Exhibit 10.4
NOTE AND SHARE PURCHASE AGREEMENT
This Note and Share Purchase Agreement (this "Loan Agreement") is entered
into as of March 1, 2000 by and among Dyna Cam Engine Corporation, a California
corporation (the "Company"), Aztore Holdings, Inc., an Arizona corporation
("Aztore" or "Lender") and assignees of Aztore who may buy participations in the
Note to be issued under this Loan Agreement (the "Lenders").
RECITALS
A. WHEREAS, the Company desires to sell, and Aztore desires to purchase, a
$350,000 Master 12% Promissory Note, due upon the first to occur of either
the "receipt of any additional funding" of the Company as defined in the
Note of March 1, 2000;
B. WHEREAS, the Master Note shall be in the form of Exhibit A attached hereto
(the "Note");
C. WHEREAS, the parties wish to enter into this Loan Agreement to set forth
certain terms and conditions in connection with the purchase and sale of
the Note, including the issuance by the Company of certain shares of common
stock (the "Shares") in order to induce Aztore to purchase the Note.
D. WHEREAS, Aztore intends to sell and assign some portion of the Note and the
Shares to third parties;
E. WHEREAS, as additional consideration to the Lenders but subject to certain
conditions precedent included in the Purchase Agreement attached as Exhibit
B hereto (the "TSI Asset Purchase Agreement"), the Company has agreed to
sell its assets to TSI Handling, Inc. ("Buyer") under terms and conditions
substantially similar to those included in the TSI Asset Purchase
Agreement; and
F. WHEREAS, the transaction contemplated under this Loan Agreement directly
relates to the TSI Asset Purchase Agreement, and the Exhibits thereto, the
Note, the Security Agreement related to the Note, the Bulldog Consulting
Agreement and other documents and agreements all referred to hereinafter as
the "Related Documents."
NOW, THEREFORE, in consideration of the mutual promises and other
consideration hereinafter set forth, the adequacy and receipt of which is hereby
acknowledged, the parties agree as follows:
1. PURCHASE AND SALE OF NOTE AND SHARES.
1.1 DESCRIPTION OF THE NOTE AND SHARES.
The Company has authorized the issuance and sale of (a) a $350,000 in
principal amount Master Note and (b) 4,900,000 Shares. The Note and the Shares
are sometimes collectively referred to herein as the "Securities."
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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1.2 INITIAL PURCHASE AND SALE OF NOTE AND SHARES.
At the Initial Closing and at Subsequent Closings (as hereinafter defined)
and subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, the Company will
issue and sell to Aztore, and Aztore will buy from the Company, the Shares for a
price of $.01 per share and execute the Master Note. The parties agree that the
amount paid for the Shares shall be accounted for as a loan fee.
1.3 SUBSEQUENT ADVANCES UNDER THE NOTE.
At the Subsequent Closings and subject to the terms and conditions hereof
and in reliance upon the representations, warranties and agreements contained
herein, the Company will issue and sell to Aztore, and Aztore will advance funds
under the Note upon the following process.
a. NOTICE. The Company shall give Aztore a five working day notice
for each subsequent advance with a proposed use of proceeds for
the requested funds.
b. MINIMUM AMOUNT. Advance requests must be at least $25,000.
1.4 CLOSING.
The closing of the purchase and sale of the Note and the Shares (the
"Closing") shall be held at 10:00 a.m. on March 6, 2000, or on such other date
as to which the Company and Aztore may agree (the date of such Closing being
herein referred to as the "Closing Date"). The Closing shall be held at the
offices of the Company or at such other place as to which the Company and Aztore
may agree.
