SECURITIES PURCHASE AGREEMENT
by and among
KINGSGATE ACQUISITIONS, INC.
and
LOOK MODELS INTERNATIONAL, INC.
and
STOCKHOLDERS OF LOOK MODELS INTERNATIONAL, INC.
and
FOUNDING STOCKHOLDERS OF KINGSGATE ACQUISITIONS, INC.
and
THE ACQUISITION TEAM OF KINGSGATE ACQUISITIONS, INC.
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AGREEMENT
AGREEMENT (this "Agreement") is dated as of July 25, 2001 by and among
Kingsgate Acquisitions, Inc., a Delaware corporation ("Kingsgate"), Look Models
International, Inc., a Delaware corporation ("LMI") and the stockholders of Look
Models International, Inc., whose names and security holdings are listed on
Schedule A ("LMI Stockholders"), the Founding Stockholders Of Kingsgate
Acquisitions, Inc., who are listed on Schedule B (the "Founding Stockholders" or
"Kingsgate Founders") and the Acquisition Team of Kingsgate Acquisitions, Inc.,
who are listed on Schedule C (the "Kingsgate Acquisition Team")
WHEREAS, Kingsgate has just completed an offering (the "Kingsgate
Offering") of 1,000,000 units ("Units") pursuant to Rule 419 ("Rule 419") under
the Securities Act of 1933 (the "Securities Act"), each Unit consisting of one
share of its common stock ("Kingsgate Share") and five redeemable common stock
purchase warrants ("Kingsgate Warrants") exercisable at $1.00; and
WHEREAS, prior to the Kingsgate Offering, Kingsgate sold 2,000,000
Kingsgate Shares, pursuant to Regulation D to the Securities Act to its initial
stockholders (Kingsgate "Founding Stockholders") whose names and security
holdings are listed on Schedule B; and
WHEREAS, LMI is an private corporation with offices in Vienna, Austria and
New York, New York that is involved, among other things, in modeling, staging
and licensing of model search contacts, and innovative brand and product
extension; and
WHEREAS, Kingsgate has placed the proceeds of the Kingsgate Offering and
certificates representing the Kingsgate and Kingsgate Warrants in an escrow
account established pursuant to Rule 419 at Xxxxxxxxxx Bank, Escrow Agent; and
WHEREAS, each registration statement ("Registration Statement") containing
business and financial information concerning Kingsgate is available on the
Electronic Data Gathering, Analysis and Retrieval System (known as "XXXXX")
maintained by the United States Securities and Exchange Commission
("Commission") on its World Wide Web site, xxx.xxx.xxx; and a printed copy of
its definitive prospectus contained in the last Registration Statement filed
with the Commission (the "Definitive Prospectus") as filed with the Commission
on Xxxxx is attached to this Agreement as Exhibit A; and
WHEREAS, pursuant to Rule 419 and the Definitive Prospectus, before
Kingsgate may consummate an acquisition, it must prepare and submit to the
Commission a post-effective amendment to its registration statement (the
"Post-Effective Amendment"), the Post-Effective Amendment must become effective;
the management of Kingsgate must submit the proposed acquisition to a vote of
subscribers to the Kingsgate Offering; and holders of at least 80% of the Units
must vote in favor of confirming the acquisition ("Reconfirmation Vote"); and
WHEREAS, Kingsgate desires to acquire all the capital stock of LMI and LMI
desires to sell to Kingsgate all of its capital stock subject to the terms and
conditions hereinafter set forth in this Agreement; and
NOW THEREFORE, in consideration of the premises and the covenants set
forth herein, the parties hereto (the "Parties" and, individually, a "Party")
hereby agree as follows:
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ARTICLE 1
PURCHASE AND SALE OF SECURITIES - FACILITIES PROVIDED
1.01 Purchase and Sale.
(a) Subject to the terms and conditions of this Agreement, Kingsgate,
LMI, the LMI Stockholders and the Kingsgate Founding Stockholders
will accomplish the following transactions:
(i) Kingsgate shall acquire all of the capital stock of LMI. In
exchange therefore, Kingsgate shall issue stock as follows:
1. 10,500,000 shares of common stock shall be issued to the
LMI Stockholders in a private transaction in proportion
to the holdings of said shareholders.
2. 1,000,000 shares of common stock shall be issued to LMI
Management (whose names are listed on Schedule D hereto)
in a private transaction.
3. Of the 2,000,000 shares of common stock currently held
by the Kingsgate Founding Stockholders, 500,000 shall be
retained by the Kingsgate Founding Stockholders and
500,000 shares shall be transferred to the Kingsgate
Acquisition Team. The remaining 1,000,000 shall be
cancelled.
4. The Kingsgate public stockholders (the "Kingsgate Public
Holders") shall retain 500,000 shares of their common
stock and shall sell 500,000 to the Kingsgate
Acquisition Team at cost.
5. The Kingsgate Public Holders shall agree to cancel three
of their five common stock purchase warrants. They shall
retain 1,000,000 warrants and shall sell 1,000,000
warrants to the Kingsgate Acquisition Team at cost.
6. Upon the effectiveness of the acquisition, Kingsgate
shall have 13,500,000 authorized and issued shares of
common stock outstanding. The LMI Group shall own
11,500,000 shares, or 85.2% of the common stock of the
combined entity and the Kingsgate Group shall own
2,000,000 or 14.8% of the combined entity. Upon
effectiveness of the acquisition, 3,000,000 of the
5,000,000 common stock purchase warrants shall be
cancelled, leaving the Kingsgate Group with 2,000,000
two-year redeemable common stock purchase warrants
outstanding.
