STOCK EXCHANGE AGREEMENT
------------------------
This Stock Exchange Agreement (the "Agreement"), dated as of June ___, is
by and among Taurus Entertainment Companies, Inc., a Colorado corporation,
("Taurus"), and Xxxxxx Xxxxxxx whose name appears and who is identified as a
stockholder on the signature page hereof (the "Stockholder"), such person being
the registered holder of all of the capital stock of Bluestar Physical Therapy,
Inc., a Texas corporation ("Bluestar").
R E C I T A L S
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WHEREAS, the Stockholder is the record and beneficial owner of the number
of shares of common stock, $.001 par value of Bluestar indicated in the table
set forth as Exhibit "A" to this Agreement (which shares are hereinafter
collectively referred to as the "Bluestar Stock");
WHEREAS, Taurus desires to acquire from the Stockholder, and the
Stockholder desires to convey to Taurus, all of the issued and outstanding
Bluestar Stock owned by the Stockholder in exchange for shares of voting common
stock, $0.001 par value of Taurus (the "Taurus Stock"), all on the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements and the respective representations and warranties herein contained in
this Agreement, and on the terms and subject to the conditions set forth in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
EXCHANGE OF SHARES
Section 1.1 Bluestar Stock. At the Closing (as defined below), the
---------------
Stockholder shall transfer, convey and deliver to Taurus the number of shares of
Bluestar Stock set forth opposite his name on Exhibit "A" hereto, and shall
deliver to Taurus stock certificates representing the Bluestar Stock, duly
endorsed to Taurus or accompanied by duly executed stock powers in form and
substance satisfactory to Taurus.
Section 1.2 Taurus Stock. At the Closing, in exchange for each share
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of Bluestar Stock transferred to Taurus, Taurus shall issue and deliver to the
Stockholder the number of shares of Taurus Stock set forth opposite their name
on Exhibit "A" hereto. The transaction by which the transfer shall take place
is referred to in this Agreement as the "Exchange".
ARTICLE II
1
THE CLOSING
The Closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at 10:00 a.m. on June ___, 2003 (the "Closing
Date"), at the offices of Xxxxxxx, Xxxxx & Xxxxxxxxx, 0000 Xxxxxxxx Xxxxx, Xxxxx
000, Xxxxxxx, Xxxxx 00000 or at such other time and place as agreed upon among
the parties hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Taurus as follows:
Section 3.1 Ownership of the Bluestar Stock. The owns, beneficially
--------------------------------
and of record, that number of shares of Bluestar Stock set forth opposite the
Stockholder's name on Exhibit "A" hereto; except for restrictions imposed by
federal and state securities laws: (i) such shares are owned by such Stockholder
free and clear of any liens, claims, equities, charges, options, rights of first
refusal, or encumbrances; (ii) the Stockholder has the unrestricted right and
power to transfer, convey and deliver full ownership of such shares without the
consent or agreement of any other person and without any designation,
declaration or filing with any governmental authority; and, (iii) upon the
transfer of such shares to Taurus as contemplated herein, Taurus will receive
good and valid title thereto, free and clear of any liens, claims, equities,
charges, options, rights of first refusal, encumbrances or other restrictions.
Section 3.2 Authorization. The Stockholder is of the full age of
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majority, with full power, capacity and authority to enter into this Agreement
and perform the obligations contemplated hereby by and for himself or herself
and his or her spouse, if any. All action on the part of the Stockholder
necessary for the authorization, execution, delivery and performance of this
Agreement by the Stockholder has been taken or will be taken prior to the
Closing. This Agreement constitutes a valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, and other laws of general
application relating to or affecting creditors' rights and to general equitable
principles.
Section 3.3 Pending Claims. There is no claim, suit, action or
---------------
proceeding, whether judicial, administrative or otherwise, pending or, to the
best of the Stockholder's knowledge, threatened that would preclude or restrict
the transfer to Taurus of the Bluestar Stock owned by the Stockholder or the
performance of this Agreement by the Stockholder.
Section 3.4 No Default. The execution, delivery and performance of
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this Agreement by the Stockholder does not and will not constitute a violation
or default under or conflict with any contract, agreement, understanding or
commitment to which such Stockholder is a party or by which such Stockholder is
bound.
