SHARE PURCHASE AGREEMENT
by and among
XX0.XXX INC.,
as Purchaser
and
XXXX XXXXXX XXXXXXX, XXXXX XXXXX XXXXXX XXXXX AND
XXXX XXXXXX XXXXXXX AND XXXXX XXXX XXXXXXX AS TRUSTEES OF THE
XXXX XXXXXX XXXXXXX 1999 CHILDREN'S SETTLEMENT
as Sellers
AND
METAVISUAL CREATIONS LIMITED
Dated as of September 27, 1999
TABLE OF CONTENTS
Page
PURCHASE AND SALE OF SHARES.......................................................................................1
1.1 Purchase of Shares..............................................................................1
1.2 Purchase Price..................................................................................1
1.3 Closing; Deliveries.............................................................................2
1.4 Closing Date....................................................................................2
REPRESENTATIONS AND WARRANTIES OF THE SELLERS.....................................................................2
2.1 Organization and Qualification..................................................................2
2.2 Capitalization..................................................................................2
2.3 Subsidiaries and Affiliates.....................................................................2
2.4 Options or Other Rights.........................................................................3
2.5 Ownership of the Shares.........................................................................3
2.6 Validity and Execution of Agreement.............................................................3
2.7 No Conflict.....................................................................................3
2.8 Books and Records...............................................................................3
2.9 Articles of Organization; Memorandum............................................................3
2.10 Financial Statements............................................................................4
2.11 Undisclosed Liabilities.........................................................................4
2.12 No Material Adverse Change......................................................................4
2.13 Tax Matters.....................................................................................4
2.14 Litigation......................................................................................4
2.15 Contracts and Other Agreements..................................................................5
2.16 Real Estate.....................................................................................5
2.17 Transactions with Affiliates....................................................................5
2.18 Compensation Arrangements; Officers, Directors and Employees....................................5
2.19 Operations......................................................................................6
2.20 Tangible Property...............................................................................7
2.21 Intellectual Property; Proprietary Rights; Employee Restrictions................................8
2.22 Licenses and Permits............................................................................9
2.23 Compliance with Laws...........................................................................10
2.24 Banks and Proxies..............................................................................10
2.25 Year 2000 Compliance...........................................................................10
2.26 Brokers........................................................................................10
2.27 Acquisition of Xx0.xxx Shares..................................................................10
2.28 Disclosure.....................................................................................11
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..................................................................11
3.1 Validity and Execution of Agreement............................................................11
3.2 No Conflict....................................................................................12
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3.3 Brokers........................................................................................12
3.4 Disclosure.....................................................................................12
PRE-CLOSING COVENANTS............................................................................................12
4.1 Corporate Examinations and Investigations......................................................12
4.2 Conduct of Business............................................................................13
4.3 Preservation of Business.......................................................................13
4.4 No Solicitations...............................................................................14
4.5 Other Agreements...............................................................................14
CONDITIONS PRECEDENT TO THE CLOSING..............................................................................14
5.1 Conditions Precedent to the Obligations of the Purchaser to Complete the Closing...............14
5.2 Conditions Precedent to the Obligations of the Sellers to Complete the Closing.................15
POST-CLOSING COVENANTS...........................................................................................16
6.1 Further Information............................................................................16
6.2 Record Retention...............................................................................16
6.3 Post-Closing Assistance........................................................................16
6.4 SEC Reporting..................................................................................17
SURVIVAL; INDEMNIFICATION........................................................................................17
7.1 Survival of Agreements, Representations and Warranties.........................................17
7.2 Indemnification by the Sellers.................................................................17
7.3 Purchaser's Indemnity..........................................................................18
7.4 Method of Asserting Claims.....................................................................18
7.5 Limitations on the Seller's Obligations........................................................19
7.6 General Provisions.............................................................................19
7.7 Right of Offset................................................................................20
TERMINATION OF AGREEMENT.........................................................................................20
8.1 Termination....................................................................................20
8.2 Survival After Termination.....................................................................20
MISCELLANEOUS....................................................................................................21
9.1 Certain Definitions............................................................................21
9.2 Expenses.......................................................................................26
9.3 Further Assurances.............................................................................26
9.4 Notices........................................................................................26
9.5 Publicity......................................................................................27
9.6 Entire Agreement...............................................................................27
9.7 Waivers and Amendments.........................................................................27
9.8 Governing Law..................................................................................28
9.9 Jurisdiction...................................................................................28
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9.10 Binding Effect, No Assignment..................................................................28
9.11 Variations in Pronouns.........................................................................28
9.12 Counterparts...................................................................................28
9.13 Exhibits and Schedules.........................................................................28
9.14 Headings.......................................................................................28
9.15 Severability of Provisions.....................................................................28
EXHIBITS
EXHIBIT A Purchaser's Note
EXHIBIT B Seller's Closing Certificate
EXHIBIT C Purchaser's Closing Certificate
EXHIBIT D Registration Rights Agreement
EXHIBIT E Services Agreement
SCHEDULES
SCHEDULE I Sellers, Allocation of Purchase Price
SCHEDULE 2.3 Subsidiaries and Affiliates
SCHEDULE 2.4 Options or Other Rights
SCHEDULE 2.12 Material Adverse Changes
SCHEDULE 2.15 Material Contracts
"Required Consents/Contracts"
SCHEDULE 2.17 Transactions with Affiliates
SCHEDULE 2.18 Compensation Arrangements; Officers, Directors and Employees
SCHEDULE 2.19 Operations
SCHEDULE 2.20 Tangible Property
"Required Consents/Tangible Property"
SCHEDULE 2.21 Intellectual Property; Proprietary Rights; Employee Restrictions
"Required Consents/Intellectual Property"
SCHEDULE 2.22 Licenses and Permits
"Required Consents/Permits"
SCHEDULE 2.24 Banks and Proxies
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SHARE PURCHASE AGREEMENT, dated as of September 27, 1999,
by and between XX0.XXX INC. (the "Purchaser"), a Colorado corporation having
its principal address at 000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx,
Xxxxxx Xxxxxx of America 10013, and Xxxx Xxxxxx Xxxxxxx (the "Warrantor") and
each of the other persons named in Schedule I (together with the Warrantor,
the "Sellers"), having their respective addresses as set forth in Schedule I
as the shareholders of MetaVisual Creations Limited, a private company
limited by shares and incorporated under the laws of England with registered
number 2674066 and formerly known as xx Xxxxx-Xxxxxxx Limited (the
"Company"), having its principal address at 00 Xxx Xxxxxx Xxxx, Xxxxxx,
Xxxxxxxxx XX00 0XX, Xxxxxx Xxxxxxx.
WHEREAS, the Sellers own 700 ordinary shares of one xxxxx
each of the Company (the "Company Shares"); and
WHEREAS, the Sellers wish to sell, and the Purchaser wishes
to purchase, the Company Shares on the terms and subject to the conditions
hereinafter set forth such that after the completion of the transactions
contemplated by this Agreement, the Company will become wholly-owned by the
Purchaser;
NOW, THEREFORE, in consideration of the mutual terms,
conditions and other agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Purchaser, the Sellers and the Company hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 PURCHASE OF SHARES. On the terms and subject to the
conditions set forth in this Agreement, the Sellers agree to sell the Company
Shares to the Purchaser, and the Purchaser agrees to purchase the Company
Shares from the Sellers. Capitalized terms used without definition shall have
the respective meanings given them in Section 9.1.
1.2 PURCHASE PRICE. The purchase price (the "Purchase Price")
for all of the Company Shares shall be (a) US $330,000 in cash (the "Cash
Portion"), (b) the Purchaser's promissory notes (the "Purchasers Notes") in
the original aggregate principal amount of $332,500 payable on the first
anniversary of the Closing Date, each substantially in the form of Exhibit A
and (c) that aggregate number of shares of Purchaser Common Stock (the "Share
Consideration"), rounded to the nearest whole share, equal to the quotient of
$2,137,500 divided by the Per Share Price. The shares that comprise the Share
Consideration will be "restricted shares" as defined in Rule 144 and shall
have the benefit of the Registration Rights Agreement. The Purchase Price
will be allocated and paid to the Sellers according to Schedule I.
1.3 CLOSING; DELIVERIES. At the Closing (as defined in
Section 1.4)
(a) The Purchaser shall sell, issue and deliver the Share
Consideration to the Sellers, together with the certificates, opinions and
other agreements and instruments contemplated by Section 5.2, as allocated in
Schedule I
(b) The Sellers shall sell and deliver the Company Shares
respectively owned by them to the Purchaser, as shown in Schedule I, together
with the certificates, opinions and other agreements and instruments
contemplated by Section 5.1, free and clear of all Liens.
(c) The delivery of both the Company Shares and the Share
Consideration shall be effected by the Sellers' presentation of certificates
representing the Company Shares respectively owned by them and the
Purchaser's presentation of certificates representing the Share
Consideration, in the case of the Sellers each, accompanied by a duly signed
stock transfer form. The Sellers shall be solely liable for any Taxes arising
from the sale or transfer of the Company Shares (other than Stamp Duty which
shall be borne by the Purchaser), and the Purchaser shall be solely liable
for any Taxes arising from the issuance or sale of the Share Consideration.
