Exhibit 10.3
Closing/Common Stock Purchase Agreement dated December 31, 2002.
CLOSING/COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (THE "AGREEMENT") is made as of this 31st
day of December 2002, by and among ECLIPSE ENTERTAINMENT GROUP, INC., a Nevada
corporation ("ECLE"), TERRASTAR MARKETING INC., a Nevada corporation ("TMI"),
TERRASTAR DATA CORP., a Nevada corporation ("TDC") Certain terms are used herein
as defined below in Article I or elsewhere in this Agreement.
RECITALS
WHEREAS, ECLE is a publicly held company with its common stock trading on the
OTC bulletin board and is looking to acquire the stock of growing privately held
company;
WHEREAS, TDC collectively owns all of the outstanding shares of Common Stock of
TMI (the "TMI Shares").
WHEREAS, TMI is a growing privately held company which is desirous of being
acquired by a publicly held company;
WHEREAS, TMI is currently subject to a licensing agreement with TerraStar Data
Corp., which provides TMI with the exclusive license to market its devices; and
WHEREAS, after good faith negotiations, ECLE, TDC and TMI have agreed upon
certain terms and conditions which will govern the sale of TMI to ECLE and have
set forth these terms and conditions in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the respective covenants contained herein
and intending to be legally bound hereby, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
For convenience, certain terms used in more than one part of this Agreement are
listed in alphabetical order and defined or referred to below (such terms as
well as any other terms defined elsewhere in this Agreement shall be equally
applicable to both the singular and plural forms of the terms defined).
"ECLE Common Stock" means the 50,000,000 authorized shares of Common Stock of
ECLE, $0.001par value per share.
"ECLE Preferred Stock" means the 10,000,000 authorized shares of Preferred Stock
of ECLE, $0.001par value per share, of which 3,000,000 have been divided into
Class A Preferred Stock with 6 to 1 voting and conversion rights.
"ECLE Shares" means the shares of ECLE Class A Preferred Stock with 6 to 1
voting and conversion rights to be provided in connection with the Transaction.
"Affiliates" means, with respect to a particular party, persons or entities
controlling, controlled by or under common control with that party, including
but not limited to any officers, directors of that party and of its other
Affiliates and any entity in which that party owns more than 5% of the voting
securities on a fully diluted basis.
"Code" means the Internal Revenue Code of 1986, as amended, and the Regulations
promulgated thereunder.
"TDC or TerraStar Data Corp." means TerraStar Data Corp., a Nevada corporation.
"TMI Assets" means all of the assets, properties, licenses, claims, contracts,
goodwill and rights of every kind and description, real and personal, tangible
and intangible, wherever situated, whether or not reflected in the most recent
financial statements, that TMI has a right, title or interest to or in and
whether or not used by TMI in the TMI Business.
"TMI Business" means the entire business, operations and facilities of TMI
unless otherwise specified.
"TMI Common Stock" means the 1000 shares of validly issued and outstanding
Common Stock, with par value of $0.001 per share, held by TDC.
"TMI's knowledge" or "ECLE's knowledge" means the actual knowledge of TMI or
ECLE, as the case may be, or of any director, officer or other employee of TMI
or ECLE, respectively, and such knowledge as any of the foregoing should have
obtained upon reasonable inquiry.
"TMI Shares" means all of the outstanding shares of TMI Common Stock.
"Encumbrances" means any lien, mortgage, security interest, pledge, restriction
on transferability, defect of title or other claim, charge or encumbrance of any
nature whatsoever on any property or property interest.
"NGCL" means the Nevada General Corporations Law.
"Intellectual Property" is defined in Section 3.17.
"Material Adverse Effect" means a material adverse effect on the financial
condition, results of operations, liquidity, products, competitive position,
customers and customer relations of any Representing Party.
"Minor Contracts" is defined in Section 3.16(a).
"Non-Real Estate Leases" is defined in Section 3.9.
"Person" means any natural person, corporation, partnership, proprietorship,
association, trust or other legal entity.
"Securities Act" means the Securities Act of 1933, as amended, and the
Regulations promulgated thereunder.
"Termination Date" is defined in Section 9.1(b).
ARTICLE 2
SALE AND PURCHASE OF TMI SHARES
2.1 SALE AND PURCHASE OF TMI SHARES. Subject to the terms and conditions of this
Agreement, at the Closing, TMI and TDC shall sell, transfer, convey, assign and
deliver to ECLE, and ECLE shall purchase, acquire and accept from TDC, all the
TMI Shares free and clear of all liens, claims, charges, restrictions, equities
and encumbrances of any kind.
2.2 ISSUANCE AND TRANSFER OF SHARES. In consideration for the TMI Shares, ECLE
shall issue and deliver to TDC Three Million (3,000,000) Class A Preferred
Shares of ECLE.
2.3 CLOSING. Unless this Agreement shall have been terminated and the
Transactions abandoned pursuant to Article X, subject to satisfaction or waiver
of the conditions to the Transactions set forth in Article VIII, the Closing
shall take place upon satisfaction or waiver of the conditions to the
Transactions set forth in Article VIII, at the offices of ECLE in Los Angeles,
Ca, unless the parties hereto agree in writing to another date or place. The
date on which the Closing occurs is referred to herein as the "Closing Date."
2.4 DELIVERY TO ECLE. At the Closing, TDC and/or TMI will deliver to ECLE (i)
certificates representing the TMI Shares, together with stock power duly
endorsed, (ii) all such other endorsements, assignments and other instruments as
are necessary to vest in ECLE title to the TMI Shares free and clear of any
adverse claims and (iv) all other previously undelivered documents required to
be delivered to ECLE at or prior to the Closing in connection with the
Transactions, including those contemplated by Article 8.
