UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 20, 2000
Ableauctions.com, Inc.
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(Exact name of registrant as specified in its charter)
Florida 000-28179 Not Available
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(State of incorporation) (Commission file number) (I.R.S. Employer
Identification No.)
1963 Lougheed Highway
Coquitlam, British Columbia
Canada V3K 3T8
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(Address of principal executive offices)
Registrant's telephone number, including area code: (604) 521 2253
Not Applicable
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(Former name or address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to an asset purchase agreements dated March 20, 2000,
Ableauctions.com, Inc., a Florida corporation (the "Registrant"), through its
wholly-owned subsidiary, Ableauctions.com (Washington), Inc., a Washington
corporation, acquired substantially all of the property, assets, and business,
as a going concern, of Mesler's Auction House of Scottsdale, LLC, an Arizona
limited liability company ("Mesler's"). The Registrant agreed to purchase
Mesler's for the following consideration:
(a) $255,000 in cash;
(b) the balance of $245,000 by issuing to Mesler's:
(i) 30,625 shares of common stock of the Registrant; and
(ii) a non-transferable share purchase warrant entitling Mesler's to
purchase up to 150,000 shares of common stock of the Registrant
at the price of $8.00 per share for one year from the closing
date of the purchase and sale;
In connection with the Registrant's acquisition of Mesler's, the Registrant
entered into a separate real estate purchase and sale agreement dated March 20,
2000 with C&C Capital Investment, Inc. ("C&C"), under which the Registrant,
through its Subsidiary, purchased from C&C real estate and the building thereon
located at 7303 East Earll Drive, Scottsdale, Arizona, 85251 (the "Property").
Under the real estate purchase and sale agreement, the Registrant will paid to
C&C the following consideration:
(a) as to $1,200,000 in cash;
(b) as to approximately $1,050,000, by the Subsidiary assuming the
wrap-around promissory note and wrap-around trust deed and assignment
of rents in favor of Lewis Hollander Scottsdale; and
(c) issue to C&C 155,486 shares of its common stock.
The Registrant funded the cash portion of the acquisition from the proceeds
of a $5,000,000 unit private placement at $5.00 per unit, each unit consisting
of one share of common stock and one non-transferable share purchase warrant
exercisable to acquire one additional common share of the Registrant at a price
of $5.00 until the first anniversary after the date of issuance and thereafter
at a price of $6.00 until the second anniversary after the date of issuance.
The acquisition closed on March 20, 2000.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of the Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits
Exhibit
Number Description
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2.1 Asset Purchase Agreement among Mesler's Auction House of
Scottsdale, LLC, Ableauctions.com (Washington), Inc. and
Ableauctions.com, Inc. dated as of March 20, 2000 (without
schedules or exhibits).(1)
2.2 Real Estate Purchase Agreement between C&C Capital Investment,
Inc. and Ableauctions.com, Inc. dated as of March 20, 2000
(without schedules or exhibits).(1)
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(1) Ableauctions.com, Inc. agrees to supplementally furnish a copy of any
omitted schedule or exhibit to the Securities and Exchange Commission upon
request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the duly
authorized undersigned.
Ableauctions.com, Inc.
April 4, 2000 /s/ Abdul Lahda
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(Date) Abdul Lahda, President and Director
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EXHIBIT INDEX
Exhibit
Number Description
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2.1 Asset Purchase Agreement among Mesler's Auction House of
Scottsdale, LLC, Ableauctions.com (Washington), Inc. and
Ableauctions.com, Inc. dated as of March 20, 2000 (without
schedules or exhibits).(1)
2.2 Real Estate Purchase Agreement between C&C Capital Investment,
Inc. and Ableauctions.com, Inc. dated as of March 20, 2000
(without schedules or exhibits).(1)
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(1) Ableauctions.com, Inc. agrees to supplementally furnish a copy of any
omitted schedule or exhibit to the Securities and Exchange Commission upon
request.
ASSET PURCHASE AGREEMENT
THIS AGREEMENT made as of the 20th day of March, 2000.
BETWEEN:
MESLER'S AUCTION HOUSE OF SCOTTSDALE, LLC, a limited liability company
formed under the laws of Arizona and having its head office at 2425
East Camelback Road, Suite 975, Phoenix, Arizona, 85016-4215, with
attention to Harold Friend, Facsimile (602) 224-5434
(the "Vendor")
OF THE FIRST PART
AND:
ABLEAUCTIONS.COM (WASHINGTON), INC., a company incorporated under the
laws of the State of Washington and having its registered office at
31635 36th Avenue SW, Federal Way, Washington, 98023-2105, with
attention to Abdul Ladha, Facsimile (604) 432-9866
(the "Purchaser")
OF THE SECOND PART
AND:
ABLEAUCTIONS.COM, INC., a company incorporated under the laws of
Florida and having its head office at 3112 Boundary Road, Burnaby,
British Columbia, V5M 4A2, with attention to Abdul Ladha, Facsimile
(604) 432-9866
(the "Parent Company")
OF THE THIRD PART
WHEREAS:
A. The Vendor carries on the business of the auction of antiques and other
furniture and equipment;
B. The Vendor has agreed to sell, and the Purchaser has agreed to purchase,
subject to certain exceptions, all of the property, assets, and undertaking
of the Vendor's business, as a going concern;
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C. The Purchaser is the wholly owned subsidiary of the Parent Company;
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the premises
and the covenants, agreements, representations, warranties, and payments set
forth in this Agreement, the parties covenant and agree as follows:
1. INTERPRETATION
1.1 Where used in this Agreement, each of the following words will have the
following meanings:
(a) "Assets" means all properties and assets normally and necessarily used in
the Business, as a going concern, including without limitation:
(i) the Goodwill;
(ii) the Equipment;
(iii) the Material Contracts;
(iv) the Intangible Property, including Licenses and Permits; and
(v) all of the Vendor's right, title, and interest in and to all other
personal property and assets, tangible or intangible, used by the
Vendor or to which the Vendor is entitled in connection with the
Business,
but does not include:
(vi) cash on hand or in banks; and
(vii) the Receivables;
(b) "Business" means the business currently carried on by the Vendor for the
auction of antiques and other furniture and equipment;
(c) "Closing" means the completion of the sale and purchase of the Assets and
the payment of or provision for the Purchase Price, all as provided in this
Agreement;
(d) "Closing Date" means March 20, 2000;
(e) "Equipment" means all machinery, equipment, automobiles, trucks, office
equipment, furniture, furnishings, tools, stores, and supplies of all kinds
used in connection with the Business and leased or owned by the Vendor,
including the machinery, equipment, and other property described in
Schedule "A";
(f) "Goodwill" means the goodwill of the Business, together with the
Purchaser's exclusive right to represent itself as carrying on the business
in continuation of and in succession to the Vendor and the right to use any
words indicating that the Business is so carried on, including the right to
use the Name as part of the name of or in connection with the Business or
any part thereof carried on or to be carried on by the Purchaser and all
lists of
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customers, documents, records, correspondence, and other information
related to the Assets;
(g) "Indebtedness" means any and all of the Vendor's trade accounts, debts,
duties, endorsements, guarantees, liabilities, obligations,
responsibilities, and undertakings assumed, created, incurred, or made,
whether voluntary or involuntary, however incurred or made or arising,
whether due or not due (except accrued employees' salaries which are not
yet due and obligations of the Vendor under Material Contracts), absolute,
inchoate, or contingent, liquidated or unliquidated, determined or
undetermined, direct or indirect, express or implied, and whether the
Vendor may be liable individually or jointly with others;
(h) "Intangible Property" means all of the Vendor right and interest to all
registered and unregistered trade marks, trade or brand names, copyrights,
designs, inventions, patents, licenses, authorities, restrictive covenants,
and other rights used in connection with the Business, including without
limitation the Intangible Property described in Schedule "B";
(i) "Material Contracts" means the benefit of all contracts, engagements, or
commitments, whether written or oral, to which the Vendor is entitled in
connection with the Business, including without limitation its right,
title, and interest in, to, and under the material agreements and contracts
described in Schedule "C";
(j) "Name" means the name "Mesler's Auction House of Scottsdale" or any
variation;
(k) "Person" means an individual, corporation, body corporate, limited
liability company, partnership, joint venture, society, association, trust,
or unincorporated organization, or any trustee, executor, administrator, or
other legal representative;
(l) "Purchase Price" means the purchase price for the Assets set forth in
section 3.1;
(m) "Real Estate Purchase" means the purchase by the Purchaser of certain real
estate and the building thereon owned by C&C Capital Investment, Inc.
pursuant to an agreement of purchase and sale dated March 20, 2000;
(n) "Receivables" means all accounts receivable, trade accounts, notes
receivable, and other debts owing to the Vendor as of the Closing Date in
connection with or arising out of the Business or otherwise, and the full
benefit of all securities for these accounts, notes, or debts;
(o) "Shares" means 30,625 shares of common stock of the Parent Company to be
issued to the Vendor pursuant to section 3.1(b) hereof;
(p) "Statements" means the Vendor's financial statements for the financial year
ended December 31, 1999, a copy of which is attached as Schedule "D"; and
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(q) "Warrant"means the share purchase warrant to be issued to the Vendor
pursuant to section 3.1(b) hereof, entitling the Vendor to purchase up to
150,000 shares of common stock of the Parent Company at the price of $8.00
per share for one year from the Closing Date.
1.2 In this Agreement, except as otherwise expressly provided:
(a) "Agreement" means this Agreement, including the preamble and the Schedules,
as supplemented or amended from time to time;
(b) the headings are for convenience only and do not form a part of this
Agreement and are not intended to interpret, define, or limit the scope,
extent, or intent of this Agreement or any provision hereof;
(c) the singular of any term includes the plural and vice versa, the use of any
term is equally applicable to any gender and, where applicable, a body
corporate, the word "or" is not exclusive and the word "including" is not
limited (whether or not non-limited language, such as "without limitation"
or "but not limited" to words of similar import, is used with reference
thereto);
(d) any accounting term not otherwise defined has the meanings assigned to it
in accordance with generally accepted accounting principles applicable in
the United States;
(e) any reference to a statute includes and is a reference to that statute and
to the regulations made under that statute, with all amendments made to
that statute and in force from time to time, and to any statute or
regulations that may be passed which has the effect of supplementing or
superseding that statute or those regulations;
(f) except as otherwise provided, any dollar amount referred to in this
Agreement is in U.S. funds; and
(g) any other term defined within the text of this Agreement has the meaning so
ascribed.
1.3 The following are the Schedules to this Agreement:
Schedule Description
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A List of Equipment
B List of Intangible Property
C List of Material Contracts
D Financial Statements of the Vendor
E Terms of Employment
F Accredited Investor Questionnaire
G Management Consulting Agreement
H Warrant Certificate
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2. PURCHASE AND SALE
2.1 On the terms and subject to the conditions of and based on the
representations and warranties contained in this Agreement, the Vendor agrees to
sell, convey, transfer, assign, and deliver to the Purchaser, and the Purchaser
agrees to purchase, acquire, and accept from the Vendor, the Assets belonging to
or used in the Business, as a going concern, as and from the Closing Date.
2.2 The parties acknowledge that the purchase and sale provided for in section
2.1 is restricted to the Assets only and without limiting the generality of the
foregoing, the Purchaser is not acquiring any assets other than the Assets nor
is the Purchaser purchasing any business of the Vendor other than the Business.
2.3 Except as provided in the list of Material Contracts set forth as Schedule
"C", the Purchaser and the Parent Company are not assuming any liability or
obligation of the Vendor of whatever nature whether now in existence or arising
hereafter.
3. PURCHASE PRICE
3.1 The Purchase Price of the Assets is the sum of $500,000, which the
Purchaser will satisfy and pay on the Closing Date as follows:
(a) $255,000 in the form of a wire transfer to Chicago Title Insurance Company
(the "Title Company"), Esplanade Office, 2415 East Camelback Road, #300,
Phoenix, Arizona, 85016, in accordance with wire transfer instructions to
be furnished in writing by the Title Company not less than two business
days before the Closing Date, made payable in U.S. funds;
(b) the balance of $245,000 by issuing to the Vendor the Shares at a deemed
price of $8.00 per Share and the Warrant.
3.2 The Vendor acknowledges that there will be restrictions on the transfer of
the Shares and any shares of the Parent Company's common stock issued to the
Vendor on the exercise of the Warrant (the "Warrant Shares") as follows:
(a) Restrictions on Transfer. The Vendor agrees that it will not sell, assign,
pledge, give, transfer, or otherwise dispose of the Shares or the Warrant
Shares or any interest therein, or make any offer or attempt to do any of
the foregoing, except pursuant to a registration of the Shares or the
Warrant Shares under the United States Securities Act of 1933 (the
"Securities Act") and all applicable state securities laws or in a
transaction that is exempt from the registration provisions of the
Securities Act and all applicable state securities laws.
Any attempted sale, assignment, or other transfer of the Shares or the
Warrant Shares without compliance with the provisions of this Agreement
will be void.
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(b) Legend. The following legend will be affixed on the certificates
representing the Shares and the Warrant Shares to be issued to the Vendor
and the Parent Company will affix this legend on each share certificate
subsequently issued to the Vendor:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED
STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR
INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED ON THE BOOKS OF THE
CORPORATION, WITHOUT REGISTRATION UNDER ALL APPLICABLE UNITED STATES
FEDERAL OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION
THEREFROM, SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE
EVIDENCED BY AN OPINION OF THE HOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE
CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT
FROM ANY PROPOSED TRANSFER OR ASSIGNMENT."
3.3 Piggy-Back Registration Rights.
(a) Notice of Registration. If at any time during the 12 months following the
Closing Date the Parent Company determines to register any of its
securities in an offering, other than a registration relating solely to
employee benefit plans or a registration relating solely to a Securities
and Exchange Commission (the "Commission") Rule 145 transaction, the Parent
Company will:
(i) promptly give to the Vendor written notice thereof; and
(ii) subject to section 3.3(b), include in such registration (and any
related qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Registrable Securities (as
defined below) specified in a written request or requests made within
20 days after receipt of such written notice from the Parent Company,
by the Vendor. "Registrable Securities" means:
(A) all Shares of the Parent Company's common stock acquired by the
Vendor pursuant to this Agreement;
(B) any common stock or other securities of the Parent Company issued
or issuable with respect to, or in exchange for or in replacement
of the Shares or such additional shares upon any stock split,
stock dividend, recapitalization, or similar event; provided,
however, that shares of common stock or other securities will
only be treated as Registrable Securities for the purposes of
this section 3.3 if and so long as they have not been sold
pursuant to Rule 144 under the Securities Act or pursuant to an
effective Registration Statement under the Securities Act, or
otherwise to or through
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a broker or dealer or underwriter in a public distribution or a
public securities transaction.
(b) Underwriting. If the registration of which the Parent Company gives notice
is for a registered public offering involving an underwriting, the Parent
Company will so advise the Vendor as a part of the written notice given
pursuant to section 3.3(a) hereof. In such event, the right of the Vendor
to registration pursuant to section 3.3 will be conditioned upon the
Vendor's participation in such underwriting and the inclusion of
Registrable Securities in the underwriting to the extent provided herein.
The Vendor proposing to distribute its securities through such underwriting
will (together with the Parent Company) enter into an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by the Corporation. Notwithstanding any other provision of
this section 3.3, if the managing underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten,
the managing underwriter may limit the Registrable Securities and other
securities to be distributed through such underwriting, for the account of
the Vendor to 20% of the total number of shares to be distributed. The
Parent Company will so advise the Vendor distributing its securities
through such underwriting of such limitations and, subject to the foregoing
rights of the investors, the number of shares of Registrable Securities, if
any, that may be included in the registration (and underwriting, if any).
(c) Right to Terminate Registration. The Parent Company will have the right to
terminate or withdraw any registration initiated by it under section 3.3
prior to the effectiveness of such registration whether or not the Vendor
has elected to include securities in such registration. The Registration
Expenses (as defined below) of such withdrawn registration will be borne by
the Parent Company in accordance with section 3.4 hereof.
3.4 Expenses of Registration. All Registration Expenses incurred in connection
with registration pursuant to section 3.3 will be borne by the Parent Company.
"Registration Expenses" means all expenses, except as otherwise stated below,
incurred by the Parent Company in complying with section 3.3 hereof, including,
all registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Parent Company, blue sky fees and
expenses, fees to issue the Shares, and the expense of any special audits
incident to or required by any such registration.
3.5 Registration Procedures. In the case of any registration effected by the
Parent Company pursuant to section 3.3, the Parent Company will keep the Vendor
advised in writing as to the initiation of the registration and as to the
completion thereof. At its expense the Parent Company will:
(a) prepare and file with the Commission a registration statement with respect
to such securities and use its best efforts to cause such registration
statement to become and remain effective for at least six months or, if
earlier, until the distribution described in the registration statement has
been completed;
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(b) prepare and file with the Commission during the period specified in section
3.5(a) such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement as may
be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement;
(c) furnish to the Vendor participating in such registration and to the
underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as the Vendor and such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
(d) furnish, at the request of the Vendor requesting registration of
Registrable Securities at the time such securities are delivered to the
underwriters (if any) for sale in connection with a registration pursuant
to section 3.3:
(i) an opinion, dated such date, of the counsel representing the Parent
Company for the purposes of such registration, in form and substance
as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters and to the Vendor requesting
registration of Registrable Securities; and
(ii) a letter dated the date of commencement of the offering and a
"bring-down" letter dated as of the closing date of such offering,
from the independent accountants of the Parent Company, in form and
substance as is customarily given by independent accountants to
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Vendor requesting registration of
Registrable Securities.
3.6 Non-Transferable Registration Rights. The rights to cause the Parent
Company to register securities granted the Vendor under section 3.3 may not be
assigned.
3.7 Indemnification for Registration.
(a) The Vendor will indemnify the Parent Company, each of its directors and
officers, each underwriter, if any, of the Parent Company's securities
covered by such a registration statement, and each person who controls the
Parent Company or such underwriter within the meaning of section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or
any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Parent Company and such directors,
officers, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such
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untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Parent Company by the Vendor and stated to be
specifically for use therein. Notwithstanding the foregoing, the liability
of the Vendor under this subsection (b) will be limited to the proportion
of any such loss, claim, damage, liability or expense which is equal to the
proportion that the public offering price of the shares sold by the Vendor
under such registration statement bears to the total public offering price
of all securities sold thereunder, but not to exceed the proceeds received
by the Vendor from the sale of Registrable Securities covered by such
registration statement.
