UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
Wanderlust Interactive, Inc.
----------------------------
(Name of Issuer)
Common Stock, $.01 par value
----------------------------
(Title of Class of Securities
933694 10 1
----------------------------
(CUSIP Number)
Richard S. Kalin
Kalin & Banner, 757 Third Avenue, New York, New York 10017
(212) 888-9010
-----------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 4, 1997
----------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person had previously filed a statement 13G to
report the acquisition which is the subject of this Schedule 13D,
and is filing this schedule because of 13d-1(b)(3) or (4), check
the following box [ ].
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.
The information required on the remainder of this cover page
shall be deemed to be "filed" for the purpose of Section 18 of
the Securities Exchange Act of 1934 ("Act") or otherwise subject
to the liabilities of that section of the Act but shall be
subject to all other provisions of the Act (however, see the
Notes.)
Page 1 of 29; Exhibit Index is on page 6
<PAGE>
SCHEDULE 13D
CUSIP No. 933694 10 1 Page 2 of 29 pages
1. Name of reporting person.
S.S. or I.R.S. Identification No. of Above Person
Jay Smith III
2. Check the appropriate box if a member of a group*.
(a) [ ]
(b) [ ]
3. SEC use only.
4. Source of funds: PF (personal shares).
5. Check box if disclosure of legal proceedings if required
pursuant to items 2(d) or 2(e). [ ]
6. Citizenship or place of organization: USA
Number of shares beneficially owned by each reporting person
with:
7. Sole voting power: 0
8. Shared voting power: 732,462
9. Sole dispositive power: 0
10. Shared dispositive power: 732,462
11. Aggregate amount beneficially owned by each reporting
person: 732,462
12. Check box if the aggregate amount in row (11) excludes
certain shares*. [ ]
13. Percentage of class represented by amount in row (11): 16%
14. Type of reporting person*: IN
*SEE INSTRUCTIONS BEFORE FILING OUT! INCLUDE BOTH SIDES OF THE
COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE
SCHEDULE, AND THE SIGNATURE ATTESTATION.
Item 1. Security and Issuer.
Common Stock, $.01 par value, of Wanderlust
Interactive, Inc. (the "Company"). The Company's principal
executive offices are located at 462 Broadway, New York, New York
10013.
Item 2. Identity and Background.
(a) Name: Jay Smith III and Susan Smith, trustees of
the Jay and Susan Smith Living Trust, of which Jay Smith is the
beneficial owner.
(b) Residence or business address: 5301 Beethoven
Street, Los Angeles, CA 90066.
(c) Present principal occupation or employment and the
name, principal business and address of any corporation or other
organization in which such employment is conducted: Mr. Smith is
President of Western Technologies, Inc. ("Western"), a wholly-
owned subsidiary of the Comapny. Western develops, manufactures
and distributes video games and interactive toys.
(d) Whether or not during the last five years, such
person has been convicted in a criminal proceeding (excluding
traffic violations or similiar misdemeanors) and, if so, give the
dates, nature of conviction, name and location of court, any
penalty imposed, or other disposition of the case.: None.
(e) Whether or not during the last five years, such
person was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or
finding any violation with respect to such laws; and if so,
identify and describe such proceedings and summarize the terms of
such judgment, decree or final order: Not applicable.
(f) Citizenship: USA.
Item 3. Source and Amount of Funds or Other Consideration:
Mr. Smith exchanged his ownership of all of the outstanding
shares of Common Stock of Western for his shares of stock in the
Company.
Item 4. Purpose of Transaction:
The purpose of the transaction was so that Western would
become a wholly-owned subsidiary of the Company; the Company
anticipates that Mr. Smith will be nominated to the Company's
Board of Directors at its next annual meeting.
Page 3
Item 5. Interest in Securities of the Issuer:
(a) Aggregate number owned by reporting person:
732,462 Shares, or 16%.
(b) Sole power to vote: 0 Shares
Shared power to vote: 732,462 Shares
Sole power to dispose: 0 Shares
Shared power to dispose: 732,462 Shares
(c) None.
(d) Susan Smith, Mr. Smith's wife, is a co-trustee and
beneficiary of the trust in which the shares are held.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with respect to Securities of the Issuer.
None.
Item 7. Material to be Filed as Exhibits.
Copy of the Acquisition Agreement among the Company, Mr.
Smith and Western.
Page 4<PAGE>
Signature
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this statement is true, complete and correct.
Dated: February 12, 1997 s/ Jay Smith III
Jay Smith III
Page 5
<PAGE>
Exhibit Index
1. Acquisition Agreement among Wanderlust Interactive, Inc., Jay
Smith III d/b/a Smith Engineering and Western Technologies, Inc.
Page 6
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT, dated as of December 30,
1996, by and among WANDERLUST INTERACTIVE, INC., a Delaware
corporation whose principal place of business is 462 Broadway,
New York, NY 10013 ("Wanderlust"), JAY SMITH III, an individual
whose principal place of business is 5301 Beethoven Street, Los
Angeles, CA 90066, including Smith d/b/a Smith Engineering, a
sole proprietorship) ("Smith") and Western Technologies, Inc., a
California corporation whose principal place of business is 5301
Beethoven Street, Los Angeles, CA 90066 ("Western" or "Acquired
Entity").
WHEREAS, Smith is the owner of all of the outstanding
shares of stock of Western; and
WHEREAS Smith desires to sell to Wanderlust and
Wanderlust desires to acquire from Smith: (i) all of the
outstanding shares of stock of Western (the "Western Stock") and
(ii) all of the assets of Smith Engineering (other than those
exclusively assigned to Western pursuant to the License
Agreement, defined below and those excluded pursuant to Schedule
2.13A hereof (the "Smith Assets;" the Western Stock and the Smith
Assets are collectively referred to herein as the "Acquired
Stock");
NOW THEREFORE in consideration of the promises and
mutual agreements herein contained, the parties agree as follows:
1. Purchase and Sale of Acquired Stock; Price;
Delivery; Closing.
1.1 Purchase and Sale of the Acquired Stock.
On the Closing Date (as defined in Paragraph 1.4 below), Smith
shall sell the Acquired Stock and Wanderlust shall purchase the
Acquired Stock for the Purchase Price set forth in Paragraph 1.2.
1.2 Purchase Price and Payment for the Acquired
Stock. Wanderlust shall pay Smith the Purchase Price as follows:
(a) Guaranteed Purchase Price. At the Closing,
Wanderlust shall issue Smith 800,000 shares of Common Stock of
Wanderlust (the "Guaranteed Shares");
(b) Contingent Purchase Price. Wanderlust shall
issue Smith additional shares of Common Stock of Wanderlust if
any or all of the conditions set forth in Schedule 1.2(b)
attached hereto and made a part hereof are met. The aggregate
issuance of such additional shares shall not exceed 600,000
shares.