1.5 DELIVERIES OF COMPANY AT CLOSING.
At the Closing or on such other date as may be mutually agreed between the
Company and the Investors, the Company shall execute and deliver or cause to be
executed and delivered to each Investor the following:
a. a Master Note in substantially the form of Exhibit A hereto;
b. a Subscription Agreement of the Shares purchased in the form of
Exhibit C hereto;
c. a initial advance request for $100,000;
d. such other documents, certificates and instruments as may
reasonably be required by Aztore in connection with the
transactions contemplated hereby. Such documents shall include:
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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i. a consulting agreement retaining Bulldog Advisors, a
division of Aztore to assist the Company in meeting its
financial reporting obligations hereunder and
ii. an agreement to use the name Dyna-Cam Corp. by TSI Handling,
Inc. In the event that the conditions precedent in the TSI
Asset Purchase Agreement are not met then TSI will forfeit
the right to use such name.
1.6 DELIVERIES OF AZTORE AT CLOSING.
At the Closing or on such other date as may be mutually agreed between the
Company and the Investors, Aztore shall deliver or cause to be delivered to the
Company a $100,000 advance under the Note.
1.7 SUBSEQUENT PARTICIPATION OF THE NOTE AND TRANSFER OF THE SHARES.
Aztore may sell participations in the Note and transfer some or all of the
Shares to the Lenders under the following conditions:
a. such Lenders must be accredited investors; and
b. such Lenders must acknowledge the representations, warranties and
restrictions made by Aztore under this Loan Agreement
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ITS OFFICERS.
Subject to and except as specifically disclosed by the Company in the
Schedule of Exceptions attached as Exhibit D hereto, the Company represents and
warrants to Aztore and to each of the Lenders that:
2.1 ORGANIZATION AND STANDING.
The Company is a corporation duly organized and existing under, and by
virtue of, the laws of the State of California and is in good standing under
such laws. The Company has the requisite corporate power and authority to own
and operate its properties and assets, and to carry on its business as presently
conducted. The Company is presently qualified to do business as a domestic
corporation in California and there is no other jurisdiction in which the
failure to be so qualified would have a material adverse effect on the business
or financial condition of the Company.
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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2.2 CORPORATE POWER.
The Company has all requisite legal and corporate power and authority to
execute and deliver this Loan Agreement, the Note and the Related Documents and
to carry out and perform its obligations under the terms of this Loan Agreement
and the Note. Such authority is reflected in the resolutions attached hereto as
Exhibit F.
2.3 SUBSIDIARIES.
The Company has no subsidiaries or affiliated companies and does not
otherwise own or control, directly or indirectly, any equity interest in any
corporation, association or business entity.
2.4 CAPITALIZATION.
The authorized capital stock of the Company consists of 40,000,000 shares
of Common Stock and 5,000,000 shares of Preferred Stock. No preferred stock has
been issued and 34,965,831 shares of common stock have been issued and are owned
in accordance with Exhibit E. 4,000,000 warrants have been issued. All currently
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable. Except as listed above or provided in the
Company's Articles of Incorporation (the "Charter Documents") there are no
options, warrants or other rights to purchase or acquire any of the Company's
authorized and unissued capital stock. In the event the holders of the warrants
desire to exercise and there are insufficient authorized shares, the Company
will designate the preferred shares as equivalent to common shares and issue
these shares.
2.5 AUTHORIZATION.
All corporate action on the part of the Company, its directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Loan Agreement, the Note, the Related Documents and the
issuance of the Shares by the Company, and the performance of all of the
Company's obligations hereunder and thereunder has been taken or will be taken
prior to the Closing. This Loan Agreement, the Note and the Shares, when
executed and delivered by the Company, shall constitute valid and binding
obligations of the Company, enforceable in accordance with their terms, subject
to laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies. The Shares, when issued in compliance with the
provisions of this Loan Agreement, will be validly issued, fully paid and
nonassessable. The Shares have been duly and validly reserved and, when issued
in compliance with the provisions of the Related Documents, will be validly
issued, fully paid and nonassessable.
2.6 PROPRIETARY RIGHTS.
The Company has exclusive title and ownership of, or a valid right to use,
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes used in or necessary for its
business as now conducted without any conflict with or infringement of the
rights of others. Such rights specifically include patent no. 4492188 covering
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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all of its uses. The Company has not violated any of the patents, trademarks,
service marks, trade names, copyrights or trade proprietary rights of any other
person or entity. To the best knowledge of the Company, none of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of his or
her best efforts to promote the interests of the Company or that would conflict
with the Company's business as proposed to be conducted.
