<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1995
Commission File Number 0-14692
GLOBAL MAINTECH CORPORATION
f/k/a MIRROR TECHNOLOGIES, INCORPORATED
MINNESOTA 41-1523657
State of Incorporation I.R.S. Employer Identification No.
6468 City West Parkway
Eden Prairie, MN 55344
(612) 944-0400
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, NO PAR VALUE
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulations S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
[x]
The Company's revenues for the Fiscal Year Ended December 31, 1995 totaled
$1,173,744.
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 1, 1996 was approximately $2,100,000 based upon the
closing bid price on the OTC Bulletin Board on that date. The number of shares
of the Company's no par value common stock outstanding as of March 1, 1996 was
45,185,139.
Transitional Small Business Disclosure Format (Check One):
Yes No X
--- ---
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement for the Annual Meeting of Shareholders
for the year ended December 31, 1995 are incorporated by reference in part III
COPIES OF THE COMPANY'S FORMS 10-KSB, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, MAY BE OBTAINED FREE OF CHARGE FROM JAMES GEISER AT THE COMPANY,
6468 CITY WEST PARKWAY, EDEN PRAIRIE, MINNESOTA 55344, PHONE 612-944-0400
<PAGE>
PART I
------
ITEM 1. DESCRIPTION OF BUSINESS.
General
The Company was incorporated under the laws of the State of Minnesota in
1985 as Computer Aided Time Share, Inc. In September 1989, in connection with
the Company's merger with Mirror Technologies, Incorporated, the Company's name
was changed to Mirror Technologies, Incorporated ("Mirror"). As of March 1,
1996/December 31, 1995, the Company had no paid employees for a period of over
one year and its principal subsidiary, Global MAINTECH, Inc., formerly MAINTECH
Resources, Inc., a Minnesota corporation ("MAINTECH"), had six paid employees as
of March 1, 1996.
At the Company's annual shareholders meeting on May 15, 1995, the
shareholders approved, among other things, the change of its name to Global
MAINTECH Corporation from Mirror Technologies, Incorporated.
Effective January 1, 1995, the Company merged with MAINTECH (the "Merger"),
pursuant to the terms of an Agreement and Plan of Merger, dated December 6,
1994, as amended (the "Agreement"), among the Company, Mirror Consolidation
Company, a Minnesota corporation and wholly owned subsidiary of Mirror ("Mirror
Subsidiary"), and MAINTECH. Under the terms of the Agreement, each share of
MAINTECH's common stock was converted into 358.75 shares of the Company's common
stock. As a result, the Company issued 28,700,001 shares of common stock in
exchange for all of the outstanding capital stock of MAINTECH. MAINTECH had four
operating units all related to the IBM mainframe computer business which
included engineering, brokerage, parts and services to users of IBM mainframe
computers ("Brokerage") and a start up unit engaged in the development of
software and the sale of a hardware product when sold in combination is designed
to automate the operation of large corporate data centers ("ICS").
Effective December 31, 1995, the Company sold its Brokerage business,
including over $400,000 in related inventory, to one of the Company's former
executives. The Company recorded losses from discontinued operations of
approximately $600,000 in connection with the Brokerage business including a
loss on the sale. The effect of this loss was partially offset by debt
forgiveness of $400,000 by two of the Company's executive officers which was
recorded as additional paid-in-capital.
Global MAINTECH, Inc., a wholly owned subsidiary of the Company, is the
operating entity resulting from the Merger. For the fiscal years 1992, 1993 and
1994 the majority of the Company's activity had been in buying and selling used
IBM mainframes, parts and features. During this time the Company changed its
business strategy and began to maintain and monitor computer equipment in large
data centers. In late 1994, the Company became the exclusive distributor,
outside of Japan, of the monitoring system of Circle Corporation of Japan. In
1995, the Company adapted this monitoring system which is oriented to single-
unit users and to simple functions, to meet the more complex requirements of the
U. S. market. While the Company continues to buy some hardware and software from
Circle Corporation, the Company has added significant architecture, compiling
and source code. The updated system provides enhanced operational control over
computer hardware and software. In 1995, the Company made its first three
installations of this system, now called the Intelligent Console System or ICS,
in the data centers of a large industrial and financial company.
The ICS is a tool designed to automate many of the processes associated
with the physical and operational attributes of mainframe-based data centers. It
is an external system that monitors and controls the subject mainframe and other
data center computers from a workstation quality RISC computer, which is housed
separately from the computers it controls. ICS users are able to reduce staffing
levels, consolidate all data center operations and technical support functions
to a single location regardless of the physical location of the data center(s)
and achieve improved levels of operational control and system availability.
The ICS competes with internal monitoring systems (which monitor certain
pieces of hardware internally) sold by other companies. Sales of internal
monitoring systems within the U.S. were estimated at $700 million for 1994. It
is believed the market recently has been expanding at a rapid rate, growing over
30% in recent years. The Company believes the ICS is well suited for use in
enterprise computing applications. Enterprise computing is the term associated
with the hardware and software that enables computers that contain different
processors to be linked together. The Company has adapted the ICS and coupled it
with proprietary software to form an enterprise
2
<PAGE>
computing management system. The market size for computer networking systems,
which is one segment of the enterprise computing system market, is $15 billion
per year within the U.S. The ICS can also be used to monitor and control desktop
and mid-range servers.
As a result of discontinuing the Brokerage operations the Company is now
engaged solely in the business of manufacturing and selling computer systems
that monitor and control large computer data centers. This new business
generated over 90% of the Company's revenue in 1995 from one customer. While
this concentration on one customer is significant, the Company believes that the
credit risk is minimal due to the superior credit worthiness of this customer.
ITEM 2. DESCRIPTION OF PROPERTY.
MAINTECH conducts its business in a 3,100 square foot office at 6468 City
West Parkway, Eden Prairie, MN 55344. The lease for this facility provides for
monthly payments through July 31, 1998 without extension or renewal. The parent
company also conducts business in a 400 square foot office facility located at
63 South Ninth Street, suite 450, Minneapolis, MN 55402. This facility is leased
under a rent-free operating lease. This lease can be terminated by either party
with 30 days notice. The Company is responsible for utilities, insurance, and
other operating expenses.
ITEM 3. LEGAL PROCEEDINGS.
On February 21, 1996, MFP Technology Services Inc. ("MFP") commenced a suit
against Global MAINTECH, Inc. in Hennepin County District Court for the State of
Minnesota. The suit alleges breach of contract arising out of actions occurring
in 1994. MFP was the owner of an IBM mainframe which the Company purchased in
its computer brokerage business. This contract was subsequently renegotiated to
defer payment for the computer. MFP is seeking collection of approximately
$100,000 it claims is owed under a contract executed in 1994 in the original
amount of $377,000. The Company has recorded liabilities as of December 31, 1995
equal to the claim by MFP. The Company has not responded to this action but
intends to contest this claim. The Company currently is consulting with legal
counsel with respect to this matter. Management of the Company believes that if
the Company was held liable for the claimed amount, such a decision would not
have a material adverse effect on the Company's financial position, however it
would adversely affect its liquidity and cash flow.
The Company is not a party to any other material pending litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of the Company's shareholders
during the quarter ended December 31, 1995.
3
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PART II
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ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock trades on the OTC Bulletin Board under the
symbol "GBMT". Prior to May 26, 1995, the Company's common stock traded under
the symbol "MIRR". Until June 23, 1994, the Company's common stock traded on the
Nasdaq Small Cap Market.
The following are the high and low bid quotations for the Company's common
stock as reported on the OTC Bulletin Board during each quarter of the fiscal
years ended December 31, 1995 and 1994. These quotations represent prices quoted
between dealers, without retail mark-up, mark-down or commission, and may not
necessarily represent actual transactions.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
Common Stock
Quarter Low High
----------------------------
<S> <C> <C>
First $0.06 $0.13
Second 0.05 0.11
Third 0.03 0.08
Fourth 0.04 0.09
YEAR ENDED DECEMBER 31, 1994
Common Stock
Quarter Low High
----------------------------
First $0.16 $0.38
Second 0.19 0.28
Third 0.09 0.25
Fourth 0.06 0.13
</TABLE>
As of March 1, 1996, the Company had 494 shareholders of record. The
Company has not paid cash dividends on its common stock and does not anticipate
paying cash dividends in the forseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Results of Operations
The consolidated financial statements that accompany this discussion show
the operating results of the Company for the years ended December 31, 1995 and
1994. These results include the operations of Global MAINTECH, Inc., a new
subsidiary which had been engaged in certain aspects of the mainframe computer
business (Brokerage). In December 1995, the Brokerage business was discontinued.
The Company continues in the computer monitoring and control systems business.
The Company, prior to its merger with MAINTECH had discontinued all of its
operations, restructured its balance sheet and planned to merge with an
operating company. As a result, the Company merged with Global MAINTECH, Inc.
effective January 1, 1995. Although Mirror is the surviving legal entity, for
accounting and reporting purposes, MAINTECH is the reporting entity. In the
second fiscal quarter of 1995, the Company's name was changed to Global MAINTECH
Corporation (the "Company") from Mirror Technologies, Incorporated.
Net cash used in operating/discontinued activities for the year ended
December 31, 1995 was approximately $650,000 compared to $485,000 in the year
ended December 31, 1994. Cash was used to reduce various short term liabilities
including accounts payable and deferred revenue of approximately $200,000. Cash
was also used to fund an increase in accounts receivable. The net loss includes
non-cash charges for depreciation and amortization of approximately $76,000, and
a loss on disposal of discontinued operations of approximately $420,000. Cash
was provided to MAINTECH by an intercompany advance of approximately $713,000
from its parent.
4
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Sales from continuing operations for the year ended December 31, 1995 were
approximately $1,174,000 compared to sales of continuing operations of $56,000
of MAINTECH in the year ended December 31, 1994. Continuing sales for the
current year ended December 31, 1995 reflect business activity generated by the
new business unit, known as the Intelligent Console System or ICS unit. ICS unit
sales were just over $1,000,000 with additional sales of approximately $160,000
coming from the Company's remote support facility business. In the year ended
December 31, 1994, the remote support facility, which is the only continuing
business from fiscal year 1994, generated approximately $56,000 in revenue. The
remote facility revenue is related to a remote monitoring process whereby a
warning call is initiated by an IBM mainframe when the internal operating
software detects a problem. After the Company began to focus on the ICS unit, it
reduced its activities in the remote support facility business unit. As a
result, further growth in remote support facility revenues is not expected. In
the 1995 fiscal year, the gross margin improved substantially due to sales of
ICS units and a one-time sale of $166,000 of certain data base maintenance
programs. No comparable sales were recorded in the fiscal year ended December
31, 1994.
Selling, general and administrative costs for the year ended December 31,
1995 were approximately $765,000 compared to approximately $840,000 for the same
period in the prior year. This $75,000 decrease is primarily due to decreases in
utilities, depreciation, building rent and insurance expenses. The decrease in
utilities, building rent and insurance is related to closing an office in Texas
and reduced activities at the corporate level. The decline in depreciation is a
function of the depreciation rate decline when using the double declining
method. These decreases were partially offset by increases in corporate
governance expenses associated with a public company (MAINTECH was privately
held in the prior year). Research and development expenses in 1995 relate to the
development of the ICS unit and comprise salaries and consulting fees for
programming expertise.
Non-operating expenses in the year ended December 31, 1995 primarily
consisted of interest expense. The decrease is partially due to the elimination
of the subordinated notes payable to two officers of the Company and the payment
of mortgage debt after the sale of a building owned by MAINTECH. Interest
expense includes accrued interest on the Company's convertible subordinated
debentures, notes payable to vendors, a bank, and individuals. Total debt
outstanding declined approximately $1.2 million from 1994 to 1995.
Cash provided by investing activities of approximately $1,400,000 reflects
the proceeds received from the sale of the building formerly occupied by
MAINTECH and cash received in the merger with Global MAINTECH Corporation
(formerly, Mirror Technologies). Both the merger and the building sale occurred
in January 1995. The Company sold the office and warehouse owned by MAINTECH
producing net cash after payment of the mortgage on the property of
approximately $125,000. Cash was used for investing activities in the year ended
December 31, 1994 due to the acquisition of office equipment.
Cash was used by financing activities partially due to the sale of
MAINTECH's building in January 1995, a substantial portion of which was used to
repay the mortgage note payable and to reduce other notes payable of the
Company. Cash was raised through the sale of common stock at $0.06 per share as
follows: (i) by the sale in late August 1995 of 2.5 million shares to a Japanese
company affiliated with the ICS product; (ii) by sale pursuant to a private
placement memorandum in November and December 1995 in the approximate amount of
$200,000; and, (iii) by the conversion of $100,000 of debt to common shares. In
the year ended December 31, 1994, MAINTECH raised cash solely through the net
issuance of notes payable as previously described. In the year ended 1994 cash
was used to pay monthly dividends when MAINTECH was a privately held company.
Liquidity and Capital Resources
As of December 31, 1995, the Company had negative working capital of
approximately $1,019,000 compared to negative working capital of $2,037,000 in
the year ended December 31, 1994. The negative working capital as of December
31, 1995 is primarily due to notes payable of $479,000 and the Company's
convertible subordinated debentures of approximately $262,000. The scheduled
payment of a $190,000 note payable is currently being renegotiated. The
remaining notes payable have scheduled payments throughout the next fiscal year
and the convertible subordinated debentures have a due date of July 1, 1996. The
remaining negative working capital is related to certain large accounts payable
to Brokerage vendors and the Japanese vendor for the ICS unit. The Company's
vendors have been cooperative throughout the year and it is believed payment
schedules for these accounts payable will continue to be worked out in 1996 to
match the Company's ability to pay. However, there can be no assurance that the
Company will be able to continue to enjoy the forbearance of its creditors and
in the event
5
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the Company is unable to do so, it may have a material adverse effect on the
Company's operations. Due to cash flow constraints the Company has been
delinquent under each of the above mentioned contractual liabilities and has
been slow to pay certain of its accounts payable at various times since June
1995. As of December 31, 1995 the Company is delinquent under the terms of
the $190,000 note payable. The holder of this note has declined to exercise its
rights under the note during the renegotiations. The Company expects to conclude
these negotiations successfully and expects its working capital will then be
sufficient to support cash requirements to June 30, 1996 without obtaining
additional sources of capital. However, there can be no assurance that the
Company will be successful in these negotiations and in the event the Company is
unable to do so, it may have a material adverse effect on the Company's
operations.
During the 1995 fiscal year the Company renegotiated the payment terms for
two of its notes payable. One note holder converted $100,000 of his note into
common stock at a conversion price of $.06 per share. Also during the current
fiscal year, subordinated debt of $400,000 was forgiven by two of the Company's
executive officers and recorded as additional paid-in-capital. The Company's
assets are insufficient to satisfy the existing debt schedule. It is believed
additional sales of the ICS units will also enhance the Company's ability to
raise capital to replace some of its maturing debt. However, no assurances can
be given that these events will transpire in accordance with expectations.
During the year ended December 31, 1995, the Company used its cash to
reduce current liabilities and established new payment terms on certain other
liabilities. Cash was used primarily to reduce accounts payable and deferred
revenue and to fund an increase in accounts receivable. The cash used by
operating activities was funded entirely by cash advances pursuant to an
intercompany note from the Company's parent of approximately $713,000. Cash
generated from the sale of assets, primarily related to the building sale, and
from the issuance of common stock, was used to reduce mortgage and notes payable
of approximately $1.2 million. In the year ended December 31, 1994, MAINTECH
used cash from its financing activities primarily to fund operating losses, not
funded from increases in accounts payable, accrued liabilities and a reduction
of inventory
In June 1995, the Company settled a lawsuit commenced in 1993 by a
competitor of MAINTECH. While the Company strongly contested the lawsuit, it
agreed to settle the lawsuit at an amount less than the estimated legal costs
associated with the scheduled court procedures. The Company paid $45,000 to the
counterparty during 1995.
The Company's losses from discontinued operations and its remaining debt
obligations, indicate additional capital will be needed to fund the Company's
ongoing operations. The Company believes increased sales of its ICS product will
provide operating capital to satisfy some of these requirements. However, it is
likely additional capital will be needed to satisfy all the obligations as they
become due. There can be no assurance that either sufficient sales increases
will occur or that additional sources of new capital will be found. If the
Company does not succeed in one or both of these areas, the affect on the
business could be material and adverse. During the last six months of the year
ended December 31, 1995, the Company borrowed from time to time against its
accounts receivable from its principal bank and may continue to do so in the
future. As of December 31, 1995, the Company had no debt outstanding from its
principal bank.
During 1995, the Company began to focus its activities on the computer
monitoring and control systems operations and to reduce its Brokerage
operations. In 1995, the Company discontinued and, effective December 31, 1995,
sold its Brokerage operations. In the last six months of 1995, the Company
completed the requirements to fulfill the delivery and installation of three ICS
units to a large industrial and financial company.
The liquidity and capital resources of the Company have been diminished as
a result of the discontinued operations and a substantial portion of the
accounts payable and current interest bearing obligations that remain with the
Company as of December 31, 1995 relate to the Brokerage activities not assumed
by the buyer of the discontinued operations. The Company's ability to
renegotiate or convert portions of its notes payable and to attract additional
capital to facilitate these negotiations is uncertain, as is the timing of the
new sales of ICS units. While the Company believes in the viability of its
operating plan and currently anticipates that its operating plan will be
achieved, there can be no assurances to that effect. To the extent this plan is
delayed, the Company will seek the continued forbearance of its lenders.
6
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Recent Developments
The Company recently entered into a contract with Burlington Northern Railroad
Company to provide four ICS units. Delivery of the ICS units will occur in the
Company's first and second fiscal quarters. The purchase price for the ICS units
totals $800,000. Under the terms of the contract, the Company will provide both
software and hardware maintenance for which the Burlington Northern Railroad
Company will pay a monthly maintenance fee on a per unit basis beginning the
month following installation.
7
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ITEM 7. FINANCIAL STATEMENTS.
