SECURITIES AND EXCHANGE
COMMISSION
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): April 4, 2000
OAK BROOK CAPITAL III, INC.
(Exact Name of Registrant as specified in its Charter)
Colorado 000-56321 05-0499527
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
1250 Turks Head Building
Providence, RI 02903
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code:
(401) 272-5800
50 Airport Parkway, Suite 117, San Jose, California 95110
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Cautionary Statement for Purposes of "Safe Harbor Provisions" of the
Private Securities Litigation Reform Act of 1995:
Except for historical facts, all matters discussed in this report which are
forward looking involve a high degree of risks and uncertainties. Potential
risks and uncertainties include, but are not limited to, competitive pressures
from other food export companies and political developments in overseas
markets, economic conditions in the Company's primary markets and other
uncertainties detailed or to be detailed from time to time in the Company's
Securities and Exchange Commission filings.
Item 1. Changes in Control of Registrant.
On April 4, 2000, a closing was concluded under a Stock Purchase Agreement
(the "Plan"), pursuant to which a change of control of the Registrant occurred.
Pursuant to the Plan, Wai Hong Chong sold 9,670,500 shares of the Registrant's
common stock to Mark T. Thatcher ("Thatcher") and Gerard M. Werner in exchange
for $1.00. In addition, all of the issued and outstanding shares of Mighty Star
Holdings, Ltd. ("MSHL"), a British Virgin Islands corporation and wholly-owned
subsidiary of the Registrant were transferred to Wai Hong Chong. Pursuant to
the Plan, the Registrant's then officers and directors resigned and
were replaced by new management as set forth below.
The following table sets forth certain information with respect to the persons
designated as newly appointed directors of the Registrant under the Plan,
including their beneficial ownership in the Registrant as of the closing under
the Plan concluding April 4, 2000 .
Name and Address Age Number of Shares
Beneficially Owned Percentage of Class
Gerard Werner, Esq.(1)
C/O Mark T. Thatcher
1250 Turks Head Building
Providence, RI
02903 29 552,600 45.00%
Mark T. Thatcher(1)
Nadeau & Simmons, P.C.
1250 Turks Head Building
Providence, Rhode Island
02903 35 552,600 45.00%
All directors and
executive officers
as a group (2 persons) 1,105,200 90.00%
The names, addresses and titles of the persons who, upon the effective
date of the Plan, became the officers of the Company, and who shall hold
their offices at the pleasure of the board are as follows:
Name and Address Age Title(s)
Gerard Werner 29 Vice President and a Director
Mark T. Thatcher 35 President and Director
BIOGRAPHICAL INFORMATION WITH RESPECT TO NEW DIRECTORS AND OFFICERS
Gerard Werner
Mr. Werner passed the District of Columbia, Court of Appeals Bar
examination in February 1998. Since that time he has served as
Case Design Manager for The Equitable, April 1998- Sep. 1998. He is a
registered representative, having passed series 6 and series 63, as well as
Virginia's Life and Health Insurance licensing exam.
Mr. Werner graduated from the Georgetown University Law School
in 1997 where he served as a staff member of the American Criminal
Law Review Volume 33, and as Articles and Notes Editor Volume 34.
He published author Volume 33-3, Eleventh Survey of White Collar Crime-
"Tax Evasion".
Mr. Werner graduated in 1994 from Georgetown University with a
double major in philosophy and government. He served as an intern in United
States Representative Thomas Petri's office on three separate occasions: 1992,
1994 and 1995.
Mark T. Thatcher
Mr. Thatcher attended the University of Denver where he earned
his law degree and masters in business administration. He is
presently a member of the State Bar of Colorado; Court of Appeals,
District of Columbia; Committee Member of the Securities Forum,
Colorado, Washington, D.C. and the American Bar Association; and
Member of the International Society of Business Law.
Mr. Thatcher has participated as a business and legal advisor for a
number of public and privately held companies. He has been retained
for federal and state securities compliance, venture capital
analysis, public and private mergers and acquisitions, corporate
reorganization/restructuring, and international franchising
development. From 1991 through 1995, Mr. Thatcher was "of counsel"
to Daniel P. Edwards, P.C., an "AV" rated Colorado law firm. The
firm was "of counsel" to Hughes Dorsey, Denver, Colorado, Heron
Burchette, Washington, D.C. and Sparks, Dix and Enoch, Colorado
Springs, Colorado. From 1995 through August of 1999 he served as
general counsel to Acadia Group, Inc. (Ticker "ANHS") and
CollegeLink.com (Ticker "APS"). He has recently joined the
Providence-based law firm of Nadeau & Simmons, P.C. in an
"of-counsel" capacity. He is an honorary member of Alpha Kappa
Delta, Sutton Award candidate, and recipient of the E.V. Graham
Scholarship Merit Award.
Item 2. Acquisition or Disposition of Assets.
Pursuant to the attached Plan, Wai Hong Chong transferred all of his
controlling interest in the Registrant to Mr. Werner and Mr. Thatcher.
In October 1999, an 8-K was filed with the SEC reporting on a reverse
merger and potential name change for Oak Brook Capital III, Inc., the
predecessor corporation to MHSL. Such transaction was never fully
consummated, and as a result, has been abandoned. On April 3,
2000, documents were prepared to confirm the complete nullification
of the transaction as set forth herein.
Mr. Werner and Mr. Thatcher were the original directors and majority
shareholders of the Registrant and will now continue to operate and
manage the Registrant as an ongoing "blank check" issuer, a company
whose business plan is to seek out and consummate a business
combination transaction with a privately held corporation whose
intent is to become a reporting company under Section 12 of the
Securities Exchange Act of 1934 (the "Exchange Act").
Item 7. Financial Statements, Pro-Forma Financial Information and
Exhibits.
(a) Financial Statements of Business to be acquired.
Not Applicable.
(b) Pro-Forma Financial Information.
Not Applicable.
(c) Exhibits.
2.1. Stock Purchase Agreement, dated as of April 4, 2000, by and among the
Registrant, Werner, Thatcher, Mighty Star Holdings, Ltd. and Chong
Wai Hong.
SIGNATURE
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 thereunto duly authorized.
OAK BROOK CAPITAL III, INC.
By: /s/ Mark T. Thatcher
Mark T. Thatcher,
Dated: April 17, 2000
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of this ____ day of April,
2000, by and among Mark T. Thatcher ("Thatcher"), an individual, Gerard M.
Werner ("Werner"), (hereinafter referred to collectively as "Purchaser"),
Chong Wai Hong, an individual and resident of Hong Kong ("Seller"), Mighty Star
Holdings, a Colorado corporation formerly known as OAK BROOK CAPITAL III,
INC., a ("Company") and Mighty Star Holdings, Ltd., ("MSH") a British Virgin
Islands corporation and wholly-owned subsidiary of Company. Purchaser,
Seller, Company and MSH are sometimes referred to herein collectively as the
"Parties" and individually as a "Party."
BACKGROUND STATEMENT
A. On or about October 17, 1999 the Parties entered into an
Acquisition Agreement (the "Acquisition Agreement") under which,
inter alia, Company issued to Seller 9,670,500 shares of
Company's Common Stock, par value $.001 per share (the "Shares")
which constitutes 88.73% of all issued and outstanding Common
Stock of Company. In consideration of the issuance of the
Shares to Seller, Seller transferred 100% of the issued and
outstanding shares of MSH Common Stock to Company, which
constitutes 1 share of MSH Common Stock (the "MSH Share").
