THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITES ACT OF 1933 (THE "1933 ACT"), NOR REGISTERED UNDER ANY STATE
SECURITIES LAW, AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE
144 UNDER THE 1933 ACT. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933
ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT (the "Agreement"), is made this 15th day of
March, 1999, by and between SPORTS GROUP INTERNATIONAL, INC. ("SPGK"), a Florida
corporation, and SURF CITY ACQUISITION CORPORATION II ("SCAC"), an Arizona
corporation.
RECITALS
1. SPGK is a corporation duly organized and existing under the laws of the
State of Florida with an authorized capital stock consisting of 50,000,000
shares of voting common stock, $0.001 par value ("SPGK Common Stock"), of which
6,300,000 shares are issued and outstanding prior to its merger with Sports
Group International ("SGI") and 13,747,246 shares are issued and outstanding
following its merger with SGI. Said shares take into account the share exchange
between SPGK and SGI and all shares issued for debt reduction by SGI.
2. Prior to the date of this Agreement, Investors Communication Group, Inc.
("ICC") entered into an agreement with Xxxxxx Xxxxxxxxxx ("LC") herein ICC
purchased 95% of the outstanding common stock of Secretarial Services of
Orlando, Inc., a Florida corporation ("Secretarial"). All contingencies and
conditions of the ICC-LC agreement have been completed and satisfied. The
undersigned, on behalf of SPGK hereby represents and warrants that the ICC-LC
Agreement has been completed and that the undersigned has the right and power to
enter into this Agreement. Prior to the date of this Agreement, Secretarial
formally changed its name to Sports Group International, Inc., a Florida
corporation, with a symbol on the NASD of "SPGK" ("SPGK"). SPGK is a party to an
Amended Merger Agreement and Plan of Reorganization, dated March 15, 1999 ("Plan
of Merger") with Sports Group International, Inc., a Delaware corporation
("SGI). (A true and correct copy of the ICC-LC Agreement and the Plan of Merger
are attached collectively hereto as Exhibit "A."). THIS SHARE PURCHASE AGREEMENT
IS BEING ENTERED INTO AND EXECUTED FOLLOWING THE CLOSING OF THE COMPLETED
PURCHASE BY ICC OF LC'S SHARES AS REPRESENTED IN EXHIBIT "A", THE NAME CHANGE OF
SECRETARIAL TO SPORTS GROUP INTERNATIONAL, INC., A FLORIDA CORPORATION, THE
SYMBOL ON NASD OF SPGK, AND THE PLAN OF MERGER BETWEEN SPGK AND SGI, AND IN
RELIANCE OF THE CLOSING OF THE PLAN OF MERGER. WITHOUT ALL OF THE AFOREMENTIONED
TRANSACTIONS BEING COMPLETE, SCAC WOULD NOT ENTER INTO THIS AGREEMENT.
3. SCAC is a corporation duly organized and existing under the laws of the
State of Arizona with authorized capital stock consisting of 10,000,000 shares
of voting common stock, $.01 par value, of which 850,000 shares are issued and
outstanding ("SCAC Common Stock") and 1,000,000 authorized Serial Preferred
Stock with a par value of $10.00 per share of which 0 shares are issued and
outstanding ("SCAC Preferred Stock"). SCAC is the owner of 100% of the
outstanding common shares of Surf City Squeeze, Inc., which owns all of the
shares of its subsidiaries. (Surf City Squeeze, Inc. and its subsidiaries are
collectively referred to herein as "Surf City").
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4. SPGK will issue and deliver 525,000 shares of SPGK Series A Redeemable
Convertible Secured Preferred Stock in consideration for the issuance and
delivery of 825,000 shares of SCAC Common Stock which represents 100% of the
total of the issued and outstanding shares of SCAC Common Stock ("the
"Transaction"). In addition, SPGK will issue but not deliver an additional
50,000 shares of SPGK Series A Redeemable Convertible Secured Preferred Stock to
cover those shares necessary to provide shares of stock in the event that the
Weider Warrants are exercised. (See Article 2.2(e)).
5. In Exhibit "E" to this Agreement, SGI Proforma Balance Sheet for the 1st
Quarter for the period ending March 31, 1999, there is a balance of
$1,007,012.00 identified as "Other Assets (2)." It is understood and being
relied upon by the parties to this Agreement that Investors Communication
Corporation, Inc. and Xxxxxxx Xxxxx (hereinafter collectively referred to herein
as "Black") are the debtors of said asset for $1,000,000.00 payable to SPGK
(hereinafter "Note") on said Proforma and that said Note shall be paid from the
proceeds of Black's free trading 504 shares.
6. SPGK and SCAC desire to make certain representations, warranties,
covenants and agreements in connection with the Transaction, and also desire to
prescribe various conditions precedent to the Transaction.
NOW, THEREFORE, in consideration of the recitals which are a part of this
Agreement, and of the mutual agreements, SPGK and covenants herein contained,
including the recitals above which are part of this Agreement, the parties
hereto hereby agree as follows:
ARTICLE 1
1. CONSIDERATION OF SECURITIES AND PLAN OF TRANSACTION
1.1 CONSIDERATION. Subject to all of the terms and conditions of this
Agreement, SPGK agrees to issue and deliver to Xxxxx X. Xxxxxxxxx 525,000 shares
of SPGK Preferred stock in consideration for the issuance and delivery to SPGK
by Xxxxx X. Xxxxxxxxx that number of shares of SCAC Common Stock which, at the
Closing Date, will represent 100% of the total of the issued and outstanding
shares of SCAC Common Stock.
