<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-24053
Noble Onie, Inc.
(Name of Small Business Issuer in its charter)
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<S> <C>
Nevada 88-0350154
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18952 MacArthur Avenue, Suite 315
Irvine, California Florida 92612
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(Address of principal executive offices) (Zip Code)
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Issuer's telephone number, including area code (949) 261-2101
--------------
Securities to be registered under Section 12(b) of the Act:
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<CAPTION>
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None N/A
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Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of class)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X No
----- -----
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K contained in this form, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
---
The market capitalization value of the voting stock held by non-affiliates of
the registrant as of April 7, 2000 was approximately $33,090,130.
The number of shares of the Common Stock outstanding as of April 7, 2000 was
7,318,090.
Documents incorporated by reference: None.
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Part I
Item 1. Description of Business.
Unless otherwise indicated, all references to the Company include its
subsidiaries: The National Capital Companies, Inc., National Capital, LLC,
National Capital Merchant Group, Ltd., Travis Morgan Securities, Inc., National
Capital Asset Group, Inc, National Brokers & Distributors, Inc., Cornerstone
Capital Management, Inc., AISCO Holdings, Ltd., American Investment Services,
Inc., AISCO Trading, Inc., AISCO Agencies, Inc., AISCO Futures, Inc., Dunhill
Capital Management, Inc., and Facilities Financial, Inc.
Business Development
- --------------------
Noble Onie, Inc., a Nevada corporation ("the Company"), is a financial
services company primarily engaged, through its subsidiaries, in securities
trading, merchant banking, securities brokerage, investment banking, venture
capital, broker/dealer services and professional money management. The Company
was formed under the laws of the State of Nevada in 1995 and from 1995 until
February 2000 was engaged in the business of land acquisition and the pursuit of
mergers and acquisition opportunities with existing companies. In February
2000, the Company discontinued all operations relating to land acquisition and,
at the same time, acquired all of the outstanding capital shares of The National
Capital Companies, Inc., an Oklahoma corporation ("NCC") engaged in the business
of providing financial services to individuals, institutions and small
businesses.
The National Capital Reorganization. On February 23, 2000, pursuant to a
-----------------------------------
Securities Purchase Agreement and Plan of Reorganization dated February 4, 2000
by and among the Company and the shareholders of NCC ("NCC Shareholders"), the
Company issued 4,000,000 shares of its common stock in exchange for all of the
outstanding capital shares of NCC. The Company's acquisition of the outstanding
capital stock of NCC is referred to herein as the "NCC Reorganization."
Since the NCC shareholders owned approximately 61.5% of the outstanding
shares of the common stock of the Company after giving effect to the NCC
Reorganization, NCC was deemed the accounting acquirer and the Company's
acquisition of NCC has been accounted for as a reverse merger under the purchase
method. Accordingly, from an accounting standpoint, the equity of NCC is
carried forward as the equity of the combined entity. There has been no step up
in the Company's accounting bases and, as a result, NCC is assumed to have
acquired the Company at the Company's book value of $0, after giving effect to
the consummation of the NCC Reorganization. This adjustment reflects the
adjustment of the Company's equity and accumulated deficit.
The AISCO Holding, Ltd. Acquisition. Effective March 9, 2000, the Company
------------------------------------
acquired substantially all of the issued and outstanding voting securities of
AISCO Holdings, Ltd., an Illinois corporation ("AISCO"), pursuant to the terms
of a Securities Purchase and Agreement and Plan of Reorganization dated March 9,
2000 by and among the Company and the holders of the Class A common stock of
AISCO ("AISCO Agreement"). Pursuant to the terms of the AISCO Agreement, the
Company acquired approximately 82% of the issued and outstanding Class A common
stock of AISCO in exchange for the Company's issuance of a total of 818,089.50
shares of its common stock to holders of the Class A common stock of AISCO. The
Company's acquisition of the Class A common stock of AISCO is referred to herein
as the "AISCO Acquisition."
The Company's executive offices are located at 18952 MacArthur Boulevard,
Suite 315, Irvine, California 92612; telephone (949) 261-2906.
Business of the Issuer
- ----------------------
The Company, through its wholly-owned subsidiary, NCC, and majority-owned
subsidiary AISCO Holdings, Ltd., is a financial services holding company whose
principal subsidiaries are National Capital, LLC, National Capital Merchant
Group, Ltd., Travis Morgan Securities, Inc., National Capital Asset Group, Inc,
National Brokers & Distributors, Inc., Cornerstone Capital Management, Inc.,
American Investment Services, Inc., AISCO Trading, Inc., AISCO Agencies, Inc.,
AISCO Futures, Inc., Dunhill Capital Management, Inc., and Facilities Financial,
Inc. NCC was incorporated in 1998 to serve as a holding company for the
ownership and
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management of its member firms and future acquisition candidates. AISCO was
incorporated in 1995 and also serves as a holding company for the ownership and
management of its member firms and future acquisition candidates.
Financial Services
The Company, through its subsidiaries, provides the following financial
services:
Brokerage Services
------------------
Through its subsidiaries, Travis Morgan Securities, Inc. ("Travis Morgan")
and American Investment Services, Inc. ("American"), the Company provides
brokerage services to individuals and institutions. Travis Morgan was acquired
by NCC in 1998 and is based in Irvine, California. Travis Morgan is a
registered broker-dealer with the Securities and Exchange Commission ("SEC") in
approximately 35 states and is a member of the National Association of
Securities Dealers ("NASD"). American is a registered broker-dealer with the
Securities and Exchange Commission ("SEC") in all 50 states and is a member of
the National Association of Securities Dealers ("NASD"). American has 195
registered representatives and focuses primarily on providing financial planning
and related services to individual investors
As a securities broker, the Company acts as agent for its customers in the
purchase and sale of common and preferred stocks, options and debt securities
traded on securities exchanges or in the over-the-counter ("OTC") market. Major
portions of the Company's revenues are derived from commissions from customers
on these transactions. In the OTC market, transactions with customers in
securities not listed on an exchange may be effected as a principal, rather than
an agent. Customer transactions in securities are effected either on a cash or
margin basis. The Company also provides investment and financial planning
consultation to its individual clients, offering a diverse range of investments
and services including fixed income securities, mutual funds, retirement
planning and estate planning vehicles. The Company offers full service
investment counseling to those clients in need of planning or advice and
discounted transaction services to those clients who are active traders.
The Company also executes securities transactions for institutional
investors such as banks, mutual funds, insurance companies, hedge funds, money
managers and pension and profit sharing plans. The Company focuses its
institutional practice on sales and trading services for equity investors in the
United States and Europe. The Company also enters into dealer agreements with
mutual fund management companies and publicly registered limited partnerships.
Commissions on the sale of these securities are derived from the standard
dealers discounts, which range from approximately Two percent (2%) to Ten
percent (10%)of the purchase price of the securities, depending on the terms of
the dealer agreement and the amount of the purchase.
Corporate Finance and Investment Banking.
----------------------------------------
The Company raises capital through public and private offerings of
securities for corporations that are engaged in a variety of businesses. The
Company participates in underwritings of corporate securities as managing
underwriter and as a syndicate member. Management of an underwriting account is
generally more profitable than participation as a member of an underwriting
syndicate. Revenues generated by syndicate participations have not been
material.
The Company generally underwrites public offerings of securities in the
range of $500,000 to $2,000,000 on a "best efforts" basis. The Company and
other underwriters may also sell a portion of their commitment through a
"selling group" of other stock brokerage firms that participate in selling the
offering. As an underwriter, the Company is also subject to potential liability
under federal and state securities laws and other laws if the registration
statement or prospectus contains a material misstatement or omission. The
Company's potential liability as an underwriter is uninsured.
When the Company acts as the managing underwriter or co-managing
underwriter for a securities offering, the Company typically receives a
percentage of the aggregate amount of money raised in an offering to cover non
accountable expenses as well as the compensation of the underwriters, selling
group members and registered representatives. The size of this percentage
depends on the size of the transaction. The Company also
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typically receives warrants to purchase securities in an amount equal to a fixed
percentage of the securities sold in the offering, although a portion of these
warrants are typically transferred as compensation to persons associated with
the Company and, in certain cases, to other major underwriters in the public
offering.
In addition to its corporate financing activities, the Company also
provides its company clients with advisory services designed to assist them
with their evaluation of potential merger and acquisition candidates and
opportunities. The Company helps its clients identify and contact potential
acquirers, merger, joint venture or investment partners and then prepares a
descriptive memorandum of the client's business for use in discussions with
prospective companies. The Company also assists clients with the due diligence
process, the negotiating and structuring of the transaction and the development
of corporate strategies for growth and investment.
Trading and Market Making
-------------------------
In addition to executing trades as an agent, the Company regularly acts as
a principal in executing trades in equity securities. The Company's market
making activities are conducted primarily with other dealers in the "wholesale
market." Transactions with dealers are effected as principal at the current
inter-dealer price. The Company's transactions as a principal expose it to risk
because securities positions are subject to fluctuations in market value and
liquidity. Profits or losses on trading and investment positions depend upon the
skills of the employees in the Company's trading divisions and employees
responsible for taking investment positions.
The level of positions carried in the Company's trading and investment
accounts fluctuates significantly. The size of the securities positions at any
date may not be representative of the Company's exposure on any other date,
because the securities positions vary substantially depending upon economic and
market conditions, the allocation of capital among types of inventories, and
trading volume The aggregate value of inventories that the Company may carry is
limited by certain requirements under the SEC's net capital rules.
All of the Company's trading and market making activity is conducted
through its subsidiaries, National Capital, LLC ("NATC") and AISCO Trading, Inc.
("AISC") NATC was founded in 1992 and is based in Oklahoma City, Oklahoma.
NATC is a securities trading and wholesale market-making firm, a registered
broker-dealer with the SEC, and a member of the NASD. NATC makes a market in
approximately 200 OTC traded equity securities and currently employs six
traders. AISCO Trading, Inc. was founded in 1997 and is based in East Peoria,
IL. AISC is a securities trading and wholesale market-making firm, a registered
broker-dealer with the SEC, and a member of the NASD. AISC makes a market in
approximately 30 OTC traded equity securities and currently employs one trader.
Merchant Banking
----------------
The Company offers merchant banking services through its wholly owned
subsidiary, National Capital Merchant Group, Ltd. ("NCMG"). NCMG is an
investment fund that was founded in 1998 and is based in Nassau, Bahamas. NCMG
acts as a traditional merchant bank, providing both debt and equity financing to
micro-cap and small-cap companies and acting as a strategic partner to assist in
the development and growth of select companies.
NCMG makes proprietary investments for its own account. NCMG identifies
and evaluates investment opportunities, then structures direct equity
investments or mezzanine financing primarily with public companies. NCMG
invests primarily in private placements, open market transactions, negotiated
block transactions and through stock option agreements.
Additional Financial Services
-----------------------------
In addition to Travis Morgan, American, NATC, AISC and NCMG, the Company
also offers financial services through the following subsidiaries:
National Capital Asset Group, Inc. ("NCAG"), was formed by the Company in
1999 and is based in Las Vegas, Nevada. NCAG provides extensive financing
services to developmental public companies, including institutional debt or
equity funding, traditional commercial lending, and non-traditional financing
sources.
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NCAG employs approximately 10 consultants who provide services such as small
business development, strategic planning and analysis, mergers and acquisitions
advisory, joint ventures, strategic partnerships, and other corporate advisory
services.
National Brokers & Distributors, Inc. ("NBDS") was formed by the Company in
1999 and is based in Las Vegas, NV. NBDS's business is to provide domestic and
international product distribution. NBDS focuses on marketing consumer-oriented
products to national grocery and drug chains, mass merchandisers, the food
service industry, government accounts, hospitals and convalescent homes.
Additionally, NBDS assists startup companies in establishing programs for sales
and marketing, packaging, public relations, product pricing, advertising,
management, corporate structure and key personnel placement.
Cornerstone Capital Management, Inc. ("CCM") which was acquired by the
Company in 1999, is based in Colorado Springs, Colorado and is a Registered
Investment Advisor with the SEC. CCM provides professional money management to
five open end investment companies (mutual funds), one hedge fund, and
approximately 300 accounts for wealthy individuals, institutions, foundations,
endowments, and municipalities. CCM currently manages in excess of $120 million
and expects to increase assets under management to more than $200 million within
one year through acquisitions and internal growth.
Dunhill Capital Management, Inc. ("Dunhill") is based in East Peoria,
Illinois and is a Registered Investment Advisor with the SEC. Dunhill provides
professional money management services for wealthy individuals, institutions,
foundations, endowments, and municipalities.
AISCO Agencies, Inc. ("Agencies"), is based in East Peoria, Illinois and is
an insurance agency that offers the products of more than 120 insurance
carriers, including variable annuities, fixed annuities, variable universal
life, term life, group life, individual health, long-term care, disability
income and supplemental group benefits.
AISCO Futures, Inc. ("Futures"), is based in East Peoria, Illinois and is a
commodity futures merchant licensed by the Commodities Futures Trading
Commission ("CFTC").
Facilities Financial, Inc. ("Facilities") is based in East Peoria, Illinois
and holds title to the Company's physical property and equipment located in its
East Peoria, Illinois location.
Regulation
The securities business is subject to extensive regulation under federal
and state laws. The principal purpose of regulation and discipline of broker-
dealers is the protection of customers and the securities markets. The SEC is
the federal agency charged with administration of the federal securities laws.
Much of the regulation of broker-dealers, however, has been delegated to self-
regulatory organizations, principally the NASD. These self-regulatory
organizations adopt rules (subject to approval by the SEC) which govern the
industry and conduct periodic examinations of member broker-dealers. Securities
firms are also subject to regulation and examination by state securities
commissions in the states in which they are registered. The Company is
registered with the SEC as a broker-dealer under the Securities Exchange Act of
1934 and is also a member of the NASD.
