AGREEMENT OF PURCHASE AND SALE
OF THE CAPITAL STOCK OF
SELF-HEATING CONTAINER
CORPORATION OF CALIFORNIA,
a California corporation
as ISSUER
BY
THE L. L. XXXXXXXXXXXXX CO., INC.
a California corporation,
as BUYER;
DATED September 17, 1996
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. SUBJECT MATTER OF AND CONSIDERATION FOR SALE. . . . . . . . . . . . . . . 1
1.1 Transfer of Shares.. . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Consideration for Shares.. . . . . . . . . . . . . . . . . . . . . 2
2. PAYMENT OF CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . 2
3. CLOSING AND CLOSING DATE. . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. REPRESENTATIONS AND WARRANTIES OF SHC . . . . . . . . . . . . . . . . . . 2
4.1 Validity of Agreement, etc.. . . . . . . . . . . . . . . . . . . . 2
4.2 Ownership of Issuer . . . . . . . . . . . . . . . . . . . . . . . 3
4.3 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . 3
4.4 Capitalization of the Issuer. . . . . . . . . . . . . . . . . . . 3
4.5 Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . 3
4.6 Financial Condition Of Issuer . . . . . . . . . . . . . . . . . . 3
4.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . 4
4.9 Title to Properties; Encumbrances. . . . . . . . . . . . . . . . . 5
4.10 Patents, Copyrights, Inventions, Trade Secrets, etc. . . . . . . . 5
4.11 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 5
4.12 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . 7
4.13 Corporate Records. . . . . . . . . . . . . . . . . . . . . . . . . 7
4.14 Material Misstatements or Omissions. . . . . . . . . . . . . . . . 7
4.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.16 Permits and Other Operating Rights . . . . . . . . . . . . . . . . 7
4.17 Business Generally . . . . . . . . . . . . . . . . . . . . . . . . 8
4.18 Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . 8
4.19 Nature of Representations and Warranties . . . . . . . . . . . . . 8
5. BUYER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 8
5.1 Validity of Agreement, etc . . . . . . . . . . . . . . . . . . . . 8
5.2 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Capitalization of the Buyer. . . . . . . . . . . . . . . . . . . . 9
5.4 Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . 9
5.5 Financial Condition Of Buyer.. . . . . . . . . . . . . . . . . . . 9
5.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.7 Absence of Certain Changes.. . . . . . . . . . . . . . . . . . . . 9
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5.8 Title to Properties; Encumbrances. . . . . . . . . . . . . . . . .11
5.9 Patents, Copyrights, Inventions, Trade Secrets, etc. . . . . . . .11
5.10 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . .11
5.11 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . .12
5.12 Corporate Records. . . . . . . . . . . . . . . . . . . . . . . . .12
5.13 Material Misstatements or Omissions. . . . . . . . . . . . . . . .13
5.14 Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
5.15 Permits and Other Operating Rights.. . . . . . . . . . . . . . . .13
5.16 Business Generally.. . . . . . . . . . . . . . . . . . . . . . . .13
5.17 Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
5.18 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
5.19 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
5.20 No Public Market . . . . . . . . . . . . . . . . . . . . . . . . .14
5.21 Access to Data.. . . . . . . . . . . . . . . . . . . . . . . . . .14
5.22 Distribution Agreement.. . . . . . . . . . . . . . . . . . . . . .14
5.23 Nature of Representations and Warranties . . . . . . . . . . . . .14
6. ISSUER'S PRE-CLOSING COVENANTS AND AGREEMENTS . . . . . . . . . . . . . .15
6.1 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . .15
6.1.1 Regular Course of Business. . . . . . . . . . . . . . . .15
6.1.2 Amendments. . . . . . . . . . . . . . . . . . . . . . . .15
6.1.3 Capital Changes; Dividends; Redemptions; Dilution . . . .15
6.1.4 Antidilution Rights . . . . . . . . . . . . . . . . . . .15
6.1.5 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . .17
6.1.6 Organization. . . . . . . . . . . . . . . . . . . . . . .17
6.1.7 Certain Changes . . . . . . . . . . . . . . . . . . . . .17
6.1.8 Access. . . . . . . . . . . . . . . . . . . . . . . . . .18
6.1.9 Obligation to Update Disclosure Schedules . . . . . . . .18
7. BUYER'S PRE-CLOSING COVENANTS AND AGREEMENTS. . . . . . . . . . . . . . .18
7.1 Access.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
7.2 Obligation to Update Disclosure Schedules. . . . . . . . . . . . .18
8. CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . . . . .19
8.1 Conditions Precedent to Obligations of Buyer . . . . . . . . . . .19
8.1.1 Correctness of Representations and Warranties . . . . . .19
8.1.2 Performance of Covenants and Agreements . . . . . . . . .19
8.1.3 Corporate Records . . . . . . . . . . . . . . . . . . . .19
8.1.4 Corporate Approval. . . . . . . . . . . . . . . . . . . .19
8.1.5 Appointment of Officers and Directors . . . . . . . . . .19
8.1.6 No Government Proceeding or Litigation. . . . . . . . . .19
8.1.7 Material Change . . . . . . . . . . . . . . . . . . . . .19
8.1.8 Officers' Certificate.. . . . . . . . . . . . . . . . . .19
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8.1.9 Opinions of Counsel . . . . . . . . . . . . . . . . . . .20
8.2 Conditions Precedent to Obligations of Issuer. . . . . . . . . . .20
8.2.1 Correctness of Representations and Warranties . . . . . .20
8.2.2 Performance of Covenants and Agreements . . . . . . . . .21
8.2.3 Corporate Records . . . . . . . . . . . . . . . . . . . .21
8.2.4 Corporate Approval. . . . . . . . . . . . . . . . . . . .21
8.2.5 No Government Proceeding or Litigation. . . . . . . . . .21
8.2.6 Material Change . . . . . . . . . . . . . . . . . . . . .21
8.2.7 Officers' Certificate . . . . . . . . . . . . . . . . . .21
8.2.8 Opinion of Counsel. . . . . . . . . . . . . . . . . . . .21
9. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
9.1 Indemnification by Issuer. . . . . . . . . . . . . . . . . . . . .22
9.2 Indemnification by Buyer.. . . . . . . . . . . . . . . . . . . . .22
9.3 Notice and Opportunity to Defend.. . . . . . . . . . . . . . . . .22
9.4 Indemnification Not a Waiver.. . . . . . . . . . . . . . . . . . .23
10. RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
10.1 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . .23
10.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
10.3 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . .24
10.4 Recovery of Fees and Costs.. . . . . . . . . . . . . . . . . . . .25
10.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . .25
10.6 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . .25
10.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . .25
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .25
10.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . .25
10.10 Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . . .26
10.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
10.12 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
10.13 Governing Law Venue. . . . . . . . . . . . . . . . . . . . . . . .26
10.14 Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . .26
10.15 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . .26
10.15.1 No Strict Construction. . . . . . . . . . . . . . . . . .26
10.15.2 Independent Significance. . . . . . . . . . . . . . . . .26
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AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made and entered into
effective as of September 17, 1996, by and among The L. L. Xxxxxxxxxxxxx Co.,
Inc., a California corporation ( "LLK" or "Buyer"), and Self-Heating Container
Corporation of California, a California corporation ("SHC" or the "Issuer").
RECITALS
A. The stockholders appearing in the schedule attached hereto as
Exhibit "A" (collectively the "Stockholders") own of record 52,850 common shares
of the Issuer in the amounts appearing in Exhibit A. The shares owned of
record by the Stockholders represent all of the issued and outstanding stock of
the Issuer;
B. Insta-Heat, Inc., a California corporation ("IHI") an affiliate of
SHC, owns certain patents which have been licensed to SHC;
C. LLK desires to acquire 30,536 shares of the capital stock of SHC,
representing 25% of the outstanding stock in the Issuer (the "Shares");
D. LLK and the Issuer intend to enter into an exclusive distribution
agreement granting LLK certain rights to distribute products produced pursuant
to the patents held by IHI and licensed to SHC;
E. LLK and the Issuers entered into a letter of intent on July 12, 1996
regarding the subject matter of this Agreement. This letter of intent is
attached hereto as Exhibit "B."
F. The facts recited as Paragraphs A - E, inclusive, are expressly made
a part hereof and incorporated herein for all purposes as covenants to this
agreement and are binding upon the parties hereto as covenants.
