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 22, 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.)
180 Newport Center Drive, Suite 100, Newport Beach, California
(Address of Principal Executive Offices)
92660
(Zip Code)
(949) 644-2454
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 9, 2001, the Registrant commenced negotiations with Venture
Planning, Inc. (Venture Planning), with a view of acquiring 50% of
the membership interest in Sea Hunt, LLC. and a 100% interest in
Telcoenergy, LLC, including its wholly owned subsidiary Telcoenergy,
LLC.'s wholly owned subsidiary, OGC Pipelines, LLC. 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 in a
manner that might be detrimental to the shareholders of the Registrant
should the proposed purchase not be consummated.
On March 22, 2001, 100% of the membership interest in Sea Hunt, LLC. and a
100% interest in Telcoenergy, LLC, including its wholly owned subsidiary
Telcoenergy, LLC.'s wholly owned subsidiary, OGC Pipelines, LLC was
purchased by the Registrant, subject to Board approval by the Board of
Directors of each company, for the sum of $6,842,400. The terms of the
transaction were as follows:
1) Consideration for the purchased assets listed below was 400,000
restricted common shares of the Registrant's common stock, and 1,500,000
voting convertible preferred shares valued at $1.00 each. The common
shares will be restricted and legend bearing subject to Rule 144 (k),
starting as of 12-29-00. During this restricted period, if and when the
value of the initial 400,000 common shares is less than the value of the
acquired assets listed below during a consecutive period of more than 90
days, an appropriate number of the Preferred Shares may be surrendered and
exchanged for common shares, at a share price equal to the average stock
price of the five prior days of trading, to insure that the combined value
of the initial 400,000 common shares and the number of Preferred Shares
exchanged for common shares is not less than the value of the assets listed
below. 50% of any treasure recovered from the Juno would revert to Venture
Planning.
2) The purchased assets consist of:
1) 100% ownership of SEA HUNT, LLC., which owns 50% of SEA HUNT, INC.,
which in turn owns two permits to retrieve treasure issued by the
Commonwealth of Virginia (Virginia Marine Resource Commission) representing
permit areas 97-0163 and 97-0498. 50% of the value of the permits therein
has been set at $1,500,000 based on $3,000,000 spent by SEA HUNT, INC. in
fiscal years 1997, 1998, 1999.
The Registrant has a period of 135 days from the execution date of the
agreement to finalize due diligence on SEA HUNT, LLC., including all
corporate and other pertinent documentation reasonably required by the
Registrant.
The acquisition was subject to the Registrant assuming $500,000 of SEA
HUNT's obligations, $200,000 of which are payable on or before 4-15-01
and the balance payable on or before 6-30-01.
2) 100% ownership of Telcoenergy, LLC. and its subsidiary OGC
Pipeline, LLC. and associated pipelines and pipeline easements, mainly in
Oklahoma. This is valued at $5,842,400 based on the replacement cost at
fair market value of the pipeline easements. This value is net of a
$2,300,000 first mortgage lien against the pipelines and pipeline easements
and accrued outstanding interest of approximately $400,000. The mortgage
holder has expressed a willingness to convert its mortgage into stock
3) Venture Planning, Inc. shall have one seat on Purchaser's
Board of Directors.
DESCRIPTION OF THE ASSETS ACQUIRED
A) SEA HUNT, LLC.
Sea Hunt, LLC, an Oklahoma limited liability company, was formed in
September of 2000 for the purpose of owning 50% of Sea Hunt, Inc. Sea Hunt,
Inc. was incorporated in 1996. Sea Hunt, Inc. was granted two permits from
the Commonwealth of Virginia to seek out and salvage sunken shipwrecks
within its territorial waters. The Company located approximately twelve
wrecks within the boundary of Sea Hunt's permits. Two of these wrecks
are believed to be the Spanish "galleons" named the Juno and the La Galga.
PRODUCTS AND SERVICES
Sea Hunt, Inc. is a New Hampshire corporation under contract to the
Commonwealth of Virginia to explore for and salvage abandoned shipwrecks
imbedded in certain submerged lands within Virginia's territorial waters.
