ACQUISITION AGREEMENT
Exhibit
10.1
This
Agreement dated as of the 26th day of December, 2007 by and among ARTFEST
INTERNATIONAL, INC., a Delaware Corporation, with an address at 00000 Xxxxx
Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx, 00000
(“International”), those shareholders of International who are listed on Exhibit
“A” (Article “Heading”), which is annexed hereto and made part hereof, (the
“International Shareholders”), those shareholders of ART CHANNEL,
INC. who are listed on Exhibit “B” (Article “Heading”), which is annexed to, and
made a part of, this Agreement (the “Channel Shareholders”), and ART CHANNEL,
INC., a Texas Corporation, with an address at 00000 Xxxxxx Xxxx 000, Xxxx Xxxxx,
Xxxxx, 00000 (“Channel”), which is only a party to this Agreement with respect
to Articles “6”, “9”, “11” through “15” and “17” through “21” of this
Agreement.
WITNESSETH
WHEREAS,
International desires
to acquire all of the shares of Channel;
WHEREAS,
the Channel
Shareholders desire to exchange all of their shares of Channel for twenty-eight
million (28,000,000) shares of common stock of International of which eight
million (8,000,000) shares will be issued at Closing (the “Closing Issuance”),
which is hereinafter defined, and an additional twenty million (20,000,000)
shares of common stock (the “Second Issuance”) shall be issued as soon as is
practicable after the Closing and International files with the Delaware
Secretary of State a Certificate of Amendment to the Certificate of
Incorporation increasing the authorized shares to one hundred million shares
of
common stock and two million (2,000,000) shares
of
preferred stock (the “Amendment”);
-1-
WHEREAS,
International would
not enter into this Agreement with the Channel Shareholders unless Channel
agreed to make the representations and warranties set forth in Article “6” of
this Agreement;
WHEREAS,
Channel agrees to
make the representations and warranties set forth in Article “6” of this
Agreement in order to induce International to enter into this
Agreement;
WHEREAS,
the Channel
Shareholders and the Board of Directors of International deem it advisable
and
in the best interests of each corporation and their respective shareholders
that
International acquires all of the shares of Channel from the Channel
Shareholders in order to advance the long-term business interests of Channel
and
International;
WHEREAS,
the Boards of
Directors of each of Channel and International have adopted, approved and
authorized the execution and delivery of this Agreement to implement the
acquisition of all of the shares of Channel by International from the Channel
Shareholders in compliance with the provisions of the Texas State Corporate
Law
and the Delaware General Corporation Law with the result that International
shall issue shares of International to the Channel shareholders in exchange
for
one hundred (100%) percent of the issued and outstanding shares of Channel,
and
Channel shall thereby become a wholly-owned subsidiary of
International;
WHEREAS,
Channel and
International intend that the acquisition of all of the shares of Channel by
International from the Channel shareholders will qualify as a tax-free
reorganization pursuant to Section 368(a)(1)(B) of the Internal Revenue Code
of
1986, as amended;
WHEREAS,
the Boards of
Directors of Channel and International intend to, and shall, have this Agreement
and the transactions with respect to this Agreement approved by the shareholders
of Channel
and International in accordance with the applicable provisions of the Texas
State Corporate Law and the Delaware General Corporation Law; the Channel
shareholders shall approve of this Agreement in its entirety, including, but
not
limited to, Article “6” of this Agreement;
-2-
WHEREAS,
as of the date of
this Agreement, International has issued and outstanding twenty eight million
one hundred ninety thousand six hundred twenty nine (28,190,629)
shares of common stock, par value $0.00001 (the “International Common
Stock”);
WHEREAS, on
the Closing Date
International shall issue eight million (8,000,000) shares of common
stock, and shall issue an additional twenty million (20,000,000) shares as
soon
as it is practicable after the Amendment, of International Common Stock to
the
Channel Shareholders on a pro rata basis as set forth on Exhibit “B” (Article
“3A”), which is annexed to, and made a part of this Agreement, in exchange for
all of their shares of common stock of Channel, par value $0.001 per share
(the
“Channel Common Stock”), after which exchange International shall own one
hundred (100%) percent of Channel’s issued and outstanding common stock, and
Channel shall thereby become a wholly-owned subsidiary of
International.
NOW,
THEREFORE, in
consideration of the mutual covenants of the parties hereinafter set forth,
and
for good and valuable consideration, receipt of which is hereby
acknowledged,
IT
IS AGREED:
1.
Recitals. The
parties hereby adopt as part of this Agreement each of the recitals which is
set
forth above in the WHEREAS clauses, and agree that such recitals shall be
binding upon
the
parties hereto by way of contract and not merely by way of recital or inducement
and such WHEREAS clauses are hereby confirmed and ratified as being accurate
by
each party as to itself, herself and himself.
-3-
2.
Authorized
Shares. International agrees to authorize and implement the
Amendment to increase its number of authorized shares as soon as it is
practicable, so that there shall be one hundred million (100,000,000) authorized
shares, par value $.0001 of International Common Stock, and two million
(2,000,000) authorized shares, par value $.001) of International Preferred
Stock.
3. Closing
Transactions.
A.
On the
Closing Date, subject to, and consistent with, the provisions of this Agreement,
International shall issue eight million (8,000,000) shares of common stock
to
the Channel Shareholders as set forth on Exhibit “B” (Article “3A”), which is
annexed to, and made a part of, this Agreement, in exchange for all of the
shares of Channel Common Stock; after which exchange International shall own
one
hundred (100%) percent of Channel’s common stock, and Channel shall thereby
become a wholly-owned subsidiary of International.
B.
Subject to, and consistent with, the provisions of this Agreement, and in
accordance with the relevant provisions of the Texas State Corporate Law and
Delaware General Corporation Law, Channel shall become a wholly-owned subsidiary
of International through the share exchange set forth in Paragraph “A” of this
Article “3” of this Agreement (the “Exchange”). As soon as
practicable on, or subsequent to, the Closing Date, the Articles of Exchange
pursuant toArticle
5.02 of the Texas Business Corporation Act shall be duly executed and
acknowledged and promptly delivered to the Secretary of State of the State
of
Texas for filing, as provided in the Texas Business Corporation Act. The
Exchange shall become effective upon the time of filing of the Articles of
Exchange with the Delaware Secretary of State (such time, the “Effective Time”).
Upon the Effective Time, the effect of the Exchange shall be as provided in
the
applicable provisions of the Texas State Corporate Law and the Delaware General
Corporation Law.
-4-
C.
Voting
Agreement. The shareholders of International owning a majority
of the issued and outstanding shares of common stock shall enter into the voting
agreement (the “Voting Agreement”) with the Channel Shareholders, in the form
annexed hereto and made a part hereof as Exhibit “C” which sets forth
that:
i.
The
Shareholders of International shall authorize and implement the Amendment as
soon as is practicable;
ii.
The
Shareholders of International shall authorize the Second Issuance;
and
iii.
After the Closing Issuance until the Second Issuance, the Shareholders of
International agree to, in all circumstances in which the Board of Directors
of
International seek approval of its shareholders either voluntarily or by
requirement of law, deliver to the Channel shareholder proxies such that the
Channel Shareholders shall have the right to vote forty seven and eight-tenths
(47.8%) percent of the total issued and outstanding shares of
International.
-5-
4. Post-Closing
Obligations.
A.
Satisfaction of Liabilities. Subject to, and consistent with, the provisions
of
this Agreement:
i.
Channel shall utilize its best effort to enter into agreements with all of
International’s creditors, except for the secured note owed to the Ditto Family
Trust (“DFT”), of which the balance owed as of November 30, 2007 was four
hundred fifty –four thousand nine hundred sixty-seven ($454,967) dollars, for
the payment of all outstanding loan obligations by International.
ii.
In
consideration for the cancellation of the secured note held by DFT,
Channel shall pay to the DFT an aggregate of five hundred thousand ($500,000)
dollars, pursuant to the following schedule:
a.
twenty five thousand ($25,000)
dollars due upon the closing of this Agreement;
b.
one hundred and twenty five
thousand ($125,000) dollars on March 31, 2008; and
c.
monthly installments of seven
thousand ($7,000) dollars per month until the remaining balance of three hundred
fifty thousand ($350,000) dollars is fully satisfied, due upon the first
business day of each month, beginning April 1, 2008.
iii.
In
exchange for the cancellation of International’s indebtedness owed to Xx. Xxxxx
Xxxxx, as soon as practicable subsequent to Closing, International shall issue
to Xx. Xxxxx one millionfive
hundred thousand (1,500,000) shares of common stock..
-6-
B.
Capital. The
management of Channel agrees to use its best efforts subsequent to Closing
to
introduce to International sources to provide up to five million
($5,000,000) dollars of working capital to Acquisition; provided, however,
that
there shall be no consequences if all or a portion of such monies is not
raised.
C.
Forbearance
of Reverse Stock
Split International agrees that, for a period of one hundred
eighty (180) days after Closing, International shall not approve or implement
a
reverse stock split of the Internatontal’s shares of common stock, or engage in
any other measures outside of the ordinary course of business in which the
intended result is the reduction of the value of shares of common stock, or
the
substantial dilution of the shares of common stock.
D.
Increase
in Authorized
Shares. As soon as is practicable after the Closing, and in
accordance with the Voting Agreement, International shall authorize and
implement the Amendment, increasing the authorized number of shares of common
stock to one hundred million (100,000,000), and the number of shares of
preferred stock to two million (2,000,000).
E.
Second
Issuance. Immediately after the implementation of the
Amendment, the Board of Directors of International shall resolve to issue to
the
Channel Shareholders as additional consideration for the Channel shares being
exchanged, the Second Issuance, to be distributed pro-rata to the of
Channel Shareholders, based upon his, her or its ownership of Channel
immediately prior to the Closing of this Agreement, and each share shall further
be duly authorized and validlyissued
and free of preemptive rights, with no personal liability attaching to the
ownership thereof.
-7-
5.
Directors
and
Officers.
A.
At the
Closing, the Board of Directors of International shall appoint two directors,
who shall be designated by Channel to serve as the directors of International,
to hold office in accordance with the certificate of incorporation and bylaws
of
the respective entity until their successor is duly elected or appointed and
qualified. Xxxxx Xxxxx, a director of International immediately prior to the
Closing, shall remain on the Board of Directors for a period of at least six
(6)
months, and there after shall serve only if appointed by the Board of Directors
and/or stockholders of International, All other directors of International
serving immediately prior to the Closing Date shall resign upon the
Closing.
B.
At the
Closing, after the appointment of individuals so designated by Channel as set
forth in Paragraph “A” of this Article “5” of this agreement to International’s
Board of Directors, International shall appoint the current officers of Channel,
to hold office in accordance with the certificate of incorporation and bylaws
of
International. The officers of International serving immediately
prior to the Closing Date shall resign upon the Closing.
5.
Closing
Date. The closing of this transaction (the “Closing”) shall
take place at the offices having an address of 00000 Xxxxxx Xxxxxxx, Xxxxx
000,
Xxxxxxx, Xxxxx, 00000 at 12:00 PMCentral
Standard Time (“CST”) on December 28th, 2007 (the “Closing Date”).
-8-
6.
Channel
and the Channel
shareholders’ Joint and Several Representations, Warranties and
Covenants. Channel and the Channel shareholders jointly and
severally represent, warrant and covenant to International as
follows:
A.
Corporate
Status.
i.
Channel is a corporation duly organized pursuant to the laws of the State of
Texas, with all requisite power and authority to carry on its business as
presently conducted in all jurisdictions where presently conducted, to enter
into this Agreement and to consummate the transactions set forth in this
Agreement; and
ii.
Copies of (a) the Certificate of Incorporation of Channel, and all amendments
thereto, certified by the Secretary of State of the State of Texas, (b) the
By-Laws of Channel, as amended, certified by the Secretary of Channel, and
(c) a
good standing certificate for Channel issued by the Secretary of State of the
State of Texas as of a date not more than thirty (30) days prior to the date
of
this Agreement, are annexed to, and made a part of, this Agreement as Exhibits
“D” (Article “6Aii”), “E” (Article “6Aii”), and “F” (Article “6Aii”),
respectively, and are complete and correct as of the date of this
Agreement.
B.
Authority
of
Channel. Channel has the full corporate power and authority
toexecute,
deliver and perform this Agreement and has taken all corporate action required
by law and its organizational documents to authorize the execution and delivery
of this Agreement and the consummation of the transactions set forth in this
Agreement, and no other corporate action on its part is necessary to authorize
and approve this Agreement or to consummate the transactions contemplated
hereby. This Agreement and the consummation by Channel of the
transactions set forth in this Agreement have been duly and validly authorized,
executed and delivered by the Board of Directors of Channel, and (assuming
the
valid authorization, execution and delivery of this Agreement by
International) this
Agreement is valid and binding upon Channel and enforceable against Channel
in
accordance with its terms (except as the enforceability thereof may be limited
by bankruptcy, insolvency, bank moratorium or similar laws affecting creditors'
rights generally and laws restricting the availability of equitable remedies,
and may be subject to general principles of equity whether or not such
enforceability is considered in a proceeding at law or in equity). A
certified resolution of the Board of Directors of Channel and a unanimous
consent of the Channel shareholders approving Channel’s entry into this
Agreement and consummation of the transactions set forth in this Agreement
are
annexed to, and made a part of, this Agreement as Exhibits “G” (Article “6B”)
and “H” (Article “6B”).
-9-
C.
Ownership. Annexed
hereto and made a part hereof as Exhibit “I” (Article “6C”), is a schedule of
all Channel shareholders and their respective ownership of Channel Common
Stock.
D.
Compliance
with the Law and
Other Instruments. Except as otherwise provided in this
Agreement and in the Exhibits annexed to, and made a part of, this Agreement,
the businessand
operations of Channel have been and are being conducted in all material respects
in accordance with all applicable laws, rules and regulations of all authorities
which affect Channel or its properties, assets, businesses or
prospects.
-00-
X.
Xxxxxxx
of
Conflicts. The execution and delivery of this Agreement, and
the consummation by Channel of the transactions set forth in this Agreement:
(i)
do not and shall not conflict with or result in a breach of any provision of
Channel’s Certificate of Incorporation or By-Laws, (ii) do
not
and shall not result in any breach of, or constitute a default or cause an
acceleration under any arrangement, agreement or other instrument to which
Channel is a party to or by which any of its assets are bound, (iii) do not
and
shall not cause Channel to violate or contravene any provision of law or any
governmental rule or regulation, and (iv) will not and shall not result in
the
imposition of any lien, or encumbrance upon, any property of
Channel. Channel has performed in all material respects all of its
obligations which are, as of the date of this Agreement, required to be
performed, pursuant to the terms of any such agreement, contract or
commitment.
F.
Financial
Condition. Except as set forth on the Channel Disclosure
Schedule, which is annexed to, and made a part of, this Agreement as Exhibit
“H”
(Article “7F”) (i) Channel does not have any outstanding indebtedness or other
liabilities or obligations of any nature (whether absolute, accrued, contingent
or otherwise, and whether due or to become due), (ii) there has not been any
material adverse change in Channel’s financial condition, assets, liabilities or
business, (iii) there has not been any damage, destruction or loss, whether
or
not covered by insurance, materially affecting Channel’s properties, assets or
business, (iv) Channel has not incurred any indebtedness, liability or other
obligation of any nature whatsoever except in the ordinary course of business,
and(v)
Channel has not made any change in its accounting methods or
practices.
-11-
G.
Environmental
Compliance. Channel is
in
compliance with all applicable environmental laws.
H.
OSHA
Compliance. Channel is in compliance with all applicable
federal, state and local laws, rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and other
governmental requirements relating to occupational health and safety including,
but not limited to, the Occupational Safety and Health Act of 1970, as amended,
and the rules and regulations promulgated thereunder.
I.
Taxes.
Channel
has timely filed all required federal tax returns for income, franchise, social
security, withholding, sales, excise, unemployment insurance, real estate and
other taxes, and has paid or made adequate provisions for the payment of all
such taxes shown to be due on said returns.
J.
Litigation. There
are no legal, administrative, arbitration or other proceedings or governmental
investigations adversely affecting Channel or its properties, assets or
businesses, or with respect to any matter arising out of the conduct of
Channel’s business pending or to its knowledge threatened, by or against, any
officer or director of Channel in connection with its affairs, whether or not
covered by insurance. Except as set forth on the Channel Disclosure
Schedule, which is annexed to, and made a part of, this Agreement as Exhibit
“J”
(Article “6J”), neither Channel norits
officers or directors are subject to any order, writ, injunction or decree
of
any court, department, agency or instrumentality affecting
Channel. Channel is not presently engaged in any legal
action.
-12-
K.
Contracts. Except
as set forth on the Channel Disclosure Schedule, Channel is not a party to
any
material contracts.
L.
No
Approvals. No approval of any governmental authority is
required of Channel in connection with the consummation of the transactions
set
forth in this Agreement.
M.
Broker. Channel
has not had any dealing with respect to this transaction with any business
broker, firm or salesman, or any person or corporation, investment banker or
financial advisor who is or shall be entitled to any broker's or finder's fee
or
any other commission or similar fee with respect to the transactions set forth
in this Agreement. Channel represents that it has not dealt with any
such person, firm or corporation and agrees to indemnify and hold harmless
International from and against any and all claims for brokerage commissions
by
any person, firm or corporation on the basis of any act or statement alleged
to
have been made by Channel or its affiliates or agents.
N.
Complete
Disclosure. No representation or warranty of Channel which is
contained in this Agreement, or in a writing furnished or to be furnished
pursuant to this Agreement, to Channel’s knowledge contains or shall contain any
untrue statement of a material fact, or omits orshall
omit to state any fact which is required to make the statements which are
contained herein or therein, in light of the circumstances under which they
were
made, not materially misleading. There is no fact relating to the
business, affairs, operations, conditions (financial or otherwise) or prospects
of Channel which would materially adversely affect same which has not been
disclosed to International in this Agreement.
-13-
O.
Securities
Laws. Neither Channel nor, to Channel's knowledge, any
director or executive officer thereof, is or has been the subject of any action
involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of Channel, there is not, pending or contemplated, any
investigation by the Securities and Exchange Commission, the Financial Industry
Regulatory Authority (FINRA), or other regulatory authority with respect to
Channel or, to Channel's knowledge, any current or former director or executive
officer of Channel.
7.
International’s
and
International’s Shareholders Representations, Warranties and
Covenants. International and the International Shareholders,
jointly and severally, represent, warrant and covenant to Channel and to each
of
the Channel shareholders as follows:
-14-
A.
Corporate
Status.
i.
International is a corporation duly organized, validly existing and in good
standing pursuant to the laws of the State of Delaware, with all requisite
power
and authority to carry on its business as presently conducted in all
jurisdictions where presently conducted, to enter into this Agreement and to
consummate the transactions set forth in this Agreement; and
ii.
copies of (a) the Certificate of Incorporation of International, and all
amendments thereto, certified by the Secretary of State of the State of
Delaware, (b) the By-Laws of International, as amended, certified by the
Secretary of International, and (c) a good standing certificate for
International issued by the Secretary of State of the State of Delaware as
of a
date not more than thirty (30) days prior to the date of this Agreement, are
annexed to, and made a part of, this Agreement as Exhibits “K” (Article “7Aii”),
“L” (Article “7Aii”) and “M” (Article “7Aii”) respectively, and are complete and
correct as of the date of this Agreement.
B.
Capitalization. Prior
to the Amendment required pursuant to Article “4” of this Agreement,
International’s authorized capital stock consists of forty million (40,000,000)
shares of International Common Stock. After the Amendment,
International’s authorized capital stock shall consist of one hundred million
(100,000,000) shares of International Common Stock, and two million (2,000,000)
shares of International Preferred Stock. Except as set forth in this
Agreement, there are no subscriptions, options, warrants, rights or other
agreements outstanding to acquire from International
shares of stock of International or any other equity security or security
convertible into an equity security. Except as set forth in this
Agreement, there are no agreements or commitments to increase, decrease or
otherwise alter the authorized capital stock of International. Except
as set forth on the disclosure schedule (the “International Disclosure
Schedule”) which is annexed to, and made a part of, this Agreement as Exhibit
“N” (Article “7B”), International has not granted any registration rights with
respect to any series of International stock outstanding.
-15-
C.
Authority
of International
and the International Shareholders. International and the
International Shareholders have the full power and authority to execute, deliver
and perform this Agreement and has taken all action required by law and its
organizational documents to authorize the execution and delivery of this
Agreement and the consummation of the transactions set forth in this Agreement,
and no other corporate action on its part is necessary to authorize and approve
this Agreement or to consummate the transactions contemplated
hereby. This Agreement and the consummation by International and the
International Shareholders of the transactions set forth in this Agreement
have
been duly and validly authorized, executed, and delivered by the Board of
Directors of International, and (assuming the valid authorization, execution
and
delivery of this Agreement by the Channel shareholders) this Agreement is valid
and binding upon International and enforceable against International in
accordance with its terms (except as the enforceability thereof may be limited
by bankruptcy, insolvency, bank moratorium or similar laws affecting creditors'
rights generally and laws restricting the availability of equitable remedies
and
may be subject to general principles of equity whether or not such
enforceability is considered in a proceeding at law or in equity). A
certified resolution of the Board of Directors of International and a consent
of
the shareholders holding
a
majority of the votes of International approving International’s entry into this
Agreement and consummation of the transactions set forth in this Agreement
are
annexed to, and made a part of, this Agreement as Exhibits “O” (Article “7C”)
and “P” (Article “7C”).
-16-
D.
Ownership. The
individuals and/or entities set forth on Exhibit “Q” (Article “7D”) which is
annexed to, and made a part of, this Agreement, are the shareholders of record
of International.
E.
Financial
Condition. International has fully disclosed its financial
condition including all assets and liabilities on Form 10-QSB for the period
ending September 30, 2007 which was filed on November 19, 2007 with the SEC
(the
“10-QSB). All liabilities accrued after September 30, 2007 are set
forth on the International Disclosure Schedule, which is annexed hereto and
made
a part hereof as Exhibit “N”. Channel shall satisfy the obligations
owed to the DFT pursuant to the schedule set forth in Subparagraph “ii” of
Paragraph “A” of Article “4” of this Agreement, and shall seek to satisfy all
other obligations of International pursuant to Subparagraph “i” of Paragraph “A”
of Article “4” of this Agreement. Channel understands that the
liabilities of International not owed to the DFT (the “Liability
Balance”) are held by a group of International shareholders which may upon
reaching an agreement with International after the Closing shall convert a
portion of, or all of the Liability Balance into Common Shares of International
at a future date.
F.
Compliance
with the Law and
Other Instruments. The business and operations of
International have been and are being conducted in all material respects in
accordance with allapplicable
laws, rules and regulations of all authorities which affect International or
its
properties, assets, businesses or prospects.
-17-
G.
Absence
of
Conflicts. The execution and delivery of this Agreement and
the issuance of the securities of International, and the consummation by
International of the transactions set forth in this Agreement: (i) do not and
shall not conflict with or result in a breach of any provision of
International’s Certificate of Incorporation or By-Laws, (ii) do
not
and shall not result in any breach of, or constitute a default or cause an
acceleration under any arrangement, agreement or other instrument to which
International is a party to or by which any of its assets are bound, (iii)
do
not and shall not cause International to violate or contravene any provision
of
law or any governmental rule or regulation, and (iv) will not and shall not
result in the imposition of any lien, or encumbrance upon, any property of
International. International has performed in all material respects
all of its obligations which are, as of the date of this Agreement, required
to
be performed, pursuant to the terms of any such agreement, contract or
commitment.
H.
Environmental
Compliance. International
is
in compliance with all applicable environmental laws.
I.
OSHA
Compliance. International is in compliance with all applicable
federal, state and local laws, rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and other
governmental requirements relating to occupational health and safety including,
but not limited to, the Occupational Safety and Health Act of 1970, as
amended,and
the
rules and regulations promulgated thereunder.
-18-
J.
Taxes. International
has timely filed all required federal, state, city and local tax returns for
income, franchise, social security, withholding, sales, excise, unemployment
insurance, real estate and other taxes, and has paid or made adequate provisions
for the payment of all such taxes shown to be due on said returns.
K.
Litigation. There
are no legal, administrative, arbitration, or other proceedings or governmental
investigations adversely affecting International or its properties, assets
or
businesses, or with respect to any matter arising out of the conduct of
International’s business pending, or to its knowledge threatened, by or against,
any officer or director of International in connection with its affairs, whether
or not covered by insurance. Except as set forth on the International
Disclosure Schedule, neither International nor its officers or directors are
subject to any order, writ, injunction, or decree of any court, department,
agency, or instrumentality, affecting International. International is
not presently engaged in any legal action.