1.1.1 Valid and binding obligations of SPGK and SCAC existing on the
Closing Date shall become and remain the valid and binding obligations of
the surviving corporation.
1.1.2 SPGK agrees to assume any and all obligations of SCAC, Xxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxxx and Xxxxx Xxxxxxx (Collectively "SCAC"),
whether incurred prior to this Agreement or after this Agreement. In
addition, SPGK agrees to assume any and all obligations of the officers,
directors, shareholders and employees of SCAC incurred on behalf of SCAC or
for the benefit of SCAC. In addition, SPGK expressly agrees to assume any
and all obligations owing, owed or to be owed pursuant to any and all
Personal Guarantees enforced or enforceable against Xxxxx X. Xxxxxxxxx,
Xxxxxxx Xxxxxxxxx, and any other (past or present) officer, director and/or
shareholder of Surf City Squeeze, Inc., Kona Coast Provisions, Surf City
Squeeze Franchise Corporation or Malibu Smoothie Franchise Corporation.
This agreement to assume Personal Guarantees includes any and all Personal
Guarantees signed by Xxxxx X. Xxxxxxxxx ("KAB") and Xxxxxxx Xxxxxxxxx after
this Agreement is executed.
1.2 FRACTIONAL SHARES. Fractional common shares shall not be issued; and
fractional shares shall be rounded up to the nearest whole share.
1.3 SPGK SHARES EXEMPT FROM REGISTRATION. The parties hereto intend that
the SPGK shares to be issued to the Shareholders at the Closing shall be exempt
from the registration requirements of the Securities act of 1933, as amended
(the "Act"), pursuant to Section 4(2) of the Act and the rules and regulations
promulgated thereunder.
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1.4 ADDITIONAL CONSIDERATION. As additional consideration for the
Transaction.
(a) SPGK shall provide to SCAC working capital in the amount of
$1,000,000.00. Said sum shall be due and payable as follows:
(i) $250,000.00 on or before April 1, 1999;
(ii) $250,000.00 on or before April 30, 1999;
(iii) $250,000.00 on or before June 30, 1999; and
(iv) $250,000.00 on or before September 30, 1999.
(b) During the period of three (3) years from the Date of Closing, the
SPGK Board of Directors shall consist only of five (5) members, three (3)
of whom shall be selected by KAB.
1.5 USE AND DISPOSITION OF PREFERRED STOCK. At Closing, SPGK will deliver
to KAB, 525,000 shares of Series A Redeemable Convertible Secured Preferred
Stock. 50,000 shares of said stock shall be held by KAB for issuance to Weider
in the event that Weider exercises its Warrants as described in Article 2.2(e)
of this Agreement and Attached hereto as Exhibit "B" and incorporated herein by
this reference.
1.5.1 In addition to the 525,000 shares of Series A Redeemable
Convertible Secured Preferred Stock issued to KAB, SPGK shall issue and
hold an additional 50,000 shares of said Stock for use and issuance in the
event that Weider exercises its Warrants as described in Article 2.2(e) of
this Agreement.
1.5.2 If Weider exercises its Warrants prior to expiration, KAB and
SPGK will each transfer and/or issue to Weider a total of 100,000 Series A
Redeemable Convertible Secured Preferred Stock to Weider. Said transfer
shall be divided as follows: KAB shall transfer to Weider 50,000 shares of
Series A Stock and SPGK will transfer 50,000 shares of Series A Stock. If
Weider fails to exercise its Warrants prior to expiration and said Warrants
expire, the Series A Redeemable Convertible Secured Preferred Stock held
for Weider by KAB shall become unrestricted Preferred shares for the sole
use of KAB. The Preferred shares held by SPGK shall expire upon the
expiration of the Weider Warrants.
1.6 REDEMPTION FEATURE. At the option of the Holder, shares of KAB's Series
A Stock may be redeemed, in whole or in part, at any time and from time to time
after the date of issuance of the Shares of Series A Stock to be redeemed, upon
the terms and conditions set forth as follows:
1.6.1 The redemption price per share shall be Ten Dollars ($10.00) per
share, plus an amount equal to unpaid cumulative dividends accrued to date
of redemption (whether or not declared), which shall be accrued at the
dividend rate of 10% per annum and payable quarterly, pro rata to the date
of redemption.
1.6.2 Redemption Schedule. 1/5 of outstanding Series A Stock may be
redeemed 1 year from the date of issuance. An additional 1/5 of outstanding
Series A Stock may be redeemed 2 years from the date of issuance. All
outstanding Series A Stock may be redeemed 3 years from the date of
issuance.
1.6.3 Waiver of Redemption Feature. At the absolute and sole
discretion of the Holder of the Series A Stock, the Redemption Feature, or
any part thereof can be waived. In the event that said waiver is made, the
holder of said Series A Stock, Issued and Outstanding at the time of the
waiver, shall be entitled to purchase ten (1) share of SPGK Common Stock
for every five (5) shares of Series A Stock held by the Holders, for $1.00
each.
1.7 SECURITY FEATURE. The Holder of the Series A Stock shall be secured by
100% of the Outstanding Shares of the SCACII Common Stock pursuant to the terms
of the Pledge Agreement dated March 12, 1999.