NOW THEREFORE, in consideration of the foregoing recitals and the mutual
promises, agreements, representations and warranties herein contained, the
parties hereto agree as follows:
1. SUBJECT MATTER OF AND CONSIDERATION FOR SALE.
1.1 TRANSFER OF SHARES. Upon the terms and subject to all of the
conditions contained herein and upon the performance by each of the parties
hereto of their obligations hereunder, the Issuer hereby agrees to issue,
sell, assign, transfer and deliver the Shares to Buyer, on and as of the Closing
Date (as hereinafter defined), by delivering to Buyer at the Closing
certificates representing the Shares, duly issued by the Issuer.
1
1.2 CONSIDERATION FOR SHARES. As consideration for Buyer's purchase
of the Shares and upon and subject to all of the terms and conditions herein
and upon the performance by each of the parties hereto of their obligations
hereunder, Buyer agrees to pay to the Issuer, in the manner described in
Sections 2.1, 2.2, and 2.3, an aggregate purchase price for the Shares of Six
Hundred Thousand Dollars ($600,000.00) ("Purchase Price").
2. PAYMENT OF CONSIDERATION.
The Purchase Price shall be paid at the Closing, by Buyer delivering to SHC
by wire transfer according to the instructions of SHC the sum of Six Hundred
Thousand Dollars ($600,000.00) in full payment of the amount of the Purchase
Price.
3. CLOSING AND CLOSING DATE
3.1 TIME AND PLACE. Subject to the provisions of Section 8 hereof,
the Closing ("Closing") of the transactions contemplated by this Agreement shall
take place at the offices of counsel to SHC at 5:00 P.M. on September 17, 1996
("Closing" or "Closing Date"), or at such later date, time and place as may be
hereafter agreed upon in writing by the parties.
4. REPRESENTATIONS AND WARRANTIES OF SHC.
SHC represents and warrants the following, the truth and accuracy of each
of which shall constitute a condition precedent to the obligations of Buyer
hereunder:
4.1 VALIDITY OF AGREEMENT, ETC. This Agreement is, or will be at the
Closing, valid and binding upon Issuer and is, or will be at the Closing,
enforceable in accordance with its respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, or other laws
affecting generally the enforcement of creditors' rights and except to the
extent that courts may award money damages rather than specific performance of
contractual provisions.
Neither the execution and delivery of this Agreement by the Issuer nor the
consummation of the transactions contemplated hereby, nor any action of the
Issuer contemplated by this Agreement, will violate any provision of the
Articles of Incorporation or By-Laws of the Issuer, nor will such actions
violate or be in conflict with or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or cause the
acceleration of the maturity of, any debt or obligation pursuant to, or result
in the creation or imposition of any security interest, lien, or other
encumbrance upon any property or assets of the Issuer under any agreement or
commitment to which the Issuer is a party, or by which the Issuer is bound, or
to which the property of the Issuer is subject, or violate any statute or law or
any judgment, decree, order, regulation, or rule of any court or governmental
authority.
2
4.2 OWNERSHIP OF ISSUER. The Stockholders are the sole owners of
record of all of the issued and outstanding shares of the Issuer's capital
stock. Except as set forth in Exhibit E, there are no outstanding
subscriptions, options, rights, warrants, convertible securities, or other
agreements, commitments, or rights obligating the Issuer to issue any shares of
stock to any person or firm, nor obligating the Stockholders, or any of them, to
transfer any shares to any person or firm.
4.3 CORPORATE ORGANIZATION. The Issuer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
California and qualified to do business in the State of California and has full
corporate power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns; is not, and the
nature of Issuer's activities do not require it to be, qualified to do business
as a foreign corporation in any other jurisdiction. The copies of the
Certificate of Incorporation and By-Laws of the Issuer previously delivered to
Buyer are complete and correct copies of such instruments as presently in
effect.
4.4 CAPITALIZATION OF THE ISSUER. As of the date of this Agreement,
the authorized capital stock of the Issuer consists of 100,000 shares of common
stock; of which 59,850 shares of common stock are issued and outstanding. All
issued and outstanding shares of common stock of the Issuer are validly issued,
fully paid, and nonassessable; there are no preemptive rights applicable to any
common stock of the Issuer, and all outstanding securities of the Issuer have
been offered, sold, and delivered by the Issuer in compliance with all
applicable federal and state laws.
4.5 SUBSIDIARIES AND AFFILIATES. The Issuer has no subsidiaries
nor any equity interest in any other corporation, partnership, or business.
4.6 FINANCIAL CONDITION OF ISSUER. Exhibit F contains true,
complete, and correct copies of the Issuer's Statements of Financial Condition
("Balance Sheet") as of June 30, 1996 ("Balance Sheet Date") and its statements
of income and Statement of Cash Flows for the 6 months ended June 30, 1996, are
hereinafter collectively referred to as the "Issuer's Financial Statements."
The Issuer's Financial Statements are: (i) statements prepared from the books
and records of the Issuer by its independent certified public accountants; (ii)
prepared substantially in accordance with the same accounting methods,
practices, and principles utilized in connection with the preparation of prior
financial statements issued by the Issuer; (iii) set forth fairly and completely
the financial position and the results of operations of the Issuer at the
relevant dates thereof and for the period(s) covered thereby; (iv) contain and
reflect all necessary material adjustments for a fair and complete presentation
of the Issuer's financial position and the results of operations for the period
covered by the Issuer's Financial Statements; (v) reflect all material
liabilities, realized or unrealized, contingent or not contingent, to which the
Issuer is liable, except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since the Balance
Sheet Date; and (vi) the reserves reflected in the Issuer's Financial Statements
are in the opinion of management adequate, appropriate and reasonable.
3
4.7 TAXES. The Issuer has duly filed when due all tax reports and
returns required to be filed and has duly paid all taxes, assessments,
penalties, interest, and other charges due or claimed to be due from it by
federal, state, local, or foreign taxing authorities (including, without
limitation, those due in respect of the properties, income, franchises,
licenses, sales, or payrolls of the Issuer), and Issuer shall have no further
liability for any such tax, assessment, penalty, or interest.
4.8 ABSENCE OF CERTAIN CHANGES. Except as and to the extent set
forth in the Issuer's Financial Statements or notes thereto, or in a written
disclosure schedule delivered to either party prior to Closing ("Disclosure
Schedule"), since the Balance Sheet Date the Issuer has not:
(a) Suffered any material adverse change in, or the occurrence of any
events which, individually or in the aggregate have had a material adverse
effect on its working capital, financial condition, assets, liabilities
(absolute, accrued, contingent or otherwise), reserves, business, or operations;
(b) Incurred any liabilities or obligations (absolute, accrued,
contingent, or otherwise), except items incurred in the ordinary course of
business and consistent with past practice, or increased, or experienced any
material change in any assumptions underlying or methods of calculating any bad
debt, contingency, or other reserves;
(c) Paid, discharged, or satisfied any material claim, liability, or
obligation (absolute, accrued, contingent, or otherwise) other than the payment,
discharge, or satisfaction in the ordinary course of business and consistent
with past practice;
(d) Permitted or allowed any of its material property or assets (real,
personal, or mixed, tangible or intangible) to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, restriction, or charge of any
kind, except for liens for current taxes not yet due;
(e) Sold, transferred, or otherwise disposed of any of its material
properties or assets (real, personal, or mixed, tangible or intangible), except
in the ordinary course of business and consistent with past practice;
(f) Disposed of or permitted to lapse any rights to the use of any
patent, trademark, trade name, or copyright, or disposed of or disclosed to any
person, any trade secret, formula, process, or know-how not theretofore a matter
of public knowledge;
(g) Granted any increase in the compensation of officers or employees
(including any such increase pursuant to any bonus, pension, profit-sharing, or
other plan or commitment) or any material increase in the compensation payable
or to become payable to any officer or employee from the day following the
Balance Sheet Date through the Closing Date, and no such increase is required by
agreement or understanding except for employee salary increases in the ordinary
course of business and in accordance with past practice;
4
(h) Paid, loaned, or advanced any amount to, or sold, transferred, or
leased any properties or assets (real, personal, or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of its
officers or directors or any affiliate, family member, or associate of any of
its officers or directors;
(i) Suffered any loss, damage, destruction, or other casualty materially
and adversely affecting any of the properties, assets, or business of the Issuer
(whether or not covered by insurance);
(j) Borrowed or agreed to borrow any material amount of funds or
incurred or assumed or become subject to, whether directly or by way of
guarantee or otherwise, any material obligation or liability, except obligations
and liabilities incurred in the ordinary course of business and consistent with
past practice;
(k) Licensed, sold, transferred, pledged, modified, disclosed, disposed
of, or permitted to lapse any rights to the use of the name of the Issuer or any
fictitious firm name used by the Issuer;
(l) Entered into any transaction with the Stockholders, or any of them,
their relatives, related trusts or related business entities;
(m) Entered into any other transaction, contract, or commitment other
than in the ordinary course of business; and
(n) Agreed, whether in writing or otherwise, to take any action
described in this section.
