STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of
November 10, 2000, by and between the individuals listed in Schedule A attached
hereto ("Sellers"), and
XxxxXxx.xxx, Inc., A Nevada corporation (the "Purchaser").
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W I T N E S S E T H:
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WHEREAS, the Sellers own an aggregate of 1,000 shares of the
common stock of PTS TV, a Texas corporation (the "Company"), which constitute
all of the issued and outstanding shares of the Company's capital stock; and
WHEREAS, the Sellers wish to sell to the Purchaser all of such
common shares (the "Shares") of the common stock of the Company pursuant to the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Purchaser and the
Sellers hereby agree as follows:
ARTICLE I.
Purchase and Sale of Stock
Section 1.01 Purchase and Sale of Stock. Subject to
the terms and conditions hereof, on the Closing Date (as
defined below) the Sellers agrees to sell to the Purchaser,
and the Purchaser agrees to purchase from the Sellers, the
Shares:
(a) In exchange for 2,000,000 shares of Purchaser's
Class A convertible preferred stock, par value $1.00 per share
(the "Preferred Stock"), which Preferred Stock shall be
delivered to the Sellers pro rata, in proportion to the
Seller's current ownership of Company common stock. The
Preferred Stock shall the rights, preference and restrictions
set forth on the Certificate of Determination attached hereto
as Schedule B.
(b) At the Closing (as hereinafter defined) Purchaser
will deposit with an escrow agent agreeable to Sellers and
Purchaser pursuant to an escrow agreement in the form attached
hereto as Exhibit A (the "Escrow Agreement"), one million
shares of Preferred Stock, which shares would be delivered to
the Sellers (pro rata in proportion to their current ownership
of Company common stock) upon attainment by the Company of
gross revenues of at least $24 million during the twelve-month
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period ending December 31, 2001, and at least $1 of pre-tax
net income for the same period as audited. If the
above-mentioned pre-tax net income and revenues are not
achieved, the one million shares of Preferred Stock will be
delivered from escrow back to Purchaser.
(c) Purchaser agrees to issue to the Sellers (pro
rata in proportion to their current ownership of Company
common stock) one share of its common stock for each dollar of
the Company's pre-tax income, as audited, during each of the
two twelve-month periods ending on December 31, 2001 and 2002.
Any and all stock issued under this Section 1.01(c) shall be
delivered by Purchaser to Sellers within 60 days after the end
of each respective calendar year. The Sellers shall receive a
maximum under this provision of 7.5 million shares of common
stock combined for both calendar years stated above.
(d) Purchaser shall, until after December 31, 2002,
cause the Company to operate independently and to maintain its
separate corporate identity.
(e) For purposes of this Agreement, "pre-tax income"
of the Company for each of the years ended December 31, 201
and 2002 shall mean its aggregate earnings net of losses from
operations, after deduction of all appropriate expenses,
charges and reserves, but before adjustment for federal,
state, and local income or franchise taxes. Pre-tax income
shall be determined in accordance with the Company's generally
accepted accounting principles, consistently applied per an
audit by the firm of independent certified public accountants
engaged by the Purchaser for its audit ("Purchaser's
Accountants"); provided, however, that in determining such
pre-tax income:
(i) pre-tax income shall be computed without
regard to "extraordinary items" of gain or loss as
that term shall be defined in GAAP;
(ii) pre-tax income shall not include any
gains, losses or profits realized from the sale of
any assets other than in the ordinary course of
business;
(iii) no deduction shall be made for any
management fees, general overhead expenses or other
intercompany charges, of whatever kind or nature,
charged by the Purchaser to the Company, except that
the Purchaser may charge interest on any loans or
advances made by the Purchaser to the Company in
connection with its business operations at a rate of
8% per annum;
(iv) no deduction shall be made for legal or
accounting fees and expenses arising out of this
Agreement; and
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(v) the purchase and sales prices of goods
and services sold by the Company to the Purchaser or
its affiliates or purchased by the Company from the
Purchaser or its affiliates shall be adjusted to
reflect the amounts that the Company would have
realized or paid if dealing with an independent party
in an arm's length commercial transaction.
(f) Time of Determination.
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(i) The pre-tax income of the Company shall
be determined promptly after the close of each of the
2001 and 2002 fiscal years by an audit conducted by
Purchaser's Accountants. Copies of their reports
setting forth their computation of the pre-tax income
of the Company shall be submitted in writing to the
Sellers and the Purchaser and, unless either Sellers
or the Purchaser notifies the other within 20
business days after receipt of the report that its
objects to the computation of pre-tax income set
forth therein, the reports shall be binding and
conclusive for the purposes of this Agreement. The
Sellers shall have access to the books and records of
the Company and to Purchaser's Accountants'
workpapers during regular business hours to verify
the computation of pre-tax income made by Purchaser's
Accountants.
(ii) If either a Seller or the Purchaser
notifies the other in writing within 20 business days
after receipt of Purchaser's Accountants' report that
it objects to the computation of the pre-tax income
set forth therein, the amount of pre-tax income for
the fiscal year for which such report relates shall
be determined by negotiation between the Sellers and
the Purchaser. If the Sellers and the Purchaser are
unable to reach agreement within 20 business days
after such notification, the determination of the
amount of pre-tax income for the period in question
shall be submitted to a mutually agreeable third
party firm of independent certified public
accountants ("Special Accountants") for
determination, whose determination shall be binding
and conclusive on the parties. If the Special
Accountants determine that the pre-tax income has
been understated by 5% or more, then the Purchaser
shall pay the Special Accountants' fees, costs and
expenses. If pre-tax income has not been understated
or has been understated by less than 5%, then the
Sellers shall pay the Special Accountants' fees,
costs and expenses.
Section 1.02 Closing Date. The consummation of the
purchase and sale of the Shares hereunder (the "Closing")
shall be held at the offices of XxxxXxx.xxx, Inc, located at
00000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000
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at 10:00 AM (Local Time) on December 15, 2000, or at such
other time and place as the Sellers and the Purchaser may
mutually agree (the "Closing Date").
ARTICLE II.
Representations and Warranties of the Sellers
Section 2.01 Representations of Each of the Sellers.
Each of the Sellers represents and warrants to the Purchaser
that the following is true and correct as of the date hereof
and shall be true and correct as of the Closing Date. The
representations and warranties of the Sellers set forth in
this Section 2.01 are several obligations, meaning that the
particular Seller making the representation and warranty will
be solely responsible therefor to the extent provided in
Section 6.02 hereof for loss, etc. the Purchaser may suffer as
a result of any breach thereof:
(a) Existence. The Company is a corporation duly
organized and validly existing under the laws of Texas.
(b) Authorization; No Violation. The execution,
delivery and performance by each Seller of this Agreement are
within such Sellers powers, have been duly authorized by all
necessary action, and do not contravene in any material
respect any Requirement of Law or Contractual Obligation of
Sellers. As used herein, "Requirement of Law" shall mean, as
to any Person, the certificate of incorporation and bylaws or
other organizational or governing documents of such Person, if
applicable, and any law, treaty, rule or regulation, or
determination of an arbitrator or any court or other
Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such
Person or any of its property is subject. As used herein,
"Contractual Obligation" shall mean, as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or undertaking to which such Person is a
party or by which it or any of its property is bound. As used
herein, "Person" shall mean an individual or any corporation,
association, partnership, joint venture, estate, trust or
other legal entity, including any Governmental Authority. As
used herein, "Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof,
and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
(c) Government and Other Consents. No authorization
or approval or other action by, and no notice to or filing
with, any Governmental Authority is required to be obtained or
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made, and no consent of any third party is required to be
obtained by, each Seller for the due execution, delivery and
performance by each Seller of this Agreement.
(d) Enforceable Obligations. This Agreement has been
duly executed and delivered on behalf of each Seller and
constitutes the legal, valid and binding obligation of each of
the Sellers enforceable against each Seller in accordance with
its terms and conditions, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of
equity.
(e) No Litigation. No claim, action, suit,
investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of each
Seller, threatened by or against each Seller with respect to
the Company, this Agreement or any of the transactions
contemplated hereby. To the best of Sellers' knowledge, no
judgment, order, writ, injunction, decree or award issued by
any Governmental Authority is applicable to any Seller which
affects any of the Shares, the Company, this Agreement or any
of the transactions contemplated hereby.