2.7. LITIGATION.
There are no material actions, suits, proceedings or investigations pending
or, to the Company's knowledge, threatened against the Company or its properties
before any court or governmental agency. The foregoing includes, without
limitation, material actions pending or threatened (or any basis therefor known
to the Company) involving the prior employment of any of the Company's
employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any material order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no material action, suit, proceeding or investigation
by the Company currently pending or which the Company intends to initiate.
2.8 TITLE TO PROPERTIES AND ASSETS; LIENS.
Except liens related to the SBA loan, the Company has good and marketable
title to its properties and assets, and has good title to all its leasehold
interests, in each case subject to no mortgage, pledge, lien, encumbrance or
charge, other than (a) the lien of current taxes not yet due and payable, and
(b) minor liens and encumbrances which, when considered individually or
together, do not materially detract from the value of the property subject
thereto or materially impair the operations of the Company, and such properties
and assets are sufficient to enable the Company to carry on its business as
presently conducted.
2.9 COMPLIANCE WITH OTHER INSTRUMENTS.
The Company is not in violation of or default under: (a) any term of its
Charter Documents, as amended to date; (b) any material term or provision of any
mortgage, indebtedness, indenture, contract, agreement, instrument, judgment or
decree; or (iii) any material order, statute, rule or regulation applicable to
the Company. The execution, delivery and performance of this Loan Agreement, the
Note and the Related Documents have not resulted and will not result in any
violation of, or conflict with, or constitute a default under, the Company's
Charter Documents, as amended to date, and have not and will not result in any
violation of, or conflict with, or constitute a default under, any of its
material agreements nor result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company.
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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2.10 EMPLOYEES.
The Company has no employment agreement with any of its employees that are
not terminable by the Company at will, and is not a party to any collective
bargaining agreements.
2.11 GOVERNMENTAL CONSENTS.
To the best of the Company's knowledge, no consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Loan Agreement, the Note and the Related
Documents, or the consummation of any other transaction contemplated hereby,
except the qualification (or taking of such action as may be necessary to secure
an exemption from qualification, if available) of the offer and sale of the
Shares under applicable Blue Sky laws, which filings and qualifications, if
required, will be accomplished in a timely manner.
2.12 BROKERS OR FINDERS.
Neither the Company nor any Investor, as a result of any action taken by
the Company, have incurred or will incur, directly or indirectly, any liability
for brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Loan Agreement or the transactions contemplated hereby.
2.13 PERMITS.
The Company has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could materially and adversely affect the business,
properties, prospects or financial condition of the Company. The Company is not
in default in any material respect under any of such franchises, permits,
licenses or other similar authority.
2.14 INSURANCE.
The Company has insurance policies in effect covering the risks associated
with its business and properties which are of such character and in such amounts
as are customarily maintained by entities engaged in the same or similar
business and similarly situated.
2.15. FINANCIAL STATEMENTS.
The Company has delivered to Aztore and the Lenders an unaudited balance
sheet and profit and loss statements as of and for the annual periods ended
November 30, 1997, 1998 and 1999 (collectively the "Annual Financial
Statements"). The Annual Financial Statements have been complied on a consistent
basis throughout the period indicated and with each other. The Financial
Statements fairly present the financial condition and operating results of the
Company as of the dates, and for the periods, indicated therein, subject to
normal year-end audit adjustments. Except as set forth in the Annual Financial
Statements, the Company has no material liabilities, contingent or otherwise,
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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other than (a) liabilities incurred in the ordinary course of business
subsequent to November 30, 1999 and (b) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Annual Financial
Statements, which, in both cases, individually or in the aggregate are not
material to the financial condition or operating results of the Company. The
Company hereby represents and warrants that the 1998 and 1999 Annual Financial
Statements shall be audited by an independent certified public accounting firm
qualified to report to the SEC and in a manner satisfactory to the SEC and that
such financial statements shall be prepared in accordance with generally
accepted accounting principles.
