EXHIBIT 2.3
AGREEMENT OF PURCHASE AND SALE
1. DATE AND PARTIES
This Agreement is dated June 29, 2001 and is entered into by and between
Total Creative, Inc., a ___________ corporation ("TCI"), 0000 Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, fax number 000 000 0000
and Total Film Group, a Delaware corporation ("Total Film") (collectively
"Sellers"), 0000 Xxxxxxxx Xxxxxxxxx, #000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, fax
number 000 000 0000, on one hand, and Viridian Entertainment, a California
corporation or assignee ("Buyer"), 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000, fax number 000 000 0000, on the other hand. Buyer and
Sellers are sometimes referred to individually as a "party" and collectively as
the "parties".
2. RECITALS
2.1 Total Film owns _____ issued and outstanding shares of capital stock
of TCI (individually a "share"), representing 100% of the issued and outstanding
shares.
2.2 Sellers desire to sell and Buyer desires to purchase substantially all
the assets of TCI free from its liabilities, on the terms and conditions set
forth below.
2.3 Sellers proposes to cause TCI to pay or settle all the existing
liabilities of TCI as of June 30, 2001.
2.4 TCI currently is the lessee of the premises known as 0000 Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 (the "Premises") under a
lease with Daishin U. S. A. Co., Ltd. (the "Landlord") for a term ending March
31, 2005 (the "Lease"), and Total Film has guaranteed the Lease.
3. PURCHASE AND SALE
TCI hereby agrees to sell its assets set forth under the heading "Assets"
on the Balance Sheet of TCI prepared as of June 29, 2001 (the "Balance Sheet"),
a copy of which is attached as Exhibit "A" including, without limitation, its
name, Total Creative, Inc., insurance policies on such assets and such other
assets as are shown on such Exhibit (collectively the "Assets"), and Buyer
hereby agrees to purchase the Assets and pay to TCI the purchase price, defined
below, on the terms and conditions set forth below. Buyer agrees that its use of
the name "Total Creative" is limited to a maximum term of 6 months, after which
Buyer must drop the use of the word "Total" in its name so as to avoid confusion
with the ongoing Total Group entities.
3.1 PURCHASE PRICE. Buyer agrees to pay to TCI, as provided below, the
purchase and sale price of $26,000 plus an amount equal to 20% of the net
profits, as defined below (the "20% Participation"), for each of the three
fiscal years beginning July 1, 2001 and ending June 30, 2004, from the operation
by Buyer, or a subsidiary of Buyer, of a business substantially similar to the
business conducted by TCI (the "TCI Business") during the last twelve months
(the "purchase price").
3.2 TCI BUSINESS & NET PROFITS. Buyer hereby agrees to organize a separate
division or subsidiary to operate a business similar to the TCI Business so that
it may account for the income and expenses of such a business for purpose of
calculating the 20% Participation. Buyer may discontinue such business at any
time without liability to Sellers. The net profits of the TCI Business shall be
determined using generally accepted accounting principles, consistently applied,
subject to excluding from allowable expenses interest, depreciation and any
salary paid to Xxxxxx Xxxxx.
3.3 RIGHT TO AUDIT. Sellers shall have the right to audit, at Sellers'
expense, the books and records of the TCI Business for a period of one year
following the end of each of the three fiscal years.
3.4 PAYMENT OF PURCHASE PRICE. Buyer agrees to pay the $26,000 portion of
the purchase price into an escrow account to be opened with or at a mutually
acceptable escrow holder. The escrow holder shall be obligated to release such
funds to TFG at such time as TFG delivers to Buyer reasonable evidence that it
has paid or settled all the debts of TCI as they exist as of June 30, 2001. The
20% Participation shall be payable yearly beginning on or before October 15,
2002 and continuing on the same date of each of the succeeding two fiscal years.
Buyer hereby agrees to deliver to Sellers together with such payment a statement
of profit and loss showing the calculation of the 20% Participation and the net
profits for the twelve month fiscal period ending on June 30th immediately
preceding the October 15 due date, from the TCI Business for such period. Buyer
shall be responsible for the payment of any sales tax due on the purchase of the
Assets.