B. There are 10,898,500 shares of the Company's Common Stock issued
and outstanding, of which 9,670,500 shares are owned by Seller.
C. Purchaser desires to purchase and Sellers desire to sell,
transfer, convey and assign to Purchaser, the Shares for the
Purchase Price (as hereinafter defined) and upon the terms and
subject to the conditions hereinafter set forth.
D. Seller desires to acquire and Company desires to transfer, convey
and assign to Seller, the MSH Share upon the terms and subject to
the conditions set forth in the Non-recourse Assignment attached
hereto as Exhibit A.
STATEMENT OF AGREEMENT
In consideration of the representations, warranties, covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1.O PURCHASE AND SALE OF SHARES.
1.1 Shares Transferred.
(a) Transfer of the Shares. Sellers hereby agree to sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser agrees to acquire
from Seller, at the Closing (as hereinafter defined) for the Purchase
Price, the Shares free and clear of any and all liens, pledges, security
interests, encumbrances, charges and claims thereon.
(b) Transfer of the MSH Share. Company hereby agrees to transfer,
convey, assign and deliver to Seller, at the Closing (as hereinafter
defined), in accordance with the terms and conditions set forth in
Exhibit A, the MSH Share free and clear of any and all liens, pledges,
security interests, encumbrances, charges and claims thereon.
1.2 Transfer at Closing. Certificates evidencing the Shares shall be
delivered by Sellers to Purchaser and shall be duly endorsed in blank for
transfer or accompanied by appropriate stock powers duly endorsed in
blank for transfer.
1.3 CLOSING. The closing of the sale of the Shares (the "Closing") shall
take place at 10:00 a.m., (EST), on the _____ day of April, 2000 (the
"Closing Date"), at the offices of Purchaser's counsel, Nadeau &
Simmons, P.C., in Providence, Rhode Island or at such other time and place
as the parties may agree. The Closing shall be effective as of 12:01 a.m.
on April ___, 2000.
2.0 PURCHASE PRICE AND PAYMENT.
(a) Payment of Purchase Price
At Closing, Purchaser shall pay to Seller in cash or immediately
available funds the amount of One Dollar and 00/100 ($1.00) (the
"Purchase Price").
3.0 REPRESENTATIONS AND WARRANTIES RELATING TO COMPANY. Company, MSH and
Seller hereby jointly and severally represents and warrants to Purchaser
that:
3.1 Corporate Organization. Company is duly organized, validly existing
and in good standing under the laws of the State of Colorado, and has all
requisite corporate power and authority to own, lease, license and
operate its properties and assets and to conduct the Business now
conducted by it. Company is duly qualified, licensed or domesticated and
in good standing in each jurisdiction where the nature of its activities
conducted in connection with the Business, or the character of the
properties owned, leased or operated by it in connection with the
Business, require such qualification, licensing or domestication. The
Company's Articles of Incorporation and Bylaws, as amended to date,
copies of which have been delivered to Purchaser, are true and complete
copies of such documents as now in effect. The minute books of the
Company contain accurate records of all meetings of its board of
directors, committees of the boards of directors, and shareholders since
its incorporation, and accurately reflect all transactions referred to
therein. Company's stock records accurately reflect all transactions
involving the issuance or transfer of the Shares.
3.2 Authorization, Certain Actions, No Conflicts. The Company, MSH and
Seller has all requisite power and authority to execute and deliver this
Agreement and all necessary proceedings have been taken to authorize the
execution, delivery and performance of this Agreement by Company, MSH and
Seller. This Agreement is enforceable as to Company, MSH and Seller in
accordance with its terms, except as such validity, binding effect or
enforcement may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights or by equitable principles relating to the
availability of remedies. Neither the execution, delivery nor performance
of this Agreement by Company, MSH and Seller will, with or without the
giving of notice or the passage of time, or both, conflict with, result
in a default, right to accelerate or loss of rights under, or result in
the creation of any lien, charge or encumbrance pursuant to, any
provision of Company and MSH's certificate of incorporation or bylaws, or
any franchise, mortgage, deed of trust, lease, license, agreement,
understanding, law, rule or regulation or any order, judgment, or decree
to which Company, MSH or Seller is a party or by which Company, MSH or
Seller may be bound or affected.
3.3 Shares. The entire authorized capital stock of Company consists of
40,000,000 shares of Common Stock, of which 10,898,500 are issued and
outstanding. SCHEDULE 3.3 sets forth a list of the record owners of all
of said shares and the number of said shares owned by each of them. Such
holders are the legal and beneficial owners of said shares and have good,
sufficient and legal title to said shares free and clear of all liens,
pledges, security interests or other claims whatsoever. All of the issued
and outstanding shares are duly authorized and validly issued, fully paid
and nonassessable. There are no subscriptions, options, warrants, rights
or calls or other commitments or agreements to which Company or Seller is
a party or by which such parties are bound, calling for the issuance,
transfer, sale or other disposition of any class of securities of
Company. There are no outstanding securities of Company convertible or
exchangeable, actually or contingently, into shares or any other
securities of Company.
3.4 Subsidiaries. Except as stated in Schedule 3.4, Company has no
subsidiaries and there are no corporations, partnerships or other
entities owned or controlled by Company. As used herein, "owned or
controlled by" means (i) the ownership of not less than fifty percent
(50%) of the voting securities or other interests of a corporation,
partnership or other business entity, or (ii)the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a corporation, partnership or other business
entity, whether through the ownership of voting shares, by contract or
otherwise. Company has not made any investment in, and does not own any
capital stock of, or any other proprietary interest in, any other
corporation, partnership or other business entity.
3.5 Financial Statements. Omitted
3.6 Absence of Certain Changes or Events. Except as disclosed on SCHEDULE
3.6 or as contemplated or permitted by this Agreement, since December 31,
1999 there has not been any event or development which has or will likely
give rise to a material adverse change in the Condition of the Business.
Company has not, in any amount or manner (a) sold, transferred, leased to
others or otherwise disposed of any of the assets used in the Business,
except for inventory sold in the ordinary course of business; (b)
canceled or compromised any debt or claim, or waived or released any
right of value relating to the Business; (c) received any notice of
termination of any contract, lease or other agreement relating to the
Business; (d) had any employee strikes, work stoppages or lockouts
affecting the Business, or had any change in its relations with its
employees, agents, customers or suppliers; (e) transferred or granted any
rights under, or entered into any settlement regarding the breach or
infringement of, any license, patent, copyright, trademark, trade name,
invention or similar right, or modified any existing right with respect
thereto; (f) made any change in the rate of compensation, commission, or
other direct or indirect remuneration payable, or paid or agreed or
orally promised to pay, conditionally or otherwise, any bonus, extra
compensation, pension or severance pay, to any officer, employee,
distributor or agent of Company other than in the ordinary course of
business and consistent with past practices; (g) made any capital
expenditures or capital additions or betterments in respect of any asset
of the Business in excess of $25,000; (h) issued or sold, or agreed to
issue or sell, any of its capital stock, options, warrants, rights or
calls to purchase such stock, any securities convertible or exchangeable
into such capital stock or other securities or effected any subdivision or
other recapitalization affecting its capital stock; (i) declared, paid or
set aside any dividends or other distributions or payments on any
outstanding capital stock, or redeemed or repurchased, or agreed to
redeem or repurchase, any outstanding stock; (j) other than consistent
with prior practice and in the ordinary course of business, made any
loans or advances to any person or assumed, guaranteed or otherwise
become responsible for the obligations of any person; (k) made any
change in accounting methods; (l) made or agreed to make any payments to
Seller or any affiliate of Seller in the nature of a management or
transaction fee; or (m) entered into any agreement or made any
commitment to take any of the types of action described in subparagraphs
(a) through (l) above.
