take such other action or corporate
proceedings as may be necessary or desirable to carry out the terms hereof.
12.15 SURVIVAL. All provisions of this Agreement shall survive the
closing.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
COMPANY: BUYER:
XXXXXX INTERNATIONAL WEST, INC., I-PAC MANUFACTURING, INC.,
a Delaware corporation a California corporation
By:_____________________________________ By:_______________________________
Xxxxxx Xxxxxxx, Chairman of the Board Xxxxxxx X. Xxxxx, CEO
PHOTOMATRIX, INC.,
a California corporation
By:_______________________________
Xxxxxxx X. Xxxxx, CEO
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