4.9 TITLE TO PROPERTIES; ENCUMBRANCES. The Issuer has good, valid,
and marketable title to all the properties and assets which each purports to own
(real, personal, and mixed, tangible and intangible), including without
limitation, all the properties and assets reflected in the Balance Sheet except
for property sold since the Balance Sheet Date in the ordinary course of
business and consistent with past practice.
4.10 PATENTS, COPYRIGHTS, INVENTIONS, TRADE SECRETS, ETC. The Issuer
has good and valid title to, or otherwise possesses adequate and exclusive
rights to use, all patents, copyrights, inventions, trade secrets, and other
proprietary information necessary to permit the Issuer to conduct its business
in the same manner as its business has been conducted prior to the date hereof.
4.11 COMPLIANCE WITH LAW. The operations of the Issuer have been
conducted in substantial accordance with all applicable laws, regulations, and
other requirements of all national governmental authorities and of all states,
municipalities, and other political subdivisions and agencies thereof having
jurisdiction over the Issuer, including but not limited to, all laws,
regulations, and requirements relating to antitrust, environmental protection
and conservation, pollution, equal employment and anti-discrimination acts,
consumer protection, currency exchange,
5
health, occupational safety, pension, securities, and trading-with-the-enemy
matters. The Issuer has not received any notification of any asserted present
or past failure by the Issuer to comply with such laws, rules, or regulations.
The Issuer has filed when due all reports required to be filed with any
governmental, regulatory, or administrative agency and has obtained all permits,
licenses, certificates, registrations, qualifications, and other authorizations
which are required to be obtained by the Issuer under federal, state, and local
laws relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes. The Issuer is in substantial compliance with all terms and
conditions of the required permits, licenses, and authorizations and is also in
substantial compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and timetables
contained in those laws relating to pollution or protection of the environment
or contained in any regulation, code, plan, order, decree, judgment, notice, or
demand letter issued, entered, promulgated, or approved thereunder. Except as
set forth in the Disclosure Schedule, the Issuer has not engaged in any
activities that could cause any material violation of any federal, state, or
local laws, ordinances, rules, or regulations relating to air or water
pollution, toxic waste, or other environmental protection or relating to
occupational health or safety or Hazardous Materials (as defined below)
applicable to its properties, assets, the real estate which it now occupies, or
any real estate which it has previously occupied. The Issuer has no material
liability, contingent or otherwise, with respect to the contamination with toxic
waste or Hazardous Materials of premises it now occupies or has previously
occupied, which contamination occurred during a time that such premises were
occupied by a previous tenant, whether the contamination occurred from the
activities conducted by the previous tenant, from contamination flow from other
properties, or otherwise. As used herein, the term "Hazardous Materials" shall
mean any explosives, radioactive materials, hazardous wastes (including, without
limitation, asbestos and asbestos containing materials), hazardous or toxic
substances, or related materials defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended (42 U.S.C. Section
9601), et. seq.), the Hazardous Materials Transportation Act as amended (49
U.S.C. Section 1801, et. seq.), the Resource Conservation and Recovery Act of
1976 as amended (42 U.S.C. Section 6901, et. seq.), and in the regulations
adopted and publications promulgated pursuant thereto, or any other federal,
state, or local environmental laws, ordinances, rules, or regulations.
The Issuer is not aware of, nor has the Issuer received notice of, any
past, present, or future events, conditions, circumstances, activities,
practices, incidents, actions, or plans which may interfere with or prevent
continued compliance, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, suit, proceeding,
hearing, or investigation based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge, release, or threatened release into the environment of any
pollutant, contaminant, or hazardous or toxic material or waste.
6
4.12 UNDISCLOSED LIABILITIES. The Issuer is not obligated for, nor
are any of the Issuer's assets subject to, any liabilities (whether absolute,
accrued, or contingent and whether due or to become due) other than liabilities
arising in the ordinary course of business since the Balance Sheet Date.
4.13 CORPORATE RECORDS. Except as set forth in the Disclosure
Schedule, the corporate minute books of the Issuer contain a complete and
accurate record of all actions taken or required to be taken by the Board of
Directors and shareholders of the Issuer, and the stock transfer records, books
of account, financial records, and correspondence of the Issuer has been kept in
the usual course of business and are complete insofar as they relate to the
business of the Issuer from inception to the date of this Agreement and will be
complete insofar as they relate to the business of the Issuer from the inception
of each to the Closing Date. The financial books and records of the Issuer have
been maintained consistently and, to the best of the Issuer's knowledge, in
accordance with sound business practices.
4.14 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or
warranties by the Issuer contained in this Agreement or in any document,
statement, or certificate furnished or to be furnished to Buyer in connection
with the transactions contemplated hereby, contain, or will contain on the
Closing Date, any statement of a material fact known to be untrue, or omit, or
will omit on the Closing Date, any material known fact necessary to make the
statements of fact contained therein not misleading.
4.15 LITIGATION. There are no actions, suits, or proceedings pending
or threatened involving the Issuer or affecting its business, nor are there any
claims of third parties made or threatened against the Issuer.
The Issuer is not subject to any judgment, order, or decree entered in any
lawsuit or proceeding which may have an adverse effect on its business practices
or on its ability to acquire any property or conduct its business in any area.
No consent of any person is necessary to the consummation of the
transactions contemplated hereby, including, without limitation, consents from
parties to loans, contracts, leases, or other agreements and consents from
governmental agencies, whether federal, state, or local.
4.16 PERMITS AND OTHER OPERATING RIGHTS. The Issuer has received the
consent of all third persons required to permit it to operate its business in
the manner in which it presently is being conducted and possesses all necessary
permits and other authorizations from third persons, including without
limitation, federal, foreign, state, and local governmental authorities
presently required by applicable provisions of law, including statutes,
regulations, and existing judicial decisions, and by the property and contract
rights of third persons, the absence of which would have a material adverse
effect upon the business or properties of the Issuer.
7
4.17 BUSINESS GENERALLY. There have been no events or transactions or
information which has come to the attention of the Issuer which, as they relate
directly to the business and assets of the Issuer, could reasonably be expected
to have a material adverse effect on the profitability of the business and
operations of the Issuer.
4.18 DISTRIBUTION AGREEMENT. The Issuer hereby agrees to enter into a
Distribution Agreement substantially on the terms set forth in the Letter of
Intent appearing in Exhibit "B". Issuer agrees to negotiate in good faith with
the Buyer in order to agree on all other terms of and to preparation of and to
execute a formal license or distribution agreement by and between the Issuer and
the Buyer.
4.19 NATURE OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by the Issuer in Sections 4.6 through 4.12 herein are made
to the best of its knowledge, without any independent duty to investigate.
5. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer represents and warrants the following, the truth and accuracy of
each of which shall constitute a condition precedent to the obligations of the
Issuer hereunder:
5.1 VALIDITY OF AGREEMENT, ETC. This Agreement is, or will be at the
Closing, valid and binding upon Buyer and is, or will be at the Closing,
enforceable in accordance with its respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, or other laws
affecting generally the enforcement of creditors' rights and except to the
extent that courts may award money damages rather than specific performance of
contractual provisions.
Neither the execution and delivery of this Agreement by Buyer nor the
consummation of the transactions contemplated hereby, nor any action of the
Buyer contemplated by this Agreement, will violate any provision of the Articles
of Incorporation or By-Laws of the Buyer, nor will such actions violate or be in
conflict with, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the creation or
imposition of any security interest, lien, or other encumbrance upon any
property or assets of the Buyer under any agreement or commitment to which the
Buyer is a party or by which the Buyer is bound, or to which the property of the
Buyer is subject, or violate any statute or law or any judgment, decree, order,
regulation, or rule of any court or governmental authority.