The regulations to which broker-dealers are subject cover all aspects of
the securities business, including sales methods, trading practices among
broker-dealers, capital structure of securities firms, record keeping and the
conduct of directors, officers and employees. Additional legislation, changes in
rules promulgated by the SEC and by self-regulatory bodies or changes in the
interpretation or enforcement of existing laws and rules often affect directly
the method of operation and profitability of broker-dealers. The SEC, NASD and
state regulatory authorities may conduct administrative proceedings, which can
result in censure, fine, suspension or expulsion of a broker-dealer, its
officers or employees.
The SEC and the NASD also have stringent provisions with respect to net
capital requirements applicable to the operation of securities firms. The
Company's broker/dealer subsidiaries are required to maintain minimum "net
capital" under the SEC's net capital rule of not less than Twelve and one half
percent (12.5% of
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their aggregate indebtedness Any significant reduction in the Company's net
capital, even if the Company were still in compliance with the SEC's net capital
rule for its retail and trading activities, could have a material adverse impact
on the ability of the Company's subsidiaries to continue their business.
Competition
All aspects of the Company's business are highly competitive. In its
general brokerage activities, the Company competes directly with numerous other
broker-dealers, many of which are large well-known firms with substantially
greater financial and personnel resources than the Company. Many of the
Company's competitors employ extensive advertising and actively solicit
potential clients in order to increase business. In addition, brokerage firms
compete by furnishing investment research publications to existing clients, the
quality and breadth of which are considered important in the development of new
business and the retention of existing clients. The Company also competes with a
number of smaller regional brokerage firms.
Some commercial banks and thrift institutions offer securities brokerage
services. Many commercial banks offer a variety of investment banking services.
Competition among financial services firms also exists for investment
representatives and other personnel.
The securities industry has become considerably more concentrated and more
competitive since the Company was founded, as numerous securities firms have
either ceased operations or have been acquired by or merged into other firms.
This trend has been particularly pronounced among firms similar in size and
business mix to the Company. In addition, companies not engaged primarily in
the securities business, but with substantial financial resources, have acquired
leading securities firms. These developments have increased competition from
firms with greater capital resources than those of the Company. Various
legislative and regulatory developments have tended to increase competition
within the industry or reduced profits for the industry. In particular, various
recent developments have tended to increase competition from commercial banks.
The securities industry has experienced substantial commission discounting by
broker-dealers competing for brokerage business. In addition, an increasing
number of specialized firms now offer "discount" services to individual
customers. These firms generally effect transactions for their customers on
"execution only" basis without offering other services such as portfolio
valuation, investment recommendations and research. The continuation of such
discounting and an increase in the number of new and existing firms offering
discounts could adversely affect the Company. In addition, rapid growth in the
mutual fund industry is presenting potential customers of the Company with an
increasing number of alternatives to traditional stock brokerage accounts.
In its investment banking activities, the Company competes with other
brokerage firms, venture capital firms, banks and all other sources of capital
for small, growing companies. Since the Company generally manages offerings
smaller than $2 million, it does not typically compete with the investment
banking departments of large, well-known national brokerage firms. Nevertheless,
the Company occasionally manages larger offerings. In addition, large national
and regional investment banking firms occasionally manage offerings of a size
that is competitive with the Company, typically for fees and compensation less
than that charged by the Company. When the market for public offerings is
active, many small regional firms that do not typically engage in investment
banking activities also begin to compete with the Company.
Employees
As of the date of this Report, the Company had approximately 70 employees,
of whom approximately 40 were executives and support staff and 30 were involved
in brokerage activities and compensated primarily on a commission basis. The
Company also had independent contractor arrangements with approximately 225
independent contractors, all of whom are compensated solely on a commission
basis.
Item 2. Description of Property.
The Company's executive offices are located in Irvine, California and
consist of approximately 8027 square feet which the Company rents for $13,594.00
per month. The lease is for a 4-year term and expires in July 2002. In
addition, the Company maintains corporate offices in Las Vegas, Nevada, Colorado
Springs, Colorado, Oklahoma City, Oklahoma, and East Peoria, Illinois.
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Item 3. Legal Proceedings.
None
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to the security holders of the Company
during the fourth quarter of the fiscal year ended December 31, 1999.
Part II
Item 5. Market for Common Equity and Related Shareholder Matters.
The Company's Common Stock has been listed on the OTC Bulletin Board under
the symbol "NBOI" since October 1999 however no trading in the Common Stock
occurred until February 2000 following the completion of the Company's
reorganization with NCC.
As of April 7, 2000, there were 50 record holders and approximately 100
beneficial owners of the Company's Common Stock.
The Company has not paid any cash dividends on its common stock since its
inception and does not contemplate paying dividends in the foreseeable future.
It is anticipated that earnings, if any, will be retained for the operation of
the Company's business.
Item 6. Recent Sales of Unregistered Securities
During the fiscal year ended December 31, 1999, the Company did not sell
any unregistered shares of its Common Stock.
Item 7. Management's Discussion and Analysis or Plan of Operation.
The Company was incorporated under the laws of the state of Nevada in 1995 for
the purpose of engaging in a merger or acquisition with an existing company.
Prior to its reorganization with NCC, the Company had no assets and no
operations.
The National Capital Reorganization.
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In February 2000, 1998, the Company closed a Securities Purchase Agreement and
Plan of Reorganization ("Reorganization Agreement") with the National Capital
Companies, Inc., an Oklahoma corporation engaged in the business of providing
financial services to individuals, institutions and businesses. Pursuant to the
Reorganization Agreement, the shareholders of NCC became the controlling
stockholders of the Company and NCC became a wholly owned subsidiary of the
Company (referred to herein as the "NCC Reorganization").
Since the NCC shareholders owned approximately 61.5% of the outstanding shares
of the common stock of the Company after giving effect to the NCC
Reorganization, NCC was deemed the accounting acquirer and the Company's
acquisition of NCC will be accounted for as a reverse merger under the purchase
method. Accordingly, from an accounting standpoint, the equity of NCC is
carried forward as the equity of the combined entity. There will be no step up
in the Company's accounting bases and, as a result, NCC will be assumed to have
acquired the Company at the Company's book value of $0, after giving effect to
the consummation of the NCC Reorganization. This adjustment will reflect the
adjustment of the Company's equity and accumulated deficit.
In accordance with the requirements of Form 10-KSB, the Company has included
with this Annual Report its financial statements as of and for the year ended
December 31, 1999. Because the NCC
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Reorganization occurred after the end of the Company's fiscal year, however, the
financial statements included in this Annual Report do not give effect to the
NCC Reorganization. The financial statements of the Company that give effect to
the NCC Reorganization are currently being audited by the Company's independent
public accountants and, when they are available, will be filed with an amendment
to this Annual Report. These financial statements will include both historical
financial statements of the Company and NCC as well as pro forma financial
statements that give effect to the NCC Reorganization. The Company also intends
to amend this Item 7, Management's Discussion and Analysis to complement the
Company's financial statements that give effect to the NCC Reorganization.
The AISCO Holding, Ltd. Acquisition.
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On March 9, 2000, pursuant to a Securities Purchase and Agreement and Plan of
Reorganization dated March 9, 2000 by and among the Company and the Class A
shareholders of AISCO Holdings, Ltd. ("AISCO"), the Company issued 818,089.50
shares of its common stock in exchange for all of the outstanding voting shares
of AISCO. The Company has filed a Form 8-K that discloses the Company's
acquisition of AISCO and intends to file an amendment to that 8-K that includes
the historical financial statements of AISCO as well as pro forma financial
statements that give effect to the acquisition of AISCO.
Forward Looking Statements
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This report contains forward-looking statements that are based on the
Company's beliefs as well as assumptions made by and information currently
available to the Company. When used in this report, the words "believe,"
"expect," "anticipate," "estimate" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks, uncertainties and assumptions, including, without limitation, the
Company's recent commencement of commercial operations and the risks and
uncertainties concerning the acceptance of its services and products by its
potential customers; the Company's present financial condition and the risks and
uncertainties concerning the availability of additional capital as and when
required; technological changes; increased competition; and general economic
conditions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, or projected. The Company cautions
potential investors not to place undue reliance on any such forward-looking
statements, all of which speak only as of the date made.
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Item 7. Financial Statements
INDEX TO FINANCIAL STATEMENTS
In accordance with the requirements of form 10-ksb, the company has included
with this annual report its financial statements as of and for the year ended
December 31, 1999. Because the NCC Reorganization occurred after the end of the
Company's fiscal year, however, the financial statements included in this Annual
Report do not give effect to the NCC Reorganization. The financial statements
of the Company that give effect to the NCC Reorganization are currently being
audited by the Company's independent public accountants and, when they are
available, will be filed with an amendment to this Annual Report. These
financial statements will include both historical financial statements of the
Company and NCC as well as pro forma financial statements that give effect to
the NCC Reorganization.
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Report of Independent Certified Public Accountants.......................................... 18
Balance Sheet at December 31, 1999.......................................................... 19
Statement of Operations for the year ended December 31, 1999
and cumulative from inception (December 12, 1995) to December 31, 1999.................... 20
Statement of Stockholders' Equity from inception (December 12, 1995) to December 31, 1999... 21
Statement of Cash Flows for the year ended December 31, 1999
and cumulative from inception (December 12, 1995) to December 31, 1999..................... 22
Notes to Financial Statements............................................................... 23
</TABLE>
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INDEPENDENT AUDITOR'S REPORT
Board of Directors
Noble Onie, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheets of Noble Onie, Inc. (a
development stage company), as of December 31, 1999 and the related statements
of operations, stockholders equity and cash flows for the year ended December
31, 1999. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Noble Onie, Inc. at December
31, 1999 and the results of their operations and their cash flows for the year
then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has had no operations and has no established
source of revenue. This raises substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are also
described in Note 3. The financial statements do not include any adjustments
that might result from the outcome of this certainty.
Kurt D. Saliger C.P.A.
March 20, 2000
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NOBLE ONIE, INC.
(A Development Stage Company)
BALANCE SHEET
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<CAPTION>
December 31,
1999
------------
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ASSETS
CURRENT ASSETS
Cash $ 0
--------
TOTAL CURRENT ASSETS $ 0
OTHER ASSETS $ 0
TOTAL ASSETS $ 0
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 0
--------
TOTAL CURRENT LIABILITIES $ 0
LONG-TERM DEBT $ 0
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value
authorized 25,000,000 shares issued
and outstanding at December 31, 1999
250,000 shares $ 250
Additional Paid In Capital $ 2,500
Deficit Accumulated During Development Stage ($2,500)
--------
TOTAL STOCKHOLDERS' EQUITY $ 0
--------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 0
========
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NOBLE ONIE, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
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<CAPTION>
Dec. 12, 1995
Jan. 1, 1999 to (inception) to
Dec. 31, 1999 Dec. 31, 1999
--------------- --------------
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INCOME
Revenue $ 0 $ 0
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TOTAL INCOME $ 0 $ 0
EXPENSES
General and Administrative $ 0 $ 2,500
-------- ---------
TOTAL EXPENSES $ 0 $ 2,500
-------- ---------
NET PROFIT (LOSS) $ 0 ($2,500)
======== =========
NET PROFIT (LOSS)
PER SHARE $0.0000 ($0.0100)
======== =========
AVERAGE NUMBER OF
SHARES OF COMMON
STOCK OUTSTANDING $250,000 $ 250,000
======== =========
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NOBLE ONIE, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
December 31, 1999
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<CAPTION>
Common Stock
------------
(Deficit)
Accumulating
Additional During
Number of Paid In Development
Shares Amount Capital Stage
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
January 16, 1996
issued for cash (Note 2) 250,000 $250 $2,250
Net Income, December 12, 1995
(inception) to December 31, 1996 ($2,500)
-------- ----- ------- --------
Balance, December 31, 1996 250,000 $250 $2,250 ($2,500)
Net Income, December 31, 1997 $ 0
-------- ----- ------- --------
Balance, December 31, 1997 250,000 $250 $2,250 ($2,500)
Net Income, December 31, 1998 $ 0
-------- ----- ------- --------
Balance, December 31, 1998 250,000 $250 $2,250 ($2,500)
Net Income, December 31, 1999 $ 0
----- ------- --------
Balance December 31, 1999 250,000 $250 $2,250 ($2,500)
======== ===== ======= ========
</TABLE>
<PAGE>
NOBLE ONIE, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Dec. 12, 1995
Jan. 1, 1999 to (inception) to Dec.
Dec. 31, 1999 31, 1999
--------------- -------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $0 ($2,500)
Adjustment to reconcile net (loss) to net cash
provided by operating activities:
Amortization $0 $ 0
-------- ---------
Net cash provided by operations $0 ($2,500)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES $0 $ 0
CASH FLOWS FROM FINANCING ACTIVITIES
Issue common stock $0 $ 2,500
-------- ---------
Net increase in cash $0 $ 0
Cash, Beginning of Period $0 $ 0
-------- ---------
Cash, Ending of Period $0 $ 0
======== =========
</TABLE>
<PAGE>
(NOBLE ONIE, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES
The Company was incorporated October 11, 1995 under the laws of the State of
Nevada. The Company was organized to engage in any lawful activity. The
Company currently has no operations and, in accordance with SFAS #7, is
considered a development stage company.
The Company has not determined its accounting policies and procedures, except
as follows:
1. The Company uses the accrual method of accounting.
2. Earnings per share are computed using the weighted average number of
shares of common stock outstanding.
3. The Company has not yet adopted any policy regarding payment of dividends.
No dividends have been paid since inception.
NOTE 2 - ISSUANCE OF COMMON STOCK
The Company issued 250,000 shares of common stock for cash of $2,500 on
January 16, 1996.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern.
NOTE 4 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares
of common stock.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
Set forth below are the directors and officers of the Company.
