UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT STATEMENT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest
event reported): January 26, 2000
JFAX.COM, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 0-25965 51-0371142
(State of (Commission (I.R.S. Employer
incorporation) Number) Identification No.)
6922 Hollywood Blvd.
Suite 900
Los Angeles, California 90028
(Address of principal executive offices)
(323) 860-9200
(Registrant's telephone number, including area code)
10960 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
(Former Address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
(a) On January 26, 2000, JFAX.COM, Inc. acquired the outstanding stock of
SureTalk.Com, Inc., a closely held Internet-based faxing, messaging and
communications company based in Carlsbad, California. The stock was
acquired directly from the shareholders of SureTalk.Com, Inc. in a
stock-for-stock purchase transaction valued at approximately $9.28
million. The shareholders of SureTalk.Com, Inc. included Steven J.
Hamerslag, Timothy Johnson, and Lester Morales, as well as various
other former employees of SureTalk.Com, Inc. Concurrently with the
closing, Mr. Hamerslag was named President and Chief Executive Officer
of JFAX.COM, Inc., Mr. Johnson was named Vice President of Product
Marketing and Business Development, and Mr. Morales was named Vice
President of Sales. Certain of the other former employee-shareholders
of SureTalk.Com, Inc. also joined JFAX.COM, Inc. as employees.
The purchase price was paid in the form of 1,515,545 shares of common
stock of JFAX.COM, Inc. valued at the closing price for such common
stock as reported on the NASDAQ on the date preceding the closing
(January 25, 2000), $6.125 per share. The approximately $9.28 million
consideration paid for SureTalk.Com, Inc. was determined by negotiation
between management for the two companies.
(b) Certain of the assets of SureTalk.Com Inc. acquired indirectly in the
acquisition consist of personal computers, LAN network equipment, phone
switches, and office furniture that were used by SureTalk.Com, Inc. for
internal office purposes. JFAX.COM, Inc. intends to continue such use.
The acquired assets also consist in part of approximately 15 fax
transmission servers that were used by SureTalk.Com, Inc. to provide
fax transmission services to its customers. JFAX.COM, Inc. intends to
continue such use as well.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
2
<PAGE>
It is impractical to provide the required financial information at the
time of filing this report. The required financial information will be
filed by amendment to this form 8-K not later than April 10, 2000.
(b) Pro Forma Financial Information.
It is impractical to provide the required pro forma financial
information at the time of filing this report. The required pro forma
financial information will be filed by amendment to this Form 8-K not
later than April 10, 2000.
(c) Exhibits
Exhibit Number Description
2.1 Stock Purchase Agreement, dated as
of January 15, 2000, among JFAX.COM,
Inc., the stockholders of
SureTalk.Com, Inc. listed therein,
and SureTalk.Com, Inc. Such
agreement contains a listing of
schedules or similar attachments.
Pursuant to the applicable
instruction, such schedules or
attachments are not filed herewith.
However, the Registrant agrees to
furnish supplementally to the
Commission upon request a copy of
any omitted schedule or attachment.
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, thereunto duly authorized.
Dated: February 9, 2000
3
<PAGE>
JFAX.COM, Inc.
(Registrant)
By: /s/ Nicholas V. Morosoff
------------------------
Nicholas V. Morosoff
Secretary
STOCK PURCHASE AGREEMENT
by and among
The Selling Stockholders of SureTalk.com, Inc.
and
SureTalk.com, Inc.
and
JFAX.COM, Inc. as Purchaser
Dated as of January 15, 2000
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Purchase and Sale
1.1 Purchase and Sale................................................2
1.2 Payment of Purchase Price........................................2
1.3 Closing..........................................................2
1.4 Tax Treatment of Transaction.....................................3
ARTICLE II
Representations and Warranties of the Selling Stockholders
2.1 Organization and Authority.......................................3
2.2 Noncontravention.................................................4
2.3 No Governmental Consent or
Approval Required................................................4
2.4 Organization and Authority of
the Company......................................................4
2.5 Capitalization of the Company....................................5
2.6 Financial Statements.............................................5
2.7 Undisclosed Liabilities..........................................6
2.8 Absence of Certain Developments..................................6
2.9 Title to Properties..............................................6
2.10 Contracts........................................................7
2.11 Litigation.......................................................7
2.12 Compliance with Law; Governmental
Permits..........................................................8
2.13 Employee Benefit Plans...........................................8
2.14 Certain Interests...............................................10
2.15 Intercompany Transactions.......................................10
2.16 No Brokers or Finders...........................................10
2.17 Environmental Matters...........................................10
2.18 Intellectual Property...........................................10
2.19 Purchase for Investment, Etc....................................11
2.20 Minimum Working Capital.........................................12
ARTICLE III
Representations and Warranties of the Purchaser
-i-
<PAGE>
3.1 Organization and Authority.......................................12
3.2 Noncontravention.................................................13
3.3 No Governmental Consent or Approval
Required.........................................................13
3.4 Issuance of Purchaser Stock......................................13
3.5 Purchase for Investment..........................................14
ARTICLE IV
Covenants
4.1 Cooperation and Access...........................................14
4.2 Conduct of Business..............................................14
4.3 Commercially Reasonable Efforts;
Government Approvals.............................................16
4.4 Confidentiality..................................................16
4.5 Employees and Employee Benefits..................................17
4.6 Insurance........................................................17
ARTICLE V
Tax Matters
5.1 Definitions......................................................17
5.2 Tax-Related Representations and
Warranties.......................................................18
5.3 Liability for Taxes and Related
Matters..........................................................19
5.4 Liability of the Selling
Stockholders for Taxes...........................................21
5.5 Adjustment to Purchase Price.....................................21
5.6 Transfer Taxes...................................................21
5.7 Assistance and Cooperation.......................................21
5.8 Survival, Etc....................................................21
ARTICLE VI
Conditions to Closing
6.1 Conditions to the Obligations of
the Purchaser....................................................21
6.2 Conditions to the Obligations of
the Selling Stockholders.........................................23
-ii-
<PAGE>
ARTICLE VII
Termination
7.1 Grounds for Termination.........................................24
7.2 Effect of Termination...........................................25
ARTICLE VIII
Survival, Etc.
8.1 Survival of Representations,
Warranties, Covenants and Agreements............................25
8.2 Maximum Liability...............................................26
8.3 Limitation as to Certain Selling
Stockholders....................................................26
8.4 Insurance Proceeds..............................................27
8.5 Escrow..........................................................27
8.6 Representations to Shore........................................28
ARTICLE IX
Certain Definitions
9.1 Certain Definitions.............................................28
ARTICLE X
Miscellaneous
10.1 Amendments......................................................33
10.2 Assignment......................................................33
10.3 Notices.........................................................33
10.4 Severability....................................................35
10.5 Governing Law...................................................35
10.6 Interpretation..................................................35
10.7 Entire Agreement................................................36
10.8 Publicity.......................................................36
10.9 Expenses........................................................36
10.10 No Third Party Beneficiaries....................................37
10.11 Jurisdiction; Waivers...........................................37
10.12 Authority of Selling Stockholders'
Representative..................................................37
10.13 Counterparts....................................................38
-iii-
<PAGE>
10.14 Acceptance of Agreement.........................................38
-iv-
<PAGE>
EXHIBITS
A. Non-Competition Agreement
B. Employment Agreement with Steven J. Hamerslag
C. Registration Rights Agreement
D. Stock-Out Agreement
-v-
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of January 15, 2000, is made by
and among JFAX.COM, Inc., a Delaware corporation (the "Purchaser"), the
stockholders of SureTalk.com, Inc. listed in Schedule 1.2 hereto (the "Selling
Stockholders") and SureTalk.com, Inc., a Delaware corporation (the "Company").
RECITALS
A. The Selling Stockholders own shares of the capital stock (the
"Stock") of the Company, constituting all of the issued and outstanding capital
stock of the Company. The Selling Stockholders further own Rights to acquire
Stock of the Company, constituting all of the issued and outstanding Rights to
acquire such Stock. The ownership of the Stock and the Rights is detailed in
Schedule 1.2 hereto.
B. The Company is engaged in the Business (this and other capitalized
terms shall have the meanings assigned to such terms in Article IX).
C. The Selling Stockholders undertake that all Rights to acquire Stock
of the Company will be exercised (or will lapse) at or before the Closing
hereunder such that the transaction contemplated hereby may consist of the
purchase and sale of Stock of the Company only. Hereinafter, references to the
Stock give effect to the exercise or the lapse of the Rights as contemplated by
this recital, except as the context may otherwise require; for example, see
Section 2.5 herein which, notwithstanding this sentence, distinguishes between
the Stock and Rights.
D. The Purchaser desires to purchase the Stock from the Selling
Stockholders, the Selling Stockholders desire to sell the Stock to the
Purchaser, and the Company desires to facilitate such purchase and sale of the
Stock, all on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants
<PAGE>
and conditions contained herein, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale
1.1 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, the Selling Stockholders shall sell to the Purchaser, and the
Purchaser shall purchase from the Selling Stockholders, the Stock at the Closing
and the Selling Stockholders shall deliver at the Closing the certificates
evidencing the Stock, properly endorsed, or accompanied by duly executed stock
powers duly endorsed, in blank, and with signatures thereon guaranteed by an
Eligible Guarantor Institution or witnessed by a notary public.
