Exhibit No. 1
Form 8-K
CirTran Corporation
File No. 33-13674-LA
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made and entered into as of
June 12, 2000, by and among Xxxxxxxxxx Ventures, Inc., a Nevada
corporation (the "Company"), CTI Systems, Inc., a Utah
corporation (the "Buyer"), Xxx Xxxxxxx ("Xxxxxxx") and Circuit
Technology, Inc., a Utah corporation doing business as Circuit
Technology Corporation (the "Seller").
This Agreement contemplates a transaction in which the Buyer
will purchase substantially all of the assets (and assume
substantially all of the liabilities) of the Seller in return for
certain shares of the common stock of the Company.
Now, therefore, in consideration of the premises and the
mutual promises herein made, and in consideration of the
representations, warranties and covenants herein contained, the
Parties agree as follows.
1. Definitions. For the purposes of this Agreement, the
following terms shall have the following meanings:
"Accredited Investor" has the meaning set forth in
Regulation D promulgated under the Securities Act.
"Acquired Assets" means all of the right, title, and
interest that the Seller possesses and has the right to transfer
in and to all of its assets, including all of its (a) leases,
subleases, and rights thereunder, (b) tangible personal property
(such as machinery, equipment, inventories of raw materials and
supplies, manufactured and purchased parts, goods in process and
finished goods, furniture, automobiles, trucks, tractors,
trailers, tools, jigs, and dies), (c) intellectual property,
goodwill associated therewith, licenses and sublicenses granted
and obtained with respect thereto, and rights thereunder,
remedies against infringements thereof, and rights to protection
of interests therein under the laws of all jurisdictions, (d)
agreements, contracts, indentures, mortgages, instruments,
Security Interests, guaranties, other similar arrangements, and
rights thereunder, (e) accounts, notes, and other receivables,
(f) claims, deposits, prepayments, refunds, causes of action,
choses in action, rights of recovery, rights of set off, and
rights of recoupment (including any such item relating to the
payment of taxes), (g) franchises, approvals, permits, licenses,
orders, registrations, certificates, variances, and similar
rights obtained from governments and governmental agencies, (h)
books, records, ledgers, files, documents, correspondence, lists,
drawings, and specifications, creative materials, advertising and
promotional materials, studies, reports, and other printed or
written materials and (i) Cash above $75,000; provided, however,
that the Acquired Assets shall not include (i) the corporate
charter, qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification
numbers, seals, minute
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books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and
existence of the Seller as a corporation, or (ii) any of the
rights of the Seller under this Agreement (or under any side
agreement between the Seller on the one hand and the Buyer and/or
the Company on the other hand entered into on or after the date
of this Agreement).
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Allocation Schedule" has the meaning set forth in Section
2.9.
"Applicable Rate" means the corporate base rate of interest
publicly announced from time to time by First Security Bank of
Utah N.A. plus two percent per annum.
"Assumed Liabilities" means all liabilities and obligations
of the Seller and its Subsidiaries including (a) all liabilities
of the Seller as shown on the Seller's Financial Statements,
together with all liabilities incurred after Seller's Most Recent
Fiscal Month End in the Ordinary Course of Business, and (b) all
other liabilities and obligations of the Seller set forth in the
Seller's Disclosure Schedule.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents (including marketable
securities and short term investments) calculated in accordance
with GAAP applied on a basis consistent with the preparation of
the Seller's Financial Statements or the Company's Financial
Statements, as the case may be.
"Closing" has the meaning set forth in Section 2.4 below.
"Closing Date" has the meaning set forth in Section 2.4
below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Cogent" means Cogent Capital Corporation.
"Company's Disclosure Schedule" has the meaning set forth in
Section 4 below.
"Company's Financial Statements" has the meaning set forth
in Section 4.9 below.
"Company's Most Recent Month End" has the meaning set forth
in Section 4.9 below.
"Confidential Information" means, with respect to the Seller
or the Company, any information concerning the businesses and
affairs of the Seller or the Company, as the case may be, and
its Subsidiaries that is not already generally available to the
public.
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"Constituent Component" means all software (including
operating systems, programs, packages and utilities), firmware,
hardware, networking components, and peripherals provided as part
of the configuration.
"Xxxxxxx" has the meaning set forth in the preface above.
"Effective Date" means the date on which this Agreement has
been signed by all of the Parties.
"Effective Share Price" means the average of the daily
closing bid price of the common stock of the Company on the OTC
Bulletin Board during the 120 day period ending on the date which
is five days prior to the date hereof and multiplied by 90%.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified
defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee
Welfare Benefit Plan or material fringe benefit or other
retirement, bonus, or incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA 3(1).
"Environmental, Health, and Safety Requirements" shall mean
all federal, state, local and foreign statutes, regulations, and
ordinances concerning public health and safety, worker health and
safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of
any hazardous materials, substances or wastes, as such
requirements are enacted and in effect on or prior to the Closing
Date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Xxxxxxxx" means Xxxxx Xxxxxxxx, the President of the
Seller.
"Income Tax" means any federal, state, local, or foreign
income tax, including any interest, penalty, or addition thereto,
whether disputed or not.
"Income Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to
Income Taxes, including any schedule or attachment thereto.
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"Knowledge" means actual knowledge without independent
investigation.
"Lockup Agreement " has the meaning set forth in Section
2.7 below.
"Losses " shall mean, as to any Person who is entitled to
be indemnified hereunder, any and all claims, liabilities,
judgements, expenses or costs (including reasonable attorneys'
fees) incurred by such Person as a result of any event or events
giving rise to such entitlement.
"Multiemployer Plan" has the meaning set forth in ERISA
3(37).
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with
respect to quantity and frequency).
"Parties" means the Company, the Buyer, Xxxxxxx, and the
Seller.
"Payment Shares" has the meaning set forth in Section 2.3
below.
"Person" means an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture,
an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Purchase Price" has the meaning set forth in Section 2.3
below.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for taxes
not yet due and payable or for taxes that the taxpayer is
contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with
the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller's Disclosure Schedule" has the meaning set forth in
Section 3 below.
"Seller's Financial Statements" has the meaning set forth in
Section 3.7 below.
"Seller's Most Recent Financial Statements" has the meaning
set forth in Section 3.8 below.
"Seller's Most Recent Fiscal Month End" has the meaning set
forth in Section 3.8 below.
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"Stock Pledge Agreement" has the meaning set forth in
Section 2.6 below.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the
common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Year 2000 Qualification Requirements" means, as to any
Person, that the internal computer systems and each Constituent
Component of those systems and all computer-related products of
each Constituent Component of those products of such Person (i)
have been reviewed to confirm that they store, process (including
sorting and performing mathematical operations, calculations and
computations), input and output data containing date and
information correctly regardless of whether the date contains
dates and times before, on or after January 1, 2000, (ii) have
been designed to ensure date and time entry recognition,
calculations that accommodate same century and multi-century
formulas and date values, leap year recognition and calculations,
and date data interface values that reflect the century, (iii)
accurately manage and manipulate data involving dates and times,
including single century formulas and multi-century formulas, and
will not cause an abnormal ending scenario within the application
or generate incorrect values or invalid results involving such
dates, (iv) accurately process any date rollover, and (v) accept
and respond to two-digit year date input in a manner that
resolves any ambiguities as to the century.
2. Basic Transaction.
2.1 Purchase and Sale of Assets. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to
purchase from the Seller, and the Seller agrees to sell,
transfer, convey, and deliver to the Buyer, all of the Acquired
Assets at the Closing for the consideration specified below in
this Section 2.
2.2 Assumption of Liabilities. On and subject to the terms
and conditions of this Agreement, the Buyer agrees to assume and
become responsible for all of the Assumed Liabilities at the
Closing.
2.3 Purchase Price. In addition to assuming all of the
Assumed Liabilities as provided above, the Company and the Buyer
agree to pay for the Acquired Assets by delivering to the Seller
at the Closing 10,000,000 shares of the common stock of the
Company (the "Payment Shares"). For the purposes of this
Agreement, the Parties agree that the purchase price hereunder
(the "Purchase Price") shall be the Effective Share Price
multiplied by the number of Payment Shares.
2.4 The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at the offices of Jones, Waldo, Xxxxxxxx & XxXxxxxxx, 000 Xxxxx
Xxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxx Xxxx, Xxxx 00000 commencing at
9:00 a.m. local time on June 30, 2000 or such other date as the
Parties may mutually determine (the "Closing Date").
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2.5 Reverse Split. Within 10 calendar days after the
Effective Date, the Company shall cause a reverse split of the
common stock of the Company, such that there will be 141,567
shares of common stock outstanding thereafter and immediately
prior to the Closing.
2.6 Stock Pledge Agreements. Xxxxxxx agrees to enter into
an agreement in the form attached hereto as Exhibit A (a "Stock
Pledge Agreement") in connection with the Closing.
2.7 Lockup Agreement. Each of the Company and Xxxxxxx
agrees to enter into an agreement in the form attached hereto as
Exhibit D (the "Lockup Agreement") in connection with the
Closing.
2.8 Deliveries at the Closing. At the Closing:
(a) the Seller will deliver to the Buyer and the
Company the various certificates, instruments and documents
referred to in Section 7.1 below,
(b) the Buyer and the Company will deliver to the
Seller the various certificates, instruments and documents
referred to in Section 7.2 below,
(c) the Seller will execute, acknowledge (if
appropriate), and deliver to the Buyer (i) assignments in
the forms attached hereto as Exhibits B-1 through B-3 and
(ii) such other instruments of sale, transfer, conveyance,
and assignment as the Buyer reasonably may request,
including endorsing over to the Buyer any stock certificates
in any Subsidiary of the Seller,
(d) the Buyer will execute, acknowledge (if
appropriate), and deliver to the Seller (i) an assumption in
the form attached hereto as Exhibit C and (ii) such other
instruments of assumption as the Seller reasonably may
request,
(e) the Company and Xxxxxxx will execute and deliver
to the Seller the Lockup Agreement,
(f) Xxxxxxx will execute and deliver to the Seller a
Stock Pledge Agreement, together with the certificates of
stock referred to therein and blank transfer forms with
respect thereto,
(g) the Company will deliver (i) to the Seller
certificates representing 9,200,000 shares of the Payment
Shares and (ii) to Cogent certificates representing 800,000
shares of the Payment Shares, as directed by the Seller as
compensation for services rendered to the Seller.
(h) the Company will cause Xxxxxxxx to be appointed as
a director of the Company and each of its Subsidiaries,
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(i) the Company will deliver resignations of all
officers and directors (other than Xxxxxxxx) of the Company
and each of its Subsidiaries, which shall be stated to be
effective as of the Closing, and
(j) the Company and the Seller will jointly issue a
press release in form and substance mutually acceptable to
the Parties.
