Exhibit 10.15
COMMON STOCK
PURCHASE AGREEMENT
BETWEEN
ONTRO, INC.
and
AURA PVT. LTD
DATED: April 27, 2001
TABLE OF CONTENTS
SECTION 1 DEFINITIONS.................................................1
SECTION 2 SALE AND ISSUANCE OF SECURITIES; CLOSING....................3
2.1 SALE OF COMMON STOCK..................................................3
2.4 CLOSING OBLIGATIONS...................................................4
SECTION 3 REPRESENTATIONS AND WARRANTIES OF ONTRO, INC................4
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION.........................4
3.2 SUBSIDIARIES..........................................................4
3.3 CAPITALIZATION; VOTING RIGHTS.........................................4
3.4 AUTHORIZATION; BINDING OBLIGATIONS....................................5
3.5 FINANCIAL STATEMENTS..................................................5
3.6 LIABILITIES...........................................................5
3.7 AGREEMENTS; ACTION....................................................5
3.8 OBLIGATIONS TO RELATED PARTIES........................................6
3.9 CHANGES...............................................................6
3.10 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC............................8
3.11 PATENTS AND TRADEMARKS................................................8
3.12 COMPLIANCE WITH OTHER INSTRUMENTS.....................................8
3.13 LITIGATION............................................................9
3.14 TAX RETURNS AND PAYMENTS..............................................9
3.15 EMPLOYEES............................................................10
3.16 OBLIGATIONS OF MANAGEMENT............................................10
3.17 VOTING RIGHTS........................................................10
3.18 COMPLIANCE WITH LAWS; PERMITS........................................10
3.19 ENVIRONMENTAL AND SAFETY LAWS........................................11
3.20 OFFERING VALID.......................................................11
3.21 FULL DISCLOSURE......................................................11
3.22 MINUTE BOOKS.........................................................11
3.23 INSURANCE............................................................12
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYERS...................12
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION........................12
4.2 AUTHORIZATION; BINDING OBLIGATIONS...................................12
4.3 DISCLOSURE...........................................................12
4.4 BROKERS OR FINDERS...................................................12
4.5 INVESTMENT MATTERS...................................................13
SECTION 5 REGISTRATION...............................................13
5.1 REGISTRATION STATEMENT...............................................13
SECTION 6 GENERAL PROVISIONS.........................................13
6.1 EXPENSES.............................................................13
6.2 PUBLIC ANNOUNCEMENTS.................................................14
6.3 CONFIDENTIALITY......................................................14
6.4 NOTICES..............................................................14
6.5 JURISDICTION; SERVICE OF PROCESS.....................................15
6.6 FURTHER ASSURANCES...................................................15
6.7 WAIVER...............................................................15
6.9 ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS....................16
6.10 SEVERABILITY.........................................................16
6.11 SECTION HEADINGS, CONSTRUCTION.......................................16
6.12 GOVERNING LAW........................................................16
6.13 COUNTERPARTS.........................................................16
EXHIBIT PAGES
EXHIBIT A.........Disclosure Schedule
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COMMON STOCK
PURCHASE AGREEMENT
This Common Stock Purchase Agreement ("Agreement") is made as of April
27, 2001, by and among Ontro, Inc., a California corporation ("Ontro" or the
"Company"), and Aura Pvt. Ltd., a Pakistani corporation ("Buyer").
RECITALS
Ontro is a development stage enterprise engaged in the research and
development of integrated thermal containers utilizing proprietary technology
which it has incorporated into a proposed product line of fully-contained
self-heating beverage containers designed to heat liquid contents such as
coffee, tea, hot chocolate, soups and baby formula. Ontro desires to raise
capital through the issuance and sale of its common stock ("Common Stock") to
Buyer and one or more additional investors, respectively. Buyer desires to
purchase the number of shares of Common Stock as set forth below in accordance
with the terms and conditions of this Agreement.
AGREEMENT
The parties, incorporating the above introduction and recitals, and
intending to be legally bound, agree as follows:
SECTION 1
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"APPLICABLE CONTRACT"-- any material Contract by which Ontro
or any of its assets is or may become bound.
"BEST EFFORTS"-- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible.
"CLOSING" -- as defined in Section 2.2.
"CONTRACT" -- any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"CONTROL" -- means the power to direct the business and
policies of another Person.