1.3 Transfer Stamps. All transfer stamps and/or
documentary stamps shall be affixed to the Acquired Stock with
the cost of such stamps, if any, borne by Smith.
1.4 Closing. The closing of the sale and
purchase of the Acquired Stock (the "Closing") shall take place
at the offices of Clark & Trevithick, at 9:00 am P.S.T., on
January 28, 1997 or at such other time, place or date as the
parties hereto may agree (the "Closing Date").
1.5 Transfer of Acquired Stock and Payment of
Purchase Price at Closing. At the Closing, subject to the terms
of this Agreement, the following transactions shall occur, and
each such transaction shall be deemed to occur simultaneously
with the other transactions:
(a) Acquired Stock Certificates. Smith shall
deliver certificates to Wanderlust representing the Western
Stock, duly endorsed in blank, with any required stock transfer
and other documentary stamps affixed;
(b) Bills of Sale. Smith shall deliver
Assignments and Bills of Sale necessary to convey the Smith
Assets to Wanderlust, in form and substance satisfactory to
Wanderlust.
(c) Delivery of Guaranteed Shares to Smith.
Wanderlust shall deliver or instruct Wanderlust's transfer agent
to deliver to Smith certificates representing 800,000 shares of
Common Stock of Wanderlust, registered in the name of Smith or as
otherwise directed by Smith.
(d) Opinions of Counsel. Smith shall cause to be
delivered to Wanderlust the opinion of Clark & Trevithick,
counsel to Smith and Western, in accordance with the provisions
of Section 9.1 hereof;
(e) Employment Agreement. Smith shall execute
and deliver to Wanderlust an employment agreement between Western
and Smith (the "Smith Employment Agreement"), in the form
attached hereto as Exhibit 1.5(e);
(f) License Agreement. Smith shall have entered
into a license agreement for the benefit of Western in the form
attached hereto as Exhibit 1.5(f).
2. Representations, Warranties and Covenants of Smith
and the Acquired Entity. Smith and the Acquired Entity each
hereby represent, warrant and covenant to Wanderlust as follows:
2.1 Organization and Standing; Articles and
Bylaws. The Acquired Entity is a corporation duly organized and
validly existing under the laws of its state of incorporation and
is in good standing under such laws. The Acquired Entity has the
requisite corporate power to own and operate its properties and
assets, and to carry on its business as presently conducted and
as proposed to be conducted. The Acquired Entity is qualified or
licensed as a foreign corporation in all jurisdictions where the
nature of its activities or of its properties owned or leased
makes such qualification or licensing necessary at this time.
The Acquired Entity has furnished Wanderlust with copies of its
Articles of Incorporation and Bylaws. Said copies are true,
correct and complete and contain all amendments through the date
of this Agreement.
2.2 Corporate Power. The Acquired Entity and/or
Smith has, and will have at the Closing, all requisite legal and
corporate power to enter into this Agreement, to sell the
Acquired Stock sold by Smith hereunder, and to carry out and
perform its or his obligations under the terms of this Agreement.
2.3 Subsidiaries. The Acquired Entity has no
subsidiaries except as set forth on Schedule 2.3 attached hereto.
The Acquired Entity does not own, directly or indirectly, shares
of stock or other interests in any other corporation,
association, joint venture, or business organization except set
forth on Schedule 2.3 attached hereto.
2.4 Capitalization. The Acquired Entity has the
authorized number of shares of Common Stock as set forth on
Schedule 2.4. All of the issued and outstanding shares of the
Acquired Entity have been duly authorized and validly issued, and
are fully paid and non-assessable and were issued in compliance
with all applicable state and federal laws concerning the
issuance of securities. There are no outstanding options or
other commitments to issue shares of the Acquired Entity except
as set forth on Schedule 2.4 attached hereto, which options or
other commitments have been cancelled or exercised in accordance
with the agreements attached hereto as Schedule 2.4.
2.5 Authorization.
(a) All corporate action on the part of the
Acquired Entity, its officers, directors and stockholders
necessary for the performance by the Acquired Entity of its
obligations hereunder, has been taken prior to the execution of
this Agreement. This Agreement is a legal, valid, and binding
obligation of Smith and the Acquired Entity, enforceable against
them in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium, or similar
laws of general application affecting enforcement of creditor's
rights, and affecting the availability of equitable remedies.
(b) The Acquired Stock sold by Smith under this
Agreement, when sold to Wanderlust in compliance with the
provisions of this Agreement, will be validly issued, fully-paid
and nonassessable, and will be free of any liens or encumbrances.
(c) No shareholder of the Acquired Entity has any
right of first refusal or any preemptive rights in connection
with the issuance of the Acquired Stock.
2.6 Financial Statements. Each of the Acquired
Entity's and Smith's financial statements for the presented
periods (collectively the "Financial Statements") are attached
hereto as Schedule 2.6, are true and correct, have been prepared
in accordance with generally accepted accounting principles
consistently applied (except as disclosed therein), and fairly
present the financial condition of Smith or the Acquired Entity
and results of the operations of Smith or the Acquired Entity as
of the date thereof.
2.7 Changes in Financial Condition. Except as
set forth in Schedule 2.7 attached hereto, since September 30,
1996: (a) neither Smith nor the Acquired Entity has entered into
any transaction, including, but not limited to, incurring any
obligation, granting or releasing any lien, transferring or
otherwise disposing of any assets, compromise any debt, release
any rights of value, granted any concessions, which was not in
the ordinary course of business; (b) there has been no material
adverse change in the condition (financial or otherwise),
business, property, assets, or liabilities of Smith, or the
Acquired Entity; (c) there has been no damage to, destruction of,
or loss of physical property (whether or not covered by
insurance) materially adversely affecting the business or
operations of Smith or the Acquired Entity; (d) the Acquired
Entity has not declared or paid any dividend or made any
distribution on its shares; (e) the Acquired Entity has not
materially increased the compensation of any employee, or the
rate of pay of employees as a group; (f) neither Smith nor the
Acquired Entity has received notice that there has been a loss of
any major customer of Smith or the Acquired Entity, nor any
material order cancellation; (g) there has been no resignation or
termination of employment of any senior or key officer or
employee of the Acquired Entity, and neither Smith nor the
Acquired Entity (including, without limitation, the members of
Western's board of directors and its executive officers as of the
date of this Agreement) knows of an impending resignation or
termination of employment of any officer or employee of the
Acquired Entity or Smith that if consummated could have a
materially adverse effect on the business of the Acquired Entity
or Smith; (h) there has been no labor dispute involving Smith or
the Acquired Entity or its employees and none is pending or, to
the best knowledge of Smith or the Acquired Entity (including,
without limitation, the members of Western's board of directors
and its executive officer as of the date of this Agreement),
threatened; (i) neither Smith nor any of the officers or
employees of the Acquired Entity have lent Smith or the Acquired
Entity any funds; and (j) to the best of their knowledge, there
has been no other event or condition of any character pertaining
to and materially adversely affecting the assets or business of
the Acquired Entity or Smith.
