As filed with the Securities and
Exchange Commission on March 3, 2000
File No. 000-24989
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment to
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Exchange Act
Date of Report: March 17, 2000
AMERICAS POWER PARTNERS, INC.
(Exact Name of Registrant as Specified in its Charter)
COLORADO
(State or Other Jurisdiction of Incorporation)
000-24989 05-0499526
(Commission File Number) (I.R.S. Employer Identification No.)
105 East First Street, Hinsdale, IL 60521
(Address of Principal Executive Offices) (Zip Code)
(630) 325-9101
(Registrant's Telephone Number, Including Area Code)
CHUHAK &TECSON, P.C.
225 WEST WASHINGTON STREET, SUITE 1300
CHICAGO, IL 60606-3418
---------------------------------------------------
(Name and Address of agent for service)
------------------------------------------------------
FORWARD LOOKING STATEMENTS
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THIS FORM 8-K AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY
AMERICAS POWER PARTNERS, INC. (HEREINAFTER REFERRED TO AS "APPI" AND/OR
"COMPANY" AND/OR "REGISTRANT") OR ITS REPRESENTATIVES CONTAIN STATEMENTS
WHICH MAY CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
FIFTEEN U.S.C.A. SECTIONS 77Z-2 AND 78U-5 (SUPP. 1996). THOSE STATEMENTS INCLUDE
STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF APPI AND
MEMBERS OF ITS MANAGEMENT TEAM AS WELL AS THE ASSUMPTIONS ON WHICH SUCH
STATEMENTS ARE BASED.
PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE
NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND
THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING
STATEMENTS ARE SET FORTH IN THE SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-
LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1 TO THIS FORM 8-K, AND ARE HEREBY
INCORPORATED HEREIN BY REFERENCE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE
OR REVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE
OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER
TIME.
INFORMATION INCLUDED IN THIS REPORT
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not Applicable
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
This Current Report on Form 8-K relates to the Common Stock of Americas Power
Partners, Inc., a Colorado corporation (the "Company"), which has its
principal corporate offices at 105 East First, Suite 101, Hinsdale, IL 60521.
Armstrong International, Inc., the Armstrong International Employees
Pension Plan, Merrill Armstrong and Douglas Bloss (collectively the
"Shareholders"), have purchased Series A Convertible shares in the Company,
terms and conditions more fully defined below.
The following table sets forth the membership of the Shareholders and ownership
of its Americas Power Partners, Inc. common stock:
Beneficial Ownership.
No. of Shares
Beneficially Owned
Armstrong International, Inc. 1,542,793
2081 SE Ocean Boulevard, 4th Floor
Stuart, FL 34996-3376
Armstrong International Employees Pension Plan 266,667
C/O Armstrong International, Inc.
2081 SE Ocean Boulevard, 4th Floor
Stuart, FL 34996-3376
Merrill Armstrong 775,046
C/O Armstrong International, Inc.
2081 SE Ocean Boulevard, 4th Floor
Stuart, FL 34996-3376
Douglas Bloss 125,013
C/O Armstrong International, Inc.
2081 SE Ocean Boulevard, 4th Floor
Stuart, FL 34996-3376
The Shareholders hold the securities described herein in connection with the
purchase of a Series A Preferred Stock of Americas Power Partners, Inc. on
January 31, 2000 pursuant to a Series A Preferred Stock Purchase Agreement. The
Series A Preferred shares were purchased at $1.46/share and have the right of
conversion into an equal number of shares of Common Stock of the Registrant.
The Shareholders have sole power to direct the vote of these shares and
sole power to direct the disposition of such shares.
ITEMS 3 THROUGH 4, 6 THROUGH 9 NOT APPLICABLE.
ITEM 5. OTHER EVENTS.
Americas Power Partners, Inc.
Executive Summary of Business Plan
The Company's authorized capital consists of 40,000,000 shares of Common
Stock, without a par value. Each common share is entitled to one vote at the
meetings of shareholders. All Common Shares are equal to each other with
respect to liquidation rights and dividends rights. There are no preemptive
rights to purchase any additional Common Shares. The Articles of Incorporation
of the Company prohibit cumulative voting on the election of directors.
Americas Power Partners, Inc. will develop, own and operate power plant
systems (steam, electric, compressed air, chilled water and condensate return)
for industrial, institutional, and commercial clients. The Company has formed
strategic alliances with other companies in the areas of fuel supply, power
plant optimization, operations and maintenance and electric power marketing.
The Company's strategic vision is to purchase mid size "in the fence" power
generation facilities from industrial, institutional and commercial users and
provide applicable utility requirements under long term contracts. The Company
optimizes utility costs for the end users by upgrading generation facilities and
providing solution for lower cost utilities. Through our expert management team
and strategic partners we provide the end-user: monetization of existing power
plant systems, competitive cost of power commodities, utility systems upgraded
to "Best in Class", reliable supply of utilities, and transfer of operations and
maintenance
services.
The Company responds to these needs by offering our project implementation
services. The Company directly benefits by taking a working interest
participation in the most viable projects. The interactions and services will
develop into strategic partnerships with the most qualified small developers and
independent power proponents.
The Company's corporate headquarters are located at 105 E. First Street,
Hinsdale, IL 60521. The Company's transfer agent is American Securities
Transfer, Inc., 1825 Lawrence Street, Ste 444 Denver, CO 80020 (303) 298-5370.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAS POWER PARTNERS, INC.
By: /s/ Mark A. Margason
________________________________
MARK A. MARGASON
Chief Executive Officer
Date: March 17, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/s/David W. Pequet President & Director March 17, 2000
/s/Theodore Bogard Vice President & Director March 17, 2000
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
EXHIBITS
TO
FORM 8-K
CURRENT REPORT FILED PURSUANT TO
THE SECURITIES EXCHANGE ACT OF 1934
---------------------------
AMERICAS POWER PARTNERS, INC.
EXHIBIT INDEX
Exhibit No. Exhibit
## 2.1 Articles of Merger between Oak Brook Capital II, Inc. and
Americas Power Partners, Inc., dated August 17, 1999;
## 2.2 Plan of Merger dated August 17, 1999;
# 3(a) Articles of Incorporation
# 3(b) Bylaws
# 4(a) Agreements Defining Certain Rights of Shareholders
# 4(b) Specimen Stock Certificate
7 Not applicable
9 Not applicable
## 10.1 Issuance of Restricted Shares from Authorized Shares
Exhibit No. Exhibit
## 10.2 Opinion to Transfer Agent Authorizing Issuance of Restricted
Shares from Authorized Shares
x 10.3 Series A Convertible Stock Purchase Agreement
11 Not applicable
14 Not applicable
16 Not applicable
## 20.1 Board of Director's Resolution's authorizing merger and name
change from Oak Brook Capital II, Inc. to Americas Power
Partners, Inc.;
21 Not applicable
x 23.1 Consent of Counsel
(contained in Exhibit 5.1)
x 24.1 Consent of Dennis W. Bersch, CPA.