(f) Ownership of the Shares. Each Seller is the owner
of record and beneficially of the number of issued and
outstanding shares listed in Schedule C. All of the Shares are
free and clear of any liens, claims and encumbrances
(collectively, "Encumbrances"). Each Seller has the right to
transfer title to the Shares to the Purchaser. There are no
commitments, agreements or rights relating to the purchase,
sale or other disposition of the Shares or any interest
therein (including, without limitation, any subscription
agreement, preemptive right or right of first refusal). None
of the Shares are subject to any voting trust, voting
agreement, or other similar agreement or understanding with
respect to the voting or control thereof, nor is any proxy in
existence with respect to any of the Shares. Upon the sale of
the Shares to the Purchaser pursuant to this Agreement, the
Purchaser will own the Shares free and clear of all
Encumbrances.
(g) Disclosure. No representation or warranty made by
Sellers in this Agreement and in any schedule or exhibit
hereto, to the best knowledge of Sellers, contains any untrue
statement of material fact or omits any material fact in order
to make the statements made and information contained therein
as of the date hereof not misleading.
(h) Brokers, Finders. The Seller has no liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated
by this Agreement for which Purchaser could become liable or
obligated.
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Section 2.02 Representations of the Sellers as to the
Company. Each Seller represents and warrants to the Purchaser
that the following is true and correct with respect to the
Company as of the date hereof and shall be true and correct as
of the Closing Date. The representations and warranties set
forth in this Section 2.02 are several obligations, meaning
that the particular Seller making the representation and
warranty will be solely therefor to the extent provided in
Section 6.02 hereof for loss, etc. the Purchaser may suffer as
a result of any breach thereof:
(a) Organization, Standing and Qualification of the
Company. The Company is a corporation duly organized, validly
existing and in good standing under the laws of Texas and the
Company has all necessary corporate power and authority to
engage in the business in which it is presently engaged. The
Company has not qualified to do business as a foreign
corporation in any state other than California. Sellers have
delivered to the Purchaser true, correct and complete copies
of the certificate of incorporation and bylaws of the Company,
and all amendments thereto.
(b) Capital Structure of the Company. The authorized
capital stock of the Company consists of 1,000 shares of no
par value common stock, of which 1,000 shares are issued and
outstanding. No other class or series of capital stock of the
Company is or has been authorized, nor has the Company
authorized or issued, nor does it have outstanding, any other
securities (including, without limitation, options, warrants,
conversion privileges or other rights, contingent or
otherwise, to purchase any capital stock or other securities
of the Company). All of the Shares are duly authorized,
validly issued, fully paid and non-assessable. All of the
Shares were issued in compliance with all applicable
Requirements of Law (including securities laws) and in
compliance with the certificate of incorporation and bylaws of
the Company. There are no outstanding subscriptions for any
securities to be issued by the Company.
(c) No Violation of Statute or Breach of Contract. To
the best knowledge of the Sellers, the Company is not in
default under, or in violation of, (a) any material applicable
Requirement of Law, or (b) any material Contractual
Obligation. The Company has not received notice that any
Person claims that the Company has committed such a default or
violation.
(d) Government and Other Consents. No consent,
authorization, license, permit, registration or approval of,
or exemption or other action by, any Governmental Authority is
required to be obtained or made, and no consent of any third
party is required to be obtained by the Company in connection
with the execution and delivery of this Agreement or with the
consummation of the transactions contemplated hereby.
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(e) Effect of Agreement. The execution and delivery
of this Agreement by the Sellers, performance of the
obligations of the Sellers hereunder and consummation of the
transactions contemplated hereby will not (i) result in a
breach or violation of any Requirement of Law applicable to
the Company; (ii) result in the breach of, or be in conflict
with, any term, covenant, condition or provision of, any
Contractual Obligation of the Company; or (iii) result in the
creation or imposition of any Encumbrance upon any assets of
the Company.
(f) Financial Statements. The audited balance sheet
and income statement of the Company as of December 31, 1998,
December 31, 1999, and September 30, 2000, to be procured and
paid for by the Purchaser and approved by the Sellers (the
"Financial Statements") shall be complete and accurate and
fairly present the assets and liabilities of the Company as of
the dates and for the periods therein specified.
(g) Assets and Business. The Company owns the
tangible assets listed in Schedule D (plus tangible assets
acquired after the date hereof and minus tangible assets
disposed of in the ordinary course of business after the date
hereof) free and clear of all Encumbrances except as set forth
in Schedule D, as such Schedule may be amended to include
Encumbrances attaching after the date hereof to tangible
assets acquired after the date hereof.
(h) Absence of Undisclosed Liabilities. Except as
included in the Financial Statements and except for
liabilities which arise after the date of the Financial
Statements in the ordinary course of business, to the best of
Sellers' knowledge, the Company does not have any material
debt, liability, or obligation as of the Closing Date of any
nature, accrued, absolute or contingent, due or to become due,
liquidated or unliquidated (each, "Undisclosed Liability").
For purposes of this subsection 2.01(h), a liability shall be
deemed to be material if it exceeds 5% of the Company's assets
as shown on the Financial Statements.
(i) Tax Returns and Payments. All income tax returns,
federal, state, local, foreign and other, including, without
limitation, all federal income tax returns and reports for
each fiscal year of the Company through the fiscal year ended
December 31, 1999 required to be filed by and/or on behalf of
the Company in respect of any income taxes (including without
limitation all foreign, federal, state, county and local
income taxes) have been filed, and the Company has paid all
income taxes shown thereon as owing except where the failure
to file or to pay income taxes would not have a material
adverse affect on the financial condition of the Company.
There are no deficiency assessments against the Company with
respect to any foreign, federal, state, local or other taxes.
There are no outstanding agreements or waivers extending the
period of limitation applicable for assessment or collection
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for any federal, state, local or foreign tax, or for the
filing of any tax return, in respect of the Company for any
period. Neither the federal tax returns nor any state, county,
local or foreign tax returns of the Company have in the past
been audited by the Internal Revenue Service or any other
taxing authority. The Sellers have heretofore made available
to the Purchaser copies of all federal, state, local and
foreign tax returns or reports of the Company filed prior to
the Closing Date. To Sellers' best knowledge, all tax returns
filed by or on behalf of the Company are materially true,
correct and complete. To the best knowledge of the Sellers,
all taxes that the Company is or was required to withhold or
collect (including, without limitation, payroll taxes) have
been duly withheld or collected and paid to the proper
Governmental Authority.
(j) Contracts. Attached hereto as Schedule E is a
list of all written agreements and contracts to which the
Company is a party or by which it is bound (the "Contracts").
Sellers have no reason to believe the Contracts are not valid,
legally binding and enforceable in accordance with their terms
and are in full force and effect. Copies of the Contracts have
been delivered to the Purchaser.
(k) Litigation. Except as set forth on Schedule F, no
claim, action, suit, or other proceeding against the Company
is pending or, to the knowledge of Sellers, is threatened
before or by any court, administrative or regulatory body, or
other Governmental Authority. The Sellers know of no
investigation of the Company by any administrative agency of
any federal, state or local government. No judgment, order,
writ, injunction, decree or award issued by any Governmental
Authority is applicable to the Company.
(l) Accounts, Powers of Attorney. There are no
persons holding a power of attorney on behalf of the Company
or otherwise holding the right to act as an agent on behalf of
the Company. Schedule G lists the names and addresses of each
bank or other financial institution in which on the date
hereof the Company has an account, deposit or safe-deposit
box, including the number of each such account, deposit and
safe-deposit box.
(m) Insurance. Except as set forth in Schedule H,
there are no insurance policies maintained by or on behalf of
the Company in effect on the Closing Date.
(n) No Subsidiaries or Joint Ventures. The Company
does not own, directly or indirectly, beneficially or of
record, or have any obligation to acquire, any stock of, or
other equity or ownership interest in, any Person. The Company
is not a party to or involved in any joint venture.
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(o) Accounts Receivable. Schedule I shall be
completed by the Company on the Closing date to include a
complete and accurate list of all accounts receivable of the
Company as of the Closing Date.
