PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is made and entered into as of
the 18th day of November 2005, by and between the following:
XXXXXX XXXXXXX, an individual, and XXXXXX XXXXX, an individual,
(collectively hereinafter, the "Sellers"); and
M POWER ENTERTAINMENT INC., a Delaware corporation (hereinafter "MPWE"
or "Buyer").
W I T N E S S E T H
WHEREAS, subject to the terms and conditions of this Agreement, MPWE and
Sellers desire for MPWE to purchase from Sellers, and for Sellers to sell to
MPWE, all of the outstanding common stock of Tropical Printing LLC, a Florida
corporation (the "Tropical Stock" and "'Tropical" respectively); and
WHEREAS, the Board of Directors of MPWE deems it desirable and in the
best interests of MPWE and its stockholders that MPWE purchase the Tropical
Stock, in consideration of $450,000 to be paid in the shares of restricted
common stock of MPWE, par value $.001, to the Sellers (the "MPWE Shares");
and
WHEREAS. Sellers deem it desirable and in the best interests of Sellers
that Sellers sell the Tropical Stock to MPWE; and
WHEREAS, MPWE and Sellers desire to provide for certain undertakings,
conditions, representations, warranties, and covenants in connection with the
transactions contemplated by this Agreement; and
WHEREAS, Sellers and the Board of Directors of MPWE have approved and
adopted this Agreement, subject to the terms and conditions set forth herein;
NOW, THEREFORE. in consideration of the promises and the mutual
covenants and agreements herein contained, the parties hereto do hereby agree
as follows:
SECTION 1
DEFINITIONS
1.1 "Agreement", "Tropical", "Tropical Stock", "MPWE", "MPWE Shares",
"Sellers", "Assets", respectfully shall have the meanings defined in the
foregoing preamble and recitals to this Agreement.
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1.2 "Closing Date" shall mean 4:00 o'clock p.m., Eastern time, Tuesday,
November 22, 2005, the date on which the parties hereto shall close the
transactions contemplated herein.
1.3 "1933 Act" shall mean the Securities Act of 1933, as amended.
1.4 "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.5 "SEC Documents" shall have the meaning defined in Section 35
hereof.
1.6 "Confidential information" shall have the meaning defined in
Section 11.1 hereof.
1.7 "Assets" shall mean all equipment, real estate, proprietary assets,
goodwill, trademarks, patents, and graphics as relating to normal business.
SECTION 2
AGREEMENT FOR PURCHASE AND SALE OF TROPICAL STOCK
2.1 Substantive Terms of the Purchase and Sale of Tropical Stock.
Sellers shall sell and deliver to MPWE one hundred percent (100%) of the
issued and outstanding capital stock of Tropical in a form enabling MPWE, then
and there, to become the record and beneficial owner of said common stock,
which represents all of the issued and outstanding capital stock of Tropical.
In addition, the Seller shall cause to be sold, assigned, transferred,
conveyed and delivered to the purchaser, at the Closing Date, good and valid
title to all Assets.
2.2 Consideration Paid by MPWE
(a) Tropical Subsidiary. It is the present intention of MPWE
that, following the Closing Date, Tropical will operate as a wholly owned
subsidiary ("Tropical-Sub") of MPWE.
(b) Securities as Consideration. Buyer will issue to Xx. Xxxxxxx
$400,000 and to Xx. Xxxxx $50,000 (totaling $450,000) worth of its restricted
common stock at Closing Date. The MPWE shares shall be issued pursuant to an
exemption from registration under the 1933 Act and from registration under any
and all applicable state securities laws and the certificates representing the
MPWE shares shall bear the restrictive legend set forth in Rule 144 of the
Rules and Regulations of the 1933 Act and any appropriate legend required
under applicable state securities laws.
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(c) SEC Audit Compliance. In compliance with SEC rules
requiring a completed audit of Tropical within 60 days from the Closing Date,
Sellers agree to provide all necessary information and reasonable access to
all pertinent records and transactions as required by Buyer's auditing firm.
(d) Buyer's Right to Rescind. All MPWe securities issued to
Sellers fro the acquisition of Tropical will remain under the Sellers'
possession and control until a satisfactory audit has been obtained. In the
event that a satisfactory audit is not provided to Buyer within 120 days from
the Closing Date, Buyer may at its option rescind this Agreement. In the
event of a rescission, Buyer and Sellers shall return all securities
associated with the contemplated acquisition within 30 days from the date of
notification from Buyer that it has made such an election.