2.16. EMPLOYEE BENEFIT PLANS.
The Company does not have any Employee Benefit Plans, as defined in the
Employee Retirement Income Security Act of 1974.
2.17. TAX RETURNS AND PAYMENTS.
The Company has filed all tax returns and reports as required by law for
the period covered by the Annual Financial Statements and has supplied copies of
such returns to the Lender. These returns and reports are true and correct in
all material respects. The Company has paid all taxes and other assessments due,
except to the extent the Company, in good faith, is contesting such amounts.
2.18. RESTRICTIVE AGREEMENTS REGARDING OFFICERS.
Until the Note is paid in full, the current officers of the Company
executing this Loan Agreement agree to the following:
a. COVENANT NOT TO COMPETE. The Officers agree while the Note is
outstanding they shall not perform services anywhere worldwide (or if a court
determines that this restriction is not necessary to protect the Company's
legitimate interests, then such geographical area that is determined necessary
to protect Company's legitimate interests) in any business which sells or
otherwise deals with products similar to or competitive with those developed by
or in the process of development by the Company during the term of employment
hereunder. This non-competition covenant shall include all forms of competition,
direct or indirect, including competition as an employee, proprietor,
shareholder, member, officer, director, consultant, trustee, independent
contractor or in any other capacity. The parties acknowledge that the geographic
area of this covenant is reasonable in view of the highly specialized and narrow
scope of the present and proposed business of the Company and the consequent
ability of the Officers to work in non-competitive areas. The Officers and
Company expressly acknowledge that the Company and its customers conduct
business on a worldwide basis and that the covenant contained herein is
reasonable and necessary to protect the Company's interests notwithstanding the
absence of a geographic restriction.
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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b. CONFIDENTIAL INFORMATION. The Officers agree that all Proprietary
Information is the sole and exclusive property of the Company and that the
Officers will not, during the term of employment or any time after termination
of employment, disclose any Proprietary Information to any third party or use
any Proprietary Information in any way to compete with or to act in any way
adverse to the Company, except with the prior written consent of the Company.
The Officers acknowledge that each Officer has and will have access to
Proprietary Information of the Company and Proprietary Information of the
Company's subsidiaries, divisions and affiliated companies, now or hereafter
existing (collectively referred to hereinafter as the "AFFILIATES") throughout
the term of this Agreement and that part of Officers' work assignment may
involve the development of Proprietary Information. Any such Proprietary
Information, regardless of whether Officers alone or with others developed any
such Proprietary Information, shall be and shall remain the property of the
Company or of the Company's Affiliates. During the term of this Agreement and
after termination of employment, Officers shall not, either voluntarily or
involuntarily, on either his own account, as a member of a firm, or on behalf of
another employer or otherwise, directly or indirectly, use or reveal to any
person, partnership, corporation or association any trade secret or confidential
information of the Company or of the Affiliates. Such trade secrets shall
include, but shall not be limited to, software formulas, programs, patterns,
codes, algorithms, devices, secret inventions, processes, business plans,
marketing plans or programs, any non-public financial information, including but
not limited to financial information, forecasts and statistics, contracts,
customer lists, compensation arrangements and business opportunities. Officers
will not make available to any person, partnership, corporation or association,
or retain after termination of employment, any Company or Affiliates policy
manuals, printed materials, programs, formulas, algorithms, files, records,
drawings or computer disc containing information related to the Company or
Affiliates.
c. INVENTION RIGHTS. The Officers hereby agree to assign any and all rights
to any Proprietary Information, discovery, idea, computer program, invention or
inventive improvement (whether patentable or not), design, drawing, sketch,
specification, or other things conceived of or reduced to practice during
employment with the Company which relate to the Company's business, or which are
conceived of or reduced to practice after termination of employment which make
use of any of the foregoing. The Officers further agree to execute (without
further consideration) any documents in furtherance of perfecting the Company's
rights in the foregoing, including documents transferring patent, copyright,
trademark, trade secret or other rights. In instances where any doubt exists in
the Officers' mind as to whether anything developed by Officers falls within the
foregoing categories, the Officers agrees to request a written statement from
the Company and the Lender regarding the same.