2.9 Allocation. The Parties will allocate the Purchase
Price (and all other capitalizable costs) among the Acquired
Assets for all purposes (including financial accounting and tax
purposes) within 30 days after the Closing as they shall
reasonably agree.
2.10 Tax and Accounting Consequences. It is intended by the
Parties that the purchase of the Acquired Assets pursuant hereto
shall (a) constitute a reorganization within the meaning of
Section 368(a)(1)(C) of the Code and (b) be accounted for
financial reporting purposes as a purchase.
2.11 Taxes. The Buyer shall be responsible for all sales,
use, transfer other similar type taxes incurred in connection
with the purchase and sale of the Acquired Assets pursuant
hereto.
2.12 Exhibits. The Parties agree that the forms of the
Exhibits shall be attached hereto within 20 days after the
Effective Date. The Seller shall provide drafts of Exhibits A,
B, C and D to the Company and the Company shall provide its
proposed changes thereto. The Parties agree to negotiate in good
faith the forms of such Exhibits.
2.13 Tax Matters. Any agreement between the Seller and any
of its Subsidiaries regarding allocation or payment of taxes or
amounts in lieu of taxes shall be deemed terminated at and as of
the Closing. The Buyer and the Seller will (A) cooperate in the
preparation and filing of an election under Code 338(h)(10)
with respect to the sale of the stock of the Subsidiaries
hereunder and (B) take all such action as is required in order to
give effect to the election for state, local, and foreign tax
purposes to the greatest extent permitted by law.
2.14 Employee Benefits Matters. The Company will adopt and
assume at and as of the Closing each of the Employee Benefit
Plans that the Seller maintains and each trust, insurance
contract, annuity contract, or other funding arrangement that the
Seller has established with respect thereto. The Company will
ensure that the Employee Benefit Plans treat employment with any
of the Seller and its Subsidiaries prior to the Closing Date the
same as employment with any of the Buyer and its Subsidiaries
from and after the Closing Date for purposes of eligibility,
vesting, and benefit accrual. The Seller will transfer (or cause
the plan administrators to transfer) at and as of the Closing all
of the corresponding assets associated with the Employee Benefit
Plans that the Company is adopting and assuming. With respect to
each Multiemployer Plan, the Parties shall take all actions
necessary to comply with the requirements of ERISA 4204.
2.15 Investment Representations. In connection with the
liquidation of the Seller following the Closing, the Seller
agrees that, prior to distributing any Payment Shares to any
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shareholder of the Seller, the Seller shall receive from such
shareholder representations and warranties that such shareholder
(a) understands that the Payment Shares have not been, and will
not be, registered under the Securities Act, or under any state
securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any
public offering, (b) is acquiring the Payment Shares solely for
its own account for investment purposes, and not with a view to
the distribution thereof, (c) understands that the Payment
Shares or any interest therein shall not be resold or otherwise
disposed of the shareholder unless such shares are subsequently
registered under the Securities Act and under appropriate state
securities laws, or unless an exemption from registration is
available, (d) is a sophisticated investor with knowledge and
experience in business and financial matters, (e) has received
certain information concerning the Company and has had the
opportunity to obtain additional information as desired in order
to evaluate the merits and the risks inherent in holding the
Payment Shares received by it, (f) is able to bear the economic
risk and lack of liquidity inherent in holding the Payment Shares
received by it, (g) is an Accredited Investor and (h) agrees that
the Payment Shares will contain an appropriate legend restricting
their sale.
2.16 Capital Holdings. Subject to the conditions specified
herein, the Seller agrees to pay on behalf of the Company an
outstanding invoice from Xxxxxxx Holdings, Inc. in the amount of
$185,000 (the "Invoice").
2.17 No Liabilities. The Company agrees that, immediately
prior to the Closing, the Company and the Buyer shall have no
assets and shall have no liabilities (whether liquidated or
contingent).
2.18 Information Statement. The Seller and the Company agree
to cooperate to prepare an Information Statement for the
shareholders of the Seller.
2.19 Financial Statements. Within 10 days after the
Effective Date, the Company shall provide to the Seller audited
consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal
years ended December 31, 1997, December 31, 1998 and December 31,
1999 for the Company and its Subsidiaries. No later than June
10, 2000, the Company shall provide to the Seller audited
consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal year
ended December 31, 1999 and for the interim peiod up to April 30,
2000 for the Seller and its Subsidiaries.
3. Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer and the Company that the
statements contained in this Section 3 are correct and complete
as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement
throughout this Section 3), except as otherwise shown in the
disclosure schedule accompanying this Agreement (the "Seller's
Disclosure Schedule"). The Seller's Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 3.
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3.1 Organization of the Seller. The Seller and each of its
Subsidiaries is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its
incorporation.
3.2 Authorization of Transaction. The Seller has full
corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. Subject to
approval by the Seller's shareholders as provided herein, this
Agreement has been duly authorized by the Seller and constitutes
the valid and legally binding obligation of the Seller,
enforceable in accordance with its terms and conditions.
3.3 Noncontravention. Except as otherwise shown in Section
3.3 of the Seller's Disclosure Schedule, to the Knowledge of the
Seller, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section
2 above), will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or
court to which any of the Seller and its Subsidiaries is subject
or any provision of the charter or bylaws of any of the Seller
and its Subsidiaries or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which any of
the Seller and its Subsidiaries is a party or by which it is
bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets),
except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to
give notice, or Security Interest would not have a material
adverse effect on the financial condition of the Seller and its
Subsidiaries taken as a whole or on the ability of the Parties to
consummate the transactions contemplated by this Agreement. To
the Knowledge of the Seller, none of the Seller and its
Subsidiaries needs to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in Section
2 above), except where the failure to give notice, to file, or to
obtain any authorization, consent, or approval would not have a
material adverse effect on the financial condition of the Seller
and its Subsidiaries taken as a whole or on the ability of the
Parties to consummate the transactions contemplated by this
Agreement.
3.4 Brokers' Fees. Except as provided in Section 2.8(g),
the Seller has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer
or the Company could become liable or obligated. Cogent is the
Seller's agent.
3.5 Title to Tangible Assets. Except as otherwise shown
in Section 3.5 of the Seller's Disclosure Schedule, the Seller
and its Subsidiaries have good title to, or a valid leasehold
interest in, the material tangible assets they use regularly in
the conduct of their businesses, and all such assets are
operational as necessary to the ordinary course of the Seller's
business.
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3.6 Subsidiaries. Section 3.6 of the Seller's Disclosure
Schedule sets forth for each Subsidiary of the Seller (i) its
name and jurisdiction of incorporation, (ii) the number of shares
of authorized capital stock of each class of its capital stock,
(iii) the number of issued and outstanding shares of each class
of its capital stock, the names of the holders thereof, and the
number of shares held by each such holder, (iv) the number of
shares of its capital stock held in treasury, and (v) its
directors and officers. Each Subsidiary of the Seller is a
corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation.
Each Subsidiary of the Seller is duly authorized to conduct
business and is in good standing under the laws of each
jurisdiction where such qualification is required, except where
the lack of such qualification would not have a material adverse
effect on the financial condition of the Seller and its
Subsidiaries taken as a whole. Each Subsidiary of the Seller has
full corporate power and authority to carry on the businesses in
which it is engaged and to own and use the properties owned and
used by it. All of the issued and outstanding shares of capital
stock of each Subsidiary of the Seller have been duly authorized
and are validly issued, fully paid, and nonassessable. One of the
Seller and its Subsidiaries holds of record and owns beneficially
all of the outstanding shares of each Subsidiary of the Seller.
3.7 Financial Statements. The Seller has previously
provided to the Company following financial statements
(collectively the "Seller's Financial Statements"): (i) audited
consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal year
ended December 31, 1998 for the Seller and its Subsidiaries; and
(ii) unaudited consolidated balance sheets and statements of
income, changes in stockholders' equity, and cash flow (the
"Seller's Most Recent Financial Statements" as of and for the six
months ended April 30, 2000 (the "Seller's Most Recent Fiscal
Month End") for the Seller and its Subsidiaries. The Seller's
Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby and present fairly the
financial condition of the Seller and its Subsidiaries as of such
dates and the results of operations of the Seller and its
Subsidiaries for such periods; provided, however, that the
Seller's Most Recent Financial Statements are subject to normal
year-end adjustments and lack footnotes and other presentation
items.
3.8 Events Subsequent to the Seller's Most Recent Fiscal
Month End. Since the Seller's Most Recent Fiscal Month End, there
has not been any material adverse change in the financial
condition of the Seller and its Subsidiaries taken as a whole.
Without limiting the generality of the foregoing, since that date
none of the Seller and its Subsidiaries has engaged in any
practice, taken any action, or entered into any transaction
outside the Ordinary Course of Business.
3.9 Legal Compliance. To the Knowledge of the Seller, each
of the Seller and its Subsidiaries has complied with all
applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments
(and all agencies thereof), except where the failure to comply
would not have a material adverse effect upon the financial
condition of the Seller and its Subsidiaries taken as a whole.
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3.10 Income Tax Matters. Each of the Seller and its
Subsidiaries has filed all Income Tax Returns that it was
required to file, and has paid all Income Taxes shown thereon as
owing, except where the failure to file Income Tax Returns or to
pay Income Taxes would not have a material adverse effect on the
financial condition of the Seller and its Subsidiaries taken as a
whole. Section 3.11 of the Seller's Disclosure Schedule lists the
last Income Tax Returns filed with respect to any of the Seller
and its Subsidiaries that have been audited. None of the Seller
and its Subsidiaries has waived any statute of limitations in
respect of Income Taxes or agreed to any extension of time with
respect to an Income Tax assessment or deficiency. None of the
Seller and its Subsidiaries is a party to any Income Tax
allocation or sharing agreement.
3.11 Real Property. Neither Seller nor any of its
Subsidiaries owns any real property. Section 3.11 of the
Seller's Disclosure Schedule lists all real property leased or
subleased to any of the Seller and its Subsidiaries. To the
Knowledge of the Seller, each lease and sublease listed in
Section 3.11 of the Seller's Disclosure Schedule is legal, valid,
binding, enforceable, and in full force and effect, except where
the illegality, invalidity, nonbinding nature, unenforceability,
or ineffectiveness would not have a material adverse effect on
the financial condition of the Seller and its Subsidiaries taken
as a whole.
3.12 Intellectual Property. Section 3.12 of the Seller's
Disclosure Schedule identifies each patent or registration which
has been issued to any of the Seller and its Subsidiaries with
respect to any of its intellectual property, identifies each
pending patent application or application for registration which
any of the Seller and its Subsidiaries has made with respect to
any of its intellectual property, and identifies each license,
agreement, or other permission which any of the Seller and its
Subsidiaries has granted to any third party with respect to any
of its intellectual property.