2.5 DELIVERY OF THE ECLE SHARES. At the Closing, ECLE shall deliver the ECLE
Shares referred to in Section 2.02. ECLE shall also deliver all previously
undelivered documents required hereunder to be delivered by ECLE at or prior to
the Closing, including those contemplated by Article 8.
2.6 FURTHER ASSURANCES. After the Closing, TDC, TMI and ECLE shall each from
time to time, at the request of a party hereto and without further cost or
expense to the requesting party, execute and deliver such other instruments of
conveyance and transfer and take such other actions as the requesting party may
reasonably request, in order to more effectively consummate the Transactions and
to vest in ECLE, TDC or TerraStar Data Corp., as the case may be, title to the
TMI Shares or ECLE Shares, as the case may be, being transferred hereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TMI
TMI hereby represents and warrants to ECLE as follows:
3.1 CORPORATE STATUS. TMI is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada. TMI is qualified to do
business as a foreign corporation in any jurisdiction where it is required to be
so qualified, except where the failure to so qualify would not have a Material
Adverse Effect. The Charter Documents and bylaws of TMI that have been delivered
to ECLE have been duly adopted and are current, correct and complete.
3.2 AUTHORIZATION. TMI has the requisite power and authority to execute and
deliver the Transaction Documents to which it is or will be a party and to
perform the Transactions to be performed by it. Such execution, delivery and
performance by TMI has been duly authorized by all necessary corporate action.
The Transaction Documents executed on or before the date hereof constitute, and
the Transaction Documents to be executed after the date hereof will constitute,
valid and binding obligations of TMI, enforceable in accordance with their
terms.
3.3 CONSENTS AND APPROVALS. Except for the consents specified in Schedule
3.03 (the "Required Consents"), neither the execution and delivery by TMI of the
Transaction Documents to which it is or will be a party, nor the performance of
the Transactions to be performed by TMI, will require any filing, consent or
approval or constitute a Default under (a) any Regulation or Court Order to
which TMI is subject, (b) the Charter Documents or bylaws of TMI or (c) any
Contract, Governmental Permit or other document to which TMI is a party.
3.4 CAPITALIZATION AND STOCK OWNERSHIP. The total authorized capital stock of
TMI consists of 1000 shares of TMI Common Stock, all of which are issued and
outstanding on the date hereof and no shares of which are issued and held by TMI
as treasury stock. There are no issued shares of Preferred Stock. All of the TMI
Shares are duly and validly authorized and issued to TDC, fully paid and
non-assessable. TMI complied with all applicable Regulations in connection with
the issuance of all of the TMI Shares.
3.5 FINANCIAL STATEMENTS. TMI has delivered to ECLE correct and complete copies
of TMI's unaudited financial statements consisting of (i) Balance Sheets of TMI,
and (ii) Income Statements. All such unaudited financial statements are referred
to herein collectively as the "TMI Financial Statements" and fairly represent
the current financial condition of TMI.
3.6 TITLE TO TMI ASSETS AND RELATED MATTERS. TMI has good and marketable title
to, or valid leasehold interests in, all of the TMI Assets, free from any
Encumbrances. The use of the TMI Assets is not subject to any Encumbrances
(other than those specified in the preceding sentence), and such use does not
materially encroach on the property or rights of anyone else. All Real Property
and tangible personal property of TMI are suitable for the purposes for which
they are used, in good working condition and reasonable repair, free from any
known defects, except such minor defects that would not in the aggregate exceed
$10,000.
3.7 REAL PROPERTY. TMI is not currently in Default under any of the Real Estate
Leases, and TMI is not aware of any Default by any of the lessors thereunder.
TMI does not have an ownership interest in any Real Property.
3.8 CERTAIN PERSONAL PROPERTY. Since the TMI Balance Sheet Date, TMI has not
acquired or disposed of any items of tangible personal property that have, in
each case, a carrying value in excess of $10,000. All of TMI's tangible personal
property is in good operating condition, reasonable wear and tear excepted.
3.9 NON-REAL ESTATE LEASES. TMI is not currently in Default under any of the
Non-Real Estate Leases, and TMI is not aware of any Default by any of the
lessors thereunder. There are no existing Non-Real Estate Leases under which the
obligations of TMI exceed $10,000 with respect to any individual Non-Real Estate
Lease. "Non-Real Estate Leases" refers to any and all leases that relate to an
asset, right or property (other than Real Property) used in the operation of the
TMI Business or otherwise possessed by TMI, including licenses from TerraStar
Data Corp. and also including, but not limited to all trucks, automobiles,
machinery, equipment, furniture and computers.
3.10 INVENTORY. All inventory of TMI consists of items of quality and quantity
saleable in the ordinary course of business at regular sales prices of TMI in
the ordinary course of its business.
3.11 TAXES. TMI has duly filed all foreign, federal, state, local and other tax
returns that are required to be filed and that were due, and has paid all
material taxes and assessments that have become due pursuant to such returns or
pursuant to any assessment received. All taxes and other assessments and levies
that TMI has been required by law to withhold or to collect have been duly
withheld and collected and have been paid over to the proper governmental
authorities or are properly held by TMI for such payment. There are no
proceedings or other actions, nor is there any basis for any proceedings or
other actions, for the assessment and collection of additional taxes of any kind
for any period for which returns have or should have been filed. TMI is not
being audited nor has any audit in the past five years resulted in the claim or
imposition of any penalty or additional tax on TMI.
