EXHIBIT A
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FORM OF AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
by and between
SBI Communications, Inc., a Delaware corporation
and
Valencia Entertainment Acquisition Corporation, a Delaware corporation
on the one hand
and
Valencia Entertainment International, LLC,
a California limited liability company
and
Valencia Members
on the other hand
Dated as of October 16, 2000
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
RECITALS
AGREEMENT
1. THE MERGER
1.1 Surviving Corporation; Effective Time
1.2 Articles of Incorporation and Bylaws
1.3 Directors...
1.4 Conversion of Shares
1.5 Fractional Shares
1.6 Stock Certificates
1.7 Closing
2. REPRESENTATIONS AND WARRANTIES OF VALENCIA
AND THE VALENCIA MEMBERS
2.1 Organization
2.2 Capitalization of Valencia
2.3 Subsidiaries and Investments
2.4 Financial Statements
2.5 Liabilities
2.6 Absence of Material Changes
2.7 Litigation
2.8 Title to Assets
2.9 Contracts and Undertakings
2.10 Transactions with Affiliates, Managers and Members
2.11 No Conflict
2.12 Authority
2.13 Compliance with Law
2.14 Securities Laws
2.15 Tax Matters
2.16 Salaries
2.17 Accrued Compensation
2.18 Employee Benefit Plans
2.19 Insurance
2.20 No Broker
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND SUB
3.1 Organization
3.2 Capitalization of the Company
3.3 Subsidiaries and Investments
3.4 Liabilities
3.5 Litigation
3.6 Title to Assets
3.7 Contracts and Undertakings
3.8 Transactions with Affiliates, Directors and Stockholders
3.9 No Conflict
3.10 Authority
3.11 Compliance with Law
3.12 Tax Matters
3.13 Salaries
3.14 Accrued Compensation
3.15 Employee Benefit Plans
3.16 No Broker
4. COVENANTS AND AGREEMENTS OF THE PARTIES
EFFECTIVE PRIOR TO CLOSING
4.1 Corporate Examinations and Investigations
4.2 Cooperation; Consents
4.3 Conduct of Business
4.4 Litigation
4.5 Notice of Default
5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS
6. CONDITIONS TO CLOSING
6.1 Conditions to Obligation of Valencia and Valencia Members
(a) Representations and Warranties of Company to be True
(b) No Legal Proceedings
(c) Statutory Requirements
(d) Stockholders Agreement
(e) Officer's Certificate
(f) Legal Fees
(g) Certificate of Amendment Filed
6.2 Conditions to Obligations of Company.
(a) Representations and Warranties of Valencia and the
Valencia Members to be True
(b) No Legal Proceedings
(c) Statutory Requirements
(d) Employment Agreement
(e) Certain Releases
(f) Stockholders Agreement
(g) Certain Other Conditions
(h) Members' Certificate
(i) Manager's Certificate
(j) Accounting and Auditing Fees
(k) Certificate of Amendment Filed
7. INDEMNIFICATION
7.1 Indemnification by the Valencia Members
7.2 Indemnification by the Company
7.3 Computation of Losses
7.4 Notice to Indemnifying Party
7.5 Defense by Indemnifying Party
8. MISCELLANEOUS
8.1 Further Assurances
8.2 Expenses of Sale
8.3 Use and Confidentiality
8.4 Notices
8.5 Parties in Interest
8.6 Entire Agreement, Amendments
8.7 Headings, Etc.
8.8 Pronouns
8.9 Counterparts
8.10 Governing Law
8.11 Attorneys' Fees
SCHEDULES
Schedule 1.5 Conversion of Shares
Schedule 2.5 Liabilities
Schedule 2.7 Litigation
Schedule 2.8 Title to Assets
Schedule 2.9 Contracts and Undertakings
Schedule 2.10 Transactions with Affiliates, Managers and
Members
Schedule 2.11 No Conflict
Schedule 2.13 Compliance with Law
Schedule 2.14 Legend
Schedule 2.16 Salaries
Schedule 2.17 Accrued Compensation
Schedule 2.18 Employee Benefit Plans
Schedule 3.3 Subsidiaries and Investments
Schedule 3.4 Liabilities
Schedule 3.6 Litigation
Schedule 3.7 Title to Assets
Schedule 3.8 Contracts and Undertakings
Schedule 3.9 Transactions with Affiliates, Directors and
Stockholders
Schedule 3.14 Salaries
Schedule 3.15 Accrued Compensation
Schedule 3.16 Employee Benefit Plans
EXHIBITS
Exhibit A California Certificate of Merger
Exhibit B Certificate of Amendment
Exhibit C Delaware Certificate of Merger
Exhibit D Articles of Organization
Exhibit E Operating Agreement
Exhibit F Stockholders Agreement
Exhibit G Employment Agreement
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is
dated as of October 16 2000, by and between SBI Communications, Inc.,
a Delaware corporation (the "Company"), and Valencia Entertainment
Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of the Company ("Sub"), on the one hand; and Valencia
Entertainment International, LLC, a California limited liability company
("Valencia"), and each of the members of Valencia set forth on the
signature page hereto (collectively, the "Valencia Members"), on the
other hand.
RECITALS
A.The Company, Sub and Valencia have each determined to
engage in the transactions contemplated hereby (collectively, the
"Transaction") pursuant to which Sub will merge with and into Valencia,
with Valencia being the surviving limited liability company (the
"Merger"), and the outstanding membership interests of Valencia shall
be converted into shares of the Company's common stock in the manner
herein described;
B.The respective Boards of Directors or members, as the case may
be, of the Company, Sub and Valencia have each approved the Merger,
the Transaction, this Agreement, and the California Certificate of Merger
and the Delaware Certificate of Merger, both referred to in Section
1.1(b) hereof, and the Valencia Members and the Company, as the sole
stockholder of Sub, have each approved the Merger, the Transaction, this
Agreement, and the California Certificate of Merger and the Delaware
Certificate of Merger, both referred to in Section 1.1(b) hereof, and the
parties intend that this Agreement constitutes a plan of reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated
thereunder; and
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and in reliance upon the representations and
warranties hereinafter set forth, the parties hereto hereby agree as
follows:
1.THE MERGER
1.1SURVIVING ENTITY; EFFECTIVE TIME.
(a)At the Closing (as hereinafter defined), subject to the terms and
conditions of this Agreement, Sub shall be merged with and into
Valencia in accordance with Sections 1113 and 17551 of the California
Corporations Code (the "CCC"), whereupon the separate existence of
Sub shall cease, and Valencia shall be the surviving limited liability
company. It is intended by the parties hereto that the Transaction shall
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code and the parties hereto hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
(b)Simultaneously with the Closing, Valencia and Sub shall file a
Limited Liability Company Certificate of Merger (the "California
Certificate of Merger"), in the form attached hereto as Exhibit A, in the
office of the Secretary of State of the State of California in accordance
with the CCC. The Merger shall become effective at such time as the
California Certificate of Merger is duly filed in California (the date of
such filing being hereinafter referred to as the "Effective Date" and the
time of such filing being hereinafter referred to as the "Effective Time");
provided, however, that the California Certificate of Merger shall not be
filed until the Company has filed a Certificate of Amendment to the
Certificate of Incorporation of the Company (the "Certificate of
Amendment"), substantially in the form of Exhibit __ hereto, with the
Delaware Secretary of State. On the Effective Date a certificate of
merger (the "Delaware Certificate of Merger"), in the form attached
hereto as Exhibit B, shall be filed with the Secretary of State of the State
of Delaware in accordance with the Delaware General Corporation Law.
From and after the Effective Time, Valencia shall possess all the rights,
privileges, powers and franchises and be subject to all of the restrictions,
disabilities and duties of both Valencia and Sub, as provided under the
CCC.
1.2ARTICLES OF ORGANIZATION AND OPERATING
AGREEMENT. The Articles of Organization and Operating Agreement
of Valencia shall be amended and restated effective as of the Effective
Time in the forms attached hereto as Exhibits ___ and ___, respectively.
1.3DIRECTORS. From and after the Effective Time, until
successors are duly elected and qualified in accordance with applicable
law, the directors of the Company shall be the same directors of the
Company who are in office immediately preceding the Effective Time.
1.4OFFICERS. From and after the Effective Time, until
successors are duly appointed and qualified in accordance with
applicable law, the officers of the Company immediately after the
Effective Time shall be the officers of Valencia.
1.5CONVERSION OF SHARES. As of the Effective Time, by
virtue of the Merger, automatically and without any action on the part of
any holder thereof:
(a)Each share of common stock, par value $0.01 per share, of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into a 0.1% fully paid and nonassessable membership interest
of Valencia ("Valencia Membership Interest") and the Company shall be
admitted as the sole member of Valencia.
(b)Each Class A Valencia Membership Interest outstanding
immediately prior to the Effective Time shall be converted into shares of
the Company's common stock, par value $0.001 per share ("Company
Shares"), at the rate of 378,549.82 Company Shares for each one percent
(1%) Class A Valencia Membership Interest. Each Class B Valencia
Membership Interest outstanding immediately prior to the Effective Time
shall be converted into Company Shares, at the rate of 378,549.82
Company Shares for each one percent (1%) Class B Valencia
Membership Interest. Each Valencia Member shall be entitled to receive
the number of Company Shares set forth on Schedule 1.5 attached
hereto, and, collectively, the Valencia Members shall be entitled to
receive an aggregate of 75,709,965 Company Shares.
