AGREEMENT FOR THE ISSUANCE, SALE AND PURCHASE
OF COMMON STOCK
OF ERLY INDUSTRIES, INC.
This Agreement for Issuance, Sale and Purchase of Common Stock of Erly
Industries, Inc, dated as of the 12th day of September, 2000 (the "Agreement")
is made by and between Xxxxxx Consulting Group, Inc., a Nevada corporation
("Purchaser") and Erly Industries, Inc., a California corporation (the
"Company"),and provides as follows,
1. Agreement for the Issuance, Sale and Purchase of Shares. Subject to the
terms and conditions of this Agreement, the Purchaser hereby agrees to purchase
from the Company on September 12th, 2000 (the "Closing Date"), at a price of One
Hundred Twenty Thousand and No/100 ($120,000.00) Dollars (The "Purchase Price",
being $0.012989948 per share), 9,237,912 shares (the "Shares") of the common
stock, par value $0.01 per share, of the Company (the "Common Stock").
2. Escrow. 'The parties hereto acknowledge and agree that Shares will be
issued by the Company from its authorized but unissued shares of Common Stock,
The Purchaser shall deliver, at the Closing (as defined below), the Purchase
Price, by wire transfer in immediately available funds. It is contemplated that
both the Shares and the Purchase Price shall be held by an escrow agent in a
suitable trust account until such time as all terms and conditions of this
Agreement, and all obligations of the parties hereto, have, been fulfilled and
satisfied. Unless otherwise specifically agreed upon by the parties hereto and
memorialized in a separate written agreement, any and all costs associated with
this engagement of said escrow agent and/or the establishment and utilization of
send trust account shall be borne by the Purchaser.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
a. Corporate Existence and Power. The Company is a corporation duly
organized and validly existing under the laws of the State of Calidornia
with full corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and thereunder.
b. Due Authorization. The Company has full power and authority to
execute, deliver and perform this Agreement and to carry out the
contemplated transaction contemplated hereby and thereby have been duly and
validly authorized by all be necessary corporate action of the Company and
constitute the valid and binding obligations of the Company enforceable
against the Company in accordance with its terms.
c. Conflict With Instruments, Governmental Consents and Approvals.
(i) The execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby will not (A)
violate or result in any breach of any of the terms or conditions of,
or constitute a default under, the Articles of Incorporation or
By-Laws of the Company or (B) result in -any violation of any order,
writ, injunction or decree. of any court, administrative agency or
governmental body.
(ii) The execution, delivery and performance of this Agreement by
the Company do not and will not (A) require any consent, approval,
authorization or other order of, action by, filing with or
notification to any federal, state, local or foreign government,
governmental, regulatory or administrative authority, agency or
commission of any court, tribunal or judicial or arbitrary body,
except for such filings as may be necessary with the Securities and
Exchange Commission (the "SEC") to report the execution by the Company
of this Agreement, or (B) violate or conflict with, or permit the
cancellation of or constitute a default under any agreement to which
the Company is a party.
d. Capitalization of the Company. The authorized capital stock of the
Company consists of 15,000,000 shares of Common Stock and 6,000 shares of
preferred stock, par value $100 per share (the "Preferred Stock"), As of
the date hereof, 5,762,088 shares of Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable.
None of the outstanding shares of Common Stock was issued in violation any
preemptive rights. No shares of Preferred Stock are issued or outstanding.
e. Bankruptcy Completed. On Augus 9, 1999 , the U.S. Bankruptcy Court
in and for the Southern District of Texas, Corpus Christi Division,
rendered in Order Confirming Debtors' and ERLY Creditors' Committee Joint
Plan of Reorganization as Modified, wherein the Company was discharged of
all debts that were dischargeable pursuant to 11 U.S.C, ss. 1141 and
pursuant to the terms of the Debtors and ERLY Creditors' Committee Joint
Plan of Reorganization as Modified.
f. Subsidiaries.The Company is the direct or indirect owner of 100% of
the outstanding capital stock of the following subsidiaries (the
"Subsidiaries"): Chemonics Industries, Inc., Chemonics International, Inc.,
Erly Juice, Inc., Beverage Source, Inc., Watch- Edge International, Inc.