5.2 CORPORATE ORGANIZATION. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and qualified to do business in the State of California and has full
corporate power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns; is not, and the
nature of Buyer's activities do not require it to be, qualified to do business
as a foreign corporation in any
8
other jurisdiction. The copies of the Certificate of Incorporation and By-Laws
of the Buyer previously delivered to the Issuer are complete and correct copies
of such instruments as presently in effect.
5.3 CAPITALIZATION OF THE BUYER. As of the date of this Agreement,
the authorized capital stock of the Buyer consists of 100,000,000 shares of
common stock; of which 13,752,285 shares of common stock are issued and
outstanding. All issued and outstanding shares of common stock of the Buyer are
validly issued, fully paid, and nonassessable; there are no preemptive rights
applicable to any securities of the Buyer, and all outstanding securities of the
Buyer have been offered, sold, and delivered by the Buyer in compliance with all
applicable federal and state laws.
5.4 SUBSIDIARIES AND AFFILIATES. Except as set forth in the
schedule previously delivered to the Issuer by the Buyer (the "Buyer's
Disclosure Schedule") the Buyer has no subsidiaries nor any equity interest in
any other corporation, partnership, or business.
5.5 FINANCIAL CONDITION OF BUYER. Exhibit E contains a true,
complete, and correct copy of the Buyer's Annual Report on Form 10-KSB as filed
with the United States Securities and Exchange Commission (the "SEC") including
Buyer's Statements of Financial Condition ("Balance Sheet") as of December 31,
1995 ("Balance Sheet Date") and its statements of income and Statement of Cash
Flows for the twelve months ended December 31, 1995, hereinafter collectively
referred to as the "Buyer's Financial Statements." The Buyer's Financial
Statements are: (i) statements prepared from the books and records of the Buyer
and audited by its independent certified public accountants; (ii) prepared
substantially in accordance with the same accounting methods, practices, and
principles utilized in connection with the preparation of the last three annual
prior financial statements issued by the Buyer; (iii) set forth fairly and
completely the financial position and the results of operations of the Buyer at
the relevant dates thereof and for the period covered thereby, (iv) contains and
reflects all necessary material adjustments for a fair and complete presentation
of the Buyer's financial position and the results of operations for the periods
covered by the Buyer's Financial Statement; (v) contain and reflect all
material liabilities, realized or unrealized, contingent or not contingent, to
which the Buyer is liable, except for liabilities and obligations incurred in
the ordinary course of business consistent with past practice since the balance
sheet date; and (vi) the reserves reflected in the Buyer's Financial Statement
are in the opinion of management adequate, appropriate, and reasonable.
5.6 TAXES. The Buyer has duly filed when due all tax reports and
returns required to be filed and has duly paid all taxes, assessments,
penalties, interest, and other charges due or claimed to be due from it by
federal, state, local, or foreign taxing authorities (including, without
limitation, those due in respect of the properties, income, franchises,
licenses, sales or payrolls of the Buyer), and Buyer shall have no further
liability for any such tax, assessment, penalty, or interest.
5.7 ABSENCE OF CERTAIN CHANGES. Except as and to the extent set
forth in the Buyer's Financial Statements or notes thereto or in the Buyer's
Disclosure Schedule, since the Balance Sheet Date, Buyer has not:
9
(a) Suffered any material adverse change in, or the occurrence of any
events which, individually or in the aggregate, have had a material adverse
effect on, its working capital, financial condition, assets, liabilities
(absolute, accrued, contingent or otherwise), reserves, or business operations;
(b) Incurred any material liabilities or obligations (absolute, accrued,
contingent or otherwise), except items incurred in the ordinary course of
business and consistent with past practice, or increased or experienced any
material change in any assumptions underlying or methods of calculating any bad
debt, contingency, or other reserves;
(c) Paid, discharged, or satisfied any material claim, liability, or
obligation (absolute, accrued, contingent, or otherwise) other than the payment,
discharge, or satisfaction in the ordinary course of business and consistent
with past practice;
(d) Permitted or allowed any of its material property or assets (real,
personal, or mixed, tangible or intangible) to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, restriction, or charge of any
kind, except for liens for current taxes not yet due;
(e) Sold, transferred, or otherwise disposed of any of its material
properties or assets (real, personal, or mixed, tangible or intangible), except
in the ordinary course of business and consistent with past practice;
(f) Disposed of or permitted to lapse any rights to the use of any
material patent, trademark, trade name, or copyright, or disposed of or
disclosed to any person any trade secret, formula, process, or know-how not
theretofore a matter of public knowledge;
(g) Granted any increase in the compensation of officers or employees
(including any such increase pursuant to any bonus, pension, profit-sharing, or
other plan or commitment) or any material increase in the compensation payable
or to become payable to any officer or employee from the day following the
Balance Sheet Date through the Closing Date, and no such increase is required by
agreement or understanding except for employee salary increases in the ordinary
course of business and in accordance with past practice;
(h) Paid, loaned, or advanced any amount to, or sold, transferred, or
leased any properties or assets (real, personal, or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of its
officers or directors or any affiliate, family member, or associate of any of
its officers or directors;
(i) Suffered any loss, damage, destruction, or other casualty materially
and adversely affecting any of the properties, assets, or business of the Buyer
(whether or not covered by insurance);
10
(j) Borrowed or agreed to borrow any material amount of funds or
incurred or assumed or become subject to, whether directly or by way of
guarantee or otherwise, any material obligation or liability, except obligations
and liabilities incurred in the ordinary course of business and consistent with
past practice;
(k) Licensed, sold, transferred, pledged, modified, disclosed, disposed
of, or permitted to lapse any rights to the use of the name of the Issuer or any
fictitious firm name used by the Buyer;
(l) Entered into any other transaction, contract, or commitment other
than in the ordinary course of business; and
(m) Agreed, whether in writing or otherwise, to take any action
described in this section.
5.8 TITLE TO PROPERTIES; ENCUMBRANCES. The Buyer has good, valid,
and marketable title to all the properties and assets which it purports to own
(real, personal, and mixed, tangible and intangible), including without
limitation, all the properties and assets reflected in the Balance Sheet except
for property sold since the Balance Sheet Date in the ordinary course of
business and consistent with past practice.
5.9 PATENTS, COPYRIGHTS, INVENTIONS, TRADE SECRETS, ETC. The Buyer
has good and valid title to or otherwise possesses adequate and exclusive rights
to use, all patents, copyrights, inventions, trade secrets, and other
proprietary information necessary to permit the Buyer to conduct its business in
the same manner as its business has been conducted prior to the date hereof.
5.10 COMPLIANCE WITH LAW. The operations of the Buyer have been
conducted in substantial accordance with all applicable laws, regulations, and
other requirements of all national governmental authorities, and of all states,
municipalities, and other political subdivisions and agencies thereof, having
jurisdiction over the Buyer, including, but not limited to, all laws,
regulations, and requirements relating to antitrust, environmental protection
and conservation, pollution, equal employment and anti-discrimination acts,
consumer protection, currency exchange, health, occupational safety, pension,
securities, and trading-with-the-enemy matters. The Buyer has not received any
notification of any asserted present or past failure by the Buyer to comply with
such laws, rules, or regulations.
The Buyer has filed when due all reports required to be filed with any
governmental, regulatory, or administrative agency and has obtained all permits,
licenses, certificates, registrations, qualifications, and other authorizations
which are required to be obtained by the Buyer under federal, state, and local
laws relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes. The Buyer is in substantial compliance with all terms and
conditions of the required permits, licenses, and
11
authorizations, and is also in substantial compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in those laws relating to
pollution or protection of the environment or contained in any regulation, code,
plan, order, decree, judgment, notice, or demand letter issued, entered,
promulgated, or approved thereunder. Except as set forth in the Buyer's
Disclosure Schedule, the Buyer has not engaged in any activities that could
cause any material violation of any federal, state, or local laws, ordinances,
rules, or regulations relating to air or water pollution, toxic waste, or other
environmental protection or relating to occupational health or safety or
Hazardous Materials (as defined below) applicable to its properties, assets, the
real estate which it now occupies nor, or any real estate which it has
previously occupied. The Buyer has no material liability, contingent or
otherwise, with respect to the contamination with toxic waste or Hazardous
Materials of premises it now occupies or has previously occupied, which
contamination occurred during a time that such premises were occupied by a
previous tenant, whether the contamination occurred from the activities
conducted by the previous tenant, from contamination flow from other properties,
or otherwise. As used herein, the term "Hazardous Materials" shall mean any
explosives, radioactive materials, hazardous wastes (including, without
limitation, asbestos and asbestos containing materials), hazardous or toxic
substances, or related materials defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section
9601), et. seq.), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Section 1801, et. seq.), the Resource Conservation and Recovery Act of
1976, as amended (42 U.S.C. Section 6901, et. seq.), and in the regulations
adopted and publications promulgated pursuant thereto, or any other federal,
state, or local environmental laws, ordinances, rules, or regulations.