3.7 Undisclosed Liabilities. As of December 31, 1999, Company had no debts,
liabilities or obligations, contingent, accrued or absolute, of a nature
required by GAAP to be reflected on a consolidated balance sheet, other
than those debts, liabilities and obligations reflected or reserved
against in the balance sheet of Company at December 31, 1999 (the
"December 31 Balance Sheet") or as disclosed on SCHEDULE 3.7.
3.8 Properties. Company has good, marketable and legal title to, or holds
by valid and existing lease or license, free and clear of all mortgages,
pledges, liens, or security interests, each piece of real and personal
property owned or leased by it, except for PermittedEncumbrances. As
used herein, "Permitted Encumbrances" means those items listed on
SCHEDULE 3.8. Company has made available to or has delivered to Purchaser
complete and accurate copies of all deeds, leases and other agreements
with respect to real property and other property referred to in this
Section 3.8. Company's deeds, leases and other agreements are legal,
valid, and binding in accordance with their terms, and there does not
exist thereunder any default or event or condition which, after notice or
lapse of time or both, would constitute a default thereunder by Company
(or to Seller's Knowledge, any other party thereto). Except as disclosed
on Schedule 3.8, all of the Company's real and personal property is in
good operating condition and repair, and has been maintained in
accordance with good industry standards.
3.9 Litigation; Orders. To the best of the Knowledge of Company, MSH and
Seller, there is not any claim, legal action, administrative proceeding,
governmental investigation, arbitration or other proceeding pending, nor
to Sellers' Knowledge threatened, against Company. To the best of the
Knowledge of Company, MSH and Seller, there is no judgment or outstanding
order, injunction, decree, stipulation or award (whether rendered by a
court or administrative agency, or by arbitration) against Company that
would prohibit the consummation of the transaction contemplated by this
Agreement. To the best of the Knowledge of Company, MSH and Seller, no
citations, fines or penalties have been asserted against Company with
respect to the Business since October 17, 1999, under a foreign, federal,
state or local law.
3.10 Intellectual Property. Schedule 3.10 contains a complete and correct
list of all patents and registered trade names, trademarks, service marks
and user names, and applications for registration of the foregoing, both
domestic and foreign, presently owned, possessed, used or held by Company
(the "Intellectual Property"). The Intellectual Property is valid and in
full force and effect, and Company has not received any notice or claim
that any of the Intellectual Property is invalid or unenforceable by it.
Except as set forth on SCHEDULE 3.10, the Intellectual Property is owned
by Company free and clear of any license, sublicense, agreement, right,
understanding, judgment, order, decree, stipulation, lien, charge or
encumbrance. None of the Intellectual Property or any of the technology
covered thereby has been misappropriated from any Person. Company is not
infringing upon any intellectual property owned by any other Person, and
there has been no claim nor is there presently any action by any Person
pending,or to Sellers' Knowledge threatened, with respect thereto. There
is no infringement or improper use by any third party of any of the
Intellectual Property, and there is no action or proceeding instituted by
Company in which an act constituting an infringement of any of the rights
to such Intellectual Property was alleged to have been committed by a
third party. Company has not taken or omitted to take any action that
would have the effect of waiving any rights to any Intellectual Property.
SCHEDULE 3.10 lists all licenses, sublicenses or agreements relating to
the use by third parties of any of the Intellectual Property and or the
use by the Business of the Intellectual Property of another Person, and
there is no default by the Company under any such license, sublicense or
agreement.
3.11 Labor Matters. There is no collective bargaining labor dispute,
arbitration, lawsuit or administrative proceeding relating to labor
matters involving employees of the Business. The Business is in
compliance with all applicable labor agreements, except where
noncompliance would not have a material adverse effect on the Business.
Each such labor agreement (a) has been made available to Purchaser and
its representatives, (b) is complete and correct,(c) has not been
amended since the date supplied, and (d) is listed on SCHEDULE 3.11.
Company shall have paid in full or accrued by adequate reserves on its
financial statements in accordance with GAAP all wages, salaries,
commissions, bonuses, employee benefits, vacation pay and all other
direct or indirect compensation and benefits of any kind earned by all
employees and agents of Company through the Closing Date (whether or not
payable by such date). SCHEDULE 3.11 sets forth all severance agreements
with employees or former employees of Company. Company is in compliance
in all respects with all federal, state and local laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where noncompliance would not have
a material adverse effect on the Business. There is no labor strike or
stoppage pending or threatened, and except as described on SCHEDULE 3.11,
none has occurred since October 17, 1999.
3.12 Compliance with Laws. Except as disclosed on SCHEDULE 3.12 and
except where noncompliance would not have a material adverse effect on
the Business, the conduct of the Business complies in all respects with
all applicable statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto.
3.13 Insurance; Workers' Compensation. Omitted
3.14 Taxes.
(a) Company has timely filed with the appropriate federal, state, local
and foreign governmental entity or other authority (individually or
collectively, "Taxing Authority") all Tax Returns, as defined in Section
3.14(d), required to be filed and has timely paid in full all Taxes, as
defined in Section 3.14(c), if any, shown to be due on such Tax Returns,
or otherwise has accrued for or paid all other Taxes due, and at the
Closing Date shall have paid or accrued for all Taxes due and payable
through and including the close of business on the Closing Date (whether
or not shown on any Tax Return). All Tax Returns filed by Company are
true, correct and complete in all respects and no other Taxes for the
periods covered by such Tax Returns are required to be paid that have not
been reserved on the books of Company. There are no recorded liens for
Taxes upon Company or its assets except liens for current Taxes not yet
due. Company has delivered to Purchaser correct and complete copies of all
federal and state income Tax Returns, examination reports by any Taxing
Authority, and any statements of deficiencies assessed against or agreed
by Company. To Seller's Knowledge, no facts exist that would constitute
grounds for the assessment of any additional Taxes by any Taxing Authority
against Company.
Except as set forth on SCHEDULE 3.14, there has never been an
examination or notice of potential examination of the Tax Returns of
Company by any Taxing Authority, and Company has never granted any waiver
of any statute of limitations with respect to, or any extension of a
period for the assessment of, any Taxes.
(b) All Taxes with respect to Company that are required to be withheld or
collected have been duly withheld or collected and, to the extent
required, have been paid to the proper governmental authorities or
properly deposited as required by applicable laws.
(c) As used in this Agreement, "Tax" means any of the Taxes and "Taxes"
means, with respect to any Person, (A) all income taxes (including any tax
on or based upon net income, or gross income, or income as specially
defined, or earnings, or profits, or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property or windfall profit taxes, alternative
or add-on minimum taxes, custom duties or other taxes, fees, assessments
or charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any Taxing
Authority on such Person and (B)any liability for the payment of any
amount described in the immediately preceding clause (A) as a result of
being a "transferee" (within the meaning of Section 6901 of the Internal
Revenue Code of 1986, as amended (the "Code") or any other applicable law)
of another Person or a member of an affiliated or combined group.
