Exhibit 10.1
Share Exchange Agreement
SHARE EXCHANGE AGREEMENT
DATED AS OF AUGUST 23, 2002
by and among
BitzMart, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
and
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
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AGREEMENT AND PLAN OF SHARE EXCHANGE
This AGREEMENT AND PLAN OF SHARE EXCHANGE (the "Plan" and/or
"Agreement") by and among ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. ("Acquirer"), a Nevada
corporation, and BitzMart, Inc., a Colorado corporation ("BITZMART") and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, President of BITZMART ("▇▇▇▇▇▇▇▇▇") is made this 23rd day of
August 2002.
RECITALS
A. The Boards of Directors Acquirer and BITZMART have determined that
it is in the best interests of their respective shareholders for Acquirer to
acquire BITZMART.
B. In furtherance of such acquisition, the Boards of Directors of both
companies have unanimously approved the acquisition of BITZMART by Acquirer by
an exchange of BITZMART shares for Acquirer shares (the "Exchange"), and have
resolved to recommend that their respective shareholders approve the Exchange,
subject to the terms and conditions contained herein.
C. The parties intend that the Exchange shall qualify as a tax-free
reorganization with the meaning of Section 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended (the "Code"), and a share exchange under Section
▇-▇▇▇-▇▇▇ of the Colorado Business Corporation Act. It is the intention of the
parties hereto that, immediately following consummation of the exchange of the
BITZMART Shares pursuant to this Agreement, Acquirer shall own all of the
outstanding shares of capital stock of BITZMART, and the BITZMART shareholders,
in combination with any other persons transferring property to Acquirer in
exchange for common stock of Acquirer pursuant to transactions contemplated by
this Agreement, shall own, immediately after the completion of such
transactions, stock constituting control of Acquirer within the meaning of
Section 368(c) of the Code.
D. Each party to this Plan desires to make certain representations,
warranties and agreements in connection with the Exchange and also to prescribe
various conditions thereto.
AGREEMENT AND PLAN
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants set forth below, Acquirer and BITZMART and ▇▇▇▇▇▇▇▇▇ agree as follows:
SHARE EXCHANGE
1.1 THE EXCHANGE. On the Effective Date, as defined in Section 3.1,
BITZMART and Acquirer shall exchange shares, subject to the terms and
conditions of this Plan and the applicable provisions of the Colorado
Business Corporation Act (the "CBCA").
1.2 CONVERSION OF BITZMART SHARES IN THE EXCHANGE. On the Effective Date,
subject to the terms and conditions of this Plan, each share of
BITZMART, issued and outstanding, as reflected on the stock record book
of BITZMART, shall be converted and become exchangeable for shares of
Acquirer by virtue of the Exchange and without any action on the part
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of any holder of any stock of BITZMART. On the Effective Date as
defined in Section 3.1 below, the shareholders of BITZMART (who have
not dissented) shall hold at least ninety-five percent of the
outstanding voting shares of Acquirer, and the shareholders of Acquirer
shall hold not more than five percent of the outstanding voting shares
of Acquirer. Pursuant to this Plan, on the Effective Date, BITZMART
will become a wholly owned subsidiary of Acquirer.
1.3 EXCHANGE RATIO. On the Effective Date, all of the issued and
outstanding shares of BITZMART Stock, other than BITZMART Dissenting
Shares as defined in Section 1.12 hereto, shall be acquired, converted
into, and become exchangeable for 17,000,000 shares of validly issued,
fully paid and nonassessable shares of common stock, without par value,
of Acquirer stock pursuant to the Exchange Ratio and as provided in
this Plan. In this Plan, the term "Exchange Ratio" means a fraction,
the NUMERATOR of which is equal to 17,000,000, less a number equal to
the total of all shares of the common stock of BITZMART underlying
outstanding purchase warrants and stock option (summarized on SCHEDULE
4.5) and the DENOMINATOR of which is equal to the sum of the whole
number of shares of BITZMART stock issued and outstanding as of the
Effective Date (the "Exchange Ratio"). Fractional shares shall be
rounded up to the next whole number of shares as described in Section
1.11 below. The consideration referred to in this Section 1.3 is
hereinafter referred to as the "Exchange Consideration."
1.4 CONVERSION OF BITZMART WARRANTS AND OPTIONS. On the Effective Date, all
outstanding warrants and options to purchase common stock (as
summarized and identified on SCHEDULE 4.5) shall be automatically
exchanged for and converted into the right purchase from Acquirer, on
terms equivalent to the terms of the outstanding warrants and options
and for the same total exercise consideration, the number of shares of
Acquirer equal to the number of BITZMART shares presented by the
warrants and options prior to the Effective Date multiplied by the
Exchange Ratio identified in Section 1.3 above. From and after the
Effective Date, the holders of all BITZMART warrants and options shall
thereafter be entitled only to purchase, in accordance with the terms
of the existing warrants and options, and for the same total exercise
price, the adjusted number of shares of Acquirer. If any of the
warrants or options expire before exercise, a number of Acquirer shares
equal to the expired warrants or options shall be issued and
distributed pro rata to the persons or entities who were shareholders
of BITZMART at the Effective Date.
1.5 CONVERSION OF CONVERTIBLE NOTES AND INVESTOR WARRANTS. From and after
the Effective Date, the holders of all 12% Convertible Notes and
Investor Warrants of BITZMART (identified and summarized on SCHEDULE
1.5) shall be exchanged for the right to convert such notes and to
exercise the Investor Warrants to acquire common stock of Acquirer. The
number of shares of Acquirer to be issued upon conversion of the 12%
Convertible Notes of BITZMART upon exercise of the Investor Warrants
shall be adjusted as follows: the principal amount of the 12%
Convertible Notes, plus accrued interest through the Effective Date
shall be convertible into Acquirer common stock at a conversion rate of
one share for each $0.50 of principal and interest. Each Investor
Warrant shall be exchanged for a warrant to purchase a number of
Acquirer's shares equal to six times the number of warrants reflected
in the warrant certificate at an exercise price of $0.50 per share.