1.2 Payment of Purchase Price. If the obligations of the parties to
proceed with the Closing set forth in Article VI are satisfied or waived, at the
Closing, in consideration for the Stock and as payment in full therefor, the
Purchaser shall pay the Selling Stockholders the Purchase Price by delivering to
the respective Selling Stockholders certificates evidencing the shares of the
common stock, par value $.01 per share (the "Purchaser Stock") of the Purchaser,
in the respective share amounts indicated in Schedule 1.2, and registered in the
respective names of the Selling Stockholders. The aggregate Purchase Price
consists of 1,532,789 shares of the Purchaser Stock, less the number of shares
to be issued to Mark Schwartz under the Stock-Out Agreement in the form attached
hereto as Exhibit D, and less 17,211 shares of Purchaser Stock in consideration
for the assumption by the Purchaser of the cash severance obligation of Barry
Shore set forth in the Employment Letter dated July 23, 1999. The certificates
for such Purchaser Stock will be legended and restricted as to transfer as
contemplated by Section 2.19 herein.
1.3 Closing. The closing (the "Closing") of the purchase and sale of
the Stock shall take place at the offices of Sullivan & Cromwell, 1888 Century
Park East, Los Angeles, CA 90067 as soon as practicable after the
-2-
<PAGE>
satisfaction or waiver of the conditions set forth in Article VI, or at such
other time and place as the parties shall mutually agree. The date on which the
Closing actually occurs is herein referred to as the "Closing."
1.4 Tax Treatment of Transaction. The parties intend that the purchase
and sale of the stock will be treated as a reorganization under Section 368(a)
of the Code and the parties will act in a manner consistent with that intention.
However, each party shall be responsible for its own taxes as a consequence of
the transactions contemplated by this Agreement, except as otherwise
specifically provided in this Agreement.
ARTICLE II
Representations and Warranties of the Selling Stockholders
Each of the Selling Stockholders represents and warrants and agrees
with the Purchaser that, except as set forth in the Disclosure Schedule
previously provided to Purchaser:
2.1 Organization and Authority. In the case of any Selling Stockholder
that is a corporation, partnership, trust, limited liability company or other
entity, such Selling Stockholder is duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation. Such Selling
Stockholder has the requisite power and authority to execute, deliver and
perform this Agreement and such other documents as are contemplated hereunder to
be executed and delivered by it at or prior to the Closing. In the case of each
of the Selling Stockholders, the execution, delivery and performance by such
Selling Stockholder of this Agreement and the Ancillary Agreements to which it
is to be a party and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by such Selling Stockholder and by any
requisite shareholders, partners, trustees, members or other similar Persons
applicable to it. This Agreement constitutes a valid and, assuming due execution
and delivery by the Purchaser, binding obligation of such Selling Stockholder,
enforceable against such Selling Stockholder in
-3-
<PAGE>
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors' rights
generally, and to general equitable principles. Upon execution and delivery of
the Ancillary Agreements to which each Selling Stockholder is to be a party by
the parties thereto, such Ancillary Agreements will constitute valid and binding
obligations of such Selling Stockholder, enforceable against such Selling
Stockholders in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally, and to general equitable principles.
2.2 Noncontravention. The execution, delivery and performance of this
Agreement by such Selling Stockholder, the performance of this Agreement by such
Selling Stockholder and the consummation of the transactions contemplated hereby
will not violate or conflict with, or constitute a breach or default under (a)
the charter documents or other similar documents of such Selling Stockholder (if
it is a corporation, partnership, trust, limited liability company or other
entity) or the Company or (b) any law, regulation, order, judgment or decree
applicable to such Selling Stockholder or the Company.
2.3 No Governmental Consent or Approval Required. Except as
contemplated by the Registration Rights Agreement, no authorization, consent,
Permit, approval or other order of, declaration to, or registration,
qualification, designation or filing with, any Governmental Entity is required
for or in connection with the execution, delivery and performance of this
Agreement by any Selling Stockholder, and the consummation of the transactions
contemplated hereby, other than any instances where the failure to obtain would
not (a) have a Material Adverse Effect on the Business or (b) prohibit the
transfer of the Stock or the consummation of any of the transactions
contemplated hereby or create a Lien on the Stock.
2.4 Organization and Authority of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its Business as presently conducted and to
-4-
<PAGE>
consummate the transactions contemplated hereby. Except as set forth on Schedule
2.4(a), the Company is qualified to do business as a foreign corporation in good
standing in each jurisdiction where failure to so qualify would have a Material
Adverse Effect on the Business. Schedule 2.4(b) correctly lists the current
directors and executive officers of the Company. True, correct and complete
copies of the certificate of incorporation and by-laws of the Company as in
effect on the date hereof have been delivered to the Purchaser. The Company has
no subsidiaries except as listed on Schedule 2.4(c). References herein to the
Company include its subsidiaries, except as the context may otherwise require.
2.5 Capitalization of the Company. (a) The entire authorized capital
stock of the Company consists 30,000,000 shares of Common Stock, par value
$.0001 per share, of which 10,166,371 shares are issued and outstanding, and
5,660,000 shares of Preferred Stock, par value $.0001 per share, of which
5,657,876 shares are issued and outstanding. All of the Stock has been duly
authorized and validly issued and is fully paid and nonassessable. Except as
listed on Schedule 2.5, there are no outstanding warrants, options,
subscription, conversion, exchange, preemptive or other rights (collectively,
"Rights") entitling any Person to purchase or otherwise acquire any capital
stock of the Company. (b) In the respective amounts indicated in Schedule 1.2,
each of the Selling Stockholders has good and valid title to the Stock and the
Rights, which in the aggregate include all of the Stock and the Rights, free and
clear of all Liens and, subject to applicable securities laws and competition
laws, free of any restriction on its right to transfer or exercise any voting or
other right with respect thereto. At the Closing, good and valid title to the
Stock, free and clear of all Liens, encumbrances, equities or claims shall be
transferred to the Purchaser, and all of the Rights shall have previously been
exercised (resulting in additional Stock being transferred to the Purchaser) or
any non-exercised Rights shall lapse effective as of the Closing, and shall
cease to be of any force or effect whatsoever. The Selling Stockholders
acknowledge that the Purchaser is not assuming any of the Rights.
-5-
<PAGE>
2.6 Financial Statements. The Selling Stockholders have delivered to
the Purchaser the individual and combined balance sheets of the Company and
ProtoDyne, Inc. as of December 31, 1998 and November 30, 1999 (the "Balance
Sheets") and their respective individual and combined statements of operations
and cash flows for the periods ended December 31, 1998 and November 30, 1999
(together with the Balance Sheets, the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP consistently applied,
subject to the omission or abbreviation of footnote disclosures, and fairly and
accurately present in all material respects the respective financial position of
the Company and ProtoDyne, Inc. as of the respective dates thereof and the
results of operations, changes in financial position and cash flows of the
Company and ProtoDyne, Inc. for the respective periods covered thereby.
2.7 Undisclosed Liabilities. The Company has no liabilities required to
be set forth on the latest Balance Sheet referred to in Section 2.6 except for
(a) liabilities incurred in the ordinary course of business since the date of
the Balance Sheet or (b) liabilities that would not reasonably be expected to
have a Material Adverse Effect on the Business.
2.8 Absence of Certain Developments. Since the date of the latest
Balance Sheet, there has not been (a) any change or event that has had or would
reasonably be expected to have a Material Adverse Effect on the Business, other
than (x) changes relating to or arising from general economic, market or
financial conditions or generally affecting the industries or markets in which
the Company operates or (y) changes relating to or arising from the consummation
or disclosure of this Agreement or any transaction contemplated by this
Agreement, (b) any declaration, setting aside or payment of any dividend or
other distribution with respect to the capital stock of the Company, (c) any
loss, destruction or damage to any property of the Company, whether or not
insured, that has had or would reasonably be expected to have a Material Adverse
Effect on the Business, or (d) any material change in any of the significant
accounting policies, practices or procedures of the Company with respect to the
Business.
-6-
<PAGE>
2.9 Title to Properties.
(a) Personal Property. Except as disclosed in the Financial Statements,
the Company has, or prior to the Closing will have, good and marketable title
to, or a valid leasehold interest in, all of the personal properties and assets
held, occupied or used primarily in the Business, free and clear of all Liens
other than Permitted Liens.
(b) Real Property. Schedule 2.9(b) lists all real properties currently
owned or leased by the Company (collectively, the "Real Property"). The Company
has good and marketable title to (or a leasehold interest in) all Real Property
shown as owned or leased, if applicable, by it on Schedule 2.9(b), free and
clear of all Liens other than (a) the lien of current taxes not yet due and
payable and (b) Permitted Liens or such other Liens which do not materially
detract from the value of such property.
2.10 Contracts. Attached as Schedule 2.10(a) is a true and complete
list of all debt instruments, contracts, leases, license agreements, employment
and labor agreements, and other agreements to which the Company or any of its
respective properties is subject or by which any thereof is bound (a) which is
material to the continued conduct of the Business as currently conducted or (b)
which pursuant to its terms imposes payment obligations on the Company or the
other party or obligor thereto in excess of $25,000 annually or $25,000 in the
aggregate or (c) which is an agreement with any director or officer of the
Company ("Material Contracts"). Except as disclosed in Schedule 2.10(b), each
Material Contract is in full force and effect; and no breach or default or event
which would (with the passage of time, notice or both) constitute a breach or
default thereunder by the Company or, to the Knowledge of any Selling
Stockholder or the Company, any other party or obligor with respect thereto,
exists which in each case would reasonably be expected to materially impair the
benefits expected to be derived therefrom. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in a breach of or default under any Material
Contract, will not (and will not give any Person a right to)
-7-
<PAGE>
terminate or modify any rights of, or accelerate or augment any material
obligation of, the Company, and do not require any consent, approval, waiver or
other action by any party to any such Material Contract, other than the matters
identified in Schedule 2.10(b).