"ENCUMBRANCE" -- any material charge, claim, community
property interest, condition, equitable interest, mortgage, deed of trust, lien,
option, pledge, security interest, right of first refusal or restriction of any
kind, including any restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership.
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"FINANCIAL STATEMENTS" -- as defined in Section 3.5.
"GOVERNMENTAL BODY" -- any:
(a) nation, state, county, city, town, village,
district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or
other government;
(c) governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official or
entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
"KNOWLEDGE" -- an individual will be deemed to have
"Knowledge" of a particular fact or other matter if such individual is actually
aware of such fact or other matter.
A Person other than an individual will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving as a director, officer, partner, executor or trustee of such Person (or
in any similar capacity) has, or at any time had, Knowledge of such fact or
other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal,
foreign, international, multinational or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
"ORDER" -- any award, decision, injunction, judgment, order,
ruling, subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person
will be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices
of such Person and is taken in the ordinary course of the normal day-to-day
operations of such Person;
(b) such action is not required to be authorized by
the general partner or the board of directors of such Person (or by any Person
or group of Persons exercising similar authority); and
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(c) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the board of directors
(or by any Person or group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons that are in
the same line of business as such Person.
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate
of incorporation and the bylaws of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) the Articles of Organization and Operating Agreement of any
limited liability company; (e) any charter or similar document adopted or filed
in connection with the creation, formation or organization of a Person; and (f)
any amendment to any of the foregoing.
"PERSON" -- any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union or
other entity or Governmental Body.
"REPRESENTATIVE" -- with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor or other representative
of such Person, including legal counsel, accountants and financial advisors.
"SECURITIES ACT" -- the United States Securities Act of 1933,
as amended, or any successor law, and regulations and rules issued pursuant to
that Act or any successor law.
"TAX RETURN" -- any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any tax.
"THREATENED" -- a claim, Proceeding, dispute, action or other
matter will be deemed to have been "Threatened" if any written demand or
statement has been made or any written notice has been given with respect
thereto.
SECTION 2
SALE AND ISSUANCE OF SECURITIES; CLOSING
2.1 SALE OF COMMON STOCK. Subject to the terms and conditions of this
Agreement, Ontro will sell and transfer to Buyer a total of SIX Hundred NINETY
SEVEN Thousand EIGHT Hundred SEVENTY TWO (697,872) shares of Common Stock and
Buyer shall purchase such number of shares of Common Stock from Ontro at a price
of ONE DOLLAR AND TWENTY CENTS ($1.20) per share for an aggregate purchase price
of EIGHT Hundred THIRTY SEVEN Thousand FOUR HUNDRED FORTY SIX DOLLARS AND FORTY
CENTS ($837,446.40) (the "Purchase Price").
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2.2 PURCHASE AND CLOSING. Both parties acknowledge purchase price has
been paid. MSK
2.4 CLOSING OBLIGATIONS.
Ontro will deliver to Buyer forthwith: MSK ▇▇▇
(i) a Certificate representing the shares purchased;
(ii) such other documents as may be reasonably
requested by Buyer with respect to the transaction contemplated herein.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF
ONTRO, INC.
Except as set forth on the Disclosure Schedule of even date herewith,
attached hereto as Exhibit A and incorporated herein by this reference
("Disclosure Schedule"), Ontro represents and warrants to Buyer as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Ontro is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, to issue and sell the Common Stock, to carry out the provisions
of this Agreement and to carry on its business as presently conducted and as
presently proposed to be conducted. The Company is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
all jurisdictions in which the nature of its activities and of its properties
(both owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business.
3.2 SUBSIDIARIES. The Company owns all of the outstanding stock of
Insta-Heat, Inc, a California corporation. The Company does not own or Control
any equity security or other interest of any other Person. The Company is not a
participant in any joint venture, partnership or similar arrangement.
3.3 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of the
Company, immediately prior to January 27, 2001, will consist of 20,000,000
shares of Common Stock, no par value, 6,951,070 shares of which are issued and
outstanding, and 5,000,000 shares of preferred stock, none of which have been
issued. All issued and outstanding shares of the Company's Common Stock (a) have
been duly authorized and validly issued, (b) are fully paid and nonassessable,
and (c) were issued in compliance with all applicable state and federal laws
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concerning the issuance of securities. The Common Stock, when issued, sold and
delivered in accordance with the terms of this Agreement, shall be duly and
validly issued, fully paid and non-assessable. The Common Stock may be subject
to restrictions on transfer under state and/or federal securities laws as set
forth herein or as otherwise required by such laws at the time a transfer is
proposed.
