SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported): March 14, 2001
TRIDENT SYSTEMS INTERNATIONAL INC
(Exact name of Registrant as specified in Charter)
Nevada 000-30769 87-0419231
(State or Other Jurisdiction (Commission (IRS Employer)
of Incorporation) File Number) Identification No.)
27752 Greenfield Drive, Laguna Hills CA
(Address of Principal Executive Offices)
92653
(Zip Code)
(949) 643-8585
Registrant's Telephone Number, including Area Code
Toner Systems International, Inc.
4485 Abinadi Road, Salt Lake City, Utah 84107
(Former name or former address, if changed since last report)
ITEM 2. Acquisition of Assets
On March 12, 2001, the Registrant commenced negotiations with Salient
Cybertech, Inc. (Salient), with a view of acquiring Futronix, Inc., a
wholly owned subsidiary of Salient. It was agreed that until a deal was
struck, all negotiations would remain confidential, as any news released
might effect the market for the shares of the Registrant or Salient in a
manner that might be detrimental to the shareholders of the Registrant or
Salient should the proposed purchase not be consummated.
On March 19, 2001, upon all parties having completed the due
diligence requirements they felt necessary, Futronix, Inc. was purchased by
the Registrant, subject to Board approval by the Board of Directors of each
company. The transaction was valued at $8,000,000. The terms of the
transaction were as follows:
1) Salient received 400,000 common shares of the Registrant, said shares
to be restricted for a two-year period, and subject to a 12-month buy-back
option at $11.00 per share. As part of the transaction, Salient had to
infuse $600,000 into Futronix by March 20, 2001. The closing price of the
said shares was $21 1/16 on March 19, 2001.
2) $150,000 are to be paid by Registrant to Salient on or before March
26, 2001
3) $75,000 are to be paid to Salient in bi-weekly increments for the
next 12 weeks following the initial payment.
4) A further two installments of $100,000 are to be paid to Salient on
or before each of May 15, 2001 and May 30, 2001.
5) In the event any payment is not made on time, and the default is not
cured within 10 days of the date such payment is due, Salient may rescind
this contract and keep 100% of all monies it has received prior to the date
of such rescission as liquidated damages. In the event Salient rescinds the
agreement, all shares given by each party to the other will be returned. In
the event that Salient chooses to rescind the agreement, the provisions of
this paragraph shall be Salient's sole remedy.
6) In the event the Registrant defaults, Salient may register such
number of shares of the Registrant it received as are necessary to fully
liquidate any sums due to Salient pursuant to the agreement.
7) Registrant agreed to abide by the terms of the agreement between
Salient and Futronix, provided, however, that Salient agreed to pay any
bonus shares required pursuant to the said agreement, in common shares of
Salient, for an 18 month period.
8) Registrant agreed to assign all accounts receivable of Futronix to
Salient until all amounts due to Salient as specified in the agreement were
paid in full. Further, until all payments due Salient are paid in full,
Registrant may not sell, hypothecate, or otherwise encumber any of the
assets of Futronix in any manner whatsoever, except with the explicit
written consent of the Salient. As well, the Registrant may not sell,
hypothecate, or otherwise encumber any purchase order of Futronix, except
with the explicit written consent of Salient until all sums due to Salient
have been paid in full.
DESCRIPTION OF THE CORPORATION ACQUIRED
FUTRONIX, INC., a Florida Corporation incorporated in March of 1988, made
its entry into the electronic contract manufacturing industry in March of
1988 providing assembly labor to a consignment base. Consignment is an
industry term where the customers supplied the components and FUTRONIX
provides the equipment and labor to assemble and test the products. This
concept has relatively low capital risk because the raw components typically
make up about 70% of the cost of an electronic assembly. This consignment
work continued through 1996, with the exception of a few small "turn-key"
jobs. Turnkey is a concept that requires components and labor to be provided
to complete a finished Printed Circuit Assembly (PCA) for the customers
based on their drawings and specifications.
In 1997, a major transition to "turn-key" was accomplished, resulting in
35% of sales in 1997 being "turn-key" as opposed to less than 10% in 1996.
In 1998 turnkey sales accounted for 75% of sales. With turnkey work,
Futronix sets the production schedules based on longer term Purchase Orders.
The transition to turn key work required the development of a purchasing
department, Materials Requirement Planning and related materials tracking,
stocking, and issuing systems. An NT based SQL server with over 30 on line
stations was installed supporting the following control and tracking
databases:
- - Shop control that tracks the status of all work-in-process (WIP)
- - Purchase order system that verifies and controls all purchases made,
verifies receipt of ordered items and tracks vendor quantity in three
categories.
- - Inventory control that logs receipt, and issuance of all materials used
in all value added services.
- - Materials Requirement Planning (MRP) that can generate forward looking
reports for future material needs, based on current schedules, orders,
inventory, work-in process.
- - Return stock (RTS) and scrap. The MRP system assures that when a job is
scheduled, the components to complete the job are on hand when needed.
- - Quality reporting that provides process status, process yield, vendor
status, and other quality reporting as required by ISO9002 policy.
- - Schedule control that allows for efficient workload and leveling.
- - Bill of material (BOM) control and verification that ensures every
component used in a customer's product is approved and correct.
- - Job cost module that utilizes the shop floor tracking system, materials
and labor utilization to feed back costing information to management for
quoting and resource allocation purposes.
The controls enumerated above were implemented to provide full turn-key
services and to meet the requirements for ISO9002 quality standard
certification. The substantial costs to the company to implement this system
resulted in reduced earnings in 1997 and 1998. However, the company is now
poised to facilitate larger turn-key accounts. In the first quarter of 1998,
FUTRONIX received ISO9002 quality standard certification from Underwriters
Laboratories (UL), without a single nonconformance. As a result of
operating in a solid operable quality system, the Company increased its
first pass yield (FPY) from 70% to currently better than 97% for any
individual process.
Facilities
FUTRONIX, INC. is located in Suncoast Industrial Park, Homosassa, Florida
and presently occupies two main buildings, and several support and storage
buildings totaling 35,000 sq. ft, owned by the Registrant. Approximately
40 acres of adjacent industrial property is owned by the Registrant and is
available for expansion as required. All manufacturing facilities are
provided to Futronix by the Registrant.
Management is of the opinion that Futronix' current facilities are adequate
for its immediate needs. As the Company's business increases, additional
facilities may be required. The current facilities are expected to suffice
until after December 31, 2001.
Products and Services
FUTRONIX INC is a high quality Electronic Contract Manufacturer (ECM)
providing manufacturing, test, prototyping, and product development and
support for a diverse set of market segments. Printed circuit assemblies
and box build products manufactured in medium to high volume supplied to
OEM's for commercial, industrial, medical, and telecommunication
applications. As an ECM, Futronix reviews our customers' product
specifications and develops and implements a plan to fabricate and test the
product (typically a Printed Circuit Assembly), that meets or exceeds the
functional and quality specifications. This plan typically calls for
continual improvement that will reduce the costs while maintaining quality.
A percentage of the realized cost savings, typically 50%, are passed on to
the customer.