<TABLE>
<CAPTION>
Name Age Position
- --------------------------- --------- -------------------------------------------------
<S> <C> <C>
Darrell T. Uselton 33 Chairman of the Board and Chief Executive Officer
Joseph A. Cerbone 61 President and Director
William K. Cantrell 56 Executive Vice President, Secretary and Director
Teresa Landers 47 Chief Financial Officer
E. Andrew Sensenig 39 Director
Jason D. Huntley 28 Director
</TABLE>
Mr. Uselton has served as the Chairman and the Chief Executive Officer of
the Company since February 2000. Mr. Uselton founded NCC in 1992 and has served
as its Chief Executive Officer since its inception. Mr. Uselton also serves as
the Managing Director of two of the Company's subsidiaries, National Capital,
LLC and National Capital Merchant Group, Ltd.
Mr. Cerbone has served as the President and as a director of the Company
since February 2000. From 1998 to the present, Mr. Cerbone has served as the
President of the Company's wholly-owned subsidiary, NCC. From 1996 to the
present, Mr. Cerbone has served as the Chairman of the Company's wholly owned
subsidiary, Travis Morgan. From 1994 to 1996, Mr. Cerbone served as the
Marketing Director for Spectrum Securities. Mr. Cerbone also serves as a
director of Hydrogiene Corp.
Mr. Cantrell has served as the Executive Vice President, Secretary and as a
director of the Company since February 2000. From April 1998 to June 1999, Mr.
Cantrell was a principal of Sun Point Securities. From February 1997 to the
present, he has also served as a consultant for WKC Associates. From October
1997 to February 1998, he was a principal with Fletcher & Fara Day, Inc. from
February 1996 to January 1997, he served as the President of First American
Equities, Inc. From June 1989 to July 1996, he served as the President of
Pacific Securities Training Institute.
Mr. Sensenig has served as a director of the Company since February 2000.
For the past five years, Mr. Sensenig has served as the Vice Chairman and
Director of Investment Management for Travis Morgan Securities, Inc., a
subsidiary of the Company.
Mr. Huntley has been a director of the Company since February 2000. , In
1997, Mr. Huntley founded Cornerstone Capital Management, Inc., a subsidiary of
the Company and has served as its President & CEO since its inception. From
1994 to 1997, Mr. Huntley served as Director of Institutional Services for First
Affirmative/Walnut Street, a provider of investment management and advisory
services.
All directors serve for a one-year term and until their successors are duly
elected and qualified. All officers serve at the discretion of the Board of
Directors.
Ms. Landers has served as the Chief Financial Officer of the Company since
February 2000. From 1995 to the present, Ms. Landers has served as the
Controller of NCC and its predecessors. From 1995 to 1996, Ms. Landers served as
the Controller of First American Equities, Inc.
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our officers, directors and persons who beneficially own more than 10% of a
registered class of our equity securities to file reports of securities
ownership and changes in such ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than 10% beneficial
owners are also required by rules promulgated by the SEC to furnish us with
copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to us, or
written representations that no Form 5 filings were required, we believe that
during the fiscal year ended December 31, 1999, all Section 16(a) filing
requirements applicable to our officers, directors and greater than 10%
beneficial owners were complied with.
Item 10. Executive Compensation.
Cash Compensation of Executive Officers. The following table sets forth the
cash compensation paid by the Company to its Chief Executive Officer and to all
other executive officers for services rendered during the fiscal years ended
December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------------------------------- -----------------------------
Common
Shares
Other Restricted Underlying
Annual Stock Options
Compensation Awards Granted All Other
Name and Position Year Salary Bonus (1) ($) (# Shares) Compensation
- -------------------- ---- -------- ------- ------------ ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Darrel T. Uselton, 1999 $80,000 -0- $ 53,252 -0- -0- $8,400(2)
Chairman and CEO 1998 $15,000 -0- $ 3,084 -0- -0- -0-
1997 $17,000 -0- -0- -0- -0- -0-
Joseph A. Cerbone, 1999 $54,000 -0- $115,309 -0- -0- -0-
President(3) 1998 $10,500 -0- $ 10,563 -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0-
John Katter, 1999 -0- -0- -0- -0- -0- -0-
President and 1998 -0- -0- -0- -0- -0- -0-
CEO(4) 1997 -0- -0- -0- -0- -0- -0-
</TABLE>
___________________
(1) Represents trading commissions paid to Mr. Uselton and Mr. Cerbone.
(2) Represents a car allowance of $700 per month payable to Mr. Uselton.
(3) Mr. Cerbone joined NCC in September 1998.
(4) Mr. Katter served as President of the Company until its reorganization with
NCC in February 2000.
Compensation of Directors. At the present time, directors receive no
compensation for serving as directors of the Company, however the Company may in
the future begin to compensate its non-officer directors. All directors receive
reimbursement for out-of-pocket expenses in attending Board of Directors
meetings. From time to time the Company may engage certain members of the Board
of Directors to perform services on behalf of the Company and will compensate
such persons for the services which they perform.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding the
beneficial ownership of the shares of Common Stock as of April 7, 2000 by (i)
each person who is known by the Company to be the beneficial owner of more than
five percent (5%) of the issued and outstanding shares of Common Stock, (ii)
each of the Company's directors and executive officers and (iii) all directors
and executive officers as a group.
<TABLE>
<CAPTION>
Name and Address(1) Number Percent
- ------------------------------------- ------------ -----------
<S> <C> <C>
Darrell T. Uselton 2,030,466 27.7%
Joseph A. Cerbone 353,522 4.8%
Teresa Landers 46,790 (2)
William Cantrell 8,318 (2)
Andrew Sensenig 176,761 2.4%
Jason D. Huntley 93,580 1.2%
All officers and directors as a group 2,709,437 37.0%
</TABLE>
_______________
(1) Address is 18952 MacArthur Avenue, Suite 315, Irvine, California 92612.
(2) Less than one percent.
<PAGE>
Item 12. Certain Relationships and Related Transactions.
In February 2000, the Company issued 4,000,000 shares of Common Stock to
the former shareholders of NCC. For a more complete description of the terms of
the NCC Reorganization see, Item 1, Description of Business.
Item 13. Exhibits and Reports on Form 8-K.
(a) Index To Exhibits
<TABLE>
<CAPTION>
Page
-----
<S> <C>
3.1 Articles of Incorporation of the Company.(1)
3.2 Bylaws of the Company.(1)
4.1 Specimen of Common Stock Certificate.(1)
10.1 Securities Purchase Agreement and Plan of Reorganization between the
Company and the shareholders of The National Capital Companies, Inc.,
dated February 4, 2000.
10.2 Securities Purchase Agreement between the Company and the holders of
the Class A Common Stock of AISCO Holdings, Ltd., dated March 17, 2000.
21.1 List of Subsidiaries.
27.1 Financial Data Schedule
</TABLE>
_______________
(1) Previously filed as part of the Company's registration statement on Form 10-
SB (SEC File No. 0-26141) filed with the Securities and Exchange Commission
on May 20, 1999.
(b) Reports on Form 8-K.
None.
<PAGE>
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
NOBLE ONIE, INC.
Date: April 14, 2000 By: /s/ DARRELL T. USELTON
--------------------------
Darrell T. Uselton, Chairman and Chief Executive
Officer
Date: April 14, 2000 By: /s/ TERESA LANDERS
----------------------
Teresa Landers, Chief Financial Officer
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ------------------------------------------ ------
<S> <C> <C>
/s/ DARRELL T. USELTON Chairman of the Board and Chief Executive April 14, 2000
- ------------------------------------ Officer
DARRELL T. USELTON
/s/ JOSEPH A. CERBONE President and Director April 14, 2000
- ------------------------------------
JOSEPH A. CERBONE
/s/ WILLIAM CANTRELL Executive Vice President and Director April 14, 2000
- ------------------------------------
WILLIAM CANTRELL
/s/ E. ANDREW SENSENIG Director April 14, 2000
- ------------------------------------
E. ANDREW SENSENIG
/s/ JASON D. HUNTLEY Director April 14, 2000
- ------------------------------------
JASON D. HUNTLEY
</TABLE>
<PAGE>
EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
-----------------------------
AND PLAN OF REORGANIZATION
--------------------------
THIS SECURITIES PURCHASE AGREEMENT AND PLAN OF REORGANIZATION ("Agreement")
is entered into on February 4, 2000 by and among NOBLE ONIE, INC., a Nevada
corporation ("Company"), and the stockholders of THE NATIONAL CAPITAL COMPANIES,
INC., an Oklahoma corporation ("National Capital"), listed on the list of
selling stockholders ("List of Selling Stockholders") attached as Exhibit "A"
hereto and who have executed this Agreement ("Selling Stockholders").
R E C I T A L S
---------------
A. The Company has authorized capital stock consisting of 50,000,000
shares of common stock ("Common Stock"), $.001 par value, of which 2,500,000
shares of Common Stock are issued and outstanding.
B. National Capital has authorized capital stock consisting of 10,000,000
shares of common stock, $.001 par value, of which 2,000,000 shares ("National
Capital Shares") are issued and outstanding and held by the Selling
Shareholders.
C. The Selling Stockholders wish to sell, and the Company wishes to
acquire, all of the National Capital Shares on the Closing Date (as defined
below), in exchange for the Company's issuance to the Selling Stockholders of an
aggregate of 4,000,000 shares ("Company Shares") of Common Stock, subject to and
upon the terms and conditions hereinafter set forth.
A G R E E M E N T
-----------------
It is agreed as follows:
1. SECURITIES PURCHASE AND REORGANIZATION.
--------------------------------------
1.1 Agreement to Exchange Securities. Subject to the terms and upon
--------------------------------
the conditions set forth herein, each Selling Stockholder agrees to sell,
assign, transfer and deliver to the Company, and the Company agrees to purchase
from each Selling Stockholder, at the Closing (as defined below), the National
Capital Shares owned by the respective Selling Stockholder as set forth on the
List of Selling Stockholders, in exchange for the transfer, at the Closing, by
the Company to each Selling Stockholder of a pro rata share of the Company
Shares. A Selling Stockholder's pro rata share of the Company Shares shall be
determined by multiplying the total number of the Company Shares (i.e.,
----
4,000,000 shares of Common Stock) by a fraction, the numerator of which is the
total number of National Capital Shares owned by the Selling Stockholder at the
Closing and the denominator of which is the total number of National Capital
Shares issued and outstanding at the Closing.
-1-
<PAGE>
1.2 Instruments of Transfer.
-----------------------
(a) National Capital Shares. Each Selling Stockholder shall
-----------------------
deliver to the Company original certificates evidencing the National Capital
Shares along with executed stock powers, in form and substance satisfactory to
the Company for purposes of assigning and transferring all of their right, title
and interest in and to the National Capital Shares. From time to time after the
Closing Date, and without further consideration, the Selling Stockholders will
execute and deliver such other instruments of transfer and take such other
actions as the Company may reasonably request in order to more effectively
transfer to the Company the securities intended to be transferred hereunder.
(b) The Company Shares. The Company shall deliver to the Selling
------------------
Stockholders on the Closing Date original certificates evidencing the Company
Shares, in form and substance satisfactory to the Selling Stockholders, in order
to effectively vest in the Selling Stockholders all right, title and interest in
and to the Company Shares. From time to time after the Closing Date, and
without further consideration, the Company will execute and deliver such other
instruments and take such other actions as the Selling Stockholders may
reasonably request in order to more effectively issue to them the Company
Shares.
1.3 Closing. The closing ("Closing") of the exchange of the National
-------
Capital Shares and the Company Shares shall take place at the offices of
National Capital, at 10:00 a.m., local time, on February 4, 2000, or at such
other time and place as may be agreed to by the Selling Shareholders and the
Company ("Closing Date").
1.4 Tax Free Reorganization. The parties intend that the transaction
-----------------------
under this Agreement qualify as a tax free reorganization under Section 368
(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
2. DELIVERIES AT CLOSING.
---------------------
2.1 Company's Deliveries at Closing. At the Closing, the Company
-------------------------------
shall deliver or cause to be delivered to the Selling Stockholders all of the
following:
(a) certificates representing the Company Shares, registered in
the names of the Selling Stockholders;
(b) Officer's Certificates signed by John Katter in the form
attached hereto as Exhibit "B";
(c) certified resolutions of the Board of Directors of the
Company authorizing consummation of the transactions contemplated by this
Agreement;
(d) a certified list of the record holders of the Common Stock
evidencing that the Company has 2,500,000 shares of Common Stock issued and
outstanding; and
(e) such other documents and instruments as shall be reasonably
necessary to effect the transactions contemplated hereby.
-2-
<PAGE>
2.2 Selling Stockholders' Deliveries at Closing. At the Closing, the
-------------------------------------------
Selling Stockholders shall deliver or cause to be delivered to the Company all
of the following:
(a) original certificates representing the National Capital Shares,
along with duly executed stock powers, in form and substance satisfactory to the
Company; and
(b) such other documents and instruments as shall be reasonably
necessary to effect the transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
----------------------------------------------------------
Selling Stockholder severally represents, warrants and covenants to and with the
Company with respect to himself, as follows:
3.1 Power and Authority. The Selling Stockholder has all requisite
-------------------
individual power and authority to enter into and to carry out all of the terms
of this Agreement and all other documents executed and delivered in connection
herewith (collectively, the "Documents"). All individual action on the part of
the Selling Stockholder necessary for the authorization, execution, delivery and
performance of the Documents by the Selling Stockholder has been taken and no
further authorization on the part of the Selling Stockholder is required to
consummate the transactions provided for in the Documents. When executed and
delivered by the Selling Stockholder, the Documents shall constitute the valid
and legally binding obligation of the Selling Stockholder enforceable in
accordance with their respective terms.
3.2 Ownership of and Title to Securities. The Selling Stockholder
------------------------------------
represents that the Selling Shareholders are the sole owners of all of the
issued and outstanding shares of capital stock of National Capital and that
there are no warrants, options, subscriptions, calls, or other similar rights of
any kind for the issuance or purchase of any securities of National Capital held
by the Selling Stockholder or any other persons. The Selling Stockholder
represents that the Selling Stockholder has and will transfer to the Company
good and marketable title to the National Capital Shares which he owns, free and
clear of all pledges, security interests, mortgages, liens, claims, charges,
restrictions or encumbrances.