(p) Minute Books. All stock books, stock ledgers and
minute books of the Company have been made available to
Purchaser for review.
(q) Employees. The Company has approximately
twenty-five employees and except as set forth on Schedule J,
no employee benefit plans or pension plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974 ("ERISA") or any incentive, bonus, stock option, stock
appreciation or parachute program or any other type of
employee compensation arrangement or program. Neither the
Company nor any employee benefit or pension plan previously
maintained by the Company has any unsatisfied liability or
obligation to any former employee of the Company or in
connection with any employee benefit or pension plan or any
incentive, bonus, stock option, stock appreciation or
parachute program.
(r) Toxic Wastes; Employee Safety, etc.
(i) Definitions. For purposes of this Agreement, the following
capitalized terms shall have the meanings set forth below:
a) "Hazardous Substances" shall mean any chemical, compound,
material, mixture, living organism or substance that is now or
hereafter defined or listed in, or otherwise classified or
regulated in any way pursuant to, any Environmental Laws as a
"hazardous waste," "hazardous substance," "hazardous
material," "extremely hazardous waste," "infectious waste,"
"toxic substance," "toxic pollutant" or any other formulation
intended to define, list, or classify substances by reason of
deleterious properties, including without limitation,
ignitability, corrosivity, reactivity, carcinogenicity or
toxicity, such materials to include without limitation, oil,
waste oil, petroleum waste petroleum, polychlorinated
biphenyls (PCBs), asbestos, radon, natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for
fuel (or mixtures of natural gas and such synthetic gas).
b) "Environmental Laws" shall mean applicable federal, state, or
local laws, including without limitation, common law,
statutes, rules, regulations, codes or ordinances,
requirements under licenses, permits, franchises, approvals or
contracts, orders, demands, decrees, judgments, directives,
injunctions and requirements of any other governmental
authority, relating to the protection of health, safety or the
environment.
(ii) Neither the Sellers nor the Company are in actual or alleged
violation of any Environmental Laws, arising from the Sellers or
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the Company's ownership, operation or use of any property prior to
the Closing Date, or arising from their ownership, operation or
use of any of their other current or former assets or businesses.
(iii) To the Sellers' knowledge, no property currently or formerly
owned, operated or used by the Company or any property to which
the Company may have transported, treated or disposed or arranged
for the transport, treatment or disposal of Hazardous Substances
is listed as a site on the National Priorities List (as defined in
the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended) or comparable federal, state or
local list of sites of environmental concern. In addition, to the
Sellers' knowledge, none of such sites are or have been the
subject of any remediation, removal, cleanup, investigation,
response action, claim, judgment or enforcement action regarding
any actual or alleged presence of Hazardous Substances.
(iv) To the Sellers' knowledge, the Company has not received any
written notice or report of any releases of Hazardous Substances
on, under, from or into any property formerly owned, operated or
used by the Company during the time of its ownership, operation or
use or, to the knowledge of the Sellers, prior to the Company's
ownership, operation or use.
(v) To the best of Sellers' knowledge, there are no civil, criminal or
administrative actions, suits, demands, claims, hearings,
proceedings or notices pending or, threatened against the Company
under any Environmental Laws, including without limitation, those
related to any allegations of economic loss, personal injury,
illness or damage to real or personal property or the environment.
To the Sellers' knowledge, there are no facts or circumstances
which are reasonably likely to give rise to such a claim.
(vi) The Company is not a party or a successor in interest to any
contract or agreement, including without limitation, any purchase
agreements, leases, indemnities or guaranties, pursuant to which
the Company has assumed or agreed to be responsible for any
current or contingent liabilities with respect to any Hazardous
Substances or any matters under Environmental Laws.
(s) Permits, Licenses, Etc. No franchise, license,
permit, certificate, authorization, right or other approval
issued or granted by any Governmental Authority to or for the
benefit of the Company is in existence or effect, except for
the Company's incorporation in Texas, the Company's
authorization to transact business in California as a foreign
corporation, and the Company's certificate of occupancy to
occupy its offices.
(t) Officers; Directors. Schedule K contains a
complete and correct list of all of the officers and directors
of the Company.
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ARTICLE III.
Representations and Warranties of the Purchaser
Section 3.01 The Purchaser hereby represents and
warrants to the Sellers as follows:
(a) Existence. The Purchaser is a corporation duly
organized and validly existing under the laws of the State of
Nevada.
(b) Authorization; No Violation. The execution,
delivery and performance by the Purchaser of this Agreement
are within the Purchaser's corporate powers and have been duly
authorized by all necessary action, and do not contravene in
any material respect any Requirement of Law or Contractual
Obligation of the Purchaser.
(c) Government Authorization. No authorization or
approval or other action by, and no notice to or filing with,
any Governmental Authority is required to be obtained or made
by the Purchaser for the due execution, delivery and
performance by the Purchaser of this Agreement.
(d) Enforceable Obligations. This Agreement and the
Voting Agreement and employment agreements (provided for in
Sections 4.02(d) and (e), respectively, when executed) have
been duly executed and delivered on behalf of the Purchaser
and constitute the legal, valid and binding obligations of the
Purchaser enforceable against the Purchaser in accordance with
their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity.
(e) No Litigation. No claim, action, suit,
investigation or other proceeding of or before any arbitrator
or Governmental Authority is pending or, to the knowledge of
the Purchaser, threatened by or against the Purchaser with
respect to this Agreement or any of the transactions
contemplated hereby.
(f) Brokers, Finders. The Purchaser has not retained
any person to act on its behalf as a broker or finder in
connection with the purchase of the Shares.
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(g) Investment Intent. The Shares are being acquired
by the Purchaser for its own account and not with a view to
distribution within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"). The Purchaser acknowledges
that there is no existing public market for the Shares and
that no registration statement relating to the Shares has been
filed under the Securities Act or any applicable state
securities laws, and that the Shares must be held by it for an
indefinite period of time unless the Shares are subsequently
registered under the Securities Act and state securities laws
or unless an exemption from any such applicable registration
requirement is available, and the Purchaser acknowledges that
there is no assurance or obligation as to any such
registration or exemption.
ARTICLE IV.
Conditions to Closing
Section 4.01 Conditions to Purchaser's Obligations.
The obligation of the Purchaser to purchase the Shares at the
Closing is subject to the fulfillment on or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties Correct;
Performance of Obligations. The representations and warranties
made by the Sellers in Article II hereof shall be true and
correct in all material respects when made, and shall be true
and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on and as
of the Closing Date. The Sellers shall have performed in all
material respects all obligations and conditions herein
required to be performed or observed by them on or prior to
the Closing Date.
(b) Qualifications. All actions and steps necessary
to assure compliance with applicable federal and state
securities laws shall have been duly obtained and shall be
effective on and as of the Closing, except for such filings as
are required or permitted by state or federal securities laws
subsequent to the Closing.
(c) Dividends. The Company shall not have declared or
paid any dividend or otherwise changed its capitalization
between the date hereof and the Closing Date.
(d) Audited Financial Statements. Purchaser shall
have received and approved the Financial Statements. The
Purchaser agrees that it is the Purchaser's sole obligation to
pay for such audit and that neither the Sellers nor the
Company shall have any liability for such expense.
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Section 4.02 Conditions to Obligations of the
Sellers. The Sellers' obligation to sell the Shares at the
Closing is subject to the fulfillment on or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties Correct;
Performance of Obligations. The representations and warranties
of the Purchaser in Article III hereof shall be true and
correct in all material respects when made, and shall be true
and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on and as
of the Closing Date, and the Purchaser shall have performed in
all material respects all obligations and conditions herein
required to be performed by it on or prior to the Closing
Date.
(b) Incumbency Certificate of the Purchaser. The
Sellers shall have received a certificate of the Purchaser in
its capacity as Secretary of the Purchaser, certifying the
names and signatures of officers of the Purchaser authorized
to sign this Agreement and the other documents to be delivered
hereunder on behalf of the Purchaser.
(c) Escrow Agreement. The Escrow Agreement shall have
been executed by the Purchaser, the Sellers and the escrow
agent and the shares of Preferred Stock shall have been
deposited in escrow pursuant thereto.
(d) Voting Trust Agreement. A Voting Trust Agreement
in form and substance acceptable to the Sellers shall have
been executed by the Sellers and the Purchaser, providing for
the voting by a trustee selected by the Sellers of the shares
of the Company.
