SHARE PURCHASE AGREEMENT
This Share Purchase Agreement ("Agreement"), dated as of July 23, 2001
among Walter Galdenzi ("Seller"), JNS Marketing, Inc. ("JNS"), and Latinocare
Management, Inc. ("Buyer").
W I T N E S S E T H:
A. WHEREAS, JNS is a corporation duly organized under the laws of the State of
Colorado.
B. WHEREAS, Buyer wishes to purchase 3,270,000 of the outstanding common shares
of JNS free and clear of liens and encumbrances from Seller (the "Purchase
Shares").
C. WHEREAS, prior to the transaction Buyer is not an affiliate of JNS.
D. The shares are being purchased to effectuate a change of control which will
result in a share exchange between shareholders of Buyer and JNS, whereby Buyer
becomes a wholly owned subsidiary of JNS.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
The Consideration
1.1 Subject to the conditions set forth herein, Seller shall sell and Buyer
shall purchase 3,270,000 shares of common stock of JNS. The purchase price for
the shares to be paid by Buyer to Seller is $300,000 (the "Consideration") for
which $25,000 is herewith paid to M.A. Littman, as attorney for Seller, and is
deemed non-refundable consideration to Seller for granting the Share Purchase
Agreement. The balance of the purchase price of $275,000 shall be paid as
follows: cash at closing.
ARTICLE II
Closing and Conveyance of Shares
2.1 The Purchase Shares shall be delivered and conveyed by Seller to Buyer
with duly executed stock powers, upon receipt of the Consideration by Seller.
2.2 Closing hereunder with delivery of the consideration and shares shall
occur on or before August 31, 2001 at 5:00 p.m. PDT ("Closing Date"). Closing
may occur through use of Federal Express and wire transfers.
ARTICLE III
Representations, Warranties and Covenants of Seller as to JNS
Seller and JNS each hereby, jointly and severally, represent, warrant
and covenant to Buyer as follows:
3.1 JNS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado, and has the corporate power
and authority to own or lease its properties and to carry on its business as it
is now being conducted. The Articles of Incorporation and Amendments and Bylaws
of JNS, copies of which have been delivered to Buyer, are complete and accurate,
and the minute books of JNS, copies of which have also been delivered to Buyer,
contain a record, which is complete and accurate in all material respects, of
all meetings, and all corporate actions of the shareholders and Board of
Directors of JNS.
3.2 The authorized capital stock of JNS consists of 50,000,000 shares of
common stock. There are 3,781,455 shares of Common Stock issued and outstanding.
All such shares of capital stock of JNS are validly issued, fully paid and
non-assessable. JNS has no outstanding options, warrants, or other rights to
purchase, or subscribe to, or other securities convertible into or exchangeable
for any shares of capital stock of JNS, or contracts or arrangements of any kind
relating to the issuance, sale or transfer of any capital stock or other equity
securities of JNS except that certain shares must be issued under this agreement
pursuant to Article 9.9 hereof, to which Buyer consents hereby. All of the
outstanding shares of capital stock of JNS have been offered, issued, sold and
delivered in compliance with applicable federal and state securities laws and
none of such securities were, at the time of issuance, subject to preemptive
rights.
3.3 JNS does not own nor has it owned, in the last five years, any
outstanding shares of capital stock or other equity interests of any
partnership, joint venture, trust, corporation, limited liability company or
other entity and there are no obligations of JNS to repurchase, redeem or
otherwise acquire any capital stock or equity interest of another entity.
3.4 This Agreement has been duly authorized, validly executed and delivered
on behalf of the Seller and JNS and is a valid and binding agreement and
obligation of the Seller and JNS enforceable against each Seller, jointly and
severally, and against JNS in accordance with its terms, subject to limitations
on enforcement by general principles of equity and by bankruptcy or other laws
affecting the enforcement of creditors' rights generally, and the Seller and JNS
each have complete and unrestricted power to enter into and, upon the
appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
3.5 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
JNS will conflict with or result in a breach or violation of the Articles of
Incorporation or Bylaws of JNS, or of any material provisions of any indenture,
mortgage, deed of trust or other material agreement or instrument to which JNS
is a party or by which it or any of its material properties or assets are bound,
or of any material provision of any law, statute, rule, regulation, or any
existing applicable decree, judgment or order by any court, federal or state
regulatory body, administrative agency, or other governmental body having
jurisdiction over JNS, or any of its material properties or assets, or will
result in the creation or imposition of any material lien, charge or encumbrance
upon any material property or assets of JNS pursuant to the terms of any
agreement or instrument to which JNS is a party or by which JNS may be bound or
to which any of JNS property is subject and no event has occurred with which
lapse of time or action by a third party could result in a material breach or
violation of or default by JNS.
