Exhibit 10.1.
STOCK SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made this 14th day of March 2007, by and among Xxxxx
Xxxxxxxx ("Seller"), an individual, MOTORSPORTS EMPORIUM, INC. ("Company"), a
Nevada corporation, and Xxxxxxx Xxxxx, ("Purchaser"), an individual.
WHEREAS, the Seller desires to sell to the Purchaser 200,000 shares of the
Series C Preferred Stock of the Company, with a par value of $0.001 per share,
representing all the issued and outstanding Series C Preferred Stock of the
Company ("Stock" or "Company Stock").
WHEREAS, the Purchaser desires to purchase the Stock as hereinafter
provided; and
WHEREAS, the Purchaser desires to reduce a substantial amount of the
Company's indebtedness in order to improve the Company's balance sheet and
financial position in order to benefit the Company's shareholders and the
Purchaser desires to assist the Company in reducing its indebtedness;
NOW, THEREFORE, in consideration of the foregoing and the following mutual
covenants and agreements, the parties hereto agree as follows:
PURCHASE OF STOCK. At the signing of this Agreement ("Closing"), upon the
basis of the covenants, warranties and representations of the Purchaser set
forth in this Agreement, the Seller will sell, transfer, assign, and deliver to
the Purchaser 200,000 shares of Company Stock, represented by Certificate No.
C-001, by causing the Company to reissue such 200,000 shares of Company Stock in
a new Certificate No. C-002, clear of all liens, pledges, rights of third
parties and any other encumbrances, except as otherwise may be permitted
hereunder.
COMPENSATION; PAY-OFF OF INDEBTEDNESS. Purchaser agrees to the following:
PAYMENT OF $10,000.00 IN CASH TO SELLER; AND
PAYMENT OF ALL ITEMS LISTED IN THE COLUMN NAMED "NET BALANCE PAID IN CASH"
ON SCHEDULE A ATTACHED HEREIN AND THE ACCOMPANYING FOOTNOTES.
RESTRICTIVE LEGEND. All shares of the Stock to be delivered hereunder shall
bear a restrictive legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT."
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REPRESENTATIONS AND WARRANTIES OF THE SELLER. Where a representation
contained in this Agreement is qualified by the phrase "to the best of Seller's
knowledge" (or words of similar import), such expression means that, after
having conducted a due diligence review, the Seller believes the statement to be
true, accurate and complete in all material respects. Knowledge shall not be
imputed nor shall it include any matters which such person should have known or
should have been reasonably expected to have known. The Seller represents and
warrants to the Purchaser as follows:
POWER AND AUTHORITY. The Seller has full power and authority to execute,
deliver and perform and deliver this Agreement and all other agreements,
certificates or documents to be delivered in connection herewith, including,
without limitation, the other agreements, certificates and documents
contemplated hereby (collectively the "Other Agreements").
BINDING EFFECT. Upon execution and delivery by the Seller, this Agreement
shall be and constitute the valid, binding and legal obligations of the Seller,
enforceable against the Seller in accordance with the terms hereof and thereof,
except as the enforceability hereof or thereof may be subject to the effect of
(i) any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting creditors' rights generally, and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
EFFECT. Neither the execution and delivery of this Agreement nor full
performance by the Seller of its obligations hereunder or thereunder will
violate or breach, or otherwise constitute or give rise to a default under, the
terms or provisions of the Articles of Incorporation or Bylaws of the Company
or, of any contract, commitment or other obligation of the Company or the Seller
or necessary for the operation of the Company following the Closing or any other
contract, commitment or other obligation to which the Seller or the Company is a
party, or create or result in the creation of any encumbrance on any of the
property of the Company other than what is disclosed in Schedule A and the
accompanying footnotes. The Company is not in violation of its Articles of
Incorporation, as amended, its Bylaws, as amended, or of any indebtedness,
mortgage, contract, lease, or other agreement or commitment other than what is
disclosed in Schedule A and the accompanying footnotes.
NO CONSENTS. No consent, approval or authorization of, or registration,
declaration or filing with any third party, including, but not limited to, any
governmental department, agency, commission or other instrumentality, will,
except such consents, if any, delivered or obtained on or prior to the Closing,
be obtained or made by the Seller prior to the Closing to authorize the
execution, delivery and performance by the Seller of this Agreement or the Other
Agreements which are listed on Schedule A and the accompanying footnotes
STOCK OWNERSHIP OF THE SHARES TO BE SOLD BY THE SELLER. The Seller, who is
the only legal and beneficial owner of the Stock, has good, absolute and
marketable title to 200,000 shares of the Company Stock which constitute 100% of
the issued and outstanding shares of the Company Stock. The shares of the
Company Stock to be sold by the Seller hereunder constitute all of the shares of
the Company Stock of the Company owned by the Seller. The Seller has the
complete and unrestricted right, power and authority to cause the sale, transfer
and assignment of the Company Stock pursuant to this Agreement. The delivery of
the Company Stock to the Purchaser as herein contemplated will vest in the
Purchaser good, absolute and marketable title to the shares of the Company Stock
as described herein, free and clear of all liens, claims, encumbrances and
restrictions of every kind, except those restrictions imposed by applicable
securities laws. No one affiliated with the Seller or any of its officers,
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directors or principal stockholders owns any shares of the Company Stock, other
than the Company Stock owned by the Seller.
ORGANIZATION AND STANDING OF THE COMPANY. The Company is a duly organized
and validly existing Nevada corporation in good standing, with all requisite
corporate power and authority to carry on its business as presently conducted.
Purchaser agrees that Seller has provided a copy of Certificate of Existence
with Status in Good Standing as of January 31, 2007 prior to the signing of this
Agreement. Currently, the Company is registered to do business in Nevada and in
no other jurisdiction.
SUBSIDIARIES. The Company has the following subsidiaries; Scottsdale
Diecast, Inc., and Quadriga MotorSports, Inc. The Company also has the following
divisions; Pit Stop Studios and Drivers Digs. The Purchaser has received full
disclosure to include a copy of the Company's filed Definitive Schedule 14C
Information statement stipulating its plans to issue a stock dividend of the
Company's subsidiary, Scottsdale Diecast, Inc., to shareholders of the Company.
A turn of events has caused the Company to sell its web site XXX.XXXXXXXXX.XXX
and divest its interest in the die cast model car business. Quadriga MotorSports
is currently marketing a line of car care products, but generates very little
revenue for the Company. Both PitStop Studios and Drivers Digs generate
insignificant revenue and represent less than 1% of annual gross revenue to the
Company. Since the Company has deemed it imprudent to carry out the proposed
stock dividend of Scottsdale Diecast, Inc., the Company will notify Nasdaq that
it will not follow through on such dividend.