2.11 Litigation. Except as disclosed in Schedule 2.11, there is no
claim, complaint, arbitration, action, suit, proceeding or investigation pending
or to the Knowledge of any Selling Stockholder or the Company, threatened,
against or affecting the Business, the Company or such Selling Stockholder,
which if resolved adversely (a) would reasonably be expected to result in a
Material Adverse Effect on the Business, or (b) would prevent, challenge or
impair in any other manner the consummation of the transactions contemplated
hereby. There is no organized labor strike, dispute, slowdown or stoppage, or
collective bargaining or unfair labor practice claim pending, or to the
Knowledge of any Selling Stockholder or the Company, threatened, against or
affecting the Company, nor are there, to the Knowledge of any Selling
Stockholder or the Company, any union organizing efforts with respect to
employees of the Company.
2.12 Compliance with Law; Governmental Permits. Except as set forth in
Schedule 2.12, the Company is in compliance with all laws, regulations, orders,
judgements and decrees of any Governmental Entity which are applicable to the
Business, except such noncompliance as would not reasonably be expected to have
a Material Adverse Effect on the Business. The Company holds all Permits that
are required by any Governmental Entity to permit the Company to conduct the
Business as now conducted, except for such Permits the absence of which would
not reasonably be expected to have a Material Adverse Effect on the Business.
Each such material Permit is in full force and effect, except for any such
Permit the absence of which would not reasonably be expected to have a Material
Adverse Effect on the Business. To the Knowledge of any Selling Stockholder or
the Company, no suspension, cancellation or termination of any of such material
Permits is threatened or imminent.
2.13 Employee Benefit Plans. Except as disclosed in Schedule 2.13:
-8-
<PAGE>
(a) All benefit and compensation plans and agreements maintained by the
Company which cover employees of the Company (the "Employees"), including, but
not limited to, "employee benefit plans" within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
deferred compensation, stock option, stock purchase, stock appreciation rights,
stock based, incentive and bonus plans (the "Benefit Plans"), are listed in
Schedule 2.13(a). True and complete copies of all Benefit Plans, including, but
not limited to, any trust instruments and insurance contracts forming a part of
any Benefit Plans, and all amendments thereto have been provided or made
available to Purchaser.
(b) All employee benefit plans maintained by the Company which cover
Employees (the "Plans"), to the extent subject to ERISA, are in substantial
compliance with ERISA. Each Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
intended to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service with respect to
"TRA" (as defined in Section 1 of Rev. Proc. 93-39), and to the Knowledge of any
Selling Stockholder and the Company there are no circumstances likely to result
in revocation of any such favorable determination letter. There is no material
pending or, to the Knowledge of any Selling Stockholder or the Company
threatened, litigation relating to the Plans. The Company has not engaged in a
transaction with respect to any Plan that, assuming the taxable period of such
transaction expired as of the date hereof, could subject the Company to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in
an amount which would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by the Company with respect to any ongoing, frozen or
terminated "single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by the Company, or the single-employer
plan of any entity which is considered one employer with the Company under
Section 4001 of ERISA or Section 414 of the Code (an
-9-
<PAGE>
"ERISA Affiliate"). The Company has not maintained or contributed to at any time
during the five-year period preceding the date of this Agreement any employee
pension benefit plan which is a multiemployer plan, within the meaning of
Section 3(37) of ERISA, which is subject to Title IV of ERISA.
(d) All contributions required to be made under the terms of any
Benefit Plan have been timely made and have been reflected on the Financial
Statements. Neither any Pension Plan nor any single-employer plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver.
(e) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any employees of the Company to severance pay, (ii)
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of the Benefit Plans or (iii) result in any breach or violation of, or a
default under, any of the Benefit Plans.
2.14 Certain Interests. No officer or director of the Company is
indebted or otherwise obligated to the Company, and the Company is not indebted
or otherwise obligated to any such officer or director, except for amounts due
under normal arrangements applicable to all employees generally as to salary or
reimbursement of ordinary business expenses or as set forth on Schedule 2.14.
2.15 Intercompany Transactions. Except as described in the Financial
Statements or Schedule 2.15, incurred in the ordinary course of business in
non-material amounts since the date of latest Balance Sheet or that is
contemplated by, or will be discharged or terminated pursuant to, this
Agreement, the Company has no liabilities or obligations to any Selling
Stockholder or any Affiliate of any Selling Stockholder (other than the Company)
and none of the Selling Stockholders or such Affiliates has any obligations to
the Company.
-10-
<PAGE>
2.16 No Brokers or Finders. No agent, broker, finder, or investment or
commercial banker or other Person or firm engaged by or acting on behalf of the
Selling Stockholders or the Company or any of their respective Affiliates in
connection with the negotiation, execution or performance of this Agreement or
the transactions contemplated by this Agreement, is or will be entitled to any
brokerage or finder's or similar fee or other commission as a result of this
Agreement or such transactions.
2.17 Environmental Matters. Except as set forth in Schedule 2.17, or as
would not be expected to have a Material Adverse Effect on the Business: (i) the
Company is in substantial compliance with all applicable Environmental Laws;
(ii) the Company has not received any written notices from any Governmental
Entity alleging the violation of any applicable Environmental Laws other than
for matters that have been fully resolved; (iii) the Company is not subject to
any court order, administrative order or decree arising under any Environmental
Law; and (iv) the Company has not disposed of any Hazardous Substance on any
property owned or operated by it or had any emissions or discharges of any
Hazardous Substances except as permitted under applicable Environmental Laws.
2.18 Intellectual Property. The Company owns or possesses valid
licenses or other rights to use all patents, trademarks, service marks, trade
names, copyrights, know-how, trade secrets and other intellectual property
reasonably necessary to conduct the Business of the Company in the manner in
which it has been and is being conducted, and except as set forth in the
Schedule 2.18, neither any Selling Stockholder nor the Company have received any
notice of infringement or of conflict with (and they know of no such
infringement or conflict with) asserted rights of others with respect to any
patents, trademarks, service marks, trade names, copyrights, knowhow, trade
secrets or other intellectual property which, if determined adversely to the
Company, would individually or in the aggregate have a Material Adverse Effect
on the Business; and the inventions, products or processes of the Company do not
infringe or conflict with any right or patent, or any invention, product or
process which is the subject of a
-11-
<PAGE>
patent application known to them, which if determined adversely would have a
Material Adverse Effect on the Business.
2.19 Purchase for Investment, Etc. Each of the Selling Stockholders is
purchasing the Purchaser Stock for investment for its own account and not with a
view to, or for sale in connection with, the distribution thereof. Each of the
Selling Stockholders acknowledges that the Purchaser Stock is not registered
under the United States Securities Act of 1933, as amended, any applicable state
securities laws or any applicable foreign securities laws, and that the
Purchaser Stock may not be transferred or sold except pursuant to the
registration provisions of the United States Securities Act of 1933, as amended,
or applicable foreign securities laws or pursuant to an applicable exemption
therefrom and pursuant to state securities laws as applicable. Except as
indicated in Schedule 2.19, each of the Selling Stockholders is an accredited
investor as defined in Regulation D under such Securities Act. Each of the
Selling Stockholders has such knowledge and experience in financial matters as
to be capable of evaluating the merits and risks of an investment in the
Purchaser Stock, has received and carefully reviewed the documents filed by the
Purchaser under the Securities and Exchange Act of 1934 as referred to in
Section 3.4(b) hereof and any other documents that such Selling Stockholder has
requested from the Purchaser relating to this transaction, and has been given
the opportunity to ask questions of, and receive answers from, the Purchaser
concerning the terms and conditions of the transaction and to obtain any
additional information which the Purchaser can acquire without unreasonable
effort or expense that is necessary to verify the accuracy of the information
furnished by the Purchaser. Each Selling Stockholder also acknowledges and
agrees that he or she is relying on his or her own advisors in agreeing to enter
into this Agreement and is not relying on the Company, or any of its officers,
directors, agents or representatives, including, without limitation, the law
firm of the Company, in connection with entering into this Agreement.
2.20 Minimum Working Capital. As of the Closing, notwithstanding any
limitation in any other
-12-
<PAGE>
representation or warranty herein and regardless of any statement or other
disclosure that may be set forth in the Disclosure Schedule, the Company's
working capital (taking into account, without limitation, any notes receivable
from employees permitted hereunder to remain in place after the Closing, whether
or not such notes mature within one year, as well as any professional fees and
payables, and other fees and payables, arising in connection with or otherwise
incident to the negotiation, preparation, and performance of this Agreement)
shall not be less than a deficit of $250,000.
ARTICLE III
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to each of the Selling
Stockholders that:
3.1 Organization and Authority. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Purchaser has full power and authority to execute, deliver and
perform this Agreement. The execution, delivery and performance by the Purchaser
of this Agreement and any Ancillary Agreement to which the Purchaser is to be a
party and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of the
Purchaser. This Agreement constitutes a valid and, assuming due execution and
delivery by the Selling Stockholders, binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and to general equitable principles. Upon
execution and delivery of the Ancillary Agreements to which the Purchaser is to
be a party by the parties thereto, such Ancillary Agreements will constitute
valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
-13-
<PAGE>
affecting creditors' rights generally, and to general equitable principles.
3.2 Noncontravention. The execution, delivery and performance of this
Agreement by the Purchaser and the consummation of the transactions contemplated
hereby will not violate or conflict with, or constitute a breach or default
(whether upon lapse of time and/or the occurrence of any act or event or
otherwise) under (a) the charter documents of the Purchaser or (b) any law,
regulation, order, judgment, or decree applicable to the Purchaser.
3.3 No Governmental Consent or Approval Required. Except as
contemplated by the Registration Rights Agreement, no authorization, consent,
Permit, approval or other order of, declaration to, or registration,
qualification, designation or filing with, any Governmental Entity is required
for or in connection with the execution, delivery and performance of this
Agreement by the Purchaser and the consummation of the transactions contemplated
hereby, other than any instances where the failure to obtain would not prohibit
the issuance of the Purchaser Stock or the consummation of any of the
transactions contemplated hereby.