Index to Financial Data
Page
----
Independent Auditors' Report 9
Consolidated balance sheets 10
Consolidated statements of operations 12
Consolidated statements of stockholders' equity (deficit) 13
Consolidated statements of cash flows 14
Notes to consolidated financial statements 15
8
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INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders of Global MAINTECH Corporation:
We have audited the accompanying consolidated balance sheets of Global MAINTECH
Corporation (formerly Mirror Technologies, Incorporated) and subsidiary as of
December 31, 1995 and 1994, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Global MAINTECH
Corporation and subsidiary as of December 31, 1995 and 1994, and the results of
their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that Global MAINTECH Corporation will continue as a going concern. As discussed
in note 3, the Company's 1995 net loss, working capital deficit and accumulated
deficit raise substantial doubt about the entity's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in note 3. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/S/ KPMG PEAT MARWICK LLP
Minneapolis, Minnesota
February 23, 1996
9
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
GLOBAL MAINTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 39,364 $ 24,309
Accounts receivable, less allowance
for doubtful accounts of $15,000
and $56,000 321,052 222,439
Other receivables 40,218 29,090
Inventory 186,812 -
Prepaid expenses and other 21,004 19,551
-------- ----------
Total current assets 608,450 295,389
Assets of discontinued operations (note 4)
Inventory - 573,612
-------- ----------
PROPERTY AND EQUIPMENT, NET 16,300 849,932
-------- ----------
$624,750 $1,718,933
======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
10
<PAGE>
GLOBAL MAINTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 808,430 $ 857,400
Current portion of notes payable
(note 6) 479,038 588,304
Mortgage note payable (note 6) - 620,000
Convertible subordinated debentures
(note 5) 261,750 -
Accrued liabilities
Compensation and payroll taxes 33,810 19,992
Interest (notes 5 and 6) 38,070 24,163
Other 6,430 73,895
Deferred revenue - 148,000
----------- -----------
Total current liabilities 1,627,528 2,331,754
----------- -----------
Notes payable, less current portion
(note 6) 58,000 490,531
Subordinated notes payable to
officers (note 9) - 400,000
----------- -----------
Total liabilities 1,685,528 3,222,285
STOCKHOLDERS' EQUITY (DEFICIT) (note 7)
Voting, convertible preferred stock
- Series A, convertible into one common
stock share for each preferred share,
no par value; 4,439,900 shares
authorized; 4,326,036 shares issued
and outstanding; total liquidation
preference of outstanding
shares-$1,622,000 405,770 -
Common stock, no par value; 245,560,100
shares authorized; 52,438,473 shares
issued and outstanding - 800
Additional paid-in-capital 906,658 79,200
Accumulated deficit (2,373,206) (1,583,352)
----------- -----------
Total stockholders' deficit (1,060,778) (1,503,352)
----------- -----------
Commitments and contingencies
(notes 4, 9 and 11)
$ 624,750 $ 1,718,933
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
11
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<TABLE>
<CAPTION>
GLOBAL MAINTECH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended
December 31
------------------------------------
1995 1994
-------------- ----------------
<S> <C> <C>
Net sales $ 1,173,744 $ 56,088
Cost of sales 350,585 34,560
----------- -----------
Gross profit 823,159 21,528
Operating expenses
Selling, general and administrative 763,807 838,080
Research and development 113,234 -
----------- -----------
Loss from operations (53,882) (816,552)
Other income (expense):
Interest expense (134,453) (411,821)
Interest income 7,309 156
Other (7,770) 3,280
----------- -----------
Total other expense, net (134,914) (408,385)
----------- -----------
Loss from continuing operations before income taxes (188,796) (1,224,937)
Provision for income taxes 5,850 4,832
----------- -----------
Loss from continuing operations (194,646) (1,229,769)
----------- -----------
Discontinued operations (note 4)
Loss from operations (174,578) (168,530)
Loss on disposal (420,630) -
----------- -----------
Loss from discontinued operations (595,208) (168,530)
----------- -----------
Net loss $ (789,854) $(1,398,299)
=========== ===========
Net earnings (loss) per common and common
equivalent share (notes 2, 4 and 7):
Continuing operations $ (0.004) $ (0.027)
Discontinued operations (0.012) (0.003)
----------- -----------
Net loss (1) $ (0.016) $ (0.030) (1)
=========== ===========
Weighted average number of common and
common equivalent shares outstanding (1) 50,640,491 46,288,331 (1)
=========== ===========
</TABLE>
(1) Net earnings (loss) per share and weighted average number of common and
common equivalent shares outstanding for the year ended, December 31, 1994
assume the merger as described in note 2 had occurred on January 1, 1994
for presentation purposes.
The accompanying notes are an integral part of these consolidated statements
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<PAGE>
GLOBAL MAINTECH CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Preferred stock Common stock Additional
--------------------------------------- paid-in Accumulated
Shares Amount Shares Amount capital deficit Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 - - 80,000 $ 800 $ 79,200 ($45,053) $ 34,947
Net loss - - - - - (1,398,299) (1,398,299)
Distributions to stockholders - - - - - (140,000) (140,000)
- ---------------------------------------- ---------------------------------------------------------------------------------
Balance at December 31, 1994 - - 80,000 800 79,200 (1,583,352) (1,503,352)
Net loss - - - - - (789,854) (789,854)
Stockholder debt forgiveness (note 10) - - - - 400,000 - 400,000
Subsidiary common Stock retired in
connection with merger (note 2) - - (80,000) (800) - - (800)
Commons stock issued in connection
with merger (note 2) - - 45,351,806 - 21,471 - 21,471
Common stock issued (note 7) - - 7,790,000 - 456,200 - 456,200
Stock subscriptions receivable (note 7) - - (816,667) - (47,000) - (47,000)
Stock issue costs (note 7) - - - - (13,843) - (13,843)
Preferred stock related to merger
(note 2) 4,439,370 416,400 - - - - 416,400
Converted preferred shares (note 7) (113,334) (10,630) 113,334 - 10,630 - -
- ---------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 4,326,036 $405,770 52,438,473 - $906,658 ($2,373,206) ($1,060,778)
===========================================================================================================================
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
13
<PAGE>
GLOBAL MAINTECH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended
December 31,
------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(789,854) $(1,398,299)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 76,253 127,936
Loss on disposal of discontinued operations 420,630 -
Changes in operating assets and liabilities:
Increase in accounts and other receivables (109,741) (152,473)
Increase (decrease) in inventory (33,830) 430,577
Decrease in prepaid expenses 1,453 8,027
Increase (decrease) in accounts payable (48,970) 430,597
Decrease in accrued expenses (39,739) (59,481)
Increase (decrease) in deferred revenue (148,000) 129,712
Increase in other 20,467 -
--------- -----------
Cash used by operating and discontinued activities (651,331) (483,404)
--------- -----------
Cash flows from investing activities:
Proceeds (payment) from sale (purchase) of
property and equipment 764,454 (7,226)
Net cash received in merger 637,071 -
--------- -----------
Cash provided (used) by investing activities 1,401,525 (7,226)
--------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock 426,658 -
Decrease in short-term notes payable (109,266) (324,164)
Principal payments on mortgage note payable (620,000) -
Increase (decrease) of notes payable (432,531) 830,000
Dividend distribution - (140,000)
--------- -----------
Cash provided (used) by financing activities (735,139) 365,836
--------- -----------
Net increase (decrease) in cash 15,055 (124,794)
Cash and cash equivalents at beginning of year 24,309 149,103
--------- -----------
Cash and cash equivalents at end of year $ 39,364 $ 24,309
========= ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for: Interest $ 125,517 $ 393,112
Taxes $ 8,126 -
</TABLE>
Supplemental disclosure of noncash investing and financing activities:
During 1995, a $100,000 portion of a note payable was converted to common
stock and $400,000 of subordinated notes payable were forgiven.
The accompanying notes are an integral part of these consolidated statements.
14
<PAGE>
GLOBAL MAINTECH CORPORATION
- ------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS: At the Company's annual shareholders meeting on May 15,
1995, the shareholders approved, among other things, the change of its name to
Global MAINTECH Corporation from Mirror Technologies, Incorporated. The renamed
Mirror Technologies, Incorporated is the parent company of Global MAINTECH, Inc.
Global MAINTECH, Inc. ("MAINTECH") is the operating entity resulting from
the merger between MAINTECH and Mirror Technologies, Incorporated ("Mirror")
effective January 1, 1995 (see note 2). For the years 1992, 1993 and 1994 the
majority of MAINTECH's activity involved buying and selling used IBM mainframes,
parts and features. During this time the Company changed its business strategy
and began to maintain and monitor computer equipment in large data centers. In
late 1994, the Company became the exclusive distributor, outside of Japan, of
the monitoring system of Circle Corporation of Japan. In 1995, the Company
adapted this monitoring system which is oriented to single-unit users and to
simple functions, to meet the more complex requirements of the U. S. market.
While the Company continues to buy some hardware and software from Circle
Corporation, the Company has added significant architecture, compiling and
source code. The updated system provides enhanced operational control over
computer hardware and software. In 1995, the Company made its first three
installations of this system, now called the Intelligent Console System or ICS,
in the data centers of a large industrial and financial company.
The ICS is a tool designed to automate many of the processes associated
with the physical and operational attributes of mainframe-based data centers. It
is an external system that monitors and controls the subject mainframe and other
data center computers from a workstation quality RISC computer, which is housed
separately from the computers it controls. ICS users are able to reduce staffing
levels, consolidate all data center operations and technical support functions
to a single location regardless of the physical location of the data center(s)
and achieve improved levels of operational control and system availability.
PRINCIPLES OF CONSOLIDATION: As a result of the merger described in note 2, the
consolidated financial statements represent the historical financial information
of MAINTECH and include the accounts of Mirror since the date of the merger. All
significant intercompany accounts and transaction have been eliminated in
consolidation.
CASH AND CASH EQUIVALENTS: The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts.
INVENTORY: Inventory is stated on a first in, first out (FIFO) basis at the
lower of cost or market (net realizable value).
PROPERTY AND EQUIPMENT: Property and equipment is recorded at cost. Depreciation
is provided for principally using the double declining method, based on the
estimated useful lives of the respective assets which generally have lives of
three years.
Maintenance and repairs are charged to expense as incurred. Renewals and
betterments are capitalized and depreciated over their estimated useful service
lives.
REVENUE RECOGNITION: Revenue is recognized upon shipment. Deferred revenue is
recorded when the Company receives customer payments before shipment. The
Company sells maintenance agreements which require minor updates of software to
be delivered to the customers free of charge. New versions of the Company's
software representing a major upgrade are not a part of the maintenance
agreements. The Company expenses the costs of minor updates to its software as
incurred.
RESEARCH AND DEVELOPMENT: Research and development costs are expensed as
incurred.
15
<PAGE>
GLOBAL MAINTECH CORPORATION
- ------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK: Net loss per share is computed
based on the weighted average number of common and common equivalent shares
outstanding each period they have a dilutive effect. Common equivalent shares
are excluded for 1995 and 1994 because of their anti-dilutive effect.
INCOME TAXES: Deferred taxes are provided on a liability method for temporary
differences and operating loss and tax credit carryforwards. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
RECLASSIFICATIONS: Certain reclassifications have been made to the 1994 data to
conform with the 1995 presentation.
USE OF ESTIMATES: Management of the company has made a number of estimates
and assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these consolidated
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from these estimates.
NOTE 2. MERGER TRANSACTION
Effective January 1, 1995, Mirror merged with MAINTECH, a Minnesota corporation
(the "Merger"), pursuant to the terms of an Agreement and Plan of Merger, dated
December 6, 1994, as amended (the "Agreement"). Under the terms of the
Agreement, each share of MAINTECH's common stock was converted into 358.75
shares of Mirror's common stock. As a result, Mirror issued 28,700,001 shares of
common stock in exchange for all of the outstanding capital stock of MAINTECH.
In connection with the Merger, outstanding options of MAINTECH to purchase
68,214 shares of MAINTECH's common stock converted into the right to purchase
approximately 24,472,006 shares of Mirror's common stock at an exercise price of
$0.03 per share. Stock for the purchase of options covering 24,200,001 shares of
Mirror's common stock will vest on June 1, 1999, or earlier, subject to the
merged business (the "Company") attaining certain earnings levels. Subsequent to
December 1995, options to purchase approximately 3,700,000 shares were canceled
due to the departure of an officer of the Company.
As a result of this Merger and prior to the dilution of subsequent issues of
common stock, the former shareholders of MAINTECH held unregistered stock
comprising approximately 58 percent of the common stock and common stock
equivalents of the Company and if the options to purchase common stock are
exercised, these shareholders will hold approximately 70 percent of the
outstanding shares of the Company. The Merger resulted in the former
shareholders of MAINTECH having majority common stock ownership and majority
board of directors representation in the surviving entity. Accordingly, for
financial statement purposes, the transaction has been accounted for as if
MAINTECH acquired Mirror. This transaction was accounted for as a reverse
acquisition but Mirror will remain as a surviving legal entity. The Merger was
accounted for as a purchase of the net assets of Mirror by MAINTECH. Mirror
assets consisted principally of cash with book value approximating fair value.
Subsequent to the 1995 year end, and in addition to the cancellation of stock
options, the former shareholders of MAINTECH voluntarily forfeited 6,700,001
shares of common stock pursuant to an agreement related to the November 1, 1995
Private Placement Memorandum. As a result the percentage currently held by these
particular stockholders is approximately 43 percent and 52 percent, respectively
compared to the 58 percent and approximate 70 percent listed above. Two of the
officers of MAINTECH were elected to the Board of Directors of the Company
subsequent to the consummation of the Merger.
If the above described merger had occurred effective January 1, 1994, net
sales would not have changed and the pro-forma net loss would have been
approximately $2,070,000 for the year ended December 31, 1994.
16
<PAGE>
GLOBAL MAINTECH CORPORATION
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 3. GOING CONCERN
As of December 31, 1995, the Company had negative working capital of
approximately $1,019,000 compared to negative working capital of $2,037,000 at
December 31, 1994. Due to cash flow constraints the Company has been delinquent
under each of the contractual liabilities in notes 5 and 6 at year end and has
been slow to pay certain of its accounts payable during 1995. (At year end the
Company is delinquent under one note payable of $190,000.) The Company's assets
are insufficient to satisfy the existing debts as they become due.
The Company's net losses from operations and its remaining debt obligations,
indicate additional capital will be needed to fund the Company's ongoing
operations. The Company believes increased sales of its ICS product will provide
operating capital to satisfy some of these requirements. But it is likely
additional capital will be needed to satisfy all the obligations as they become
due. There can be no assurance that either sufficient sales increases will occur
or that the Company will be able to raise additional capital. If the Company is
not successful in one or both of these areas, the affect on the business would
be material and adverse. During the six months ended December 31, 1995, the
Company borrowed from time to time against its accounts receivable from its
principal bank and may continue to do so in the future. As of December 31, 1995,
the Company had no debt outstanding from its principal bank.
The Company's ability to renegotiate or convert to equity portions of its notes
payable and subordinated debentures and to attract additional capital to
facilitate these negotiations is uncertain, as is the timing of any sales of ICS
units. While the Company believes in the viability of its operating plan and
currently anticipates that its operating plan will be achieved, there can be no
assurances to that effect. To the extent this plan is delayed, the Company will
seek the continued forbearance of its lenders.
NOTE 4. DISCONTINUED OPERATIONS, SALE AND BASIS OF ACCOUNTING
During the fourth quarter of 1995, the Company's Board of Directors made the
decision to discontinue that portion of the operations which brokers and sells
parts for IBM mainframe computers ("Brokerage") due to poor financial
performance. In addition, the prospects for future profitablilty were poor.
Effective December 31, 1995 the Company sold the Brokerage inventory and certain
selected liabilities for a total of $123,000 to Norcom Resources, Inc., a
privately held corporation whose sole shareholder is a former officer and a
major shareholder of the Company. This sale resulted in a loss on disposal of
$420,630. Due to the uncertainty of collection, the Company will treat payments
under this sale as income when received. The sales proceeds are secured by
approximately 2,080,000 shares of the Company's common stock held by this former
officer. In conjunction with the sale, the Company has agreed to remove this
former officer as personal guarantor from a certain note payable in the amount
of $190,000 prior to March 31, 1997. The Company will issue additional shares of
common stock at $0.06 per share to this individual to the extent any debt is
still outstanding under this note on which this former officer is guarantor on
March 31, 1997.
17
<PAGE>
GLOBAL MAINTECH CORPORATION
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Selected financial information for the discontinued operations for the years
ended December 31, 1995 and 1994, is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994
------------------------
<S> <C> <C>
Revenue $6,138,316 $22,122,938
Cost of sales 5,590,976 21,108,649
------------------------
Gross Profit 547,340 1,014,289
Operating expenses 721,918 1,182,819
------------------------
Operating loss from
discontinued operations ($174,578) ($168,530)
========================
</TABLE>
NOTE 5. CONVERTIBLE SUBORDINATED DEBENTURES
The Company's 11 percent convertible subordinated debentures are due July 1,
1996, with interest due semi-annually, and are redeemable by the Company or
convertible at the option of the holder into 209,400 common shares at a price
per share of $1.25. During the year the Company purchased at face value bonds
totaling $25,000. Expenses associated with the original issuance of the
unconverted debentures are being amortized over a period ending July 1, 1996.
NOTE 6. NOTES PAYABLE
MAINTECH had a mortgage secured by land and building in the amount of $620,000
at 3 1/2% interest at December 31, 1994. The note required monthly interest
payments of $1,808 until February 1, 1995 when the entire principal balance was
due. On January 17, 1995, the Company sold the land and building and paid the
mortgage note in full. The sale transaction resulted in a net gain on sale of
$8,200 and cash of approximately $125,000, net of related costs. The cash
received was used to pay off the Bank Windsor note included in notes payable in
1994 listed below.
Notes payable at December 31, 1995 and 1994 are comprised of the following:
<TABLE>
<CAPTION>
1995 1994
--------------------- ---------------------
Interest Interest
Amount rate Amount rate
--------------------- ---------------------
<S> <C> <C> <C> <C>
Notes payable to First Bank, due in
quarterly installments of $16,750
April 1 1995 and $25,000 through
March 31, 1997 $174,750 10.5% $250,000 11.5%
Note payable to related party, due
in monthly installments beginning
January 1, 1995 100,000 13.0% 250,000 13.0%
Note payable to vendor, due in
monthly installments of $10,267
through March 1, 1996, at which
date the remaining balance is due 190,246 13.5% 248,835 13.5%
Bank Windsor, due in January, 1995 - 130,000 8.5%
Note payable to Mirror (see note 2),
</TABLE>
18
<PAGE>
GLOBAL MAINTECH CORPORATION
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
due in January 1998, secured by
accounts receivable. This note is
eliminated in consolidation in 1995 - 200,000 12.0%
Note payable to vendor due in quarterly
installments of $19,000 plus interest
until paid 72,042 6.0%
-------- ---------
537,038 1,078,835
Less current portion (479,038) (588,304)
-------- ---------
$ 58,000 $490,531
======== =========
</TABLE>
The interest rate on the note payable to First Bank and note payable to vendor
in the amount of $190,246 are based on prime plus 2% and prime plus 5%,
respectively.
