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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Commission File No. 0-26182
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
SEPTEMBER 2, 1997
Date of Report (Date of Earliest Event Reported)
INTERNATIONAL IMAGING, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 13-3469649
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
Suite 930, 1875 Century Park East,, Los Angeles, CA 90067
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(Address of principal executive offices) (Zip Code)
(310) 203-4500
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On September 2, 1997, International Imaging, Inc. entered into an
agreement to purchase all of the outstanding stock of Chiralt Corporation
("Chiralt"), a healthcare and chemical specialties marketing and manufacturing
company. Chiralt develops and markets proprietary healthcare products. A
subsidiary, Rose Color, Inc., manufactures and distributes dyes, pigments, and
chemicals to the petroleum and plastics industries with manufacturing facilities
in Newark, New Jersey and Baroda, India. SPS Alfachem, Inc., another wholly
owned subsidiary, develops and distributes fine chemicals to the pharmaceutical
and cosmetics industries. It also imports nutritional organic chemicals and
medicinal botanicals. A majority owned subsidiary, Quantex, develops and
produces chemical speciality products based on phosphor for medical diagnostic
uses.
The selling shareholders were EROSE Capital, Mark L. Saginor M.D., and
Victor Portanova, Esq. The aggregate purchase price was 14,630,408 shares of the
Company's stock as approved under the Reorganization Plan dated August 19, 1997.
The Reorganization Plan called for a one for five reverse stock split
and the issuance to the Company's creditors of 500,000 shares of common stock
and warrants to purchase 3,000,000 shares of common stock of the Company in
exchange for outstanding debt. The Company's Plan was filed in cooperation with
the named creditors and has been approved by a majority of the shareholders. The
Court approved the Reorganization Plan as modified on August 19, 1997.
Subsequent to the purchase of Chiralt, it was agreed to sell the stock
of the Company's subsidiary, Electronic Systems Engineering Co. ("ESECO") to
Speedmaster, Inc. The stock sold represented approximately 92% of the issued and
outstanding stock of ESECO. Speedmaster, Inc. is owned by two of the Directors
of the Company, Arthur A. Kaminshine and Edward L. Handlin. They abstained on
the vote to spin off ESECO.
The book value of ESECO at August 31, 1997 was $10,540. Consideration
received for the stock of ESECO was $40,000 in preferred stock of Speedmaster,
Inc.
(b) The principal assets of Chiralt consist of patent rights and
licensing agreements. The principal assets of Rose Color Inc., a subsidiary,
were accounts receivable, inventory, and chemical processing equipment with a
book value of approximately $9,300,000 at June 30, 1997.
ITEM 4. CHANGE IN REGISTRANT'S CERTIFYING AUDITOR
As a result of the relocation of the Company's headquarters, its
Auditor, Arthur Andersen and Co. was terminated. There were no disagreements
about accounting or other matters.
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ITEM 5. OTHER EVENTS
None
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
The required financial statements of the acquired business
have not been completed at this time. Such statements will be
filed on Form 8 no later than sixty (60) days from September
17, 1997.
(b) PRO FORMA FINANCIAL INFORMATION
Compilation of the required pro forma financial information
relating to the Company and to the acquired business cannot be
completed at this time. Such statements will be filed on Form
8 no later than sixty (60) days from September 17, 1997.
( c ) EXHIBITS
(1) STOCK PURCHASE AGREEMENT dated September 2, 1997.
SIGNATURE
Pursuant to the regulations of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL IMAGING, INC.
Date: September 18, 1997 /s/ Ronald J. Amen
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Ronald J. Amen, President
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is entered into this
2nd of September, 1997, by and among INTERNATIONAL IMAGING, INC., a Delaware
corporation (hereinafter referred to as "Buyer"); and EROSE CAPITAL CORP., a
California corporation ("Erose"), Mark L. Saginor, M.D., an individual and
Victor Portanova, an individual (hereinafter collectively referred to as
"Seller"), being the majority shareholders of CHIRALT CORPORATION, a California
corporation (hereafter referred to as "Company").
WHEREAS, Seller is the owner of record and beneficially owns Forty
Eight Million Nine Hundred Seventeen Thousand Five Hundred (48,917,500) shares
of the issued and outstanding shares of Common Stock of the Company.
WHEREAS, Seller desires to sell all of the Shares to Buyer, and Buyer
desires to purchase the Shares, upon the terms and conditions set forth herein:
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, and subject to the
accuracy of the representations and warranties of the parties, the parties
hereto agree as follows:
I.
