FORM OF ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT") is made and entered into as
of this _____ day of __________, 1999, by and between FULL POWER GROUP, INC., a
Florida corporation ("BUYER") having its principal place of business at 00000
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxx 00000, and _________________________,
a(n) ______________________ ("SELLER") having its principal place of business at
____________________________.
In consideration of the mutual promises hereinafter set forth and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
set forth in this Agreement:
(a) Seller agrees to sell, transfer, convey and assign to
Buyer, and Buyer agrees to purchase and acquire from Seller, on the Closing Date
(as defined below), all of Seller's right, title and interest in and to all of
the assets and properties of Seller described on attached SCHEDULE 1
(collectively, the "PURCHASED ASSETS"), free and clear of all liens and
encumbrances whatsoever.
(b) As consideration for the sale of the Purchased Assets,
Buyer agrees to issue the following securities to Seller on the Closing Date
(collectively, the "RESTRICTED SECURITIES"):
(i) ________ shares of common stock, $0.001 par value
per share ("COMMON STOCK"), of Buyer (collectively, the "SHARES");
and
(ii) a warrant to purchase up to _______ shares of Common
Stock from Buyer at an exercise price of $4.00 per share, which
warrant shall be in the form attached as EXHIBIT A (the
"WARRANT").
(c) The date of such sale and purchase of Restricted Securities
shall be the date hereof (the "CLOSING DATE"). Upon execution of this
Agreement, Seller shall deliver the following to Buyer or its designated
representative:
(i) the full amount of cash and cash equivalents
included in the Purchased Assets (which shall not be less than
$________), in the form of cash, a certified check or money order
made payable to the order of Buyer, or a wire transfer of
immediately available funds to an account designated by Buyer;
(ii) a completed and executed general assignment and xxxx
of sale in the form attached as EXHIBIT B (the "ASSIGNMENT"); and
(iii) a copy of the written resolutions of Seller
evidencing approval of the transactions described in this
Agreement by each of the partners of Seller in accordance with the
partnership agreement of Seller, which resolutions shall be
certified by the managing partners of Seller and shall be in form
and substance acceptable to Buyer (the "CERTIFIED RESOLUTIONS").
(d) As promptly as practicable following the Closing Date,
Buyer shall deliver to Seller the Warrant and a certificate evidencing the
Shares included in the Restricted Securities; provided that Buyer shall have no
obligation to issue such instruments to Seller unless and until all of the
conditions to closing set forth in Section 2 hereof have been satisfied. Buyer
will bear all expenses in connection with the preparation, issuance and delivery
of the instruments representing the Restricted Securities.
(e) All deliveries, payments and other transactions and
documents relating to the Closing shall be interdependent and none shall be
effective unless and until all are effective. Seller shall, at the reasonable
request of Buyer from time to time and at any time, whether on or after the
Closing Date, and without further consideration, execute and deliver such
assignments, transfers, assumptions, conveyances, powers of attorney, receipts,
acknowledgments, acceptances and assurances as may be reasonably necessary to
procure for Buyer, and its transferees, successors and assigns, or for aiding
and assisting in collecting and reducing to possession, any and all of the
Purchased Assets or otherwise to satisfy and perform the obligations of Seller
hereunder.
(f) Buyer shall not assume or be liable or responsible for any
obligation or liability of Seller of any kind or nature whatsoever (other than
those specifically described in the Lease Assignment). Seller shall pay,
satisfy and perform all of its obligations, whether fixed, contingent, known or
unknown and whether existing as of the Closing Date or arising thereafter, or
that may affect the Purchased Assets in any way. Notwithstanding any other
provision of this Agreement, the obligations of Seller pursuant to this Section
shall survive the Closing and consummation of the transactions contemplated by
this Agreement.
2. CONDITIONS TO CLOSING. Buyer shall have no obligation to purchase
the Purchased Assets or issue the Restricted Securities unless each of the
following conditions have been satisfied (or waived by Buyer in its sole
discretion) on or prior to the Closing Date:
(a) The amount of cash and cash equivalents included in the
Purchased Assets shall not be less than $________ on the Closing Date.
(b) Seller shall have delivered all of the cash and cash
equivalents included in the Purchased Assets (which shall not be less than
$_________) to Buyer as provided in Section 1(c)(i) hereof.
(c) Seller shall have delivered executed original copies of the
Assignment and the Certified Resolutions to Buyer.
(d) The board of directors of Buyer (the "BOARD") shall have
approved the transactions described in this Agreement.