2.8 Material Contracts and Commitments. Except
as set forth on Schedule 2.8, all of the material contracts,
commitments, agreements and instruments to which Smith or the
Acquired Entity is a party are legal, valid, binding, and in full
force and effect in all material respects and enforceable by
Smith or the Acquired Entity in accordance with their terms,
except as limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws of general application affecting
enforcement of creditor's rights, and except as limited by
application of legal principles affecting the availability of
equitable remedies. Neither Smith nor the Acquired Entity is in
default under any of such contracts.
2.9 Compliance with Other Instruments, etc.
The Acquired Entity is not in violation of any term of its
Articles of Incorporation or Bylaws, or neither the Acquired
Entity nor Smith is in violation in any respect of any mortgage,
indenture, contract, agreement, instrument, or any judgement,
decree, order, statute, rule, or regulation applicable to it or
him. The execution, delivery, and performance by Smith of this
Agreement, and the issuance and sale of the Acquired Stock,
pursuant hereto, will not result in any such violation or be in
conflict with or constitute a default under any such term, or
cause the acceleration or maturity of any loan or material
obligation to which the Acquired Entity or Smith is a party or by
which Smith or the Acquired Entity is bound or with respect to
which Smith or the Acquired Entity is an obligor or guarantor, or
result in the creation or imposition or any material lien, claim,
charge, restriction, equity, or encumbrance of any kind
whatsoever upon, or give to any other person any interest or
right (including any right of termination or cancellation) in or
with respect to any of the properties, assets, business, or
agreements of the Acquired Entity. No such term or condition
materially adversely affects or in the future (so far as can
reasonably be foreseen by Smith or the Acquired Entity,
including, without limitation, the members of its board of
directors and its executive officers, as of the date of this
Agreement) may materially adversely affect the business,
property, prospects, condition, affairs, or operations of Smith
or the Acquired Entity.
2.10 Litigation, etc. Except as set forth on
Schedule 2.10, there are no actions, proceedings or
investigations pending or threatened against either Smith or the
Acquired Entity in any way relating to the Acquired Entity or
Smith, to the best of the knowledge of Smith and the Acquired
Entity (including, without limitation, the members of the board
of directors of the Acquired Entity and its executive officers as
of the date of this Agreement), any basis therefor or threat
thereof, which, either individually or in the aggregate, could
result in any adverse change in the business, prospects,
conditions, affairs, or operations of the Acquired Entity or
Smith or in any of its or his properties or assets, or in any
impairment of the right or ability of the Acquired Entity, or
Smith to carry on its or his business as proposed to be
conducted, or in any material liability on the part of the
Acquired Entity or Smith, or which could affect the validity of
this Agreement or any action taken or to be taken in connection
herewith.
2.11 Governmental Consent, etc. Except as set
forth on Schedule 2.11, no consent, approval or authorization of,
or designation, declaration or filing with, any governmental unit
or any other entity is required on the part of Smith or the
Acquired Entity in connection with the valid execution and
delivery of this Agreement, or the offer, sale, or issuance of
the Acquired Stock pursuant hereto or by this Agreement or
necessary or appropriate for consummation of transactions
contemplated.
2.12 Offering. The offer, sale and issuance of
the Acquired Stock in conformity with the terms of this Agreement
will not violate the Securities Act of 1933 or the securities
laws or "Blue Sky" laws of California.
2.13 List of Properties and Assets. Schedule 2.13
attached hereto is a complete and correct list setting forth the
following information:
(i) all real property owned of record or
beneficially by the Acquired Entity and all leases of real
property to which the Acquired Entity is a party, with a brief
description of the property and any buildings or structures
located thereon and, in the case of each lease, the rental terms
(including rents, termination dates and renewal conditions);
(ii) all licenses, leases and other rights to
personal property to which the Acquired Entity or Smith
(including Smith d/b/a as Smith Engineering) is a party, with a
brief description of the property which each such license, lease
or other right relates and the rental or other applicable usage
terms (including rents, termination dates and renewal
conditions), other than leases with respect to office equipment,
fixtures and other incidental personal property none of which
involves payments in excess of $5,000 per annum and all of which
in the aggregate do not involve payments in excess of $25,000 per
annum;
(iii) all personal property owned of record or
beneficially by the Acquired Entity or Smith (including Smith
d/b/a as Smith Engineering) other than office equipment, fixtures
and other incidental personal property having an aggregate value
not in excess of $50,000. Schedule 2.13A sets forth certain
assets of Smith which will not be transferred;
(iv)(A) all patents, trademarks and trade names,
trademark and trade name registrations, servicemark, brandmark
and brand name registrations, copyrights and copyright
registrations, unexpired as of the date hereof, all applications
pending on said date for patents, for trademark or trade name
registrations, for servicemark, brandmark or brand name
registrations or for copyright registrations, and all other
proprietary or trade rights, used and/or owned in whole or in
part as noted thereon on said date by the Acquired Entity or
Smith (including Smith d/b/a Smith Engineering), and (B) all
licenses granted by or to the Acquired Entity or Smith (including
Smith d/b/a Smith Engineering) and all other agreements to which
the Acquired Entity or Smith (including Smith d/b/a Smith
Engineering) is a party which relate in whole or in part to any
items of the categories mentioned in (A) next above or to other
proprietary rights, whether owned by the Acquired Entity or Smith
(including Smith d/b/a Smith Engineering) or otherwise;
(v) all policies of insurance in force (with a
notation as to the status of premiums paid or payable thereon)
insuring the properties, buildings, machinery, equipment,
fixtures or other assets of the Acquired Entity or Smith
(including Smith d/b/a Smith Engineering);
(vi) all contracts, understandings and
commitments (including, without limitation, mortgages, leases,
indentures and loan agreements) to which the Acquired Entity or
Smith (including Smith d/b/a Smith Engineering) is a party, or to
which they or any of their assets or properties is subject,
except contracts or commitments involving the payment by or to
the Acquired Entity or Smith (including Smith d/b/a Smith
Engineering) of less than $10,000 with respect to any one
contract or commitment or $50,000 with respect to any related
group of contracts or commitments;
(vii) all oral and written collective bargaining
agreements, employment and consulting agreements, executive
compensation plans, bonus plans or other incentive compensation
plans, deferred compensation agreements, employee pension plans
or retirement plans, severance pay arrangements, employee profit
sharing plans, employee stock purchase and stock option plans,
group life insurance, hospitalization insurance or other plans or
arrangements providing for benefits for employees of the
Acquired Entity or Smith (including Smith d/b/a Smith
Engineering) (indicating, with respect to each of the persons
named pursuant to Section 2.21 below, the amount received in the
fiscal year ended June 30, 1996 under each such agreement, plan
or arrangement);
(viii) the name of each bank or other financial
institution from which loans, lines of credit or other credit
commitments to the Acquired Entity or Smith (including Smith
d/b/a Smith Engineering) are outstanding, the amount of each such
loan or commitment and the principal terms thereof;
(ix) all arrangements respecting loans to, or
guarantees of loans to, employees of the Acquired Entity or Smith
(including Smith d/b/a Smith Engineering) made by or to the
Acquired Entity or Smith (including Smith d/b/a Smith
Engineering).