SALE AND PURCHASE OF THE SHARES
1.1 Sale and Purchase. Subject to the terms and conditions hereof, at
the Closing (as defined in paragraph 1.2 below), Seller agrees to sell, assign,
transfer, convey and deliver to Buyer, and Buyer agrees to purchase from Seller,
the Shares listed in Exhibit "A". attached hereto, which together constitute
100% of the issued and outstanding Shares of Common Stock of the Company.
1.2 Closing. The purchase shall be consummated at a closing ("Closing")
to take place at 9:00 o'clock a.m., at the offices of Buyer's counsel upon the
earlier of (i) three days after Buyer has been presented with verified, and
fully executed copies of a certain agreement evidencing Company's unconditional
and complete ownership of all of Rose Color Inc. and SPS Alfachem, Inc., or (ii)
September 15, 1997 ("Closing Date").
1.3 Purchase Price. The aggregate purchase price ("Purchase Price") for
the Shares shall be Fourteen Million Six Hundred Thirty Thousand, Four Hundred,
Eight (14,630,408) shares of Common Stock of the Buyer ("Buyer's Shares"). This
portion of the Purchase Price shall be paid at Closing, by issuance and delivery
of Buyer's Shares as follows:
(a) Eleven Million Two Hundred Fifty Thousand (11,250,000)
shares to Seller against receipt of certificates representing
the Shares, duly endorsed for transfer to Buyer (less One
Million One Hundred and Twenty-Five Thousand (1,125,000)
shares
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of International Imaging stock to be placed in escrow with the
Banc One, as escrow agent, for the benefit of Electronic
Systems Engineering Co. ("ESECO"), to ensure the payment by
Seller or its agents of the amount of Two Hundred Fifty
Thousand Dollars ($250,000.00), as evidenced by a promissory
note, to "ESECO" no later than One Hundred Twenty (120) days
from closing as referenced in P. 1.4, below)).
(b) Three Million (3,000,000) shares to Rose International,
Ltd. of 100% of the ownership of Rose Color Inc. and SPS
Alfachem, Inc..
(c) The amount of One Hundred Ninety Thousand, Two Hundred and
Four (190,204) shares each to Mark L. Saginor, M.D. and Victor
Portanova.
1.4 Other Agreements. At closing, the indicated parties shall execute
and deliver the following additional agreements in substantially the form
attached hereto:
(a) Stock certificates representing all of the Shares, duly
endorsed to Buyer and in blank or assignments separate from
the certificates, transferring the Shares from Seller to
Buyer.
(b) That certain Stock Purchase Agreement by and among
Speedmaster, Inc. and International Imaging, Inc. As part of
such agreement, Erose agrees to place in escrow with the Bank
One the amount of One Million One Hundred and Twenty-Five
Thousand (1,125,000) shares of International Imaging stock,
which shall remain in the name of Seller, for the benefit of
Electronic Systems Engineering Co. ("Eseco"), to ensure the
payment by Erose or its agents the amount of Two Hundred Fifty
Thousand Dollars ($250,000.00), as evidenced by a promissory
note, to the Company no later than One Hundred Twenty (120)
days from closing. During such period of escrow, Erose shall
have full rights and authority to vote such stock.
No later than September 30, 1997, Erose shall pay to
the order of the Company or its designee the sum of Forty
Thousand Dollars ($40,000.00). Thereafter, Erose shall pay the
remaining balance of Two Hundred Ten Thousand Dollars
($210,000.00) in equal monthly installments of Fifty-Two
Thousand Five Hundred Dollars ($52,500.00)(the "Installment
Payments"). In the event that Erose fails to make any
installment when due, and if not cured after ten (10) days
notice to Erose, any remaining Installment Payments shall
immediately become due and payable and the escrow agent shall
be authorized to immediately deliver any Shares remaining in
escrow to the Company, which shall have all right, title and
interest to such Shares. Further, if Erose successfully
completes all Installment Payments, Eseco shall forgive the
sum the sum of Thirty-Two Thousand, Eighty-Five Dollars and
Ninety-Five Cents ($32,085.92) now due and owing from Buyer to
Eseco.
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Without waiving its right to any of the above, Erose
shall be entitled to withdraw certain amounts of Shares if the
stock price of Seller trades above a $4.00 bid for three days,
Five Hundred Sixty-Two Thousand Five Hundred (562,5000) may be
released to Erose. If Seller or Erose makes the first capital
infusion of Forty Thousand dollars ($40,000.00) as scheduled
and the stock price of Seller is above $4.00 per share, Ninety
Thousand Shares shall be released to Erose. Each time Seller
or Erose make a scheduled Installment Payment, One Hundred
Eighteen Thousand One Hundred Twenty-Five (118,125) Shares
will be released to Erose or Seller. Upon the satisfaction of
the last remaining installment payment, any remaining Shares
in escrow shall be released to Erose.