3.3 Investment and Related Representations. The Selling Stockholder
--------------------------------------
is aware that neither the Company Shares nor the offer or sale thereof to the
Selling Stockholder has been registered under the Securities Act of 1933, as
amended ("Securities Act"), or under any state securities law. The Selling
Stockholder understands that the Company Shares will be characterized as
"restricted" securities under federal securities laws inasmuch as they are being
acquired in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances.
The Selling Stockholder agrees that the Selling Stockholder will not sell all or
any portion of the Company Shares except pursuant to registration under the
Securities Act or pursuant to an available exemption from registration under the
Securities Act. The Selling Stockholder understands that each certificate for
the Company Shares issued to the Selling Stockholder or to any subsequent
transferee shall be stamped or otherwise imprinted with an appropriate legend
summarizing the restrictions described in this Section 3.3 and that the Company
shall refuse to transfer the Company Shares except in accordance with such
restrictions.
-3-
<PAGE>
3.4 No Further Representations. Except as expressly provided herein,
--------------------------
the Selling Stockholder makes no representations or warranties concerning the
National Capital Shares. The Selling Shareholder states hereby its intent to
enter into this Agreement in strict reliance on the Company's representations,
acknowledgments and agreements set forth in Section 4.8 and it is intimately
familiar with all aspects of National Capital and that it is willing to acquire
the National Capital Shares on an "as is, where is and with all faults" basis.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
--------------------------------------------------------
represents, warrants and covenants to and with each of the Selling Stockholders
as follows:
4.1 Organization and Good Standing. The Company is a corporation
------------------------------
duly organized, validly existing, and in good standing under the laws of the
State of Nevada and has full corporate power and authority to enter into and
perform its obligations under this Agreement.
4.2 Capitalization. The authorized capital stock of the Company
--------------
consists of 50,000,000 shares of Common Stock, $.001 par value, of which
2,500,000 shares of Common Stock are issued and outstanding. All outstanding
shares of Common Stock have been duly authorized and validly issued, and are
fully paid, nonassessable, and free of any preemptive rights. There are no
warrants, options, subscriptions, calls, other similar rights to purchase any of
the Company's authorized and unissued Common Stock, and there are no voting,
pooling or voting trust agreements, arrangements or contracts by and among the
Company, its shareholders, or any of them.
4.3 No Subsidiaries. The Company does not control, or have any
---------------
interest in, directly or indirectly, any corporation, partnership, business
trust, association or other business entity.
4.4 Validity of Transactions. This Agreement, and each document
------------------------
executed and delivered by the Company in connection with the transactions
contemplated by this Agreement, and the performance of the transactions
contemplated therein have been duly authorized by the directors and shareholders
of the Company, have been duly executed and delivered by the Company and is each
the valid and legally binding obligation of the Company, enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency reorganization and moratorium laws and other laws affecting
enforcement of creditor's rights generally and by general principles of equity.
The Company Shares issuable hereunder, when issued in accordance with the terms
of this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable. The Company Shares will be free of any liens or encumbrances,
except for any restrictions imposed by federal or state securities laws.
4.5 Approvals and Consents. There are no permits, consents, mandates
----------------------
or approvals of public authorities, either federal, state or local, or of any
third party necessary for the Company's consummation of the transactions
contemplated hereby.
4.6 SEC Reports. The Company has delivered to the Selling
-----------
Stockholders its registration statement on Form 10-SB, as amended to date, and
all quarterly reports on Form 10-
-4-
<PAGE>
QSB subsequently filed with the Securities and Exchange Commission
(collectively, the "SEC Reports"). The information in the SEC Reports, taken as
a whole, is true and correct in all material respects and does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
4.7 Litigation. There are no suits or proceedings (including without
----------
limitation, proceedings by or before any arbitrator, government commission,
board, bureau or other administrative agency) pending or, to the knowledge of
the Company, threatened against or affecting the Company which, if adversely
determined, would have a material adverse effect on the financial condition,
results of operations, prospects or business of the Company, or which questions
the validity of this Agreement or any action to be taken in connection
therewith, and the Company is subject to or in default with respect to any
order, writ, injunction or decree of any federal, state, local or other
governmental department. The Company has not commenced nor currently intends to
commence any legal proceedings against any other person or entity.
4.8 Disclaimer of Warranty. The Company is acquiring the National
----------------------
Capital Shares "AS-IS", "WHERE-IS" and "WITH ALL FAULTS" and subject to any
conditions which may exist, without any representations or warranties by the
Selling Stockholders except as expressly provided herein. The Company
acknowledges that it is relying solely upon its own inspections, examinations
and evaluations of the National Capital Shares and National Capital and is
accepting assignment of the National Capital Shares without the standard
representations, warranties or covenants customarily provided to the purchaser
of a business.
4.9 Taxes. All federal income tax returns and state and local income
-----
tax returns for the Company have been filed as required by law. All taxes as
shown on such returns or on any assessment received subsequent to the filing of
such returns have been paid, and there are no pending assessments or adjustments
or any income tax payable for which reserves, which are reasonably believed by
the Company to be adequate for the payment of any additional taxes that may come
due, have not been established. All other taxes imposed by any government
authority on the Company have been paid and any reports or returns due in
connection therewith have been filed. No outstanding claim for assessment or
collection of taxes has been asserted against the Company and there are no
pending, or to the knowledge of the Company, threatened tax audits, examinations
or claims.
4.10 No Defaults. No material default (or event which, with the
-----------
passage of time or the giving of notice, or both, would become a material
default) exists or is alleged to exist with respect to the performance of any
obligation either of the Company under the terms of any indenture, license,
mortgage, deed of trust, lease, note, guaranty, joint venture agreement,
operating agreement, partnership agreement, or other contract or instrument to
which the Company is a party or any of its assets are subject, or by which it is
otherwise bound, and, to the best knowledge of the Company, no such default or
event exists or is alleged to exist with respect to the performance of any
obligation of any party thereto.
4.11 Corporate Documents. The Company has furnished to the Selling
-------------------
Stockholders true and complete copies of the Articles of Incorporation and
Bylaws of the Company certified by its secretary and copies of the resolutions
adopted by the Company's
-5-
<PAGE>
Board of Directors authorizing and approving this Agreement and the transactions
contemplated hereby. The Company has made available to the Selling Stockholders
and their representatives all corporate minute books of the Company, and such
minute books contain complete and accurate records of the proceedings of the
Company's shareholders and directors.
4.12 Contracts and Other Commitments. The Company does not have and
-------------------------------
is not bound by any contract, agreement, lease, commitment or proposed
transaction, judgment, order, writ or decree, written or oral, absolute or
contingent.
4.13 Compliance with Laws. The Company has complied in all material
--------------------
respects with all laws, regulations and orders affecting its business and
operations and is not in default under or in violation of any provision of any
federal, state or local rule, regulation or law, including without limitation,
any applicable statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
4.14 No Assets or Liabilities. The Company represents and warrants
------------------------
that it does not have any assets, liabilities or operations.
4.15 Brokers and Finders. The Company has not incurred, nor shall it
-------------------
incur, directly or indirectly, any liability for any brokerage or finders' fees,
agent commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
5. MISCELLANEOUS.
-------------
5.1 Cumulative Remedies. Any person having any rights under any
-------------------
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement, and to exercise all other rights granted by law, which rights
may be exercised cumulative and not alternatively.
5.2 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not.
5.3 Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement or the other documents.
5.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts when taken together will constitute one and the
same agreement.
5.5 Entire Agreement. This Agreement constitutes the entire
----------------
agreement and understanding of the parties with respect to the subject matter
thereof, and supersedes all prior and contemporaneous agreements and
understandings.
-6-
<PAGE>
5.6 Survival of Representations. All representations, warranties and
---------------------------
agreements contained herein or made in writing by the Company and the Selling
Stockholders in connection with the transactions contemplated hereby except any
representation, warranty or agreement as to which compliance may have been
appropriately waived, shall survive the execution and delivery of this
Agreement.
5.7 Expenses and Attorney Fees. The Company and the Selling
--------------------------
Stockholders shall each pay all of their respective legal and due diligence
expenses in connection with the transactions contemplated by this Agreement,
including, without limiting the generality of the foregoing, legal and
accounting fees.
5.8 Waiver of Conditions. At any time or times during the term
--------------------
hereof, the Company may waive fulfillment of any one or more of the conditions
to its obligations in whole or in part, and the Selling Stockholders may waive
fulfillment of any one or more of the foregoing conditions to their obligation,
in whole or in part, by delivering to the other party a written waiver or
waivers of fulfillment thereof to the extent specified in such written waiver or
waivers. Any such waiver shall be validly and sufficiently authorized for the
purposes of this Agreement if, as to any party, it is authorized in writing by
an authorized representative of such party. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
5.9 Partial Invalidity. If any term, covenant or condition of this
------------------
Agreement or the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of such term, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term, covenant or condition of this Agreement shall be
valid and be enforced to the fullest extent permitted by law.
5.10 Successors and Assigns. The terms, covenants and conditions
----------------------
contained herein shall be binding upon and inure to the benefit of the heirs,
successors and assigns of the parties hereto.
5.11 Law Governing. This Agreement shall be construed and
-------------
interpreted in accordance with and governed and enforced in all respects by the
laws of the State of California.
5.12 Attorneys' Fees. If any action at law or in equity is necessary
---------------
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which such party may be entitled.
[Continued on next page]
-7-
<PAGE>
IN WITNESS WHEREOF, each of the parties to this Agreement has executed or
caused this Agreement to be executed as of the date first above written.
"Company"
NOBLE ONIE, INC.,
a Nevada corporation
By:
-------------------------------------------
John Katter, President
[Signatures of Selling Stockholders Appear on Exhibit A]
-8-
<PAGE>
EXHIBIT A
LIST OF SELLING STOCKHOLDERS
----------------------------
<TABLE>
<CAPTION>
Number of National Capital
Name and Address of Shares Owned by Selling
Selling Stockholder Signature Stockholder
- ---------------------------------- ------------------------------- -------------------------------
<S> <C> <C>
Darrel T. Uselton
29502 Spotted Bull Lane
San Juan Capistrano, CA 92675 ------------------------------- 976,400
Jack E. Uselton
419 Lakeside Estates Drive
Houston, TX 77042 ------------------------------- 150,000
P. Craig Musgrave
3028 Willowbrook
Oklahoma City, OK 73120 ------------------------------- 65,000
Barkston Trading LTD
Suite 61, Grosvenor Close By:____________________________
Shirley Street P.O. Box N7521 Shaniqua Mcphee,
Nassau, Bahamas Director 100,000
Joseph A. Cerbone
71 Promenade
Irvine, CA 92612 ------------------------------- 170,000
Shogun Investments Inc.
5333 S. Arville, Suite 7A By:____________________________
Las Vegas, NV 89118 Jeff Bradley, President 60,000
Andrew Sensenig
2800 S. Surrey
Carrollton, TX 75006 ------------------------------- 85,000
John Martin
722 Palo Verde Avenue
Pasadena, CA 91104 ------------------------------- 50,000
</TABLE>
A-1
<PAGE>
<TABLE>
<S> <C> <C>
Julie Martin
722 Palo Verde Avenue
Pasadena, CA 91104 ------------------------------- 10,000
Marcus Hurlburt
762 Stanford Court
Irvine, CA 92612 ------------------------------- 24,000
M. Blaine Riley
33966 Crystal Lantern
Dana Point, CA 92629 ------------------------------- 100,000
Timothy Chamberlain
5846 E. Creekside, #28
Orange, CA 92869 ------------------------------- 15,000
Natalie Bannister
4029 SE 25
Del City, OK 73115 ------------------------------- 13,000
Teresa M. Landers
105 Sandpiper Lane
Aliso Viejo, CA 92656 ------------------------------- 22,500
Nicholson Trust
962 N. Highland Drive By:____________________________
Porterville, CA 93257 An authorized trustee 8,000
Gary O. Loo
102 N. Cascade, Suite 500
Colorado Springs, CO 80903 ------------------------------- 4,500
Point Loma Nazarene U
3900 Loma Land Drive By:____________________________
San Diego, CA 92106 An authorized officer 2,000
David W. Francis
102 N. Cascade, Suite 500
Colorado Springs, CO 80903 ------------------------------- 500
Jason D. Huntley
2825 Moonstone View
Colorado Springs, CO 80906 ------------------------------- 40,000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Randall Letcavage
1914 Kenmore
Gross Points Wood, MI ------------------------------- 20,000
Stephen Boruchin
2516 Stepple Chase Road
Edmond, OK 73034 ------------------------------- 4,000
Corbett Williams
762 Stanford Court
Irvine, CA 92612 ------------------------------- 3,000
Michelle Weinfurter
1100 N. Lemon Street, Suite C5
Fullerton, CA 92832 ------------------------------- 1,500
Jeffrey Weinfurter
1100 N. Lemon Street, Suite C5
Fullerton, CA 92832 ------------------------------- 4,000
Holly Kellog
7 Mayfair
Aliso Viejo, CA 92656 ------------------------------- 1,000
Kathleen Toole
4000 Park Newport, #202
Newport Beach, CA 92660 ------------------------------- 1,000
Michael Webb
419 8th Street
Huntington Beach, CA 92648 ------------------------------- 3,000
Dreux Valenti
2443 Allegheny Way
Placentia, CA 92870 ------------------------------- 1,000
Dan Marinescu
3338 West Faircrest Drive
Anaheim, CA 92804 ------------------------------- 1,100
Jason D. and Kirschten Huntley
2825 Moonstone View
Colorado Springs, CO 80906 ------------------------------- 5,000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Steven H. and Colleen Helm
5930 Topview Court
Colorado Springs, CO 80918 ------------------------------- 3,000
Clarion Financial Services
29502 Spotted Bull Lane By:
-------------------------
San Juan Capistrano, CA 92675 Darrel Uselton,
President
30,000
Keith Michel
140 W. Wilson Street, #R5
Costa Mesa, CA 92627 ------------------------------- 6,000
Curtis Randall Munro
28 Greenmoor
Irvine, CA 92614 ------------------------------- 4,500
Nathan Torosian
6170 W. Lake Mead Boulevard
Suite 207
Las Vegas, NV 89108 ------------------------------- 5,000
Barry Migliorini
16516 Oak Circle
Fountain Valley, CA 92708 ------------------------------- 2,500
Joseph Stapley
5 Nutwood
Irvine, CA 92604 ------------------------------- 2,500
G. Linnette Johnson
221 S. Gilbert
Anaheim, CA 92804 ------------------------------- 800
Karen Cawthra
2333 Vista Huerta
Newport Beach, CA 92660 ------------------------------- 300
Elaine Winner
12620-K Briarglen Loop
Stanton, CA 90680 ------------------------------- 300
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Alicia Mlagenovich
2236 Franzen
Santa Ana, CA 92705 ------------------------------- 200
Michelle Texley
419 Canal
Newport Beach, CA 92663 ------------------------------- 200
Jorge Rodriguez
1328 N Durant, Apt. P
Santa Ana, CA 92706 ------------------------------- 200
William Key Cantrell
9318 Brightwood Court
Northridge, CA 91325 ------------------------------- 4,000
</TABLE>
<PAGE>
EXHIBIT B
OFFICER'S CERTIFICATE
---------------------
_________________, hereby certifies the following to the Selling
Stockholders:
1. I am the duly elected and acting ____________________________________
of Noble Onie, Inc., a Nevada corporation ("Company").