27 Financial Data Schedule
28 Not applicable
# 99.1 Safe Harbor Compliance Statement
____________________________
x filed herewith
# incorporated herein by reference from Registrant's Third
Amendment to Form 10SB12G, filed July 29, 1999.
## incorporated herein by reference from Registrant's Form 8-K/A
filed on October 29, 1999
SERIES A PREFERRED STOCK
PURCHASE AGREEMENT
by and among
AMERICAS POWER PARTNERS, INC.
and
ARMSTRONG INTERNATIONAL, INC.,
ARMSTRONG INTERNATIONAL, INC. EMPLOYEES PENSION PLAN,
MERRILL ARMSTRONG
and
DOUGLAS BLOSS
January 31, 2000
TABLE OF CONTENTS
SECTION 1
Authorization and Sale of Securities . . . . . . . . . . . . . . . . 1
1.1 Authorization . . . . . . . . . . . . . . . . . . . . 1
1.2 Sale of Shares. . . . . . . . . . . . . . . . . . . . 1
SECTION 2
Closing Date, Delivery . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Closing Date. . . . . . . . . . . . . . . . . . . . . 1
2.2 Delivery. . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Use of Proceeds . . . . . . . . . . . . . . . . . . . 1
SECTION 3
Representations and Warranties of the Company. . . . . . . . . . . . 2
3.1 Organization and Standing; Articles and Bylaws . . . 2
3.2 Corporate Power; No Contravention . . . . . . . . . . 2
3.3 Subsidiaries. . . . . . . . . . . . . . . . . . . . . 2
3.4 Capitalization. . . . . . . . . . . . . . . . . . . . 2
3.5 Authorization, Validity of Stock. . . . . . . . . . . 3
3.6 Financial Statements. . . . . . . . . . . . . . . . . 3
3.7 No Material Adverse Change. . . . . . . . . . . . . . 4
3.8 Assets. . . . . . . . . . . . . . . . . . . . . . . . 5
3.9 Patents and Other Intangible Assets . . . . . . . . . 6
3.10 Material Contracts and Commitments. . . . . . . . . . 6
3.11 Compliance with Other Instruments, None Burdensome,
Etc.. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.12 Litigation, Etc.. . . . . . . . . . . . . . . . . . . 7
3.13 Employees . . . . . . . . . . . . . . . . . . . . . . 7
3.14 Insurance . . . . . . . . . . . . . . . . . . . . . . 7
3.15 No Registration Rights. . . . . . . . . . . . . . . . 7
3.16 Governmental Consent, Etc.. . . . . . . . . . . . . . 8
3.17 Company Transactions with its Officers, Directors, or
Shareholders. . . . . . . . . . . . . . . . . . . . . 8
3.18 Taxes Paid. . . . . . . . . . . . . . . . . . . . . . 8
3.19 Offering. . . . . . . . . . . . . . . . . . . . . . . 8
3.20 Brokers or Finders. . . . . . . . . . . . . . . . . . 8
3.21 Disclosure. . . . . . . . . . . . . . . . . . . . . . 8
3.22 Environmental Matters . . . . . . . . . . . . . . . . 9
3.23 Bankruptcy. . . . . . . . . . . . . . . . . . . . . . 9
3.24 Issuance Taxes. . . . . . . . . . . . . . . . . . . .10
3.25 Compliance with Laws. . . . . . . . . . . . . . . . .10
SECTION 4
Representations and Warranties of the Purchasers . . . . . . . . . .10
4.1 Experience. . . . . . . . . . . . . . . . . . . . . .10
4.2 Investment. . . . . . . . . . . . . . . . . . . . . .10
4.3 Rule 144. . . . . . . . . . . . . . . . . . . . . . .11
4.4 No Public Market. . . . . . . . . . . . . . . . . . .11
4.5 Access to Data. . . . . . . . . . . . . . . . . . . .11
4.6 Authorization . . . . . . . . . . . . . . . . . . . .11
4.7 Compliance with Other Instruments . . . . . . . . . .11
4.8 Governmental Consent, Etc.. . . . . . . . . . . . . .11
4.9 Status. . . . . . . . . . . . . . . . . . . . . . . .12
SECTION 5
Conditions to Closing of Purchasers. . . . . . . . . . . . . . . . .12
5.1 Representations and Warranties Correct. . . . . . . .12
5.2 Covenants . . . . . . . . . . . . . . . . . . . . . .12
5.3 Articles of Amendment . . . . . . . . . . . . . . . .12
5.4 Charter Documents, Good Standing Certificates . . . .12
5.5 Proof of Corporate Action, Approvals. . . . . . . . .12
5.6 Incumbency Certificate. . . . . . . . . . . . . . . .12
5.7 Consents. . . . . . . . . . . . . . . . . . . . . . .13
5.8 Approvals . . . . . . . . . . . . . . . . . . . . . .13
5.9 Opinion of Counsel. . . . . . . . . . . . . . . . . .13
5.10 Due Diligence . . . . . . . . . . . . . . . . . . . .13
SECTION 6
Conditions to Closing of Company . . . . . . . . . . . . . . . . . .13
6.1 Representations . . . . . . . . . . . . . . . . . . .13
6.2 Covenants . . . . . . . . . . . . . . . . . . . . . .13
SECTION 7
Covenants of the Company . . . . . . . . . . . . . . . . . . . . . .13
7.1 Maintenance of Corporate Status . . . . . . . . . . .13
7.2 Compliance with Articles and Bylaws . . . . . . . . .13
7.3 Reservation of Stock. . . . . . . . . . . . . . . . .14
7.4 Compliance with Laws, Licenses and Permits, No
Infringement. . . . . . . . . . . . . . . . . . . . .14
7.5 Discharge of Obligations. . . . . . . . . . . . . . .14
7.6 Maintenance of Properties . . . . . . . . . . . . . .14
7.7 Maintenance of Proprietary Information. . . . . . . .14
7.8 Insurance . . . . . . . . . . . . . . . . . . . . . .15
7.9 Books and Records . . . . . . . . . . . . . . . . . .15
7.10 Further Assurances. . . . . . . . . . . . . . . . . .15
SECTION 8
Rights of First Refusal. . . . . . . . . . . . . . . . . . . . . . .15
SECTION 9
Composition of Board of Directors. . . . . . . . . . . . . . . . . .16
SECTION 10
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
10.1 Governing Law . . . . . . . . . . . . . . . . . . . .16
10.2 Survival. . . . . . . . . . . . . . . . . . . . . . .16
10.3 Successors and Assigns. . . . . . . . . . . . . . . .16
10.4 Entire Agreement, Amendment . . . . . . . . . . . . .16
10.5 Notices, Etc. . . . . . . . . . . . . . . . . . . . .17
10.6 Delays or Omissions . . . . . . . . . . . . . . . . .17
10.7 Counterparts. . . . . . . . . . . . . . . . . . . . .17
10.8 Severability. . . . . . . . . . . . . . . . . . . . .17
10.9 Titles and Subtitles. . . . . . . . . . . . . . . . .18
10.10 Further Assurances. . . . . . . . . . . . . . . . . .18
10.11 Amendment to Agreement. . . . . . . . . . . . . . . .18
EXHIBIT A
Disclosure Schedule
EXHIBIT B
Capitalization of the Company
EXHIBIT C
Material Contracts
EXHIBIT D
Articles of Amendment to Articles of Incorporation
EXHIBIT E
Proposed Amended and Restated Articles of Incorporation
EXHIBIT F
Opinion of Counsel
AMERICAS POWER PARTNERS, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This SERIES A PREFERRED STOCK PURCHASE AGREEMENT is made as of
January 31, 2000, by and between AMERICAS POWER PARTNERS, INC., a Colorado
corporation (the "Company"), with principal offices at 105 East First Street,
Suite 101, Hinsdale, Illinois 60521, and those other parties whose names appear
on the signature page hereof (each, a "Purchaser," and collectively,
"Purchasers").
