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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): November 23, 1999
WESTMINSTER CAPITAL, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-4923 95-2157201
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
9665 Wilshire Boulevard, Suite M-10
Beverly Hills, California 90212
(Address of Principal Executive Offices)
(310) 278-1930
(Registrant's Telephone Number)
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ITEM 5. OTHER EVENTS.
On November 23, 1999, Westminster Capital, Inc. (the "Registrant")
entered into a Stock Purchase Agreement with Logic Technology Group, Inc.
(dba, Matrix Visual Solutions) ("Matrix"), Paul Motal ("Motal"), and Amy
Hsiao ("Hsiao"). Motal and Hsiao are referred to collectively as the
"Sellers." The Registrant purchased from Sellers 68% of the issued and
outstanding capital stock of Matrix for an initial purchase price of $3.765
million. This purchase price is subject to adjustment based on the earnings
of Matrix for its fiscal year ended September 30, 1999, before deduction for
interest, income taxes, depreciation and amortization. Matrix is engaged in
the rental and sale of audiovisual and computer equipment. Pursuant to the
Stock Purchase Agreement, the Registrant acquired 35% of the issued and
outstanding capital stock of Matrix from Hsiao, and 33% of the issued and
outstanding capital stock of Matrix from Motal. The acquisition was financed
through the Registrant's existing cash reserves.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements. None.
(b) Pro Forma Financial Information. None.
(c) Exhibits.
Exhibit 2.1 Stock Purchase Agreement, dated November
23, 1999. Pursuant to Item 601(b)(2) of
Regulation S-K, the Registrant hereby agrees
to furnish supplementally to the Commission
a copy of any exhibit or schedule omitted
from this filing 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
undersigned hereunto duly authorized.
December 13, 1999 WESTMINSTER CAPITAL, INC.
By: /s/ KEENAN BEHRLE
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Keenan Behrle
Executive Vice President
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EXHIBIT INDEX
Exhibit Page Number
- ------- -----------
2.1 Stock Purchase Agreement, 5
dated November 23, 1999.
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is made and entered
into as of the 23rd day of November 1999, by and among Westminster Capital,
Inc., a Delaware corporation ("PURCHASER"), Logic Technology Group, Inc.
(dba, Matrix Visual Solutions), a California corporation (the "COMPANY"),
Paul Motal ("MOTAL") and Amy Hsiao ("HSIAO"). Motal and Hsiao are sometimes
each referred to as a "SELLER" and collectively referred to as the "SELLERS."
A. The Sellers own all of the issued and outstanding capital stock
of the Company.
B. On the terms and subject to the conditions of this Agreement,
Purchaser desires to purchase from the Sellers, and the Sellers desire to
sell to Purchaser, 68% of the issued and outstanding capital stock of the
Company. Specifically, Hsiao desires to sell 35% of the issued and
outstanding capital stock of the Company, representing her entire ownership
interest in the Company, and Motal desires to sell 33% of the issued and
outstanding capital stock of the Company, representing a portion of his
ownership interest in the Company.
NOW, THEREFORE, with reference to the foregoing facts, and
consideration of the mutual covenants and agreements hereinafter set forth,
Purchaser, the Sellers and the Company agree as follows:
1. DEFINITIONS.
As used in this Agreement and the exhibits and schedules
attached hereto, the following terms shall have the following meanings:
"1999 EBITDA" shall mean the earnings of the Company for
its fiscal year ended September 30, 1999, before deduction for interest,
income taxes, depreciation and amortization ("EBITDA"), as reflected in the
Company's 1999 financial statements prepared in accordance with generally
accepted accounting principles, applied on a basis consistent with the
policies, practices and procedures, and using the same classifications,
judgments and estimation methodologies, used in the preparation of the
Company Financial Statements.
"ACQUISITION" shall mean the purchase and sale of the
Shares pursuant to this Agreement.
"ACTION" shall mean any lawsuit, litigation, action,
demand, suit, proceeding, inquiry, arbitration or claim before any court or
Governmental Authority, whether formal or informal, or civil, criminal,
administrative, or investigative, and includes mediation, arbitration,
appellate, bankruptcy and judgment-execution proceedings.
"ADJUSTED PURCHASE PRICE" shall mean the Purchase Price
multiplied by the Adjustment Percentage.
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"ADJUSTMENT PERCENTAGE" shall mean (i) the actual 1999
EBITDA (as determined in accordance with Section 2(d)), divided by (ii)
$2,000,000.
"AFFILIATE" shall mean, with respect to any specified
Person: (a) any other Person who, directly or indirectly, owns or controls,
is under common ownership or control with, or is owned or controlled by, such
specified Person; (b) any relative of the specified Person or any other
Person described in clause (a) of this definition who has the same residence
of such Person; or (c) any Person of which the specified Person and/or any
one or more of the Persons specified in clause (a) or (b) of this definition,
individually or in the aggregate, beneficially own 10% or more of any class
of voting securities or otherwise have a substantial beneficial interest.
"AGREEMENT" shall mean this Agreement, as amended,
supplemented or modified from time to time in accordance with its terms.
"BEST KNOWLEDGE" with respect to any Person shall mean and
include: (a) actual knowledge of the Person, provided that, with respect to
the Company, it shall mean the actual knowledge of Motal and Hsiao; and (b)
that knowledge which a prudent businessperson could have obtained in the
management of his business after making due inquiry with respect thereto.
"BUSINESS CONDITION" of any Person shall mean the condition
(financial or other), earnings, results of operations, business or properties
of such Person in the aggregate.
"BUSINESS DAY" shall mean any day except a Saturday, Sunday
or other day on which commercial banks in the city of Los Angeles, California
are authorized by Law to close.
"CLOSING" shall mean the closing of the transactions
contemplated by this Agreement.
"CLOSING DATE" shall mean the date of the Closing.
"COMPANY" shall mean Logic Technology Group, Inc., a
California corporation (dba. Matrix Visual Solutions).
"COMPANY CAPITAL STOCK" shall mean the capital stock,
without par value, of the Company, as designated on the date hereof.
"COMPANY CONTRACT" shall mean any Contract to which the
Company is a party or otherwise bound, or to which any asset or property of
the Company is subject.
"COMPANY DISCLOSURE SCHEDULE" shall mean the schedule of
exceptions to representations and warranties of the Sellers and the Company
made pursuant to Section 3 hereof.
"COMPANY FINANCIAL STATEMENTS" shall mean: (i) the balance
sheet of the Company as of September 30, 1998 and the related statements of
operations, shareholders' equity and cash flows for the fiscal year then
ended; and (ii) the balance sheet of the Company as of July 31, 1999 and the
related statements of operations, shareholders' equity and cash flows for the
10 months then ended.
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"CONTINUING OBLIGATIONS" shall mean the obligations of the
Company to the Sellers for salaries for the bi-monthly payment period in
which the Closing occurs.
"CONTRACT" shall mean any written or oral note, bond,
debenture, mortgage, license, agreement, commitment, document, instrument or
contract.
"CURRENT BALANCE SHEET" shall mean the balance sheet of the
Company as of July 31, 1999.
"EMPLOYEE PLAN" with respect to any Person shall mean any
plan, arrangement or Contract providing compensation or benefits to, for or
on behalf of employees and/or directors of such Person, including employment,
deferred compensation, retirement or severance Contracts; plans pursuant to
which Securities are issued, including stock purchase, stock option and stock
appreciation rights plans; bonus, thrift, pension, savings, insurance, profit
sharing, severance, loan guaranty, employee loan or incentive compensation
plans or arrangements; supplemental unemployment benefit, hospitalization or
other medical, life, dental, vision, health care or other insurance; and
ERISA Plans.
"EMPLOYMENT AGREEMENT" shall mean the Employment Agreement
entered into on or prior to the Closing by and between the Company and Motal,
which agreement shall be substantially in the form of the Employment
Agreement attached as EXHIBIT A to this Agreement.
"ENVIRONMENTAL LAW" shall mean any order, writ, injunction,
decree, judgment, ruling or Law of any Governmental Authority, or any binding
agreement with any such Governmental Authority, relating to pollution or
protection of the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata), including, without
limitation, the Resource Conservation and Recovery Act of 1976, as amended;
the Comprehensive Environmental Response Compensation and Liability Act of
1980, as amended; the Superfund Amendments and Reauthorization Act of 1986,
as amended; the Toxic Substances Control Act of 1976, as amended; the
Emergency Planning and Community Right-To-Know Act of 1986; the Federal Water
Pollution Control Act Amendments of 1972, as amended by the Clean Water Act
of 1977 and the Water Quality Act of 1987; and the Clean Air Act, as amended,
and other Laws relating to (a) emissions, discharges or releases of Polluting
Substances or (b) the handling, storage, disposal, reclamation, recycling or
transportation of Polluting Substances.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, and includes all rules and regulations promulgated
under that Act.
"ERISA PLANS" of any Person shall mean all "employee
benefit plans," within the meaning of Section 3(3) of ERISA maintained by,
contributed to (or required to be contributed to), or sponsored by such
Person.
"ESCROW AGENT" shall mean Wells Fargo Bank, National
Association.
"ESCROW AGREEMENT" shall mean the Escrow Agreement entered
into on or prior to the Closing by and among the Escrow Agent, Purchaser and
the Sellers, which agreement shall be substantially in the form of the Escrow
Agreement attached as EXHIBIT B to this Agreement.
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"EXPLOIT" shall mean manufacture, advertise, license,
market, merchandise, promote, publicize, sell, use, market or distribute, and
"EXPLOITATION" shall have a correlative meaning.
"GOVERNMENTAL AUTHORITY" shall mean any nation or
government, any state or other political subdivision thereof, a public body
or authority, and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
whether domestic or foreign or local, state, regional or national.
"HOLDBACK AMOUNT" shall mean $941,250, which equals 25% of
the Purchase Price.
"INCOME TAX" means any federal, state, local, or foreign
income tax, including any interest, penalties, and additions imposed with
respect to such taxes.
"INCOME TAX RETURN" means all returns, declarations,
reports, claims for refunds, information returns, statements, and other forms
required to be filed with respect to any Income Taxes, including any schedule
or attachment thereto, and including any amendments thereof.
"INDEBTEDNESS" of a Person shall mean: (a) indebtedness of
such Person for money borrowed, whether short-term or long-term and whether
secured or unsecured; (b) the undrawn face amount of, and unpaid
reimbursement obligations in respect of, all letters of credit issued for the
account of such Person; (c) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (d) all obligations of
such Person upon which interest charges are customarily paid; (e) obligations
of such Person to purchase, redeem, retire, defease or otherwise acquire for
value any capital stock or other equity interests of such Person or any
warrants, rights or options to acquire such capital stock or other equity
interests; (f) all indebtedness of the types referred to in clauses (a)
through (e) above of another Person which is guaranteed directly or
indirectly by such Person or secured by the assets of such Person and (g)
renewals, extensions, refundings, deferrals, restructurings, amendments and
modifications of any such indebtedness, obligation or guarantee.
"IP" shall mean patents, trademarks, service marks, trade
names, copyrights (which have been filed with the federal copyright
authorities), trade secrets, trade dress and other rights and property
commonly referred to as intellectual property, and rights or licenses to use
the same, and any and all applications therefor.
"IRC" shall mean United States Internal Revenue Code of
1986, as amended and in effect from time to time (or any successor statute in
effect from time to time), and the rules and regulations promulgated
thereunder.
"IRS" shall mean the United States Internal Revenue Service.
"LAW" shall mean any foreign, federal, state or local
statute, law, rule, regulation, ordinance, order, code, policy or rule of
common law arising from final nonappealable decisions of Governmental
Authorities and state and federal courts in the United States, now or
hereafter in effect, and in each case as amended, and any judicial or
administrative interpretation thereof by a Governmental Authority or
otherwise, including any judicial or administrative order, consent, decree
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or judgment arising from final nonappealable decisions of Governmental
Authorities and state and federal courts in the United States.
"LIEN" shall mean any mortgage, deed of trust, pledge,
security interest, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority, or other
security agreement or preferential arrangement, charge, or encumbrance of any
kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the Uniform Commercial Code or
comparable Law of any jurisdiction to evidence any of the foregoing).
