United States
Securities and Exchange Commission
Washington, D.C. 20549
Commission File No.:0-22273
SCHEDULE 13D
Under the Securities Exchange Act of 1934
BOULDER CAPITAL OPPORTUNITIES III, INC.
--------------------------------------
(Name of Issuer)
COMMON
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(Title of Class of Securities)
10 1 409100
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(Cusip Number)
SONIC JET PERFORMANCE, LLC, ALBERT MARDIKIAN, 15662 COMMERCE LANE,
HUNTINGTON BEACH, CA 92649 - (714) 895-0944
- -------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
JUNE 25, 1998
------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13- d(b)(3) or (4), check the following box
/ /.
Check the following box if a fee is being paid with the statement /X/.
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and 92) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7)
<PAGE>
SCHEDULE 13D
CUSIP NO.: 10 1 409100 Page 1 of 6 Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Sonic Jet Performance, LLC,
a California Limited Liability Company
Tax ID#: 33-0756605
Members of LLC
Albert Mardikian
SSN: ###-##-####
Sheik Mohammed Al Rashid
SSN: ###-##-####
Majed Al Rashid
SSN: ###-##-####
2. Check the Appropriate Box if A Member of a Group*
a /X/
b / /
3. SEC Use Only
4. Source of Funds
OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
/ /
6. Citizenship or Place of Organization
California Limited Liability Company
15662 Commerce Lane
Huntington Beach, CA 92649
7. Sole Voting Power
5,000,000
8. Shared Voting Power
0
<PAGE>
9. Sole Dispositive Power
5,000,000
10. Shared Dispositive Power
0
11. Aggregate Amount Beneficially Owned by Each Reporting Person
5,000,000
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares
/ /
13. Percent of Class Represented by Amount in Row (11)
83%
14. Type of Reporting Person
OO
ITEM 1. SECURITY & ISSUER
This statement relates to common shares of Boulder Capital
Opportunities III, Inc.
ITEM 2.
a. Sonic Jet Performance, LLC - a California Limited Liability
Company
b. Principal Place of Business - 15662 Commerce Lane,
Huntington Beach, CA 92649
c. Prior to this transaction, reporting party was the operator of
Sonic Jet Performance watercraft manufacturers business which
has now been acquired by registrant. Company is the owner of
5,000,000 shares of Boulder Capital Opportunities III, Inc.
common stock
d. The reporting person has not during the last five years been
convicted in a criminal proceeding (excluding traffic
violations).
e. The reporting person has not during the last five years been
subject to or party to a civil proceeding of any type nor has
any judgment, decree or order of any type been entered against
reporting person.
f. Citizenship: Place of Formation: State of California
<PAGE>
II. Manager of LLC and 74% Interest beneficial owner of Sonic Jet
Performance, LLC through Sonic Jet Performance, Inc., a California
corporation.
a. Albert Mardikian
b. 15662 Commerce Lane, Huntington Beach, CA 92649
c. Mr. Mardikian's principal occupation has been as President
of Sonic Jet Performance, Inc. and manager of Sonic Jet
Performance, LLC within the past two years. The address of
such businesses is 15662 Commerce Lane, Huntington Beach,
CA 92649
d. The reporting person has not during the last five years been
convicted in a criminal proceeding (excluding traffic
violations).
e. The reporting person has not during the last five years been
subject to or party to a civil proceeding of any type nor has
any judgment, decree or order of any type been entered against
reporting person.
f. Citizenship: United States
III. 24% owner of Sonic Jet Performance, LLC
a. Sheik Mohammed al Rashid
b. Jedda, Saudi Arabia
c. Currently an independent investor living in Jedda, Saudi
Arabia. He owns 24% of Sonic Jet Performance, LLC
d. The reporting person has not during the last five years
been convicted in a criminal proceeding (excluding
traffic violations).
e. The reporting person has not during the last five years
been subject to or party to a civil proceeding of any
type nor has any judgment, decree or order of any type
been entered against reporting person.
f. Citizenship: Saudi Arabia
ITEM 3. SOURCE AND AMOUNT OF THE FUNDS
Not applicable to a Stock Exchange for assets.
<PAGE>
ITEM 4. PURPOSE OF THE TRANSACTION
The transaction was to complete the acquisition of the assets and
business of Sonic Jet Performance, LLC, a jet ski based watercraft manufacturer,
by Boulder Capital Opportunities III, Inc.
Sonic Jet Performance, LLC conveyed all of its assets, liabilities and
business to Boulder Capital Opportunities III, Inc. in consideration of issuance
of 5,000,000 shares of common stock to Sonic Jet Performance, LLC.
Alex Mardikian has been appointed as Vice President of Boulder Capital
Opportunities III, Inc. It is anticipated that Alex Mardikian will be appointed
to the Board of Directors of the Company, Boulder Capital Opportunities III,
Inc. upon compliance with Section 14f of the Securities Exchange Act of 1934.
Robert Soehngen expects to resign as Director and President upon request of the
Board as then duly constituted. No other Board members have been selected,
however at least two other members will be appointed in the future.
The issuer, Boulder Capital Opportunities III, Inc. has now acquired
the assets and liabilities of Sonic Jet Performance, LLC for 5,000,000 shares of
common stock. Concurrently, $1,500,000 was paid for 1,600 shares of newly
authorized Series A Convertible Preferred Stock by a private investment company.
Such shares of Series A Convertible Preferred Stock are convertible to common at
the lower of $4.00 per share or the average of the five lowest closing prices of
common in the 20 trading days prior to the Notice of Conversion by holder.
The assets of Sonic Jet Performance, LLC were $6,190,134 at December
31, 1997, according to the Audited Balance Sheet of Wayne Voigt, C.P.A. and the
liabilities were $837,677 at December 31, 1997. This balance sheet, as combined
with the issuer, Boulder Capital Opportunities III, Inc. has materially changed
the capitalization of Boulder Capital Opportunities III, Inc.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
a. 5,000,000 common shares (83%) of issuer are owned
beneficially and of record by Sonic Jet Performance, LLC,
the Reporting Person.
b. Sonic Jet Performance, LLC has sole power to vote 5,000,000
shares of common stock. Albert Mardikian is the Manager of
Sonic Jet Performance, LLC.
Sonic Jet Performance, LLC is owned beneficially as follows:
74% Sonic Jet Performance, Inc. (beneficially
Albert Mardikian)
<PAGE>
24% Sheik Mohammed Al Rashid
2% Majed Al Rashid
c. None
d. Not Applicable
e. Not Applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
The information contained in response to Item 4 and 5 is incorporated
herein.
Registrant entered into an Agreement with JNC Strategic Fund, Ltd. in
conjunction with an investment of $1,500,000 in Series A Preferred convertible
stock by JNC Strategic Fund, Ltd. Such Agreement contains covenants that the
Registrant:
Further, Registrant has entered into a Registration Rights Agreement
which requires the company to Register common shares for conversion of the
Preferred Series A by JNC Strategic Fund, Ltd. Company is currently preparing
such registration statement.
Registrant repurchased 100,000 shares of common stock of Robert
Soehngen for $100,000 on June 17, 1998.
The former control party, Robert Soehngen has granted an option to
issuer to purchase 332,500 shares of common stock of Boulder Capital
Opportunities III, Inc. for $46,958.97 on or before December 1, 1998. It has
been agreed, as part of the Stock Purchase Agreement for Series A Preferred
Stock by JNC Strategic Ltd, that the 332,500 shares of Robert Soehngen as well
as the 100,000 shares already purchased will be retired into the treasury of the
company.
The Registrant assumed a royalty agreement with a company owned by Albert
Mardikian, manager of Sonic Jet Performance, LLC, under which royalties are paid
for patent and design usage in products marketed by the Registrant, Boulder
Capital Opportunities III, Inc.
Exhibit 6.1 Share Exchange Agreement
Exhibit 6.2 Sale Agreement
Exhibit 6.3 Securities Purchase Agreement (JNC
Strategic Fund, Ltd.)
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 15, 1998
Sonic Jet Performance, LLC
/s/Albert Mardikian
-------------------------------
Signature
ALBERT MARDIKIAN/MANAGER
-------------------------------
Name/Title
Exhibit 6.1
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SHARE EXCHANGE AGREEMENT
BY AND AMONG
BOULDER CAPITAL OPPORTUNITIES III, INC.
A COLORADO CORPORATION
AND
SONIC JET PERFORMANCE, LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
DATED: JUNE 15, 1998
<PAGE>
SHARE EXCHANGE AGREEMENT
BOULDER CAPITAL OPPORTUNITIES III, INC.
AND
SONIC JET PERFORMANCE, LLC
This Share Exchange Agreement ("Agreement"), dated as of June 15, 1998,
among BOULDER CAPITAL OPPORTUNITIES III, INC. ("BCOIII"), a Colorado
Corporation, SONIC JET PERFORMANCE, LLC ("SJP"), a California Limited Liability
Company.
W I T N E S S E T H:
A. WHEREAS, BCOIII is a corporation duly organized under the laws of
the State of Colorado, and SJP is a Limited Liability Company organized in
California.
B. PLAN OF EXCHANGE. It is the intention that the assets of SJP shall
be acquired by BCOIII and all liabilities and other obligations of SJP shall be
assumed in exchange solely for voting stock of BCOIII. For federal income tax
purposes it is intended that this exchange shall be treated under Sec. 351 of
the Internal Revenue Code as may be applicable.
C. EXCHANGE OF SHARES. SJP agrees that all of the assets of SJP shall
be exchanged with BCOIII for 5,000,000 common shares of BCOIII issued to SJP
fully paid and nonassessable, and that BCOIII shall assume all liabilities and
other obligations of SJP.
D. WHEREAS, the parties hereto wish to enter into this Agreement,
pursuant to the provisions of the Colorado Revised Statutes.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
THE CONSIDERATION
1.1 Subject to the conditions set forth herein on the "Closing Date"
(as herein defined), SJP shall convey all of its assets by assignment or Bill of
Sale and BCOIII shall assume all liabilities of SJP by way of an assumption
agreement as such assets and liabilities are specified in the unaudited balance
sheet of SJP, dated as of May 31, 1998, attached hereto, and made a part hereof
by this reference, for 5,000,000 common shares of BCOIII common stock. The
transactions contemplated by this Agreement shall be completed at a closing
("Closing") on a closing date ("Closing Date") on or before June 5, 1998.
On the Closing Date, all of the documents to be furnished to BCOIII and
SJP, including the documents to be furnished pursuant to Article VII of this
Agreement, shall be delivered to M.A. Littman, to be held in escrow until all
<PAGE>
closing conditions hereunder have been met or the date of termination of this
Agreement, but no longer than 10 days after closing date, whichever first
occurs, and thereafter shall be promptly distributed to the parties as their
interests may appear.
1.2 Concurrent with the execution hereof, SJP shall deposit or cause to
be deposited to BCOIII $9,000 as a non-refundable consideration for this
agreement which will be used to pay accrued legal fees to Al Brennan and audit
costs for 1997 10-K.
1.3 For accounting purposes, the Agreement shall be effective as of
12:01 a.m., on the last day of the month preceding the Closing Date.