3.5 THE CLOSING. The closing shall be at 11 a.m. on Friday, June 29, 2001,
or sooner (the "closing date") and it shall take place at the offices of Total
Film, 0000 Xxxxxxxx Xxxxxxxxx, #000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000.
4. FREE AND CLEAR OF LIENS & ENCUMBRANCES AND ADJUSTMENTS
4.1 NO LIENS OR ENCUMBRANCES. Buyer is purchasing the Assets effective
close of business June 30, 2001, free and clear of all liens, encumbrances or
claims of third parties.
4.2 ADDITIONAL LIABILITIES; SCHEDULE OF CREDITORS. The purchase price
shall be reduced by any liabilities of TCI accruing prior to July 1, 2001 and
not paid or settled by Sellers that Buyer is required to pay. Sellers will
deliver to Buyer
by the closing a schedule listing (a) in alphabetical order all the creditors of
TCI, (b) beside the name of each creditor shall be two columns, the first
containing the amount owed each and the second column showing the amount each
has agreed to accept as payment in full if a lesser amount, as of June 30, 2001,
and the total of each column. Sellers represent and warrant to Buyer that the
amounts shown on such schedule as the amounts each creditor has agreed to accept
as payment in full are true and correct.
4.3 PAYMENT OF CREDITORS. Sellers hereby covenant and agree to pay (a)
within 30 (thirty) days of the closing of this purchase agreement, the creditors
of TCI listed on the attached Exhibit "B", namely the creditors that Buyer
believes must be paid by such date in order not to jeopardize the business
currently being done by TCI and all salaries, accrued vacation pay to June 30,
2001 owing to the employees of TCI and all accrued and unpaid payroll and sales
taxes; and (b) on or before July 31, 2001, the amounts owed to all the other
creditors of TCI through June 30, 2001 including, without limitation, those
shown on the schedule referred to in paragraph 4.2 above. Buyer shall assume the
obligations for the computer equipment currently leased by TCI in the Premises
arising from and after July 1, 2001, at such time as Sellers shall have paid all
amounts owing on such obligations up through June 30, 2001. Buyer agrees to sign
a separate lease assumption agreement with Seller for this equipment, attached
as Exhibit X. Xxxxxxx shall remain responsible for the leases for equipment and
real estate related to the San Francisco space for which TCI was and may be
currently obligated, and as such, Seller shall retain possession of any
furniture and equipment that is covered under the San Francisco leases.
4.4 SUBLEASE. Sellers hereby agree to sublease the Premises to Buyer and
Buyer hereby agrees to sublease the Premises, on the same terms and conditions
as the Lease contain except that Buyer's obligations shall commence from and
after July 1, 2001 up through March 31, 2005, subject to Buyer's right to elect
to cancel such sublease, any time on giving Sellers written notice that Buyer
intends to cancel such sublease no earlier than six months following the deemed
receipt of such notice. Buyer shall pay on or before July 1, 2001 the rent for
July due on such date. Buyer shall not be required to pay a security deposit.
Buyer acknowledges having a copy of the Lease. The sublease shall include the
right to park up to four vehicles in the Wilshire Parking Facility, one of which
shall be a valet space, and the right to park up to 11 vehicles in the Doheny
Parking Facility, as those terms are defined in the Lease, on the same terms as
provided in the Lease, all at the expense of Buyer, at the then monthly rate
charged to Sellers by the Landlord, for such spaces. Such sublease shall give
Buyer the right to make such monthly rent payments directly to landlord. As
subtenant of the lease, Buyer is also responsible for paying all applicable
taxes and building fees associated with the space. Buyer and Seller both agree
that Seller will provide Buyer with an executable Sublease Agreement within 7
(seven) business days from the Closing of this agreement.