Section 3.5 Acquisition of Stock for Investment. The Stockholder
---------------------------------------
understands that the issuance of Taurus Stock will not have been registered
under the Securities Act of 1933, as amended
2
(the "Act"), or any state securities acts, and, accordingly, are restricted
securities, and that he represents and warrants to Taurus that his present
intention is to receive and hold the Taurus Stock for investment only and not
with a view to the distribution or resale thereof.
Additionally, the Stockholder understands that any sale by the Stockholder
of any of the Taurus Stock received under this Agreement will, under current
law, require either: (a) the registration of the Taurus Stock under the Act and
applicable state securities acts; (b) compliance with Rule 144 of the Act; or
(c) the availability of an exemption from the registration requirements of the
Act and applicable state securities acts. The Stockholder understands that
Taurus has not undertaken and does not presently intend to file a Registration
Statement to register the Taurus Stock that is to be issued to the Stockholder.
The Stockholder hereby agrees to execute, deliver, furnish or otherwise provide
to Taurus an opinion of counsel reasonably acceptable to Taurus prior to any
subsequent transfer of the Taurus Stock, that such transfer will not violate the
registration requirements of the federal or state securities acts. The
Stockholder further agrees to execute, deliver, furnish or otherwise provide to
Taurus any documents or instruments as may be reasonably necessary or desirable
in order to evidence and record the Taurus Stock acquired hereby.
To assist in implementing the above provisions, the Stockholder hereby
consents to the placement of the legend, or a substantially similar legend, set
forth below, on all certificates representing ownership of the Taurus Stock
acquired hereby until the Taurus Stock has been sold, transferred, or otherwise
disposed of, pursuant to the requirements hereof. The legend shall read
substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES ACTS. THESE SECURITIES MUST BE ACQUIRED FOR
INVESTMENT, ARE RESTRICTED AS TO TRANSFERABILITY, AND MAY
NOT BE SOLD, HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT
COMPLIANCE WITH THE REGISTRATION AND QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS
OR APPLICABLE EXEMPTIONS THEREFROM."
Section 3.6 Stockholder Access to Information. The Stockholder hereby
---------------------------------
confirms and represents that he: (a) has been afforded the opportunity to ask
questions of and receive answers from representatives of Taurus concerning the
business and financial condition, properties, operations and prospects of Taurus
and has asked such questions as he/she desires to ask and all such questions
have been answered to the full satisfaction of the Stockholder; (b) has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the relative merits and risks of the transactions contemplated
hereby; (c) has had an opportunity to engage and is represented by an attorney
of his/her choice; (d) has had an opportunity to negotiate the terms and
conditions of this Agreement; (e) has been given adequate time to evaluate the
merits and risks of the transactions contemplated hereby; and (f) has been
provided with and given an opportunity to review all current information about
Taurus including Taurus's Form 10-KSB for the fiscal year ended September 30,
2002
3
and Taurus's Form 10-QSB for the quarter ended December 31, 2002 and the Form
10-QSB for the quarter ended March 31, 2003.
Section 3.7 Disclosure. To the best of the Stockholder's knowledge, no
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representation or warranty of the Stockholder contained in this Agreement
(including the exhibits and schedules hereto) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
Section 3.8 Indemnification by Stockholder. The Stockholder recognizes
------------------------------
that the Exchange being conducted with Taurus is based, to a material degree,
upon the representations and warranties of Stockholder as set forth and
contained herein and the Stockholder hereby agrees to indemnify and hold
harmless Taurus against all damages, costs, or expenses (including reasonable
attorney's fees) arising as a result of any breach of representation or warranty
or omission made herein by the Stockholder.