1.6FRACTIONAL SHARES. Fractional shares of the Company
shall not be issued in connection with the Company Shares, but any
fractional shares shall be rounded to the nearest whole share. No cash
shall be issued in lieu of any fractional shares.
1.7STOCK CERTIFICATES.
(a)At the Effective Time, the Valencia Members shall each be
entitled to receive one or more certificates representing the number of
shares of Company Shares to which each such Valencia Member is
entitled pursuant to the provisions of Section 1.5(b) hereof.
(b)Each Valencia Membership Interest converted into
Company Shares shall, by virtue of the Merger and without any action on
the part of the holder thereof, cease to be outstanding, be cancelled and
retired and cease to exist. As of the Effective Time, by virtue of the
Transaction, each Valencia Member shall thereafter cease to possess any
rights with respect to each such Valencia Membership Interest, except
the right to receive the number of Company Shares as provided by
Section 1.5(b) hereof.
(c)All Company Shares delivered to the Valencia
Members in respect of the Valencia Membership Interests in accordance
with the terms of this Agreement shall be deemed to have been delivered
in full satisfaction of all rights pertaining to such Valencia Membership
Interests.
1.8CLOSING. Subject to the satisfaction of the conditions
precedent specified in Section 6 hereof, the closing of the Transaction
shall take place at 11:00 a.m. (Los Angeles time) at the offices of ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇▇, a Law corporation, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, on or before ________, 2000 or on such other date as may be
mutually agreed upon by the parties (the "Closing").
2.REPRESENTATIONS AND WARRANTIES OF VALENCIA
AND THE VALENCIA MEMBERS
Valencia and the Valencia Members hereby represent and warrant to the
Company as follows:
2.1ORGANIZATION.
(a)Valencia is a limited liability company, duly organized, validly
existing, and in good standing under the laws of the State of California.
Valencia has the power and authority to carry on its business as presently
conducted; and Valencia is qualified to do business in all jurisdictions
where the failure to be so qualified would have a material adverse effect
on its business.
(b)The copies of the charter documents of Valencia, including but
not limited to the Articles of Organization and the Amended and
Restated Operating Agreement of Valencia, heretofore furnished to the
Company, are complete and correct copies thereof as amended and in
effect immediately prior to the Effective Time.
2.2CAPITALIZATION OF VALENCIA.
(a)The capital structure of Valencia consists of Class A
and Class B Membership Interests, and one hundred percent (100%) of
such Class A and B Membership Interests are presently, and will be
immediately prior to the Closing, issued and outstanding. All of the
issued and outstanding Valencia Membership Interests are duly
authorized, validly issued, fully paid and nonassessable and are free from
any liens, claims, charges, security interests or other encumbrances. The
Valencia Members are the sole beneficial and record owners of the
Valencia Membership Interests, and such Valencia Members have as of
the date hereof, and will have as of the Effective Time, the unqualified
right to transfer and dispose of such Valencia Membership Interests.
(b)There are no outstanding options, warrants or rights of any kind
to acquire any membership interests, economic interests or other
securities of Valencia, whether direct or indirect, derivative or otherwise.
2.3SUBSIDIARIES AND INVESTMENTS. Except as set forth in
Schedule 2.3 attached hereto, Valencia does not own any capital stock or
have any interest of any kind whatsoever in any corporation, partnership,
or other form of business organization.
2.4FINANCIAL STATEMENTS. The reviewed balance sheets of
Valencia as of September 30, 2000 and reviewed statements of
operations and cash flows for the 9 months ended September30, 2000,
the audited balance sheets of Valencia as of December 31, 1999 and
audited statements of operations and cash flows for the 12 months ended
December 31, 1999, and the audited balance sheets as of December 31,
1998 and audited statements of operations and cash flows for the 12
months ended December 31, 1998 (collectively, the "Valencia Financial
Statements") (a) are complete and correct in all material respects, (b)
were prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods indicated, and (c)
fairly and accurately present the financial condition and results of
operations of Valencia as of the relevant dates thereof and for the periods
covered thereby.
2.5LIABILITIES. All of the liabilities of any nature whatsoever,
contingent or otherwise, of Valencia as of the date hereof are accurately
described in detail and quantified (both individually and in the aggregate)
in Schedule 2.5 attached hereto.
2.6ABSENCE OF MATERIAL CHANGES. Since December 31,
1999, there has not been:
(a)any material adverse change in the condition (financial or
otherwise) of the properties, assets, liabilities or business of Valencia,
except changes in the ordinary course of business which, individually
and in the aggregate, have not had a material adverse effect on the
business, operations, affairs or financial condition of Valencia or its
properties or assets.
(b)any redemption, purchase or other acquisition of any
membership or economic interest of Valencia or the granting, issuance or
execution of any rights, warrants, options or commitments by Valencia
relating to any membership or economic interest of Valencia.
2.7LITIGATION. Except as set forth on Schedule 2.7 attached
hereto, there is no claim, proceeding, litigation or investigation, whether
civil or criminal in nature, pending or threatened against Valencia or any
of its affiliates in any court or by or before any governmental body or
agency, including without limitation any claim, proceeding or litigation
for the purpose of challenging, enjoining or preventing the execution,
delivery or consummation of the Transaction and this Agreement.
Valencia is not subject to any order, judgment, decree, stipulation or
consent or any agreement with any governmental body or agency that
affects its business or operations.
2.8TITLE TO ASSETS. Except as set forth on Schedule 2.8
attached hereto, Valencia has good and marketable title to all of the
assets and properties now carried on its books including those reflected
in the most recent balance sheet contained in the Valencia Financial
Statements, free and clear of all liens, claims, charges, security interests
or other encumbrances, except as described in the Valencia Financial
Statements or arising thereafter in the ordinary course of business (none
of which will be material).
2.9CONTRACTS AND UNDERTAKINGS. Except as set forth
on Schedule 2.9 attached hereto, Valencia has no contracts, agreements,
leases, licenses, arrangements, commitments or other undertakings
(collectively the "Valencia Contracts") to which it is a party or to which
it or its property is subject. Except as set forth on such Schedule 2.9
attached hereto, Valencia is not in material default under any of the
Valencia Contracts and no other party to any Valencia Contract is in
default thereunder nor does there exist any condition or event which,
after notice or lapse of time or both, would constitute a default by any
party to any such Valencia Contract.
2.10TRANSACTIONS WITH AFFILIATES, MANGAGERS AND
MEMBERS. Except as set forth on Schedule 2.10 attached hereto, there
are no contracts, agreements, arrangements or other transactions between
Valencia and any officer, manager or member of Valencia, or any
corporation or other entity owned or controlled, directly or indirectly, by
any such officer, manager or member, a member of any such officer,
manager or member's family, or any affiliate of any such officer,
manager or member.
2.11NO CONFLICT. Except as set forth on Schedule 2.11 attached
hereto, the execution and delivery of this Agreement and the
consummation of the Transaction will not conflict with or result in a
breach of any term or provision of, or constitute a default under, the
charter documents of Valencia or any agreement, contract or instrument
to which Valencia or any of the Valencia Members is a party or by which
any of them or any of their respective assets are bound.
2.12AUTHORITY. Valencia and each of the Valencia Members
has full power and authority to enter into this Agreement and to carry out
the Transaction. The execution and delivery of this Agreement and the
consummation of the Transaction have been duly authorized and
approved by all of the Members and the Manager(s) of Valencia and no
other corporate or other proceedings on the part of Valencia or the
Valencia Members are necessary to authorize this Agreement and the
Transaction.
2.13COMPLIANCE WITH LAW. Except as set forth on Schedule
2.13 attached hereto, Valencia has in all material respects complied with
and it is now in all material respects in compliance with, all federal, state
and local laws applicable to it. The Valencia Membership Interests were
issued in compliance with all state and federal securities laws.
2.14SECURITIES LAWS. The Valencia Members acknowledge
that the Company Shares are not being registered under the Securities
Act of 1933, as amended (the "Securities Act"), on the ground that the
offer and sale of the Company Shares are exempt from the registration
provisions of Section 5 of the Securities Act pursuant to Section 4(2)
thereof, as transactions by an issuer not involving any public offering,
and/or may be deemed not to involve an offer or sale within the meaning
of Section 5 of the Securities Act pursuant to Regulation D promulgated
thereunder, and that the Company Shares may not be resold in any
transaction subject to Section 5 of the Securities Act unless registered or
an exemption from registration is available for such sale, and that the
certificates representing the Company Shares will bear a legend to that
effect, substantially in the form set forth on Schedule 2.14 attached
hereto. Each of the Valencia Members is acquiring the Company Shares
for investment purposes only and not with a view to distribution or resale
thereof.
2.15TAX MATTERS.
