EXHIBIT 10.3
AGREEMENT FOR PURCHASE AND SALE OF STOCK
This agreement is made as of December 22, 2005 at Fremont, California,
among Pegasus Wireless Corp., a Nevada corporation ("Buyer"), AMAX Engineering
Corporation, a California corporation ("AMAX"), AMAX Information Technologies, a
California corporation ("AIT"), and those shareholders of AMAX and AIT who are
listed on Exhibit A to this agreement ("Sellers"). Sellers, AMAX, and AIT are
collectively referred to in this agreement as "Selling Parties."
I.
RECITALS
Buyer desires to purchase from Sellers, and Sellers desire to sell and
transfer to Buyer, on the terms and subject to the conditions of this agreement,
7,301,390 shares of AMAX common stock ("AMAX Stock") and 5,227,500 shares of AIT
common stock ("AIT Stock") in exchange for the purchase price described in
Paragraph 2.1. The AMAX Stock and the AIT Stock are sometimes collectively
referred to in this agreement as the "Stock." AMAX and AIT desire that this
transaction be consummated. In consideration of the mutual covenants,
representations and warranties contained in this agreement, the parties agree as
set forth herein.
II.
PURCHASE AND SALE OF STOCK
2.1 Purchase and Sale of Stock. Subject to the terms and conditions set
forth in this agreement, on the Closing Date (Section 9.1), Sellers will sell
the Stock to Buyer, and Buyer will buy the Stock from Sellers. The purchase
price of the AMAX Stock is $4,662,114.52 ($0.638524243 per share), and the price
of the AIT Stock is $3,337,885.48 ($0.638524243 per share).
2.2 Consideration from Buyer at Closing. As payment for the transfer of the
Stock by Sellers to Buyer, at the Closing, Buyer shall pay Sellers $4,000,000
("Cash Consideration") by wire transfer and deliver to Sellers a number of
shares of Buyer's fully paid, non-assessable $0.0001 par value common stock
determined in accordance with Section 2.3 below ("Share Consideration"). The
Cash Consideration and the Share Consideration shall be allocated among the
Sellers in the manner set forth in Exhibit A to this agreement.
2.3 Share Consideration. The number of shares of Buyer's stock that shall
constitute the Share Consideration shall be determined by dividing $4,000,000 by
66% of the average daily closing price per share of Buyer's common stock as
measured over the 30 trading days immediately preceding the Closing, as reported
in the Nasdaq automated quotation system.
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III.
SELLING PARTIES' REPRESENTATIONS AND WARRANTIES
Except as otherwise provided in Exhibit B, Selling Parties jointly and
severally represent and warrant that:
3.1 Organization, Standing and Qualification. AMAX is a corporation that is
duly organized, validly existing and in good standing under the laws of
California. AIT is a corporation that is duly organized, validly existing and in
good standing under the laws of California. AMAX and AIT have all necessary
corporate powers to operate the businesses as now owned and operated by them.
AMAX and AIT are qualified to do business in each jurisdiction in which, by
virtue of the ownership of their properties or the nature of their businesses,
they are required by applicable law to be qualified.
3.2 Stock of Company. The authorized capital stock of AMAX consists of
20,000,000 shares of common stock, 13,706,450 shares of which are currently
issued and outstanding. The authorized capital stock of AIT consists of
20,000,000 shares of common stock, of which 10,250,000 shares are issued and
outstanding. AMAX has outstanding options to purchase 610,000 shares of its
common stock pursuant to an employee stock option plan. There are no other
outstanding subscriptions, options, rights, warrants, convertible securities or
other agreements or commitments obligating either AMAX or AIT to issue or
transfer from treasury shares of its capital stock.
3.3 Title to Stock. Sellers are the owners, beneficially and of record, of
the Stock, free and clear of all liens, encumbrances, security agreements,
equities, options, claims, charges and restrictions. Sellers have full power to
transfer their respective Stock to Buyer without obtaining the consent or
approval of any other person or governmental authority.
3.4 Subsidiaries. AMAX and AIT do not own, directly or indirectly, any
interest or investment in any corporation, partnership, business trust or other
entity.
3.5 Absence of Undisclosed Liabilities. Neither AMAX nor AIT has any debt,
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, that is not reflected in the
consolidated balance sheet dated October 31, 2005 included in the financial
statements described in Section 3.16 below, other than liabilities incurred in
the ordinary course of business after the date of such balance sheet.
