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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
by and among
COMVEST CAPITAL PARTNERS, LLC
and
LIL MARC, INC.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ LIMITED LIABILITY COMPANY
and
▇▇▇▇▇ ▇▇▇▇▇▇
As of May 19, 2000
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STOCK PURCHASE AGREEMENT, dated as of May 19, 2000 by and among ComVest
Capital Partners, LLC (hereinafter referred to as "Buyer") and Lil Marc, Inc., a
Nevada corporation (the "Company"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ Limited Liability Company ("▇▇▇▇▇▇▇"), and ▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ are sometimes hereinafter referred to
individually as a "Seller" and collectively as the "Sellers").
W I T N E S S E T H :
WHEREAS, Buyer desires to purchase in the aggregate 1,194,166 shares (the
"1,194,166 Shares") of common stock, par value $.01 per share (the "Common
Stock") of the Company from the Sellers for in the aggregate $315,000 and the
Sellers severally desire to sell the 1,194,166 Shares to Buyer, and/or its
designees (the "1,194,166 Share Purchase");
WHEREAS, simultaneously with the 1,194,166 Share Purchase, the Buyer
desires to purchase from the Company for in the aggregate $250,000 (i) 1,000,000
shares of Common Stock and (ii) an eighteen (18) month warrant (the "Warrant")
to purchase 3,000,000 shares of Common Stock at an exercise price of $.25 per
share (the "1,000,000 Share and Warrant Purchase," and together with the
1,194,166 Share Purchase shall sometimes hereinafter be collectively referred to
as the "Purchase Transactions");
WHEREAS, the Company is a corporation subject to the reporting requirements
of Section 15(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and has not had any active operations other than as disclosed
in its Annual Report on Form 10-KSB for the year ended December 31, 1999;
WHEREAS, the shares of Common Stock are quoted on the NASD's
over-the-counter Bulletin Board (the "OTCBB") under the symbol "LILM;"
WHEREAS, as of the date hereof and prior to the Purchase Transactions, the
Company has (i) 1,768,666 shares of Common Stock issued and outstanding, and
(ii) no options, warrants or other convertible or exchangeable securities are
outstanding;
WHEREAS, simultaneously with the closing of the Purchase Transactions, all
of the directors and officers of the Company shall resign and be replaced by
designees of the Buyer;
WHEREAS, immediately following the Closing of the Purchase Transactions,
the outstanding securities of the Company shall be (i) 2,768,666 shares of
Common Stock consisting of (a) 2,194,666 shares of Common Stock owned by the
Buyer, and (b) 574,500 shares of Common Stock owned by the Company's other
shareholders, and (ii) the Warrant to purchase 3,000,000 shares of Common Stock.
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties contained herein, the parties hereto do hereby
agree as follows:
1. SALE OF SECURITIES, ETC.
1.1 1,194,166 Share Purchase. Subject to the terms and conditions of this
Agreement, at the Closing (as defined in Section 2.1 below) to be held pursuant
to Section 2 below, Sellers shall sell, assign, transfer, convey and deliver to
Buyer (and/or its designees), and Buyer (and/or its designees) shall purchase
and acquire from Sellers, good and marketable title to the 1,194,166 Shares,
free and clear of all mortgages, liens, encumbrances, claims, equities and
obligations to other persons of every kind and character, except that the
1,194,166 Shares will be "restricted securities" as defined in the Securities
Act of 1933, as amended (the "Securities Act"). The aggregate purchase price for
all 1,194,166 Shares shall be $315,000 (approximately $.264 per share) payable
to Sellers according to the amounts set forth on Schedule 1.1 hereto. Schedule
1.1 also contains the name of each Seller, the number of each stock certificate
to be transferred by each Seller and the number of the 1,194,166 Shares
represented thereby.
1.2 1,000,000 Share and Warrant Purchase. Subject to the terms and
conditions of this Agreement, at the Closing, the Company shall sell to the
Buyer (and/or its designees) and the Buyer (and/or its designees) shall purchase
from the Company for an aggregate purchase price of $250,000 (i) 1,000,000
shares of Common Stock (the "1,000,000 Shares"), and (ii) the Warrant to
purchase 3,000,000 shares of Common Stock at an exercise price of $.25 per
share. The form of Warrant is annexed hereto as Exhibit 1.2.
1.3 Post-Closing Capital Structure. Immediately following the Closing there
shall be no outstanding securities of the Company except (i) 2,768,666 shares of
Common Stock consisting of (a) 2,194,166 owned by the Buyer; and (b) 574,500
shares of Common Stock owned by other stockholders of the Company; and (ii) the
Warrant to purchase 3,000,000 shares of Common Stock. The 1,000,000 Shares, the
Warrant, and the 3,000,000 shares of Common Stock issuable upon execution of the
Warrant shall be "restricted securities" as defined under the Securities Act.
2. THE CLOSING
2.1 Place and Time. The closing of the sale and purchase of the Shares (the
"Closing") shall take place at the offices of Gusrae, ▇▇▇▇▇▇ & Bruno, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m. on such date as the parties hereto have
satisfied all closing conditions as set forth in Sections 7 and 8 but no later
than May 26, 2000 (unless otherwise agreed to by the parties or unless the
failure to close is the result of the actions of the Company or the Sellers) or
at such other place, date and time as the parties may agree in writing.
2.2 Deliveries by Sellers. At the Closing, Sellers shall deliver the
following to Buyer:
(a) Certificates representing the 1,194,166 Shares, duly endorsed for
transfer to Buyer (and/or its designees), or accompanied by duly executed
stock powers in blank, together with such other documents or instruments,
if any, as may be necessary (in the opinion of the Buyer), to convey the
Shares to Buyer (and/or its designees) as provided herein.
(b) A certificate executed by each of Sellers, attesting to the
accuracy of the representations and warrants of Sellers made in this
Agreement.
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(c) All other documents, instruments and writings required (or
reasonably requested by the Buyer and/or its counsel), by this Agreement to
be delivered by Sellers at the Closing.
(d) A stock certificate for 100,000 shares of Common Stock to be
placed into escrow with the Escrow Agent (as defined below) and used for
the purchase of all of the capital stock of the Company's wholly owned
subsidiary as provided in Section 14.2 of this Agreement.