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(e) No action, suit, claim or other proceeding shall have been
instituted or threatened or demand made against any party seeking to restrain,
enjoin or otherwise prohibit or to obtain damages with respect to the
consummation of the transactions described herein, no court, arbitrator or other
forum of competent jurisdiction shall have issued any judgment, decree,
injunction or order or taken any other action restraining, enjoining or
otherwise prohibiting the transactions described herein.
3. PROVISION OF CERTAIN INFORMATION ABOUT BUYER. Seller acknowledges
that, prior to the date hereof, Buyer has provided Seller with copies of the
following information concerning Buyer: (i) the Articles of Incorporation of
Buyer (the "ARTICLES OF INCORPORATION," a copy of which is attached as
EXHIBIT C); (ii) the Bylaws of Buyer (the "BYLAWS," a copy of which is attached
as EXHIBIT D); (iii) Buyer's consolidated financial statements for the year
ended December 31, 1998 (the "FINANCIAL STATEMENTS," copies of which are
attached as EXHIBIT E).
4. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Seller
represents and warrants, and covenants and agrees with Buyer, on behalf of
itself and each of its partners that:
(a) Seller is a limited liability partnership duly organized,
validly existing and in good standing under the laws of the State of
____________. Seller has all necessary power and authority to make, execute and
deliver this Agreement and all other agreements and documents to be executed and
delivered by it pursuant to this Agreement without the need for the consent of
any other person or entity; and Seller has taken all necessary actions required
to be taken to authorize it to execute and deliver this Agreement and such other
agreements, and to perform all of its obligations, undertakings and agreements
to be observed and performed by it hereunder and thereunder. This Agreement and
such other agreements have been duly authorized by each partner of Seller, have
been duly executed and delivered by Seller and constitute the legal, valid and
binding obligations of Seller, enforceable against it in accordance with the
respective terms hereof.
(b) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated by this Agreement, by Seller
will constitute a violation of, or be in conflict with, or result in a
cancellation of, or constitute a default under, or create (or cause the
acceleration of the maturity of) any debt, obligation or liability affecting, or
result in the creation or imposition of any security interest, lien, or other
encumbrance upon any of the Purchased Assets under: (i) the partnership
agreement or other governing documents of Seller; (ii) any applicable judgment,
decree, order, regulation or rule of any court or governmental authority;
(iii) any applicable statute or law; or (iv) any contract, agreement, indenture,
lease or other commitment to which Seller is a party or by which it or any of
its assets are bound.
(c) No consent of, or notice to, any governmental authority or
any other third person or entity is required to be obtained or given by Seller
in connection with the execution, delivery or performance of this Agreement or
any other agreement or document to be executed, delivered or performed hereunder
by Seller.
(d) Except as described in EXHIBIT F, there are no lawsuits,
proceedings, actions, claims or governmental investigations pending or, to the
knowledge of Seller, threatened against
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Seller or against or involving any of the Purchased Assets. There are no
unsatisfied judgments against Seller.
(e) Seller is the sole owner of and has good and valid title to
all of the Purchased Assets, and upon the consummation of the transaction
contemplated by this Agreement, Buyer will take the Purchased Assets free and
clear of all mortgages, liens, pledges, charges, security interests,
encumbrances or other third party interests of any kind whatsoever.
(f) No broker or finder has acted on behalf of Seller in
connection with this Agreement or the transactions contemplated herein, and
Seller agrees to indemnify Buyer and its affiliates from and against any and all
claims or demands for commissions or other compensation by any broker, finder or
similar agent claiming to have been employed by or on behalf of Seller.
5. DESCRIPTION OF BUYER'S CAPITAL STOCK. The following summary
description of the capital stock of Buyer is as of the Closing Date, does not
purport to be complete, does not take into account the issuance of the
Restricted Securities subscribed for herein, and is qualified in its entirety by
reference to the Articles of Incorporation and the Bylaws.
(a) As of April 23, 1999, the total number of shares of all
classes of stock that Buyer was authorized to issue was 60,000,000 shares
(collectively, the "STOCK"), consisting of:
(i) 50,000,000 shares of Common Stock, of which
8,727,750 shares were issued and 5,127,750 shares were outstanding; and
(ii) 10,000,000 shares of preferred stock, $100.00 par
value per share (the "PREFERRED STOCK"), none of which were designated by
the Board or were presently issued or outstanding.
