EXHIBIT 10.10
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is dated as of April 21, 1999 by and
between Motorcycle Centers of America, Inc., a Nevada corporation ("Buyer") and
the persons whose names are set forth on the signature page of this Agreement or
on Schedule A hereto (collectively referred to herein as "Seller"), and
Management which includes Xxxxx, Xxxxxxx and Xxxxxx, the holders of all of the
outstanding shares of Case's Ladder, Inc., a California corporation ("CL").
This Agreement sets forth the terms and conditions upon which Seller has agreed
to sell and Buyer has agreed to purchase from Seller all of the outstanding
shares of the common stock of CL (the "CL Shares"). Seller represents and
warrants that Seller owns all of the outstanding shares of the common stock of
CL, and that no class of shares or securities requiring the issuance of common
or preferred stock of CL exists other than as set forth herein.
In consideration of the mutual agreements contained herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. SALE OF THE SHARES
1.01 Shares Being Sold
Subject to the terms and conditions of this Agreement, Seller is selling,
assigning and delivering the CL Shares to Buyer at the closing provided for in
Section 1.03 hereof (the "Closing"), free and clear of all liens, charges,
claims or encumbrances of any kind or nature whatsoever.
1.02 Consideration
Subject to the terms and conditions of this Agreement, and in reliance upon the
representations, warranties and agreements of Seller contained herein and in
consideration for the sale, assignment and delivery of the CL Shares and in full
payment therefor:
1.02(a) Buyer shall issue to Seller at the Closing an aggregate of 700,000
shares of common stock of Buyer (the "Buyer Shares") in the form of
certificates registered in the names and amounts as listed in Schedule A
hereto. The Buyer Shares shall be "restricted securities" as that term is
defined in Rule 144 ("Rule 144") under the Securities Act of 1933, as
amended (the "Act").
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1.02(b) For one (1) year from the Closing, Seller and each of them, shall
have the right and privilege, at their option, to have their Buyer Shares
registered for sale at Buyers expense (except for commissions to brokers
or underwriters, which shall be paid by Buyer) as part of any registration
the Company files and to sell their shares in the Company's offering of
its shares to the public to the extent, and only to the extent, that the
Company's directors and/or officers, or any of them have such registration
rights and sale privileges. If Rule 144 shall be available to any Buyer,
Buyer shall utilize Rule 144 to effect the sale of Buyer's Shares to the
greatest extent possible.
1.02(c) On or before April 17, 1999, Seller shall perform, at Seller's own
expense, an audit of all of the business of CL, including but not limited
to any and all financial records, inventories, accounts receivable and
payable, and lists of equipment. Seller shall promptly transmit to Buyer a
copy of said audit. Buyer shall then have ten business days after receipt
thereof to approve or reject the audit.
1.02(d) In the event that Buyer disapproves of any part of the audit, any
document submitted by Management in the course of this transaction, any
representation made by Management in the course thereof, or for any other
reason, Buyer does not proceed with this transaction, Buyer and Management
agree that the amount of damages Management would suffer thereby would be
difficult to ascertain and would be incapable of being proven with any
certainty. As a result, Buyer and Management agree that any amounts
previously paid by Buyer at the time Buyer notifies Management that it
will not complete the transaction will constitute liquidated damages for
such failure by Buyer, and shall constitute Management's only remedy and
compensation therefor.
1.02(e)
(i) After this transaction is completed, Xxxxx Xxxxxxx, Xxxx Xxxxx
and Xxxxxx Xxxxxx shall each serve as Employees of CL on the terms
and conditions set forth in the Employment Agreements attached
hereto as Exhibit 1.02(d).
(ii) Management represents that neither Seller nor CL has undertaken
any transaction or transfer of any asset of CL in the calendar year
preceding the date hereof, except in the ordinary course of
business. Management further represents that Seller will make no
transfer of any asset of CL prior to the Closing, other than in the
ordinary course of business.
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1.02(f) On the Closing Date, except as set forth herein, Buyer will
terminate Management's authority to write checks against, or have
outstanding checks honored from the funds in CL's bank account. The
persons set forth on Exhibit 1.02(f) shall have the authority to
issue checks from CL's checking account not in excess of $2,000
each; but not to any of Seller or Seller's affiliates. Any checks so
issued shall only be pursuant to internal account procedures
established by Buyer. On the Closing Date, Management shall also
deliver to Buyer a schedule setting forth those checks of CL that
remain outstanding (the "Outstanding CL Checks"). To provide funds
for the Outstanding CL Checks, Buyer shall, on the Closing Date,
deposit into a conventional checking account, in the name of CL,
funds sufficient to pay all Outstanding CL Checks, and shall
cooperate with Management to enable such funds to be used in fully
satisfying all Outstanding CL Checks. Buyer shall thereafter
indemnify Management from and against all claims and liabilities
attributable to Outstanding CL Checks.
