SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
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Commission File Number 0-18565
SEMPER RESOURCES CORPORATION
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(Exact name of small business issuer as specified in its charter)
Nevada 93-0947570
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(State or other jurisdiction of
incorporation or organization (IRS Employer Identification Number)
8484 Wilshire Blvd., Suite 525, Beverly Hills, CA 90211
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(Address of principal executive offices)
(213) 658-1477
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(Issuer's telephone number)
5277 Cameron Street, Suite 130, Las Vegas, NV 89118
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(Former name, former address and former fiscal year if changed since last
report)
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
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
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As of October 31, 1996 there were 25,207,964 shares of the issuer's Common
Stock, $.001 par value, outstanding.
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SEMPER RESOURCES CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
Number
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of September 30, 1996
and December 31, 1995..........................................3
Statements of Operations for the Three Months and
Nine Months Ended September 30, 1996 and 1995..................4
Statements of Cash Flows for the Nine Months
Ended September 30, 1996 and 1995..............................5
Notes to Financial Statements..................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................8
PART II - OTHER INFORMATION.............................................10
SIGNATURES..............................................................11
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PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
SEMPER RESOURCES CORPORATION
BALANCE SHEETS (Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
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<S> <C> <C>
ASSETS
Current assets:
Cash $ 114,383 $ 151
Prepaid Expenses 38,110 -
----------- -----------
Total current assets: 152,493 151
Property & equipment, net - -
Other assets:
Joint venture timber concessions 7,098,948 7,098,948
Goodwill, net 103,071 108,626
Royalty advances 68,620 -
Deposits 110,169 -
Other 6,750 -
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Total other assets 7,387,558 7,207,574
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Total assets $ 7,540,051 $ 7,207,725
=========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ 29,923 $ 10,000
Accrued expenses 10,884 2,670
Advances from related parties 4,045 5,100
Notes payable due related parties 100,077 70,000
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Total current liabilities 144,929 87,770
Stockholders' equity
Common Stock, $.001 par value 25,208 118,690
Preferred Stock $.001 par value, Series A 1 -
Additional paid in capital 10,627,874 10,022,643
Accumulated deficit (2,471,991) (2,471,991)
Deficit accumulated during the development stage (785,970) (549,387)
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Total stockholders' equity 7,395,122 7,119,955
Total liabilities and stockholder' equity $ 7,540,051 $ 7,207,725
=========== ===========
</TABLE>
See accompanying notes to financial statements
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SEMPER RESOURCES CORPORATION
STATEMENT OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Revenues
Sales $ - $ - $ - $ -
Expenses:
Selling, general &
administrative 89,756 32,775 227,813 57,635
Depreciation and amortization 1,852 47 5,555 281
---------- --------- ---------- ---------
Total expenses 91,608 32,822 233,368 57,916
---------- --------- ---------- ---------
Loss from operations (91,608) (32,822) (233,368) (57,916)
Other income (expenses)
Interest expenses (3,027) - (8,214) -
---------- --------- ---------- ---------
Net loss $ (94,635) $ (32,822) $ (241,582) $ (57,916)
========== ========= ========== =========
Loss per share $ (.00) $ (.01) $ (.01) $ (.02)
========== ========= ========== =========
Weighted average shares
outstanding 25,207,964 3,379,279 25,087,964 3,066,498
========== ========== ========== =========
</TABLE>
See accompanying notes to financial statements
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SEMPER RESOURCES CORPORATION
STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(241,582) $ (57,916)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation & Amortization 5,555 281
Changes in assets and liabilities:
Prepaid expenses (38,110) -
Other assets (increase) (178,789) -
Accounts payable and other liabilities 27,082 (2,017)
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Net cash (used in) operating activities (425,844) (59,652)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock 280,000 26,850
Proceeds from sales of preferred stock 230,000 -
Loan proceeds 30,076 50,000
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Net cash provided by financing activities 540,076 76,850
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Net increase (decrease) in cash 114,232 17,198
Cash and cash equivalents, at beginning
of period 151 27
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Cash and cash equivalents, at end of period $ 114,383 $ 17,225
========= =========
</TABLE>
See accompanying notes to financial statements.
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SEMPER RESOURCES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. INTERIM FINANCIAL PRESENTATION
The financial statements have been prepared by the Company without audit
and are subject to year-end adjustment. Certain information and footnote
disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. These interim statements should be
read in conjunction with the audited financial statements filed by the
Company on Form 10-K with the Securities and Exchange Commission. The
financial statements reflect all adjustments (which include only normal
recurring adjustments) which, in the opinion of management, are necessary
to present fairly the Company's financial position, results of operations
and cash flows.
Results of operations for the three months and nine months ended September
30, 1996 and 1995, are not necessarily indicative of results to be
achieved for the full fiscal year.
2. SHAREHOLDER'S EQUITY
During the nine months ended September 30, 1996, the Company issued, for
$230,000, 230 shares of Series A 12% Preferred Stock to an offshore
investor pursuant to Regulation S under the Securities Act of 1933, as
amended. The preferred shares are convertible into common stock, at the
option of the holder until December 31, 1997, at a price of $1.50 per
share. The preferred shares are entitled to receive a 12% dividend
payable semi-annually in cash or, at the Company's option, in common stock
(at $1.50 per share).
The preferred shares have a liquidation preference of $1,000 per share and
are subject, at the Company's option, to forced conversion or redemption
at $1,000 per share on or after December 31, 1997.
During the nine months ended September 30, 1996, the Company issued 20,000
shares of common stock at $1.50 per share for a total of $30,000 and
83,333 shares of common stock at $3.00 per share, or a total of
$250,000. Both were issued pursuant to a private placement under
Regulation D of the Securities Act of 1933, as amended. Pursuant to
the placement of those shares, the Company granted to the holders of
such shares demand registration rights commencing August 24, 1996 and
expiring February 24, 1997.
3. PROPOSED ACQUISITION OF FREMONT FOREST PRODUCTS
In September of 1996, the Company entered into an Asset Purchase and Sale
Agreement with Fremont Forest Products ("Fremont") pursuant to which the
Company agreed to purchase, through a subsidiary, and Fremont agreed to
sell substantially all of the assets utilized by Fremont in the operation
of a lumber and building products dock terminal business in Long Beach and
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Whittier, California. The purchase price of the assets to be acquired is
$1,300,000 plus 500,000 shares of common stock. $100,000 of the purchase
price was paid on execution of the agreement with the balance being
payable at closing which shall be no later than December 4, 1996.
In connection with the proposed purchase of the assets of Fremont, the
Company agreed to loan $500,000 of working capital to its newly formed
subsidiary for use in connection with the acquired operation. As a
condition of the contemplated purchase and sale, the Company and the two
principal officers of Fremont will enter into a Consulting and
Noncompetition Agreement providing for monthly consulting fees of $4,000
to the President of Fremont and an Employment Agreement providing for a
base salary of $100,000 annually to James Salo, the former Vice President
of Fremont, who will serve as President of the Company's newly formed
subsidiary.
Consummation of the Fremont acquisition is subject to various
contingencies, including the arrangement of financing for the purchase.
As of November 1, 1996, the Company lacked adequate funds to complete the
acquisition and had no commitments from third parties to provide such
funding. In the event the Company is unable, or elects not, to close the
acquisition, other than as a result of Fremont's failure to deliver the
assets to be acquired, the $100,000 deposit paid by the Company shall be
forfeited to Fremont.
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ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
There were no revenues for either the nine months ended September 30, 1996 or
September 30, 1995 as the sole business activity of the Company was its search
for a business to acquire and the acquisition of certain timber concessions and
the planning for their development.
Operating expenses increased by $175,452, or 302.9%, to $233,368 from $57,916
for the nine months ended September 30, 1995. This increase is the result of
costs incurred in evaluating the acquisition of certain timber concessions and
planning their development. In addition, the Company incurred interest expense
of $8,214 on a shareholder loan for the nine months ended September 30, 1996.
