EXHIBIT 2.1
SECURITIES PURCHASE AGREEMENT
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AND PLAN OF REORGANIZATION
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THIS SECURITIES PURCHASE AGREEMENT AND PLAN OF REORGANIZATION
("Agreement") is entered into on July 17, 1995 by and among GLOBAL DIAMOND
RESOURCES INC., a British Columbia corporation ("Global Diamond"); WESTERN
CAPITAL FINANCIAL CORPORATION, a Nevada corporation ("Western Capital"); and the
stockholders of Global Diamond listed on the list of selling stockholders ("List
of Selling Stockholders") attached as Exhibit "A" hereto and who have executed
this Agreement ("Selling Stockholders").
R E C I T A L S
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A. Western Capital has authorized capital stock consisting of
25,000,000 shares of common stock, $.001 par value ("Western Capital Common
Stock"), and 10,000,000 shares of preferred stock, $.001 par value ("Western
Capital Preferred Stock"). Western Capital has issued and outstanding 7,211,500
shares of Western Capital Common Stock and no shares of Western Capital
Preferred Stock.
B. Global Diamond has an authorized capitalization consisting of
50,000,000 shares no par value common stock ("Global Diamond Common Stock").
Global Diamond has issued and outstanding 4,415,000 shares of Global Diamond
Common Stock. Global Diamond and Western Capital intend to solicit the persons
on the list of Selling Stockholders such that this Agreement shall be executed
by Selling Stockholders who own at least 90% of the issued and outstanding
shares of Global Diamond Common Stock as of the Closing Date (as defined in
Section 1.3), as set forth on the List of Selling Stockholders as it may be
further amended on or before the Closing Date ("Offered Global Diamond Shares").
C. Prior to the Closing Date, Western Capital shall effect a 1 for
28.846 reverse split ("Reverse Split") of the issued and outstanding shares of
Western Capital common stock.
D. The Selling Stockholders wish to sell the Offered Global Diamond
Shares and Western Capital wishes to acquire the Offered Global Diamond Shares,
on the Closing Date, in exchange for the transfer to the Selling Stockholders of
an aggregate of 4,750,000 shares (post-split) of Western Capital Common Stock
("Western Capital Shares"), subject to and upon the terms and conditions
hereinafter set forth.
A G R E E M E N T
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It is agreed as follows:
1. SECURITIES PURCHASE AND REORGANIZATION.
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1.1 Agreement to Exchange Securities. Subject to and upon the terms
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and conditions set forth herein, each Selling Stockholder agrees to sell,
assign, transfer and deliver to Western Capital, and Western Capital agrees to
purchase from each Selling Stockholder, on the Closing Date, the Offered Global
Diamond Shares owned by the respective Selling Stockholder as set forth on the
List of Selling Stockholders, in exchange for the transfer, on the Closing Date,
by Western Capital to each Selling Stockholder a pro rata share of Western
Capital Shares (i.e., an aggregate of 4,750,000 shares (post-split) of Western
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Capital Common Stock). A Selling Stockholder's pro rata share of Western
Capital Shares ("Pro Rata Share") shall be determined by multiplying the total
number of Western Capital Shares (i.e., 4,750,000 shares (post-split) of Western
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Capital Common Stock) by a fraction, the numerator of which is the total number
of shares of Global Diamond Common Stock owned by the Selling Stockholder on the
Closing Date and the denominator of which is the total number of shares of
Global Diamond Common Stock issued and outstanding on the Closing Date.
1.2 Instruments of Transfer.
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(a) Offered Global Diamond Shares. The Selling Stockholders
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shall each deliver to Western Capital on the Closing Date the original
certificate(s) evidencing the Offered Global Diamond Shares with such
endorsements, assignments and other instruments of transfer, in form
satisfactory to Western Capital and its counsel, in order to effectively vest in
Western Capital all of the Selling Stockholders' right, title and interest in
and to the Offered Global Diamond Shares. From time to time after the Closing
Date, and without further consideration, the Selling Stockholders will execute
and deliver such other instruments of transfer and take such other actions as
Western Capital may reasonably request in order to more effectively transfer to
Western Capital the securities intended to be transferred hereunder.
(b) Western Capital Shares. Western Capital shall deliver to
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the Selling Stockholders on the Closing Date original certificates evidencing
Western Capital Shares, in form and substance satisfactory to Global Diamond and
its counsel, in order to effectively vest in the Selling Stockholders all right,
title and interest in and to the Western Capital Shares. From time to time
after the Closing Date, and without further consideration, Western Capital will
execute and deliver such other instruments and take such other actions as the
Selling Stockholders may reasonably request in order to more effectively issue
to them Western Capital Shares.
1.3 Closing. The closing ("Closing") of the exchange of the Offered
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Global Diamond Shares and Western Capital Shares shall take place at the offices
of Xxxxx & Xxxxx, A Professional Corporation, Xxx Xxxxxxx Xxxxx, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000, at
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10:00 a.m., local time, on July 17, 1995, or at such other time and place as may
be agreed to by Global Diamond and Western Capital ("Closing Date"). Additional
closings, upon substantially identical terms and conditions to those contained
herein, may be held until all of the shares of Global Diamond Common Stock
issued and outstanding as of the date of this Agreement have been exchanged for
the Western Capital Shares. Unless otherwise stated, the initial closing and
any additional closings shall be referred to herein as the "Closing;" however,
the term "Closing Date" shall only refer to the initial Closing Date presently
scheduled for July 17, 1995.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
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Selling Stockholder severally represents, warrants and covenants to and with
Western Capital with respect to itself, as follows:
2.1 Corporate Organization, Etc. The Selling Stockholder, if a
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corporation or partnership, is a corporation or partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization.
2.2 Power and Authority. The Selling Stockholder has all requisite
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corporate, partnership or individual power and authority to enter into and to
carry out all of the terms of this Agreement and all other documents executed
and delivered in connection herewith (collectively, the "Documents"). All
corporate, partnership or individual action on the part of the Selling
Stockholder necessary for the authorization, execution, delivery and performance
of the Documents by the Selling Stockholder has been taken and no further
corporate, partnership or other authorization on the part of the Selling
Stockholder is required to consummate the transactions provided for in the
Documents. When executed and delivered by the Selling Stockholder, the
Documents shall constitute the valid and legally binding obligation of the
Selling Stockholder enforceable in accordance with their respective terms,
subject to the qualification and limitation that the procedural and remedial
rights of the other parties to this Agreement may be limited or rendered
unenforceable by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws, (ii) legal or equitable principles now or hereafter in effect
relating to or affecting the enforcement of rights or remedies generally, or
(iii) the availability of equitable remedies. The Selling Stockholder, if a
corporation or partnership, represents that neither the execution, delivery nor
performance of the Documents by the Selling Stockholder shall violate or result
in a breach of any provisions of its articles of incorporation or bylaws,
certificates of partnership or partnership agreements nor any statute, civil or
criminal, of its jurisdiction of organization.
2.3 Ownership of and Title to Securities. The Selling Stockholder
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represents that the List of Selling Stockholders accurately sets forth the name,
residence address and number of Global Diamond Common Stock owned by the Selling
Stockholder. The Selling Stockholder represents that, except for the Global
Diamond Common Stock, the Global Diamond Warrants (as defined in Section 3.2) or
as disclosed on the Global Diamond Disclosure Schedule attached as Schedule 1
hereto ("Global Diamond Disclosure Schedule"), there are no warrants, options,
subscriptions, calls, or other similar rights of any kind for the issuance or
purchase of any securities of Global Diamond held by the Selling
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Stockholder. The Selling Stockholder represents that the Selling Stockholder
has and will transfer to Western Capital good and marketable title to the
Offered Global Diamond Shares which it owns as set forth on the List of Selling
Stockholders, free and clear of all pledges, security interests, mortgages,
liens, claims, charges, restrictions or encumbrances, except for restrictions
under applicable U.S. federal or state securities laws.
2.4 No Governmental or Other Proceeding or Litigation. The Selling
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Stockholder represents that, to his or her best knowledge, no order of any court
or administrative agency is in effect which restrains or prohibits the Selling
Stockholder from consummating the transactions contemplated hereby, and no suit,
action, investigation, inquiry or proceeding by any governmental body or other
person or legal or administrative proceeding has been instituted or threatened
which questions the validity or legality of the Selling Stockholder's
consummation of the transactions contemplated hereby.
2.5 Approvals and Consents. The Selling Stockholder represents that,
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to his or her best knowledge, there are no permits, consents, mandates or
approvals of public authorities, either U.S. or foreign, federal, state or
local, or of any third party necessary for the Selling Stockholder's
consummation of the transactions contemplated hereby, except such consents,
mandates or approvals as may be required under applicable U.S. federal and state
securities laws which shall be obtained by the Selling Stockholder prior to the
Closing Date.
2.6 Brokerage. The Selling Stockholder represents that no broker or
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finder has acted directly or indirectly for the Selling Stockholder in
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finder's fee or other
commission in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of the Selling Stockholder.