(c) That certain Agreement and Plan of Reorganization by and
among Chiralt Corp., Rose International Ltd., Rose Color,
Inc., SPS Alfachem, Inc. and Struthers Industries, Inc.
(d) An agreement by and between certain key employees and
stockholders of the Buyer and Seller that the existing
directors and officers of Buyer and Company remain unchanged
only until such time as the transaction referenced in
subparagraph (b) above has been executed. Buyer and Seller
agree to consummate the transaction referenced in subparagraph
(b) contemporaneously with this Agreement. Seller and Company
further agree that any Shares owned or controlled by them
shall be used to vote in favor of the existing directors and
officers of Seller and Company until the closing is
consummated.
1.5 Basic Agreements and Transactions Defined. This Agreement and other
agreements listed in paragraph 1.4, are sometimes referred to as the "Basic
Agreement". The transactions contemplated by the Basic Agreement are sometimes
referred to as the "Transactions".
II.
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Seller. Seller represent and
warrant to Buyer as follows.
(a) Title to the Shares. At Closing, Seller shall own of record and
beneficially the number of the Shares listed in Exhibit "A", of the Company,
free and clear of all liens, encumbrances, pledges, claims, options, charges and
assessments of any nature whatsoever, with full right and lawful authority to
transfer the Shares to Buyer. No person has any preemptive rights or rights of
first refusal with respect to any of the Shares. There exists no voting
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agreement, voting trust, or outstanding proxy with respect to any of the Shares.
There are no outstanding rights, options, warrants, calls, commitments, or any
other agreements of any character, whether oral or written, with respect to the
Shares.
(b) Organization. Seller is a corporation duly incorporated, validly
existing and in good standing wider the laws of the State of California. Seller
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business. The Company is duly qualified and in
good standing as a foreign corporation in each jurisdiction where its ownership
of property or operation of its business requires qualification.
(c) Authorized Capitalization. The authorized capitalization of the
Company consists of Seventy Five Million (75,000,000) shares of Common Stock, of
which Forty Eight Million Nine Hundred Seventeen Thousand Five Hundred
(48,917,500) shares have been issued and are outstanding and Series A Preferred
Shares of which Sixty-One Thousand, Two Hundred Sixty-Eight (61,268) shares are
outstanding and Series B Preferred Shares of which Two Hundred Forty Thousand,
Four Hundred Eighty-Three (240,483) shares are outstanding and Series C
Preferred Shares of which Forty-One Thousand, Six Hundred and Eighty-Eight
(41,688) shares are outstanding (collectively referred to as the "Shares"). The
Shares have been duly authorized, validly issued, are fully paid and
nonassessable with no personal liability attaching to the ownership thereof and
were offered, issued, sold and delivered by the Company in compliance with all
applicable state and federal laws. Except as set forth in Exhibit "C" attached
hereto, the Company is not a party to and are not bound by any agreement,
contract, arrangement or understanding, whether oral or written, giving any
person or entity any interest in, or any right to share, participate in or
receive any portion of, the Company's income, profits or assets, or obligating
the Company to distribute any portion of its income, profits or assets.
(d) Authority. Seller has full power and lawful authority to execute
and deliver the Basic Agreements and to consummate and perform the Transactions
contemplated thereby. The Basic Agreements constitute (or shall, upon execution,
constitute) valid and legally binding obligations upon Seller, enforceable in
accordance with their terms. Neither the execution and delivery of the Basic
Agreements by Seller, nor the consummation and performance of the Transactions
contemplated thereby, conflicts with, requires the consent, waiver or approval
of, results in a breach of or default under, or gives to others any interest or
right of termination, cancellation or acceleration in or with respect to, any
agreement by which Seller or the Company is a party or by which Seller or the
Company or any of their respective properties or assets are bound or affected.
(e) Company Financial Statements. The Company Financial Statements
are complete, were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods and fairly and
accurately present the financial position of the Company as of July 31, 1997.
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(f) No Undisclosed Liabilities. Except as set forth in the Company
Financial Statements previously delivered to Buyer and as set forth on Exhibit
"D", Seller is not aware of any liabilities for which the Company is liable or
will become liable in the future.
(g) Taxes. The Company has filed and paid all federal, state, local tax
and other returns and reports which were required to be filed with respect to
all taxes, levies, imposts, duties, licenses and registration fees, charges or
withholdings of every nature whatsoever ("Tares"), and their exists a
substantial basis in law and fact for all positions taken in such reports. No
waivers of periods of limitation are in effect with respect to any taxes arising
from and attributable to the ownership of properties or operations of the
business of the Company. Adequate cash reserves exist for the full payment of
obligations incurred for all such taxes which are not yet due, but may be
incurred at or near Closing.
