Exhibit 2.01
--------------------------------------------------------------------------------
STOCK AND ASSET PURCHASE AGREEMENT
Dated September 3, 1998
By and Between
COLORSMART, INC.
and
MAGNUM DIGITAL SERVICES CORPORATION
--------------------------------------------------------------------------------
TABLE OF CONTENTS
INTRODUCTION 5
RECITALS 5
ARTICLE I. PLAN OF REORGANIZATION 5
1.01 Sale and Transfer of MAGNUM Stock 5
1 .02 Consideration at Closing 5
1.02 Consideration at Closing 5
1.03 Assignment of Contracts and Assumption of
Obligations 6
1.04 Plan of Reorganization 6
ARTICLE II. CLOSING
2.01 Closing 6
Date 6
2.02 Delivery 6
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER 7
3.01 Title to Shares 7
3.02 Authorization 7
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF MAGNUM 7
4.01 Organization 8
4.02 Capitalization 8
4.03 MAGNUM Subsidiaries 8
4.04 Validity of Agreement 8
4.05 MAGNUM Financial Statements 8
4.06 Events Since Date of MAGNUM Balance Sheet 9
4.07 Properties 11
4.08 Accounts Receivable 11
4.09 Taxes 12
4.10 Compensation 12
4.11 Compliance with Law 12
Litigation 13
4.13 Contracts 13
4.14 Real Property 14
4.15 Proprietary Rights 15
4.16 Toxic Wastes; Employee Safety, etc 15
4.17 Insurance 15
4.18 Bank Accounts 16
4.19 No Conflict 16
4.20 No Default 16
4.21 Certain Advances 16
4.22 Related Parties 17
4.23 Copies of Certain Documents 17
4.24 Underlying Documents 17
4.25 Disclosure 17
4.26 Effect of Agreement 17
4.27 Indemnification of ColorSmart 18
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF COLORSMART 19
5.01 Organization 19
5.02 Validity of Agreement 19
5.03 Effect of Agreement 19
5.04 Indemnification of MAGNUM and
the Shareholder 21
ARTICLE VI. ACCESS TO INFORMATION; CONFIDENTIALITY 22
6.01 Access 22
6.02 Confidentiality 23
ARTICLE VII. COVENANTS OF MAGNUM AND THE SHAREHOLDER 23
7.01 Conduct of Business 23
7.02 Notice of Certain Adverse Changes, Defaults
or Claim 24
7.03 Actions Requiring Consent 24
7.04 Implementation of Representations and Warranties 24
7.05 Communications 24
7.06 Other Negotiations 24
7.07 Cooperation 25
7.08 Facilitation of Public Offering
ARTICLE VIII. COVENANTS OF COLORSMART 25
8.01 Implementation of Representations and Warranties 25
8.02 Communications 25
8.03 Registration of ColorSmart Stock 25
8.04 Additional SEC Documents 26
ARTICLE IX. SECURITIES LAW MATTERS 26
9.01 Securities Act Exemptions 26
9.02 Stock Restrictions 26
9.03 Representations of ColorSmart 26
9.05 Legend Restrictions 27
ARTICLE X. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDER 27
10.01 Accuracy of Representations and Warranties 27
10.02 Fulfillment of Covenants 27
10.03 Approval of Sale 27
10.04 No Litigation 27
ARTICLE XI. CONDITIONS TO OBLIGATIONS OF COLORSMART 28
11.01 Accuracy of Representations and Warranties 28
11.02 Fulfillment of Covenants 28
11.03 Approval of Sale 28
11.04 Consents Obtained 28
11.05 No Litigation 28
11.06 Accountant's Review 28
11.07 Accounting Treatment 29
11.08 ColorSmart Review 29
11.09 Resignation of Directors 29
11.10 Sale of MAGNUM Stock 29
ARTICLE XII. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS 29
ARTICLE XIII. PAYMENT OF EXPENSES 29
13.01 Expenses 29
13.02 Brokers 30
ARTICLE XIV. GENERAL PROVISIONS 30
14.01 Notices 30
14.02 Headings 31
14.03 Counterparts 31
14.04 Assignment 31
14.05 Waiver 31
14.06 Entire Agreement 31
14.07 Good Faith 31
14.08 Applicable Law 32
14.09 Severability 32
SCHEDULE OF EXHIBITS 33
STOCK AND ASSET PURCHASE AGREEMENT
THIS STOCK AND ASSET PURCHASE AGREEMENT ("Agreement") is made and entered
into as of the day of September 3, 1998, by and between ColorSmart, Inc., a
Nevada corporation ("ColorSmart") and Magnum Digital Services Corp., a Florida
corporation ("MAGNUM"); and the sole shareholder of Magnum, Xxxxxx XxXxxxxx (the
"Shareholder").
RECITALS:
A. The Shareholder is the holder of one-hundred percent (100%) of the
outstanding voting stock of MAGNUM (the "MAGNUM Stock") and the owner in fee
simple title of certain real property upon which the MAGNUM business is
currently conducted ("MAGNUM Real Estate");
B. ColorSmart desires to purchase from the Shareholder, and the Shareholder
desires to sell to ColorSmart, all of the outstanding MAGNUM Stock owned by
Shareholder in exchange for the consideration described herein; and
C. The parties desire to effect the transaction pursuant to plan of
reorganization under Section 368(a)(1)(B), of the Internal Revenue Code of 1986,
as amended (the "Code") [it is unclear to me whether this transaction needs to
be accounted for as a reorganized for IRS purposes--I don't think so].
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:
ARTICLE I.
PLAN OF REORGANIZATION
1.01 Sale and Transfer of MAGNUM Stock. Subject to the terms and
conditions of this Agreement, on the Closing Date (as hereinafter defined) the
Shareholder agrees to sell, and ColorSmart agrees to purchase, all of the shares
of MAGNUM Stock owned by the Shareholder, and Shareholder agrees to convey
ownership free and clear of any liens or encumbrances.
1.02 Consideration. As payment for the MAGNUM Stock, ColorSmart shall
deliver at closing as hereinafter defined, to the Shareholder by certified bank
check or wire transfer, the sum of $500,000.00 ("Purchase Price") in cash. In
addition to the cash payment to seller, ColorSmart will pay the balances due on
all outside equipment leases, of which is not to exceed $275,000.00. Further, to
the aforementioned ColorSmart shall also delivery to the seller 200,000 of
ColorSmart ordinary shares, each share shall carry one (1) vote which is
consistent with all ColorSmart shareholders.
1.03 Assignment of Contracts and Assumption of Obligations.
[are there any special assignments or assumptions contemplated?]