2.7 Global Diamond as Representative on Behalf of the Selling
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Stockholders. The Selling Stockholder hereby appoints Global Diamond as the
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Selling Stockholder's representative and attorney-in-fact to execute, in the
name and on behalf of the Selling Stockholder, and deliver to Western Capital
appropriate stock powers in order to transfer to Western Capital the Selling
Stockholder's ownership in the Offered Global Diamond Shares in accordance with
Section 1.2(a).
2.8 Investment and Related Representations.
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(a) Western Capital Shares as Regulation S or "Restricted"
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Securities. The Selling Stockholder is aware that neither the Western Capital
Shares nor the offer or sale thereof to the Selling Stockholder has been
registered under the U.S. Securities Act of 1933, as amended ("Securities Act"),
or under any foreign or state securities law. The Selling Stockholder further
understands that no registration statement has been filed with the Securities
and Exchange Commission ("SEC"), nor with any other U.S. or foreign regulatory
authority and that, as a result, any benefit which might normally accrue to an
investor such as the Selling Stockholder by an impartial review of such a
registration
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statement by the SEC or other regulatory commission will not be forthcoming.
The Selling Stockholder acknowledges that the Western Capital Shares are being
offered alternatively pursuant to Regulation S under the Securities Act and
certain exemptions from Section 5 of the Securities Act. The Selling
Stockholder acknowledges that, except as otherwise disclosed on the Global
Diamond Disclosure Schedule, it is not a "U.S. person" as defined by Rule 902(o)
under the Securities Act, a copy of which has been provided to each Selling
Stockholder, and that it is not acquiring the Western Capital Shares for the
account or benefit of any "U.S. person." The Selling Stockholder understands
that to the extent Regulation S does not apply to Western Capital's issuance of
Western Capital Shares to the Selling Stockholder, the Western Capital Shares
will be characterized as "restricted" securities under U.S. federal securities
laws inasmuch as they are being acquired in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may
be resold without registration under the Securities Act only in certain limited
circumstances. The Selling Stockholder represents that the Selling Stockholder
is familiar in general with Rule 144 under the Securities Act (which provides
generally for a two year holding period and limitations on the amount of
"restricted" securities that can be sold in compliance with the rule upon
completion of the holding period), and understands the resale limitations
imposed thereby and by the Securities Act. The Selling Stockholder agrees that
the Selling Stockholder will not sell all or any portion of Western Capital
Shares except in accordance with Regulation S, pursuant to registration under
the Securities Act or pursuant to an available exemption from registration under
the Securities Act. The Selling Stockholder understands that each certificate
for Western Capital Shares issued to the Selling Stockholder or to any
subsequent transferee shall be stamped or otherwise imprinted with an
appropriate legend summarizing the restrictions described in this Section 2.8(a)
and that Western Capital shall refuse to transfer the Western Capital Shares
except in accordance with such restrictions.
(b) Investment Representation. This Agreement is made with the
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Selling Stockholder in reliance upon the Selling Stockholder's representation to
the other parties to this Agreement, which by the Selling Stockholder's
execution of this Agreement the Selling Stockholder hereby confirms, that the
Western Capital Shares to be received by the Selling Stockholder are being
acquired pursuant to this Agreement for investment and not with a view to the
public resale or distribution thereof unless in accordance with Regulation S,
pursuant to an effective registration statement or exemption under the
Securities Act.
(c) No Public Solicitation. The Selling Stockholder is
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acquiring the Western Capital Shares after private negotiation and has not been
attracted to the acquisition of the Western Capital Shares by any press release,
advertising or publication.
(d) Access to Information. The Selling Stockholder believes it
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has received all of the information it considers necessary or appropriate for
deciding whether to acquire the Western Capital Shares, including, but not
limited to the copies of the following materials: (i) Western Capital Financial
Statements (as defined in Section 4.4) and (ii) the Global Diamond Financial
Statements (as defined in Section 3.4). The Selling Stockholder further
represents that it has had an opportunity to ask questions of, and to
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receive answers from, Western Capital and Global Diamond regarding Western
Capital and Global Diamond, their businesses and prospects, and the Western
Capital Shares.
(e) Investor Sophistication and Ability to Bear Risk of Loss.
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The Selling Stockholder, if a corporation or a partnership, has not been
organized for the purpose of acquiring the Western Capital Shares. The Selling
Stockholder acknowledges that it is able to protect its interests in connection
with the acquisition of the Western Capital Shares and can bear the economic
risk of investment in such securities without producing a material adverse
change in the Selling Stockholder's financial condition. The Selling Stockholder
otherwise has such knowledge and experience in financial or business matters
that the Selling Stockholder is capable of evaluating the merits and risks of
the investment in the Western Capital Shares.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF GLOBAL DIAMOND.
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Global Diamond represents, warrants and covenants to and with
Western Capital as follows:
3.1 Corporate Organization, Etc. Global Diamond is a British
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Columbia corporation duly organized, validly existing and in good standing under
the laws of British Columbia and is duly qualified to do business and is in good
standing as a foreign corporation under the laws of each jurisdiction in which
the character or location of the assets owned or leased by it require
qualification, except where the failure to so qualify would not materially
adversely affect the business or condition, financial or otherwise, of Global
Diamond. Global Diamond has delivered or prior to the Closing Date will deliver
to Western Capital complete and correct copies of its Certificate of
Incorporation or Articles, as amended, certified by the Secretary of Global
Diamond to be complete and correct. Global Diamond owns all of the issued and
outstanding securities of Global Diamond (Pty), Ltd., a South African
corporation ("Global-SA"), and 50% of the outstanding securities of Zaire
Diamond Partners, LLC, a California limited liability company ("Zaire
Partners"). Other than Global-SA and Zaire Partners, Global Diamond has no
subsidiaries or equity ownership in any other entities.
3.2 Capitalization. The authorized, issued, outstanding and reserved
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capitalization of Global Diamond is as recited in the recitals to this
Agreement, except for the issued and outstanding warrants ("Global Diamond
Warrants") to purchase up to 550,000 shares of Global Diamond Common Stock,
copies of which have been provided to Western Capital. All issued and
outstanding shares of Global Diamond Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable and none of such issued and
outstanding shares of Global Diamond Common Stock have been issued in violation
of the preemptive rights of any past or present stockholders. Except as set
forth in the recitals to this Agreement, in this Section 3.2, or in the Global
Diamond Disclosure Schedule, no warrants, options, subscriptions, calls,
commitments or other rights or agreements of any kind issued, granted or entered
into by Global Diamond for the purchase, issuance or sale of, or security
exchangeable for or convertible into, any authorized shares of Global Diamond
Common Stock is outstanding or otherwise exists and
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no authorized unissued shares of Global Diamond Common Stock are reserved for
any purpose. The Selling Stockholders are the only holders of Global Diamond
Common Stock and, to the best knowledge of Global Diamond, the List of Selling
Stockholders accurately sets forth the names and residence addresses and number
of Global Diamond Common Stock owned by the Selling Stockholders.
3.3 Corporate Power and Authority. Global Diamond has all requisite
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corporate power and authority to own or lease all of its properties and assets,
to operate its properties and assets and to carry on its businesses as now
conducted. Global Diamond has all requisite corporate power and authority to
enter into and to carry out all of the terms of the Documents. The execution,
delivery and performance of the Documents has been duly authorized and approved
by vote of the Board of Directors of Global Diamond. All corporate action on
the part of Global Diamond and its shareholders necessary for the authorization,
execution, delivery and performance of the Documents by Global Diamond has been
taken and no further corporate authorization on the part of Global Diamond is
required to consummate the transactions provided for in the Documents. Global
Diamond has furnished or on or before the Closing Date will furnish Western
Capital with certified copies of all corporate resolutions or consents relating
to the execution, delivery and performance of the Documents. When executed and
delivered by Global Diamond, the Documents shall constitute the valid and
legally binding obligation of Global Diamond enforceable in accordance with
their respective terms subject to the qualification and limitation that
procedural and remedial rights of the other parties may be limited or rendered
unenforceable by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws, (ii) equitable principles now or hereafter in effect relating to
or affecting the enforcement of rights or remedies generally, or (iii) the
availability of equitable remedies. Neither the execution, delivery nor
performance of the Documents by Global Diamond shall violate or result in a
breach of any provisions of Articles of Incorporation or Bylaws, as amended.
Except where such violation or breach would not adversely affect the performance
by Global Diamond of its obligations hereunder and would not have a material
adverse effect on the business or condition, financial or otherwise, of Global
Diamond, neither the execution, delivery nor performance of the Documents by
Global Diamond shall constitute a default or result in a breach of or accelerate
the performance required under any mortgage, deed of trust, lien, lease,
restriction or other contract or agreement to which Global Diamond or any of its
properties or assets are bound or affected, or violate any order, writ,
injunction, decree, judgment or other restriction of any court, administrative
agency or governmental body.
3.4 Financial Statements. Global Diamond has delivered to Western
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Capital its unaudited consolidated balance sheets as of May 31, 1995 (the
"Global Diamond Balance Sheet"). The Global Diamond Balance Sheet has been
prepared in accordance with the books of account and records of Global Diamond,
is complete and correct and fairly and accurately presents the financial
position of Global Diamond as of the date indicated, contains and reflects
adequate reserves for all accrued and contingent liabilities and for all
anticipated losses, and has been prepared in accordance with good accounting
practices.
