Exhibit 2.3
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made and executed on
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this the 1st day of October, 1997 (the "Date of This Agreement"), by and among
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LANSTAR SEMICONDUCTOR INC., a Utah corporation ("Lanstar"), XXXX XXXXXXX
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("Xxxxxxx"), and WORLD DATA LIMITED, a Cayman Islands corporation ("WDL").
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SOUTHWEST MEMORY INTERNATIONAL, INC., a Texas corporation ("SMI"), SOUTHWEST
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MEMORY, INC., a Texas corporation ("SWM"), and MG TK CORP., a Texas corporation
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("MG TK"), have also executed this Agreement to make certain representations,
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warranties and covenants and to indemnify Lanstar as provided herein. Lanstar,
Xxxxxxx, WDL, SMI, SWM and MG TK are collectively sometimes called the
"Signatories to this Agreement".
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RECITALS:
WHEREAS, Lanstar, SMI and WDL executed that certain Stock Purchase
Agreement dated as of November 4, 1996 (the "Original Agreement"), to permit
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Lanstar to acquire all of the outstanding shares of SMI solely in exchange for
voting common stock of Lanstar; and
WHEREAS, the share exchange contemplated by the Original Agreement closed
in 1996; and
WHEREAS, Article VI of the Original Agreement provided that WDL would
indemnify Lanstar against breaches of representations and warranties; and
WHEREAS, the Signatories to this Agreement have irreconcilable differences
regarding certain liabilities and the future operations of SMI; and
STOCK PURCHASE AGREEMENT - Page 1 of 21 Pages
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WHEREAS, WDL wishes to acquire One Hundred Percent (100%) of the issued and
outstanding shares of SMI which are owned by Lanstar (collectively, the "SMI
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Shares"); and
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WHEREAS, Lanstar desires to sell the SMI Shares, and WDL wishes to purchase
the SMI Shares; and
WHEREAS, Lanstar desires to acquire all of the Lanstar shares owned by WDL
and Xxxxxxx, and WDL and Xxxxxxx desire to sell all of their Lanstar shares; and
WHEREAS, the Signatories to this Agreement desire to set forth certain
indemnities, representations, warranties and covenants made by each to the
others as an inducement to the execution and delivery of this Agreement and
certain additional agreements related to the transactions contemplated hereby,
including, without limitation, Exhibit A - Individuals' Representations,
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Warranties, Covenants and Indemnities, attached hereto and incorporated herein
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for all purposes;
NOW, THEREFORE, for and in consideration of the premises, the agreements
that are set forth herein and other good and valuable consideration, the
receipt, sufficiency and adequacy of which are hereby acknowledged, the
Signatories to this Agreement agree as follows:
(1) RECITALS. The foregoing recitals are true, correct and complete and
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constitute the basis for this Agreement and they are incorporated into this
Agreement for all purposes.
(2) PURCHASE AND SALE. At the Closing (which term is hereinafter
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defined), WDL agrees to purchase from Lanstar and Lanstar agrees to sell,
transfer, assign and deliver to WDL, for the purchase price hereinafter
specified, all of the SMI Shares. The transfer of the SMI
STOCK PURCHASE AGREEMENT - Page 2 of 21 Pages
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Shares shall be effective for all purposes at the Closing which shall occur ten
(10) days after the giving of notice to Lanstar's shareholders as required by
Utah law (the "Closing").
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(3) PURCHASE PRICE. In exchange for the SMI Shares, Ten Dollars ($10.00)
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paid to Xxxxxxx and other good and valuable consideration, the receipt, adequacy
and sufficiency of which are hereby acknowledged, Xxxxxxx and WDL agree to
deliver the following consideration and cause the following actions to occur:
(A) Lanstar shall retain the Eight Million (8,000,000) shares of
Lanstar common stock, having a value of Twenty-Five Cents
($.25) per share (collectively, the "Prior Shares"), previously
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delivered to it by WDL; and
(B) WDL and Xxxxxxx hereby sell, transfer, assign and deliver to
Lanstar an aggregate of Seventeen Million Five Hundred Fifty-
Five Thousand (17,555,000) shares of Lanstar's common stock,
having an agreed value of Twenty-Five Cents ($.25) per share
(collectively, the "Balance Shares") in addition to the Prior
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Shares described above.
(4) WARRANT. At the Closing, Lanstar shall grant to SMI a warrant to
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purchase up to Eighteen Million (18,000,000) shares of Lanstar's common stock
within three (3) years of the Date of This Agreement with an exercise price of
One Dollar and Fifty Cents ($1.50) per share, such warrant having an agreed
value of Five Hundred Thousand Dollars ($500,000.00). The Warrant shall be in
the form marked Exhibit B, attached hereto and incorporated herein for all
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purposes. At the Closing of the Warrant sale, SMI will execute a Promissory Note
in the form marked Exhibit C, attached hereto and incorporated herein for all
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STOCK PURCHASE AGREEMENT - Page 3 of 21 Pages
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purposes, in the amount of Five Hundred Thousand Dollars ($500,000.00) payable
to the order of Lanstar with a maturity of twelve (12) months and an interest
rate of prime plus Two Percent (2%).
(5) PRE-CLOSING MATTERS.
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(A) SMI hereby releases Lanstar from any and all obligations that
may be owed in connection with any intercompany receivables,
advances or distributions as of the Closing.
(B) By 2:00 P.M. on October 1, 1997, SMI will wire the amount of
Two Hundred Fifty Thousand Dollars ($250,000.00) into Lanstar's
account at Xxxxxxx Xxxxx. Lanstar will receive from SMI Three
Thousand Six Hundred (3,600) pieces of Lanstar 8Meg SIMM
inventory valued at Seventy-Nine Thousand Two Hundred Dollars
($79,200.00) by Wednesday, October 1, 1997, at 5:00 P.M. SMI
will pay One Hundred Seventy Thousand Eight Hundred Dollars
($170,800.00) to Lanstar in the form of 16 and/or 32Meg SIMM
inventory, with the cost and product type to be agreed upon by
SMI and Lanstar in the form marked Exhibit D - Consideration in
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the Form of SIMM Inventory, attached hereto and incorporated
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herein for all purposes, such agreement to be reached by
Wednesday, October 1, 1997, at 5:00 P.M. and delivery to be
made by 5:00 P.M. on October 1, 1997.