1.04 Plan of Reorganization. The parties hereby adopt this Agreement as a
plan of reorganization under Section 368(a)(l)(B) of the Code.
ARTICLE II.
CLOSING
2.01 Closing Date. The closing of the purchase and sale of the MAGNUM
Stock,(the "Closing") shall be held at the offices of MAGNUM on or before
November 30, 1998 or at such other time and place upon which ColorSmart and
MAGNUM may agree in writing (the "Closing Date"); provided, however, that any
agreement postponing the Closing Date beyond November 30, 1998 shall also
require the consent of all the parties hereto.
2.02 Delivery. At the Closing, the Shareholder shall deliver to ColorSmart
a stock certificate or certificates, duly endorsed with signatures guaranteed,
representing the shares of MAGNUM Stock to be purchased from such Shareholder
and totaling an aggregate of_____________thousand (______) shares, duly endorsed
with appropriate signature guarantees for transfer. Upon receipt of the stock
certificate or stock certificates referenced in the preceding sentence, and all
other conditions to Closing are satisfied, ColorSmart shall cause to be
delivered to the Shareholder the Purchase Price.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
The Shareholder represents and warrants to ColorSmart as set forth below
that:
3.01 Title to MAGNUM Stock. Shareholder is the owner, beneficially and of
record, of all of the outstanding shares of capital stock issued by MAGNUM and
to be sold by such Shareholder thereunder, free and clear of any liens,
encumbrances, security agreements, options, claims, charges or restrictions of
any nature whatsoever. Further, that such Shareholder shall cause his shares to
be voted in favor of the consummation of the transactions contemplated by this
Agreement, at any meeting of such Shareholder which may be required hereunder.
3.02 Authorization. Such Shareholder has the full power and authority to
execute and deliver this Agreement and to execute and deliver any and all other
collateral agreements hereto and which are referred to as a part hereof. This
Agreement constitutes the valid and binding obligation of such Shareholder,
enforceable in accordance with its terms, except as enforcement may be limited
by applicable bankruptcy laws or other similar laws affecting creditors' rights
generally and by principles of equity.
ARTICLE IV.
JOINT REPRESENTATIONS AND WARRANTIES OF
MAGNUM AND THE SHAREHOLDER
Subject to and except for the information which is set forth in a list of
exceptions, identified by the Section in this Article to which they pertain, and
contained in a schedule delivered to ColorSmart prior to the execution of this
Agreement and signed for identification on behalf of ColorSmart and MAGNUM (the
"MAGNUM Schedule"), MAGNUM and the Shareholder jointly and severally represent
and warrant to ColorSmart that:
4.01 Organization. MAGNUM is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida, and has
full corporate power and authority to carry on its business as it is now being
conducted. MAGNUM is duly qualified to do business and is in good standing in
each jurisdiction in which the nature of its business or properties make such
qualification necessary, except where the failure to be so qualified will not
have a material adverse effect on MAGNUM.
4.02 Capitalization. The authorized capital stock of MAGNUM consists
of____________ shares of Common Stock all of which is issued and outstanding.
All such outstanding shares have been duly authorized, are validly issued, fully
paid and nonassessable and not subject to preemptive rights created by statute,
MAGNUM's Articles of Incorporation or Bylaws or any agreement to which MAGNUM is
a party or by which it is bound. All such outstanding shares have been issued in
accordance with all applicable state and federal securities laws. Except as set
forth herein, there are no options, warrants, calls, rights, commitments or
agreements of any character to which MAGNUM is a party or by which it is bound
obligating MAGNUM to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of its capital stock or obligating MAGNUM to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement.
4.03 MAGNUM Subsidiaries. MAGNUM owns no shares of capital stock directly
or indirectly, of any other corporation, partnership or joint venture interest.
4.04 Validity of Agreement. MAGNUM has corporate power and authority to
execute and deliver this Agreement. This Agreement constitutes the valid and
binding obligation of MAGNUM, enforceable in accordance with its terms, except
as enforcement may be limited by applicable bankruptcy laws or other similar
laws affecting creditors' rights generally and by principles of equity. The
execution and delivery of this Agreement by MAGNUM, and the consummation of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action, and such execution and delivery do not require the consent,
approval or authorization of any person, public authority or other entity.
4.05 MAGNUM Financial Statements. MAGNUM has furnished to ColorSmart true
and correct copies of its unaudited statements of operations, statements of
shareholders' equity and statements of changes in financial condition for its
fiscal year ended December 31, 1997, and for the interim period from January
1,1998 to June 30, 1998, and MAGNUM's unaudited balance sheets as of the end of
such fiscal period (the balance sheet as of December 31, 1997, and as of June
30, 1998, hereinafter referred to as the "MAGNUM Balance Sheets", and all such
financial statements, together with the notes thereto, being hereinafter
referred to collectively as the "MAGNUM Financials"). All of the MAGNUM
Financials: (i) are in accordance with MAGNUM's books and records; (ii) present
fairly the financial position of MAGNUM and the results of its operations as of
the respective dates and for the periods indicated thereon (subject to normal
adjustments);
and (iii) have been prepared in accordance with generally accepted accounting
principles, applied on a consistent basis. At the date of the MAGNUM Balance
Sheets, MAGNUM had no material liabilities or obligations, fixed, contingent or
otherwise, not set forth on or reserved against in the MAGNUM Financials, or the
accompanying notes thereto, or in the MAGNUM Schedule. For purposes of this
Agreement, "materiality" shall mean amounts in excess of $10,000 either
individually or in the aggregate.
4.06 Events Since Date of MAGNUM Balance Sheets. Since the date of the
MAGNUM Balance Sheet, except as otherwise contemplated by this Agreement, and
except as described in the MAGNUM Schedule, MAGNUM has conducted its business
only in the ordinary and usual course and, without: (i) limiting the generality
of the foregoing:
(a) MAGNUM has not sustained any damage, destruction or loss by reason of
fire, explosion, earthquake, casualty, labor trouble, requisition or taking of
property by any government or agency thereof, windstorm, embargo, riot, act of
God or public enemy, flood, accident, revocation of license or right to do
business, total or partial termination, suspension, default or modification of
contracts, governmental restriction or regulation, other calamity, or other
similar or dissimilar event (whether or not covered by insurance) materially and
adversely affecting the condition (financial or otherwise), business, net worth,
assets, properties or operations of MAGNUM taken as a whole.