ARTICLE II
ISSUANCE AND EXCHANGE OF SHARES
2.1 The shares of $.0001 par value common stock of BCOIII shall be
issued by it to SJP at closing.
2.2 BCOIII represents that no outstanding options or warrants for its
unissued shares exist, except as may be contained in an Encore Capital
Subscription Agreement now in negotiation.
2.3 No fractional shares of BCOIII stock shall be issued as a result of
the Agreement. Shares shall be rounded to nearest whole share.
ARTICLE III
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF SONIC JET PERFORMANCE, LLC
No representations or warranties are made by any director, officer,
employee or shareholder of SJP as individuals, except as and to the extent
stated in this Agreement or in a separate written statement (the "SJP Disclosure
Statement"), if any. SJP hereby represents, warrants and covenants to BCOIII
except as stated in the SJP Disclosure Statement, as follows:
3.1 SJP is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of California, and has the
power and authority to carry on its business as it is now being conducted. The
Articles of Organization and Operating Agreement of SJP are complete and
accurate, and the minute books of SJP contain a record, which is complete and
accurate in all material respects, of all meetings, and all actions of the
members and managers of SJP.
3.2 SJP has complete and unrestricted power to enter into and, upon the
appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
<PAGE>
3.3 Neither the making of nor the compliance with the terms and
provisions of this Agreement and consummation of the transactions contemplated
herein by SJP will conflict with or result in a breach or violation of the
Articles of Organization or Operating Agreement of SJP.
3.4 The execution, delivery and performance of this Agreement has been
duly authorized and approved by SJP's sole manager, Albert Mardikian, a
"MAJORITY OF MEMBERS" (as such term is defined in the operating agreement for
SJP).
3.5 Within 5 days SJP will deliver to BCOIII consolidated audited
financial statements of SJP, as of December 31, 1997 and an unaudited balance
sheet of SJP at May 31, 1998. All such statements, herein sometimes called "SJP
Financial Statements", are complete and correct in all material respects and,
together with the notes to these financial statements, present fairly the
financial position and results of operations of SJP for the periods included.
The statements will have been prepared in accordance with generally accepted
accounting principles.
3.6 Since the dates of the SJP Financial Statements, there have not
been any material adverse changes in the business or condition, financial or
otherwise of SJP.
3.7 There are no legal proceedings or regulatory proceedings involving
material claims pending, or to the knowledge of SJP, threatened against SJP or
affecting any of its assets or properties, and SJP is not in any material breach
or violation of or default under any contract or instrument to which SJP is a
party, and no event has occurred which with the lapse of time or action by a
third party could result in a material breach or violation of or default by SJP
under any contract or other instrument to which SJP is a party or by which it or
any of its properties may be bound or affected, or under its respective Articles
of Organization or Operating Agreement, nor is there any court or regulatory
order pending, applicable to SJP.
3.8 All liability of SJP has been properly provided for and is adequate
to comply with all regulatory requirements regarding same.
3.9 The representations and warranties of SJP shall be true and correct
as of the date hereof and as of the Closing Date.
3.10 SJP will deliver to BCOIII a copy of each of the federal income
tax returns of SJP for the year ending December 31, 1997, and for any additional
open years. All returns and information reports required or requested by
federal, state, county, and local tax authorities have been filed or supplied in
a timely fashion, and all such information is true and correct in all material
respects. Provision has been made for the payment of all taxes due to date by
<PAGE>
SJP, including taxes for the current year ending December 31, 1997. No
federal income tax return of SJP is currently under audit.
3.11 SJP has no employee benefit plan, including non-qualified stock
awards, options, and consulting fees for independent contractors, other than as
disclosed in the books and records and disclosure statement.
3.12 No representation or warranty by SJP in this Agreement, the SJP
Disclosure Statement or any certificate delivered pursuant hereto contains any
untrue statement of a material fact or omits to state any material fact
necessary to make such representation or warranty not misleading.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BCOIII, INC.
No representations or warranties are made by any director, officer,
employee or shareholder of BCOIII as individuals, except as and to the extent
stated in this Agreement or in a separate written statement.
BCOIII hereby represents, warrants and covenants to SJP, except as
stated in the BCOIII Disclosure Statement, as follows:
4.1 BCOIII is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado, and has the corporate
power and authority to own or lease its properties and to carry on its business
as it is now being conducted. The Articles of Incorporation and Bylaws of
BCOIII, copies of which have been delivered to SJP, are complete and accurate,
and the minute books of BCOIII contain a record, which is complete and accurate
in all material respects, of all meetings, and all corporate actions of the
shareholders and Board of Directors of BCOIII.
4.2 The aggregate number of shares which BCOIII is authorized to issue
is 100,000,000 shares of common stock with a par value of $.001 per share, of
which approximately 1,010,000 shares of such common stock will be issued and
outstanding, fully paid and non-assessable, prior to closing under this
agreement. BCOIII has no outstanding options, warrants or other rights to
purchase, or subscribe to, or securities convertible into or exchangeable for
any shares of capital stock.
4.3 BCOIII has complete and unrestricted power to enter into and, upon
the appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
4.4 Neither the making of nor the compliance with the terms and
provisions of this Agreement and consummation of the transactions contemplated
<PAGE>
herein by BCOIII will conflict with or result in a breach or violation of the
Articles of Incorporation or Bylaws of BCOIII.
4.5 The execution of this Agreement has been duly authorized and
approved by the BCOIII's Board of Directors.
4.6 BCOIII has delivered to SJP financial statements of BCOIII dated
December 31, 1997. All such statements, herein sometimes called "BCOIII
Financial Statements" are (and will be) complete and correct in all material
respects and, together with the notes to these financial statements, present
fairly the financial position and results of operations of BCOIII of the periods
indicated. All statements of BCOIII will have been prepared in accordance with
generally accepted accounting principles.
4.7 Since the dates of the BCOIII Financial Statements, there have not
been any material adverse changes in the business or condition, financial or
otherwise, of BCOIII. BCOIII does not have any material liabilities or
obligations, secured or unsecured except as shown on updated financials (whether
accrued, absolute, contingent or otherwise).
4.8 BCOIII has delivered to SJP a list and description of all pending
legal proceedings involving BCOIII, none of which will materially adversely
affect them, and, except for these proceedings, there are no legal proceedings
or regulatory proceedings involving material claims pending, or, to the
knowledge of the officers of BCOIII, threatened against BCOIII or affecting any
of its assets or properties, and BCOIII is not in any material breach or
violation of or default under any contract or instrument to which BCOIII is a
party, and no event has occurred which with the lapse of time or action by a
third party could result in a material breach or violation of or default by
BCOIII under any contract or other instrument to which BCOIII is a party or by
which they or any of their respective properties may be bound or affected, or
under their respective Articles of Incorporation or Bylaws, nor is there any
court or regulatory order pending, applicable to BCOIII.
4.9 BCOIII shall not enter into or consummate any transactions prior to
the Closing Date other than in the ordinary course of business and will pay no
dividend, or increase the compensation of officers and will not enter into any
agreement or transaction which would adversely affect its financial condition.
4.10 BCOIII is not a party to any contract performable in the future.
4.11 The representations and warranties of BCOIII shall be true and
correct as of the date hereof and as of the Closing Date.
<PAGE>
4.12 BCOIII has delivered to SJP, all of its corporate books and
records for review, true and correct copies of BCOIII's tax return since 1996,
if any. BCOIII will also deliver to SJP on or before the Closing Date any
reports relating to the financial and business condition of BCOIII which occur
after the date of this Agreement and any other reports sent generally to its
shareholders after the date of this Agreement.
4.13 BCOIII has no employee benefit plan in effect at this time.
4.14 No representation or warranty by BCOIII in this Agreement, the
BCOIII Disclosure Statement or any certificate delivered pursuant hereto
contains any untrue statement of a material fact or omits to state any material
fact necessary to make such representation or warranty not misleading.
4.15 BCOIII agrees that all rights to indemnification now existing in
favor of the employees, agents, directors or officers of SJP and its
subsidiaries, as provided in the Articles of Incorporation or Bylaws or
otherwise in effect on the date hereof shall survive the transactions
contemplated hereby in accordance with their terms, and BCOIII expressly assumes
such indemnification obligations of SJP.
4.16 BCOIII has delivered, to SJP true and correct copies of the BCOIII
10-K and each of its other reports to shareholders and filing with the
Securities and Exchange Commission ("SEC") for the current year. BCOIII will
also deliver to SJP on or before the Closing Date any reports relating to the
financial and business condition of BCOIII which are filed with the SEC after
the date of this Agreement and any other reports sent generally to its
shareholders after the date of this Agreement.
4.17 BCOIII has duly filed all reports required to be filed by it under
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended, (the "Federal Securities Laws"). No such reports, or any reports
sent to the shareholders of BCOIII generally, contained any untrue statement of
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements in such report, in light of the
circumstances under which they were made, not misleading.
4.18 BCOIII hereby covenants that during the contract period, prior to
closing, it will not take any board action without Mardikian's approval in
writing, pending selection of new officers and directors at closing.
<PAGE>
ARTICLE V
OBLIGATIONS OF THE PARTIES PENDING THE CLOSING DATE
5.1 This Agreement shall be duly submitted to the members of SJP for
the purpose of considering and acting upon this Agreement in the manner required
by law at a meeting of members on a date selected by SJP, such date to be the
earliest practicable date or by majority written consent. The manager of SJP,
subject to its fiduciary obligations to members, shall use its best efforts to
obtain the requisite majority approval of SJP members of this Agreement and the
transactions contemplated herein. SJP and BCOIII shall take all reasonable and
necessary steps and actions to comply with and to secure SJP member approval of
this Agreement.
5.2 At all times prior to the Closing Date during regular business
hours, each party will permit the other to examine its books and records and the
books and records of its subsidiaries and will furnish copies thereof on
request. It is recognized that, during the performance of this Agreement, each
party may provide the other parties with information which is confidential or
proprietary information. During the term of this Agreement, and for four years
following the termination of this Agreement, the recipient of such information
shall protect such information from disclosure to persons, other than members of
its own or affiliated organizations and its professional advisers, in the same
manner as it protects its own confidential or proprietary information from
unauthorized disclosure, and not use such information to the competitive
detriment of the disclosing party. In addition, if this Agreement is terminated
for any reason, each party shall promptly return or cause to be returned all
documents or other written records of such confidential or proprietary
information, together with all copies of such writings and, in addition, shall
either furnish or cause to be furnished, or shall destroy, or shall maintain
with such standard of care as is exercised with respect to its own confidential
or proprietary information, all copies of all documents or other written records
developed or prepared by such party on the basis of such confidential or
proprietary information. No information shall be considered confidential or
proprietary if it is (a) information already in the possession of the party to
whom disclosure is made, (b) information acquired by the party to whom the
disclosure is made from other sources, or (c) information in the public domain
or generally available to interested persons or which at a later date passes
into the public domain or becomes available to the party to whom disclosure is
made without any wrongdoing by the party to whom the disclosure is made.