SECTION 1
Authorization and Sale of Securities
1.1 Authorization. The Company will authorize the sale and issuance
of 2,725,000 shares of its Series A Preferred Stock (the "Shares"). The Shares
are sometimes referred to as the "Securities."
1.2 Sale of Shares. Subject to the terms and conditions hereof, the
Company will issue and sell the Shares to the Purchasers and the Purchasers,
severally not jointly, agree to buy the Shares from the Company for the amounts
set opposite their names on the signature page hereof, less the two hundred
fifty thousand dollar ($250,000) refundable deposit paid by Armstrong
International, Inc. ("Armstrong"), in the case of Armstrong, and exchanges of
common stock of the Company set opposite their names on the signature page
hereof.
SECTION 2
Closing Date, Delivery
2.1 Closing Date. The purchase and sale of the Securities hereunder
shall be held at a closing ("Closing") at 10:00 a.m. (Central Time) on January
31, 2000, at the offices of Chuhak & Tecson, P.C., 225 West Washington Street,
Suite 1300, Chicago, Illinois 60606 or at such other time and place as the
Company and the Purchasers shall agree. The date of the Closing is hereinafter
referred to as the "Closing Date".
2.2 Delivery. At the Closing, the Company will deliver to each
Purchaser a certificate registered in the name of such Purchaser or its nominee,
representing the Shares to be purchased against payment of the purchase price
therefor, by check payable to the Company or wire transfer per the Company's
instructions and if applicable, by exchange of existing shares of common stock.
2.3 Use of Proceeds. The Company will use the proceeds from the sale
of the Shares for capital acquisitions and general corporate purposes.
SECTION 3
Representations and Warranties of the Company
Except as set forth on the Disclosure Schedule attached as Exhibit A
hereto, the Company represents and warrants to the Purchasers as follows:
3.1 Organization and Standing; Articles and Bylaws. The Company is a
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Colorado and is in good standing under such laws. The
Company has requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted.
The Company is qualified to do business as a foreign corporation in those
jurisdictions in which the failure to be so qualified would have a material
adverse effect on the Company's business as now conducted or as now proposed to
be conducted. The states in which the Company is qualified to do business are
listed in Item 3.1 of Exhibit A. The Company has furnished Purchasers with
copies of its Articles of Incorporation and its Bylaws, which copies are true,
correct and complete and will contain all amendments through the Closing Date.
3.2 Corporate Power; No Contravention. The Company will have at the
Closing Date all requisite legal and corporate power and authority to execute
and deliver this Agreement and the Company's Articles of Amendment ("Articles")
to the Articles of Incorporation, enacted without shareholder action, in the
form attached as Exhibit D hereto which amends the Company's Articles of
Incorporation, to sell and issue the Securities hereunder and to carry out and
perform its obligations under the terms of this Agreement and the Articles
of Incorporation. This Agreement will not conflict with or contravene the terms
of the Company's Articles of Incorporation, Bylaws or any amendment thereof, and
will not result in any material breach of any contractual obligations or law,
rule or regulation to which the Company is subject. Attached hereto as Exhibit E
are proposed amended and restated Articles of Incorporation which have been
approved by the Board of Directors and will be submitted by the Board of
Directors for shareholder vote at the next annual meeting of the shareholders.
3.3 Subsidiaries. The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity.
3.4 Capitalization. The authorized capital stock of the Company
consists or will immediately prior to the Closing Date, consist solely of
(a) 40,000,000 shares of Common Stock, of which 8,465,294 shares are or will be
issued and outstanding immediately prior to the Closing Date, 7,943,600 of which
will be issued and outstanding immediately after the Closing Date, (b) 1,500,000
shares of Common Stock which have been reserved for issuance to key employees
and consultants pursuant to the Company's Stock Option Plan, of which 479,813
remain available for issuance under such plan; and (c) 10,000,000 shares of
Preferred Stock, of which 2,725,000 will be designated as Series A Preferred
Stock when the Articles are filed with the Colorado Secretary of State, none of
which are or will be issued and outstanding immediately prior to the Closing
Date and 2,709,519 of which will be issued and outstanding immediately after the
Closing. In addition, up to 900,000 shares of Common Stock may be purchased by
certain persons via stock options granted pursuant to their respective
independent contractor agreements. As of the Closing Date, the outstanding
shares of Common Stock and Series A Preferred Stock have been duly authorized
and validly issued, and are fully paid and nonassessable. The Company has
reserved 2,725,000 shares of Common Stock for issuance upon conversion of the
Shares (the "Conversion Shares"). A schedule listing all shareholders of the
Company and the number of shares of capital stock held by each such shareholder
and a listing of all outstanding options and warrants and any other obligation
of the Company convertible into capital stock of the Company is set forth on
Exhibit B hereto and is complete and accurate through the Closing Date. Except
as set forth in Exhibits B and D and described herein and in Item 3.4 of the
Disclosure Schedule, there are no options, warrants, convertible securities or
other rights to purchase or acquire any of the Company's authorized and unissued
capital stock and, further, there are no preemptive rights, tag along rights,
rights of first refusal, rights of co-sale or other similar rights with respect
to the Company's capital stock or other contracts or agreements which, through
anti-dilution protection or otherwise, obligate or allow the Company to issue or
redeem any of its capital stock. Upon the Closing contemplated herein, the
Series A Original Purchase Price, as defined in the Articles, will be $1.46, and
the Ownership Percentage, as defined in the Articles, will be 21.55%.
3.5 Authorization, Validity of Stock. All corporate action on the
part of the Company, its directors and shareholders necessary for the
authorization, execution, delivery and performance of this Agreement by the
Company, the authorization, sale, issuance and delivery of the Shares and the
Conversion Shares and the performance of all of the Company's obligations
hereunder has been taken or will be taken prior to the Closing. This Agreement
and the Articles, when executed and delivered by the Company, shall constitute
valid and binding obligations of the Company, enforceable in accordance with
their terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies. The Shares and the
Conversion Shares, when issued in compliance with the provisions of this
Agreement, will be validly issued, fully paid and nonassessable and will be free
of any liens or encumbrances; provided, however, that the Shares and the
Conversion Shares may be subject to restrictions on transfer under the state
and/or federal securities laws as set forth herein. The Shares and the
Conversion Shares are not subject to any preemptive rights or rights of first
refusal. The Company has duly reserved 2,725,000 Conversion Shares.
