EXHIBIT 10
Exhibit 10
AGREEMENT REGARDING SALE OF
XXXXXXX.XXX (NEVADA), INC. ("THE SUBSIDIARY")
This AGREEMENT, made this 5th day of March, 2001, by and between
Xxxxxxx.xxx, Inc. ("the Company") and 595796 B.C. Ltd. ("the Purchaser") is made
for the purpose of setting forth the terms and conditions upon which the Company
will sell all of the issued and outstanding capital stock of Wowtown (Nevada),
Inc. ("the Subsidiary") in exchange for shares of the Company's common stock.
In consideration of the mutual promises, covenants, and representations
contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I
SALE OF SUBSIDIARY
1.01 Subject to the terms and conditions of this Agreement, the Company agrees
to sell, and the Purchaser agrees to buy all of the shares of the Subsidiary and
those assets listed on Exhibit A (the "Assets") in consideration for:
o the return to the Company by the Purchaser of 9,500,000 shares of the
Company's common stock;
o the assumption by the Purchaser of those liabilities and contractual
commitments of the Company and/or the Subsidiary shown on Exhibit B
attached to and made a part of this Agreement; and
o the foregiveness by the Purchaser and any officer, employee,
shareholder or affiliate of the Purchaser of any loans or advances
made by such persons to the Company, including those loans and
advances enumerated in Exhibit B attached hereto.
1.02 The parties hereto agree that any liabilities or contractual commitments of
the Company and/or the Subsidiary which are not shown on Exhibit B and indicated
under the heading "Nevada" will be the responsibility of the Company. The
Exhibits to this Agreement are:
Exhibit A Assets
Exhibit B Liabilities and Contractual Commitments
Exhibit C Financial Statements
Exhibit D Contracts and Leases Exhibit E Insurance Policies
Exhibit F Litigation Exhibit G Directors, Bank Accounts and Power of
Attorney
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Company that:
2.01 Organization. The Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of British Columbia. Subject to
the approval of this Agreement by the shareholders of the Purchaser, the
Purchaser has the right, power, and authority to enter into, and perform its
obligations under, this Agreement. The execution and delivery of this Agreement
by the Purchaser and the performance by the Purchaser of its obligations
hereunder will not cause, constitute, or conflict with or result in (a) any
breach or violation or any of the provisions of or constitute a default under
any license, indenture, mortgage, charter, instrument, articles of
incorporation, by-law, or other agreement or instrument to which the Purchaser
is a party, or by which it may be bound, nor will any consents or authorizations
of any party other than those hereto be required, (b) an event that would permit
any party to any agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of the Purchaser, or (c) an
event that would result in the creation or imposition or any lien, charge, or
encumbrance on any asset of the Purchaser or would create any obligation for
which the Purchaser would be liable, except as contemplated by this Agreement.
2.02 Assets. The Purchaser will have at closing good and marketable title
to 9,500,000 shares of the Company's common stock and such shares will not, at
closing, be subject to any claim, lien or encumbrance.
2.03 Financial Statements. Exhibit C to this Agreement sets forth the
consolidated financial statements of the Company for the periods ended April 30,
2000 and 1999, together with the independent auditors' report thereon, and the
management prepared financial statements of the Company for the periods ended
October 31, 2001 and 2001 (the "Financial Statements"). The Financial Statements
have been and the January 31, 2001 and 2000 Financial Statements (when delivered
at closing) will be prepared in accordance with generally accepted accounting
principles consistently followed by the Company throughout the periods
indicated, and fairly present the financial position of the Company as of the
dates of the balance sheets included in the financial statements, and the
results of its operations for the periods indicated.
2.04 Absence of Changes. Since January 31, 2001 there has not been any change in
the financial condition or operations of the Company or the Subsidiary, except
changes reflected in Exhibit C or changes in the ordinary course of business
which changes have not in the aggregate been materially adverse.
2.05 Absence of Undisclosed Liabilities. The Company and the Subsidiary did not,
as of the date hereof, have any debt, liability, or obligation of any nature,
whether accrued, absolute, contingent, or otherwise, and whether due or to
become due, that is not reflected on Exhibit B.
2.06 Tax Returns. Within the times and in the manner prescribed by law, the
Company and the Subsidiary have filed all tax returns required by law and have
paid all taxes, assessments, and penalties due and payable. No tax returns of
the Company or the Subsidiary have been audited by any government agency. The
provision for taxes, if any, reflected in the Company's balance sheet as at
January 31, 2001 to be delivered at closing is adequate for any and all taxes
for the period ending on the date of that balance sheet and for all prior
periods, whether or not disputed. There are no present disputes as to taxes of
any nature payable by the Company or the Subsidiary.
