STOCK PURCHASE AGREEMENT
BY AND AMONG
PAXFORD INVESTMENTS, S.A.,
AND
XXXXXX X. XXXXX, XXXX X. XXX,
and XXXXXXX X. XXX XXXXX
TABLE OF CONTENTS
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PAGE
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ARTICLE I Sale and Purchase of the Company's Common Stock and Purchase
Price.........................................................1
1.01 Sale of Company Stock.........................................1
1.02 Purchase Price and Method of Payment..........................2
ARTICLE II Closing Date and Deliveries at Closing........................2
2.01 Closing Date..................................................2
2.02 Deliveries by Stockholders....................................2
2.03 Deliveries by Purchaser.......................................3
2.04 Further Assurances............................................3
ARTICLE III Representations and Warranties of the Purchaser...............3
3.01 Due Organization..............................................3
3.02 Power and Authority...........................................3
3.03 Investment Representations....................................4
ARTICLE IV Representations and Warranties of the Stockholders............5
4.01 Due Organization..............................................5
4.02 Certificate of Incorporation and By-laws......................5
4.03 Power and Authority...........................................5
4.04 Accuracy......................................................6
4.05 Brokers.......................................................6
4.06 No Pending or Threatened Legal Claim..........................7
4.07 Capital Stock.................................................7
4.08 Taxes.........................................................7
4.09 Financial Statement...........................................7
4.10 Contracts, Obligations and Commitments........................8
4.11 Title to Properties...........................................8
4.12 Accounts Receivable...........................................8
4.13 Undisclosed Liabilities.......................................8
4.14 Disclosure....................................................8
4.15 SEC Filings...................................................9
4.16 Legend........................................................9
4.17 Holding Period................................................9
4.18 Absence of Certain Changes....................................9
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TABLE OF CONTENTS
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(Continued)
PAGE
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ARTICLE V Condition Precedent to Purchaser's Obligation................10
5.01 Warrants.....................................................10
5.02 Consents and Approvals.......................................10
5.03 Other Documents..............................................11
ARTICLE VI Indemnification..............................................11
6.01 Stockholder's Indemnification Obligation.....................11
6.02 Purchaser's Indemnification Obligation.......................11
ARTICLE VII Termination..................................................12
ARTICLE VIII Confidentiality and Publicity................................12
8.01 Confidentiality..............................................12
8.02 Publicity....................................................12
ARTICLE IX Miscellaneous................................................13
9.01 Transaction Costs............................................13
9.02 Entire Agreement.............................................13
9.03 Amendments...................................................13
9.04 Further Assurances...........................................13
9.05 Binding Effect...............................................13
9.06 Headings.....................................................14
9.07 Notices......................................................14
9.08 Severability.................................................14
9.09 Waivers......................................................14
9.10 Equitable Remedies...........................................15
9.11 Third Parties................................................15
9.12 Enforcement Costs............................................15
9.13 Remedies Cumulative..........................................15
9.14 Counterparts.................................................15
9.15 Governing Law................................................16
9.16 Jurisdiction and Venue.......................................16
9.17 Preparation of Agreement.....................................16
9.18 Survival.....................................................16
9.19 Inducement to Transaction....................................16
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TABLE OF CONTENTS
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(Continued)
PAGE
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9.20 Advice of Counsel............................................16
9.21 Denominations................................................16
9.22 Counterparts.................................................16
9.23 Agent........................................................16
9.24 Finder's Fee.................................................17
9.25 Time of the Essence..........................................17
9.26 Pronouns.....................................................17
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into
as of the 23rd day of May, 1997, by and among Paxford Investments, S.A., a
Bahamian corporation, (hereinafter referred to as the "COMPANY" or "PURCHASER"),
and Xxxxxx X. Xxxxx, Xxxx X. Xxx and Xxxxxxx X. Xxx Xxxxx (hereinafter referred
to individually as a "STOCKHOLDER" and collectively as the "STOCKHOLDERS" or the
"SELLERS").
WITNESSETH:
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WHEREAS, the Company was formed for the acquisition of certain shares of
Lahaina Acquisitions, Inc. ("LAHAINA");
WHEREAS, the Company intends, although there is no assurance or guarantee,
to effect a share exchange or similar transaction with Root Industries, Inc. a
Canadian corporation, upon consummation of this Agreement;
WHEREAS, the Stockholders own beneficially and of record issued and
outstanding shares of common stock of Lahaina, with each Stockholder owning the
number of such shares set forth beside his name on EXHIBIT A attached hereto and
collectively comprise all of the directors of Lahaina; and
WHEREAS, Purchaser desires to purchase from the Stockholders, and the
Stockholders desire to sell to Purchaser, Seven Hundred and Fifty Thousand
(750,000) shares of the issued and outstanding stock of Lahaina, representing
approximately Seventy Five and Twenty-Six/100 percent (75.26%) interest of
Lahaina, on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
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SALE AND PURCHASE OF THE COMPANY'S COMMON STOCK AND PURCHASE PRICE
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1.01 SALE OF COMPANY STOCK. Upon the terms and subject to the conditions
of this Agreement, at the Closing (as that term is defined in Section 2.01
hereof), the Stockholders agree to sell, assign, transfer, convey and deliver to
Purchaser, and Purchaser agrees to purchase and acquire, approximately
Seventy-Five and Twenty-Six/100 percent (75.26%) of the issued and outstanding
common stock of Lahaina, no par value, and represented by Seven Hundred and
Fifty Thousand (750,000) shares of Lahaina Common Stock from Xxxxxx X. Xxxxx
(selling 366,667 shares), Xxxx X. Xxx (selling 366,667 shares), and Xxxxxxx X.