5.3 BCOIII and SJP shall promptly provide each other with information
as to any significant developments in the performance of this Agreement, and
shall promptly notify the other if it discovers that any of its representations,
warranties and covenants contained in this Agreement or in any document
<PAGE>
delivered in connection with this Agreement was not true and correct in all
material respects or became untrue or incorrect in any material respect.
5.4 All parties to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use their best efforts in order
to consummate the transactions contemplated hereby as promptly as practicable.
ARTICLE VI
PROCEDURE FOR EXCHANGE
6.1 At the Closing Date, the exchange shall be effected as set forth in
Colorado Revised Statutes with common stock certificates of BCOIII being
exchanged for SJP assets and the assumption by BCOIII of the liabilities and
other obligations of SJP, all as delineated above, together with delivery of
Assignments and Bills of Sale for the assets transferred by SJP to BCOIII, and
an Assumption Agreement for the liabilities and other obligations assumed by
BCOIII.
ARTICLE VII
CONDITIONS PRECEDENT TO THE
CONSUMMATION OF THE EXCHANGE
The following are conditions precedent to the consummation of the
Agreement on or before the Closing Date:
7.1 SJP shall have performed and complied with all of its respective
obligations hereunder which are to be complied with or performed on or before
the Closing Date and BCOIII and SJP shall provide one another at the Closing
with a certificate to the effect that such party has performed each of the acts
and undertakings required to be performed by it on or before the Closing Date
pursuant to the terms of this Agreement.
7.2 This Agreement, the transactions contemplated herein shall have
been duly and validly authorized, approved and adopted by the manager of SJP in
accordance with the applicable laws.
7.3 No action, suit or proceeding shall have been instituted or shall
have been threatened before any court or other governmental body or by any
public authority to restrain, enjoin or prohibit the transactions contemplated
herein, or which might subject any of the parties hereto or their directors or
officers to any material liability, fine, forfeiture or penalty on the grounds
that the transactions contemplated hereby, the parties hereto or their directors
or officers, have violated any applicable law or regulation or have otherwise
acted improperly in connection with the transactions contemplated hereby, and
the parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit or proceeding raises substantial questions of law or
fact which could reasonably be decided adversely to any party hereto or its
directors or officers.
<PAGE>
7.4 All actions, proceedings, instruments and documents required to
carry out this Agreement and the transactions contemplated hereby and the form
and substance of all legal proceedings and related matters shall have been
approved by counsel for SJP and BCOIII.
7.5 The representations and warranties made by SJP and BCOIII in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Closing Date, except to the extent that such
representations and warranties may be untrue on and as of the Closing Date
because of (1) changes caused by transactions suggested or approved in writing
by SJP or (2) events or changes (which shall not, in the aggregate, have
materially and adversely affected the business, assets, or financial condition
of BCOIII or SJP during or arising after the date of this Agreement.)
7.6 SJP shall have furnished BCOIII with:
(1) a certified copy of a resolution or resolutions
duly adopted by a "MAJORITY OF MEMBERS", as such term is
defined in the operating agreement for SJP, approving this
Agreement and the transactions contemplated by it;
(2) an opinion of its counsel dated as of the Closing
Date in accordance with 7.5 hereof;
(3) an agreement from each member-"affiliate" of SJP
as defined in the rules adopted under the Securities Act of
1933, as amended, to the effect that (a) the affiliate is
familiar with SEC Rules 144 and 145; (b) none of the shares of
BCOIII common stock will be transferred by or through the
affiliate in violation of the Federal Securities Laws; (c) the
affiliate will not sell or in any way reduce his risk relative
to any BCOIII common stock received pursuant to this Agreement
until such time as financial results covering at least 30 days
of post-closing date combined operations shall have been
published by BCOIII on SEC Form 10-Q or otherwise; and (d) the
affiliate acknowledges that BCOIII is under no obligation to
register the sale, transfer, or the disposition of BCOIII
common stock by the affiliate or to take any action necessary
in order to make an exemption from registration available to
the affiliate, but understands that BCOIII will satisfy the
public information requirements of Rules 144 and 145 during
the three-year period following the Closing Date.
<PAGE>
7.7 BCOIII shall furnish SJP with a certified copy of a resolution or
resolutions duly adopted by the Board of Directors of BCOIII, approving this
Agreement and the transactions contemplated by it.
7.8 All outstanding liabilities of BCOIII shall have been paid and
released prior to closing.
7.9 Encore Capital shall have delivered a fully executed Stock
Subscription Agreement between BCOIII and Encore Capital for a $1,500,000
investment in Preferred Convertible Stock.
7.10 BCOIII shall appoint, at closing, Albert Mardikian as President of
BCOIII and, subject to filing a Form 14f with the SEC and mailing to
shareholders required thereby, shall appoint Mardikian as a director and such
other persons as Mardikian may direct.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 Anything contained in this Agreement to the contrary
notwithstanding, the Agreement may be terminated and abandoned at any time prior
to the Closing Date:
(a) By mutual consent of SJP and BCOIII;
(b) By SJP or BCOIII, if any condition set forth in
Article VII relating to the other party has not been met or
has not been waived;
(c) By SJP or BCOIII, if any suit, action or other
proceeding shall be pending or threatened by the federal or a
state government before any court or governmental agency, in
which it is sought to restrain, prohibit or otherwise affect
the consummation of the transactions contemplated hereby;
(d) By any party, if there is discovered any material
error, misstatement or omission in the representations
and warranties of another party;
(e) By any party if the Agreement Closing Date is not
within 30 days from the date hereof; or
8.2 Any of the terms or conditions of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, by action taken
by its Board of Directors or Manager provided; however, that such action shall
be taken only if, in the judgment of the Board of Directors or Manager taking
the action, such waiver will not have a materially adverse effect on the
benefits intended under this Agreement to the party waiving such term or
condition.
<PAGE>
ARTICLE IX
TERMINATION OF REPRESENTATION AND
WARRANTIES AND CERTAIN AGREEMENTS
9.1 The respective representations and warranties of the parties hereto
shall expire with, and be terminated and extinguished by consummation of the
Agreement; provided, however, that the covenants and agreements of the parties
hereto shall survive in accordance with their terms.
ARTICLE X
MISCELLANEOUS
10.1 This Agreement embodies the entire agreement between the parties,
and there have been and are no agreements, representations or warranties among
the parties other than those set forth herein or those provided for herein.
10.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument. Counterparts shall include the execution of the
Exchange Agreement and Representations by all shareholders.
10.3 All parties to this Agreement agree that if it becomes necessary
or desirable to execute further instruments or to make such other assurances as
are deemed necessary, the party requested to do so will use its best efforts to
provide such executed instruments or do all things necessary or proper to carry
out the purpose of this Agreement.
10.4 This Agreement may be amended upon approval of the Board of
Directors of each party provided that the shares issuable hereunder shall not be
amended without approval of SJP.
10.5 Any notices, requests, or other communications required or
permitted hereunder shall be delivered personally or sent by overnight courier
service, fees prepaid, addressed as follows:
To BCOIII, Inc.:
Robert Soehngen
1280 Centaur Village Drive, #10
Lafayette, CO 80026
copy to: Michael A. Littman
Attorney at Law
10200 W. 44th Ave., #400
Wheat Ridge, CO 80033
<PAGE>
To Sonic Jet Performance, LLC
15662 Commerce Lane
Huntington Beach, CA 92649
copy to: Law Offices of Pasquale P. Caiazza
Attn: Christopher A. Morgan, J.D.
1625 West 22nd Street
Santa Ana, California 92706-2413
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
10.6 No press release or public statement will be issued relating to
the transactions contemplated by this Agreement without prior approval of SJP
and BCOIII. However, either SJP or BCOIII may issue at any time any press
release or other public statement it believes on the advice of its counsel it is
obligated to issue to avoid liability under the law relating to disclosures, but
the party issuing such press release or public statement shall make a reasonable
effort to give the other party prior notice of and opportunity to participate in
such release or statement.
IN WITNESS WHEREOF, the parties have set their hands and seals this
15th day of June, 1998.
BOULDER CAPITAL OPPORTUNITIES III, INC.
By:__________________________
President
Attest:________________________
Secretary
SONIC JET PERFORMANCE, LLC
By:___________________________
Manager
Exhibit 6.2
<PAGE>
STOCK SALE AGREEMENT
This STOCK SALE AGREEMENT (the "Agreement"), dated as of June 12, 1998,
is made by and between Robert Soehngen, ("Seller") and Boulder Capital
Opportunities III, Inc. ("Buyer").
In consideration of One Hundred Thousand dollars and no/100ths
($100,000.00) paid herewith, Seller hereby sells to the Buyer, 100,000 shares
(the "Shares") of common stock of Boulder Capital Opportunities III, Inc. free
and clear of liens and encumbrances.
Further, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and for the purpose of defining the terms and provisions of this
Agreement and the Option hereby granted, Seller and Buyer hereby agree as
follows:
1. TERMS OF EXERCISE. The Option granted herein may be exercised by
Buyer in whole or in part at any time or times on or before 5:00 p.m. as set
forth in 2 c). Buyer may exercise the Option from time to time by delivering to
escrow agent the amounts set forth in 2 below net to Seller for each Share (the
"Exercise Price") for which Buyer is exercising the Option. Payment shall be
made to Seller by bankcheck or wire transfer. Upon receipt by Escrow Agent of
Buyer's payment, Escrow Agent shall transfer from the number of Shares so
purchased upon the exercise of the Option.
2. PURCHASE SCHEDULE CONDITIONS.
a) Shares shall be held by Michael A. Littman, Escrow Agent
who may transfer the shares purchased upon concurrent payment of the purchase
price to Escrow Agent.
b) Buyer must purchase the shares within the time period
specified below in order to maintain the option in force and effect. Failure to
exercise the purchase in the given time period shall cause the option to be null
and void.
c) 432,500 of the shares of Boulder Capital Opportunities III,
Inc. @ $.14123 per share on or before December 1, 1998, by delivery of wired
funds or cashier's check to the Escrow Agent, who is hereby then instructed to
deliver the shares to Buyer or assigns.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.
Seller hereby represents and warrants as follows:
a) None of the representations or warranties made by Seller
contains any untrue statement of material fact, or omits to state any material
fact necessary to make the statements made, in the light of the circumstances
under which they were made, not misleading.
<PAGE>
b) The shares are unencumbered by any lien or claim.
4. UNREGISTERED SECURITIES. The Shares have not been registered under
the Securities Act of 1933, as amended (the "Act"), however, the Shares may be
sold or conveyed only pursuant to Rule 144.
5. NOTICES. Any notice pursuant to this Agreement by Seller or Buyer
shall be in writing and shall be deemed to have been duly given if delivered
personally with written receipt acknowledged or mailed by certified mail five
days after mailing, return receipt requested:
If to Seller:
If to Buyer:
Robert Soehngen
Any party hereto may from time to time change the address to which
notices to it are to be delivered or mailed hereunder by notice in accordance
herewith to the other party.
6. This Option is conditional and shall not be exercisable unless and
until Boulder Capital Opportunities III, Inc. has completed the acquisition of
Sonic Jet Performance, LLC.
