SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 28, 1999
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SITEK, INCORPORATED
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(Exact name of Registrant as Specified in Its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
33-28417 86-0923886
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(Commission File Number) (I.R.S. Employer Identification No.)
1817 WEST 4TH STREET, TEMPE, ARIZONA 85281
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(Address of Principal Executive Offices) (Zip Code)
(480) 921-8555
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS.
On April 28, 1999, the Registrant acquired all of the outstanding
shares of common stock of VSM Corporation, an Arizona corporation, in exchange
for $1,000,000 cash pursuant to a Stock Purchase Agreement (the "Agreement")
with VSM's shareholders, Charles L. and Barbara Y. Vaughan (the "Vaughans"). VSM
Corporation is engaged in the businesses of manufacturing and refurbishing
semiconductor processing equipment. The Registrant intends to operate VSM
Corporation as a subsidiary in the same businesses.
Under the Agreement, the Vaughans agreed to not engage in certain
competitive activities in the United States and Mexico for two years. Pursuant
to the Agreement, the Registrant also agreed to:
(i) cause VSM to pay to the Vaughans $200,000 in satisfaction of all VSM's
indebtedness to the Vaughans; and
(ii) use its best efforts to obtain releases of the Vaughans for all existing
guaranties or other suretyship obligations in favor of, or for the benefit
of, any person providing financial accomodations to VSM.
The terms of the acquisition are more fully described in the Agreement,
a copy of which is attached as Exhibit 10.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
The required financial statements are not included in this report, but
the Registrant will file them by amendment no later than 60 days after this
initial report on Form 8-K must be filed.
(b) PRO FORMA FINANCIAL INFORMATION
The required pro forma financial statements are not included in this
report, but will be filed by amendment no later than 60 days after this initial
report on Form 8-K must be filed.
(c) EXHIBITS
10.1 A copy of the Agreement is annexed to this Form 8-K as Exhibit
10.1.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SITEK, Incorporated
(Registrant)
Date: May 13, 1999 By: /s/ Don Jackson, Jr.
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Don Jackson, Jr., President, Director
and Chief Executive Officer
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STOCK PURCHASE AGREEMENT
AGREEMENT made this 28th day of April, 1999 by and among Sitek
Incorporated, a Delaware corporation ("Buyer"), and Charles L. Vaughan and
Barbara Y. Vaughan, husband and wife (collectively, "Sellers").
BACKGROUND
Sellers own all of the issued and outstanding shares of the common
stock (the "Stock") of VSM Corporation, an Arizona corporation ("Corporation").
Corporation conducts the business of manufacturing equipment for use in the
manufacture of semiconductors.
By that Option Agreement to Purchase Stock dated January 15, 1999 (the
"Option Agreement"), Sellers granted Buyer an option to purchase the Stock in
exchange for payment to them of an option fee of $50,000 (the "Option Fee").
Subsequent to the date of the Option Agreement, Buyer conducted extensive
investigations and examinations of the business and affairs of the Corporation.
Buyer and Sellers desire that Buyer exercise the Option and acquire all
of the Stock of Corporation on the terms and conditions hereinafter set forth.
Buyer has elected to exercise the Option to purchase the Stock.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto, intending to be legally
bound, agree as follows:
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1. PURCHASE OF STOCK.
At the Closing (as hereinafter defined) Sellers shall sell, convey,
transfer and assign, upon the terms and conditions hereinafter set forth, to
Buyer, free and clear of all liens, pledges, claims, agreements and
encumbrances, and Buyer shall purchase and accept from Sellers, the Stock (as
defined in Paragraph 3(b) below).
2. PURCHASE PRICE.
The price to be paid by Buyer to Sellers to purchase the Stock is $
1,000,000. Such amount shall be payable at Closing. Buyer shall receive a credit
to be applied to the payment of the purchase price for the Stock in the amount
of the Option Fee ($50,000).
3. SELLERS' AND CORPORATION'S REPRESENTATIONS AND WARRANTIES.
To induce Buyer to enter into this Agreement and for the benefit of
Buyer, Sellers and the Corporation, jointly and severally, represent and warrant
as of the Closing Date as follows:
(a) CORPORATE STATUS AND AUTHORITY. Corporation is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Arizona, has the requisite corporate power to own, operate and lease
its assets and properties and to carry on its business as it is now being
conducted, and is duly qualified to do business in all jurisdictions in which
the nature of its business as conducted therein requires such qualification.
This Agreement and the transactions contemplated at the Closing have been duly
authorized by all requisite corporate and shareholder actions.
(b) CAPITALIZATION. Corporation was incorporated under the laws
of the State of Arizona on October 11, 1990 and has an authorized capital
consisting of 2,400 shares of Common Stock, par value $10.00 per share, of which
200 shares of Common Stock are validly issued and outstanding, fully paid, and
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nonassessable. No options, warrants, or other rights to purchase or subscribe
for, or contracts or commitments to issue, or any interests, instruments,
evidences of indebtedness or other securities convertible in any manner into,
shares of Corporation's capital stock are outstanding, except the Option
Agreement.
(c) BOOKS AND RECORDS. The minute books and stock records of
Corporation are complete and accurate, have been kept at all times in accordance
with sound business practices, and all signatures included therein are the
genuine signatures of the persons whose signatures are required.
(d) DIRECTORS, OFFICERS AND BANK ACCOUNTS. SCHEDULE "A" is a
correct and complete list of all directors and officers of Corporation, all bank
accounts and safe deposit boxes of Corporation and of all persons authorized to
sign checks drawn on such accounts and to have access to such safe deposit
boxes. (SCHEDULE "A" and all other schedules and exhibits referred to herein are
attached hereto and hereby made a part hereof).
(e) FINANCIAL STATEMENTS. The Balance Sheets of Corporation at
December 31, 1998, January 31, 1999, February 28, 1999, and March 31, 1999 and
the related Statements of Income for the fiscal years ended December 31, 1996,
December 31, 1997 and December 31, 1999, and all related schedules and notes to
the foregoing (copies of which constitute EXHIBIT "1") fairly and accurately
present the financial position of Corporation at the dates of such Balance
Sheets and the results of the operations of Corporation for the fiscal years and
period then ended, all in accordance with generally accepted accounting
principles as applied on a consistent basis, except that the Corporation has
elected to omit substantially all of the informative disclosures and statements
of cash flow and except as otherwise disclosed in the footnotes to such
financial statements.