The Buyer is not aware of, nor has the Buyer received notice of, any past,
present, or future events, conditions, circumstances, activities, practices,
incidents, actions, or plans which may interfere with or prevent continued
compliance, or which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, suit, proceeding, hearing, or
investigation, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling, or the emission,
discharge, release, or threatened release into the environment, of any
pollutant, contaminant, or hazardous or toxic material or waste.
5.11 UNDISCLOSED LIABILITIES. The Buyer is not obligated for, nor are
any of the Buyer's assets subject to, any liabilities (whether absolute, accrued
or contingent and whether due or to become due) other than liabilities arising
in the ordinary course of business since the Balance Sheet Date, none of which
liabilities individually or in the aggregate is materially adverse when
comparing the condition of the Buyer as of the Balance Sheet Date with the date
of this Agreement.
5.12 CORPORATE RECORDS. Except as set forth in the Buyer's Disclosure
Schedule, the corporate minute books of the Buyer contain a complete and
accurate record of all actions taken or required to be taken by the Board of
Directors and shareholders of the Buyer, and the stock transfer records, books
of account, financial records, and correspondence of the Buyer have been kept in
the usual course of business and are complete insofar as they relate to the
business of the Buyer from the inception of each to the date of this Agreement,
and will be complete insofar as they relate to the
12
business of the Buyer from the inception of each to the Closing Date. The
financial books and records of the Buyer have been maintained consistently and,
to the best of the Buyer's knowledge, in accordance with sound business
practices.
5.13 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or
warranties by the Buyer contained in this Agreement or in any document,
statement, or certificate furnished or to be furnished to the Issuer in
connection with the transactions contemplated hereby, contain, or will contain
on the Closing Date, any statement of a material fact known to be untrue, or
omit, or will omit on the Closing Date, any material known fact necessary to
make the statements of fact contained therein not misleading.
5.14 LITIGATION. Except as set forth in the Buyer's Disclosure
Schedule, there are no actions, suits, or proceedings pending or threatened
involving the Buyer or affecting its business, nor are there any claims of
third parties made or threatened against the Buyer.
The Buyer is not subject to any judgment, order, or decree entered in any
lawsuit or proceeding which may have an adverse effect on its business
practices, or on the ability of it to acquire any property or conduct its
business in any area.
No consent of any person is necessary to the consummation of the
transactions contemplated hereby, including, without limitation, consents from
parties to loans, contracts, leases, or other agreements and consents from
governmental agencies, whether federal, state, or local.
5.15 PERMITS AND OTHER OPERATING RIGHTS. The Buyer has received the
consent of all third persons required to permit it to operate its business in
the manner in which it presently is being conducted, and possesses all necessary
permits and other authorizations from third persons, including without
limitation, federal, foreign, state, and local governmental authorities,
presently required by applicable provisions of law, including statutes,
regulations, and existing judicial decisions, and by the property and contract
rights of third persons, the absence of which would have a material adverse
effect upon the business or properties of the Buyer.
5.16 BUSINESS GENERALLY. There have been no events or transactions,
or information which has come to the attention of the Buyer which, as they
relate directly to the business and assets of the Buyer, could reasonably be
expected to have a material adverse effect on the profitability of the business
and operations of the Buyer.
5.17 EXPERIENCE. Buyer is an accredited investor as defined by Rule
501(a) of the Securities Act of 1933 ("Securities Act") and has a net worth in
excess of five million dollars ($5,000,000), and has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Issuer so that it is capable of evaluating the merits
and risks of its investment in the Issuer and has the capacity to protect its
own interests.
13
5.18 INVESTMENT. Buyer is acquiring the Shares for investment for its
own account, not as a nominee or agent, and not with the view to, or for resale
in connection with, any distribution thereof. It understands that the Shares
have not been and will not be registered under the Securities Act by reason of
specific exemptions from the registration provisions of the Securities Act and
California law, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of such Buyer's
representations as expressed herein and in the Subscription Agreement.
5.19 RULE 144. Buyer acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act and
applicable state law, or unless an exemption from such registration is
available. Buyer is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including among
other things, the existence of a public market for the Shares, the availability
of certain current public information about the Issuer, the resale occurring not
less than two years after a party has purchased and paid for the security to be
sold, the sale being effected through a "broker's transaction" or in
transactions directly with a "market maker," and the number of shares being sold
during any three-month period not exceeding specific limitations.
5.20 NO PUBLIC MARKET. Buyer understands that no public market now
exists for any of the securities issued by the Issuer and that the Issuer has
made no assurances that a public market will ever exist for the Shares.
5.21 ACCESS TO DATA. Buyer has had an opportunity to discuss the
Issuer's business, management, and financial affairs with the Issuer's
management and has had the opportunity to review the Issuer's facilities,
business plan, and 1995 and 1996 year-end financial statements. It has also had
an opportunity to ask questions of officers of the Issuer, which questions were
answered to its satisfaction. It understands that such discussions, as well as
any written information issued by the Issuer, including the business plan, were
intended to describe certain aspects of the Issuer's business and prospects but
were not a thorough or exhaustive description.
5.22 DISTRIBUTION AGREEMENT. The Buyer hereby agrees to enter into a
Distribution Agreement substantially on the terms set forth in the Letter of
Intent appearing in Exhibit "B". The Buyer agrees to negotiate in good faith
with the Issuer to agree on all other terms of and to preparation of and to
execute a definitive license or distribution agreement by and between the Buyer
and the Issuer.
5.23 NATURE OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by the Buyer in Sections 5.5 through 5.11 are made to the
best of its knowledge, without any independent duty to investigate.
14
6. ISSUER'S PRE-CLOSING COVENANTS AND AGREEMENTS
The Issuer hereby affords Buyer the following affirmative and negative
covenants, thereby agreeing to do or not to do, as the case may be, the
following, the fulfillment of each of which (except for those covenants which
survive or are required to be performed subsequent to the Closing) shall
constitute a condition precedent to the obligations of Buyer hereunder:
6.1 BEST EFFORTS. Pending the Closing and except as disclosed in
Exhibit C or the Disclosure Schedule or otherwise expressly consented to or
approved by Buyer in writing, the Issuer hereby covenants and agrees that it
will use its best efforts in order that:
6.1.1 REGULAR COURSE OF BUSINESS. The Issuer will carry on its
business diligently and substantially in the same manner as heretofore
conducted. The Issuer shall not engage in any transaction or activity, enter
into any agreement, or make any commitment, except in the ordinary course of
business and consistent with past practice.
6.1.2 AMENDMENTS. No change or amendment shall be made in the Articles
of Incorporation or Bylaws of the Issuer.
6.1.3 CAPITAL CHANGES; DIVIDENDS; REDEMPTIONS; DILUTION. The Issuer
will not, except as disclosed in Exhibit C or the Disclosure Schedule, before
the Closing, issue or sell any shares of capital stock or other securities,
acquire directly or indirectly by redemption or otherwise, any such capital
stock, reclassify or split up any such capital stock, declare or pay any
dividends thereon in cash, securities, or other property, or make any other
distribution with respect thereto, or grant or enter into any options, warrants,
calls, or commitments of any kind with respect thereto.
6.1.4 ANTIDILUTION RIGHTS.
6.1.4.1 ADJUSTMENT TO PURCHASE PRICE; ISSUANCE OF ADDITIONAL
SHARES. If after the Closing, the Issuer is involved in the sale of additional
stock (as defined below in Section 6.1.4.3) in a transaction or series of
transactions (an "Equity Financing"), and in connection with such Equity
Financing the Issuer issues any additional stock for a consideration per share
determined as provided for below, of less than the price per share paid by the
Buyer herein (subject to adjustment for stock dividends, splits and
combinations), then the Issuer shall promptly, but not less than ten (10) days
following the closing of such Equity Financing, issue and deliver certificates
to the Buyer, representing that number of duly and validly issued, fully paid,
and non assessable shares of common stock of the Issuer (the "Antidilution
Stock") that would be required to cause the Purchase Price divided by the sum of
the Antidilution Stock and the Shares to be equal to the Purchase Price of the
additional stock issued for less than the price per share paid by the Buyer
herein.