(b) If the Parent Company is entitled to indemnification under this section
3.7, the Parent Company will give notice to the Vendor promptly after the
Parent Company has actual knowledge of any claim as to which indemnity may
be sought, and will permit the Vendor to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Vendor, who will conduct the defense of such claim or litigation resulting
therefrom, will be approved by the Parent Company (whose approval will not
unreasonably be withheld), and the Parent Company may participate in such
defense at the Vendor's expense, and provided further that the failure of
the Parent Company to give notice as provided herein will not relieve the
Vendor of its obligations under section 3.7 unless the failure to give such
notice is materially prejudicial to the Vendor's ability to defend such
action and provided further, that the Vendor will not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses but will bear the expense of such defense nevertheless.
The Parent Company will furnish such information regarding itself or the
claim in question as the Vendor may reasonably request in writing and as
will be reasonably required in connection with the defense of such claim
and litigation resulting therefrom. The Vendor, in the defense of any such
claim or litigation, will not, except with the consent of the Parent
Company, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to the Parent Company of a release from all liability
in respect to such claim or litigation. Notwithstanding the other
provisions of this Agreement, the Vendor will not be obligated to indemnify
the Parent Company for amounts paid by the Parent Company in settlement of
any loss, claim, damage, liability or action if such settlement is effected
without the consent of the Vendor (which consent has not been unreasonably
withheld).
(c) If the indemnification provided for paragraphs (a) through (b) of this
section 3.7 is unavailable or insufficient to hold harmless the Parent
Company under such paragraphs in respect of any losses, claims, damages,
liabilities, expenses or actions in respect thereof referred to therein,
then the Vendor will in lieu of indemnifying the Parent Company contribute
to the amount paid or payable by the Parent Company as a result of such
losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Parent Company, the
underwriters, and the Vendor of such Registrable Securities, respectively,
in connection with the statements or omissions that resulted in such
losses, claims, damage, liabilities, expenses or actions in respect thereof
as well as any
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other relevant equitable considerations, including the failure to give any
notice under paragraph (b). The relative fault will be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact relates to information supplied by the Parent
Company, on the one hand, or the underwriters or the Vendor of such
Registrable Securities, on the other, and to the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Parent Company and the Vendor agree that it
would not be just and equitable if contributions pursuant to this
subsection were determined by pro rata allocation or by any other method of
allocation which did not take account of the equitable considerations
referred to above in this subsection. The amount paid or payable by the
Parent Company as a result of the losses, claims, damages, liabilities or
action in respect thereof, referred to above in this subsection, will be
deemed to include any legal or other expenses reasonably incurred by the
Parent Company in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection, the
Vendor will not be required to contribute any amount in excess of the
lesser of (i) the proportion that the public offering price of shares sold
by the Vendor under such registration statement bears to the total public
offering price of all securities sold thereunder, but not to exceed the
proceeds received by the Vendor for the sale of Registrable Securities
covered by such registration statement and (ii) the amount of any damages
that the Vendor would have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission. No person guilty of
fraudulent misrepresentations (within the meaning of section 11(f) of the
Securities Act), will be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation
(d) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement
(if any) entered into in connection with an underwritten public offering of
the Registrable Securities are in conflict with the foregoing provisions,
the provisions in such underwriting agreement will control.
3.8 Information by Vendor. The Vendor, where its Registrable Securities are
included in any registration, will furnish to the Parent Company such
information regarding the Vendor, the Registrable Securities held by it, and the
distribution proposed by the Vendor that the Parent Company may reasonably
request in writing and as will be required in connection with any registration,
qualification or compliance referred to in section 3.3.
4. VENDOR'S REPRESENTATIONS AND WARRANTIES
The Vendor represents and warrants to the Purchaser and the Parent Company as
follows, with the intent that the Purchaser and the Parent Company will rely on
these representations and warranties in entering into this Agreement, and in
concluding the purchase and sale contemplated by this Agreement:
4.1 Status of Vendor. The Vendor is a limited liability company duly formed
under the laws of the State of Arizona, is validly existing and in good standing
regarding the filing of annual returns, and has the power and capacity to own
and dispose of the Assets, to carry on the Business
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now being conducted by it, to enter into this Agreement, and carry out its terms
to the full extent.
4.2 Ownership of Vendor. On the Closing Date, the only members of the Vendor
will be F&F Capital Investment, Inc. and Stockbridge Realty Investor - Arizona,
Inc., both of whom are "accredited investors" within the meaning of the
Accredited Investor Questionnaire attached hereto as Schedule "F".
4.3 Authority to Sell. All necessary company action on the Vendor's part has
duly and validly authorized the signing and delivery of this Agreement and the
completion of the transaction contemplated by this Agreement, and this Agreement
constitutes a legal, valid, and binding obligation of the Vendor enforceable
against the Vendor in accordance with its terms except as may be limited by laws
of general application affecting the rights of creditors.
4.4 Sale will Not Cause Default. Neither the signing nor delivery of this
Agreement, nor the completion of the purchase and sale contemplated in this
Agreement, will:
(a) violate any of the terms and provisions of the Vendor's Articles of
Organization or Operating Agreement, or any judgment, order, decree,
statute, by-law, regulation, covenant, restriction, or any Material
Contract or agreement applicable to the Vendor or any of the Assets
(subject to the obligation to obtain consents, if any, in the Material
Contracts);
(b) give any person the right to terminate, cancel, or remove any of the
Assets, save to the extent that the consent of third parties is required to
assign the Material Contracts; or
(c) result in any fees, duties, taxes, assessments, or other amounts relating
to any of the Assets becoming due or payable.
4.5 Assets. The Vendor owns and possesses and has a good and marketable title
to the Assets and, on Closing, the Assets will be free and clear of all liens,
charges, mortgages, pledges, security interests or encumbrances whatsoever.
4.6 Books and Records. The Vendor's books and records fairly and correctly set
out and disclose in all material respects, in accordance with generally accepted
accounting principles, the Vendor's financial position, and the Vendor has
accurately recorded all of its material financial transactions relating to the
Business in those books and records.
4.7 Financial Statements. The Vendor's Statements for the financial year ended
December 31, 1999, a copy of which is attached as Schedule "D", have been
prepared in accordance with generally accepted accounting principles in the
United States applied on a basis consistent with those of previous financial
years and present fairly and correctly the Vendor's assets, liabilities (whether
accrued, absolute, contingent, or otherwise), and financial condition as of the
date of the Statements, and the sale and earnings of the Vendor's operations
during the periods covered by the Statements. The Vendor's Statements are
in-house accounts and are not audited financial statements. When and if the
Vendor compiles audited financial statements, the Vendor will provide those
statements to the Purchaser.
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12
4.8 Material Change. Since the date of the balance sheet included in the
Statements there has not been:
(a) any material change in the financial condition of the Business, its
liabilities, or the Assets, other than changes in the ordinary course of
business, none of which has been materially adverse; or
(b) any damage, destruction, loss, or other event (whether or not covered by
insurance) materially and adversely affecting the Assets or the Business.
4.9 Litigation. There is no litigation or administrative or government
proceeding or inquiry pending or, to the Vendor's knowledge, threatened against
or relating to the Vendor, the Business, or any of the Assets, and the Vendor
does not know of or have reasonable grounds for believing that there is any
basis for any action, proceeding, or inquiry, except for a potential claim by
Ms. Amaral in respect of a diamond ring purchased through one of the Vendor's
auctions.
4.10 Conformity with Laws. The Vendor has not breached any statute, by-law,
regulation, covenant, restriction, plan, or permit, and the Vendor will not
transfer any government licenses and permits to the Purchaser or to any Person
and the Purchaser will be responsible for obtaining its own permits and
licenses.
4.11 No Collective Agreement. The Vendor is not a party to any collective
agreement relating to the Business with any labour union or other association of
employees and no part of the Business has been certified as a unit appropriate
for collective bargaining.
4.12 Employee Plans and Benefits; Employees and Independent Contractors. Except
as set forth in Schedule "E", neither the Vendor nor any member of a "controlled
group" (within the meaning of Section 4971(e)(2)(B) of the Internal Revenue
Code) that includes the Vendor (hereinafter referred to as an "ERISA Affiliate")
is a party to or participates in or has any liability or contingent liability
with respect to:
(a) any "employee welfare benefit plan" or "employee pension plan" (as
those terms are respectively defined in ERISA Sections 3(1) and 3(2))
or a Multiemployer Plan (referred to collectively as the "Plans"); or
(b) any retirement or deferred compensation plan, incentive compensation
plan, stock plan, unemployment compensation plan, vacation pay,
severance pay, bonus or benefit arrangement, insurance or
hospitalization program, or any other fringe benefit arrangements for
any employee, director, consultant, or agent, whether pursuant to a
contract, arrangement, custom, or informal understanding, which does
not constitute an "employee benefit plan," as defined in Section 3(3)
of ERISA (referred to collectively as "Compensation Arrangements");
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13
The Vendor has provided the Purchaser with complete and accurate copies of any
written Plans and Compensation Arrangements (or related insurance policies),
including any amendments thereto, along with copies of any employee handbooks or
similar documents describing the Plans and Compensation Arrangements. Any
unwritten Plans or Compensation Arrangements also are listed in Schedule "E",
and complete descriptions thereof have been furnished to the Purchaser. Except
as disclosed in Schedule "E", neither the Vendor nor any ERISA Affiliate is a
party to or has in effect or will have in effect after the date of this
Agreement any plan or arrangement that will become a Plan or Compensation
Arrangement.
4.13 Terms of Employment. The name and position of each present employee of the
Vendor, the duration of the employment of each employee with the Vendor, and the
Vendor's remuneration and benefit obligations and accrued vacation pay of each
employee is accurately set out in Schedule "E", and the Vendor will have paid
the full amounts of salaries, pensions, bonuses, commissions, and other
remuneration of any nature, including severance pay and unpaid earned wages of
the Vendor's employees and salespersons, as at the Closing Date up to the most
recent pay day, and there is no employee who cannot be dismissed on less than
two months' notice without further liability, except as disclosed in the List of
Material Contracts attached as Schedule "C".
4.14 List of Material Contracts. Schedule "C" contains a true and correct
listing of each written or oral Material Contract, including without limitation,
the following types:
(a) contracts or commitments out of the ordinary course of business;
(b) contracts or commitments involving an obligation to pay in the aggregate
$10,000 or more or of a duration greater than one year;
(c) contracts or commitments affecting ownership of or title to or any interest
in the Assets;
(d) contracts or commitments for the Intangible Property;
(e) except as required by statute or regulation, contracts or commitments for
bonuses, incentive compensation, pensions, group insurance, or employee
welfare plans, all of which are fully funded as determined by an
independent and reputable firm of actuaries employed by the Vendor; and
(f) employment contracts or commitments other than unwritten employment
contracts of indefinite duration entered into in the ordinary course of the
Business.
4.15 No Defaults. Except as otherwise expressly disclosed in this Agreement,
there has been no material default in any term, condition, provision, or
obligation to be performed under any Material Contract, each of which is in good
standing and in full force and effect, unamended.
4.16 Condition of Equipment. To the Vendor's best knowledge, all the Equipment
is in normal operating condition and in a state of reasonable maintenance and
repair per the Purchaser's right of inspection, and are being sold "as is". The
Equipment represents all machinery and
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14
equipment owned by the Vendor and used by the Vendor in the operation of the
Business.
4.17 No Infringement. To the best of the Vendor's knowledge, no copyright,
franchise or license, patent right, trade mark, trade name, or other of the
Vendor's Intangible Property used in or relating to the Business in any way
infringes on the right of any Person under or regarding any patent, trade mark,
trade name, copyright, or other industrial or intellectual property.
4.18 Use of Name. The Vendor has not:
(a) granted the right or license to any Person to use the Name;
(b) received notice from any Person that the Vendor's use of the Name infringes
the rights of any other Person; and
(c) assigned any rights to the Name or any other Intangible Property to any
other Person.
4.19 No Lien Indebtedness. The Vendor has no Indebtedness to any Person which
might, by operation of law or otherwise, now or hereafter, constitute a lien,
charge, or encumbrance on any of the Assets, except for encumbrances which will
be discharged on or following Closing on conditions satisfactory to the
Purchaser's counsel acting reasonably. There are no security interests in, or
financing statements filed or recorded in any jurisdiction relating to, any of
the Assets.
4.20 No Liability for Indebtedness. There is no Indebtedness of any kind
whatsoever, whether or not determined or determinable relating to the Business,
for which the Purchaser may become liable on or after the Closing Date, and
there has been no material increase in the Indebtedness since the date of the
balance sheet included in the Statements.
4.21 No Other Agreement. There is no written or oral agreement, option,
understanding, or commitment, or any right or privilege capable of becoming an
agreement, for the purchase of the Business or any of the Assets from the
Vendor, other than purchase orders accepted by the Vendor in the ordinary course
of the operation of the Business.
4.22 Tax Matters. All tax returns required to be filed by the Vendor with any
governmental entity have been filed when due; all taxes of any kind have been
paid timely; there are no tax liens filed against the Assets; and all taxes
required to be withheld by the Vendor have, in fact, been withheld and remitted
timely to the appropriate governmental entity.
4.23 Accuracy of Representations. No certificate furnished by or on behalf of
the Vendor to the Purchaser and the Parent Company at the Closing Date regarding
the Vendor's representations, warranties, or covenants in this Agreement will
contain any untrue statement of a material fact or omit to state a material fact
known to the maker of the certificate necessary to make the statements contained
in the certificate not misleading.
4.24 Schedules Accurate. To the Vendor's best knowledge, all information set out
in the Schedules to this Agreement is complete and accurate in every material
respect.
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15
4.25 Other Representations and Warranties. The Vendor acknowledges that no
representations or warranties have been made to it concerning the business of
the Purchaser or the Parent Company, the Shares, and the Warrant, except as
specifically set forth in this Agreement.
5. VENDOR'S COVENANTS
5.1 Conduct of Business. Until the Closing Date, the Vendor will conduct the
Business diligently and only in the ordinary course and will use its best
efforts to preserve the Assets intact, to keep available to the Purchaser its
present employees, and to preserve for the Purchaser its relationship with its
suppliers, customers, and others having business relations with it.
5.2 Access by Purchaser. The Vendor will give to the Purchaser and the Parent
Company and their officers, counsel, accountants, and other representatives full
access, during normal business hours throughout the period before the Closing
Date, to all of the Assets and of the Vendor's properties, books, contracts,
commitments, and records relating to the Business, and will furnish to the
Purchaser and the Parent Company during this period all information that they
may reasonably request.
5.3 Insurance. From this date until the Closing Date, the Vendor will obtain
and maintain in full force and effect policies of insurance adequate to insure,
subject to a reasonable deductible, the replacement value of the Assets.
5.4 Procure Consents. The Purchaser and the Vendor will cooperate regarding any
consents that may be required to validly assign the Material Contracts to the
Purchaser.
5.5 Covenant of Indemnity. The Vendor will indemnify and hold harmless each of
the Purchaser and the Parent Company from and against:
(a) any and all Indebtedness existing at or arising before, up to, or after the
Closing Date;
(b) any and all damage or deficiencies resulting from any misrepresentation,
breach of warranty, or non-fulfillment of any covenant on the Vendor's part
under this Agreement or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished to the
Purchaser and the Parent Company; and
(c) any and all actions, suits, proceedings, demands, assessments, judgments,
costs, and legal and other expenses incident to any of the foregoing.
5.6 Pay Employees. The Vendor will pay to all employees in the Business all
wages, salaries, bonuses, severance pay, pay in lieu of notice, and vacation pay
and will pay all source deductions up to and including the Closing Date.
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16
5.7 Termination of Employees. Upon completion of the Management Consulting
Agreement attached as Schedule "G", the Vendor will terminate the employment of
all of its employees and will indemnify and save harmless the Purchaser from and
against all claims by any employee of the Vendor for wages, salaries, bonuses,
pension or other benefits, severance pay, notice or pay in lieu of notice, and
vacation pay for any period before the termination of the Management Consulting
Agreement.
5.8 Steps to Transfer Assets. The Vendor will, before the Closing Date, take or
cause to be taken all proper steps, actions, and corporate proceedings on its
part to the extent required by applicable law (including the approval of the
sale by the Vendor's managers and members) to enable it to vest a good and
marketable title in the Purchaser to the Assets, free and clear of all liens,
mortgages, encumbrances, equities, or claims of every nature and kind.
5.9 Care of Assets. From the signing of this Agreement to the Closing Date, the
Vendor will take reasonable care to protect and safeguard the Assets and do all
necessary repairs and maintenance to the assets that the Vendor uses in the
operations of the Business, and will not sell or dispose of any of the Assets
except in the ordinary course of business.
5.10 Purchase of Members' Interest. The Vendor agrees to cause Stockbridge
Realty Investor - Arizona, Inc. to purchase all membership interest of Larry and
Christine Mesler in the Vendor before the Closing Date.
5.11 Tax Filings. The Vendor will, from the signing of this Agreement to the
Closing Date, make all necessary tax, government, and other filings in a timely
fashion.
5.12 Adverse Development. The Vendor will, from the signing of this Agreement to
the Closing Date, promptly advise the Purchaser and the Parent Company regarding
any development which materially affects the Business or the Assets, in either
case taken as a whole, but no such advice will cure any breach of any
representation or warranty made by the Vendor in this Agreement.
6. PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser and the Parent Company represent and warrant to the Vendor as
follows, with the intent that the Vendor will rely on these representations and
warranties in entering into this Agreement, and in concluding the purchase and
sale contemplated in this Agreement:
6.1 Status of Purchaser. The Purchaser is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of
Washington, and has the power and capacity to enter into this Agreement and to
carry out its terms.
6.2 Status of Parent Company. The Parent Company is a corporation duly
incorporated and in good standing under the laws of the State of Florida, is
validly existing, and has the power and capacity to enter into this Agreement
and to carry out its terms. The Parent Company's shares of common stock are
quoted for trading on the National Association of
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17
Securities Dealers Over-the-Counter Bulletin Board.
6.3 Authority to Purchase. All necessary corporate action on the part of each
of the Purchaser and the Parent Company has duly and validly authorized the
signing and delivery of this Agreement and the completion of the transaction
contemplated by this Agreement, and this Agreement constitutes a legal, valid,
and binding obligation of the Purchaser and the Parent Company enforceable
against them in accordance with its terms, except as limited by laws of general
application affecting the rights of creditors.