The Company is technically in default pursuant to the terms of note payable of
$190,246. The Company is currently renegotiating the terms of this note payable
and expects to reach a mutually satisfactory conclusion. This note payable is
guaranteed by two of the officers of the Company.
The long term portion of the notes payable is due in 1997.
NOTE 7. STOCKHOLDERS' EQUITY
COMMON STOCK WARRANTS: The Company has or, subsequent to year end, will issue
warrants in conjunction with common stock issued pursuant to the Private
Placement Memorandum dated November 1, 1995. These warrants are exercisable at
$0.072 per share and expire on December 31, 2000. As of December 31, 1995, the
Company had issued warrants to purchase 19,200 shares of common stock
outstanding and subsequent to year end the Company issued an additional 541,000
such warrants
COMMON STOCK OPTIONS: The Company's stock option plan ("Plan"), provides for
granting to the Company's employees, directors and consultants, qualified
incentive and nonqualified options to purchase common shares of stock. The Plan
was amended during 1995 to increase the number of aggregate options which can be
issued to 50,000,000 shares of common stock. Qualified incentive options must be
granted with exercise prices equal to the fair market value of the stock at the
date of grant. Nonqualified options must be granted with exercise prices equal
to at least 85% percent of the fair market value of the stock at the date of
grant.
Information with respect to stock options under the plan are summarized as
follows:
<TABLE>
<CAPTION>
Incentive Stock Options Nonqualified Options
---------------------------- -------------------------
Shares Price Range Shares Price Range
<S> <C> <C> <C> <C>
Outstanding at December 31, 1994 100,000 $0.06 415,000 $1.125 to 1.25
Granted 24,768,000 $0.03 to 0.06 - -
Canceled (3,708,000) $0.03 - -
---------------------------- -------------------------
Total outstanding at December 31, 1995 21,160,000 $0.03 to 0.06 415,000 $1.125 to 1.25
============================ =========================
</TABLE>
Options for 1,583,000 shares of common stock were exercisable as of
December 31, 1995. No options were exercised in 1995.
19
<PAGE>
GLOBAL MAINTECH CORPORATION
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
COMMON STOCK ISSUED: In addition to the common stock issued pursuant to the
merger described in note 2, the Company issued 7,790,000 shares of common stock
some of which are included in stock subscriptions receivable at December 31,
1995. In addition, 113,334 shares of common stock were issued to preferred
shareholders on a one-for-one exchange conversion in accordance with terms of
the preferred stock series A.
Of the 7.8 million shares issued, 3.4 million shares were issued pursuant to a
Private Placement Memorandum dated November 1, 1995 and 2.5 million shares were
issued to a Japanese company which is an affiliate of the company with which
MAINTECH has a distribution agreement. In December an additional 1.67 million
shares were issued to a debt holder in exchange for debt in the amount of
$100,000 and 200,000 shares were issued to a vendor in cancellation of a trade
payable. The 7.8 million shares were issued at an average value per share of
$0.06. Subsequent to December 31, 1995 the three former owners of MAINTECH
voluntarily canceled 6.7 million shares originally issued in the January 1995
merger with MAINTECH. This share reduction was in consideration for the shares
issued pursuant to the Private Placement Memorandum dated November 1, 1995.
NOTE 8. INCOME TAXES
At December 31, 1995, the Company had a net operating loss carryforward of
approximately $9.2 million. As a result of the January 1, 1995 ownership change
as described in note 2 and prior ownership changes, approximately $8.4 million
of the net operating loss carryforward will be subject to an annual limitation
as defined by Section 382 of the Internal Revenue Code. The annual limitation
for losses incurred prior to January 1, 1995 is approximately $200,000. Due to
this limitation, approximately $5.2 million of the net operating loss will
expire prior to utilization. In addition, the utilization of these losses may be
further limited by application of the separate return limitation year rules.
Subsequent and future stock sales and/or conversion of debt to common stock
could further limit these net operating losses available in any one year.
The net deferred taxes includes the following as of:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Deferred tax asset $1,445,000 $3,694,000
Valuation allowance for deferred tax asset (1,445,000) (3,694,000)
---------- ----------
Net $0 $0
========== ==========
</TABLE>
The tax effects of temporary differences as of December 31, 1995 and 1994 are
shown as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Allowance for doubtful accounts $ 5,000 $ 19,000
Net operating loss carryforward 1,440,000 3,675,000
---------- ----------
Subtotal 1,445,000 3,694,000
Valuation allowance for deferred tax asset (1,445,000) (3,694,000)
---------- ----------
Net $0 $0
========== ==========
</TABLE>
20
<PAGE>
GLOBAL MAINTECH CORPORATION
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The reconciliation between the federal income tax provision computed at the
statutory rate and the income tax provision recorded is as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Benefit at statutory rate ($268,600) ($475,400)
State income tax benefit, net of federal (23,700) (55,900)
Change in valuation allowance (2,249,000) 531,300
Effect of change in ownership on net
operating loss carryforward 2,541,300 -
---------- ---------
Net federal tax provision $0 $0
========== =========
</TABLE>
The state income tax provision for the year ended December 31, 1995 was $5,850
and was $4,832 in the prior year ended December 31, 1994.
NOTE 9. OPERATING LEASES
The Company has operating leases for an automobile, telephone equipment and its
offices. The rental payments under these leases are charged to expense as
incurred. All the leases provide that the Company pay taxes, maintenance,
insurance, and other operating expenses applicable to the leases. Lease expense
in 1995 and 1994 was approximately $154,000 and $132,000, respectively. The
future minimum lease payments are approximately $88,000, $40,000 an $19,000 for
the years 1996, 1997 and 1998, respectively.
NOTE 10. STOCKHOLDER DEBT FORGIVENESS
Prior to the merger on January 1, 1995 described in note 2, MAINTECH issued two
subordinated notes of $200,000 each for cash received individually from the
president of MAINTECH, and an executive vice-president of MAINTECH. Subsequent
to December 31, 1995, the executive vice-president left the employ of the
Company in connection with the purchase of the Brokerage inventory by Norcom
Resources, Inc. During the year ended December 31, 1995 the $400,000 balance due
was forgiven by these two individuals for no additional consideration.
Accordingly, the Company has reflected the debt forgiveness as an addition to
paid-in-capital in the Consolidated Statements of Stockholders' Equity
(Deficit).
NOTE 11. LITIGATION
The Company is a defendant in a suit filed in late February 1996. The suit asks
for judgment to collect approximately $100,000 relating to a contract executed
in 1994. No action has yet been taken by the Company, due to an extension of
time granted by the Plaintiff. However, the amount claimed by the Plaintiff is
recorded as a liability of the Company as of December 31, 1995. In the opinion
of the Company's management, if the suit continues, an adverse decision would
not have a material adverse effect on the Company's financial position, however
it would adversely affect its liquidity and cash flow.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE.
The Company has previously reported a change in accountants on Form 10-KSB
dated December 31, 1994, (File No. 0-14692)
21
<PAGE>
PART III
--------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The information with respect to Directors of the Company under the caption
"Election of Board of Directors" contained in the Company's Proxy Statement
relating to the Annual Meeting of Shareholders for the year ending December 31,
1995 is incorporated herein by reference.
The information with respect to the Executive Officers of the Company under
the caption "Executive Officers" contained in the Company's Proxy Statement
relating to the Annual Meeting of Shareholders for the year ending December 31,
1995 is incorporated herein by reference.
The information contained under the caption "Compliance with Section 16(a)
of the Securities Exchange Act of 1934" contained in the Company's Proxy
Statement relating to the Annual Meeting of Shareholders for the year ending
December 31, 1995 is incorporated herein by reference.
ITEM 10. EXECUTIVE COMPENSATION.
The information contained under the caption "Executive Compensation" in the
Company's Proxy Statement relating to the Annual Meeting of Shareholders for the
year ending December 31, 1995 is incorporated herein by reference.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Company's Proxy Statement relating to
the Annual Meeting of Shareholders for the year ending December 31, 1995 is
incorporated herein by reference.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained under the caption "Related Transactions" in the
Company's Proxy Statement relating to the Annual Meeting of Shareholders for the
year ending December 31, 1995 is incorporated herein by reference.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Index of Exhibits
Exhibit
Description Number
----------- -------
Agreement and Plan of Merger dated December 6, 2
1994, as amended, among the Company, Mirror
Consolidation Company, and MAINTECH Resources, Inc.
(the Articles of Merger are attached thereto as
Exhibit A) (Incorporated herein by reference to
Exhibit 2 to the Company's Form 8-K filed with the
Commission on January 19, 1995, (File No. 0-14692).
Bylaws of the Company, as amended (incorporated 3.2
herein by reference to Exhibit 3.2 to the
Registrant's Form S-1 (File No. 33-34894).
Restated Articles of Incorporation of the Company, 3.3
as amended in May 15, 1995 annual meeting of common
stockholders (corporate name change and increase in
authorized stock).
22
<PAGE>
Form of 11% Convertible Subordinated Debenture due 4.2
July 1, 1996 (incorporated herein by reference to
Exhibit 4.2 to the Company's Annual Report on Form
10-K for the year ended March 31, 1991, (File No.
0-14692).
Form of Registration Agreement between the Company 4.3
and holders of the Company's 11% Convertible
Subordinated Debentures Due July 1, 1996
(incorporated herein by reference to Exhibit 4.4 to
the Registrant's Form 10-K for the year ended March
31, 1991, (File No. 0-14692).
Form of Certificate of the Company's Series A 4.4
Convertible Preferred Stock (incorporated herein by
reference to the Registrant's Form 10-KSB for the
year ended December 31, 1994, (File No. 0-14692).
Form of Certificate of the Company's Common Stock 4.5
following change of corporate name change.
The Company's 1989 Stock Option Plan (incorporated 10.1
herein by reference to Exhibit 28 to the Company's
Registration Statement on Form S-8, File 33-33576).
Amendments No. 1 and 2, dated October 17, 1991 and 10.2
April 24, 1992, respectively, to the Company's 1989
Stock Option Plan (incorporated herein by reference
to Exhibit 10.1 to the Company's Annual Report on
Form 10-K for the year ended March 31, 1992, (File
No. 0-14692).
Mirror Technologies, Incorporated 401(K) Plan 10.3
effective April 1, 1992 (incorporated herein by
reference Exhibit 10.6 to the Company's Annual
Report on Form 10-K for the year ended March 31,
1992, (File No. 0-14692).
Lease Agreement dated April 22, 1993 between the 10.4
Company and Opus Corporation (incorporated by
reference to Exhibit 10.4 to the Company's Annual
Report on Form 10-KSB for the year ended March 31,
1993, (File No. 0-14692).
Sales Agency Agreement dated January 6, 1994 10.5
between the Company and MacUSA, Inc. (incorporated
by reference to the Company's Form 8-K filed on
January 21, 1994, (File No. 0-14692).
Office Lease Agreement between the Company and 10.6
Jason Bassett Creek Plaza dated March 28, 1994
(incorporated herein by reference to the Company's
Form 10-KSB for the fiscal year ended March 31,
1994).
Office Lease Agreement between the Company and 10.7
Physician's and Surgeon's Capital Corporation dated
October 1, 1994 (incorporated herein by reference
to the Registrant's Form 10-KSB for the year ended
December 31, 1994, (File No. 0-14692)
23
<PAGE>
Office and Warehouse Lease Agreement between 10.8
MAINTECH Resources, Inc. and David D. Heinen dated
December 20, 1994 (incorporated herein by reference
to the Registrant's Form 10-KSB for the year ended
December 31, 1994, (File No. 0-14692).
Exclusive Distributor and Licensing Agreement 10.9
between Yutaka Takagi and Circle Corporation and
MAINTECH Resources, Inc. and Global MAINTECH, Inc.
dated December 20, 1994 (incorporated herein by
reference to the Registrant's Form 10-KSB for the
year ended December 31, 1994, (File No. 0-14692).
Office Lease Agreement between the Company and 10.10
Charles and Sharron Mills dated December 12, 1995.
Brokerage Asset Purchase Agreement between Norcom 10.11
Resources, Inc. and Global MAINTECH, Inc. dated
December 31, 1995.
Amendment No. 3, dated May 15, 1995 to the 10.12
Company's 1989 Stock Option Plan.
Subsidiaries of the Registrant 21
Consent of KPMG Peat Marwick LLP 23
Financial data schedule 27
(b) Reports on Form 8-K
No Form 8-K was filed in the last quarter of the twelve month period ended
December 31, 1995.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Global MAINTECH Corporation
Dated: March 27, 1996 By /s/ James Geiser
--------------------------
James Geiser
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<S> <C> <C>
/s/ David McCaffrey Chief Executive Officer
- ----------------------- (Principal Executive Officer) and March 27, 1996
David McCaffrey Director
/s/ James Geiser Chief Financial Officer and March 27, 1996
- ----------------------- Secretary (Principal Financial
James Geiser and Accounting Officer)
/s/ Robert E. Donaldson Director March 27, 1996
- -----------------------
Robert E. Donaldson
</TABLE>
25
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Page
Description Number Number
- --------------------------------------------------------------------- ------- ------
<S> <C> <C>
Restated Articles of Incorporation of the Company, as amended in 3.3 27
May 15, 1995 annual meeting of common stockholders (corporate
name change and increase in authorized stock).
Form of Certificate of the Company's Common Stock 4.5 28
following change of corporate name change.
Office Lease Agreement between the Company and Charles and 10.10 30
Sharron Mills dated December 12, 1995.
Brokerage Asset Purchase Agreement between Norcom Resources, 10.11 46
Inc. and Global MAINTECH, Inc. dated December 31, 1995.
Amendment No. 3, dated May 15, 1995 to the Company's 1989 10.12 83
Stock Option Plan.
Consent of KPMG Peat Marwick LLP 23 84
Financial data schedule 27 85
</TABLE>
26
<PAGE>
EXHIBIT 3.3
GLOBAL MAINTECH CORPORATION
CERTIFICATE OF AMENDMENT
I, James Geiser, Secretary of Global MAINTECH Corporation, formerly, Mirror
Technologies, Incorporated, do hereby certify that the following amendments to
Articles 1 and 3.1 of the Articles of Incorporation of said corporation have
been duly adopted by the shareholders of that corporation.
Such amendments were adopted by the shareholders of such corporation on May
15, 1995 and pursuant to Chapter 302A of the Minnesota Business Corporation Act.
"Article 1 of the Amended and Restated Articles of Incorporation of Mirror
Technologies, Incorporated is amended in its entirety to read as follows:
Article 1. Name
----------------
The name of the corporation is Global MAINTECH Corporation.
Article 3.1 of the Amended and Restated Articles of Incorporation of Mirror
Technologies, Incorporated is amended in its entirety to read as follows:
3.1. Designation and Number. The aggregate number of authorized
shares of the corporation is 250,000,000 shares, no par value, of which
4,439,900 shares shall be designated Series A Convertible Preferred Stock,
and 245,560,100 shares shall be divisible into such classes and series,
have such designations, voting rights, and other rights and preferences and
be subject to such restrictions, as the Board of Directors of the
corporation may from time to time establish, fix and determine consistent
with Articles 4 and 5 of the hereof. Unless otherwise designated in these
Restated Articles or by the Board of Directors, all issued shares shall be
deemed Common Stock with equal rights and preferences. The rights,
preferences, privileges and restrictions granted to and imposed upon the
Common Stock and the Series A Convertible Preferred Stock (the "Preferred
Stock") are set forth in Article 3."
/s/ James Geiser
Secretary
1
<PAGE>
Exhibit 4.5
[LOGO]
Global MAINTECH Corporation
NUMBER SHARES
M- GLOBAL MAINTECH CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA
SEE REVERSE SIDE
FOR CERTAIN DEFINITIONS
-----------------
CUSIP 379338 10 6
-----------------
THIS CERTIFIES THAT
SPECIMEN
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, NO PAR VALUE, OF
------------============ GLOBAL MAINTECH CORPORATION ============------------
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this certificate properly endorsed. This
certificate is not valid unless countersigned by the Transfer Agent and
Registrar.
IN WITNESS WHEREOF, the said Corporation has caused this certificate to be
signed by facsimile signatures of its duly authorized officers.
Dated:
/s/ James Geiser /s/ Robert E. Donaldson
SECRETARY PRESIDENT
Countersigned and Registered:
NORWEST BANK MINNESOTA, N.A.
Transfer Agent and Registrar
By
Authorized Signature
<PAGE>
The Issuer of the securities represented by this certificate will furnish
to any shareholder upon request and without charge, a full statement of the
designations, preferences, limitations and relative rights of the shares of each
class or series authorized to be issued by such issuer, so far as they have been
determined, and the authority of the board of directors of such issuer to
determine the relative rights and preferences of subsequent classes or series.
- --------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
UTMA - ________ Custodian __________
TEN COM - as tenants in common (Cust) (Minor)
TEN ENT - as tenants by entireties under Uniform Transfer to Minors
JT TEN - as joint tenants with right of
survivorship and not as tenants Act ______________________________
in common (State)
Additional abbreviations may also be used though not in the above list.
- --------------------------------------------------------------------------------
For value received ______ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------- Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- ----------------------------------------------------------------------- Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated -----------------------------------------
-----------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE GUARANTEED
<PAGE>
Exhibit 10.10
[GLOBAL MAINTECH LOGO]
SUB-LEASE AGREEMENT
-------------------
This Agreement is entered into this 12th day of December, l995, between
Global MAINTECH, Inc., a Minnesota corporation (MAINTECH), and Art-In-Motion,
Inc., a Minnesota corporation ("Art").
WHEREAS, Art has occupied and leased the space at 6468 City West Parkway,
Eden Prairie ("space") and seeks to vacate the space;
WHEREAS, MAINTECH desires to occupy the space;
WHEREAS, Art is in Chapter ll reorganization and is obligated to past
rent to Charles C. Mills, the landlord;
WHEREAS, Art has the right to sublease the space, and both parties have
notified Charles C. Mills and have received verbal acceptance that Art may
sublease to MAINTECH;
NOW, THEREFORE, the parties mutually agree:
l. MAINTECH hereby subleases the space from Art;
2. The terms of the sublease are identical to those of the lease dated
June 22, l995 between Art and Charles and Sharron Mills (the owner and landlord
of the space) and this lease is attached to and considered a part of this
Agreement;
3. The deposit referred in the lease dated June 22, l995 and made by Art
is now the property of MAINTECH;
4. MAINTECH is not obligated for any outstanding obligations of Art,
including those relating to the space or the lease dated June 22, l995;
5. MAINTECH shall be obligated for lease payments with the time period
beginning January l, l996 and continuing to the end of the lease period;
6. MAINTECH is accepting the space on an "as is" basis and has no claims
on Art for cleaning or repairs;
7. This Agreement shall be governed by the laws of the State of Minnesota
and shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns.