(i) Each of Valencia and the Valencia Members has filed or caused to be
filed with the appropriate Federal, state, county, local and foreign
governmental agencies or instrumentalities all tax returns and tax reports
required to be filed, and all taxes, assessments, fees and other
governmental charges in respect of Valencia have been fully paid when
due (subject to any extensions filed).
(ii) There is not pending nor, to the best knowledge of each of
Valencia and the Valencia Members, is there any threatened Federal,
state or local tax audit of the Valencia or any Valencia Member in
respect of Valencia. There is no agreement with any Federal, state or
local taxing authority by the Valencia or any Valencia Member that may
affect the subsequent tax liabilities of Valencia.
(iii) Without limiting the foregoing: (a) the Valencia Financial
Statements include adequate provisions for all taxes, assessments, fees,
penalties and governmental charges which have been or in the future may
be assessed against Valencia or any Valencia Member in respect of
Valencia with respect to the period ended September 30, 2000 and all
periods prior thereto; and (b) neither Valencia nor any Valencia Member
is, on the date hereof, liable for taxes, assessments, fees or governmental
charges in respect of Valencia.
2.16SALARIES. Schedule 2.16 attached hereto sets forth a true and
complete list, as of the date of this Agreement, of all of the persons who
are employed by Valencia, together with their compensation (including
bonuses) for the calendar year ended December 31, 1999, and the rate of
compensation (including bonus arrangements) currently being paid to
each such employee.
2.17ACCRUED COMPENSATION. Valencia does not have any
outstanding liability for payment of wages, vacation pay (whether
accrued or otherwise), salaries, bonuses, pensions or contributions under
any labor or employment contract, whether oral or written, or by reason
of any past practices with respect to such employees based upon or
accruing with respect to services of present or former employees of the
Company or Sub, except as disclosed in Schedule 2.17 attached hereto.
2.18EMPLOYEE BENEFIT PLANS. Valencia does not have any
pension plan, profit sharing plan or employee's savings plan, and is not
otherwise subject to any applicable provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA") except as set forth
on Schedule 2.18 attached hereto.
2.19INSURANCE. Schedule 2.19 contains a description of each
insurance policy maintained by Valencia (or which names Valencia as an
additional insured) with respect to its properties, assets and business, or
with respect to the life of the Manager or any officer of Valencia, and
each such policy is presently in full force and effect. The Company is
not in default with respect to any insurance policy maintained by it, and,
to the Company's Knowledge, there is no default with respect to any
insurance policy that names the Company as an additional insured.
2.20NO BROKER. All negotiations relative to this Agreement and
the Transaction have been carried on directly by Valencia and the
Valencia Members with the Company without the intervention of any
person on behalf of Valencia or any Valencia Member in such manner as
to give rise to any valid claim against any of the parties hereto for a
brokerage commission, finder's fee or other like payment.
3.REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND SUB
Each of the Company and Sub hereby represents and warrants,
individually as to itself, to the Valencia Members as follows:
3.1ORGANIZATION
(a)Except as set forth on Schedule 3.1 attached hereto,
each of the Company and Sub is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware,
has the corporate power and authority to carry on its business as
presently conducted, and is qualified to do business in all jurisdictions
where the failure to be so qualified would have a material adverse effect
on the business of the Company or Sub, as the case may be.
(b)The copies of the Certificate of Incorporation of the
Company and Sub, and the Bylaws of the Company and Sub heretofore
furnished to Valencia are complete and correct copies of the Certificate
of Incorporation and the Bylaws, as amended, of the Company and Sub
as in effect on the date hereof.
3.2CAPITALIZATION OF THE COMPANY. Upon filing the
Certificate of Amendment, the authorized capital stock of the Company
will consist of One Hundred Million (100,000,000) shares of common
stock, par value $0.001 per share, of which Twelve Million Three
Hundred Twenty-Four Thousand Eight Hundred Seventy-Eight
(12,324,878) shares are issued and outstanding as of the date of the date
hereof; and Ten Million (10,000,000) shares of Preferred Stock, par
value, upon filing the Certificate of Amendment, $.001 per share, of
which Sixty-Three Thousand (63,000) shares are issued and outstanding
as of the date hereof. All of the issued and outstanding shares are duly
authorized, validly issued, fully paid and non-assessable, and, at the
Closing, the Company Shares will be duly authorized, validly issued,
fully paid and non-assessable. Except for such outstanding shares, there
are no outstanding shares of capital stock or other securities or other
equity interests of the Company or options, warrants or rights of any kind
to acquire such stock or other securities of the Company.
3.3SUBSIDIARIES AND INVESTMENTS. Except as set forth
on Schedule 3.3 attached hereto, the Company does not own directly or
indirectly, any capital stock or have any interest in any corporation,
partnership or other form of business organization.
3.4LIABILITIES. Except as set forth on Schedule 3.4 attached
hereto or otherwise contemplated in this Agreement, the liabilities of the
Company will not exceed __ as of the Closing. As used herein, liabilities
shall mean liabilities of any nature whatsoever, contingent or otherwise.
3.5LITIGATION. Except as set forth on Schedule 3.5 attached
hereto, there is no litigation, proceeding or investigation pending or, to
the knowledge of the Company or Sub, as the case may be, threatened
against the Company or Sub, as the case may be, affecting any of its
properties or assets that might result, either in any case or in the
aggregate, in any material adverse change in the business, operations,
affairs or financial condition of the Company or Sub, as the case may be,
or their respective properties or assets, or that might call into question the
validity of this Agreement, or any action taken or to be taken pursuant
hereto.
3.6TITLE TO ASSETS. Except as set forth on Schedule 3.6
attached hereto, each of the Company and Sub has good and marketable
title to all of its assets and properties now carried on its books including
those reflected in the balance sheet contained in the Company Financial
Statements, free and clear of all liens, claims, charges, security interests
or other encumbrances, except as described in the Company Financial
Statements or arising thereafter in the ordinary course of business (none
of which will be material).
3.7CONTRACTS AND UNDERTAKINGS. Except as set forth
on Schedule 3.7 attached hereto, the Company or Sub, as the case may
be, has no contracts, agreements, leases, licenses, arrangements,
commitments or other undertakings (collectively, the "Company
Contracts") to which the Company or Sub, as the case may be, is a party
or to which it or its property is subject. Except as set forth on Schedule
3.7 attached hereto, the Company or Sub, as the case may be, is not in
material default, or alleged to be in material default, under any Company
Contract and, to the knowledge of the Company or Sub, as the case may
be, no other party to any Company Contract to which the Company or
Sub, as the case may be, is a party is in default thereunder nor, to the
knowledge of the Company or Sub, as the case may be, does there exist
any condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any such Company Contracts.
3.8TRANSACTIONS WITH AFFILIATES, DIRECTORS AND
STOCKHOLDERS. Except as set forth on Schedule 3.8 attached hereto,
there are no contracts, agreements, arrangements or other transactions
between the Company or Sub, as the case may be, and any officer,
director, or 5% stockholder, a member of any such officer, director or
5% stockholder's family, or any affiliate of any such officer, director or
5% stockholder.
3.9NO CONFLICT. The execution and delivery of this Agreement
and the consummation of the Transaction will not conflict with or result
in a breach of any term or provision of, or constitute a default under, the
Certificate of Incorporation or Bylaws of the Company or Sub, as the
case may be, or any agreement, contract or instrument to which the
Company or Sub, as the case may be, is a party or by which it or any of
their respective assets are bound.
3.10AUTHORITY. Each of the Company and Sub has full power
and authority to enter into this Agreement and to carry out the
Transaction. The execution and delivery of this Agreement, the
consummation of the Transactions and the issuance of the Company
Shares in accordance with the terms hereof, have been duly authorized
and approved by the Board of Directors of the Company and Sub and no
other corporate proceedings on the part of the Company or Sub are
necessary to authorize this Agreement, the Transaction and the issuance
of the Company Shares in accordance with the terms hereof.
3.11COMPLIANCE WITH LAW. To the knowledge of Company
or Sub, as the case may be, each of the Company and Sub has in all
material respects complied with and it is now in all material respects in
compliance with, all Federal, State and local laws applicable to the
Company or Sub, as the case may be. Except for the issuance of the
Company Shares to the Valencia Members hereunder, all outstanding
securities have been issued in full compliance in all material respects
with all state and federal securities laws. The securities filings of the
Company contain no material misstatement or fail to state a material fact
necessary to make the statements made, in light of the circumstances
under which they were made, not misleading.
3.12TAX MATTERS.
(i) Except as to taxes contested in good faith, each of the Company and
Sub has filed or caused to be filed with the appropriate Federal, state,
county, local and foreign governmental agencies or instrumentalities all
tax returns and tax reports required to be filed, and all taxes,
assessments, fees and other governmental charges have been fully paid
when due (subject to any extensions filed).
(ii) There is not pending nor, to the best knowledge of each of
the Company and Sub, is there any threatened Federal, state or local tax
audit of the Company or Sub. There is no agreement with any Federal,
state or local taxing authority by the Company or Sub that may affect the
subsequent tax liabilities of Valencia.
(iii) Without limiting the foregoing: (a) the Company Financial
Statements include adequate provisions for all taxes, assessments, fees,
penalties and governmental charges which have been or in the future may
be assessed against the Company or Sub with respect to the period then
ended and all periods prior thereto; and (b) neither the Company nor Sub
is, on the date hereof, liable for taxes, assessments, fees or governmental
charges.