"LOSSES" shall mean losses, liabilities, damages, claims,
fines, penalties, judgments, demands, assessments, levies, costs and
expenses, sustained or incurred by the party incurring such Losses, including
without limitation, reasonable attorneys', accountants', investigators' and
experts' fees and expenses, sustained or incurred in connection with the
defense or investigation of any Action, net of any insurance proceeds
actually collected in respect thereof (net of related expenses, including
premium adjustments).
"PERSON" shall mean an individual or a group, syndicate,
cooperative, joint venture, unincorporated organization, partnership,
corporation, trust, association, limited liability company, Governmental
Authority or other entity.
"POLLUTING SUBSTANCES" shall mean pollutants, contaminants,
chemicals, or industrial toxic or hazardous substances or wastes.
"PURCHASE PRICE" shall mean $3,765,000.
"PURCHASER" shall mean Westminster Capital, Inc., a
Delaware corporation.
"SECURITIES" shall mean capital stock, Stock Equivalents
and any other "security" as that term is defined under the Securities Act.
"SECURITIES ACT" shall mean the United States Securities
Act of 1933, as amended, or any successor federal statute, and the rules and
regulations of the SEC thereunder.
"SELLERS" shall mean Motal and Hsiao.
"SEPTEMBER 30, 1999 BALANCE SHEET" shall mean the balance
sheet of the Company as of September 30, 1999, which is prepared pursuant to
Section 2(d).
"SHARES" shall mean the 391,143 shares of the Company
Capital Stock being purchased by the Purchaser, consisting of 201,323.5
shares being purchased from Hsiao and 189,819.5 shares being purchased from
Motal.
"STOCK EQUIVALENTS" shall mean options, warrants, calls,
rights, commitments, convertible securities and other securities pursuant to
which the holder, directly or indirectly, has the right to acquire (with or
without additional consideration) capital stock.
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"SUBSIDIARY" when used in reference to any particular
party, means a corporation with respect to which the party either: (a) is
required to consolidate the reporting of its financial information in
accordance with generally accepted accounting principles; or (b) is a
beneficial owner of either at least 50% of any class of the corporation's
securities or securities of the corporation representing at least 50% of the
voting power of all the corporation's outstanding securities that are
entitled to vote in the election of its directors.
"TAX LIABILITIES" shall mean all liabilities related to
Taxes.
"TAX RETURNS" shall mean all returns, declarations,
reports, claims for refunds or information returns or statements relating to
Taxes, including any schedule or attachment thereto, and including any
amendments thereof.
"TAXES" shall mean all taxes, charges, fees, levies or
other governmental assessments, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, unemployment,
social security (including any social security charge or premium) excise,
estimated, alternative minimum, severance, stamp, occupation, property or
other taxes, customs, dues, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority (federal, state, local or
foreign).
"TRANSFER" shall mean sell, assign, transfer, pledge, grant
a security interest in, license, sublicense or otherwise dispose of, with or
without consideration.
The masculine form of words includes the feminine and the
neuter and vice versa, and, unless the context otherwise requires, the
singular form of words includes the plural and vice versa. As used in this
Agreement, the word "including" is always without limitation. The words
"herein," "hereof," "hereunder," and other words of similar import when used
in this Agreement refer to this Agreement as a whole, and not to any
particular section or subsection. Except as otherwise expressly provided in
this Agreement, accounting terms used, but not otherwise defined, in this
Agreement are to be construed and interpreted in accordance with "generally
accepted accounting principles" in effect on the date hereof, as described in
Accounting Standards Board SAS No. 69 and established by various
pronouncements of the Accounting Principles Board, the Financial Accounting
Standards Board, and the American Institute of Certified Public Accountants.
2. PURCHASE AND SALE; CLOSING; PURCHASE PRICE ADJUSTMENTS.
(a) PURCHASE AND SALE. On the terms and subject to the
conditions set forth in this Agreement, Purchaser shall purchase the Shares
from the Sellers at the Closing, and the Sellers shall sell the Shares to the
Purchaser at the Closing.
(b) PURCHASE PRICE. The aggregate purchase price for the
Shares (the "PURCHASE PRICE") shall be $3,765,000. In order to facilitate the
Closing, the Purchase Price has been based on the parties estimate of 1999
EBITDA of $2,000,000 and is subject to adjustment after determination of the
actual 1999 EBITDA as set forth in Sections 2(d) and 2(e) below. The Purchase
Price shall be allocated among the Sellers as set forth in SCHEDULE I hereto.
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(c) THE CLOSING. The Closing shall take place at the
offices of Troop Steuber Pasich Reddick & Tobey, LLP, 2029 Century Park East,
Los Angeles, California 90067, on November [15], 1999 or such other date as
may be mutually agreed to by the Sellers and Purchaser. At the Closing, each
of the Sellers shall deliver to Purchaser the certificates evidencing the
number of Shares being purchased from such Seller, duly endorsed in blank for
transfer, against delivery by Purchaser of the Purchase Price, less the
Holdback Amount, by certified or bank cashiers check or by wire transfer of
funds to the account(s) designated by the Sellers. On or prior to the
Closing, Purchaser and the Sellers will enter into the Escrow Agreement with
the Escrow Agent. On the Closing Date, Purchaser shall deposit the Holdback
Amount with the Escrow Agent to be held in accordance with the terms of the
Escrow Agreement.
(d) DETERMINATION OF 1999 EBITDA. Within 90 days following
the Company's 1999 fiscal year end, the Purchaser shall deliver to Sellers
its written determination of 1999 EBITDA (the "DETERMINATION NOTICE"),
together with a copy of the Company's 1999 financial statements audited by
Deloitte & Touche LLP and such working papers as may be reasonably requested
by the Sellers. The Sellers shall advise Purchaser if Sellers agree or
disagree with Purchaser's determination of 1999 EBITDA. If the Sellers fail
to so advise Purchaser within 10 days following the delivery of the
Determination Notice, it shall be deemed that the Sellers shall have accepted
Purchaser's determination of 1999 EBITDA. If the Sellers disagree with
Purchaser's determination, the Sellers shall give notice of disagreement (a
"DISAGREEMENT NOTICE"), which notice shall specify Sellers' determination of
the 1999 EBITDA. If a Disagreement Notice shall be delivered, Purchaser and
the Sellers shall attempt to reach agreement on the 1999 EBITDA. If Purchaser
and the Sellers are unable to reach an agreement within 10 days, either
Purchaser or the Sellers may submit the disagreement to arbitration in
accordance with the following procedures. The arbitrator of any disagreement
pursuant to this Section 2(d) shall be a nationally recognized independent
accounting firm mutually acceptable to the parties, which firm shall not have
had a material relationship with the Company, either of the Sellers or
Purchaser within the two years preceding the appointment (the "ARBITER"). If
the parties cannot agree on the selection of the Arbiter, the parties shall
request the American Arbitration Association to appoint the Arbiter, and such
appointment shall be conclusive and binding upon the parties. The Arbiter
shall be instructed to determine, promptly, but no later than 20 days after
its acceptance of its appointment as Arbiter, based solely on presentations
by the Company, the Sellers and Purchaser, and not by independent review,
only those issues in dispute and the resulting computation of the 1999
EBITDA, which shall be conclusive and binding upon the parties. In resolving
any disputed item, the Arbiter may not assign a value to any item greater
than the greater value for such item claimed by either party or less than the
smallest value for such item claimed by either party. The fees, costs and
expenses of the Arbiter shall be paid by the party whose estimate of the 1999
EBITDA most differs from the 1999 EBITDA determined by the Arbiter. The
Company, Sellers and Purchaser shall each make available to the other their
respective work papers generated in connection with the preparation or review
of the 1999 EBITDA. Notwithstanding anything to the contrary contained in
this Agreement, any and all costs and expenses attributable to the audit of
the Company's 1999 financial statements to be performed by Deloitte & Touche
LLP shall be paid by (i) the Company upon the Closing or (ii) Purchaser, if
this Agreement is terminated at any time prior to Closing.
(e) ADJUSTMENT TO PURCHASE PRICE. Within 2 Business Days
following determination of the 1999 EBITDA (either by agreement or by
arbitration, as the case may be) an adjustment to the Purchase Price shall be
made as follows.
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(i) If the Adjusted Purchase Price shall be less
than the Purchase Price, Sellers and Purchaser shall deliver appropriate
written notice to the Escrow Agent and the Escrow Agent shall, in accordance
with the terms of the Escrow Agreement, pay such difference between the
Adjusted Purchase Price and the Purchase Price, plus the interest earned on
such amount, if any, under the Escrow Agreement, to Purchaser out of the
Holdback Amount and the remainder of the Holdback Amount, if any, shall be
paid to the Sellers, including the interest earned on such amount. In the
event that such difference between the Adjusted Purchase Price and the
Purchase Price is greater than the Holdback Amount, the Sellers shall pay an
amount equal to the amount by which such difference exceeds the Holdback
Amount to Purchaser by certified or bank cashiers check or by wire transfer
of funds to the account(s) designated by Purchaser.
(ii) If the Adjusted Purchase Price shall be
equal to or greater than the Purchase Price, Sellers and Purchaser shall
deliver appropriate written notice to the Escrow Agent and the Escrow Agent
shall, in accordance with the terms of the Escrow Agreement, pay the entire
Holdback Amount, plus interest earned on such amount, to the Sellers. In
addition, if the Adjusted Purchase Price shall be greater than the Purchase
Price, Purchaser shall pay to the Sellers such difference between the
Adjusted Purchase Price and the Purchase Price, by certified or bank cashiers
check or by wire transfer of funds to the account(s) designated by the
Sellers.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE
COMPANY.
Subject to the exceptions set forth in the Company
Disclosure Schedule dated the date hereof and delivered by the Sellers and
the Company to Purchaser concurrently with this Agreement, each of the
Sellers and the Company represents and warrants to Purchaser as follows:
(a) ORGANIZATION AND CAPITALIZATION OF THE COMPANY.
(i) The Company is a corporation duly
organized, validly existing in good standing under the Laws of the State of
California and has all requisite corporate power and corporate authority to
own, lease and operate its properties and assets and to carry on its business
as now being conducted. Complete and correct copies of the Company's current
Articles of Incorporation and Bylaws have been delivered to Purchaser or its
attorneys.
(ii) The Company is duly qualified to do
business as a foreign corporation and is in good standing in every
jurisdiction where it owns or leases any property or its business activities
require it to so qualify.
(iii) The authorized capital stock of the
Company consists solely of 10,000,000 shares of the Company Capital Stock, of
which only 575,210 shares are issued and outstanding, and no other class of
Securities. The Sellers own of record and beneficially all of the Shares. The
Company Disclosure Schedule sets forth the number of Shares owned of record
by each Seller. The Shares are not subject to any Lien and no Person has any
right or option to purchase or acquire, with or without consideration, any of
the Shares. The Shares have been duly authorized and validly issued and are
fully paid and nonassessable. The holders of the Shares possess exclusive
voting rights with respect to the affairs of the Company.
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(iv) There are no outstanding Stock
Equivalents of the Company. The Company is not obligated to purchase or
redeem any Securities.
(v) The Company has not, either directly or
through any agent, offered any Securities to or solicited any offers to
acquire any Securities from, or otherwise approached, negotiated or
communicated in respect of any Securities with, any Person in such a manner
as to require that the offer or sale of such Securities be registered
pursuant to the provisions of Section 5 of the Securities Act and the rules
and regulations of the SEC thereunder or the securities Laws of any state.
The Company has complied with all federal and state securities and blue sky
Laws in all offers, sales and purchases of its Securities prior to the date
hereof and has not violated any applicable Law in making such issuances and
purchases of its Securities prior to the date hereof. Any notices required to
be filed under federal and state securities and blue sky Laws prior to the
date hereof have been filed on a timely basis prior to or as so required.
(b) AUTHORITY; ENFORCEABILITY.
(i) This Agreement has been duly executed and
delivered by the Company and constitutes a valid and legally binding
obligation of the Company enforceable against the Company in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar Laws relating to or
affecting creditors' rights generally, or the availability of equitable
remedies.