Xxx Xxxxx (selling 16,666 shares) (the "LAHAINA STOCK").
1.02 PURCHASE PRICE AND METHOD OF PAYMENT.
The purchase price ("PURCHASE PRICE") to be paid by Purchaser to the
Stockholders in exchange for Lahaina Stock is One Hundred and Twenty-Five
Thousand and No/100 Dollars ($125,000.), allocated pro rata as per Exhibit A,
subject to adjustments as described herein below.
ARTICLE II
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CLOSING DATE AND DELIVERIES AT CLOSING
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2.01 CLOSING DATE. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall be held at the offices of Corporate Stock
Transfer, 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx on or before 5:00 p.m.,
Mountain time, May 27, 1997, or at any such other date and at such other place
as may be mutually agreed upon by the parties, simultaneously occurring with the
execution and delivery of this Agreement. The date of the Closing is sometimes
referred to herein as the "CLOSING DATE."
2.02 DELIVERIES BY STOCKHOLDERS. In addition to and without limiting any
other provision of this Agreement, the Stockholders agree to deliver, or cause
to be delivered, to Purchaser, at or prior to the Closing, the following:
(a) All certificates representing Lahaina Stock, endorsed in blank
and otherwise in form acceptable for transfer of the books of Lahaina, with all
necessary transferred tax stamps attached;
(b) Resignations executed by the Stockholders as officers and
directors of Lahaina, accompanied by a certified copy of the resolutions adopted
by the Board of Directors of Lahaina authorizing the resignations and appointing
the new officers and directors of Lahaina as provided by the Purchaser;
(c) An opinion of legal counsel to Stockholders, that the shares of
Lahaina Stock are validly issued, fully paid and nonassessable and are not
subject to any preemptive rights, and on the Closing Date there will be no
voting trust agreements or other contracts, agreements or arrangements
restricting voting or dividend rights or transferability with respect to the
Lahaina Stock; and
(d) Such other documents, instruments or certificates as shall be
reasonably requested by Purchaser or its counsel, including, but not limited to,
all contracts, books, and records of the Company not previously delivered.
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2.03 DELIVERIES BY PURCHASER. In addition to and without limiting any
other provision of this Agreement, Purchaser agrees to deliver or cause to be
delivered to the Stockholders, at or prior to the Closing, the following:
(a) The Purchase Price required to be delivered, by wire transfer,
at Closing pursuant to Section 1.02 hereof;
(b) A certified copy of the resolutions adopted by the Board of
Directors of Purchaser authorizing the transactions contemplated by this
Agreement and authorizing specified officers of Purchaser, as the case may be,
to execute and deliver this Agreement and/or any other documents or instruments
which they deem necessary and appropriate in connection herewith;
(c) Such other documents or certificates as shall be reasonably
requested by the Stockholders or their counsel.
2.04 FURTHER ASSURANCES. The Stockholders and Purchaser shall, on
request, on or after the Closing Date, cooperate with each other by furnishing
any additional information, executing and delivering any additional documents
and/or instruments and doing any and all such other things as may be reasonably
required by the parties or their counsel to consummate or otherwise implement
the transactions contemplated by this Agreement.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser hereby represents and warrants to the Stockholders as
follows:
3.01 DUE ORGANIZATION. The Company is a duly organized and validly
existing corporation under the laws of The Bahamas and has the corporate power
and lawful authority to own its properties and to transact the business in which
it is currently engaged.
3.02 POWER AND AUTHORITY.
(a) The Company has full corporate power to enter into this
Agreement and to carry out their respective obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Company's Board
of Directors. No other corporate acts or proceedings on the part of the Company
will be necessary to authorize the performance of this Agreement by the Company
or the transactions contemplated hereby. This Agreement constitutes a valid and
legally binding obligation of the Company and is enforceable against the Company
in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to creditors' rights or by the application of equitable principles when
equitable remedies are sought.