3.13SALARIES. Schedule 3.13 attached hereto sets forth a true and
complete list, as of the date of this Agreement, of all of the persons who
are employed by the Company and Sub, together with their compensation
(including bonuses) for the calendar year ended December 31, 1999, and
the rate of compensation (including bonus arrangements) currently being
paid to each such employee.
3.14ACCRUED COMPENSATION. The Company and Sub do not
have any outstanding liability for payment of wages, vacation pay
(whether accrued or otherwise), salaries, bonuses, pensions or
contributions under any labor or employment contract, whether oral or
written, or by reason of any past practices with respect to such employees
based upon or accruing with respect to services of present or former
employees of the Company or Sub, except as disclosed in Schedule 3.14
attached hereto.
3.15EMPLOYEE BENEFIT PLANS. The Company and Sub do
not have any pension plan, profit sharing plan or employee's savings
plan, and neither is otherwise subject to any applicable provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA") except as
set forth on Schedule 3.15 attached hereto.
3.16NO BROKER. All negotiations relative to this Agreement and
the Transaction have been carried on directly by the Company and Sub
with Valencia and the Valencia Members without the intervention of any
person on behalf of the Company or Sub in such manner as to give rise to
any valid claim against any of the parties hereto for a brokerage
commission, finder's fee or other like payment.
4.COVENANTS AND AGREEMENTS OF THE PARTIES
EFFECTIVE PRIOR TO CLOSING
4.1CORPORATE EXAMINATIONS AND INVESTIGATIONS.
Prior to the Closing, each party shall be entitled, through its employees
and representatives, to make such investigations and examinations of the
books, records and financial condition of the Company, Sub and
Valencia as each party may request. In order that each party may have
the full opportunity to do so, the Company, Sub, each of the Valencia
Members and Valencia shall furnish each party and its representatives
during such period with all such information concerning the affairs of the
Company, Sub or Valencia as each party or its representatives may
reasonably request and cause the Company, Sub or Valencia and their
respective officers, managers, employees, consultants, agents,
accountants and attorneys to cooperate fully with each party's
representatives in connection with such review and examination and to
make full disclosure of all information and documents requested by each
party and/or its representatives. Any such investigations and
examinations shall be conducted at reasonable times and under
reasonable circumstances, it being agreed that any examination of
original documents will be at each party's premises, with copies thereof
to be provided to each party and/or its representatives upon request.
4.2COOPERATION; CONSENTS. Prior to the Closing, each
party shall cooperate with the other parties to the end that the parties
shall (i) in a timely manner make all necessary filings with, and conduct
negotiations with, all authorities and other persons the consent or
approval of which, or the license or permit from which is required for the
consummation of the Transaction and (ii) provide to each other party
such information as the other party may reasonably request in order to
enable it to prepare such filings and to conduct such negotiations.
4.3CONDUCT OF BUSINESS. Subject to the provisions hereof,
from the date hereof through the Closing, each party hereto shall (i)
conduct its business in the ordinary course and in such a manner so that
the representations and warranties contained herein shall continue to be
true and correct in all material respects as of the Closing as if made at
and as of the Closing and (ii) not enter into any material transactions or
incur any material liability not required or specifically contemplated
hereby, without first obtaining the written consent of the Company and
Sub on the one hand and Valencia on the other hand. Without the prior
written consent of the Company, Sub and Valencia, except as required or
specifically contemplated hereby, each party shall not undertake or fail to
undertake any action if such action or failure would render any of said
warranties and representations untrue in any material respect as of the
Closing.
4.4LITIGATION. From the date hereof through the Closing, each
party hereto shall promptly notify the representative of the other parties
(Valencia shall represent itself and the Valencia Members and the
Company shall represent itself and Sub) of any lawsuits, claims,
proceedings or investigations which after the date hereof are threatened
or commenced against such party or any of its affiliates or any officer,
director, employee, consultant, agent or shareholder thereof, in their
capacities as such, which, if decided adversely, could reasonably be
expected to have a material adverse effect upon the condition (financial
or otherwise), assets, liabilities, business, operations or prospects of such
party or any of its subsidiaries.
4.5NOTICE OF DEFAULT. From the date hereof through the
Closing, each party hereto shall give to the representative of the other
parties (Valencia shall represent itself and the Valencia Members and the
Company shall represent itself and Sub) prompt written notice of the
occurrence or existence of any event, condition or circumstance
occurring which would constitute a violation or breach of this Agreement
by such party or which would render inaccurate in any material respect
any of such party's representations or warranties herein.
5.SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS.
All representations, warranties and covenants of the parties hereto
contained herein shall survive the consummation of the Transaction and
remain in full force and effect until the expiration of the applicable
statute of limitations except (a) Sections 2.4 and 3.4 hereof which shall
not survive the Closing and (b) Section 2.5 hereof which shall remain in
full force and effect for a period of one year from the Closing.
6.CONDITIONS TO CLOSING
6.1CONDITIONS TO OBLIGATION OF VALENCIA AND
VALENCIA MEMBERS. The obligations of Valencia and the Valencia
Members under this Agreement shall be subject to each of the following
conditions:
(a)REPRESENTATIONS AND WARRANTIES OF
COMPANY TO BE TRUE. The representations and warranties of the
Company and Sub, as the case may be, herein contained shall be true in
all material respects at the Closing with the same effect as though made
at such time, except to the extent they expressly relate to an earlier date.
The Company and Sub, as the case may be, shall have performed in all
material respects all obligations and complied in all material respects, to
their respective actual knowledge, with all covenants and conditions
required by this Agreement to be performed or complied with by it at or
prior to the Closing.
(b)NO LEGAL PROCEEDINGS. No injunction or
restraining order shall be in effect prohibiting this Agreement, and no
action or proceeding shall have been instituted and, at what would
otherwise have been the Closing, remain pending before the court to
restrain or prohibit the Transaction.
(c)STATUTORY REQUIREMENTS. All statutory
requirements for the valid consummation by the Company or Sub, as the
case may be, of the Transaction shall have been fulfilled. All
authorizations, consents and approvals of all governments and other
persons required to be obtained by Company and Sub in order to permit
consummation by the Company or Sub, as the case may be, of the
Transaction shall have been obtained except as to any authorization,
consents and approvals that may be required for the issuance of the
Company Shares to the Valencia Members hereunder.
(d)STOCKHOLDERS AGREEMENT. The Company and the
Valencia Members shall have entered into a stockholders agreement
substantially in form of Exhibit F attached hereto (the "Stockholders
Agreement").
(e)OFFICER'S CERTIFICATE. The Company shall have
delivered to Valencia and the Valencia Members, an officer's certificate
to Valencia and the Valencia Members, in form and substance
reasonably satisfactory to Valencia and the Valencia Members, as to the
satisfaction of the foregoing conditions.
(f)CERTIFICATE OF AMENDMENT FILED. The Company
shall have filed the Certificate of Amendment with the Delaware
Secretary of State.
6.2CONDITIONS TO OBLIGATIONS OF COMPANY. The
obligation of the Company and Sub under this Agreement shall be
subject to the following conditions:
(a)REPRESENTATIONS AND WARRANTIES OF
VALENCIA AND THE VALENCIA MEMBERS TO BE TRUE. The
representations and warranties of Valencia and the Valencia Members
herein contained shall be true in all material respects as of the Closing
and shall have the same effect as though made at such time, except to the
extent they expressly relate to an earlier date. Valencia and the Valencia
Members shall have performed in all material respects all obligations and
complied in all material respects, with all covenants and conditions
required by this Agreement to be performed or complied with by them
prior to the Closing.
(b)NO LEGAL PROCEEDINGS. No injunction or restraining
order shall be in effect, and no action or proceeding shall have been
instituted and, at what would otherwise have been the Closing, remain
pending before the court to restrain or prohibit the Transaction.
(c)STATUTORY REQUIREMENTS. All statutory
requirements for the valid consummation by Valencia and the Valencia
Members of the Transaction shall have been fulfilled. All authorizations,
consents and approvals of all governments and other persons required to
be obtained by Valencia and the Valencia Members in order to permit
consummation by Valencia and the Valencia Members of the Transaction
shall have been obtained.
(d)EMPLOYMENT AGREEMENT. The Company shall
have entered into an employment agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇
substantially in the form of Exhibit G attached hereto.
(e)CERTAIN RELEASES. Each Valencia Member shall have
delivered to the Company and Valencia, an acknowledgment and release,
in form and substance reasonably satisfactory to the Company,
acknowledging that Valencia has no liabilities, debts or obligations of
any nature whatsoever to such Valencia Member, and fully and forever
releasing the Company and Valencia in respect thereof.
(f)STOCKHOLDERS AGREEMENT. The Company and the
Valencia Members shall have entered into a stockholders agreement
substantially in form of Exhibit F attached hereto.
(g)CERTAIN OTHER CONDITIONS. The conditions
contemplated by Sections 6.1(c), 6.1(d) and 6.1(f) hereof shall have been
satisfied.