(C) SMI hereby confirms that as of October 1, 1997, SMI will extend
to Lanstar a line of credit (which will not be released by
Section [5][A] above or by the Closing) to purchase inventory
in the amount of Five Hundred Thousand Dollars ($500,000.00) on
a net thirty (30) day basis. Inventory will be sold by SMI to
Lanstar at a gross profit margin not to exceed Five Percent
(5%) based upon SMI's actual purchase price.
STOCK PURCHASE AGREEMENT - Page 4 of 21 Pages
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(6) WARRANTIES AND REPRESENTATIONS BY LANSTAR. To induce WDL and Xxxxxxx
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to enter into this Agreement, Lanstar warrants and represents to WDL and Xxxxxxx
as follows, which representations and warranties shall survive the closing of
all transactions contemplated herein:
(A) Lanstar is the lawful owner in every respect, legal and
equitable, direct and indirect, of the SMI Shares.
(B) Lanstar has not executed any assignment, option, pledge,
security agreement, financing statement or hypothecation
agreement with respect to the SMI Shares.
(C) Lanstar has the complete and unrestricted right, power, and
authority to sell, transfer and assign the SMI Shares pursuant
to this Agreement. Lanstar has not executed any agreement to
place any liens, claims, encumbrances or restrictions on the
SMI Shares.
(D) Lanstar has taken no action that would fail to cause SMI to be
a duly organized and validly existing Texas corporation, in
good standing, with all requisite corporate power and authority
to carry on its business as presently conducted. Lanstar has
taken no action to cause SMI to possess any subsidiaries or any
other direct or indirect equity interest in any other firm,
corporation or business enterprise.
(E) Lanstar has taken no action to amend the Articles of
Incorporation of SMI in any way or to otherwise cause a
restructuring of its capital. Lanstar has not caused the
creation of any outstanding options, contracts, commitments,
warranties, agreements or other rights of any character
affecting or relating in any manner to the issuance of stock of
SMI or other securities
STOCK PURCHASE AGREEMENT - Page 5 of 21 Pages
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entitling anyone to acquire stock of SMI or other securities of
SMI.
(F) Except for any agreement between Xxxxxxxx & Xxxxxx, L.L.P. and
Lanstar in connection with the audit of Lanstar, Lanstar has
not executed any agreement to cause SMI or its assets to be
subject to any indebtedness or other contractual obligations.
(G) Lanstar has no actual knowledge of any legal actions, suits,
arbitrations or other legal administrative or governmental
proceedings pending or threatened against SMI, its properties,
assets or business except for the following:
(i) NECX, Plaintiff vs. Southwest Memory, Inc., Defendant,
United States District Court, District of Massachusetts,
Cause No. 97-10190-EFH;
(ii) Vanstar Corporation vs. Southwest Memory, Inc., United
States District Court For the Western District of
Washington at Seattle, C96-1714-Z; and
(iii) Progressive Technology, Inc. vs. Southwest Memory, Inc.
and Southwest Memory International, Inc., in the Supreme
Court of the County of York, State of Maine, Docket No.
CV-96-531.
(H) To the best of Lanstar's actual knowledge, Lanstar has not
unilaterally caused the business and operation of SMI to be
conducted in violation of any applicable law, rule or
regulation of any authorities.
(I) To the best actual knowledge and belief of Lanstar, Lanstar has
taken no affirmative action to divest SMI of title to its
assets.
STOCK PURCHASE AGREEMENT - Page 6 of 21 Pages
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(J) Except as provided in this Agreement and except for
distributions, intercompany receivables and intercompany
advances prior to the Date of This Agreement, there is no
declaration of a dividend from SMI to Lanstar.
(K) From the Date of This Agreement to the Closing, Lanstar will
not interfere with the business of SMI.
(7) TRANSFER OF THE SMI SHARES. For and in consideration of the payment
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of the consideration described herein, Lanstar agrees to sell, assign, transfer
and convey all of Lanstar's right, title and interest in and to the SMI Shares
to WDL at the Closing. Lanstar will relinquish all of its rights as a
Shareholder in SMI at the Closing. At the Closing, Lanstar will relinquish all
right, power and authority which Lanstar has or may have had to act for and/or
on behalf of SMI and/or to bind SMI. Each party to this Agreement shall be
solely responsible for its/his federal tax consequences.
(8) ACCEPTANCE OF TRANSFER OF THE SMI SHARES. WDL will accept the
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transfer of the SMI Shares.
(9) RELEASE. WDL, Xxxxxxx, SMI, SWM and MG TK for themselves and their
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respective heirs, personal representatives, executors, administrators,
successors and assigns hereby fully, finally and forever release and discharge
Lanstar, its officers, directors, shareholders, employees, agents, legal
counsel, accountants and representatives and their respective heirs, personal
representatives, executors and administrators, of and from any and all claims,
actions and causes of action and damages (collectively, the "Claims") of every
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kind, whether known or unknown, whether contingent or matured, regardless of
when such
STOCK PURCHASE AGREEMENT - Page 7 of 21 Pages
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Claims arose, but only Claims arising through the effective time of Closing.
(10) REPRESENTATIONS AND WARRANTIES BY WDL AND XXXXXXX. To induce Lanstar
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to enter into this Agreement, WDL and Xxxxxxx represent and warrant to Lanstar
and to Lanstar's successors, assigns and legal representatives as follows, which
representations and warranties shall survive the closing of all transactions
contemplated herein:
(A) There are no agreements whether written or oral with respect to
ownership of the Prior Shares or the Balance Shares. Neither
WDL, nor Xxxxxxx nor or any person or entity acting on their
behalf in any capacity has executed any assignment, rights
agreement, warrant, option, pledge, security agreement,
financing statement, trust, power of attorney, voting
agreement, nominee agreement, hypothecation or any agreement of
any type with respect to the Prior Shares or the Balance
Shares.