(iii) Kingsgate will file the Post-Effective Amendment containing,
inter alia, a description of the business of LMI, risk
factors, audited financial statements of Kingsgate and LMI and
consolidated pro-forma financial statements of Kingsgate and
LMI;
(iv) as soon as practicable after the effective date of the
Post-Effective Amendment, the present management of Kingsgate
will dispatch a copy of the Definitive Prospectus contained in
the Post-Effective Amendment, a copy of this Agreement and a
notice soliciting a vote in favor of or against the
acquisition of LMI and informing holders of Units that the
vote of at least the holders of 80% of the Units will be
required to confirm the acquisition of LMI by Kingsgate;
(vi) Upon the execution of this Agreement, the present management
of Kingsgate will call a meeting of the board of directors and
at such meeting nominate and elect Xxxxxxxx Xxxxxxx to the
board of directors, such appointment to take place as of the
Reconfirmation Vote.
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Kingsgate will also accept a letter of resignation from the
all directors of the Kingsgate board of directors, such
resignation to take place as of the Reconfirmation Vote.
(vii) The present management of Kingsgate, in conjunction with the
present management of LMI, will use its best efforts to secure
a listing of the Kingsgate Shares and Kingsgate Warrants on
the Over-the-Counter Bulletin Board commencing the date of the
Reconfirmation Vote or as soon as practicable thereafter.
1.03 Exemption from Registration. Certificates representing the Kingsgate
Shares issued to LMI shall bear a restrictive legend setting forth that
the Kingsgate Shares were issued in a transaction exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act") and
may not be transferred unless pursuant to an effective registration
statement filed with the SEC or an exemption therefrom.
1.04 Registration Statement. Kingsgate will file the Post-Effective Amendment
as soon as practical after the date of this Agreement.
ARTICLE 2
CLOSING
2.01 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of LMI in New
York or at another place mutually agreed upon by the Parties. The
"Closing" shall mean the deliveries to be made by the Parties at the
Closing in accordance with this Agreement. The Closing will occur as soon
as practicable after the reconfirmation of the acquisition by the
Kingsgate Unit holders pursuant to Rule 419.
2.02 Deliveries by LMI. At the Closing, LMI shall deliver to Kingsgate Share
certificates purchased by Kingsgate pursuant to paragraph 1.01(a). If not
previously delivered, LMI shall also deliver to Kingsgate at the Closing
all documents the delivery of which are contemplated by this Agreement.
2.03 Deliveries by Kingsgate. At the Closing, Kingsgate shall deliver
certificates in accordance with section 1 hereof. The certificates shall
be legended to restrict transfer in the absence of an effective
registration statement filed with the Commission an exemption from such
registration.
2.04 Further Assurances. Prior, at or after the Closing, each Party shall
prepare, execute, and deliver, such further instruments of conveyance,
sale, assignment, or transfer, and shall take or cause to be taken such
other or further action, as any Party shall reasonably request of any
other Party at any time or from time to time in order to consummate, in
any other manner, the terms and provisions of this Agreement, including
opinions of counsel for each Party relating to the representations and
warranties set forth in this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LMI
In this Agreement, any reference to any event, change, condition or effect
being "material" with respect to any entity or group of entities means any
material event, change, condition or effect related to the financial condition,
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such entity or group of entities. In this
Agreement, any reference to a "Material Adverse Effect" with respect to any
entity or group of entities means any event, change or effect that is materially
adverse to the financial condition, properties, assets, liabilities, business,
operations or results of operations of such entity.
In this Agreement, any reference to a Party's "knowledge" means such
Party's actual knowledge after reasonable inquiry of officers, directors and
other employees of such Party reasonably believed to have knowledge of such
matters.
LMI represents and warrants to Kingsgate as follows:
3.01 Organization, Standing and Power. LMI is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. LMI has
the corporate power to own its properties and to carry on its business as
now being conducted and as proposed to be conducted and is duly qualified
to do business and is in good standing in each jurisdiction in which the
failure to be so qualified and in good standing would have a Material
Adverse Effect on LMI. At or prior to the Closing, LMI will deliver a true
and correct copy of its certificate of incorporation, a certificate of
good standing and by-laws or other charter documents, as applicable, to
Kingsgate.
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LMI is not in violation of any of the provisions of its certificate of
incorporation or bylaws or equivalent organizational documents. LMI has no
direct or indirect majority-owned subsidiaries.
3.02 Restrictions on Business Activities. There is no agreement, judgment,
injunction, order or decree against either LMI which has or could
reasonably be expected to have the effect of prohibiting or materially
impairing any current or future business practice, any acquisition of
property or the conduct of business as currently conducted or as proposed
to be conducted.
3.03 Governmental Authorization. LMI has obtained each federal, state, county,
local or foreign governmental consent, license, permit, grant, or other
authorization of a governmental entity (i) pursuant to which it currently
operates or holds any interest in any of its properties or (ii) that is
required for its operation, and all of such authorizations are in full
force and effect, except where the failure to obtain or have any such
authorizations could not reasonably be expected to have a Material Adverse
Effect.