The Company had no interest expense for the corresponding period of the prior
year.
As discussed below, the Company has entered into an agreement to acquire
substantially all of the assets of Fremont Forest Products ("Fremont") in the
operation of a lumber and building products dock terminal. In the event the
Company is successful in acquiring the Fremont assets, future operating results
are expected to change materially to reflect such operations.
CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
For the past twelve months, the Company has funded its operating losses and
capital requirements through the sale of stock and loans from its shareholders.
As of September 30, 1996, the Company had a cash balance of $114,383 and
working capital of $7,563.
Net cash used in operating activities increased to $425,844 from $59,652 for
the nine months ended September 30, 1996 and 1995, respectively. The increase
in cash used in operations resulted from the evaluation of the timber
concessions and the planning for their development.
Net cash provided by financing activities increased to $540,076 from $76,850
for the nine months ended September 30, 1996 and 1995, respectively. This
increase is attributable to increased sales of common stock and preferred stock
and a loan from the principal shareholder.
At September 30, 1996, the Company had a demand loan payable to a shareholder
of $100,077.
In September of 1996, the Company entered into an Asset Purchase and Sale
Agreement with Fremont Forest Products ("Fremont") pursuant to which the
Company agreed to purchase, through a subsidiary, and Fremont agreed to sell
substantially all of the assets utilized by Fremont in the operation of a
lumber and building products dock terminal business in Whittier, California.
The purchase price of the assets to be acquired is $1,300,000 plus 500,000
shares of common stock. $100,000 of the purchase price was paid on execution of
the agreement with the balance being payable at closing which shall be no later
than December 4, 1996.
In connection with the proposed purchase of the assets of Fremont, the Company
agreed to loan $500,000 of working capital to its newly formed subsidiary for
use in connection with the acquired operation. As a condition of the
contemplated purchase and sale, the Company and the two principal officers of
Fremont will enter into a Consulting and Noncompetition Agreement providing for
monthly consulting fees of $4,000 to the President of Fremont and an Employment
Agreement providing for a base salary of $100,000 annually to James Salo, the
former Vice President of Fremont, who will serve as President of the Company's
newly formed subsidiary.
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Consummation of the Fremont acquisition is subject to various contingencies,
including the arrangement of financing for the purchase. As of November 1,
1996, the Company lacked adequate funds to complete the acquisition and had no
commitments from third parties to provide such funding. In the event the
Company is unable, or elects not, to close the acquisition, other than as a
result of Fremont's failure to deliver the assets to be acquired, the $100,000
deposit paid by the Company shall be forfeited to Fremont.
The Company has experienced significant operating losses throughout its
history, and the acquisition of Resources of the Pacific, Inc. will require
substantial funds for the development of its business. Therefore,
the Company's ability to survive is dependent on its ability to raise capital
through the issuance of stock or borrowing of additional funds. Without the
success of one of these options, the Company will not have sufficient cash to
satisfy its working capital and investment requirements for the next twelve
months.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit
Number Description
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2.1 Asset Purchase and Sale Agreement
3.1 Restated Articles of Incorporation
3.2 Certificate of Designation Fixing terms of Series A
Preferred Stock
b. Reports on Form 8-K
None
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereto duly authorized.
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(REGISTRANT) SEMPER RESOURCES CORPORATION
BY (SIGNATURE) /s/ Robert A. Dietrich
(NAME AND TITLE) Robert A. Dietrich, President and
Chief Executive Officer
(DATE) November 18, 1996
BY (SIGNATURE) /s/ John H. Brebbia
(NAME AND TITLE) John H. Brebbia, Chief Financial Officer
(DATE) November 18, 1996
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 114,383
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 152,493
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,387,558
<CURRENT-LIABILITIES> 144,929
<BONDS> 0
1
0
<COMMON> 25,088
<OTHER-SE> 7,370,033
<TOTAL-LIABILITY-AND-EQUITY> 7,395,122
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 228,368
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,214
<INCOME-PRETAX> (236,582)
<INCOME-TAX> 0
<INCOME-CONTINUING> (236,582)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (236,582)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
ASSET PURCHASE AND SALE AGREEMENT
As of ,1996, THIS AGREEMENT OF PURCHASE AND SALE OF
--------------
ASSETS ("Agreement") is made by and between, FREMONT FOREST PRODUCTS, a
California corporation ("Seller"), and SEMPER RESOURCES CORPORATION, a
Nevada corporation ("Buyer"), collectively, the "Parties."
RECITALS
A. WHEREAS, Seller is the operator of a lumber and building products
dock terminal service business including lease of wharf facility ("Wharf
Lease") as further described in Section 1.2, located at Pier T122 in the Port
of Long Beach, CA ("Premises") and the operation known as the business
"Business" and the personal property, collectively "Business Assets,"
associated therewith along with certain corporate assets, located at 7200
Greenleaf Avenue, Suite 310 Whittier, CA 90607 ("Whittier"); and
B. WHEREAS, Buyer desires to purchase and Seller desires to sell to Buyer
on the terms and conditions hereinafter set forth, the Business, the
Business Assets and certain Whittier assets;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. PURCHASE AND SALE OF THE ASSETS.
1.1 ASSETS. On the terms and subject to the conditions set forth herein,
at the "Closing" (as closing is defined in Section 4.1 hereof) Seller shall
sell, transfer, convey and assign to Buyer, and Buyer shall purchase and
assume from Seller, the Business and Business Assets including the Wharf
Lease. Buyer will establish a subsidiary ("Fremont Resources Corporation") for
the purpose of acquiring the Business and Business Assets and will fund
such subsidiary with Five Hundred Thousand Dollars ($500,000) in the form of a
loan from Buyer (Semper Resources Corporation) to be used for working capital
purposes. The Business and Business Assets shall consist of all of the personal
property owned by Seller and used in connection with the operation of the
Business, including but not limited to the following:
1.1.1 The Business, including the customer list(s), all trade names,
trademarks, copyrights, telephone number(s) used in connection with the
Business, the goodwill of the Business and the right to use the name
"Fremont" but not "Fremont Forest Products";
1.1.2 All furniture, fixtures and equipment located on the Premises
and at the Whittier office or used in connection with the Business (the
"FF&E"), as detailed on Schedule 1.1.2, attached;
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1.1.3 All customer files, records, cards, computer records,
accounting and bookkeeping records and all other written materials
reflecting the business that has been conducted by Seller at the Premises
and at the Whittier office.
1.1.4 All Supplies and Equipment ("Supplies") at Premises and
Whittier necessary and desirable in order to effectively conduct the
Business, as detailed on Schedule 1.1.4, attached;
1.1.5 All licenses and permits held by or issued to Seller which are
required for the lawful conduct of the Business, but only to the extent
lawfully transferable and necessary for Buyer to carry on the Business;
1.1.6 All fixed assets, leasehold improvements and material handling
equipment, as detailed on Schedule 1.1.6, attached; and
1.1.7 All accounts receivable and all material handling contracts in
process.
PROVIDED, HOWEVER, that the Business Assets shall not include (i) any cash or
cash equivalents of Seller (except as herein provided), (ii) any liabilities of
the Business (except as is set forth at Section 1.2 below), (iii) any shares of
stock of Seller or any other entity or (iv) any tax, lease, insurance or
utilities refunds or deposits, excluding deposits on the leases assumed
hereunder.
1.2 LIABILITIES NOT ASSUMED. Buyer shall not assume, pay or be liable
for any of the liabilities, obligations, promises or agreements of Seller of
whatever kind or description, with the exception of: (i) a computer lease with
Brook Equipment Leasing Ltd., (ii) the Wharf Lease (dated July 8, 1982 covering
parcels I, IA, IB, II, III, IV, and V), and (iii) the Whittier office lease.