3.12 SUBSIDIARIES. TMI does not own, directly or indirectly, any interest or
investment (whether equity or debt) in any corporation, partnership, business,
trust, joint venture or other legal entity, other than shares in a publicly
traded company not exceeding 2% of the voting securities of that company.
3.13 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW. There is no Litigation that is
pending or threatened against or related to TMI. There has been no Default under
any Regulations applicable to TMI. There has been no Default with respect to any
Court Order applicable to TMI.
3.14 EMPLOYEE RELATIONS. TMI is not (a) a party to, involved in or threatened
by, any labor dispute or unfair labor practice charge or (b) currently
negotiating any collective bargaining agreement, and TMI has not experienced any
work stoppage during the three years immediately preceding the execution of this
Agreement.
3.15 BENEFIT PLANS. There are no Benefit Plans sponsored or maintained by TMI or
under which TMI may be obligated.
3.16 CORPORATE RECORDS. The minute books of TMI contain complete, correct and
current copies of its Charter Documents and bylaws and of all minutes of
meetings, resolutions and other proceedings of its Board of Directors or
committees thereof and stockholders. The stock record book of TMI is complete,
correct and current.
3.17 ABSENCE OF CERTAIN CHANGES. Since the TMI Balance Sheet Date, TMI has
conducted the TMI Business in the ordinary course and there has not been:
(a) any material adverse change in the TMI Business or its Liabilities;
(b) any distribution or payment declared or made in respect of its capital stock
by way of dividends, purchase or redemption of shares or otherwise;
(c) any sale, assignment or transfer of the TMI Assets, or any additions to or
transactions involving any TMI Assets, other than those made in the ordinary
course of business;
(d) other than in the ordinary course of business, any waiver or release of any
claim or right or cancellation of any debt held; or
3.18 CUSTOMERS AND LICENSEES/LICENSORS. TMI has used commercially reasonable
efforts to maintain, and currently maintains, good working relationships with
all of its customers and licensees/licensors. None of such licensees/licensors
has given TMI notice terminating, canceling or threatening to terminate or
cancel any Contract or relationship with TMI.
3.19 FINDER'S FEES. No Person retained by TMI is or will be entitled to any
commission or finder's or similar fee in connection with the Transactions.
3.20 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made in reliance upon
the representations of TDC to ECLE, which by their execution of this Agreement
each hereby confirms, that the ECLE Shares will be acquired for investment for
each party's own account, not as a nominee or agent, and not with a view to
distribution (as such term is defined under the Securities Act of 1933, as
amended (the "Act")) of any part thereof. Each party represents that it has full
power and authority to enter into this Agreement.
3.21 RESTRICTED SECURITIES. TDC understand that the ECLE Shares are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from ECLE in a transaction not involving a
public offering and that under such laws and applicable regulations such shares
may be resold without registration under the Act, only in certain limited
circumstances. It is understood that the ECLE Shares shall bear a legend to such
effect.
3.22 ACCURACY OF INFORMATION. No representation or warranty by TMI in any
Transaction Document, and no information contained therein or otherwise
delivered to ECLE in connection with the Transactions, contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained herein or therein not misleading. There
is no fact known to TMI that may materially adversely affect the TMI Assets or
the TMI Business that has not been set forth in this Agreement or the other
documents furnished to ECLE on or prior to the date hereof in connection with
the Transactions.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ECLE
EEGI hereby represents and warrants to TMI as follows:
4.1 CORPORATE STATUS. ECLE is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada. ECLE is qualified to do
business as a foreign corporation in any jurisdiction where it is required to be
so qualified, except where the failure to so qualify would not have a Material
Adverse Effect. The Charter Documents and bylaws of ECLE that have been
delivered to TMI have been duly adopted and are current, correct and complete.
4.2 AUTHORIZATION. ECLE has the requisite power and authority to execute and
deliver the Transaction Documents to which it is or will be a party and to
perform the Transactions to be performed by it. Such execution, delivery and
performance by ECLE have been duly authorized by all necessary corporate action.
The Transaction Documents executed on or before the date hereof constitute, and
the Transaction Documents to be executed after the date hereof will constitute,
valid and binding obligations of ECLE, enforceable in accordance with their
terms.
4.3 CONSENTS AND APPROVALS. Neither the execution and delivery by ECLE of the
Transaction Documents to which it is or will be a party, nor the performance of
the Transactions to be performed by ECLE, will require any filing, consent or
approval or constitute a Default under (a) any Regulation or Court Order to
which ECLE is subject, (b) the Charter Documents or bylaws of ECLE or (c) any
Contract, Governmental Permit or other document to which ECLE is a party.
4.4 CAPITALIZATION AND STOCK OWNERSHIP. The total authorized capital stock of
ECLE currently consists of 50,000,000 shares of Common Stock with par value of
$0.001 per share, 18,179,321 of which are issued and outstanding on the date
hereof and no shares of which are issued and held by ECLE as treasury stock.
ECLE has caused its authorized capital stock to be increased to consist of: (a)
50,000,000 shares of Common Stock with par value of $0.001 per share; (b)
10,000,000 shares of Preferred Stock with par value of $0.001 per share, of
which 3,000,000 shares have been divided into Class A Preferred Stock with 6 to
1 voting and conversion rights. There will be 3,000,000 shares of Class A
Preferred Stock issued as of the Closing Date in connection with this
Transaction. All of the ECLE Shares are duly and validly authorized and issued,
fully paid and non-assessable. Schedule 4.04 correctly lists the record owners
of all of the ECLE Shares. ECLE complied with all applicable Regulations in
connection with the issuance of all of the ECLE Shares.