From and after the Effective Date, the holders of BITZMART's 12%
Convertible Notes and Investor Warrants shall be entitled only to
acquire common stock of Acquirer upon conversion of such notes or
exercise of the Investor Warrants.
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1.6 CLOSING OF TRANSFER BOOKS. The stock transfer books of BITZMART shall
be closed and no transfer of BITZMART stock shall be made from and
after the Effective Date. BITZMART Certificates presented to Acquirer
after the Effective Date shall be canceled and exchanged in accordance
with the procedures set forth in this Article 1.
1.7 METHOD OF EXCHANGE OF ACQUIRER STOCK CERTIFICATES. The shares of
Acquirer stock into which shares of BITZMART stock shall be converted
in the Exchange shall be deemed to have been issued at the Effective
Date. From and after the Effective Date, each holder of a certificate
which immediately prior to the Effective Date represented outstanding
shares of BITZMART stock, other than shares with respect to which
dissenters' rights, if any, are granted by reason of the Exchange under
the CBCA, shall be entitled to receive in exchange therefor, upon
surrender thereof to Acquirer, a certificate or certificates
representing the number of whole shares of Acquirer voting stock into
which such holder's shares of BITZMART stock were converted pursuant to
Section 1.3. From and after the Effective Date Acquirer shall be
entitled to treat the certificates which immediately prior to the
Effective Date represented shares of BITZMART stock and which have not
yet been surrendered for exchange as evidencing the ownership of the
number of full shares of Acquirer stock into which the shares of
BITZMART stock represented by such certificates shall have been
converted pursuant to Section 1.3, notwithstanding the failure to
surrender such certificates. Likewise, BITZMART's 12% Convertible
Notes, warrants, Investor Warrants and option agreements, if any,
shall, after the Effective Date, represent the rights to acquire, upon
conversion or exercise, as appropriate, the adjusted number of shares
of Acquirer's common stock.
1.8 DIVIDENDS. No dividends shall be paid with respect to any shares
represented by such certificates until holders or transferees of
certificates which represented shares of BITZMART stock immediately
prior to the Effective Date have surrendered them for exchange as
provided herein, notwithstanding any other provision of this Plan. Upon
surrender of the certificate(s) which immediately prior to the
Effective Date represented outstanding shares of BITZMART stock, there
shall be paid to the holder of such certificate the amount of any
dividends which theretofore became payable, but which were not paid by
reason of the foregoing, with respect to the number of whole shares of
Acquirer stock represented by the certificate or certificates issued
upon such surrender.
1.9 STOCK TO BE ISSUED IN THE NAME OF ANOTHER. If any certificate for
shares of Acquirer stock is to be issued in a name other than that in
which the certificate, which immediately prior to the Effective Date
represented shares of BITZMART stock surrendered in exchange therefor
is registered, it shall be a condition of such exchange that the person
requesting such exchange shall pay any transfer or other taxes required
by reason of the issuance of certificates for such shares of Acquirer
stock in a name other than that of the registered holder of any such
certificate surrendered.
1.10 CERTIFICATES ISSUED AFTER SURRENDER. Upon surrender of BITZMART
certificates for cancellation to Acquirer, together with a duly
executed letter of transmittal and such other documents as Acquirer
shall require, the holder of such BITZMART certificates shall, subject
to the Escrow Agreement, be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Acquirer stock
into which the shares of BITZMART stock represented by BITZMART
Certificates so surrendered shall have been converted pursuant to the
provisions of the Plan.
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1.10.1 LOST CERTIFICATES. If any certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such certificate to be lost,
stolen or destroyed and, if required by Acquirer, the
posting by such person of a bond in such reasonable amount
as Acquirer may direct as indemnity against any claim that
may be made against it with respect to such certificate, the
Exchange Consideration and, if applicable, any unpaid
dividend and distributions on shares of Acquirer stock
deliverable in respect thereof pursuant to this Agreement.
1.10.2 Notwithstanding the foregoing no party hereto shall be
liable to a holder of shares of BITZMART stock for any
shares of Acquirer stock or dividends or distributions
thereon delivered to a public official pursuant to
applicable escheat laws.
1.11 FRACTIONAL SHARES. The parties agree that fractional shares of Acquirer
stock shall be issued upon the surrender for exchange of BITZMART
certificates pursuant to this Plan, and in lieu thereof, each fraction
of an Acquirer share which would otherwise be issued in the exchange
shall be rounded up to the next whole number of shares.
1.12 DISSENTING SHARES. Notwithstanding anything to the contrary contained
in this Plan, holders of shares of BITZMART stock with respect to which
dissenters' rights, if any, are granted by reason of the Exchange under
the CBCA and who do not vote in favor of the Exchange and otherwise
comply with the CBCA ("BITZMART Dissenting Shares"), shall not be
entitled to shares of Acquirer stock pursuant to Section 1.3, and shall
be entitled to receive from BITZMART only the payment provided for
pursuant to the CBCA.
1.13 NOTICE TO SHAREHOLDERS. As soon as practicable after the Effective
Date, Acquirer shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Date represented
outstanding shares of BITZMART stock (collectively, the "BITZMART
Certificates") a form letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title to BITZMART
Certificates shall pass, only upon actual delivery of BITZMART
Certificates to Acquirer and instructions for use in effecting the
surrender of BITZMART Certificates in exchange for certificates
representing shares of Acquirer stock.
1.14 EFFECTIVE DATE. Closing will occur on the Effective Date. If Closing
does not occur on or before September 30, 2002 ("Termination Date") or
such later date to which the parties may have agreed, either Acquirer
or BITZMART may terminate this Agreement, without prejudice to any
rights either may have.