(e) Employment Agreements. Employment Agreements in
form and substance acceptable to the Sellers shall have been
executed by the Sellers and the Company.
(f) Audited Financial Statements. Sellers shall have
received and approved the Financial Statements.
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ARTICLE V.
Closing Deliveries
Section 5.01 Sellers' Deliveries. At the Closing, in
addition to any other documents or agreements required under
this Agreement, the Sellers shall deliver or cause to be
delivered to the Purchaser the following:
(a) Stock certificates evidencing the Shares duly
endorsed in blank, or accompanied by stock powers duly
executed in blank, in a form reasonably satisfactory to the
Purchaser.
(b) Copies of all consents and approvals obtained,
and all registrations, qualifications, declarations, filings
and notices made, by the Sellers pursuant to Section 4.01(b)
hereof.
(c) All records, documents and files of the Company
including, without limitation, all minute books, stock records
and internal accounting records.
(d) Such other documents, assignments, instruments of
conveyance and certificates as reasonably may be required by
the Purchaser to consummate this Agreement and the
transactions contemplated hereby.
Section 5.02 Purchaser's Deliveries. At the Closing,
in addition to any other documents or agreements required
under this Agreement, the Purchaser shall deliver to the
Sellers the Preferred Stock in accordance with the
instructions of Sellers, together with. such other documents
as reasonably may be required by the Sellers to consummate
this Agreement and the transactions contemplated hereby and
the Purchaser shall deliver one million shares of Preferred
Stock to the Escrow Agent.
ARTICLE VI.
Survival of Representations; Indemnification
Section 6.01 Survival of Representations. The parties
agree that, notwithstanding any right or ability of the
Purchaser fully to investigate the affairs of the Company, any
knowledge of facts determinable by the Purchaser pursuant to
such investigations or right of or ability to investigate, the
Purchaser has the right to rely fully upon the
representations, warranties, covenants and agreements of the
Sellers contained in this Agreement and on the accuracy of any
schedule, exhibit, document or certificate annexed hereto. All
representations and warranties of the parties contained herein
shall survive the Closing until the expiration of the time
periods set forth in Section 6.04.
Section 6.02 Indemnification by the Sellers.
14
(a) Subject to the provisions of this Article VI,
each Seller shall indemnify and hold harmless the Company, the
Purchaser and their affiliates and the officers, partners,
directors, employees, agents, owners, successors and assigns
thereof from such Seller's Allocable Portion of any loss,
damage, liability or expense, including, without limitation,
reasonable expenses of investigation and reasonable attorneys'
fees and expenses incurred in connection with any action, suit
or proceeding against any thereof ("Adverse Consequence")
incurred or suffered by such party and arising out of or
resulting from (i) any material breach of any representation
or warranty contained in Article II of this Agreement
(provided, however, that the Sellers shall not be deemed to
have breached the provisions of Section 2.01(g) unless the
Sellers are also liable to the Purchaser under Section 10b-5
of the Securities Exchange Act of 1934 or Section 12(2) of the
Securities Act of 1933), (ii) any material breach of any
covenant made by Sellers hereunder, or (iii) any lawsuit or
other proceeding or claim brought by any third party after the
Closing against the Company, the Purchaser, or any of their
respective officers, partners, directors, employees, agents,
owners, successors and assigns with respect to any acts or
omissions of the Company prior to the Closing For purposes of
this Section 6.02(a), the term "material" means a breach which
would have a material adverse effect on the Company's
business, taken as a whole. Notwithstanding the provisions of
this Section 6.02(a), the Sellers shall not have any
obligation to indemnify and hold harmless the Purchaser from
and against any Adverse Consequences caused by the breach of
any representation or warranty or covenant of the Sellers
contained in this Agreement (i) until the Purchaser has
suffered Adverse Consequences for which the purchaser is
afforded indemnification under Section 6.02 in excess of a
$75,000 ($115,000 of the shares provided from Section 1.01(b)
are delivered from escrow to the Sellers) aggregate deductible
(after which point the Sellers will be obligated only to
indemnify the Purchaser from and against further losses) or
thereafter, (ii) to the extent the Adverse Consequences
suffered by the Purchaser by reason of all such breaches
exceeds a $2,000,000 ($3,000,000 if the shares provided for in
Section 1.01(b) are delivered from escrow to the Sellers)
aggregate ceiling (after which point the Sellers have no
obligation to indemnify and hold harmless the Purchaser from
and against further such Adverse Consequences. The term
"Allocable Portion" with respect to a Seller means the number
of Shares owned by such Seller divided by the number of Shares
owned by all Sellers.
15
(b) Anything to the contrary contained herein
notwithstanding, in the event of liability of any or all the
Sellers to the Purchaser under this Article VI, the Sellers
may discharge such liability by transferring to the Purchaser
shares of Preferred Stock which shall be deemed to have a
value per share equal to the average public trading price of
the Purchaser's common stock during the 20 trading days prior
to such transfer, but not less than $1 per share.
Section 6.03 Indemnification by the Purchaser. The
Purchaser shall indemnify and hold Sellers harmless from any
loss, damage, liability or expense (including, without
limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses) in connection with
any action, suit or proceeding brought against Sellers, either
jointly or severally, incurred or suffered by Sellers and
arising out of or resulting from (i) any breach of any
representation, warranty, or covenant made by the Purchaser
hereunder, or (ii) any lawsuit or other proceeding or claim
brought by a third party after the Closing against one or more
of the Sellers with respect to any acts or omissions of the
Purchaser or the Company after the Closing.
Section 6.04 Time Periods. The indemnification
obligations under this Article VI shall continue for the
periods specified below and shall terminate with the
expiration of such respective periods:
(a) as to representations and warranties set forth in
Section 2.01(f), such representations and warranties shall
survive the Closing indefinitely;
(b) as to representations and warranties set forth in
Section 2.02(i), until the lapse of the statute of limitations
applicable to the matters described therein;
(c) as to all other representations and warranties
and breaches of any other covenant or undertaking, for two (2)
years after the Closing Date.
Any claim or demand against any Sellers or the Purchaser of which notice has
been given pursuant to Section 6.06 at or prior to the expiration of the related
period shall continue to be subject to indemnification hereunder notwithstanding
the expiration of such period.
Section 6.05 Notice Claim. Purchaser, on the one
hand, and each of the Sellers, on the other hand, shall
promptly notify the other of any claim, suit or demand of
which the notifying party has actual knowledge which entitles
it to indemnification under this Article VI, provided,
however, that the delay or failure of any party required to
provide such notification shall not affect the liability of
the indemnifying party hereunder except to the extent the
indemnifying party is harmed by such delay or failure.
16
Section 6.06 Defense. If the liability or claim for
which indemnification under this Article VI is sought is
asserted by a third party, the indemnifying party shall have,
at its election, the right to defend any such matter at its
sole cost and expense through counsel chosen by it and
reasonably acceptable to the indemnified party (provided that
the indemnifying party shall have no such right if it is
contesting its liability under this Article VI). If the
indemnifying party so undertakes to defend, the indemnifying
party shall promptly notify the indemnified party hereto of
its intention to do so. The indemnifying party shall not,
without the indemnified party's written consent, settle or
compromise any claim or consent to an entry of judgment which
does not include as an unconditional term thereof a release of
the indemnified party.
Section 6.07 Cooperation and Conflicts. Each party
agrees in all cases to cooperate with the indemnifying party
and its counsel in the defense of any such liabilities or
claims. The indemnifying party and the indemnified party or
parties may be represented by the same counsel unless such
representation would be inappropriate due to conflicts of
interest between them. In addition, the indemnified party or
parties shall at all times be entitled to monitor and
participate in such defense through the appointment of counsel
of its or their own choosing, at its or their own cost and
expense.
ARTICLE VII.
Miscellaneous
Section 7.01 Waiver. Any extension or waiver with
respect to any agreement or condition contained herein or the
breach thereof shall be valid only if set forth in a separate
instrument in writing signed by the party to be bound thereby.