True and complete copies of all documents and true and
complete written summaries of all oral agreements referred to in
such list have been delivered to Wanderlust and its counsel.
2.14 Books and Records. The books and records of
the Acquired Entity and Smith (including Smith d/b/a Smith
Engineering) are in all respects complete and correct, have been
maintained in accordance with good business practices and
accurately reflect the basis for the financial condition and
results of operations of the Acquired Entity and Smith (including
Smith d/b/a Smith Engineering) set forth in the Financial
Statements referred to in Section 2.6 hereof.
2.15 Patents, Trademarks, etc. To the best
knowledge of the Acquired Entity and Smith (including Smith d/b/a
Smith Engineering) after due inquiry, the Acquired Entity owns,
or is licensed to use, all patents, trade names, trademarks,
copyrights, technology, know-how and processes now used by it in
connection with its business, including those heretofore owned by
Smith (including Smith d/b/a/ Smith Engineering). The Acquired
Entity has protected by way of service mark or trade name or
application or registration therefor, trademark, trademark
registration or application, copyright, copyright registration or
application, patent, patent application or registration or
otherwise, to the fullest extent permitted by law, the names or
designs set forth in Schedule 2.13 hereto and no other service
marks or trade names or applications or registrations therefor,
trademarks, trademark registrations or applications, patents or
patent applications or registrations are necessary for the
conduct of the business of the Acquired Entity or Smith
(including Smith d/b/a Smith Engineering) as now conducted. All
service marks and trade names and application and registrations
therefor, trademarks, trademark registrations and applications,
copyrights, copyright registrations and applications, patents and
patent registrations and applications listed in Schedule 2.13 are
in good standing, are valid and enforceable, are free from any
security interest, lien or encumbrance, or any default on the
part of the Acquired Entity or Smith (including Smith d/b/a Smith
Engineering) and, except as disclosed in Schedule 2.15 hereto,
have not been and are not now challenged in any way or involved
in any pending or threatened infringement proceeding. Neither
the Acquired Entity nor Smith (including Smith d/b/a Smith
Engineering) is a licensor in respect of any service mark or
trade name or registration or application therefor, trademark,
trademark registration or application, copyright, copyright
registration or application, patent or patent registration or
application. To the best knowledge of the Acquired Entity or
Smith (including Smith d/b/a Smith Engineering), neither the
Acquired Entity nor Smith (including Smith d/b/a Smith
Engineering) is in violation of any service mark or trade name or
registration or application therefor, trademark, trademark
registration or application, copyright, copyright registration or
application, patent or patent registration or application of any
other person. None of the rights of the Acquired Entity or Smith
(including Smith d/b/a Smith Engineering) to any such patents,
trademarks, trade names, copyrights, designs and any licenses
relating thereto will be impaired in any way by the transactions
contemplated by this Agreement.
2.16 Accounts Receivable and Accounts Payable.
The accounts receivable of the Acquired Entity as reflected on
the Financial Statements and on Schedule 2.16 and all accounts
receivable arising thereafter and prior to the date hereof arose
from bona fide transactions in the ordinary course of business
and are current and to the best knowledge of Smith and the
Acquired Entity after due inquiry, fully collectible, less the
applicable allowance for doubtful accounts and subject to year-
end adjustments consistent with practices in prior years. No
counterclaims or offsetting claims with respect to such accounts
receivable are pending or, to the best knowledge of Smith or the
Acquired Entity, are threatened. The accounts payable reflected
on any Financial Statements and on Schedule 2.16 and all accounts
payable arising thereafter and prior to the date hereof arose
from bona fide transactions in the ordinary course of business
and have been paid or are not yet due and payable.
2.17 Transactions with Management. The Acquired
Entity is not now, nor during the period since April 1993 has
been, a party to any contract, lease or commitment with any
officer, director or stockholder of the Acquired Entity, nor any
"associate" of any such officers, directors or stockholders (as
the term "associate" is defined in Rule 405 of the Rules and
Regulations promulgated under the Securities Act of 1933) nor are
there now, or since April 1993 have there been, any loans
outstanding to any of such persons from the Acquired Entity,
except as disclosed in Schedule 2.17. In no event shall any such
loans be in excess of $130,000 at the Closing, provide for the
payment of more than $40,000 at the Closing, or mature prior to
five years from the Closing Date.
2.18 Disclosure. All facts material to the
financial condition, assets, business and prospects of the
Acquired Entity or Smith (including Smith d/b/a Smith
Engineering) have been disclosed (or with respect to facts
arising hereafter will be promptly disclosed prior to the Closing
Date) to Wanderlust in writing. No representation or warranty
contained in this Agreement, and no statement, certificate,
schedule, list or other information furnished by or on behalf of
the Acquired Entity or Smith (including Smith d/b/a Smith
Engineering) to Wanderlust in connection with this Agreement,
contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they
were made, not misleading.
2.19 Title to and Condition of Properties. Except
as set forth on Schedule 2.19, the Acquired Entity has good and
marketable title to all of its tangible and intangible property
and assets, including those reflected in the Financial Statements
specifically including, but not limited to, software programs
(except as such assets have been sold or otherwise disposed of in
the ordinary course of business), and such property and assets
are subject to no mortgage or security interest, conditional
sales contract, charge, lien or encumbrance (except for the lien
of current taxes not yet due and payable and such imperfections
of title, easements and encumbrances, if any, as are not
substantial in character, amount, or extent and do not detract
from the value of, or interfere with the present use of the
properties subject thereto or affected thereby, or otherwise
impair the business operations of the Acquired Entity), and the
Acquired Entity has not sold or disposed of any of its property
and assets or obligated itself to do so except in the ordinary
course of business. Except for such minor defects as are not
substantial in character and which do not have a materially
adverse effect upon the validity thereof, all material real and
personal property leases to which the Acquired Entity is a party,
are in good standing, valid and effective, and there is not under
any such lease any existing default or event which with notice of
lapse of time or both would constitute a default and in respect
of which the Acquired Entity has not taken reasonable steps to
prevent such a default from occurring, except as set forth on
Schedule 2.19.
2.20 Taxes. Except as set forth on Schedule 2.20,
each of Smith and the Acquired Entity has timely filed all tax
returns that are required to have been filed by them prior to the
date of this Agreement with appropriate federal, state, country,
and local governmental agencies or instrumentalities, and each of
said returns correctly reflects the Acquired Entity's and Smith's
income and its or his tax liability required to be shown therein.