CAPITALIZATION AND OTHER OUTSTANDING SHARES. The Company is authorized by
its Articles of Incorporation to issue 500,000,000 shares of the Common Stock,
$.001 par value per share and 200,000 shares of Series C Preferred Stock. As of
the date of this Agreement, the Company has duly and validly issued and
outstanding, fully paid and non-assessable, 4,368,678 shares of the Common Stock
and 200,000 shares of the Series C Preferred Stock. The Company intends to file
a Form S-8 registration statement covering 1,000,000 shares of its common stock
for issuance under the Company's 2007 Employee and Consultant Stock Incentive
Plan ("New form S-8"). With the exception of what is disclosed in Schedule A and
the accompanying footnotes or pursuant to the New Form S-8, there are no
outstanding options, contracts, commitments, warrants, preemptive rights,
agreements or any rights of any character affecting or relating in any manner,
including without limitation, with respect to the voting, sale, transfer, rights
of first refusal, rights of first offer, proxy or registration or calls, demands
or commitments of any kind, to the issuance of any common or preferred stock of
the Company or other securities or entitling anyone to acquire the common or
preferred stock or other securities of the Company, whether directly or upon the
exercise or conversion of other securities with the exception of 96 preferred A
share that are convertible into 19,200 shares of the Company's common stock.
Additionally, Xxxxxx Xxxxx has a promissory note for a total of $5,500 that is
due on April 23, 2006. The Company can convert the debt into $10,000 of common
stock of the Company. Also, with the exception of what is disclosed in Schedule
A and the accompanying footnotes or pursuant to the New Form S-8, there are, and
at the Closing there will be, no outstanding contractual obligations of the
Seller or the Company to repurchase, redeem or otherwise acquire any shares of
their respective capital stock or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any other entity
or person. Upon Closing, the investors who have delivered the three Subscription
Agreements described in the Footnotes section of Schedule will have the right to
rescind their subscriptions and receive a full refund of their collective
$75,000 in subscription funds. The subscription agreements are signed by the
investors but not by the Company. There are no anti-dilution or price adjustment
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provisions contained in any security issued by the Company with the exception of
what is disclosed in Schedule A and the accompanying footnotes.
TAXES. All federal, state, local or foreign return, report, information
return or other document (including any related or supporting information) filed
or required to be filed with any governmental body in connection with the
determination, assessment or collection of any Taxes (as defined below) or the
administration of any laws, regulations or administrative requirements relating
to any returns that are or were required to be filed by the Company, pursuant to
the laws or administrative requirements of each governmental body with taxing
power over it or its assets have been duly filed as of the Closing with the
exception of the Company's 2006 Federal and State returns that will be filed
upon the completion of the Company's 2006 audited financials. "Taxes" means all
taxes, charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property but not estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, together with any interest
and any penalties, fines, additions to tax or additional amounts imposed by any
governmental body and shall include any transferee liability in respect of
Taxes. As of the Closing there is no audit, action, suit, claim, proceeding or
any investigation or inquiry, whether formal or informal, public or private, now
pending or threatened against or with respect to the Company in respect of any
Tax that the Company has been made aware. As of the Closing there exists no tax
assessment, proposed or otherwise, against the Company or any lien for Taxes
against any assets or property of the Company. All Taxes that the Company is or
was required to withhold or collect have been duly withheld or collected as of
Closing and, to the extent required, have been paid to the proper governmental
body. The Company is not a party to, bound by or subject to any obligation under
any tax sharing, tax indemnity, tax allocation or similar agreement. The Seller
is unaware of any claim, audit, action, suit, proceeding or investigation with
respect to Taxes due or claimed to be due from the Company or of any Tax Return
filed or required to be filed by the Company pending or threatened against or
with respect to the Seller or the Company as of the Closing with the exception
of the Company's 2006 Federal and State taxes that will be filled upon
completion of the Company's 2006 audited financials.
LITIGATION. Except as set forth in Schedule A, there is no action, suit,
hearing, inquiry, review, proceeding or investigation by or before any court or
governmental body pending, or threatened against or involving the Company, its
affiliates or the Seller or with respect to the activities of any employee or
agent of the Company. Except as set forth in Schedule A, neither the Seller nor
the Company has received any notice of any event or occurrence which could
result in any such action, suit, hearing, inquiry, review, proceeding or
investigation.
RECORDS. As of March 14, 2007, the books of account and minute books of the
Company are complete and correct to the best of Seller's and Company's
knowledge, and reflect all those transactions involving the Company's business,
which properly should have been set forth in such books.
INTERNAL ACCOUNTING CONTROLS. The Company maintains a system of internal
accounting controls sufficient, in the judgment of the Company's board of
directors, to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
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accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. To the best of the Seller's knowledge, the books of account,
corporate records and minute books of the Company are complete and correct in
all material respects from September 30, 2004 to present.
STOCK ISSUANCES. AS OF SEPTEMBER 30, 2004. Since September 30, 2004, all
issuances by the Company of its stock have been legally and validly effected.
All of the offerings were conducted in strict accordance and in full compliance
with the requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, as applicable, and in full
compliance with and according to the requirements of state law and the Articles
of Incorporation and By-laws of the company.
ANTI-TAKEOVER PLAN; STATE TAKEOVER STATUTES. Other than what is set forth
and disclosed in Schedule A and the accompanying footnotes, neither the Company
nor any of its subsidiaries has in effect any plan, scheme, device or
arrangement, commonly or colloquially known as a "poison pill" or
"anti-takeover" plan or similar plan, scheme, device or arrangement. No other
state takeover statute or similar statute or regulation applies or purports to
apply to this agreement or the transactions contemplated hereby.
THE SELLER'S REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE. To the best
of the Seller's knowledge, in all material respects as of the Closing.
representations and warranties of the Seller in this Agreement are true,
accurate and complete,
NO KNOWLEDGE OF THE PURCHASER'S DEFAULT. Except for what is set forth in
Schedule A and the accompanying footnotes, the Seller has no knowledge that any
of the Purchaser's representations and warranties contained in this Agreement or
the Other Agreements are untrue, inaccurate or incomplete or that the Purchaser
is in default under any term or provision of this Agreement or the Other
Agreements.
NO UNTRUE STATEMENTS. No representation or warranty by the Seller in this
Agreement or in any writing furnished or to be furnished pursuant hereto,
contains or will contain any untrue statement of a material fact, or omits, or
will omit to state any material fact required to make the statements herein or
therein contained not misleading.
RELIANCE. The foregoing representations and warranties are made by the
Seller with the knowledge and expectation that the Purchaser is placing complete
reliance thereon.
ISSUANCES OF SECURITIES. Other than what the Company is contractually
obligated to perform under the disclosure(s) set forth in Schedule A and the
accompanying footnotes and in the New form S-8, the Company will not issue any
shares of its capital stock, issue or create any warrants, obligations,
subscriptions, options, convertible securities, or other commitments under which
any additional shares of its capital stock of any class might be directly or
indirectly authorized, issued, or transferred from treasury, or agree to do any
of the acts listed above
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Where a representation
contained in this Agreement is qualified by the phrase "to the best of the
Purchaser's knowledge" (or words of similar import), such expression means that,
after having conducted a due diligence review, the Purchaser believes the
statement to be true, accurate, and complete in all material respects. Knowledge
shall not be imputed nor shall it include any matters which such person should
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have known or should have been reasonably expected to have known. The Purchaser
hereby represents and warrants to the Seller as follows:
POWER AND AUTHORITY. The Purchaser has full power and authority to execute,
deliver and perform this Agreement and the Other Agreements.