(B) The Prior Shares and the Balance Shares are free and clear of
any liens, trusts, charges, restrictions on transfer, options,
warrants, rights to purchase, security interests, powers of
attorney, claims, pledges, rights of offset and encumbrances
whatsoever.
(C) SMI has not knowingly engaged in or conspired to engage in any
deceptive labeling, remarking or misrepresentation of the
quality, capacity or capability of any inventory purchased or
sold by SMI prior to the effective time of the Closing.
(11) OTHER REPRESENTATIONS AND WARRANTIES. To induce Lanstar to enter
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into this Agreement, SMI, SWM and MG TK hereby each
STOCK PURCHASE AGREEMENT - Page 8 of 21 Pages
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represent and warrant to Lanstar that SMI has not knowingly engaged in or
conspired to engage in any deceptive labeling, remarking or misrepresentation of
the quality, capacity or capability of any inventory purchased or sold by SMI
prior to the effective time of the Closing.
(12) COVENANTS REGARDING FINANCIAL STATEMENTS. To induce Lanstar to enter
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into this Agreement, SMI, SWM, WDL, MG TK and Xxxxxxx (collectively, the
"Covenantors") hereby each covenant to Lanstar as follows:
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(A) The auditors of Lanstar shall be allowed complete access to the
books and records of MG TK, SWM and SMI for the purpose of
preparing tax returns and financial statements for Lanstar for
any period ending on or before October 31, 1997, for which such
information is relevant in the reasonable judgment of Lanstar's
auditors. Management of MG TK, SWM and SMI shall give
management representations considered necessary in the
reasonable judgment of Lanstar's auditors, which
representations shall be accurate and complete. In the event of
violation of this Section (12), the Signatories to this
Agreement agree that damages to Lanstar would be impossible to
calculate and an insufficient remedy. Therefore, upon any
breach or threatened breach of this provision, the Signatories
to this Agreement agree that Lanstar shall be entitled to seek
specific performance and/or injunctive relief of this provision
in a court of competent jurisdiction.
(B) The Covenantors agree to reasonably cooperate with Lanstar in
the future in connection with any securities filing,
investigation, audit, administrative proceeding, collection
action or other administrative action to which Lanstar may be
or become subject.
STOCK PURCHASE AGREEMENT - Page 9 of 21 Pages
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(C) SMI shall furnish unaudited financial statements of SMI to
Lanstar's auditors for the nine-month period ending September
30, 1997, and for the ten-month period ending October 31, 1997,
which statements will be accurate, correct and complete in all
respects and will have been prepared in accordance with
generally accepted accounting principles, applied on a
consistent basis throughout the periods indicated. Each balance
sheet will present fairly the financial condition of SMI as of
the dates indicated thereon, and each income statement and
statement of operations will present fairly the results of
operations of SMI for the periods indicated thereon. None of
such financial statements, as of the dates and the periods
thereof, will misstate or omit to state any liability, absolute
or contingent, the omission of which renders such financial
statements misleading.
(13) INDEMNIFICATION. To induce Lanstar to enter into this Agreement,
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WDL, Xxxxxxx, SMI, SWM and MG TK (collectively, the "Indemnitors") hereby
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jointly and severally for themselves and their respective heirs, personal
representatives, executors, administrators, successors and assigns hereby
indemnify and agree to hold harmless Lanstar, its officers, directors,
shareholders, employees, agents, legal counsel, accountants and representatives
and their respective heirs, personal representatives, executors and
administrators, of and from any and all Claims and Damages of every kind
(collectively, the "Indemnified Items"), whether known or unknown, whether
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contingent or matured, regardless of when such Indemnified Items arose, which
relate to, result from, or are caused by the following:
(A) Any liability of any Indemnitor including, without limitation,
any tax or withholding liabilities;
STOCK PURCHASE AGREEMENT - Page 10 of 21 Pages
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(B) Any misrepresentation, breach of warranty or breach of covenant
made by Indemnitors contained in this Agreement; or
(C) Any act or omission of any Indemnitor or any officer, director,
shareholder, employee, agent or representative of any
Indemnitor.
The foregoing indemnity shall apply to all litigation liabilities and all
tax liabilities of SMI, SWM and/or MG TK without regard to any act or failure to
act by Lanstar, but the foregoing indemnity shall not apply in other cases where
Lanstar, its officers and directors solely caused the liability.
Lanstar and the other indemnified persons shall act in good faith, but
shall have the exclusive right to control the defense, concession or settlement
of any claim with respect to an indemnified liability. The Indemnitors shall
have the right to reasonably consult and reasonably participate at their expense
in connection with any defense or settlement. Lanstar and the other indemnified
persons shall be entitled to be paid in cash for any loss or Damages with
respect to indemnified liabilities. "Damages" as used herein, include direct
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damages, interest, penalties, punitive damages, court costs, legal fees,
accounting costs, expert costs and all costs of collection or enforcement of
this indemnity including reasonable legal fees. An indemnified person shall be
deemed damaged when a liability arises whether by court judgment, settlement or
concession. Payment of any loss or Damages by the indemnified person shall not
be a condition precedent to collection of the indemnity payment from any party
hereto. No indemnifying party shall be entitled to a right of offset or
reduction in its indemnity obligation as a result of any tax benefits accruing
to the indemnified person.
STOCK PURCHASE AGREEMENT - Page 11 of 21 Pages
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(14) INVENTORY. WDL and Xxxxxxx acknowledge and agree that certain
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items of SMI's inventory are obsolete and/or slow moving and that neither WDL
nor Xxxxxxx nor SMI shall have any recourse against Lanstar with respect to any
inventory of SMI.