(b) There have been no changes in the condition (financial or otherwise),
business, net worth, assets, properties, operations, obligations or liabilities
(fixed or contingent) of MAGNUM which, in the aggregate, have had or may be
reasonably expected to have (whether before or after the Closing Date) a
materially adverse effect on the condition (financial or otherwise), business,
net, worth, assets, properties or operations of MAGNUM as a whole.
(c) MAGNUM has not issued, or authorized for issuance, any equity
security, bond, note or other security or granted, or entered into, any
commitment or obligation to issue or sell any such equity security, bond, note
or other security, whether pursuant to offers, stock option agreements, stock
bonus agreements, stock purchase plans, incentive compensation plans, warrants,
calls, conversion rights or otherwise.
(d) MAGNUM has not incurred additional debt for borrowed money, nor
incurred any obligation or liability (fixed, contingent or otherwise) except in
the ordinary and usual course of business.
(e) MAGNUM has not declared or made any dividend, payment or other
distribution on or with respect to any share of its capital stock.
(f) MAGNUM has not purchased, redeemed or otherwise acquired or committed
itself to acquire for a consideration, directly or indirectly, any share or
shares of its capital stock.
(g) MAGNUM has not mortgaged, pledged, otherwise encumbered or subjected
to lien any of its assets or properties, tangible or intangible, nor committed
itself to do any of the foregoing, except for liens for current taxes which are
not yet due and payable and purchase money liens arising out of the purchase or
sale of products or services made in the ordinary and usual course of business.
(h) MAGNUM has not disposed of, or agreed to dispose of, any asset or
property, tangible or intangible, except in the ordinary and usual course of
business, and in each case for a consideration at least equal to the fair value
of such asset or property, nor leased or licensed to others (including officers
and directors), or agreed to lease or license, any asset or property.
(i) MAGNUM has not purchased or agreed to purchase or otherwise acquire
any debt or equity securities of any corporation, partnership, joint venture,
firm or other entity.
(j) MAGNUM has not entered into any transaction or contract, or made any
commitment to do the same, except in the ordinary and usual course of business
and not involving an amount in any case in excess of $10,000 nor waived any
right of substantial value or canceled any debt or claim or voluntarily suffered
any extraordinary loss.
(k) MAGNUM has not sold, assigned, transferred or conveyed, or committed
itself to sell, assign, transfer or convey, any Proprietary Right (as defined in
Section 4.15).
(l) MAGNUM has not effected or agreed to any amendment or supplement to
any employee profit sharing, stock option, stock purchase, pension, bonus,
incentive, retirement, medical reimbursement, life insurance, deferred
compensation or any other employee benefit plan or arrangement.
(m) MAGNUM has not effected or agreed to effect any change in its
directors or executive management.
(n) MAGNUM has not effected or committed itself to effect any amendment or
modification to its Articles of Incorporation or Bylaws.
4.07 Properties. The MAGNUM Balance Sheets reflects all of the assets and
properties, real and personal, used by MAGNUM in its business or otherwise held
by it, except for: (i) property acquired or disposed of in the ordinary and
usual course of business since the date of such balance sheet; and (ii) property
not required under generally accepted accounting principles to be reflected
thereon; and (iii) the MAGNUM Real Estate. Except as set forth in the MAGNUM
Schedule, MAGNUM has good and marketable title to all assets and properties
listed on the MAGNUM Balance Sheet and thereafter acquired, free and clear of
any imperfections of title, lien, claim, encumbrance, restriction, charge or
equity of any nature whatsoever, except for the lien of current taxes not yet
due and payable. All of the fixed assets and properties listed on the MAGNUM
Balance Sheet and thereafter acquired are in good operating condition and are
free from any material defect. Attached hereto and made a part hereof as Exhibit
4.07 is a full and complete legal description of the MAGNUM Real Estate.
4.08 Accounts Receivable. All of the accounts receivable of MAGNUM shown
on the MAGNUM Balance Sheet or thereafter acquired arose and are collectible in
the ordinary and usual course of MAGNUM's business, except that the value of any
account receivable the collection of which is doubtful or which is subject to a
defense or set-off has been written down to an amount not in excess of
realizable market value or adequate reserves or allowances therefor have been
provided. The values at which accounts receivable are carried reflect the
accounts receivable valuation policy of MAGNUM, which is consistent with its
past practice and in accordance with generally accepted accounting principles
applied on a consistent basis.
4.09 Taxes. MAGNUM has duly filed with the appropriate United States,
state, local and foreign governmental agencies, all tax returns and reports
required to be filed and has paid or accrued in full all taxes, interest,
penalties, assessments or deficiencies, if any, due to, or claimed to be due by,
any taxing authority. The MAGNUM Balance Sheet includes adequate provision for
all such taxes, interest, penalties, assessments or deficiencies, if any,
through the date indicated thereon. MAGNUM has not executed or filed with any
taxing authority any agreement extending the period for assessment or collection
of any taxes. MAGNUM is not a party to any pending action or proceeding, nor, to
the best of its knowledge, is any such action or proceeding threatened by any
governmental authority for the assessment or collection of taxes, interest,
penalties, assessments or deficiencies, and no claim for assessment or
collection of taxes, interest, penalties, assessments or deficiencies has been
asserted against it. No issue has been raised by any federal, state, local, or
foreign taxing authority in connection with an audit or examination of MAGNUM
tax returns, business or properties which has not been settled or resolved.
4.10 Compensation. The MAGNUM Schedule contains a full and complete list
of all persons who served as directors, officers, employees or consultants of
MAGNUM at June 30, 1998, specifying their names and job designations, the annual
compensation paid or payable to such persons and the basis of such compensation,
whether fixed or commission or a combination thereof. Except as otherwise
disclosed in the MAGNUM Schedule, since June 30, 1998, there his been no
material change in compensation, by means of wages, salaries, bonuses,
gratuities or otherwise, to any such director, officer, employee or consultant
of MAGNUM.
4.11 Compliance with Law. Except for possible minor exceptions, the curing
or non-curing of which would not have a material effect on the condition
(financial or otherwise), business, net worth, assets, properties, or operations
of MAGNUM taken as a whole, the business of MAGNUM has been conducted in
accordance with all applicable laws, regulations, orders and other requirements
of governmental authorities, including, without limiting the generality of the
foregoing, all laws, regulations and orders relating to employment practices and
procedures and the health and safety of employees. MAGNUM has not received any
notice of alleged violations of any of the foregoing.
4.12 Litigation. Except as set forth in the MAGNUM Schedule, there is no
claim, dispute, action, proceeding, suit, appeal or investigation, at law or in
equity, pending against MAGNUM or involving any of its business or properties,
before any court, agency, authority, arbitration panel or other tribunal, and,
to the best knowledge of MAGNUM and the Shareholder, none has been threatened.