If any action is brought against Taurus in respect of which indemnity may
be sought against the Stockholder pursuant to the foregoing paragraph, Taurus
shall promptly notify the Stockholder in writing of the institution of such
action (but the omission to so notify the Stockholder shall not relieve it from
any liability that it may have to Taurus except to the extent the Stockholder is
materially prejudiced or otherwise forfeit substantive rights or defenses by
reason of such failure), and the Stockholder shall assume the defense of such
action, including the employment of counsel to be chosen by the Stockholder to
be reasonably satisfactory to Taurus, and payment of expenses. Taurus shall
have the right to employ the Stockholder's or their own counsel in any such
case, but the fees and expenses of such counsel shall be at Taurus expense,
unless the employment of such counsel shall have been authorized in writing by
the Stockholder in connection with the defense of such action, or the
Stockholder shall not have employed counsel to take charge of the defense of
such action, or counsel employed by the Stockholder shall not be diligently
defending such action, or Taurus shall have reasonably concluded that there may
be defenses available to it which are different from or additional to those
available to the Stockholder, or that representation of Taurus by the same
counsel would be inappropriate under applicable standards of professional
conduct due to actual or potential differing interests between them (in which
case the Stockholder shall not have the right to direct the defense of such
action on behalf of Taurus), in any of which event such fees and expenses shall
be borne by the Stockholder. Anything in this paragraph to the contrary
notwithstanding, the Stockholder shall not be liable for any settlement of, or
any expenses incurred with respect to, any such claim or action effected without
the Stockholder written consent, which consent shall not be unreasonably
withheld. The Stockholder shall not, without the prior written consent of
Taurus effect any settlement of any proceeding in respect of which Taurus is a
party and indemnity has been sought hereunder unless such settlement includes an
unconditional release of Taurus from all liability on claims that are the
subject matter of such proceeding.
Section 3.9 No Brokerage Commission. No broker or finder has acted for
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the Stockholder in connection with this Agreement or the transactions
contemplated hereby, and no person is entitled to any brokerage or finder's fee
or compensation in respect thereof based in any way on agreements,
4
arrangements or understandings made by or on behalf of the Stockholder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE STOCKHODER
ABOUT BLUESTAR
In addition to the representations and warranties of the Stockholder as
set forth in Article III herein, the Stockholder hereby represents and warrants
to Taurus as follows:
Section 4.1 Organization and Capitalization. Bluestar is a corporation
-------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Texas, with full power and authority and all necessary governmental and
regulatory licenses, permits and authorizations to carry on the businesses in
which it is engaged, to own the properties that it owns currently and will own
at the Closing. Bluestar is qualified as a foreign corporation and is in good
standing in each jurisdiction in which the failure to qualify would have a
material adverse effect on the business, properties or condition (financial or
otherwise) of Bluestar. Bluestar does not have any subsidiaries or any other
investments or ownership interest in any corporation, partnership, joint venture
or other business enterprise. The authorized capital stock of Bluestar consists
of 20,000,000 shares of common stock, $.001 par value, of which 9,650,000 shares
are validly issued and outstanding. All of such issued and outstanding shares
of Bluestar Stock have been duly authorized and validly issued and are fully
paid and non-assessable. None of the shares were issued in violation of any
preemptive rights. There are no existing warrants, options, rights of first
refusal, conversion rights, calls, commitments or other agreements of any
character pursuant to which Bluestar is or may become obligated to issue any of
its stock or securities. Bluestar has no obligation to repurchase, reacquire or
redeem any of its outstanding capital stock.
Section 4.2 Financial Information. Bluestar has delivered its most
----------------------
current financial information to Taurus. Such financial information are in
accordance with the books and records of Bluestar and fairly present the
financial condition of Bluestar. Except as, and to the extent reflected or
reserved against in the financial information, Bluestar, as of the date of the
financial information, has no material liability or obligation of any nature,
whether absolute, accrued, continued or otherwise, not fully reflected or
reserved against in the financial information. As of the Closing Date, there
will not have been any adverse change in the financial condition or other
operations, business, properties or assets of Bluestar other than liabilities
incurred in the ordinary course of business in which, in the aggregate, are not
in excess of $100,000 from that reflected in the latest financial information
Bluestar furnished to Taurus pursuant hereto.
Section 4.3 Litigation. There are no actions, suits or proceedings,
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formal or informal, pending or, to the best knowledge of the Stockholder's
threatened against Bluestar, nor is Bluestar subject to any order, judgment or
decree, except in all cases, whether known or unknown, for matters which, in the
aggregate, would not result in a loss to Bluestar in excess of $100,000.
Section 4.4 Taxes. Bluestar has filed all federal, state, county, city
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and all other local income tax returns and property tax bills and reports due or
required to be filed, and has paid all
5
taxes, interest payments and penalties, if any, required to be paid with respect
thereto. Bluestar has made adequate provision for the payment of all taxes
accruable for all periods ending on or before the Closing Date to any taxing
authority and is not delinquent in the payment of any material tax or
governmental charge of any nature.