Smith and the Acquired Entity each has paid or established
reserves for all income, franchise, and other taxes due by it as
reflected on said returns. The provisions for taxes due by the
Acquired Entity as shown in the Financial Statements are
sufficient for the payment in full of all unpaid federal, state,
county, and local taxes in respect of their business and
operations for the periods then ended and all prior periods.
There is no pending dispute with any taxing authority relating to
any of said returns which if determined adversely to the taxpayer
corporation would result in the assertion by any taxing authority
of any valid deficiency in a material amount for taxes. No
federal income tax return of the Acquired Entity has been audited
nor are there any pending or threatened audits of such returns.
2.21 Employees of Smith or Western. Schedule 2.21
contains a true and correct statement of the names, dates of
hire, accrued vacation and sick time and current rates of
compensation of each employee (whether in the form of salary,
bonuses, commissions or other supplemental compensation now or
hereafter payable) of Smith and the Acquired Entity. Wanderlust
shall have the right to inspect Smith's and the Acquired Entity's
personnel and payroll files for all such employees on or prior to
the Closing Date, at reasonable times and upon reasonable notice.
Neither the Acquired Entity nor Smith has any pension, profit-
sharing, option, or other incentive or employee benefit plan
(including obligations to or customary arrangements with
employees for incentive compensation, allowances, vacation,
severance pay or other benefits) except as listed in Schedule
2.21. To the knowledge of Smith and the Acquired Entity, as of
the date hereof, (i) all obligations of the Acquired Entity
pursuant to the pension plan, if any, were fully funded as to
past service benefits under such pension plan, (ii) all accrued
payments thereunder had been paid or reserved for, (iii) the
pension plan did not have an accumulated funding deficiency, and
(iv) no material liability to the Pension Benefit Guaranty
Corporation had been incurred with respect to the pension plan.
2.22 Bank Accounts and Powers of Attorney.
Schedule 2.22 sets forth a true and complete list of:
(a) The name of each bank in which the Acquired
Entity and/or Smith (including Smith d/b/a/ Smith Engineering)
have accounts or safe deposit boxes and the names of all persons
authorized to draw thereon or have access thereto; and
(b) Each power of attorney granted by Smith and
the Acquired Entity, identifying the nature of the power and the
holder or holders thereof.
2.23 Customers. Smith and the Acquired Entity
have prepared and have in their possession a list of their
customers, and the amounts due by such customers to Smith or the
Acquired Entity, which list is substantially true and correct and
attached hereto as Schedule 2.23.
2.24 Brokers. Other than Joe Abrams who is
entitled to a fee of up to one percent of the Purchase Price from
Wanderlust, and Commercial Scientific, which may be entitled to a
commission from Smith, there is no finder, broker, agent,
financial advisor or other intermediary who has acted on behalf
of Smith or the Acquired Entity in connection with this Agreement
or the negotiation or consummation of the Agreement or the
transactions contemplated hereby who is entitled to any
compensation by Wanderlust.
2.25 Covenant Not to Compete. Smith covenants and
agrees that for five years following the Closing Date (except as
may be provided in the Employment Agreement delivered pursuant to
Section 1.5(e)), Smith will not directly or indirectly:
(i) become a stockholder, partner, employee,
associate, owner, agent, creditor, independent contractor,
coventurer of or otherwise be interested in or associated with
any corporation, firm or business engaged in the same or any
similar business competitive with the business now or at any time
during such period engaged in by the Acquired Entity in any
geographical area in which the Acquired Entity, or any affiliate
of the Acquired Entity, now is or may during such period be
engaged; or
(ii) solicit, cause or authorize, directly or
indirectly, to be solicited, for or on behalf of himself or third
parties, from parties who were within two years prior thereto, or
then are, customers of Smith or the Acquired Entity or its
subsidiaries, any business similar to the business transacted by
him or it with such customer; or
(iii) accept or cause or authorize, directly or
indirectly, to be accepted, for or on behalf of himself or third
parties, any such business from any such customer; or
(iv) solicit or cause or authorize, directly or
indirectly, to be solicited for employment for or on behalf of
himself or third parties, any persons who were within two years
prior thereto employees of the Acquired Entity or its
subsidiaries.
(b) Wanderlust shall be entitled, in addition to
any other right or remedy it may have, at law or in equity, to an
injunction, without the posting of any bond or other security,
enjoining or restraining Smith and third parties, as aforesaid,
from any violation or threatened violation of this Section 2.24.
If any of the restrictions contained herein shall be deemed to be
unenforceable by reason of the extent, duration or geographical
scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent,
duration geographical scope thereof, or other provisions hereof
and, in its reduced form, this Section 2.25 shall be enforceable
in the manner contemplated hereby. It is expressly acknowledged
that this covenant is given as part of the consideration for the
acquisition of the Acquired Entity by Wanderlust contemplated by
this Agreement.
2.26 Conduct of the Business of Smith and the
Acquired Entity Prior to the Closing Date. Smith and the
Acquired Entity agree that at all times after the date hereof and
prior to the Closing Date, except as otherwise consented to in
writing by Wanderlust:
(a) the business of Smith and the Acquired Entity
shall be conducted only in the ordinary and usual course;
(b) shall not (i) amend the Certificates of
Incorporation or By-laws of the Acquired Entity; (ii) change the
number of authorized or issued shares of the Acquired Entity; or
(iii) declare, set aside or pay any dividend or other
distribution or payment in cash, stock or property.
(c) neither Smith nor the Acquired Entity shall
(i) issue, grant, sell or pledge or agree or propose to issue,
grant, sell or pledge any shares of, the capital stock of the
Acquired Entity; (ii) acquire any assets, other than in the
ordinary course of business; (iii) dispose of, encumber or
mortgage any assets or properties; (iv) incur any indebtedness
for borrowed money, discharge or satisfy any lien or encumbrance
or pay any obligation or liability (fixed or contingent), or
enter into any other material transaction, other than in the
ordinary course of business; (v) waive, release, grant or
transfer any rights of value or modify or change in any material
respect any existing license, lease, contract or other document;
or (vi) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(d) Smith shall use his best efforts to preserve
intact the business organization of the Acquired Entity, to keep
available the services of its present officers and key employees,
and to preserve the good will of those having business
relationships with him and the Acquired Entity.
(e) neither Smith nor the Acquired Entity will
(i) increase the compensation payable or to become payable by
them to any employee of Smith or the Acquired Entity, (ii) pay or
provide for any bonus, profit sharing, stock option, pension,
retirement, deferred compensation, employment or other payment
plan, agreement or arrangement for the benefit of employees of
Smith or the Acquired Entity except in the ordinary course of
the administration of its existing employment agreements and
benefit plans, all of the material terms of which heretofore have
been disclosed in writing to Wanderlust, (iii) enter into any
employment agreement or other contract or arrangement with
respect to the performance of personal services which is not
terminable without liability by them on thirty days' notice or
less or which involves an annual rate of compensation (exclusive
of overtime and sales commissions) in excess of $20,000, or (iv)
make any loan to, or enter into any other transaction with, any
officer, director or stockholder of the Acquired Entity;
(f) the properties of Smith and the Acquired
Entity shall be maintained in customary repair, order and
condition, reasonable wear and use excepted, and insurance on
such properties and with respect to the conduct of the businesses
of Smith and the Acquired Entity shall be maintained in such
amounts and of such kinds comparable to the insurance in effect
on the date hereof.