(ii) The execution and delivery by the Company
of this Agreement do not, and compliance by the Company with the provisions
hereof will not: (A) conflict with or result in a breach or default under any
of the terms, conditions or provisions of any Material Company Contract; or
(B) violate any Law applicable to the Company; or (C) result in the creation
or imposition of any Lien on any asset of the Company.
(c) SUBSIDIARIES. The Company does not have and has never
had any Subsidiaries.
(d) FINANCIAL STATEMENTS. The Company Financial Statements
have been prepared from the books and records of the Company in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except for changes specified therein and except that
unaudited financial statements are not accompanied by notes and subject to
normal year end adjustments, and present fairly (as defined under GAAP) the
financial condition, results of operations, shareholders' equity and cash
flows of the Company as of the dates thereof and for the periods specified
therein. All transactions involving the Company have been properly and
accurately recorded in its financial books, records and accounts.
(e) TAXES.
(i) The Company has filed, as of the date
hereof, and will have filed as of the Closing Date, all Tax Returns that it
was required to file for tax periods ending before those dates. All such Tax
Returns were correct and complete in all material respects. In particular,
the foregoing Tax Returns were not subject to penalties under IRC Section
6662, relating to accuracy-related penalties (or any corresponding provision
of the state, local or foreign Tax Law) or any predecessor provision of Law,
and the Company has disclosed on its federal income Tax Returns all
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positions taken therein that could give rise to a substantial understatement
of federal income Tax within the meaning of IRC Section 6662 (or any
corresponding provision of the state, local or foreign Tax Law) or any
predecessor provision of Law. The Company is not the beneficiary of any
extension of time within which to file any Tax Return. All Taxes due and
owing by the Company relating to the periods covered by such Tax Returns
(whether or not shown on any Tax Return) have been paid, or will be paid
before the Closing Date. The Company has not requested, nor currently is the
beneficiary of, any extension of time within which to file any Tax Return
that has not been filed. No claim has ever been made by an authority in a
jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Liens on any of the
assets of the Company that arose in connection with any failure (or alleged
failure) to pay any Tax other than Liens for current Taxes not yet delinquent.
(ii) The Company has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, stockholder, or
other third party (including, without limitation, as required under IRC
Sections 1441-1464, IRC Sections 3401-3406, IRC Section 6041 and IRC Section
6049).
(iii) Neither the Sellers nor the Company
expect any authority to assess any additional Taxes for any period for which
Tax Returns have been filed. To the Best Knowledge of each of the Sellers and
the Company there is no dispute or claim concerning any Tax Liability of the
Company either claimed or raised by any Governmental Authority in writing or
upon personal contact with any agent of such authority. The Company
Disclosure Schedule lists: (A) all Income Tax Returns filed with respect to
the Company; (B) indicates those Tax Returns listed in (A) that have been
audited; and (C) indicates those Tax Returns listed in (A) that currently are
the subject of audit. The Company has made available to Purchaser complete
copies of all federal or state Income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Company.
(iv) The Company has not waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(v) The Company has never filed a consent
under IRC Section 341(f) (or any corresponding provision of state, local or
foreign income tax Law) concerning collapsible corporations or agreed to have
IRC Section 341(f)(2) (or any corresponding provision of state, local or
foreign income tax Law) apply to any disposition of any asset owned by it.
The Company has not made any payments, is not obligated to make any payments,
and is not a party to any Contract that under certain circumstances could
obligate it to make any payments that will not be deductible under IRC
Section 280G. The Company has not been a United States real property holding
corporation within the meaning of IRC Section 897(c)(2) during the applicable
period specified in IRC Section 897(c)(1)(A)(ii).
(vi) The Company is not a party to any Tax
indemnity, Tax sharing or Tax allocation agreement. The Company (A) has not
been a member of an affiliated group of corporations within the meaning of
IRC Section 1504 within the four years preceding the date hereof, or (B) has
no Tax Liability for the Taxes of any Person under IRC Section 1.1502-6 (or
any similar provision of state, local, or foreign Law), as a transferee or
successor, by Contract, or otherwise.
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The Company Disclosure Schedule sets forth an estimate of the following
information with respect to the Company as of the most recent practicable
date: (A) the tax basis in its assets; and (B) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused
foreign tax credit or excess charitable contribution allocable to the Company.
(f) CUSTOMS MATTERS. To the Best Knowledge of the Sellers,
the Company has all licenses, permits, consents, orders, approvals and other
authorizations necessary under the customs and trade Laws of the United
States of America, including without limitation bilateral trade agreements,
to carry on its business as currently being conducted. To the Best Knowledge
of the Sellers, the Company has properly reported all goods imported into the
United States, accurately stated all dutiable costs thereof and paid all
tariffs due thereon at the time of entry.
(g) REAL PROPERTY AND ASSETS.
(i) The Company has good and transferable
title to all of its assets of material value to it whether real, personal,
tangible or intangible which are reflected on the Current Balance Sheet, free
and clear of all Liens except for: (A) Liens that are reflected in the
Current Balance Sheet; (B) Liens for current taxes not yet delinquent; (C)
assets sold or transferred in the ordinary course of business and consistent
with past business practice since the date of the Current Balance Sheet; and
(D) restrictions imposed by Law and easements and restrictions which are
neither individually nor in the aggregate material to the Company or its
Business Condition.
(ii) The Company Disclosure Schedule
identifies each parcel of real property that the Company owns or leases. The
Company enjoys peaceful and undisturbed possession under all material leases
for the use of real property under which it operates.
(iii) The Company Disclosure Schedule
identifies the material assets utilized by the Company in its business and
the location of such assets. The Company owns all such assets. Material
assets currently used by the Company and listed on the Company Disclosure
Schedule are in good operating condition and repair, normal wear and tear
accepted.
(iv) All inventories are current and readily
merchantable and contain no amount of damaged, obsolete or unsalable product
which have not been written down or reserved to their market value.
(v) All accounts receivable reflected on the
September 30, 1999 Balance Sheet are stated in accordance with generally
accepted accounting principles and: (A) constitute bona fide and valid rights
of the Company to collect payments from other Persons; (B) represent credit
extended in a manner consistent with the Company's trade practices; (C) are
not subject to any defense, counterclaim or offset; and (D) except for
reserves set forth in the September 30, 1999 Balance Sheet, are fully
collectable.
(vi) Neither the Sellers nor any Affiliates
thereof (other than the Company), own or have any interest in any assets or
property (including the name "Matrix") which have been used within the past
two years or are presently being used or are necessary to be used in the
business of the Company as presently conducted.
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(h) ENVIRONMENTAL LIABILITIES.
(i) Subject to subsections (ii) and (iii)
of this Section, to the Best Knowledge of the Sellers, the Company has
conducted and is conducting its business, and has used and is using its
properties, whether currently owned, operated or leased or owned, operated or
leased by it at any time in the past, in material compliance with all
applicable Environmental Laws.
(ii) Neither the Company nor any property
currently owned, operated or leased or which has been owned, operated or
leased by the Company, is subject to any pending or threatened investigation
of which the Sellers or the Company has either actual knowledge or written
notice, or any pending or threatened action or proceeding, including any
notice of violation, of which the Sellers or the Company has knowledge, by
any Governmental Authority regarding contamination of any part of the
property or infractions of any Environmental Law or any license or permit
issued by any Governmental Authority pursuant to any such Law.
(iii) To the Best Knowledge of the Sellers, no
Polluting Substance is presently located on or under any property which is
currently owned, operated or leased by the Company, except for office
supplies, cleaning supplies, photocopying materials and other materials of
similar nature, kept by the Company in the ordinary course of its business,
or as indicated in any environmental reports, studies, assessments or data
listed on the Company Disclosure Schedule and delivered to Buyer.
(i) LITIGATION AND PROCEEDINGS. There is no pending or, to
the Best Knowledge of the Sellers, threatened Action to which the Company is
a party or otherwise involving the Company, and the Company is not subject to
any judgment, order, writ, injunction, decree or regulatory directive or
agreement.
(j) EMPLOYEE CONTRACTS AND ERISA PLANS.
(i) All Employee Plans which are now
maintained by the Company or have been maintained by the Company are
identified in the Company Disclosure Schedule. True and complete copies of
all Employee Plans listed on the Company Disclosure Schedule have been
furnished to Purchaser or its agents. The Company Disclosure Schedule
summarizes all material oral agreements listed therein and the annual
compensation payable by the Company to each of its officers, employees,
agents or consultants, including salary, bonus and any other benefits.
(ii) Neither the Company nor any entity that
is a member of a "controlled group of corporations" or that is under "common
control" with the Company, within the meaning of IRC Section 414(b) or (c)
(an "ERISA AFFILIATE"), has ever maintained, contributed to (or been required
to contribute to), or sponsored a "multiemployer plan," within the meaning of
ERISA Section 3(37)(a). The Company has never maintained, contributed to (or
been required to contribute to), or sponsored a "defined benefit plan,"
within the meaning of ERISA Section 3(35).
(iii) Any ERISA Plan maintained by the Company
has been administered in substantial compliance with ERISA, the IRC and the
terms of such ERISA Plan, and there is no pending or threatened litigation
relating to any ERISA Plan.
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(iv) Any ERISA Plan maintained by the Company
that is a "pension plan" within the meaning of ERISA Section 3(2)
(collectively, the "PENSION PLANS") has received a favorable determination
letter from the IRS under IRC Section 401(a).
(v) Neither the Company nor any fiduciary
of any Pension Plan maintained by the Company has engaged in any transaction
that is prohibited by ERISA Section 406 or the regulations thereunder for
which an exemption does not exist.
(vi) No Pension Plan maintained by the Company
is currently in effect, and no current or former employee or officer of the
Company is entitled to any present or future payment with respect to any
Pension Plan maintained by the Company.
(vii) Any payments required to be made pursuant
to the terms of any Employee Plan maintained by the Company that relate to
any period prior to the Closing will have either been timely made or accrued
on the books of the Company in accordance with generally accepted accounting
principles.
(viii) The Company does not offer and has never
in the past offered health benefits for retired employees except to the
extent required by applicable Law.
(ix) The Company does not maintain any
Employee Plans outside of the United States for non-U.S. citizen employees of
the Company.
(x) The Company Disclosure Schedule lists
separately all Contracts pursuant to which the consummation of the
transactions as contemplated hereunder will (a) entitle any current or former
employee or officer of the Company to severance pay, unemployment
compensation or any other payment, or (b) accelerate the time of payment or
vesting or increase the amount of compensation due any such employee or
officer. The consummation of the transactions as contemplated hereunder will
not result in any prohibited transaction described in Section 406 of ERISA or
Section 4975 of the IRC for which an exemption is not available or the cost
of which is not borne by the former employee or his beneficiary.
(xi) No liability under Title IV of ERISA has
been incurred by the Company or any of its ERISA Affiliates since the
effective date of ERISA that has not been satisfied in full, and no condition
exists that presents a material risk to the Company or any of its ERISA
Affiliates of incurring directly or indirectly a liability under such Title,
other than liability for premiums due the Pension Benefit Guaranty
Corporation.
(xii) Each Employee Plan maintained by the
Company is in full force and effect, and the Company is not in default under
any Employee Plan maintained by the Company. There have been no claims of
default and, there are no facts or conditions which if continued, or on
notice, will result in a default under any Employee Plan.