Section 4.5 Compliance with Laws. Bluestar is, and at all times prior
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to the date hereof has been, to the best of the Stockholder's knowledge, in
compliance with all statutes, orders, rules, and regulations applicable to it or
to the ownership of its assets or the operation of its business, except for
failures to be in compliance that would not have a material adverse effect on
the business, properties, condition (financial or otherwise) or prospects of
Bluestar, and Bluestar has no basis to expect to receive, and has not received,
any order or notice of any such violation or claim of violation of any such
statute, order, rule, ordinance or regulation.
Section 4.6 Books and Records. The books of account, minute books,
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stock record books and other records of Bluestar, all of which have been made
available to Taurus, are accurate and complete in all material respects and have
been maintained in accordance with sound business practices.
Section 4.7 Title to Properties; Encumbrances. Bluestar has good title
---------------------------------
to all of its properties and assets, real and personal, tangible and intangible,
that are material to the condition (financial or otherwise), business,
operations or prospects of Bluestar, free and clear of all mortgages, claims,
liens, security interests, charges, leases, encumbrances and other restrictions
of any kind and nature, except (i) as disclosed in the financial information of
Bluestar, (ii) statutory liens not yet delinquent, and (iii) such liens
consisting of zoning or planning restrictions, imperfections of title,
easements, pledges, charges and encumbrances, if any, as do not materially
detract from the value or materially interfere with the present use of the
property or assets subject thereto or affected thereby.
Section 4.8 Disclosure. To the best of the Stockholder's knowledge, no
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representation or warranty of the Stockholder contained in this Agreement
(including the exhibits and schedules hereto) contains any untrue statement or
omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
Section 4.9 Insurance. Bluestar maintains adequate insurance with
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respect to their respective businesses and are in compliance with all material
requirements and provisions thereof.
Section 4.10 Material Agreements; Action. There are no material
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contracts, agreements, commitments, understandings or proposed transactions,
whether written or oral, to which Bluestar is a party or by which it is bound
that involve or relate to: (i) any of their respective officers, directors,
stockholders or partners or any Affiliate thereof; (ii) the sale of any of the
assets of Bluestar other than in the ordinary course of business; (iii)
covenants of Bluestar not to compete in any line of business or with any person
in any geographical area or covenants of any other person not to compete with
Bluestar in any line of business or in any geographical area; (iv) the
acquisition by Bluestar of
6
any operating business or the capital stock of any other Person; (v) the
borrowing of money or (vi) the expenditure of more than $100,000 in the
aggregate or the performance by Bluestar extending for a period more than one
year from the date hereof, other than in the ordinary course of business.
Section 4.11 Employee Benefit Plans. Bluestar is not a party to any
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employee benefit plan.
Section 4.12 No Pending Transactions. Except for the transactions
-------------------------
contemplated by this Agreement, Bluestar is not a party to or bound by or the
subject of any agreement, undertaking, commitment or discussions or negotiations
with any person that could result in (i) the sale, merger, consolidation or
recapitalization of Bluestar, (ii) the sale of all or substantially all of the
assets of Bluestar, or (iii) a change of control of more than five percent of
the outstanding capital stock of Bluestar.
Section 4.13 No Undisclosed Liabilities. To the best of the
----------------------------
Stockholder's knowledge, Bluestar has no obligation or liability (contingent or
otherwise) that would be required to be reflected in the financial information
of Bluestar in accordance with GAAP except as is reflected in Bluestar's
financial information as given to Taurus.
Section 4.14 Indemnification by the Stockholder. The Stockholder
--------------------------------------
agrees and recognizes that the Exchange being conducted with Taurus is based, to
a material degree, upon the representations and warranties of the Stockholder as
set forth and contained herein and the Stockholder hereby agrees to indemnify
and hold harmless Taurus against all damages, costs, or expenses (including
reasonable attorney's fees) arising as a result of any breach of representation
or warranty or omission made herein by the Stockholder.