BINDING EFFECT. Only upon payment in full and satisfaction of all items
listed in the column named "Net Balance Paid In Cash" on Schedule A and the
footnotes attached herein, the execution and delivery by the Purchaser, this
Agreement shall be and constitute the valid, binding and legal obligations of
the Purchaser enforceable against the Purchaser in accordance with the terms
hereof or thereof, except as the enforceability hereof and thereof may be
subject to the effect of (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally, and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
NO CONSENTS. No consent, approval or authorization of, or registration,
declaration or filing with any third party, including, but not limited to, any
governmental department, agency, commission or other instrumentality, will,
except such consents, if any, delivered or obtained on or prior to the Closing,
be obtained or made by the Purchaser prior to the Closing to authorize the
execution, delivery and performance by the Purchaser of this Agreement or the
Other Agreements.
THE PURCHASER'S REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE. All
representations and warranties of the Purchaser in this Agreement are true,
accurate and complete in all material respects as of the Closing.
NO KNOWLEDGE OF THE SELLER'S DEFAULT. Except what is set forth in Schedule
A and the accompanying footnotes the Purchaser has no further knowledge that any
of the Seller's representations and warranties contained in this Agreement are
untrue, inaccurate or incomplete in any respect or that the Seller is in default
under any term or provision of this Agreement..
NO UNTRUE STATEMENTS. No representation or warranty by the Purchaser in
this Agreement or in any writing furnished or to be furnished pursuant hereto,
contains or will contain any untrue statement of a material fact, or omits, or
will omit to state any material fact required to make the statements herein or
therein contained not misleading.
RECEIPT AND REVIEW OF DUE DILIGENCE MATERIALS. The Purchaser hereby
acknowledges, represents and warrants that the Purchaser has received and
reviewed all Form 8-Ks, Form 10-QSBs, Form 10-KSBs, Form S-8s and Schedule 14Cs
filed by the Company during the past three (3) years, as well as all Forms 3, 4
and 5 and Schedule 13Ds filed by the Company's officers, directors, affiliates
and major shareholders during the past three (3) years. The Purchaser has been
given unfettered access to the management, assets, liabilities, books of
account, stock transfer records of the Company and has received satisfactory
answers to any and all questions the Purchaser has asked or inquired about
during the course of conducting the Purchaser's due diligence with respect to
this transaction.
RELIANCE. The foregoing representations and warranties are made by the
Purchaser with the knowledge and expectation that the Seller is placing complete
reliance thereon.
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CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER. All obligations of
the Purchaser under this Agreement are subject to the fulfillment, prior to or
at the Closing, of the following conditions:
REPRESENTATIONS AND WARRANTIES TRUE AT THE CLOSING. The representations and
warranties of the Purchaser herein shall be deemed to have been made again as of
the Closing, and then be true and correct, subject to any changes contemplated
by this Agreement. The Purchaser shall have performed all of the obligations to
be performed by it hereunder on or prior to the Closing.
DELIVERIES AT THE CLOSING. The Purchaser shall have delivered to the Seller
at the Closing all checks backed by good funds required for full satisfaction
and payment of all items listed in the column named "Net Balance Paid In Cash"
on Schedule A and the accompanying footnotes .
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER. All obligations of the
Seller under this Agreement are subject to the fulfillment, prior to or at the
Closing, of the following conditions:
CORPORATE RECORDS, ETC. The Seller has provided Purchaser with copies of
all contracts and agreements as set forth in Schedule A and the footnotes
attached, a copy of the Articles of Incorporation, Bylaws, minute books, and
other corporate governance that have been in the Seller's possession since
September 30, 2004, and such documents will be turned over to Purchaser at the
Closing.
REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations and
warranties of the Seller herein shall be deemed to have been made again at the
Closing, and then be true and correct, subject to any changes contemplated by
this Agreement. The Seller shall have performed all of the obligations to be
performed by it hereunder on or prior to the Closing.
PAYMENT OF THE PURCHASE PRICE. At or before Closing, the Purchaser shall
deliver checks backed by good funds to fully pay and satisfy all items listed in
the column named "Net Balance Paid In Cash" on Schedule A and the accompanying
footnotes attached thereto. Funds shall be valid and in good delivery no later
than two business days from Closing at which time Certificate No. C- 002 shall
be delivered to Purchaser or Purchaser's representative.
EVIDENCE OF SATISFACTION. Purchaser shall deliver good deliverable funds at
Closing, to satisfy the payment in full of all items listed on the spreadsheet
in the column named "Net Balance Paid In Cash" on Schedule A and the
accompanying footnotes. Also, Purchaser shall pay cash or issue shares of
registered common shares to Seller commencing on or before July 31, 2007
continuing for six (6) months in six equal payments of $7,250 as set forth on
Schedule A and the footnotes attached hereto.
THE NATURE AND SURVIVAL OF REPRESENTATIONS, COVENANTS AND WARRANTIES. All
statements and facts contained in any memorandum, certificate, instrument or
other document delivered by or on behalf of the parties hereto for information
or reliance pursuant to this Agreement, shall be deemed representations,
covenants and warranties by the parties hereto under this Agreement. All
representations, covenants and warranties of the parties shall survive the
Closing and all inspections, examinations or audits on behalf of the parties,
shall expire one year following the Closing.
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INDEMNIFICATION.
Indemnification by Seller. The Seller agrees to indemnify and hold harmless
the Purchaser and its affiliates against and in respect to all damages (as
hereinafter defined) up to the amount of the Purchase Price. Damages, as used
herein shall include any claim, salary, wage, action, tax, demand, loss, cost,
expense, liability (joint or several), penalty, and other damage, including,
without limitation, counsel fees and other costs and expenses reasonably
incurred in investigating or attempting to avoid same or in opposition to the
imposition thereof, or in enforcing this indemnity, resulting to the Purchaser
from any intentional inaccurate representation or omission made by or on behalf
of the Seller in or pursuant to this Agreement, breach of any of the warranties
made by or on behalf of the Seller in or pursuant to this Agreement, breach or
default in the performance by the Seller of any of the obligations to be
performed by it hereunder.
Notwithstanding the scope set forth in the attached Schedules A and the
accompanying footnotes, the Seller represents and warranties herein or of any
individual representation or warranty, or any disclosure to the Purchaser herein
or pursuant hereto, or the definition of damages contained in the preceding
sentence, or the Purchaser's knowledge of any fact or facts at or prior to the
Closing, damages shall also include all debts, liabilities, and obligations of
any nature that is not disclosed or set forth in Schedule A and the accompanying
footnotes as of the date hereof; all potential claims, actions, demands, losses,
costs, expenses, or liabilities resulting from any potential litigation from
causes of action arising prior to the Closing involving the Company has been
disclosed as set forth in Schedules A and the accompanying footnotes; all
potential claims, actions, demands, losses, costs, expenses, liabilities or
potential penalties resulting from (i) the Company's potential infringement or
potential claimed infringement upon or acting adversely to the rights or claimed
rights of any person under or in respect to any copyrights, trademarks,
trademark rights, patents, patent rights or patent licenses; or (ii) any
potential claim or potential pending or threatened action with respect to the
matters described in clause (i); all potential claims, actions, demands, losses,
costs, expenses, liabilities or potential penalties resulting from the Company's
failure in any respect to perform any obligation required by it to be performed
at or prior to the Closing, or by reason of any default of the Company, at the
Closing, under any of the contracts, agreements, leases, documents, or other
commitments to which it is a party or otherwise bound or affected; and all
losses, costs, and expenses (including without limitation all fees and
disbursements of counsel) relating to damages.