3.04 Compliance With Laws. To its knowledge, LMI has complied with, is not in
violation of, and has not received any notices of violation with respect
to, any federal, state, local or foreign statute, law or regulation with
respect to the conduct of its business, or the ownership or operation of
its business, except for such violations or failures to comply as could
not be reasonably expected to have a Material Adverse Effect.
3.05 Authority. LMI has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been adopted by the Board of Directors of LMI
in resolutions which are in full force and effect. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of LMI. This Agreement has been duly executed and
delivered by LMI and constitutes the valid and binding obligation of LMI
enforceable against LMI in accordance with its terms, except that such
enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to creditors' rights generally,
and is subject to general principles of equity. The execution and delivery
of this Agreement by LMI does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation or
acceleration of any material obligation or loss of any material benefit
under (i) any provision of the certificate of incorporation or bylaws of
LMI, or (ii) any mortgage, indenture, lease, contract or other agreement
or instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to LMI or
any of its properties or assets. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality ("Governmental Entity") is required by or with respect to
LMI or in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except for (i)
such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and
state securities laws, including but not limited to Rule 419 under the
Securities Act, and (ii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have
a Material Adverse Effect on LMI and would not prevent, or materially
alter or delay any of the transactions contemplated by this Agreement.
3.06 Financial Statements. Prior to the Closing, LMI will deliver to Kingsgate
audited financial statements for the period ended December 31, 2000 and
unaudited financial statements for the period ended June 30, 2001 (the
"LMI Financial Statements"). The LMI Financial Statements will be complete
and correct in all material respects and will be prepared in accordance
with generally accepted accounting principles, applied on a consistent
basis throughout the periods indicated and with each other. The LMI
Financial Statements will accurately will set out and describe in all
material respects the financial condition and operating results as of the
dates, and for the periods, indicated therein, subject to normal year-end
adjustments. LMI will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted
accounting principles.
3.07 Absence of Certain Changes. Subsequent to the date of the LMI Financial
Statements, except as otherwise disclosed in writing, LMI will represent
at the Closing that it has conducted its business in the ordinary course
consistent with past practice and there has not occurred: (i) any change,
event or condition that has resulted in, or might reasonably be expected
to result in, a Material Adverse Effect; (ii) any acquisition, sale or
transfer of any material asset other than in the ordinary course of
business and consistent with past practice; (iii) any material change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates); (iv) any declaration, setting aside, or
payment of a dividend or other distribution, or any direct or indirect
redemption, purchase or other acquisition of any shares of capital stock
except as disclosed in writing to Kingsgate; (v) any material contract
entered into other than in the ordinary course of business, or any
material
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amendment or termination of, or default under, any material contract; (vi)
any undisclosed material amendment or change to the incorporation
documents or bylaws; (vii) any increase in or modification of the
compensation or benefits payable or to become payable to any directors or
employees other than in the ordinary course of business and consistent
with past practice or (viii) any negotiation or agreement to do any of the
things described in the preceding clauses (i) through (vii) (other than
negotiations with Kingsgate and its representatives regarding the
transactions contemplated by this Agreement or as otherwise disclosed to
Kingsgate).
3.08 Absence of Undisclosed Liabilities. LMI has no material obligations or
liabilities of any nature (matured or unmatured, fixed or contingent)
other than (i) those set forth or adequately provided for in the LMI
Financial Statements; (ii) those incurred in the ordinary course of
business and not required to be set forth in the LMI Financial Statements
under generally accepted accounting principles; (iii) those incurred in
the ordinary course of business since the date of LMI Financial Statements
and consistent with past practice; and (iv) those incurred in connection
with the execution of this Agreement.
3.09 Taxes. LMI and Kingsgate have timely filed all tax returns required to be
filed and has paid all taxes shown thereon to be due. The LMI Financial
Statements (i) fully accrue all actual and contingent liabilities for
taxes with respect to all periods through December 31, 2000 and neither
LMI nor its subsidiaries has or will incur any tax liability in excess of
the amount reflected on the LMI Financial Statements with respect to such
periods, and (ii) properly accrue in accordance with generally accepted
accounting principles all liabilities for taxes payable after December 31,
2000 with respect to all transactions and events occurring on or prior to
such date. No material tax liability since December 31, 2000 has been
incurred by LMI other than in the ordinary course of business and adequate
provision has been made in the LMI Financial Statements for all taxes
since that date in accordance with generally accepted accounting
principles.
3.10 Litigation. There is no private or governmental action, suit, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or, to the knowledge of LMI, threatened
against either LMI or any of its properties or any of their respective
officers or directors (in their capacities as such) that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect on LMI except as has been previously disclosed to Kingsgate. There
is no judgment, decree or order against LMI or, to the knowledge of LMI,
any of its directors or officers (in their capacities as such), that could
prevent, enjoin, or materially alter or delay any of the transactions
contemplated by this Agreement, or that could reasonably be expected to
have a Material Adverse Effect on LMI.
3.11 Title to Property. LMI has, and will have, as the case may be good and
marketable title to all of its properties, interests in properties and
assets, real and personal, as reflected in the LMI Financial Statements or
acquired after the LMI Financial Statements. The property and equipment
that are used in the operations of its business are in all material
respects in good operating condition and repair, ordinary wear and tear
excepted.
