STOCK PURCHASE AGREEMENT
AGREEMENT (this "Agreement"), made and entered into as of the 10th day
of April 2004, by and between MEDIA SERVICES GROUP, INC., a Nevada corporation
(the "Purchaser") and FUTURE DEVELOPMENTS AMERICA, INC., a Delaware corporation
(the "Company").
W I T N E S S E T H:
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WHEREAS, the Company wishes to issue and sell, and the Purchaser wishes
to subscribe for and purchase, certain shares of the authorized but unissued
Common Stock of the Company, as more particularly set forth in, and pursuant to
the terms and conditions of, this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereby agrees as follows:
SECTION 1
1.1 Stock Purchase.
Subject to the terms and conditions of this Agreement, the Purchaser
hereby subscribes for and agrees to purchase an aggregate of 51 shares (the
"Shares") of Common Stock (the "Common Stock"), of the Company, representing 51%
of the outstanding stock of the Company, for an aggregate purchase price of
$1,000,000 ("Total Purchase Price"). The Shares shall be issued simultaneously
with the execution and delivery of this Agreement. The Total Purchase Price is
payable with the initial payment of $500,000 payable on the date hereof (the
"Closing Date"), with the remainder of the Purchase Price to be made in payments
on an as needed basis, in anticipation of the cash needs established by the
fiscal year projections, as set forth on Exhibit B attached hereto, but in any
event the Total Purchase Price will be paid within six (6) months after the
Closing Date.
1.2 Additional Shares.
Further subject to the terms and conditions of this Agreement and
Exhibit A attached hereto, upon the occurrence of each of the Target Dates, the
Company shall issue to the Purchaser without any additional consideration up to
24 additional shares, representing a total beneficial ownership of up to 75% of
the Company, if the corresponding Target Amounts as set forth on Exhibit A are
not met. Company will be given until the completion of the 4th and final quarter
to reach the Total Target Amount before triggering the additional consideration
representing up to an additional 25% of the Company.
1.3 Performance Bonuses
The Purchaser agrees that in the event that the Company exceeds the
Fiscal Year Total Target Amount on June 30, 2005, as set forth on Exhibit A,
Xxxxxx Xxxxx and Xxxxx Xxxxx (the "Principals," and each a "Principal") shall
each receive from the Company a one-time bonus equal
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to 5% of the collected additional pretax income, which exceeds the relevant
Total Target Amount.
1.4 Purchase of Interest in Future Developments, Ltd.
The Purchaser agrees to use its best efforts to enter into a second
transaction with the Principals, pursuant to which Purchaser would purchase 51%
of the business of Future Developments, Ltd., an Alberta corporation ("FDL")
from the Principals, including but not limited to the total law enforcement,
defense and intelligence related operations of FDL, the goodwill and the
confidential information of FDL (including, without limitation, business
contacts, trade secrets, client or customer lists, technology, know-how
marketing techniques, contacts and other confidential or proprietary
information) for a purchase price of $200,000 in cash plus 200,000 unregistered
shares of common stock of Media Services Group, Inc. The Purchaser will use its
commercially reasonable efforts to complete the transaction within thirty (30)
days from April 30, 2004, subject to the Purchaser's satisfactory review of all
financial, legal and environmental due diligence of FDL, and the absence of any
contingencies or liabilities unknown to the Purchaser as of the date of this
Agreement.
SECTION 2
2.1 Purchaser Representations and Warranties. In connection with the
purchase of the Shares hereunder, the Purchaser hereby acknowledges, represents
and warrants to, and agrees with, the Company as follows:
(a) The Purchaser acknowledges that the issuance of the Shares
is intended to be exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), by virtue of Section 4(2) of the Securities Act
and the provisions of Regulation D promulgated thereunder ("Regulation D"). In
furtherance thereof, the Purchaser represents and warrants, and agrees with the
Company, that the Purchaser: (i) is an "accredited investor" as that term is
defined in Section 2(15) of the Securities Act and Rule 501(a) of Regulation D;
(ii) has the financial ability to bear the economic risk of this investment in
the Company and has no need for liquidity with respect to its investment in the
Company; and (iii) has such knowledge and experience regarding companies similar
to the Company in terms of the Company's business and stage of development so as
to be capable of evaluating the merits and risks of an investment in the
Company.