If any action is brought against Taurus in respect of which indemnity may
be sought against the Stockholder pursuant to the foregoing paragraph, Taurus
shall promptly notify the Stockholder in writing of the institution of such
action (but the omission to so notify the Stockholder shall not relieve it from
any liability that it may have to Taurus except to the extent the Stockholder is
materially prejudiced or otherwise forfeit substantive rights or defenses by
reason of such failure), and the Stockholder shall assume the defense of such
action, including the employment of counsel to be chosen by the Stockholder to
be reasonably satisfactory to Taurus, and payment of expenses. Taurus shall have
the right to employ the Stockholder or their own counsel in any such case, but
the fees and expenses of such counsel shall be at Taurus expense, unless the
employment of such counsel shall have been authorized in writing by the
Stockholder in connection with the defense of such action, or the Stockholder
shall not have employed counsel to take charge of the defense of such action, or
counsel employed by the Stockholder shall not be diligently defending such
action, or Taurus shall have reasonably concluded that there may be defenses
available to it which are different from or additional to those available to the
Stockholder, or that representation of Taurus by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them (in which case the Stockholder
shall not have the right to direct the defense of such action on behalf of
Taurus), in any of which event such fees and expenses shall be borne by the
Stockholder. Anything in this paragraph to the contrary notwithstanding, the
Stockholder shall not be liable for any settlement of, or any expenses incurred
with respect to, any
7
such claim or action effected without the Stockholder's written consent, which
consent shall not be unreasonably withheld. The Stockholder shall not, without
the prior written consent of Taurus effect any settlement of any proceeding in
respect of which Taurus is a party and indemnity has been sought hereunder
unless such settlement includes an unconditional release of Taurus from all
liability on claims that are the subject matter of such proceeding.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TAURUS
Taurus hereby represents and warrant to the Stockholder as follows:
Section 5.1 Organization and Capitalization. Taurus is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Colorado, with full power and authority and all necessary governmental
and regulatory licenses, permits and authorizations to carry on the businesses
in which it is engaged, to own the properties that it owns currently and will
own at the Closing, and to perform its obligations under this Agreement. Taurus
is qualified as a foreign corporation and is in good standing in each
jurisdiction in which the failure to qualify would have a material adverse
effect on the business, properties or condition (financial or otherwise) of
Taurus. Taurus does not have any subsidiaries or any other investments or
ownership interest in any corporation, partnership, joint venture or other
business enterprise, except as set forth in Exhibit 5.2. Immediately prior to
the Closing Date the authorized capital stock of Taurus consists of (i)
20,000,000 shares of common stock, $.01 par value of which 4,002,006 shares are
validly issued and outstanding, and (ii) 10,000,000 shares of preferred stock
$.001 par value, none of which are issued and outstanding. All of such issued
and outstanding shares of Taurus Stock have been and all of the shares of Taurus
Stock to be issued hereby will be, at the Closing, duly authorized and validly
issued and are and will be at the Closing fully paid and non-assessable. None
of the shares that were issued and none of the shares to be issued hereby will
be in violation of any preemptive rights. Taurus has no obligation to
repurchase, reacquire or redeem any of its outstanding capital stock.
Section 5.2 Subsidiaries. Schedule 5.2 sets forth a complete and
------------
accurate list of all Subsidiaries of Taurus. All of the outstanding capital
stock of, or other ownership interests in, each Subsidiary is owned by Taurus,
directly or indirectly, free and clear of any lien or any other limitation or
limitation or restriction (including restrictions on the right to vote). All
outstanding shares of the capital stock of any Subsidiary have been duly
authorized and validly issued and are fully paid and non-assessable and are free
of any preemptive rights. There are no outstanding securities of any Subsidiary
convertible into or evidencing the right to purchase or subscribe for any shares
of capital stock of any Subsidiary, there are no outstanding or authorized
options, warrants, calls, subscriptions, rights, commitments or any other
agreements of any character obligating any Subsidiary to issue any shares of its
capital stock or any securities convertible into or evidencing the right to
purchase or subscribe for any shares of such stock, and there are no agreements
or understandings with respect to the voting, sale, transfer or registration of
any shares of capital stock of any Subsidiary.
8
Section 5.3 Authorization. All corporate action on the part of Taurus
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necessary for the authorization, execution, delivery and performance of this
Agreement by Taurus has been taken or will be taken prior to the Closing.
Taurus has the requisite corporate power and authority to execute, deliver and
perform this Agreement. This Agreement has been duly executed and delivered by
Taurus, and constitutes a valid and binding obligation of Taurus, enforceable
against Taurus in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
Section 5.4 Litigation. Except as set forth in Exhibit 5.4, there are
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no claims, actions, suits or proceedings, formal or informal, pending or, to the
best knowledge of Taurus, threatened against Taurus, nor is Taurus subject to
any order, judgment or decree, except in either case for matters which, in the
aggregate, would not result in a loss to Taurus in excess of $100,000.
