STOCK PURCHASE AGREEMENT
MEDIQUIK SERVICES, INC.
a Delaware corporation;
MIRAQUEST VENTURES LLC,
an Idaho limited liability company;
Dated as of June 30, 2000
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TABLE OF CONTENTS
Page
SECTION 1. PURCHASE AND SALE OF SECURITIES 1
1.1 Authorization 1
1.2 Sale and Purchase 1
1.3 Payment of Purchase Price 1
1.4 Closing 2
1.5 Closing Obligations of the Company 2
1.6 Closing Obligations of MiraQuest 2
1.7 Adjustment to Number of Shares and Units 3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4
2.1 Organization, Good Standing and Qualification 4
2.2 Corporate Power 4
2.3 Subsidiaries 4
2.4 Authorization 5
2.5 Capitalization 5
2.6 Valid Issuance of Securities 6
2.7 Governmental Consents 6
2.8 Exempt Offering 6
2.9 Compliance with Laws; Permits 7
2.10 Compliance With Other Instruments 7
2.11 Related-Party Transactions 8
2.12 Agreements; Action 8
2.13 Title to Property and Assets; Leases 9
2.14 Changes 9
2.15 Intellectual Property 11
2.16 Litigation 11
2.17 Tax Returns and Payments 12
2.18 Labor Agreements and Actions 12
2.19 Employee Benefit Plans 12
2.20 Rights of Registration and Voting Rights 13
2.21 Insurance 13
2.22 Corporate Documents 13
2.23 No Conflict 13
2.24 Financial Statements 14
2.25 Employees 14
2.26 Full Disclosure 15
2.27 Investment Company Act 15
2.28 Purchase Entirely for Own Account 15
2.29 Disclosure of Information 15
2.30 Restricted Securities 16
2.31 Legends 16
2.32 Knowledge and Experience 16
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2.33 Principal Office 17
SECTION 3. REPRESENTATIONS AND WARRANTIES OF MIRAQUEST 17
3.1 Authorization 17
3.2 Consents 17
3.3 Purchase Entirely for Own Account 17
3.4 Disclosure of Information 18
3.5 Restricted Securities 18
3.6 Legends 18
3.7 Accredited Investor 19
3.8 Principal Office 19
SECTION 4. CONDITIONS OF MIRAQUEST'S OBLIGATIONS AT CLOSING 19
4.1 Representations and Warranties True; Performance of
Obligations 19
4.2 Qualifications; Legal Investment 19
4.3 Related Agreements 19
4.4 Filing of Series A Preferences 19
4.5 Proceedings and Documents 20
4.6 Approval of Board of Directors and Shareholders 20
4.7 Opinion of Company's Counsel 20
4.8 Board of Directors 20
4.9 Chief Financial Officer 20
4.10 Approval of Budget 20
4.11 Employment Agreements 20
4.12 Approval by Accountant 21
SECTION 5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING 21
5.1 Representations and Warranties 21
5.2 Performance 21
5.3 Qualifications; Legal Investment 21
5.4 Related Agreements 21
5.5 Consulting Agreements 21
SECTION 6. ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES 21
6.1 Confidentiality 21
6.2 Access 22
6.3 Notification 22
6.4 No Negotiation 22
6.5 Future Funding for the Company 23
6.6 Public Company Status 23
6.7 MiraQuest Business Combination 23
6.8 Transfer of Preferred Shares 23
6.9 NASDAQ Requirements 23
6.10 Investment Company Act 23
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SECTION 7. TERMINATION 23
7.1 Termination Events 23
7.2 Effect of Termination 24
SECTION 8. GENERAL PROVISIONS 24
8.1 Governing Law 24
8.2 Survival 24
8.3 Successors and Assigns 25
8.4 Entire Agreement 25
8.5 Severability 25
8.6 Amendment and Waiver 25
8.7 Delays or Omissions 25
8.8 Notices 26
8.9 Expenses 26
8.10 Attorneys' Fees 26
8.11 Counterparts and Execution 26
8.12 Titles and Subtitles 26
8.13 Pronouns 27
8.14 Broker's Fees 27
8.15 Corporate Securities Law 27
8.16 Publicity 27
1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of June 30, 2000, by and between MEDIQUIK SERVICES, INC., a Delaware
corporation (the "Company"), and MIRAQUEST VENTURES LLC, an Idaho limited
liability company ("MiraQuest").
R E C I T A L S:
A. Whereas, the Company desires to sell and issue shares of its
common stock and shares of its Series A preferred stock, no par value (the
"Series A preferred stock," and together with the common stock, the
"Securities").
B. Whereas, MiraQuest desires to purchase the Company's common stock
and Series A preferred stock, and the Company desires to issue and sell its
common stock and Series A preferred stock to MiraQuest, in each case on the
terms and conditions set forth herein.
A G R E E M E N T :
NOW, THEREFORE, the parties agree as follows:
SECTION 1. PURCHASE AND SALE OF SECURITIES
1.1 AUTHORIZATION. On or prior to the Closing (as defined in
Section 1.4 below), the Company shall have authorized the sale and issuance of
its common stock and its Series A preferred stock to MiraQuest. The Series A
preferred stock shall have the rights, preferences, privileges and restrictions
set forth in the attached EXHIBIT A (the "Series A Preferences").
1.2 SALE AND PURCHASE. Subject to the terms and conditions of
this Agreement, at the Closing MiraQuest shall buy and the Company shall sell
and issue 7,048,996 shares of its common stock, 513,266 shares of its Series A
preferred stock, and a warrant for the purchase of 650,000 shares of common
stock to MiraQuest for a total consideration to the Company of up to $35,538,632
(the "Purchase Price").
1.3 PAYMENT OF PURCHASE PRICE. The Purchase price shall be
paid to the Company as follows:
(a) up to 7,251,600 membership units of MiraQuest (the "Units")
pursuant to Section 1.7; and
(b) up to $2,000,000 cash as follows:
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(i) at the time of Closing, cancellation of loans to the
Company from MiraQuest made before the signing of this Agreement in the amount
of $800,000 (the specific loan dates and amounts are 3-28-00: $100,000, 4-3-00:
$100,000, 4-10-00: $100,000, 4-17-00: $100,000, 5-22-00: $100,000, 6-16-00:
$100,000, 6-23-00: $100,000, 6-27-00: $100,000).
(ii) at the time of Closing, cancellation of the loan to the
Company from MiraQuest made at the signing of this Agreement in the amount of
$300,000;
(iii) at the time of Closing, cancellation of any loans
to the Company from MiraQuest made after the signing of this Agreement in an
amount not to exceed $900,000 (such loans shall be made in the sole discretion
of MiraQuest and only after approval by MiraQuest of the Company's budget).
1.4 CLOSING. The closing of the purchase and sale of the
Securities (the "Closing") shall take place no later than August 15, 2000, at
the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Rock & Fields, ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
10th Floor, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. (local time), or at
such other time and place as the Company and MiraQuest mutually agree, orally or
in writing (the date of the Closing is hereinafter referred to as the "Closing
Date").