7. All the covenants and provisions of this Agreement by or for the
benefit of Buyer or Seller shall bind and inure to the benefit of their
respective successors and assigns hereunder.
8. APPLICABLE LAW. This Agreement shall be deemed to be a contract made
under the laws of the State of Colorado and for all purposes shall be construed
in accordance with the laws of said State.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the day and year first above written.
Seller: Buyer:
Boulder Capital Opportunities III, Inc.
/S/ROBERT SOEHNGEN BY:/S/ROBERT SOEHNGEN
- ------------------ ---------------------
Robert Soehngen President
Exhibit 6.3
<PAGE>
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of June 17,
1998, among BOULDER CAPITAL OPPORTUNITIES III, INC., a corporation organized
under the laws of the State of Colorado (the "COMPANY"), SONIC JET PERFORMANCE,
LLC, a limited liability company organized under the laws of the State of
California ("SJP") and the purchasers (the "PURCHASER") set forth on the
execution page hereof (the "EXECUTION PAGES").
WHEREAS:
A. The Company, SJP and Purchaser are executing and delivering this
Agreement in connection with the reliance by the Company and the Purchaser upon
the exemption from securities registration afforded by the provisions of
Regulation D ("REGULATION D"), as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "SECURITIES ACT").
B. The Company and SJP have executed and entered into that certain
Share Exchange Agreement, dated June 15, 1998 (the "SHARE EXCHANGE AGREEMENT"),
whereby the Company will acquire substantially all of the assets and liabilities
of SJP in exchange for common stock of the Company (the "TRANSACTION"). After
completion of the Transaction the Company will change its name to "Sonic JET
Performance, Inc."
C. The Company desires to sell, and Purchaser desires to purchase, upon
the terms and conditions stated in this Agreement, 1,600 shares of the Company's
Series A Convertible Preferred Stock, no par value (the "PREFERRED SHARES"),
convertible into shares of the Company's common stock, no par value (the "COMMON
STOCK"). The rights, preferences and privileges of the Preferred Shares,
including the terms upon which such Preferred Shares are convertible into shares
of Common Stock, are set forth in the form of Certificate of Designations,
Preferences and Rights attached hereto as EXHIBIT A (the "CERTIFICATE OF
DESIGNATION"). The shares of Common Stock issuable upon conversion of the
Preferred Shares or otherwise pursuant to the Certificate of Designation are
referred to herein as the "CONVERSION SHARES". The Preferred Shares, and the
Conversion Shares are collectively referred to herein as the "SECURITIES" and
each of them may individually be referred to herein as a "SECURITY."
D. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as EXHIBIT B (the "REGISTRATION RIGHTS AGREEMENT"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.
<PAGE>
NOW, THEREFORE, the Company, SJP and the Purchaser hereby agree as
follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
(a) PURCHASE OF PREFERRED SHARES. On the Closing Date (as defined
below), subject to the satisfaction (or waiver) of the conditions set forth in
Section 7 and Section 8 below, the Company shall issue and sell to Purchaser,
and Purchaser shall purchase from the Company, the Preferred Shares. The
purchase price (the "PURCHASE PRICE") shall be One Million Five Hundred Thousand
Dollars ($1,500,000.00) for the Preferred Shares.
(b) FORM OF PAYMENT. On the Closing Date, Purchaser shall pay the
aggregate Purchase Price by wire transfer to the Company, in accordance with the
Company's written wiring instructions, against delivery of duly executed
certificates representing the Preferred Shares being purchased by Purchaser and
the Company shall deliver such certificates against delivery of such aggregate
Purchase Price.
(c) CLOSING DATE. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 7 and Section 8 below, the date and time
of the issuance and sale of the Preferred Shares pursuant to this Agreement (the
"CLOSING") shall be 12:00 noon, New York City time, on June 19, 1998, subject to
a two business day grace period at either party's option, but in any event not
later than June 26, 1998, or such other time as may be mutually agreed upon by
the Company and the Purchaser (the "CLOSING DATE"). The Closing shall occur at
the offices of Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, 1401 Walnut
Street, Philadelphia, Pennsylvania 19102.
2. PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to the Company as follows:
(a) PURCHASE FOR OWN ACCOUNT, ETC. Purchaser is purchasing the
Preferred Shares for Purchaser's own account and not with a present view towards
the public sale or distribution thereof, except pursuant to sales that are
exempt from the registration requirements of the Securities Act and/or sales
registered under the Securities Act. Purchaser understands that Purchaser must
bear the economic risk of this investment indefinitely, unless the Securities
are registered pursuant to the Securities Act and any applicable state
securities or blue sky laws or an exemption from such registration is available,
and that the Company has no present intention of registering the resale of any
such Securities other than as contemplated by the Registration Rights Agreement.
Notwithstanding anything in this Section 2(a) to the contrary, by making the
representations herein, the Purchaser does not agree to hold the Securities for
any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
<PAGE>
statement or an exemption from the registration requirements under the
Securities Act.
(b) ACCREDITED INVESTOR STATUS. Purchaser is an "ACCREDITED
INVESTOR" as that term is defined in Rule 501(a) of Regulation D.
(c) RELIANCE ON EXEMPTIONS. Purchaser understands that the Preferred
Shares are being offered and sold to Purchaser in reliance upon specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and Purchaser's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of Purchaser set forth herein in order to
determine the availability of such exemptions and the eligibility of Purchaser
to acquire the Preferred Shares.
(d) INFORMATION. Purchaser and its counsel, if any, have been furnished
all materials relating to the business, finances and operations of the Company
and SJP and materials relating to the offer and sale of the Preferred Shares
which have been specifically requested by Purchaser or its counsel. Purchaser
and its counsel have been afforded the opportunity to ask questions of the
Company and SJP. Neither such inquiries nor any other investigation conducted by
Purchaser or its counsel or any of its representatives shall modify, amend or
affect Purchaser's right to rely on the Company's or SJP's representations and
warranties contained in Section 3 and Section 4 below. Purchaser understands
that Purchaser's investment in the Preferred Shares involves a high degree of
risk.
(e) GOVERNMENTAL REVIEW. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Preferred Shares.
(f) TRANSFER OR RESALE. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the sale or resale of the
Preferred Shares and the Conversion Shares have not been and are not being
registered under the Securities Act or any state securities laws, and the
Preferred Shares and the Conversion Shares may not be transferred unless (a) the
resale of the Preferred Shares or the Conversion Shares, as applicable, has been
registered thereunder; or (b) Purchaser shall have delivered to the Company an
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the Preferred Shares or Conversion Shares to be sold or transferred may be sold
or transferred pursuant to an exemption from such registration; or (c) the
Preferred Shares or the Conversion Shares, as applicable, are sold under Rule
144 promulgated under the Securities Act (or a successor rule) ("RULE 144"); or
(d) the Preferred Shares or the Conversion Shares, as applicable, are sold or
transferred to an affiliate of Purchaser who agrees to sell or otherwise
<PAGE>
transfer the Preferred Shares or the Conversion Shares, as applicable, only in
accordance with the provisions of this Section 2(f) and who is an Accredited
Investor; and (ii) neither the Company nor any other person is under any
obligation to register such Preferred Shares or the Conversion Shares under the
Securities Act or any state securities laws (other than pursuant to the
Registration Rights Agreement). Notwithstanding the foregoing or anything else
contained herein to the contrary, the Preferred Shares or the Conversion Shares
may be pledged as collateral in connection with a bona fide margin account or
other lending arrangement.
(g) LEGENDS. Purchaser understands that the certificates for the
Preferred Shares and, until such time as the Conversion Shares have been
registered under the Securities Act (including registration pursuant to Rule 416
thereunder) as contemplated by the Registration Rights Agreement or otherwise
may be sold by Purchaser under Rule 144, the certificates for the Conversion
Shares may bear a restrictive legend in substantially the following form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any state of the United States. The securities represented hereby may
not be offered, sold or transferred in the absence of an effective
registration statement for the securities under applicable securities
laws unless offered, sold or transferred under an available exemption
from the registration requirements of those laws.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security upon which it is
stamped if, unless otherwise required by state securities laws, (a) the sale of
such Security is registered under the Securities Act (including registration
pursuant to Rule 416 thereunder) as contemplated by the Registration Rights
Agreement; (b) such holder provides the Company with an opinion of counsel, in
form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security may
be made without registration under the Securities Act; or (c) such holder
provides the Company with reasonable assurances that such Security can be sold
under Rule 144. Purchaser agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, pursuant
to an effective registration statement or under an exemption from the
registration requirements of the Securities Act. In the event the above legend
is removed from any Security and thereafter the effectiveness of a registration
statement covering such Security is suspended or the Company determines that a
supplement or amendment thereto is required by applicable securities laws, then
upon reasonable advance notice to Purchaser the Company may
<PAGE>
require that the above legend be placed on any such Security that cannot then be
sold pursuant to an effective registration statement or under Rule 144 and
Purchaser shall cooperate in the replacement of such legend. Such legend shall
thereafter be removed when such Security may again be sold pursuant to an
effective registration statement or under Rule 144.
(h) AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of Purchaser and are valid and binding agreements of Purchaser
enforceable against Purchaser in accordance with their terms.
(i) RESIDENCY. Purchaser is a resident of the jurisdiction set forth
under Purchaser's name on the Execution Page hereto executed by Purchaser.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Purchaser as follows:
(a) ORGANIZATION AND QUALIFICATION. The Company and each of its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Company and each of its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it
makes such qualification necessary and where the failure so to qualify would
have a Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means any material
adverse effect on (i) the Securities, (ii) the ability of the Company or SJP to
perform its obligations hereunder or under the Certificate of Designation or the
Registration Rights Agreement, (iii) the ability of the Company or SJP to
consummate the Transaction or (iv) the business, operations, properties,
prospects or financial condition of the Company or SJP and their subsidiaries,
taken as a respective whole.
(b) AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement and the Registration Rights Agreement, to issue and sell the
Preferred Shares in accordance with the terms hereof, to issue the Conversion
Shares upon conversion of the Preferred Shares in accordance with the terms of
the Certificate of Designation; (ii) the execution, delivery and performance of
this Agreement and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Preferred Shares and the
issuance and reservation for issuance of the Conversion Shares) have been duly
authorized by the Company's Board of Directors and no further consent or
<PAGE>
authorization of the Company, its Board of Directors, any committee of the Board
of Directors or the Company's shareholders is required, and (iii) this Agreement
constitutes, and, upon execution and delivery by the Company of the Registration
Rights Agreement, such agreements will constitute, valid and binding obligations
of the Company enforceable against the Company in accordance with their terms.
(c) STOCKHOLDER AUTHORIZATION. The Company believes that neither the
execution, delivery or performance of this Agreement or the Registration Rights
Agreement by the Company nor the consummation by it of the transactions
contemplated hereby or thereby (including, without limitation, the Transaction,
the issuance of the Preferred Shares or the issuance, reservation for issuance
or listing of the Conversion Shares) requires any consent, approval or
authorization of the Company's stockholders.