5. THE CLOSING
5.1 BUYER'S AND SELLERS' OBLIGATIONS TO EACH OTHER. On July 2, 2001, Buyer
shall deliver to an escrow holder to be selected, $26,000 by wire transfer or by
a bank cashier's check payable to escrow holder drawn on a bank that clears its
checks through the Los Angeles Clearing House. Each of Sellers shall deliver to
Buyer, and Buyer shall deliver to Sellers, its respective certified corporate
resolutions authorizing the entering into of this agreement and the closing of
the agreement all in a form reasonably acceptable to Buyer.
5.2 DOCUMENTS TO BE DELIVERED BY SELLERS. Sellers shall deliver to Buyer
duly executed by Sellers, or TCI, as the case may be, at the closing or as
provided below:
(a) their respective certified resolutions referred to above
within 7 days following the closing;
(b) An assignment of all of Sellers right, title and interest in the
leases for the computer equipment located at the Xxxxxxx Hills office of TCI;
(c) a xxxx of sale from Sellers listing the Assets and including a
representation and warranty that each of the Assets is being transferred by
Sellers free and clear of all liens, encumbrances and claims of third parties
and that Sellers have the authority to transfer such assets to Buyer without the
consent of any third parties, within 7 days following the closing ; and
(d) the sublease for the Premises in a form reasonably acceptable to
Buyer, within 7 days following the closing.
5.3 DOCUMENTS TO BE DELIVERED BY BUYER. Buyer shall deliver to Sellers
duly executed by Buyer at the closing or as provided below:
(a) its certified resolutions referred to above within 7 days
following the closing;
(b) an assumption of the liabilities for the computer equipment
located at the Xxxxxxx Hills office of TCI arising from and after July 1, 2001;
and
(c) the sublease for the Premises within 7 days following the
closing.
6. ACCOUNTINGS PRIOR TO THE CLOSING
Prior to the closing, Sellers shall cause TCI to deliver to Buyer a
schedule of the accounts receivable as of a date as close to June 30, 2001 as is
practicable. Sellers acknowledges that receivables due to TCI prior to June 30,
2001belong to Buyer
7. RECORDS OF THE COMPANY
The parties agree that TCI shall keep its own books and records except
that Buyer shall be assigned the software, a copy of the database containing the
business records of TCI and manuals for such software that TCI has used for
keeping its books and records. TCI agrees to allow Buyer the right to audit and
or inspect the books and records of TCI to verify that the liabilities of TCI
agreed to be paid will have been paid within the time specified as well as to
obtain information about any transactions with customers or suppliers that
occurred prior to the closing date so long as such inspections are conducted
during normal business hours and are preceded by 24 hours notice.
8. OMITTED INTENTIONALLY.
9. NON-COMPETE CLAUSE
Each of the Sellers covenants that each shall not compete with Buyer's
business in any manner in any county in the United States in which TCI did
business or had customers located during the past two years as well as in the
balance of the United States, for a period of three years from July 1, 2001.
Such non-compete shall apply to each in the capacity of an owner, partner,
employee or consultant, directly or indirectly, of any business similar to the
business now conducted by TCI anytime during the two years preceding July 1,
2001.
10. INTENTIONALLY OMITTED
11. LEGAL REPRESENTATION; WAIVER OF POTENTIAL CONFLICTS OF A INTEREST
11.1 Xxxxxx X. Xxxxxx, 000 Xxxxx Xxxxxx Xxxxx, #000, Xxxxxxx Xxxxx, XX
00000 has prepared this document based on the directions he has received from
Buyer and Sellers, as a scrivener for the parties and not as an advocate for
either Buyer or Sellers. Notwithstanding the foregoing, Buyer has agreed to pay
for the reasonable legal services of Xxxxxx in acting as scrivener and in
performing whatever services are required to close the contemplated transactions
11.2 Each of Buyer and each of the Sellers acknowledges being advised that
each has the right to have this Agreement and the proposed transaction reviewed
by an attorney of each's own choosing. Each has not as of the date of this
Agreement hired independent counsel, although each may elect to do so at
anytime.
11.3 Each of the Sellers and Buyer acknowledges that the activities of
Xxxxxx in acting as scrivener creates the possibilities of conflicts of interest
and each waives any such potential conflicts of interest.