1.03 The Closing
The Closing of the transactions provided for in Sections 1.04 and 1.05
shall take place at the offices of Buyer's counsel, Xxxxx X. Xxxxx, Esq.,
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, within
21 days of the date of this Agreement or at such time and place as shall
be mutually agreed upon by Buyer and Seller. The date of the Closing is
referred to herein as the "Closing Date".
1.04 Delivery by Seller
At the Closing, Management shall deliver to Buyer:
(i) a certificate or certificates representing the CL Shares
endorsed in blank and otherwise in form acceptable to Buyer for
transfer on the books of CL;
(ii) all contracts, books and records of CL not previously delivered
to Buyer;
(iii) the certificates of the officers of Seller in the form annexed
hereto as Exhibit 1.04(iii); and
(iv) the opinion of C. Xxxxxxx Xxxxx, Esq., counsel to Seller, in
the form annexed hereto as Exhibit 1.04(iv).
1.05 Delivery by Buyer
Buyer shall make to Seller the payments provided in Section 1.02(a)
hereof.
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2. ASSUMPTION OF CERTAIN LIABILITIES BY SELLER
For a period of four months, Management hereby assumes, jointly and severally,
all liability claims by employees of CL as of the Closing Date attributable to
occurrences prior to the Closing Date and agrees to indemnify and hold Buyer
harmless from and against any and all liabilities, claims, costs and expenses,
including attorney's fees, expended or incurred by Buyer with respect thereto.
All such claims made or, after diligent inquiry are known to Management, are set
forth on Exhibit 2 hereto.
3. REPRESENTATIONS AND WARRANTIES BY SELLER
Management, jointly and severally, hereby represents, warrants and covenants to
Buyer as follows:
3.01(a)
CL is a corporation duly organized, validly existing, and in good standing
under the laws of the state of California and is duly qualified to do
business in all states in which such qualification is necessary.
3.01(b)
(i) The authorized capital stock of CL consists of 30,000,000
million shares of common stock, no par value, of which 10,585,061,
shares are validly issued and outstanding, fully paid and
nonassessable. Seller owns and shall deliver on the Closing Date all
of such CL Shares, free and clear of any liens, claims, options,
charges or encumbrances of any kind or nature whatsoever.
(ii) Seller has the unqualified right to sell, assign and deliver
the CL Shares to Buyer, has given no other person or entity any
right in or to such CL Shares and upon consummation of the
transactions contemplated by this Agreement, Buyer will acquire good
and valid title to the CL Shares free and clear of all liens,
claims, options, charges and encumbrances of any nature whatsoever,
except restrictions on resale imposed by applicable federal and/or
state laws and regulations.
(iii) There are no outstanding options, warrants or rights or other
agreements of any nature requiring or relating to the issuance by CL
of any shares of its capital stock.
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3.01(c)
CL has the corporate power and authority to carry on its business as
presently conducted except as set forth on Exhibit 3.01(c).
3.01(d)
All obligations of Seller and CL under any Lease (as defined in Section
5.03 below) are current as of the Closing Date.
3.02 No Violation
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation or default under
any term or provision of the articles of incorporation or bylaws of CL or of any
material contract, commitment, indenture or other agreement or restriction of
any kind or character to which CL or Seller is a party or by which CL or Seller
is or may be bound.
3.03 Financial Statements
Seller has delivered to Buyer the audited Financial Statements of CL (the
"Financial Statements") as of December 31, 1998 and February 28, 1999 (the
"Valuation Date"), copies of which are attached hereto as Exhibit 3.03. The
Financial Statements are true and correct in all material respects and a fair
and accurate representation of the financial condition and assets and
liabilities (whether accrued, absolute, contingent or otherwise) of CL as of
such dates, stated on a basis consistent with that of previous periods.
3.04 Tax Returns
CL has duly filed all tax reports and returns required to be filed by it and has
duly paid or accrued (except as set forth below) all taxes and other charges
claimed to be due from it by federal, state or local taxing authorities
(including, without limitation, those due in respect of its properties, income,
franchises, licenses, sales and payrolls); there are no tax liens upon any of
CL's property or assets except for liens for current taxes not yet due and
payable or as set forth on Exhibit 3.04 hereto; and except as may be noted on
the Financial Statement, there are not now nor does Seller have knowledge, after
reasonable inquiry, of any pending matters relating to or claims asserted for
taxes or assessments against CL or any of its assets except as disclosed herein.
Buyer agrees to make CL's books and records available to Seller at reasonable
times in CL's or Buyer's facility for review and copying during the pendency of
this transaction.