3.6 Leases. AMAX occupies the premises located ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ pursuant to a lease dated April 6, 1998 between Animated LLC
as lessor and AMAX as tenant. AIT also occupies the premises located at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ pursuant to a lease dated April 6, 1998
between Animated LLC as lessor and AIT as tenant. Each lease is valid and
enforceable, subject to limitations contained in bankruptcy laws, insolvency
laws and other similar laws affecting the rights of creditors generally and to
rules governing the availability of the remedy of specific enforcement of
contracts. AMAX and AIT are current in the payment of rent and other amounts
payable under their respective leases.
3.7 Inventory. The inventory of AMAX's and AIT's businesses, as reflected
in the October 31, 2005 consolidated balance sheet, consists of items of a
quality and quantity usable and saleable in the ordinary course of business by
AMAX or AIT. All of the items included in the inventory are the property of AMAX
and AIT, except for sales made in the ordinary course of business after October
31, 2005. No items included in the inventory are pledged as collateral or are
held by either AMAX or AIT on consignment from others.
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3.8 Other Tangible Personal Property. Exhibit C attached to this agreement
is a complete and accurate schedule describing and specifying the location of
all motor vehicles, machinery, equipment, fixtures, furniture, tools and all
other items of tangible personal property having individual book value over
$1,000, owned by, in the possession of, or used by AMAX and AIT in connection
with their businesses. The property in Exhibit C constitutes all such tangible
personal property necessary for the conduct by AMAX and AIT of their businesses
as now conducted. No tangible personal property used by AMAX and AIT in
connection with their businesses is held under any lease, security agreement,
conditional sales contract or other title retention or security arrangement, or
is located other than in the possession of AMAX and AIT. All tangible personal
property of AMAX and AIT is in good operating condition and repair, ordinary
wear and tear accepted.
3.9 Intellectual Property. The trademark IMPRESSION and the trademark and
service ▇▇▇▇ AMAX ENGINEERING CORPORATION are owned by AMAX. The trademark and
service ▇▇▇▇ AMAX INFORMATION TECHNOLOGY is owned by AIT. AMAX and AIT own no
other trademarks or service marks except AIT. Selling Parties have no knowledge
of any infringement or alleged infringement by others of such marks. To the best
of Selling Parties' knowledge, neither AMAX nor AIT has infringed, or is now
infringing, on any trademark or service ▇▇▇▇ belonging to any other person, firm
or corporation. Attached to this agreement as Exhibit D is a list of all United
States and foreign copyrights and patents owned by AMAX and AIT and all licenses
pursuant to which AMAX and AIT are entitled to use the trademarks, service
marks, copyrights, patents or trade secrets of others or pursuant to which
others are entitled to use the trademarks, service marks, copyrights, patents or
trade secrets of AMAX or AIT. All listed copyrights and patents are valid,
enforceable and free of encumbrances. All listed licenses are valid and
enforceable, except as enforceability may be limited by bankruptcy laws,
insolvency laws and other similar laws affecting the rights of creditors
generally and rules governing the availability of the remedy of specific
performance, and no party to any such license is in default with respect to its
obligations thereunder. Selling Parties have no knowledge of any infringement or
alleged infringement by others of any listed copyright or patent. Neither AMAX
nor AIT has infringed, or is now infringing, on any copyright or trademark
belonging to any other person, firm or corporation.
3.10 Title to Assets. AMAX and AIT have good and marketable title to all of
their assets and interests in assets, whether personal, tangible or intangible,
which consist of all of the assets and interests in assets that are used in the
businesses of AMAX and AIT, respectively.
3.11 Customers. Selling Parties have no information indicating that any of
AMAX's or AIT's customers intend to cease doing business, or materially alter
the amount of business they are presently doing, with AMAX or AIT, as the case
may be.
3.12 Compliance with Laws. Neither AMAX nor AIT is in material violation of
any applicable law or regulation.
3.13 Litigation. There is not pending or, to the best of Selling Parties'
knowledge, threatened any suit, action, arbitration or legal, administrative or
other proceeding or governmental investigation against or affecting AMAX or AIT
or the business, assets or financial condition of either of them. Neither AMAX
nor AIT is in default with respect to any order, writ, injunction or decree of
any court, department, agency or instrumentality. Neither AMAX nor AIT is
presently engaged in any legal action to recover monies due it or damages
sustained by it.
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3.14 Agreement Will Not Cause Breach. The consummation of the transaction
contemplated by this agreement will not result in or constitute any of the
following: (1) a default or an event that, with notice or lapse of time or both,
would be a default, breach or violation of the articles of incorporation or
bylaws (or equivalent documents) of a Selling Party or any lease or other
agreement, instrument or arrangement to which any Selling Party is a party or by
which any of them or the property of any them is bound; (2) an event that would
permit any party to terminate any agreement to which AMAX or AIT is a party; or
(3) the creation or imposition of any lien, charge or encumbrance on any of
AMAX's or AIT's properties.