6.4 Inspection. The Purchaser represents that its representatives have examined
the premises in which the Business is now being conducted by the Vendor and has
inspected the physical condition of all the Assets. The Purchaser covenants that
it will accept a conveyance of the Assets in their present state and condition,
subject to reasonable use to the Closing Date.
6.5 Other Representations and Warranties. The Purchaser acknowledges that no
representations or warranties have been made to it concerning the Business or
the Assets except as specifically set forth in this Agreement.
7. PURCHASER'S COVENANTS
7.1 Offer Employment. The Purchaser covenants with the Vendor to offer, as of
the date of termination of the management consulting agreement to be entered
into between the Purchaser and Arizona Realty Consultants, LCC, employment to
former employees of the Vendor to be selected by the Purchaser in its discretion
on terms and conditions acceptable to the Purchaser.
7.2 Consents. The Purchaser will, at the Vendor's request, sign and deliver all
applications for consent and all assumption agreements, provide all information
necessary to obtain the consents referred to in section 5.4, and assist and
co-operate with the Vendor in obtaining those consents.
7.3 Assumption of Material Contracts. The Purchaser agrees to assume all of the
Vendor's obligations and liabilities under the Material Contracts identified in
Schedule "C" as of the Closing Date.
7.4 Indemnity. The Purchaser and the Parent Company will jointly and severally
indemnify and hold harmless the Vendor from and against:
(a) any and all covenants, provisions, debts, or obligations of or under the
Material Contracts arising from and after the Closing Date;
(b) any and all debts arising out of whatever contracts, transactions, or
business relationships are entered into by the Purchaser from and after the
Closing Date;
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18
(c) any and all damage or deficiencies resulting from any misrepresentation,
breach of warranty, or non-fulfillment of any covenant on the part of the
Purchaser or the Parent Company under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished to the Vendor; and
(d) any and all actions, suits, proceedings, demands, assessments, judgments,
costs, and legal and other expenses incident to any of the foregoing.
7.5 Proceeds of Auction. The Purchaser agrees to pay to the Vendor 50% of the
proceeds that may be received in respect of the auction to be held in
Scottsdale, Arizona by the Purchaser on March 24, 25, and 26, 2000. For the
purposes of this section, "proceeds" is defined as the gross sales of the
auction, less payments to consignees (25%) plus 10% of the auction purchaser's
purchase price, less sales commission (20% )that applies to the net proceeds
after payment to the consignor.
$100 Gross Sales Proceeds
($75) Payment to consignee (25%)
-----
$25 Net Proceeds after Payment to consignor
+ $10 Purchaser's 10% commission on sale price
-----
$35 Net proceeds before commission
($5) Commissions to sales people: 20% of net proceeds
---- after payment to consignee
$30 Proceeds to be split
If there is any disagreement between the parties as to the amount to be paid to
the Vendor hereunder, the matter will be referred for final determination to the
Purchaser's independent auditor.
7.6 Adverse Development. The Purchaser and the Parent Company will, from the
signing of this Agreement to the Closing Date, promptly advise the Vendor and
any related third parties regarding any development that materially affects the
Purchaser or the Parent Company's business or the terms of this Agreement, in
either case taken as a whole, but no such advice will cure any breach of any
representation or warranty made by the Purchaser in this Agreement.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS
8.1 Representations, Warranties, and Covenants of Vendor. All statements
contained in any certificate or other instrument delivered by or on behalf of
the Vendor under this Agreement will be deemed to be the Vendor's
representations and warranties. All of the Vendor's representations, warranties,
covenants, and agreements in this Agreement will, unless otherwise expressly
stated, survive the Closing Date and any investigation at any time made by or on
behalf of the Purchaser and the Parent Company and, subject to section 8.2, will
continue in full force and effect for the benefit of the Purchaser and the
Parent Company.
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8.2 Limitation on Vendor's Indemnity. No claim by the Purchaser or the Parent
Company under the covenant of indemnity contained in section 5.5 or for damages
or other relief regarding the Vendor's breach of warranty under this Agreement
will be valid unless:
(a) the Purchaser or the Parent Company gives to the Vendor written notice of
the claim before the expiration of six months after the Closing Date; and
(b) the aggregate amount of any and all claims made under section 5.5 exceeds
$5,000, it being understood that once such amount is exceeded, the
aggregate of all such claims (including such $5,000 amount and any amount
in excess thereof), will be payable to the Purchaser by the Vendor.
8.3 Purchaser's Representations, Warranties, and Covenants. All
representations, warranties, covenants, and agreements of the Purchaser and the
Parent Company in this Agreement will, unless otherwise expressly stated,
survive the Closing Date and any investigation at any time made by or on behalf
of the Vendor and will continue in full force and effect for the Vendor's
benefit.
8.4 Limitation on Purchaser's Indemnity. No claim by the Vendor under the
covenant of indemnity contained in section 7.4 or for damages or other relief
regarding breach of warranty by the Purchaser or the Parent Company under this
Agreement will be valid unless:
(a) the Vendor gives to the Purchaser and the Parent Company written notice of
the claim before the expiration of six months after the Closing Date; and
(b) the aggregate amount of any and all claims made under section 7.4 exceeds
$5,000, it being understood that once such amount is exceeded, the
aggregate of all such claims (including such $5,000 amount and any amount
in excess thereof), will be payable to the Vendor by the Purchaser.
9. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS
All obligations of the Purchaser and the Parent Company under this Agreement are
subject to the fulfillment at or before the Closing Date of the following
conditions:
9.1 Purchaser's Due Diligence. The Purchaser will have completed due diligence
in respect of the Assets satisfactory to the Purchaser in its sole discretion.
9.2 Vendor's Representations and Warranties. The Vendor's representations and
warranties contained in this Agreement and in any certificate or document
delivered under this Agreement will be true at and as of the Closing Date if the
Vendor made the representations and warranties at and as of that time.
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9.3 Vendor's Covenants. The Vendor will have performed and complied with all
covenants, agreements, and conditions required by this Agreement to be performed
or complied with by it before or at the Closing Date.
9.4 Vendor's Certificate. The Vendor will have delivered to the Purchaser and
the Parent Company a certificate of the Vendor's Manager, as a manager of the
Vendor and not in his personal capacity, dated the Closing Date and certifying
in such detail specified by the Purchaser and the Parent Company the fulfillment
of the conditions set forth in sections 9.2 and 9.3.
9.5 Opinion of Counsel. The Purchaser will have received from the Vendor's
legal counsel an opinion dated the Closing Date that, among other things, the
Vendor has taken all necessary steps and corporate proceedings to validly
transfer the Assets to the Purchaser, and that, to the knowledge of legal
counsel but without investigation, there are no claims, actions, or proceedings,
pending or threatened against or affecting the Assets or the transfer of the
Assets to the Purchaser.
9.6 Regulatory Approval. The Purchaser and the Parent Company will have
obtained all approvals that may be required from all securities regulatory
authorities having jurisdiction over the affairs of the Purchaser and the Parent
Company.
9.7 No Adverse Affect. Before the Closing Date, the Vendor will not have
experienced any event or condition or have taken any action of any kind
adversely affecting the Assets or the Business to materially reduce the value of
the Assets or the Business to the Purchaser.
9.8 Concurrent Purchases. Concurrently on the Closing Date, the Purchaser will
have completed the Real Estate Purchase and neither the transaction contemplated
by this Agreement nor the Real Estate Purchase will close unless the other
transaction closes concurrently.
9.9 Consents of Third Parties. The Vendor will have obtained all consents or
approvals required to be obtained to sell, assign, or transfer the Assets,
provided that the Vendor has not waived the need for any consents or approvals.
The foregoing conditions are for the exclusive benefit of the Purchaser and the
Parent Company and they may waive any condition in whole or in part before or at
the Closing Date by delivering to the Vendor a signed written waiver.
10. CONDITIONS PRECEDENT TO THE VENDOR'S OBLIGATIONS
All of the Vendor's obligations under this Agreement are subject to the
fulfillment, before or at the Closing Date, of the following conditions:
10.1 Vendor's Due Diligence. The Vendor will have completed due diligence in
respect of the Shares and the Warrant to be granted to the Vendor on the Closing
Date, satisfactory to the Vendor in its sole discretion.
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21
10.2 Purchaser's Representations and Warranties. The representations and
warranties of the Purchaser and the Parent Company contained in this Agreement
will be true at and as of the Closing Date as though they made the
representations and warranties at and as of that time.
10.3 Purchaser's Covenants. The Purchaser and the Parent Company will have
performed and complied with all covenants, agreements, and conditions required
by this Agreement to be performed or complied with by them before or at the
Closing Date.
10.4 Consents of Third Parties. The Vendor will have obtained all consents or
approvals required to be obtained to sell, assign, or transfer the Assets,
provided that the Vendor may only rely on this condition if the Vendor warrants
in writing that it has diligently used its best efforts to procure all consents
or approvals and the Purchaser and the Parent Company have not waived the need
for any consents or approvals.
The foregoing conditions are for the Vendor's exclusive benefit and the Vendor
may waive any condition in whole or in part before or at the Closing Date by
delivering to the Purchaser and the Parent Company a signed written waiver.
11. CLOSING
11.1 Time of Closing. Subject to the terms and conditions of this Agreement, the
purchase and sale of the Assets will close on the Closing Date.
11.2 Place of Closing. The Closing will take place at the offices of the Title
Company, Chicago Title Insurance Company, 2415 East Camelback Road, Suite 300,
Phoenix, Arizona, 85016.
11.3 Documents to be Delivered by the Vendor. At the Closing, the Vendor will
deliver or cause to be delivered to the Purchaser and the Parent Company:
(a) all bills of sale, transfer, and assignments in form and content
satisfactory to the Purchaser's counsel, appropriate to effectively vest a
good and marketable title to the Assets in the Purchaser to the extent
contemplated by this Agreement, and immediately registrable in all places
where registration of these instruments is required;
(b) possession of the Assets;
(c) the certificate of the Vendor's Manager under section 9.4;
(d) signed releases of or evidence to the Purchaser's reasonable satisfaction
for the discharge of any and all Indebtedness and encumbrances which may be
enforceable against any of the Assets being purchased or trust conditions
agreed on by counsel for the Vendor and the Purchaser discharging the same;
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22
(e) certified copies of documentation of the Vendor's members to the extent
required under applicable law that are required to be passed to authorize
the signing, delivery, and implementation of this Agreement and of all
documents to be delivered by the Vendor under this Agreement;
(f) all lists of customers, outstanding orders for the purchase and sale of
Inventory, brochures, samples, price lists, files, records, documents, and
other information related to the Business, and all licenses, authorities,
and other rights used in connection with the Business included in the
Assets;
(g) the Accredited Investor Questionnaire in the form attached as Schedule "F";
and
(h) signed resignations of each of Larry and Christine Mesler as managers and
members of the Vendor.
11.4 Documents to be Delivered by the Purchaser. At the Closing, the Purchaser
and the Parent Company will deliver or cause to be delivered:
(a) a wire transfer in U.S. funds payable to the Vendor or as directed by the
Vendor in the total amount set out in subsection 3.1(a);
(b) a certificate evidencing ownership of the Shares;
(c) a certificate representing the Warrant in the form attached as Schedule
"H"; and
(d) a signed management consulting agreement between the Purchaser and Arizona
Realty Consultants, LCC in the form attached as Schedule "G".
12. BULK SALES
The parties waive compliance with any applicable bulk sales provisions of the
Uniform Commercial Code as enacted and in force in the State of Arizona. The
Vendor agrees to indemnify the Purchaser and the Parent Company against any
claims by creditors alleging an interest in the Assets arising under applicable
bulk sales provisions.
13. TERMINATION
This Agreement is binding as to both parties and will not be terminated or any
party's interest rescinded but for a material breach of its terms.
14. RISK OF LOSS
From the date of this Agreement to the Closing Date, the Assets will be and
remain at the Vendor's risk. If any of the Assets are lost, damaged, or
destroyed before the Closing Date and are not replaced by the Vendor, the
Purchaser and the Parent Company may terminate this Agreement on
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23
written notice to the Vendor or elect by notice in writing to the Vendor to
complete the purchase to the extent possible without reduction of the Purchase
Price, in which event all proceeds of any insurance or compensation for any
loss, damage, or destruction will be paid to the Purchaser and all of the
Vendor's right and claim to any amounts not paid by the Closing Date will be
assigned to the Purchaser by written assignment in form and substance
satisfactory to the Purchaser's counsel.
15. NON-DISCLOSURE
The parties and their respective directors, officers, shareholders, employees,
and associates each agree that they will not, either during the currency of the
transaction contemplated by this Agreement or at any time thereafter:
(a) disclose the terms of this Agreement or any Confidential Information (as
defined below) to any other person, unless expressly authorized by the
other party in writing;
(b) use any Confidential Information for its own purposes or for any purpose
other than those of the other party; and
(c) make any copies, summaries, or other reproductions of any of the
Confidential Information without the other party's prior written consent.
"Confidential Information" means any non-public information (received in any
form) regarding one party and its businesses and affairs that the other party
may obtain or have access to during its association with that party.
Each party will comply with any directions that any other party may make to
ensure the safeguarding or confidentiality of all Confidential Information and
the terms of this Agreement.
16. RESTRICTIVE COVENANT
So long as H. James Friend is employed by or under contract with the Purchaser
or an affiliate of the Purchaser, the Vendor, H. James Friend, and the managers,
members, and employees of the Vendor (collectively, the "Vendor Group") will not
directly or indirectly engage in or carry on, individually or in partnership or
in conjunction with any one or more persons, firms, associations, syndicates, or
corporations, as principal, agent, employee, director, officer, shareholder of
any corporation, guarantor, creditor, or in any manner whatsoever, within
Arizona, any business that is the same as or similar to, in whole or in part,
the business of the Purchaser and its affiliates. The Vendor Group acknowledge
that they have considered this provision and that this provision is, regarding
their interests and those of the Purchaser and its affiliates, reasonable as to
all of the circumstances of the transactions contemplated by this Agreement.
On termination of the employment or association of H. James Friend with the
Purchaser or any of its affiliates, this restrictive covenant will not apply to
H. James Friend, except that he will not, for and during a period of two years
after the date of such termination, consign for sale in Arizona any antique
equipment, furniture, inventory, or other antique goods with or through any
third party,
<PAGE>
24
other than the Purchaser or its affiliates. Despite the foregoing, Harold Friend
may continue, from and after the Closing Date, to buy and sell antiques for his
own personal account as a hobby only and not as a business in competition with
the Purchaser or its affiliates.
The Vendor Group acknowledge and agree that a breach of this section 16 would
result in damages to the Purchaser and its affiliates and that they could not
adequately be compensated for such damages by monetary award. Accordingly, the
Vendor Group agree that the Purchaser and its affiliates will be entitled to
injunctive or other equitable relief to prevent or cure any breach or threatened
breach of section 16 of this Agreement by the Vendor Group. Resort to such
equitable relief, however, will not be construed to be a waiver of any other
right or remedy that the Purchaser and its affiliates may have for damages or
otherwise.
17. FURTHER ASSURANCES
The parties will sign all other documents and do all other things necessary to
carry out and give effect to the intent of this Agreement.
18. SET-OFF
If after the Closing, under this Agreement or any document delivered under this
Agreement, the Vendor or the Purchaser or the Parent Company becomes obligated
to pay any sum of money to the other, then this sum may, at either party's
election and without limiting or waiving any right or remedy of either party
under this Agreement, be set-off against and will apply to any sum of money or
security owed by either party to the other until this amount has been completely
set-off.
19. NOTICE
Any notices to be given by either party to the other will be sufficiently given
if delivered personally or transmitted by facsimile or if sent by registered
mail, postage prepaid, to the parties at their respective addresses shown on the
first page of this Agreement, or to any other addresses as the parties may
notify to the other from time to time in writing. This notice will be deemed to
have been given at the time of delivery, if delivered in person or transmitted
by facsimile, or within five business days from the date of posting if mailed.
20. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the parties and there
are no representations or warranties, express or implied, statutory or
otherwise, and no terms, conditions, or agreements collateral to this Agreement
other than as expressly set forth or referred to in this Agreement. This
Agreement supersedes all letters of intent or agreements made between the
parties before the date of this Agreement.
21. TIME OF THE ESSENCE
Time will be of the essence of this Agreement.
<PAGE>
25
22. APPLICABLE LAW
This Agreement will be governed by and interpreted in accordance with the laws
of the State of Arizona.
23. SUCCESSORS AND ASSIGNS
This Agreement will enure to the benefit of and be binding on the parties and
their respective heirs, executors, administrators, successors, and assigns.
IN WITNESS WHEREOF the parties have signed this Agreement as of the date
written on the first page of this Agreement.