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(b) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance by the
Company with any of the provisions hereof, will:
(i) violate, or conflict with, or result in a breach of any
provisions of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company or any of the terms, conditions or provisions of the
Articles of Incorporation or By-laws of the Company, or any note, bond,
mortgage, indenture, deed of trust, license, agreement, lease or other
instrument or obligation to which the Company or by which the Company or any of
its properties or assets, or any of the Stockholders may be bound or affected,
except where the violation, conflict, breach, default, termination, or
acceleration would not have a material adverse effect on the financial condition
of the Company; or
(ii) violate any order, writ, injunction, decree, or any
statute, rule or regulation, applicable to the Company or any of the properties
or assets of the Company, except where the violation would not have a material
adverse effect on the financial condition of the Company.
3.03 INVESTMENT REPRESENTATIONS.
(a) The undersigned Purchaser understands that the shares have not
been approved or disapproved by the United States Securities and Exchange
Commission ("SEC") or any state securities agency;
(b) The Purchaser is not an underwriter and is acquiring Lahaina
shares solely for investment for the account of the Purchaser and not with a
view to, or for, resale in connection with any distribution within the meaning
of the federal securities acts or any applicable state securities acts;
(c) The Purchaser understands the speculative nature and risks of
investments associated with Lahaina and confirms that the Lahaina Stock is
suitable and consistent with the Purchaser's investment program and the
Purchaser's financial position enables the Purchaser to bear the risks of this
investment; and that there may not be any public market for the Lahaina Stock
subscribed for herein;
(d) The Lahaina Stock subscribed for herein may not be transferred,
encumbered, sold, hypothecated, or otherwise disposed of to any person, without
the prior opinion of counsel for Lahaina that such disposition will not violate
federal and/or state securities acts. Disposition shall include, but is not
limited to acts of selling, assigning, transferring, pledging, encumbering,
hypothecating, and any form of conveying, whether voluntary or not;
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(e) Neither Lahaina nor the Stockholders are under any obligation to
register or provide an exemption under any federal and/or state securities acts
for any Lahaina Stock or to cause or permit such Lahaina Stock to be transferred
in the absence of any such registration or exemption and that the Purchaser
herein must hold such stock indefinitely until such Lahaina Stock is
subsequently registered under any federal and/or state securities acts or an
exemption from registration is available;
(f) The Purchaser has had the opportunity to ask questions of
Lahaina and the Stockholders and receive additional information from Lahaina and
the Stockholders to the extent that Lahaina and the Stockholders possess such
information, or could acquire it without unreasonable effort or expense
necessary, to evaluate the merits and risks of any investment in Lahaina.
Further, subject to Article IV herein, the Purchaser has been given and
received: (1) All reports filed with the SEC; and (2) An opportunity to question
Stockholders and the appropriate executive officers of Lahaina;
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
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The Stockholders jointly and severally represent and warrant to
Purchaser as follows:
4.01 DUE ORGANIZATION. Lahaina is a duly organized and validly existing
corporation in good standing under the laws of the State of Colorado and has the
corporate power and lawful authority to own its properties and to transact the
business in which it is currently engaged.
4.02 CERTIFICATE OF INCORPORATION AND BY-LAWS. The copies of the Articles
of Incorporation and By-Laws of Purchaser delivered to the Company on or before
the Closing Date are, and on the Closing Date will be, true and complete, and on
the Closing Date will be as in effect on the date hereof.
4.03 POWER AND AUTHORITY.
(a) The Stockholders have the full power to enter into this
Agreement and to carry out its obligations thereunder. No other corporate acts
or proceedings on the part of the Stockholders or Lahaina, except as provided
for under Article V, will be necessary to authorize this Agreement, or the
transactions contemplated thereby, and this Agreement constitutes the valid and
legally binding obligations of the Stockholders, enforceable against the
Stockholders in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to creditors' rights or by the application of equitable
principles when equitable remedies are sought.
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(b) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated thereby, nor compliance by the
Stockholders with any of the provisions thereof, will:
(i) violate, or conflict with, or result in a breach of any
provisions of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Lahaina, any of the terms, conditions or provisions of the Articles of
Incorporation or By-Laws of Lahaina, or any note, bond, mortgage, indenture,
deed of trust, license, agreement or other instrument or obligation to which
Lahaina or the Stockholders are a party, or by which they or any of their
properties or assets may be bound or affected; or
(ii) violate any order, writ, injunction or decree, or any
statute, rule or regulation applicable to the Stockholders or Lahaina.
(c) All of the issued and outstanding shares of capital stock of
Lahaina validly issued, fully paid and nonassessable and owned by Stockholders
are free and clear of any lien, charge, security interest, pledge, or
encumbrance of any kind or nature (any of the foregoing being a "Lien"), and
following the execution of this Agreement, the Purchaser shall have good and
marketable title to such shares, free and clear of all claims, liens and
encumbrances of any nature whatsoever. The stockholders have the unqualified
right to sell, assign, and deliver the Lahaina Stock, and, upon consummation of
the transactions contemplated by this Agreement, the Purchaser will acquire good
and valid title to the Lahaina Stock, free and clear of any liens, claims,
options, charges, and encumbrances of whatsoever nature. The Purchaser
acknowledges that the Lahaina Stock being acquired from the Stockholders will be
Restricted Securities as that term is defined in Rule 144 of the Securities Act
of 1933, as amended (the "Act").
