Exhibit 2.1
Stock Purchase Agreement
1. Introduction. Agreement made as of November 25, 2003 between G. Xxxxxx
Xxxxxxxx, residing at 000 Xxxxxxx Xxxx Xxxxxxx, Xxxxxxxx 00000, Xxxxx Xxxxxxxxx,
residing as 000000 Xxxx 00xx Xxxxxx Xxxxxxxxx, XX 00000 and Founders Group, with
offices at 00000 X.X. Xxxxxxx Xxx, #000 Xxxxxxxx, XX 00000 (collectively,
Sellers, individually, a Seller) and Electronic Identification, Inc., with
offices at 0000 X. Xxxxxxxxx Xxx., Xxxxx X, Xxxxxxxxx, XX 00000 (Buyer).
2. Sale and Purchase of Stock. Sellers will sell to Buyer all outstanding
shares (i.e. 100%) of the issued and outstanding capital stock of Manakoa
Services Corporation, a Washington corporation with offices at 0000 X. Xxxxxxxxx
Xxx., Xxxxx X, Xxxxxxxxx, XX 00000 (Corporation) free of all liens and
encumbrances, and Buyer will purchase the shares subject to the provisions of
this Agreement. It is understood that Sellers (the "Shares") represent that they
are the owners of all of the outstanding capital stock of any kind issued or
issuable by the Corporation.
3. Purchase Price. The purchase price shall be common shares of Buyer
exchanged pro-rata for the Corporation stock of each Seller, calculated as
follows. Buyer represents that as of the date of this Stock Purchase Agreement,
there are approximately 4,342,000 shares of common stock of Buyer either
outstanding or issuable upon the exercise of any outstanding rights (e.g.
options or warrants) to acquire common stock of Buyer. In addition, it is
Buyer's intent to issue convertible debt of up to $200,000 convertible into
Buyer Common stock at the rate of $0.40 per share (i.e. 500,000 shares). Buyer
then intends to issue up to 3,600,000 additional shares for $.50 per share.
After such transactions are completed, it is anticipated that Buyer will have an
estimated total of 8,442,000 shares of common stock issued or issuable,
exclusive of the stock to be issued under this Agreement (Estimated Total Buyer
Stock). There upon, the Buyer shall issue to the seller an additional 19,300,000
shares.
In the case of the convertible debt and the additional shares, investors
will also receive a warrant for one share for each share acquired exercisable
for one year at an exercise price of $1.25 (Warrant Shares). Buyer also
anticipates adopting a stock option plan that will authorize the issuance of
options to acquire up to 3,000,000 shares of Buyer's common stock. Such Warrant
shares and any options granted under such stock option plan shall not be
included in the calculation of the Estimated Total Buyer Stock.
4. Payment of the Purchase Price. The purchase price shall be paid to
Seller as follows. On the closing of the sale, Buyer shall issue stock
certificates to Sellers and such other holders of Corporation common stock as
may exist as of the date of Closing, upon the tender of their endorsed stock
certificates representing all outstanding shares of Corporation's common stock
to Buyer, in amounts equal to each such holder's pro-rata share of Buyer's stock
issuable as calculated under Section 3.
5. Seller's Representations and Warranties. To induce Buyer to purchase
their stock, Sellers jointly and severally represent and warrant the following:
a. Corporation Duly Organized. Corporation is a business corporation
organized in accordance with the laws of Washington and is authorized to
engage in all business that may be lawfully conducted under the laws of
Washington, including but not limited to the business of software, hardware
and servces.
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5. Seller's Representations and Warranties - continued
b. Corporation in Good Standing. Corporation is in good standing. All
taxes currently due, including income and franchise taxes, have been paid.
There are no pending actions or proceedings to limit or impair
Corporation's power to engage in business or to dissolve Corporation.
c. Stock Properly Issued. Sellers' shares constitute, and as of the
closing shall constitute, all the issued and outstanding shares of
Corporation's stock. The shares have been properly issued and are fully
paid and nonassessable. There are, and as of the closing there shall be, no
outstanding rights (e.g. warrants, options) to acquire any equity in the
Corporation other than options held by key employees to acquire 1,000,000
shares of Corporation Common Stock (Corporation Options). Seller agrees
that the Corporation Options shall be included as part of the calculations
under Section 3 above. Distribution of said shares shall be consistent with
provisions of the purchase agreement made between Secure Logistix
Corporations by Manakoa Services Corporation dated November 25, 2003.
d. No Suits Pending or Imminent. There are no actions at law or equity
or administrative proceedings pending against Corporation or in which
Corporation is a plaintiff, defendant, petitioner, or respondent.