3.6 Financial Statements. The Company has delivered to the Purchasers
its audited balance sheet and statement of operations (the "Financial
Statements") as of and for the fiscal year ended June 30, 1999 (the "Balance
Sheet Date"). The Financial Statements are complete and correct in all material
respects and they have been prepared in accordance with generally accepted
accounting principles ("GAAP") on a consistent basis throughout the periods
indicated. The Financial Statements accurately describe the respective financial
condition and operating results of the Company as of the dates, and during the
periods indicated. Except as set forth in the Financial Statements, the Company
has no material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business after the Balance Sheet Date, and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under GAAP to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of the Company. Except
as disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP.
3.7 No Material Adverse Change. Since the Balance Sheet Date:
(a) The Company has not entered into any transaction which was
not in the ordinary course of its business except as contemplated by this
Agreement or as set forth in Exhibits or Schedules to this Agreement.
(b) There has been no change in the condition (financial or
otherwise), business, business prospects, property, assets, or liabilities of
the Company other than changes in the ordinary course of its business, none of
which, individually or in the aggregate, is material.
(c) There has been no damage to, destruction of or loss of
physical property (whether or not covered by insurance) materially adversely
affecting the business or operations of the Company.
(d) There has been no resignation or termination of employment
of any officer or key employee of the Company, and the Company does not know of
the impending resignation or termination of employment of any officer or
employee of the Company that would have a materially adverse effect on the
business of the Company.
(e) There have been no loans made by the Company to employees,
officers or directors other than travel advances and sales commission advances
made in the ordinary course of business;
(f) There has been no waiver or compromise by the Company of a
valuable right or of a material debt owed to it;
(g) There has been no satisfaction or discharge of any lien,
claim, or encumbrance or payment of any obligation by the Company, except in the
ordinary course of business and that is not material to the business,
properties, prospects, or financial condition of the Company (as such business
is presently conducted and as it is presently proposed to be conducted);
(h) There has been no material change to a material contract
or arrangement by which the Company or any of its assets is bound or subject
except for certain options granted by the Company as provided in the Disclosure
Schedule;
(i) There has been no material change in any compensation
arrangement or agreement with any employee, officer, director or shareholder;
(j) There has been no sale, assignment, or transfer of any
patents, trademarks, copyrights, trade secrets, or other intangible assets;
(k) There has been no receipt of notice that there has been a
loss of, or material order cancellation by, any major customer of the Company;
(l) There has been no mortgage, pledge, transfer of a security
interest in, or lien, created by the Company, with respect to any of its
material properties or assets, except liens for taxes, mechanics or materialmen
not yet due or payable or being contested in good faith;
(m) There has been no declaration, setting aside, or payment
of any dividend or other distribution of the Company's assets in respect of any
of the Company's capital stock, or any direct or indirect redemption, purchase,
or other acquisition of any of such stock by the Company;
(n) To the best of the Company's knowledge, there has been no
other event or condition of any character that might materially and adversely
affect the business, properties, prospects or financial condition of the Company
(as such business is presently conducted and as it is presently proposed to be
conducted); and
(o) There has been no agreement or commitment by the Company
to do any of the things described in this Section 3.7.
3.8 Assets. The Company has good and, with respect to real property,
marketable, title to all of its real and personal property, including all assets
reflected on the balance sheets included in the Financial Statements or acquired
by the Company since the Balance Sheet Date, all of which are in good operating
condition subject to ordinary wear and tear, and free and clear of material
restrictions on or conditions to transfer or assignment, and free and clear of
all liens, claims, mortgages, pledges, charges, equities, easements, rights of
way, covenants, conditions, security interests, encumbrances, or restrictions,
except for liens for current taxes, mechanics, or materialmen not yet due and
payable or being contested in good faith. Set forth on Item 3.8 of the
Disclosure Schedule is a correct and complete list of all real property owned by
the Company and a list (including the amount of monthly rents called for and a
summary description of the leased property) of all leases for real property
under which the Company is a lessee. The properties and leases listed on Item
3.8 of the Disclosure Schedule are sufficient for the conduct of the Company's
business as now being and presently planned to be conducted. The Company holds
a valid leasehold interest in all leases listed on Item 3.8 of the Disclosure
Schedule, free of any liens, claims, or encumbrances granted by the Company, and
is not in default under any such lease. The Company enjoys peaceful and
undisturbed possession of all premises owned by it, or leased to it from others,
and does not occupy any real property in material violation of any law,
regulation, or decree.
3.9 Patents and Other Intangible Assets.
(a) The Company (i) to the best of its knowledge, owns or has
the right to use, free and clear of all liens, claims and restrictions, all
patents, trademarks, service marks, trade names, copyrights, licenses and other
intellectual property rights used in the conduct of its business as now
conducted or as proposed to be conducted (the "Proprietary Information")
without, to the best of its knowledge, infringing upon or otherwise acting
adversely to the right or claimed right of any person under or with respect to
any of the foregoing, and (ii) is not obligated or under any liability
whatsoever to make any payments by way of royalties, fees or otherwise to any
owner of, licensor of, or other claimant to, any patent, trademark, tradename,
copyright or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise.
(b) To the best of its knowledge, the Company owns or has the
unrestricted right to use all trade secrets, including know-how, inventions,
designs, processes, computer programs, security buy or sell research models and
technical data required for or incident to the development, manufacture,
operation and sale of all products and services sold or proposed to be sold by
the Company (the "Trade Secret Information"), free and clear of any rights,
liens or claims of others, including without limitation former employers of all
employees of the Company.
(c) True and complete copies of all papers and documents
relating to the Proprietary Information and Trade Secret Information have been
made available to Purchasers, including all patent application file histories,
trademark and service mark application file histories, copyright registration
file histories, license and option negotiation papers, purchase negotiation
papers, and all licenses, assignments and agreements relating to the Proprietary
Information and Trade Secret Information.
(d) There is no pending or, to the Company's knowledge,
threatened claim or litigation against the Company relating to the Proprietary
Information or Trade Secret Information, or asserting the infringement or other
violation of any intellectual property rights of any third party or past or
current employee of the Company.
(e) To the Company's knowledge, there is no claim that can be
asserted by or against a third party for infringement, misappropriation, breach
or otherwise relating to the Proprietary Information or Trade Secret
Information.
3.10 Material Contracts and Commitments. Each of the contracts,
agreements and instruments and each compensation arrangement or any other
agreement with officers, consultants, shareholders or affiliates which is
material to the business or financial condition of the Company is listed on
Exhibit C attached hereto. All contracts, agreements and instruments to which
the Company is a party are valid and binding obligations of, enforceable
against, and in full force and effect in all material respects against, the
Company and, to the best knowledge of the Company, the other parties thereto,
subject to the laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
3.11 Compliance with Other Instruments, None Burdensome, Etc. The
Company is not in violation of any material term or provision of any material
mortgage, indebtedness, indenture, contract, agreement, instrument, judgment or
decree, and is not in violation of any order, statute, rule or regulation
applicable to the Company which would have a material adverse effect on the
Company. The execution, delivery and performance of and compliance with this
Agreement and the Articles, and the issuance of the Securities have not resulted
and will not result in any violation of, or conflict with, or constitute a
default under, any of the terms of any corporate restriction or of any
indenture, mortgage, deed of trust, pledge, bank loan or credit agreement,
corporate charter, bylaw or any instrument, document or agreement by which the
Company or its properties may be bound or affected, or result in the creation of
any mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company or result in the acceleration of any indebtedness or
obligation.