3.4 Issuance of Purchaser Stock. (a) The Purchaser has the ability to
make the payment of the Purchase Price on the terms and conditions contemplated
by this Agreement. Upon issuance of the Purchaser Stock to the Selling
Stockholders as consideration for the purchase of the Stock hereunder, the
Purchaser Stock will be duly authorized and validly issued and will be fully
paid and non-assessable. (b) The Purchaser is a reporting company under the
Securities Exchange Act of 1934, as amended. The Purchaser represents and
warrants to each of the Selling Stockholders that the documents filed by it
under such Act, taken together as of the date hereof, do not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
3.5 Purchase for Investment. The Purchaser is purchasing the Stock for
investment for its own account and
-14-
<PAGE>
not with a view to, or for sale in connection with, the distribution thereof.
The Purchaser acknowledges that the Stock are not registered under the United
States Securities Act of 1933, as amended, any applicable state securities laws
or any applicable foreign securities laws, and that the Stock may not be
transferred or sold except pursuant to the registration provisions of the United
States Securities Act of 1933, as amended, or applicable foreign securities laws
or pursuant to an applicable exemption therefrom and pursuant to state
securities laws as applicable.
ARTICLE IV
Covenants
4.1 Cooperation and Access. From and after the date hereof, upon
reasonable advance notice, the Selling Stockholders shall cause the Company to
permit the Purchaser and its representatives to have access, during regular
business hours, to the assets, employees, books and records of the Company
relating to the Business, and shall furnish, or cause to be furnished, to the
Purchaser and its representatives such financial, tax and operating data and
other available information with respect to the Business as the Purchaser shall
from time to time reasonably request; provided, however, that no such access
shall unreasonably interfere with the Company and its operation of the Business;
provided further that all information received by the Purchaser and given by or
on behalf of the Company in connection with this Agreement and the transactions
contemplated hereby shall be held by the Purchaser and its Affiliates, agents
and representatives confidential pursuant to the terms of the Confidentiality
Agreement.
4.2 Conduct of Business. During the period from the date of the latest
Balance Sheet until the Closing, except as set forth on Schedule 4.2, and except
as the Purchaser shall otherwise consent in writing, the Selling Stockholders
agree that they have caused and shall cause the Company to conduct the Business
in the ordinary and usual course consistent with past practice, and to use its
commercially reasonable efforts to preserve intact the Business and related
relationships with customers, service
-15-
<PAGE>
providers and other third parties. From such date until the Closing, except as
set forth on Schedule 4.2. and except as otherwise contemplated herein or as the
Purchaser shall otherwise consent in writing, the Selling Stockholders agree
that they have not and shall not permit the Company to:
(a) issue or transfer any capital stock of the Company or any security
convertible into or exchangeable for any such capital stock or any Right to
acquire any such capital stock;
(b) make any change in its certificate of incorporation or bylaws;
(c) pay any dividend, make any other distribution to stockholders or
otherwise dispose of any material part of its assets or property;
(d) incur or assume any indebtedness for borrowed money other than in
the ordinary course of business consistent with past practice or guarantee any
indebtedness of any other Person;
(e) liquidate, dissolve or otherwise reorganize or seek protection from
creditors;
(f) adopt or amend in any respect any Benefit Plan if such will
increase the obligation of Purchaser or the Company;
(g) enter into any lease for real property, except renewals of existing
leases in the ordinary course of business;
(h) enter into any contract or agreement or engage in any other type of
transaction with any Selling Stockholder or any of their Affiliates; or
(i) agree or commit itself to do any of the foregoing.
4.3 Commercially Reasonable Efforts; Government Approvals.
-16-
<PAGE>
(a) Upon the terms and subject to the conditions herein provided, each
of the parties hereto agrees to use its commercially reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary for it to do under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, (i) to comply promptly with all legal requirements which may
be imposed on it with respect to this Agreement and the transactions
contemplated hereby (which actions shall include, without limitation, furnishing
all information required by applicable laws and regulations in connection with
approvals of or filings with any Governmental Entity), (ii) to satisfy the
conditions precedent to the obligations of the parties hereto and (iii) to
obtain any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity or other public or private third party required to be
obtained or made by the Purchaser, the Selling Stockholders or the Company in
connection with the acquisition of the Stock or the taking of any action
contemplated by this Agreement.
(b) Without limiting the generality of the foregoing, each of the
parties hereto agrees to use its commercially reasonable efforts prior to the
Closing to maintain each Material Contract of the Company in full force and
effect.
4.4 Confidentiality. Each party hereto, at all times prior to the
Closing and after any termination of this Agreement, will hold all confidential
information provided to such party by or on behalf of any other party hereto in
confidence pursuant to the terms of the Confidentiality Agreement (whether or
not such party was originally a party to the Confidentiality Agreement). Upon
any termination of this Agreement, each party hereto will promptly return to
each other party that provided confidential information to the first party, such
confidential information including any copies thereof. Each party hereto
acknowledges that each other party would be irreparably harmed by a breach of
this Section 4.4 and that there would be no adequate remedy at law or in damages
to compensate each other party for any such breach and agrees that, in addition
to any other remedy, the other party shall
-17-
<PAGE>
be entitled to one or more injunctions requiring specific performance by the
first party of this Section 4.4.
4.5 Employees and Employee Benefits. From and after the Closing,
subject to disclosure thereof pursuant to Sections 2.10 and 2.13, the Purchaser
shall cause the Company to honor all severance plans, retention plans and
employment agreements of the Company in accordance with their terms. The
Purchaser will cause the employees of the Company as of the date of this
Agreement to continue to be employees of the Company, and to become employees of
the Purchaser group of companies, from and after the Closing hereunder. Such
employees of the Company will be given credit, under any Purchaser sponsored
benefit plans, for their period of service with the Company prior to the Closing
and will be entitled to participate in benefit plans of the Purchaser group on a
non-discriminatory basis. Nothing in this provision, however, is intended to
create any third party beneficiary rights for any employees of the Company.
After the Closing, such employees will be "at will" employees of the Company and
of the Purchaser group, unless they have a written employment agreement.
4.6 Insurance.
Prior to the Closing, the Selling Stockholders shall cause the Company
to take such action as may be required to ensure that any insurance coverage for
any claims that have been filed with the applicable insurers prior to the
Closing relating to the Company will continue with respect to such claims
following the Closing. Following the Closing, the Purchaser and/or the Company
shall be responsible for the control of all claims filed with third party
insurers, subject to the control exercised by any insurers in accordance with
the applicable insurance policies.
-18-
<PAGE>
ARTICLE V
Tax Matters
5.1 Definitions. For purposes of this Agreement, "Taxes" shall mean all
federal, state, local and foreign income, property, sales and use, excise,
withholding, franchise, transfer, gross receipt, capital stock, production,
business and occupation, disability, employment, payroll, severance or similar
taxes imposed on the income, properties or operations of the Company, together
with any penalties, additions or interest relating thereto and any interest in
respect of such additions or penalties; "Tax Return" shall mean all reports and
returns required to be filed with respect to Taxes including, without
limitation, combined or consolidated returns for any group of taxpayers that
includes the Company.
5.2 Tax-Related Representations and Warranties.
(a) Tax Allocation Agreements. The Selling Stockholders represent and
warrant to the Purchaser that, except as disclosed in Schedule 5.2(a), the
Company is not a party to any agreement, contract or understanding relating to
any sharing by the Company of any Tax liability of any Person.
(b) Tax Returns and Reports. The Selling Stockholders represent and
warrant to the Purchaser that except as set forth in Schedule 5.2(b), (i) all
Tax Returns that are required to be filed by or with respect to the Company have
been or, if required on or before the Closing, will be duly filed, (ii) all
Taxes shown to be due on the Tax Returns referred to in clause (i) have been or
will be paid in full, (iii) all deficiencies asserted or assessments made as a
result of any tax examinations have been settled or paid in full, (iv) no issues
that have been raised in writing by the relevant taxing authority in connection
with the examination of any of the Tax Returns referred to in clause (i) are
currently pending and (v) no waivers of statutes of limitation have been given
by or requested with respect to any Taxes of the Company. Schedule 5.2(b) lists
-19-
<PAGE>
the date or dates through which the Internal Revenue Service has examined the
United States federal income tax returns of the Company.
(c) No FIRPTA Withholding. The Selling Stockholders represent and
warrant to the Purchaser that no tax is required to be withheld pursuant to
Section 1445 of the Code as a result of the transfer contemplated by this
Agreement.
(d) No Parachute Payments. The Selling Stockholders represent and
warrant to the Purchaser that, as a result of the Purchaser's purchase of the
Stock, neither the Company nor the Purchaser will be obligated to make a
payment to an individual that would be a "parachute payment" to a "disqualified
individual" as those terms are defined in Section 280G of the Code without
regard to whether such payment is reasonable compensation for personal services
performed or to be performed in the future. In this regard, it shall be a
condition to Closing hereunder for all parties that the requisite stockholders
of the Company have signed an approval of accelerated vesting provisions and
severance payments, which shall be prepared by representatives of the Company
and the Selling Stockholders, and shall be satisfactory in form and substance to
the Purchaser. By signing this Agreement each Selling Stockholder approves the
approval of accelerated vesting provisions and severance payments in the
accompanying form.
5.3 Liability for Taxes and Related Matters.
The Selling Stockholders represent and warrant and agree for the
benefit of the Purchaser that:
(a) The Selling Stockholders have caused the Company to make available
to the Purchaser and its representatives for review copies of all Tax Returns
filed by the Company.