(h) Properties. The Company has good and marketable title to all its
personal property, equipment, processes, patents, copyrights, trademarks,
franchises, licenses and other properties and assets (except fox items leased or
licensed to the Company), including all property reflected in the Company
Financial Statements (except for assets reflected therein which have been sold
in the normal course of its business where the proceeds from such sale or other
disposition have been properly accounted for in the financial statements of the
Company), in each case free and clear of all liens, claims and encumbrances of
every kind and character, except as set forth in Exhibit "E". The Company has no
ownership interest in any real property. The assets and properties owned,
operated or leased by the Company and used in its business are in good operating
condition, reasonable wear and tear excepted, and suitable for the uses for
which intended.
(i) Books and Records. The books and records of the Company are
complete and correct in all material respects, have been maintained in
accordance with good business practices and accurately reflect in all material
respects the business, financial condition and results of operations of the
Company as set forth in the Company Financial Statements.
(j) Insurance. Exhibit "F" contains an accurate and complete list and
brief description of all performance bonds and policies of insurance, including
fire and extended coverage, general liability, workers compensation, products
liability, property, and other forms of insurance or indemnity bonds held by the
Company. The Company is not in default with respect to any provisions of any
such policy or indemnity bond and has not failed to give any notice or present
any claim thereunder in due and timely fashion. All policies of insurance and
bonds are: (1) in full force and effect; (2) are sufficient for compliance by
the Company with all requirements of law and of all agreements and instruments
to which the Company is a party; (3) are valid, outstanding and enforceable; (4)
provide adequate insurance coverage for the assets, business and operations of
the Company in amounts at least equal to customary coverage in the Company's
industry; (5) will remain in full force and effect through the Closing; and (6)
will not
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be affected by, and will not terminate or lapse by reason of, the transactions
contemplated by this Agreement.
(k) Transactions with certain Persons. Except as disclosed in Exhibit
"G", the Company has no outstanding agreement, understanding, contract, lease,
commitment, loan or other arrangement with any officer, director or shareholder
of the Company or any relative of any such person, or any corporation or other
entity in which such person owns a beneficial interest.
(1) Material Contracts. Except as set forth in exhibit "H", the Company
has no purchase, sale, commitment, or other contract, the breach or termination
of which would have a materially adverse effect on the business, financial
condition, results of operations, assets, liabilities, or prospects of the
Company.
(m) Employment Matters. Exhibit "I" contains a list of all officers,
their base salaries, accrued vacation pay, sick pay, and severance pay through
August 15, 1997. Except as set forth in Exhibit "I", the Company is not a party
to any employment agreement, or any pension, profit sharing, retirement or other
deferred compensation plan or agreement. The Company has not incurred any
unfunded deficiency or liability within the meaning of the Employee Retirement
Income Security Act of 1974 ("ERISA"), has not incurred any liability to the
Pension Benefit Guarantee Corporation established under ERISA in connection with
any employee benefit plan and has no outstanding obligations or liabilities
under any employee benefit plan. The Company has not been a party to a
"prohibited transaction," which would subject the Company to any tax or penalty.
There is no collective bargaining agreement or negotiations therefor, labor
grievance or arbitration proceeding against the Company pending or threatened,
and to the knowledge of the Seller, there are no union organizing activities
currently pending or threatened against or involving the Company.
(n) Authorizations. The Company has no licenses, permits, approvals and
other authorizations from any governmental agencies and any other entities that
are necessary for the conduct of its business, except as set forth in Exhibit
"J" which contains a list of all licenses, permits, approvals, and other
authorizations, as well as a list of an copyrights, patents, trademarks,
tradenames, servicemarks, franchises, licenses and other permits, each of which
is valid and in bill force and effect.
(o) No Powers of Attorney. The Company has no powers of attorney or
similar authorizations outstanding.
(p) Compliance with Laws. The Company is not in violation of any
federal, state, local or other law, ordinance, rule or regulation applicable to
its business, and have not received any actual or threatened complaint, citation
or notice of violation or investigation from any governmental authority.
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(q) Compliance with Environmental Laws. The Company is in compliance
with all applicable pollution control and environmental laws, rules and
regulations. The Company has no environmental licenses, permits and other
authorizations held by the Company relative to compliance with environmental
laws, rules and regulations.
(r) Litigation. There are no actions, suits, claims, complaints or
proceedings pending or threatened against the Company, at law or in equity, a
before or by any governmental department, commission, court, board, bureau,
agency or instrumentality: and there are no facts which would provide a valid
basis for any such lotion, suit or proceeding. There are no orders, judgments or
decrees of any governmental authority outstanding which specifically apply to
the Company or any of its assets.