(k) CONTRACTS. The Company Disclosure Schedule lists all of
the following types of Company Contracts (the "Material Company Contracts"):
(i) Each Contract (or group of related
Contracts) which is to be performed in whole or in part at or after the date
of this Agreement and which: (A) cannot be
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canceled upon 90 days' notice without payment or penalty of less than
$10,000; (B) involves aggregate future payments by or to the Company of more
than $10,000; (C) involves material nonmonetary obligations to be performed
later than one year from the date hereof; or (D) otherwise materially affects
the Company or its Business Condition;
(ii) Each Contract pursuant to which the
Company: (A) has borrowed or is committed or entitled to borrow money in an
amount in excess of $50,000; (B) has lent or committed to lend money; or (C)
has given or is committed to give a guarantee of, or otherwise to incur
primary or secondary liability for (including any letter of credit), any
obligation of any other party in any amount;
(iii) Each Contract regarding advertising,
brokerage, licensing, management, representative or agency relationships;
(iv) Each Contract with or concerning any
labor or employee organization;
(v) Each Contract for the Transfer of any
properties, assets or rights of the Company (A) for consideration in excess
of $50,000, or (B) which requires the consent of any third party to the
Transfer of such assets, properties or rights;
(vi) Each Contract with any Seller or any
Affiliate of the Company;
(vii) Each Contract: (A) under which the
benefits cannot be retained upon the consummation of the transactions
contemplated by this Agreement without the written consent or approval of
other parties; (B) under which there will be a default as a result of the
consummation of the transactions contemplated by this Agreement unless such
other parties provide written consent or approval; or (C) which would require
the making of any payment, other than payments as contemplated by this
Agreement, to any employee of the Company or to any other Person as a result
of the consummation of the transactions contemplated herein;
(viii) Each Contract involving a guarantee by the
Sellers of any the Company Indebtedness or imposing a Lien on personal assets
of the Sellers which serve as collateral for the Company Indebtedness;
(ix) Each Contract pursuant to which the
Company has granted or agreed to any discount in connection with future
product sales, rebates, inventory balancing or product returns or exchanges;
(x) Each Contract providing the Company the
right or license to use or exploit the IP of any other Person; and/or
(xi) Each Contract requiring the Company to make
capital expenditures in excess of $50,000.
(l) ABSENCE OF LIABILITIES. The Company has no
Indebtedness, obligation or liability, absolute, accrued, contingent or
otherwise, except for: (i) those disclosed in the Company Disclosure
Schedule; (ii) those accrued, reserved or disclosed in the Current Balance
Sheet and notes
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thereto; or (iii) trade payables and obligations incurred in the ordinary
course of business on or after the date of the Current Balance Sheet; or (iv)
obligations incurred in the ordinary course of business prior to the date of
the Current Balance Sheet which, in accordance with generally accepted
accounting principles, were not required to be recorded thereon.
(m) CONFLICTS OF INTEREST. Neither the Company nor any
officer, employee, agent or any other person acting on behalf of the Company
has, directly or indirectly, given or agreed to give or received or agreed to
receive any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to or from any
customer, supplier, licensor, employee or agent of a customer or supplier, or
official or employee of any Governmental Authority or other Person who was,
is, or may be in of a position to help or hinder the business of the Company
(or assist in connection with any actual or proposed transaction therewith)
which: (i) might subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding; (ii) if not given in the
past, might have had a material adverse effect on the Business Condition of
the Company; or (iii) if not continued in the future, might have a material
adverse effect on the Business Condition of the Company.
(n) OTHER RELATIONSHIPS. Neither of the Sellers nor the
Company has any interest (other than as a noncontrolling holder of securities
of a publicly traded company), either directly or indirectly, in any Person,
including without limitation, any Person (whether as an employee, officer,
director, shareholder, agent, independent contractor, security holder,
creditor, consultant, or otherwise) that presently (i) provides any services
or designs, produces and/or sells any products or product lines, or engages
in any activity which is the same, similar to or competitive with any
activity or business in which the Company is now engaged; (ii) is a supplier
of, customer of, creditor of, or has an existing contractual relationship
with the Company; or (iii) has any direct or indirect interest in any asset
or property used by the Company or any property, real or personal, tangible
or intangible, that is necessary or desirable for the conduct of the business
of the Company. To the Best Knowledge of the Sellers, no current or former
stockholder, director, officer or employee of the Company nor any Affiliate
of any such person, is, or since September 30, 1997, has been, directly or
indirectly through his affiliation with any other person or entity, a party
to any transaction (other than as an employee) with the Company providing for
the furnishing of services by, or rental of real or personal property from,
or otherwise requiring cash payments to any such person.
(o) LICENSES; COMPLIANCE WITH LAWS AND CONTRACTS.
(i) The Company has all material franchises,
permits, licenses and other rights which are necessary for the conduct of its
business and to the Best Knowledge of the Sellers, there is not any basis for
the denial of such rights in the future and the Company is in compliance
with, and is not in violation of, any Law.
(ii) The Company Disclosure Schedule lists all
material federal, state, local and foreign licenses, permits and other
authorizations issued by any Governmental Authority to the Company.
(iii) The Company has performed all of the
obligations required to be performed by it to date under all Material Company
Contracts and is not in breach of or default under any such Material Company
Contract (including any breach or default arising from any
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misrepresentation). To the Best Knowledge of the Sellers: (A) each other
party to a Material Company Contract has performed all of the material
obligations required to be performed by it to date under such Contract and is
not in material default thereunder; and (B) no event has occurred or
circumstances exist which, with notice or lapse of time or both, would
constitute a breach of any Material Company Contract.
(p) IP RIGHTS. The Company Disclosure Schedule contains a
true and complete list of all IP presently owned, licensed, held or needed
for the operation of the business by the Company (the "COMPANY IP") and the
basis of the right of the Company to use the Company IP. The Company IP
constitutes all IP that is required to enable the Company to conduct its
business as now conducted. The Company has not received any written notice of
infringement or other written complaint that the operations of the Company
contravenes, violates or otherwise infringes IP or any other proprietary
rights of others. To the Best Knowledge of the Sellers, neither the Company
nor any Person employed by or affiliated with the Company has wrongfully
Exploited any IP owned or licensed by any former employer, and neither the
Company nor any Person employed by or affiliated with the Company has
violated any confidential relationship which such Person may have had with
any third party. To the Best Knowledge of the Sellers, the Company has and
will have full right and authority to utilize the Company IP, including,
without limitation, the processes, systems and techniques presently used by
it in the design, development, manufacture, marketing, sale and distribution
of its present products and all rights to any such IP developed by any
employee or consultant of the Company have been duly and validly assigned to
the Company. No royalties, honoraria, damages or fees are or will be payable
by the Company to other Persons by reason of the ownership or use by the
Company of any Company IP. Neither of the Sellers nor any other Affiliate of
the Company owns or holds, directly or indirectly, any interests in any
Company IP. To the Best Knowledge of the Sellers, no Person has interfered
with, infringed upon, misappropriated, or otherwise violated any IP right of
the Company. The Company has not Transferred to any Person right to Exploit
any Company IP.
(q) INSURANCE.
(i) The Company Disclosure Schedule lists:(A)
all policies of insurance that are in force on the date hereof and/or which
have been in force at any time within the prior three years and insure the
Company or any of its assets or employees (the "INSURANCE POLICIES"); (B) all
outstanding claims under the Insurance Policies; (C) all claims made by or on
behalf of the Company under any Insurance Policy; and (D) any Contract under
which the Company is obligated to maintain insurance on behalf of any other
Person. The Company will continue to renew following the date hereof through
the Closing Date substantially the same insurance coverages that are in force
on the date hereof, and the Company has delivered to Purchaser true and
complete copies of each Insurance Policy, including all amendments,
supplements, modifications, or side letters relating thereto.
(ii) To the Best Knowledge of the Sellers, the
Insurance Policies are: (A) all in full force and effect; (B) sufficient for
compliance with all requirements of Law and all Company Contracts; and (C)
will not terminate or lapse by reason of consummation of the transactions
contemplated by this Agreement. The premiums with respect to all Insurance
Policies covering all periods up to and including the Closing Date have been
paid or will have been paid
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prior to the Closing, and no notice of cancellation or termination has been
received with respect to any such Policy.
(r) CUSTOMERS. No Large Customer of the Company has
canceled or otherwise terminated, or notified the Company in writing that it
intends to cancel or terminate, its relationship with the Company, or its
purchase of products or services from the Company, and neither of the Sellers
nor the Company has any knowledge that any Large Customer intends to cancel
or otherwise terminate its relationship with the Company or decrease
materially the amount of products it purchases from the Company compared to
products it has purchased in recent periods. A "LARGE CUSTOMER" of the
Company shall mean any customer which has, since September 30, 1998,
purchased in excess of $100,000 of products from the Company or paid rental
fees in excess of $100,000 to the Company.
(s) SUPPLIERS. No supplier of the Company has canceled or
otherwise terminated, or notified the Company in writing that it intends to
cancel or terminate, its relationship with the Company, or its sale of
products to the Company, and neither of the Sellers nor the Company has any
knowledge that any supplier intends to cancel or otherwise terminate its
relationship with the Company or decrease materially the amount or change the
type of products it sells to the Company compared to products it has sold in
recent periods. The Company has an alternative source of supply for all
products supplied by its current suppliers.
(t) LABOR RELATIONS. There is no pending or, to the Best
Knowledge of the Sellers, threatened labor dispute, strike or work stoppage
affecting the Business Condition of the Company. To the Best Knowledge of the
Sellers, the Company has conducted and conducts its business in all material
respects in accordance with all Laws regarding employment, unfair labor
practices and nondiscrimination.
(u) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since July 31,
1999 there has not been:
(i) Any damage, destruction or loss (whether
or not covered by insurance) to tangible assets of the Company which has had
a materially adverse effect on the Business Condition of the Company;
(ii) Any declaration, setting aside or payment
of any dividend or other distribution with respect to any Securities of the
Company or any direct or indirect redemption, purchase or other acquisition
by the Company of Securities of the Company;
(iii) Any issuance or Transfer by the Company
or any Seller of any Securities of the Company, or any agreement of any
character to which the Company has been a party or by which it has been bound
obligating the Company to issue, sell or deliver any Securities;
(iv) Any Lien created affecting any assets of
the Company or assumed by the Company with respect to any such assets except
for purchase money security interests in supplies and inventory acquired by
the Company in the ordinary course of business, consistent with past
practices, except for Liens for Taxes not yet delinquent;
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(v) Any Indebtedness or other material
liability, guarantee or obligation (whether absolute, accrued, contingent, or
otherwise) incurred, or other transaction engaged in by the Company, other
than in the ordinary course of business, consistent with past practices;
(vi) Any Transfer of any asset of the Company
with a book value in excess of $25,000, other than inventory in the ordinary
course of business consistent with past practices;
(vii) Any cancellation, without full payment,
of any note, loan or other obligation owing to the Company;
(viii) Any loan made or credit extended by the
Company, other than in the ordinary course of business;
(ix) Any waiver or release of any right or
claim of the Company;
(x) Any change in the method of accounting
including, without limitation, any change in depreciation or amortization
policies or rates, by the Company from the methods consistently applied
throughout the periods covered by the Company Financial Statements;
(xi) Any amendment or termination of any
Contract which would be a Material Company Contract if such Contract were in
effect as of the date of this Agreement;
(xii) Any new employees hired by the Company or
commitments by the Company to hire any new employees; or any increase in the
compensation payable or to become payable by the Company to any existing
employee or director of the Company; or
(xiii) Any Contract, other than this Agreement,
by which the Company will or could be obligated to undertake or engage in any
action described in the preceding clauses (i) through (xii).
(v) BROKERS. Other than TransMeridian Capital Corporation
and any fees payable to TransMeridian Capital Corporation by the Sellers,
neither the Sellers nor the Company have retained or otherwise engaged or
employed any broker, finder or any other person, or paid or agreed to pay any
fee or commission to any agent, broker, finder or other person, for or on
account of acting as a finder or broker in connection with this Agreement or
the transactions contemplated hereby.
(w) PRODUCT AND SERVICE WARRANTIES. The Company Disclosure
Schedule sets forth all express warranties, written or oral, with respect to
the products or services sold or rented by the Company, other than those
provided and paid for by vendors of the Company. There are no product or
service warranty claims against the Company. Adequate reserves have been
provided in the Company Financial Statements for all product and service
warranties.
(x) YEAR 2000. Except for (i) the Company's internal
accounting systems, (ii) all rental products and systems rented as of Closing
Date that are scheduled to be returned to the Company prior to the end of
1999 and (iii) all rental products and systems not rented as of the Closing
Date, all products and systems sold or rented by the Company in its business
are able to
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process date data (including, but not limited to, calculating, comparing and
sequencing) in a consistent and accurate manner from, into and between the
twentieth century (through 1999), the year 2000 and the twenty-first century,
including leap year calculations.
(y) BANKS, AGENTS, ETC. The Company Disclosure Schedule
contains a complete and correct list setting forth the name of (i) each
financial institution in which the Company has an account, safe deposit box
or borrowing privilege and the names of all persons authorized to draw
thereon, to have access thereto or to borrow thereupon, as the case may be,
and (ii) each agent to whom the Company has granted a power of attorney or
similar authority to act on its behalf.