(b) No representations or warranties have been made to the
Purchaser by the Company, or any director, officer, employee, agent, affiliate
or subsidiary of the Company, other than the representations of the Company
contained herein, and in subscribing for the Shares the Purchaser is not relying
upon any representations other than those contained herein.
SECTION 3
3.1 Company Representations and Warranties. In connection with the
issuance and sale of the Shares hereunder, the Company hereby acknowledges,
represents and warrants to the Purchaser as follows:
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(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to do business and is in good standing in each jurisdiction in
which it does business, except where the failure to be so qualified would not
have a material adverse effect on the business, assets, financial condition or
results of operations of the Company (herein a "Material Adverse Effect").
(b) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to issue the Shares to the
Purchaser, to consummate the transactions contemplated herein, and to carry on
its business as now conducted or presently proposed to be conducted by it. The
execution, delivery and performance of this Agreement by the Company has been
authorized by all necessary corporate action on the part of the Company, and
this Agreement constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that (i) the enforceability hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect and affecting the rights of creditors generally, (ii) the enforceability
hereof is subject to general principles of equity, and (iii) the indemnification
provisions hereof may be held to be violative of public policy. The execution,
delivery and performance by the Company of this Agreement, and the issuance and
sale of the Shares hereunder, does not and will not result in any violation of
or be in conflict with, or result in a breach of or constitute a default under,
any term or provision of any federal, state or local law, statute, rule or
regulation, or any final order, judgment or decree of any court, arbitrator,
tribunal or governmental authority having jurisdiction over the Company, or any
material license, franchise, permit or similar right granted under any of the
foregoing to which the Company is subject, or the Company's Certificate of
Incorporation or By-Laws, except for such violations, conflicts, breaches or
defaults which would not have a Material Adverse Effect.
(c) The Company is not in violation of, or in default under,
any provision of its Certificate of Incorporation or By-Laws. True and complete
copies of the Certificate of Incorporation and By-Laws of the Company, as in
effect on the date hereof, have been made available to the Purchaser.
(d) No consent, approval, qualification, order or
authorization of, or filing with, any governmental authority is required in
connection with the Company's execution, delivery or performance of the
Agreement, or the offer, issuance or sale of the Shares, except for applicable
federal and state securities laws.
(e) As of the date of this Agreement, and prior to the
consummation of the transactions contemplated herein, the outstanding capital
stock of the Company consists of 49 shares of voting common stock. All of the
outstanding shares of stock have been validly issued and are fully paid and
nonassessable.
To the best knowledge of the Company, the representations and
warranties of the Company in this Section 3 do not contain any untrue statements
of fact or omit to state a material fact necessary in order to make the
statements contained in this Section 3 not misleading in any material respect.
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SECTION 4
4.1 Right Of First Refusal.
(a) The Purchaser is hereby granted the right of first refusal
(the "First Refusal Right"), exercisable in connection with any proposed
transfer of any Shares of the Company from the Company or any other holder of
Shares (each a "Stock Seller"). For purposes of this Section 4.1 the term
"transfer" shall include any sale, assignment, pledge, encumbrance or other
disposition of the Shares intended to be made by Stock Seller.
(b) In the event any Stock Seller desires to accept a bona
fide third-party offer for the transfer of any or all of such shares (the Shares
subject to such offer to be hereinafter referred to as the "Target Shares"),
Stock Seller shall promptly deliver to the Purchaser written notice (the
"Disposition Notice") of the terms of the offer, including the purchase price
and the identity of the third-party offeror, and (ii) provide satisfactory proof
that the disposition of the Target Shares to such third-party offeror.