12. BUYER'S INSPECTIONS; EMPLOYEES; SELLER'S INDEMNITY
12.1 INSPECTIONS. Buyer acknowledges that it is relying on the books and
records of TCI that were prepared by TCI under the control of Total Film. The
parties acknowledge that Xxxxxx Xxxxx, the President of Buyer, was formerly the
President and a shareholder of Total Film up to May 31, 2001, at which time his
employment ended and his shares of Total Film were purchased. Sellers represent
and warrant to Buyer that Sellers have not materially interfered with the
business of TCI since such date
12.2 EMPLOYEES. Buyer and Sellers acknowledge that TCI has notified all
its employees that their last day of employment is June 29, 2001. Buyer shall
have the right but not the obligation to hire any of the current employees of
TCI on such terms as Buyer and such employees shall agree to from and after June
29, 2001.
12.3 INDEMNITY. Sellers hereby agree to indemnify and hold harmless Buyer
from any liabilities of TCI existing as of June 30, 2001 or that arise later
that relate to acts taken or not taken prior to July 1, 2001, not disclosed to
Buyer in writing by the closing date. Buyer hereby agrees to indemnify and hold
harmless Sellers from any liabilities of the TCI Business arising from and after
July1, 2001.
13. USE OF FICTITIOUS NAME
Sellers agree that Buyer is acquiring the name "Total Creative Inc.," the
stationary bearing such name, the phone and fax numbers used by TCI and all
right to do business under such name. Sellers hereby covenant not to use such
name or one similar to it so long as Buyer continues to do business using such
name or one similar to it. Sellers shall cause TCI to change its name to a name
materially different and distinguishable from Total Creative, Inc. that is
subject to the approval of Buyer, which shall not be unreasonably withheld, by
amending its articles of incorporation immediately following the close.
14. CONFIDENTIALITY
Sellers shall hold in strict confidence all confidential information of the TCI
Business not otherwise generally available to the public (the "Confidential
Information"), and neither of the Sellers nor any of their affiliates or
representatives shall directly or indirectly (a) use or permit the use of any of
the Confidential Information for, or in connection with, any business of Sellers
or any of their affiliates or representatives or any other person whatsoever, or
for any purpose other than the analysis of the statements of profit and loss
provided by Buyer above, or (b) disclose or permit the disclosure of any of the
Confidential Information to any person or entity other than Sellers'
representatives; provided that (i) this obligation not to disclose shall not
extend to any Confidential Information which is or has become generally
available to the public through no act or omission of the party receiving the
information or any of its affiliates or representatives, and (ii) Sellers may
disclose any Confidential Information which is it legally compelled to do so
pursuant to legal process or regulatory requirement; provided however that
Sellers shall notify Buyer prior to disclosure of any Confidential Information
to any person pursuant to this paragraph.
15 MISCELLANEOUS
15.1 HEADINGS: The subject Headings of the paragraphs and subparagraphs of
this Agreement are included for convenience only and shall not affect the
construction or interpretation of any of its provisions.
15.2 ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement
between the parties pertaining to the subject manner contained in it and
supersedes all prior and contemporaneous agreements, representations, and
understandings of the parties. No supplement, modification, or amendment of this
Agreement shall be binding unless executed in writing by all the parties. No
waiver of any of the provisions of this Agreement shall be deemed, or shall
constitute, a continuing wavier. No waiver shall be binding unless executed in
writing by the party making the waiver.
15.3 ASSIGNMENT: This Agreement shall be binding on, and shall inure to
the benefit of, the parties to it and respective heirs, legal representatives,
successors and assigns.
15.4 GOVERNING LAW: The Agreement shall be construed in accordance with,
and governed by, the laws of the State of California as applied to contracts
that are executed and performed entirely in California.
15.5 SEVERABILITY: If any provision in this Agreement is held invalid or
unenforceable by any court of final jurisdiction, it is the intent of the
parties that the other provisions of this Agreement be construed to remain fully
valid, enforceable and binding on the parties.
15.6 ATTORNEYS' FEES. If any dispute arises under this agreement or in
connection with it, the prevailing party shall be entitled to recover his or her
reasonable attorneys' fees and court costs, as the court having jurisdiction
over this matter may award.