3.6 There is no claim, legal action, arbitration, governmental
investigation or other legal or administrative proceeding, nor any order, decree
or judgment in progress, pending or in effect, or to the best knowledge of the
Seller threatened against or relating to JNS or affecting any of its assets,
properties, business or capital stock. There is no continuing order, injunction
or decree of any court, arbitrator or governmental authority to which JNS is a
party or by which JNS or its assets, properties, business or capital stock are
bound.
3.7 JNS has accurately prepared and filed all Federal, state and other tax
returns required by law, domestic and foreign, to be filed by it, has paid or
made provisions for the payment of all taxes shown to be due and all additional
assessments, and adequate provisions have been and are reflected in the
financial statements of JNS for all current taxes and other charges to which JNS
is subject and which are not currently due and payable. None of the Federal
income tax returns of JNS have been audited by the Internal Revenue Service or
other foreign governmental tax agency. JNS has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether federal or state)
pending or threatened against JNS for any period, nor of any basis for any such
assessment, adjustment or contingency.
3.8 Seller are the legal, beneficial and registered owners of the Purchase
Shares, free and clear of any liens, charges, encumbrances, voting trusts,
shareholder agreements or rights of any kind granted to any person or entity, or
any interest in or the right to purchase or otherwise acquire any of the
Purchase Shares from the Seller at any time upon the happening of any stated
event and may transfer such shares without the consent of any third party. Upon
closing of the transactions contemplated hereby, the Buyer will acquire all
right, title and interest in the Purchase Shares, free and clear of all liens,
charges or encumbrances except Seller's lien and will have all of Seller's
entire right, title and interest in and to the Purchase Shares.
3.9 JNS has delivered to Buyer audited financial statements dated
September 30, 2000 and un-audited financial statements for the period ended
March 31, 2001. All such statements, herein sometimes called "JNS Financial
Statements" are complete and correct in all material respects and, together with
the notes to these financial statements, present fairly the financial position
and results of operations of JNS for the periods indicated. All financial
statements of JNS have been prepared in accordance with generally accepted
accounting principles.
3.10 As of the date hereof, JNS and the Seller hereby, jointly and
severally, represent and warrant that all outstanding indebtedness of JNS is as
shown on the financial statements and all such indebtedness, if any, will be
paid or released by Seller at Closing hereunder.
3.11 Since the dates of the JNS Financial Statements, there have not
been any material adverse changes in the business or condition, financial or
otherwise, of JNS. JNS does not have any liabilities, commitments or
obligations, secured or unsecured except as shown on updated financials (whether
accrued, absolute, contingent or otherwise).
3.12 JNS is not a party to any contract performable in the future except to
issue shares set forth in 7.9 hereof.
3.13 The representations and warranties of the Seller and JNS shall be true
and correct as of the date hereof.
3.14 JNS has delivered to Buyer, all of its corporate books and records for
review.
3.15 JNS has no employee benefit plan in effect at this time.
3.16 No representation or warranty by JNS or the Seller in this
Agreement, or any certificate delivered pursuant hereto contains any untrue
statement of a material fact or omits to state any material fact necessary to
make such representation or warranty not misleading.
3.17 Seller or JNS have delivered, to Buyer true and correct copies of
a Form 10KSB filed with by the Securities and Exchange Commission ("SEC") for
the year ended September 30, 2000 and each of its other reports to shareholders
filed with the SEC for the period ended June 31, 2001. JNS is a registered
company under the Securities Exchange Act of 1934, as amended.
3.18 JNS has duly filed all reports required to be filed by it under
the Securities Exchange Act of 1934, as amended (the "Federal Securities Laws").
No such reports, or any reports sent to the shareholders of JNS generally
contained any untrue statement of material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements in such
report, in light of the circumstances under which they were made, not
misleading.
3.19 The Seller has not received any general solicitation or general
advertising regarding the shares of Buyer's common stock comprising the
Consideration.
3.20 JNS has conducted no business in the last two years to date, has
incurred no liabilities except as shown on the financial statements and has no
contract or open account affiliations whatsoever.
ARTICLE IV
Termination of Representation and
Warranties and Certain Agreements; Indemnification
4.1 The respective representations and warranties of the parties hereto
shall survive this Agreement for three years and the covenants shall survive
hereafter.