4.04 ACCURACY. All certificates, documents and instruments furnished by
Stockholders or any of Lahaina's directors, officers, employees or shareholders
in connection with this Agreement, or any other transaction contemplated by this
Agreement, are true and complete, and neither this Agreement, nor any
certificate, document or instrument furnished by Stockholders or any of
Lahaina's directors, officers, employees or shareholders in connection with this
Agreement, or any other transaction contemplated by this Agreement, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements included herein or therein not misleading in
light of the circumstances under which they were made.
4.05 BROKERS. Each of the parties represents and warrants that such party
has dealt with no broker or finder with any of the transactions contemplated by
this Agreement, and insofar as such party knows, no broker or other person is
entitled to any commission or finder's fee in connection with any of these
transactions, with the exception of Xxxxxxx XxXxxx, who will be paid by the
Purchaser . The parties agree to indemnify and hold harmless one another against
loss, liability, damage, cost, claim or expense incurred by reason of any
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brokerage commission or finder's fee alleged to be payable because of any act,
omission or statement of the indemnifying party.
4.06 NO PENDING OR THREATENED LEGAL CLAIM. No litigation of any kind
relating to this Agreement or the transaction contemplated herein shall be
pending or threatened and no preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or by any federal or state
governmental or regulatory body, nor any statute, rule, regulation or executive
order promulgated or enacted by any federal or state governmental authority
after the date of this Agreement, which prohibits or affects in any material
adverse way the consummation of the transactions contemplated by this Agreement,
affects in any material adverse way the business properties or condition,
financial or otherwise, of Lahaina or affects in any way the Stockholders's
title to the Shares or the Stockholders's ability to transfer the Shares to the
Purchaser in accordance with this Agreement, shall be in effect, pending or
threatened
4.07 CAPITAL STOCK. The authorized capital stock of Lahaina consists of
Eight Hundred Million (800,000,000) shares of common stock of no par value, of
which Nine Hundred and Ninety-Six Thousand and Five Hundred (996,500) shares are
validly issued and outstanding, fully paid and nonassessable and Ten Million
(10,000,000) shares of no par value of Preferred Stock of which none are issued.
There are Nine Hundred and Ninety-Three Thousand (993,000) Class A warrants
outstanding and Nine Hundred and Ninety-Three Thousand (993,000) Class A
warrants outstanding Nine Hundred and Ninety-Three Thousand (993,000) Class B
warrants outstanding. Pursuant to the Warrant Agreement, the Class A warrants
and the Class B warrants are subject to mandatory redemption at $.001 per
warrant at any time by Lahaina upon 30 days written notice to the warrantholder.
As of the date hereof, there are no bonds, debentures, notes or other
indebtedness, issued or outstanding having voting rights under any
circumstances. There are no options, calls or other rights, agreements or
commitments presently outstanding obligating Lahaina or any shareholder of
Lahaina to issue, deliver or sell shares of its capital stock, or obligating
Lahaina or any shareholder of Lahaina to grant, extend or enter into any such
option, warrant, call or other such right, agreement or commitment. Lahaina does
not own, directly or indirectly, any capital stock or other ownership interest
in any Lahaina, partnership, joint venture or other entity.
4.08 TAXES. Within the times (including extensions) and in the manner
prescribed by law, Lahaina has filed all federal, state and local tax returns
required to be filed by them and have paid in full or made adequate provision
for the periods ending on or before the date hereof, including, without
limitation, those shown to and in compliance in all material respects with the
laws, rules and regulations applicable to such returns. The Stockholders and
Lahaina have not waived any applicable statute of limitations relating to the
assessment of federal, state or local taxes and no examination of any federal,
state or local tax returns of Lahaina have resulted in any action or proceeding
by a government authority for the assessment or collection of taxes and no claim
against Lahaina for additional taxes, penalties or interest is pending or
threatened.
4.09 FINANCIAL STATEMENT. The Stockholders have delivered to the
Purchaser the audited financial statements of Lahaina as of September 30, 1996,
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as filed on Form 10K/A with the SEC, audited by Xxxxx Xxxx, CPA, P.C. Further,
Stockholders have supplied to Purchaser the unaudited financial statements as
contained in filings made with the SEC. Those financial statements are true and
correct and are fair and accurate presentation of the financial condition and
assets and liabilities, (whether accrued, absolute, contingent, or otherwise) of
Lahaina as of the date thereof in accordance with generally accepted principles
of accounting applied on a consistent basis.