L.
Contracts. Except
as set forth on the International Disclosure Schedule, International is not
a
party to any material contracts.
M.
Absence
of
Changes. There has not been any material adverse change in, or
any event or condition (financial or otherwise) affecting the business,
properties, assets, liabilities, historical
operations or prospects of International, there are no liabilities or
obligations of any nature, whether absolute, contingent or otherwise, whether
due or to become due (including, without limitation, liabilities for taxes
with
respect to or measured by income of International for any period prior to the
date of this Agreement or arising out of any transaction of International prior
to such date). There has not been any declaration, setting aside or
payment of any dividend or other distribution with respect to International’s
securities, or any direct or indirect redemption, purchase or other acquisition
of any of International’s securities. To International’s knowledge,
there has not been an assertion against International of any liability of any
nature or in any amount not fully reflected or reserved against in the
International Disclosure Schedule.
-19-
N.
No
Approvals. No approval of any governmental authority is
required of International in connection with the consummation of the
transactions set forth in this Agreement.
O.
Broker. International
has not had any dealing with respect to this transaction with any business
broker, firm or salesman, or any person or corporation, investment banker or
financial advisor who is or shall be entitled to any broker's or finder's fee
or
any other commission or similar fee with respect to the transactions set forth
in this Agreement. International represents that it has not dealt
with any such person, firm or corporation and agrees to indemnify and hold
harmless each of the Channel shareholders from and against any and all claims
for brokerage commissions by any person, firm or corporation including on the
basis of any act or statement alleged to have been made by International or
its
affiliates or agents.
P.
Securities
Laws. Neither International nor, to International's knowledge,
any director or executive officer thereof, is or has been the subject of any
action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not
been, and to the knowledge of International, there is not, pending or
contemplated, any investigation by the Securities and Exchange Commission,
the
Financial Industry Regulatory Authority (FINRA), or other regulatory authority
with respect to International or, to International's knowledge, any current
or
former director or executive officer of International.
-20-
Q.
Complete
Disclosure. No representation or warranty of International
which is contained in this Agreement, or in a writing furnished or to be
furnished pursuant to this Agreement, to International’s knowledge contains or
shall contain any untrue statement of a material fact, or omits or shall omit
to
state any fact which is required to make the statements which are contained
herein or therein, in light of the circumstances under which they were made,
not
materially misleading. There is no fact relating to the business,
affairs, operations, conditions (financial or otherwise) or prospects of
International which would materially adversely affect same which has not been
disclosed to the Channel shareholders in this Agreement.
R.
No
Defense. It shall not be a defense to a suit for damages for
any misrepresentation or breach of covenant or warranty that any of the Channel
shareholders knew or had reason to know that any covenant, representation or
warranty of International in this Agreement or furnished or to be furnished
to
such Channel Shareholder contained untrue statements.
-21-
8.
Channel
Shareholders’
Representations, Warranties and Covenants.Each
of
the Channel shareholders, each as to himself or itself, hereby represents and
warrants to each of the other parties to this Agreement that the statements
contained in this Article “8” of this Agreement are true and
correct:
A.
Ownership. He,
she or it is the record, beneficial and equitable owner of such number of shares
of Channel Common Stock as is set forth opposite his or its name on Exhibit
“I”
or “Q”. He or it holds said shares free and clear of all liens,
claims or encumbrances, and has the full right and authority to exchange or
transfer said shares pursuant to the terms of this Agreement.
B.
Absence
of
Conflicts. His, she or its execution and delivery of this
Agreement, the transfer of his or its shares of Channel Common Stock and the
consummation by him or it of the transactions set forth in this Agreement do
not
and shall not cause him or it to violate or contravene any provision of law
or
any governmental rule or regulation.
C.
No
Approvals. No approval of any governmental authority is
required of him , her or it in connection with the consummation of the
transactions set forth in this Agreement.
D.
Complete
Disclosure. No representation or warranty of him, her or it
which is contained in this Agreement, or in a writing furnished or to be
furnished pursuant to this Agreement, to his or its knowledge contains or shall
contain any untrue statement of a material fact, omits or shall omit to state
any fact which is required to make the statements which are contained herein
or
therein, in light of the circumstances under which they were made, not
materially misleading.
-22-
E.
No
Defense. It shall not be a defense to a suit for damages by
another party to this Agreement against him, her or it for any misrepresentation
or breach of covenant or warranty that the other party which is suing him or
it
knew or had reason to know that any covenant, representation or warranty of
him,
her or it in this Agreement contained untrue statements.
F.
Broker. He,
she or it has not had any dealing with respect to this transaction with any
business broker, firm or salesman, or any person or corporation, investment
banker or financial advisor who is or shall be entitled to any broker's or
finder's fee or any other commission or similar fee with respect to the
transactions set forth in this Agreement. Each of the Channel
shareholders represents that he or it has not dealt with any such person, firm
or corporation and agrees to indemnify and hold harmless International from
and
against any and all claims for brokerage commissions by any person, firm or
corporation on the basis of any act or statement alleged to have been made
by
him or it or his or its affiliates or agents.
9.
Mutual
Covenants of All of
the Parties Hereto.
A.
Best
Efforts. Each of the parties hereto shall use its best efforts
to perform or satisfy each covenant or condition to be performed or satisfied
by
each of them before and after the Closing Date.
-23-
B.
Notice
of Developments and
Updates. Each of the parties hereto shall give prompt written
notice pursuant to Paragraph “C” of Article “21” of this Agreement to the other
parties hereto of any act, event or occurrence which may cause or constitute
a
breach of any of its own representations and warranties in Articles “6”, “7” or
“8” of this Agreement, as the case may be.
C.
No
Public
Announcement. None of the parties hereto shall, without the
prior written approval of all of the Channel shareholders and International,
make any press release or other public announcement or communicate with any
customer, competitor, or supplier of, or others having business dealings with,
either of Channel or International concerning the transactions contemplated
by
this Agreement, except as and to the extent that such party shall determine
such
disclosure is required by law (which determination shall be made by such party
based upon the advice of its counsel), in which event the other parties hereto
shall be advised and the parties shall use their best efforts to cause a
mutually agreeable release or announcement to be issued.
D.
Exclusivity. Neither
Channel nor International shall, without the prior written approval of (i)
in
the case of International, all of the Channel shareholders or (ii) in the case
of Channel, International, (i) enter into, or (ii) solicit, initiate or
encourage any inquiries or proposals that constitute, or could reasonably be
expected to lead to, a proposal or offer for, a merger, consolidation, business
combination, sale of substantial assets, sale of shares of capital stock
(including, but not limited to, by way of a tender offer) or similar transaction
involving such party, other than the transactions contemplated by this
Agreement.
-24-
10.
Conduct
of International’s
Business Prior to the Closing Date. Between the date of this
Agreement and the Closing Date, International shall carry on its business in
the
ordinary course and in the same manner as heretofore conducted and shall
preserve intact the existing business organization of International, and use
its
best efforts to preserve International’s relationships, if any, with customers,
suppliers and others having business dealings with International, to the end
that its goodwill and ongoing business shall not be materially impaired on
the
Closing Date. Without the prior written consent of all of the Channel
shareholders, International shall not:
A.
make
any change in its Certificate of Incorporation or By-Laws, except pursuant
to
the terms and conditions of this Agreement;
B.
authorize or issue any capital stock or any rights, warrants, options or
convertible securities to acquire such stock, except pursuant to the terms
and
conditions of this Agreement;
C.
take
any action or omit to do any act which would cause the representations or
warranties of International contained herein to be untrue or incorrect in any
material respect;
D.
declare or make any payment or distribution to its shareholders (other than
payment of compensation for services rendered, if applicable) or purchase or
redeem any shares of capital stock, except pursuant to the terms and conditions
of this Agreement;
-25-
E.
commit
any act or omit to do any act which would cause a material breach ofany
agreement, contract or commitment which is listed in an Exhibit annexed to
this
Agreement;
F.
wind
down or transfer its business; or
G.
engage
in any business activities whatsoever.
11.
Conduct
of Channel Business
Prior to the Closing Date. Between the date of this Agreement
and the Closing Date, Channel shall carry on its business in the ordinary course
and in the same manner as heretofore conducted and shall preserve intact the
existing business organization of Channel, and use its best efforts to (i)
keep
available to Channel the services of Channel’s present officers and employees,
(ii) preserve Channel’s relationships, if any, with customers, suppliers and
others having business dealings with Channel, to the end that its goodwill
and
ongoing business shall not be materially impaired on the Closing
Date. Without the prior written consent of International, Channel
shall not:
A.
make
any change in the Certificate of Incorporation or By-Laws of
Channel;
B.
conduct the business of Channel in any manner other than in the ordinary
course;
C.
authorize or issue any capital stock or any rights, warrants, options or
convertible securities to acquire such stock;
-26-
D.
declare or make any payment or distribution to its shareholders (other than
payment of compensation for services rendered, if applicable) or purchase or
redeem any shares of capital stock, except pursuant to the terms and conditions
of this Agreement;
E.
take
any action or omit to do any act which would cause the representations or
warranties of Channel contained herein to be untrue or incorrect in any material
respect;
F.
commit
any act or omit to do any act which would cause a material breach of any
agreement, contract or commitment which is listed in an Exhibit annexed to
this
Agreement; or
G.
commit
any other act or omit to do any other act which would have a material adverse
effect upon the business, financial condition or earnings of
Channel.
12.
Nondisclosure
of
Confidential Information/Non-Circumvent.
A.
As
used in this Agreement, “Confidential Information” shall mean oral or written
information which is directly or indirectly presented to a party, its past,
present or future subsidiaries, parents, officers, consultants, directors,
shareholders, affiliates, attorneys, employees, agents and its and their
respective Immediate Families (as defined below; all of the foregoing are
hereinafter collectively referred to as “Agents”) by another party or its
Agents, including, but not limited to, information which is developed, conceived
or created by the party, or disclosed to the other party or its
Agents or known by or conceived or created by the other party or its Agents
during, or after the termination of, this Agreement if disclosed to the other
party or its Agents or known by or conceived or created by the other party
or
its Agents as a result of this Agreement, with respect to the party, its
business or any of said party’s products, processes, and other services relating
thereto relating to the past or present business or any plans with respect
to
future business of the party, or relating to the past or present business of
a
third party or plans with respect to future business of a third party which
are
disclosed to the party. Confidential Information includes, but is not
limited to, all documentation, hardware and software relating thereto, and
information and data in written, graphic and/or machine readable form, products,
processes and services, whether or not patentable, trademarkable or
copyrightable or otherwise protectable, including, but not limited to,
information with respect to discoveries; know-how; ideas; computer programs,
source codes and object codes; designs; algorithms; processes and structures;
product information; marketing information; price lists; cost information;
product contents and formulae; manufacturing and production techniques and
methods; research and development information; lists of customers and vendors
and other information relating thereto; financial data and information; business
plans and processes; documentation with respect to any of the foregoing; and
any
other information of the party that the party informs the other party or its
Agents or the other party or its Agents should know, by virtue of said party’s
position or the circumstances in which said party learned such other
information, is to be kept confidential including, but not limited to, any
information acquired by the other party or its Agents from any sources prior
to
the commencement of this Agreement. Confidential Information also
includes similar information obtained by the party in confidence from its
vendors, licensors, licensees, customers and/or clients. Confidential
Information may or may notbe
labeled as confidential.
-27-
For
purposes of this Agreement, “Immediate Family” shall include the following: (A)
any spouse, parent, spouse of a parent, mother-in-law, father-in-law,
brother-in-law, sister-in-law, child, spouse of a child, adopted child, spouse
of an adopted child, sibling, spouse of a sibling, grandparent, spouse of a
grandparent, and any issue or spouse of any of the foregoing, and (B) such
child
or issue of such child which is born and/or adopted during or after the term
of
this Agreement and the issue (whether by blood or adoption) of such person;
provided, however, that it shall not include any person who was legally adopted
after attaining the age of eighteen (18) by any of the persons specified in
this
Paragraph “A” of this Article “12” of this Agreement or any spouse or issue
(whether by blood or adoption) of any such person. A parent of a
specified person shall include an affiliate.
B.
Except
as required in the performance of a party’s or its Agents’ obligations pursuant
to this Agreement, neither said party nor its Agents shall, during, or after
the
termination of, this Agreement, directly or indirectly, use any Confidential
Information or disseminate or disclose any Confidential Information to any
person, firm, corporation, association or other entity. Said Party or
its Agents shall take all reasonable measures to protect Confidential
Information from any accidental, unauthorized or premature use, disclosure
or
destruction. The foregoing prohibition shall not apply to any
Confidential Information which: (i) was generally available to the public prior
to such disclosure; (ii) becomes publicly available through no act or omission
of said party or its Agents (iii) is disclosed as reasonably required in a
proceeding to enforce said party’s rights under this Agreement
or (iv) is disclosed as required by court order or applicable law; provided,
however, that if said party and/or its Agents are legally requested or required
by court order or applicable law, including, but not limited to, by oral
question, interrogatories, request for information or documents, subpoenas,
civil investigative demand or similar process to disclose any Confidential
Information, said party and/or its Agents, as the case may be, shall promptly
notify the party of such request or requirement so that the party may seek
an
appropriate protective order; provided further, however; that if such protective
order is not obtained, said party and/or its Agents, as the case may be, agree
to furnish only that portion of the Confidential Information which they are
advised by their respective counsel is legally required.
-28-
C.
Upon
termination of this Agreement for any reason or at any time upon request of
a
party, the other party and its Agents agree to deliver to the requesting party
all materials of any nature which are in the other party’s or its Agents’
possession or control and which are or contain Confidential Information, or
which are otherwise the property of the requesting party or any vendor,
licensor, licensee, customer or client of the party, including, but not limited
to writings, designs, documents, records, data, memoranda, tapes and disks
containing software, computer source code listings, routines, file layouts,
record layouts, system design information, models, manuals, documentation and
notes. The other party and its Agents shall destroy all written
documentation prepared by them for internal purposes based in whole or in part
on any Confidential Information and such destruction shall be confirmed to
the
requesting party in writing by the other party and/or its Agents.
D.
Upon
the consummation of the transaction set forth in this Agreement, all of the
Confidential Information shall be deemed to be the property of
International.
-29-
13.
Survival
of Representations,
Warranties and Covenants. All covenants, agreements,
representations and warranties made in or in connection with this Agreement
shall survive the Closing Date hereof, and shall continue in full force and
effect, it being understood and agreed that each of such covenants, agreements,
representations and warranties is of the essence of this Agreement and the
same
shall be binding upon and shall inure to the benefit of the parties hereto,
and
their successors and assigns.
14.
Conditions
of
Closing.
A.
Conditions
to the Channel
shareholders’ Obligation to Close. The obligation of the
Channel shareholders to close the transactions set forth in this Agreement
shall
be subject to the following conditions:
i.
Representations
and
Warranties of International and the International Shareholders to be
True. To International and the International Shareholders’
knowledge, the representations and warranties of International and International
Shareholders set forth in this Agreement shall be true in all material respects
on the Closing Date with the same effect as though made at such time, except
to
the extent waived or affected by the transactions set forth in this Agreement;
and International shall have delivered to the Channel shareholders a certificate
ofInternational
(the “International Certificate”) in the form annexed to, and made a part of,
this Agreement as Exhibit “R” (Article “14Ai”), signed by the President of
International dated the Closing Date to such effect;
-30-
ii.
Performance
of Obligations
of International. International shall have performed all
obligations and complied with all covenants set forth in this Agreement to
be
performed or complied with in all material respects by it prior to the Closing
Date, and International shall have delivered to the Channel shareholders the
International Certificate signed by the President of International and dated
the
Closing Date to such effect;
iii.
No Adverse
Change. There shall not have occurred any material adverse
change since the date of this Agreement and through the date of the Closing
Date
in the business, properties, results of operations or business or financial
condition of International, and International shall have delivered to the
Channel shareholders the International Certificate signed by the President
of
International and dated the Closing Date to such effect;
iv.
Statutory
Requirements. Any statutory requirement for the valid
consummation by International of the transactions set forth in this Agreement
shall have been fulfilled; any authorizations, consents and approvals of all
federal, state and local governmental agencies and authorities required to
be
obtained, in order to permit consummation by International of the transactions
set forth in this Agreement and to permit the business presently carried on
by
International to continue unimpaired following the Closing Date, shall have
been
obtained, andInternational
shall have delivered to the Channel shareholders the International Certificate
signed by the President of International and dated the Closing Date to such
effect;
-31-
v.
No
Governmental
Proceedings. No action or proceeding shall have been
instituted before a court or other governmental body by any governmental agency
or public authority to restrain or prohibit the transactions set forth in this
Agreement and International shall have delivered to the Channel shareholders
the
International Certificate signed by the President of International and dated
the
Closing Date to such effect;
vi.
Consents
Under
Agreements. International shall have obtained the consent or
approval of each person whose consent or approval shall be required in
connection with the transactions set forth in this Agreement and International
shall have delivered to the Channel shareholders the International Certificate
signed by the President of International and dated the Closing Date to such
effect;
vii.
Good Standing
Certificate. On the Closing Date, International shall provide
the Channel shareholders with a good standing certificate for International
issued by the Secretary of State of the State of Delaware, which certificate
is
complete and correct as of a date within thirty (30) days prior to the Closing
Date;
viii.
Shareholder
Approval. As soon as it practicable subsequent to the
execution of this Agreement, the shareholders of International approve this
Agreement and its related transactions
in accordance with the applicable provisions of the Delaware Corporations Code,
and International shall have delivered to the Channel shareholders a consent
of
the shareholders of International in the form annexed to, and made a part of,
this Agreement as Exhibit “P” (Article “7C”); and
-32-
ix.
Directors
and
Officers. The Board of Directors of International shall have
appointed so designated by Channel pursuant to Paragraph “A” of Article “4” of
this Agreement, and the directors and officers of International serving
immediately prior to the Closing Date shall have resigned pursuant to Paragraphs
“A” and “B” of Article “4” of this Agreement, respectively; provided however,
that Xxxxx X. Xxxxx shall remain a member of the Board of Directors for a period
of six month subsequent to Closing, and thereafter upon the discretion of
Channel and Channel’s shareholders.
x.
No
Liabilities. International shall have no liabilities,
contractual or other obligations, or business activities, all of which shall
have been satisfied, resolved or transferred except those which have
been set forth on the Form 10-QSB, those liabilities set forth in Paragraph
“A”
of Article “4” or set forth on the International Disclosure Schedule prior to
the Closing without any recourse or liability to International.
B.
Conditions
to
International’s Obligation to Close. The obligation of
International to close the transactions set forth in this Agreement shall be
subject to the following conditions:
-33-
i.
Representations
and
Warranties of Channel and the Channel shareholders to be
True. To Channel and the Channel shareholders’ knowledge, the
representations and warranties of Channel and the Channel shareholders set
forth
in this Agreement shall be true in all material respects on the Closing Date
with the same effect as though made at such time, except to the extent waived
or
affected by the transactions set forth in this Agreement; and the Channel
shareholders shall have delivered to International a certificate of Channel
(the
“Channel Certificate”) in the form annexed hereto and made a part hereof as
Exhibit “S” (Article “14Bi”), signed by the President of Channel and all of the
Channel shareholders and dated the Closing Date to such effect;
ii.
Performance
of Obligations
of Channel and the Channel shareholders. Channel and each of
the Channel shareholders shall have performed all obligations and complied
with
all covenants set forth in this Agreement to be performed or complied with
in
all material respects by him or it prior to the Closing Date, and the Channel
shareholders shall have delivered to International the Channel Certificate
signed by the President of Channel and all of the Channel shareholders and
dated
the Closing Date to such effect;
iii.
No Adverse
Change. There shall not have occurred any material adverse
change through the date of the Closing Date in the business, properties, results
of operations or business or financial condition of Channel, and Channel shall
have delivered to International the Channel Certificate signed by the President
of Channel and all of the Channel shareholders and dated the Closing Date to
such effect;
-34-
iv.
Statutory
Requirements. Any statutory requirement for the valid
consummation by Channel and the Channel shareholders of the transactions set
forth in this Agreement shall have been fulfilled; any authorizations, consents
and approvals of all federal, state and local governmental agencies and
authorities required to be obtained, in order to permit consummation by Channel
and the Channel shareholders of the transactions set forth in this Agreement
and
to permit the business presently carried on by Channel to continue unimpaired
following the Closing Date, shall have been obtained, and the Channel
shareholders shall have delivered to International the Channel Certificate
signed by the President of Channel and all of the Channel shareholders and
dated
the Closing Date to such effect;
v.
No
Governmental
Proceedings. No action or proceeding shall have been
instituted before a court or other governmental body by any governmental agency
or public authority to restrain or prohibit the transactions set forth in this
Agreement, and the Channel shareholders shall have delivered to International
the Channel Certificate signed by the President of Channel and all of the
Channel shareholders and dated the Closing Date to such effect;
vi.
Consents
Under
Agreements. The Channel shareholders shall have obtained the
consent or approval of each person whose consent or approval shall be required
in connection with the transactions set forth in this Agreement, and the Channel
shareholders shall have delivered to International the Channel Certificate
signed by the President of Channel and all of the Channel shareholders and
dated
the Closing Date to such effect; and
-35-
vii.
Shareholder
Approval. The Channel shareholders shall have approved this
Agreement and its related transactions pursuant to the applicable provisions
of
the Texas Business Corporation Act, and the Channel shareholders shall have
delivered to International a consent of the Channel shareholders in the form
annexed to, and made a part of, this Agreement as Exhibit “H” (Article
“6B”).
viii.
Good Standing
Certificate. On the Closing Date, the Channel shareholders
shall provide International with a status certificate for Channel issued by
the
Secretary of State of the State of Texas, which certificate is complete and
correct as of a date within thirty (30) days prior to the Closing
Date;
x.
Shareholder
Designation. The Channel shareholders irrevocably constitute and appoint
Xxxxx Xxxxxx with full power of substitution and re-substitution, as its and
their true and lawful agent, attorney-in-fact and representative, with full
power to act for and on behalf of the Shareholders, and each of them, for all
purposes pursuant to this Agreement and in connection with the transactions
therein as set forth in the form annexed to, and made a part of, this Agreement
as Exhibit “W”.
15.
Documents,
Certificates,
etc. to be Delivered at Closing.
A.
At the
Closing, International shall deliver the following items to the Channel
shareholders:
-36-
i.
the
International Certificate (as defined in Subparagraph “i” of Paragraph “A” of
Article “14” of this Agreement), signed by the President of International, in
the form annexed to, and made a part of, this Agreement as Exhibit “R” (Article
“14Ai”);
ii.
stock
certificates evidencing the Closing Issuance, as defined in the
second “WHEREAS” clause of this Agreement;
iii.
a
good standing certificate of International, dated within thirty (30) days prior
to the Closing Date;
iv.
a
consent of the shareholders of International, in the form annexed to, and made
a
part of, this Agreement as Exhibit “P” (Article “7C”).
B.
At the
Closing, the Channel shareholders shall deliver the following items to
International:
i.
the
Channel Certificate, as defined in Subparagraph “i” of Paragraph “B” of Article
“14” of this Agreement, signed by the President of Channel, in the form annexed
to, and made a part of, this Agreement as Exhibit “S” (Article
“14Bi”);
-37-
ii.
a
single stock certificate evidencing all of the issued and outstanding shares
of
Channel
Common Stock; and
iii.
a
consent of the Channel shareholders, in the form annexed to, and made a part
of,
this Agreement as Exhibit “H” (Article “6B”).
iv.
a
good standing certificate of Channel, dated within thirty (30) days prior to
the
Closing Date.
16.
Equitable
Relief.
A.
International acknowledges that the Channel shareholders shall be irreparably
damaged if this Agreement is not consummated. Therefore, in the event
of any breach by International of this Agreement, any of the Channel
shareholders shall have the right, at his or its election, to obtain equitable
relief including, but not limited to, an order for specific performance of
this
Agreement or an injunction, without the need to: (i) post a bond or other
security, (ii) to prove any actual damage or (iii) to prove that money damages
would not provide an adequate remedy. Resort to such equitable
relief, however, shall not be construed to be a waiver of any other rights
or
remedies which any of the Channel shareholders may have for damages or
otherwise.
B.
