[EXHIBIT 10.1.4]
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is
entered into as of the ___th day of March, 2004, by and
between Film and Miracle Entertainment, Inc., a Nevada
corporation (the "Company"), and Lesteron Limited, a
British Virgin Islands corporation ("Purchaser"), with
reference to the following facts and circumstances:
WHEREAS, the Company desires to issue and sell, and the
Purchaser desires to purchase, certain equity securities of
the Company, all upon and subject to the terms, provisions
and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual and
dependent agreements and covenants herein set forth, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1
Authorization, Purchase and Sale of Shares
1.1 Authorization. The Company has, or before the
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Closing (as defined in Section 2.1(a) below) will have,
authorized the sale and issuance of Fifty Million
(50,000,000) restricted shares (the "Shares") of the
Company's common stock, par value $0.001 per share ("Common
Stock").
1.2 Purchase and Sale of Shares at Closing. At the
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Closing, and subject to the terms and conditions hereof and
in reliance upon the representations, warranties and
agreements contained herein, the Company will issue and sell
to Purchaser and Purchaser will purchase from the Company
the Shares for a purchase (the "Purchase Price") of Five
Million Dollars (US$5,000,000), such consideration being
equal to US$0.10 per Share.
SECTION 2
Closing, Payment and Delivery
2.1 Closing Date and Place of Closing. The closing of
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the purchase and sale of the Shares listed (the "Closing")
shall be held immediately following, and on the date of, the
execution and delivery of this Agreement, or upon such other
date as the Company and Purchaser may agree (the "Closing
Date"), but in no event later than April 20_________ ___,
2004. The place of the Closing shall be at such location as
the Company and Purchaser agree.
2.2 Payment and Delivery. At the Closing, Purchaser
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shall pay the Purchase Price to the Company by major money-
center bank or cashier's check or by wire transfer to:
City National Bank
000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
ABA Routing: 000-000-000
For credit to the Account of:
Film and Music Entertainment, Inc.
Account No.: 000-000-000
As soon as practicable following receipt of the
Purchase Price, the Company will deliver to Purchaser a
certificate or certificates representing the Shares.
SECTION 3
Representations and Warranties of the Company
The Company hereby represents and warrants to
Purchaser as follows, except as set forth on Exhibit
"A" attached hereto and incorporated herein by this
reference (the "Schedule of Exceptions"):
3.1 Organization and Standing; Articles and Bylaws.
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(a) The Company is duly organized, validly
existing and in good standing under the laws of the
State of Nevada, and has all requisite corporate
power and authority to own the properties owned by it
and to conduct its business as being conducted and as
contemplated by the Company's current business plan
as heretofore delivered to Purchaser.
(b) The Company is duly qualified to do
business as a foreign corporation in good standing in
each jurisdiction in which the character and location
of its properties (owned or leased) or the nature of
its business requires such qualification, except for
such jurisdictions where the failure to so qualify
would not materially and adversely affect the
business, operations or financial condition of the
Company, taken as a whole.
(c) The Company has made available to
Purchaser true, correct and complete copies of its
Articles of Incorporation, Bylaws and all amendments
thereto to date (as so amended, collectively, the
"Charter Documents").
3.2 Corporate Power. The Company has all
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requisite corporate power and authority to enter into
this Agreement, to sell the Shares, and to carry out
and perform its other obligations hereunder.
3.3 Capitalization.
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(a) The Company's authorized capital stock
consists of Two Hundred Fifty Million (250,000,000)
shares of Common Stock, $0.001 par value (hereinabove
defined as the "Common Stock"), of which Ninety-Seven
Million Nine Hundred Eighty-Three Thousand Two
Hundred Twenty-Three (97,983,223) shares are
presently outstanding.
(b) All of the issued and outstanding
shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, and
have been offered, issued, sold and delivered by the
Company in compliance with all applicable federal and
state securities laws.
(c) Except for the options identified on
Schedule 3.3(c) attached hereto and incorporated
herein by this reference, there are no outstanding
preemptive, conversion or other rights, options,
warrants or agreements granted or issued by or
binding upon the Company for the purchase or
acquisition of any shares of its capital stock.
3.4 Authorization. All corporate action on the
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part of the Company, its directors and shareholders
necessary for the authorization, execution, delivery
and performance by the Company of this Agreement, and
the consummation of the transactions contemplated
herein, has been taken. This Agreement constitutes
the valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws of general application
affecting enforcement of creditors' rights generally.
The execution, delivery and performance by the
Company of this Agreement and compliance therewith
and the issuance and sale of the Shares will not
result in any violation of and will not conflict
with, or result in a breach of any of the terms of,
or constitute a default under, any provision of state
or federal law to which the Company is subject, the
Company's Charter Documents, or any mortgage,
indenture, agreement, instrument, judgment, decree,
order, rule or regulation or other restriction to
which the Company is a party or by which it or any of
its assets are bound, or result in the creation of
any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company.
The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued,
fully paid and nonassessable, and will be free of any
liens or encumbrances created by the Company, except
restrictions on transfer in compliance with federal
and state securities laws, and will have the rights,
preferences, privileges and restrictions as provided
in the Charter Documents.