Product Description
Printed Circuit Assembly (PCA): Futronix utilizes automated, high-speed
assembly equipment that can be used or adapted for most any type of PCA
manufacturing. PCA types include Surface Mount Technology (SMT),
conventional through whole technology, mixed technology, and mechanical
fabrication and assembly. Turnkey, consignment or combinations of these
services are offered. The Company also provides design and product
development, along with design for test and manufacturability services for
customers who do not have the personnel or expertise to fulfill this
requirement.
Box build at multi levels from finished products bulk shipped in retail
dress box packing shipped direct to the distribution center, retail outlet
or even to the end user. Stocking finished goods, warranty return service,
invoicing and payment processing are additional services Futronix can offer.
Competition
FUTRONIX is small to mid size in comparison to the top ECM's with sales
over $100 million. The Company is able to be competitive in bidding for
contracts based on its capability, reputation and its location in a plentiful
and favorable labor market. The Company has had to turn down substantial
contracts in the past due to limitations in its ability to purchase
inventory of components in advance for large contracts. The excess capacity
of our production facility allows us to immediately respond to increases of
current customer needs as well as the influx of new business. This surplus
capacity allows Futronix to be very competitive when responding to requests
for quotations. Since the fixed overhead is covered by current work, any
additional work will lower our burdened labor rate, thus allowing aggressive
quotations at the same time increasing margins.
Technology
Technology is the basis of our business and it's growth. Electronic
circuits are becoming more and more prevalent in every day life. Mechanical
products of just a few years ago now have electronic circuits that control,
monitor, indicate, and make the product easier to use. From toys to
automobiles, appliances to computers, consumer, commercial and industrial
products have included technology as a tool to gain a competitive edge. As
technology becomes more specialized Original Equipment Manufacturers (OEM)
are focusing more on leading edge design and outsourcing the manufacturing
to ECMs. In addition, as component complexity grows, OEMs are finding the
capital expense for the specialized equipment and assembly techniques
outweigh the cost to outsource in many applications. Futronix has been,
management believes, a leader in technology advancement to meet these needs.
Futronix co-developed a process with AIM solderpastes for intrusive reflow
that cut 60% of the assembly costs for a customer's computer product. The
process called Step Soldering Aids "Intrusive" Reflow was published in the
September 1996 issue of SMT magazine.
Future Products
Futronix sees the mutual advantages of consolidating the diversified needs
of an OEM into a "one stop" contract manufacturing enterprise where box
build products are leading the growth in our industry. Expansion plans to
meet these growing requirements include an injection molding facility and
laminated keypad fabrication. Both of these products/services fit well in
our industry and are used in the vast majority of Box build products.
Market Analysis Summary
According to Manufacturing Market Insider (MMI) September 1997, the ECM
market is estimated to be nearly $90 billion in 1998. The article sited the
trend of OEM's to outsource manufacturing to the ECM industry:
"Electronics contracting manufacturing should continue its growth of nearly
20 percentage points more than the overall electronic equipment industry
growth". According to Contracting Manufacturing from a Global Perspective,
a recent report from Technology Forecasters, based on a study of 149
electronic contract manufacturers and their customers. "There's no holding
back in evidence - OEM's demand for manufacturing cost reduction, new
assembly techniques, global manufacturing, and outsourcing of complete
systems contributes to the 25 percent global compound annual growth rate from
1996 through 2001," said Pamila J. Gordon, management consultant and
president of Technology Forecasters.
Strategy and Implementation Summary
Futronix Inc. strategy for growth consists these key elements:
- - To maintain focus on key competencies such SMT and mixed technology PCA
assembly, and expand our involvement in box build products, which represents
the ECM markets fastest growing segment.
- - To build and maintain long term relationships with our customers. To
become a partner, not a vendor to OEM's by providing not only a product
delivered on time, but include a service that will continually provide cost
reduction actions and product improvements.
- - To continually improve our internal systems to provide our customers the
highest quality in the industry. Quality not only in the products we
manufacture, but also in communications, information, and all other services
offered.
Sales Strategy
The key to growth is an effective marketing plan utilizing qualified,
experienced marketing personnel. As a concurrent effort, we are putting
emphasis on key vendor relations to provide quick response to Requests for
Quotation (RFQ). This not only takes coordination with vendors regarding
component pricing, but also our internal labor costing estimates based on
acquiring the new work. We have budgeted for several internal cost tracking,
forecasting and compilation programs and systems. These will be continually
upgraded to maintain the capability to provide a "snapshot" of what
operations would be if the quotation were accepted.
Additionally, we will be directing our marketing efforts towards a network
of Futronix representatives throughout the US and other regions. These
Independent representatives are well versed in the industry and have focused
local knowledge of prospective customers. We will be focusing on our core
competencies, which are medium to high volume PCA's with an emphasis on SMT.
Management
Nevin C. Jenkins (42), PRESIDENT: Mr. Jenkins, president of Futronix, Inc.,
manages the company on a day-to-day basis. His background gives him a wealth
of experience to draw upon in guiding Futronix in its future growth. In 1976,
a Vice President of Diversified Industries, Mr. Jenkins headed up the
national marketing effort that grew from less than a $1M in 1976 to over
$10M by 1978. He sold his interest in Diversified in 1979 to form his own
company, Med-E-Lert. Based on his knowledge of both security system
electronic capabilities and market demands, he developed the Personal
Emergency Response System (PERS), which became nationally famous with the
slogan "Help, I've fallen and can't get up". In 1985 Mr. Jenkins sold
the marketing rights for the PERS to Life Call Systems. He retained the
manufacturing rights for the PERS and in 1986 moved the production facilities
from Clearwater, Florida to Homosassa, Florida, where he built a
manufacturing plant for high volume production of the PERS base units and
supporting devices.
In 1988 he partnered with Rande Newberry and formed the electronic
manufacturing company - FUTRONIX, INC. The PERS manufacturing plant was sold
and the company's operations were moved to the larger facilities where
FUTRONIX, INC. is today.
Rande W. Newberry (43), VICE PRESIDENT: Mr. Newberry has brought to Futronix
the electronic knowledge needed for expansion in the electronic contract
manufacturing business. Mr. Newberry holds a BSEE from the University of
South Florida, as well as associate degrees in Business Administration (ASBA)
and Electronic Engineering Technology (ASEET). From 1983 to 1987 he worked
from Senior Engineering Technician to Engineer at Honeywell's Tampa, Florida
operations. In 1988 he became an independent contractor for Honeywell until
joining with FUTRONIX, INC.
Robert J. Fountaine - General Manager, Futronix, Inc. Mr. Fountaine has 20
years senior and executive management experience in sales, marketing and
general management in both the Electronics contract manufacturing and
electronic component distribution industries. Prior experience includes
positions with Avnet, Flextronics, SGI and most recently Future Electronics,
where Robert increased sales almost five-fold and negotiated the purchase of
a Honeywell facility in Phoenix that resulted in a 5 year, $100million
outsourcing contract. As a Regional Manager with Avnet, Mr. Fountaine's team
sales grew from $14million to $30million in 3 1/2 years and as District
Manager for Florida's West coast his sales went from $35million to $49million
in the first fiscal year. Mr. Fountaine has continually demonstrated
repeated success in the development, growth and profitability of creative
management, marketing and supply chain solutions.
Robert Garrett, Chief Financial Officer. Mr. Garrett has 35 years experience
in accounting, along with prior teaching at University Of South Florida for
tax and accounting. Mr. Garrett's accounting firm, W.R. Garrett CPA was
utilized by Futronix since incorporation. Mr. Garrett is a certified public
accountant and holds a Master Degree in accounting from Nova Southeastern
University and a bachelor's degree in accounting from University Of Florida.