Each
of the Channel shareholders acknowledges that International shall be irreparably
damaged if this Agreement is not consummated. Therefore, in the event
of any breach byChannel
or any of the Channel shareholders of this Agreement, International shall have
the right, at its election, to obtain equitable relief including, but not
limited to, an order for specific performance of this Agreement or an
injunction, without the need to: (i) post a bond or other security, (ii) to
prove any actual damage or (iii) to prove that money damages would not provide
an adequate remedy. Resort to such equitable relief, however, shall
not be construed to be a waiver of any other rights or remedies which
International may have for damages or otherwise.
-38-
17.
Method
of
Termination. This Agreement may be terminated prior to the
Closing Date, by any of the following methods:
A.
by
mutual written consent of International and all of the Channel shareholders,
authorized by the Boards of Directors of each of International and
Channel;
B.
by
written notice from (i) International to all of the Channel shareholders, or
(ii) all of the Channel shareholders to International, if within ten (10)
business days after receipt of such written notice that the Closing Date has
passed, the Closing has not occurred; provided, however, that if
the Closing shall not have occurred on, or prior to, the Closing Date as a
result of any action taken, or failure to act, by any governmental or regulatory
authority including, but not limited to, the withholding of, or a delay in,
any
approval in connection with any aspect of the transactions contemplated hereby,
then the Closing Date shall automatically be extended until a date which is
a
reasonable time subsequent to the date upon which such governmental or
regulatory action is resolved which will allow the parties to complete the
procedures required to consummate the transactions
contemplated hereby; provided,
further, however, that the right to terminate this Agreement pursuant to
this Paragraph “B” of this Article “17” of this Agreement shall not be available
to any party whose failure to fulfill any obligation pursuant to this Agreement
has been the cause of or resulted in the failure of the Closing to occur on
or
before such date;
-39-
C.
by
International if there is a material breach of any representation or warranty
set forth in Article “6” of this Agreement or by any Channel Shareholder in
Article “8” of this Agreement or any covenant or agreement to be complied with
or performed by Channel or any of the Channel shareholders pursuant to the
terms
of this Agreement, including, but not limited to, the covenants set forth in
Article “9” of this Agreement, or the failure of a condition set forth in
Paragraph “B” of Article “14” of this Agreement to be satisfied (and such
condition is not waived in writing by International) on or prior to the Closing
Date, or the occurrence of any event which results in the failure of a condition
set forth in Paragraph “B” of Article “14” of this Agreement to be satisfied on
or prior to the Closing Date; provided however, that,
International may not terminate this Agreement prior to the Closing
Date
if Channel or any of the Channel shareholders, as the case may be, has not
had
an adequate opportunity to cure such failure, pursuant to Article “19” of this
Agreement; or
D.
by the
mutual written consent of all of the Channel shareholders if there is a material
breach of any representation or warranty set forth in Article “7” of this
Agreement or any covenant or agreement to be complied with or performed by
International, including, but not limited to, the covenants set forth in Article
“9” of this Agreement, or the failure of a condition set forth
in Paragraph
“A” of Article “14” of this Agreement to be satisfied (and such condition is not
waived in writing by Channel) on or prior to the Closing Date, or the occurrence
of any event which results in the failure of a condition set forth in Paragraph
“A” of Article “14” of this Agreement to be satisfied on or prior to the Closing
Date; provided however, that,
the Channel shareholders may not terminate this Agreement by mutual
written consent prior to the Closing Date if International has not had an
adequate opportunity to cure such failure pursuant to Article “19” of this
Agreement.
-40-
18.
Effect
of
Termination. If this Agreement is terminated pursuant to the
provisions set forth in Article “17” of this Agreement, this Agreement shall
become null and void and shall have no further effect.
19.
Cooperation;
Notice;
Cure. Subject to compliance with applicable law, from the date
of this Agreement until the Closing Date, each of the parties shall confer
on a
regular and frequent basis with one or more representatives of the other parties
to report on the general status of ongoing operations. Channel or the
Channel shareholders, as the case may be, shall promptly provide International
or its counsel with copies of any filings any of them made with any governmental
entity in connection with this Agreement and the transactions contemplated
hereby and thereby. Each of the
parties shall notify the others of, and will use all commercially reasonable
efforts to cure before the Closing Date, any event, transaction or circumstance,
as soon as practical after it becomes known to such party, that causes or will
cause any covenant or agreement of the parties pursuant to this Agreement to
be
breached or that renders or will render untrue any representation or warranty
of
the parties
contained in this Agreement. Each of the parties shall also notify
the others in writing of, and will use all commercially reasonable efforts
to
cure, before the Closing Date, any violation or breach, as soon as practical
after it becomes known to such party, of any representation, warranty, covenant
or agreement made by the parties. No notice given pursuant to this
paragraph shall have any effect on the representations, warranties, covenants
or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein.
-41-
20.
Indemnification.
A.
Indemnification
by
International. In order to induce Channel and the
Channel shareholders to enter into and perform this Agreement, International
does hereby indemnify, protect, defend and save and hold harmless Channel and
each of the Channel shareholders and each of their Agents (the "Indemnified
Parties"), from and against any loss resulting to any of them from any material
loss, liability, cost, damage, or expense which the Indemnified Parties may
suffer, sustain or incur arising out of or due to a breach by International
of
the representations, warranties and covenants set forth in Article “7” of this
Agreement or in any documents delivered pursuant hereto or of a breach by
International of any of its obligations pursuant to this Agreement or in any
documents delivered pursuant hereto.
B.
Indemnification
by the
Channel shareholders. In order to induce International to
enter into and perform this Agreement, each of the Channel shareholders hereby
jointly indemnifies, protects, defends and saves and holds harmless
International and each of its Agents (the "Indemnified Parties"),
from and against any loss resulting to any of them from any material loss,
liability, cost, damage, or expense which the Indemnified Parties may suffer,
sustain or incur arising out of or due to a breach by Channel or such Channel
Shareholder of the representations, warranties and covenants set forth in
Article “6” of this Agreement or in any documents delivered pursuant hereto or
of a breach by Channel or such Channel Shareholder of any of his or its
obligations pursuant to this Agreement or in any documents delivered pursuant
hereto.
-42-
C.
Reasonable
Costs,
Etc. The indemnification, which is set forth in this Article
“20” of this Agreement shall be deemed to include not only the specific
liabilities or obligation with respect to which such indemnity is provided,
but
also all counsel fees, reasonable costs, expenses and expenses of settlement
relating thereto, whether or not any such liability or obligation shall have
been reduced to judgment.
D.
Third
Party
Claims. If any demand, claim, action or cause of action, suit,
proceeding or investigation (collectively, the “Claim”) is brought against an
Indemnified Party for which the Indemnified Party intends to seek indemnity
from
the other party hereto (the "Indemnifying Party"), then the Indemnified Party
within twenty-one (21) days after such Indemnified Party's receipt of the Claim,
shall notify the Indemnifying Party pursuant to Paragraph “C” of Article “21” of
this Agreement which notice shall contain a reasonably thorough description
of
the nature and amount of the Claim (the "Claim Notice"). The
Indemnifying Party shall have the option to undertake, conduct and control
the
defense of such claim or demand. Such option to undertake, conduct
and control the defense of such claim or demand shall be exercised by
notifyingthe
Indemnified Party within ten (10) days after receipt of the Claim Notice
pursuant to Paragraph “C” of Article “21” of this Agreement (such notice to
control the defense is hereinafter referred to as the “Defense
Notice”). The failure of the Indemnified Party to notify the
Indemnifying Party of the Claim shall not relieve the Indemnifying Party from
any liability which the Indemnifying Party may have pursuant to this Article
“20” of this Agreement except to the extent that such failure to notify the
Indemnifying Party prejudices the Indemnifying Party. The Indemnified
Party shall use all reasonable efforts to assist the Indemnifying Party in
the
vigorous defense of the Claim. All costs and expenses incurred by the
Indemnified Party in defending the Claim shall be paid by the Indemnifying
Party. If, however, the Indemnified Party desires to participate in
any such defense or settlement, it may do so at its sole cost and expense (it
being understood that the Indemnifying Party shall be entitled to control the
defense). The Indemnified Party shall not settle the
Claim. If the Indemnifying Party does not elect to control the
defense of the Claim, within the aforesaid ten (10) day period by proper notice
pursuant to Paragraph “C” of Article “21” of this Agreement, then the
Indemnified Party shall be entitled to undertake, conduct and control the
defense of the Claim (a failure by the Indemnifying Party to send the Defense
Notice to the Indemnified Party within the aforesaid ten (10) day period by
proper notice pursuant to Paragraph “C” of Article “21” of this Agreement shall
be deemed to be an election by the Indemnifying Party not to control the defense
of the Claim); provided, however, that the Indemnifying Party shall be entitled,
if it so desires, to participate therein (it being understood that in such
circumstances, the Indemnified Party shall be entitled to control the
defense). Regardless of which party has undertaken to defend any
claim, the Indemnifying Party may, without the prior written consent of the
Indemnified Party, settle, compromise or offer to settle or compromise any
such
claim or demand; provided however, that ifany
settlement would result in the imposition of a consent order, injunction or
decree which would restrict the future activity or conduct of the Indemnified
Party, the consent of the Indemnified Party shall be a condition to any such
settlement. Notwithstanding the foregoing provisions of this Article
“20” of this Agreement, as a condition to the Indemnifying Party either having
the right to defend the Claim, or having control over settlement as indicated
in
this Article “20” of this Agreement, the Indemnifying Party shall execute an
agreement, in the form annexed hereto and made a part hereof as Exhibit “T”
(Article “20D”), acknowledging its liability for indemnification pursuant to
this Article “20” of this Agreement. Whether the Indemnifying Party
shall control and assume the defense of the Claim or only participate in the
defense or settlement of the Claim, the Indemnified Party shall give the
Indemnifying Party and its counsel access, during normal business hours, to
all
relevant business records and other documents, and shall permit them to consult
with its employees and counsel.
-43-
21.
Miscellaneous.
A.
Headings. Headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
B.
Enforceability. If
any provision which is contained in this Agreement, should, for any reason,
be
held to be invalid or unenforceable in any respect under the laws of any State
of the United States, such invalidity or unenforceability shall not affect
any
other provision of this Agreement and in this Agreement shall be construed
as if
such invalid or unenforceable provisionhad
not
been contained herein.
-44-
C.
Notices. Any
notice or other communication required or permitted hereunder shall be
sufficiently given if sent by (i) mail by (a) certified mail, postage prepaid,
return receipt requested and (b) first class mail, (ii) overnight delivery
with
confirmation of delivery or (iii) facsimile transmission with an original mailed
by first class mail, postage prepaid, addressed as follows:
|
If
to Channel:
|
ART
CHANNEL INC.
|
|
00000
Xxxxxx Xxxx 000,
|
|
|
Xxxx
Xxxxx, Xxxxx, 00000
|
|
|
Attention:
Xxxxx Xxxxxx, CEO
|
|
|
Facsimile
No.: (000) 000-0000
|
|
|
with
a copy to:
|
Xxxxx
& Fraade, P.C.
|
|
000
Xxxxxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Attention:
Xxxxxxxxx X. Xxxxx, Esq.
|
|
|
Facsimile
No.: (000) 000-0000
|
|
|
If
to International:
|
ARTFEST
INTERNATIONAL, INC.
|
|
00000
Xxxxx Xxxxxxxxx Xxxxxxx
|
|
|
Xxxxx
000
|
|
|
Xxxxxxx
Xxxxx, XX 00000
|
|
|
Attention:
Xxxxx Xxxxx
|
|
|
Facsimile
No.: _____________
|
-45-
|
with
a copy to:
|
________________________
|
|
________________________
|
|
|
________________________
|
|
|
Attention:
_______________
|
|
|
Facsimile
No.: _____________
|
|
|
If
to any of the Channel Shareholders:
|
To
the address set forth for said party on Exhibit “A”.
|
|
with
a copy to:
|
Xxxxx
& Fraade, P.C.
|
|
000
Xxxxxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Attention:
Xxxxxxxxx X. Xxxxx, Esq.
|
|
|
Facsimile
No.: (000) 000-0000
|
or
in
each case to such other address and facsimile number as shall have last been
furnished by like notice. If all of the methods of notice set forth
in this Paragraph “C” of this Article “21” of this Agreement are impossible for
any reason, notice shall be in writing and personally delivered to
theaforesaid
addresses. Each notice or communication shall be deemed to have been
given as of the date so mailed or delivered as the case may be; provided,
however, that any notice sent by facsimile shall be deemed to have been given
as
of the date so sent if a copy thereof is also mailed by first class mail on
the
date sent by facsimile. If the date of mailing is not the same as the
date of sending by facsimile, then the date of mailing by first class mail
shall
be deemed to be the date upon which notice is given; provided further, however,
that any notice sent by overnight delivery shall be deemed to have been given
as
of the date of delivery.
-46-
D.
Governing
Law;
Disputes. This Agreement shall in accordance with Section
5-1401 of the General Obligations Law of New York in all respects be construed,
governed, applied and enforced under the internal laws of the State of New
York
without giving effect to the principles of conflicts of laws and be deemed
to be
an agreement entered into in the State of New York and made pursuant to the
laws
of the State of New York. The parties agree that they shall be deemed
to have agreed to binding arbitration with respect to the entire subject matter
of any and all disputes relating to or arising under this Agreement including,
but not limited to, the specific matters or disputes as to which arbitration
has
been expressly provided for by other provisions of this Agreement and that
any
such arbitration shall be commenced exclusively in New York, New
York. Any such arbitration shall be by a panel of three arbitrators
and pursuant to the commercial rules then existing of the American Arbitration
Association in the State of New York, County of New York. In all
arbitrations, judgment upon the arbitration award may be entered in any court
having jurisdiction. The parties specifically designate the courts in
the City of New York, State of New York as properly having jurisdiction for
any
proceeding to confirm and enter judgment upon any such arbitration award. The
parties hereby consent to and submit to the exclusive jurisdiction of the courts
of the State of New York in any action or proceeding and submit to personal
jurisdiction over each of them by such courts. The parties hereby
waive personal service of any and all process and specifically consent that
in
any such action or proceeding brought in the courts of the State of New York,
any service of process may be effectuated upon any of them by certified mail,
return receipt requested, in accordance with Paragraph “C” of this Article “21”
of this Agreement. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by
law.
-47-
The
parties agree, further, that the prevailing party in any such arbitration as
determined by the arbitrators shall be entitled to such costs and attorney's
fees, if any, in connection with such arbitration as may be awarded by the
arbitrators. In connection with the arbitrators’ determination for
the purpose of which party, if any, is the prevailing party, they shall take
into account all of the factors and circumstances including, without limitation,
the relief sought, and by whom, and the relief, if any, awarded, and to
whom. In addition, and notwithstanding the foregoing sentence, a
party shall not be deemed to be the prevailing party in a claim seeking monetary
damages, unless the amount of the arbitration award exceeds the amount offered
in a legally binding writing by the other party by fifteen percent (15%) or
more. For example, if the party initiating arbitration (“A”) seeks an
award of $100,000 plus costs and expenses, the other party (“B”) has offered A
$50,000 in a legally binding written offer prior to the commencement of the
arbitration proceeding, and the arbitration panel awards any amount less than
$57,500 to A, the panel should determine that B has “prevailed”.
The
arbitration panel shall have no power to award non-monetary or equitable relief
of any sort. It shall also have no power to award (i) damages
inconsistent with any applicable agreement between the parties or (ii) punitive
damages or any other damages not measured by the prevailing party’s actual
damages; and the parties expressly waive their right to obtain such damages
in
arbitration or in any other forum. In no event, even if any other
portion of these provisions is held invalid or unenforceable, shall the
arbitration panel have power to make an award or impose a remedy which could
not
be made or imposed by a court deciding the matter in the same
jurisdiction.
-48-
Discovery
shall be permitted in connection with the arbitration only to the extent, if
any, expressly authorized by the arbitration panel upon a showing of substantial
need by the party seeking discovery.
All
aspects of the arbitration shall be treated as confidential. The
parties and the arbitration panel may disclose the existence, content or results
of the arbitration only as provided in the rules of the American Arbitration
Association in New York, New York. Before making any such disclosure,
a party shall give written notice to all other parties and shall afford such
parties a reasonable opportunity to protect their interest.
E.
Expenses. Each
party to this Agreement shall bear and pay its own costs and expenses incurred
in connection with the execution and delivery of this Agreement and the
transactions set forth in this Agreement. International shall bear
all legal fees and expenses withrespect
to the preparation of this Agreement, and the preparation and filing of the
Offering as set forth in Subparagraph “xii” of Paragraph “A” of Article “14” of
this Agreement.
-49-
F.
Construction. Each
of the parties hereto hereby further acknowledges and agrees that (i) each
has
been advised by counsel during the course of negotiations and (ii) each counsel
has had significant input in the development of this Agreement and (iii) this
Agreement shall not, therefore, be construed more strictly against any party
responsible for its drafting regardless of any presumption or rule requiring
construction against the party whose attorney drafted this
Agreement.
G.
Entire
Agreement. This Agreement and all documents and instruments
referred to herein (a) constitute the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof, and (b) are not intended
to
confer upon any person other than the parties hereto any rights or remedies
hereunder. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, none makes any
other
representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers, directors,
employees, agents, financial and legal advisors or other representatives, with
respect to the execution and delivery of this Agreement or the transactions
contemplated hereby, notwithstanding the delivery or disclosure to the other
or
the other's representatives of any documentation or other information with
respect to any one or more of the foregoing.
H.
Further
Assurances. The parties agree to execute any and all such
other furtherinstruments
and documents, and to take any and all such further actions which are reasonably
required to effectuate this Agreement and the intents and purposes
hereof.
-50-
I.
Binding
Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
personal representatives, successors and assigns.
J.
Non-Waiver. Except
as otherwise expressly provided herein, no waiver of any covenant, condition,
or
provision of this Agreement shall be deemed to have been made unless expressly
in writing and signed by the party against whom such waiver is charged; and
(i)
the failure of any party to insist in any one or more cases upon the performance
of any of the provisions, covenants or conditions of this Agreement or to
exercise any option herein contained shall not be construed as a waiver or
relinquishment for the future of any such provisions, covenants or conditions,
(ii) the acceptance of performance of anything required by this Agreement to
be
performed with knowledge of the breach or failure of a covenant, condition
or
provision hereof shall not be deemed a waiver of such breach or failure and
(iii) no waiver by any party of one breach by another party shall be construed
as a waiver of any other or subsequent breach.
K.
Counterparts. This
Agreement may be executed simultaneously in one or more counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
L.
Facsimile
Signatures. Any signature which is delivered via facsimile
shall be deemed to be an original and have the same force and effect as if
such
facsimile signature were the original thereof.
-51-
M.
Modifications. This
Agreement may not be changed, modified, extended, terminated or discharged
orally, except by a written agreement specifically referring to this Agreement
which is signed by all of the parties to this Agreement.
N.
Exhibits. All
Exhibits annexed or attached to this Agreement are incorporated into this
Agreement by reference thereto and constitute an integral part of this
Agreement.
O.
Severability. The
provisions of this Agreement shall be deemed separable. Therefore, if
any part of this Agreement is rendered void, invalid or unenforceable, such
rendering shall not affect the validity or enforceability of the remainder
of
this Agreement; provided, however, that if the part or parts which are void,
invalid or unenforceable as aforesaid shall substantially impair the value
of
this whole Agreement to any party, that party may cancel and terminate this
Agreement by giving written notice to the other party.
-52-
IN
WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the date first
above written.
|
ART
CHANNEL INC.
|
|
|
By:
Xxxxx
Xxxxxx
|
|
|
Name:
Xxxxx Xxxxxx
|
|
|
Title: Chairman,
President and CEO
|
|
|
(ART
CHANNEL INC. agrees to be bound by Articles “6”, “9”, “11” through “15”
and “17” through “21” of this Agreement)
|
|
|
ARTFEST
INTERNATIONAL, INC.
|
|
|
By:
Xxxxx
Xxxxx
|
|
|
Name:
Xxxxx Xxxxx
|
|
|
Title:
|
|
|
INTERNATIONAL
SHAREHOLDERS
|
|
|
Xxxxx
Xxxxx
|
|
|
Name: Xxxxx
Xxxxx
|
|
|
Shares:
|
-53-
Exhibit
List
|
Exhibit
A
|
International
Shareholders Parties to this Agreement (Article
“Heading”)
|
|
Exhibit
B
|
Channel
shareholders Parties to this Agreement (Article
“Heading”)
|
|
Exhibit
C
|
Voting
Agreement
|
|
Exhibit
D
|
Channel
Certificate of Incorporation (Article “6Aii”)
|
|
Exhibit
E
|
Channel
By-Laws (Article “6Aii”)
|
|
Exhibit
F
|
Channel
Good Standing Certificate (Article “6Aii”)
|
|
Exhibit
G
|
Resolution
of Board of Directors of Channel (Article “6B”)
|
|
Exhibit
H
|
Unanimous
Resolution of the Channel shareholders (Article “6B”)
|
|
Exhibit
I
|
List
of Shareholders of Channel (Article “6C”)
|
|
Exhibit
J
|
Channel
Disclosure Schedule (Article “6J”)
|
|
Exhibit
K
|
International
Certificate of Incorporation (Article “7Aii”)
|
|
Exhibit
L
|
International
By-Laws (Article “7Aii”)
|
|
Exhibit
M
|
International
Good Standing Certificate (Article “7Aii”)
|
|
Exhibit
N
|
International
Disclosure Schedule (Article “7B”)
|
|
Exhibit
O
|
Resolution
of Board of Directors of International (Article “7C”)
|
|
Exhibit
P
|
Resolution
of Shareholders of International (Article “7C”)
|
|
Exhibit
Q
|
List
of Shareholders of International (Article “7D”)
|
|
Exhibit
R
|
International
Certificate (Article “14Ai”)
|
|
Exhibit
S
|
Channel
Certificate (Article “14Bi”)
|
|
Exhibit
T
|
Indemnification
Letter Agreement (Article “20D”)
|
|
Exhibit
W
|
Shareholder
Designation (Article “14Bx”)
|
-54-
EXHIBIT
A
INTERNATIONAL
SHAREHOLDERS PARTIES TO THIS AGREEMENT
|
Name
&
Address
|
Shares
Held
|
|
Xxxxx
Xxxxx
|
1,000,000
|
|
17
Via Xxxxxxxx
|
3.542%
|
|
Xxxxxx
Xxxxx, XX 00000
|
|
| Ditto Family Trust | 2,000,000 |
| 00000 Xxxxx Xxxxxx | 0.000% |
| Xxxxxxx Xxxxx, XX 00000 |
*
Additional shareholders to be added at a later date.
A-1
EXHIBIT
B
CHANNEL
SHAREHOLDERS PARTIES TO THIS AGREEMENT
Deleted
from SEC filing due to the confidential nature of the
information.
B-1
DRAFT
(Subject to Execution)
EXHIBIT
C
STOCKHOLDER
AGREEMENT
AGREEMENT
made as of the 28th day of December, 2007, by and among Artfest International,
Inc., a Delaware corporation with an office located at 00000 Xxxxx Xxxxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx, 00000 (”International”), Xx.
Xxxxx X. Xxxxx with an address at 00000 Xxxxx Xxxxxxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx, 00000 (the “Stockholder”), and Art
Channel, Inc., a Texas corporation with an address at 00000 Xxxxxx Xxxx
000,
Xxxx Xxxxx, Xxxxx, 00000 (“Channel”).
WHEREAS,
International and Channel have entered into the Acquisition Agreement dated
December 26, 2007 (the “Acquisition Agreement”), whereby International shall
acquire one hundred (100%) of the issued and outstanding shares of Channel,
and
accordingly Channel shall become a wholly owned subsidiary of
International;
WHEREAS,
the Stockholder owns or controls an aggregate of three million (3,000,000)
shares of International common stock.
WHEREAS,
on the Closing Date of the Acquisition Agreement, International shall issue
eight million (8,000,000) shares of common stock to the Channel Stockholders
(the “Closing Issuance”) as partial consideration for one hundred (100%) of the
issued and outstanding shares of Channel;
WHEREAS,
International has agreed to issue an additional twenty million (20,000,000)
shares of common stock to the Channel Stockholders as set forth on Exhibit
“A”,
which is annexed hereto and made a part hereof, (the “Additional
Shares”), however as of the date of closing, International does not have
sufficient number of authorized shares of common stock to do so;
WHEREAS,
International has agreed that as soon as is practicable after the Closing
of the
Acquisition Agreement, International shall amend its Certificate of
Incorporation to increase its authorized shares to one hundred million
(100,000,000) shares of common stock and two million (2,000,000) shares
of
preferred stock (the “Amendment”);
WHEREAS,
International, pursuant to Delaware law, requires the approval of stockholder(s)
owing a majority of its issued and outstanding common stock to implement
the
Amendment.