(b) All Taxes that accrue or are payable by the Company (x) in respect
of taxable period that end on or before the Closing Date and (y) for any taxable
period that begins before the Closing Date and ends thereafter, to the extent
such Taxes are attributable to the portion of such
-20-
<PAGE>
period ending on the Closing Date as described in the following sentence, have
or will have been timely paid on or before the Closing Date unless a reserve for
the amount of such Tax has been established therefor in the Balance Sheet as of
November 30, 1999 of the Company as delivered to the Purchaser hereunder. In the
case of Taxes that are payable with respect to a taxable period that begins
before the Closing and ends after the Closing, the portion of such Taxes payable
for the period ending on the Closing shall be (i) in the case of any Tax based
upon or measured by income, and in the case of any sales or use tax, the amount
which would be payable if the taxable year ended as of the end of the Closing
and (ii) in the case of any other Tax, such as property, the amount of such tax
for the entire period multiplied by a fraction, the numerator of which is the
number of days in the period ending on the Closing and the denominator of which
is the number of days in the entire period.
(c) Except as set forth in Schedule 5.3(c), all Tax Returns have been
audited by the applicable Governmental Authority or the applicable statue of
limitations has expired for the period covered by such Tax Returns, and there is
not in force any extension of time with respect to the due date for the filing
of any Tax Return or any waiver or agreement for any extension of time for the
assessment or payment of any Tax due with respect to the period covered by any
Tax Return and the Company has not required any extension of time within which
to file any Tax Return that is currently pending.
(d) There is no deficiency, assessment or claim asserted against the
Company for any Taxes, and no assessment, deficiency or adjustment has been
asserted, proposed or threatened with respect to any Taxes of the Company except
to the extent adequate liabilities or reserves with respect thereto are accrued
on the above-mentioned Balance Sheet or the deficiency or claim meets each of
the following conditions: (i) such deficiency or claim is being contested in
good faith by appropriate proceedings, (ii) no such accrual is required on such
Balance Sheet and (iii) the nature and amount of the disputed Tax is set forth
in Schedule 5.3(d).
-21-
<PAGE>
(e) The Company has not filed a consent under Code Section 341(f)
concerning collapsible corporations and the Company has not made any payments,
nor is it obligated to make any payments, and is not a party to any agreement
that could obligate it to make any payments that will not be deductible under
Code Section 280G.
(f) The Company (i) has not been a member of any affiliated group
filing a consolidated federal income Tax Return and (ii) does not have any
liability for the Taxes of any other person as defined in Section 770(a)(1) of
the Code under Treas. Reg. ss. 1.1502-6 (or any similar provision of state,
local or foreign law), as a transferee or successor, by contact, or otherwise.
(g) None of the assets of the Company (i) are required to be treated as
being owned by any other person pursuant to the so-called safe harbor lease
provisions of former Section 168(f)(8) of the Code, (ii) secures any debt the
interest on which is tax-exempt under Code Section 103(a) or (iii) is tax-exempt
use property within the meaning of Code Section 168(h).
5.4 Liability of the Selling Stockholders for Taxes. The Primary
Selling Stockholders (as defined in Section 8.3), jointly and severally, shall
be liable for and indemnify Purchaser for any breach of their representatives,
warranties and agreements representing Taxes contained in this Article V
including, without limitation, any obligation to contribute to the payment of a
tax determined on a consolidated, combined or unitary basis with respect to a
group of corporations that included the Company prior to the Closing.
5.5 Adjustment to Purchase Price. Any payment under this Article V will
be an adjustment to the purchase price.
5.6 Transfer Taxes. Notwithstanding anything to the contrary in this
Article V, the Selling Stockholders shall be liable for all transfer taxes
arising in connection with the transactions under this Agreement.
-22-
<PAGE>
5.7 Assistance and Cooperation. After the Closing, each of the Selling
Stockholders and the Purchaser shall (i) assist (and cause their respective
Affiliates to assist) the other parties in preparing any Tax Returns of or
involving the Company, (ii) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of or involving the
Company, and (iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to Taxes
of or involving the Company.
5.8 Survival, Etc. Notwithstanding anything to the contrary contained
in this Agreement, the representations and warranties and the indemnification
obligations set forth in this Article V shall survive the Closing and shall
remain in effect for the period specified in Section 8.1.
ARTICLE VI
Conditions to Closing
6.1 Conditions to the Obligations of the Purchaser. The obligations of
the Purchaser to consummate the transactions contemplated by this Agreement are
subject to the satisfaction at or prior to the Closing of the conditions set
forth in this Section 6.1 and in Section 5.2(d), any one or more of which may be
waived, in whole or in part, by the Purchaser:
(a) Approvals. With respect to any Governmental Entities, the parties
shall have procured such approvals, if applicable, or there shall have occurred
the expiration or early termination of the applicable waiting periods, if any,
with respect to the consummation of the transactions contemplated by this
Agreement without there being any continuing objection thereto. Additionally,
the parties shall have procured such approvals and consents to assignment as
shall be necessary to assure that the Material Contracts may be continued by the
Company after the Closing in the manner contemplated by Section 2.10 and
Schedule 2.10(b), and further the parties shall procure other similar approvals
and consents to assignment as the Purchaser may reasonably consider necessary to
continue the Business following the Closing.
-23-
<PAGE>
(b) Orders. No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the sale of the Stock or the other transactions
contemplated by this Agreement.
(c) Accuracy of Representations. The representations and warranties of
the Selling Stockholders in this Agreement shall be true and correct at and as
of the Closing as if made at and as of the Closing, except where the failure of
the representations and warranties to be true and correct would not reasonably
be expected to have a Material Adverse Effect on the Business, and the Purchaser
shall have received a certificate, dated the Closing, signed by the Selling
Stockholders' Representative on behalf of the Primary Selling Stockholders to
that effect.
(d) Performance of Covenants. Each of the Selling Stockholders shall
have performed and complied in all material respects with all covenants and
agreements contained in this Agreement that are required to be performed or
complied with by it at or prior to the Closing, and the Purchaser shall have
received a certificate, dated the Closing, signed by the Selling Stockholders'
Representative on behalf of the Primary Selling Stockholders to that effect.
(e) Resignation of Directors. The directors of the Company shall have
submitted their resignations in writing, effective as of the Closing, to the
Company and the Purchaser.
(f) Ancillary Agreements. The Ancillary Agreements shall have been
executed and delivered by the parties thereto and be in full force and effect.
(g) Debt and Intercompany Accounts. All debt for borrowed money or
representing an extension of credit of the Company as of the Closing, including
all intercompany loans, advances and other extensions of credit made between the
Company, on the one hand, and any Selling Stockholder or any Affiliate of any
Selling Stockholder(other than the Company), on the other hand, shall have been
eliminated or repaid in the manner specified in Schedule 6.1(g).
-24-
<PAGE>
(h) Due Diligence Investigation. Prior to the Closing, the Purchaser
and its advisors shall have been given the opportunity to complete all legal,
business and accounting due diligence investigations of the Company and its
Business, including the retention of key employees of the Company, and the
results of such due diligence investigation shall be satisfactory to the
Purchaser in its sole discretion.
6.2 Conditions to the Obligations of the Selling Stockholders. The
obligations of the Selling Stockholders to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing of the conditions set forth in this Section 6.2 and in Section
5.2(d), any one or more of which may be waived, in whole or in part, by the
Selling Stockholders.
(a) Approvals. With respect to any Governmental Entities, the parties
shall have procured such approvals, if applicable, or there shall have occurred
the expiration or early termination of the applicable waiting periods, if any,
with respect to the consummation of the transactions contemplated by this
Agreement without there being any continuing objection thereto.
(b) Orders. No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the sale of the Stock or the other transactions
contemplated by this Agreement.
(c) Accuracy of Representations. The representations and warranties of
the Purchaser in this Agreement shall be true and correct in all material
respects at and as of the Closing as if made at and as of the Closing, and the
Selling Stockholders shall have received a certificate, dated the Closing, of an
executive officer of the Purchaser to that effect.
(d) Performance of Covenants. The Purchaser shall have performed and
complied in all material respects with all covenants and agreements contained in
this Agreement that are required to be performed or complied with by it at or
prior to the Closing, and the Selling
-25-
<PAGE>
Stockholders shall have received a certificate, dated the Closing, of an
executive officer of the Purchaser to that effect.
(e) Ancillary Agreements. The Ancillary Agreements shall have been
executed and delivered by the parties thereto and be in full force and effect.
ARTICLE VII
Termination
7.1 Grounds for Termination. This Agreement may be terminated at any
time prior to Closing:
(a) Mutual Agreement. by the mutual written agreement of the Selling
Stockholders and the Purchaser;
(b) Expiration. by the Selling Stockholders or by the Purchaser if the
Closing shall not have occurred on or before February 29, 2000, unless the
failure to consummate the Closing by such date (i) shall be due to the failure
of the party seeking to terminate this Agreement to have fulfilled any of its
obligations under this Agreement or (ii) is due to the continuance of a waiting
period or lack of an approval required under or an injunction or equivalent
thereof entered based upon the requirement of any Governmental Entity, in which
event no party may rely upon this Section 7.1(b) to terminate this Agreement
until March 31, 2000;
(c) Contravention of Law. by the Selling Stockholders or by the
Purchaser if consummation of the transactions contemplated hereby would violate
any nonappealable final order, decree or judgment of any court or Governmental
Entity having competent jurisdiction; and
(d) Breach. by the Selling Stockholders or by the Purchaser if there
has been a material breach of any covenant or agreement made to or for the
benefit of the terminating party in this Agreement, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach.
-26-
<PAGE>
7.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 7.1 (other than paragraph (d) of Section 7.1), such termination shall be
without liability of any party (or any stockholder, director, officer, employee
or agent of any party) to any other party to this Agreement, except that nothing
herein shall relieve any party from liability for any breach prior to such
termination. Notwithstanding the foregoing, Section 4.4 shall survive any
termination hereof.
ARTICLE VIII
Survival, Etc.