d. DISCLOSURE OF INFORMATION. The Officers agree to promptly disclose in
writing to the Company any discovery, idea, computer program, invention or
inventive improvement (whether patentable or not), design, drawing, sketch,
specification, or other things conceived of or reduced to practice during
employment with the Company which relate to the Company's business, or which are
conceived of or reduced to practice after termination of employment which make
use of any of the foregoing. In instances where any doubt exists in the
Officers' mind as to whether anything developed by the Officers falls within the
foregoing categories, the Officers agree to request a written statement from the
Company and the Lender regarding the same. The Officers agree to safeguard all
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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the foregoing information from public disclosure, including taking any such
measures as the Company may require to prevent divulgence to third parties.
e. UNAUTHORIZED DISCLOSURE. During the period that the Officers are
actively employed by the Company and thereafter, the Officers shall not make any
Unauthorized Disclosure. For purposes of this Agreement, "Unauthorized
Disclosure" shall mean disclosure by the Officers without the consent of the
Board and the Lender (other than pursuant to a court order) to any person, other
than an employee, consultant, auditor, attorney or director of the Company or a
person to whom disclosure is reasonably necessary or appropriate in connection
with the performance by the Officers of their duties as employees of the Company
or as may be legally required, in violation of any valid standard nondisclosure
agreement (or similar document) executed by the Officers; PROVIDED, HOWEVER,
that such term shall not include the use or disclosure by the Officers, without
consent, of any information known generally to the public (other than as a
result of disclosure by him in violation of this Section 12) or any information
not otherwise considered confidential and material by a reasonable person
engaged in the same business as that conducted by the Company.
3. REPRESENTATIONS AND WARRANTIES OF AZTORE AND THE LENDERS.
Aztore and the Lenders represent and warrant to the Company that for itself
and for each assignee that:
3.1 PREEXISTING RELATIONSHIP WITH COMPANY; BUSINESS AND FINANCIAL
EXPERIENCE.
It either (a) has a prior business and/or personal relationship with the
Company and/or its officers and directors, or (b) by reason of its business or
financial experience or the business or financial experience of its professional
advisors who are unaffiliated with the Company, and who are not compensated by
the Company, it has the capacity to protect its own interests in connection with
the purchase of the Securities.
3.2 INVESTMENT INTENT; BLUE SKY.
Except for the Shares to be transferred to the Lenders as part of Aztore's
participation agreement, all of whom will be accredited investors, it is
acquiring the Securities for investment for its own account, not as a nominee or
agent, and not with the view to, or for resale in connection with, any
distribution thereof. It understands that the issuance of the Securities,
including the issuance of the Shares has not been, and will not be, registered
under the Securities Act of 1933, as amended (the "Securities Act"), by reason
of a specific exemption from the registration provisions of the Securities Act,
the availability of which depends upon, among other things, the bona fide nature
of the Lender's investment intent and the accuracy of the Investor's
representations as expressed herein. The Investor's address set forth on Exhibit
A represents the Investor's true and correct state of domicile, upon which the
Company may rely for the purpose of complying with applicable "Blue Sky" laws.
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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3.3 RULE 144.
It acknowledges that the Shares must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
such registration is available. It is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Company, the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being effected through a
"broker's transaction" or in a transaction directly with a "market maker," and
the number of shares being sold during any three-month period not exceeding
specified limitations.
3.4 NO PUBLIC MARKET.
It understands that no public market now exists for any of the securities
issued by the Company and that the Company has made no assurances that a public
market will ever exist for the Company's securities.
3.5 RESTRICTIONS ON TRANSFER; RESTRICTIVE LEGENDS.
It understands that the transfer of the Shares is restricted by applicable
state and Federal securities laws, and that the certificates representing the
Shares will be imprinted with legends restricting transfer except in compliance
therewith.