(e) The Stock Sale Agreement (the "Stock Sale Agreement") in the form
annexed hereto as Exhibit 14.2(a).
(f) The executed Escrow Agreement (the "Escrow Agreement") in the form
annexed hereto as Exhibit 14.2(b).
(g) Letter acknowledging receipt of $315,000 and simultaneous transfer
of $15,000 to the person set forth on Schedule 5.7 hereto.
2.3 Deliveries by the Company. At the Closing, the Company shall deliver to
the Buyer the following:
(a) A stock certificate(s) in the name of the Buyer (and/or its
designees) representing the 1,000,000 Shares purchased by the Buyer;
(b) The Warrant (executed);
(c) Resignations of all directors and officers of the Company
(effective as of the Closing) and the unanimous written consent of Board of
Directors of the Company electing Buyer' designees (effective immediately
subsequent to the Closing) to fill the vacancies in the Board of Directors
of the Company.
(d) A certificate issued by the Nevada Secretary of State as to the
good standing of the Company as of the date of the Closing;
(e) A true and complete copy of the Certificate of Incorporation (as
amended) of the Company as in effect as of the date of the Closing,
certified by the Secretary of State of Nevada;
(f) A true and correct copy of the By-Laws (as amended) of the Company
as in effect as of the date of the Closing, certified by the Secretary of
the Company;
(g) A stock certificate in the name of the Company's wholly-owned
subsidiary representing all of the issued and outstanding capital stock of
such wholly-owned
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subsidiary (which stock certificate shall be delivered directly to the
Escrow Agent and held pursuant to the Escrow Agreement);
(h) Legal opinion from Company counsel;
(i) Officers' certificate;
(j) Board Resolutions authorizing all transactions contemplated by
this Agreement (including the sale of the Company's subsidiary for 100,000
shares of Common Stock);
(k) All other documents, instruments and writings required (or
reasonably requested by the Buyer and/or its counsel);
(l) True and complete copies of the minute books (original) and all
other original books, records and other documents (including tax returns,
SEC filings and correspondence and NASD filings and correspondence) of the
Company. Such books and records shall be complete and accurate in all
material respects and shall reflect all material actions of the Company
from the date of its incorporation to the date of the Closing;
(m) Letter acknowledging receipt of $250,000 for the sale of the
1,000,000 Shares and the Warrant;
(n) The executed Escrow Agreement; and
(o) The executed Stock Sale Agreement.
2.4 Deliveries by Buyer. At the Closing, the Buyer shall deliver the
following to the Sellers:
(a) Bank, certified or cashier's checks payable to the order of (i)
Sellers in the amount of $315,000 in accordance with Section 1.1 above,
from which $315,000 purchase price shall be paid $15,000 directly at the
Closing to the person set forth on Schedule 5.7.
(b) Bank, certified or cashier's checks payable to the order of the
Company in the amount of $250,000 in accordance with Section 1.2 above
(with satisfactory assurance that funds have been placed into a Company
bank account).
(c) A certificate executed by the Buyer, attesting to the accuracy of
the representations and warranties of Buyer made in this Agreement.
(d) All other documents, instruments and writings required by this
Agreement to be delivered by Buyer at the Closing.
(e) A list of all nominees to fill all vacancies of the Board of
Directors of the Company.
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(f) The Investment Letter annexed hereto as Exhibit 4.4.
(g) Letter acknowledging receipt of the 1,000,000 Shares and the
Warrant.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY
Sellers and the Company severally represent, warrant and covenant to and
with Buyer, both as of the date of this Agreement and as of the date of Closing,
as an inducement to Buyer to enter into this Agreement and to consummate the
transaction contemplated hereby as follows:
3.1 Authorization of Agreement. The Company and each of the Sellers is
fully able, authorized and empowered to execute and deliver this Agreement and
any other agreement or instrument contemplated by this Agreement and to perform
his, her or its covenants and agreements hereunder and thereunder. This
Agreement and any such other agreement or instrument, upon execution and
delivery by Sellers and the Company (and assuming due execution and delivery
hereof and thereof by the other parties hereto and thereto), will constitute a
valid and legally binding obligation of each of the Sellers and the Company, in
each case enforceable against each of them in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws from time to time in effect which
affect creditors' rights generally and by legal and equitable limitations on the
availability of specific performance and other equitable remedies against the
Company and the Sellers under or by virtue of this Agreement or such other
agreement or instrument.
3.2 Ownership of the 1,194,166 Shares. Each of the Sellers is the sole
record and beneficial owner of that portion of the 1,194,166 Shares set forth
opposite his, her or its name on Schedule 1.1, annexed hereto. Each of the
Sellers holds his, her or its respective Shares free and clear of any lien,
pledge, encumbrance, charge, security interest, claim or right of another and
has the absolute right to sell and transfer such 1,194,166 Shares to the Buyer
as provided in this Agreement without the consent of any other person or entity.
Upon transfer of such 1,194,166 Shares to Buyer hereunder, Buyer will acquire
good and marketable title to such 1,194,166 Shares free and clear of any lien,
pledge, encumbrance, charge, security interest, claim or right of another.
3.3 No Breach. Neither the execution and delivery of this Agreement nor
compliance by the Company and/or the Seller with any of the provisions
hereof nor the consummation of the Transactions and actions contemplated hereby
will:
(a) violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of the Company;
(b) violate or, alone or with notice of the passage of time, result in
the material breach or termination of, or otherwise give any contracting
party the right to terminate, or declare a material default under, the
terms of any agreement or other document or
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undertaking, oral or written to which any of the Sellers and/or the Company
is a party or by which any of them or any of their respective properties or
assets may be bound;
(c) result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of any of the Sellers
and/or the Company pursuant to the terms of any such agreement or
instrument;
(d) violate any statute, ordinance, regulation judgment, order,
injunction, decree or award of any court or governmental or quasi
governmental agency against, or binding upon any of the Sellers and/or the
Company or upon any of their respective properties or assets; or
(e) violate any law or regulation of any jurisdiction relating to any
of the Sellers and/or the Company or any of their respective securities,
assets or properties.
3.4 The 1,000,000 Shares and the Warrants. The Warrant, the 1,000,000
shares of Common Stock and the 3,000,000 shares of Common Stock issuable upon
exercise of the Warrant when issued shall be duly authorized, fully paid and
non-assessable and vest in the Buyer full and absolute title free and clear of
any lien, pledge, encumbrances or any other change and will not be issued in
violations of any pre-emptive rights or similar rights including any rights of
first refusal.