8.1 Survival of Representations, Warranties, Covenants and Agreements.
The representations and warranties included or provided for herein shall survive
the Closing until 120 days after the Closing, except that the representations
and warranties in Sections 2.7, 2.11, 2.14, 2.15, 2.18, 2.20, 3.4(b) and Article
V shall survive until 18 months after the Closing, and except that the
representations and warranties in Sections 2.1, 2.5, 2.16, 2.19, 3.1, 3.4(a) and
3.5 shall survive without time limit until the applicable statute of limitations
period has expired. Any representation and warranty for which a bona fide notice
of breach is given prior to expiration of the applicable time limit shall
survive until the claim of breach is finally resolved. The covenants and
agreements provided for herein shall terminate on the Closing; provided,
however, that any covenant or agreement that was not performed within such time
period shall survive the Closing until it has been performed.
8.2 Maximum Liability.
The obligations of the Selling Stockholders, in the aggregate, on the
one hand, and of the Purchaser, on the other hand, under this Agreement shall be
limited to a maximum liability equal to the Purchase Price. The obligations of
any Selling Stockholder, individually, shall be limited to a maximum liability
equal to the portion of the Purchase Price received by such Selling Stockholder.
After the Closing, no claim shall be brought against any
-27-
<PAGE>
Selling Stockholder based on any of the representations and warranties herein
that survive until 120 days after the Closing or that survive until 18 months
after the Closing, unless and until the aggregate amount of all such claims
exceed $100,000, and once such threshold is reached, only the amount in excess
of $100,000 with respect to such claims may be pursued.
8.3 Limitation as to Certain Selling Stockholders. The following
Selling Stockholders are herein called the "Primary Selling Stockholders": Barry
Shore, Lester Morales and Steve Hamerslag. After the Closing, the Selling
Stockholders who are not Primary Selling Stockholders shall have no liability
under this Agreement to the Purchaser in respect of the representations and
warranties that survive until 120 days after the Closing or that survive until
18 months after the Closing or that are contained in Section 2.5(a). The
liabilities of the Primary Selling Stockholders are not so limited, nor are the
liabilities of the other Selling Stockholders in respect of any other
representations or warranties herein. Notwithstanding anything else set forth in
this Agreement or otherwise, including, but not limited to, the representations
and warranties contained in Articles II and V, after the Closing, Mark Schwartz
shall have no liability whatsoever under this Agreement except for (i) the
representations and warranties set forth in Sections 2.19 and 8.6 hereof and
(ii) the following representation and warranty which shall be deemed to be part
of Section 2.19 insofar as Mr. Schwartz is concerned:
Mark Schwartz hereby represents and warrants to Purchaser that he holds
good and valid title to 1,725,000 shares of the Company's Common Stock (the
"Schwartz Stock") and options (the "Schwartz Options") to purchase up to 950,000
shares of the Company's Common Stock (collectively, the "Schwartz Stock and
Options"). The Schwarz Stock and Options are free and clear of all Liens and,
subject to the applicable securities laws and competition laws (and subject to a
Stockholders Agreement dated as of July 23, 1999 which will be terminated by the
parties thereto at or before the Closing), free of any restriction on his right
to transfer or exercise any voting or other right with respect thereto. At the
Closing, good
-28-
<PAGE>
and valid title to the Schwartz Stock, free and clear of all Liens,
encumbrances, equities or claims shall be transferred to the Purchaser, and all
of the Schwartz Options shall have previously been exercised (resulting in
additional Schwartz Stock being transferred to the Purchaser) or any non-
exercised Schwartz Options shall lapse effective as of the Closing, and shall
cease to be of any force or effect whatsoever. Mark Schwartz acknowledges that
the Purchaser is not assuming any of the Schwartz Options.
8.4 Insurance Proceeds. In determining the amount of any liability for
which any party is entitled to recovery from another party under this Article
VIII, the gross amount thereof will be reduced by any insurance proceeds
realized by such first party from third party insurers.
8.5 Escrow. As security for the indemnification obligations of the
Selling Stockholders to the Purchaser pursuant to this Agreement, Barry Shore
agrees that, at the Closing, 57,000 shares of the Purchaser Stock to be issued
to him at the Closing in exchange for a portion of his Stock of the Company (the
"Shore Escrow Shares"), shall be deposited into escrow pursuant to an escrow
agreement (the "Escrow Agreement") to be in form and substance reasonably
satisfactory to both the Purchaser and Mr. Shore and the institution selected by
the Purchaser, with Mr. Shore's reasonable concurrence, to act as escrow agent,
to be held and distributed as provided in such Escrow Agreement. Subject to the
limitations set forth in the last sentence of Section 8.2, the Purchaser agrees
that no claim or claims shall be brought against any Selling Stockholder based
on any of the representations and warranties herein or a breach of any other
provision hereof, unless and until it shall have exhausted its remedies under
the Escrow Agreement by applying the Shore Escrow Shares to satisfy Purchaser's
damages related to such claim, and Mr. Shore agrees that the Purchaser shall
have the right to recover against the Shore Escrow Shares in respect of any
claim or claims against any or all Selling Stockholders whether or not Mr. Shore
is one of such Selling Stockholders. The preceding sentence shall cease to be
applicable at such time as the ability of the Purchaser to make claim against
the Shore Escrow Shares pursuant to the Escrow Agreement has been terminated.
-29-
<PAGE>
8.6 Representations to Shore. In consideration of the escrow of the
Shore Escrow Shares by Barry Shore, each Selling Stockholder other than Mark
Schwartz hereby makes to Barry Shore the representations and warranties set
forth in Sections 2.1, 2.2, 2.5(b) (related to each individual Selling
Stockholder's ownership of his or her individual shares of Stock and not to the
full capitalization of the Company) and 2.19 with respect to such Selling
Stockholder and not any other Selling Stockholder. Mark Schwartz hereby makes to
Barry Shore the representations and warranties set forth in Section 2.19 as
supplemented by the second paragraph of Section 8.3 with respect to Mark
Schwartz and not any other Selling Stockholder. The representations and
warranties made hereby by the Selling Stockholders to Barry Shore shall survive
the Closing to the date which is thirty (30) days after the termination of the
escrow under the terms of the Escrow Agreement; provided that any representation
and warranty for which a bona fide notice of breach is given prior to expiration
of the applicable time limit shall survive until the claim of breach is finally
resolved. It is further understood that the limitation of liability set forth in
Section 8.3 shall not apply to any representation or warranty made by a Selling
Stockholder to Barry Shore.
ARTICLE IX
Certain Definitions
9.1 Certain Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, a specified Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person,
-30-
<PAGE>
whether through the ownership of voting securities or by contract or otherwise.
"Agreement" means this Agreement by and between the Selling
Stockholders and the Purchaser, as amended or supplemented together with all
Exhibits and Schedules attached or incorporated by reference.
"Ancillary Agreements" shall mean the Non-Competition Agreement, the
Employment Agreement, the Registration Rights Agreement and the Stock-Out
Agreement.
"Balance Sheets" has the meaning set forth in Section 2.6.
"Benefit Plans" has the meaning set forth in Section 2.13(a).
"Business" shall mean the web-based faxing and other services of the
Company as the date of this Agreement.
"Business Days" shall mean any day other than a Saturday, a Sunday or a
day on which banks in Los Angeles are authorized or obligated by law or
executive order to close.
"Closing" has the meaning set forth in Section 1.3.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" shall mean the Confidentiality Agreement,
dated November 24, 1999, between the Company and the Purchaser.
"Eligible Guarantor Institution" means a firm or other entity
identified in Rule 17A(d)-15 under the Securities Exchange Act of 1934, as
amended, as an "eligible guarantor institution", including a bank, broker,
dealer, credit union, or savings association that is a participant in a
securities transfer association recognized program.
"Employees" has the meaning set forth in
-31-
<PAGE>
Section 2.13(a).
"Employment Agreement" shall mean the Employment Agreement with Steven
J. Hamerslag substantially in the form attached hereto as Exhibit B.
"Environmental Law" shall mean any applicable law, regulation, code,
license, permit, order, judgment, decree or injunction promulgated by any
Governmental Entity (i) for the protection of the environment, (including air,
water, soil and natural resources) or (ii) regulating the use, storage,
handling, release or disposal of Hazardous Substances, in each case as presently
in effect.
"ERISA" has the meaning set forth in Section 2.13(a).
"ERISA Affiliate" has the meaning set forth in Section 2.13(c).
"Financial Statements" has the meaning set forth in Section 2.6.
"GAAP" shall mean generally accepted accounting principles in the
United States as in effect from time to time.
"Governmental Entity" shall mean any court, administrative agency or
commission or other national, federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" shall mean any hazardous or toxic substance,
pollutant, contaminant, material or waste regulated by any federal, state or
local governmental authority.
"Knowledge" shall mean, with respect to any Person, the actual
Knowledge of such Person or, in the case of non-individuals, of any officer with
a rank of vice president or higher of such Person, the law department of such
Person or any other employee of such Person with responsibility for the
particular subject area or subject matter.
-32-
<PAGE>
"Lien" shall mean any mortgage, pledge, security interest, lien,
charge, encumbrance, equity, claim, option, tenancy, right or restriction on
transfer of any nature whatsoever.
"Losses" means any and all fines, liabilities, judgments, losses,
costs, expenses, or actual damages, including in each case, interest, penalties,
reasonable attorneys' fees and reasonable costs of investigations and
litigation.
"Material Adverse Effect" shall mean any material adverse effect on the
assets or properties used in, or the condition (financial or otherwise) or
results of operations with respect to, the Business.
"Material Contracts" has the meaning set forth in Section 2.10.
"Non-Competition Agreement" shall mean the Non-competition Agreement
substantially in the form attached hereto as Exhibit A.