3.15 Authority. Selling Parties have the right, power, legal capacity and
authority to enter into and to perform their obligations under this agreement.
The execution and delivery of this agreement by AMAX, AIT, and Sellers (if
applicable) have been duly authorized by all necessary corporate action.
3.16 AMAX's and AIT's Financial Statements. AMAX's and AIT's audited
consolidated income statements and balance sheets for the 12 month periods
ending, and as of, September 30, 2003, September 30, 2004, and September 30,
2005, and an unaudited financial report for the month of October 2005 attached
hereto as Exhibit E, have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods and fairly
present the financial position of AMAX and AIT as of the respective dates of the
balance sheets, and the results of their operations for the respective periods,
indicated.
3.17 Absence of Specified Changes. Since October 31, 2005, there has not
been any:
(1) Transactions by AMAX or AIT, except in the ordinary course of
business as conducted on that date;
(2) Capital expenditures by AMAX or AIT exceeding $5,000 individually
or $20,000 in the aggregate;
(3) Material adverse change in the financial condition, liabilities,
assets, business or prospects of AMAX or AIT;
(4) Destruction or loss of or damage to any asset of AMAX or AIT
(whether or not covered by insurance) that materially and adversely
affects the financial condition, business, or prospects of AMAX or
AIT, as the case may be;
(5) Change in accounting methods or practices of AMAX or AIT;
(6) Declaration, setting aside, or payment of a dividend or other
distribution in respect of the capital stock of AMAX or AIT;
(7) Sale or transfer of any asset of AMAX or AIT, except in the
ordinary course of business;
(8) Amendment or termination of any contract, agreement, or license to
which AMAX or AIT is a party;
(9) Loan by AMAX or AIT to any person or entity, or guarantee by AMAX
or AIT of any loan;
(10) Mortgage, pledge, or other encumbrance of any asset of AMAX or
AIT;
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(11) Waiver or release of any right or claim of AMAX or AIT, except in
the ordinary course of business;
(12) Commencement, or notice or threat of commencement, of any civil
litigation or any governmental proceeding against or investigation of
AMAX or AIT or the affairs of either;
(13) Issuance or sale by AMAX or AIT of any shares of its capital
stock of any class, or of any other of its securities;
(14) Agreement by AMAX or AIT to do any of the things described in the
preceding clauses of this Section 3.17; or
(15) Other event or condition of any character that has or might
reasonably have a material and adverse effect on the financial
condition, business, assets, liabilities, or prospects of AMAX or AIT.
3.18 Environmental Matters. Neither AMAX nor AIT has received written
notice of an investigation or inquiry by any governmental entity under an
applicable law or regulation pertaining to health, safety, the environment,
hazardous substances or solid wastes with respect to the premises occupied by
AMAX and AIT, and such premises are not contaminated with hazardous substances,
solid wastes or other contaminating materials.
3.19 Investment Intent. Sellers are acquiring the Share Consideration for
their own account, not as nominee or agent, and not with a view to or for sale
in connection with a distribution of the Stock. Sellers understand that the
Stock has not been, registered under the United States Securities Act of 1933
and, therefore, must be held indefinitely unless subsequently registered under
the Securities Act of 1933 or unless an exemption from such registration is
available.
3.20 Access to Information about Buyer. Sellers have had an opportunity to
discuss Buyer's business and financial affairs with Buyer's management and to
inspect Buyer's facilities. Sellers have also had an opportunity to ask
questions of officers of Buyer, which questions were answered to Sellers'
satisfaction. Sellers understand that such discussions, as well as any written
information issued by Buyer, were intended to describe certain aspects of
Buyer's business and prospects but were not intended to be an exhaustive
description.
3.21 Binding Obligation. This agreement is the obligation of Selling
Parties, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or laws limiting the availability of equitable remedies.
IV.
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants as follows:
4.1 Organization, Standing and Qualification of Buyer. Buyer is a
corporation that is duly organized, validly existing and good standing under the
laws of the State of Nevada.
4.2 Stock of Buyer. The authorized capital stock of Buyer consists of
100,000,000 shares of $0.0001 par value common stock, 65,770,596 shares of which
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are currently issued and outstanding, and 20,000,000 shares of 0.0001 par value
preferred stock, none of which issued. Buyer has outstanding 1,181,584 options
pursuant to an Incentive Stock Option Plan and 3,480,000 options issued to the
officers of the company to purchase Buyer's common stock. There are no other
outstanding subscriptions, options, rights, warrants, convertible securities or
other agreements or commitments obligating Buyer to issue or transfer from
treasury shares of its capital stock.