2. This Officer's Certificate is being delivered to the Selling
Stockholders pursuant to Section 2.1(b) of the Securities Purchase Agreement And
Plan Of Reorganization ("Agreement") dated February 4, 2000 by and between the
Company and the Selling Stockholders.
3. All of the representations and warranties of the Company made in the
Agreement are true and correct in all material respects on and as of the date
hereof as though such representations and warranties had been made or given on
and as of the date hereof.
4. The Company has performed and complied in all material respects with
all of the covenants and agreements made in the Agreement to be performed by or
complied with by the Company on or prior to the date hereof.
Executed effective as of February 4, 2000.
__________________________________________
<PAGE>
EXHIBIT 10.2
SECURITIES PURCHASE AGREEMENT
AND PLAN OF REORGANIZATION
THIS SECURITIES PURCHASE AGREEMENT AND PLAN OF REORGANIZATION ("Agreement")
is entered into on March 17, 2000 by and among NOBLE ONIE, INC., a Nevada
corporation ("Company"), and the holders of the Class A Common Stock and Class B
Warrants of AISCO HOLDINGS, LTD., an Illinois corporation ("AISCO"), listed on
the list of Selling Shareholders ("List of Selling Shareholders") attached as
Exhibit "A" hereto and who have executed this Agreement ("Selling
Shareholders").
R E C I T A L S
---------------
A. The Company has authorized capital stock consisting of 50,000,000
shares of common stock ("Common Stock"), $.001 par value, of which 6,500,000
shares of Common Stock are issued and outstanding.
B. The authorized capital stock of AISCO consists of 10,000,000 shares of
Class A common stock, of which 1,636,179 shares ("AISCO Class A Shares") are
issued and outstanding; 10,000,000 shares of Class B common stock ("Class B
Common Stock"), of which 386,421 shares are issued and outstanding; 10,000,000
shares of Class Y preferred stock, none of which are issued or outstanding; and
10,000,000 shares of Class Z preferred stock, none of which are issued or
outstanding. In addition, there are currently outstanding warrants to purchase
up to 700,000 shares of Class A common stock at an exercise price of $0.30 per
share (the "Class A Warrants") and warrants to purchase up to 300,000 shares of
Class B common stock at an exercise price of $3.33 per share (the "Class B
Warrants").
C. The Selling Shareholders wish to sell, and the Company wishes to
acquire, all of the AISCO Class A Shares and the Class B Warrants on the Closing
Date (as defined below), in exchange for the Company's issuance to the Selling
Shareholders of an aggregate of 818,089.50 shares ("Company Shares") of Common
Stock, subject to and upon the terms and conditions hereinafter set forth.
A G R E E M E N T
-----------------
It is agreed as follows:
1. SECURITIES PURCHASE AND REORGANIZATION.
--------------------------------------
1.1 Agreement to Exchange Securities. Subject to the terms and upon
--------------------------------
the conditions set forth herein, each Selling Shareholder agrees to sell,
assign, transfer and deliver to the Company, and the Company agrees to purchase
from each Selling Shareholder, at the
<PAGE>
Closing (as defined below), the AISCO Class A Shares owned by the respective
Selling Shareholder as set forth on the List of Selling Shareholders, in
exchange for the transfer, at the Closing, by the Company to each Selling
Shareholder of a pro rata share of the Company Shares. A Selling Shareholder's
pro rata share of the Company Shares shall be determined by multiplying the
total number of the Company Shares (i.e., 818,089.50 shares of Common Stock) by
----
a fraction, the numerator of which is the total number of AISCO Class A Shares
owned by the Selling Shareholder at the Closing and the denominator of which is
the total number of AISCO Class A Shares issued and outstanding at the Closing.
1.2 Purchase of Class B Warrants. Subject to the terms and upon the
----------------------------
conditions set forth herein, each Selling Shareholder agrees to sell, assign,
transfer and deliver to the Company, and the Company agrees to purchase from
each Selling Shareholder, at the Closing (as defined below), the Class B
Warrants owned by such Selling Shareholder as set forth on the List of Selling
Shareholders, in exchange for the aggregate consideration of $1.00, receipt of
which is hereby acknowledged.
1.3 Instruments of Transfer.
-----------------------
(a) AISCO Class A Shares. Each Selling Shareholder shall deliver
--------------------
to the Company original certificates evidencing the AISCO Class A Shares along
with executed stock powers, in form and substance satisfactory to the Company
for purposes of assigning and transferring all of their right, title and
interest in and to the AISCO Class A Shares. From time to time after the Closing
Date, and without further consideration, the Selling Shareholders will execute
and deliver such other instruments of transfer and take such other actions as
the Company may reasonably request in order to more effectively transfer to the
Company the securities intended to be transferred hereunder.
(b) Class B Warrants. The Selling Shareholders that own the
----------------
Class B Warrants shall deliver to the Company original warrant certificates or
other documentation evidencing the Class B Warrants, in form and substance
satisfactory to the Company for purposes of assigning and transferring all of
their right, title and interest in and to the Class B Warrants. From time to
time after the Closing Date, and without further consideration, the Selling
Shareholders will execute and deliver such other instruments of transfer and
take such other actions as the Company may reasonably request in order to more
effectively transfer to the Company the securities intended to be transferred
hereunder.
(c) The Company Shares. The Company shall deliver to the Selling
------------------
Shareholders on the Closing Date original certificates evidencing the Company
Shares, in form and substance satisfactory to the Selling Shareholders, in order
to effectively vest in the Selling Shareholders all right, title and interest in
and to his/her/its portion of the Company Shares. From time to time after the
Closing Date, and without further consideration, the Company will execute and
deliver such other instruments and take such other actions as the Selling
Shareholders may reasonably request in order to more effectively issue to them
the Company Shares.
1.3 Closing. The closing ("Closing") of the exchange of the AISCO
-------
Class A Shares and the Company Shares and the sale of the Class B Warrants shall
take place at the offices of AISCO, at 10:00 a.m., local time, on March 17,
2000, or at such other time and place as may be agreed to by the Selling
Shareholders and the Company ("Closing Date").
<PAGE>
1.4 Tax Free Reorganization. The parties intend that the transaction
-----------------------
under this Agreement qualify as a tax free reorganization under Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
2. DELIVERIES AT CLOSING.
---------------------
2.1 Company's Deliveries at Closing. At the Closing, the Company
-------------------------------
shall deliver or cause to be delivered to the Selling Shareholders all of the
following:
(a) certificates representing the Company Shares, registered in
the names of the Selling Shareholders; and
(b) such other documents and instruments as shall be reasonably
necessary to effect the transactions contemplated hereby.
2.2 Selling Shareholders' Deliveries at Closing. At the Closing, the
-------------------------------------------
Selling Shareholders shall deliver or cause to be delivered to the Company all
of the following:
(a) original certificates representing the AISCO Class A Shares,
along with duly executed stock powers, in form and substance satisfactory to the
Company;
(b) original certificates or other documents representing the
Class B Warrants, along with duly executed assignments, in form and substance
satisfactory to the Company; and
(c) such other documents and instruments as shall be reasonably
necessary to effect the transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
----------------------------------------------------------
Selling Shareholder severally represents, warrants and covenants to and with the
Company with respect to himself or herself, as follows:
3.1 Power and Authority. The Selling Shareholder has all requisite
-------------------
individual power and authority to enter into and to carry out all of the terms
of this Agreement and all other documents executed and delivered in connection
herewith (collectively, the "Documents"). All individual action on the part of
the Selling Shareholder necessary for the authorization, execution, delivery and
performance of the Documents by the Selling Shareholder has been taken and no
further authorization on the part of the Selling Shareholder is required to
consummate the transactions provided for in the Documents. When executed and
delivered by the Selling Shareholder, the Documents shall constitute the valid
and legally binding obligation of the Selling Shareholder enforceable in
accordance with their respective terms, except as its enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws which affect the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
3.2 Ownership of and Title to Securities. Each Selling Shareholder
------------------------------------
represents that such Selling Shareholder is the sole owner of the AISCO Class A
Shares and the Class B warrants attributed to him or her on Exhibit A and that
there are no warrants, options,
<PAGE>
subscriptions, calls, or other similar rights of any kind for the issuance or
purchase of any securities of AISCO held by such Selling Shareholder. The
Selling Shareholder represents that the Selling Shareholder has and will
transfer to the Company good and marketable title to the AISCO Class A Shares
and Class B Warrants which he or she owns, free and clear of all pledges,
security interests, mortgages, liens, claims, charges, restrictions or
encumbrances.
3.3 Investment and Related Representations. The Selling Shareholder
--------------------------------------
is aware that neither the Company Shares nor the offer or sale thereof to the
Selling Shareholder has been registered under the Securities Act of 1933, as
amended ("Securities Act"), or under any state securities law. The Selling
Shareholder understands that the Company Shares will be characterized as
"restricted" securities under federal securities laws inasmuch as they are being
acquired in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances.
The Selling Shareholder agrees that the Selling Shareholder will not sell all or
any portion of the Company Shares except pursuant to registration under the
Securities Act or pursuant to an available exemption from registration under the
Securities Act. The Selling Shareholder understands that each certificate for
the Company Shares issued to the Selling Shareholder or to any subsequent
transferee shall be stamped or otherwise imprinted with an appropriate legend
summarizing the restrictions described in this Section 3.3 and that the Company
shall refuse to transfer the Company Shares except in accordance with such
restrictions. Each certificate for the Company Shares issued to the Selling
Shareholder or to any subsequent transferee shall be stamped or otherwise
imprinted with an appropriate legend substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS."
3.4 Investment Intent. This Agreement is made with the Selling
-----------------
Shareholder in reliance upon the Selling Shareholder's representation to the
other parties to this Agreement, which by the Selling Shareholder's execution of
this Agreement the Selling Shareholder hereby confirms, that the Company Shares
to be received by the Selling Stockholder are being acquired pursuant to this
Agreement for investment and not with a view to the public resale or
distribution thereof unless pursuant to an effective registration statement or
exemption under the Securities Act.
3.5 No Public Solicitation. The Selling Shareholder is acquiring the
----------------------
Company Shares after private negotiation and has not been attracted to the
acquisition of the Company Shares by any press release, advertising or
publication.
<PAGE>
3.6 Access to Information. The Selling Shareholder believes it has
---------------------
received all of the information it considers necessary or appropriate for
deciding whether to acquire the Company Shares, including, but not limited to
the copies of the Company's Disclosure Reports, attached hereto as Schedule A
(the "Company Disclosure Reports"). The Selling Shareholder further represents
that it has had an opportunity to ask questions of, and to receive answers from,
the Company regarding the Company, its business and prospects, and the Company
Shares.
3.7 Investor Sophistication and Ability to Bear Risk of Loss. The
--------------------------------------------------------
Selling Shareholder, if a corporation or a partnership, has not been organized
for the purpose of acquiring the Company Shares. The Selling Shareholder
acknowledges that it is able to protect its interests in connection with the
acquisition of the Company Shares and can bear the economic risk of investment
in such securities without producing a material adverse change in the Selling
Shareholder's financial condition. The Selling Shareholder otherwise has such
knowledge and experience in financial or business matters that the Selling
Shareholder is capable of evaluating the merits and risks of the investment in
the Company Shares.
4. REPRESENTATIONS AND WARRANTIES OF SELLING SHAREHOLDERS. James Burgauer
------------------------------------------------------
("Burgauer") and A. Philip Chang ("Chang") represent, warrant and covenant,
jointly and severally, to their knowledge to and with the Company, as follows:
4.1 Corporate Organization, Etc. AISCO is an Illinois corporation
---------------------------
duly organized, validly existing and in good standing under the laws of the
State of Illinois and is duly qualified to do business and is in good standing
as a foreign corporation under the laws of each jurisdiction in which the
character or location of the assets owned or leased by it require qualification,
except where the failure to so qualify would not materially adversely affect the
business or condition, financial or otherwise, of AISCO. AISCO has delivered or
prior to the Closing Date will deliver to the Company complete and correct
copies of its bylaws and other organizational documents, as amended, certified
by the Secretary of AISCO to be complete and correct. AISCO is the sole owner
of all of the outstanding capital securities of the entities (collectively, the
"AISCO Subsidiaries") set forth on the AISCO Disclosure Schedule attached hereto
as Schedule B (the "AISCO Disclosure Schedule"). Except for the AISCO
Subsidiaries, AISCO does not own greater than 5% of the outstanding voting
securities of any other entities.