(e) Audit/Legal Fees. Buyer shall pay all audit fees associated
with the acquisition of Tropical. Buyer and Sellers shall pay their own legal
fees
(f) Stock Options. During the term of their employment Xx.
Xxxxxxx and Xx. Xxxxx shall be eligible to receive options to purchase Buyer's
common stock. The number of options and the conditions for such options shall
be set by Buyer's Board of Directors Compensation Sub Committee.
2.3 Additional Consideration Paid by Tropical
(a) No less than one percent (1%) of Tropical's gross revenues
shall be paid monthly to MPWE in consideration of overhead costs related to
regular business practices. Payment shall be due and payable on the 25th of
the following month. The percentage will increase in accordance with
Tropical's performance and ability to pay.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF MPWE
MPWE, in order to induce the Sellers to execute this Agreement and to
consummate the transactions contemplated herein, represents and warrants to
Sellers as follows:
3.1 Organization and Qualification. MPWE is a corporation duly
organized, validly existing, and in good standing under the laws of Delaware,
with all requisite power and authority to own its property and to carry on its
business as it is now being conducted. MPWE is duly qualified as a foreign
corporation and in good standing in each jurisdiction where the ownership,
lease, or operation of property or the conduct of business requires such
qualification, except where the failure to be in good standing or so qualified
would not have a material, adverse effect on the financial condition or
business of MPWE.
3.2 Ownership of MPWE. MPWE is authorized to issue two classes of
stock of up to 275,000,000 common shares, $0.001 par value per share, of which
approximately 43,889,688 are currently issued and outstanding, and up to
10,000,000 preferred shares, $0.001 par value per share of which there are
232,276 shares outstanding.
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3.3 Authorization and Validity. MPWE has the requisite power and is
duly authorized to execute and deliver and to carry out the terms of this
Agreement. The board of directors and stockholders of MPWE have taken all
action required by law, its Articles of Incorporation and Bylaws, both as
amended, or otherwise to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
subject to the satisfaction or waiver of the conditions precedent set forth in
Section 8 of this Agreement. Assuming this Agreement has been approved by all
action necessary on the part of Sellers, this Agreement is a valid and binding
agreement of MPWE.
3.4 No Defaults. MPWE is not in default under or in violation of any
provision of its Articles of Incorporation or Bylaws, both as amended. MPWE is
not in default under or in violation of any material provision of any
indenture, mortgage, deed of trust, lease, loan agreement, or other agreement
or instrument to which it is a party or by which it is bound or to which any
of it is subject, if such default would have a material, adverse effect on the
financial condition or business of MPWE. MPWE is not in violation of any
statute, law, ordinance, order, judgment, rule, regulation, permit, franchise,
or other approval or authorization of any court or governmental agency or body
having jurisdiction over it or any of its properties which, if enforced, would
have a material, adverse effect on the financial condition or business of
MPWE. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated herein, will conflict with or
result in a breach of or constitute a default under any of the foregoing or
result in the creation of any lien, mortgage, pledge, charge, or encumbrance
upon any asset of MPWE and no consents or waiver hereunder are required to be
obtained in connection therewith in order to consummate the transactions
contemplated by this Agreement.
3.5 SEC Documents: Financial Statements. As of the Closing, MPWE has
filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the
1934 Act (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). As of their respective dates, the SEC Documents substantially
complied in all material respects with the requirements for the 1934 Act and
the rules and regulations of the SEC promulgated hereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective date, the financial statements
of MPWE included in the SEC Documents substantially complied as to form in all
material respects with applicable accounting requirements and published rules
and regulations of the SEC with respect thereto. Such financial statements
have been prepared in substantial accordance with generally accepted
accounting principles, consistently applied, during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of MPWE as
of the dates thereof and the results of its operation and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or on behalf of
MPWE to the Sellers which is not included in the SEC Documents, including,
without limitation, contains any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they are or were made, not
misleading. Neither the Company nor any of its officers, directors, employees
or agents has provided the Sellers with any material, non-public information.
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3.6 Absence of Certain Changes. Since the most recent filing by MPWE
with the SEC, there has been no material adverse change and no material
adverse development in the business, properties, operations, financial
condition, results of operations or prospects of MPWE. MPWE has not taken any
steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does MPWE have any knowledge or reason to
believe that its creditors intend to initiate involuntary bankruptcy
proceedings.