4.3 Investment Intent. Buyer is acquiring the Stock for Buyer's own
account, not as nominee or agent, and not with a view to or for sale in
connection with a distribution of the Stock. Buyer understands that the Stock
has not been registered under the United States Securities Act of 1933 and,
therefore, must be held indefinitely unless subsequently registered under the
Securities Act of 1933 or unless an exemption from such registration is
available.
4.4 Binding Obligation. Upon the approval by Buyer's board of directors of
the execution and delivery of this agreement by Buyer, and the transaction
contemplated by this agreement, this agreement shall constitute the binding
obligation of Buyer, enforceable in accordance with its terms, subject to the
laws relating to bankruptcy, insolvency and the relief of debtors applicable to
creditors generally and to laws limiting the availability of equitable remedies.
4.5 Valid Issuance. The outstanding shares of common stock of Buyer are
duly and validly authorized and issued, fully paid and nonassessable and were
issued in accordance with applicable state securities laws or pursuant to valid
exemptions therefrom.
4.6 Authority. Buyer has the right, power, legal capacity and authority to
enter into and perform its obligations under this agreement.
4.7 Litigation. There is no action, claim, proceeding or, to the best of
Buyer's knowledge, investigation pending or, to the best of Buyer's knowledge,
threatened against Buyer before any court or administrative agency that, if
determined adversely to Buyer, is likely to have a material adverse effect on
Buyer.
4.8 No Violation of Charter Documents. Neither the execution and delivery
of this agreement nor the consummation of the transactions contemplated herein,
will conflict with or (with or without notice or lapse of time, or both) result
in a termination, breach, impairment or violation of any provision of the
articles of incorporation or bylaws of Buyer as currently in effect.
4.9 Disclosure. No representation or warranty of Buyer contained in this
agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein not
misleading in light of the circumstances under which they are made.
4.10. Disclosure Information. Buyer has had an opportunity to ask questions
and receive answers from Sellers regarding the purchase of the Stock.
V.
SELLING PARTIES' OBLIGATIONS BEFORE CLOSING
Selling Parties covenant that from the date of this agreement until the
Closing:
5.1 Buyer's Access to Premises. Buyer and its representatives shall have
full access during normal business hours to all premises, inventories and
equipment of AMAX and AIT. AMAX and AIT shall make available to Buyer and its
representatives all information, records and documents regarding the business,
premises, inventories and equipment that Buyer may reasonably request.
5.2 Conduct of Business. AMAX and AIT shall carry on their businesses and
activities diligently and in substantially the same manner as they previously
have been carried on and shall not make or institute any unusual or novel
methods of purchase, sale, lease, management or operation that vary materially
from those methods currently used by AMAX and AIT.
5.3 Preservation of Business and Relationships. AMAX and AIT will use their
best efforts to preserve their business organizations intact and to preserve
their relationships with suppliers, customers, principals and others having
business relationships with it.
5.4 New Transactions. AMAX and AIT shall not, without Buyer's written
consent, enter into any contract, commitment or transaction (1) that is not in
the usual and ordinary course of its business or (2) that obligates either of
them to take an action prohibited by this Article V.
5.5 Existing Agreements. AMAX and AIT shall not, without Buyer's written
consent, modify, amend, cancel or terminate any of its existing contracts or
agreements, or agree to do so.
5.6 Consents. Selling Parties shall use their best efforts to obtain any
consents that are necessary to the consummation of the transaction described in
this agreement.
5.7 New Securities, Dividends, Stock Splits. Neither AMAX nor AIT shall (1)
issue shares of stock or other securities except pursuant to the exercise of an
option or a warrant, or the conversion of a convertible security, that is
outstanding on the date of this agreement, (2) declare or pay a dividend or
other distribution to shareholders, whether payable in cash or property,
including, for example, shares or other securities of AMAX or AIT, or (3)
subdivide its outstanding shares.
5.8 Compensation. Neither AMAX nor AIT shall award or pay any bonus to an
employee, except as required by compensation arrangements in effect on the date
of this agreement, or alter the compensation of any employee.
5.9 AMAX's Stock Option Plan. AMAX shall terminate its employee stock
option plan effective as of the Closing; provided that such termination shall
not affect the options granted under the plan prior to the date of this
agreement.
VI.