(d) CAPITALIZATION. The capitalization of the Company as of the date
hereof and the pro forma capitalization of the Company assuming the consummation
of the Transaction, including the authorized capital stock, the number of shares
issued and outstanding, the number of shares issuable and reserved for issuance
pursuant to the Company's stock option plans, the number of shares issuable and
reserved for issuance pursuant to securities (other than the Preferred Shares)
exercisable or exchangeable for, or convertible into, any shares of capital
stock is set forth on SCHEDULE 3(D). All of such outstanding shares of capital
stock have been, or upon issuance in accordance with the terms of any such
warrants, options or preferred stock, will be, validly issued, fully paid and
non-assessable. No shares of capital stock of the Company (including the
Preferred Shares, the Conversion Shares) are subject to preemptive rights or any
other similar rights of the stockholders of the Company or any liens or
encumbrances. Except for the Securities and as set forth on SCHEDULE 3(D), as of
the date of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock of the Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its subsidiaries, and (ii) there are no agreements or arrangements
under which the Company or any of its subsidiaries is obligated to register the
sale of any of its or their securities under the Securities Act (except the
Registration Rights Agreement). Except as set forth on SCHEDULE 3(D), (i) there
are no securities or instruments containing antidilution or similar provisions
that will be triggered by the issuance of the Securities in accordance with the
terms of this Agreement, the Certificate of Designation, (ii) there are no
outstanding securities or instruments of the Company or any of its subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
<PAGE>
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to redeem a security of the Company or any
of its subsidiaries, and (iii) the Company does not have any stock appreciation
rights or "phantom stock" plans or agreements or any similar plan or agreement.
The Company has furnished to the Purchaser true and correct copies of the
Company's Certificate of Incorporation as in effect on the date hereof
("CERTIFICATE OF INCORPORATION"), the Company's By-laws as in effect on the date
hereof (the "BY-LAWS"), and all other instruments and agreements governing
securities convertible into or exercisable or exchangeable for capital stock of
the Company. The Certificate of Designation, in the form attached hereto, will
be duly filed prior to Closing with the Secretary of State of the State of
Colorado and, upon the issuance of the Preferred Shares in accordance with the
terms hereof, each Purchaser shall be entitled to the rights set forth therein.
(e) ISSUANCE OF SHARES. The Preferred Shares are duly authorized and,
upon issuance in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances and will not be subject to preemptive rights or other similar
rights of stockholders of the Company and will not impose personal liability on
the holders thereof. The Conversion Shares are duly authorized and, in
accordance with the Certificate of Designation reserved for issuance, and, upon
conversion of the Preferred Shares in accordance with the terms thereof, will be
validly issued, fully paid and non-assessable, and free from all taxes, liens,
claims and encumbrances and will not be subject to preemptive rights or other
similar rights of stockholders of the Company and will not impose personal
liability upon the holder thereof.
(f) NO CONFLICTS. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Company, the performance
by the Company of its obligations under the Certificate of Designation, and the
consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the Transaction, the issuance and
reservation for issuance, as applicable, of the Preferred Shares and
Conversion Shares) will not (i) result in a violation of the Certificate of
Incorporation or By-laws or (ii) conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would become a default)
under, or give to others any rights of termination, amendment (including,
without limitation, the triggering of any anti-dilution provisions) acceleration
or cancellation of, any agreement, indenture or instrument to which the Company
or any of its subsidiaries is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and rules or regulations of any self-regulatory
organizations to which either the Company or its securities are subject)
applicable to the Company or any of its subsidiaries or by which any property
<PAGE>
or asset of the Company or any of its subsidiaries is bound or affected (except,
with respect to clause (ii), for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations that would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its subsidiaries is in violation of its Certificate of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its subsidiaries is in default (and no event has occurred which, with
notice or lapse of time or both, would put the Company or any of its
subsidiaries in default) under, nor has there occurred any event giving others
(with notice or lapse of time or both) any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, except for actual or possible
violations, defaults or rights that would not, individually or in the aggregate,
have a Material Adverse Effect. The businesses of the Company and its
subsidiaries are not being conducted, and shall not be conducted so long as
Purchaser owns any of the Securities, in violation of any law, ordinance or
regulation of any governmental entity, except for possible violations the
sanctions for which either singly or in the aggregate would not have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and the
Registration Rights Agreement, the Company is not required to obtain any
consent, approval, authorization or order of, or make any filing or registration
with, any court or governmental agency or any regulatory or self regulatory
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement or the Registration Rights Agreement or to perform its
obligations under the Certificate of Designation, in each case in accordance
with the terms hereof or thereof.
(g) SEC DOCUMENTS, FINANCIAL STATEMENTS. Since December 31, 1994, the
Company has timely filed (within applicable extension periods) all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") (all of the foregoing and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to herein as the
"SEC DOCUMENTS"). The Company has delivered to the Purchaser true and complete
copies of the SEC Documents. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act or
the Securities Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
statements made in any such SEC Documents is, or has been,
<PAGE>
required to be amended or updated under applicable law (except for such
statements as have been amended or updated in subsequent filings made prior to
the date hereof). As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC applicable with respect thereto. Such financial
statements have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP"), consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may not include footnotes or may be condensed or summary
statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
immaterial year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC Documents filed prior to the date
hereof, the Company has no liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to the date
of such financial statements, (ii) liabilities not required by GAAP to be
disclosed on a balance sheet prepared in accordance with GAAP, and (iii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under GAAP to be reflected in such financial
statements, which liabilities and obligations referred to in clauses (i), (ii)
and (iii), individually or in the aggregate, are not material to the financial
condition or operating results of the Company. Neither the Company nor any of
its subsidiaries or any of their officers, directors, employees or agents have
provided the Purchaser with any material, nonpublic information.
(h) ABSENCE OF CERTAIN CHANGES. Since December 31, 1997, there has been
no material adverse change and no material adverse development in the business,
properties, operations, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole, except as disclosed in
SCHEDULE 3(H) or in the SEC Documents filed prior to the date hereof.
(i) ABSENCE OF LITIGATION. Except as set forth on SCHEDULE 3(I) and as
expressly disclosed in the SEC Documents filed prior to the date hereof, there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company or any of its subsidiaries, threatened
against or affecting the Company, any of its subsidiaries, or any of their
respective directors or officers in their capacities as such. There are no facts
which, if known by a potential claimant or governmental authority, could give
rise to a claim or proceeding which, if asserted or conducted with results
<PAGE>
unfavorable to the Company or any of its subsidiaries, could reasonably be
expected to have a Material Adverse Effect.
(j) INTELLECTUAL PROPERTY. Each of the Company and its subsidiaries
owns or is licensed to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, permits, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures) and other similar rights and proprietary knowledge (collectively,
"INTANGIBLES") necessary for the conduct of its business as now being conducted
and as described in the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1997. To the best knowledge of the Company, neither the
Company nor any subsidiary of the Company infringes or is in conflict with any
right of any other person with respect to any Intangibles which, individually or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries has received written notice of any pending conflict with or
infringement upon such third party Intangibles, which alleged pending conflict
or alleged infringement, if adversely determined, would result in a Material
Adverse Effect. Except as disclosed in the SEC Documents filed prior to the date
hereof, the termination of the Company's ownership of, or right to use, any
single Intangible would not result in a Material Adverse Effect on the Company.
Neither the Company nor any of its subsidiaries has entered into any consent
agreement, indemnification agreement, forbearance to sue or settlement agreement
with respect to the validity of the Company's or its subsidiaries' ownership or
right to use its Intangibles and, to the best knowledge of the Company, there is
no reasonable basis for any such claim to be successful. The Intangibles are
valid and enforceable and no registration relating thereto has lapsed, expired
or been abandoned or canceled or is the subject of cancellation or other
adversarial proceedings, and all applications therefor are pending and in good
standing. The Company and its subsidiaries have complied, in all material
respects, with their respective contractual obligations relating to the
protection of the Intangibles used pursuant to licenses. To the best knowledge
of the Company, no person is infringing on or violating the Intangibles owned or
used by the Company or its subsidiaries.
(k) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977;
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
<PAGE>
(l) DISCLOSURE. All information relating to or concerning the Company
set forth in this Agreement or provided to the Purchasers pursuant to Section
2(d) hereof or otherwise in connection with the transactions contemplated hereby
is true and correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or exists with respect to the
Company or its subsidiaries or their respective businesses, properties,
prospects, operations or financial conditions, which has not been publicly
disclosed but, under applicable law, rule or regulation, would be required to be
disclosed by the Company in a registration statement filed on the date hereof by
the Company under the Securities Act with respect to the primary issuance of the
Company's securities.
(m) ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF THE PREFERRED
SHARES. The Company acknowledges and agrees that the Purchaser is not acting as
a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement or the transactions contemplated hereby, the
relationship between the Company and the Purchaser is "arms-length" and any
statement made by Purchaser or any of its representatives or agents in
connection with this Agreement and the transactions contemplated hereby is not
advice or a recommendation and is merely incidental to Purchaser's purchase of
the Preferred Shares and has not been relied upon by the Company, its officers
or its directors in any way. The Company further acknowledges that the Company's
decision to enter into this Agreement has been based solely on an independent
evaluation by the Company and its representatives.
(n) FORM SB-2 ELIGIBILITY. The Company is currently eligible to
register the resale of its Common Stock on a registration statement on Form SB-2
under the Securities Act. There exist no facts or circumstances that would
prohibit or delay the preparation and filing of a registration statement on Form
SB-2 with respect to the Registrable Securities (as defined in the Registration
Rights Agreement).
(o) NO GENERAL SOLICITATION. Neither the Company nor any distributor
participating on the Company's behalf in the transactions contemplated hereby
(if any) nor any person acting for the Company, or any such distributor, has
conducted any "general solicitation," as such term is defined in Regulation D,
with respect to any of the Securities being offered hereby.
(p) NO INTEGRATED OFFERING. Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf,
<PAGE>
has directly or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would require
registration of the Securities being offered hereby under the Securities Act or
cause this offering of Securities to be integrated with any prior offering of
securities of the Company for purposes of the Securities Act or any applicable
stockholder approval provisions.
(q) NO BROKERS. Except for a consulting fee payable to CDC Consulting,
Inc. In the amount of 400,000 shares of Common Stock, the Company has taken no
action which would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments by any Purchaser relating to this
Agreement or the transactions contemplated hereby.
(r) ACKNOWLEDGMENT OF DILUTION. The number of Conversion Shares
issuable upon conversion of the Preferred Shares may increase in certain
circumstances, including if the trading price of the Common Stock declines. The
Company's executive officers have studied and fully understand the nature of the
Securities being sold hereunder. The Company acknowledges that its obligation to
issue Conversion Shares upon conversion of the Preferred Shares in accordance
with the Certificate of Designation is absolute and unconditional, regardless of
the dilution that such issuance may have on the ownership interests of other
stockholders. Taking the foregoing into account, the Company's Board of
Directors has determined in its good faith business judgment that the issuance
of the Preferred Shares hereunder and the consummation of the other transactions
contemplated hereby are in the best interests of the Company and its
stockholders.