(b) All shares of Common Stock are identical and entitle the
holders thereof to the same powers, preferences and rights. However, the Common
Stock is junior to the Preferred Stock and is subject to all the powers, rights,
privileges, preferences and priorities of the Preferred Stock as set forth in
the Articles of Incorporation and any designations of the terms of the Preferred
Stock that are approved by the Board from time to time.
(c) The holders of shares of Common Stock have full voting
rights and powers with respect to any matter requiring the vote or approval of
Buyer's shareholders, except as may otherwise be set forth in the Articles of
Incorporation. Each holder of Common Stock is entitled to one vote for each
share held of record by such holder.
(d) Subject to the terms and conditions set forth in the
Articles of Incorporation, Buyer may pay dividends on the Preferred Stock and
the Common Stock only as and when declared by the Board out of any funds of
Buyer legally available for the payment thereof.
(e) Subject to the terms and conditions set forth in the
Articles of Incorporation, in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of Buyer, after
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any required distributions to creditors of Buyer and the holders of any shares
of Preferred Stock then outstanding, the remaining assets and funds of the
Corporation shall be distributed to the holders of Common Stock according to
their respective shares.
(f) No holder of any of the shares of Stock currently has any
preemptive rights to purchase or subscribe for any unissued Stock of any class
or any additional shares of any class to be issued by reason of any increase of
the authorized Stock of any class, or bonds, certificates of indebtedness,
debentures or other securities convertible into shares of Stock, or carrying any
rights to purchase Stock of any class, whether such securities shall be issued
for cash, property or any other lawful consideration. As such, the holders of
the Common Stock do not have the right to purchase a portion of such securities
sufficient to enable such holders to maintain their respective percentage
interests of the outstanding Common Stock.
(g) Seller acknowledges that Buyer and its employees, agents,
attorneys and affiliates are relying on the truth and accuracy of the
representations and warranties of Seller contained in this Agreement.
6. RESTRICTION ON TRANSFER OF RESTRICTED SECURITIES. Seller agrees
not to sell, exchange, deliver, assign, pledge, mortgage, hypothecate, encumber,
make a gift of or otherwise transfer or dispose of any of the Restricted
Securities (including, without limitation, the shares issuable upon exercise of
the Warrant), or any beneficial or other interest therein, whether voluntarily,
involuntarily or by operation of law, for a period of two years after the
Closing Date (the "RESTRICTED PERIOD").
7. RIGHT TO ACQUIRE ADDITIONAL SECURITIES. In the event that, upon
expiration of the Restricted Period, the aggregate market value of the
Restricted Securities (as determined by the closing price of the Common Stock on
NASDAQ's Over-the-Counter-Bulletin Board Service averaged over the 30 day period
immediately preceding the date upon which the Restricted Period expires) is less
than $2,000,000, Buyer shall, upon Seller's written request, issue to Seller
such additional shares of its Common Stock as are needed so that the market
value of all shares of Common Stock issued to Seller under this Agreement (as
determined by the method previously described) equals $2,000,000.
8. SELLER'S INVESTMENT REPRESENTATIONS AND WARRANTIES. In connection
with its acquisition of the Restricted Securities, Seller represents and
warrants, and covenants and agrees with Buyer, on behalf of itself and each of
its partners that:
(a) SELLER: (i) IS AWARE THAT THERE IS NO PUBLIC MARKET FOR
THE RESTRICTED SECURITIES; (ii) CAN AFFORD TO HOLD THE RESTRICTED SECURITIES FOR
AN INDEFINITE PERIOD AND TO SUFFER THE COMPLETE LOSS OF ITS INVESTMENT IN THE
RESTRICTED SECURITIES; (iii) UNDERSTANDS THE RISKS RELATED TO ITS ACQUISITION OF
THE RESTRICTED SECURITIES; (iv) ACKNOWLEDGES THAT IT EITHER HAS SUFFICIENT
KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS TO BE CAPABLE OF
EVALUATING THE MERITS AND RISKS OF ACQUIRING THE RESTRICTED SECURITIES, OR HAS
HAD THE OPPORTUNITY TO CONSULT WITH ITS INVESTMENT, TAX AND OTHER PROFESSIONAL
ADVISORS IN EVALUATING THE MERITS AND RISKS OF ACQUIRING THE RESTRICTED
SECURITIES; (v) HAS MADE A THOROUGH INVESTIGATION OF THE AFFAIRS AND PROSPECTS
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OF BUYER; (vi) HAS HAD THE OPPORTUNITY TO ASK QUESTIONS OF OFFICERS OF BUYER AND
TO OBTAIN (AND HAS RECEIVED TO ITS SATISFACTION) SUCH INFORMATION ABOUT THE
BUSINESS AND FINANCIAL CONDITION OF BUYER AS SELLER HAS REASONABLY REQUESTED;
AND (vii) IS AWARE OF THE FACT THAT NO FEDERAL OR STATE AGENCY HAS MADE ANY
FINDING OR DETERMINATION AS TO THE FAIRNESS OF ANY OF THE RESTRICTED SECURITIES
FOR INVESTMENT OR HAS MADE ANY RECOMMENDATION OR ENDORSEMENT OF ANY OF THE
RESTRICTED SECURITIES FOR INVESTMENT.