Sources and Availability of Raw Materials and the Names of Principal Suppliers
All of our supplies for manufacture are generic in nature, making us
independent of any major supplier or suppliers. All raw materials utilized by
us are always readily available in the marketplace.
Dependence on One or a Few Major Customers
Currently we are not dependent on one or a few major customers. It
must be noted that approximately 60% of our sales over the current year were
to 5 customers. It is anticipated that this percentage will drop to below 25%
over the next fiscal year.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts, Including Duration
Futronix owns no Patents in its own right
No other patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts are used by Futronix.
Need for Any Government Approval of Principal Products or Services
None.
Effect of Existing or Probable Governmental Regulations on the Business
Futronix is unaware of any probable regulation of its business, other
than as will apply to businesses in general.
Estimate of the Amount Spent During Each of the Last Two Fiscal Years on
Research and Development Activities, and if Applicable the Extent to Which
the Cost of Such Activities are Borne Directly by Customers
During the past two years management believes Futronix spent
approximately $150,000 on R&D, none of which will be directly borne by
Futronix' customers, but all of which will be indirectly borne by the customer
as reflected in the price of the products of Futronix, a portion of which will
be allocated to the amortized cost of development.
Costs and Effects of Compliance with Federal, State and Local Environmental
Laws
Futronix is not aware of any expenses directly attributable to
compliance with federal, state or local environment laws or regulations.
Number of Total Employees and Number of Full Time Employee
Futronix has 76 full time employees, and 3 part time employees.
Equipment
The fixed assets of Futronix, as valued for accounting purposes have
a depreciated book value of $3,000,000, and an non-depreciated book value of
$4,399,000. The assets are principally comprised of manufacturing equipment,
computers, computer equipment, and software, along with office furniture.
ITEM 6 Resignation of Directors
Stan J. H. Lee and Daniel Ryu resigned from the Board of Directors
and Officers, effective March 14, 2001.
ITEM 7
Financial Statements and Exhibits
Item Page
(a) Financial Statements of Business Acquired
all audited statements will be filed by amendment within 60 days of the date
of this Current Report.
(c) Exhibits
Purchase and Sales Agreement Page 10
27. Financial Data Schedule:
.1 The Financial Data Schedule will be filed by amendment within 60 days
of the filing of this Current Report.
SIGNATURES:
Pursuant to the requirements of the Securities Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
March 20, 2001.
Trident Systems International, Inc.
By:/s/Alan Sporn/s/
_____________________
Alan Sporn, Chief Executive Officer
STOCK PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 19TH day of March, 2001
BETWEEN:
Salient Cybertech, Inc.
(hereinafter called the "Seller")
OF THE FIRST PART
A N D:
Trident Systems International, Inc.,
a corporation incorporated under the laws of the State of Nevada
(hereinafter called the "Purchaser")
OF THE SECOND PART
WHEREAS, the Seller controls and represents all of the authorized
issued and outstanding shares of Futronix, Inc., (herein referred to as the
"Corporation"), and;
WHEREAS, the Purchaser desires to acquire all of the outstanding
shares of the Corporation's Common Stock, and;
NOW, THEREFORE, THIS AGREEMENT WITNESSETH THAT, in
consideration of the covenants, agreements, warranties, and payments herein
set out and provided for, the parties hereby respectively covenant and agree
as follows:
ARTICLE 1.00 - DEFINED TERMS
1.1 When used herein or in any amendments hereto, the following terms
shall have the following meanings respectively.
"Agreement" means this agreement and all schedules attached to this
agreement. The term includes each case where it may be supplemented or
amended from time to time. The expressions "hereof", "herein", "hereto",
"Hereunder", "hereby" and similar expressions refer to this agreement, and
"Article", "section" and "subsection" mean and refer to the specified
Article, section, and subsection of this agreement.
"books and records" means the accounting books of original entry
including the general ledger, record of cash receipts and disbursements,
purchase journal and banking records.
"Business" means the business presently and heretofore carried on by the
Corporation
"Business day" means a day other than a Saturday, Sunday or a day that
is a statutory holiday.
"Closing" means the closing of the transaction for purchase and sale
contemplated herein.
"Closing Date" or "Date of Closing" means March 16, 2001 or such other
date as may be mutually agreed upon in writing by the parties hereto.
"Closing Financial Statements" has the meaning ascribed to it in section
4.1.1.
"Common Shares" means the issued and outstanding common shares in
the capital of the Corporation.
"Corporation" means Futronix, Inc.
"EBIT" means net earnings before income taxes, as determined by the
auditors, in accordance with GAAP.
"Exchange Shares" means those shares defined in Exhibit "A" attached
hereto offered by the Purchaser to the Sellers as partial consideration in
exchange for 100% of the outstanding shares of the Corporation.
"Financial Statements" means, collectively, the Closing Financial
Statements defined hereinabove.
"Intercompany Transactions" means, collectively, all transactions of any
nature between the Corporation and any Person associated with or related
to the Corporation or otherwise not dealing with the Corporation on an
arms-length basis.
"GAAP" means generally accepted accounting principles in the United
States, as appropriate and as in effect from time to time, consistently
applied.
"NASDAQ" means the National Association of Securities Dealers and
Quotations.
"Non Arm's Length Person" means any shareholder director, officer,
employee, affiliate, or associate (as defined in the Securities Act of 1933,
as amended) of the Corporation. This term includes any one or more of
the Seller or any other Person who does not deal at arm's length with the
Corporation or any one or more of the Seller within the meaning of such
concept as used in the Income Tax Act (USA).
"Person" includes an individual, a corporation, a joint venture, a
partnership, a trust or trustee, any unincorporated organization, an
association, or any other entity (including any governmental,
administrative, or regulatory authority).
"Permitted Liens" means, at any time, such Liens as the Purchaser may
agree, in writing, shall constitute a Permitted Lien for the purpose of this
Agreement.
"Purchased Shares" shall have the meaning attributed thereto in section
3.1 hereof.
"Requirements of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational, governing documents of
such Person. This term includes any law, treaty, regulation or rule, or
determination of an arbitrator or a court or other governmental authority or
agency, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Rule 144" means rule 144 of the United States Securities and Exchange
Commission.
"SEC" means the Securities and Exchange Commission of the United
States.
"Seller" shall mean, specifically for purposes of this agreement and
identifying the parties thereto, all of the shareholders of the Corporation.
"Subsidiary", relation to any body corporate, means any corporation of
which issued and outstanding securities are held, other than by way of
security only, by such body corporate, and includes any corporation in like
relation to a Subsidiary.
"this agreement", "this agreement", "herein", "hereto", "hereunder",
"hereof" and similar expressions refer to the within agreement and not to
any particular portion thereof, and include the schedules referred to in
Article 2.00.
"Time of Closing" means two o'clock in the afternoon on the Closing Date.
ARTICLE 2.00 - SCHEDULES
2.1 The following schedules, at time of closing, shall be delivered and
attached to and incorporated in this Agreement by reference and deemed to be
part hereof:
Schedule B - The audited financial statements of
the Corporation, and all material defined herein as part of Schedule B.
Schedule C - All Filings of the Purchaser, filed
with the SEC.
