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PURCHASE AGREEMENT
September 30, 1996
Exportadora Xxxxxxx, X.X. de X.X.
Xxxxxxx #1750
Colonia Del Fresno
Guadalajara, Jal. Mexico
C.P. 44900
Gentlemen:
M.G. Products, Inc., a California corporation (the
"Company"), proposes to issue and sell to you 3,642,076 fully
paid and nonassessable shares of its authorized but heretofore
unissued common stock, no par value per share (hereinafter called
the "Stock"). You have advised the Company that you desire to
purchase the Stock upon the terms and subject to the conditions
set forth in this Purchase Agreement.
1. PURCHASE AND SALE OF STOCK. Subject to the terms and
conditions and upon the representations, warranties and
agreements herein set forth, on September 30, 1996 (the "Closing
Date") the Company agrees to issue and sell the Stock to you and
you agree to purchase the Stock from the Company at a total
purchase price of $2,003,141.85 ($0.55 per share) which will be
paid by the cancellation on the Closing Date of $2,003,141.85 of
our indebtedness to you.
2. REPRESENTATIONS AND WARRANTIES BY COMPANY. The Company
represents, warrants and agrees with you that:
(a) The Company is duly organized and validly existing
and in good standing under the laws of the State of California
and has all requisite corporate power and authority to carry on
its business.
(b) The Company's Report on Form 10-K for the fiscal
year ended December 31, 1995 and the Company's Reports on Form 10-
Q for the quarters ended March 31 and June 30, 1996 (collectively
herein referred to as the "Reports") are attached as Exhibits A,
B and C. The financial statements included in the Reports
(hereafter referred to as the "Financial Statements") have been
prepared in accordance with generally accepted accounting
principles for such Reports, consistently followed throughout the
periods covered. The June 30, 1996 balance sheet fairly presents
the condition of the Company at June 30, 1996 and the statement
of profit and loss for the quarter then ended fairly presents the
results of the operations of the Company for such period.
(c) Neither this Agreement, nor the Financial
Statements, nor any certificate furnished or to be furnished to
you by the Company or any officer thereof, contain or will
contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not
misleading and the Company has apprised you of all such facts as
would be relevant to a prudent investor's determination in making
an additional investment in the Company.
(d) To the knowledge of the Company, no fact or
condition exists or is contemplated or threatened which might
result in a material adverse change in the assets, liabilities or
condition (financial or otherwise) or business of the Company in
the future, which have not been disclosed to you in the Financial
Statements, other supporting documents or in discussions.
(e) Since June 30, 1996, the Company has not declared
any cash dividend or declared or made any other distribution on
any of its stock, and has not directly or indirectly, purchased
or otherwise acquired any stock of the Company or agreed to do
so.
(f) Since June 30, 1996, neither the business nor the
condition (financial or otherwise) of the Company, nor any of its
properties or assets has been materially adversely affected in
any way (whether or not insured) as the result of any revocation
of license or right to do business, fire, explosion, labor
trouble, condemnation, Act of God or otherwise.
(g) Except as set forth in the Financial Statements
there is no action, proceeding, or investigation pending or, to
the knowledge of the Company, threatened which might result in
any materially adverse change in the Company's business or
condition (financial or otherwise) or in any of its properties or
assets, or in any liability on the part of the Company (not
covered by insurance), or which questions the validity of this
Agreement or of the Stock or of any action taken or to be taken
by the Company pursuant to or in connection with this Agreement.
The Financial Statements set forth accurately and in reasonable
detail all litigation to which the Company is a party at the date
hereof wherein relief sought is other than money damages or if
the only relief sought is money damages, involving an amount in
excess of $50,000.
(h) The Company's Articles of Incorporation, as
amended, authorize the issuance of 15,000,000 shares of common
stock of which 10,564,078 shares are outstanding on the date
hereof. Except as shown in the Reports, no rights, options,
warrants or other agreements for the issuance of stock of the
Company, nor any securities convertible into stock of the Company
are outstanding. All corporate action necessary for the issuance
of the Stock has been duly taken.
(i) Except as shown in the Reports, the Company has no
stock option plan, pension plan, profit sharing plan, or bonus
plan for its employees.
3. MECHANICS OF THE CLOSING.
(a) The delivery to you of the Stock and the payment
by you therefor shall be made at the Company's office in San
Antonio, Texas at 10 A.M. on September 30, 1996. This date may
by agreement in writing signed by the Company and Mr. Xxxx Xxxxxx
Xxxxxxxxx, as your representative, be changed to a date and/or an
hour other than set forth above, and in the event that any such
agreement is entered into the altered date or hour shall for all
purposes of this Agreement become the Closing Date.
(b) Delivery of the Stock shall be made to you on the
Closing Date against cancellation of the indebtedness referred to
in Section 1 hereof.
(c) The certificate for the Stock when delivered shall
be in definitive form, shall be registered in your name and shall
bear the legends shown on Exhibit D.