(b) SELLER'S INVESTMENT IN THE RESTRICTED SECURITIES INVOLVES A
HIGH DEGREE OF RISK, AND SELLER IS AWARE OF THE POSSIBILITY THAT IT COULD LOSE
ITS ENTIRE INVESTMENT. SELLER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE
RISK FACTORS ATTACHED HERETO AS EXHIBIT F.
(c) SELLER HAS REVIEWED, AND HAS HAD THE OPPORTUNITY TO ASK
QUESTIONS OF OFFICERS OF BUYER AND ITS INVESTMENT, TAX AND OTHER PROFESSIONAL
ADVISORS CONCERNING THIS AGREEMENT, THE ARTICLES OF INCORPORATION, THE BYLAWS
AND THE FINANCIAL STATEMENTS.
(d) SELLER IS SUBSCRIBING FOR THE RESTRICTED SECURITIES FOR
INVESTMENT FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, THE DISTRIBUTION OR OTHER DISPOSITION THEREOF. SELLER HAS NO
PRESENT PLAN OF SELLING, TRANSFERRING OR DISTRIBUTING ANY OF THE RESTRICTED
SECURITIES TO ANY OF ITS PARTNERS OR ANY OTHER PERSON OR ENTITY.
(e) Seller will not, directly or indirectly, offer, transfer,
sell, pledge, hypothecate or otherwise dispose of any Restricted Securities (or
solicit any offers to buy, purchase or otherwise acquire or take a pledge of any
Restricted Securities), except in compliance with the Securities Act of 1933, as
amended (the "SECURITIES ACT"), the rules and regulations promulgated
thereunder, applicable state securities laws. No person or entity has any
interest, beneficial or otherwise, in the Restricted Securities to be issued to
Seller hereunder.
(f) Seller has been advised that: (i) the Restricted
Securities are not registered under the Securities Act in reliance upon the
exemption set forth in Section 4(2) of the Securities Act and that Buyer has no
obligation to effectuate any such registration; (ii) the Restricted Securities
must be held indefinitely and Seller must continue to bear the economic risk of
the investment in the Restricted Securities unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available; (iii) this Agreement imposes an absolute restriction on any sale or
transfer of the Restricted Securities during the Restricted Period as provided
in Section 6 hereof; (iv) Rule 144 promulgated under the Securities Act ("RULE
144") may not be available with respect to the sale of any of the securities of
Buyer, and Buyer has no obligation nor any intention to make Rule 144 available;
(v) when and if any of the Restricted Securities may be disposed of following
the Restricted Period without registration in reliance on Rule 144, the amounts
which may be disposed of may be limited in accordance with the terms and
conditions of Rule 144; (vi) if the exemption provided by Rule 144 is not
available, public sale without registration after the Restricted Period will
require compliance with Regulation D (or some other exemption) promulgated under
the Securities Act; (vii) restrictive legends in the form attached as EXHIBIT G
will be placed on the certificates representing the Restricted Securities;
(viii) a notation will be made in the
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appropriate records of Buyer indicating that the Restricted Securities are
subject to restrictions on transfer; and (ix) appropriate stop-transfer
restrictions will be issued to Buyer's transfer agent with respect to the
Restricted Securities.
9. EXPENSES. All expenses incurred by Buyer and its affiliates in
connection with the authorization, preparation, execution and performance of
this Agreement and the transactions contemplated hereby, including without
limitation, all fees and expenses of their counsel, agents and representatives,
shall be paid by Buyer or such affiliates, as appropriate. All expenses
incurred by Seller in connection with the authorization, preparation, execution
and performance of this Agreement and the transactions contemplated hereby,
including without limitation, all fees and expenses of its counsel, agents and
representatives, shall be paid by Seller.