(s) Validity. All contracts, agreements, leases and licenses to which
the Company is a party or by which it or any of its properties or assets are
bound or affected, are valid and in full force and effect; and no breach or
default exists, or upon the giving of notice or lapse of time, or both, would
exist, on the part of the Company or by any other party thereto.
(t) No Adverse Changes. Since July 31, 1997, there have been no actual
or threatened developments of a nature that is materially adverse to or involves
any materially adverse effect upon the business, financial condition, results of
operations, assets, liabilities, or prospects of the Company.
(u) Fees. All negotiations relating to the Basic Agreements and the
Transactions have been conducted by the Seller in such a manner as not to give
rise to any valid claim for any finder's fees, brokerage commission, financial
advisory fee or related expense or other like payment for which the Company or
Buyer are or may be liable. In the event that Seller's conduct or actions
results in the demand for the payment of such fees, Seller agrees to indemnify
and hold harmless Buyer from any and all claims and costs associated with such
demand for fees.
(v) Full Disclosure. All statements of Seller contained in the Basic
Agreements and in any other written documents delivered by or on behalf of the
Company or Seller to Buyer are true and correct in all material respects and do
not omit any material fact necessary to make the statements contained therein
not misleading in light of the circumstances under which they were made. There
are no facts known to Seller which could have a materially adverse affect upon
the business, financial condition, results of operations, assets, liabilities,
or prospects of the Company, which have not been disclosed to Buyer in the Basic
Agreements. Seller acknowledges and agrees that Buyer has relied upon such
representations in the decision to consummate the transaction.
2.2 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows;
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(a) Organization Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of Delaware. Buyer has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business. Buyer is duly qualified and in good
standing as a foreign corporation in each jurisdiction where its ownership of
property or operation of its business requires qualification. The Certificate of
Incorporation and the Bylaws of Buyer presently provide that the number of
members of the Board of Directors shall be at least one.
(b) Authorized Capitalization. The authorized capitalization of the
Buyer consists of Three Hundred Million (300,000,000) shares of Common Stock, of
which Four Million Seven Hundred Thirty Three Thousand Four Hundred sixteen
(4,733,416) shares have been issued and are outstanding. There are no
outstanding rights, options, or warrants to purchase any issued shares except
for those outlined in the Bankruptcy Plan of Reorganization and Disclosure
Statement. A 1 for 5 reverse split has been approved along with other aspects of
its current capitalization as specified in the Bankruptcy Plan of Reorganization
and Disclosure Statement attached and incorporated hereto as Exhibit "K".
(c) Authority. Buyer has full power and lawful authority to execute and
deliver the Basic Agreements and to consummate and perform the Transactions
contemplated thereby. The Basic Agreements constitute (or shall, upon execution,
constitute) valid and legally binding obligations upon Buyer, enforceable in
accordance with their terms. Neither the execution and delivery of the Basic
Agreements by Buyer, not the consummation and performance of the Transactions
contemplated thereby, conflicts with, requires the consent, waiver or approval
of, results in a breech of or default under, or gives to others any interest or
right of termination, cancellation or acceleration in or with respect to, any
agreement by which Buyer is a party or by which Buyer or any of its properties
or assets are bound or affected.
(d) Investment Intent. Buyer is acquiring the Shares for its own
account, for investment purposes only, and not with a view to the sale or
distribution of any part thereof, and Buyer has no present intention of selling,
granting participation in, or otherwise distributing the same. Buyer understands
the specific risks related to an investment in the Shares, especially as it
relates to the financial performance of the Company.
(e) Estimated Liabilities. As of the 2nd day of September, 1997, Buyer
states that its current accounts payable or liabilities do not exceed thirty
thousand dollars ($30,000.00.00).
III.
COVENANTS
3.1 Covenants of Seller. Seller covenants and agrees that from the date
hereof to the Closing without the prior written consent of Buyer:
<PAGE> 9
(a) Ordinary Course of Business. Seller will operate the business of
the Company only in the ordinary course and will use their best efforts to
preserve the Company's business, organization, goodwill and relationships with
persons having business dealings with them.
(b) Maintain Properties. Seller will maintain all of the Company's
properties in good working order, repair and condition (reasonable wear and use
excepted) and cause the Company to take all steps reasonably necessary to
maintain in full force and effect its patents, trademarks, servicemarks, trade
names, brand names' copyrights and other intangible assets.
(c) Compensation. Seller will not permit the Company to (1) enter into
or alter any employment agreements; (2) grant any increase in compensation other
than normal merit increases consistent with the Company's general prevailing
practices to any officer or employee; or (3) enter into or alter any labor or
collective bargaining agreement or any bonus or other employee fringe benefit.