4.2 The right to indemnification, payment of Damages (as defined in section
4.5) or other remedy based on any representation, warranty, covenant or
obligation of a party hereunder shall not be affected by any investigation
conducted with respect to, or any knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and delivery of
this Agreement, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant or obligation.
4.3 The waiver of any condition to a party's obligation to consummate the
transactions contemplated hereunder, where such condition is based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representation, warranty, covenant or obligation.
4.4 JNS and each of the Seller, jointly and severally, shall indemnify and
hold harmless the Buyer (the "Buyer Indemnified Persons") for, and will pay to
the Buyer Indemnified Persons, the amount of, any loss, liability, claim, damage
(including, without limitation, incidental and consequential damages), cost,
expense (including, without limitation, interest, penalties, costs of
investigation and defense and the reasonable fees and expenses of attorneys and
other professional experts) or diminution of value, whether or not involving a
third-party claim (collectively, "Damages"), directly or indirectly arising
from, attributable to or in connection with:
(a) any representation or warranty made by Seller and JNS in this
agreement or any of Seller's and JNS closing deliveries, that is,
or was at the time made, false or inaccurate, or any breach of, or
misrepresentation with respect to, any such representation or
warranty; and
(b) any breach by any of the Seller or JNS of any covenant, agreement
or obligation of the Seller contained in this agreement.
(c) any claims or litigation relating to JNS now pending or threatened
or which may hereafter be brought against Buyer and/or JNS based
upon events occurring prior to the date hereof and not
attributable to the acts of the Buyer.
(d) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, losses, liabilities and reasonable
legal and other expenses incident to any of the foregoing.
4.5 The Seller and JNS shall have no liability for indemnification with
respect to any representation or warranty, unless, on or before the [third]
anniversary of the date hereof, the Buyer notifies the Seller of a claim
specifying the basis thereof in reasonable detail to the extent then known by
the Buyer. A claim with respect to any covenant, agreement or obligation
contained in this agreement, may be made at any time without any time
limitation.
4.6 Promptly after receipt by an indemnified party of written notice (the
"Notice of Claim") of the commencement of any action, suit or proceeding against
it, or written threat thereof, such indemnified party will, if a claim is to be
made against an indemnifying party under either of said sections, as applicable,
give notice to the indemnifying party of the commencement of such action, suit
or proceeding. The indemnified party shall furnish to the indemnifying party in
reasonable detail such information as the indemnified party may have with
respect to such indemnification claims (including copies of any summons,
complaint or other pleading which may have been served on it and any written
claim, demand, invoice, billing or other document evidencing or assenting the
same). Subject to the limitations set forth in this section, no failure or delay
by the indemnified party in the performance of the foregoing shall reduce or
otherwise affect the obligation of the indemnifying party to indemnify and hold
the indemnified party harmless except to the extent that such failure or delay
shall have materially and adversely affected the indemnifying party's ability to
defend against, settle or satisfy any action, suit or proceeding the claim for
which the indemnified party is entitled to indemnification hereunder. The
foregoing shall not apply to the extent inconsistent with the provisions of
section 4.8 relating to Proceedings.
4.7 If the claim or demand set forth in the Notice of Claim given by the
indemnified party is a claim or demand asserted by a third party, the
indemnifying party shall have 30 days after the Date of Notice of Claim to
notify the indemnified party in writing of its election to defend such third
party claim or demand on behalf of the indemnified party (the "Notice Period");
provided, however, that the indemnified party is authorized to file any motion,
answer or other pleading which it deems necessary or appropriate to protect its
interests during the Notice Period. If the indemnifying party elects to defend
such third party claim or demand, the indemnified party shall make available to
the indemnifying party and its agents and representatives all records and other
materials which are reasonably required in the defense of such third party claim
or demand and shall otherwise cooperate (at the sole cost and expense of the
indemnifying party) with, and assist (at the sole cost and expense of the
indemnifying party) the indemnifying party in the defense of, such third party
claim or demand, and so long as the indemnifying party is diligently defending
such third party claim in good faith, the indemnified party shall not pay,
settle or compromise such third party claim or demand. If the indemnifying party
elects to defend such third party claim or demand, the indemnified party shall
have the right to control the defense of such third party claim or demand, at
the indemnified party's own expense. If the indemnifying party does not elect to
defend such third party claim or demand or does not defend such third party
claim or demand in good faith, the indemnified party shall have the right, in
addition to any other right or remedy it may have hereunder at the indemnifying
party's expense, to defend such third party claim or demand.
4.8 The term "Date of Notice of Claim" shall mean the date the Notice of
Claim is effective pursuant to section 5.5 of this Agreement.