2. PURCHASE PRICE FOR THE BUSINESS AND THE BUSINESS ASSETS.
The purchase price for the Business and the Business Assets shall be One
Million Three Hundred Thousand Dollars ($1,300,000) and 500,000 common shares
of Semper Resources Corporation. The purchase price will be paid to Seller by
Buyer as follows:
2.1 One Hundred Thousand Dollars ($100,000) cashier's check to be paid to
Seller upon Seller's executing this Agreement, and
2.2 At Closing, One Million Two Hundred Thousand Dollars ($1,200,000)
cashier's check;
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2.3 At Closing, five hundred thousand (500,000) common shares of Semper
Resources Corporation.
3. REPORTING AND ALLOCATION OF THE PURCHASE PRICE.
3.1 REPORTING OF TRANSACTION. Each of the parties hereto agrees to timely
cause to be filed with the appropriate tax and governmental authorities such
forms and/or information as is required to properly report this transaction and
to comply with any and all reporting requirements. If either Seller or Buyer
fails to file the required information and/or forms, such party shall fully
indemnify and hold harmless the other party against any damage, including, but
not limited to, attorneys' and accountants' fees, as well as costs that result
directly or indirectly therefrom.
3.2 BULK SALE LAW. Seller shall timely and fully comply with any or all
applicable bulk sale laws, if any, including the obligation to provide any
required timely notice to creditors. The cost and expense of such compliance
shall be borne by Seller.
3.3 ALLOCATION. Buyer and Seller hereby agree that the fair market
valuation allocation of the Business and Business Assets as set forth on
Schedule 3.3 is acceptable to each other and is agreed upon, and further that
each shall timely report, as necessary and required, the allocation to the
appropriate taxing authority(ies), documentation of which will be exchanged at
closing.
4. CLOSING; EFFECTIVE DATE.
4.1 CLOSING. The "Closing" shall mean the date and time at which Seller
consummates the sale of the Business and the Business Assets to Buyer. Seller
shall deliver to Buyer and Buyer shall deliver to Seller the document(s) set
forth in this Section 4. The Closing shall take place at the offices of
Seller's counsel around 9:00 A.M. (local time) on the "Closing Date." The
"Closing Date" for the sale and purchase of the Business and Business Assets
shall be the ninetieth (90th) day after signing this agreement or any other
date mutually agreed upon by Buyer and Seller. The Closing shall be deemed to
be effective for tax, financial and accounting purposes as of 9:00 A.M. on the
agreed upon Closing Date.
4.2 DELIVERIES. At the Closing:
4.2.1 Seller shall deliver to Buyer a Bill of Sale and Certificate of
Ownership for the Business and Business Assets and a list of all customers
of the Business and their records for 1995 and to Closing.
4.2.2 Buyer shall deliver to Seller the cashier's check of the cash
balance owing hereunder, and a certificate representing the five hundred
thousand (500,000) shares of Buyer's common stock as well as other items
required hereby.
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4.3 RELATIONSHIP AND NONCOM PETITION AGREEMENTS. Seller's President,
Mr. Peter V. Speek, and Vice President, James R. Salo, each shall execute
Agreements attached hereto as Exhibits "A" and Exhibit "B," respectively; which
Agreements are incorporated herein.
4.4 ASSUMPTION/ASSIGNMENT OF LEASE. Seller shall deliver to Buyer the
necessary paperwork by which Buyer shall assume or be assigned the Wharf Lease
at the Premises, Whittier assets and computer equipment with the express
written approval of the landlord or lessor, subject to the terms of such
assignment, including the duration thereof. Such assignment shall include any
right of Buyer to the proceeds or payment of the security deposit.
4.5 PREMISES CLEANUP. Seller shall be responsible for all clean up of any
kind or nature to be done to the Premises and Whittier which were directly
attributable to Seller's occupancy of the Premises and Whittier (the
"Responsible Period") and solely with respect to the Premises and Whittier. In
addition, Seller (i) hereby fully, explicitly and completely releases and
discharges Buyer from any clean up of any kind or nature to be done to the
Premises and Whittier which originated solely during the Responsible Period,
and (ii) shall be responsible for the clean up per applicable city, state or
federal laws regarding hazardous materials or toxic waste caused by Seller's
operations during the Responsible Period. Buyer shall be responsible for all
clean up of any kind or nature to be done to the Premises and Whittier which
occurred after the Closing of this Agreement.
4.6 WRITTEN RECORDS. Seller shall deliver to Buyer all records, cards,
computer records, accounting and bookkeeping records, and all of the written
materials reflecting the Business that has been conducted by Seller at the
Premises except Seller's internal corporate records to which, however, Seller
shall provide Buyer access for purposes of Buyer's audit requirements upon
reasonable notice to Seller.
5. BUYER'S CONDITIONS TO CLOSING.
Buyer's obligation to consummate the Closing is subject to the approval of
Buyer, which approval shall not be unreasonably withheld, or an explicit
written waiver by Buyer, of each of the following conditions and the occurrence
of the following events:
5.1 DELIVERY OF DOCUMENTS. Delivery of the documents described in
Section 4.
5.2 FINANCING. Buyer shall have obtained financing on terms acceptable to
Buyer in order to pay the purchase price.
5.3 REPRESENTATIONS AND WARRANTIES. All covenants, representations and
warranties of Seller contained in this Agreement shall be true and correct when
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made and as of the Closing Date as if made again at such time and shall survive
the closing of the purchase and sale of assets for a period of three (3) years
from the Closing Date, and Seller shall have performed and satisfied all
covenants and conditions required by this Agreement to be performed and
satisfied by Seller at or prior to the Closing Date.
5.3.1 COMPLIANCE WITH LAWS. Except as set forth on Schedule 5.3.1,
to the best of Seller's knowledge, Seller is now in compliance, and at all
times has been operated in compliance with all material federal, state and
local laws, statutes, regulations, ordinances and governmental policies
(collectively "Laws") including, without limitation, all material Laws
relating to environmental protection, occupational safety and health and
equal employment practices, and such compliance does not and will not
materially impair the operations of the Business. Except as set forth on
Schedule 5.3.1, no notice, citation, summons or order has been issued, no
investigation or review is pending or, to the knowledge of Seller,
threatened by any governmental or other entity (i) with respect to any
alleged violation by Seller of any Law, (ii) with respect to any alleged
failure by Seller to have any material permit, certificate, license,
approval, registration or authorization or (iii) with respect to any
generation, treatment, storage recycling, transportation or disposal of any
hazardous or toxic or polluting substances. Except as set forth on Schedule
5.3.1, the Seller has not treated, stored, recycled or disposed of any
hazardous, toxic or polluting substances on the Premises. Seller has
reported, to the extent required by Law, all past and present sites where
hazardous, toxic or polluting substances, if any, from Seller have been
treated, stored or disposed. The Seller has not transported any hazardous,
toxic or polluting substances or arranged for the transportation of such
substances to any location which is subject of federal, state or local
enforcement actions or other investigations which may lead to claims
against Seller or Buyer for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including, but not limited
to, claims under the Comprehensive Environmental Response, Compensation and
Liabilities Act of 1980.
5.3.2 NO DEFAULTS, ETC. Neither the execution and delivery by Seller
of this Agreement or the consummation by Seller of the transaction
contemplated hereby is an event that, of itself, or with giving of notice
or the passage of time or both, constitutes a material violation of or will
conflict with or result in any material breach of or any default under, or
require the giving or any notice under the terms, conditions or provisions
or any material Law to which Seller or any of the acquired assets is
subject, or of any material agreement or instrument to which Seller is a
party or by which Seller or any of the acquired assets is bound, or result
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in the creation or imposition of any material lien, charge or encumbrance
on the acquired assets nor will it result in an acceleration or
modification of any liability or obligation of the Seller.