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1.7.1 Default. Any of the following events shall be deemed a "default"
for the purposes of this Article:
(a) If the SCAC Holder presents Series A Stock to the Company for
redemption and the Company cannot redeem said shares;
(b) SPGK loses its Exclusive License to market the Spalding name
as permitted in the Spalding License
Agreement (the Spalding License along with all amendments and
renewals are attached hereto as Exhibit "C" and incorporated herein by
this reference);
(c) Filing by SPGK of a voluntary petition in bankruptcy or
seeking reorganization, adjustment, readjustments of debts, or any
other relief under the Bankruptcy Code, as amended, or any insolvency
act or law, state or federal, now or hereafter existing;
(d) Filing of an involuntary petition against SPGK in bankruptcy
or seeking reorganization, arrangement, readjustment of debts, or any
other relief under the Bankruptcy Code, as amended, or. under any
other insolvency act or law, state or federal, now or hereafter
existing, and the continuance thereof for sixty (60) days undismissed,
unbonded, or undischarged;
(e) Failure of SPGK to provide funding to SCAC on the following
schedule:
1. $250,000.00 to be received on or before April 1, 1999;
2. $250,000.00 to be received on or before April 30, 1999;
3. $250,000.00 to be received on or before June 30, 1999; and
4. $250,000.00 to be received on or before September 30, 1999.
Said funding shall be secured without encumbering any of the assets of
SCAC or its subsidiaries.
1.7.2 Remedies upon the Occurrence of an Event of Default. Upon the
occurrence of an Event of Default as defined in Article 1.7.1 of this
Agreement, KAB may at his option exercise any rights identified in the
Pledge Agreement attached hereto and incorporated herein by this reference
as Exhibit "D".
ARTICLE 2
2. REPRESENTATIONS AND WARRANTIES
2.1 SPGK REPRESENTATIONS AND WARRANTIES. Except as disclosed in the
Disclosure Schedule dated as of the date of this Agreement and delivered to SCAC
concurrently herewith (by specific reference to the section hereof pursuant to
which the disclosure is being made), SPGK represents and warrants, as follows:
(a) ORGANIZATION. It is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has full power and authority to conduct its business as
it is now being conducted, and to own and lease its properties and assets;
and it is duly qualified to do business as a foreign corporation in good
standing in every jurisdiction in which the conduct of its business or
ownership or leasing of its properties requires such qualification or, if
any jurisdiction is not so qualified, such failure to qualify will not have
any material adverse effect on its "business, prospects, assets, income or
financial conditions" (hereinafter "Financial Condition").
(b) AUTHORITY. It has full power and authority to enter into this
Agreement and to carry out the transactions contemplated herein. The
execution and delivery of this agreement and the consummation of the
transactions contemplated herein have been duly and validly authorized and
approved by its Board of Directors, and no other corporate proceedings on
its part are necessary to authorize this Agreement or the consummation of
the transactions contemplated herein. This Agreement has been duly and
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validly executed and delivered by it and constitutes a valid and binding
agreement of it, enforceable against it in accordance with the terms
hereof.
(c) CONFLICTS/APPROVALS. Neither the execution and delivery of this
Agreement nor compliance by it with the terms thereof by SPGK will (1)
violate or conflict with or result in a breach or default of any of the
terms or conditions of the Articles of Incorporation or Bylaws of SPGK; (2)
violate any applicable law, statute, rule, regulation or order promulgated
by any governmental authority; or (3) conflict with or result in a material
breach, acceleration or material default or under any of the terms,
conditions of (A) any judgment, order, decree, or ruling to which it is a
party, or any injunction to which it is subject, or any court or
governmental authority, domestic or foreign, or (B) any agreement, contract
or commitment to which it s a party; or (4) require the consent or approval
of, or declaration, filing or registration with, any non-governmental third
party or, to the best of its knowledge, any governmental authority, or
stock exchange in the United States.
(d) AFFILIATES. Except as set forth in Item 2.1(d) of the Disclosure
Schedule, no person owns of record or, to its best knowledge, owns
beneficially five percent (5%) or more of any class of its issued and
outstanding voting securities. In Schedule 2.1 attached hereto, SPGK lists
its stock ownership. SPGK has no controlled subsidiaries.
(e) LITIGATION. Except as set forth in Item 2.1(e) of the Disclosure
Schedule, (1) there is no action, suit, proceeding, claim or investigation,
pending or, to its knowledge, threatened, by or against or otherwise
affecting it which might have a material adverse effect on its Financial
Condition; and it knows of no basis or grounds for any such action, suit,
proceeding, claim or investigation; and (2) there is no outstanding order,
writ, injunction or decree of any court, government or governmental agency,
or any arbitration award against it which might have a material adverse
effect on its Financial Condition.
(f) TAXES. All tax returns and reports required by law to be filed by
it have been duly filed or are in the process of being filed, and, except
as set forth in Item 2.1(f) of the Disclosure Schedule, all taxes,
assessments, fees and other governmental charges (collectively "Taxes")
upon it or upon any of its respective properties, assets, interest or
income which are due and payable have been paid or adequate reserve
therefor have been provided for on its books and financial statements.
(g) TITLE. To the best of its knowledge and belief, except as set
forth in Item 2.1(g) of the Disclosure Schedule, it has good and marketable
title to all of the properties and assets, real and personal, which it
purports to own, free and clear of all liens, claims, charges, encumbrances
and restrictions of whatsoever nature ("Encumbrances").
(h) SECURITIES COMPLIANCE. To the best of its knowledge and belief
during the five (5) year period prior to the execution of this Agreement,
no Director of Officer of it has been involved in any of the events set
forth in Rule 401(f) of Regulation S-K of the Securities Act of 1933, as
amended ("Act"). It has never been subject to any claim or proceeding
brought by any shareholder of it under either state or federal securities
laws. In addition, the stock of SPGK is freely trading as a priced
quotation listed on the Over the Counter Bulletin Board of the NASD and is
not subject to any investigation or inquiry by the NASD, SEC or any other
governmental agencies.
