Exhibit 4.6
FINANCING AGREEMENT
THIS AGREEMENT, dated for reference January 25, 2001, is among Iwasaka
Investments Limited of, 00xx Xxxxx, 00 Xxxxxx Xxxxxx, Xxxxxxx, Xxxx Xxxx (IIL),
and Xxxxx Xxxxxxx (the Principal) and Xxxxxxx Media, Inc. (H.M.I.).
WHEREAS, IIL has agreed to organize up to a 2.5 million financing of H.M.I.
through a company publicly traded, and the Shareholders of H.M.I. have agreed to
exchange all of their shares in H.M.I. for shares in the new public company
("Parent").
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
acknowledged, the parties agree to the following:
INTERPRETATION
1. The definitions in the recital are part of this agreement
2. In this agreement:
a. "Acquisition Agreement" means the acquisition attached as Exhibit
A.
b. "Acquisition shares" means 13,527,950 of the Parent shares as
defined in the Acquisition Agreement.
c. "Business Plan" means the business plan of the H.M.I.,
shareholders dated as of January 1, 2001.
d. "Closing" means February 1, 2001, or later date in accordance
with the terms of this agreement.
e. "Escrow Agent" means 3rd party escrow for the H.M.I. shareholders
shares
f. "Financial Statements" means the management-prepared financial
statements of H.M.I. dated December 31, 2000, prepared in
accordance with accounting principles and practices generally
accepted in the United States.
g. "Financing" means 2.5 million dollars for the development of
H.M.I. as described in the Business Plan and for the development
of H.M.I.
h. "Parent" means a company whose shares are quoted and publicly
traded.
i. "Principals' Shares" means the Principals entire interest in
H.M.I.
j. "Restricted Shares" means 5,000,000 common shares of the Parent
owned by principals subject to the trading restrictions of Rule
144 and escrow.
k. "Rule 144" means Rules 144 of the United States securities Act of
1933.
l. "Term" means thirty six months from Closing. m. "$" means United
States dollars.
TERMS AND CONDITIONS OF THE FINANCING
The Parent
3. I.I.L. will organize the Parent for the purpose of this agreement, and
will ensure that the Parent has an authorized capital of at least
20,000,000 shares, has no liabilities or potential liabilities
exceeding $5,000 dollars, and is in good standing in, and complies
with the laws of its incorporation jurisdiction.
4. The Parent will have approx. 15.5 million shares outstanding when the
reorganization is completed, not accounting for the finance shares.
IIL will arrange to have the Restricted Shares transferred to the
parties set out in Exhibit B of this Agreement.
5. The parent will change its name following the Closing to H.M.I. or
other name adopted by Parent's Board of Directors.
6. The parent must apply to Standard and Poor's for a manual exemption as
soon as possible if applicable.
Advancing and Financing
7. I.I.L. will provide equity capital by arranging for subscriptions to
the finance shares at a price of $.50 per share using only accredited
investors.
8. I.I.L. will arrange for the Financing to be advanced to the Parent in
the minimum increments set out in Table 1. The Parent will issue the
appropriate number of Shares as each stage of the Financing is
completed.
100,000 February 15, 2001 (Loan) can convert to common @.50 per share
150,000 March 30, 2001 (Loan) at lenders diccression
Table No. 1 Table No. 2
100,000 April 30th 2001 1,500,000 per expansion
100,000 May 30th 2001 needs based on review of
100,000 June 30th 2001 H.M.I.'s performance and
100,000 July 30th 2001 on a best efforts basis
100,000 August 30th 2001
100,000 September 30th 2001
100,000 October 30th 2001
50,000 November 30th 2001
TOTAL 1,000,000
9. If the closing is delayed, then each date of forwarding capital in
Table 1 is delayed by the same number of days, and the payment due on
Closing is due three business days after the Closing.
10. The Company will give I.I.L. the right of refusal to provide an
additional three million dollars of Financing at 1/3 of the prevailing
market price for a term of two years. If more than that amount of
financing is needed, the Company will give a
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written notice of the terms and conditions of its requirements and
it's proposed use of proceeds at least two months before it requires
the financing I.I.L. must notify the Company in writing within two
weeks of its receipt of the Company's notice whether it intends to
exercise its right to provide the financing. This right of first
refusal ends if I.I.L. refuses to provide a specific financing.