(c) The Purchaser shall, for a period of forty-five (45) days
following receipt of the Disposition Notice, have the right to purchase any or
all of the Target Shares subject to the Disposition Notice upon the same terms
as those specified therein or upon such other terms (not materially different
from those specified in the Disposition Notice) to which Stock Seller consents.
Such right shall be exercisable by delivery of written notice (the "Exercise
Notice") to Stock Seller prior to the expiration of the forty-five (45)-day
exercise period. If such right is exercised with respect to all the Target
Shares, then the Purchaser shall effect the repurchase of such shares, including
payment of the purchase price, not more than fifteen (15) business days after
delivery of the Exercise Notice; and at such time the certificates representing
the Target Shares shall be delivered to the Purchaser.
(d) Should the purchase price specified in the Disposition
Notice be payable in property other than cash or evidences of indebtedness, the
Purchaser shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property. If Stock Seller and the Purchaser
cannot agree on such cash value within thirty (30) days after the Purchaser's
receipt of the Disposition Notice, the valuation shall be made by an appraiser
of recognized standing selected by Stock Seller and the Purchaser or, if they
cannot agree on an appraiser within forty-five (45) days after the Purchaser's
receipt of the Disposition Notice, each shall select an appraiser of recognized
standing and the two (2) appraisers shall designate a third appraiser of
recognized standing, whose appraisal shall be determinative of such value. The
cost of such appraisal shall be shared equally by Stock Seller and the
Purchaser. The closing shall then be held on the later of (i) the fifteenth
(15th) business day following delivery of the Exercise Notice or (ii) the
fifteenth (15th) business day after such valuation shall have been made.
4.2 Non-Exercise of the First Refusal Right. In the event the Exercise
Notice is not given to Stock Seller prior to the expiration of the forty-five
(45)-day exercise period, Stock Seller shall have a period of thirty (30) days
thereafter in which to sell or otherwise dispose of the Target Shares to the
third-party offeror identified in the Disposition Notice upon terms (including
the purchase price) no more favorable to such third-party offeror than those
specified in the Disposition Notice. The third-party offeror
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shall acquire the Target Shares free and clear of the First Refusal Right. In
the event Stock Seller does not effect such sale or disposition of the Target
Shares within the specified thirty (30)-day period, the First Refusal Right
shall continue to be applicable to any subsequent disposition of the Target
Shares by Stock Seller until such right lapses.
4.3 Partial Exercise of the First Refusal Right. In the event the
Purchaser makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Stock Seller shall effect the sale to the Purchaser of the portion of the Target
Shares which the Purchaser has elected to purchase, such sale to be effected in
substantial conformity with the provisions of Paragraph 4.1(c), with remaining
Target Shares to be available for sale or other disposition to the third-party
offeror identified in the Disposition Notice, once the First Refusal Right
relating to the relevant Disposition Notice lapses in accordance with Section
4.1(c).
SECTION 5
5.1 Covenant Not to Compete. The Company acknowledges that an important
part of the consideration which the Purchaser will receive in connection with
the two transactions contemplated hereby is the goodwill of the Company's
business and the confidential information of the Company (including, without
limitation, business contacts, trade secrets, client or customer lists,
technology, know-how marketing techniques, contacts and other confidential or
proprietary information). The Purchaser acknowledges that the Principals
currently operate FDL, which is based exclusively in Canada and are, in the
process of forming another business ("Chameleon Corp.") which will sell FDL
products to the United States and European markets, but shall not sell to any
member of any law enforcement, military or intelligence community in the United
States, unless otherwise provided by a written agreement with the Company and
Purchaser. In order that the Purchaser may enjoy the benefits of such goodwill
and such confidential information, the Purchaser is requiring that the
Principals will execute non-compete agreements, providing that each Principal
will not in any manner compete with the Company or, directly or indirectly, own,
manage, operate, control, be a consultant to, participate or have any interest
in (excluding ownership of not more than 3% of a publicly-held corporation if
such ownership does not involve managerial or operational responsibility) or be
connected in any manner with, the ownership, management, operation or control of
any business engaged in the research, design, development, licensing, patenting,
marketing or sale of any services, programs or products which provide similar
functions to any of the services, programs or products engaged in by the Company
or currently engaged in by the Company in the United States until the expiration
of five years after the Closing Date. This Section 5.1 shall not limit the
Principals ability to operate FDL or Chameleon Corp. and to transact commercial
and industrial sector business throughout the world, as long as Chameleon
Corp.'s and FDL's businesses strictly exclude any sales to any active members of
any law enforcement, military or intelligence communities in the United States.