(15) DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY. EXCEPT FOR THE
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EXPRESS WARRANTIES GIVEN BY LANSTAR IN THIS AGREEMENT OR IN ANY OTHER DOCUMENT,
INSTRUMENT OR AGREEMENT EXECUTED BY LANSTAR PURSUANT TO THIS AGREEMENT, LANSTAR
HEREBY DISCLAIMS ANY AND ALL EXPRESS AND IMPLIED REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO SMI, LANSTAR, THE BUSINESS OF SMI AND/OR THE PROPERTY AND ASSETS
OF SMI. Notwithstanding any provision of this Agreement to the contrary, Lanstar
shall not incur any liability to WDL or Xxxxxxx for any representation or
warranty contained in this Agreement, including the documents, instruments and
agreements to be executed and/or delivered by Lanstar pursuant hereto, which is
false, misleading or untrue as of the Date of This Agreement or as of the
Closing if WDL or Xxxxxxx had actual knowledge of such false, misleading or
untrue representation or warranty, and failed to notify Lanstar in writing that
WDL or Xxxxxxx had such actual knowledge on or before the Closing. For purposes
of this Section (14), the actual knowledge of WDL or Xxxxxxx shall include the
actual knowledge of the employees of either WDL or Xxxxxxx and their agents and
affiliates.
(16) VALIDITY OF AGREEMENT. This Agreement and all other documents
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executed and delivered or to be executed and delivered by any Signatory to this
Agreement, pursuant to or in connection with this
STOCK PURCHASE AGREEMENT - Page 12 of 21 Pages
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Agreement, as appropriate, have been, or will be on or before the Closing, duly
authorized, executed and delivered by such party and constitute or will
constitute the legal, valid and binding obligation of such party, enforceable
against such party in accordance with their respective terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
creditors' rights and to equitable principles which may affect the availability
of specific performance, injunctive and other forms of equitable relief.
(17) NO CONFLICT WITH OTHER INSTRUMENTS. The execution and delivery of
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this Agreement and the consummation of the transactions contemplated hereby by
WDL and Xxxxxxx will not (i) result in any breach of any of the terms or
conditions of, or constitute a default under, the Articles of Incorporation of
SMI or WDL or the Bylaws of SMI or WDL; or (ii) to the best knowledge of WDL and
Xxxxxxx, result in any violation of any law, or any rule or regulation of any
administrative, agency or governmental body or any order, injunction or decree
of any court, administrative agency or governmental body. The execution,
delivery and performance of this Agreement and all other documents executed and
delivered in connection herewith by WDL and Xxxxxxx to the best knowledge of WDL
and Xxxxxxx will not result in a violation or breach of any term or provision
of, or constitute a default or accelerate the performance required under, any
indenture, mortgage, deed of trust, commitment, note, bond, license or other
contract, agreement, or obligation to which WDL or Xxxxxxx is a party or by
which WDL or Xxxxxxx or their assets are bound, or violate any order, writ,
injunction or decree of any court, administrative agency or governmental body.
STOCK PURCHASE AGREEMENT - Page 13 of 21 Pages
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(18) NO CONFLICT WITH OTHER INSTRUMENTS. The execution and delivery of
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this Agreement and the consummation of the transactions contemplated hereby by
Lanstar will not (i) result in any breach of any of the terms or conditions of,
or constitute a default under, the Articles of Incorporation of Lanstar or the
Bylaws of Lanstar; or (ii) to the best knowledge of Lanstar, result in any
violation of any law, or any rule or regulation of any administrative, agency or
governmental body or any order, injunction or decree of any court,
administrative agency or governmental body. The execution, delivery and
performance of this Agreement and all other documents executed and delivered in
connection herewith by Lanstar to the best knowledge of Lanstar will not result
in a violation or breach of any term or provision of, or constitute a default or
accelerate the performance required under, any indenture, mortgage, deed of
trust, commitment, note, bond, license or other contract, agreement, or
obligation to which Lanstar is a party or by which Lanstar or its assets are
bound, or violate any order, writ, injunction or decree of any court,
administrative agency or governmental body.
(19) INVESTMENT INTENT. The SMI Shares being acquired by WDL hereunder
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are being purchased for its account and not with the view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"). WDL
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understands that the SMI Shares have not been registered under the Securities
Act or any applicable state laws by reason of their issuance in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act and such laws, and that they must be held indefinitely unless
they are registered
STOCK PURCHASE AGREEMENT - Page 14 of 21 Pages
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under the Securities Act and any applicable state laws or are exempt from
registration. WDL has such knowledge and experience in financial and business
matters and is capable of evaluating the merits and risks of the prospective
investment in the SMI Shares. WDL has had access to SMI, its books and records
and to SMI's executive officers and directors for a reasonable period of time
prior to the Closing. WDL has had the opportunity to ask questions of and to
receive answers concerning the SMI Shares and SMI and to obtain any additional
information which SMI possessed or could acquire without unreasonable effort or
expense.
(20) SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, COVENANTS
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AND AGREEMENTS. All of the indemnities, representations, warranties, covenants
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and agreements that are made in this Agreement shall survive the closing and
shall not be merged therein.
(21) TIME OF THE ESSENCE. Time is of the essence in the performance of this
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Agreement.
(22) ENTIRE AGREEMENT. This Agreement and the exhibits attached hereto
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supersede any and all other understandings and agreements, either oral or in
writing, between any and/or all of the Signatories to this Agreement and
constitute the sole and only agreement between the Signatories to this
Agreement. All prior negotiations and agreements between the Signatories to this
Agreement with respect to the sale are merged into this Agreement. The
Signatories to this Agreement agree that no representations, inducements,
statements, promises or agreements, orally or otherwise, have been made by any
of them or by anyone acting on behalf of any of them which are not set forth in
this Agreement and in the attached exhibits and that any representation,
inducement,
STOCK PURCHASE AGREEMENT - Page 15 of 21 Pages
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statement, promise or agreement that is not set forth in this Agreement or the
attached exhibits shall not be valid or binding or of any force or effect.
