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MEMORANDUM OF AGREEMENT
THIS MEMORANDUM OF AGREEMENT ("Memorandum") is entered into as of
August 8th, 1995 by and among Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx"), CBG
Partnership, a California general partnership ("CBG"), Capital Bay Group, a
California corporation ("CapBay"), BKP Partners ("BKP") and Xxxx Xxxxxxxx,
Inc., a California corporation (the "Company").
This Memorandum of Agreement is made with respect to the following facts
and circumstances:
X. Xxxxxxxx, CBG, CapBay and BKP desire to restructure in part the
capitalization of the Company as described in this Memorandum.
B. The parties desire to establish a management committee (the "Management
Committee") to govern the business of the Company pursuant to the provisions of
this Memorandum.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. CBG Shares. CBG shall immediately:
(a) relinquish and reconvey to the Company an aggregate of 635,000
common shares at no cost to the Company;
(b) transfer to BKP at no cost to BKP an aggregate of 300,000 common
shares;
(c) transfer and convey up to 300,000 common shares at no cost as
directed by CapBay pursuant to the provisions of paragraph 5(a)
below; and
(d) transfer and convey up to 165,000 common shares at no cost
pursuant to the provisions of paragraph 5(b) below.
2. Xxxxxxxx Shares. Xxxxxxxx shall immediately:
(a) relinquish and reconvey to the Company an aggregate of 1,515,000
common shares at no cost to the Company;
(b) transfer to BKP at no cost to BKP an aggregate of 700,000 common
shares;
(c) transfer and convey up to 700,000 common shares at no cost as
directed by CapBay pursuant to the provisions of paragraph 5(a)
below; and
(d) transfer and convey up to 385,000 common shares at no cost
pursuant to the provisions of paragraph 5(b) below.
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3. Management Committee. The Management Committee shall immediately be
formed. The members of the Management Committee shall consist of Xxxxxxxx,
Xxxxxx Xxxxxxx, a representative of BKP and a representative CBG. The
Management Committee shall be empowered to administer the business of the
Company. Each member of the Management Committee shall have one vote and the
actions of the Management Committee shall be governed by a majority of the
voting member. All contractual obligations undertaken by the Company, all
modifications to any existing contractual obligations, all expenditures of
funds, capital issuances and all material decisions with respect to the
operation of the Company shall be subject to the prior approval of the
Management Committee. Xxxxxxxx shall remain as President of the Company but
shall not undertake any matters with respect to the Company subject to the
control of the Management Committee without the prior consent of the
Management Committee. The Management Committee shall coordinate the efforts of
Xxxxxx Xxxxxxxxxxx ("Xxxxxxxxxxx") and Xxxxxxx Xxxxxxx ("Xxxxxxx") as such
individuals are involved in the business of the Company and in particular in
connection with the resolution of the immediate problems relating to the Xxx.
Xxxxxx license. The Management Committee will immediately commence a search for
a chief executive officer for the Company and at the direction of the
Management Committee the individual as selected by the Management Committee
will be promptly appointed as the Chief Executive Officer and shall thereafter
exercise the authority of the Chief Executive Officer of the Company subject to
the continuing authority of the Management Committee. Xxxxxxxx will continue to
explore the possibilities of new licenses for the Company and will assist in
marketing the products of the Company subject to the control of the Management
Committee and subject to the Chief Executive Officer when appointed.
4. BKP Shares. As provided in paragraph 1(b) and paragraph 2(b) above,
Xxxxxxxx and CBG shall immediately convey to BKP 700,000 and 300,000 shares
respectively of the common stock of the Company at no cost to BKP. Such shares
to be conveyed to BKP, together with 1,822,858 common shares of the Company
currently held by BKP (an aggregate amount of 2,822,858 common shares) shall
constitute the total share ownership in the Company held by BKP as of the date
hereof. It is acknowledged that as of the date of this Memorandum, BKP holds
no common shares or rights to common shares (including warrants) or promissory
notes other than as set forth in this paragraph 4.