(d) No Indebtedness. Seller will not permit the Company to create,
incur, assume, guarantee or otherwise become liable with respect to any
obligation for borrowed money, indebtedness, capitalized lease or similar
obligation, except in the ordinary course of business consistent with past
practices where the entire net proceeds thereof are deposited with and used by
and in connection with the business of the Company and after notice to Buyer.
(e) Maintain Books. Seller will cause the Company to maintain its
books, accounts and records in the usual, regular ordinary and sound business
manner and in accordance with generally accepted accounting principles applied
on a basis consistent with past practices.
(f) No Amendments. Seller will not permit the Company to amend its
corporate charter or bylaws (or similar documents) without prior consent of
Buyer and will cause the Company to maintain their corporate existence,
licenses, permits, powers and rights in full force and effect.
(g) Taxes and Accounting Matters. Seller will cause the Company to file
when due all federal, state and local tax returns and reports which shall be
accurate and complete, including but not limited to income, withholding,
franchise, excise, ad valorem, and other taxes with respect to its business and
properties, and to pay as they become due all taxes or assessments except for
taxes for which adequate reserves are established and which are being contested
in good faith by appropriate proceedings. Seller will not permit
<PAGE> 10
the Company to change their accounting methods or practices or any depreciation,
amortization or inventory valuation policies or practices.
(h) No Disposition or Encumbrance. Except in the ordinary course of
business consistent with past practice. Seller will not permit the Company to
(1) dispose of or encumber any of its properties and assets, (2) discharge or
satisfy any lien or encumbrance or pay any obligation or liability (fixed or
contingent) except for previously scheduled repayment of debt, (3) cancel or
compromise any debt or claim, (4) transfer or grant any rights under any
concessions, leases, licenses, agreements, patents, inventions, proprietary
technology or process, trademarks, servicemarks or copyrights, or with respect
to any know-how, or (5) enter into or modify in any material respect or
terminate any existing license, lease, or contract.
(i) Insurance. Seller will cause the Company to maintain in effect all
its current insurance policies.
(j) No Securities Issuances. Seller will not permit the Company to
issue any shares of any class of capital stock, or enter into any contract,
option, warrant or right calling for the issuance of any such shares of capital
stock, or create or issue any securities convertible into any securities of the
Company except for the transactions contemplated herein.
(k) No Dividends. Seller will not permit the Company to declare, set
aside or pay any dividends or other distributions of any nature whatsoever.
(1) Contracts. Seller will not permit the Company to enter into or
assume any contract, agreement. obligation, lease, license, or commitment except
in the ordinary course of business consistent with past practice or as
contemplated by this Agreement.
(m) No Breach. Seller will not permit the Company to do any act or omit
to do any act which would cause a breach of any contract, commitment or
obligation of the Company.
(n) Due Compliance. Seller will cause the Company to comply with all
laws, regulations, rules and ordinances applicable to it and 10 the conduct of
its business.
(o) No Waiver of Rights. Seller will not permit the Company to amend,
terminate or waive any material right whether or not in the ordinary course of
business.
(p) Capital Commitments. Seller will not permit the Company to make or
commit to make any capital expenditure, capital addition or capital improvement
without the express knowledge and consent of Buyer.
<PAGE> 11
(q) No Related Party Transactions. Seller will not permit the Company
to make any loans to, or enter into any transaction, agreement, arrangement or
understanding or any other nature with, any officer, director or employee of the
Company.
(r) Notice of Change. Seller will promptly advise Buyer in writing of
any material adverse change, or the occurrence of any event which involves any
substantial possibility of a material adverse change, in the business, financial
condition, results of operations, assets, liabilities or prospects of the
Company.
(s) Consents. Seller will use their, and will cause the Company to use
its, best good faith efforts to obtain the consent or approval of each person or
entity whose consent or approval is required for the consummation of the
Transactions contemplated hereby and to do all things necessary to consummate
the Transactions contemplated by the Basic Agreements.
(t) Reorganization. Seller will provide a statement by its Board of
Directors and an opinion of counsel stating that certain reorganization
specified in P. 1.4(c) above shall have been fully and properly consummated in
accordance with all applicable federal and state law.
IV.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
The obligation of Buyer to close the Transactions contemplated hereby
is subject to the fulfillment by Seller prior to Closing of each of the
following conditions, which may be waived in whole or in part by Buyer:
4.1 Compliance with Representations, Warranties and Covenants. The
representations and warranties of Seller contained in this Agreement shall have
been true and correct when made and shall be true and correct as of the Closing
with the same force and effect as if made at the Closing. Seller shall have
performed all agreements, covenants and conditions required to be performed by
Seller prior to the Closing.