Any waiver of any term or condition shall not be construed as
a waiver of any subsequent breach or a subsequent waiver of
the same term or condition, or a waiver of any other term or
condition, of this Agreement. The failure of any party to
assert any of its rights hereunder shall not constitute a
waiver of any such rights.
Section 7.02 Further Assurances. The Sellers jointly
and severally agree, without further consideration, to execute
and deliver following the Closing such other instruments of
transfer and take such other action as the Purchaser may
reasonably request in order to put the Purchaser in possession
of, and to vest in the Purchaser, good and valid title to the
Shares free and clear of any Encumbrances in accordance with
this Agreement and to otherwise consummate the transactions
contemplated by this Agreement.
17
Section 7.03 Entire Agreement; Amendment. This
Agreement and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement
among the parties hereto with regard to the subject matter
hereof and thereof and supersede all prior and contemporaneous
agreements and understandings, oral or written, among the
parties hereto with respect to such subject matter. Any term
of this Agreement may be amended and the observance of any
term of this Agreement may be waived only with the written
consent of the parties hereto.
Section 7.04 Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable
of being enforced by any law, rule or regulation or public
policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent
possible.
Section 7.05 Notices, etc. All notices and other
communications required or permitted hereunder shall be in
writing and shall be delivered personally, mailed by
first-class mail, postage prepaid, or sent by reputable
overnight courier service addressed (a) if to the Purchaser,
at the Purchaser's address set forth on Section 1.02 hereto or
at such other address as such Purchaser shall have furnished
to the Sellers by 10 days' notice in writing, with a copy to
(b) if to any Sellers, at the addresses set forth on Exhibit B
hereto, or such other address as such Sellers shall have
furnished to the Purchaser by 10 days' notice in writing.
Section 7.06 Expenses. All costs and expenses,
including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in
connection with the negotiation, preparation, execution and
delivery of this Agreement and consummation of the
transactions contemplated hereby shall be paid by the party
incurring such costs and expenses; however, the Company shall
pay, at the Closing, the legal fees and disbursements of legal
counsel to the Sellers and the Purchaser shall pay for the
audit of the Company.
Section 7.07 Governing Law; Jurisdiction. This
Agreement shall be governed in all respects by the laws of the
State of California without application of principles of
conflicts of laws. Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this
18
Agreement may be brought against any of the parties in any
state or federal court located in the State of California,
County of Los Angeles, and each of the parties consents to the
jurisdiction of such courts in any such action or proceeding
and waives any objection to venue laid therein. Process in any
action or proceeding referred to in the preceding sentence may
be served on any party anywhere in the world.
Section 7.08 Benefit of Agreement; Assignment. This
Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns
of the parties. This Agreement may not be assigned by
operation of law or otherwise by the Purchaser without the
express written consent of the Sellers (which consent may be
granted or withheld in the sole discretion of the Sellers).
Notwithstanding the foregoing, this Agreement and the rights
hereunder may be (i) assigned as collateral security to any
lender of funds to the Company, and (ii) assigned by the
Purchaser after the Closing to the beneficial owners of the
Purchaser or to any subsequent purchaser or other holder of
all or a portion of the Shares, provided that in no event
shall the Purchaser be relieved from its obligations hereunder
in connection with any such assignment.
Section 7.09 WAIVER OF JURY TRIAL. EACH OF THE
PARTIES HERETO HEREBY WAIVES TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT ON ANY
MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR
IN ANY WAY CONNECTED WITH THIS AGREEMENT.
Section 7.10 Titles and Subtitles. The titles of the
Sections of this Agreement are for convenience of reference
only and are not to be considered in construing this
Agreement.
Section 7.11 Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one
instrument.
Section 7.12 Representation Disclaimer. Sellers shall
not be deemed to have made to Purchaser any representation or
warranty other than as expressly made by Sellers in Article II
hereof. Without limiting the generality of the foregoing, and
notwithstanding any otherwise express representations and
warranties made by Sellers in Article II hereof, Seller makes
no representation or warranty to Purchaser with respect to:
(a) any projections, estimates or budgets
heretofore delivered to or made available to
Purchaser of future revenues, expenses or
expenditures or future results of operations; or
19
(b) except as expressly covered by a
representation and warranty contained in Article II
hereof, any other information or documents (financial
or otherwise) made available to Purchaser or its
counsel, accountants or advisers with respect to the
Company.
Section 7.13 Purchaser's Due Diligence Investigation.
Purchaser has had over 60 days (such period, "Purchaser's Due
Diligence Period") in which to conduct its confirmatory due
diligence. During such Purchaser's Due Diligence Period,
Purchaser and its accountants, consultants, and advisers have
been permitted to review the premises, facilities, books and
records and contracts of the Company, and to conduct
interviews with the Company's senior management regarding the
business, operations, financial condition and results of
operations of the Company, for the purpose of confirming the
accuracy of the representations and warranties of Sellers
contained herein. Purchaser had the right, at any time during
the Purchaser's Due Diligence Period, at Purchaser's sole
discretion and without any liability or obligation, to
terminate all negotiations with the Sellers, except for the
Purchaser's obligation to pay for an audit of the Company.
Section 7.14 Sellers' Due Diligence Investigation.
Sellers have had over 60 days (such period, "Sellers' Due
Diligence Period") in which to conduct its confirmatory due
diligence. During such Sellers' due diligence period, Sellers
and their accountants, consultants, and advisers were
permitted to review the premises, facilities, books and
records and contracts of the Purchaser, and to conduct
interviews with the Purchaser's senior management regarding
the business, operations, financial condition and results of
operations of the Company, for the purpose of confirming the
accuracy of the representations and warranties of Purchaser
contained herein. Sellers had the right, at any time during
the Sellers' Due Diligence Period, at Sellers' sole discretion
and without any liability or obligation, to terminate all
negotiations with the Purchaser.
Section 7.15 Press Releases and Public Announcements.
No party shall issue any press release or make any public
announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of the
Purchaser and the Sellers; provided, however, that any party
may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the
disclosing party will use its efforts to advise the other
parties prior to making the disclosure).
Section 7.16 Holding Period. The Purchaser agrees
that, for purposes of Securities and Exchange Commission Rule
144, the holding period with respect to all shares of
Purchaser common stock delivered to the Sellers under this
20
Agreement, whether pursuant to conversion of shares of
Preferred Stock or otherwise, commences on the date of the
Closing and that upon the expiration of one year thereafter
(or any shorter period included in any amendment to Section
(d) of Rule 144), upon compliance with the other requirements
of Rule 144, as amended, such shares may be publicly sold.
Upon the expiration of two years after the Closing (or any
shorter period included in any amendment to Section (k) of
Rule 144), the Purchaser shall remove all restrictive legends
from certificates evidencing shares of Preferred Stock and
common stock issued upon the conversion thereof.
Section 7.17 Capital for the Company. The Sellers
have disclosed to the Purchaser that the Company is in need of
$1,000,000 in capital. As a material inducement to the Sellers
to enter into this Agreement, the Purchaser has represented to
the Sellers that the Purchaser will conduct a private
placement of its common stock (the "Offering") in order to
raise funds for the Company. Accordingly, promptly after the
execution of this Agreement, the Purchaser shall conduct the
Offering and use its best efforts to raise capital, at least
one-third of which (not to exceed $1,000,000) will be loaned
to the Company on an interest-only basis at 6% per annum if
raised before the Closing. The loan will be converted to
capital at the Closing. If the Closing fails to occur, the
loan will be repaid in 20 equal quarterly installments of
principal and interest, with the first payment commencing on
April 1, 2001. If the offering closes after the Closing, at
least one-third of the funds raised (not to exceed $1,000,000)
will be contributed by the Purchaser to the Company as
capital.
21
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth in the heading hereof.
XxxxXxx.xxx, Inc.
By:________________________________
------------------------------------
Xxxx Xxxxxxx
------------------------------------
Xxxx X. Xxxxx
------------------------------------
Xxxxxxx Xxxxxxx
------------------------------------
Xxxxx Xxxx
22
"EXHIBIT "A"
ESCROW AGREEMENT
This Escrow Agreement, dated as of December____, 2000 (the "Closing
Date"), among XxxxXxx.xxx, a Nevada corporation ("Buyer"), Xxxx Xxxxxxx ("X.