4.10 CONTRACTS, OBLIGATIONS AND COMMITMENTS. The Stockholders have
delivered to Purchaser true copies of all material written, and disclosed to
Purchaser all material oral, outstanding contracts, obligations, leases and
commitments of Lahaina entered into connection with and related to the business
of Lahaina, all of which (exclusive of Leases) are listed in EXHIBIT 4.10 (the
"Contracts") (true and correct copies of certain written contracts being
attached thereto). Lahaina is not in violation of or in default under (nor does
there exist any condition which upon the passage of time or the giving of notice
would cause such a violation of or default under) any of the Contracts.
4.11 TITLE TO PROPERTIES: ENCUMBRANCES. Lahaina has good and marketable
title to all of its property and assets, real and personal, tangible and
intangible, including, without limitation, the properties and assets reflected
in the financial statements of Lahaina. All such properties and assets reflected
in that balance sheet have a fair market or realizable value at least equal to
the value thereof as reflected upon the balance sheet, and they are subject to
no mortgage, pledge, lien, conditional sale agreement, encumbrance, or change of
whatsoever nature.
4.12 ACCOUNTS RECEIVABLE. All accounts receivable of Lahaina, whether
reflected in Lahaina's financial statements or otherwise, represents sales
actually made in the ordinary course of business and the reserve for
uncollectability for receivables as reflected in the aforesaid balance sheet is
adequate and was calculated in a way consistent with past practice. There are
currently no accounts receivable of Lahaina.
4.13 UNDISCLOSED LIABILITIES. Except to the extent reflected or reserved
against in the audited balance sheet of Lahaina dated September 30, 1996, as
amended by Lahaina's Form 10-Q filed May 14, 1997, Lahaina as of that date had
no liabilities or obligations of any nature, or absolute, accrued, contingent,
or otherwise due or to become due. Further, the Stockholders do no know or have
any reasonable ground to know of any basis for the assertion against Lahaina of
any liability or obligation as of May 23, 1997, of any nature or in any amount
not fully reflected or reserved against in the financial statements. Lahaina had
no accounts payable as of the hereof.
4.14 DISCLOSURE. The stockholders have disclosed to the Purchaser all
facts material to the assets, prospects and business of Lahaina. No
representation or warranty by the stockholders contained in this Agreement, and
no statement contained in any instrument, list, certificate, or writing
furnished to the Purchaser pursuant to the provisions hereof or in connection
with the transaction contemplated hereby, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
8
statements contained herein or therein not misleading or necessary in order to
provide a prospective purchaser of the business of Lahaina with proper
information as to Lahaina and its affairs.
4.15 SEC FILINGS. Within the times (including extensions) and in the
manner prescribed by law, Lahaina has filed with the SEC all documents required
to be filed under the Act or any other Federal or State Securities Rule or
Regulation that requires the filing of documents relating to, or registration
of, Lahaina Stock.
4.16 LEGEND. The certificates representing the Lahaina Stock delivered
pursuant to this Agreement shall bear a legend in the following form:
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended,
(the "Act"), or any other applicable federal or state
securities act; and are "Restricted Securities" as defined
by Rule 144 of the Act. The shares may not be transferred,
sold, or otherwise disposed of unless; (1) a registration
statement with respect to the shares shall be affected under
the Act or any other federal or state securities act or an
exemption from registration requirements under the Act is
affected, and (2) Lahaina shall have received an opinion of
counsel for Lahaina that no violations of any securities
Acts will be involved in any transfer.
4.17 HOLDING PERIOD. If the Lahaina Stock represented by these
certificates have been held for a period of at least one (1) year and if Rule
144 of the Act is applicable (there being no representations by Lahaina or the
Stockholders that Rule 144 is applicable), then the Purchaser may make sales of
the Lahaina Stock under the terms and conditions prescribed by Rule 144 of the
Act or any other exemption that may be available.
4.18 ABSENCE OF CERTAIN CHANGES. Lahaina has not since September 30,
1996:
(a) Suffered any material adverse change in
financial condition, assets, liabilities, business or
prospects;
(b) Incurred any obligation or liability (with an
absolute, accrued, contingent, or otherwise) other than in
the ordinary course of business and consistent with past
practice;
(c) Paid any claim or discharged or satisfied any
lien or encumbrance or paid or satisfied any liability
(whether absolute, accrued, contingent, or otherwise)
other than liability shown or reflected in Lahaina's
financial statements, in the ordinary course of business
and consistent with past practices;
9
(d) Permitted or allowed any of its assets, tangible
or intangible, to be mortgaged, pledged, or subjected to
any liens or encumbrances;
(e) Written down the value of any inventory or
written-off as uncollectible any notes or accounts
receivable and any portion thereof;
(f) Canceled any other debts or claims or waived any
rights of substantial value, or sought or transferred any
of its assets or properties, tangible or intangible, other
than sales of inventory or merchandise made in the
ordinary course of business and consistent with past
practice;
(g) Made any capital expenditures or commitments for
additions to property, plant, or equipment;
(h) Declared, paid, or set aside for payment to its
stockholders any dividend or distribution in respect of
its capital stock or redeemed or purchased or otherwise
acquired any of its capital stock or any options relating
thereto or agreed to take any such actions;
(i) Made any material change in any method of
accounting or accounting practice.