2.07 Contracts and Leases. Exhibit D attached hereto and made a part hereof
contains a summary of the provisions of all material contracts, leases, and
other agreements of the Company or the Subsidiary presently in existence or
which have been agreed to by the Company or the Subsidiary (whether written or
oral). Except as disclosed on Exhibit D, neither the Company nor the Subsidiary
are in default under any of these agreements or leases.
2.08 Insurance Policies. Exhibit E to this Agreement is a description of all
insurance policies held by the Company and the Subsidiary concerning their
business and properties. All these policies are in the respective principal
amounts set forth in Exhibit E and are in full force and effect.
2.09 Compliance with Laws. The Company and the Subsidiary have complied with,
and are not in violation of, any applicable federal, state, or local statutes,
laws, and regulations affecting their properties or the operation of their
business, including but not limited to applicable federal and state securities
laws.
2.10 Litigation. Except as disclosed on Exhibit F neither the Company nor the
Subsidiary are a party to any suit, action, arbitration, or legal,
administrative, or other proceeding, or governmental investigation pending or,
to the best knowledge of the Purchaser threatened, against or affecting the
Company, the subsidiary or their business, assets, or financial condition.
Neither the Company nor the Subsidiary are in default with respect to any order,
writ, injunction, or decree of any federal, state, local, or foreign court,
department, agency, or instrumentality. Neither the Company nor the Subsidiary
are engaged in any legal action to recover moneys due to, or damages sustained
by the Company or the Subsidiary.
2.11 Directors and Officers' Compensation; Banks. Exhibit G to this Agreement
contains: (i) the names and titles of all directors and officers of the Company
and all persons whose compensation from the Company as of the date of this
Agreement will equal or its expected to equal or exceed, at an annual rate, the
sum of $5,000; (ii) the name and address of each bank with which the Company or
the Subsidiary has an account or safety deposit box, the identification number
thereof, and the names of all persons who are authorized to draw thereon or have
access thereto; and (iii) the names of all persons who have a power of attorney
from the Company or the Subsidiary and a summary of the terms thereof.
The Company represents and warrants to the Purchaser that:
2.12 Organization. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware. Subject to the
approval of this Agreement by the shareholders of the Company, the Company has
the right, power, and authority to enter into, and perform its obligations
under, this Agreement. The execution and delivery of this Agreement by the
Company and the performance by the Company of its obligations hereunder will not
cause, constitute, or conflict with or result in (a) any breach or violation or
any of the provisions of or constitute a default under any license, indenture,
mortgage, charter, instrument, articles of incorporation, by-law, or other
agreement or instrument to which the Company is a party, or by which it may be
bound, nor will any consents or authorizations of any party other than those
hereto be required, (b) an event that would permit any party to any agreement or
instrument to terminate it or to accelerate the maturity of any indebtedness or
other obligation of the Company, or (c) an event that would result in the
creation or imposition or any lien, charge, or encumbrance on any asset of the
Company or would create any obligations for which the Company would be liable,
except as contemplated by this Agreement, or in the case of dissenter's rights
which will be available to the shareholders of the Company.
2.13 Assets. The Company has good and marketable title to the shares of
the Subsidiary and the Assets, and except as described on Exhibit A, the shares
of the Subsidiary and the Assets are free of any claim, lien or encumbrance.
2.14 Registration Rights. The Company will include 126,500 shares of the
Company's' common stock held by the Purchaser in any amendment to the Company's
current registration on Form SB-2 or in any future registration statement filed
by the Company which registers securities of the Company which are to be sold by
any shareholder of the Company, unless such shares may be sold by the Purchaser
under Rule 144 and the Company has provided the Purchaser with an opinion of
counsel to that effect.
ARTICLE III
OBLIGATIONS BEFORE CLOSING
3.0l Investigative Rights. From the date of this Agreement until the date
of closing, each party shall provide to the other party, and such other party's
counsel, accountants, auditors, and other authorized representatives full access
during normal business hours to all of each party's properties, books,
contracts, commitments, records and correspondence and communications with
regulatory agencies for the purpose of examining the same. Each party shall
furnish the other party with all information concerning each party's affairs as
the other party may reasonably request.
3.02 Conduct of Business. Prior to the closing, and except as contemplated
by this Agreement, the Company and the Subsidiary shall conduct their business
in the normal course, and shall not sell, pledge, or assign any assets, without
the prior written approval of the other party, except in the regular course of
business. Except as contemplated by this Agreement, or as disclosed in Exhibit
C, neither the Company nor the Subsidiary shall amend its Articles of
Incorporation or By-laws, declare dividends, redeem or sell stock or other
securities, incur additional or newly-funded material liabilities, acquire or
dispose of fixed assets, change senior management, change employment terms,
enter into any material or long-term contract, guarantee obligations of any
third party, settle or discharge any balance sheet receivable for less than its
stated amount, pay more on any liability than its stated amount, or enter into
any other transaction other than in the regular course of business.