EFFECT OF SHARE EXCHANGE
2.1 EFFECT OF SHARE EXCHANGE. On the Effective Date of the Exchange, the
shares, 12% Convertible Notes, warrants, Investor Warrants and option
agreements, if any, of BITZMART will be deemed to be exchanged as
provided in this Plan, and the former holders of said securities will
be entitled only to the exchange rights provided in the Articles of
Share Exchange or to their rights provided in this Agreement.
2.1.1 Acquirer will survive in the Exchange as a holding company for
BITZMART. Acquirer will continue as a corporation organized
under the laws of the State of Nevada.
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2.1.2 BITZMART will survive as a wholly owned subsidiary of Acquirer
with all the rights, privileges, duties, liabilities,
immunities and franchises, public or private, of a corporation
organized under the CBCA. Its directors and officers before
the Effective Date shall continue after the Effective Date.
EFFECTIVE DATE
3.1 EFFECTIVE DATE. The Exchange will become effective once the conditions
set forth in Sections 7.1 through 8.8 have been satisfied on or after
September 30, 2002 at the time the Articles of Share Exchange is filed
with the office of the Secretary of State of the Colorado or at such
later time or date as may be specified in the Articles of Share
Exchange (the "Effective Date").
REPRESENTATIONS OF BITZMART
BITZMART hereby represents and warrants, and, with respect to Section
4.1 and 4.2 only, ▇▇▇▇▇▇▇▇▇, represents and warrants, as follows:
4.1 OWNERSHIP OF BITZMART STOCK. Each exchanging shareholder is the lawful
owner of the number of shares of BITZMART Stock set forth opposite such
shareholder's name on SCHEDULE 4.1 hereto, which shall be free and
clear of all liens, encumbrances, security interests, restrictions and
claims of every kind and character ("Encumbrances"), other than the
Encumbrance, if any, that may arise by the execution by the Exchanging
Shareholders of this Agreement. The BITZMART Stock constitutes all of
the issued and outstanding shares of capital stock of BITZMART. The
delivery to Acquirer of the BITZMART Stock pursuant to the provisions
of this Agreement will transfer to Acquirer valid title thereto, free
and clear of any and all Encumbrances.
4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. This Agreement has been duly
executed and delivered by BITZMART and, assuming the due execution of
this Agreement by Acquirer, is a valid and binding obligation of
BITZMART, enforceable in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization and similar laws affecting the enforcement
of creditors' rights generally and to general equitable principles.
4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of
this Agreement by BITZMART and the consummation by BITZMART of the
exchange of the BITZMART Stock as contemplated herein and the other
transactions contemplated hereby (the "Exchange") (a) will not violate
the provisions of the Articles of Incorporation or Bylaws of BITZMART,
(b) will not violate any statute, rule, regulation, order or decree of
any public body or authority by which any the Exchanging Stockholder or
BITZMART is bound or by which any of their respective properties or
assets are bound, (c) will not require any filing with, or permit,
consent or approval of, or the giving of any notice to, any United
States governmental or regulatory body, agency or authority on or prior
to the Effective Date, and (d) will not result in a violation or breach
of, conflict with, constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation
of any Encumbrance upon any of the properties or assets of BITZMART
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, lease,
franchise agreement or any other instrument or obligation to which
BITZMART is a party, or by which it or any of its respective properties
or assets may be bound.
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4.4 EXISTENCE AND GOOD STANDING. BITZMART is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Colorado and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted. BITZMART is duly qualified or licensed as a foreign
corporation to conduct its business, and is in good standing in each
jurisdiction in which the character or location of the property owned,
leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so
duly qualified or licensed would not have a Material Adverse Effect.
The term "Material Adverse Effect" means any circumstance, change in or
effect on BITZMART that is materially adverse to the business,
operations, properties, financial condition or results of operations of
BITZMART and its Subsidiaries, taken as a whole.
4.5 CAPITAL STOCK. BITZMART has an authorized capitalization consisting of
100,000,000 shares of common stock, without par value per share, of
which 2,323,985 shares are issued and outstanding, and 20,000,000
shares of preferred stock, none of which have been issued or are
outstanding. All such outstanding shares have been duly authorized and
validly issued and are fully paid and nonassessable. Except as set
forth on SCHEDULE 4.5, there are no outstanding subscriptions, options,
warrants, rights, calls, commitments, conversion rights, rights of
exchange, plans or other agreements providing for the purchase,
issuance or sale of any shares of the capital stock of BITZMART.
4.6 SUBSIDIARIES. Except for Watermark Technologies, Inc., BITZMART has no
subsidiaries.
4.7 FINANCIAL STATEMENTS. BITZMART has heretofore furnished Acquirer with
the consolidated balance sheet of BITZMART as at December 31, 2001 and
the related statements of income and cash flows for the year then ended
(the "Financial Statements"). The Financial Statements, including the
footnotes thereto have been prepared in accordance with generally
accepted accounting principles and fairly present in all material
respects the financial position of BITZMART and the results of their
operations and cash flows at such dates and for such periods.
4.8 LITIGATION. Except for litigation regarding a claim for approximately
$65,000 by ▇▇▇▇ ▇▇▇▇▇▇▇▇, a former employee, there are no (i) actions,
suits or legal, equitable, arbitrative or administrative proceedings
pending, or to the Knowledge of BITZMART, threatened against BITZMART
or (ii) judgments, injunctions, writs, rulings or orders by any
Governmental Person against BITZMART.
4.9 TAXES. BITZMART has filed all federal, state and foreign income tax
returns and all other material tax returns that are required to be
filed by it and has paid all taxes due pursuant to such returns or
pursuant to any assessment received by it in writing and all other
related penalties and charges other than those being contested in good
faith and by appropriate proceedings. The charges, accruals and
reserves on the other governmental charges are, in the opinion of
BITZMART, adequate. BITZMART has not given or been requested to give a
waiver of the statute of limitations relating to the payment of Federal
or other taxes.