ARTICLE V
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CONDITION PRECEDENT TO PURCHASER'S OBLIGATION
---------------------------------------------
Purchaser's obligations under this Agreement, including Purchaser's
obligation to close the transaction contemplated by this Agreement, are subject
to the satisfaction, on or prior to Closing, of all of the following conditions
precedent:
5.01 WARRANTS. Stockholders hereby agree to cause the Board of
Directors of Lahaina accept the return of, and cancel all outstanding Class A
and Class B Warrants of Lahaina (the "WARRANTS") owned directly or beneficially
by the Stockholders, totaling Eight Hundred Thousand (800,000) Class A Warrants
and Eight Hundred Thousand (800,000) Class B Warrants, totaling One Million, Six
Hundred Thousand (1,600,000) Warrants.
5.02 CONSENTS AND APPROVALS. As of the Closing Date, the
Stockholders shall have obtained all required approvals, consents or
acquiescence from third parties ("Consents") with respect to the transactions
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contemplated by this Agreement, including, without limitation, the following:
(i) to the extent required, any lenders or lessors possessing security
interests, liens or encumbrances against any of the assets of Lahaina, and (ii)
to the extent required, any vendors or suppliers of Lahaina. The Stockholders
shall have delivered to Purchaser executed copies of all such Consents.
5.03 OTHER DOCUMENTS. The Purchaser shall have received from the
Stockholders all other documents and instruments, duly executed where required
or appropriate, as the Purchaser may reasonably request in connection with the
transaction contemplated by this Agreement, including, but not limited to, the
following:
i. An opinion of Stockholders's legal counsel, as required in
Section 2.02(c), dated as of the Closing Date, attached hereas as EXHIBIT
5.02(I); and
ii. Originals and/or copies of all documents, contracts,
instruments, books, specifications, records and data relating to Lahaina.
The Purchaser shall have the right to waive any of the foregoing.
ARTICLE VI
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INDEMNIFICATION
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6.01 STOCKHOLDER'S INDEMNIFICATION OBLIGATION. The Stockholders, jointly
and severely, agree to indemnify the Purchaser and hold it harmless from and in
respect of any assessment, loss, damage, liability, cost, and expense
(including, without limitation, interest, penalties and reasonable attorneys'
fees) in excess of One Thousand and No/100 Dollars ($1,000.00) in the aggregate,
imposed upon or incurred by the Stockholders resulting from a breach of this
Agreement, representation, or warranty by the Stockholders. Assertion by the
Purchaser of its right to indemnification under this Article VI shall not
preclude the assertion by the non-breaching party of any other rights or seeking
of any other remedies against the breaching party.
6.02 PURCHASER'S INDEMNIFICATION OBLIGATION. The Purchaser agrees to
indemnify the Stockholders and hold them harmless from and in respect of any
assessment, loss, damage, liability, cost, and expense (including, without
limitation, interest, penalties and reasonable attorneys' fees) in excess of One
Thousand and No/100 Dollars ($1,000.00) in the aggregate, imposed upon or
incurred by the Purchaser resulting from a breach of this Agreement,
representation, or warranty by the Purchaser. Assertion by the Stockholders of
their right to indemnification under this Article VI shall not preclude the
assertion by the non-breaching party of any other rights or seeking of any other
remedies against the breaching party.
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ARTICLE VII
-----------
TERMINATION
-----------
This Agreement may be terminated at any time prior to the Closing as
follows, and in no other manner:
(i) by mutual consent of Purchaser and the Stockholders;
(ii) by Purchaser or the Stockholders, if at or before the Closing, any
conditions set forth herein for the benefit of the Purchaser or the
Stockholders, respectively, shall not have been timely met;
(iii) by Purchaser, if the Closing of the transactions contemplated by
this Agreement shall not have occurred on or before May 27, 1997, 5:00 p.m.,
Mountain time, or such later date as may have been agreed upon in writing by the
parties hereto; or
(iv) by Purchaser or the Stockholders, if any representation or warranty
made herein for the benefit of Purchaser or the Stockholders, respectively, or
in any certificate or document furnished to Purchaser or the Stockholders,
respectively, pursuant to this Agreement is untrue in any material respect, or
the Purchaser or any of the Stockholders, respectively, shall have defaulted in
any material respect in the performance of any material obligation herein
contained.