AGREED BY: Global MAINTECH, Inc. Accepted by
by /s/ David McCaffrey /s/ Charles S. Mills
--------------------------- ---------------------------
its Chief Executive Officer
Art-In-Motion, Inc
by /s/ John Gulfuss
---------------------------
its
1
<PAGE>
OFFICE LEASE
------------
THIS AGREEMENT, made this 22nd day of June, 1995, by and between Charles
and Sharron Mills, hereinafter called the Lessor or Landlord and Art-In-Motion,
Inc. hereinafter called the Tenant.
WITNESSETH:
That the Lessor, in consideration of the rents and covenants hereinafter
mentioned, does hereby demise, lease and let unto the Tenant, and the Tenant
does hereby hire and take from the Lessor, the following described premises
located in the County of Hennepin and State of Minnesota, more particularly
described as comprising approximately 3,106 square feet on the main floor of the
Building located at 6468 City West Parkway, which is to be used and occupied as
an office for the transaction of the business of Tenant, which is production of
visual and audio communications and for no other purpose.
TO HAVE AND HOLD said premises just as they are, without any liability or
obligation on the part of the Lessor to make any alteration, improvements or
repairs of any kind on or about said premises (save and except as otherwise
stated herein) for a term of Three Years from and after the 1st day of August,
1995 and terminating on the 31st day of July, 1998. In the event that said
premises are not ready for occupancy on the commencement date thereof, this
lease shall not be void or voidable, nor shall Lessor be liable to Tenant for
any loss or damage resulting therefrom; but in such event there shall be a pro-
rata abatement of rent for the period between the aforesaid commencement date of
the term and the date when said premises are ready for occupancy.
ARTICLE I. BASE RENT
The Tenant shall pay to the Lessor as base rent for the premises
$2,682.21 per month ($32,186.52 per annum) in advance on the
first day of each month during the entire term of this lease. In
the event of any fractional months occurring during the term of
this lease, Tenant shall pay a pro-rata portion of said
fractional month. Said rental is sometimes hereinafter referred
to as "annual base rental" or "monthly base rental." Rent will
commence September 15, 1995. There will be no rent charge for
July 1995, August 1995, or the first two weeks in September 1995.
All rental checks shall be made payable to Charles and Sharron
Mills, and mailed to 650 S. E. Sixth Avenue, Pompano Beach,
FL 33060.
ARTICLE II. ADDITIONAL RENTAL
In addition to the annual base rental described in the foregoing
paragraph of this lease, Tenant shall pay all of its utilities in
relation to the premises; water, sewer, rubbish removal, gas, and
electricity.
ARTICLE III. SECURITY DEPOSIT
On or before July 1, 1995, Tenant shall deposit with Lessor the
sum of Two Thousand Six Hundred Eighty Two and 21/100 Dollars
($2,682.21) (the"Security Deposit") as security for the full and
faithful performance of this Lease to be performed by Tenant. If
Tenant defaults with respect to any provision of this Lease,
including, without limitation, the provisions relating to the
payment of Base Rent, or Additional Rent, the repair of damage to
the Premises and/or cleaning or restoring the Premises upon
termination of this Lease, Lessor may use, apply or retain all or
any part of this security deposit for the payment of any Base
Rent, or Additional Rent or other sum in default and any amounts
which Lessor may spend or become obligated to spend by reason of
Tenant's default to the full extent permitted by law. If any
portion of said deposit is so used, applied or retained, Tenant
shall, within the (10 days after written demand therefor, deposit
cash with Lessor in an amount sufficient to restore the security
deposit to an amount equal to one monthly installment of the
then-applicable Base Rent, and other charges payable hereunder by
Tenant multiplied by the number of months worth of Base Rent
represented by the initial security deposit, and Tenant's failure
to
2
<PAGE>
do so shall be a material default and breach of the Lease. Lessor
shall not be required to keep any security deposit separate from
its general funds, and Tenant shall not be entitled to interest
on any such deposit. If Tenant shall fully and faithfully perform
every provision of this Lease to be performed by it, the security
deposit or any balance thereof shall be returned to Tenant or to
the last assignee of Tenant's interest hereunder within sixty
days after the expiration of the Term.
ARTICLE IV. OVERDUE AMOUNTS--RENT INDEPENDENT
Any installment of Base Rent, or other charges to be paid by
Tenant accruing under the provisions of this Lease, which shall
not be paid when due, shall bear interest at the rate of eighteen
percent (18%) per annum from the date when the same is due until
the same shall be paid, but if such rate exceeds the maximum
interest rate permitted by law, such rate shall be reduced to the
highest rate allowed by law under the circumstances. Tenant's
covenants to pay the Base Rent and the Additional Rent are
independent of any other covenant, condition, provision or
agreement herein contained.
ARTICLE V. INSURANCE
Lessor shall keep the Building insured for the benefit of Lessor
in an amount equivalent to the full replacement value thereof
(excluding foundation, grading and excavation costs) against:
(a) loss or damage by fire; and
(b) such other risk or risks of a similar or dissimilar nature
as are now, or may in the future be, customarily covered with
respect to buildings and improvements similar in construction,
general location, use, occupancy and design to the Building,
including, but without limiting the generality of the foregoing,
windstorms, hail, explosion, vandalism, malicious mischief, civil
commotion, and such other coverage as may be deemed necessary by
Lessor, providing such additional coverage is obtainable and
providing such additional coverage is such as is customarily
carried with respect to buildings and improvements similar in
construction, general location, use, occupancy and design to the
Building.
These insurance provisions shall in no way limit or modify any of
the obligations of Tenant under any provision of this Lease
Agreement. Lessor agrees that such policy or policies of
insurance shall permit releases of liability as provided herein
and/or waiver of subrogation clause as to Tenant and Lessor
waives, releases and discharges Tenant from all claims or demands
whatsoever which Lessor may have or acquire arising out of damage
to or destruction of the Building or loss of use thereof
occasioned by fire or other casualty, which such claim or demand
may arise because of the negligence or fault of Tenant, its
agents, employees, customers or business invitees, or otherwise,
and Lessor agrees to look to the insurance coverage only in the
event of such loss. Notwithstanding the foregoing, Tenant shall
be obligated to pay the rental called for hereunder in the event
of damage to or destruction of the Premises or the Building if
such damage or destruction is occasioned by the negligence or
fault of Tenant, its agents or employees. Insurance premiums paid
thereon shall be a portion of the "Operating Expenses" described
in Rental Adjustment hereof.
Tenant shall keep all of its machinery, equipment, furniture,
fixtures, personal property (including also property under the
care, custody, or control of Tenant) and business interests which
may be located in, upon, or about the Premises insured for the
benefit of Tenant in an amount equivalent to the full replacement
value or insurable value thereof against:
(a) loss or damage by fire; and
(b) such other risk or risks of a similar or dissimilar nature
as are now, or may in the future be, customarily covered with
respect to a tenant's machinery, equipment, furniture, fixtures,
personal property and business located in a building similar in
construction, general location, use, occupancy and design to the
Building, including, but without limiting the generality of the
foregoing, windstorms, hail, explosions, vandalism, theft,
malicious mischief civil commotion, and such other coverage as
Tenant may deem appropriate or necessary.
Tenant agrees that such policy or policies of insurance shall
permit releases of liability as provided herein and/or waiver of
subrogation clause as to Lessor and Tenant waives, releases and
discharges Lessor, its agents, employees, and contractors from
all claims or demands whatsoever which Tenant may have or acquire
arising out of damage to or destruction of the machinery,
equipment, furniture, fixtures, personal property, and loss of
use thereof occasioned by fire or other casualty, whether such
claim or demand may arise because of the negligence or fault of
Lessor, its agents, employees, contractors or otherwise, and
Tenant agrees to look to the insurance coverage only in the event
of such loss.
3
<PAGE>
Lessor shall, as a portion of the Operating Expenses maintain,
for its benefit and the benefit of its managing agent, general
public liability insurance against claims for personal injury,
death or property damage occurring upon, in or about the
Building, such insurance to afford protection to Lessor and its
managing agent.
Tenant shall, at Tenant's sole cost and expense but for the
mutual benefit of Lessor, its managing agent and Tenant, maintain
general public liability insurance against claims for personal
injury, death or property damage occurring upon, in or about the
Premises, such insurance to afford protection to Lessor, its
managing agent and Tenant to the limit of not less than One
Million and No/100 Dollars ($1,000,000.00) in respect to the
injury or death to a single person, and to the limit of not less
than One Million and No/100 Dollars ($1,000,000.00) in respect to
any one accident, and to the limit of not less than Five Hundred
Thousand and No/100 Dollars ($500,000.00) in respect to any
property damage. Such policies of insurance shall be written in
companies reasonably satisfactory to Lessor, naming Lessor and
its managing agent as additional insured thereunder, and such
policies, or a memorandum or certificate of such insurance, shall
be delivered to Lessor endorsed "Premium Paid" by the company or
agency issuing the same or accompanied by other evidence
satisfactory to Lessor that the premium thereon has been paid. At
such time as insurance limits required of tenants in office
buildings in the area in which the Building is located are
generally increased to greater amounts, Lessor shall have the
right to require such greater limits as my then be customary.
Tenant agrees to include in such policy the contractual liability
coverage insuring Tenant's indemnification obligations provided
for herein. Any such coverage shall be deemed primary to any
liability coverage secured by Lessor.
Tenant agrees to indemnify and save Lessor and its managing agent
harmless against and from any and all claims, loss, damage and
expense by or on behalf of any person or persons, firm or firms,
corporation or corporations, arising from any breach or default
on the part of Tenant in the performance of any covenant or
agreement on the part of Tenant to be performed, pursuant to the
terms of this Lease, or arising from any act of negligence on the
part of Tenant or its agents, contractors, servants, employees or
licensees, or arising from any accident, injury or damage to the
extent caused by Tenant, its agents, and employees to any person,
firm or corporation occurring during the term of this Lease or
any renewal thereof, in or about the Premises and the Building,
and from and against all costs, reasonable counsel fees, expenses
and liabilities incurred in or about any such claim or action or
proceeding brought thereon; and in case any action or proceeding
be brought against Lessor or its managing agent by reason of any
such claim, Tenant, upon notice from Lessor, covenants to resist
or defend such action or proceeding by counsel reasonably
satisfactory to Lessor.
Tenant agrees, to the extent not expressly prohibited by law,
that Lessor, its agents, employees and servants shall not be
liable, and Tenant waives all claims for damage to property and
business sustained during the term of this Lease by Tenant
occurring in or about the Building, resulting directly or
indirectly from any existing or future condition, defect, matter
or thing in the Premises, the Building, or any part thereof, or
from equipment or appurtenances becoming out of repair or from
accident, or from any occurrence or act or omission of Lessor,
its agents, employees or servants, or any tenant or occupant of
the building or any other person. This paragraph shall apply
especially, but not exclusively, to damage caused as aforesaid or
by the flooding of basements or other subsurface areas, or by
refrigerators, sprinkling devices, air conditioning apparatus,
water, snow, frost, steam, excessive heat or cold, falling
plaster, broken glass, sewage, gas, odors or noise, or the
bursting or leaking of pipes or plumbing fixtures, and shall
apply equally, whether any such damage results from the act or
omission of other tenants or occupants in the Building or any
other persons, and whether such damage be caused by or result
from any of the aforesaid, or shall be caused by or result from
other circumstances of a similar or dissimilar nature.
Anything therein to the contrary notwithstanding, in the event
any damage to the Building results from any act or omission of
Tenant, its agents, employees or invitees, and all or any portion
of Lessor's loss is "deductible", Tenant shall pay to Lessor the
amount of such deductible loss (not to exceed $1,000 per event).
All property in the Building or on the Premises belonging to
Tenant, its agents, employees, invitees or otherwise located at
the Premises, shall be at the risk of Lessee only, and Lessor
shall not be liable for damage thereto or theft, misappropriation
or loss thereof and Tenant agrees to defend and hold Lessor, its
agents, employees and servants harmless and indemnify them
against claims and liability for injuries to such property.
ARTICLE VI. REPAIRS
Tenant agrees to keep the demised premises in as good condition
and repair as they were in at the time Tenant took possession of
the same, reasonable wear and tear excepted; to keep the leased
premises in a clean and sanitary condition; not to commit any
nuisance or waste on the leased premises; overload the premises;
throw foreign substances in plumbing facilities; or waste any of
the utilities furnished by Landlord. If Tenant shall
4
<PAGE>
fail to keep and preserve the demised premises in the state or
condition required by the provisions of this paragraph, the
Lessor may at its option, put or cause the same to be put into
the condition and state of repair agreed upon and in such case,
the Tenant, on demand, shall pay the cost thereof. Tenant agrees
to abide by such rules and regulations as may be reasonably
promulgated by the Landlord from time to time.
ARTICLE VII. TENANT COVENANTS:
A. Tenant as a material part of the consideration to be rendered
to Lessor under this lease, hereby waives all claims against
Lessor for damages to goods, wares and merchandise, in, upon or
about said premises and for injuries to persons in or about said
premises, from any cause arising at any time and Tenant will hold
Lessor exempt and harmless for and on account of any damage or
injury to any person or to the goods, wares and merchandise of
any person, arising from the use of the premises by Tenant, or
arising from the failure of Tenant to keep the premises in good
condition as herein provided. Lessor shall not be liable to
Tenant for any damage by or from any act or negligence of any co-
tenant or other occupant of the building, or by any owner or
occupant of adjoining or contiguous property. Tenant agrees to
pay for all damage to the building, as well as all damage to
Tenants or occupants thereof caused by Tenant's misuse or neglect
of said premises, its apparatus or appurtenances.
B. Tenant shall not use, or permit said premises, or any part
thereof, to be used, for any purpose or purposes other than the
purpose or purposes for which said premises are hereby leased, to
wit: production of visual and audio communications and no use
shall be made or permitted to be made of said premises, nor acts
done, which will increase the existing rate of insurance upon the
building in which said premises are located or cause a
cancellation of any insurance policy covering said building or
any part thereof, nor shall Tenants sell, or permit to be kept,
used, or stored in or about said premises any article which may
be prohibited by the standard form of fire insurance policy.
Tenant shall not commit or suffer to be committed any waste upon
the said premises, or any public or private nuisance, or other
act or thing which may disturb the quiet enjoyment of any other
of any other Tenant in the building in which the premises are
located, nor, without limiting the generality of the foregoing,
shall Tenant allow said premises to be used for any improper,
immoral, unlawful or objectionable purpose and nothing shall be
prepared, manufactured or mixed in said premises which might emit
an odor in the corridors of said building, nor shall Tenant use
any apparatus, machinery or device in or about the demised
premises which shall make any noise or set up any vibration, or
which shall in any way increase the amount of electricity, water
or other service to be furnished or supplied under this lease.
Tenant shall comply with all requirements of all municipal, state
and federal authorities now in force or which may hereafter be in
force pertaining to said premises and shall faithfully observe in
the use of the premises all municipal ordinances and state and
federal statutes now in force or which may hereafter be in force.
Tenant will reimburse Lessor for any expense or damage incurred
by Lessor in enforcing any of the covenants set out in this
Lease.
ARTICLE VIII. ASSIGNMENT AND SUBLETTING
Tenant shall not assign this lease or any interest therein, and
shall not sublet the said premises or any part thereof, or any
right or privilege appurtenant thereto or suffer any other
person, firm or corporation to occupy or use the said premises,
or any portion thereof, without the written consent of Lessor
first had and obtained, and a consent of one assignment,
subletting, occupation or use by any other person, firm or
corporation, shall not be deemed to be a consent to any
subsequent assignment, subletting, occupation or use by any other
person, firm or corporation. Any such assignment or subletting
without such consent shall be void, and shall, at the option of
Lessor, terminate this Lease. This Lease shall not, nor shall any
interest therein, be assignable, as to the interest of Tenant by
operation of law, without the written consent of Lessor. Lessor's
right to assign this lease is and shall remain unqualified. The
consent of Lessor to an assignment, subletting, occupation or use
shall not be unreasonably withheld.
ARTICLE IX. SUBORDINATION
This Lease shall be subject and subordinate to any mortgage, deed
of trust or ground lease now or hereafter placed upon the
Premises, the Building, the Property, or any portion thereof by
Lessor, its successors or assigns, and to amendments,
replacements, renewals and extensions thereof. Tenant agrees at
any time hereafter, upon demand, to execute and deliver any
instruments, releases or other documents that may be reasonable
required for the purpose of subjecting and subordinating this
Lease, as above provided, to the lien of any such mortgage, deed
of trust or ground lease. It is agreed, nevertheless, that as
long as Tenant is not in default in the payment of Base Rent,
Additional Rent, and the payment of other charges to be paid by
Tenant under this Lease, and the performance of all covenants,
agreements and conditions to be performed by Tenant under this
Lease, then neither Tenant's right to quiet enjoyment under this
Lease, nor the right of Tenant to continue to occupy the Premises
and to conduct its business thereon, in accordance with the terms
of this Lease as against any lessor, tenant, mortgagee, trustee,
or their successors or assigns shall be interfered with.
5
<PAGE>
The above subordination shall be effective without the necessity
of the execution and delivery of any further instruments on the
part of Tenant to effectuate such subordination. Notwithstanding
anything hereinabove constrained in this Article X, in the event
the holder of any mortgage, deed of trust or ground lease shall
at any time elect to have this Lease constitute a prior and
superior lien to this mortgage, deed of trust or ground lease,
then, and in such event, upon any such holder or landlord
notifying Tenant to that effect in writing, this Lease shall be
deemed prior and superior in lien to such mortgage, deed of
trust, ground lease, whether this Lease is dated prior to or
subsequent to the date of such mortgage, deed of trust or ground
lease and Tenant shall execute such attainment agreement as may
be reasonably requested by said holder.
Tenant agrees, provided the mortgagee, ground lessor or trust
deed holder under any mortgage, ground lease, deed of trust or
other security instrument shall have notified Tenant in writing
(by the way of a notice of assignment of lease or otherwise) of
its address, Tenant shall give such mortgagee, ground lessor or
trust deed holder, or other secured party, simultaneously with
delivery of notice to Lessor, by registered or certified mail, a
copy of any such notice of default served upon Lessor. Tenant
further agrees that such mortgagee, ground lessor or trust deed
holder, or other secured party shall have the right to cure any
alleged default during the same period that Lessor has to cure
such default.