MESLER'S AUCTION HOUSE OF )
SCOTTSDALE, LLC by )
Stockbridge Realty Investors - )
Arizona, Inc. )
)
/s/ Harold Friend ) c/s
- -------------------------------------- )
Authorized Signatory )
)
- -------------------------------------- )
Authorized Signatory )
THE CORPORATE SEAL OF )
ABLEAUCTIONS.COM )
(WASHINGTON), INC. was affixed )
in the presence of: )
)
/s/ [Illegible] ) c/s
- -------------------------------------- )
Authorized Signatory )
)
- -------------------------------------- )
Authorized Signatory )
<PAGE>
26
THE CORPORATE SEAL OF )
ABLEAUCTIONS.COM, INC. )
was affixed in the presence of: )
)
)
/s/ [Illegible] ) c/s
- -------------------------------------- )
Authorized Signatory )
)
- -------------------------------------- )
Authorized Signatory )
The provisions of section 16 of this Agreement are acknowledged and agreed to by
H. James Friend and Harold Friend.
/s/ H. JAMES FRIEND /s/ HAROLD FRIEND
- --------------------------------- ---------------------------------
H. JAMES FRIEND HAROLD FRIEND
<PAGE>
SCHEDULE "A"
Fixed Asset Depreciation Schedule - Equipment List
(Mesler's Auction House)
<TABLE>
Net book
Date Method Basis Value
---- ------ ----- -----
<S> <C> <C> <C> <C>
1. Furniture & Fixtures
o Safe Showcase 11/99 SL-6 7,875.00 7,875.00
2. Computer Equipment
o Computer - Dell Laptop 3/31/99 SL-6 3,004.07
o Computer - CIS 8/10/99 SL-5 3,085.00
o Computer 3/31/97 SL-6 1,711.73
o Computer, TV's etc. 2/18/98 SL-7 1,485.11
--------
TOTALS 9,285.91 7,465.19
3. Office Equipment
o Microwave 2/11/98 SL-7 617.78
o Chairs 2/12/98 SL-7 670.16
o Tables for Auction 2/18/98 SL-7 79.47
o Lions for office 2/22/98 SL-7 1,000.00
o Lamps plus 3/1/98 SL-7 74.64
o Glass shelves 3/22/98 SL-7 580.14
o Fax Machine 6/11/99 SL-7 2,643.11
--------
TOTALS 5,665.30 4,601.79
4. Computer Software
o Software 3/31/99 SL-5 8,000.00
o BCS Software 6/2/99 SL-5 903.00
o CID Premier Computer 6/11/99 SL-5 1,439.63
--------
TOTALS: 10,342.63 8,855.98
GRAND TOTALS: 33,168.84 28,797.96
</TABLE>
<PAGE>
SCHEDULE "B"
List of Intangible Property
1. The name, "Mesler's Auction House", and the goodwill associated therewith.
<PAGE>
SCHEDULE "C"
Mesler's Auction House
Verbal and Written Contract Liabilities as of March 14, 2000
<TABLE>
No. Party Purpose Term Approx. Amount
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
1 Mountain Telecommunications T1Line 2/2003 $1,100/mo.
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
2 Dancris Internet Service for 1.5 T1 3/2003 600/mo.
Line
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
3 Cox Cable(1) TV advertising 4/2000 1,920
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
4 KTVK TV(1) TV advertising 4/2000 1,320
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
5 KPHO TV(1) TV advertising 4/2000 2,760
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
6 KSAZ TV(1) TV advertising 4/2000 1,080
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
7 KPNX TV(1) TV advertising 4/2000 3,128
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
8 KNXV TV(1) TV advertising 4/2000 1,800
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
9 Burrell's Media Directory National listing of Balance due 400
all media
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
10 US West Centrax Phone Service 12/2002 750/mo.
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
11 US West Yellow Pages 2/2001 200/mo.
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
12 Tori Parking lot sweeping Month-to-month 70/mo.
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
13 The Hartford Insurance Liability Insurance Month-to-month
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
14 Safeguard Security monitoring Month-to-month 90/mo.
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
15 Waste Management Trash removal Month-to-month 75/mo.
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
16 Airtouch Paging Pager Month-to-month 15/mo.
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
17 Airtouch Cellular Larry Cell Phone 1/2001 190/mo.
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
18 Cellular One Rick Cell Phone 1/2000 90/mo.
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
19 Cleaning Services Cleaning Month-to-month 800/mo.
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
20 Landscape Services Landscaping Month-to-month 500/mo.
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
21 C&C Capital (verbal) Building lease Month-to-month
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
22 Larry Mesler(1) Employment
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
23 Export Tyre Holding Co.(1) Admin. Service
Agreement
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
24 Sean Morton Appraisal Consultant
Agreement
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
25 Christine Mesler Non compete agreement
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
26 Larry Mesler Non compete agreement
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
</TABLE>
<PAGE>
-2-
<TABLE>
<S> <C> <C> <C> <C>
27 Various Consignment Contracts Various Various
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
28 Telecheck Check Authorization
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
29 City of Scottsdale License Information
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
30 Robbie Kelldorf Consignment Agreement
(termination)
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
31 Larry Mesler/State of Arizona Real Estate License*
- ------------- ---------------------------------- ----------------------- ---------------------- ----------------------
</TABLE>
* State of Arizona Department of Real Estate - Real Estate Self Employed
Broker License for Larry Myron Mesler, Mesler Real Estate
(1) Indicates a Material Contract that will not be assumed by the Purchaser at
Closing.
<PAGE>
SCHEDULE "D"
MESLER'S AUCTION HOUSE OF SCOTTSDALE
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
<TABLE>
<S> <C>
Current Assets
Cash $ 33,089
Accounts Receivable - Trade 15,782
Consigner Advances 1,500
Employee advance - C Mesler 411
Inventories 1,700
Prepaid Insurance 1,271
--------
Total Current Assets 53,753
--------
Fixed Assets
Office Furniture and Equipment 36,939
Less: Accum Depreciation (4,686)
--------
Net Fixed Assets 32,253
Other Assets
Deposits 850
--------
Total Other Assets 850
--------
TOTAL ASSETS $ 86,856
=========
LIABILITIES
Current Liabilities
Accounts Payable Trade $ 14,446
Consignments Payable 59,876
Sales Tax Payable 779
Accounts Payable I/C 205,921
Accrued Expenses 5,961
Payroll Withholding 4,236
--------
Total Current Liabilities 291,219
--------
EQUITY
</TABLE>
<PAGE>
-2-
<TABLE>
<S> <C>
Capital - F & F Capital 120,233
Capital - Mesler (1,955)
Capital - Stockbridge Realty 100,000
Draws - Mesler 11,997
Net Income (Loss) - Current Yr. (434,638)
---------
Total Equity (204,363)
---------
TOTAL LIABILITIES AND EQUITY $ 86,856
=========
</TABLE>
<PAGE>
-3-
MESLER'S AUCTION HOUSE OF SCOTTSDALE
Statement of Operations
January 1, 1999 to December 31, 1999
<TABLE>
<S> <C> <C>
Income
Auction Proceeds $ 37,904 $ 1,685,085
Commission Income 3,772 163,270
Appraisal Income 0 1,412
Administrative Fees 2 2
House Sales (Net) 0 21,493
Broker Commission Income 0 3,310
---------- -------------
Total Income 41,678 1,874,572
---------- -------------
Cost of Sales
Expenses of Sales 1,054 6,682
Consigner Payments 28,264 1,294,015
---------- -------------
Cost of Sales 29,318 1,300,697
---------- -------------
Gross Income $ 12,360 $ 573,875
---------- -------------
Operating Expenses
Office Expense 5,206 43,323
Payroll Taxes & Ins. 1,861 24,577
Utilities 591 5,993
Insurance 3,728 15,746
Travel & Entertainment 2,038 5,438
Computer Expense 86 7,463
Freight In 0 373
Commissions Expense 5,503 14,024
Consulting Expense 99 12,439
Referral Fees 7,216 7,216
Admin. Service Fee 0 1,100
Freight Out 20 915
Salaries and Wages 16,770 146,564
Salaries and Wages 8,308 154,241
Mgr/Membs 42,945 329,490
Advertising 3,000 9,300
Appraisal Services 174 1,788
Vehicle 499 23,920
Auction Merch Deliveries 0 4,496
Bad Debt 859 3,257
Contract Services 437 2,651
Depreciation 0 4,136
Legal and Accounting 128 13,194
Taxes, Licenses and Fees 0 1,036
Personal Property Taxes 3,302 24,267
Credit Card Fees/Telecheck 0 3,125
</TABLE>
<PAGE>
-4-
<TABLE>
<S> <C> <C>
Seminars & Conventions 6,950 77,533
Rent 2,686 41,573
Postage and Courier 203 935
Supplies 500 5,562
Repair & Maintenance 0 1,923
Security 0 3,162
Referral Fee 1,959 13,068
Telephone 0 450
---------- -------------
Contributions 108,625 969,638
---------- -------------
Total Operating Expenses $(106,056) $(434,638)
=========== =============
Net Income (Loss)
</TABLE>
<PAGE>
SCHEDULE "E"
Employee Listing
(Mesler's Auction House)
<TABLE>
Name Position Date of Current Commission Available
Hire Rate of Pay Vacation
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
<S> <C> <C> <C> <C> <C>
Ballard, Mercedes T. Administrative 6/1/99 $2,600.00/mo N/A 0
Assistant
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
Bortolotti, Gary Accountant Closing $3,000.00/mo N/A 0
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
Friend, Andy Chief Operating Closing $6,000.00/mo N/A 0
Officer
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
Friend, Jimmy Account Executive 5/6/87 $6,701.16/mo 20% of Auction 0
House comm.
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
Harvey, Jack Accountant Closing $3,000.00/mo N/A 0
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
Hooton, Richard L General Manager 1/6/97 $6,701.16/mo N/A 168 hours
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
Lawson, John R. General Help 8/30/99 $11.00/hr N/A 0
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
Mesler, Larry M. Account Executive 2/8/99 $8,000.00/mo $1,000 monthly 40 hours
guaranteed draw
against comm. *
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
Morton, Sean Account Executive 12/1/99 $2,000.00/mo $800 monthly 0
guaranteed draw
against comm.*
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
Oen, Douglas O. Account Executive 5/1/96 $4,250.00/mo 20% of Auction 0
House comm.
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
Rowedder, Gary L. General Help 4/28/87 $3,328.00/mo N/A 0
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
Williams, Brenda J. Clerical Support 6/21/99 $2,500.00/mo N/A 0
- ------------------------------ ----------------------- -------------- ------------------ --------------------- ----------------
</TABLE>
* Both of these individuals receive the amount stated along with their
monthly salary compensation checks. They are not eligible for commission
payments until their earned commissions exceed the amount stated. The
commissions for Mesler and Morton are 20%.
All of the above employees of the Vendor are covered by a group insurance
plan.
All of the above employee plans are subject to a vacation pay plan that
gives no vacation during the first full year of employment. In the second
year of employment, an employee receives one week; in the third year, two
weeks and in the sixteenth year, 3 weeks. Part-time employees receive no
benefits at all.
<PAGE>
SCHEDULE "F"
INVESTOR QUESTIONNAIRE
The undersigned (the "Purchaser"), in connection with the acquisition of
securities (the "Securities") of Ableauctions.com, Inc. (the Company") pursuant
to that certain asset purchase agreement ("Agreement") among the Purchaser, the
Company, and Ableauctions.com (Washington), Inc. dated March o, 2000, makes the
following representations and warranties:
The Purchaser understands that the Company is relying on this information
in determining to offer securities to the undersigned in a manner exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Act"), and applicable state securities laws.
1. Qualified Investor
The Purchaser represents and warrants that the Purchaser falls within the
category (or categories) marked. PLEASE INDICATE EACH CATEGORY OF ACCREDITED
INVESTOR THAT YOU, THE PURCHASER, SATISFY, BY PLACING AN "X" ON THE APPROPRIATE
LINE BELOW.
_____ Category 1. A bank, as defined in Section 3(a)(2) of the
Act, whether acting in its individual or fiduciary capacity;
or
_____ Category 2. A savings and loan association or other
institution as defined in Section 3(a) (5) (A) of the Act,
whether acting in its individual or fiduciary capacity; or
_____ Category 3. A broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934; or
_____ Category 4. An insurance company as defined in Section 2(13)
of the Act; or
_____ Category 5. An investment company registered under the
Investment Company Act of 1940; or
_____ Category 6. A business development company as defined in
Section 2(a) (48) of the Investment Company Act of 1940; or
_____ Category 7. A small business investment company licensed by
the U.S. Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958; or
_____ Category 8. A plan established and maintained by a state,
its political subdivision or any agency or instrumentality
of a state or its political subdivisions, for the benefit of
its employees, with assets in excess of US$5,000,000; or
<PAGE>
-2-
_____ Category 9. An employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974 in which
the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a
bank, savings and loan association, insurance company or
registered investment advisor, or an employee benefit plan
with total assets in excess of US$5,000,000 or, if a
self-directed plan, the investment decisions are made solely
by persons who are accredited investors; or
_____ Category 10. A private business development company as
defined in Section 202(a) (22) or the Investment Advisors
Act of 1940; or
_____ Category 11. An organization described in Section 501(c)(3)
of the Internal Revenue Code, a corporation, a Massachusetts
or similar business trust, or a partnership, not formed for
the specific purpose of acquiring the Shares, with total
assets in excess of US$5,000,000; or
_____ Category 12. A director, executive officer or general
partner of the Company; or
_____ Category 13. A natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of
this purchase exceeds US$1,000,000; or
_____ Category 14. A natural person who had an individual income
in excess of US$200,000 in each of the two most recent years
or joint income with that person's spouse in excess of
US$300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year; or
_____ Category 15. A trust, with total assets in excess of
US$5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in SEC Rule
506(b)(2)(ii); or
_____ Category 16. An entity in which all of the equity owners are
accredited investors.
If you are not an accredited investor, please so indicate by placing
an "X" on the following line: _____
2. Purchasing Entirely for Own Account
The Purchaser represents and warrants that it is acquiring the Securities
solely for its own account for investment and not with a view to or for sale or
distribution of the Securities or any portion thereof and without any present
intention of selling, offering to sell, or otherwise disposing of or
distributing the Securities or any portion thereof in any transaction other than
a transaction complying with the registration requirements of the Act and
applicable state securities or "blue sky" laws, or pursuant to an exemption
therefrom. The Purchaser also represents that the entire legal and beneficial
interest of the Securities that it is purchasing is being purchased for, and
will
<PAGE>
-3-
be held for, the Purchaser's account only, and neither in whole nor in part for
any other person or entity.
3. Information Concerning the Company
The Purchaser acknowledges that it has received all information that it
deems necessary and appropriate to enable it to evaluate the financial risk
inherent in making an investment in the securities (the "Disclosure Documents")
and the documents and materials submitted therewith, which include a description
of the risks inherent in an investment in the Company. The Purchaser further
acknowledges that it has received satisfactory and complete information
concerning the business and financial condition of the Company in response to
all inquiries in respect thereof.
4. Economic Risk and Suitability
The Purchaser represents and warrants as follows:
(a) The Purchaser realizes that its purchase of the Securities involves a high
degree of risk and will be a highly speculative investment, and that it is
able, without impairing its financial condition, to hold the Securities for
an indefinite period of time.
(b) The Purchaser has carefully considered and has, to the extent it believes
such discussion necessary, discussed with its professional legal, tax, and
financial advisors the suitability of an investment in the Company for the
particular tax and financial situation of the Purchaser and that the
Purchaser and/or its advisors have determined that the Securities are a
suitable investment for the Purchaser.
(c) The financial condition and investment of the Purchaser are such that it is
in a financial position to hold the Securities for an indefinite period of
time and to bear the economic risk of, and withstand a complete loss of,
the purchase price.
(d) The Purchaser alone, or with the assistance of professional advisors, has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its purchase of the
Securities, or has a pre-existing personal or business relationship with
the Company or any of its officers, directors, or controlling persons of a
duration and nature that enables it to be aware of the character, business
acumen, and general business and financial circumstances of the Company or
that other person.
(e) The Purchaser has carefully read the Disclosure Documents and the documents
and materials submitted therewith, and the Company has made available to
the Purchaser or its advisors all information and documents requested by
the Purchaser relating to investment in the Securities, and has provided
answers to the Purchaser's satisfaction to all of the Purchaser's questions
concerning the Company.
(f) If the Purchaser is a partnership, trust, corporation, or other entity: (1)
it was not organized for the purpose of acquiring the Securities (or all of
its equity owners are "accredited
<PAGE>
-4-
investors" as defined in Section 1 above); (2) it has the power and
authority to execute and comply with the terms of the asset purchase
agreement and the person executing said documents on its behalf has the
necessary power to do so; (3) its principal place of business and principal
office are located within the state set forth in its address below; and (4)
all of its trustees, partners and/or shareholders, whichever the case may
be, are bona fide residents of said state.
(g) The Purchaser understands that neither the Company nor any of its officers
or directors has any obligation to register the Securities under any
federal or state securities act or law.
(h) The Purchaser has relied solely on the Disclosure Documents and the
documents and materials submitted therewith, advice of its representatives,
if any, and independent investigations made by the Purchaser and/or its
purchaser representatives, if any, in making the decision to purchase the
Securities subscribed for herein and acknowledges that no representations
or agreements other than those set forth in the Disclosure Documents have
been made to the Purchaser in respect thereto.
(i) All information that the Purchaser has provided concerning itself is
correct and complete as of the date set forth below, and if there is any
material change in that information, it will immediately provide that
information to the Company.
(j) The Purchaser confirms that it has received no general solicitation or
general advertisement and has attended no seminar or meeting (whose
attendees have been invited by any general solicitation or general
advertisement) and has received no advertisement in any newspaper,
magazine, or similar media, broadcast on television, or radio regarding the
offering of the Securities.
(k) The Purchaser is a resident of the United States and has an office at the
address indicated below.
5. Restricted Securities
The Purchaser acknowledges that the Company has hereby disclosed to the
Purchaser in writing that:
(a) The Securities that the Purchaser is purchasing have not been registered
under the Act, or the securities laws of any state of the United States,
and the Securities must be held indefinitely unless a transfer of them is
subsequently registered under the Act or an exemption from such
registration is available; and
(b) The Company will make a notation in its records of the above described
restrictions on transfer and of the legend described below.
6. Legend
The Purchaser agrees that all of the Securities will have endorsed thereon
a legend to the
<PAGE>
-5-
following effect:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED
STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR
INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED ON THE BOOKS OF THE
CORPORATION, WITHOUT REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE
UNITED STATES FEDERAL OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN
APPLICABLE EXEMPTION THEREFROM, SUCH COMPLIANCE, AT THE OPTION OF THE
CORPORATION, TO BE EVIDENCED BY AN OPINION OF SHAREHOLDER'S COUNSEL, IN
FORM ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION
PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT."
IN WITNESS WHEREOF, the undersigned has executed this questionnaire as of
March ___, 2000.
(Signature)
Mesler's Auction House of Scottsdale, LLC
-----------------------------------------
(Print Name)
-----------------------------------------
(Address)
-----------------------------------------
(City/State/Zip Code)
-----------------------------------------
(Area Code/Telephone Number)
<PAGE>
SCHEDULE "G"
MANAGEMENT CONSULTING AGREEMENT
This Agreement dated this 20th day of March, 2000 is made
BETWEEN:
ARIZONA REALTY CONSULTANTS, INC., a company incorporated under the
laws of Arizona and having its head office at 2425 East Camelback
Road, Suite 975, Phoenix, Arizona, 85016-4215, with attention to
Harold Friend, Facsimile (602) 224-5434
(the "Manager/Consultant")
OF THE FIRST PART
AND:
ABLEAUCTIONS.COM (WASHINGTON), INC., a company incorporated under the
laws of the State of Washington and having its registered office at
331635 36th Avenue SW, Federal Way, Washington, 98023-2105, with
attention to Abdul Ladha, Facsimile (604) 432-9866
(the "Company")
OF THE SECOND PART
WHEREAS:
A. Mesler's Auction House of Scottsdale, LLC, an affiliate of the
Manager/Consultant, has sold its assets and name to the Company under the terms
of an Asset Purchase Agreement ("Asset Agreement") dated March 20, 2000 and;
B. The Manager/Consultant has agreed to continue to operate and manage the
Company's auction business (Mesler's Auction House of Scottsdale) for a limited
period of time, specifically for its knowledge and expertise of the auction and
sale currently scheduled for March 24, 2000 and;
C. The Company will pay for the Manager/Consultant's costs, certain fees
for services, and overhead associated with the operation of the auction business
for such time.