To the best knowledge of MAGNUM and the Shareholder, there are no facts which,
if known to shareholders, customers, governmental authorities or other persons,
would result in any such claim, dispute, action, proceeding, suit, appeal or
investigation which would have a material adverse effect on the condition
(financial or otherwise), business, net worth, assets, properties or operations
of MAGNUM taken as a whole. Except as set forth in the MAGNUM Schedule, MAGNUM
is not subject to any order, writ, injunction or decree of any court, agency,
authority, arbitration panel or other tribunal, or in default with respect to
any notice, order, writ, injunction or decree.
4.13 Contracts. The MAGNUM Schedule contains a full and complete list
(subject in the case of clause (i) below to the dollar amount indicated therein)
of each partially or totally executory contract or agreement to which MAGNUM is
a party, or by which it is bound in any respect, including, without limitation,
any and all: (i) contracts or agreements for the purchase, sale, lease or other
disposition of equipment, goods, materials, research and development, supplies,
studies, or capital assets, or for the performance of services, in any case
involving more than $10,000, except that such limitation as to dollar amount
shall not apply as to any contracts or agreements covered by Section 4.22; (ii)
contracts or agreements for the joint performance of work or services, and all
other joint venture or teaming agreements, (iii) management or employment
contracts, consulting contracts, collective bargaining contracts or termination
and severance agreements; (iv) notes, mortgages, deeds of trues, loan
agreements, security agreements, guarantees, debentures, indentures, credit
agreements and other evidences of indebtedness; (v) pension, retirement, profit
sharing, deferred compensation, bonus, incentive, life insurance,
hospitalization, or other employee benefit plans or arrangements (including,
without limitation, any contracts or agreements with trustees, insurance
companies or others relating to any such employee benefit plan or arrangement);
(vi) stock option, stock purchase, warrant, repurchase or other contracts or
agreements relating to any shares of capital stock; (vii) contracts or
agreements with agents, brokers, consignees, sales representatives or
distributors; (viii) contracts or agreements with any director, officer,
employee, consultant or shareholder; (ix) powers of attorney or similar
authorizations granted to third parties; and (x) licenses, sublicenses, royalty
agreements, and other contracts or agreements to which MAGNUM is a party, or
otherwise subject, relating to technical assistance or to Proprietary Rights (as
defined in Section 4.15). MAGNUM is not a party to, nor bound by, any contract
or agreement which: (A) MAGNUM can reasonably foresee will result in any
material loss upon the performance thereof (including any material liability for
penalties or damages, whether liquidated, direct, indirect, incidental or
consequential, or down time charges); and (B) is not reflected or adequately
reserved against on the MAGNUM Balance Sheets. No party has raised any claim,
dispute or controversy or withheld payments from MAGNUM with respect to any of
its contracts nor has MAGNUM received notice or warning of alleged
nonperformance, delay in delivery or other noncompliance
with respect to the obligations of MAGNUM under any of its contracts, nor are
there any facts which exist indicating that any of such contracts may be totally
or partially terminated or suspended by the other party thereto. MAGNUM has not
entered into any contract or agreement containing covenants limiting its right
to compete in any business with any person. As used in this Agreement, the terms
"contract" and "agreement" mean and include every contract, agreement and
commitment whether written or oral.
4.14 Real Property. The MAGNUM Schedule contains a full and complete list
of all real property leased by MAGNUM. All such property is held under valid and
enforceable leases, copies of which have been delivered to ColorSmart and as to
which neither party to the lease is in material default. MAGNUM does not own any
real property in fee simple. To the best knowledge of MAGNUM, the operations of
MAGNUM on any of such real property, nor any improvement thereon, violate any
applicable building code, zoning requirement, or pollution control ordinance or
any other regulation or statute applicable to such real property.
4.15 Proprietary Rights. The MAGNUM Schedule contains a full and complete
list of all trademarks, trade names, service marks, and copyrights, or
applications therefor, owned or used by MAGNUM. MAGNUM owns, or possesses
adequate licenses or other rights to use, all trademarks, trademark
applications, service marks, trade names, copyrights, inventions, drawings,
computer software, designs, trade secrets, customer lists, proprietary know-how
or information, or other rights with respect thereto (collectively referred to
as "Proprietary Rights") required for or incident to the operation, sale and use
of all products and services sold or provided by MAGNUM, free and clear of any
right, lien, encumbrance or claim of others, including without limitation
present or former employees of MAGNUM or their former employers; provided,
however, that the possibility exists that other persons, completely independent
of MAGNUM or its employees or agents, could have developed trade secrets,
customer information or items of technical information similar or identical to
that of MAGNUM. MAGNUM is not aware of any such development by other persons of
similar or identical trade secrets or technical information. MAGNUM has taken
reasonable security measures to protect the secrecy and confidentiality of such
of its Proprietary Rights, the value of which depends upon such secrecy and
confidentiality.
4.16 Toxic Wastes; Employee Safety etc. To the best of its knowledge,
MAGNUM makes adequate provision for the control, removal, disposal and storage
of all toxic wastes, if any, generated by its business operations. MAGNUM is not
presently in violation of any federal or state law, regulation, ordinance, or
the like governing protection of the environment and human health and safety
regarding toxic wastes. MAGNUM is not presently in violation of any provision of
OSHA or any regulation promulgated thereunder. No action, proceeding, claim,
suit or the like is pending or has been threatened against by any government
agency or any person with respect to toxic wastes, occupational health and
safety or environmental damage, nor is MAGNUM aware of any potential claims
concerning any such matters.
4.17 Insurance. The MAGNUM Schedule contains a full and complete list of
all policies of insurance to which MAGNUM is a party or is a beneficiary or
named insured, and MAGNUM has in full force and effect, with all premiums due
thereon paid, the policies of insurance set forth therein. All the insurable
properties of MAGNUM are insured in amounts and coverages and against risks and
losses which are adequate and usual for similar properties and businesses.
4.18 Bank Accounts. The MAGNUM Schedule contains a full and complete list
of all the bank accounts of MAGNUM together with the names of the persons
authorized to draw thereon. All cash in such accounts is held in demand deposits
and is not subject to any restriction or limitation as to withdrawal.