4.2 Capitalization. The authorized, issued and outstanding
--------------
capitalization of AISCO is as recited in the recitals to this Agreement. All
issued and outstanding shares of AISCO capital stock have been duly authorized
and validly issued and are fully paid and non-assessable and none of such issued
and outstanding shares of AISCO capital stock have been issued in violation of
the preemptive rights of any past or present stockholders. Except as set forth
in recitals to this Agreement, there are no warrants, options, subscriptions,
calls, commitments or other rights or agreements of any kind issued, granted or
entered into by AISCO or any AISCO Subsidiary for the purchase, issuance or sale
of, or security exchangeable for or convertible into, any authorized shares of
AISCO or any AISCO Subsidiary and no authorized unissued shares of the capital
stock of AISCO or any AISCO Subsidiary are reserved for any purpose. The List
of Selling Shareholders accurately sets forth the names and residence addresses
and number of AISCO Class A Shares and Class B Warrants owned by the Selling
Shareholders.
<PAGE>
4.3 Corporate Power and Authority. AISCO and each of the AISCO
-----------------------------
Subsidiaries has all requisite corporate power and authority to own or lease all
of its properties and assets, to operate its properties and assets and to carry
on its businesses as now conducted except where failure to do so will not have a
material adverse effect on the business or condition, financial or otherwise, of
AISCO. AISCO has all requisite corporate power and authority to enter into and
to carry out all of the terms of this Agreement. All corporate action on the
part of AISCO and its stockholders necessary for the authorization, execution,
delivery and performance of this Agreement by AISCO has been taken and no
further corporate authorization on the part of AISCO is required to consummate
the transactions provided for in this Agreement. Neither the execution,
delivery nor performance of this Agreement by AISCO or the Selling Shareholders
shall violate or result in a breach of any provisions of the Bylaws or other
organizational documents, as amended, of AISCO. Except as set forth in the
AISCO Disclosure Schedule, neither the execution, delivery nor performance of
this Agreement by the Selling Shareholders shall constitute a default or result
in a breach of or accelerate the performance required under any mortgage, deed
of trust, lien, lease, restriction or other contract or agreement to which
AISCO, any AISCO subsidiary or any of their properties or assets are bound or
affected, or violate any order, writ, injunction, decree, judgment or other
restriction of any court, administrative agency or governmental body which
violation would materially adversely effect the business or condition, financial
or otherwise, of AISCO and the AISCO Subsidiaries.
4.4 Financial Statements. AISCO has furnished to the Company its
--------------------
consolidated balance sheets as of the end of its fiscal year ended December 31,
1999 and 1998 and its consolidated statements of earnings, stockholders' equity
and cash flows for the fiscal years ended December 31, 1999, 1998 and 1997,
together with appropriate notes to such consolidated financial statements. No
later than sixty (60) days after the Closing, AISCO shall deliver to the Company
the aforementioned financial statements, accompanied by reports thereon
containing opinions without comment or qualification, except as therein noted,
by its independent certified public accountants.
All of the foregoing consolidated financial statements (collectively, the
"AISCO Financial Statements"), including in each case the related notes, have
been prepared in conformity with United States generally accepted accounting
principles consistently applied and are correct and complete in all material
respects and such consolidated financial statements fairly present the financial
position of AISCO and the AISCO Subsidiaries as of the dates of such balance
sheets and the results of operations for the respective periods indicated.
4.5 Absence of Undisclosed Liabilities. AISCO and the AISCO
----------------------------------
Subsidiaries have no material obligations of any nature, whether known or
unknown, absolute, accrued, contingent or otherwise, and whether due or to
become due, not disclosed in the AISCO Financial Statements except (i) a loan
from an affiliate of James Burgauer in the amount of $200,000, (ii) those
liabilities set forth in the AISCO Disclosure Schedule, and (iii) liabilities
incurred since December 31, 1999 in the ordinary course of business or as
contemplated or permitted by this Agreement.
4.6 Absence of Adverse Changes. Except as disclosed in the AISCO
--------------------------
Disclosure Schedule or the AISCO Financial Statements, since December 31, 1999,
there has not been (i) any material adverse change in the assets or liabilities
or in the condition, financial or
<PAGE>
otherwise, or business, properties, earnings or net worth of AISCO and the AISCO
Subsidiaries, taken as a whole, or (ii) any damage or destruction in the nature
of a casualty loss, whether covered by insurance or not, materially and
adversely affecting any property or business of AISCO or the AISCO Subsidiaries
which is material to the consolidated financial condition, operation or business
of AISCO and the AISCO Subsidiaries, taken as a whole.
4.7 Contracts and Agreements. Set forth in the AISCO Disclosure
------------------------
Schedule is a list of all contracts and agreements (including loan agreements),
other than contracts for goods or services in the ordinary course of business,
to which AISCO or any AISCO Subsidiary is a party or by which it is bound,
involving more than $50,000. Except as set forth in the AISCO Disclosure
Schedule, none of the contracts and agreements will expire or be terminated or
be subject to any modification of terms or conditions upon the consummation of
the transactions contemplated by this Agreement. Except as set forth in the
AISCO Disclosure Schedule, neither AISCO nor any AISCO Subsidiary is in default
in any material respect under the terms of any such contract or agreement nor in
default in the payment of any principal of or interest on any indebtedness for
borrowed money nor has any event occurred which, with the passage of time or
giving of notice, would constitute such a default by AISCO or any AISCO
Subsidiary and no other party to any such contract or agreement is in default in
any material respect thereunder nor has any such event occurred with respect to
such party.
4.8 No Violation or Litigation. Except as set forth in the AISCO
--------------------------
Disclosure Schedule, neither AISCO nor any AISCO Subsidiary is in material
violation of any law or order, writ, injunction or decree of any court or other
governmental department, commission, board, bureau, agency or instrumentality,
and there are no material lawsuits, proceedings, claims or governmental
investigations pending or threatened against AISCO, any AISCO Subsidiary against
the properties or business of any of them, or any officer or employee of AISCO
or any AISCO Subsidiary, nor is there any reasonable basis known to AISCO for
any such action and there is no action, suit, proceeding or investigation
pending, threatened or contemplated which questions the legality, validity or
propriety of the transactions contemplated by this Agreement.
4.9 Employee or Consulting Agreements. The AISCO Disclosure Schedule
---------------------------------
lists all plans, contracts, and arrangements, oral, implied or written, included
but not limited to union contracts, employment agreements, consulting
agreements, employee manuals, incentive payment plans and employee benefit
plans, whereunder AISCO or any AISCO Subsidiary has any obligations (other than
obligations to make current wage or salary payments terminable on notice of 90
days or less) to its officers or employees or other persons or their
beneficiaries or whereunder AISCO or any AISCO Subsidiary owes money to any such
person, except to the extent any such obligation is set forth in the AISCO
Financial Statements.
4.10 Insurance. AISCO and the AISCO Subsidiaries each maintain
---------
policies of fire and casualty, liability and other forms of insurance in such
amounts and against such risks and losses as are reasonable for its businesses
and properties, and will keep such insurance in full force and effect through
the Closing. A list and brief description (including effective and termination
dates) of all policies of insurance, including insurance providing benefits for
employees, owned or held by AISCO or the AISCO Subsidiaries on the date hereof
and of all material performance bonds maintained by AISCO on the date hereof are
set forth in the AISCO Disclosure Schedule.
<PAGE>
4.11 Trademarks and Patents. AISCO and the AISCO Subsidiaries have
----------------------
no material trademarks, trade names, copyrights, inventions, patents or
applications therefor which are owned, used, registered in the name of or
licensed to AISCO or any AISCO Subsidiary, except for those listed in the AISCO
Disclosure Schedule. Except as disclosed in the AISCO Disclosure Schedule, no
proceedings have been instituted or are pending or threatened or contemplated
which challenge the validity of the ownership by AISCO or any AISCO Subsidiary
of any such trademark, trade name, copyright, invention or patent. Except as
disclosed in the AISCO Disclosure Schedule, neither AISCO nor any AISCO
Subsidiary has licensed anyone to use any such trademark or any technical know
how or other proprietary rights of AISCO or any AISCO Subsidiary.
4.12 Regulatory Matters. American Investment Services, Inc. (#21111)
------------------
and AISCO Trading, Inc. (#40901) are registered as broker-dealers pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended, and a member in
good standing with the National Association of Securities Dealers, Inc.
("NASD"). AISCO Futures, Inc. is registered under the Commodity Futures Trading
Act. AISCO Agencies, Inc. is registered as an insurance broker under various
state statutes. The AISCO Disclosure Schedule lists all employees, consultants
and agents of AISCO and the AISCO Subsidiaries that are licensed with the NASD
and any state securities commission, including a description of the licenses
held (collectively referred to as the "Licensed Persons"). The AISCO Disclosure
Schedule describes all customer complaints and regulatory inquiries of AISCO,
any AISCO Subsidiary and any of the Licensed Persons over the last two years.
4.13 Approvals and Consents. There are no permits, consents,
----------------------
mandates or approvals of public authorities, federal, state or local, or of any
third party necessary for AISCO's or the Selling Shareholders' consummation of
the transactions contemplated hereby, the absence of which is material to the
consolidated financial condition, operation or business of AISCO and the AISCO
Subsidiaries, taken as a whole.
4.14 Brokerage. No broker or finder has acted directly or indirectly
---------
for the Selling Shareholders in connection with this Agreement or the
transactions contemplated hereby, and no broker or finder is entitled to any
brokerage or finder's fee or other commission in respect thereof based in any
way on agreements, arrangements or understandings made by or on behalf of the
Selling Shareholders.
4.15 Permits and Other Operating Rights. Except as disclosed in the
----------------------------------
AISCO Disclosure Schedule, AISCO and the AISCO Subsidiaries currently possess
all permits, licenses, certificates and other authorizations from third parties,
including, without limitation, foreign and domestic governmental authorities,
necessary or required by applicable provisions of law and judicial decisions,
and by the property and contract rights of third parties, for it to own or lease
its properties and assets and to operate its business in the manner in which it
is intended except where failure to do so will not have a material adverse
effect on the business or condition, financial or otherwise, of AISCO.
4.16 Employee Retirement Plans. Neither AISCO nor any AISCO
-------------------------
Subsidiary has an employee pension, retirement or benefit plan.
<PAGE>
4.17 Personal Property, Inventories and Title to Property. All
----------------------------------------------------
personal property owned, leased or used by AISCO and the AISCO Subsidiaries is
reflected in the AISCO Financial Statements, and is in good operating and
working condition and fit for operation in the usual course of business,
ordinary wear and tear excepted. Except as set forth in the AISCO Disclosure
Schedule, AISCO and the AISCO Subsidiaries have good and marketable title to all
of their assets, and a good and valid leasehold interest in all property leased
by the corporation, free and clear of all liens.
4.18 Environmental Matters. There has been no manufacture, refining,
---------------------
storage, disposal or treatment of Hazardous Substances (as hereinafter defined)
by AISCO or any AISCO Subsidiary at any real property currently or in the past
owned, operated, used, leased or contracted for by AISCO or any AISCO
Subsidiary, or otherwise in violation of any Environmental Laws (as hereinafter
defined) or which would require remedial action under any Environmental Law.
During the past three years neither AISCO nor any AISCO Subsidiary has received
(a) notice of any such violation with respect to any Hazardous Substance at or
by any of such real property, (b) notice from any governmental agency that AISCO
or any AISCO Subsidiary is a potentially responsible party for cleanup liability
with respect to the emission, discharge or release of any Hazardous Substance or
for any other matter arising under the Environmental Laws or in any litigation,
administrative proceeding, finding, order, citation, notice, investigation or
complaint under any Environmental Law, or (c) notice of violation, citation,
complaint, request for information, order, directive, compliance schedule,
notice of claim, proceeding or litigation from any party concerning AISCO's or
any AISCO Subsidiaries' compliance with any Environmental Law. As used herein
"Environmental Laws" means the Resource Conservation Recovery Act, the
Comprehensive Environmental Responsibility Compensation and Liability Act, the
Superfund Amendments and Reauthorization Act, the Toxic Substances Control Act,
the Hazardous Materials Transportation Act, the Clean Air Act, the Clean Water
Act, and other similar foreign, federal, state and local laws, as amended,
together with all regulations issued or promulgated thereunder, relating to
pollution, the protection of the environment or the health and safety of workers
or the general public. As used herein "Hazardous Substance" means any hazardous
substance, hazardous or toxic waste, hazardous material, pollutant or
contaminant, as those or similar terms are used in the Environmental Laws,
including, without limitation, asbestos and asbestos-related products,
chlorofluorocarbons, oils or petroleum derived compounds, polychlorinated
biphenyl, pesticides and radon.
4.19 Tax Matters. Except as set forth in the AISCO Disclosure
-----------
Schedule, AISCO and each AISCO Subsidiary has timely filed all tax returns and
all information returns and reports required to be filed by or with respect to
it under the laws of its jurisdiction for all periods ending on or prior to the
date hereof and will timely file all such returns and reports required to be
filed from the date hereof through the Closing Date. AISCO and the AISCO
Subsidiaries have paid all taxes which have become due or payable, and will pay
on or prior to the Closing Date all taxes which have become due or payable on or
prior to the Closing Date.
4.20 Transactions with Affiliates. Except as set forth in the notes
----------------------------
to the AISCO Financial Statements or the AISCO Disclosure Schedule, neither
AISCO nor any AISCO Subsidiary has purchased, acquired or leased any property or
services from, or sold, transferred or leased any property or services to, or
loaned or advanced any money to, or borrowed any money from, or guaranteed or
otherwise become liable for any indebtedness or other obligations
<PAGE>
of, or acquired any capital stock, obligations or securities of, or made any
management, consulting or similar fee arrangement with any officer, director,
employee or stockholder of AISCO or any AISCO Subsidiary (nor any spouse, child
or affiliate thereof), nor is AISCO or any AISCO Subsidiary a party to any
agreement oral or written with respect to any of the foregoing.