On March 11, 1998, Sea Hunt filed verified In Rem admiralty complaints
against two wrecks. The complaints alleged that pursuant to the Abandoned
Shipwreck Act of 1987 (ASA), the Commonwealth of Virginia was the owner of
the shipwrecks and Sea Hunt was entitled to salvage the wreck(s) under
Virginia permit. Alternatively, Sea Hunt requested a liberal salvage award
for recovering the artifacts from their marine peril. In order to protect
the ongoing salvage from interference by third parties, Sea Hunt requested
an injunction prohibiting third parties from interfering with the salvage
operations. On March 12, 1998, the United States admiralty court issued an
Order directing the In Rem arrest of the vessels, which granted Sea Hunt
the exclusive right to continue the salvage activities and appointed Sea
Hunt as Substitute Custodian.
HISTORY OF THE JUNO
After the Juno left Vera Cruz, Mexico in March of 1802 with 2,200,000 pesos
it was damaged and went to Puerto Rico in April for repairs. When the
repairs took too long these pesos were taken off the Juno and placed on
another ship (called the Asia) in August for which there are clear records
available in the archives in Seville, Spain. The Juno was finally repaired
in October and ready to sail. It was decided to put the Third Battalion
onboard. Many of these soldiers who had been on duty for up to twenty years
campaigning throughout the New World would have had their authorized
allotment of pilferage onboard the ship with them when it sank. Their
private hordes of treasure are now archeological artifacts that may be of
great interest to the public. In addition, Sea Hunt found documents which
are not in the archives in Seville, (because there was no manifest),
indicating that coins were loaded onto the Juno before attempting to sail
home with 425 people on board.
Sea Hunt's archivists found a letter in Puerto Rico from the Viceroy of
Santo Domingo basically saying that as per instructions I have emptied the
Royal strong box of paste (gold and silver), and loaded it onto the Juno
which left Puerto Rico yesterday. Another letter was uncovered from the
Viceroy of Santo Domingo saying in effect that I followed instructions and
emptied the mint for the Juno, but should have been allowed to keep an
amount of 500,000 to pay the governments obligations. Although Spain does
not have these two letters in Seville, they should have been aware of a
third letter which was included amongst the 700 documents which Spain
submitted as evidence in their lawsuit. This letter which was sent in
November of 1802 after the Juno sank, is on record in both the archives of
Puerto Rico and Seville. It is from the Admiralty in Havana to the King
concerning news about the loss of the Juno. The letter says the Juno was
sent to Spain with a registered 700,000 pesos.
Furthermore, there is reason to believe that certain high level authorities
in the New World may have realized that the end was near when they were
ordered to empty the mint of all its money. Sea Hunt believes that the
greatest treasure besides the 700,000 pesos to be recovered from the Juno
are the personal artifacts carried onboard by the soldiers and possibly
fleeing people, (including women and children). For example, it is of
record that the Juno was carrying the accumulated treasure of an important
general who twice led the natives in Haiti against France. He was killed
and his treasure, which was considerable, had an official stamp on his
gold and silver bars.
SUMMARY
The primary vessel arrested by Sea Hunt, determined to be the Juno, sank
in 1802. Sea Hunt's archivists undertook extensive research work to
determine that the Juno was carrying valuable treasure. The ship was
attempting to return to the Old World with an extensive array of artifacts,
and 700,000 pesos to pay Napoleon's army. Because this payroll money was
lost at sea, Napoleon shortly thereafter sold the Louisiana Territory to
the United States for $15,000,000 making this an historic vessel.
Current Litigation
In August 1998 The National Park Service tried unsuccessfully to establish
ownership of these two shipwrecks. The National Park Service appealed to
the US Justice Department to intervene. In turn the United States (Justice
Department) convinced Spain to use its status as a foreign sovereignty to
assert ownership of the two wrecks, agreeing to pay for Spain's legal fees.
In 1998 The Kingdom of Spain and the United States sued Sea Hunt, Inc. and
the Commonwealth of Virginia for possession of the two shipwrecks.
Eventually the court ruled that the United States had no claim to the
wrecks and that the US Justice Department could not spend US taxpayer's
money to fund Spain's legal bills.