3.5 Obligations; Authorizations. Neither the Company nor any of the Sellers
is (i) in violation of any judgment, order, injunction, award or decree which is
binding on any of them or any of their assets, properties, operations or
business which violation, by itself or in conjunction with any other such
violation, would materially and adversely affect the consummation of the
transaction contemplated hereby; or (ii) in violation of any law or regulation
or any other requirement of any governmental body, court or arbitrator relating
to him, her or it, or to his, her or its assets, operations or businesses which
violation, by itself or in conjunction with other violations of any other law,
regulation or other requirement, would materially adversely affect the
consummation of the transaction contemplated hereby.
3.6 Consents. All requisite consents of third parties, including, but not
limited to, governmental or other regulatory agencies, federal, state or
municipal, required to be received by or on the part of the Company and/or each
of the Sellers for the execution and delivery of this Agreement and the
performance of their respective obligations hereunder have been obtained and are
in full force and effect. The Company and the Sellers have fully complied with
all conditions of such consents.
3.7 SEC Reports. The Company has filed in a timely manner with the
Securities and Exchange Commission (the "SEC"), all reports required to be filed
and is "current" in its reporting obligations. The Company has delivered to
Buyer a true and correct copy of each of the following documents (the "SEC
Reports") relating to the Company, receipt of which is hereby acknowledged by
Buyer: (i) Annual Report on Form 10-KSB for the fiscal year ended December 31,
1999, (ii) Annual Report on Form 10-KSB for the fiscal year ended December 31,
1998 (the "1998 10-K"), (iii) Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1999, June 30, 1999 and March 31, 1999, (iv) the Quarterly
Report on
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Form 10-QSB for the quarter ended March 31, 2000, (v) all Forms 3 and Forms 4
filed by the Company and its shareholders, and (vi) the Company's Form 10-SB
filed by the Company on June 10, 1998 (and all amendments thereto), which became
effective on August 11, 1998. The Company has been subject to the requirements
of Section 15(d) of the Exchange Act since at least August 8, 1998, and the SEC
Reports constitute all of the documents and reports that the Company was
required to file with the SEC pursuant to the Exchange Act and the rules and
regulations promulgated thereunder by the SEC since August 8, 1998. As of their
respective dates, the SEC Reports comply in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder and none of the SEC Reports contained an untrue statement of a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.8 Financial Statements. The financial statements of the Company included
in the SEC Reports (including in each case the related notes thereto) (i) are in
accordance with the books and records of the Company, (ii) are correct and
complete in all material respects, (iii) present fairly the financial position
and results of operations of the Company as of the respective dates indicated
(subject, in the case of unaudited statements, to normal, recurring adjustments,
none of which were material) and (iv) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis ("GAAP").
3.9 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has full
power and authority to own, lease and operate its properties and to carry on its
business as now being and as heretofore conducted. The Company is duly qualified
as a foreign corporation in the State of Utah. The Company is not qualified or
licensed to do business as a foreign corporation in any other jurisdiction and
neither the location of its assets nor the nature of its business requires it to
be so qualified.
3.10 Capitalization. The total authorized and issued capital stock of the
Company as of the date of this Agreement is as set forth in the 1999 Form
10-KSB. There are no subscriptions, options warrants or other rights' agreements
or commitments (oral or otherwise) obligating the Company to issue any shares of
its capital stock or other securities.
3.11 Certificate of Incorporation and By-Laws. Annexed hereto as Exhibit
3.11 is a true and complete copy of the Certificate of Incorporation and By-Laws
of the Company as in effect on the date hereof, certified by the Secretary of
the Company in the case of the By-Laws and by the Secretary of State of the
State of Nevada in the case of the Certificate of Incorporation.
3.12 Officers and Directors. Attached hereto as Schedule 3.12 is a list of
the names and titles of all officers and directors of
the Company.
3.13 Liabilities, Etc.
(a) The Company has filed all federal, state and local tax returns
which are required to be filed by it, including its Federal Income Tax
Returns and Nevada Franchise Tax
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Returns for the fiscal year ended December 31, 1999, and all taxes shown to
be due thereon (together with any applicable penalties and interest) have
been paid. Since December 31, 1999 the Company has not incurred any
liability for taxes except in the ordinary course of business. The Company
has paid or provided adequate reserves for all taxes which have become due
for all periods prior to the date of this Agreement or pursuant to any
assessments received by it or which the Company is obligated to withhold
from amounts owing to any employee, creditor or other third party as at or
with respect to any period prior to the date of this Agreement. The Federal
Income tax Returns of the Company have never been audited by the Internal
Revenue Service. The Company has not waived any statute of limitations in
respect of taxes, nor agreed to any extension of time with respect to a tax
assessment or deficiency.
(b) On the date hereof, there are no liabilities, debts or obligations
of the Company, whether accrued, absolute, contingent or otherwise
("Liabilities")
3.14 Absence of Certain Events. Since December 31, 1999 the Company has
been conducted solely in the usual and ordinary
course. Without limiting the generality of the foregoing, the Company has not:
(a) waived any right or rights of substantial value or paid, directly
or indirectly, any Liability before such Liability became due in accordance
with its terms;
(b) other than in the ordinary and usual course of business, created
any Liability (whether absolute or contingent and whether or not currently
due and payable), or entered into or assumed any contract, agreement,
arrangement, lease (as lessor or lessee), license or other commitment
otherwise than in the ordinary and usual course of business; or
(c) purchased, sold or transferred any assets other than in the
ordinary and usual course of the operations of the Company; granted any
security interest or other lien or encumbrance affecting any of its assets
or properties other than in the ordinary and usual course of business and
in amounts not material; or amended any agreement or contract to which the
Company is a party or by which its assets and properties are bound.
3.15 Adverse Developments. Since December 31, 1999 there has been no
material adverse change in the business, operations or condition (financial or
otherwise) of the Company; nor has there been since such date, any damage,
destruction or loss, whether covered by insurance or not, materially or
adversely affecting the business, properties or operations of the Company.