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4.10 BROKER'S OR FINDER'S FEES. No agent, broker, firm or other Person
acting on behalf of the Exchanging Shareholders or BITZMART is, or will
be, entitled to any commission or broker's or finder's fees from any of
the parties hereto, or from any Person controlling, controlled by or
under common control with any of the parties hereto, in connection with
any of the transactions contemplated herein, except that, following the
Closing, Acquirer shall issue to Southampton Ltd. or its designees an
aggregate of 300,000 shares of Acquirer common stock and make one or
more loans as a fee for services rendered to BITZMART.
REPRESENTATIONS OF ACQUIRER
Acquirer represents and warrants as follows:
5.1 ACQUIRER STOCK. Upon the execution and delivery of this Agreement, and
the issuance of the shares of Acquirer common stock that constitute the
Exchange Price, all such shares shall be duly authorized, validly
issued, fully paid and nonassessable.
5.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Acquirer has full power and
authority (corporate or otherwise) to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly executed
and delivered by Acquirer and, assuming the due execution of this
Agreement by BITZMART, is a valid and binding obligation of Acquirer,
enforceable against Acquirer in accordance with its terms, except to
the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization and similar laws affecting the
enforcement of creditors' rights generally and to general equitable
principles.
5.3 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of
this Agreement by Acquirer and the consummation by Acquirer of the
exchange of the BITZMART Stock as contemplated herein and the other
transactions contemplated hereby (a) will not violate the provisions of
the Certificate of Incorporation or Bylaws of Acquirer, (b) will not
violate any statute, rule, regulation, order or decree of any public
body or authority by which Acquirer is bound or by which any of their
respective properties or assets are bound, (c) will not require any
filing with, or permit, consent or approval of, or the giving of any
notice to, any United States governmental or regulatory body, agency or
authority on or prior to the Effective Date (as defined in Section 1.3)
including any filing by the Securities and Exchange Commission, and (d)
will not result in a violation or breach of, conflict with, constitute
(with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon
any of the properties or assets of the Acquirer under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
license, franchise, permit, agreement, lease, franchise agreement or
any other instrument or obligation to which Acquirer is a party, or by
which they or any of its properties or assets may be bound.
5.4 EXISTENCE AND GOOD STANDING. Acquirer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted. Acquirer is duly qualified or licensed as a foreign
corporation to conduct its business, and is in good standing in each
jurisdiction in which the character or location of the property owned,
leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so
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duly qualified or licensed would not have a Material Adverse Effect.
The term "Material Adverse Effect" means any circumstance, change in or
effect on Acquirer that is materially adverse to the business,
operations, properties, financial condition or results of operations of
Acquirer, taken as a whole.
5.5 CAPITAL STOCK. Acquirer will have on the Effective Date, an authorized
capitalization consisting of 50,000,000 shares of common stock, par
value $.001 per share, of which 20,310,884 shares are issued and
outstanding (before giving effect to a one for ten and a one for
twenty-five reverse stock split, each effective before the Effective
Date) and no preferred stock. All such outstanding shares have been
duly authorized and validly issued in accordance with applicable laws,
including, without limitation, the anti-fraud provisions of applicable
federal and state securities laws and are fully paid and nonassessable.
There are no outstanding subscriptions, options, warrants, rights,
calls, commitments, conversion rights, rights of exchange, plans or
other agreements providing for the purchase, issuance or sale of any
shares of the capital stock of Acquirer. The Acquirer has agreed to
sell 3,118,750 post-reverse splits shares to certain investors for
total consideration of $31,287.50, which sale shall close within thirty
days of the date hereof.
5.6 FINANCIAL STATEMENTS. Acquirer has heretofore furnished, or will
furnish prior to the Effective Date, BITZMART with the audited
consolidated balance sheet of Acquirer as at January 31, 2002 and the
related audited statements of income and cash flows for the year then
ended (the "Financial Statements") and unaudited financial statements
in Form 10-QSB for the quarter ended July 31, 2002. The Financial
Statements, including the footnotes thereto, and all financial
statements contained in any SEC Reports (defined in Section 3.7 below)
have been prepared in accordance with generally accepted accounting
principles and fairly and accurately present in all material respects
the financial position of Acquirer and the results of its operations
and cash flows at such dates and for such periods. Since January 31,
2002, there has been no material adverse change in the financial
condition, operations, or business of Acquirer.
5.7 SECURITIES FILINGS. Since the initial filing of the registration
statement on Form 10SB by Acquirer, and prior to the execution and
delivery of this Agreement, Acquirer has filed all forms, reports,
statements and other documents required to be filed with the Securities
and Exchange Commission (the "SEC") and all state securities regulatory
agencies, if any, including, without limitation, (A) all Annual Reports
on Form 10-KSB, (B) all Quarterly Reports on Form 10-QSB, (C) all proxy
statements and information statements under Regulation 14C relating to
meetings of Shareholders (whether annual or special and including all
matters anticipated for shareholder approval under this Agreement), (D)
all Reports on Form 8-K, (E) the Form 10SB described above, and (E) all
other reports or registration statements (collectively, the "SEC
Reports"). The SEC Reports (i) were prepared in all material respects
in accordance with the requirements of the Securities Act of 1933 as
amended (the "1933 Act") and the Securities Exchange Act of 1934 as
amended, and the rules and regulations of the SEC thereunder applicable
to such SEC Reports and (ii) did not at the time they were filed and as
of the date hereof, and, with respect to registration statements as of
their effective dates, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
5.8 INDEBTEDNESS. Acquirer has no outstanding liabilities or Indebtedness
of any kind (including contingent obligations, tax assessments and
unusual forward or long-term commitments), other than miscellaneous
payables and accrued expenses not to exceed $10,000. For purposes of
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this Agreement, "Indebtedness" shall mean any obligation for borrowed
money, or for payment for services rendered or tangible or intangible
property acquired or leased, including without limitation (A) any
obligation owed for all or any part of the purchase price of any
assets, (B) accounts payable, (C) any obligations secured by any
Encumbrance (including, without limitation, any Encumbrance on
after-acquired property of Acquirer) in respect of property even though
the person owning the property has not assumed or become liable for the
payment of such obligation, (D) any guarantee with respect to any of
the foregoing indebtedness of another person, (E) obligations in
respect of letters of credit, and (F) liabilities of any kind to any
present or former Shareholders of Acquirer.