10. ASSIGNMENT; BENEFIT AND BURDEN. No party may assign any of its
rights or obligations hereunder without the prior written consent of the other
party. This Agreement shall be binding upon and inure to the benefit of and be
enforceable by and against each party and its respective successors and
permitted assigns.
11. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the domestic substantive laws of the State of Ohio without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of the domestic substantive laws of any other state.
12. VENUE; SUBMISSION TO JURISDICTION. For the purpose of any action
or proceeding instituted with respect to this Agreement, each party hereby
irrevocably submits to the jurisdiction of any state or federal court having
subject matter jurisdiction and located in Cleveland, Ohio. Each party also
irrevocably consents to the service or process out of said courts by mailing a
copy thereof, by certified mail, postage prepaid, to such party at its address
set forth in the preamble hereof, and each party hereby agrees that such
service, to the fullest extent permitted by law (i) shall be deemed in every
respect effective service of process upon such party in any such suit, action or
proceeding and (ii) shall be taken and held to be valid personal service upon
and personal delivery to such party. Each party irrevocably waives, to the
fullest extent permitted by law, any objection that such party may have or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court located in Cleveland, Ohio and any claim that any such
suit, action or proceeding brought in such a court has been brought in an
inconvenient forum.
13. AMENDMENT. This Agreement cannot be changed orally, and may only
be amended by an instrument in writing signed by the party against whom
enforcement of such change is sought.
14. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended nor will it be construed to give any person or entity any right, remedy
or claim under or in respect of this Agreement or any provisions hereof.
15. INTEGRATION. This Agreement, the Warrant and the Assignment set
forth all of the promises, agreements, conditions, understandings, warranties
and representations among the parties hereto with respect to the subject matter
hereof and thereof, and supersede and are intended to be an
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integration of any and all prior agreements or understandings, oral or written,
with respect to the subject matter hereof and thereof.
16. EXECUTION IN COUNTERPARTS. This Agreement may be executed by any
one or more of the parties hereto in any number of counterparts, each of which
will be deemed to be an original, but all such counterparts will together
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
Buyer: FULL POWER GROUP, INC.
By:
----------------------------------
Xxxxxx X. Xxxxxxx, President
BY SIGNING THIS AGREEMENT, SELLER ACKNOWLEDGES THAT IT HAS CAREFULLY REVIEWED
THIS AGREEMENT AND FULLY UNDERSTANDS, AND HAS HAD THE OPPORTUNITY TO CONSULT
WITH ITS INVESTMENT, TAX AND OTHER PROFESSIONAL ADVISORS ABOUT, THE RISKS AND
BENEFITS OF INVESTING IN THE RESTRICTED SECURITIES.
Seller:
-------------------------------------
By:
----------------------------------
Printed Name:
------------------------
Title: Managing Partner
and
Printed Name:
------------------------
Title: Managing Partner
and
Printed Name:
------------------------
Title: Managing Partner
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SCHEDULE 1
PURCHASED ASSETS
1. All cash in hand or on deposit and other cash equivalents owned by Seller
on the Closing Date.
2. All right, title and interest of Seller in and under the Sublicense
Agreement between Courant Consulting, Inc. and Seller dated October 6,
1998.
EXHIBIT A
FORM OF AWARRANT
EXHIBIT A TO WARRANT
FULL POWER GROUP, INC.
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the Warrant
("WARRANT") issued by Full Power Group, Inc. (the "COMPANY") to ____________ on
__________, 1999, into shares of Common Stock, par value $0.001 per share
("COMMON STOCK"), of the Company, according to the conditions hereof, as of the
date written below. All capitalized terms used herein without definition shall
have the meanings assigned to them in the Warrant. If Warrant Shares are to be
issued in the name of a person other than the Holder, then the Holder shall pay
all transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as may be reasonably requested by the Company in
accordance with the Warrant. No fee will be charged to the Holder for any
exercise, except for such transfer taxes, if any.
