STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is made effective as of this 19TH day of
September, 1997, by and between Chelsea Capital Corporation ("Chelsea"), a
Delaware corporation whose address is c/o H. Xxxx Xxxxxx, X.X. Xxx 0000, Xx
Xxxxx, XX 00000-0000 and TAC, Inc. ("TAC"), a Utah corporation whose address is
000 Xxxx 000 Xxxxx, Xxxx Xxxx Xxxx, XX 00000, with respect to the following:
RECITALS
WHEREAS, in exchange for Chelsea delivering to TAC all of the issued
and outstanding stock of Vale Terrace Corporation ("Vale"), a Delaware
corporation whose address is c/o H. Xxxx Xxxxxx, X.X. Xxx 0000, Xx Xxxxx, XX
00000-0000, and whose sole asset is an office building located at 000 Xxxx
Xxxxxxx Xxxxx, Xxxxx, Xxx Xxxxx Xxxxxx, Xxxxxxxxxx ("the Property"), TAC agrees
to deliver to Chelsea a certain number of shares of TAC Common Stock having a
value of approximately One Hundred Forty Thousand Dollars ($140,000.),
determined by dividing $140,000 by the bid price as of the Closing Date
hereunder.
AGREEMENT
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties have agreed as follows:
1. Representations and Warranties of Chelsea
Chelsea represents and warrants as follows:
(i) Chelsea is a corporation duly organized, and validly
existing under the laws of the state of Delaware.
(ii) Chelsea acknowledges that the receipt of Common Stock
as compensation involves a high degree of risk and
further acknowledges that it can bear the economic
risk of compensation in Common Stock;
(iii) Chelsea understands and acknowledges that the Common
Stock being issued pursuant to this Agreement will be
issued in reliance on specific exemptions from
registration requirements of federal and state
securities laws and that TAC is relying upon the
truth and accuracy of the representations,
warranties, agreements, acknowledgments and
understandings of Chelsea set forth herein in order
to determine the applicability of such exemptions and
the suitability of Chelsea to acquire the Common
Stock;
(iv) Chelsea is sufficiently experienced in financial and
business matters to be capable of evaluating the
merits and risks of receiving Common Stock, and to
make an informed decision relating thereto. Further,
it is an "accredited investor" as defined in the
Securities Act of 1933;
(v) Chelsea has consulted its own investment and/or legal
advisors in entering this Agreement;
(vi) Chelsea understands that in the view of the
Securities and Exchange Commission the statutory
basis for the exemption claimed for this transaction
would not be present if the offering of Common Stock
or option to purchase Common Stock is part of a
scheme or plan to evade the registration provisions
of the Securities Act of 1933. Chelsea confirms that
this transaction is not part of any such plan or
scheme.
(vii) Chelsea is not an underwriter of, or dealer in, the
Common Stock and it is not participating, pursuant to
a contractual agreement, in the distribution of the
Common Stock.
(viii) Chelsea hereby acknowledges that it has been provided
with audited financial statements of TAC for the
years ending December 31, 1995 and 1996, as well as
such other documents as Chelsea considers necessary
in acquiring the shares of TAC pursuant to this
transaction. Chelsea further acknowledges that it has
been afforded the opportunity to inspect or request
such further documents as may be necessary to make an
informed decision concerning whether or not to accept
TAC shares pursuant to this Agreement.
2. Representations of TAC
TAC represents and warrants as follows:
(i) The Company is a corporation duly organized and
validly existing under the laws of the State of Utah.
(ii) TAC has all necessary corporate power and authority
under the laws of Utah and all other applicable
provisions of law to own its properties and other
assets now owned by it, to carry on business as now
being conducted, and to execute and deliver and carry
out the provisions of this Agreement.
(iii) All corporate action on the part of TAC required for
the lawful execution and delivery of this Agreement
and the issuance, execution and delivery of the
Shares will have been duly and effectively taken.
Upon execution and delivery, this agreement will
constitute a valid and binding obligation of TAC,
enforceable in accordance with its terms, except as
the enforceability may be limited by applicable
bankruptcy, insolvency or similar laws and judicial
decisions affecting creditors' rights generally.
3. Transfer of TAC Common Stock. The shares to be issued hereunder shall
be issued in compliance with the exemption from Federal registration
provided by Rule 504 of Regulation D promulgated under the Securities
Act of 1933 and exemptions from applicable state registration. Chelsea
hereby agrees to obtain an opinion of independent counsel, satisfactory
to the counsel of TAC, to the effect that the resale of such shares is
permitted under applicable state or federal law, before offering and
selling the Common Stock to be transferred to it under this Agreement.
4. Exemption; Reliance on Representations. Chelsea understands that the
TAC Common Stock has not been registered under the Securities Act of
1933 and that TAC is relying on the representations, warranties and
agreements of Chelsea made herein.
5. Transfer Agent Instructions. TAC's transfer agent will be instructed to
issue one or more stock certificates representing the Common Stock in
the name of Chelsea and bearing the following legend:
The securities evidenced hereby have not been registered under the
Securities Act of 1933, as amended (the"Act"), nor qualified under the
securities laws of any states, and have been issued in reliance upon
exemptions from such registration and qualification for non-public
offerings. Accordingly, the sale, transfer, pledge, hypothecation, and
or other disposition of any such securities or any interest therein may
not be accomplished except pursuant to an effective registration
statement or exemption under the Act and qualification under applicable
State securities laws, or pursuant to an opinion of counsel,
satisfactory in form and substance to the Issuer, to the effect that
such registration or exemption and qualification are not required.