3.6 AUTHORIZATION.
All action on the part of any Lender's partners, board of directors and
stockholders, as applicable, necessary for the authorization, execution,
delivery and performance of this Loan Agreement, the Note and the Shares by the
Lender, the purchase of and payment for the Securities and the performance of
all of the Lenders' obligations hereunder and under the Note have been taken or
will be taken prior to the Closing. This Loan Agreement and the Note, when
executed and delivered by the Aztore, shall constitute valid and binding
obligations of the Lenders, enforceable in accordance with their terms, subject
to laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies.
3.7 ACQUISITION OF THE COMPANY'S ASSETS.
Aztore and the Lenders specifically acknowledge the intent of the Company
to sell its assets under the TSI Asset Purchase Agreement and agree that the
Note may be assumed under that agreement.
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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3.8 TAX LIABILITY.
It has reviewed with its own tax advisors the tax consequences of the
transactions contemplated by this Loan Agreement. It has relied solely on such
advisors and not on any statements or representations of the Company or any of
the Company's agents with respect to such tax consequences. It understands that
it, and not the Company, shall be responsible for its own tax liability that may
arise as a result of the transactions contemplated by this Loan Agreement.
4. COVENANTS OF THE COMPANY.
From and after the Closing Date and continuing so long as any Note remains
outstanding:
4.1 CORPORATE EXISTENCE, ETC.
The Company will preserve and keep in force and effect its existence and
such licenses and permits which, in its reasonable opinion, are necessary and
material to the proper conduct of its business.
4.2 INSURANCE.
The Company will maintain insurance coverage by financially sound and
reputable insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties in similar
locations.
4.3 SECURED DEBT.
The Company will not, without the prior written consent of Aztore incur any
secured indebtedness.
4.4 SALE OF ADDITIONAL SHARES OF COMMON OR PREFERRED STOCK.
As long as the Note is outstanding, the Company shall not sell any
preferred stock and if it sells additional common stock additional shares will
be issued to Aztore to maintain the ratio of the Shares to the total Shares
outstanding.
4.5 CONSOLIDATIONS, MERGERS AND SALES OF ASSETS.
Except for the TSI Asset Purchase Agreement, as long as the Note is
outstanding, the Company shall not consolidate with or merge into any other
corporation or sell or otherwise transfer its assets substantially as an
entirety to any person.
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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4.6 TAXES, CLAIMS FOR LABOR AND MATERIALS, COMPLIANCE WITH LAWS.
The Company will promptly pay and discharge all lawful taxes, assessments
and governmental charges or levies imposed upon the Company or upon or in
respect of all or any part of the property or business of the Company, all trade
accounts payable in accordance with usual and customary business terms, and all
claims for work, labor or materials, which if unpaid might become a lien or
charge upon any property of the Company, provided that the Company shall not be
required to pay any such tax, assessment, charge, levy, account payable or claim
if the validity, applicability or amount thereof is being contested in good
faith by appropriate actions or proceedings which will prevent the forfeiture or
sale of any property of the Company or any material interference with the use
thereof by the Company.
4.7 MAINTENANCE, ETC.
The Company will maintain, preserve and keep its properties which are used
or useful in the conduct of its business (whether owned in fee or a leasehold
interest) in good repair and working order (subject to normal wear and tear) and
from time to time will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be maintained.
4.8 SECURITIES COMPLIANCE.
As soon as possible on or after the Closing Date, and in no event later
than 15 days following the Closing Date, the Company shall cause to be prepared
and filed with the Securities and Exchange Commission, the Arizona Corporation
Commission and any such other authority as applicable, a Form D related to the
issuance of the Note and the Shares.
5. AZTORE AND THE LENDERS' CONDITIONS TO CLOSING.
The obligation of Aztore to purchase the Note and the Shares at the Initial
Closing is subject to the fulfillment on or prior to the Closing Date of each of
the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties made by the Company in Section 2 hereof
shall be true and correct in all material respects when made, and shall be true
and correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of the Closing Date.
5.2 PERFORMANCE.
All covenants, agreements and conditions contained in this Loan Agreement
to be performed or complied with by the Company on or prior to the Closing Date
shall have been performed or complied with in all respects.
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
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5.3 LEGAL INVESTMENT.
