AGREEMENT
This Agreement ("Agreement") is executed on the 6th day of March, 2002, to
be effective as of such date, by and between Group Management Corporation,
formerly known as Internet Venture Group, Inc. ("iVG") of 00000 Xxxxx Xxxxxxx,
Xxxxx 0, Xxxxxxxxx, XX, 00000, Swan Magnetics, Inc., (hereinafter "Swan"), of
0000 Xxxxx Xxxx., Xxxxx Xxxxx, XX, 00000, and Xxxxx Worldwide Industries, Inc.,
("LWI") of 00000 Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx 00000 (together "the
Parties").
RECITALS
WHEREAS, iVG is an internet holding and development company which has
acquired approximately 88.5 % of the outstanding and issued commons shares of
Swan; and
WHEREAS, the Parties believe Swan has developed certain products and
technology for an ultra high capacity ("UHC") flexible disk drive and possesses
cash and other assets of value and interest to LWI; and
WHEREAS, LWI is a holding and development company organized to acquire,
develop and capitalize suitable internet technology and related businesses into
a network of businesses; and
WHEREAS, iVG is interested in selling all of its shares in Swan to LWI and
LWI is interested in obtaining such shares;
NOW THEREFORE, the parties hereby enter into this Agreement for the
acquisition by LWI of all Swan shares of stock held by iVG as described below.
1.0 DEFINITIONS
1.1 AGREEMENT. Agreement shall refer to this Agreement which through its
terms effects the sale of shares described herein.
1.2 IVG. iVG shall refer to Group Management Corporation, formerly known as
Internet Venture Group, Inc., a Florida corporation with its principal place of
business at 00000 Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, XX, 00000.
1.3 SWAN. Swan shall refer to Swan Magnetics, Inc., a California
corporation dba Swan Magnetics, Swan Instruments, Scotts Valley Instruments and
SVI with its principal place of business at 0000 Xxxxx Xxxx., Xxxxx Xxxxx, XX,
00000.
1.4 COMMON STOCK. Common Stock shall refer to the total number of issued
and outstanding shares of Common Stock of Swan held by iVG, which is
approximately 88.5% of the total of all common stock of Swan.
1.5 CASH. Cash shall refer to any cash or cash equivalent in monies of the
United States of America.
1.6 EFFECTIVE DATE. Shall be the date of this Agreement.
2.0 REPRESENTATIONS
2.1 PARTY REPRESENTATIONS. The parties to this Agreement each represents to
the other as follows:
A. it is authorized to execute this Agreement for the purposes and on the
terms and conditions stated herein;
B. the execution of this Agreement will not conflict with any undertaking,
agreement, order, statute, rule or other obligation to which it is subject;
C. all signatories are authorized to sign in the capacity stated;
D. it has obtained all approvals, waivers or certifications necessary to
the performance of this Agreement; and
E. it has read and understood the terms of the Agreement and is aware that
this Agreement is binding upon the party.
2.2 IVG REPRESENTATIONS. iVG represents and warrants that:
a. it owns and holds in its own name 41,773,157 (approximately 88.5% of the
total) of the issued and outstanding common shares of Swan;
b. it understands that the Swan consolidated balance sheet of June 30, 2000
(unaudited) showed a total liabilities and shareholders' equity of
$8,943,733, did not include personal property or other tangible or
intangible property, including intellectual property rights (whether or not
such rights are registered or filed in a public registry);
c. it understands that Swan's personal property and other tangible or
intangible property, including intellectual property rights (whether or not
such rights are registered or filed in a public registry) existing on or
about June 30, 2000, were reasonably valued in an amount in excess of
$5,000,000 in aggregate;
d. its former Chairman Xxxx Xxx was Chairman of Swan, but it has not had
competent and reliable access to the corporate books and records of Swan
since the date of Eden Kim's separation from management of iVG;
e. it is not aware of any change in the number of outstanding shares of
stock of Swan since the acquisition of its shares of Swan but does not
currently have access to the books and records of Swan to make an accurate
determination;
f. it understands that as of November 30, 2001, Swan was in possession of
the sum of at least $2,000,000 in cash on hand or in accounts maintained by
Swan for that purpose;
g. it understands that Swan has an equity interest in a company named iTVR,
which may be a majority or controlling interest of iTVR but does not
currently have access to the books and records of Swan to make an accurate
determination; and
h. it will undertake to effect the reasonable and timely transfer or
delivery of documents necessary to the completion of this Agreement.