6
<PAGE>
ARTICLE X. INSTALLATION OF IMPROVEMENTS; ALTERATIONS
Subject to Tenant's performance of its obligations hereunder,
Lessor agrees to install at Lessor's cost and expense the
improvements described in Exhibit A attached hereto. All other
improvements to the Premises shall be installed at the cost and
expense of Tenant (which cost shall be payable on demand by
Lessor as Additional Rent), but only in accordance with plans and
specifications which have been previously submitted to and
approved in writing by Lessor, and only by Lessor or by
contractors and subcontractors approved in writing by Lessor
(which approval shall not be unreasonably withheld). Tenant shall
not be allowed to make any alterations, modifications,
improvements, additions, or installations if such action results
or would result in a labor dispute or otherwise would materially
interfere with Lessor's operation of the building. All
alterations, additions, improvements and partitions erected by
Tenant shall be and remain the property of Tenant during the term
of this Lease and Tenant shall, unless Lessor otherwise elects as
hereinafter provided, remove all alterations, additions,
improvements and partitions erected by Tenant and restore the
Premises to its original condition by the date of expiration or
termination of this Lease or upon earlier vacating of the
Premises and title shall pass to Lessor under this Lease as by a
bill of sale. All such removals and restoration shall be
accomplished in a good workmanlike manner by contractors approved
in writing by Lessor so as not to damage the primary structure or
structural qualities of the Building. All alterations, additions
or improvements proposed by Tenant shall be constructed (a) in a
first-class manner consistent with the Building; and (b) in
accordance with all governmental laws, ordinances, rules and
regulations, including, without limitation, the ADA. Tenant
shall, prior to construction, provide such assurances to Lessor
including but not limited to, waivers of lien, surety company
performance and payment bonds and personal guaranties of
individuals of substance, as Lessor shall require to assure
payment of the costs thereof and to protect Lessor against any
loss from mechanics', laborers', materialmen's or other liens. If
such improvements are not being performed by Lessor, Tenant shall
permit Lessor, if Lessor so desires, to supervise construction
operations in connection with such work. Tenant will pay Lessor a
reasonable fee for Lessor's inspection and engineering time. In
no event will such supervision or right to supervise by Lessor,
nor shall any approvals given by Lessor under this Lease,
constitute any warranty by Lessor to Tenant of the adequacy of
the design, workmanship or quality of such work or materials for
Tenant's intended use or impose any liability upon Lessor in
connection with the performance of such work.
ARTICLE XI. DAMAGE BY FIRE OR OTHER CASUALTY
In the event of a partial destruction of said premises during the
term of this lease, from any cause, Lessor shall forthwith repair
the same, provided such repairs can be made within ninety (90)
days and such partial destruction shall in nowise annul or void
this Lease, except that Tenant shall be entitled to a
proportionate deduction of rent while such repairs are being
made, if such repairs shall interfere with the business carried
on by Tenant in the said premises. In the event that such repairs
cannot be made within such one hundred eighty (180) day period,
this Lease may be terminated at the option of either party. In
the event that the building in which the demised premises are
situated is destroyed to the extent of sixty-five percent (65%)
or more of the replacement cost thereof, Lessor may elect to
terminate this Lease, whether the demised premises be injured or
not. A total destruction of the building in which the said
demised premises are situated shall terminate this Lease. In the
event of any dispute between Lessor and Tenant relative to the
provisions of this paragraph, they shall each select an
arbitrator, the two arbitrators so selected shall select a third
arbitrator, and the three arbitrators so selected shall hear and
determine the controversy and their decision thereon shall be
final and binding upon both Lessor and Tenant, who shall bear the
cost of such arbitration equally between them.
ARTICLE XII. EMINENT DOMAIN
If the demised premises are taken by any public authority under
the power of eminent domain, then the term of the Lease shall
cease as of the date of possession by such public authority, and
Lessor shall make a pro-rata refund of any rent that may have
been paid in advance. All damages awarded for such taking under
the power of eminent domain shall belong to and be the property
of Lessor, irrespective of the basis upon which they are awarded.
7
<PAGE>
ARTICLE XIII. SURRENDER OF PREMISES
A. On the last day of the term of this Lease, or on the sooner
termination thereof, Tenant shall peaceably surrender the leased
premises in good condition and repair, wear and tear, and damage
from fire or other casualty for which insurance is normally
procured excepted. On or before the last day of the term of the
Lease or the sooner termination thereof, Tenant shall at its
expense remove all of its equipment from the Leased premises,
and any property not removed shall be deemed abandoned. All
alterations, additions and fixtures, other than Tenant's
equipment, which have been made or installed by either Lessor or
Tenant upon the lease premises shall remain as Lessor's property
and shall be surrendered with the leased premises as a part
thereof. If the leased premises be not surrendered at the end of
the term or sooner termination thereof, Tenant shall indemnify
Lessor against loss or liability resulting from delay by Tenant
in so surrendering the premises, including, without limitation,
claims made by any succeeding Tenant founded on such delay.
Tenant shall promptly surrender all keys for the leased premises
to Lessor at the place then fixed for the payment of rent and
shall inform Lessor of combinations on any locks and safes on the
leased premises.
B. In the event Tenant remains in possession of the premises
herein leased after the expiration of the term of this Lease and
without the execution of a new lease, the Tenant shall be deemed
to be occupying said premises as a Tenant from month to month,
subject to all the conditions, provisions and obligations of this
lease insofar as the same can be applicable to a month-to-month
tenancy, but the monthly rental set forth on page one of this
Lease shall be increased by a sum equal to One Hundred Fifty
Percent (150%) of said monthly rental.
8
<PAGE>
ARTICLE XIV. NOTICES
All notices to be given Tenant shall be given in writing
personally or by depositing the same in the United State Mail,
postage prepaid and addressed to Tenant at said premises, whether
or not Tenant has departed from, abandoned or vacated the
premises.
All notices to be given to Lessor shall be given in writing
personally or by depositing the same in the United State Mail,
postage prepaid and addressed to Charles and Sharron Mills,
650 S. E. Sixth Avenue, Pompano Beach, FL 33060.
Each term and each provision of this Lease to be performed by
Tenant shall be construed to be both a covenant and a condition.
All preliminary negotiations are merged into and incorporated in
this lease. This lease shall be modified or amended only by an
agreement in writing signed by the parties hereto. All provisions
hereof shall be binding upon the heirs, personal representatives,
successors and assigns of each party hereto.
ARTICLE XV. MISCELLANEOUS
A. The Lessor or its employees or agents shall have the right to
enter the premises at all reasonable times for the purpose of
inspection, cleaning, repairing, altering or improving the same
or the building of which the premises is a part. Right to enter
to be during tenant's business hours with prior notice.
B. Tenant agrees to pay all sums of money in respect to any
labor, services, materials, supplies or equipment furnished or
alleged to have been furnished to Tenant in or about the demised
premises which may be secured by any mechanic's lien or other
lien against the demised premises or the building in which the
demised premises are situated or the Lessor's interest therein
and will cause each such lien to be discharged at the time
performance of any obligation secured thereby matures, provided
that Tenant may contest such lien by depositing with Lessor a
deposit of cash in an amount sufficient to satisfy such lien, all
attorney's fees thereon and all interest, cost and disbursements
thereon, or may make such deposit with the District Court of the
County in which the demised premises are situated. The Lessor
shall have the right to post and maintain on the demised
premises, notices of non-responsibility for mechanics' liens
under the laws of the State of Minnesota.
C. The appointment of a receiver to take possession of all of
the assets of Tenant or a general assignment by Tenant for the
benefit of creditors or any action taken or suffered by Tenant
under any insolvency or bankruptcy act shall constitute a breach
of this lease by Tenant. The Tenant's duty to pay rent shall not
terminate if the Tenant abandons the premises, is removed from
the premises or if the Lessor re-enters the premises in
accordance with the Lease provisions. In addition, Lessor
specifically retains and preserves all of its common law rights
and remedies. In the event of any breach of this Lease by Tenant,
then Lessor, besides other rights or remedies he may have, shall
have the immediate right of reentry and may remove all persons
and property from the demised premises; such property may be
removed and stored in any other place in the building in which
the demised premises are situated, or in any other place, of the
account of, and at the expense and risk of the Tenant. Tenant
hereby waives all claims for damages which may be caused by the
re-entry of Lessor and taking possession of the demised premises
or removing or storing the furniture and property of Tenant as
herein provided, and will save Lessor harmless from any loss,
costs or damages occasioned Lessor thereby, and no such re-entry
shall be considered or construed to be a forcible entry. Should
Lessor elect to re-enter, as herein provided, or should he take
possession pursuant to legal proceedings or pursuant to any
notice provided for by law, he may either terminated this Lease
or he may from time to time, without terminating this Lease,
relet said premises or part thereof for such term or terms and at
such rental or rentals and upon such other terms and conditions
as Lessor in its sole discretion my deem advisable, with the he
right to make alterations and repairs to said premises. Rentals
received by Lessor from such reletting shall be applied: First,
to the payment of any indebtedness other than rent due hereunder
from Tenant to Lessor; Second, to the payment of rent due and
unpaid hereunder; Third, to the payment of any cost of such
reletting; Fourth, to the payment of any cost of any alterations
and repairs to the premises; and the residue, if any, shall be
held by Lessor and applied in payment of future rent as the same
may become due and payable hereunder. Should such rentals
received from such reletting during any month be less than that
agreed to be paid during that month by Tenant hereunder, then
Tenant shall pay such deficiency to Lessor. Such deficiency shall
be calculated and paid monthly. No such re-entry or taking
possession of said premises by Lessor shall be construed as an
election on its part to terminate this Lease unless a written
notice of such intention be given to Tenant or unless the
termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any such reletting without
termination, Lessor may at any time thereafter elect to terminate
this lease for such previous breach. Should Lessor at any time
terminate this Lease for any breach, in addition to any other
remedy he may have, he may recover from Tenant all damages he may
incur by reason of such breach, including the cost or recovering
the premises, and including the worth at the time of such
termination of the excess, if any, of the amount of rent and
charges equivalent to rent reserved in
9
<PAGE>
this lease for the remainder of the stated term over the then
reasonable rental value of the premises for the remainder of the
stated term.
D. The conditions, covenants and agreements in the foregoing
Lease contained to be kept and performed by the parties hereto
shall be binding upon said respective parties, their heirs,
executors, administrators successors and assigns.
E. The Tenant shall pay promptly all taxes and assessments
levied on or against Tenant's property on said premises, and all
license, permit, occupational and inspection fees assessed or
charged against said premises or either party to this Lease by
reason of the Tenant's use or occupancy of said premises, and the
Tenant shall hold the Lessor free and harmless from any loss,
damage or expense arising out of or by reason of any charges
specified in this paragraph.
10
<PAGE>
F. This Agreement and its attached Exhibits constitutes the
entire agreement between the parties, and each party understands
that there are no other oral understandings or agreements other
than those set out herein. This agreement cannot be added to,
altered or amended in any way except by a written agreement
signed by both of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Lease
Agreement, the day and year first above written.
LESSOR
IN THE PRESENCE OF: Charles Mills
/s/ Charles Mills
---------------------------- ----------------------------
Sharron Mills
/s/ Sharron Mills
----------------------------
TENANT
Art-In-Motion, Inc.
/s/ John Gulfuss
---------------------------- ----------------------------
By:
-----------------------
Its: CEO
-----------------------
JJD:#6
EXHIBIT "B"
HAZARDOUS SUBSTANCES
The TENANT, its employees and/or invitees shall not without the prior written
consent of LESSOR bring into the Demised Premises or common areas, or permit to
be in the Demised Premises or common areas, or release from the Demised Premises
or common areas any "HAZARDOUS SUBSTANCES." For Purposes hereof, "HAZARDOUS
SUBSTANCES" shall mean any toxic or hazardous substance or waste pollutant or
contaminant (including, without limitation, asbestos, urea formaldehyde, the
group of organic compounds known as polychlorinated biphenyls petroleum products
including gasoline, fuel, oil crude oil and various constituents of such
products) and any hazardous substance as defined in any state, local or federal
law, regulation, rule, policy or order relating to the protection of the
environment.
The LESSOR may withhold or condition consent as it sees fit, in its absolute
discretion. Notwithstanding any termination of the Lease, the TENANT will
indemnify and hold the LESSOR harmless from any cost, expense, or damage
resulting from a violation of the Exhibit, and will, upon request from the
LESSOR promptly remove at its sole expense any material so brought or released
in violation of this Exhibit. The LESSOR may, from time to time inspect the
Leased Premises to determine compliance with this Exhibit, and require the
TENANT certify to such compliance. A violation of this Exhibit is a breach for
which the LESSOR need not provide notice or a period to cure, and any contrary
provision in this Lease is hereby modified to so provide.
EACH ITEM ON THE FOLLOWING CHECKLIST MUST BE ANSWERED
11
<PAGE>
1. Will any chemicals be used or stored on the premises? YES NO x
--- ---
If yes, list all chemicals that are to be used or stored in the premises.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
2. Will any materials be used or stored on the premises that appear on any
local, state or federal list of "HAZARDOUS SUBSTANCES" YES NO x
If yes, list all items in the space provided. --- ---
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
3. Do you have any permits to handle, use or store "HAZARDOUS SUBSTANCES?"
YES NO x
--- ---
IF YES, ATTACH COPIES OF THESE PERMITS TO THIS EXHIBIT.
4. Will any flammables be used or stored on the premises? YES NO x
--- ---
If yes, list type, quantities and how the flammable will be stored.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
Tenant certifies that the above information is true, complete and correct.
Further, Tenant understands and agrees that no substances other than those
listed above and approved by the Lessor may be used or stored on the premises
and that any additions to the above list must be approved in writing.
- ----------
INITIAL
12
<PAGE>
Exhibit 10.11
BROKERAGE ASSET PURCHASE AGREEMENT
THIS AGREEMENT, is made and entered into this 31st day of December, 1995 by
and between Norcom Resources, Inc., a Minnesota corporation ("Buyer") and Global
MAINTECH, Inc., a Minnesota corporation ("Seller").
WHEREAS, Seller has been in the mainframe brokerage business for over three
years and has determined to exit the mainframe brokerage business ("Brokerage
Business"); and,
WHEREAS, Buyer or Buyer's executive officer and principal shareholder has
had numerous years of experience in this same business and is interested in
remaining in this business; and,
WHEREAS, the parties hereto mutually agree on the terms of a sale of the
Brokerage Business from Seller to Buyer.
NOW, THEREFORE, in consideration of the covenants and agreements contained
in this Agreement and other good and valuable consideration, the receipt and
adequacy of which are acknowledged by Buyer and Seller, the parties agree as
follows:
ARTICLE 1.
PURCHASE OF ASSETS; LIMITED ASSUMPTION OF LIABILITIES
-----------------------------------------------------
1.1 Purchase of Assets from Seller. Subject to the terms and conditions
hereof, Seller agrees on the Closing Date (as hereinafter defined) to assign,
sell, transfer, convey, and deliver to Buyer, and Buyer agrees on the Closing
Date to purchase from Seller, all of the assets and personal property of Seller
(excepting only the assets specifically identified as "Excluded Assets" in
Section 1.2) related to or used in the operation of its brokerage business,
wherever the same may be located (collectively referred to as the "Brokerage
Assets"), including without limitation, the following:
(a) All of Seller's right title and interest in the brokerage business;
(b) Office furniture and warehouse equipment, including those items
identified on Exhibit 1.1 (b) ("Equipment");
(c) The vehicle identified as the Infiniti, 4 door model Q45, 1994 model
year, serial number JNKNGO1DORM251284 ("Vehicle") and subject to a lease as
provided in subsection 3.3(c) hereof.
<PAGE>
(d) All intangible personal property, business records, customer lists and
goodwill related to the brokerage business, provided that Buyer will
provide copies thereof or access thereto upon request by Seller for
reasonable business purposes, ("Intangible Property").
(e) All inventory, including raw materials, supplies, work in process and
finished inventory of the brokerage business as of the date of this
Agreement ("Inventory") a partial list of which is attached on Exhibit 1.1
(e).
(f) All permits, licensing approvals and notifications, governmental or
otherwise, relating to the brokerage business ( "Licenses and Permits");
and
(g) All other contract rights related to the brokerage business, subject to
the terms and conditions thereof ("Contracts").
1.2 Excluded Assets. Notwithstanding anything herein to the contrary,
Buyer does not purchase, and Seller does not sell, any of the following assets
("Excluded Assets"):
(a) Seller's corporate minute book and corporate records (provided that
Seller will provide copies thereof relating to the brokerage business to
Buyer upon request by Buyer for reasonable business purposes).
(b) Any repayments or deposits of obligations which Buyer does not assume
under Section 1.3 below.
(c) All notes receivable, rights to payment and accounts receivable of the
brokerage business as of the date of this Agreement ("Accounts
Receivable").
(d) (i) All assumed names under which Seller conducts its business
including Maintech and MAINTECH Resources,
(ii) All common law tradenames, trademarks or service marks and all
goodwill associated therewith ("Trademarks");
It is not the intention of either parties herein to include any assets
which are not specifically defined as Brokerage Assets or to include by error
any assets defined as Brokerage Assets which the Seller does not own as of the
date of this Agreement. Any such assets under lease by Seller to either R. P.
Capital Corporation and Data Sales Co. attached hereto as Exhibits 1.2.1 and
1.2.2 are to be used by Buyer and buyer agrees to allow Seller to retake such
assets under lease at the end of the lease term or if it can be arranged with
Lessor, Seller will allow Buyer to purchase said assets at its cost at the end
of the respective lease terms. This right to usage during the lease term does
not constitute an assignment of either of said leases.
1.3 Liabilities and Obligations Assumed. Buyer shall not assume any
liabilities, obligations or undertakings of Seller of any kind or nature
whatsoever, whether fixed or
<PAGE>
contingent, known or unknown, determined or determinable, due or not yet due
(excepting only liabilities and obligations specifically identified on Exhibit
1.3 (a)). By way of example, and not by way of limitation, buyer specifically
disclaims responsibility for:
(a) Any federal, state or local taxes (or claims for refunds relating to
such liabilities) based upon or measured by income or profits from
operation of its brokerage business through the date of this Agreement; and
(b) Any obligation incurred by Seller for accounting, legal or other
professional fees which are related to the consummation of the transaction
contemplated herein.
1.4 Sales, Use and Deed Taxes. Seller shall be responsible for payment of
any sales, use or deed taxes and related transfer or filing fees assessable with
respect to the transfer of the Brokerage Assets contemplated herein.
ARTICLE 2.