1.5 CLOSING OBLIGATIONS OF THE COMPANY.
At the Closing, the Company will deliver to MiraQuest:
(a) subject to Section 1.7, stock certificates representing the
7,048,996 shares of the Company's common stock and 513,266 shares of the
Company's Series A preferred stock being purchased by MiraQuest pursuant to this
Agreement;
(b) a warrant to purchase 650,000 shares of the Company's common
stock at an exercise price of $0.60 per share with a term of ten years and no
vesting period;
(c) duly executed copies of the Voting Agreement and the
Noncompetition Agreement (as defined in Section 2.4 below); and
(d) a certificate executed by the President and Chief Executive
Officer of the Company representing and warranting to MiraQuest that each of the
Company's representations and warranties in this Agreement was accurate in all
respects as of the date of this Agreement and is accurate in all respects as of
the Closing Date as if made on the Closing Date; and
(e) the other documents and instruments referenced in Section 4
hereof.
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1.6 CLOSING OBLIGATIONS OF MIRAQUEST. At the Closing, MiraQuest
will deliver to the Company:
(a) certificate(s) representing the Units;
(b) duly executed copies of the Related Agreements;
(c) a certificate executed by the chief executive officer of
MiraQuest to the effect that, except as otherwise stated in such certificate,
each of MiraQuest's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is accurate in all
respects as of the Closing Date as if made on the Closing Date; and
(d) the other documents and instruments referred to in Section 5
hereof.
1.7 ADJUSTMENT TO NUMBER OF SHARES AND UNITS.
(a) REDUCED NUMBER OF SHARES AND UNITS TO BE HELD IN TRUST. The
number of shares of the Company's common stock and Series A preferred stock
delivered to MiraQuest at Closing and the number of membership units of
MiraQuest to be delivered to the Company at Closing shall be reduced if the
loans to the Company from MiraQuest that are canceled at Closing pursuant to
Section 1.3(b)(iii) are less than $900,000. The amount of such reduction shall
be determined by the following steps:
(1) subtract the amount of loans canceled at Closing
pursuant to Section 1.3(b)(iii) from $900,000 (the
"Resultant");
(2) divide the Resultant from Step (1) by $2,000,000 (the
"Percentage");
(3) multiply the Percentage from Step (2) by the number of
shares of the Company's common stock and Series A
preferred stock being purchased by MiraQuest pursuant
to Section 1.2; and
(4) multiply the Percentage from Step (2) by the number of
membership units of MiraQuest being delivered to the
Company pursuant to Section 1.2.
The number of shares calculated in Step (3) shall be held, in trust,
by the Company's attorney and the number of membership units calculated in Step
(4) shall be held, in trust, by MiraQuest's attorney.
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(b) PAYMENT OF ADDITIONAL AMOUNTS. If and when MiraQuest pays
the amount calculated in Step (1) to the Company, the Company's attorney shall
deliver to MiraQuest the shares it is holding in trust and MiraQuest's attorney
shall deliver to the Company the membership units of MiraQuest it is holding in
trust. If MiraQuest pays less than the full amount calculated in Step (1), then
the Company's attorney shall deliver a number of shares and MiraQuest's attorney
shall deliver a number of membership units in the same proportion that the
amount paid bears to the amount calculated in Step (1).
(c) TERMINATION OF TRUST ARRANGEMENTS. The trust arrangement
with the Company's attorney for holding the shares and with MiraQuest's attorney
for holding the membership units calculated in Section 1.7(a) shall terminate on
December 31, 2000. If there are any shares being held by the Company's attorney
at that time, such shares shall be returned to the Company and if there are any
membership units being held by MiraQuest's attorney at that time, such
membership units shall be returned to MiraQuest.
1.8 TREATMENT OF LOANS TO THE COMPANY FROM MIRAQUEST. In the
event that Closing does not occur by August 15, 2000, or such other date as
agreed to by the parties, then the loans to the Company from MiraQuest
referenced in Section 1.3 shall not be canceled but shall be converted into the
Company's common stock and warrants as follows: for each $2 of monies loaned to
the Company by MiraQuest, MiraQuest shall receive (i) one share of common stock
of the Company plus (ii) two warrants, which shall vest immediately, to purchase
two shares of common stock of the Company with an exercise price of $2 per
warrant.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to MiraQuest that, except
as set forth on the Schedule of Exceptions attached hereto as EXHIBIT B
specifically identifying the relevant Section hereof, which exceptions shall be
deemed to be representations and warranties as if made hereunder, the following
statements are true and correct:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware. The Company has all requisite corporate
power and authority to own and operate its properties and assets and to carry on
its business as now conducted and as proposed to be conducted. The Company is
duly qualified, is authorized to transact business, and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its current
activities and 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 and properties.
The Company has furnished MiraQuest or counsel to MiraQuest with copies of its
Articles of Incorporation and Bylaws (the "Charter Documents"). Said copies of
the Charter Documents are true, correct and complete and contain all amendments
as of the Closing Date.
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2.2 CORPORATE POWER. The Company will have at the Closing Date
all requisite legal and corporate power (i) to execute and deliver this
Agreement and the Related Agreements, (ii) to sell and issue the Securities
hereunder, and (iii) to carry out the provisions of this Agreement, the Related
Agreements, and the Series A Preferences.
2.3 SUBSIDIARIES. The Company does not currently own or
control, directly or indirectly, any interest in any other corporation,
association or other business entity. The Company is not a participant in any
joint venture, partnership or other similar arrangement.
2.4 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the Voting Agreement in
the form attached hereto as EXHIBIT C (the "Voting Agreement"), the Agreements
Not to Compete in the form attached hereto as EXHIBIT D (the "Noncompetition
Agreements"), the Warrant Agreement granted to MiraQuest in form and substance
acceptable to the Company and MiraQuest granting MiraQuest a warrant to purchase
up to 650,000 shares of common stock at an exercise price of $0.60 with a term
of ten years and no vesting period (the "Warrant," and collectively with the
Noncompetition Agreements and the Voting Agreement, the "Related Agreements"),
the performance of all obligations of the Company hereunder and thereunder and
the authorization, issuance (or reservation for issuance), sale and delivery of
the Securities, has been taken or will be taken prior to the Closing, and this
Agreement and the Related Agreements, when executed and delivered by the
Company, will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective terms except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally, as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
2.5 CAPITALIZATION.
(a) Immediately prior to the Closing, the authorized capital
stock of the Company will consist of: (i) 50,000,000 shares of common stock, of
which 6,392,633 shares are issued and outstanding, and (ii)1,000,000 shares of
Preferred Stock, all of which are designated "Series A preferred stock," and
none of which are issued and outstanding. No other shares of capital stock are
outstanding. All issued and outstanding shares of the Company's common stock
have been duly and validly authorized and issued and are fully paid and are
nonassessable. The Securities have the rights, preferences, privileges and
restrictions as set forth in EXHIBIT A. A true, correct and complete list of
all holders of equity securities of the Company, and all holders of options,
warrants and convertible preferred securities exercisable for or convertible
into any equity securities of the Company, together with their respective
holdings as of the date hereof is attached as EXHIBIT F to this Agreement (the
"Stockholder List").