(s) TITLE. The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and merchantable title to all
personal property owned by them that is material to the business of the Company
and its subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in SCHEDULE 3(S) or such as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
its subsidiaries. Any real property and facilities held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries.
(t) TAX STATUS. Except as set forth on SCHEDULE 3(T), the Company and
each of its subsidiaries has made or filed all foreign, federal, state and local
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
<PAGE>
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. Except as set forth on SCHEDULE 3(T), there are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim. The Company
has not executed a waiver with respect to any statute of limitations relating to
the assessment or collection of any federal, state or local tax. Except as set
forth on SCHEDULE 3(T), none of the Company's tax returns is presently being
audited by any taxing authority.
(u) ENVIRONMENTAL LAWS. The Company and each of its subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
(v) REGULATORY PERMITS. The Company and each of its subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.
(w) NO OTHER AGREEMENTS. The Company has not, directly or indirectly,
made any agreements with Purchaser relating to the terms or conditions of the
transactions contemplated by this Agreement, the Certificate of Designation and
the Registration Rights Agreement except as set forth in such documents.
(x) ELIGIBILITY FOR SALE UNDER RULE 144. The Company's Common Stock is
eligible for resale under Rule 144 promulgated under the Securities Act of 1933,
as amended, without regard to the status of any holder of such Common Stock as
an affiliate of the Company or any applicable holding period thereunder. Upon
consummation of the Transaction, Kapher Trust will not be an affiliate of the
Company. For the purposes of this Section 3(x), the term "affiliate" shall be
defined as set forth in section (a)(1) of Rule 144 promulgated under the
Securities Act ("Rule 144").
<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF SJP.
SJP represents and warrants to each Purchaser as follows:
(a) ORGANIZATION AND QUALIFICATION. SJP and each of its subsidiaries is
a corporation duly organized and existing in good standing under the laws of the
jurisdiction in which it is incorporated, and has the requisite corporate power
to own its properties and to carry on its business as now being conducted. SJP
and each of its subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification
necessary and where the failure so to qualify would have a Material Adverse
Effect.
(b) AUTHORIZATION; ENFORCEMENT. (i) SJP has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement; (ii) the execution, delivery and performance of this Agreement by SJP
and the consummation by it of the transactions contemplated hereby (including,
without limitation, the Transaction) have been duly authorized by SJP's Board of
Directors and no further consent or authorization of SJP, its Board of
Directors, any committee of the Board of Directors or SJP's shareholders is
required; and (iii) this Agreement constitutes valid and binding obligations of
SJP enforceable against SJP in accordance with their terms.
(c) STOCKHOLDER AUTHORIZATION. Neither the execution, delivery or
performance of this Agreement by SJP nor the consummation by it of the
transactions contemplated hereby (including, without limitation, the
Transaction) requires any consent, approval or authorization of SJP's
stockholders.
(d) CAPITALIZATION. The capitalization of SJP as of the date hereof,
including the authorized capital stock, the number of shares issued and
outstanding, the number of shares issuable and reserved for issuance pursuant to
SJP's stock option plans, the number of shares issuable and reserved for
issuance pursuant to securities exercisable or exchangeable for, or convertible
into, any shares of capital stock is set forth on SCHEDULE 4(D). All of such
outstanding shares of capital stock have been, or upon issuance in accordance
with the terms of any such warrants, options or preferred stock, will be,
validly issued, fully paid and non-assessable. No shares of capital stock of SJP
are subject to preemptive rights or any other similar rights of the stockholders
of SJP or any liens or encumbrances. Except for the Securities and as set forth
on SCHEDULE 4(D), as of the date of this Agreement, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exercisable or exchangeable for, any shares of capital stock of SJP or any of
its subsidiaries, or arrangements by which SJP or any of its subsidiaries is or
<PAGE>
may become bound to issue additional shares of capital stock of SJP or any of
its subsidiaries, and (ii) there are no agreements or arrangements under which
SJP or any of its subsidiaries is obligated to register the sale of any of its
or their securities under the Securities Act. Except as set forth on SCHEDULE
4(D), (i) there are no securities or instruments containing antidilution or
similar provisions that will be triggered by the execution of this Agreement,
(ii) there are no outstanding securities or instruments of SJP or any of its
subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which SJP or any of
its subsidiaries is or may become bound to redeem a security of SJP or any of
its subsidiaries, and (iii) SJP does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement. SJP has
furnished to the Purchaser true and correct copies of SJP's Certificate of
Incorporation as in effect on the date hereof ("CERTIFICATE OF INCORPORATION"),
SJP's By-laws as in effect on the date hereof (the "BY-LAWS"), and all other
instruments and agreements governing securities convertible into or exercisable
or exchangeable for capital stock of SJP.
(e) NO CONFLICTS. The execution, delivery and performance of this
Agreement by SJP and the consummation by SJP of the transactions contemplated
hereby and thereby (including, without limitation, the Transaction) will not (i)
result in a violation of the Certificate of Incorporation or By-laws or (ii)
conflict with, or constitute a default (or an event which, with notice or lapse
of time or both, would become a default) under, or give to others any rights of
termination, amendment (including, without limitation, the triggering of any
anti-dilution provisions), acceleration or cancellation of, any agreement,
indenture or instrument to which SJP or any of its subsidiaries is a party, or
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and rules or
regulations of any self-regulatory organizations to which either SJP or its
securities are subject) applicable to SJP or any of its subsidiaries or by which
any property or asset of SJP or any of its subsidiaries is bound or affected
(except, with respect to clause (ii), for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations that would
not, individually or in the aggregate, have a Material Adverse Effect). Neither
SJP nor any of its subsidiaries is in violation of its Certificate of
Incorporation, By-laws or other organizational documents and neither SJP nor any
of its subsidiaries is in default (and no event has occurred which, with notice
or lapse of time or both, would put SJP or any of its subsidiaries in default)
under, nor has there occurred any event giving others (with notice or lapse of
time or both) any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which SJP or any of its
subsidiaries is a party, except for actual or possible violations, defaults or
rights that would not, individually or in the aggregate, have a Material
<PAGE>
Adverse Effect. The businesses of SJP and its subsidiaries are not being
conducted, and shall not be conducted so long as Purchaser owns any of the
Securities, in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations the sanctions for which either singly or
in the aggregate would not have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and the Registration Rights
Agreement, SJP is not required to obtain any consent, approval, authorization or
order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
Registration Rights Agreement in accordance with the terms hereof or thereof.
(f) ABSENCE OF CERTAIN CHANGES. Since December 31, 1997, there has been
no material adverse change and no material adverse development in the business,
properties, operations, prospects, financial condition or results of operations
of SJP and its subsidiaries, taken as a whole, except as disclosed in SCHEDULE
4(F) or in the Disclosure Materials (as defined below).
(g) ABSENCE OF LITIGATION. Except as set forth on SCHEDULE 4(G) and as
expressly disclosed in the Disclosure Materials (as defined below) filed prior
to the date hereof, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of SJP or any
of its subsidiaries, threatened against or affecting SJP, any of its
subsidiaries, or any of their respective directors or officers in their
capacities as such. There are no facts which, if known by a potential claimant
or governmental authority, could give rise to a claim or proceeding which, if
asserted or conducted with results unfavorable to SJP or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect.
(h) INTELLECTUAL PROPERTY. Each of SJP and its subsidiaries owns or is
licensed to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, copyright applications,
licenses, permits, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures) and
other similar rights and proprietary knowledge (collectively, "INTANGIBLES")
necessary for the conduct of its business as now being conducted and as
described in the Disclosure Materials (as defined below). To the best knowledge
of SJP, neither SJP nor any subsidiary of SJP infringes or is in conflict with
any right of any other person with respect to any Intangibles which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect. Neither SJP nor any of
its subsidiaries has received written notice of any pending conflict with or
infringement upon such third party Intangibles, which alleged pending conflict
<PAGE>
or alleged infringement, if adversely determined, would result in a Material
Adverse Effect. Except as disclosed in the Disclosure Materials (as defined
below), the termination of SJP's ownership of, or right to use, any single
Intangible would not result in a Material Adverse Effect on SJP. Neither SJP nor
any of its subsidiaries has entered into any consent agreement, indemnification
agreement, forbearance to sue or settlement agreement with respect to the
validity of SJP's or its subsidiaries' ownership or right to use its Intangibles
and, to the best knowledge of SJP, there is no reasonable basis for any such
claim to be successful. The Intangibles are valid and enforceable and no
registration relating thereto has lapsed, expired or been abandoned or canceled
or is the subject of cancellation or other adversarial proceedings, and all
applications therefor are pending and in good standing. SJP and its subsidiaries
have complied, in all material respects, with their respective contractual
obligations relating to the protection of the Intangibles used pursuant to
licenses. To the best knowledge of SJP, no person is infringing on or violating
the Intangibles owned or used by SJP or its subsidiaries.
(i) FOREIGN CORRUPT PRACTICES. Neither SJP, nor any of its
subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of SJP or any subsidiary has, in the course of his actions for, or on
behalf of, SJP, used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
(j) DISCLOSURE. All information relating to or concerning SJP set forth
in this Agreement or provided to the Purchasers pursuant to Section 2(d) hereof
or otherwise in connection with the transactions contemplated hereby is true and
correct in all material respects and SJP has not omitted to state any material
fact necessary in order to make the statements made herein or therein, in light
of the circumstances under which they were made, not misleading. No event or
circumstance has occurred or exists with respect to SJP or its subsidiaries or
their respective businesses, properties, prospects, operations or financial
conditions, which has not been publicly disclosed but, under applicable law,
rule or regulation, would be required to be disclosed by SJP in a registration
statement filed on the date hereof by SJP under the Securities Act with respect
to the primary issuance of SJP's securities.
(k) ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF THE
PREFERRED SHARES. SJP acknowledges and agrees that the Purchaser
is not acting as a financial advisor or fiduciary of SJP (or in
<PAGE>
any similar capacity) with respect to this Agreement or the transactions
contemplated hereby, the relationship between SJP and the Purchaser is
"arms-length" and any statement made by any Purchaser or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to Purchaser's purchase of the Preferred Shares and has not been relied upon by
SJP, its officers or its directors in any way. SJP further acknowledges that
SJP's decision to enter into this Agreement has been based solely on an
independent evaluation by SJP and its representatives.
(l) NO BROKERS. Except for a consulting fee payable to CDC Consulting,
Inc. In the amount of 400,000 shares of Common Stock, SJP has taken no action
which would give rise to any claim by any person for brokerage commissions,
finder's fees or similar payments by any Purchaser relating to this Agreement or
the transactions contemplated hereby.
(m) TITLE. SJP and its subsidiaries have good and marketable title in
fee simple to all real property and good and merchantable title to all personal
property owned by them that is material to the business of SJP and its
subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in SCHEDULE 4(M) or such as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by SJP and its subsidiaries. Any
real property and facilities held under lease by SJP and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not materially interfere with the use made and
proposed to be made of such property and buildings by SJP and its subsidiaries.