PURCHASE PRICE AND PAYMENT
--------------------------
2.1 Purchase Price. The purchase price for the Brokerage Assets shall be
the sum of seventy thousand Dollars ($70,000) and the sum of the liabilities
assumed on Exhibit 1.3("Purchase Price").
2.2 Payment of Purchase Price. The Purchase Price shall be paid as
follows:
(a) Cash Payment. Buyer shall deliver to Seller at the Closing $1.00 the
receipt and sufficiency of which is hereby acknowledged.
(b) Notes. Buyer shall deliver its two Notes, in the form attached
hereto as:
Exhibit 2.2 (i) the first payable to the order of Seller in the amount
of $35,000, payable in twelve equal monthly installments beginning
March 31, 1996 of two thousand nine hundred sixteen Dollars and sixty-
seven cents ($2,916.67), each of which shall be deemed to include
interest at the rate of ten and one-quarter percent (10.25%) per annum
on the unpaid balance ("Note 1"). Said Note 1 shall provide for
Buyer's right to offset against its obligations thereunder any amounts
due Buyer from Seller pursuant to this Agreement.
Exhibit 2.2 (ii) the second payable to the order of Seller in the
amount of $35,000, payable in one installment on March 31, 1997 which
payment shall be deemed to include interest at the rate of ten and
one-quarter percent (10.25%) per annum on the unpaid balance ("Note
2"). Said Note 2 shall provide for Buyer's right to offset against its
obligations thereunder any amounts due Buyer from Seller pursuant to
this Agreement.
<PAGE>
(c) Assumption of certain liabilities. Buyer shall negotiate to pay the
third parties, to whom the liabilities listed on Exhibit 1.3 are due,
directly with the third party(s).
2.3 Allocation of Purchase Price. The purchase price is hereby allocated
among the Brokerage Assets as set forth in Exhibit 2.3.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller makes the following representations and warranties to the best of
its knowledge to Buyer with the intention that Buyer may rely upon the same and
acknowledge that the same shall be true on the date hereof and as of the Closing
Date (as if made at the Closing) and shall survive the Closing of this
transaction.
3.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota, has all
requisite power and authority, corporate and otherwise, to own its properties
and assets and to conduct its business.
3.2 Financial Statements. Seller has furnished Buyer with a true and
complete copy of its balance sheets, statements of changes in financial
condition and statements of income for the fiscal year ending December 31, 1994
and for interim quarterly periods ended September 30, 1995 of Buyer's parent
company and monthly internal income statements for October and November 1995
referred to as "division allocation of standard operating income/expense" and
information sheet known as "spin-off.xls" which serves as an initial issues
worksheet for the sale of the Brokerage Assets, all of which are attached hereto
as Exhibit 3.2.
3.3 Title to Assets. Except as listed below, Seller holds good and
marketable title to the Brokerage Assets free and clear of all liens,
encumbrances, licenses or leases:
(a) Pursuant to a Secured Promissory Note and Security Agreement dated
December 6, 1994 as amended, the holder, Global MAINTECH Corporation,
formerly known as Mirror Technologies, Incorporated, has a security
interest in the Brokerage Assets. A copy of the release of the security
interest in the Brokerage Assets by Global MAINTECH Corporation is attached
hereto as Exhibit 3.3 (a).
(b) Pursuant to a Promissory Note dated June 15, 1994, Paul F. Burger held
a security interest in the Brokerage Assets. Mr. Burger canceled this June
15, 1994 Promissory Note and for value received accepted an unsecured
Promissory Note dated December 31, 1995 in the amount of $100,000. A copy
of this December 31, 1995 unsecured Promissory Note is attached hereto as
Exhibit 3.3 (b).
(c) Seller assigns the leases of the Vehicle from Infiniti Financial
Services a copy of which is attached hereto as Exhibit 3.3 (c).
<PAGE>
3.4 Inventory. The Inventory represents the stock in trade and normal
supplies of Seller on hand as of the close of business on the date of this
Agreement. Due to the nature of the Inventory and Buyer's extensive experience
in selling the Inventory, the Seller makes no representations and warranties as
to the merchantability or saleability or condition of the Inventory.
3.5 Licenses and Permits. The Seller is not aware of any permits,
licenses, approvals and notifications, governmental or otherwise, the absence of
which would have a material adverse effect on its brokerage business. Seller
will cooperate with Buyer if any Licenses or Permits owned by Seller as of the
Closing Date are required to be transferred to Buyer to reasonably complete this
transaction.
3.6 Employee Plans. None of the Seller's employee plans are a part of
this Agreement and any employees of Seller relating to the Brokerage Assets are
considered to have resigned. Accordingly, Seller makes no representation or
warranties as regards its employee plans except that any vested benefits of the
resigned employees of the brokerage business are fully funded.
3.7 Insurance. Seller has maintained through the date of this Agreement
insurance on Seller's tangible real and personal property and assets, whether
owned or leased, against loss or damage by fire or other casualty.
3.8 Binding Obligation. This Agreement constitutes the legal, valid and
binding obligation of Seller in accordance with the terms hereof. Seller has all
requisite corporate power and authority, including the approval of its Board of
Directors, to execute, perform, carry out the provisions of and consummate the
transactions contemplated in this Agreement.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer makes the following representations and warranties to the best of its
knowledge to Seller, with the intention that Seller may rely upon the same, and
acknowledge that the same shall be true as of the Closing Date (as if made at
the Closing) and shall survive the Closing of this transaction.
4.1 Organization. Buyer is a corporation, duly organized, validly
existing in good standing under the laws of the State of Minnesota, and has all
requisite power and authority, corporate and otherwise, to own its properties
and conduct the business in which it is presently engaged.
4.2 Corporate Authority. Buyer has all requisite power and authority,
including the approval of its Board of Directors, to execute, perform and carry
out the provisions in this Agreement.
<PAGE>
4.3 Breaches of Contracts; Required Consents. Neither the execution and
delivery of this Agreement by Buyer, nor compliance by Buyer with the terms and
provisions of this Agreement, will:
(a) Conflict with or result in a breach of: (i) any of the terms,
conditions or provisions of the Articles of Incorporation, Bylaws or other
governing instruments of Buyer, (ii) any judgment, order, decree or ruling
to which the Buyer is a party, (iii) any injunction of any court or
governmental authority to which it is subject, or (iv) any agreement,
contract or commitment which is material to the financial condition of
Buyer; or
(b) Require the affirmative consent or approval of any third party.
4.4 Binding Obligation. This Agreement constitutes the legal, valid and
binding obligation of Buyer in accordance with the terms hereof. Buyer is not
subject to any charter, mortgage, lien, lease, agreement, contract, instrument,
law, rule, regulation, order, judgment or decree, or other restriction of any
kind or character, which would prevent the consummation of the transactions
contemplated in this Agreement.
4.5 Completeness of Disclosure. No representation in this Article
contains any untrue statement of a material fact or omits to state any material
fact the omission of which would be misleading.
ARTICLE 5.
CONDUCT AND TRANSACTIONS OF SELLER'S BUSINESS PRIOR TO CLOSING
--------------------------------------------------------------
The principal officer and shareholder of Buyer has also been an executive
officer of Seller. Accordingly, Seller and Buyer agree that Buyer will conduct
the brokerage business from the date of this Agreement under Buyer's name and
any profits or losses arising from the conduct of the business after the date of
this Agreement to the Closing Date will accrue to the Buyer.
5.1 Access to Information. From the date of this Agreement to Closing
Date, Buyer shall give Seller and Seller's authorized representatives, full
access to all of the property, books, contracts, commitments and records
relating to its business and shall furnish to Seller during such period all such
information concerning its business or the Brokerage Assets as Seller reasonably
may request ("Confidential Information"). Requests for business records covering
such period may be made any time in the future so long as Seller has a
reasonable business reason for making the request.
5.2 Restrictions in Operation of its Business. Buyer represents and
covenants that and during the period from the date of this Agreement to the
Closing (except as Seller otherwise has consented in writing):
(a) The brokerage business will be conducted only in the usual and
ordinary manner.
<PAGE>
(b) Buyer will not sell, dispose, transfer, assign or otherwise remove any
of the Brokerage Assets except inventory in the ordinary course of
business.
(c) Buyer shall use its best efforts to preserve the organization related
to the Brokerage Assets and to keep available during such period the
employees formerly associated with the Brokerage Assets and the Seller as
of the date of this Agreement. After the date of this Agreement the Seller
will no longer be responsible for the salaries of Michael Erickson, Jeanne
Lechner and Mark Licke and Seller will treat these former employees as
having voluntarily resigned.
5.3 No Solicitation of Other Offers. Buyer and Seller agree that without
the other's consent, prior to Closing Date or the termination of this Agreement
pursuant to Section 6.4, neither Buyer nor Seller nor any representatives of
said parties will enter into any negotiations with or solicit any written offer,
inquiry or proposal from any other person with respect to the sale, merger or
other acquisition of the Brokerage Assets. Such consent by either party will not
be unreasonably withheld.
ARTICLE 6.
CONDITIONS OF CLOSING; ABANDONMENT OF TRANSACTION
-------------------------------------------------
6.1 Conditions to Obligations of Buyer to Proceed on the Closing Date. The
obligations of Buyer to proceed on the Closing Date shall be subject (at its
discretion) to the satisfaction, on or prior to the Closing, of all of the
following conditions:
(a) Truth of Representations and Warranties and Compliance with
Obligations. The representation and warranties of Seller herein shall
be true in all material respects on the Closing Date with the same effect
as though made at such time. Seller shall have performed all material
obligations and complied with all material covenants and conditions prior
to or as of the Closing Date. Seller shall have delivered to Buyer a
certificate of Seller in form and substance satisfactory to Buyer dated as
of the Closing Date and executed by the any two of the Chief Executive
Officer, President or Chief Financial Officer of Seller to all such
effects.
(b) Assignments. Seller shall have executed and delivered to Buyer
documents assigning all of its right, title and interest in the Intangible
Property, the Vehicle and related lease.
(c) Release Secured Claims. Seller shall have obtained full and complete
releases of all security interests, or other encumbrances upon the
Brokerage Assets, including those set forth in Exhibit 3.3 (a).
(d) Delivery of Documents. Seller shall have delivered all documents
required to be delivered at Closing pursuant to Section 7.2 hereof.
<PAGE>
(e) Litigation Affecting Closing. No suit, action or other proceeding
shall be pending or threatened by or before any court or governmental
agency in which it is sought to restrain or prohibit or to obtain damages
or other relief in connection with this Agreement or the consummation of
the transaction contemplated by this Agreement, and no investigation that
may result in any such suit, action or other proceeding shall be pending or
threatened.
6.2 Conditions to Obligations of Seller to Proceed on the Closing Date.
The obligation of Seller to proceed on the Closing Date shall be subject (at its
discretion) to the satisfaction, on or before the Closing, of the following
conditions:
(a) Truth of Representations and Warranties and Compliance with
Obligations. The representations and warranties of Buyer herein contained
shall be true in all material respects on the Closing Date with the same
effect as though made at such times. Buyer shall have performed all
material obligations and complied with all material covenants and
conditions prior to or as of the Closing Date. Buyer shall have delivered
to Seller a certificate in form and substance reasonably satisfactory to
Seller dated as of the Closing Date and executed by its President to all
such effects.
(b) Delivery of Documents. Buyer shall have delivered all documents
required to be delivered at Closing pursuant to Section 7.3 hereof.
(c) Required Consents. All required consents shall have been received
from governmental agencies whose approval is required to consummate the
transaction contemplated herein.
(d) Litigation Affecting Closing. No suit, action or other proceeding
shall be pending or threatened by or before any court or governmental
agency in which it is sought to restrain or prohibit or to obtain damages
or other relief in connection with this Agreement or the consummation of
the transaction contemplated by this Agreement, and no investigation that
might eventuate in any such suit, action or other proceeding shall be
pending or threatened.
6.3 Absence of Exhibits. The parties acknowledge that Exhibits ???????
are not attached hereto and that only a preliminary version of Exhibits ?????
have been attached hereto. The parties agree to use their best efforts to
negotiate in good faith the final form of such Exhibits, and no party may
decline to proceed at the Closing unless the other party has failed to negotiate
in good faith concerning a material portion of any such Exhibit.
6.4 Termination of Agreement. This Agreement and the transactions
contemplated herein may be terminated at or prior to the Closing Date as
follows:
(a) By mutual written consent of all parties.
<PAGE>
(b) By Buyer pursuant to written notice delivered at or prior to the
Closing if Seller has failed in any material respect to satisfy all of the
conditions to Closing set forth in Section 6.1 or if the parties have been
unable after good faith efforts to reach agreement on any issue arising
under Section 6.3.
(c) By Seller pursuant to written notice delivered at or prior to the
Closing if Buyer has failed in any material respect to satisfy the
conditions set forth in Section 6.2 or if the parties have been unable
after good faith efforts to reach agreement on any issue arising under
Section 6.3.
6.5 Consequences of Termination. In the event of termination of this
Agreement, each party will return to the other all documents and materials
obtained from the other in connection with the transaction contemplated by this
Agreement and will not use and will keep confidential all Confidential
Information about the other party obtained pursuant to this Agreement pursuant
to the terms of Section 5.1 hereof. However, Seller does not agree to re-hire
any employees solely as a result of termination hereunder.
ARTICLE 7
CLOSING
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7.1 Closing. The closing of the transaction contemplated by this
Agreement ("Closing") shall be held at the offices of Buyer on March 20, 1996 at
4:00 p.m., or at such later date or time or place as the parties may mutually
agree upon in writing. Such date of Closing is referred to herein as the Closing
Date.
7.2 Documents to be Delivered by Seller. Seller agrees to deliver the
following documents, duly executed as appropriate, to Buyer at the Closing:
(a) Articles of Incorporation of Seller certified by the Secretary of State
of Minnesota.
(b) Bylaws of Seller certified by the Seller's Secretary.
(c) Certificate of Good Standing of Seller dated no earlier than forty
(40) days prior to Closing Date.
(d) Certified copies of corporate resolutions of Seller authorizing it to
enter into this Agreement and to consummate the transactions contemplated
herein.
(e) A Bill of Sale for the assignment and transfer of the Purchases Assets.
(f) Appropriate assignment documents assigning Seller's title and interest
in the Equipment and Vehicle Lease.
(g) Certificate of Seller's CEO or President and CFO regarding
representations and warranties as required under Section 6.1 (a).
<PAGE>
(h) Such other documents as Buyer may reasonably request for the purpose
of assigning, transferring, granting, conveying, and confirming to Buyer or
reducing to its possession any and all of the Brokerage Assets.
7.3 Documents Delivered by Buyer. Buyer agrees to deliver the following
documents, duly executed as appropriate, to Seller at the Closing:
(a) Articles of Incorporation of Buyer certified by the Secretary of State
of Minnesota.
(b) Bylaws of Buyer certified by the Seller's Secretary.
(c) Certificate of Good Standing of Buyer dated no earlier than forty (40)
days prior to Closing Date.
(d) Certified copies of corporate resolutions of Buyer authorizing it to
enter into this Agreement and to consummate the transactions contemplated
herein.
(e) The sum of $1.00.
(f) Certificate of Buyer's CEO or President regarding representations and
warranties as required under Section 6.2 (a).
(h) Such other documents as Seller may reasonably request to carry out the
transactions contemplated under this Agreement.
7.4 Assignment and Assumption of Certain Contracts. Effective upon
consummation of all transactions hereon as of the date of this Agreement, Seller
hereby assigns to Buyer all of Seller's rights, title and benefit under the
Intangible Property and Vehicle and lease associated with the Vehicle. Buyer
hereby assumes all risks of ownership related to the Brokerage Assets including
all liabilities or obligations arising thereafter with respect to the Brokerage
Assets.
ARTICLE 8.
POST CLOSING OBLIGATIONS
------------------------
8.1 Further Documents and Assurances. At any time and from time to time
after the Closing Date, each party shall, upon request of another party,
execute, acknowledge and deliver all such further and other assurances and
documents, and will take such action consistent with terms of this Agreement, as
may be reasonably requested to carry out the transactions contemplated herein
and to permit each party to enjoy its rights and benefits hereunder. If
requested by Buyer, Seller further agrees to prosecute or otherwise enforce in
its own name for the benefit of Buyer, any claim, right or benefit transferred
by this Agreement that may require prosecution or enforcement in Seller's name.
Any prosecution or enforcement of claims, rights, or benefits under this
provision shall be solely at Buyer's expense (and if requested by Seller,
<PAGE>
shall be evidenced by a prepayment of such estimated expense), unless the
prosecution or enforcement is made necessary by a breach of this Agreement on
the part of Seller.
ARTICLE 9.
INDEMNIFICATION
---------------
9.1 Indemnification by Seller. Subject to the limitations set forth in
Section 9.2, Seller shall indemnify and hold Buyer harmless at all times and
after the date of this Agreement, against and in respect of all damages, losses,
costs and expenses (including reasonable attorneys' fees) which Buyer may suffer
or incur in connection with any of the following matters:
(a) Any claim, demand, action or proceeding asserted by any person
respecting any liabilities of Seller which are not expressly assumed by
Buyer under this Agreement.
(b) The breach by Seller of any of its representations, warranties or
covenants in this Agreement.
(c) The rights of Buyer with respect to any claims arising under Section
9.1 shall be limited to recovery of actual losses, costs and expenses
(including reasonable attorneys' fees). Buyer hereby waives any remedy or
right of rescission arising on the basis of such claims.
9.2 Indemnification by Buyer. Buyer shall indemnify and hold Seller
harmless at all times from and after the date of this Agreement, against and in
respect of all losses, damages, costs and expenses (including reasonable
attorneys' fees) which Seller may suffer or incur in connection with any of the
following matters:
(a) The breach by Buyer of any representation, warranties or covenants in
this Agreement.
(b) Any claim, demand, action or proceeding asserted by any person against
Seller relating to any obligation or liability assumed by Buyer hereunder
or to any obligation or liability relating to its business incurred after
the date of this Agreement.