2.3 SWAN REPRESENTATIONS. Swan represents and warrants that:
a. its current board of directors was duly elected by the shareholders in
accordance with the by-laws of the company;
b. its current board of directors has been actively seeking to obtain the
books and records of the corporation from the prior management;
c. its current board of directors gave notice to the company's prior
counsel of the change in management and the termination of such counsel
from any representation of the company;
d. it waives any right to purchase or re-purchase the shares of common
stock made the basis of this Agreement;
e. to the knowledge of the current board of directors, there have been no
amendments to the Articles of Incorporation or the by-laws of the company
since iVG's acquisition of the common shares of stock of Swan; and
f. it has full authority to enter into this Agreement for the express
purposes stated herein and will undertake to effect the reasonable and
timely transfer or delivery of documents necessary to the completion of
this Agreement.
2.4 LWI REPRESENTATIONS. LWI represents and warrants that:
a. it enters into this Agreement for the purposes and on the terms and
conditions set forth herein for the purchase of all of the common shares of
stock of Swan now owned or claimed by iVG;
b. it has no past or current relationship with Swan, iVG, Xxxx Xxx or any
other person claiming to manage or control Swan (other than through this
Agreement) and has no agreement or understanding with any person or party
related to this transaction not stated in this Agreement;
c. it seeks to acquire the shares of common stock for its own account and
as part of its business plan and;
d. it understands that iVG has made no representations regarding Swan,
Swan's assets or the value of the Swan shares iVG currently holds.
2.5 SURVIVAL OF REPRESENTATIONS. Swan and iVG have delivered some
information to LWI prior to the execution of this Agreement, but do not
represent that such information is complete or sufficient for adequate due
diligence by LWI. LWI acquires the shares of common stock of Swan without an
adequate opportunity for due diligence. LWI, Swan and iVG acknowledge that this
Agreement is predicated upon the information presented and the representations
and warranties made herein. All such representations and warranties are
material to the transactions, are relied upon by the other parties hereto, and
shall be enforceable without regard to any other party's ability or opportunity
to conduct due diligence or other investigation into the representations and
warranties. All representations and warranties shall survive the closing
3.0 CONSIDERATION.
LWI shall deliver to iVG a Promissory Note in the form attached hereto, in the
principal amount of Two Million Five Hundred Thousand and No/100 ($2,500,000.00)
Dollars, payable on March 6, 2009, in Sugarland, Texas. Additionally, as
further consideration, LWI agrees that it will act in its capacity as the
controlling shareholder of Swan to extinguish and/or assume responsibility for
any debt shown on Swan's financial records as owing from iVG, if any, and that
neither LWI nor Swan will pursue any action against iVG, or it officers or
directors, for any debts that Swan shows as owing from iVG, regardless whether
such debt is known or unknown at this time.
4. CONDITIONS TO CLOSING.
4.1 All governmental and third party consents necessary to authorize the
execution and delivery of common shares of Swan made the basis of this Agreement
shall have been obtained.
4.2 Swan shall be in good standing in the state of incorporation, and shall
be qualified to do business in the jurisdictions in which its business
operations and assets require it to be so qualified.
4.3 There shall be no default under the terms of this Agreement.
5. BINDING NATURE OF AGREEMENT
This Agreement, including all representations and warranties, shall remain
binding on the parties hereto, their successors and assigns.
6. ADDENDUM & EXHIBITS
There are three(3) addendums to this agreement.
Addendum 1 Promissory Note
Addendum 2 Royalty agreement
Addendum 3 Asset Search Purchase list
There are three(3) Exhibits attached to this agreement.
Exhibit A Minutes of GPMT Board Meeting dated 2/21/2002
Exhibit B Minutes of GPMT Board Meeting dated 3/13/2002
Exhibit C Minutes of Swan Board Meeting dated 2/22/2002
7. MISCELLANEOUS.
The interpretation and enforcement of this Agreement shall be governed by the
internal laws of the State of Texas, without regard to its conflict of interest
laws. The headings are provided for convenience only and are not to be used in
construing the meaning of any section of this Agreement. Section 1.0 in its
entirety is provided solely for informational purposes only and does not create
any legal duties or obligations on the parties unless otherwise stated in a
separate section of this Agreement. If a court of competent jurisdiction shall
find any section of this Agreement unenforceable, all other sections shall
remain in effect. If the parties shall resort to litigation to resolve any
dispute concerning any aspect of this Agreement, the prevailing party shall be
awarded reasonable attorney's fees and costs.
