EXHIBIT 10.1
C-3D DIGITAL
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") dated this ______ day of
February, 2000 between CHEQUEMATE INTERNATIONAL, INC., a Utah corporation
("Buyer" or "Chequemate") doing business as C-3D Digital, with its principal
offices located at 000 Xxxxxxxxxx Xxxx., Xxxxx 000, Xxxxxx xxx Xxx, XX
00000-0000 ("Buyer"), and i-O Display Systems, LLC, a California limited
liability company, with its principal offices located at 0000 Xxxxxx Xxxx,
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000 ("Seller");
WITNESSETH:
WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, on the terms and subject to the conditions of this Agreement, certain
goods;
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties agree
as follows:
ARTICLE 1. SALE OF GOODS
Subject to the terms and conditions set forth in this Agreement, Seller
agrees to sell to Buyer, and Buyer agrees to purchase from Seller, Five
Hundred Thousand Dollars ($500,000.00) (less any balance presently owed to
Seller by Buyer) worth of Seller's goods, in particular, 3D video viewing, 3D
internet viewing and/or 3D gaming systems or other 3D products. The unit
price shall be the lowest distributor price offered by the Seller for the
Seller's goods for a given configuration and purchase volume. Exhibit "A" is
the Seller's price list effective February 1st, 2000.
ARTICLE 2. PURCHASE PRICE
2.1 PAYMENT OF PURCHASE PRICE: In consideration for the transfer and
assignment by Seller of the Assets, and in consideration of the
representations, warranties and covenants of the Seller set forth
herein, Buyer on the conditions set forth herein states that:
(a) Buyer shall pay to Seller the sum of Five Hundred Thousand
Dollars ($500,000.00).
(b) Payment will be made in full on or before February 18, 2000.
Payment will be in cash or, at Buyer's option, in the form of
Chequemate International, Inc. restricted common stock, or
both. Any such shares of stock shall be valued at the average
of the end of day closing price for free-trading common stock
in Chequemate International, Inc., over the previous five (5)
days of trading. The number of shares to be issued shall be
sufficient in value to equal the balance due on the date of
payment.
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ARTICLE 3. DOCUMENTATION
DELIVERIES: In the event that stock in Buyer is used as all or a portion of
the purchase price, Buyer shall deliver to Seller the following
instruments and documents against delivery of the goods:
(a) Stock Certificates issued in the name of Seller, for the
balance due, of Buyers common stock. (See Section 2.1); and
(b) The certificate of the President or Secretary of the Buyer
confirming that proper minutes and resolutions of the Buyer's
Board of Directors have been secured approving the purchase of
the goods.
(c) Purchase may be made in whole or in part in the form of cash
or certified funds.
(d) Seller shall have demand registration rights on any and all
stock accepted hereunder toward the purchase price.
ARTICLE 4. SALES TAXES
Buyer shall pay all sales, use and transfer taxes arising out of the transfer
of the Assets.
ARTICLE 5. DELIVERY
All goods purchased hereunder are F.O.B. Seller's warehouse, Menlo Park,
California.
Buyer may take delivery of the goods in whole or in part, from time to time,
during the one hundred twenty (120) days following the payment of the
purchase price hereunder. Buyer shall give Seller reasonable notice of the
number of consumer kits of which it anticipates taking delivery.
ARTICLE 6. OTHER TERMS
All provisions of the Strategic Procurement Agreement entered into by the
parties on or about September 16, 1999, shall apply to this transaction to
the extent that this agreement does not expressly contradict them.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES AND BUYER.
Buyer represents and warrants to the Seller as follows:
7.1 ORGANIZATION AND QUALIFICATION. Chequemate is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Utah. Chequemate has all requisite power and authority to own
or operate its properties and conduct its business as it is now being
conducted.
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7.2 CAPITALIZATION; SUBSIDIARIES. The authorized capital stock of
Chequemate consists of 500,000,000 shares of Common Stock. As of
October 25, 1999, 23,866,834 shares of Chequemate's Common Stock were
issued and outstanding. As of February 2, 2000, there was a 1 to 4
reverse split, resulting in fewer than 6 million shares being
outstanding. All issued and outstanding shares of capital stock of
Chequemate are validly issued, fully paid, non-assessable and free of
preemptive rights.