("Watch-Edge").
g. Majority Ownership of Common Stock. Upon its purchase of the Shares
as Contemplated hereby, the Purchaser shall own a majority of the total
number of Shares of Common Stock of the Company that are issued and
outstanding immediately upon consumation of the transaction contemplated by
this Agreement.
h Preparation and Filing of Annual Report on Form 10-K and
Eligibility_for Quotation on the OTCBB. Because of the Bankruptcy
Proceedings (as defined in Section 4d(i)), the Company has to date neither
prepared nor filed with the SEC Annual Reports on Form 10-K for each of the
fiscal years ended March 31, 1998 ,and 1999, and the Shares of the
Companies Common Stock - are not presently eligible for quotation on the
OTC Bulletin Board" (the "OTCBB"). The Purchaser shall: (i) prepare and
file any and all quarterly and annual SEC reports necessary to bring the
Company current; and: (ii) engage the services of a Market Maker in order
that the Shares of the Company's Common Stock may become eligible for
quotation on the OCTBB.
i. Corporate Records. It is understood and acknowledged that numerous
Corporate Documents will be transferred to the ERLY and WEI Creditors'
Limited Partnership, as the successor in interest and assignee of ERLY
Industries, Inc. and assignee of its creditors, c/o Xx. Xxxxx Van Meter,
Manager, ERLY and WEI Creditors' Limited Partnership, Navigant Consulting,
0000 Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx, 00000-0000, and Xx. Xxxxxx
Xxxx Xxxxxxx, Attorney at Law, 0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxxx
Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, on or about Scptember 7, 2000, which
date is prior to the time of the Closing. Pursuant to an agreement reached
between the Company and the ERLY and WEI Creditors' Limited Partnership, as
evidenced by those certain correspondence dated August 29, 2000, and
September 6, 2000, the Company shall have access to any ERLY-related
documents previously on-site in Baton Rouge, Louisiana, on an on-going
basis following the transfer of said documents to the ERLY and WEI
Creditors' Limited Partnership in Houston, Texas. Said agreement between
the Company and the ERLY and WEI Creditors' Limitedd Partnership shall
remain in effect following the transaction contemplated herein, thus
allowing the Purchaser the same access to said Corporate Documents to the
extent that said Corporate Documents exist, including specifically, but not
limited to:
(i) Certificates/Articles of Incorporation
(a) Amendments
(b) Unusual provisions re quorums, voting, approvals,
etc.
(ii) Minutes
(a) Shareholders
(b) Board of Directors
(c) Committees of Board o Directors
(iii) Capital Structure
(a) Authorized shares
(b) Issued shares
(c) List and copies of options/warrants,
convertible/exchangeable securities, preemptive rights, etc.
with respec to the Company or any subsidiary.
(d) Stock transfer records, including list of
transactions during last three years for holders of over 5%
of any class of securities.
(e) List and copies of agreements by and among
shareholders and/or the Company related to its stock, stock
purchase or repurchase agreements, voting trust agreements,
or agreements related to the sale, purchase, transfer,
registration, redemption or voting or issuing of any stock
or other equity interest.
(f) List and copies of acquisition or purchase,
reorganization, consolidation, amalgamation, sale or merger
agreements (whether relating to assets or stock) previously
entered into or currently in effect.
(iv) Management
(a) Members of Board of Directors
(b) Members of committees of Board of Directors
(c) Remuneration of Directors
(d) Officers and other persons holding senior
management positions; description of responsibilities and
brief biography for each,
(e) Remuneration of officers and other persons holding
senior management positions.
Affiliations among officers, directors, shareholders, creditors,
suppliers, .and other business counterparties.
(g) Signatories of the Company; proxies granted.
4. Representation and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows:
a. Corporate Existence, Etc. The Purchase is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Nevada and is duly authorized, qualified and
licensed under all applicable laws, regulations, ordinances and
orders of public authorities to carry on its business.
b. Due Authorization, The Purchaser has full power and
authority to execute, deliver and perform this Agreement and to
carry out the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and-agreements related
hereto, and the transaction contemplated hereby have duly and
validly authorized by all necessary corporate actions of the
Purchaser. This Agreement has been duly and validly executed and
delivered by the Purchaser, and constitutes the valid and binding
obligation of the Purchaser enforceable against the Purchaser, in
accordance with its terms.
c. Conflict With Other Instruments, Governmental Consents
and Approvals.,
(i) The execution and delivery of this Agreement and
the consummation of the transaction contemplated hereby will
not (A) violate or result in any breach of any of the terms
or conditions of, or constitute a default under, the
Articles of Incorporation or By-Laws of the Purchaser or (B)
result in any order, writ, injunction or decree of any
court, administrative agency or governmental body.