3.7 Documents. The copies of all agreements and other instruments that
have been delivered by MPWE to Sellers are true, correct, and complete copies
of such agreements and instruments and include all amendments thereto.
3.8 Disclosure. The representations and warranties made by MPWE
herein and in any schedule, statement, certificate, or document furnished or
to be finished by MPWE to Sellers pursuant to the provisions hereof or in
connection with the transactions contemplated hereby, taken as a whole, do not
and will not as of their respective dates contain any untrue statements of a
material fact, or omit to state a material fact necessary to make the
statements made not misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, in order to induce MPWE to execute this Agreement and to
consummate the transactions contemplated herein, represent and warrant to MPWE
as follows
4.1 Organization and Qualification. Tropical is a Florida corporation,
duly organized, validly existing, and in good standing under the laws of the
State of Florida with all requisite power and authority to own its property
and assets and to carry on its business as it is now being conducted.
4.2 Ownership of Tropical Stock. Tropical is authorized to issue one
class of stock of up to 1,000 shares of common stock, $1,000 par value per
share. At the date hereof, of such authorized shares, 1,000 shares of common
sock have been validly issued and are outstanding (for documentation, see
Attachment), fully paid, and nonassessable. All of the shares of common stock
are owned of record and beneficially by the Sellers, who have not granted any
options, warrants, or other securities exercisable or convertible into or any
calls, commitments, or agreements of any kind relating to any issued equity
securities of Tropical. There are no options, warrants, or other securities
exercisable or convertible into or any calls, commitments, or agreements of
any kind relating to any unissued equity securities of Tropical by or on
behalf of Tropical.
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4.3 Authorization and Validity. The Sellers have the requisite power
and are duly authorized to execute and deliver and to carry out the terms of
this Agreement. Assuming this Agreement has been approved by all action
necessary on the part of MPWE, this Agreement is a valid and binding agreement
of Sellers.
4.4 Tropical Financial Statements
(a) Tropical financial statements (as prepared by Sellers as the
management of Tropical) for the current fiscal year ending December 31, 2004
and YTD 2005 and any notes thereto, fairly and accurately present the
financial condition and the results of operations, income, expenses, assets,
liabilities, changes in shareholders' equity, and cash flows of Tropical,
consistent with the past practices of Tropical (collectively, "Tropical
Financial Statements").
(b) Tropical Financial Statements are capable of being examined,
audited and reported upon with an unqualified opinion expressed by an
independent certified public accountant and will comply with the requirements
and standards set forth in Regulation S-X, as promulgated and adopted by the
Securities and Exchange Commission.
4.5 Conduct and Transactions of Tropical. Since inception, Tropical
has conducted the operations of its business consistent with past practice and
used its best efforts to maintain and preserve its properties, key employees,
and relationships with customers and suppliers. Without limiting the
foregoing, during such period Tropical did not:
(a) Incur any liabilities except to maintain its facilities and
assets in the ordinary course of its business;
(b) Declare or pay any dividends on any shares of capital stock
or make any other distribution of assets to the holders thereof;
(c) Issue, reissue, or sell, or issue options or rights to
subscribe to, or enter into any contract or commitment to issue, reissue, or
sell, any shares of capital stock or acquire or agree to acquire any shares of
capital stock;
(d) Amend its Articles of Incorporation or Bylaws or merge or
consolidate with or into any other corporation or sell all or substantially
all of its assets or change in any manner the rights of its capital stock or
other securities;
(e) Pay or incur any obligation or liability, direct or
contingent, except in the ordinary course of its business;
(f) Incur any indebtedness for borrowed money, assume, guarantee,
endorse, or otherwise become responsible for obligations of any other party,
or make loans or advances to any other party except in the ordinary course of
its business;
Page 6 of 14
(g) Increase in any manner the compensation, direct or indirect,
of any of its officers or executive employees; or
(h) Make any capital expenditures except in the ordinary course
of its business.
4.6 Compensation Due Employees. As of the Closing Date, Tropical will
not have any outstanding liability for payment of wages, payroll taxes,
vacation pay (whether accrued or otherwise), salaries, bonuses, pensions,
contributions under any employee benefit plans or other compensation, current
or deferred, under any labor or employment contracts, whether oral or written,
based upon or accruing in respect of those services of employees of Tropical
that have been performed prior to the Closing Date. As of the Closing Date,
Tropical will not have any unfunded, contingent or other liability under any
defined benefits plan or any other retirement or retirement-type plan, whether
such plan(s) are to continue or are thereupon terminated, except for the
normal on-going obligations for future contributions under such plan(s) not
related, generally or specifically, to the termination of such plan(s)
4.7 Union Agreements and Employment Agreements. Tropical is not a
party to any union agreement or any organized labor dispute. Tropical has no
written or verbal employment agreements with any of its employees.