"Pension Plan" has the meaning set forth in Section 2.13(b).
"Permit" shall mean any license, permit, franchise, certificate of
authority, or order, or any waiver of the foregoing, required to be issued by
any Governmental Entity.
"Permitted Liens" shall mean the following types of Liens: (a)
statutory Liens of landlords, statutory Liens of banks and rights of set-off,
statutory Liens of carriers, warehousemen, mechanics, repairmen, workmen and
materialmen, and other Liens imposed by law, in each case incurred in the
ordinary course of business (i) for amounts not yet overdue or (ii) for amounts
that are overdue and that (in the case of such amounts overdue for a period in
excess of 30 days) are being contested in good faith by appropriate proceedings,
so long as such reserves or other appropriate provisions, if any, as shall be
required by GAAP shall have been made for any such contested amounts; (b)
easements, rights-of-way, restrictions, encroachments, and other minor
-33-
<PAGE>
defects or irregularities in title, in each case which do not and will not
interfere in any material respect with the ordinary conduct of the Business; and
(c) any zoning or similar law or right reserved to or vested in any Governmental
Entity to control or regulate the use of any real property.
"Person" shall mean an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization, a Governmental Entity or any other entity.
"Plans" has the meaning set forth in Section 2.13(b).
"Primary Selling Stockholders" has the meaning set forth in Section
8.3.
"Purchase Price" shall mean, in the aggregate, 1,532,789 shares of the
Purchaser Stock, less the number of shares to be issued to Mark Schwartz under
the Stock-Out Agreement in the form attached hereto as Exhibit D, and less
17,211 shares of Purchaser Stock in consideration for the assumption by the
Purchaser of the cash severance obligation of Barry Shore set forth in the
Employment Letter dated July 23, 1999, and shall be allocated as provided in
Schedule 1.2. The Purchaser Stock shall be valued at the closing price of such
stock on the Nasdaq National Market on the trading day immediately prior to the
Closing.
"Purchaser Stock" has the meaning set forth in Section 1.2.
"Real Property" has the meaning set forth in Section 2.9(b).
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, which provides for the registration of the Purchaser Stock under the
Securities Act of 1933, substantially in the form attached hereto as Exhibit C.
"Rights" has the meaning set forth in Section 2.5.
-34-
<PAGE>
"Schedule" shall mean a disclosure schedule delivered by the Selling
Stockholders to the Purchaser on or prior to the date of this Agreement.
"Selling Stockholders' Representative" has the meaning set forth in
Section 10.12.
"Stock" has the meaning set forth in Recitals of this Agreement.
"Stock-Our Agreement" means such agreement referred to in Section 1.2
among the Company, the Purchaser and Mark R. Schwartz, substantially in the form
attached hereto as Exhibit D.
"Subsidiary" or "subsidiary" means, with respect to any specified
Person, and Affiliate of that specified Person that is controlled by such Person
directly, or indirectly through one or more intermediaries.
"Taxes" has the meaning set forth in Section 5.1.
"Tax Return" has the meaning set forth in Section 5.1.
ARTICLE X
Miscellaneous
10.1 Amendments. This Agreement may not be amended or modified except
by the express written consent of the parties hereto.
10.2 Assignment. No party may assign this Agreement or its rights or
obligations hereunder, whether by operation of law or otherwise, to any third
party without the prior written consent of the other parties; provided however,
that any party participating in a transaction that consists of a merger,
consolidation, sale of all or substantially all assets, or sale of all or
substantially all stock of such party, may assign this Agreement to the
acquiring, surviving or purchasing entity, as part of such transaction, without
any consent of the other parties to
-35-
<PAGE>
this Agreement being required.
10.3 Notices. All notices or communications hereunder or under any
Ancillary Agreement shall be in writing and shall be sent by personal service,
by facsimile transmission or by overnight mail by courier of nationally
recognized standing addressed as follows (or such other address as such party
may designate in writing):
To the Purchaser:
JFAX.COM, Inc.
10960 Wilshire Boulevard, Suite 500
Los Angeles, California 90024
Attention: Richard S. Ressler, and
Nicholas V. Morosoff
Facsimile: (310) 966-1651
With a copy to:
Sullivan & Cromwell
1888 Century Park East
Los Angeles, California 90067
Attention: Frank H. Golay, Jr., Esq.
Facsimile: (310) 712-8800
To the Selling Stockholders:
To each of them at their respective addresses set forth on the
signature pages hereof.
-36-
<PAGE>
To the Company:
SureTalk.com, Inc.
2752 Loker Avenue West
Carlsbad, California 92008.
Attention: Steven J. Hamerslag
Facsimile: (760)931-6618
With a copy to:
Brobeck Phleger & Harrison, LLP
38 Technology Drive,
Irvine California 92618
Attention: Greg Williams, Esq.
Facsimile: (949)790-6301
Any notice hereunder shall be effective upon receipt by the intended recipient.
10.4 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or
the application thereof, in any other jurisdiction.
10.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
10.6 Interpretation. When a reference is made in this Agreement to an
Article, Section, Exhibit or Schedule, such reference is to an Article or
Section of, or
-37-
<PAGE>
an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" and "including" are used in
this Agreement, they are deemed to be followed by the words "without
limitation." For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (a) the terms defined include
the plural as well as the singular, (b) references to the masculine, feminine or
neuter include each of them without distinction, (c) all accounting terms not
otherwise defined herein have the meanings assigned under GAAP, and (d) the
words "herein," "hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular Article, Section or other
subdivision.
10.7 Entire Agreement. This Agreement, together with any agreement
executed and delivered by the parties concurrently herewith and the Schedules
and Exhibits attached hereto and together with the Confidentiality Agreement,
constitutes the entire agreement between the Purchaser and the Selling
Stockholders with respect to the subject matter hereof. There are no
representations, warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth herein. This
Agreement supersedes all prior agreements between the parties with respect to
the Stock purchased hereunder and the subject matter hereof, other than the
Confidentiality Agreement. Each party acknowledges that it is not relying on any
other party, or any representative of any other party, for written or oral
advice as to legal, tax, accounting or other considerations applicable to the
transactions contemplated herein, and each party has consulted with its own
legal, tax, accounting and other advisors to the extent it has deemed necessary,
and has made its own investment decisions relating to such transactions.
10.8 Publicity. The parties jointly will prepare a news release or
other announcement regarding this Agreement and, subject to their respective
legal obligations or stock exchange requirements, thereafter will consult with
each other regarding the text of any press release or other
-38-
<PAGE>
public statement relating to the transaction contemplated by this Agreement
prior to any release or filing thereof.
10.9 Expenses. Subject to Article V and Article VIII, the Selling
Stockholders and the Purchaser each shall pay their own expenses incident to the
negotiation, preparation and performance of this Agreement and the transactions
contemplated hereby, including but not limited to the fees, expenses and
disbursements of their respective investment bankers, accountants and counsel.
10.10 No Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, is intended to confer upon any person, other than the
parties hereto and their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
10.11 Jurisdiction; Waivers. Each of the parties hereto hereby
irrevocably submits in any legal action or proceeding relating to or arising out
of this Agreement, any of the Ancillary Agreements or any other document
relating hereto or delivered in connection with the transactions contemplated
hereby, or for recognition and enforcement of any judgment in respect thereof,
to the exclusive jurisdiction of the State Courts of California and the United
States District Courts located in Los Angeles, California, and appellate courts
thereof. Each of the parties hereto further (a) consents that any such action or
proceeding may be brought in any such court and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in such
court or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same; (b) agrees that service of process in any
such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such party at its address set forth in Section 10.3 or at
such other address of which such party shall have given notice pursuant thereto;
and (c) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law.
10.12 Authority of Selling Stockholders' Representative. The "Selling
Stockholders' Representative"
-39-
<PAGE>
is Steven J. Hamerslag. Each Selling Stockholder agrees that the Selling
Stockholders' Representative shall have authority to act on behalf of each of
the other Selling Stockholders with respect to all matters arising under this
Agreement at or prior to the Closing. The Selling Stockholders' Representative
shall have authority to execute and deliver any closing documents on behalf of
the Selling Stockholders called for by Article VI hereunder and the Registration
Rights Agreement (or, in any event, the Selling Stockholders shall be bound by
the Registration Rights Agreement when it is executed and delivered by and
between the Purchaser and the Company, on behalf of the Selling Stockholders).
Such authority of the Selling Stockholders' Representative shall also extend to
routine and administrative matters arising after the Closing.
10.13 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
10.14 Acceptance of Agreement. The Purchaser may elect that the Closing
shall be deemed to occur immediately upon Purchaser's receipt of a signed
Agreement and stock certificates from Selling Stockholders holding at least 90%
of the Stock, assuming the satisfaction or waiver of the conditions set forth in
Article VI, and Purchaser may treat the Agreement as fully accepted with respect
to itself, the Company and the Selling Stockholders who have so signed the
Agreement. Purchaser may accept additional Selling Stockholders as parties to
the Agreement after such time at its discretion. The Purchase Price shall be
reduced to the extent of any purported Selling Stockholders herein who do not
become parties to the Agreement as aforesaid.
-40-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the date first above written, by the duly authorized representatives of the
corporate parties hereto and by the Selling Stockholders.
JFAX.COM, Inc.
By: /s/ Richard S. Ressler
----------------------
Name: Richard S. Ressler
Title: Chief Executive Officer
SureTalk.com, Inc.