Corporation does not propose to commence an action at law or equity or an
administrative proceeding in which it will be a plaintiff or petitioner. On
information and belief, there are no actions at law or equity or
administrative proceedings pending in which it is anticipated that
Corporation will join or be joined as a party.
e. No New Contracts Before Closing. Corporation will not enter into
any new contracts or agreements between the date of this Agreement and the
closing except in the regular course of business.
f. No Dividends. The Board of Directors of Corporation have not
declared any dividends since the date of the balance sheet attached to this
Agreement and more fully described in Paragraph 5(g). There are no
dividends unpaid that were declared in an earlier period. From the date of
this Agreement to the closing, the Board of Directors of Corporation will
declare no dividends.
g. No Salary Increases; No New Employees. From the date of this
Agreement to the closing, Corporation will not increase any employee's
salary or hire any new employee without first obtaining Buyer's written
consent, which consent shall not be unreasonably withheld or delayed.
h. Officers and Directors. Seller and the following listed individuals
(if any) are the only officers and directors of Corporation: Xxxxx
Xxxxxxxxx and G. Xxxxxx Xxxxxxxx. From the date of this Agreement to the
closing, Buyer agrees to appoint the aforementioned individuals to its
Board of Directors.
6. Sellers' Indemnity. Sellers guarantee payment of any obligations, debts,
and liabilities of Corporation that exist before the closing and are not
included in the balance sheet attached to this Agreement and/or in any other
disclosures made by Sellers or the Corporation to Buyer (including to any of
Buyer's officers or directors) unless they were incurred following the date of
the balance sheet in the regular course of business or pursuant to the terms of
this Agreement. The Buyer acknowledges that certain continuing obligations exist
resulting from the acquisition of Secure Logistix Corporation by Manakoa. The
Buyer assumes all responsibility for said obligations. The obligations, debts,
and liabilities described in this Paragraph 6 include any that mature after the
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6. Sellers' Indemnity - continued
closing but are based upon Corporation's activities before the closing. Seller
will indemnify Buyer and hold Buyer harmless by reason of any loss, including
attorney fees, that Buyer or Corporation may suffer because of Seller's failure
to make any payment required pursuant to this Paragraph 6.
7. Buyer's Representations. Buyer represents and warrants that Buyer has
inspected Corporation's premises, inventory, furnishings, fixtures, equipment,
and other physical assets and knows their condition. Buyer further represents
and warrants that Buyer has examined Corporation's books of account and other
business records and is relying solely upon such business records with respect
to the Corporation's past and present earnings and financial condition.
Buyer further represents that:
a. Buyer Duly Organized. Buyer is a business corporation organized in
accordance with the laws of Nevada and is authorized to engage in all
business that may be lawfully conducted under the laws of Nevada.
b. Buyer in Good Standing. Buyer is in good standing. All taxes
currently due, including income and franchise taxes, have been paid. There
are no pending actions or proceedings to limit or impair Corporation's
power to engage in business or to dissolve Corporation.
c. Stock Properly Issued. Buyer' outstanding and issuable equity as
disclosed in Section 3 is, and as of the closing shall constitute, all the
issued and outstanding or issuable shares of Buyer's stock. The shares that
have been issued and that will be issued upon closing of this Agreement
have been or will be properly issued and are or will be as of closing fully
paid and nonassessable. There are, and as of the closing there shall be, no
outstanding rights (e.g. warrants, options) to acquire any equity in the
Corporation other than as disclosed in Section 3 above. Buyer agrees to
assume the obligations to honor the Corporation Options outstanding as of
closing in accord with the terms of such options and with an adjustment in
the number of Buyer shares issuable upon exercise of such options in accord
with the exchange ratio as determined under Section 3, as such ratio may be
adjusted from time to time prior to exercise of such options (and if a
ratio adjustment is required after exercise of any such options to issue
additional shares with respect thereto as provided under Section 3).
d. Buyer's Financial Condition. There will be no changes in buyers
financial condition as stated in the 9/30/2003 10Q finding except for those
changes that normally occur in the normal course of business.