C-1
WHEREAS;
as soon as is practicable after the Amendment is filed with the Delaware
Secretary of State, International shall issue the Additional Shares on a
pro-rata basis to the Channel Shareholders, listed on Exhibit “B’, which is
annexed hereto and made part hereof;
WHEREAS;
after the Closing of the Acquisition Agreement but prior to the issuance
of the
Additional Shares, the Stockholder, together with certain other stockholders
of
International, agree to provide to the Channel Shareholders such number of
additional votes which shall be equal to the percentage ownership of shares
which the Channel Shareholders would have received if they had received the
Additional Shares at Closing; and
WHEREAS,
as a material inducement to International and Channel entering into the
Acquisition Agreement, the Stockholder has agreed to enter into this Agreement
and abide by the covenants and obligations with respect to the shares of
International.
NOW
THEREFORE, in consideration of the mutual covenants of the parties which
are
hereinafter set forth and for other good and valuable consideration, receipt
of
which is hereby acknowledged,
IT
IS
AGREED:
1. Recitals. The
parties hereby adopt as part of this Agreement each of the recitals which
is set
forth above in the WHEREAS clauses, and agree that such recitals shall be
binding upon the parties hereto by way of contract and not merely by way
of
recital or inducement and such WHEREAS clauses are hereby confirmed and ratified
as being accurate by each party as to itself.
2. Stockholder
Voting. The Stockholder hereby agrees to vote his shares of
International as follows:
A. to
consent to the Amendment as soon as is practicable;
B. to
consent to the Additional Shares; and
C. Until
the Additional Shares are issued, in all circumstances in which the Board
of
Directors of International seeks approval of its stockholders either voluntarily
or by requirement of law, the Stockholder, together with certain other
stockholders of International, shall deliver to the Channel shareholders
proxies
on a pro-rata basis based upon the number of shares each of Channel Shareholders
owned as of the Closing Date such that the Channel
Shareholders shall have the right to vote an aggregate of additional thirty
four
and two-thirds (34⅔%) percent of the total issued and outstanding shares of
International.
C-2
3. Representations
of the Stockholder. The Stockholder hereby represents, warrants
and covenants the following:
(A) The
Stockholder shall not (i) sell or otherwise transfer any shares of Stock,
beneficial ownership thereof or any other interest therein to any person
or
entity pursuant to a private transaction pursuant to the Securities Act of
1933,
as amended, unless said person(s) or entity agrees to be bound by the terms
of
this Agreement, (ii)
enter
into any agreement, arrangement or understanding with any person or entity,
or
take any other action that violates or conflicts with or would reasonably
be
expected to violate or conflict with, or result in or give rise to a violation
of or conflict with, such Stockholder’s representations, warranties, covenants
and obligations pursuant to this Agreement, or (iii) take any action that
could
restrict or otherwise affect such Stockholder’s legal power, authority and right
to comply with and perform its covenants and obligations under this
Agreement. Any transfer of any Stock or interests in violation of
this Paragraph “C” of this Article “3” of this Agreement shall be
void.
(B) Except
for this Agreement, the Stockholder (i) has not entered into, and shall not
enter into at any time while this Agreement remains in effect, any voting
agreement or voting trust with respect to his, her or its shares of
International, (ii) has not granted, and shall not grant at any time while
this
Agreement remains in effect, a proxy (except as set forth in this Agreement),
consent or power of attorney with respect to his, her or its shares of
International and (iii) has not taken and shall not knowingly take any action
that would make any representation or warranty of the Stockholder contained
herein untrue or incorrect or have the effect of preventing or disabling
the
Stockholder from performing any of his obligations pursuant to this
Agreement.
(C) This
Agreement has been duly executed and delivered by the Stockholder and, assuming
this Agreement constitutes a valid and binding obligation of the other parties
hereto, constitutes a legal, valid and binding agreement of the Stockholder,
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
of
general applicability relating to or affecting creditors’ rights and to general
equitable principles.
(D) No
consent, approval, order or authorization of, or registration, declaration
or
filing with, any governmental authority is necessary to be obtained or made
by
the Stockholder in connection with the Stockholder’s execution, delivery and
performance of this Agreement or the consummation by the Stockholder of the
transactions contemplated hereby, except for (i) the applicable requirements
of
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as
amended, and state securities and “blue sky” laws, and (ii) such other consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, any governmental authority where the failure to obtain or take
such action, individually or in the aggregate, would not reasonably be expected
to impair the ability of the Stockholder to perform its obligations hereunder
on
a timely basis.
C-3
(E) There
is no action pending and no order of any governmental authority outstanding
nor,
to the knowledge of the Stockholder, is any such action or order threatened,
against the Stockholder which may prevent or materially delay such Stockholder
from performing its obligations under this Agreement or consummating the
transactions contemplated hereby on a timely basis.
4. Term. This
Agreement and the respective rights and obligations of the parties hereto
shall
commence upon the Closing Date of the Acquisition Agreement and shall
terminate upon the earlier of the following to occur: (A) the issuance of
the
Additional Shares, or (B) March 31, 2008; provided, however, that if
the Information Statement that is required to be sent to the stockholders
of
International with respect to the Amendment has been delayed either due to
any
failure of the International Stockholders to cooperate or due to a delay
in the
review and approval by the Securities and Exchange Commission, then the Term
of
this Agreement shall be automatically extended for such period of time of
any
such delay.
C-4
5. Miscellaneous.
A.
Headings. Headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
B.
Enforceability. If any provision which is contained in this
Agreement, should, for any reason, be held to be invalid or unenforceable
in any
respect under the laws of any State of the United States, such invalidity
or
unenforceability shall not affect any other provision of this Agreement and
in
this Agreement shall be construed as if such invalid or unenforceable provision
had not been contained herein.
C.
Notices. Any notice or other communication required or
permitted hereunder shall be sufficiently given if sent by (i) mail by (a)
certified mail, postage prepaid, return receipt requested and (b) first class
mail, (ii) overnight delivery with confirmation of delivery or (iii) facsimile
transmission with an original mailed by first class mail, postage prepaid,
addressed as follows:
If
to
International: Artfest
International, Inc..
00000
Xxxxxx Xxxx 000,
Xxxx
Xxxxx, Xxxxx, 00000
Attn:
Xxxxx Xxxxxx,
President
Facsimile
No.:
_______________
with
a
copy
to: Xxxxx
& Fraade, P.C.
000
Xxxxxxx Xxxxxx, Xxxxx
0000
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxxxx X. Xxxxx,
Esq.
Facsimile
No.: (000)
000-0000
If
to the
Stockholder: Xxxxx
X. Xxxxx
00000
Xxxxx Xxxxxxxxx Xxxxxxx, Xxxxx
000,
Xxxxxxx
Xxxxx, Xxxxxxxxxx,
00000
Fax
No.:
___________________
with
a
copy
to: __________________________
________________________
________________________
Attention:
________________
Facsimile
No.:
_____________
or
in
each case to such other address and facsimile number as shall have last been
furnished by like notice. If all of the methods of notice set forth
in this Paragraph “C” of this Article “5” of this Agreement are impossible for
any reason, notice shall be in writing and personally delivered to the aforesaid
addresses. Each notice or communication shall be deemed to have been
given as of the date so mailed or delivered as the case may be; provided,
however, that any notice sent by facsimile shall be deemed
to
have
been given as of the date so sent if a copy thereof is also mailed by first
class mail on the date sent by facsimile. If the date of mailing is
not the same as the date of sending by facsimile, then the date of mailing
by
first class mail shall be deemed to be the date upon which notice is given;
provided further, however, that any notice sent by overnight delivery shall
be
deemed to have been given as of the date of delivery.
C-5
or
in
each case to such other address and facsimile number as shall have last
been
furnished by like notice. If all of the methods of notice set forth
in this Paragraph “C” of this Article “5” of this Agreement are impossible for
any reason, notice shall be in writing and personally delivered to the
aforesaid
addresses. Each notice or communication shall be deemed to have been
given as of the date so mailed or delivered as the case may be; provided,
however, that any notice sent by facsimile shall be deemed
to
have
been given as of the date so sent if a copy thereof is also mailed by first
class mail on the date sent by facsimile. If the date of mailing is
not the same as the date of sending by facsimile, then the date of mailing
by
first class mail shall be deemed to be the date upon which notice is given;
provided further, however, that any notice sent by overnight delivery shall
be
deemed to have been given as of the date of delivery.
D.
Governing Law; Disputes. This Agreement shall in accordance
with Section 5-1401 of the General Obligations Law of New York in all respects
be construed, governed, applied and enforced under the internal laws of
the
State of New York without giving effect to the principles of conflicts
of laws
and be deemed to be an agreement entered into in the State of New York
and made
pursuant to the laws of the State of New York. The parties agree that
they shall be deemed to have agreed to binding arbitration with respect
to the
entire subject matter of any and all disputes relating to or arising under
this
Agreement including, but not limited to, the specific matters or disputes
as to
which arbitration has been expressly provided for by other provisions of
this
Agreement and that any such arbitration shall be commenced exclusively
in New
York, New York. Any such arbitration shall be by a panel of three
arbitrators and pursuant to the commercial rules then existing of the American
Arbitration Association in the State of New York, County of New
York. In all arbitrations, judgment upon the arbitration award may be
entered in any court having jurisdiction. The parties specifically
designate the courts in the City of New York, State of New York as properly
having jurisdiction for any proceeding to confirm and enter judgment upon
any
such arbitration award. The parties hereby consent to and submit to
the exclusive jurisdiction of the courts of the State of New York in any
action
or proceeding and submit to personal jurisdiction over each of them by
such
courts. The parties hereby waive personal service of any and all
process and specifically consent that in any such action or proceeding
brought
in the courts of the State of New York, any service of process may be
effectuated upon any of them by certified mail, return receipt requested,
in
accordance with Paragraph “C” of this Article “5” of this
Agreement. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law.
C-6
The
parties agree, further, that the prevailing party in any such arbitration
as
determined by the arbitrators shall be entitled to such costs and attorney's
fees, if any, in connection
with such arbitration as may be awarded by the arbitrators. In
connection with the arbitrators’ determination for the purpose of which party,
if any, is the prevailing party, they shall take into account all of the
factors
and circumstances including, without limitation, the relief sought, and by
whom,
and the relief, if any, awarded, and to whom. In addition, and
notwithstanding the foregoing sentence, a party shall not be deemed to be
the
prevailing party in a claim seeking monetary damages, unless the amount of
the
arbitration award exceeds the amount offered in a legally binding writing
by the
other party by fifteen percent (15%) or more. For example, if the
party initiating arbitration (“A”) seeks an award of $100,000 plus costs and
expenses, the other party (“B”) has offered A $50,000 in a legally binding
written offer prior to the commencement of the arbitration proceeding, and
the
arbitration panel awards any amount less than $57,500 to A, the panel should
determine that B has “prevailed”.
The
arbitration panel shall have no power to award non-monetary or equitable
relief
of any sort. It shall also have no power to award (i) damages
inconsistent with any applicable agreement between the parties or (ii) punitive
damages or any other damages not measured by the prevailing party’s actual
damages; and the parties expressly waive their right to obtain such damages
in
arbitration or in any other forum. In no event, even if any other
portion of these provisions is held invalid or unenforceable, shall the
arbitration panel have power to make an award or impose a remedy which could
not
be made or imposed by a court deciding the matter in the same
jurisdiction.
Discovery
shall be permitted in connection with the arbitration only to the extent,
if
any, expressly authorized by the arbitration panel upon a showing of substantial
need by the party seeking discovery.
All
aspects of the arbitration shall be treated as confidential. The
parties and the arbitration panel may disclose the existence, content or
results
of the arbitration only as provided in the rules of the American Arbitration
Association in New York, New York. Before making any such disclosure,
a party shall give written notice to all other parties and shall afford such
parties a reasonable opportunity to protect their interest.
C-7
E.
Expenses. Each party to this Agreement shall bear and pay its
own costs and expenses incurred in connection with the execution and delivery
of
this Agreement and the transactions set forth in this Agreement.
F.
Construction. Each of the parties hereto hereby further
acknowledges and agrees that (i) each has been advised by counsel during
the
course of negotiations and (ii) each counsel has had significant input in
the
development of this Agreement and (iii) this Agreement shall not, therefore,
be
construed more strictly against any party responsible for its drafting
regardless of any presumption or rule requiring construction against the
party
whose attorney drafted this Agreement.
G.
Entire Agreement. This Agreement and all documents and
instruments referred to herein (a) constitute the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among
the parties with respect to the subject matter
hereof and thereof, and (b) are not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder. Each party
hereto agrees that, except for the representations and warranties contained
in
this Agreement, none makes any other representations or warranties, and each
hereby disclaims any other representations and warranties made by itself
or any
of its officers, directors, employees, agents, financial and legal advisors
or
other representatives, with respect to the execution and delivery of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure to the other or the other's representatives of any documentation
or other information with respect to any one or more of the
foregoing.
H.
Further Assurances. The parties agree to execute any and all
such other further instruments and documents, and to take any and all such
further actions which are reasonably required to effectuate this Agreement
and
the intents and purposes hereof.
I.
Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, personal representatives, successors and assigns.
J.
Non-Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to
insist
in any one or more cases upon the performance of any of the provisions,
covenants or conditions of this Agreement or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future
of
any such provisions, covenants or conditions, (ii) the acceptance of performance
of anything required by this Agreement to be performed with knowledge of
the
breach or failure of a covenant, condition or provision hereof shall not
be
deemed a waiver of such breach or failure and (iii) no waiver by any party
of
one breach by another party shall be construed as a waiver of any other or
subsequent breach.
K.
Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but
all of
which together shall constitute one and the same instrument.
L.
Facsimile Signatures. Any signature which is delivered via
facsimile shall be deemed to be an original and have the same force and
effect
as if such facsimile signature were the original thereof.
M.
Modifications. This Agreement may not be changed, modified,
extended, terminated or discharged orally, except by a written agreement
specifically referring to this Agreement which is signed by all of the
parties
to this Agreement.
N.
Severability. The provisions of this Agreement shall be deemed
separable. Therefore, if any part of this Agreement is rendered void,
invalid or unenforceable, such rendering shall not affect the validity
or
enforceability of the remainder of this Agreement; provided, however, that
if
the part or parts which are void, invalid
or unenforceable as aforesaid shall substantially impair the value of this
whole
Agreement to any party, that party may cancel and terminate this Agreement
by
giving written notice to the other party.
C-8
IN
WITNESS WHEREOF, this Agreement is executed effective as of the day, month
and
year set forth above.
_________________________________
Xxxxx
X. Xxxxx
Artfest
International,
Inc.
By:______________________________
Xxxxx
Xxxxxx, CEO
:
Art
Channel, Inc.
By:______________________________
Xxxxx
Xxxxxx,
CEO
C-9
EXHIBIT
D
CHANNEL
CERTIFICATE OF INCORPORATION
|
Corporations
Section
X.X.
Xxx
00000
Xxxxxx,
Xxxxx
00000-0000
|
 |
Xxxxx
Xxxxxxxx
Secretary
of State
|
Office
of the
Secretary of State
CERTIFICATE
OF FILING
OF
|
|
ART
CHANNEL,
INC.
File
Number:
800779313
|
The
undersigned, as Secretary of State
of Texas, hereby certifies that a Certificate of Formation for the above named Domestic
For-Profit
Corporation has been received in this office and has been found to conform to the applicable
provisions of
law.
ACCORDINGLY,
the undersigned, as
Secretary of State, and by virtue of the authority vested in the secretary by law,
hereby issues this
certificate evidencing filing effective on the date shown
below.
The
issuance
of
this certificate does
not authorizethe use of a name
in this
state in
violation of the rights
of
another under the federal Trademark
Act of 1946, the Texas trademark law, the Assumed Business or Professional
Name
Act, or the common law.
Dated:
02/26/2007
Effective:
02/26/2007
 |
|
|
Xxxxx
Xxxxxxxx
Secretary
of
State
|
 |
|
Phone:
(000) 000-0000
Prepared
by: Xxxxx
Xxxx
|
Come
visit us on the internet at
xxxx://xxx.xxx.xxxxx.xx.xx/
Fax:
(000)
000-0000
TID:
10306
|
Dial:
7-1-1 for Relay Services
Document:
161751740002
|
D-1
ARTICLES
OF
INCORPORATION
OF
ART
CHANNEL,
INC.
I,
the undersigned natural person of the
age of twenty-one years or more, a citizen of the State of Texas, acting
as
incorporator of the corporation under the Texas Business Corporation Act,
do hereby adopt the
following Articles of Incorporation for such corporation.
ARTICLE
I
|
|
The
name of the corporation is ART
CHANNEL, INC.
|
ARTICLE
II
|
|
The
period of its duration is
perpetual.
|
ARTICLE
III
The
purpose for which
the corporation is organized is the transaction of anylawful
act or activity
for which corporations may be organized under the Texas BusinessAct.
ARTICLE
IV
The
aggregate number of
shares which the corporation shall have authority toissue
is 5,000,000
shares of common stock of the par value of $0.001 each. The sharesshall
be designated as
common stock and shall have identical voting rights, privileges andpowers,
except that
cumulative voting as permitted by the Texas Business CorporationAct
is hereby expressly
prohibited in all elections of every kind and character and in all voting
issues
where the same, under any circumstances and in absence of this
prohibition,might
otherwise be
permissible.
ARTICLE
V
The
corporation shall
not commence business until it has received for issuance of its
shares
consideration of the value of ONE THOUSAND DOLLARS ($1,000.00)consisting
of money,
labor done, or property actually received, which sum is not less
thanONE
THOUSAND DOLLARS ($1,000.00).
D-2
Articles
of Incorporation of ART
CHANNEL, INC.
Page
Two
ARTICLE
VI
The
corporation shall indemnify any
director, officer of employee or former director, officer
or employee of the
corporation, or any person who may have served as director, officer
or employee or another
corporation in which it owns shares of stock, or of which it is a
creditor, against
expenses actually and necessarily incurred in any action, suit or proceeding,
whether civil or
criminal in nature, in which he/she is made a party by reason of being or
having been such
director, officer or employee (whether or not a director, officer
or employee at the
time such costs or expenses were incurred by or imposed upon him),
except in relation to
matters as to which he/she shall be adjudged in such action, suit
or proceeding to be
liable for gross negligence or willful misconduct Such rights of indemnification
and
reimbursement shall not be deemed exclusive of any other rights to which
such director,
officer or employee may be entitled by law or under any bylaw, agreement,
vote of
shareholders, or otherwise.
ARTICLE
VII
No
shares of capital
stock of the corporation may be sold or transferred except incompliance
with the
registration provisions of the Securities Act of 1933, as amended,
orpursuant
to an exemption there from, and the corporation shall not be obligated
to
registerany
stock transfer or
to recognize the transferee as a shareholder of the corporation forany
purpose unless and
until the transferee shall have delivered to the corporation anopinion,
satisfactory
to the corporation and its counsel, of legal counsel experience in
thepractice
of federal
securities law to the effect that such shares have been registered in
accordance
with the registration provisions of the Securities Act of 1933, as amended,
orthat
a
specified exemption from such registration provisions is available in
connectionwith
the transactions
described in such opinion.
ARTICLE
VIII
No
contract or
transaction between the corporation and one or more of itsdirectors
or officers,
or between the corporation and any other corporation, partnership,association,
or other
organization in which one or more of the directors or officers of
thecorporation
are
directors, officers, or partners or have financial interest in such
corporation,
partnership, association or other organization shall be void or voidable
solelyby
reason of such relationship, or solely because the director or officer
is
present at orparticipated
in the
meeting of the Board of Directors of the corporation or committeethere
of which
authorized the contract or transaction, or solely because his/her or
theirvotes
are counted for such purpose, if any of the following conditions is
met:
D-3
Articles
of Incorporation of ART
CHANNEL, INC.
Page
Three
|
(1)
|
The
material facts as to the
relationship or interest of the director or officer and as
the contract or transaction
are disclosed or known to the Board of Directors of the corporation
or the
committee thereof that authorized the contract
or transaction, and the
Board of Directors of the corporation or committee
thereof in good faith
authorizes the contract or transaction by the affirmative
votes of a majority of
the disinterested directors or members of such committee,
even
though the disinterested directors or committee members
be less than a quorum;
or
|
|
(2)
|
The
material facts as to the
relationship or interest of the director or officer and as
to the contract, or
transaction are disclosed or are known to the shareholders
of the corporation
entitled to vote thereon, and the contract or transaction
is specifically
approved in good faith by a vote of the shareholders of the
corporation at any annual
or special meeting of shareholders called for the purpose;
or
|
|
(3)
|
The
contract or transaction is
fair as to the corporation as of the time it is authorized,
approved or ratified
by the Board of Directors of the corporation, a committee
thereof, or the
shareholders of the
corporation.
|
Common
or interested
directors may be counted in determining the presence of a quorumat
a meeting of the
Board of Directors of the corporation or of a committee thereof,
whichauthorizes
the contract
or transaction.
ARTICLE
IX
No
shareholder or other person shall
have any pre-emptive rights whatsoever.
ARTICLE
X
The
post office address of its initial
registered office is:
10300
X. Xxxxxxx Xxxxxxxxxx, Xxxxx
000
Xxxxxx,
XX
00000
and
the name of its initial registered
agent at such address is:
Xxxxx
Xxxxxx
D-4
Articles
of Incorporation of ART
CHANNEL, INC.
Page
Four
ARTICLE
XI
The
number of directors of the
corporation shall be fixed from time to time by resolution of the
Board of Directors of
the corporation. The number of directors constituting the
initial board of
directors is one (1), and the names and addresses of the persons who are to
serve as directors
until the first annual meeting of the shareholders or until their successors
be
elected and qualified is as follows:
|
Xxxxx
Xxxxxx
|
00000
X. Xxxxxxx Xxxxxxxxxx, Xxxxx
000
|
|
Xxxxxx,
XX
00000
|
ARTICLE
XII
The
initial by-laws shall be adopted by
the Board of Directors. The power to alter, amend or repeal the by-laws
or adopt
new by-laws is vested in the Board of Directors, subject
to repeal or change
by action of the shareholders.
ARTICLE
XII
The
name and address of the incorporator
is:
|
Xxxxx
Xxxxxx
|
00000
X. Xxxxxxx Xxxxxxxxxx, Xxxxx
000
|
|
Xxxxxx,
XX
00000
|
IN
WITNESS WHEREOF, I have executed
these Articles of Incorporation on this 15thday
of February
2007.
/s/
Xxxxx Xxxxxx
Xxxxx
Xxxxxx,
Incorporator
D-5
EXHIBIT
E
CHANNEL
BY-LAWS
BYLAWS
OF
ART
CHANNEL, INC.
a
Texas corporation
ARTICLE
1.
DEFINITIONS
1.1
Definitions.
Unless
the context clearly requires otherwise, in these Bylaws:
(a)
"Board" means the board
of directors of the Company.
(b)
"Bylaws" means these
bylaws as adopted by the Board and includes amendments
subsequently adopted
by the Board or by the Stockholders.
(c)
"Articles of
Incorporation" means the Articles of Incorporation of Art Channel, Inc.,
as filed with the
Secretary of State of the State of Texas and includes all amendments thereto
and
restatementsthereof
subsequently filed.
(d)
"Company" means Art
Channel, Inc., a Texas corporation.
(e)
"Section" refers to
sections of these Bylaws.
(f)
"Stockholder" means
stockholders of record of the Company.
1.2
Offices.
The title of
an office refers to the person or persons who at any given time perform the
duties of that particular office for the Company.
ARTICLE
2.
OFFICES
2.1
Principal
Office. The
Company may locate its principal office within or without the state of
incorporation as the Board may determine.
2.2
Registered
Office.
The registered office of the Company required by law to be maintained in
the
state of incorporation may be, but need not be, the same as the principal
place
of business of the Company. The Board may change the address of the registered
office from time to time.
2.3
Other
Offices. The
Company may have offices at such other places, either within or without the
state ofincorporation,
as the Board may designate or as the business of the Company may require
from
time to time.
ARTICLE
3.