(23) GENDER AND NUMBER. Words of any gender that are used in this
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Agreement shall be held and construed to include any other gender, and words in
the singular number shall be held to include the plural, and vice versa, unless
the context requires otherwise.
(24) MODIFICATION. No change or modification of this Agreement shall be
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valid or binding upon the Signatories to this Agreement unless the change or
modification is in writing and signed by the Signatories to this Agreement.
(25) HEADINGS. The headings that are used in this Agreement are used
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for reference and convenience purposes only and do not constitute substantive
matters to be considered in construing the terms and provisions of this
Agreement.
(26) TEXAS LAW TO APPLY. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED
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AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUDING ANY
CONFLICTS-OF-LAW RULE OR PRINCIPLE OF TEXAS LAW THAT MIGHT REFER THE GOVERNANCE,
CONSTRUCTION OR INTERPRETATION OF THIS AGREEMENT TO THE LAWS OF ANOTHER STATE).
(27) LEGAL CONSTRUCTION. In the event that any one or more of the
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terms, provisions or agreements that are contained in this Agreement shall be
held by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect for any reason, the invalid, illegal or
unenforceable term, provision or agreement shall not affect any other
STOCK PURCHASE AGREEMENT - Page 16 of 21 Pages
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term, provision or agreement that is contained in this Agreement and this
Agreement shall be construed as if the invalid, illegal or unenforceable term,
provision or agreement had never been contained herein.
The Signatories to this Agreement acknowledge that each of them and
their respective counsel have reviewed this Agreement and that the rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
No provision of this Agreement shall be deemed to have been waived
unless the waiver is in writing and signed by the Signatories to this Agreement.
No custom or practice which may evolve between the Signatories to this Agreement
after the Date of This Agreement shall be deemed or construed to waive or lessen
the right of any of them to insist upon strict compliance with the terms of this
Agreement.
(28) PLACE OF PERFORMANCE AND VENUE. The obligations of the Signatories
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to this Agreement under this Agreement shall be and are performable in Dallas
County, Texas. The Signatories to this Agreement consent and agree that venue of
any action brought in state or federal court under this Agreement shall be in
Dallas County, Texas. All Signatories to this Agreement hereby submit to the
jurisdiction of the state and federal courts that are located in Dallas County,
Texas.
(29) SIGNATORIES TO THIS AGREEMENT BOUND. The terms, provisions,
-----------------------------------
warranties, representations, covenants and agreements that are contained in this
Agreement shall apply to, be binding upon and inure to the benefit of the
Signatories to this Agreement and their
STOCK PURCHASE AGREEMENT - Page 17 of 21 Pages
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respective heirs, executors, administrators, legal representatives, successors
and assigns.
(30) NOTICE. Any notice that is required or permitted to be given or
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delivered hereunder shall be deemed to be given or delivered only when actually
received by the party to whom the notice is addressed or when actually delivered
to the address of that party, as evidenced by a receipt signed by a person at
the appropriate address, at the addresses set forth below, or at any other
addresses that they have theretofore specified by written notice delivered in
accordance herewith. Notice may be given by facsimile to the telecopy number for
each party that is set forth below (provided that receipt of such facsimile is
confirmed by the sender).
(A) Notice to Lanstar shall be addressed and delivered as follows:
LANSTAR SEMICONDUCTOR INC.
0000 XXXXXX X - XXXXX 000
XXXXXXXXX, XXXXX 00000
ATTENTION: XXXXX X. XXXXX
CHIEF EXECUTIVE OFFICER
TELECOPIER NUMBER: 817-640-1411
CONFIRMATION NUMBER: 000-000-0000
With a copy thereof delivered to:
XXXXX X. XXXXXX, ESQ.
KASMIR & XXXXX, L.L.P.
0000 XXXXX XXXXX - XXXXX 0000
XXXXXX, XXXXX 00000-0000
TELECOPIER NUMBER: 000-000-0000
CONFIRMATION NUMBER: 000-000-0000
STOCK PURCHASE AGREEMENT - Page 18 of 21 Pages
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(B) Notice to Xxxxxxx, SMI, SWM and MG TK shall be addressed and
delivered as follows:
SOUTHWEST MEMORY INTERNATIONAL, INC.
0000 XXXXXX XXXXXXX - XXXXX 000
XXXXXXXXXX, XXXXX 00000-0000
ATTENTION: XXXX XXXXXXX
CHIEF EXECUTIVE OFFICER
TELECOPIER NUMBER: 000-000-0000
CONFIRMATION NUMBER: 972-934-8373
(C) Notice to WDL shall be addressed and delivered as follows:
WORLD DATA LIMITED
X/X XXXXXX XXXXXXXXXXXXX XXXXXXX
XXXXXX XXXXX - XXXXX XXXXX
XXXX STREET
GEORGETOWN GRAND CAYMAN,
CAYMAN ISLANDS, BRITISH WEST INDIES
ATTENTION: XXXXX X. XXXX
MANAGING PARTNER
TELECOPIER NUMBER: 000-000-0000
CONFIRMATION NUMBER: 000-000-0000
Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was actually received shall be
deemed to be receipt of the notice.
STOCK PURCHASE AGREEMENT - Page 19 of 21 Pages
------------------------
IN WITNESS WHEREOF, the Signatories to this Agreement have executed
this Stock Purchase Agreement as of the Date of This Agreement.
LANSTAR SEMICONDUCTOR INC.
BY:/s/ XXXXX X. XXXXX
--------------------------
XXXXX X. XXXXX
CHIEF EXECUTIVE OFFICER
/s/ XXXX XXXXXXX
-----------------------------
XXXX XXXXXXX
INDIVIDUALLY
WORLD DATA LIMITED
BY:/s/XXXXX X. XXXX
--------------------------
XXXXX X. XXXX
PRESIDENT
SOUTHWEST MEMORY
INTERNATIONAL, INC.