4.19 No Conflict. The execution and delivery of this Agreement by MAGNUM
and the performance of its obligations hereunder: (i) are not in violation or
breach of, and will not conflict with or constitute a default under, any of the
terms of its Articles of Incorporation or Bylaws, or any note, debt instrument,
security agreement, lease, deed of trust or mortgage, or any other contract,
agreement or commitment binding upon MAGNUM or any of its assets or properties;
(ii) will not result in the creation or imposition of
any lien, encumbrance, equity or restriction in favor of any third party upon
any of its assets or properties; and (iii) will not conflict with or violate any
applicable law, rule, regulation, judgment, order or decree of any government,
governmental instrumentality or court having jurisdiction over MAGNUM or any of
its assets or properties. The MAGNUM Schedule contains a full and complete list
of all necessary consents, waivers and approvals of third parties required to be
obtained by MAGNUM in connection with the execution and delivery of this
Agreement by MAGNUM and the performance of its obligations hereunder.
4.20 No Default. MAGNUM has in all respects performed, or is now
performing, the obligations of, and is not in material default (and would not by
the lapse of time and/or the giving of notice be in material default) in respect
of, any note, debt instrument, "security agreement, option to purchase, lease,
deed of trust or mortgage, or any other material contract, agreement or
commitment binding upon it or its assets or properties. Each of the material
contracts, agreements or other instruments described on the MAGNUM Schedule is a
legal, binding, and enforceable obligation by or against it. To the best
knowledge of MAGNUM, no party with whom it has an agreement or contract, which
is of material importance to the condition (financial or otherwise), business,
net worth, assets, properties, or operations of MAGNUM taken as a whole, is in
default thereunder or has breached any terms of provisions thereof in a material
way.
4.21 Certain Advances. There are no receivables of MAGNUM owing by
directors, officers, employees, consultants or its shareholders, or owing by any
affiliate of any director or officer of MAGNUM, other than advances in the
ordinary and usual course of business to officers and employees for reimbursable
business expenses.
4.22 Related Parties. No officer or director of MAGNUM, or any affiliate
of any such person, has, either directly or indirectly: (i) an interest in any
corporation, partnership, firm or other person or entity which furnishes or
sells products or services which are similar to those furnished or sold by
MAGNUM; or (ii) a beneficial interest in any contract or agreement to which
MAGNUM is a party or by which MAGNUM may be bound. For purposes of this Section
4.22, there shall be disregarded any interest which arises solely from the
ownership of less than a one (1) percent equity interest in a corporation whose
stock is regularly traded on any national securities exchange or in the
over-the-counter market.
4.23 Copies of Certain Documents. The MAGNUM Schedule contains true and
complete copies of: (i) its currently effective Articles of Incorporation,
certified by the Secretary of State of Florida; (ii) its currently effective
Bylaws, certified by the Secretary of MAGNUM; and (iii) all federal and other
tax returns filed by MAGNUM since its inception [or for a shorter period agreed
to by the parties such as 5 years].
4.24 Underlying Documents. All underlying documents listed or described in
the MAGNUM Schedule have heretofore been furnished to ColorSmart. All such
documents furnished to ColorSmart are true and correct copies, and there are no
amendments or modifications thereto, except as expressly noted in the MAGNUM
Schedule. The minute books of MAGNUM contain full, complete and accurate records
of all meetings and other corporate actions taken by the directors and
shareholders of MAGNUM, and ColorSmart has heretofore been furnished true and
correct copies of all documents and records contained in said minute books.
4.25 Disclosure. Neither this Agreement, the MAGNUM Schedule, nor any
other written statement or certificate furnished by MAGNUM or the Shareholders
to ColorSmart in connection with the transactions contemplated hereby, when
taken together, contain any untrue statement of a material fact or omit to state
any material fact necessary to make any statement, in light of the circumstances
under which such statement is made, not misleading.
4.26 Effect of Agreement. The execution, delivery and performance by the
Shareholder and by MAGNUM of this Agreement, and the consummation of the
transactions herein contemplated, will not conflict with, or result in a breach
of the terms of, or constitute a default under or violation of, any law or
regulation of any governmental authority or any provision of the Articles of
Incorporation or Bylaws of either, or any
agreement or instrument to which the Shareholder or MAGNUM is a party or by
which they are bound or to which they are subject. No consent of any person not
a party to this Agreement and no consent of any governmental authority is
required to be obtained on the part of the Shareholder or MAGNUM to permit the
consummation of the transactions contemplated by this Agreement, which consents
will not have been received before the Closing Date.
4.27 Indemnification of ColorSmart. MAGNUM and the Shareholder, agree,
jointly and severally, to indemnify, defend and hold ColorSmart, its officers,
directors, employees and attorneys (all such persons and entities being
collectively referred to as the "ColorSmart Group"), harmless from and against
any and all losses, damages, costs and expenses, including attorneys' fees (any
such loss, damage, cost or expense herein called a "Loss"), which they or any
member of the ColorSmart Group may at any time sustain or incur by reason of (i)
any inaccuracy or breach of any of the representations, warranties or covenants
of MAGNUM or the Shareholder contained herein or in any certificate delivered
pursuant hereto, or (ii) any claim or claims whether or not presently known to
the ColorSmart Group, which arise in connection with the operation of the
business of MAGNUM, where the event which gives rise to such claim occurred
prior to the date of this Agreement, or (iii) any claim or claims arising out of
the failure of MAGNUM or the Shareholder to discharge any of their obligations
pursuant to this Agreement. In any action in respect of which indemnity may be
sought hereunder by a party hereto shall be brought against such party, the
other party shall be entitled to participate in the defense thereof at its own
expense and to settle any such action on such terms as it shall see fit so long
as the party entitled to indemnification hereunder shall be released from any
liability by reason of such settlement. In such event, the party required to
provide indemnification shall receive full cooperation and access to all
relevant and nonprivileged records. The indemnification provisions of this
Section shall not be deemed exclusive and shall not prejudice any other rights
or remedies, at law or in equity, of any party under this Agreement with respect
to any matter relating to the terms, provisions, covenants or conditions of this
Agreement or any transaction contemplated hereby.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF COLORSMART
ColorSmart represents and warrants to MAGNUM and the Shareholder that:
5.01 Organization. ColorSmart is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada and has full
corporate power and authority to carry on its business as now being conducted.
5.02 Validity of Agreement. ColorSmart has full corporate power and
authority to execute and deliver this Agreement. This Agreement constitutes the
valid and binding obligation of ColorSmart, enforceable in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy laws or
other similar laws affecting creditors' rights generally and by principles of
equity. The execution and delivery of this Agreement by ColorSmart, and the
consummation of the transactions contemplated hereby, have been duly authorized
by all necessary corporate action, and such execution and delivery do not
require the consent, approval or authorization of any person, public authority
or other entity.