(ii) The execution, delivery and performance of this
Agreement by the Purchaser do not and will not (A) require
any consent, approval, authorization or other order of,
action by, filing with or notification to any federal,
state, local or foreign government, governmental, regulatory
or administrative authority, agency or commission of any
court, tribunal or judicial or arbitral body, or (B) violate
or conflict with, or permit the cancellation of or
constitute a default under any agreement to which the
Purchaser is a party.
d. Securities Laws Representations.
(i) The Purchaser has received and carefully read are
audited consolidated balance sheet of the Company as of
August 20, 1999, which reflects that the Company has no
assets. The Purchaser recognizes that the Company and
Watch-Edge have previously filed a voluntary petition of
reorganization under Chapter 11 of the U. S. Bankruptcy
Code, (the "Bankruptcy Proceedings") in the U.S. Bankruptcy
Court for the Southern District of Texas, Corpus Christi
Division (the "Bankruptcy Court"). The Bankruptcy Court, on
August 9, 1999, confirmed the Company's Joint Plan of
Reorganization, will became effective on August 20, 1999.
Pursuant to the Confirmation Order issued by the Bankruptcy
Court, all property of the, Company and its subsidiaries
became vested in the ERLY and WEI Creditors' Limited
Partnership for the benefit of the Company's creditors and,
as a result, The Company retained no assets, other than the
capital stock in the Subsidiaries. The Purchaser also
understands and acknowledges that an investment in the
Company involves significant risk including the risk that
the Purchaser will lose its entire investment.
(ii) The Purchaser is acquiring the Shares with the
understanding that the Company is a "shell" with sufficient
assets to cover outstanding liabilities, and no operations.
(iii) The parties hereto acknowledge and agree that
while the Company's shares of Common Stock have been
previously registered With the SEC pursuant to Section 12(g)
of tho Securities Exchange Act of 1934, as amended, the
Company has not filed certain reports with the SEC because
of the Bankruptcy Proceedings, and as a result, its shares
of Common Stock were delisted from the Nasdaq ,Stock Market,
and are not presently eligible for quotation on the OTCBB.
(iv) The Purchaser has been furnished materials
relating to the Company, its business and financial
condition and any other matter which it has requested and
its representatives have been afforded the opportunity to
ask questions and receive answers concerning the terms and
conditions of the issuance and sale of the shares hereby and
to obtain any additional information which the Company
possesses or can acquire without unreasonable effort or
expense.
(v) The Company has answered all inquiries that the
Purchaser's representatives have made of it concerning the
Company, its business, and financial condition, or any other
matter relating to the operation of the Company and the
issuance and sale of the Shares.
(vi) The Purchaser is an "accredited investor" within
the means of Rule 501(a) of Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"),
The Purchaser has such knowledge and experience in financial
and business matters to enable it to utilize the information
made available to it in connection with the issuance of the
Shares, to evaluate the merits and risks of the prospective
investment, and to make an informed investment decision with
respect thereto.
(vii) The Purchaser (A) has adequate means of providing
for its current needs and possible contingencies, (B) has no
need for liquidity in this investment, (C) is able to bear
the economic risks of its investment in the Shares, and (D)
at the present time, can afford a complete loss of such
investment.
(viii) The Purchaser is purchasing the Shares for its
own account, for investment, and not for distribution,
assignment or resale to others, and no other person has any
direct or indirect beneficial interest in such Shares.
(ix) The undersigned understands that (A) there is and
will be no market for the Common Stock of the Company, (B)
the sale of the Shares has not been and will not be
registered under the Securities Act in reliance of the
exemption for non-public offerings provided by Section 4(2)
of the Securities Act and Regulation D promulgated
thereunder and must be held indefinitely unless they are
subsequently registered under the Securities Act or an
exemption from such registration is available; (C) the
Company is under no obligation to register the Shares on
behalf of the Purchaser or to assist it in complying with
any exemption. from registration, and (D) the Shares may not
be sold pursuant to Rule 144 promulgated by the SEC pursuant
to the Securities Act unless all of the conditions of such
Rule are met.
(x) The Purchaser understands that no Federal or State
agency has
passed upon the Shares, or made any finding or determination
as to the fairness of the investment or any recommendation
or endorsement of the Shares, The Purchaser will not
transfer the Shares without registering or qualifying the
same under applicable state securities laws unless such
transfer is exempt under such laws.