BY:/s/ XXXX XXXXXXX
--------------------------
XXXX XXXXXXX
CHIEF EXECUTIVE OFFICER
STOCK PURCHASE AGREEMENT - Page 20 of 21 Pages
------------------------
SOUTHWEST MEMORY, INC.
BY:/s/ XXXX XXXXXXX
--------------------------
XXXX XXXXXXX
PRESIDENT
MG TK CORP.
BY:/s/ X. XXXXXXXXXX
--------------------------
XXXXXXX XXXXXXXXXX
PRESIDENT
STOCK PURCHASE AGREEMENT - Page 21 of 21 Pages
------------------------
EXHIBITS TO STOCK PURCHASE AGREEMENT
EXHIBIT A - INDIVIDUALS' REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNITIES
EXHIBIT B - WARRANT
EXHIBIT C - PROMISSORY NOTE
EXHIBIT D - CONSIDERATION IN THE FORM OF SIMM INVENTORY
EXHIBITS TO
-----------
STOCK PURCHASE AGREEMENT - Page Solo
------------------------
EXHIBIT A -
INDIVIDUALS' REPRESENTATIONS, WARRANTIES,
COVENANTS AND INDEMNITIES
In order to induce LANSTAR SEMICONDUCTOR INC., a Utah corporation
("Lanstar"), to enter into that certain Stock Purchase Agreement dated October
-------
1, 1997, to which this letter is Exhibit A, the undersigned XXXXXX XXXXXXXX
---------
("Xxxxxxxx") and XXXXXXX XXXXXXXXXX ("Xxxxxxxxxx") agree as follows:
-------- ----------
(1) RELEASE. Xxxxxxxx and Goldshtein for themselves and their respective
-------
heirs, personal representatives, executors and administrators hereby fully,
finally and forever release and discharge Lanstar, its officers, directors,
shareholders, employees, agents, legal counsel, accountants and representatives
and their respective heirs, personal representatives, executors and
administrators, of and from any and all claims, actions and causes of action and
damages (collectively, the "Claims") of every kind, whether known or unknown,
------
whether contingent or matured, regardless of when such Claims arose, but only
Claims arising through the effective time of Closing.
(2) REPRESENTATIONS AND WARRANTIES. Xxxxxxxx and Xxxxxxxxxx hereby each
------------------------------
represent and warrant to Lanstar that SMI has not knowingly engaged in or
conspired to engage in any deceptive labeling, remarking or misrepresentation of
the quality, capacity or capability of any inventory purchased or sold by SMI
prior to the effective time of the Closing.
(3) COVENANTS REGARDING FINANCIAL STATEMENTS. Xxxxxxxx and Goldshtein
----------------------------------------
(collectively, the "Covenantors") hereby each covenant to Lanstar as follows:
-----------
EXHIBIT A - INDIVIDUALS' REPRESENTATIONS,
----------------------------------------
WARRANTIES, COVENANTS AND INDEMNITIES - Page 1 of 5 Pages.
-------------------------------------
(A) The auditors of Lanstar shall be allowed complete access to the
books and records of MG TK, SWM and SMI for the purpose of
preparing tax returns and financial statements for Lanstar for
any period ending on or before October 31, 1997, for which such
information is relevant in the reasonable judgment of Lanstar's
auditors. Management of MG TK, SWM and SMI shall give management
representations considered necessary in the reasonable judgment
of Lanstar's auditors, which representations shall be accurate
and complete. In the event of violation of this Section (3), the
Signatories to this Agreement agree that damages to Lanstar would
be impossible to calculate and an insufficient remedy. Therefore,
upon any breach or threatened breach of this provision, the
Signatories to this Agreement agree that Lanstar shall be
entitled to seek specific performance and/or injunctive relief of
this provision in a court of competent jurisdiction.
(B) The Covenantors agree to reasonably cooperate with Lanstar in the
future in connection with any securities filing, investigation,
audit, administrative proceeding, collection action or other
administrative action to which Lanstar may be or become subject.
(C) SMI shall furnish unaudited financial statements of SMI to
Lanstar's auditors for the nine-month period ending September 30,
1997, and for the ten-month period ending October 31, 1997, which
statements will be accurate, correct and complete in all respects
and will have been prepared in accordance with generally accepted
accounting principles, applied on a consistent basis throughout
the periods indicated. Each balance sheet will present fairly the
financial condition of SMI as of the dates indicated thereon, and
each income statement and statement of operations will present
fairly the results
EXHIBIT A - INDIVIDUALS' REPRESENTATIONS,
----------------------------------------
WARRANTIES, COVENANTS AND INDEMNITIES - Page 2 of 5 Pages.
-------------------------------------
of operations of SMI for the periods indicated thereon. None of
such financial statements, as of the dates and the periods
thereof, will misstate or omit to state any liability, absolute
or contingent, the omission of which renders such financial
statements misleading.
(4) INDEMNIFICATION. Xxxxxxxx and Xxxxxxxxxx (collectively, the
---------------
"Indemnitors") hereby jointly and severally for themselves and their respective
-----------
heirs, personal representatives, executors and administrators hereby indemnify
and agree to hold harmless Lanstar, its officers, directors, shareholders,
employees, agents, legal counsel, accountants and representatives and their
respective heirs, personal representatives, executors and administrators, of and
from any and all Claims and Damages of every kind (collectively, the
"Indemnified Items"), whether known or unknown, whether contingent or matured,
-----------------
regardless of when such Indemnified Items arose, which relate to, result from,
or are caused by the following:
(A) Any liability of any Indemnitor including, without limitation,
any tax or withholding liabilities;
(B) Any misrepresentation, breach of warranty or breach of covenant
made by the Covenantors contained in this letter; or
(C) Any act or omission of any Indemnitor or any officer, director,
shareholder, employee, agent or representative of any Indemnitor.