1.4 CLOSING DATE. The consummation of the purchase and sale of
the Interests (the "Closing") shall be held at 10:00 a.m. at the offices of
the Purchaser's Counsel on the business day immediately after the conditions
set forth in Article 5 have been satisfied, but in no event later than
September 27, 1999 or such other time and date as shall be mutually agreed to
by the Purchaser and the Warrantor.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE WARRANTOR
To induce the Purchaser to enter into this Agreement, to purchase
all of the Company Shares and to perform its other obligations under this
Agreement, the Warrantor represents and warrants to the Purchaser as follows:
2.1 ORGANIZATION AND QUALIFICATION. The Company is a private
company limited by shares and duly incorporated under the laws of England.
The Company has all requisite power and authority to (a) own, lease and
operate its properties and assets as they are now owned, leased and operated
and (b) carry on its business as currently conducted and as proposed to be
conducted by the Warrantor prior to the date of this Agreement.
2.2 CAPITALIZATION. The Company Shares have been duly
authorized and have been validly issued and are fully paid.
2.3 SUBSIDIARIES AND AFFILIATES. Except as described on
SCHEDULE 2.3, the Company does not own, directly or indirectly, any capital
stock of, or any partnership, or other interest in, any other Person.
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2.4 OPTIONS OR OTHER RIGHTS. Except as described on SCHEDULE
2.4, no options, warrants, calls, commitments or other rights to acquire,
sell or issue Company Shares or equity interests of the Company, whether upon
conversion of other securities or otherwise, are issued or outstanding, and
there is no agreement or understanding with respect to the voting of such
Company Shares or other equity interests.
2.5 OWNERSHIP OF THE SHARES. Each of the Sellers has good and
marketable title to, and is the lawful record and beneficial owner of, the
Company Shares owned by such Sellers, subject to no Liens. None of the
Sellers has entered into any agreements or understandings with respect to the
ownership or voting of the Company Shares.
2.6 VALIDITY AND EXECUTION OF AGREEMENT. Each of the Sellers
and the Company has the full legal right, capacity and power required to
enter into, execute and deliver this Agreement and to perform fully its
respective obligations hereunder. This Agreement has been duly executed and
delivered by each of the Sellers and the Company and constitutes the valid
and binding obligation of the Sellers and the Company, enforceable in
accordance with its terms, subject to the qualifications that enforcement of
the rights and remedies created hereby is subject to (a) bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and (b) general principles of
equity (regardless of whether such enforcement is considered in a proceeding
in equity or at law).
2.7 NO CONFLICT. Neither the execution and delivery of this
Agreement by any of the Sellers and the Company nor the performance by any of
the Sellers and the Company of the transactions contemplated hereby will: (a)
violate or conflict with any of the provisions of the Certificate of
Incorporation or Memorandum of the Company; (b) violate, conflict with,
result in the acceleration of, or entitle any party to accelerate the
maturity or the cancellation of the performance of any obligation under, or
result in the creation or imposition of any Lien in or upon any of the
properties or assets of such Sellers or the Company, as the case shall be, or
constitute a default (or an event which might, with the passage of time or
the giving of notice, or both, constitute a default) under any mortgage,
indenture, deed of trust, lease, contract, loan or credit agreement, license
or other instrument to which such Sellers or the Company, as the case shall
be, is a party or by which it or any of its respective properties or assets
may be bound or affected; or (c) violate or conflict with any provision of
any Law or Order applicable to such Sellers or the Company or require any
consent or approval of or filing or notice with any Governmental or
Regulatory Body by such Sellers or the Company, as the case shall be.
2.8 BOOKS AND RECORDS. Each of the Books and Records of the
Company as supplied to the Purchaser is true, correct, complete and current
in all material respects and, as applicable, accurately reflects all actions
taken by the Sellers and the Company since the date of inception of the
Company, and all signatures contained therein are the true signatures of the
Persons whose signatures they purport to be.
2.9 ARTICLES OF ORGANIZATION; MEMORANDUM. The Company has
heretofore delivered to the Purchaser true, correct and complete copies of
the Certificate of Incorporation and the
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Memorandum as certified by the managing director of the Company, as in full
force and effect on the date hereof.
2.10 FINANCIAL STATEMENTS. The unaudited accounts of the Company
for the years ended March 31, 1996 through 1999 (the "Company Financial
Statements"), true and complete copies of which have been delivered to the
Purchaser, present fairly, in all material respects, the financial position of
the Company as at such dates and the results of operations of the Company for
the years then ended.
2.11 UNDISCLOSED LIABILITIES. The Company does not have any
material direct or indirect indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, fixed or unfixed, xxxxxx or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent
or otherwise (all of the foregoing being collectively referred to as
"Liabilities" and individually as a "Liability"), of a kind required to be set
forth on a financial statement that is not fully and adequately reflected or
reserved against on the Company Financial Statements. The Company does not have
any Liabilities of any kind required to be set forth on a financial statement,
other than (a) Liabilities incurred since the Company's inception in the
ordinary course of business (none of which is a Liability for breach of
contract, breach of warranty, tort, infringement, or a pending claim or
lawsuit), and fully reflected as Liabilities on the Company's Books and Records,
none of which individually or in the aggregate, is material to the business,
operations, income, condition (financial or otherwise), assets or properties of
the Company or (b) Liabilities disclosed and reflected as liabilities on the
Company Financial Statements.
2.12 NO MATERIAL ADVERSE CHANGE. Except as described in Schedule
2.12, since March 31, 1999, there has been no material adverse change in the
business, operations, income or condition (financial or otherwise), assets or
properties of the Company, nor is any such change threatened, nor has there been
any damage, destruction or loss which could reasonably be expected to have a
Material Adverse Effect on the Company, whether or not covered by insurance.
2.13 TAX MATTERS. All Tax Returns, reports and declarations of
estimated tax or estimated tax deposit forms required to be filed by the Company
have been duly and timely filed; the Company has paid all Taxes which have
become due whether pursuant to such returns or any assessment received by it or
otherwise, and has paid all installments of estimated Taxes due; and all Taxes
which the Company is required by law to withhold or to collect have been duly
withheld and collected, and have been paid over to the proper Governmental or
Regulatory Body. There are no tax liens upon any of the assets or properties of
the Company except for Liens for Taxes not yet due.
2.14 LITIGATION. There are no outstanding Orders by which the
Company, or any of its securities, assets, properties or businesses are bound,
and there is no Action or Proceeding pending or, to the knowledge of the
Company, threatened (whether or not the defense thereof or liabilities in
respect thereof are covered by insurance) against or affecting the Company or
any of
4
its assets, properties or businesses, nor, to the knowledge of the Sellers, are
there any facts which are likely to give rise to any such Action or Proceeding
which if adversely decided, would have a Material Adverse Effect on the Company.
2.15 CONTRACTS AND OTHER AGREEMENTS. SCHEDULE 2.15 sets forth the
Material Contracts to which the Company is a party or by or to which the
Company, or its assets, properties or businesses, is bound or subject. The
Warrantor has delivered true and complete copies of all of the Material
Contracts to the Purchaser. All of the Material Contracts are valid, subsisting,
in full force and effect and binding upon the Company and, to the knowledge of
the Warrantor, the other parties thereto in accordance with their terms, subject
to the qualifications that enforcement of the rights and remedies created
thereby is subject to (i) bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting the rights and remedies of creditors
and (ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law). The Company has satisfied in
full or provided for all of its liabilities and obligations under such Material
Contracts requiring performance prior to the date hereof in all material
respects, and is not in default under any of them, nor, to the knowledge of the
Warrantor, does any condition exist that with notice or lapse of time or both
would constitute such a default. To the knowledge of the Warrantor, no other
party to any such Material Contract is in default thereunder, nor does any
condition exist that with notice or lapse of time or both would constitute such
a default. Except as set forth on SCHEDULE 2.15 under the heading "Required
Consents/Contracts," no approval or consent of any Person is needed for any of
the Material Contracts to continue to be in full force and effect. All of the
Company's rights under such Material Contracts will be in full force and effect
following consummation of the transactions contemplated by this Agreement.
2.16 REAL ESTATE. The Company does not own or lease any real
property.
2.17 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
2.17, no director or shareholder or Affiliate of the Company or Affiliate of
such director or shareholder has: (a) borrowed money from or loaned money to the
Company which remains outstanding; (b) had any contractual or other claim,
express or implied, of any kind whatsoever against the Company; (c) had any
interest in any property or assets used by the Company in the business of the
Company; (d) engaged in any other transaction with the Company; or (e) owned,
directly or indirectly, any interest in (except not more than five percent (5%)
stockholdings for investment purposes in securities of publicly held and traded
companies), or served as a director, employee or consultant of or otherwise
received remuneration from, any Person which is, or has engaged in business as,
a competitor, lessor, lessee, customer or supplier of the Company.