(n) TAX STATUS. Except as set forth on SCHEDULE 4(N), SJP and each of
its subsidiaries has made or filed all foreign, federal, state and local income
and all other tax returns, reports and declarations required by any jurisdiction
to which it is subject (unless and only to the extent that SJP and each of its
subsidiaries has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. Except as set
forth on SCHEDULE 4(N), there are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of SJP
know of no basis for any such claim. SJP has not executed a waiver with respect
to any statute of limitations relating to the assessment or collection of any
federal, state or local tax. Except as set forth on SCHEDULE 4(N), none of SJP's
tax returns is presently being audited by any taxing authority.
<PAGE>
(o) ENVIRONMENTAL LAWS. SJP and each of its subsidiaries (i) are in
compliance with any and all Environmental Laws, (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval.
(p) REGULATORY PERMITS. SJP and each of its subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither SJP nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit.
(q) NO OTHER AGREEMENTS. SJP has not, directly or indirectly, made any
agreements with Purchaser relating to the terms or conditions of the
transactions contemplated by this Agreement, the Certificate of Designation and
the Registration Rights Agreement except as set forth in such documents.
(r) DISCLOSURE MATERIALS. The financial statements of SJP dated
December 31, 1997 and any other financial statements delivered by SJP to the
Purchasers (the "FINANCIAL STATEMENTS" and, together with the Schedules to this
Agreement and other documents and information furnished by or on behalf of SJP
at any time prior to the Closing, the "DISCLOSURE MATERIALS") comply in all
material respects with applicable accounting requirements. Such Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved, except as
may be otherwise specified in such Financial Statements or the notes thereto,
and fairly present in all material respects the financial position of SJP as of
and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal
year-end audit adjustments. There are not liabilities, contingent or otherwise,
of SJP involving material amounts not disclosed in said Financial Statements.
The Disclosure Materials do not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Since December 31, 1997 there has been no event,
occurrence or development that has had or that could have or result in a
Material Adverse Effect.
5. COVENANTS.
(a) BEST EFFORTS. The parties shall use their best efforts timely to
satisfy each of the conditions described in Section 7 and Section 8 of this
Agreement.
<PAGE>
(b) FORM D: BLUE SKY LAWS. The Company shall file with the SEC a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to each Purchaser promptly after such filing. The Company shall, on
or before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the Purchaser
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States or obtain exemption therefrom, and shall provide
evidence of any such action so taken to the Purchasers on or prior to the
Closing Date.
(c) REPORTING STATUS. So long as any Purchaser beneficially owns any of
the Securities, the Company shall timely file all reports required to be filed
with the SEC pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination. In addition, the Company shall take all actions necessary to
continue to be eligible to register the resale of its Common Stock on a
registration statement on Form SB-2 under the Securities Act.
(d) USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Preferred Shares as set forth in SCHEDULE 5(D).
(e) EXPENSES. Except as otherwise provided herein and in Section 5 of
the Registration Rights Agreement, each party hereto shall be responsible for
its own expenses incurred in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the other agreements
to be executed in connection herewith.
(f) FINANCIAL INFORMATION. The Company shall send the following reports
to Purchaser until Purchaser transfers, assigns or sells all of its Securities:
(i) within 10 days after the filing with the SEC, a copy of its Annual Report on
Form 10-KSB, its Quarterly Reports on Form 10-QSB, its proxy statements and any
Current Reports on Form 8-K; (ii) within one day after release, copies of all
press releases issued by the Company or any of its subsidiaries; and (iii)
copies of any notices and other information made available or given to
shareholders of the Company generally, contemporaneously with making available
or giving thereof to such shareholders.
(g) RESERVATION OF SHARES. The Company shall at all times have
authorized and reserved for the purpose of issuance a sufficient number of
shares of Common Stock to provide for the full conversion of the outstanding
Preferred Shares and issuance of the Conversion Shares in connection therewith,
subject to and as otherwise required by the Certificate of Designation, as
applicable.
<PAGE>
(h) LISTING. The Company shall promptly secure the listing of the
Conversion Shares upon the American Stock Exchange ("AMEX"), the New York Stock
Exchange ("NYSE"), the Nasdaq National Market ("NNM"), the Nasdaq SmallCap
Market ("SMALLCAP") or in the over-the-counter market on the electronic bulletin
board (the "BULLETIN BOARD") and will comply in all respects with the reporting,
filing and other obligations under the Listing Standards, Policies and
Requirements of the AMEX and the bylaws or rules of the NYSE and the National
Association of Securities Dealers, Inc., as applicable and shall maintain, so
long as Purchaser (or any of their affiliates) own any Securities, such listing
of all Conversion Shares from time to time issuable upon conversion of the
Preferred Shares, as applicable. The Company shall promptly provide to each
holder of Preferred Shares copies of any notices it receives regarding the
continued eligibility of the Common Stock for trading on any securities exchange
or automated quotation system on which securities of the same class or series
issued by the Company are then listed or quoted, if any.
(i) CORPORATE EXISTENCE. So long as a Purchaser beneficially owns any
Securities, the Company shall maintain its corporate existence, and in the event
of a merger, consolidation or sale of all or substantially all of the Company's
assets, the Company shall ensure that the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and under the
Certificate of Designation (except as otherwise provided therein) and the
agreements and instruments entered into in connection herewith regardless of
whether or not the Company would have had a sufficient number of shares of
Common Stock authorized and available for issuance in order to effect the
conversion of all Preferred Shares outstanding as of the date of such
transaction and (ii) is a publicly traded corporation whose common stock is
listed for trading on the AMEX, NYSE, NNM, SmallCap or the Bulletin Board.
Notwithstanding the foregoing, the Company covenants and agrees that it will not
engage in any merger, consolidation or sale of all or substantially all of its
assets at any time prior to the effectiveness of the registration statement
required to be filed pursuant to the Registration Rights Agreement without (A)
providing Purchaser with written notice of such transaction at least 60 days
prior to the consummation of such transaction, (B) obtaining the written consent
of the Purchaser on or before the 10th day after the delivery of such notice by
the Company, and (C) publicly announcing such transaction.
(j) NO INTEGRATED OFFERINGS. The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities Act or cause the offering of the Securities to be integrated with any
other offering of securities by the Company for purposes of any stockholder
approval provision applicable to the Company or its securities.
<PAGE>
(k) LEGAL COMPLIANCE. The Company shall conduct its business and the
business of its subsidiaries in compliance with all laws, ordinances or
regulations of governmental entities applicable to such businesses, except where
the failure to do so would not have a Material Adverse Effect.
(l) FILING OF FORM 8-K. On or before the first (1st) business day
following the Closing Date, the Company shall file a Current Report on Form 8-K
with the SEC describing the terms of the transactions contemplated by this
Agreement, the Certificate of Designation and the Registration Rights Agreement
in the form required by the Exchange Act.
(m) CAPITAL AND SURPLUS; SPECIAL RESERVES. The amount to be represented
in the capital account for the Series A Preferred Stock at all times for each
outstanding share of Series A Preferred Stock shall be an amount equal to the
Redemption Amount therefor.
(n) ADDITIONAL EQUITY CAPITAL; RIGHT OF FIRST OFFER. The
-----------------------------------------------
Company and SJP agree that during the period beginning on the date hereof and
ending on the date which is 180 days following the Closing Date (the "LOCK-UP
PERIOD"), the Company will not obtain additional financing in which any equity
or equity-linked securities are issued (including any debt financing with an
equity component) ("FUTURE OFFERINGS") without first obtaining the written
consent of the Purchaser. In addition, during the period beginning on the date
hereof and ending 180 days following the expiration of the Lock-Up Period, the
Company will not conduct a future offering unless it shall have first delivered
to Purchaser, at least ten (10) business days prior to the closing of such
Future Offering, written notice describing the proposed Future Offering,
including the terms and conditions thereof, and providing Purchaser and its
affiliates an option during the ten (10) business day period following delivery
of such notice to purchase all of the securities being offered in the Future
Offering on the same terms as contemplated by such Future Offering (the
limitation referred to in this Section 5(n) is referred to as the "CAPITAL
RAISING LIMITATION"). The Capital Raising Limitation shall not apply to any
transaction involving issuances of securities as consideration in a merger,
consolidation or acquisition of assets, or in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise
equity capital), or as consideration for the acquisition of a business, product
or license by the Company. The Capital Raising Limitation also shall not apply
to (i) the issuance of securities pursuant to an underwritten public offering,
(ii) the issuance of securities upon exercise or conversion of the Company's
options, warrants or other convertible securities outstanding as of the date
hereof or (iii) the grant of additional options or warrants, or the issuance of
additional securities, under any duly authorized Company stock option or
restricted stock plan for the benefit of the Company's employees or directors.
<PAGE>
(o) The Company shall have filed, within ten (10) days of the Closing
hereunder, a complete application on Form 211 with the National Association of
Securities Dealers seeking approval for the quotation of the Company's Common
Stock in the over the counter market on the Electronic Bulletin Board by the
National Association of Securities Dealers, Inc.
6. TRANSFER AGENT INSTRUCTIONS.
(a) The Company shall instruct its transfer agent to issue
certificates, registered in the name of each Purchaser or its nominee, for the
Conversion Shares in such amounts as specified from time to time by such
Purchaser to the Company upon conversion of the Preferred Shares, as applicable.
(b) The Company warrants that no instruction other than such
instructions referred to in this Section 6, and stop transfer instructions to
give effect to Section 2(f) hereof in the case of the transfer of the Conversion
Shares prior to registration of the Conversion Shares under the Securities Act
or without an exemption therefrom, will be given by the Company to its transfer
agent and that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this Agreement
and the Registration Rights Agreement. Nothing in this Section shall affect in
any way each Purchaser's obligations and agreement set forth in Section 2(g)
hereof to resell the Securities pursuant to an effective registration statement
or under an exemption from the registration requirements of applicable
securities law.
(c) If a Purchaser provides the Company and the transfer agent with an
opinion of counsel, which opinion of counsel shall be in form, substance and
scope customary for opinions of counsel in comparable transactions, to the
effect that the Preferred Shares to be sold or transferred may be sold or
transferred pursuant to an exemption from registration, or a Purchaser provides
the Company with reasonable assurances that such Preferred Shares may be sold
under Rule 144, the Company shall permit the transfer and, in the case of the
Conversion Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by Purchaser.
7 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Preferred
Shares to Purchaser at the Closing is subject to the satisfaction, at or before
the Closing, of each of the following conditions, provided that such conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion by providing prior written notice to each Purchaser.
<PAGE>
(a) The Purchaser shall have executed this Agreement and the
Registration Rights Agreement, and delivered executed copies to the Company.
(b) The Purchaser shall have delivered the Purchase Price for the
Preferred Shares in accordance with Section 1(b) above.
(c) The representations and warranties of the Purchaser shall be true
and correct as of the date when made and as of the date and time of such closing
as though made at that time (except for representations and warranties that
relate to a different date, which shall be true and correct as of such date),
and the Purchaser shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Purchaser at or
prior to the Closing Date.
(d) No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby that prohibits the consummation of any of the transactions contemplated
by this Agreement.
8. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE.