3.16 Actions and Proceedings. Neither the Sellers nor the Company is a
subject to any outstanding orders, writs, injunctions or decrees of any court or
arbitration tribunal or any governmental department, commission, board, agency
or instrumentality, domestic or foreign, against, involving or affecting the
business, properties or employees of the Company or the Sellers' right to enter
into, execute and perform this Agreement (or any of the transactions
contemplated hereby). There are no actions, suits, claims or legal,
administrative or arbitration proceedings or investigations, including any
warranty or product liability claims (whether or not the defense thereof or
liabilities in respect thereof are covered by policies of insurance) relating
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to or arising out of the business, properties or employees of the Company
pending or, to the best knowledge of the Company and the Sellers, threatened
against or affecting the Company.
3.17 Compliance with Laws. The Company has complied in all material
respects with all laws, ordinances, regulations and orders applicable to the
conduct of its business, including all laws relating to environmental matters,
employees and working conditions.
3.18 Bank Accounts and Credit Cards. Except as set forth on Schedule 3.18,
as of the date hereof, the Company does not have any bank account, safe deposit
box or credit or charge cards.
3.19 Stockholders. Annexed hereto as Exhibit 3.19 is a Shareholder List as
provided by Pacific Stock Transfer dated May 12, 2000.
3.20 Due Diligence. The Company and the Sellers have completed their due
diligence investigation of Buyer, the results of which were
satisfactory to Sellers.
3.21 Capitalization; No Pre-Emptive Rights, Etc. The Company has authorized
5,000,000 shares of Common Stock. All of the issued and outstanding shares of
Common Stock are duly authorized and validly issued and outstanding, fully paid
and non-assessable. There are no pre-emptive rights (or other similar rights,
including any rights of first refusal) outstanding relating to the 1,194,166
Shares and/or the 1,000,000 Shares and Warrants.
3.22 Subsidiaries. Other than as set forth on Schedule 3.22, there are no
corporations, partnerships or other business entities controlled by the Company.
As used herein, "controlled by" means (i) the ownership of not less than fifty
(50%) percent of the voting securities or other interests of a corporation,
partnership or other business entity, or (ii) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a corporation, partnership or other business entity, whether through
the ownership of voting shares, by contract or otherwise. The Company has not
made any investments in, nor does it own, any of the capital stock of, or any
other proprietary interest in, any other corporation, partnership or other
business entity.
3.23 Environmental. As used in this Agreement, the term "Hazardous
Materials" shall mean any waste material which is regulated by any state or
local governmental authority in the states in which the Company conducts
business, or the United States Government, including, but not limited to, any
material or substance which is (i) defined as "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste" under any provision of Nevada law, (ii) petroleum, (iii)
asbestos, (iv) designated as a "hazardous substance" pursuant to Section 311 of
the Clean Water Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant
to Section 307 of the Clean Water Act (33 U.S.C. 1317), (v) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6901), or (vi) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq. (42 U.S.C.
9601). The current operations of the Company and its current and, to the best of
its knowledge, its past use comply and then complied in all material respects
with all applicable laws and governmental regulations including all applicable
federal, state and
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local laws, ordinances, and regulations pertained to air and water quality.
Hazardous Materials, waste, disposal or other environmental matters, including
the Clean Water Act, the Clean Air Act, the Federal Water Pollution Control Act,
the Solid Waste Disposal Act, the Resource Conservation Recovery Act, and the
statutes, rules and regulations and ordinances or the state, city and country in
which The Company's property is located.
3.24 Litigation, Compliance with Law. There are no actions, suits,
proceedings, or governmental investigations (or any investigation of any
self-regulatory organization) relating to the Company or to any of its
properties, assets or businesses pending or, to the best of its knowledge,
threatened, or any order, injunction, award or decree outstanding against the
Company or against or relating to any of its properties, assets or businesses.
The Company is not in violation of any law, regulation, ordinance, order,
injunction, decree, award or other requirements of any governmental body, court
or arbitrator relating to its properties, assets or business.
3.25 Agreements and Obligations; Performance. Other than pursuant to this
Agreement, the Company is not a party to, or bound by any: (i) contract,
arrangements, commitment or understanding which involves aggregate payments or
receipts in excess of $500, (ii) contractual obligation or contractual liability
of any kind to any Company stockholder; (iii) contract, arrangement, commitment
or understanding with its customers or any officer, employee, stockholder,
director, representative or agent thereof for the repurchase of products,
sharing of fees, the rebating of charges to such customers, bribes, kickbacks
from such customers or other similar arrangements; (iv) contract for the
purchase or sale of any materials, products or supplies which contain, or which
commits or will commit it for a fixed term; (v) contract of employment with any
officer or employee not terminable at will without penalty or premium or any
continuing obligation of liability; (vi) deferred compensation, bonus or
incentive plan or agreement not cancelable at will without penalty or premium or
any continuing obligation or liability: (vii) management or consulting agreement
not terminable at will without penalty or premium or any continuing obligation
or liability; (viii) lease for real or personal property (including borrowings
thereon), license or royalty agreement; (ix) union or other collective
bargaining agreement; (x) agreement, commitment or understanding relating to the
indebtedness for borrowed money; (xi) contract involving aggregate payments or
receipts of $500 or more which, by its terms, requires the consent of any party
thereto to the consummation of the transactions contemplated hereby; (xii)
contract containing covenants limiting the freedom of the Company to engage or
compete in any line of business or with any person in any geographic area;
(xiii) contract or opinion relating to the acquisition or sale of any business;
(xiv) voting trust agreement or similar stockholders' agreement; and/or (xiv)
other contract, agreement, commitment or understanding which materially affects
any of its properties, assets or business, whether directly or indirectly, or
which was entered into other than in the ordinary course of business.
3.26 Permits and Licenses. The Company is in compliance in all material
respects with all requirements, standards and procedures of the federal, state,
local and foreign governmental bodies which issued such permits, licenses,
orders, franchises and approvals.
3.27 Employee Benefit Plans. The Company does not maintain and is not
required to make contributions to any "pension" and "welfare" benefit plans
(within the respective meanings
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of Sections 4(2) and 4(1) of the Employee Retirement Income Security Act of
1974, as amended).