3.5 Financial Information. Attached hereto as
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Schedule 3.5 is the Company's unaudited, consolidated
balance sheet (the "Balance Sheet") as of December
31, 2003 (the "Balance Sheet Date"), and related
statements of operations, shareholders' equity and
changes in financial position for the year then
ended, together with the report of the Chairman with
respect thereto and related statements of operations,
shareholders' equity and changes in financial
position for the twelve (12) months then ended. Such
financial statements (i) are in accordance with the
books and records of the Company (ii) present fairly
the financial condition of the Company on a
consolidated basis at such date and the results of
its operations for the periods therein specified, and
(iii) have been prepared in accordance with generally
accepted accounting principles applied on a basis
consistent with prior accounting periods.
Specifically, but not by way of limitation, the
Balance Sheet discloses all of the debts, liabilities
and obligations of any nature (whether absolute,
accrued, contingent or otherwise, and whether due or
to become due) of the Company and its subsidiaries at
the Balance Sheet Date and includes appropriate
reserves for all taxes and other liabilities accrued
or due at such date but not yet payable.
3.6 Outstanding Debt. The Company has no outstanding
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indebtedness for borrowed money except as reflected
on the Balance Sheet, and is not a guarantor or
otherwise contingently liable for any such
indebtedness. There exists no default under the
provisions of any instrument evidencing such
indebtedness or of any agreement relating thereto.
3.7 Absence of Undisclosed Liabilities. The
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Company has no material liabilities (fixed or
contingent, including without limitation any tax
liabilities due or to become due) that are not fully
reflected or provided for on the Balance Sheet and/or
the Schedules and/or Exhibits attached hereto. The
Company does not know of any material liability of
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any nature, direct or indirect, contingent or
otherwise, or in any amount not adequately reflected
or reserved against in the Balance Sheet.
3.8 Absence of Certain Changes. Since the Balance
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Sheet Date, there has not been:
(a) Any material adverse change in the condition,
assets, liabilities or business of the Company taken
as a whole from that shown on the Balance Sheet;
(b) Any damage, destruction or loss of any
of the properties or assets of the Company (whether
or not covered by insurance) materially adversely
affecting the business or plans of the Company;
(c) Any declaration, setting aside or
payment or other distribution in respect of any of
the Company's capital stock, or any direct or
indirect redemption, purchase or other acquisition of
any of such stock by the Company; or
(d) Any labor trouble, or any event or
condition of any character, materially adversely
affecting the business or plans of the Company, taken
as a whole.
3.9 Taxes. The Company has not filed federal or
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state tax returns since 1999, and since that time has
not had significant income and believes that a tax-
loss carryforward will inure to the benefit of the
Company when all outstanding returns are filed, and
the Company intends to file such returns following
the Closing. Subject to the foregoing, the Company
has filed or will file within the time prescribed by
law (including extensions of time approved by the
appropriate taxing authority) all tax returns and
reports required to be filed with the United States
Internal Revenue Service and with the State of
California, and (except to the extent that the
failure to file would not have a material adverse
effect on the condition or operations of the Company)
with all other jurisdictions where such filing is
required by law; and the Company has paid, or made
adequate provision in the Balance Sheet for
deficiencies shown to be due or claimed to be due on
or in respect of such tax returns and reports. The
Company knows of (i) no other tax returns or reports
which are required to be filed which have not been so
filed and (ii) no unpaid assessment for additional
taxes for any fiscal period or any basis thereof.
The Company's federal income tax returns have not
been audited by the Internal Revenue Service.
3.10 Contracts; Insurance. Except as set forth
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in the Schedule of Exceptions, the Company has no
currently existing contract, obligation or commitment
(written or oral) of any material nature including
without limitation the following:
(a) employment, bonus or consulting agreements,
pension, profit sharing, deferred compensation, stock
bonus, retirement, stock option, stock purchase,
phantom stock or similar plans, including agreements
evidencing rights to purchase securities of the
Company and agreements among shareholders and the
Company;
(b) Loan or other agreements, notes,
indentures, or instruments relating to or evidencing
indebtedness for borrowed money, or mortgaging,
pledging or granting or creating a lien or security
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interest or other encumbrance on any of the Company's
property or any agreement or instrument evidencing
any guaranty by the Company of payment or performance
by any other person;
(c) Agreements with dealers, sales
representatives, brokers or other distributors,
jobbers, advertisers or sales agencies;
(d) Agreements with any labor union or
collective bargaining organization or other labor
agreements;
(e) Any contract or series of contracts
with the same person for the furnishing or purchase
of machinery, equipment, goods or services, including
without limitation agreements with processors and
subcontractors;
(f) Any indenture, agreement or other
document (including private placement brochures)
relating to the sale or repurchase of debt or equity
securities of the Company;
(g) Any joint venture contract or
arrangement or other agreement involving a sharing of
profits or expenses to which the Company is a party;
(h) Agreements limiting the freedom of the
Company to compete in any line of business or in any
geographic area or with any person;
(i) Agreements providing for disposition of the
business, assets or shares of the Company, agreements
of merger or consolidation to which the Company is a
party or letters of intent with respect to the
foregoing;
(j) Agreements involving or letters of
intent with respect to the acquisition of the
business, assets or shares of any other business; and
(k) Insurance policies.