5.9 LITIGATION. There are no (i) actions, suits or legal, equitable,
arbitrative or administrative proceedings pending, or to the Knowledge
of Acquirer, threatened against Acquirer, or, to the Knowledge of
Acquirer, is there any basis for any of the foregoing or (ii)
judgments, injunctions, writs, rulings or orders by any Governmental
Person against Acquirer.
5.10 TAXES. Acquirer has filed all federal, state and foreign income tax
returns and all other material tax returns ("Tax Returns") that are
required to be filed by it. All such Tax Returns are correct and
complete in all respects. Acquirer has paid all taxes due pursuant to
such returns or otherwise or pursuant to any assessment received by it
in writing and all other related penalties and charges on a timely
basis other than those being contested in good faith and by appropriate
proceedings. No claim has ever been made by a governmental authority in
a jurisdiction where Acquirer does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. Acquirer has not
requested or obtained any extension of time within which to file any
Tax Return, which Tax Return has not since been filed. There are no
Encumbrances on any of the assets of the Company that arose in
connection with any failure (or alleged failure) to pay any tax. The
charges, accruals and reserves set forth in Acquirer's Financial
Statements for taxes and other governmental charges are, in the opinion
of Acquirer, adequate. Acquirer has not given or been requested to give
a waiver of the statute of limitations relating to the payment of
Federal or other taxes.
5.11 BROKER'S OR FINDER'S FEES. No agent, broker, firm or other person
acting on behalf of Acquirer is, or will be, entitled to any commission
or broker's or finder's fees from any of the parties hereto, or from
any person controlling, controlled by or under common control with any
of the parties hereto, in connection with any of the transactions
contemplated herein. The Acquirer shall pay the sum of $35,000 to a
financial advisor, within ten days following the Effective Date.
5.12 Accuracy of Information. None of the representations and warranties of
Acquirer contained herein or in the documents furnished by it pursuant
hereto contain any material misstatement of fact, or omit to state any
material fact necessary to make the statements herein or therein in
light of the circumstances in which they were made not misleading.
17
CERTAIN AGREEMENTS
6.1 REASONABLE BEST EFFORTS. Each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all action to do
or cause to be done, and to assist and cooperate with the other party
hereto in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement,
including, but not limited to, (a) the obtaining of all necessary
waivers, consents and approvals from governmental or regulatory
agencies or authorities and the making of all necessary registrations
and filings and the taking of all reasonable steps as may be necessary
to obtain any approval or waiver from, or to avoid any action or
proceeding by, any governmental agency or authority, (b) the obtaining
of all necessary consents, approvals or waivers from Shareholders and
other third parties and (c) the defending of any lawsuits or any other
legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby,
including, without limitation, seeking to have any temporary
restraining order entered by any court or administrative authority
vacated or reversed; provided, however, that neither BITZMART nor the
BITZMART Shareholders shall be required to expend any funds to defend
any lawsuits or any other legal proceedings, whether judicial or
administrative, arising out of or related to the business or operations
(including the issuance of securities) of Acquirer prior to the
Effective Date.
6.2 OPTIONS AND WARRANTS. At the Closing, all unexercised options and
warrants to purchase common stock of BITZMART set forth on SCHEDULE 4.5
shall be converted into options and warrants to acquire, for the same
exercise price, the number of shares of Acquirer which the holder of
such options or warrants would have received had such options or
warrants been exercised immediately prior to the Closing. Upon any
exercise of any such options or warrants, BITZMART shall transfer to
the holder of such options or warrants the shares of Acquirer Common
Stock held by BITZMART for such purpose in accordance with clause
(b)(ii) of the proviso in Section 1.2 hereof. If any of such options or
warrants expire prior to exercise thereof, then the shares of Acquirer
Common Stock set aside for issuance upon exercise thereof pursuant to
Section 1.2 shall be distributed pro-rata to all persons who were
Shareholders of BITZMART as of the Effective Date.
6.3 TAX MATTERS. Each party hereto shall take all reasonable actions
necessary to cause the transfers of BITZMART common stock to Acquirer
to qualify as tax-free transfers of property under the provisions of
Section 351(a) of the Code to the extent permitted by law, and with
respect to the transfers of BITZMART common stock, a reorganization
within the meaning of Section 368(a)(1)(B). Each party agrees that it
will not knowingly take any action, either before or after the
Effective Date, which would cause the transfers of such property to
Acquirer pursuant to this Agreement to fail to qualify as transfers
described in Section 351(a) of the Code and/or Section 368(a)(1)(B).
The parties hereto agree that they will report in their respective
federal income Tax Returns for the taxable year including the Effective
Date that the transfers of such property did so qualify under Section
351(a) and Section 368(a)(1)(B) of the Code, and will properly file
with such Tax Returns all information required by Treasury Regulations
Sections 1.351-3 and 1.368-3. No party hereto, unless required by law,
will take any Tax reporting position inconsistent with the
characterization of the transactions contemplated by this Agreement as
transfers described in Section 351(a) and/or Section 368(a)(1)(B) of
the Code.
18
6.4 IRREVOCABLY PROXY. Within 30 days following the Effective Date, the
holders of not less than 2,000,000 shares (not including the BITZMART
Shareholders) of Acquirer shall have executed and delivered to
▇▇▇▇▇▇▇▇▇ irrevocable proxies, in form reasonably satisfactory to the
Board of Directors of BITZMART, appointing ▇▇▇▇▇▇▇▇▇ as proxy with
respect to such shares for the purposes of voting for the election of
directors of Acquirer.