(d) As used in the Agreement, "Tax Return" is defined as any return,
report, information return or other document (including any related or
supporting information) filed or required to be filed with any Taxing
Authority or other authority in connection with the determination,
assessment or collection of any Tax paid or payable by Company or the
administration of any laws, regulations or administrative requirements
relating to any such Tax.
(e) SCHEDULE 3.14 lists each jurisdiction in which Company files Tax
Returns or pays Taxes with respect to which no returns are required to be
filed, and any action, suit, proceeding, investigation, audit or claim
now pending against Company in respect of any Tax, and any matter under
discussion with any Taxing Authority relating to any Tax, or any claim
for additional Tax asserted by any such authority against Company. Except
as provided on SCHEDULE 3.14, no claim has ever been made by any Taxing
Authority in a jurisdiction where Company does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction.
(f) Omitted
(g) No property owned by Company is property that Company is or will be
required to treat as being owned by another Person pursuant to the
provisions of Section 168(f) (8) of the Internal Revenue Code of 1954, as
amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986, or is "tax-exempt use property" as defined in Section
168(h) of the Code.
(h) Company has never agreed to or been required to make any adjustment
pursuant to Section 481(a) of the Code by reason of any change in
accounting method initiated by Company; the Internal Revenue Service (the
"IRS") has not proposed any such adjustment or change in accounting method;
and Company does not have any application pending with any Taxing Authority
requesting permission for any changes in accounting methods.
(i) Company is not and during the applicable period specified in Section
897(c) (1) (A) (ii) of the Code has not been a United States real property
holding corporation as defined in Section 897(c) (2) of the Code.
(j) Company is not now or has never been a party to any agreement, contract,
arrangement or plan that would result, separately or in the aggregate,
in the payment of any "excess parachute payments" within themeaning of
Section 280G of the Code.
(k) Company has not filed a consent pursuant to Section 341(f)of the Code
nor agreed to have Section 341(f)(2) of the Code apply to any disposition
of a subsection (f) asset (as such term is defined in Section 341(f)(4) of
the Code) owned by Company.
(l) Except as set forth on SCHEDULE 3.14, Company is not and has never
been a member of an affiliated group of corporations (as defined in
Section 1504(a) of the Code) or filed or been included in a combined,
consolidated, or unitary income Tax Return.
(m) Except as provided on SCHEDULE 3.14, Company is not an obligor on and
none of its respective assets are collateral securing any tax-exempt bonds.
(n) Except as provided on SCHEDULE 3.14, Company has not executed or
entered in to a closing agreement pursuant to Section 7121 of the Code or
any predecessor provision thereof or any similar provision of state, local
or foreign law that relates to the assets or operations of Company.
(o) Company is not a party to any Tax allocation or sharing agreement and
has no contractual obligation to indemnify any other Person with respect
to Taxes.
(p) Company does not have pending any request for a revenue or private
letter ruling.
(q) Company has not been a personal holding company within the meaning of
Section 542 of the Code during the five year period preceding the date
hereof.
(r) Omitted
(s) Omitted
3.15 Contracts.
(a) Except as set forth on SCHEDULE 3.15 there is no contract, agreement,
commitment or arrangement ("Contract"), or any outstanding unaccepted
offer ("Offer"), whether written or oral, express or implied,fixed or
contingent, to which Company is bound:
(i) that is a mortgage, indenture, security agreement or other agreement
or instrument relating to the borrowing of money by, or any extension of
credit to, the Company;
(ii) that is a collective bargaining agreement or other union contract
with Company;
(iii) that contains covenants or other provisions limiting Company's
right to compete in any line of business or with any Person or in any area;
(iv) that is a license agreement, either as licensor or licensee, where
payments in the latest fiscal year were $25,000 or more;
(v) that provides for any sharing of profits with others of $25,000 or
more in the latest fiscal year or any joint venture or similar enterprise;
(vi) that is a revocable or irrevocable power of attorney or proxy granted
by Company to any person for any purpose whatsoever;
(vii) that involves any remaining or unsatisfied obligation(i) to make
capital expenditures(whether through the purchase of real or personal
property or otherwise) involving $25,000 or more in the case of any one
item or group of similar items, (ii) to purchase goods involving $25,000
or more in the case of any one item or group of similar items from the
same entity, or (iii) to supply products or provide services involving
$25,000 or more in the case of any one item or group of similar items to
the same customer; or
(viii) that is any other agreement, contract or commitment that in any case
involves payment or receipts of more than $25,000.
(b) Except for fringe benefit and similar plans which apply to employees
or groups of employees generally, agreements and arrangements listed in
this Agreement or on SCHEDULE 3.15, Company is not a party to (a) any
written agreement with any executive officer or other key employee of the
Business (i) the benefits of which are contingent, or the terms of which
are altered, upon the occurrence of a transaction involving the Business
of the nature of the transaction contemplated by this Agreement, (ii)
providing any term of employment or compensation guarantee extending for a
period ending more than three (3) months after the Closing Date, (iii)
providing severance benefits or other benefits after the termination of
employment of such employee regardless of the reason for such termination
of employment; or (b) any other employee agreement or plan, including,
without limitation, any incentive or bonus plan, stock option plan, stock
appreciation rights plan or stock purchase plan.
Except as disclosed on SCHEDULE 3.15, neither Company nor to Seller's
Knowledge any other party to a Contract is in breach thereof or default
thereunder, and to Seller's Knowledge there does not exist any event which,
with or without the giving of notice or the lapse of time or both, would
constitute such a breach or default. Except as otherwise set forth on
SCHEDULE 3.15, all Contracts described or reflected therein are in full
force and effect. To the extent any Contract or Offer expressly prohibits or
expressly provides for termination, breach, renegotiation or amendment in
the event of a change of ownership of the type contemplated by this
Agreement, such prohibition is noted on SCHEDULE 3.15. To the extent any
borrowing by the Company may not be prepaid without penalty, such penalty is
noted on SCHEDULE 3.15. For purposes of this Section 3.15, the term
"Contract" shall not include any employee benefit plans referred to in
Section 3.21 of this Agreement.
3.16 Receivables. All receivables relating to the Business (including
accounts receivable, loans receivable and advances) that are reflected on
the December 31 Balance Sheet have, and all receivables resulting from
operations of the Business between December 31, 1999 and the Closing Date
will have, arisen only from bona fide transactions in the ordinary course
of the Business and (to the extent not already collected) are fully
collectible when due, or in the case of each account receivable, within
such period after it arose as established by the individual terms
relating to said account, without resort to litigation and without
offset or counterclaim, except to the extent of the allowance for
doubtful accounts with respect to accounts receivable as set forth or
reflected on the Closing Date Balance Sheet.
3.17 Inventories. Omitted.
3.18 Consents, Approvals, etc. Except as set forth on SCHEDULE 3.18, there
are no filings required to be made by Company with, and there are no
consents, approvals, permits or authorizations required to be obtained by
Company from, governmental and regulatory authorities of the United States
or the several states in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby.