--------------------------------------------
Date to Effect Exercise
--------------------------------------------
Number of Warrant Shares to be Issued (must
be at least ____)
--------------------------------------------
Aggregate Exercise Price (must be at least
$________)
--------------------------------------------
Signature of the Holder
--------------------------------------------
Printed Name (exactly as it is to appear on
the Warrant Shares)
--------------------------------------------
Address of the Holder
EXHIBIT B
FORM OF ASSIGNMENT
GENERAL ASSIGNMENT AND XXXX OF SALE
KNOW ALL MEN BY THESE PRESENTS that _________________________ ("SELLER")
does by these presents hereby grant, bargain, sell, convey, transfer, assign,
set over and deliver unto FULL POWER GROUP, INC., a Florida corporation
("BUYER"), pursuant to the terms of that certain Asset Purchase Agreement by and
between Buyer and Seller of even date herewith (which, together with the
schedules and exhibits thereto, is hereinafter referred to as the "PURCHASE
AGREEMENT"), all of Seller's right, title and interest in and to the "PURCHASED
ASSETS" (as such term is defined in Section 1(a) of the Purchase Agreement)
owned or otherwise held by Seller, consisting of the following:
1. All cash in hand or on deposit and other cash equivalents
owned by Seller on the date hereof.
2. All right, title and interest of Seller in and under the
Sublicense Agreement between Courant Consulting, Inc. and
Seller dated October 6, 1998 (the "LICENSE").
TO HAVE AND TO HOLD unto Buyer, its successors and assigns forever all of
the Purchased Assets.
Seller has good and valid title to the Purchased Assets, and has the full
right to sell, transfer, convey, assign and deliver the Purchased Assets to
Buyer free and clear of all liens and encumbrances whatsoever.
Seller hereby assigns, and Buyer hereby assumes, all of Seller's rights,
duties and obligations under the License, including, without limitation, any and
all claims it may have against Courant Consulting, Inc. or Full Power
Corporation with respect to the License.
This instrument is made, executed and delivered for and upon the
consideration provided in the Purchase Agreement. Capitalized terms not
otherwise defined herein have the meanings assigned to them in the Purchase
Agreement. This instrument is not intended to and does not change or in any
manner increase the obligations of Seller under the Purchase Agreement relating
to the representations and warranties of Seller contained therein. This
instrument shall inure to the benefit of and be binding upon Buyer and Seller
and their respective successors and assigns. The validity and effect of this
instrument shall be governed by and construed and enforced in accordance with
the laws of the State of Ohio, without regard to conflicts of law principles.
IN WITNESS WHEREOF, Seller has caused this instrument to be signed in its
name by its duly authorized managing members as of this _____ day of __________,
1999.
-------------------------------------
By:
----------------------------------
Printed Name:
------------------------
Title: Managing Partner
and
----------------------------------
Printed Name:
------------------------
Title: Managing Partner
and
----------------------------------
Printed Name:
------------------------
Title: Managing Partner
Full Power Corporation, an Ohio corporation and wholly-owned subsidiary
of Buyer, hereby consents to the sale and assignment of the Sublicense Agreement
between Courant Consulting, Inc. and Seller dated October 6, 1998 to Buyer as
required by Section 4.11 thereof.
FULL POWER CORPORATION
By:
----------------------------------
Xxxxxx X. Xxxxxxx, President
EXHIBIT C
ARTICLES OF INCORPORATION OF BUYER
EXHIBIT D
BYLAWS OF BUYER
EXHIBIT E
FINANCIAL STATEMENTS OF BUYER
EXHIBIT F
RISK FACTORS
THE RESTRICTED SECURITIES INVOLVE SIGNIFICANT RISKS AND ARE NOT INTENDED
AS A COMPLETE INVESTMENT PROGRAM -- THEY ARE A SUITABLE INVESTMENT ONLY IF
SELLER CAN BEAR THE RISK OF LOSING ITS ENTIRE INVESTMENT AND CAN PROVIDE FOR ITS
NEEDS AND CONTINGENCIES WITHOUT RESPECT TO THIS INVESTMENT. IN ADDITION TO
GENERAL INVESTMENT RISKS, SELLER SHOULD CONSIDER THE FOLLOWING FACTORS IN
EVALUATING ITS INVESTMENT:
LIMITATIONS ON TRADING
The Restricted Securities may not be sold or otherwise transferred unless
sold or transferred in accordance with applicable state securities laws.
Buyer's Common Stock is currently quoted on NASDAQ's Over-the-Counter-Bulletin
Board Service ("OTCBB") under the trading symbol "FPGR," but there can be no
assurance that an active trading market in Buyer's Common Stock will continue.
Because of the recent changes in the NASDAQ listing rules, as of July
1999, market makers will not be permitted to quote the Common Stock on the OTCBB
unless Buyer files appropriate financial information and other required
information with the Securities and Exchange Commission (the "COMMISSION").