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3.5 Absence of Undisclosed Liabilities. Global Diamond has no
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material liabilities or material obligations of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, which were
not reflected in the Global Diamond Balance Sheet as of the relevant date as a
liability or by adequate reserves therefor (or, in the case of contingent
liabilities, reflected in the notes thereto) or in the Global Diamond Disclosure
Schedule.
3.6 Absence of Adverse Changes. Except as disclosed in the Global
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Diamond Disclosure Schedule or Global Diamond Balance Sheet, since May 31, 1995,
there has not been any material adverse change in the assets, properties,
financial condition, or business or operations of Global Diamond.
3.7 Tax Matters. All foreign, federal, state, county, local and
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other taxes, including without limitation, income taxes, corporate franchise
taxes, property and ad valorem taxes, sales and use taxes, license and payroll
taxes, which are now due and payable by Global Diamond have been paid or are
provided for on the Global Diamond Balance Sheet and Global Diamond has timely
filed all tax returns and reports required to be filed by it with all foreign or
federal taxing authorities and with all state, county and local taxing
authorities in those states in which Global Diamond has qualified to do
business. No unpaid assessments or deficiencies have been made or threatened
against Global Diamond and no examination is pending by the Internal Revenue
Service or any other taxing authority with respect to any of the tax returns or
reports mentioned above in this Section 3.7.
3.8 Personal Property. Except as set forth on the Global Diamond
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Disclosure Schedule or in the Global Diamond Balance Sheet, Global Diamond has
good, marketable and indefeasible title to all its personal property and assets
(tangible and intangible), free and clear of all mortgages, pledges, security
interests, liens, claims, charges, restrictions and encumbrances.
3.9 Real Property. Global Diamond owns no real property and there is
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no contract under which Global Diamond is obligated or has an option to acquire,
dispose of or lease any such interest.
3.10 Accounts and Notes Receivable. Except as set forth on the
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Global Diamond Disclosure Schedule, all accounts and notes receivable of Global
Diamond as reflected in the Global Diamond Balance Sheet represent bona fide
claims against debtors and are current and collectible except for those accounts
receivable which are uncollectible and for which adequate and sufficient
reserves have been made.
3.11 Permits and Other Operating Rights. Except as disclosed in the
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Global Diamond Disclosure Schedule, Global Diamond currently possesses all
permits, licenses, certificates and other authorizations from third parties,
including, without limitation, foreign, federal, state and local governmental
authorities, necessary or required by applicable provisions of law and judicial
decisions, and by the property and contract rights of third
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parties, for it to own or lease its properties and assets and to operate its
business in the manner in which it is intended.
3.12 Contracts and Commitments. The Global Diamond Disclosure
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Schedule contains an accurate and complete list and identification of all
contracts, agreements or other commitments of Global Diamond involving in excess
of $5,000.
3.13 Defaults. Except as set forth on the Global Diamond Disclosure
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Schedule or in the Global Diamond Balance Sheet, there is no default in any
obligation to be performed by Global Diamond under any contract, lease,
agreement, commitment or undertaking to which it is a party or by which it or
its assets or properties are bound or affected. Except where such default would
not and can not reasonably be expected to have a material adverse affect on the
business or condition, financial or otherwise, of Global Diamond, Global Diamond
has not received notice of and is not in default in any respect with respect to
any order of any court, regulatory agency or other governmental agency.
3.14 Employee Benefit Plans. Global Diamond has no "employee benefit
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plans" (as defined in Section 3(3) of ERISA) or any other deferred compensation
plans and/or bonus plans.
3.15 Labor Matters. The relations of Global Diamond with its
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employees are good in all material respects.
3.16 Litigation. The Global Diamond Disclosure Schedule sets forth
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an accurate and complete list and description of all actions, proceedings or
investigations, threatened or pending, by or against Global Diamond before any
court, governmental agency, regulatory authority or arbitrator. Except as set
forth on the Global Diamond Disclosure Schedule or in the Global Diamond Balance
Sheet, there is no litigation at law or in equity, and no proceeding before any
governmental agency pending against Global Diamond or to which Global Diamond is
a party, or threatened against Global Diamond, or affecting any business,
property or assets of Global Diamond or the right of Global Diamond to carry on
its businesses as now conducted or as intended to be conducted by Global
Diamond. Except as set forth on the Global Diamond Disclosure Schedule or in
the Global Diamond Financial Information, Global Diamond has not received notice
of, nor to the knowledge of Global Diamond is Global Diamond in violation of any
law or order, writ, injunction or decree of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality materially affecting the business operations of Global Diamond.
3.17 Approvals and Consents. Except for (i) such consents or
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approvals as may be required under applicable U.S. federal and state securities
laws which shall be obtained prior to the Closing Date as provided in Section
5.1 or (ii) as set forth on the Global Diamond Disclosure Schedule, and provided
Selling Stockholders holding at least 90% of the outstanding Global Diamond
Common Stock execute this Agreement, no consent, approval or authorization of,
or declaration, filing or registration with, any
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governmental or regulatory authority or third party is required in connection
with the execution, delivery and performance of this Agreement by Global
Diamond.
3.18 Other Information. No portion of this Agreement as it relates
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to Global Diamond is false or misleading in any material respect or omits to
state a fact required to be stated therein or necessary in order to make any of
the statements therein not misleading in any material respect in light of the
circumstances under which they were made.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF WESTERN CAPITAL.
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Western Capital represents, warrants and covenants to and with Global Diamond
and the Selling Stockholders as follows:
4.1 Corporate Organization, Etc. Western Capital is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Nevada, and is duly qualified to do business and is in good standing as
a foreign corporation under the laws of each jurisdiction in which the character
or location of the assets owned or leased by it require qualification, except
where the failure to so qualify would not materially adversely affect the
business or condition, financial or otherwise, of Western Capital. Western
Capital has delivered or prior to the Closing Date will deliver to Global
Diamond complete and correct copies of the articles of incorporation, as
amended, bylaws, as amended, and minutes of Western Capital since incorporation,
certified by the secretary thereof to be complete and correct. As of the date
of this Agreement, Western Capital is the owner of all issued and outstanding
shares of the common stock of Western Capital Leasing Corporation, a California
corporation ("Western Leasing"). Other than Western Leasing, Western Capital
has no other subsidiaries or equity ownership in any other entity.
4.2 Capitalization. The authorized, issued, outstanding and reserved
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capital stock of Western Capital is as recited in the recitals to this
Agreement. All issued and outstanding shares of capital stock of Western
Capital have been duly authorized and validly issued and are fully paid and non-
assessable and none of such issued and outstanding shares have been issued in
violation of the preemptive rights of any past or present shareholder. Except
as set forth in the Western Capital Disclosure Schedule attached hereto as
Schedule 2 ("Western Capital Disclosure Schedule"), no warrants, options,
subscriptions, calls, commitments or other rights or agreements of any kind
issued, granted or entered into by Western Capital for the purchase, issuance or
sale of, or security exchangeable for or convertible into, any shares of such
authorized capital stock is outstanding or otherwise exists and no authorized
unissued shares of Western Capital are reserved for any purpose.
4.3 Corporate Power and Authority. Western Capital has all requisite
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corporate power and authority to own or lease all of its properties and assets,
to operate its properties and assets and to carry on its businesses as now
conducted. Western Capital has all requisite corporate power and authority to
enter into and to carry out all of the terms of the Documents. The execution,
delivery and performance of the Documents has been duly authorized and approved
by vote of Western Capital board of directors without dissent. All corporate
action on the part of Western Capital, its officers, directors and shareholders
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necessary for the authorization, execution, delivery and performance of the
Documents by Western Capital will have been taken and no further corporate
authorization on the part of Western Capital will be required to consummate the
transactions provided for in the Documents. Western Capital has furnished or on
or before the Closing Date will furnish Global Diamond with certified copies of
all corporate resolutions or consents relating to the execution, delivery and
performance of the Documents. When executed and delivered by Western Capital,
the Documents shall constitute the valid and legally binding obligation of
Western Capital enforceable in accordance with their respective terms subject to
the qualification and limitation that the other parties procedural and remedial
rights may be limited or rendered unenforceable by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws, (ii) equitable principles now
or hereafter in effect relating to or affecting the enforcement of rights or
remedies generally, or (iii) the availability of equitable remedies. Neither
the execution, delivery nor performance of the Documents by Western Capital
shall violate or result in a breach of any provisions of Western Capital's
articles of incorporation or bylaws. Except where such violation or breach
would not adversely affect the performance by Western Capital of its obligations
hereunder and would not have a material adverse effect on the business or
condition, financial or otherwise, of Western Capital, neither the execution,
delivery nor performance of the Documents by Western Capital shall constitute a
default or result in a breach of or accelerate the performance required under
any mortgage, deed of trust, lien, lease, restriction or other contract or
agreement to which Western Capital or any of its properties or assets are bound
or affected, or violate any order, writ, injunction, decree, judgment or other
restriction of any court, administrative agency or governmental body.