3.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company, its officers, directors and shareholders necessary for the
authorization of this Agreement, the performance of all obligations of the
Company hereunder at the Closing and the authorization, sale, issuance and
delivery of the Common Stock pursuant hereto has been taken or will be taken
prior to the Closing. The Agreement is a valid and binding obligation of the
Company enforceable in accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights, and (b) general
principles of equity that restrict the availability of equitable remedies. The
sale of the Common Stock is not and will not be subject to any preemptive right
or rights of first refusal.
3.5 FINANCIAL STATEMENTS. The Company has made available to the Buyer
(a) its audited balance sheet as at December 31, 1999 and statement of income
and cash flows for the twelve months ending December 31, 1999 and (b) its
unaudited balance sheet as at September 30, 2000 (the "Statement Date"), and
consolidated statement of income and cash flows for the nine (9) month period
ending on the Statement Date (collectively, the "Financial Statements"). The
Financial Statements, together with the notes thereto, are complete and correct
in all material respects, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated, except as disclosed therein, and present fairly the financial
condition and position of the Company as of December 31, 1999 and the Statement
Date.
3.6 LIABILITIES. The Company has no material liabilities and, to the
best of its Knowledge, knows of no material contingent liabilities, either of
which are not disclosed in the Financial Statements, except current liabilities
incurred in the Ordinary Course of Business subsequent to the Statement Date
which have not been, either in any individual case or in the aggregate,
materially adverse.
3.7 AGREEMENTS; ACTION.
Other than as set forth on Schedule 3.7:
(a) There are no Applicable Contracts, understandings or
proposed transactions between the Company and any of its officers, directors,
affiliates or any affiliate thereof.
(b) There are no Applicable Contracts, proposed transactions,
judgments, orders, writs or decrees to which the Company is a party or to its
Knowledge by which it is bound which may involve (i) obligations (contingent or
otherwise) of, or payments to, the Company (other than obligations of, or
payments to, the Company arising from purchase or sale agreements entered into
in the Ordinary Course of Business), or (ii) the transfer or license of any
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patent, copyright, trade secret or other proprietary right to or from the
Company (other than licenses arising from the purchase of "off the shelf" or
other standard products), or (iii) provisions restricting the development,
manufacture or distribution of the Company's products or services, or (iv)
indemnification by the Company with respect to infringements of proprietary
rights (other than indemnification obligations arising from purchase, sale or
license agreements entered into in the Ordinary Course of Business).
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities (other than with respect to indebtedness and other obligations
incurred in the Ordinary Course of Business or as disclosed in the Financial
Statements), (iii) made any loans or advances to any person, other than advances
for travel and business expenses in the Ordinary Course of Business, or (iv)
sold, exchanged or otherwise disposed of any of its assets or rights, other than
the sale of its inventory or services in the Ordinary Course of Business.
(d) The Company has not engaged in the past three (3) months,
and is not currently engaged, in any discussion (i) with any Representative of
any entity regarding the consolidation or merger of the Company with or into any
such corporation or corporations, (ii) with any corporation, partnership,
association or other business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of the assets of the
Company, or a transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Company is disposed of, or (iii)
regarding any other form of acquisition, liquidation, dissolution or winding up
of the Company.