5.3.3 DISCLOSURE. No covenant, representation or warranty by Seller,
and no written statement, or document to be furnished by Seller pursuant
hereto or at the Closing hereunder, contains or will contain any untrue
statement of material fact, or will omit to state a material fact necessary
to provide Buyer with complete and accurate information as to the Seller,
the acquired assets, or to make statements therein not misleading. To
Seller's knowledge, all documentation and information furnished by Seller to
Buyer are accurate in all respects.
5.4 SELLER'S PERFORMANCE. Seller shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by Seller on or before the Closing
Date.
5.5 CONDUCT OF BUSINESS. Prior to the Closing Date, Seller shall conduct
its business only in the ordinary course, shall maintain the Supplies at
current levels and shall not take, or permit to be taken by any person under
his control, any action that is represented and warranted not to have been
taken except as otherwise consented to by Buyer in writing.
5.6 PRESERVATION OF ORGANIZATION. Seller shall use its best efforts (i)
to preserve Seller's business organization intact, (ii) to continue the
operations of Seller at normal and customary levels, and (iii) to preserve for
Buyer the goodwill and loyalty of the customers and others having business
relations with Seller, which may include one or more letters or similar
writings to be sent by mail or provided by or on behalf of Seller to all of the
customers or vendors of the Business within two (2) years prior to execution of
this Agreement recommending that said customers or vendors utilize the goods
and services of Buyer. Such letters or similar writings shall be mailed or
provided no later than five (5) business days after the Closing Date.
5.7 ADVERSE CHANGES. It is understood that Buyer shall have the option
not to complete the purchase herein in the event that in the reasonable opinion
of Buyer there is, at any time prior to the Closing, any adverse change in the
condition (financial or otherwise), affairs, business, assets or prospects of
Seller, the lease on the Premises, or environmental regulations and/or
liabilities associated therewith, including that no environmental agency shall
have imposed any conditions upon the transfer of the Business or Business
Assets deemed by Buyer to be unduly burdensome for reason of timing, costs or
otherwise.
5.8 TAXES AND ASSESSMENTS. Except as set forth in Schedule 5.8, Seller
represents and warrants that it has paid all taxes and assessments due and
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owing, or for which it would or will become liable, or that otherwise may be or
become a lien on the Business or Business Assets, including any franchise taxes
due, or franchise fees, as well as any payroll or income taxes, except as set
forth in Section 7.5, and Seller further represents that any and all necessary
tax returns which are directly associated with the Business and Business Assets
have been timely and properly filed. Seller further represents and warrants
that any and all due and owing, or accrued sales tax(es) associated with the
Business or Business Assets shall be completely and entirely paid by or before
the close of escrow.
5.9 INABILITY TO CLOSE. Buyer may desire not to close the transaction for
whatever reason; in which event Buyer shall forfeit the One Hundred Thousand
Dollars ($100,000) deposit in escrow unless any or all of the following
conditions exist:
a. Seller is unable to convey the Business and Business Assets to the
Buyer, or
b. Seller is unable to effect the assignment of the Wharf Lease, or
c. Buyer having obtained a Phase One Environmental Audit of the Long Beach
Wharf, as requested by Seller, has determined in its own opinion that
the environmental liability in excess of Fifty Thousand Dollars
($50,000) and therefore is unacceptable to Buyer, or
d. Seller shall have failed to enter into a new labor agreement with the
Cabinet Makers, Millman & Industrial Carpenters, Local 721 which
provides for average annual wage increases thereunder at or below ten
percent (10%).
5.10 CORPORATE ACTION. All corporate actions necessary to authorize the
performance of this agreement and the consummation of the sale by Seller shall
have been duly and validly taken by Seller; and Buyer shall have been furnished
with copies of all necessary resolutions and consents certified by the
secretary or an assistant secretary of Seller, as of the Closing Date.
5.11 OFFICERS CERTIFICATE. Seller shall execute and deliver or caused to
be delivered to Buyer a certificate dated the Closing Date signed by the
President or Secretary of Seller certifying that the representations and
warranties of Seller made herein were true and correct as of the Closing Date
and that Buyer has performed and complied in all material respects with all
covenants and agreements required to be performed or complied with by Seller
prior to the Closing Date and dated the Closing Date.
5.12 GOOD STANDING. Buyer shall have received from the California
Secretary of State a certificate of good standing concerning the corporate
status of Seller.
6. SELLER'S CONDITIONS TO CLOSING.
Seller's obligation to consummate the Closing is expressly subject to the
approval of Seller, which approval shall not be unreasonably withheld, or an
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explicit written waiver by Seller of each of the following conditions and the
occurrence of the following events:
6.1 REPRESENTATIONS AND WARRANTIES AT CLOSING. Each of the covenants,
representations and warranties of Buyer set forth in this Agreement shall be
true and correct when made, and as of the Closing, as if made again at such
time and shall survive the closing of the purchase and sale of assets for a
period of three (3) years from the Closing Date, and Buyer shall have performed
or complied with all agreements and covenants required by this Agreement to
have been complied with by Buyers prior to the Closing.
6.2 CORPORATE ACTION. All corporate actions necessary to authorize the
performance of this agreement and the consummation of the sale by Buyer shall
have been duly and validly taken by Buyer; and Seller shall have been furnished
with copies of all necessary resolutions and consents certified by the
secretary or an assistant secretary of Buyer, as of the Closing Date.
6.3 OFFICERS CERTIFICATE. Buyer shall execute and deliver or caused to be
delivered to Seller a certificate dated the Closing Date signed by the
President or Secretary of Buyer certifying that the representations and
warranties of Buyer made herein were true and correct as of the Closing Date
and that Seller has performed and complied in all material respects with all
covenants and agreements required to be performed or complied with by Buyer
prior to the Closing Date and dated the Closing Date.
6.4 BUYER'S PERFORMANCE. Buyer shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by Buyer on or before the Closing
Date.
6.5 EMPLOYEES. A review will be made by Buyer of the employees of Seller,
and the scope of their responsibilities, and consideration will be given as to
which employees (if any) are to be retained in connection with the Business;
provided, however, that neither this Agreement, nor any other actions by Buyer,
other than the execution and delivery of a written agreement by Buyer to any
such employee(s), will create in Seller's employee's any rights, explicit or
implied, to continued employment.
6.6 RELEASES; FEES. Share Recipients (defined in Section 25) shall
deliver releases as required by such Section and the advisory fee of any
brokers or professional advisors shall be paid in full.
6.7 EMPLOYMENT, CONSULTING AGREEMENTS. The Employment and Consulting
Agreements for Mr. Salo and Mr. Speek, respectively, shall be fully executed
and delivered.
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6.8 GOOD STANDING. Seller shall have received from the Nevada Secretary
of State a certificate of good standing concerning the corporate status of
Buyer.
7. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer as follows:
7.1 SELLER'S BEST KNOWLEDGE. With respect to the representations and
warranties of Seller herein that are to "Seller's Best Knowledge," "Best
Knowledge" shall mean and include the actual knowledge of Seller or key
employees of Seller.
7.2 EXECUTION, DELIVERY AND PERFORMANCE. Seller has the right, power,
legal capacity and authority to enter into and perform its obligations under
this Agreement, and to execute and deliver this Agreement. No further action
is required on the part of Seller or any other person, entity, or court to
render this Agreement and such other agreements or instruments to be delivered
pursuant to this Agreement by Seller as legal, valid, and binding obligations
of Seller which are enforceable against it in accordance with their terms.
Seller further represents and warrants that it is a corporation in good
standing, organized and existing pursuant to the laws of the State of
California, and that it has complied with all requisite corporate formalities,
and that its business license is current and valid.