The obligation of Purchaser hereunder to purchase the Preferred Shares
to be purchased by it at the Closing and the payment of the Purchase Price is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that such conditions are for Purchaser's sole
benefit and may be waived by Purchaser at any time in such Purchaser's sole
discretion:
(a) The Company and SJP shall have executed this Agreement and the
Company shall have executed the Registration Rights Agreement, and each shall
have delivered executed copies to Purchaser.
(b) The Certificate of Designation shall have been accepted for filing
with the Secretary of State of the State of Colorado and a copy thereof
certified by the Secretary of State of the State of Colorado shall have been
delivered to Purchaser.
(c) The Company shall have delivered to Purchaser duly executed
certificates (each in such denominations as Purchaser shall request)
representing the Preferred Shares being so purchased by Purchaser in accordance
with Section 1(b) above.
(d) The Common Stock shall be authorized for quotation and listed on
the AMEX, the NYSE, the NNM, the SmallCap or the Bulletin Board and trading in
the Common Stock (or the AMEX, the NYSE, the NNM, the SmallCap generally or the
Bulletin Board) shall not have been suspended by the SEC, the AMEX, the NYSE,
<PAGE>
the NNM, the SmallCap or the Bulletin Board, as applicable, and the Conversion
Shares shall be listed on the AMEX, the NYSE, the NNM, the SmallCap or the
Bulletin Board, as applicable.
(e) The representations and warranties of the Company and SJP shall be
true and correct as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that relate to a
different date, which shall be true and correct as of such date) and the Company
and SJP shall have performed, satisfied and complied with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company or SJP, as applicable at or prior to the Closing
Date. Such Purchaser shall have received certificates, executed by the Chief
Executive Officer of the Company and of SJP, dated as of the Closing Date to the
foregoing effect and as to such other matters as Purchaser may reasonably
request.
(f) No litigation, statute, rule, regulation, executive order, decree,
ruling, injunction, action or proceeding shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby that questions the validity of, or challenges or
prohibits the consummation of, any of the transactions contemplated by this
Agreement.
(g) Purchaser shall have received an opinions of the Company's dated as
of the Closing Date, in form, scope and substance reasonably satisfactory to the
Purchaser and in substantially the form of EXHIBIT C attached hereto. Purchaser
shall be entitled to receive, and rely upon, an opinion of SJP's counsel, dated
as of the closing of the Transaction, in form, scope and substance reasonably
satisfactory to the Purchaser in connection with the consummation of the
Transaction.
(h) The Company shall have delivered evidence reasonably satisfactory
to the Purchaser that the Company's transfer agent has agreed to act in
accordance with irrevocable instructions in the form attached hereto as EXHIBIT
D.
(i) There shall have been no material adverse changes and no material
adverse developments in the business, properties, operations, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, or SJP and its subsidiaries, taken as a whole,
since the date hereof, and no information, of which the Purchasers are not
currently aware, shall come to the attention of the Purchaser that is materially
adverse to the Company or SJP.
(j) The Board of Directors of the Company and the Board of Directors of
SJP shall have adopted resolutions consistent with Section 3(b) (ii) and Section
4(b)(ii) above, respectively, and in a form reasonably acceptable to such
Purchaser.
<PAGE>
(k) The Company and SJP shall have delivered to Purchaser certificates
evidencing the incorporation and good standing of the Company and each of its
subsidiaries and of SJP and each of its subsidiaries in such corporation's state
of incorporation issued by the Secretary of State of such state of incorporation
as of a date within ten days of the Closing Date.
(l) The Company and SJP shall have delivered to Purchaser certified
copies of their respective Articles of Incorporation as certified by the
Secretary of State of their respective states of incorporation within ten days
of the Closing Date.
(m) The Company and SJP shall have delivered to Purchaser secretary's
certificates, dated as of the Closing Date, as to (i) the resolutions described
in Section 7(j), (ii) their respective Certificates of Incorporation and (iii)
their respective Bylaws, each as in effect at the Closing.
(n) SJP shall have obtained and delivered to Purchaser written evidence
of the consent of each member of SJP to the Transaction, and the Transaction
shall have been consummated in accordance with the Share Exchange Agreement. The
Purchaser and its counsel shall have the right to review and approve, in their
sole and absolute discretion, all documentation and matters related thereto. SJP
and the Company shall have delivered to the Purchaser copies of an executed Bill
of Sale and an executed Assumption Agreement, or similar documents evidencing
the consummation of the Transaction.
(o) All of the "CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE" set
forth in Section 8 that certain Securities Purchase Agreement, dated as of June
17, 1998, among the Purchaser and Kapher Trust shall have been satisfied.
(p) The Company shall have cancelled or retired to treasury at least
400,000 shares of Common Stock as set forth on Schedule 3(d) hereto.
<PAGE>
9. GOVERNING LAW; MISCELLANEOUS.
(a) GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of Colorado applicable to
contracts made and to be performed in the State of Colorado. The Company and SJP
irrevocably consent to the jurisdiction of the United States federal courts and
the state courts located in the State of Colorado in any suit or proceeding
based on or arising under this Agreement and irrevocably agree that all claims
in respect of such suit or proceeding may be determined in such courts. The
Company and SJP irrevocably waive the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The Company and SJP further agree that
service of process mailed by first class mail shall be deemed in every respect
effective service of process in any such suit or proceeding. Nothing herein
shall affect the right of Purchaser to serve process in any other manner
permitted by law. The Company and SJP agree that a final non-appealable judgment
in any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
(b) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
(c) HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
(e) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the instruments
referenced herein contain the entire understanding of the Purchasers, the
Company, SJP, their affiliates and persons acting on their behalf with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company, SJP nor Purchaser makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived other than by an instrument in
writing signed by the party to be charged with enforcement and no provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company, SJP and Purchaser.
<PAGE>
(f) NOTICES. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
facsimile, and shall be effective upon receipt or refusal of receipt, if
delivered personally or by courier or confirmed facsimile, in each case
addressed to a party. The addresses for such communications shall be:
If to the Company:
BOULDER CAPITAL OPPORTUNITIES III, INC.
2434 Vine Place
4750 Table Mesa Drive
Boulder, CO 80304
Facsimile:
Attn: Robert Soehngen
with a copy simultaneously transmitted by like means to:
Michael A. Littman, Esquire
10200 W. 44th Avenue, #400
Wheat Ridge, CO 80033
Facsimile: (303) 422-7796
If to SJP:
SONIC JET PERFORMANCE, LLC
15662 Commerce Lane
Huntington Beach, CA 92649
Facsimile:
Attn: Albert Mardikian
with a copy simultaneously transmitted by like means to:
Law Offices of Pasquale P. Caiazza
1625 West 22nd Street
Santa Ana, CA 92706-2413
Facsimile: (714) 543-2971
Attn: Christopher A. Morgan, J.D.
If to Purchaser, to such address set forth under Purchaser's name on
the Execution Page hereto executed by Purchaser.
Each party shall provide notice to the other parties of any change in
address.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns, including,
but not limited to, the corporation which is the surviving entity in the
Transaction. Except as provided herein or therein, neither the Company, SJP
<PAGE>
nor any Purchaser shall assign this Agreement or the Registration Rights
Agreement or any rights or obligations hereunder or thereunder. Notwithstanding
the foregoing, Purchaser may assign its rights hereunder to any of its
"affiliates" (as that term is defined under the Exchange Act) who are Accredited
Investors without the consent of the Company (provided such assignees agree to
be bound by all of the terms and conditions hereof), or to any other person or
entity with the consent of the Company, which consent shall not be unreasonably
withheld. This provision shall not limit Purchaser's right to transfer the
Securities pursuant to the terms of the Certificate of Designation and this
Agreement or to assign such Purchaser's rights hereunder or thereunder to any
such transferee.
(h) THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
(i) SURVIVAL. The representations, warranties, agreements and covenants
of the Company and SJP set forth in Sections 3, 4, 5, 6 and 9 hereof shall
survive the Closing notwithstanding any investigation conducted by or on behalf
of Purchaser. None of the representations and warranties made by the Company or
SJP, as applicable, herein shall act as a waiver of any rights or remedies
Purchaser may have under applicable federal or state securities laws. The
Company and/or SJP, as applicable, shall indemnify and hold harmless Purchaser
and each Purchaser's officers, directors, employees, partners, members, agents
and affiliates for all losses or damages arising as a result of or related to
any breach or alleged breach by the Company and/or SJP, as applicable, of any of
its representations or covenants set forth herein, including advancement of
reasonable expenses as they are incurred.
(j) PUBLICITY. The Company and each Purchaser shall have the right to
review before issuance any press releases, SEC filings, filings with the AMEX,
NYSE, the NNM, the SmallCap or the Bulletin Board, as applicable, or any other
public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior review
of the Purchasers, to make any press release, SEC filings or filings with the
AMEX, NYSE, the NNM, the SmallCap or the Bulletin Board, as applicable, with
respect to such transactions as is required by applicable law and regulations
(although the Purchaser shall be consulted by the Company in connection with any
such press release and filing prior to its release and shall be provided with a
copy thereof).
(k) FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
<PAGE>
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
(l) TERMINATION. In the event that the Closing shall not have occurred
on or before June __, 1998, unless the parties agree otherwise, this Agreement
shall terminate at the close of business on such date. Notwithstanding any
termination of this Agreement, any party not in breach of this Agreement shall
preserve all rights and remedies it may have against another party hereto for a
breach of this Agreement prior to or relating to the termination hereof.
(m) JOINT PARTICIPATION IN DRAFTING. Each party to this Agreement has
participated in the negotiation and drafting of this Agreement, the Certificate
of Designation and the Registration Rights Agreement. As such, the language used
herein and therein shall be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction will
be applied against any party to this Agreement.
(n) EQUITABLE RELIEF. The Company and SJP, respectively, acknowledge
that a breach by it of its obligations hereunder will cause irreparable harm to
Purchaser by vitiating the intent and purpose of the transactions contemplated
hereby. Accordingly, the Company and SJP, respectively, acknowledge that the
remedy at law for a breach of its obligations hereunder (including, but not
limited to, its obligations pursuant to Section 6 hereof) will be inadequate and
agree, in the event of a breach or threatened breach by the Company or by SJP of
the provisions of this Agreement (including, but not limited to, its obligations
pursuant to Section 5 hereof), that Purchaser shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach and
requiring immediate issuance and transfer of the Securities, without the
necessity of showing economic loss and without any bond or other security being
required.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
BOULDER CAPITAL OPPORTUNITIES, INC.
By:
Name:
Title:
SONIC JET PERFORMANCE, LLC.
By:
Name:
Title:
PURCHASER:
JNC STRATEGIC FUND LTD.
By:
Name:
Title:
RESIDENCE: Cayman Islands
ADDRESS: c/o Olympia Capital (Cayman) Ltd.
Williams House
20 Reid Street
Hamilton HM11
Bermuda
Telecopy: (441) 295-2305
Attention: Thomas Davis
with copies of all notices to:
Encore Capital Management, L.L.C.
12007 Sunrise Valley Drive
Suite 460
Reston, VA 20191
Telecopy: (703) 476-7711
Attn: Neil T. Chau