3.13 Contracts. Section 3.13 of the Seller's Disclosure
Schedule lists all written contracts and other written agreements
to which any of the Seller and its Subsidiaries is a party the
performance of which will involve consideration in excess of
$50,000, other than (a) agreements with customers in the Seller's
standard form and (b) purchase orders from customers that have
been accepted by the Seller. The Seller has delivered to the
Buyer a correct and complete copy of each contract or other
agreement listed in Section 3.13 of the Seller's Disclosure
Schedule (as amended to date).
3.14 Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of any of the Seller and its
Subsidiaries.
3.15 Litigation. Section 3.15 of the Seller's Disclosure
Schedule sets forth each instance in which any of the Seller and
its Subsidiaries (a) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (b) is a party to
any action, suit, proceeding, hearing, or investigation of, in,
or before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction, pending or
threatened, except where the injunction, judgment, order, decree,
ruling, action, suit, proceeding, hearing, or investigation would
not have a material adverse effect on the financial condition of
the Seller and its Subsidiaries taken as a whole.
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3.16 Employee Benefits. Section 3.16 of the Seller's
Disclosure Schedule lists each Employee Benefit Plan that any of
the Seller and its Subsidiaries maintains or to which any of the
Seller and its Subsidiaries contributes.
3.17 Environmental, Health, and Safety Matters. To the
Knowledge of the Seller, (a) the Seller and its Subsidiaries are
in compliance with Environmental, Health, and Safety
Requirements, except for such noncompliance as would not have a
material adverse effect on the financial condition of the Seller
and its Subsidiaries taken as a whole, and (b) the Seller and its
Subsidiaries have not received any written notice, report or
other information regarding any actual or alleged material
violation of Environmental, Health, and Safety Requirements, or
any material liabilities or potential material liabilities
(whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective
obligations, relating to the Seller or its Subsidiaries or their
facilities arising under Environmental, Health, and Safety
Requirements, the subject of which would have a material adverse
effect on the financial condition of the Seller and its
Subsidiaries taken as a whole. This Section 3.17 contains the
sole and exclusive representations and warranties of the Seller
with respect to any environmental, health, or safety matters,
including without limitation any arising under any Environmental,
Health, and Safety Requirements.
3.18 Certain Business Relationships with the Seller and Its
Subsidiaries. Except as otherwise shown in Section 3.18 of the
Seller's Disclosure Schedule, and except for loans from
stockholders that have been repaid prior to the date hereof, none
of the stockholders of the Seller has been involved in any
material business arrangement or relationship with any of the
Seller and its Subsidiaries within the past 12 months, and none
of the stockholders of the Seller owns any material asset,
tangible or intangible, which is used in the business of any of
the Seller and its Subsidiaries.
3.19 Seller's Investment Representation. The Seller (a)
understands that the Payment Shares have not been, and will not
be, registered under the Securities Act, or under any state
securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any
public offering, (b) is acquiring the Payment Shares solely for
its own account for investment purposes, and not with a view to
the distribution thereof, (c) understands that the Payment Shares
or any interest therein may not be resold or otherwise disposed
of by the Seller unless such shares are subsequently registered
under the Securities Act and under appropriate state securities
laws, or unless an exemption from registration is available, (d)
is a sophisticated investor with knowledge and experience in
business and financial matters, (e) has received certain
information concerning the Company and has had the opportunity to
obtain additional information as desired in order to evaluate the
merits and the risks inherent in holding the Payment Shares
received by it, (f) is able to bear the economic risk and lack of
liquidity inherent in holding the Payment Shares received by it
and (g) has received representations and warranties from each of
the Seller's shareholders that such shareholder is an Accredited
Investor.
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3.20 Cogent's Investment Representation. Cogent (a)
understands that the Payment Shares have not been, and will not
be, registered under the Securities Act, or under any state
securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any
public offering, (b) is acquiring the Payment Shares solely for
its own account for investment purposes, and not with a view to
the distribution thereof, (c) understands that the Payment Shares
or any interest therein may not be resold or otherwise disposed
of by Cogent unless such shares are subsequently registered under
the Securities Act and under appropriate state securities laws,
or unless an exemption from registration is available, (d) is a
sophisticated investor with knowledge and experience in business
and financial matters, (e) has received certain information
concerning the Company and has had the opportunity to obtain
additional information as desired in order to evaluate the merits
and the risks inherent in holding the Payment Shares received by
it and (f) is able to bear the economic risk and lack of
liquidity inherent in holding the Payment Shares received by it.
3.21 Year 2000 Compliance. The Seller has adopted plans
such that each of the Seller's and each of the Seller's
Subsidiaries' internal computer systems and each Constituent
Component of those systems and all computer-related products and
services and each Constituent Component of those products and
services of the Seller and each of its Subsidiaries will fully
comply with the Year 2000 Qualification Requirements.
3.22 Disclaimer of other Representations and Warranties.
Except as expressly set forth in this Section 3, the Seller makes
no representation or warranty, express or implied, at law or in
equity, in respect of any of its assets (including, without
limitation, the Acquired Assets), liabilities (including, without
limitation, the Assumed Liabilities) or operations, including,
without limitation, with respect to merchantability or fitness
for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed. Each of the Buyer
and the Company hereby acknowledges and agrees that, except to
the extent specifically set forth in this Section 3, the Buyer is
purchasing the Acquired Assets on an "as-is, where-is" basis.
Without limiting the generality of the foregoing, the Seller
makes no representation or warranty regarding any assets other
than the Acquired Assets or any liabilities other than the
Assumed Liabilities, and none shall be implied at law or in
equity.
4. Representations and Warranties of the Company and the Buyer.
Each of the Company and the Buyer represents and warrants to the
Seller that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 4), except as otherwise
shown in the Company's Disclosure Schedule. The Company's
Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Section
4.
4.1 Organization of the Company and the Buyer. Each of the
Company and the Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction
of its incorporation.
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4.2 Authorization of Transaction. Each of the Company and
the Buyer has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement has been duly
authorized by all necessary corporate action and constitutes the
valid and legally binding obligation of each of the Company and
the Buyer, enforceable in accordance with its terms and
conditions.
4.3 Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments and
assumptions referred to in Section 2 above), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Company or
the Buyer is subject or any provision of its charter or bylaws or
(ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument,
or other arrangement to which the Company or the Buyer is a party
or by which it is bound or to which any of its assets is subject.
Neither the Company nor the Buyer needs to give any notice to,
make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for
the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to
in Section 2 above).
4.4 Capital Structure. The authorized stock of the Company
consists of no shares of preferred stock, of which no shares are
currently issued, and 500,000,000 shares of common stock, of
which 141,567 shares were issued and outstanding as of the date
hereof. The authorized capital stock of the Buyer consists of
50,000 shares of common stock, 1,000 shares of which, as of the
date hereof, are issued and outstanding and are held by Company.
All such shares have been duly authorized, and all such issued
and outstanding shares have been validly issued, are fully paid
and nonassessable and are free of any liens or encumbrances other
than any liens or encumbrances created by or imposed upon the
holders thereof. Except as otherwise shown on Section 4.4 of the
Company's Disclosure Schedule, there are no warrants or options
with respect to any shares of the stock of the Company or any of
its Subsidiaries.
4.5 Payment Shares. The Payment Shares to be issued
pursuant to Section 2 will, when issued in accordance with the
terms of this Agreement, be duly authorized, validly issued,
fully paid and nonassessable.
4.6 Brokers' Fees. Neither the Company nor the Buyer has
any liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Seller could become
liable or obligated.
4.7 Certain Business Relationships with the Company and Its
Subsidiaries. None of the stockholders of the Company has been
involved in any material business arrangement or relationship
with any of the Company and its Subsidiaries within the past 12
months, and none of the stockholders of the Company owns any
material asset, tangible or intangible, which is used in the
business of any of the Company and its Subsidiaries.
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4.8 Minute Books. The minute books of the Company and the
Buyer provided to the Seller are the only minute books of the
Company and the Buyer and contain a reasonably accurate summary
of all meetings of directors (or committees thereof) and
shareholders or actions by written consent since the time of
incorporation of the Company and the Buyer.
4.9 Company's Financial Statements. The Company has
previously provided to the Seller the following financial
statements: (i) audited consolidated balance sheets and
statements of income, changes in stockholders' equity, and cash
flow as of and for the fiscal years ended December 31, 1997 ,
December 31, 1998 and December 31, 2000 for the Company and its
Subsidiaries; and (ii) unaudited consolidated balance sheets and
statements of income, changes in stockholders' equity, and cash
flow (the "Company's Most Recent Financial Statements" as of and
for the period ended May 30, 2000 (the "Company's Most Recent
Month End") for the Company and its Subsidiaries. The financial
statements specified in this Section 4.9 and in Section 2.20 are
collectively referred to as the "Seller's Financial Statements".
The Seller's Financial Statements (including the notes thereto)
have been (or will be, as the case may be) prepared in accordance
with GAAP applied on a consistent basis throughout the periods
covered thereby and present (or will present) fairly the
financial condition of the Company and its Subsidiaries as of
such dates and the results of operations of the Company and its
Subsidiaries for such periods; provided, however, that the
Company's Most Recent Financial Statements are subject to normal
year-end adjustments and lack footnotes and other presentation
items.
4.10 No Undisclosed Liabilities. Neither the Company nor
any of its Subsidiaries has any liability, indebtedness,
obligation, expense, claim, deficiency, guaranty or endorsement
of any type, whether accrued, absolute, contingent, matured,
unmatured or other (whether or not required to be reflected in
financial statements in accordance with generally accepted
accounting principles), which individually or in the aggregate,
(a) has not been reflected in the Company's Financial Statements,
or (b) has not arisen in the Company's or a Subsidiary's Ordinary
Course of Business since the Company's Most Recent Month End,
consistent with past practices, and in the aggregate do not
exceed $1.
4.11 Events Subsequent to the Company's Most Recent Month
End. Since the Company's Most Recent Month End, there has not
been any material adverse change in the financial condition of
the Company and its Subsidiaries taken as a whole. Without
limiting the generality of the foregoing, since that date none of
the Company and its Subsidiaries has engaged in any practice,
taken any action, or entered into any transaction outside the
Ordinary Course of Business.
4.12 Legal Compliance. To the Knowledge of the Company, each
of the Company and its Subsidiaries has complied with all
applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments
(and all agencies thereof), except where the failure to comply
would not have a material adverse effect upon the financial
condition of the Company and its Subsidiaries taken as a whole.
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4.13 Tax Matters. Each of the Company and its Subsidiaries
has filed all Income Tax Returns that it was required to file,
and has paid all Income Taxes shown thereon as owing, except
where the failure to file Income Tax Returns or to pay Income
Taxes would not have a material adverse effect on the financial
condition of the Company and its Subsidiaries taken as a whole.