The foregoing indemnity shall apply to all litigation liabilities and all
tax liabilities of Xxxxxxxx and Goldshtein without regard to any act or failure
to act by Lanstar, but the foregoing indemnity shall not apply in other cases
where Lanstar, its officers and directors solely caused the liability.
EXHIBIT A - INDIVIDUALS' REPRESENTATIONS,
----------------------------------------
WARRANTIES, COVENANTS AND INDEMNITIES - Page 3 of 5 Pages.
-------------------------------------
Lanstar and the other indemnified persons shall act in good faith, but
shall have the exclusive right to control the defense, concession or settlement
of any claim with respect to an indemnified liability. The Indemnitors shall
have the right to reasonably consult and reasonably participate at their expense
in connection with any defense or settlement. Lanstar and the other indemnified
persons shall be entitled to be paid in cash for any loss or Damages with
respect to indemnified liabilities. "Damages" as used herein, include direct
-------
damages, interest, penalties, punitive damages, court costs, legal fees,
accounting costs, expert costs and all costs of collection or enforcement of
this indemnity including reasonable legal fees. An indemnified person shall be
deemed damaged when a liability arises whether by court judgment, settlement or
concession. Payment of any loss or Damages by the indemnified person shall not
be a condition precedent to collection of the indemnity payment from any party
hereto. No indemnifying party shall be entitled to a right of offset or
reduction in its indemnity obligation as a result of any tax benefits accruing
to the indemnified person.
IN WITNESS WHEREOF, XXXXXX XXXXXXXX and XXXXXXX XXXXXXXXXX have executed
this Exhibit A - Individuals' Representations, Warranties, Covenants and
-------------------------------------------------------------------
Indemnities on this the 1st day of October, 1997.
-----------
/s/ X. Xxxxxxxx
---------------------------------
XXXXXX XXXXXXXX
INDIVIDUALLY
EXHIBIT A - INDIVIDUALS' REPRESENTATIONS,
----------------------------------------
WARRANTIES, COVENANTS AND INDEMNITIES - Page 4 of 5 Pages.
-------------------------------------
/s/ X. Xxxxxxxxxx
---------------------------------
XXXXXXX XXXXXXXXXX
INDIVIDUALLY
EXHIBIT A - INDIVIDUALS' REPRESENTATIONS,
----------------------------------------
WARRANTIES, COVENANTS AND INDEMNITIES - Page 5 of 5 Pages.
-------------------------------------
EXHIBIT B
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE SECURITIES
OR BLUE SKY LAWS. NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD,
ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
UNDER SAID ACT OR UNDER APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR
EXEMPTIONS FROM SUCH REGISTRATION.
OCTOBER 13, 1997 WARRANT NO. WA97-028
LANSTAR SEMICONDUCTOR INC.
STOCK PURCHASE WARRANT
Registered Owner: Southwest Memory International, Inc.
For value received, LANSTAR SEMICONDUCTOR INC., a Utah corporation (the
"Corporation"), grants the following rights to the registered owner of this
Warrant.
(a) RESTRICTED STOCK; REGISTRATION. The shares of Common Stock of the
Corporation purchased upon exercise of this Warrant ("Restricted Stock") or
purchasable upon exercise of this Warrant ("Underlying Stock") shall not be
transferable except upon the conditions stated below, which are intended to
insure compliance with federal and state securities laws. If, at the time of
exercise of this Warrant by the registered owner, the representations and
warranties made by the registered owner in a Subscription Agreement are
acceptable to the Corporation, the Corporation will undertake to cause the
Underlying Stock to be issued to the registered owner pursuant to Section 4(2)
of the Securities Act of 1933, as amended. The certificates representing these
shares of stock shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The securities represented by this Certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
state. The securities have been acquired for investment and may not be
sold, offered for sale or transferred in
- 1 -
the absence of an effective registration under the Securities Act of 1933,
as amended, and any applicable state securities laws or an opinion of
counsel satisfactory in form and substance to counsel for the Corporation
that the transaction shall not result in a violation of state or federal
securities laws".
(b) ISSUE. Upon tender to the Corporation (as defined in paragraph (f)
hereof), the Corporation shall issue to the registered owner hereof up to the
number of shares specified in paragraph (c) hereof of fully paid and
nonassessable shares of Common Stock of the Corporation that the registered
owner is otherwise entitled to purchase.
(c) NUMBER OF SHARES. The total number of shares of Common Stock of the
Corporation that the registered owner of this Warrant is entitled to receive
upon complete exercise of this Warrant is EIGHTEEN MILLION (18,000,000) shares.
The Corporation shall at all times reserve and hold available sufficient shares
of Common Stock to satisfy all conversion and purchase rights represented by
outstanding convertible securities, options and warrants, including this
Warrant. The Corporation covenants and agrees that all shares of Common Stock
that may be issued upon the exercise of this Warrant shall, upon issuance, be
duly and validly issued, fully paid and nonassessable, and free from all taxes
and liens with respect to the purchase and the issuance of the shares.
(d) EXERCISE PRICE. The exercise price of this Warrant, the price at
which the shares of stock purchasable upon exercise of this Warrant may be
purchased, is ONE and 50/100 DOLLARS ($1.50) per share.
(e) EXERCISE PERIOD. Provided, that this Warrant may only be exercised up
to and including October 13, 2000 ("Exercise Period"). If not exercised during
this period, this Warrant and all rights granted under this Warrant shall expire
and lapse.
(f) TENDER. The exercise of this Warrant must be accomplished by actual
delivery of the Exercise Price for the requested number of shares in cash in the
form of a cashier's check and by actual delivery of a duly executed exercise
form, a copy of which is attached to this Warrant as Exhibit 1, properly
executed by the registered owner of this Warrant, and by surrender of this
Warrant. The payment and exercise form must be delivered, personally or by mail,
to the registered office of the Corporation. Documents sent by mail shall be
deemed to be delivered when they are received by the Corporation.
- 2 -
IN WITNESS WHEREOF, the Corporation has signed this Warrant by its duly
authorized officer effective as of the date first above written.
