AGREEMENT FOR THE PURCHASE OF COMMON STOCK
AGREEMENT, made this January 15, 1998, by and between the undersigned
Shareholders of XXXX CORP. ("XXXX") and Alternative Entertainment, Inc.
("PURCHASER"), for the purpose of setting forth the terms and conditions upon
which the Shareholders will sell to PURCHASER shares of XXXX'x common stock.
The information contained in the outline pages preceding this
Agreement is part of and intended to be merged into and made a part of this
Agreement.
In consideration of the mutual promises, covenants, and
representations contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I
SALE OF SECURITIES
Subject to the terms and conditions of this Agreement, the
Shareholders agree to sell, and PURCHASER agrees to purchase, 4,821,997 shares
of the common stock of XXXX for $50,000.00. The shares to be sold by each
Shareholder and the consideration to be received by each Shareholders is
reflected in the following table:
Shares Consideration
Shareholder to be sold to be received
Xxxxxxxxxx Realty 1,225,896 $ 12,601.00
Xxxxxx Xxxxxxx 750,000 7,800.00
Xxxxxxx Xxxxxxx 760,000 7,904.00
Tramdot Development Corp. 1,000,000 10,400.00
Southward Investments 553,101 5,752.00
Xxxx Xxxxxx 286,071 2,975.00
Xxxxxx Xxxxx 246,929 2,568.00
Totals 4,821,997 $50,000.00
At PURCHASER's option, subject to there being available, and upon
written notification to the Shareholders prior to closing, PURCHASER will have
the option to purchase from the Shareholders additional shares of XXXX'x common
stock at a price to be negotiated. The additional shares to be purchased shall
be sold, and the additional consideration will be paid, on a pro rata basis
among the Shareholders. Each Shareholder hereby appoints Southward Investments
to receive and hold all consideration received from PURCHASER for the sale of
the shares described above.
Upon the execution of this Agreement, PURCHASER has
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tendered a check in the amount of $3,500 to the Shareholders. This amount will
be applied as an irrevocable performance deposit and will be applied at closing
towards the payment of the shares described above.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Shareholders, jointly and severally, represent and warrant to
PURCHASER that the following shall be true and correct in all respects as of the
closing (as defined in Article IV of this Agreement).
2.01 ORGANIZATION. XXXX is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware, has all necessary
corporate powers to own properties and carry on a business, and is duly
qualified to do business and is in good standing in Delaware. All actions taken
by the Incorporators, Directors and/or shareholders of XXXX have been valid and
in accordance with the laws of the State of Delaware.
2.02 CAPITAL. The authorized capital stock of XXXX consists of
20,000,000 shares of common stock, $0.001 par value, of which 6,027,496 shares
are issued and outstanding. All outstanding shares are fully paid and non
assessable, free of liens, encumbrances, options and legal or equitable rights
of others not a party to this Agreement. At closing, there will be no
outstanding subscriptions, options, rights, warrants, convertible securities, or
other agreements or commitments obligating XXXX to issue or to transfer from
treasury any additional shares of its capital stock. None of the outstanding
shares of XXXX are subject to any stock restriction agreements. There are
approximately 715 bonafide shareholders of XXXX. All of such shareholders have
valid title to such shares and acquired their shares in a lawful transaction and
in accordance with Delaware corporate law. At least 80% of such shareholders
each own at least 100 shares of XXXX'x common stock.
2.03 FINANCIAL STATEMENTS. Exhibit A to this Agreement includes the
balance sheets of XXXX as of January 20, 1998, and the related statements of
income and retained earnings for the period then ended. The financial statements
have been prepared in accordance with generally accepted accounting principles
consistently followed by XXXX throughout the periods indicated, and fairly
present the financial position of XXXX as of the date of the balance sheet
included in the financial statements, and the results of its operations for the
periods indicated.
2.04 ABSENCE OF CHANGES. Since January 20, 1998, there has not been
any change in the financial condition or operations of XXXX, except changes in
the ordinary course of business, which changes have not in the aggregate been
materially adverse.
2.05 LIABILITIES. XXXX did not as of January 20, 1998
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have any debt, liability, or obligation of any nature, whether accrued,
absolute, contingent, or otherwise, and whether due or to become due, that is
not reflected in XXXX'x balance sheet as of January 20, 1998. The Shareholders
are not aware of any pending, threatened or asserted claims, lawsuits or
contingencies involving XXXX or its common stock. There is no dispute of any
kind between XXXX and any third party, and no such dispute will exist at the
closing of this Agreement. At closing, XXXX will be free from any and all
liabilities, liens, claims and/or commitments.