Section 4.13 of the Company's Disclosure Schedule lists the last
Income Tax Returns filed with respect to any of the Company and
its Subsidiaries at have been audited. None of the Company and
its Subsidiaries has waived any statute of limitations in respect
of Income Taxes or agreed to any extension of time with respect
to an Income Tax assessment or deficiency. None of the Company
and its Subsidiaries is a party to any Income Tax allocation or
sharing agreement.
4.14 Real Property. Neither Company nor any of its
Subsidiaries owns or leases any real property.
4.15 Intellectual Property. Section 4.15 of the Company's
Disclosure Schedule identifies each patent or registration which
has been issued to any of the Company and its Subsidiaries with
respect to any of its intellectual property and identifies each
pending patent application or application for registration which
any of the Company and its Subsidiaries has made with respect to
any of its intellectual property.
4.16 Contracts. Section 4.16 of the Company's Disclosure
Schedule lists all written contracts and other written agreements
to which any of the Company and its Subsidiaries is a party the
performance of which will involve consideration in excess of $1.
The Company and its Subsidiaries have no written employment
contracts.
4.17 Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of any of the Company and its
Subsidiaries.
4.18 Litigation. Section 4.18 of the Company's Disclosure
Schedule sets forth each instance in which any of the Company and
its Subsidiaries (a) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (b) is a party to
any action, suit, proceeding, hearing, or investigation of, in,
or before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction, except where
the injunction, judgment, order, decree, ruling, action, suit,
proceeding, hearing, or investigation would not have a material
adverse effect on the financial condition of the Company and its
Subsidiaries taken as a whole.
4.19 Employee Benefits. Neither the Company nor the Buyer
has any employees.
4.20 Environmental, Health, and Safety Matters. To the
Knowledge of the Company, (a) the Company and its Subsidiaries
are in compliance with Environmental, Health, and Safety
Requirements, except for such noncompliance as would not have a
material adverse effect on the financial condition of the Company
and its Subsidiaries taken as a whole, and the Company and its
Subsidiaries have not received any written notice, report or
other information regarding any actual or alleged material
violation of Environmental, Health, and Safety Requirements, or
any material liabilities or potential material liabilities
(whether accrued, absolute, contingent,
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unliquidated or otherwise), including any investigatory, remedial
or corrective obligations, relating to the Company or its
Subsidiaries or their facilities arising under Environmental,
Health, and Safety Requirements, the subject of which would have
a material adverse effect on the financial condition of the
Company and its Subsidiaries taken as a whole. This Section 4.20
contains the sole and exclusive representations and warranties of
the Company with respect to any environmental, health, or safety
matters, including without limitation any arising under any
Environmental, Health, and Safety Requirements.
4.21 Representations Complete. None of the representations
or warranties made by the Company or the Buyer contains or will
contain as of the Closing, any untrue statement of a material
fact, or omits or will omit on the Closing to state any material
fact necessary in order to make the statements contained herein
or therein, in the light of the circumstances under which they
were made, not misleading.
5. Survival of Representations and Warranties; Indemnification.
5.1 Survival of Representations and Warranties. All of the
representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the
Closing and continue until 5:00 p.m., Utah time, on the second
anniversary of the Closing Date, except that the representations
and warranties set forth in Section 3.10 and 4.13 shall survive
the Closing and continue until 5:00 p.m., Utah time, on the fifth
anniversary of the Closing Date.
5.2 Obligation of the Company, the Buyer and Xxxxxxx to
Indemnify, Reimburse, etc. Each of the Company, the Buyer and
Xxxxxxx shall indemnify, defend, protect and hold harmless the
Seller and its successors and assigns and each of its directors,
officers, employees, affiliates, agents, and their respective
successors and assigns (each a "Seller Indemnitee") from and
against any Losses resulting from, imposed upon, incurred or
suffered by any of them, directly or indirectly, based upon,
arising out of or otherwise in respect of any inaccuracy in or
breach of any representation, warranty, covenant or agreement of
the Company, the Buyer or Xxxxxxx. The liability of the
Company, the Buyer and Xxxxxxx hereunder shall be joint and
several.
6. Pre-Closing Covenants. The Parties agree as follows with
respect to the period between the execution of this Agreement and
the Closing.
6.1 General. Each of the Parties will use its reasonable
best efforts to take all action and to do all things necessary,
proper, or advisable in order to consummate and make effective
the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth
in Section 7 below).
6.2 Notices and Consents. The Seller will give (and will
cause each of its Subsidiaries to give) any notices to third
parties, and the Seller will use its reasonable best efforts (and
will cause each of its Subsidiaries to use its reasonable best
efforts) to obtain any third party consents, that the Buyer
reasonably may request in connection with the matters referred to
in Section 3.3 above. Each of the Parties will (and the Seller
will cause each of its Subsidiaries to)
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give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents,
and approvals of governments and governmental agencies in
connection with the matters referred to in Section 3.3 and
Section 4.3 above.
6.3 Operation of Company's Business. The Company will not
(and will not cause or permit any of its Subsidiaries to) engage
in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business.
6.4 No Further Issuance of Shares. Except as otherwise
provided in Section 2.5, the Company will not issue any further
shares of the common stock of the Company until the Closing as
provided herein.
6.5 No Distributions. The Company will not make any
distributions to its shareholders prior to the Closing.
6.6 No Changes. The Company will not make or allow any
changes to its articles of incorporation or bylaws prior to the
Closing.
6.7 Full Access to Seller's Business. The Seller will
permit (and will cause each of its Subsidiaries to permit)
representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with the
normal business operations of the Seller and its Subsidiaries, to
its accountants and all premises, properties, personnel, books,
records (including tax records), contracts, and documents of or
pertaining to each of the Seller and its Subsidiaries. The Buyer
will treat and hold as such any Confidential Information it
receives from any of the Seller and its Subsidiaries in the
course of the reviews contemplated by this Section 6.7, will not
use any of the Confidential Information except in connection with
this Agreement, and, if this Agreement is terminated for any
reason whatsoever, will return to the Seller and its Subsidiaries
all tangible embodiments (and all copies) of the Confidential
Information which are in its possession.
6.8 Full Access to Company's Business. The Company will
permit (and will cause each of its Subsidiaries to permit)
representatives of the Seller to have full access at all
reasonable times, and in a manner so as not to interfere with the
normal business operations of the Company and its Subsidiaries,
to all premises, properties, personnel, books, records (including
tax records), contracts, and documents of or pertaining to each
of the Company and its Subsidiaries. The Seller will treat and
hold as such any Confidential Information it receives from any of
the Company and its Subsidiaries in the course of the reviews
contemplated by this Section 6.8, will not use any of the
Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason
whatsoever, will return to the Company and its Subsidiaries all
tangible embodiments (and all copies) of the Confidential
Information which are in its possession.
6.9 Notice of Developments. Each Party will give prompt
written notice to the other Party of any material adverse
development causing a breach of any of its own representations
and warranties in Section 3 and Section 4 above. No disclosure by
any Party pursuant to this Section
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6.9, however, shall be deemed to amend or supplement the
Company's Disclosure Schedule or the Seller's Disclosure Schedule
or to prevent or cure any misrepresentation or breach of
warranty.
6.10 Exclusivity. Each Party will not (and will not cause
or permit any of its Subsidiaries to) solicit, initiate, or
encourage the submission of any proposal or offer from any Person
relating to the acquisition of all or substantially all of the
capital stock or assets of any of the such Party and its
Subsidiaries (including any acquisition structured as a merger,
consolidation, or share exchange); provided, however, that each
Party, its Subsidiaries and their directors and officers will
remain free to participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing to the
extent their fiduciary duties may require.
7. Conditions to Obligation to Close.
7.1 Conditions to Obligation of the Buyer. The obligation
of the Buyer and the Company to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(a) the representations and warranties set forth in
Section 3 above shall be true and correct in all material
respects at and as of the Closing Date;
(b) the Seller shall have performed and complied with
all of its covenants hereunder in all material respects
through the Closing;
(c) there shall not be any injunction, judgment,
order, decree, ruling, or charge in effect preventing
consummation of any of the transactions contemplated by this
Agreement;
(d) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions
specified above in Section 7.1 (a), (b) and (c) is satisfied
in all respects;
(e) the Seller and its Subsidiaries, and the Company
and its Subsidiaries, shall have received all other
authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3.3 and Section
4.3 above; and
(f) all actions to be taken by the Seller in
connection with consummation of the transactions
contemplated hereby and all certificates, opinions,
instruments and other documents required to effect the
transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer and the
Company.
The Buyer may waive any condition specified in this Section 7.1
if it executes a writing so stating at or prior to the Closing.
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7.2 Conditions to Obligation of the Seller. The obligation
of the Seller to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of
the following conditions:
(a) the representations and warranties set forth in
Section 4 above shall be true and correct in all material
respects at and as of the Closing Date;
(b) the shareholders of the Seller shall have approved
this Agreement and the transaction contemplated hereby;
(c) the Buyer and the Company shall have performed and
complied with all of its covenants hereunder in all material
respects through the Closing;
(d) there shall not be any injunction, judgment,
order, decree, ruling, or charge in effect preventing
consummation of any of the transactions contemplated by this
Agreement;
(e) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions
specified above in Section 7.2 (a), (b), (c) and (d) is
satisfied in all respects;
(f) the Seller and its Subsidiaries, and the Company
and its Subsidiaries shall have received all other
authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3.3 and Section
4.3 above;
(g) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated
hereby will be reasonably satisfactory in form and substance
to the Seller;
(h) the Seller shall have satisfactorily completed its
due diligence as to the Company and its principals, in its
sole discretion; and
(i) the shareholders of the Company shall have duly
ratified the Xxxxx Agreement in accordance with Utah law and
the By-Laws of the Company as provided in Section 2.20.
The Seller may waive any condition specified in this Section 7.2
if it executes a writing so stating at or prior to the Closing.
The Seller shall waive the condition specified in subsection (h)
or terminate this Agreement pursuant to Section 8.1(c) below no
later than 10 days after the Effective Date.
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8. Termination.