4.8 Contracts and Leases. Tropical is not a party to any written or
oral leases, commitments, or any other agreements except as attached to this
Agreement, copies of which to be supplied to MPWE on or before closing. On
the Closing Date, Tropical has paid or performed in all material respects all
obligations required to be paid or performed by any of them to such date and
will not be in default under any document, contract, agreement, lease or other
commitment to which any of them is a party. Tropical shall provide to MPWE a
list of all material contracts, purchase orders, etc. that might have a
material influence on revenues for year 2004, 2005 and 2006.
4.9 Insurance. There are no policies of insurance in effect, for
equipment in place.
4.10 Liabilities. Tropical has no liabilities, except as those incurred
in the normal course of business, which liabilities are also set forth in
relevant detail on Tropical Financial Statements.
4.11 Proprietary Rights. Tropical owns or is duly licensed to use such
trademarks and copyrights as are necessary to conduct its business as
presently conducted. The conduct of business by Tropical does not, to the best
knowledge of Sellers, infringe upon the trademarks or copyrights of any third
pasty.
4.12 Internal Controls. Since inception:
(a) There have been no transactions except in accordance with the
general or specific authorization of management of Tropical.
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(b) Tropical has devised and maintained systems of internal
accounting controls and procedures (the "Internal Controls") that were
designed with the objective of providing reasonable assurance that (1)
Tropical transactions were properly authorized; (2) Tropical assets were
safeguarded against unauthorized or improper use; and (3) Tropical
transactions were properly recorded and reported, all (i) to permit the
preparation of Tropical Financial Statements in conformity with generally
accepted accounting principles and (ii) to maintain accountability for assets
and expenses.
(c) Tropical's chief executive officer has evaluated Tropical
Internal Controls, which evaluation included a review of the controls'
objectives and design and the controls' implementation by Tropical and its
management. In the course of the Internal Controls' evaluation, Tropical
management sought to identify data errors, controls problems, or acts of fraud
and to confirm that appropriate corrective action, including process
improvements, were being undertaken. Other personnel in Tropical organization
also evaluated the Internal Controls on an ongoing basis. Among other matters,
Tropical has sought to determine whether there were any "significant
deficiencies" or "material weaknesses" in the Internal Controls, or whether
Tropical had identified any acts of fraud involving personnel who had a
significant role in the Internal Controls. For purposes of this subsection,
"significant deficiencies" means "reportable conditions" (control issues that
could have a significant adverse effect on the ability to record, process,
summarize and report financial data in the financial statements) and "material
weakness" means a particularly serious reportable condition where the Internal
Controls do not reduce to a relatively low level the risk that misstatements
caused by error or fraud may occur in amounts that would be martial in
relation to Tropical Financial Statements and not be detected within a timely
period by employees in the normal course of performing their assigned
functions. Tropical has also sought to deal with other Internal Controls
matters in the evaluation thereof, and, in each case if a problem was
identified, Tropical considered what revision, improvement and/or correction
to make in accord with its on-going procedures.
4.13 Contracts and Agreements. Tropical is not a party to any material
contracts or agreements in respect of the operation of its business other than
those listed attached herein.
4.14 Minute Books. The minute books of Tropical contains true,
complete, and accurate records of all meetings and other corporate actions of
its shareholders and Board of Directors, and true and accurate copies thereof
have been delivered to counsel for MPWE prior to the Closing Date. The
signatures appearing on all documents contained therein are the true
signatures of the persons purposing to have signed the same.
4.15 Litigation. There are no actions, suits, proceedings, orders,
investigations, or claims (whether or not purportedly on behalf of Tropical)
pending against or affecting Tropical at law or in equity or before or by any
federal, state, municipal, or other governmental department, commission,
board, agency, or instrumentality, domestic or foreign, nor has any such
action, suit, proceeding, or investigation been pending or threatened in
writing during the 12-month period preceding the date hereof which, if
adversely determined, would materially and adversely affect the financial
condition of Tropical which seeks to prohibit, restrict, or delay the
consummation of the stock sale contemplated hereby. Tropical is not operating
under or subject to, or in default with respect to, any order, writ,
injunction, or decree of any court or federal, state, municipal, or other
governmental department, commission, board, agency, or instrumentality.