(h)MEMBERS' CERTIFICATE. The Valencia Members shall
have delivered to the Company a certificate as to good title to the
Valencia Membership Interests owned by them and as to their waiver of
appraisal rights available under the CCC in respect of the Merger.
(i)MANAGER'S CERTIFICATE. Valencia shall have delivered
to the Company a manager's certificate in form and substance reasonably
satisfactory to the Company, as to the satisfaction of the foregoing
conditions.
(j)ACCOUNTING AND AUDITING FEES. Subject to
the billing statements having been submitted to Valencia for advance
review, ▇▇▇ ▇. ▇▇▇▇▇▇▇, APC, shall have confirmed in writing that all
sums payable for services rendered through the Closing Date, to the
extent billed, have been paid in full.
(k)CERTIFICATE OF AMENDMENT FILED.
The Company shall have filed the Certificate of Amendment with the
Delaware Secretary of State.
7.INDEMNIFICATION.
7.1INDEMNIFICATION BY THE VALENCIA MEMBERS.
Provided the Company's claim therefor is instituted by written notice
within the time period specified in Section 5 hereof, except that notice
shall be deemed to have been given for the disputes referred to in
Schedule 2.5 attached hereto, the Valencia Members shall, jointly and
severally, indemnify, defend and hold harmless and in all respects make
whole the Company, its officers, directors, employees and agents and
each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all claims, demands, liabilities, damages, judgments
and payments, including reasonable attorneys' fees ("Losses"), which
may be incurred or suffered by the Company or to which it may be
subject, which may arise out of or result from (i) any breach of or exist in
violation of any representation, warranty, covenant or agreement of
Valencia and the Valencia Members contained in this Agreement, or (ii)
the disputes referred to in Schedule 2.5 attached hereto.
7.2INDEMNIFICATION BY THE COMPANY. Provided the
claim therefor is instituted by written notice within the time period
specified in Section 5 hereof, the Company shall indemnify, defend and
hold harmless and in all respect make whole the Valencia Members from
and against any Losses which may be incurred or suffered by any such
party or to which any such party may be subject, which may arise out of
or result from any breach of or exist in violation of any representation,
warranty, covenant or agreement of the Company or Sub, as the case may
be, contained in this Agreement.
7.3COMPUTATION OF LOSSES. For purposes of calculating
any Losses suffered by an indemnified party pursuant to Sections 7.1 or
7.2 hereof, the amount of the Losses suffered by the indemnified party
shall be the net amount of damage so suffered after giving effect to any
insurance proceeds recovered with respect to such matter.
7.4NOTICE TO INDEMNIFYING PARTY. If any party (the
"Indemnified Party") receives notice of any claim or other
commencement of any action or proceeding with respect to which any
other party (or parties) (the "Indemnifying Party") is obligated to provide
indemnification pursuant to Sections 7.1 or 7.2 hereof, the Indemnified
Party shall promptly give the Indemnifying Party written notice thereof
which notice shall specify, if known, the amount or an estimate of the
amount of the Losses arising therefrom. Such notice shall be a condition
precedent to any liability of the Indemnifying Party for indemnification
hereunder. The Indemnified Party shall not settle or compromise any
claim by a third party for which it is entitled to indemnification
hereunder, without the prior written consent of the Indemnifying Party
(which shall not be unreasonably withheld or delayed) unless suit shall
have been instituted against it and the Indemnifying Party shall not have
taken control of such suit after notification thereof as provided in Section
7.5 hereof.
7.5DEFENSE BY INDEMNIFYING PARTY. In connection with
any claim giving rise to indemnity hereunder resulting from or arising out
of any claim or legal proceeding by a person who is not a party to this
Agreement, the Indemnifying Party at its sole cost and expense shall
assume the defense of any such claim or legal proceeding using counsel
of its choice (subject to the approval of the Indemnified Party, which
approval may not be unreasonably withheld or delayed). The
Indemnified Party shall be entitled to participate in the defense of any
such action, with its counsel and at its own expense; provided, however,
that if the Indemnified Party, in its sole reasonable discretion, determines
that there exists a conflict of interest between the Indemnifying Party (or
any constituent party thereof) and the Indemnified Party or that the
Indemnifying Party does not have sufficient financial resources to fully
defend the proceeding or to pay the claim or judgment, the Indemnified
Party (or any constituent party thereof) shall have the right to engage
separate counsel, the reasonable costs and expenses of which shall be
paid by the Indemnifying Party, but in no event shall the Indemnifying
Party be liable for the costs and expenses of more than one such separate
counsel. If the Indemnifying Party does not assume the defense of any
such claim or litigation resulting therefrom, the Indemnified Party may
defend against such claim or litigation, after giving notice of the same to
the Indemnifying Party, on such terms as the Indemnified Party may
deem appropriate, and the Indemnifying Party shall be entitled to
participate in (but not control) the defense of such action, with its
counsel and at its own expense.
8.MISCELLANEOUS
8.1FURTHER ASSURANCES. From time to time, at another
party's request and without further consideration, each of the parties will
execute and deliver to the requesting party such documents and take such
action as such other party may reasonably request in order to
consummate more effectively the Transaction.
8.2EXPENSES OF SALE. Except as otherwise provided herein,
whether or not the Transaction is consummated, each party shall bear its
direct and indirect expenses incurred in connection with the negotiation
and preparation of this Agreement and the consummation and
performance of the Transaction. Without limitation, such expenses shall
include the fees and expenses of all attorneys, brokers, investment
bankers, accountants, agents and finders and other professionals incurred
in connection herewith, acting on behalf of such party. The parties shall
indemnify each other against any claims, costs, losses, expenses or
liabilities arising from any claim of commissions, broker's fees, finder's
fees or other compensation in connection with the Transaction which
may be asserted by any person based on any agreement or arrangement
for payment by the other party.
8.3USE AND CONFIDENTIALITY. All of the information,
records, books, and data to which the parties are given access as set forth
herein shall be used by the parties solely for the purpose of confirming
the representations and warranties set forth herein. Subject to any
obligation to comply with (i) any law (ii) any rule or regulation of any
authority or securities exchange or (iii) any subpoena or other legal
process to make information available to the persons entitled thereto,
whether or not the Transaction shall be concluded, all information
obtained by any party about the other, and all of the terms and conditions
of this Agreement, shall be kept in confidence by each party, and each
party shall cause its stockholders, directors, trustees, officers, employees,
agents and attorneys to hold such information confidential. Such
confidentiality shall be maintained to the same degree as such party
maintains its own confidential information and shall be maintained until
such time, if any, as any such data or information either is, or becomes,
published or a matter of public knowledge; provided, however, that the
foregoing shall not apply to any information obtained by either party
through its own independent investigations of the other party or received
by such party from a third party not under any obligation to keep such
information confidential nor to any information obtained by such party
which is generally known to others engaged in the trade or business; and
provided, further, that, from and after the Closing, such party shall be
under no obligation to maintain confidential any such information
concerning the other party. If this Agreement shall be terminated for any
reason, each party shall return or cause to be returned to the other all
written data, information, files, records and copies of documents,
worksheets and other materials obtained by such party in connection with
the Transaction.
8.4NOTICES. All notices, requests and other communications
hereunder shall be in writing and shall be delivered by courier or other
means of personal service (including by means of a nationally recognized
courier service or professional messenger service), or sent by telex or
telecopy or mailed first class, postage prepaid, by certified mail, return
receipt requested, or by Federal Express or other reputable overnight
delivery service, in all cases, addressed:
TO VALENCIA OR VALENCIA MEMBERS:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
TO THE COMPANY:
SBI Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
All notices, requests and other communications shall be deemed given on
the date of actual receipt or delivery as evidenced by written receipt,
acknowledgment or other evidence of actual receipt or delivery to the
address. In case of service by telecopy, a copy of such notice shall be
personally delivered or sent by registered or certified mail, in the manner
set forth above, within three (3) business days thereafter. Either party
hereto may from time to time by notice in writing served as set forth
above designate a different address or a different or additional person to
which all such notices or communications thereafter are to be given.
8.5PARTIES IN INTEREST. Except as otherwise expressly
provided herein, all the terms and provisions of this Agreement shall be
binding upon, shall inure to the benefit of and shall be enforceable by the
respective heirs, beneficiaries, personal and legal representatives,
successors and assigns of the parties hereto; provided, however, that no
assignment or transfer by any party of this Agreement or its rights or
obligations hereunder shall occur without the prior written consent of the
other parties hereto.
8.6ENTIRE AGREEMENT, AMENDMENTS. This Agreement,
including the Schedules, Exhibits and other documents and writings
referred to herein or delivered pursuant hereto, which form a part hereof,
contains the entire understanding of the parties with respect to this
subject matter. There are no restrictions, agreements, promises,
warranties, covenants or undertakings other than those expressly set forth
herein or therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
This Agreement may be amended only by a written instrument duly
executed by the parties or their respective permitted successors or
assigns.
8.7HEADINGS, ETC. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretations of this Agreement.
8.8PRONOUNS. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural,
as the identity of the person, persons, entity or entities may require.
8.9COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
8.10GOVERNING LAW. This Agreement shall be governed by the
laws of the State of California.