3.12 Intellectual Property.
(a) LMI owns or is licensed or otherwise possesses legally enforceable
rights to use all trademarks, trade names, service marks,
copyrights, domain registrations and any applications therefor, and
tangible or intangible proprietary information or material
("Intellectual Property") that are used in its business as currently
conducted, except to the extent that the failure to have such rights
has not had and would not reasonably be expected to have a Material
Adverse Effect.
(b) LMI has not been sued in any suit, action or proceeding and has not
brought any action, suit or proceeding for infringement of
Intellectual Property or breach of any license or agreement
involving Intellectual Property against any third party. The conduct
of its business does not infringe any trademark, service xxxx,
copyright, trade secret or other proprietary right of any third
party, where such infringement would have a Material Adverse Effect.
3.13 Interested Party Transactions. LMI is not indebted to any director,
officer, employee or agent (except for amounts due as normal salaries and
bonuses and in reimbursement of ordinary expenses), and no such person is
indebted to LMI except as disclosed in the LMI Financial Statements.
3.14 Insurance. LMI does not currently carry any insurance, except as
identified in Schedule 3.14
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3.15 Brokers' and Finders' Fees. LMI has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement
3.16 Minute Books. LMI will make available to Kingsgate a complete and accurate
summary of all meetings of directors and shareholders or actions by
written consent since the time of incorporation of LMI, and reflect all
transactions referred to in such minutes accurately in all material
respects.
3.17 Complete Copies of Materials. LMI has delivered or made available, and
will continue to deliver or make available until the Closing true and
complete copies of each agreement not in the ordinary course of business
to which LMI is a party.
3.18 Representations Complete. None of the representations or warranties made
by LMI, or documents furnished by LMI or pursuant to this Agreement or any
written statement furnished to Kingsgate pursuant hereto or in connection
with the transactions contemplated hereby, when all such documents are
read together in their entirety, contains or will contain at the Closing
any untrue statement of a material fact, or omits or will omit at the
Closing to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances
under which made, not misleading; provided, however, that for purposes of
this representation, any document attached hereto as a "Superseding
Document" (even if not actually physically attached hereto) that provides
information inconsistent with or in addition to any other written
statement furnished to Kingsgate in connection with the transaction
contemplated hereby, shall be deemed to supersede any other prior document
or written statement furnished to Kingsgate with respect to such
inconsistent or additional information.
3.19 Compliance With Other Instruments. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby will not result in any violation or default of any provision of any
instrument, judgment, order, writ, decree or contract to which LMI is a
party or by which it is bound, or require any consent under or be in
conflict with or constitute, with or without the passage of time and
giving of notice, either a violation or default under any such provision.
3.19 Capital Structure. 9,727,847 shares of LMI common stock are issued and
outstanding. Such shares are fully paid and nonassessable. There are no
other outstanding securities of LMI and no outstanding commitments to
issue any securities.
3.20 Authorized Shares of Common Stock and Warrants. The LMI Shares to be
transferred to Kingsgate under this Agreement will be free and clear of
any lien, pledge, security interest or other encumbrance and, upon
delivery of the securities at the Closing as provided for in this
Agreement, and assuming Kingsgate is acquiring the LMI Shares in good
faith and without notice of any adverse claim, Kingsgate will acquire good
title thereto, free and clear of any lien, pledge, security interest or
encumbrance (other than restrictions on transfer arising under applicable
securities laws).
3.21 Disclosure. LMI has fully provided Kingsgate with all the information in
its possession that Kingsgate has requested in determining whether to
enter into this Agreement. Neither this Agreement nor any document
attached to this Agreement nor any certificate delivered pursuant hereto
that, in any such case, has been or will be provided by or on behalf of
LMI contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements made herein or therein not
misleading in light of the circumstances under which they were made.
3.22 Employee Matters. To its best knowledge, LMI is in compliance in all
material respects with all currently applicable laws and regulations
respecting employment, discrimination in employment, terms and conditions
of employment, wages, hours and occupational safety and health and
employment practices, and is not engaged in any unfair labor practice. To
its best knowledge, there are no pending claims against LMI under any
workers compensation plan or policy or for long term disability. There are
no employee benefit plans or stock option plans or other bonus
compensation to employees.
3.23 Delivery of Documents. LMI has delivered or will deliver to Kingsgate at
or prior to the Closing all documents required to be delivered under this
Agreement.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF KINGSGATE
Kingsgate represents and warrants to LMI as follows:
4.01 Organization, Standing and Power. Kingsgate is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware. Kingsgate has the corporate power to own its properties and to
carry on its business as now being conducted and as proposed to be
conducted and is duly qualified to do business and is in good standing in
each jurisdiction in which the failure to be so qualified and in good
standing would have a Material Adverse Effect on Kingsgate.
4.02 Authority. Kingsgate has all requisite corporate power and authority to
enter into 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 authorized by all
necessary corporate action on the part of Kingsgate. This Agreement has
been duly executed and delivered by Kingsgate and constitutes the valid
and binding obligation of Kingsgate enforceable against Kingsgate in
accordance with its terms, except that such enforceability may be limited
by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to creditors' rights generally, and is subject to general
principles of equity. The execution and delivery of this Agreement by
Kingsgate does not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or default
under (with or without notice or lapse of time, or both), or give rise to
a right of termination, cancellation or acceleration of any material
obligation or loss of any material benefit under (i) any provision of the
articles of organization or bylaws of Kingsgate as amended, or (ii) any
material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
Kingsgate or any of its properties or assets. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority
or instrumentality ("Governmental Entity") is required by or with respect
to Kingsgate or Kingsgate in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby, except for (i) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under
applicable state securities laws and the securities laws of any foreign
country, (ii) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material
Adverse Effect on Kingsgate and would not prevent, or materially alter or
delay any of the transactions contemplated by this Agreement and (iii)
subject, as to the enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally, to general equitable principles and to
limitations on the enforceability of indemnification provisions as applied
to certain types of claims arising hereafter, if any, under the federal
securities laws.