Page 8 of 14
4.16 Taxes. At the Closing Date, all tax returns required to be filed
with respect to the operations or assets of Tropical prior to Closing Date
have been correctly prepared in all material respects and timely filed, and
all taxes required to be paid in respect of the periods covered by such
returns have been paid in full or adequate reserves have been established for
the payment of such taxes. Tropical tax returns are true and complete in all
material respects. No audits by federal or state authorities are currently
pending or threatened.
4.17 No Defaults. Tropical is not in default under or in violation of
any provision of its Articles of Incorporation or Bylaws. Tropical is not in
default under or in violation of any material provision of any indenture,
mortgage, deed of trust, lease, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of
its assets no subject, if such default would have material, adverse effect on
the financial condition or business of Topical. Tropical is not in violation
of any statute, law, ordinance, order, judgment, rule, regulation, permit,
franchise, or other approval or authorization of any court or governmental
agency or body having jurisdiction over it or any of its properties which, if
enforced, would have a material, adverse effect on the financial condition or
business of Tropical. Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated herein, will conflict
with or result in a breach of or constitute a default under any of the
foregoing or result in the creation of any lien, mortgage, pledge, charge, or
encumbrance upon any asset of Tropical and no consents or waivers thereunder
are required to be obtained in connection therewith in order to consummate the
transactions contemplated by this Agreement.
4.18 Documents. The copies of all agreements and other instruments
that have been delivered by Sellers to MPWE are true, correct, and complete
copies of such agreements and instruments and include all amendments thereto.
4.19 Disclosure. The representations and warranties made by Sellers
herein and in any schedule, statement, certificate, or document furnished or
to be furnished by Tropical and/or either of Sellers to MPWE pursuant to the
provision hereof or in connection with the transactions contemplated hereby
taken as a whole do not and will not as of their respective dates contain any
untrue statements of a material fact, or omit to state a material fact
necessary to make the statements made not misleading.
4.20 Due Diligence. MPWE has completed its due diligence and is
satisfied with the data provided by Sellers' accountants; however, Seller will
cooperate in providing due diligence to MPWE, its accountants, auditors,
financiers and lenders.
4.21 Material Adverse Change. Sellers warrant and represent that there
has been no material change in the assets, holdings or sources of revenue of
the company which would adversely affect its valuation since the time of the
signing of the letter of intent between the parties on August 1, 2005 until
the closing date.
SECTION 5
INVESTIGATION: PRESS RELEASE
5.1 Investigation.
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(a) MPWE acknowledges that it has made an investigation of
Tropical to confirm, among other things, the assets, liabilities, and status
of business of Tropical and the cash position, accounts receivable,
liabilities, and mortgages in process. In the event of termination of this
Agreement, MPWE will deliver to Sellers all documents, work papers, and other
materials and all copies thereof obtained by MPWE, or on its behalf, from
Tropical or Sellers, whether obtained before or after the execution hereof,
will not use, directly or indirectly, any confidential information obtained
from Tropical or Sellers hereunder or in connection herewith, and will keep
all such information confidential and not use in any way detrimental to
Tropical or Sellers except to the extent the same is publicly disclosed by
Tropical or Sellers.
(b) Sellers acknowledge that they have made an investigation of
MPWE, which has included, among other things, the opportunity of discussions
with executive officers of MPWE, and its accountants, investment bankers, and
counsel. In the event of termination of this Agreement, Sellers will deliver
to MPWE all documents, work papers, and other materials and all copies thereof
obtained by either of them, or on behalf of either of them, from MPWE,
whether obtained before or after the execution hereof and will not use,
directly or indirectly, any confidential information obtained from MPWE
hereunder or in connection herewith, and will keep all such information
confidential and not use in any way detrimental to MPWE, except to the extent
the same is publicly disclosed by MPWE.
(c) Except in the event that any party hereto discovers in the
course of its respective investigation any breach of a representation or
warranty by the other party hereto and does not disclose it to such other
party prior to the Closing Date, no investigation pursuant to this Section 5.1
shall affect or be deemed to modify any representation or warranty made by any
party hereto.