LANSTAR SEMICONDUCTOR INC.
By:
----------------------------
Xxxxx X. Xxxxx
Chief Executive Officer and
Chairman of the Board
- 3 -
EXHIBIT 1
WARRANT EXERCISE FORM
TO: LANSTAR SEMICONDUCTOR INC.
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase up to _____________________ (_______________) shares of restricted
Common Stock of LANSTAR SEMICONDUCTOR INC., pursuant to Warrant No. WA97-028
heretofore issued to the undersigned on October 13, 1997; (2) encloses payment
of ______________________________ ($________________) for these shares at a
price of ONE and 50/100 DOLLARS ($1.50) per share; and (3) requests that a
certificate for the shares be issued in the name of Southwest Memory
International, Inc. and delivered to the undersigned at the address specified
below:
Date:
---------------------
INVESTOR NAME: Southwest Memory International, Inc.
By:
------------------------------------
Printed Name:
------------------------------------
Title:
------------------------------------
Address:
------------------------------------
------------------------------------
Signature guaranteed by: ------------------------------------
EXHIBIT 1 - WARRANT EXERCISE FORM - Page Solo
EXHIBIT C
PROMISSORY NOTE
FOR VALUE RECEIVED, SOUTHWEST MEMORY INTERNATIONAL, INC., a Texas
corporation (hereinafter called the "Maker"), promises to pay to the order of
-----
LANSTAR SEMICONDUCTOR INC., a Utah corporation (hereinafter called the "Payee"),
-----
the principal amount of Five Hundred Thousand Dollars ($500,000.00), together
with interest from the date of this Promissory Note on the unpaid principal
balance, all as set forth below. All sums that are due under this Promissory
Note are payable at such place in Arlington, Tarrant County, Texas, as the Payee
may designate in writing.
(1) INTEREST RATE. The unpaid principal balance of this Promissory Note
-------------
shall bear interest at a rate that is equal to the prime commercial rate
established from time to time by Bank One, Texas, N.A. plus Two Percent (2%).
(2) PAYMENT OF PRINCIPAL AND INTEREST. The principal of this Promissory
---------------------------------
Note, together with all accrued interest, shall be due and payable on or before
twelve (12) months from the date of execution of this Promissory Note
(hereinafter called the "Due Date").
--------
(3) PREPAYMENT. The Maker shall have the right and privilege at any time
----------
to prepay, in whole or in part, the principal balance of this Promissory Note
without premium or penalty and interest shall immediately cease on any amount so
prepaid.
(4) RECEIPT OF INTEREST. All agreements between the Maker and the Payee
-------------------
are hereby expressly limited so that in no contingency or event whatsoever shall
the amount paid, or agreed to be paid, to the
PROMISSORY NOTE - Page 1 of 3 Pages
---------------
Payee for the use, forbearance or detention of the money to be loaned hereunder
exceed the maximum amount permissible under Texas law. If, from any
circumstances whatsoever, fulfillment of any provision of this Promissory Note
at the time performance of such provision shall be due shall involve
transcending the limit of validity prescribed by Texas law, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity,
and if from any circumstances the Payee should ever receive, as interest, an
amount that would exceed the highest lawful rate, then such amount that would be
excessive interest shall be applied to the reduction of the principal amount
owing and not to the payment of interest.
(5) TEXAS LAW TO APPLY. THIS PROMISSORY NOTE SHALL BE GOVERNED BY,
------------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
(EXCLUDING ANY CONFLICTS-OF-LAW RULE OR PRINCIPLE OF TEXAS LAW THAT MIGHT REFER
THE GOVERNANCE, CONSTRUCTION OR INTERPRETATION OF THIS PROMISSORY NOTE TO THE
LAWS OF ANOTHER STATE).
(6) NOTICE. Within ten (10) days of the Due Date, the Payee shall mail
------
written notice that the principal of this Promissory Note, together with all
accrued interest, is due and payable on or before the Due Date to the Maker at
the address that is set forth below the signature line by certified mail, return
receipt requested, postage prepaid.
(7) ATTORNEY'S FEES. If this Promissory Note is not paid as set forth
---------------
herein and is placed in the hands of an attorney for collection, or if it is
collected through a bankruptcy, a probate or any other court after maturity,
then the Payee shall be entitled to reasonable attorney's fees for collection.
PROMISSORY NOTE - Page 2 of 3 Pages
---------------
IN WITNESS WHEREOF, the Maker, SOUTHWEST MEMORY INTERNATIONAL, INC., has
executed this Promissory Note on this the 13th day of October, 1997.
SOUTHWEST MEMORY
INTERNATIONAL, INC.
MAKER
BY:
--------------------------------
XXXX XXXXXXX
CHIEF EXECUTIVE OFFICER
ADDRESS FOR NOTICE:
------------------
0000 XXXXXX XXXXXXX-XXXXX 000
XXXXXXXXXX, XXXXX 00000-0000
ATTENTION: XXXX XXXXXXX
PROMISSORY NOTE - Page 3 of 3 Pages
---------------
EXHIBIT D - CONSIDERATION IN
THE FORM OF SIMM INVENTORY
Purchaser: LANSTAR SEMICONDUCTOR INC.
---------
Seller: SOUTHWEST MEMORY INTERNATIONAL, INC.
------
Product Mix
-----------
to be Delivered: 3125 16Meg SIMM Inventory
---------------
685 32Meg SIMM Inventory
Brand of Product: Hyundai 16Meg SIMM Inventory
----------------
Panasonic 32Meg SIMM Inventory
Cost Per Unit: $38.00/16Meg SIMM Inventory Unit
-------------
$76.00/32Meg SIMM Inventory Unit
Delivery Date: October 1, 1997, on or before 5:00 P.M.
-------------
Total Market Value
-----------------
of Inventory Sold: $170,800
-----------------
EXHIBIT D - CONSIDERATION IN
----------------------------
THE FORM OF SIMM INVENTORY - Page Solo
--------------------------