The Seller shall reimburse and/or pay on behalf of the Purchaser and/or the
Company on demand for any payment made or required to be made by the Purchaser
and/or the Company at any time after the Closing based upon the judgment of any
court of competent jurisdiction or pursuant to a bona fide compromise or
settlement of claims, demands or actions, in respect to the damages that were
not disclosed by the Seller as set forth in Schedules A and the accompanying
footnotes. The Purchaser shall give, or the Purchaser shall cause the Company to
give, the Seller written notice within 30 days after notification of any
litigation threatened or instituted against the Company which might constitute
the basis of a claim for indemnity by the Purchaser and/or the Company against
the Seller. Purchaser agrees that the maximum potential liability of the Seller
will be the value of the shares of registered common stock the Purchaser has
agreed to issue to the Seller on or before July 31, 2007 as it is set forth in
Schedule A and the accompanying footnotes. Seller shall not be liable for any
liabilities of or on behalf of the Purchaser or Company or its affiliates after
the Purchaser issues Seller registered common shares.
Notwithstanding anything contained in this Agreement to the contrary, the
right to indemnification described in this paragraph shall expire three (3)
months after the Closing.
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Indemnification by Purchaser. The Purchaser agrees to indemnify and hold
harmless the Seller, the Company and its affiliates against and in respect to
all damages (as hereinafter defined). Damages, as used herein shall include any
claim, salary, wage, action, tax, demand, loss, cost, expense, liability (joint
or several), penalty, and other damage, including, without limitation, counsel
fees and other costs and expenses reasonably incurred in investigating or
attempting to avoid same or in opposition to the imposition thereof, or in
enforcing this indemnity, resulting to the Seller or the Company from any
intentional inaccurate representation or omission made by or on behalf of the
Purchaser in or pursuant to this Agreement, breach of any of the warranties made
by or on behalf of the Purchaser in or pursuant to this Agreement, breach or
default in the performance by the Purchaser of any of the obligations to be
performed by it hereunder.
The Purchaser shall reimburse and/or pay on behalf of the Seller and/or the
Company on demand for any payment made or required to be made by the Seller
and/or the Company at any time after the Closing based upon the judgment of any
court of competent jurisdiction or pursuant to a bona fide compromise or
settlement of claims, demands or actions, in respect to the damages incurred by
the Seller and/or the Company resulting from any misrepresentation or omission
of Purchaser in or related to this Agreement or for non-performance by Purchaser
of any of its covenants, agreements or obligations under this Agreement. The
Seller and/or the Company shall give the Purchaser written notice within 30 days
after notification of any litigation threatened or instituted against the Seller
and/or the Company which might constitute the basis of a claim for indemnity by
the Seller and/or the Company against the Purchaser.
RECORDS OF THE COMPANY. For a period of five years following the Closing,
the books of account and records of the Company pertaining to all periods prior
to the Closing shall be available for inspection by the Seller for use in
connection with tax audits or any event that is deemed material by the Seller.
FURTHER CONVEYANCES AND ASSURANCES. After the Closing, the Seller and the
Purchaser will, without further cost or expense to, or consideration of any
nature from the other, execute and deliver, or cause to be executed and
delivered, to the other, such additional documentation and instruments of
transfer and conveyance, and will take such other and further actions, as the
other may reasonably request as more completely to sell, transfer and assign to
and fully vest in the Purchaser ownership of the Company Stock and to consummate
the transactions contemplated hereby.
CLOSING. The Closing of the sale and purchase contemplated hereunder shall
be on or before March___2007, subject to acceleration or postponement from time
to time as the Seller and the Purchaser may mutually agree.
DELIVERIES AT THE CLOSING BY THE SELLER. At the Closing, the Seller shall
deliver to the Purchaser:
Certificates representing 200,000 shares of the Company Stock, duly
endorsed by the Seller, free and clear of all liens, claims, encumbrances, and
restrictions of every kind except for the restrictive legend required by
Paragraph 3 hereof, it being understood by the parties that such certificates
shall not be deliverable to Purchaser until good funds have been received by the
Seller for the Company Stock and the liabilities set forth on Schedule A under
the column named "Net Balance Paid in Cash" and the attached footnotes have been
paid in full.
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Seller will submit a letter of resignation for his positions as CEO, CFO
and Director effective on or about April 2, 2007
Xxxxxx Xxxxxxxx will submit a letter of resignation for her positions of
secretary, COO and Director effective on or about April 2, 2007
DELIVERIES AT THE CLOSING BY THE PURCHASER. At the Closing, the Purchaser
shall deliver to the Seller the following:
Full payment and satisfaction of all items listed in the column named "Net
Balance Paid In Cash" on Schedule A and the accompanying footnotes attached
herein
Agreement that sets forth the payment of cash or issuance of registered
common stock to the Seller commencing on or before July 31, 2007 continuing for
six (6) months in six equal payments of $7,250.
Purchaser represents it is his intentions with the Company and
acknowledgment of the Company's debts and its continuing obligation to satisfy
the debts pursuant to Schedule A attached and the footnotes hereinto.
NO ASSIGNMENT. This Agreement shall not be assignable by any party without
the prior written consent of the other parties, which consent shall be subject
to such parties' sole, absolute and unfettered discretion.
BROKERAGE. The Seller and the Purchaser agree to indemnify and hold
harmless each other against, and in respect of, any claim for brokerage or other
commissions relative to this Agreement, or the transactions contemplated hereby,
based in any way on agreements, arrangements, understandings or contracts made
by either party with a third party or parties whatsoever.
MEDIATION AND ARBITRATION. All disputes arising or related to this
Agreement must exclusively be resolved first by mediation with a mediator
selected by the parties, with such mediation to be held in Scottsdale, Arizona.
If such mediation fails, then any such dispute shall be resolved by binding
arbitration under the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time the arbitration proceeding commences, except
that (a) Arizona law and the Federal Arbitration Act must govern construction
and effect, (b) the locale of any arbitration must be in Scottsdale, Arizona,
and (c) the arbitrator must with the award provide written findings of fact and
conclusions of law. Any party may seek from a court of competent jurisdiction
any provisional remedy that may be necessary to protect its rights or assets
pending the selection of the arbitrator or the arbitrator's determination of the
merits of the controversy. The exercise of such arbitration rights by any party
will not preclude the exercise of any self-help remedies (including without
limitation, setoff rights) or the exercise of any non-judicial foreclosure
rights. An arbitration award may be entered in any court having jurisdiction.
ATTORNEY'S FEES. In the event that it should become necessary for any party
entitled hereunder to bring suit against any other party to this Agreement for
enforcement of the covenants contained in this Agreement, the parties hereby
covenant and agree that the party or parties who are found to be in violation of
said covenants shall also be liable for all reasonable attorney's fees and costs
of court incurred by the other party or parties that bring suit.
10
BENEFIT. All the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by each of the parties
hereto, and his respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
NOTICES. All notices, requests, demands, and other communications hereunder
shall be in writing and delivered personally or sent by registered or certified
United States mail, return receipt requested with postage prepaid, or by
telecopy or e-mail, if to the Seller, addressed to 0000 X. Xxxxxxxx Xxxx Xxxxx
X, Xxxxxxxxxx, XX 00000 and if to the Purchaser, addressed to Xxxxxxx Xxxxx
00000 Xxxxxxxxx Xxxxxx, Xxxxx 000 Xxxx xx Xxxxxxxx, XX 00000. Any party hereto
may change its address upon 10 days' written notice to any other party hereto.