ARTICLE 3.00 - PURCHASE AND SALE
3.1 Subject to the terms and conditions hereof, the Seller hereby agree to
sell, assign, and transfer to the Purchaser 100% of the Common Shares in the
Corporation ("the Purchased Shares"). The Purchaser covenants and
agrees to purchase from the Seller the Purchased Shares for an amount
equal in the aggregate to the Purchase Price of $8,000,000 dollars, payable
as hereinafter set out in Exhibit "A" attached hereto. The said Purchase
Price has a book value of $4,000,000 as the Exchange Shares have a buy-
back option at an average price of $10.00 per share, as opposed to a
present market value of $19.50 per share. At time of Closing, the
Purchased Shares will constitute 100% of the outstanding common shares
of all shareholders of the Corporation.
3.2 The Purchase Price shall be paid in the manner set forth in Exhibit
"A" attached hereto.
3.3 The Seller hereby represent, warrant, covenant, and acknowledge the
following.
3.3(A) The Purchased Shares are being transferred without registration
under the provisions of Section 5 of the Act.
3.3(B) All of the Purchased Shares will bear legends restricting the
transfer, sale, conveyance, and hypothecation within the
jurisdictional boundaries of the United States. This provision is
exclusive of when such Exchange Shares are registered under the
provisions of Section 5 of the Act and under applicable State laws.
Moreover, an opinion of legal counsel may be provided by the
Purchaser to certify that such registration is not required as a result
of applicable exemptions therefrom.
3.3(C) The Seller shall not transfer any of the Exchanged Shares except in
compliance with all applicable laws.
3.3(D) The Seller is acquiring the Exchanged Shares for their own account,
for investment purposes only and not with a view to further sale or
distribution, except as permitted by law.
3.3(E) The Seller have made themselves fully and completely familiar with
all aspects of the Purchaser"s business, operations, and financial
statements and, immediately following closing on this Agreement,
will assume operational control thereof.
3.4 The Purchaser hereby represents, warrants, covenants and
acknowledges the following.
3.4(A) The Exchange Shares are being transferred without Registration
under the provisions of Section 5 of the Securities Exchange Act of
1934, as amended (the "Act").
3.4(B) All of the Exchange Shares will bear legends restricting the
transfer, sale, conveyance, and hypothecation worldwide for a period of 2
years.
3.4(C) The Purchaser shall not transfer any of the Purchased Shares except
as herein provided for a two year period commencing on the date of
closing.
3.4(D) The Purchaser is acquiring the Purchased Shares for its own
account, for investment purposes only and not with a view to
further sale or distribution.
3.4.1 The Purchaser has 50,000,000 shares of capital stock, $0.001 par value,
authorized, 5,000,000, more or less, of which will be the total outstanding
and fully diluted amount immediately prior to conclusion of this transaction
and upon its conversion of both the preferred stock and warrants.
3.4.2 Except as described herein, the Purchaser has no other, outstanding
securities of any class or of any kind or character. There are no
outstanding subscriptions, options, warrants, or other agreements or
commitments obligating the Purchaser to issue or sell any additional shares
or options or rights with respect thereto or any securities convertible into
any shares of Stock of any class.
3.5 The Purchase Price shall be paid and satisfied in full by the delivery of
the issued Exchange Shares and other consideration in the manner set out
in Exhibit "A" attached hereto.
3.6 The certificates representing the shares being exchanged shall each bear
the following legend:
"THESE SHARES HAVE NEITHER BEEN REGISTERED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
OR WITH THE SECURITIES REGULATORY AUTHORITIES OF
ANY STATE, PROVINCE, OR NATIONAL AUTHORITY).
CONSEQUENTLY, THESE SHARES MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THEY
ARE FIRST REGISTERED UNDER APPLICABLE STATE,
PROVINCIAL AND FEDERAL SECURITIES LAWS OR THE
TRANSACTION'S EXEMPTION THEREFROM IS DEMONSTRATED
TO THE FULL SATISFACTION OF THE CORPORAITON'S LEGAL
COUNSEL."
ARTICLE 4.00 - COVENANTS, REPRESENTATIONS, AND
WARRANTIES OF AND THE CORPORATION
4.1 The President and Members of the Board of Directors of the Seller hereby
covenant, represent, and warrant, and the Seller, jointly and severally,
represent to the best of their knowledge, as follows:
4.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Seller, and made a part hereof as Schedule B are the
following:
(A) audited balance sheet of the Corporation to be acquired as of December
31, 2001, with the related statement of operations and unaudited statement
of cash flow for the period ending December 31, 2001 (such balance
sheets, statements of operations, and other statements are referred to
herein as the "Corporation's Financial Statements").
4.2.2 Corporation has been duly incorporated and organized and is validly
subsisting and in good standing under the laws of Florida.
4.2.3 Corporation has the corporate power to own or lease its property
and carry on the Business. The Corporation is duly qualified as a
corporation to do business under the laws of Florida, being the only
jurisdiction in which the nature of its business or the property owned or
leased by it makes such qualification necessary.
4.2.4 omit
4.2.5 At Time of Closing, the authorized capital of the Corporation shall
be as described in Schedule B.
4.2.6 All of the Purchased Shares are owned by the Seller as the beneficial
owners of record as listed at Schedule B. Seller has a good and
marketable title thereto, free and clear of all mortgages, liens, charges,
security interests, adverse claims, pledges, encumbrances, and demands.
This provision includes voting trusts, shareholders' agreements, options, or
other agreements of any kind, except as provided in the public filings of the
Seller. The Seller represent that said listed shareholders have the absolute
right to transfer the Purchased Shares, subject to Board of Directors
approval, and they shall be enjoyed by the Purchaser free from any
interruption or disturbance subject only to the terms and conditions herein.
4.2.7 The Corporation owns no shares in the capital of any other corporation
and has not agreed to acquire any subsidiary or any shares of the capital of
any other corporation or to acquire or lease any other business operations,
except as disclosed in the public filings of the Seller.
4.2.8 No person, firm, or corporation has any agreement, option, or any
right or privilege (whether by law, pre-emptive, or contractual) for the
purchase, subscription, allotment, or issuance of either any of the authorized
stock in the capital of the Corporation or of any securities of the
Corporation, except as disclosed in Schedule B. This provision includes
convertible securities, warrants, and convertible obligations of any nature.
4.2.9 omit
4.2.10 To the best of Seller's knowledge are not now, nor will there be on
Closing, any material claims or potential or contingent claims against the
Corporation for product liability in respect of goods manufactured and/or
sold by the Corporation.
4.2.11 The Corporation's Financial Statements have been prepared in
accordance with GAAP and present fairly to include:
4.2.11(A) all the assets, liabilities (whether accrued, absolute,
contingent, or otherwise), and the financial condition of the
Corporation as at the respective dates of the Corporation's
Financial Statements; and
4.2.11(B) the sales, earnings, and results of the operations of the
Corporation during the periods covered by the
Corporation's Financial Statements.
4.2.12 The corporate records and minute books of the Corporation contain
complete and accurate minutes of all meetings of and copies of all by-laws
and resolutions passed by the directors and shareholders of the Corporation
since the incorporation of the Corporation. All such meetings have been
duly called and held. The share certificate book with register of
shareholders, register of transfers, register of directors, and other
corporate registers of the Corporation are complete and accurate in all
material respects.