11. Should the forwarding of capital, as described in table 1, be delayed
I.I.L. must notify H.M.I. in writing two weeks prior to the due date.
If H.M.I. has not received the capital per schedule two weeks after
due date, as described in table 1, it will be considered in accordance
with this agreement a breech of the agreement and shall revoke I.I.L.
first right of refusal.
INVESTOR RELATIONS
12. I.I.L. will conduct the Parent's investor and public relations during
the Term under a Consulting Agreement to be mutually agreed upon.
13. The Principals will make themselves available to appear on reasonable
notice before investment groups in North America, Europe and Asia,
will provide the information and material that the Financing Group
requests during the Term.
DIRECTORS AND OFFICERS OF THE PARENT
14. The Principal, namely Xxxxx Xxxxxxx, will become a director of the
parent, and will hold the offices indicated as of the Closing day. The
principals will add the appropriate person(s) at the appropriate
time(s) to the Board of Directors by mutual consent.
15. Until H.M.I. becomes profitable, principal's salaries shall not exceed
$120,000 for Xxxxx Xxxxxxx and $80,000 for all other officers for the
first year, and will increase by no more than 10% of total H.M.I.
gross revenues at the end of the first and second year. Xxxxxxx shall
receive 3 years employment agreement attached.
16. As conditions precedent to the advancing of the Financing as set out
in table 1
a. H.M.I. will deliver true copies of its charter documents to
I.I.L.
b. H.M.I. and Principal will sign the Acquisition Agreement and the
Principals will deliver the Principals' Shares and I.I.L. Shares
to the Escrow Agent, duly endorsed for transfer to the parent in
accordance with the terms of this agreement and the Acquisition
Agreement.
c. H.M.I. will deliver the Restricted Shares and the Acquisition
Shares to the Escrow Agent, duly endorsed for transfer to the
Parent in accordance with terms of this agreement found under the
heading "Share Transfer."
d. The representations and warranties of the Principals must be true
and correct in all material respects.
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THE SHARE TRANSFER
17. As consideration for the Principals' making this agreement, I.I.L.
will arrange for the Restricted Shares to be transferred to the order
of the Principals, when the Principals' Shares are transferred to the
Parent. The Principals will instruct the Escrow Agent in writing of
the names of the transferees to receive the Restricted Shares.
18. The Escrow Agent will deliver the Principals 5, million Restricted
Shares, owned by the principals, as indicated of which 2.5, million
will be held in escrow per the following schedule:
2,500,000 shares released at closing for Principals;
1,000,000 shares released when H.M.I. reaches sales of 7 million;
1,000,000 shares released when H.M.I. reaches sale of 14 million; and
500,000 shares released when H.M.I. reaches sales of 21 million.
19. H.M.I. will make the corporate changes necessary to complete this
agreement and the Acquisition Agreement, if the forms of the corporate
organizations do not permit the transfers contemplated by this
agreement and the Acquisition Agreement.
POSITIVE COVENANTS
20. During the Term, the parent, H.M.I. will;
a. Maintain their corporate existence,
b. Conduct their business in a prudent, reasonable and ethical
businesslike manner in accordance with good business principles
and practices, prudently manage their cash resources, and keep
proper books or account in accordance with generally accepted
accounting principles and practices.
c. Deliver to I.I.L. at the end of each month a written report
describing any strategic or material modifications of the
Business Plan, which I.I.L. agrees not to disclose to a third
party without the prior authorization of H.M.I.
d. Deliver to I.I.L. by the twentieth day of each month their
consolidated financial statements for the preceding month,
consistence of a balance sheet, statement of operations,
statement of changes in shareholders' equity, statement of cash
flow, and notes to the financial statement, all prepared in
accordance with the accounting principles and practices generally
accepted in the United States and
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e. I.I.L. will be granted the privilege of hiring outside
bookkeeping services if mutually agreed to by the board and will
bear the cost of such services.
f. Deliver to I.I.L. any other information, which I.I.L. reasonably
requests.