7.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Chequemate has all requisite
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of Chequemate, and no other corporate
proceedings on the part of Chequemate are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by
Chequemate and, assuming this Agreement constitutes a valid and
binding obligation of the Seller, this Agreement constitutes a valid
and binding agreement of Chequemate, enforceable against Chequemate in
accordance with its terms.
7.4 SEC REPORTS. Since January 1, 1998, to the best of its knowledge
Chequemate has filed all required forms, reports and documents
("Chequemate SEC Reports") with the Securities and Exchange Commission
(the "SEC") required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations thereunder, all of
which have complied in all material respects with all applicable
requirements of the Securities Act of 1933 (the "Securities Act") and
the Securities Exchange Act of 1934 (the "Exchange Act"), and the
rules and interpretive releases promulgated thereunder. None of such
Chequemate SEC Reports, including without limitation any financial
statements, notes, or schedules included therein, at the time filed,
contained any untrue statement of a material fact, or omitted to state
a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
Each of the consolidated balance sheets in or incorporated by
reference into the Chequemate SEC Reports fairly presents or will
fairly present the financial position of the entity or entities to
which it relates as of its date, and each of the related consolidated
statements of operations and retained earnings and cash flows or
equivalent statements in the Chequemate SEC Reports (including any
related notes and schedules) fairly presents or will fairly present
the results of operations, retained earnings and cash flows, as the
case may be, of the entity or entities to which it relates for the
period set forth therein (subject in the case of unaudited interim
statements, to normal yearend audit adjustments) in each case in
accordance with generally-accepted accounting principles applicable to
the particular entity consistently applied throughout the periods
involved, except as may be noted therein; and independent certified
public accountants for Chequemate have rendered or will render an
unqualified opinion with respect to each audited financial statement
included in the Chequemate SEC Reports. The consolidated financial
statements included in the Chequemate
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SEC Reports are hereinafter sometimes collectively referred to as the
"Chequemate Financial Statements."
7.5 CONSENTS AND APPROVALS: NO VIOLATION. Neither the execution and
delivery of this Agreement by Chequemate nor the consummation of the
transactions contemplated hereby nor compliance by Chequemate with any
of the provisions hereof will conflict with or result in any breach of
any provision of the Articles of Incorporation or by-laws of
Chequemate or any Subsidiary, require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Authority, except pursuant to the Securities Act and the
Exchange Act, such filings and approvals as may be required under the
"blue sky", takeover or securities laws of various states, or result
in a default (with or without due notice or lapse of time or both) (or
give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, contract, license, agreement or other instrument
or obligation to which Chequemate is a party or by which Chequemate,
any of its Subsidiaries or any of their respective assets may be
bound, result in the creation or imposition of any lien, charge or
other encumbrance on the assets of Chequemate or violate any order,
writ, injunction, decree, statute, rule or regulation applicable to
Chequemate or any of its respective assets.
7.6 LITIGATION, ETC. Except as disclosed in the Chequemate SEC Reports or
in Exhibit "B" attached hereto, there is no action, claim, or
proceeding pending or, to the knowledge of Chequemate, threatened, to
which Chequemate is or would be a party before any court or
Governmental Authority acting in an adjudicative capacity or any
arbitrator or arbitration tribunal with respect to which there is a
reasonable likelihood of a determination having, or which, insofar as
reasonably can be foreseen in the future would have, a material
adverse effect on Chequemate and since December 31, 1997, there have
been no claims made or actions or proceedings brought against any
officer or director of Chequemate arising out of or pertaining to any
action or omission within the scope of his employment or position with
Chequemate, which claim, action or proceeding would involve a material
adverse effect on Chequemate taken as a whole. All material litigation
and other material administrative, judicial or quasi-judicial
proceedings to which Chequemate is a party or to which it has been
threatened to be made a party, are described in the Chequemate SEC
Reports, or Exhibit "B" attached hereto.
7.7 COMPLIANCE WITH LAW AND PERMITS. Chequemate has owned and operated
its properties and assets in substantial compliance with the
provisions and requirements of all laws, orders, regulations, rules
and ordinances issued or promulgated by all Governmental Authorities
having jurisdiction with respect thereto. All necessary governmental
certificates, consents, permits, licenses or other authorizations with
regard to the ownership or operation by Chequemate of their respective
properties and assets have been obtained and no violation exists in
respect of such licenses, permits or authorizations. None of the
documents and materials filed with or furnished to any Governmental
Authority with respect to the properties, assets or businesses of
Chequemate
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contains any untrue statement of a material fact or fails to state a
material fact necessary to make the statements therein not misleading.