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(b) The Company has reserved the following: (i) 10,265,328
shares of common stock for issuance upon the conversion of the Series A
preferred stock in accordance with the Series A Preferences; (ii) 0 shares of
common stock reserved for issuance under the Company's Employee Stock Option
Plan; and (iii) 650,000 shares of common stock reserved for issuance under the
Warrant. Except as set forth in the Schedule of Exceptions and in EXHIBIT E,
other than as may be granted hereunder or pursuant to the Related Agreements,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal), convertible securities, proxy or
shareholder agreements, or agreements of any kind for the purchase or
acquisition from or by the Company of any of its securities. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participating or similar rights with respect to the securities of the Company.
Nothing set forth in the Schedule of Exceptions represents any anti-dilution or
similar adjustments required as a result of the consummation of the transactions
contemplated hereby or otherwise.
(c) All outstanding securities of the Company were issued in
compliance with applicable Federal and state securities laws. Other than
pursuant to the Related Agreements, the Company is not a party or subject to any
agreement or understanding and, to the best of the Company's knowledge, there is
no agreement or understanding between any persons and/or entities that affects
or relates to the voting or giving of written consents with respect to any
security or by a director of the Company.
2.6 VALID ISSUANCE OF SECURITIES. The Securities that are
being issued to MiraQuest hereunder, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly issued, fully paid and nonassessable and free of restrictions
on transfer other than restrictions on transfer under this Agreement and
applicable Federal and state securities laws. Based in part upon the
representations of MiraQuest in this Agreement and subject to the provisions of
Section 2.7 below, the Securities will be issued in compliance with all
applicable Federal and 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 Securities to any person or
persons so as to bring the sale of the Securities by the Company within the
registration provisions of the Securities Act of 1933, as amended (the
"Securities Act") or any state securities laws. Except as set forth in
Section 2.7 below, 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 Series A preferred stock or 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 a timely
manner.
2.7 GOVERNMENTAL CONSENTS. No consent, approval, order, or
authorization of, or designation, declaration, registration, qualification or
filing with, any local, state or Federal governmental authority is required on
the part of the Company in connection with the Company's valid execution,
delivery and performance of this Agreement and the Related Agreements, and the
transactions contemplated hereby and thereby, including without limitation,
7
its offer, sale and issuance of the Securities, except (i) the filing of the
Series A Preferences with the Secretary of State of the State of Delaware,
and (ii) the filing of Form 8-K with the Securities and Exchange Commission
("SEC"), and (iii) any other post-closing filing as may be required under SEC
Regulation D or any applicable state "Blue Sky" securities laws, all of which
the Company will file within the time periods required.
2.8 EXEMPT OFFERING. Assuming the accuracy of the
representations and warranties of MiraQuest contained in Section 3 hereof, and
completion of any filings required under Section 2.7(iii) above, the offer, sale
and issuance of the Securities will be exempt from the registration and
prospectus delivery requirements of Section 5 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 "Blue Sky" and securities laws, rules and regulations.
Neither the Company nor any authorized agent acting on its behalf will take any
action hereafter that would cause the loss of such exemptions.
2.9 COMPLIANCE WITH LAWS; PERMITS. To the best of its
knowledge, the Company is not in violation, in any material respect, of any
applicable statute, law, ordinance, 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 and
assets, including without limitation, regulations concerning hazardous or toxic
wastes, materials or substances, pollutants or contaminants and tax statutes and
regulations, the violation of which would materially and adversely affect the
business, assets, liabilities, condition (financial or otherwise) operations or
prospects of the Company. The Company has all franchises, permits, licenses and
any similar authority ("Governmental Authorizations") necessary for the conduct
of its business as now being conducted by it, the lack of which or failure to
obtain would materially and adversely affect the business, properties, condition
(financial or otherwise), operations or prospects 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. All such Governmental
Authorizations are in full force and effect, and no violations have been
communicated in writing to the Company in respect of same and no proceeding is
pending or, to the Company's knowledge, threatened toward the revocation of any
such franchises, licenses, permits and any similar authority. The Schedule of
Exceptions contains a complete and accurate list of each Governmental
Authorization that is held by the Company or that otherwise relates to the
business of, or to any of the assets owned or used by, the Company. The listed
Governmental Authorizations collectively constitute all of the Governmental
Authorizations necessary to permit the Company to lawfully conduct and operate
its business in the manner it currently conducts and operates the business and
to permit the Company to own and use its assets in the manner in which it
currently owns and uses the assets.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not, and
will not by virtue of entering into and performing this Agreement, the Related
Agreements or the transactions contemplated hereunder and thereunder,
respectively, be in violation or default in any material respect of any
provision of its Charter Documents or of any term or provision of
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any mortgage, indenture, contract, lease agreement or instrument to which it
is a party or by which it is bound or of any judgment, order, writ, decree or
to its knowledge, statute, rule, regulation or restriction applicable to the
Company which could have a material adverse effect on the business, assets,
liabilities, condition (financial or otherwise), operations or prospects of
the Company. The execution, delivery and performance by the Company of this
Agreement and the Related Agreements, the issuance and sale of the Securities
pursuant hereto and pursuant to the Series A Preferences, and the
consummation of the other transactions contemplated hereby and thereby, will
not, with or without the passage of time or giving of notice, result in any
such violation or be in conflict with or constitute a default under any of
the above, or result in the creation of any mortgage, pledge, lien, charge,
or encumbrance upon any of the properties or assets of the Company or the
suspension, revocation, impairment, forfeiture or non-renewal of any permit,
license, authorization or approval applicable to the Company, its business or
operations, or any of its assets or properties. 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 material right under any license, permit,
contract or any other agreement.
2.11 RELATED-PARTY TRANSACTIONS. No employee, officer,
stockholder or director of the Company or member of his or her immediate family
is indebted to the Company, nor is the Company indebted (or committed to make
loans or extend or guarantee credit) to any of them, other than (i) for payment
of salary for services rendered, (ii) reimbursement for reasonable expenses
incurred on behalf of the Company, and (iii) for other standard employee
benefits generally made available to all employees (including stock option
agreements outstanding under any stock option plan approved by the Board of
Directors of the Company). To the best of the Company's knowledge, none of such
persons has any direct or indirect ownership 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 that competes with the Company, except
that employees, stockholders, officers or directors of the Company and members
of their immediate families may own stock in publicly-traded companies that may
compete with the Company. To the best of the Company's knowledge, no officer,
director or stockholder or any member of their immediate families is, directly
or indirectly, interested in any material contract with the Company (other than
such contracts as relate to any such person's ownership or capital stock or
other securities of the Company). The Company is not a guarantor, surety or
indemnitor of any indebtedness of any other person, firm or corporation.
2.12 AGREEMENTS; ACTION.
(a) Except for this Agreement and the Related Agreements, or
as disclosed in the Schedule of Exceptions, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or to
9
its knowledge by which it is bound which may involve (i) obligations
(contingent or otherwise) of, or payments to, the Company in excess of
$10,000 individually or $100,000 in the aggregate (other than obligations of
or payments to the Company arising from transactions in the ordinary course
of business), or (ii) the license of any 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 or affecting 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 or sale 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) since inception, incurred any indebtedness for money
borrowed (including by way of guaranty) or any other liabilities individually in
excess of $10,000 or, in the case of indebtedness and/or liabilities
individually less than $10,000, in excess of $100,000 in the aggregate,
(iii) made any loans or advances to any person, other than ordinary advances for
travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Charter Documents, as the same have been amended, which materially and adversely
affects its business as now conducted or as proposed to be conducted, its
properties or its financial condition.