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3.05 Title to Properties; Encumbrances
CL has good and marketable title to all of its properties and assets, real and
personal, tangible and intangible, including without limitation the property and
assets reflected on the Financial Statement (except for inventory and other
properties and assets that have been sold or otherwise disposed of in the
ordinary course of the business of CL since the Valuation Date). No such
properties are subject to mortgage, pledge, lien, conditional sale agreement,
encumbrance or charge of any nature whatsoever except: (a) liens shown on
Exhibit 3.05 as securing specified liabilities (with respect to which no default
exists); (b) liens for current taxes not yet due; and (c) minor imperfections of
title and encumbrances, if any, that are not substantial in amount, do not
materially detract from the value of the property subject thereto or materially
impair the operations of CL and have arisen only in the ordinary course of
business consistent with past practice.
3.06 Patents, Trademarks, Trade Names, Etc.
All patents, trademarks, trade names and assumed names, copyrights or licenses
therefor held by CL, all of which are set forth on Exhibit 3.06, are valid and
in good standing and free and clear of all liens and encumbrances of any and
every nature and are not involved in any pending or threatened interference
proceeding; to the best knowledge of Seller, after reasonable inquiry, none of
the products manufactured or sold by CL and none of the formulae, processes,
know-how or designations used in the business of CL infringe on any patent,
trade secret, trademark, trade name or copyright of any other person.
3.07 Accounts Receivable
All accounts receivable of CL, as reflected in the Financial Statements, as
adjusted for ordinary business transactions between the Valuation Date and the
Closing Date, represent sales actually made in the ordinary course of business
and the reserve for collectibility of receivables as reflected in the Financial
Statements is adequate and was calculated in a way consistent with past
practice. Except to the extent set forth in Exhibit 3.07 hereto, or for which
adequate reserves have been established as reflected on the Financial
Statements, there are not now any questions, controversies or disputes relating
to any accounts receivable of CL.
3.08 Undisclosed Liabilities
Except to the extent reflected or reserved against in the Financial Statements,
as of the Valuation Date CL had no liabilities or obligations of any nature,
whether absolute, accrued, contingent or
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otherwise and whether due or to become due, except those that are not required
by generally accepted accounting principles to be included in the Financial
Statements. Further, Seller, following reasonable inquiry, does not know or have
any reasonable ground to know of any basis for the assertion against CL as of
the Valuation Date, of any liability or obligation of any nature or in any
amount not fully reflected or reserved against in the Financial Statements.
3.09 Financial Statement Errors
If subsequent to closing, Buyer discovers that there is a material variance
between the assets and/or liabilities as disclosed in CL's audited Financial
Statements and actual assets and/or liabilities, the Parties agree to negotiate
any differences in good faith and if differences are agreed to, to adjust the
amount of stock issued to Seller paid for CL's Shares. Such adjustment shall be
based upon the closing bid price of Buyer's Shares at the time of signing this
Agreement. Any dispute not settled by good faith negotiations shall be submitted
to mediation in accordance with the dispute resolution paragraph of this
Agreement.
3.10 Absence of Certain Changes
CL has not, since the Valuation Date and will not have from the Valuation Date
to the Closing Date:
3.10(a)
Suffered any material adverse change in its financial condition, assets,
liabilities, business or prospects, except those set forth in Exhibit
3.10(a) hereto;
3.10(b)
Incurred any obligation or liability (whether absolute, accrued,
contingent or otherwise) other than in the ordinary course of business and
consistent with past practice or with respect to any agreement to which CL
is subject or bound by;
3.10(c)
Paid any claim or discharged or satisfied any lien or encumbrance or paid
or satisfied any liability (whether absolute, accrued, contingent or
otherwise) other than liabilities shown or reflected in the Financial
Statements or liabilities incurred since the Valuation Date in the
ordinary course of business and consistent with past practice;
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3.10(d)
Permitted or allowed any of its assets, tangible or intangible, to be
mortgaged, pledged or subjected to any liens or encumbrances;
3.10(e)
Written down the value of any inventory or written off as uncollectible
any notes or accounts receivable or any portion thereof except for write
offs of such items in the ordinary course of business;
3.10(f)
Canceled any other debts or claims or waived any rights of substantial
value or sold or transferred any of its assets or properties, tangible or
intangible, other than in the ordinary course of business and consistent
with past practice;
3.10(g)
Disposed of or permitted to lapse any material patent, trademark or
copyright or any application for any material patent, trademark or
copyright;
3.10(h)
Disposed of or disclosed to any person any trade secret, formula, process
or other know-how except pursuant to inquiries to purchase CL or its
assets for which Confidentiality Agreements were obtained by Seller, all
of which agreements are annexed hereto as Exhibit 3.10(h);
3.10(i)
Granted any general uniform increase in the compensation of employees
(including any increase pursuant to any bonus, pension, profit-sharing or
plan or commitment) or any substantial increase in any compensation
payable or to become payable to any officer or employee, and no such
increase (whether general or otherwise) is required pursuant to any
existing employment agreements or otherwise;
3.10(j)
Made any capital expenditures or commitments in excess of $20,000 for
additions to its property, plant or equipment;
3.10(k)
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Declared, paid or set aside for payment to its stockholders, any dividend
or other distribution in respect of its capital stock or redeemed or
purchased or otherwise acquired any of its capital stock or any options
relating thereto or agreed to take any such action; or
3.10(1)
Made any material change in any method of accounting or accounting
practice.