(xi) All information which the Purchaser has provided
to the Company concerning itself, its financial position,
and its knowledge of financial and business matters,
including all information contained herein, is true and
complete as of the date hereof, and if there should by any
adverse change in such information prior to the closing of
the sale of the Shares, the Purchaser will immediately
provide the Company with accurate and complete information
concerning any such change.
5. Indemnification. The Purchaser agrees to indemnify and hold harmless
the Company, its officers, directors, employees, shareholders, attorneys and
affiliates and any person acting on behalf of the Company, from and against any
and all damage, loss, liability, cost, and expense (including attorneys' fees)
which any of them may incure by reason of the failure by the Purchaser to
fulfill any of the terms or conditions of this Agreement, or by reason of any
breach of the representations and warranties made by the Purchaser herein. All
representations, warranties an covenants contained in this Agreement, and the
indemnification contained in this paragraph 5, shall survive tile closing of the
sale of the Shares.
6. Compliance with Section 4(2). The Purchaser acknowledges and agrees
that the following restrictions and limitations are applicable to its purchase
of the Shares which are being sold to it in reliance on the exemption from
registration contained in Section 4(2) of the Securities Act:
a. The Shares may not be sold, pledged, hypothecated or otherwise
transferred unless they are registered under the Securities Act and applicable
state securities laws or are exempt therefrom.
b. A legend to the following effect will be placed on any
certificates representing the Shares:
"THE SECURITIES EVIDENCED BY THE CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR APPLICABLE STATE LAW AND NO INTEREST THEREIN MAY
BE SOLD,. DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE' STATE
SECURITIES LAWS OR (2) THIS CORPORATION RECEIVES AN OPINION OF COUNSEL
(WHICH MAY BE COUNSEL TO THE COMPANY) SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED."
c. Stop transfer instructions to the transfer agent, if any,
of the Shares have been or will be placed with respect to the Shares so as to
restrict resale, pledge, hypothexation or other transfer thereof, subject to the
provisions hereof, including the provisions of the legend referred to in
subparagraph above for as long as shares are delisted.
7. Other Agreements.
a. Directors' and Officers' Indemnification. The Purchaser
agrees that the provisions of the Articles of Incorporation and By-Laws of the
Company with respect to indemnification will not be amended, repealed or
otherwise modified for a period of six years from the Closing Date in any manner
that would adversly affect the rights there under of individuals who immediately
prior to the Closing were directors, officers, employees or agents of the
Company or any of its subsidiaries, unless such modification is required by law.
b. Election of Directors. The Company covenants and agrees, in
accordance with its Articles of Incorporation and By-Laws, to cause the members
of its Board of Directors, effective immediately prior to the Closing, to (i)
increase the authorized number of directors from five (5) to six (6), and (ii)
fill the vacancy caused by the increase in the authorized number of directors by
electing the Purchaser's designee, Xxxxxxx X. Xxxxxx (the "Purchaser Director'),
as a new director of the Company. Immediately upon the effectiveness of the
Closing (ii) the Company agrees that the members of the Board of Directors of
the Company, other than the Purchaser Director, and all officers of the Company
shall resign, effective immediately at such time and. (iii) the Purchaser agrees
to cause the Purchaser Director, on behalf of the Company, to accept such
resignations, In accordance with Article III, Section 4 of the Company's
By-Laws, The Purchaser Director, as the Company's sole remaining director, shall
be entitled to elect new directors to fill the vacancies caused by such
resignations.
c. Release of Claims. The Purchaser covenants and agrees to
cause the Purchaser Director, concurrently with the Closing aiid immediately
following the resignation of the directors as set forth in Section 7b, to
release on behalf of the Company any and all claims, demands, causes of action
and the like that the Company may have against any of the directors and officers
of the Company who have resigned pursuant to Section 7b. Such release of claims
to be in writing and in form and substance satisfactory to such former officers
and directors.
d. Use of Purchase Price and Cash on Hand. Upon receipt by the
Company of the Purchase Price, the liabilities will be zero (-0-), The Company
agrees to, and the Purchaser covenants and agrees to cause the Company to,
utilize both the Purchase Price and any Cash on hand for the payment of any
liabilities of the Company in existence at the time of the Closing, and for such
other purposes in the sole discretion and as directed by the five (5) directors
and officers of the Company who resign concurrently With the Closing.