3.12 Litigation, Etc. There are no complaints, writs, orders,
injunctions, judgments, actions, suits, proceedings or investigations pending
against the Company or its properties before any court or governmental agency
(nor, to the best of the Company's knowledge, is there any basis therefor or
threat thereof), which, either in any case or in the aggregate, might result in
any material adverse change in the business or financial condition of the
Company or any of its properties or assets, or in any material impairment of the
right or ability of the Company to carry on its business as now conducted or as
proposed to be conducted, or in any material liability on the part of the
Company, and none which questions the validity of this Agreement or any action
taken or to be taken in connection herewith. The Company is not in default of
its obligations under any complaints, writs, orders, injunctions or judgments to
which it is subject.
3.13 Employees. To the best of the Company's knowledge, no employee of
the Company is in violation of any term of any contract or agreement relating to
the relationship of any such employee with the Company or any other party
because of the nature of the business conducted or to be conducted by the
Company. The Company does not have any collective bargaining agreements
covering any of its employees. The Company does not have or otherwise
contribute to or participate in any employee retirement benefit plan subject to
the Employee Retirement Income Security Act of 1974, as amended.
3.14 Insurance. The Company has fire, casualty and liability insurance
policies, with extended coverage, adequate to protect against all risks against
which it is customary to issue by companies engaged in businesses the same or
similar to the business conducted by the Company.
3.15 No Registration Rights. Except as set forth in the Articles, the
Company is not under any obligation to register any of its presently outstanding
securities or any of its securities which may hereafter be issued.
3.16 Governmental Consent, Etc. No consent, approval or authorization
of or designation, declaration or filing, with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement or the offer, sale or issuance of the Securities,
except for the filing of the Articles and the qualification (or taking such
action as may be necessary to secure an exemption from qualification, if
available) of the offer and sale of the Securities under applicable Blue Sky
laws, which filings and qualifications, if required, will be accomplished in a
timely manner prior to or promptly upon the completion of the Closing.
3.17 Company Transactions with its Officers, Directors, or
Shareholders. The Company is not indebted, either directly or indirectly, to any
of its officers, directors or shareholders or to their respective spouses or
children, in any amount whatsoever, other than for payment of salary for
services rendered and reasonable expenses. None of the Company's officers,
directors, or shareholders or any members of their immediate families is
indebted to the Company, nor do any officers, directors or, to the best of
the knowledge of the Company, shareholders have any direct or indirect ownership
interest in any firm or corporation which controls, is controlled by or under
common control with the Company or which competes with the Company. Except for
consulting agreements or arrangements as listed on Exhibit C, no officer,
director or shareholder or any member of their immediate families is, directly
or indirectly, interested in any material contract with the Company. The
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
3.18 Taxes Paid. The Company has timely filed all tax returns that are
required to have been filed by it with appropriate federal, state, county and
local governmental agencies or instrumentalities. The Company has paid or
established reserves for all income, franchise, payroll and other taxes due as
reflected on those returns. There is no pending dispute with any taxing
authority relating to any of the Company's returns. The Company has no
knowledge of any proposed material liability for any tax to be imposed upon its
properties or assets for which there is not an adequate reserve reflected in the
Financial Statements.
3.19 Offering. Subject to the accuracy of Purchasers' representations
in Section 4 hereof, the offer, sale and issuance of the Securities to be issued
in conformity with the terms of this Agreement constitute transactions exempt
from the registration requirements of Section 5 of the Securities Act of 1933,
as amended (the "Securities Act") and applicable Blue Sky laws. The Company
has not issued any securities in violation of applicable federal or state
securities laws except for such violations, if any, which in the aggregate do
not and will not have a material adverse affect on the Company or the Shares.
3.20 Brokers or Finders. The Company has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
3.21 Disclosure. No representation or warranty of the Company
contained in this Agreement and any exhibit attached hereto, or any written
statement or certificate furnished or to be furnished to the Purchasers pursuant
hereto or in connection with the transactions contemplated hereby (when read
together) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were
made.
3.22 Environmental Matters.
(a) The Company is in compliance in all material respects
with all Environmental Laws (as defined) and, to its knowledge, no material
expenditures are or will be required in order to comply with any Environmental
Law. The Company has not knowingly handled, stored or released, or exposed any
person to, any Hazardous Substances (as defined) except in compliance with
Environmental Laws. The Company is not, and has not been notified that it will
be in the future, liable or responsible for clean-up costs, remedial work or
damages in connection with the handling, storage, release, or exposure by the
Company of any Hazardous Substances or in connection with any Environmental Law.
(b) As used in this Section 3.22, "Environmental Laws" means
any and all present and future laws (whether common or statutory), compacts,
treaties, conventions or rules, regulations, codes, plans, requirements,
criteria, standards, orders, decrees, judgments, injunctions, notices or demand
letters issued, promulgated or entered thereunder by any foreign, federal,
tribal, state or local governmental entity relating to public or employee health
and safety, pollution or protection of the environment, including without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendment and Reauthorization
Act of 1986 ("CERCLA"), the Resource Conversation and Recovery Act ("RCRA"), the
Federal Safe Drinking Water Act, the Federal Water Pollution Control Act, the
Used Oil Recycling Act of 1980, the Solid Waste Disposal Act, the Emergency
Planning and Community Right-To-Know Act of 1986, the Clean Air Act and any and
all of the foreign, federal, state, tribal and local laws, rules, regulations
and orders relating to reclamation of land, wetlands and waterways or relating
to use, storage, emissions, discharges, clean-up, release or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
Hazardous Substances on or into the workplace or the environment (including
without limitation, ambient air, oceans, waterways, wetlands, surface water,
ground water (tributary and non-tributary), land surface or subsurface strata)
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation or handling of pollutants,
contaminants, chemicals or industrial, toxic, hazardous or similar substances,
as all of the foregoing may be amended, supplemented or reauthorized from time
to time, and "Hazardous Substances" means (i) any and all "wastes" and
"hazardous wastes," as defined by CERCLA; (ii) "solid wastes" and "hazardous
wastes," as defined by RCRA; (iii) any pollutant, contaminate or hazardous,
dangerous or toxic chemicals, materials or substances within the meaning of any
Environmental Law; (iv) any radioactive material, including any source, special
nuclear or by-product material as defined at 42 U.S.C. Section 2011 et seq. as
amended; and (v) asbestos in any form or condition.