2.06 TAX RETURNS. Within the times and in the manner prescribed by
law, XXXX has filed all federal, state, and local tax returns required by law
and has paid all taxes, assessments, and penalties due and payable. No federal
income tax returns of XXXX have been audited by the Internal Revenue Service.
The provision for taxes, if any, reflected in XXXX'x balance sheet as of January
20, 1998, is adequate for any and all federal, state, county, and local taxes
for the period ending on the date of that balance sheet and for all prior
periods, whether or not disputed. There are no present disputes as to taxes of
any nature payable by XXXX.
2.07 ABILITY TO CARRY OUT OBLIGATIONS. The Shareholders have the
right, power, and authority to enter into, and perform their obligations under
this Agreement. The execution and delivery of this Agreement by the Shareholders
and the performance by the Shareholders of their obligations hereunder will not
cause, constitute, or conflict with or result in (a) any breach or violation or
any of the provisions of or constitute a default under any license, indenture,
mortgage, charter, instrument, articles of incorporation, bylaw, or other
agreement or instrument to which XXXX or the Shareholders are a party, or by
which they may be bound, nor will any consents or authorizations of any party
other than those hereto be required, (b) an event that would cause XXXX to be
liable to any party, or (c) an event that would result in the creation or
imposition of any lien, charge, or encumbrance on any asset of XXXX or upon the
securities of XXXX to be acquired by PURCHASER.
2.08 FULL DISCLOSURE. None of representations and warranties made by
the Shareholders, or in any certificate or memorandum furnished or to be
furnished by the Shareholders, or on their behalf, contains or will contain any
untrue statement of a material fact, or omit any material fact the omission of
which would be misleading.
2.09 CONTRACTS AND LEASES. XXXX does not and has never carried on any
business. XXXX is not a party to any contract, agreement or lease. No person
holds a power of attorney from XXXX.
2.10 COMPLIANCE WITH LAWS. XXXX has complied with, and is not in
violation of any federal, state, or local statute, law, and/or regulation
pertaining to XXXX. XXXX has complied with
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all federal and state securities laws in connection with the offer, sale and
distribution of its securities. At the time XXXX filed its Form D with the
Securities and Exchange Commission, XXXX was entitled to use the exemption
provided by Section 504 of the Securities and Exchange Commission relative to
the exchange of its shares or any other transaction described in such Form D.
2.11 LITIGATION. XXXX is not (and has not been) a party to any suit,
action, arbitration, or legal, administrative, or other proceeding, or pending
governmental investigation. To the best knowledge of the Shareholders, there is
no basis for any such action or proceeding and no such action or proceeding is
threatened against XXXX. XXXX is not subject to or in default with respect to
any order, writ, injunction, or decree of any federal, state, local, or foreign
court, department, agency, or instrumentality.
2.12 CONDUCT OF BUSINESS. Prior to the closing, XXXX shall conduct its
business in the normal course, and shall not (without the prior written approval
of PURCHASER) (i) sell, pledge, or assign any assets (ii) amend its Articles of
Incorporation or Bylaws, (iii) declare dividends, redeem or sell stock or other
securities, (iv) incur any liabilities, (v) acquire or dispose of any assets,
enter into any contract, guarantee obligations of any third party, or (vi) enter
into any other transaction.
2.13 CORPORATE DOCUMENTS. Copies of each of the following documents,
which are true, complete and correct in all material respects, will be attached
to and made a part of this Agreement:
(i) Articles of Incorporation;
(ii) Bylaws;
(iii) Minutes of Shareholders Meetings;
(iv) Minutes of Directors Meetings;
(v) An Opinion Letter from our attorney attesting to the
validity and condition of the Corporation
(vi) List of Officers and Directors;
(vii) List of Shareholders;
(viii) Copy of Form D filed with Securities and Exchange
Commission;
(ix) Balance Sheet as of January 20, 1998, together with other
financial statements described in Section 2.03;
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(x) Secretary of State Filing Receipt stamped on the Certificate
of Incorporation.
(xi) Copies of all federal and state income tax returns of XXXX;
(xii) Stock certificate records of XXXX and a current, accurate
list of XXXX shareholders;
(xiii) A copy of Form M-11 filed with the State of New York;
2.14 CLOSING DOCUMENTS. All minutes, consents or other documents
pertaining to XXXX to be delivered at closing shall be valid and in accordance
with the laws of Delaware.
2.15 TITLE. The Shareholders have good and marketable title to all of
the securities to be sold to PURCHASER pursuant to this Agreement. The
securities to be sold to PURCHASER will be, at closing, free and clear of all
liens, security interests, pledges, charges, claims or encumbrances of any kind.