8.11ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement or because of any dispute,
breach, default or claim hereunder, the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees and other costs it
incurred in that action or proceeding, in addition to any other relief to
which it may be entitled.
EXHIBIT B
---------
WRITTEN CONSENT OF
THE MAJORITY STOCKHOLDERS OF
SBI COMMUNICATIONS, INC.
IN LIEU OF MEETING
The undersigned, being the holders of at least a majority of the
outstanding capital stock of SBI Communications, Inc., a Delaware
corporation (the "Corporation"), acting pursuant to authority granted by
the Bylaws of the Corporation and Section 228(a) of the General
Corporation Law of the State of Delaware, do hereby adopt the following
resolutions by written consent as of October 16, 2000:
AMENDMENTS TO CERTIFICATE OF INCORPORATION
WHEREAS, it is proposed by the Corporation's Board of Directors that
the Corporation enter into an Agreement and Plan of Merger (the
"Merger Agreement"), by and between the Corporation and Valencia
Entertainment Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of the Corporation ("VAC"), on the one hand,
and Valencia Entertainment International, LLC, a California limited
liability company ("Valencia"), and its members, on the other hand,
whereby VAC would be merged with and into Valencia, with Valencia
being the surviving limited liability company (the "Merger");
WHEREAS, it is deemed to be in the best interests of the Corporation
and its stockholders that VAC be merged with and into Valencia, with
Valencia as the surviving limited liability company;
WHEREAS, pursuant to the Merger, it is proposed that the name of the
Corporation be changed to ValCom, Inc;
WHEREAS, in order effectuate the terms of the Merger, it is deemed to
be in the best interests of the Corporation and its stockholders to amend
the Corporation's Certificate of Incorporation to increase the
Corporation's aggregate number of authorized shares of common stock;
WHEREAS, it is deemed to be in the best interests of the Corporation
and its stockholders to decrease the par value of the Corporation's
Preferred Stock, from $5.00 to $0.001 per share;
NOW, THEREFORE, BE IT RESOLVED, that, effective upon the filing
with the Delaware Secretary of State of a Certificate of Amendment to
the Certificate of Incorporation of the Corporation (the "Certificate of
Amendment"), the article numbered FIRST of the Corporation's
Certificate of Incorporation be, and hereby is, amended in its entirety to
read as follows:
"The name of the Corporation (hereinafter called the "Corporation") is
ValCom, Inc."
RESOLVED FURTHER, that, effective upon the filing of the Certificate
of Amendment with the Delaware Secretary of State, the article
numbered FOURTH of the Corporation's Certificate of Incorporation be,
and hereby is, amended in its entirety to read as follows:
"The total number of shares of stock which the Corporation shall have
authority to issue is 110,000,000 shares, of which 10,000,000 shares
shall be Preferred Stock of the par value of $0.001 each (hereinafter
called "Preferred Stock") and 100,000,000 shares shall be Common
Stock of the par value of $0.001 each (hereinafter called "Common
Stock")."
RESOLVED FURTHER, that any officer of the Corporation, acting
alone, be and hereby is authorized, empowered and directed, for and on
behalf of the Corporation, to file the Certificate of Amendment with the
Delaware Secretary of State in order to effectuate the foregoing
resolutions;
RESOLVED FURTHER, that any officer of the Corporation, acting
alone, be and hereby is authorized, empowered and directed, for and on
behalf of the Corporation, to execute and deliver any and all certificates,
instruments and other documents, and to take such further actions as any
such officer deems necessary or appropriate to effectuate the purposes of
the foregoing resolutions.
ELECTION OF DIRECTORS
WHEREAS, it is deemed to be in the best interests of the Corporation
and its stockholders that, effective upon the consummation of the
Merger, the Corporation elect four (4) directors to serve as the
Corporation's Board of Directors for the ensuing year until their
successors are duly elected or qualified;
NOW, THEREFORE, BE IT RESOLVED, that, effective upon the
consummation of the Merger, the following individuals be, and hereby
are, duly appointed and qualified to serve as the members of the
Corporation's Board of Directors until their successors are duly elected
or qualified:
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
RESOLVED FURTHER, that any officer of the Corporation, acting
alone, be and hereby is authorized, empowered and directed, for and on
behalf of the Corporation, to execute and deliver any and all certificates,
instruments and other documents, and to take such further actions as any
such officer deems necessary or appropriate to effectuate the purposes of
the foregoing resolutions.
REVIEW OF BUSINESS
WHEREAS, the undersigned stockholders have reviewed all actions
taken by the officers and directors of the Corporation since the last
annual meeting of the stockholders of the Corporation;
NOW, THEREFORE, BE IT RESOLVED, that any action or actions
heretofore taken by any officer or director of the Corporation for and on
behalf of the Corporation since the last annual meeting of stockholders
be, and hereby are, ratified and approved as the actions of the
Corporation.
This Written Consent shall be added to the records of the
Corporation and made a part thereof, and the resolutions set forth above
shall have the same force and effect as if adopted at a meeting duly
noticed and held.
This Written Consent may be executed in counterparts with the effect as
if all parties hereto had executed the same document. All counterparts
shall be construed together and shall constitute a single Written Consent.
Shareholder Signature Shares Beneficially Owned
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 4,154,178
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ 1,000,000
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 1,000,000
/s/ ▇▇▇▇▇ ▇▇▇▇▇ 800,000
as trustee for the ▇▇▇▇▇ ▇▇▇▇▇ Trust
EXHIBIT C
---------
THE NAMED AMENDMENT
RESOLVED, that the First Article of the Certificate of
Incorporation of the Corporation be amended to read in its entirety as
follows:
FIRST:The name of the Corporation (hereinafter called the
"Corporation") is:
ValCom, Inc.
* * * *
EXHIBIT D
----------
THE PAR VALUE AND AUTHORIZED SHARE AMENDMENT
RESOLVED FURTHER, that the fourth Article of the
Certificate of Incorporation of the Corporation be amended to read in its
entirety as follows:
FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is 110,000,000 shares, of which
10,000,000 shares shall be Preferred Stock of the par value of $.001 each
(hereinafter called "Preferred Stock") and 100,000,000 shares shall be
Common stock of the par value of $.001 each (hereinafter called the
"Common Stock").
EXHIBIT E
---------
MEMORANDUM OF AGREEMENT
This Joint Venture agreement ("Agreement") is made and entered into as
of this 1st day of January 2001, by and between ValCom, Inc., a Delaware
corporation, whose address is ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ("ValCom") and ▇▇▇▇▇ ▇▇▇▇▇▇ Productions ("WFP") and ▇▇▇▇▇
▇▇▇▇▇▇ \("Fraser"), whose address is ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ with reference to the following facts:
RECITALS
WHEREAS, ValCom desires to engage the services of WFP and Fraser as
a television production company for ValCom, and WHEREAS, the parties
(collectively "Parties" and individually a "Party")
desire to form a joint venture for the purpose of development and
production of various television projects,
NOW THEREFORE, in consideration of the mutual covenants and
promises contained herein, and for valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, the Parties to this
Agreement agree as follows:
AGREEMENT
Purpose: The primary purpose of the joint venture is the development
and production of television shows, including but not limited to pilots, and
television specials.
1. Duties of WFP and Fraser:
(a) WFP and Fraser shall be responsible for developing, selling and
producing the following series: "▇▇▇▇▇▇▇", "▇▇▇▇ ▇▇▇▇", and "Hangin With The
Boyz", "Ultimate Challenge", TNN game show pilot, "Face Off", "Million Dollar
House"project, "Rock and Roll Hall of Fame", as well as any new projects to be
developed for ValCom. The services of WFP and Fraser
shall be exclusive to ValCom and they shall not render services to any
third party without the prior express written approval of ValCom. WFP and
Fraser shall use to best efforts to develop, sell and produce new television
projects for ValCom. Gross receipts from any and all such productions shall be
deposited into ValCom's ▇▇▇▇▇ Fargo bank account. ValCom shall open a separate
bank account for each show by show or project name.
Funds shall notbe co-mingled between shows but must be disbursed only
for each specified project. The distribution of such revenues shall be at the
sole discretion of ▇▇▇▇▇ ▇▇▇▇▇▇, however each check shall be co-signed by
▇▇▇▇▇ ▇▇▇▇▇▇ and an authorized signatory of ValCom.
(b) WFP and Fraser will also oversee the reorganization, training and
reprogramming of the Indonesian network, Great Asian Holdings, with all
costs being paid by said network.
2. Contributions of ValCom:
(a) ValCom shall advance to WFP or Fraser a draw in the amount of
$500,000 per year beginning January 2001. This amount shall be paid in ten
(10) equal payments in the amount of $50,000. Payments will be paid in
February, March, April, May, June, July, August, September, October, and
November.
Payments \are due and payable on the first (1st) day of each month and must
be made within five (5) working days. This money shall be used by WFP and
Fraser for all office salaries, development personnel, T & E expenses,
and fringe development costs for rights and title searches. WFP shall
submit an accounting to ValCom each month, detailing the allocation of the
monthly expenses. Office space shall be provided by ValCom.