Section 5.5 SEC Reports. During the last twelve months, Taurus has
------------
filed with the SEC all of the reports required to be filed with the SEC pursuant
to Section 15(d) of the Securities Exchange Act of 1934, as amended, through the
filing of its Form 10-KSB for the fiscal year ended September 30, 2002, which
the Stockholders acknowledge receipt thereof. To the best of Taurus knowledge,
as of their respective dates, the SEC Filings did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 5.6 Taxes. Taurus has filed all federal, state or local tax
-----
returns and reports due or required to be filed and has paid all taxes, interest
payments and penalties, if any, required to be paid with respect thereto, and
has made adequate provision for the payment of all taxes accruable for all
periods ending on or before the Closing Date to any taxing authority and is not
delinquent in the payment of any material tax or governmental charge of any
nature.
Section 5.7 Financial Information. Taurus has delivered to the s the
---------------------
audited balance sheet of Taurus as of September 30, 2002, together with the
related statements of income, changes in shareholder's equity and cash flow for
the years then ended, including the related notes, all certified by Xxxxxxx
Xxxx, P.C., certified public accountants ( the "Financial Statements). Such
Financial Statements, including the related notes, are in accordance with the
books and records of Taurus and fairly present the financial position of Taurus
and the results of operations and changes in financial position of Taurus as of
the dates and for the periods indicated, in each case in conformity with
generally accepted accounting principles applied on a consistent basis. Except
as, and to the extent reflected or reserved against in the Financial Statements,
Taurus as of the date of the financial statements has no material liability or
obligation of any nature, whether absolute, accrued, continued or otherwise, not
fully reflected or reserved against in the Financial Statements. As of the
Closing Date, there will not have been any adverse change in the financial
condition or other operations, business, properties or assets of Taurus in
excess of $100,000 from that reflected in the latest financial statements of
Taurus furnished to the Stockholder pursuant hereto.
Section 5.8 Compliance with Laws. Taurus is, and at all times prior to
--------------------
the date hereof has been, to the best of its knowledge, in compliance with all
statutes, orders, rules, ordinances and
9
regulations applicable to it or to the ownership of its assets or the operation
of its businesses, except for failures to be in compliance that would not have a
material adverse effect on the business, properties, condition (financial or
otherwise) or prospects of Taurus and Taurus has no basis to expect, nor has
received, any order or notice of any such violation or claim of violation of any
such statute, order, rule, ordinance or regulation.
Section 5.9 Title to Properties; Encumbrances. Taurus has good and
------------------------------------
marketable title to all of its properties and assets, real and personal,
tangible and intangible, that are material to the condition (financial or
otherwise), business, operations or prospects of Taurus, free and clear of all
mortgages, claims, liens, security interests, charges, leases, encumbrances and
other restrictions of any kind and nature, except (i) as disclosed in the
Financial Statements of Taurus, (ii) statutory liens not yet delinquent, and
(iii) such liens consisting of zoning or planning restrictions, imperfections of
title, easements, pledges, charges and encumbrances, if any, as do not
materially detract from the value or materially interfere with the present use
of the property or assets subject thereto or affected thereby.
Section 5.10 Disclosure. To the best of Taurus knowledge, no
----------
representation or warranty of Taurus contained in this Agreement (including the
exhibits and schedules hereto) contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
Section 5.11 No Default. The execution, delivery and performance of
-----------
this Agreement by Taurus does not and will not constitute a violation or default
under or conflict with any contract, agreement, understanding or commitment to
which it is a party or by which it is bound or the Certificate of Incorporation
or Bylaws of Taurus or any statute, regulation, law, ordinance, judgment,
decree, writ, injunction, order or ruling of any government entity.
Section 5.12 Pending Claims. There is no claim, suit, action or
---------------
proceeding, whether judicial, administrative or otherwise, pending or, to the
best of Taurus's knowledge, threatened that would preclude or restrict the
transfer to the s of the Taurus Stock or the performance of this Agreement by
Taurus.
Section 5.13 Insurance. Taurus and its Subsidiaries maintain adequate
---------
insurance with respect to their respective businesses and are in compliance with
all material requirements and provisions thereof.