EXECUTED, on the date first above written by and between:
GROUP MANAGEMENT CORPORATION, BY: SWAN MAGNETICS, INC., BY:
/s/ Xxxxxxx Xxxxxxx /s/ Xxxx Xxxxxxx
______________________________ ____________________________
XXXXXXX XXXXXXX, PRESIDENT XXXX XXXXXXX, PRESIDENT
XXXXX WORLDWIDE INDUSTRIES, INC., BY:
/s/ Xxxxxx-Xxxxxxx Xxxxx
_________________________________
XXXXXX-XXXXXXX XXXXX, PRESIDENT
PROMISSORY NOTE - PAYABLE ON A DESIGNATED DATE OR DATES
$2,500,000 (Two Million Five Hundred Thousand) Sugar Land, Texas
For value received, the undersigned, Xxxxx Worldwide Industries, Inc.,
("LWI") of 00000 Xxxxx Xxxxxxx, Xxxxx 000, Xxxxx Xxxx, Xxxxx 00000, herein after
referred to as ("Maker") promises to pay to Group Management Corporation,
formerly known as Internet Venture Group, Inc. ("iVG") of 00000 Xxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxxxx, XX, 00000, herein after referred to as ("Payee"),the
principal sum of (Two Million Five Hundred Thousand) Dollars ($2,500,000),
------------------------------------- ------------
together with interest at the rate hereinafter provided for on the unpaid
principal balance of this note from until paid in full.
Interest shall accrue on the unpaid and outstanding principal balance
of this note commencing on the date hereof and continuing until repayment of
this note in full at a rate per annum equal to prime plus 1%. (payment schedule
--------------------------------
attached). Interest and principal payments will be accelerated if and when funds
-------- are verified within Swan Magnetics.
Maker shall make all payments hereunder to Payee in lawful money of
the United States and in immediately available funds.
Payee may not accelerate the maturity of this note in the event Maker
is in breach or default of any of the terms, conditions or covenants of any
other agreement with Payee or its affiliates.
In the event any installment provided for herein is not paid on or
before two (2) days following its due date, Maker promises to pay to the holder
of this promissory note an amount equal to one percent (1%) of the amount of
such installment. In addition, Maker promises to pay interest on any such
unpaid installment from the date due until such installment is paid in full at a
per annum rate equal to the lesser of three percent (3%). Time is of the
essence.
Maker waives presentment, demand, notice of demand, protest, notice of
protest or notice of nonpayment in connection with the delivery, acceptance,
performance, default or enforcement of this note or of any document or
instrument evidencing any security for payment of this note.
Failure at any time to exercise any of the rights of Payee hereunder
shall constitute a waiver of such rights and shall not be a bar to exercise of
any of such rights at a later date. In the event of commencement of suit to
enforce payment of this note, the prevailing party shall be entitled to receive
the costs of collection including reasonable attorneys' fees and court costs.
Nothing contained in this note shall be deemed to require the payment
of interest or other charges by Maker or any other person in excess of the
amount, which the Payee may lawfully charge under the applicable usury laws. In
the event that Payee shall collect moneys which are deemed to constitute
interest which would increase the effective interest rate to a rate in excess of
that permitted to be charged by applicable law, all such sums deemed to
constitute interest in excess of the legal rate shall be credited against the
principal balance of this note then outstanding, and any excess shall be
returned to Maker.
IN WITNESS WHEREOF, the undersigned has caused this promissory note to
be duly executed as of the date first written below.
Dated: __________________ [Maker] /s/
__________________________________________
By: _____________________________________________
Title: __________________________________________
PAYMENT SCHEDULE
Due Date Amount Due
-------- ----------
April 30, 2003 $0.00
April 30, 2004 $0.00
April 30, 2005 $122,500
April 30, 2006 $122,500
April 30, 2007 $122,500
April 30, 2008 $122,500
April 30, 2009 $2,622,500
ROYALTY AGREEMENT
ADDENDUM TO AGREEMENT TO PURCHASE SWAN MAGNETIC FROM GPMT BY XXXXX WORLD WIDE
INDUSTRIES INC. DATED MARCH 6TH 2002
The Parties in the above referenced agreement agree and enter into a royalty
agreement for any and all products sold by Swan Magnetic or its wholly owned or
partially owned subsidiaries, business partners, or alliances in which Swan
Magnetic or its subsidiaries receive a participation, for a period of seven
years.
1. ROYALTY The Royalty payable to GPMT will be equal to 4% of the gross Sales
on any products sold by or through Swan, directly, via licenses, alliance, or
other agreement that yields a revenue for Swan or its Subsidiaries.
2. TERM The term of this agreement shall be for Seven(7) years.
3. PRODUCTS Products shall refer to any item that is manufactured, licensed,
or resold by Swan or its subsidiaries.
4. NOTICE Xxxxx WorldWide Industries Inc. will provide written notice within
30 days of the end of each quarter to GPMT at GPMT's offices located at 00000
Xxxxx Xxxxxxx, Xxxxx 000 Xxxxx Xxxx XX 00000, on a quarterly basis the amount of
the gross sales of Swan & its subsidiaries and the amount of Royalties that are
due GPMT.
5. PAYMENT Payment will be due 60 days after the end of each Quarter in cash.
Cash shall refer to any cash or cash equivalent in monies of the United States
of America.
The internal laws of the State of Texas shall govern the interpretation and
enforcement of this Agreement.