(i) LOANS. It has not received any notices of default, other than
those already disclosed, regarding any of their loans or other credit
facilities.
(j) CONDUCT OF BUSINESS. Since December 1, 1998, except as set forth
in Item 2.1(j) of the Disclosure statement, it has not:
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1. Directly or indirectly redeemed, purchased or otherwise
acquired or re-capitalized or reclassified any of its capital stock or
liquidated in whole or in part;
2. Merged or consolidated with any other companies.
3. Mortgaged, pledged or otherwise encumbered any of its assets;
4. Altered or amended its certificate of incorporation or bylaws;
5. Entered into, materially amended or terminated any material
contract, agreement, franchise, permit or license; and
6. Except in the normal course of business made any material
increase in compensation payable or to become payable by it to its
directors, officers or employees, or any increase in benefits or
benefit plan costs, or any increase in any bonus, insurance, pension,
compensation or other benefit plan covering any directors or officers.
(k) CAPITAL. Its authorized capital stock consists of 100,000,000
common voting shares, par value $0.001, of which 13,747,246shares are
issued and outstanding. All of such issued and outstanding shares are
validly issued, fully paid and non-assessable.
(l) FINANCIALS. Attached hereto as Exhibit "E" are true and correct
copies of (1) the audited financial statement for the period ending
December 31, 1997; (2) the unaudited financial statements for the period
ending December 31, 1998; and (3) the unaudited Proforma Balance Sheet for
the First Quarter of 1999, dated March 31, 1999. There has not been any
material adverse change in the Financial Condition, results of operations
or business of SPGK since February 28, 1999, and no event or condition has
occurred or exists which will result in a material adverse change other
than changes resulting from general economic conditions.
(m) ISSUANCE OF SPGK SHARES. All approvals, permits, consents, orders
and authorizations have been obtained and the necessary documents have been
filed under all applicable laws of the United States to qualify the
issuance, exchange and distribution of the SPGK Shares to be issued to the
Shareholders pursuant to this Agreement.
2.2 SCAC REPRESENTATIONS AND WARRANTIES. Except as disclosed in the
Disclosure Schedule dated as of the date of this Agreement and delivered to SPGK
concurrently herewith (by specific reference to the section hereof pursuant to
which the disclosure is being made), SCAC represents and warrants to SPGK as
follows:
(a) ORGANIZATION. It is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has full power and authority to conduct its business as
it is now being conducted.
(b) AUTHORITY. It has full power and authority to enter into this
Agreement and to carry out the transactions contemplated herein. The
execution and delivery of this agreement and the consummation of the
transactions contemplated herein have been duly and validly authorized and
no other corporate proceedings on its part are necessary to authorize this
Agreement or the consummation of the transactions contemplated herein. This
Agreement has been duly and validly executed and delivered by it and
constitutes a valid and binding agreement of it, enforceable against it in
accordance with the terms hereof.
(c) CONFLICTS/APPROVALS. Neither the execution and delivery of this
Agreement nor compliance by it with the terms thereof by SPGK will (1)
violate or conflict with or result in a breach or default of any of the
terms or conditions of the Articles of Incorporation or Bylaws of SPGK; (2)
violate any applicable law, statute, rule, regulation or order promulgated
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by any governmental authority; or (3) conflict with or result in a material
breach, acceleration or material default or under any of the terms,
conditions of (A) any judgment, order, decree, or ruling to which it is a
party, or any injunction to which it is subject, or any court or
governmental authority, domestic or foreign, or (B) any agreement, contract
or commitment to which it is a party; or (4) require the consent or
approval of, or declaration, filing or registration with, any
non-governmental third party or, to the best of its knowledge, any
governmental authority, or stock exchange in the United States.
(d) CAPITAL. Its authorized capital stock consists of 10,000,000
common shares, $.01 par value, of which 825,000 shares are issued and
outstanding. All of such issued and outstanding common voting shares are
validly issued, fully paid, and non-assessable. In addition, Its authorized
Serial Preferred Stock, $10 par value, of which 0 shares are issued and
outstanding.
(e) WEIDER WARRANTS. SCAC has issued Warrants to Weider Health &
Fitness, a Nevada Corporation ("Weider"), which permits Weider to purchase
175,000 shares of SCAC. Pursuant to the terms of the Warrant Agreement (a
true and correct copy is attached hereto as Exhibit "B" and incorporated
herein by this reference), SPGK expressly assumes and acknowledges said
Warrants and agrees to deliver the Holder of said Warrants such shares of
stock, securities or assets as, in accordance with the provisions contained
within said Warrant Agreement. SPGK further agrees to defend, indemnify and
hold harmless, the shareholders, officers, directors and employees of SCAC
and Surf City for and from any action by Weider relating to the Warrants
identified in Exhibit "B" of this Agreement.
ARTICLE 3
3. CONDITIONS PRECEDENT TO SPGK'S PERFORMANCE.
3.1 ACCURACY OF REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties by SCAC in this Agreement, or in
any written Statement that shall be delivered to SPGK by SCAC under this
Agreement, shall be true and accurate in all material respects and as of the
Closing Date as though made at that time.
3.2 PERFORMANCE. SCAC shall have performed, satisfied and complied with all
covenants, agreements and conditions required by this Agreement to be performed
or complied with on or before the Closing Date. If SCAC has not performed, SPGK
may give SCAC written notice, prior to Closing, including particulars known to
it, and the Closing shall be delayed and SPGK shall have ten (10) days to
perform or comply. SPGK's signature on this Agreement shall be deemed to be
SPGK's acceptance of performance by SCAC and satisfaction with said performance
and condition of SCAC.