4.03 Litigation. There is no action, suit, proceeding, or investigation pending
or, to its knowledge, currently threatened against Kingsgate which
questions the validity of this Agreement or the right of Kingsgate to
enter into this Agreement or to consummate the transactions contemplated
hereby.
4.04 Financial Statements. The financial statements of Kingsgate ("Kingsgate
Financial Statements") as filed with the Commission are complete and
correct in all material respects and were prepared in accordance with
generally accepted accounting principles, applied on a consistent basis
throughout the periods indicated and with each other. The Kingsgate
Financial Statements accurately set out and describe in all material
respects the financial condition and operating results as of the dates,
and for the periods, indicated therein, subject to normal year-end
adjustments.
4.05 Absence of Certain Changes. Since the date of the Kingsgate Financial
Statements, except as otherwise disclosed in writing, Kingsgate represents
that it has conducted its business in the ordinary course consistent with
past practice and that Kingsgate has been an inactive company except for
the issuance of shares of common stock to its founding stockholders,
filing Registration Statements with the Commission and conducting the
Kingsgate Offering.
4.06 Absence of Undisclosed Liabilities. Kingsgate has no material obligations
or liabilities of any nature (matured or unmatured, fixed or contingent)
other than (i) those set forth or adequately provided for in the Kingsgate
Financial Statements; (ii) those incurred in the ordinary course of
business and not required to be set forth in the Kingsgate Financial
Statements under generally accepted accounting principles; (iii) those
incurred in the ordinary course of business since the Kingsgate Financial
Statements and consistent with past practice; and (iv) those incurred in
connection with the execution of this Agreement.
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4.07 Taxes. Kingsgate has, or will have prior to the Closing filed all tax
returns required to be filed and has paid all taxes shown thereon to be
due. The Kingsgate Financial Statements will (i) fully accrue all actual
and contingent liabilities for taxes with respect to all periods through
June 30, 2001, and Kingsgate has not or will not incur any tax liability
in excess of the amount reflected on the Kingsgate Financial Statements
with respect to such periods, and (ii) properly accrue in accordance with
generally accepted accounting principles all liabilities for taxes payable
after June 30, 2001 with respect to all transactions and events occurring
on or prior to such date. No material tax liability since June 30, 2001
has been incurred by Kingsgate.
4.08 Governmental Authorization. Kingsgate has obtained each federal, state,
county, local or foreign governmental consent, license, permit, grant, or
other authorization of a Governmental Entity (i) pursuant to which it
currently operates or holds any interest in any of its properties or (ii)
that is required for its operation, and all of such authorizations are in
full force and effect, except where the failure to obtain or have any such
authorizations could not reasonably be expected to have a Material Adverse
Effect.
4.09 Title to Property. Kingsgate has good and marketable title to all of its
properties, interests in properties and assets, reflected in the Kingsgate
Financial Statements.
4.10 Interested Party Transactions. Kingsgate is not indebted to any director,
officer, employee or agent and no such person is indebted to Kingsgate.
4.11 Insurance. Kingsgate does not currently carry any insurance.
4.12 Compliance With Laws. To its knowledge, Kingsgate has complied with, is
not in violation of, and has not received any notices of violation with
respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership
or operation of its business, except for such violations or failures to
comply as could not be reasonably expected to have a Material Adverse
Effect.
4.13 Authorization. This Agreement has been adopted by the Board of Directors
of Kingsgate in resolutions which are in full force and effect. All acts
and conditions required by law on the part of Kingsgate to authorize the
execution and delivery of this Agreement and the transactions contemplated
herein and the performance of all obligations of Kingsgate hereunder have
been duly performed and obtained, and this Agreement constitutes a valid
and legally binding obligation of Kingsgate, enforceable in accordance
with its terms, subject, as to the enforcement of remedies, to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally, to general equitable principles and
to limitations on the enforceability of indemnification provisions as
applied to certain types of claims arising hereafter, if any, under the
federal securities laws.
4.14 Compliance With Other Instruments. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby will not result in any violation or default of any provision of any
instrument, judgment, order, writ, decree or contract to which Kingsgate
is a party or by which it is bound, or require any consent under or be in
conflict with or constitute, with or without the passage of time and
giving of notice, either a violation or default under any such provision.
4.15 Authorized Shares of Common Stock and Warrants. The Kingsgate Shares to be
transferred to LMI under this Agreement will be free and clear of any
lien, pledge, security interest or other encumbrance and, upon delivery of
the securities at the Closing as provided for in this Agreement, and
assuming LMI is acquiring the shares in good faith and without notice of
any adverse claim, LMI Stockholders will acquire good title thereto, free
and clear of any lien, pledge, security interest or encumbrance (other
than restrictions on transfer arising under applicable securities laws).