MEETINGS
OF STOCKHOLDERS
3.1
Annual
Meetings. The
Stockholders of the Company shall hold their annual meetings for the purpose
ofelecting
directors and for the transaction of such other proper business as may come
before such meetings at such time, date and place as the Board shall determine
by resolution.
3.2
Special
Meetings. The
Board, the Chairman of the Board, the President or a committee of the Board
duly
designated and whose powers and authority include the power to call meetings
may
call special meetings of the Stockholders of the Company at any time for
any
purpose or purposes. Special meetings of the Stockholders of the Company
may
also be called by the holders of at least 30% of all shares entitled to vote
at
the proposed special meeting.
3.3
Place
of Meetings.
The Stockholders shall hold all meetings at such places, within or without
the
State of Texas, as the Board or a committee of the Board shall specify in
the
notice or waiver of notice for such meetings.
1/13
Bylaws
of
Art
Channel, Inc.
3.4
Notice
of Meetings.
Except as otherwise required by law, the Board or a committee of the Board
shall
give notice of each meeting of Stockholders, whether annual or special, not
less
than 10 nor more than 50 days before the date of the meeting. The Board or
a
committee of the Board shall deliver a notice to each Stockholder entitled
to
vote at such meeting by delivering a typewritten or printed notice thereof
to
him personally, or by depositing such notice in the United States mail, in
a
postage prepaid envelope, directed to him at his address as it appears on
the
records of the Company, or by transmitting a notice thereof to him at such
address by telegraph, telecopy, cable or wireless. If mailed, notice is given
on
the date deposited in the United States mail, postage prepaid, directed to
the
Stockholder at his address as it appears on the records of the Company. An
affidavit of the Secretary or an Assistant Secretary or of the Transfer Agent
of
the Company that he has given notice shall constitute, in the absence of
fraud,
prima facie evidence of the facts stated therein.
Every
notice of a meeting of the Stockholders shall state the place, date and hour
of
the meeting and, in the case of a special meeting, also shall state the purpose
or purposes of the meeting. Furthermore, if the Company will maintain the
list
at a place other than where the meeting will take place, every notice of
a
meeting of the Stockholders shall specify where the Company will maintain
the
list of Stockholders entitled to vote at the meeting.
3.5
Stockholder
Notice.
Subject to the Articles of Incorporation, the Stockholders who intend to
nominate persons to the Board of Directors or propose any other action at
an
annual meeting of Stockholders must timely notify the Secretary of the Company
of such intent. To be timely, a Stockholder's notice must be delivered to
or
mailed and received at the principal executive offices of the Company not
less
than 50 days nor more than 90 days prior to the date of such meeting; provided,
however, that in the event that less than 75 days' notice of the date of
the
meeting is given or made to Stockholders, notice by the Stockholder to be
timely
must be received not later than the close of business on the 15th day following
the date on which such notice of the date of the annual meeting was mailed.
Such
notice must be in writing and must include a (i) a brief description of the
business desired to the brought before the annual meeting and the reasons
for
conducting such business at the meeting; (ii) the name and record address
of the
Stockholder proposing such business; (iii) the class, series and number of
shares of capital stock of the Company which are beneficially owned by the
Stockholder; and (iv) any material interest of the Stockholder in such business.
The Board of Directors reserves the right to refuse to submit any such proposal
to stockholders at an annual meeting if, in its judgment, the information
provided in the notice is inaccurate or incomplete.
3.6
Waiver
of Notice.
Whenever these Bylaws require written notice, a written waiver thereof, signed
by the person entitled to notice, whether before or after the time stated
therein, shall constitute the equivalent of notice. Attendance of a person
at
any meeting shall constitute a waiver of notice of such meeting, except when
the
person attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting
is not lawfully called or convened. No written waiver of notice need specify
either the business to be transacted at, or the purpose or purposes of any
regular or special meeting of the Stockholders, directors or members of a
committee of the Board.
3.7
Adjournment
of
Meeting. When the Stockholders adjourn a meeting to another time or
place, notice need not be given of the adjourned meeting if the time and
place
thereof are announced at the meeting at which the adjournment is taken. At
the
adjourned meeting, the Stockholders may transact any business which they
may
have transacted at the original meeting. If the adjournment is for more than
30
days or, if after the adjournment, the Board or a committee of the Board
fixes a
new record date for the adjourned meeting, the Board or a committee of the
Board
shall give notice of the adjourned meeting to each Stockholder of record
entitled to vote at the meeting.
3.8
Quorum.
Except as
otherwise required by law, the holders of a majority of all of the shares
of the
stock
entitled
to vote at the meeting, present in person or by proxy, shall constitute a
quorum
for all purposes at any meeting of the Stockholders. In the absence of a
quorum
at any meeting or any adjournment thereof, the holders of a majority of the
shares of stock entitled to vote who are present, in person or by proxy,
or, in
the absence therefrom of all the Stockholders, any officer entitled to preside
at, or to act as secretary of, such meeting may adjourn such meeting to another
place, date or time.
If
the
chairman of the meeting gives notice of any adjourned special meeting of
Stockholders to allStockholders
entitled to vote thereat, stating that the minimum percentage of stockholders
for a quorum as provided by Texas law shall constitute a quorum, then, except
as
otherwise required by law, that percentage at such adjourned meeting shall
constitute a quorum and a majority of the votes cast at such meeting shall
determine all matters.
2/13
Bylaws
of
Art
Channel, Inc.
3.9
Organization.
Such
person as the Board may have designated or, in the absence of such a person,
the
highest ranking officer of the Company who is present shall call to order
any
meeting of the Stockholders, determine the presence of a quorum, and act
as
chairman of the meeting. In the absence of the Secretary or an Assistant
Secretary of the Company, the chairman shall appoint someone to act as the
secretary of the meeting.
3.10
Conduct of
Business. The chairman of any meeting of Stockholders shall determine the
order of business and the procedure at the meeting, including such regulations
of the manner of voting and the conduct of discussion as he deems in
order.
3.11
List of
Stockholders. At least 10 days before every meeting of Stockholders, the
Secretary shall prepare a list of the Stockholders entitled to vote at the
meeting or any adjournment thereof, arranged in alphabetical order, showing
the
address of each Stockholder and the number of shares registered in the name
of
each Stockholder. The Company shall make the list available for examination
by
any Stockholder for any purpose germane to the meeting, during ordinary business
hours, for a period of at least 10 days prior to the meeting, either at a
place
within the city where the meeting will take place or at the place designated
in
the notice of the meeting.
The
Secretary shall produce and keep the list at the time and place of the meeting
during the entire duration of the meeting, and any Stockholder who is present
may inspect the list at the meeting. The list shall constitute presumptive
proof
of the identity of the Stockholders entitled to vote at the meeting and the
number of shares each Stockholder holds.
A
determination of Stockholders entitled to vote at any meeting of Stockholders
pursuant to this Sectionshall
apply to any adjournment thereof.
3.12
Fixing of Record
Date. For the purpose of determining Stockholders entitled to notice of
or to vote at any meeting of Stockholders or any adjournment thereof, or
Stockholders entitled to receive payment of any dividend, or in order to
make a
determination of Stockholders for any other proper purpose, the Board or
a
committee of the Board may fix in advance a date as the record date for any
such
determination of Stockholders. However, the Board shall not fix such date, in
any case, more than 60 days nor less than 10 days prior to the date of the
particular action.
If
the
Board or a committee of the Board does not fix a record date for the
determination of Stockholders entitled to notice of or to vote at a meeting
of
Stockholders, the record date shall be at the close of business on the day
next
preceding the day on which notice is given or if notice is waived, at the
close
of business on the day next preceding the day on which the meeting is held
or
the date on which the Board adopts the resolution declaring a
dividend.
3.13
Voting of Shares. Each
Stockholder shall have one vote for every share of stock having voting
rightsregistered
in his name on the record date for the meeting. The Company shall not have
the
right to vote treasury stock of the Company, nor shall another corporation
have
the right to vote its stock of the Company if the Company holds, directly
or
indirectly, a majority of the shares entitled to vote in the election of
directors of such other corporation. Persons holding stock of the Company
in a
fiduciary capacity shall have the right to vote such stock. Persons who have
pledged their stock of the Company shall have the right to vote such stock
unless in the transfer on the books of the Company the pledgor expressly
empowered the pledgee to vote such stock. In that event, only the pledgee,
or
his proxy, may represent such stock and vote thereon.
A
plurality of the votes of the shares present in person or represented by
proxy
at the meeting and entitledto
vote
shall determine all elections and, except when the law or Articles of
Incorporation require otherwise, the affirmative vote of a majority of the
shares present in person or represented by proxy at the meeting and entitled
to
vote shall determine all other matters.
Where
a
separate vote by a class or classes is required, a majority of the outstanding
shares of such class orclasses,
present in person or represented by proxy, shall constitute a quorum entitled
to
take action with respect to that vote on that matter and the affirmative
vote of
the majority of shares of such class or classes present in person or represented
by proxy at the meeting shall be the act of such class.
3/13
Bylaws
of
Art
Channel, Inc.
The
Stockholders may vote by voice vote on all matters. Upon demand by a Stockholder
entitled to vote,or
his
proxy, the Stockholders shall vote by ballot. In that event, each ballot
shall
state the name of the Stockholder or proxy voting, the number of shares voted
and such other information as the Company may require under the procedure
established for the meeting.
3.14
Inspectors. At
any meeting in which the Stockholders vote by ballot, the chairman may appoint
one ormore
inspectors. Each inspector shall take and sign an oath to execute the duties
of
inspector at such meeting faithfully, with strict impartiality, and according
to
the best of his ability. The inspectors shall ascertain the number of shares
outstanding and the voting power of each; determine the shares represented
at a
meeting and the validity of proxies and ballots; count all votes and ballots;
determine and retain for a reasonable period a record of the disposition
of any
challenges made to any determination by the inspectors; and certify their
determination of the number of shares represented at the meeting, and their
count of all votes and ballots. The certification required herein shall take
the
form of a subscribed, written report prepared by the inspectors and delivered
to
the Secretary of the Company. An inspector need not be a Stockholder of the
Company, and any officer of the Company may be an inspector on any question
other than a vote for or against a proposal in which he has a material
interest.
3.15
Proxies. A
Stockholder may exercise any voting rights in person or by his proxy appointed
by aninstrument
in writing, which he or his authorized attorney-in-fact has subscribed and
which
the proxy has delivered to the Secretary of the meeting pursuant to the manner
prescribed by law.
A
proxy
is not valid after the expiration of 13 months after the date of its execution,
unless the person executing it specifies thereon the length of time for which
it
is to continue in force (which length may exceed 12 months) or limits its
use to
a particular meeting. Each proxy is irrevocable if it expressly states that
it
is irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power.
The
attendance at any meeting of a Stockholder who previously has given a proxy
shall not have the effect of revoking the same unless he notifies the Secretary
in writing prior to the voting of the proxy.
3.16
Action by
Consent. Any action required to be taken at any annual or special meeting
of stockholders of the Company or any action which may be taken at any annual
or
special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing setting
forth the action so taken, shall be signed by the holders of outstanding
stock
having not less than the minimum number of votes that would be necessary
to
authorize or take such action at a meeting at which all shares entitled to
vote
thereon were present and voted and shall be delivered to the Company by delivery
to its registered office, its principal place of business, or an officer
or
agent of the Company having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the Company's registered office
shall be by hand or by certified or registered mail, return receipt
requested.
Every
written consent shall bear the date of signature of each stockholder who
signs
the consent, and nowritten
consent shall be effective to take the corporate action referred to therein
unless, within 50 days of the earliest dated consent delivered in the manner
required by this section to the Company, written consents signed by a sufficient
number of holders to take action are delivered to the Company by delivery
to its
registered office, its principal place of business or an officer or agent
of the
Company having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Company's registered office
shall be by hand or by certified or registered mail, return receipt
requested.
Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous writtenconsent
shall be given to those stockholders who have not consented in
writing.
4/13
Bylaws
of
Art
Channel, Inc.
ARTICLE
4.
BOARD
OF DIRECTORS
4.1
General
Powers. The
Board shall manage the property, business and affairs of the
Company.
4.2
Number.
The number of
directors who shall constitute the Board shall equal not less than 1 nor
more
than 10, as the Board or majority stockholders may determine by resolution
from
time to time.
4.3
Election
of Directors and
Term of Office. The Stockholders of the Company shall elect the directors
at the annual or adjourned annual meeting (except as otherwise provided herein
for the filling of vacancies). Each director shall hold office until his
death,
resignation, retirement, removal, or disqualification, or until his successor
shall have been elected and qualified.
4.4
Resignations.
Any
director of the Company may resign at any time by giving written notice to
the
Board or to the Secretary of the Company. Any resignation shall take effect
upon
receipt or at the time specified in the notice. Unless the notice specifies
otherwise, the effectiveness of the resignation shall not depend upon its
acceptance.
4.5
Removal.
Stockholders
holding 2/3 of the outstanding shares entitled to vote at an election of
directors may remove any director or the entire Board of Directors at any
time,
with or without cause.
4.6
Vacancies.
Any
vacancy on the Board, whether because of death, resignation, disqualification,
an increase in the number of directors, or any other cause may be filled
by a
majority of the remaining directors, a sole remaining director, or the majority
stockholders. Any director elected to fill a vacancy shall hold office until
his
death, resignation, retirement, removal, or disqualification, or until his
successor shall have been elected and qualified.
4.7
Chairman
of the
Board. At the initial and annual meeting of the Board, the directors may
elect from their number a Chairman of the Board of Directors. The Chairman
shall
preside at all meetings of the Board and shall perform such other duties
as the
Board may direct. The Board also may elect a Vice Chairman and other officers
of
the Board, with such powers and duties as the Board may designate from time
to
time.
4.8
Compensation.
The
Board may compensate directors for their services and may provide for the
payment of all expenses the directors incur by attending meetings of the
Board
or otherwise.
ARTICLE
5.
MEETINGS
OF DIRECTORS
5.1
Regular
Meetings. The
Board may hold regular meetings at such places, dates and times as the Board
shall establish by resolution. If any day fixed for a meeting falls on a
legal
holiday, the Board shall hold the meeting at the same place and time on the
next
succeeding business day. The Board need not give notice of regular
meetings.
5.2
Place
of Meetings.
The Board may hold any of its meetings in or out of the State of Texas, at
such
places as the Board may designate, at such places as the notice or waiver
of
notice of any such meeting may designate, or at such places as the persons
calling the meeting may designate.
5.3
Meetings
by
Telecommunications. The Board or any committee of the Board may hold
meetings by means of conference telephone or similar telecommunications
equipment that enable all persons participating in the meeting to hear each
other. Such participation shall constitute presence in person at such
meeting.
5.4
Special
Meetings. The
Chairman of the Board, the President, or one-half of the directors then in
office may call a special meeting of the Board. The person or persons authorized
to call special meetings of the Board may fix any place, either in or out
of the
State of Texas as the place for the meeting.
5.5
Notice
of Special
Meetings. The person or persons calling a special meeting of the Board
shall give written notice to each director of the time, place, date and purpose
of the meeting of not less than three business days if by mail and not less
than
24 hours if by telegraph or in person before the date of the meeting. If
mailed,
notice is given on the date deposited in the United States mail, postage
prepaid, to such director. A director may waive notice of any special meeting,
and any meeting shall constitute a legal meeting without notice if all the
directors are present or if those not present sign either before or after
the
meeting a written waiver of notice, a consent to such meeting, or an approval
of
the minutes of the meeting. A notice or waiver of notice need not specify
the
purposes of the meeting or the business which the Board will transact at
the
meeting.
5/13
Bylaws
of
Art
Channel, Inc.
5.6
Waiver
by Presence.
Except when expressly for the purpose of objecting to the legality of a meeting,
adirector's
presence at a meeting shall constitute a waiver of notice of such
meeting.
5.7
Quorum.
A majority of
the directors then in office shall constitute a quorum for all purposes at
any
meeting
of the Board. In the absence of a quorum, a majority of directors present
at any
meeting may adjourn the meeting to another place, date or time without further
notice. No proxies shall be given by directors to any person for purposes
of
voting or establishing a quorum at a directors’ meetings.
5.8
Conduct
of Business.
The Board shall transact business in such order and manner as the Board
may
determine.
Except as the law requires otherwise, the Board shall determine all matters
by
the vote of a majority of the directors present at a meeting at which a quorum
is present. The directors shall act as a Board, and the individual directors
shall have no power as such.
5.9
Action by Consent.
The Board committee may take any required or permitted action without a meeting
if all members of the Board or committee consent thereto in writing and file
such consent with the minutes of the proceedings of the Board or
committee.
ARTICLE
6.
COMMITTEES
6.1
Committees
of the
Board. The Board may designate, by a vote of a majority of the directors
then in office, committees of the Board. The committees shall serve at the
pleasure of the Board and shall possess such lawfully delegable powers and
duties as the Board may confer.
6.2
Selection
of Committee
Members. The Board shall elect by a vote of a majority of the directors
then inoffice
a
director or directors to serve as the member or members of a committee. By
the
same vote, the Board may designate other directors as alternate members who
may
replace any absent or disqualified member at any meeting of a committee.
In the
absence or disqualification of any member of any committee and any alternate
member in his place, the member or members of the committee present at the
meeting and not disqualified from voting, whether or not he or they constitute
a
quorum, may appoint by unanimous vote another member of the Board to act
at the
meeting in the place of the absent or disqualified member.
6.3
Conduct
of Business.
Each committee may determine the procedural rules for meeting and conducting
its
business and shall act in accordance therewith, except as the law or these
Bylaws require otherwise. Each committee shall make adequate provision for
notice of all meetings to members. A majority of the members of the committee
shall constitute a quorum, unless the committee consists of one or two members.
In that event, one member shall constitute a quorum. A majority vote of the
members present shall determine all matters. A committee may take action
without
a meeting if all the members of the committee consent in writing and file
the
consent or consents with the minutes of the proceedings of the
committee.
6.4
Authority.
Any
committee, to the extent the Board provides, shall have and may exercise
all the
powersand
authority of the Board in the management of the business and affairs of the
Company, and may authorize the affixation of the Company's seal to all
instruments which may require or permit it. However, no committee shall have
any
power or authority with regard to amending the Articles of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
Stockholders the sale, lease or exchange of all or substantially all of the
Company's property and assets, recommending to the Stockholders a dissolution
of
the Company or a revocation of a dissolution of the Company, or amending
these
Bylaws of the Company. Unless a resolution of the Board expressly provides,
no
committee shall have the power or authority to declare a dividend, to authorize
the issuance of stock, or to adopt a certificate of ownership and
merger.
6/13
Bylaws
of
Art
Channel, Inc.
6.5
Minutes.
Each
committee shall keep regular minutes of its proceedings and report the same
to
the Boardwhen
required.
ARTICLE
7.
OFFICERS
7.1
Officers
of the
Company. The officers of the Company shall consist of a President, a
Secretary, a Treasurer and such Vice Presidents, Assistant Secretaries,
Assistant Treasurers, and other officers as the Board may designate and elect
from time to time. The same person may hold at the same time any two or more
offices.
7.2
Election
and Term.
The Board shall elect the officers of the Company. Each officer shall hold
office until his death, resignation, retirement, removal or disqualification,
or
until his successor shall have been elected and qualified.
7.3
Compensation
of
Officers. The Board shall fix the compensation of all officers of the
Company. Noofficer
shall serve the Company in any other capacity and receive compensation, unless
the Board authorizes the additional compensation.
7.4
Removal
of Officers and
Agents. The Board may remove any officer or agent it has elected or
appointed at any time, with or without cause.
7.5
Resignation
of Officers and
Agents. Any officer or agent the Board has elected or appointed may
resign at any time by giving written notice to the Board, the Chairman of
the
Board, the President, or the Secretary of the Company. Any such resignation
shall take effect at the date of the receipt of such notice or at any later
time
specified. Unless otherwise specified in the notice, the Board need not accept
the resignation to make it effective.
7.6
Bond.
The Board may
require by resolution any officer, agent, or employee of the Company to give
bond to the Company, with sufficient sureties conditioned on the faithful
performance of the duties of his respective office or agency. The Board also
may
require by resolution any officer, agent or employee to comply with such
other
conditions as the Board may require from time to time.
7.7
President.
The
President shall supervise and direct all of the business and affairs of the
Company. Whenpresent,
he shall sign (with or without the Secretary, an Assistant Secretary, or
any
other officer or agent of the Company which the Board has authorized) deeds,
mortgages, bonds, contracts or other instruments which the Board has authorized
an officer or agent of the Company to execute. However, the President shall
not
sign any instrument which the law, these Bylaws, or the Board expressly require
some other officer or agent of the Company to sign and execute. In general,
the
President shall perform all duties incident to the office of President and
such
other duties as the Board may prescribe from time to time.
7.8
Vice
Presidents. In
the absence of the President or in the event of his death, inability or refusal
to act, the Vice Presidents in the order of their length of service as Vice
Presidents, unless the Board determines otherwise, shall perform the duties
of
the President. When acting as the President, a Vice President shall have
all the
powers and restrictions of the Presidency. A Vice President shall perform
such
other duties as the President or the Board may assign to him from time to
time.
7.9
Secretary.
The
Secretary shall (a) keep the minutes of the meetings of the Stockholders
and of
the Board in one or more books for that purpose, (b) give all notices which
these Bylaws or the law requires, (c) serve as custodian of the records and
seal
of the Company, (d) affix the seal of the corporation to all documents which
the
Board has authorized execution on behalf of the Company under seal, (e) maintain
a register of the address of each Stockholder of the Company, (f) sign, with
the
President, a Vice President, or any other officer or agent of the Company
which
the Board has authorized, certificates for shares of the Company, (g) have
charge of the stock transfer books of the Company, and (h) perform all duties
which the President or the Board may assign to him from time to
time.
7.10
Assistant
Secretaries. In the absence of the Secretary or in the event of his
death, inability or refusal to act, the Assistant Secretaries in the order
of
their length of service as Assistant Secretary, unless the Board determines
otherwise, shall perform the duties of the Secretary. When acting as the
Secretary, an Assistant Secretary shall have the powers and restrictions
of the
Secretary. An Assistant Secretary shall perform such other duties as the
President, Secretary or Board may assign from time to time.
7/13
Bylaws
of
Art
Channel, Inc.
7.11
Treasurer. The
Treasurer shall (a) have responsibility for all funds and securities of the
Company, (b)receive
and give receipts for moneys due and payable to the corporation from any
source
whatsoever, (c) deposit all moneys in the name of the Company in depositories
which the Board selects, and (d) perform all of the duties which the President
or the Board may assign to him from time to time.
7.12
Assistant
Treasurers. In the absence of the Treasurer or in the event of his death,
inability or refusal to act, the Assistant Treasurers in the order of their
length of service as Assistant Treasurer, unless the Board determines otherwise,
shall perform the duties of the Treasurer. When acting as the Treasurer,
an
Assistant Treasurer shall have the powers and restrictions of the Treasurer.
An
Assistant Treasurer shall perform such other duties as the Treasurer, the
President, or the Board may assign to him from time to time.
7.13
Delegation of
Authority. Notwithstanding any provision of these Bylaws to the contrary,
the Board may delegate the powers or duties of any officer to any other officer
or agent.
7.14
Action with Respect to
Securities of Other Corporations. Unless the Board directs otherwise, the
President shall have the power to vote and otherwise act on behalf of the
Company, in person or by proxy, at any meeting of stockholders of or with
respect to any action of stockholders of any other corporation in which the
Company holds securities. Furthermore, unless the Board directs otherwise,
the
President shall exercise any and all rights and powers which the Company
possesses by reason of its ownership of securities in another
corporation.
7.15
Vacancies. The
Board may fill any vacancy in any office because of death, resignation,
removal,disqualification
or any other cause in the manner which these Bylaws prescribe for the regular
appointment to such office.
ARTICLE
8.
CONTRACTS,
LOANS, DRAFTS, DEPOSITS AND ACCOUNTS
8.1
Contracts.
The Board
may authorize any officer or officers, agent or agents, to enter into any
contract orexecute
and deliver any instrument in the name and on behalf of the Company. The
Board
may make suchauthorization
general or special.
8.2
Loans.
Unless the
Board has authorized such action, no officer or agent of the Company shall
contract for a loan on behalf of the Company or issue any evidence of
indebtedness in the Company's name.
8.3
Drafts.