(b) ValCom shall set up a development fund to be used for pilots,
presentations, and show development that WFP can draw from after
obtaining approval from ValCom. WFP shall prepare and submit a budget
breakdown for ValCom approval.
3. Profit Participation: The percentage of interest in the joint venture is
as follows:
ValCom:75 % WFP and Fraser: 25%
The parties shall receive payment based on these percentages of 100% of
the Net Profit from the exploitation of each television show produced by the
joint venture. Net Profit means the amount of Gross Receipts remaining, if any,
after first deducting from Gross receipts, on a continuing and cumulative
basis, the aggregate of all administrative, production and distribution
expenses, including monthly advance to WFP and Fraser. Gross Receipts means the
aggregate of
(a) Gross Film Distribution Receipts, including but not limited to cash
sales from free television distribution, barter sales, copyright royalties, pay
television receipts, home video receipts from both sales and rentals.
(b) Music Publishing Receipts
(c) Music Recording Receipts
(d) Merchandising and Literary Publishing
(e) Ancillary Rights Receipts
No distribution of Net Profit from a project will be made to the Parties
until all production and distribution expenses for said project are recouped
by ValCom.
4. Term: The term of this Agreement shall be three (3) years beginning
January 1, 2001 and terminating December 31, 2003.
This Agreement may be terminated by ValCom in the event of illness
or permanent disability of Fraser resulting in a failure to substantially
dischargehis duties under this Agreement for a period of six (6) months or a
total of one hundred and eighty (180) days in any calendar year.
5. Other Fees: WFP and/or Fraser may also be paid executive producer
fees for television shows produced by this joint venture. Such fees shall be
paid from the individual show budget.
6. Stock Options: Fraser shall be granted stock in the amount of 250,000
shares of restricted Company Common Stock in the first calendar year. If,
at any time prior to the issuance of said shares there shall be any alteration
in the capital stock of the Company, other than an increase in the
authorized or issued capital, the said issuance shall attach to an appropriate
number of the shares or securities of the Company, which shall have, been
created by anysuch alteration. In addition, Fraser and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇'▇ assistant, shall be granted a stock option of restricted Company
Common Stock in an amount to be determined by the Board of Directors of
ValCom at the end of each calendar year.
Fraser warrants and represents that the shares are being acquired solely for
its own account and not with a view to, or for resale in connection with, any
distribution of common shares within the meaning of the Securities Act. Fraser
agrees that the shares may not be sold in absence of registration unless such
sale is exempt from registration under the Act and any applicable state
securities laws. The certificate for the shares shall bear the following
restrictive legend:
"THE SHARES REPRESENTED BY THE CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 ("THE ACT")
AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE
144 UNDER THE ACT. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF
WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY."
7. Dissolution: Upon dissolution, the business of the Joint Venture shall be
wound up by the partners. Proceeds from all joint venture projects shall be
applied to (i) payment of any joint venture debts (other than to partners)
including any expenses of liquidation, (ii) deposit in a
trust account of a reasonable reserve for payment of contingent liabilities
and expenses, and (iii) repayment of loans from partners. The remaining
proceeds shall be distributed in the manner provided for distribution of
cash generally. After a reasonable time and payment of contingencies arising
in that time, the balance remaining in the trust account shall be
distributed to the Partners in the same manner.
WFP and Fraser may terminate this Agreement if:
a. Valcom becomes insolvent, executes an assignment for the benefit of
creditors, or takes advantage of any applicable insolvency or any other like
stature, or a petition under any bankruptcy or liguidation act is filed by or
against it, or a receiver is appointed for Valcom's assets.
b. ValCom fails to perform under the terms and conditions of this
Agreement and fails to cure such default or breach within thirty (30) days
after written notice from WFP and Fraser.
In the event that WFP and Fraser terminate this Agreement due to any
reason outlined in Paragraphs 7a. or 7b., WFP and Fraser shall be entitled
to all of the rights and profit participation (after recoupment of all
production and distribution expenses as outlined in Paragraph 3) of any
production that has not been completed prior to the occurrence of such
event.
8. Miscellaneous: The parties hereto agree to execute such further and
other documents and to enter into such further undertakings as may be
reasonably necessary to carry out the full force and intent of this Agreement.
8.1 The provisions of this Agreement shall enure to the benefit of and be
binding upon the legal representatives of the ValCom, WFP and Fraser and
upon their respective heirs, executors, administrators, successors and
permitted assigns.
8.2 Each party ("Indemnifying Party") hereby indemnifies, defends and
holds harmless the other party and its successors, licensees, assigns, and
employees, officers, directors (collectively for the purposes of this
Paragraph "Indemnified Party") from and against any and all liability, loss,
damage, cost and expense, including, without limitation, reasonable
attorney's fees, arising out of any breach, or claim by a third party with
respect to any warranty, representation or agreement made by the
Indemnifying Party herein. The Indemnified Party shall promptly notify the
Indemnifying Party of any claim to which the foregoing indemnification
applies and the Indemnifying Party shall undertake, at its own
cost and expense, engage its own counsel. If the Indemnifying Party fails
to promptly appoint competent and experienced counsel, the Indemnified Party may
engage its own counsel and the reasonable charges in connection therewith shall
promptly be paid by the Indemnifying Party. If the Indemnified Party
settles or compromises any such suit, claim or proceeding, the amount
thereof shall be charged to the Indemnifying Party, provided that the
Indemnifying Party's reasonable prior approval has been secured.
8.3 Any notice required or permitted to be given hereunder may be
delivered, sent by registered mail, postage prepaid, or sent by facsimile,
addressed to the proposed recipient of the notice at the address set out on
the first page hereof or to such other address or addresses
as the parties may indicate from time to time by notice in writing to the
others.
8.4 This Agreement shall in all respects be interpreted, enforced and
governed under the laws of the State of California. The language and all
parts of this Agreement shall be in all cases construed as a whole according
to its very meaning and not strictly for or against any individual party.
ValCom, WFP and Fraser agree that any legal disputes that may occur
between them, and that arise out of, or related in any way to, this
Agreement, and which disputes cannot be resolved informally, shall be
resolved exclusively through final and binding private arbitration before an
arbitrator mutually selected by ValCom, WFP and Fraser with each party
to bear its own costs and attorney fees. If ValCom, WFP and Fraser
are unable to agree upon an arbitrator within twenty-one (21) days after
any party made a demand for arbitration, the matter will be submitted for
arbitration to the Los Angeles office of the American Arbitration Association
pursuant to the rules governing contract dispute resolution in effect as of
December 1, 1998. Notwithstanding the foregoing, in no event shall
a demand for arbitration be made after the date when institution of legal or
equitable proceedings based on such claim, dispute, or other matter in question
would be barred by the applicable statutes of limitation.
8.5 This Agreement memorializes and constitutes the entire agreement and
understanding between the parties regarding the subject matter hereof, and
supersedes all prior negotiations, proposed agreements and agreements, whether
written or unwritten. The parties acknowledge that no other party, nor any
agent or attorney of any other party, has made any promises, representations,
or warranties whatsoever, expressly or impliedly, which are not expressly
contained in this Agreement, and the parties further acknowledge that they
have not executed this Agreement in reliance upon any collateral promise,
representation, warranty, or in reliance upon any belief as to any fact or
matter not expressly recited in this Agreement. This Agreement may not be
altered or modified except by a writing signed by all of the respective
parties hereof. No breach or violation of this Agreement shall be waived
except in writing executed by the party granting such waiver.
8.6 Should any provision of this Agreement be declared or determined by
any court to be illegal or invalid, the validity of the remaining parts,
terms or provisions shall not be affected thereby and, in lieu of such
illegal or invalid provision, there shall be added a provision as similar in
terms and amount to such illegal or invalid provision as may be
possible and, if such illegal or invalid provision cannot be so modified,
then it shall be deemed not to be a part of this Agreement.
8.7 For the convenience of the parties, this Agreement may be executed by
facsimile signatures and in counterparts that shall together constitute the
agreement of the parties as one and the same instrument. It is the intent of
the parties that a copy of this Agreement signed by any party shall be fully
enforceable against that party.
IN WITNESS THEREOF the parties have executed this Agreement as of
the date first above written,
VALCOM, INC.
By:_/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer
▇▇▇▇▇ ▇▇▇▇▇▇ PRODUCTIONS
By:_/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, AN INDIVIDUAL
By:_/s/▇▇▇▇▇ ▇▇▇▇▇▇
--------------------
▇▇▇▇▇ ▇▇▇▇▇▇
EXHIBIT F
-----------
MEMORANDUM OF AGREEMENT
This purchase/option agreement ("Agreement") is made and entered
into as of this ___________ day of January 2001, by and between SBI
Communications, Inc., a Delaware corporation, whose address is ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, #▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ("Company") and Half Day
Video, whose address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ("Half Day") and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") with reference to
the following facts:
RECITALS
WHEREAS, Company desires to purchase 100% of the stock,
including the business operations and goodwill ("Operations") of Half
Day; and
WHEREAS, Company desires an option to purchase the real estate
belonging to ▇▇▇▇▇▇▇▇, located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Property"),
NOW THEREFORE, in consideration of the mutual covenants and
promises contained herein, and for valuable consideration, the receipt
and sufficiency of which are hereby mutually acknowledged, the parties
to this Agreement (collectively "parties" and individually a "party")
agree as follows:
AGREEMENT
1. Company agrees to purchase the Operations of Half Day for a total
purchase price of $950,000. This acquisition shall include all of the
equipment of Half Day, as outlined on the attached Exhibit A. The
following assets are specifically excluded from the purchase:
a. Receivables from ▇▇▇▇▇ ▇▇▇▇▇ and/or Triangle Multi Media, Inc. in
settlement of the claim against them for damages sustained to video
production truck and equipment.
b. Any monies recovered from an insurance claim against Triangle Multi
Media, Inc. for damages sustained to video production truck and
equipment.