2.18 COMPENSATION ARRANGEMENTS; OFFICERS, DIRECTORS AND EMPLOYEES.
SCHEDULE 2.18 sets forth: (a) the name of all current directors and employees of
the Company and current annual salary, including any promised, expected or
customary bonus or other amount, and (b) the names and titles of all directors
of the Company. The Company has not made a commitment or agreement (verbally or
in writing) to increase the compensation or to modify the conditions or
5
terms of employment of any Person listed on SCHEDULE 2.18. To the knowledge of
the Sellers, none of such Persons has made a threat to the Company to terminate
such Person's relationship with the Company.
2.19 OPERATIONS. Except as expressly authorized by this
Agreement or as set forth on SCHEDULE 2.19, since May 31, 1999, the Company has
not:
(a) amended its Certificate of Incorporation or the Memorandum
or merged with or into or consolidated with any other Person, or changed or
agreed to rearrange in any manner the character of the business of the Company;
(b) issued, sold or purchased options or rights to subscribe
to, or entered into any contracts or commitments to issue, sell or purchase, any
shares of its capital stock or other equity interests;
(c) entered into, amended or terminated any (i) employment
agreement or collective bargaining agreement, (ii) adopted, entered into or
amended any arrangement which is, or would be, a plan or arrangement adopted for
the benefit of some or all of its employees or (iii) made any change in any
actuarial methods or assumptions used in funding any such plan or arrangement or
in the assumptions or factors used in determining benefit equivalencies
thereunder;
(d) issued any note, bond or other debt security, created,
incurred or assumed any indebtedness for borrowed money other than in the
ordinary course of business in connection with trade payables;
(e) made any distributions of any kind to any of the Sellers
(other than tax distributions) or made any direct or indirect redemption,
retirement, purchase or other acquisition of its equity interests;
(f) knowingly waived any right of material value to the
business of the Company;
(g) made any change in its accounting methods or practices or
made any changes in depreciation or amortization policies or rates adopted by it
or made any material write-down of inventory or material write-off as
uncollectable of accounts receivable;
(h) made any wage or salary increase or bonus, or increase in
any other direct or indirect compensation, for or to any of its managers,
employees, consultants, agents or other representatives, or any accrual for or
commitment or agreement to make or pay the same, other than increases made in
the ordinary course of business consistent with past practice;
(i) entered into any transactions with any of the Sellers or
any of the Company's Affiliates, employees, consultants, agents or other
representatives (other than employment arrangements made in the ordinary course
of business consistent with past practice),
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or with any Affiliate of any shareholder, officer, director, consultant,
employee, agent or other representative;
(j) made any payment or commitment to pay any severance or
termination pay to any Person or any of its officers, directors, employees,
consultants, agents or other representatives, other than payments or commitments
to pay such Persons or their officers, directors or employees in the ordinary
course of business;
(k) (i) entered into any lease (as lessor or lessee), (ii)
sold, abandoned or made any other disposition of any of its assets or properties
other than in the ordinary course of business consistent with past practice,
(iii) granted or suffered any Lien on any of its assets or properties other than
sales of inventory in the ordinary course of business or (iv) entered into or
amended any Material Contract or other agreement to which it is a party, or by
or to which it or its assets or properties are bound or subject, or pursuant to
which it agrees to indemnify any Person or to refrain from competing with any
Person;
(l) other than in the ordinary course of its business,
incurred or assumed any debt, obligation or liability (whether absolute or
contingent and whether or not currently due and payable);
(m) made any acquisition of all or any part of the assets,
properties, capital stock or business of any other Person;
(n) paid, directly or indirectly, any of its Liabilities
before the same became due in accordance with their terms or otherwise than in
the ordinary course of business, except to obtain the benefit of discounts
available for early payment;
(o) except in the ordinary course of business, created,
incurred or assumed any indebtedness for borrowed money, or guaranteed any
indebtedness for borrowed money or any capitalized lease obligation, in each
case in excess of $5,000 individually or in the aggregate;
(p) made any capital expenditures or commitments for capital
expenditures in an aggregate amount exceeding $5,000; or
(q) terminated, failed to renew, amended or entered into any
contract or other agreement of a type required to be disclosed pursuant to
Section 2.15.
2.20 TANGIBLE PROPERTY. SCHEDULE 2.20 sets forth a true, complete
and correct list of all categories of tangible personal property with an
aggregate value in excess of $5,000, which is material to the business of the
Company (other than inventory), including, without limitation, equipment,
furniture, leasehold improvements, fixtures, vehicles, structures, any related
capitalized items and other similar tangible property, in each case owned or
leased by the Company and material to the business of the Company (collectively,
the "Tangible Property"), together with a description of all material leases or
subleases of Tangible Property to which the Company is the lessor, sublessor,
lessee or sublessee and all options to purchase or sell the
7
underlying property. The Tangible Property is in good operating condition,
subject to continued repair and replacement in accordance with past practice.
The Company has not received notice that any of the Tangible Property is in
violation of any existing Law or Order. During the past three years there has
not been any material interruption of the operations of the Company due to
inadequate maintenance of the Tangible Property. Except as set forth on SCHEDULE
2.20 under the heading "Required Consents/Tangible Property," no approval or
consent of any Person is needed so that the interest of the Company in the
Tangible Property shall continue to be in full force and effect and enforceable
by the Purchaser following the transactions contemplated by this Agreement.
2.21 INTELLECTUAL PROPERTY; PROPRIETARY RIGHTS; EMPLOYEE
RESTRICTIONS.
(a) The Company has disclosed in SCHEDULE 2.21 all copyrights,
copyright registrations and copyright applications, trademark registrations and
applications for registration, patents and patent applications, trademarks,
service marks, trade names, trade secrets, Internet domain names or other
proprietary rights (collectively, the "Disclosed Intellectual Property Rights"
and together with any and all licenses, databases, computer programs and other
computer software user interfaces, know-how, trade secrets, customer lists,
proprietary technology, processes and formulae, source code, object code,
algorithms, architecture, structure, display screens, layouts, development
tools, instructions, templates, marketing materials, inventions, trade dress,
logos and designs and all documentation and electronic media constituting,
describing or relating to the foregoing, the "Intellectual Property Rights")
used in the Company's business, including, without limitation, all licenses,
assignments and releases of Intellectual Property Rights of others in material
works embodied in its products. SCHEDULE 2.21 separately lists the (i) owned
Intellectual Property Rights and (ii) licensed Intellectual Property Rights.
Except as set forth on SCHEDULE 2.21 under the heading "Required
Consents/Intellectual Property," no approval or consent of any Person is needed
so that the interest of the Company in its Intellectual Property Rights shall
continue to be in full force and effect and enforceable by the Purchaser
following the transactions contemplated by this Agreement. All Intellectual
Property Rights purported to be owned by the Company held by any employee,
director or consultant have been validly assigned to the Company. The Company's
Intellectual Property Rights are sufficient to carry on the business of the
Company as presently conducted. The Company has exclusive ownership of or
license to use all Intellectual Property Rights identified in SCHEDULE 2.21 or
has obtained any licenses, releases or assignments reasonably necessary to use
all third parties' Intellectual Property Rights in works embodied in its
products. To the knowledge of the Sellers, the business activities or products
of the Company do not infringe any Intellectual Property Rights of others. The
Company has not received any notice or other claim from any Person asserting
that any of the Company's activities infringe or may infringe any Intellectual
Property Rights of such Person.
(b) The Company has the right to use, free and clear of claims
or rights of others, all trade secrets, customer lists, hardware designs,
programming processes, software and other information required for or incident
to its products or its business as presently conducted or contemplated. The
Company has taken all reasonable measures to protect and preserve the
8
security and confidentiality of its Intellectual Property Rights. All employees
and consultants of the Company involved in the design, review, evaluation or
development of products or Intellectual Property Rights have executed
nondisclosure and deeds or assignment of inventions agreements sufficient to
protect the confidentiality of the Company's Intellectual Property Rights and to
vest in the Company exclusive ownership of such Intellectual Property Rights.
All trade secrets and other confidential information of the Company are
presently valid and protectable and are not part of the public domain or
knowledge, nor, have they been used, divulged or appropriated for the benefit of
any Person other than the Company or otherwise to the detriment of the Company.
No employee or consultant of the Company has used any trade secrets or other
confidential information of any other Person in the course of their work for the
Company.
(c) The Company is the exclusive owner of all right, title and
interest in its Intellectual Property Rights as purported to be owned by the
Company, such Intellectual Property Rights are valid and in full force and
effect. No university, government agency (whether federal or state) or other
organization has sponsored research and development conducted by the Company or
has any claim of right to or ownership of or other encumbrance upon the
Intellectual Property Rights of the Company. The Company is not aware of any
infringement by others of its copyrights or other Intellectual Property Rights
in any of its products, technology or services, or any violation of the
confidentiality of any of its proprietary information. The Company is not making
unlawful use of any confidential information or trade secrets of any past or
present employees of the Company.