9.3 Third Party Claims. If a claim by a third party is made against any
of the indemnified parties, and if any of the indemnified parties intends to
seek indemnity with respect to such claim under this Article, such indemnified
party shall promptly notify the indemnifying party of such claim. The
indemnifying party shall have sixty (60) days after receipt of the above-
mentioned notice to undertake, conduct and control, through counsel of such
party's own choosing (subject to the consent of the indemnified party, such
consent not to be unreasonably withheld) at such party's expense, the settlement
or defense of it, and the indemnified party shall cooperate with the
indemnifying party in connection with such efforts; provided that: (i) the
indemnifying party shall not by this Agreement permit to exist any lien,
encumbrance or other adverse charge upon any asset of any indemnified party,
(ii) the indemnifying party shall permit the indemnified party to participate in
such settlement or defense through counsel chosen by the
<PAGE>
indemnified party, provided that the fees and expenses of such counsel shall be
borne by the indemnified party, and (iii) the indemnifying party shall agree
promptly to reimburse the indemnified party for the full amount of any loss
resulting from such claim and all related expense incurred by the indemnified
party pursuant to this Article. So long as the indemnifying party is reasonably
contesting any such claim in good faith, the indemnified party shall not pay or
settle any such claim. If the indemnifying party does not notify the indemnified
party within sixty (60) days after receipt of the indemnified party's notice of
a claim of indemnity under this Article that such party elects to undertake the
defense of such claim, the indemnified party shall have the right to contest,
settle or compromise the claim in the exercise of the indemnified party's
exclusive discretion at the expense of the indemnifying party.
9.4 Prepayment. In the event Seller has a claim against Buyer for
indemnification pursuant to this Article, such claim may be made by Seller in
the amount of the estimated costs which shall be prepaid or bonded. If not so
prepaid, Seller shall have the right to contest, settle or compromise the claim
in the exercise of Seller's exclusive discretion at the expense of the Buyer.
ARTICLE 11.
GENERAL
-------
11.1 Counterparts. This Agreement may be executed in counterparts and by
different parties on different counterparts with the same effect as if the
signatures thereto were on the same instrument. This Agreement shall be
effective and binding upon all parties hereto at such time as all parties have
executed a counterpart of this Agreement.
11.2 Exhibits. Each Exhibit delivered pursuant to the terms of this
Agreement shall be in writing and shall constitute a part of this Agreement.
11.3 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given, when
received, if delivered by hand or telegram, or mail, return receipt requested,
postage prepaid and addressed to the appropriate party at the following
addresses:
If to Seller: 6468 City West Parkway
Eden Prairie, MN 55344.
If to Buyer: 1230 Eagan Industrial Drive
Suite 160
Eagan, MN 55121
Addresses may be changed by written notice given pursuant to this Section,
however any such notice shall not be effective, if mailed, until three (3)
working days after depositing in the mails or when actually received, whichever
occurs first.
11.4 Successors and Assigns. Neither Seller or Buyer shall assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the other party which
<PAGE>
consent shall not be unreasonably withheld. Provided however, that a merger or
acquisition of the entire legal entity of either party hereto shall be permitted
without obtaining written consent of the other party.
11.5 Expenses. Except as otherwise provided herein, each party hereto
shall each bear and pay for its own costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereby, including,
without limitation, all fees and disbursements of attorneys, accountants and
financial consultants incurred through the Closing Date.
11.6 Entire Agreement. This Agreement, together with the Exhibits and
the related written agreements specifically referred to herein, represents the
only agreement among the parties concerning the subject matter hereof and
supersedes all prior agreements whether written or oral, relating thereto.
11.7 Modification and Waiver. No purported amendment, modification or
waiver of any provision hereof shall be binding unless set forth in a written
document signed by all parties ( in the case of amendments or modifications) or
by the party to be charged thereby (in the case of waivers). Any waiver shall be
limited to the circumstance or event specifically referenced in the written
waiver document and shall not be deemed a waiver of any other term hereof or of
the same circumstance or event upon any recurrence thereof.
11.8 Governing Law. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Minnesota.
11.9 Knowledge. Knowledge, as used in this Agreement or the instruments,
certificates or other documents required under this Agreement, means actual
knowledge of a fact or constructive knowledge if a reasonably prudent person in
a like position would have known, or should have known, the fact.
11.10 Benefit. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties to this Agreement or
their permitted successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
Each of the parties hereto has caused this Brokerage Asset Purchase
Agreement to be executed in the manner appropriate to each, to be effective as
of the day and year first above written.
Norcom Resources, Inc. (Buyer) Global MAINTECH, Inc. (Seller)
By /s/ Michael A. Erickson By /s/ David McCaffrey
----------------------- --------------------
Michael A. Erickson David McCaffrey
Its: President Its: Chief Executive Officer
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
PROMISSORY NOTE 1
$35,000 December 31, 1995
FOR VALUE RECEIVED, Norcom Resources, Inc. (hereinafter referred to as
"Borrower") promises to pay to the order of Global MAINTECH, Inc. (hereinafter
referred to as "Lender") the sum of thirty-fifty thousand Dollars ($35,000) to
include interest at the rate of ten and one-quarter percent (10.25%) per annum
on the unpaid balance. This Note 1 represents the unpaid balance due arising out
of Asset Purchase Agreement dated as of December 31, 1995 ("Agreement") relating
to the purchase of inventory and certain equipment. Such inventory and equipment
were transferred by said Agreement to Borrower and comprise the principal assets
of Borrower. Borrower acknowledges receipt of such inventory and equipment and
represents that such inventory and equipment constitute adequate consideration
for its assumption of the obligation for the unpaid purchase price thereof in
the form of its promise to pay the amounts due hereunder.
The term for this Note 1 is 15 months, maturing on March 31, 1997.
Beginning March 31, 1996 payments on this Note 1 shall be payable in twelve
equal monthly installments of two thousand nine hundred sixteen Dollars and
sixty-seven cents ($2,916.67), each of which shall be deemed to include interest
at the rate of ten and one-quarter percent (10.25%) per annum on the unpaid
balance. The last such payment is due March 31, 1997. Each payment made on this
Note 1 shall be applied first against interest and the remainder against
principal based on actual days elapsed in a year of 365 days.
This Note 1 is secured by a security interest in 600,000 shares of common
stock of Global MAINTECH Corporation ("Stock") owned by Michael A. Erickson in
accordance with the terms and conditions of a Security Agreement from Borrower
dated as of the same date herewith. In the event of default in any covenant or
payment herein or in any covenant, term or condition contained in the Security
Agreement, the entire outstanding principal balance hereunder and interest
accrued hereon shall become immediately due and payable, at the option of Holder
hereof and without notice. Provided however, that the Holder may not exercise
its right to use its security interest in the common stock of Global MAINTECH
Corporation to offset an acceleration of principal arising from a default until
the final maturity date of April 1, 1997. The Holder of this Note 1 need not
grant nor permit any grace period after default before accelerating the debt
created hereby.
The Borrower shall have the right to pre-pay the principal balance due
under this Note 1 in whole or in part at any time without premium or penalty,
and any partial pre-payment(s) shall be applied in reduction of the principal
last to mature hereunder. Pre-payment may include the Buyer's right to offset
against its obligations hereunder any amounts due Buyer from Seller pursuant to
this Agreement.
The undersigned hereof:
<PAGE>
A. Agrees to pay this Note 1 and guarantees payment hereof;
B. Waives demand, presentment, protest and notice of dishonor;
C. Consents to the extensions and renewals hereof without notice;
D. Consents to the extension, renewal, exchange, surrender or release of
any collateral securing this Note 1 with or without consideration;
E. Agrees in the case of any default to pay all costs of collection,
including reasonable attorneys' fees, and interest per annum at the rate
of twelve and one-quarter percent (12.25%) or the maximum rate of
interest whichever is lower or late charges permitted by law.
This Note 1 shall be governed by the laws of the State of Minnesota.
Borrower: Norcom Resources, Inc.
By: /s/ Michael A. Erickson
-----------------------
Michael A. Erickson
Its: President
As regards the Common Stock Collateral, only
By: /s/ Michael A. Erickson
-----------------------
Michael A. Erickson
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
----------------------------------
EXHIBIT 2.2.1 (b)
PROMISSORY NOTE 2
$35,000 December 31, 1995
FOR VALUE RECEIVED, Norcom Resources, Inc. (hereinafter referred to as
"Borrower") promises to pay to the order of Global MAINTECH, Inc. (hereinafter
referred to as "Lender") the sum of thirty-fifty thousand Dollars ($35,000) to
include interest at the rate of ten and one-quarter percent (10.25%) per annum
on the unpaid balance. This Note 2 represents the unpaid balance due arising out
of Asset Purchase Agreement dated as of December 31, 1995 ("Agreement") relating
to the purchase of inventory and certain equipment. Such inventory and equipment
were transferred by said Agreement to Borrower and comprise the principal assets
of Borrower. Borrower acknowledges receipt of such inventory and equipment and
represents that such inventory and equipment constitute adequate consideration
for its assumption of the obligation for the unpaid purchase price thereof in
the form of its promise to pay the amounts due hereunder.
The term for this Note 2 is 15 months, maturing on March 31, 1997. One
payment on the date of maturity shall be deemed to include interest at the rate
of ten and one-quarter percent (10.25%) per annum on the unpaid balance. Payment
made on this Note 2 shall be applied first against interest and the remainder
against principal based on actual days elapsed in a year of 365 days.
This Note 2 is secured by a security interest in 600,000 shares of common
stock of Global MAINTECH Corporation owned by Michael A. Erickson in accordance
with the terms and conditions of a Security Agreement from Borrower dated as of
the same date herewith. In the event of default in any covenant or payment
herein or in any covenant, term or condition contained in the Security
Agreement, the entire outstanding principal balance hereunder and interest
accrued hereon shall become immediately due and payable, at the option of Holder
hereof and without notice. Provided however, that the Holder may not exercise
its right to use its security interest in the common stock of Global MAINTECH
Corporation to offset an acceleration of principal arising from a default until
the final maturity date of March 31, 1997. The Holder of this Note 2 need not
grant nor permit any grace period after default before accelerating the debt
created hereby.
The Borrower shall have the right to pre-pay the principal balance due
under this Note 2 in whole or in part at any time without premium or penalty,
and any partial pre-payment(s) shall be applied in reduction of the principal
last to mature hereunder. Pre-payment may include the Buyer's right to offset
against its obligations hereunder any amounts due Buyer from Seller pursuant to
this Agreement.
The undersigned hereof:
A. Agrees to pay this Note 2 and guarantees payment hereof;
B. Waives demand, presentment, protest and notice of dishonor;
<PAGE>
C. Consents to the extensions and renewals hereof without notice;
D. Consents to the extension, renewal, exchange, surrender or release of
any collateral securing this Note 2 with or without consideration;
E. Agrees in the case of any default to pay all costs of collection,
including reasonable attorneys' fees, and interest per annum at the rate
of twelve and one-quarter percent (12.25%) or the maximum rate of
interest whichever is lower or late charges permitted by law.
This Note 2 shall be governed by the laws of the State of Minnesota.
Borrower: Norcom Resources, Inc.
By: /s/ Michael A. Erickson
-----------------------
Michael A. Erickson
Its: President
As regards the Common Stock Collateral, only
By: /s/ Michael A. Erickson
-----------------------
Michael A. Erickson
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 2.2.2 (a)
SECURITY AGREEMENT
NOTE 1
For value received Norcom Resources, Inc., a Minnesota corporation located at
1230 Eagan Industrial Drive, Suite 160, Eagan, MN 55121 (herein referred to as
("Borrower") grants to Global MAINTECH, Inc., (herein referred to as ("Lender"),
a security interest to secure the payment of that certain promissory note dated
December 31, 1995, executed and delivered by the Borrower to the Lender in the
original principal sum of thirty-five thousand Dollars ($35,000), interest and
other charges as therein provided (herein referred to as ("Note 1"). This
security interest also secures all extensions, renewals, and replacements of
Note 1. Such obligations are herein collectively referred to as the ("Secured
Obligation"). To secure payment of the Secured Obligation, the Borrower grants
the Lender a security interest in the following property (hereinafter referred
to as the "Collateral"): 600,000 shares of common stock of Global MAINTECH
Corporation ("Stock") owned by Michael A. Erickson. The Collateral shall include
all substitutions and replacements for and proceeds of any and all of the
foregoing property, and all accessions, accessories, attachments, parts,
equipment, and repairs now or hereafter attached or affixed to or used in
connection with such Collateral.
Borrower warrants, represents, and agrees that:
1. The Collateral will be kept at the following locations 1230 Eagan
Industrial Drive, Suite 160, Eagan, MN or 9220 James Avenue South,
Bloomington, MN and will not be moved from such locations unless, prior
to any such removal, Borrower has given written notice to the Lender of
the location or locations to which Borrower desires to remove the
Collateral; and the Lender has given its written consent to such
removal.
2. Borrower's place of business is located at 1230 Eagan Industrial Drive,
suite 160, Eagan, MN; Michael A. Erickson's address is 822 Mayflower
Court, Northfield, MN 55057 and Borrower will notify the Lender in
writing of any change in location of Borrower's place of business.
3. Borrower, or in the case of the Stock, Michael A. Erickson have title to
and will at all times keep the Collateral free of all liens and
encumbrances, except the security interest created hereby, and has full
power and authority to execute this Security Agreement, to perform
Borrower's obligations hereunder, and to subject the Collateral to the
security interest created hereby. Borrower will pay all fees,
assessments, charges, or taxes arising with respect to the Collateral.
There is no encumbrance or security interest with respect to all or any
part of the Collateral which either (i) is superior to the Lender's
security interest hereunder, or (ii) has not been disclosed to the
Lender by the Borrower. All costs of keeping the Collateral free of
encumbrances and security interests prohibited by this Agreement and of
removing same if they should arise, shall be borne and paid by Borrower.
4. Borrower will at any time or times hereafter execute such financing
statements and other documents and instruments and perform such acts as
the Lender may from time to time request to establish, maintain,
perfect, and enforce a valid security interest in the Collateral, and
will pay all costs of filing and recording.
<PAGE>
5. Borrower will keep the Collateral in good condition and insure it
against loss or damage by fire, theft, physical damage, and against such
other risk, in such amounts, in such companies and upon such terms as
Lender may reasonably require. Borrower will obtain loss payable
endorsements on applicable insurance policies in favor of Borrower and
Lender as their interests may appear and at Lender's request will
deposit the insurance policies with Lender. Borrower will cause each
insured to agree, by policy endorsement or by issuance of Certificate of
Insurance or by independent instrument furnished to Lender, that such
insurer will give 30 days written notice to Lender before such policy
will be altered or canceled. Borrower irrevocably appoints Lender as
Borrower's attorney-in-fact to make any claim for, to negotiate
settlement of the claims, to receive for and to execute and endorse any
documents, checks, or other instruments in payment for loss, theft, or
damage under any insurance policy covering the Collateral.
6. Upon default by Borrower in the performance of the obligations
hereunder, the Lender shall have the authority, but shall not be
obligated to: (i) effect such insurance and pay the premiums thereof;
and (ii) pay and discharge any fees, assessments, charges, taxes, liens,
and encumbrances on the Collateral. All sums so advanced or paid by the
Lender shall be payable by Borrower on demand with interest at the
default rate or the maximum rate allowed by law whichever is lower and
shall be part of the Secured Obligations.
7. Borrower will not sell, lease, or otherwise dispose of the Collateral
other than in the ordinary course of its business thereof.
8. Borrower will keep and maintain accurate records with respect to the
Collateral, and with respect to the general business of Borrower, and
will make the same available to the Lender at its request for
examinations and inspections; and will make and render to the Lender
such reports, accounting, and statements as the Lender may from time to
time request with respect to the Collateral; will permit any authorized
representative of the Lender to examine and inspect, during normal
business hours, any and all premises where the Collateral is or may be
kept or located.
9. The occurrence of any of the following events will constitute a Default:
(a) failure of Borrower to pay when due any amount payable under any of
the secured obligations; (b) failure to perform any agreement of
borrower contained herein or in any other agreement with the Lender; (c)
any statement, representation of warranty of Borrower made herein or at
any time furnished to the Lender is untrue in any respect as of the date
made; (d) entry of any judgment against Borrower; (e) borrower becomes
insolvent or is generally not paying its debts as such debts become due;
(f) appointment of or assignment to a custodian, as that term is defined
in the United States Bankruptcy Code, or loss, substantial damage to,
destruction, theft, encumbrance, levy, seizure, or attachment of any
portion of the Collateral; (g) commencement of any proceeding or filing
of a petition by or against Borrower under the provisions of the United
States Bankruptcy Code or under any insolvency law or other statute or
law providing for the modification or adjustments of the rights of
creditors; or, (h) dissolution, or transfer of a substantial part of the
property of Borrower.
10. Whenever a default shall exist, the Lender may at its option and
without demand or notice declare all or any part of the secured
obligation immediately due and payable; and the Lender may exercise, in
addition to the rights and remedies granted hereby, all rights and
remedies of the secured party under the Uniform Commercial Code or any
other applicable law. Provided however, that the Holder may not
exercise its right to use its security interest in the
<PAGE>
common stock of Global MAINTECH Corporation to offset an acceleration
of principal arising from a default until the final maturity date of
March 31, 1997.
11. Borrower agrees in the event of default, to make the Collateral
available to the Lender at a place or places to be designated by the
Lender, which is reasonably convenient to both parties, and to pay all
costs of the Lender, including reasonable attorneys fees in the
collection of any of the secured obligations and the enforcement of any
of the Lender's rights. If any notification of intended disposition of
any of the Collateral is required by law, such notification shall be
deemed properly given if mailed a reasonable time before such
disposition, postage prepaid, addressed to the Borrower at the address
shown above. The Lender's duty of care with respect to the Collateral
in its possession such be deemed fulfilled if the Lender exercises
reasonable care in physically safekeeping such Collateral, and the
Lender need not otherwise preserve, protect, insure, or care for any
Collateral. The Lender shall not be obligated to preserve any rights
the Borrower may have against prior parties, to realize on the
Collateral at all or in any particular manner or order, or to apply any
cash proceeds of Collateral in any particular order of application. No
delay or failure by the Lender in the exercise of any right or remedy
shall preclude other or further exercise thereof or the exercise of any
other rightful remedy.
12. This Agreement is governed by the laws of the State of Minnesota.
Executed this 20th day of March, 1996.
Borrower: Norcom Resources, Inc.
By:/s/ Michael A. Erickson
-----------------------
Michael A. Erickson
Its: President
As regards the Common Stock Collateral, only
By: /s/ Michael A. Erickson
-----------------------
Michael A. Erickson
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 2.2.2 (b)
SECURITY AGREEMENT
NOTE 2
For value received Norcom Resources, Inc., a Minnesota corporation located at
1230 Eagan Industrial Drive, Suite 160, Eagan, MN 55121 (herein referred to as
("Borrower") grants to Global MAINTECH, Inc., (herein referred to as ("Lender"),
a security interest to secure the payment of that certain promissory note dated
December 31, 1995, executed and delivered by the Borrower to the Lender in the
original principal sum of thirty-five thousand Dollars ($35,000), interest and
other charges as therein provided (herein referred to as ("Note 2"). This
security interest also secures all extensions, renewals, and replacements of
Note 2. Such obligations are herein collectively referred to as the ("Secured
Obligation"). To secure payment of the Secured Obligation, the Borrower grants
the Lender a security interest in the following property (hereinafter referred
to as the "Collateral"): 600,000 shares of common stock of Global MAINTECH
Corporation ("Stock") owned by Michael A. Erickson. The Collateral shall include
all substitutions and replacements for and proceeds of any and all of the
foregoing property, now or hereafter attached or affixed to or used in
connection with such Collateral.