8.1 Termination of Agreement. Certain of the Parties may
terminate this Agreement as provided below:
(a) the Buyer, the Company and the Seller may
terminate this Agreement by mutual written consent at any
time prior to the Closing;
(b) the Buyer and the Company may terminate this
Agreement by giving written notice to the Seller at any time
prior to the Closing (i) in the event the Seller has
breached any material representation, warranty, or covenant
contained in this Agreement in any material respect,
including without limitation Section 6.4 above, the Buyer
and the Company have notified the Seller of the breach, and
the breach has continued without cure for a period of 30
days after the notice of breach or (ii) if the Closing shall
not have occurred on or before July 31, 2000, by reason of
the failure of any condition precedent under Section 7.1
hereof (unless the failure results primarily from the Buyer
or the Company itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(c) the Seller may terminate this Agreement by giving
written notice to the Buyer and the Company at any time
prior to the Closing (i) in the event the Buyer and/or the
Company has breached any material representation, warranty,
or covenant contained in this Agreement in any material
respect, the Seller has notified the Buyer and the Company
of the breach, and the breach has continued without cure for
a period of 30 days after the notice of breach, (ii) in the
event the Seller is not satisfied with the result of its due
diligence investigations, or (iii) if the Closing shall not
have occurred on or before July 31, 2000, by reason of the
failure of any condition precedent under Section 7.2 hereof
(unless the failure results primarily from the Seller itself
breaching any representation, warranty, or covenant
contained in this Agreement).
8.2 Effect of Termination. If any Party terminates this
Agreement pursuant to Section 8.1 above, all rights and
obligations of the Parties hereunder shall terminate without any
liability of any Party to any other Party (except for any
liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in Sections 6.7 and 6.8
above shall survive termination.
8.3 Break-up Fees. In the event that the Company and the
Buyer fail to consummate the transactions contemplated by this
Agreement after all of the conditions to Closing described in
Section 7.1 and 7.2 have been duly satisfied or waived, the
Company shall promptly, but in no event later than two days after
the date of such termination, pay the Seller a fee equal to
$200,000 in immediately available funds (the "Termination Fee").
In the event that the Seller fails to consummate the transactions
contemplated by this Agreement after all of the conditions to
Closing described in Section 7.1 and 7.2 have been duly satisfied
or waived, the Seller shall promptly, but in no event later than
two days after the date of such termination, pay the Company the
Termination Fee. The parties hereto acknowledge that the
agreements contained in this
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Section 8.3 are an integral part of the transactions contemplated
by this Agreement and that, without these agreements, neither the
Company nor the Seller would enter into this Agreement;
accordingly, if the Seller or the Company fails to pay in a
timely manner the amounts due pursuant to this Section 8.3, and,
in order to obtain such payment, such other party makes a claim
that results in a judgment against the Seller or the Company, as
applicable, for the amount set forth in this Section 8.3, then
such defaulting party shall pay to such other party its
reasonable costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on
the amount set forth in this Section 8.3 at the Applicable Rate
in effect on the date such payment was required to be made.
Payment of the fee described in this Section 8.3 shall not be in
lieu of damages incurred in the event of breach of this
Agreement.
9. Other Agreements.
9.1 Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating
to the subject matter of this Agreement prior to the Closing
without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making
the disclosure).
9.2 No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
9.3 Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement
between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written
or oral, to the extent they related in any way to the subject
matter hereof.
9.4 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of
the other Party.
9.5 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
9.6 Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
9.7 Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication
E-22
hereunder shall be deemed duly given if (and then two business
days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
if to Company or the Buyer, to:
Xxxxxxxxxx Ventures, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx #000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
if to Xxxxxxx, to:
Xxx Xxxxxxx
0000 Xxxxx Xxxxxxxx Xxxxx #000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
if to the Seller, to:
Circuit Technology Corporation
0000 Xxxxx 0000 Xxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Jones, Waldo, Xxxxxxxx & XxXxxxxxx
000 X. Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxx Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address
set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have
E-23
been duly given unless and until it actually is received by the
intended recipient. Any Party may change the address to which
notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
9.8 Governing Law. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State
of Utah without giving effect to any choice or conflict of law
provision or rule (whether of the State of Utah or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Utah.
9.9 Attorneys' Fees. In the event of any dispute between
any of the Parties, the prevailing Party shall be entitled to
attorneys' fees and costs incurred by the prevailing Party in
connection therewith.
9.10 Amendments and Waivers. No amendment of any provision
of this Agreement shall be valid unless the same shall be in
writing and signed by all of the Parties. No waiver by any Party
of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any way
any rights arising by virtue of any prior or subsequent such
occurrence.
9.11 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
9.12 Expenses. Each of the Company, the Buyer and Xxxxxxx
(on the one hand) and the Seller (on the other hand) will bear
its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions
contemplated hereby.
9.13 Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word "including" shall mean
including without limitation.
9.14 Incorporation of Exhibits and Schedules. Subject to the
provisions of Section 2.12 above, the Exhibits and Schedules
identified in this Agreement are incorporated herein by reference
and made a part hereof.
9.15 Bulk Transfer Laws. The Buyer acknowledges that the
Seller will not comply with the provisions of any bulk transfer
laws of any jurisdiction in connection with the transactions
contemplated by this Agreement.
E-24
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
XXXXXXXXXX VENTURES, INC.
By: /s/ Xxx Xxxxxxx
Title: President
CTI SYSTEMS, INC.
By:/s/ Xxx Xxxxxxx
Title: President
/s/ Xxx Xxxxxxx
XXX XXXXXXX
CIRCUIT TECHNOLOGY, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Title: President
The undersigned hereby agrees as to Section 3.20 only and agrees
to bound thereby:
Cogent Capital Corporation
By: /s/ Xxxxxxx Xxxxxxx
Title: President
Dated: June 14, 2000
E-25
STOCK PLEDGE AGREEMENT
THIS AGREEMENT, made and executed this _____ day of June
2000, by and between Xxxxxxx Holdings, Inc. (referred to herein
as "Pledgor"), in favor of Circuit Technology, Inc., a Utah
corporation d/b/a Circuit Technology Corporation (referred to
herein as "Pledgee"), and Xxxxxxxxxx Ventures, Inc., a Nevada
corporation (the "Company").
WITNESSETH:
WHEREAS, pursuant to that certain Asset Purchase Agreement
dated as June 12, 2000 (the " Asset Purchase Agreement") among
the Company, CTI Systems, Inc., a Utah corporation (the "Buyer"),
Pledgor, Xxx Xxxxxxx ("Xxxxxxx") and the Pledgee, the Buyer
agreed to purchase substantially all of the assets (and assume
substantially all of the liabilities) of the Pledgee in return
for certain shares of the common stock of the Company;
WHEREAS, Pledgor and Xxxxxxx were principals in the Company
and benefited from the transactions contemplated by the Asset
Purchase Agreement;
WHEREAS, Pledgor and Xxxxxxx agreed in the Asset Purchase
Agreement, to indemnify Pledgee with respect to certain matters
involving the Company and the Buyer;
WHEREAS, as security for such obligation to indemnify
Pledgee, Pledgor agreed in the Asset Purchase Agreement to pledge
all of his stock in the Company as provided herein; and
WHEREAS, the Company is willing to undertake certain
obligations to accommodate Pledgor and Pledgee.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, promises and warrants hereinafter described.
the parties do hereby stipulate and agree each to the other as
follows:
1. Pledge and Grant of Security Interest. Pledgor hereby
grants to Pledgee a security interest in, and hereby pledges,
assigns, transfers, delivers and conveys to Pledgee, all of those
certain securities listed in Exhibit A attached hereto, together
with the certificate(s) evidencing such shares and all
distributions with respect hereto, and accompanied by stock
powers or other instruments of assignment ("Stock Powers") duly
executed by Pledgor (collectively, "Collateral")
2. Obligations Secured. The obligations secured by this Pledge
Agreement are all the obligations of the Company, the Buyer,
Pledgor and Xxxxxxx under the Asset Purchase Agreement as
specified in Section 5.2 thereof.
3. Representations and Warranties. Pledgor hereby represents
and warrants that
a. The shares pledged under this Agreement constitute all of
Pledgor's stock in the Company.
E-26
b. Pledgor has, at all times shall have, good and
marketable title to the Collateral, free and clear of any
security interest mortgage, adverse claim, pledge, lien charge,
default, defense, condition precedent, or encumbrance, except the
rights granted to Pledgee hereunder .
c. This Agreement constitutes and at all times shall
constitute a legal, valid
and binding first priority security interest in the Collateral
enforceable in accordance with its
terms.
d. Neither the execution, delivery, nor the performance of
this Agreement nor compliance with the terms and provisions
hereof will conflict with or constitute a breach or default under
any of the terms, covenants or condition of any other agreement
or instrument to which Pledgor is a party or by which Pledgor or
any of its property may now or hereafter be subject.
e. The Collateral is genuine and complies with all
applicable laws concerning form, content and manner o f
preparation and execution.
f. All signatories to any and all of the Collateral are
bound as they appear to be by their signatures and have the
requisite authority and capacity to execute the Collateral,
including the endorsements thereon and the stock powers thereto
attached.
4. Pledgor' Covenants. Pledgor hereby covenants to the Pledgee:
a. Pledgor, at its expense, shall surrender and defend the
title to the Collateral against any claim of third parties and
shall, from time to time, execute and deliver all such further
documents and take all such further action as may be necessary or
appropriate as Pledgee from time to time reasonably deems
necessary or appropriate (i) to create, perfect, protect and
maintain the security interest consummated by this Agreement;
(ii) to facilitate the performance of this Agreement; (iii) to
secure or facilitate Pledgee, exercise of their rights and
remedies contained and provided herein; (iv) to evaluate the
worth, condition, amount or extent of the Collateral; (v) to
evaluate Pledgor, performance of the terms of this Agreement;
(vi) to determine the nature and source of prior or subsequent
security interests, mortgages, adverse claims, pledges, liens,
charges or encumbrances on or affecting the Collateral, or (vii)
to maintain, preserve and protect the Collateral in accordance
with standards and practices generally adhered to by owners
thereof.
b. Pledgor shall not knowingly create or suffer to be
created or to assist any security interest in or to any mortgage,
pledge, lien, charge or encumbrance upon the Collateral or any
part thereof other than the security interest created and granted
under the terms of this Agreement.
c. Pledgor shall execute and deliver and. if requested by
Pledgee, file or record all such financing statements or other
documents or instruments which may be reasonably necessary to
perfect or give any necessary or desirable notice of Pledgor,
security interest m the Collateral,
E-27
including notice of the obligors of any debt securities included
in the Collateral and notice to the Company or any other person
issuing equity securities of the rights of Pledgee pursuant to
the provisions of this Agreement.
d. Pledgor agrees and covenants promptly to notify Pledgee
in writing of any
.legal process levied against the Collateral or any part thereof
or any other event which affects the Collateral or the rights and
remedies of Pledgor in relation thereto.
5. Rights of Pledeee. At any time, without notice, but at
the expense of Pledgor. Pledgee may, but shall not be obligated
to:
a. Notify the Company as to the rights of Pledgee under the
terms of this Agreement.
b. Insure, defend and preserve the Collateral,
c. Perform any of the obligations of Pledgor with respect
to the Collateral.