ARTICLE IV
CONDITIONS PRECEDENT TO PERFORMANCE BY THE COMPANY
4.01 Conditions. The Company's obligations hereunder shall be subject to
the satisfaction, at or before the Closing, of all the conditions set forth in
this Article IV. The Company may waive any or all of these conditions in whole
or in part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by the Company of any other condition of or
any of the Company's other rights or remedies, at law or in equity, if the
Purchaser shall be in default of any of its representations, warranties, or
covenants under this agreement.
4.02 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by the Purchaser in this Agreement
or in any written statement that shall be delivered to the Company by the
Purchaser under this Agreement shall be true on and as of the closing date as
though made at those times.
4.03 Performance. The Purchaser shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it, on or before the closing. The
Purchaser shall have obtained all necessary consents and approvals necessary to
consummate the transactions contemplated hereby.
4.04 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this agreement or to its consummation, shall have been
instituted or threatened on or before the closing.
4.05 Other. In addition to the other provisions of this Article IV the
Company's obligations hereunder shall be subject to the satisfaction, at or
before Closing, of the following.
A. The shareholders of the Company shall have approved the sale of the
Subsidiary and the Assets in accordance with the provisions of the Delaware
General Corporation Law.
B. Shareholders owning not more than 100,000 shares of the Company's common
stock will have exercised dissenters rights with respect to the proposed
sale of the Subsidiary and the Assets.
C. All employment agreements between the Company and any employees of the
Company will be terminated upon the closing of this Agreement.
D. The shareholders of the Purchaser shall have approved the purchase of the
Subsidiary and the Assets in accordance with the provisions of the British
Columbia Company Act.
E. Either: (i) the assignment of all those contracts listed under the heading
"Xxxxxxx.xxx, Inc. Contracts" in Exhibit D hereto by the Company to the
Subsidiary with a concurrent release by the other contracting party or
parties in favor of the Company; or (ii) the termination o such contracts
by the other contracting party or parties with a concurrent release being
made by the other contracting party or parties in favor of the Company.
F. The Subsidiary shall have applied its GST refunds to satisfy the income tax
liabilities of the Company.
ARTICLE V
CONDITIONS PRECEDENT TO PERFORMANCE BY THE PURCHASER
5.01 Conditions. The Purchaser's obligations hereunder shall be subject to
the satisfaction, at or before the Closing, of the conditions set forth in this
Article V. The Purchaser may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by the Purchaser of any other condition of or any of
the Purchaser's rights or remedies, at law or in equity, if the Company shall be
in default of any of its representations, warranties, or covenants under this
agreement.
5.02 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by the Company in this Agreement
or in any written statement that shall be delivered to the Purchaser by the
Company under this Agreement shall be true on and as of the closing date as
though made at those times.
5.03 Performance. The Company shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it, on or before the closing. The
Company shall have obtained all necessary consents and approvals necessary to
consummate the transactions contemplated hereby, including those required by the
Delaware General Corporation Law.
5.04 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this agreement or to its consummation, shall have been
instituted or threatened on or before the closing.
5.05 Other. In addition to the other provisions of this Article IV, the
Purchaser's obligations hereunder shall be subject to the satisfaction, at or
before the Closing, of the following:
A. An agreement, in form and substance satisfactory to the Purchaser, whereby
Century Capital Management Ltd. agrees to release the Purchaser from its
guarantee with respect to the $200,000 loan made by Century Capital
Management Ltd. to the Company and the related pledge by the Purchaser of
2,500,000 shares of the Company's stock.
B. An agreement, in form and substance satisfactory to the Purchaser providing
that Xxxxxxx Xxxxxxx will be retained by the Company as a consultant for 2
months effective March 1, 2001 at a monthly fee of US$2,000 plus a signing
bonus of US$2,000 and the grant of options.
ARTICLE VI
CLOSING
6.0l Closing. The closing of this transaction shall be held at the offices
of the Company within 5 days of the date on which the shareholders of the
Company approve the sale of the Subsidiary and the Assets to the Purchaser. At
the closing, the following documents, in form reasonably acceptable to counsel
to the parties or as set forth herein, shall be delivered:
By the Purchaser:
1. Certificates representing 9,500,000 shares of the Company's common
stock, endorsed in the manner specified by the Company.