Notwithstanding the provisions of this Section 6.1.4.1, such Antidilution
Rights shall not apply if the issuance of the additional stock is approved by
the unanimous vote of the Issuer's Board of Directors.
15
6.1.4.2 DETERMINATION OF CONSIDERATION PER SHARE OF ADDITIONAL
STOCK. The consideration per share of additional stock issued by the Issuer in
an Equity Financing shall be determined as follows:
6.1.4.2.1 In the case of the issuance of common stock
for cash, the consideration shall be deemed to be the amount of cash received by
the Issuer therefor before deducting any reasonable and customary discounts,
commissions or other related expenses allowed, paid or incurred by the Issuer
for any underwriting or otherwise in connection with the issuance and sale
thereof.
6.1.4.2.2 In the case of the issuance of common stock
for a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined in good
faith by the Board of Directors, irrespective of any accounting treatment.
6.1.4.2.3 In the case of the issuance of options to
purchase or rights to subscribe for common stock, securities by their terms
convertible into or exchangeable for common stock or options to purchase or
rights to subscribe for such convertible or exchangeable securities, the
following provisions shall apply for all purposes of this Section 6.1.4.
6.1.4.2.3.1 In the case of options or rights to
acquire common stock, the consideration shall be deemed to be the consideration
(determined in the manner provided in Sections 6.1.4.2.1 and 6.1.4.2.2), if any,
received by the Issuer upon the issuance of such options or rights, plus the
exercise price provided in such options or rights for the common stock covered
thereby.
6.1.4.2.3.2 In the case of: (a) securities which are
convertible or exchangeable for common stock; or (b) options to purchase or
rights to subscribe for such convertible or exchangeable securities, the
consideration shall be deemed to be the consideration, if any, received by the
Issuer for any such securities and related options or rights, plus the
additional consideration, if any to be received by the Issuer, upon the
conversion or exchange of such securities or the exercise of any related options
or rights, calculated on a common equivalent basis (the consideration in each
case to be determined in the manner provided in Sections 6.2.1 and 6.2.2).
6.1.4.3 DEFINITION OF ADDITIONAL STOCK. For purposes of this
Section 6, "Additional Stock" shall mean any shares of common stock issued (or
deemed to have been issued pursuant to Section 6.1.4.2) by the Issuer other
than:
6.1.4.3.1 Shares of common stock (or related options)
issuable or issued to employees, consultants, or directors of the Issuer
pursuant to a stock option plan or agreement or restructured stock plan or
agreement existing as of the Closing or subsequently approved by the unanimous
vote of the Board of Directors of the Issuer;
16
6.1.4.3.2 Shares of common stock issued or issuable
upon exercise of options or warrants outstanding as of the Closing;
6.1.4.3.3 Shares of common stock issued pursuant to
this Agreement;
6.1.5 SUBSIDIARIES. The Issuer will not organize any new subsidiary,
acquire any capital stock or other equity securities of any corporation, or
acquire any equity or ownership interest in any business.
6.1.6 ORGANIZATION. The Issuer shall use its best efforts to preserve
its corporate existence and business organization intact and to preserve its
relationships with licensors, suppliers, distributors, customers and others
having business relations with it.
6.1.7 CERTAIN CHANGES. The Issuer will not:
(a) Borrow or agree to borrow any funds or incur, or assume or become
subject to, whether directly or by way of guarantee or otherwise, any material
obligation or liability (absolute or contingent), except obligations and
liabilities incurred in the ordinary course of business and consistent with past
practice;
(b) Pay, discharge or satisfy any material claim, liability, or
obligation (absolute, accrued, contingent, or otherwise), other than the
payment, discharge, or satisfaction in the ordinary course of business and
consistent with past practice of liabilities or obligations reflected or
reserved against in the Balance Sheet or incurred in the ordinary course of
business and consistent with past practice since the date of the Balance Sheet;
(c) Prepay any material obligation having a fixed maturity of more than
ninety (90) days from the date such obligation was issued or incurred;
(d) Permit or allow any of its material property or assets (real,
personal, or mixed, tangible or intangible) to be subjected to any mortgage,
pledge, lien, or encumbrance;
(e) Write down the value of any material inventory or write off as
uncollectible any notes or accounts receivable, except for immaterial write-
downs and write-offs in the ordinary course of business and consistent with past
practice;
(f) Cancel any material debts or waive any claims or rights of
substantial value or sell, transfer, or otherwise dispose of any of its
properties or assets, except in the ordinary course of business and consistent
with past practice;
(g) Dispose of or permit to lapse any rights to the use of any patent,
trademark, trade name, or copyright, or dispose of or disclose to any person any
trade secret, formula, process, or know-how not theretofore a matter of public
knowledge;
17
(h) Pay, loan, or advance any amount to, or sell, transfer, or lease any
properties or assets to, or enter into any agreement or arrangement with, any of
its officers or directors or any affiliate of any of its officers or directors;
(i) Grant or extend any power of attorney; act as guarantor, surety,
consigner, endorser, co-maker, indemnitor, or otherwise in respect of the
obligation of any person, corporation, partnership, joint venture, association,
organization, or other entity; or
(j) Agree, whether in writing or otherwise, to do any of the foregoing.
6.1.8 ACCESS. The Issuer shall provide Buyer, Buyer's attorneys,
accountants, and other representatives full and complete access to all financial
statements, business plans, and other information which can be reasonably
provided to Buyer relating to the securities to be sold to the Buyer pursuant
hereto.
6.1.9 OBLIGATION TO UPDATE DISCLOSURE SCHEDULES. The Issuer shall
promptly disclose to the Buyer in writing any facts or circumstances arising
after the date hereof that would have been required to be reflected on any of
the exhibits if such facts or circumstances had existed as of the date hereof.
No disclosure made by the Issuer pursuant to this Section 6.1.8 shall be deemed
to supplement or amend any of the Disclosure Schedules for purposes of
determining the accuracy of any of the representations and warranties of the
Issuer set forth herein or for purposes of determining compliance with any of
the conditions set forth herein.
7. BUYER'S PRE-CLOSING COVENANTS AND AGREEMENTS
The Buyer hereby affords the Issuer the following affirmative and negative
covenants, thereby agreeing to do or not to do, as the case may be, the
following, the fulfillment of each of which (except for those covenants which
survive or are required to be performed subsequent to the Closing) shall
constitute a condition precedent to the obligations of the Issuer hereunder:
7.1 ACCESS. The Buyer shall provide Issuer, Issuer' attorneys,
accountants, and other representatives full and complete access to all 10-Ks,
10-Qs, and Exchange Act reports and filings and Registration Statements relating
to the securities to be provided to the Issuer pursuant hereto.
7.2 OBLIGATION TO UPDATE DISCLOSURE SCHEDULES. The Buyer shall
promptly disclose to the Issuer in writing any facts or circumstances arising
after the date hereof that would have been required to be reflected on any of
the exhibits if such facts or circumstances had existed as of the date hereof.
No disclosure made by the Buyer pursuant to this Section 7.2 shall be deemed to
supplement or amend any of the Disclosure Schedules for purposes of determining
the accuracy of any of the representations and warranties of the Buyer set forth
herein or for purposes of determining compliance with any of the conditions set
forth herein.
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8. CONDITIONS PRECEDENT TO CLOSING.
8.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The Closing shall
not take place unless all of the following conditions have been fulfilled
before or are fulfilled at the Closing (any of which may be waived by Buyer in
whole or in part):
8.1.1 CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. There shall be no
representation or warranty of the Issuer contained in this Agreement or in any
exhibit attached hereto which is untrue or inaccurate to any material extent.
8.1.2 PERFORMANCE OF COVENANTS AND AGREEMENTS. There shall be no
covenant or agreement of the Issuer contained in this Agreement and required to
be performed before the Closing which has been breached to any material extent.
8.1.3 CORPORATE RECORDS. The Issuer shall have made available for
inspection to the Buyer the stock book, stock ledger, minute books of the
Issuer, and those contracts and agreements described in this Agreement.