6. Power of Attorney. Pledgor hereby appoints Xxxxx
Xxxxxxxx as his attorney in
fact and such attorney in fact may, without obligation to do so:
a. In his name or in the name of Pledgor, prepare, execute
and file or record financing statements, continuation statements,
termination statements, applications for registration, and
similar papers necessary or desirable to perfect, preserve or
release the rights of Pledgee in or to any Collateral created by
this Agreement.
b. Endorse and deliver evidence of title incident thereto.
c. Demand, receive, collect, enforce and xxx for any or
all obligations of any person to Pledgor if such persons have
issued debt securities which are part of the collateral and to
give receipts, releases and satisfactions therefor.
d. Perform any obligation of Pledgor , exercise such
rights as Pledgor might exercise and collect such proceeds as
Pledgor might collect incident to the Collateral.
e. Take any other action which such attorney in his
discretion deem necessary
or desirable in order to protect, preserve or enforce Pledgee's
rights under this agreement or in and to the Collateral, provided
that Pledgor shall be accountable only for such funds as are
actually received by such attorney. Pledgor acknowledges and
agrees that the powers granted hereunder are coupled with an
interest arid that the same shall not be revocable by Pledgor
except upon the prior written consent and approval of the
Pledgee.
7. Disposition and Handling of Collateral and Proceeds
Thereof. Pledgor shall retain possession of the Collateral being
purchased until the obligations secured thereby have been fully
paid. If other Collateral is subject to encumbrances, Pledgor
shall assign its interest therein to Pledgee and shall notify in
writing the holders of such Collateral of Pledgee, interest
therein.
E-28
During all times which Pledgor is not in default under the terms
of this Agreement, Pledgor shall have the right to receive cash
dividends, interest and any and all other income paid by the
issuers of the Collateral and vote all pledged equity securities,
provided, nevertheless, that in the event of any reorganization,
stock dividend or other substitution of securities by the issuer
thereof, such substituted securities shall be held and retained
by Pledgee and shall be deemed to be Collateral subject to the
provisions of this Agreement.
8. Events of Default. The following conduct or occurrences
shall be deemed events
of default ("Event of Default") under the terms of this
Agreement:
a. Any inaccuracy in or breach of any representation,
warranty, covenant or agreement of or by the Company, the Buyer,
Pledgor or Xxxxxxx under the Asset Purchase Agreement
b. Any default under the terms and provisions of this
Agreement.
9. Pledgees' Rights Upon Default. Upon the occurrence of
an Event of Default and
so long as any such default is not corrected, the Pledgees may
exercise any or all of the following remedies:
a. Sell or dispose of the Collateral as Pledgee deems
appropriate for the purpose of performing any or all of Pledgor
obligations.
b. Declare immediately due and payable any and all of the
obligations of Pledgor to Pledgee.
c. In the discretion of Pledgee, sell, assign and deliver
all or any part of the Collateral at public or private sale for
cash or on credit and upon such terms as Pledgor shall determine
at public or private auction which Pledgor agrees constitutes
commercially reasonable methods of disposing of the Collateral
since differences in the sales prices generally realized in
different kinds of sales are ordinarily off-set by the speed,
costs and credit risks of such sales.
d. Bid and become buyers at any public or private sale or
auction.
E Apply any Collateral or other security available for
satisfaction of Pledgor, obligations to the payment of any
expense incurred by Pledgee in connection with the sale, transfer
or delivery of such Collateral to the payment of any other costs,
charges, attorneys' fees of Pledgee separate counselor expenses
by Pledgee in connection with the transactions related to this
Agreement.
f. Enter into any extension, reorganization, deposit,
merger or consultation agreement or any other agreement relating
to arid affecting any of the Collateral and in connection
therewith Pledgee may (i) deposit or surrender control of any of
the Collateral; (ii) accept other property in exchange for any of
the Collateral; (iii) do and perform any such acts and things as
Pledgee may deem proper, and (iv) apply any monies or properties
received in
E-29
exchange for any of the Collateral to any of the obligations
secured by this Agreement.
g. Make any compromise or settlement which Pledgee may
deem desirable or
proper in respect to any of the Collateral for any contributions
or disputes relating thereto and release persons liable thereon
and any Collateral.
h. Exercise any and all voting rights incident, attached
to, or arising out of Pledgor securities.
i. Endorse, receive and collect by legal action or
otherwise all dividends, interest, principal or other sums
payable or to become payable on account of or in connection with
any of the Collateral.
j. Exercise any and all other rights, powers and remedies
which Pledgor would have, except for this Agreement, in
connection with the Collateral.
10 Miscellaneous Provisions.
a. Indemnity and Expenses. Pledgor shall indemnify and
hold Pledgee harmless from any loss, cost, liability and legal or
other expense, including without limitation, attorneys' fees of
Pledgee which Pledgee may directly or indirectly suffer or incur
by reason of the failure of Pledgor to perform any of its
obligations to Pledgee or any of its obligations to any third
party as a consequence of the execution of this Agreement or as a
consequence of Pledgee taking the security called for herein,
whether resulting from any legal action or proceeding brought by
any third party, investigations by any government body or agency
or others.
b. Waivers, etc. Except as expressly provided in this
Agreement, Pledgor hereby waives presentment, protest, notice of
protest, notice of dishonor, notice of non-payment with respect
to any proceeds of the Collateral to which Pledgee is entitled
hereunder, and any defense arising by reason of any disability or
other defense of any other person or by reason of the cessation
from any cause whatsoever of the liability of any other person to
Pledgee or Pledgor. Pledgor also waives any right to direct the
application of payments or security for its obligations
hereunder.
c. No Third Parties Benefited: Transfer of Interests.
This Agreement is made
and entered into for the sole protection and benefit of the
parties hereto, their successors and
assigns, and no other person or persons shall have any right of
action hereon. This Agreement shall be binding upon Pledgor and
his successors, assigns and legal representatives. Pledgee may
transfer this Agreement to any person or entity, and such
transferee shall be vested with all the rights and powers of such
Pledgee hereunder with respect to such transferred Collateral.
d. Time. Time is of the essence of this Agreement.
e. Utah Law Governs, This Agreement shall be governed by
and be construed
according to the internal laws of the State of Utah.
E-30
f. Descriptive Headings. The descriptive headings used and
inserted in this
Agreement are for convenience only and shall not be deemed to
affect the meaning or construction of any provision hereof
g. Amendments. This Agreement contains the entire
agreement of the parties
hereto and may only be modified or amended by a written
instrument executed by each of the parties hereto.
h. Enforceability. If any provision of this Agreement
shall for any reason be
unenforceable in any respect, such unenforceability shall not
affect any other provision hereof, and this Agreement shall be
construed as if such unenforceable provisions had not been
contained herein.
I Failure or Indulgences Not Waiver: Cumulative Remedies.
No failure to
exercise and no delay in exercising any right, power or privilege
hereunder on the part of Pledgee shall operate as a waiver
thereof. nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. No express waiver shall affect any default ( or event
of default) other than the default specified in the waiver, and
said waiver shall be operative only for the time and to the
extent therein stated. Waivers of any covenant term or condition
contained herein shall not be construed as a waiver of any
subsequent breach of the same covenant, term or condition. All
the rights, privileges, powers and remedies of Pledgee shall be
cumulative and shall be in addition to any and all other rights
and remedies provided by law. The exercise of any right or remedy
by Pledgee shall not in any way constitute a cure or waiver of
default ( or any event of default) hereunder, invalidate any act
done pursuant to any notice of default (or event of default), or
prejudice Pledgee in the exercise of any of its rights or
remedies.
j. Survival of Warranties: All representations,
warranties, covenants and
agreements of Pledgor contained herein shall survive the
execution of this Agreement and shall continue in full force and
effect until the full and final satisfaction of all the
obligations secured hereby.
k. Taxes. Pledgor hereby agrees to pay, prior to
delinquency, all taxes, charges, liens and assessments against
any or all of the Collateral (including any taxes payable with
respect to the execution of this Agreement), whether now existing
or hereafter arising, and shall indemnify and hold Pledgee
harmless against all such liabilities.
l. Termination. This Agreement shall be a continuing
agreement and shall apply to all secured obligations.
m. Notices. All notices given hereunder shall be
transmitted to the addresses below or to such other address as a
party may designate by written notice to the other parties:
E-31
If to Pledgor:
Xxxxxxx Holdings, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx #000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Pledgee, to:
Circuit Technology Corporation
0000 Xxxxx 0000 Xxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attention: lehab Xxxxxxxx
Telephone No.: (801) 96-5 112
Facsimile No.: (000) 000-0000
with a copy to
Jones, Waldo, Xxxxxxxx & XxXxxxxxx
000 X. Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
All such notices shall be deemed to have been given at the time
of actual delivery , or on the
fourth business day after date of mailing, when sent by certified
or registered mail, postage
prepaid, or in case of telegraphic notice, when delivered to the
telegraphic company, charges
prepaid.
n. Attorney's Fees. In the event of any dispute between
any of the Parties, the prevailing Party shall be entitled to
attorneys' fees and costs incurred by the prevailing Party in
connection therewith.
[THIS SPACE INTENTIONALLY LEFT BLANK]
E-32
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and
year first above written.
PLEDGOR:
Xxxxxxx Holdings, Inc.
By:
Name:
Its:
PLEDGEE:
Circuit Technology, Inc d/b/a Circuit Technology Corporation
By:
Xxxxx Xxxxxxxx
President
COMPANY:
Xxxxxxxxxx Ventures, Inc.
By: /s/ Xxx Xxxxxxx
President
E-33
EXHIBIT A
Leases
E-34
Exhibit X-x
FORM OF ASSIGNMENT OF LEASES
ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES ("Assignment") is made as of the
_____ day of _______ 2000, by and between CTI Systems, Inc., a
Utah corporation ("Buyer"), and Circuit Technology, Inc., a Utah
corporation doing business as Circuit Technology Corporation
("Seller"), collectively, the "Parties", or individually, a
"Party".
RECITALS
A. Pursuant to that certain Asset Purchase Agreement dated
as June 12,2000 (the "Asset Purchase Agreement") among the
Xxxxxxxxxx Ventures, Inc., a Nevada corporation (the "Company"),
Buyer, Xxx Xxxxxxx ("Xxxxxxx") and Seller, Buyer agreed to
purchase substantially all of the assets (and assume
substantially all of the liabilities) of the Seller in return for
certain shares of the common stock of the Company;
B. As part of the purchase of substantially all of the
assets (and assume substantially all of the liabilities) by
Buyer, Seller agreed to assign to Buyer all of Sellers right,
title and interest in all of its leases, including without
limitation, those listed in Exhibit
"A" (the "Leases")
NOW, THEREFORE, for Ten Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:
1. Assignment and Assumption. Seller hereby irrevocably
assigns, sets over, transfers and conveys to Buyer all of Seller'
right, title and interest in and to the Leases. Buyer accepts
this Assignment and the rights granted herein, and expressly
assumes the Leases and all
obligations and liabilities, fixed and contingent, of Seller
thereunder as of the date of this Assignment.
