EXHIBIT 10.19
JUDGMENT PURCHASE AGREEMENT
BETWEEN
AFFINITEC CORPORATION,
a Missouri corporation,
CENTERGISTIC SOLUTIONS, INC.,
a California corporation,
AND
VENTURE COMMUNICATIONS CORPORATION,
a Nevada corporation
Dated September 27, 2000
JUDGMENT PURCHASE AGREEMENT
THIS JUDGMENT PURCHASE AGREEMENT (the "Agreement") is entered
into effective as of September 27, 2000, by and between Affinitec Corporation, a
Missouri corporation ("Seller"), Centergistic Solutions, Inc., a California
corporation ("Centergistic"), and Venture Communications Corporation, a Nevada
corporation ("Buyer").
RECITALS
A. Seller was the plaintiff in a lawsuit brought against
Siemens Business Communications Systems, Inc. in Orange County Superior Court
Case No. 790903 in which a judgment or jury verdict was entered by the court on
June 7, 1999 in favor of Seller (the "Judgment"). Xxxxx & Xxxxxx, a partnership
of professional corporations ("Xxxxx & Xxxxxx"), represented Seller in such
litigation and has a lien on the Judgment for its fees and expenses. A copy of
the Judgment is attached as Exhibit A hereto. Seller is a wholly-owned
subsidiary of Centergistic.
B. Seller desires to sell to Buyer, and Buyer desires to
acquire from Seller, Seller's interest in the Judgment and a warrant to acquire
566,000 shares of Common Stock of Centergistic in exchange for a total of
$1,745,413 in cash or immediately available funds on the terms and conditions
specified herein. In consideration thereof, Buyer will assume the liability of
Seller and Centergistic for the fees of Xxxxx & Xxxxxx.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements herein contained, the parties agree
as follows:
1. Purchase and Sale of Judgment. Upon the terms and
subject to the conditions contained herein, Seller hereby sells and assigns to
Buyer, and Buyer hereby purchases from Seller and Centergistic, respectively,
Seller's interest in the Judgment and the Warrant (as defined below), at a
purchase price of $1,745,413. The purchase price shall be payable by Buyer to
Centergistic in cash via wire transfer of funds according to the following
schedule:
Date Amount
---- ------
September 27, 2000 $ 400,000
December 15, 2000 250,000
March 15, 2001 300,000
June 15, 2001 350,000
September 15, 2001 445,413
----------
$1,745,413
Notwithstanding the foregoing schedule, the unpaid balance of the purchase price
shall be due and payable within thirty (30) days after the Judgment is satisfied
in full.
Buyer shall have the right to offset against the foregoing scheduled payments,
as well as the purchase price payable for the shares, if any, purchased by Buyer
pursuant to the Warrant, all sums due Buyer by reason of any breach of this
Agreement by Seller or Centergistic, including, without limitation, a breach of
any of the representations or warranties set forth in Sections 3 and 4 below.
Any such offset shall be made first against the scheduled payments, beginning
with the payments to be made furthest in the future, and then against the
purchase price payable for the shares, if any, purchased by Buyer pursuant to
the Warrant. Immediately upon execution of this Agreement, Seller agrees to file
with the court an Assignment of Judgment and an Acknowledgment of Assignment of
Judgment, substantially in the form of Exhibit B hereto, to record the sale and
assignment of the Judgment to Buyer and Buyer shall thereafter exclusively
control the further prosecution of the litigation which resulted in the
Judgment. Seller and Centergistic shall provide reasonable cooperation to Buyer
in connection with such litigation at no expense to Buyer.
2. Issue and Sale of Warrant. As additional
consideration for the payments by Buyer provided for in Section 1 above,
Centergistic shall issue and sell to Buyer a Warrant representing the right to
purchase, for a price of $5.75 per share, 566,000 shares of Common Stock of
Centergistic (the "Warrant"). The Warrant shall be substantially in the form of
Exhibit C to this Agreement. Centergistic has previously issued to Buyer a
Common Stock Purchase Warrant dated June 26, 1998 for 60,000 shares of
Centergistic's Common Stock at an exercise price of $5.41 per share (the
"Existing Warrant"). Centergistic hereby covenants and agrees that the
expiration date of the Existing Warrant shall be extended to September 27, 2005
to be co-terminus with the Warrant issued to Buyer pursuant to this Agreement.
Upon the request of Buyer, Centergistic shall execute and deliver to Buyer a
replacement warrant for the Existing Warrant reflecting the new expiration date
of September 27, 2005 or provide Buyer with an amendment thereto reflecting such
extended expiration date.