4.4 Financial Statements. Western Capital has furnished to Global
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Diamond and the Selling Stockholders an unaudited balance sheet of Western
Capital only as of May 31, 1995 (the "Western Capital Balance Sheet"). The
Western Capital Balance Sheet has been prepared in accordance with the books of
account and records of Western Capital, is complete and correct and fairly and
accurately presents the financial position of Western Capital as of the date
indicated, contains and reflects adequate reserves for all accrued and
contingent liabilities and for all anticipated losses, and has been prepared in
accordance with good accounting practices and on a basis consistent with prior
periods.
4.5 Absence of Undisclosed Liabilities. Western Capital has no
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material liabilities or material obligations of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, and whether
or not the primary obligation of Western Leasing, which are not reflected in the
balance sheets included in the Western Capital Balance Sheet as of the relevant
date as a liability or by adequate reserves therefor (or, in the case of
contingent liabilities, reflected in the notes thereto) or in the Western
Capital Disclosure Schedule.
4.6 Absence of Adverse Changes. Except as disclosed in the Western
--------------------------
Capital Disclosure Schedule or the Western Capital Balance Sheet, since May 31,
1995 there has not been any material adverse change in the assets, properties,
financial condition, or business or operations of Western Capital.
-11-
4.7 Tax Matters. All foreign, federal, state, county, local and
-----------
other taxes, including without limitation, income taxes, corporate franchise
taxes, property and ad valorem taxes, sales and use taxes, license and payroll
taxes, which are now due and payable by Western Capital have been paid or are
provided for on the Western Capital Balance Sheet and Western Capital has timely
filed all tax returns and reports required to be filed by it with all foreign or
federal taxing authorities and with all state, county and local taxing
authorities in those states in which Western Capital has qualified to do
business. No unpaid assessments or deficiencies have been made or threatened
against Western Capital and no examination is pending by the Internal Revenue
Service or any other taxing authority with respect to any of the tax returns or
reports mentioned above in this Section 4.7.
4.8 Personal Property. Except for its ownership of the issued and
-----------------
outstanding common shares of Western Leasing, Western Capital has no personal
property and there is no contract under which Western Capital is obligated or
has an option to acquire, dispose of legal personal property.
4.9 Real Property. Western Capital owns no real property and there
-------------
is no contract under which Western Capital is obligated or has an option to
acquire, dispose of or lease real property.
4.10 Accounts and Notes Receivable. All accounts and notes
-----------------------------
receivable of Western Capital as reflected on the Western Capital Balance Sheet
represent bona fide claims against debtors for sales or other charges actually
made in the ordinary course of business and are current and collectible except
for those accounts receivable which are uncollectible and for which adequate and
sufficient reserves have been made on the Western Capital Balance Sheet.
4.11 Permits and Other Operating Rights. Western Capital currently
----------------------------------
possesses all permits, licenses, certificates and other authorizations from
third parties, including, without limitation, foreign, federal, state and local
governmental authorities, necessary or required by applicable provisions of law
and judicial decisions, and by the property and contract rights of third
parties, for it to operate its businesses in the manner in which they presently
are being conducted, except where the absence thereof would not have a material
adverse effect on the business or condition, financial or otherwise, of Western
Capital.
4.12 Contracts and Commitments. Western Capital has no contracts,
-------------------------
agreements, instruments, indentures or other commitments of Western Capital
involving in excess of $500. There are no persons holding powers of attorney
from Western Capital.
4.13 Employee Benefit Plans; ERISA. Western Capital has no plans
-----------------------------
which are "employee benefit plans" (as defined in Section 3(3) of ERISA) or any
other deferred compensation plans or bonus plans.
-12-
4.14 Labor Matters. Western Capital has no employees, other
-------------
than Xxxxxx X. Xxxxxxxx and Xxxxxx X. Xxx.
4.15 Insurance. Western Capital has no insurance policies.
---------
4.16 Litigation. The Western Capital Disclosure Schedule sets forth
----------
an accurate and complete list and description of all actions, proceedings or
investigations, threatened or pending, by or against Western Capital or Western
Leasing before any court, governmental agency, regulatory authority or
arbitrator. Except as set forth on the Western Capital Disclosure Schedule,
there is no litigation at law or in equity, and no proceeding before any
governmental agency pending against Western Capital or Western Leasing or to
which Western Capital or Western Leasing is a party, or threatened against
Western Capital or Western Leasing, or affecting any business, property or
assets of Western Capital or Western Leasing or the right of Western Capital or
Western Leasing to carry on its businesses as now conducted or as intended to be
conducted by Western Capital or Western Leasing. Neither Western Capital nor
Western Leasing has received notice of, nor to their knowledge in violation of
any law or order, writ, injunction or decree of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality materially affecting the business operations of Western Capital
or Western Leasing (including, without limitation, applicable environmental
protection legislation and regulations, equal employment and civil rights
legislation and occupational health and safety legislation).
4.17 Issuance of Western Capital Securities. All of the Western
--------------------------------------
Capital Shares to be issued to the Selling Stockholders pursuant to this
Agreement when delivered to the Selling Stockholders in accordance with the
terms of this Agreement will be duly authorized and issued, free and clear of
all pledges, security interests, mortgages, liens or other encumbrances, except
for restrictions under applicable federal and state securities laws.
4.18 Approvals and Consents. There are no permits, consents or
----------------------
approvals of public authorities, federal, state or local, or of any third party
necessary for the consummation of the transactions contemplated hereby, except
such consents or approvals as may be required under applicable federal and state
securities laws which shall be obtained by Western Capital prior to the Closing
Date as provided in Section 5.1.
4.19 Other Information. No portion of the Documents (which includes
-----------------
all schedules and exhibits) furnished or to be furnished by Western Capital or
any of its authorized representatives to Global Diamond or the Selling
Stockholders or any of their representatives is false or misleading or omits to
state a fact required to be stated therein or necessary in order to make any of
the statements therein not misleading in light of the circumstances under which
they were made.
-13-
5. CERTAIN ADDITIONAL UNDERSTANDINGS AND AGREEMENTS.
------------------------------------------------
5.1 Approvals and Consents.
----------------------
(a) In General. The parties hereto shall each use all reasonable
----------
best efforts to obtain, and shall not take any action which jeopardizes
obtaining, the necessary approvals and consents of other persons and
governmental authorities required to be obtained to consummate the transactions
contemplated by this Agreement.
(b) Selling Stockholders Compliance With Securities Laws. Each
----------------------------------------------------
Selling Stockholder shall take such actions as shall be required in order to
exempt the offer and sale of the Offered Global Diamond Shares to Western
Capital from the registration and prospectus delivery requirements under the
Securities Act and to register or qualify or exempt from registration and
qualification requirements the offer and sale of the Offered Global Diamond
Shares to Western Capital under applicable foreign and state securities laws.
(c) Global Diamond and Western Capital Compliance With Securities
-------------------------------------------------------------
Laws. Western Capital shall cooperate with Global Diamond in taking such
----
actions as shall be required in order to comply with Regulation S under the
Securities Act or exempt the offer and sale of the Western Capital Shares to the
Selling Stockholders from the registration and prospectus delivery requirements
under the Securities Act and to register or qualify or exempt from registration
and qualification requirements the offer and sale of the Western Capital Shares
to the Selling Stockholders under applicable foreign and state securities laws.
5.2 Survival of Representations and Warranties.
------------------------------------------
(a) Global Diamond and Selling Stockholders. The
---------------------------------------
representations and warranties of Global Diamond and the Selling Stockholders
made herein shall not be affected by any information furnished to, or
investigations made by Western Capital or any of its employees or
representatives in connection with the subject matter of this Agreement and
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated thereby for a period of four (4) years after
the Closing Date.
(b) Western Capital. The representations and warranties of
---------------
Western Capital made herein shall not be affected by any information furnished
to, or investigations made by, Global Diamond or the Selling Stockholders, or
any of their employees or representatives, in connection with the subject matter
of this Agreement and shall survive the execution and delivery of this Agreement
and the consummation of the transactions contemplated thereby for period of four
(4) years after the Closing Date.
5.3 Conduct of Business Prior to the Closing Date. From the date
---------------------------------------------
hereof until the Closing Date, Global Diamond and Western Capital shall each act
as follows, except as otherwise expressly consented to by the other in writing,
which consent shall not be unreasonably withheld, except such actions taken to
consummate the transactions in accordance with this Agreement as contemplated
thereby:
-14-
(a) Notification. Global Diamond and Western Capital shall each
------------
immediately notify the other of any material breaches of the representations and
warranties or any material nonfulfillment of the covenants, agreements or
obligations of it or, in the case of Global Diamond, the Selling Stockholders
contained herein or of any developments which could materially or adversely
affect the value of the Offered Global Diamond Shares or Western Capital Shares.
Without limiting the foregoing, Global Diamond and Western Capital shall each
immediately notify the other of (1) any unexpected emergency or other material
change in the normal course of business or in the operation of its properties,
(2) the instigation of or any material development in any litigation or
regulatory proceedings, governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated) in which Global
Diamond is named as a party, and (3) budgets, capital expenditures and material
decisions involving its material properties or assets. Global Diamond and
Western Capital shall each keep the other fully informed of such events and
permit its representatives access to all materials prepared in connection
therewith.