5. Additional Shares.
(a) CapBay has agreed to endeavor to raise the sum of $500,000 for the
immediate needs of the Company by offering to investors shares at the
rate of $0.50 per common share of the Company. For each such share
purchased by an investor as issued by the Company, such investor as
designated by CapBay shall be entitled to receive an additional share
of common stock of the Company at not cost to the investor. Each such
additional share to be conveyed to the investor as designated by
CapBay, shall be conveyed seven-tenths (0.7) by Xxxxxxxx and
three-tenths (0.3) by CBG from the shares as described in paragraph
2(c) and paragraph 1(c) respectively above. The equity funds to raised
by CapBay shall be raised pursuant to that certain letter agreement,
dated August 1, 1995, ("Letter Agreement") a copy of which is attached
to this Memorandum as Exhibit A. The
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parties acknowledge that any inconsistency between the provisions of
this Memorandum and the provisions of the Letter Agreement shall be
governed by the provisions of this Memorandum.
(b) CapBay, or designee of CapBay, shall in addition be entitled to
receive, at no cost, an aggregate of 50,000 common shares of the
Company and one share of common stock of the Company for each one
dollar ($1) raised pursuant to the provisions of this paragraph 5
and the Letter Agreement up to a maximum of 500,000 shares. Each
such share shall be conveyed seven-tenths (0.7) by Xxxxxxxx and
three-tenths (0.3) by CBG from shares as described in paragraph 2(d)
and paragraph 1(d), respectively, above.
6. Captions. The captions or paragraph headings used herein are for
convenience only and not a part of this Memorandum. They shall not be referred
to in construing or interpreting this Memorandum.
7. Necessary Document. Each of the parties does hereby agree to do any act
and to execute any other or further documents necessary or convenient to the
carrying out of the provisions of this Memorandum.
8. Xxx & Xxxxxx. The parties hereto acknowledge that certain principals of
Xxx & Xxxxxx participate as partners of CBG and that Xxx & Xxxxxx has
represented and may in the future represent one or more of the parties to this
Memorandum and that therefore the potential for conflict of interest exists.
Each of the parties acknowledges and agrees that Xxx & Xxxxxx has not
represented any party in connection with the negotiation or preparation of this
Memorandum.
9. Release of Claims. As a material consideration for this Memorandum, each
of the parties hereto hereby releases and forever discharges each of the other
parties (and its employees, officers, partners, and representatives) from any
and all claims, causes of action, or liabilities of any kind whatsoever, known
or unknown, arising out of or relating in any fashion to the Company, issuance
of shares of the Company or any other matters as described in this Memorandum.
Each of the parties waives the provisions of section 1542 of the Civil Code of
California which states:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR."
10. Inurement. This Memorandum shall be binding on and shall inure to the
benefit of the parties hereto, their respective heirs, legal representatives,
successors and assigns.
11. California Law. This Memorandum shall be governed by and be construed
according to the laws of the State of California.
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12. Severability. In the event that any provision of this Memorandum shall be
found to be unenforceable or invalid, such provision shall be severed from the
balance of this Memorandum and the balance of this Memorandum shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be
duly executed and delivered as of the day and year first above written.
Xxxxxxxx: CapBay:
/s/ XXXXXXX X. XXXXXXXX Capital Bay Group, a California
------------------------------- corporation
Xxxxxxx X. Xxxxxxxx
CBG: By: /s/ XXXXXX XXXXXXX
---------------------------------
CBG Partnership, a California Xxxxxx Xxxxxxx, President
general partnership
BKP:
BKP Partners
By: /s/
-------------------------------
General Partner
The Company: By: /s/ XXXXXX XXXX
----------------------------------
Xxxxxx Xxxx, C.E.O.
Xxxx Xxxxxxxx, Inc.
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------
Xxxxxxx X. Xxxxxxxx, President
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STATE OF CALIFORNIA ]
] ss.