4.2.13 The Business has been carried on in the ordinary course since
September, 1998. Since then, there has been no change in the business
operations, affairs, or condition of the Corporation, financial or otherwise.
This provision includes changes arising as a result of any legislative or
regulatory change, revocation of any license or right to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation, act of God, or otherwise. This provision excludes changes
occurring in the ordinary course of business, which changes have not
materially aversely affected and will not materially aversely affect the
organization, business, properties, prospects, and financial condition of the
Corporation or the ability of the Corporation to carry on Business.
4.2.14 The books and records, financial and otherwise, of the Corporation
fairly and correctly set out and disclose, in all material respects, the
financial position and result of operations of the Corporation as at the date
hereof. All material, financial transactions of the Corporation are accurately
recorded in such books and records.
4.2.15 Execution of this Agreement by the Seller and delivery of the
Agreement by them to the Purchaser and their performance hereunder is subject
to the approval of the Board of Directors, said approval to be sought within
24 hours of the execution of this Agreement, and the decision of the said
Board to be conveyed to the Purchaser within 24 hours thereof.
4.2.16 Upon approval of the Board of Directors of the Seller, and except for
matters divulged to the Purchaser, the execution and the consummation of
this transaction for purchase and sale contemplated by this Agreement will
not result in a breach of any term or provision of or constitute any default
under the constituting documents, by-laws, or resolutions of the
Corporation. This provision includes any indenture, agreement,
instrument, license, permit, or understanding to which the Corporation or
any one or more of the Seller is a party or by which any one or more of
them is bound. Nor will the consummation of this transaction accelerate
any commitment or obligation of the Corporation or result in the creation
of any lien or encumbrance upon any of the assets or property of the
Corporation.
4.2.17 This agreement and the consummation of the transactions contemplated
hereby will not result in the violation of any law or regulation or any
applicable order of any court, arbitrator, or governmental authority having
jurisdiction over the Corporation, the Seller, or their respective properties
or businesses.
4.2.18 No consent, authorization, license, franchise, permit, approval, or
order of any court, governmental agency or body, of any lessor, or of any
person is required for the acquisition by the Purchaser of the Purchased
Shares, including completion of any of the other transactions contemplated
hereby. This provision also includes the continuance of any rights of the
Corporation pursuant to any agreement affecting its assets or the Business
following closing.
4.2.19 The Corporation will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration
of any employee except in the normal course of business.
4.2.20 The aggregate amount of salaries, pension, bonuses, rents, or other
remuneration of any nature paid or payable by the Corporation, subsequent
to the execution of this Agreement and up to the Time of Closing, will be
made only at the regular rates heretofore paid.
4.2.21 No capital expenditures, except in the ordinary course of business,
will be made or authorized by the Corporation after the date hereof and up to
the Time of Closing without the prior written consent of the Purchaser.
4.2.22 Except as disclosed in Schedule B, the Corporation has no outstanding
bonds, debentures, mortgages, notes or other evidence of indebtedness or
other security instruments of the Corporation, and the Corporation is not
under any agreement to and shall not create or issue any bonds, debentures,
mortgages, notes, or other evidence of indebtedness or other security
agreements from the date hereof until Closing without the written consent
of the Purchaser.
4.2.23 The Corporation is not a party to any lease or agreement in the
nature of a lease, whether as lessor or lessee, except those leases described
in Schedule B. The schedule specifies the parties to each of such leases,
their dates of execution and expiry dates, any options to renew, any consents
required, the locations of any leased lands and premises, and the rental
payable thereunder
4.2.24 The Corporation is not a party to any conditional sales contract,
hire- purchase agreement, or other title retention agreement.
4.2.25 The Corporation is not party to any actual or impending lawsuit except
as disclosed to Purchaser or divulged on public filings of the Seller. In the
event that the Corporation is not successful in defending such suit as has
been divulged to Purchaser, Seller shall return such portion of the shares as
may be necessary to pay 125% of any judgment against the Corporation.
4.2.26 omit.
4.2.27 omit
4.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business, the Corporation is not a party to any outstanding
agreement, contract, or commitment, whether written or oral.
4.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of the
Corporation.
4.2.30 The Corporation is and at Closing will be in substantial compliance
in all jurisdictions in which it employs persons, with legislation governing
hours of work, termination and severance pay, vacation pay and similar
employee rights, the Worker's Compensation Act, and all such similar statutes.
4.2.31 The uses of the real properties owned or leased by the Corporation
referred to in this agreement or the schedules hereto are not in material
breach of any statute, by-law, ordinance, regulation, covenant, restriction,
or official plan.
4.2.32 The Corporation owns, possesses, and has a good and marketable title
to its undertaking, property, and assets, being free and clear of any and all
mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever arising
except as listed at Schedule B.
4.2.33 The conduct of the Business does not infringe upon the patents, trade
marks, trade names, or copyrights (domestic or foreign) of any other
person, firm, or corporation.
4.2.34 omit
4.2.35 To the best of Seller's knowledge, the Corporation is conducting the
Business in compliance with all applicable laws, rules and regulations of
each jurisdiction in which the Business is carried on, is not in breach of
any such laws, rules or regulations, except for breaches which in the
aggregate are immaterial. Also the Corporation is duly licensed, registered,
or qualified in each jurisdiction in which it owns or leases property or
carries on the Business. To enable the business to be carried on as now
conducted and its property and assets to be owned, leased, and operated,
all such licenses, registrations and qualifications are valid and subsisting
and in good standing. None of the same will be canceled or amended by
virtue of the transaction for purchase and sale provided for herein.
4.2.36 All facilities and equipment owned and used by the Corporation in
connection with the Business are in good operating condition and are in a
state of good repair and maintenance.
4.2.37 There are not now any loans or other indebtedness outstanding between
the Corporation and the Seller or either any current or former directors,
officers, shareholders, or employees of the Corporation or any Non Arms
Length Persons, except as stated herein, or divulged in the audit forming
part of Schedule "B". This provision is exclusive of normal salaries,
bonuses, fringe benefits, and the obligation to reimburse for expense
incurred on behalf of the Corporation in the normal course of business or
otherwise disclosed in the Corporation's Financial Statements.
4.2.38 To the best of the Seller' knowledge, there are no liabilities of the
Corporation of any kind whatsoever, whether or not accrued and whether
or not determined or determinable, in respect of which the Corporation or
the Purchaser may become liable before, on, or after the Closing. This
provision is exclusive of liabilities disclosed on, reflected in, or provided
for in the Financial Statements or incurred in the ordinary course of
business. This provision is also exclusive of those liabilities attributable
to the period from the Corporation's Financial Statements to the actual time
of Closing and are not materially adverse, individually or in the aggregate,
to the Business, operations, affairs or financial condition of the
Corporation.
4.2.39 There is not now nor will there be at the Time of Closing any
application pending for the issuance of articles of amendment to the
originating documents of the Corporation.
4.2.40 omit.
4.2.41 omit
4.2.42 The Seller have no information or knowledge of any facts relating to
the Seller, the Business, the Corporation, or the Purchased Shares which, if
known to the Purchaser, might reasonably be expected to deter the
Purchaser from completing the transaction of purchase and sale herein
contemplated.