The Company has complied with all the material
provisions of all said contracts and commitments and
are not in default thereunder.
The Company maintains insurance which is
adequate to protect the Company against the risks
involved in the business conducted by it.
3.11 Litigation. Except as disclosed on
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Schedule 3.11 attached hereto and incorporated herein
by this reference, there is neither pending nor, to
the Company's knowledge and belief, threatened any
action, suit, proceeding or claim, or any basis
therefor, whether or not purportedly on behalf of the
Company, to which the Company is or may be named as a
party or its property is or may be subject and in
which an unfavorable outcome, ruling or finding might
have a material adverse effect on the condition,
financial or otherwise, or operations of the Company,
taken as a whole, and the Company has no knowledge of
any unasserted claim, the assertion of which is
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likely, that, if asserted, will represent a claim for
damages, an injunction or other legal, equitable,
monetary or non-monetary relief that, if granted,
would have a material adverse effect on the
condition, financial or otherwise, or operations of
the Company, taken as a whole.
3.12 Consents. All consents, qualifications,
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orders, approvals or authorizations of, or filings
with, any governmental authority required in
connection with the Company's valid execution,
delivery and performance of this Agreement, and the
offer, sale and issuance of the Shares, and the
consummation of any other transaction contemplated on
the part of the Company hereunder, shall have been
duly obtained and are currently effective.
3.13 Title to Properties; Liens and Encumbrances.
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The Company has good and marketable title to all of
its properties and assets, free from all mortgages,
pledges, liens, security interests, conditional sale
agreements, encumbrances or charges, other than as
may be set forth on the Schedule of Exceptions.
3.14 Leases. Set forth on the Schedule of
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Exceptions is a correct and complete list (including
the amount of rents called for and a description of
the leased property) of all material leases under
which the Company is a lessee. The Company enjoys
peaceful and undisturbed possession under all such
leases. All of such leases are valid and subsisting
and the Company is not in default on any of them in
any material respect.
3.15 Business of the Company. The Company has
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no knowledge or belief that (i) other than as
disclosed in Section 3.11 above, there is pending or
threatened any claim or litigation against or
affecting the Company contesting its right to provide
services, or to produce, manufacture, sell or use any
product, process, method, substance, part or other
material presently produced, manufactured, sold or
used or planned to be produced, manufactured, sold or
used by the Company or its subsidiaries in connection
with their operations or (ii) there exists, or there
is pending or planned, any patent, invention, device,
application or principle, or any statute, rule, law,
regulation, standard or code which would materially
adversely affect the condition, financial or
otherwise, or the operations of the Company and its
subsidiaries, taken as a whole.
3.16 Franchises, Licenses, Trademarks, Patents
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and Other Rights. The Company has all franchises,
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permits, certificates, authorizations, licenses and
other similar authority required by law or
governmental regulations from all applicable federal,
state or local authorities and any other regulatory
authorities or necessary for the conduct of its
business as now being conducted and as planned to be
conducted, the lack of which could materially and
adversely affect the operations or condition,
financial or otherwise, of the Company, taken as a
whole, and the Company is not in default in any
material respect under any of such franchises,
permits, certificates, authorizations, licenses or
other similar authority. The Company possess all
patents, patent rights, trademarks, trademark rights,
trade names, trade name rights and copyrights
necessary to conduct its business as now being
conducted and as planned to be conducted without
conflict with or infringement upon any valid rights
of others and the lack of which could materially and
adversely affect the operations or condition,
financial or otherwise, of the Company, taken as a
whole, and has not received any notice of
infringement upon or conflict with the asserted
rights of others.
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3.17 Offering. Subject in part to the truth and
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accuracy of Purchaser's representations set forth in
this Agreement, the offer, sale and issuance of the
Shares will be exempt from the registration
requirements of the Securities Act of 1933, as
amended (the "Securities Act", which term shall
include any successor federal statute) and are exempt
from the qualification requirements of the California
Corporate Securities Law of 1968, as amended (the
"California Securities Law"), and neither the Company
nor anyone acting on its behalf will take any action
hereafter that would cause the loss of such
exemptions.
3.18 Compliance with Other Instruments. The
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Company is not in violation of any term of its
Charter Documents. The Company is not in violation
of any term of any mortgage, indenture, contract,
agreement, instrument, judgment, decree, order,
statute, rule or regulation to which it is subject
and a violation of which would have a material
adverse affect on the condition, financial or
otherwise, or operations of the Company, taken as a
whole.
3.19 Employees. To the best of the Company's
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knowledge and belief, no employee of the Company is,
or is now expected to be, in violation of any term of
any employment contract, patent disclosure agreement,
non-competition agreement, or any other contract or
agreement or any restrictive covenant relating to the
right of any such employee to be employed because of
the nature of the business conducted or to be
conducted by the Company or to the use of trade
secrets or proprietary information of others, and the
employment of the Company's employees does not and
will not subject them or Purchaser to any liability.
The Company does not have any collective bargaining
agreement covering any of its employees.
3.20 Registration Rights. The Company is not
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under any obligation to register any of its currently
outstanding securities or any of its securities that
may hereafter be issued, including the Shares.