4.5 FINANCIAL STATEMENTS. ECLE has delivered to TMI correct and complete copies
of ECLE's latest 10SB; 10KSB; 10QSB; 8K, along with the last six (6) months of
press releases and all other relevant materials. Additionally, ECLE has provided
TMI with its audited financial statements consisting of (i) Balance Sheets of
ECLE for the years ending 1999, 2000 and 2001, and (ii) Income Statements for
the years ending 1999, 2000 and 2001. All such audited financial statements are
referred to herein collectively as the "ECLE Financial Statements."
4.6 TITLE TO ECLE ASSETS AND RELATED MATTERS. ECLE has good and marketable title
to, or valid leasehold interests in, all of the ECLE Assets, free from any
Encumbrances The use of the ECLE Assets is not subject to any Encumbrances and
such use does not materially encroach on the property or rights of anyone else.
All Real Property and tangible personal property of ECLE are suitable for the
purposes for which they are used, in good working condition and reasonable
repair, free from any known defects, except such minor defects that would not in
the aggregate exceed $10,000.
4.7 REAL PROPERTY. ECLE is not currently in Default under any of the Real Estate
Leases, and ECLE is not aware of any Default by any of the lessors thereunder.
Excepted as listed on Schedule 4.07, ECLE does not have an ownership interest in
any Real Property.
4.8 CERTAIN PERSONAL PROPERTY. Since the ECLE Balance Sheet Date, ECLE has not
acquired or disposed of any items of tangible personal property that have, in
each case, a carrying value in excess of $10,000. All of ECLE's tangible
personal property is in good operating condition, reasonable wear and tear
excepted.
4.9 ABSENCE OF UNDISCLOSED LIABILITIES. ECLE does not have any Liabilities, and
none of the ECLE Assets is subject to any Liabilities.
4.10 TAXES. ECLE has duly filed all foreign, federal, state, local and other tax
returns that are required to be filed and that were due, and has paid all
material taxes and assessments that have become due pursuant to such returns or
pursuant to any assessment received. All taxes and other assessments and levies
that ECLE has been required by law to withhold or to collect have been duly
withheld and collected and have been paid over to the proper governmental
authorities or are properly held by ECLE for such payment. There are no
proceedings or other actions, nor is there any basis for any proceedings or
other actions, for the assessment and collection of additional taxes of any kind
for any period for which returns have or should have been filed. ECLE is not
being audited nor has any audit in the past five years resulted in the claim or
imposition of any penalty or additional tax on ECLE.
4.11 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW. There is no Litigation that is
pending or threatened against or related to ECLE. There has been no Default
under any Regulations applicable to ECLE. There has been no Default with respect
to any Court Order applicable to ECLE.
4.12 PATENTS AND OTHER INTELLECTUAL PROPERTY. To the best knowledge of ECLE,
ECLE neither currently uses nor has used in the operation of the ECLE Business
during the three years immediately preceding the execution of this Agreement
(including in the development or marketing of products and services) any patent,
trademark, trade name, service xxxx, copyright, trade secret or know-how, with
the exception of the ECLE film assets. ECLE is not infringing upon or unlawfully
or wrongfully using any patent, trademark, trade name, service xxxx, copyright
or trade secret owned or claimed by another Person. ECLE has not received any
notice of any claim of infringement or any other claim or proceeding, with
respect to any such patent, trademark, trade name, service xxxx, copyright or
trade secret. No current or former employee of ECLE and no other Person owns or
has any proprietary, financial or other interest, direct or indirect, in whole
or in part, in any of the Intellectual Property, or in any application therefor.
4.13 EMPLOYEE RELATIONS. ECLE is not (a) a party to, involved in or threatened
by, any labor dispute or unfair labor practice charge or (b) currently
negotiating any collective bargaining agreement, and ECLE has not experienced
any work stoppage during the three years immediately preceding the execution of
this Agreement.
4.14 BENEFIT PLANS. There are no Benefit Plans sponsored or maintained by ECLE
or under which ECLE may be obligated.
4.15 CORPORATE RECORDS. The minute books of ECLE contain complete, correct and
current copies of its Charter Documents and bylaws and of all minutes of
meetings, resolutions and other proceedings of its Board of Directors or
committees thereof and stockholders. The stock record book of ECLE is complete,
correct and current.
4.16 ABSENCE OF CERTAIN CHANGES. Since the ECLE Balance Sheet Date, ECLE has
conducted the ECLE Business in the ordinary course and there has not been:
(a) any material adverse change in the ECLE Business or its Liabilities;
(b) any distribution or payment declared or made in respect of its capital stock
by way of dividends, purchase or redemption of shares or otherwise;
(c) any sale, assignment or transfer of the ECLE Assets, or any additions to or
transactions involving any ECLE Assets, other than those made in the ordinary
course of business;
(d) other than in the ordinary course of business, any waiver or release of any
claim or right or cancellation of any debt held; or
4.17 PREVIOUS SALES; WARRANTIES. To the best knowledge of ECLE, all goods sold
or distributed and services performed by ECLE were of merchantable and
satisfactory quality, and ECLE has not breached any express or implied
warranties in connection with the sale or distribution of such goods and
performances of such services.
4.18 CUSTOMERS. ECLE has used commercially reasonable efforts to maintain, and
currently maintains, good working relationships with all of its customers and
licensees.
4.19 FINDER'S FEES. No Person retained by ECLE is or will be entitled to any
commission or finder's or similar fee in connection with the Transactions.