(d) Neither the Company nor any of the Company's employees,
have any agreements or arrangements with former employers of such employees
relating to confidential information or trade secrets of such employers or are
bound by any consulting agreement relating to confidential information or trade
secrets of another entity that are being violated by such persons. The
activities of the Company's employees on behalf of the Company do not violate
any agreements or arrangements known to the Company which any such employees
have with former employers or any other entity to whom such employees may have
rendered consulting services.
(e) All key employees, including all developers (contract or
otherwise) of or to the Company, have executed and delivered to and in favor of
the Company an agreement regarding the protection of confidential and
proprietary information and the assignment to the Company of all Intellectual
Property Rights arising from the services performed for the Company by such
persons.
2.22 LICENSES AND PERMITS. SCHEDULE 2.22 sets forth a list of the
material government permits, licenses, domain name and other registrations and
other consents and authorizations (federal, state, local and foreign) of any
Governmental or Regulatory Body (collectively, "Permits") which the Company has
obtained in connection with its assets, properties and business. Except as set
forth on SCHEDULE 2.22 under the heading "Required Consents/Permits," no
material Permit is required to be obtained by the Company in connection with its
properties or the business of the Company. The Company has not received any
notice of any claim of
9
revocation of any such Permit. The Sellers has no knowledge of any event which
would be likely to give rise to such a claim.
2.23 COMPLIANCE WITH LAWS. The Company (a) is in compliance in all
material respects with all, and not in violation in any material respect of any,
and has not received any claim or notice that it is not in compliance in any
material respect with, or that it is in violation in any material respect of,
any Law or Order to which the Company or any of its businesses, operations,
assets or properties (including the use and occupancy thereof) are subject and
(b) has not failed in any material respect to obtain or to adhere to the
requirements of any Permit necessary in connection with its assets, properties
or business.
2.24 BANKS AND PROXIES. SCHEDULE 2.24 sets forth (a) the name of
each bank, trust company, securities or other broker or other financial
institution with which the Company has an account, credit line or safe deposit
box or vault, or otherwise maintains relations; (b) the name of each person
authorized by the Company to draw thereon or to have access to any safe deposit
box or vault; (c) the purpose of each such account, safe deposit box or vault;
and (d) the names of all persons authorized by proxies, powers of attorney or
other instruments to act on behalf of the Company in matters concerning the
business of the Company. All such accounts, credit lines, safe deposit boxes and
vaults are maintained by the Company for normal business purposes. No such
proxies, powers of attorney or other like instruments are irrevocable.
2.25 YEAR 2000 COMPLIANCE. All Date Data and Date-Sensitive
Systems of the Company are Year 2000 Compliant.
2.26 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by the Sellers directly
with the Purchaser, without the intervention of any other Person on behalf of
the Sellers in such manner as to give rise to any valid claim by any Person
against any of the Sellers or the Purchaser for a finder's fee, brokerage
commission or similar payment.
2.27 ACQUISITION OF XX0.XXX SHARES.
(a) Each of the Sellers represents and warrants that the Share
Consideration is being acquired for his own account, with no intention of
transferring or assigning any participation or any interest therein, and without
a view to the distribution of any portion thereof, except in accordance with the
Securities Act. No Sellers will sell, assign, transfer or encumber any of such
shares unless (i) a registration statement under the Securities Act with respect
thereto is in effect and the prospectus included therein meets the requirements
of Section 10 of the Securities Act or (ii) the Purchaser has received a written
opinion of its counsel that, after an investigation of the relevant facts, such
counsel is of the opinion that such proposed sale, assignment, transfer or
encumbering does not require registration under the Securities Act.
(b) Each of the Sellers understands that (i) the Share
Consideration is not being registered under Securities Act and must be held
indefinitely unless the Share Consideration is subsequently registered
thereunder or any exemption from such registration is
10
available and therefore (ii) the Sellers may be required to bear the economic
risk of its investment in the Share Consideration for an indefinite period of
time, (iii) the Share Consideration is not being registered under the Securities
Act in part on the ground that the issuance thereof is exempt under Section 4(2)
of the Securities Act as a transaction by an issuer not involving any public
offering and (iv) the Purchaser's reliance on such exemption is predicated in
part on the foregoing representation and warranty of the Sellers.
(c) Each of the Sellers understands that the Purchaser will
have an appropriate stop order placed on its stock records indicating the
existence of the terms of this Agreement, and that each certificate representing
the Share Consideration shall bear the following or a substantially similar
legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED
OR ENCUMBERED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT, OR UNLESS
THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT THAT SUCH
SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT."
(d) Each of the Sellers has received copies of the Purchasers
Current Report on SEC Form 8-K filed June 21, 1999 and the Company's Quarterly
Report on SEC Form 10-QSB filed August 23, 1999.
2.28 DISCLOSURE. To the knowledge of the Warrantor, none of the
representations, warranties or covenants contained in this Agreement, or any
Schedule or Exhibit to this Agreement, made by the Sellers or the Company
contains an untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
To induce the Sellers to enter into this Agreement, to sell the Company
Shares owned by them and to perform their other obligations under this
Agreement, the Purchaser hereby represents and warrants to the Sellers as
follows:
3.1 VALIDITY AND EXECUTION OF AGREEMENT. The Purchaser has the
full legal right and power required to enter into, execute and deliver this
Agreement and to perform fully its obligations hereunder. This Agreement has
been duly executed and delivered by the Purchaser and constitutes the valid and
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, subject to the qualifications that enforcement of the
rights and remedies created hereby is subject to (a) bankruptcy, insolvency,
reorganization, moratorium
11
and other laws of general application affecting the rights and remedies of
creditors and (b) general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
3.2 NO CONFLICT. Neither the execution and delivery of this
Agreement by the Purchaser nor the performance by the Purchaser of the
transactions contemplated hereby will: (a) violate or conflict with any
provisions of any Law or Order applicable to the Purchaser; or (c) require any
consent or approval by or filing or notice with any Governmental or Regulatory
Body.
3.3 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by the Purchaser directly
with the Sellers without the intervention of any other Person on behalf of the
Purchaser in such manner as to give rise to any valid claim by any Person
against the Sellers for a finder's fee, brokerage commission or similar payment.
3.4 DISCLOSURE. To the knowledge of the Purchaser, none of the
representations, warranties or covenants contained in this Agreement, or in any
Schedule or Exhibit hereto, made by the Purchaser, contains any untrue statement
of a material fact or omits a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE 4
PRE-CLOSING COVENANTS
The Sellers and the Purchaser hereby covenant and agree as follows:
4.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS.
(a) At or prior to the Closing Date, the Purchaser shall be
entitled to make such investigation of the assets, properties, business and
operations of the Company and such examination of the books, records, Tax
Returns, financial condition and operations of the Company as the Purchaser may
wish. Any such investigation and examination shall be conducted at reasonable
times and under reasonable circumstances and the Company shall cooperate fully
therein. In order that the Purchaser may have full opportunity to make such a
business, accounting and legal review, examination or investigation as they may
wish of the business and affairs of the Company, the Company shall furnish to
the Purchaser during such period all such information and copies of such
documents concerning the affairs of the Company as the Purchaser may reasonably
request and cause the Company's officers, employees, consultants, agents,
accountants and attorneys to cooperate fully with the Purchaser in connection
with such review and examination and to make full disclosure to the Purchaser of
all material facts affecting the financial condition and business operations of
the Company.
(b) Until the Closing and if the Closing shall not occur,
thereafter, the Purchaser and its Affiliates shall keep confidential and shall
not use in any manner inconsistent
12
with the transactions contemplated by this Agreement and after termination of
this Agreement, the Purchaser and its Affiliates shall not disclose, nor use for
their own benefit, any information or documents obtained from the Company
concerning its assets, properties, business and operations, unless (i) readily
ascertainable from public or published information, or trade sources, (ii)
received from a third party not under an obligation to the Company to keep such
information confidential or (iii) required by any Law or Order. If this
transaction does not close for any reason, the Purchaser and its Affiliates
shall return or destroy all such confidential information and compilations
thereof as is practicable, and shall certify such destruction or return to the
Company. In furtherance of the foregoing, prior to the Closing, the Warrantor
will provide to the Purchaser:
(1) access to the Technology in the form of object code,
source code, compiled applications, dynamic link libraries, and similar usable
software components, such that the Purchaser is able to use the Intellectual
Property Rights within its demonstration and "Beta" versions of products and
services;
(2) rights to redistribute for demonstration and so-called
"Beta testing" the decompression components of the Intellectual Property Rights.
Such redistribution will be limited to playback software only and will in no
event include software that enables compression of video. The Purchaser will
require its Beta users to agree to a license restricting their rights and
privileges in ways similar to those restrictions the Purchaser uses for its own
technology, including, but not limited to, restrictions against reverse
engineering, further distributions, modifications, changes in copyright notices
and information about authorship and reasonable time limits;
(3) consulting time and services to facilitate and expedite
the process of integrating the Intellectual Property Rights into the Purchaser's
products and services, such consulting to include making improvements and
changes to the Intellectual Property Rights, working directly with the
Purchaser's engineers (both remotely and on-site) to integrate the Technology,
providing answers to technical questions related to the Technology and assisting
with the testing and debugging of the Technology as deployed by the Purchaser;
and
(4) access to records and other materials relating to the
Seller's proprietary information, including patent applications and related
materials, sufficient to enable the Purchaser to review issues of ownership and
infringement.