7.3 FINANCIAL STATEMENTS. Seller has delivered to Buyer for its
inspection and review prior to the execution of this Agreement the true and
correct books and records of the Business from 1995 through and including the
most recent unaudited financial statement(s) of the Business containing a
balance sheet, statement of operations for the year to the date of such
statement(s), schedules to the statement of operations, statement(s) of cash
flows, cash receipts journal, cash disbursements journal, general journal and
general ledger (collectively, the "Financial Statements"). Except as has been
disclosed by Seller to Buyer in the Financial Statements, the Financial
Statements present fairly and accurately the results of operations of the
Business for the period of time covered by such Financial Statements, which
such Financial Statements have not materially misstated or otherwise
misrepresented the financial condition of the Business.
7.4 NO ADVERSE CHANGE. Except as has been disclosed by Seller to Buyer
in the Financial Statements, there has not been:
7.4.1 Any damage or destruction, whether or not covered by insurance,
materially and adversely affecting the financial condition, assets or
operation of the Business; nor
7.4.2 Any sale or transfer of any asset of the Business, except in
the ordinary course of business.
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7.5 LITIGATION. Except as set forth in Schedule 7.5, to the Seller's Best
Knowledge, there are no suits, claims, actions, tax liens, court-imposed or
judgment liens, levies or attachments, proceedings or investigations pending or
threatened against Seller relating to either the Business or any of the
Business Assets, except as noted below, and Seller has no knowledge or reason
to suspect that the Business is currently operated in violation of any
applicable law, ordinance or regulation.
7.6 TITLE TO AND CONDITION OF THE BUSINESS ASSETS. Except as set forth in
Schedule 7.6, Seller has good and marketable title to each of the Business
Assets, free and clear of all claims of third parties, except to the extent (if
any) that Seller has provided explicit, written information to Buyer indicating
the nature, background, extent and status of any security interest any third
party may have in any of the Business or Business Assets, and any obligations
or liabilities of any kind or nature whatsoever that Seller has to any third
parties related to the Business or Business Assets. The Business Assets (i)
constitute all of the assets used in the conduct of the Business, and (ii) all
of the assets as indicated in Section 1.1 and subparts above, and (iii) as of
the Closing Date shall be in the same condition as historically operated by
Seller.
7.7 FULL DISCLOSURE. None of the representations, warranties or covenants
made by Seller in this Agreement or in any attached Exhibits or documents
delivered to Buyer pursuant to this Agreement by or on behalf of Seller contain
any untrue statement of any fact or omit to state any fact required to be
stated in order to make the representations, warranties or covenants not
misleading. There is no fact known to Seller which materially adversely
affects the business, operations, affairs, prospects or condition of the
Business which has not been clearly set forth in this Agreement or an attached
Exhibit or a document delivered to Buyer pursuant to this Agreement.
7.8 RELATIONS. Seller's Long Beach facility is organized under a
collective bargaining agreement with Cabinet Makers, Millman & Industrial
Carpenters, Local 721, dated December 1, 1993. The current union agreement
terminates on November 30, 1996. Seller is not aware of any work stoppages nor
have work stoppages been threatened during the past five years, nor has work
stoppages been a normal, frequent or routine part of contract renegotiation or
renewals. Seller is not aware of any activity by any other union, including the
Longshoreman's Union, to organize, incorporate, merge or substitute Sellers
current union representation and its agreement with Seller with another union
representation or agreement.
8. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller as follows:
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8.1 VALID EXECUTION AND DELIVERY. Buyer has all requisite power and
authority to enter into, execute and perform the obligations under this
Agreement, and no further action is necessary on the part of Buyer to render
this Agreement and such other agreements or instruments to be delivered
pursuant to this Agreement by Buyer enforceable in accordance with their terms.
8.2 INSPECTION AND INVESTIGATION. On the day of or immediately preceding
the Closing Date, Buyer shall have a full inspection for the purpose of
examining the physical condition of the FF&E, the Supplies and the Business
Assets, relating to the Business. Prior to the Closing, Buyer shall also have
had the opportunity to fully investigate the books, records and the Financial
Statements relating to the Business. As of the Closing Date, Buyer shall be
purchasing the Business based on: (a) its own independent investigation and
evaluation of the Business, (b) its future prospects, and (c) the covenants,
representations and warranties of Seller set forth herein, and is not relying
on any oral representations made by Seller or any other person in this
transaction with regard to the Business and Business Assets not otherwise
contained explicitly or implicitly herein.
9. RISK OF LOSS.
Notwithstanding the execution of this Agreement by Buyer and Seller, Seller
shall bear the entire risk of loss with respect to the Business and Business
Assets until both title and possession are transferred to Buyer on the Closing
Date. If, prior to the Closing Date, any of the Business Assets are destroyed
or diminished by an amount equal to or more than Five Thousand Dollars ($5,000)
for an uninsured casualty, then the purchase price shall be reduced
accordingly. If Buyer elects to accept the Business Assets in their damaged or
diminished condition, then, provided that the proceeds of any insurance or
condemnation awards payable to Seller by reason of such casualty or taking
shall be sufficient, in Buyer's sole discretion, to rebuild or repair the
damaged or taken Business Assets, all proceeds of any insurance or condemnation
awards payable to Seller by reason of such casualty or taking shall forthwith
be paid or turned over to Buyer.
10. INDEMNIFICATION.
10.1 INDEMNIFICATION BY SELLER. Seller agrees to indemnify, defend and
hold harmless Buyer from and against any losses, costs, damage(s) and expenses
(including but not limited to reasonable attorneys' fees and costs) incurred by
Buyer and resulting from any material breach by Seller of any of Seller's
representations, warranties and covenants set forth in this Agreement. In
furtherance and not in limitation of the foregoing indemnity, Seller shall
indemnify and hold harmless Buyer from and against all claims asserted against,
and all losses, costs, damages and expenses incurred by Buyer arising from the
business conducted by Seller at the Premises prior to the Closing. Buyer shall
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promptly notify Seller of the existence of any claim, demand or other matter to
which Seller's indemnification obligations would apply and shall give Seller
reasonable opportunity to defend the same at its own expense and with counsel
of its own selection; provided, that Buyer shall at all times also have the
right to fully participate in the defense at its own expense. If Seller shall,
within a reasonable time after such notice, fail to defend, Buyer shall have
the right, but not the obligation, to undertake the defense of, and to
compromise or settle, the claim or other matter on behalf of Seller. If the
claim is one that cannot by its nature be defended solely by Seller, Buyer
shall make available all information and assistance that Seller may reasonably
request. Notwithstanding any of the foregoing to the contrary, no
indemnification or liability of Seller shall give rise to a claim of indemnity
or otherwise by Buyer unless and until the value of such damages, costs and
expenses incurred by Buyer exceed Fifteen Thousand Dollars (15,000) and only to
the extent of such excess amount.
10.2 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify, defend and hold
harmless Seller from and against any losses, costs, damage(s) and expenses
(including but not limited to reasonable attorneys' fees and costs) incurred by
Seller and resulting from any breach by Buyer of any of Buyer's
representations, warranties, and covenants set forth in this Agreement. Seller
shall promptly notify Buyer of the existence of any claim, demand or other
matter to which Buyer's indemnification obligations would apply and shall give
Buyer reasonable opportunity to defend the same at its own expense and with
counsel of its own selection; provided, that Seller shall at all times also
have the right to fully participate in the defense at its own expense. If
Buyer shall, within a reasonable time after this notice, fail to defend, Seller
shall have the right, but not the obligation, to undertake the defense of, and
to compromise or settle (exercising reasonable business judgment), the claim or
other matter on behalf of Buyer. If the claim is one that cannot by its nature
be defended solely by Buyer, Seller shall make available all information and
assistance that Buyer may reasonably request.
10.2.1 Any time after the Closing Date, but limited to one (1) year
after the Closing Date, Seller shall inform Buyer by written notification
("Claim Notice") of any claim for indemnification under Section 10.2.