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the premises
and the covenants, agreements, representations, warranties, and payments set
forth in this Agreement, the parties covenant and agree as follows:
<PAGE>
2
1. Consultation/Management Services. The Company hereby employs the
Manager/Consultant to perform the following services in accordance with the
terms and conditions set forth in this agreement:
The Manager/Consultant will employ those individuals listed in
Schedule "A" at those salaries and/or rates of pay listed therein on behalf of
the Company. In addition, the following three individuals will perform services
under this Agreement for the benefit of the Company and as detailed by Schedule
"A": Andy Friend, Gary Bartolotti, and Jack Harvey.
The Manager/Consultant will continue to operate the Company's auction
business in the State of Arizona at the current Scottsdale location.
The Manager/Consultant, from and after the date of March 20, 2000,
will cause to be paid all reasonable expenses associated with the cost of doing
business as an auction in Mesler's Auction House of Scottsdale in Scottsdale
Arizona at its current address, 7303 East Earll Drive, Scottsdale, County of
Maricopa, State of Arizona.
The Manager/Consultant will consult with certain officers and
employees of the Company concerning matters relating to the management and
organization of the auction business in Arizona, its financial policies, and
generally any matter arising out of day to day operation of the Company's
auction business in Arizona.
The Manager/Consultant will cause certain reports and accountings to
be disclosed to the Company on a weekly basis or at the reasonable request of
the Company, and will provide the Company with copies of all receipts and
vouchers in respect of all non-payroll expenses incurred in the performance of
its services hereunder.
2. Term of the Agreement. This agreement will begin on March 20, 2000 and
will be effective on a month to month basis at the will of either party. With
five days notice in writing, either by certified mail or personal delivery,
either party may cancel this agreement.
3. Time Devoted by Manager/Consultant. It is anticipated that the
Manager/Consultant and its employees will spend whatever time necessary in
fulfilling its obligations under this contract. The particular amount of time
may vary from day to day or week to week.
4. Place Where Services Will Be Rendered. The Manager/Consultant will
perform most services in accordance with this Agreement at the Earll Drive
location as well as the offices located at 4110 North Scottsdale Road, Suite
308, Scottsdale, Arizona 85251.
5. Payment to Consultant. Upon signing and commencement of the term of this
agreement, the Company shall deliver to the Manager/Consultant a wire transfer
in the amount of $50,000 representing a retainer to be used by the
Manager/Consultant for the operation and management of the auction business,
which includes paying all expenses similar to those itemized in the December 31,
1999 Financial Statement (Schedule D to the Asset Purchase Agreement of Mesler's
Auction House of Scottsdale and Able Auctions.com, Inc.) Upon
<PAGE>
3
depletion of the initial retainer, the retainer shall be replenished at the
request of the Manager/Consultant. In addition, the Manager/Consultant will pay
$11,000 a month for the three individuals listed above in Section 2 of this
Agreement which will be paid from Company's retainer.
The Manager/Consultant shall draw from that retainer all reasonable
expenses, including employee payroll and other employee benefits as well as day
to day operating expenses for the auction business.
The Manager/Consultant's draws shall be based on actual cost of
expenses and payroll per Schedule "A" to this Agreement, not on any hourly or
time requirement. The Manager/Consultant reserves the right to hire additional
temporary, part-time or full-time employees with the prior consent of the
Company based upon the staffing needs of the Company's auction business.
6. Confidential Information.
All reports, documents, customer lists, concepts, and products,
together with any business contracts or any business opportunities prepared,
produced, developed, or acquired by the Manager/Consultant, directly or
indirectly, in connection with the performance of its services hereunder
(collectively, the "Work Product") will belong exclusively to the Company or any
of its affiliates, as appropriate (collectively, the "Companies"), which will be
entitled to all rights, interest, profits, or benefits in respect thereof,
except as otherwise provided by the Asset Purchase Agreement between Mesler's
Auction House of Scottsdale, LLC and the Company.
No copies, summaries, or other reproductions of any Work Product will
be made by the Manager/Consultant without the express written permission of the
Company, provided that the Manager/Consultant is permitted to maintain one copy
of the Work Product for its own use during the term of this Agreement.
The Manager/Consultant and any of its managers, members, agents,
employees, or consultants (collectively, the "Associates") will not disclose any
information, documents, or Work Product developed by the Manager/Consultant or
to which the Manager/Consultant may have access by virtue of its performance of
its services to any person not expressly authorized in writing by the Company
for that purpose. The Manager/Consultant will comply with any directions the
Company may make to ensure the safeguarding or confidentiality of all such
information, documents, and the Work Product.
The Manager/Consultant and the Associates will not, either directly or
indirectly as a manager, member, shareholder, director, officer, employee,
agent, consultant, or associate of any person, make any use of any confidential
information for the purpose of soliciting the business of any customer or former
customer of the Companies, or for the purpose of appropriating any business
opportunity whatsoever available to, or which might be available to the
Companies.
<PAGE>
4
The Manager/Consultant acknowledges and agrees that the confidential
information is and will be of a special and unique character, the loss of which
cannot be reasonably, readily, or accurately calculated in monetary terms.
Accordingly, the Companies will be entitled to injunctive or other equitable
relief to prevent or cure any breach or threatened breach of this Agreement by
the Manager/Consultant or any of the Associates. Resort to such equitable
relief, however, will not be construed to be a waiver of any other right or
remedy that the Companies may have for damages or otherwise.
The Manager/Consultant agrees that during the term of this Agreement
and for a period of two years following the date of termination of this
Agreement, neither the Manager/Consultant nor any of the Associates will:
(a) encourage or entice any persons who are or become employees or
consultants of the Companies at any time during or after the term of
this Agreement or who were employees or consultants of the Company at
any time within the 30 days preceding the date of this Agreement to
seek employment or service with persons other than the Companies; or
(b) offer employment or service contracts directly or indirectly to any
persons who are or become employees or consultants of the Companies at
any time during or after the term of this Agreement or who were
employees or consultants of the Companies at any time within the 30
days preceding the date of this Agreement;
(c) in this section, letters (a) and (b) do not apply to the following:
i) those employees or other Associates that were Mesler's Auction
House of Scottsdale employees prior to March 20, 2000 who are
terminated upon termination of this Agreement and not rehired by
the Companies; and
ii) those employees or other Associates that were subsequently hired
by the Company and are so employed for a period less than 6
months from March 20,2000.
The Manager/Consultant and the Associates acknowledge and agree that a
breach of this section 6 would result in damages to the Company for which the
Company could not adequately be compensated by monetary award. Accordingly, the
Manager/Consultant and the Associates agree that the Company will be entitled to
injunctive or other equitable relief to prevent or cure any breach or threatened
breach of section 6 of this Agreement by the Manager/Consultant and the
Associates. Resort to such equitable relief, however, will not be construed to
be a waiver of any other right or remedy that the Company may have for damages
or otherwise. The remedies afforded to the Companies by this Agreement will be
cumulative and not alternative and will be in addition to and not in
substitution for any other rights and remedies available to them at law or in
equity, including the remedy of injunctive relief.
<PAGE>
5
7. Termination of Employees. Upon completion of this Agreement and the
termination of Manager/Consultant's services, the Manager/Consultant will
terminate all employees to whom the Company has made permanent offers of
employment. Those employees not hired by the Company shall no longer provide
services to the Company and the Manager/Consultant agrees to indemnify and hold
harmless the Company from and against all claims by any such employee of the
Manager/Consultant for any wages, salaries, bonuses, pension or other benefits,
severance pay, notice or pay in lieu of notice and vacation pay for any period
before or after the termination date.
IN WITNESS WHEREOF the parties have signed this Agreement as of the date
written on the first page of this Agreement.
THE CORPORATE SEAL OF )
ARIZONA REALTY )
CONSULTANTS, INC. was affixed ) c/s
in the presence of: )
)
/s/ Harold Friend )
- -------------------------------------- )
Authorized Signatory )
)
- -------------------------------------- )
Authorized Signatory )
THE CORPORATE SEAL OF )
ABLEAUCTIONS.COM )
(WASHINGTON), INC. was affixed ) c/s
in the presence of: )
)
)
- -------------------------------------- )
Authorized Signatory )
)
/s/ [Illegible] )
- -------------------------------------- )
Authorized Signatory )
<PAGE>
SCHEDULE "A"
Employee Listing
(Mesler's Auction House)
<TABLE>
Name Position Date of Current Commission Available
Hire Rate of Pay Vacation
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
<S> <C> <C> <C> <C> <C>
Ballard, Mercedes T. Administrative 6/1/99 $2,600.00/mo N/A 0
Assistant
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
Bortolotti, Cary Accountant Closing $3,000.00/mo N/A 0
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
Friend, Andy Chief Operating Closing $6,000.00/mo N/A 0
Officer
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
Friend, Jimmy Account 5/6/87 $6,701.16/mo 20% of Auction 0
Executive House comm.
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
Harvey, Jack Accountant Closing $3,000.00/mo N/A 0
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
Hooton, Richard L General Manager 1/6/97 $6,701.16/mo N/A 168 hours
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
Lawson, John R. General Help 8/30/99 $11.00/hr N/A 0
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
Mesler, Larry M. Account 2/8/99 $8,000.00/mo $1,000 monthly 40 hours
Executive guaranteed draw
against comm. *
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
Morton, Sean Account 12/1/99 $2,000.00/mo $800 monthly 0
Executive guaranteed draw
against comm.*
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
Oen, Douglas O. Account 5/1/96 $4,250.00/mo 20% of Auction 0
Executive House comm.
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
Rowedder, Gary L. General Help 4/28/87 $3,328.00/mo N/A 0
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
Williams, Brenda J. Clerical Support 6/21/99 $2,500.00/mo N/A 0
- ------------------------------- ---------------------- ------------- ------------------ --------------------- ----------------
</TABLE>
* Both of these individuals receive the amount stated along with their
monthly salary compensation checks. They are not eligible for commission
payments until their earned commissions exceed the amount stated. The
commissions for Mesler and Morton are 20%.
All of the above employees of the Vendor are covered by a group insurance
plan.
All of the above employee plans are subject to a vacation pay plan that
gives no vacation during the first full year of employment. In the second
year of employment, an employee receives one week; in the third year, two
weeks and in the sixteenth year, 3 weeks. Part-time employees receive no
benefits at all.
<PAGE>
SCHEDULE "H"
THIS WARRANT AND THE SHARES DELIVERABLE ON EXERCISE OF THE WARRANT HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THIS WARRANT
MAY NOT BE EXERCISED UNLESS THE UNDERLYING SHARES HAVE BEEN REGISTERED UNDER THE
1933 ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY STATE OR AN EXEMPTION
FROM THOSE REGISTRATION REQUIREMENTS IS AVAILABLE.
ABLEAUCTIONS.COM, INC.
NON-TRANSFERABLE WARRANT
A. TO PURCHASE SHARES OF COMMON STOCK
150,000 Common Shares Void after
Par Value of U.S. $0.001 March 20, 2001.
This is to certify that, for value received, MESLER'S AUCTION HOUSE OF
SCOTTSDALE, LLC. (the "Warrant Holder"), of 2425 East Camelback Road, Suite 975,
Phoenix, Arizona, 85016-4215, has the right to purchase from Ableauctions.com,
Inc., a Florida corporation (the "Company"), on and subject to the terms and
conditions hereinafter referred to, 150,000 fully paid and non-assessable shares
of common stock of the Company having a par value of US$0.001 per share (the
"Shares"), or any greater or lesser number of shares that may be determined by
application of the anti-dilution provisions of this Warrant. The Shares may be
purchased at a price of US$8.00 per Share at any time up to 5:00 p.m. local time
in Seattle, Washington, on March 20, 2001. The right to purchase the Shares may
be exercised in whole or in part by the Warrant Holder only at the price set
forth above (the "Exercise Price") within the time set forth above by:
(a) completing and signing the attached Subscription Form for the number of
Shares that the Warrant Holder wishes to purchase, in the manner therein
indicated;
(b) surrendering this Warrant Certificate, together with the completed
Subscription Form, to Interwest Transfer Company, Inc., 1981 E. 4800 South,
Ste. 100, Salt Lake City, Utah 84117, (the "Transfer Agent");
(c) delivering an investor questionnaire and/or similar documents acceptable to
the Company demonstrating that the sale of the shares to be purchased is
exempt from registration under the Securities Act of 1933, as amended (the
"1933 Act"), and any state securities law; and
(d) paying the appropriate Exercise Price, in United States funds, for the
number of Shares subscribed for, either by certified cheque or bank draft
or money order payable to the Company in Vancouver, British Columbia, or
any other address that the Company may advise by written notice to the
address of the Warrant Holder.
<PAGE>
2
This Warrant and the Shares issuable on exercise of the Warrant have not been
registered under the 1933 Act or the securities laws of any state of the United
States, and this Warrant may not be exercised unless the Shares are registered
under the 1933 Act and the securities laws of all applicable states of the
United States or an exemption from registration requirements is available.
On surrender and payment, the Company will issue to the Warrant Holder, or to
any other person or persons that the Warrant Holder may direct, the number of
the Shares subscribed for and will deliver to the Warrant Holder, at the address
set forth on the Subscription Form, a certificate or certificates evidencing the
number of Shares subscribed for. If the Warrant Holder subscribes for a number
of Shares that is less than the number of Shares permitted by this Warrant, the
Company will forthwith cause to be delivered to the Warrant Holder a further
Warrant Certificate in respect of the balance of the Shares referred to in this
Warrant Certificate not then being subscribed for. The Shares so purchased will
be deemed to be issued as of the close of business on the date on which this
Warrant has been exercised by payment to the Company of the Exercise Price. No
fractional shares will be issued on the exercise of this Warrant.
In the event of any subdivision of the common shares of the Company (as those
common shares are constituted on the date hereof) into a greater number of
common shares while this Warrant is outstanding, the number of Shares
represented by this Warrant will thereafter be deemed to be subdivided in like
manner and the Exercise Price adjusted accordingly, and any subscription by the
Warrant Holder for Shares hereunder will be deemed to be a subscription for
common shares of the Company as subdivided.
In the event of any consolidation of the common shares of the Company (as those
common shares are constituted on the date hereof) into a lesser number of common
shares while this Warrant is outstanding, the number of Shares represented by
this Warrant will thereafter be deemed to be consolidated in like manner and the
Exercise Price adjusted accordingly, and any subscription by the Warrant Holder
for Shares hereunder will be deemed to be a subscription for common shares of
the Company as consolidated.
In the event of any capital reorganization or reclassification of the common
shares of the Company or the merger or amalgamation of the Company with another
corporation at any time while this Warrant is outstanding, the Company will
thereafter deliver, at the time of purchase of the Shares hereunder, the number
of common shares the Warrant Holder would have been entitled to receive in
respect of the number of the Shares so purchased had the right to purchase been
exercised before the capital reorganization or reclassification of the common
shares of the Company or the merger or amalgamation of the Company with another
corporation.
If at any time while this, or any replacement, Warrant is outstanding:
(a) the Company proposes to pay any dividend of any kind on its common shares
or make any distribution to the holders of its common shares;
(b) the Company proposes to offer for subscription pro rata to the holders of
its common shares any additional shares of stock of any class or other
rights;
<PAGE>
3
(c) the Company proposes any capital reorganization or classification of its
common shares or the merger or amalgamation of the Company with another
corporation; or
(d) there is a voluntary or involuntary dissolution, liquidation, or winding-up
of the Company,
the Company must give to the Warrant Holder at least seven days prior written
notice (the "Notice") of the date on which the books of the Company are to close
or a record is to be taken for the dividend, distribution, or subscription
rights, or for determining rights to vote with respect to the reorganization,
reclassification, consolidation, merger, amalgamation, dissolution, liquidation,
or winding-up. The Notice will specify, in the case of any dividend,
distribution, or subscription rights, the date on which holders of common shares
of the Company will be entitled to exchange their common shares for securities
or other property deliverable on any reorganization, reclassification,
consolidation, merger, amalgamation, sale, dissolution, liquidation, or
winding-up, as the case may be. Each Notice will be delivered by hand, addressed
to the Warrant Holder at the address of the Warrant Holder set forth above or at
any other address that the Warrant Holder may from time to time specify to the
Company in writing.
The holding of this Warrant Certificate or the Warrants represented hereby does
not constitute the Warrant Holder a member of the Company.
Nothing contained herein confers any right on the Warrant Holder or any other
person to subscribe for or purchase any Shares of the Company at any time
subsequent to 5:00 p.m. local time in Seattle, Washington, on March 20, 2001,
and from and after that time, this Warrant and all rights hereunder will be
void.
The Warrants represented by this Warrant Certificate are non-transferable. Any
common shares issued pursuant to this Warrant will bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED
STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR
INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED ON THE BOOKS OF THE
CORPORATION, WITHOUT REGISTRATION UNDER ALL APPLICABLE UNITED STATES
FEDERAL OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION
THEREFROM, SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE
EVIDENCED BY AN OPINION OF THE HOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE
CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT
FROM ANY PROPOSED TRANSFER OR ASSIGNMENT."
Time will be of the essence hereof.
<PAGE>
4
This Warrant Certificate is not valid for any purpose until it has been signed
by the Company.
IN WITNESS WHEREOF, the Company has caused its common seal to be hereto affixed
and this Warrant Certificate to be signed by one of its directors as of the 20th
day of March, 2000.
ABLEAUCTIONS.COM, INC.
Per:
- --------------------------------
Abdul Ladha, Director
<PAGE>
SUBSCRIPTION FORM
To: Ableauctions.com, Inc. (the "Company")
And to: The directors of the Company
Pursuant to the Share Purchase Warrant made the 20th day of March, 2000, the
undersigned subscribes for and agrees to purchase __________ shares of common
stock of the Company having a par value of US$0.001 (the "Shares"), at a price
of US$8.00 per Share for the aggregate sum of US$_________ (the "Subscription
Funds"), and encloses herewith: (i) a certified cheque, bank draft, or money
order payable to the Company in full payment of the Shares; and (ii) a completed
accredited investor questionnaire (attached as Schedule A).