None of such Shares are or will be subject to any voting trust or agreement. No
person holds or has the right to receive any proxy or similar instrument with
respect to such shares. Except as provided in this Agreement, the Shareholders
are not parties to any agreement which offers or grants to any person the right
to purchase or acquire any of the securities to be sold to PURCHASER. There is
no applicable local, state or federal law, rule, regulation, or decree which
would, as a result of the purchase of the Shares by PURCHASER, impair, restrict
or delay PURCHASER's voting rights with respect to the Shares.
ARTICLE III
INVESTMENT INTENT
PURCHASER agrees that the securities being acquired pursuant to this
Agreement may be sold, pledged, assigned, hypothecated or otherwise transferred,
with or without consideration ("Transfer") only 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 XXXX. PURCHASER agrees, prior to any Transfer, to give
written notice to XXXX expressing his desire to effect the Transfer and
describing the proposed Transfer.
ARTICLE IV
CLOSING
The closing of this transaction will occur when all of the documents
and/or consideration described below have been delivered. Unless the closing of
this transaction takes place on or before February 15, 1998, then either party
may terminate this
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Agreement. If this Agreement is terminated due to the failure of the
Shareholders to provide the documents specified below, then all consideration
paid by PURCHASER shall be returned to PURCHASER. If this Agreement is
terminated by the Shareholders due to the failure of PURCHASER to provide the
consideration specified below, then all amounts previously paid by PURCHASER
will be forfeited to the Shareholders and PURCHASER will have no further
liability to the Shareholders. As part of the closing, the following documents,
in form reasonably acceptable to counsel to the parties, shall be delivered:
By the Shareholders:
A. A certificate or certificates for 4,821,997 shares of XXXX'x common
stock, registered in the name of PURCHASER or its designees.
B. A certificate for such additional shares of XXXX'x common stock as
PURCHASER may have elected to purchase in accordance with Article I of this
Agreement if applicable.
C. The resignation of all officers of XXXX.
D. A Board of Directors resolution appointing PURCHASER's designees as
directors of XXXX.
E. The resignation of all the directors of XXXX, except PURCHASER's
designees, dated subsequent to the resolution described in D. above.
F. Certified financial statements of XXXX, which shall include a balance
sheet dated as of January 31, 1998 and statements of operations, stockholders'
equity and cash flows for the twelve month period then ended.
The financial statements of XXXX shall be covered by a report of a
certified public accountant. The accountant's report shall state that the
accountant conducted his audit in accordance with generally accepted auditing
standards, that his audit provided a reasonable basis for his opinion, and that
in his opinion, the financial statements covered by the report present fairly,
in all material respects, the financial position of XXXX as of January 31, 1998,
and the results of its operations and its cash flows for the twelve months ended
January 31, 1998, in conformity with generally accepted accounting principles.
Such report will not be qualified or limited in any respect.
The accountant reporting on such financial statements will submit
proof to PURCHASER, on or before closing, that the accountant has a standard
professional liability policy (which provides coverage for the audit report on
XXXX'x financial statements) with policy limits of at least $1,000,000 for each
occurrence or claim.
G. All of the business and corporate records of XXXX, including but not
limited to correspondence files, bank statements, checkbooks, savings account
books, minutes of shareholder
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and directors meetings, financial statements, shareholder listings, stock
transfer records, agreements and contracts.
H. Such other minutes of XXXX'x shareholders or directors as may reasonably
be required by PURCHASER.
By PURCHASER:
A. A check in the amount of $21,500.00, representing the balance of the
cash payment due for the 4,821,997 shares of XXXX'x common stock.
B. A check for any additional shares which PURCHASER elected to purchase in
accordance with Article I of this Agreement if applicable.
C. The amount of Twenty One Thousand, Five Hundred Dollars, ($21,500.00)
will be paid at Closing and the sum of Twenty Five Thousand Dollars,
($25,000.00) payable of which One Thousand Dollars, ($1,000.00) shall be due and
payable ninety days from the date of the closing and Two Thousand Dollars,
($2,000.00) to be paid before the tenth (10th) day of each month thereafter for
a period of Twelve (12) months.
D. Purchaser shall establish an escrow account acceptable to both parties
wherein the shares purchased will be held and installment payments are to be
deposited.
ARTICLE V
REMEDIES
5.01 ARBITRATION. Any controversy or claim arising out of, or relating
to, this Agreement, or the making, performance, or interpretation thereof, shall
be settled by arbitration in Rochester, New York in accordance with the Rules of
the American Arbitration Association then existing, and judgment on the
arbitration award may be entered in any court having jurisdiction over the
subject matter of the controversy.