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(f) REAL ESTATE. Corporation has no interest as owner, lessor,
lessee, or otherwise in any real estate except as set forth in SCHEDULE "B".
(g) SUBSIDIARIES AND JOINT VENTURES. Except as set forth in
SCHEDULE "C", Corporation has no subsidiaries and does not own any capital
stock, securities, partnership interests or other interests of any kind of any
corporation, partnership, joint venture, association or other entity.
(h) OWNERSHIP OF ASSETS AND PROPERTIES. Corporation has good and
marketable title to all of its real and personal assets and properties, tangible
and intangible, including all assets and properties reflected on its Balance
Sheet at March 31, 1999 which is part of Exhibit "1" (the "1999 Balance Sheet"),
or acquired subsequent to the date of the 1999 Balance Sheet, which is used in
or necessary to the operation of its business, all of which is owned by
Corporation, free and clear of all liens, mortgages, pledges, security
interests, restrictions, prior assignments, encumbrances and claims of every
kind and character, except as disclosed in Schedule "D" or as disposed of by it
in the ordinary course of its business since the date of the 1999 Balance Sheet,
which disposition has been disclosed to the extent otherwise required by this
Agreement.
(i) CONDITION OF ASSETS AND PROPERTIES. The machinery, equipment,
fixtures, tools, furniture, furnishings, office equipment and all other tangible
personal assets and properties of Corporation presently used in the operation of
its business do not require repairs other than normal maintenance and are in
good operating condition. Except as set forth in Schedule "E", the raw
materials, work in progress and finished inventory of Corporation are all in
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good condition and are usable in the production and sales activities of
Corporation, and Corporation does not have on hand or on order any raw
materials, work in progress or finished goods inventory in excess of its normal
requirements.
(j) OWNERSHIP OF RIGHTS. Corporation possesses its corporate name
and all patents, patent rights, service marks, trademarks, trade names, and
copyrights used in or necessary to the operation of its business as now
conducted, and all licenses and franchises appropriate to entitle Corporation to
use all of the foregoing, all of which are listed in SCHEDULE "F." Except as
listed in SCHEDULE "F", Corporation is not obligated to pay any fees, royalties,
or other amounts with respect to any such items. The Corporation is not
infringing upon or acting adversely to, or in conflict with, any patents, patent
rights, service marks, trademarks, trade names, corporate names, copyrights,
licenses, or other proprietary rights of others.
(k) ACCOUNTS RECEIVABLE. Each of the accounts receivable of
Corporation has been acquired in the ordinary course of Corporation's business
and constitutes a valid claim in the full amount thereof against the debtor
charged therewith on the books of Corporation and is, to the knowledge of
Sellers, subject to no defenses, setoffs or counterclaims.
(l) TAXES. Except as set forth in SCHEDULE "G," Corporation has
filed all tax returns and reports required to be filed with all appropriate
federal, state and local taxing authorities and has paid all taxes and
assessments required to have been paid to date. Corporation is not in default in
the payment of any federal, state or local tax or assessment. All tax returns
required to be filed by Corporation have been accurately prepared and duly and
timely filed. All deposits required by law to be made by Corporation with
respect to employees withholding and other taxes have been duly made.
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(m) LEASES, CONTRACTS, AGREEMENTS AND OTHER OBLIGATIONS. Except
as listed in SCHEDULE "H," Corporation is not a party to any material written,
oral or implied (i) contract for any person or firm to render services of any
kind which is not terminable at will without penalty; or (ii) lease, contract,
agreement or other obligation not made or created in the ordinary course of
business (or, if made in the ordinary course of business, which involves
obligations on the part of Corporation in excess of $50,000 as to any party),
which is not terminable by Corporation on thirty (30) days' or less notice
without penalty. All leases, contracts, agreements and other obligations to
which Corporation is a party or by which it is bound are valid, binding and
enforceable in accordance with their terms. Corporation has disclosed to Buyer,
and provided to Buyer copies of, all leases, contracts, agreements, and other
obligations which could have a material adverse effect on Corporation or its
operations.
(n) COMPLIANCE WITH LAW AND OTHER REGULATIONS. Except as set
forth in SCHEDULE "I," Corporation is in compliance with all requirements of
federal, state and local law, and all requirements of all governmental bodies
and agencies having jurisdiction over it, the conduct of its business, the use
of its assets and properties and all premises occupied by it. Corporation has
not received any notice, not heretofore complied with, from any federal, state
or local authority or any insurance or inspection body that any of its assets,
properties, facilities, equipment or business procedures or practices fails to
comply with any applicable law, ordinance, regulation, building or zoning law,
or requirement of any public authority or body. Sellers are not aware of any
proposed laws, rules, regulations, ordinances, orders, judgments, decrees,
governmental takings, condemnations or other proceedings which could reasonably
be expected to materially and adversely affect Corporation's assets,
liabilities, operations or prospects, either before or after the Closing Date.
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(o) LABOR, EMPLOYMENT CONTRACTS, AND EMPLOYEE BENEFIT PROGRAMS.
Without limiting the generality of any provision of this Agreement, except as
set forth in SCHEDULE "J," Corporation is not a party to any collective
bargaining agreement or employment agreement, and Corporation has not
experienced any labor problems and is not a party to any pending or threatened
labor dispute. Except for the VSM Corporation Profit Sharing Plan, Plan
Identification Number 001, Corporation has no employee pension benefit plans,
which shall include any retirement, welfare, deferred compensation, fringe
benefit or similar plan, program or policy, including any plan described in
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA").
Neither Corporation, nor any affiliate of Corporation (as determined under
Section 414(b), (c), (m) or (o) of the Internal Revenue Code) is now or has ever
contributed to any multiemployer plan, as defined in Section 3(37) of ERISA, or
any defined benefit plan, as defined in Section 3(35) of ERISA. Corporation, and
each "employee benefit plan," has complied with all applicable provisions of the
Internal Revenue Code and ERISA and with all other applicable federal, state,
and local laws relating to employee benefit plans and to the employment of
labor. Each "employee benefit plan" has been administered in accordance with its
terms, and each "employee benefit plan" intended to qualify under Section 401(a)
of the Internal Revenue Code meets in all material respects all requirements for
qualification and has received a favorable determination letter as to its
qualified status. There is no employee of Corporation whose employment is not
terminable at will, except as set out in SCHEDULE "J."