4.2 CONDUCT OF BUSINESS. From the date hereof through the Closing
Date, the Sellers shall cause the business of the Company to be conducted in the
ordinary course in the same manner as it has been conducted since May 31, 1998.
4.3 PRESERVATION OF BUSINESS. From the date hereof through the
Closing Date, the Sellers shall cause the Company to use commercially reasonable
efforts to (i) preserve intact the business, assets, properties and
organizations of the Company, (ii) keep available the services of the present
officers, employees, consultants and agents of the Company; and (iii) maintain
the present suppliers and customers and preserve the goodwill of the Company.
13
4.4 NO SOLICITATIONS. Neither the Company nor any of the Sellers
will take any action to solicit, initiate, seek, encourage or support any
inquiry, proposal or offer from, furnish any information to, or participate in
any negotiations with, any corporation, partnership, person or other entity or
group regarding any acquisition of the Company, any merger or consolidation with
or involving the Company, or any acquisition of any material portion of the
stock or assets of the Company, or any equity or debt financing of the Company
or any material license of Intellectual Property Rights (any of the foregoing
being referred to in this Agreement as an "Acquisition Transaction") or enter
into an agreement concerning any Acquisition Transaction with any party other
than the Purchaser. If between the date of this Agreement and the earlier of (a)
the Closing Date and (b) termination of this Agreement pursuant to Article 8,
the Company or the Sellers receives from a third party any offer to negotiate or
consummate an Acquisition Transaction, the Company and the Sellers shall
immediately (i) notify the Purchaser (orally and in writing) of such offer,
including the identity of such party and the terms of any proposal therein, and
(ii) notify such third party in writing of the Company's and the Sellers'
obligations under this Agreement.
4.5 OTHER AGREEMENTS. The Sellers and the Purchaser agree to take,
or cause to be taken, all actions and to do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, without limitation, the obtaining of all necessary waivers, consents
and approvals and the effecting of all necessary registrations and filings,
including, but not limited to, submissions of information requested by
Governmental or Regulatory Bodies and any other Persons required to be obtained
by them for the consummation of the closing and the continuance in full force
and effect of the permits, contracts and other agreements set forth on the
Schedules to this Agreement.
ARTICLE 5
CONDITIONS PRECEDENT TO THE CLOSING
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER TO
COMPLETE THE CLOSING. The obligations of the Purchaser to perform its
obligations under this Agreement at the Closing are subject to the fulfillment
of the following conditions, any one or more of which may be waived by the
Purchaser:
(a) CLOSING CERTIFICATE OF THE SELLERS. The Warrantor shall
have delivered to the Purchaser a certificate signed by him, dated the Closing
Date, substantially in the form of EXHIBIT B.
(b) DELIVERY OF COMPANY SHARES. The Sellers shall have
delivered to the Purchaser's Counsel certificates evidencing the Company Shares
together with a duly signed stock transfer form in favor of the Purchaser.
(c) NO LITIGATION. No Action or Proceeding shall be pending in
which it is sought to restrain or prohibit the consummation of the transactions
contemplated hereby. No
14
Order which restrains or prohibits the transactions contemplated hereby shall be
in effect. No Governmental or Regulatory Body shall be seeking such an Order or
threatening to do so.
(d) REQUIRED CONSENTS. Each of the Required Consents shall
have been obtained.
(e) LOANS TO DIRECTORS. All loans by the Company to its
directors shall have been cancelled or paid in full.
(f) SERVICE AGREEMENT. The Warrantor and the Company shall
have entered into the Service Agreement.
(g) REGISTRATION RIGHTS AGREEMENT. Each of the Sellers and
Xxxxx Xxxxxx shall have entered into and delivered the Registration Rights
Agreement to the Purchaser.
(h) OPINION OF COUNSEL. The Purchaser shall have received an
opinion of counsel from Sellers' Solicitors as to such matters as it shall
reasonably request.
(i) APPROVAL OF DOCUMENTS. The form and substance of all legal
proceedings, documents, or papers used or delivered hereunder by the Sellers
shall be reasonably satisfactory to the Purchaser's Counsel.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS TO
COMPLETE THE CLOSING. The obligations of the Sellers to perform their
obligations under this Agreement at the Closing are subject to the fulfillment
on or prior to the Closing Date, of the following conditions, any one or more of
which may be waived by the Warrantor:
(a) CLOSING CERTIFICATE OF THE PURCHASER. The Purchaser shall
have delivered to the Warrantor a certificate signed by it, dated the Closing
Date, substantially in the form of EXHIBIT C.
(b) PURCHASER'S DELIVERY. The Purchaser shall have paid to the
Sellers' Solicitors the Cash Portion and delivered to the Sellers' Solicitors
the Purchaser's Notes and the Share Consideration.
(c) SERVICE AGREEMENT. The Warrantor and the Company shall
have entered into the Service Agreement.
(d) REGISTRATION RIGHTS AGREEMENT. The Purchaser shall have
entered into and delivered the Registration Rights Agreement to the Seller's
Counsel.
(e) NO LITIGATION. No Action or Proceeding shall be pending in
which it is sought to restrain or prohibit the consummation of the transactions
contemplated hereby. No Order which restrains or prohibits the transactions
contemplated hereby shall be in effect. No Governmental or Regulatory Body shall
be seeking such an Order or threatening to do so.
15
(f) OPINION OF COUNSEL. The Sellers shall have received an
opinion from Purchaser's Counsel as to such matters as the Sellers shall
reasonably request.
(g) INLAND REVENUE CLEARANCE LETTER. The Sellers shall have
received a Section 138 clearance letter (the "Clearance Letter") from Inland
Revenue such that the Share Consideration portion of the Purchase Price is
not immediately taxable to the Sellers.
(h) APPROVAL OF DOCUMENTS. The form and substance of all
legal proceedings, documents, or papers used or delivered hereunder by the
Purchaser shall be reasonably satisfactory to the Sellers' Counsel.
ARTICLE 6
POST-CLOSING COVENANTS
The parties covenant to take the following actions after the Closing
Date:
6.1 FURTHER INFORMATION. Following the Closing, each party
will afford to the other party, its counsel and its accountants, during
normal business hours, reasonable access to the books, records and other data
of the Company relating to the business of the Company in their possession
with respect to periods prior to the Closing and the right to make copies and
extracts therefrom, to the extent that such access may be reasonably required
by the requesting party (a) to facilitate the investigation, litigation and
final disposition of any claims which may have been or may be made against
any party or its Affiliates and (b) for any other reasonable business purpose.
6.2 RECORD RETENTION. Each party agrees that for a period of
not less than five years following the Closing Date, such party shall not
destroy or otherwise dispose of any of the Books and Records of the Company
relating to the business of the Company in his or its possession with respect
to periods prior to the Closing Date. Each party shall have the right to
destroy all or part of such Books and Records after the fifth anniversary of
the Closing Date or, at an earlier time by giving each other party hereto 30
days prior written notice of such intended disposition and by offering to
deliver to the other party or parties, at the other party's or parties'
expense, custody of such Books and Records as such party may intend to
destroy.
6.3 POST-CLOSING ASSISTANCE. The Sellers, on the one hand, and
the Purchaser, on the other hand, will provide each other with such
assistance as may reasonably be requested in connection with the preparation
of any Tax Return, any audit or other examination by any taxing authority, or
any judicial or administrative proceedings relating to liability for Taxes,
and each will retain and provide the requesting party with any records or
information that may be reasonably relevant to such return, audit or
examination, proceedings or determination. The party requesting assistance
shall reimburse the other party for reasonable out-of-pocket expenses
incurred in providing such assistance. Any information obtained pursuant to
this Section 6.3 or pursuant to any other Section hereof providing for the
sharing of information or the review of
16
any Tax Return or other schedule relating to Taxes shall be kept confidential
by the parties hereto.
6.4 SEC REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Share Consideration and other securities of the
Purchaser to the public without registration, from and after the Closing, the
Company will:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times; and
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Exchange Act.
ARTICLE 7
SURVIVAL; INDEMNIFICATION
7.1 SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES.
Notwithstanding any investigation conducted or notice or knowledge obtained
by or on behalf of any party hereto, each agreement in this Agreement shall
survive the Closing without limitation as to time until fully performed and
each representation and warranty in this Agreement or in the Exhibits,
Schedules or certificates delivered pursuant to this Agreement shall survive
the Closing for a period of two years (other than the representations and
warranties contained in Section 2.5 which shall survive the Closing without
limitation as to time). Notice must be given to the party from whom
indemnification is sought of any claim for indemnification under Article 7
prior to the termination of the relevant survival period.