3.23 Bankruptcy. The Company has not admitted in writing its inability
to pay its debts generally as they become due, filed or consented to the filing
against it of a petition in bankruptcy or a petition to take advantage of any
insolvency act, made an assignment for the benefit of creditors, consented to
the appointment of a receiver for itself or for the whole or any substantial
part of its property, or had a petition in bankruptcy filed against it, been
adjudicated a bankrupt, or filed a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other law or statute of the
United States of America or any other jurisdiction.
3.24 Issuance Taxes. All taxes (other than those based on income of
the Purchasers) imposed by law in connection with the issuance, sale and
delivery of the Shares will have been fully paid, and all laws imposing such
taxes (other than those based on income of the Purchasers) shall have been fully
complied with, as of the Closing Date.
3.25 Compliance with Laws.
(a) The Company has complied with and is in compliance in all
material respects with all foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, judgments, orders and decrees applicable to it
and its assets, business and operations, and
(b) The Company has not received written notice of any claim
of default under or violation of any statute, law, ordinance, regulation, rule,
judgment, order or decree except for any such noncompliance or claim of default
or violation, if any, which in the aggregate do not and will not have a material
adverse effect on the property, operations, financial condition or prospects of
the Company.
SECTION 4
Representations and Warranties of the Purchasers
Each Purchaser hereby severally represents and warrants to the Company
with respect to the purchase of the Securities as follows:
4.1 Experience. It has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
4.2 Investment. It is acquiring the Securities and the Conversion
Shares for investment for its own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution thereof.
It understands that the Securities and the Conversion Shares have not been, and
will not be when issued, registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of such Purchaser's representations as
expressed herein. Purchaser was not formed solely for the purpose of acquiring
the Securities or the Conversion Shares.
4.3 Rule 144. It acknowledges that the Securities and the Conversion
Shares must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available. It
is aware of the provisions of Rule 144 promulgated under the Securities Act
which permit limited resale of shares purchased in a private placement subject
to the satisfaction of certain conditions, including, among other things, the
existence of a public market for the shares, the availability of certain current
public information about the Company, the resale occurring not less than one
year after a party has purchased and paid for the security to be sold, the sale
being effected through a "broker's transaction" or in transactions directly with
a "market maker" and the number of shares being sold during any three-month
period not exceeding specified limitations.
4.4 No Public Market. It understands that no public market now
exists for the Securities but shares of Common Stock are sold on the over-the-
counter bulletin board.
4.5 Access to Data. It has had an opportunity to discuss the
Company's business, management and financial affairs with its management and the
opportunity to review the Company's facilities and business plan.
4.6 Authorization. All action (corporate or partnership, as
appropriate) on the part of such Purchaser necessary for the authorization,
execution, delivery and performance of this Agreement by Purchaser and the
performance of all of the Purchaser's obligations hereunder has been taken or
will be taken prior to the Closing. This Agreement when executed and delivered
by such Purchaser will constitute a valid and legally binding obligation of
such Purchaser, enforceable in accordance with its terms, except as
indemnification provisions may be limited by principles of public policy, and
subject to laws of general application relating to bankruptcy, insolvency, and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
4.7 Compliance with Other Instruments. The execution, delivery and
performance of and compliance with this Agreement, and the issuance of the
Securities or the Conversion Shares have not resulted and will not result in any
violation of, or conflict with, or constitute a default under, any of the terms
of any corporate or partnership restriction or of any indenture, mortgage, deed
of trust, pledge, bank loan or credit agreement, corporate charter, bylaw or any
instrument, document or agreement by which the Purchaser or its properties may
be bound or affected, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Purchaser.
4.8 Governmental Consent, Etc. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Purchaser is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Securities or
the Conversion Shares, except for the qualification (or taking such action as
may be necessary to secure all exemption from qualification, if available) of
the offer and sale of the Securities under applicable Blue Sky laws, which
filings and qualifications, if required, will be accomplished by the Company in
a timely manner prior to or promptly upon the completion of the Closing.
4.9 Status. Armstrong International, Inc. is validly existing under
the laws of the state of Michigan, is resident in Florida and has all power and
authority to enter into and perform this Agreement and any related agreements.
Armstrong International, Inc. Employees Pension Plan is a resident of Michigan,
and has all power and authority to enter into and perform this Agreement and any
related agreements. Merrill Armstrong is a resident of Florida.
Douglas Bloss is a resident of Florida. Each Purchaser is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act.
SECTION 5
Conditions to Closing of Purchasers
Each Purchaser's obligation to purchase the Securities at the Closing
are, at the option of each Purchaser, subject to the fulfillment of the
following conditions:
5.1 Representations and Warranties Correct. The Representations and
Warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects as of the Closing Date.
5.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
5.3 Articles of Amendment. The Company shall have duly filed the
Articles with the Colorado Secretary of State in the form of Exhibit D hereto.
5.4 Charter Documents, Good Standing Certificates. Purchasers shall
have received a copy, certified by a duly authorized officer of the Company to
be true and complete as of the Closing Date, of the Articles of Incorporation
and bylaws of the Company, as amended prior to the filing of the Articles, a
copy of the Articles file stamped by the Colorado Secretary of State, and a
certificate of the Secretary of the State of Colorado as to the Company's good
standing dated January 4, 2000.
5.5 Proof of Corporate Action, Approvals. Purchasers shall have
received from the Company copies, certified by a duly authorized officer thereof
to be true and complete as of the Closing Date, of the records of all corporate
action taken to authorize the execution, delivery and performance of this
Agreement and all other actions and agreements required in connection with this
Agreement, and further certifying that all representations and warranties made
by the Company in Section 3 of this Agreement are true, correct and complete as
of the Closing.
5.6 Incumbency Certificate. Purchasers shall have received from the
Company an incumbency certificate, dated the Closing Date, signed by a duly
authorized officer of the Company and giving the name and bearing a specimen
signature of each individual who shall be authorized to sign, in the name and on
behalf of the Company, this Agreement and each related agreement, and to give
notices and to take other action on the Company's behalf.
5.7 Consents. All necessary agreements and consents of any third
parties (including those listed on the Disclosure Schedule) to the consummation
of the transactions contemplated by this Agreement shall have been obtained by
the Company and delivered to Purchasers.
5.8 Approvals. All necessary approvals or authorizations of any
governmental authority of the United States or of any state therein or of any
foreign governmental authority that are required in connection with the
execution and performance of this Agreement, including the issuance and sale of
the Shares, shall have been obtained and shall be effective as of the Closing
Date.
5.9 Opinion of Counsel. Purchasers shall have received a written
opinion of Seller's counsel in the form attached hereto as Exhibit F.
5.10 Due Diligence. Purchasers shall have conducted and completed all
due diligence reviews and examinations of the business and any other due
diligence reviews as necessary, and the results of such investigations shall be
satisfactory to Purchasers in their sole discretion.
SECTION 6
Conditions to Closing of Company
The Company's obligation to sell and issue the Securities at the Closing
Date is, at the option of the Company, subject to the fulfillment as of the
Closing Date of the following conditions:
6.1 Representations. The representations made by Purchasers in
Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date.
6.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by each of the Purchasers on or prior to the
Closing Date shall have been performed or complied with in all material
respects.