(f) The Company has not granted rights to manufacture,
produce, assemble, license, market or sell its services or products to any
other person and is not bound by any agreement that affects the Company's
exclusive right to develop, manufacture, assemble, distribute, market or sell
its services or products.
2.13 TITLE TO PROPERTY AND ASSETS; LEASES. The Company has good
and marketable title to its property and assets, and good title to its leasehold
interests and estates, in each case free and clear of all mortgages, liens,
claims, encumbrances and charges, other than (i) liens for current taxes not yet
delinquent, (ii) minor liens imposed by law and incurred in the ordinary course
of business for obligations not past due to common carriers, warehousemen,
laborers, materialmen, and the like, (iii) liens in respect of pledges or
deposits under workers' compensation laws or similar legislation, or (iv) minor
defects in title, none of which, individually or in the aggregate, materially
interferes with the Company's ownership or use of
10
such property or assets. 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.
2.14 CHANGES. Since the date of the Balance Sheet (identified
in Section 2.24 below), there has not been:
(a) Any change in the assets, liabilities, financial condition
or operating results of the Company 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 such assets, liabilities, condition
(financial or otherwise), operations or prospects of the Company;
(b) Any resignation or termination of any key officers 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;
(c) Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
surety, endorsement, indemnity, warranty or otherwise, or any mortgage, pledge,
transfer of a security interest in, created by the Company, with respect to any
of its material properties or assets, except for liens for taxes not yet due and
payable;
(d) Any waiver by the Company of a valuable right or of a
material debt owed to it;
(e) Any direct or indirect loans made by the Company to any
shareholder, employee, officer or director of the Company, other than advances
for expenses and similar items made in the ordinary course of business;
(f) Any material change in any compensation arrangement or
agreement with any employee, officer, director or shareholder;
(g) Any declaration, setting aside or payment or other
distribution in respect of any of the Company's capital stock, or any direct or
indirect redemption, purchase or other acquisition of any such stock by the
Company;
(h) 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;
(i) Any material change in or amendment to any material
contract or agreement to which the Company is a party or by which it or any of
its properties or assets are
11
bound, which materially and adversely affects the business, assets,
liabilities, condition (financial or otherwise), operations or prospects of
the Company, except as contemplated by this Agreement and the Related
Agreements;
(j) Any material change in any compensation arrangement or
agreement with any employee, officer, director or shareholder;
(k) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(l) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(m) Receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company;
(n) Any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business or which is not material to the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(o) Any other event or condition of any character that, either
individually or cumulatively, could materially and adversely affect the
business, assets, liabilities, condition (financial or otherwise), operations or
prospects of the Company; or
(p) Any agreement or commitment by the Company to do any of
the things described in this Section 2.14.
2.15 INTELLECTUAL PROPERTY. To the best of the Company's
knowledge, the Company owns or possesses sufficient title or legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
information and other proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted, without any known
infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is the Company
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 of "off the shelf" or standard products. The Company has not
received any written communications alleging that the Company has violated or
infringed or, by conducting its business as proposed, would violate or infringe
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity,
12
nor is the Company aware of any such violations. The Company is not aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company or that would conflict with the
Company's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement and the Related Agreements, nor the carrying on of
the Company's business by the employees of the Company, nor the conduct of the
Company's business as proposed will, to the best of 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, covenant or instrument 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.
2.16 LITIGATION. There is no action, suit, proceeding or
investigation pending or to the Company's knowledge, currently threatened
against the Company or its properties before any court or governmental agency,
that questions the validity of this Agreement or the Related Agreements or the
right of the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby, or which might result, either
individually or in the aggregate, in any material adverse change in the
business, assets, liabilities, condition (financial or otherwise) operations or
prospects of the Company, or any change in the current equity ownership of the
Company, nor is the Company aware that there is any basis for 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,
injunction, judgment or decree of any court or governmental agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
2.17 TAX RETURNS AND PAYMENTS. The Company has filed all tax
returns and reports as required by law. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due.
2.18 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by
or subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the knowledge of
the Company, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the knowledge of the Company, threatened, which could
have a material adverse effect on the assets, properties, financial condition,
operating results or business of the Company, nor is the Company aware of any
labor organizing activity involving
13
its employees. Each employee of the Company is employed on an at-will basis.
To its knowledge, the Company has complied in all material respects with all
applicable state and federal equal employment opportunity laws and with other
laws related to employment. To the knowledge of the Company, no employee of
the Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual
to be employed by, or to contract with, the Company because of the nature of
the business to be conducted by the Company that would have a material
adverse effect on 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 its independent contractors, will not result in
any such violation that would have a material adverse effect on the Company.
To its knowledge, the Company has not received any notice alleging that any
such violation has occurred.
2.19 EMPLOYEE BENEFIT PLANS. Except for the group insurance
programs listed in the Schedule of Exceptions, if any, the Company does not
maintain any medical, health, life, dental, short- or long-term disability,
hospitalization, accident, death benefits, or other employee benefit insurance
programs, sick leave or vacation or holiday or leave policies, profit-sharing,
401(k) or other retirement plans, or any welfare plans (within the meaning of
Section 3(1) of ERISA) for the benefit of any current or former employees, and,
except as required by law, the Company has no liability, fixed or contingent,
for health or medical benefits to any former employee.
2.20 RIGHTS OF REGISTRATION AND VOTING RIGHTS. The Company has
not granted or agreed to grant any registration rights, including piggyback
rights, to any person or entity. To the Company's knowledge, except as provided
in the Voting Agreement, no stockholder of the Company has entered into any
agreements with respect to the voting of capital shares of the Company.
2.21 INSURANCE. The Company has insurance policies with
coverage customary for companies similarly situated to the Company. The Company
has delivered to MiraQuest true and complete copies of all policies of insurance
to which the Company is a party or under which the Company, or any director of
the Company, is or has been covered at any time within the two (2) years
preceding the date of this Agreement.
2.22 CORPORATE DOCUMENTS. The books of account, minute books,
stock record books, and other records of the Company, all of which have been
made available to Buyer, are complete and correct and have been maintained in
accordance with sound business practices and the requirements of
Section 13(b)(2) of the Securities Exchange Act of 1934, as amended (regardless
of whether or not the Company is subject to that Section), including the
maintenance of an adequate system of internal controls. The Certificate of
Incorporation and Bylaws of the Company are in the form made available to
counsel for MiraQuest. The copy of the minute books of the Company made
available to MiraQuest contains minutes of all meetings
14
of directors and stockholders and all actions by written consent without a
meeting by the directors and stockholders since the date of incorporation and
reflects all actions by the directors and stockholders with respect to all
transactions referred to in such minutes accurately in all material respects.