4.9 A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
4.10 Any legal action or proceeding with respect to this Agreement or any
matters arising out of or in connection with this Agreement or the transactions
contemplated hereby or the documents executed and delivered in connection
herewith, and any action for enforcement of any judgment in respect thereof may
be brought in the courts of the State of Colorado or of the United States of
America for the District of Colorado, and, by execution and delivery of this
Agreement, the parties each hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts and appellate courts thereof. The parties irrevocably consent to service
of process out of any of the aforementioned courts in any such action or
proceeding in accordance with the notice provisions set forth in Section 5.5.
The parties each hereby irrevocably waive any objection that it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or the
transactions contemplated hereby or the documents execute and delivered in
connection herewith brought in the courts referred to above and hereby further
irrevocably waive and agree, to the extent permitted by applicable law, not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum. Nothing herein shall
affect the right of any party hereto to serve process in any other manner
permitted by law.
ARTICLE V
Procedure for Closing
5.1 At the Closing Date, the purchase and sale shall be consummated
after satisfaction of all conditions precedent set forth in Article VI common
stock certificates of JNS being delivered by Seller, duly executed, for
3,270,000 shares of common stock to Buyer and the delivery of the Consideration
to Seller from Buyer, together with delivery of all other agreements, stock
powers, warranties, and representations set forth in this Agreement.
ARTICLE VI
Conditions Precedent to the
Consummation of the Purchase
The following are conditions precedent to the consummation of the
Agreement on or before the Closing Date:
6.1 Seller shall have performed and complied with all of their
respective obligations hereunder which are to be complied with or performed on
or before the Closing Date.
6.2 No action, suit or proceeding shall have been instituted or shall
have been threatened before any court or other governmental body or by any
public authority to restrain, enjoin or prohibit the transactions contemplated
herein, or which might subject any of the parties hereto or their directors or
officers to any material liability, fine, forfeiture or penalty on the grounds
that the transactions contemplated hereby, the parties hereto or their directors
or officers, have violated any applicable law or regulation or have otherwise
acted improperly in connection with the transactions contemplated hereby, and
the parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit or proceeding raises substantial questions of law or
fact which could reasonably be decided adversely to any party hereto or its
directors or officers.
6.3 The representations and warranties made by BUYER and SELLER in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Closing Date, except to the extent that such
representations and warranties may be untrue on and as of the Closing Date
because of changes caused by transactions suggested or approved in writing by
BUYER.
6.4 All outstanding liabilities of JNS shall have been paid and
released at or prior to closing.
6.5 Any obligation of Seller and JNS hereunder is specifically
conditioned upon: a) Buyer having executed the Share Exchange Agreement attached
hereto as Exhibit A; b) the delivery of all executed documents necessary to
carry out the Share Exchange Agreement attached hereto with Shareholders of LMI;
and c) the completed closing and Share Exchange under said Agreement, occurring
simultaneously with the Closing hereunder.
6.6 Buyer agrees, as an inducement to seller to enter into this
agreement, to the prior adoption of a "poison pill" resolution by the Board of
Directors of JNS and which shall be a continuing covenant surviving the closing
under this Agreement, providing for a two year period within which no actions
will be taken by the Company or its shareholders which would reverse split,
consolidate, reorganize, merge, or in any way reduce the number of outstanding
shares of stock of JNS or any successor company (which shall be known as the
"no-reverse covenant"). In the event that the "no-reverse covenant" is breached,
the resolution and this covenant shall provide that it shall trigger a grant by
JNS of an immediate mandatory dividend to each shareholder as of August 31, 2001
or the day prior to closing, whichever is earlier, for each share owned after
the reverse split, consolidation, merger, or reduction of outstanding shares of
a number of shares inversely proportional to the amount of the reverse split,
except that shares subsequently retired to treasury or cancelled of record shall
be excluded from the dividend.
ARTICLE VII
Termination and Abandonment
7.1 Anything contained in this Agreement to the contrary
notwithstanding, the Agreement may be terminated and abandoned at any time prior
to or on the Closing Date:
(a) By mutual consent of parties;
(b) By Seller or Buyer, if any condition set forth in Article VI
relating to the other party has not been met or has not been
waived;
(c) By Seller or Buyer, if any suit, action, or other proceeding
shall be pending or threatened by the federal or a state
government before any court or governmental agency, in which
it is sought to restrain, prohibit, or otherwise affect the
consummation of the transactions contemplated hereby;
(d) By any party, if there is discovered any material error,
misstatement or mission in the representations and warranties
of another party; or
(e) By the Seller, if the Closing does not occur, through no
failure to act by Seller, on August 31, 2001, or if Buyer
fails to deliver the consideration.