3. Representations, Warranties and Covenants of
Wanderlust. Wanderlust hereby represents, warrants and covenants
to Smith as follows:
3.1 Organization and Good Standing of Wanderlust.
Wanderlust is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
3.2 Authority of Wanderlust. Wanderlust has the
full corporate authority to enter into this Agreement and carry
out the terms of this Agreement. Neither the execution nor
delivery of this Agreement by Wanderlust, nor performance
hereunder will result in a violation or breach of any term or
provision nor constitute a default under any indenture, mortgage,
deed of trust or other contract or agreement to which Wanderlust
is a party. Except as provided herein, in a schedule attached
hereto, A.S. Goldmen & Co., Inc., or previously obtained by
Wanderlust, no consent of any party to any such agreement or
instrument is required for the execution, delivery or performance
of this Agreement, and the consummation of the transactions
contemplated hereby will not result in a breach of, or give rise
to a right of cancellation of, any such agreement or instrument.
3.3 Material Misstatements or Omissions. No
representations or warranties by Wanderlust in this Agreement,
nor any document, statement, certificate or schedule furnished or
to be furnished Smith pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any
untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statement of facts
contained herein or therein nor misleading.
3.4 Brokerage and Finder's Fees. Other than Joe
Abrams for which it is responsible for a fee of up to 1% of the
Purchase Price, Wanderlust has not employed any broker, finder or
agent, nor has Wanderlust become in any way obligated for
finder's, broker's, agent's or similar fee with respect to the
transactions referred to herein.
3.5 Information Correct and Complete. All
information contained in the representations and warranties made
in this Paragraph 3 by Wanderlust is correct and complete and
will be correct and complete on the Closing Date.
3.6 Address. The address given for Wanderlust in
Paragraph 13 is its true and correct primary place of business,
and it has no present intention of moving to any other state or
jurisdiction.
3.7 Opportunity to Seek Information. Wanderlust
has been given the opportunity to ask questions of, and receive
answers from, Smith and the management of the Acquired Entity
regarding the terms and conditions of this Agreement, and the
transactions contemplated hereby, as well as the affairs of the
Acquired Entity and related matters.
3.8 Capitalization. Wanderlust has the authority
to issue 10,000,000 shares of Common Stock and 100,000 shares of
Series Preferred Stock. There are currently issued and
outstanding 3,763,719 shares of Common Stock. All of the issued
and outstanding shares of Wanderlust have been duly authorized
and validly issued, and are fully paid and non-assessable and
were issued in compliance with all applicable state and federal
laws concerning the issuance of securities. A Form 10-KSB Annual
Report of Wanderlust for its fiscal year ended June 30, 1996 and
its Form 10-QSB Quarterly Report for its calendar quarter ended
September 30, 1996 have been delivered to Smith for his review.
3.9 Wanderlust Shares Duly Authorized. The shares
of Common Stock of Wanderlust issued to Smith under this
Agreement, when issued in compliance with the provisions of this
Agreement, will be validly issued, fully paid and nonassessable,
and will be free of any liens or encumbrances. No shareholder of
Wanderlust has any right of first refusal or any preemptive
rights in connection with the issuance of the Wanderlust Shares.
3.10 Infusion of Capital. Wanderlust agrees to
invest as debt or equity an aggregate of $500,000 into Western,
including any amounts advanced to Western prior to Closing.
4. Survival of Representations, Warranties and
Covenants. The representations, warranties and covenants
contained herein shall survive the delivery, and payment for, the
Acquired Stock for 18 months from the Closing Date (except for
the representations contained in Section 2.20, which shall
survive indefinitely).
5. Indemnification.
5.1 Indemnification by Smith. Smith hereby
agrees to indemnify and hold harmless Wanderlust, its employees,
agents and attorneys against any and all losses, claims, demands,
liabilities and expenses (including reasonable legal or other
expenses incurred by each such person in connection with
defending or investigating any such claims or liabilities,
whether or not resulting in any liability to such person) to
which any such indemnified party may become subject under the
federal securities laws, under any other statutes, at common law
or otherwise, insofar as such losses, claims, demands,
liabilities and expenses (a) arise out of or are based upon any
untrue statement of a material fact made by Smith or the Acquired
Entity in this Agreement, or (b) arise out of or are based upon
any breach of any representation, warranty or agreement made by
Smith or the Acquired Entity herein. The indemnity contained in
this Section is limited to the extent that any such losses,
claims, demands, liabilities and expenses exceed an aggregate
amount of $10,000 up to a maximum of $2,000,000 (excluding the
payment of taxes, for which Smith fully indemnifies Wanderlust).
The Company shall have the right to receive 100% of the royalties
under the License Agreement (instead of 75%) in order to fulfill
Smith's indemnification obligation under this Section.
5.2 Indemnification by Wanderlust. Wanderlust hereby
agrees to indemnify and hold Smith harmless against any and all
losses, claims, demands, liabilities and expenses (including
reasonable legal or other expenses incurred by each such person
in connection with defending or investigating any such claims or
liabilities, whether or not resulting in any liability to such
person) to which any such indemnified party may become subject
under the federal securities laws, under any such statutes, at
common law or otherwise, insofar as such losses, claims, demands,
liabilities and expenses (a) arise out of or are based upon any
untrue statement of a material fact made by Wanderlust in this
Agreement or (b) arise out of or are based upon any breach of any
representation, warranty or agreement made by Wanderlust herein.
The indemnity contained in this Section is limited to the extent
that any such losses, claims, demands, liabilities and expenses
exceed an aggregate amount of $10,000 up to a maximum of
$2,000,000.
6. Fees and Expenses. Each party hereto shall pay all
fees and expenses incurred by it incident to the preparation of
this Agreement, carrying this Agreement into effect, and the
consummation of the transaction contemplated hereby. Western
agrees that its outstanding legal fees and expenses at the
Closing shall not exceed $45,000 arising out of this transaction
or for any other matter.
7. Representation by Counsel. All parties to this
Agreement have been represented by counsel of their own
selection, which counsel participated in the drafting of this
Agreement. Accordingly, no provision of this Agreement is to be
construed against any party by reason that such party drafted
such provision.