(b) Forbearance. From the effective date hereof to the Closing
-----------
Date, Global Diamond and Western Capital shall not, without the prior written
consent of the other, which consent shall not be unreasonably withheld, except
for such actions taken to consummate the transactions in accordance with this
Agreement as contemplated thereby: (1) amend its articles of incorporation or
bylaws; (2) issue any shares of capital stock or securities convertible into any
such securities or enter into any agreement or commitment with respect to the
issuance or purchase of any such securities; (3) declare, pay or set aside for
payment any dividend or distribution in respect to any securities, or redeem,
purchase or otherwise acquire any securities any options, warrants or other
rights to purchase or subscribe to any securities; (4) make or contract for any
capital investment, capital expenditure, capital addition or capital
improvement; (5) negotiate with any person other than the other concerning any
merger, disposition of all or substantially all of its business, properties, or
assets, any tender offer, acquisition or other business combination, other than
the transactions provided for in this Agreement; (6) organize any new
subsidiary, acquire any capital stock or other debt or equity securities of any
corporation, enter into any partnership or joint venture or acquire any equity
or ownership interest in any business; or (7) take any action which would cause
or constitute a material breach, or would, if it had been taken prior to the
date hereof, have caused a material breach of the representations and warranties
of it set forth herein.
5.4 Access. Each of the parties hereto may, prior to the Closing
------
Date, through its respective representatives, make such reasonable investigation
as is permitted by the laws of its respective jurisdiction of organization of
the property, records and the financial condition of the other parties hereto as
it reasonably deems necessary or advisable to assure itself of the accuracy of
the representations and warranties of the other parties hereto and compliance by
the other parties hereto with all agreements and conditions to be satisfied by
them. Such investigation shall be done at reasonable times and under reasonable
circumstances. Each party shall each keep confidential in the same manner in
which it preserves its own confidential information any information so obtained
which is not otherwise publicly available or ascertainable and to which it has
been given access by
-15-
another party, subject to applicable reporting and disclosure requirements under
applicable foreign, federal and state laws, including without limitation
securities laws. Nothing in this Section 5.4 shall be deemed to constitute a
waiver by any party, or an agreement of any party to waive, with respect to any
document, any claim of attorney-client privilege or legal or contractual
privilege or requirement of confidentiality; provided, however, that the party
claiming such privilege or requirement shall identify to the extent it is
legally permitted the subject matter thereof to the party seeking such document.
5.5 Indemnification.
---------------
(a) Indemnification by Western Capital. Western Capital
----------------------------------
agrees to indemnify, defend and hold harmless Global Diamond and the Selling
Stockholders against and in respect of any and all claims, demands, losses,
costs, expenses, liabilities and damages, including interest, penalties, and
reasonable attorneys' fees, that Global Diamond or the Selling Stockholders
shall incur or suffer which arise, result from or relate to any material
inaccuracy in or material breach or nonfulfillment of any of the
representations, warranties, covenants or agreements made by Western Capital in
this Agreement, the schedules or exhibits hereto or in any other Document
furnished by Western Capital under this Agreement.
(b) Indemnification by Global Diamond. Global Diamond agrees to
---------------------------------
indemnify, defend and hold harmless Western Capital against and in respect of
any and all claims, demands, losses, costs, expenses, liabilities and damages,
including interest, penalties, and reasonable attorneys' fees, that Western
Capital shall incur or suffer which arise, result from or relate to any material
inaccuracy in or material breach of nonfulfillment of any of the
representations, warranties, covenants or agreements made by Global Diamond in
this Agreement, the schedules or exhibits hereto or in any other Document
furnished by Global Diamond under this Agreement.
(c) Procedures; Rights to Separate Counsel. In the event any
--------------------------------------
party receives a complaint, claim or other notice of any loss, claim or damage,
liability or action, giving rise to a claim for indemnification under this
Section 5.5, the party claiming indemnification shall promptly notify the
indemnifying part of such complaint, notice, claim or action, and such
indemnifying party shall have the right to investigate and defend any such loss,
claim, damage, liability or action. The party claiming indemnification shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof but the fees and expenses of such counsel shall not be at
the expense of the indemnifying party, unless the indemnifying party fails to
promptly defend, in which case the fees and expenses of such separate counsel
shall be borne by the indemnifying party. In no event shall an indemnifying
party be obligated to indemnify another party for any settlement of any claim or
action effected without the indemnifying party's prior written consent.
5.6 Recapitalization and Charter Amendments. Prior to the initial
---------------------------------------
Closing, Western Capital will obtain director and stockholder approval of: (a)
this Agreement and the transactions contemplated hereby; (b) the Reverse Split;
(c) the change in the corporate
-16-
name of Western Capital to "Global Diamond Resources, Inc.;" (d) such amendments
to the Bylaws and Articles of Incorporation of Western Capital as may be
reasonably requested by Global Diamond; and (e) the election of a new board of
directors of Western Capital, namely Xxxxxx xx Xxxxxxxx, Xxxxxxx XxxXxxx and
Xxxx Xxxxx to the Board of Directors of Western Capital effective upon and
subject to the initial Closing.
5.7 Sale of Western Leasing. Prior to the initial Closing, Western
-----------------------
Capital shall obtain all necessary director and stockholder approval of, and
shall carry out and effect, the sale of all outstanding shares of the common
stock of Western Leasing presently owned by Western Capital to Xxxxxx X.
Xxxxxxxx. The sale of Western Leasing to Xx. Xxxxxxxx shall be approved by a
majority of the shares entitled to vote on the matter excluding those shares
held or controlled by Xx. Xxxxxxxx.
5.8 Replacement of Global Diamond Warrants. At the Closing, Western
--------------------------------------
Capital shall deliver to the holders of the Global Diamond Warrants, in
consideration of their cancellation of the Global Diamond Warrants, warrants
(the "Western Capital Warrants") to purchase an aggregate of 550,000 shares of
Western Capital Common Stock on the terms and subject to the conditions set
forth in the Global Diamond Warrants.
6. REGISTRATION RIGHTS.
-------------------
6.1 Definitions. As used in this Section 6, the following terms have
-----------
the meanings indicated:
"Designated Holder" means each of the Selling Stockholders and any
transferee of any of them to whom Registrable Securities have been transferred,
other than a transferee to whom such securities have been transferred pursuant
to a registration statement under the Act or Rule 144 under the Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Selling Stockholders" shall include any Person to whom Registrable
Securities are transferred by any of them.
"Person" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, government (or an agency or political
subdivision thereof) or other entity of any kind, and shall include any
successor (by merger or otherwise) of such entity.
"Registrable Securities" mean each of the following: (a) the Western
Capital Shares, or (b) any shares of Western Capital Common Stock issued or
issuable by Western Capital with respect to the Western Capital Shares by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise and
shares of Western Capital Common Stock issuable upon conversion, exercise or
exchange thereof.
-17-
6.2 Securities Subject to this Agreement.
------------------------------------
(a) Registrable Securities. For the purposes of this Section 6,
----------------------
Registrable Securities will cease to be Registrable Securities when a
registration statement covering such Registrable Securities has been declared
effective under the Securities Act by the SEC and such Registrable Securities
have been disposed of pursuant to such effective registration statement.
(b) Holders of Registrable Securities. A Person is deemed to be a
---------------------------------
holder of Registrable Securities whenever such Person owns of record Registrable
Securities, or holds an option to purchase, or a security convertible into or
exercisable or exchangeable for, Registrable Securities whether or not such
acquisition or conversion has actually been effected and disregarding any legal
restrictions upon the exercise of such rights. If Western Capital receives
conflicting instructions, notices or elections from two or more persons with
respect to the same Registrable Securities, then Western Capital may act upon
the basis of the instructions, notice or election received from the registered
owner of such Registrable Securities. Registrable Securities issuable upon
exercise of an option or upon conversion of another security shall be deemed
outstanding for the purposes of this Section 6.
6.3 Demand Registration.
-------------------
(a) Request for Demand Registration. At any time after the
-------------------------------
Closing Date and expiring two (2) years from the Closing Date, the Selling
Stockholders holding more than 50% of the Registrable Securities then held by
all of the Selling Stockholders may make a written request for registration
(such Designated Holders making such request being deemed to be "Initiating
Holders") of Registrable Securities under the Securities Act, and under the
securities or blue sky laws of any jurisdiction reasonably designated by such
holder or holders (a "Demand Registration"); provided, Western Capital will not
be required to effect more than one Demand Registration at the request of the
Selling Stockholders pursuant to this Section 6.3. For purposes of the preceding
sentence, two or more registration statements filed in response to one demand
shall be counted as one registration statement. Such request for a Demand
Registration shall specify the amount of the Registrable Securities proposed to
be sold, the intended method of disposition thereof and the jurisdictions in
which registration is desired. Upon a request for a Demand Registration, Western
Capital shall promptly take such steps as are necessary or appropriate to
prepare for the registration of the Registrable Securities to be registered.