3. Representations and Warranties of Seller. Seller
hereby represents and warrants to Buyer as follows:
(a) Organization. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Missouri and has all requisite power and authority to carry on its business, to
own and hold its properties and assets, to enter into and perform this
Agreement.
(b) Authorization. The execution, delivery and
performance by Seller of this Agreement have been duly and validly authorized by
Seller's shareholders and Board of Directors. This Agreement constitutes the
legal, valid and binding obligations of Seller and is enforceable against Seller
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally.
(c) No Conflict. Except for the credit and
security agreement with First Bank and Trust and the filings and approvals
contemplated by this Agreement and the Exhibits attached hereto, the execution,
delivery and performance by Seller of this Agreement: (i) will not conflict
with, result in a breach of or constitute a default under any contract,
agreement, indenture, loan or credit agreement, deed of trust, mortgage, lease,
security
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agreement or other arrangement to which Seller is a party or by which Seller or
any of its properties or assets is bound or affected; (ii) will not cause Seller
to violate or contravene any provision of its Articles of Incorporation or
Bylaws; or (iii) require any authorization, consent, approval, permit, exemption
or other action by or notice to any court or administrative or governmental body
pursuant to the Articles of Incorporation or Bylaws of Seller, any law, statute,
rule or regulation to which Seller is subject or any agreement, instrument,
order, judgment or decree to which Seller is subject.
(d) Title to Judgment. Seller is the lawful
owner of the Judgment and has the right to transfer the Judgment to Buyer, and
the Judgment is free and clear of all liens, mortgages, pledges, security
interests, encumbrances and claims of any kind or nature whatsoever except for
the interest of Xxxxx & Xxxxxx therein and the lien of First Bank and Trust
securing an outstanding balance of approximately $160,000 as of September 18,
2000 owed by Centergistic.
(e) Wholly-Owned Subsidiary. Seller is a
wholly-owned subsidiary of Centergistic.
(f) No Payments. Seller and Centergistic have
not received any payment whatsoever with respect to the Judgment. The
outstanding balance due and owing thereunder is approximately $5,613,000 as of
the date of this Agreement, comprised of a principal amount of $4,972,677.99 and
accrued interest at the rate of 10% from June 7, 1999 in the amount of
approximately $640,000.
4. Representations and Warranties of Centergistic.
Centergistic hereby represents and warrants to Buyer as follows:
(a) Organization. Centergistic is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has all requisite power and authority to carry on its
business, to own and hold its properties and assets, to enter into and perform
this Agreement and to issue and carry out the provisions of the Warrant.
(b) Authorization. The execution, delivery and
performance by Centergistic of this Agreement and the Warrant have been duly and
validly authorized by Centergistic's Board of Directors and no authorization or
approval of Centergistic's shareholders is required in connection therewith.
This Agreement and the Warrant constitute the legal, valid and binding
obligations of Centergistic and each is enforceable against Centergistic in
accordance with its respective terms, except as such enforcement may be limited
by bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally.
(c) No Conflict. Except for the credit and
security agreement with First Bank and Trust and the filings and approvals
contemplated by this Agreement and the Exhibits attached hereto, the execution,
delivery and performance by Centergistic of this Agreement and the issuance of
the Warrant: (i) will not conflict with, result in a breach of or constitute a
default under any contract, agreement, indenture, loan or credit agreement, deed
of trust, mortgage, lease, security agreement or other arrangement to which
Centergistic is a party or by which Centergistic or any of its properties or
assets is bound or affected; (ii) will not cause
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Centergistic to violate or contravene any provision of its Articles of
Incorporation or Bylaws; or (iii) require any authorization, consent, approval,
permit, exemption or other action by or notice to any court or administrative or
governmental body pursuant to the Articles of Incorporation or Bylaws of
Centergistic, any law, statute, rule or regulation to which Centergistic is
subject or any agreement, instrument, order, judgment or decree to which
Centergistic is subject.
(d) Warrant Shares. All of the shares of Common
Stock issuable upon exercise of the Warrant have been duly authorized and
reserved for issuance and, upon payment thereon and issuance thereof in
accordance with the terms of the Warrant, will be duly authorized, validly
issued, fully paid and nonassessable.
(e) Title to Judgment. Seller is the lawful
owner of the Judgment and has the right to transfer the Judgment to Buyer, and
the Judgment is free and clear of all liens, mortgages, pledges, security
interests, encumbrances and claims of any kind or nature whatsoever except for
the interest of Xxxxx & Xxxxxx therein and the lien of First Bank and Trust
securing an outstanding balance of approximately $160,000 as of September 18,
2000 owed by Centergistic.