3.28 Trading. The shares of Common Stock are and have traded since February
1998 on the OTCBB under the symbol "LILM." The Company has not received any
correspondence and/or notice (nor has any reason to believe it will in the
future receive) regarding the continued eligibility of the Common Stock to be
quoted on the OTCBB
3.29 Insurance. The Company has no insurance policies.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company and the Sellers, both as of
the date of this Agreement and as of the date of the Closing, as follows:
4.1 Authorization of Agreement. The Buyer is fully able, authorized and
empowered to execute and deliver this Agreement, and any other agreement or
instrument contemplated by this Agreement, and to perform his, her or its
obligations contemplated hereby and thereby. This Agreement, and any such other
agreement or instrument, upon execution and delivery by Buyer (and assuming due
execution and delivery hereof and thereof by the other parties hereto and
thereto), will constitute the legal, valid and binding obligation of each of the
Buyer, in each case enforceable against each of them in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws from time to time in
effect which affect creditors' rights generally and by legal and equitable
limitations on the availability of specific performance and other equitable
remedies against the Buyer under or by virtue of this Agreement or such other
agreement or instrument.
4.2 No Buyer Defaults. Neither the execution and delivery of this
Agreement, nor the consummation of the transaction contemplated hereby, will (i)
violate, conflict with or result in the breach or termination of, or otherwise
give any other contracting party the right to terminate, or constitute a default
under the terms of, any mortgage, bond, indenture or material agreement to which
the Buyer is a party or by which the Buyer or any of their property or assets
may be bound or materially affected, (ii) violate any judgment, order,
injunction, decree or award of any court, administrative agency or governmental
body against, or binding upon, the Buyer or upon the property of the Buyer, or
(iii) constitute a violation by the Buyer of any applicable law or regulation of
any jurisdiction as such law or regulation relates to Buyer or to the property
of the Buyer.
4.3 No Litigation, Etc. There is no material suit, action, or legal,
administrative, arbitration or other proceeding or governmental investigation
pending or, to Buyer's best knowledge, threatened against, materially affecting
or which will materially affect, the property of the Buyer.
4.4 Investment Intent. The Buyer is acquiring the securities being
purchased pursuant to this Agreement for its own account and for investment
purposes and not with a view to distribution or resale, nor with the intention
of selling, transferring or otherwise disposing of all or any part of the Shares
except in compliance with all applicable provisions of the Securities Act of
1933, as amended (the "Act"), the rules and regulations promulgated by the SEC
-11-
thereunder, and applicable state securities laws. The Buyers shall sign the form
of Investment Letter annexed hereto as Exhibit 4.4.
4.5 Legend. The Buyer understands that all certificates representing
securities of the Company received by it pursuant to this Agreement shall bear
the following legend, or one substantially similar thereto:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933. The shares have been acquired for investment
and may not be sold, transferred or assigned in the absence of an effective
registration statement for those shares under the Securities Act of 1933, as
amended, or an opinion satisfactory to the Company's counsel that registration
is not required under said Act."
5. PRE-CLOSING COVENANTS AND AGREEMENTS OF THE PARTIES.
The Sellers and the Company and the Buyer (as to covenants they expressly
are providing below in this Section 5) hereby covenant and agree that, from the
date hereof and until the Closing:
5.1 Access. The Company (and its subsidiaries) shall afford to the
officers, attorneys, accountants and other authorized representatives of the
Buyer free and full access, during regular business hours and upon reasonable
notice, to the Company's books, records, personnel and properties (including,
without limitation, the work papers prepared by its auditors) so that the Buyer
may have full opportunity to make such review, examination and investigation as
it may desire of the Company's (and its subsidiaries) business and affairs. The
Company will cause its employees, accountants and attorneys to cooperate fully
with said review, examination and investigation and to make full disclosure to
the Buyer of all material facts affecting the Company's (and its subsidiaries)
financial conditions and business operations.
5.2 Conduct of Business. The Company (and its subsidiaries) shall each
conduct its business only in the ordinary and usual course and make no material
change thereto.
5.3 Liabilities. Neither the Company (nor its subsidiaries) shall incur any
obligation or liability, absolute and continent.
5.4 No Breach. Each of the parties hereto will (i) use its best efforts to
assure that all of its respective representations and warrants contained herein
are true in all material respects at and as of the date hereof, and as of the
Closing no breach shall occur with respect to any of the parties' covenants,
representations or warranties contained herein that has not been cured by the
Closing; (ii) not voluntarily take any action or do anything which will cause a
material breach of or default respecting such covenants, representations or
warranties; and (iii) promptly notify the other of any event or fact which
represents a breach or default.
5.5 Other SEC/NASD Filings, NASD Continued Listing. The Company shall file
with the SEC and the NASD (if required) all required forms and disclosure items
in a timely manner (which forms and disclosure items must be approved by legal
counsel to the Company and the Buyer prior to filing and/or disclosure) required
and/or relating to this Agreement or
-12-
otherwise; and the Company shall take any and all actions to ensure that the
shares of Common Stock continue to be eligible for quotation on the OTCBB and
there shall be no notice of any possible proceeding to make the Common Stock not
eligible for quotation on the OTCBB.
5.6 Public Announcements. No party hereunder shall, without the express
prior written consent of the Company and the Buyer make any announcement or
otherwise disclose any information regarding this Agreement and/or the
transactions contemplated hereby other than as required by law or otherwise
deemed advisable in counsel's opinion to ensure compliance with public
disclosure requirements under the federal securities laws; provided, however,
that the parties hereto agree that the Current Report on Form 8-K substantially
as annexed hereto as Exhibit 5.6 shall be filed with the SEC by the Company no
later than two (2) business days following execution of this Agreement.
5.7 Brokers. Except as set forth on Schedule 5.7 to this Agreement, each of
the Company and the Sellers on the one hand and the Buyer on the other hand
represent and warrant to the other that neither has employed any broker, finder
or similar agent and no person or entity with which each has had any dealings or
communications of any kind is entitled to any brokerage, finder's or placement
fee or any similar compensation in connection with this Agreement or the
transaction contemplated hereby.
5.8 Expenses. Each of the parties hereto agrees to bear its own expenses in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the consummation of the transaction contemplated hereby.
5.9 Further Assurances. Each of the parties shall execute such documents or
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
in this Agreement.