15.7 FURTHER ACTION. Each of Buyer and Seller agrees to execute and
deliver to the other such additional documents and perform such additional acts
as may be reasonably requested by the other to carry out the intent of the terms
of this agreement.
15.8 NOTICE. All notices under this agreement shall be in writing and
shall be deemed to have been duly given on the date of service if served
personally on the party to whom notice is to be given or on the second day after
mailing if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, and properly addressed to the
addresses first set forth above or by fax if sent to the numbers set forth
above.
A copy of each such notice shall be sent to Xxxxxx X. Xxxxxx, 000 Xxxxx
Xxxxxx Xxxxx, #000, Xxxxxxx Xxxxx, XX 00000.
Any party may change its address for purposes of this paragraph by giving
the other parties written notice of the new address in the manner set forth
above.
(signature page follows)
16. SIGNATURES
The parties have executed this agreement as of the date first set forth
above at Los Angeles, California.
Viridian Entertainment, a California
corporation, Buyer
By: /s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx, President
Total Film Group, a Delaware
corporation, Seller
By: /s/ Xxxx Xxxxxxx
Total Creative Inc., a ___________
_____________ corporation, Seller
By: /s/ Xxxx Xxxxxxx
Exhibit "A"
Assets
Total Creative Inc.
ASSETS:
Due form Match $ 4,449.19
------------------------
Total Assets: $ 4,449.19
------------------------
CASH ACCOUNTS:
Mercantile Bank - LA $ 3,079.33
Xxxxx Cash - LA $ 250.68
------------------------
Total Cash Accounts: $ 3,330.01
------------------------
ACCOUNTS RECEIVABLE:
Accounts Receivable - LA $ 99,592.64
Accounts Receivable - SF $ 13,090.37
Allowance for Doubtful Accounts - LA $(23,730.53)
Allowance for Doubtful Accounts - SF $(16,275.00)
------------------------
Total Accounts Receivable $ 72,677.48
------------------------
OTHER CURRENT ASSETS:
Prepaid Expenses - LA $ 22,983.61
Deposits $(75.00)
Employee Exchange Account $ 251.95
Due from TFG - Interoffice $ 50.92
Defferrred Costs $ 25,372.37
------------------------
Total Other Current Assets: $ 48,583.85
------------------------
FIXED ASSETS:
Furniture & Fixtures - LA $ 18,283.40
Acc. Dep. - Furniture & Fixtures - LA $(15,952.83)
Office Equipment - LA $ 279,161.19
Acc. Dep. - Office Equipment - LA $(179,640.58)
Editing Equipment $ 107,854.07
Acc. Dep. - Editing Equipment $(107,854.07)
Leasehold Improvements $ 75,679.51
Acc. Dep. - L/H Improvements $(2,238.50)
------------------------
Total Fixed Assets: $ 175,292.19
------------------------
OTHER ASSETS:
Goodwill - Xxxxxx Xxxxx $ 313,540.25
Acc. Amort - Goodwill M/R $(47,031.03)
------------------------
$ 266,509.22
------------------------
TOTAL ASSETS $ 570,841.94
========================
Exhibit "B"
List of Creditors to be Paid
As of June 30, 2001
(in addition to employees)
NAME AMOUNT
American Business Leasing - Lease payments for computers $2,179
Exhibit "B"
Amount
Vendor Due
--------------------------------------------------------- -------------
Total Creative as of 6/29/01
Abacus 1 Computer Supplies 1,082
Adweek 808
Andre Ink 1,000
American Business Leasing 2,179
Xxxxxxxx Digital Prepress 1,031
Arrowhead Water 298
California Federal Bank 22,833
Canon Business System 953
Catapult Integrated Systems 800
CD&L 137
Citicroup Vendor 4,806
Clients & Profits 893
Coast Litho 13,258
Creative Oxygen 26,361
Xxx Xxxxx 2,913
Xxxxx Xxxx 450
Xxxxx Urastu 345