2. An agreement providing that the Purchaser agrees to assume those
liabilities and contractual commitments of the Company and/or the Subsidiary
shown on Exhibit A.
3. An agreement providing that the Purchaser and any officer, employee,
shareholder or affiliate of the Purchaser forgives any loans or advances made by
such persons to the Company.
By the Company:
1. Assignment of Assets listed on Exhibit A.
2. Certificates representing all of the issued and outstanding capital
stock of the Subsidiary registered in the name of the Purchaser.
3. The agreements referred to in Section 5.05.
4. The Company's quarterly report on form 10QSB for the period ended
January 31, 2001 as filed with the Securities and Exchange Commission.
6.02 Officer and Directors. At the closing of this Agreement all present
officers and directors of the Company, with the exception of Xxxxxxx Xxxxxxx,
will resign.
ARTICLE VII
REMEDIES
7.01 Arbitration. Any controversy or claim arising out of, or relating to,
this Agreement, or the making, performance, or interpretation thereof, shall be
settled by arbitration in Vancouver, British Columbia in accordance with the
General Rules of Arbitration in British Columbia then existing, and judgment on
the arbitration award may be entered in any court having jurisdiction over the
subject matter of the controversy.
7.02 Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorney's fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or they may be
entitled.
7.03 Termination. In addition to the other remedies, the Company or the
Purchaser may on or prior to the closing date terminate this Agreement, without
liability to the other party:
(i) If any bona fide action or proceeding shall be pending against the
Company or the Purchaser on the closing date that could result in an unfavorable
judgment, decree, or order that would prevent or make unlawful the carrying out
of this Agreement or if any agency of the federal or of any state government
shall have objected at or before the closing date to this acquisition or to any
other action required by or in connection with this Agreement;
(ii)If the legality and sufficiency of all steps taken and to be taken
by each party in carrying out this Agreement shall not have been approved by the
respective party's counsel, which approval shall not be unreasonably withheld.
(iii) If a party breaches any representation, warranty, covenant or
obligation of such party set forth herein and such breach is not corrected
within ten days of receiving written notice from the other party of such breach.
ARTICLE VIII
MISCELLANEOUS
8.01 Captions and Headings. The Article and paragraph headings throughout
this Agreement are for convenience and reference only, and shall in no way be
deemed to define, limit, or add to the meaning of any provision of this
Agreement.
8.02 No Oral Change. This Agreement and any provision hereof, may not be
waived, changed, modified, or discharged orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, or discharge is sought.
8.03 Non-Waiver. Except as otherwise expressly provided herein, no waiver
of any covenant, condition, or provision of this Agreement shall be deemed to
have been made unless expressly in writing and signed by the party against whom
such waiver is charged; and (i) the failure of any party to insist in any one or
more cases upon the performance of any of the provisions, covenants, or
conditions of this Agreement or to exercise any option herein contained shall
not be construed as a waiver or relinquishment for the future of any such
provisions, covenants, or conditions, (ii) the acceptance of performance of
anything required by this Agreement to be performed with knowledge of the breach
or failure of a covenant, condition, or provision hereof shall not be deemed a
waiver of such breach or failure, and (iii) no waiver by any party of one breach
by another party shall be construed as a waiver with respect to any other or
subsequent breach.
8.04 Time of Essence. Time is of the essence of this Agreement and of each
and every provision hereof.
8.05 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements,
understandings and the letters of intent between the parties.
8.06 Applicable Law. This Agreement and its application shall be governed
by the laws of British Columbia.
8.07 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.08 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed to the following address or to such other
address as specified in writing from time to time by one party to the other:
Xxxxxxx.xxx, Inc.
Suite 450
999 West Hastings St.
Vancouver, British Columbia, Canada V6C 2W2
595796 B.C. Ltd.
Xxxxx 0000, 000 Xxxxxxxxx Xxxxxx
P.O. Box 10068, Pacific Centre
Vancouver, British Columbia, Canada, V7Y 1C3
8.09 Binding Effect. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives, successors and assigns of each of
the parties to this Agreement.
8.10 Effect of Closing. All representations, warranties, covenants, and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion, or other writing provided for in it, shall survive the
closing of this Agreement.
8.11 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other and
further documents and take such other and further actions as may be necessary or
convenient to effect the transaction described herein. Neither party will
intentionally take any action, or omit to take any action, which will cause a
breach of such party's obligations pursuant to this Agreement.
AGREED TO AND ACCEPTED as of the date first above written.
Xxxxxxx.xxx, Inc.
By /s/ Xxxxx Xxxxxxx
-------------------------------
Xxxxx Xxxxxxx, President
595796 B.C. Ltd.
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxx, President