ARTICLE VIII
------------
CONFIDENTIALITY AND PUBLICITY
-----------------------------
8.01 CONFIDENTIALITY. Stockholders will hold in confidence all
information concerning the business, operations, prospects and other matters of
or relating to the Company or Lahaina and will use or disclose such information
only for the purpose of considering and obtaining financing for the transactions
proposed herein. Stockholders further agree that they will not otherwise
disclose any such information to any third party except upon the written consent
of the Company, or except as required by law. If the Closing shall not occur for
any reason, Stockholders will return all such information furnished to it and
all copies thereof to the party that furnished such information. Such obligation
of confidentiality shall not extend to any information which is or has been
generally known to others engaged in the same trade or business as the
furnishing party, or that is or shall be public knowledge through no act or
omission of Purchaser or its directors, officers, employees, professional
advisors or other representatives or as required by a final order of a court or
other governmental agency or authority of competent jurisdiction.
8.02 PUBLICITY. Before, during and after the Closing Date, Stockholders
hereby agrees that, subject at all times to compliance with the law and
generally accepted accounting principles, any proposed press release pertaining
12
to the transactions contemplated herein shall be coordinated with and approved
by all other parties prior to the publication of such press release, which
approval shall not be unreasonably withheld. Subject to the foregoing and
subject at all times to compliance with the law, generally accepted accounting
principles and Purchaser's public disclosure requirements imposed by federal
securities laws, the parties agree to keep confidential and not disclose or
communicate, either directly or indirectly, the amount of the Purchase Price,
the terms of payment of the Purchase Price or the other terms or conditions of
this Agreement, to any third person (other than professional advisors on a
need-to-know basis).
ARTICLE IX
MISCELLANEOUS
9.01 TRANSACTION COSTS
(a) Except as otherwise provided herein, the Purchaser shall pay all
of its costs (including attorneys' fees and other legal costs and expenses and
accountants' fees and other accounting costs and expenses) incurred in
connection with this Agreement
(b) Except as otherwise provided herein, the Company shall pay all
of its costs (including attorneys' fees and other legal costs and expenses and
accountants' fees and other accounting costs and expenses) incurred in
connection with this Agreement
9.02 ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto)
represents the entire understanding and agreement among the parties with respect
to the subject matter hereof, and supersedes all other negotiations,
understandings and representations (if any) made by and among such parties.
9.03 AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
9.04 FURTHER ASSURANCES. The parties hereby agree from time to time to
execute and deliver such further and other transfers, assignments and documents
and do all matters and things which may be convenient or necessary to more
effectively and completely carry out the intentions of this Agreement.
9.05 BINDING EFFECT. All of the terms and provisions of this Agreement,
whether so expressed or not, shall be binding upon, inure to the benefit of, and
be enforceable by the parties and their respective administrators, executors,
legal representatives, heirs, successors and permitted assigns.
13
9.06 HEADINGS. The headings contained in this Agreement are for
convenience of reference only, are not to be considered a part hereof and shall
not limit or otherwise affect in any way the meaning or interpretation of this
Agreement.
9.07 NOTICES. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including
electronic transmission) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, electronically
transmitted, or mailed (airmail if international) by registered or certified
mail (postage prepaid), return receipt requested, addressed to:
TO SELLING STOCKHOLDERS: WITH A COPY TO:
------------------------ ---------------
Xxxxxx X. Xxxxx Xxxxxx X. Xxxxxx, Esq.
0000 X. Xxxx Xxxxxx Xxxx 000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxxxx 00000
TO PAXFORD: WITH A COPY TO:
----------- ---------------
Paxford Investments, X.X. Xxxxxxx, Xxxxxxx, Xxxxxx-Xxxxx
Teek Building & Xxxxxxx, P.A.
Xxxxxx Street 000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxxxx N8160 Xxxx Xxxxxxxxxx, Xxxxxxx 00000
ATTN: Xxxxxx Xxxxxx ATTN: Xxxxxxx X. Xxxxxxx
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date of transmission with
confirmed answer back if by electronic transmission; and(c) on the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed.
9.08 SEVERABILITY. If any provision of this Agreement or any other
agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render the
provision valid and enforceable, such provision shall have the meaning which
renders it valid and enforceable.
9.09 WAIVERS. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if known,
shall not affect the right of such party to require performance of that
provision or to exercise any right, power or remedy hereunder. Any waiver by any
party of any breach of any provision of this Agreement should not be construed
as a waiver of any continuing or succeeding breach of such provision, a waiver
14
of the provision itself, or a waiver of any right, power or remedy under this
Agreement. No notice to or demand on any party in any case shall, of itself,
entitle such party to any other or further notice or demand in similar or other
circumstances.
9.10 EQUITABLE REMEDIES. Purchaser acknowledge that the Company will be
irreparably harmed (and damages at law would be an inadequate remedy) by a
breach or threatened breach of the provisions hereof. Therefore, in the event of
a breach or threatened breach by Purchaser of any provision of this Agreement,
the Company shall be entitled, in addition to all other rights, remedies or
damages to which it is entitled, to injunctions restraining such breach and/or
to a decree for specific performance of the provisions of this Agreement,
without being required to show any actual damage or to post any bond or other
security.