Purchaser shall deliver at Closing a $10,000 check made payable to Xxxxx
Xxxxxxxx with all funds to be satisfy listed in the column named "Net Balance
Paid In Cash" on Schedule A and the accompanying footnotes attached herein to be
deliver to the Company's bank account.
CONSTRUCTION. Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular number shall be
held to include the plural, and vice versa, unless the context requires
otherwise.
WAIVER. No course of dealing on the part of any party hereto or its agents,
or any failure or delay by any such party with respect to exercising any right,
power or privilege of such party under this Agreement or any instrument referred
to herein shall operate as a waiver thereof, and any single or partial exercise
of any such right, power or privilege shall not preclude any later exercise
thereof or any exercise of any other right, power or privilege hereunder or
thereunder.
CUMULATIVE RIGHTS. The rights and remedies of any party under this
Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
INVALIDITY. In the event any one or more of the provisions contained in
this Agreement or in any instrument referred to herein or executed in connection
herewith shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect the other provisions of this Agreement or any such other instrument.
INCORPORATION BY REFERENCE. The Attachments and Schedules to this Agreement
referred to or included herein constitute integral parts to this Agreement and
are incorporated into this Agreement by this reference.
CONTROLLING AGREEMENT. In the event of any conflict between the terms of
this Agreement or exhibits referred to herein, the terms of this Agreement shall
control.
LAW GOVERNING; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona without regard to
any conflicts of laws provisions thereof. Each party hereby irrevocably submits
to the personal jurisdiction of the United States District Court for Maricopa
County, Arizona, as well as of the Courts of the State of Arizona over any suit,
action or proceeding arising out of or relating to this Agreement. Each party
hereby irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
mediation, arbitration, suit, action or proceeding brought in any such county
11
and any claim that any such mediation, arbitration, suit, action or proceeding
brought in such county has been brought in an inconvenient forum.
MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
ENTIRE AGREEMENT. This instrument and the attachments hereto contain the
entire understanding of the parties and may not be changed orally, but only by
an instrument in writing signed by the party against whom enforcement of any
waiver, change, modification, extension, or discharge is sought.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, this Agreement has been executed on the date
first written above.
FOR: SELLER
By /s/ Xxxxx Xxxxxxxx
---------------------------------------------
Xxxxx Xxxxxxxx
FOR: PURCHASER
By /s/ Xxxxxxx Xxxxx
---------------------------------------------
Xxxxxxx Xxxxx
FOR: XXXXXX X. XXXXX NOTE HOLDER
Accepted and Authorized
By /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx
FOR IAC NOTE HOLDER
Accepted and Authorized
By /s/ Xxxxxx X Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx for IAC
FOR: MOTORSPORTS EMPORIUM, INC.
By /s/ Xxxxx Xxxxxxxx
---------------------------------------------
Xxxxx Xxxxxxxx
Its President, CEO, CFO and Director
12
MOTOR SPORTS EMPORIUM - MSEM SCHEDULE A
3/14/2007 V5
Due up to Due Due Due
# Total Liabilities Amount Due March 2 March 9 March 16 March 23
-- ----------------- ---------- ------- ------- -------- --------
1 ACCOUNTS PAYABLES
2 Xxxxx & Xxxxxxx (law firm) $ 20,488.19 $ 20,488.19
3 HJ & Associates (auditor) $ 16,376.33 $ 8,376.33
4 AZ Dept of Revenue $ 1,515.59 $ 1,515.59
5 City of Scottsdale $ 50.00 $ 50.00
6 UPS $ 795.09 $ 505.09 $ 290.00
7 US Treasury $ 343.40 $ 171.70
8 Business Wire $ 570.00 $ 570.00
9 Xxxxx & Associates $ 4,149.03 $ 4,149.03
10 Xxxxx Xxxx (attorney) $ 17,213.98 $ 6,112.50
11 Qwest $ --
12 Salaries $ 1,581.40 $ 790.70
12A Xxxxx/Xxxxxx Salaries $ 9,461.54
13 Internet $ 121.00 $ 121.00
14 Xxxxxx Accounting $ 700.00 $ 350.00
15 Rent $ 3,166.44
16 Expenses $ 1,964.12 $1,964.12
17 Rivers/Xxxxxxxxx $ 7,000.00 $5,000.00
18 TOTAL ACCOUNTS PAYABLES $ 76,034.57 $ 41,766.73 $5,290.00 $10,773.94 $2,085.12
19 ACCRUED EXPENSES
20 Xxx Xxxxxx & Xxxx Xxxxxxxx $ 60,000.00 $ 60,000.00
21 Xxxxx Consulting Debt $114,000.00 $114,000.00
22 X-Clearing Judgement $ 40,649.06 $ 40,649.06
23 Xxxxx Xxxxx (Consulting) $ 9,233.00 $ 9,233.00
24 ACCRUED WAGES PAYABLE
25 Xxxxx $ 85,787.70 $ 85,787.70
26 Xxxxxx $ 49,615.35 $ 49,615.35
Due Gross
March 30 Write Offs Paid Amount Due
-------- ---------- ---- ----------
1 ACCOUNTS PAYABLES
2 Xxxxx & Xxxxxxx (law firm) $ (8,388.19) $12,100.00
3 HJ & Associates (auditor) $ 8,000.00 $ (8,376.33) $ 8,000.00
4 AZ Dept of Revenue $ (1,515.59) $ --
5 City of Scottsdale $ (50.00) $ --
6 UPS $ (419.62) $ 375.47
7 US Treasury $ 171.70 $ 343.40
8 Business Wire $ (570.00) $ --
9 Xxxxx & Associates $ (4,149.03) $ --
10 Xxxxx Xxxx (attorney) $11,101.48 $17,213.98
11 Qwest $ --
12 Salaries $ 790.70 $ 1,581.40
12A Xxxxx/Xxxxxx Salaries $ 9,461.54 $18,923.08
13 Internet $ 121.00
14 Xxxxxx Accounting $ 350.00 $ 700.00
15 Rent $ 3,166.44 $ 3,166.44
16 Expenses $ 1,964.12
17 Rivers/Xxxxxxxxx $ 2,000.00 $ (3,000.00) $ 4,000.00
18 TOTAL ACCOUNTS PAYABLES $35,041.86 $ (8,388.19) $(18,080.57) $68,488.89
19 ACCRUED EXPENSES
20 Xxx Xxxxxx & Xxxx Xxxxxxxx $(60,000.00) $ --
21 Xxxxx Consulting Debt $(50,000.00) $64,000.00
22 X-Clearing Judgement $40,649.06
23 Xxxxx Xxxxx (Consulting) $ 9,233.00
24 ACCRUED WAGES PAYABLE
25 Xxxxx $ 11,500.00 $ (5,000.00) $92,287.70
26 Xxxxxx $(11,500.00) $38,115.35
Due up to Due Due Due
# Total Liabilities Amount Due March 2 March 9 March 16 March 23
-- ----------------- ---------- ------- ------- -------- --------
27 ACCRUED INTEREST
28 Interest on Xxx Xxxx'x Note $ 8,728.60 $ 8,728.60
29 NOTE PAYABLE
30 Xxxxx Xxxxxxxxxx $ 14,500.00 $ 14,500.00
31 Damascus Group $ 62,000.00 $ 62,000.00
32 Xxx Xxxxx Note (2/21/07) $ 31,139.14 $ 31,139.14
33 IAC Note (2/21/07) $226,437.48 $226,437.48
34 Xxx Xxxxx Note $121,919.19 $121,919.19
35 Xxxxx & Xxxxxxx (law firm) $ 15,000.00 $ 15,000.00