7.2 INDEMNIFICATION BY THE SELLERS. From and after the Closing
Date, subject to the limitations set forth in Section 7.5, the Sellers will
indemnify, hold harmless and defend the Purchaser and its Affiliates (including,
without limitation, the Company) (and their respective directors, officers,
agents and employees, successors and assigns) (each, a "PURCHASER INDEMNIFIED
PARTY") in accordance with the provisions of this Article 7 from and against:
(i) any and all Damages incurred by any of them arising out
of, relating to or based upon any inaccuracy in, or breach of, any of
the representations or warranties, covenants or agreements of the
Sellers or the Company contained in or incorporated into this
Agreement, in the Schedules hereto or in certificates delivered
pursuant to this Agreement; and
(ii) any Cost incurred by the Company in connection with the
enforcement of this Agreement.
17
The right of the Purchaser Indemnified Parties to be indemnified hereunder
shall not be limited or affected by any investigation conducted or notice or
knowledge obtained by or on behalf of any such Persons.
7.3 PURCHASER'S INDEMNITY. From and after the Closing Date,
the Purchaser will indemnify, hold harmless and defend the Sellers from and
against any and all Damages incurred by the Sellers arising out of, relating
to or based upon any inaccuracy in, or breach of, any of the representations
or warranties, covenants or agreements of the Purchaser contained in or
incorporated into this Agreement or in certificates delivered pursuant to
this Agreement.
7.4 METHOD OF ASSERTING CLAIMS. The party making a claim under
this Article 7 is referred to as the "Indemnified Party" and the party
against whom such claims are asserted under this Article 7 is referred to as
the "Indemnifying Party". All claims by any Indemnified Party under this
Article 7 shall be asserted and resolved as follows:
(a) Whenever an Indemnified Party becomes aware of a claim
for which an Indemnifying Party would be liable to an Indemnified Party
hereunder, the Indemnified Party shall with reasonable promptness notify in
writing the Indemnifying Party of such claim, identifying the representation
or warranty on which such claim is based, the basis for such claim or demand,
and the amount or the estimated amount thereof to the extent then
determinable (which estimate shall not be conclusive of the final amount of
such claim and demand; the "Claim Notice"); PROVIDED, that any failure to
give a Claim Notice will not be deemed a waiver of any rights of the
Indemnified Party except to the extent the rights of the Indemnifying Party
are actually prejudiced by such failure. If the basis of such claim is a
claim or demand by a third party, the Indemnifying Party, upon request of the
Indemnified Party, shall retain counsel (who shall be reasonably acceptable
to the Indemnified Party) to represent the Indemnified Party and shall pay
the reasonable fees and disbursements of such counsel with regard thereto;
PROVIDED, that any Indemnified Party is hereby authorized prior to the date
on which it receives written notice from the Indemnifying Party designating
such counsel, to retain counsel, whose fees and expenses shall be at the
expense of the Indemnifying Party, to file any motion, answer or other
pleading and take such other action which it reasonably shall deem necessary
to protect its interests or those of the Indemnifying Party until the date on
which the Indemnified Party receives such notice from the Indemnifying Party.
After the Indemnifying Party shall retain such counsel, the Indemnified Party
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party unless (x) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to
the retention of such counsel or (y) representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. The Indemnifying Party shall not, in connection with
any proceedings or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one such firm for the Indemnified
Party (except to the extent the Indemnified Party retained counsel to protect
its (or the Indemnifying Party's) rights prior to the selection of counsel by
the Indemnifying Party). If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any claim or demand which the Indemnifying Party
defends. A claim or demand may not be
18
settled by either party without the prior written consent of the other party
(which consent shall not be unreasonably withheld) unless, as part of such
settlement, the Indemnified Party shall receive a full and unconditional
release reasonably satisfactory to such Indemnified Party.
(b) Whenever any Indemnified Party shall have a claim
against any Indemnifying Party hereunder which does not involve a claim or
demand being asserted against or sought to be collected from it by a third
party, the Indemnified Party shall send a Claim Notice with respect to such
claim to the Indemnifying Party.
(c) After delivery of a Claim Notice, so long as any right
to indemnification exists pursuant to this Article 7, the affected parties
each agree to retain all Books and Records related to such Claim Notice. In
each instance, the Indemnified Party shall have the right to be kept fully
informed by the Indemnifying Party and its legal counsel with respect to any
legal proceedings. Any information or documents made available to any party
hereunder and designated as confidential by the party providing such
information or documents and which is not otherwise generally available to
the public and not already within the knowledge of the party to whom the
information is provided (unless otherwise covered by the confidentiality
provisions of any other agreement among the parties hereto, or any of them),
and except as may be required by applicable law, shall not be disclosed to
any third Person (except for the representatives of the party being provided
with the information, in which event the party being provided with the
information shall request its representatives not to disclose any of such
information which it has agreed hereunder to keep confidential).
7.5 LIMITATIONS ON THE SELLER'S OBLIGATIONS. Notwithstanding
the provisions of Section 7.2, no claim for indemnification under Section 7.2
may be made (a) unless the aggregate amount of Damages or Taxes (aggregating
all claims for indemnification under such Section) exceeds U.S. $ ten
thousand dollars ($10,000), PROVIDED, HOWEVER, that in the event this
threshold is exceeded, claims may be made from first dollar, and PROVIDED,
FURTHER, that claims arising under Section 2.5 or 2.13, may be made from
first dollar without regard whether the U.S. ten thousand ($10,000) threshold
is met or (b) for any Damage or Tax which, when added to all previous claims,
would exceed U.S. three million dollars ($3,000,000) of Damages and Taxes
(including all legal and other costs incurred by the Indemnifying Party in
connection with its obligations under this Section) claimed under Section 7.2.
7.6 GENERAL PROVISIONS. The following general provisions shall
apply to any claim for indemnification under this Article 7:
(a) The amount of any claim subject to indemnification
shall be determined after taking into account the present value of any tax
benefits (net of tax detriments) accruing to the Indemnified Party or any
Affiliate as a result of such claim.
(b) Except as otherwise set forth in this Section 7.5(b),
with respect to any breach, violation or nonfulfillment of or default in the
performance of any representation, warranty or covenant of this Agreement for
which a right to claim indemnification is provided in this Article 7, after
the Closing a claim or an action under and pursuant to the terms, conditions
19
and limitations of this Article 7 shall be the sole and exclusive right and
remedy of the Purchaser and the Sellers, and neither the Purchaser nor the
Sellers shall have any other claim, cause of action, right, or remedy for
such breach, violation, non-fulfillment or default against the other based
upon this Agreement, any provision of any securities or other statute, law,
rule or regulation or based upon any other cause of action arising at law or
in equity; PROVIDED, that if for any reason a court of competent jurisdiction
shall refuse to enforce this provision, and shall permit the Purchaser or the
Sellers to assert any action based other than upon the right to claim
indemnification as provided in this Article 7, the Purchaser and the Sellers
agree that the amount of such other claim shall be subject to and limited by
the provisions of this Article 7. The provisions of this Section 7.5(b) shall
not preclude the prosecution of any action or proceeding based on fraud that,
if found to exist, would be sufficient to give rise to the right of
rescission with respect to the transactions contemplated by this Agreement.
7.7 RIGHT OF OFFSET. If and to the extent that any of the
Sellers is obligated to indemnify, defend and hold the Purchaser harmless
pursuant to Section 7.2, the Purchaser may, at its sole election, satisfy all
or part of any such obligation of such Sellers by offsetting any amounts due
to the Purchaser from the Sellers against any amounts due to such Sellers
from the Purchaser under this Agreement or under the Services Agreement.
ARTICLE 8
TERMINATION OF AGREEMENT
8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing as follows:
(a) by mutual written consent of the Purchaser and the
Warrantor; and
(b) subject to the prior set forth below in the Section, by
the Purchaser, on the one hand, or by the Warrantor, on the other hand, by
written notice to the other party hereto, if the Closing shall not have
occurred on or prior to the close of business on September 25, 1999 (unless
such delay has been caused by a breach of this Agreement by the party seeking
such termination); and
(c) by the Purchaser or by the Sellers, if any Judgment
shall have been enacted, entered, promulgated or enforced which prohibits or
enjoins the consummation of the sale and purchase of the Company Shares or
the Share Consideration and such Judgment is or shall have become final and
nonappealable.
8.2 SURVIVAL AFTER TERMINATION. If this Agreement is
terminated pursuant to Section 8.1, (a) this Agreement shall become null and
void and of no further force and effect, except for the provisions of Article
4 relating to the obligation to keep confidential certain information and
20
(b) there shall be no liability on the part of the Company or the Purchaser
or their respective Affiliates.
ARTICLE 9
MISCELLANEOUS
9.1 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
"ACTION OR PROCEEDING" means any action, suit, proceeding or
arbitration by any Person or any investigation or audit by any Governmental
or Regulatory Body.
"ACQUISITION TRANSACTION" has the meaning specified in Section 4.4.
"AFFILIATE" with respect to any Person, means any other Person
controlling, controlled by or under common control with such Person.
"AGREEMENT" means this Agreement.
"AMEX" means the American Stock Exchange.