Section 5.14 Employee Benefit Plans. Taurus is not a party to any
------------------------
employee benefit plan.
Section 5.15 No Pending Transactions. Except for the transactions
-------------------------
contemplated by this Agreement, neither Taurus nor any Subsidiary is a party to
or bound by or the subject of any agreement, undertaking, commitment or
discussions or negotiations with any person that could result in (i) the sale,
merger, consolidation or recapitalization of Taurus or any Subsidiary, (ii) the
sale of
10
all or substantially all of the assets of Taurus or any Subsidiary, or (iii) a
change of control of more than five percent of the outstanding capital stock of
Taurus or any Subsidiary.
Section 5.16 No Undisclosed Liabilities. to the best of its knowledge,
--------------------------
neither Taurus nor or any Subsidiary has any obligation or liability (contingent
or otherwise) that would be required to be reflected in the financial statements
of the Company in accordance with GAAP except as reflected in Taurus Balance
Sheet.
Section 5.17 Indemnification by Taurus Taurus recognizes that the
---------------------------
Exchange being conducted with the Stockholder is based, to a material degree,
upon the representations and warranties of Taurus as set forth and contained
herein and Taurus hereby agrees to indemnify and hold harmless the Stockholder
against all damages, costs, or expenses (including reasonable attorney's fees)
arising as a result of any breach of representation or warranty or omission made
herein by Taurus.
If any action is brought against Taurus, the Stockholder ( the "Indemnified
Parties") in respect of which indemnity may be sought against Taurus pursuant to
the foregoing paragraph, the Indemnified Parties shall promptly notify Taurus in
writing of the institution of such action (but the omission to so notify Taurus
shall not relieve it from any liability that it may have to such Indemnified
Parties except to the extent Taurus is materially prejudiced or otherwise
forfeits substantive rights or defenses by reason of such failure), and Taurus
shall assume the defense of such action, including the employment of counsel to
be chosen by Taurus to be reasonably satisfactory to the Indemnified Parties,
and payment of expenses. The Indemnified Parties shall have the right to employ
Taurus or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the Indemnified Party's expense, unless the employment of
such counsel shall have been authorized in writing by Taurus in connection with
the defense of such action, or Taurus shall not have employed counsel to take
charge of the defense of such action, or counsel employed by Taurus shall not be
diligently defending such action, or the Indemnified Parties shall have
reasonably concluded that there may be defenses available to it which are
different from or additional to those available to Taurus, or that
representation of such Indemnified Party and Taurus by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them (in which case Taurus shall not
have the right to direct the defense of such action on behalf of the Indemnified
Parties), in any of which event such fees and expenses shall been borne by
Taurus. Anything in this paragraph to the contrary notwithstanding, Taurus
shall not be liable for any settlement of, or any expenses incurred with respect
to, any such claim or action effected without Taurus written consent, which
consent shall not be unreasonably withheld. Taurus shall not, without the prior
written consent of the Indemnified Parties effect any settlement of any
proceeding in respect of which any Indemnified Parties is a party and indemnity
has been sought hereunder unless such settlement includes an unconditional
release of such Indemnified Parties from all liability on claims that are the
subject matter of such proceeding.
Section 5.18 No Brokerage Commission. No broker or finder has acted
-------------------------
for Taurus in connection with this Agreement or the transactions contemplated
hereby, and no person is entitled to any brokerage or finder's fee or
compensation in respect thereof based in any way on agreements,
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arrangements or understandings made by or on behalf of Taurus.
ARTICLE VI
CLOSING; DELIVERY
Section 6.1(a) Closing Documents of the Stockholder. The obligations
-------------------------------------
of Taurus to effect the transactions contemplated hereby are subject to the
delivery by the Stockholder at Closing of each of the following documents:
(i) The Stockholder shall have delivered certificates evidencing their
Bluestar Common Stock duly endorsed for transfer by the Stockholder to
Taurus as contemplated by this Agreement.
Section 6.1(b) Closing Documents of Taurus. The obligations of the
------------------------------
Stockholder to effect the transactions contemplated hereby are subject to Taurus
delivering either: (i) certificates evidencing Taurus Common Stock, duly
executed for issuance by Taurus to the Stockholder as contemplated by this
Agreement or (ii) letters of instructions from a duly authorized officer of
Taurus to Taurus's transfer agent, instructing the transfer agent to duly issue
stock certificates evidencing the shares of Common Stock of Taurus to the
Stockholders, all as contemplated by this Agreement, in form and substance
satisfactory to counsel for the Stockholder.