3.19 Certain Payments; Absence of Certain Business Practices. To Company,
MSH and Seller's Knowledge neither Company nor any of its representatives
or agents has made or will cause to be made by or on behalf of the
Business, any payments, loans or gifts or promises or offers of
payments, loans or gifts of any money or anything of value, directly or
indirectly, (i) to or for the use or benefit of any official or employee
of any government, (ii) to any political party or official or candidate
thereof, (iii) to any other person either in advance or as a
reimbursement if he or it knows or has reason to suspect that any part
of such payment, loan or gift will be directly or indirectly given or
paid by such other person, or will reimburse such other person for
payments, gifts or loans previously made, to any governmental official
or political party or candidate or official thereof, or iv) to any other
person or entity; the payment of which would violate the laws, or
regulations having the force of law, of the United States or the
country of domicile and/or residence of such party. Neither the IRS nor
any other federal, state, local or foreign government agency or entity
has notified the Company of any pending or threatened investigation of
any payment made by or on behalf of the Business of, or alleged to be
of, the type described in this Section 3.19.
3.20 Licenses and Permits. Company has obtained all governmental licenses
and permits necessary to conduct the Business, except where the failure
to obtain any licenses or permits would not have a material adverse
effect on the Business. Such licenses and permits are valid and in full
force, and except as set forth on SCHEDULE 3.20, no licenses or permits
will be terminated or impaired or become terminable as a result of the
transactions contemplated by this Agreement.
3.21 Employee Benefit Plans.
(a) Set forth on SCHEDULE 3.21 is a true and complete list of all "pension
plans" and "welfare plans" within the meaning of Sections 3(1)and 3(2) of
the Employee Retirement Security Income Act of 1974, as amended("ERISA")
of Company, including pension, profit-sharing, thrift, savings, bonus,
retirement, vacation, life insurance, health insurance, sickness,
disability, medical and death benefit plans.
(b) Company does not maintain, sponsor, contribute to, or otherwise
participate in any "pension plan" within the meaning of Section 3(2) of
ERISA including any "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") (collectively, together with
the trusts or other funding media thereunder, the "Retirement Plans"), for
any employees of Company, except for those plans and agreements listed on
SCHEDULE 3.21. All Retirement Plans cover only employees of Company.
Seller has caused to be made available to Purchaser true and correct
copies of each of the Retirement Plans, including true and correct copies
of all amendments thereto. There are no agreements between Company and any
employee, participant, labor union, collective bargaining unit or any
other person or entity that require or may require any amendments to any
of the Retirement Plans. The Retirement Plans are qualified plans under
the provisions of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the trusts under the Retirement Plans are exempt
trusts under Section 501(a) of the Code. Company has not been notified
that there are any issues relating to the qualification or exemption of
the Retirement Plans currently pending before the Internal Revenue
Service, the United States Department of Labor, the Pension Benefit
Guaranty Corporation ("PBGC") or any court. The Retirement Plans and the
administration thereof meet and do not violate the applicable requirements
of ERISA, the Code and all other laws, rules and regulations applicable to
the Retirement Plans. All reports and returns with respect to the
Retirement Plans required to be filed with any governmental department,
agency, service or other authority have been properly and timely filed.
Except as set forth on SCHEDULE 3.21, there are no issues or disputes with
respect to any of the Retirement Plans or the administration thereof
currently existing between Company or any Subsidiary, or any trustee or
other fiduciary thereunder, and any governmental agency, any current or
former employee of Company or beneficiary of any such employee or any
other person or entity. No "reportable event" within the meaning of
Section 4043(b) of ERISA with respect to which the PBGC has not waived
the requirement for thirty (30) days notice has occurred within the prior
three (3) years with respect to any of the Retirement Plans. The funding
method used in connection with each Retirement Plan which is subject to
the minimum funding requirements of ERISA and the actuarial assumptions
used in connection with funding each such plan are described in the
actuarial report and annual report for each such plan as provided to
Purchaser. No "accumulated funding deficiency" for which an excise tax is
due or would be due in the absence of a waiver as defined in Section 412
of the Code or as defined in Section 302(a)(2) of ERISA, whichever may
apply, exists with respect to any Retirement Plan. All payments and
contributions required to be made by Company pursuant to any retirement
Plan, any "pension plan" which is a Multiemployer Plan or applicable law
have been made.
(c) Seller has caused to be made available to Purchaser true and correct
copies, including true and correct copies of all amendments thereof, of
all "welfare plans" within the meaning of Section 3(1) of ERISA including
any Multiemployer Plans which Company maintains, sponsors, contributes to
or otherwise participates in for any employees of Company, as listed on
SCHEDULE 3.21 hereto (collectively the "Welfare Plans"). There are no
agreements between Company and any employee, participant, labor union,
collective bargaining unit or other person or entity that require or may
require any amendments to any of the Welfare Plans. The Welfare Plans, and
the administration thereof, meet and do not violate the applicable
requirements of ERISA and all other laws, rules and regulations presently
applicable to said Welfare Plans. All reports and returns with respect to
the Welfare Plans required to be filed with any governmental department,
agency, service or other authority have been properly and timely filed.
There are no issues or disputes with respect to any of the Welfare Plans,
or the administration thereof, currently existing between Company or any
fiduciary under any of the Welfare Plans and any governmental agency, any
current or former employee of Company or beneficiary of any such employee
or any other person or entity. All payments and contributions required to
be made by Company pursuant to any of said Welfare Plans, any "welfare
plan" which is a Multiemployer Plan or applicable law have been made. No
liability to the PBGC has been incurred by Company or Subsidiaries on
account of any termination of a pension plan within the meaning of Section
3(2) of ERISA. Company has not made a complete or partial withdrawal from
a Multiemployer Plan so as to incur withdrawal liability as defined in
Section 4021 of ERISA that has not been previously satisfied by Company.
3.22 Transactions with Interested Persons. Except as set forth on SCHEDULE
3.22, no officer or director of Company, or their respective spouses or
children, owns directly or indirectly, on an individual or joint basis,
any interest in, or serves as an officer or director of, any competitor
or customer or supplier of the Business or any organization which has
a contract, agreement, arrangement or commitment with Company. Except
as set forth on SCHEDULE 3.22, the Business is not indebted in any amount
to any director, officer or employee of Company, or any employees of the
Business, except for amounts due as normal salaries, commissions, wages,
bonuses and in reimbursement of ordinary expenses on a current basis. No
director, officer or employee of Company is indebted in any amount to the
Business or Company, except for advances for ordinary business expenses
in a normal amount.
3.23 Environmental Matters. Omitted
3.24 Real Estate Leases. SCHEDULE 3.24 lists all real property leases
under which Company is a lessee or a lessor. Except as set forth on
Schedule 3.24, all such leases are valid, binding and enforceable in
accordance with their terms, and are in full force and effect and will
not be effected by the transaction contemplated herein; there are no
defaults thereunder by Company or another party thereto; and no event has
occurred which (whether with or without notice, lapse of time or both)
would constitute a default thereunder.
3.25 Equipment Leases. SCHEDULE 3.25 sets forth a true and complete list
of all lease agreements or other arrangements relating to the Business to
which Company is a lessee or a lessor of personal property or equipment
from or to any Person and which individually provide for annual payments
of more than $25,000. All such leases are valid, binding and enforceable
in accordance with their terms and are in full force and effect; there
are no defaults thereunder by Company or another party thereto; and no
event has occurred which (whether with or without notice, lapse of time
or both) would constitute a material default thereunder.