7.8 CHEQUEMATE COMMON STOCK. The shares to be issued by Chequemate
pursuant to this Agreement have been duly authorized and, when issued
in accordance with the terms of the this Agreement, will be validly
authorized and issued and fully paid and nonassessable, and no
shareholder of Chequemate will have any preemptive rights or
dissenter's right with respect thereto.
ARTICLE 8. SECURITIES ASPECTS OF AGREEMENT
8.1 All parties to this Agreement mutually understand, agree and covenant
that any referenced sale or other disposition of any security under
this Agreement shall be controlled and governed by this section.
Specifically should there arise any conflict of application or
interpretation under this section and any other provision or section
of this Agreement, this section shall be given primary definition and
control. The term "securities" for the purposes of this Agreement
shall mean and include all shares of Chequemate, and any warrants to
acquire those shares as well as any other instrument or obligation
customary or commonly described as a security. Each of the following
terms and conditions of the issuance and distribution of the
securities shall be fully applicable unless otherwise specifically
waived or treated in the following paragraphs.
8.2 Each security issued pursuant to the terms of this Agreement shall be
a "restricted" security unless otherwise specifically referenced as
being issued pursuant to a registration or offering.
8.3 Seller understands and agrees that a restricted security, for the
purposes of this Agreement, is one which is issued without meeting
registration requirements under both federal and state law within the
United States. Each party to this Agreement further agrees and
acknowledges that the nature of a restricted security is that it is
not freely tradable. That is, the holder of such security cannot
immediately market or further distribute such security in the open
market, or through private transactions without the express written
consent of the issuer, primarily Chequemate under the terms of this
Agreement.
8.4 Seller fully acknowledges and understands that the resale of a
restricted security will normally require substantial holding periods
unless subsequently subject to an intervening registration under
applicable federal and state securities laws. Seller acquiring
restricted stock under this Agreement further acknowledges and agrees
that the principal, though not exclusive, means by which restricted
securities are resold under United States law and conforming state
laws and regulations is Securities and Exchange Commission ("SEC")
Rule 144, which essentially requires a holding period of one year
before the stock can be resold or any interest therein further sold or
assigned. In general terms, Rule 144 would require that there be
current public information about the Company before the provisions of
the Rule could be relied upon for subsequent resale, that the
aforementioned holding period had been met, that the sales occurred
through independent arms-length and unsolicited brokerage
transactions, that certain volume limitations on the number of
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shares sold in each three month period be observed, and that a report
of sales will be filed with the SEC. Seller understands that the
foregoing constitutes only a general description of Rule 144 and that
such person is or has the means to become familiar with all of the
specific provisions and terms of Rule 144 through his independent
legal advisors. Seller further acknowledges and agrees that while Rule
144 is not exclusive, that it is anticipated and intended that it
would be the primary means by which securities acquired under this
Agreement could be resold absent the specific registration provisions
of this Agreement.
8.5 Seller further acknowledges and agrees that, except as specifically
provided by the terms of this Agreement, none of the corporate parties
will have any obligation to register securities issued, and have no
present intention to register such securities other than is
specifically provided for by this Agreement. Each person under this
Agreement acquiring securities further understands and agrees that
individual registration of securities, absent registration by the
issuer, is usually not practical and should not be relied upon as a
means for resale or other distributions of securities acquired under
this Agreement.
8.6 Any entity acquiring securities pursuant to this Agreement with the
intent to divide such securities among its principal shareholders or
members as part of the acquisition process, will be responsible for
obtaining the knowledgeable consent and agreement of such actual
shareholder to the terms of this Agreement, specifically referencing
this paragraph.
8.7 Seller fully understands and agrees that should such person be deemed
to be in a "control" position as to Chequemate incident to the
completion of this Agreement, that such person must comply with the
volume limitations of Rule 144 to complete sales of his or her
securities acquired, except for securities which have been otherwise
registered pursuant to this Agreement. A control person has been
defined by the SEC, and by most state securities regulatory agencies,
as a person who has the capacity to exercise control over the issuing
company. While no precise mathematical formulation of a control person
is applicable to all situations, the following are generally presumed
to be control people:
(i) a person holding 10% or more of the shares of the issuing company;
(ii) any principal officer or any director of the issuing company.