4.20 ACCURACY OF INFORMATION. No representation or warranty by ECLE in any
Transaction Document, and no information contained therein or otherwise
delivered to ECLE in connection with the Transactions, contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained herein or therein not misleading. There
is no fact known to ECLE that may materially adversely affect the ECLE Assets or
the ECLE Business that has not been set forth in this Agreement or the other
documents furnished to ECLE on or prior to the date hereof in connection with
the Transactions.
ARTICLE V
COVENANTS OF TMI
5.1 OPERATION OF THE TMI BUSINESS.
(a) From the date hereof to the Closing, TMI shall conduct the TMI Business
solely in the ordinary course, and shall refrain from the following actions in
furtherance of and in addition to such restriction (except as contemplated by
this Agreement): amending its Charter Documents or bylaws; merging or
consolidating with, or acquiring all or substantially all of, or otherwise
acquiring any business operations of, any Person; selling or otherwise disposing
of any TMI Assets other than in the ordinary course; entering into any Contract
or otherwise incurring any Liability, even if in the ordinary course, if TMI's
executory obligation in any such individual case, or series of related cases,
exceeds $1,000, except that entering into contracts to provide events is
permitted without restriction; discharging or satisfying any Encumbrance or
paying or satisfying any material Liability except pursuant to the terms thereof
or compromising, settling or otherwise modifying any material claim or
litigation; or making any capital expenditure involving in any individual case,
or series of related cases, more than $1,000.
(b) From and after the Closing, TMI shall cease to conduct any business in the
field of computer product marketing except as a wholly owned subsidiary of ECLE.
5.2 STOCKHOLDER MEETING. TMI shall cause a meeting of its stockholders (the "TMI
Stockholder Meeting") to be duly called and held as soon as reasonably
practicable for the purpose of voting on the approval of this Agreement and the
Transactions. In connection with such meeting, TMI (a) will use all reasonable
efforts to obtain the necessary approvals by its stockholders of this Agreement
and the Transactions and (b) will otherwise comply with all legal requirements
applicable to such meeting.
5.3 ACCESS. TMI shall give ECLE and its accountants, counsel and other
representatives full access, without unreasonably interfering with business
operations, to all properties, books, Contracts and records of TMI and shall
furnish to ECLE all such documents, records and information as ECLE shall from
time to time reasonably request.
5.4 NO OTHER NEGOTIATIONS. Until the earlier of the Closing or the termination
of this Agreement, TMI shall not (a) solicit, encourage, directly or indirectly,
any inquiries, discussions or proposals for, (b) continue, propose or enter into
any negotiations or discussions looking toward or (c) enter into any agreement
or understanding providing for any acquisition of any capital stock of TMI or of
any part of the TMI Assets or the TMI Business, other than as contemplated or
authorized hereby, nor shall TMI provide any information to any Person (other
than as contemplated by Section 5.3) for the purpose of evaluating or
determining whether to make or pursue any such inquiries or proposals with
respect to any such acquisition. TMI shall immediately notify ECLE of any such
inquiries or proposals or requests for information for such purpose. TMI shall
use commercially reasonable efforts to cause the directors, officers, employees,
agents and other representatives of TMI to comply, with the provisions of this
Section 5.4.
5.5 MAINTENANCE OF THE TMI ASSETS. TMI shall continue to maintain and service
the TMI Assets consistent with past practice. TMI shall not, directly or
indirectly, sell or encumber all or any part of the TMI Assets, other than sales
in the ordinary course of business, or initiate or participate in any
discussions or negotiations or enter into any agreement to do any of the
foregoing.
5.6 EMPLOYEES AND BUSINESS RELATIONS. TMI shall use commercially reasonable
efforts to keep available the services of its current employees, licensees,
independent contractors and agents and to maintain its relations and goodwill
with its suppliers, customers, distributors and any others having business
relations with it.
5.7 CONFIDENTIALITY. Prior to and after the Closing, TMI will hold, and will use
commercially reasonable efforts to cause the officers, directors, employees,
accountants, counsel, consultants, advisors and agents of TMI to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all confidential documents and information
concerning ECLE furnished to TMI in connection with the Transactions, except to
the extent that such information can be shown to have been (a) previously known
on a non-confidential basis by TMI, (b) in the public domain through no fault of
TMI or (c) later acquired by TMI from sources other than ECLE so long as, to the
knowledge of TMI, such sources are not subject to a contractual or fiduciary
duty of confidentiality with respect to such information; provided that TMI may
disclose such information to its officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the Transactions so
long as such Persons are informed by TMI of the confidential nature of such
information and are directed by TMI to treat such information confidentially.
The obligation of TMI to hold any such information in confidence shall be
satisfied if it exercises the same care with respect to such information as it
would take to preserve the confidentiality of its own similar information. If
this Agreement is terminated, TMI will, and will use commercially reasonable
efforts to cause the officers, directors, employees, accountants, counsel,
consultants, advisors and agents of TMI to, destroy or deliver to ECLE all
documents and other materials, and all copies thereof, obtained by TMI or on its
behalf from ECLE in connection with this Agreement that are subject to such
confidence.
5.8 FULFILLMENT OF CONDITIONS. TMI shall use commercially reasonable efforts to
fulfill the conditions specified in Article 7 to the extent that the fulfillment
of such conditions is within its control. The foregoing obligation includes (a)
the execution and delivery of the Transaction Documents and (b) taking or
refraining from such actions as may be necessary to fulfill such conditions
(including conducting the TMI Business in such manner that on the Closing Date
the representations and warranties of TMI contained herein shall be accurate as
though then made, except as contemplated by the terms hereof).