4.2 No Adverse Change. There shall have been no event which has had or
may have a material adverse effect upon the business, financial condition,
results of operation, assets, liabilities or prospects of the Company.
Notwithstanding the above, Seller has disclosed to Buyer that its shares are no
longer listed as trading publicly with the National Association of Securities
Dealers ("NASD"). Seller has advised Buyer that it cannot represent to Buyer the
reason why its shares were delisted or when such shares may be relisted and
available for trading. Buyer acknowledges such problem and has nonetheless
agreed to assume all risk associated with such share delisting and continue with
the Closing. Representatives of Seller will reasonably cooperate with Buyer in
order to facilitate the relisting of such shares with the
<PAGE> 12
NASD. Seller hereby disclaims any and all representations or warranties with
respect to the value of or the listing of its shares with the NASD.
4.3 No Legal Proceedings. No suit, action or other legal or
administrative proceeding before any court or other governmental agency shall be
pending or threatened seeking to enjoin the consummation of the Transactions
contemplated hereby.
4.4 Documents to be Delivered by Seller. Seller shall have delivered
the following documents:
(a) Stock certificates representing all of the Shares, duly endorsed to
Buyer and in blank or accompanied by duly executed stock powers, copies of which
are attached as Exhibit "L".
(b) A copy of (i) the Certificate of Incorporation of the Company,
certified as correct by the Company; and (ii) the bylaws of the Company
certified as correct by the Company; and (iii) a certificate of Good Standing,
to the effect that the Company is in good standing and has paid all franchise
taxes in such state, collectively attached hereto as Exhibit "M";
(c) All agreements referred to in paragraph 1.4 above, specifically as
to the capitalization of ESECO in the amount of $250,000.00, executed and
finalized by all parties thereto other than Buyer.
(d) All corporate and other records of or applicable to the Company
included but not limited to, current and up-to-date minute books, stock transfer
books and registers, books of accounts, leases and material contracts.
(e) Such other documents or certificates as shall be reasonably
required by Buyer or its counsel in order to close and consummate this
Agreement.
V.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLER TO CLOSE
The obligation of Seller to close the Transactions is subject to the
fulfillment prior to closing of each of the following conditions, any of which
way be waived in whole or in part by Seller:
5.1 Compliance with Representations, Warranties and Covenants. The
representations and warranties made by Buyer in this Agreement shall have been
true and correct when made and shall be true and correct in all material
respects at the Closing with the
<PAGE> 13
same force and effect as if made at the closing, and Buyer shall have performed
all agreements, covenants and conditions required to be performed by Buyer prior
to the Closing.
5.2 No Legal Proceedings. No suit, action or other legal or
administrative proceedings before any court or other governmental agency shall
be pending or threatened seeking to enjoin the consummation of the Transactions
contemplated hereby.
5.3 Payments. Seller shall have received from Buyer all Common Stock to
be issued at the closing by Buyer pursuant to all the Basic Agreements.
5.4 Escrow of Liabilities. Seller shall escrow all sums necessary to
satisfy accrued liabilities due and payable by Company at the date of closing.
5.5 Documentation. Seller shall have been provided all documentation
called for in this Agreement.
VI.
MODIFICATION, WAIVERS, TERMINATION
AND EXPENSES
6.1 Modifications. Buyer and Seller may amend, modify or supplement
this Agreement in any manner as they way mutually agree in writing.
6.2 Waivers. Buyer and Seller may in writing extend the time for or
waive compliance by the other with any of the covenants or conditions of the
other contained herein.
6.3 Termination and Abandonment. This Agreement may be terminated and
the purchase of the shares may be abandoned before the closing:
(a) By the mutual consent of Seller and Buyer;
(b) By Buyer, if the representations and warranties of Seller
set forth herein shall not be accurate, or the conditions precedent set
forth in Article V shall have not have been satisfied, in all material
respects; or
(c) By Seller, if the representations and warranties of Buyer
set forth herein shall not be accurate, or the conditions precedent set
forth in Article V shall not have been satisfied in all material
respects.
Termination shall be effective on the date of receipt of written notice
specifying the reasons therefor.
<PAGE> 14
VII.
MISCELLANEOUS
7.1 Representations and Warranties to Survive. Unless otherwise
provided, all of the representations and warranties contained in this Agreement
and in any certificate, exhibit or other document delivered pursuant to this
Agreement shall survive the Closing for a period of two (2) years. No
investigation made by any party hereto or their representatives shall constitute
a waiver of any representation or warranty, and no such representation or
warranty shall be merged into the Closing.