The undersigned requests that:
(a) the Shares be allotted to the undersigned;
(b) the name and address of the undersigned as shown below be entered in the
registers of members and allotments of the Company;
(c) the Shares be issued to the undersigned as fully paid and non-assessable
common shares of the Company; and
(d) a share certificate representing the Shares be issued in the name of the
undersigned.
Dated this _______ day of ______________, 200__.
DIRECTION AS TO REGISTRATION:
(Name and address exactly as you wish them to appear on your share certificate
and in the register of members.)
Full Name(1): ------------------------------------------------------------------
Full Address: ------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Signature of Subscriber(1): ----------------------------------------------------
If the name above differs from Signature of Subscriber guaranteed by:
the name of the Subscriber, then
please complete the following
guarantee: ----------------------------------------
Authorized Signature Number
(1) NOTE: The signature to this subscription form must correspond with the name
as recorded on the Warrant Certificate in every particular without alteration or
enlargement or any change
<PAGE>
2
whatever. The signature of the person signing this power must be guaranteed in a
manner satisfactory to the Company's transfer agent.
<PAGE>
Schedule "A"
INVESTOR QUESTIONNAIRE
The undersigned (the "Purchaser"), in connection with the acquisition of
securities (the "Securities") of Ableauctions.com, Inc. (the Company") pursuant
to the share purchase warrant dated March 20, 2000, makes the following
representations and warranties:
The Purchaser understands that the Company is relying on this information
in determining to offer securities to the undersigned in a manner exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Act"), and applicable state securities laws.
1. Qualified Investor
The Purchaser represents and warrants that the Purchaser falls within the
category (or categories) marked. PLEASE INDICATE EACH CATEGORY OF ACCREDITED
INVESTOR THAT YOU, THE PURCHASER, SATISFY, BY PLACING AN "X" ON THE APPROPRIATE
LINE BELOW.
_____ Category 1. A bank, as defined in Section 3(a)(2) of the
Act, whether acting in its individual or fiduciary capacity;
or
_____ Category 2. A savings and loan association or other
institution as defined in Section 3(a) (5) (A) of the Act,
whether acting in its individual or fiduciary capacity; or
_____ Category 3. A broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934; or
_____ Category 4. An insurance company as defined in Section 2(13)
of the Act; or
_____ Category 5. An investment company registered under the
Investment Company Act of 1940; or
_____ Category 6. A business development company as defined in
Section 2(a) (48) of the Investment Company Act of 1940; or
_____ Category 7. A small business investment company licensed by
the U.S. Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958; or
_____ Category 8. A plan established and maintained by a state,
its political subdivision or any agency or instrumentality
of a state or its political subdivisions, for the benefit of
its employees, with assets in excess of US$5,000,000; or
<PAGE>
-2-
_____ Category 9. An employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974 in which
the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a
bank, savings and loan association, insurance company or
registered investment advisor, or an employee benefit plan
with total assets in excess of US$5,000,000 or, if a
self-directed plan, the investment decisions are made solely
by persons who are accredited investors; or
_____ Category 10. A private business development company as
defined in Section 202(a) (22) or the Investment Advisors
Act of 1940; or
_____ Category 11. An organization described in Section 501(c)(3)
of the Internal Revenue Code, a corporation, a Massachusetts
or similar business trust, or a partnership, not formed for
the specific purpose of acquiring the Shares, with total
assets in excess of US$5,000,000; or
_____ Category 12. A director, executive officer or general
partner of the Company; or
_____ Category 13. A natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of
this purchase exceeds US$1,000,000; or
_____ Category 14. A natural person who had an individual income
in excess of US$200,000 in each of the two most recent years
or joint income with that person's spouse in excess of
US$300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year; or
_____ Category 15. A trust, with total assets in excess of
US$5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in SEC Rule
506(b)(2)(ii); or
_____ Category 16. An entity in which all of the equity owners are
accredited investors.
If you are not an accredited investor, please so indicate by placing an "X"
on the following line: _____
2. Purchasing Entirely for Own Account
The Purchaser represents and warrants that it is acquiring the Securities
solely for its own account for investment and not with a view to or for sale or
distribution of the Securities or any portion thereof and without any present
intention of selling, offering to sell, or otherwise disposing of or
distributing the Securities or any portion thereof in any transaction other than
a transaction complying with the registration requirements of the Act and
applicable state securities or "blue sky" laws, or pursuant to an exemption
therefrom. The Purchaser also represents that the entire legal and beneficial
interest of the Securities that it is purchasing is being purchased for, and
will
<PAGE>
3
be held for, the Purchaser's account only, and neither in whole nor in part for
any other person or entity.
3. Information Concerning the Company
The Purchaser acknowledges that it has received all information that it
deems necessary and appropriate to enable it to evaluate the financial risk
inherent in making an investment in the securities (the "Disclosure Documents")
and the documents and materials submitted therewith, which include a description
of the risks inherent in an investment in the Company. The Purchaser further
acknowledges that it has received satisfactory and complete information
concerning the business and financial condition of the Company in response to
all inquiries in respect thereof.
4. Economic Risk and Suitability
The Purchaser represents and warrants as follows:
(a) The Purchaser realizes that its purchase of the Securities involves a high
degree of risk and will be a highly speculative investment, and that it is
able, without impairing its financial condition, to hold the Securities for
an indefinite period of time.
(b) The Purchaser has carefully considered and has, to the extent it believes
such discussion necessary, discussed with its professional legal, tax, and
financial advisors the suitability of an investment in the Company for the
particular tax and financial situation of the Purchaser and that the
Purchaser and/or its advisors have determined that the Securities are a
suitable investment for the Purchaser.
(c) The financial condition and investment of the Purchaser are such that it is
in a financial position to hold the Securities for an indefinite period of
time and to bear the economic risk of, and withstand a complete loss of,
the purchase price.
(d) The Purchaser alone, or with the assistance of professional advisors, has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its purchase of the
Securities, or has a pre-existing personal or business relationship with
the Company or any of its officers, directors, or controlling persons of a
duration and nature that enables it to be aware of the character, business
acumen, and general business and financial circumstances of the Company or
that other person.
(e) The Purchaser has carefully read the Disclosure Documents and the documents
and materials submitted therewith, and the Company has made available to
the Purchaser or its advisors all information and documents requested by
the Purchaser relating to investment in the Securities, and has provided
answers to the Purchaser's satisfaction to all of the Purchaser's questions
concerning the Company.
<PAGE>
4
(f) If the Purchaser is a partnership, trust, corporation, or other entity: (1)
it was not organized for the purpose of acquiring the Securities (or all of
its equity owners are "accredited investors" as defined in Section 1
above); (2) it has the power and authority to execute and comply with the
terms of the asset purchase agreement and the person executing said
documents on its behalf has the necessary power to do so; (3) its principal
place of business and principal office are located within the state set
forth in its address below; and (4) all of its trustees, partners and/or
shareholders, whichever the case may be, are bona fide residents of said
state.
(g) The Purchaser understands that neither the Company nor any of its officers
or directors has any obligation to register the Securities under any
federal or state securities act or law.
(h) The Purchaser has relied solely on the Disclosure Documents and the
documents and materials submitted therewith, advice of its representatives,
if any, and independent investigations made by the Purchaser and/or its
purchaser representatives, if any, in making the decision to purchase the
Securities subscribed for herein and acknowledges that no representations
or agreements other than those set forth in the Disclosure Documents have
been made to the Purchaser in respect thereto.
(i) All information that the Purchaser has provided concerning itself is
correct and complete as of the date set forth below, and if there is any
material change in that information, it will immediately provide that
information to the Company.
(j) The Purchaser confirms that it has received no general solicitation or
general advertisement and has attended no seminar or meeting (whose
attendees have been invited by any general solicitation or general
advertisement) and has received no advertisement in any newspaper,
magazine, or similar media, broadcast on television, or radio regarding the
offering of the Securities.
(k) The Purchaser is a resident of the United States and has an office at the
address indicated below.
5. Restricted Securities
The Purchaser acknowledges that the Company has hereby disclosed to the
Purchaser in writing that:
(a) The Securities that the Purchaser is purchasing have not been registered
under the Act, or the securities laws of any state of the United States,
and the Securities must be held indefinitely unless a transfer of them is
subsequently registered under the Act or an exemption from such
registration is available; and
(b) The Company will make a notation in its records of the above described
restrictions on transfer and of the legend described below.
<PAGE>
5
6. Legend
The Purchaser agrees that all of the Securities will have endorsed thereon
a legend to the following effect:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED
STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR
INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED ON THE BOOKS OF THE
CORPORATION, WITHOUT REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE
UNITED STATES FEDERAL OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN
APPLICABLE EXEMPTION THEREFROM, SUCH COMPLIANCE, AT THE OPTION OF THE
CORPORATION, TO BE EVIDENCED BY AN OPINION OF SHAREHOLDER'S COUNSEL, IN
FORM ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION
PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT."
IN WITNESS WHEREOF, the undersigned has executed this questionnaire as of
_____________________________, ___________.
(Signature)
Mesler's Auction House of Scottsdale, LLC
-----------------------------------------
(Print Name)
-----------------------------------------
(Address)
-----------------------------------------
(City/State/Zip Code)
-----------------------------------------
(Area Code/Telephone Number)
EXHIBIT 2.2
PURCHASE AND SALE AGREEMENT
(WITH ESCROW INSTRUCTIONS)
THIS PURCHASE AND SALE AGREEMENT (WITH ESCROW INSTRUCTIONS) (this
"Agreement") is made as of the 20th of March, 2000, by and between C & C Capital
Investment, Inc., an Arizona corporation ("Seller"), and Ableauctions.com
(Washington), Inc., a Washington corporation ("Buyer").
RECITALS
A. Seller is the owner of an auction-house commercial property located at
7303 East Earll Drive, Scottsdale, Maricopa County, Arizona (the "Property," as
more specifically described below).
B. Buyer desires to purchase the Property from Seller, and Seller desires
to sell the Property to Buyer, through an escrow (the "Escrow") with Chicago
Title Insurance Company ("Escrow Agent" or "Title Company," as applicable), all
upon the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the obligations and undertakings
hereinafter set forth, and in consideration of the sums to be paid by Buyer, and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Seller and Buyer agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE PROPERTY
Section 1.1. Purchase. For the consideration hereinafter set forth, but
subject to the terms, provisions, covenants and conditions contained herein,
Seller hereby agrees to sell and convey to Buyer, and Buyer agrees to purchase
from Seller, all of the following (collectively, the "Property"):
(a) the real property described on Exhibit A attached hereto and made
a part hereof by reference (the "Land");
(b) the existing buildings and other improvements, structures, parking
facilities and fixtures owned by Seller and constructed, installed or
located on the Land (collectively, the "Improvements"; the Land and the
Improvements are sometimes hereinafter collectively referred to as the
"Real Property");
(c) all equipment and other tangible personal property owned by Seller
(and not otherwise included in the sale of assets by Mesler's Auction House
of Scottsdale, L.L.C., an
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Arizona limited liability company ("Mesler's") to Buyer) and located,
placed or installed on or about the Real Property and used in the operation
thereof (the "Personal Property");
(d) all right, title and interest of Seller in and to all contracts
(not otherwise included in the sale of assets by Mesler's to Buyer),
including, without limitation, all contracts for repair or maintenance and
contracts for the provision of services (e.g., the maintenance of
landscaping or mechanical systems), relating to the operation of the Real
Property or the Personal Property, all of which existing as of the date
hereof are listed on Exhibit B attached hereto (the "Contracts"), to the
extent that they are assignable and provided they are accepted by Buyer,
will be transferred to and assumed by Buyer;
(e) all right, title and interest of Seller in and to all unexpired
third-party warranties, guaranties and bonds (not otherwise included in the
sale of assets by Mesler's to Buyer), including, without limitation,
contractors' and manufacturers' warranties or guaranties, relating to the
Real Property or the Personal Property, to the extent that they are
assignable (the "Warranties");
(f) all right, title and interest of Seller in and to all governmental
permits, licenses, certificates and authorizations (not otherwise included
in the sale of assets by Mesler's to Buyer), including, without limitation,
certificates of occupancy, relating to the construction, use or operation
of the Real Property or the Personal Property, to the extent that they are
assignable (the "Permits"); and
(g) any and all other easements, hereditaments and other rights
appurtenant to the Real Property.
Section 1.2. Purchase Price. The purchase price for the Property (the
"Purchase Price") shall be Three Million Five Hundred Dollars ($3,500,000.00),
to be paid as set forth below:
(a) Buyer shall deposit via wire transfer in Escrow upon Closing (as
hereinafter defined) One Million Two Hundred Thousand Dollars
($1,200,000.00) in immediately available funds, to be applied by Escrow
Agent as set forth herein;
(b) Assumption by Buyer of that certain Wrap-Around Promissory Note
(the "Wrap Note"), dated July 24, 1998, in the original principal sum of
One Million Sixty-Five Thousand Dollars ($1,065,000.00), wherein C&C
Capital Investments, Inc., an Arizona corporation, is the Maker, and Lewis
Hollander of Scottsdale, a California limited partnership, is the Payee,
with an approximate remaining unpaid principal balance as of the date
hereof of One Million Fifty Thousand Dollars ($1,050,000.00); and
(c) The balance of the Purchase Price, by Buyer causing the issuance
by Buyer's parent company, Ableauctions.com, Inc., a Florida corporation
(the "Parent"), to Seller of a certificate for that number of shares of the
Parent's common stock which is determined by dividing (i) the balance of
the Purchase Price by (ii) eight (8).
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Section 1.3. Escrow Agent; Title Company; Escrow Provisions
(a) Seller and Buyer hereby appoint Chicago Title Insurance Company as
the Escrow Agent for the transaction contemplated by this Agreement, with
Escrow to be opened as of the date of signed acceptance by Escrow Agent of
a fully executed original of this Agreement (the "Opening of Escrow").
(b) Escrow Agent, acting in its capacity as a Title Insurance Company
("Title Company"), shall issue and underwrite the ALTA Owner's Extended
Coverage Title Insurance Policy in accordance with this Agreement.
(c) Escrow Agent, as the party designated as the person responsible
for closing the transaction contemplated hereby within the meaning of
Section 6045(a)(2)(A) of the Internal Revenue Code, shall file all
necessary information, reports, returns and statements regarding this
transaction as required by the Code, including, without limitation, any tax
reports required pursuant to Section 6045 of the Code.
(d) If Closing fails to occur because of Seller's default, Seller
shall be liable for any expenses, fees or cancellation charges of Escrow
Agent. If Closing fails to occur because of Buyer's default, Buyer shall be
liable for any expenses, fees or cancellation charges of Escrow Agent. If
Closing fails to occur for any other reason, including a termination by
Buyer as allowed hereunder, Seller and Buyer shall each be liable for
one-half of any reasonable and customary expenses, fees or cancellation
charges of Escrow Agent.
(e) The parties agree to the following general provisions regarding
Escrow Agent's duties hereunder, provided that nothing set forth below
shall in any way limit the Escrow Agent/Title Company's obligations
otherwise set forth in this Agreement and/or attached Escrow Instructions.
(i) For the purpose of closing adjustments and prorations (such
as are addressed in Section 4.5 hereof) as of "Closing" or the
"Closing Date," Escrow Agent shall consider that "Closing" and the
"Closing Date" occur on the date that the instrument transferring
title to the Real Property is delivered to Buyer and recorded.
(ii) Funds due Seller shall be disbursed by the Escrow Agent by
bank certified or cashier's check or by wire transfer pursuant to such
instructions as Seller or Seller's counsel may provide in writing to
Escrow Agent prior to or at Closing.
(iii) Any change of this Agreement shall be given in writing
signed by all parties hereto. In the event conflicting demands are
made or notices served upon Escrow Agent with respect to the Escrow in
a situation where this Agreement does not expressly grant one party or
the other the exclusive right to direct the Escrow Agent or does not
expressly specify the action to be taken by Escrow Agent, such that
Escrow Agent is reasonably unsure how it is obligated to proceed, the
parties hereto agree that Escrow Agent shall have the right at Escrow
Agent's election to do either
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or both of the following: (i) withhold and stop all further
proceedings in, and performance of, the Escrow; or (ii) file a suit in
interpleader in Maricopa County, Arizona and obtain an order from the
court requiring the parties to interplead and litigate in such court
their several claims and rights among themselves. In the event such
interpleader suit is brought, Escrow Agent shall thereupon be fully
released and discharged from all obligations to further perform any
and all duties or obligations imposed upon Escrow Agent in the Escrow,
and the parties jointly and severally agree to pay all reasonable
costs, expenses, and reasonable attorneys' fees expended or incurred
by Escrow Agent, the amount thereof to be fixed and a judgment
therefor entered by the court in such suit.
(iv) Except for Escrow Agent's breach of contract, negligence or
willful misconduct or as provided under applicable law, Escrow Agent
shall not be held liable for the identity, authority or rights of any
person executing any document deposited in the Escrow, or for Seller
or Buyer's failure to comply with any of the provisions of any
agreement, contract or other instrument deposited in the Escrow, and
Escrow Agent's duties hereunder shall be limited to the safekeeping of
such money, instruments, or other documents received by Escrow Agent
as escrow holder, and for the disposition of same in accordance with
the written instructions accepted by Escrow Agent in the Escrow.
(v) Except for Escrow Agent's breach of contract, negligence or
willful misconduct, Seller and Buyer agree, jointly and severally, to
pay on demand, as well as to indemnify and hold Escrow Agent harmless
from and against, all costs, damages, judgments, attorneys' fees,
expenses, obligations and liabilities which in good faith Escrow Agent
may, consistent with this Agreement, reasonably incur or sustain in
connection with or arising out of the Escrow.
(vi) It is agreed by the parties to this Agreement that so far as
Escrow Agent's rights and liabilities are concerned, this transaction
is an escrow and not any other legal relation.