"BOOKS AND RECORDS" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations,
condition (financial or other), results of operations, assets or properties
of such Person, including, without limitation, financial statements, Tax
Returns and related work papers and letters from accountants, budgets,
pricing guidelines, ledgers, journals, deeds, title policies, minute books,
stock transfer ledgers, contracts and other agreements, licenses, customer
lists, computer files and programs, retrieval programs, operating data and
plans and environmental studies and plans.
"CASH PORTION" means US $330,000 in cash, certified check or other
immediately available funds.
"CLAIM NOTICE" has the meaning specified in Section 7.4(a).
"CLEARANCE LETTER" has the meaning given it in Section 5.2(g).
"CLOSING" has the meaning specified in Section 1.4.
"CLOSING DATE" has the meaning specified in Section 1.4.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the U.S. Securities and Exchange Commission.
21
"COMPANY" means MetaVisual Creations Limited, a private company
limited by shares and incorporated under the laws of England with registered
number 2674066.
"COMPANY FINANCIAL STATEMENTS" has the meaning specified in Section
2.10.
"COMPANY SHARES" means seven hundred ordinary shares of one xxxxx
each of the Company.
"CONTRACTS" means all executory contracts, agreements, notes,
understandings, indentures, bonds, loans, instruments, leases, mortgages,
franchises, licenses, commitments or other legally binding arrangements.
"COSTS" means costs, fees and expenses.
"DAMAGES" shall mean any and all losses, costs, claims, damages,
Liabilities, Judgments, settlements, demands, offsets, Taxes, reasonable
out-of-pocket costs, expenses and attorneys' fees and penalties and interest,
if any, incurred by any indemnified party, but shall not include any
incidental or consequential damages unless assessed against an indemnified
party as a result of a third party claim or attorneys' fees incurred in
enforcing any indemnified party's right to indemnification under this
Agreement.
"DATE DATA" means any data of any type that includes date
information or which is otherwise derived from, dependent on or related to
date information.
"DATE-SENSITIVE SYSTEM" means any software, microcode or hardware
system or component, including any electric or electronically controlled
system or component, that processes any Date Data and (a) that is installed,
in development or on order by the Company for its internal use, or (b) which
the Company sells, supports, maintains, operates, warrants, leases, licenses,
assigns or otherwise provides as an integral part of its products or services
(or has sold, supported, maintained, operated, warranted, leased, licensed,
assigned or otherwise provided in the past as an integral part of its
products or services).
"DISCLOSED INTELLECTUAL PROPERTY RIGHTS" has the meaning specified
in Section 2.21 (a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United
States of America.
"GOVERNMENTAL OR REGULATORY BODY" means any court, tribunal,
arbitrator or any government or political subdivision thereof, whether
federal, state, county, local or foreign, or any agency, authority, official
or instrumentality of any such government or political subdivision.
"INDEMNIFIED PARTY" has the meaning specified in Section 7.4.
"INDEMNIFYING PARTY" has the meaning specified in Section 7.4.
22
"INTELLECTUAL PROPERTY RIGHTS" has the meaning specified in Section
2.21 (a).
"IRS" means the Internal Revenue Service of the United States of
America.
"JUDGMENT" means any judgments, orders, injunctions (temporary or
permanent), decrees, rulings or awards of any federal, state, local or
foreign court, arbitrator or other judicial authority or any federal, state,
local or foreign governmental, administrative or regulatory authority.
"LAW" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Body.
"LIABILITIES" has the meaning specified in Section 2.11.
"LIEN" means any lien, pledge, hypothecation, mortgage, security
interest, claim, lease, fixed or floating charge, option, right of first
refusal, easement, servitude, transfer restriction under any agreement,
encumbrance or any other restriction or limitation whatsoever, other than (i)
materialmen's, mechanics', repairmen's or other like liens arising in the
ordinary course of business for amounts either not yet due or being contested
in good faith and by appropriate proceedings so long as such proceedings
shall not involve any material danger of sale, forfeiture or loss of any part
of the assets of the Company and shall have been disclosed to the Purchaser
hereunder, or (ii) any Lien arising as a result of any act or omission of the
Purchaser.
"MATERIAL ADVERSE EFFECT" means, in the case of any Person, any
change or changes or effect or effects that individually or in the aggregate
are or may reasonably be expected to be materially adverse to (i) the assets,
properties, business, operations, income or condition (financial or
otherwise) of such Person or (ii) the ability of such Person to perform its
obligations under this Agreement.
"MATERIAL CONTRACT" shall mean any Contract of the following
categories to which the Company is a party or by which the Company or any of
its assets or properties is bound: (i) employment Contracts, including
Contracts to employ executive officers and other Contracts with officers,
directors or shareholders, and all severance, change in control or similar
arrangements with any officers, employees or agents that will result in any
obligation (absolute or contingent) to make any payment to any officers,
employees or agents following either the consummation of the transactions
contemplated hereby, termination of employment, or both; (ii) Contracts with
organizations representing employees; (iii) Contracts out of the ordinary
course of business; (iv) Contracts which, individually, involve an aggregate
yearly amount in excess of $25,000 and are not cancelable (without material
penalty, cost or other liability) within ninety days; (v) Contracts the
duration of which exceeds three years and involving an annual amount in
excess of $25,000; (vi) other Contracts that create a right and/or an
obligation with respect to the Company in excess of $50,000; (vii) Contracts
(and in particular, promissory notes, loan agreements, indentures or other
evidence of indebtedness) providing for the lending of money, whether as
borrower, lender or guarantor; (viii) Contracts containing covenants limiting
the freedom to engage in any line of business or compete with any Person or
operate at any
23
location; (ix) joint venture or partnership agreements or joint development
or similar agreements involving a commitment in excess of $25,000 (x)
Contracts providing for the acquisition, directly or indirectly (by merger or
otherwise), of substantially all of the assets or any part of the capital
stock of another Person; (xi) Contracts including a change of control or
similar provision, pursuant to which the other party to such Contract has the
right, as a mere result of the transactions contemplated by this Agreement,
to substantially modify the terms of such Contract (including accelerate any
payment thereunder), or to terminate such Contract; and (xii) Contracts
providing for powers of attorney or similar authorizations that have been
entered into out of the Company's ordinary course of business.
"MEMORANDUM" means the Memorandum and Articles of Association of the
Company, as in effect as of the date of this Agreement.
"OPTION AGREEMENT" means the Agreement, dated July 25, 1999, between
the Warrantor and the Purchaser relating to the subject matter of this
Agreement.
"ORDER" means any writ, judgment, decree, injunction or similar
order of any Governmental or Regulatory Body, in each case whether
preliminary or final.
"PERMITS" has the meaning specified in Section 2.22.
"PERSON" means any individual, corporation, limited liability
company, partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental or Regulatory Body or other
entity.
"PER SHARE PRICE" means the arithmetic average of the closing price
of Purchaser Common Stock as quoted on the Amex for the 75 trading days
immediately prior to the Closing Date; PROVIDED, that if the Closing occurs
prior to the 75th trading day after June 30, 1999, the Per Share Price shall
be computed as the arithmetic average of the closing prices for Purchaser
Common Stock during the period beginning with June 21, 1999 and ending on the
trading day prior to the Closing Date.
"XXXXX XXXXXX" means Xxxxx Xxxxxx of Monk's Pool, Xxxxxxx Xxxx,
Xxxxxxxxxxx, Xxxxxxxxxxxx XX00 0XX, Xxxxxx Xxxxxxx.
"PURCHASE PRICE" has the meaning given it in Section 1.2.
"PURCHASER" means Xx0.Xxx Inc., a Colorado corporation having its
principal address at 000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx,
Xxxxxx Xxxxxx of America 10013.
"PURCHASER COMMON STOCK" means the common stock, no par value, of
the Purchaser.
"PURCHASER INDEMNIFIED PARTY" has the meaning specified in Section
7.2.
"PURCHASER'S COUNSEL" means Xxxxxxxxx Xxxxxxx of 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, Xxxxxx Xxxxxx of America 10166.
24
"PURCHASER'S NOTE" means, collectively, the promissory notes of the
Purchaser delivered in the Sellers in the aggregate original principal amount
of US $332,500, substantially in the form of Exhibit A.
"REQUIRED CONSENTS" means any approvals or consents of any Person to
the transactions contemplated by this Agreement required under (a) any
Material Contract, as set forth on SCHEDULE 2.15 under the heading "Required
Consents/Contracts," (b) any right or interest of the Company relating to
Tangible Property, as set forth on SCHEDULE 2.20 under the heading "Required
Consents/Tangible Property," (b) any right or interest of the Company
relating to Intellectual Property Rights, as set forth on SCHEDULE 2.21 under
the heading "Required Consents/Intellectual Property," or (d) any Permit, as
set forth on SCHEDULE 2.22 under the heading "Required Consents/Permits."
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement to be entered into by the Purchaser, Xxxxx Xxxxxx and the Sellers
substantially in the form of Exhibit D.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLERS" has the meaning given it in the initial paragraph of this
Agreement.