5.9 DISCLOSURE OF CERTAIN MATTERS. During the period from the date hereof
through the Closing Date, TMI shall give ECLE prompt written notice of any event
or development that occurs that (a) had it existed or been known on the date
hereof would have been required to be disclosed under this Agreement, (b) would
cause any of the representations and warranties of TMI contained herein to be
inaccurate or otherwise misleading, (c) gives TMI any reason to believe that any
of the conditions set forth in Article 7 will not be satisfied prior to the
Termination Date, or (d) is of a nature that is or may be materially adverse to
the operations, prospects or condition (financial or otherwise) of TMI.
5.10 SATISFACTION OF LIABILITIES. Except as otherwise prohibited herein, prior
to and after the Closing, TMI will perform all of its obligations, contractual
or otherwise, and discharge all of its Liabilities in accordance with the terms
thereof.
5.11 NO VIOLATION OF SECURITIES LAWS. TMI will not sell, transfer or otherwise
dispose of any of the ECLE Shares in violation of the Securities Act.
5.12 EXPENSES. TMI shall pay all of the legal, accounting and other expenses
incurred by TMI in connection with the Transactions.
ARTICLE 6
COVENANTS OF ECLE
6.1 OPERATION OF THE ECLE BUSINESS. From the date hereof to the Closing, ECLE
shall conduct the ECLE Business solely in the ordinary course, and shall refrain
from the following actions in furtherance of and in addition to such restriction
(except as contemplated by this Agreement): amending its Charter Documents or
bylaws; merging or consolidating with, or acquiring all or substantially all of,
or otherwise acquiring any business operations of, any Person; selling or
otherwise disposing of any ECLE Assets other than in the ordinary course;
entering into any Contract or otherwise incurring any Liability, even if in the
ordinary course, if ECLE's executory obligation in any such individual case, or
series of related cases, exceeds $1,000, except that entering into contracts to
provide events is permitted without restriction; discharging or satisfying any
Encumbrance or paying or satisfying any material Liability except pursuant to
the terms thereof or compromising, settling or otherwise modifying any material
claim or litigation; or making any capital expenditure involving in any
individual case, or series of related cases, more than $1,000.
6.2 STOCKHOLDER MEETING. ECLE shall cause a meeting of its stockholders (the
"ECLE Stockholder Meeting") to be duly called and held as soon as reasonably
practicable for the purpose of voting on the approval of this Agreement and the
Transactions. In connection with such meeting, ECLE (a) will use all reasonable
efforts to obtain the necessary approvals by its stockholders of this Agreement
and the Transactions and (b) will otherwise comply with all legal requirements
applicable to such meeting.
6.3 ACCESS. ECLE shall give TMI and its accountants, counsel and other
representatives full access, without unreasonably interfering with business
operations, to all properties, books, Contracts and records of ECLE and shall
furnish to TMI all such documents, records and information as TMI shall from
time to time reasonably request.
6.4 NO OTHER NEGOTIATIONS. Until the earlier of the Closing or the termination
of this Agreement, ECLE shall not (a) solicit, encourage, directly or
indirectly, any inquiries, discussions or proposals for, (b) continue, propose
or enter into any negotiations or discussions looking toward or (c) enter into
any agreement or understanding providing for any acquisition of any capital
stock of ECLE or of any part of the ECLE Assets or the ECLE Business, other than
as contemplated or authorized hereby, nor shall ECLE provide any information to
any Person (other than as contemplated by Section 6.3) for the purpose of
evaluating or determining whether to make or pursue any such inquiries or
proposals with respect to any such acquisition. ECLE shall immediately notify
TMI of any such inquiries or proposals or requests for information for such
purpose. ECLE shall use commercially reasonable efforts to cause the directors,
officers, employees, agents and other representatives of TMI to comply, with the
provisions of this Section 6.4.
6.5 MAINTENANCE OF THE ECLE ASSETS. ECLE shall continue to maintain and service
the ECLE Assets consistent with past practice. ECLE shall not, directly or
indirectly, sell or encumber all or any part of the ECLE Assets, other than
sales in the ordinary course of business, or initiate or participate in any
discussions or negotiations or enter into any agreement to do any of the
foregoing.
6.6 EMPLOYEES AND BUSINESS RELATIONS. ECLE shall use commercially reasonable
efforts to keep available the services of its current employees, licensees,
independent contractors and agents and to maintain its relations and goodwill
with its suppliers, customers, distributors and any others having business
relations with it.
6.7 CONFIDENTIALITY. Prior to the Closing, ECLE will hold, and will use
commercially reasonable efforts to cause the officers, directors, employees,
accountants, counsel, consultants, advisors and agents of ECLE to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all confidential documents and information
concerning TMI furnished to ECLE in connection with the Transactions, except to
the extent that such information can be shown to have been (a) previously known
on a non-confidential basis by ECLE, (b) in the public domain through no fault
of ECLE or (c) later acquired by ECLE from sources other than TMI so long as, to
the knowledge of ECLE, such sources are not subject to a contractual or
fiduciary duty of confidentiality with respect to such information; provided
that ECLE may disclose such information to its officers, directors, employees,
accountants, counsel, consultants, advisors and agents in connection with the
Transactions so long as such Persons are informed by ECLE of the confidential
nature of such information and are directed by ECLE to treat such information
confidentially. The obligation of ECLE to hold any such information in
confidence shall be satisfied if it exercises the same care with respect to such
information as it would take to preserve the confidentiality of its own similar
information. If this Agreement is terminated, ECLE will, and will use
commercially reasonable efforts to cause the officers, directors, employees,
accountants, counsel, consultants, advisors and agents of ECLE to, destroy or
deliver to TMI all documents and other materials, and all copies thereof,
obtained by ECLE or on its behalf from TMI in connection with this Agreement
that are subject to such confidence.