BUYER'S OBLIGATIONS BEFORE CLOSING
6.1 Information to be Held in Confidence. Buyer agrees that, unless and
until the Closing has been consummated, it and its representatives will hold in
strict confidence, and will not use to the detriment of AMAX or AIT, all
information with respect to AMAX's and AIT's businesses obtained in connection
with this transaction or agreement and, if the transaction contemplated by this
agreement is not consummated, will return to AMAX and AIT any and all such data
and information.
6.2 Cooperation in Securing Consents. Buyer will use its best efforts to
assist Selling Parties in obtaining the consents of all necessary persons,
entities and agencies to the consummation of the transaction described in this
agreement.
VII.
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
7.1 Introduction. The obligation of Buyer to purchase the Stock under this
agreement is subject to the satisfaction, at or before the Closing, of all the
conditions set out in this Article VII. Buyer may waive any or all of these
conditions in whole or in part without prior notice, and no such waiver of a
condition shall constitute a waiver by Buyer of any of its other rights or
remedies, at law or in equity, if a Selling Party shall be in default of any of
its representations, warranties or covenants in this agreement.
7.2 Accuracy of Selling Parties' Representations and Warranties. Except as
otherwise permitted by this agreement, all representations and warranties of
Selling Parties in this agreement, or in any written statement that shall be
delivered to Buyer by Selling Parties under this agreement, shall be true and
correct on and as of the Closing Date as though made on and as of that time.
7.3 Performance by Selling Parties. Selling Parties shall have performed,
satisfied and complied with all covenants, agreements and conditions required by
this agreement to be performed or complied with by them, or any of them, on or
before the Closing Date.
7.4 Absence of Adverse Changes. During the period from the date of this
agreement to the Closing Date, there shall not have been a material adverse
change in AMAX's or AIT's financial condition or results of operations, and
neither AMAX nor AIT shall have sustained a material loss of or damage to its
assets, whether or not insured, that materially affects their ability to conduct
their businesses.
7.5 Absence of Litigation. No action, suit or proceeding before any court
or any governmental body or authority, pertaining to the transaction
contemplated by this agreement or to its consummation, shall have been
instituted or threatened on or before the Closing Date.
7.6 Corporate Approval. The execution and delivery of this agreement by
Selling Parties, and the performance of Selling Parties' obligations under it,
shall have been duly authorized by all necessary corporate action, and Buyer
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shall have received copies of all resolutions or actions pertaining to that
authorization. The execution and delivery of this agreement by Buyer, and the
performance of Buyer's obligations under it, shall have been duly approved by
Buyer's board of directors.
7.7 Consents. All necessary agreements and consents of any parties to the
consummation of the transaction contemplated by this agreement, or otherwise
pertaining to the matters covered by this agreement, shall have been obtained by
Selling Parties and delivered to Buyer.
7.8 Audit of Financial Statements. Buyer shall have caused AMAX's and AIT's
financial statements for the fiscal years ended September 30, 2004 and September
30, 2005 to be audited by a firm of certified public accountants and shall be
satisfied with the results of the audit.
7.9 Opinion of Selling Parties' Counsel. Selling Parties' legal counsel
shall have delivered to Buyer an opinion as to the matters stated in Sections
3.1, 3.2, 3.3, 3.4, 3.14, 3.15, and 3.21 of this agreement, in form satisfactory
to Buyer in Buyer's reasonable judgment.
7.10 Results of Buyer's Investigation. Buyer shall be satisfied with the
results of its investigation of AMAX and AIT and AMAX's and AIT's businesses and
affairs.
7.11 Securities Exemption. The offer and sale of the Share Consideration
pursuant to this agreement shall be exempt from the registration requirements of
the Securities Act of 1933 and the qualification requirements of applicable Blue
Sky laws.
VIII.
CONDITIONS PRECEDENT TO SELLING PARTIES' PERFORMANCE
8.1 Introduction. The obligations of Sellers to sell and transfer the Stock
under this agreement are subject to the satisfaction, at or before the Closing,
of all of the following conditions. Sellers may waive any or all of these
conditions in whole or in part without prior notice, and no such waiver by
Sellers shall constitute a waiver by it of any of its other rights or remedies
at law or in equity, if Buyer should be in default of any of its
representations, warranties or covenants under this agreement.
8.2 Accuracy of Buyer's Representations and Warranties. All representations
and warranties by Buyer contained in this agreement or in any written statement
delivered by Buyer under this agreement shall be true and correct on and as of
the Closing Date as though made on and as of that date.
8.3 Buyer's Performance. Buyer shall have performed and complied with all
covenants and agreements and satisfied all conditions it is required by this
agreement to perform, comply with or satisfy before or at the Closing.