5.03 Effect of Agreement. The execution, delivery and performance by
ColorSmart of this Agreement, and the consummation of the transactions herein
contemplated, will not conflict with, or result in a breach of the terms of, or
constitute a default under or violation of, any law or regulation of any
governmental authority or any provision of the Articles of Incorporation or
Bylaws of ColorSmart, or any agreement or instrument to which ColorSmart is a
party or by which it is bound or to which it is subject. No consent of any
person not a party to this Agreement and no consent of any governmental
authority is required to be obtained on the part of ColorSmart to permit the
consummation of the transactions contemplated by this Agreement, which consent
will not have been received before the Closing Date.
5.04 Indemnification of MAGNUM and the Shareholder. ColorSmart agrees to
indemnify, defend and hold MAGNUM, the Shareholder, their respective officers,
directors, employees and attorneys (all such persons and entities being
collectively referred to as the "MAGNUM Group"), harmless from and against any
and all losses, damages, costs and expenses, including attorneys' fees (any such
loss, damage, cost or expense herein called a "Loss"), which they or any member
of the MAGNUM Group may at any time sustain or incur by reason of: (i) any claim
or claims whether or not presently known to the ColorSmart Group, which arise in
connection with the operation of the business of ColorSmart, where the event
which gives rise to such claim occurred prior to the date of this Agreement, or
(ii) any claim or claims arising out of the failure of ColorSmart to discharge
any of its obligations pursuant to this Agreement. In any action in respect of
which indemnity may be sought hereunder by a party hereto shall be brought
against such party, the other party shall be entitled to participate in the
defense thereof at its own expense and to settle any such action on such terms
as it shall see fit so long as the party entitled to indemnification hereunder
shall be released from any liability by reason of such settlement. In such
event, the party required to provide indemnification shall receive full
cooperation and access to all relevant and nonprivileged records. The
indemnification provisions of this Section shall not be deemed exclusive and
shall not prejudice any other rights or remedies, at law or in equity, of any
party under this Agreement with respect to any matter relating to the terms,
provisions, covenants or conditions of this Agreement or any transaction
contemplated hereby.
ARTICLE VI.
ACCESS TO INFORMATION: CONFIDENTIALITY
6.01 Access.
(a) Prior to the Closing Date, MAGNUM shall afford representatives of
ColorSmart reasonable access to the officers and personnel of MAGNUM and to such
of its financial, contractual and other records as shall be reasonably necessary
for ColorSmart's investigation of MAGNUM and its business and operations.
(b) ColorSmart shall make available to the Shareholder the opportunity to
ask questions of and receive answers from appropriate officers or
representatives of ColorSmart concerning the terms and conditions of the
transactions contemplated by this Agreement and to obtain any additional
information which ColorSmart possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy of the information
furnished to the Shareholder hereunder.
6.02 Confidentiality.
(a) No information concerning MAGNUM not previously disclosed to the
public or in the public domain which is contained herein or in the MAGNUM
Schedule, or which shall have been furnished to or obtained by ColorSmart as
provided in Section 6.01(a), shall be disclosed to any person other than
ColorSmart's employees, legal counsel, financial advisers, or accountants in
confidence, or used for any purpose other than as contemplated herein. In the
event that the purchase and sale of the MAGNUM Stock shall not be consummated,
ColorSmart shall return to MAGNUM all such information in its possession which
is in written form.
(b) No information concerning ColorSmart not previously disclosed to the
public or in the public domain which is contained herein or which shall have
been furnished to or obtained by MAGNUM or any Shareholder as provided in
Section 6.01(b) or 6.01(c), shall be disclosed by them to any person other than
their respective employees, legal counsel, financial advisors, or accountants in
confidence, or used for any purpose other than as contemplated herein. In the
event that the purchase and sale of the MAGNUM Stock shall not be consummated,
each such person shall return to ColorSmart all such information in their
possession which is in written form.
ARTICLE VII
COVENANTS OF MAGNUM AND THE SHAREHOLDER
MAGNUM and the Shareholder hereby jointly and severally covenant:
7.01 Conduct of Business. From and after the execution and delivery of
this Agreement and until the Closing Date or the termination of this Agreement,
whichever shall first occur: (i) MAGNUM shall not engage in any activities or
transactions which shall be outside the ordinary course of its business without
the prior written consent of ColorSmart, which consent shall not be unreasonably
withheld; (ii) such persons will use their best efforts to preserve the existing
licenses, franchises, rights and privileges pertinent to the business and
operations of MAGNUM; and (iii) such persons will use their best efforts to
preserve intact the business organization of MAGNUM and to preserve its goodwill
and relationships with its suppliers, customers, employees and others with whom
it deals.
7.02 Notice of Certain Adverse Changes, Defaults or Claims. MAGNUM shall
give prompt notice to ColorSmart of any material adverse change to the property
or business of MAGNUM, or any notice of default received by it, subsequent to
the date of this Agreement and prior to the Closing Date, under any instrument
or agreement to which MAGNUM is a party or by which any of its property is
bound, or of the assertion of any claim which, if upheld, would render
inaccurate any representation contained herein.
7.03 Actions Requiring Consent. Between the date hereof and the Closing
Date or, the termination of this Agreement, whichever shall first occur, MAGNUM
shall not, without the prior written consent of ColorSmart, which consent shall
not unreasonably be withheld, take any action of the type described in clauses
(c) through (n) of Section 4.06.
7.04 Implementation of Representations and Warranties. Such persons shall
use all reasonable efforts to render accurate as of the Closing Date their
representations and warranties contained in this Agreement, and shall refrain
from taking any action which would render inaccurate as of the Closing Date any
of such representations or warranties.
7.05 Communications. Between the date hereof and the Closing Date, such
persons shall furnish no communication to the public with respect to the
transactions contemplated by this Agreement without the prior approval of
ColorSmart as to the content thereof, which approval shall not unreasonably be
withheld by ColorSmart.
7.06 Other Negotiations. Between the date hereof and the Closing Date or
the termination of this Agreement, whichever shall first occur, such persons
will disclose to ColorSmart all bona fide inquiries from other persons, firms or
corporations concerning the possible acquisition of MAGNUM (by consolidation,
merger, sale or exchange of assets, sale of stock or otherwise) or equity
securities of MAGNUM; and neither MAGNUM nor the Shareholder will solicit an
acquisition of MAGNUM by another person, firm or corporation, whether by
consolidation, merger or purchase or sale of business or assets or by the sale
or exchange of stock, nor will MAGNUM solicit the sale of any of its capital
stock or other equity securities to any other person, firm or corporation.
Nothing contained in this Section shall be construed as limiting the rights of
the Board of Directors of MAGNUM to discharge their fiduciary responsibilities
in response to unsolicited offers from third parties.