5.2 MSGI Corporate Function. As additional consideration for the
transaction, Purchaser will maintain a base of operations in New York for the
Company, providing all accounting and finance functions, including invoicing,
accounts receivable, accounts payable, general ledger, collections and tax
return preparations for the Company. Purchaser will also provide limited
marketing support which shall include collateral material, e-mail and website
hosting.
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5.3 FDL Licensing. In connection with this transaction FDL shall grant
the Company an exclusive right to sell all FDL products (including the
transmitter) in the United States. This license will in no way restrict FDL from
selling its products in Canada or any other region, excluding the United States
in accordance with section 5.1.
SECTION 6
6.1 Indemnity. The Company agrees to indemnify and hold harmless the
Purchaser and its trustees, officers, directors, employees, agents,
representatives, successors and permitted assigns, and each other person, if
any, who controls any thereof, against any loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation commenced or threatened or any claim whatsoever) arising out of
or based upon any false representation or warranty or breach or failure by the
Company to comply with any covenant or agreement made by the Company herein or
in any other document furnished by the Company to any of the foregoing in
connection with this transaction.
6.2 Modification. Neither this Agreement nor any provisions hereof
shall be modified, deemed waived, discharged or terminated except by an
instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.
6.3 Notices. Any notice, demand or other communication which either
party hereto may be required, or may elect, to give to anyone interested
hereunder shall be sufficiently given if (a) properly mailed, registered or
certified mail, return receipt requested, addressed to such address as may be
given herein, or (b) delivered personally at such address, or (c) delivered by
electronic or digital means, with confirmation of receipt. Notice, demand and/or
communication hereunder shall be deemed given on the earliest of two (2)
business days after mailing, on the date of personal delivery or the date when
confirmation of receipt by electronic or digital means is transmitted, whichever
is applicable.
6.4 Counterparts. This Agreement may be executed by fax and/or through
the use of separate signature pages or in any number of counterparts, and each
of such fax signatures and counterparts shall, for all purposes, have binding
legal effect and constitute one agreement binding on both parties,
notwithstanding that both parties are not signatories to the same counterpart.
6.5 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, executors,
administrators, legal representatives, successors and permitted assigns.
6.6 Entire Agreement. This Agreement contains the entire agreement of
the parties with respect to the subject matter hereof, and there are no other or
inconsistent representations, covenants, understandings or other agreements,
written or oral, except as stated or referred to herein.
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6.7 Assignability. This Agreement is personal in nature and is not
transferable or assignable by the Purchaser and any attempt to do so shall be
void ab initio.
6.8 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
conflicts of law principles.
IN WITNESS WHEREOF, each party, intending to be legally bound, has
caused this Agreement to be executed on its behalf by an officer thereunto duly
authorized, all as of the date first set forth above.
PURCHASER:
MEDIA SERVICES GROUP, INC.
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, Chief Executive Officer
THE COMPANY:
FUTURE DEVELOPMENTS, INC.
By: /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx, Principal
By: /s/ Xxxxx Xxxxx
---------------------------------------
Xxxxx Xxxxx, Principal
Accepted and agreed to with regard to Section 5.1
By: /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
Accepted and agreed to with regard to Sections 5.1 and 5.3
FUTURE DEVELOPMENTS LTD.
By: /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx, Principal
By: /s/ Xxxxx Xxxxx
---------------------------
Xxxxx Xxxxx, Principal
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