6.8 EXPENSES. ECLE shall pay all of the legal, accounting and other expenses
incurred by ECLE in connection with the Transactions.
6.9 FULFILLMENT OF CONDITIONS. From the date hereof to the Closing, ECLE shall
use commercially reasonable efforts to fulfill the conditions specified in
Article 7 to the extent that the fulfillment of such conditions is within its
control. The foregoing obligation includes (a) the execution and delivery of the
Transaction Documents and (b) taking or refraining from such actions as may be
necessary to fulfill such conditions (including conducting the business of TMI
in such manner that on the Closing Date the representations and warranties of
TMI contained herein shall be accurate as though then made).
6.10 BOARD OF DIRECTORS MEETING. ECLE shall cause a meeting of its Board of
Directors (the "ECLE Directors Meeting") to be duly called and held as soon as
reasonably practicable for the purpose of voting on the approval of this
Agreement and the Transactions.
6.11 DISCLOSURE OF CERTAIN MATTERS. During the period from the date hereof
through the Closing Date, ECLE shall give TMI prompt written notice of any event
or development that occurs that (a) had it existed or been known on the date
hereof would have been required to be disclosed under this Agreement, (b) would
cause any of the representations and warranties of ECLE contained herein to be
inaccurate or otherwise misleading or (c) gives ECLE any reason to believe that
any of the conditions set forth in Article 7 will not be satisfied prior to the
Termination Date.
ARTICLE 7
CONDITIONS PRECEDENT TO THE TRANSACTIONS
7.1 CONDITIONS TO OBLIGATIONS OF ECLE. The obligations of ECLE to consummate the
Transactions shall be subject to the satisfaction or waiver, on or before the
Closing, of each of the following conditions:
(a) TMI STOCKHOLDER APPROVAL. The Transactions shall have been approved and
adopted by TDC of TMI in accordance with TMI's Articles of Incorporation and
bylaws.
(b) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties of
TMI contained herein shall be true and correct in all material respects at and
as of the date hereof and at and as of the Closing as though such
representations and warranties were made again at and as of the Closing, except
for changes contemplated by this Agreement.
(c) PERFORMANCE. TMI shall have performed and complied in all material respects
with the agreements contained in this Agreement required to be performed or
complied with by it on or prior to the Closing.
(d) CONSENTS AND APPROVALS. TMI shall have obtained all governmental and third
party consents and approvals necessary, proper or advisable to consummate the
Transactions, except for those which would not have a Material Adverse Effect.
Such third party consents shall include the Required Consents.
(e) NO GOVERNMENTAL ORDER OR REGULATION. There shall not be in effect any order,
decree or injunction (whether preliminary, final or appealable) of a United
States federal or state court of competent jurisdiction, and no Regulation shall
have been enacted or promulgated by any governmental authority or agency that
prohibits consummation of the Transactions.
(f) OTHER DOCUMENTS. ECLE shall have received executed copies of all Transaction
Documents to which TMI or any TMI stockholder is a party to the extent that they
shall not have been received prior to the Closing. ECLE shall have received all
other documents required under the terms of any of the Transaction Documents and
any other documents reasonably requested on or prior to the Closing Date.
7.2 CONDITIONS TO OBLIGATIONS OF TMI. The obligations of TMI to consummate the
Transactions shall be subject to the satisfaction or waiver, on or before the
Closing, of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and warranties of
ECLE contained herein shall be true and correct in all material respects at and
as of the date when made and at and as of the Closing as though such
representations and warranties were made again at and as of the Closing, except
for changes contemplated by this Agreement.
(b) PERFORMANCE. ECLE shall have performed and complied in all material respects
with the agreements contained in this Agreement required to be performed or
complied with by them on or prior to the Closing.
(c) NO GOVERNMENTAL ORDER OR REGULATION. There shall not be in effect any order,
decree or injunction (whether preliminary, final or appealable) of a United
States federal or state court of competent jurisdiction, and no Regulation shall
have been enacted or promulgated by any governmental authority or agency, that
prohibits consummation of the Transactions.
(d) OTHER DOCUMENTS. TMI shall have received executed copies of all Transaction
Documents to which ECLE is a party to the extent that they shall not have been
received prior to the Closing. TMI shall have received all other documents
required under the terms of any of the Transaction Documents and any other
documents reasonably requested on or prior to the Closing Date.
ARTICLE 9
TERMINATION
9.1 GROUNDS FOR TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by mutual written consent of ECLE, TMI or TDC;
(b) by either ECLE, TMI or TDC, if the Closing has not occurred by January 31,
2003 (such date, as it may be extended from time to time by the written
agreement of ECLE, TMI or TDC, is referred to herein as the "Termination Date");
provided, however, that the right to terminate this Agreement under this
paragraph (b) of Section 9.1 shall not be available to any party that has
breached any of its covenants, representations or warranties in this Agreement;
(c) by TMI, if ECLE shall have breached any of its covenants hereunder in any
material respect or if the representations and warranties of ECLE contained in
this Agreement shall not be true and correct, except for such changes as are
contemplated by this Agreement, in all material respects, and in either event,
if such breach is subject to cure, ECLE has not cured such breach within 10
business days of TMI's notice of an intent to terminate;
(d) by ECLE, if TMI or TDC shall have breached any of its covenants hereunder in
any material respect or if the representations and warranties of TMI contained
in this Agreement shall not be true and correct, except for such changes as are
contemplated by this Agreement, in all material respects, and in either event,
if such breach is subject to cure, TMI has not cured such breach within 10
business days of ECLE's notice of an intent to terminate; or
(e) by TMI, if at the ECLE Stockholder Meeting (including any adjournments
thereof), this Agreement and the Transactions shall fail to be approved and
adopted by the affirmative vote of the holders of ECLE Common Stock required
under the NGCL.