7.2 Binding Effect of the Basic Agreements. The Basic Agreements as
identified in P. 1.4 and the certificates and other instruments delivered by or
on behalf of the parties pursuant thereto, constitute the entire agreement
between the parties. The terms and conditions of the Basic Agreements shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successor and assigns of the parties hereto. Nothing in the
Basic Agreements, expressed or implied, confers any rights or remedies upon any
party other than the parties hereto and their respective heirs, legal
representatives and assigns.
7.3 Applicable Law. The Basic Agreements are made pursuant to, and will
be construed under, the laws of the State of Oklahoma.
7.4 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and will be deemed to have been duly given when
delivered or mailed, first class postage prepaid:
(a) If to Seller, to:
Chiralt Corporation
1875 Century Park East #930
Los Angeles, CA 90067
Telephone: (310) 203-4500
Fax: (310) 203-4505
(b) If to Buyer, to:
International Imaging, Inc.
Attn.: Arthur A. Kaminshine, President and CEO
One ESECO Road
Cushing, Oklahoma 74023-9601
Telephone: (918) 225-1266
Fax: (918) 225-1284
<PAGE> 15
These addresses may be changed from time to time by written notice to
the other parties.
7.5 Headings. The headings contained in this Agreement are for
reference only and will not affect in any way the meaning or interpretation of
this Agreement.
7.6 Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original and all of which together will constitute
one instrument.
7.7 Severability. If any one or more of the provisions of this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
under applicable law this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. The
remaining provisions of this Agreement shall be given effect to the maximum
extent then permitted by law.
7.8 Forbearance; Waiver. Failure to pursue any legal or equitable
remedy or right available to a party shall not constitute a waiver of such
right, nor shall any such forbearance, failure or actual waiver imply or
constitute waiver of subsequent default or breach.
7.9 Attorneys' Fees and Expenses. The prevailing party in any legal
proceeding based upon this Agreement shall be entitled to reasonable attorneys'
fees and expenses and court costs.
7.10 Expenses. Each party shall pay all fees and expenses incurred by
it incident to this Agreement and in connection with the consummation of all
transactions contemplated by this Agreement.
7.11 Integration. This Agreement and all documents and instruments
executed pursuant hereto merge and integrate all prior agreements and
representations respecting the Transactions, whether written or oral, and
constitute the sole agreement of the parties in connection therewith. This
Agreement has been negotiated by and submitted to the scrutiny of both Seller
and Buyer and their counsel and shall be given a fair and reasonable
interpretation in accordance with the words hereof, without consideration or
weight being given to its having been drafted by either party hereto or its
counsel.
7.12 Indemnification.
(a) Seller's Indemnification. Seller and Company shall indemnify,
exonerate and hold harmless Buyer, its present directors and officers, including
but not limited to Arthur Kaminshine and Edward Handlin, in their individual and
corporate capacities, from and against any claim, loss, cost, damage, expense or
other liability arising out of the Agreement,
<PAGE> 16
including any claims involving conflicts of interests or self-dealing, which
shall survive the Closing. This indemnity shall include indemnity against all
costs, expenses and liabilities incurred in and in connection with any such
claim or liability, and proceeding brought thereon, and the reasonable cost of
the defense thereof with legal counsel reasonably acceptable to Buyer.
(b) Buyer's Indemnification. Buyer shall indemnify, exonerate and hold
harmless the Seller and the Company, their present directors and officers,
including but not limited to David Shriner, Greg Tiefer and Ron Amen, in their
individual and corporate capacities, from and against any claim, loss, cost,
damage, expense or other liability arising out of the Agreement, including any
claims involving conflicts of interests or self-dealing, which shall survive the
Closing. This indemnity shall include indemnity against all costs, expenses and
liabilities incurred in and in connection with any such claim or liability, and
proceeding brought thereon, and the reasonable cost of the defense thereof with
legal counsel reasonably acceptable to Buyer.
7.13 Facsimile Documents. The parties agree to accept copies and
facsimile documents of this Agreement and related exhibits and other documents
as if such documents were the originals.
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed
this Agreement on the date first written above.
<TABLE>
<CAPTION>
"BUYER" "SELLER"
INTERNATIONAL IMAGING, INC. EROSE CAPITAL CORP.
<S> <C>
By: /s/ By: /s/
------------------------------ ------------------------------
Arthur A. Kaminshine David Shriner
President President
"COMPANY" MARK L. SAGINOR, M.D.
CHIRALT CORPORATION
/s/
------------------------------
By: /s/
------------------------------
Ronald J. Amen VICTOR PORTANOVA, ESQ.
President
- ----------------------------------
ROSE INTERNATIONAL, LTD AND
G. DAVID GORDON AND ASSOCIATES
By: /s/
------------------------------
G. David Gordon, President
</TABLE>