4.16 Minute Books. Kingsgate will make available to LMI a complete and accurate
summary of all meetings of directors and shareholders or actions by
written consent since the time of incorporation, and reflect all
transactions referred to in such minutes accurately in all material
respects.
4.17 Brokers' and Finders' Fees. Kingsgate has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement.
9
4.18 Representations Complete. None of the representations or warranties made
by Kingsgate, or documents furnished by Kingsgate or pursuant to this
Agreement or any written statement furnished to Kingsgate pursuant hereto
or in connection with the transactions contemplated hereby, when all such
documents are read together in their entirety, contains or will contain at
the Closing any untrue statement of a material fact, or omits or will omit
at the Closing to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances
under which made, not misleading; provided, however, that for purposes of
this representation, any document attached hereto as a "Superseding
Document" (even if not actually physically attached hereto) that provides
information inconsistent with or in addition to any other written
statement furnished to Kingsgate in connection with the transaction
contemplated hereby, shall be deemed to supersede any other prior document
or written statement furnished to LMI with respect to such inconsistent or
additional information.
4.19 Disclosure. Kingsgate has fully provided LMI with all the information in
its possession that LMI has requested in determining whether to enter into
this Agreement. Neither this Agreement nor any document attached to this
Agreement nor any certificate delivered pursuant hereto that, in any such
case, has been or will be provided by or on behalf of Kingsgate contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements made herein or therein not misleading in
light of the circumstances under which they were made.
4.20 Capital Structure. The present capitalization of Kingsgate consists of
45,000,000 shares of common stock, par value $.001 each, of which
3,000,000 shares of common stock are issued and outstanding as of the date
of closing and 5,000,000 shares of "blank check" preferred stock, $.001
par value each of which none are issued. In addition, Kingsgate has issued
5,000,000 common stock purchase warrants exercisable at $1.00. There are
no other outstanding securities of Kingsgate and no outstanding
commitments to issue any securities. At Closing the capitalization of
Kingsgate will be as agreed to in Article 1 of this Agreement.
4.21 Employee Matters. Kingsgate has no employees.
4.22 Delivery of Documents. Kingsgate has delivered or will deliver to LMI at
or prior to the Closing all documents required to be delivered under this
Agreement.
ARTICLE 5
LEGEND REMOVAL, TRANSFER, CERTAIN SALES, ADDITIONAL SHARES
5.01 Removal of Legend. The restrictive legend shall be removed and Kingsgate
shall issue, or shall cause to be issued, a certificate without such
legend to the holder of any security upon which it is stamped, and a
certificate for a security shall be originally issued without the legend,
if, (a) the resale of such security is registered under the Securities
Act, and (b) such holder provides Kingsgate with an opinion of counsel, in
form, substance and scope customary for opinions of counsel in comparable
transactions and reasonably satisfactory to Kingsgate and its counsel (the
reasonable cost of which shall be borne by Kingsgate if neither an
effective registration statement under the Securities Act or Rule 144 is
available in connection with such sale) to the effect that a public sale
or transfer of such security may be made without registration under the
Securities Act pursuant to an exemption from such registration
requirements.
5.02 Transfer Agent Instructions. Kingsgate shall instruct its transfer agent
to issue certificates, registered in the name of Kingsgate or its
transferees, for the Kingsgate Shares in such amounts specified from time
to time by Kingsgate or its transferees to exercise of the Warrants.
ARTICLE 6
TERMS GOVERNING MANAGEMENT AND THE ACQUISITION
6.01 Prior to the Closing, Kingsgate will take take all corporate and other
action necessary to establish the size of its Board of Directors at the
number of members LMI designates, to accept the resignation of Xxxxxx
Xxxxxxxxx and Xxxxxx XxXxxxxx, effective upon the Closing and to elect,
effective upon the Closing, Xxxxxxxx Xxxxxxxx and his designess. All
current Kingsgate officers and directors shall resign their positions
effective as of the Closing. The combined entity shall be managed by a
Board of Directors appointed by LMI.
10
6.02 The combined entity shall not employ any employees of Kingsgate, and any,
and all Kingsgate employees, if any, shall be terminated as of the
effective date of the acquisition.
6.03 Each share of stock of the combined entity shall have one vote.
6.04 The acquisition must be completed within one (1) year of the date of this
Agreement.
6.05 The combined entity shall be renamed Look Models International, Inc., and
all formalities to affect said naming of the entity shall be undertaken
and completed at the effective date of the acquisition.
6.06 There shall be no fees or other compensation paid to present Kingsgate
management, or its affiliates or advisors, and there is no understanding
or future arrangement that will result in income for current Kingsgate
management or its affiliates or advisors, other than rights to income
associated with stock ownership. Notwithstanding the foregoing, LMI shall
pay fees and expenses of Kingsgate's counsel, Xxxxxx X. Xxxxxxx, Esq. for
due diligence investigation, for drafting a post-effective amendment to
Kingsgate registration statement and for responding to SEC comment letters
through effectiveness. Fees for the services as identified in this
paragraph will be capped at $60,000. A retainer of $25,000 shall be paid
upon execution of Securities Purchase Agreement. The second payment of
$35,000 shall be paid upon filing of the post-effective amendment to the
registration statement. Expenses shall be paid upon receipt of written
verification thereof.