7.07 Cooperation. The Shareholder shall cooperate, and will use its best
efforts to have the other present officers, directors and employees of MAGNUM
cooperate, with ColorSmart, at its request, on and after the Closing Date and
without further consideration, in endeavoring to effect the collection of
accounts or notes receivable owing to MAGNUM at the Closing Date, and, at
ColorSmart's expense, in furnishing information, evidence, testimony and other
assistance in connection with any actions, proceedings, arrangements or disputes
relating to adjustment of federal income or any other taxes of MAGNUM for all
periods prior to the Closing Date and in connection with any other actions,
proceedings, arrangements or disputes whatsoever involving MAGNUM and based upon
contracts, arrangements or acts which were in effect or occurred on or prior to
the Closing Date.
7.08 Facilitation of the ColorSmart Public Offering. MAGNUM and the
Shareholder shall use their best efforts to cooperate, and will use their best
efforts to have the other present officers, directors, agents, employees,
attorneys, and accountants of MAGNUM to cooperate with ColorSmart in the process
of ColorSmart's initial public offering of its common stock, being undertaken by
ColorSmart pursuant to the Securities Act of 1933, as amended ("Public
Offering"). Such cooperation shall include, but not be limited to: (i) providing
for, at ColorSmart's expense, a certified audit of MAGNUM's financial statements
and statements of operation for the two year period ended December 31, 1997 and
for the preparation and review of any interim financial statements and
statements of operations of MAGNUM as required by Regulation S-B promulgated
under the Securities Act, if such certified audit shall be required in the
Public Offering; and (ii) providing such additional information or documents
which may be reasonably necessary for ColorSmart to conduct its Public Offering
and to permit the effectiveness of the registration statement to be filed by
ColorSmart with the United States Securities and Exchange Commission ("SEC").
ARTICLE VIII.
COVENANTS OF COLORSMART
ColorSmart hereby covenants:
8.01 Implementation of Representations and Warranties. ColorSmart shall
use all reasonable efforts to render accurate as of the Closing Date its
representations and warranties contained in this Agreement, and shall refrain
from taking any action which would render inaccurate as of the Closing Date any
of such representations or warranties.
8.02 Communications. Between the date hereof and the Closing Date (except
to the extent required by state or federal securities laws), ColorSmart shall
furnish no communication to the public with respect to the transactions
contemplated by this Agreement without the prior approval of MAGNUM as to the
content thereof, which approval shall not unreasonably be withheld by MAGNUM.
8.03 Registration of ColorSmart Common. ColorSmart will use its best
efforts to file and maintain an effective registration statement with the SEC
and applicable state securities commissions covering the registration on Form
SB-2 and sale of its common stock in order to conduct the Public Offering as
soon as practicable after the execution of this Agreement.
8.04 Additional SEC Documents. ColorSmart shall furnish to MAGNUM and the
Shareholder copies of all documents, if any, (other than preliminary material
and documents which describe this Agreement and the transactions contemplated
hereby) that ColorSmart files with the SEC from the date hereof through the
Closing Date.
ARTICLE IX.
SECURITIES LAW MATTERS
9.01 Securities Act Exemptions. The MAGNUM Stock to be transferred by the
Shareholder to ColorSmart pursuant to this Agreement shall not be registered
under the Securities Act, in reliance upon exemptions from such registration
contained in Section (4)(l) and/or Section 4(2) of the Securities Act.
9.02 Stock Restrictions. The certificates representing the shares of
MAGNUM Stock transferred pursuant to this Agreement shall bear a restrictive
legend in substantially the following form (and appropriate stock transfer
orders shall be placed against the transfer thereof):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE `ACT'). THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
HYPOTHECATED OR, OTHERWISE DISPOSED OF EXCEPT UNDER THE CIRCUMSTANCES SPECIFIED
BY A SHAREHOLDERS AGREEMENT, A COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY
OF THE CORPORATION."
9.03 Representations of ColorSmart. ColorSmart represents and warrants to
the Shareholder that it is acquiring the MAGNUM Stock for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof and without any present intention of selling the same;
provided, however, that any disposition thereof will at all times be within its
control.
9.05 Legend Restrictions. It is understood that the certificates
representing the MAGNUM Stock purchased hereunder shall be endorsed with a
legend restricting transfer as necessary to conform to the requirements of the
Securities Act.
ARTICLE X.
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDER
The obligations of the Shareholder under this Agreement are, at the option
of the Shareholder, subject to the satisfaction at or prior to the Closing of
the following conditions:
10.01 Accuracy of Representations and Warranties. All of the
representations and warranties made by ColorSmart in this Agreement shall be
true in all material respects as of the Closing Date with the same force and
effect as though such representations and warranties had been made as of the
Closing Date, except for changes contemplated by this Agreement, and ColorSmart
shall have delivered to MAGNUM and the Shareholder a certificate to such effect
dated the Closing Date and signed by its President and Chief Executive Officer.
10.02 Fulfillment of Covenants. All of the terms, covenants and conditions
of this Agreement to be complied with and performed by ColorSmart at or before
the Closing Date shall have been duly complied with and performed, and
ColorSmart shall have delivered to MAGNUM and the Shareholder a certificate to
such effect dated the Closing Date and signed by its President and Chief
Executive Officer.
10.03 Approval of Sale. All authorizations, consents and approvals of all
federal, state and local governmental agencies and authorities required to be
obtained in order to permit consummation of the transactions contemplated by
this Agreement shall have been obtained.
10.04 No Litigation. There shall be no litigation pending which has been
brought for the purpose of enjoining any transaction contemplated by this
Agreement or which would have the effect, if successful, of imposing a material
liability upon MAGNUM the Shareholder because of such transaction.
ARTICLE XI.
CONDITIONS TO OBLIGATIONS OF COLORSMART
The obligations of ColorSmart under this Agreement are, at the option of
ColorSmart, subject to the satisfaction at or prior to the Closing of the
following conditions:
11.01 Accuracy of Representations and Warranties. All of the
representations and warranties made by MAGNUM and the Shareholder in this
Agreement shall be true in all material respects as of the Closing Date with the
same force and effect as though such representations and warranties had been
made as of the Closing Date, except for changes contemplated by this Agreement,
MAGNUM shall have delivered to ColorSmart a certificate to such effect dated the
Closing Date and signed by its President and Chief Executive Officer.