5.2 Press Release. MPWE and Sellers shall agree with each other as to
the form and substance of any press releases and the filing of any documents
with any federal or state agency related to this Agreement and the
transactions contemplated hereby and shall consult with each other as to the
form and substance of other public disclosures related thereto; provided
however, that nothing contained herein shall prohibit either party from making
any disclosure that its counsel deems necessary.
SECTION 6
BROKERAGE
6.1 Brokers and Finders. Neither MPWE nor Sellers, or any of their
respective officers, directors, employees, or agents, have employed any
banker, finder, or financial advisor or incurred any liability for any fee or
commissions in connection with initiating the transactions contemplated
herein. Each party hereto agrees to indemnify and hold the other party
harmless against or in respect of any other commissions, finders fees, or
brokerage fees incurred or alleged to have been incurred with respect to
initiating the transactions contemplated herein as a result of any action of
the indemnifying party.
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SECTION 7
CLOSING AGREEMENTS
7.1 Closing Agreements. On the Closing Date, the following activities
shall occur, the following agreements shall be executed and delivered, and the
respective parties thereto shall have performed all acts that are required by
the terms of such activities and agreements to have been performed
simultaneously with the execution and delivery thereof as of the Closing Date:
(a) Sellers have executed and delivered documents to MPWE
sufficient then and there to transfer record and beneficial ownership to MPWE
of the Tropical Stock, consisting of an aggregate of one hundred percent
(100%) of the shares of common stock of Tropical. Such shares shall be validly
issued, the total shares outstanding, not pledged, totally unencumbered, fully
paid, and non-assessable.
(b) MPWE shall have delivered to Sellers the MPWE shares in the
name of XXXXXX XXXXXXX and XXXXXX XXXXX as follows: an aggregate of four
hundred fifty thousand dollars ($450,000) of MPWE Common Stock of which four
hundred thousand dollars ($400,000) of MPWE Common Stock will be in the name
of XXXXXX XXXXXXX and fifty thousand dollars ($50,000) of MPWE Common Stock
will be in the name of XXXXXX XXXXX. The MPWE shares shall be issued
pursuant to an exemption from registration under the 1933 Act and from
registration under any and all applicable state securities laws and the
certificates representing the MPWE shares shall bear the restrictive legend
set forth in Rule 144 of the Rules and Regulations of the 1933 Act and any
appropriate legend required under applicable state securities laws. The
exact number of shares to be issued shall be determined in each case by taking
$450,000 and dividing that sum by the average closing price for the five day
trading period immediately prior to Closing Date. The closing price on
11/14/2005 was $.05, 11/15/2005 was $.043, 11/16/2005 was $.042, 11/17/2005
was $.043 and on 11/18/2005 was .045 for the five-day average of $.045.
(c) XXXXXX XXXXXXX and XXXXXX XXXXX shall have mutually executed
an Employment Agreement with Tropical-Sub whereby XXXXXX XXXXXXX will have
agreed to continue to act as the President of Tropical-Sub and XXX XXXXX as
the Vice President each for a twenty-four month-period of time and thereafter
by mutual agreement for additional twelve month periods of time and to not
compete with MPWE or any of its subsidiaries or affiliates for a period of
thirty-six months from the Closing Date as worded in the individual
agreements.
SECTION 8
CONFIDENTIALITY
8.1 MPWE acknowledges that its principals have, and will, acquire
information and materials from Sellers and/or Tropical and knowledge about the
technology, business, products, strategies, customers, clients and suppliers
of Tropical and that all such information, materials and knowledge acquired,
are and will be trade secrets and confidential and proprietary information of
Tropical (collectively, such acquired information, materials, and knowledge
are the "Confidential Information"). MPWE, itself and behalf of its
principals, covenants to hold such Confidential Information in strict
confidence, not to disclose it to others or use it in any way, commercially or
otherwise, except in connection with the transactions contemplated by this
Agreement and not to allow any unauthorized person access to such Confidential
Information.
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8.2 The Confidential Information disclosed by the Sellers and/or
Tropical to MPWE shall remain the property of the disclosing party.
8.3 MPWE, and its principals, shall maintain in secrecy all
Confidential Information disclosed to them by Sellers and/or Tropical using
not less than reasonable care. MPWE, and its principals, shall not use or
disclose in any manner to any third party any Confidential Information without
the express written consent of the Sellers or until the Confidential
Information is:
(a) publicly available or otherwise in the public domain; or
(b) rightfully obtained by any third party without restriction;
or
(c) disclosed by Sellers and/or Tropical without restriction
pursuant to judicial action, or government regulations or other requirements.