3.3 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 against SCAC or Surf City on or before the Closing Date other than as
listed on Exhibit "F".
3.4 CORPORATE PROCEEDINGS. All corporate and other necessary proceedings
contemplated herein, and all documents necessary thereto, shall be reasonably
satisfactory in form and substance to the parties hereto and to their counsel.
(a) STATUTORY REGULATIONS. All statutory requirements for the valid
consummation of the transactions contemplated by this Agreement shall have
been fulfilled, all authorizations, consents and approvals of all
non-governmental; third parties, and all governmental authorities required
to be obtained in order to permit consummation of the transactions
contemplated by this agreement, and to permit the business currently
carried on by it to continue unimpaired immediately following the Closing
Date, shall have been obtained.
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(b) SHAREHOLDER APPROVAL. The transactions contemplated by this
Agreement shall have been approved in the manner required by law by the
holders of the issued and outstanding shares of SCAC Common Stock, entitled
to vote thereon, and all other corporate action required by law with
respect to the Transaction shall have been taken.
3.5 OFFICER'S CERTIFICATE. SCAC shall have delivered to SPGK a certificate,
dated the Closing Date and signed by its President, certifying that the
conditions specified in this Agreement have been fulfilled and accepted. In the
alternative, the signature of an Officer to this Agreement shall constitute
certification that the conditions specified in this Agreement have been
fulfilled.
ARTICLE 4
4. CONDITIONS PRECEDENT TO SCAC PERFORMANCE
4.1 CONDITIONS. SCAC's obligations hereunder shall be subject to the
satisfaction, at or before the Closing Date, of all the conditions set forth in
this Agreement and, upon finalization and execution of all documentation, SCAC
shall have a period of fifteen (15) days to have said Transaction and
documentation reviewed and approved by securities counsel. Failure to obtain
such approval will not void this Agreement. SCAC may waive any or all of these
conditions, in whole or in part, without prior notice, so long as such waiver is
in writing and provided, however, that no such waiver of a condition shall
constitute a waiver by SCAC of any other condition or any of SCAC's rights or
remedies, at law or in equity, if SPGK shall be in default of any of its
representations, warranties, or covenants under this Agreement.
4.2 ACCURACY OF REPRESENTATION. Except as otherwise permitted by this
Agreement, all representations and warranties by SPGK in this Agreement, or in
any written Statement that shall be delivered to SCAC by SPGK under this
Agreement, shall be true and accurate in all material respects and, as of the
Closing Date, as though made at that time.
4.3 PERFORMANCE. SPGK 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 Date. If SPGK has not
performed, SCAC may terminate this Agreement at its sole discretion any time
after thirty (30) days from signature.
4.4 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 against SPGK on or before the Closing Date.
4.5 CORPORATE PROCEEDINGS. All corporate and other necessary proceedings
contemplated herein and all documents necessary thereto shall be reasonably
satisfactory in form and substance to the parties hereto and to their counsel.
(c) STATUTORY REGULATIONS. All statutory requirements for the valid
consummation of the transactions contemplated by this Agreement shall have
been fulfilled, all authorizations, consents and approvals of all
non-governmental; third parties, and all governmental authorities required
to be obtained in order to permit consummation of the transactions
contemplated by this Agreement and to permit the business currently carried
on by it to continue unimpaired immediately following the Closing Date
shall have been obtained.
(d) SHAREHOLDER APPROVAL. The transactions contemplated by this
Agreement has been approved in the manner required by law by the holders of
the issued and outstanding shares of SPGK Common Stock, entitled to vote
thereon, and all other corporate action required by law with respect to the
Transaction has been taken.
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4.6 OFFICER'S CERTIFICATE. SPGK shall deliver to SCAC a certificate, dated
the Closing Date and signed by its President, certifying that the conditions
specified this Agreement have been fulfilled and accepted. In the alternative,
the signature of an Officer to this Agreement shall constitute certification
that the conditions specified in this Agreement have been fulfilled and
accepted.
ARTICLE 5
5. CLOSING.
5.1 CLOSING. The Closing (the "Closing Date") shall take place at such
location and time on March 15, 1999, or on such date and at such time as the
parties may mutually agree upon.
5.2 SPGK DELIVERIES TO SCAC. At Closing, SPGK shall deliver to SCAC and KAB
the following instruments and documents:
(a) Certificates representing 525,000 shares of SPGK Series A
Redeemable Convertible Preferred Stock, par value $10.00 with cumulative
dividends of 10% per annum on the outstanding shares;
(b) Certified resolutions of SPGK's Board of Directors, in a form
satisfactory to counsel for SCAC, authorizing the execution and performance
of this Agreement and all actions to be taken by SPGK under this Agreement;
(c) A Certificate executed by the President or Vice President and the
Secretary of SPGK certifying that all of SPGK's representations and
warranties under this Agreement are true as of the Closing, as though each
of those representations and warranties had been made on the date of
Closing or alternatively, the signature of an officer and/or director of
SPGK to this agreement shall be deemed said certification of said officer
and/or director of SPGK and thus bind the company; and
(d) SPGK shall deliver the opinion of its counsel, dated the Closing
Date, in form and in substance satisfactory to counsel for SCAC to the
effect that or in the absence of an opinion from counsel for SPGK, the
undersigned, on behalf of SPGK, represents and warrants that:
(1) SPGK is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida, duly qualified
to do business and in good standing in each State where its business
requires qualification.