Spain, however, continued its assertions of ownership, and in January,
2001, the 4th District Court held that the two wrecks had never been
abandoned by Spain, and were the property of the Spanish Government.
The Court refused to award any salvage costs to Sea Hunt. Sea Hunt Inc.
appealed to the Supreme Court to overturn the 4th District's decision to
award ownership of the two vessels to Spain without granting a salvage
award to Sea Hunt, Inc., and the Supreme Court decided not to hear the case.
Currently, Sea Hunt has appealed the lower Court's order to turn over the
location coordinates of the Juno to Spain, claiming
intellectual property rights to the information, and further claiming
salvage fees for the information. Sea Hunt spent over $2,000,000 on the
research and recovery of the Juno. Management and Sea Hunt's Counsel feel
that Sea Hunt will prevail in the litigation.
There also appears to be congressional support for an ACT that would allow
Sea Hunt to be awarded salvage for the vessels.
THE INDUSTRY
Following World War II, and with the introduction of SCUBA dive-gear and
underwater metal detectors, "treasure-diving" rapidly became an international
sport - the success of which brought into being the "commercial retrieval"
of valuable sunken cargoes. This differed from the normal salvage work in
that it was largely developed by individuals who relied on the absence of
industrial standards and lack of legislation to mount projects without
regard to national or international regulations. By the end of the 1960's,
such submarine "wildcat" operations were slowly giving way to more serious,
regulated, retrieval operations - but the necessary regulatory restrictions
also resulted in fewer and fewer treasure-hunting expeditions being launched,
as is the situation today and for the same reasons. This is due to the fact
that, right from the beginning, there has been no real "industry" to support
such enterprise, no central organization to promote and back the many
individual components driving it.
Over the past thirty years the underwater archeological community has
demonstrated its extremely limited ability to raise sufficient funds from
either government sources, institutions or charitable donations to preserve
historic wrecks from peril. The recovery of future wrecks depends primarily
on the ability of free enterprise to salvage them commercially under the
supervision and support of the regulatory bodies involved. Important
artifacts need to go to the museums, but the majority of duplicate coins,
for example, may be sold to private collectors who appreciate their historic
value. Museums are only interested in displaying, for example, a limited
number of duplicate silver bars from these wrecks. The treasure-hunting
industry needs to develop creative ways to maximize the market value of
ancient silver to help pay for future treasure expeditions and find more
artifacts that museums will want to exhibit. Today museums, under pressure
from the underwater archeological institutes, are boycotting the purchase
and/or display of underwater artifacts recovered by non-institutional
archeological salvors.
SEA HUNT'S MISSION
Sea Hunt, Inc. is a recognized industry leader. It has already demonstrated
proprietary research and recovery techniques in locating twelve wrecks
within the boundaries of its permits. In the case of the Juno, Sea Hunt has
been exemplar in its compliance with Virginia's strict permitting
requirements, including rigid archeological procedures, and was successful
in retrieval operations until halted by the commencement of the lawsuit
earlier disclosed.
SEA HUNT'S BUSINESS PLAN:
Sea Hunt plans to provide funding to valid, track-proven, treasure hunting
enterprises in exchange for joint-interests in their finds, and a
coordinated marketing effort, to offer continuity in their work rather than
the expensive and inhibiting "go-stop-go-stop" practices presently
employed. This will entail providing sufficient financing to support
operations for sometimes two years, or more, until the individual venture
yields dividends. Many valid expeditions who originally thought themselves
adequately financed have found that the time and expense of obtaining
governmental approval and the necessary licenses has eaten away at their
funds to such an extent they can no longer cover their start-up costs, let
alone await a division of treasure at an unknown future date. This is
especially true if the treasure has to be adjudicated through a laboriously
slow Court process.
The leading salvors recognize the need to bring professional attributes to
bear on the business of treasure-hunting in the form of planned and
organized expeditions, funding, business management, media coverage and
especially marketing of museum-surplus treasure items. The sale of salvaged
shipwreck coins and other legally marketable artifacts must be well
coordinated through a controlled marketing program. Sea Hunt recognizes the
need for consolidation in this business and its potential to grow through
future acquisition. However, the most important attribute which Sea Hunt,
Inc. has to offer both salvors and investors is its marketing program to
sell shipwreck treasures at their highest value. Several leading salvagers
have expressed willingness to be acquired by Sea Hunt, Inc., to unify
marketing efforts and help focus and self-regulate the treasure-hunting
industry so as to offer a profitable environment for investors and
provide public access to information and artifacts from historic shipwrecks
which are in peril.