00 Xxxx Xxxxxx (lawyer) $ 6,499.96 $ 6,499.96
37 Xxxxxxx and Xxxx Xxxxx $ 23,000.00 $ 23,000.00
38 ECG International $ 900.00
39 XXXXXXXX VOTING SHARES $ 10,000.00 $ 10,000.00
TOTAL AMOUNTS $955,444.05 $920,276.21 $5,290.00 $10,773.94 $2,085.12
Due Gross
March 30 Write Offs Paid Amount Due
-------- ---------- ---- ----------
27 ACCRUED INTEREST $ 8,728.60
28 Interest on Xxx Xxxx'x Note
29 NOTE PAYABLE $ (14,500.00) $ --
30 Xxxxx Xxxxxxxxxx $ (62,000.00) $ --
31 Damascus Group $ (2,418.00) $ 28,721.14
32 Xxx Xxxxx Note (2/21/07) $(17,582.00) $208,855.48
33 IAC Note (2/21/07) $121,919.19
34 Xxx Xxxxx Note $ (6,100.00) $ 8,900.00
35 Xxxxx & Xxxxxxx (law firm) $ 6,499.96
00 Xxxx Xxxxxx (lawyer) $ 23,000.00
37 Xxxxxxx and Xxxx Xxxxx $ 900.00
38 ECG International $ 10,000.00
39 XXXXXXXX VOTING SHARES
$35,041.86 $(200,988.19) $(43,080.57) $729,398.37
TOTAL AMOUNTS
Current Common Shares Outstanding 4,368,768.00
Restricted Shares Issued for Debt --
S-8 Issued For Debt 8,528,872.33
Restricted Issued For Service 3,500,000.00
Total Shares Issued/Oustanding 16,397,640.33
Disclaimer:
All prior worksheets, including this attached worksheet, are unaudited and are
presumed to be relatively accurate. The worksheets do not represent any
guarantee of accuracy therefore are used for discussion purposes only. Only
worksheets market AUDITED represent reliable facts and figures to the company's
best ability.
SEE FOOTNOTES ATTACHED
FOOTNOTES TO SCHEDULE A:
AS OF MARCH 14, 2007
ITEM 2: $20,488.19 Xxxxx & Xxxxxxx legal bills for defending the Company against
its lawsuit against X-Clearing (item 22). Though no formal settlement agreement
has been reached, the Company and Xxxxx & Xxxxxxx (via Xxxxxxx Xxxxxxx) have
discussed full satisfaction of the debt in the form of restricted common shares
valued at approximately $12,100.
ITEM 3: $8,000 is an estimated amount that will be due to HJ & Associates,
Company's Auditors, to complete the 2006 10-KSB
ITEM 6: $375.47 due UPS
ITEM 7: $343.40 due US Treasury from the Salaries in Item 12
ITEM 10: $17,213.98 December 21, 2005 the Company entered into an engagement
agreement with the law offices of Xxxxx X Xxxx. The law firm accepts shares of
S-8 stock for payment of services. Should proceeds received from the sale of
securities be less than the invoice amount, additional shares shall be issued to
satisfy any deficiency. The Company has a current balance due of $6,112.50 with
a deficiency of $11,101.48.
ITEM 12: $1,581.40 Salaries
ITEM 12A: $18,923.08 Salaries of Xxxxx and Xxxxxx
ITEM 13: $121 Internet fee
ITEM 14: $700 Xxxxxx Accounting
ITEM 15: $3,166.44 Total rent
ITEM 16: $1,964.12 Expense reimbursements
ITEM 17: $4,000 is an estimate amount that Rivers & Xxxxxxxx, the Company
Controller, will charge to complete the Company's 2006 10-KSB
ITEM 20: $60,000 June 30, 2004, the Company, its prior management Xxxx Xxxxxxxx
and Xxx Xxxxxx along with Xxxxxx X Xxxxx entered into a Management Service
Agreement. On December 20, 2004 the Company, its new management Xxxxx Xxxxxxxx
and prior management Xxxxxxxx and Xxxxxx entered into a General Release and
Assignment Agreement. Xxxxxxxx and Xxxxxx were to receive a total of $100,000
for services; however, certain obligations and costs born by the Company would
reduce the debt owed. Xxxxxxxx and Xxxxxx had a balance of $60,000 due them
until the Company was served with a lawsuit from its prior transfer agent
X-Clearing. Prior management was aware of potential liability and even
litigation but failed to disclose this within the Management Service Agreement
or the General Release and Assignment Agreement. The cost of the lawsuit is in
excess of $60,000 and on December 29, 2006 the Company's attorney rendered a
legal opinion that the Company is no longer liable for this debt. However, the
legal opinion was intended for negotiating with the Company's auditors and
cannot be relied on by the Company or the Purchaser and the Company and the
Purchaser waive any and all rights against the law firm arising from such legal
opinion.
ITEM 21: $144,000 In November 16, 2005 the Company entered into a Consulting
Agreement with Xxxxxx Xxxxx whereby Xx. Xxxxx would perform services in receipt
of cash, restricted common stock or a combination. The debt due and owing to Xx.
Xxxxx which is believed to be a combination a current and a prior consulting
balance due to Xx. Xxxxx. Once the Company completes its 2006 10-KSB audit, the
Company can verify and confirm an exact amount due to Xx. Xxxxx.
ITEM 22: $40,639.06 In June 2006 the Company lost a lawsuit in Colorado (Case No
05-CV5129) against its former transfer agent X-Clearing. X-Clearing was awarded
judgments and on November 27, 2006 case No. CV2006-018061 was domesticated in
Arizona for attorney's fees of $19,231 and a one time charge of $912.
Additionally, case No. CV2006-018060 was domesticated for the principal amount
of $20,496.06 for costs. The Company has communicated with X-Clearing to settle
the judgment but nothing has been agreed to in writing.
ITEM 23: $9,200 On September 25, 2005 the Company and Xxxxx Xxxxx Racing entered
into a Personal Service Agreement whereby Xxxxx Xxxxx would perform certain
services for the Company for the 2006 racing series. Scheduled payments were to
be made to Xxxxx Xxxxx starting February 2006 thru Nov. 2006. Xx. Xxxxx received
shares of the Company's registered common stock and the Company is currently
delinquent in issuing/paying Xx. Xxxxx the balance of approximately $9,200 and
has agreed to receive shares of register common stock in the Company for final
payment. Xx. Xxxxx has reported the approximate balance of $9,200 the Company is
showing is incorrect due to the decline in share price from time of issuance to
time of sale. The Company's current management has a personal relationship with
Xx. Xxxxx and will work directly with him and hold the Company harmless of any
debt over the stated $9,200.
ITEM 25: $80,787, WITH AN ADJUSTED AMOUNT DUE OF $92,287.70 Xxxxx Xxxxxxxx
accrued wages. $48,787.70 is immediately due with the balance of $43,500 to be
paid in cash or issuance of registered common stock to the Seller commencing on
or before July 31, 2007 continuing for six (6) months in six equal payments of
$7,250. Seller agrees to forfeit the registered shares should the 10K not be
filed in compliance with the deadlines.