8.4 Absence of Litigation. No action, suit or proceeding before any court
or any governmental body or authority, pertaining to the transaction
contemplated by this agreement, shall have been instituted or threatened on or
before the Closing Date.
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8.5 Consents. All necessary agreements and consents of any parties to the
consummation of the transaction contemplated by this agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained.
8.6 Corporate Approval. The execution and delivery of this agreement by
Buyer, and the performance of obligations under it, shall have been duly
authorized by Buyer's board of directors, and Selling Parties shall have
received copies of all resolutions or actions pertaining to that authorization.
8.7 Opinion of Buyer's Counsel. Buyer's legal counsel shall have delivered
to Selling Parties an opinion as to the matters stated in Sections 4.1, 4.2 and
4.4 of this agreement, in form satisfactory to Selling Parties in Selling
Parties' reasonable judgment.
8.8 Buyer's Certificate. Selling Parties shall have received a certificate
signed by an officer of Buyer stating that, to the best of Buyer's knowledge,
Buyer has received all information it considers necessary in deciding whether to
purchase the Stock.
IX.
THE CLOSING
9.1 Time and Place. The transfer of the Stock by Sellers to Buyer (the
"Closing") shall take place at the principal office of Buyer, ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ , at 2:00 p.m., local time, on December 22,
2005, or at such other time and place as the parties may agree to in writing.
The term "Closing Date" shall mean December 22, 2005 unless the parties specify
another date for the consummation of the purchase and sale of the Stock, in
which case "Closing Date" shall mean such other date.
9.2 Selling Parties' Obligations at Closing. At the Closing, Sellers shall
deliver to Buyer the following instruments, in the form and substance
satisfactory to Buyer, against delivery of the item specified in Section 9.3:
(1) A certificate or certificates representing the Stock, registered
in the names of Sellers, duly endorsed by Sellers for transfer to
Buyer or accompanied by an assignment of the Stock duly executed by
Sellers;
(2) The documents necessary to reconstitute AMAX's board of directors
so that it consists of five members, two of whom are persons initially
designated by AMAX's current board, who shall be ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇
▇▇▇▇ and three of whom are persons initially designated by Buyer,
which shall be ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
(3) The documents necessary to reconstitute AIT's board of directors
so that it consists of five members, two of whom are persons initially
designated by AIT's current board, who shall be ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇
▇▇▇▇ and three of whom are initially designated by Buyer, which shall
be ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇; and
(4) Evidence of Selling Parties' compliance with Section 5.9 (AMAX's
Stock Option Plan).
(5) AMAX and AIT BOD minutes, dated concurrently with the closing,
changing fiscal year end of the companies to December 31, effective
immediately.
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9.3 Buyer's Obligations at Closing. At the Closing, Buyer shall deliver to
Sellers the Cash Consideration and irrevocably instruct its transfer agent to
cause the Share Consideration to be issued to Sellers, allocated among Sellers
as provided in Exhibit A, as soon as practicable and in any event within ten
days of the Closing.
X.
SELLERS' OBLIGATIONS AFTER CLOSING
10.1 Sellers' Indemnity. Sellers shall jointly and severally indemnify,
defend and hold harmless Buyer against and in respect of any and all claims,
including interest, penalties and reasonable attorneys' fees, that Buyer shall
incur or suffer, that arise or result from or relate to a breach of or failure
by a Selling Party to perform any of its representations, warranties, or
covenants in this agreement or in any schedule, certificate, exhibit or other
instrument to be furnished by a Selling Party under this agreement.
10.2 Sellers' Employment. Except as provided below, Sellers shall continue
in the employ of AMAX and/or AIT as full time employees for at least three years
from the Closing, upon terms, including rate of compensation, that are
substantially the same as those applicable to their employment during the fiscal
year ended September 30, 2005. They shall continue to perform their duties
faithfully and diligently. If a Seller desires to terminate his or her
employment within such three year period, he or she shall submit to his or her
employer a written plan for the smooth transition of his or her duties to
another person, who may or may not then be employed by such Seller's employer,
specifying the effective date of the proposed termination, which shall be at
least 60 days from the date the plan is submitted, and (except as otherwise
provided in Exhibit F regarding the termination of ▇▇▇▇▇ ▇▇▇▇'▇ employment)
naming the suggested replacement. A resignation within such period will be
subject to the written approval of the Seller's employer and Buyer, provided
that the employer and Buyer may not unreasonably withhold or delay such
approval.