Although Buyer presently intends to start making these filings with the
Commission, Buyer may, in its sole discretion, elect not to make such filings
with the Commission, or may not be able to do so, in which event the Common
Stock will cease to be quoted on the OTCBB. If the Common Stock is not quoted
on the OTCBB, there will not be a public market for the Common Stock and,
therefore, Seller may have to maintain its investment in the Common Stock for an
indefinite period of time.
LIMITED OPERATING HISTORY
Buyer is a holding company that currently conducts business exclusively
through its wholly-owned subsidiary, Full Power Corporation, an Ohio corporation
("FPC"), which was originally organized in 1998 to take advantage of the
deregulation of the electrical service industry in the State of California.
FPC operates as an electrical service provider ("ESP") registered with
the California Public Utilities Commission (ESP No. 1308). Although FPC is
licensed to do so, FPC has yet to sell any electricity to residential and small
commercial consumers in the State of California and does not anticipate doing so
before the end of the year 2000. There can be no assurance that FPC will ever
conduct business as an ESP in the State of California.
FPC has evaluated and continues to evaluate the opportunities to become a
seller of electricity, natural gas and related services in other states,
primarily on the East Coast, that have or are developing energy deregulation
programs. FPC is in the final stages of preparing to file an application to
provide electric service in the State of Pennsylvania. FPC has also filed an
application
to buy and sell electricity as a wholesale broker with the Federal Energy
Regulatory Commission ("FERC"), which it expects to be approved by July 1999.
However, there can be no assurance that any of these applications will be
approved.
Pursuant to a loan agreement with All Power Corp., a New York corporation
("All Power"), FPC will have the right to acquire all of the outstanding common
stock of All Power in the event that All Power defaults on its obligation to
repay the loan. All Power was organized in March 1999 and intends to engage in
the business of selling electricity and natural gas in the State of New York.
Although All Power is licensed to do so, All Power has yet to sell any
electricity and has just begun to market natural gas to consumers in the State
of New York. There can be no assurance that FPC will acquire the stock of All
Power or that All Power will be successful in conducting business in the State
of New York or any other states.
In short, Buyer has little operating and financial history upon which
prospective investors can base an evaluation of the likely future performance of
Buyer. Further, there can be no assurances that Buyer will experience growth in
revenues in the future, or if there is growth in revenues, that such growth will
be sustainable.
DEPENDENCE ON SALES AND MARKETING ARRANGEMENTS
Buyer believes that its growth strategy is dependent upon its ability to
create and maintain strategic relationships with suppliers of electricity and
natural gas as well as sales and marketing companies. There can be no assurance
that any such relationships will be formed, or if formed, that they will prove
successful or profitable for Buyer.
INTENSE COMPETITION
Buyer encounters intense competition in all aspects of its business as a
provider of electrical and natural gas service. Buyer competes directly with
other providers of such services, a significant number of which have greater
capital and other resources and may have greater operating efficiencies than
Buyer does. In addition to competition from other providers, Buyer competes
directly with utility distribution companies ("UDCs") in the State of California
such as Pacific Gas and Electric, San Diego Gas and Electric and Southern
California Edison, as well as investor-owned utilities, rural electric
cooperatives and municipal operations in other states, all of which have
established reputations and long standing relationships with electrical
consumers in their respective service territories.
Buyer's success in each state where it chooses to operate will depend on
its ability to provide electricity and/or natural gas to customers there at
prices competitive with or lower than the competition and on its ability to
market ancillary products and services to those customers. If Buyer fails to
provide competitive pricing or obtain sufficient amounts of electricity and/or
natural gas for its customers, the sales and marketing companies may market
Buyer's services less aggressively, which could adversely affect Buyer's ability
to successfully compete in the future.
ACCEPTANCE BY THE PUBLIC OF NON-UTILITY SERVICE PROVIDERS
The success of Buyer is substantially dependent upon its ability to
encourage consumers or their representatives to purchase electricity and/or
natural gas from non-utility electrical or natural gas service providers, such
as Buyer. The inability of Buyer to convince such consumers to purchase
electricity and/or natural gas from Buyer, whether as a result of Buyer's
inability to offer electricity and/or natural gas at competitive prices, or any
other reason, will adversely affect Buyer's results of operations.