Dell Financial Services 2,038
Deluxe Business Forms 101
Xxxxx Media 7,948
IC Capital 14,245
Loco Toons 2,500
Driving Force Limousines 133
LA Department of Water 760
AD Delivery 1,056
Eagle Security 2,070
Federal Express 2,575
First Choice 1,166
Friendlander Cherwon Capper & Pardell 2,727
GDS Publishing Limited 2,250
Xxxxxx Xxxxx 2,888
Image Bank 1,299
IGIPIX 831
InMac 5,194
JT&A 3,871
Killer Tracks 1,150
King Relocation 5,712
Los Angeles County Tax Collector 6,492
Xxxx Xxxxxxxxx 3,777
Xxxxxxx Xxxxx 6,000
Messengers & Distribution 131
Metafor Digital 2,285
Meta Taggers 97,660
Xxxxxx X'Xxxxxx 200
O Day Printing 620
Pacific Graphics 3,846
Pacific Xxxx 118
Pan Records 150
Pitney Xxxxx Inc. 1,676
Primary Colors 1,980
Robins Xxxxxx & Xxxxxx 2,663
Xxxxxxxx Diamant 28,640
Xxx Xxxx 10,387
Savin 1,276
SFC Capital Group 2,170
Shadow Broadcast Services 4,250
State Board of Equalization 606
Xxxxx Sukyun 3,868
Still Photo Lab, Inc. 375
Superior National 787
Xxx Xxxxx 5,000
Xxx Xxxx 1,250
Trustmark Insurance 589
Verizon Wireless-LA 000
Xxxxxx Xxxxxxx & Xxxxxxxx 294
Westcoast Logistics 355
Wil Copy 000
Xxxxx Xxxx Financial Partners 2,675
Sub-Total TCI AP 331,734
Balance Sheet Items
Mercantile Bank 90,000
West America Bank 23,531
Sales Tax Liability 1,821
Total TCI 447,086
Assignment & Assumption of Equipment Leases
ASSIGNMENT
The undersigned hereby assign to Viridian Entertainment and its successors and
assigns, as assignee, all their right title and interest in and to those certain
equipment leases effective July 1, 2001 set forth below:
1. Astro Office Products, now Copelco, lessor, Total Film Group, lessee,
lease# 0862870 for the Canon color copier/printer;
2. Astro Office Products, now Copelco, lessor, Total Film Group, lessee,
lease # 0862871, for the CanonGP200S Black and white copier;
3. Pacifica Capital, now American Business, lessor, Total Film Group and
Total Creative Inc. are lessees, for software including Quak,
Illustrator, Office 98 among others, and the RAID array and hard drives
for the TCI Springfield file server;
4. Pacifica Capital, now Imperial Business Credit, lessor, Total Film
Group and Total Creative Inc. are lessees, for 6 Apple G3 workstations,
3 Apple Imac workstations, with extra memory and other peripherals;
5. Pacifica Capital, now SFC Capital, lessor, Total Film Group and Total
Creative Inc. are lessees, for 2 network switches, 6 network interface
cards, a DLT tape backup drive, a Netopia dual analog router with adapter,
making it an Ethernet router, Monitor calibration software and CPU part of
Springfield network file server;
6. Savin copier lease (lease missing);
7. Pitney Xxxxx postage machine (lease missing).
The undersigned represent and warrant to assignee that they the leases are in
full force and effect, they have the authority to assign such leases without the
consent of any third parties and there are no existing defaults under any of
such leases.
Date: June 30, 2001
Total Film Group, a Delaware Total Creative Inc.,
acorporation, Assignor _________corporation, Assignor
By: /s/ Xxxx Xxxxxxx
By: Xxxx Xxxxxxx, CEO
Name & title name & title
ASSUMPTION
The undersigned, Viridian Entertainment, hereby assumes all the obligations of
Assignors named above arising under said leases from and after July 1, 2001,
provided that assignors have paid all their obligations that were due and
payable under said leases up through June 30, 2001.
Date: June 30, 0000
Xxxxxxxx Xxxxxxxxxxxxx
By: /s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx, President