The
President, any Vice President, the Treasurer, any Assistant Treasurer, and
such
other persons as the Board shall determine shall issue all checks, drafts
and
other orders for the payment of money, notes and other evidences of indebtedness
issued in the name of or payable by the Company.
8.4
Deposits.
The
Treasurer shall deposit all funds of the Company not otherwise employed in
such
banks,trust
companies, or other depositories as the Board may select or as any officer,
assistant, agent or attorney of the Company to whom the Board has delegated
such
power may select. For the purpose of deposit and collection for the account
of
the Company, the President or the Treasurer (or any other officer, assistant,
agent or attorney of the Company whom the Board has authorized) may endorse,
assign and deliver checks, drafts and other orders for the payment of money
payable to the order of the Company.
8.5
General
and Special Bank
Accounts. The Board may authorize the opening and keeping of general
andspecial
bank accounts with such banks, trust companies, or other depositories as
the
Board may select or as any officer, assistant, agent or attorney of the Company
to whom the Board has delegated such power may select. The Board may make
such
special rules and regulations with respect to such bank accounts, not
inconsistent with the provisions of these Bylaws, as it may deem
expedient.
8/13
Bylaws
of
Art
Channel, Inc.
ARTICLE
9.
CERTIFICATES
FOR SHARES AND THEIR TRANSFER
9.1
Certificates
for
Shares. Every owner of stock of the Company shall have the right to
receive a certificate or certificates, certifying to the number and class
of
shares of the stock of the Company which he owns. The Board shall determine
the
form of the certificates for the shares of stock of the Company. The Secretary,
transfer agent, or registrar of the Company shall number the certificates
representing shares of the stock of the Company in the order in which the
Company issues them. The President or any Vice President and the Secretary
or
any Assistant Secretary shall sign the certificates in the name of the Company.
Any or all certificates may contain facsimile signatures. In case any officer,
transfer agent, or registrar who has signed a certificate, or whose facsimile
signature appears on a certificate, ceases to serve as such officer, transfer
agent, or registrar before the Company issues the certificate, the Company
may
issue the certificate with the same effect as though the person who signed
such
certificate, or whose facsimile signature appears on the certificate, was
such
officer, transfer agent, or registrar at the date of issue. The Secretary,
transfer agent, or registrar of the Company shall keep a record in the stock
transfer books of the Company of the names of the persons, firms or corporations
owning the stock represented by the certificates, the number and class of
shares
represented by the certificates and the dates thereof and, in the case of
cancellation, the dates of cancellation. The Secretary, transfer agent, or
registrar of the Company shall cancel every certificate surrendered to the
Company for exchange or transfer. Except in the case of a lost, destroyed,
stolen or mutilated certificate, the Secretary, transfer agent, or registrar
of
the Company shall not issue a new certificate in exchange for an existing
certificate until he has canceled the existing certificate.
9.2
Transfer
of Shares. A
holder of record of shares of the Company's stock, or his attorney-in-fact
authorized by power of attorney duly executed and filed with the Secretary,
transfer agent or registrar of the Company, may transfer his shares only
on the
stock transfer books of the Company. Such person shall furnish to the Secretary,
transfer agent, or registrar of the Company proper evidence of his authority
to
make the transfer and shall properly endorse and surrender for cancellation
his
existing certificate or certificates for such shares. Whenever a holder of
record of shares of the Company's stock makes a transfer of shares for
collateral security, the Secretary, transfer agent, or registrar of the Company
shall state such fact in the entry of transfer if the transferor and the
transferee request.
9.3
Lost
Certificates.
The Board may direct the Secretary, transfer agent, or registrar of the Company
to issue a new certificate to any holder of record of shares of the Company's
stock claiming that he has lost such certificate, or that someone has stolen,
destroyed or mutilated such certificate, upon the receipt of an affidavit
from
such holder to such fact. When authorizing the issue of a new certificate,
the
Board, in its discretion may require as a condition precedent to the issuance
that the owner of such certificate give the Company a bond of indemnity in
such
form and amount as the Board may direct.
9.4
Regulations.
The
Board may make such rules and regulations, not inconsistent with these Bylaws,
as itdeems
expedient concerning the issue, transfer and registration of certificates
for
shares of the stock of thecorporation.
The Board may appoint or authorize any officer or officers to appoint one
or
more transfer agents, or one or more registrars, and may require all
certificates for stock to bear the signature or signatures of any of
them.
9.5
Holder
of Record. The
Company may treat as absolute owners of shares the person in whose name
theshares
stand of record as if that person had full competency, capacity and authority
to
exercise all rights ofownership,
despite any knowledge or notice to the contrary or any description indicating
a
representative, pledge or other fiduciary relation, or any reference to any
other instrument or to the rights of any other person appearing upon its
record
or upon the share certificate. However, the Company may treat any person
furnishing proof of his appointment as a fiduciary as if he were the holder
of
record of the shares.
9.6
Treasury
Shares.
Treasury shares of the Company shall consist of shares which the Company
has
issuedand
thereafter acquired but not canceled. Treasury shares shall not carry voting
or
dividend rights.
9/13
Bylaws
of
Art
Channel, Inc.
ARTICLE
10.
INDEMNIFICATION
10.1
Definitions. In
this Article:
(a)
"Indemnitee" means (i)
any present or former Director, advisory director or officer of theCompany,
(ii) any person who while serving in any of the capacities referred to in
clause
(i) hereof servedat
the
Company's request as a director, officer, partner, venturer, proprietor,
trustee, employee, agent orsimilar
functionary of another foreign or domestic corporation, partnership, joint
venture, trust, employeebenefit
plan or other enterprise, and (iii) any person nominated or designated by
(or
pursuant to authoritygranted
by) the Board of Directors or any committee thereof to serve in any of the
capacities referred to inclauses
(i) or (ii) hereof.
(b)
"Official Capacity"
means (i) when used with respect to a Director, the office of Director of
theCompany,
and (ii) when used with respect to a person other than a Director, the elective
or appointiveoffice
of
the Company held by such person or the employment or agency relationship
undertaken by suchperson
on
behalf of the Company, but in each case does not include service for any
other
foreign ordomestic
corporation or any partnership, joint venture, sole proprietorship, trust,
employee benefit plan orother
enterprise.
(c)
"Proceeding" means any
threatened, pending or completed action, suit or proceeding, whethercivil,
criminal, administrative, arbitrative or investigative, any appeal in such
an
action, suit or proceeding,and
any
inquiry or investigation that could lead to such an action, suit or
proceeding.
10.2
Indemnification. The
Company shall indemnify every Indemnitee against all judgments,
penalties(including
excise and similar taxes), fines, amounts paid in settlement and reasonable
expenses actually incurred by the Indemnitee in connection with any Proceeding
in which he was, is or is threatened to be named defendant or respondent,
or in
which he was or is a witness without being named a defendant or respondent,
by
reason, in whole or in part, of his serving or having served, or having been
nominated or designated to serve, in any of the capacities referred to in
Section 10.1, if it is determined in accordance with Section 10.4 that the
Indemnitee (a) conducted himself in good faith, (b) reasonably believed,
in the
case of conduct in his Official Capacity, that his conduct was in the Company's
best interests and, in all other cases, that his conduct was at least not
opposed to the Company's best interests, and (c) in the case of any criminal
proceeding, had no reasonable cause to believe that his conduct was unlawful;
provided, however, that in the event that an Indemnitee is found liable to
the
Company or is found liable on the basis that personal benefit was improperly
received by the Indemnitee the indemnification (i) is limited toreasonable
expenses actually incurred by the Indemnitee in connection with the Proceeding
and (ii) shall not be made in respect of any Proceeding in which the Indemnitee
shall have been found liable for willful or intentional misconduct in the
performance of his duty to the Company. Except as provided in the immediately
preceding proviso to the first sentence of this Section 10.2, no indemnification
shall be made under this Section 10.2 in respect of any Proceeding in which
such
Indemnitee shall have been (a) found liable on the basis that personal benefit
was improperly received by him, whether or not the benefit resulted from
an
action taken in the Indemnitee's Official Capacity, or (b) found liable to
the
Company. The termination of any Proceeding by judgment, order, settlement
or
conviction, or on a plea of nolo contendere or its equivalent, is not of
itself
determinative that the Indemnitee did not meet the requirements set forth
in
clauses (a), (b) or (c) in the first sentence of this Section 10.2. An
Indemnitee shall be deemed to have been found liable in respect of any claim,
issue or matter only after the Indemnitee shall have been so adjudged by
a court
of competent jurisdiction after exhaustion of all appeals therefrom. Reasonable
expenses shall, include, without limitation, all court costs and all fees
and
disbursements of attorneys for the Indemnitee. The indemnification provided
herein shall be applicable whether or not negligence or gross negligence
of the
Indemnitee is alleged or proven.
10.3
Successful
Defense. Without limitation of Section 10.2 and in addition to the
indemnification provided for in Section 10.2, the Company shall indemnify
every
Indemnitee against reasonable expenses incurred by such person in connection
with any Proceeding in which he is a witness or a named defendant or respondent
because he served in any of the capacities referred to in Section 10.1, if
such
person has been wholly successful, on the merits or otherwise, in defense
of the
Proceeding.
10/13
Bylaws
of
Art
Channel, Inc.
10.4
Determinations.
Any indemnification under Section 10.2 (unless ordered by a court of
competentjurisdiction)
shall be made by the Company only upon a determination that indemnification
of
the Indemnitee is proper in the circumstances because he has met the applicable
standard of conduct. Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum consisting of Directors who, at
the
time of such vote, are not named defendants or respondents in the Proceeding;
(b) if such a quorum cannot be obtained, then by a majority vote of a committee
of the Board of Directors, duly designated to act in the matter by a majority
vote of all Directors (in which designated Directors who are named defendants
or
respondents in the Proceeding may participate), such committee to consist
solely
of two (2) or more Directors who, at the time of the committee vote, are
not
named defendants or respondents in the Proceeding; (c) by special legal counsel
selected by the Board of Directors or a committee thereof by vote as set
forth
in clauses (a) or (b) of this Section 10.4 or, if the requisite quorum of
all of
the Directors cannot be obtained therefor and such committee cannot be
established, by a majority vote of all of the Directors (in which Directors
who
are named defendants or respondents in the Proceeding may participate); or
(d)
by the shareholders in a vote that excludes the shares held by Directors
that
are named defendants or respondents in the Proceeding. Determination as to
reasonableness of expenses shall be made in the same manner as the determination
that indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, determination
as to reasonableness of expenses must be made in the manner specified in
clause
(c) of the preceding sentence for the selection of special legal counsel.
In the
event a determination is made under this Section 10.4 that the Indemnitee
has
met the applicable standard of conduct as to some matters but not as to others,
amounts to be indemnified may be reasonably prorated.
10.5
Advancement of
Expenses. Reasonable expenses (including court costs and attorneys' fees)
incurred by an Indemnitee who was or is a witness or was, is or is threatened
to
be made a named defendant or respondent in a Proceeding shall be paid by
the
Company at reasonable intervals in advance of the final disposition of such
Proceeding, and without making any of the determinations specified in Section
10.4, after receipt by the Company of (a) a written affirmation by such
Indemnitee of his good faith belief that he has met the standard of conduct
necessary for indemnification by the Company under this Article and (b) a
written undertaking by or on behalf of such Indemnitee to repay the amount
paid
or reimbursed by the Company if it shall ultimately be determined that he
is not
entitled to be indemnified by the Company as authorized in this Article.
Such
written undertaking shall be an unlimited obligation of the Indemnitee but
need
not be secured and it may be accepted without reference to financial ability
to
make repayment. Notwithstanding any other provision of this Article, the
Company
may pay or reimburse expenses incurred by an Indemnitee in connection with
his
appearance as a witness or other participation in a Proceeding at a time
when he
is not named a defendant or respondent in the Proceeding.
10.6
Employee Benefit
Plans. For purposes of this Article, the Company shall be deemed to have
requested an Indemnitee to serve an employee benefit plan whenever the
performance by him of his duties to the Company also imposes duties on or
otherwise involves services by him to the plan or participants or beneficiaries
of the plan. Excise taxes assessed on an Indemnitee with respect to an employee
benefit plan pursuant to applicable law shall be deemed fines. Action taken
or
omitted by an Indemnitee with respect to an employee benefit plan in the
performance of his duties for a purpose reasonably believed by him to be
in the
interest of the participants and beneficiaries of the plan shall be deemed
to be
for a purpose which is not opposed to the best interests of the
Company.
10.7
Other Indemnification
and Insurance. The indemnification provided by this Article shall (a) not
be deemed exclusive of, or to preclude, any other rights to which those seeking
indemnification may at any time be entitled under the Company's Articles
of
Incorporation, any law, agreement or vote of shareholders or disinterested
Directors, or otherwise, or under any policy or policies of insurance purchased
and maintained by the Company on behalf of any Indemnitee, both as to action
in
his Official Capacity and as to action in any other capacity, (b) continue
as to
a person who has ceased to be in the capacity by reason of which he was an
Indemnitee with respect to matters arising during the period he was in such
capacity, (c) inure to the benefit of the heirs, executors and administrators
of
such a person and (d) not be required if and to the extent that the person
otherwise entitled to payment of such amounts hereunder has actually received
payment therefor under any insurance policy, contract or otherwise.
10.8
Notice. Any
indemnification of or advance of expenses to an Indemnitee in accordance
with
this Article shall be reported in writing to the shareholders of the Company
with or before the notice or waiver of notice of the next shareholders' meeting
or with or before the next submission to shareholders of a consent to action
without a meeting and, in any case, within the 12-month period immediately
following the date of the indemnification or advance.
11/13
Bylaws
of
Art
Channel, Inc.
10.9
Construction.
The indemnification provided by this Article shall be subject to all valid
and
applicable laws, including, without limitation, the Texas Business Organization
Code, and, in the event this Article or any of the provisions hereof or the
indemnification contemplated hereby are found to be inconsistent with or
contrary to any such valid laws, the latter shall be deemed to control and
this
Article shall be regarded as modified accordingly, and, as so modified, to
continue in full force and effect.
10.10
Continuing Offer,
Reliance, etc. The provisions of this Article (a) are for the benefit of,
and may be enforced
by, each Indemnitee of the Company, the same as if set forth in their entirety
in a written instrument duly executed and delivered by the Company and such
Indemnitee and (b) constitute a continuing offer to all present and future
Indemnitees. The Company, by its adoption of these Bylaws, (a) acknowledges
and
agrees that each Indemnitee of the Company has relied upon and will continue
to
rely upon the provisions of this Article in becoming, and serving in any
of the
capacities referred to in Section 10.1 of this Article, (b) waives reliance
upon, and all notices of acceptance of, such provisions by such Indemnitees
and
(c) acknowledges and agrees that no present or future Indemnitee shall be
prejudiced in his right to enforce the provisions of this Article in accordance
with its terms by any act or failure to act on the part of the
Company.
10.11
Effect of
Amendment. No amendment, modification or repeal of this Article or any
provision hereof shall in any manner terminate, reduce or impair the right
of
any past, present or future Indemnitees to be indemnified by the Company,
nor
the obligation of the Company to indemnify any such Indemnitees, under and
in
accordance with the provisions of the Article as in effect immediately prior
to
such amendment, modification or repeal with respect to claims arising from
or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
ARTICLE
11.
TAKEOVER
OFFERS
In
the
event the Company receives a takeover offer, the Board of Directors shall
consider all relevantfactors
in evaluating such offer, including, but not limited to, the terms of the
offer,
and the potential economic and social impact of such offer on the Company's
stockholders, employees, customers, creditors and community in which it
operates.
ARTICLE
12.
NOTICES
12.1
General.
Whenever these Bylaws require notice to any Stockholder, director, officer
or
agent, such notice does not mean personal notice. A person may give effective
notice under these Bylaws in every case by depositing a writing in a post
office
or letter box in a postpaid, sealed wrapper, or by dispatching a prepaid
telegram addressed to such Stockholder, director, officer or agent at his
address on the books of the Company. Unless these Bylaws expressly provide
to
the contrary, the time when the person sends notice shall constitute the
time of
the giving of notice.
12.2
Waiver of
Notice. Whenever the law or these Bylaws require notice, the person
entitled to said notice may waive such notice in writing, either before or
after
the time stated therein.
ARTICLE
13.
MISCELLANEOUS
13.1
Facsimile
Signatures. In addition to the use of facsimile signatures which these
Bylaws specificallyauthorize,
the Company may use such facsimile signatures of any officer or officers,
agents
or agent, of theCompany
as the Board or a committee of the Board may authorize.
12/13
Bylaws
of
Art
Channel, Inc.
13.2
Corporate Seal.
The Board may provide for a suitable seal containing the name of the Company,
of
which the Secretary shall be in charge. The Treasurer, any Assistant Secretary,
or any Assistant Treasurer may keep and use the seal or duplicates of the
seal
if and when the Board or a committee of the Board so directs.
13.3
Fiscal Year.
The Board shall have the authority to fix and change the fiscal year of the
Company.
ARTICLE
14.
AMENDMENTS
14.1
Subject to the provisions of the Articles of Incorporation, the Stockholders
or
the Board may amend orrepeal
these Bylaws at any meeting.
The
undersigned hereby certifies that the foregoing constitutes a true and correct
copy of the Bylaws of theCompany
as adopted by the Directors on the 16th day of February,
2007.
|
Executed
as of this 16th day
of February, 2007.
|
|
|
_______________________________________
|
|
|
Xxxxx
Xxxxxx
|
|
|
President
|
13/13
Bylaws
of
Art
Channel, Inc.
EXHIBIT
F
CHANNEL
GOOD STANDING CERTIFICATE
|
Corporations
Section
X.X.
Xxx 00000
Xxxxxx,
Xxxxx 00000-0000
|
|
Xxxx
Xxxxxx
Secretary
of State
|
|
Office
of the Secretary of State
|
Certificate
of Fact
The
undersigned, as Secretary of State of Texas, does hereby certify that the document, Certificate of Formation
for ART CHANNEL, INC. (file number 800779313), a Domestic For-Profit
Corporation, was filed in this office on February 26, 2007.
It
is further certified that the entity status in Texas is in
existence.
|
In
testimony whereof, I have hereunto signed my name officially and
caused to
be impressed hereon the Seal of State at my office in Austin, Texas
on
December 26, 2007.
|
|
|
/s/
Xxxx Xxxxxx
Xxxx
Xxxxxx
Secretary
of State
|
|
Come
visit us on the internet at xxxx://xxx.xxx.xxxxx.xx.xx/
|
||
|
Phone:
(000) 000-0000
|
Fax:
(000) 000-0000
|
Dial:
7-1-1 for Relay Services
|
|
Prepared
by: SOS-WEB
|
TID:
10264
|
Document:
197600670003
|
F-1
EXHIBIT
G
ART
CHANNEL, INC.
RESOLUTION
OF THE BOARD OF DIRECTORS
At
the
meeting of the Board of Directors of Art Channel, Inc. (“Company”) held on
December 5, 2007, the following resolutions were proposed and approved by the
Board:
WHEREAS,
ArtFest International, Inc. (ARTI), a publicly traded company with its common
stock traded on the OTCBB under the stock symbol (ARTI), wishes to acquire
the
Company through a tax-free share exchange agreement (hereinafter, the
“Acquisition”), whereupon the Company shall become a wholly owned subsidiary of
ARTI. In connection with the Acquisition, each issued and outstanding
share of the Company’s common stock shall be deemed cancelled and converted into
the right to receive, as applicable, 28,000,000 shares of ARTI common
stock.
BE
IT
RESOLVED, that the Board approves the Acquisition and intends to have completed
by January 31, 2008, or sooner.
Date: December
5,
2007
|
CHAIRMAN
AND
PRESIDENT
|
|
|
____________________________
|
|
|
Xxxxx
Xxxxxx
|
|
|
SECRETARY
|
|
|
____________________________
|
|
|
Xxxxxxxxx
Xxxxxx
|
|
|
TREASURER
|
|
|
____________________________
|
|
|
J.
Xxxxx
Xxxxxx
|
G-1
EXHIBIT
H
ART
CHANNEL, INC.
RESOLUTION
OF THE MAJORITY SHAREHOLDERS
At
the
meeting of the Majority Shareholders (“Shareholders”) of the Art Channel, Inc.
(“Company”) held on December 5, 2007, collectively holding over 66.7% of the
shares of the Company, the following resolutions were approved by the
Shareholders:
WHEREAS,
ArtFest International, Inc. (ARTI), a publicly traded company with its common
stock traded on the OTCBB under the stock symbol (ARTI), wishes to acquire
the
Company through a tax-free share exchange agreement (hereinafter, the
“Acquisition”), whereupon the Company shall become a wholly owned subsidiary of
ARTI. In connection with the Acquisition, each issued and outstanding
share of the Company’s common stock shall be deemed cancelled and converted into
the right to receive, as applicable, 28,000,000 shares of ARTI common
stock.
BE
IT
RESOLVED, that the Shareholders approve the Acquisition and intends to have
completed by January 31, 2008,
or sooner.
Date: December
5,
2007
|
Majority
Shareholder
|
|
|
NRG,
INC.
|
|
|
By:
________________________
|
____________/_____________
|
|
Xxxxx
Xxxxxx
|
No.
of Shares %
Ownership
|
|
Majority
Shareholder
|
|
|
____________ _____________
|
____________/_____________
|
|
X.
Xxxxx and Xxxxxxxxx
Xxxxxx
|
No.
of Shares %
Ownership
|
H-1
EXHIBIT
I
LIST
OF SHAREHOLDERS OF CHANNEL
Deleted from SEC
filing due to the confidential nature of the information.
I-1
EXHIBIT
J
CHANNEL
DISCLOSURE SCHEDULE
Financial
Condition
Since
the
date of Channel’s last financial audit, for the period ending Sept. 30, 2007,
Channel incurred additional liabilities of $15,000 in the form of Notes Payable
in a similar format to those of the other note holders as identified in Item
#5
of the financial audit.
These
funds were used for general operating expenses and other expenses associated
to
professional fees related to this acquisition transaction.
J-1
EXHIBIT
K
CERTIFICATE
OF INCORPORATION
OF
SOLDNET,
INC.
FIRST:
The name of the Corporation is Soldnet Inc.
SECOND: Its registered office
is to be located at Xxxxx 000, 0000 X. Xxxxxx
Xxxxxx, Xxxxxxxxxx, XX 00000, County of New
Castle. The registered agent is American Incorporators
Limited whose address is the same as above.
THIRD: The
nature of business and purpose of the organization is to
engage in any lawful act or activity for
which corporations may
be organized under the Delaware General Corporation
Laws.
FOURTH: The
total number of shares of stock which
the corporation shall have authority to issue is forty
million (40000000). All such shares are to be with par
value of 0.001 and are to be of one class.
FIFTH:
The name and address of the incorporator are as follows:
Xxxxxxxx
Xxxxx
Xxxxx
000
0000
X.
Xxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
SIXTH:
The powers of the undersigned incorporator will terminate upon filing
of the certificate of incorporation. The name and mailing address of
the person(s) who will serve as director(s) until the first annual meeting
of
the stockholders or until a successor(s) is elected and qualified
are:
Xxxxxx
Xxxxx
0000
Xxxxxxx Xxxx
Xxxxxxxxxx
Xxxxx, XX 00000
SEVENTH: Each person who serves or
has served as a director shall not be
personally liable to the corporation or
its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that this
provision shall not eliminate or limit
the liability of a director: (i) for
any breach of loyalty to the corporation or its stockholders; (ii)
for acts or omission not in good faith or which
involve intentional misconduct or a
knowing violation of law; (iii)
for unlawful payment of dividend
or unlawful stock purchase or
redemption as
such liability is imposed under Section 174
of the General Corporation Laws
of Delaware; or (iv) for
any transaction from which the
director derived an improper personal benefit.
K-1
I,
THE
UNDERSIGNED, for the purpose of forming a
corporation under the laws of the State of Delaware, do make, file
and record this certificate, and do certify that the facts stated herein are
true, and I have accordingly set my hand.
|
/s/
Xxxxxxxx Xxxxx
|
|
|
Xxxxxxxx
Xxxxx
|
|
|
INCORPORATOR
|
K-2
EXHIBIT
L
WRITTEN
CONSENT OF THE
BOARD
OF
DIRECTORS
ARTFEST
INTERNATIONAL, INC.
Re: 2005
Special Meeting of Board, BYLAWS
Effective
Date: November 7, 2005
THESE
ARE
THE MINUTES of the Board of Directors of Artfest International, Inc., by Written
Consent in lieu of a Special Meeting of the Board, effective the date
above. Notice of any Meeting is waived. Reference is made to past
Board discussions regarding this subject, and the need to maintain records
of
approvals and related items, therefore, the Board hereby resolves:
1.