4. PURCHASER'S CONDITIONS PRECEDENT TO THE CLOSING. Your
obligations to purchase and pay for the Stock are subject to the
accuracy on the Closing Date of all representations and
warranties by the Company contained herein or otherwise made by
or on behalf of the Company in writing in connection with the
transactions contemplated hereby, and to the fulfillment to your
satisfaction, prior to or at the Closing Date, of the following
additional conditions:
(a) You shall have received from Xxxxxx & Xxxxxxxx
L.L.P., securities counsel for the Company, a favorable opinion
addressed to you and dated the Closing Date, substantially in the
form of Exhibit E.
(b) The Company shall have performed and complied with
all covenants and conditions contained herein required to be
performed or complied with by it prior to or at the Closing Date.
(c) The Company shall have delivered to you its
certificate dated the Closing Date and signed by its Chief
Financial Officer certifying in form satisfactory to you and to
your counsel that the conditions specified in sub-paragraph (b)
of this paragraph 4 have been met and that, in particular, the
issue and sale of the Stock are in full compliance with the
provisions of the Articles of Incorporation of the Company, as
amended, and the By-laws of the Company, as amended.
(d) The Company shall have delivered to you the
certificate evidencing the Stock.
5. COMPANY'S CONDITIONS PRECEDENT TO THE CLOSING.
(a) The Company shall have received a fully executed
copy of a shareholder's agreement, substantially in the form of
Exhibit F hereto.
(b) The Company shall have received the evidence of
cancellation of indebtedness provided for in Section 3.
6. INVESTMENT REPRESENTATIONS. You understand that the
Stock is offered and sold to you pursuant to an exemption
commonly referred to as the "Private Placement" or "Non-public
Offering" exemption from the registration requirements under the
Securities Act of 1933 (the "Act").
You also understand that the Stock is subject to
restrictions on transfer and resale and may not be transferred or
resold except as permitted under the Act and the applicable state
securities laws, pursuant to registration or exemption therefrom,
and that, except as shown in Exhibit F, the Company has no
intention to register the shares under the Act.
You agree that you will purchase the Stock for your own
account for investment and with no present intention of
distributing or reselling the same, but subject to your right to
dispose of the Stock if at some future time you deem it advisable
so to do.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
covenants, agreements, representations and warranties made herein
and in any documents delivered at the Closing or pursuant
thereto, shall be deemed to be material and to have been relied
upon by you, and shall survive the Closing to the extent
immediately hereinafter provided. All liabilities of the Company
with respect to such covenants, agreements, representations and
warranties shall terminate and expire on the first anniversary of
the Closing Date; provided, however, that all such liabilities
shall survive beyond the aforesaid one-year period in respect of
any claim that shall be asserted in reasonable detail by written
notice mailed to the Company on or prior to said first
anniversary.
8. NOTICES. Any notice, request, instructions or other
document deemed by either party to be necessary or desirable to
be given to the other parties shall be in writing and shall be
delivered by public courier service as follows:
If to Exportadora: Exportadora Xxxxxxx, X.X. de X.X.
Xxxxxxx #1750
Colonia Del Fresno
Guadalajara, Jal. Mexico
C.P. 44900
Attn: Mr. Xxxx Xxxxxx Xxxxxxxxx
If to the Company: M.G. Products, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000-0000
Attn: Chief Financial Officer
The addresses to which deliveries must be made may be changed
from time to time by a notice delivered as aforesaid.
9. MISCELLANEOUS.
(a) All the terms and provisions of this Agreement shall be
binding upon and shall inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto
whether so expressed or not.
(b) This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of
California without giving effect to principles of conflicts of
laws.
(c) This Agreement may be executed in several counterparts
each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth
the agreement between us by signing a copy of this agreement in
the place provided below and returning the same to us. When
confirmed by you, this letter will constitute the Agreement
between the Company and you.
M.G. PRODUCTS, INC.
By:
EXPORTADORA XXXXXXX, X.X.
DE C.V.
By:
LIST OF EXHIBITS
EXHIBIT
A 10-K
B 10-Q for first quarter
C 10-Q for second quarter
D Legends
E Xxxxxx & Xxxxxxxx L.L.P. opinion
F Shareholder Agreement
EXHIBIT D
"The securities evidenced by this
certificate have not been registered pursuant
to the Securities Act of 1933, as amended
(the "Act"), or any state securities law, and
such securities may not be sold, transferred
or otherwise disposed of unless the same are
registered and qualified in accordance with
the Act and any applicable state securities
laws, or in the opinion of counsel reasonably
satisfactory to the Company, such
registration and qualification are not
required."
"The shares represented by this
certificate are subject to an irrevocable
proxy and certain restrictions against
transfer under the terms of a Shareholders'
Agreement entered into by and among this
Company and certain of its shareholders,
effective as of September 30, 1996, a copy of
which is on file at the Company's principal
place of business or registered office. A
copy of such Agreement will be furnished to
the holder hereof without charge upon written
request to the Company at its principal place
of business or registered office."