Section 1.5. Title Insurance. Seller shall cause the Escrow Agent, in its
capacity as a Title Insurance Company ("Title Company"), to issue at Closing, or
to unconditionally commit at Closing to issue, an extended coverage owner's
title insurance policy insuring Buyer's title to the Real Property in the amount
of the Purchase Price (the "Owner's Policy"), subject only to the Permitted
Exceptions as specified in Section 2.1(e). Seller shall pay the premium charge
for that portion of the Owner's Policy attributable to standard coverage. Buyer
shall pay the premium charge for the extended coverage portion of the Owner's
Policy. If further endorsements are desired by Buyer, Buyer shall order same
directly from Escrow Agent and shall undertake all actions and pay all
additional premiums and all other costs in excess of those which would be
required by the Title Company for a standard coverage Owner's policy.
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ARTICLE II
INVESTIGATION OF THE PROPERTY
Section 2.1. Title Report and Objections.
(a) Seller shall cause Title Company to issue and deliver to Seller
and Buyer a preliminary commitment for title insurance concerning the Real
Property, together with copies of all instruments referred to therein which
will remain as exceptions to title following Closing (the "Title Report"),
within two (2) days following the Opening of Escrow (or as soon thereafter
as Title Company may be able to provide such Title Report). The Title
Report is to be preliminary to the Owner's Policy to be issued by Title
Company. Buyer shall have until one business day before the Closing Date to
advise Seller, in writing, either (i) that the condition of title to the
Real Property as evidenced by the Title Report is acceptable; or (ii) to
object to any easements, liens, encumbrances or other items, exceptions or
requirements in the Title Report (collectively "Buyer's Title Objections"),
except for (A) the Wrap-Around Deed of Trust and Assignment of Rents (the
"Wrap Deed of Trust") securing the Wrap Note referred to in Section 1.2(b)
and the American Savings Life Insurance Company Promissory Note and Deed of
Trust wrapped thereby, and (B) matters (such as taxes and assessments not
yet delinquent) which will be prorated between the parties at Closing. If
Buyer shall not have notified Seller of Buyer's Title Objections within
such time specified above, Buyer shall be deemed to have approved of the
condition of title of the Real Property as shown by the Title Report.
(b) Seller shall have one (1) business day after Seller's receipt of
Buyer's Title Objections (if any) within which to cure any or all of
Buyer's Title Objections.
(c) If Seller shall not have cured all of Buyer's Title Objections,
Buyer shall either: (i) waive, in writing, the curing of such Buyer's Title
Objections as Seller shall have been unwilling or unable to cure and
proceed to close this Agreement; or (ii) elect to terminate this Agreement
by giving written notice to Seller, in which event this Agreement and the
Escrow shall be deemed immediately terminated, and neither party shall have
any liability or further obligation to the other.
(d) If at any time prior to Closing Title Company shall issue a
supplemental title report which discloses additional matters which render
title unmarketable (other than matters created by or with the written
consent of Buyer or arising as a result of any work performed by or other
activities of Buyer regarding the Property), the provisions set forth above
in this Section 2.1 shall govern the review, objection and objection
resolution obligations of the parties with respect to such additional
matters.
(e) All matters which are either approved or deemed approved pursuant
to this Section shall be referred to as the "Permitted Exceptions."
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Section 2.2. Inspection of Property.
(a) Buyer shall have from the Opening of Escrow until the Closing Date
(the "Inspection Period") to investigate the Property and all matters
relevant to its acquisition, development, usage, occupancy, operation or
marketability, except for matters relating to title as provided in Section
2.1 above. Such right of investigation shall include, without limitation,
the right to review or to have made, at Buyer's expense, any surveys,
architectural and engineering studies, environmental studies, soil borings
and similar examinations, tests, studies and inspections of the Property as
Buyer may deem necessary or appropriate (collectively, the "Inspections").
Buyer agrees to cause each Inspection report or study of the Property which
is obtained from a third party to be addressed to and certified (if
customarily certified) to Seller, at Buyer's expense, if Buyer does not
proceed to Closing for any reason other than a default by Seller. Buyer
shall and does hereby agree to repair any damage to the Property resulting
from the Inspections and to indemnify, defend, protect and hold harmless
Seller from any and all liabilities, claims, losses, costs, damages and
expenses, including but not limited to court costs and attorneys' fees and
any liens placed upon the Property, which may be incurred by Seller because
of the Inspections. Any provision of this Agreement to the contrary
notwithstanding, the indemnity of Buyer set forth in this Section shall
survive Closing or any termination of this Agreement.
(b) Seller agrees to cooperate reasonably with any such Inspections
made by Buyer or at Buyer's direction, so long as such cooperation is at no
expense to Seller, and to make Seller's books, records and files concerning
the Property (exclusive of any confidential or proprietary information)
reasonably available to Buyer at the offices of Seller in Phoenix, Arizona.
(c) On or before the expiration of the Inspection Period as scheduled
pursuant to Section 2.2(a) above, Buyer may provide Seller written notice
setting forth Buyer's dissatisfaction with the Property or its condition
for any reason whatsoever ("Buyer's Inspection Objections"). If Buyer
expressly elects in such written notice to terminate this Agreement, this
Agreement and Escrow shall terminate immediately, and neither party shall
have any liability or further obligation to the other party. If no notice
of termination or dissatisfaction is timely received by Seller, Buyer shall
conclusively be deemed to have approved the condition of the Property, and
this Agreement shall remain in full force and effect in accordance with its
terms.
(d) If Buyer provides notice of Buyer's Inspection Objections at least
one (1) day prior to Closing and does not therein elect to terminate this
Agreement, Seller shall have until the Closing to cure all of Buyer's
Inspection Objections.
(e) If Seller shall not have cured all of Buyer's Inspection
Objections by the Closing, Buyer shall either: (i) waive, in writing, the
curing of such Buyer's Inspection Objections as Seller shall have been
unwilling or unable to cure and proceed to close this Agreement; or (ii)
elect to terminate this Agreement and Escrow by giving written notice to
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Seller, in which event this Agreement shall terminate immediately as
provided in Section 2.3 hereof. If Buyer fails to so provide such notice,
Buyer shall conclusively be deemed to have elected to proceed to Closing
rather than terminate.
Section 2.3. Termination. Upon any termination by either of the parties
hereto as expressly allowed under this Agreement, (a) Buyer shall deliver to
Seller all Inspection studies and reports to Seller as provided in Section
2.2(a); (b) Buyer shall return to Seller any informative materials concerning
the Property previously delivered by Seller to Buyer; and (c) the parties shall
thereafter be relieved from any further liability to one another hereunder,
except with respect to any obligations under this Agreement, including without
limitation indemnity obligations of Buyer and Seller, which are expressly stated
to survive any termination of this Agreement. A copy of any notice of
termination allowed under this Agreement shall be sent to Escrow Agent by the
party electing to terminate.
Section 2.4. Estoppel Certificate. In connection with Buyer's assumption of
the Wrap Note and Wrap Deed of Trust referenced in Section 1.2(b) and Section
2.1(a), Seller shall obtain and deliver to Buyer prior to Closing an estoppel
certificate, in substance and form acceptable to Buyer, wherein the Seller and
Payee of the Wrap Note each certifies to Buyer (i) the remaining unpaid
principal balance of the Wrap Note as of a date no earlier than ten (10) days
prior to the Closing Date, (ii) there is no default by Seller under any of the
terms of the Wrap Note or the Wrap Deed of Trust, (iii) there are no outstanding
or unpaid late fees under the Wrap Note or Wrap Deed of Trust, (iv) no late fees
have been added to or are part of the unpaid principal balance of the Wrap Note
(pursuant to Paragraph No. 5), or, if there are any such late fees which are
part of the unpaid principal, the amount thereof is $ , (v) no default rate of
interest is applicable to all or any portion of the paid or unpaid principal
amounts owing under the Wrap Note, (vi) there is no assumption fee or any other
cost or fee (other than the recording fee) relating to the assignment and
assumption of the Wrap Note or Wrap Deed of Trust, (vii) the amount of the
remaining unpaid principal balance of the American Savings Life Insurance
Company Note (the "ASL Note") around which the Note is wrapped, (viii) there is
no default under the ASL Note or the Deed of Trust securing such ASL Note, and
the conveyance of the Property to Buyer will not constitute a default under the
ASL Note or Deed of Trust, and (ix) Buyer shall have no personal liability under
the Wrap Note and/or Wrap Deed of Trust. Provided such certificate is acceptable
to Buyer, Buyer agrees to assume the Note and Deed of Trust at Closing, subject
to and provided that the provisions of Paragraph No. 5 of the Wrap Note and the
third paragraph of Paragraph No. 11 and Paragraph No. 16 of the Wrap Deed of
Trust are and shall remain applicable to Buyer, its successors and assigns.
ARTICLE III
WARRANTIES AND REPRESENTATIONS
Section 3.1. Seller's Warranties and Representations Seller warrants and
represents to Buyer (with the express understanding that Buyer is relying on
each and all of such warranties and representations by Seller as a material and
significant inducement to Buyer to enter into this Agreement) as follows:
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(a) Authority. Seller is a corporation duly organized, existing and in
good standing under the laws of the State of Arizona. Seller has the full
right and authority to enter into this Agreement and consummate the
transaction contemplated by this Agreement. All requisite action has been
and will be taken by and on behalf of Seller in connection with the
entering into of this Agreement, the instruments referenced herein and the
consummation of the transaction contemplated hereby. The persons and/or
entities signing this Agreement on behalf of Seller are authorized to do
so. Seller shall furnish to Buyer such documentation to evidence such
authority as Buyer shall reasonably request.
(b) Consents; Binding Obligations. Any third-party approvals or
consents which may be required for Seller to enter into this Agreement or
to consummate the transaction contemplated hereby have been, or will prior
to Closing be, obtained by Seller. This Agreement and all documents
required hereby to be executed by Seller are and shall be valid, legally
binding obligations of Seller, enforceable against Seller in accordance
with their terms.
(c) Property Matters.
(i) Seller has received no notice of any, and to the best of
Seller's knowledge there are no, suits, arbitrations, claims,
proceedings (including condemnation proceedings), governmental
actions, or investigations pending or threatened against or affecting
Seller or the Property;
(ii) To the best of Seller's knowledge, there are no prescriptive
easements or adverse claims by any person or persons (including but
not limited to adjoining property owners) and, except as shown on a
survey of the Property by Consulting Land Surveyors dated June 10,
1998, no encroachments onto or from the Property;
(iii) Seller has received no notice of any, and to the best of
Seller's knowledge there is no, alleged existing violation of any
material governmental law, regulation, ordinance or code applicable to
the Property.
(iv) Seller has not sold, conveyed, assigned, leased or otherwise
transferred or agreed to sell, convey, assign, lease or transfer, all
or any part of the Property except to Buyer. There are no written or
oral options agreements or rights of first refusal (to purchase or
lease), leases, licenses or other agreements affecting all or any part
of the Land and/or the Improvements;
(v) Buyer acknowledges Seller has advised Buyer that (A) Buyer
occupies the first floor of the Improvements subject to a City of
Scottsdale (the "City") inspector's inspection notice and approval of
temporary occupancy, (B) the second floor is subject to inspection by
the City, (c) provided authorized representatives from Buyer and
Seller (and Seller agrees it will make available its authorized
representative upon request by Buyer) meet with the City Development
Services
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Department promptly after the Closing, the City will issue the
necessary new documentation to Buyer for temporary occupancy of the
first floor, (D) the second floor of the Improvements are not subject
to occupancy until certain "tenant improvements" have been completed,
and (E) additionally, the ceiling and interior walls of approximately
3,000 to 4,000 square feet of space on the first floor have not been
completely finished. However, Seller warrants and represents that, to
the best of its knowledge, the first floor Improvements, plumbing,
HVAC system and equipment, the electrical system and equipment
pertaining thereto, and all other utilities in and leading to the
Improvements on the first floor are in good and operable working order
and condition and that the bearing walls and roof of the Improvements
are structurally sound and in good condition.
(vi) The Contracts listed in Exhibit B hereto constitute all
existing Contracts in effect (other than those included in the sale of
assets by Mesler's to Buyer) which in any way pertain to or affect all
or any part of the Property as of the date of this Agreement;
(vii) Seller has received no notice from its insurers of any
alleged existing defects or inadequacies in the Improvements which
have materially affected the insurability of same or caused the
imposition of extraordinary premiums therefor;
(viii) To the best of Seller's knowledge, no portion of the
Property is located in an area having special flood hazards;
For purposes of subsection 3.1(c), references to Seller's "knowledge" or
"notice" mean to the knowledge of Harold Friend, the President of Seller. The
foregoing warranties and representations are true as of the date hereof and
shall be true as if made on the Date of Closing of Escrow.
Section 3.2. Buyer's Warranties and Representations. Buyer warrants and
represents to Seller (with the express understanding that Seller is relying on
each and all of such warranties and representations by Buyer as an inducement to
Seller to enter into this Agreement) as follows:
(a) Authority. Buyer is a corporation duly organized, existing and in
good standing under the laws of the State of Washington. Buyer has the full
right and authority to enter into this Agreement and consummate the
transaction contemplated by this Agreement. All requisite action has been
and will be taken by Buyer in connection with the entering into this
Agreement, the instruments referenced herein and consummating the
transaction contemplated hereby. The persons and/or entities signing this
Agreement on behalf of Buyer are authorized to do so. Buyer shall furnish
to Seller such documentation to evidence such authority as Seller shall
reasonably request.
(b) Consents; Binding Obligations. Any third-party approvals or
consents which may be required for Buyer to enter into this Agreement or to
consummate the transaction contemplated hereby have been, or will prior to
Closing be, obtained by Buyer. This Agreement and all documents required
hereby to be executed by Buyer are and shall be valid,
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legally binding obligations of Buyer, enforceable against Buyer in
accordance with their terms.
Section 3.3. Seller's Operation of the Property.
(a) Until the earlier of the Closing or the termination of this
Agreement Seller agrees that Seller shall:
(i) Not do anything which would impair the status of title as
shown on the Title Report or undertake any alterations or work to the
Property (other than ordinary repairs and maintenance);
(ii) Operate and maintain the Property in substantially the same
manner as heretofore, reasonable wear and tear and damage by fire or
other casualty excepted, and timely pay all sales taxes related
thereto;
(iii) Not enter into any service contract which, following
Closing, will be binding upon Buyer or the Property; and
(iv) Not transfer or further encumber any of Seller's interest in
the Property, except subject to the terms of this Agreement.
ARTICLE IV
CLOSING
Section 4.1. Time of Closing. The Closing shall take place in the offices
of Escrow Agent on March 20, 2000, unless otherwise agreed upon in writing by
Seller and Buyer at their sole discretion.
Section 4.2. Buyer's Obligation to Close. Buyer shall not be obligated to
close hereunder unless each of the following conditions shall exist on the
Closing Date:
(a) Title Policy. The Title Company shall be prepared to issue (or
prepared to unconditionally commit to issue) the Owner's Policy as
described in Section 1.5, subject to (i) matters affecting Buyer (such as,
for example, judgment or tax liens or qualification to do business), and
(ii) Permitted Exceptions and the other matters set forth in Section
4.4(a).
(b) Accuracy of Warranties and Representations. The warranties and
representations made by Seller in Article III shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
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(c) Condition of Repair. Subject to the provisions of Section
3.1(c)(v), the Improvements and all systems thereof and the Personal
Property shall be in the same good condition and repair as on the Opening
of Escrow, ordinary wear and tear and damage by casualty (as addressed in
Section 4.8) excepted.
(d) Seller's Performance. Seller shall have performed all covenants
and obligations and satisfied all conditions required by this Agreement to
be performed or satisfied by Seller on or before the Closing Date.
Section 4.3. Seller's Obligation to Close. Seller shall not be obligated to
close hereunder unless each of the following conditions shall exist on the
Closing Date: (a) no Buyer Event of Default (as defined in Section 5.2) shall
have occurred and be continuing; (b) the representations and warranties made by
Buyer in Article III shall be true and correct in all material respects on and
as of the Closing Date with the same force and effect as if made on and as of
the Closing Date; (c) Buyer shall have performed all covenants and obligations
and all conditions required by this Agreement to be performed or satisfied by
Buyer on or before the Closing Date, and (d) the conditions of Section 6.14 are
fully satisfied.
Section 4.4. Closing Deliveries. At the Closing the following shall occur:
(a) Seller shall deliver to Buyer a duly executed and acknowledged
Affidavit of Property Value and Special Warranty Deed in form attached as
Exhibit C (the "Deed") conveying good and marketable title to the Real
Property to Buyer, subject only to (i) current (non-delinquent) taxes,
assessments, improvement liens and similar matters to be prorated between
the parties at Closing; and (ii) the "Permitted Exceptions" accepted by the
Buyer pursuant to Section 2.1.
(b) Buyer shall pay to Seller the Purchase Price as provided in
Section 1.2, subject to the adjustments described in Section 4.5.
(c) Possession of the Property shall be delivered to Buyer.
(d) Seller shall execute and deliver to Buyer and the Title Company an
affidavit that evidences that Seller is exempt from the withholding
requirements of Section 1445 of the Internal Revenue Code, in the form
attached as Exhibit D.
(e) Seller shall execute and deliver to Buyer a Bill of Sale and
Assignment in form attached as Exhibit E, conveying to Buyer the Personal
Property and the Warranties, Permits and Related Property (not otherwise
transferred to Buyer pursuant to the sale of assets by Mesler's to Buyer),
and shall deliver to Buyer the originals of any Warranties or Permits in
Seller's possession.
(f) Seller and Buyer shall execute and deliver an Assignment and
Assumption of the Wrap Note referenced in Section 1.2(b) and the Wrap Deed
of Trust (dated July 24,
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1998, recorded on July 24, 1998 at Recorder's No. 98-0639755, records of
Maricopa County, Arizona, in the form attached as Exhibit F.
(g) Seller and Buyer shall execute and deliver an Assignment and
Assumption of the Contracts being assigned, in form attached as Exhibit G.
Seller shall also deliver to Buyer originals, to the extent in Seller's
possession, of all such assigned contracts.
(h) Seller shall execute and deliver a certified Resolution(s) of all
of the Seller's shareholders and directors, in form acceptable to Buyer,
authorizing and directing the Seller to sell and convey the Property to
Buyer, and authorizing and directing Harold Friend, as President of Seller,
to execute and deliver this Agreement, the Special Warranty Deed, and any
and all other instruments required to be delivered by Seller to Buyer
pursuant to the terms of this Agreement. Seller's counsel, Mitchell C.