6.5 ASSUME CERTAIN BITZMART OBLIGATIONS. On the Effective Date, Acquirer
shall assume the obligations of Bitzmart to the holders of the 12%
Convertible Notes and Investor Warrants described on SCHEDULE 1.5.
CONDITIONS TO ACQUIRER'S OBLIGATIONS
The acquisition of the BITZMART Stock by Acquirer on the Effective Date
is conditioned upon the satisfaction or waiver, at or prior to the consummation
of the Exchange, of the following conditions:
7.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of BITZMART and the BITZMART Shareholders contained in this
Agreement or in any Schedule delivered pursuant hereto shall be true
and correct in all material respects on and as of the Effective Date
with the same effect as though such representations and warranties have
been made on and as of such date (except to the extent that any such
representation and warranty is stated in this Agreement to be made as
of a specific date, in which case such representation and warranty
shall be true and correct as of such specified date).
7.2 PERFORMANCE OF AGREEMENTS. Each and all of the agreements of BITZMART
and the BITZMART Shareholders to be performed at or prior to the
Effective Date pursuant to the terms hereof shall have been duly
performed in all material respects.
7.37 NO INJUNCTION. No court or other government body or public authority
shall have issued an order that shall then be in effect restraining or
prohibiting the completion of the transactions contemplated hereby.
7.4 NO LITIGATION. There shall not be any action, suit or proceeding
pending or threatened that seeks to (i) make the consummation of the
transactions contemplated hereby illegal or otherwise restrict or
prohibit consummation thereof or (ii) require the divestiture by
Acquirer or any of its subsidiaries or Affiliates of shares of stock or
of any business, assets or property of any of its subsidiaries or
Affiliates, or impose any material limitation on the ability of any of
them to conduct their business or to own or exercise control of such
assets, properties or stock and which, in either case, in the
reasonable, good faith determination of Acquirer has a significant
likelihood of having a material adverse effect on Acquirer.
CONDITIONS TO BITZMART AND THE BITZMART
SHAREHOLDERS' OBLIGATIONS
The exchange of the BITZMART Stock by the Shareholders of BITZMART on
the Effective Date is conditioned upon satisfaction or waiver, at or prior to
the consummation of the Exchange of the following conditions:
8. TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Acquirer contained in this Agreement shall be true and
correct in all material respects on and as of the Effective Date with
the same effect as though such representations and warranties had been
made on and as of such date.
19
8. PERFORMANCE OF AGREEMENTS. Each and all of the agreements of Acquirer
to be performed at or prior to the Effective Date pursuant to the terms
hereof shall have been duly performed in all material respects.
8. There shall not be any action, suit or proceeding pending or threatened
that seeks to (i) make the consummation of the transactions
contemplated hereby illegal or otherwise restrict or prohibit
consummation thereof or (ii) impose any material limitation on the
ability of (a) Acquirer or BITZMART to conduct their business or (b)
Acquirer, BITZMART or the BITZMART Shareholders to own or exercise
control of their assets, properties or stock and which, in either case,
in the reasonable, good faith determination of the BITZMART
Shareholders has a significant likelihood of having a material adverse
effect on Acquirer, BITZMART, or the BITZMART Shareholders.
8. RESIGNATIONS; ELECTION TO BOARD OF DIRECTORS. If requested by BitzMart,
all Persons who are officers and directors of Acquirer immediately
prior to the Effective Date shall have resigned such positions.
8.5 DUE DILIGENCE. The Board of Directors of BITZMART shall be satisfied,
in its sole but reasonable discretion, with the condition (business,
financial, legal and otherwise), of Acquirer.
8.6 NO ENCUMBRANCES. There shall be no Encumbrances on any assets
(including any stock of any subsidiaries) of Acquirer (including,
without limitation, any Encumbrance on after-acquired property of
Acquirer).
8.7 REGULATORY FILINGS. The Board of Directors of BITZMART shall have
approved, in its reasonable discretion and prior to filing, all filings
on behalf of Acquirer with any governmental or quasi-governmental
commission, department or agency (including, without limitation, the
Securities and Exchange Commission, Nasdaq, the NASD, or any state
securities regulatory agency).
8.8 TAX FREE TRANSACTIONS. The BITZMART Shareholders shall be satisfied, in
their sole discretion, that the transfer of BITZMART Common Stock to
Acquirer contemplated by this Agreement shall qualify for
non-recognition of gain pursuant to Section 351(a) or Section
368(a)(1)(B) of the Code so that such transfer in exchange for Acquirer
common stock shall not result in any tax liability to the BITZMART
Shareholders.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9. SURVIVAL OF REPRESENTATIONS. The representations and warranties set
forth in this Agreement shall survive for three years after the
Effective Date.
9. INDEMNITIES. () Each Exchanging Stockholder, severally but not jointly,
hereby agrees to indemnify and hold harmless Acquirer from and against
any and all damages, claims, losses or expenses (including reasonable
attorneys' fees and expenses) ("Damages") actually suffered or paid by
20
Acquirer or BITZMART as a result of the breach of any representation or
warranty made by such Exchanging Stockholder in this Agreement. To the
extent that the Exchanging Stockholder's undertakings set forth in this
Section 7.2(a) may be unenforceable, the Exchanging Shareholders shall
contribute the maximum amount that they are permitted to contribute
under applicable law to the payment and satisfaction of all Damages
incurred by the parties entitled to indemnification hereunder. BITZMART
hereby agrees to indemnify and hold harmless Acquirer and the BITZMART
Shareholders from and against any and all damages, claims, losses or
expenses (including reasonable attorneys' fees and expenses) actually
suffered or paid by Acquirer or the BITZMART Shareholders as a result
of the breach of any representation or warranty made by BITZMART in
this Agreement.