9.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to Section
9.1, the agreements contained in Sections 5.7 and 6.7 shall survive the
termination hereof. In addition, any party may pursue any legal or equitable
remedies that may be available if such termination is based on a breach of
another party.
ARTICLE 10
CONTENTS OF AGREEMENT, AMENDMENT, PARTIES IN INTEREST, ASSIGNMENT, ETC.
This Agreement sets forth the entire understanding of the parties hereto with
respect to the subject matter hereof. This Agreement may be amended, modified or
supplemented only by a written instrument duly executed by each of the parties
hereto. This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, legal representatives, successors and
permitted assigns of the parties hereto. No party hereto shall assign this
Agreement or any right, benefit or obligation hereunder. Any term or provision
of this Agreement may be waived at any time by the party entitled to the benefit
thereof by a written instrument duly executed by such party. The parties hereto
shall execute and deliver any and all documents and take any and all other
actions that may be deemed reasonably necessary by their respective counsel to
complete the Transactions.
ARTICLE 11
INTERPRETATION
Unless the context of this Agreement clearly requires otherwise, (a) references
to the plural include the singular, the singular the plural, the part the whole,
(b) "or" has the inclusive meaning frequently identified with the phrase
"and/or" and (c) "including" has the inclusive meaning frequently identified
with the phrase "but not limited to." The section and other headings contained
in this Agreement are for reference purposes only and shall not control or
affect the construction of this Agreement or the interpretation thereof in any
respect. Section, subsection, schedule and exhibit references are to this
Agreement unless otherwise specified. Each accounting term used herein that is
not specifically defined herein shall have the meaning given to it under GAAP.
ARTICLE 12
NOTICES
All notices that are required or permitted hereunder shall be in writing and
shall be sufficient if personally delivered or sent by mail, facsimile message
or Federal Express or other delivery service. Any notices shall be deemed given
upon the earlier of the date when received at, or the third day after the date
when sent by registered or certified mail or the day after the date when sent by
Federal Express to, the address or fax number set forth below, unless such
address or fax number is changed by notice to the other party hereto:
IF TO ECLE:
To the address set out above
IF TO TMI:
Suite JJ1
00-000 Xxx 000
Xxxx Xxxxxx Xx. 00000
IF TO TDC:
Suite JJ1
00-000 Xxx 000
Xxxx Xxxxxx Xx. 00000
ARTICLE 13
GOVERNING LAW
This Agreement shall be construed and interpreted in accordance with the laws of
the State of Nevada, without regard to its provisions concerning conflict of
laws.
ARTICLE 14
COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which shall
be binding as of the date first written above, and all of which shall constitute
one and the same instrument. Each such copy shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
ARTICLE 15
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties made by any party in this Agreement or
pursuant hereto shall survive the Closing hereunder and any investigation at any
time made by or on behalf of the other party and for a period of one year
following the Closing.
ARTICLE 16
REMEDIES CUMULATIVE
The remedies provided herein shall be cumulative and shall not preclude a party
from asserting any other rights or seeking any other remedies against the other
party or its successors or assigns.
ARTICLE 17
SEVERABILITY
The invalidity of any one or more of the words, phrases, sentences, clauses or
sections contained in this Agreement shall not affect the enforceability of the
remaining portions of this Agreement or any part thereof, all of which are
inserted conditionally on their being valid in law, and, in the event that any
one or more of the words, phrases, sentences, clause or sections contained in
this Agreement shall be declared invalid, this Agreement shall be construed as
if such invalid word or words, phrase or phrases, sentence or sentences, clause
or clauses, or section or sections had not been inserted. If such invalidity is
caused by length of time or size of area, or both, the otherwise invalid
provision will be considered to be reduced to a period or area which would cure
such invalidity.
ARTICLE 19
ARBITRATION
The parties agree that all disputes, claims, and controversies between or among
them arising from or relating to this Agreement shall be arbitrated in Xxxxx
County, Nevada, pursuant to the Rules of the American Arbitration Association,
upon the request of any party.
ARTICLE 20
TAX FREE EXCHANGE
It is understood that the parties intend that this transaction represents a tax
free exchange under the Internal Revenue Code. However, this Agreement is not
contingent upon a ruling from the Internal Revenue Service (the "IRS") that the
transactions contemplated herein constitute a tax free exchange and the parties'
agreements herein are effective and binding on them irrespective of any
favorable or negative ruling from the IRS.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of
the day and year first written above.
ECLIPSE ENTERTAINMENT GROUP, INC.
A NEVADA CORPORATION
By:
--------------------------------
Name:
Title:
TERRASTAR MARKETING INC.
A NEVADA CORPORATION
By:
--------------------------------
Name: Xxxx Xxxxxxxx
Title: CEO and Chairman
TERRASTAR DATA CORP.
A NEVADA CORPORATION
By:
--------------------------------
Name: Xxxx Xxxxxxxx
Title: CEO and Chairman