4.2.43 The Purchaser shall prepare and file all documents and forms necessary
to effect the filing and registration of the combined companies (with the
Purchaser as the parent holding corporation) so as to complete and receive
approval of an effective registration statement for AMEX or NASDAQ
Small- Cap listing as soon as reasonable (i.e., within 120 days) from the
date of closing.
ARTICLE 5.00 - REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER
5.1 The Purchaser covenants, represents, and warrants as follows and
acknowledges that the Seller are relying upon such covenants,
representations, warranties, and covenants in connection with the sale by
the Seller of the Purchased Shares.
5.2.1 Delivered at Closing, warranted to be true and correct to the best
knowledge of the Purchaser, and made a part hereof as Schedule C are the
following:
(A) All Filings submitted to the SEC;
5.2.2 Purchaser has been duly incorporated and organized and is validly
subsisting and in good standing under the laws of Nevada.
5.2.3 Purchaser has the corporate power to own or lease its property and carry
on the Business. The Corporation is duly qualified as a corporation to do
business under the laws of Nevada, being the only jurisdiction in which the
nature of its business or the property owned or leased by it makes such
qualification necessary.
5.2.4 At time of Closing, the authorized capital of the Purchaser shall
consist of 50,000,000 shares with a par value of $0.001.
5.2.5 At time of Closing, the authorized issued capital of the Purchaser shall
be 5,000,000 shares of its common stock (more or less) and will have been
duly and validly allotted and issued and outstanding as fully paid and non-
assessable and beneficially owned by the Purchaser.
5.2.6 The Purchaser has no subsidiaries and owns no shares in the capital of
any other corporation and has not agreed to acquire any subsidiary or any
shares of the capital of any other corporation or to acquire or lease any
other business operations except as disclosed in Schedule C.
5.2.7 Except as listed in Schedule "B", no person, firm, or corporation has
any agreement, option, or any right or privilege (whether by law, pre-emptive,
or contractual) for the purchase, subscription, allotment, or issuance of
either any of the authorized stock in the capital or any securities of the
Purchaser. This provision includes convertible securities, warrants, and
convertible obligations of any nature.
5.2.8 The Purchaser is not a party to or bound to any person, firm, or
corporation. This provision includes any agreement of guarantee,
indemnification, assumption, endorsement, or any other like commitment of
obligations or liabilities (contingent or otherwise) or indebtedness of any
person, firm, or corporation.
5.2.9 There are not now, nor will there be on Closing, any material claims or
potential or contingent claims against the Purchaser for product liability.
5.2.10 The Purchaser's Financial Statements have been prepared in accordance
with GAAP and present fairly to include:
(A) all the assets, liabilities (whether accrued, absolute, contingent, or
otherwise), and the financial condition of the Purchaser as at the
respective dates of the Purchaser's Financial Statements, and;
(B) the sales, earnings, and results of operations during the periods covered
by the Corporation's Financial Statements.
5.2.11 The corporate records and minute books of the Purchaser contain
complete and accurate minutes of all meetings of and copies of all by-laws
and resolutions passed by the directors and shareholders of the Purchaser
since the incorporation of the Purchaser. All such meetings have been duly
called and held. The share certificate book with register of shareholders,
register of transfers, register of directors, and other corporate registers
of the Purchaser are complete and accurate in all material respects.
5.2.12 The business of the Purchaser is fully, fairly, and truthfully set out
in Schedule C.
5.2.13 omit.
5.2.14 The books and records, financial and otherwise, of the Purchaser fairly
and correctly set out and disclose, in all material respects, the financial
position and result of operations of the Purchaser as at the date hereof. All
material, financial transactions of the Purchaser are accurately recorded in
such books and records.
5.2.15 The execution and delivery of this Agreement by the Purchaser as well
as the performance by the Purchaser hereunder have been duly authorized.
No further action will be necessary on the part of the Purchaser to make
this Agreement valid and binding in accordance with its terms upon the
Purchaser.
5.2.16 The execution and the consummation of this transaction for purchase and
sale contemplated by this Agreement will not result in a breach of any term
or provision of or constitute any default under the constituting documents,
by-laws, or resolutions of the Purchaser. This provision includes any
indenture, agreement, instrument, license, permit, or understanding to
which the Purchaser is a party or by which any one or more of them is
bound. Nor will the consummation of this transaction accelerate any
commitment or obligation of the Purchaser or result in the creation of any
lien or encumbrance upon any of the assets or property of the Purchaser.
5.2.17 This agreement and the consummation of the transactions contemplated
hereby will not result in the violation of any law or regulation or any
applicable order of any court, arbitrator, or governmental authority having
jurisdiction over the Purchaser.
5.2.18 No consent, authorization, license, franchise, permit, approval, or
order of any court, governmental agency or body, of any lessor, or of any
person is required for the acquisition by the Purchaser of the Purchased
Shares, including completion of any of the other transactions contemplated
hereby. This provision also includes the continuance of any rights of the
Purchaser pursuant to any agreement affecting its assets or the Business
following closing.
5.2.19 The Purchaser will not, prior to the Closing Date, hire any new
employees, terminate any employee, or increase the salary or remuneration of
any employee except in the normal course of business.
5.2.20 The aggregate amount of salaries, pension, bonuses, rents, or other
remuneration of any nature paid or payable by the Purchaser, subsequent to
the execution of this Agreement and up to the Time of Closing, will be
made only at the regular rates heretofore paid.
5.2.21 No capital expenditures, except in the ordinary course of business,
will be made or authorized by the Purchaser after the date hereof and up to
the Time of Closing without the prior written consent of the Seller.
5.2.22 Purchaser is not under any agreement to and shall not create or issue
any bonds, debentures, mortgages, notes, or other evidence of indebtedness or
other security agreements from the date hereof until Closing without the
written consent of the Seller.
5.2.23 The Purchaser is not a party to any lease or agreement in the nature of
a lease, whether as lessor or lessee except as disclosed in Schedule C.
5.2.24 The Purchaser is not a party to any conditional sales contract, hire-
purchase agreement, or other title retention agreement except as disclosed
in Schedule C.
5.2.25 The Purchaser is not, and will not be at the Time of Closing, a party
to any agreement to acquire or to acquire any beneficial interest in any real
or immovable property.
5.2.26 The Purchaser does not maintain any insurance policies.
5.2.27 There are no actions, suits, or proceedings, including product warranty
claims, pending or threatened against or affecting the Purchaser, at law or
in equity or before or by any federal, provincial, municipal, or other
governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign. The Purchaser is not aware of any
existing ground on which any such action, suit, or proceeding might be
commenced with any reasonable likelihood of success.
5.2.28 Except for agreements, contracts, and commitments in the ordinary
course of business, the Purchaser is not a party to any outstanding agreement,
contract, or commitment, whether written or oral.
5.2.29 All vacation pay, bonuses, commissions, and other emoluments are
accurately reflected and have been accrued in the books of account of the
Purchaser.
5.2.30 The Purchaser is and at Closing will be in substantial compliance in
all jurisdictions in which it employs persons, with legislation governing
hours of work, termination and severance pay, vacation pay and similar
employee rights, the Worker's Compensation Act, and all such similar statutes.
5.2.31 The Purchaser does not lease any real property.
5.2.32 The Purchaser owns, possesses, and has a good and marketable title to
its undertaking, property, and assets, being free and clear of any and all
mortgages, liens, pledges, charges, security interests, encumbrances,
actions, claims, or demands of any nature whatsoever or howsoever
arising.