8.8 Seller represents that it is acquiring the Shares for its own account,
for investment and not with a view to the distribution or resale
thereof. The Seller further represents that its financial and other
circumstances are such that it has adequate means of providing for its
current and anticipated future needs without having to sell or
otherwise dispose of the Shares, and that the Seller is able to bear
the economic risks of this investment and consequently is able to hold
the Shares for an indefinite period of time and to sustain the loss of
its entire investment in the Shares, in the event such a loss should
occur.
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8.9 Seller acknowledges and represents that, due to its knowledge and
experience in financial and business matters, its investment
experience generally and its experience with investments similar to
the Shares in particular, Seller, either alone or together with its
advisors, if any, is able to understand and merits of, and the risks
involved in, its proposed investment in the Shares. Seller, either
alone or together with its advisors, if any, has the capacity to
protect its own interests in connection with this transaction.
8.10 Seller acknowledges that Chequemate has furnished or made available to
Seller all financial and other data relating to Chequemate, required
by Seller to enable it to make an informed decision concerning its
approval of this transaction and its resulting acquisition of the
Shares. In particular, Seller acknowledges that it has received and
reviewed the financial statements of Chequemate for the past two years
and complete copies of all of the Chequemate SEC Reports for such
period. Seller acknowledges that it has been informed that Chequemate
has not previously conducted business except as disclosed in the
Chequemate SEC Reports. Seller represents and acknowledges that it and
its principals have been engaged in the business of providing cable
television services and pay-per-view services in the hotel/lodging
industry, which is intended area of business for which the goods are
being acquired by the Buyer. In this regard, Seller has been
acquainted with the Chief Executive Officer of Chequemate. Seller
further represents and acknowledges that it has had full opportunity
to obtain additional information from Chequemate to verify the
accuracy of the information supplied by it and to evaluate the merits
of its investment decision, including, without limitation, full
opportunity to ask questions of and receive satisfactory answers and
other information from Chequemate, its officers, directors and other
persons acting on its behalf, and all such questions have been
answered, and such other information supplied, to Seller's full
satisfaction. Seller is aware of, and has thoroughly evaluated, to its
own satisfaction, the high degree of risk associated with investing in
Chequemate, including but not limited to, the specific risks
associated with Chequemate's business and the risks associated with
the ownership of common stock.
8.11 Seller hereby represents and warrants to Chequemate that Seller is an
"accredited investor" as that term is defined in Rule 501(a) of
Regulation D. Seller further represents and warrants that it is a
limited liability company, and that each of the equity owners of
Seller is an "accredited investor" by reason of the fact that each of
the equity owners meets one or both of the following criteria:
(i) The owner is a natural person whose individual net worth, or
joint net worth with owner's spouse, at the time of this
agreement, exceeds $1,000,000; or
(ii) The owner is a natural person who had an individual income in
excess of $200,000 in each of the two most recent years, or
joint income with owner's spouse in excess of $300,000 in each of
those years, and has a reasonable expectation of reaching the
same income level in the current year.
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ARTICLE 9. FURTHER ASSURANCES
The parties agree to execute such additional or modified agreements as are
reasonably necessary to give full effect to the intentions of the parties as
shown in this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
it as of the day and year first above written.
BUYER
CHEQUEMATE INTERNATIONAL, INC.
a Utah corporation
By
-------------------------------------
Its:
SELLER
i-O Display Systems, LLC
a California limited liability company
By
-------------------------------------
Its:
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EXHIBIT "B"
Litigation, arbitration, etc.
Management believes that these lawsuits and threats of lawsuits are not
material, but lists them here for the sake of completeness and will furnish
detailed information upon request.
Magnum Financial v. Chequemate (settled)
Central Meadow Park x. Xxxxxx et al. (settled)
Multi-Dimensional Studios v. Chequemate (settled)
B & H d/b/a Ignite Advertising v. Chequemate (settled)
Orix Credit Alliance v. Strata (pending)
First Security Leasing Company v. Strata (settled)
Rocky Mountain Employee Benefits, Inc. v. Chequemate (pending)
Transwestern American Plaza II v. Chequemate (pending)
All American Semiconductor v. Chequemate (pending)
Eagle Plaza (threat of lawsuit)
3DTV Corporation (threat of lawsuit)
Universal Electronics (threat of lawsuit)
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