5.10 No-Shop Agreement. Neither the Company nor any of the Sellers (nor any
of their respective affiliates) shall directly and/or indirectly (a) initiate
contact with, solicit or encourage any inquiries or proposals by, or (b) enter
into any discussions or negotiations with, or disclose directly or indirectly
any information concerning its business, prospects, and properties to, or afford
any access to its properties, books and records to, any corporation,
partnership, person, or other entity or group (other than Buyer and its
affiliates, employees, representatives, and agents) regarding a sale of all or a
portion of the Company's or the Sellers' securities of the Company or a merger,
consolidation, or sale of all or a substantial portion of the assets of the
Company or any subsidiary of the Company or any similar transaction until
termination of this Agreement pursuant to Section 13 hereof.
6. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
6.1 Nature of Statements. All statements contained in any Schedule,
certificate or other instruments delivered by or on behalf of any party hereto
pursuant to this Agreement, shall be deemed representations and warranties by
such party.
6.2 Survival of Representations and Warranties. Regardless of any
investigation at any time made by or on behalf of any party hereto or of any
information any party may have in respect thereof, all covenants, agreements,
representations and warranties made hereunder or
-13-
pursuant hereto or in connection with the transaction contemplated hereby shall
survive the Closing and continue in effect through the first anniversary of the
Closing except that the representations and warranties set forth in Section 3.23
(with respect to environmental law only) shall continue in effect until the
expiration of the applicable statute of limitations, and the agreements of
indemnity for claims set forth in Sections 8, 9 and 10 shall survive the Closing
and continue in effect for the period during which such claims are enforceable.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER
The obligations of the Buyer to effectuate the Closing is subject to the
fulfillment, prior to the date of Closing, of each of the following conditions
(any one or more of which may be waived by the Buyer unless such condition is a
requirement of law).
7.1 Representations and Warranties. All representations and warranties of
the Company and the Sellers contained in this Agreement and in any written
statement, schedule or other documents delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be true and correct
in all material respects as of the date hereof. Any changes in information set
forth in the Schedules hereto shall be set forth on amended schedules which
shall be delivered to the Buyer at the Closing. Except as set forth in such
amended Schedules, all representations and warranties of the Company contained
in this Agreement and in any written statement, schedule or other documents
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be true and correct in all material respects as of the Closing.
7.2 Covenants. The Company and the Sellers shall have performed and
complied in all material respects with all covenants and other agreements
required by (or contained in) this Agreement to be performed or complied with or
by them prior to or at the Closing.
7.3 No Actions. No action, suit, proceeding or investigation shall have
been instituted against any of the Sellers or the Company, and be continuing
before a court or before or by a governmental body or agency, and be unresolved,
to restrain or to prevent or to obtain damages in respect of, the carrying out
of the transactions contemplated hereby or which might materially and adversely
affect the rights of the Buyer to consummate the transactions contemplated
hereby.
7.4 Approvals. Each of the Sellers and the Company shall have obtained all
approvals and consents to consummate this Agreement and the transactions to be
consummated at or immediately following the Closing, in accordance with all
applicable laws, rules and regulations.
7.5 Due Diligence. The Buyer shall have completed to its sole satisfaction
its due diligence of the Company (its subsidiaries), the Sellers and all other
items it deems necessary and/or advisable, and shall be satisfied with the
results thereof.
7.6 Stock Sale Agreement and Related Matters. The Company and ▇▇▇▇▇▇▇ shall
have entered into the Stock Sale Agreement and the Escrow Agreement as provided
in Section 14.2 below and the required stock certificates shall have been placed
into escrow pursuant to the Escrow Agreement.
-14-
7.7 Closing Documents. The Buyer shall receive all of the documents
(executed where applicable) set forth in Section 2.2 and Section 2.3 of this
Agreement, which documents shall be in form and substance reasonably
satisfactory to Buyer and its legal counsel.
8. CONDITIONS PRECEDENT TO THE OBLIGATION TO THE COMPANY AND
THE SELLERS TO CLOSE
The obligations of the Company and the Sellers to effectuate the Closing is
subject to the fulfillment, prior to the date of Closing, of each of the
following conditions (any one or more of which may be waived by the Buyer unless
such condition is a requirement of law).
8.1 Representations and Warranties. All representations and warranties of
the Buyer contained in this Agreement and in any written statement, schedule or
other documents delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be true and correct in all material respects as of the
date hereof. Any changes in information set forth in the Schedules hereto shall
be set forth on amended schedules which shall be delivered to the Company and
the Sellers at the Closing. Except as set forth in such amended Schedules, all
representations and warranties of the Buyer contained in this Agreement and in
any written statement, schedule or other documents delivered pursuant hereto or
in connection with the transactions contemplated hereby shall be true and
correct in all material respects as of the Closing.
8.2 Covenants. The Buyer shall have performed and complied in all material
respects with all covenants and other agreements required by (or contained in)
this Agreement to be performed or complied with by it prior to or at the
Closing.
8.3 No Actions. No action, suit, proceeding or investigation shall have
been instituted against the Buyer, and be continuing before a court or before or
by a governmental body or agency, and be unresolved, to restrain or to prevent
or to obtain damages in respect of, the carrying out of the transactions
contemplated hereby, or which might materially and adversely affect the rights
of the Sellers and the Company to consummate the transactions contemplated
hereby.
8.4 Approvals. The Buyer shall have obtained all required consents and
approvals to this Agreement and the transactions to be consummated at or
immediately following the Closing, in accordance with all applicable laws, rules
and regulations.
8.5 Closing Documents. The Sellers and/or the Company shall receive all of
the documents set forth in Section 2.4 of this Agreement, which documents shall
be in form and substance reasonably satisfactory to such parties and their legal
counsel.
9. INDEMNIFICATION BY THE COMPANY AND THE SELLERS.
9.1 Claims Against the Company and the Sellers.
(a) The Company and the Sellers, jointly and severally, shall
indemnify and hold the Buyer harmless from and against any loss, damage or
expense (including reasonable attorneys' fees) caused by or arising out of
any claim made against the Company:
-15-
(i) for any broker's or finder's fee or any similar fee, charge
or commission incurred by the Company prior to or in connection with
this Agreement or the transaction contemplated hereby;
(ii) for any foreign, Federal, state or local tax of any kind
arising out of or by reason of the existence or operations of the
Company and/or the Sellers prior to the Closing, including, without
limitation, any payroll taxes owed by the Company on account of
compensation paid to any employee of the Company prior to such date;
(iii) in respect of transactions occurring prior to the Closing
arising under the Act, the Exchange Act, or any state blue sky or
securities law;
(iv) in respect of any salary, bonus, wages or other compensation
of any kind owed by the Company to its employees for services rendered
on or prior to the Closing;
(v) for any damages to the environment caused by or arising out
of any pollution resulting from or otherwise attributable to the
operation of the business of the Company prior to the Closing;
(vi) in respect of any payable of the Company incurred prior to
the Closing;
(vii) in respect of any liability or indebtedness for borrowed
money or otherwise incurred on or before the Closing; and
(viii) for expenses required to be borne by the Company and/or
the Sellers under the provisions of this Agreement.