Borrower warrants, represents, and agrees that:
1. The Collateral will be kept at the following locations 1230 Eagan
Industrial Drive, Suite 160, Eagan, MN or 9220 James Avenue South,
Bloomington, MN and will not be moved from such locations unless, prior
to any such removal, Borrower has given written notice to the Lender of
the location or locations to which Borrower desires to remove the
Collateral; and the Lender has given its written consent to such
removal.
2. Borrower's place of business is located at 1230 Eagan Industrial Drive,
suite 160, Eagan, MN; Michael A. Erickson's address is 822 Mayflower
Court, Northfield, MN 55057 and Borrower will notify the Lender in
writing of any change in location of Borrower's place of business.
3. Borrower, or in the case of the Stock, Michael A. Erickson have title to
and will at all times keep the Collateral free of all liens and
encumbrances, except the security interest created hereby, and has full
power and authority to execute this Security Agreement, to perform
Borrower's obligations hereunder, and to subject the Collateral to the
security interest created hereby. Borrower will pay all fees,
assessments, charges, or taxes arising with respect to the Collateral.
There is no encumbrance or security interest with respect to all or any
part of the Collateral which either (i) is superior to the Lender's
security interest hereunder, or (ii) has not been disclosed to the
Lender by the Borrower. All costs of keeping the Collateral free of
encumbrances and security interests prohibited by this Agreement and of
removing same if they should arise, shall be borne and paid by Borrower.
4. Borrower will at any time or times hereafter execute such financing
statements and other documents and instruments and perform such acts as
the Lender may from time to time request to establish, maintain,
perfect, and enforce a valid security interest in the Collateral, and
will pay all costs of filing and recording.
5. Borrower will keep the Collateral in good condition and insure it
against loss or damage by fire, theft, physical damage, and against such
other risk, in such amounts, in such companies
<PAGE>
and upon such terms as Lender may reasonably require. Borrower will
obtain loss payable endorsements on applicable insurance policies in
favor of Borrower and Lender as their interests may appear and at
Lender's request will deposit the insurance policies with Lender.
Borrower will cause each insured to agree, by policy endorsement or by
issuance of Certificate of Insurance or by independent instrument
furnished to Lender, that such insurer will give 30 days written notice
to Lender before such policy will be altered or canceled. Borrower
irrevocably appoints Lender as Borrower's attorney-in-fact to make any
claim for, to negotiate settlement of the claims, to receive for and to
execute and endorse any documents, checks, or other instruments in
payment for loss, theft, or damage under any insurance policy covering
the Collateral.
6. Upon default by Borrower in the performance of the obligations
hereunder, the Lender shall have the authority, but shall not be
obligated to: (i) effect such insurance and pay the premiums thereof;
and (ii) pay and discharge any fees, assessments, charges, taxes,
liens, and encumbrances on the Collateral. All sums so advanced or paid
by the Lender shall be payable by Borrower on demand with interest at
the default rate or the maximum rate allowed by law whichever is lower
and shall be part of the Secured Obligations.
7. Borrower will not sell, lease, or otherwise dispose of the Collateral
other than in the ordinary course of its business thereof.
8. Borrower will keep and maintain accurate records with respect to the
Collateral, and with respect to the general business of Borrower, and
will make the same available to the Lender at its request for
examinations and inspections; and will make and render to the Lender
such reports, accounting, and statements as the Lender may from time to
time request with respect to the Collateral; will permit any authorized
representative of the Lender to examine and inspect, during normal
business hours, any and all premises where the Collateral is or may be
kept or located.
9. The occurrence of any of the following events will constitute a
Default: (a) failure of Borrower to pay when due any amount payable
under any of the secured obligations; (b) failure to perform any
agreement of borrower contained herein or in any other agreement with
the Lender; (c) any statement, representation of warranty of Borrower
made herein or at any time furnished to the Lender is untrue in any
respect as of the date made; (d) entry of any judgment against
Borrower; (e) borrower becomes insolvent or is generally not paying its
debts as such debts become due; (f) appointment of or assignment to a
custodian, as that term is defined in the United States Bankruptcy
Code, or loss, substantial damage to, destruction, theft, encumbrance,
levy, seizure, or attachment of any portion of the Collateral; (g)
commencement of any proceeding or filing of a petition by or against
Borrower under the provisions of the United States Bankruptcy Code or
under any insolvency law or other statute or law providing for the
modification or adjustments of the rights of creditors; or, (h)
dissolution, or transfer of a substantial part of the property of
Borrower.
10. Whenever a default shall exist, the Lender may at its option and
without demand or notice declare all or any part of the secured
obligation immediately due and payable; and the Lender may exercise, in
addition to the rights and remedies granted hereby, all rights and
remedies of the secured party under the Uniform Commercial Code or any
other applicable law. Provided however, that the Holder may not
exercise its right to use its security interest in the common stock of
Global MAINTECH Corporation to offset an acceleration of principal
arising from a default until the final maturity date of March 31, 1997.
<PAGE>
11. Borrower agrees in the event of default, to make the Collateral
available to the Lender at a place or places to be designated by the
Lender, which is reasonably convenient to both parties, and to pay all
costs of the Lender, including reasonable attorneys fees in the
collection of any of the secured obligations and the enforcement of any
of the Lender's rights. If any notification of intended disposition of
any of the Collateral is required by law, such notification shall be
deemed properly given if mailed a reasonable time before such
disposition, postage prepaid, addressed to the Borrower at the address
shown above. The Lender's duty of care with respect to the Collateral
in its possession such be deemed fulfilled if the Lender exercises
reasonable care in physically safekeeping such Collateral, and the
Lender need not otherwise preserve, protect, insure, or care for any
Collateral. The Lender shall not be obligated to preserve any rights
the Borrower may have against prior parties, to realize on the
Collateral at all or in any particular manner or order, or to apply any
cash proceeds of Collateral in any particular order of application. No
delay or failure by the Lender in the exercise of any right or remedy
shall preclude other or further exercise thereof or the exercise of any
other rightful remedy.
12. This Agreement is governed by the laws of the State of Minnesota.
Executed this 20th day of March, 1996.
Borrower: Norcom Resources, Inc.
By:/s/ Michael A. Erickson
-----------------------
Michael A. Erickson
Its: President
As regards the Common Stock Collateral, only
By: /s/ Michael A. Erickson
-----------------------
Michael A. Erickson
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 1.1 (b)
EQUIPMENT LIST
Office desks, chairs and file storage for five offices. Four desktop
personal computers, one portable personal computer, and computer networking
equipment.
Warehouse equipment:
One banding tool;
One-half ownership interest or residual interest in forklift; and,
All other equipment located in warehouse at 9220 James Avenue South on
December 31, 1995.
All of the above which may be subject to lease (attached hereto on Exhibits
1.2.1 and 1.2.2) shall remain on lease and are not being assigned to Buyer.
Buyer agrees to be maintain such equipment in good condition normal wear and
tear excepted.
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 1.1 (c)
VEHICLE LEASE
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 1.1 (e)
PARTIAL LIST OF INVENTORY
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 1.2.1
LEASE WITH R.P. CAPITAL CORPORATION
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 1.2.2
LEASE WITH DATA SALES CO.
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 1.3 (a)
LIABILITIES ASSUMED BY BUYER AS OF DECEMBER 31, 1995
The following three liabilities are assumed by Buyer:
1. That certain Vehicle lease attached as Exhibit 3.3 (c).
2. Broward County/MLC penalty (project # s-495-1731) in the amount of
$28,000 at December 31, 1995.
3. Liability to Forsythe McArthur for HH TCM ( broker Tony DeFalco) in
the amount of $25,000 at December 31, 1995.
All other known liabilities identified on the financial statements of Seller as
of December 31, 1995 shall remain the obligation of Seller. If however, Seller
remains an obligor for items 2 and/or 3 above, Buyer agrees to grant Seller a
security interest in an additional 883,334 shares of common stock owned by
Michael A. Erickson which security interest will be recorded in a form
substantially equal to the form used in Exhibit's 2.2.2 (a) and (b). The terms
of the security interest will allow Seller to offset any payments made by seller
on or before March 31, 1997 or any obligations remaining of items 2 or 3 above,
as verified by the third party, as of March 31, 1997 to which Seller remains
obligated ("Third Party Obligation"), against the common stock collateral. The
offset will be calculated as the Third Party Obligation divided by a common
share price of $.06 and will be determined as of March 31, 1997. Seller and
Buyer agree that at the time of Closing herein, neither party can determine if
the third parties in item 2 or 3 above will agree to release Seller of these
obligations. And further agree to make this determination by April 30, 1996. If
by that time Seller does not have in its possession a signed release of
liability, then, for these purposes, it will be deemed to be still liable for
items 2 and 3 above and the security interest described above will be documented
by the Seller and Buyer.
NOTE: In exchange for the liabilities assumed by Buyer in this Exhibit
1.3(a) Global MAINTECH, Inc. agrees to:
(i) reduce the original debt from Buyer from $100,000 to $70,000;
and,
(ii) reduce the financial exposure to Data Sales Co. from $190,000,
before accrued interest to $70,000. This reduces the joint and
several liability of Mike Erickson, one of the two guarantors of the
Data Sales Co. note. Global MAINTECH, Inc. is more reasonably
assured of meeting the payment requirements on the remaining $70,000
of Data Sales debt.
Approval and acceptance of terms on the 20th day of March 1996:
Global MAINTECH, Inc. Norcom Resources, Inc. As regards the Common
Stock Collateral, only
/s/ David McCaffrey /s/ Michael A. Erickson /s/ Michael A. Erickson
- ------------------- ----------------------- -----------------------
Name: David McCaffrey Name: Michael A. Erickson Name: Michael A. Erickson
Title: CEO Title: President
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 2.3
ALLOCATION OF PURCHASE PRICE
Both parties to this Agreement agree the Purchase Price shall be allocated
entirely to the Inventory.
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 3.2
FINANCIAL STATEMENTS
1. Exhibit 3.2.1 financial statements of Seller as of and for the year
ended December 31, 1994.
2. Exhibit 3.2.2 interim quarterly financial statements as of and for the
nine months ended September 30, 1995 of Seller's parent company.
3. Exhibit 3.2.3 monthly internal incomes statements for October and
November 1995 (division allocation of standard operating income/expense).
4. Exhibit 3.2.4 Brokerage spin-off issues named "Spin-off.xls".
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 3.3 (a)
RELEASE OF SECURITY INTEREST
Global MAINTECH Corporation which possesses a security interest in the
Inventory, as defined in the Brokerage Asset Purchase Agreement dated
December 31, 1995, pursuant to that certain Secured Promissory Note dated
December 6, 1994 between Global MAINTECH Corporation (f/k/a Mirror
Technologies, Incorporated) and Global MAINTECH, Inc., as amended, hereby
renounces and releases said security interest as regards the Inventory.
/s/ James Geiser /s/ Michael A. Erickson
---------------- -----------------------
James Geiser, CFO David McCaffrey, CEO
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
EXHIBIT 3.3 (b)
Burger Note
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
OFFICERS' CERTIFICATE OF SELLER
The undersigned, David McCaffrey and James Geiser, being the duly appointed
Chief Executive Officer and Chief Financial Officer, respectively of Global
MAINTECH, Inc. ("Seller") hereby certify, on behalf of Seller , pursuant to
Section 6.1 (a) of that certain Brokerage Asset Purchase Agreement between Buyer
and Seller dated December 31, 1995, that as of March 20, 1996, the Closing Date:
(a) The representations and warranties of Seller therein are true in all
material respects to the best of its knowledge on the Closing Date with the
same effect as though made at such time.
(b) Seller has performed all material obligations and complied with all
material covenants and conditions prior to or as of the Closing Date.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
this 20th day of March, 1996.
/s/ David McCaffrey
-------------------
David McCaffrey, CEO
/s/ James Geiser
----------------
James Geiser, CFO
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
OFFICERS' CERTIFICATE OF BUYER
The undersigned, Michael A. Erickson, being the duly appointed President,
Norcom Resources, Inc. ("Buyer") hereby certifies, on behalf of Seller ,
pursuant to Section 6.2 (a) of that certain Brokerage Asset Purchase Agreement
between Buyer and Seller dated December 31, 1995, that as of March 20, 1996, the
Closing Date:
(a) The representations and warranties of Buyer therein are true in all
material respects to the best of its knowledge on the Closing Date with the
same effect as though made at such time.
(b) Buyer has performed all material obligations and complied with all
material covenants and conditions prior to or as of the Closing Date.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
this 20th day of March, 1996.
/s/ Michael A. Erickson
-----------------------
Michael A. Erickson, President
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
ASSIGNMENT PURSUANT TO SUBSECTION 6.1 (b)
Seller hereby assigns its rights, interests and obligations pursuant to
that certain lease of the Vehicle as defined with Infiniti Financial Services
attached to the Brokerage Asset Purchase Agreement as Exhibit 3.3 (c) to Buyer.
Seller also assigns its right, title and interest in the Intangible Property, as
defined, to Buyer. Excluded from the Intangible Property, as defined, are those
intangibles listed in subsection 1.2 (d) (i) & (ii).
Global MAINTECH, Inc.
/s/ David McCaffrey
-------------------
David McCaffrey, CEO
/s/ James Geiser
----------------
James Geis er, CFO
<PAGE>
BROKERAGE ASSET PURCHASE AGREEMENT
BILL OF SALE
For good and valuable consideration, the receipt of which is hereby
acknowledged, Global MAINTECH, Inc. ("Seller") does hereby sell, transfer and
convey to Norcom Resources, Inc. ("Buyer") its entire right, title and interest
in and to the Inventory, as defined, pursuant to the terms of the Brokerage
Asset Purchase Agreement between Buyer and Seller dated December 31, 1995 and
described below:
All inventory, including raw materials, supplies, work in process and
finished inventory of the brokerage business as of December 31, 1995 a
partial list of which is attached on Exhibit 1.1 (e) of the Brokerage
Asset Purchase Agreement. ("Inventory").
Seller makes no warranty or representation, either express or implied, as
to title to, as to the design or condition of, or as to quality of the material,
equipment or workmanship in, the Inventory, and Seller makes no warranty of
merchantability or fitness of the Inventory for any particular purpose or any
component thereof, or any other representation or warranty, express or implied,
with respect to any item of Inventory, either upon delivery thereof to Buyer, or
otherwise, except that Seller warrants that it has conveyed to Buyer all of its
right, title and interest in and to the Inventory and that the Inventory is free
and clear of encumbrances created by Seller unrelated to the transactions
contemplated by the Brokerage Asset Purchase Agreement.
Seller agrees to perform, upon the request and at the expense of Buyer,
such further acts and to execute such additional documents as may be necessary
to give effect to the transfer of the Inventory to Buyer in accordance with the
terms of this Bill of Sale.
Global MAINTECH, Inc.
By:/s/ David McCaffrey
-------------------
David McCaffrey
Its: CEO
Dated: March 20, 1996
<PAGE>
Exhibit 10.12
GLOBAL MAINTECH CORPORATION
CERTIFICATE OF AMENDMENT
I, James Geiser, Secretary of Global MAINTECH Corporation do hereby certify
that the following amendment to the 1989 Stock Option Plan was duly adopted by
the shareholders of that corporation.
This amendment was adopted by the shareholders of such corporation on May
15, 1995.:
"Section 2 of the 1989 Stock Option Plan shall be amended in its entirety
to read as follows:
2. Stock Subject to Plan.
----------------------
Subject to the provisions of Section 12 hereof, the stock to be
subject to options under the Plan shall be the Company's authorized
Common Stock, no par value per share. Such shares may be either
authorized but unissued shares, or issued shares which have been
reacquired by the Company. subject to adjustment as provided in Section
12 hereof, the maximum number of shares on which options may be
exercised under this Plan shall be 50,000,000 shares. If an option under
the Plan expires, or for any reason is terminated or unexercised with
respect to any shares, such shares shall again be available for options
thereafter granted during the term of the Plan."
/s/ James Geiser
Secretary
1
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Global MAINTECH Corporation:
We consent to incorporation by reference in the registration statement
No. 33-33576, on Form S-8 of Global MAINTECH Corporation of our report dated
February 23, 1996, relating to the consolidated balance sheets of Global
MAINTECH Corporation and subsidiary as of December 31, 1995, and 1994, and the
related consolidated statements of operations, stockholders' equity (deficit),
and cash flows for the years then ended, which report appears in the December
31, 1995 annual report on Form 10-KSB of Global MAINTECH Corporation.
Our report dated February 23, 1996, contains an explanatory paragraph that
states that the Company has suffered losses from operations and has a working
capital deficit and accumulated deficit, which raise substantial doubt about its
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of that
uncertainty.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
March 29, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31, 1995 FORM 10-KSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-START> JAN-01-1995 JAN-01-1994
<PERIOD-END> DEC-01-1995 DEC-01-1994
<CASH> 39 24
<SECURITIES> 0 0
<RECEIVABLES> 321 222
<ALLOWANCES> 0 0
<INVENTORY> 187 0
<CURRENT-ASSETS> 608 295
<PP&E> 16 850
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 625 1,719
<CURRENT-LIABILITIES> 1,628 2,332
<BONDS> 58 891
0 0
406 0
<COMMON> 907 80
<OTHER-SE> (2,373) (1,583)
<TOTAL-LIABILITY-AND-EQUITY> 625 1,719
<SALES> 1,174 56
<TOTAL-REVENUES> 1,174 56
<CGS> 351 35
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 877 838
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 134 412
<INCOME-PRETAX> (189) (1,225)
<INCOME-TAX> 6 5
<INCOME-CONTINUING> (195) (1,230)
<DISCONTINUED> (595) (169)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (790) (1,398)
<EPS-PRIMARY> (0.02) (0.03)
<EPS-DILUTED> (0.02) (0.03)<F1>
<FN>
<F1> Net earnings (loss) per share and weighted average number of common and
common equivalent shares outstanding for the year ended, December 31, 1994
assume the merger as described in note 2 had occurred on January 1, 1994
for presentation purposes.
</FN>
</TABLE>