Xxxxxxx"), Xxxx X. Xxxxx ("Xxxxx"), Xxxxxxx Xxxxxxx ("X. Xxxxxxx"), and Xxxxx
Xxxx ("Cody" and collectively with A. Anthony, Jones, and X. Xxxxxxx,
"Sellers"), and ____________________________________, a ___________________ as
escrow agent ("Escrow Agent").
This is the Escrow Agreement referred to in the Stock Purchase
Agreement dated December ___, 2000 (the "Purchase Agreement") among Buyer and
Sellers. Capitalized terms used in this agreement without definition shall have
the respective meanings given to them in the Purchase Agreement.
The Parties, intending to be legally bound, hereby agree as follows:
1. ESTABLISHMENT OF ESCROW
(a) Buyer is depositing with Escrow Agent one million (1,000,000)
shares of Buyer's Class A convertible stock (together with any securities issued
by Buyer as a result of the anti-dilution provisions of the shares, (the
"Shares"). Escrow Agent acknowledges receipt thereof.
(b) Escrow Agent hereby agrees to act as escrow agent and to hold,
safeguard and disburse the Shares pursuant to the terms and conditions hereof.
2. DELIVERY OF SHARES
(a) If Sellers give a notice ("Notice") to Buyer and Escrow Agent stating that
the Sellers are entitled to delivery of the Shares in accordance with Section
1.01(b) of the Purchase Agreement, within 10 days after the 10th business day
following such Notice, Escrow Agent shall deliver the Shares to the Sellers as
follows:
X. Xxxxxxx............................. 225,000
Xxxxx.................................. 450,000
X. Xxxxxxx............................. 225,000
Cody................................... 100,000
(b) If Buyer gives notice to Sellers and Escrow Agent disputing
Seller's entitlement to delivery of the Shares, (a "Counter Notice") within 10
days following receipt by Escrow Agent of the Notice given under Section 3(a),
such dispute shall be resolved as provided in Section 3(c).
1
(c) If a Counter Notice is received by the Escrow Agent, Escrow Agent
shall deliver the Shares only in accordance with (i) joint written instructions
of Buyer and Sellers or (ii) a final non-appealable order of a court of
competent jurisdiction. Any court order shall be accompanied by a legal opinion
by counsel for the presenting party satisfactory to Escrow Agent to the effect
that the order is final and non-appealable. Escrow Agent shall act on such court
order and legal opinion without further question.
3. TERMINATION OF ESCROW
On June 1, 2000, Escrow Agent shall deliver the Shares to Buyer unless
(i) Escrow Agent shall have previously received a Notice from the Sellers as
provided in Section 3(a), or (ii) Buyer has given a Counter Notice to Sellers
and Escrow Agent in which case the Shares shall be retained by Escrow Agent, in
either case until it receives joint written instructions of Buyer and Sellers or
a final non-appealable order of a court of competent jurisdiction as
contemplated by Section 3(c).
4. DUTIES OF ESCROW AGENT
(a)......Escrow Agent shall not be under any duty to give the Shares
held by it hereunder any greater degree of care than it gives its own similar
property.
(b)......Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against Escrow Agent, the Buyer shall jointly and severally indemnify and hold
harmless Escrow Agent (and any successor Escrow Agent) from and against any and
all losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursements, arising out of and in connection
with this Agreement.
(c)......Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent may conclusively presume that the undersigned representative of any party
hereto which is an entity other than a natural person has full power and
authority to instruct Escrow Agent on behalf of that party unless written notice
to the contrary is delivered to Escrow Agent.
(d)......Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Agreement and shall not be liable for any
action taken or omitted by it in good faith in accordance with such advice.
2
(e)......Escrow Agent does not have any interest in the Shares
deposited hereunder but is serving as escrow holder only and having only
possession thereof.
(f)......Escrow Agent makes no representation as to the validity,
value, or genuineness of the Shares or of any document delivered to it.
(g)......Escrow Agent shall not be called upon to advise any party as
to the wisdom in selling or refraining from any action with respect to the
shares.
(h)......Escrow Agent (and any successor Escrow Agent) may at any time
resign as such by delivering the Shares to any successor Escrow Agent jointly
designated by the other parties hereto in writing, or to any court of competent
jurisdiction, whereupon Escrow Agent shall be discharged of and from any and all
further obligations arising in connection with this Agreement. The resignation
of Escrow Agent will take effect on the earlier of (a) the appointment of a
successor (including a court of competent jurisdiction) or (b) the day which is
30 days after the date of delivery of its written notice of resignation to the
parties hereto. If at that time Escrow Agent has not received a designation of a
successor Escrow Agent, Escrow Agent's sole responsibility after that time shall
be to retain and safeguard the Shares until receipt of a designation of
successor Escrow Agent or a joint written disposition instruction by the other
parties hereto or a final non-appealable order of a court of competent
jurisdiction.
(i)......In the event of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection with the
Shares or in the event that Escrow Agent is in doubt as to what action it should
take hereunder, Escrow Agent shall be entitled to retain the Shares until Escrow
Agent shall have received (i) a final nonappealable order of a court of
competent jurisdiction directing delivery of the Shares or (ii) a written
agreement executed by the other parties hereto directing delivery of the Escrow
Fund, in which event Escrow Agent shall disburse the Shares in accordance with
such order or agreement. Any court order shall be accompanied by a legal opinion
by counsel for the presenting party satisfactory to Escrow Agent to the effect
that the order is final and non-appealable. Escrow Agent shall act on such court
order and legal opinion without further question.
3
5. LIMITED RESPONSIBILITY
This Agreement expressly sets forth all the duties of Escrow Agent with
respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this agreement against Escrow Agent. Escrow Agent
shall not be bound by the provisions of any agreement among the other parties
hereto except this Agreement.
6. NOTICES
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt) provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers: Xxxx Xxxxxxx [HOLD]
Facsimile No.:
--------------------
with copy to: Xxxxxx X. Xxxxxxxx, Esquire
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000-0000
Facsimile No.: 000-000-00000
Buyer: XxxxXxx.xxx,. Inc.
Attention:
------------------------
Facsimile No.:
--------------------
Escrow Agent:
----------------------------------
Attention:
------------------------
Facsimile No.:
--------------------
with copy:
----------------------------------
Attention:
------------------------
Facsimile No.:
--------------------
4
7. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of California, County of ________________, or
it has or can acquire jurisdiction, in the United States District Court for the
__________________ District of California, and each of the parties consents to
the jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceedings and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
8. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original and all of which, when taken together,
will be deemed to constitute one and the same.
9. SECTION HEADINGS
The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation.
10. WAIVER
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be defined to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11. EXCLUSIVE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
5
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the Buyer, the
Sellers and the Escrow Agent.
6
12. GOVERNING LAW
This Agreement shall be governed by the laws of the State of California
without regard to conflicts of law principles.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
Buyer:
Sellers:
XxxxXxx.xxx, Inc.
By:
------------------------ ---------------------------------
As: Xxxx Xxxxxxx
------------------------
Escrow Agent:
Xxxx X. Xxxxx
By:
------------------------
As:
------------------------ ---------------------------------
Xxxxxxx Xxxxxxx
Xxxxx Xxxx
7
EXHIBIT "B"
Sellers' Addresses
Xxxx Xxxxxxx
4 Calaneva #00 Xxxxxxx Xxxx
Xxxxxxx Xxx, XX. 00000
Xxxx Xxxxx
000 Xxxxxxxx Xx.
Xxx Xxxx, XX 00000
Xxxxx Xxxx
125 Xxxxx
Xxxxxx,XX 00000
Xxxxxxx Xxxxxxx
000 Xxxxxxx
Xxxxx Xxxxx, XX 00000
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SCHEDULE A
List of Sellers
Xxxx Xxxxxxx
4 Calaneva #00 Xxxxxxx Xxxx
Xxxxxxx Xxx, XX. 00000
Xxxx Xxxxx
000 Xxxxxxxx Xx.
Xxx Xxxx, XX 00000
Xxxxx Xxxx
125 Xxxxx
Xxxxxx,XX 00000
Xxxxxxx Xxxxxxx
000 Xxxxxxx
Xxxxx Xxxxx, XX 00000
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SCHEDULE B
Certification of Determination
CERTIFICATE OF DESIGNATION, NUMBER, POWERS
PREFERENCES AND RELATIVE, PARTICIPATING
OPTIONAL, AND OTHER SPECIAL RIGHTS AND THE
QUALIFICATIONS, LIMITATIONS, RESTRICTIONS, AND
OTHER DISTINGUISHING CHARACTERISTICS OF
SERIES A PREFERRED STOCK
OF
XXXXXXX.xxx, INC.