3.21 Disclosure. This Agreement, including
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Schedules and Exhibits hereto, and all other
documents or writings delivered to Purchaser in
connection herewith do not contain any untrue
statement of a material fact and do not omit to state
a material fact necessary in order to make the
statements contained therein or herein not misleading
in the light of the circumstances under which they
are or were made.
SECTION 4
Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to the
Company as follows:
4.1 Experience. Purchaser is experienced in
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evaluating and investing in publicly and privately
held entities involved in the businesses in which the
Company is engaged.
4.2 Investment. Purchaser is acquiring the
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Shares for investment for its own account and not
with the view to, or for resale in connection with,
any distribution thereof, specifically including any
sale, transfer or other disposition to persons or
entities situate in the United States of America in
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violation of Regulation S promulgated under the
Securities Act, or a sale, transfer or other
disposition in violation of the applicable securities
or other laws of any foreign jurisdiction. Purchaser
understands that the Shares have not been registered
under the Securities Act nor qualified under the
California Securities Law by reason of specified
exemptions therefrom which depend upon, among other
things, Purchaser's investment experience and
sophistication and the bona fide nature of its
investment intent as expressed herein.
4.3 Rule 144. Purchaser acknowledges that the
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Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or
an exemption from such registration is available, and
acknowledges that it has been advised or is aware of
the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of
shares purchased in a private placement subject to
the satisfaction of certain conditions, including,
without limitation, the availability of certain
current public information about the Company, the
length of time that a party has held restricted
securities, the relationship of the party to the
issuer, and the number of shares being sold.
Purchaser acknowledges, and assumes full
responsibility for compliance with, applicable
securities laws of foreign jurisdictions that may
impose similar requirements and which might prevent
transfer restrictions from being removed until those
laws are complied with.
4.4 Access to Data. Purchaser has had an
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opportunity to discuss the Company's business,
management and financial affairs with the Company's
management and has had the opportunity to inspect the
Company's facilities and operations.
SECTION 5
Purchaser's Conditions to Closing
The obligation of Purchaser to purchase the Shares at
the Closing is subject to the fulfillment to its
satisfaction on or prior to the Closing Date of each
of the following conditions:
5.1 Representations and Warranties Correct. The
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representations and warranties made by the Company in
Section 3 hereof shall be true and correct in all
respects when made, and shall be true and correct in
all respects on the Closing Date with the same force
and effect as if they had been made on and as of the
Closing Date.
5.2 Performance. All covenants, agreements and
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conditions contained in this Agreement to be performed
or complied with by the Company on or prior to the
Closing Date shall have been performed or complied
with in all respects.
5.3 Legal Investment. At the time of the
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Closing, the purchase of the Shares by Purchaser
shall be legally permitted by all laws and
regulations to which it and the Company are subject.
5.4 Compliance Certificate. The Company shall
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have delivered to Purchaser a certificate of the
President of the Company, dated the Closing Date,
certifying to the fulfillment of the conditions
specified in paragraphs 5.1 and 5.2 of this
Agreement.
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5.5 Proceedings and Documents. All corporate and
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other proceedings in connection with the transactions
contemplated hereby and all documents and instruments
incident to such transactions shall be satisfactory
in substance and form to Purchaser and its counsel.
5.6 Qualification. All authorizations,
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approvals or permits, if any, of any governmental
authority or regulatory body that are required in
connection with the lawful issuance and sale of the
Shares shall have been duly obtained and shall be
effective on and as of the Closing.
5.7 Voting Agreement. Purchaser, the Company
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and Xxxx Xxxx shall have executed and delivered a
Stockholder Voting Agreement in the form of Exhibit
5.7 hereto (the "Voting Agreement").
SECTION 6
Company's Conditions to Closing
The Company's obligation to sell the Shares at
the Closing is subject to the fulfillment to its
satisfaction on or prior to the Closing Date of each
of the following conditions:
6.1 Representations. The representations made
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by Purchaser pursuant to Section 4 hereof shall be
true and correct when made and shall be true and
correct on the Closing Date.
6.2 Legal Investment. At the time of the
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Closing, the conditions set forth in Sections 5.3 and
5.6 shall have occurred and the purchase of the
Shares by the Purchaser shall be legally permitted by
all laws and regulations to which Purchaser and the
Company are subject.
6.3 Voting Agreement. Purchaser, the Company
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and Xxxx Xxxx shall have executed and delivered the
Voting Agreement.
SECTION 7
Use of Proceeds
The Company will use the proceeds from the sale of
the Shares to increase its working capital and for any
lawful corporate purpose; provided, however, that
without limiting the generality of the foregoing, the
Company covenants for the benefit of Purchaser that
it will use its best efforts to utilize a portion of
the proceeds to (i) invest in a three-year, [Pounds] 1
million convertible debenture with interest at LIBOR
plus two hundred fifty (250) basis points payable
annually in advance and being convertible into a
twenty-one and one-half percent (21.5%) interest in
"Filmnight" under terms and conditions of a loan
agreement acceptable to the Board of Directors, (ii)
investment of up to US$1.8 million in "My First
Wedding", subject to due diligence and approval of
the completed final cut by the Board of Directors,
(iii) the retaiention of Xxxxxxx Xxxxx for the
preparation of a [Pounds] 10-50 million Sterling Film Fund
offering for the Company in the United Kingdomn under
terms and conditions acceptable to the Board of
Directors, and (iv) make appropriate expenditures to
enable the Company to trade on the NASDAQ or American
Stock Exchange.