(z) MINUTE BOOKS; FINANCIAL RECORDS. The minute books of
the Company provided to the Purchaser contain a complete summary of all
meetings of directors, committees of directors, executive committees and
stockholders and reflect all transactions referred to in such minutes
accurately in all material respects. The books, records and accounts of the
Company accurately and fairly reflect, in reasonable detail, all of the
transactions of the Company, including acquisitions and dispositions of the
assets of the Company.
(aa) ACCURACY OF INFORMATION. To the Best Knowledge of the
Sellers, no representation or warranty by the Company or Sellers in this
Agreement (including without limitation, the Schedules and Exhibits hereto)
or any document furnished by the Company or Sellers at the Closing, contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
Each of the Sellers severally represents and warrants to
Purchaser as to itself as follows:
(a) TITLE TO SHARES. Each of the Sellers owns beneficially
and of record, and has good and marketable title to, the Shares set forth
opposite such Seller's name on Schedule II hereto, free and clear of any
Liens. In consideration for the Purchase Price, Purchaser shall acquire good
and marketable title to the Shares, free and clear of any Liens.
(b) AUTHORITY; ENFORCEABILITY.
(i) This Agreement has been duly executed and
delivered by such Person and constitutes a valid and legally binding
obligation of such Person enforceable against such Person in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar Laws relating to or
affecting creditors' rights generally, or the availability of equitable
remedies.
(ii) The execution and delivery by such Person
of this Agreement does not, and compliance by such Person with the provisions
hereof will not: (A) conflict with or result in a breach or default under any
of the terms, conditions or provisions of any Contract to which such Person
is a party or by which any of its assets is subject; or (B) violate any Law
applicable to such Person; or (C) result in the creation or imposition of any
Lien on any asset of such Person.
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5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to the Sellers as follows:
(a) ORGANIZATION OF PURCHASER. Purchaser is a corporation
duly organized, validly existing and in good standing under the Laws of the
state of Delaware and has all requisite corporate power and corporate
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted.
(b) AUTHORITY; ENFORCEABILITY.
(i) This Agreement has been duly executed and
delivered by Purchaser and constitutes a valid and legally binding obligation
of Purchaser enforceable against Purchaser in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar Laws relating to or affecting
creditors' rights generally, or the availability of equitable remedies.
(ii) The execution and delivery by Purchaser
of this Agreement do not, and compliance by Purchaser with the provisions
hereof will not: (A) conflict with or result in a breach or default under any
of the terms, conditions or provisions of any Contract to which Purchaser is
a party or otherwise bound, or to which any asset or property of Purchaser is
subject; (B) violate any Law applicable to Purchaser; or (C) result in the
creation or imposition of any Lien on any asset of Purchaser.
(c) BROKERS. Other than TransMeridian Capital Corporation
and any fees payable to TransMeridian Capital Corporation by the Sellers,
Purchaser has not retained or otherwise engaged or employed any broker,
finder or any other person, or paid or agreed to pay any fee or commission to
any agent, broker, finder or other person, for or on account of acting as a
finder or broker in connection with this Agreement or the transactions
contemplated hereby.
(d) FINANCIAL CAPACITY. Purchaser will have at the Closing
sufficient funds to perform its obligations hereunder.
(e) INDEPENDENT ANALYSIS. Purchaser recognizes that, except
as expressly provided in Sections 3 and 4 hereof, neither the Sellers nor the
Company has made any representation or warranty upon which Purchaser is
relying in respect to the Company's ability to obtain business subsequent to
the Closing Date. Purchaser further recognizes that any cost estimates,
projections or other predictions contained or referred to in the Company
Disclosure Schedule or in the information provided to Purchaser or any of its
employees, agents or representatives were prepared for internal planning
purposes only and are not and shall not be deemed to be representations or
warranties of the Sellers or the Company. Purchaser is purchasing the Shares
based upon the representations and warranties contained herein and its own
independent analysis of the Company and its ability to obtain future business.
(f) INVESTMENT INTENTION. Purchaser has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of acquiring the Shares. Purchaser is acquiring the
Shares for investment only, and not with a view toward or for sale in
connection with any distribution thereof in violation of the Securities Act,
or with any present
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intention of distributing or selling any of the Shares. Purchaser understands
that the transactions contemplated hereby have not been, and will not be, the
subject of a registration statement filed under the Securities Act, or
qualified under applicable states securities law, by reason of a specific
exemption from the registration provisions of the Securities Act and the
qualification provisions of the applicable state securities laws. Purchaser
understands that none of the Shares may be resold unless such resale is
registered under the Securities Act and qualified under applicable state
securities laws, or an exemption from such registration and qualification is
available.
6. PRE-CLOSING COVENANTS.
(a) CONDUCT OF BUSINESS OF THE COMPANY. From the date
hereof until the Closing, and except as authorized or contemplated by this
Agreement or otherwise approved in advance in writing by Purchaser, the
Company shall maintain itself as a validly existing corporation in good
standing under the laws of its state or jurisdiction of incorporation,
conduct its affairs and business according to its usual and ordinary course
of business, and use commercially reasonable efforts to sustain and preserve
in all material respects its goodwill and business organization and all its
material business relationships with lenders, customers, suppliers and
licensors and keep available the services of its respective officers and
employees. Without limiting the generality of the foregoing, the Company
shall:
(i) confer on a regular basis with one or
more representatives of Purchaser regarding the conduct of its business;
(ii) not propose, adopt, or authorize any
amendment to its charter or organizational documents;
(iii) promptly notify Purchaser of any event,
circumstance or development that would result in the representations and
warranties under Section 3 of this Agreement not to be true in all material
respects if such representations and warranties had been made on such date;
(iv) not authorize, issue, grant, award,
Transfer, purchase, retire or redeem any Securities of the Company, or effect
any stock split, combination, recapitalization or otherwise change its
capitalization as it existed on the date hereof, or accept any capital
contribution;
(v) not declare, set aside or, except to the
extent reflected as a dividend payable on the Current Balance Sheet, pay any
dividend or distribution payable in cash, stock or property with respect to
shares of its Securities;
(vi) not authorize or enter into, or commit to
enter into, any transaction or Contract which, if it had been completed as of
the date hereof or entered into on or prior to the date hereof, would have
been required to have been disclosed in the Company Disclosure Schedule,
except in the ordinary course of business;
(vii) except in the usual and ordinary course
of business consistent with past practice, not: (A) acquire or Transfer any
assets; (B) create or permit to exist any Lien on any assets; or (C)
relinquish, forfeit or waive any right under any Company Contract;
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(viii) not incur any Indebtedness, other than
accrued interest on Indebtedness outstanding at the date of this Agreement;
(ix) not make any loan or extend any credit,
other than in the ordinary course of business;
(x) not enter into or amend any Contract with
the Sellers or any Affiliate of the Sellers;
(xi) not hire any new employees, other than as
replacements for employees who leave and at an annual base salary of less
than $60,000;
(xii) not adopt or amend any Employee Plan,
increase compensation or benefits payable to employees under any Plan or
otherwise, or pay any bonuses to any employees, except increases or bonuses,
consistent with past practices, to employees other than Motal or Hsiao;
(xiii) not take any action which would cause any
representation or warranty of the Sellers or the Company under Section 3 of
this Agreement not to be true and correct as of the Closing; and
(xiv) not agree or commit to do any of the
foregoing.
(b) ACCESS AND INFORMATION. During the period from the date
hereof to the Closing, the Company shall during normal business hours upon
reasonable advance notice: (i) afford Purchaser (and its representatives and
professional advisors) complete access to the books, records, Contracts,
officers, key employees and properties of the Company; (ii) permit Purchaser
(and its representatives and professional advisors) to make such examinations
of the books, records, Contracts, officers, key employees, and properties of
the Company; (iii) furnish to Purchaser (and its representatives and
professional advisors) all existing financial, operating, and other data and
information concerning the Company as they reasonably request; and (iv)
permit Purchaser (and its representatives and professional advisors) to
conduct such other reasonable investigation as is appropriate in connection
with the transactions contemplated by this Agreement.
(c) ACQUISITION PROPOSALS. During the period from the date
hereof and extending through the earlier of termination of this Agreement or
the Closing (the "PROPOSAL PERIOD"), each of the Sellers and the Company
agrees: (i) that such Person shall not, and shall direct and cause its
respective officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or
accountant) not to, initiate, solicit, intentionally encourage or accept the
submission of any proposal or offer with respect to a merger, acquisition,
sale, consolidation or similar transaction involving all or any significant
portion of the assets or any equity securities of the Company (any such
proposal or offer being hereinafter referred to as an "ACQUISITION PROPOSAL")
or engage in any negotiations or discussions concerning, or provide any
confidential information or data to, any person relating to an Acquisition
Proposal; and (ii) that such Person will notify Purchaser immediately if any
such inquiries or proposals are received by, any such information is received
from, or any such negotiations or discussions are sought to be initiated or
continued with, any such Person. If the Company or the Sellers breach this
Section 6(c) and the Company or the Sellers definitively concludes a
transaction similar to the transaction contemplated
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hereby prior to April 30, 2000, then the Company and/or the Sellers shall pay
to Purchaser, within 24 hours of the occurrence of such transaction, $250,000
in immediately available funds.
(d) TRANSFER OF SHARES. Prior to the earlier of the Closing
or the termination of this Agreement, the Sellers and the Company agree not
to Transfer any Shares except pursuant to this Agreement.
(e) THE COMPANY. Each of the Sellers agrees to use
commercially reasonable efforts to cause the Company to comply with each of
its covenants and agreements under this Agreement required to be performed on
or prior to the Closing.
(f) RELEASE OF GUARANTEES. Each of the parties hereto
agrees to use its best efforts to cause Wells Fargo Bank to release the
Sellers from their personal guarantees of the Company's obligations to Wells
Fargo Bank (the "WELLS FARGO GUARANTEES"). In furtherance thereof, if
requested by Purchaser, Motal agrees to personally guarantee that portion of
the Company's obligations to Wells Fargo Bank equal to his percentage
ownership of the Company
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE SELLERS.
The obligation of the Sellers to consummate the Acquisition
is subject to satisfaction and fulfillment of all of the following conditions
precedent, each of which must be satisfied on or before the Closing, unless
waived by the Sellers:
(a) COMPLIANCE BY PURCHASER; REPRESENTATIONS AND WARRANTIES
CORRECT. All of the terms, conditions, agreements and obligations of this
Agreement to be complied with and performed by Purchaser at or before the
Closing shall have been complied with and performed in all material respects,
and all the representations and warranties made by Purchaser in this
Agreement shall be true and correct in all material respects at and as of the
Closing (unless made as of a specified date, in which case such
representation and warranty shall be true and correct in all material
respects as of the specified date) with the same force and effect as though
such representations and warranties had been made at and as of the Closing.
(b) NO ACTIONS. No Action seeking to enjoin or prohibit the
Acquisition shall be pending.
(c) GOVERNMENTAL CONSENTS. All orders, permits, consents,
licenses, approvals, franchises, certificates, registrations and other
authorizations from Governmental Authorities that are necessary for Purchaser
to consummate the Acquisition (including all Blue Sky and state securities
permits, approvals, registrations and qualifications) shall have been
obtained.
(d) EMPLOYMENT AGREEMENT. The Company shall have executed
and delivered the Employment Agreement to Motal.
(e) ESCROW AGREEMENT. Purchaser shall have executed and
delivered the Escrow Agreement to Sellers.
(f) RELEASE OF GUARANTEES. Wells Fargo Bank shall be
irrevocably committed to release Hsiao from all Wells Fargo Guarantees upon
the Closing or as soon as practicable thereafter.
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(g) CERTIFICATE. Purchaser shall have delivered to the
Sellers a certificate, dated as of the Closing and signed on behalf of
Purchaser by a Chief Executive Officer or the Chief Financial Officer to the
effect that: (i) the representations and warranties of Purchaser shall be
true and correct at and as of the Closing with the same force and effect as
though such representations and warranties had been made at and as of the
Closing (unless made as of a specified date, in which case such
representation and warranty shall be true and correct in all material
respects as of the specified date); (ii) Purchaser shall have complied in all
material respects with its obligations and agreements under this Agreement;
and (iii) the conditions set forth in Section 7(c) shall have been satisfied.
8. CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASER.
The obligation of Purchaser to consummate the Acquisition
is subject to satisfaction and fulfillment of all of the following conditions
precedent, each of which must be satisfied on or before the Closing unless
waived by Purchaser:
(a) COMPLIANCE BY THE SELLERS AND THE COMPANY;
REPRESENTATIONS AND WARRANTIES CORRECT. All of the terms, conditions,
agreements and obligations of this Agreement to be complied with and
performed by the Sellers and the Company at or before the Closing shall have
been complied with and performed in all material respects, and all the
representations and warranties made by the Sellers and the Company in this
Agreement shall be true and correct in all material respects at and as of the
Closing (unless made as of a specified date, in which case such
representation and warranty shall be true and correct in all material
respects as of the specified date) with the same force and effect as though
such representations and warranties had been made at and as of the Closing.
(b) CONSENTS. The Company shall have obtained all consents
and approvals which are necessary so that the execution, delivery and
performance of this Agreement, and the consummation of the Acquisition, will
not result in a breach or default under, or give a third party the right to
terminate, any Material Company Contract, which consents and approvals shall
be in form and substance reasonably satisfactory to Purchaser.
(c) OPINION OF COUNSEL FOR THE SELLERS. Purchaser shall
have received an opinion of Morrison & Foerster LLP, counsel for the Sellers,
dated the Closing Date and addressed to Purchaser, in form and substance
reasonably satisfactory to Purchaser and its counsel, containing the opinions
set forth in EXHIBIT C.
(d) NO ACTIONS. No Action seeking to enjoin or prohibit the
Acquisition shall be pending.
(e) GOVERNMENTAL CONSENTS. All orders, permits, consents,
licenses, approvals, franchises, certificates, registrations and other
authorizations from Governmental Authorities that are necessary for the
Sellers to consummate the Acquisition (including all Blue Sky and state
securities permits, approvals, registrations and qualifications) must have
been obtained.
(f) EMPLOYMENT AGREEMENT. Motal shall have executed and
delivered the Employment Agreement to the Company.
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(g) ESCROW AGREEMENT. Sellers shall have executed and
delivered the Escrow Agreement to Purchaser.
(h) FINANCIAL TESTS. The Company shall satisfy the
following financial tests as of the Closing Date: (i) shareholders equity of
at least $1,870,000 and (ii) a ratio of current assets to current liabilities
of at least 1 to 1.
(i) CERTIFICATE. The Sellers and the Company shall have
delivered to Purchaser a certificate, dated as of the Closing to the effect
that: (i) except as disclosed in the Company Disclosure Schedule delivered at
the Closing, the representations and warranties of the Sellers and the
Company shall be true and correct at and as of the Closing with the same
force and effect as though such representations and warranties had been made
at and as of the Closing (unless made as of a specified date, in which case
such representation and warranty shall be true and correct in all material
respects as of the specified date); (ii) the Sellers and the Company shall
have complied in all material respects with its obligations and agreements
under this Agreement; and (iii) the conditions set forth in Sections 8(b),
(e) and (h) shall have been satisfied.
9. ADDITIONAL COVENANTS.
(a) CERTAIN TAX MATTERS.
(i) Purchaser shall prepare or cause to be
prepared, consistent with past practice, and file or cause to be filed all
Tax Returns for the Company for all periods ending on or prior to the Closing
which are filed after the Closing. Purchaser shall permit the Sellers to
review and comment on each such Tax Return described in the preceding
sentence prior to filing. The Sellers shall pay all Taxes or shall reimburse
Purchaser for any Taxes of the Company with respect to periods ending on or
before September 30, 1999 within 15 days after payment by Purchaser or the
Company of such Taxes to the extent such Taxes are not reflected in the
reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) shown
on the face of the September 30, 1999 Balance Sheet (rather than in any notes
thereto) or to the extent that they were otherwise taken into account in any
adjustment of the Purchase Price for any of the Shares pursuant to this
Agreement.
(ii) Purchaser shall prepare or cause to be
prepared and file or cause to be filed any Tax Returns of the Company for
periods which begin before the Closing and end after the Closing. Sellers
shall pay to Purchaser within 15 days after the date on which Taxes are paid
with respect to periods ending on or before September 30, 1999 an amount
equal to the portion of such Taxes which relates to the period ending on
September 30, 1999 to the extent such Taxes are not reflected in the reserve
for Tax Liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) shown on the face of
the September 30, 1999 Balance Sheet (rather than in any notes thereto) or to
the extent that they were otherwise taken into account in any adjustment of
the Purchase Price for any of the Shares pursuant to this Agreement. The
Company shall pay all Taxes which relate to any period subsequent to
September 30, 1999. For purposes of this Section, in the case of any Taxes
that are imposed on a periodic basis and are payable for a taxable period
that includes (but does not end on) September 30, 1999, the portion of such
Tax which relates to the portion of such period ending on September 30, 1999
shall: (x) in the case of any Taxes other than Taxes based upon or related to
income or receipts, be
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deemed to be the amount of such Tax for the entire taxable period multiplied
by a fraction the numerator of which is the number of days in the period
ending on September 30, 1999 and the denominator of which is the number of
days in the entire period; and (y) in the case of any Tax based upon or
related to income or receipts be deemed equal to the amount which would be
payable if the relevant taxable period ended on September 30, 1999. Any
credits relating to a taxable period that begins before and ends after
September 30, 1999 shall be taken into account as though the relevant period
ended on September 30, 1999. All determinations necessary to give effect to
the foregoing allocations shall be made in a manner consistent with prior
practice of the Company.
(iii) Purchaser, the Company and the Sellers
shall cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of Tax Returns pursuant to this Section
9(a) and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. To the extent
not delivered to Purchaser, the Sellers agree: (A) to retain all books and
records with respect to Tax matters pertinent to the Company relating to any
taxable period beginning before the Closing until the expiration of the
statute of limitations (and, to the extent notified by Purchaser, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority; and (B)
to give the other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the other party
so requests, the Sellers shall allow Purchaser to take possession of such
books and records. Purchaser and the Sellers further agree, upon request, to
use their commercially reasonable efforts to obtain any certificate or other
document from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby), including, where appropriate, the execution and filing of any and
all consents, waivers, extensions of any applicable statutes of limitations,
powers of attorney and other documents as shall be reasonably requested by
any party hereto in connection with such Tax audit, assessment or other
controversy.
(iv) Purchaser shall promptly notify the
Sellers in writing within 10 days of receipt by Purchaser or any of its
Affiliates of notice of: (A) any pending or threatened federal, state, local
or foreign Tax audits or assessments of the Company; and (B) any pending or
threatened federal, state, local or foreign Tax audits or assessments of
Purchaser or any of its Affiliates which may affect the Liabilities for Taxes
of the Company with respect to any period ending on or before September 30,
1999. The Sellers shall promptly notify Purchaser in writing within 10 days
of receipt by the Sellers of notice of any pending or threatened federal,
state, local or foreign Tax audits or assessments relating to the income,
properties or operations of the Company. The Sellers shall select an
independent tax representative, who shall be reasonably acceptable to
Purchaser: (x) to represent the Company's interest with respect to any such
Tax audit or assessment, including in any administrative or court proceeding
relating thereto; and (y) to employ counsel of its choice at its expense and
to control the conduct of such audit, assessment, or proceeding, including
settlement or other disposition thereof. The Sellers, Purchaser and the
Company will cooperate with the representative and its counsel in the defense
against or compromise of any claim in any such audit, assessment, or
proceeding and the Company shall keep the Sellers apprized of any material
developments in such audit, assessment, or proceeding.
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(v) All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties
and interest) incurred in connection with this Agreement (including any
corporate-level gains tax triggered by the Agreement) shall be paid by the
Sellers when due, and the Sellers will, at their own expense, file all
necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and
fees, and, if required by applicable Law, Purchaser will, and will cause its
Affiliates to, join in the execution of any such Tax Returns and other
documentation.
(vi) Purchaser and the Sellers agree upon
request to provide the other party with all information that either party may
be required to report pursuant to IRC Section 6043 and all Treasury
Regulations promulgated thereunder.
(vii) All tax sharing agreements or similar
agreements with respect to or involving the Company, on one hand, and the
Sellers, on the other hand, shall be terminated as of the Closing and, after
the Closing, the Company shall not be bound thereby or have any liability
thereunder.
(b) RELEASE. Effective as of the Closing, each of the
Sellers hereby forever relieves, releases and discharges the Company from any
and all claims, debts, liens, liabilities, losses, demands, obligations,
promises, acts, agreements, costs and expenses, damages, actions and causes
of action, of whatever kind or nature, whether known or unknown, suspected or
unsuspected, existing now, existing as of the Closing or accruing after the
Closing based on, arising out of, or in connection with any action or
omission of the Company prior to the Closing (other than the Continuing
Obligations) (collectively, "RELEASED CLAIMS") and agrees that neither
Purchaser nor the Company shall have any liability or obligation whatsoever
to either of the Sellers (or any Person claiming by or through either of
them) arising out of or in connection with the Released Claims. Each of the
Sellers represents that he or she has not Transferred any Released Claims. In
furtherance thereof, each of the Sellers acknowledges that he or she is
familiar with Section 1542 of the Civil Code of the State of California,
which provides as follows:
A general release does not extend to claims which the creditor
did not know or suspect to exist in his favor at the time of
executing the release, which if known by him, must have
materially affected his settlement with the debtor.
Each of the Sellers waives any and all rights he or she has or may have under
California Civil Code Section 1542 and/or any successor section to it with
respect to the claims released hereby.
(c) MUTUAL COOPERATION. Each of the parties to this
Agreement shall cooperate with the other parties and use its commercially
reasonable efforts to take all actions and do all things that are proper,
advisable or necessary to consummate the transactions contemplated by this
Agreement, including: (i) effecting all necessary filings and registrations
with Governmental Authorities and responding to all related requests for
additional information; (ii) obtaining before the Closing all necessary
orders, permits, consents, licenses approvals, authorizations, and
qualifications from governmental authorities; (iii) defending any litigation
or other legal proceedings challenging this Agreement or the consummation of
the transactions contemplated by this Agreement; and (iv) seeking relief from
any order that enjoins, impairs or restrains the ability of the
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parties to consummate the transactions contemplated by this Agreement
provided that nothing in this Agreement shall require any party to make any
payment in order to produce any order, permit, consent, approval,
authorization or qualification.
(d) EXPENSES OF THE COMPANY; BROKER'S FEE. The Sellers
shall pay all fees and other charges of TransMeridian Capital Corporation in
connection with the transactions contemplated by this Agreement. The Company
shall pay all other costs and expenses incurred by the Sellers, the Company
or Purchaser in connection with the negotiation, execution and delivery of
this Agreement and the consummation of the transactions contemplated by this
Agreement, including fees and expenses of counsel and such amounts shall not
be included for purposes of any adjustment to the Purchase Price.
(e) COVENANT NOT TO COMPETE. Hsiao agrees that for a period
of three years following the Closing Date, she will not, directly or
indirectly, either as an employee, employer, consultant, agent, investor,
principal, partner, stockholder (except as the holder of less than 2% of the
issued and outstanding stock of a publicly held corporation), corporate
officer or director, or in any other individual or representative capacity,
engage or participate in (i) the sale, rental or installation of audio visual
equipment, (ii) the sale or rental of computer displays, (iii) the rental of
computer equipment, or (iv) the staging of any of the equipment referred to
in (i), (ii) or (iii) above, in any county identified in EXHIBIT D to this
Agreement or any other jurisdiction, domestic or foreign, in which the
Company has conducted business. The foregoing restrictions shall not prohibit
Hsiao from having an ownership interest in or being employed by or consulting
for companies that develop or sell software and, in connection with their
software business, manufacture integrated systems and services incorporating
computers, monitors, LCD displays and touch screen systems. Examples of these
companies are automated business center providers, operators of integrated
software and hardware kiosks and Internet software development companies with
fully integrated solutions for permanent locations; provided such integrated
solutions and kiosks are not sold or rented for temporary applications to
conventions, corporate meetings, trade shows, hotels or other temporary
applications. Motal agrees that he shall not, so long as he is a shareholder
of the Company and for a period of three years after he ceases to be a
beneficial shareholder of the Company, directly or indirectly, either as an
employee, employer, consultant, agent, investor, principal, partner,
stockholder (except as the holder of less than 2% of the issued and
outstanding stock of a publicly held corporation), corporate officer or
director, or in any other individual or representative capacity, engage or
participate in (i) the sale, rental or installation of audio visual
equipment, (ii) the sale or rental of computer displays, (iii) the rental of
computer equipment, or (iv) the staging of any of the equipment referred to
in (i), (ii) or (iii) above, in any county identified in EXHIBIT D to this
Agreement or any other jurisdiction, domestic or foreign, in which the
Company has conducted business. Notwithstanding the foregoing, Motal may
continue to manage the two verbal contracts between MVS Enterprises, Inc., a
California corporation (formerly Matrix Visual Solution, Inc.) and each of
Picker International and Tropitone, on a basis consistent with how such
contracts are currently being managed, until such contracts are terminated.