() Acquirer and BITZMART hereby agree to indemnify and hold harmless the
Exchanging Shareholders against Damages actually suffered or paid by
the Exchanging Shareholders as a result of the breach of any
representation or warranty made by the Acquirer in this Agreement. To
the extent that the Acquirer's undertakings set forth in this Section
7.2(b) may be unenforceable, the Acquirer and BITZMART shall contribute
the maximum amount that they are permitted to contribute under
applicable law to the payment and satisfaction of all Damages incurred
by the parties entitled to indemnification hereunder.
() Any party seeking indemnification under this Article VII (an
"Indemnified Party") shall give each party from whom indemnification is
being sought (each, an "Indemnifying Party") notice of any matter for
which such Indemnified Party is seeking indemnification, stating the
amount of the Damages, if known, and method of computation thereof, and
containing a reference to the provisions of this Agreement in respect
of which such right of indemnification is claimed or arises. The
obligations of an Indemnifying Party under this Article VII with
respect to Damages arising from any claims of any third party which are
subject to the indemnification provided for in this Article VII
(collectively, "Third Party Claims") shall be governed by and
contingent upon the following additional terms and conditions: if an
Indemnified Party shall receive, after the Effective Date, initial
notice of any Third Party Claim, the Indemnified Party shall give the
Indemnifying Party notice of such Third Party Claim within such time
frame as is necessary to allow for a timely response and in any event
within 30 days of the receipt by the Indemnified Party of such notice;
PROVIDED, HOWEVER, that the failure to provide such timely notice shall
not release the Indemnifying Party from any of its obligations under
this Article VII except to the extent the Indemnifying Party is
materially prejudiced by such failure. The Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at
its expense and through counsel of its choice if it gives notice of its
intention to do so to the Indemnified Party within 30 days of the
receipt of such notice from the Indemnified Party; PROVIDED, HOWEVER,
that if there exists or is reasonably likely to exist a conflict of
interest that would make it inappropriate in the reasonable judgment of
the Indemnified Party (upon advice of counsel) for the same counsel to
represent both the Indemnified Party and the Indemnifying Party, then
the Indemnified Party shall be entitled to retain its own counsel, at
the expense of the Indemnifying Party, provided that the Indemnified
Party and such counsel shall contest such Third Party Claims in good
faith. In the event the Indemnifying Party exercises the right to
undertake any such defense against any such Third Party Claim as
provided above, the Indemnified Party shall cooperate with the
Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as
is reasonably required by the Indemnifying Party. Similarly, in the
event the Indemnified Party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the Indemnifying Party
21
shall cooperate with the Indemnified Party in such defense and make
available to the Indemnified Party, at the Indemnifying Party's
expense, all such witnesses, records, materials and information in the
Indemnifying Party's possession or under the Indemnifying Party's
control relating thereto as is reasonably required by the Indemnified
Party. The Indemnifying Party shall not, without the written consent of
the Indemnified Party, (i) settle or compromise any Third Party Claim
or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to
the Indemnified Party of a written release from all liability in
respect of such Third Party Claim or (ii) settle or compromise any
Third Party Claim in any manner that may adversely affect the
Indemnified Party. No Third Party Claim which is being defended in good
faith by the Indemnifying Party or which is being defended by the
Indemnified Party as provided above in this Section 7.2(c) shall be
settled by the Indemnified Party without the written consent of the
Indemnifying Party.
MISCELLANEOUS
10. EXPENSES. Except as otherwise provided in this Agreement, each party to
this Agreement will bear its respective fees and expenses incurred in
connection with the preparation, negotiation, execution and performance
of this Agreement and the transactions contemplated herein. If this
Agreement is terminated, the obligation of each party to pay its own
fees and expenses will be subject to any rights of such party arising
from a breach of this Agreement by another party.
10. WAIVER; REMEDIES CUMULATIVE. The rights and remedies of the parties to
this Agreement are cumulative and not alternative. Neither any failure
nor any delay by any party in exercising any right, power or privilege
under this Agreement or any of the documents referred to in this
Agreement will operate as a waiver of such right, power or privilege,
and no single or partial exercise of any such right, power or privilege
will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right
arising out of this Agreement or any of the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by
a waiver or renunciation of the claim or right unless in writing signed
by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of that party or of the right of the party giving
such notice or demand to take further action without notice or demand
as provided in this Agreement or the documents referred to in this
Agreement.
10. ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all prior
agreements between the parties hereto, whether written or oral, with
respect to its subject matter, and constitutes (along with the
Exhibits, Schedules and other documents delivered pursuant to this
Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This
Agreement may not be amended, supplemented, or otherwise modified
except by a written agreement executed by the party to be charged with
the amendment.
10. ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS. No party may assign
any of its rights or delegate any of its obligations under this
Agreement without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will apply to, be
22
binding in all respects upon and inure to the benefit of the successors
and permitted assigns of the parties. Nothing expressed or referred to
in this Agreement will be construed to give any Person other than the
parties to this Agreement any legal or equitable right, remedy or claim
under or with respect to this Agreement or any provision of this
Agreement, except such rights as shall inure to a successor or
permitted assignee pursuant to this Section.
10. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part
or degree will remain in full force and effect to the extent not held
invalid or unenforceable.
10. CONSTRUCTION. The headings of Articles and Sections in this Agreement
are provided for convenience only and will not affect its construction
or interpretation. All references to "Articles" and "Sections" refer to
the corresponding Articles and Sections of this Agreement.