e. No Suits Pending or Imminent. Except as defined in the most recent
10Q report filing, there are no actions at law or equity or administrative
proceedings pending against Buyer or in which Buyer is a plaintiff,
defendant, petitioner, or respondent. Buyer does not propose to commence an
action at law or equity or an administrative proceeding in which it will be
a plaintiff or petitioner. There are no actions at law or equity or
administrative proceedings pending in which it is anticipated that Buyer
will join or be joined as a party.
f. No New Contracts Before Closing. Except as disclosed in Section 3
above, Buyer will not enter into any new contracts or agreements between
the date of this Agreement and the closing except in the regular course of
business.
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7. Buyer's Representations - continued
g. No Dividends. The Board of Directors of Buyer have not declared any
dividends since the date of the balance sheet attached to this Agreement
and more fully described in Paragraph 7(g). There are no dividends unpaid
that were declared in an earlier period. From the date of this Agreement to
the closing, the Board of Directors of Buyer will declare no dividends.
h. No Salary Increases; No New Employees. From the date of this
Agreement to the closing, Buyer will not increase any employee's salary or
hire any new employee without first obtaining Corporation's written
consent, which consent shall not be unreasonably withheld or delayed.
i. Officers and Directors. The following listed individuals (if any)
are the only officers and directors of Buyer: as defined in the Corporate
10Q filing are Xxxxxx Xxxxx, Xxxx Xxxxxx, and Xxxx Xxxxxxxxx. From the date
of this Agreement to the closing, Buyer will not elect any other directors
or appoint any other officers except as Corporation may direct in writing.
m. Buyer's Indemnity. The Buyer indemnifies the seller, its employees
and agents from any all action that may result from this agreement
including but not limited to the payment of legal fees to defend said
Sellers.
8. Representations to Survive Closing. The representations and warranties
contained in Paragraphs 5 and 7 shall survive the closing.
9. Risk of Loss or Destruction. If Corporation's business is terminated
before the closing by loss or damage caused by fire, wind, or other casualty,
Buyer may terminate this Agreement and this Agreement shall terminate and have
no further effect, and Buyer and Sellers shall have no further rights against
each other. If the loss or damage is not sufficiently severe to terminate or
interrupt Corporation's business, the purchase price of the shares shall be
adjusted to represent the actual monetary loss to Corporation.
10. Documents to Be Delivered to Buyer at Closing. At the closing, Sellers
shall deliver to Buyer the following: a. Stock Certificates. Certificates
representing all outstanding shares of Corporation's capital stock, indorsed for
transfer in blank; b. Corporate Books and Records. Corporation's books of
account and business records, minute book, stock transfer book, blank stock
certificates, and seal; and d. Agreements. All agreements, contracts, and leases
to which Corporation or any subsidiary of Corporation is a party.
11. Employment of Sellers by Corporation. As a condition of closing, Buyer
agrees that it will honor all then existing employment agreements between
Corporation and any of its employees.
12. Arbitration. Any and all disputes between the parties arising under
this Agreement shall be determined by arbitration in Xxxxxx County, Washington,
before the American Arbitration Association in accordance with its rules then
obtaining, and judgment may be entered upon the award.
13. Time and Place of Closing. The closing shall take place at Buyer's
office, on December 15, 2003 at 1 PM Pacific Standard Time, or at such other
time or place as the parties may agree upon. Closing shall be evidenced by the
issuance of Buyer's common stock to Sellers and the execution of a receipt by
Sellers acknowledging his receipt of the stock certificate(s) evidencing such
stock.
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14. Agreement Binding. This Agreement is binding upon and shall inure to
the benefit of the parties' heirs, executors, administrators, representatives,
successors, and assigns.
15. Applicable Law. This Agreement shall be construed in accordance with
the laws of Washington, the state in which Buyer is located.
/s/ G. Xxxxxx Xxxxxxxx
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Seller: G. Xxxxxx Xxxxxxxx
Date:
/s/ Xxxxx X. Xxxxxxxxx
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Seller: Xxxxx X. Xxxxxxxxx
Date:
/s/ Xxxxxxx Xxxxxx
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Seller: Founders Group, Inc.,
by Xxxxxxx Xxxxxx, its President
Date:
Buyer: Electronic Identification Corporation
By:______________________________
Its: President
Date:
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