THE PRINCIPALS
21. In the capacity of officers and directors the Principals will, at all
times use their best efforts during the currency of the agreement;
a. devote their best efforts to the business of H.M.I. and the
Parent as full time employees,
b. ensure that all of H.M.I. assets and liabilities are limited to
H.M.I. and that the parent has no liabilities or potential
liabilities except those that relate to the Parent's own
administration and the liabilities that the parent must assume
under this agreement, and
c. if the principals are directors of the parent, ensure that the
parent does everything that it is rightfully and lawfully
obligated to do under this agreement.
22. Neither H.M.I. nor Parent during the Term, without the written consent
of I.I.L. will;
a. authorize the issuance of or issue any of its shares or other
securities except those authorized by this agreement,
b. authorize any changes to the Parent's charter documents.
c. Cause any of its assets to be encumbered in excess of $250,000 as
required by corporate leases etc.
x. Xxxxx any options to directors, officers and employees that may
be exercised during the Term without the written consent of
I.I.L.
REPRESENTATIONS AND WARRANTIES
I.I.L.
23. I.I.L. represents and warrants that it has the experience and
expertise required to negotiate and finalize the Financing and to
perform the Consulting Agreement.
24. The principals represent and warrant that:
a. Nothing in the Business Plan is proprietary to any other person,
and the principal's expertise and services to either H.M.I. or
the parent are not an infringement of intellectual property
rights owned by any person or company.
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b. The business Plan truly and accurately reflects the business of
H.M.I. and the intention of the Principals.
25. The Principals represent and warrant that they own the Principals'
Shares free of any claim by any person and have the right to transfer
them as described in this agreement and have not granted rights to
acquire additional interest in H.M.I. to any other person or company.
I.I.L. will provide H.M.I. with a written monthly report on the
progress of Company share issuance and purchases as it is relative to
H.M.I.
THE PRINCIPALS
H.M.I.
26. H.M.I. represents and warrants that:
a. It is a company formed and in good standing under the laws of
Florida.
b. The only persons with any interest or potential interest in
H.M.I. are the Principals, and no person has a right to acquire
an interest that is outstanding.
c. It has the legal capacity and authority to make and perform this
agreement.
d. Will conduct no other business.
e. No claims against it or any of its members are before any court
or regulatory authority, or are pending or threatened, and it is
not aware of any ground for any claim that might succeed.
OTHER PROVISIONS
27. The Principals and H.M.I. acknowledge that this agreement was prepared
for them, and that it may contain terms and conditions onerous to
them. They expressly acknowledge they have had adequate time to
thoroughly review this agreement, and to seek and obtain independent
legal advice, and they represent that they have in fact sought and
obtained independent legal advice and are fully satisfied with all the
terms and conditions of this agreement.
28. The Parent will pay out of the proceeds of the Financing all-legal and
other costs in connection with the making and performing of the
Agreement.
29. This is the entire agreement among the parties and replaces any
earlier understandings and agreements whatsoever, whether written or
oral.
30. Time is of essence of this agreement.
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31. This agreement is governed by the laws of California and must be
litigated in the courts of California.
32. Any notice that must be given or delivered under this agreement must
be in writing, and delivered by hand to the address, or transmitted by
fax to the fax number given for the party on page 1. Further, any such
notice is deem3ed to have been received when it is either delivered by
hand or transmitted by fax, unless the delivery or transmission is
made after 4:00 p.m. or on a non-business day where it is received, in
which case it is deemed to have been delivered or transmitted on the
next business day. Any payments of money must be delivered by hand, or
wired as instructed in writing by the receiving party. Any delivery of
anything, other than written notice or money, must be delivered by
hand receiving party's address.
33. Neither the Principals nor H.M.I. may assign this agreement or any
part thereof to another party.
34. Any amendment to this agreement must be in writing and signed by the
parties.
35. This agreement ensures to the benefit of, and binds the parties and
their respective successors, heirs and permitted assignees.
36. No failure or delay by I.I.L. in exercising any right under this
agreement operates as a waiver of the right. Rights under this
agreement are cumulative, and do not preclude I.I.L. from either
relying on or enforcing any legal or equitable right or remedy.