4.21 Other Information. None of the written information, documents
-----------------
or memoranda furnished or to be furnished by AISCO or the Selling Shareholders
to the Company or any of their representatives is false or misleading in any
material respect or omits to state a material fact required to be stated therein
or necessary in order to make any of the statements therein, in the light of the
circumstances under which they were made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
---------------------------------------------
represents, warrants and covenants to and with each Selling Shareholder as
follows:
5.1 Corporate Organization, Etc. The Company is a Nevada corporation
---------------------------
duly organized, validly existing and in good standing under the laws of the
State of Nevada and is duly qualified to do business and is in good standing as
a foreign corporation under the laws of each jurisdiction in which the character
or location of the assets owned or leased by it require qualification, except
where the failure to so qualify would not materially adversely affect the
business or condition, financial or otherwise, of the Company. The Company has
delivered or prior to the Closing Date will deliver to AISCO and the Selling
Shareholders complete and correct copies of its bylaws and other organizational
documents, as amended, certified by the Secretary of the Company to be complete
and correct.
5.2 Capitalization. The authorized, issued and outstanding
--------------
capitalization of the Company is as recited in the recitals to this Agreement.
All issued and outstanding shares of the Company capital stock have been duly
authorized and validly issued and are fully paid and non-assessable and none of
such issued and outstanding shares of the Company capital stock have been issued
in violation of the preemptive rights of any past or present stockholders.
5.3 Corporate Power and Authority. The Company has all requisite
-----------------------------
corporate power and authority to own or lease all of its properties and assets,
to operate its properties and assets and to carry on its businesses as now
conducted. The Company has all requisite corporate power and authority to enter
into and to carry out all of the terms of this Agreement. All corporate action
on the part of the Company and its stockholders and directors necessary for the
authorization, execution, delivery and performance of this Agreement by the
Company has been taken and no further corporate authorization on the part of the
Company is required to consummate the transactions provided for in this
Agreement. Neither the execution, delivery nor performance of this Agreement by
the Company shall violate or result in a breach of any provisions of the Bylaws
or other organizational documents, as amended, of the Company. Neither the
execution, delivery nor performance of this Agreement by the Company shall
constitute a default or result in a breach of or accelerate the performance
required under any mortgage, deed of trust, lien, lease, restriction or other
contract or agreement to which the Company or any of its properties or assets
are bound or affected, or violate any order, writ, injunction, decree, judgment
or other restriction of any court, administrative agency or governmental body.
<PAGE>
5.4 Financial Statements. The Company has furnished to AISCO and the
--------------------
Selling Shareholders its consolidated balance sheets as of the end of its fiscal
year ended December 31, 1999 and 1998 and its consolidated statements of
earnings, stockholders' equity and cash flows for the fiscal years ended
December 31, 1999, 1998 and 1997, together with appropriate notes to such
consolidated financial statements. No later than sixty (60) days after the
Closing, the Company shall deliver to AISCO and the Selling Shareholders the
aforementioned financial statements, accompanied by reports thereon containing
opinions without comment or qualification, except as therein noted, by its
independent certified public accountants.
All of the foregoing consolidated financial statements (collectively,
the "Company's Financial Statements"), including in each case the related notes,
have been prepared in conformity with United States generally accepted
accounting principles consistently applied and are correct and complete in all
material respects and such consolidated financial statements fairly present the
consolidated financial position of the Company as of the dates of such balance
sheets and the results of operations for the respective periods indicated.
5.5 Absence of Undisclosed Liabilities. The Company has no material
----------------------------------
liabilities, fixed or contingent, other than (i) liabilities fully reflected in
the Company's Financial Statements, or (ii) liabilities incurred since December
31, 1999 in the ordinary course of business or as contemplated or permitted by
this Agreement or referred to in the Company Disclosure Schedule, all of which
in the aggregate, taken into consideration with all other changes in the
financial condition of the Company in the ordinary course of business, have had
no material adverse affect on the financial position or results of operations of
the Company taken as a whole, or on the conduct of its businesses.
5.6 Absence of Adverse Changes. Except as disclosed in the Company
--------------------------
Disclosure Schedule or the Company's Financial Statements, since December 31,
1999, there has not been (i) any material adverse change in the assets or
liabilities or in the condition, financial or otherwise, or business,
properties, earnings or net worth of the Company, or (ii) any damage or
destruction in the nature of a casualty loss, whether covered by insurance or
not, materially and adversely affecting any property or business of the Company
which is material to the consolidated financial condition, operation or business
of the Company.
5.7 No Violation or Litigation. Except as set forth in the Company
--------------------------
Disclosure Schedule, the Company is not in material violation of any law or
order, writ, injunction or decree of any court or other governmental department,
commission, board, bureau, agency or instrumentality, and there are no material
lawsuits, proceedings, claims or governmental investigations pending or, to the
knowledge of any executive officer or employee of the Company, threatened
against the Company, against the properties or business of any of the Company,
or any officer or employee of the Company, nor is there any reasonable basis
known to the Company for any such action and there is no action, suit,
proceeding or investigation pending, threatened or, to the knowledge of the
Company, contemplated which questions the legality, validity or propriety of the
transactions contemplated by this Agreement.
<PAGE>
5.8 Approvals and Consents. There are no permits, consents,
----------------------
mandates or approvals of public authorities, federal, state or local, or of any
third party necessary for the Company's consummation of the transactions
contemplated hereby.
5.9 Brokerage. No broker or finder has acted directly or indirectly
---------
for the Company in connection with this Agreement or the transactions
contemplated hereby, and no broker or finder is entitled to any brokerage or
finder's fee or other commission in respect thereof based in any way on
agreements, arrangements or understandings made by or on behalf of the Company.
5.10 Permits and Other Operating Rights. Except as disclosed in the
----------------------------------
Company Disclosure Schedule, the Company currently possesses all permits,
licenses, certificates and other authorizations from third parties, including,
without limitation, foreign and domestic governmental authorities, necessary or
required by applicable provisions of law and judicial decisions, and by the
property and contract rights of third parties, for it to own or lease its
properties and assets and to operate its business in the manner in which it is
intended.
5.11 Transactions with Affiliates. Except as set forth in the notes
----------------------------
to the Company Financial Statements or the Company Disclosure Schedule, the
Company has not purchased, acquired or leased any property or services from, or
sold, transferred or leased any property or services to, or loaned or advanced
any money to, or borrowed any money from, or guaranteed or otherwise become
liable for any indebtedness or other obligations of, or acquired any capital
stock, obligations or securities of, or made any management, consulting or
similar fee arrangement with any officer, director, employee or stockholder of
the Company (nor any spouse, child or affiliate thereof), nor is the Company a
party to any agreement oral or written with respect to any of the foregoing.
5.12 Other Information. None of the written information, documents
-----------------
or memoranda furnished or to be furnished by the Company to the Selling
Shareholders to the Company or any of their representatives is false or
misleading in any material respect or omits to state a material fact required to
be stated therein or necessary in order to make any of the statements therein,
in the light of the circumstances under which they were made, not misleading.
6. CERTAIN ADDITIONAL UNDERSTANDINGS AND AGREEMENTS.
------------------------------------------------
6.1 Approvals and Consents.
----------------------
(a) In General. The parties hereto shall each use all reasonable
----------
best efforts to obtain, and shall not take any action which jeopardizes
obtaining, the necessary approvals and consents of other persons and
governmental authorities required to be obtained to consummate the transactions
contemplated by this Agreement.
(b) AISCO and Selling Shareholder Compliance With Securities Laws.
-------------------------------------------------------------
AISCO and each Selling Shareholder shall cooperate with the Company in taking
such actions as shall be required in order to exempt the offer and sale of the
AISCO Shares to the Company from the registration and prospectus delivery
requirements under the Securities Act
<PAGE>
and to register or qualify or exempt from registration and qualification
requirements the offer and sale of the AISCO Shares to the Company under
applicable state securities laws.
(c) Company Compliance With Securities Laws. The Company shall
---------------------------------------
cooperate with the Selling Shareholders in taking such actions as shall be
required in order to exempt the offer and sale of the Company Shares to the
Selling Shareholders from the registration and prospectus delivery requirements
under the Securities Act and to register or qualify or exempt from registration
and qualification requirements the offer and sale of the Company Shares to the
Selling Shareholders under applicable state securities laws.
6.2 Survival of Representations and Warranties.
------------------------------------------
(a) Selling Shareholders. The representations and warranties of
--------------------
the Selling Shareholders made herein shall not be affected by any information
furnished to, or investigations made by the Company or any of its employees or
representatives in connection with the subject matter of this Agreement. The
representations and warranties of the Selling Shareholders shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated thereby for a period of one (1) year after the Closing
Date.
(b) The Company. The representations and warranties of the
-----------
Company made herein shall not be affected by any information furnished to, or
investigations made by, AISCO or the Selling Shareholders, or any of their
employees or representatives, in connection with the subject matter of this
Agreement and shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated thereby for period of four (4)
years after the Closing Date.
6.3 Conduct of Business Prior to the Closing Date. From the date
---------------------------------------------
hereof until the earlier of the Closing Date or April 30, 2000, AISCO, Chang,
Burgauer and the Selling Shareholders, on the one hand, and the Company, on the
other, shall each act as follows, except as otherwise expressly consented to by
the other in writing, which consent shall not be unreasonably withheld, except
such actions taken to consummate the transactions in accordance with this
Agreement as contemplated thereby:
(a) Notification. AISCO, Burgauer and Chang and the Company
------------
shall each immediately notify the other of any material breaches of the
representations and warranties or any material nonfulfillment of the covenants,
agreements or obligations of it or of any developments which could materially
adversely affect the value of the AISCO Shares or the Company Shares. The
Selling Shareholders shall each immediately notify the Company of any material
breaches of the representations and warranties or any material nonfulfillment of
the covenants, agreements or obligations of them or of any developments known by
them which could materially adversely affect the value of the AISCO Shares.
Without limiting the foregoing, AISCO, Burgauer, Chang and the Selling
Shareholders (to the extent known by them), on the one hand, and the Company, on
the other hand, shall each immediately notify the other of (1) any unexpected
emergency or other material change in the normal course of business or in the
operation of its properties, (2) the instigation of or any material development
in any litigation or regulatory proceedings, governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) in which AISCO or the Company is named as a
<PAGE>
party, and (3) budgets, capital expenditures and material decisions involving
its material properties or assets. AISCO, Burgauer, Chang and the Selling
Shareholders (to the extent known by them), on the one hand, and the Company, on
the other hand, shall each keep the other fully informed of such events and
permit its representatives access to all materials prepared in connection
therewith.
(b) Forbearance. From the effective date hereof to the earlier of the
-----------
Closing Date or April 30, 2000, AISCO and the Company, or any of their
subsidiaries, shall not, without the prior written consent of the other, which
consent shall not be unreasonably withheld, except for such actions taken to
consummate the transactions in accordance with this Agreement as contemplated
thereby: (1) amend its articles of incorporation or bylaws; (2) issue any
shares of capital stock or securities convertible into any such securities or
enter into any agreement or commitment with respect to the issuance or purchase
of any such securities; (3) declare, pay or set aside for payment any dividend
or distribution in respect to any securities, or redeem, purchase or otherwise
acquire any securities any options, warrants or other rights to purchase or
subscribe to any securities; (4) make or contract for any capital investment,
capital expenditure, capital addition or capital improvement; (5) negotiate with
any person other than the other parties to this Agreement concerning any merger,
disposition of all or substantially all of its business, properties, or assets,
any tender offer, acquisition or other business combination, other than the
transactions provided for in this Agreement; (6) organize any new subsidiary,
acquire any capital stock or other debt or equity securities of any corporation,
enter into any partnership or joint venture or acquire any equity or ownership
interest in any business, other than in the ordinary course of business; or (7)
take any action which would cause or constitute a material breach, or would, if
it had been taken prior to the date hereof, have caused a material breach of the
representations and warranties of it set forth herein.
6.4 Access. Each of the parties hereto may, prior to the Closing Date,
------
through its respective representatives, make such reasonable investigation as is
permitted by the laws of its respective jurisdiction of organization of the
property, records and the financial condition of the other parties hereto as it
reasonably deems necessary or advisable to assure itself of the accuracy of the
representations and warranties of the other parties hereto and compliance by the
other parties hereto with all agreements and conditions to be satisfied by them.
Such investigation shall be done at reasonable times and under reasonable
circumstances. Each party shall each keep confidential in the same manner in
which it preserves its own confidential information any information so obtained
which is not otherwise publicly available or ascertainable and to which it has
been given access by another party, subject to applicable reporting and
disclosure requirements under applicable foreign, federal and state laws,
including without limitation securities laws. Nothing in this Section 6.4 shall
be deemed to constitute a waiver by any party, or an agreement of any party to
waive, with respect to any document, any claim of attorney-client privilege or
legal or contractual privilege or requirement of confidentiality; provided,
however, that the party claiming such privilege or requirement shall identify to
the extent it is legally permitted the subject matter thereof to the party
seeking such document.
6.5 Indemnification.
---------------
<PAGE>
(a) Indemnification by the Company. The Company agrees to
------------------------------
indemnify, defend and hold harmless the Selling Shareholders against and in
respect of any and all claims, demands, losses, costs, expenses, liabilities and
damages, including interest, penalties, and reasonable attorneys' fees, that the
Selling Shareholders shall incur or suffer which arise during the 12 month
period following the Closing and which arise, result from or relate to any
material inaccuracy in or material breach or nonfulfillment of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement, the schedules or exhibits hereto or in any other Document furnished
by the Company under this Agreement.
(b) Indemnification by the Selling Shareholders. Each Selling
-------------------------------------------
Shareholder agrees to indemnify, defend and hold harmless the Company against
and in respect of any and all claims, demands, losses, costs, expenses,
liabilities and damages, including interest, penalties, and reasonable
attorneys' fees, that the Company shall incur or suffer which arise during the
12 month period following the Closing and which arise, result from or relate to
any material inaccuracy in or material breach of nonfulfillment of any of the
representations, warranties, covenants or agreements made by such Selling
Shareholder in this Agreement, the schedules or exhibits hereto or in any other
Document furnished by such Selling Shareholder under this Agreement.