9.11 THIRD PARTIES. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties hereto and their respective
administrators, executors, other legal representatives, heirs, successors and
permitted assigns. Nothing in this Agreement is intended to relieve or discharge
the obligation or liability of any third persons to any party to this Agreement,
nor shall any provision give any third persons any right of subrogation or
action over or against any party to this Agreement.
9.12 ENFORCEMENT COSTS. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provision of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' fees, sales and use taxes, court costs and all
expenses even if not taxable as court costs (including, without limitation, all
such fees, taxes, costs and expenses incident to arbitration, appellate,
bankruptcy and post-judgment proceedings), incurred in that action or
proceeding, in addition to any other relief to which such party or parties may
be entitled. Attorneys' fees shall include, without limitation, paralegal fees,
investigative fees, administrative costs, sales and use taxes and all other
charges billed by the attorney to the prevailing party.
9.13 REMEDIES CUMULATIVE. Except as otherwise expressly provided herein,
no remedy herein conferred upon any party is intended to be exclusive of any
other remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. No single or partial exercise by
any party of any right, power or remedy hereunder shall preclude any other or
further exercise thereof.
9.14 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. Confirmation of execution
by telex or by telecopy or telefax of a facsimile signature page shall be
binding upon any party so confirming.
15
9.15 GOVERNING LAW. This Agreement and all transactions contemplated by
this Agreement shall be governed by, and construed and enforced in accordance
with, the internal laws of the State of Colorado without regard to principles of
conflicts of laws.
9.16 JURISDICTION AND VENUE. The parties acknowledge that a substantial
portion of the negotiations of this Agreement occurred or shall occur in
Colorado. Any civil action or legal proceeding arising our of or relating to
this Agreement shall be brought in the courts of record of the State of Colorado
or the federal courts of record for the State of Colorado. Each party consents
to the jurisdiction of such court in any such civil action or legal proceeding
and waives any objection to the laying of venue of any such civil proceeding in
such court. Service of any court paper may be effected on such party by mail, as
provided in this Agreement, or in such other manner as may be provided under
applicable laws, rules of procedure or local rules.
9.17 PREPARATION OF AGREEMENT. This Agreement shall not be construed more
strongly against any party regardless of who is responsible for its preparation.
The parties acknowledge each contributed and is equally responsible for its
preparation.
9.18 SURVIVAL. All representations, warranties, covenants and agreements
made herein or otherwise made in writing by any party pursuant hereto shall
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby for two (2) years from the Closing Date.
9.19 INDUCEMENT TO TRANSACTION. All representations and warranties made
by any party in this Agreement shall be deemed made for the purpose of inducing
the other party to enter into this Agreement.
9.20 ADVICE OF COUNSEL. EACH PARTY ACKNOWLEDGES THAT IT HAS HAD THE
OPPORTUNITY TO BE ADVISED BY ITS OWN COUNSEL WITH RESPECT TO THE TRANSACTION
GOVERNED BY THIS AGREEMENT.
9.21 DENOMINATIONS. All amounts expressed in this Agreement and all
payments required by this Agreement are in United States dollars.
9.22 COUNTERPARTS. This letter of intent may be executed in counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
9.23 AGENT. Each of the Stockholders, individually, shall have the full
authority to execute all documents and receive said purchase price on behalf of
the other Stockholders, individually. Further, Stockholders hereby authorize and
direct each other to act as their agent in connection with the disbursement of
the monies set forth above and direct the Purchaser to issue its check and
deliver said funds made payable to either Xxxxxx X. Xxxxx or Xxxx X. Xxx.
16
9.24 FINDER'S FEE. The parties that there is one finder in connection
with this transaction, to wit; Xxxxxxx XxXxxx. That Xxxxxxx XxXxxx has agreed to
a fee in the amount of $10,000 which the Purchaser agrees to pay. The parties
hereby represent to one another, pursuant to Section 4.05, that there are no
other finders.
9.25 TIME OF THE ESSENCE Time is of the essence with respect to each
provision of this Agreement which requires that action be taken by either party
within a stated time period, or upon a specified date.
9.26 PRONOUNS. In this Agreement, the use of any gender shall be deemed
to include all genders, and the use of the singular shall include the plural and
vice versa, wherever it appears appropriate from the context.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PURCHASER:
PAXFORD INVESTMENTS, S.A.
.
BY: /s/ Xxxxxx Xxxxxx
------------------------------------
Xxxxxx Xxxxxx, President
STOCKHOLDERS:
/s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxx X. Xxx
------------------------------------
Xxxx X. Xxx
/s/ Xxxxxxx X. Xxx Xxxxx
------------------------------------
Xxxxxxx X. Xxx Xxxxx
17
Exhibit A
Schedule of Stockholders
------------------------
Name of Stockholder Number of Shares
------------------- ----------------
Xxxxxx X. Xxxxx 366,667
Xxxx X. Xxx 366,667
Xxxxxxx X. Xxx Xxxxx 16,666
1