2. General Provisions
2.1 Costs and Attorneys' Fees. In the event of any dispute
between any of the
Parties, the prevailing Party shall be entitled to attorneys'
fees and costs incurred by the prevailing Party in connection
therewith.
2.2 Successors. This Assignment shall be binding upon and
inure to the benefit of the Parties and their respective heirs,
legal representatives, successors and assigns
2.3 Counterparts. This Assignment may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which shall constitute but one and the same
E-35
instrument.
IN WITNESS WHEREOF, this Assignment of Leases was made and
executed as of the date first above written.
Seller:
Circuit Technology, Inc., a Utah corporation d/b/a
Circuit Technology Corporation.
BY: /s/ Xxxxx Xxxxxxxx
President
Buyer:
CTI Systems, Inc., a Utah corporation
By: /s/ Xxx Xxxxxxx
President
E-36
Exhibit B-2
FORM OF XXXX OF SALE
XXXX OF SALE
THIS XXXX OF SALE, dated as of-.2000 (this 'Xxxx of Sale")
is entered into by Circuit Technology, Inc., a Utah corporation
d/b/a Circuit Technology Corporation ("Seller"), in favor of CTI
Systems, Inc., a Utah corporation ("Buyer").
Pursuant to that certain Asset Purchase Agreement dated as
June 12.2000 (the "Asset Purchase Agreement") among the
Xxxxxxxxxx Ventures, Inc., a Nevada corporation (the "Company"),
the Buyer, Xxx Xxxxxxx ("Xxxxxxx") and the Seller, the Buyer
agreed to purchase substantially all of the assets (and assume
substantially all of the liabilities) of the Seller in return for
certain shares of the common stock of the Company.
For good and valuable consideration and by this Xxxx of
Sale, the Seller hereby GRANTS, BARGAINS, SELLS, ASSIGNS,
CONVEYS, TRANSFERS AND DELIVERS unto the Buyer all of the
Acquired Assets of the Seller, as defined in the Asset Purchase
Agreement (the "Assets"). Capitalized terms used herein without
definition shall have the respective meanings set forth in the
Asset Purchase Agreement.
TO HAVE AND TO HOLD the same unto the Buyer and its
successors and assigns
The Assets are conveyed to the Buyer subject to all
restrictions and qualifications in the Asset Purchase Agreement,
including without limitation the Buyer's representation and
warranty in Section 3.22 that it is acquiring the Assets on an
''as is, where is", as more particularly described therein.
This Xxxx of Sale shall be governed by and construed in
accordance with the laws of the State of Utah without regard to
principles of conflict of laws.
In the event of a conflict between the terms and conditions
of this Xxxx of Sale and the terms and conditions of the Asset
Purchase Agreement, the terms and conditions of the Asset
Purchase Agreement shall govern, supersede and prevail.
In the event of any dispute between any of the Parties, the
prevailing Party shall be entitled to attorneys' fees and costs
incurred by the prevailing Party in connection therewith.
[THIS SPACE INTENTIONALLY LEFT BLANK]
E-37
IN WITNESS WHEREOF, Seller has caused this Xxxx of Sale to
be executed the day and year first written above.
SELLER:
Circuit Technology, Inc., a Utah corporation
d/b/a Circuit Technology Corporation
By: /s/ Xxxxx Xxxxxxxx
Its: President
E-38
Exhibit B-3
FORM OF ASSIGNMENT OF AGREEMENTS
ASSIGNMENT OF AGREEMENTS
THIS ASSIGNMENT OF AGREEMENTS (the "Assignment") is entered
into as of June ____, 2000, by and between Circuit Technology,
Inc., a Utah corporation d/b/a Circuit Technology Corporation
("Assignor") and CTI Systems, Inc, a Utah corporation
("Assignee").
WHEREAS, pursuant to that certain Asset Purchase Agreement
dated as June, 2000 (the "Asset Purchase Agreement") among the
Xxxxxxxxxx Ventures, Inc., a Nevada corporation (the "Company"),
Assignee, Xxx Xxxxxxx ("Xxxxxxx") and Assignor, Assignee agreed
to purchase substantially all of the assets (and assume
substantially all of the liabilities) of Assignor in return for
certain shares of the common stock of the Company;
WHEREAS, pursuant to the Asset Purchase Agreement, Assignor
shall assign to Assignee all of its agreements, including,
without limitation, those listed on Exhibit " A "(the
" Agreements"); and
WHEREAS, Assignee has agreed to the assignment of the
Agreements on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants
provided herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Assignment. Assignor hereby assigns, transfers, sets
over, delivers and conveys unto Assignee, its successors and
assigns, all of Assignor's right, title and interest in and to
the Agreements, and Assignee hereby accepts assignment of the
same, and agrees to perform all of the Assignor's obligations
thereunder.
2. Additional Documentation. Assignor and Assignee hereby
covenant and agree to execute, acknowledge and deliver such
further conveyances, approvals and instruments or documents, and
to do such further acts as may be necessary or appropriate to
assure Assignee, its successors and assigns, of all of Assignor's
right, title and interest in and to the Agreements.
3. Attorneys Fees. In the event of any dispute between any
of the Parties, the prevailing Party shall be entitled to
attorneys' fees and costs incurred by the prevailing Party in
connection therewith.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date written above.
"Assignor"
Circuit Technology, Inc., a Utah corporation
d/b/a Circuit Technology Corporation
By: /s/ Xxxxx Xxxxxxxx
Its: President
"Assignee"
CTI Systems, Inc., a Utah corporation
By: /s/ Xxx Xxxxxxx
Its: President
EXHIBIT A
LIST OF AGREEMENTS
E-40
Exhibit C
FORM OF ASSUMPTION OF LIABILITIES
ASSUMPTION OF LIABILITIES AGREEMENT
THIS ASSUMPTION OF LIABILITIES AGREEMENT is entered into as
of June ____, 2000, by and between Circuit Technology, Inc., a
Utah corporation d/b/a Circuit Technology Corporation ("
Assignor") and CT! Systems, Inc., a Utah corporation ("
Assignee").
WITNESSETH
WHEREAS, pursuant to that certain Asset Purchase Agreement
dated as June -3,2000 (the "Asset Purchase Agreement') among the
Xxxxxxxxxx Ventures, Inc., a Nevada corporation (the "Company").
Assignee, Xxx Xxxxxxx ("Xxxxxxx") and Assignor, Assignee agreed
to purchase substantially all of the assets (and assume
substantially all of the liabilities) of Assignor in return for
certain shares of the common stock of the Company; and
WHEREAS, pursuant to the Asset Purchase Agreement, Assignee
agreed to assume all the Assumed Liabilities (as defined in the
Asset Purchase Agreement) of the Assignor; and
NOW, THEREFORE, in consideration of the mutual covenants
provided herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Assignment and Assumption. Assignor hereby assigns,
transfers, sets over,
delivers and conveys unto Assignee, its successors and assigns,
all of Assignor's right, title and interest in and to the Assumed
Liabilities, to have and to hold the Assumed Liabilities hereby
assigned, transferred, set over, delivered, conveyed or intended
so to be unto Assignee, its successors and assigns, forever, and
Assignee hereby accepts the assignment and assumption of the
Assumed Liabilities and hereby assumes, agrees to pay, perform
and discharge any and all obligations or liabilities incident
thereto.
2. Additional Documentation. Assignor and Assignee hereby
covenant and agree
to execute, acknowledge and deliver such further conveyances and
instruments or documents, and to do such further acts as may be
necessary or appropriate to assure Assignee, its successors and
assigns, of all of Assignor's right, title and interest in and to
the Assumed Liabilities hereby assigned, transferred, set over
and delivered, conveyed or intended so to be.
3. Miscellaneous.
a. Governing Law. This Agreement shall be governed by and
construed in
accordance with the laws of the State of Utah, without giving
effect to any choice or conflict of law provision or rule thereof
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b. 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.
c. Attorneys Fees. In the event of any dispute between any
of the Parties, the
prevailing Party shall be entitled to attorneys' fees and costs
incurred by the prevailing Party in connection therewith.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first
above written.
"Assignor"
Circuit Technology, Inc., a Utah corporation d/b/a
Circuit Technology Corporation
By: /s/ Xxxxx Xxxxxxxx
President
"Assignee"
CTI Systems., a Utah corporation
By: /s/ Xxx Xxxxxxx
President
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Exhibit D
FORM OF LOCKUP AGREEMENT
LOCKUP AGREEMENT
THIS LOCKUP AGREEMENT is made and entered into as of June
___, 2000 by and among Xxxxxxxxxx Ventures, Inc., a Nevada
corporation (the "Company") and Xxx Xxxxxxx ("Xxxxxxx").
WHEREAS, pursuant to that certain Asset Purchase Agreement
dated as June 12,2000 (the "Asset Purchase Agreement") among the
Company, CTI Systems, Inc., a Utah corporation (the "Buyer"),
Xxxxxxx, and Circuit Technology, Inc., a Utah corporation d/b/a
Circuit Technology Corporation ("Seller"), the Buyer agreed to
purchase substantially all of the assets (and assume
substantially all of the liabilities) of the Seller in return for
certain shares of the common stock of the Company.
WHEREAS, Xxxxxxx owns 0 shares of the Company represented by
Certificates Nos._______, which is all the stock he owns in the
Company;
WHEREAS, Xxxxxxx Holdings, Inc. ("Xxxxxxx") owns 90,000
shares of the
Company represented by Certificates Nos.______ which is all the
stock he owns in the
Company; and
WHEREAS, Xxxxxxx and Xxxxxxx (individually a "Shareholder",
and collectively, the "Shareholders") agreed in Section 2.7 of
the Asset Purchase Agreement to enter into a Lockup Agreement in
the form hereof in connection with the closing of the Asset
Purchase Agreement.
NOW, THEREFORE the parties agree as follows:
1. Agreement Not to Sell.
(a) Subject to the provisions of Subsection (b) below, the
Shareholders agree
that for a period of 12 months following the date hereof, the
Shareholders will not sell, agree to sell, contract or offer to
sell, grant any option for the sale of, transfer, hypothecate or
otherwise dispose of. directly or indirectly. or announce an
offering of, or file with the Securities and Exchange Commission
("SEC") a registration statement under the 1933 Securities Act,
to register any Shares ( or securities convertible into or
exchangeable or exercisable for Shares), owned or directly or
indirectly controlled (whether or not beneficially owned by the
Shareholders or registered in the name of the Shareholders) by
the Shareholders.