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(p) LIABILITIES. Corporation has no known obligations or
liabilities whether related to tax or non-tax matters, except and to the extent
reflected or reserved against on the 1999 Balance Sheet or in this Agreement or
any schedule or exhibit hereto, other than obligations or liabilities incurred
in the ordinary course of its business and disclosed to the extent otherwise
required by this Agreement. Without limiting the foregoing, Corporation does not
have any obligation or liability, contingent or otherwise, with respect to
product warranties relating to products sold by it not adequately covered by
insurance. Corporation has not shipped products to any customer on a contingent
or similar basis except for shipments set forth in SCHEDULE "K."
(q) LITIGATION. Except as set forth in SCHEDULE "L," there are no
suits, actions, claims, arbitrations, administrative or other proceedings or
governmental investigations pending or threatened against or affecting
Corporation, its business or its assets and properties in any court or before or
by any federal, state, local or other governmental department or agency, and
neither Corporation, nor its business, assets or properties are subject to or
directly affected by any order, judgment, award, decree, order or ruling of any
court or governmental agency. In addition to the foregoing, Corporation is not
contemplating the institution of any suit, action, claim, arbitration,
administrative or other proceeding.
(r) INSURANCE. There is in effect at present (i) public liability
and workman's compensation insurance covering Corporation, its assets,
properties and operations, (ii) fire and extended coverage insurance and (iii)
product liability insurance with respect to the assets and properties of
Corporation and the premises occupied by Corporation. A summary of this
insurance, giving the amounts, expiration dates, name of insurer and coverage is
set forth in SCHEDULE "M." Corporation has not received notice from or on behalf
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of any issuer of any such policy of its intention to cancel or refuse to renew
any policy issued by it or to materially increase the cost of premiums
thereunder.
(s) AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS AFFECTING
CORPORATION. Except as set forth in SCHEDULE "N," the execution and delivery of
this Agreement, the consummation of the transactions contemplated hereby, and
the fulfillment of the terms hereof, will not violate any provision of the
articles of incorporation or by-laws of Corporation, nor will they result in the
breach of any term or provision of, or result in the termination or modification
of, or constitute a default under, or conflict with, or cause the acceleration
of any obligation under, or permit any party to modify or terminate, any loan
agreement, note, debenture, indenture, mortgage, deed of trust, lease, contract,
agreement or other obligation of any description to which Corporation is a party
or by which it is bound, or any judgment, decree, order, or award of any court,
governmental body, or arbitrator, or any applicable law, rule or regulation.
Corporation has obtained all consents necessary for the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby.
(t) ACTIONS IN THE ORDINARY COURSE OF BUSINESS. Except as set
forth in SCHEDULE "O," since December 31, 1998 Corporation:
(i) has not taken any action outside of the ordinary and
usual course of business;
(ii) has paid all of its debts and obligations as they
became due;
(iii) has not incurred any debt, liability or obligation of
any nature to any party except for obligations arising from the purchase of
goods or the rendition of services in the ordinary course of business;
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(iv) has not knowingly waived any right of substantial
value;
(v) has used its best efforts to preserve its business
organization intact, to keep available the services of its employees, and to
preserve its relationships with its customers, suppliers and others with whom it
deals; and
(vi) has not increased or committed to increase the salary,
fee or compensation of any officer, employee, firm or person performing services
for it except for bonuses paid in the ordinary course of business and consistent
with past practices.
(vii) has not declared or paid any dividends to its
shareholders; (viii) has not sold, transferred, leased, mortgaged, or encumbered
any of its assets or equipment except in the ordinary course of business; or
(ix) has not been notified of the termination or possible
termination of any material contract, lease or agreement.
(u) NO MATERIAL ADVERSE CHANGE. Except as set forth in SCHEDULE
"P," since December 31, 1998, there has not been and there is not threatened any
material adverse change in the financial condition, results of operations or
business of Corporation or any material physical damage or loss to any of its
assets or properties or to the premises occupied by it (whether or not such
damage or loss is covered by insurance).
(v) The execution, delivery and performance by Sellers and
Corporation of this Agreement and the consummation by them of the transactions
contemplated by this Agreement will not require any consent or approval of, or
filing or notice to, any federal, state or local governmental or regulatory
authority, except those that have been obtained prior to Closing.
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(w) ENVIRONMENTAL MATTERS. To Sellers' and Corporations'
knowledge, (i) any real property in which Corporation has any interest, whether
in leasehold or in fee, is free of contamination from any Hazardous Material,
(ii) Corporation has not stored or used, nor caused any release of Hazardous
Material at such real property except for storage and use of Hazardous Material
in de minimis amounts in compliance with all Environmental Laws, (iii)
Corporation has been in compliance with all Environmental Laws, (iv) Corporation
has obtained all environmental permits required by any applicable law for the
operation of Corporation's business as presently conducted, there is no
litigation arising under or related to any environmental law concerning such
real property, and no notice has been received by Corporation or Sellers
identifying it as a potentially responsible party under applicable law. For
purposes of this representation, Environmental Laws is defined to mean any and
all federal, state and local laws, rules, orders, permits, regulations,
statutes, ordinances, codes or decrees regulating or imposing liability or
standards of conduct concerning Hazardous Materials or the environment. For
purposes of this representation, Hazardous Materials means (i) petroleum
hydrocarbons, (ii) asbestos or asbestos containing materials, (iii) radon,
explosives or radioactive materials, (iv) any hazardous compound, mixture or
formulation defined as or included in the definition of "hazardous substance,"
"hazardous waste," hazardous material," "extremely hazardous waste," "restricted
hazardous waste" "or toxic substance" as defined under Environmental Law.