7.2 Any of the terms or conditions of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, by action taken
by its Board of Directors provided; however, that such action shall be taken
only if, in the judgment of the Board of Directors taking the action, such
waiver will not have a materially adverse effect on the benefits intended under
this Agreement to the party waiving such term or condition.
ARTICLE VIII
Continuing Representations and
Warranties and Covenants
8.1 The respective representations, warranties, and covenants of the
parties hereto and the covenants and agreements of the parties hereto shall
survive after the closing under this Agreement in accordance with the terms
thereof.
ARTICLE IX
Miscellaneous
9.1 This Agreement embodies the entire agreement between the parties,
and there have been and are no agreements, representations or warranties among
the parties other than those set forth herein or those provided for herein,
except that a companion document, the Share Exchange Agreement, has been
executed concurrently which contains numerous warranties and representations.
9.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument.
9.3 All parties to this Agreement agree that if it becomes necessary or
desirable to execute further instruments or to make such other assurances as are
deemed necessary, the party requested to do so will use its best efforts to
provide such executed instruments or do all things necessary or proper to carry
out the purpose of this Agreement.
9.4 This Agreement may not be amended except by written consent of
both parties.
9.5 Any notices, requests, or other communications required or
permitted hereunder shall be delivered personally or sent by overnight courier
service, prepaid, addressed as follows:
To Seller: Walter Galdenzi
17776 Tomball Parkway, #31A
Houston, TX 77064
To Buyer: Latinocare Management, Inc.
4150 Long Beach Boulevard
Long Beach, California 990807
Copy to:
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
9.6 No press release or public statement will be issued relating to the
transactions contemplated by this Agreement without prior approval of Buyer and
Seller. However, JNS may issue at any time any press release or other public
statement it believes on the advice of its counsel it is obligated to issue to
avoid liability under the law relating to disclosures, but the party issuing
such press release or public statement shall make a reasonable effort to give
the other party prior notice of and opportunity to participate in such release
or statement.
9.7 This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement. This Agreement may be executed by facsimile signatures.
9.8 This Agreement shall be governed by and construed in accordance
with and enforced under the laws of the state of Colorado applicable to all
agreements made hereunder. Venue and jurisdiction for any legal actions
hereunder shall be District Court in and for the City and County of Denver,
Colorado.
9.9 Concurrent with closing under this Agreement, Buyer shall be authorized
to issue JNS shares for services rendered as follows:
a. 20,000 shares (Registered under S-8) to Henry F. Schlueter for
legal services rendered to JNS in 1998-1999, and 50,000 shares registered under
S-8 to M.A. Littman for legal services rendered in 2001 for securities filings
and contracts.
b. 50,000 shares (restricted) to Jarrold Bachmann, and 95,000
shares (restricted) to Steve Naremore for consulting services rendered in
structuring the transaction.
c. Gencorp Enterprises, Inc. 100,000 shares of restricted stock.
9.10 From the initial consideration paid to Seller at Closing
hereunder, Seller agrees that the following cash fees shall be paid: $35,000 to
M.A. Littman for legal services and costs for JNS relating to the transaction
(less credit of $25,000) and $40,000 to Jarrold Bachmann for consulting services
rendered. These fees to be paid out of proceeds received by JNS, all payments
are to come directly from JNS and are not the responsibility of LatinoCare
Management Corporation to pay or assure payment thereof.
9.11 Concurrent with the execution hereof, Buyer shall provide a "Cold
Comfort" letter from its Auditors that the Auditors can and will deliver audited
financial statements of Buyer pursuant to Reg. SB of the Securities Exchange Act
of 1934, on or before 45 days after closing which audit is in accordance with
GAAP standards.
9.12 In the event of a breach or default of this Agreement or any of
the continuing covenants hereunder which results in a party, or any affected
shareholder who is a beneficiary of a surviving or continuing covenant,
commencing legal action the prevailing party in such legal action shall be
entitled to an award of all legal fees and costs of the action, against the
non-prevailing party.
IN WITNESS WHEREOF, the parties have executed this Agreement this 23rd day
of July, 2001.
SELLER:
/s/ Walter Galdenzi
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Walter Galdenzi
JNS Marketing, Inc.
By: /s/ Walter Galdenzi
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BUYER:
Latinocare Management, Inc.
By: /s/ Jose J. Gonzalez
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