(b) Other Matters. The Company and the Sellers, jointly and severally,
shall also indemnify and hold the Buyer harmless from and against any loss,
damage or expense (including reasonable attorneys' fees) caused by or
arising out of (i) any breach or default in the performance by the Company
and the Sellers of any covenant or agreement of the Company and the Sellers
contained in this Agreement, (ii) any breach of warranty or inaccurate or
erroneous representation made by the Company and the Sellers herein or in
any Schedule, certificate or other instrument delivered by or on behalf of
the Company and the Sellers pursuant hereto, and (iii) any and all actions,
suits, proceedings, claims, demands, judgments, costs and expenses
(including reasonable legal and accounting fees) incident to any of the
foregoing.
10. THE INDEMNIFICATION BY BUYER.
The Buyer shall indemnify and hold harmless the Sellers from and against
all loss, damage or expense (including reasonable attorneys' fees) caused by or
arising out of (i) any breach or default in the performance by the Buyer of any
covenant or agreement of the Buyer contained in this Agreement, (ii) any breach
of warranty or inaccurate or erroneous representation made by the Buyer herein
or in any certificate or other instrument delivered by or on behalf of the Buyer
pursuant hereto and (iii) any and all actions, suits, proceedings, claims,
demands, judgments, costs and expenses (including reasonable legal and
accounting fees) incident to the foregoing.
-16-
11. NOTICE AND OPPORTUNITY TO DEFEND
Promptly after the receipt by Buyer or the Company and/or the Sellers of
notice of any action, proceeding, claim or potential claim (any of which is
hereinafter individually referred to as a "Circumstance") which could give rise
to a right to indemnification under this Agreement, such party (the "Indemnified
Party") shall give prompt written notice to the party or parties who may become
obligated to provide indemnification hereunder (the "Indemnifying Party"). Such
notice shall specify in reasonable detail the basis and amount, if
ascertainable, of any claim that would be based upon the Circumstance. The
failure to give such notice promptly shall relieve the Indemnifying Party of its
indemnification obligations under this Agreement, unless the Indemnified Party
establishes that the Indemnifying Party either had knowledge of the Circumstance
or was not prejudiced by the failure to give notice of the Circumstance. The
Indemnifying Party shall have the right, at its option, to compromise or defend
the claim, at its own expense and by its own counsel, and otherwise control any
such matter involving the asserted liability of the Indemnified Party, provided
that any such compromise or control shall be subject to obtaining the prior
written consent of the Indemnified Party which shall not be unreasonably
withheld. An Indemnifying Party shall not be liable for any costs of settlement
incurred without the written consent of the Indemnifying Party. If any
Indemnifying Party undertakes to compromise or defend any asserted liability, it
shall promptly notify the Indemnified Party of its intention to do so, and the
Indemnified Party agrees to cooperate fully with the Indemnifying Party and its
counsel in the compromise of or defense against any such asserted liability. All
costs and expenses incurred in connection with such cooperation shall be borne
by the Indemnifying Party, provided such costs and expenses have been previously
approved by the Indemnifying Party. In any event, the Indemnified Party shall
have the right at its own expense to participate in the defense of an asserted
liability.
12. MISCELLANEOUS
12.1 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns. No assignment of this Agreement or of any rights
hereunder shall relieve the assigning party of any of its obligations or
liabilities hereunder; provided, however, Buyer may assign the securities it
receives pursuant to this Agreement.
12.2 Notices. All notices or other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been duly
given if delivered by hand, overnight courier, facsimile transmission or prepaid
cable or telegram and confirmed in writing, or mailed first class, postage
prepaid, by registered or certified mail, return receipt requested (mailed
notices and notices sent by facsimile transmission, cable or telegram shall be
deemed to have been given on the date sent) as follows:
If to the Sellers, as follows:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
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With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
If to the Buyer, as follows:
Commonwealth Associates, LP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
With a copy to:
Gusrae, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or in any case to such other address or addresses as hereafter shall be
furnished as provided in this Section 12.2 by either of the parties hereto to
the other party hereto.
12.3 Waiver; Remedies. No delay on the part of any of the Sellers, the
Company or Buyer in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any of the
Sellers or Buyer of any right, power or privilege hereunder operate as a waiver
of any other right, power or privilege hereunder, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise of any other right, power or privilege hereunder. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies which the parties hereto may otherwise have at law or in equity.
12.4 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements or understandings (in writing, oral or otherwise) of the
parties relating thereto including, but not limited to, the letter dated April
19, 2000 between the Buyer, the Sellers and the Company.
12.5 Amendment. This Agreement may be modified or amended only by written
agreement of the parties hereto.
12.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument.
-18-
12.7 Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the internal laws of the State of New York
without regard to the conflicts of laws principles thereof. The parties hereto
hereby expressly and irrevocably agree that any suit or proceeding arising
directly and/or indirectly pursuant to, arising out of or under this Agreement,
shall be brought solely and exclusively in a federal or state court located in
the City, County and State of New York. By its execution hereof, the parties
hereby expressly covenant and irrevocably submit to the in personam jurisdiction
of the federal and state courts located in the City, County and State of New
York and agree that any process in any such action may be served upon any of
them personally, or by certified mail or registered mail upon them or their
agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York City. The parties hereto expressly and
irrevocably waive any claim that any such jurisdiction is not a convenient forum
for any such suit or proceeding and any defense or lack of in personam
jurisdiction with respect thereto. In the event of any such action or
proceeding, the party prevailing therein shall be entitled to payment from the
other party hereto of its reasonable counsel fees and disbursements in an amount
judicially determined.