(x) No representation or warranty by Corporation or Sellers in
this Agreement, nor any statement or certificate furnished or to be furnished by
Corporation or Sellers to Buyer or its representatives in connection with or
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact required to make
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those statements not misleading or necessary in order to
provide a prospective purchaser of the business or capital stock of Corporation
with adequate information as to Corporation's condition (financial and
otherwise), assets, liabilities and prospects. Sellers and Corporation have
disclosed to Buyer in writing all material adverse facts known to them relating
to the same.
4. FURTHER REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLERS.
To induce Buyer to enter into this Agreement and for the benefit of
Buyer, Sellers further represent, warrant and agree:
(a) OWNERSHIP OF CAPITAL STOCK OF CORPORATION. Sellers own 200
shares of Common Stock of Corporation, constituting all of the issued and
outstanding capital stock of Corporation. Sellers have good, marketable, and
unencumbered title to such stock (other than the option granted in the Option
Agreement) and there are no restrictions on their right to transfer such stock
to Buyer pursuant to this Agreement.
(b) RIGHTS TO ACQUIRE SHARES. Sellers do not have any outstanding
options, warrants or other rights to purchase or subscribe to, or contracts or
commitments to sell, or any interests, instruments, evidences of indebtedness or
other securities convertible in any manner into, shares of Corporation's capital
stock except pursuant to the Option Agreement.
(c) POWER OF SELLERS TO EXECUTE AGREEMENT. Sellers have full
power and authority to execute, deliver and perform this Agreement, and this
Agreement is the legal and binding obligation of Sellers and is enforceable
against them in accordance with its terms.
(d) AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS AFFECTING
SELLERS. The execution and delivery of this Agreement, the consummation of the
transactions hereby contemplated, and the fulfillment of the terms hereof, will
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not result in the breach of any term or provision of, or constitute a default
under, or conflict with, or cause the acceleration of any obligation under, any
agreement or other instrument of any description to which any Seller is a party
or by which any is bound, or any judgment, decree, order, or award of any court,
governmental body, or arbitrator, or any applicable law, rule or regulation.
5. BUYER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS. To induce
Sellers to enter into this Agreement, Buyer represents warrants and agrees as
follows:
(a) CORPORATE STATUS AND AUTHORITY. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been validly authorized by all
appropriate corporate action.
(b) AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS. The execution
and delivery of this Agreement, the consummation of the transactions
contemplated hereby, and the fulfillment of the terms hereof, will not violate
any provision of the articles of incorporation or by-laws of Buyer nor will they
result in the breach of any term or provision of, or constitute a default under,
or conflict with, or cause the acceleration of any obligation under, any loan
agreement, note, debenture, indenture, mortgage, deed of trust, lease, contract,
agreement or other obligation of any description to which Buyer is a party or by
which it is bound, or any judgment, decree, order, or award of any court,
governmental body, or arbitration or any applicable law, rule or regulation.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties shall survive for a period of two years after the Closing unless
notice of breach is given prior to termination except that representations and
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warranties made in Paragraphs 3(b), 4(a), and 4(b) shall survive indefinitely
and representations concerning the payment of taxes shall survive until
extinguished by the appropriate statute of limitations.
7. Buyer's Conditions Precedent to Closing. The obligations of
Buyer hereunder and its obligations to consummate the Closing provided for
herein shall be subject to the following conditions precedent, any one or more
of which may be waived by Buyer:
(a) COMPLIANCE WITH AGREEMENTS AND COVENANTS. Sellers shall have
performed and complied with each of their agreements, covenants and obligations
to be performed hereunder on or prior to the Closing date except those calling
for performance after the Closing date.
(b) TRUTH AND CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Sellers and Corporation contained in this
Agreement shall be true and correct as of the Closing date. (c) Absence of
Litigation or Proceedings. No litigation, governmental action or other
proceedings shall be threatened in good faith or commenced against Corporation
or Sellers with respect to any matter or against any person with respect to the
consummation of the transactions provided for herein.
(d) DELIVERY OF DOCUMENTS. All other documents required to be
delivered by Sellers at or prior to the Closing shall have been delivered or
shall be tendered at the Closing.
(e) COMPLETING DILIGENCE. Buyer shall have completed all of its
due diligence inquiries, and the results of all such inquiries shall have been
acceptable to Buyer.
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8. SELLERS' CONDITIONS PRECEDENT TO CLOSING. The obligations of Sellers
hereunder and their obligations to consummate the Closing provided for herein
shall be subject to the following conditions precedent, any one or more of which
may be waived by Sellers.
(a) COMPLIANCE WITH AGREEMENTS AND COVENANTS. Buyer shall have
performed and complied with each of their agreements, covenants and obligations
to be performed hereunder on or prior to the Closing Date.
(b) TRUTH AND CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct as of the Closing Date.
(c) DELIVERY OF DOCUMENTS. All other documents required to be
delivered by Buyer or Subsidiary at or prior to the Closing shall have been
delivered or shall be tendered at the Closing.
9. RELEASE OF GUARANTIES. Buyer and Sellers agree that they shall use
their best efforts before and after Closing to obtain the release of all
obligations of Sellers under all guaranties or other suretyship obligations,
whether secured or unsecured, in favor or for the benefit of any person or
entity providing financial accommodations (whether as a loan, lease, or
otherwise) to or for the benefit of Corporation. Until such guarantors shall
have been released, Buyer agrees to indemnify Sellers and hold them harmless
for, from and against any claims arising under such guarantees with respect to
obligations of Corporation incurred after Closing or that were incurred in good
faith by Corporation prior to Closing. Sellers represent and warrant that no
claims have been made or threatened against either of them prior to Closing with
respect to any guaranty or suretyship obligations.
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10. CLOSING. The Closing under this Agreement shall take place at 10:00
A.M. Phoenix, Arizona on the date of this Agreement and simultaneously with its
execution, at the offices of Squire, Sanders & Dempsey L.L.P., Suite 2700, 40 N.
Central Avenue, Phoenix, Arizona.
(a) DELIVERIES BY SELLERS. Sellers shall deliver at Closing:
(i) Certificates for 200 shares of Corporation's Common
Stock endorsed in blank, or with stock powers executed in blank attached.
(ii) The written resignations of all directors and
officers of Corporation.