Buyer shall have ten (10) days from the date of the Claim notice in which
to dispute any such claim. If Seller does not receive written notification
("Buyer's Notice") of any such dispute prior to 5:00 p.m. on the tenth
(10th) day following the date of the Claim Notice such claim shall be
deemed to be approved. In the event that all or any portion of a claim
remains unresolved twenty (20) days after the date of Buyer's Notice after
good faith efforts to resolve the claim, Seller and Buyer shall attempt to
resolve such claim through mediation, and then, if necessary, by
arbitration in accordance with the procedures described in Section 23.
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11. NOTICES.
All notices under this Agreement by either party hereto shall be in
writing and shall be deemed effectively given when delivered if delivered in
person, or if sent by mail at the earlier of their receipt or five (5) days
after the same have been deposited in a regularly maintained receptacle for the
deposit of U.S. mail, registered or certified, postage prepaid, and addressed
to such party as set forth below:
If to Seller: Fremont Forest Products, Inc.
c/o Peter V. Speek
P.O. Box 4129
Whittier, CA 90607
If to Buyer: Mr. Robert A. Dietrich
President & CEO
Semper Resources Corporation
5277 Cameron Street, Suite 130
Las Vegas, NV 89118
or to such other place as each such party may from time to time designate by
written notice to the other party delivered in the manner specified herein.
12. FURTHER ASSURANCES.
Seller and Buyer agree to take all actions reasonably necessary to satisfy
or cause to be satisfied the conditions set forth in this Agreement and to
consummate the sale of the Business Assets to Buyer on the terms set forth in
this Agreement, and shall take or cause to be taken such further or other
actions reasonably necessary to carry out the intent and purposes of this
Agreement. Seller and Buyer agree that on request of the other and from time
to time prior to or after the Closing, each will take such actions and execute
and deliver such instruments and agreements as may be reasonably necessary to
vest and confirm the Business and Business Assets in Buyer.
13. AMENDMENTS AND WAIVERS.
No amendment or waiver of any provision of this Agreement shall in any
event be effective unless the same shall be in writing and signed by the party
to be bound thereby, or its designated and authorized representative. No
failure or delay on the part of any party in exercising any power, right,
privilege or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy
constitute a waiver of any other or further exercise of any right, power or
remedy. Any waiver of any provision of this Agreement, and any consent to any
departure by any of the parties from the terms or conditions of any provision
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of this Agreement, shall be effective only in the specific instance and for the
specific purpose for which given.
14. SEVERABILITY OF PROVISIONS.
This Agreement shall be performed and shall be enforceable to the full
extent allowable by applicable law, and the illegality, invalidity, waiver or
unenforceability of any provision of this Agreement shall not affect the
legality, validity, applicability or enforce ability of the remaining provisions
hereof.
15. COUNTERPARTS.
This Agreement may be executed in two or more counterparts and in separate
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
16. ENTIRE AGREEMENT.
This Agreement contains the entire agreement of the parties hereto with
respect to the matters set forth herein. Any prior offers, counter-offers,
agreements or understandings, written or oral, with respect to the matters set
forth in this Agreement are completely superseded by this Agreement. Each
party certifies to its full familiarity with the provisions of this Agreement
and agrees that the provisions of this Agreement are not to be construed either
for or against either party merely because one party or the other has been
responsible for the preparation of the text of this Agreement.
17. REMEDIES CUMULATIVE.
Except as otherwise expressly set forth in this Agreement, the rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies that any party may otherwise have at law or in equity.
18. SUCCESSORS.
This Agreement shall be binding, and shall inure to the benefit of, Buyer,
Seller and their respective successors, devisees and assigns.
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19. ATTORNEYS' FEES.
If any legal action or any arbitration or other proceeding is brought for
the enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled.
20. RECITALS/HEADINGS/NUMBER/GENDER.
All recitals set forth immediately preceding Section 1 hereof shall be
incorporated herein and constitute warranties of the appropriate party. The
headings contained in this Agreement are solely for convenience and are not
intended to and do not affect the terms hereof. Whenever the single number is
used in this Agreement, the same shall include the plural, and the masculine
gender shall include the feminine and neuter genders, and the word "person"
shall include corporation, firm, or association when required by the context.
21. GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the laws
of the State of California. Jurisdiction and venue over any legal action
brought hereunder shall reside exclusively in the County of Los Angeles, State
of California.
22. EXPENSES.
Seller and Buyer shall each pay all expenses incurred by it (respectively)
in connection with and arising out of this Agreement, including but not limited
to, all fees and expenses of its counsel and accountants.
23. ARBITRATION OF DISPUTES.
Any dispute arising out of this Agreement, shall be finally settled by
binding arbitration before a single arbitrator in the County of Los Angeles,
California, in accordance with the then current Commercial Arbitration Rules of
the American Arbitration Association ("AAA") and the California Arbitration Act
("C.C.P. Code Section 1280, et seq."). The term "dispute" includes, without
limitation, any disagreements between the parties concerning the existence,
interpretation or enforcement of this Agreement, or the alleged breach of this
Agreement, and any misrepresentation in connection with any of the provisions
of this Agreement. The award rendered by the arbitrator shall be final and
binding upon Seller and Buyer and may be entered in any court (subject to
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Section 21) having jurisdiction thereof subject only to the challenges
available under the California Arbitration Act. Either party may commence
arbitration by sending a written notice of arbitration to the other party.
The notice will state the dispute with particularity. As part of his or her
decision, the arbitrator shall allocate the costs of arbitration, including
fees of attorneys and experts, as he or she deems fair and equitable in light
of all relevant circumstances. Said arbitration shall be conducted by an
arbitrator chosen by mutual agreement of Seller and Buyer, or failing such
agreement, an arbitrator experienced in commercial/business matters, including
the sale and/or purchase of a small business, appointed by the AAA. There
shall be limited discovery prior to the arbitration hearing as follows: (a)
exchange of witness lists and copies of documentary evidence and documents
related to or arising out of the issues to be arbitrated, (b) depositions of
all party witnesses, and (c) such other depositions as may be allowed by the
arbitrator(s) upon a showing of good cause. Depositions shall be conducted in
accordance with the California Code of Civil Procedure. The arbitrator shall
be required to provide in writing to the parties the basis and reasoning of the
award or order of such arbitrator. A court reporter may record all hearings,
with such record constituting the official transcript of such proceedings.
Nothing contained herein, however, shall preclude either party from promptly
seeking equitable relief against the other, if deemed truly necessary, in a
Court in Los Angeles County. Each party hereto understands and accepts that by
virtue of this arbitration clause, there will very likely be no trial by jury
available hereunder and, thus, each party hereto acknowledges a waiver of that
otherwise fundamental right to a trial by jury.
24. UNDERSTANDING AND LEGAL COUNSEL.
Each party hereto has carefully read and reviewed this Agreement, and the
exhibits hereto, and understands same. Each party has also carefully reviewed
this Agreement with his counsel and/or accountant or other professional
advisor(s), or chosen not to do so at his own risk. Each party voluntarily
enters into this Agreement.
25. BROKERS/FINDERS/INTERMEDIARIES.
Seller shall be responsible for any and all fees charged by any broker,
finder or intermediary incurred or to be incurred as the result of the
consummation of this Agreement and closing engaged by Seller, except
thirty-five thousand (35,000) shares of five hundred thousand (500,000) shares
referenced in Section 2.3 and fifteen thousand (15,000) additional shares of
Buyer will be used as such compensation and allocated to the following persons
("Share Recipients") as follows:
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Name Number of Shares
Lou Lessor, etc. al. 35,000
Dean Alger 15,000
Each Share Recipient shall execute a release in substantially the form set
forth on Exhibit 25 attached hereto on or prior to the Closing. The parties
hereto acknowledge that Management Resource Center has served as a financial
advisor to Seller and shall be paid its advisory fee on or prior to the
Closing.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of
the date and year first above written.