(2) SPGK's authorized capital stock is as set forth in Section 2
hereof and as listed in Schedule 2.1 attached hereto.
(3) The execution and consummation of this Agreement have been
duly authorized and approved by SPGK's Board of Directors. To the best
of counsel's knowledge and belief, after reasonable inquiry, the
making and performance of this Agreement by SPGK will not violate SPGK
of any laws, rules, regulations, decrees, orders or judgments known to
such counsel of SPGK's Certificate of Incorporation or Bylaws and will
not result in the breach or violation of, or constitute a default
under, any contractual agreement of SPGK.
(4) Counsel or the undersigned has no knowledge of any
litigation, proceeding or investigation of the type described in
Section 2.1(e) hereof.
(5) The SPGK shares pursuant to this Agreement are duly and
validly authorized and issued and are fully paid and non-assessable.
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(6) All applicable approvals, permits, consents, orders and
authorizations have been obtained, and the necessary documents have
been filed under all applicable laws of the United States and, except
for filing of requisite notices or other documentation with any
applicable governmental authority or stock exchange in the United
States, no other regulatory action is required in connection with the
issuance and delivery of SPGK Common Stock. SPGK is listed, quoted and
trading on the Over the Counter Bulletin Board of the NASD as of the
date of this Agreement.
5.3 SCAC'S DELIVERIES TO SPGK. At Closing, SCAC shall deliver to SPGK the
following instruments and documents:
(a) Certificates representing 825,000 shares of Common Stock of SCAC,
par value $0.01, representing therein no less than 100% of the issued and
outstanding capital stock of SCAC.
(b) Certified resolutions of SCAC's Board of Directors, in a form
satisfactory to counsel for SPGK, authorizing the execution and performance
of this Agreement and all actions to be taken by SCAC under this Agreement;
and
(c) A Certificate executed by the President or Vice President and the
Secretary of SPGK certifying that all of SCAC `s representations and
warranties under this Agreement are true as of the Closing, as though each
of those representations and warranties had been made on the date of
Closing.
ARTICLE 6
6. DISPUTE RESOLUTION.
6.1 GOOD FAITH NEGOTIATION FOLLOWED BY MEDIATION. The parties will attempt
in good faith to resolve through negotiation any dispute, claim or controversy
arising out of or relating to this agreement. Either party may initiate
negotiations by providing written notice in letter form to the other party,
setting forth the subject of the dispute and the relief requested. The recipient
of such notice will respond in writing within five days with a statement of its
position on and recommended solution to the dispute. If the dispute is not
resolved by this exchange of correspondence, then representatives of each party
with full settlement authority will meet at a mutually agreeable time and place
within twenty days of the date of the initial notice in order to exchange
relevant information and perspectives, and to attempt to resolve the dispute. If
the dispute is not resolved by these negotiations, the matter will be submitted
to JO AO MO S/ENDISPUTE, or its successor, or another mediation firm or retired
judge mutually agreed upon by the parties for mediation.
6.2 MEDIATION. Except as provided herein, no civil action with respect to
any dispute, claim or controversy arising out of or relating to this agreement,
may be commenced until the matter has been submitted to JO AO MO S/ENDISPUTE, or
its successor, or another mediation firm or retired judge mutually agreed upon
by the for mediation. Either party may commence mediation by providing to JO AO
MO S/ENDISPUTE and the other party a written request for mediation, setting
forth the subject of the dispute and the relief requested. The parties will
cooperate with JO AO MO S/ENDISPUTE and with one another in selecting a mediator
from JO AO MO S/ENDISPUTE panel of neutrals, and in scheduling the mediation
proceedings. If the parties are unable to mutually agree upon a panel of
neutrals from JO AO MO S/ENDISPUTE, the parties shall mutually agree upon a
retired judge or other mediator to assist the parties in the mediation process.
The parties covenant that they will participate in the mediation in good faith,
and that they will share equally in its costs. All offers, promises, conduct and
statements, whether oral or written, made in the course of the mediation by any
of the parties, their agents, employees, experts and attorneys, and by the
mediator and any JO AO MO S/ENDISPUTE employees, are confidential, privileged
and inadmissible for any purpose, including impeachment, in any litigation or
other proceeding involving the parties, provided that evidence that is otherwise
admissible or discoverable shall not be rendered inadmissible or
non-discoverable as a result of its use in the mediation. Either party may seek
equitable relief prior to the mediation to preserve the status quo pending the
completion of that process. Except for such an action to obtain equitable
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relief, neither party may commence a civil action with respect to the matters
submitted to mediation until after the completion of the initial mediation
session, or 45 days after the date of filing the written request for mediation,
whichever occurs first. Mediation may continue after the commencement of a civil
action, if the parties so desire. The provisions of this Clause may be enforced
by any Court of competent jurisdiction, and the party seeking enforcement shall
be entitled to an award of all costs, fees and expenses, including attorneys
fees, to be paid by the party against whom enforcement is ordered.
6.3 COURT PROCEEDINGS.
(a) If a dispute is mediated unsuccessfully, or a dispute arises that is
not subject to the mediation provision of this Agreement, either party may avail
itself of the right to seek relief from a court of competent jurisdiction in or
about San Diego County, in San Diego, California, and only in that location.