It is felt by management that the awards for present salvage projects will
fund the abovementioned acquisition and marketing strategy. In the event
that there are no salvage awards from the Juno salvage, or other current
projects, further growth will have to be curtailed indefinitely.
B) TELCOENERGY LLC.
Telcoenergy, LLC. was formed in 2000 in the state of Oklahoma.
The company owns, maintains and leases gas pipeline easements, primarily in
the State of Oklahoma.
ITEM 5
Change of Address and Telephone Number
The Registrant changed the location of its head office to:
180 Newport Center Drive
Suite 100
Newport Beach
California 92660.
Its new telephone number is:
(949) 644-2454
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 8
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 28, 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 22nd day of March, 2001.
BETWEEN:
Venture Planning, 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 membership interest in Sea Hunt, LLC. and a 100% interest
in Telcoenergy, LLC, (herein jointly referred to as the "Corporation), and;
WHEREAS, the Purchaser desires to acquire 100% of the membership
interest in Sea Hunt, LLC. and a 100% interest in Telcoenergy, LLC, including
its wholly owned subsidiary Telcoenergy, LLC.'s wholly owned subsidiary, OGC
Pipelines, LLC. 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 22, 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 Purchased Assets.
"EBIT" means net earnings before income taxes, as determined by the auditors,
in accordance with GAAP.
"Exchange Shares" means those shares defined in Schedule "A" attached hereto
offered by the Purchaser to the Sellers in exchange for the Purchased Assets.
"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 Assets" 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", in 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 Schedule including the information defined
herein concerning the Assets.
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 membership
interest in Sea Hunt, LLC. and a 100% interest in Telcoenergy, LLC,
including its wholly owned subsidiary Telcoenergy, LLC.'s wholly owned
subsidiary, OGC Pipelines, LLC ("the Purchased Assets"). 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 $6,842,400
dollars, payable as hereinafter set out.
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 Assets are being transferred free and clear of
encumbrances except as divulged herein.
3.3(B) 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.
3.4 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) ll of the Exchange 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 securities 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.
3.4.1 The Purchaser has 50,000,000 shares of capital stock,
$0.001 par value, authorized, 6,100,000, 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 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. Purchased Assets have been duly organized and are validly subsisting
and in good standing under the laws of Oklahoma.
4.3 All of the Purchased Assets are wholly owned by the Seller or its
subsidiaries. Such Purchased Assets have good and marketable title thereto,
free and clear of all mortgages, liens, charges, security interests, adverse
claims, pledges, encumbrances, and demands whatsoever except as stated
herein. The Seller represents that Seller has the absolute right to transfer
the Purchased Assets, and Purchased Assets shall be enjoyed by the Purchaser
free from any interruption or disturbance subject only to the terms and
conditions herein.
4.4 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; the purchase price is based on and directly
correlates to the net tangible worth (being assets less liabilities) of
the Purchased Assets, which the Seller represents to be approximately
$6,842,400 upon audit.
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 6,100,000 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 properties.
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 Assets to be duly and regularly transferred to the Purchaser.
6.2.2 Until the time of Closing, continue to maintain the Purchased Assets
prudently and in such a manner as to preserve and maintain the value of the
Purchased Assets.
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 Assets 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.
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 of the Purchased Assets 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
as relates to the Purchased Assets from that shown on or reflected in the
Financial Statements.
9.6 Any consent, authorization, license, franchise, permit, approval,
or order of any court or governmental agency or regulatory body required
for the acquisition by the Purchaser of the Purchased Assets 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.
ARTICLE 10.00-CLOSING ARRANGEMENTS
10.1 The closing is scheduled to take place on March 15, 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 and other documents, including a Bill of Sale, and proof of
compliance with any State imposed Bulk Sale provisions with respect to all
the Purchased Assets.
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:
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 New York.