5.2.33 The conduct of business does not infringe upon the patents, trade
marks, trade names, or copyrights (domestic or foreign) of any other person,
firm, or corporation.
5.2.34 omit.
5.2.35 The Purchaser exists in compliance with all applicable laws, rules and
regulations of each jurisdiction in which the Business is carried on, is not
in breach of any such laws, rules or regulations, except for breaches in the
aggregate are immaterial. Also the Purchaser is duly licensed, registered,
or qualified in each jurisdiction in which it owns or leases property or
carries on the Business. To enable the business to be carried on as now
conducted and its property and assets to be owned, leased, and operated,
all such licenses, registrations and qualifications are valid and subsisting
and in good standing. None of the same will be canceled or amended by
virtue of the transaction for purchase and sale provided for herein.
5.2.36 All facilities and equipment owned or used by the Purchaser are in good
operating condition and are in a state of good repair and maintenance.
5.2.37 Except as specified at Schedule C, there are not any loans or other
indebtedness outstanding between the Purchaser and either the Seller or
either any current or former directors, officers, shareholders, or employees
of the Purchaser or any Non Arms Length Persons. This provision is
exclusive of normal salaries, bonuses, fringe benefits, and the obligation to
reimburse for expense incurred on behalf of the Purchaser in the normal
course of business.
5.2.38 There are no liabilities of the Purchaser of any kind whatsoever,
whether or not accrued and whether or not determined or determinable, in
respect of which the Purchaser may become liable before, on, or after the
Closing. This provision is exclusive of liabilities disclosed on, reflected
in, or provided for in the Financial Statements or incurred in the ordinary
course of business. This provision is also exclusive of those liabilities
attributable to the period from the Purchaser's Financial Statements to the
actual time of Closing and are not materially adverse, individually or in the
aggregate, to the Business, operations, affairs or financial condition of the
Purchaser.
5.2.39 There is not now nor will there be at the time of Closing any
application pending for the issuance of articles of amendment to the
originating documents of the Purchaser.
5.2.40 The Purchaser is not, and has not over the preceding 12 months, been in
default or late in the filing of any corporate return or report that may be
required under any federal, provincial and/or municipal law or regulation,
including, but not in any way limited to reports required to be filed with the
SEC. Counsel for the Purchaser shall, at closing, provide an opinion that
the Purchaser is eligible to file registration statements on Form S-8 or form
S-3.
5.2.41 The Purchaser has duly and timely filed or has pending all tax returns
required and has paid all taxes and installments of taxes which are due and
payable. This provision includes all assessments, reassessments, and all
other taxes (including sales taxes, withholding taxes, and payments to
Workers' Compensation), governmental charges, penalties, interest, and
fines due and payable by it on or before the date hereof. The income tax
liability of the Purchaser has been not reviewed or determined by the IRS
or the applicable State for all fiscal years up to and including the fiscal
year to date.
5.2.42 The Purchaser has no information or knowledge of any facts relating to
the Purchaser which if known to the Seller might reasonably be expected to
deter the Seller from completing the transaction and sale herein
contemplated.
ARTICLE 6.00 - COVENANTS OF THE SELLER
6.1 The Seller covenant and agree with the Purchaser that on or before the
Closing Date they will do or cause to be done the following.
6.2.1 Take all necessary steps and proceedings required for all of the
Purchased Shares to be duly and regularly transferred to the Purchaser.
6.2.2 Until the time of Closing, continue to operate the business of the
Corporation prudently and in such a manner as to preserve and maintain
the goodwill of the Corporation.
6.2.3 All necessary corporate actions and proceedings by the Purchaser shall
have been taken to permit the due execution and delivery of this Agreement
and the valid transfer of the Purchased Shares to the Purchaser
ARTICLE 7.00 - COVENANTS OF THE PURCHASER
7.1 The Purchaser covenants and agrees with the Seller that, on or before the
Closing Date, it will do or cause to be done the following.
7.2.1 All necessary corporate actions and proceedings by the Purchaser shall
have been taken to permit the due execution and delivery of this Agreement
and the valid transfer of the Exchange Shares to the Seller.
7.2.2 omit
7.2.3 Cause such directors and officers of the Purchaser as the Seller may
specify to resign in favor of nominees of the Seller, such resignations to be
effective as at the time of Closing.
7.2.4 Up to the Time of Closing, continue to operate the businesses of the
Purchaser prudently and in such a manner as to preserve and maintain the
goodwill of the Purchaser.
ARTICLE 8.00 - SURVIVAL OF COVENANTS, REPRESENTATIONS
AND WARRANTIES
8.1 The covenants, representations, and warranties of the Seller contained in
this Agreement and contained in any document or certificate given
pursuant hereto shall survive the Closing herein. Notwithstanding Closing,
this survival is inclusive of any investigation made by or on behalf of the
Purchaser and shall continue in full force and effect for the benefit of the
Purchaser following the Closing Date.
8.2 The covenants, representations and warranties of the Purchaser contained
in this Agreement and contained in any document or certificate given
pursuant hereto shall survive the Closing herein. Notwithstanding Closing,
this survival is inclusive of any investigation made by or on behalf of the
Seller and shall continue in full force and effect for the benefit of the
Seller following the Closing Date.
ARTICLE 9.00 - CONDITIONS OF CLOSING
9.1 The sale and purchase of the Purchase Shares is subject to the following
terms and conditions, each of which is hereby declared to be for the
exclusive benefit of the Purchaser to be fulfilled and performed at or prior
to the time of Closing.
9.2 The covenants, representations, and warranties of the Seller contained in
this Agreement or any schedule hereto or certificate or other document
delivered or given to the Purchaser pursuant to this Agreement, including
without limitation the representations and warranties contained in Article
4.00, shall be true and correct on and as of the Closing Date with the same
force and effect as if they had been made as of the date hereof, each and
every one of which is hereby deemed to be a condition.
9.3 The Seller shall provide at the time of Closing a certificate, dated the
Closing Date, to the effect that the covenants, representations, and
warranties of the Seller contained herein are true and correct on and as of
the Closing Date, with the same force and effect as though made on and as
of such date, provided that the acceptance of such certificate and the
closing of the transaction herein provided for shall not be a waiver of the
said covenants, representations, and warranties, which shall continue in full
force and effect as provided herein.
9.4 The Seller shall have complied with all covenants and agreements herein
agreed to be performed or caused to be performed by them.
9.5 At the Closing Date, there shall have been no material adverse change in
the affairs, assets, liabilities, financial condition, or business of the
Corporation from that shown on or reflected in the Financial Statements.
9.6 Any consent, authorization, licence, franchise, permit, approval, or order
of any court or governmental agency or regulatory body required for the
acquisition by the Purchaser of the Purchased Shares shall have been
obtained.
9.7 The Purchaser shall provide at the time of Closing a certificate, dated
the Closing Date, to the effect that the covenants, representations, and
warranties of the Purchaser contained herein are true and correct on and as
of the Closing Date. This certificate shall have the same force and effect as
though made on and as of such date provided that the acceptance of such
certificate and the closing of the transaction herein provided for shall not
be a waiver of the said covenants, representations, and warranties which shall
continue in full force and effect as provided herein.