(iii) The stock books and records, corporate minute
books and corporate seal of Corporation. All assignments, consents, certificates
and other documents delivered by Seller shall be in form reasonably satisfactory
to counsel for Buyer.
(b) DELIVERIES BY BUYER. Buyer shall deliver to Sellers at the
Closing certified funds in the amount of $950,000 in payment of the unpaid
portion of the purchase price for the Stock. All certificates and other
documents delivered by Buyer shall be in form reasonably satisfactory to counsel
for Seller.
11. INDEBTEDNESS TO SELLERS. Buyer shall cause the Corporation to pay
to Sellers $200,000 (all of which, for accounting purposes, shall be attributed
to repayment of principal) in satisfaction of all indebtedness of Corporation to
Sellers arising under one or more promissory notes or other evidences of
indebtedness payable to Sellers. Such monies are to be paid to Sellers out of
monies received by Corporation from Motorola de Mexico on account of amounts
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outstanding under invoices issued by Corporation to Motorola de Mexico or before
the Closing Date. Buyer shall cause such amounts to be paid immediately upon
receipt of funds from Motorola de Mexico, and in any event within 90 days after
the Closing. Sellers shall deliver to Corporation the original promissory notes
or instruments representing any indebtedness of Corporation to Sellers (other
than salary to Barbara Vaughan payable in the ordinary course of business)
marked to reflect that such indebtedness, regardless of its amount, has been
paid in full upon payment in full of such $200,000 to Sellers.
12. NON-COMPETITION. Because of the importance of Sellers to the
development and operation of the business of Corporation, as well as their
knowledge of and reputation in Corporation's industry, Buyer is unwilling to
enter into and perform this Agreement unless Sellers all enter into the
noncompetition agreement contained in this Paragraph 11. To induce Buyer to
enter into this Agreement and for the benefit of Buyer, Sellers jointly and
severally agree as follows:
(a) DURATION AND EXTENT OF RESTRICTION. Sellers shall not, for a
period ending two (2) years after the date hereof, within the United States and
Mexico, engage in a business the same as, similar to, or in general competition
with the business being conducted by Corporation as of the date hereof. The term
"engage in" shall include, but shall not be limited to, activities, whether
direct or indirect, as proprietor, partner, stockholder, director, officer,
principal, member, manager, agent, employee, consultant, contractor or lender;
provided, however, that the ownership of not more than three percent (3%) in the
aggregate by Sellers of the stock of a publicly held corporation shall not be
included in said term.
-17-
<PAGE>
(b) RESTRICTIONS WITH RESPECT TO CUSTOMERS AND EMPLOYEES. In
furtherance of, and without in any way limiting the restriction in subparagraph
(a) above, for the period specified in subparagraph (a) above, Sellers shall
not, directly or indirectly,
(i) request any present or future customers of Corporation
to curtail or cancel their business with Buyer;
(ii) disclose the identity of any past, present or future
customers of Corporation, or Buyer, to any other person, firm or corporation
engaged in a business the same as, similar to or in general competition with the
business being conducted by Corporation within the territorial limits described
in subparagraph (a) above;
(iii) solicit, canvas or accept, from any past, present or
future customers of Corporation or Buyer, any business for any other person,
firm or corporation engaged in a business the same as, similar to or in general
competition with the business being conducted by Corporation within the
territorial limits described in subparagraph (a) above; or
(iv) induce or attempt to influence any employee of
Corporation or Buyer to terminate his employment. As used in this subparagraph
(b), "future customer" shall mean a customer with whom business will have been
transacted between the date hereof and the end of the term specified in
subparagraph (a) above.
(c) REMEDIES FOR BREACH. Sellers acknowledge that the
restrictions contained in this Paragraph 11, in view of the nature of the
business in which Corporation is engaged, are reasonable and necessary to
protect the legitimate interests of Buyer and that any violation of these
restrictions would result in irreparable injury to Buyer. Sellers agree that, in
-18-
<PAGE>
the event of a violation of any of such restrictions, Buyer shall be entitled to
preliminary and permanent injunctive relief as well as an equitable accounting
of all earnings, profits and other benefits arising from such violation, which
rights shall be cumulative and in addition to any other rights or remedies to
which Buyer may be entitled.
13. CONSULTING SERVICES. Charles L. Vaughan shall provide after
Closing, if requested by Buyer, reasonable consulting services regarding the
business and affairs of the Corporation upon such terms and conditions as the
parties shall specify by separate written agreement.
14. FURTHER ASSURANCES. Sellers and Buyer shall execute and deliver all
such other instruments and take all such other action as any party may
reasonably request from time to time, before or after the Closing, in order to
effectuate the transactions provided for herein. The parties shall cooperate
with each other and with their respective counsel and accountants in connection
with any steps to be taken as a part of their respective obligations under this
Agreement, including the preparation of financial statements.
15. INDEMNIFICATION.
(a) INDEMNITY AGAINST LOSSES FROM UNTRUTH OF REPRESENTATIONS OR
WARRANTIES OR BREACH OF AGREEMENTS OR COVENANTS. Subject to Paragraphs 14(c) and
14(d) in the event that at any time hereafter but prior to the termination of
such representation or warranty it shall appear that any representation or
warranty of Sellers contained or referred to in any paragraph of this Agreement
or in any certificate, schedule, exhibit or document delivered pursuant hereto
was incorrect or untrue when made, or that Sellers breached any covenant or
agreement contained in this Agreement, Sellers, jointly and severally shall pay
Buyer, at Buyer's option, the amount of the loss, expense or damage suffered or
-19-
<PAGE>
incurred by Buyer, which would not have been suffered or incurred if the facts
set forth in those representations or warranties had been correct or those
covenants and agreements had not been breached plus all reasonable attorney's
fees and costs incurred by Buyer in pursuing its rights.