(f) CONFIDENTIALITY; PUBLICITY. Each of the Sellers will
not at any time after the date hereof disclose or use for his or her own
benefit or purposes or the benefit or purposes of any other Person, other
than Purchaser or the Company, any trade secrets, information, data, or other
confidential information relating to customers, development programs, costs,
marketing, trading, investment, sales activities, promotion, credit and
financial data, financial methods, plans, or the
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business and affairs of Purchaser or the Company generally; provided that the
foregoing shall not apply to information which is generally known to the
public other than as a result of Seller's breach of this covenant. If this
Agreement shall be terminated in accordance with its terms prior to the
Closing, the parties hereto shall continue to be bound by the foregoing
provisions of this Section 9(f) and by the binding provisions of that certain
Letter of Intent, dated August 11, 1999, between the parties. Except as
required by law, neither the Sellers nor the Company shall disclose to any
Person or make any public announcement, by press release or otherwise, of
this Agreement or the transactions contemplated by this Agreement without the
prior written consent of Purchaser, which consent will not be unreasonably
withheld or delayed once this Agreement is publicly announced by Purchaser.
Purchaser will consult with the Company regarding any proposed written public
announcement or press release concerning this Agreement or the transactions
contemplated hereby, and will in good faith consider any comments and
suggestions the Company may have; provided, however, that Purchaser shall
have the right to determine the actual text of any such announcement or
release.
(g) SUPPLEMENTS TO SCHEDULES; COVENANTS. If prior to the
Closing Date, Sellers become aware of any event or condition that causes any
of their or the Company's representations or warranties herein to be
inaccurate in any material respect or becomes aware that any of their or the
Company's representations or warranties herein was inaccurate when made in
any material respect, Sellers shall promptly notify Purchaser in writing.
Sellers may thereafter (but not following the Closing) supplement the Company
Disclosure Schedule to account for such inaccuracy; provided, that the
delivery of a supplemented or amended Disclosure Schedule pursuant to this
Section, to the extent that the supplement or amended disclosure is material,
shall constitute a failure by Sellers to satisfy the condition to Purchaser's
obligations to consummate the Closing set forth in Section 8 hereof. If
Purchaser determines to waive the conditions set forth in Section 8 after the
delivery of such supplement or amended Disclosure Schedule, then the
representations, warranties, covenants and agreements made by Sellers and the
Company as modified by such amended or supplemented Disclosure Schedule shall
be the basis for any indemnification pursuant to Section 10 below.
(h) RECORDS. For a period of three (3) years (or the length
of the statute of limitations on breach of contract claims in connection with
Sellers' performance of their tax-related obligations under this Agreement)
after the Closing, Purchaser shall use its best efforts to cause the Company
(a) to maintain in an orderly and businesslike fashion all books, records and
data in the Company's possession on the Closing Date; (b) to permit Sellers'
and their employees, agents and representatives to have reasonable access at
Sellers' expense to such books, records and data in connection with the
preparation of Sellers' financial reports, tax returns, tax audits and the
defense or prosecution of litigation (including arbitration); and (c) to
provide Sellers with reasonable assistance at Sellers' expense (but only for
Purchaser's documented, out-of-pocket expenses that have been pre-approved by
Sellers) by the provision of employees of the Company to act as witnesses and
to prepare documents, reports and other information requested by Sellers in
support of activities described in clause (b) above.
(i) COLLECTION OF ACCOUNTS RECEIVABLE. After the Closing,
Purchaser agrees to cause the Company to use its commercially reasonable
efforts to collect all accounts receivable of the Company existing on the
Closing Date.
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(j) AUTOMOBILE LOANS. After the Closing, each of the
Sellers agrees, and agrees to cause any of their Affiliates, to take (and the
Company agrees to assist the Sellers in taking) whatever action is necessary
to transfer title to any automobiles which are held in their names and which
are used by the Company in its business into the name of the Company. The
Company agrees to take (and the Sellers agree to assist the Company in
taking) whatever action is necessary to assume all loan obligations of the
Sellers and any of their Affiliates (other than the Company) relating to such
automobiles and, in furtherance thereof, agrees to indemnify each of the
Sellers for any liability such Seller may incur as a result of the Company's
failure to assume such loan obligations upon the Closing.
(k) REAL ESTATE LEASE GUARANTEES. The Company and each of
the Sellers agree to take whatever action is necessary to cause the Sellers
to be released from all personal guarantees relating to the real estate
leases entered into by the Company and identified on the Company Disclosure
Schedule. In furtherance thereof, the Company agrees to indemnify each of the
Sellers for any liability such Seller may incur as a result of such personal
guarantees.
10. INDEMNIFICATION.
(a) GENERAL. From and after the Closing, the parties shall
indemnify each other as provided in this Section 10. For the purposes of this
Section 10, each party shall be deemed to have remade all of its
representations and warranties contained in this Agreement at the Closing
with the same effect as if originally made at the Closing. As used in this
Agreement: (i) the term "INDEMNIFIED PARTY" shall mean a party who is
entitled to indemnification from a party hereto pursuant to this Section 10;
(ii) the term "INDEMNIFYING PARTY" shall mean a party hereto who is required
to provide indemnification under this Section 10 to another party; and (iii)
the term "THIRD PARTY CLAIM" shall mean any Action which is asserted or
threatened by a party other than the parties hereto, their successors and
permitted assigns, against any Indemnified Party or to which any Indemnified
Party is subject.
(b) THE SELLERS' INDEMNIFICATION OBLIGATIONS. Subject to
Section 10(d)(i) hereof, the Sellers shall jointly and severally indemnify,
save and keep Purchaser and its officers, directors, employees and
stockholders, the Company and its officers, directors and employees (other
than Motal or Hsiao), and their respective heirs, successors and assigns
(each a "PURCHASER INDEMNITEE" and collectively, the "PURCHASER INDEMNITEES")
harmless against and from all Losses sustained or incurred by any Purchaser
Indemnitee, as a result of or arising out of or by virtue of:
(i) any inaccuracy in any representation and
warranty made to Purchaser in this Agreement;
(ii) the breach by the Company before the
Closing or either of the Sellers before or after the Closing of, or failure
of the Company before the Closing or either of the Sellers before or after
the Closing to comply with, any of their respective covenants or obligations
under this Agreement; and
(iii) fraud by either of the Sellers in
connection with this Agreement and the transactions contemplated hereby.
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(c) PURCHASER INDEMNIFICATION OBLIGATIONS. Subject to
Section 10(d)(i) hereof, Purchaser shall indemnify, save and keep the Sellers
and their successors and permitted assigns (individually a "SELLER
INDEMNITEE" and collectively, the "SELLER INDEMNITEES") harmless against and
from all Losses sustained or incurred by any Seller Indemnitee as a result of
or arising out of or by virtue of:
(i) any inaccuracy in any representation and
warranty made by Purchaser to the Sellers in this Agreement;
(ii) any breach by Purchaser of, or failure by
Purchaser to comply with, any of its respective covenants or obligations
under this Agreement;
(iii) the Wells Fargo Guarantees; provided,
Purchaser shall only be liable to indemnify Motal to the extent that the
portion of guarantee obligations for which he is liable exceed 32% of the
total guarantee obligations; and
(iv) fraud by Purchaser in connection with
this Agreement and the transactions contemplated hereby.
(d) LIMITATION ON INDEMNIFICATION OBLIGATIONS.
(i) Neither Purchaser Indemnitees nor the
Seller Indemnitees shall be entitled to recover under Sections 10(b)(i) or
10(c)(i) unless: (A) a claim has been asserted by written notice, setting
forth the basis for such claim, delivered to Purchaser or the Sellers, as the
case may be, on or prior to June 30, 2001; and (B) the aggregate amount of
indemnifiable Losses incurred by Purchaser Indemnities on the one hand or the
Seller Indemnitees on the other hand exceeds $100,000. In addition, each
Seller shall be liable under Section 10(b)(i) for Losses arising out of any
inaccurate representation or warranty only up to one hundred percent (100%)
of the amount of such Seller's portion of the Purchase Price and,
notwithstanding anything to the contrary contained in this Agreement, the
Sellers shall be liable severally, and not jointly, for any breach of their
respective representations and warranties relating to Section 4.
(ii) Notwithstanding anything to the contrary
herein contained, the limitations contained in Sections 10(d)(i) shall not
apply to indemnification obligations under Sections 10(b) and (c) for: (A)
breaches of any of the representations and warranties relating to Sections
3(a)(iii) or (iv), 3(e), 4(a) or 4(b)(i); (B) breach of any covenant or
obligation of any Indemnifying Party contained in this Agreement; or (C)
fraud by an Indemnifying Party in connection with this Agreement and the
transactions contemplated by this Agreement.
(iii) For purposes of determining the amount of
any Losses, such amount shall be reduced by the amount of any insurance
benefits and proceeds received by the Indemnified Party in respect of the
Losses (net of any deductible amounts). For purposes of determining insurance
benefits, if the Company elects not to maintain insurance coverage identical
to the insurance coverage maintained as of the Closing Date, the Company
shall be deemed to have received insurance benefits equal to the greater of
insurance benefits it would have received had it maintained such insurance
policies in effect after the Closing or the insurance benefits it actually
receives.
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(e) NO CLAIM BY THE SELLERS OR OTHERS. Although the Sellers
may have relied on information supplied by the Company in making certain
representations and warranties contained in this Agreement and the Company
Disclosure Schedule, each Seller has no claim, and shall assert no claim, for
contribution, indemnification or otherwise, against the Company with respect
to any breach of any covenant or of any of the representations and warranties
or any inaccuracy in the Company Disclosure Schedule irrespective of whether
the information supplied by the Company and relied upon by such Seller was
incomplete or inaccurate in any way or for whatsoever reason; further, each
Seller acknowledges that the Company has made no representation or warranty
to the Sellers with respect to the information supplied by it to the Sellers
whatsoever.
(f) NOTICE OF ASSERTED LIABILITY. Promptly after Purchaser
or Sellers become aware of any fact, condition or event that may give rise to
Losses for which indemnification may be sought under this Article 10,
Indemnified Party shall give notice thereof in the manner provided in this
Section 10(f) (the "Claims Notice") to Indemnifying Party. The Claims Notice
shall include a description in reasonable detail of any claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") against Indemnified Party, and shall
indicate the amount (estimated, if necessary) of the Losses that have been or
may be suffered by Indemnified Party. Failure of Indemnified Party to
promptly give notice hereunder shall not affect rights to indemnification
hereunder, except to the extent that Indemnifying Party demonstrates actual
damage caused by such failure. Upon Indemnifying Party's request, Indemnified
Party shall provide Indemnifying Party with reasonable access to all books
and records relating to the Asserted Liability, and to all employees or other
persons who are knowledgeable about such Asserted Liability, in order to
allow Indemnifying Party to audit the status of such Asserted Liability and
the payments that have been, or will be, made with respect thereto.