SECTION 7
Covenants of the Company
7.1 Maintenance of Corporate Status. The Company shall maintain its
corporate existence in good standing or effective under the laws of its
jurisdiction of organization and any other states or jurisdictions in which its
failure to qualify as a foreign corporation or entity would have a material
adverse effect on its operations or financial condition.
7.2 Compliance with Articles and Bylaws. The Company shall comply in
all material respects with its Articles of Incorporation, including the
Articles, and Bylaws.
7.3 Reservation of Stock. The Company shall reserve and keep
available out of its authorized but unissued shares of Common Stock, for the
purpose of issuance upon the conversion of the Shares, that number of shares of
Common Stock issuable upon conversion of all outstanding Shares (subject to
adjustment as provided by the terms thereof). The Company shall take all
commercially reasonable actions necessary for all Conversion Shares to be issued
without violation in any material respect of any applicable state and federal
laws or regulations or any requirements of any domestic securities exchange upon
which shares of Common Stock may then be listed (except for official notice of
issuance, which the Company shall transmit to the Purchasers promptly upon
receipt).
7.4 Compliance with Laws, Licenses and Permits, No Infringement. The
Company shall comply with all applicable federal, state, local, foreign and
other laws, regulations and ordinances, and with all applicable federal, state,
local and foreign governmental licenses and permits necessary for conducting its
business, except to the extent that any noncompliance would not have a material
adverse effect upon the Company. The Company shall not knowingly engage in any
activities that infringe upon the intellectual property rights of any other
person, corporation, partnership or other entity which could have a material
adverse effect upon the Company.
7.5 Discharge of Obligations. The Company shall pay and discharge all
taxes, assessments, and governmental charges lawfully levied or imposed upon it
(in each case before they become delinquent and before penalties accrue), all
lawful claims for labor, materials, supplies and rents, and all other debts and
liabilities that if unpaid would, by law, be a lien or charge upon any of the
assets or properties of the Company or lead to suspension of the business of the
Company (except to the extent contested in good faith by the Company and for
which adequate reserves are established).
7.6 Maintenance of Properties. The Company shall maintain all real
and personal property used in the business of the Company in good operating
condition, and shall make all repairs, renewals, replacements, additions and
improvements to those properties as are necessary or appropriate in the ordinary
course of business.
7.7 Maintenance of Proprietary Information. The Company shall
maintain all Proprietary Information and Trade Secret Information, and all
applications and registrations therefor owned or held by the Company, in full
force and effect, except as otherwise determined in the ordinary course of
business. The Company shall not encumber or license others to use the
Proprietary Information owned by it except in the ordinary course of the
Company's business, and shall maintain the confidentiality and trade secret
status of all Proprietary Information that is confidential and trade secret
except where disclosure would not have a material effect on the Company's
business, is necessary to obtain copyright registrations or patents, or is
necessary or desirable in the ordinary course of the Company's business.
7.8 Insurance. The Company shall maintain in full force and effect
(a) adequate insurance policies to protect its assets and businesses covering
property damage by fire, business interruption or other casualty, sufficient in
amount to allow it to replace any of its properties damaged or destroyed; and
(b) insurance policies to protect against all liabilities, claims, and risks
against which it is customary in amounts customary for companies similarly
situated with the Company.
7.9 Books and Records. The Company shall keep proper books of records
and account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Company in accordance with GAAP.
The Company shall provide Purchasers with access to all such books and records
and allow Purchasers to make copies and abstracts thereof at reasonable times.
7.10 Further Assurances. The Company will execute and deliver
promptly to each Purchaser upon request all such other and further documents,
agreements and instruments in compliance with or pursuant to its covenants and
agreements herein, and will make any recordings, file any notices, and obtain
any consents as may be necessary or appropriate in connection therewith.
SECTION 8
Rights of First Refusal
The Purchasers agree that if any Purchaser desires to sell, assign,
transfer or otherwise dispose of any Shares , then such Purchaser (the
"Transferor") shall first deliver to the Company and each other shareholder of
the Company holding more than ten percent (10%) of the outstanding shares
("Shareholders") a written notice (the "Notice") stating its desire to sell
such stock ("Offered Stock"). The Notice must be in connection with a bona
fide offer from an unrelated party to purchase the Shares owned by Transferor
and must specify the amount of such Shares to such offer, the price and terms of
the offer and the name and address of the prospective purchaser. The Company
shall provide written notice to the Transferor of the Company's intent to
purchase all or part of the Offered Stock within fifteen (15) days of its
receipt of the Notice. Within fifteen (15) days after termination of the
original fifteen (15) day period or after notice from the Company of the number
of Shares it will not purchase, the Shareholders who have received the Notice
may elect to purchase such portion of the remaining Offered Stock as the number
of shares of Common Stock owned by them (on an as-converted basis) on the date
of receipt of the Notice shall bear to the total number of shares of common
stock of the Company owned by all such other Shareholders (on an as-converted
basis), excluding the Transferor. If any Shareholder does not purchase the
proportionate number of shares to which it is entitled, the remaining
Shareholders may purchase a pro rata portion of the shares not purchased (the
proportion to be based upon the shares of Common Stock owned by the remaining
such Shareholders (on an as-converted basis) who wish to purchase) at any time
within fifteen (15) days after the termination of the second fifteen (15) day
period, or after notice from such other Shareholders of the number of shares
which it will not purchase. The Company's or a Shareholder's election to
purchase shares of Offered Stock at the designated offering price shall be
reflected in a written notice to the Transferor during the appropriate election
period. The closing of the purchase will take place on a date selected by the
Transferor and those purchasing shares not more than twenty (20) days after the
end of the latter election period. At the closing, the Shareholders purchasing
the Shares shall pay in cash the purchase price of the Offered Stock. If shares
of Offered Stock are not the subject of an election to purchase by the Company
or a Shareholder, or if the Company or a Shareholder has elected to purchase
such stock and fails to do so within the applicable period for such purchase,
the Transferor may within ninety (90) days after the end of the latter election
period sell the Offered Stock which has not been purchased to the person
specified in the Notice and on the terms and at a price the same as set forth
in the Notice. Any and all such shares so sold shall remain subject to the
terms and conditions of this Agreement. The provisions of this section shall
not apply to (i) a bona fide gift or transfer without consideration of any stock
of the Company owned by the Shareholder; (ii) the transfer or distribution of
shares to a partner or affiliate of any Shareholder; (iii) transfers between
Shareholders; (iv) repurchases by the Company of stock; (v) transfers of shares
of Common Stock which a holder of Series A Preferred may happen to own, or into
which any shares of Series A Preferred have been converted; or (vi) transfers
where the Series A Preferred shall be converted into Common Stock on or before
the date of the closing of the transfer.
SECTION 9
Composition of Board of Directors
Provided Armstrong International, Inc. owns a majority of the shares of
Series A Preferred Stock originally issued to it, holders of a majority of the
shares of Series A Preferred Stock shall have the right to designate one (1)
member of the Board. Notwithstanding the foregoing, the holder of each share of
Series A Preferred Stock shall be entitled to the number of votes equal to the
number of shares of common stock of the Company into which each share of Series
A Preferred Stock could be converted for the election of all other members of
the Board.