(b) INDEMNITY AGAINST SUITS AND CLAIMS. Without in any way
limiting any of the rights of Buyer, subject to Paragraphs 14(c) and 14(d),
Sellers hereby indemnify and hold harmless Buyer from all liabilities, suits,
claims, demands, damages, fees, costs and expenses (including reasonable
attorney's and accountant's fees) arising out of the incorrectness of any
representation or warranty or the breach of any agreement or covenant of Sellers
under this Agreement, plus all attorney's fees and cost incurred by Buyer in
pursuing its rights. Upon written demand by Buyer, Sellers shall defend against
any liabilities, suits, claims and demands which may arise from the
incorrectness of those representations or warranties or the breach of those
covenants and agreements, subject to Paragraphs 14(c) and 14(d). Sellers shall
conduct any defense diligently and shall keep Buyer advised of the status of
such defense. If Sellers are called upon to defend, Buyer shall be entitled to
participate, through counsel of their own choice, in any such defense, at
Buyer's expense. Buyer shall not settle or compromise any liability, suit, claim
or demand for which Sellers are to provide indemnification hereunder without the
prior written consent of Sellers, which consent will not be unreasonably
withheld.
(c) BUYER'S KNOWLEDGE. Buyer acknowledges that Buyer, with the
full cooperation of Sellers, conducted extensive investigations and inquiries
concerning the business and affairs of the Corporation. Buyer represents and
warrants that, as of the Closing, it is not aware of any facts or circumstances
that cause or reasonably should cause Buyer to believe that any representation
-20-
<PAGE>
or warranty made by Sellers or Corporation is false or incorrect or that would
give rise to a claim against Sellers under this Paragraph 14.
(d) MAXIMUM LIABILITY. In no event shall Sellers have any
aggregate liability for all claims under this Paragraph 14 in excess of the
purchase price paid by Buyer to Sellers for the Stock.
16. BROKERS AND FINDERS. Each of the parties hereto represents and
warrants to the others that it has not employed or retained any broker or finder
in connection with the transactions contemplated by this Agreement nor has it
had any dealings with any person which may entitle that person to a fee or
commission from any other party hereto. Each of the parties indemnifies and
holds the others harmless from and against any claim, demand or damages
whatsoever by virtue of any arrangement or commitment made by it with or to any
person that may entitle such person to any fee or commission from the other
parties to this Agreement.
17. GENERAL PROVISIONS.
(a) NOTICES. All notices, requests, demands and other
communications required or permitted under this Agreement shall: (a) be in
writing; (b) shall be deemed to have been duly given, made and received on the
day of hand delivery to the party to whom directed, one day following the day of
deposit thereof with delivery charges prepaid with a national overnight delivery
service, two days following the deposit thereof, postage prepaid, with the
United States Postal Service, by registered or certified mail, return receipt
requested, or upon confirmation of receipt if sent by telecopier, with a copy by
regular first class mail; and (c) addressed to the parties at their respective
addresses set forth below:
-21-
<PAGE>
(i) If to Buyer:
Sitek Corporation
1817 W. 4th Street
Tempe, Arizona 85281
Attention: Don Jackson
Facsimile (602) 921-8550
with a copy to:
Quarles & Brady
One E. Camelback Road
Phoenix, Arizona 85012
Attention: Robert S. Bornhoft, Esq.
(ii) If to Sellers:
Charles L. Vaughan and Barbara Y. Vaughan
2616 South Bala Drive
Tempe, Arizona 85282
with a copy to:
Squire, Sanders & Dempsey L.L.P.
40 N. Central Avenue
Suite 2700
Phoenix, Arizona 85004
Attention: James L. Adler, Jr., Esq.
Facsimile: (602) 253-8129
Any party may alter the address or addresses to which communications or
copies are to be sent by giving notice of such change of address in conformity
with the provisions of this paragraph for the giving of notice.
(b) BINDING NATURE OF AGREEMENT; ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns, except that
no party may assign or transfer its rights or obligations under this Agreement
without the prior written consent of the other parties hereto.
-22-
<PAGE>
(c) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. This
Agreement may not be modified or amended other than an agreement in writing.
(d) CONTROLLING LAW. This Agreement and all questions relating to
its validity, interpretation, performance and inducement, shall be governed by
and construed, interpreted and enforced in accordance with the internal laws of
the State of Arizona without giving effect to conflicts of laws principles.
(e) PROVISIONS SEPARABLE. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
(f) INDULGENCES NOT WAIVERS. Neither the failure nor any delay on
the part of any party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
-23-
<PAGE>
(g) TITLES NOT TO AFFECT INTERPRETATION. The titles of paragraphs
and subparagraphs contained in this Agreement are for convenience of reference
only, and they neither form a part of this Agreement nor are they to be used in
the construction or interpretation hereof.
(h) EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
(i) GENDER. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context requires.
(j) NUMBER OF DAYS. In computing the number of days for purposes
of this Agreement, all days shall be counted, including Saturdays, Sundays and
holidays; provided, however, that if the final day of any period falls on a
Saturday, Sunday or holiday, then the final day shall be deemed to be the next
day which is not a Saturday, Sunday or holiday.
(k) FURTHER ASSURANCES. The parties hereto shall promptly execute
and deliver all instruments, documents, or assurances, and do such do such other
acts, as may be reasonably necessary and requested by a party to carry out the
intent of this Agreement and more fully vest in the requesting party all rights,
interests, powers, benefits, privileges, and advantages conferred or intended to
be conferred on it by this Agreement or to correct any mathematical error.
(l) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure the benefit of the parties' respective successors, assigns, heirs, and
personal representatives.