3.8 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the
Company to officers, directors, shareholders or employees of the Company other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). None of the officers, directors or shareholders of
the Company, or any members of their immediate families, are indebted to the
Company or have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation which competes with the
Company, except that officers, directors and/or shareholders of the Company may
own stock in publicly traded companies which may compete with the Company. No
officer, director or shareholder, or any member of their immediate families, is,
directly or indirectly, interested in any Applicable Contract (other than as
relates to any such person's ownership of capital stock or other securities of
the Company). Except as may be disclosed in the Financial Statements, the
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
3.9 CHANGES. Since the Statement Date, there has not been:
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(a) Any change in the assets, liabilities, financial condition
or operations of the Company from that reflected in the Financial Statements,
other than changes in the Ordinary Course of Business, none of which
individually or in the aggregate has had or is expected to have a material
adverse effect on the assets, liabilities, financial condition, operations or
prospects of the Company;
(b) Any resignation or termination of any officer or key
employee of the Company; and the Company, to the best of its Knowledge, does not
know of the impending resignation or termination of employment of any such
officer or key employee;
(c) Any material change in the contingent obligations of the
Company by way of guaranty, endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any waiver by the Company of a material right or of a
material debt owed to it;
(f) Any direct or indirect loans made by the Company to any
shareholder, employee, officer or director of the Company, other than advances
made in the Ordinary Course of Business;
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or shareholder;
(h) Any declaration or payment of any dividend or other
distribution of the assets of the Company;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the Ordinary Course of Business;
(k) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets other than
licenses entered into in the Ordinary Course of Business;
(l) Any changes in any Applicable Contract which materially
and adversely affects the business, assets, liabilities, financial condition,
operations or prospects of the Company;
(m) Any other event or condition of any character, to the
Knowledge of the Company that, either individually or cumulatively, has
materially and adversely affected the business, assets, liabilities, financial
condition, operations or prospects of the Company; or
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(n) Any arrangements or commitment by the Company to do any of
the acts described in subsection (a) through (m) above.
3.10 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good
and marketable title to its properties and assets, the properties and assets
reflected in the most recent balance sheet included in the Financial Statements,
and good title to its leasehold estates, in each case subject to no Encumbrance,
other than (a) those resulting from taxes which have not yet become delinquent,
(b) Encumbrances reflected in the Financial Statements or which do not
materially detract from the value of the property subject thereto, and (c) those
that have otherwise arisen in the Ordinary Course of Business. All facilities,
machinery, equipment, fixtures, vehicles and other properties owned, leased or
used by the Company are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used. The
Company is in compliance with all material terms of each lease to which it is a
party or is otherwise bound.
3.11 PATENTS AND TRADEMARKS. The Company owns or possesses patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes which constitutes
sufficient legal rights necessary for its business as now conducted and as
presently proposed to be conducted, without any known infringement of the rights
of others. The Company is not bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase or sale of "off the shelf" or
standard products or as arose in the Ordinary Course of Business. The Company
has not received any communications alleging that the Company has violated or,
by conducting its business as presently proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity. The Company is not aware
that any of its employees is obligated under any Contract, or subject to any
order, that would interfere with their duties to the Company or that would
conflict with the Company's business as presently proposed to be conducted.
Neither the execution nor delivery of this Agreement, nor the carrying on of the
Company's business by the employees of the Company, nor the conduct of the
Company's business as presently proposed, will, to the Company's Knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any Contract under which any employee is now
obligated. The Company does not believe it is or will be necessary to utilize
any inventions, trade secrets or proprietary information of any of its employees
made prior to their employment by the Company, except for inventions, trade
secrets or proprietary information that have been assigned to the Company.
3.12 COMPLIANCE WITH OTHER INSTRUMENTS.
(a) The Company is not in violation or default of any term of
its Organizational Documents, or of any provisions of any mortgage, indenture,
contract, agreement, instrument or contract to which it is party or by which it
is bound or of any judgment, decree, order or writ. The execution, delivery and
performance of and compliance with this Agreement, and the issuance and sale of
the Common Stock pursuant hereto will not, with or without the passage of time
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or giving of notice, result in any such violation, or be in conflict with or
constitute a default under any such term, or result in the creation of any
Encumbrance upon any of the properties or assets of the Company or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Company, its business or
operations or any of its assets or properties.
(b) The Company has avoided every condition, and has not
performed any act, the occurrence of which would result in the Company's loss of
any right granted under any Applicable Contract.
3.13 LITIGATION. Other than as set forth in Schedule 3.13 attached
hereto and incorporated herein by this reference, there is no action, suit,
proceeding or investigation pending or to the Company's Knowledge currently
Threatened against the Company that questions the validity of this Agreement or
the right of the Company to enter into this Agreement, or to consummate the
transactions contemplated hereby, or which might result, either individually or
in the aggregate, in any material adverse change in the assets, condition,
affairs or prospects of the Company, nor is the Company aware that there is any
basis for any of the foregoing. The foregoing includes, without limitation,
actions pending or threatened (or any basis therefor known to the Company)
involving the prior employment of any of the Company's employees, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or subject
to the provisions of any order, writ, judgment or decree of any court or
government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or which the Company intends to
initiate.