It is hereby certified that
1. The name of the corporation (hereinafter called the "Corporation")
is XxxxXxx.xxx, Inc.
2. The certificate of incorporation of the Corporation authorizes the
issuance of 25,000,000 shares of Preferred Stock with a par value to be
determined by the Board of Directors and expressly vests in the Board of
Directors of the Corporation the authority provided therein to issue any or all
of said shares in one or more series and by resolution or resolutions, the
designation, number, full or limited voting powers, or the denial of voting
powers, preferences and relative participating, optional, and other special
rights and the qualifications, limitations, restrictions, and other
distinguishing characteristics of each series to be issued.
3. The Board of Directors of the Corporation, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a Series A issue of Preferred Stock:
RESOLVED, that three million (3,000,000) shares of the Preferred Stock (par
value $1.00 per share) are authorized to be issued by this Corporation pursuant
to its certificate of incorporation, and that there be and hereby is authorized
and created a series of preferred stock, hereby designed as the Series A
Preferred Stock, which shall have the voting powers, designations, preferences
and relative participating, optional or other rights, if any, or the
qualifications, limitations, or restrictions, set forth in such certificate of
incorporation and in addition thereto, those following:
(a) DESIGNATION. The Preferred Stock subject hereof shall be designated
Series A Preferred Stock ("Series A Preferred"). No other shares of
Preferred Stock shall be designated as Series A Preferred Stock.
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(b) DIVIDENDS. The holders of the shares of Series A Preferred shall be
entitled to receive dividends at the rate of 6% per annum of the
liquidation preference per share payable yearly in fully paid and
nonassessable shares of the Corporation's common stock. The number of
shares of common stock to be distributed as a dividend will be
calculated by dividing such payment by 95% of the Market Price on the
first trading day after January 1 of each year. The term "Market Price"
means, as of any date, the average of the daily closing price for the
five consecutive trading days ending on such date. Delivery of such
shares of common stock shall be made not later than January 15 of each
year. The closing price for each day shall be the last sales price or
in case no such reported sales take place on such day, the average of
the last reported bid and asked price, in either case, on the national
securities exchange on which the shares of common stock are admitted to
trading or listed, or if not listed or admitted to trading on such
exchange, the representative closing bid price as reported by the
NASDAQ National Market, or other similar organization if the NASDAQ
National Market is no longer reporting such information, the OTC
Bulletin Board, or if not so available, the fair market price as
determined, in good faith, by the Board of Directors of the Company.
No dividends may be declared or paid any other outstanding Corporation
securities unless all dividends on the Series A Preferred and any other
shares of Preferred Stock on a parity with the Series A Preferred have
been declared and paid in full through the immediately preceding
dividend payment date. The holders of the Series A Preferred at the
close of business on January 1 of each year will be entitled to receive
the dividend on the dividend payment date.
(c) CONVERSION. The Series A Preferred shall, at the option of the holder
thereof, at any time and from time to time, be convertible into that
number of fully paid and nonassessable shares of the common stock of
the Corporation, equal to the par value of the shares of Series A
Preferred Stock being converted plus accrued but unpaid dividends,
divided by 95% of the Market Price (as that term is defined above) of
the Corporation's common stock at the time of conversion. Subject to
the provisions of (d) and (e), below, in no event shall the holders of
the Class A Preferred Stock be entitled to receive more than 6,000,000
shares of common stock upon conversion of the Series A Preferred Stock.
The conversion right of the holders of Series A Preferred shall be
exercised by the surrender of the certificates representing shares to
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be converted to the Corporation or its transfer agent for the Series A
Preferred, accompanied by written notice electing conversion.
Immediately prior to the close of business on the date the Corporation
receives written notice of conversion, each converting holder of Series
A Preferred shall be deemed to be the holder of record of common stock
issuable upon conversion of such holder's Series A Preferred
notwithstanding that the share register of the Corporation shall then
be closed or that certificates representing such common stock shall not
then be actually delivered to such person. When shares of Series A
Preferred are converted, all accumulated and unpaid dividends (whether
or not declared or currently payable) on the Series A Preferred so
converted, to and not including the conversion date, shall be due and
payable. The conversion price shall be subject to adjustment if any of
the events described in the next paragraph of this paragraph (c)
occurs. The adjustment will be accomplished from time to time as
described in the following paragraph.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR STOCK DIVIDENDS AND FOR
COMBINATIONS OR SUBDIVISIONS OF COMMON STOCK. In the event that the
Corporation at any time or from time to time after the date of the
filing of this Certificate shall declare or pay, without consideration,
any dividend on the common stock payable in common stock or in any
right to acquire common stock for no consideration, or shall effect a
subdivision of the outstanding shares of common stock into a greater
number of shares of common stock (by stock split, reclassification or
otherwise than by payment of a dividend in common stock or in any right
to acquire common stock), or in the event the outstanding shares of
common stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of common stock, then the
Market Price, before such event used to calculate dividends and the
conversion rate, shall be proportionately decreased or increased, as
appropriate. In the event that this Corporation shall declare or pay,
without consideration, any dividend on the common stock payable in any
right to acquire common stock for no consideration, then the
Corporation shall be deemed to have made a dividend payable in common
stock in an amount of shares equal to the maximum number of shares
issuable upon exercise of such rights to acquire common stock.
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(e) ADJUSTMENTS FOR RECLASSIFICATION AND REORGANIZATION. If the common
stock issuable upon conversion of the Series A Preferred shall be
changed into the same or different number of shares of any other class
or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination
of shares provided for in (d) above, the Market Price shall,
concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Series A
Preferred shall be convertible into, in lieu of the number of shares of
common stock which the holders would otherwise have been entitled to
receive, a number of shares of such other class or classes of stock
equivalent to the number of shares of common stock that would have been
subject to receipt by the holders upon conversion of the Series A
Preferred immediately before that change.
(f) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If at any
time or from time to time after the date of this Certificate, there is
a capital reorganization of the common stock (other than as
subdivision, combination or reclassification of shares provided for in
(d) and (e), above), as a part of such capital reorganization,
provision shall be made so that the holders of the Series A Preferred
shall thereafter be entitled to receive upon conversion of the Series A
Preferred the number of shares of stock or other securities or property
of the Company to which a holder of the number of shares of common
stock deliverable upon conversion would have been entitled on such
capital reorganization. In any such case, appropriate adjustment shall
be made in the application of the provisions of (b), (c) and (f) with
respect to the rights of the holders of Series A Preferred after the
capital reorganization to the end that the provisions of (b), (c) and
(f) (including adjustment of the Market Price then in effect and the
number of shares issuable upon conversion of the Series A Preferred)
shall be applicable after that event and be as nearly equivalent as
practicable.
(g) NO IMPAIRMENT. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder
by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Certificate and in the
taking of all such action as may be necessary or appropriate in order
to protect the dividend and conversion rights of the holders of the
Series A Preferred against impairment.
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(h) CERTIFICATES AS TO ADJUSTMENTS. Upon the occurrence of each adjustment
or readjustment of the Market Price pursuant to this Certificate, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and
furnish to each holder of Series A Preferred a certificate executed by
the Corporation's President or Chief Financial Officer setting forth
such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based. The Corporation shall,
upon the written request at any time of any holder of Series A
Preferred, furnish or cause to be furnished to such holder a like
certificate setting forth such adjustments and readjustments.
(i) ISSUE TAXES. The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of shares
of common stock on conversion of Series A Preferred pursuant hereto;
provided, however, that the Corporation shall not be obligated to pay
any transfer taxes resulting from any transfer requested by any holder
in connection with any such conversion.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation shall at
all times reserve and keep available out of its authorized but unissued
shares of common stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred, such number of its
shares of common stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A
Preferred; and if at any time the number of authorized but unissued
shares of common stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Series A Preferred, the
Corporation will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued
shares of common stock to such number of shares as shall be sufficient
for such purpose, including, without limitation, engaging in best
efforts to obtain the requisite stockholder approval of any necessary
amendment to this Certificate.