"SELLER'S SOLICITORS" means Xxxxxxx of 00 Xxxxx Xxxxxx, Xxxxxx XX0X
0XX Xxxxxx Xxxxxxx of Great Britain and Northern Ireland.
"SERVICE AGREEMENT" means the Service Agreement to be entered into
between the Company and the Warrantor, substantially in the form of Exhibit E.
"SHARE CONSIDERATION" has the meaning specified in Section 1.2.
"TANGIBLE PROPERTY" has the meaning specified in Section 2.20.
"TAX RETURN" means any return, report, information return, or other
document (including any related or supporting information) filed or required
to be filed with any federal, state, local, or foreign governmental entity or
other authority in connection with the determination, assessment or
collection of any Tax (whether or not such Tax is imposed on the Company) or
the administration of any laws, regulations or administrative requirements
relating to any Tax.
"TAX" and "TAXES" means all taxes, charges, fees, levies or other
assessments imposed by any federal, state, local or foreign taxing authority,
whether disputed or not, including, without limitation, income, capital,
estimated, excise, property, sales, transfer, withholding, employment,
payroll, and franchise taxes and such terms shall include any interest,
penalties or additions attributable to or imposed on or with respect to such
assessments and any expenses incurred in connection with the settlement of
any tax liability.
"WARRANTOR" has the meaning given it in the initial paragraph of
this Agreement.
25
"YEAR 2000 COMPLIANT" means (i) with respect to Date Data, that such
data is in proper format and accurate for all dates in the twentieth and
twenty-first centuries, and (ii) with respect to Date-Sensitive Systems, that
each such system correctly and accurately processes all Date Data without
interruption before, during and after January 1, 2000, including those
relating to the twentieth and twenty-first centuries, without loss of any
functionality or performance, including but not limited to calculating,
comparing, sequencing, storing and displaying such Date Data (including all
leap year considerations and the quad-centennial rule), when used as a stand
alone system or in combination with other software or hardware.
9.2 EXPENSES. Each of the parties to this Agreement shall pay
his own expenses (including, without limitation, attorney's and accountants'
fees and out-of-pocket expenses) incident to this Agreement and the
transactions contemplated hereby.
9.3 FURTHER ASSURANCES. At any time and from time to time
after the Closing Date at the request of the Purchaser, and without further
consideration, the Sellers will execute and deliver such other instruments of
sale, transfer, conveyance, assignment and confirmation and take such other
action as the Purchaser may reasonably deem necessary or desirable in order
to transfer, convey and assign the Company Shares to the Purchaser and to
assist the Purchaser in exercising all rights with respect thereto. The
parties shall use their best efforts to fulfill or obtain the fulfillment of
the conditions to the Closing, including, without limitation, the execution
and delivery of any documents or other papers, the execution and delivery of
which are conditions precedent to the Closing.
9.4 NOTICES. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in
writing and shall be given personally, sent by facsimile transmission or sent
by prepaid air courier or certified or express mail, postage prepaid. Any
such notice shall be deemed to have been given (a) when received, if
delivered in person or sent by facsimile transmission (if clearly received in
full) or (b) three business days following the mailing thereof, if sent by
prepaid air courier or certified or express mail, postage prepaid, return
receipt requested, in any such case as follows (or to such other address or
addresses as a party may have advised the other in the manner provided in
this Section 9.4):
If to the Company:
MetaVisual Creations Limited
00 Xxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxx
XX0 0XX
Xxxxxx Xxxxxxx
Attention: Mr. Xxxx Xxxxxx Xxxxxxx
with a copy to:
Xxxxxxx
00 Xxxxx Xxxxxx
00
Xxxxxx XX0X 0XX
Fax: 00-0-000-000-0000
reference: TJT
If to the Sellers, at their respective addresses set forth
in Schedule I, with a copy to:
Xxxxxxx
00 Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Fax: 00-0-000-000-0000
reference: TJT
If to the Purchaser:
Xx0.Xxx Inc.
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
with a copy to:
Xxxxxxxxx Traurig
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
9.5 PUBLICITY. No publicity release or announcement concerning
this Agreement or the transactions contemplated hereby shall be made without
advance approval thereof by the Purchaser and the Sellers, except as may be
required by applicable law.
9.6 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and Schedules) and the agreements, certificates and other documents delivered
pursuant to this Agreement contain the entire agreement among the parties
with respect to the transactions described herein, and supersede all prior
agreements, written or oral, with respect thereto, including the Option
Agreement. In the event of any inconsistency between the Option Agreement and
this Agreement, the terms of this Agreement (including the price and related
terms) shall prevail.
9.7 WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be
waived, only by a written instrument signed by the Purchaser and the
Warrantor or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.
27
9.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to principles of conflicts of law; PROVIDED, that all matters concerning the
due incorporation of the Company, the validity of any Contracts to which the
Company is a party and the requirements for the transfer of the Company
Shares shall be governed by English law.
9.9 JURISDICTION. Each of the Purchaser, each of the Sellers
and the Company hereby irrevocably and unconditionally consents and submits
to the exclusive jurisdiction of any state or federal court located within
the County of New York, State of New York, in connection with any, actions,
suits or proceedings arising out of or relating to this Agreement or any of
the agreements delivered in connection herewith (except the Services
Agreement) or the transactions contemplated hereby or thereby. Each of the
Purchaser, the Sellers and the Company hereby waives any objection to venue
in such jurisdiction, and agrees that service of any summons, complaint,
notice or other process relating to such proceeding may be effected as
provided by Section 9.4, or to their respective attorneys at their respective
addresses set forth in Section 9.4 by internationally recognized overnight
express service such as DHL or Federal Express.
9.10 BINDING EFFECT, NO ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement is not assignable by any
party hereto without the prior written consent of the other parties hereto
except by operation of law and any other purported assignment shall be null
and void.
9.11 VARIATIONS IN PRONOUNS. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as
the context may require.
9.12 COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed by
all of the parties hereto.
9.13 EXHIBITS AND SCHEDULES. The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall
otherwise require.
9.14 HEADINGS. The headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement.
9.15 SEVERABILITY OF PROVISIONS. If any provision or any
portion of any provision of this Agreement or the application of such
provision or any portion thereof to any Person or circumstance, shall be held
invalid or unenforceable, the remaining portion of such provision and the
remaining provisions of this Agreement, or the application of such provision
or portion of such provision as is held invalid or unenforceable to persons
or circumstances (or in
28
jurisdictions) other than those as to which it is held invalid or
unenforceable, shall not be affected thereby.
29
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
THE PURCHASER:
XX0.XXX INC.
By: /s/ Xxx Xxxxxx
------------------------------------------
Name: Xxx Xxxxxx
Title: President
THE SELLERS:
/s/ Xxxx Xxxxxx Xxxxxxx
---------------------------------------------
Xxxx Xxxxxx Xxxxxxx
/s/ Simon Xxxxx Xxxxxx-Xxxxx
---------------------------------------------
Simon Xxxxx Xxxxxx-Xxxxx
/s/ Xxxx Xxxxxx Xxxxxxx
---------------------------------------------
/s/ Xxxxx Xxxx Xxxxxxx
---------------------------------------------
Xxxx Xxxxxx Xxxxxxx and
Xxxxx Xxxx Xxxxxxx as trustees
THE COMPANY:
METAVISUAL CREATIONS LIMITED
By: /s/ Xxxx Xxxxxx Xxxxxxx
------------------------------------------
Name: Xxxx Xxxxxx Xxxxxxx
Title: Director
30
Schedule I
NAMES AND ADDRESSES OF THE SELLERS; ALLOCATIONS OF THE PURCHASE PRICE
Company Cash Paid Purchaser's
Name and Address Shares at Closing (1) Note (2) Share Consideration (3)
---------------- ------ -------------- -------- -----------------------
Xxxx Xxxxxx Xxxxxxx 610 $281,142.86 $289,750.00 $1,862,678.59
00 Xxx Xxxxxx Xxxx
Xxxxxx Xxxxxxxxx XX0 0XX
Xxxxxx Xxxxxxx
Simon Xxxxx Xxxxxx-Xxxxx 20 $ 10,857.14 $ 9,500.00 $ 61,071.41
00 Xxxxxxxxxx, Xxxxxx Xxxxxxxx
Xxxxxxxxx XX0 0XX Xxxxxx Xxxxxxx
Xxxx Xxxxxx Xxxxxxx and Xxxxx Xxxx Xxxxxxx as 70 $ 38,000.00 $ 33,250.00 $ 213,750.00
trustees of the Xxxx Xxxxxx Xxxxxxx 1999
Children's Settlement
00 Xxx Xxxxxx Xxxx
Xxxxxx
Xxxxxxxxx XX0 0XX
Xxxxxx Xxxxxxx
TOTAL $330,000.00 $332,500.00 $2,137,500.00
=========== =========== =============
(1) All amounts expressed in United States dollars.
(2) The amounts are original principal amounts.
(3) To be converted into numbers of shares of the Purchaser according to the
Agreement.
31