-24-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
BUYERS:
SITEK INCORPORATED, an Arizona corporation
By
------------------------------------------
Name:
---------------------------------------
Its:
---------------------------------------
SELLERS:
/s/ Charles L. Vaughan
------------------------------------------
Charles L. Vaughan
/s/ Barbara Y. Vaughan
------------------------------------------
Barbara Y. Vaughan
-25-
<PAGE>
STOCK PURCHASE AGREEMENT
Sitek Incorporated
an Arizona corporation
Buyer
and
Charles L. Vaughan
Barbara Y. Vaughan
Sellers
April 28, 1999
-26-
<PAGE>
TABLE OF CONTENTS
Page
----
1. Purchase of Stock...................................................... 2
2. Purchase Price......................................................... 2
3. Sellers' Representations and Warranties................................ 2
(a) Corporate Status and Authority ................................... 2
(b) Capitalization ................................................... 2
(c) Books and Records ................................................ 3
(d) Directors, Officers and Bank Accounts ............................ 3
(e) Financial Statements ............................................. 3
(f) Real Estate ...................................................... 4
(g) Subsidiaries and Joint Ventures .................................. 4
(h) Ownership of Assets and Properties ............................... 4
(i) Condition of Assets and Properties ............................... 4
(j) Ownership of Rights .............................................. 5
(k) Accounts Receivable .............................................. 5
(l) Taxes ............................................................ 5
(m) Leases, Contracts, Agreements and Other Obligations .............. 5
(n) Compliance with Law and Other Regulations ........................ 6
(o) Labor, Employment Contracts, and Employee Benefit Programs ....... 7
(p) Liabilities ...................................................... 7
(q) Litigation ....................................................... 8
(r) Insurance ........................................................ 8
(s) Agreement Not in Breach of Other Instruments Affecting Corporation. 9
(t) Actions in the Ordinary Course of Business ........................ 9
(u) No Material Adverse Change ........................................ 10
4. Further Representations, Warranties and Agreements of Sellers........... 12
(a) Ownership of Capital Stock of Corporation ......................... 12
(b) Rights To Acquire Shares .......................................... 12
-i-
<PAGE>
TABLE OF CONTENTS
Page
----
(c) Power of Sellers to Execute Agreement ............................. 12
(d) Agreement Not in Breach of Other Instruments Affecting Sellers..... 12
5. Buyer's Representations, Warranties and Agreements...................... 13
(a) Corporate Status and Authority .................................... 13
(b) Agreement Not in Breach of Other Instruments ...................... 13
6. Survival of Representations and Warranties.............................. 13
7. Buyer's Conditions Precedent to Closing................................. 14
(a) Compliance With Agreements and Covenants .......................... 14
(b) Truth and Correctness of Representations and Warranties ........... 14
(c) Absence of Litigation or Proceedings .............................. 14
(d) Delivery of Documents ............................................. 14
8. Sellers' Conditions Precedent to Closing................................ 15
(a) Compliance with Agreements and Covenants .......................... 15
(b) Truth and Correctness of Representations and Warranties ........... 15
(c) Delivery of Documents ............................................. 15
(d) Release of Guaranties ............................................. 15
9. Closing................................................................. 16
(a) Deliveries by Sellers ............................................. 16
(b) Deliveries by Buyer ............................................... 16
10. Indebtedness to Sellers................................................. 17
11. Non-competition......................................................... 17
(a) Duration and Extent of Restriction ................................ 17
(b) Restrictions with Respect to Customers and Employees .............. 18
(c) Remedies for Breach ............................................... 18
13. Further Assurances...................................................... 19
14. Indemnification......................................................... 19
(a) Indemnity Against Losses from Untruth of Representations or
Warranties or Breach of Agreements or Covenants ................... 19
-ii-
<PAGE>
TABLE OF CONTENTS
Page
----
(b) Indemnity Against Suits and Claims ................................ 20
(c) Limited Indemnity ................................................. 20
(d) Maximum Liability ................................................. 21
15. Brokers and Finders..................................................... 21
16. General Provisions...................................................... 21
(a) Notices ........................................................... 21
(b) Binding Nature of Agreement; Assignment ........................... 22
(c) Entire Agreement .................................................. 23
(d) Controlling Law ................................................... 23
(e) Provisions Separable .............................................. 23
(f) Indulgences Not Waivers ........................................... 23
(g) Titles Not to Affect Interpretation ............................... 24
(h) Execution in Counterparts ......................................... 24
(i) Gender ............................................................ 24
(j) Number of Days .................................................... 24
(k) Further Assurances ................................................ 24
(l) Successors and Assigns ............................................ 25
-iii-
<PAGE>
EXHIBIT "1"
BALANCE SHEETS
The Balance Sheets of Corporation at 1/31/99, 2/28/99, and 3/31/99 and the
Financial Statements for the fiscal years ended 12/31/95, 12/31/96, 12/31/97 and
12/31/1998 and all related schedules and notes to the foregoing.
-Exhibit 1-
<PAGE>
SCHEDULE "A"
BANK ACCOUNTS
Charles L. Vaughan President and Chief Financial Officer
Barbara Y. Vaughan Vice President and Secretary
Judith E. Hill Director
Community First National Bank Accounts:
Business Checking Account 8210615310
Dealer Reserve Account 8210800510
All persons authorized to sign checking accounts checks.
Up for renewal 4/24/99.
-Schedule A-
<PAGE>
SCHEDULE "B"
REAL ESTATE
Property located at 1919 West Fairmont, Tempe, Arizona:
1. Lease Agreement with Redondo Wilton Property Company for Suites 1 through 4
expires 5/31/99.
2. Sublease Agreement with Advertising Checking Bureau for Suite 5 expires
2/29/00.
-Schedule B-
<PAGE>
SCHEDULE "C"
SUBSIDIARIES
NONE
-Schedule C-
<PAGE>
SCHEDULE "D"
PERMITTED LIENS
NONE
-Schedule D-
<PAGE>
SCHEDULE "E"
EXCESS MATERIALS
NONE
-Schedule E-
<PAGE>
SCHEDULE "F"
LICENSES AND TRADEMARKS
Agreement with Richard Martin to furnish mechanical designs. Copy of royalty
agreement is attached.
-Schedule F-1-
<PAGE>
[VSM Corporation Logo]
1919 W. Fairmont * Suite 2 * Tempe, AZ 85282
P.O. Box 25826 * Tempe, AZ 85285
(602) 431-0444 * Fax (602) 431-0528
February 1, 1996
Mr. Richard Martin
72 Kettletown Woods Road
Southbury, CT 06488
Dear Dick:
This letter will serve to define the agreement we have made for your furnishing
to VSM Corporation certain mechanical designs, and for the payment of royalties
to you on the sales of products made to those designs.
DESIGNS
The kind of designs to be furnished presently amount to two in number.
Additional designs may be furnished by you from time to time. The present
designs are:
CHECK VALVE. Three types of check valve designs are presently furnished.