(g) OPPORTUNITY TO DEFEND. Indemnifying Party may elect to
compromise or defend, at its own expense and with counsel reasonably
satisfactory to Indemnified Party, any Asserted Liability; PROVIDED, HOWEVER,
that Indemnifying Party may not compromise or settle any Asserted Liability
without the consent of Indemnified Party, such consent not to be unreasonably
withheld, unless such compromise or settlement requires no more than a
monetary payment for which Indemnified Party and any other indemnifiable
parties hereunder are fully indemnified and does not in any way effect the
business, reputation or ongoing operations or liabilities of Indemnified
Party or such other indemnifiable parties. If Indemnifying Party elects to
compromise or defend such Asserted Liability, it shall within 15 days (or
sooner, if the nature of the Asserted Liability so requires) notify
Indemnified Party of its intent to do so and Indemnified Party shall
reasonably cooperate in the compromise of, or defense against, such Asserted
Liability. If Indemnifying Party elects not to compromise or defend any
Asserted Liability, fails to notify Indemnified Party of its election as
herein provided or contests its obligation to indemnify, Indemnified Party
may pay, compromise or defend such Asserted Liability without prejudice to
any right it may have hereunder. In any event, each of Purchaser and Sellers
may participate, at its own expense, in the defense of any Asserted Liability
in respect of which it may have an indemnification obligation hereunder. If
either party chooses to defend or participate in the defense of any Asserted
Liability, it shall have the right to receive from the other party any books,
records or other documents within such party's control that are necessary or
appropriate for such defense.
(h) LIQUIDATION OF INDEMNIFICATION CLAIMS. When an
Indemnified Party shall give an Indemnifying Party notice of a Loss that has
been fixed or determined as to amount, the
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notice shall specify in reasonable detail the nature and amount of the Losses
and the sections of this Agreement upon which the claim for indemnification
for the Losses is based. If the Indemnifying Party desires to dispute the
claim, it shall, within 30 days after notice of the claim is given pursuant
to this Section 10(h), give counter notice to the Indemnified Party, setting
forth in reasonable detail the basis for disputing the claim. If no such
counter notice is given within that 30-day period, or if the Indemnifying
Party acknowledges liability for the indemnification, then the
indemnification obligation shall be promptly satisfied.
(i) DISPUTE RESOLUTION. If, within 15 days after the giving
of a counter notice by the Indemnifying Party, the Indemnifying Party and the
Indemnified Party have not reached agreement as to the indemnification claim
in question, then the claim for indemnification shall be submitted to and
settled by arbitration as hereinafter provided (it being expressly understood
and agreed that if such counter notice is duly given, it is the intention of
the parties to this Agreement that any such indemnification claim shall be
resolved by arbitration as provided in this Section 10(i)). The arbitration
shall be by a single arbitrator experienced in the matters at issue selected
by, and mutually acceptable to, the Indemnifying Party and the Indemnified
Party and shall be conducted in accordance with the arbitration rules of the
American Arbitration Association. The arbitrator must be independent (not an
agent, officer, director, attorney, employee, or shareholder of Purchaser or
either Seller or a relative or Affiliate of any of those persons) without any
economic or financial interest of any kind in the outcome of the arbitration.
Each arbitrator's conduct will be governed by the Code of Ethics for
Arbitrators in Commercial Disputes (1986) that has been approved and
recommended by the American Bar Association and the American Arbitration
Association. Within 60 days after the effective date of the counter notice of
the Indemnifying Party, the arbitrator shall convene a hearing for the
dispute to be held on such date and at such time and place in Los Angeles
County, California, as the arbitrator designates upon 30 days' advance notice
to each Indemnified Party and each Indemnifying Party. The parties shall
request that the arbitrator render his decision within 30 days after the
conclusion of the hearing. The arbitrator shall hear and decide the dispute
based on the evidence produced, notwithstanding the failure or refusal to
appear by a party who has been duly notified of the date, time, and place of
the hearing. The decision of the arbitrator shall be final and binding as to
any matters submitted under this Agreement, and to the extent that the
arbitrator's decision is that Losses have been incurred for which a party is
to be indemnified under this Agreement, the Losses shall be promptly
satisfied; provided, however, that, if necessary, such decision may be
enforced by either the Indemnifying Party or the Indemnified Party in any
court of record having jurisdiction over the subject matter or over any of
the parties hereto. The prevailing party shall recover all of such party's
costs, and reasonable attorneys' fees incurred in connection with any such
arbitration.
(j) CHARACTERIZATION OF INDEMNIFICATION PAYMENTS. All
amounts paid by Purchaser or the Sellers, as the case may be, under the terms
of this Section 10 shall be treated for all Tax purposes as an adjustment of
the Purchase Price, unless otherwise required by applicable law in which
event such payments shall be made in an amount sufficient to indemnify the
party on a net after-Tax basis.
(k) ACCOUNTS RECEIVABLE. For purposes of determining
whether accounts receivable are fully collectable as represented pursuant to
Section 3(g)(v), an account shall be deemed not fully collectable if is shall
not have been collected within eight months of the Closing Date.
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(l) EXCLUSIVE REMEDY. The provisions for indemnification
set forth in this Section 10 are the exclusive remedies of the parties hereto
with respect to claims related to a breach of, or inaccuracy in, a
representation or warranty made by Sellers, the Company or Purchaser
hereunder.
11. TERMINATION. This Agreement may be terminated:
(a) by delivery of written notice from Purchaser to the
Sellers: (i) if any material condition to the obligation of Purchaser to
complete the Acquisition set forth in Section 8 is not satisfied at the
Closing or such earlier time or times contemplated thereby; or (ii) in the
event of a material breach of any representation, warranty, condition or
agreement of the Sellers contained in this Agreement that is not cured within
10 days of the time that written notice of such breach is received by the
Sellers or the Company; or
(b) by delivery of written notice from the Sellers to
Purchaser: (i) if any material condition to the obligations of the Sellers to
complete the Acquisition set forth in Section 7 is not satisfied at the
Closing or such earlier time or times contemplated thereby; or (ii) in the
event of a material breach of any representation, warranty, condition or
agreement of Purchaser contained in this Agreement that is not cured within
10 days of the time that written notice of such breach is received by
Purchaser; or
(c) by delivery of written notice from a party to the other
parties if the Acquisition shall not have been consummated on or before
November 15, 1999; or
(d) by mutual written consent of Purchaser and the Sellers.
The termination of this Agreement shall not relieve any
party from liability for any breach or default occurring prior to termination
of this Agreement. If termination of this Agreement shall be judicially
determined to have been caused by willful breach of this Agreement, then, in
addition to other remedies at Law or in equity for breach of this Agreement,
the party so found to have willfully breached this Agreement shall indemnify
the other parties for their respective costs, fees and expenses of their
counsel, accountants and other experts and advisors as well as fees and
expenses incident to negotiation, preparation and execution of this Agreement
and related documentation.
12. MISCELLANEOUS PROVISIONS.
(a) NOTICES. All notices, consents, demands, requests,
approvals or other communications hereunder shall be in writing and shall be
deemed to have been duly given if: (i) delivered in person, on the date
actually given; (ii) by United States mail, certified or registered, with
return receipt requested, on the date which is two Business Days after the
date of mailing; or (iii) if sent by telex or facsimile transmission, with a
copy mailed on the same day in the manner provided in (i) above, on the date
transmitted provided receipt is confirmed by telephone:
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(A) if to Purchaser to:
Westminster Capital, Inc.
9665 Wilshire Blvd., Suite M-10
Beverly Hills, CA 90212
Attention: Keenan Behrle
Telecopy No.: (310) 271-6274
(B) if to the Sellers to:
Amy Hsiao
2410 Bennett
Tustin, CA 92782-1228
and
Paul Motal
615 Iris
Corona Del Mar, CA 92665
or at such other address as may have been furnished by such Person in writing
to the other parties.
(b) SEVERABILITY. Should any Section or any part of a
Section within this Agreement be rendered void, invalid or unenforceable by
any court of Law for any reason, such invalidity or unenforceability shall
not void or render invalid or unenforceable any other Section or part of a
Section in this Agreement.
(c) EXHIBITS AND SCHEDULES. Each Exhibit and Schedule
delivered pursuant to the terms of this Agreement, each document, instrument
and certificate delivered by the parties in connection with the transactions
contemplated hereby constitutes an integral part of this Agreement and is
incorporated by reference into this Agreement.
(d) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED BOTH AS TO VALIDITY AND PERFORMANCE AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO THE CHOICE OF
LAW PRINCIPLES THEREOF.
(e) SUBMISSION TO JURISDICTION AND WAIVER OF IMMUNITY AND
INCONVENIENT FORUM. Each of the parties hereto agree that any and all
disputes arising in connection with this Agreement and the transactions
contemplated hereby may be brought in any state or federal court of record
located in the Counties of Los Angeles or Orange, State of California. Each
of the parties hereto irrevocably submits to the jurisdiction of the state
and federal courts located in the Counties of Los Angeles or Orange, State of
California in any legal action or proceeding relating to this Agreement and
the transactions contemplated hereby. The parties hereto irrevocably waive
all immunity from jurisdiction, attachment and execution, whether on the
basis of sovereignty or otherwise, to which they might otherwise be entitled
in any legal action or proceeding in any state or federal court located in
the Counties of Los Angeles or Orange, State of California. Each of the
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parties hereto irrevocably waives, to the fullest extent permitted by Law,
any objection which it may now or hereafter have to any suit, action or
proceeding relating to this Agreement and the transactions contemplated
hereby being brought in the federal or state courts located in the Counties
of Los Angeles or Orange, State of California, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
(f) HEADINGS. Section headings and subheadings used in this
Agreement are for convenience only and shall not affect the meaning or
construction of this Agreement.
(g) NO ADVERSE CONSTRUCTION. The rule that a contract is to
be construed against the party drafting the contract is hereby waived, and
shall have no applicability in construing this Agreement, any other document
delivered at the Closing or any provisions hereof or thereof.
(h) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) COSTS AND ATTORNEYS' FEES. In the event that any
action, suit, or other proceeding is instituted concerning or arising out of
this Agreement the prevailing party shall recover all of such party's costs,
and reasonable attorneys' fees incurred in each and every such action, suit,
or other proceeding, including any and all appeals or petitions therefrom.
(j) SUCCESSORS AND ASSIGNS. All rights, covenants and
agreements of the parties contained in this Agreement shall, except as
otherwise provided herein, be binding upon and inure to the benefit of their
respective successors and assigns. Neither of the Sellers may assign his or
her obligations under this Agreement without the prior written consent of
Purchaser, and Purchaser may not assign any of its obligations under this
Agreement without the prior written consent of the Sellers.
(k) AMENDMENT. This Agreement may be amended at any time
prior to or after the Closing by the mutual written agreement of all parties
hereto.
(l) WAIVER. At any time prior to the Closing, Purchaser and
the Sellers together may:
(i) extend the time for the performance of
any of the obligations or other acts of the parties hereto;
(ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto; or
(iii) waive compliance with any of the
agreements or conditions contained herein.
Any agreement on the part of Purchaser or the Sellers to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed
by or on behalf of such party.
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(m) ENTIRE AGREEMENT. This Agreement, the attached Exhibits
and Schedules, the other agreements and schedules referred to in this
Agreement, contain the entire understanding of the parties and there are no
further or other agreements or understandings, written or oral, in effect
between the parties relating to the subject matter hereof unless expressly
referred to herein.
(n) TIME OF ESSENCE. Time is of the essence in the
performance and satisfaction by each party of every condition, obligation and
agreement to be performed or satisfied by the party under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
WESTMINSTER CAPITAL, INC.,
A DELAWARE CORPORATION
By: /s/ Keenan Behrle
----------------------------
By:
----------------------------
LOGIC TECHNOLOGY GROUP, INC.
A CALIFORNIA CORPORATION
By: /s/ Paul Motal
----------------------------
By: /s/ Amy Hsiao
----------------------------
/s/ Paul Motal
-------------------------------
Paul Motal
/s/ Amy Hsiao
-------------------------------
Amy Hsiao
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This Agreement has been executed by the undersigned respective
spouses of Paul Motal and Amy Hsiao, each of whom may claim a community
property or other interest in the Shares being sold hereunder. Each
undersigned spouse represents that he or she has read and understands the
provisions of this Agreement and the effect of such provisions on any
community property or other interest he or she may have in the Shares.
/s/ Lisa Motal
----------------------------
Lisa Motal
/s/ Kim Kao
----------------------------
Kim Kao
38