3.14 TAX RETURNS AND PAYMENTS. All federal, state, local and foreign
tax returns and reports required to be filed by the Company have been filed, and
all taxes, interest, assessments or deficiencies, fees and other governmental
charges upon the Company, or upon any of its properties, income or franchises,
shown in such returns and on assessments received by the Company to be due and
payable or claimed to be due and payable by any Governmental Body, have been
paid. The Company has not executed or filed with any taxing authority any
agreement, waiver or consent for the extensions of the period for assessment or
collection of any taxes or the audit of any tax returns or reports. The Company
is not a party to any pending action or proceeding, nor, to the Knowledge of the
Company, is any such action or proceeding Threatened by any Governmental Body
for the assessment or collection of taxes, interest, penalties, assessments or
deficiencies, and no claim for assessment of collection of taxes, interest,
penalties, assessments or deficiencies has been asserted against the Company. No
issue has been raised by any federal, state, local or foreign taxing authority
in connection with an audit or examination of the tax returns, reports, business
or properties of the Company which has not been settled or resolved. The Company
has not agreed to extend the statute of limitations with respect to any tax
period or the review or audit of any tax return. The Company has not made or
agreed (or been required) to make any adjustment or change in accounting method.
No material special charges, penalties, fines or Encumbrances have been asserted
against the Company with respect to the payment or failure to pay any taxes
which have not been paid or received without further liability to the Company.
Proper and accurate amounts have been withheld by the Company from its employees
for all periods in compliance with the withholding provisions of applicable
federal, state and local tax laws.
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3.15 EMPLOYEES. The Company has no collective bargaining agreements
with any of its employees. There is no labor union organizing activity pending
or, to the Company's Knowledge Threatened with respect to the Company. To the
Company's Knowledge, no employee of the Company, nor any consultant with whom
the Company has contracted, is in violation of any term of any Contract relating
to the right of any such individual to be employed by, or to contract with, the
Company; and to the Company's Knowledge the continued employment by the Company
of its present employees, and the performance of the Company's Contracts with
the independent contractors, will not result in any such violation. The Company
has not received any notice alleging that any such violation has occurred. The
Company is not aware that any officer or key employee, or that any group of key
employees, intends to terminate his, her or their employment with the Company,
nor does the Company have a present intention to terminate the employment of any
officer, key employee or group of key employees.
3.16 OBLIGATIONS OF MANAGEMENT. Each officer of the Company is
currently devoting one hundred percent (100%) of his or her business time to the
conduct of the business of the Company. The Company is not aware that any
officer or key employee of the Company is planning to work less than full time
at the Company in the future. No officer or key employee is currently working
or, to the Company's Knowledge, plans to work for a competitive enterprise,
whether or not such officer or key employee is or will be compensated by such
enterprise.
3.17 VOTING RIGHTS.
To the Company's Knowledge, no shareholder of the Company has
entered into any agreement with respect to the voting of equity securities of
the Company.
3.18 COMPLIANCE WITH LAWS; PERMITS. Other than as set forth in Schedule
3.18:
(a) The Company, to its Knowledge, is not in violation of any
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company.
(b) No governmental orders, permissions, consents, approvals
or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement and the issuance of the Common Stock, except such as
has been duly and validly obtained or filed, or with respect to any filings that
must be made after the Closing, as will be filed in an timely manner.
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(c) The Company has all franchises, permits, licenses and any
similar authority necessary for the conduct of its business as now being
conducted by it the lack of which could materially and adversely affect the
business, properties, prospects or financial condition of the Company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted.
3.19 ENVIRONMENTAL AND SAFETY LAWS. The Company, to its Knowledge after
reasonable investigation, is not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and no
material expenditures are or will be required in order to comply with any such
existing statute, law or regulation. Other than calcium oxide, no Hazardous
Materials (as defined below) are used or have been used, stored or disposed of
by the Company or, to the Company's Knowledge after reasonable investigation, by
any other person or entity on any property owned, leased or used by the Company.
For the purposes of the preceding sentence, "Hazardous Materials" shall mean
materials which are listed or otherwise defined as "hazardous" or "toxic" under
any applicable local, state, federal and/or foreign laws and regulations that
govern the existence and/or remedy of contamination on property, the protection
of the environment from contamination, the control of hazardous wastes, or other
activities involving hazardous substances.