Within 15 days after the receipt of such request, Western Capital shall give
written notice thereof to all other Designated Holders holding Registrable
Securities (the "Non-Initiating Holders") and include in such registration all
Registrable Securities held by a Designated Holder with respect to which Western
Capital has received written requests for inclusion therein within 15 days of
the receipt by such Designated Holder of such written notice. Each such request
shall specify the number of Registrable Securities to be registered, the
intended method of disposition thereof and the jurisdictions in which
registration is desired. Unless Designated Holders holding the majority of the
Registrable Securities to be included in the Demand Registration consent in
writing, no other party, including Western Capital (but not including any other
Designated Holder), shall be permitted to offer securities under any such Demand
Registration.
-18-
(b) Effective Demand Registration. A registration shall not constitute
-----------------------------
a Demand Registration until it has become effective and remains continuously
effective until the earlier of (i) the date of sale of all Registrable
Securities registered thereunder or (ii) 90 days from the effective date.
Western Capital shall use its best efforts to cause any such Demand Registration
to become effective not later than 60 days after it receives a request under
Section 6.3(a) hereof.
(c) Expenses. Western Capital shall pay all Registration Expenses (as
--------
defined in Section 6.4(d)), other than underwriting discounts and commissions in
connection therewith, whether or not such Demand Registration becomes effective;
provided, however, that each Designated Holder participating in such Demand
Registration shall bear the costs of its own legal counsel.
(d) Underwriting Procedures. If Initiating Holders holding a majority
-----------------------
of the Registrable Securities held by all such Initiating Holders so elect, the
offering of such Registrable Securities pursuant to such Demand Registration
shall be in the form of a firm commitment underwritten offering and the managing
underwriter or underwriters selected for such offering shall be the Underwriter
selected in accordance with Section 6.3(e). In such event, if the Underwriter
advises Western Capital in writing that in its opinion the aggregate amount of
such Registrable Securities requested to be included in such offering is
sufficiently large to have a material adverse affect on the success of such
offering, Western Capital shall include in such registration only the aggregate
amount of Registrable Securities that in the opinion of the Underwriter may be
sold without any such material adverse affect and shall reduce, first as to any
stockholders who are the Non-Initiating Holders as a group and then as to the
Initiating Holders as a group, pro rata within each group based on the number of
Registrable Securities included in the request for Demand Registration, the
amount of Registrable Securities to be included by each Designated Holder in
such registration.
(e) Selection of Underwriters. If any Demand Registration of
-------------------------
Registrable Securities is in the form of an underwritten offering, the
Initiating Holders holding a majority of the Registrable Securities held by all
such Initiating Holders shall, in their discretion, select and obtain an
investment banking firm to act as the managing underwriter of the offering (the
"Underwriter").
6.4 Registration Procedures.
-----------------------
(a) Obligations of Western Capital. Whenever registration of
------------------------------
Registrable Securities has been requested pursuant to Section 6.3, Western
Capital shall use its best efforts to effect the registration and sale of such
Registrable Securities in accordance with the intended method of distribution
thereof as quickly as practicable, and in connection with any such request,
Western Capital shall, as expeditiously as possible:
(i) diligently use its best efforts to prepare and file with the
SEC a registration statement on any form for which Western Capital then
qualifies of which counsel for Western Capital shall deem appropriate and which
form shall be available for
-19-
the sale of such Registrable Securities in accordance with the intended method
of distribution thereof, and use its best efforts to cause such registration
statement to become effective; provided, however, that before filing a
registration statement or prospectus or any amendments or supplements thereto,
Western Capital shall (A) provide counsel selected by the Designated Holders
holding a majority of the Registrable Securities being registered in such
registration ("Holders' Counsel") and any other Inspector (as hereinafter
defined) with an adequate and appropriate opportunity to participate in the
preparation of such registration statement and each prospectus included therein
(and each amendment or supplement thereto) to be filed with the SEC, which
documents shall be subject to the review of Holders' Counsel, and (B) notify the
Holders' Counsel and each seller of Registrable Securities of any stop order
issued or threatened by the SEC and take all reasonable action required to
prevent the entry of such stop order or to remove it if entered;
(ii) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period of
not less than 90 days, or such shorter period which will terminate when all
Registrable Securities covered by such registration statement have been sold,
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(iii) as soon as reasonably possible, furnish to each seller of
Registrable Securities, prior to filing a registration statement, copies of such
registration statement as is proposed to be filed, and thereafter such number of
copies of such registration statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus) and such other
documents as each such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller:
(iv) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller of Registrable Securities reasonably requests, and to continue such
qualification in effect in such jurisdiction for as long as is permissible
pursuant to the laws of such jurisdiction, or for as long as any such seller
requests or until all of such Registrable Securities are sold, whichever is
shortest, and do any and all other acts and things which may be reasonably
necessary or advisable to enable any such seller to consummate the disposition
in such jurisdictions of the Registrable Securities owned by such seller;
provided, however, that Western Capital shall not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 6.4, (B) subject itself to taxation in
any such jurisdiction or (C) consent to general service of process in any such
jurisdiction;
(v) use its best efforts to cause the Registrable Securities covered
by such registration statement to be registered with or approved by such other
-20-
governmental agencies or authorities as may be necessary by virtue of the
business and operations of Western Capital to enable the seller or sellers of
Registrable Securities to consummate the disposition of such Registrable
Securities;
(vi) notify each seller of Registrable Securities at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and Western Capital shall
promptly prepare a supplement or amendment to such prospectus and furnish to
each seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, after delivery to the purchasers of
such Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made;
(vii) enter into and perform customary agreements (including an
underwriting agreement in customary form with the Underwriter or Western Capital
Underwriter, if any, selected as provided in Sections 6.3) and take such other
actions as are prudent and reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities;
(viii) make available for inspection by any seller of Registrable
Securities, any managing underwriter participating in any disposition pursuant
to such registration statement, Holders' Counsel and any attorney, accountant or
other agent retained by any such seller or any managing underwriter (each, an
"Inspector" and collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of Western Capital and its
subsidiaries (collectively, the "Records") as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause Western
Capital's and its subsidiaries, officers, directors and employees, and the
independent public accountants of Western Capital, to supply all information
reasonably requested by any such Inspector in connection with such registration
statement. Records that Western Capital determines, in good faith, to be
confidential and which it notifies the Inspectors are confidential shall not be
disclosed by the Inspectors unless (A) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in the registration
statement, (B) the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, or (C) the information in
such records has been made generally available to the public other than through
a breach of the confidentiality requirement set forth above. Each Seller of
Registrable Securities agrees that it shall, upon learning that disclosure of
such Records is required by any court of competent jurisdiction, give notice to
Western Capital and allow Western Capital, at Western Capital's expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential;
-21-
(ix) if such sale is pursuant to an underwritten offering, use its
best efforts to obtain a "cold comfort" letter from Western Capital's
independent public accountants in customary form and covering such matters of
the type customarily covered by "cold comfort" letters as Holders' Counsel or
the managing underwriter reasonably request;
(x) use its best efforts to furnish, at the request of any seller of
Registrable Securities on the date such securities are delivered to the
underwriters for sale pursuant to such registration or, if such securities are
not being sold through underwriters, on the date the registration statement with
respect to such securities becomes effective, an opinion, dated such date, of
counsel representing Western Capital for the purposes of such registration,
addressed to the underwriters, if any, and to the seller making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as such seller may reasonably request and are
customarily included in such opinions;
(xi) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable but no later than 15 months after the effective
date of the registration statement, an earnings statement covering a period of
12 months beginning after the effective date of the registration statement, in a
manner which satisfies the provisions of Section 11(a) of the Securities Act:
(xii) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by Western Capital are
then listed, provided, that the applicable listing requirements are satisfied;
(xiii) keep each seller of Registrable Securities advised in writing
as to the initiation and progress of any registration under Section 6.3
hereunder;
(xiv) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD"); and
(xv) use best efforts to take all other steps necessary to effect the
registration of the Registrable Securities contemplated hereby.
(b) Seller Information. Western Capital may require each seller of
------------------
Registrable Securities as to which any registration is being effected to furnish
to Western Capital such information regarding the seller and the distribution of
such securities as Western Capital may from time to time reasonably request in
writing.
(c) Notice to Discontinue. Each Designated Holder of Registrable
---------------------
Securities agrees that, upon receipt of any notice from Western Capital of the
happening of any event of the kind described in Section 6.4(a)(vi), such
Designated Holder shall
-22-
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such
Designated Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 6.4(a)(vi) and, if so directed by Western
Capital, such Designated Holder shall deliver to Western Capital (at Western
Capital's expense) all copies, other than permanent file copies then in such
Designated Holder's possession, of the prospectus covering such Registrable
Securities which is current at the time of receipt of such notice. If Western
Capital shall give any such notice, Western Capital shall extend the period
during which such registration statement shall be maintained effective pursuant
to this Section 6.4 (including without limitation the period referred to in
Section 6.4(a)(ii)) by the number of days during the period from and including
the date of the giving of such notice pursuant to Section 6.4(a)(vi) to and
including the date when the Designated Holder shall have received the copies of
the supplemented or amended prospectus contemplated by and meeting the
requirements of Section 6.4(a)(vi).