3.11 Litigation
Except to the extent set forth in Exhibit 3.11 hereto there are no actions,
proceedings or investigations pending or, after reasonable inquiry and to the
knowledge of Seller, threatened against CL and Management does not know or have
any reason to know of any basis for any such action, proceeding or
investigation.
3.12 Disclosure
Management has disclosed to Buyer all facts material to the assets, prospects
and business of CL known to Management. No representation or warranty by
Management contained in this Agreement and no statement contained in any
exhibit, list, certificate or writing furnished to Buyer pursuant to the
provisions hereof or in connection with the transactions contemplated hereby
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 not
misleading or necessary in order to provide a prospective purchaser of the
business of CL with accurate and complete information which any reasonable
purchaser of CL would desire as to CL and its affairs.
3.13 Exhibits
Each of the Exhibits to this Agreement is incorporated into this Agreement and
made a part hereof, and is true, accurate and complete.
3.14 Material Events or Conditions
After reasonable inquiry, to the best knowledge of Management, there is no event
or condition of any kind or character pertaining to the business, assets or
prospects of CL that may materially or adversely affect such business, assets or
prospects.
4. REPRESENTATIONS AND WARRANTIES BY BUYER
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Buyer hereby represents, warrants and covenants to Seller as follows:
4.01 Organization, Etc.
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the state of Nevada.
4.02 Authority
The execution and delivery of this Agreement by Buyer and the consummation by
Buyer of the transactions contemplated hereby have been duly authorized by the
board of directors of Buyer. The officers of Buyer acting on behalf of Buyer
with respect to these transactions and executing this Agreement on behalf of
Buyer have been duly authorized by all necessary and appropriate corporate
action to take such actions and to execute this Agreement.
4.03 No Violation
Neither the execution nor the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby will constitute any violation or default
under any term or provision of the articles of incorporation or bylaws of Buyer
or of any material contract, commitment, indenture or other agreement or
restriction of any kind or character to which Buyer is a party or by which Buyer
is bound.
4.04 Investment Experience
Buyer has significant knowledge and experience in financial and business matters
enabling it to evaluate the significant risks associated with its acquisition of
the CL Shares.
5. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
5.01 Survival of Representations
All representations, warranties and agreements made by any party in this
Agreement or pursuant hereto shall survive the execution and delivery hereof for
a period of one year.
5.02 Existing Lease
Exhibit 5.02 contains a true and complete copy of the Lease Agreement dated
January 4, 1999 (the "Lease") on Seller's business premises located at 00000
Xxxxx Xxxxxx, Xxxxxx Xxxxx, XX 00000 (the "Premises").
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As further consideration for the purchase hereunder, Buyer agrees to assume and
fulfill CL's obligations to pay all rent under the Lease after the Closing Date
for so long as CL may continue to occupy the Premises, and to indemnify and hold
the Seller harmless from any claims by, or demands from, the Landlord under the
Lease related to, or arising from any failure to make such payments. Buyer will
indemnify Seller from any liabilities and expenses resulting from its and/or
CL's occupancy of the Premises and termination of the Lease following the
Closing Date.
6. MISCELLANEOUS
6.01 Expenses
All fees and expenses incurred by CL in connection with the transactions
contemplated by this Agreement shall be borne by CL and all fees and expenses
incurred by Buyer in connection with the transactions contemplated by this
Agreement shall be borne by Buyer.
6.02 Insurance
Seller hereby assigns to Buyer the benefits under and proceeds of each and all
existing policies of insurance coverage relating to products or services
provided by CL of which policies Seller or CL is a beneficiary. Copies of all
such policies shall be delivered to Buyer at the Closing. Seller further agrees
to cause CL to be named the sole insured under such policies and to deliver
evidence thereof satisfactory to Buyer within 30 days of the Closing Date. Such
benefits and proceeds shall be utilized in satisfaction of claims, liabilities,
costs and expenses of CL, if any, related to occurrences prior to the Closing
Date. Following the payment of such benefits and proceeds, the indemnification
provisions of Section 5.02 of this Agreement shall apply.
6.03 Further Assurances
From time to time, at Buyer's request and without further consideration, CL at
its own expense will execute and transfer such documents and will take such
other action as Buyer may reasonably request in order to more effectively
consummate the transactions contemplated hereby.
6.04 Parties and Interests
All the terms and provisions of this Agreement shall be binding upon, shall
inure to the benefit of and shall be enforceable by the respective heirs,
beneficiaries, representatives, successors and permitted assigns of the parties
hereto.