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 )_____________________________
)
) /s/Peter Knollenberg/s/
) SELLER
) By:Peter Knollenberg,
President
)
)
)
) /s/Alan Sporn/s/
) PURCHASER
) By:Alan Sporn,
President
)
Exhibit "A"
Consideration for the purchased Assets listed below shall be 400,000
restricted common shares of the Purchaser's stock, and 1,500,000 voting
convertible preferred shares valued at $1.00 each. The common shares shall
be restricted and legend bearing subject to Rule 144 K, starting as of
the 12-29-00 closing of this agreement. During this restricted period, if
and when the value of the initial 400,000 common shares is less than the
value of the acquired assets listed below during a consecutive period of
more than 90 days, an appropriate number of the Preferred Shares shall be
surrendered and exchanged for common shares, at a share price equal to the
average stock price of the five prior days of trading, to insure that the
combined value of the initial 400,000 common shares and the number of
Preferred Shares exchanged for common shares is not less than the value of
the assets listed below.
The Purchased Assets consist of:
1) 100% ownership of SEA HUNT, LLC., which owns 50% of SEA HUNT, INC.
Sea Hunt, Inc. owns two permits to retrieve treasure, said permits issued
by the Commonwealth of Virginia (Virginia Marine Resource Commission)
representing permit areas 97-0163 and 97-0498. 50% of the value of the
permits therein has been set at $1,500,000 based on $3,000,000 spent by
SEA HUNT, INC. in fiscal years 1997, 1998, 1999 as filed in the tax
returns (also see valuation on part of potentially recoverable treasure,
attached hereto for estimated value on portion of treasure, as is, where
is). Venture Planning will retain 50% of any treasure found on the Juno.
The Purchaser has a period of 30 days from the execution date of this
agreement to finalize due diligence on SEA HUNT, LLC., including all
corporate and other pertinent documentation reasonably required by the
Purchaser. The Parties hereto acknowledge that there is currently a
litiginous matter with respect to the potential assets of Sea Hunt, and
the extended period is to allow some resolution of the dispute.
This acquisition is subject to the Purchaser assuming $500,000
of SEA HUNT obligations as per the attached breakdown, $200,000
of which are payable on or before 4-15-01 and the balance of
$300,000 payable on or before 6-30-01.
2) 100% ownership of Telcoenergy, LLC. and its subsidiary OGC Pipeline,
LLC. and associated pipelines and pipeline easements, mainly in Oklahoma.
This is valued at $5,842,400 based on the replacement cost at fair market
value of the pipeline easements, as outlined in the attached schematic.
This value is net of a $2,300,000 first mortgage lien against the pipelines
and pipeline easements and accrued outstanding interest of approximately
$400,000. The mortgage holder has expressed a willingness to convert its
mortgage into stock of a publicly traded company.
The acquisition is subject to a valuation of the Purchased assets, whereby
the Purchaser has a period of 120 days from the date of execution of this
agreement to obtain a valuation of the Purchased Assets by a third party
appraiser to ascertain that the net value of the replacement costs at fair
market value attributed to them by Seller, said party or parties to be duly
accredited to appraise the said Purchased Assets.
This agreement is further subject to the Purchaser having a fully completed
closing of the purchase of JBE Electronics and a net tangible asset
valuation of $32 million within 120 days of the execution date of this
agreement.
In the event that Purchaser has not finalized the JBE purchase or does not
have the requisite net asset value, or in the event that seller's pipeline
easements are appraised at a value lower than the valuation as derived
herein, or Purchaser finds discrepancies from its due diligence of SEA
HUNT then the aggrieved party may demand a spin out of one or both
subsidiaries of Purchaser who owns said Purchased Assets upon forced
surrender of all Seller's shares in Purchaser save 50,000 shares of common
stock. Seller shall own 95% of the subsidiary or subsidiaries so spun out,
with at least some percentage of the retained shares held by the Purchaser
in the spun out company to be distributed to Purchaser's shareholders.
However, in the event that the spin-out is by Purchaser for cause, then the
Seller must return any funds advanced by Purchaser to Seller or to the
maintenance or for the benefit of the entities to be spun out, and all
shares Seller received from Purchaser.
Seller shall have one seat on Purchaser's Board of Directors.