(d) Registration Expenses. Western Capital shall pay all expenses
---------------------
(other than as set forth in Section 6.5(c)) arising from or incident to the
performance of, or compliance with, this Section 6, including without
limitation, (i) SEC, stock exchange and NASD registration and filing fees, (ii)
all fees and expenses incurred in complying with securities or blue sky laws
(including reasonable fees, charges and disbursements of counsel in connection
with blue sky qualifications of the Registrable Securities), (iii) all printing,
messenger and delivery expenses, (iv) the fees, charges and disbursements of
counsel to Western Capital and of its independent public accountants and any
other accounting and legal fees, charges and expenses incurred by Western
Capital (including without limitation any expenses arising from any special
audits incident to or required by any registration or qualification), and (v)
any liability insurance or other premiums for insurance obtained (which
insurance Western Capital agrees to use its best efforts to obtain upon the
reasonable request of any seller of Registrable Securities) retained in
connection with any Demand Registration pursuant to the terms of this Section 6,
regardless of whether such registration statement is declared effective. All of
the expenses described in this Section 6 are referred to herein as "Registration
Expenses."
6.5 Indemnification; Contribution
-----------------------------
(a) Indemnification by Western Capital. Western Capital agrees to
----------------------------------
indemnify, to the fullest extent permitted by law, each Designated Holder, its
officers, directors, partners, employees, advisors and agents and each Person
who controls (within the meaning of the Securities Act or the Exchange Act) such
Designated Holder from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue, or allegedly untrue, statement of a material
fact contained in any registration statement, prospectus or preliminary
prospectus or notification or offering circular (as amended or supplemented if
Western Capital shall have furnished any amendments or supplements thereto) or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in
-23-
writing to Western Capital by such Designated Holder expressly for use therein.
Western Capital shall also indemnify any underwriters of the Registrable
Securities, their officers, directors and employees and each Person who controls
such underwriters (within the meaning of the Securities Act and the Exchange
Act) to the same extent as provided above with respect to the indemnification of
the Designated Holders of Registrable Securities.
(b) Indemnification by Designated Holders. In connection with any
-------------------------------------
registration statement in which a Designated Holder is participating pursuant to
Section 6.3 hereof, each such Designated Holder shall furnish to Western Capital
in writing such information with respect to such Designated Holder as Western
Capital may reasonably request or as may be required by law for use in
connection with any such registration statement or prospectus and each
Designated Holder agrees to indemnify, to the fullest extent permitted by law,
Western Capital, any underwriter retained by Western Capital and their
respective directors, officers, employees and each Person who controls Western
Capital or such underwriter (within the meaning of the Securities Act and the
Exchange Act) to the same extent as the foregoing indemnity from Western Capital
to the Designated Holders, but only with respect to any such information
furnished in writing by such Designated Holder; provided, however, that the
total amount to be indemnified by such Designated Holder pursuant to this
Section 6.5(b) shall be limited to the net proceeds received by such Designated
Holder in the offering to which the registration statement or prospectus
relates.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder (the "Indemnification Party") agrees to give prompt
written notice to the indemnifying party (the "Indemnifying Party") after the
receipt by the Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or contribution
pursuant to this Section 6; provided, that the failure to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability
that it may have to the Indemnified Party hereunder. If notice of commencement
of any such action is given to the Indemnifying Party as above provided, the
Indemnifying Party shall be entitled to participate in and, to the extent it may
wish, jointly with any other Indemnifying Party similarly notified, to assume
the defense of such action at its own expense, with counsel chosen by it and
satisfactory to such Indemnified Party. The Indemnified Party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the Indemnified Party unless
(i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party
fails to assume the defense of such action with counsel satisfactory to the
Indemnified Party in its reasonable judgment, (iii) the named parties to any
such action (including any impleaded parties) have been advised by such counsel
that either (A) representation of such Indemnified Party and the Indemnifying
Party by the same counsel would be inappropriate under applicable standards of
professional conduct or (B) there may be one or more legal defenses available to
it which are different from or additional to those available to the Indemnifying
Party. In either of such cases the Indemnifying Party shall not have the right
to assume the defense of such action on behalf of such Indemnified Party. No
Indemnifying Party shall be liable
-24-
for any settlement entered into without its written consent, which consent shall
not be unreasonably withheld.
(d) Contribution. If the indemnification provided for in this
------------
Section 6 from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Party in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative faults of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in this Section 6.5, any legal or other
fees, charges or expenses reasonably incurred by such party in connection with
any investigation or proceeding. The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 6.5(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person.
6.6 Rule 144. Western Capital covenants that, from and after the
--------
date that Western Capital has a class of equity securities registered under the
Exchange Act, it shall (i) file any reports required to be filed by it under the
Exchange Act and the rules and regulations adopted by the SEC thereunder; and
(ii) take such further action as each Designated Holder of Registrable
Securities may reasonably request (including providing any information necessary
to comply with Rules 144 and 144A under the Securities Act), all to the extent
required from time to time to enable such Designated Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 or Rule 144A under the Securities
Act, as such rules may be amended from time to time, or (b) any similar rules or
regulations hereafter adopted by the SEC. Western Capital shall, upon the
request of any Designated Holder of Registrable Securities, deliver to such
Designated Holder a written statement as to whether it has complied with such
requirements.
7. CONDITIONS TO GLOBAL DIAMOND AND SELLING STOCKHOLDERS. The
-----------------------------------------------------
obligations of Global Diamond and the Selling Stockholders, hereunder are
subject to the fulfillment on or before the Closing Date, of the following
conditions (any of which may be waived in writing by Global Diamond as
representative on behalf of the Selling Stockholders):
-25-
7.1 Representations and Warranties, Etc. The representations and
-----------------------------------
warranties of Western Capital contained herein shall have been true and correct
in all material respects when made and as of the Closing Date, except as
affected by actions taken after the date hereof with the prior written consent
of Global Diamond as representative on behalf of the Selling Stockholders.
7.2 Performance of Covenants. Western Capital shall have performed
------------------------
and complied in all material respects with all covenants, agreements, terms and
conditions and executed all documents required by this Agreement to be
performed, complied with, or executed by it prior to or on the Closing Date,
including, but not limited to, those matters set forth in Sections 5.6 and 5.7.
7.3 No Governmental or Other Proceeding or Litigation. No order of
-------------------------------------------------
any court or administrative agency shall be in effect which restrains or
prohibits the transactions contemplated hereby, and no suit, action,
investigation, inquiry or proceeding by any governmental body or other person or
legal or administrative proceeding shall have been instituted or threatened
which questions the validity or legality of the transactions contemplated
hereby.
7.4 Approvals and Consents. All permits, consents or approvals of
----------------------
applications to public authorities, federal, state or local, and all approvals
of any third persons, including without limitation all approvals or consents
under applicable federal or state securities laws, the granting of which are
necessary for the consummation of the transactions contemplated hereby shall
have been obtained.
7.5 Selling Stockholder Approval. The holders of at least ninety
----------------------------
percent (90%) of the shares of Global Diamond Common Stock issued and
outstanding as of the Closing Date shall have approved this Agreement and the
transactions contemplated hereby, and shall have delivered to Western Capital
instruments of transfer for such shares of Global Diamond Common Stock in form
and substance reasonably satisfactory to both Western Capital and its counsel
and Global Diamond and its counsel as shall be necessary to effectively transfer
all of the Selling Stockholders' right, title and interest in such shares of
Global Diamond Common Stock to Western Capital.
7.6 Western Capital Stockholder Approval. The holders of the
------------------------------------
outstanding shares of the Western Capital Common Stock shall have approval, in
accordance with Nevada General Corporation Law (i) Western Capital's issuance of
Western Capital Shares in exchange for the Offered Global Diamond Shares, (ii)
the Reverse Split; (iii) the Amendment to Western Capital's Articles of
Incorporation; (iv) the election of the Global Diamond Nominees to Western
Capital's board of directors; and (v) the sale of Western Leasing to Xxxxxx X.
Xxxxxxxx in accordance with Section 5.7.
7.7 Delivery of Instruments of Transfer. Western Capital shall have
-----------------------------------
delivered to Global Diamond as representative on behalf of the Selling
Stockholders certificates evidencing Western Capital Shares and agreements
representing the Western Capital Warrants.
-26-
7.8 Certificate. The chief executive officer, chief financial
-----------
officer and secretary of Western Capital shall have delivered to Global Diamond
as representative on behalf of the Selling Stockholders a certificate certifying
as of the Closing Date the matters set forth in Section 7.1 and 7.2.
8. CONDITIONS TO THE OBLIGATIONS OF WESTERN CAPITAL. The obligations
------------------------------------------------
of Western Capital hereunder are subject to the fulfillment on or before the
Closing Date, of the following conditions (any of which may be waived in writing
by Western Capital):
8.1 Representations and Warranties. The representations and
------------------------------
warranties of Global Diamond and the Selling Stockholders contained herein shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Closing Date.