COUNTY OF SAN FRANCISCO ]
_____________________________]
On August 8, 1995 before me, Xxxxxxxx Xxxxxxx, personally appeared
Xxxxxxx X. Xxxxxxxx, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity, and that by his/her/their signature(s) on
the instrument, the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal. XXXXXXXX XXXXXXX
Comm. # 1034372
Notary Public-
California
San Francisco County
My Comm. Expires July 31, 1998
/s/ XXXXXXXX XXXXXXX [SEAL]
-----------------------------
Xxxxxxxx Xxxxxxx
STATE OF CALIFORNIA ]
] ss.
COUNTY OF SAN FRANCISCO ]
_____________________________]
On August 8, 1995 before me, Xxxxxxxx Xxxxxxx, personally appeared
W. Xxxxx Xxxxxxxxx, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity, and that by his/her/their signature(s) on
the instrument, the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal. XXXXXXXX XXXXXXX
Comm. # 1034372
Notary Public-
California
San Francisco County
My Comm. Expires July 31, 1998
/s/ XXXXXXXX XXXXXXX [SEAL]
-----------------------------
Xxxxxxxx Xxxxxxx
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STATE OF CALIFORNIA ]
] ss.
COUNTY OF ________________ ]
_____________________________]
On August __, 1995 before me, __________________, personally appeared
Xxxxxx Xxxxxxx, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity, and that by his/her/their signature(s) on
the instrument, the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL]
-----------------------------
STATE OF CALIFORNIA ]
] ss.
COUNTY OF ________________ ]
_____________________________]
On August __, 1995 before me, __________________, personally appeared
Xxxxxx Xxxx, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity, and that by his/her/their signature(s) on
the instrument, the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL]
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C.B. MANAGEMENT, L.L.C. 000-X Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
August 1, 1995
Xx. Xxxxxxx X. Xxxxxxxx
XXXX XXXXXXXX, INC.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Xx. Xxxxx Xxxxxxxxx
CBG PARTNERSHIP
000 Xxx Xxxxxxxxxxx, Xxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Re: Xxxx Xxxxxxxx, Inc. Financing
Dear Messers. Xxxxxxxx and Bercovich:
The following sets forth the agreement of C.B. Management ("CBM"), an Arizona
Limited Liability Corporation, to purchase newly issued common stock of Xxxx
Xxxxxxxx, Inc., a California Corporation ("Company"). The terms and conditions
under which CBM agrees to purchase such common stock of the Company are
summarized as follows:
1. CBM has retained Capitol Bay Securities ("CBS") to raise up to $500,000 of
additional capital on behalf of CBM through a private placement of securities
(the "Offering"). CBM will use all net proceeds from the Offering to purchase
newly issued common stock of the Company ("Common Stock") at $0.50 per share
(the "Investment"). CBM will use its best efforts to complete the Investment
within 30 days from the date hereof but will purchase a minimum of $75,000 of
Common Stock by August 4, 1995 (the "Initial Investment");
2. As a condition of the Investment, Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx") and CBG
Partnership ("CBG") will jointly convey, from their respective holdings,
Company common stock to CBM or its designated assign or nominee as follows:
a. Two (2) Company common shares for every dollar of the Investment at
the time any portion of the Investment is consummated;
b. Fifty Thousand (50,000) Company common shares upon completion of the
Initial Investment for use of services to be performed by a law firm,
designated by CBM; and
Exhibit A
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Xx. Xxxxxxx X. Xxxxxxxx
Mr. W. Xxxxx Xxxxxxxxx
August 1, 1995
Page 2
c. One Company common share for every dollar of the Investment at the
time any portion of the Investment is consummated as compensation
for arranging the Investment.
Company common stock conveyed to CBM under this provision will come 2/3 from
Xxxxxxxx and 1/3 from CBG.
3. In connection with this issuance of shares to CBM and CBS, the Company
acknowledges that it may not currently be in compliance with both the federal
securities laws and the securities laws of the State of California, as a result
of earlier issuance of its securities. Therefore, the Company agrees in a
timely manner to take all steps necessary to bring itself into compliance with
the relevant statutory provisions of which it is currently in violation, if
any, and to provide to CBM and CBS written documentation that any and all
disqualifications arising from such earlier violations have been waived.