5.02 TERMINATION. In addition to any other remedies, PURCHASER may on
or before the closing date terminate this Agreement, without liability.
(i) If any bonafide action or proceeding shall be pending against
the Shareholders or XXXX on the closing date that could result in an unfavorable
judgment, decree, or order that would prevent or make unlawful the carrying out
of this Agreement or if any agency of the federal or of any state government
shall have objected at or before the closing date to the acquisition of XXXX'x
securities by PURCHASER or to any other action required by or in connection with
this Agreement;
(ii) If at the Closing the Shareholders failed to do all things
required to be completed pursuant to the terms of
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this agreement
5.03 INDEMNIFICATION. The Parties, jointly and severally agree to
indemnify the other against all actual losses, damages and expenses caused by
(i) any material breach of this Agreement or any material misrepresentation
contained herein or (ii) any misstatement of a material fact or omission to
state a material fact required to be stated herein or necessary to make the
statements herein not misleading.
ARTICLE VI
MISCELLANEOUS
6.01 CAPTIONS AND HEADINGS. The Article and paragraph headings
throughout this Agreement are for convenience and reference only, and shall in
no way be deemed to define, limit, or add to the meaning of any provision of
this Agreement.
6.02 NO ORAL CHANGE. This Agreement and any provision hereof, may
not be waived, changed, modified, or discharged orally, but only by an agreement
in writing signed by the party against whom enforcement of any waiver, change,
modification, or discharge is sought.
6.03 NON WAIVER. Except as otherwise expressly provided herein,
no waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to insist
in any one or more cases upon the performance of any of the provisions,
covenants, or conditions of this Agreement or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future of
any such provisions, covenants, or conditions, (ii) the acceptance of
performance of anything required by this Agreement to be performed with
knowledge of the breach or failure of a covenant, condition, or provision hereof
shall not be deemed a waiver of such breach or failure, and (iii) no waiver by
any party of one breach by another party shall be construed as a waiver with
respect to any other or subsequent breach.
6.04 TIME OF ESSENCE. Time is of the essence of this Agreement
and of each and every provision hereof.
6.05 ENTIRE AGREEMENT. This Agreement contains the entire
Agreement and understanding between the parties hereto, and supersedes all prior
agreements and understandings.
6.06 COUNTERPARTS. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
6.07 NOTICES. All notices, requests, demands, and other
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communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is to be given, or on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed as follows:
The SHAREHOLDERS:
c/o Xxxxxx Xxxxxxx
Southward Investments
0000 Xxxxxx Xxx. Xxxxx 000
Xxxxxxxxx, XX 00000
PURCHASER
Alternative Entertainment, Inc.
Xxxxx Xxxxx: President
0000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xx Xxxxx, Xxxxx. 00000
6.08 BINDING EFFECT. This Agreement shall inure to and be binding
upon the heirs, executors, personal representatives, successors and assigns of
each of the parties to this Agreement.
6.9 EFFECT OF CLOSING. All representations, warranties,
covenants, and agreements of the parties contained in this Agreement, or in any
instrument, certificate, opinion, or other writing provided for in it, shall be
true and correct as of the closing and shall survive the closing of this
Agreement.
6.10 MUTUAL COOPERATION. The parties hereto shall cooperate with
each other to achieve the purpose of this Agreement, and shall execute such
other and further documents and take such other and further actions as may be
necessary or convenient to effect the transaction described herein.
6.11 The Buyer hereby acknowledges that with the exception of
those certificates to be issued to Buyer (or its nominee) hereunder and those to
be retained by Sellers, no stock certificates have been issued to the other
shareholders (a list of those entitled to same having been kept in book entry
form). Buyer further acknowledges its obligation to prepare and issue
certificates to the shareholders in the names and amounts appearing on the
shareholders list to be given to Buyer at the Closing.
AGREED AND ACCEPTED as of the date first above written.
PURCHASER
/s/ Xxxxx X. Xxxxx
-------------------------------
Alternative Entertainment, Inc.
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Xxxxx Xxxxx: President
/s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxxxxxx Realty
Xxxxxx Xxxxxxx: President
/s/ Xxxxxxx Xxxxxxx
-----------------------------------
Tramdot Development Corp
Xxxxxxx Xxxxxxx: President
/s/ Xxxxxx Xxxxxxx
-----------------------------------
Southward Investment
Xxxxxx Xxxxxxx: C.O.O.
/s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxx Xxxxxx Xxxxxxxx
-----------------------------------
Xxxx Xxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxx
-----------------------------------
Xxxxxx Xxxxx
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