10. TIME OF ESSENCE. With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
10. NOTICES. All notices, consents, waivers and other communications
required or permitted by this Agreement shall be in writing and shall
be deemed given to a party when (a) delivered to the appropriate
address by hand or by nationally recognized overnight courier service
(costs prepaid); (b) sent by facsimile or e-mail with confirmation of
transmission by the transmitting equipment, so long as such facsimile
or e-mail is followed by a copy sent by mail; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt
requested, in each case to the following addresses, facsimile numbers
or e-mail addresses and marked to the attention of the person (by name
or title) designated below (or to such other address, facsimile number,
e-mail address or person as a party may designate by notice to the
other parties):
if to Acquirer, to it at:
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
a Nevada corporation
▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: President
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and if to BITZMART, to it, care of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, at:
BITZMART, INC.
▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: President
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
23
With a copy to:
▇▇▇▇ ▇▇▇▇▇▇, Esq.
Suite 1000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
10. GOVERNING LAW; CONSENT TO JURISDICTION. (a) The interpretation and
construction of this Agreement, and all matters relating hereto, shall
be governed by the laws of the State of California applicable to
contracts made and to be performed entirely within the State of
California.
(b) Any proceeding, action, litigation or claim (a "Proceeding") arising
out of or relating to this Agreement or any of the transactions
contemplated herein may be brought in the courts of the State of
California, County of Los Angeles, or, if it has or can acquire
jurisdiction, in the United States District Court for the Central
District of California, and each of the parties irrevocably submits to
the exclusive jurisdiction of each such court in any such Proceeding,
waives any objection it may now or hereafter have to venue or to
convenience of forum, agrees that all claims in respect of the
Proceeding shall be heard and determined only in any such court and
agrees not to bring any Proceeding arising out of or relating to this
Agreement or any of the transactions contemplated herein in any other
court. The parties agree that either or both of them may file a copy of
this paragraph with any court as written evidence of the knowing,
voluntary and bargained agreement between the parties irrevocably to
waive any objections to venue or to convenience of forum. Each party
hereto hereby consents to process being served in any such action or
proceeding by the mailing of a copy thereof to the address set forth
opposite its name below and agrees that such service upon receipt shall
constitute good and sufficient service of process or notice thereof.
Nothing in this paragraph shall affect or eliminate any right to serve
process in any other manner permitted by law.
10. WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY
JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE
PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH
ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND
BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY
JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS
AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS SHALL INSTEAD BE
TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A
JURY.
10. EXECUTION OF AGREEMENT. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement. The exchange of copies of this
Agreement and of signature pages by facsimile transmission shall
constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile shall be
deemed to be their original signatures for all purposes.
24
IN WITNESS WHEREOF, each of the parties have caused this Agreement to
be executed by their respective officers who have been duly authorized, all as
of the day and year first above written.
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
a Nevada corporation
By: ______________________________
Name: ______________________________
Title: ______________________________
BITZMART, Inc., a Colorado corporation
By: ______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, CEO
______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
25
SCHEDULE 1.5
------------
Holders of 12% Convertible Notes and Investor Warrants
NAME NOTE AMOUNT NO OF ACQUIRER WARRANTS
---- ----------- -----------------------
26
SCHEDULE 4.1
------------
Stockholdings of BITZMART Shareholders
NAME OF SHAREHOLDER NO. OF SHARES
------------------- -------------
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 20,000
▇▇▇▇▇, ▇▇▇▇ 9,500
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, JT 26,026
BSI SA 37,625
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 13,284
S. ▇▇▇▇▇ ▇▇▇▇▇ 1,203
Colorocs Info Tech, Inc. 170,932
Credit Agricole Indosuez Luxembourg 16,737
Gianokopolis, ▇▇▇▇▇▇▇ 5,013
GTS ▇▇▇▇ Trading Services, Inc. 7,000
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 1,000
▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇ 7,000
▇▇▇▇, ▇▇▇▇▇ 20,000
Lemanik SA 154,000
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 496,042
▇▇▇▇▇▇ ▇▇▇▇▇▇ 1,667
▇▇▇ ▇▇▇▇▇▇ 1,667
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 7,000
▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇
Revocable Trust U/T/A Dtd 10/20/97 12,000
▇▇▇▇▇, ▇▇▇▇▇▇▇ 332,285
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 5,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 9,500
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ 3,500
▇▇▇▇▇▇▇▇▇ Securities, Inc. 10,000
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ 347,013
▇▇▇▇▇▇ Capital 3,014
UTEK Corp. 641,667
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 10,472
Yaagoub, Anan 130,000
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 20,000
▇▇▇▇▇, ▇▇▇▇ 9,500
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, JT 26,026
-----------
Total 2,500,147
27
SCHEDULE 4.5
------------
BitzMart Warrants and Options
----------------------------- --------------------- ----------------- ------------ ----------------------------------
NUMBER OF EXERCISE
NAME RELATIONSHIP WARRANTS PRICE NOTES
----------------------------- --------------------- ----------------- ------------ ----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Director 35,000
----------------------------- --------------------- ----------------- ------------ ----------------------------------
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Advisor 31,050
----------------------------- --------------------- ----------------- ------------ ----------------------------------
▇▇▇▇▇▇▇▇▇ Securities, Inc. Investment Banker 14,000 $3.60
----------------------------- --------------------- ----------------- ------------ ----------------------------------
▇▇▇▇▇▇▇▇▇ Securities, Inc. Investment Banker 6,710 $3.60 (Each warrant is for one share of
(unit warrants) common stock and 1.375 warrants
exercisable at $0.10 per share)
----------------------------- --------------------- ----------------- ------------ ----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ President 40,000
----------------------------- --------------------- ----------------- ------------ ----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ Investor 20,000
----------------------------- --------------------- ----------------- ------------ ----------------------------------
----------------------------- --------------------- ----------------- ------------ ----------------------------------
Total Warrants: 146,760
----------------------------- --------------------- ----------------- ------------ ----------------------------------
28
SCHEDULE 3.5
------------
Warrant Holders of Acquirer
Warrant to purchase 720 shares of common stock for $15.00 per share,
expiring on October 29, 2002 (after giving effect to the
reverse stock splits described herein)
29