By: /s/ Steven J. Hamerslag
-----------------------
Name: Steven J. Hamerslag
Title: President/CEO
[A separate signature page follows
for each of the Selling
Stockholders]
<PAGE>
/s/ Sanjiv Ahuja
---------------------------
Sanjiv Ahuja
11 Tillman Court
Bridgewater, NJ 08807
<PAGE>
/s/ Michael Albert
---------------------------
Michael Albert
2723 Greencock Ct.
Carlsbad, CA 92008
<PAGE>
/s/ Precious Albright
---------------------------
Precious Albright
8763 Harlington Dr.
San Diego, CA 92126
<PAGE>
/s/ Steven Archer
---------------------------
Steven Archer
2049 Century Park East
Suite 3700
Los Angeles, CA 90067
<PAGE>
/s/ Navid Ashroff
---------------------------
Navid Ashroff
18641 Saticoy St., #32
Reseda, CA 91335
<PAGE>
/s/ Troy Bass
---------------------------
Troy Bass
449 Yorkshire Blvd.
Dearborn Heights, MI 48127
<PAGE>
/s/ Eileen M. Beale
---------------------------
Eileen M. Beale
15559 Liverpool Street
Livonia, MI 48154
<PAGE>
Brobeck, Phleger & Harrison LLP
By: /s/ Greg T. Williams, Partner
-----------------------------
Name: Greg T. Williams
Title: Partner
Brobeck, Phleger & Harrison LLP
Attention: Greg Williams
38 Technology Drive
Suite 100
Irvine, CA 92618
<PAGE>
/s/ Christopher Brunn
---------------------------
Christopher Brunn
18424 Halsted St., #17
Northridge, CA 91325
<PAGE>
/s/ Tony Busko
---------------------------
Tony Busko
18540 Plummer St., #118
Northridge, CA 91324
<PAGE>
/s/ V. Gordon Clemons
---------------------------
V. Gordon Clemons
19 St. Vincent
Laguna Niguel, CA 92677
<PAGE>
/s/ Arthur J. Cormier
---------------------------
Arthur J. Cormier
P.O. Box 1714
Rancho Santa Fe, CA 92067
<PAGE>
/s/ John Davis
---------------------------
John Davis
2329 Marisa Ct.
Olivenhain, CA 92024
<PAGE>
/s/ Nila Dawson
---------------------------
Nila Dawson
2953 Lexington Circle
Carlsbad, CA 92008
<PAGE>
/s/ Kevin D. DeBre
-------------------------------
Kevin D. DeBre
c/o Brobeck, Phleger & Harrison
38 Technology Drive, Suite 100
Irvine, CA 92618
<PAGE>
/s/ Henry Edelman
---------------------------
Henry Edelman
42 Esplanade, Suite 19
Redondo Beach, CA 90277
<PAGE>
/s/ Patrick Farley
---------------------------
Patrick Farley
3541 Cedar Bridge Way
Carlsbad, CA 92008
<PAGE>
/s/ Joseph B. Fenley
---------------------------
Joseph B. Fenley
Box 988
Rancho Santa Fe, CA 92067
<PAGE>
/s/ Richard A. Fink
---------------------------
Richard A. Fink
c/o Brobeck, Phleger & Harrison
38 Technology Drive, Suite 100
Irvine, CA 92618
<PAGE>
/s/ Lawrence Fish
---------------------------
Lawrence Fish
1840 Lyndon Road
San Diego, CA 92103
<PAGE>
By: /s/ Georges J. Daou, Trustee
----------------------------
Georges J. Daou Trust
(Georges J. Daou, Trustee)
6877 Spyglass Lane
Rancho Santa Fe, CA 92067-5801
<PAGE>
/s/ David Gollub
---------------------------
David Gollub
15250 Ventura Boulevard
Suite 1015
Sherman Oaks, CA 91403
<PAGE>
By: /s/ Marvin Nelson, Trustee
---------------------------
Greenwood Family Trust est.
5/16/96 by Marvin Greenwood and
Loriann Greenwood
(Marvin Nelson and Loriann
Greenwood, Trustees)
18 North Calle Cita
Laguna Beach, CA 92651
<PAGE>
/s/ Steven J. Hamerslag
---------------------------
Steven J. Hamerslag
17501 Via de Fortuna
P.O. Box 730
Rancho Santa Fe, CA 92067
<PAGE>
/s/ Anita Isanto
---------------------------
Anita Isanto
3453 Castle Glen Dr., #G2
San Diego, CA 92123
<PAGE>
/s/ Tim Johnson
---------------------------
Tim Johnson
2554 Ocean
Carlsbad, CA 92008
<PAGE>
/s/ John Jones
---------------------------
John Jones
c/o Brobeck, Phleger & Harrison
38 Technology Drive, Suite 100
Irvine, CA 92618
<PAGE>
/s/ Philip Kamornick
---------------------------
Philip Kamornick
35 Rehov Hamen Gimmel
2nd Entrance, Apt. 3
Jerusalem, ISRAEL
<PAGE>
By: /s/ James M. Seaman, Member
---------------------------
KSSM Investments, L.L.C.
Attn: James M. Seaman
City Center Square
1100 Main Street, Suite 2001
Kansas City, Missouri 64105
<PAGE>
/s/ Moshe Lazar
---------------------------
Moshe Lazar
159 South Formosa Street
Los Angeles, CA 90036
<PAGE>
/s/ Ian A. Lerner
---------------------------
Ian A. Lerner
8676 Dunaway Drive
La Jolla, CA 92037
<PAGE>
/s/ Aaron Lieu
---------------------------
Aaron Lieu
5251 Palmyra Ave.
San Diego, CA 92117
<PAGE>
By: /s/ Alan L. Lipman, Trustee
---------------------------
Lipman Family Trust
(Alan L. Lipman, Trustee)
1308 Ozone Avenue
Santa Monica, CA 90405
<PAGE>
/s/ Robert Lipman
---------------------------
Robert Lipman
6A Sorotzkin
Jerusalem, ISRAEL
<PAGE>
By: /s/ David Nagelberg
---------------------------
Manhattan Group Funding
(David Nagelberg)
P.O. Box 2142
Rancho Santa Fe, CA 92067
<PAGE>
/s/ Lester P. Morales
---------------------------
Lester P. Morales
1867 Deer Path Trail
Oxford, MI 48371
<PAGE>
/s/ Christopher Outwater
---------------------------
Christopher Outwater
329 San Ysidro Road
Santa Barbara, CA 93108
<PAGE>
By: /s/ Jeffrey Dankworth
---------------------------
QB Sports Money Purchase Plan
(Jeffrey Dankworth)
300 E. Second Street, Suite 1510
Reno, NV 89501
<PAGE>
/s/ Daniel Rasmussen
---------------------------
Daniel Rasmussen
105 Forest Hill Drive
Los Gatos, CA 95032
<PAGE>
/s/ Roswell R. Roberts, III
---------------------------
Roswell R. Roberts, III
11272 Woodrush Court
San Diego, CA 92128
<PAGE>
/s/ Jack B. Root
---------------------------
Jack B. Root
2304 Cedardale Place
Las Vegas, NV 89134
<PAGE>
By: /s/ Ellsworth Roston, General Partner
-------------------------------------
Roston Enterprises
(Ellsworth Roston, General Partner)
10877 Wilshire Boulevard
10th Floor
Los Angeles, CA 90024
<PAGE>
/s/ Michael Sawyer
---------------------------
Michael Sawyer
321 Josephine Avenue
Royal Oak, MI 48067
<PAGE>
/s/ Mark R Schwartz
---------------------------
Mark R Schwartz
23665 Park Sevilla
Calabasas, CA 91302
<PAGE>
/s/ Barry F. Shore
---------------------------
Barry F. Shore
811 Appelby Street #1000
Marina del Rey, CA 90291
<PAGE>
/s/ Philip Sussholz
---------------------------
Philip Sussholz
52 Bezalel
Noam Building, Suite 501
Ramat Gan, ISRAEL 52521
<PAGE>
/s/ Tom Taulli
---------------------------
Tom Taulli
12 White Cap Lane
Newport Coast, CA 92637
<PAGE>
/s/ Lowell Teschmacher
---------------------------
Lowell Teschmacher
1410 Cressa Court
Carlsbad, CA 92009
<PAGE>
By: /s/ Lane Harrison
---------------------------
Value Added Ventures LLC
(Lane Harrison)
704 Lake Street, Suite 56
Huntington Beach, CA 92648
<PAGE>
/s/ Shannon VanHaaren
---------------------------
Shannon VanHaaren
310 North Hawthorne
Westland, MI 48185
<PAGE>
By: /s/ Larry W. Wangberg, Trustee
------------------------------
Wangberg Living Trust
(Larry W. and Michelle D. Wangberg,
Trustees)
33 Irving Avenue
Atherton, CA 94027-2007
<PAGE>
/s/ Warren H. Weiner
---------------------------
Warren H. Weiner
3099 Caminito Sagunto
Del Mar, CA 92014
<PAGE>
/s/ Greg T. Williams
---------------------------
Greg T. Williams
c/o Brobeck, Phleger & Harrison
38 Technology Drive, Suite 100
Irvine, CA 92618
<PAGE>
/s/ Denise Woods
---------------------------
Denise Woods
1216 Woodbourne
Westland, MI 48186
<PAGE>
/s/ Robert Zink
---------------------------
Robert Zink
28402 Warren Rd., Apt. B-10
Westland, MI 48185
<PAGE>
/s/ Wade H. Snell, III
---------------------------
Wade H. Snell, III
50 Paso del Arroyo
Portola Valley, CA 94028
<PAGE>
/s/ Mike Terpin
---------------------------
The Terpin Group, Mike Terpin
4676 Admiralty Way, #520
Merina del Rey, CA 90292
<PAGE>
/s/ Lewis Plotkin
---------------------------
PPG Advertising, Louis Plotkin
1522 Cloverfield Blvd., #B
Santa Monida, CA 90404
<PAGE>
/s/ Richard Rabuck
---------------------------
The Rabuck Agency, Richard Rabuck
3221 Hutchinson Ave., #H
Los Angeles, CA 90034