11.02 Fulfillment of Covenants. All of the terms, covenants and conditions
of this Agreement to be complied with and performed by MAGNUM or the Shareholder
at or before the Closing Date shall have been duly complied with and performed,
and MAGNUM shall each have delivered to ColorSmart a certificate to such effect
dated the Closing Date and signed by its President and Chief Executive Officer.
11.03 Approval of Sale. All authorizations, consents and approvals of all
federal, state and local governmental agencies and authorities required to be
obtained in order to permit consummation of the transactions contemplated by
this Agreement shall have been obtained.
11.04 Consents Obtained. MAGNUM and the Shareholder shall have delivered
to ColorSmart the written consent or approval of each person or organization
whose consent or approval shall be required in order to permit them to
consummate the transactions contemplated hereby or in order to avoid any breach
or termination of any agreement to which they are a party.
11.05 No Litigation. There shall be no litigation pending which has been
brought for the purpose of enjoining any transaction contemplated by this
Agreement or which would have the effect, if successful, of imposing a material
liability upon ColorSmart, or any of its officers or directors because of such
transaction.
11.06 Accountant's Review. ColorSmart shall have received from
_______________ a letter to the effect that on the basis of their "acquisition
review" of MAGNUM, not constituting a full audit, nothing has come to their
attention which has caused them to believe that the accounts or balances to
which they applied their procedures should be adjusted.
11.07 Accounting Treatment. ColorSmart shall have received from
__________, a written analysis stating that the business combination resulting
from the consummation of the transactions contemplated by this Agreement may be
accounted for on a pooling of interests basis in accordance with generally
accepted accounting principles and in accordance with all rules, regulations and
policies of the SEC.
11.08 ColorSmart Review. There shall not have come to the attention of
ColorSmart, as a result of any investigation performed pursuant to Section 6.01
hereof, any information, not previously disclosed to ColorSmart, which is likely
to materially and adversely affect the business, property or operations of
MAGNUM following the Closing Date.
11.09 Resignation of Directors. All persons serving as directors of MAGNUM
shall have tendered their resignations to be effective as of the Closing Date.
11.10 Sale of MAGNUM Stock. Not less than one hundred percent (100%) of the
shares of MAGNUM Stock outstanding as of the Closing Date shall have been
tendered by the Shareholder for purchase by ColorSmart hereunder.
ARTICLE XII.
SURVIVAL OF REPRESENTATIONS WARRANTIES AND COVENANTS
The representations, warranties and covenants of the parties contained in
this Agreement or in any certificate or instrument delivered pursuant hereto
shall survive the Closing hereunder.
ARTICLE XIII.
PAYMENT OF EXPENSES
13.01 Expenses. Except as provided herein, the parties shall each pay
their own legal and accounting fees and other out-of-pocket expenses incurred
incident to the preparation and carrying out of this Agreement and the
transactions herein contemplated, whether or not such transactions are
consummated; provided however, in the event that the Shareholder, or MAGNUM, or
either of them, shall fail to consummate the transactions contemplated by this
Agreement, for reasons other than a material breach by ColorSmart of the terms
of this Agreement, MAGNUM shall pay to ColorSmart as a "break-up" fee all actual
accounting and legal expenses incurred by ColorSmart up to a maximum of $15,000.
In the event that such transactions are consummated, the reasonable legal and
accounting fees and ether expenses of MAGNUM shall be borne by ColorSmart
following the Closing. All other expenses shall be deemed to be expenses of the
Shareholder, and the Shareholder, jointly and severally, shall assume and be
responsible for the payment thereof.
13.02 Brokers. Each of the parties represents that it has dealt with no
broker or finder in connection with any of the transactions contemplated by this
Agreement and, insofar as it knows, no broker or other person is entitled to any
commission or finder's fee in connection with any such transaction. Each party
agrees to indemnify and hold the other parties harmless against any loss,
liability, damage, claim or expense incurred by reason of any brokerage
commission or finder's fee alleged to be payable because of any act, omission or
statement of the indemnifying party.
ARTICLE XIV.
GENERAL PROVISIONS
14.01 Notices. Any notice, request, instruction or other document to be
given hereunder by a party to any other party shall be in writing and effective
when delivered personally or sent by certified mail with return receipt
requested, postage prepaid, as follows:
To ColorSmart:
Attn: President
With a Copy to:
Attn:
To MAGNUM
Attn: President
With a Copy to:
Attn:
To Shareholder:
or to such other addresses or other persons as may be designated in writing by
any of the parties, by notice given as aforesaid.
14.02 Headings. The headings of the several sections of this Agreement are
inserted for the convenience of reference only and are not intended to affect
the meaning or interpretation of this Agreement.
14.03 Counterparts. This Agreement may be executed in one or more
counterparts, and when so executed each counterpart shall be deemed to be an
original, and said counterparts together shall constitute one and the same
instrument.
14.04 Assignment. None of the parties may assign or transfer any rights or
obligations under this Agreement.
14.05 Waiver. Any party hereto may, by written notice to the others: (i) waive
any of the conditions to its obligations hereunder or extend the time for the
performance of any of the obligations or actions of the others; (ii) waive any
inaccuracies in the representations of the others contained in this Agreement or
in any documents delivered pursuant to this Agreement; (iii) waive compliance
with any of the covenants of the others contained in this Agreement; or (iv)
waive or modify performance of any of the obligations of the others. No action
taken pursuant to this Agreement, including without limitation any investigation
by or on behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representation, warranty,
condition or agreement contained herein. Waiver of the breach of any one or more
provisions of this Agreement shall not be deemed or construed to be a waiver of
other breaches or subsequent breaches of the same provisions.
14.06 Entire Agreement. This Agreement, including the schedules and exhibits
hereto, constitutes the entire agreement between the parties pertaining to the
subject matter contained herein 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 the party sought to be bound.
14.07 Good Faith. Each of the parties hereto agree that it or they shall
act in good faith in an attempt to cause all the conditions precedent to their
respective obligations hereunder to be satisfied.
14.08 Applicable Law. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of Nevada.
14.09 Severability. Should any provision of this Agreement be determined
to be invalid, it shall be severed from this Agreement and the remaining
provisions of the Agreement shall remain in full force and effect.
Witness the due execution of this Agreement by the parties hereto as of
the date first set forth above.
COLORSMART, INC.
By [ILLEGIBLE]
-----------
Title: Chairman/CEO
MAGNUM DIGITAL SERVICES CORP.
By [ILLEGIBLE]
-----------
Title: President
SHAREHOLDER:
[ILLEGIBLE]
-----------
(Signature)
(Typed or printed name and title, if applicable) [ILLEGIBLE]
-----------
SCHEDULE OF ATTACHMENTS
Section
Exhibit/Schedule Title