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6.05 Employment Agreements
At the Closing Buyer will enter into employment agreements in the form set forth
in Exhibit 6.05 with Xxxxxx Xxxx, Xxxxx Xxxxxxx and Xxxx Xxxxx.
6.06 Prior Agreements; Amendments
This Agreement supersedes all prior agreements and understandings between the
parties with respect to the subject matter hereof. This Agreement may be amended
only by a written instrument duly executed by the parties hereto or their
respective successors or assigns.
6.07 Representation
Each of the representations and warranties contained herein shall be true and
accurate as of the date of this Agreement and as of the Closing Date.
6.08 Counsel
Buyer and CL confirm that they have each been represented by counsel of their
choice in the negotiation of this Agreement and the transactions contemplated
hereby.
6.09 Headings
The section and paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretations of
this Agreement.
6.10 Governing Law and Judicial Proceedings
This Agreement shall be governed by and construed and enforced in accordance
with the laws of the state of California without regard to its conflict of laws
rules. Any judicial proceedings brought by Buyer against Seller with respect to
this Agreement must be brought in a court of competent jurisdiction in the
County of Los Angeles, State of California.
6.11 Dispute Resolution
The Parties agree to submit any and all disputes between them arising under or
in relation to this Agreement to mediation with a mediator approved by both
parties. If the Parties resolve their disputes through mediation, the Parties
shall share the costs of mediation evenly but pay their own attorneys' fees and
other
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expenses related to mediation. If mediation fails to resolve all disputes within
thirty (30) days after submission to the mediator, then either Party may file a
law suit or request arbitration. The Parties agree that a good faith attempt at
mediation is a precondition to filing a law suit. The prevailing Party in any
law suit or arbitration relating to the transactions contemplated by this
contract shall be entitled to costs and expenses including reasonable attorneys
fees and attorneys fees and expenses incurred in connection with mediation that
failed to resolve the dispute(s).
6.12 Notices
All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered or mailed
(registered or certified mail, postage prepaid, return receipt requested) as
follows:
If to Buyer:
eUniverse, Inc.
000 Xxxxx Xx Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: President
Telephone: (310) 546 - 5437
Facsimile: (310) 546 - 2807
With a copy to:
Xxxxx X. Xxxxx, Esq.
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telephone: (310) 553 - 9009
Facsimile: (310) 553 - 9693
If to Seller:
Xxxxx Xxxxxxx
0000 Xxxxx Xxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
C. Xxxxxxx Xxxxx, Esq.
Suite 174
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00000 Xxxxxxxx Xxxx.
Xxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Fax: (000) 000-0000
6.13 Counterparts
This Agreement may be executed simultaneously in several Counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
6.14 No Third Party Beneficiaries
This Agreement is for the benefit of Buyer and Seller only and is not intended
to nor shall it operate to create any third party beneficiary or other rights in
any other person or entity.
6.15 Assignment
Neither party may assign its rights under this Agreement or delegate its duties
or obligations hereunder absent the prior written consent of the other party.
6.16 Brokers
If either party has retained, or is claimed to have retained, a broker or finder
in connection with this transaction, the party which so retained, or is claimed
to have retained, the broker or finder shall indemnify and hold the other party
harmless from any and all claims, fees and/or compensation sought by such actual
or alleged broker or finder.
6.17 Investment Intent; No Distribution
CL and each of the Seller is acquiring the Buyer Shares to be issued pursuant to
this Agreement for his, her or its own account, for investment and not as a
nominee and not with a present view to the redistribution thereof. Seller is
aware that there are legal and practical limits on Seller's ability to dispose
of the Buyer Shares and therefore that Seller must bear the economic risk of
holding the Buyer's Shares for an indefinite period of time and has adequate
means of providing for his, her or its current needs and possible personal
contingencies and has adequate other means for providing for Seller's financial
needs. By making the representations in this Section 6.16 Seller does not agree
to hold the Buyer's Shares for any minimum or other specific term and reserves
the right to dispose of the Buyer Shares at any time in accordance with or
pursuant to a registration statement under the Act or an exemption from
registration under the Act.
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6.18 No General Solicitation
The Buyer Shares were not offered to Seller and Seller is not aware of any form
of general solicitation or general advertising, including without limitation (a)
any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, and
(b) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
6.19 Restricted Securities
Seller understands that the Buyer Shares to be issued at the Closing are
"restricted securities" under Federal Securities Laws in as much as they are
being acquired from Buyer in a transaction not involving any public offering and
that under such laws and applicable regulations such securities may not be
transferred or resold without registration under the Act or pursuant to an
exemption from such registration. In this connection Seller and each of them
represents that Seller is familiar with or has been addressed by counsel
concerning Rule 144 under the Act, as presently in effect and understands the
resale limitations imposed thereby and by the Act.