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SECTION 8
Restrictions on Transferability
8.1 Restrictions on Transferability. The Shares
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shall not be transferable, except upon the conditions
specified in this Section 8, which conditions are
intended to insure compliance with the provisions of
the Securities Act and any applicable foreign
securities laws. Purchaser will cause any proposed
transferee of Shares to agree to take and hold those
securities subject to the provisions and upon the
conditions specified in this Section 8.
8.2 Restrictive Legend. Each certificate
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representing the Shares and upon any other securities
of the Company issued upon any stock split, stock
dividend, recapitalization, merger, consolidation or
similar event, shall (unless otherwise permitted or
unless the securities evidenced by such certificate
shall have been registered under the Securities Act
and publicly sold pursuant to such registration) be
stamped or otherwise imprinted with a legend
substantially in the following form (in addition to
any legend required under applicable state securities
laws):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
UNITED STATES OR IN ANY OTHER JURISDICTION IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO
THE SECURITIES UNDER THESAID ACT AND ANY APPLICABLE
STATE OR FOREIGN JURISDICTION SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
Upon request of a holder of such a certificate,
the Company shall remove the foregoing legend from
the certificate or issue to such holder a new
certificate therefor free of any transfer legend, if,
with such request, the Company shall have received
either (i) a written opinion of legal counsel who
shall be reasonably satisfactory to the Company,
addressed to the Company and reasonably satisfactory
in form and substance to the Company's counsel, to
the effect that the proposed transfer of the securities
may be effected without registration under the Securities
Act and any applicable state or foreign jurisdiction
securities laws, or (ii) a "no action" letter from
the Securities and Exchange Commission (and any
necessary state securities administrators) to the
effect that the distribution of such securities
without registration will not result in a
recommendation by the staff of the Securities and
Exchange Commission (or such administrators) that
action be taken with respect thereto.
SECTION 9
Miscellaneous
9.1 Governing Law. This Agreement shall be
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governed by and construed in accordance with the laws
of the State of California.
9.2 Survival. The representations, warranties,
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covenants and agreements made herein shall survive (i) any
investigation made by Purchaser and (ii) the Closing.
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9.3 Successors and Assigns. Except as otherwise
----------------------
expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon,
the successors, assigns, heirs, executors and
administrators of the parties hereto; provided,
however, that neither the Company nor Purchaser may
assign its rights hereunder without the prior written
consent of the other, which consent may be granted or
withheld in the sole discretion of the requested
party.
9.4 Entire Agreement; Amendment. This Agreement
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(including the Schedules and Exhibits hereto) and the
other documents delivered pursuant hereto constitute
the full and entire understanding and agreement
between the parties with regard to the subjects
hereof and thereof. Neither this Agreement nor any
term hereof may be amended, waived, discharged or
terminated orally, except by a written instrument
signed by the Company and Purchaser.
9.5 Notices. All notices and other communications
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required or permitted hereunder shall be in writing
and shall be mailed by first-class mail, postage
prepaid, or delivered either by hand or by messenger,
addressed (a) if to Purchaser, at such address as
Purchaser shall have furnished to the Company in
writing, or (b) if to the Company, at 0000 Xxxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
or at such other address as the Company shall have
furnished to Purchaser in writing. All such notices
or communications shall be deemed given when actually
delivered by hand, messenger, telegram or mailgram
or, if mailed, three days after deposit in the
U.S. Mail.
9.6 Delays or Omissions. No delay or omission
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to exercise any right, power or remedy accruing to
any holder of any Shares upon any breach or default
of the Company under this Agreement, shall impair any
such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be
deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character
on the part of any holder of any breach or default
under this Agreement, or any waiver on the part of
any holder of any provisions or conditions of this
Agreement must be made in writing and shall be
effective only to the extent specifically set forth
in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
9.7 Severability. In case any provision of the
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Agreement shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the
remaining provisions shall not in any way be affected
or impaired thereby.
9.8 Information Confidential. Purchaser
------------------------
acknowledges that the information received by it
pursuant hereto may be confidential and for its use
only, and it will not use such confidential
information in violation of the Securities Exchange
Act of 1934, as amended, or reproduce, disclose or
disseminate such information to any other person
(other than its employees or agents having a need to
know the contents of such information, and its
attorneys), except in connection with the exercise of
rights under this Agreement, unless the Company has
made such information available to the public
generally or the Purchaser is required to disclose
11
such information by a governmental body.
9.9 Expenses. The Company and Purchaser shall
--------
each bear its own expenses and legal fees incurred on
its behalf with respect to this Agreement and the
transactions contemplated hereby.
9.10 Titles and Captions. The titles of the sections
-------------------
and subsections of this Agreement are for convenience of
reference only and are not to be considered in
construing this Agreement.
9.11 Counterparts. This Agreement may be executed
------------
in any number of counterparts, by facsimile transmitted
and/or manual signatures, each of which shall be an
original, but all of which together shall constitute
one instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered by their
proper and duly authorized officers or representatives
as of the day and year first written above.