At the time of the Closing, the purchase of the Note and the Related
Documents hereunder shall be legally permitted by all laws and regulations to
which Aztore and the Company are subject.
5.4 CONDUCT OF BUSINESS; NO MATERIAL ADVERSE CHANGE.
During the period from the date hereof to the Closing, (i) the business of
the Company shall have been conducted only in, and the Company shall not have
taken any action except in, the ordinary course of business and in a manner
consistent with past practice; and (ii) no material adverse change shall have
occurred in the condition (financial or otherwise), properties, assets,
liabilities, business or operations of the Company.
5.5 PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the transactions
contemplated hereby and all documents and instruments incident to such
transactions shall be reasonably satisfactory in form and substance to Aztore
and its counsel.
5.6 QUALIFICATION.
All authorizations, approvals or permits of any governmental authority or
regulatory body that are required in connection with the lawful issuance and
sale of the Securities on the Closing Date shall have been duly obtained and
shall be effective on and as of the Closing.
5.7 OFFICERS' CERTIFICATE.
a. Aztore shall have received from the Company's Secretary a Certificate
having attached thereto (i) the Company's Articles of Incorporation and Bylaws
as in effect at the time of the Closing, (ii) resolutions of the Board of
Directors and, to the extent required, the stockholders authorizing the
transactions contemplated hereby and (iii) good standing certificates with
respect to the Company from the Secretaries of State of California and Arizona,
each dated as of a recent date.
b. Aztore shall have received a certificate executed by the Chief Executive
Officer and Chief Financial Officer dated as of the Closing Date stating that
the Closing Date stating that the representations and warranties of the Company
set forth in Section 2 hereof are true and correct as of the date when made and
as of the Closing Date and that the Company has performed, satisfied and
complied with and shall continue to perform, satisfy and comply with all
covenants, agreements and conditions as required to be performed by it as a
condition to the Closing as may be set forth in this Loan Agreement and the
Note.
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
PAGE 14 OF 18
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6. THE COMPANY'S CONDITIONS TO CLOSING.
The Company's obligation to sell the Note and the Related Documents at the
Closing is subject to the fulfillment to its satisfaction on or prior to the
Closing Date of each of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties made by Aztore in Section 3 hereof shall
be true and correct in all material respects when made and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of the Closing Date.
6.2 PERFORMANCE.
All covenants, agreements and conditions contained in this Loan Agreement
to be performed or complied with by Aztore on or prior to the Closing Date shall
have been performed or complied with in all respects.
6.3 LEGAL INVESTMENT.
At the time of the Closing, the purchase of the Note and the Related
Documents shall be legally permitted by all laws and regulations to which each
Investors and the Company are subject.
7. TERMINATION.
7.1 This Loan Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written consent duly authorized by the Board of
Directors of the Company and Aztore;
(b) by Aztore or the Company if the Closing shall not have occurred on
or before March 15, 2000;
(c) by Aztore if the representations and warranties of the Company
shall not be true and correct in all material respects at and as of the date of
the Closing and each advance, except for changes permitted or contemplated by
this Loan Agreement, or if the Company fails to comply in any material respect
with any of its covenants or agreements contained herein; or
(d) by the Company if the representations and warranties of Aztore
shall not be true and correct in all material respects at and as of the date of
termination by the Company, except for changes permitted or contemplated by this
Loan Agreement, or if Aztore fails to comply in any material respect with any of
their covenants or agreements contained herein.
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
PAGE 15 OF 18
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7.2 EFFECT OF TERMINATION.
In the event of the termination of this Loan Agreement pursuant to Section
7.1 hereof, notice thereof shall be promptly given by the terminating party to
the other party and thereafter this Loan Agreement shall forthwith become void
and have no effect, without any liability on the part of any party or their
respective directors, officers or shareholders, except that nothing in this
Section 7.2 shall relieve any party to this Loan Agreement from liability for
breach of this Loan Agreement or any misrepresentation hereof.