(k) FRACTIONAL SHARES. No fractional share shall be issued upon the
conversion of any share or shares of Series A Preferred. All shares of
common stock (including fractions thereof) issuable upon conversion of
more than one share of Series A Preferred by a holder thereof shall be
aggregated for purposes of determining whether the conversion would
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result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance
of a fraction of a share of common stock, the Corporation shall, in
lieu of issuing any fractional share, pay the holder otherwise entitled
to such fraction a sum in cash equal to the Market Price of such
fraction on the date of conversion.
(l) REDEMPTION. The Series A Preferred shall be redeemable by the
Corporation at any time at the rate of $1.00 per share plus accrued and
unpaid dividends. The redemption price is payable in cash 45 days after
the delivery by the Corporation to each holder of Series A Preferred of
a written redemption notice. If redeemed, each holder of redeemed
Series A Preferred shall deliver to the Corporation the certificates
evidencing the redeemed Series A Preferred. Upon receipt of the
redemption notice, the holders of the Preferred Stock shall have 30
days to convert the Series A Preferred Stock into common stock at the
conversion rate set forth in (c), above.
(m) SINKING FUND. No provision shall be made for any sinking fund.
(n) LIQUIDATION RIGHTS. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders
of the Series A Preferred shall be entitled to receive $1.00 per share
before the holders of common shares and any other class or series of
preferred stock (other than a class or series created after the date
hereof which is entitled to share ratably with the Series A Preferred
in the payment of dividends or shall, in the event the amounts payable
thereon in liquidation are not paid in full, be entitled to share
ratably with the Series A Preferred in any other distribution of
assets, which class or series is hereinafter referred to as "Pari Passu
Stock") receive any amount as a result of a liquidation, dissolution or
winding up of the Corporation. If the assets to be distributed among
the holders of the Series A Preferred and any Pari Passu Stock are
insufficient to permit the Corporation to pay the full amount of the
liquidation preference, the Corporation shall distribute its assets
among the holders of the Series A Preferred and Pari Passu Stock
ratably based on the respective amounts otherwise payable to them. The
purchase or redemption by the Corporation of stock of any class, in any
number permitted by law, shall not for the purpose of this paragraph be
regarded as a liquidation, dissolution or winding up of the
Corporation. The Corporation shall not create, authorize, or issue any
shares of stock which are superior in preference to dividends or
liquidation proceeds to the Series A Preferred.
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(o) INVOLUNTARY LIQUIDATION. In the event of involuntary liquidation, the
shares of this series shall be entitled to the same amounts as in the
event of voluntary liquidation.
(p) PREFERENCE TO DIVIDEND. No dividends shall be declared or paid on the
common stock of the Corporation before all accumulated dividends on the
Series A Preferred Stock have been paid.
(q) OTHER RESTRICTIONS. There shall be no conditions or restrictions upon
the creation of indebtedness of the Corporation, or any subsidiary or
upon the creation of any other series of preferred stock with any other
preferences.
(r)
VOTING. (i) Each holder of shares of Series A Preferred shall be
entitled to one vote per share of Series A Preferred (except as
otherwise expressly provided herein or as required by law, voting
together with the Common Stock as a single class) and shall be entitled
to notice of any stockholders' meeting in accordance with the Bylaws of
the Corporation. If any of the events described in (d), (e), or (f)
above occur, the number of votes to which the holders of the Series A
Preferred are entitled shall be adjusted, as appropriate, to preserve
their voting power.
(ii) In addition to the voting rights set forth in (r)(i)
above, the holders of Series A Preferred, voting together as a class,
shall be entitled to elect two members of the Board of Directors at
each meeting and pursuant to each consent of the Corporation's
shareholders for the election of directors. In case of any vacancy of
in the office of a director occurring among the directors elected by
the holders of the Series A Preferred, the remaining director so
elected by the holders of the Series A Preferred may elect a successor
to hold the office for the unexpired term of the director whose place
shall be vacant. Any director who shall have been elected by the
holders of the Series A Preferred or any director so elected as
provided in the preceding sentence hereof, may be removed during the
aforesaid term of office, whether with or without cause, only by the
affirmative vote of the holders of a majority of the Series A
Preferred.
(s) STATED VALUE. The shares of Series A Preferred shall have a stated
value of $1.00 per share.
(t) OTHER PREFERENCES. The shares of the Series A Preferred shall no other
preferences, rights, restrictions, or qualifications, except as
otherwise provided by law or the certificate of incorporation of the
Corporation.
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FURTHER RESOLVED, that the statements contained in the foregoing
resolution creating and designating the said series A Preferred Stock and fixing
the number, powers, preferences and relative, optional, participating, and other
special rights and the qualifications, limitations, restrictions, and other
distinguishing characteristics thereof shall, upon the effective date of said
series, be deemed to be included in and be a part of the certificate or
incorporation of the Corporation.
Signed on November , 2000
--------------------------------
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SCHEDULE C
Ownership of Shares
Xxxx Xxxxx 450 45 %
Xxxx Xxxxxxx 225 22.5 %
Xxxxx Xxxx 100 10 %
Xxxxxxx Xxxxxxx 225 22.5 %
SCHEDULE D
Tangible Assets
This will be delivered very soon. We are still waiting on our CPA.
SCHEDULE E
List of Contracts
1. CJDS
2. Web Ideals
3. Pro Shine
4. Xxxxxxx TV Index
5. Lease - Cadillac
6. Lease - Savin 9925DP
7. Lease - 2 SavinFax 3685
8. Lease - SavinFax 3680
9. Lease - Dodge Durango
10. Lease - Neopost Postage
11. Lease - Suburban
12. Lease - Lucent Tech
13. Lease - Buick Regal
14. SLO Self Storage
15. Black Mamba
16. Camelot Media
17. Feel Golf
18. IMT
19. Xxxxxx Electric
20. Liquidmetal Golf
21. XxXxxxx Metal
22. Media Funding-Spin Doctor
23. Natural Golf
24. Mind Body Dynamics
25. Q-Ray
26. Spin Doctor
27. Sony
28. Sport Max
29. Swing Jacket
30. Tae Bo
31. Wedgewood
32. Good Times Entertainment
SCHEDULE F
Litigation
Case No. 98-CV-2696 Denver, Colorado
Plaintiff and Counterclaim Defendant: LONGBALL SPORTS, INC.
Defendant and Counterclaimant: Prime Time Sports TV, Inc.
SCHEDULE G
List of Financial Institutions
First Bank 281044966 PTSTV Operations
First Bank 281047183 PTSTV Credit Card
First Bank 281047175 KRYPTOLIGHT Operations
First Bank 281047175 KRYPTOLIGHT Credit Card
SCHEDULE H
Insurance Policies
Company Information
-------------------
The Hartford (General Liability)
Policy #: 51-43189634A
Lock Box 79212
0000 Xxxxxxxxx Xxxxx, 0xx Xxx
Xxxxxxxx Xxxx, XX. 00000
000-000-0000
Health Net (Medical)
Policy #: 47701A
00000 Xxxxxx Xxxxxx 0xx Xxxxx
Xxxxxxxx Xxxxx, XX 00000-0000
000-000-0000
The Principal (Dental)
Policy #: P 833-1
Group Operations
000 Xxxx Xxxxxx
Xxx Xxxxxx, XX 00000-0000
000-000-0000
Medical Eye Services (Optical)
Policy #: 09392
X.X. Xxx 00000
Xxxx Xxxxx, XX 00000-0000
000-000-0000
Fremont Employers Ins. (Xxxxxxx'x Comp)
Policy #: WCN 304424 3
File #54523
Xxx Xxxxxxx, XX 00000-0000
000-000-0000
SCHEDULE I
Accounts Receivable (not applicable)
SCHEDULE J
Employee Benefit Plans or Pension Plans
Dental
Medical
Personal Leave
Vacation
401K
Holiday
Sick Leave
SCHEDULE K
Officers and Directors of the Company
Xxxx Xxxxxxx CEO, Secretary, Director
Xxxx Xxxxx President, Director
Xxxxx Xxxx Vice President, Director