8.2 Performance of Covenants. Global Diamond and the Selling
------------------------
Stockholders shall have performed and complied in all material respects with all
covenants, agreements, terms and conditions and executed all documents required
by this Agreement to be performed, complied with or executed by them prior to or
on the Closing Date.
8.3 Instruments of Transfer. The Selling Stockholders shall have
-----------------------
delivered to Western Capital instruments of transfer for at least 90% of the
then outstanding shares of Global Diamond Common Stock of Global Diamond in form
and substance reasonably satisfactory to Western Capital and its counsel as
shall be necessary to effectively transfer all of the Selling Stockholders'
right, title and interest in such shares of Global Diamond Common Stock to
Western Capital.
8.4 No Governmental or Other Proceeding or Litigation. No order of
-------------------------------------------------
any court or administrative agency shall be in effect which restrains or
prohibits the transactions contemplated hereby, and no suit, action,
investigation, inquiry or proceeding by any governmental body or other person or
legal or administrative proceeding shall have been instituted or threatened
which questions the validity or legality of the transactions contemplated
hereby.
8.5 Approvals and Consents. All permits, consents or approvals of
----------------------
applications to public authorities, federal, state or local, and all approvals
of any third persons, including without limitation all approvals or consents
under applicable federal or state securities laws, the granting of which are
necessary for the consummation of the transactions contemplated hereby shall
have been obtained.
8.6 Certificate. The Chief Executive Officer, Chief Financial
-----------
Officer and Secretary of Global Diamond shall have delivered to Western Capital
a certificate certifying as of the Closing Date the matters set forth in
Sections 8.1 and 8.2.
-27-
9. MISCELLANEOUS.
-------------
9.1 Cumulative Remedies. Any Person having any rights under any
-------------------
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement, and to exercise all other rights granted by law, which rights
may be exercised cumulative and not alternatively.
9.2 Successors and Assigns. The rights and obligations of the
----------------------
parties under this Agreement shall not be assignable without the written consent
of Global Diamond and Western Capital and any such purported assignment with
their written consent shall be void ab initio. Except as otherwise expressly
-- ------
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not.
9.3 Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement or the other documents.
9.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts when taken together will constitute one and the
same agreement.
9.5 Notices. Any approvals, consents or notices required or
-------
permitted to be sent or given shall be delivered in writing personally or
mailed, certified mail, return receipt requested, to the following addresses and
shall be deemed to have been received within five days after such mailing:
If to Global Diamond or the Global Diamond Resources, Inc.
Selling Stockholders ((Global 000 Xxxxxxxx Xxxxxx, Xxxxx 0X
Xxxxxxx being designated for Xx Xxxxx, Xxxxxxxxxx 00000
such purpose as representative Attn: Xxxxxx xx Xxxxxxxx
on behalf of the Selling Chief Executive Officer
Stockholder):
with a copy to: Xxxxx & Perry
A Professional Corporation
Xxx Xxxxxxx Xxxxx, Xxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
-28-
If to Western Capital: Western Capital Financial Corporation
00000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
President
with a copy to: Law Offices of Xxxxxxx X.
Xxxxxxx, XX, Esq.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, XX, Esq.
9.6 Governing Law. The validity, meaning and effect of this
-------------
Agreement and the other Documents shall be determined in accordance with the
laws of California applicable to contracts made and to be performed in that
state.
9.7 Schedules and Exhibits. All schedules and exhibits are an
----------------------
integral part of this Agreement.
9.8 Litigation Costs. If any legal action or any arbitration or
----------------
other proceeding is brought for the enforcement of this Agreement or the other
Documents, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions thereof, 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.
9.9 Specific Performance. Each party's obligation under this
--------------------
Agreement is unique. If any party should default in its obligations under this
Agreement, the parties each acknowledge that it would be extremely impracticable
to measure the resulting damages. Accordingly, the nondefaulting party, in
addition to any other available rights or remedies, may xxx in equity for
specific performance and the parties each expressly waive the defense that a
remedy in damages will be adequate.
-29-
9.10 Entire Agreement. This Agreement constitutes the entire
----------------
agreement and understanding of the parties with respect to the subject matter
thereof, and supersedes all prior and contemporaneous agreements and
understandings.
IN WITNESS WHEREOF, each of the parties to this Agreement has executed or
caused this Agreement to be executed as of the date first above written.
"Western Capital"
WESTERN CAPITAL FINANCIAL CORPORATION
a Nevada corporation
By:
-----------------------------------
Xxxxxx X. Xxxxxxxx, President
"Global Diamond"
GLOBAL DIAMOND RESOURCES INC.,
a British Columbia corporation
By:
-----------------------------------
Xxxxxx xx Xxxxxxxx, Chief Executive Officer
[Signatures of Selling Stockholders Appear on Exhibit A]
-30-
EXHIBIT A
LIST OF SELLING STOCKHOLDERS
----------------------------
NUMBER OF SHARES OF
GLOBAL DIAMOND
COMMON STOCK
NAME AND ADDRESS OF OWNED BY
SELLING STOCKHOLDER SIGNATURE SELLING STOCKHOLDER
----------------------------------------------------------------------------------------
Banque Xxx Xxxxx & Cie SA By:_______________________ 150,000
00, Xxx xx Xxxxx Xxxxxxxx Xxxxxx
0000 Xxxxxx Xxxxxxxxxxx
C.M.F. Xxxxxxxx-Xxxxxxx 33,000
Rockbank, Mugdock Rd. __________________________
Milngavie, Glasgow C.M.F. Xxxxxxxx-Xxxxxxx
G62 8PB, Scotland
X.X. xx Xxxxxxxx Family Trust 100,000
836 Prospect, Suite 2B __________________________
Xx Xxxxx, Xxxxxxxxxx 00000 Xxxxxx xx Xxxxxxxx
Esperanto Investment Group 100,000
0000 Xxxxxxxxxx Xxxxxx By:_______________________
West Vancouver, X.X. Xxx Saadien
V7V 2X2
Euroswiss Securities Limited 200,000
0 Xxxxxxxxx Xxxxx By:_______________________
Queen Street, St. Helier Xxxxxx X. Xxxxx
Jersey, JE2 4WD Channel Islands
Xxxxxxx Trustees (Jersey) Limited 467,000
X.X. Xxx 000, Xxxxxx Xxxxx By:______________________
0 Xxx Xxxxxx, Xx. Xxxxxx Xxxxxx Xxxxxxxx
Xxxxxx, XX0 0XX Channel Islands
Nikolee Xxxxxxx xx Xxxxxxxx 25,000
836 Prospect, Suite 2B ___________________________
Xx Xxxxx, Xxxxxxxxxx 00000 Nikolee Xxxxxxx xx Xxxxxxxx
Xxxx Xxxxxxxx 50,000
0000 Xxxxxxx Xxxxxx ___________________________
Xxxx Xxxxxxxxx, XX Xxxx Xxxxxxxx
X0X 0X0
India Minerals, Inc. 300,000
X.X. Xxx 00000 ___________________________
0000-0000 Xxxx Xxxxxxx Xxxxxx H. Visons
Xxxxxxxxx, XX X0X 0X0
J & D Holdings, Ltd. 50,000
0000 Xxxx Xxxxxx Xxxxxxx Xx:________________________
Xxxxxx, XX X0X 0X0 Xxxxx Xxxxxx
A-1
Xxxxx Xxxxxxxx 25,000
00 Xxx Xxxxx Xxxx ___________________________
Enfield, Middlesex Xxxxx Xxxxxxxx
XX0 0XX, Xxxxxxx
Xxxxxxxx X. Xxxxxxxx 25,000
000-0000 Xxxxxxx Xxxxxx ___________________________
Xxxxxxxxx, XX Xxxxxxxx X. Xxxxxxxx
X0X 0X0
Pyrox Holdings S.A. 120,000
Im Glockenacker 50 By:_______________________
0000 Xxxxxx Xxxxxxxxxxx X. Xxxxxxxxxx
Royal Bank of Scotland 120,000
Xxxxxxxxxx 00 By:______________________
0000 Xxxxxx Xxxxxxxxxxx Xxxxx Xxxxxx
Xxxxx Saadien 200,000
0000 Xxxxxxxxxx Xxxxxx _________________________
Xxxx Xxxxxxxxx, XX Xxxxx Xxxxxxx
X0X 0X0
Xxxx Xxxxxxxx 100,000
4 Villa Xxxx, 0000 Xxxx 0xx Xxx. __________________________
Xxxxxxxxx, XX Xxxx Xxxxxxxx
X0X 0X0
Xxxx International Limited 2,350,000
Pasca Estate, Road Town _________________________
Tortola, British Virgin Islands Xxxxxxx Xxxxxx
A-1
SCHEDULE 1
GLOBAL DIAMOND DISCLOSURE SCHEDULE
----------------------------------
Section 2.8(a)
--------------
The X.X. xx Xxxxxxxx Family Trust and Nikolee Xxxxxxx xx Xxxxxxxx are "U.S.
persons" as defined by Rule 902(o) under the Securities Act of 1933.
SCHEDULE 2
WESTERN CAPITAL DISCLOSURE SCHEDULE
-----------------------------------