ITEM 26: $49,615.35 WITH AN ADJUSTED AMOUNT DUE OF $38,115.35 Xxxxxx Xxxxxxxx
accrued wages to be immediately paid.
ITEM 28: $8,728.60 Interest on Xxx Xxxxx Note.
ITEM 30: $14,500 On or around 2002 Xxxxx Xxxxxxxxxx made a $14,500 investment
into the Company formally known as Ten Stix, Inc. Past Company filings show
$14,500 owed to Xx. Xxxxxxxxxx. Only recently did the Company discover transfer
agent records that reveal the issuance of common stock to Xx. Xxxxxxxxxx in
excess of $14,500. Current management is unaware of any written requests from
Xx. Xxxxxxxxxx to collect debt. On December 29, 2006 the Company received a
legal opinion from its attorney stating the $14,500 was satisfied and paid in
full as a result of shares issued. However, the legal opinion was intended for
negotiating with the Company's auditors and cannot be relied on by the Company
or the Purchaser and the Company and the Purchaser waive any and all rights
against the law firm arising from such legal opinion.
ITEM 31: $62,000 On or around 2002 Damascus invested $47,000 and Rob & Xxxx
Xxxxxxx (owners of Damascus and X-Clearing) invested $15,000 into the Company
formally known as Ten Stix, Inc. The total debt of $62,000 has been reported
under Damascus and none under Rob & Xxxx Xxxxxxx (personally). The Company
recently discovered transfer agent records that reveal the issuance of common
stock to Damascus. It was also reports in the Company's 10K in 2003 that shares
were issued to Damascus to satisfy the debt. On December 29, 2006 the Company
received a legal opinion from its attorney stating the $47,000 and $15,000
($62,000) can be legally considered satisfied and paid in full as a result of
the issuance of shares. However, the legal opinion was intended for negotiating
with the Company's auditors and cannot be relied on by the Company or the
Purchaser and the Company and the Purchaser waive any and all rights against the
law firm arising from such legal opinion.
ITEMS 32 & 33: $31,139.14 AND $226,437 August 21, 2006 the Company entered into
a Twelve Month Convertible Note with IAC (owned by Xx. Xxxxx) and Xxx Xxxxx. The
Company purchased 1,250,000 shares of Pf B stock held by IAC and 171,897 shares
of Pf B stock held by Xxx Xxxxx for a sum of $250,000 plus 10% interest per
annum. Scheduled payments are to be made with the balance due August 30, 2007.
The Company can extend the Note twice for an additional year with penalties and
a higher monthly payment. The Company is current with all scheduled payments.
The Note is fully assignable, in whole or in part, and any new HOLDERS will have
the same rights and privileges as the original HOLDERS.
ITEM 34: $121,919.19 November 23, 2004 the Company, its subsidiary Scottsdale
Diecast, Inc. and Xxx Xxxxx of ScaleCars, Ltd entered into an Asset Purchase
Agreement, Xxxx of Sale and Promissory Note for the sum of 4.9M shares of the
Company common restricted stock and $166,919.89. The Promissory note called for
scheduled payments in which the Company had difficulty meeting so the parties
entered into a revised promissory Note on September 22, 2006 extending the
balance of $121,919.89 with scheduled payments and the remaining balance due
February 2007. On October 16, 2006 the Company, its subsidiary and the creditor
(Xxxxx) entered into an Assignment, Assumption and Release Agreement whereby the
creditor will solely look towards the Company (not the subsidiary) for all debt
payments. Xxxxx has expressed interest in converting the Note into common stock.
No formal arrangements have been made to convert debt into equity.
ITEM 35: $15,000 July 28, 2005 the Company entered into a Settlement of Debt
Agreement with Xxxxx & Xxxxxxx law firm for representing the Company in April
2004 in the "Rapid Funding, LLC vs. Ten Stix, Inc. et al., Case No 04-CV-0461
("Rapid Funding Litigation"). The Company incurred substantial fees and
expenses, which as of June 30, 2005 was $33,254.64. Xxxxx & Xxxxxxx agreed to
accept $30,000 in full and complete satisfaction of the account which shall be
paid in 24 equal payments of $1,250 commencing on or before August 15, 2005. The
Company is currently in default and the balance now due is estimated to be
$15,000. The Company and Xxxxx & Xxxxxxx (via Xxxxxxx Xxxxxxx) have verbally
discussed satisfaction of the debt in the form of restricted common shares
valued at $8,900.
ITEM 36: $6,499.96 July 14, 2005 the Company entered into a Promissory Note with
Xxxx Xxxxxx, P.C. for the principal amount of $13,000. The debt holder agreed to
receive 24 equal payments of $541.67 (no interest) beginning August 1, 2005
until July 1, 2007. In 2004 the debt holder also received 500,000 shares of
restricted common stock of the company. The Company is in default with an
estimated balance of $6,499.96 due to debt holder. The Company has communicated
with debt holder to settle the balance in restricted common stock, however this
was verbal and some time ago. The Company is unable to guarantee the settlement
of this debt.
ITEM 37: $23,000 On or around February 2007 the Company entered into three
separate subscription agreements, each to sell 1,000,000 shares of restricted
common stock at $.025 for $25,000. A total of 3,000,000 shares were sold at
$.025 for a grand total of $75,000. Upon Closing and payment in full by
Purchaser, all three subscription agreements will be cancelled and all funds
returned to investors. $23,000 of the $75,000 needs to be paid back to Xxxxxxx
and Xxxx Xxxxx.
ITEM 38: $900 ECG International
ITEM 39: $10,000 Xxxxxxxx Voting Shares
OTHER 1: August 10, 2005 the Company entered into a Consulting Agreement with
Xxxxxxx Xxxxxxxx to perform certain duties for the Company. The Company also
entered into a license Agreement with Xxxxxxxx on Aug. 10, 2005 whereby the
Company has the exclusive rights to design, develop and sell a product known as
GS610, a high performance brake fluid. The relationship began in June 2005 when
the Company loaned Xx. Xxxxxxxx $5,000 and began discussions about licensing the
GS610 product. Certain disputes arose between the Company and Xx. Xxxxxxxx which
disputes resulted in the Company filing a lawsuit against Xx. Xxxxxxxx
(CV2005-052607). On June 28, 2006 the Company and Wachholz entered into a
Settlement Agreement that terminated the Loan agreement, terminated the
Consulting Agreement and the Company dismissed the complaint against Xx.
Xxxxxxxx. The Licensing Agreement remains in full force today and is for a
period of five years with an extension for an additional five years solely at
the discretion of the Company. The Agreement stipulates that Xx. Xxxxxxxx shall
receive a 7% commission on gross sales made by the Company. The Company produced
an estimated 34,000 bottles of GS610 brake fluid which has been sold. Xx.
Xxxxxxxx has received all earned commissions. Recently Xx. Xxxxxxxx learned
about a distributor (ComarPerformance) that purchased the bulk of the Company's
GS610 inventory at a reduced price (see ComarPerformance/Xxxxx Xxxxxx below).