3.20 OFFERING VALID. Assuming the accuracy of the representations and
warranties of Buyer contained in Section 4 hereof, the offer, sale and issuance
of the Common Stock will be exempt from the registration requirements of the
Securities Act, and will have been registered or qualified, or are exempt from
registration and qualification, under the registration, permit or qualification
requirements of all applicable state securities laws. Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Common Stock to any
person or persons so as to bring the sale of such Common Stock by the Company
within the registration provisions of the Securities Act or any state securities
laws.
3.21 FULL DISCLOSURE. The Company has provided Buyer with all
information requested by Buyer in connection with their respective decisions to
purchase the Common Stock, including all information the Company believes is
reasonably necessary to make such investment decision. Neither this Agreement,
the Exhibit hereto, nor any other document delivered by the Company to Buyer or
its attorneys or agents in connection herewith or with the transactions
contemplated hereby, contain any untrue statement of a material fact, nor, to
the Company's Knowledge, omit to state a material fact necessary in order to
make the statements contained herein or therein not misleading. Notwithstanding
the foregoing, all forward-looking information provided to Buyer was prepared by
the management of the Company in a good faith effort to describe the Company's
presently proposed business and products and the markets therefore. The
assumptions applied in preparing such forward-looking material appeared
reasonable to management as of the date thereof; however, there is no assurance
that these assumptions will prove to be valid or that the objectives set forth
in such forward-looking material will be achieved.
3.22 MINUTE BOOKS. The minute books of the Company made available to
Buyer contain a complete summary of all meetings of directors and shareholders
for which minutes were prepared since the time of incorporation and reflect all
material actions by the directors or shareholders.
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3.23 INSURANCE. The Company has fire and casualty insurance policies
with coverage customary for companies similarly situated to the Company. Each
such policy is in full force and effect with all premiums due thereupon paid.
3.24 BROKERS OR FINDERS. Except for a finder's fee payable to Aura
(Pvt.) Ltd., neither Ontro nor its officers or agents have incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement. Ontro will indemnify and hold Buyer and the other parties hereto
harmless from any such payment alleged to be due by or through Ontro as a result
of the action of Ontro or its officers or agents.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Ontro as follows:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Is an individual or
a corporation or other entity duly organized, validly existing and in good
standing under the laws of the State of its formation. Buyer has all requisite
power and authority to execute and deliver this Agreement, and to carry out the
provisions of this Agreement.
4.2 AUTHORIZATION; BINDING OBLIGATIONS. All action on the part of Buyer
its general partners and limited partners or persons serving similar functions
necessary for the authorization of this Agreement and the performance of all
obligations of Buyer hereunder at the Closing and the purchase and receipt of
the Common Stock has been taken or will be taken prior to the Closing. This
Agreement is a valid and binding obligation of Buyer enforceable in accordance
with its terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights, and (b) general principles of equity that
restrict the availability of equitable remedies.
4.3 DISCLOSURE. No representation or warranty of Buyer in this
Agreement omits to state a material fact necessary to make the statements herein
or therein, in light of the circumstances in which they were made, not
misleading.
4.4 BROKERS OR FINDERS. Buyer and its officers and agents have not
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement. Buyer will indemnify and hold Ontro and the other parties hereto
harmless from any such payment alleged to be due by or through Buyer as a result
of the action of Buyer or its officers or agents, except as previously agreed by
Ontro. MSK ▇▇▇
12
4.5 INVESTMENT MATTERS. The Common Stock to be issued to Buyer
hereunder will be acquired for its own account and not on behalf of any other
Person, and all such securities are being acquired by Buyer for investment
purposes only and not with a view to, or for sale in connection with, any resale
or distribution of such securities. Buyer has had the opportunity to ask
questions and receive answers from Ontro concerning Ontro, and has, to its
Knowledge, been furnished with all of the information about Ontro which it has
requested. Buyer is an "accredited investor" as defined in Rule 501(a) of the
Securities Act, and to its Knowledge has been fully appraised of all facts and
circumstances necessary to permit it to make an informed decision about
acquiring such securities, has sufficient knowledge and expertise in business
and financial matters that it is capable of evaluating the merits and risk of
the investment in such securities, and has the capacity to protect its own
interests in connection with the transactions contemplated by this Agreement.