SECTION 10
Miscellaneous
10.1 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of Colorado without giving effect to principles of
conflicts of law.
10.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by any Purchaser and
the closing of the transactions contemplated hereby.
10.3 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of Purchasers to purchase the Securities
shall not be assignable without the consent of the Company.
10.4 Entire Agreement, Amendment. This Agreement and the other
documents delivered pursuant hereto at the Closing constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived,discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought,
provided, however, that holders of a majority of the Shares may act for all
Purchasers.
10.5 Notices, Etc. All notices and other communication required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to a Purchaser, at the Purchaser's address set forth on the
signature page hereto, or at such other address as such Purchaser shall have
furnished to the Company in writing, with a copy to the addresses set forth
below, or (b) if to any other holder of any Securities, at such address as such
holder shall have furnished the Company in writing, or, until any such holder so
furnishes an address to the Company, then to and at the address of the last
holder of such Securities who has so furnished an address to the Company, or (c)
if to the Company, one copy should be sent to its address set forth on the
cover page of this Agreement and addressed to the attention of the corporate
secretary, or at such other address as the Company shall have furnished to
Purchasers. Each such notice or other communication shall for all purposes of
this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid.
10.6 Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any holder
of any Securities, upon any breach or default of the Company under this
Agreement, shall impair any such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any holder of any
breach or default under this Agreement, or any waiver on the part of any holder
of any revisions or conditions of this agreement, must be in writing and be
executed by the party to be bound thereby, and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any holder, shall be cumulative and
not alternative.
10.7 Counterparts. This Agreement may be executed in counterparts,
each of which shall be enforceable against the party actually executing such
counterparts, and all of which together shall constitute one instrument.
10.8 Severability. In the event that any provisions of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provisions provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
10.9 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
10.10 Further Assurances. The Company will execute and deliver
promptly to each Purchaser upon request all such other and further documents,
agreements and instruments in Compliance with or pursuant to its covenants and
agreements herein, and will make any recordings, file any notices, and obtain
any consents as may be necessary or appropriate in connection therewith.
10.11 Amendment to Agreement. This Agreement may be altered, amended
or waived by a writing signed by the Company and by each of the Purchasers.
IN WITNESS WHEREOF, the undersigned have executed this Series A Preferred
Stock Purchase Agreement as of the date first above written.
AMERICAS POWER
PARTNERS, INC.
By:
David Pequet, President
Purchasers
<TABLE>
<S> <C> <C>
NAME AND ADDRESS SHARES PURCHASED PURCHASE PRICE
ARMSTRONG INTERNATIONAL, INC. 1,542,793 $1,800,000 cash
2081 E. Ocean Boulevard, 4th Floor plus 236,719 shares
Stuart, Florida 34996 of common stock
By: _______________________________
Its: _______________________________
MERRILL ARMSTRONG 775,046 $700,000 cash plus
2081 E. Ocean Boulevard, 4th Floor 226,929 shares of
Stuart, Florida 34996 common stock
__________________________________
Merrill Armstrong
DOUGLAS BLOSS 125,013 $100,000 cash plus
2081 E. Ocean Boulevard, 4th Floor 58,046 shares of
Stuart, Florida 34996 common stock
__________________________________
Douglas Bloss
ARMSTRONG INTERNATIONAL, INC. 266,667 $400,000 cash
EMPLOYEES PENSION PLAN
2081 E. Ocean Boulevard, 4th Floor
Stuart, Florida 34996
By:________________________________
Stephen P. Gibson, Trustee
</TABLE>
EXHIBIT A
Disclosure Schedule
Item 3.1 - Illinois
Item 3.4 - The Company has adopted a Stock Option Plan
for the benefit of officers, directors,
employees, consultants or advisors, pursuant
to which the Company may issue options to
purchase up to 1,500,000 shares of the common
stock of the Company. Pursuant to this Stock
Option Plan, the Company has granted 1,020,187
options, as follows: (i) 287,744 to David
Pequet, (ii) 287,745 to Mark Margason, and
(iii) 444,698 to Thomas Smith. In addition,
under their respective independent contractor
agreements, each of Mark Margason and David
Pequet have options to purchase up to 450,000
shares of Common Stock of the Company, spread
out over a 3 year period.
Item 3.8 - Real Property Owned: None.
Real Property Leased: A portion of the building
commonly known as 113-115 S Garfield Avenue,
Hinsdale, Illinois, is leased from Schramko Realty
Holdings, L.L.C., pursuant to a lease dated September
22, 1999..
EXHIBIT B
Capitalization of the Company
EXHIBIT C
Material Contracts
1. Independent Contractor Agreement by and between the Company
and Mark Margason.
2. Independent Contractor Agreement by and between the Company and
David Pequet.
3. Independent Contractor Agreement by and between the Company and
Larry Cox.
4. Employment Agreement by and between the Company and Thomas Smith.
5. Consulting Agreement by and between the Company and MPI Venture
Management, LLC
6. Lease of computer equipment pursuant to lease agreement number
008558322-003 with Dell Financial Services, L.P. dated November
18, 1999.
EXHIBIT D
Articles of Amendment to Articles of Incorporation
EXHIBIT E
Proposed Amended and Restated Articles of Incorporation
EXHIBIT F
Opinion of Counsel
DENNIS W. BERSCH
CERTIFIED PUBLIC ACCOUNTANTS
CONSENT FOR INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Oak Brook Capital II, Inc.
(Predecessor corporation to APPI)
Dated: June 22, 1999
I hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of my report dated February 25, 1999 appearing on page F-2
of Oak Brook Capital II, Inc. Registration Statement on Form 10SB12G for the
year ended December 31, 1998. I also consent to the reference to me under the
heading "Exhibits" in such Registration Statement.
/s/ Dennis W. Bersch
------------------------------------
Dennis W. Bersch
CONSENT OF COUNSEL
I hereby consent to the incorporation by reference of my consent dated May 16,
1999 appearing in the Oak Brook Capital II, Inc. Registration Statement on Form
10SB12G, Third Amendment, filed July 29, 1999. I also consent to the reference
to me under the heading "Exhibits" in such Registration Statement.
MARK T. THATCHER, P.C.
/s/ Mark T. Thatcher
By:_______________________
MARK T. THATCHER, ESQ.
Newport, RI
EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD-LOOKING STATEMENTS
In passing the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"), 15 U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996), Congress
encouraged public companies to make "forward-looking statements" by creating a
safe harbor to protect companies from securities law liability in connection
with forward-looking statements. Americas Power Partners, Inc. ("APPI" or the
"Company") intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe
harbor provisions.
"Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All forward-
looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those projected. Due to those
uncertainties and risks, the investment community is urged not to place undue
reliance on written or oral forward-looking statements of APPI. The Company
undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward-Looking Statements (the "Safe Harbor Statement") to
reflect future developments. In addition, APPI undertakes no obligation
to update or revise forward-looking statements to reflect changed assumptions,
the occurrence of unanticipated events or changes to future operating results
over time.