6.20 Disposition
Without in any way limiting the representations set forth above, for one (1)
years from the Closing Date, except for transfers to holders of options to
purchase CL Shares as reflected in Schedule A, Seller further agrees not to make
any disposition of all or any portion of the Buyer's Shares unless and until (a)
there is then in effect a registration statement under the Act covering such
proposed disposition and such disposition is made in accordance with such
registration statement; or (b) (i) Seller shall have notified Buyer of the
proposed disposition and shall have furnished Buyer with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by Buyer Company Seller shall have furnished Buyer with an opinion of
counsel, reasonably satisfactory to Buyer that such disposition is being made in
accordance with the rules and regulations under the Act.
6.21 Exempt Transaction
Seller understands that Buyer Shares are being issued and sold in reliance on
specific exemptions from the registration requirements of the Act and state
securities laws and the representations, warranties and covenants set forth
herein are being relied upon by Buyer in determining that applicability of such
exemptions and the suitability of Seller to acquire such Shares.
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6.22 Legend
It is understood that any and all certificates representing Buyer Shares shall
bear substantially the following legend:
"The securities represented hereby have not been registered under the Securities
Act of 1933, as amended, or applicable state securities laws or the securities
laws of any other jurisdiction. They may not be sold or transferred in the
absence of an effective registration statement under those securities laws or
pursuant to an exemption therefrom."
IN WITNESS WHEREOF this Agreement has been duly executed by the parties hereto
on the date first above written.
MOTORCYCLE CENTERS OF AMERICA, INC.
By:__________________________________
Xxxx Xxxxxxxxx, President
CASE'S LADDER, INC.
By:__________________________________
XXXXX XXXXXXX, CEO, for SELLER
_____________________________________
XXXXX XXXXXXX, CEO and Chairman
_____________________________________
XXXX XXXXX, COO and CFO
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They may not be sold or transferred in the absence of an effective registration
statement under those securities laws or pursuant to an exemption therefrom."
IN WITNESS WHEREOF this Agreement has been duly executed by the parties hereto
on the date first above written.
MOTORCYCLE CENTERS OF AMERICA, INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------
Xxxx Xxxxxxxxx, President
CASE'S LADDER, INC.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
XXXXX XXXXXXX, CEO, for SELLER
/s/ Xxxxx Xxxxxxx
---------------------------------------
XXXXX XXXXXXX, CEO and Chairman
/s/ Xxxx Xxxxx 4/21/99
---------------------------------------
XXXX XXXXX, COO and CFO
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SCHEDULE A
CASE'S LADDER INC.
Name of Shareholder No. of Shares of No. of Shares of Motorcycle
("Seller") Case's Ladder, Inc. Centers of America, Inc.
---------- ------------------- ------------------------
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MANAGEMENT AGREEMENT
This agreement dated April 19, 1999, is made by and between Entertainment
Universe, referred to as the "Company", and Xxxxxx X. Xxxxx
1. Services. The Company hereby employs Xxxxxx Xxxxx to perform the following
services in accordance with the terms and conditions set forth in this
agreement: Xx Xxxxx will consult with the officers and employees of the Company
concerning matters relating to the management and organization of the Company,
their financial policies, the terms and conditions of employment, and generally
any matter arising out of the business affairs of the Company.
2. Terms of Agreement. This agreement will begin upon the Company's acquisition
of Cases Ladder, Inc., and will run for a period of no less than 12 months from
the acquisition. Either party may cancel this agreement on sixty (60) days
notice to the other party in writing, by certified mail or personal delivery.
Upon termination of employment by the Company for any reason, Xxxxxx Xxxxx shall
be paid 1 years pay, including options and bonus, by the Company.
3. Place Where Services Will Be Rendered and Responsibilities. Xx. Xxxxx shall
perform most services in accordance with this contract in his own offices and/or
home. In addition, Xx. Xxxxx will perform services on the telephone and at such
other places as designated by the Company to perform these services in
accordance with this agreement. The responsibilities will be as follows but will
not be limited to: (a) Management of the Cases Ladder Internet site and all
activities associated with it; (b) Involvement in the growth and management of
all activities related to On-line entertainment and community; (c) Activities
related to software sales and Company acquisitions.
4. Payment to Xxxxxx Xxxxx. Xx. Xxxxx will be paid at the rate of $9166.67 per
month on a biweekly basis for work performed in accordance with this agreement.
All taxes and appropriate deductions will be administrated by the Company.
5. Additional Consideration to Xxxxxx Xxxxx. Xx. Xxxxx will be entitled to a
bonus no less than once per year, payable every six months from the date of the
acquisition of Cases Ladder. The bonus for Xxxxxx Xxxxx shall be based on
performance criteria set by the compensation committee.