(f) Wholly-Owned Subsidiary. Seller is a
wholly-owned subsidiary of Centergistic.
(g) No Payments. Seller and Centergistic have
not received any payment whatsoever with respect to the Judgment. The
outstanding balance due and owing thereunder is approximately $5,613,000 as of
the date of this Agreement, comprised of a principal amount of $4,972,677.99 and
accrued interest at the rate of 10% from June 7, 1999 in the amount of
approximately $640,000.
(h) Outstanding Shares. There are 1,568,196
issued and outstanding shares of Common Stock of Centergistic inclusive of all
shares subject to issuance pursuant to all outstanding warrants and options
exclusive of the Warrant. Attached hereto as Exhibit D is a true and correct
listing of the holders of all shares of Common Stock of Centergistic as well as
the holders of all warrants and options to purchase such shares as of the date
of this Agreement.
(i) Xxxxx & Xxxxxx Fees. The amount due Xxxxx &
Xxxxxx pursuant to the Engagement Agreement (as hereinafter defined) is 50% of
the Judgment after reducing the amount of the Judgment by $197,000.
5. Representations, Warranties and Covenants of Buyer.
Buyer hereby represents, warrants and covenants to Seller as follows:
(a) Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite power and authority to carry on its business, to
own and hold its properties and assets, to enter into and perform this
Agreement.
(b) Authorization. The execution, delivery and
performance by Buyer of this Agreement has been duly and validly authorized by
Buyer's Board of Directors and no authorization or approval of Buyer's
shareholders is required in connection therewith. This
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Agreement constitutes the legal, valid and binding obligations of Buyer and is
enforceable against Buyer in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally.
(c) No Conflict. The execution, delivery and
performance by Buyer of this Agreement: (i) will not conflict with, result in a
breach of or constitute a default under any contract, agreement, indenture, loan
or credit agreement, deed of trust, mortgage, lease, security agreement or other
arrangement to which Buyer is a party or by which Buyer or any of its properties
or assets is bound or affected; (ii) will not cause Buyer to violate or
contravene any provision of its Articles of Incorporation or Bylaws; or (iii)
require any authorization, consent, approval, permit, exemption or other action
by or notice to any court or administrative or governmental body pursuant to the
Articles of Incorporation or Bylaws of Buyer, any law, statute, rule or
regulation to which Buyer is subject or any agreement, instrument, order,
judgment or decree to which Buyer is subject.
(d) Line of Credit. Buyer has established a line
of credit in the amount of $1,750,000 at Prudential Bank & Trust Company for the
stated purpose of funding the purchase of the Judgment.
(e) Securities Representations.
(i) Buyer understands that the Warrant
and any shares of Common Stock issuable upon exercise of the Warrant
(collectively, the "Securities") will be issued by the Seller without
registration under the Securities Act of 1933, as amended ("Act"), and without
qualification and/or registration under applicable state securities laws
pursuant to specific exemptions from registration and/or qualification contained
in the Act and in applicable state securities laws. Buyer understands that the
foregoing exemptions depend upon, among other things, the bona fide nature of
its investment intent as expressed herein.
(ii) Buyer agrees that none of the
Securities, nor any interest in the Securities, will be sold, transferred or
otherwise disposed of by it without registration and/or qualification under the
Act or applicable state securities laws unless Buyer first demonstrates to the
reasonable satisfaction of Centergistic that specific exemptions from such
registration and qualification requirements are available with respect to such
resale or disposition or provides Centergistic an opinion of counsel reasonably
satisfactory to Centergistic that a contemplated transfer may be made without
violation of the Act or applicable state securities laws.
(iii) Buyer is acquiring the Securities
for investment purposes only, for Buyer's own account, and not as nominee or
agent for any other person, and not with a view to, or for resale in connection
with, any distribution thereof within the meaning of the Act.
(iv) Buyer has received all the
information it considers necessary or appropriate to evaluate the risks and
merits of an investment in Centergistic, and has had an opportunity to discuss
Centergistic's business, management, financial affairs and prospects with
Centergistic's management.
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(v) Buyer is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Act.
(vi) Buyer is able to bear the economic
risks related to a purchase of the Securities. Buyer either has a pre-existing
personal or business relationship with Centergistic or any of its officers,
directors or controlling persons, or by reason of Buyer's business or financial
experience or the business or financial experience of its professional advisor
who is unaffiliated with and who is not compensated by Centergistic or any
affiliated or selling agent of Centergistic, directly or indirectly, has the
capacity to protect its own interests in connection with the subject
transactions.