<TABLE>
<S> <C>
(REGISTRANT) SEMPER RESOURCES CORPORATION
BY (SIGNATURE) /s/ Robert A. Dietrich
(NAME AND TITLE) Robert A. Dietrich, President
and Chief Executive Officer
(DATE) November , 1996
FREMONT FOREST PRODUCTS, INC.
BY (SIGNATURE) /s/ Peter V. Speek
(NAME AND TITLE) Peter V. Speek, President
(DATE) November , 1996
BY (SIGNATURE) /s/ James R. Salo
(NAME AND TITLE) James R. Salo, Vice President
(DATE)
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RESTATED ARTICLES OF INCORPORATION
OF
RESOURCES OF THE PACIFIC CORPORATION
We, the undersigned President and Secretary of Resources of the Pacific
Corporation do hereby certify:
That the board of directors of said corporation at a meeting duly convened
on May 16, 1996, adopted resolutions to amend and restate the Articles of
Incorporation, and
That the number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 14,000,000; that
said amendments have been consented to and approved by a majority vote of
the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon, and
That the text of Articles of Incorporation as amended to date reads as
herein set forth in full:
ARTICLE I
NAME
The name of the corporation (hereinafter called "Corporation") is
Resources of the Pacific Corporation.
ARTICLE II
PERIOD OF DURATION
The period of duration of the Corporation is perpetual.
ARTICLE III
PURPOSES AND POWERS
The purpose for which this Corporation is organized is to engage in the
business of investing in investments of all forms and nature and to engage in
any and all other lawful business.
ARTICLE IV
CAPITALIZATION
The total number of shares of stock which the Corporation shall have the
authority to issue is one hundred million one hundred thousand (100,100,000)
shares, consisting of one hundred million (100,000,000) shares of Common Stock
having a par value of $.001 per share and one hundred thousand (100,000) shares
of Preferred Stock having a par value of $.001 per share.
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A. Preferred Stock
The Board of Directors is authorized, subject to the limitations prescribed
by law and the provisions of this Article, to provide for the issuance of
the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Nevada, to establish from
time to time the number of shares to be included in each such series and to
fix the designation, powers, preferences and rights of the shares of each
such series and the qualifications, limitations or restrictions thereof.
1. The authority of the Board with respect to each series shall include,
but not be limited to, determination of the following:
a. The number of shares constituting that series and the distinctive
designation of that series;
b. The dividend rate on the shares of that series, whether dividends
shall be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on
shares of that series;
c. Whether that series shall have voting rights, in addition to the
voting rights provided by law, and if so, the terms of such voting
rights;
d. Whether that series shall have conversion privileges and, if so,
the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events as the Board
of Directors shall determine;
e. Whether or not the shares of that series shall be redeemable and,
if so, the terms and conditions of such redemption, including the
date or dates upon or after which they shall be redeemable and the
amount per share payable in case of redemption, which amount may
vary under different conditions and at different redemption dates;
f. Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series and, if so, the terms and amount
of such sinking fund;
g. The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of
payment of shares of that series; and
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<PAGE>
h. Any other relative rights, preferences and limitations of that
series.
2. Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment, before any dividends shall be paid
or declared and set apart for payment on Common Stock with respect to
the same dividend period.
3. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets available for distribution to
holders of shares of Preferred Stock of all series shall be
insufficient to pay such holders the full preferential amount to which
they are entitled, then such assets shall be distributed ratably among
the shares of all series of Preferred Stock in accordance with the
respective preferential amounts (including unpaid cumulative dividends,
if any) payable with respect thereto.
4. Unless otherwise provided in any resolution of the Board of Directors
providing for the issuance of any particular series of Preferred Stock,
no holder of Preferred Stock shall have any pre-emptive right as such
holder to subscribe for, purchase or receive any part of any new or
additional issue of capital stock of any class or series, including
unissued and treasury stock, or obligations or other securities
convertible into or exchangeable for capital stock of any class or
series, or warrants or other instruments evidencing rights or options
to subscribe for, purchase or receive any capital stock of any class or
series, whether now or hereafter authorized and whether issued for cash
or other consideration or by way of dividend.
B. Common Stock
1. Subject to the prior and superior rights of the Preferred Stock and on
the conditions set forth in the foregoing parts of this Article or in
any resolution of the Board of Directors providing for the issuance of
any particular series of Preferred Stock, and not otherwise, such
dividends (payable in cash, stock or otherwise) as may be determined by
the Board of Directors may be declared and paid on the Common Stock
from time to time out of any funds legally available therefor.
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2. Except as otherwise provided by law, by this Certificate of
Incorporation or by the resolution or resolutions of the Board of
Directors providing for the issue of any series of the Preferred Stock,
the Common Stock shall have the exclusive right to vote for the
election of directors and for all other purposes, each holder of the
Common Stock being entitled to one vote for each share held.
3. Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, and after the holders of the
Preferred Stock of each series shall have been paid in full the amount
to which they respectively shall be entitled, or a sum sufficient for
such payments in assets of the Corporation shall be distributed pro
rata to the holders of the Common Stock in accordance with their
respective rights and interests, to the exclusion of the holders of the
Preferred Stock.
ARTICLE V
REGISTERED OFFICE AND AGENT
The address of the corporation's current registered office is 5277 Cameron
Street, Suite 130, Las Vegas, Nevada 89118 the name of the corporation's
current registered agent at such address is John Henry Brebbia.
ARTICLE VI
DIRECTORS
The Corporation shall be governed by a Board of Directors consisting of
such number of directors as shall be fixed the Corporation's bylaws. The
number of directors constituting the current board of directors of the
corporation is four and the names and addresses of the directors are as
follows:
<TABLE>
<CAPTION>
Name Address
<S> <C>
Ray E. Besharaty 5277 Cameron Street, Suite 130
Las Vegas, Nevada 89118
John H. Brebbia 5277 Cameron Street, Suite 130
Las Vegas, Nevada 89118
Wayne M. Walters 5277 Cameron Street, Suite 130
Las Vegas, Nevada 89118
</TABLE>
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ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
There shall be no preemptive right to acquire unissued and/or treasury
shares of the stock of the Corporation.
ARTICLE VIII
LIABILITY OF OFFICERS AND DIRECTORS
A director or officer of the Corporation shall not be liable to the
Corporation or its shareholders for damages for breach of fiduciary duty as a
director or officer unless the act or omission involves intentional misconduct,
fraud, a knowing violation of law or the payment of an unlawful dividend in
violation of NRS 78.300.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify any and all persons who may serve or who
have served at any time as directors or officers or who, at the request of the
Board of Directors of the Corporation, may serve or at any time have served as
directors or officers of another corporation in which the Corporation at such
time owned or may own shares of stock or of which it was or may be a creditor,
and their respective heirs, administrators, successors and assigns, against any
and all expenses, including amounts paid upon judgments, counsel fees and
amounts paid in settlement (before or after suit is commenced), actually and
necessarily by such persons in connection with the defense or settlement of any
claim, action, suit or proceeding in which they, or any of them, are made
parties, or a party, or which may be asserted against them or any of them, by
reason of being or having been directors or officers of the Corporation, or of
such other corporation, except in relation to matters as to which any such
director or officer of the Corporation, or of such other corporation or former
director or officer or person shall be adjudged in any action, suit or
proceeding to be liable for his own negligence or misconduct in the performance
of his duty. Such indemnification shall be in addition to any other rights to
which those indemnified may be entitled under any law, by law, agreement, vote
of shareholder or otherwise.
DATED this 16 day of May, 1996
<TABLE>
<S> <C>
BY (SIGNATURE) /s/ Ray Besharaty
(NAME AND TITLE) Ray Besharaty, President
(DATE) May 16, 1996
BY (SIGNATURE) /s/ John H. Brebbia
(NAME AND TITLE) John H. Brebbia, Secretary
(DATE) May 16, 1996
</TABLE>
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<PAGE>
STATE OF )
)
COUNTY OF )
On May , 1996, personally appeared before me, a Notary Public, Ray
Besharaty, who acknowledged that he executed the above document in his capacity
as President of Resources of the Pacific Corporation.