8. Registration Rights.
8.1 Inclusion of Wanderlust Stock in Public
Offerings. If during the three year period following the date of
this Agreement, Wanderlust shall register any shares of
Wanderlust Common Stock in a registration statement pursuant to
an underwritten public offering (a "Public Offering"), or other
offering other than a Form S-8 Registration Statement, Wanderlust
will give Smith at least thirty days advance written notice
thereof and except as set forth in Paragraph 8.2, include in such
registration statement (and any related qualification under Blue
Sky laws or other compliance), all shares of Wanderlust owned by
Smith and specified by him in a written request sent to
Wanderlust within fifteen days after receipt of such written
notice from Wanderlust. All costs of such registration shall be
borne by Wanderlust.
8.2 Underwriting. The right to register the
Wanderlust Shares shall be pro rata with Catherine Winchester and
Richard S. Kalin and shall be subject to a "No objection" letter
of any underwriter for such registration.
8.3 Registration Procedures. In the case of each
registration, qualification, or compliance effected by
Wanderlust, Wanderlust will keep Smith fully advised in writing
as to the initiation of each registration, qualification and
compliance and as to the completion thereof. At its expense,
Wanderlust will:
(a) Keep such registration, qualification or
compliance effective for a period of 180 days or until Smith has
completed the distribution described in the registration
statement relating thereto, whichever first occurs; and
(b) Furnish such number of prospectuses and other
documents incident thereto as Smith from time to time may
reasonably request.
8.4 Indemnification. The respective
indemnification rights of Smith and Wanderlust pursuant to
Paragraph 5 of this Agreement shall apply with respect to
statements or omissions made by Smith or Wanderlust incident to
any registration, qualification or compliance pursuant to this
Paragraph 8.
8.5 Information by Smith. In the event Smith
elects that his shares of Common Stock of Wanderlust be included
in any registration pursuant to this Paragraph 8, Smith shall
furnish to Wanderlust such written information regarding his
proposed distribution as Wanderlust may reasonably request in
writing and as shall be required in connection with any
registration, qualification or compliance referred to in this
Paragraph 8.
8.6 Rule 144 Reporting. In order to facilitate
Smith's potential ability to benefit from certain rules and
regulations of the SEC which may permit the sale of the
Wanderlust Shares to the public without registration, Wanderlust
agrees to use its best efforts to:
(a) Make and keep public information available,
as those terms are understood and defined in Rule 144 under the
1933 Act, at all times; and
(b) File with the SEC in a timely manner all
reports and other documents required of the Acquired Entities
under the federal securities laws;
9. Conditions to Obligations of the Parties.
The obligations of Wanderlust under this Agreement
are subject to the satisfaction of the following conditions at or
prior to the Closing Date:
9.1 Opinion of Counsel. Smith shall have delivered
to Wanderlust the opinion of Clark & Trevithick, counsel to
Smith, and the Acquired Entity, dated the Closing Date, and
satisfactory to counsel for Wanderlust, to the effect that: (i)
this Agreement has been duly executed by Smith and the Acquired
Entity and constitutes the legal, valid and binding agreement of
Smith and the Acquired Entity enforceable in accordance with its
terms, subject to limitations on enforceability imposed by
bankruptcy, insolvency, reorganization, moratorium, or similar
laws of general application affecting enforcement of creditor's
rights, and affecting the availability of equitable remedies;
(ii) all corporate or other proceedings which were required to be
taken by Smith and the Acquired Entity to enable Smith or such
Acquired Entity to carry out this Agreement have been taken;
(iii) The Acquired Entity is duly incorporated and validly
existing under the laws of its state of incorporation, with the
corporate power to own or lease and operate its properties and
assets and to carry on its business in the manner in which such
business is now being conducted, and is duly qualified to do
business and in good standing as a foreign corporation in every
jurisdiction wherein the character of the real properties owned
or leased by it makes such qualification necessary; (iv) all of
the issued and outstanding shares of the Acquired Entity have
been duly authorized and validly issued, and are fully paid and
non-assessable and none of such shares were issued in violation
of any preemptive rights of stockholders and when transferred to
Wanderlust in accordance with this Agreement shall be owned by
Wanderlust free and clear of any liens and encumbrances and
Wanderlust shall own 100% of the Acquired Entity; (v) all of the
warrants or options to acquire any such shares have been
cancelled or exercised; (vi) neither the execution nor delivery
of this Agreement nor the consummation of the transactions
contemplated herein will result in a violation of any judicial or
governmental decree, order or judgment or constitute a default or
result in a termination under any material agreement or other
instrument to which Smith or the Acquired Entity is a party or by
which any of them is bound and which is known to such counsel,
and no consent of any party to any such agreement or instrument
is required for the execution, delivery or performance of this
Agreement; (vii) all of the patents and licenses of Smith
(including Smith d/b/a Smith Engineering) have been fully,
legally assigned in all respects to Western; (viii) there are no
actions, suits or proceedings pending or threatened against
Smith or the Acquired Entity in any court, or by or before any
arbitrator or governmental agency or authority; (ix) the offer,
sale and issuance of the Acquired Stock will not violate the
Securities Act of 1933 or the securities laws of any State or
jurisdiction; and (x) such other opinions that counsel for
Wanderlust may reasonably require from Smith. Counsel for Smith
may rely on such other counsel, including patent counsel, in
rendering its opinion.
9.2 Legal Action. There shall not have been
instituted or threatened any legal proceeding seeking to prohibit
the consummation of the transactions contemplated by this
Agreement.
9.3 Representations Remain Accurate. Smith shall
deliver a certificate at the Closing setting forth that the
representations and warranties of the Acquired Entity and Smith
contained in this Agreement shall be true and correct in all
material respects at and as of the Closing as if made at and as
of such time, except as affected by transactions contemplated
hereby and except to the extent that any such representation or
warranty is made as of a specified date in which case such
representation or warranty shall have been true and correct as of
such date.
9.4 Options Exercised or Cancelled. All options
and all warrants shall have been exercised or cancelled at or
prior to the Closing.
9.5 Employment Agreements Executed. Smith shall,
and certain employees of the Acquired Entity (including Mike
Cartabinao, Mark Miller and Chris Longpre) shall, have entered
into employment agreements in the form attached hereto as Exhibit
9.5 or in a manner satisfactory to Wanderlust.
9.6 License Agreement. Western and Smith shall
have entered into a License Agreement in the form attached hereto
as Exhibit 1.5(f) (the "License Agreement"). The License
Agreement shall provide for Smith to exclusively license all of
its intellectual property for which Smith is receiving royalties,
to Western, and for Smith to assign 75% of the proceeds from
royalties from such property to Western. Upon Smith receiving
$2,000,000 from the 25% of royalties retained by Smith from such
properties, Smith shall transfer to Western or its assignee all
of his right, title and interest in and to such property and
Smith shall have no direct interest in such property thereafter.
However, in the event Wanderlust must pay any losses, claims,
demands, liabilities and expenses pursuant to Section 5.1, Smith
shall reimburse Wanderlust for such amount from any sources
including his 25% share of royalty payments from properties
licensed pursuant to the License Ageement.