3.26 Defects in Products or Designs; Product Safety.
(a) Except as set forth on SCHEDULE 3.26, to Company, MSH and Seller's
Knowledge, since October 17, 1999 there has been no pattern of defects in
any product line in the design, construction, manufacturing or
installation of any product ("Product") made, manufactured, constructed,
distributed, sold, leased, distributed or installed by the Business, its
employees or agents, that would adversely affect the performance or
quality of such Product or services or designs provided by the Company to
any third parties. All of the Products have been designed, manufactured
and installed in compliance with the regulatory, engineering, industrial
and other codes generally recognized as being applicable thereto and
Company or MSH has not received written notice of alleged noncompliance
with any such code.
(b) Except as set forth on SCHEDULE 3.26, since October 17, 1999, Company
has not been required to file and has not filed a notification or other
report with, or provide information to, the United States Consumer Product
Safety Commission concerning actual or potential hazards with respect to
any product manufactured or sold by the Business.
3.27 Products. SCHEDULE 3.27 sets forth the warranty experience of Company
and MSH since October 17, 1999. The products manufactured and sold by
Company or MSH have been designed and manufactured in compliance with all
regulatory, engineering, industrial and other codes generally recognized
as being applicable thereto. There have been no product recalls or
material defects in the design or manufacture of any products sold by
Company that would adversely affect the performance or quality of such
products.
3.28 Accounts. Except as disclosed on SCHEDULE 3.28, Company does not
maintain any bank, securities, commodities or other brokerage or similar
account, safe deposit box or other depository for the Business, nor is any
such account, box or depository maintained on behalf of, or for the
benefit of, the Business. A complete list of the names of all persons with
any power or authority to act with respect to any such account, box or
depository has been provided to Purchaser.
3.29 Letters of Credit, Surety Bonds, Guarantees. SCHEDULE 3.29
identifies all letters of credit, performance or payment bonds, guaranty
arrangements and surety bonds of any nature relating to the Business.
3.30 No Misstatements. Each of the schedules and exhibits attached hereto
is incorporated herein by reference and is true, correct and complete in
all material respects with respect to each item thereof. This Agreement,
including the schedules and exhibits attached hereto and all documents
and instruments executed in connection herewith, contain no
misrepresentation or untrue statement of fact by Sellers or Company nor
does this Agreement or any such document omit to state a fact necessary
to make such representation or statement by Sellers or Company contained
herein or therein not misleading.
3.31 Certain Defined Items. References in Sections 3.1 through 3.30 and
elsewhere in this Agreement to (i) "Seller's Knowledge" shall refer to
the facts and circumstances that the Company or any of the Sellers knew
or should have known after appropriate inquiry; (ii) "Person" shall mean
any individual, corporation, partnership, proprietorship or other entity
of any kind; and (iii) "Condition of the Business" shall mean the assets,
financial condition, results and operations of the Business.
4.O REPRESENTATIONS AND WARRANTIES OF PURCHASER. Omitted
5.0 CONDUCT OF BUSINESS PRIOR TO CLOSING.
(a) Prior to the Closing, Seller shall cause Company to conduct its
business and affairs and the business and affairs of the Business only in
the ordinary course and consistent with prior practice and shall maintain,
keep and preserve the assets and properties of the Company and the
Business in good condition and repair and maintain insurance thereon in
accordance with past practices, and, except as otherwise agreed by
Purchaser, Seller will cause Company to use its best efforts to preserve
the Business intact. Without limiting the generality of the foregoing,
prior to the Closing, Seller will cause Company to refrain from the
following without Purchaser's prior written approval: (i) the taking of
any action or causing to be done anything that would, in accordance with
Company's policies as in effect as of the date hereof, require approval by
its shareholders; (ii) the issuance, sale or agreement to issue or sell
any capital stock, options, warrants, rights or calls to purchase such
stock; (iii) the changing of any salary, benefits or other direct or
indirect remuneration or compensation paid or payable to any officer,
employee, distributor or agent of Company other than in the ordinary
course of business and consistent with past practices; or (iv) the
declaration or payment of any dividend, whether in cash, stock or in kind,
or other distribution of any kind on or in respect of any shares of
capital stock of the Company, or the making of any payment to any Person
(including Seller or any affiliate of Seller) in the nature of a
transaction fee or management fee.
(b) Seller shall give Purchaser prompt written notice of any change in any
of the information contained in the representations and warranties made in
Article 3.0 or elsewhere in this Agreement or the schedules or exhibits
referred to herein that occurs prior to the Closing.
(c) Seller shall cause the Company to refrain from the following without
Purchaser's prior written approval, which approval shall not be
unreasonably withheld: (i) the sale of any business units or product
lines; (ii) the cancellation of contracts, agreements,commitments or
other understandings or arrangements other than in the ordinary course of
business to which Company is a party, including, without limitation,
purchase orders for items of inventory; (iii) the commitment for capital
expenditures or improvements; (iv) the discontinuance of particular
Products other than in the ordinary course of business; or (v) significant
changes to the Company's purchasing, pricing or selling policies.
(d) If prior to the Closing either Purchaser or Seller shall become aware
of any breach of a representation, warranty or covenant by another Party
hereto, then such Party who becomes aware shall immediately notify the
other Parties hereto of such breach and breaching Party shall be afforded
a reasonable period of time, not to exceed five (5) days ("Cure Period"),
in which to cure such breach or take such action as may be appropriate to
correct the circumstances giving rise to such breach. If prior to the
Closing either Purchaser or a Seller shall become aware of its own breach
of a representation, warranty or covenant, then such Party shall
immediately notify the other Parties hereto of such breach and such
breaching Party shall have a reasonable period of time, not to exceed the
Cure Period, in which to cure such breach or take such action as may be
appropriate to correct the circumstances giving rise to such breach. If
any such breach described above in this Section 5(d) is cured within the
earlier of the expiration of the applicable Cure Period or the Closing
Date, then the affected representation, warranty or covenant shall be
deemed not violated.
(e) Except as otherwise agreed by Purchaser, Seller and Company will use
their best efforts to cause the employees of Company to continue to make
available their employment services to Company on and after the Closing.
(f) After the date hereof, Seller will cause Company to consult with
Purchaser regarding any discussions with any union.
6.O ACCESS TO INFORMATION AND DOCUMENTS.
6.1 Access Prior to Closing. Upon reasonable notice and during regular
business hours, Company will give Purchaser and Purchaser's attorneys,
accountants and other representatives full access to its personnel,
properties, documents, contracts, books and records. Company will furnish
Purchaser with copies of such documents (certified by Company's officers
if so requested and with such information with respect to the affairs of
the Business as Purchaser may from time to time request and Purchaser
will not improperly disclose the same prior to the Closing. Any such
furnishing of such information to Purchaser or any investigation by
Purchaser shall not affect Purchaser's right to rely on any
representation or warranty made in this Agreement or in connection
herewith or pursuant hereto. Company shall keep Purchaser informed as to
its affairs and the affairs of the Business and shall consult with
Purchaser on important matters pertaining to the Company and the Business.
6.2 Access After Closing. Each Party agrees that for a period of five (5)
years from the Closing Date or, if longer, until the expiration of the
applicable period for which taxes can be assessed it will (i) cooperate
with and make available to the other Party, during normal business hours,
all books and records, information and employees (without substantial
disruption of employment or normal business activities) retained and
remaining in existence after the Closing which are necessary or useful in
connection with any investigation, dispute, litigation, inquiry or
compliance with applicable securities, tax, environmental or other laws
and regulations, or any other matter requiring any such books and
records, information or employees for any reasonable business purpose;
(ii) use reasonable efforts to keep all such books and records and
information in existence and in good order for such period of time as the
other Party is entitled to access thereto pursuant to this Section 6.2;
and (iii) cooperate with and make available to the other Party any
employees employed by such Party after the Closing in order to provide
statements, participate in depositions, provide testimony or otherwise
assist (including serving as experts or other witnesses) in connection
with the matters described in this Section 6.2. The Party requesting any
such books and records, information or employees shall bear out-of-pocket
costs and expenses (excluding reimbursement for salaries and employee
benefits) reasonably incurred in connection with providing such books and
records, information or employees.