6. Expenses incurred by Xxxxxx Xxxxx. Xx. Xxxxx will receive reimbursement for
all Company-mandated travel, mileage, entertainment and other reasonable
out-of-pocket expenses. Xx. Xxxxx will submit a statement setting forth the
expenses, and the Company will pay the amounts due within ten (10) days of
receipt.
7. Stock Options to Xxxxxx Xxxxx. Xx. Xxxxx will be granted stock options at the
quantity of 60K shares at a price of $10 per share option. These options will
vest quarterly equally over a 36 month period under the terms and conditions of
eUniverse's Stock Option Plan. The first option for 5,000 shares shall be
granted no later than 45 days after the purchase of such acquisition. The
exercise price of the options will be at $10 per share and in accordance with
the stock option plan.
8. Additional Benefits. The Company will offer Xx. Xxxxx, the opportunity to
participate in its medical, dental, life insurance, and other benefit programs
such as a car allowance and monthly expenses at a minimum equal to his current
medical/insurance/dental plan, but at terms no less favorable than those offered
to its officer of the Company.
9. Loans and deferred pay to the Company. Upon completion of the sale of Case's
Ladder to Entertainment Universe all loans as well as deferred pay that Cases
Ladder owes to Xx. Xxxxx shall be paid. The amount is not to exceed $10,000.00.
This obligation shall remain in force despite any termination of this agreement,
with or without cause. In addition, the Company shall provide Xx. Xxxxx with a 3
year $28,000
Page 2
Management Agreement
loan in the form of a Note Payable. Such Note shall carry no interest for 12
months, and after 12 months interest shall be charged at 7%. The 3 year note
shall be secured by an Xx. Xxxx'x stock in the Company. In addition, 50% of any
money received from bonuses and 50% of any profits Xx. Xxxxx receives from
either exercise of his options and sale of the stock received or from the
Company repurchasing such options, shall go towards repayment of the Note. A
check for the full amount of deferred pay as well as the loan shall be made to
Xx. Xxxxx no later than two weeks after the signing of the employment agreement.
10. Confidential Information. Xx. Xxxxx agrees that any information received by
the him during any furtherance of the employee's obligations in accordance with
this contract, which concerns the personnel, financial or other affairs of the
Company will be treated by the employee in full confidence and will not be
revealed to any other persons, firms or organizations except as necessary and
appropriate for Xx. Xxxxx to perform his duties under this Agreement or in
response to legal process.
11. Registration Rights. The Company agrees to register all option shares issued
to Xxxxxx Xxxxx so that they are tradable in the public market upon issuance.
12. Governing Law - This Agreement shall be construed and its performance
enforced in accordance with the laws of the State of California, excluding its
choice of law provisions.
13. Modifications - Any and all modifications, amendments or additions to this
Agreement shall be in writing. Similarly, any and all waivers of any terms of
this Agreement shall be in writing. Any and all oral modifications, amendments,
additions, and/or waivers shall be unenforceable.
14. Dispute Resolution - The Parties agree to submit any disputes arising under
or in relation to this Agreement to mediation with a mediator approved by the
Parties. If the Parties resolve their disputes through mediation, they shall
share the costs of mediation evenly but pay their own attorneys' fees and other
expenses related to mediation. If mediation fails to resolve all disputes within
thirty (30) days after submission to the mediator, then either Party may file a
law suit or request arbitration. The Parties agree that mediation is a
pre-condition to filing a law suit. The prevailing Party in any law suit or
arbitration relating to the transactions contemplated by this Agreement shall be
entitled to costs and expenses including reasonable attorneys fees and the
attorneys fees and expenses incurred in connection with mediation that failed to
resolve the dispute.
15. Severability - If a court of competent jurisdiction or arbitrator finds that
one or more provisions of this Agreement is or are illegal or unenforceable, the
remaining provisions of this Agreement shall remain in full force and effect as
if such provision or provisions never existed.
16. Waiver - No Party's right to require performance of another Party's
obligations under this Agreement shall be affected by any previous delay in
enforcing such right, express waiver of prior similar right to require
performance, or course of dealing.
17. Integration Clause. This Agreement constitutes the entire understanding
between the Parties and supersedes all prior proposals and agreements, oral or
written, and all prior or contemporaneous communications between the Parties
relating to the subject of this Agreement. This Agreement may only be amended or
modified by a writing signed by the Party against whom such amendment or
modification is sought to be enforced.
18. Notices. Notices under this Agreement shall be sufficient only if sent (a)
by overnight courier, or (b) by facsimile or other electronic means and by U. S.
Mail, or (c) personally delivered to the other Party. Notices shall be addressed
as follows:
To the Company: To Consultant
Page 3
Management Agreement
Xxxxxx Xxxxx
0000 Xxxxxxxxxxxx Xx.
Xxxxxxxx Xxxxxxx, XX 00000
Telephone: Telephone: (000)000-0000
Fax: Fax: (000) 000-0000
Any Party may change the above information by giving written notice as set forth
above.