Film and Music Entertainment,
Inc., a Nevada corporation
By:
--------------------------------
Lesteron Limited, a British Virgin
Islands corporation
By:
--------------------------------
12
Exhibit "A"
(Schedule of Exceptions)
Liens & Encumbrances
Encumbrances of the Company
---------------------------
1. $1,901.41 Short term informal no interest loan
Digital Video Broadcast Systems, Inc.
Deferred Salaries
-----------------
1. Deferred salaries as of 3/15/04 to Officers,
Directors and others: $10,000.
Encumbrances of Assets
----------------------
1. $22,500 proportional encumbrance on 1120 acre parcel
owned net 30.67% now due with accrued interest in
the amount of $25,000, plus Real Estate taxes due and
payable. (Note: Myrob has a titular 46% interest in
this property, however 15.33% of the titular interest
is pledged to Xxxxxxx Honey, Esq., attorney in the
cause of action relating to the movie "The Business
Fan"): total Trust Deed in the amount of $80,000:
Myrob has the right to acquire the un-owned 54%
interest in this property for $260,000 (current
market value of $1,566,000).
2. $9,000 1st trust deed against 320 acre parcel now due
and payable plus unrecorded indebtedness not to exceed
$11,000 and Real Estate taxes now due and payable.
3. Real Estate taxes now due and payable on 50% undivided
tenants in common interest in 19.6 acre parcel.
4. Contingent liabilities to various parties for the
development and production of feature films due from
proceeds of those projects.
5. A short term assignment of the distribution rights to
"Tournament of Dreams" for a pre-production advance
of $100,000 for "Blood and Bones", to be
extinguished and repaid from production funding.
Exhibit 5.7
(Form of Voting Agreement)
STOCKHOLDER VOTING AGREEMENT
This Stockholder Voting Agreement (this "Agreement") is
entered into as of April ___, 2004, by and among Film and
Music Entertainment, Inc., a Nevada corporation (the
"Company"), Xxxx Xxxx ("Xxxx"), and Lesteron Limited, a
British Virgin Islands corporation (the "Investor" and,
together with Xxxx, the "Stockholders"), with reference to
the following facts and circumstances:
WHEREAS, Xxxx is the Chairman and Chief
Executive Officer and a holder of shares of the
Company's common stock, par value $0.001 per share
("Common Stock");
WHEREAS, simultaneously herewith, the
Company and the Investors are closing under
that certain Stock Purchase Agreement, of even
date herewithd March __, 2004 (the "Purchase
Agreement"), pursuant to which the Company is
issuing and the Investor is purchasing, Fifty
Million (50,000,000) shares of Common Stock;
WHEREAS, it is a condition to the obligations
to close of the Investor and the Company under
the Purchase that this Agreement be executed by
the parties hereto, and the parties are willing to
execute, and to be bound by the provisions of, this
Agreement.
NOW, THEREFORE, for and in consideration of
the foregoing and the agreements set forth below,
and for other good and valuable consideration,
the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Election of Directors and Related Matters
1.1 Voting of Shares. In all elections of
----------------
Directors of the Company and during the term of
this Agreement, the Stockholders shall vote all
shares of Common Stock owned by them, or as to
which they have voting power, for the candidates
designated pursuant to the provisions of this
Agreement.
1.2 Number of Directors. The authorized number
-------------------
of seats on the Board of Directors shall remain
atconsists of Nnine (9) Directors, of which only
five (5) seats shall be filled until such time as
the Company is required to fill any one (1) or more
of such vacancies and/or to further enlarge the
Board to comply with applicable regulatory or
exchange requirements, including, without
limitation, compliance in order to permit any
public offering of the Company's securities or to
allow the Company's securities to be traded on
the NASDAQ Small Cap or National Markets or the
American Stock Exchange, in which event the
Stockholders agree to cooperate in filling such
vacancies or otherwise in enlarging the Board of
Directors until such time as the number of
Directors may be increased above such number in
accordance with the Company's Bylaws ("Bylaws")
as then in effect. The parties shall use their
best efforts to permit no amendment of the Bylaws
would reduce the number of directors constituting
the Board of Directors below nine or that otherwise
would conflict with the terms of this Agreement.
1.3 Designated Directors. In elections of
--------------------
Directors of the Company, the Stockholders shall
vote for the candidates designated pursuant to this
Section 1.3:
(a) Two candidates for the Board of
Directors shall be designated by the Investor (the
"Investor Directors"), one of whom should be
qualified to sit on the Audit Committee of the
Board and be considered an "independent" and/or "non-
affiliated" Director as defined by the Securities
and Exchange Commission; and (b) Ttwo candidates
for the Board of Directors shall be designated
by Xxxx (the "Xxxx Directors"). The Investor
initially designates Xxxx Goloubovich and Xxxxxxx
Goloubovich as the Investor Directors, and Xxxx
initially designates himself and Xxxxx X. Xxxxx as
the Xxxx Directors.
In the event that the number of directors
constituting the Board of Directors is increased
above Nine (9), the provisions of this Agreement
shall continue with respect to four (4) of the
total number of Directors, with the remaining
Directors being elected in such manner as may be
provided by law or in the Articles of
Incorporation or Bylaws of the Company or pursuant to
any agreement entered into in connection with such
increase.