(b) All disputes which involve adjudication in a court shall be governed by
the provisions of section 6 of this Agreement. If, in an action commenced in a
court pursuant to section 6 of this Agreement, a party seeks temporary or
preliminary injunctive relief, the court hearing the matter shall proceed to
adjudicate the issues before it with respect to such relief and shall not delay
the entry of any order with respect to such relief; provided, however, that
except for matters fully determined in connection with proceedings for temporary
or preliminary relief, the dispute resolution procedures set forth herein shall
be used. If in an action commenced in court pursuant to section 6, the opposing
party shall raise a legally sufficient claim by way of defense, cross-claim or
counterclaim which is otherwise subject to the dispute resolution provisions of
this Article 6, the court hearing the matter shall proceed to adjudicate the
issues before it; provided, however, that the court may elect to use the dispute
resolution procedures set forth herein with respect to any such defense,
counterclaim or cross-claim to the maximum extent feasible, so long as the use
of all such dispute resolution procedures may be completed within 60 days from
the date the matter is referred to the mediator for that purpose.
6.4 VENUE; WAIVER OF JURY; LIMITATION OF DAMAGES. The parties hereby agree
as follows:
(a) ANY AND ALL COURT PROCEEDINGS ARISING FROM MATTERS RELATED TO THIS
AGREEMENT SHALL BE BROUGHT IN, AND ONLY IN, A COURT OF COMPETENT JURISDICTION IN
SAN DIEGO COUNTY, SAN DIEGO, CALIFORNIA. IN EITHER CASE, THE PARTIES HEREBY
CONSENT TO THE EXERCISE OF SUBJECT MATTER AND PERSONAL JURISDICTION BY SUCH
COURTS.
(b) THE PARTIES AGREE THAT ALL DISPUTES ADMITTED TO THE COURT PURSUANT TO
THIS AGREEMENT SHALL BE TRIED TO THE COURT SITTING WITHOUT A JURY,
NOTWITHSTANDING ANY STATE OR FEDERAL CONSTITUTIONAL OR STATUTORY RIGHTS OR
PROVISIONS.
(c) NO PUNITIVE OR EXEMPLARY DAMAGES SHALL BE AWARDED AGAINST EITHER PARTY,
OR ANY AFFILIATES OF EITHER OF THEM, IN ANY PROCEEDING ARISING UNDER THIS
AGREEMENT, AND ALL CLAIMS TO SUCH DAMAGES ARE HEREBY WAIVED.
ARTICLE 7
7. MISCELLANEOUS
7.1 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 this Agreement.
7.2 MODIFICATIONS. This Agreement may be waived, changed, modified or
discharged in written form only, signed by the party seeking the waiver, change,
modification or discharge and by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
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7.3 NON-WAIVER. Except as otherwise expressly provided herein, no waiver of
any covenant or condition 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 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 covenant or condition; (ii) the
acceptance of performance of anything required by this Agreement to be performed
with knowledge of the breach or failure of a covenant or condition of this
Agreement 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 subsequent breach.
7.4 TIME OF THE ESSENCE. Time is of the essence in this Agreement and of
each and every provision hereof.
7.5 ENTIRE AGREEMENT; MODIFICATION. This Agreement contains all of the
terms and conditions and representations agreed upon by the parties hereto with
reference to the subject matter hereof. No other agreements or representations,
oral or otherwise shall be deemed to exist or to bind any of the parties hereto
and all prior agreements and understandings are superseded hereby. No officer or
employee or agent of SCAC has any authority to make any representation or
promise not contained in this Agreement. SPGK agrees that it has executed this
Agreement without reliance upon any such unauthorized representation or promise
and in fact has received no representation or promise not contained within this
agreement. This Agreement cannot be modified or changed except by written
instrument signed by all of the parties hereto.
7.6 COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts and/or by facsimile signatures, each of which shall be deemed
an original but which together shall constitute one and the same instrument and
have the same force and effect as if executed in one complete document.
7.7 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, registered or certified mail, postage
prepaid, and properly addressed as follows or at an alternative address or
person as the Party may from time to time furnish to the other party:
To SPGK: Xx. Xxxxxxx Xxxxx c/o Investors Communications Group
00000 Xxxxxxxx Xxxxxx, Xxxxx X
Xxxx Xxxxxx, XX 00000
Phone: 000-000-0000
with a copy to: Xxx Xxxxx, Esq.
Xxxxx & Associates
X.X. Xxx 0000
Xxxxxx Xxx Xxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
To SCAC or KAB: Mr. Xxxxx Xxxxxxxxx
0000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxx Xxxxxx, Esq.
000 Xxxx "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
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7.8 BINDING EFFECT. This Agreement is and shall inure to and be binding
upon the heirs, executors, personal representatives, successors and assigns of
the parties to this Agreement.
7.9 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 reasonable
and necessary or convenient to effect the Transaction described herein.
7.10 BROKERS. Each of the parties hereto shall indemnify and hold the other
harmless against any and all claims, losses, liabilities or expenses which may
be asserted against it as a result of its dealings, arrangements or agreements
with any broker, finder or person claiming to have a right to compensation for
bringing the parties into agreement.
7.11 ANNOUNCEMENTS. SPGK and SCAC will consult and cooperate with each
other as to the timing and content of any announcements of the transactions
contemplated hereby to the general public or to employees, customers or
suppliers. No party is permitted to announce this transaction until the all
parties have signed this Agreement. This shall not prevent the parties from
providing necessary persons with information about the Agreement.
7.12 EXPENSES. In the event the Transaction contemplated hereby is
consummated, SPGK will pay all legal, accounting and any other out-of-pocket
expenses reasonably incurred in connection with the Transaction.