19. Counterparts. This Agreement may executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same Agreement.
IN WITNESS WHEREOF, the Parties execute this Agreement as of the last date
written below.
Date: April 21, 1999 ENTERTAINMENT UNIVERSE, INC.
By:
--------------------------------------
------------------------------------------
Print Name and Title
Date: April 21, 1999 /s/ Xxxxxx Xxxxx
------------------------------------------
Xxxxxx Xxxxx
-----------------------------------------------------------------------------------------------------------------------------
Data
-----------------------------------------------------------------------------------------------------------------------------
Nominee Name Phone SSN CL Shrs eUniverse Shrs
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx Xxxxx Xxxxxxx 000-000-0000 (blank) 5,000 331
------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxx 000-000-0000 (blank) 5,000 331
------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx 000-000-0000 ###-##-#### 627,500 41,497
------------------------------------------------------------------------------------------------
Xxxx Xxxxx 000-000-0000 (blank) 7,500 496
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx 000-000-0000 (blank) 100,000 6,613
------------------------------------------------------------------------------------------------
Xxxxxx Xxxx 000-000-0000 (blank) 6,250 413
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx Total 751,250 49,681
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxx Datiana Xxxxxxx 000-000-0000 ###-##-#### 250,000 16,533
------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxx 000-000-0000 ###-##-#### 3,437,500 227,322
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxx Xxxxxxx 000-000-0000 ###-##-#### 125,000 8,266
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx 000-000-0000 na 125,000 8,266
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx 000-000-0000 ###-##-#### 125,000 8,266
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx 000-000-0000 ###-##-#### 125,000 8,266
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxx Total 4,187,500 276,919
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx Xxxxxxx Xxxxxxx 000-000-0000 ###-##-#### 50,000 3,307
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx 000-000-0000 ###-##-#### 300,000 19,839
------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx 000-000-0000 (blank) 1,250,000 82,664
------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx 000-000-0000 ###-##-#### 50,000 3,307
------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx 000-000-0000 ###-##-#### 50,000 3,307
------------------------------------------------------------------------------------------------
Xxx Xxxxxxx 000-000-0000 (blank) 71,250 4,712
------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx 000-000-0000 ###-##-#### 50,000 3,307
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxx 000-000-0000 ###-##-#### 31,250 2,067
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx Total 1,852,500 122,510
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxx Xxxxxx Xxxxx 000-000-0000 (blank) 24,375 1,612
------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxx 000-000-0000 ###-##-#### 36,563 2,418
-----------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxx Total 60,938 4,030
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx 000-000-0000 (blank) 18,750 1,240
------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx 000-000-0000 ###-##-#### 2,093,750 138,462
------------------------------------------------------------------------------------------------
Xxx Xxxxxx 000-000-0000 (blank) 12,500 827
------------------------------------------------------------------------------------------------
Xxxx Xxxxxx 000-000-0000 (blank) 62,500 4,133
------------------------------------------------------------------------------------------------
Xxx Xxxxxx 000-000-0000 (blank) 31,250 2,067
------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx 000-000-0000 (blank) 62,500 4,133
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx Total 2,281,250 150,862
-----------------------------------------------------------------------------------------------------------------------------
(blank) Xxxxx Xxxxxxxx 000-000-0000 ###-##-#### 65,000 4,299
------------------------------------------------------------------------------------------------
Xxx Xxxxx 000-000-0000 ###-##-#### 205,000 13,557
------------------------------------------------------------------------------------------------
C. Xxxxxxx Xxxxx 000-000-0000 (blank) 20,313 1,343
------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxxx 000-000-0000 ###-##-#### 33,750 2,232
------------------------------------------------------------------------------------------------
Xxxxx Xxxxx 000-000-0000 ###-##-#### 20,313 1,343
------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxxx 000-000-0000 (blank) 79,688 5,270
------------------------------------------------------------------------------------------------
Xxx Xxxxxx 000-000-0000 ###-##-#### 645,996 42,720
------------------------------------------------------------------------------------------------
Xxx Xxxxxxxx 000-000-0000 ###-##-#### 31,250 2,067
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxx 000-000-0000 (blank) 71,250 4,712
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx 000-000-0000 (blank) 71,250 4,712
------------------------------------------------------------------------------------------------
Xxx Xxxx 000-000-0000 ###-##-#### 20,313 1,343
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxx 000-000-0000 ###-##-#### 187,500 12,400
-----------------------------------------------------------------------------------------------------------------------------
(blank) Total 1,451,623 95,998
-----------------------------------------------------------------------------------------------------------------------------
Grand Total 10,585,061 700,000
-----------------------------------------------------------------------------------------------------------------------------