The
Board acknowledges that the attached Bylaws are the Bylaws for our Company,
and
the name is hereby amended to become Artfest International, Inc., for the
document.
2.
Xxxxxx Xxxxx, President and CEO, is authorized to execute documents and take
action as is reasonable and lawful to give effect to the above.
This
may
be executed in counterparts and by fax and notwithstanding when executed, is
ratified as being effective the effective date above.
_____________________________
Xxxxxx
Xxxxx
_____________________________
Xxxxx
Xxxxxxx
_____________________________
Xxxxx
Xxx
L-1
BY-LAWS
ARTICLE
I
The
Stockholders
SECTION
1.1. ANNUAL
MEETING. The annual meeting of the stockholders of Soldnet, Inc. (the
"Corporation") shall be held on the third Thursday in January of each year
at
10:30 a.m. local time, or at such other date or time as shall be
designated from time to time by the Board of Directors and stated in
the notice of the meeting, for the election of directors and for
the transaction of such other business as may come before
the meeting.
SECTION
1.2. SPECIAL MEETINGS. A special meeting of the
stockholders may be called at any time by the written resolution or
request of two-thirds or more of the members of the Board of
Directors, the president, or any executive
vice president and shall be called upon the
written request of the holders of two-thirds or more in
amount, of each class or series of the capital stock of
the Corporation entitled to vote at such meeting on the matters(s)
that are the subject of the proposed meeting, such
written request in each case to specify the purpose or purposes for
which such meeting shall be called, and with respect to
stockholder proposals, shall further comply with
the requirements of this Article.
SECTION 1.3. NOTICE
OF MEETINGS. Written notice of each meeting
stockholders whether annual or special, stating the date, hour and place where
it is to be held, shall be reserved either personally or
by mail, not less than fifteen nor more than sixty days before the
meeting, upon each stockholder of
record entitled to vote at such meeting, and to any
other stockholder to whom the giving of notice may be required by
law. Notice of a special meeting shall also state
the purpose or purposes for which
the meeting is called and shall indicate that it is
being issued by, or at
the direction of, the person or persons calling
the meeting. If, at any meeting, action is proposed to be taken that would,
if
taken, entitle stockholders to receive payment for their stock, the notice
of
such meeting shall include a statement of that purpose and to that effect.
If
mailed, notice shall be deemed to be delivered when deposited in the
United States mail or with any private express mail service, postage or delivery
fee prepaid, and shall be directed to each such stockholder at his
address, as it appears on the records of
the stockholders of
the Corporation, unless he shall
have previously filed with the secretary of
the Corporation a written request that notices intended
for him be mailed to some other address, in which case, it shall be
mailed to the address designated in such request.
SECTION
1.4. FIXING DATE
OF RECORD. (a) In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any
meeting of stockholders, or any
adjournment thereof, the Board of Directors may fix a
record date, which record date shall
not precede the date upon which the
resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be
more than sixty nor less than ten days before the date of such meeting. If
no
record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of, or to vote at, a
meeting of stockholders shall be at
the close of business on the day next preceding
the day on which notice is given, or if notice is waived, at the close of
business
on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice
of, or to vote at, a meeting of stockholders shall apply to any adjournment
of
the meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
L-2
(b)
In
order that the Corporation may determine the stockholders
entitled to consent to corporate action in
writing without a meeting (to the extent that such action by
written consent is permitted by law, the Certificate
of Incorporation or
these By-Laws), the Board of Directors may fix
a record date, which record date shall
not precede the date upon which the resolution fixing the
record date is adopted by the Board
of Directors, and which date shall not be more than ten
days after the date upon which the resolution fixing the record date
is adopted by the Board of Directors. If no record date has been fixed by the
Board of Directors, the record date
for determining stockholders entitled to consent to
corporate action in writing without a
meeting, when no prior action by the Board
of Directors is required by law, shall be the
first date on which
a signed written consent setting forth the action taken
or proposed to
be taken is delivered to
the Corporation by delivery to its
registered office in
its state of incorporation, its principal place of
business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to
the Corporation's registered office shall be
by hand or by certified or
registered mail, return receipt requested. If no record
date has been fixed by the Board of Directors and prior action by the Board
of
Directors is required by law, the record date
for determining stockholders entitled to consent
to corporate action in writing without a meeting shall be at the
close of business on the day on which the Board
of Directors adopts
the resolution taking such prior action.
(c)
In
order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or
other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of
stock, or for the purpose of any other lawful action, the
Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty
days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
SECTION
1.5. INSPECTORS. At each
meeting of the stockholders, the polls shall be opened and closed and the
proxies and ballots shall be received and be taken in
charge. All questions touching on the qualification of
voters and the validity of proxies and the acceptance or rejection of
votes, shall be decided by one or
more inspectors. Such inspectors shall be
appointed by the Board of Directors before or at the meeting, or, if
no such appointment shall have been made, then by the presiding
officer at the meeting. If for any reason any of the
inspectors previously appointed
shall fail to attend or refuse or be unable to serve, inspectors in
place of any so failing to attend or refusing or unable to serve shall be
appointed in like manner.
SECTION
1.6. QUORUM. At any meeting
of the stockholders, the holders of a majority of the shares entitled
to vote, represented in person or by proxy,
shall constitute a quorum of
the stockholders for
all purposes, unless the representation of a
larger number shall be required by law,
and,
in that case, the representation of the number so required shall constitute
a
quorum.
L-3
If
the holders of the amount of
stock necessary to constitute a quorum shall fail
to attend in person or by proxy at
the time and place fixed in accordance with
these By-Laws for an annual or special meeting, a majority
in interest of the stockholders present in person or by
proxy may adjourn, from time to time, without
notice other than by announcement at the meeting, until
holders of the amount of stock requisite to constitute a quorum shall attend.
At
any
such
adjourned meeting at which a quorum shall be present, any business
may be transacted which might have
been transacted at the meeting as originally
notified.
SECTION 1.7. BUSINESS. The chairman of the Board, if any, the
president, or in his absence
the vice-chairman, if any, or an executive vice
president, in the order named, shall call meetings of the stockholders to order,
and shall act as chairman of such meeting; provided, however, that
the Board of Directors or executive committee may appoint any
stockholder to act as chairman of any meeting in the absence of the chairman
of
the Board. The secretary of the Corporation
shall act as secretary at all meetings of
the stockholders, but in the absence of the secretary at
any meeting of the stockholders, the presiding officer may
appoint any person to act as secretary of the meeting.
SECTION
1.8. STOCKHOLDER
PROPOSALS. No proposal by a stockholder shall be presented for vote
at a special or annual meeting of stockholders unless such
stockholder shall, not later than
the close of business on the fifth
day
following the date on which notice of the meeting is first given to
stockholders, provide the Board of Directors or the secretary of the Corporation
with written notice
of intention to present
a proposal for action at the
forthcoming meeting of stockholders, which
notice shall include the name and address of
such stockholder, the number of
voting securities that he holds of record and that he holds
beneficially, the text of the proposal to be presented to the meeting
and a statement in support of the proposal.
Any stockholder who
was
a stockholder of record on
the applicable record date may make any other proposal at an annual
meeting or special meeting of stockholders and the same may be
discussed and considered, but unless stated in writing and filed with
the Board of Directors or the secretary prior to the date
set forth herein above, such proposal shall be laid over
for action at an adjourned, special, or annual meeting of
the stockholders taking place sixty days or more
thereafter. This provision shall not prevent the consideration and
approval or disapproval at the annual meeting of reports of officers, directors,
and committees, but in connection with such reports, no new business proposed
by
a stockholder, qua stockholder, shall
be acted upon at such annual meeting unless stated and
filed as herein provided.
Notwithstanding any
other
provision of these By-Laws, the Corporation shall be under
no obligation to include
any stockholder proposal in its proxy
statement materials or otherwise present any such proposal to
stockholders at a special or annual meeting of stockholders if the
Board of Directors reasonably believes the
proponents thereof have not complied with Sections 13 or 14 of the
Securities Exchange Act of
1934, as amended, and the rules
and regulations thereunder; nor
shall the Corporation be required to include
any stockholder proposal not required to be included in its
proxy materials to stockholders in accordance with any
such section, rule or regulation.
L-4
SECTION
1.9. PROXIES. At all meetings of
stockholders, a stockholder entitled to vote may
vote either in person or by proxy executed in writing by
the stockholder or by his duly authorized attorney-in-fact. Such
proxy shall be filed with the secretary before or at the time of the meeting.
No
proxy shall be valid after eleven months from
the date of its execution, unless otherwise
provided in the proxy.
SECTION
1.10. VOTING BY
BALLOT. The votes for directors, and upon the demand of
any stockholder or when required by law, the votes upon
any question before the meeting, shall be by ballot.
SECTION 1.11. VOTING LISTS. The
officer who has charge of the stock ledger of the Corporation shall prepare
and
make, at least ten days before every meeting of stockholders, a complete list
of
the stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address
of each stockholder and the number of shares of
stock registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least ten days prior to
the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice
of
the meeting, or if not
so specified, at the place where the meeting is to be
held. The list shall also
be produced and kept at the time and place of the
meeting during the whole time thereof and may be inspected
by any stockholder who
is
present.
SECTION 1.12. PLACE
OF
MEETING. The Board of Directors may designate any place, either
within or without the state of incorporation, as the place of
meeting for any annual meeting or any
special meeting called by the Board of
Directors. If no designation is made or if
a special meeting is otherwise
called, the place of meeting shall be the principal office of the
Corporation.
SECTION 1.13. VOTING
OF
STOCK OF CERTAIN HOLDERS. Shares of capital stock of the
Corporation standing in the name of
another corporation, domestic or foreign, may be voted by
such officer, agent, or proxy as the by-laws of such corporation may
prescribe, or in the absence of such provision, as the board of
directors of such corporation may determine.
Shares
of
capital stock of the Corporation standing in
the name of a deceased person, a minor xxxx or
an incompetent person may be voted by his
administrator, executor, court-appointed guardian
or conservator, either in person or by
proxy, without a transfer of
such stock into the name of such
administrator, executor, court-appointed guardian
or conservator. Shares of capital stock of the
Corporation standing in the name of a trustee may be voted by him,
either in person or by proxy.
Shares
of capital stock of
the Corporation standing in the name of a receiver may be
voted, either in person or by proxy, by such receiver, and stock held by or
under the control of a receiver may be voted by such receiver without
the transfer thereof into his name
if authority to do so is contained
in any appropriate order of the court by which such receiver was
appointed.
L-5
A stockholder whose stock
is pledged shall be entitled to vote such stock, either in
person or by proxy, until the stock has been transferred into the
name of the pledgee, and thereafter the pledgee shall be
entitled to vote, either in person or by proxy, the stock so
transferred.
Shares
of
its own capital stock belonging to this Corporation shall not be
voted, directly or indirectly, at
any meeting and shall not be counted in
determining the total number
of outstanding stock at
any given time, but shares of its own stock
held by it in a fiduciary capacity may be voted and shall be
counted in determining the total number
of outstanding stock at any given
time.
ARTICLE
II
Board
of
Directors
SECTION
2.1. GENERAL POWERS. The
business, affairs, and the property of
the Corporation shall be managed and controlled by the
Board of Directors (the "Board"), and, except as otherwise expressly provided
by
law, the Certificate of Incorporation or these
By-Laws, all of the powers of the Corporation shall be
vested in the Board.
SECTION
2.2. NUMBER OF
DIRECTORS. The number of directors which shall
constitute the whole Board shall be
not fewer than one or more than five. Within the limits above specified, the
number of directors shall be determined by the Board
of Directors pursuant to
a resolution adopted by a majority of the directors then
in office.
SECTION
2.3. ELECTION, TERM AND
REMOVAL. Directors shall be elected at the annual meeting
of stockholders to succeed those directors whose terms
have expired. Each director shall
hold office for the term for which elected and until his
or her successor shall be elected and qualified. Directors need not be
stockholders. A director may
be removed from office at a
meeting expressly
called for that purpose by
the vote of not less than
a majority of the
outstanding
capital stock entitled to vote at an election of directors.
SECTION
2.4.
VACANCIES. Vacancies in the Board of Directors, including
vacancies resulting from an increase in the number of
directors, may be filled by the affirmative vote of a majority of the
remaining directors then in office, though less than a quorum; except
that vacancies resulting from removal from
office by a vote of the stockholders may be filled by
the stockholders at the same meeting at which such removal
occurs provided that the holders of not less than a majority of the
outstanding capital stock of
the Corporation (assessed upon the basis of votes and not
on the basis of number of shares) entitled to
vote for the election of directors, voting together as a
single class, shall vote for
each replacement director. All
directors elected to fill vacancies shall hold office for
a term expiring at the time of the next annual meeting of
stockholders and upon election and qualification of his
successor. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of an incumbent director.
L-6
SECTION
2.5. RESIGNATIONS. Any director of the Corporation may
resign at any time by giving written notice to the president or to the secretary
of the Corporation. The resignation of
any director shall take effect at the time
specified therein and, unless
otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION
2.6. PLACE OF
MEETINGS, ETC. The Board of Directors may hold
its meetings, and may have
an office and keep the books of
the Corporation (except as otherwise may be provided for by law), in
such place or places in or outside the state of incorporation as the Board
from
time to time may determine.
SECTION 2.7. REGULAR MEETINGS. Regular meetings of
the Board of Directors shall be held as soon as
practicable after adjournment of the annual meeting
of stockholders at such time and place as the Board
of Directors may fix. No notice shall be required for any
such regular meeting of the Board.
SECTION 2.8. SPECIAL MEETINGS. Special meetings of
the Board of Directors shall be held at places
and times fixed by resolution of the Board of Directors, or upon call
of the chairman of the Board, if any, or vice-chairman of the
Board, if any, the president, an executive vice president
or two-thirds of the directors then in office.
The
secretary or
officer performing the secretary's duties shall give not
less than twenty-four hours' notice by letter, telegraph or telephone (or in
person) of all special meetings of the Board of Directors, provided
that notice need not given of the annual meeting or of
regular meetings held at times and
places fixed by resolution of
the Board. Meetings may be held at any time
without notice if all of
the directors are present, or if
those not present waive notice in
writing either before or after
the meeting. The notice of meetings of the
Board need not state the purpose of the meeting.
SECTION
2.9. PARTICIPATION BY CONFERENCE TELEPHONE. Members
of the Board of Directors of the Corporation, or any committee thereof, may
participate in a regular or special or any other meeting of the Board
or committee by means of conference telephone or
similar communications equipment by means of which
all persons participating in
the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
SECTION 2.10. ACTION
BY WRITTEN CONSENT. Any action required or
permitted to be taken at any meeting of
the Board of Directors, or of any
committee thereof, may be taken without a meeting if prior or subsequent to
such
action all the members of the Board
or such committee, as the case may be, consent thereto
in writing, and the writing
or writings are filed with the minutes of the proceedings
of the Board or committee.
SECTION
2.11. QUORUM. A
majority of the total number of directors then in office
shall constitute a quorum for the transaction of
business; but if at any meeting of the
Board there be less than a quorum present, a
majority of those present may adjourn the meeting from time to
time.
SECTION
2.12. BUSINESS. Business
shall be transacted at meetings of the Board of Directors in
such
order as the Board may determine. At all meetings of the Board of
Directors, the chairman of the Board, if any, the president, or in
his absence the vice-chairman, if any, or an executive
vice president, in the order named, shall preside.
L-7
SECTION
2.13. INTEREST OF
DIRECTORS IN CONTRACTS. (a) No contract or
transaction between the Corporation and one
or more of its directors or
officers, or between the Corporation and any
other corporation, partnership, association, or
other organization in which one or more of
the Corporation's directors or officers, are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director
or officer is present at
or participates in the meeting of
the Board or committee which authorizes the contract or transaction,
or solely because his or their votes are counted for such purpose,
if:
(1)
The material facts as to his
relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the
committee, and the Board or committee in good faith authorizes the
contract or transaction by
the affirmative votes of a majority of
the disinterested directors, even though the disinterested directors
be less than a quorum; or
(2)
The material facts as to his
relationship or interest and as to the contract or transaction are disclosed
or
are known to the stockholders entitled to vote
thereon, and the contract or transaction
is specifically approved in good faith by vote of the
stockholders; or
(3)
The contract or transaction is
fair as to the Corporation as of the time it
is authorized, approved or ratified, by
the Board of Directors, a committee of the Board of
Directors or the stockholders.
(b)
Interested directors
may be counted in determining the presence of a quorum at
a meeting of the Board
of Directors or of a committee which
authorizes the contract or transaction.
SECTION 2.14. COMPENSATION OF DIRECTORS. Each director of the
Corporation who is not a salaried officer or employee of the
Corporation, or of a subsidiary of the Corporation, shall
receive such allowances for serving as a director and such fees
for attendance at meetings of the Board of Directors or
the executive committee or any
other committee appointed by the Board as the Board may
from time to time determine.
SECTION
2.15. LOANS TO
OFFICERS OR EMPLOYEES. The Board of Directors may lend
money to, guarantee any obligation of, or otherwise assist, any officer or
other
employee of the Corporation or of any subsidiary, whether
or not such officer or employee is also a director of
the Corporation, whenever, in the judgment of
the directors, such loan, guarantee, or assistance may reasonably be
expected to benefit
the Corporation; provided, however, that
any such loan, guarantee, or
other assistance given to an officer or
employee who is also a director
of the Corporation must be authorized by a majority of the entire Board of
Directors. Any such loan, guarantee, or other assistance may be made
with or without interest and may be unsecured or secured in such
manner as the Board of Directors shall
approve, including, but not limited to, a pledge of shares
of the Corporation, and may be made upon such other terms
and conditions as the Board of Directors may
determine.
L-8
SECTION
2.16. NOMINATION. Subject to
the rights of holders of any class or series of stock having a
preference over the common stock as to dividends or
upon liquidation, nominations for the election of
directors may be made by the Board of Directors or by
any stockholder entitled to vote in the election of
directors generally. However, any stockholder entitled to
vote in the election
of directors generally may nominate one
or more persons for election as
directors at a meeting only if written notice of
such stockholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United
States mail, postage prepaid, to the secretary of the
Corporation not later than (i) with respect to an election to be held
at an annual meeting of stockholders, the close of business on the
last day of the eighth month after the immediately preceding annual meeting
of
stockholders, and (ii) with respect to an election to be held at a
special meeting of stockholders for the election of directors, the
close of business on the fifth day following the date on which notice of
such meeting is first given
to stockholders. Each such notice shall set
forth: (a) the name and address of the stockholder who
intends to make the nomination and of the person or persons to be
nominated; (b) a representation that the stockholder is a
holder of record of stock of the Corporation entitled to vote at
such meeting and
intends to appear in person or by proxy at the
meeting to nominate the person
or persons specified in
the notice; (c) a description of
all arrangements or understandings between the
stockholder and each nominee and any other person or
persons (naming such person or persons)
pursuant to which the nomination or nominations are to
be made by the stockholder; (d) such
other information regarding each nominee proposed by such
stockholder as would be required to
be included in a
proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, had the nominee been
nominated, or intended to be nominated, by the Board of Directors,
and; (e) the consent of each nominee to serve as a director of
the Corporation if so elected. The
presiding officer at the meeting may refuse to acknowledge
the nomination of
any person not made in compliance with the foregoing
procedure.
ARTICLE
III
Committees
SECTION
3.1.
COMMITTEES. The Board of Directors, by resolution adopted by
a majority of
the number of directors then fixed
by these By-Laws or
resolution thereto, may establish such standing
or special committees of the Board as it may deem
advisable, and the members, terms, and
authority of such committees shall be set forth in the resolutions establishing
such committee.
SECTION
3.2. EXECUTIVE COMMITTEE NUMBER AND TERM OF OFFICE. The
Board of Directors may, at any meeting, by
majority vote of the Board of Directors, elect from the directors an
executive committee. The executive committee shall
consist of such number of members as
may be fixed from time to time by
resolution of the Board of Directors. The Board
of Directors may designate a chairman of the committee who
shall preside at all meetings thereof, and the
committee shall designate a
member thereof to preside in the absence of the
chairman.
L-9
SECTION
3.3.
EXECUTIVE COMMITTEE POWERS. The executive committee may,
while the Board of Directors is not
in session, exercise all or any of the powers
of the Board of Directors in all cases in which specific directions shall
not have been given by the Board
of Directors; except that
the executive committee shall not have the power or authority of the
Board of Directors to (i) amend the Certificate of Incorporation or
the By-Laws of the Corporation, (ii) fill
vacancies on the Board of Directors, (iii) adopt an agreement or
certification of ownership, merger
or consolidation, (iv) recommend to the
stockholders the sale, lease or exchange of all
or substantially all of the
Corporation's property and assets, or a
dissolution of the Corporation or a
revocation of a dissolution, (v) declare a
dividend, or (vi) authorize the issuance of
stock.
SECTION
3.4. EXECUTIVE COMMITTEE
MEETINGS. Regular and special meetings
of the executive committee may
be called and held subject to the same
requirements with respect to time, place and notice as
are specified in these By-Laws for regular
and special meetings of the Board
of Directors. Special meetings of the executive committee
may be called by any member thereof. Unless
otherwise indicated in the notice thereof, any and all business may
be transacted at a special or regular meeting of the
executive meeting if a quorum is present. At
any meeting at which every member of
the executive committee shall be present, in person or by
telephone, even though without any notice, any business may
be transacted. All action by
the executive committee shall be reported to
the Board of Directors at its meeting next succeeding such action.
The
executive committee shall fix its
own rules of procedure, and shall meet where and
as provided by such rules or
by resolution of the Board of Directors, but in
every case the presence of a majority of the total number of members
of the executive committee shall be necessary to constitute a quorum. In every
case, the affirmative vote of a quorum shall be necessary for the adoption
of
any resolution.
SECTION
3.5. EXECUTIVE COMMITTEE
VACANCIES. The Board of Directors, by majority vote of the Board of
Directors then in office, shall fill vacancies in the executive
committee by election from the directors.
ARTICLE
IV
The
Officers
SECTION
4.1. NUMBER AND TERM OF
OFFICE. The officers of the Corporation shall consist of, as the
Board of Directors may determine and appoint from time
to time, a chief executive officer, a president, one
or more executive vice-presidents, a
secretary, a treasurer, a controller, and/or
such other officers as may from time to time
be elected or appointed by
the Board of Directors, including such additional
vice-presidents with such designations, if any, as may
be determined by
the Board of Directors and such assistant
secretaries
and assistant treasurers. In addition, the
Board of Directors may elect a chairman of the Board and may also elect a
vice-chairman as officers of the Corporation. Any two or
more offices may be held by the same person. In its discretion, the
Board of Directors may leave unfilled any
office
except as may be required by law.
L-10
The
officers of the Corporation shall
be elected or appointed from time to time by the Board
of Directors. Each officer shall
hold office until his successor shall have been duly
elected or appointed or until his death or until he shall resign or shall have
been removed by the Board of Directors.
Each
of
the salaried officers of
the Corporation shall devote his
entire time, skill and energy to the business of
the Corporation, unless the contrary is
expressly consented to by the Board of Directors or
the executive committee.
SECTION 4.2. REMOVAL. Any officer may
be removed by the Board of Directors whenever, in its
judgment, the best interests of the Corporation would be served
thereby.
SECTION
4.3. THE CHAIRMAN OF THE
BOARD. The chairman of the Board, if any, shall preside at
all meetings of stockholders and of the Board of Directors and
shall have
such other authority and perform such other duties
as are prescribed by law, by these By-Laws and by the Board of
Directors. The Board of Directors may designate the chairman of the
Board as chief executive officer, in which case
he shall have such authority and perform such duties as
are prescribed
by these By-Laws and the Board of Directors for the
chief executive officer.
SECTION
4.4. THE
VICE-CHAIRMAN. The vice-chairman, if any, shall have
such authority and perform such other duties as are prescribed by
these By-Laws and by
the Board of Directors. In
the absence or inability to act of
the chairman of the Board and the president, he shall preside at the meetings
of
the stockholders and of the Board
of Directors and shall have and exercise all of the powers
and duties of the chairman of the Board. The Board of
Directors may designate the vice-chairman as chief
executive officer, in which case he shall have
such authority and perform such duties as are prescribed
by these By-Laws and the Board of Directors for the chief executive
officer.