10.3 Noncompetition. Sellers shall not, while employed by AMAX or AIT, or
until the third anniversary of the Closing if later, directly or indirectly
engage in, or have an interest in a person or entity (as an employee, director,
shareholder, member, manager, partner or otherwise) that engages in, a business
activity in any county or similar political subdivision ("County") in the world
that is the same as or competitive with any business activity engaged in by AMAX
or AIT in such County within the six month period prior to the Closing, so long
as AMAX or AIT or a successor of either engages in such activity in such County.
The covenant in the preceding sentence shall be construed as a series of
separate covenants, one for each County specified. If a court or arbitrator
shall refuse to enforce any of the separate covenants deemed to be included in
such sentence, such unenforceable covenants shall be eliminated from these
provisions to the extent necessary to permit the remaining separate covenants to
be enforced. AMAX or AIT, or a successor, shall be deemed to be engaged in a
business activity in a County if, for example, it sells goods or services to a
customer, distributor or dealer located in such County. Notwithstanding the
foregoing, Sellers shall not be prohibited from being employed by, being a
director of or a consultant to or owning stock of Acma Computers, Inc., a
California corporation ("Acma"), as long as Acma is a customer of either AMAX or
AIT and does not buy goods from a competitor of either for resale.
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XI.
BUYER'S OBLIGATIONS AFTER CLOSING
11.1 Buyer's Indemnity. Buyer shall indemnify, defend and hold harmless
Sellers against and in respect of any and all claims, including interest,
penalties and attorneys' fees, Sellers may incur by reason of Buyer's breach of
or failure to perform any of Buyer's representations, warranties or covenants in
this agreement.
11.2 Stock Options. Buyer will extend its employee incentive stock option
plan to cover AMAX's employees so long as Buyer continuously owns at least 51%
of the outstanding capital stock of AMAX.
11.3 Leases. AMAX and AIT shall continue to be bound by the terms of the
lease agreement described in Section 3.6 until the expiration thereof.
11.4 Sellers' Employment. Except as otherwise provided in the third
sentence of Section 10.2 (Sellers' Employment) above, Buyer shall guarantee
Sellers to be employed by AMAX and/or AIT, in substantially the same positions,
as specified in Exhibit F, and upon substantially the same terms, including, for
example, rate of compensation, applicable during the fiscal year ended September
30, 2005, for at least three years from the Closing. A Seller's employment may
be terminated by his or her employer if he or she commits a material act of
dishonesty related to his or her employer.
XII.
MISCELLANEOUS
12.1 Effective Date. This agreement is effective as of October 1, 2005 for
purpose of Financial Statement Consolidation. Any actions taken by seller
between October 1 and December 1, 2005, in anticipation of closing this
agreement, which could in any way be construed as a breach or violation of the
terms and agreements therein are hereby waived as breaches or violations of this
agreement. .
12.2 Brokers' Fees. Each party represents that it has dealt with no broker
or finder in connection with any transaction contemplated by this agreement; and
as far as it knows, no broker or other person is entitled to any commission or
finder's fee in connection with these transactions. Sellers and Buyer each agree
to indemnify and hold harmless one another against any loss, liability, damage,
cost, claim or expense incurred by reason of any brokerage commission or
finder's fee alleged to be payable because of any act, omission or statement of
the indemnifying party.
12.3 Expenses. Each party shall pay all costs and expenses incurred or to
be incurred by it in negotiating and preparing this agreement and in carrying
out the transactions contemplated by this agreement.
12.4 Headings. The subject headings of the articles and sections of this
agreement are included for convenience only and shall not affect the
construction or interpretation of any of its provisions.
12.5 Entire Agreement; Modification; Waiver. This agreement constitutes the
entire agreement between the parties pertaining to the subject matter contained
in it and supersedes all prior and contemporaneous agreements, representations
and understandings of the parties. No supplement, modification or amendment of
this agreement shall be binding unless executed in writing by all the parties.
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No waiver of the provisions of this agreement shall be deemed, or shall
constitute, a waiver of any provision, whether or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
12.6 Counterparts. This agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.7 Parties in Interest. Nothing in this agreement, whether express or
implied, is intended to (1) confer any rights or remedies under or by reason of
this agreement on any persons other than the parties to it and their respective
successors and assigns; (2) relieve or discharge the obligation or liability of
any third person to any party to this agreement; or (3) give any third person
any right of subrogation or action against a party to this agreement.
12.8 Assignment. This agreement shall be binding on, and shall inure to the
benefit of, the parties to it and their respective heirs, legal representatives,
successors and assigns; provided, however, that Buyer may not assign their
rights under this agreement.