8. Miscellaneous.
8.1 GOVERNING LAW AND SUBMISSION TO JURISDICTION.
The rights and obligations of the parties hereto shall be construed and
enforced in accordance with and governed by the internal laws (and not the
conflict of laws principles) of the State of Arizona. Any action or proceeding
arising out of, relating to or concerning this Loan Agreement, including,
without limitation, any claim of breach of contract, shall be filed in the State
and Federal courts located in Maricopa County, Arizona, which courts shall have
exclusive jurisdiction over the parties hereto and be the exclusive venue for
all such actions or proceedings.
8.2 ENTIRE AGREEMENT; AMENDMENT.
This Loan Agreement, including the exhibits hereto, constitutes the full
and entire understanding and agreement among the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Loan Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
8.3 NOTICES, ETC.
All notices and other communications required or permitted hereunder shall
be in writing and shall be mailed by registered or certified mail, postage
prepaid, or otherwise delivered by facsimile transmission, by hand or by
messenger, addressed:
(a) if to the Lenders, to
Aztore Holdings, Inc.
0000 Xxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Fax: 000-000-0000
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
PAGE 16 OF 18
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with a copy to:
Xxxxx and Roca LLP
00 Xxxxx Xxxxxxx Xxx.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Fax No. (000) 000-0000
or at such other address as such Lender shall have furnished to the Company.
(b) if to the Company, to:
Dyna Cam Engine Corporation
00000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxxxx Xxxxx
Fax: (000) 000-0000
or at such other address as the Company shall have furnished to Aztore in
writing,
Each such notice or other communication shall for all purposes of this Loan
Agreement be treated as effective or having been given when received if
delivered personally, if sent by facsimile, the first business day after the
date of confirmation that the facsimile has been successfully transmitted to the
facsimile number for the party notified, or, if sent by mail, at the earlier of
its receipt or 72 hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
8.4 DELAYS OR OMISSIONS.
Except as expressly provided herein, no delay or omission to exercise any
right, power or remedy accruing to any party, upon any breach or default of
another party under this Loan Agreement, shall impair any such right, power or
remedy of such party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this Loan
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Loan Agreement, must be in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Loan Agreement or by law or otherwise afforded to any party, shall be
cumulative and not alternative.
8.5 EXPENSES.
Each party shall bear its own expenses incurred on its behalf with respect
to this Loan Agreement and the transactions contemplated hereby.
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
PAGE 17 OF 18
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8.6 COUNTERPARTS.
This Loan Agreement may be executed in any number of counterparts, each of
which shall be an original, and all of which together shall constitute one
instrument.
8.7 SEVERABILITY.
In the event that any provision of this Loan Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Loan Agreement shall continue in full force and effect without said
provision, which shall be replaced with an enforceable provision closest in
intent and economic effect as the severed provision, provided that no such
severability shall be effective if it materially changes the economic benefit of
this Loan Agreement to any party.
8.8 TITLES AND SUBTITLES.
The titles and subtitles used in this Loan Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Loan Agreement.
8.9 SUCCESSORS AND ASSIGNS.
This Loan Agreement shall be binding upon the Company and its successors
and assigns and shall inure to the benefit of the Investor and to the benefit of
their respective successors and assigns, including each successive holder or
holders of the Note.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
THE COMPANY LENDER
DYNA CAM ENGINE CORPORATION AZTORE HOLDINGS, INC.
23960 Madison 0000 Xxxx Xxxx Xxxxx
Xxxxxxxx, XX Xxxxxxx, XX 00000
/s/ Xxxxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------ ----------------------------------------
Xxxxxxxx X. Xxxxx, President Xxxxxxx X. Xxxxxxxx, President
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, Chief Operating
Officer
NOTE AND SHARE PURCHASE AGREEMENT DATED MARCH 1, 2000 BY AND BETWEEN DYNA CAM
ENGINE CORPORATION AND AZTORE HOLDINGS, INC.
PAGE 18 OF 18
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EXHIBIT LIST
EXHIBIT DESCRIPTION
------- -----------
A. Master Note
B. TSI Asset Purchase Agreement
C. Subscription Agreement
D. Schedule of Exceptions
E. Ownership schedule
F. Resolutions