2.23 NO CONFLICT. Except as set forth in the Schedule of
Exceptions, neither the execution and delivery of this Agreement nor the
consummation or performance of the Company's obligations under this Agreement
will, directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with, or result in a violation
of any resolution adopted by the board of directors or the stockholders of
the Company;
(b) contravene, conflict with, or result in a violation
of, or give any governmental body or other person the right to challenge any
of the transactions contemplated by this Agreement or to exercise any remedy
or obtain any relief under, (i) any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute,
or treaty or (ii) 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 to
which the Company, or any of the assets owned or used by the Company, may be
subject;
(c) contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any governmental body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Company or that otherwise
relates to the business of, or any of the assets owned or used by, the
Company;
(d) cause MiraQuest or the Company to become subject to,
or to become liable for the payment of, any tax;
(e) cause any of the assets owned by the Company to be
reassessed or revalued by any taxing authority or other governmental body; or
(f) contravene, conflict with, or result in a violation
or breach of any provision of, or give any person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any material agreement to
which the Company, or any of the assets owned or used by the Company, may be
subject.
2.24 FINANCIAL STATEMENTS. The Company has delivered to
MiraQuest: (a) balance sheets of the Company as at December 31 in each of the
years 1998 through 1999, and the related statements of income, changes in
stockholders' equity, and cash flow for each of the fiscal years then ended, and
(c) an unaudited balance sheet of the Company as at March 31,
15
2000 (the "Interim Balance Sheet") and the related unaudited consolidated
statements of income, changes in stockholders' equity, and cash flow for the
three months then ended, including in each case the notes thereto. Such
financial statements and notes fairly present the financial condition and the
results of operations, changes in stockholders' equity, and cash flow of the
Company as at the respective dates of and for the periods referred to in such
financial statements, all in accordance with GAAP, subject, in the case of
interim financial statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that, if presented, would not differ
materially from those included in the Balance Sheet); the financial
statements referred to in this Section reflect the consistent application of
such accounting principles throughout the periods involved. No financial
statements of any Person other than the Company are required by GAAP to be
included in the financial statements of the Company. Except as set forth in
the Schedule of Exceptions, the Company has no liabilities or obligations of
any nature (whether known or unknown and whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the Balance Sheet or the Interim Balance Sheet and
current liabilities incurred in the Ordinary Course of Business since the
respective dates thereof.
2.25 EMPLOYEES. Set forth in the Schedule of Exceptions is a
complete and accurate list of the following information for each employee or
director of the Company, including each employee on leave of absence or layoff
status: employer; name; job title; current compensation paid or payable and any
change in compensation since January 1, 2000; vacation accrued; and service
credited for purposes of vesting and eligibility to participate under the
Company's pension, retirement, profit-sharing, thrift-savings, deferred
compensation, stock bonus, stock option, cash bonus, employee stock ownership
(including investment credit or payroll stock ownership), severance pay,
insurance, medical, welfare, or vacation plan, other employee pension benefit
plan or employee welfare benefit plan, or any other employee benefit plan or any
director plan. No employee or director of the Company is a party to, or is
otherwise bound by, any agreement or arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement, between such employee or
director and any other person that in any way adversely affects or will affect
(i) the performance of his duties as an employee or director of the Company, or
(ii) the ability of the Company to conduct its business. To the Company's
knowledge, no director, officer, or other key employee of the Company intends to
terminate his employment with the Company.
2.26 FULL DISCLOSURE. This Agreement, the Exhibits hereto, the
Related Agreements and all other documents delivered by the Company to MiraQuest
or their attorneys or agents in connection herewith or therewith or with the
transactions contemplated hereby or thereby, taken as a whole, do not 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 in light of the circumstances under which they were
made. To the Company's knowledge, other than matters of a general economic
nature, there are not facts which (individually or in the aggregate) materially
affect the business, assets, liabilities, financial condition, prospects or
operations of the Company that have not been set forth in this
16
Agreement, the Related Agreements, the Exhibits hereto, or in other documents
delivered to MiraQuest or their attorneys or agents in connection herewith.
2.27 INVESTMENT COMPANY ACT. The Company is not, and will not
be as a result of the transaction contemplated in this Agreement, a company
required to be registered under the Investment Company Act of 1940.
2.28 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with the Company in reliance upon the Company's representation to MiraQuest,
which by the Company's execution of this Agreement, the Company hereby confirms,
that the Units to be acquired by the Company will be acquired for investment for
the Company's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that the Company has no present
intention of selling, granting any participation in, or otherwise distributing
the same, except the Company may, subject to the restrictions set forth in
Section 2.30 below, transfer the Units to a person or entity that directly or
indirectly, through one or more intermediaries, controls or is under common
control with the Company. By executing this Agreement, the Company further
represents that the Company does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Units. The Company has not been formed for the specific purpose of acquiring
the Units.
2.29 DISCLOSURE OF INFORMATION. The Company represents that it
has had an opportunity to discuss MiraQuest's business, management, financial
affairs and the terms and conditions of the offering of the Units with
MiraQuest's management and has had an opportunity to review MiraQuest's books,
records and facilities and to obtain additional information necessary to verify
the accuracy of the information supplied or to which it has access. The Company
understands that such discussions, as well as any written information delivered
by MiraQuest to the Company, were intended to describe the aspects of
MiraQuest's business that it believes to be material. The Company represents
and acknowledges that it has been solely responsible for its own "due diligence"
investigation of MiraQuest and its management and business, for its own analysis
of the merits and risks of this investment, and for its own analysis of the
fairness, desirability, and tax consequences of the terms of the investment.
The foregoing, however, does not limit or modify the representations and
warranties of MiraQuest in Section 3 of this Agreement or the right of the
Company to rely thereon.
2.30 RESTRICTED SECURITIES. The Company understands that the
Units have not been, and will not be, registered under the Securities Act, by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Company's representations as
expressed herein. The Company understands that the Units are "restricted
securities" under applicable U.S. Federal and state securities laws and that,
pursuant to these laws, the Company must hold the Units indefinitely unless they
are registered with the Securities and Exchange Commission and qualified by
state authorities, or an exemption from such registration and qualification
requirements is available. The Company acknowledges that MiraQuest has no
17
obligation to register or qualify the Units for resale. The Company further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Units, and
on requirements relating to MiraQuest that are outside of the Company's control,
and which MiraQuest is under no obligation and may not be able to satisfy.
2.31 LEGENDS. The Company understands that the Units, and any
securities issued in respect thereof or exchange therefor, may bear one or all
of the following legends:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
IN A FORM SATISFACTORY TO MIRAQUEST THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933."
(b) Any legend set forth in the Related Agreements.
(c) Any legend required by the Blue Sky laws of any
state to the extent such laws are applicable to the shares represented by the
certificate so legended.
2.32 KNOWLEDGE AND EXPERIENCE. The Company, by and through its
officers and/or directors, is knowledgeable and has substantial experience in
evaluating and investing in transactions in companies similar to MiraQuest. The
Company acknowledges that MiraQuest is in the development stage and has a
limited operating history and that an investment in the Units involves a high
degree of risk. The Company is able to fend for itself in evaluating and
consummating the transactions contemplated by this Agreement, can bear the
economic risk of its investment (including a possible complete loss of such
investment) for an indefinite period of time and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Units. The Company is entering into
this Agreement without knowledge of any public solicitation or general
advertising by MiraQuest related to the Units.