1.4 Removal of Directors and Vacancies.
----------------------------------
Directors may be removed at any time with or
without cause, provided that no Stockholder shall
vote for the removal of a Director nominated and
elected pursuant to this Agreement, and no such vote
shall be effective, unless the party who nominated
such Director shall vote for such removal. If such
parties do so specify the removal of a Director,
the Stockholders agree to vote all shares of
Common Stock owned by them, or as to which they
have voting power, for the removal of such Director.
If a vacancy occurs on the Board of Directors, the
remaining Directors shall immediately elect the
nominee of party that nominated the departing
Director. If the remaining Directors fail for any
reason to elect such nominee, the Company or
the Stockholders shall cause a Stockholders'meeting
to be held at the earliest practicable date, at
which meeting the Stockholders shall vote, pursuant
to this Agreement, all shares of Common Stock owned
by them, or as to which they have voting power, for
such nominee.
1.5 Amendment of Bylaws. The Company, Xxxx and
-------------------
the Investor agree to use their best efforts
promptly following the date hereof to cause the
Company's Bylaws to be amended so as to require
(i) that the Board of Directors meet not less frequently
than monthly, unless such requirement is waived as to
any meeting by the Investor or its nominees on the
Board of Directors, and (ii) that all insurance
agreements and policies, investments by the Company
in film or other projects, and all other contracts,
arrangements, agreements and/or understanding
involving in excess of Two Hundred Thousand Dollars
(US$200,000) must be approved by the Board of
Directors prior to being entered into by or on
behalf of the Company.
1.6 Certain Amendments. In the event that during
------------------
the term of this Agreement there is proposed or
considered any amendment to the Company's Articles
of Incorporation or Bylaws, the Stockholders agree to
vote all shares of Common Stock owned by them, or as
to which they have voting power, jointly and
cooperatively for or against such amendment, and if
Xxxx and the Investor are unable to agree to vote
together for such amendment, then they hereby agree to
15
vote together in opposition thereto.
2. Additional Shares of Stock
(a) In the event additional shares of voting
capital stock of the Company are, at any time
during the term of this Agreement, issued to a
Stockholder, such additional shares of voting
capital stock shall automatically become subject to
the terms and provisions of this Agreement and
shall be voted in accordance herewith.
(b) In the event that during the term of
this Agreement there is proposed or considered any
transaction involving the issuance of shares of
voting capital stock of the Company that, if
effectuated, would dilute the voting power of the
Investor, the Stockholders agree (i) to vote all
shares of Common Stock owned by them, or as to
which they have voting power, jointly and
cooperatively as determined by the Investor, and/or
(ii) to cause their nominees on the Board of
Directors to vote in accordance with this Section
2(b) so as to implement the purpose and intent hereof
as if such proposed issuance were to be determined,
in whole or in part, by the vote of the shareholders
of the Company.
3. Termination
This Agreement shall terminate in its
entirety upon the earliest to occur of (a)
immediately prior to the closing of a public
offering of Common Stock registered under the
Securities Act of 1933, as amended, (b) any
merger, sale of assets, consolidation,
reorganization or other sale of the Company as a
result of which securities representing a majority
of the voting power of the Company are held by
persons or entities that held less than a majority
voting interest in the Company prior to such
transaction, (c) the liquidation, dissolution or
indefinite cessation of the business operations of
the Company, (d) the execution by the Company of a
general assignment for the benefit of creditors,
the appointment of a receiver or trustee to take
possession of the property and assets of the
Company, or the filing of a petition under
applicable bankruptcy laws with respect to the
Company, and (e) the seventh anniversary of the
date of this Agreement.
4. Authorization
Each party hereto represents that this
Agreement has been duly authorized, executed and
delivered by such party and constitutes a valid
and binding obligation of such party,
enforceable against such party in accordance with its
terms.
5. Successors
The provisions of this Agreement shall inure to
the benefit of and shall be binding upon the
successors and assigns of the parties hereto.
6. Counterparts
16
This Agreement may be executed in any
number of counterparts, each of which shall be
deemed an original, but all of which together shall
constitute one and the same instrument.
7. Amendment
This Agreement shall not be subject to
modification or amendment in any respect, except
by an instrument in writing signed by the Company
and each of the Stockholders.
8. Governing Law
This Agreement is entered into, and all
disputes hereunder shall be governed by and
construed and enforced in accordance with, the
internal laws of the State of California, without
regard to principles of conflict of laws.
9. Specific Performance
The parties acknowledge that money damages may
not be an adequate remedy for violations of this
Agreement and that any party may, in its sole
discretion, apply to a court of competent
jurisdiction for specific performance or injunctive
or such other relief as such court may deem just
and proper to enforce this Agreement or to prevent
any violation hereof and, to the extent permitted
by applicable law, each party waives any objection
to the imposition of such relief in appropriate
circumstances.