8. Conditions of Obligations of the Purchaser to Close. The obligations
of the Purchaser to consummate the transaction contemplated hereby shall be
subject to the fulfillment of each of the following conditions; (i) the approval
by the Purchaser's shareholders of this Agreement and the transactions
contemplated hereby; (ii) the representations and warranties of the Company
contained in this Agreement shall have been true and correct as of the date they
were deemed to have been made and shall be true and correct as of the Closing
Date with the same force and effect as if made as of the Closing Date (iii) the
covenants and agreements in this Agreement to be complied with by the Company
on, before, or concurrent with the Closing shall have been complied with and the
Purchaser shall have received a certificate from the Company to that effect (iv)
no action shall have been commenced or threatened by or before any governmental
authority against the Purchaser or the Company seeking to restrain or adversely
alter the transaction contemplated hereby or which is likely to render it
impossible or unlawful to consummate the transaction contemplated by the
Agreement. (v) the Purchaser shall have received certified extracts of
resolutions duly adopted by the Board of Directors and all officers of the
Company; and (vi) the present members of the Company's Board of Directors and
all officers of the Company and all officers and directors of the Subsidiaries,
if any, shall have submitted their resignations, and such resignations have
become effective as contemplated by Section 7b
9. Conditions of Obligations of the Company to Close. The obligations of
the Company to consummate the transaction contemplated hereby shall be subject
to the fulfillment of each of the following conditions: (i) the approval by the
Company's Board of Directors of this Agreement and the transactions contemplated
hereby; (ii) the representations and warranties of the Purchaser contained in
this Agreement shall have been true and correct as of the date they were deemed
to have been made as of the Closing Date; (iii) the covenants and agreements in
the Agreement to be complied with by the Purchaser or, before, or concurrent
with the Closing, shall have complied with the Company shall have received a
certificate from the Company to that effect; (iv) no action shall have commenced
or be threatened by or before any governmental authority against the Company or
the Purchaser seeking to restrain or adversely alter the transaction
contemplated hereby or which is likely to render it impossible or unlawful to
consummate the transaction contemplated by this Agreement (v) the company shall
have received certified extracts of resolutions duly adopted by the Board of
Directors of the Purchaser; and (vi) the present members of the Company's Board
of Directors and all officers of the Company and all officers and directors of
the Subsidiaries, if any, shall have submitted their resignations, and such
resignations have become effective as contemplated by Section 7b.
10. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing"), shall occur on the Closing Date, or such earlier or
later date as the parties may agree, by facsimile and wire transfer, or
otherwise as the parties may agree,
11. Publicity. The Purchasers shall not make or cause to be made any
press release or Public announcement in respect of this Agreement or the
transaction contemplated hereby or otherwise communicate with any news media
without prior notification to, and approval by, the Company.
12. Entire Agreement; Modification. This Agreement constitutes the
entire agreement among the parties hereto with respect to the- subject matter
hereof, and neither this Agreement nor any provisions hereof shall be waived,
changed, discharged, or eliminated except by an instrument in writing signed by
both parties.
13. Notices. Any notice, demand, or other communication which any party
hereto in may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, postage prepaid, in the United
States mail, registered or certified mail, addressed to, in the case of the
Company, 0000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx Xxxxx, Xxxxxxxxx 00000,
Attention,, Xxxxxxx X. Xxxxxx, and in the case of the Purchaser, 268 West 000
Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx, 00000, Attention, Xxxxxxx X. Xxxxxx, or
(b) delivered personally at such addresses.
14. Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors, legal representatives
and assigns.
15. Counterparts. This Agreement may be executed in one or more
counterparts, all of which when taken together shall constitute one and the same
instruments
16. Severability. If any term or other provision of this Agreement is
declared by a court of competent jurisdiction to be invalid, all other terms and
provisions of this Agreement shall, nevertheless, remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party.
17. Assignability, This Agreement may not be assigned by the Purchaser
without the prior written consent of the Company.
18. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Louisiana.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date set forth herein above.
PURCHASER:
XXXXXX CONSULTIUNG GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
Federal Taxpayer Identification Number and
Address of Principle Place of Business of the
Purchaser:
Federal Taxpayer I.D. Number 00-0000000
000 Xxxx 000 Xxxxx Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
THE COMPANY
ERLY INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
Federal Taxpayer Identification Number and
Address of Principle Place of Business of the Company
Federal Taxpayer I.D. Number 00-0000000
VIII Xxxxxx Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