The Company shall assume the liabilities of Half Day as outlined on Exhibit
B. The following liabilities are specifically not assumed by the
Company:
a. Outstanding ▇▇▇▇▇ Fargo loan in the amount of approximately
$34,000, except that Company shall assume the payment obligation for
the first year in the amount of $1100.00 per month. Following the first
year the payment obligation shall revert to ▇▇▇▇ ▇▇▇▇▇▇▇▇.
b. Outstanding loan to Half Day from ▇▇▇ ▇▇▇▇▇ in the amount of
approximately $25,000
2. Payment of the purchase price shall be as follows: Company agrees to
issue 950,000 shares of Company Common Stock to ▇▇▇▇▇▇▇▇, or his
designee upon execution of the Agreement. In the event the Fair Market
Value of the Company Common Stock is less than $1.00 per share on the
first anniversary date of the issuance of said shares, Company shall issue
an appropriate number of shares to ▇▇▇▇▇▇▇▇ in order to arrive at the
agreed upon amount of $950,000. Fair Market Value means the value of
a share of the company's Common Stock determined as follows:
a. if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of
determination on the principal securities exchange on which the
Common Stock is listed or admitted to trading;
b. if such Common Stock is quoted on the NASDAQ National Market,
its closing price on the NASDAQ National Market on the date of
determination as reported;
c. if such Common Stock is publicly traded but is not listed or admitted
to trading on a national securities exchange, the average of the closing
bid and asked prices on the date of determination as reported; and
d. if none of the foregoing is applicable, by an independent appraisal
company, the cost of which is to be borne by the parties equally.
3. ▇▇▇▇▇▇▇▇ warrants and represents that the shares are being acquired
solely for its own account and not with a view to, or for resale in
connection with, any distribution of common shares within the meaning
of the Securities Act. ▇▇▇▇▇▇▇▇ agrees that the shares may not be sold in
absence of registration unless such sale is exempt from registration under
the Act and any applicable state securities laws. Company represents and
warrants that at the end of the one-year statutory restriction, said shares
shall be fully marketable by ▇▇▇▇▇▇▇▇. The certificate for the shares shall
bear the following restrictive legend:
"THE SHARES REPRESENTED BY THE CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
("THE ACT") AND ARE "RESTRICTED SECURITIES" AS THAT
TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SHARES
MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT,
THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY."
4. Company shall have the option to purchase the real estate located at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ in one year from the date of
execution of this Agreement. Company shall have thirty (30) days from
the anniversary date in which to exercise its option by delivering written
notice to ▇▇▇▇▇▇▇▇, after which ▇▇▇▇▇▇▇▇ is free to market the Property.
The purchase price of said real estate shall be $600,000. In the event that
Company exercises its option, the transaction shall be completed within
ninety (90) days. Exercise of the option by Company is expressly
conditioned upon its compliance with all of its obligations under this
Agreement. Terms of such purchase shall be negotiated in good faith.
Nothing herein contained or done pursuant shall obligate the Company to
purchase the real estate.
5. Company shall retain ▇▇▇▇▇▇▇▇ as a regular employee of SBI subject to
the terms of the Employment Agreement, attached as Exhibit C.
6. Half Day and ▇▇▇▇▇▇▇▇ represent and warrant that:
(i) Half Day is a corporation duly formed and validly existing in good
standing under the laws of the State of California and has the full right,
power, legal capacity and authority to enter into and carry out the terms
of this Agreement.
(ii) Half Day has no agreement with or obligations to any third party with
respect to its Operations or Property, which might conflict or interfere
with or adversely affect any of the provisions of this Agreement or the
use or enjoyment by Company of any of the rights granted to it
hereunder. Half Day has secured all rights necessary for Company to use
and enjoy the rights granted to it herein. Half Day has not sold, assigned,
transferred or conveyed to any party any right, title or interest in and to
the Operation or Property or any part thereof adverse to or in derogation
of the rights granted to Company.
(iii) Half Day has good and marketable title to all of the assets and
properties now carried on its books, including those reflected in the most
recent balance sheet contained in the Half Day Financial Statements, free
and clear of all liens, claims, security interests or other encumbrances
except as those described in the Half Day Financial; Statements or
arising thereafter in the ordinary course of business (none of which will
be material).
(iv) To the best of Half Day's and ▇▇▇▇▇▇▇▇'▇ Knowledge there is no
claim, proceeding, litigation or investigation, whether civil or criminal in
nature, pending or threatened against Half Day or its principals, in any
court or by or before any governmental body or agency, including
without limitation any claim, proceeding or litigation for the purpose of
challenging, enjoining or prevention the execution, delivery or
consummation of this Agreement. Half Day is not subject to any order,
judgment, decree, stipulation or consent or any agreement with any
governmental body or agency that affects its business or operations.
7. Company represents and warrants that:
(i) Company is a corporation duly formed and validly existing in good
standing under the laws of the State of Delaware and has the full right,
power, legal capacity and authority to enter into and carry out the terms
of this Agreement.
8. Each party ("Indemnifying Party") hereby indemnifies, defends and
holds harmless the other party and its successors, licensees, assigns, and
employees, officers, directors (collectively for the purposes of this
Paragraph "Indemnified Party") from and against any and all liability,
loss, damage, cost and expense, including, without limitation, reasonable
attorney's fees, arising out of any breach, or claim by a third party with
respect to any warranty, representation or agreement made by the
Indemnifying Party herein. The Indemnified Party shall promptly notify
the Indemnifying Party of any claim to which the foregoing
indemnification applies and the Indemnifying Party shall undertake, at its
own cost and expense, engage its own counsel. If the Indemnifying Party
fails to promptly appoint competent and experienced counsel, the
Indemnified Party may engage its own counsel and the reasonable
charges in connection therewith shall promptly be paid by the
Indemnifying Party. If the Indemnified Party settles or compromises any
such suit, claim or proceeding, the amount thereof shall be charged to the
Indemnifying Party, provided that the Indemnifying Party's reasonable
prior approval has been secured.
9. The parties hereto agree to execute such further and other documents
and to enter into such further undertakings as may be reasonably
necessary to carry out the full force and intent of this Agreement.
10. The provisions of this Agreement shall enure to the benefit of and be
binding upon the legal representatives of the Company, Half Day and
▇▇▇▇▇▇▇▇ and upon their respective heirs executors, administrators,
successors and permitted assigns.
11. Any notice required or permitted to be given hereunder may be
delivered, sent by registered mail, postage prepaid, or sent by facsimile,
addressed to the proposed recipient of the notice at the address set out on the
first page hereof or to such other address or addresses as the parties may
indicate from time to time by notice in writing to the others.
12. This Agreement shall in all respects be interpreted, enforced and
governed under the laws of the state of California. The language and all
parts of this Agreement shall be in all cases construed as a whole according to
its very meaning and not strictly for or against any individual party.
13. This Agreement memorializes and constitutes the entire agreement and
understanding between the parties regarding the subject matter hereof, and
supersedes all prior negotiations, proposed agreements and agreements,
whether written or unwritten. The parties acknowledge that no other party,
nor any agent or attorney of any other party, has made any promises,
representations, or warranties whatsoever, expressly or impliedly, which are
not expressly contained in this Agreement, and the parties further acknowledge
that they have not executed this Agreement in reliance upon any collateral
promise, representation, warranty, or in reliance upon any belief as to any
fact or matter not expressly recited in this Agreement. Any modification to
this Agreement shall be made in writing.
14. Should any provision of this Agreement be declared or determined by
any court to be illegal or invalid, the validity of the remaining parts,
terms or provisions shall not be affected thereby and, in lieu of such
illegal or invalid provision, there shall be added a provision as similar
in terms and amount to such illegal or invalid provision as may be possible
and, if such illegal or invalid provision cannot be so modified, then it
shall be deemed not to be a part of this Agreement.
15. For the convenience of the parties, this Agreement may be executed by
facsimile signatures and in counterparts that shall together constitute the
agreement of the parties as one and the same instrument. It is the intent of
the parties that a copy of this Agreement signed by any party shall be fully
enforceable against that party.
IN WITNESS WHEREOF the parties have executed this Agreement as
of the date first above written
SBI COMMUNICATIONS, INC.
A Delaware Corporation
By:_/s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer
HALF DAY VIDEO, INC.
A California Corporation
By:_/s/▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
President
▇▇▇▇ ▇▇▇▇▇▇▇▇, AN INDIVIDUAL
By:_/s/▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