7.0 AUTHORIZATIONS. Company, Seller and Purchaser, as promptly as
practicable prior to or after the date hereof, shall (a) make, or cause
to be made, all such filings and submissions under laws, rules and
regulations applicable to it and its affiliates, as may be required for
it to consummate the transaction contemplated hereby in accordance with
the terms of this Agreement, (b) use best efforts to obtain, or cause to
be obtained, all authorizations, approvals, consents and waivers from all
Persons, employee groups and governmental authorities necessary to be
obtained by it or its affiliates in order for it to consummate such
transaction, and (c) use best efforts to take, or cause to be taken, all
other actions necessary, proper or advisable in order to fulfill its
obligations hereunder and to carry out the intentions of the parties
expressed herein. Company, Sellers and Purchaser will coordinate and
cooperate with one another in exchanging such information and supplying
such reasonable assistance as may be reasonably requested by each in
connection with the foregoing.
8.O ADDITIONAL COVENANTS.
8.1 Other Proposals. Between the date of this Agreement and Closing,
Seller and Company will use their respective best efforts to ensure that
none of their respective officers, directors, employees, representatives
or advisers, institute, pursue, or enter into any discussions,
negotiations or agreements (preliminary or definitive) contemplating or
providing for any merger, acquisition, purchase or sale involving any of
the Shares or any business that is part of the Business, or other
business combination or change in control of Company that would in any
way impact a sale of the Shares to Purchaser with any Person or entity
other than Purchaser or its affiliates.
8.2 Press Releases. Purchaser, Seller and Company agree to consult with
each other as to the form and substance of any press release or other
public disclosure of matters related to this Agreement or any of the
transactions contemplated hereby.
8.3 Receivables. After the Closing Date, Purchaser will use reasonable
commercial efforts to collect the accounts receivable of the Business in
accordance with Company's prior reasonable commercial practices.
9.O ADDITIONAL AGREEMENTS.
None
10.0 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES.
10.1 Conditions Precedent to Obligations of Each Party. The respective
obligations of Purchaser and Seller to consummate the transactions
contemplated by this Agreement are subject to the conditions that: (a)
there shall be no decision by any court or administrative body
restraining, enjoining or otherwise preventing the consummation of the
transactions contemplated hereby; and (b) the Parties will have received
all necessary approvals and clearances.
10.2 Conditions Precedent to Purchaser's Obligations. All obligations of
Purchaser hereunder are subject, at the option of Purchaser to the
fulfillment of each of the following conditions at or prior to the
Closing, and Sellers shall exert their best efforts to cause each such
condition to be so fulfilled:
(a) All representations and warranties of Seller and Company contained
herein or in any document delivered pursuant hereto shall be true and
correct in all respects when made and shall be deemed to have been made
again at and as of the Closing Date, and shall then be true and correct in
all respects, except for changes in the ordinary course of business after
the date hereof in conformity with the covenants and agreements contained
herein;
(b) All covenants, agreements and obligations required by the terms of
this Agreement to be performed by Seller and Company at or before the
Closing Date shall have been duly and properly performed;
(c) Since the date of this Agreement, there shall not have occurred any
material adverse change in the Condition of the Business;
(d) Omitted;
(e) Purchaser shall have received an opinion of legal counsel to Sellers,
_____________________ dated as of the Closing Date, substantially in the
form of EXHIBIT 10.2(E);
(f) Omitted;
(g) Seller and Escrow Agent shall have executed and delivered the
Escrow Agreement;
(h) Omitted;
(i) Omitted;
(j) Seller shall have caused Company to obtain written consents of all
parties to agreements, licenses, leases and other contracts relating to
the Business that, in the opinion of Purchaser, should be obtained prior
to Closing;
(k) All corporate and other proceedings of Seller and Company in
connection with the transactions contemplated by this Agreement, and all
documents and instruments incident to such proceedings, shall be
satisfactory in form and substance to Purchaser and its counsel, and
Purchaser and its counsel shall have received all such documents and
instruments, or copies thereof (certified if requested) as may be
reasonably requested; and
(l) Seller's Board of Directors shall have approved the proposed
transaction.
10.3 Conditions Precedent to Sellers' Obligations. All obligations of Sellers
at the Closing are subject, at the option of Seller to the fulfillment
of each of the following conditions at or prior to the Closing Date, and
Purchaser shall exert its best efforts to cause each such condition to
be so fulfilled:
(a) Omitted;
(b) All covenants, agreements and obligations required by the terms of this
Agreement to be performed by Purchaser at or before the Closingshall have
been duly and properly performed;
(c) Omitted;
(d) Omitted;
(e) Omitted;
(f) Omitted;
(g) All proceedings and actions by Purchaser in connection with the
transactions contemplated by this Agreement, and all documents and
instruments incident to such proceedings, shall be satisfactory in form
and substance to Seller and his counsel, and Seller and his counsel shall
have received all such documents and instruments, or copies thereof
(certified if requested) as may reasonably be requested; and
(h) Purchaser shall have delivered the Purchase Price to Seller.
11.0 INDEMNIFICATION.
11.1 Seller's Indemnification. From and after the Closing, Seller hereby
agrees to defend, indemnify and hold Purchaser harmless from, against and
in respect of (and shall on demand reimburse Purchaser for):
(a) any and all loss, liability, or damage, including reasonable
attorneys' fees and expenses (collectively "Damages") suffered or
incurred by Purchaser by reason of any untrue representation, breach
of warranty or non-fulfillment or non-performance of any covenant or
agreement of Seller contained herein or in any certificate, document
or instrument delivered to Purchaser pursuant hereto or in connection
herewith;
(b) any and all Damages suffered or incurred by Purchaser by reason of
or in connection with any claim for finder's fee or brokers or other
commission arising by reason of any services alleged to have been
rendered to or at the instance of Company, Seller or any of them with
respect to this Agreement or any of the transactions contemplated hereby;
(c) any and all Damages suffered or incurred by Purchaser by reason of
or in connection with any and all (i) liabilities of the Company arising
prior to the Closing Date or (ii) activities of the Company prior to the
Closing Date, other than claims based on products manufactured prior to
such date and those liabilities to;
(d) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses, including, without limitation, legal fees
and expenses reasonably incurred, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
11.2 Purchaser's Indemnification. From and after the Closing, Purchaser
hereby agrees to defend, indemnify and hold Sellers harmless from,
against, and in respect of (and shall on demand reimburse Seller for):
(a) any and all Damages suffered or incurred by Sellers by reason of any
untrue representation, breach of warranty or non-fulfillment or
non-performance of any covenant or agreement of Purchaser contained herein
or in any certificate, document or instrument delivered to Sellers
hereunder pursuant hereto or in connection herewith;
(b) any and all Damages suffered or incurred by Sellers by reason of or in
connection with any claim for finder's fee or brokers or other commission
arising by reason of any services alleged to have been rendered to or at
the instance of Purchaser with respect to this Agreement or any of the
transactions contemplated hereby;
(c) any and all Damages suffered or incurred by Seller by reason of or in
connection with any and all liabilities of Company arising after the
Closing Date; and
(d) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses, including, without limitation, legal fees
and expenses reasonably incurred, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or oppose the
imposition thereof, or in enforcing this indemnity.