Laird, shall execute and deliver to Buyer an opinion letter opining that
Seller, and that Harold Friend as President of the Seller, are fully
authorized and empowered to sell and convey the Property to Buyer and that
upon Closing the conveyance of the Property to Buyer is and shall be legal,
valid and binding and enforceable against Seller in accordance with the
terms of this Agreement.
(i) Seller shall deliver the estoppel certificate referenced in
Section 2.4.
(j) Seller shall execute and deliver a Certificate in the form
attached as Exhibit H pertaining to Seller's warranties and
representations.
(k) Buyer shall deliver into Escrow, for delivery to Seller, at
Closing, a certificate for the shares of stock (the "Share") of Buyer's
Parent as specified in Section 1.2(c), with the following legend affixed
thereto:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED
STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR
INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED ON THE BOOKS OF THE
CORPORATION, WITHOUT REGISTRATION UNDER ALL APPLICABLE UNITED STATES
FEDERAL OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION
THEREFROM, SUCH COMPLIANCE, AT THE OPTION OF THE CORPORATION, TO BE
EVIDENCED BY AN OPINION OF THE HOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE
CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT
FROM ANY PROPOSED TRANSFER OR ASSIGNMENT."
(l) After Closing, the Seller agrees that it will not sell, assign,
pledge, give, transfer, or otherwise dispose of the Shares or any interest
therein, or make any offer or attempt to do any of the foregoing, except
pursuant to a registration of the Shares under the United States Securities
Act of 1933 (the "Securities Act") and all applicable state securities laws
or in a transaction that is exempt from the registration provisions of the
Securities Act and all applicable state securities laws.
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Any attempted sale, assignment, or other transfer of the Shares without
compliance with the provisions of this Agreement will be void, and the
provisions of Section 4.4(k), (l) and (m) shall survive the Closing.
(m) Seller shall deliver an Accredited Investor Questionnaire in the
form of Exhibit I.
(n) See Exhibit J attached hereto for piggy back registration rights.
(o) Seller shall deliver to Buyer state and city transaction privilege
sales tax clearances with respect to Seller's receipts from the Property
which are subject to sales or transaction privilege taxes.
Section 4.5. Closing Adjustments. The funds delivered by Buyer at Closing
pursuant to Section 1.2 shall be subject to adjustment as of the Closing Date in
accordance with the following provisions:
(a) Taxes and Assessments. Current (non-delinquent) taxes,
assessments, improvement liens and similar matters affecting the Property
shall be prorated between Seller and Buyer as of the Closing Date based
upon the current year's assessed valuation established by the Maricopa
County Assessor and the 1999 tax rate, and Seller and Buyer agree that
there shall be no post-Closing re-proration of any such charges.
(b) Utilities. To the extent possible, the parties shall cause all
utility meters to be read on the day preceding the Closing Date and
transferred to Buyer as of the Closing Date. Seller shall be responsible
for the payment of all utility charges incurred prior to the Closing Date,
and Buyer shall assume and pay all charges incurred from and after the
Closing Date. Any utility company deposits shall be and remain the property
of Seller.
(c) Contracts. Amounts payable under any of the Contracts assigned to
and assumed by Buyer hereunder shall be prorated as of the Closing Date.
(d) Liens and Encumbrances. Seller shall pay at Closing an amount
sufficient to obtain the release of the Property from any and all existing
financing liens and any other monetary encumbrance or lien upon the
Property (other than the Wrap Deed of Trust and the ASL Deed of Trust).
(e) Closing Costs. Seller shall pay the premium for the Owner's Policy
as set forth in Section 1.5 hereof, one-half (1/2) of the escrow fees, the
cost of recording any instruments required to discharge any liens or
encumbrances against the Property which Seller is obligated hereunder to
discharge, the fees and expenses of Seller's attorneys, and Seller's other
customary closing costs. Seller also shall pay any Assumption Fee charged
with respect to the Wrap Note and/or Wrap Deed of Trust. Buyer shall pay
for recording the Deed, the entire cost of the extended coverage or special
endorsements to the Owner's Policy requested by Buyer, the fees and
expenses of Buyer's attorneys, one-half (1/2) of the escrow fees, and
Buyer's other customary closing costs.
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Section 4.6. Settlement Statement. At the Closing, Seller and Buyer shall
execute a closing settlement statement to reflect the credits, prorations and
adjustments contemplated by or specifically provided for in this Agreement.
Section 4.7. Eminent Domain. If prior to the Closing the entire Property or
any portion thereof shall be taken by any governmental authority under a power
of eminent domain, or if a suit relating thereto shall be filed or overtly
threatened, then this Agreement shall terminate as provided in Section 2.3.
Section 4.8. Casualty; Risk of Loss. All risk of loss with respect to the
Property shall be Seller's until the Closing. However, if the Property shall be
damaged by fire or other casualty prior to Closing to the extent that it will
require $50,000 or more to repair such damage, as determined by an adjustor
reasonably acceptable to Buyer and Seller (such determination being the "Repair
Estimate"), then Buyer shall elect, by written notice to Seller within two (2)
business days following Buyer's receipt of the Repair Estimate and all
applicable information in the insurance policy, either to (i) proceed to
Closing, whereupon (A) Seller shall assign to Buyer Seller's right to receive
any casualty insurance proceeds payable as a result of such casualty damage, up
to the amount of the Repair Estimate, (B) Seller shall pay to Buyer any amount,
up to the deductible amount on Seller's casualty policy, by which the Repair
Estimate exceeds the insurance proceeds, and (c) Buyer shall not then be able to
seek any other damages or compensation from Seller; or (ii) terminate this
Agreement, in which event this Agreement shall terminate as provided in Section
2.3. If Buyer fails to so provide such notice, Buyer shall conclusively be
deemed to have elected to terminate this Agreement, which termination shall
occur as provided in Section 2.3. In the event of any casualty resulting in
damage that will require less than $50,000 to repair, the parties at Buyer's
option shall proceed to Closing, whereupon (X) Seller shall assign to Buyer
Seller's right to receive any casualty insurance proceeds payable as a result of
such casualty damage, up to the amount of the Repair Estimate, (Y) Seller shall
pay to Buyer the applicable deductible amount and any uninsured portion of such
damage, and (Z) Buyer shall not then be able to seek any other damages or
compensation from Seller. Notwithstanding the foregoing, all risk of loss as to
the Property shall remain with Seller until Closing.
ARTICLE V
BREACH; REMEDIES
Section 5.1. Breach by Seller. Time is of the essence of Seller's
obligations hereunder. If Seller, by reason of any breach or default by Seller,
materially fails to comply with any of its obligations hereunder and such
failure shall continue for five (5) days after Seller's receipt of written
notice from Buyer of such breach or default, then Buyer, at Buyer's option,
shall be entitled to either (1) terminate this Agreement by written notice to
Seller, in which event this Agreement shall terminate as provided in Section
2.3, or (2) waive such breach and proceed to Closing. Buyer hereby waives all
right Buyer may have to seek any other remedy Buyer may have at law or in
equity, except that Buyer shall have the right to seek (a) specific performance
of the conveyance of the Property against Seller; or (b) damages, but only to
the extent specific performance is not available due to the act of Seller. If
Buyer seeks specific performance of the conveyance of the Property, Seller's
sole
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obligation, if such specific performance is awarded, shall be to convey the
Property as provided in Section 4.4 hereof upon tender by Buyer of the Purchase
Price, and under no circumstances shall Seller be obligated or required to
otherwise cure any defaults, expend any moneys, secure any permits or approvals,
change the condition of the Property or restore the Property, or take any other
action whatsoever, except as required under this Agreement. In no event shall
Buyer be entitled to obtain monetary damages for Seller's breach of this
Agreement (other than an award of Buyer's reasonable attorneys' fees and costs
as described in Section 6.14 below or as provided in clause (b) above).
Section 5.2. Breach by Buyer. Time is of the essence of Buyer's obligations
hereunder. If (a) a Buyer Event of Default (as defined below in this section)
occurs or (b) Buyer otherwise fails to complete the acquisition on the Closing
Date as herein provided by reason of any breach or default by Buyer, Seller
shall be entitled to terminate this Agreement by written notice to Buyer, in
which event Seller shall be entitled to receive Ten Thousand Dollars
($10,000.00) as liquidated damages, and this Agreement shall terminate as
provided in Section 2.3. The parties hereby agree that it would be difficult or
impossible to determine Seller's actual damages, and that, under the
circumstances of the parties' desired abnormally accelerated Closing, $10,000.00
is a fair and reasonable estimate of the total detriment that Seller would
suffer in the event of Buyer's default hereunder. "Buyer Event of Default" shall
mean the occurrence of any of the following events:
(i) Buyer shall fail to pay or deposit any monies or deliver the
certificate for Shares of stock in accordance with this Agreement by the
stated due date (and provided Buyer has not elected to terminate this
Agreement as herein provided);
(ii) Buyer shall fail to fully and timely perform any of Buyer's
obligations (other than monetary obligations as provided in (i) above)
arising under this Agreement and such failure shall continue for five (5)
days after Buyer's receipt of written notice from Seller of such default;
(iii) Buyer shall (A) voluntarily be adjudicated a bankrupt or
insolvent; (B) seek, consent to or not contest the appointment of a
receiver or trustee for itself or for all or any part of its property; (c)
file a petition seeking relief under the bankruptcy, arrangement,
reorganization or other debtor relief laws of the United States, any state
or any other competent jurisdiction; or (D) make a general assignment for
the benefit of its creditors; or
(iv) If (A) a petition is filed against Buyer seeking relief under the
bankruptcy, arrangement, reorganization or other debtor relief laws of the
United States, any state or any other competent jurisdiction; or (B) a
court of competent jurisdiction enters an order, judgment or decree
appointing, without the consent of Buyer, a receiver or trustee for Buyer,
or for all or any part of Buyer's property, and such petition, order,
judgment or decree shall not be discharged or stayed within a period of 60
days after its entry.
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ARTICLE VI
GENERAL PROVISIONS
Section 6.1. Commissions.
(a) Seller and Buyer each hereby represents and warrants to the other
that it has not engaged any broker, finder, consultant or any other person
or agent who would be entitled to any commission, finder's fee or other
compensation in connection with the execution of this Agreement or the
consummation of the transaction contemplated hereby, except that David
Austin (the "Broker") is providing certain brokerage services.
(b) Seller is solely responsible for, and agrees to deliver a
commission to the Broker pursuant to the terms of a separate written
agreement between Seller and Broker. In no event shall the Broker have any
claim to all or any part of the commission unless and until the transaction
contemplated by this Agreement closes and the Property is conveyed to
Buyer.
(c) The parties agree that, if any person ("Claimant") shall assert a
claim to a finder's fee, brokerage commission or other compensation on
account of alleged employment as a finder, broker or other consultant or
agent in connection with the transaction embodied by this Agreement
(including the Broker), the party under whom the Claimant is claiming
(i.e., the party who is alleged to have retained or utilized the services
of the Claimant) shall indemnify and hold the other party harmless from and
against any such claim and all costs, expenses and liabilities incurred in
connection with such claim or any action or proceeding brought on such
claim, including, but not limited to, attorneys and witness fees and court
costs in defending against such claims. This indemnity obligation shall
survive the Closing or any termination of this Agreement.
Section 6.2. Notices. All notices, demands, requests, consents, approvals
or other instruments required or permitted to be given pursuant hereto shall be
in writing and shall, subject to Section 6.5, be deemed to have been given and
received upon (i) receipt, if hand delivered, (ii) transmission, if delivered by
facsimile transmission, (iii) the next business day, if delivered by express
delivery service or overnight courier service, or (iv) the third business day
following the day of deposit of such notice in registered or certified mail,
return receipt requested. Notices shall be provided to the addresses (or
facsimile numbers, as applicable) specified below:
If to Seller: C&C Capital Investment, Inc.
2425 East Camelback Road, Suite 975
Phoenix, Arizona 85016-4215
Telephone: (602) 224-3731
Facsimile: (602) 224-5434
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with a copy to: Mitchell C. Laird
Laird & Hallberg, PC
1300 East Missouri, Suite C-101
Phoenix, Arizona 85014-2361
Telephone: (602) 277-5751
Facsimile: (602) 277-4881
If to Buyer: Ableauctions.com (Washington), Inc.
31635 36th Avenue S.W.
Federal Way, Washington 98023-2105
Attn: Abdul Ladha
Telephone: (604) 433-9866
Facsimile: (604) 432-9866
with a copy to: Claudia L. Losie, Barrister & Solicitor
Page Fraser & Associates
1700 - 1185 West Georgia Street
Vancouver, British Columbia, Canada V6E 4E6
Telephone: (604) 689-9356
Facsimile: (604) 689-7030
and with a copy to: Paul V. Wentworth
2901 North Central Ave., Suite 200
Phoenix, Arizona 85012
Telephone: (602) 285-5096
Facsimile: (602) 285-5099
If to Escrow Agent: Chicago Title Insurance Company
2415 East Camelback Road, Suite 300
Phoenix, Arizona 85016
Attn: Patti Krisik, Escrow Officer
Telephone: (602) 667-1041
Facsimile: (602) 667-1082
Seller or Buyer may at any time change its address for such notices by
delivering to the other, as aforesaid, a notice of such change.
Section 6.3. Further Assurances. Each of the parties hereto undertakes and
agrees to execute and deliver such documents, writings and further assurances as
may reasonably be required to carry out the intent and purpose of this
Agreement.
Section 6.4. Amendment; Waiver; Entire Agreement. No change or modification
of this Agreement shall be valid unless the same is in writing and signed by the
parties hereto. No waiver of any of the provisions of this Agreement shall be
valid unless in writing and signed by the party against whom it is sought to be
enforced. This Agreement contains the entire agreement between
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the parties relating to the purchase and sale of the Property. All prior
negotiations between the parties and any and all letters of intent executed by
the parties are merged in this Agreement, and there are no promises, agreements,
conditions, undertakings, warranties or representations, oral or written,
express or implied, between the parties other than as herein set forth.
Section 6.5. Dates and Times. Time is of the essence of this Agreement.
Unless expressly stated otherwise, all time periods shall be measured in
calendar days. If any date set forth in this Agreement for the delivery of any
document or notice or the happening of any event (such as, for example, the
expiration of the Closing Date) should, under the terms hereof, fall on a
weekend or holiday, then such date shall be automatically extended to the next
succeeding business day. Deliveries or events occurring subsequent to 5:00 p.m.
on a business day in the location of occurrence shall be deemed to have occurred
on the next business day (e.g., notices due on a certain date must be received
by 5:00 p.m. on such date).
Section 6.6. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Arizona and venue for bringing any
action hereunder shall be Maricopa County, Arizona. Any and all recitals or
disclosures required by such laws or necessary thereunder to effectuate the
expressed intent of the parties herein are hereby deemed incorporated into this
Agreement by this reference; provided that should any such incorporated
provision conflict with the express printed provisions hereof, the latter shall
in all respects be controlling.
Section 6.7. Headings. The paragraph headings which appear in some of the
Sections of this Agreement are for purposes of convenience and reference and are
not in any sense to be construed as modifying the Sections in which they appear.
Section 6.8. Assignment. Buyer shall be entitled to assign its interest
hereunder only to any person or entity controlling; controlled by or under
common control with the Buyer, without the prior written consent of Seller. In
the event any such assignment is made, any assignee shall assume all obligations
imposed on Buyer as if the assignee were the original purchaser named in this
Agreement; provided that no such assignment shall release Buyer from liability
hereunder unless expressly so agreed in writing by Seller. Any attempted
assignment in contravention of this Section shall be null and void.
Section 6.9. Successors and Assigns. Subject to Section 6.8, this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns.
Section 6.10. Survivability. All covenants and agreements of the parties,
including, but not limited to, all indemnity obligations, which, by the context
of this Agreement, are to be performed after or are to survive the termination
of this Agreement or the Closing, shall, as the case may be, survive the Closing
or the termination of this Agreement.
Section 6.11. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constitute only
one agreement.
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Section 6.12. Attorneys' Fees. In the event of any action at law or in
equity between Seller and Buyer to enforce any of the provisions and/or rights
under this Agreement or on account of a breach of any term or provision hereof,
the unsuccessful party to such litigation agrees to pay to the prevailing party
all costs and expenses, including reasonable attorneys' fees, incurred therein
by such prevailing party, including any such costs and expenses incurred in any
appeal, and if such prevailing party shall recover judgment in any action or
proceeding, such costs, expenses and fees shall be included in and as a part of
such judgment. As used herein the term "prevailing party" shall be the party to
such litigation which receives, whether by settlement or judgment, substantially
the relief prayed for in such litigation. This provision shall survive Closing
or any termination of this Agreement.
Section 6.13. Construction. The terms and provisions of this Agreement
represent the results of negotiations between Seller and Buyer, each of which
are financially sophisticated parties and each of which has been represented or
been given the opportunity to be represented by counsel of its own choosing, and
neither of which has acted under any duress or compulsion, whether legal,
economic or otherwise. Consequently, the terms and provisions of this Agreement
shall be interpreted and construed in accordance with their usual and customary
meanings, and Seller and Buyer each hereby waive the application of any rule of
law which would otherwise be applicable in connection with the interpretation
and construction of this Agreement that ambiguous or conflicting terms or
provisions contained in this Agreement shall be interpreted or construed against
the party whose attorney prepared the executed Agreement or any earlier draft of
the same.
Section 6.14. Concurrent Purchases and Closings. Buyer has also entered
into an Asset Purchase Agreement with Mesler's dated March 20, 2000. The
transaction provided for in the Mesler's Purchase Agreement shall close
concurrently with the transaction provided for in this Agreement, and this
transaction shall not close unless the Mesler's transaction closes concurrently.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.
SELLER: BUYER:
C&C Capital Investment, Inc., Ableauctions.com (Washington), Inc.,
an Arizona corporation a Washington corporation
By: /s/ Harold Friend By: /s/ Abdul Ladha
------------------------------ -----------------------------------
Name (Printed): Harold Friend Name (Printed) Abdul Ladha
Title: President Title President
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ESCROW AGENT'S ACCEPTANCE
ACCEPTED AND AGREED to this 20th day of March, 2000, which shall be deemed the
date of "Opening of Escrow" for the foregoing Agreement, and the Escrow Number
assigned to the transaction covered by the foregoing Agreement shall be 2003010.
CHICAGO TITLE INSURANCE COMPANY
By: /s/ Patti Krisik
-------------------------------------------
Patti Krisik
Escrow Officer