6.07 The Kingsgate Group shall be afforded rights against dilution for one
round of additional financing after warrant conversions.
6.08 The Kingsgate Acquisition Team and the Kingsgate Founders shall be granted
registration rights by LMI, without cost to the Kingsgate Group. Selling
Shareholder pages will be prepared and appended to the post-effective
amendment to the registration statement providing for registration for the
shares held by the Kingsgate Acquisition Team and the Kingsgate Founders.
11
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF THE PARTIES
The obligations of Kingsgate on the one hand, and LMI, on the other hand,
to the following conditions on or prior to the Closing:
7.01 Consents and Approvals. The Parties shall have obtained all consents and
approvals of third parties and governmental authorities, if any, required
to consummate the transactions contemplated by this Agreement, including
but not limited to the effectiveness of the Post-Effective Registration
Statement and the Reconfirmation Vote.
7.02 Representations, Warranties and Agreements. All representations and
warranties made herein by Kingsgate and LMI, shall be true, accurate and
correct in all respects as of the date made and as of the Closing.
Kingsgate and LMI, shall have performed all obligations and agreements
undertaken by each of them herein to be performed at or prior to the
Closing.
7.03 Certificate. Kingsgate shall have received from LMI and LMI shall have
received from Kingsgate, a certificate, dated as of the Closing and
executed by the President or Chief Executive Office and Secretary of LMI
and Kingsgate, respectively to the effect that the conditions set forth in
Article 3 or Article 4 respectively shall have been satisfied.
7.04 No Material Adverse Changes. There shall not have occurred any material
adverse change in the financial condition, properties, assets (including
intangible assets), liabilities, business, operations or results of
operations of LMI.
7.05 No Actions. Consummation of the transactions contemplated by this
Agreement shall not violate any order, decree or judgment of any court or
governmental body having jurisdiction.
7.06 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be in form and substance
reasonably satisfactory to counsel for each of the Parties, and each such
Party (or its counsel) shall have received all such counterpart originals
or certified or other copies of such documents as it may reasonably
request.
7.07 Accuracy of Documents and Information. The copies of all material
instruments, agreements, other documents and written information delivered
to any Party by any other Party or its representatives shall be complete
and correct in all material respects as of the Closing, the receipt of
audited 12-31-1999 and 12-31-2000 financial statements, 6-30-2001 reviewed
financial statements, subsequent quarterly reviewed financial statements
within thirty days of completion of such audit and subsequent audited
12-31-01 financials;
7.08 Due Diligence Review of accounts. There shall be a review and analysis of
the accounts and financial statements identified in paragraph 7.07 of this
Article 7 by an accountant selected by Kingsgate at its own expense,
satisfactory to Kingsgate;
7.09 Due Diligence Review of Facilities and Assets. There shall be an
inspection of its facilities and verification of assets claimed by LMI.
7.10 Compliance with Laws. This Securities Purchase Agreement and the
underlying acquisition must be accomplished in accordance with applicable
laws.
ARTICLE 8
INDEMNIFICATION
8.01 Indemnification. Each Party will indemnify and hold harmless the other
Party and its respective officers, directors, agents and employees, and
each person, if any, who controls or may control a Party within the
meaning of the Securities Act from and against any and all losses, costs,
damages, liabilities and expenses arising from claims, demands, actions,
causes of action, including, without limitation, reasonable legal fees,
except for the net of any recoveries under existing insurance policies,
tax benefits received by any Party or its affiliates as a result of such
damages, indemnities from third parties or in the case of third party
claims, by any
12
amount actually recovered by a Party or its affiliates pursuant to
counterclaims made by any of them directly relating to the facts giving
rise to such third party claims arising out of any misrepresentation or
breach of or default in connection with any of the representations,
warranties, covenants and agreements given or made by LMI or Kingsgate in
this Agreement, or any exhibit or schedule to this Agreement. Each Party
and its affiliates shall act in good faith and in a commercially
reasonable manner to mitigate any damages they may suffer.
ARTICLE 9
MISCELLANEOUS
9.01 (a) Notices.
(1) For LMI: Xxx Xxxx Xxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx X. Xxxxxxxxxxx.
(2) For Kingsate: 000 00xx Xxxxxx, Xxxx Xxxxxxxxx, Xxxxxxx
Xxxxxxxx X0X 0X0 Xxxxxx, Attention: Xxxxxx Xxxxxxxxx with a
copy to Xxxxxx Xxxxxxx, Esq., 000 Xxxxxx Xxxx Xxxx, Xxxxxx,
Xxxxxxx 00000.
or to such other address as any Party may have furnished in writing
to the other Party in the manner provided above.
(b) Method of Notification. Any notice, demand, request, or other
communication (collectively a "notice") required or permitted under
this agreement must be in writing and delivered by federal express,
certified or registered mail, postage prepaid, return receipt
requested. A notice must be addressed to a party at the party's last
known address, which addresses are as listed in provision 5, above.
A notice that is sent by mail will be deemed given five (5) business
days after it is mailed. Any party may designate, by notice to the
other party or the party's agent, substitute addresses or addressees
for notices; and, thereafter, notices are to be directed to those
substitute addresses or addressees.