2.33 PRINCIPAL OFFICE. The principal office of the Company in
which its investment decision was made is located at the address of the Company
set forth on the Signature Page hereto.
18
SECTION 3. REPRESENTATIONS AND WARRANTIES OF MIRAQUEST
MiraQuest hereby represents and warrants to the Company that:
3.1 AUTHORIZATION. MiraQuest has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement and the Related Agreements, to purchase the Securities and to carry
out and perform MiraQuest's obligations under the terms of this Agreement and
the Related Agreements, as applicable. All action on MiraQuest's part required
for the lawful execution and delivery of this Agreement and the Related
Agreements have been or will be effectively taken prior to the Closing. Upon
their execution and delivery, this Agreement and the Related Agreements will be
valid and binding obligations of MiraQuest, enforceable in accordance with their
respective terms, except as enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally; and
(ii) general principles of equity that restrict the availability of equitable
remedies.
3.2 CONSENTS. All consents, approvals, orders, authorizations,
registrations, qualifications, designations, declarations or filings with any
governmental or banking authority on the part of MiraQuest required in
connection with the consummation of the transactions contemplated in this
Agreement and the Related Agreements have been or shall have been obtained prior
to and be effective as of the Closing.
3.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with MiraQuest in reliance upon MiraQuest's representation to the Company, which
by MiraQuest's execution of this Agreement, MiraQuest hereby confirms, that the
Securities to be acquired by MiraQuest will be acquired for investment for
MiraQuest's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that MiraQuest has no present
intention of selling, granting any participation in, or otherwise distributing
the same, except MiraQuest may, subject to the restrictions set forth in Section
3.5 below, transfer the Securities to a person or entity that directly or
indirectly, through one or more intermediaries, controls or is under common
control with MiraQuest. By executing this Agreement, MiraQuest further
represents that MiraQuest does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Securities. MiraQuest has not been formed for the specific purpose of acquiring
the Securities.
3.4 DISCLOSURE OF INFORMATION. MiraQuest represents that it
has had an opportunity to discuss the Company's business, management, financial
affairs and the terms and conditions of the offering of the Securities with the
Company's management and has had an opportunity to review the Company's books,
records and facilities and to obtain additional information necessary to verify
the accuracy of the information supplied or to which it has access. MiraQuest
understands that such discussions, as well as any written information delivered
by the Company to MiraQuest, were intended to describe the aspects of the
Company's
19
business that it believes to be material. MiraQuest represents and
acknowledges that it has been solely responsible for its own "due diligence"
investigation of the Company and its management and business, for its own
analysis of the merits and risks of this investment, and for its own analysis
of the fairness, desirability, and tax consequences of the terms of the
investment. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement
or the right of MiraQuest to rely thereon.
3.5 RESTRICTED SECURITIES. MiraQuest understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of MiraQuest's representations as
expressed herein. MiraQuest understands that the Securities are "restricted
securities" under applicable U.S. Federal and state securities laws and that,
pursuant to these laws, MiraQuest must hold the Securities indefinitely unless
they are registered with the Securities and Exchange Commission and qualified by
state authorities, or an exemption from such registration and qualification
requirements is available. MiraQuest acknowledges that the Company has no
obligation to register or qualify the Securities for resale. MiraQuest further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company that are outside of MiraQuest's
control, and which the Company is under no obligation and may not be able to
satisfy.
3.6 LEGENDS. MiraQuest understands that the Securities, and
any securities issued in respect thereof or exchange therefor, may bear one or
all of the following legends:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933."
(b) Any legend set forth in the Related Agreements.
(c) Any legend required by the Blue Sky laws of any
state to the extent such laws are applicable to the shares represented by the
certificate so legended.
3.7 ACCREDITED INVESTOR. MiraQuest is an accredited investor
as defined in Rule 501(a) of Regulation D promulgated under the Securities Act
and is familiar with the foregoing Regulation D. MiraQuest is an investor in
securities of private companies and acknowledges that the Company is in the
development stage and has a limited operating history
20
and that an investment in the Securities involves a high degree of risk.
MiraQuest is able to fend for itself in evaluating and consummating the
transactions contemplated by this Agreement, can bear the economic risk of
its investment (including a possible complete loss of such investment) for an
indefinite period of time and has such knowledge and experience in financial
or business matters that it is capable of evaluating the merits and risks of
the investment in the Securities. MiraQuest is entering into this Agreement
without knowledge of any public solicitation or general advertising by the
Company related to the Securities.
3.8 PRINCIPAL OFFICE. The principal office of MiraQuest in
which its investment decision was made is located at the address of MiraQuest
set forth on the Signature Page hereto.
SECTION 4. CONDITIONS OF MIRAQUEST'S OBLIGATIONS AT CLOSING
The obligations of MiraQuest to the Company under this Agreement are
subject to the fulfillment, on or before the Closing, of each of the following
conditions, unless otherwise waived:
4.1 REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in
Section 2 hereof shall be true and correct in all material respects as of the
Closing Date with the same force and effect as if they had been made as of the
Closing Date, and the Company shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to the
Closing.
4.2 QUALIFICATIONS; LEGAL INVESTMENT. All authorizations,
approvals, filings or permits, if any, of any governmental authority or
regulatory body of the United States, the States of Idaho, Texas, and Delaware,
or of any other state that are required in connection with the lawful sale and
issuance of the Securities pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing Date. At the time of
the Closing, the sale and issuance of the Securities shall be legally permitted
by all laws and regulations to which MiraQuest and the Company are subject.
4.3 RELATED AGREEMENTS. The Company, MiraQuest and the
necessary number of respective parties thereto shall have executed and delivered
each of the Related Agreements.
4.4 FILING OF SERIES A PREFERENCES. The documents necessary to
create the Series A Preferences shall have been filed with and, if required,
approved by the Secretary of State of the State of Delaware.
4.5 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated hereunder and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to MiraQuest,
21
and MiraQuest shall have received all such counterpart originals or certified
or other copies of such documents as they may reasonably request.
4.6 APPROVAL OF BOARD OF DIRECTORS AND SHAREHOLDERS. The
Company's Board of Directors and, to the extent necessary, shareholders shall
have approved (i) the execution and delivery of this Agreement and the Related
Agreements, (ii) the performance of the transactions contemplated herein and
therein, and (iii) an amendment to the Company's certificate of incorporation
increasing the number of the Company's authorized common stock to 50,000,000
shares and deleting Article XII. If necessary, the Company's shareholders shall
have approved the Series A Preferences. The Company shall provide to MiraQuest
certified copies of the resolutions of the Company's Board of Directors and
shareholders authorizing this Agreement and the Related Agreements, the
transactions contemplated hereby and thereby, the Series A Preferences, and the
amendment of the Company's certificate of incorporation.
4.7 OPINION OF COMPANY'S COUNSEL. MiraQuest shall have
received from the Company's legal counsel, an opinion letter, addressed to
MiraQuest, dated as of the Closing Date, in substantially the form attached
hereto as EXHIBIT G. The opinions number 3, 4, 6(i), 6(iii), 7, 8, and 9 in
Exhibit G must be given by the Company's External Securities Counsel.