Xx. Xxxxxxxx has made recent unfounded allegations that the Company has violated
the Licensing Agreement stating the Company has sublicensed the product without
the approval of Xx. Xxxxxxxx. Under the Licensing Agreement the Company is
allowed to grant sublicenses to third parties with the approval of Xx. Xxxxxxxx,
which shall not be unreasonably withheld. The Company has NOT granted a
sublicense; rather it entered into an exclusive distributor's agreement with
ComarPerformance/Xxxxx Xxxxxx. It is the Company's opinion that Xx. Xxxxxxxx
will continue to make false and/or misleading statements to induce the Company
into filing a suit/claim. It is the Company's opinion that Xx. Xxxxxxxx has
violated the Settlement Agreement by posting false, misleading and private
Company information on public stock message boards. The Company has not taken
legal recourse against Xx. Xxxxxxxx for his recent actions. The Company believes
Xx. Xxxxxxxx has an unpaid judgment against him and should the Company prevail,
no financial gain could be collected.
OTHER 2: The Seller has agreed to remain on as President of the Company's
subsidiary known as Quadriga MotorSports. No later than September 30, 2007 the
Seller will purchase 100% of the subsidiary for $200 so that the Seller may
continue to conduct its motor sports related business.
OTHER 3: March 7, 2006 the Company entered into a Personal Service Agreement and
Consulting Services Agreement with Image Motorsport Management and Xxxx Xxxxxxxx
Jr whereby Xxxx Xxxxxxxx, Jr. would perform certain services for the Company
throughout the 2006 racing series. Scheduled payments were to be made to Xxxx
Xxxxxxxx, Jr. starting March 2006 thru December 2006. Xx. Xxxxxxxx would also
receive Company product known as GS610 brake fluid. Xx. Xxxxxxxx agreed to
receive shares of the Company's registered common stock for payment, however the
shares received were priced more than what was received when sold and therefore
there is a balance due Xx. Xxxxxxxx. The balance due is not reported on the
books because Xx. Xxxxxxxx has not provided the Company with reports showing a
balance.
OTHER 3: On September 14, 2006 the Company entered into a Subscription Agreement
with Xxxxxxxx Xxxxxx for the sale of $50,000 of restricted common stock. On
March 1, 2007 the Agreement was amended to represent a total investment of
$33,875.50 which has been paid in full and closed.
OTHER 4: October 23, 2006 the Company entered into a Promissory Note with Xxxxxx
Xxxxx for the principal amount of $5,000 with 10% interest. $5,500 is due on
April 23, 2007. Upon default Xx. Xxxxxx has the right to convert the entire debt
into $10,000 of common stock.
OTHER 5: The Company has a storage unit space for; shelves, wire rack bookcases
and misc. assets that are valued below $1,000. The Company is charged a monthly
rent rate of $150 directly to the debit card of the Company. This is a month-to
month rental with 30 day termination notice required. Arrangements will need to
be made to either sell or dispose of the assets.
OTHER 6: On October 10, 2006, the Company's Board of Directors declared a
special dividend of shares of its wholly-owned subsidiary, Scottsdale Diecast,
Inc., a Nevada corporation. As a result of this special dividend, the Company
intended to distribute to its stockholders of record on November 6, 2006, one
share of common stock of Scottsdale Diecast, Inc., a Nevada corporation, for
each one share of the Company's issued and outstanding common stock held by its
stockholders on such date. Approximately 2,148,550 shares of common stock of
Scottsdale Diecast, Inc. would have been distributed, (plus an indeterminable
number of shares of common stock will be issued in settlement of fractional
shares), representing approximately 11.5% of Scottsdale Diecast, Inc. The
special dividend would have been distributed within five business days following
the SEC's declaration of effectiveness of a Form SB-2 Registration Statement
that was intended to have been filed by Scottsdale Diecast, Inc. Because the
diecast business is no longer a viable business entity, the Company has decided
not to proceed with the issuance of the special dividend and will, therefore,
contact the Nasdaq and make a formal press release to the effect that the
dividend will not be paid.
OTHER 7: On January 25, 2007 the Company entered into a Xxxx of Sale with
Automobilia Collectibles/ Xxxxx Xxxxxxx to sell the URL (web address)
xxx.xxxxxxxxx.xxx and approximately 6,000 customer names to for a total sum of
$15,000. It was agreed that $10,000 will be paid on January 29, 2007 and $5,000
to be paid on or before March 25, 2007. On March 13, 2007 the final payment was
received and the sale is considered completed. The web address and customer data
base was used by the Company's subsidiary Scottsdale Diecast to sell its diecast
model cars under the name XxxxxXxxx.xxx
OTHER 8: On November 9, 2006 the Company's subsidiary Quadriga MotorSports
entered into an Exclusive Distribution Agreement with Comar Performance/Xxxxx
Xxxxxx. The agreement calls for Comar Performance to purchase 29,952 bottles of
GS610 brake fluid for the price of $1.13515 per bottle for a total of $34,000.
Quadriga MotorSports has been paid in full and Comar Performance has retained
ownership of the product. The product GS610 brake fluid is a derivative of the
agreement mentioned above with Xxxxxxx Xxxxxxxx.
Buyer has received copies of the above mentioned disclosures including:
* 2005 10K and third quarter 10Q ending September 30, 2006
* Certificate of Designation for Pf A, Pf B and Pf C
* Definitive 14C (proxy for shareholder vote)
* Approximate shareholder count as of March 14, 2007
Restricted Shares S-8 Shares
---------------------------------- ------------------------------------
Value Value Total S8 Total In
per per share payment Total Share notes Payble Net Balance
Issued Share Payment Issued Share in 9 mos Payment in 12 mos@8% Paid in Cash
------ ----- ------- ------ ----- -------- ------- ------------ ------------
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ 12,100.00 $ --
$ -- $ -- $ -- $ 8,000.00
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ 375.47
$ -- $ -- $ -- $ 343.40
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ --
$ -- 573,799.33 $ 0.03 $ 17,213.98 $ 17,213.98 $ --
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ 1,581.40
$ 18,923.08
$ -- $ -- $ -- $ 121.00
$ -- $ -- $ -- $ 700.00
$ -- $ -- $ -- $ 3,166.44
$ -- $ -- $ -- $ 1,964.12
$ -- $ -- $ -- $ 4,000.00
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ --
$ -- 573,799.33 $ 17,213.98 $ 17,213.98 $ 12,100.00 $ 39,174.91
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ --
$ -- 2,133,333.33 $ 0.03 $ 64,000.00 $ 64,000.00 $ --
$ -- $ -- $ -- $ 40,649.06
$ -- 307,766.67 $ 0.03 $ 9,233.00 $ 9,233.00 $ --
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ --
$ -- 1,450,000.00 $ 0.03 $ 43,500.00 $ 43,500.00 $ 48,787.70
$ -- $ -- $ -- $ 38,115.35
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ 8,728.60 $ --
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ --
$ -- $ -- $ -- $ 28,721.14 $ --
$ -- $ -- $ -- $208,855.48 $ --
$ -- 4,063,973.00 $ 0.03 $121,919.19 $121,919.19 $ --
$ -- $ -- $ -- $ 8,900.00 $ --
$ -- $ -- $ -- $ 6,499.96 $ --
$ -- $ -- $ -- $ 23,000.00
$ -- $ -- $ -- $ 900.00
$ -- $ -- $ -- $ 10,000.00
$ -- $ -- $ -- $ --
$ -- 8,528,872.33 $255,866.17 $255,866.17 $273,805.18 $200,627.02