8.1.4 CORPORATE APPROVAL. The execution and delivery of this Agreement
by Buyer, and the performance of its covenants and obligations under it,
including the issuance of Warrants, shall have been duly authorized by all
necessary corporation action, and Issuer shall have received copies of all
resolutions pertaining to that authorization, certified by the secretary of the
Issuer.
8.1.5 APPOINTMENT OF OFFICERS AND DIRECTORS. The Issuer shall have
delivered to Buyer written resolutions for the Issuer, certified by its
secretary, appointing Xx. Xxxxx X. Xxxxxxxxxxxxx as a Director of the Issuer and
authorizing the execution and delivery of this agreement, and the performance of
its covenants and obligations.
8.1.6 NO GOVERNMENT PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry, or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which (a) questions the validity or legality of the transactions
contemplated hereby, (b) in the sole and exclusive judgment of Buyer materially
impairs the Issuer's ability to exercise control over or manage the business and
affairs of the Issuer after the Closing, or (c) in the sole and exclusive
judgment of Buyer might have a material adverse effect on the business or
financial condition of the Issuer.
8.1.7 MATERIAL CHANGE. From the date of the Balance Sheet to the
Closing Date, the Issuer shall not have suffered any material adverse change in
its business, financial condition, working capital, assets, liabilities
(absolute, accrued, contingent or otherwise), reserves, or operations.
8.1.8 OFFICERS' CERTIFICATE. The Issuer shall have delivered to Buyer
a certificate, signed by the President and the Secretary of the Issuer and dated
as of the closing Date, to the effect that (i) the representations and
warranties of the Issuer set forth in this Agreement were true and correct in
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all material respects on the date of this Agreement and are true and correct in
all material respects on the date of this Agreement and are true and correct in
all material respects on the Closing date as though such representations and
warranties were made as of the Closing Date, and (ii) the Issuer has duly
complied with and performed, in all material respects, all agreements,
covenants, and obligations required by this Agreement to be complied with or
performed by the Issuer on or before the Closing Date.
8.1.9 OPINIONS OF COUNSEL. The Issuer shall have delivered to the
Buyer a written opinion of its counsel, dated as of the Closing Date, in form
and substance satisfactory to Buyer and its counsel, to the effect that:
(a) Issuer is a corporation duly organized, validly existing, and in
good standing under the laws of the State of California and has all requisite
corporate power to perform its obligations under this Agreement;
(b) All corporate proceedings required by law or by the provisions of
this Agreement to be taken by Issuer on or before the Closing Date in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly and validly taken;
(c) Issuer has the corporate power and authority to sell the common
stock of the Issuer for the consideration set forth herein;
(d) Every consent, approval, authorization, or order of any court or
governmental agency or body that is required for the consummation by Issuer of
the transactions contemplated by this Agreement has been obtained and will be in
effect on the Closing Date;
(e) The consummation of the transaction contemplated by this Agreement
does not violate or contravene any of the provisions of any charter, bylaw, or
resolution of Issuer or of any indenture, agreement, judgment, or order to which
Issuer is a party or by which Issuer is bound. In rendering its opinion,
counsel for Issuer may rely on certificates of governmental authorities and on
opinions of associate counsel.
8.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF ISSUER. The Closing shall
not take place unless all of the following conditions have been fulfilled
before, or are fulfilled at the Closing (any of which may be waived by the
Issuer in whole or in part):
8.2.1 CORRECTNESS OF REPRESENTATIONS AND WARRANTIES. There shall be no
representation or warranty of the Buyer contained in this Agreement or in any
exhibit attached hereto which is untrue or inaccurate to any material extent.
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8.2.2 PERFORMANCE OF COVENANTS AND AGREEMENTS. There shall be no
covenant or agreement of the Buyer contained in this Agreement and required to
be performed before the Closing which has been breached to any material extent.
8.2.3 CORPORATE RECORDS. The Buyer shall have made available for
inspection to the Issuer the stock book, stock ledger, minute books, transfer
agent's records, and those contracts and agreements described in this Agreement.
8.2.4 CORPORATE APPROVAL. The execution and delivery of this Agreement
by Buyer, and the performance of its covenants and obligations under it,
including the issuance of Warrants, shall have been duly authorized by all
necessary corporate action, and Issuer shall have received copies of all
resolutions pertaining to that authorization, certified by the Secretary of the
Buyer.
8.2.5 NO GOVERNMENT PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry, or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which (a) questions the validity or legality of the transactions
contemplated hereby, (b) in the sole and exclusive judgment of the Issuer
materially impairs the Buyer's ability to exercise control over or manage the
business and affairs of the Buyer after the Closing, or (c) in the sole and
exclusive judgment of the Issuer might have a material adverse effect on the
business or financial condition of the Buyer.
8.2.6 MATERIAL CHANGE. From the Balance Sheet Date to the Closing
Date, the Buyer shall not have suffered any material adverse change in its
business, financial condition, working capital, assets, liabilities (absolute,
accrued, contingent or otherwise), reserves, or operations.
8.2.7 OFFICERS' CERTIFICATE. The Buyer shall have delivered to the
Issuer a certificate, signed by the President and the Secretary of the Buyer and
dated as of the Closing Date, to the effect that (i) the representations and
warranties of the Buyer set forth in this Agreement were true and correct in all
material respects on the date of this Agreement and are true and correct in all
material respects on the Closing Date as though such representations and
warranties were made as of the Closing Date, and (ii) the Buyer has duly
complied with and performed, in all material respects, all agreements,
covenants, and obligations required by this Agreement to be complied with or
performed by the Buyer on or before the Closing Date.
8.2.8 OPINION OF COUNSEL. The Buyer shall have delivered to the Issuer
a written opinion of its counsel, dated as of the Closing Date, in form and
substance satisfactory to Issuer and its counsel, to the effect that:
(a) Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of California and has all requisite
corporate power to perform its obligations under this Agreement;
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(b) All corporate proceedings required by law or by the provisions of
this Agreement to be taken by Buyer on or before the Closing Date in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly and validly taken;
(c) Every consent, approval, authorization, or order of any court or
governmental agency or body that is required for the consummation by Buyer of
the transactions contemplated by this Agreement has been obtained and will be in
effect on the Closing Date;
(d) The consummation of the transaction contemplated by this Agreement
does not violate or contravene any of the provisions of any charter, bylaw, or
resolution of Buyer or of any indenture, agreement, judgment, or order to which
Buyer is a party or by which Buyer is bound. In rendering its opinion, counsel
for Buyer may rely on certificates of governmental authorities and on opinions
of associate counsel.
9. INDEMNIFICATION
9.1 INDEMNIFICATION BY ISSUER. The Issuer shall hold harmless and
indemnify Buyer and each of Buyer's past, present, and future directors,
officers, shareholders, employees, attorneys, agents, and other affiliates from
and against any loss, liability, damage, or expense, including without
limitation reasonable attorney fees, that is directly or indirectly suffered or
incurred at any time by Buyer or any of such directors, officers, shareholders,
employees, attorneys, agents or other affiliates and that arises directly or
indirectly out of or by virtue of, or is directly or indirectly connected with,
the breach or inaccuracy of any of the representations and warranties of the
Issuer or the failure of the Issuer to perform any of its covenants or
obligations contained in this Agreement (including the Disclosure Schedules) or
in any instrument or other document delivered hereunder or in connection
herewith.
9.2 INDEMNIFICATION BY BUYER. Buyer shall hold harmless and
indemnify the Issuer and each of Issuer's past, present and future directors,
officers, shareholders, employees, attorneys, agents and other affiliates of the
Issuer from and against any loss, liability, damage, or expense, including
without limitation reasonable attorney fees, that is directly or indirectly
suffered or incurred at any time by the Issuer or any of such directors,
officers, shareholders, employees, attorneys, agents or other affiliates and
that arises directly or indirectly out of or by virtue of, or is directly or
indirectly connected with, the breach or inaccuracy of any of the
representations and warranties of Buyer or the failure of Buyer to perform any
of its covenants or obligations contained in this Agreement, including the
Buyer's Disclosure Schedule, or in any instrument or other document delivered
hereunder or in connection herewith.