Section 6.1 (c) Conditions to the Obligations of Taurus and the
-----------------------------------------------------
Stockholder. The obligations of Taurus and the Stockholder to effect the
-----------
transactions contemplated hereby are further subject to the following condition:
(i) The Board of Directors of Taurus shall have approved and authorized
the transactions contemplated herein.
(ii) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced or
threatened, and no investigation by any governmental or regulatory
authority shall have been commenced or threatened, seeking to
restrain, prevent or challenge the transactions contemplated hereby or
seeking judgments against Bluestar, Taurus or the Stockholders.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. All notices and other communications provided
-------
for herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, or overnight air courier guaranteeing next day
delivery:
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(a) If to Taurus:
Taurus Entertainment Companies, Inc.
000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
(b) If to the Stockholder, to:
The addresses listed on Exhibit "A", attached hereto.
All notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; three days after being
deposited in the mail, postage prepaid, sent certified mail, return receipt
requested, if mailed; and the next day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
Section 7.2 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, which consent will not
be unreasonably withheld. This Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective heirs,
personal representatives, successors and assigns.
Section 7.3 Counterparts and Facsimiles. This Agreement may be
-----------------------------
executed in multiple counterparts and in any number of counterparts, each of
which shall be deemed an original but all of which taken together shall
constitute and be deemed to be one and the same instrument and each of which
shall be considered and deemed an original for all purposes. This Agreement
shall be effective with the facsimile signature of any of the parties set forth
below and the facsimile signature shall be deemed as an original signature for
all purposes and the Agreement shall be deemed as an original for all purposes.
Section 7.4 Section Headings. The section headings contained in this
-----------------
Agreement are for convenient reference only and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 7.5 Entire Agreement. This Agreement, the documents to be
-----------------
executed hereunder and the exhibits and schedules attached hereto constitute the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties pertaining to the subject
matter hereof, and there are no warranties, representations or other agreements
among the parties in connection with the subject matter hereof except as
specifically set forth herein or in documents delivered pursuant hereto. No
supplement, amendment, alteration, modification, waiver or
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termination of this Agreement shall be binding unless executed in writing by the
parties hereto. All of the exhibits and schedules referred to in this Agreement
are hereby incorporated into this Agreement by reference and constitute a part
of this Agreement.
Section 7.6 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
Section 7.7 Survival. The respective representations, warranties,
--------
covenants and agreements set forth in this Agreement shall survive the Closing
for a period of one year from the execution hereof.
Section 7.8 Public Announcements. The parties hereto agree that prior
--------------------
to making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other parties hereto and
exercise their best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by all of such parties or (ii) obtain
approval of the other parties hereto to the text of a public announcement or
statement to be made solely by the party desiring to make such public
announcement; provided, however, that if any party hereto is required by law to
make such public announcement or statement, then such announcement or statement
may be made without the approval of the other parties.
Section 7.9 Gender. All personal pronouns used in this Agreement shall
------
include the other genders, whether used in the masculine, feminine or neuter
gender, and the singular shall include the plural, and vice versa, whenever
appropriate.
Section 7.10 Choice of Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of Texas, without regard to
principles of conflict of laws.
Section 7.11 Costs and Expenses. Taurus and the Stockholder shall each
------------------
pay their own respective fees and disbursements incurred in connection with this
Agreement.
[[[SIGNATURES ON FOLLOWING PAGE]]]
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed effective as of the day and year first above written.
TAURUS ENTERTAINMENT COMPANIES, INC.
By: /s/ Xxxx Xxxxxx
---------------------------------
Xxxx Xxxxxx, President
STOCKHOLDER:
/s/ Xxxxxx Xxxxxxx
-----------------------------------
(Signature)
Xxxxxx Xxxxxxx
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Exhibit "A"
Number of Shares of Bluestar Number of Shares of Taurus
Stockholder Name to Deliver to Taurus to Deliver to Stockholder
Xxxxxx Xxxxxxx 9,650,000 9,650,000
Address:
00000 Xxxxxxxxx Xxxxxxx
Xxxxx Xxxx, Xxxxx 00000
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