(vii) Buyer acknowledges that the
Securities to be issued to it will contain a legend which prohibits an offer to
transfer or a transfer of all or any portion of the Securities unless the
Securities are registered under the Act or unless an exemption from registration
is available with respect to such resale or disposition.
6. Payment of Bank Loan. Centergistic agrees to repay in
full by June 1, 2001, the outstanding balance due First Bank and Trust
(approximately $160,000 as of September 18, 2000) under its existing credit
agreement.
7. No Further Assignments. Except as contemplated by
this Agreement, Seller shall not hereafter execute any document purporting to
grant or convey any interest or lien whatsoever in or to the Judgment except as
is reasonably requested by Buyer to confirm the sale of the Judgment to Buyer.
(a) Assumption of Engagement Agreement.
Centergistic and Seller hereby assign to Buyer all of their right, title and
interest in and to that certain Engagement Agreement between Centergistic
(formerly AAC Corporation) and Xxxxx & Xxxxxx, a partnership of professional
corporations, dated March 3, 1998 (the "Engagement Agreement") and Buyer accepts
the assignment subject to all of the terms and conditions thereof. In connection
therewith, Centergistic, Seller and Buyer hereby substitute Buyer for
Centergistic and Seller with respect to all rights and obligations under the
Engagement Agreement and Buyer assumes all obligations of Centergistic and
Seller with respect thereto.
8. Severability. In the event any provision of this
Agreement shall finally be determined to be unlawful, such provision shall be
deemed to be severed from this Agreement and every other provision of this
Agreement shall remain in full force and effect.
9. Attorneys' Fees. In the event any action in law or
equity, arbitration or other proceeding is brought for the enforcement of this
Agreement or in connection with any of the provisions of this Agreement, the
prevailing party or parties shall be entitled to its attorneys' fees and other
costs reasonably incurred in such action or proceeding.
10. Notices. Any notice to be given hereunder shall be
given (except as otherwise expressly set forth herein) by registered or
certified mail, postage prepaid, by cable, telex or facsimile, or may be
delivered by hand or by messenger and shall be deemed to have been received as
follows: if given by registered or certified mail, five business days after
posting; if given by cable, two business days after dispatch; if given by telex
or facsimile, one business
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day after dispatch; and if delivered by hand or by messenger and receipted for
by or on behalf of the party to whom the notice is directed, at the time of such
delivery. Any notice shall be sent to the address given in the signature blocks
of this Agreement or to such other address as the relevant party may notify to
the other.
11. Entire Agreement. This Agreement and the exhibits
hereto contain all of the agreements between the parties with respect to the
matters contained herein and supersedes all prior written or oral and all
contemporaneous oral agreements or understandings between the parties pertaining
to any such matters. No provision of this Agreement may be amended or added to
except by an agreement in writing signed by the parties to this Agreement or
their respective successors in interest and expressly stating that it is an
amendment of this Agreement.
12. Controlling Law. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with the laws of the
State of California applicable to agreements made and to be performed wholly
within the State of California.
13. Arbitration. Notwithstanding anything herein to the
contrary, in the event that there shall be a dispute among the parties after the
Closing arising out of or relating to this Agreement, including without
limitation the issue of arbitrability, or the breach thereof, the parties agree
that such dispute shall be resolved by final and binding arbitration conducted
in Orange County, California in accordance with the then existing rules for
commercial arbitration of the American Arbitration Association. The parties
agree that reasonable discovery shall be allowed in arbitration. Judgment upon
any award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitrator shall award to the prevailing party, in
addition to the costs of the proceeding, that party's reasonable attorneys'
fees.
[Signature page follows]
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14. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original but all of which shall
constitute one and the same instrument.
"SELLER"
AFFINITEC CORPORATION, a Missouri
corporation
By:/s/ XXXXX X. XXXXXXXXXX
--------------------------------
Print: Xxxxx X. Xxxxxxxxxx
Title: VP/CFO
"CENTERGISTIC"
CENTERGISTIC SOLUTIONS, INC., a
California corporation
By:/s/ XXXXX X. XXXXXXXXXX
--------------------------------
Print: Xxxxx X. Xxxxxxxxxx
Title: VP/CFO
"BUYER"
VENTURE COMMUNICATIONS CORPORATION,
a Nevada corporation
By:/s/ XXXXXXX XXXXXXXX
--------------------------------
Print: Xxxxxxx Xxxxxxxx
Title: President
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