12.9 Specific Performance. Each party's obligations under this agreement
are unique. If a party should default in its obligations under this agreement,
it would be extremely impracticable to measure the resulting damages.
Accordingly, the non-defaulting party or parties, in addition to any other
available rights or remedies, may ▇▇▇ in equity for specific performance, and
each party waives the defense that a remedy in damages would be adequate.
12.10 Litigation Costs. If a legal action, arbitration or other proceeding
is brought for the enforcement of this agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with this agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
12.11 Nature and Survival of Representations and Obligations. All
representations, warranties, covenants and agreements of the parties contained
in this agreement, or in any instrument, certificate, opinion or other writing
provided for in it, shall survive the Closing.
12.12 Notices. All notices, requests, demands and other communications
under this agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally upon the party to whom the
communication is to be given, or on the second day after mailing if mailed to
the party to whom the communication is to be given by first-class, certified
mail, postage prepaid, and properly addressed as follows:
To Selling Parties at: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To Buyer at: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set forth above.
12.13 Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts that
are executed and performed entirely in California.
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12.14 Severability. If a provision of this agreement is held invalid or
unenforceable, all other provisions of this agreement shall be construed to
remain fully valid, enforceable and binding on the parties.
12.15 Venue. Any legal action arising from or related to this agreement
shall be brought and maintained in Alameda County, California.
IN WITNESS WHEREOF, the parties to this agreement have duly executed this
agreement on the date and year first above written.
BUYER:
Pegasus Wireless Corp.
By: ▇▇▇▇ ▇▇▇▇
Title: CEO
AMAX:
AMAX Engineering Corporation
By: /s/▇▇▇▇▇ ▇▇▇▇
Title: President
AIT:
AMAX Information Technology, Inc.
By: /s/▇▇▇▇▇ ▇▇▇▇
Title: President
SELLERS:
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇
Chi-Lei Ni
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EXHIBIT A
LIST OF SELLING SHAREHOLDERS
------------ ------------- ---------------- --------------- -------------------
Cash Share
Seller AMAX Shares AMAX IT Shares Consideration Consideration
------------ ------------- ---------------- --------------- -------------------
▇▇▇▇▇ ▇▇▇▇ 2,505,579 522,750 $1,400,000 $533,661.48
▇▇▇▇ ▇▇▇▇ 2,505,579 3,136,500 $1,100,000 $2,502,604.22
Chi-Lei Ni 2,290,232 1,568,250 $1,500,000 $963,734.30
13
EXHIBIT B
SCHEDULE OF EXCEPTIONS
3.4 Subsidiaries. AMAX owns 4,000,000 shares of AskE Media, Inc. and AIT
owns 150,000 shares of Infrant Technologies, Inc.
3.9 Intellectual Property. IMPRESSION, AMAX, AMAX ENGINEERING CORPORATION
and AMAX INFORMATION TECHNOLOGY are not registered trademarks.
3.11 Customers. Riverbed Technologies has indicated to AMAX that they may
cease business with AMAX and transfer their business to Dell.
3.13 Litigation.
o AMAX is involved in a lawsuit in the state of New Jersey for a dispute
with a former landlord involving the non payment of $10,000 expense.
o AMAX intends to commence legal action against SJM Wholesale for
non-payment of invoices in the amount of $44871.50.
o AMAX has received a demand letter from an employment agency in regards
to the non payment of a finder's fee in the amount of $15,000.
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EXHIBIT C
LIST OF TANGIBLE PERSONAL PROPERTY
OTHER THAN INVENTORY
(See attached.)
15
EXHIBIT D
AMAX'S and AIT'S COPYRIGHTS, PATENTS AND LICENSES
None, except transferable off-the-shelf computer software licenses.
16
EXHIBIT E
AMAX'S and AIT'S CONSOLIDATED FINANCIAL STATEMENTS
(See attached.)
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EXHIBIT F
AMAX'S and AIT'S MANAGEMENT
AMAX:
CEO: ▇▇▇▇▇ ▇▇▇▇
President: ▇▇▇▇ ▇▇▇▇
Vice President: Chi-Lei Ni
AIT:
CEO: ▇▇▇▇▇ ▇▇▇▇
President: ▇▇▇▇ ▇▇▇▇
Vice President: Chi-Lei Ni
In the event that ▇▇▇▇▇ ▇▇▇▇ does not continue his duty as CEO of AMAX and/or
AIT during the three years period from Closing, ▇▇▇▇ ▇▇▇▇ shall succeed in the
CEO position vacated by ▇▇▇▇▇ ▇▇▇▇.
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