9.02 Entire Agreement; Modifications; Waiver. This Agreement and the documents
and instruments and other agreements specifically referred to herein
constitute the final, exclusive and complete understanding of the Parties
with respect to the subject matter hereof and supersedes any and all prior
agreements, understandings and discussions with respect thereto. No
variation or modification of this Agreement and no waiver of any provision
or condition hereof, or granting of any consent contemplated hereby, shall
be valid unless in writing and signed by the Party against whom
enforcement of any such variation, modification, waiver or consent is
sought. The rights and remedies available to each Party pursuant to this
Agreement and all exhibits hereunder shall be cumulative.
9.03 Captions. The captions in this Agreement are for convenience only and
shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
9.04 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall constitute an original
copy hereof, but all of which together shall constitute one agreement.
9.05 Publicity. Except for disclosure required by any law to which either Party
is subject, the timing and content of any announcements, press releases
and public statements to be made concerning the transactions pursuant to
this Agreement shall be determined solely by Kingsgate, in consultation
with LMI, unless context relates to LMI's operation in which case the
parties shall jointly decide on the content and timing of the announcement
.
9.07 Successors and Assigns. No Party may, without the prior express written
consent of each other Party, assign this Agreement in whole or in part.
This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the Parties.
9.07 Applicable Law. All questions concerning the construction, validity and
interpretation of this agreement and the performance of the obligations
imposed by this agreement shall be
13
governed by the internal law, not the law of conflicts, of the State of
New York.
9.08 Exclusive Jurisdiction and Venue. Any suit involving any dispute or matter
arising under this agreement may only be brought in a United States
District Court located in the State of New York or any New York State
Court having jurisdiction over the subject matter of the dispute or
matter. All parties hereby consent to the exercise of personal
jurisdiction by any such court with respect to any such proceeding.
9.09 Further Assurances. At the request of any of the Parties, and without
further consideration, the other Parties will execute such documents and
instruments and to do such further acts as may be necessary or desirable
to effectuate the transactions contemplated hereby, required by law,
statute, rule or regulation.
9.10 Confidentiality and Nondisclosure Agreements. All information which shall
have been furnished or disclosed by one Party to the other pursuant to
this Agreement, including without limitation, business, financial and
customer development plans, forecasts, strategies and information, shall
be held in confidence pursuant hereto and shall not be disclosed to any
person other than their respective employees, directors, legal counsel,
accountants or financial advisors, with a need to have access to such
information, and shall not make any use whatsoever of such information
except to evaluate such information internally. The confidentiality
provisions set forth herein shall survive until two years from the date
hereof, unless the Party desiring to disclose the information can document
that (i) such information is (through no improper action or inaction by
such Party or any affiliate, agent, consultant or employee) generally
available to the public, or (ii) was in its possession or known by it
prior to receipt from the other Party, or (iii) was rightfully disclosed
to it by a third party, or (iv) was independently developed by employees
of such Party who have had no access to such information.
9.11 Severability. The invalidity or unenforceability of any one or more
phrases, sentences, clauses or provisions of this Agreement shall not
affect the validity or enforceability of the remaining portions of this
Agreement or any part thereof.
9.12 Execution in Counterpart and in Separate Locations. As the parties are
currently resident in different jurisdictions, the parties agree that this
agreement may be executed by the parties in counterpart while said parties
are in different locations. Accordingly, fax transmission of signatures
shall be deemed to be authentic and constitute execution of this
agreement.
IN WITNESS WHEREOF, each Party has executed this Agreement as of the date
first above written.
KINGSGATE ACQUISITION, INC.
By: /s/ Xxxxxx Xxxxxxxxx
---------------------
Xxxxxx Xxxxxxxxx,
President
LOOK MODELS INTERNATIONAL, INC.
By: /s/ Xxxxxxxx Xxxxxxx
---------------------
Xxxxxxxx Xxxxxxx,
President
14
Schedule A
LMI Stockholders
15
Schedule B
Kingsgate Founders
Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxx
X0X 0X0 Xxxxxx
Xxxxxx XxXxxxxx
000 00xx Xxxxxx
Xxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxx
X0X 0X0 Xxxxxx
Tradewinds Investments Ltd.
Xxxxxxx Xxxxx
00 Xxxxxxx Xxxxxx
Nassau, Bahamas
Turf Holding Ltd.
Xxxxxxxx Xxxxx
0 Xxxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxx
CCD Consulting
Commerce Distribution
AG Xxxxxxxxxxxx 0
Xxxxxxxx 0000
0000 Xxxxx
Xxxxxxxxxxx
The Pembridge
Capital Establishment
P. O. Box 1617
Xxxxxxxxxxxxxxx 0
16
Vadus FL-9490
Liechtenstein
Seloz Gestion & Finance SA
Xxxxxxxxx Xx. Xxxxxxx 00
0000 Xxxxxx 0
Xxxxxxxxxxx
Partner Marketing AG
Xxxxxxx 0
0000 Xxxxxxxxx
Xxxxxxxxxxx
U. K. Menon
00, Xxxxx 00/00 X
Xxxxxxxx Xxxx
Xxxxxxxx
Xxxxxxxx
Xxxx Xxxxxxxx
Xxxxxxxxxxx 0
0000 Xxxxxxxx
Xxxxxxxxxxx
17
Schedule C
The Kingsgate Acquisition Team
R. Xxxxx Xxxxxx
Xxxx Xxxxxxxxxx
Xxxxxxx Xxxxx
18
Schedule D
LMI Management
Xxxxxxxx Xxxxxxx, President