7.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties set forth in this Agreement,
or in any instrument, certificate, opinion or other writing providing for it,
shall survive for a period of twenty-four (24) months after Closing,
irrespective of any investigation made by or on behalf of any party.
7.14 EXHIBITS. As of the execution hereof, the parties hereto have provided
each other with the Exhibits and a Disclosure Schedule provided for herein
above, including any items referenced therein or required to be attached
thereto. Any material changes to the Exhibits and Disclosure Schedule shall be
immediately disclosed to the other party. All such Exhibits or Schedules are
incorporated herein and made a part of this Agreement.
7.15 AUTHORITY. Each party to this Agreement acknowledges that: (1) this
Agreement and its reduction to final form is the result of extensive good faith
negotiations between the parties through their respective counsel; (2) said
counsel have carefully reviewed and examined this agreement for execution by
said parties, or any of them; and (3) any statute or rule of construction that
ambiguities are to be resolved against the drafting party should not be employed
in the interpretation of this Agreement.
7.16 COOPERATION. Each party hereby agrees, certifies and covenants that
they will assist each other in completing and preparing any documents to
effectuate the Agreement. Each party agrees, certifies and covenants that they
will immediately execute and revise any corrected documents or forms as
necessary and upon request in order to obtain the benefits agreed to pursuant to
the terms of this Agreement. The Parties further agree to immediately initial
any corrections on any documents containing typographical errors or omissions
upon the request of the other Party.
7.17 INDEMNITY. SPGK hereby agrees to protect, defend and indemnify SCAC,
its direct or indirect parents, their subsidiaries, affiliates and designees and
their officers (past and present), board of directors (past and present),
employees (past and present), shareholders (past and present), Xxxxx Xxxxxxxxx,
Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxx (Xxxxx Xxxxxxxxx, Xxxxx Xxxxxxx, and Xxxxxxx
Xxxxxxxxx are hereinafter and hereinabove referred to herein collectively with
respect to this Indemnity provision along with SCAC) and hold them harmless from
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and against any and all costs and expenses actually incurred by them or for
which they are liable or alleged to be liable, including attorney's fees, court
costs, expert witness fees/costs, losses, liabilities, damages, claims and
demands of every kind or nature, including, but not limited to lease
obligations, personal guarantees, the Weider Warrants, entering into this
Agreement, the avoidance of or alleged avoidance any agreement, the breach of or
alleged breach of any agreement, and including those incurred pursuant to a
settlement entered into in good faith. SCAC, and its direct or indirect parents,
their subsidiaries, affiliates and designees and their officers (past and
present), board of directors (past and present), employees (past and present),
shareholders (past and present), at their sole discretion, may hire legal
counsel of their sole choice to defend any actions brought against SCAC, its
direct or indirect parents, their subsidiaries, affiliates and designees and
officers (past and present), board of directors (past and present), employees
(past and present), shareholders (past and present) which arise out of SPGK's
obligations herein. SPGK hereby agrees to pay any and all attorneys' fees,
expert costs, and any other fees and costs incurred by SCAC, its direct or
indirect parents, their subsidiaries, affiliates and designees and their
officers (past and present), board of directors (past and present), employees
(past and present), shareholders (past and present) to said selected counsel
upon the request of SCAC, its direct or indirect parents, their subsidiaries,
affiliates and designees and their officers (past and present), board of
directors (past and present), employees (past and present). SPGK will, if
requested by SCAC, its direct or indirect parents, their subsidiaries,
affiliates and designees and their officers (past and present), board of
directors (past and present), employees (past and present), defend any suits at
the sole cost and expense of SPGK. SPGK hereby agrees to defend said suits with
the use of attorneys requested by SCAC, its direct or indirect parents, their
subsidiaries, affiliates and designees and their officers (past and present),
board of directors (past and present), employees (past and present). For
purposes of this provision, requests shall be made pursuant to the Notice
paragraph herein. For purposes of this provision, said request shall be deemed
accepted unless written notice of said non-acceptance is received by SCAC at the
address listed herein, or later changed, within 10 days of receipt of said
notice. The parties may rely upon this acceptance in their action or non-action.
7.18 SEVERABILITY. Nothing contained in this Agreement shall be construed
as requiring the commission of any act contrary to law. Whenever there is any
conflict between any provisions of this Agreement and any present or future
statute, law, ordinance, regulation or judicial decision, contrary to which the
parties have no legal right under this Agreement, the latter shall prevail, but
in such event the provision of this Agreement thus affected shall be curtailed
and limited only to the extent necessary to bring it within the requirements of
the law. In the event that any part, article, section, sentence or clause of
this Agreement shall be held to be indefinite, invalid or otherwise
unenforceable, the indefinite, invalid or unenforceable provision shall be
deemed deleted, and the remaining parts thereof shall continue in full force and
effect.
7.19 NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
benefit any other person or entity except the named parties hereto and no other
person or entity shall be entitled to any rights hereunder by virtue of
so-called "third party beneficiary rights" or otherwise.
AGREED TO AND ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN.
Dated: March 15, 1999 SPORTS GROUP INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Xxxxxxx Xxxxx, its President and
Chairman of the Board
/s/ Xxxxxxx Xxxxx
------------------------------------
Xxxxxxx Xxxxx, an Individual and on
behalf of Investors Communication
Corporation, Inc.
Dated: March 15, 1999 SURF CITY ACQUISITION CORPORATION II
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Xxxxx Xxxxxxxxx, President
/s/ Xxxxx X. Xxxxxxxxx
Dated: March 15, 1999 ------------------------------------
Xxxxx X. Xxxxxxxxx, an Individual
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