11.3 Limitations on Indemnification.
(a) Seller shall not be liable to indemnify Purchaser for Purchaser's
Damages, and Purchaser shall not be liable to indemnify Seller for
Seller's Damages, arising from or relating to a breach of representation
or warranty set forth in this Agreement unless the indemnified Party
notifies the indemnifying Party in writing of its claim or potential claim
for indemnification not later than the day which is two (2) years after
the Closing Date, and except as set forth in subsection (b) below or
Article 12.0.
(b) Notwithstanding the limitations in Section 11.3(a) above, Purchaser
may make a claim for breach of a representation or warranty relating to
the Shares, compliance with laws, or taxes, as set forth in Sections 3.3,
3.12 and 3.14, until the expiration of the survival period specified in
Article 12.0 below.
(c) The indemnity obligations of Seller hereunder shall be limited to the
Purchase Price.
12.O SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements,
representations and warranties made by each of the Parties hereto shall
survive the Closing for a period of two (2) years, except the
representations in Section 3.3 which shall survive indefinitely, the
representations in Section 3.14 which shall survive until the expiration
of the applicable statute of limitations and the representations in
Section 3.12 which shall survive for a period of five (5) years. All
indemnities, covenants and agreements made herein shall survive for the
period expressly indicated herein, or, if not so indicated, indefinitely.
13.0 ARBITRATION. Any dispute, controversy or claim arising out of or in
connection with or relating to this Agreement or the transactions
contemplated hereby, including but not limited to any breach or alleged
breach hereof, shall be determined and settled by arbitration in
Providence, Rhode Island, pursuant to the rules then in effect of the
American Arbitration Association. The expense of arbitration shall be
borne by the Parties to the arbitration, and each Party shall bear and pay
for the cost of its own experts, witnesses, evidence, counsel and other
costs in connection with the preparation and presentation of its case. The
resolution of such arbitration shall be final and binding on the parties
hereto and enforceable in a court of competent jurisdiction. Any
arbitration pursuant to this Article 13.0 above shall be governed by the
rules of discovery then in effect in the United States District Court for
the District of Rhode Island. The Parties hereby irrevocably submit to the
nonexclusive jurisdiction of the United States District Court for the
District of Rhode Island for the purpose of enforcing any arbitration
award.
14.0 NOTICES. Any and all notices or other communications required or
permitted to be given under any of the provisions of this Agreement shall
be in writing and shall be deemed to have been duly given when personally
delivered, sent by express mail, or overnight courier service or first
class registered mail, return receipt requested, or telefaxed (with a copy
also sent by express mail or overnight courier services) addressed to the
appropriate parties at the addresses set forth below or at such other
address as any party may specify by notice to the other parties, or, in
the case of a telefax, to the telefax number indicated:
If to Purchaser:
Mark T. Thatcher
c/o Nadeau & Simmons, P.C.
1250 Turks Head Building
Providence, RI 02903
Fax: (401) 272-5858
Gerard M. Werner
c/o Nadeau & Simmons, P.C.
1250 Turks Head Building
Providence, RI 02903
Fax: (401) 272-5858
If to Seller:
Chong Wai Hong
J.OK International (Hong Kong) Ltd.
Room 3203 Western Tower
Sun Tak Centre
168-200 Connaght Road Central
Hong Kong
IF to MSH:
Mighty Star Holdings, Ltd.
J.OK International (Hong Kong) Ltd.
Room 3203 Western Tower
Sun Tak Centre
168-200 Connaght Road Central
Hong Kong
15.0 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transaction
provided for herein abandoned at any time prior to the Closing Date
(unless otherwise agreed to by the parties hereto):
(a) by mutual consent of Purchaser and Seller; or
(b) by Purchaser if any of the conditions set forth in Section 10.1 or
10.2 hereof (i) shall not have been fulfilled on or prior to the Closing
Date (unless otherwise extended by the Parties hereto), or (ii) shall have
become incapable of fulfillment, and shall not have been waived; or
(c) by the Seller, if any of the conditions set forth in Section 10.1 or
10.3 hereof (i) shall not have been fulfilled on or prior to January 10,
1997 (unless otherwise extended by the parties hereto), or (ii) shall have
become incapable of fulfillment, and shall not have been waived; provided,
however, that the party seeking termination pursuant to (b) or (c) above
is not in breach of any of its representations, warranties, covenants or
agreements contained in this Agreement.
Upon termination of this Agreement pursuant to this Article 15.0, this
Agreement shall become null and void and of no further force and
effect. In the event a Party terminates this Agreement other than pursuant to
this Article 15.0, the other Parties hereto shall have all rights and
remedies available to them whether at law or in equity.
16.0 MISCELLANEOUS.
16.1 Entire Agreement; Modification. This writing, together with those
agreements specifically referenced herein, constitutes the entire
agreement of the parties with respect to the subject matter and supersedes
any prior agreements, oral or written, hereof and may not be modified,
amended or terminated except by written agreement specifically referring
to this Agreement and signed by each affected Party.
16.2 Waiver. No waiver of any breach or default hereunder shall be
considered valid unless in writing signed by the Party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or similar nature.
16.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of each Party hereto, and their respective successors, assigns,
heirs and personal representatives.
16.4 Numbers and Headings. The article, section and paragraph numbers and
headings contained herein are for the purposes of reference and
convenience only and are not intended to define or limit the contents of
said paragraphs or sections.
16.5 Exhibits and Schedules. The exhibits and schedules referred to herein
are hereby incorporated by reference as if set out in full and form and
integral part of this Agreement.
16.6 Further Actions. Each Party hereto shall cooperate and shall take such
further action and shall execute and deliver such further documents as
may be reasonably requested by the other Party in order to carry out the
provisions and purposes of this Agreement.
16.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
16.8 Expenses. Purchaser shall bear the expenses, costs and fees incurred
by it. Seller shall pay from their own funds and not from Company funds
the expenses, costs and fees incurred by Seller or Company in connection
with the transactions contemplated by this Agreement.
16.9 Validity of Provisions. If any provision of this Agreement or any
agreement referenced herein shall be held or deemed to be or shall, in
fact, be inoperative or unenforceable as applied in any particular case
because it conflicts with any other provision or provisions hereof or
any constitution, statute, rule of public policy, or for any other
reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable to any extent
whatsoever. The invalidity of any one or more phrases, sentences,
clauses, sections, or subsections of this Agreement or any other
agreements referenced herein shall not affect the remaining portions
thereof.
16.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Rhode Island.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PURCHASER:
/s/ Mark T. Thatcher
_________________________
Mark T. Thatcher
/s/ Gerard M. Werner
_________________________
Gerard M. Werner
SELLER:
/s/ Chong Wai Hong
_________________________
Chong Wai Hong
COMPANY:
Mighty Star Holdings, Ltd.
/s/ Chong Wai Hong
__________________________
By:_______________________
Its:______________________
MSH:
Mighty Star Holdings, Ltd.
/s/ Chong Wai Hong
__________________________
By:_______________________
Its:______________________