9.3 NOTICE AND OPPORTUNITY TO DEFEND. If any legal proceeding is
initiated, or any claim or demand is made, against any person with respect to
which such person (the "Indemnified Party") may make a claim against any party
hereto (the "Indemnifying Party") pursuant to this Section 9, then the
Indemnified Party shall give prompt written notice of such legal proceeding,
22
claim, or demand to the Indemnifying Party. The Indemnifying Party shall, at
its own expense and with its own counsel, defend or settle such legal
proceeding, claim or demand; provided, however, that: (i) the Indemnifying Party
shall keep the Indemnified Party informed of all material developments and
events relating to such legal proceeding, claim or demand; (ii) the Indemnified
Party shall have the right to participate, at its own expense, in the defense of
such legal proceeding, claim or demand and shall cooperate as reasonably
requested by the Indemnifying Party in the defense thereof; and (iii) the
Indemnifying Party shall not settle such legal proceeding, claim or demand
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld.
9.4 INDEMNIFICATION NOT A WAIVER. A person's right to
indemnification pursuant to this Section 9 shall not be deemed to be such
person's exclusive remedy in connection with or arising from the breach or
inaccuracy of any of the representations and warranties of the Indemnifying
Party or the failure of the Indemnifying Party to perform any of its covenants
or obligations contained in this Agreement (including the Disclosure Schedules)
or in any instrument or other document delivered hereunder or in connection
herewith; and the exercise by any person of his right to demand and receive such
indemnification shall not be deemed to prejudice, or to operate as a waiver of,
any remedy to which such person may be entitled at law or equity.
10. RELATED MATTERS.
10.1 CONFIDENTIALITY. Each party hereto will hold and will cause its
consultants and advisors to hold in strict confidence prior to the Closing Date,
unless compelled to disclose by judicial or administrative process or, in the
opinion of its counsel by other requirements of law, all documents and
information concerning the other party furnished it by such other party or its
representatives in connection with the transactions contemplated by this
Agreement (except to the extent that such information can be shown to have been:
(i) previously known by the party to which it was furnished; (ii) in the public
domain through no fault of the party to which it was furnished; or (iii) later
lawfully acquired from other sources by the party to which it was furnished),
and each party will not release or disclose such information to any other
person, except its auditors, attorneys, financial advisors, bankers, and other
consultants and advisors in connection with this Agreement.
10.2 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (i) if personally delivered, (ii) if mailed, five (5) business days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, addressed to the intended recipient as set forth
below, (iii) if given by telex or telecopier, once such notice or other
communication is transmitted to the telex or telecopier number specified below
and the appropriate answer back or telephonic confirmation is received, provided
that such notice or other communication is promptly thereafter mailed in
accordance with the provisions of clause (ii) above, or (iv) if sent through an
overnight delivery service in circumstances to which such service guarantees
next day delivery, the day following being so sent:
23
If to Buyer:
Xxxxx X. Xxxxxxxxxxxxx
The L. L. Xxxxxxxxxxxxx Co., Inc.
00000 Xxxxxxxx
Xxxxxx Xxxxx Xxxxxxxxx, XX 00000
Facsimile (000) 000-0000
Copy to:
Xxxxxxx X. Xxxxx, Esq.
00 Xxxxxxxxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile (000) 000-0000
If to the Issuer:
Xxxxx Xxxxxxx
Self-Heating Container Corporation of America
00000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxxxxxxx 00000
Facsimile (000) 000-0000
Copy to:
Xxxxxx Xxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xx Xxxxx, Xxxxxxxxxx 00000-0000
Facsimile (000) 000-0000
Attention: Xxxxx X. Xxxxxx
Any party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
10.3 ARBITRATION. The parties hereby agree to submit all
controversies, claims and matters of difference arising as a result of this
Agreement and the transactions contemplated hereby to arbitration through
Judicial Arbitration and Mediation Services ("JAMS") according to the rules and
practices of JAMS governing commercial arbitration from time to time in force.
Such arbitration shall be conducted in San Diego County, California. This
submission and agreement to arbitrate shall
24
be specifically enforceable. The parties agree to abide by all awards
rendered in such proceedings. Such awards shall be final and binding on all
parties to the extent, and in the manner, provided by California statute.
Such awards shall not be subject to appeal. All such awards may be filed with
the Clerk of the San Diego County Superior Court as a basis of judgment and
of the issuance of execution for its collection and, at the election of the
party making such filing, with the clerk of one or more other courts, state
or federal, having jurisdiction over the party against whom such an award is
rendered or the property of said party.
10.4 RECOVERY OF FEES AND COSTS. If any legal action or arbitration
proceeding is brought for the enforcement of this Agreement or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of this Agreement or documents executed and delivered pursuant
hereto, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' and experts' fees and other costs incurred in that
proceeding, in addition to any other relief to which it or they may be entitled.
10.5 ENTIRE AGREEMENT. This Agreement represents the entire agreement
of the parties hereto with respect to the subject matter hereof, superseding all
prior agreements, understandings, discussions, negotiations, representations,
and commitments of any kind. This Agreement may not be amended or
supplemented, nor may any rights hereunder be waived, except in a writing signed
by each of the parties affected thereby.
10.6 SECTION HEADINGS. The section headings in this Agreement are
included for convenience only and are not a part of this Agreement and shall not
be used in construing it.
10.7 SEVERABILITY. In the event that any provision or any part of any
provision of this Agreement is held to be illegal, invalid, or unenforceable in
any jurisdiction, as to such jurisdiction such illegality, invalidity, or
unenforceability shall not affect the validity or enforceability of any other
provision or part hereof. Any such illegality, invalidity, or unenforceability
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by law, the parties hereby waive any
provision of law that renders any provision illegal, invalid, or unenforceable
in any respect. In addition, in the event of any such illegality, invalidity
or unenforceability, the parties agree that it is their intention and agreement
that such provision which is held or determined to be illegal, invalid, or
unenforceable as written in any jurisdiction, shall nonetheless be in force and
binding to the fullest extent permitted by the law of the jurisdiction as though
such provision had been written in such a manner and to such an extent as to be
enforceable under the circumstances.
10.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 FURTHER ASSURANCES. Each party hereto shall execute and deliver
such instruments and take such other actions as the other party or parties, as
the case may be, may reasonably require in order to carry out the intent of this
Agreement.
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10.10 WAIVER OF COMPLIANCE. Any failure of the Issuer on the one hand,
or the Buyer on the other, to comply with any obligation, agreement, or
condition herein may be expressly waived in writing by the party having the
right to insist upon performance of such obligation, agreement, or condition;
but such waiver or failure to insist upon strict compliance with such
obligation, agreement, or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
10.11 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
except by operation of law.
10.12 PUBLICITY. Neither the Issuer nor the Buyer shall make or issue,
or cause to be made or issued, any announcement or written statement concerning
this Agreement or the transactions contemplated hereby for dissemination to the
general public prior to the Closing Date without the prior consent of the other
party, which shall not be unreasonably withheld. This provision shall not apply,
however, to any announcements or written statement required to be made by law or
the regulations of any federal or state governmental agency or any stock
exchange, except that the party required to make such announcement shall consult
with the other party concerning the timing and content of such announcement
before such announcement is made.
10.13 GOVERNING LAW VENUE. This Agreement and the legal relations
among the parties hereto shall be governed by and construed in accordance with
the laws of the State of California, and the venue for any actions or claims in
connection herewith shall be San Diego County, California.
10.14 THIRD PARTIES. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person or corporation other than the parties hereto
and their successors or assigns, any rights or remedies under or by reason of
this Agreement.
10.15 CONSTRUCTION:
10.15.1 NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be applied
against either party. Whenever required by the context, any gender shall
include any other gender, the singular shall include the plural, and the plural
shall include the singular. The words "herein", "hereof ", "hereunder", and
words of similar import, shall refer to the Agreement as a whole and not to a
particular section.
10.15.2 INDEPENDENT SIGNIFICANCE. The parties hereto intend that
each representation, warranty, and covenant contained herein shall have
independent significance. If any party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
26
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) that the party
has not breached, shall not detract from or mitigate the fact that the party is
in breach of the first representation, warranty, or covenant.
IN WITNESS WHEREOF, the parties have duly executed Agreement as of the first
date above mentioned.
THE L. L. XXXXXXXXXXXXX CO., INC.
By: /s/ Xxxxx Xxxxxxxxxxxxx Date: 9-17-96
----------------------------------- ----------------------
Xxxxx Xxxxxxxxxxxxx, President
SELF-HEATING CONTAINER CORPORATION OF CALIFORNIA.
By: /s/ Xxxxx Xxxxxxx Date: 9-17-96
---------------------------------- ----------------------
Xxxxx Xxxxxxx, President
27