12.8 Captions. All Section titles or captions contained in this Agreement,
in any Schedule referred to herein or in any Exhibit annexed hereto are for
convenience only, shall not be deemed a part of this Agreement and shall not
affect the meaning or interpretation of this Agreement.
12.9 Confidential Information. Each party agrees that such party and its
representatives will hold in strict confidence all information and documents
received from the other parties and, if the transactions herein contemplated
shall not be consummated, each party will continue to hold such information and
document sin strict confidence and will return to such other party all such
documents (including the documents annexed to this Agreement) then in such
receiving party's possession without retaining copies thereof, provided,
however, that each party's obligations under this Section 12.9 to maintain such
confidentiality shall not apply to any information or documents that are in the
public domain at the time furnished by the others or that become in the public
domain thereafter through any means other than as a result of any act of the
receiving party or of its agents, officers, directors or stockholders which
constitutes a breach of this Agreement, or that are required by applicable law
to be disclosed.
13. TERMINATION AND WAIVER.
13.1 Termination. Notwithstanding anything herein or elsewhere to the
contrary, Agreement may be terminated and the transactions provided for herein
abandoned at any time prior to the Closing as follows:
(a) By mutual written consent of the Buyer, Company and the Sellers;
or
(b) By the Company, the Sellers or the Buyer on May 26, 2000 if the
Closing does not occur (unless extended by the parties or unless the
failure to close is the result of the actions of the Company or the
Sellers).
13.2 Waiver. Any condition to the performance of any party hereto which
legally may be waived on or prior to the Closing may be waived at any time by
the party entitled to the
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benefit thereof by action taken or authorized by an instrument in writing
executed by the relevant party or parties. The failure of any party at any time
or times to require performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce the same. No waiver by
any party of the breach of any term, covenant, representation or warranty
contained in this Agreement as a condition to such party's obligations hereunder
shall release or affect any liability resulting from such breach, and no waiver
of any nature, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be or construed as a further or continuing waiver of any such
condition or of any breach of any other term, covenant, representation or
warranty of this Agreement.
14. The Company's Post-Closing Agreements
14.1 No Sales of Certain Securities. Subsequent to Closing, the Company
will not sell any of its shares of Common Stock at a price of less than $.25 per
share (or the proportional adjusted price in the event the Company effectuates a
recapitalization and/ or stock split) until such time as the Company identifies
a business opportunity or asset to acquire or merge into or with and appropriate
agreements have been prepared.
14.2 Sale of Subsidiary. No later than thirty (30) days from the date of
Closing, the Company shall sell all of the issued and outstanding capital stock
of its wholly-owned subsidiary, LILM, Inc. (the "Subsidiary"), to ▇▇▇▇▇▇▇ (or a
designee of ▇▇▇▇▇▇▇), for 100,000 shares of Common Stock, which 100,000 shares
shall become shares of treasury stock of the Company, pursuant to the Stock Sale
Agreement annexed hereto as Exhibit 14.2(a) which shall be entered into at the
Closing and the 100,000 shares of Common Stock shall be placed into escrow with
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. The form of Escrow Agreement shall be as annexed hereto as
Exhibit 14.2(b).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered on the day and year first above written.
Lil MARC, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Title: President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ LIMITED LIABILITY COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Title: Manager
COMVEST CAPITAL PARTNERS, LLC
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title:
-21-
LIST OF SCHEDULES AND EXHIBITS
A. SCHEDULES
1.1 Name and address of each Seller, stock certificate numbers, etc.
3.12 Current officers and directors of the Company
3.18 Bank Accounts
3.22 Subsidiaries of the Company
5.7 Brokers, Etc.
B. EXHIBITS
1.2 Warrant
3.11 Certificate of Incorporation, as amended (certified by the Secretary
of State of the State of Nevada)/By-Laws, as amended (certified by the
Secretary of Company)
3.19 Stockholders' List (dated May 12, 2000)
4.4 Investment Letter
5.6 Form of Current Report on Form 8-K
14.2(a) Stock Sale Agreement
14.2(b) Escrow Agreement
SCHEDULE 1.1
Exact Name and Number of Shares Dollar Amount to Be
Address of Seller Being Sold to Buyer Certificate Number Received for Sale of Shares(1)
----------------- ------------------- ------------------ ------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III 45,000 602 $ 11,663
149 Eat ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇.▇▇▇▇▇▇ 15,000 603 $ 3,719
149 Eat ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Limited Liability Company 495,833 581
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ # 60 75,000 579
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ 27,000 604
40,500 618
25,000 619 $151,608
▇▇▇▇▇ ▇▇▇▇▇▇ 570,833 580 $148,010
▇▇▇▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Totals 1,294,166(2) $315,000
====================================================
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(1) $15,000 of the $315,000 purchase price shall be paid directly from the
Sellers simultaneously at the Closing to the person set forth on Schedule 5.7.
(2) 100,000 shares of Common Stock owned by ▇▇▇▇▇▇▇ set forth in this Schedule
1.1 will not be sold at the Closing but will be placed into escrow at the
Closing pursuant to the Escrow Agreement (Exhibit 14.2(b)) to be sold to the
Company pursuant to the Stock Sale Agreement to be entered into at the Closing
(Exhibit 14.2(a)) for all of the outstanding capital stock of the Company's
wholly-owned subsidiary.
SCHEDULE 3.12
Current Officers and Directors
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III President, Chief Executive Officer and Director
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Secretary, Treasurer and a Director
SCHEDULE 3.18
Bank Accounts
▇▇▇▇▇ Fargo Bank West, N.A.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
1. Basic Business Checking (Account Number 089-▇▇▇▇▇▇▇)
Such account must be closed no later than the Closing with satisfactory
proof of closing of such accounts.
SCHEDULE 3.22
Subsidiaries of the Company
LILM, Inc., a Nevada corporation, is a wholly-owned subsidiary of the Company.
SCHEDULE 5.7
Brokers, Etc.
1. By the Sellers:
$15,000 to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("SM") from the $315,000 purchase price to be
paid by the Buyer to the Sellers, which $15,000 shall be paid from such $315,000
purchase price.
2. By the Buyer to SM:
- $15,000
- 6,000 shares of Common Stock to be purchased by SM from the Company
for $1,500 ($.25 per share) at or subsequent to the Closing.