1. Weld-in, 1/4"
2. Bolt in, 1/4" Face Seal, Female
3. Bolt in, 1/4" Face Seal, Male
VACUUM GENERATOR. This element is sometimes called an eductor. Two
designs are presently furnished:
1. Single 1/4" Face seal vacuum port.
2. Dual 1/4" Face seal vacuum port.
TERM
The term of this agreement is twenty years from February 1, 1996, to January 31,
2016.
-Schedule F-2-
<PAGE>
Mr. Richard Martin
February 1, 1996
Page 2
ROYALTIES
Royalties shall be computed on the net sales amounts of these products. Copies
of VSM invoices to third parties will be furnished to you on a quarterly basis,
accompanied by a summary and payment of the amounts due you. Royalties on the
products made under this agreement and used in manufacturing other VSM products
will be compensated to you in the amount of seven and one-half percent (7.5%) of
the net price charged to a most favored third party. Warranty replacement items
and samples are excluded from this royalty.
In the event you should not survive the term of this agreement, royalties shall
accrue to your surviving spouse or children.
PAYMENTS
Payment of royalty amounts due will be made quarterly on or about January 15,
April 15, July 15 and October 15 of each year.
Very truly yours,
VSM CORPORATION
Charles L. Vaughan
/s/ Charles L. Vaughan
------------------------------------
Accepted: /s/ Richard Martin
----------------------------
Richard Martin
Date: 2/12/96
CLV:jh
-Schedule F-3-
<PAGE>
SCHEDULE "G"
TAXES
NONE
-Schedule G-
<PAGE>
SCHEDULE "H"
MATERIAL CONTRACTS
1. GMAC
Isuzu Truck '97
12/31/96 36 mos. Option to purchase.
2. Orix Credit Alliance
Schleuniger Wire/Cable Machining Machine #54128
11/03/98 36 mos. $1.00 buy out at end of lease.
3. Sanwa Leasing Corporation
Sharp 2025 Copier
12/30/96 36 mos. $1.00 buy out at end of lease.
Effective 3/01/99, Sanwa Leasing Corporation is now Fleet Leasing Corporation.
-Schedule H-
<PAGE>
SCHEDULE "I"
COMPLIANCE WITH LAW
NONE
-Schedule I-
<PAGE>
SCHEDULE "J"
LABOR MATTERS
NONE
-Schedule J-
<PAGE>
SCHEDULE "K"
CONTINGENT SHIPMENTS
NONE
-Schedule K-
<PAGE>
SCHEDULE "L"
LITIGATION
There are no suits pending or threatened against Corporation. However,
Corporation received and responded to a subpoena duces tecum in the lawsuit
styled Bend Research, Inc. v. Isotronics, LLC and Robert Adams, Civ. 99-6021-HO,
United States District Court for the District of Oregon.
-Schedule L-
<PAGE>
SCHEDULE "M"
INSURANCE
[ATTACHED]
-Schedule M-1-
<PAGE>
SUMMARY OF INSURANCE Prepared: 4/23/98
For: VSM Corporation The Arizona Group, Inc.
Mark Carter 33325 E. Baseline Road
P.O. Box 25826 P.O. Box 1818
Tempe, AZ Gilbert, AZ
85282 602-431-0444 85298-1818 602-892-8755
<TABLE>
<CAPTION>
Policy
Coverage Amount Company No. Eff. Exp.
- -------- ------ ------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Commercial Application Auto Owners
Insurance 45940639 05/15/96 05/15/99
Premises 001 Building 001
1919 W. Fairmont #2
Tempe, AZ
85282
Property Auto Owners
Insurance 45940639 05/15/98 05/15/99
Premises 001 Building 001
Personal Prop 250,000
Coins % 90
Valuation RC
Cause of Loss Special
Deductable 500
PP of Others 1,000,000
Coins % 90
Valuation RC
Cause of Loss Special
Deductable 500
Stock/Invento 1,000,000
Coins % 90
Valuation RC
Cause of Loss Special
Deductable 500
Additional Coverages
Total Blanket Property BPP limit is $2,250,000.
General Liability Auto Owners
Insurance Co. 45940639 05/15/98 05/15/99
Occurance
General Aggregate 1,000,000
Products/Completed Oper. Aggr. Excluded
Personal & Advertising Injury 1,000,000
Each Occurrence 1,000,000
Fire Damage (Any One Fire) 100,000
Medical Expense (Any One Person) 10,000
Per Occurence 250
Property Damage Deductible
Endt 55091 1/89 Includeds Hired & Non-Ownd
Auto Liability
Equipment Floater Auto Owners
Insurance Co. 45940639 05/15/98 05/15/99
Coverage/Deductible
Special Form Incl Theft Actual Cast
Valuation
$250
% Coinsurance 100
</TABLE>
-Schedule M-2-
<PAGE>
SUMMARY OF INSURANCE Prepared: 4/23/98
For: VSM Corporation The Arizona Group, Inc.
Mark Carter 33325 E. Baseline Road
P.O. Box 25826 P.O. Box 1818
Tempe, AZ Gilbert, AZ
85282 602-431-0444 85298-1818 602-892-8755
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Policy
Coverage Amount Company No. Eff. Exp.
Equipment Floater (Continued)
Valuation
$250
% Coinsurance 100
</TABLE>
-Schedule M-3-
<PAGE>
<TABLE>
<CAPTION>
SCHEDULED EQUIPMENT
MODEL DESCRIPTION ID#/ DATE AMOUNT OF
NO. YEAR (TYPE, MANUFACTURER, MODEL, CAPACITY, ETC.) SERIAL NO. PURCHASED NEW/USED INSURANCE
- --- ---- ------------------------------------------- ---------- ------------------ ---------
<S> <C> <C> <C>
001 Spectrometer Helium Leak Cart BDBAD6005027 10,000
002 CP 1 D1-100 Power Supply 145 9,000
003 CP 500 Y Fweld Head 7,500
004 25 ft Remote Pendant 750
</TABLE>
-Schedule M-4-
<PAGE>
SCHEDULE "N"
CONFLICTS
NONE
-Schedule N-
<PAGE>
SCHEDULE "O"
EXTRAORDINARY ACTIONS
NONE
-Schedule O-
<PAGE>
SCHEDULE "P"
MATERIAL ADVERSE CHANGES
NONE
-Schedule P-