SECTION
4.5. THE PRESIDENT. The
president shall have such authority and perform such duties as are prescribed
by
law, by these By-Laws, by the Board of Directors and by the chief
executive officer (if the president is not the chief executive
officer). The president, if there is no chairman of the
Board, or in the absence or the inability to act of the chairman of the
Board, shall preside at all meetings of stockholders and of the Board
of Directors. Unless the Board of Directors designates the
chairman of the Board or the vice-chairman as chief executive
officer, the president shall be the chief executive officer, in which
case he shall have such authority and perform such duties as
are prescribed by these By-Laws and the Board of Directors for the
chief executive officer.
SECTION
4.6. THE CHIEF EXECUTIVE
OFFICER. Unless the Board of Directors designates the chairman of the
Board or the vice-chairman as chief executive
officer, the president shall be the chief executive officer. The chief executive
officer of the Corporation shall have, subject to the supervision and
direction of the Board of
Directors, general supervision of the
business, property and affairs of the
Corporation, including the power to appoint and discharge agents and
employees, and the powers vested in him by the Board of Directors, by law or
by
these By-Laws or which usually
attach or pertain to such office.
L-11
SECTION 4.7. THE EXECUTIVE VICE-PRESIDENTS. In
the absence of the chairman
of the Board, if any, the president and
the vice-chairman, if any, or in the event of their
inability or refusal to act, the executive vice-president (or in the
event there is more than one executive vice-president, the executive
vice-presidents in the order designated, or in the absence
of any designation, then in the order of their election) shall perform the
duties of the chairman of the Board, of the president and of the
vice-chairman, and when so acting, shall have
all
the powers of and be subject to all the restrictions upon the
chairman of the Board, the president and the vice-chairman. Any
executive vice-president may sign, with the secretary or an authorized assistant
secretary, certificates for stock of the Corporation and shall
perform such other duties as from time to time may be assigned to him by
the chairman of the
Board, the president, the vice-chairman, the
Board of Directors or these By-Laws.
SECTION
4.8. THE
VICE-PRESIDENTS. The vice-presidents, if any,
shall perform such duties as may be assigned to them from time to time by the
chairman of the Board, the president, the vice-chairman, the Board of Directors,
or these By-Laws.
SECTION
4.9. THE TREASURER. Subject
to the direction of chief executive officer and the Board of
Directors, the treasurer shall have charge and custody of all the
funds and securities of the Corporation; when necessary or proper he
shall endorse for collection, or cause
to be endorsed, on behalf of the
Corporation, checks, notes and other obligations, and shall cause the deposit
of
the same to the credit of the Corporation in such bank or banks or depositary
as
the Board of Directors may designate or as the Board of Directors by
resolution may authorize; he shall sign all receipts and vouchers for
payments made to the Corporation other than
routine receipts and vouchers, the signing of which he
may delegate; he shall sign
all checks made by
the Corporation (provided, however, that the
Board of Directors may authorize and prescribe by resolution
the manner in which checks drawn on banks
or depositories shall be signed,
including the use of facsimile signatures, and
the manner in which officers, agents or employees shall be authorized
to sign); unless otherwise provided by resolution of the
Board of Directors, he shall sign with an officer-director all bills of exchange
and promissory notes of the Corporation; whenever required by the
Board of Directors, he shall render a statement
of his cash account; he shall enter regularly
full and accurate account of the Corporation in books of the
Corporation to be kept by him for that purpose; he shall, at all
reasonable times, exhibit his books and accounts to any director of
the Corporation upon application at his office during
business hours; and he shall perform all acts incident
to the position of treasurer. If required by the Board
of Directors, the treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such sure ties as the Board of
Directors may require.
SECTION
4.10. THE
SECRETARY. The secretary shall keep the minutes of
all meetings of the Board
of Directors, the minutes of
all meetings of the
stockholders and (unless otherwise directed
by the Board of Directors) the minutes of all
committees, in books provided for that purpose; he shall
attend to the giving and serving of all notices of the Corporation; he may
sign
with an officer-director or
any other duly authorized person, in
the name of the
Corporation, all contracts authorized by
the Board of Directors or by the
executive committee, and, when so ordered
by the Board of Directors or the executive
committee, he shall affix the seal of the Corporation thereto; he may
sign with the president or an
executive vice-president all certificates of
shares of the capital stock; he shall have
charge of the certificate books, transfer books and
stock ledgers, and such other books and papers as the
Board of Directors or the executive committee may
direct, all of which shall, at all reasonable times, be
open to the examination of any director, upon application at the
secretary's office during business hours; and he shall in general perform all
the duties incident to the office of the
secretary, subject to the control of the chief executive officer and
the Board of Directors.
L-12
SECTION 4.11. THE CONTROLLER. The controller shall be
the chief accounting officer of the
Corporation. Subject to the supervision of the Board of
Directors, the chief executive officer and
the treasurer, the controller shall provide for and
maintain adequate records of all assets, liabilities and
transactions of the Corporation, shall see that accurate audits of the
Corporation's affairs are currently and adequately made
and shall perform such
other
duties as from time to time may be assigned to him.
SECTION
4.12. THE ASSISTANT
TREASURERS AND ASSISTANT SECRETARIES. The assistant
treasurers shall respectively, if required by the Board of Directors,
give bonds for the faithful discharge of their duties in such sums and with
such
sureties as the Board of Directors may determine. The
assistant secretaries as thereunto authorized by the Board of
Directors may sign with the chairman of the
Board, the president, the vice-chairman or an executive vice-president,
certificates for stock of the Corporation, the
issue of which shall have been authorized
by a resolution of the Board of Directors. The
assistant treasurers
and assistant secretaries, in
general, shall perform such duties as shall be assigned to
them by the treasurer or
the secretary, respectively, or chief executive
officer, the Board of Directors, or these By-Laws.
SECTION 4.13. SALARIES. The
salaries of the officers shall be fixed from time to time by the
Board of Directors, and no officer shall be prevented
from receiving such salary by reason of the fact that he
is also a director of the Corporation.
SECTION
4.14. VOTING UPON STOCKS.
Unless otherwise ordered by the Board of Directors or by the executive
committee, any officer, director or any person
or persons appointed in writing by
any of them, shall have full power and authority in behalf
of the Corporation to attend and to act and to vote at any
meetings of stockholders of any corporation in
which the Corporation may hold stock, and at any such
meeting shall possess and may exercise any and all the
rights and powers incident to the ownership of such
stock, and which, as the owner
thereof, the Corporation might have possessed
and exercised if present. The Board of Directors may confer like powers upon
any
other person or persons.
ARTICLE
V
Contracts
and Loans
SECTION 5.1. CONTRACTS. The
Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or
execute and deliver any instrument in the name of
and on
behalf of the Corporation, and such authority may be general or confined to
specific instances.
L-13
SECTION 5.2. LOANS. No
loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its
name unless authorized by a resolution of the Board
of Directors. Such authority may be general or
confined to specific instances.
ARTICLE
VI
Certificates
for Stock and Their Transfer
SECTION
6.1. CERTIFICATES FOR STOCK.
Certificates representing stock of the Corporation shall
be in such form as may be determined by
the Board of Directors. Such certificates shall
be signed by the chairman of the Board, the
president, the vice-chairman or an
executive vice-president and/or by the
secretary or an authorized assistant secretary and shall be sealed with the
seal
of the Corporation. The seal may be
a facsimile. If a
stock certificate is countersigned (i) by
a transfer agent other than the Corporation or
its employee, or (ii) by a registrar other than the Corporation or its employee,
any other signature on the certificate may be a
facsimile. In the event that any officer, transfer agent or registrar
who has signed or whose facsimile signature has
been placed upon
a certificate shall have ceased to
be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by
the Corporation with the same effect as if he were
such officer, transfer agent or registrar at
the date of issue. All certificates for stock
shall be consecutively numbered or otherwise
identified. The name of the person to whom the shares of stock
represented thereby are issued, with the number of shares of stock and date
of
issue, shall be entered on the books of the
Corporation. All certificates surrendered to
the Corporation for transfer shall be canceled and no
new certificates shall be issued until the
former certificate for a like number of shares of stock
shall have been surrendered and canceled, except that, in the event of a
lost, destroyed or
mutilated certificate, a new one may be issued therefore
upon such terms and indemnity to the Corporation as the Board of Directors
may
prescribe.
SECTION
6.2. TRANSFERS OF
STOCK. Transfers of stock of the Corporation shall be
made only on the books of
the Corporation by the holder of
record thereof or by his legal representative, who shall
furnish proper evidence of
authority to transfer, or by his
attorney thereunto authorized by power of
attorney duly executed and filed with the secretary of
the Corporation, and on surrender
for cancellation of
the certificate for such stock. The person in
whose name stock stands on the books of
the Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation.
ARTICLE
VII
Fiscal
Year
SECTION
7.1. FISCAL YEAR. The fiscal year of
the Corporation shall begin on
the first day of January in
each year and end on the last day of December in each
year.
L-14
ARTICLE
VIII
Seal
SECTION
8.1. SEAL. The Board of
Directors shall approve a corporate seal which shall be in
the form of a circle and shall have inscribed thereon the name of the
Corporation.
ARTICLE
IX
Waiver
of
Notice
SECTION 9.1. WAIVER
OF
NOTICE. Whenever any notice is required to be given under
the provisions of these By-Laws or under
the provisions of the Certificate
of Incorporation or under the provisions of the
corporation law of the state of incorporation, waiver thereof in
writing, signed by the person or
persons entitled to
such notice, whether before or
after the time stated therein, shall be deemed equivalent
to the giving of such notice. Attendance of any person at a
meeting for which any notice is required to be given under
the provisions of these By-Laws, the Certificate of Incorporation or the
corporation law of the state
of incorporation shall constitute a waiver of
notice of such meeting except when the person attends for the express purpose
of
objecting, at the beginning of the meeting, to
the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE
X
Amendments
SECTION 10.1. AMENDMENTS. These By-Laws
may be altered, amended or repealed and new By-Laws may be adopted at
any meeting of the Board of Directors of the Corporation by
the affirmative vote of a majority of the members of the
Board, or by the affirmative vote of a majority of the outstanding capital
stock
of the Corporation (assessed upon
the basis of votes and not on the basis of number of
shares) entitled to vote generally in
the election of directors, voting together as a
single class.
ARTICLE
XI
Indemnification
SECTION
11.1. INDEMNIFICATION. The Corporation shall indemnify
its officers, directors, employees and agents to the fullest extent permitted
by
the General Corporation Law of Delaware, as amended from time to
time.
L-15
EXHIBIT
M
INTERNATIONAL
GOOD STANDING CERTIFICATE
To
be
provided.
M-1
EXHIBIT
N
INTERNATIONAL
DISCLOSURE SCHEDULE
28-Dec-07
Exhibit
N
Artfest
International, Inc.
Current
Debt
|
Bank
of America Visa Card
|
$ | 16,215.79 |
used
for operational costs
|
||
|
GMAC
|
$ | 6,235.89 |
This
is to settle up a truck lease that Xxx Xxxxx stuck us with
Original
amount was $8314. They offered to settle of $6235
|
||
|
World
Financial Services
|
$ | 650.00 |
for
sending out a email blast for us
|
||
|
Lease
Finance Group
|
$ | 799.00 |
This
is for the lease on 2 credit card machines that Xxxxxx Xxxxx originally
guaranteed payment. It runs 14 more months at 57.07 per month
per machine.
The
equipment was lost when we closed the galleries
The
two lease numbers are 1102555 and 1166605
|
||
|
Canyon
Tax and Bookking
|
$ | 1,500.00 |
Completion
of 2005 taxes dated 12-20-07
|
||
|
Canyon
Tax and Bookking
|
$ | 1,500.00 |
Completion
of 2006 taxes dated 12-20-07
|
||
|
Canyon
Tax and Bookking
|
$ | 2,790.29 |
Completion
of 3rd quarter financials dated 12-05-07
|
||
|
Xxxxxxxx
Furniture
|
$ | 20,000.00 |
This
is a Xxxxx deal that went bad. He took possession of over
$200,000 worth of furniture from Xxxxxxxx on consignment. Most
was returned but there was an amount he couldn't "find", so Xxxxxxxx
billed us for the missing amount. Klingmans is current selling
and I had hoped the debt will be overlooked in the process but
they sent
me a letter agreeing to settle for $20,000.
I
wouldn't be surprise if the amount couldn't be reduced with an
offer.
|
||
|
Xxxxxxx
Xxxxxx and Xxxxxx
|
$ | 2,770.00 |
Corporate
attorney. We paid a $5,000.00 retainer so there should be a
refund.
|
||
|
Monthly
Payments
|
|||||
|
First
Data
|
$ | 79.95 |
Credit
card processing. It is deducted from our bank account every
month.
|
||
|
Bank
of America - VISA
|
$ | 400.00 |
varies
|
||
|
Sprint
|
$ | 265.00 |
This
is a cell phone contract left over from Xxxxx. I am not sure
how much longer it runs.
|
||
|
Lease
Finance Group
|
$ | 57.07 |
Lease
payment on credit card machines
|
||
|
Disputed
Bills - Some Amounts unknown
|
|||||
|
Xxxxx
Xxxxxxxxx
|
???
|
The
Key West gallery was leased from her. We broke it in April,
2006 because we closed the gallery.
She
took our 3 month deposit and released it in a month or so.
She
might have a weak claim.
|
|||
|
Grand
Rapids Landlord
|
??
|
This
is one of Xxxxx'x more confusing deals. This was a lease for
space in a mall. The mall was having problems getting and
keeping tenents. The management also changed.
Xxxxx
originally gave the landlord 1,000,000 shares which he claimed
was for
rent.
We
refused to pay them because of the stock.
It
was broken in May 2006
Any
claim would be very questionable
|
|||
|
Reimburseable
Expenses Paid by Ditto After November 31
|
|||||
|
11/19/2007
|
$ | 689.50 |
Equity
Technology Group for Edgarizing
Charged
to personal MC
|
||
|
12/3/2007
|
$ | 2,000.00 |
transferred
from personal acct to pay bills
|
||
|
12/7/2007
|
$ | 500.00 |
transferred
from personal acct to pay bills
|
||
|
12/15/2007
|
$ | 120.00 |
three
months of Vontage for our 800 number charged to personal
VISA
|
||
|
12/13/2007
|
$ | 3,000.00 |
transferred
from personal acct to pay bills
|
||
|
Total
of $6,309.50 Reimbursement to Ditto
|
|||||
N-1
28-Dec-07
Artfest
International, Inc.
Exhibit
N page 2
Notes
or
long term debts other than Ditto Family Trust.
We
have
actual documents on file for the first group.
Some
are
unsigned but the bank deposit at the time of each reflects receipt of their
payments.
We
have
no documentation for the second group but the bank statements at the time
of
each record receipt of their payments.
|
Xxxxxxxx
|
8/27/2004
|
$ | 20,000.00 | |||
|
Xxxxxxxx
|
4/9/2007
|
$ | 17,500.00 |
6-3-05
repaid $10,000.
|
||
|
Xxxxxxxx
|
8/18/2004
|
$ | 20,000.00 | |||
|
Xxxxx
|
7/7/2004
|
$ | 30,000.00 | |||
|
Xxxxxxx
|
6/30/2004
|
$ | 20,000.00 | |||
|
Xxxxxxx
|
3/17/2004
|
$ | 2,500.00 | |||
|
Dupon
|
6/28/2007
|
$ | 20,000.00 | |||
|
Selle,
D
|
4/16/2004
|
$ | 17,500.00 | |||
|
Xxxxxxxx
|
3/14/2004
|
$ | 5,000.00 | |||
|
Selle,
C
|
5/15/2007
|
$ | 35,000.00 | |||
|
Xxxxx
|
8/27/2004
|
$ | 10,000.00 | |||
|
Schubart
|
8/18/2004
|
$ | 20,000.00 | |||
|
Hogdahl
|
1/1/2005
|
$ | 35,000.00 | |||
|
Hogdahl
|
10/18/2007
|
$ | 20,000.00 | |||
|
Trent
|
6/24/2004
|
$ | 15,000.00 | |||
|
Art
Network
|
9/15/2005
|
$ | 18,682.05 | |||
|
Sells,
C
|
4/23/2003
|
$ | 20,100.00 | |||
|
Xxxxx
Xxxxxx
|
5/30/2003
|
$ | 24,000.00 | |||
|
Xxxxx,
D
|
10/6/2004
|
$ | 5,000.00 | |||
|
Xxxxx,
D
|
10/13/2004
|
$ | 5,000.00 | |||
|
Xxxxx,
D
|
11/24/2004
|
$ | 1,600.00 | |||
|
Cliff
& Xxxx
|
8/27/2004
|
$ | 6,000.00 |
N-2
EXHIBIT
O
ARTFEST
INTERNATIONAL, INC.
RESOLUTION
OF THE BOARD OF DIRECTORS
At
the
meeting of the Board of Directors of ArtFest International, Inc. (“Company”)
held on December 5, 2007, the following resolutions were proposed and approved
by the Board:
WHEREAS,
the Company wishes to acquire Art Channel, Inc. (ACI), a privately held
corporation, through a tax-free share exchange agreement (hereinafter, the
“Acquisition”), whereupon ACI shall become a wholly owned subsidiary of the
Company.
WHEREAS,
in connection with the Acquisition, each issued and outstanding share ACI’s
common stock shall be deemed cancelled and converted into the right to receive,
as applicable, 28,000,000 newly issued shares of the Company’s common
stock.
BE
IT
RESOLVED, that the Board approves the Acquisition, and in connection hereto,
the
issuance of 28,000,000 shares of the Company’s common stock to complete the
Acquisition; and
BE
IT
FURTHER RESOLVED, the Company intends to have the Acquisition completed by
January 31, 2008, or sooner.
Date: December
5,
2007
CHAIRMAN
____________________________
Xxxxx
X.
Xxxxx
DIRECTOR
____________________________
Xxxx
Xxxxxx
DIRECTOR
____________________________
Xxxx
Xxxxxx
O-1
EXHIBIT
P
ARTFEST
INTERNATIONAL, INC.
RESOLUTION
OF THE MAJORITY SHAREHOLDERS
At
the
meeting of the Majority Shareholders (the “Shareholders”) of ArtFest
International, Inc. (the “Company”) held on December 5, 2007, collectively
holding over 66.7% of the shares of the Company, the following resolutions
were
approved by the Shareholders:
WHEREAS,
the Company wishes to acquire Art Channel, Inc. (ACI), a privately held
corporation, through a tax-free share exchange agreement (hereinafter, the
“Acquisition”), whereupon ACI shall become a wholly owned subsidiary of the
Company.
WHEREAS,
in connection with the Acquisition, each issued and outstanding share ACI’s
common stock shall be deemed cancelled and converted into the right to receive,
as applicable, 28,000,000 newly issued shares of the Company’s common
stock.
BE
IT
RESOLVED, that the Shareholders approve the Acquisition, and in connection
hereto, the issuance of 28,000,000 shares of the Company’s common stock to
complete the Acquisition and that such Acquisition be completed by January
31,
2008, or sooner.
|
Majority
Shareholder
|
|
|
________________________
|
|
|
________________________
|
____________/_____________
|
|
Printed
Name
|
No.
of Shares %
Ownership
|
|
Majority
Shareholder
|
|
|
________________________
|
|
|
________________________
|
____________/_____________
|
|
Printed
Name
|
No.
of Shares %
Ownership
|
|
Majority
Shareholder
|
|
|
________________________
|
|
|
________________________
|
____________/_____________
|
|
Printed
Name
|
No.
of Shares %
Ownership
|
|
Majority
Shareholder
|
|
|
________________________
|
|
|
________________________
|
____________/_____________
|
|
Printed
Name
|
No.
of Shares %
Ownership
|
P-1
EXHIBIT
Q
LIST
OF SHAREHOLDERS OF INTERNATIONAL
Deleted
from SEC Filing due to the confidential nature of the information.
Q-1
EXHIBIT
R
INTERNATIONAL
CERTIFICATE
Waived
by
the Parties.
R-1
EXHIBIT
S
CHANNEL
CERTIFICATE
Waived
by
the Parties.
S-1
EXHIBIT
T
INDEMNIFICATION
LETTER AGREEMENT
|
From:
|
The
Indemnifying Party
|
|
(Name
and Address)
|
|
|
To:
|
The
Indemnified Party
|
|
(Name
and Address)
|
Date:
Gentlemen/Ladies:
This
will
confirm and acknowledge that pursuant to Article “20” of the Acquisition
Agreement and Plan of Merger (the “Agreement”) dated as of the 26th day of
December, 2007, by and among Artfest International, Inc., certain shareholders
of Artfest International, Inc., Art Channel, Inc. and certain shareholders
of
Art Channel Inc., the undersigned acknowledges its liability for indemnification
to you with respect to _________________ (description of claim) (the "Claim”),
and will not take the position that it is not liable to you with respect to
the
Claim. Such obligation is subject to all of the provisions, terms and
conditions of the Agreement.
|
Very
truly yours,
|
|
|
___________________________
|
|
|
Name
of Indemnifying Party
|
|
|
By:
___________________________
|
|
|
(Authorized
Signature)
|
|
STATE
OF
|
)
|
|
)
ss.:
|
|
|
COUNTY
OF
|
)
|
On
the
____ day of __________, ____ before me personally came __________ to me known,
who, being by me duly sworn, did depose and say that that he or she is the
____________ of __________________________, the corporation described in and
which executed the foregoing instrument; that he or she knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he or she signed his or her name thereto by like order.
______________________________
Notary Public
Notary Public
T-1
EXHIBIT
U
(Intentionally
Deleted)
U-1
EXHIBIT
V
(Intentionally
Deleted)
V-1
EXHIBIT
W
SHAREHOLDERS’
DESIGNATION
The
Art
Channel, Inc. shareholders, (the “Shareholders”) hereby irrevocably constitute
and appoint Xxxxx Xxxxxx with full power of substitution and re-substitution,
as
its and their true and lawful agent, attorney-in-fact and representative (such
person and his appointed and designated successor or successors being herein
referred to as the “Shareholder Representative”), with full power to act for and
on behalf of the Shareholders, and each of them, for all purposes pursuant
to
the Acquisition Agreement, by and between Artfest International, Inc. (“ARTI”)
and the Shareholders, (the “Agreement”) and in connection with the transactions
therein contemplated including, without limitation, for purposes of: (i)
determining the amount of damages suffered or incurred by the
Shareholders, (ii) receiving notices from ARTI given under this Agreement, of
which the Shareholder Representative will give a copy to the Investors and
the
Shareholders as the Shareholder Representative deems necessary in his sole
discretion, (iv) approving and agreeing with ARTI as to additions,
deletions, changes, modifications and amendments to this Agreement and the
Annexes hereto, except with respect to any addition, deletion, change,
modification or amendment to a material financial term or condition of any
of
such documents that would materially, financially and adversely affect the
Shareholders, (v) settling finally and completely any disputes or
controversies among the parties hereto (other than solely among the
Shareholders) with respect to the interpretation or effect of or damages or
relief under this Agreement and any and all transactions contemplated hereby.
The Shareholder Representative shall be entitled to reimbursement by the
Shareholders from the consideration actually payable to the Shareholders or
otherwise for all reasonable costs and expenses incurred by him in fulfilling
his duties hereunder, and the Investors and the Shareholders agree among
themselves that such costs and expenses shall be borne pro rata among them
according to the number of Common Stock owned immediately after the Closing.
The
Shareholders agree that the Shareholder Representative may make reasonable
requests for advances to cover such costs and expenses, and the Shareholders
shall promptly make such advances. In no event shall ARTI be liable for any
costs or expenses of any nature incurred by the Shareholder Representative
in
its capacity as such. THE SHAREHOLDERS JOINTLY AND SEVERALLY, AGREE
THAT THE SELLER REPRESENTATIVE SHALL HAVE NO LIABILITY TO THE SHAREHOLDERS
FOR
ACTION TAKEN OR OMITTED IN GOOD FAITH IN EXERCISING THE AUTHORITY GRANTED UNDER
THIS SECTION. ARTI shall not have any obligation or liability to
indemnify or defend the Shareholder Representative in respect of any claim
or
liability asserted against the Shareholder Representative by any of the
Shareholders or his successors or assigns. All determinations, decisions,
actions and the like made by the Shareholder Representative shall be final,
conclusive and binding upon all the Shareholders and all persons claiming under
or through them.
_______________________________
Shareholder
Name
_______________________________
Signature
W-1