37. If any provision of this agreement is illegal or unenforceable under
any given law, the remaining provisions remain legal and fully
enforceable.
38. This agreement may be signed on counterparts and delivered to the
parties via fax, and the counterparts together are deemed to be one
original document.
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The Parties' signatures below are evidence of their agreement.
/s/ X. Xxxxxx /s/ Xxxxx Xxxxxxx
Iwasaka Investments Xxxxxxx Media, Inc.
Limited Xxxxx Xxxxxxx
Xxxxxxxx Xxxxxx
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-Exhibit `B'
Lytec Systems Inc
Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxx, Bahamas
Colt Holdings Limited
XxXxxxxx Street, Road Town Tortola, British Virgin Islands
Bowater Trading Limited
32 Xxxxxxxxxxx Square, Providenciales, Turks and Caicos Islands
Blackstone Management Inc
X.X. Xxx 0000, Xxxxxxxxxx, Xxxxxxx Xxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxxx
Xxxxxx Corp
International Commercial Centre, Casemates Square, Gibralta
Mahindra and Mahindra Limited
00 Xxxxxxx Xxxxx, 00-00 Xxxxxxxx Xxxxxx, Xxxxxxxxx 000000
Aerodata Networks Ltd
Happy World House, xxx Xxxxxxx Xxxxxx Street, Port Xxxxx, Republic of Mauritius
Minoan Shipping Limited
00 Xxxxxxxxxxx Xxxxxx, 00000 Xxxxxxx, Xxxxxx
Khan Metals and Sundries Limited
X.X. Xxx 00000, Xxxxxxx Xxxxxx
Far Horizon Enterprises Ltd.
Xxxxx 00, XX Xxxxx, 000 Xxxxx Xxxx, Xxxxxxx, 00000 Xxxxxxxx
Xxxxxxx Management Limited
Xxxxx 00, XX Xxxxx, 000 Xxxxx Xxxx, Xxxxxxx, 00000 Xxxxxxxx
Xxxxxx Associates Limited
Xxxxx 00, XX Xxxxx, 000 Xxxxx Xxxx, Xxxxxxx, 00000 Xxxxxxxx
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Exhibit `B'
Lytec Systems Inc 700,943 shares
X.X. Xxx 000, 0000 Xxxxxxx Xxxxxx, Xxxxxxxxxx Xxxxx XX 00000
Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxx, Xxxxxxx
Colt Holdings Limited 650,000 shares
X.X. Xxx 000, 00000 Xxxxx Xxxx, Xxxxxxxxxx Xxxxx CA92647
XxXxxxxx Street, Road Town Tortola, British Virgin Islands
Bowater Trading Limited 725,000 shares
32 Xxxxxxxxxxx Square, Providenciales, Turks and Caicos Islands
Blackstone Management Inc 630,000 shares
X.X. Xxx 0000, Xxxxxxxxxx, Xxxxxxx Xxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxxx
Xxxxxx Corp 678,000 shares
International Commercial Centre, Casemates Square, Gibralta
Mahindra and Mahindra Limited 700,000 shares
00 Xxxxxxx Xxxxx, 00-00 Xxxxxxxx Xxxxxx, Xxxxxxxxx 000000
Aerodata Networks Ltd 680,000 shares
Happy World House, xxx Xxxxxxx Xxxxxx Street, Port Xxxxx, Republic of Mauritius
Minoan Shipping Limited 590,943 shares
00 Xxxxxxxxxxx Xxxxxx, 00000 Xxxxxxx, Xxxxxx
Khan Metals and Sundries Limited 595,000 shares
X.X. Xxx 00000, Xxxxxxx Xxxxxx
Far Horizon Enterprises Ltd. 675,000 shares
Xxxxx 00, XX Xxxxx, 000 Xxxxx Xxxx, Xxxxxxx, 00000 Xxxxxxxx
Xxxxxxx Management Limited 720,000 shares
Xxxxx 00, XX Xxxxx, 000 Xxxxx Xxxx, Xxxxxxx, 00000 Xxxxxxxx
Xxxxxx Associates Limited 501,886 shares
Xxxxx 00, XX Xxxxx, 000 Xxxxx Xxxx, Xxxxxxx, 00000 Xxxxxxxx
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