9.8 The Purchaser shall have complied with all covenants and agreements
herein agreed to be performed or caused to be performed by it.
9.9 0mit.
9.10 The parties shall not close and complete this transaction unless both
Seller and Purchaser have signed a written acknowledgement that the exchange
of shares between them does not create a taxable event for either party.
9.11 The parties hereby agree that the scheduled closing shall be conditional
upon shareholder approval by the shareholders of both companies.
ARTICLE 10.00-CLOSING ARRANGEMENTS
10.1 The closing is scheduled to take place on March 16, 2001 and at the Time
of Closing at such offices as are agreed to in writing among the parties
hereto at least 24 hours prior to the said Closing.
10.2 At the Time of Closing and upon fulfillment of all the conditions set out
in this Agreement, which have not been waived in writing by the Seller or the
Purchaser, the Seller shall deliver to the Purchaser proper certificates for
all the Purchased Shares.
ARTICLE 11.00-NOTICE
11.1 Any notice or other document to be given by any party hereto to any other
party shall be in writing and may be given by personal delivery or by
registered mail. Any notice directed to any party shall be addressed to it as
follows:
To the Purchaser:
71 Stony Hill Road
Second Floor
Bethel, Connecticut 06801
To the Seller and the Corporation:
Salient Cybertech, Inc.
1999 Lincoln Drive, Suite 202
Sarasota, FL. 34236
11.2 Any notice or other document aforesaid, if delivered, shall be deemed to
have been given or made on the date on which it was delivered or, if
mailed, shall be deemed to have been given and received on the fourth (4th)
business day following the date on which it was mailed. Provided that if
there exists at the time of mailing of a notice hereunder or within four (4)
business days thereafter a labor dispute or other event which would affect
the normal delivery of the notice by an express or postal service, then such
notice will only be effective if actually delivered.
11.3 The parties hereto may change any address for notices hereunder, from
time to time, by notice given in accordance with the foregoing.
ARTICLE 12.00 - GENERAL
12.1 Time shall be of the essence of this Agreement.
12.2 This Agreement may be executed in one or more counterparts, each of
which when so executed shall constitute an original, and all of which
together shall constitute one and the same agreement.
12.3 This Agreement, including the schedules hereto, constitutes the entire
agreement between the parties hereto. There are not and shall not be any
verbal statements, representations, warranties, undertakings, or agreements
between the parties, and this Agreement may not be amended or modified
in any respect except by written instrument signed by the parties hereto.
12.4 This Agreement shall be construed and enforced in accordance with and
the rights of the parties shall be governed by the laws of the State of
Florida.
12.5 The headings used herein are inserted for convenience of reference only
and shall not affect the construction of or interpretation of this Agreement.
12.6 Except as otherwise set out in this Agreement, each of the parties
hereto shall pay all of its own costs and expenses of the transaction of
purchase and sale, including all fees and expenses of its accountants,
counsel, and officers.
12.7 In the event that any Article or section of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, such
invalidity or unenforceability shall not affect the remainder of the
provisions hereof. Any such part shall be fully severable, and this
Agreement shall be construed and enforced as if such invalid or
unenforceable part had not been inserted herein. The parties hereby agree
that they would have signed this Agreement without such invalid or
unenforceable part included herein.
12.8 In this Agreement, words importing the singular number only include the
plural and vice versa; words importing the masculine gender include the
feminine and vice versa.
12.9 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal personal representatives,
successors, and permitted assigns.
12.10 Where the date either for the expiration of any time period or for the
closing of anything hereunder expires or falls upon a day which is not a
Business Day, the time so limited extends to and the thing shall be done on
the day next following that is a Business Day.
12.11 The parties hereto agree that no disclosure or public announcement with
respect to this Agreement, or any of the transactions contemplated by this
Agreement, shall be made by any party hereto without the prior written
consent of the other parties hereto.
12.12 omit
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of ) _____________________________
)
) _________________
) SELLER
) By ____________,
)
)
)
) /s/Alan Sporn/s/
) PURCHASER
) ________________________
)
Exhibit "A"
The Purchase Compensation for the Seller shall be as defined below.
Seller will receive 400,000 common shares, said shares restricted pursuant to
Rule 144 of the SEC for a minimum period of two year from date of issue,
PROVIDED, HOWEVER, THAT IN THE EVENT OF DEFAULT OF
PAYMENT AS PROVIDED HEREIN, SELLER SHALL HAVE THE
RIGHT TO DEMAND REGISTRATION OF SUCH NUMBER OF
SHARES AS ARE NECESSARY TO PAY THE SELLER THE TOTAL
SUM REQUIRED HEREIN ON LIQUIDATION OF THE SAID SHARES.
$150,000 shall be paid by Purchaser to Seller on or before March 21, 2001 and
$75,000 shall be paid to Seller in bi-weekly increments for the next 12 weeks,
commencing on the Friday following the closing, and a further two installments
of $100,000 shall be paid to Seller on or before each of May 15, 2001 and May
30, 2001. In the event any payment is not made on time, and the said default
is not cured within 10 days of the date such payment is due, Seller may
rescind this contract and 100% of all monies it has received prior to the date
of such rescission as liquidated damages. In the event Seller rescinds the
agreement as herein provided, all shares received by Seller may, at SELLER'S
sole option, except for such number of shares as are retained pursuant to the
default provisions herein, be returned to Purchaser, and in such event
Purchaser shall return all shares it received from Seller to Seller.
Purchaser shall abide by the terms of the agreement between Seller and
Corporation, provided, however, that Seller warrants that all monetary
infusions required of Seller have been made and no further infusion is
contractually required pursuant to the said agreement between Seller and
Corporation, and further provided that the Seller shall pay any bonus shares
required pursuant to the said agreement in common shares of Seller, for an 18
month period.
Seller shall infuse into Corporation the sum of $600,000 prior to March 17,
2001.
Purchaser agrees to assign all accounts receivable of Corporation to Seller
until all amounts due to Seller as specified herein are paid in full. Further,
until all payments due Seller as provided herein are paid in full, Purchaser
may not sell, hypothecate, or otherwise encumber any of the assets of the
Corporation in any manner whatsoever, except with the explicit written
consent of the Seller. The Purchaser may not sell, hypothecate, or otherwise
encumber any purchase order of the Corporation except with the explicit
written consent of the Seller until all sums due to Seller as provided herein
have been paid in full.
PURCHASER SHALL HAVE THE RIGHT, PROVIDED ALL PAYMENTS
HEREIN HAVE BEEN MADE IN A TIMELY MANNER, TO REPURCHASE
ALL THE EXCHANGE SHARES FOR $9.00 PER SHARE DURING THE
PERIOD SUCH SHARES ARE RESTRICTED, AND FOR $11.00 PER SHARE
FOR A PERIOD OF 12 MONTHS AFTER THE SAID SHARES HAVE
BECOME FREE TRADING, PROVIDED HOWEVER, THAT AT LEAST
20,000 SHARES PER 30 DAY PERIOD SHALL BE PURCHASED BY THE
PURCHASER OR ITS DESIGNEE OVER THE LIFE OF THE SAID OPTION
PERIOD, ELSE THE SAID OPTION SHALL BE DEEMED TO HAVE
EXPIRED.
The president of Corporation shall have one seat on the
Board of Directors of the Purchaser.