Buyer has been advised by Ontro and understands that (a) the securities to be
issued hereunder will not be registered under any securities laws, including
without limitation, the securities laws of the United States or any other
jurisdiction, (b) such securities must be held indefinitely unless and until
they are subsequently registered or an exemption from registration becomes
available, (c) except as otherwise provided in this Agreement, Ontro is under no
obligation to register such securities, (d) the securities shall bear
appropriate restrictive legends, (e) Ontro shall have the right to place stop
transfer orders against the securities, and (f) such securities shall be
"restricted securities" under Rule 144 of the Securities Act.
SECTION 5
REGISTRATION
5.1 S-3 REGISTRATION STATEMENT. Within ninety (90) days following
receipt by Ontro of a written request from Buyer to have the Common Stock
registered Ontro shall use its Best Efforts to file and have declared effective
as soon thereafter as possible, a registration statement on Form S-3 or any
similar short-form for the purpose of registering the resale of the Common Stock
purchased pursuant to this Agreement under the Securities Act. The parties
acknowledge that this request has been made.
MSK ▇▇▇
SECTION 6
GENERAL PROVISIONS
6.1 EXPENSES. Each party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution and performance
of this Agreement and the transactions contemplated hereby, including all fees
and expenses of agents, Representatives, counsel and accountants.
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6.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity
with respect to this Agreement or the transactions contemplated hereby will be
issued, if at all, at such time and in such manner as Ontro and Buyer shall
mutually agree, subject to the requirements of applicable law.
6.3 CONFIDENTIALITY. The terms of this Agreement, as well as any
information regarding the parties hereto, including the transactions
contemplated hereby in any form, trade secrets, formulas, processes, know-how,
data, test data or results, designs, drawings, costs, efficiency rates, price
lists, financial information and any information regarding or relating to other
parties with whom either party may have agreements or other business relations
is deemed "Confidential Information" Buyer and Ontro and each of them hereby
agree to be bound by each and every term and condition set forth below. With
regard to Confidential Information (oral or written or both), Buyer and Ontro,
on their own behalf and on behalf of each and every one of their respective
partners, employees, agents and Representatives agree that such Confidential
Information shall not be disclosed or used in any manner without the express
prior written consent of Buyer and Ontro unless required by legal process or
applicable regulatory requirements. Buyer and Ontro, on their own behalf and on
behalf of each of their respective partners, employees, agents and
Representatives agree:
(a) not to use the Confidential Information except for the
sole purpose of evaluating said information in connection with the potential
transactions contemplated by this Agreement;
(b) to treat all Confidential Information with the utmost
level of security and to not disclose or exploit it in any form, directly or
indirectly, partially or completely, commercially or otherwise;
(c) to cause all parties to whom it is deemed necessary to
disclose Confidential Information to fulfill the business purpose of this
Agreement, to execute an agreement approved by all parties and containing
corresponding confidential obligations; and
(d) to not disclose the Confidential Information to others
without the express prior written consent of Buyer and Ontro.
6.4 NOTICES. All notices, consents, waivers and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by facsimile (with written confirmation of receipt), provided that a copy
is mailed by certified mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth set forth below, or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties:
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Ontro: Ontro, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Aura (Pvt.) Ltd.: Aura (Pvt.) Ltd.
C/o ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
6.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties only in the courts of the
State of California, County of San Diego, or, if it has or can acquire
jurisdiction, in the United States District Court for the Southern District of
California, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
6.6 FURTHER ASSURANCES. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
6.7 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
15
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
6.8 DELETED
6.9 ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS. No party may
assign any of its rights under this Agreement without the prior consent of the
other parties. Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy or claim under or with respect to
this Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
6.10 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
6.11 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
6.12 GOVERNING LAW. This Agreement will be governed by the laws of the
State of California without regard to conflicts of laws principles.
6.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
ONTRO, INC.
A CALIFORNIA CORPORATION
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President and Chief Executive Officer
ON BEHALF OF:
AURA PVT. LTD.
A PAKISTANI CORPORATION
By: /S/ MIR ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: Mir ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Agent
Subject to initialed changes to ss.ss.2.2,
2.3, 4.4, 5.1 and 6.8 (deleted)
17
EXHIBIT A
DISCLOSURE SCHEDULE
NONE
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