4.8 BOARD OF DIRECTORS. Upon Closing, the authorized size of
the Board of Directors of the Company shall be seven (7) members, and the Board
shall consist of Grant Gables, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall be appointed directors until the next annual meeting of
stockholders after the date of this Agreement. At such stockholder meeting,
▇▇▇▇ ▇▇▇▇▇▇▇▇ shall be elected to the class of directors with a term expiring at
the second annual meeting of stockholders after the date of this Agreement and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall be elected to the class of directors with a term expiring
at the third annual meeting of stockholders after the date of this Agreement.
4.9 CHIEF FINANCIAL OFFICER. Upon Closing, the Company shall
have hired a Chief Financial Officer acceptable to MiraQuest and the Board of
Directors of the Company.
4.10 APPROVAL OF BUDGET. Upon Closing, the Company shall have
delivered to MiraQuest a one year budget by month for the Company sufficient for
the Company to execute its business plan, and MiraQuest shall have given the
Company MiraQuest's written approval of the budget.
4.11 EMPLOYMENT AGREEMENTS. Upon Closing, the Company shall
have entered into Employment Agreements acceptable to MiraQuest with each of the
Company's Chief Executive Officer, Chief Financial Officer, and President.
4.12 APPROVAL BY ACCOUNTANT. A Certified Public Accountant,
acceptable to MiraQuest, shall have reviewed the transactions contemplated by
this Agreement and all related
22
agreements and shall have determined that such transactions, when taken as a
whole, will be treated as a tax-free transaction pursuant to the Internal
Revenue Code of 1986, as amended.
SECTION 5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The obligations of the Company to MiraQuest under this Agreement are
subject to the fulfillment, on or before the Closing, of each of the following
conditions unless otherwise waived:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of MiraQuest contained in Section 3 shall be true and correct in all
material respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.
5.2 PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed by MiraQuest on or prior to the
Closing shall have been performed or complied with in all material respects.
5.3 QUALIFICATIONS; LEGAL INVESTMENT. All authorizations,
approvals, filings or permits, if any, of any governmental authority or
regulatory body of the United States, the States of Idaho, Texas and Delaware,
or of any other state that are required in connection with the lawful sale and
issuance of the Securities pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing Date. At the time of
the Closing, the sale and issuance of the Securities shall be legally permitted
by all laws and regulations to which MiraQuest and the Company are subject.
5.4 RELATED AGREEMENTS. The Company, MiraQuest and the
necessary number of respective parties thereto shall have executed and delivered
each of the Related Agreements.
5.5 CONSULTING AGREEMENTS. Upon Closing, MiraQuest shall pay
$50,000 to each of ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ as compensation for consulting
efforts on behalf of the Company. If the Company has already made loans to ▇▇▇
▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ in the amounts of $25,000 each prior to the Closing, then
MiraQuest shall assume such loans and pay only $25,000 to each of ▇▇▇ ▇▇▇▇▇▇ and
▇▇▇ ▇▇▇▇▇▇.
SECTION 6. ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES
6.1 CONFIDENTIALITY. Each party hereto agrees that, except
with the prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other party to which such party has been or
shall become privy by reason of this Agreement, discussions or negotiations
relating
23
to this Agreement, the performance of its obligations hereunder or the
ownership of Securities purchased hereunder. The provisions of this Section
6.1 shall be in addition to, and not in substitution for, the provisions of
any separate nondisclosure agreement executed by the parties hereto with
respect to the transactions contemplated hereby. Notwithstanding the
foregoing, nothing herein shall prevent any party from disclosing (i) such
information which has been publicly disclosed, (ii) such information which
becomes available to the party on a non-confidential basis from a source
other than a party hereto, provided that such source is not bound by a
confidentiality agreement with such party, (iii) information required to be
disclosed pursuant to subpoena or other court process or otherwise required
by law and (iv) such information was known to such party prior to its first
receipt from the other party. The parties acknowledge that MiraQuest may
from time to time desire to share information about the Company with
prospective investors in MiraQuest or its affiliates, and MiraQuest may do so
upon obtaining the Company's prior consent, which consent shall not be
unreasonably withheld.
6.2 ACCESS. Between the date of this Agreement and the Closing
Date, the Company will (a) afford MiraQuest and its representatives reasonable
access to the Company's senior personnel, properties, contracts, books and
records, and other documents and data during regular business hours, (b) furnish
MiraQuest and its representatives with copies of all such contracts, books and
records, and other existing documents and data as MiraQuest or its
representatives may reasonably request, and (c) furnish MiraQuest and its
representatives with such additional financial, operating, and other data and
information as MiraQuest may reasonably request; PROVIDED, HOWEVER, that any
information obtained from the Company is subject to the terms and conditions set
forth in Section 6.1 above.
6.3 NOTIFICATION. Between the date of this Agreement and the
Closing Date, the Company will promptly notify MiraQuest in writing if the
Company becomes aware of any fact or condition that causes or constitutes a
breach of any of the Company's representations and warranties as of the date of
this Agreement, or if the Company becomes aware of the occurrence after the date
of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a material breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. Should any
such fact or condition require any change to the Schedule of Exceptions to this
Agreement if such Schedule were dated the date of the occurrence or discovery of
any such fact or condition, the Company will promptly deliver to MiraQuest a
supplement to the Schedule of Exceptions specifying such change.
6.4 NO NEGOTIATION. The Company agrees that until Closing,
unless this Agreement shall have been earlier terminated pursuant to Section 7.1
hereof, the Company will, and the Company will cause its officers, agents and
other representatives to, (i) immediately terminate all existing discussions
with any person or entity (other than MiraQuest) concerning any sale of shares
of capital stock of the Company or similar transaction involving the Company (a
"Competing Transaction"); and (ii) shall not, nor shall it direct or authorize
any of its officers, agents or other representatives to, directly or indirectly,
solicit, initiate or participate in any way
24
in discussion or negotiations with, or provide any information to, any person
or entity (other than MiraQuest) concerning any Competing Transaction
involving the Company which would prevent MiraQuest's acquisition of the
Securities or consummation of the transactions contemplated hereby
substantially in accordance with the terms set forth in this Agreement.
6.5 FUTURE FUNDING FOR THE COMPANY. After closing MiraQuest
shall work in good faith with the Company's management and board of directors to
determine the amount of funding required for the Company's optimum growth, and
MiraQuest shall in good faith work to obtain or provide such funding for the
Company upon terms and conditions acceptable to MiraQuest and the Company.
6.6 PUBLIC COMPANY STATUS. Without the consent of the
Company's directors not elected by MiraQuest, MiraQuest will not take any action
to (i) cause a reverse split of the common stock before the Company's stock is
traded on the Nasdaq SmallCap Market, or (ii) cause the Company to cease to be a
publicly traded company within three years after the date of this Agreement.
6.7 MIRAQUEST BUSINESS COMBINATION. MiraQuest may not transfer
substantially all of its assets, merge with another business entity, or
otherwise effect a business combination with another entity under common control
with MiraQuest unless (i) the Units will be treated in the same fashion as the
other membership units of MiraQuest, and (ii) the ownership interests in the
other entity into which the membership units are converted have the same
registration rights as the Units.