ABILITY TO MAINTAIN AND MANAGE RAPID EXPANSION
As part of its growth strategy, Buyer intends to (i) expand sales
capabilities through more aggressive marketing, (ii) recruit new employees
specializing in the marketing and sale of electricity and/or natural gas and
related services, and (iii) pursue strategic acquisitions of complementary
businesses. Buyer's growth may cause a significant strain on its management,
and operational, financial and other resources of Buyer. Buyer's ability to
manage its growth effectively will require it to improve its operational and
marketing systems. These demands will require the addition of new management
personnel and the development of additional expertise by existing management.
The failure of Buyer's management team to effectively manage growth, should it
occur, could have a material adverse impact on Buyer's results of operations and
financial results.
DEPENDENCE ON KEY PERSONNEL
Buyer's success depends to a significant extent upon the performance of
its senior management team, including Xxxxxx X. Xxxxxxx, President and Chief
Executive Officer, Xxxxxx Xxxxxxx, Vice President and Chief Operating Officer
and Xxxxxxx X'Xxxxxx, Secretary and Treasurer. The loss of services of any of
Buyer's executive officers could have an adverse impact on Buyer. In addition,
Buyer's future success also depends on its continuing ability to identify, hire,
train and retain highly qualified management and marketing personnel.
Competition for qualified management and marketing personnel is intense and
there can be no assurance that Buyer will be able to hire and retain sufficient
personnel.
REGULATORY CONCERNS
Buyer's business, and the electrical and natural gas industries
generally, is subject to regulation at both the federal and state levels. As a
result of deregulation, Buyer has fewer federal and state laws and regulations
to comply with than has traditionally been the case. However, Buyer
continuously reviews its procedures and policies for compliance with laws and
regulations applicable to its operations and believes that it is in substantial
compliance with all such material laws and regulations. Furthermore, while the
costs of compliance with such laws and regulations have not been material to
Buyer, there can be no assurance that such costs will not become more
significant to Buyer in the future. In addition, the failure to comply with any
of the laws or regulations imposed upon Buyer could result in fines or the
suspension or revocation of its license to sell electricity or natural gas,
which could have a material adverse impact upon Buyer.
VOLATILITY OF STOCK PRICE
Trading of relatively small blocks of Buyer's Common Stock can have a
significant impact on the price at which the stock is traded. In addition,
significant fluctuations in the price and volume of stocks traded on OTCBB could
adversely affect the market price of the Common Stock of Buyer without regard to
the operating performance of Buyer. Buyer also believes that fluctuations in
financial results of Buyer's operations, announcements by Buyer or its
competitors or changes in securities analysts' recommendations may cause the
market price for Buyer's Common Stock to fluctuate, perhaps substantially.
These factors, as well as general economic conditions, such as recessions or
high interest rates, may have a material adverse affect on the market price of
Buyer's Common Stock.
DETERMINATION OF PRICE OF RESTRICTED SECURITIES
Buyer has arbitrarily established the price of the Restricted Securities,
and such price is not necessarily related to asset value, net worth or other
established criteria of value. No outside consultants or investment bankers
were engaged to render an opinion on the price for the Common Stock or the
fairness from a financial point of view of such price per share.
SEC INVESTIGATION
Buyer has received and is in the process of responding to a subpoena from
the Commission relating to an investigation of Twenty-First Century Power, LLC
and certain offers of securities over the Internet. Although Buyer does not
believe that it has ever offered or sold any of its securities over the
Internet, there can be no assurance that the Commission will not issue an order
prohibiting any further offers or sales of Buyer's securities pending the
outcome of the investigation.
UNAUDITED FINANCIALS
Any unaudited consolidated financial statements of Buyer are subject to
revision upon review by Buyer's independent accountants. Seller will be relying
upon management with respect to the accuracy and adequacy of all information of
a financial nature included any such unaudited financial statements.
EXHIBIT G
FORM OF RESTRICTIVE LEGENDS
THE SECURITIES EVIDENCED HEREBY WERE ISSUED WITHOUT REGISTRATION PURSUANT TO
SECTION 4(2) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THE SECURITIES EVIDENCED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT. THE ISSUER MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES EVIDENCED HEREBY ARE ALSO SUBJECT TO A TWO YEAR RESTRICTION ON
TRANSFER AS PROVIDED IN THAT CERTAIN ASSET PURCHASE AGREEMENT, DATED __________,
1999, BETWEEN THE ISSUER AND THE HOLDER. THE ISSUER WILL PROVIDE A COPY OF SUCH
AGREEMENT TO THE HOLDER UPON WRITTEN REQUEST.