8.4 The obligations of MPWE under Sections 8.1, 8.2, and 8.3 of this
Agreement shall expire upon the sooner of the Closing or one year from the
date hereof as to Confidential Information consisting of commercial and
financial information and two years from the date hereof as to Confidential
Information consisting of technical information. For this purpose, technical
information shall include without limitation all developments, inventions,
innovations, designs, discoveries, trade secrets and know-how, whether or not
patentable or copyrightable.
SECTION 9
NATURE AND SURVIVAL OF REPRESENTATIONS, ETC.
9.1 All statements contained in any certificate or other instrument
delivered by or on behalf of MPWE or Sellers pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be deemed
representations and warranties by such party. All representations and
warranties and agreements made by MPWE or Sellers in this Agreement or
pursuant hereto shall survive the Closing Date hereunder until the expiration
of the 12th month following the Closing Date,
SECTION 10
MISCELLANEOUS
10.1 Notices. Any notices or other communication required or permitted
hereunder shall be sufficiently given if written and delivered in person or
sent by registered mail, postage prepaid, addressed as follows:
to Sellers: XXXXXX XXXXXXX and XXXXXX XXXXX
Tropical Printing LLC
0000X Xxxxxx Xxxx Xxxxx
Xxxxxxxx XX 00000
to MPWE: M Power Entertainment Inc.
Attn: Xxxx Xxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
or such other address as shall be furnished in writing by the appropriate
person, and any such notice or communication shall be deemed to have been
given as of the date so mailed.
10.2 Time of the Essence. Time shall be of the essence of this
Agreement
10.3 Costs. Each party will bear the costs and expenses incurred by
it in connection with this Agreement and the transactions contemplated hereby.
10.4 Cancellation of Agreement. In the event that this Agreement is
canceled by mutual agreement of the parties or by failure of any of the
conditions precedent set forth in Paragraphs 8, 9, and 10, neither Sellers nor
MPWE shall be entitled to any damages, fees, costs, or other consideration,
except as set forth in 2.2 (b) above.
10.5 Entire Agreement and Amendment. This Agreement and documents
delivered at the Closing Date hereunder contain the entire agreement between
the parties hereto with respect to the transactions contemplated by this
Agreement and supersedes all other agreements, written or oral, with respect
thereto. This Agreement may be amended or modified in whole or in part, and
any rights hereunder may be waived only by an agreement in writing duly and
validly executed in the same manner as this Agreement or by the party against
whom the waiver would be asserted. The waiver of any right hereunder shall
be effective only with respect to the matter specifically waived and shall not
act as a continuing waiver unless it so states by its terms.
10.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party.
10.7 Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of Texas.
10.8 Attorney's Fees and Costs. In the event any party to this
Agreement shall be required to initiate legal proceedings to enforce
performance of any term or condition of this Agreement, including but not
limited to, the interpretation of any term or provision hereof, the payment of
moneys or the enjoining of any action prohibited hereunder, the prevailing
party shall be entitled to recover such sums, in addition to any other damages
or compensation received, as will reimburse the prevailing party for
reasonable attorneys' fees and court costs incurred on account thereof
(including, without limitation, the costs of any appeal) notwithstanding the
nature of the claim or cause of action asserted by the prevailing party.
Page 13 of 14
10.9 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs,
executors, personal representatives, successors, and assigns, as the case may
be.
10.10 Access to Counsel. Each party hereto acknowledges that each has
had access to legal counsel of her or its own choice and has obtained such
advice therefrom, if any, as such party has deemed necessary and sufficient
prior to the execution hereof. Each party hereto acknowledges that the
drafting of this Agreement has been a joint effort and any ambiguities or
interpretative issues that may arise from and after the execution hereof shall
not be decided in favor or, or against, any party hereto because the language
reflecting any such ambiguities or issues may have been drafted by any
specific party or its counsel.
10.11 Captions. The captions appearing in this Agreement are inserted
for convenience of reference only and shall not affect the interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
M POWER ENTERTAINMENT INC.
By: /s/ Xxxx Xxxxxxx
----------------------------
Xxxx Xxxxxxx
President & CEO
TROPICAL PRINTING LLC
/s/ Xxxxxx Xxxxxxx
By: _______________________________
Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxx
By: _______________________________
Xxxxxx Xxxxx