TAC represents that these Shares shall be freely transferable on the
books and records of TAC subject to compliance with applicable
securities laws.
6. Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants made respectively by TAC and
Chelsea in this Agreement shall survive the closing of the transaction
called for hereunder.
7. Official Notices: All official communications or legal notices shall be
given in writing by registered or certified mail, addressed to the
respective party at the postal address or other address(es) as each
party may hereafter designate in writing, or when sent by facsimile
transmission, charges prepaid. The present addresses of the parties are
as follows:
TAC, Inc.
000 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
(000) 000-0000
(000) 000-0000 fax
AND,
Chelsea Capital Corporation
c/o H. Xxxx Xxxxxx
Xxxx Xxxxxx Xxx 0000
Xx Xxxxx, Xxxxxxxxxx 00000-0000
(000) 000-0000 Tel and fax
8. Miscellaneous. The following miscellaneous provisions, standard to agreements
of this nature, are made part hereof.
a. In the event any one or more of the provisions contained in
this Agreement are for any reason held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provisions of
this Agreement.
b. This Agreement shall be binding upon and inure to the benefit
of the parties and their respective heirs, legal
representatives, successors and permitted assigns. The parties
may not transfer or assign all or any part of their rights or
obligations except to the extent expressly permitted by this
Agreement.
c. This Agreement constitutes the entire agreement and
understanding between the parties and supersedes any and all
agreements heretofore made between them. It may not be
modified or amended except in writing signed by both parties.
d. No term or condition of this Agreement shall be deemed to have
been waived nor shall there be any estoppel to enforce any
provision of this Agreement, except by written instrument of
the party charged with such waiver or estoppel.
e. This agreement shall be interpreted by the laws of the State
of California.
f. This agreement may be executed in one or more counterparts,
including electronic mail or facsimile, each of which may be
considered an original copy hereof.
9. Closing. The closing hereunder shall take place not later than
September 23, 1997 at such time and place as the parties mutually agree
to. At Closing, Chelsea shall deliver to TAC one or more certificates
(or other proof of ownership) evidencing the transfer of the Vale
stock, as well as any assignments, letters of instruction or other
instruments which may be necessary, desirable or appropriate in order
to transfer the Vale shares to TAC. At Closing, TAC shall issue and
deliver to Chelsea one or more certificates evidencing the TAC Common
Stock, as well as any assignments, letters of instruction or other
instruments which may be necessary, desirable or appropriate in order
to transfer the TAC shares to Chelsea.
a. Conditions precedent to Closing. TAC's obligations hereunder
are subject to the following conditions precedent being met:
(i) TAC's agents have the opportunity to thoroughly
inspect the Property and make a reasonable
determination the Property is as was represented by
Chelsea.
(ii) Subject to Section 9.c. (vi) herein, at Closing
Chelsea shall satisfy the existing First Deed of
Trust and carry back as Beneficiary under a new First
Deed of Trust a loan amount of $400,000., bearing
interest at the annual rate of Ten (10) per cent,
with interest only payable monthly and the unpaid
principal balance due July 29, 1998.
(iii) Chelsea will provide to TAC secondary financing in
the sum of $560,000. for a term of seven (7) years,
with interest at the annual rate of Seven (7) per
cent, payable as follows: at Closing a number of
shares of TAC Common Stock at the bid price equal to
four (4) years of interest in advance. The TAC Common
Stock shall be as provided for in Sections 3, 4 and 5
herein. After completion of the fourth (4th) year,
interest only shall be payable by TAC monthly in
cash. The unpaid balance of principal and any
interest shall be convertible into Common Stock of
TAC at the bid price less a discount of Thirty (30)
per cent after Seven (7) years. The sole security for
this loan is the Property.
(iv) Prior written consent by Xxxxx Enterprises, Inc.,
landlord under the ground lease, accepting TAC as
ground lessee and as mortgagor under Section 9.c.
(ii), as required by the terms of the December 23,
1982 Ground Lease and any amendments thereto.
(v) Resolutions by the boards of directors of TAC and
Chelsea ratifying this transaction.
(vi) Chelsea will lease back the Property from TAC for a
period of one (1) year on a triple net basis,
including all payments due under the Ground Lease and
the First Deed of Trust. The purpose herein is to
guarantee break even cash flow.
(vii) Chelsea and TAC will become parties to a standard set
of Escrow Instructions prepared by Chicago Title
Insurance Company or , in the alternative, Chelsea
will represent and warrant that as of the Closing
Date hereunder there are no liens or encumbrances of
any kind whatsoever affecting the Property, beyond
those referred to in this agreement.
(viii) Further, Chelsea represents and warrants that there
will be no environmental or other violations
affecting the Property as of the Closing Date.
(ix) Agreement by Chelsea to subordinate its interest to
any future First Deed of Trust financing obtained by
TAC.
(x) Chelsea will deliver to TAC an Investment
Representation Letter in the form attached hereto.
(xi) Chelsea will deliver to TAC all of the corporate
books and records of Vale.
(xii) Chelsea will deliver to TAC the resignations of all
current officers and directors of Vale.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
TAC, Inc. Chelsea Capital Corporation
/s/ Xxxxxxx Xxxxxx /s/
Xxxxxxx Xxxxxx, President