(b) Subject to the provisions of Subsection (c) below, the
prohibitions set forth
in subsection (a) above do not apply to the following transfers:
(i) transfers for estate and/or tax planning purposes
to or for the benefit of the
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Shareholder's family members including, without limitation.
to a corporation, partnership, limited liability company,
trust or other entity established for the benefit of the
Shareholder's :family members; or
(ii)transfers without consideration (a bona fide gift
to any public or private charitable or educational
organization or institution); or
(iii) transfers by operation of law, including without
limitation, the laws of descent and distribution.
( c ) No transfer to any person or entity permitted
under Subsection (b )(i), (ii) or
(iii) (a "Permitted Transferee") shall be valid unless each such
transferee acknowledges and agrees in writing to be bound by each
of the representations, warranties and agreements made herein by
the Shareholders. In the event that the Shareholders at any time
contemplates a disposition to a Permitted Transferee, he will
first notify the Company of such proposed disposition and will
thereafter cooperate with the Company in complying with the
provisions of this subsection and all applicable requirements of
state and federal securities laws which, in the opinion of the
Company or its counsel, must be satisfied prior to the making of
such disposition.
2. Restrictive Legends. The Shareholders hereby confers
full authority upon the
Company (a) to instruct its transfer agent not to transfer any of
the Shares until it has received written approval from the
Company and its counsel to the effect that the representations,
' warranties and agreements contained in this Lockup Agreement
have been co mp lied with. and (b ) to affix to the fact of the
certificate or certificates representing the Shares, legends with
respect to the representations set forth herein in substantially
the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
AGREEMENT NOT TO SELL FOR A PERIOD OF 12 MONTHS COMMENCING
ON JUNE 30. 2000
3 Shares Covered. The Shares covered by the above
covenants, warranties and representations shall also include any
securities into which the above securities may become convened,
subdivided or split-up, in connection with the merger,
reclassification. recapitalization or reorganization of the
Company and all securities of the Company distributed in
connection with a stock dividend on the above securities.
4. Indemnity. The Shareholders understand that the Company
is relying upon the
representations and agreements contained in this letter in
consummating the transactions contemplated by the Asset Purchase
Agreement. Therefore. the Shareholders agrees to indemnify the
Company against, and hold it harmless from, all losses,
liabilities, costs and expenses (including reasonable attorneys'
fees) which arise as a result of a sale, exchange or) other
transfer of the Shares other than as permitted hereunder.
5 Attorneys' Fees. In the event of any dispute between
any of the Parties, the
Party shall be entitled to attorneys' fees and costs inclined by
the prevailing Party in connection
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therewith.
IN WITNESS WHEREOF, the parties have cause this Lockup
Agreement to be duly executed as of the date first above written.
COMPANY:
Xxxxxxxxxx Ventures, Inc.
/s/ Xxx Xxxxxxx
President
SHAREHOLDERS:
/s/ Xxx Xxxxxxx
Millagro Holdings, Inc.
By:
Name:
Its:
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Seller's Disclosure Schedule
Section 3.3 Noncontravention
Each of the promissory notes, loan agreements and security
agreements described in Section 3.14 below prohibit the sale of
all or substantially all of the assets of the Seller.
Section 3.5 Title to Tangible Assets
The assets owned by the Seller are subject to the liens in
favor of the lenders referred to under the heading "Loan
Agreements" below. The other assets are leased by the Seller
pursuant to the leases referred to under the heading "Equipment
Leases".
Section 3.6 Subsidiaries
Racore Network, Inc., a Utah corporation
Section 3.8 Events Subsequent to the Seller's Most Recent Fiscal
Year End
Imperial Bank gave the Seller notice of default under the
Security and Loan Agreement listed below on February 5, 1999.
Imperial Bank and Seller subsequently entered into (i) that
certain First Amendment to Security and Loan Agreement and
Addendum to Security and Loan Agreement and Waiver dated as of
Xxxxx 0, 0000, (xx) that certain letter agreement dated as of
September 9, 1999, (iii) that certain letter agreement dated as
of September 17, 1999, and.(iv) that certain letter agreement
dated as of October 28, 1999.
Parkway Plastics, a sublessee of a substantial portion of
the Seller's facilities in Colorado Springs, Colorado, vacated
the premises as of September 30, 1999, taking the position that
it had no further obligations under the Sublease Agreement which
has approximately four years
remaining. The Seller is attempting to negotiate a settlement. No
assurance of the outcome can be given at this time.
Section 3.10 Tax Matters
December 31, 1997
Section 3.11 Real Property
1. Lease Agreement between VIMP , Inc, LLC ("Landlord")
and Racore Computer
Products, Inc. ("Tenant"), dated March 11, 1992.
2. Lease Agreement between I&R Properties, LLC ("Lessor")
and Circuit Technology, Inc. "Lessee"), dated November 2, 1996.
3. Sublease between Colorado Electronics Corporation, LLC,
("Sublessor") and
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Circuit Technology Corporation ("Sublessee"), dated November 30,
1998.
4. Sublease between Circuit Technology, Inc. ("Sublessor")
and Parkway Products,
Inc. ("Sublessee"), dated December 4, 1998.
Section 3.12 Intellectual Property
During the period from 1995 -1997, approximately 90% of the
Licensing income was generated by a single contract with Texas
Instruments. Racore received a royalty for use of Racore software
by Texas Instruments. Racore still owns that software and
maintains it to be current with all new Network Operating Systems
software to enable us to xxxx our current hardware product lines.
It is conceivable that Racore could again license this software
to another party in an arrangement similar to the agreement that
existed by Texas Instruments, but it is likely the revenue would
be significantly less. Some of the revenue in 1998 and 1999 is
associated with licensing that same software.
Racore has also been able to license hardware and ASIC
designs to customers based on our internal designs and expertise.
Most recently, Racore licensed a custom design for Seiko Epson
that generated a unique product for use in a line of printer
products. In addition to the Non-Recurring Engineering fees and
licensing revenue, this agreement requires Seiko Epson to
purchase 1000 adapters at $200 each in the near future.
Most of the agreements currently in place do not have
provisions that guarantee future revenue or income. The
agreements provide for custom design work on the Racore product
to create a product specific to the customer's requirements, and
future revenue will be generated a the customer orders more of
the product customized for them. Our smaller size allows us to
make custom products for companies that couldn't afford to do
that custom design work for themselves. The value of the
intellectual property is associated with owning the software and
designs required as the basis for the ability to customize the
products.
Section 3.13 Contracts
A. Loan Agreements
1. Loan and Security Agreement between Circuit Technology
, Inc. ("Borrower") and Utah Technology Finance Corporation
and Salt Lake County Revolving Loan Fund (collectively
"UTFC"), dated February 28, 1995.
2 Early Technology Business Capital Loan and Security
Agreement between Circuit Technology Corporation
("Borrower") and Utah Technology Finance Corporation
("UTFC"), dated June 6, 1995.
3. Loan Agreement between Circuit Technology Corporation
("Borrower") and Utah Technology Finance Corporation
("UTFC"), dated May 28, 1996.
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4. Loan Agreement between Circuit Technology , Inc.
("Borrower") and Utah Technology Finance Corporation ("UTFC"),
dated January 24,1997.
5. Loan Authorization and Agreement between U.S. Small
Business Administration ("SBA") and Zions First National
Bank ("Lender"), dated May 18,1995.
6. Security and Loan Agreement, with Addendum, between
Circuit Technology, Inc. ("Borrower") and Imperial Bank
("Bank"), dated April 6, 1998.
7. Loan Agreement between I & R Properties, LLC and
Circuit Technology , Inc. ("Borrower") and The Money Store
Commercial Mortgage, Inc. ("Lender"), dated Apri1 16, 1998.
8. Promissory Note between Racore Technology Corp.
("Maker") and Xxxx X. XxXxxxx ("Holder"), dated November 19,
1997.
B. Equipment Leases
1. Lease Agreement between Orix Credit Alliance, Inc.
("Lessor") and Circuit Technology , Inc. ("Lessee"), dated
June 20, 1995.
2. Master Finance Lease between Zions Credit Corporation
("Lessor") and Circuit Technology, Inc. ("Lessee"), dated
December 29, 1995.
3. Master Lease between The CIT Group/Equipment and
Financing, Inc. ("Lessor") and Circuit Technology
Corporation ("Lessee"), dated November 1,1996.
4. Lease between Colonial Pacific Leasing Corporation
("Lessor") and Circuit Technology, Inc. ("Lessee"), dated
June 9,1997.
5. Master Lease Agreement between Softech Financial
("Lessor") and Circuit Technology Corporation ("Lessee"),
dated January 14, 1998.
6. Lease Agreement between Convergent Capital Corporation
("Lessor") and Circuit Technology Corporation ("Lessee"),
dated February 11, 1999.
7. Lease Agreement between Xxxxx Fargo Equipment Finance,
Inc and Norwest Equipment Finance, Inc ("Lessor") and
Circuit Technology, Inc. ("Lessee"), dated March 31,1999.
8. Lease Agreement between IKON, Inc ("Lessor") and
Circuit Technology, Inc ("Lessee"), dated Apri1 2 1999.
9. Lease Agreement between Telco USA of Colorado, Inc
("Lessor") and Circuit Technology, Inc. ("Lessee"), dated
Apri1 19, 1999.
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10. Equipment Lease Agreement between Toshiba America
Information Systems, Inc. ("Lessor") and Circuit Technology
Corp. ("Lessee"), dated December 23, 1998.
Section 3.16 Litigation
Xxxxx Xxxxxx has filed an employment related lawsuit
claiming approximately $35,000 plus attorneys fees. The Seller is
attempting to negotiate a settlement. No assurance of the outcome
can be given at this time.
The landlord of the facilities in Colorado Springs, Colorado
has filed a lawsuit to terminate the lease and to obtain
reimbursement for approximately $65,000 in amounts paid by the
landlord. The Seller is defending the lawsuit. No assurance of
the outcome can be given at this time.
Section 3.16 Employee Benefit Plans
Health and dental plans as described in Employee Handbook of
Circuit Technology, Inc..
Employee stock options, employment contracts, and Employee
Handbook for Racore Network.
Section 3.18 Certain Business Relationships with the Seller,
Related Parties and its Subsidiaries
Lease Agreement between I&R Properties, LLC ("Lessor") and
Circuit Technology, Inc. ("Lessee"), dated November 2, 1996.
Letter Agreement between Cogent Capital Corp., ("Cogent")
and Circuit Technology, Inc. ("Company"), dated May 12,1999.
Fee Agreement between Cogent Capital Corp. ("Cogent") and
Circuit Technology, Inc. ("Client"), dated May 30, 1997.
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