6.8 TRANSFER OF PREFERRED SHARES. Notwithstanding any
provision of this Agreement or the Related Agreements to the contrary, MiraQuest
may transfer to ▇▇▇▇▇▇▇▇.▇▇▇, Inc. the right to participate in this transaction
to the extent of taking MiraQuest's obligation to purchase up to $500,000 worth
of the Series A preferred stock.
6.9 NASDAQ REQUIREMENTS. Upon the satisfaction of all Nasdaq
SmallCap initial listing requirements (other than the net tangible asset
requirement), and upon terms and conditions satisfactory to MiraQuest in its
sole discretion, MiraQuest shall provide the Company with sufficient capital so
that the Company has the minimum net tangible assets required under NASD Rule
4310 for initial inclusion in the Nasdaq SmallCap Stock Market. This provision
shall expire nine (9) months from the date of this Agreement and shall be used
only to satisfy the minimum net tangible asset requirement under NASD Rule 4310
and shall not be utilized for any other corporate purposes.
6.10 INVESTMENT COMPANY ACT. The Company shall take all
necessary and appropriate measures to avoid registration under the Investment
Company Act of 1940.
SECTION 7. TERMINATION
25
7.1 TERMINATION EVENTS. This Agreement may, by notice given
prior to or at the Closing, be terminated:
(a) by either the Company or MiraQuest if a material
breach of any provision of this Agreement has been committed by the other
party and such breach has not been waived;
(b) (i) by MiraQuest if any of the conditions in Section
4 has not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
MiraQuest to comply with its obligations under this Agreement) and MiraQuest
has not waived such condition on or before the Closing Date; or (ii) by the
Company, if any of the conditions in Section 5 has not been satisfied on the
Closing Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of the Company to comply with its obligations
under this Agreement) and the Company has not waived such condition on or
before the Closing Date;
(c) by mutual consent of the Company and MiraQuest; or
(d) by the Company if the Closing has not occurred
(other than through the failure of the Company to comply fully with its
obligations under this Agreement) on or before August 15, 2000, or such later
date as the parties may agree upon.
7.2 EFFECT OF TERMINATION. Each party's right of termination
under Section 7.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to Section
6.1 and Section 7.1, all further obligations of the parties under this Agreement
will terminate, except that the obligations in Section 8 will survive; PROVIDED,
HOWEVER, that if this Agreement is terminated by a party because of a breach of
the Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
26
SECTION 8. GENERAL PROVISIONS
8.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of Idaho. Each of the parties hereto hereby
submits to the nonexclusive jurisdiction of the United States District Court
for Idaho and of any Idaho court sitting in Ada County, State of Idaho for the
purposes of all legal proceedings arising out of or relating to this
Agreement, the Related Agreements or the transactions contemplated hereby and
thereby. Each of the parties hereto irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum.
8.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein or pursuant hereto shall survive any investigation made
by MiraQuest and the Closing of the transactions contemplated hereby. All
statements of fact as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties made by the Company hereunder as of the date of
such certificate or instrument.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of any Securities from time to time.
8.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Related Agreements, the Series A Preferences, and the other
documents delivered pursuant hereto or in connection herewith constitute the
full and entire understanding and agreement between the parties with regard to
the subject matter hereof and thereof and no party shall be liable or bound to
any other in any matter by any representations, warranties, covenants and
agreements except as specifically set forth herein and therein.
8.5 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and unenforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
8.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
written consent of the Company and MiraQuest.
(b) The obligations of the Company and the rights of the
holders of the Series A preferred stock and the common stock under this
Agreement may be waived only with
27
the written consent of the holders of at least a majority of each of the
common stock and the Series A preferred stock.
8.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any part, upon any breach,
default or noncompliance by another party under this Agreement, the Related
Agreements, or the Series A Preferences shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default
or noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on the Company's
and MiraQuest's part of any breach, default or noncompliance under this
Agreement, the Related Agreements, the Series A Preferences, or any waiver on
such party's part of any provision or conditions of this Agreement, the
Related Agreements, the Series A Preferences must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, the Related Agreements, Charter
Documents, the Series A Preferences, or otherwise afforded to any party, shall
be cumulative and not alternative.
8.8 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given:
(a) upon personal delivery to the party to be notified;
(b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day;
(c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or
(d) one (1) day after deposit with a nationally-recognized
overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the Company and MiraQuest at the
addresses set forth or at such other address as the Company or MiraQuest may
designate by ten (10) days' advance written notice to the other party hereto.
8.9 EXPENSES. All legal fees and other expenses incurred on behalf
of either party in connection with this Agreement, the documents referred to
herein and the transactions contemplated hereby and thereby shall be borne by
the respective parties incurring such expenses.
8.10 ATTORNEYS' FEES. In the event that any dispute among the
parties to this Agreement should result in litigation, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees,
costs and expenses of enforcing any right of such prevailing party under or
with respect to this Agreement, including without limitation, such
28
reasonable fees and expenses of attorneys and accountants, which shall
include, without limitation, all fees, costs and expenses of appeals.
8.11 COUNTERPARTS AND EXECUTION. 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, shall be deemed to
constitute one and the same instrument. Any counterpart may be delivered by
facsimile; PROVIDED, HOWEVER, that attachment of such counterpart to this
Agreement shall constitute the representation and warranty of the person
delivering such signature that such person has full power and authority to
attach such signature and to deliver this Agreement. Any facsimile signature
shall be replaced with an original signature as promptly as practicable.
8.12 TITLES AND SUBTITLES. The titles of the Sections and
subsections of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.13 PRONOUNS. All pronouns contained herein and any variations
thereof shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the parties hereto may require.
8.14 BROKER'S FEES. Each party represents that it neither is nor
will be obligated for any broker's or finder's fee or commission in connection
with this transaction. MiraQuest agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of
a broker's or finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which MiraQuest or any of its
officers, employees or representatives is responsible. The Company agrees to
indemnify and to hold harmless MiraQuest from any liability for any commission
or compensation in the nature of a broker's or finder's fee (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company or any of its officers, employees or representatives is
responsible.
8.15 CORPORATE SECURITIES LAW. THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES LAWS OF THE STATES OF IDAHO, TEXAS, OR
DELAWARE, NOR APPROVED OR DISAPPROVED BY THE DIRECTOR OF THE DEPARTMENT OF
FINANCE OF THE STATE OF IDAHO, NOR HAS THE DIRECTOR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
8.16 PUBLICITY. No announcement in a press release, advertisement,
professional or trade publication, mass marketing materials or otherwise to
the general public relating to the investment transaction contemplated by this
Agreement shall be made by either the Company or MiraQuest without the other
parties' prior consent, except as required by law.
29
[Signature Page Follows]
30
The parties have executed this Stock Purchase Agreement as of the
date first written above.
COMPANY:
MEDIQUIK SERVICES, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------------
Name ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Title CEO
-------------------------------------------
ADDRESS FOR NOTICE:
----------------------------
----------------------------
MIRAQUEST:
MIRAQUEST VENTURES LLC
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------------
Name ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
Title CEO
-------------------------------------------
ADDRESS FOR NOTICE:
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Tel. No.: 208/▇▇▇-▇▇▇▇
Facsimile No.: 208/424-9638