9.7 Consents. (i) Smith shall obtain any and all
consents which may be required pursuant to the terms of each of
the license, development and royalty agreements which are
licensed by Smith to Western pursuant to Exhibit 1.5(f); and (ii)
Smith shall obtain the consent of Western Bank to extend the
revolving bank loan in the amount of $250,000, which currently
matures on January 15, 1997 until not earlier than January 15,
1998.
9.8 Payment to Smith at Closing. At the Closing,
Wanderlust shall cause Western to repay Smith $40,000 in respect
of his loans to Western.
9.9 Refinance Bank Debt. In the event Wanderlust
obtains new financing in the amount of $5,000,000 or more,
Wanderlust agrees to refinance 50% of the remaining third party
debt of Western guaranteed by Smith. In the event Wanderlust
obtains new financing in the amount of $10,000,000 or more,
Wanderlust agrees to refinance 100% of the remaining third party
debt of Western guaranteed by Smith.
10. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, or twenty-four hours after being sent by
standard form of telecommunications, or five days after being
mailed (by registered or certified mail, return receipt
requested, postage prepaid), in each case addressed as follows
(or at such other address for a party as shall be specified by
like notice):
(a) if to Wanderlust:
Wanderlust Interactive, Inc.
462 Broadway
New York, New York 10007
Attention: Ms. Catherine Winchester, CEO
with a copy sent to
Richard S. Kalin, Esq.
Kalin & Banner
757 Third Avenue-7th Floor
New York, NY 10017
If to Smith or the Acquired Entities:
Mr. Jay Smith III
5301 Beethoven Street
Los Angeles, CA 90066
with a copy sent to:
Clark & Trevithick
800 Wilshire Boulevard
Los Angeles, CA 90017
11. Assignment. This Agreement may not be assigned by
any party hereto without the prior written consent of the other
parties hereto.
12. Miscellaneous. This Agreement may not be amended
except by a writing signed by the parties hereto and shall be
binding upon and incur to the benefit of the parties, their
permitted successors and assigns. Any provision of this
Agreement which is unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provision hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
The captions in this Agreement are for convenience only and shall
not define or limit any of the terms hereof. This Agreement
(including the schedules hereto and instruments referred to
herein) constitutes the entire agreement of the parties and
supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter
hereof. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of New York
without reference to the conflicts of law rules thereof. The
parties consent to the jurisdiction of any state or federal court
sitting in the Borough of Manhattan in the State of New York and
agree that any action arising out of this Agreement or its
subject matter may be heard and determined in any such court.
The parties waive any right to trial by jury in any such action.
This Agreement may be executed in one or more counterparts which
together shall constitute a single agreement.
13. Access to Properties and Records; Due Diligence.
The Acquired Entities and Smith shall afford to Wanderlust and
its accountants, counsel and representatives full access during
normal business hours throughout the period prior to the Closing
of all its properties, books, contracts, commitments and records
(including but not limited to tax returns) and, during such
period, shall furnish promptly to Wanderlust (i) a copy of each
report, schedule and other document filed or received by it
pursuant to the requirements of federal or state securities laws,
and (ii) all other information concerning its business,
properties and personnel as Wanderlust may reasonably request.
At any time until 45 days from the date the final schedules
pursuant to this Agreement have been delivered to Wanderlust, but
in no event after February 5, 1996, Wanderlust shall have the
right to terminate this Agreement for any reason, and this
Agreement shall be null and void and of no further force and
effect. In the event of the termination of this Agreement,
Wanderlust will not use or disclose any information obtained from
Smith or the Acquired Entities and, upon the Acquired Entities
and Smith's request, will cause its representatives to deliver to
the Acquired Entities and Smith all documents, work papers and
other material and all copies thereof, obtained by Wanderlust or
on its behalf from the Acquired Entities and Smith as a result of
this Agreement or in connection herewith, whether so obtained
before or after the execution hereof, and except to the
extent otherwise agreed to in writing by the Acquired Entities
and Smith, Wanderlust will use its best efforts to hold such
information in confidence until such time as such information is
otherwise publicly available.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement or have caused this Agreement to be duly
executed by an officer duly authorized, all as of the date first
written above.
WANDERLUST INTERACTIVE, INC.
By:
Catherine Winchester, President
Jay Smith III
WESTERN TECHNOLOGIES, INC.
By:
Jay Smith III, President
JAY SMITH D/B/A SMITH ENGINEERING
By:
Jay Smith III, President
<PAGE>
EXHIBIT 1.2(b)
(i) In the event Wanderlust obtains new equity capital of
at least $5,000,000, but less than $7,500,000 by July 31, 1997,
then Wanderlust shall issue Seller or his designee(s) an
aggregate of 200,000 shares of Common Stock of Wanderlust;
(ii) In the event Wanderlust obtains new equity capital of
at least $5,000,000, but less than $7,500,000 by December 31,
1997, then Wanderlust shall issue Seller or his designee(s) an
aggregate of 100,000 shares of Common Stock of Wanderlust; or
(iii) In the event Wanderlust obtains new equity capital of
$7,500,000 but less than $10,000,000 by July 31, 1997, then
Wanderlust shall issue Seller or his designee(s) an aggregate of
300,000 shares of Common Stock of Wanderlust;
(iv) In the event Wanderlust obtains new equity capital of
at least $7,500,000, but less than $10,000,000 by December 31,
1997, then Wanderlust shall issue Seller or his designee(s) an
aggregate of 150,000 shares of Common Stock of Wanderlust;
(v) In the event Wanderlust obtains new equity capital of
at least $10,000,000, but less than $12,500,000 by July 31, 1997,
then Wanderlust shall issue Seller or his designee(s) an
aggregate of 400,000 shares of Common Stock of Wanderlust;
(vi) In the event Wanderlust obtains new equity capital of
$10,000,000 but less than $12,500,000 by December 31, 1997, then
Wanderlust shall issue Seller or his designee(s) an aggregate of
200,000 shares of Common Stock of Wanderlust;
(vii) In the event Wanderlust obtains new equity capital of
at least $12,500,000, but less than $15,000,000 by July 31, 1997,
then Wanderlust shall issue Seller or his designee(s) an
aggregate of 500,000 shares of Common Stock of Wanderlust;
(viii) In the event Wanderlust obtains new equity capital of
$12,500,000 but less than $15,000,000 by December 31, 1997, then
Wanderlust shall issue Seller or his designee(s) an aggregate of
250,000 shares of Common Stock of Wanderlust;
(ix) In the event Wanderlust obtains new equity capital of
$15,000,000 or more by July 31, 1997, then Wanderlust shall issue
Seller or his designee(s) an aggregate of 600,000 shares of
Common Stock of Wanderlust; or
(x) In the event Wanderlust obtains new equity capital of
$15,000,000 or more by December 31, 1997, then Wanderlust shall
issue Seller or his designee(s) an aggregate of 300,000 shares of
Common Stock of Wanderlust.