(c) Basket Amount. Notwithstanding anything in Sections 6.5(a)
-------------
and (b) to the contrary, neither the Company nor the Selling Shareholders shall
be entitled to any indemnification under such sections if the aggregate amount
of all damages thereunder is less than $50,000 (the "Exception Amount"). The
parties hereto do not intend that the Exception Amount be deemed to be a
definition of what is "material" for any purpose in this Agreement.
(d) Maximum Liability. The aggregate amount payable by the
-----------------
Company or any Selling Shareholder pursuant to Sections 6.5 (a) and (b)
hereunder, whether as a result of a breach by the Company or the Selling
Shareholders of any representation, warranty or covenant or any claim for
indemnification under Sections 6.5 (a) and (b) hereof, shall not exceed the
greater of the aggregate consideration paid by the Company or the amount
received by such Selling Shareholders for the Company Shares.
(e) Procedures; Rights to Separate Counsel. In the event any
--------------------------------------
party receives a complaint, claim or other notice of any loss, claim or damage,
liability or action, giving rise to a claim for indemnification under this
Section 6.5, the party claiming indemnification shall promptly notify the
indemnifying party of such complaint, notice, claim or action, and such
indemnifying party shall have the right to investigate and defend any such loss,
claim, damage, liability or action. The party claiming indemnification shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof but the fees and expenses of such counsel shall not be at
the expense of the indemnifying party, unless the indemnifying party fails to
promptly defend, in which case the fees and expenses of such separate counsel
shall be borne by the indemnifying party. In no event shall an indemnifying
party be obligated to indemnify another party for any settlement of any claim or
action effected without the indemnifying party's prior written consent.
6.6 Put Option. The Company hereby grants each Selling Shareholder a
----------
"put" option to sell his,/her/its portion of the Company Shares back to the
Company at an exercise
<PAGE>
price of $6 per share. Each Selling Shareholder shall have the right, but not
the requirement, to "put" their Company Shares back to the Company subject to
the following time and volume restrictions: (i) no shares shall be "put" during
the first 60 days following the Closing; (ii) beginning 60 days after the
Closing and extending for four months thereafter, up to one half of one percent
(0.5%) of a Selling Shareholder's Company Shares per month; (iii) during the
next four month period, up to one percent (1.0%) of a Selling Shareholder's
Company Shares per month; (iv) during the next four month period, up to one and
one half of one percent (1.5%) of a Selling Shareholder's Company Shares per
month; (v) during the next 24 month period, up to two percent (2%) of a Selling
Shareholder's Company Shares per month.
6.7. Right of First Refusal on East Peoria Property. Within 30 days
----------------------------------------------
of the Closing, the Company and Burgauer or his assignee shall use their best
efforts to enter into a written agreement pursuant to which Burgauer or his
assignee shall receive a right of first refusal to purchase the real estate
currently owned by AISCO located in East Peoria at fair market value.
6.8 Replacement of Subordinated Capital. At the Closing, the Company
-----------------------------------
will replace subordinated capital of no less than $115,000 with cash or
securities into AISCO Holdings, Inc. and will release any and all security
interests associated with such subordinated capital or replace any collateral
and release any secured demand notes in connection therewith.
6.9 Retention of Current Operations. Following the Closing, the
-------------------------------
Company will endeavor to retain the primary pre-Closing operations of AISCO in
Peoria, as well as AISCO's current employee structures and rates of
compensations.
7. CONDITIONS TO THE OBLIGATIONS OF AISCO AND THE SELLING STOCKHOLDERS.
-------------------------------------------------------------------
The obligations of AISCO and the Selling Shareholders, hereunder are subject to
the fulfillment at or before the Closing, of the following conditions (any of
which may be waived in writing by AISCO and the Selling Shareholders):
7.1 Representations and Warranties, Etc. The representations and
-----------------------------------
warranties of the Company contained herein shall have been true and correct in
all material respects when made and as of the Closing, except as affected by
actions taken after the date hereof with the prior written consent of the
Selling Shareholders.
7.2 Performance of Covenants. The Company shall have performed and
------------------------
complied in all material respects with all covenants, agreements, terms and
conditions and executed all documents required by this Agreement to be
performed, complied with, or executed by it prior to the Closing.
7.3 No Governmental or Other Proceeding or Litigation. No order of
-------------------------------------------------
any court or administrative agency shall be in effect which restrains or
prohibits the transactions contemplated hereby, and no suit, action,
investigation, inquiry or proceeding by any governmental body or other person or
legal or administrative proceeding shall have been instituted or threatened
which questions the validity or legality of the transactions contemplated
hereby.
7.4 Approvals and Consents. All permits, consents or approvals of
----------------------
applications to public authorities, federal, state or local, and all approvals
of any third persons,
<PAGE>
including without limitation all approvals or consents under applicable federal
or state securities laws, the granting of which are necessary for the
consummation of the transactions contemplated hereby shall have been obtained.
7.5 Delivery of Instruments of Transfer. The Company shall have
-----------------------------------
delivered to the Selling Shareholders instruments of transfer for the Company
Shares in form and substance reasonably satisfactory to the Selling Shareholders
and their counsel as shall be necessary to effectively transfer all right, title
and interest in the Company Shares.
7.6 Tax Consequences. AISCO's analysis of the proposed ownership
----------------
structure of AISCO following the Closing shall not have revealed any adverse
income tax consequences which are not acceptable to AISCO in its reasonable
discretion.
7.7. Company Disclosure Schedule. The Company shall have delivered
---------------------------
to AISCO and the Selling Shareholders the Company Disclosure Report and the
Company Disclosure Schedule in final and definitive form.
8. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
--------------------------------------------
Company hereunder are subject to the fulfillment on or before the Closing, of
the following conditions (any of which may be waived in writing by the Company):
8.1 Representations and Warranties. The representations and
------------------------------
warranties of AISCO and the Selling Shareholders contained herein shall have
been true and correct in all material respects when made and as of the Closing,
except as affected by actions taken after the date hereof with the prior written
consent of the Company.
8.2 Performance of Covenants. The Selling Shareholders and AISCO
------------------------
shall have performed and complied in all material respects with all covenants,
agreements, terms and conditions and executed all documents required by this
Agreement to be performed, complied with or executed by them prior to or at the
Closing.
8.3 Instruments of Transfer. The Selling Shareholders shall have
-----------------------
delivered to the Company instruments of transfer for the AISCO Shares and the
Class B Warrants in form and substance reasonably satisfactory to the Company
and its counsel as shall be necessary to effectively transfer all of the Selling
Shareholders' right, title and interest in the AISCO Shares and the Class B
Warrants to the Company.
8.4 No Governmental or Other Proceeding or Litigation. No order of
-------------------------------------------------
any court or administrative agency shall be in effect which restrains or
prohibits the transactions contemplated hereby, and no suit, action,
investigation, inquiry or proceeding by any governmental body or other person or
legal or administrative proceeding shall have been instituted or threatened
which questions the validity or legality of the transactions contemplated
hereby.
8.5 Approvals and Consents. All permits, consents or approvals of
----------------------
applications to public authorities, federal, state or local, and all approvals
of any third persons, including without limitation all approvals or consents
under applicable federal or state securities
<PAGE>
laws, the granting of which are necessary for the consummation of the
transactions contemplated hereby shall have been obtained.
8.6 AISCO Disclosure Schedule. AISCO, Burgauer and Chang shall have
-------------------------
delivered to the Company the AISCO Disclosure Schedule in final and definitive
form.
9. Post-Closing Covenants; Purchase of Class B Common Stock. As soon as
--------------------------------------------------------
reasonably practicable following the Closing and subject to applicable Federal
and state securities laws, the Company shall offer to exchange shares of its
Common Stock for the outstanding shares of Class B Common Stock, or structure a
transaction having equivalent value, at a ratio of one Company Share for each
two shares of issued and outstanding Class B Common Stock, or at such other
ratio agreed to by both the Company and the holders of the Class B Common Stock.
10. MISCELLANEOUS.
--------------
10.1 Cumulative Remedies. Any person having any rights under any
-------------------
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement, and to exercise all other rights granted by law, which rights
may be exercised cumulative and not alternatively.
10.2 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not.
10.3 Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement or the other documents.
10.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts when taken together will constitute one and the
same agreement.
10.5 Entire Agreement. This Agreement constitutes the entire
----------------
agreement and understanding of the parties with respect to the subject matter
thereof, and supersedes all prior and contemporaneous agreements and
understandings.
10.6 Survival of Representations. All representations, warranties
---------------------------
and agreements contained herein or made in writing by the Company and the
Selling Shareholders in connection with the transactions contemplated hereby
except any representation, warranty or agreement as to which compliance may have
been appropriately waived, shall survive the execution and delivery of this
Agreement.
10.7 Notices. Any approvals, consents or notices required or
-------
permitted to be sent or given shall be delivered in writing personally, by
facsimile or mailed, certified mail,
<PAGE>
return receipt requested, to the following addresses and shall be deemed to have
been received within five days after such mailing:
If to AISCO: AISCO Holdings, Ltd.
600 High Point Lane
East Peoria, Illinois 61611
Attn: James Burgauer
With a copy to:
If to the Selling Shareholder: The Selling Shareholders
Address set forth on Exhibit A
with a copy to:
If to the Company: Noble Onie, Inc.
18952 MacArthur Boulevard, Suite 315
Irvine, California 92612
Attn: Darrel T. Uselton, Chairman
with a copy to: Oppenheimer, Wolff & Donnelly LLP
500 Newport Center Drive, Suite 700
Newport Beach, California 92660
Attn: Daniel K. Donahue, Esq.
10.8 Expenses and Attorney Fees. The Company and the Selling
--------------------------
Shareholders shall each pay all of their respective legal and due diligence
expenses in connection with the transactions contemplated by this Agreement,
including, without limiting the generality of the foregoing, legal and
accounting fees.
10.9 Waiver of Conditions. At any time or times during the term
--------------------
hereof, the Company may waive fulfillment of any one or more of the conditions
to its obligations in whole or in part, and the Selling Shareholders may waive
fulfillment of any one or more of the foregoing conditions to their obligation,
in whole or in part, by delivering to the other party a written waiver or
waivers of fulfillment thereof to the extent specified in such written waiver or
waivers. Any such waiver shall be validly and sufficiently authorized for the
purposes of this Agreement if, as to any party, it is authorized in writing by
an authorized representative of such party. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
10.10 Partial Invalidity. If any term, covenant or condition of this
------------------
Agreement or the application thereof to any person or circumstance shall, to any
extent, be invalid or
<PAGE>
unenforceable, the remainder of this Agreement, or the application of such term,
covenant or condition to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each
term, covenant or condition of this Agreement shall be valid and be enforced to
the fullest extent permitted by law.
10.11 Successors and Assigns. The terms, covenants and conditions
----------------------
contained herein shall be binding upon and inure to the benefit of the heirs,
successors and assigns of the parties hereto.
10.12 Law Governing. This Agreement shall be construed and
-------------
interpreted in accordance with and governed and enforced in all respects by the
laws of the State of California.
10.13 Attorneys' Fees. If any action at law or in equity is
---------------
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and disbursements
in addition to any other relief to which such party may be entitled.
10.14 Public Announcements. No party shall disclose any of the
--------------------
specific terms, conditions or other facts with respect to this Agreement or the
transactions contemplated hereby, including the status thereof, without the
prior written consent of the other parties hereto, which consent shall not be
unreasonably withheld.
10.15 Counterparts; Fax Signatures. This Agreement may be executed
----------------------------
in any number of counterparts, each signed by different persons and all of said
counterparts together shall constitute one and the same instrument, and such
instrument shall be deemed to have been made, executed and delivered on the date
first hereinabove written, irrespective of the time or times when the same or
any counterparts thereof actually may have been executed and delivered a
counterpart thereof to the Company, AISCO and the Selling Shareholders. The
parties agree that facsimile signatures may be relied upon by each of the
parties hereto as original signatures.
10.16 Syntax. Throughout this Agreement, whenever the context so
------
requires, the singular shall include the plural, and the masculine gender shall
include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
10.17 Further Acts. Each party agrees to perform any further acts and
------------
execute and deliver any documents which may be necessary to carry out the
provisions of this Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties to this Agreement has executed or
caused this Agreement to be executed as of the date first above written.
"Company"
NOBLE ONIE, INC.,
a Nevada corporation
By:____________________________________________
Darrel T. Uselton, Chairman of the Board
"AISCO"
AISCO HOLDINGS, LTD.,
an Illinois corporation
By:___________________________________________
James Burgauer, Chairman of the Board
"Chang"
_____________________________________________
A. PHILIP CHANG
"Burgauer"
____________________________________________
JAMES BURGAUER
[Signatures of Selling Shareholders Appear on Exhibit A]
<PAGE>
EXHIBIT A
LIST OF SELLING SHAREHOLDERS
----------------------------
<TABLE>
<CAPTION>
Name and Address of Number of AISCO Number of Class B Warrants
Selling Shareholder Signature Class A Shares Owned by Selling Shareholder
Owned by Selling
- -------------------------- -------------------------- Shareholder -------------------------------
<S> <C> <C> <C>
</TABLE>
<PAGE>
SUBSIDIARIES OF THE REGISTRANT Exhibit 21.1
The National Capital Companies, Inc.
National Capital, LLC
National Capital Merchant Group, Ltd.
Travis Morgan Securities, Inc.
National Capital Asset Group, Inc.
National Brokers & Distributors, Inc.
Cornerstone Capital Management, Inc.
AISCO Holdings, Ltd.
American Investment Services, Inc.
AISCO Trading, Inc.
AISCO Agencies, Inc.
AISCO Futures, Inc.
Dunhill Capital Management, Inc.
Facilities Financial, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 250
<OTHER-SE> 2,500
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