Notary Public
STATE OF )
)
COUNTY OF )
On May , 1996, personally appeared before me, a Notary Public, John H.
Brebbia, who acknowledged that he executed the above document in his capacity
as Secretary of Resources of the Pacific Corporation.
Notary Public
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RESOURCES OF THE PACIFIC CORPORATION
Certificate of Designation, Preferences and Rights
of a Series of 15,000 Shares of Preferred Stock,
$.001 Par Value, Designated
"Series A 12% Preferred Stock"
---------------------------
Resources of the Pacific Corporation, a Nevada Corporation (the
"Corporation"), by way of this Certificate of Designation, Preferences and
Rights (as it may hereafter be amended, modified or supplemented upon vote of
the Board of Directors of the Corporation and approval of all holders of Series
A 12% Convertible Preferred Stock, as such term is hereinafter defined, this
("Certificate") certifies that, pursuant to the authority expressly vested in
the Board of Directors by Article IV of the Corporation's Restated Articles of
Incorporation, and in accordance with the provisions of Section 78.195 of the
Nevada Revised Statutes, the Board of Directors of the Corporation has duly
adopted the following resolutions creating a series of its Preferred Stock
designated as Series A 12% Convertible Preferred Stock:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of
Article IV of the Articles of Incorporation of the Corporation, as amended,
this Board of Directors hereby creates a series of Preferred Stock, $.001
par value, and this Board of Directors hereby fixes the designation and the
voting power, preferences and rights, and the qualifications, limitations
or restrictions thereof, of the shares of such series (in addition to the
powers, preferences and rights, and the qualifications, limitations or
restrictions thereon, set forth in the Articles of Incorporation, as
amended, which are applicable to all series of Preferred Stock of the
Corporation) as follows:
Fifteen thousand (15,000) shares of Preferred Stock, par value $.001 per
share, of the Corporation are hereby constituted as a series of Preferred
Stock designated as Series A 12% Convertible Preferred Stock (the "Series A
12% Convertible Preferred Stock") with the voting powers and the
preferences and rights hereinafter set forth:
SECTION 1. DIVIDENDS. The holders of shares of Series A 12% Convertible
Preferred Stock (the "Preferred Shares") shall be entitled to receive out of
the assets of the Corporation legally available for dividends a dividend of
$120 per share per year payable semi-annually in cash or in stock (at $1.50 per
share), at the Corporation's option, on November 15 and May 15 of each year.
SECTION 2. LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution or winding up of the affairs of the Corporation, whether voluntary
or involuntary, the holders of the Preferred Shares shall be entitled to be
paid first out of the assets of the Corporation available for distribution to
holders of the Corporation's capital stock of all classes an amount equal to
$1,000.00 per share of Series A 12% Convertible Preferred Stock, and no more,
before any distribution shall be made to the holders of the Common Stock or any
other class of capital stock or series thereof ranking junior to the Preferred
Shares with respect to the distribution of assets. If the assets of the
Corporation shall be insufficient to permit the payment in full to the holders
of the Preferred Shares of the amounts thus distributable, then the entire
assets of the Corporation available for such distribution shall be distributed
ratably among the holders of the Preferred Shares in proportion to the full
preferential amount each such holder is otherwise entitled to receive.
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SECTION 3. VOTING RIGHTS. The holders of the Preferred Shares shall have
no right to vote with respect to matters requiring the vote of the holders of
the Corporation's capital stock except as set forth below. Without the approval
of holders of a majority of the outstanding Preferred Shares, the Corporation
shall not (a) authorize, create or issue any shares of any class or series
ranking senior to the Preferred Shares as to liquidation rights, (b) amend,
alter or repeal, by any means, the Certificate of Incorporation if the powers,
preferences, or special rights of the Preferred Shares would be adversely
affected, or (c) become subject to any restriction on the Preferred Shares,
other than restrictions arising solely under the General Corporation Law of the
State of Nevada or existing under the Certificate of Incorporation as in effect
on December 31, 1995.
SECTION 4. REDEMPTION. Preferred Shares shall be subject to redemption,
at the option of the Corporation, in whole or in part, on ten (10) days written
notice, at any time(s) after December 31, 1997 at a price equal to $1,000 per
share plus any accrued dividends.
SECTION 5. CONVERSION. (a) The holder of any Preferred Shares shall
have the right, at his option on delivery to the Corporation of written notice
and upon surrender of such shares to the Corporation, to convert part or all of
the Preferred Shares held into shares of Common Stock of the Corporation. In
the event the holder of any Preferred Shares has not notified the Corporation
of his election to convert the Preferred Shares into Common Stock on the terms
set forth herein on or before December 31, 1997, the right of the holders of
such Preferred Shares to convert the same into Common Stock shall expire,
provided, however, that all Preferred Shares remaining outstanding at such date
shall, at the option of the Corporation, be converted into Common Stock of the
Corporation on the terms set forth herein on such date.
(b) Conversion of the Preferred Shares shall be subject to the following
limitation: the outstanding Preferred Shares will become eligible for
conversion on or after the date which is 45 days after the closing date of the
purchase of such Preferred Shares (the "Closing Date"). Each conversion shall
be effected by surrendering the certificate(s) evidencing the Preferred Shares
to be converted to the Company with the form of conversion certificate executed
by the holder thereof as to all or a specified portion of the shares evidenced
by such certificate (subject to the limitations set forth above and provided
that conversions will not be permitted for Preferred Shares having an aggregate
liquidation preference of less than $100,000 except as may be required by the
foregoing limitation on conversion) and accompanied, if required by the
Company, by proper assignment in blank. The date of execution of such
certificate and delivery by facsimile to the Company at (713) 655-0018, shall
be deemed to the be "conversion date", provided that certificates evidencing
the shares so converted are delivered within three (3) business days to the
Company or its designated agent.
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(c) The number of shares of Common Stock issuable upon conversion of each
share of Series A 12% Convertible Preferred Stock shall equal the number of
shares of Preferred Shares to be converted multiplied by one thousand (1,000)
and divided by $1.50.
(d) Neither fractional shares, nor scrip or other certificates evidencing
such shares, shall be issued by the Corporation on conversion of the Preferred
Shares as herein provided, but the Corporation shall round to the nearest whole
number the number of shares issuable in such event.
(e) Preferred Shares so converted shall be restored to the status of
authorized but unissued shares.
(f) The Corporation will reserve from its authorized and unissued shares
of Common Stock, and shall increase the number of reserved shares from time to
time, a number of shares sufficient to permit conversion of the Preferred
Shares.
IN WITNESS WHEREOF, Resources of the Pacific Corporation has caused this
Certificate to be duly executed and attested effective as of the 17th day of
May, 1996.
<TABLE>
<S> <C>
RESOURCES OF THE PACIFIC CORPORATION
BY (SIGNATURE) /s/ John Henry Brebbia
(NAME AND TITLE) John Henry Brebbia, Secretary
</TABLE>
ATTEST:
/s/ John Henry Brebbia
John Henry Brebbia
Secretary
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<PAGE>
STATE OF )
)
COUNTY OF )
I, , a Notary Public, do hereby certify that
on this day of May, 1996, personally appeared before me,
who, being by me first duly sworn declared that he is the
of RESOURCES OF THE PACIFIC CORPORATION, that he signed the foregoing document
as of the corporation, and that the statements therein
contained are true and correct.
/s/ Linda N. Walker
Linda N. Walker
Notary Public in and for the
State of Nevada
Printed Name of Notary Public
Linda N. Walker
My Commission Expires: 2-2-98
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