4. As a further condition of the Investment, Xxxxxxxx agrees that, upon
completion of the Initial Investment, all affairs of the Company will be
managed exclusively by a management committee (the "Committee"). The Committee
shall be comprised of two representatives of CBS, one representative of CBG,
and Xxxxxxxx. The Committee shall be responsible for coordinating the
day-to-day management of the Company and Xxxxxx Xxxxxxxxxxx, and Xxxxxxx
Xxxxxxx, a consultant retained by the Company in conjunction with the Xxx.
Xxxxxx project and all other Company projects.
5. It is agreed by the parties that the allocation of the Investment shall be
determined by the Committee. The parties contemplate that the proceeds will be
allocated by the Committee in the following order:
a. Up to $25,000 shall be paid to Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxxxxxxx
as reimbursement for past wages and expenses;
b. Up to $60,000 shall be paid to Xx. Xxxxxx, to satisfy past-due
royalty payments and to amend the Xxx. Xxxxxx license provisions
regarding minimum annual case sales to the Company's satisfaction;
c. Up to $40,000 shall be paid to Haagen-Dazs and Van Der Xxxxx Foods,
the specific allocation of which shall be determined by the
Committee;
d. Up to $15,000 shall be used to provide immediate working capital; and
e. Up to $10,000 shall be paid to Xxxxxxxx for past wages and expenses.
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Xx. Xxxxxxx X. Xxxxxxxx
Mr. W. Xxxxx Xxxxxxxxx
August 1, 1995
Page 3
f. The remaining sums shall be used to make payment upon, and retire,
any additional past due obligations of the Company or used for
working capital.
6. It is further acknowledged by the parties that the Company, through the
Committee, shall proceed with negotiations concerning a reverse merger or
acquisition of the Company with a company whose shares are currently publicly
traded. These negotiations shall be conducted in a prompt and expeditious
manner, so as to permit the Company to begin listing its shares for public
trading as soon as practicable.
7. The parties further agree that, within 14 days from receipt of the Initial
Investment, the Company shall relocate its principal place of business as soon
as practicable from its present location to 00 Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx. In connection with this arrangement, the Company shall
pay rent to CBS, and a monthly management fee to CBS, in consideration for the
preparation of financial statements and other financial reports not currently
prepared by the Company, which may be necessary for the continued operation of
the Company. The amount of the rental payments and management fees must be
satisfactory to the Company prior to relocating its principal place of business
as contemplated herein.
8. CBS agrees that prior to the Initial Investment, it will waive all current
defaults under its $100,000 loan to the Company and will extend the maturity of
such loan for a period of not less than 6 months from the date hereof. The
principal amount of the loan, accrued interest to date, and the type and extent
of security for the loan will be confirmed by CBS and the Company prior to the
aforementioned restructuring. CBS and the Company agree to use their respective
best efforts to convert CBS's loan into Company common stock as soon as
practicable.
If this letter accurately reflects the agreement of the parties involved,
please sign below where indicated and return a copy to Capitol Bay Securities
via facsimile at (000) 000-0000 and at 0000-X Xxxxxxx Xxxx., Xxxxx 000,
Xxxxxxxxx, Xxxxxxxxxx 00000.
Sincerely,
/s/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx
President
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Xx. Xxxxxxx X. Xxxxxxxx
Mr. W. Xxxxx Xxxxxxxxx
August 1, 1995
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AGREED & ACCEPTED:
/s/ W. XXXXX XXXXXXXXX
----------------------------------
W. Xxxxx Xxxxxxxxx
as representative for CBG Partners
Dated: August 1, 1995
----------------------------
AGREED AND ACCEPTED: AGREED AND ACCEPTED:
/s/ XXXXXXX X. XXXXXXXX /s/ XXXXXXX X. XXXXXXXX
---------------------------------- -----------------------------------
Xxxxxxx X. Xxxxxxxx, President Xxxxxxx X. Xxxxxxxx, an individual
Xxxx Xxxxxxxx, Inc.
Dated: August 1, 1995 Dated: August 1, 1995
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