10. Notices
All notices, demands or other communications
desired or required to be given by any party to any
other party hereto shall
be in writing and shall be deemed effectively
given upon (a) personal delivery to the party
to be notified, (b) upon confirmation of receipt
of telecopy or other electronic facsimile
transmission, (c) one business day after deposit with
a reputable overnight courier, prepaid for priority
overnight delivery and addressed as set forth in
(d), or (d) five days after deposit with the
United States Post Office, postage prepaid, and
addressed as follows: (i) if to the Company or Xxxx,
to or c/o, as appropriate, Film and Music
Entertainment, Inc., at the address and
facsimile number of the Company's then current
executive offices; (ii) if to the Investor, at
__________________; or (iii) to such other addresses
and to the attention of such other individuals
as any party shall have designated to the other
parties by notice given in the foregoing manner.
11. Severability
If one or more provisions of this Agreement are
held to be unenforceable under applicable law,
such provisions shall be excluded from this
Agreement and the balance of this Agreement shall
be interpreted as if such provisions were so excluded
and shall be enforceable in accordance with its
terms.
12. Entire Agreement
17
This Agreement constitutes the full and entire
understanding and agreement of the parties with
respect to the subject matter hereof and supersedes
all prior agreements with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first above written.
Film and Music Entertainment, Inc.,
a Nevada corporation
By:
------------------------------------
/s/Xxxx Xxxx
---------------------------------------
Xxxx Xxxx
Lesteron Limited, a
British Virgin Islands corporation
By:
------------------------------------
18
Film and Music Entertainment, Inc. and Subsidiaries
Consolidated Balance Sheet
As of December 31, 2003
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 101,065
Other receivables 131,170
----------------------------
TOTAL CURRENT ASSETS 232,235
INVESTMENT IN SUBSIDIARIES -
FURNITURE AND EQUIPMENT 3,330
REAL ESTATE ASSETS 3,739,430
FILM DISTRIBUTION RIGHTS 3,708,333
----------------------------
TOTAL ASSETS $ 7,683,328
============================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 24,268
Accrued expenses 31,514
Notes payable 16,201
----------------------------
TOTAL CURRENT LIABILITIES 71,983
NOTES PAYABLE, less current portion 42,500
----------------------------
TOTAL LIABILITIES 114,483
----------------------------
COMMITMENT AND CONTINGENCIES -
STOCKHOLDERS' DEFICIT
Common stock; par value $0.001,
250,000,000 shares authorized
97,983,223 issued and outstanding 97,983
Additional paid-in capital 8,765,462
Accumulated deficit (1,294,600)
----------------------------
TOTAL STOCKHOLDERS' DEFICIT 7,568,845
----------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 7,683,328
============================
GROSS PROFIT -
----------------------------
OPERATING EXPENSES
Selling and marketing 40,260
General and administrative expenses 220,969
----------------------------
TOTAL OPERATING EXPENSES 261,229
----------------------------
LOSS FROM OPERATIONS (261,229)
----------------------------
OTHER INCOME (EXPENSE)
Gain on extinguishment of debt 12,541
----------------------------
TOTAL OTHER INCOME (EXPENSE) 12,541
----------------------------
LOSS BEFORE PROVISION FOR INCOME TAXES (248,688)
PROVISION FOR INCOME TAXES -
----------------------------
NET LOSS $ (248,688)
============================
Schedule 3.11
(Litigation)
The Company was previously involved in a lawsuit in
British Colombia relating to the Company's
technology. A settlement has been reached and stock
issued to perfect the settlement. The Company is
awaiting signature on the final settlement agreement.
The Company has been orally informed that it has been
named as an additional party to a suit in Los Angeles
County, California. The Company has not been served
and has no reason to believe that there are any
reasonable grounds for it being named in such a suit.
The Company acquired certain rights to the Motion
Picture "The Biggest Fan" through its acquisition of
Myrob Properties, Inc. This film has been subject to
litigation over the last year, which Myrob was a
party. Arbitration relating to the suit is currently
stayed pending the outcome of settlement
negotiations. Myrob also filed a suit as plaintiff
against a real estate agent for the conversion of
certain real property. Myrob chose to file a motion
to dismiss without prejudice pending the results
of the settlement negotiations on "The Biggest Fan".
21
Schedule 3.3(c)
(Options)
Options
granted and
outstanding
as of 1/01/04
Name Date Granted # Totals
Xxxx Xxxx 5/23/2003 * 15,750,000
10/27/2003 * 25,000,000
10/27/2003 * 3,400,000
10/27/2003 * 18,000,000 62,150,000
Xxxxxxx Xxxxx 5/23/2003 * 7,875,000 7,875,000
Xxxxxxxx Xxxxxx 5/23/2003 * 1,400,000
10/27/2003 * 1,600,000 3,000,000
Xxxxx Xxxxx 10/27/2003 * 5,000,000
Xxxxx Xxxxxx 10/27/2003 * 5,000,000
Xxxxxxxxx Xxxxxxxx 00/00/0000 3,000,000
Xxx Xxxx 10/27/2003 1,000,000
Xxx Xxxxxx 10/27/2003 * 500,000
Xxxxxx Xxxxx 10/27/2003 * 500,000
Xxx Xxxxx 10/27/2003 * 500,000
Xxxxx Xxxx 10/27/2003 * 500,000
Xxxxxx Xxxxx 8/3/2003 * 100,000
Xxxxx Xxxxxx 11/14/2003 * 250,000
Xxxxxx Xxxx 10/23/2003 57,000
Subtotal 16,407,000
89,432,000
22
